Liability for contributory infringement of IPRs certain aspects of patent infringement

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1 Question Q204P National Group: The Netherlands Title: Liability for contributory infringement of IPRs certain aspects of patent infringement Contributors: John Allen, Klaas Bisschop, Arnout Gieske, Willem Hoorneman, Hans Jansen, Cees Kapel, Armand Killan, Annemieke Kooy, Gertjan Kuipers, Andras Kupecz, Addick Land (chairman), Bernard Ledeboer, Chantal Morel Representative within Working Committee: Addick Land Date: February 10, 2010 Introduction The provision in the Dutch Patent Act 1995 ( DPA ) relating to contributory (or indirect) infringement reads as follows: Article 73 DPA 1. The proprietor of the patent may institute the claims at his disposal in enforcing his patent against any person who, in the Netherlands or Netherlands Antilles offers or delivers, in or for his business, means relating to an essential element of the invention for the application of the patented invention in the Netherlands or Netherlands Antilles, to persons other than those who by virtue of Articles 55 to 60 are entitled to apply the patented invention, provided that that person knows, or that it is evident considering the circumstances, that those means are suitable and intended for that application. 2. Paragraph (1) shall not apply if the offer or delivery takes place with the consent of the proprietor of the patent. That paragraph shall likewise not apply if the means delivered or offered are products which are generally available in commerce, unless the person involved incites the third party to whom he delivers to perform acts specified in Article 53(1). Articles DPA relate in short to prior use in the Netherlands or Netherlands Antilles (Article 55), regular licenses (Article 56) and mandatory licenses (Articles 57-60). Offering or delivering means to third persons who are entitled to apply the patented invention by virtue of these provisions thus cannot constitute indirect infringement. However, Article 73 does not exempt offering or delivering means to third persons who do not make commercial use of the patented invention, or to third persons conducting activities covered by the research exemption (even though these third persons would not actually infringe themselves). 1Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

2 Article 53(1) DPA specifies as relevant acts, in principle reserved to the patentee: a. to make, use, put on the market or resell, hire out or deliver the patented product, or otherwise deal in It, in or for his business, or to offer, import or stock it for any of those purposes; b. to use the patented process in or for his business or to use, put on the market, or resell, hire out or deliver the product obtained directly as a result of the use of the patented process, or otherwise deal in it in or for his business, or to offer, import or stock it for any of those purposes. Articles 26 and 27 of the agreement relating to Community patents (CPA) which expected not to enter into force, read as follows: Article 26 CPA - Prohibition of indirect use of the invention 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 Persons performing the acts referred to in Article 27 (a) to (c) shall not be considered to be parties entitled to exploit the invention within the meaning of paragraph 1. Article 27 CPA - Limitation of the effects of the Community patent The rights conferred by a Community patent shall not extend to: (a) acts done privately and for non-commercial purposes; (b) acts done for experimental purposes relating to the subject-matter of the patented invention; (c) the extemporaneous preparation for individual cases in a pharmacy of a medicine in accordance with a medical prescription nor acts concerning the medicine so prepared; ( ) Articles 26 and 27 CPA have been used as guidelines for the interpretation of Article 73PA. The differences are staple goods versus goods generally available in commerce,and supply versus delivery (or transfer) viz. the Dutch legal term leveren. In case law and literature these differences have not been mentioned. Questions I) Analysis of current legislation and case law 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? No (not separate) or Yes (not sufficient), Article 73 DPA requires that the 2Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

3 person offering or delivering the means knows (or that it is evident considering the circumstances) that those means are both suitable and intended for the application of the patented invention. Suitable only is not sufficient. 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? If it is established that the means are offered for the invention, it is not relevant that the means are also suitable to be put to other uses not related to the invention- see also answer under 1.a) 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? No, it is not a condition that the person supplied actually puts the means to an infringing use- see above under 1.a) b) If yes to a), is the element of intention a separate condition to any condition of suitability for an infringing use? N/A The Explanatory Memorandum of the legislator when the indirect infringement provision was first introduced in 1987 states that there should be a certain amount of knowledge about the suitability and the aim of the means, as well as of the fact that the invention is patented. According to case law if the, if the requirements of Article 73 DPA are met (District Court The Hague 6 March 2002, Henkel/Diversey II), where the situation was more than likely, the supplier knows that it is likely that its customers will use the means to apply the patented invention. 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? N/A 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? Article 73 DPA states that for indirect infringement is that the offered or, delivered means must relate to an essential element of the patented invention. This leaves ample room for interpretation. The Dutch Explanatory Memorandum to Article 73 DPA (1984) offers little additional guidance in that respect. It states that, on the one hand, it is not sufficient that the means may be used for the application of the patented invention (as these should be an essential element thereof). However, on the other hand, that it is not necessary that these means are specifically attuned to the patented invention- see also Benyamini 2. 2 Patent infringement in the European Community, IIC Studies Vol. 13, Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

4 It can be deduced from section 2 of Article 73 DPA, which relates to goods generally available in commerce, that such element itself does not need to be new or inventive. The decision of the Dutch Supreme Court dated 31 October 2003 relates to the essential element requirement and has set a high threshold therefore. In this decision regarding Senseo coffee pads, the Dutch Supreme Court confirmed on appeal that if the means are necessary for the application of the invention it is not automatically implied that these are essential thereto. Such means should concern an element of that with which, according to the patent, the teaching of the patented invention distinguishes itself from the prior art. The fact that the elements are mentioned in the claim does not imply that these are essential: in that particular case, the Senseo coffee pads were not considered essential elements even though these were mentioned in one of the claims (in brief: assembly comprising a container and a pill shaped pouch ). 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? Yes, such an additional condition (inducement 2 ) is provided for in Article 73 (2) DPA -see above- and because staple goods are in any case products generally available in commerce. 5. a) Is injunctive relief available against acts of contributory infringement? Yes. In accordance with the Dutch Code of Civil procedure, injunctive relief is available for practically all patent infringement cases. There is general no exception to this rule for contributory infringement, although it may depend on the circumstances of the case, e.g. when staple goods are involved. A claim for injunctive relief can in The Netherlands be brought before the District Court of The Hague, which Court has exclusive jurisdiction for patent cases in The Netherlands. In exceptional cases also an ex parte request is possible. 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? No. Manufacture or supply is not also sufficient per se- see also the answers to questions 1 and 2. This means that on this basis a) injunctive relief can only be directed against the manufacture if the goods are also delivered and b) cannot be directed at the supply per se. In respect of the manufacture it might in exceptional cases be possible to obtain injunctive relief in a general tort action, but it is generally held that the scope for such an action should be limited. 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? Yes. See answer under 5b 2 BIE, p. 32 4Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

5 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 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? At least a substantial threat of contributory infringement has to be proven to obtain an injunction. If an injunction has been obtained however, the wording will generally be abstract and general, e.g. the order in the Senseo case, where the president of the District Court worded the order in 2002 as follows: enjoins defendant from being involved in any way in the indirect infringement of [patent number], especially by offering or delivering the aforementioned O'lacy's coffee pads. Such orders are made subject to (substantial) recurring penalties, payable to the patentee. Any subsequent disputes regarding the scope of such a Court order and its alleged violation should be dealt with by the parties and may be the subject of further summary proceedings regarding execution (executie kort geding), in which proceedings the alleged infringer may seek to limit or prohibit the enforcement of the penalty payments. 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? Article 73 explicitly requires that the offering or delivery in The Netherlands of the means must be done for the application of the patented invention in the Netherlands. The Court of Appeal in The Hague stipulated this limited territorial scope of Article 73 in the case between Single Buoy Mooring and Bluewater Energy Services, 18 May 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? An offer can be any expressed intention (in writing or orally, in general or specific) to supply the means. see also Benyamini 3 : 3 Benyamini, A (1993) Patent Infringement in the European Community Munich: Max Planck Institute for Foreign and International Patent, Copyright and Competition Law, p Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

6 [ ] it is irrelevant how the product is offered. Thus, offering is not restricted to offering on the market. ( ) It is submitted that any expression of willingness to provide the product on a commercial basis, or give the offeree some right or title to it, amounts to an infringement by offering. This should be the rule even if the transaction is initiated by the customer, and the supplier only responds to his request. As far as the supply of means are concerned, levering (delivery or transfer) is one of the requirements by law for completing the transfer of property under Dutch law. According to article 3:90 of the Dutch Civil Code levering for the transfer of movable property takes place by providing the acquirer with the possession of the property, directly or indirectly. This provides some guidance, the term supply within the meaning of contributory infringement, however, should also extend to loan, hire, lease et cetera. In fact, any furnishing of the means by a supplier to a purchaser should qualify as supply as long as it is in a commercial sphere and the supplier knows or that it is obvious for the offeror in the given circumstances that the means are suitable for. The means can be supplied either directly to the purchaser or to his representative or supplied indirectly (for instance through a warehouse or by a person acting on behalf of the supplier). Regarding the supply of goods, Benyamini 4 also is of the opinion that: the term supply appears to be broader than putting on the market Article 73 DPA requires that either the offering or the supply should take place in the Netherlands. The territorial scope of this Article is quite restrictive. In addition, there is a second territorial and intentional requirements that ties in with the first requirement, namely that the offering or supply takes place for putting the invention into effect in the Netherlands and further that the offeror or supplier knows (or that it is obvious for the him in the given circumstances) that the means are suitable for and destined to put the invention into effect. As far as the offering is concerned, the offering in itself is ambivalent. An offer made by a Dutch party to another Dutch party is clearly an offer in the Netherlands.Also a foreign offer to supply to a Dutch party or a foreign offer that is clearly directed to the Dutch market (for instance a web site dedicated to the Netherlands) may qualify as an offer in the Netherlands and may be infringing if the invention would be put in effect in the Netherlands 5. An offer made by a Dutch supplier to a foreign purchaser is free from contributory infringement in The Netherlands. As far as the supply is concerned, clearly providing means to a party in the Netherlands will be a qualifying as supply, regardless whether the supplier is located in the Netherlands or abroad. If the means are shipped, f.o.b. for instance, to a purchaser in the Netherlands this may very well be considered as a supply in the Netherlands (or Netherlands Antilles). The legal risk, property and possession arrangements should not be relevant for the question by whom the means are shipped into the Netherlands 6. 4 Benyamini, p Several judgments of the District Court The Hague in relation to a direct patent infringement have confirmed this (President District Court The Hague, September 23, 1992 and April 13, 1995) and there seems no reason to have a dissenting view when it comes to indirect infringement 6 See also Benyamini, p Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

7 Noteworthy is that the District Court The Hague on April 11, 2007 (SBM vs. Bluewater; case number: / HA ZA ) held that it had international jurisdiction to hear a claim on contributory infringement, even though the actual putting into effect of the patented invention did not take place in the Netherlands. Bluewater offered means in the Netherlands to in-building these means outside the Netherlands. The District Court The Hague referred to this as a possible longa manu infringement. This may indicate that the Court is prepared to somewhat loosen the territorial requirements for indirect patent infringement. This case is still under appeal and this Court of First Instance did not judge on infringement, only on jurisdiction in general terms. 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 could be held liable for contributory infringement in country A by supplying the means to Y? The Dutch Group is not aware of any Dutch case law in which the Dutch Courts had to deal with a similar factual situation. However, on the basis of the wording of Article 73 (1) DPA the Dutch Group takes the view that X can be held liable for contributory infringement in country A (e.g. the Netherlands) by supplying the means to Y. Article 73 requires amongst other things, that: (a) (b) the means are delivered in the Netherlands for working the invention in the Netherlands It is clear from the facts that requirement (a) has been met. The Dutch Group submits that also requirement (b) has been met. Pursuant to Article 53 (1) (a) DPA, importing and selling a product belong to the exclusive rights of the patent proprietor. This importing and selling qualifies as the working of the invention as meant in Article 73 (1) DPA. The fact that product P is completed in country B, does not alter the fact that the invention is (also) applied ( worked ) in the Netherlands. The answer above assumes that X delivered the means for his business and that the means do not qualify as staple articles in the sense of Article 73 (2) DPA. 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? According to article 73 (1) DPA the patent holder may enforce its patent against any person who commits indirect patent infringement in The Netherlands. Further according to the Rome II Regulation, as explained further in question 9 c, the national law applies of the country in which patent protection is sought for. 7Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

8 With regard to a (valid) Dutch patent, if the means are being offered or supplied in the Netherlands for working the patented invention in the Netherlands, then Article 73 DPA applies. However, if the means are offered in the Netherlands for working the patented invention outside the Netherlands, also Dutch law still applies for the relevant question, but an indirect infringement cannot be assumed, -see however Bluewater under 7. If the means have been offered outside the Netherlands, but supplied into the Netherlands for working the patented invention, an infringement can be assumed, Article 73 (1) DPA states offers or supplies. b) What is the applicable law if the means are offered in country A but supplied in country B? The answer is dependent on the applicable International Private Law of the country of the competent court which has to decide in the matter, e.g. for the EU the Rome II Regulation as further explained below with regard to question 9c. Assuming that the means are offered in the Netherland, but supplied to a country outside the Netherlands, Dutch law applies if the plaintiff invokes a (valid) Dutch patent protection. In that case the competent court has to decide if an infringement on the Dutch patent can be assumed, e.g. whether the offer has been made for applicant of the patented invention in the Netherlands. The same can be said if the means are offered outside the Netherlands, but supplied to the Netherlands. The competent court, being asked to decide on the question if the Dutch patent has been infringed, shall apply Dutch law, i.e. the DPA, and only assume an infringement if the deliverance of the means took place for working the patented invention in the Netherlands. c) Are there any other relevant principles to determine the applicable law? Like any EU country also for the Netherlands the Rome II Regulation 7 applies with regard to applicable law for non-contractual obligations. Article 8 of Rome II Regulation reads as follows: Article 8 Infringement of intellectual property rights 1. The law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which protection is claimed. 2. In the case of a non-contractual obligation arising from an infringement of a unitary Community intellectual property right, the law applicable shall, for any question that is not governed by the relevant Community instrument, be the law of the country in which the act of infringement was committed. 3. The law applicable under this Article may not be derogated from by an agreement pursuant to Article 14. Therefore Dutch law is applicable if the claim of the plaintiff is based on infringement on a (valid) Dutch patent. II) Proposals for substantive harmonisation 7 EG Regulation no 864/2007 dated 11 July Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

9 The Groups are invited to put forward their proposals for adoption of uniform rules, and in particular consider the following questions: As far as ECC/EU harmonisation of the law relating to contributory infringement concerned, referral should be made to: Article 26 (Prohibition of indirect use of the invention) and 27 (Limitation of the effects of the Community patent) CPA, already quoted in the contribution to question 1 and The Joint declaration of the Governments of the member states of the EEC at the time of signing the Agreement relating to Community Patents, at Luxembourg, December 15 th, 1989 by Belgium, Denmark, Germany, Greece, Spain, France, Ireland, The Netherlands, Luxembourg, Portugal, Italy and the UK: The Governments have adopted to this declaration a declaration on the adjustment of national patent law (part of annex II), which states: Noting that since the signing of the Community Patent Convention of 15 December 1975 legislative procedures have been completed in several Member States with a view to eliminating as far as possible the differences between national patent law and the common system of law for patents resulting from the said Convention, TAKE NOTE of the undertaking by the Government of each Member State in which these procedures have not been completed or are yet to be begun to endeavour to adjust its law relating to national patents so as to bring it into conformity, as far as practicable, with corresponding provisions of the European Patent Convention, the Agreement relating to Community patents and the Patent Cooperation Treaty. So there is agreed upon an obligation for the Member States to adjust and bring in conformity their national law (also relating to contributory infringement), as far as practicable, with the articles 26/27 CPA as far as that not has been done before December 15 th,1989. This means that the national law should be in accordance with these articles and that the articles have to be considered as guidelines to the national courts for interpretation of the national law. The CPA has not been realized until now. The declaration (annex II) however has to be considered as at least a beginning of a substantive harmonisation in the Member States of that time of the law relating to contributory infringement. It will be a first step to uniform EU/EEA provisions (art. 26/27 CPA), whether via harmonisation, or via realization of the CPA as an EU/EEA regulation. 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? The conditions set forward in article 26/27 CPA. The Dutch (and other) legislation should amend the DPA to have the same wording as CPA. The term supply should be clearly defined in the Dutch legal context. The Dutch group proposes that the Dutch patent Act should also included a provision to extending the rights to contributory patent infringement to countries within the European Union where a corresponding patent is valid, provided the other EU countries will also bring the law into line with CPA. 2. In a harmonised system of patent law, to what extent should injunctive relief be available to prevent contributory patent infringement? 9Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

10 Injunctive relief should be available, also in other countries than The Netherlands. 3. In a harmonised system of patent law, how should it be determined where means are supplied or offered? According to the national law related to offering or supplying of the place where the act of offering or supply has occurred. Supply should be defined more clearly. 4. Should special rules apply to offers transmitted via electronic devices or placed on the internet? The Dutch group is of the opinion that it will be too difficult (and not feasible) to harmonize the civil laws of all EU countries with respect to electronic offering. 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? Preferably the law of the country in which the (intended) infringement takes place. Within the EU the resp. patent laws for direct patent infringement are already harmonized. 6. Does your Group have any other views or proposals for harmonisation in this area? The majority of the Dutch group does not support the decision of the Dutch Supreme Court in the Senseo case-see above. The Dutch group would support an initiative, e.g. a protocol, defining what could be an essential element of a patent claim, also bearing in mind the case law of the European Patent Office. As soon as the EPLA (European Patent Litigation Agreement) has entered into force, case law will become more harmonised. 10Wouter Pors (WXP) Shared Workspace\Shared Files\AIPPI\Questions\2010 Paris\Q204P The Netherlands final\

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