Making or Repairing? Guidance from the Supreme Court
The UK Supreme Court (previously ‘House of Lords’) has very recently given its judgment on the Schütz v Werit case relating essentially to the question of repair.
Patent EP0 734 967 relates to an Intermediate Bulk Container (IBC). IBCs are designed to carry large amounts of liquids and conventionally comprise a bottle in a metal cage where the cage and bottle are placed on a pallet. The inventiveness of the patent lies in the weld joints of the cage, although the claims are directed to a complete IBC with a pallet, a cage and a bottle. ‘Schütz’ is the exclusive licensee of the patent in the UK while ‘Werit’ sells IBC bottles to a reconditioner ‘Delta’. Delta replaces Schütz bottles of discarded Schütz IBCs with Werit bottles and the reconditioned IBCs are then marketed. Schütz objected to this activity alleging that Delta and Werit were both infringing the patent.
In first instance, the High Court ruled that this activity did not amount to an infringement. A key deciding factor in this decision was that:
the inventive concept of each of these claims is wholly embodied in the Schütz cage. Thus when the bottle is removed, the part retained embodies the whole of the inventive concept.
On appeal, this decision was overturned mainly on the ground that the bottle was an integral part of the claimed product. The Court of Appeal found that, by adding a Werit bottle to a Schütz cage, a product according to the claim was being ‘made’ and the patent was thus infringed.
The Supreme Court therefore had to address the question of whether this activity of repairing the IBC by replacing the bottle amounted to ‘making’ the claimed IBC within the meaning of S.60(1)(a) of the Patents Act. A previous Supreme Court (then ‘House of Lords’) decision on this point, namely United Wire Limited v Screen Repair Services (Scotland) Limited (2000), clarified that there was no repair right as such and that the courts only had to answer the question of whether the defendant was ‘making’ the claimed product. Interestingly, United Wire reads that:
as a matter of ordinary language, the notions of making and repair may well overlap. But for the purposes of the statute, they are mutually exclusive” and “[The owner’s right to repair] is a residual right, forming part of the right to do whatever does not amount to making the product.
However, United Wire did not provide any guidance on how to decide whether an action amounted to ‘making’ the product or not. Schütz v Werit now provides such guidance.
Throughout the decision, the Supreme Court insisted that this ‘making’ question is a “matter of fact and degree”. As a result, the courts would have to balance different considerations, for example “one should bear in mind, at least as part of the background, the need to protect the patentee’s monopoly while not stifling reasonable competition”.
In this particular case, the Supreme Court found that the High Court may have oversimplified the situation while the Court of Appeal did not recognise that the decision was a matter of fact and degree.
The Supreme Court used the example of replacing a damaged lid of the IBC bottle as an illustration: even though the lid is (at least implicitly) part of the claim, it would be difficult to consider that merely replacing a damaged lid would amount to a claim infringement.
The Supreme Court found that it was relevant to assess whether the bottle was a subsidiary part of the patented article when determining whether its replacement, when required, involves ‘making’ a new article or not. Factors taken into accounts included:
the lower life expectancy of the bottle compared to the cage;
the fact that the bottle was easily replaceable; and
the bottle neither including “any aspect of the inventive concept of the Patent”nor “having a function which is closely connected with that concept”.
It thus found that, in this case, the bottle was relatively subsidiary to the patented article. It therefore concluded that, on balance and taking into account the facts of this case, Delta was not ‘making’ the patented product.
This “matter of fact and degree” guidance is good news for spare part manufacturers or resellers as the Court of Appeal decision on this case might have caused them some concern. Some might have for example been worried that repairing any part of a product would be considered as an infringement, even in cases where the part is not related to the inventive concept of the patent. On the other hand, the Supreme Court has not given spare part manufacturers or resellers a licence to freely repair or replace any spare part, and in particular repairs relating to the inventive concept of a patent are less likely to be found allowable. Even though this “matter of fact and degree” is unlikely to be a straightforward point to address (and opposing parties will surely fight this point at length in court), we can now hope that, from a legal definition perspective, the issue of ‘repair’ has now been put to rest in view of the more balanced approach of the Supreme Court in Schütz v Werit.
Decision of the Supreme Court (then ‘House of Lords’) United Wire Limited v Screen Repair Services (Scotland) Limited: http://dycip.com/unitedwire