For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

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Tuesday, 14 May 2013

Wake up and smell the coffee: Arnold J gets real with consumables and indirect patent infringement

What happens when coffee and Kats
combine - something too cute to drink
The AmeriKat loves many things. Fresh lemonade. Kittens' paw pads. Summer thunderstorms. Napping. And Section 60(2) of the Patents Act 1977. It's true. There is something about the indirect infringement provisions, the scope of which is always up for debate between feuding parties and evidence in support somewhat ethereal, that makes the AmeriKat giddy with excitement. So when a decision about her beloved provision scurried into her inbox a few weeks ago, the AmeriKat rubbed her paws together. But, as always, more pressing matters got in the way. It was only this weekend she managed to get her whiskers immersed into Mr Justice Arnold's decision in Nestec v Dualit (see earlier post by Kat colleague Darren on this decision).

The case involved the famous Nestec Nespresso machines and specifically the coffee cartridges/capsules that are inserted into the machines to make that cup of legally addictive stimulants beloved by lawyers everywhere. Nestec is the owner of European Patent 2,103,236 which relates of a system comprising of a capsule extraction device which simply and inexpensively facilitates the insertion and the positioning of the capsule in the device. Nestec alleged that Dualit infringed its patent by supplying coffee capsules compatible with the Nespresso machines. As summarized by Darren, Arnold J held that none of the Nestec's claims were entitled to priority and as a result all the claims were anticipated by virtue of various prior art. " All well and good", says the Merpel, "but let's get to the meat that is the infringement claim."

Nestec argued that Dualit infringed its patents pursuant to section 60(2). Section 60(2, which is meant to have the same effect as Articles 26 of the Community Patent Convention, reads as follows:

(2) Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom.

(3) Subsection (2) above shall not apply to the supply or offer of a staple commercial product unless the supply or the offer is made for the purpose of inducing the person supplied or, as the case may be, the person to whom the offer is made to do an act which constitutes an infringement of the patent by virtue of subsection (1) above.
For more information of the historical origins of section 60(2), see a beast of a judgment from Jacob LJ in Grimme Landmaschinefabrik BmbH v Scott [2010] EWCA Civ 1110.

There were four meaty issues for Arnold J to tackle.  These were:

The means relating to the essential
element of the invention
1. Was a consumer of the Nespresso machine a "person other than a licensee"?

Dualit argued that the answer to that question was obviously "no", because the owner of the Nespresso machine was impliedly licensed to use the machine in any way he or she pleased, including using it with compatible capsules. Nestec do not impose any legal restrictions on purchasers of Nespresso machines. Because there was no restrictions on the use of the Nespresso machines, Counsel for Dualit cited the much-quoted speech of Lord Hoffman in United Wire [2001] where he stated that "a person who has acquired the product with the consent of the patentee may use or dispose of it in any way he pleases…". The user can do so by virtue of an implied licence (Betts v Willmot (1871)) or, in European patent systems, by the principle of exhaustion of rights after the first sale of the product. "The difference in the two theories", held Lord Hoffmann, " is that an implied licence may be excluded by express contrary agreement or made subject to conditions while the exhaustion doctrine leaves no patent rights to be enforced."

In the seamless logic often exhibited by Arnold J, the judge held that the purpose of the Nespresso machine is to make coffee.

"[T]o use the machine for this purpose, the purchaser must insert capsules into the machine. It follows, that the purchaser must be impliedly licensed to obtain and use capsules within the machine. Otherwise, it would be useless. In the absence of any restriction upon the purchaser preventing him from obtaining capsules from third parties, the purchaser is entitled to do so."
This position would make no difference even if as a result of the drafting of the claim, the purchaser of the machine makes a system falling within claim 1 as soon as he acquires a capsules.

"What matters is the substance of the invention, rather than the precise form of the claims. In the present case, the substance of the patented invention concerns the design of the machine. The specification of the Patent makes it clear that the invention does not lie in the design of the capsule. On the contrary, the specification proceeds on the basis that the capsule is of a pre-existing design. Indeed the invention does not even depend upon the design of the capsule, save to the limited extend that claim 1 requires the capsule to have a guide edge in the form of a flange." You know, the flange…
The judge added that analyzing the position in terms of exhaustion of rights makes the position even clearer:
" By consenting to the manufacture and sale of Nespresso machines, Nestec have exhausted their rights under the Patent to restrict purchasers' freedom to use such machines in accordance with their normal function. Their normal function is to make coffee form capsules. Accordingly, Nestec have exhausted their right to rely upon the patent to control the source from which purchasers acquire such capsules."
2. Did the Dualit capsules constitute a "means relating to an essential element of the invention"?

The means relating
to the essential element
of the Nestec decision
With no English authority directly on point, Mr Justice Arnold did what any European patent judge does nowadays and referred to decisions of courts of European countries that implemented Article 26 CPC, namely Germany and the Netherlands. The judge helpfully summarized some absolutely impenetrable dicta from the German Federal Court of Justice in Impeller Flow Meter [Case X ZR 48/03] and Pipette System (Case X ZR 38/06). These cases held that the means in question must contribute to implementing the technical teaching of the invention. The means, however, does not have to be novel in its own right. That is to say, the "fact that the element was known in the prior art did not prevent it being an essential element of the claim", but if "a feature was of completely subordinate importance for the technical teaching of the invention it could be regarded as a non-essential element."

Unfortunately, the Dutch Supreme Court came to the opposite conclusion and held in Sara Lee v Integro (Case C02/227HR) that an essential element must be one which distinguished the invention from the prior art. However, Arnold J held that the German approach was "more consonant" with the purposes of Article 26(1) of the CPC which was that third parties should not be allowed to benefit form the invention by supplying the means the market for which has been created by the invention.

It followed that the Dualit capsule does constitute a means relating to the essential element of claim 1 of the Patent because it (i) does contribute to the implementation of the technical teaching of the invention and (ii) is not of completely subordinate importance.

"Although the invention takes the capsule as a given, and claim 1 only requires the capsule to have a guide edge in the form of a flange, the flange of the capsule plays a significant role in the way in which the claimed invention works."
3. Are the Dualit capsules staple commercial products?

The only European authority on "staple commercial products" cited was a Patents County Court decision in Pavel v Sony Corporation where HHJ Ford stated that a "staple commercial product is a commodity or raw material". The judge held that for a product to be a staple commercial product it must be "ordinarily one which is supplied commercially for a variety of uses". The Dualit capsules were designed for no other repurpose but to use in the Nespresso machines. They were therefore not staple commercial products.

4. Are the Dualit capsules "means suitable for putting the invention into effect"?

The means related to the essential
element of the AmeriKat's naps
The final issue was whether a person who puts a Dualit capsule into the relevant Nespresso machine "makes" a system falling within claim 1 of the Patent. After summarizing the law set out in the Supreme Court decisions in United Wire and Shutz v Werit, Arnold J applied the multi-factoral approach recently laid down by the Supreme Court in Shutz. He held:
1. The capsule is an entirely subsidiary part of the system because
(i) Nespresso machines sell for hundreds of pounds, where as the capsules sell for 20-30p each;

(ii) the machines are intended to last for many years;

(iii) the capsules contain coffee which is perishable so have to be used by a defined time;

(iv) the functioning of the machine is not altered by the presence or absence of the capsule; and

(v) the presence or absence of the capsule dose not effect the economic value of the machine.
2. Both the machines and the capsules have an independent commercial existence. Indeed, there is a market for second-hand Nespresso machines.

3. Because the capsules are consumables, purchasers of machines would assume that they are entitled to obtain capsules to use with the machine from whatever source they pleased. Although it must be assumed for this purpose they are not impliedly licensed under the patent, even so it is clear from Lord Neuberger's reasoning in Shutz v Werit that this consideration is relevant.

4. The capsule does not embody the inventive concept of the patent. Although the flange of the capsule plays a significant role in the way the claimed invention works. However,
"[I]t remains the case that the invention takes the capsule as a given and the specification explicitly states that the invention can be used with any type of capsule….The fact the claims require the presence of a capsule is an artefact of clever claim drafting. In my view it may be inferred that the reason why the granted claims require the presence of the capsule (whereas the claims in the Priority Document did not) is precisely in order to enable Nestec to argue that the mere supply of capsules constitutes an infringement and thus to enable Nestec to continue to control the market in capsules even though EP 148 [the patent protecting the capsule itself] has expired."
5. The owner of the machine is not repairing or making the product. The judge, now on a roll with lambasting this argument concluded.
"Only in the world of patents could it even be suggested that a person "makes" a "product" merely by purchasing a consumable for use with a machine (i.e. before they have even used the consumable in the machine, here making a cup of coffee)."
So, the owners of the relevant Nespresso machines did not "make" the claimed system when they purchased the Dualit capsules.
The means relating to an essential
element of the AmeriKat's lemonade
So concludes the English chapter of the coffee wars, which has also seen the Higher Regional Court of Düsseldorf proceed down similar reasoning holding that a supplier of compatible cartridges was not liable for indirect infringement for selling compatible Nespresso cartridges. Of course its hardly surprising that the outcome of Arnold J's decision is consistent with the German approach given his reliance on German s.60(2) case-law.

But despite the nitty gritty of the interpretation of section 60(2), the underlying message from the UK courts following Shutz and Nestec is that they are unlikely to find indirect infringement where the product relates to consumables, not least because of the unspoken policy reasons. It also seems that, following Arnold J's comments, no clever claim drafting will save a patentee in these circumstances.    While Merpel may be muttering under her breath about how something can simultaneously be an entirely subsidiary part of a system but yet also contribute to the technical teaching of the invention, the AmeriKat purrs contentedly to herself.  The decision seems entirely sensible (for now…).

1 comment:

Anonymous said...

Thanks Annsley for your summary of the infringement part of this decision. One thing isn't clear to me though: why was the s60(2) test of whether the capsules were "means suitable for putting the invention into effect" equated to the s60(1) test for "making"? One might think that the capsules would be "means suitable for putting the invention into effect" simply because they had the required flange.

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