Infringement of patents: 2002 developments

The courts appear less willing to accept arguments over jurisdiction than in previous years, and have adopted a pragmatic approach to when an infringement can be considered to take place in the UK.

Placing host computer outside of jurisdiction is no defence to infringement

Since publication of the proposed European Directive on the patentability of computer-implemented inventions in February 2002, “software patents” have once again become a topic of interest. The proposed changes to the law (though not necessarily Patent Office practice) to include a requirement that a patentable invention demonstrate a “technical contribution” have dominated professional debate on the subject, with questions regarding enforcement of such patents remaining generally unanswered. The decisions of the Patents Court and Court of Appeal in Menashe v William Hill have brought this latter issue into focus.

The Claimant in the case was the inventor of a patent for “gaming systems”, which claimed a host computer, terminal computers, a communication means between them and a programme for operating the terminal computers. The Defendant, an on-line bookmaker, operated such a system. The Claimant brought proceedings for infringement of its patent, alleging that the provision of a computer program to customers to enable them to connect their “terminal” computers to William Hill’s “host” website to place bets fell within the scope of its monopoly. William Hill’s defence to the claim was simple: its host computer was based outside of the patented territory (in fact, in Curacao) and it could not therefore infringe Menashe’s patent.

As a preliminary issue, the Court at first instance was asked to consider whether it was a defence to a claim under section 60(2) of the Patents Act 1977, if otherwise good, that the host computer claimed in the patent-in-suit is not present in the UK (but is connected to the rest of the apparatus claimed in the patent). The Judge held that such a defence did not exist, accepting the Claimant’s arguments that such an approach would create a “hole” in the international rules concerning infringement. Towards the end of 2002, the decision of the Patents Court was upheld, although for different reasons.

The Court of Appeal agreed that it was no defence to a claim under section 60(2) of the Patents Act 1977 for a host computer to be placed outside of the jurisdiction. It did not, however, find the reasoning of the Judge at first instance to be convincing. In particular, whilst the Judge drew a distinction between “putting an invention into effect in the UK” (as expressly required by section 60(2)) and “infringement”, the Court of Appeal held that an infringing act or use was required. The Court of Appeal found such infringing use on the facts. In particular, the Court of Appeal commented that, in the present computer age, it did not matter where the host computer was based and it was not a mis-use of the word “use” to conclude that a punter using a gaming system from a terminal in the UK would use the claimed gaming system in the UK even when the host computer was located abroad. The Court of Appeal thus appears to be developing separate rules in relation to computer-related inventions, the legitimacy of which remains unclear. It is also unclear how such issues would be determined with a claim for infringement under section 60(1) of the Patents Act 1977.

Joint tortfeasors must make the infringing act their own to be liable; “import” and not “causes to import” is the relevant act of infringement

In the case of SABAF v MFI the Court of Appeal gave consideration to the issue of when third parties in other jurisdictions may be found to be liable for patent infringement in the UK, either as a result of being a “joint tortfeasor”, or for the infringing act of importation.

SABAF owned a patent in relation to burners for gas hobs. The first Defendant, MFI, bought gas burners from the second Defendant, Meneghetti, and sold them on in the UK. The dispute between MFI and SABAF settled out of Court and SABAF continued to pursue the second Defendant for infringement of its patent, both for committing infringing acts in importing the burners into the UK, and as a joint tortfeasor along with MFI.

At first instance, Laddie J ruled the patent invalid on the grounds of obviousness, but stated that if the patent had not been obvious, that Meneghetti would have infringed as an importer, (although not as a joint tortfeasor). SABAF appealed.

The Court of Appeal overruled the first instance decision on obviousness (see below). The Court of Appeal also disagreed with Laddie J’s view on infringement in finding that Meneghetti had not committed an infringing act as it had not “imported” the goods into the UK. The title to the burners and the hobs passed to MFI in Italy. The contract of sale was on ex works terms, i.e. that title and risk in the goods passed as soon as they left the factory. Moreover it arranged the transportation at MFI’s request and was paid by MFI for this service. According to section 60(1)(a) of the Patents Act 1977 the infringing act is “import” not “causes to export”. Meneghetti was not an importer in this case.

The Court of Appeal did, however, agree with Laddie J’s decision on joint tortfeasance. It stated: “the underlying concept for joint tortfeasance must be that the joint tortfeasor has been so involved in the commission of the tort as to make himself liable for the tort. Unless he has made the infringing act his own, he has not committed the tort”.

Whilst Meneghetti had known that the burners were going to be imported into the UK and may be said to have facilitated MFI’s infringing acts, Meneghetti had neither induced the infringing act nor participated in any kind of common design and had thus not made “the infringing acts its own”.

Euro-defences under Articles 81 and 82 can be raised in patent infringement proceedings

In Intel v Via, the Court of Appeal gave consideration to the application of Articles 81 and 82 of the EC Treaty (and equivalent provisions of the Competition Act 1998) as defences to patent infringement – the so called “Euro defences”.

Intel is the world’s largest microprocessor and CPU manufacturer and between 1996 and 1998 its chip sets accounted for approximately 100% of the market. In 1998 Intel entered into a chip set licensing agreement (“CLA”) with Via, a Taiwanese company. The agreement regulated the terms on which Via could use Intel’s patents in the design and manufacture of its own chip sets. In September 2001, Intel alleged infringement by Via of two patents in relation to chip sets and microprocessors. Via denied infringement and raised defences under Articles 81 (restrictive agreements) and 82 (abuse of dominant position) of the EC Treaty and the equivalent provisions of the Competition Act 1998. The Judge gave summary judgment for Intel on the competition issues and Via appealed this decision.

The Court of Appeal allowed Via’s appeal finding that its “Euro defences” had more than a fanciful prospect of success and should rightly be disposed of at trial. In particular, whilst exercising the rights of exclusivity through intellectual property ownership can only be abused by a dominant position in exceptional circumstances, the range of exceptional circumstances could extend to the facts stated by Via. Further, the CLA did not contain reciprocal cross-licensing provisions and there was a real prospect of Via demonstrating that its terms were incompatible with Article 81. Both Articles 81 and 82 could stand as independent defences to patent infringement. If insufficient as a defence to liability, they could constitute a defence to the remedies of an injunction, delivery up and an account of profits.

Goods temporarily in jurisdiction found to be not infringing

In Stena v Irish Ferries, the Defendant company operated a ferry between Dublin and Hollyhead, such that its ship would be within the UK’s territorial waters for approximately three hours before returning to Ireland. In addition to attacking the validity of the patent, and asserting that it fell outside of the claims of the patent, the Defendant asserted that it had a defence under Section 60(5)(d) of the Patents Act 1977, since the ship was only “temporarily” within the jurisdiction. This was challenged by the Claimant. In particular the Claimant asserted that the fact that the ferry was operated on a frequent and regular basis meant that it could not be considered to be “temporarily” within the jurisdiction. Finding for the Defendant on this point, the Court found that “temporarily” had little to do with frequency, persistency and regularity. Rather temporarily meant “for a limited period of time”. The fact that the same journey was to be repeated over and over again did not alter the fact that each entry into the UK’s waters was intended to be short-lived. Accordingly the Defendant had a good defence to infringement.