UNITED KINGDOM ROYAUME-UNI VEREINIGTES KÖNIGREICH REPORT QUESTION Q204P

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1 UNITED KINGDOM ROYAUME-UNI VEREINIGTES KÖNIGREICH REPORT QUESTION Q204P National Group: UK Title: Liability for contributory infringement of IPRs certain aspects of patent infringement Contributors: Representative within Working Committee: Huw Evans, Seiko Hidaka, Ari Laakkonen, Donald McCombie, Richard Miller Ari Laakkonen Date: 30 March 2010 I) Analysis of current legislation and case law As required by the guidelines, these answers only address the contributory infringement of patents under UK law. In addition, under English law a person may be liable for patent infringement through other mechanisms: for example, for procuring the commission of a tort (in this case, an infringement) or as a party to a common design to infringe. 1. a) Is it a separate condition for the supply or offering of means to qualify as contributory patent infringement that the means supplied or offered were suitable to be put to a use that would infringe the patent? The UK law on the contributory infringement of patents is contained in section 60(2) and (3) of the Patents Act 1977, which states as follows: (2) 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. 1

2 (3) Subsection (2) above shall not apply to the supply or offer of a staple commercial product unless the supply or the offer is made for the purpose of inducing the person supplied or, as the case may be, the person to whom the offer is made to do an act which constitutes an infringement of the patent by virtue of subsection (1) above. Sections 60(2) and 60(3) are modelled on Articles 26(1) and 26(2) of the Community Patent Convention (and by virtue of section 130(7) of the Patents Act 1997 has to be read in conformity with it, even though the Convention is not in force). Articles 26(1) and 26(2) read as follows: 1. A Community patent shall also confer on its proprietor the right to prevent all third parties not having his consent from supplying or offering to supply within the territories of the Contracting States a person, other than a party entitled to exploit the patented invention, with means, relating to an essential element of that invention, for putting it into effect therein, when the third party knows, or it is obvious in the circumstances, that these means are suitable and intended for putting that invention into effect. 2. Paragraph 1 shall not apply when the means are staple commercial products, except when the third party induces the person supplied to commit acts prohibited by Article 25. It is clearly a requirement for a finding of infringement under section 60(2) that the means supplied relating to an essential element of the invention are suitable for putting the invention into effect. Without this suitability, there can be no infringement under section 60(2), so it is a requirement. Judicial consideration of the construction of the term suitable is limited. In Cranway v Playtech [2009] EWHC 1588 (Pat), the judge took the view that Whether means are suitable for putting an invention into effect must be a purely objective test. Thus, the subjective ability (or inability) to put the means to a use that would infringe is irrelevant insofar as suitability is concerned. However, the necessary intent to put the invention into effect may not be present in such circumstances. b) If yes to a), is it relevant that the means are also suitable to be put to other uses not related to the invention? Only to a limited degree. If, in fact, the means have no other suitable use, it will in practice be easier to establish that the means are suitable for putting, and are intended to put, the invention into effect. If other suitable uses exist, their relevance will depend on the likelihood of the means being used for uses other than for putting the invention into effect. For example, in Furr v Truline [1985] FSR 2

3 553, the defendant supplied brackets which could potentially be used in an infringing manner. However, the placing of instructions in the defendant s catalogue stating that the brackets were not to be used in the particular infringing manner was held to be sufficient to avoid a finding of infringement. However, this decision was only made on the basis of a finding of fact that the prohibition in the defendant s catalogue would be sufficient to ensure that purchasers of the brackets would not use them in an infringing manner. If, based on the specific facts of the case it had been found that customers would have been likely to ignore the prohibition and use the brackets in the infringing manner regardless, the defendant could still have been liable for infringement, in spite of the express warning. In Chapman v McAnulty Jacob J. stated as follows: Section 60(2) does not require that the supply complained of will involve the invention being put into effect by all users of the thing supplied. It is sufficient if it is shown that the invention will be put into effect by some users. One would only disregard maverick or unlikely use of the thing. (emphasis added) Therefore, even if there are a number of competing uses, only if the infringing use is maverick or unlikely will this be sufficient to provide a defence to infringement. More recently, Floyd J. stated as follows in Qualcomm v Nokia [2008] EWHC 329 (Pat): [ ] It is more difficult to decide the right answer where A knows that there is a chance, maybe only a small chance, that B will infringe. A may still gain some advantage from the invention from selling the means in those circumstances. Mr Silverleaf [for Nokia] submitted that A does not infringe unless it is more likely than not in the circumstances known to him that B will infringe. Otherwise A does not know that the means are intended to put the invention into effect. Mr Watson did not demur and as we shall see, in the end recoiled from putting his case based on knowledge or foresight of what would occur. It is therefore not necessary for me to decide the question: it is preferable that it should await a case where the point arises directly. I do, however, reject Nokia's too complicated for us to know we infringe point. It does not seem to me that the sub-section is at all concerned with how difficult it is, on the facts known to the alleged infringer, to determine that he infringes. The sub-section is concerned and concerned only with whether he knows sufficient facts about what is to be done with the means supplied. If facts material to the allegation that the means are to be put to infringing use are hidden from him, then he will not infringe. But if the facts are known or obvious to him in the circumstances, their complexity does not afford a defence. Otherwise, complicated inventions are less well protected than simple ones, which would not be a rational policy. 3

4 Although he declined to come to a conclusion in this instance, it appears that Floyd J. did not regard the law to be as clear cut as suggested by Jacob J. in Chapman. However, it appears clear that the existence of an alternative use or uses will not of itself provide a defence to an allegation of infringement under s.60(2). The English cases on contributory infringement are very much dependent on the facts of the individual case, and the issue of knowledge is generally determinative (see below). 2. a) Is it a condition for the supply or offering of means to qualify as contributory patent infringement that the person supplied intended, at the time of supply or offering, to put the means to an infringing use? The means supplied must be intended to be put to an infringing use. Without this intention there can be no infringement. There is no clarification of whose is the relevant intention, although it perhaps makes sense to consider at least the intent of the person supplied. However, the wording of section 60(2) might not be incompatible with a reading in which the intention is that of the supplier. There is no requirement in section 60(2) regarding the time at which the intention should be formed, i.e. whether it must be before/at the time of supply, or whether the intention can be formed after the relevant essential means has been supplied. However as actual knowledge of intention is not required (see below), but rather it is sufficient that it would be obvious to a reasonable person in the circumstances that the means supplied are intended to be used in an infringing manner, it appears that the determination of liability cannot always turn on the actual intent of the person supplied. If actual intent is not determinative of liability, it follows that the time of forming any actual intention cannot be determinative either. There is no requirement that the person supplied has any knowledge of the patent in suit, or that use of the means supplied would amount to infringement: Ward Building Systems v Hodgson Steels, 3 June 1997, Patents Court, Unreported. b) If yes to a), is the element of intention a separate condition to any condition of suitability for an infringing use? Yes. Suitability for use in an infringing manner is a prerequisite for a finding of infringement. As stated above, intent is a further condition which needs to be satisfied before liability can be established. Both conditions need to be satisfied before liability can be established, and satisfaction of either condition does not necessarily or automatically lead to satisfaction of the other condition. c) If yes to a) is it a condition for the supply or offering of means to qualify as contributory patent infringement that the supplier was aware, at the time of supply or offering, that the person supplied intended to put the means to an actually infringing use? 4

5 A supplier must be aware, or it must be obvious to a reasonable person in the supplier s circumstances, that the means supplied are intended to be put to an infringing use. This is to be determined at the time of supply of the means - Qualcomm v Nokia: It is clear, first of all, that infringement takes place at the moment of the supply, or offer to supply, of the essential means. It follows that the time at which the knowledge requirement of the section is to be fulfilled is the instant of supply or offer as well. The knowledge requirement, and the assessment of what should be obvious to the reasonable person in the circumstances, tends to be the determinative aspect of any question of liability under section 60(2). Ultimately, these cases are decided based on the facts of the particular case, and in particular the evidence relating to what the supplier actually knew or should have known at the time of the supply. Because of this, it is difficult to advance any principle of general application beyond that which is stated in the wording of the statutory provision. Cranway v Playtech suggests that the scope of section 60(2) could be limited where there is a long supply chain. Lewison J. had already decided that the patent in suit was invalid, so his observations on infringement are arguably obiter. He then went on to explain why liability might in some cases be restricted to the supplier of a direct infringer, and why upstream suppliers might not be liable: Mr Alexander argues that the supply prohibited by section 60(2) is a supply to someone who is not entitled to work the invention. If A supplies essential means to B, who supplies them to C, and C is entitled to work the invention, then it would be absurd if B was not liable (because C is entitled to work the invention) but A is liable for supplying B. [.] [ ] Mr Tappin counters it by another example. Suppose, he says, that A is a counterfeiter. If he supplies essential means directly to an end user, he is liable under section 60(2). But if he supplies to an intermediary, then on Mr Alexander's argument, he is not liable. That, too, would be absurd. However, it seems to me that Mr Tappin's counter-example would be covered in most cases by the principles of joint torfeasance or common design. [ ] Is there any clue in section 60(2) itself which might tip the balance one way or the other? I think there is. One of the conditions for the liability of a supplier of essential means is that he knows (or it is obvious to a reasonable person): that those means are suitable for putting, and are intended to put, the invention into effect. Whether means are suitable for putting an invention into effect must be a purely objective test. But whether they are intended to put an invention into effect cannot be wholly objective. Only human beings can have intentions, although their intentions may be 5

6 attributed to other legal persons, according to rules of attribution. Thus this limb of the test must depend on the subjective intention of someone. A supplier of essential means might reasonably be supposed to know what the intention of his immediate counter-party is. But it would be a far stronger thing to expect him to discern the intention of a person far down the supply chain. Moreover, at the time of the supplier's supply of the essential means the person who ultimately forms the intention to use the means to put the invention into effect may not be ascertainable and he may not have formed that intention. It thus seems to me to be more likely that section 60(2) was directed to a supply of essential means to a direct infringer rather than to another secondary infringer. Coupled with Mr Alexander's absurdity argument, I hold that this defence would have succeeded. The law in this area could still develop. In a prior case, Novartis v Dexcel-Pharma, a claim of the patent in suit was to a pharmaceutical formulation which composition is an oil-in-water microemulsion. The judge said that There is no dispute that Dexcel will infringe [ ] pursuant to section 60(2) of the Patents Act if Deximune forms a microemulsion falling within that claim upon administration. However, there was no suggestion that in order to be liable under section 60(2) that Dexcel must have supplied its Deximune product directly to the patient or a doctor administering the product in order to infringe. A possible implication is that, if it is inevitable that use of the means supplied would infringe, it does not matter that there are several links in the supply chain use will inevitably infringe, and a reasonable person in the supplier s position would know this. In Merrell Dow v HN Norton, House of Lords [1996] RPC 76, the patent claimed a metabolite that was inevitably created in the body when the drug terfenadine was administered. Terfenadine itself was outside the claims, so the patentee relied on section 60(2). However, although the patent was held invalid, the arguments regarding infringement under section 60(2) did not depend on the defendant supplying means essential directly to patients. In Grimme Maschinenfabrik v Scott [2009] EWHC 2691 (Pat), which was decided by Floyd J. after Cranway, there is no hint in the court s reasoning that section 60(2) cannot apply where the actual infringement takes place further down the chain; however, this point was not raised in the case. The key consideration may be whether factually the supplier had knowledge of the use to which the product was to be put, or whether a reasonable person in those circumstances should have known. Where there are several links in the chain, then it could be factually less likely that a supplier would know, or it would be reasonable for him to know, how the means supplied should be used. Evidentially, it would indeed be a far stronger thing to expect [a supplier] to discern the intention of a person far down the supply chain, but it is submitted that there should be, in 6

7 principle, no blanket exclusion of liability where the supplier does not directly supply the ultimate direct infringer. 3. If it is a condition for the supply or offering of means to qualify as contributory patent infringement that the means relate to an essential, valuable or central element in the invention or that the means relate to an essential, valuable or central element in the product or service that constitutes direct infringement, what is the test for determining whether an element is essential, valuable or central? In order to establish liability under section 60(2), the supplied means must relate to an essential element of the invention. Invention in the context of infringement is likely to be taken to be that specified in a claim (as interpreted by the description), as set out in section 125 of the Patents Act 1977 which defines the extent of the invention. It is not defined, however, whether an essential element of the invention indicates an element which is essential or necessary to infringe the claim (in other words, any integer of the claim, however trivial) or whether it indicates an element which is part of the essence or core of the invention. Furthermore, section 60(2) leaves open the possibility that means can include things outside the scope of the patent claim: for example, the means might include a screwdriver, when the patent claim covers a method for attaching one thing to another using a screw. There is no well-known authority on this issue in the UK. In the relatively dated case of Hazel Grove Limited v Euro-League Leisure Products Limited [1995] RPC 529 the patents in suit all concerned a pool table incorporating certain features. The patentee sued the Defendants who refurbished pool tables. The Patents County Court Judge held that the Defendants were liable for contributory infringement under section 60(2) in respect of their supply of edge structures of the pool tables but not for its reconstruction of the (old) housing and legs. The Judge reasoned that the edge structure constituted an essential element of the invention owing to the fact that it was an integer of the claim which co-operated functionally with other integers of the claim, and so was not a subordinate part of the invention claimed. However, the housing and the legs were not essential elements of the invention because, whilst these elements were part of the claims of the patents, they did not have a functional inter-relationship with the internal mechanisms of the pool table, being the inventive aspect of the patent. Since section 60(2) is modelled on Article 26(1) of the Community Patent Convention (and by virtue of section 130(7) of the Patents Act 1997 has to be read in conformity with it) it is useful to look at other jurisdictions which have more case law on the issue, to see how they have also interpreted the relevant legislation. In this regard, the German Courts have a few cases on this point. Thus, in Flügelradzähler (Impeller Flow Meter - Case X ZR 48/03), the German Federal 7

8 High Court held that the means relating to an essential element of the invention encompasses any means which work functionally with one or more features of the claim in order to put the invention into practice, but does not include means which do not contribute to the realisation of the technical teaching of the invention. Similar finding followed in the case of Pipettensystem (Pipette system - Case X ZR 38/06). There the German Federal High Court added that it does not matter which is the "core" of the invention, only a feature which is practically insignificant for the technical teaching of the invention may be a non-essential element of the invention; whether or not this feature is known in the prior art is irrelevant in this context. A standard syringe was therefore held to be a means relating to an essential element of the invention. In Hazel Grove the Judge seemed to say that the means relating to the essential element should not be a subordinate part of the claim. However, section 60(2) is silent as to the substantiality of the means, and the recent tendency of the UK Court is to conform more closely to the wording of the statute, rather than to paraphrase it. Therefore, it is somewhat doubtful as to whether the UK Court would mandate that the means must be substantive in any way. Indeed, read together with section 60(3) of the Patents Act 1977, it may be that anything can constitute an essential element of the invention so long as the means is not a staple commercial product. For the same reason, it is unlikely that the UK Court would consider it material whether the means is a valuable or a central element in the invention, as long as it is essential. However, the UK court will not ignore the presence of the word essential, and section 60(2) does require that the means are capable of putting the invention into effect. It seems, then, that in order for this condition to be realised, the means must be essential and must play some role in producing the effect. Both in Hazel Grove and in Germany the Court considered whether the means interacted functionally with other integers of the claim, thereby putting the invention into effect. 4. To the extent the means supplied or offered are staple commercial products, is it an additional condition for the supply or offering of means to qualify as contributory patent infringement that the supplier provides any instruction, recommendation or other inducement to the person supplied to put the goods supplied or offered to an infringing use? Section 60(3) of the Patents Act 1977 provides an exception to liability under section 60(2): (3) Subsection (2) above shall not apply to the supply or offer of a staple commercial product unless the supply or the offer is made for the purpose of inducing the person supplied or, as the case may be, the person to whom the offer is made to do an act which constitutes an infringement of the patent by virtue of subsection (1) above. There is no UK case law on the interpretation of staple commercial product. Further, there is no case law on what amounts to an inducement in this context, so it is not clear whether an 8

9 instruction or a recommendation to the person supplied would be an inducement for the purposes of this sub-section. 5. a) Is injunctive relief available against acts of contributory infringement? Yes. The usual form in which injunctions are now granted by the court in England is that the Defendant be restrained from infringing Patent No.[ ]. An injunction in this form will restrain the Defendant from committing any acts of contributory infringement prohibited by s.60(2) of the Patents Act 1977 whilst preserving the Defendant s right to commit the acts excluded from contributory infringement by s.60(3) of the Act (see Coflexip SA v Stolt Comex Seaway MS Ltd [2001] RPC 9). b) If yes to a), may injunctive relief be directed against the manufacture of the means per se or the supply of the means per se? An injunction in the form set out above (i.e. the usual form) will restrain the Defendant from infringing the patent. An injunction will not normally be granted restraining the Defendant from supplying the means per se because an injunction in that form would be likely to be too wide in that it would be likely to prevent the Defendant from doing acts that, in accordance with sections 60(2) and (3), he is entitled to do. For similar reasons an injunction will not normally be granted restraining the Defendant from manufacturing the means per se. Indeed manufacture is not itself an infringing act under section 60(2). However, depending on the circumstances of the case, manufacture of the means may be taken by the court as evidence of a threat by the Defendant to supply or offer to supply the means in accordance with section 60(2) of the Patents Act 1977 in due course. Such a threat, if established, would justify the grant of an injunction by the court restraining the threatened infringement. c) If no to b), must the injunction be limited to manufacture or supply of the means in circumstances which would amount to contributory infringement? The usual form of the injunction means that, as a practical matter, the injunction is limited to supply or offer to supply of the means in circumstances which would amount to contributory infringement in accordance with section 60(2) of the Patents Act 1977 (subject to the exclusions contained in section 60(3) of the Act). d) If yes to c), how in practice should this limitation be included in injunction orders, for example: i) may claims for injunctive relief be directed for example against the abstract or hypothetical situation that the means are supplied in circumstances where the supplier is aware that the person supplied intends to put the means to an infringing use, and/or 9

10 ii) must claims for injunctive relief be directed against particular shipments of means for which the supplied person s intent and the supplier's knowledge has been proven? As mentioned above, the usual form in which injunctions are now granted by the court in England is that the Defendant be restrained from infringing Patent No.[ ]. The grant of an injunction in this form avoids the issues raised by question 5(d). Furthermore, final injunctions (as opposed to interim injunctions) are granted by the UK Court after liability for infringement has been determined. There is no need for the Claimant to specify the exact form of the injunction at the outset of the case. When an injunction is granted, it is to restrain threatened further infringement and is thus not directly connected to the past infringement (involving, for example, particular shipments). The problems raised in question 5(d) do not arise also for these reasons. 6. Is it a condition for the supply or offering of means to qualify as contributory patent infringement that the intended use of means for actual infringement is intended to take place in the country where the means are supplied or offered? Subject to the discussion in question 7 below relating to how the location of the offer is determined, the intended use of the means for actual infringement must taken place in the country where the means are supplied or offered, i.e. both must occur in the UK. This is referred to as the double territoriality requirement. 7. How is it to be determined where means are supplied or offered? For example: - Supplier X conducts business in country A, X agrees to supply person Y with means for an infringing use in country B Are the means supplied in country A or B or in both? - Supplier X undertakes to deliver means free on board in a harbour in country A in the same circumstances Are the means supplied in country A or B or in both? - Supplier X undertakes to deliver means free on board in a harbour in country B in the same circumstances Are the means supplied in country A or B or in both? - If the offer was made in country A but accepted in country B, are the means supplied in country A or B or in both? Offer to supply other than by way of sale Under UK law, supply is not restricted to supplies by way of sale. However, a supply by way of sale is probably the most common form of supply. Place of supply in relation to sales 10

11 To answer these questions one has to consider, in the case of supply by way of sale, how place of supply is determined. Section 17(1) of the Sale of Goods Act 1979 (SGA) provides that property passes when it is intended to pass. In normal circumstances this is taken to be when the goods are delivered. Section 61 of the SGA defines delivery as meaning (unless the context or subject-matter requires otherwise) the "voluntary transfer of possession from one person to another." Furthermore, in the context of an international sale of goods, section 31(1) of the SGA reads that: "Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier (whether named by the buyer or not) for the purpose of transmission to the buyer is prima facie deemed to be a delivery of the goods to the buyer." This means that in the circumstances where the supplier is in country A and the buyer is in country B, subject to agreement to the contrary, delivery occurs at the moment that the supplier transfers the goods to the carrier in country A. Depending on the circumstances, this could be the international carrier, or merely the land carrier that takes the goods to the port. Therefore, unless the context suggests otherwise, the country where the means are 'supplied' will be the country where the supplier is based. However, as stated, this is subject to agreement to the contrary. Furthermore the House of Lords also accepted in Scottish & Newcastle International Ltd v Othon Ghalanos Ltd [2008] UKHL 11, citing in support the decisions in Dunlop v Lambert (1839) 6 CI & F 600 and The Albazero [1977] AC 744, that 'where the carrier is the employee or agent of the seller, delivery to the carrier does not constitute delivery to the buyer.' In these circumstances, delivery will be assumed to take place at the point where the goods are delivered to the buyer, or passed to a carrier who is not an employee or an agent of the seller. Offer to supply For the purposes of section 60(2), an offer is made in the United Kingdom if it is made to the United Kingdom: Boegli-Gravures SA v Darsail-ASP [2009] EWHC 2690 (Pat). Therefore, it is of no consequence which country the supplier is actually based in when he makes the offer, what is important is that the offer is made to the UK. In normal circumstances it will be fairly obvious whether an offer is made to the UK, however one area that does cause difficulty is whether an offer, for example an offer on the internet, that is as such open to the entire world, is sufficient to be an offer to the UK for the purposes of section 11

12 60(2). This was discussed obiter by the court at first instance in Boegli-Gravures SA v Darsail- ASP. Here Arnold J said that the correct approach to take was that considered by Kitchen J in the trade mark context in Dearlove v Coombs [2007] EWHC 375 (Ch). In that case, after referring to Flowers Inc v Phonenames Ltd [2000] FSR 697 and Euromarket Designs Inc v Peters [2000] ETMR 1025, Kitchen J said: "The fundamental question is whether or not the average consumer of the goods or services in issue within the UK would regard the advertisement and site as being aimed and directed at him. All material circumstances must be considered and these will include the nature of the goods or services, the appearance of the website, whether it is possible to buy goods or services from the website, whether or not the advertiser has in fact sold goods or services in the UK through the website or otherwise, and any other evidence of the advertiser's intention." Therefore, applying this approach to the facts, Arnold J stated (obiter) that: "In my judgment the website is not enough without more to constitute an offer to supply rollers in the UK. At most, it is an offer to supply customers who include customers in the UK. But the website does not itself, at least in the parts relied on before me, state Darsail's delivery terms. For all one knows from reading the website, they could be ex works Moscow, in which case there would be no supply or offer to supply in the UK." Although the case did not turn on this issue, this is a reminder that what constitutes an 'offer to supply in the UK' will very much fall on the individual facts of each case, taking into account the kind of considerations given in Dearlove v Coombs. Again, the place of supply will be relevant to this, because a supplier will only offer to supply in the UK if, when those means are delivered, they would be delivered in the UK, which, in normal circumstances, would only be if the supplier is based in the UK. Free on Board Under the Incoterm standards published by the International Chamber of Commerce, the term "Free on Board" means that the seller pays for transportation of the goods to the port of shipment, plus loading costs, and the buyer pays cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination. The Term is usually used in conjunction with a port of loading, i.e. "FOB port" (where port is the name of the port where the goods will be carried from). In Scottish & Newcastle International Ltd v Othon Ghalanos Ltd [2008] UKHL 11, the House of Lords confirmed that for a standard "Free on Board" contract, delivery of possession of the goods 12

13 as well as property and risk in respect of them take place when the goods pass over the rail of the shipment at the port of departure. This can be true even if the contract itself states the port of delivery as somewhere different. So, on the facts of Scottish & Newcastle International v Othon Ghalonos, the Free on Board contract stated delivery to be to Limassol (Cyprus). However, in determining jurisdiction, the House of Lords found that delivery was actually taken to have been at Liverpool (England), the port of origin, as this is the point where the goods passed the ships rail. The reasoning was that, even though the contract may state a place of delivery, this is merely stating the destination where the carrier is to deliver the goods, and is not to be read as a statement affecting where liability for the goods passes. Staple product According to section 60(3) of the Patents Act 1977, section 60(2) does not apply where the product supplied is a staple commercial product. In such circumstances, the supply of the product is only an infringement if the supply was for the purpose of inducing the person supplied to infringe the patent. Application to the examples set out in the questions Subject to the context inferring otherwise and considering solely from the UK perspective: Supplier X conducts business in country A, X agrees to supply person Y with means for an infringing use in country B. Are the means deemed to be supplied in country A or country B? It is not clear from the question where delivery occurs. Subject to alternative contractual terms, supply will be where delivery occurs, and therefore the passing of the property which will be country A if that is where the delivery occurs; Supplier X undertakes to deliver means free on board in a harbour in country A in the same circumstances. Are the means deemed to be supplied in country A or B or both? The answer is country A as this will be the port where the goods pass over the ships rail. Note that, for the purposes of the Patents Act 1977, section 132(3) of the Act states that the territorial waters of the UK shall be treated as part of the UK; Supplier X undertakes to deliver means free on board in a harbour in country B in the same circumstances. Are the means supplied in country A or B or both? 13

14 Before answering this question, it is necessary to make some assumptions. If one assumes that the first harbour for the means is in country B then the supply under free on board terms will be country B subject to any contractual terms agreed to the contrary. If the question means the goods will pass through a harbour in country A before reaching a harbour in country B, then the contract would not normally be expressed as free on board in a harbour in country B. It would more likely be a CIF contract which may mean supply would be deemed to take place in country A but the exact position would very much turn on the facts. If the offer was made in country A but accepted in country B, are the means supplied in country A or B or in both? The country where the offer was made, or where it was accepted, will normally have no effect on the country where the means are said to be supplied or offered to be supplied to. However, the fact that the offer was accepted in country B may count as evidence that the means were offered to be supplied in country B, but the mere existence of the acceptance in that country is not enough on its own. Even if the supplier were liable for supplying the means to country B (depending on the facts as discussed above, if the supply took place), it does not necessarily mean the supplier will be liable for offering to supply in country B it all depends on what the supplier offered in country A. In the above scenarios, the foreign supplier may nevertheless be liable if his participation in the transportation into country B was sufficiently extensive so as to be regarded as having carried out an act of importation. In the case Sabaf v MFI [2004] UKHL 45, Meneghetti arranged the transportation of infringing products from Italy where it was based to the UK where its customer MFI was based. The House of Lords commented that Meneghetti s arranging the transport may or may not have been sufficient to amount to participation in the act of importation so as to make itself jointly liable, but it did not decide on this point as the allegation of joint liability was abandoned. 8. If means suitable for being incorporated into a patented product P are supplied by supplier X in country A to person Y, in circumstances where it was known to X (or it was obvious in the circumstances): i) that Y intended to export the means to country B and complete product P in country B; and ii) that Y intended to export the completed product P into country A, would Y then be regarded as having intended to put the means to an infringing use in country A by importing and selling product P in country A, with the consequence that X 14

15 could be held liable for contributory infringement in country A by supplying the means to Y? Assuming country A is the UK, the answer is Yes because section 60(2) contains a double territorial requirement, that is: 1) the supplier must supply or offer to supply the products in the United Kingdom 2) the supplier must know, or it must be 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. Therefore, if the products are supplied in country A, and the supplier knows that the means are suitable for putting, and are intended to put, the invention into effect in country A, then as long as the product consists of means relating to an essential element of the invention, this is all that is required. It is of no consequence whether those means are assembled in country A or exported and assembled in country B; as long as the supplier knows that they are intended to be put into effect at some point in country A, this will be sufficient. 9. a) Is the question of contributory infringement determined in accordance with the law of the country in which the means are: i) offered; or ii) supplied? If the UK Court is assessing contributory infringement in the UK, then it will be in accordance with UK law. Article 8 of the Rome II Regulation, which has direct effect in the UK, provides that, for the infringement of intellectual property rights, the applicable law will be the law in which protection is sought. According to Recital 14, the term intellectual property rights means copyright, related rights, sui generis rights for the protection of databases and industrial property rights. This means that in the case where goods are being supplied into the UK, or offered to be supplied into the UK, and infringement in the UK is alleged, then the courts will always apply UK Law. However, this does not preclude a claimant also bringing an action in another jurisdiction, under the law of that jurisdiction, to also seek protection there. It may also be that, in that other jurisdiction, the law is different so as to provide protection based on the country where the offer is made, as opposed to the supply. UK Courts would normally address just UK infringement 15

16 (following Roche v Primus and GAT v Luk, the number of cases in which courts of the Member States are asked to assess infringement across a number of jurisdictions has decreased. There is still a possibility, following for example a line of argument similar to that adopted in Mölnlycke v BSN Medical [2009] EWHC 3370 (Pat), that situations will arise in which a Court will assess infringement in a number of jurisdictions. In such a situation it would be expected that the Court would apply the relevant law for each jurisdiction). For example, if only UK contributory infringement is being accused, the UK court would start with a UK contributory infringement analysis. As a second step, if the Court needs to look to another law to resolve the question of where or whether a supply has taken place, it may do so. The occurrence of a supply may depend on the terms of a supply contract governed by non-uk law. Furthermore, for the UK making an offer in the UK to supply outside of the UK is not by itself contributory infringement although in reality it may well be that the offer to supply or the supply itself could actually amount to being into the UK as would be the normal position when goods are purchased from a UK supplier. If the offer is made outside of the UK to supply into the UK then the offeror may be liable for contributory infringement. Of course the supplier in the UK may be liable in any event. b) What is the applicable law if the means are offered in country A but supplied in country B? As stated above, the relevant law is the law of the country in which infringement is alleged. If infringement is alleged in the UK, the fact that an offer takes place outside the UK is not relevant. What matters is whether there is a relevant offer or supply in the UK. c) Are there any other relevant principles to determine the applicable law? Not under English law. II) Proposals for substantive harmonisation The Groups are invited to put forward their proposals for adoption of uniform rules, and in particular consider the following questions: 1. In a harmonised system of patent law, what should be the conditions for an act of supply or offering of means to qualify as a contributory patent infringement? We would suggest a provision in accordance with Article 26 CPC, but with the addition of a clear double territoriality requirement. 2. In a harmonised system of patent law, to what extent should injunctive relief be available to prevent contributory patent infringement? 16

17 We see no reason to differentiate between direct and contributory infringement. However, it might be appropriate to limit damages for contributory infringement where there is a very long supply chain between the person supplying the means and the person putting the invention into effect. 3. In a harmonised system of patent law, how should it be determined where means are supplied or offered? Our primary position is that this should be determined according to the law of the country in which infringement is accused (otherwise the jurisdictional complexity is increased unnecessarily). There may, in some cases, be an agreement governing the supply, in which case the law of the contract may determine the country in which title passes etc. However, the passing of title should be merely a factor, and may or may not be a relevant factor when determining the country in which the supply / offer occurs under the law of the country in which infringement is accused. 4. Should special rules apply to offers transmitted via electronic devices or placed on the internet? No. 5. In a harmonised system of patent law, how should it be determined which country's law should apply to acts of offering or supplying means where persons or actions in more than one country are involved? The laws of the countries in which infringement is accused should determine where and whether a relevant supply occurs. In some cases, infringement could be accused in several countries and it is possible that in such cases courts could come to differing conclusions regarding the supply. However: (a) to the extent that the question of supply is determined between the same parties in one court, we would expect the possibility of that question being res judicata as between the parties in other courts if the law of contributory infringement is the same in those courts; (b) it may be convenient, possible or necessary in some cases depending on the jurisdictional arrangements between the countries concerned that proceedings in one country are stayed while the question of supply is determined in another country. 6. Does your Group have any other views or proposals for harmonisation in this area? We think it would be useful to ensure that a double territoriality limitation is present in laws of contributory infringement. Thus, there must be a supply or offer within the same country in which the invention is to be put into effect. Without such a requirement, almost any activities outside the country concerned could amount to secondary infringement if there is some possibility of the 17

18 invention being put into effect in that country. If a number of countries do not implement a double territoriality requirement, jurisdictional inefficiency and cost could increase exponentially OOO ---- Summary UK law on contributory infringement is similar in many substantive areas to Article 26 of the Community Patent Convention (which is not in force), and via that Convention, to the laws of contributory infringement in force in some other EU Member States. The UK has a strict double territoriality test: there must be a supply on an offer to supply in the UK, so that an invention may be put into effect in the UK. It is considered that a double territoriality test gives reasonable legal certainty for both parties, and thus it would be useful if the principle could be more widely adopted to the extent not already present in national law elsewhere. There is comparatively little UK case law on the meaning of an essential element. It may be that this concept has been more developed in other laws, and perhaps substantive areas for harmonisation can be found in those laws. Résumé Le droit anglais sur l'exploitation indirecte est similaire, en de nombreux points essentiels, à l'article 26 de l'accord en matière de brevets communautaires (qui n'est pas en vigueur) et, à travers cet Accord, aux règles sur l'exploitation indirecte qui sont en vigueur dans d'autres Etats membres de l'ue. Le Royaume-Uni a une règle de double territorialité stricte: il doit y avoir une livraison à la suite d une offre de livraison effectuée au Royaume-Uni, pour qu'une invention puisse être mise en œuvre au Royaume-Uni. La règle de la double territorialité est considérée comme offrant une sécurité juridique raisonnable aux deux parties. Il serait donc utile que ce principe soit adopté plus largement dans les pays où il n'existe pas encore en droit national. Par comparaison, il existe peu de jurisprudence en droit anglais sur la notion d' «élément essentiel». Il est possible que ce concept ait été davantage développé dans d'autres droits, et qu'une source importante d'harmonisation pourrait être trouvée dans ces droits. Zusammenfassung 18

19 Das Recht des Vereinigten Königreichs (UK) hinsichtlich der mittelbaren Patentverletzung ist in vielen materiell-rechtlichen Punkten ähnlich zu Art. 26 des Gemeinschaftspatent Übereinkommen (das nicht in Kraft ist) und über dieses Übereinkommen zu dem Recht zur mittelbaren Patentverletzung einiger anderer EU-Mitgliedsstaaten. Das Vereinigte Königreich hat einen strikten, doppelten Territorialitätstest: Erforderlich ist eine Lieferung oder ein Angebot zur Lieferung im Vereinigten Königreich, so dass die Erfindung im Vereinigten Königreich zum Einsatz kommen könnte. Es wird angenommen, dass ein solcher doppelter Territorialitätsest ein vernünftiges Maß an Rechtssicherheit für beide Seiten bringt und es daher sinnvoll wäre, wenn dieses Prinzip in einem weiteren Umfang angewandt würde, soweit dies noch nicht in den übrigen nationalen Rechtsordnungen der Fall ist. Es gibt vergleichsweise wenig Rechtsprechung im Vereinigten Königreich zur Bedeutung eines wesentliches Elements. Es mag sein, dass dieses Konzept in anderen Rechtsordnungen weiter entwickelt ist und vielleicht materiell-rechtliche Punkte für eine Harmonisierung in diesen Rechtsordnungen gefunden werden können. 19