Liability for contributory infringement of IPRs certain aspects of patent infringement

Question Q204P National Group: The Danish Group Title: Liability for contributory infringement of IPRs certain aspects of patent infringement Contributors: Sture Rygaard, Anders Valentin, Emil Jurcenoks, Jakob Krag Nielsen, Leif Rørbøl and Bjørn Ryberg Representative within Working Committee: Sture Rygaard Date: 14 April 2010 Questions The Groups are invited to answer the following questions under their national laws Initial comment from the Danish group on lack of authoritative precedents Initially, it should be noted that there are practically no means to assist in interpreting the Danish provision on indirect patent infringement. The provision on indirect patent infringement, Section 3(2) of the Danish Patents Act (quoted below) was implemented into Danish law in 1978-1979, however, the preparatory works do not contain any means for interpreting the provision. Nor is there any published case law interpreting this provision. Thus, it should be noted that the following interpretations are made on the basis of the wording of the provision, purposive (teleological) considerations and legal jurisprudence. 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? In Denmark, contributory patent infringements are primarily regulated by the Danish Patents Act, Article 3(2), which governs the so-called "indirect infringements". The provision is based on the Community Patent Convention, Article 30. Section 3(2) has the following wording: "The exclusive right shall imply that no one, except the proprietor of the patent, may without permission exploit the invention by supplying or offering to supply any person who is not entitled to exploit the invention with means for working it in this country, if these means relate to an essential element of the invention and 1

the person supplying or offering to supply the means knows, or it is obvious in the circumstances, that these means are suitable and intended for such use. This provision shall not apply when the means are staple commodities, except when the person supplying or offering to supply the means induces the person supplied to commit acts as referred to in subsection 1 hereof." Indeed, according to Section 3(2) of the Danish Patents Act, it is a condition for liability for contributory infringement that the means supplied or offered are "suitable" to be put to a use that would infringe the patent in Denmark. General principles of liability for contributory acts In addition to Section 3(2), it is unclear whether a person can incur liability for contributory patent infringement in accordance with the general principles of liability for contributory acts in Danish criminal law and tort law. This was possible before the implementation of the specific indirect patent infringement provision in Section 3(2) of the Danish Patents Act, but may perhaps to some extent have been replaced (harmonised) with the indirect patent infringement rule in Section 3(2). According to Section 23(1) of the Danish Criminal Code, "The penalty in respect of an offence shall apply to any person who has contributed to the execution of the wrongful act by instigation, advice or action " Danish tort law on the other hand does not have a specific or central provision governing contributory liability. However, it is accepted in Danish legal theory that the basic standards and interpretations developed in judicial criminal literature and case law in general are identical to the perception of contributory liability in tort law. According to the general principles of liability for contributory acts in Danish tort law, it is a condition for contributory infringement that an infringement has been committed. Furthermore, it is a condition that the person contributing to the infringement knew, or ought to have known, that a direct infringement would be committed, and in order for that to be fulfilled the means would have to be suitable for being put to a use that would infringe the patent. The question of whether a person could be found to be contributing to a patent infringement according to the general principles of liability for contributory acts in Danish tort law will depend on the specific circumstances of each case. Danish judicial literature on this matter is practically non-existent, and it is not common practice in Denmark to bring a patent claim based on the general principles of liability for contributory acts. Thus, the rest of the questions in this questionnaire will not be answered in accordance with the general principles of liability for contributory acts in Danish tort law. 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? Yes, if the means are relevant to put to other uses, it may probably affect the evidence needed to show that the means were (objectively) suitable and intended for working the invention, cf. Section 3(2), first sentence. 2

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? According to the wording of Section 3(2), first sentence, it is required that " the person supplying or offering to supply the means knows, or it is obvious in the circumstances, that these means are suitable and intended for such use." Thus, the standard is, in a sense, objective. It is what the supplier or the person offering to supply knows or what should objectively be obvious to that person that is relevant, i.e. whether that person should expect that the means were suitable and intended for exploiting the patent in Denmark. It is required that the person supplying or offering to supply the means knows, or it is obvious (to a reasonable person) in the circumstances, that the means are "suitable" for and "intended" to be used for exploiting the patent. The supplier/offeror is presumably treated as knowing what is obvious to a reasonable person in the circumstances. Thus, if the means are also suitable to be put to other uses, it would be required that the supplier/offeror either knew, or it was obvious for a reasonable person in the circumstances, that objectively the means were "intended" to be used to exploit the invention. Intended must imply that the means offered or supplied are offered or supplied in order for the person supplied to exploit the invention. Further, according to Section 3(2), second sentence, of the Danish Patents Act, the first sentence regarding indirect patent infringements shall also apply when the means supplied or offered are staple commodities, such as e.g. nails, screws, wires, chemicals etc., which can indeed be put to other uses not related to the invention, but only provided that the person supplying or offering to supply such staple commodities furthermore induces the person supplied to use the means for working the invention. In such cases, it is not sufficient that the supplier knows, or should know, that the person supplied intends to use the means for patent infringement, cf. Mogens Koktvedgaard, The Patents Act Annotated, 1979, p. 115. The scope for this rule is therefore very limited. The provision would probably apply where a supplier of electronic standard components provides a user manual which states how the buyer can use the product to build a patented radio receiver. In an old judgment from 1925 (U.1925.467.Ø) from the Eastern High Court, long before the "indirect patent infringement" provision was implemented into Danish law, a person had patented sun-glasses without means for fixing them to the nose or ears but which could conveniently be carried behind a pair of ordinary glasses. Another person selling sun-glasses with instructions on the packaging of how to use these sunglasses without side bars was found to infringe the patent. In this case there was no evidence or arguments relating to the "intentions" of the purchasers. However, this old decision obviously does not address the particular requirements set out in the much later statutory provision in the Patents Act, so it is of little guidance in the interpretation thereof. Note is made that in practice it would be difficult, if not impossible, to prove the actual intentions of the persons supplied, whereas the objective assumptions of a reasonable supplier based on the circumstances could be possible to prove. 3

See the reply to a). b) If yes to a), is the element of intention a separate condition to any condition of suitability for an infringing use? 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? The relevant time is the time of the offer or supply. As explained above, it is required that the person supplying or offering to supply the means knows, or it is obvious (to a reasonable person) in the circumstances, that the means are "suitable" for and "intended" to be used for exploiting the patent. Thus, if the means are also suitable to be put to other uses, it would be required that the supplier/offeror either knew, or it was obvious for a reasonable person in the circumstances, that the means were "intended" to be used to exploit the invention. Intended must imply that the means offered or supplied are offered or supplied in order for the person supplied to exploit the invention. 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? According to Section 3(2) of the Patents Act, it is a condition for contributory infringement that the means supplied or offered relate to an "essential element" of the invention. Unfortunately, neither Section 3(2), the preparatory works, Danish case law, nor the Danish legal literature on this matter provides any guidance to determining whether an element must be considered an essential element of an invention. 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, see answer to Question 1(b) above. 5 a) Is injunctive relief available against acts of contributory infringement? Yes. The remedies available to a right-holder in case of contributory patent infringement are the same as for a direct patent infringement. Thus, a contributory patent infringement can be met with a preliminary injunction granted by an enforcement court and/or an injunction granted by an ordinary court of law. 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? 4

According to Section 3(2) of the Patents Act, it is a condition for contributory infringement that the means are "supplied" or "offered". In order to obtain an injunction against the "supply of means per se", the patent holder would have to show that the means relate to an essential element of the invention and that the person supplying the means knows, or it is obvious in the circumstances to a reasonable supplier, that these means are suitable and intended for such use (see above). Injunctive relief may normally not be directed against "the manufacture of means" per se, as only supply and offering to supply are covered, whereas "manufacture" is not covered by the provision. 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 the reply to question b). 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? It is unclear to what extent the claim could be directed against the abstract situation where the person supplying or offering to supply the means knows, or it is obvious in the circumstances, that these means are suitable and intended for working the invention. For such claims to be allowed, it would have to be clear which circumstances should make the supplier know, or which should make it obvious in the circumstances, that the means are suitable and intended for working the invention. This is because injunctive relief in Danish procedural law requires a clear specification of the acts that are injuncted, partly because the performance of acts that are injuncted is punishable by fining or imprisonment, and partly because injunctions are directly enforceable. 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? According to Article 3(2), it is a condition for contributory infringement that the means are supplied or offered "for working [the invention] in this country [Denmark]". According to Danish legal theory, Section 3 (2) only applies where: 1) the offering or supply of means takes place in Denmark and 5

2) the means supplied or offered are suitable and intended to be put to a use that would infringe the patent in Denmark. 7 How is it to be determined where means are supplied or offered? For example: (a) (b) (c) (d) 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? Examples (a)-(d): Note is made that the examples do not specify all the facts that may be relevant in determining whether an indirect infringement would occur. Therefore the replies below attempt to address examples concerning the main factors in relation to indirect patent infringement. It could only constitute indirect infringement according to the Danish Patents Act section 3 (2), if the direct infringement is supposed to take place in Denmark, i.e. Denmark was country B in the examples above. The question is how "supply" and "offer to supply" should be interpreted. As mentioned at the beginning of the questionnaire, there is no published case law or other authoritative means to assist in interpreting "supply" and "offer to supply". It is stated in Mogens Koktvedgaard, The Patents Act Annotated, 1979, that either the supply or the offer to supply must take place in Denmark. However, no statements are made as to how "supply or the offer to supply" should be interpreted. Regarding the interpretation of "supply", it is unclear whether the decisive factor is when the risk passes to the supplied person, i.e. whether the goods are shipped "Free On Board" or the like. If the means are supplied by X, who is located in B (e.g. Denmark), to Y, who is located in A (e.g. Sweden), for the purpose of committing a direct infringement of a patent in A (Sweden), X's supply of means does not constitute an indirect patent infringement within the Danish jurisdiction, regardless of where the means are offered or supplied. 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): 6

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? Yes. If X knew, or it was obvious under the circumstances, that Y would put the means to an infringing use in Denmark by selling the patented product P in Denmark, X could probably be held liable for contributory patent infringement in Denmark. 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? It could be in both countries, cf. the reply to questions 1, 4, 6 and 7 above. It could only constitute indirect patent infringement according to the Danish Patents Act section 3 (2), if the direct infringement is "intended" to take place in Denmark, as long as the means are either offered or supplied in Denmark. b) What is the applicable law if the means are offered in country A, but supplied in country B? See above under question 9(a). c) Are there any other relevant principles to determine the applicable law? See above under question 9(a). 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? Quoting parts of the proposals for harmonization from the Danish Group to Q204, the Danish group proposes that: - The offer and/or supply of all essential components of a product from a country, in which the product is protected by an IPR, to another country for assembly should be liable to infringement of the IPR in the country in or from which the components were offered and/or supplied, if the assembly would result in a direct infringement of the IPR had it occurred in the country in or from which the components were offered and/or supplied, and provided that the components are specifically made or adapted for such assembly and/or the supplier induces such assembly in the other country. 7

The offer and/or supply from one country to another country of means essential for a use liable to direct infringement of an IPR, in the country in or from which the means are offered and/or supplied, should be liable to contributory infringement, if it was known to the supplier or obvious under the circumstances that the means are suitable and intended for use in the country from which they are supplied. This may e.g. be the case where the means are used in the other country to produce an infringing product which is subsequently re-imported; or where essential parts of (or software for) a computer system are offered and/or supplied from one country to another country, but where the computer system is intended for use (e.g. via the Internet) in the country from which the parts were supplied and in which such use amounts to a direct infringement of an IPR. 2 In a harmonised system of patent law, to what extent should injunctive relief be available to prevent contributory patent infringement? It should definitely be available. 3 In a harmonised system of patent law, how should it be determined where means are supplied or offered? It should be determined on the basis of whether the supplier supplied or offered to supply the relevant means in the country of alleged indirect patent infringement, e.g. if the supplier provided for delivery in Denmark, the means should be considered "supplied" in Denmark for the purpose of this provision. It should not be decisive where the place of the change of "risk" of the product is. 4 Should special rules apply to offers transmitted via electronic devices or placed on the internet? The offer should also be considered made in the country where the receiver of the offer is, if the offeror knows or it is obvious in the circumstances that the person receiving the offer is in that other country. 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? See the proposals in the suggestions 1-4 above. 6 Does your Group have any other views or proposals for harmonisation in this area? Not apart from the proposals in point 1-4 above. Summary There are practically no means to assist in interpreting the Danish provision on indirect patent infringement and no published case law. Denmark has implemented the rule from the Community Patent Convention, Article 30 on indirect patent infringement. It is required that the person supplying or offering to supply essential elements of an invention knows, or it is obvious (to a reasonable person) in the circumstances, that these means are "suitable" for and "intended" to be used for exploiting the patent. The 8

supplier/offeror is presumably treated as knowing what is obvious to a reasonable person in the circumstances. There is no guidance to determining whether an element must be considered an essential element of an invention. The Danish Group proposes, among other things, that the offer and/or supply of all essential components of a product from a country, in which the product is protected by an IPR, to another country for assembly should be liable to infringement of the IPR in the country in or from which the components were offered and/or supplied, if the assembly would result in a direct infringement of the IPR had it occurred in the country in or from which the components were offered and/or supplied, and provided that the components are specifically made or adapted for such assembly and/or the supplier induces such assembly in the other country. Résumé Il n existe pratiquement pas de moyens pour assister à l interprétation de la disposition danoise relative à la violation indirecte des brevets et pas de jurisprudence publiée. Le Danemark a mis en œuvre la réglementation de la Convention sur le Brevet Communautaire, Article 30 sur la violation indirecte des brevets. Il est requis que l individu fournissant ou bien offrant de fournir des éléments essentiels d une invention sache, ou bien qu il soit évident (à un individu raisonnable) dans les circonstances que ces moyens sont «convenables» pour et «destinés» à être utilisés pour l exploitation du brevet. Vraisemblablement le fournisseur/l offrant est traité comme savant ce qui est évident à l individu raisonnable dans les circonstances. Il n y a pas d instructions pour déterminer si un élément doit être considéré comme un élément essentiel d une invention. Le groupe danois propose entre autres que l offert et/ou l approvisionnement de tout composant essentiel d un produit d un pays dans lequel le produit est protégé par un DPI à un autre pays en vue d assemblage doit être susceptible à la violation de la DPI dans le pays dans lequel ou bien duquel les composants étaient offerts ou bien fournis si l assemblage aurait comme conséquence une violation directe de la DPI dans le cas où il aurait eu lieu dans le pays dans lequel ou bien duquel les composants étaient offerts et/ou fournis, et à condition que les composants soient fabriqués ou bien adaptés spécifiquement pour un tel assemblage et/ou que le fournisseur induise un tel assemblage dans l autre pays. Zusammenfassung In der Praxis gibt es keine Mittel zur Mithilfe beim Interpretieren der dänischen gesetzlichen Regeln bezüglich "mittelbarer Patentverletzung" und keine veröffentlichte Rechtsprechung. Dänemark hat die Regel aus dem Gemeinschaftspatentübereinkommen, Artikel 30, bezüglich mittelbarer Patentverletzung implementiert. Es ist eine Voraussetzung, dass die Person, die wesentliche Elemente einer Erfindung liefert oder die Lieferung dieser wesentlichen Elemente anbietet, weiß, oder einer (vernünftigen) Person unter den gegebenen Umständen offensichtlich ist, dass diese Mittel für das Ausnutzen des Patents "geeignet" sind und für eine solche Verwendung "bestimmt" waren. Der Lieferer/Anbieter wird vermutlich so angesehen, als ob er weiß, was einer vernünftigen Person unter den gegebenen Umständen offensichtlich ist. Zur Bestimmung, ob ein Element als ein wesentliches Element einer Erfindung anzusehen ist, gibt es keine Richtlinien. 9

Die dänische Gruppe schlägt u.a. vor, dass das Anbieten und/oder die Lieferung aller wesentlichen Komponenten eines Erzeugnisses aus einem Land, in welchem das Erzeugnis durch ein Recht des geistigen Eigentums (IPR) geschützt ist, in ein anderes Land zum dortigen Zusammenbau eine Verletzung des IPR in dem Land, in oder aus welchem die Komponenten angeboten oder geliefert wurden, darstellen, wenn der Zusammenbau zu einer direkten Verletzung des IPR führen würde, wenn dieser in dem Land, in oder aus welchem die Komponenten angeboten und/oder geliefert wurden, stattgefunden hätte, und vorausgesetzt, dass die Komponenten für einen solchen Zusammenbau spezifisch hergestellt oder angepasst waren, und/oder dass der Liefernde einen solchen Zusammenbau in dem anderen Land veranlasst. April 2010/ 10