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 - 30 August 2024 - is below:

UPC

First PI granted by Munich Local Division on the basis of indirect infringement.

On 27 August 2024, the Munich Local Division awarded a preliminary injunction (PI) in an action brought by Hand Held Products against Scandit for patent infringement of EP3866051 (“Mobile computer configured to read multiple decodable indicia”) in relation to Scandit’s 'Data Capture SDK' software (UPC_CFI_74/2024). The Court held that Scandit's software development kit (SDK) more likely than not indirectly infringes Hand Held Products' patent, as it enables customers to create software that utilizes the patented technology. This is the first PI awarded by a UPC Local Division on the basis of indirect infringement. The Court also ordered Hand Held Products to provide a security deposit of €500,000 to cover potential damages to Scandit if the injunction is later revoked at final determination.

 Direct or Indirect Infringement

 In making this finding, the Court addressed the distinction between direct and indirect patent infringement, stating that direct infringement requires a more concrete and certain expectation of patent infringement by end users.

The patent in question contains both apparatus and method claims; however, the accused product is a software development kit. In practice, the SDK has to be incorporated into the operating software of a device with scanning capabilities in order to form an infringing apparatus, or for the claimed method to be formed. To many patent practitioners, this would appear to be a standard case of indirect, or contributory infringement, rather than a direct infringement on the patent. However, Hand Held Products argued, with reference to national case law, that in certain situations direct patent infringement can be found in instances such as this, where the infringer utilises the actions of its customer in the sense of an “extended workbench” and so it would be inequitable to hold the infringer liable only for an indirect patent infringement.

 The Court considered this and first noted that the danger must be taken into account that this could blur the boundaries between the legal consequences of direct and indirect patent infringement. The Court found that liability for direct patent infringement can only be assumed in such cases if a specifically outlined completion of the patented device is to be expected with certainty. This is unproblematic, for example, if a kit for assembly into a complete device is supplied by the customer including assembly instructions and the complete device does not function if it is assembled differently. However, in this case, such a situation did not arise because of the large number of different programming options and possibilities for assembling the hardware components available to the customer. Due to these possibilities, the formation of an infringing device (and performing of an infringing method) was not sufficiently certain for a finding of likely direct infringement.

In relation to likely indirect infringement, the Court summarised the legal test with reference to Art. 26 (1) EPC (which is mirrored in Art. 26 UPCA):

“A patent shall confer on its proprietor the right to prevent any third party not having the proprietor's consent from supplying or offering to supply, within the territory of the Contracting Member States in which that patent has effect, any 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 should have known, that those means are suitable and intended for putting that invention into effect.” (emphasis added)

 The Court considered that the SDK is a means which relates to an essential element of the invention because through its use, customers are able to create a software program which makes literal use of the technical teaching of the claimed invention. The fact that the Scandit does not provide any product images, databases with product images or reference tables with the SDK did not contradict this, as these are not essential for the invention. Rather, what is essential is the ability of the software to juxtapose certain decoded characters with certain product images in a certain way. By means of the SDK, the customer is able to write such software.

 In finding that Scandit also had the necessary knowledge for indirect infringement, the Court referenced videos and documentation published by the Scandit showing that the SDK is offered to customers for use in the claimed invention. This is because it must be assumed that the supplied party will regularly use the means in the manner suggested to them in advertising messages, instructions for use and other documents of the supplier. Scandit had not argued that the situation in the present case was any different.

 The question of the double territorial requirement for indirect infringement ((i) supply of means in country A and (ii) putting invention into effect in country A) was not addressed by the Court. Presumably because the position appears to be clear on the facts, as Scandit offers the SDK in member states including Germany and France and the invention is also put into effect in those territories.

 Injunction: Relative or Absolute Prohibition

 Following the finding of likely indirect infringement, and an analysis of validity which found the patent more likely to be valid than not, the Court then considered what the nature of the preliminary injunction should be. In particular, the Court noted that in the case of an injunction to prevent indirect/contributory patent infringement, it must always be considered whether a relative prohibition or an absolute prohibition should be issued in view of the possibilities remaining for the patent infringer to offer or supply the essential means for other, non-infringing purposes. An injunction in the form of an absolute prohibition prevents the sale of the means essential in any form that is suitable for use in the invention, whereas a relative prohibition allows the sale of the means essential (despite still being suitable for use in the invention) provided other conditions are satisfied (e.g. a warning/instruction to the customer not to use the means essential to implement the invention). In doing so the Court stated that it must be considered whether the risk of direct patent infringement by the customers of the indirect patent infringer can be sufficiently averted by a relative prohibition, for example on the basis of warnings placed on the essential means as they are sold, and conversely, whether and with what effort it appears possible to redesign the means in such a way that it is no longer suitable for use in accordance with the patent (and so could then continue to be sold in a non-infringing manner, in keeping with the absolute prohibition on infringement).

 In this case, it was undisputed that it is possible for Scandit to remove the disputed function from the program library it distributes and from the corresponding advertising statements by means of an update. This would not render the SDK unusable, and it would continue to provide a large number of non-infringing functionalities. Furthermore, the Court noted that it is much more difficult to control the behaviour of a large number of customers, especially since the software developed with the SDK will mostly be used within the customers' internal operations. Taking these circumstances into account, the Court considered an absolute injunction to be justified in the present case as the amendment of the SDK is possible and, in view of the problems described above, also justified to control the lawful conduct of the customers.

 Security for costs

 Under r. 211(5) RoP, the Court may order the provision of adequate security to cover potential damages to a Defendant if the preliminary injunction is later revoked at final determination. This was first considered by the same Local Division in 10x Genomics v Nanostring (UPC_CFI 2/2023) and it was found that security is unnecessary where if no particular difficulties are to be expected in connection with the enforcement of any title for damages, both in view of the applicant's economic situation and in view of the enforcement law in the applicant's home state.

 In this case, Scandit argued that (unlike the 10x Genomics case) proceedings for the recognition and enforcement in the United States of America of a foreign damages award would result in considerable legal costs which, even if successful, would not have to be reimbursed by the debtor. Hand Held Products did not comment on this and so this submission was taken to be undisputed. The Court found that since full compensation must be ensured, such non-refundable legal costs must be taken into account if they are significant. This led to the Court exercising its discretion to order the provision of security, set at €500,000.

SOUTH KOREA

Amendments to pharmaceutical-related laws: establishing a new drug data protection system and expanding the scope for advanced regenerative medicine.

On 1 February 2024, the Korean National Assembly passed two amendments to pharmaceutical related laws which will come into effect on 1 February 2025.

 The amendments to the Pharmaceutical Affairs Act include the abolition of the existing re-examination system for post-marketing surveillance and the establishment of a novel drug data protection system. The present re-examination system has been criticised as it prevents generic or biosimilar companies from using data submitted by developers seeking marketing approval during the re-examination period. The new data protection system will improve the situation for biosimilars and generics by protecting data submitted by developers seeking marketing approval only for a fixed period depending on the type of drug (ranging from 6-11 years from the date of the marketing authorisation).

  The amendment to the Act on the Safety and Support of Advanced Regenerative Medicine and Advanced Biopharmaceuticals provides a relaxation on the use in Korea of advanced regenerative medicine, such as cell and gene therapies. Presently such therapies can only be applied in clinical research for patients with severe or rare incurable diseases, or when no alternative treatments are available. The amendments permit ordinary patients to participate in clinical trials and enable treatment to be provided to patients outside of clinical research purposes (providing safety and treatment plans have been approved by a Review Committee). Furthermore, in an amendment already brought into effect, the range of medical institutions authorised to provide cell and gene therapies has been expanded.

UK

High Court gives guidance on difference between “patent” and “invention” in employee compensation action.

On 12 August 2024, the Patents Court handed down an interim decision in an ongoing action for employee compensation. Dr David Parsons, an analytical chemist, worked for Convatec from 1991 to 2022 during which time various inventions, mostly concerned with silver in antimicrobial products, were patented, primarily in Convatec's name.

 In September 2022, Dr Parsons brought an action against Convatec seeking compensation under s. 40 of the Patents Act 1977 on the basis that he was the inventor and the inventions were of "outstanding benefit" to the company and therefore he was eligible for compensation. This interim decision concerned, among other procedural points, a disagreement between the parties on how the invention for which compensation was claimed ought to be pleaded. The Judge considered that the substantive issue to be resolved was whether, in claims under s. 40(1), the approach to identifying an “invention” should be the same as the approach taken in infringement cases.

 Dr Parsons’ position, relying primarily on Markem, was that in order to identify an invention for the purposes of s. 40(1) a claim-by-claim approach was not appropriate. Although the claims were relevant to confirm that the inventive concept is reflected in the patent, in this case it was necessary to seek “the heart of the invention”, which is not derived from construing the claims.

 Conversely, Convatec submitted that the correct approach was the normal approach under s. 125(1): identify a particular claim; construe that claim; extract from the claim as construed the underlying inventive concept. The Judge preferred Dr Parsons’ position, considering that s. 40(1) draws a clear distinction between an invention and the patent for which is subsequently granted. S. 40(1) requires that an invention must have been made for which a patent has been granted, but does not require that the invention originally made should or must be identified by scrutinising the claims ultimately granted.

 In contrast, s. 125(1) is all about the scope of the protection conferred by the claims of the patent. The Judge considered that it is the “Eureka moment” that enables the claim to protection to be made, rather than the claim which provides the Eureka moment. As such, the term “invention” under s.4 0(1) must have a more general meaning than what is in the claims, with the guidance in Markem being invaluable in pointing towards the material relevant to identify the invention in these circumstances. However, the Judge noted that there had to be a clear link between the invention relied on and the patent granted “for” that invention, and the invention should be objectively identified by reference to the patent or patents relied on.

 The Judge ultimately concluded that a claim-by-claim approach is not appropriate; the invention must be identified from the information in the specification, rather than the specific form of the claims. Dr Parsons was ordered to amend his pleadings accordingly, following which Convatec should amend their defence. The Judge also noted that this a claim of a type where early mediation should be strongly encouraged.