Background
Facts
Decision
Comment
The Helsinki District Court recently rendered several judgments in a complicated and prolonged patent and utility model infringement dispute. A Finnish ship owner invented a new system for the transportation of steel coils. The system consisted of a type of cradle rack for which the owner was granted a Finnish patent on July 1 2001, with priority from December 30 1999. The owner was also granted a Finnish utility model on October 31 2001. The invention limits the rolling and pitching of the vessel, thus reducing the risk for cargo damage and making the crew more comfortable and loading and discharging safer and faster.
In Spring 2001 the owner suspected that two Dutch operator-managers planned to take advantage of the invention. The owner sent several letters to the operators, giving notice against possible exploitation of the invention. In Autumn 2001 the operators entered into a contract of affreightment with two Finnish steel mills. The Finnish owner had carried steel products from the same steel mills since the beginning of the 1990s. The Dutch operators commenced the transport of steel coils at the beginning of 2002 using vessels that were equipped with identical cradle racks to those described in the Finnish patent.
In January 2001 the Finnish ship owner filed infringement claims against the Dutch operators before the Helsinki District Court. The Dutch operators replied by filing declaratory claims alleging that the operators had not infringed the Finnish patent and utility model. The Dutch operators also filed an administrative opposition claim against the granted patent and utility model. The Patent Authority revoked the patent in 2004. The Supreme Administrative Court returned the opposition claim to the Patent Authority in 2005 and the same procedures were repeated in 2007.
The administrative opposition proceedings continued until June 23 2009, when the court finally rejected the claims and upheld the patent and the utility model. Additionally, an interesting opposition action was instigated before the board of appeal of the European Patent Office. After the Supreme Administrative Court's decision, the district court carried on with the handling of the infringement and declaratory claims. At the end of 2009 the Dutch operators instigated claims for annulment. In June 2010 the Finnish owner replied by instigating actions for passing off.
The Dutch operators continued with the actual steel coil transports up to 2008. The Finnish ship owner claimed €2.9 million for each vessel as compensation for the exploitation of the invention and €45 million in damages for loss of earnings from this period.
The Helsinki District Court was required to decide, among other things, whether the Dutch operators' vessels entered Finland temporarily - in regular traffic or otherwise - as described in Section 5 of the Finnish Patent Act (based on the Paris Convention for the Protection of Industrial Property and its 1925 revision). Under the above section, an invention may be exploited on foreign vessels for its own needs when temporarily entering Finland in regular traffic or otherwise. The district court found that the trade was not temporary since the vessels had visited Finland an average of 25 times a year, totalling over 500 times.
The district court had also to decide whether negotiating and entering into a contract exploited the patent. Section 3 of the Patent Act specifies the exploitation situations, but does not mention negotiating and entering into a contract. The district court found that the list in Section 3 was not exhaustive. Consequently, negotiating and contracting could also establish exploitation of the patent.
Furthermore, the district court had to decide whether the Dutch operators, which claimed that they were merely technical and commercial managers of the vessels, could commit the alleged patent infringement. Pursuant to one leading Finnish shipping law scholar, the applied management agreements (Shipman 98) described the managers as nothing but agents. However, he concluded that other factors might lead to a situation where the manager could be held as a liable operator of the vessel. Another leading shipping law scholar found, on the basis of the actual agreements, that the managers in fact operated the vessels and made - or at least were involved in - all the important decisions regarding the operations and technical solutions of the vessels. The district court shared this view.
The district court ordered the Dutch operators to pay €2.1 million in compensation and €6 million in damages. In addition, the Dutch operators were requested to pay a considerable amount of legal costs to the Finnish owner.
The case involved several interesting IP right questions as well as shipping law problems. The Supreme Court would doubtless regard this as a precedent case and would probably grant leave to appeal. The question is only whether the parties have the endurance to litigate before the appeal court and in the Supreme Court.
For further information on this topic please contact Matti Komonen or Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd by telephone (+358 9 474 2207), fax (+358 9 474 2247) or email ([email protected] or [email protected]).