In 2013 Nestec SA, the owner of the Nespresso coffee machine systems, lost its UK High Court battle against Dualit, a UK coffee capsule manufacturer. The judgment concluded the latest round of legal disputes between Nestec and rivals selling replacement coffee capsules. In this case, the UK court decided that Dualit’s replacement capsules for the Nespresso coffee machines did not infringe Nestec’s patent, and that the patent was invalid and anticipated by its own priority document.
UK coffee drinkers should now benefit from the anticipated price competition between the Nespresso-compatible coffee capsules on the market.
Nespresso has enjoyed huge worldwide sales in the $80bn global coffee market. The single-serve coffee market is currently worth around $10bn, and analysts estimate that Nespresso generates sales of around $4.75bn from their coffee capsules alone. Nespresso’s success and huge market share stems partly from their successful marketing campaign (featuring George Clooney) and partly from their suite of patents.
The Nespresso system was covered by patents intended to prevent rivals from making and selling identical or similar coffee machines. One particular European patent EP2103236 (“Patent A”), related to a device for extracting coffee from a coffee capsule, and a coffee machine that included this device. According to Nestec, improper positioning of capsules within coffee machines could damage the capsule. The patented extraction system claimed to make it easier for users to insert capsules into coffee machines and for the machine to then extract the coffee from the capsule.
Nespresso had also been awarded patents to protect its coffee capsules. However, its European coffee capsule patent EP0512148 (“Patent B”) expired in May 2011. As the patent no longer had legal effect, rival companies believed that there was nothing to stop them from making and selling coffee capsules marketed as working with the Nespresso machines.
In 2012, two Swiss coffee capsule manufacturers began marketing their coffee capsules in Germany as being compatible with Nespresso machines. Since Nestec could no longer enforce its (expired) Patent B in Germany, it instead alleged that the companies infringed its extraction system patent. However, the German court decided that the companies did not infringe Patent A because once the Nespresso machines were sold, consumers had a right to choose any capsules to use with the machines.
Highlights of the Judgment:
- Lack of Infringement – How (not) to Protect Consumables
In Nestec v Dualit, Nestec claimed that by selling Nespresso-compatible capsules, Dualit was supplying an essential element of the patented system. Such supply is considered contributory infringement under sec 60(2) of the UK Patents Act (1977). Justice Arnold agreed that Dualit’s capsules were an “essential element”. However, he held that because the functioning of the machine was not affected by the presence or absence of the capsule (i.e. because the extraction device could move through its various positions), the capsules were merely a “subsidiary part” of the machine. The judge stated that the patented invention concerned how the machine operates, but the capsules themselves do not affect the operation of the machine. Thus, the court held that Dualit did not commit contributory infringement.
Furthermore, the judge stated that he considered Nestec was attempting to continue its monopoly (and therefore market share) over the coffee capsules, some time after Patent B had expired.
The judgment makes it clear that drafting patent claims to try and limit consumers’ choice of consumables (e.g. replacement coffee capsules) may not always be successful. Generally, once a product has been purchased, consumers have the freedom to use it however they wish, and this freedom is difficult to diminish.
- Lost priority
Nestec filed the application for Patent A with a priority claim to an earlier European patent application (EP03015776, the “Priority Document”) that subsequently published. Dualit alleged that the claims of the allegedly infringed patent were not entitled to priority.
Under Art 87(1) EPC, any person who has filed a first patent application may file a European patent application “in respect of the same invention” and claim priority from the first application. The EPO stated in its decision G2/98 that for a European patent application to be entitled to priority, the skilled person must be able to derive the subject matter of the claim “directly and unambiguously, using common general knowledge, from the previous application as a whole”.
Dualit alleged Patent A was not priority-entitled because the claims of the patent covered housing arrangements and capsule orientations not disclosed in the priority document. Nestec’s Patent A described three different capsule arrangements in the document, but Justice Arnold found that the third embodiment covered “a whole range of different arrangements”. He stated that the arrangements covered by claim 1 were not defined in the priority document and were not directly and unambiguously derivable from the priority document. Consequently, the priority claim was found invalid.
A devastating effect of losing priority in this case was that because the priority document was published, the novelty of claim 1 of Patent A was destroyed by the priority application.
- Lack of Novelty over Prior Use
In addition to being anticipated by the priority document, the Judge found that Patent A also lacked novelty over Nespresso’s field tests.
In between filing the priority application and filing the application for Patent A, Nestec carried out a series of tests of its coffee machines. Forty machines were sent to consumers in Belgium and Switzerland to gain consumer feedback. However, the Judge noted that while the machines were intended to be used by the testers in accordance with normal usage, there was nothing to stop them from inspecting the machines to find out how they work. Nestec had not provided the machines to the testers under any obligation of confidentiality. The testers would have been free in law and equity to disassemble the machine and use the information gained from their investigations.
Since the priority claim was no longer valid, the field tests were conducted before Patent A was filed, and therefore, formed a novelty-destroying disclosure.
What Does This Mean?
Effectively, this means that the priority application(s) must sufficiently describe the subject matter of the later claims for the priority entitlement to be valid
The EPO is particularly strict when considering priority entitlement, and often a priority claim can be successfully attacked during EPO Opposition proceedings. It is therefore important to take care when drafting the initial (priority) application to cover any potential future developments of the invention. This of course may mean that the cost of filing an initial application is high, but this may be outweighed by the risk of losing a priority claim.
It is also important to ensure that a patent is not anticipated by an applicant’s own prior disclosure. Patent applications should be filed before submitting academic articles or presenting the invention at trade shows or conferences. Field tests or discussions of the invention with third parties (e.g. manufacturers) should be carried out under a non-disclosure agreement. This will help to prevent the tests or meetings from becoming a public disclosure that affects the validity of a granted patent.