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The correct approach in this case Ratio |
Since neither the Judge nor the Court of Appeal approached the issue in this case in the right way, we must reconsider and, if possible, determine for ourselves, the central issue, namely, whether Delta makes a patented article when it removes a damaged Schtz bottle from a Schtz cage, and replaces it with a Werit bottl... |
As is clear from United Wire, this question requires the court to focus on the question of whether, when it replaces a component of the article (viz. the bottle) the subject of the Claim, Delta makes that article (viz. the IBC as described in the Claim). Ratio |
In answering that question, I consider that it is both legitimate and helpful to consider the question of whether the bottle is such a subsidiary part of the patented article that its replacement, when required, does not involve making a new article. Ratio |
There are undoubtedly points in favour of the view that the bottle is more than subsidiary in this sense, so that its replacement involves making the claimed article, namely an IBC. Ratio |
Thus, it is a necessary part, indeed an integral part, of the patented article, but so, self-evidently, is the lid of the bottle, whose replacement, when damaged, cannot, as observed in para 59 above, sensibly be said to involve making the IBC. Ratio |
Further, the bottle is specifically referred to in Item [A] of the Claim, but then so is the lid, albeit arguably only impliedly (an upper closable filler opening). Ratio |
The question, however, is one of degree. Ratio |
In that connection, the bottle is a much more substantial feature of the composite article described in the Claim than the lid of the bottle. Ratio |
Indeed, the bottle would appear to have a greater surface area than the cage (at least if one ignores the gaps between the bars). Ratio |
However, while undoubtedly an essential and physically large part of the patented article, it seems to me that, particularly in the context of the present issue, the bottle can fairly be said to be a relatively subsidiary part of the article, viewed as a whole. Ratio |
In that connection, Mr Thorley QC identified two significant features of the bottle. Ratio |
First, the bottle has a significantly lower life expectancy than the cage and, presumably, than the pallet. Ratio |
In particular, one would anticipate replacing the bottle, on average, five or six times during the life of the cage. Ratio |
The fact that one would expect the bottle to be replaced in this way reinforces the notion that it is a subsidiary part. Ratio |
Another aspect of the same point is that the bottle is also physically less substantial than the cage (or, no doubt, the pallet), since it is made of plastic (albeit tough plastic) rather than metal. Ratio |
Looking at the point another way, if the cage has a much greater life expectancy than the bottle, a purchaser of an IBC might well expect to be able to replace the bottle. Ratio |
As Lord Hatherley LC said in Betts v Willmott (1871) LR 6 Ch App 239, 245, in a passage cited by Lord Hoffmann in United Wire at para 68: When a man has purchased an article he expects to have the control of it, and there must be some clear and explicit agreement to the contrary to justify the vendor in saying that he ... |
In principle, a purchaser of a patented article, as I see it, should be taken as entitled to make such an assumption, subject to section 60(1)(a). Ratio |
Accordingly, for that reason also, where the article includes a component which is physically easily replaceable and in practice relatively perishable, those features must constitute a factor (which may, of course, be outweighed by other factors) in favour of concluding that the replacement of that component does not f... |
Secondly, the bottle does not include any aspect of the inventive concept of the Patent. Ratio |
The extent to which a component of an article is a subsidiary part, so that its replacement is more likely to involve repairing than making the article, must be a matter of degree. Ratio |
It therefore seems to me that it must be legitimate, in the context of addressing the question whether a person makes the patented article by replacing a worn out part, to consider whether that part includes the inventive concept, or has a function which is closely connected with that concept. Ratio |
While, as already observed, there is nothing in the judgments in United Wire to support the notion that the inventive concept is relevant to the question raised in an appeal such as this, there is nothing inconsistent with such a notion either. Ratio |
What the reasoning in that case does rule out is the attractively simple use of the inventive concept in this sort of case which Floyd J suggested in his para 196. Ratio |
Mr Meade QC contended that the inventive concept of a patent is often a controversial issue, and that there could therefore be problems if it was treated as relevant in determining whether an alleged infringer makes the patented article. ARG |
I am unconvinced by that contention. Ratio |
In almost all patents, the claimed inventive concept is clearly identified or identifiable from the patent, and, if it is unclear or disputed, it will often be an issue in the proceedings anyway. Ratio |
I note that the BGH appears to have no difficulty in accommodating the inventive concept in this exercise, and, if Mr Meade QC was right, it would be much more likely to be a problem in Germany with its bifurcated approach (where different courts deal with infringement and validity) than in England with our unitary app... |
Two further factors (which are connected to some extent) carry some weight with me. Ratio |
They can be highlighted by contrasting the facts of this case with those in United Wire. Ratio |
In this case, the replaced part, the bottle, is a free-standing item of property, which does not include, or relate to, the inventive concept. Ratio |
In United Wire, the replaced part, the wire mesh system, had no independent identity from the retained part, the frame. Ratio |
Hence it was much easier to say, as Lord Hoffmann did in that case, that the original product ceased to exist when the meshes were removed, whereas in this case there are, as it were, two products (disregarding the pallet, which is included in the Claim), and one of them, which is significantly longer lasting, more sub... |
Furthermore, there is a significant difference between the nature of Deltas operations in this case and that of the defendants operations in United Wire, as described by Lord Hoffmann at para 64 of his opinion (quoted in para 31 above). Ratio |
In this case, a damaged free-standing plastic bottle is simply replaced within the metal cage, which contains the inventive concept, and the metal cage is repaired if necessary. Ratio |
In United Wire, unlike in this case, (i) the replaced part was integrally connected to the retained part, so the work included a significant element of demolition, (ii) the replaced part was subjected to significant improvement work, (iii) the inventive concept either largely resided in the replaced part (the first pat... |
Merely replacing a damaged plastic bottle (albeit one of considerable size) with a new plastic bottle (even allowing for the fact that the replacement has to be made) appears to me to be an exercise of a very different order. Ratio |
It seems to me that it would accord with the eight general principles set out in paras 26 to 28 above to take into account the various factors mentioned in the preceding eleven paragraphs, when deciding whether Delta makes the patented article. Ratio |
I derive comfort from the fact that they are factors which appear to carry force with the BGH when it is considering this issue. Ratio |
I also consider that there is nothing in the speeches of Lord Bingham or Lord Hoffmann in United Wire which suggests that it would be wrong to take these factors into account. Ratio |
The speeches appear to me to establish that the question to be determined in a case such as this is whether the alleged infringer makes the patented article, and that the answer to that question is often a matter of fact and degree. Ratio |
The speeches do not give much guidance as to what specific considerations can or cannot be taken into account when determining the question. Ratio |
The next issue to be addressed is whether it is also appropriate to consider the further point raised by the BGH in Pallet Container II, summarised in para 44 above. Ratio |
In my view, the question of whether the end-user is paid for a used IBC could have relevance to the issue which we have to determine. Ratio |
If an article has no value when it has been used and before it is worked on, and has substantial value after it has been worked on, that could fairly be said to be a factor in favour of the work resulting in the making of a new article, or, to put the point another way, in favour of the work involved amounting to more ... |
However, that would be just one factor, and it would have to be approached with caution. Ratio |
For instance, there might be considerable value to an end-user in having the used IBC collected by Delta, as it might otherwise have to be disposed of at some cost. Ratio |
Or a cross- bottled IBC may have a relatively small value, so that the collection by Delta represents significant cost to Delta. Ratio |
Further, it is possible that the value of the cage could vary significantly with the price of the metal from which it is made, and it would seem wrong that the issue whether Delta makes a new article should fluctuate with prices on the metal exchanges. Ratio |
In this case, as in Pallet Container II, there was no evidence which can fairly enable us to assess this factor. Ratio |
However, unlike the BGH in Pallet Container II, I am firmly of the view that we should not remit the case back to Floyd J, let alone another judge, so as to enable the parties to adduce evidence on the matter. Ratio |
A first instance hearing in this jurisdiction involves a full and detailed examination of all the issues, requiring the parties to devote considerable expense and effort, and taking up a significant amount of court time; and an appeal is normally limited to points of law. Ratio |
Parties are expected to adduce all their evidence and arguments before the trial judge, and are normally only permitted to adduce new evidence (whether on appeal or through a rehearing) if there was a very good reason why the evidence was not adduced at trial. Ratio |
In any event, on the basis of the evidence and arguments which we have heard, I think it very unlikely that any such evidence would have affected the outcome. Ratio |
Infringement: conclusion Ratio |
Weighing up the various relevant factors, I have come to the conclusion that by replacing the bottle in the IBC, Delta does not make the article identified in the Claim. Ratio |
Given the size of the bottle, and the fact that it is one of the two (or three, if one includes the pallet) components of that article, the issue is by no means clear. Ratio |
However, the combination of the factors discussed in paras 63 to 72 above persuade me that the conclusion reached by Floyd J on this point was right, albeit for somewhat more nuanced reasons. Ratio |
Deciding whether a particular activity involves making the patented article involves, as Lord Bingham said, an exercise in judgment, or, in Lord Hoffmanns words, it is a matter of fact and degree. Ratio |
In some such cases, one can say that the answer is clear; in other cases, one can identify a single clinching factor. Ratio |
However, in this case, it appears to me that it is a classic example of identifying the various factors which apply on the particular facts, and, after weighing them all up, concluding, as a matter of judgment, whether the alleged infringer does or does not make the patented article. Ratio |
In the present case, given that (a) the bottle (i) is a freestanding, replaceable component of the patented article, (ii) has no connection with the claimed inventive concept, (iii) has a much shorter life expectancy than the other, inventive, component, (iv) cannot be described as the main component of the article, an... |
I should add that, while ones focus in a case such as this should not be deflected from the central question of whether the alleged infringer makes the patented article, it may sometimes be a useful cross-check to consider whether its activities involve repairing the original product. Ratio |
As mentioned, that was a question which Buckley LJ found helpful in Solar Thompson, and which the BGH also invokes in this connection. Ratio |
In this case, I consider that the question does not take matters much further: for the reasons I have given for concluding that Delta does not make a new patented article, I am of the view that its cross-bottling activities involve repairing the original product. Ratio |
I would therefore allow Werits appeal on the main issue. RPC |
That means that Werits appeal on the section 68 issue is academic. Ratio |
However, because the issues that the appeal raises were fully argued, and because I do not agree with some of the conclusions of the Court of Appeal, it is right to deal with that aspect also, at least to the extent that it is safe to do so. Ratio |
The section 68 appeal Ratio |
The background facts and law FAC |
As mentioned above, Schtz has been granted an exclusive licence by the patentee, Protechna. FAC |
Schtz was initially granted a licence (the first licence) on 24 March 1994. FAC |
On 26 November 2009, the first licence was determined, and on the same day another licence (the second licence) was granted in its place. FAC |
Sections 32 and 33 of the 1977 Act (sections 32 and 33) provide for a register of patents, on which not only patents themselves, but also transactions, instruments or events affecting rights in or under patents can be registered, partly for the purpose of establishing priority. STA |
The first licence was not registered until 17 July 2008, more than fourteen years after it had been granted, and just before these proceedings were started. FAC |
The second licence was not registered until 15 November 2012, some two years after it had been granted and well after the decision of the Court of Appeal on infringement. FAC |
Section 68, in its original and current form, is in these terms: Where by virtue of a transaction, instrument or event to which section 33 above applies a person becomes the proprietor or one of the proprietors or an exclusive licensee of a patent and the patent is subsequently infringed, the court shall not award him ... |
The italicised words were in the section as enacted, but, with effect from 29 April 2006, they were repealed and replaced by the words in bold, to ensure that the section did not fall foul of Articles 13(1) and 14 of the Enforcement Directive (2004/48/EC). STA |
This was effected by regulation 2(2) of, and para 4 of Schedule 2 to, the Intellectual Property (Enforcement etc) Regulations 2006 (SI 2006/1028). STA |
The purpose of section 68 is not in dispute. Ratio |
People need to know who is on the register. Ratio |
This section is aimed at making the people who own the monopolies get on the register, as Jacob J observed in LG Electronics v NCR Financial Solutions Group Ltd [2003] FSR 24, para 18. Ratio |
The effect of the Court of Appeals decision that Werit infringed the Patent was, at least on the face of it, that Schtz was entitled to (i) damages or an account of profits in respect of infringements occurring on or after 7 August 2002 (being six years before the issue of these proceedings), and (ii) its costs (subjec... |
However, if section 68 applied, (i) its original provisions would have disentitled Schtz from recovering any damages or account in respect of infringements occurring before 29 April 2006, and (ii) the amended provisions would have cut down Schtzs right to recover costs. Ratio |
After the Court of Appeals judgment on the main issue had been made available in draft, Werit gave notice that it intended to rely on section 68. Ratio |
This led to two further decisions of the Court of Appeal [2011] EWCA Civ 927, [2012] FSR 2 and [2011] EWCA Civ 1337, [2012] Bus LR 746, [2012] 2 Costs LR 306. Ratio |
The first of those decisions gives rise to three issues, and the second decision to a fourth issue. Ratio |
I shall consider those issues in turn. Ratio |
To what extent should reliance on section 68 be pleaded? Ratio |
The first issue is whether Werit needed to have specifically raised its reliance on section 68 in its pleaded case before it could rely on its original restriction on damages and an account, and its subsequent restriction on costs recovery. Ratio |
The Court of Appeal held that the point need not be pleaded, because of the mandatory terms in which section 68 is expressed the court shall not. Ratio |
I do not agree. Ratio |
The main point of requiring a party to put forward its contentions in a statement of case or a pleading is to ensure that the other party is not taken by surprise. Ratio |
The mere fact that a statute is expressed in directory terms should not mean that its contents can be relied on by a party without any warning to the other party. Ratio |
Of course, there may be good public policy issues justifying a different view in a particular case, but, absent such a factor, I consider that clear words would be required before a party could, as of right, raise a point of this nature without fairly putting the other party on notice, which would normally be in its st... |
This conclusion is supported by the reasoning of the Court of Appeal in Fookes v Slaytor [1978] 1 WLR 1293 in relation to section 1 of the Law Reform (Contributory Negligence) Act 1945, which provides that, in a negligence case, damages shall be reduced to take into account contributory negligence. Ratio |
To much the same effect is what Lord Griffiths said about the need to plead a limitation defence in Ketteman v Hansel Properties Ltd [1987] AC 189, 219. Ratio |
The same view is taken in Bennion on Statutory Interpretation (5th edition, 2007), p.114, and specifically in relation to section 68, by Terrell on the Law of Patents (17th edition, 2010) at para 18.89. Ratio |
It should be recorded that none of these authorities appears to have been cited to the Court of Appeal in this case. Ratio |
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