Repair or reconstruction: Where do you draw the line for exhaustion under patent law?

What can the buyer of a patented product do with the product in question under the doctrine of exhaustion? Stated otherwise: when does the use of a patented invention fall outside the scope of what a buyer is allowed or even expected to do and   instead enters the grey zone of patent infringement? This question becomes even more compelling  when it comes to drawing the line between repair (permissible from a patent law perspective) and reconstruction (which constitutes patent infringement).

The difficulties in distinguishing between the two, repair or reconstruction, becomes more important when it comes to products that need refilling and  third parties are thus given the opportunity  (along with providing  refills) to also provide substitutes  for parts of the patented invention. There is  certainly room for further interpretation of the scope of the principle of exhaustion with regards to repair/reconstruction, since the caselaw relating to  it is  limited.

The German Federal Court of Justice (FCJ) decision,  in the case of “Trommeleinheit” [Drum Unit] – court docket: X ZR 55/16, GRUR-Prax 2018, 50 of the 24^th  of October 2017, provides a valuable contribution in this respect. The FCJ, has now clarified that the central point of reference, when determining whether it is a question of repair or reconstruction, is the technical effect of the invention and whether this is reflected in the replaced element.

 The case

The patentee, Canon K.K., manufactures and distributes copying machines and printers as well as their respective toner cartridges. In the toner market, Canon has to compete with companies that reuse toner cartridges by replacing the photosensitive drum with a new drum. Canon filed a law suit and claimed direct patent infringement of claim 1 of its European Patent  2 087 407 in Germany.  Claim 1 covers a photosensitive drum unit, and further independent claims cover a cartridge and an electrophotographic image-forming apparatus, both of which  encompass a drum unit. The defendants distribute recycled printer cartridges, which may be used instead of the cartridges manufactured and distributed by the plaintiff.

Both the Düsseldorf District Court and the Düsseldorf Court of Appeal found that the defendant, by substituting the drum, had engaged in act equivalent to reconstruction i.e. an act of infringement.

 

The ruling of the FCJ

A previous ruling of the FCJ, namely the Palettenbehälter II case, provided  useful guidance  by establishing that the starting point for determining if  a certain use constitutes repair or reconstruction is to ask whether the identity of the processed object is maintained, despite the replacement of components, or alternatively  whether the replacement of the component constitutes the making of a new patented product. An important parameter is whether the components in question are of such a kind that their replacement can  usually be expected during the working life of the device. If this is the case, the use (the replacement of the part) per se is not an infringement, and a further aspect then needs to be investigated, namely, whether the technical effect of the invention is reflected in the components replaced. If this is the case, then the use constitutes reconstruction and thus patent infringement.

The FCJ, just as previously the Regional Court and the Higher Regional Court, concluded that the relevant point of reference was the claimed unit. However, and contrary to the lower courts, the FCJ ruled that,  in the specific case  before it, members of the trade would have  no opinion  whether replacement of the drum is to be expected during the working life of the drum unit, since the drum unit was  not sold separately, but only sold as part of the cartridges. Since the  the “opinion of the trade” criterion was not available, the FCJ applied the second step in the Palettenbehälter II test, whereby what is determinative is whether inventive character was embodied in the replaced spare part. The Court concluded "no", and thus  the action of the defendants did not constitute infringement.

 

The conclusions

In the view of this Kat, The FCJ’s ruling is not surprising, since it confirms its previous ruling in ““Palettenbehälter II”. The ruling in “Trommeleinheit” is nevertheless  noteworthy  because it relates to the application of previous case law in a rather special case, namely where a patented (drum) unit  is exclusively placed on the market as part of a comprehensive device (the toner cartridge) rather than as a stand-alone product. This ruling has also entailed a slight adjustment in how the distinction between repair and reconstruction is to be made, namely, changing the focus from how the product is viewed in the trade in favour of focusing on the objective aspect of technical effect as embodied in the repaired spare part. The outcome in the specific case might also influence how patent applicants will claim their inventions going forward, so as to guarantee that the claims cover all of the invention’s different components and protect the inventive character of the invention at all possible levels.