Grimme Maschinenfabrik GmbH & Co KG v David Scott (t/a Scotts Potato machinery) [2010] EWCA 1110 (Pat)

The Court of Appeal has given some much-needed guidance on the scope of indirect patent infringement under s60(2) Patents Act 1977. This sub-section concerns goods ('means for putting the invention into effect') which, although not in themselves infringing, are capable of being modified or used in conjunction with other goods to infringe a patent. In a decision that will please patentees, the Court confirms the potentially very broad reach of this provision. It also stresses the relevance of other states' decisions regarding provisions originating from the same treaty, and the importance of reaching consistent decisions between them.

Business Impact

  • The operation of s60(2) is potentially very broad and may apply at a time when no infringing use has yet occurred and no specific user has even formed an intention to use in such a way. All that is required is evidence that, on the balance of probabilities, some users will intend to use the means for putting the invention into effect.
  • The Court of Appeal broadened the application of s60(2) even further, by holding that it can be used against an entity that supplies the 'means' to an intermediary, rather than directly to the primary infringer.
  • It seems that the form of injunction to be granted by the Court in s60(2) cases will put the onus on the indirect infringer to work out how to supply the 'means essential' without allowing infringing use. If the infringer takes reasonable measures to do so and still fails, he will be liable for further damages caused.
  • The Court of Appeal confirmed that where the case concerns the construction of a provision originating from a treaty implemented by other states, the case law from these states is of importance in construing the provision.

Background

The case concerned Grimme's patent (EP730399), for machines for sorting potatoes and separating them from the soil, stones and stalks etc. they might be mixed in with on harvesting. Two variants of the allegedly infringing machine were sold by Scott, the defendant. One had elastomeric rollers, and the second variant was sold with steel rollers. However the machines were designed so that the rollers were interchangeable, and were marketed on this basis.

Grimme alleged that the sale and offering for sale of the first variant directly infringed the patent. In addition it alleged that the supply of the second variant indirectly infringed the patent under s60(2) PA77, on the basis that users would buy this variant and subsequently change the steel rollers for elastomeric ones, thereby infringing the patent directly.

The High Court decision

The judge held that claim 1 of the patent was invalid but that claims 17 and 24 were valid. He found that the sale of machines fitted with elastomeric rollers directly infringed these claims and that the sale of machines with steel rollers indirectly infringed under s60(2) PA77.

The Court of Appeal's judgment

Construction, validity and direct infringement

The Court of Appeal favoured a narrower construction of claim 1 than the High Court. On revisiting the issue of the obviousness of this claim, the Court found the claim valid, since there was no convincing evidence as to why a skilled person would modify the prior art machines in the way set out in the patent. Having made this finding, the Court also found that the sale and offering for sale of Scott's machine with the elastomeric roller was a direct infringement of claim 1.

Indirect infringement under s60(2) PA77

The most interesting aspect of the judgment related to the allegation of indirect (or contributory) infringement regarding the other variant of Scott's machine, sold with the steel rollers.

In considering this, the Court of Appeal (Jacob LJ and Etherton LJ delivering a joint lead judgment) took a detailed look at the origins of this provision and its application in other key European territories, namely Holland and Germany.

Having made their own enquiries of the courts in these territories, the Court of Appeal was "astonished" to find that the patent in suit had previously come before the Dutch courts and that neither party had brought this fact to the attention of the Judges.

S60(2) originates from Article 26 of the Community Patent Convention (the "CPC") and is intended to have the same effect. The Court stressed that, in circumstances such as this where a provision of such a convention is to be implemented by all parties to it, the same legal rules should apply across all countries. The Court would try to follow the reasoning of an important decision in another country, unless it was convinced it was erroneous.

In this regard, the Court compared the wording of Art 26 CPC and s60(2) and concluded that, immaterial embellishments aside, the key wording had not changed. S60(2) says:

"Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom.” [Emphasis added]

Meaning of "means, relating to an essential element of the invention"

Scott argued that the machine fitted with steel rollers was not 'means essential' because it is a complete, non-infringing machine capable of being used as supplied. The Court rejected this submission, saying the fact that the steel-rollered machine is non-infringing as sold, is irrelevant. S60(2) was clearly intended to apply to products which are capable of being used in a non-infringing manner.

The knowledge and intention requirements of s60(2)

The following issues relating to the knowledge and intention requirements of s60(2) were addressed by the Court:

  1. whose intention is referred to?

The Court confirmed the position from the recent High Court case of KCI Licensing v Smith & Nephew [2010] EWHC 1487 (Pat), that the relevant intention is that of the person supplied, not the supplier.

The Court also answered the question of whether the relevant intention is limited to that of the person directly supplied by the alleged s60(2) infringer (as was the view of the High Court in Cranway v Playtech [2009] EWHC 1588 (Pat)) or that of the ultimate user of the product. The Court of Appeal decided the latter was the correct view noting that, otherwise, a party who only supplied essential means to middlemen could never be liable for indirect infringement, even if he knew that the ultimate users would use them to infringe.

  1. how specific must the intention be?

The Court held that the relevant "intention" is not specifically that of the ultimate user, but that the question was "whether the "means" and the circumstances surrounding it being offered or supplied are such that some ultimate users will intend to use or adapt the "means" so as to infringe." [emphasis added]. The Court also said that the question must "be established in the usual way on a balance of probabilities. It is more accurate, therefore, to state the test in terms of what probably will be intended and what probably will be the use to which the means will be put."

Therefore it seems to be the case that the relevant intention does not have to be the defined intention of any specific person, but that indirect infringement can be made out if, on the facts, it is more likely than not that the essential means will be intended to be used to put the invention into effect – a broad test.

  1.  when must the intention be formed?

The Court noted that s60(2) uses the present tense in relation to the intention (i.e. that the means "are intended" to put the invention into effect). However, the Court decided that the only way to make sense of the fact that the provision also covers the offer to supply means essential (at which point the intention of a particular ultimate user to infringe could not be formed yet), was to conclude that a "future intention of a future buyer is enough if that is what one would expect in all the circumstances".

  1.  is there a de minimis threshold for indirect infringement?

Although the Court did not expressly address this point, it seems there is no threshold of putting the invention into effect below which no indirect infringement can be made out. The Court of Appeal said "the extent of [modifying the machine so as to infringe] is a matter which at this stage is premature: it really arises on an inquiry as to damages. For present purposes, we proceed on the basis that [modifying the machine so as to infringe] sometimes happens".

The Court also said "[w]e do not think it matters that [the defendant] now says only a few users do make [the change rendering the machine infringing]…[The defendant] knew that users would intend to make their devices infringing if it suited them and positively encouraged that intention."

  1.  The relevance of indications or recommendations from the supplier to use in an infringing way

Scott had pointed out to purchasers of its machines that they could be adapted by changing the steel rollers for elastomeric ones. The Court of Appeal noted the relevance of this evidence (finding support in the German case of Deckenheizung [BGH X ZR 153/03], 13 June 2006) in establishing that the intended use of the invention was known (or it would have been obvious) to Scott.

The Court said "[i]n short, the knowledge and intention requirements… are satisfied if, at the time of supply or offer of supply, the supplier knows, or it is obvious in the circumstances, that ultimate users will intend to put the invention into effect. That is to be proved on the usual standard of balance of probabilities. It is not enough merely that the means are suitable for putting the intention into effect (for that is a separate requirement), but it is likely to be the case where the supplier proposes or recommends or even indicates the possibility of such use in his promotional material."

  1. the form of injunction against infringement under s60(2) PA77

The Court also gave some very interesting guidance as to the form of injunction applicable in s60(2) cases. It was considered whether, in cases under s60(2) where the goods sold by the defendant may have both infringing and non-infringing uses, the injunction should be varied from the normal form (i.e. simply restraining the defendant from infringing patent X), for instance to spell out what the defendant can do.

The Court said that this would not normally be appropriate, since it is up to the defendant to work out how to ensure that there is no ultimate infringement. However, the Court did note that, in the event that the defendant "does take reasonable steps but they turn out unexpectedly to be ineffective, enforcement of the injunction by launching proceedings for contempt of court instead of a fresh action for infringement may be inappropriate."

Therefore, a defendant who makes reasonable efforts to prevent infringing use of its goods (e.g. by including notices in promotional materials) may nevertheless be liable for further damages if customers ignore his efforts.

  1.  The measure of damages or profits for indirect infringement

Lastly, the Court pointed out the difficulties in assessing the damages (or profits) to be awarded, although it noted that its views were purely provisional at this stage. One approach suggested by the Court was to apply the proportion of goods which are used to infringe as the proportion of the defendant's total sales which should be treated as infringing. Another was to ask by how much the defendant increased its sales by virtue of his indirect infringement.