Irides: Weekly patent litigation update

The Irides Weekly Update is our round-up of patent litigation news highlights from around the world. Taking its name from the plural of “iris” - a nod to the ability of Irides to see what’s happening around the world.

Our latest edition - 5 January 2024 - is below:

UK

Court of Appeal considers unjustified threats provisions in the context of Amazon’s IPR policy

On 12 December 2023, the Court of Appeal handed down its decision in The NOCO Company v Shenzhen Carku Technology Co., Ltd  [2023] EWCA Civ 1502. The issue on appeal was whether communications between The NOCO Company (NOCO) and Amazon amounted to a “threat of infringement proceedings” for the purpose of s. 70 Patents Act 1977. 

As reported in Irides Weekly Update here, Mr Justice Meade held at first instance that the communications did amount to a threat. NOCO was the proprietor of GB 2 257 858, which was found to be invalid for obviousness at first instance. The Judge’s conclusions on validity were not appealed. 

Background 

The parties are rival manufacturers of lithium-ion batteries for jump-starting vehicles. Carku supplies products to distributors, who market the products via Amazon. NOCO has a first party relationship with Amazon, meaning that Amazon buys products directly from NOCO to sell on Amazon’s own account. 

NOCO made a number of complaints via Amazon’s “Infringement Form” in respect of certain Carku products, providing (among other information) the following: 

1. The type of intellectual property right (i.e., “patent infringement”); and
2. The infringing Amazon Standard Identification Number (ASIN), which could be used to identify distributors.

The Infringement Form also contained an “Additional Information” box. In the majority of its complaints, NOCO filled in this box in the following form: 

“These ASINs infringe on our utility patent, number GB2527858. Please remove these ASINs” or 

“The registration for our utility patent is GB2527858.2. Please remove these ASINs”.

Further, on 3 February 2020 a representative of NOCO sent an email to NOCO’s designated contact at Amazon stating that NOCO “do continue to file lawsuits against companies that infringe on our safety patent”. NOCO made no direct approach to Carku. 

As a result of the notifications made by NOCO, Amazon notified Carku’s distributors that it had removed some of Carku’s products from sale. 

Relevant Law 

The key provisions relating to unjustified threats are set out in ss. 70-70B of the Patents Act 1977. These were summarised by Lord Justice Lewison as follows: 

1. The recipient of the communication must understand that the person intends to bring infringement proceedings against another person, who need not be the recipient of the communication; 
2. A threat is not actionable if made to a primary infringer or if it alleges an act of primary infringement (i.e. import or manufacture); 
3. Proceedings may be brought by any person aggrieved by the threat, not just the recipient or the person against whom the threat is made; and 
4. A threat is not actionable if it is not an express threat, and is contained in a permitted communication. However, any communication that requests a person to cease doing, for commercial purposes, anything in relation to a product cannot be a permitted communication. 

The court also restated the principle established in Best Buy Co Inc v Worldwide Sales Corporation Espaňa SL [2011] EWCA Civ 618, that the recipient’s understanding of the communication should be assessed from the perspective of a reasonable person, with knowledge of the circumstances at the date of the communication. The recipient’s actual understanding is not directly relevant. 

Decision of the Court of Appeal

NOCO’s Infringement Form notifications included an assertion of infringement and a request for removal of the products from sale. Applying the principles set out above, the court concluded that the reasonable person would understand the explicit allegation of patent infringement combined with a request for removal of the listing to be at least an implicit threat that, if the request were not complied with, the complainant would bring proceedings for patent infringement.  

Further, the court considered it implicit in the drafting of s.70B(4)(a) that a request to a potential secondary infringer, e.g., to Amazon, to delist or stop selling would amount to a threat. NOCO’s communications via the Infringement Form therefore amounted to an unjustified threat, without the need to consider the email of 3 February 2020. 

Counsel for NOCO argued that, if these conclusions were true, any use of Amazon’s Infringement Form would amount to a threat. However, Lewison LJ reiterated that it was the provision of the additional information by NOCO which caused the communications in this instance to amount to a threat. The Infringement Form itself only invites the provision of neutral information. 

Finally, counsel for NOCO argued that Amazon would not have contemplated that it would be a defendant to the threatened infringement proceedings. Regardless, the court did not consider this to be relevant. It is sufficient for a reasonable person in the position of the recipient to understand that the patentee intends to bring infringement proceeding against “another person”, not necessarily against the recipient of the communication. NOCO’s appeal was therefore dismissed, and the decision of Meade J upheld.

UPC

UPC considers whether original claims of a European patent as filed can be used as an aid to interpretation in connection with amendments to the claims made during prosecution

On 20 December 2023, the Munich Local Division ruled in relation to an application for interim measures. The applicant sought interim measures against several defendants claiming that the defendants' products infringed their unitary patent, particularly concerning the technology of electronic labels used in retail for product and price labelling. These labels are distinct in being identified by a unique identifier and include components such as a radio frequency communication module, memory, display screen, microcontroller, and radio frequency peripheral.

It was necessary for the panel to consider a patent claim which highlighted the importance of maintaining a deliberate spatial separation between the chip and the antenna to mitigate electromagnetic interference, a concept initially established in the original version of the claim and further elaborated during subsequent amendments. The revised claim clarified the technical purpose of this separation. However, even after considering the amendments to the claim, it remained ambiguous regarding the possibility of positioning the antenna behind the display screen, as the explicit spatial relationship between the screen and the antenna is not clearly defined in the claim's wording.

Upon review, the judicial panel was not sufficiently convinced that the defendants' products infringed the patent in question. The court determined it had jurisdiction to hear the case; the defendants challenged competence but the court decided that the patentee’s submissions conclusively substantiated acts of infringement in Germany and that was sufficient for the examination of competence.  However, the Local Division found that the alleged acts of infringement were not substantiated enough to warrant the interim measures. The court deliberated on the technical aspects and positioning of the components within the electronic label as described in the patent claim and found discrepancies in the actual products against the patented claims. In coming to their conclusion, the Local Division looked to the prosecution history and held that the original version of the claim in the application as filed could be used as an aid to interpretation in connection with amendments made during prosecution.

Although the defendants had also argued that the application for interim measures should be dismissed on the basis that the patent was invalid, the Local Division did not deal with the question of validity given that they were not convinced with sufficient certainty that the products in question infringed the patent in suit.

Consequently, the application for interim measures was dismissed, and as the unsuccessful party, the applicant was ordered to pay the costs of the legal dispute and other costs incurred by the defendants, including the costs for filing a protective brief. The amount in dispute was set at €2 million (the level proposed by the patentee to which the defendants had not objected), with the upper limit for costs to be reimbursed set at €200,000.

ISRAEL

Supreme Court rules on unjust enrichment based on a patent application

On 26 December 2023, an extended panel of the Israeli Supreme Court handed down a decision in a case between Unipharm and Sanofi.  The enlarged panel of five judges following a rehearing upheld by majority its previous majority decision from a panel of three judges, in which it was determined that a patent holder who deliberately deceives the Israeli Patent Office (ILPTO) or omits important information could be responsible for paying over earnings acquired from postponing the market entry of generic products.

The court found that Sanofi had intentionally deceived the ILPTO by knowingly withholding pertinent information after it became aware that the patent application in question (related to a certain polymorph of clopidogrel bisulfate, the active ingredient in Plavix) included erroneous information. Of the four judges who held in favour of Unipharm, three based their finding of violation of the Israeli law of unjust enrichment on the ground Sanofi was found to have acted in bad faith.  The fourth judge found for Unipharm based on his finding that Sanofi’s conduct amounted to an abuse of monopoly under Israel Competition Law, which in turn formed the basis of the finding of unjust enrichment.

In reaching its decision, the court set out the following guidelines:

• A generic manufacturer may seek to recover profits made by a patent holder through an "unjust enrichment" claim if the patent holder intentionally submitted false information to the ILPTO.
• The claim is only available if the deception was intentional (mere (gross) negligence does not qualify), and there must be a demonstrable direct link between the misconduct and the delay of generic products entering the market.
• The misrepresented or hidden information must be significant; however, the strict "but-for" materiality standard adopted in other jurisdictions is not required.
• Notably, and exceptionally in this ruling, the patent holder can be held liable even if the patent was never enforced or ultimately not registered. For instance, in this specific case, the patent application was withdrawn post opposition (Israel has a pre-grant opposition system), but the court determined that the deceptive information provided had artificially prolonged the period of patent application, thereby deterring generic companies who were waiting for a clear field before launching their products.

As a result, Sanofi was liable to pay Unipharm restitution of the illicit profits made in the 15-month period during which entry of Unipharm’s generic clopidogrel product was delayed. Interestingly, it is reported that other parties have filed similar lawsuits based on the same cause of action, including at least one health fund. As the claim to unjust enrichment is restitutionary rather than compensatory, it remains to be seen how the lower court (to which the Supreme Court has remitted the Unipharm case to calculate the sums to be awarded) will apportion the illicit profits as between various aggrieved parties.

The decision indicates that the criteria for actionable misrepresentation are more adaptable, and the potential liability includes the patent holder's profits, emphasising the importance of thoroughly reviewing all communications with the ILPTO during the patent process to avoid potential legal repercussions.