In a decision that will be of considerable importance for manufacturers of spare parts, such as printer cartridges and fragrance canisters, the UK Supreme Court has considered what constitutes “making” for the purposes of the Patents Act 1977. The judgment also highlights the importance of registering licences and other transactions concerning patents promptly.
The “making” of a patented product will be an infringement of the patent, if done without the patent proprietor’s consent. A person who supplies another with the means for putting an invention into effect may also be liable for patent infringement. It is therefore vital for manufacturers (and users) of spare parts to know in what circumstances the use of those spare parts could make them liable for patent infringement. In particular, when will repairing an article be considered to be the impermissible manufacture of a new one?
In the case before the Supreme Court – Schütz (U.K.) Limited v Werit (UK) Limited – the product concerned was an intermediate bulk container (“IBC”), a large container used for transporting liquids. IBCs are formed of a metal cage, into which a large plastic container is fitted. These plastic containers often become damaged through use. The metal cage also has a limited duration; however it is significantly longer than the plastic container. The plastic container may be replaced by a fresh container from the original manufacturer, or through a method known as “cross-bottling”, which involves replacing the container with a container from a different source. This process is done by a “reconditioner”. Werit sold bottles for IBCs to a third party reconditioner (Delta Containers Limited). Schütz, the exclusive licensee under the relevant patent, accused Werit of patent infringement.
The question to be decided was whether Delta’s activities amounted to the “making” of the patented article. At first instance the High Court found that the activities did not amount to making the patented product – the judge held that the inventive concept resided in the Schütz cage, and so replacing the plastic container could not be “making”. The Court of Appeal came to the opposite conclusion, considering that the question to be asked was simply whether the acts being undertaken would or would not amount to “making”.
The Supreme Court overturned the Court of Appeal’s decision. In the Supreme Court’s opinion, the word “makes” must be interpreted contextually and given a meaning which, as a matter of ordinary language, it can reasonably bear. The word was not a term of art and like many English words did not have a precise meaning. It would inevitably be a matter of fact and degree, to be assessed in each case, whether an activity involved the making of an article or whether it fell short of that.
In the light of the Supreme Court’s judgment, which drew from decisions of the German Supreme Court on the same issue, some relevant considerations are:
- Whether replacing a part of a patented article constitutes “making” is a matter of fact and degree.
- The concepts of “repair” and “making” are not mutually exclusive – they may overlap – but it is legitimate to consider whether the part being replaced (in this case, the bottle) is such a subsidiary part of the patented article that its replacement, when required, does not involve “making” the article. It may therefore sometimes be useful to consider whether the alleged infringer is repairing rather than making the article.
- Would the life expectancy of the part being replaced compared to the remainder of the article mean that one would expect to replace that part during the life of the article as a whole? The fact that a component of an article was physically easily replaceable and relatively perishable would be a factor indicating that replacement of that component did not amount to the impermissible making of an article.
- However, does the part being replaced embody the inventive concept of the patent? If so, that would indicate that replacing the part would amount to a “making” of the patented article.
- Is the replacement part integrally connected to the retained part, such that the work needed to carry out the replacement involves a significant degree of demolition? If so, the act in question is more likely to be one of manufacture or “making”.
In the present case the bottle was a free-standing part that did not itself include or relate to the inventive concept of the patent, which was all to do with the construction of the cage. Furthermore, the life expectancy of the bottle was such that one would expect to replace it several times during the life time of the cage – the patent in question itself stated that the bottle could be replaced. The Supreme Court concluded that, on the facts of the case, replacement of the bottle was not an infringing act.
Registration of transactions affecting patents – costs and damages
Another fact of this case was that Schütz has been granted two licences by the patentee. The first was granted in 1994 but only registered in 2008. This was replaced in 2009 by the second licence, which was not registered until 2012 – well after the decision of the Court of Appeal on infringement.
The Patents Act provides that if certain transactions, such as an assignment or the grant of an exclusive licence, are not registered with the UK Intellectual Property Office within 6 months (or if this is not practicable, as soon as possible thereafter), and the patent is subsequently infringed before the transaction is registered, then “in proceedings for such an infringement, the court shall not award him costs or expenses.”
The Court of Appeal had held that the effect of this provision was that costs incurred by a licensee during a period in which the licence was unregistered were not recoverable. The Supreme Court disagreed. The expression “proceedings for such an infringement” must be a reference to acts of infringement before the transaction is registered rather than to legal proceedings that took place before registration. In a case where there was a claim for pre- and post-registration relief, there would have to be an apportionment of costs.
The Supreme Court was also of the view, again contrary to the Court of Appeal judgment, that it was necessary for a party wishing to rely on this provision of the Patents Act to expressly plead the point.
For businesses that manufacture and supply spare parts for third party products, or which repair such products, this Supreme Court decision will be welcomed, as the earlier Court of Appeal judgment took a much stricter line on the question of whether such acts would amount to patent infringement.
However, the Supreme Court decision does not give such businesses carte blanche to do whatever they wish. On the contrary, the proposed acts will need to be considered on a case by case basis in order to determine whether they will in fact amount to the “making” of a patented article and therefore patent infringement. This will inevitably introduce an element of uncertainty, which may help original equipment manufacturers who wish to discourage the growth of a market in spare parts from other sources. In particular, the question of whether the replacement part embodies the “inventive concept” of the patent is likely in many cases to point to a conclusion that replacement of that part will be an infringing act.
Finally, in order not to be penalised in costs in future patent litigation, the only safe course for assignees and licensees is to register the relevant transaction with the UK Intellectual Property Office as soon as possible.