At the beginning of November 2016, Italy ratified the UPC Agreement. The ratification law (Law no. 214 of 3 November 2016), was published in the Official Gazette of the Italian Republic (link to the Official Gazette here) and is now officially in force.
While the UPC Agreement has not yet come into force - and the future of the UPC itself is still uncertain, as the mandatory ratifications foreseen by its Article 88 have not been completed yet - one of the provisions of the above mentioned ratification law, Article 4, has already caught the attention of commentators.
By this provision, the Italian Parliament immediately implemented into Italian law Article 26 of the UPC Agreement on indirect infringement, by adding three brand new paragraphs (namely paragraphs 2-bis, 2-ter and 2-quater) to Article 66 of the Italian Industrial Property Code (IPC).
These represent the first statutory provisions ever adopted by the Italian legislator on indirect infringement, which, until the entry into force of this ratification law, had been construed and applied in Italy solely in case law. This has led to some degree of uncertainty in respect of the identification of the objective and subjective elements of indirect infringement, which the newly introduced provisions seem to have - partially - clarified.
As regards the contents of the provisions, these may appear at first sight as a rather literal transposition of Article 26 of the UPC Agreement. However, careful reading is required in order to get a true understanding of the scope and implications.
Article 66, par. 2-bis, IPC provides that “The patent shall confer on its proprietor the exclusive right to prevent any third party not having the proprietor’s consent from supplying or offering to supply any person other than a party entitled to exploit the patented invention, with means relating to an essential element of that invention and necessary for putting it into effect within the territory of a State in which the invention is protected, when the third party knows, or should have known using ordinary care, that those means are suitable and intended for putting that invention into effect”.
In relation to the above paragraph, it should be noted that the wording chosen by the Italian legislator to define the territory wherein the invention is put into effect (see also below on this), i.e. “within the territory of a State in which the invention is protected” differs from the original Article 26 of the UPC Agreement, which uses the sentence “within the territory of the Contracting Member States in which that patent has effect”.
Furthermore, the reference to the territory has been moved to the final part of the provision, and, specifically, after the words “putting it into effect” and could therefore be intended as being referable to such acts/behaviour, while no explicit reference to territory is made in respect of “supplying or offering to supply”.
It is likely that this will bring about discussions on the implications of this provision in those cases in which the acts of supplying or offering to supply the means, on the one hand, and the putting into effect of the invention, on the other, take place in different jurisdictions.
Article 66, par. 2-ter, IPC also deserves closer inspection. It reads as follows: “Paragraph 2-bis shall not apply when the means consist of products that are currently in the market, except where the third party induces the person supplied to perform any of the acts prohibited by paragraph 2”.
The exact meaning of the phrase “when the means consist of products that are currently in the market” appears to be the first issue. A superficial reading of the Italian wording of the provision may lead one to conclude that paragraph 2-ter simply refers to those cases in which the means are freely in the market as they are also suitable for lawful uses.
However, a more careful reading will clarify that the preceding paragraph 2-bis already encompasses the case of means that are also suitable for lawful uses. Said paragraph simply states, in fact, that the means must be “essential” and “necessary” for putting the invention into effect: it is not specified that, e.g. said means must be “univocally destined” to putting the invention into effect. Furthermore, if paragraph 1 was only relating to means whose use is necessarily infringing, then the further requirement that the supplier or offeror “knows, or should have known using ordinary care, that those means are suitable and intended for putting that invention into effect” could be said to be superfluous, as the objective fact that the means are only suitable for infringing uses would have to be decisive.
Therefore, in principle, even in case of means capable of lawful uses, the subjective requirement seems to remain that of par. 2-bis of Article 66 IPC, i.e. the knowledge (including constructive knowledge) that the means are destined to putting the invention into effect by an unauthorised party.
It seems, therefore, that the scope of paragraph 2-ter must be confined to a narrower category of cases, namely that of staple products, i.e. those products that are a commodity or raw material, of a kind required on a daily basis, which can be generally obtained, and capable of numerous uses and applications . In this case, a qualified behaviour of “inducement” is required on the part of the supplier of this type of means in order to cause a finding of indirect infringement.
Finally, Article 66, par. 2-quater, IPC now provides that “For the purposes of paragraph 2-bis, persons performing the acts foreseen in Article 68(1) shall not be considered to be parties entitled to exploit the invention”, Article 68(1) IPC being the provision containing the limitation of patent rights and, in particular, the private use, experimental use and so-called Bolar exceptions.
First, somewhat in line with the most recent Italian case law, the provision explicitly clarifies that indirect infringement does not require the carrying out of a direct infringement downstream, as the subject acting downstream could well be exempted from patent infringement without this impacting on the unlawfulness of the conduct of the upstream supplier or offeror.
Furthermore, it could be argued that by clarifying that these subjects are not to be considered “authorised” to exploit the invention, the legislator took a position in the lively debate related to the actual scope of the above mentioned Bolar exception, currently ongoing in a number of European jurisdictions, on whether and to what extent such exceptions could also apply to third parties who manufacture and supply the patented substances needed for the carrying out, by the experimenter or the generic company, activity that is clearly exempted under the experimental or Bolar exceptions. Especially when the said third parties operate in a “structured” fashion and on a large scale, rather than producing small quantities of product specifically tailored for those who will carry out the exempted activity.