The much anticipated decision of the Supreme Court in Schütz v Werit has now been delivered, and has been followed by the usual frenzy of claims of outright victory and far-reaching consequences.

A slighter more considered reading of the judgment reveals a far more nuanced picture and an interesting set of criteria for considering these issues in the future.

Background

Schütz is the UK licensee of a patent which protects a specific design of intermediate bulk container (IBC). The overall design is similar to the prior art in that the container comprises a wooden or metal pallet, a plastic container bottle (normally around 100 litres in volume) and a cage of metal strips welded at key joints. The patent is addressed entirely to aspects of the welded joints designed to add flexibility without compromising strength. The key claim relates to the container as a whole, comprising the three elements I have described.

Werit makes and sells bottles for use in IBCs. For the purposes of this case, its key business is to sell bottles which fit Schütz cages to Delta, a company which is in the business of reconditioning and re-selling used IBCs. It is common ground that the bottles are frequently used for toxic substances or are damaged in use and need to be replaced if the IBC is to be re-used.

Schütz objects in the strongest terms to the activities of Werit and Delta in what is known as "cross-bottling" - the insertion of a bottle which does not originate from Schütz into one of their IBC cages. It brought actions for patent infringement against Werit in the English and German courts. It alleged that a combination of Werit and Delta infringed the patent by "making" a product according to the patent contrary that is to Section 60 Patents Act 1977. The question for the court was whether the act of inserting a new bottle in a Schütz cage amounted to "making" for the purposes of the statute.

The history of the litigation

In the UK, the case was heard at first instance by Floyd J. He adopted a satisfyingly simple test called the "whole inventive concept test". The gist was that, since the whole inventive concept resided in the cages, it would not be an act of infringement by "making" a product to put new or reconditioned plastic bottles into the cage. The bottles themselves formed no part of the inventive concept (even though the patent was addressed to the container as a whole, with both the pallet and the bottle incorporated in the description).

The Court of Appeal, led by Jacob LJ, took a different view. Relying on the previous House of Lords authority in United Wire, the Court of Appeal's approach can perhaps be summed up as follows. If it would be "making a product" to make a cage and put a Schütz bottle in it, then it must equally amount to "making a product" to put a Werit bottle in a Schütz cage. If that were not true, said Jacob LJ, "it would mean that even Schütz never made IBCs".

Jacob LJ appeared to have been influenced by a line in Delta's website which described their activities as "remanufacturing".

Meanwhile the same issue was under consideration in Germany, where it reached the Federal Supreme Court. That tribunal took a totally different approach. In an approach reminiscent of the car parts cases in the 1980s in this country, the German court concluded that the right to use a product which one has legitimately bought extends to "necessary repair or maintenance works". The court concluded that the acts carried out by Delta amounted to repair, not remanufacture, noting that the substantial elements of the inventive step solely appear in the outer cage.

The German court felt that it was decisive that, when the products were put on the market with the patent owners' consent, the purchasers expected the bottles to be exchanged during the lifetime of the product. It said "the legitimate expectations of the purchasers of such containers are of primary importance".

The Supreme Court decision

It has probably come as a surprise to the litigants to find that a dispute about something as mundane as an IBC should find its way to the highest courts in England and Germany! However, that is exactly what has happened and the Supreme Court of England and Wales has now given its decision, unanimously supporting a judgment of Lord Neuberger.

In short, he does not wholly adopt the thinking of any of the previous decisions. Instead he has delivered a carefully thought through and highly nuanced judgment which, in the end, means that cases of this sort will very substantially depend on their facts.

In reaching his decision, Lord Neuberger carried out a comprehensive review of the relevant law, in particular a meticulous consideration of the meaning which should be (and has been) applied to the word "makes".

Acknowledging that there can be a fine line between repairing and making, and with Lord Hoffman's description of the question as "one of fact and degree" in mind, Lord Neuberger set about applying the principles to this case. He felt that Floyd J's "whole inventive concept test", while having the attraction of simplicity, was not the right way to approach the question as a whole. However, he equally felt that the Court of Appeal's slavish attempt to bring this case and its distinctive facts within the principles of the United Wire decision were ill-conceived and incorrect. He said:

"since neither the Judge nor the Court of Appeal approached the issue in this case in the right way, we must reconsider and, if possible, determine for ourselves the central issue, namely, whether Delta "makes" a patented article when it removes a damaged Schütz bottle from a Schütz cage and replaces it with a Werit bottle"

He started by asking himself if the bottle is a subsidiary part of the patented article so its replacement does not involve "making" a new product. He follows a factual analysis and concludes that, although physically large, the bottle can be regarded as relatively subsidiary in the context of the patented product. First, it is common ground that it has a lower life expectancy than the cage and the pallet.

Secondly, the bottle does not contain any aspect of the inventive concept. He concluded that this was a legitimate and relevant consideration when considering the subsidiary nature of the bottle. Accordingly he is not adopting Floyd's test, but rather saying that it can be a relevant consideration of the wider issue - to assess whether replacing the part in question amounts to "making" a new product.

He took two further issues into consideration, both strongly related to the facts of the case. The bottle is a free-standing item of property which does not include or relate to the inventive concept - this distinguishes the case from the wire mesh system which was under consideration in United Wire. Further, and another distinguishing issue, is that the replacement can be completed with no work being done to the cage which does embody the invention.

He concludes that, in the factual context of this case, the act of replacing the plastic bottle does not constitute "making" an article within the meaning of Section 60.

He says:

"Deciding whether a particular activity involves "making" the patented article involves........an exercise in judgment or, in Lord Hoffman's words, it is a matter of fact and degree. In some cases, one can say that the answer is clear; in other cases one can identify a single clinching factor. However, in this case, it appears to me that it is a classic example of identifying the various factors which apply on the particular facts, and, after weighing them all up, concluding, as a matter of judgment, whether the alleged infringer does or does not "make" the patented article. In the present case, given that (a) the bottle (i) is a freestanding, replaceable component of the patented article, (ii) has no connection with the claimed inventive concept, (iii) has a much shorter life expectancy than the other, inventive, component, (iv) cannot be described as the main component of the article, and (b) apart from replacing it, Delta does no additional work to the article beyond routine repairs, I am of the view that, in carrying out this work, Delta does not "make" the patented article"

Analysis

So, is this, as it has already been described by some commentators, a charter for spare part manufacturers to operate free from the constraints of patents? Clearly not in my view.

The decision is severely circumscribed by the facts of the case, and the recognition that a different case with different facts may give rise to a completely different result. What if the replaced part does contain an aspect of the invention? What if it is substantial and connected closely to other parts of the product as a whole where the invention lies? What if the act of replacement involved an element of reconstruction of the whole? What if the part replaced is not free-standing and has no "life of its own" outside the patented product?

What we learn from this case is that there are no hard and fast principles nor any single simple test to assess what constitutes "making" for the purposes of Section 60. It is totally sensitive to the facts of the case and the wider circumstances surrounding each act of alleged infringement.

What we do have is a strong framework for assessing the facts of each case and some guidance as to the sort of principles which will underpin the perennial question - making or repairing?