The recent judgment in Schütz v Werit from the Supreme Court (the United Kingdom's highest court) has provided guidance on the question of when repairing a patented product by replacing a component part infringes a patent to the product as a whole. This guidance will be welcomed by those who repair patented products in the United Kingdom.
The subject matter of the patent in suit related to intermediate bulk containers (IBCs) which are used for the transport of liquids, normally in volumes of around 1,000 litres. In simple terms, an IBC has two components: a large plastic container which holds the liquid (the bottle); and a strong metal cage into which the bottle fits snugly.
The metal cage protects the plastic container and allows IBCs to be stacked for increased convenience during transport. The claims of the patent were directed to a product which encompassed both the bottle and the metal cage.
The metal cage has a longer life than the plastic bottle (around five or six times longer). This is because sometimes the bottle is used to carry toxic liquids, is punctured because it is less sturdy or is in some other way rendered unusable. Unsurprisingly, this means that there is a market exploiting the longer life of the metal cage by replacing the bottles and selling these refurbished IBCs.
Schütz is the exclusive licensee of the patent, and is the leading manufacturer of rigid composite IBCs in the United Kingdom. Werit is a manufacturer of bottles for IBCs and sold such bottles to a further party (Delta) that used the Werit bottles in the metal frames of used Schütz IBCs which it then sold.
Section 60(1)(a) of the Patents Act 1977 concerns direct infringement and sets out that a person infringes a patent for a product if he or she makes, disposes of, offers to dispose of, uses or imports the product or keeps it, whether for disposal or otherwise. Section 60(2) sets out the acts that are considered to be indirect infringement, which include the knowing "supply" to a primary infringer of "any of the means" which enable him or her to carry out the infringing act. It was common ground between the parties that if Delta infringed the patent, then so did Werit.
Therefore, the question to be answered was whether Delta infringed the patent. In the High Court, the trial judge had held that Delta’s activity of replacing the inner container of a Schütz IBC with a Werit bottle did not amount to making the patented product. This was reversed in the Court of Appeal, and that decision was appealed.
Supreme Court decision
In both the High Court and the Court of Appeal, a prior decision of the House of Lords (the predecessor of the Supreme Court) on the subject of repair was considered in detail (United Wire Ltd v Screen Repair Services). The court began by considering the approaches taken by the High Court and the Court of Appeal, and dismissed each one, announcing that it would need to consider from first principles the issue of "making". In doing so, the Supreme Court set out that what had to be determined was whether the bottle should be considered a subsidiary part of the whole article, and thus whether the replacement of the bottle was making a new article.
The court noted that the fact that the cage had a lifespan which was five to six times longer meant that it would be expected that the bottle needed to be replaced, as was the fact that it was made from a much less hard-wearing material. The fact that replacement was expected was considered to be indicative that the bottle was a subsidiary part. The court set out at Paragraph 66 of the judgment that:
“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. 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 has not given the purchaser his licence to sell the article, or to use it wherever he pleases as against himself.”
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). 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 fall foul of section 60(1)(a).”
The second assessment conducted by the court in determining whether the bottle was a subsidiary part was to consider whether the bottle embodied any aspect of the inventive concept of the patent, or was closely connected with that concept. In this case, the High Court had found that the invention resided in the cage, and this finding was considered to be relevant.
An additional factor which was considered to carry some weight was that both the cage and the bottle were “free-standing” items of property. It was noted by the court that the cage, which was found to be significantly longer lasting, more substantial and the only inventive component, certainly did not cease to exist when one bottle was removed and another substituted in its place. This was considered to be related to a further point, which was that in the court’s opinion there was no substantive demolition and rebuilding of the patented item by the replacement of bottles (which the Supreme Court considered to differentiate the present situation from that in United Wire).
Weighing up the factors, the court therefore concluded that Delta did not make the patented article.
The judgment may open up the market for certain reconditioned patented products within the United Kingdom. However, it should be noted in this regard that the court cautioned in its judgment that the assessment was a matter of fact and degree, and so the applicability of this judgment is likely to differ on a case-by-case basis.
This article first appeared in IAM magazine. For further information please visit www.iam-magazine.com