Open Sesame! (part 1)

I have always thought of case law decisions as well as experts’ commentaries on the patentability (or rather the unpatentability) of business methods as a tough read.

Fortunately for many bloggers and authors around the world, the name of one of the most significant recent U.S. decisions in this respect, namely Alice Corp. v. CLS Bank International, has elicited a mass of enjoyable headings and extended metaphors (most of them involving Wonderland one way or another) making the read somewhat more fun.

We in France did have a relatively significant recent decision on this topic as well.

And fortunately for us French bloggers and authors, the decision’s designation, Sesame Active System v. Directeur général de l’INPI, also makes a number of (bad) puns possible.

Even more fortunately for me, my partner and friend Aujain Eghbali agreed to comment on the case, in a two-part post. He does the hard work, I make the bad puns, teamwork at its best.

So thanks to Aujain, the Sesame ruling will now open up for us.

In the case at hand, Sesame Active System filed a patent application before the INPI (French patent and trademark office) in 2012 to protect a communication platform dedicated to light commercial vehicle goods transportation or haulage. The platform receives and compares information related to charterers’ offers and carriers’ capacities and constraints, so as to send most relevant offers to carriers who can thereby optimize their load. The platform has a specific architecture and specific software, and it processes data concrete and specific to vehicle loading. The platform optimizes such vehicle loading and thereby offers many advantages including global traffic reduction.

In 2013, the INPI sent a communication declaring that no search report could be established and that a rejection was to be expected, as the application related to subject-matter excluded from the scope of patentability. As far as we can tell based on the facts set forth in the judgment, it seems that this communication was sent to the applicant after the INPI itself received a similar declaration from the EPO. Indeed, French patent applications which do not claim a foreign priority are sent to the EPO which is in charge of establishing the search report, owing to an agreement between the two offices.

A few letters were exchanged between the patent office and Sesame’s representative, who attempted to resolve the situation with claim amendments and arguments.

But finally, the director of the INPI refused the application on the ground that it was directed to subject-matter excluded from the scope of patentability (in other words, to ineligible subject-matter), as it related to a method for performing mental acts or doing business as such, and the mere fact that it was automated owing to generic computing means was not sufficient to change its nature.

In addition, the director of the INPI considered that no search report could be issued: the only technical elements of the claim were those of a very generic and well-known computing system which was manifestly not novel, without a need to perform any prior art search; and no relevant comparison with the state of the art could be made as there were no technical features.

In 2015, the applicant lodged an appeal before the Cour d’appel de Paris, which led to the decision at stake.

Unsurprisingly for European practitioners familiar with this field of innovation, the Cour d’appel de Paris confirmed that the claimed system may not be patented. The court relied on general principles similar to those usually relied on by the EPO in similar cases; but on the other hand, the court also departed from the EPO’s well-established methodology set in particular by the famous Comvik decision T 641/00.

The key to the Sesame ruling.
The key to the Sesame ruling.

It should first be noted that the grounds on which the INPI can refuse a patent application are listed in Art. L. 612-12 of the Code de la propriété intellectuelle, which notably provides:

Any patent application will, wholly or partly, be refused: (…) 5° If its subject-matter can manifestly not be considered as an invention in the meaning of Article L.611-10, second paragraph;

Art. L. 611-10 which is referred to recites almost exactly the same provisions as Art. 52 EPC, and its second paragraph thus excludes from the scope of patentability methods for performing mental acts or doing business, and programs for computers.

Now, relying on these statutory provisions, the Cour d’appel de Paris held the following:

Even though this exclusion relates to “methods”, it does not follow that the mere definition of the claims with the terms “system” and “process” necessarily leads to patentability […].

The legislator was not concerned with the phrasing of the claims.

The spirit of the statute is to exclude patentability of solutions that are not at a technical level but at a business level.

The Court thus followed the general principle that, in order to get a valid patent, there needs to be a solution of a technical nature (rather than of a business nature) to a technical problem. As such, this is in line with well-established EPO case law: refusal of applications directed to business schemes is regularly approved by the boards of appeal, regardless of the incorporation of the schemes into claims involving computer hardware – such as a computer system claim or a computer-implemented method claim.

After having recalled this general principle, the Cour d’appel de Paris then held that it was not met by the invention at stake:

The claimed “system” is thus characterized by the fact that it comprises sets and subsets of data of a business nature related to deliveries to be performed for charterers (type, delivery place and date) and to haulage offers (capacity and positioning of the vehicle) as well as a CPU which compares this data.

The data “registers” are not characterized on a technical level (format, compression, etc) but only by the type (business-related) of data they contain.

The mere fact that this data is grouped into three sets (type of loading/time/space) of two subsets (charterers/carriers) relates to a mere information organization which does not bring about any technical character as such.

No technical indication is provided on the CPU, which is only characterized by the fact that it performs comparisons, that is, operations of an intellectual nature that consist in putting data in relation one with another.

Therefore, similarly to the EPO in T 172/03 (Order management/RICOH) and T 696/06 (Freight exchange/ELGRABLY), the French judges did not see any technical considerations in the data structures and data processes involved in the method of claim 1, as they were of a business and intellectual nature.

By way of comparison, T 172/03 was concerned with “an improved office system suitable to select, out of a plurality of suppliers, a supplier of expendable supplies of items needed by a section of the office“, while T 696/06 was directed to “a data processing system (x) adapted to confront an offer (o) and a demand (d) in the field of transporting travelers or goods“.

The Court further established that the automation of such data processing of a non-technical nature did not remedy the above deficiencies:

The solution thus relies on a computer system that allows its automation.

Such a system is commonly used in human activities and notably business and thus does not bring about any specific configuration.

It is not characterized at a technical level and is only defined by reference to data gathering and comparison operations that it allows to perform.

This is also in line with EPO case law which consistently holds that the mere automation of a non-technical process cannot be awarded a patent, when conventional systems are at use. See the above-cited decision T 172/03 (Order management/RICOH) and also landmark decision T 258/03 (Auction method/Hitachi).

More surprisingly, although the reasoning would have appeared sufficient with the above considerations, the French judges went a step further by adding the following subsidiary statement:

In addition, the problem raised is not solved by this data processing since the carrier is then only put in front of possible choices that could optimize his profitability.

Although very succinct and arguably not necessary for the court’s demonstration, this consideration is quite something of its own.

It clearly reminds us of the so-called “broken technical chain fallacy” concept laid out by the boards of appeal in T 1741/08 (GUI layout/SAP) and T 1670/07 (Shopping with mobile device/NOKIA). According to this concept, the need for the intervention of a user to solve an alleged technical problem breaks the technical chain and makes the whole chain non-technical.

In summary, the Sesame decision shows that, when the EPO does not grant patents for software for implementing business or administrative methods, applicants probably do not have much more to expect from French courts.

Actually, the accuracy with which the Cour d’appel applied principles also in use at the EPO in this field is remarkable. It is sometimes believed that courts in France tend to set out a “loose” reasoning. But the decision at hand shows that, even in the complex field of business method software patentability, the Cour d’appel de Paris can reach the same general conclusion as the EPO in a precise and well-reasoned manner.

That said, the Cour d’appel de Paris did not follow the exact same approach as the EPO.

Specifically, under European case law, the application should probably have been refused on the ground of lack of inventive step; whereas the Cour d’appel approved the director of the INPI for refusing the application on the ground that it was directed to subject-matter excluded from patentability. Discrepancies of this kind are not a surprise for French practitioners. Usually, such discrepancies between French practice and European practice are apparent at the litigation stage only. But in the present case, there could be consequences on prosecution before the INPI as well.

Thank you Aujain for the detailed account as well as the final cliffhanger. I am looking forward for the second part.


CASE REFERENCE: Cour d’appel de Paris, pôle 5 chambre 2, February 26, 2016, Sesame Active System v. Directeur général de l’INPI, RG No. 15/01962.

Bang bang

Prior user rights are one area of common misconceptions about patent law among the public.

Suppose you teach an IP class in a scientific university, and you tell the students about patent infringement, the first-to-file system, etc. Soon enough one of them will speak up and express the view that there cannot possibly be a right to a patent if the invention was actually made by someone else earlier. “Sorry folks, but there most certainly is a right to a patent if the invention was not publicly disclosed before the filing date“, you reply. “That said, there are what they call prior user rights“. At this point, relief is palpable in the room, until you add: “But hey, don’t count on that, it is only an exemption and it is seldom of any use in practice“.

This last part sometimes gets over people’s heads. Not just students, but also misleading websites that allegedly provide cheap protection to inventors. In one of those (no link included in this post), it is stated that “prior user right is the ideal alternative to patent filing, it makes it possible to legally protect an invention and to continue exploiting it even in the presence of a patent filed later on a similar invention, it also allows you to regularly make your innovation evolve”. Quite a few inaccurate statements in this sentence…

Let’s have a look at what French law actually has to say on the subject, and more particularly article L. 613-7 of the Code de la propriété intellectuelle:

Any person who was in possession of the patented invention in good faith, at the patent filing or priority date, on the territory where the present law is applicable, has the right to personally exploit the invention despite the existence of the patent. 

The right acknowledged by the present article can only be transmitted with the business assets, company or part of the company to which it relates. 

So, this is not a form of legal protection similar to a patent. It is a defense that can be raised against allegations of infringement. It can only apply if the prior possessed invention is the same as the patented one (and not just a “similar” one). Accordingly, the defense may no longer apply if the prior user later changes something in their invention.

Also, this defense can only be raised by the person (individual or company) who possessed the invention before the filing / priority date. Not by anyone else, even if they are related to this person. The defense cannot be raised if the possession of the invention occurred abroad. And finally this “right” cannot be freely transmitted to another person, it is linked to the business assets to which it relates (somewhat like the opponent status in EPO opposition proceedings).

This is only a short summary of course, but it already makes it clear that there are many boxes that need to be ticked before a prior user right can be effectively used as a defense. And of course there is also the issue of proof – the burden being on the defendant who relies on this right. Not exactly “the ideal alternative to patent filing“.

Accordingly, prior user right defense is seldom relied upon, and even more rarely successfully so.

One recent example involved a French patent on an “adaptable and modulable support assembly for automatic/semi-automatic gun“. The two co-owners of the patent were the inventors themselves. Together with their licensee, Société Technique de Rééquipement de Combat, they sued the manufacturer (RDS Industries) and the distributor (OPS Equipement) of an allegedly infringing gun support. The plaintiffs lost both in first instance and on appeal.

If only guns always shot candy bullets like this one...
If only guns always shot candy bullets like this one…

However, a prior user right defense was raised and this part of the defense was shot down by the first instance judges as well as the appeal ones.

The patent filing date was December 17, 2008. The company RDS Industries was founded by a Mr. K only three weeks earlier. Mr. K previously owned another weapon and ammunition manufacturing business, known as L’Armurier Breton (i.e. “the Breton gunsmith“). This was a personal business, and not an incorporated one.

According to the defendants, Mr. K had an employee at L’Armurier Breton who made a prototype back in 2007-2008 having all the features of the patented invention. But they never moved forward with production and marketing due to commercial uncertainty, they said. Anyway, they added, Mr. K possessed the prototype (and thus the invention) when RDS Industries was created, so that the company should benefit from a prior user right.

The Court of appeal admitted that Mr. K possessed a prototype made by his employee but nevertheless rejected the prior user right defense on two grounds.

First, not enough evidence was provided that the prototype or one of the prototypes made in 2007-2008 comprised all the patented features. The defendants’ case was apparently incomplete in this respect:

Even if, when RDS Indstries was created, Mr. K may have possessed a prototype received from his inventor […], nothing shows that this is the prototype that they rely on. The engineer who is said to have designed it is not specific on the identification of the prototype in question as well as on the features said by the respondents to be identical to those of the invention of the patent. In particular, he wrote in his affidavit: “we have made several prototypes from early 2008”. 

This illustrates the major burden of proof issue that those wishing to rely on prior user rights always face. It is certainly fair to demand full and convincing evidence from the defendants, especially since the plaintiffs are generally not in a position to provide counter-evidence of their own on this topic. But documenting and record-keeping practices being what they are, such evidence is usually very difficult to provide.

Second, even if there was some sort of prior user right, it was not proven that RDS Industries could benefit from it:

Even if one admits that Mr. K can claim the possession of the mentioned prototype […], the freedom to exploit that he can benefit from under the first paragraph of article L. 613-7 is personal. It cannot extend to the company that he founded, unless there is a demonstration that the individual transferred this right to the company according to the provisions of the second paragraph of the article (which is not the case). 

The case illustrates that there are many hurdles on the way to prior user rights, and any of them is sufficient to make the defense stumble.

Fortunately for the defendants in this case, and unfortunately for the plaintiffs, the patent was revoked for lack of inventive step. The inventive step discussion is actually rather interesting as well so that I may want to address it in a future post.


CASE REFERENCE : Cour d’appel de Paris, Pôle 5 chambre 2, May 27, 2016, Rogeon, Cambres & STRC v. RDS Industries & OPS Equipement, RG No. 14/03454.

The blind date

I initially thought today’s decision raised an exciting conundrum. But after figuring it out, I must say I feel sort of disappointed. Like someone having heard of the famous curious incident of the dog in the night-time may be underwhelmed to hear that the incident was that there was in fact no incident.

Speaking of dog incidents, the decision is precisely related to serious dog incidents and how to prevent them. Indeed, the invention at stake is in the field of dog collars – the kind that contain chemicals to prevent severe parasitic diseases. The invention is protected by European patent No. EP 1022944 (EP’944), which was initially filed by Hoescht Roussel Vet and later assigned to Akzo Nobel and then Intervet International.

Two companies from the Bayer group jointly filed a nullity suit against Intervet in front of the Paris Tribunal de grande instance (TGI). The patent proprietor counterclaimed for infringement of the patent.

The patent contains three independent Swiss-type claims. The first one is worded as follows:

Use of a pyrethroid in the manufacture of a medicament in the form of a collar for the protection of dogs from bites of phlebotomine sandflies.

The other two are similar except that the use is respectively “for the control of leishmaniasis in dogs“, and “for the control of human visceral leishmaniasis“.

When prophylaxis meets fashion.
If only prophylaxis could sometimes meet fashion.

Bayer argued that the three main claims lacked novelty over an article authored by the inventors themselves. There seems to have been little debate over the fact that, in terms of contents, the article was indeed prejudicial to the novelty of the claims. But the central discussion was rather whether the article belonged to the state of the art in the first place.

The patent claims a priority date of June 18, 1997. The article was published in the issue of Medical and Veterinary Entomology of April 1997But the patent proprietor’s defense was that:

Back in 1997, the publication of this type of document took a certain time and […] contrary to what one could think in view of the journal, it was published for the first time on June 19, 1997, after the priority date of the EP’944 patent. 

Hmm, as far as I can remember, back in 1997 journals were no longer delivered by stagecoaches, but why not. Which evidence did the patentee provide? Two faxes.

The first fax was sent from the editor Blackwell Sciences to one of the inventors on January 6, 1998. The fax indicates that the article dated April 1997 was published for the first time on June 19, 1997. By the way, this is exactly the day after the priority date.

The second fax was sent from the British Library to the original applicant two days later, on January 8, 1998. The fax mentions that the issue of the journal at stake was received by the library on June 25, 1997 and made available to the public on that same date.

The court was not convinced by these messages faxed during the priority year.

The court’s appraisal of the second fax seems to make perfect sense:  the fact that one particular library (however prestigious it may be) received a copy of the journal issue on a certain date does not disprove that other recipients may have received their own copies significantly earlier.

The fate of the first fax is probably more debatable. The court noted that the recipient was one of the inventors, just like the recipient of the other fax was the applicant. These are “persons or companies having a vested interest in the patent […], which weakens the probative value of these documents“.

Now, this is tough! How were the inventors / applicants supposed to proceed in order to determine the exact date of publication of the article other than try to obtain a statement from the editor?

The court also remarked that the context of the faxes is unknown, i.e. Intervet did not explain why these faxes were requested from the editor and the library. I personally do not think that this is critical. What is important is the contents of the faxes. Besides, it can be fairly assumed that the applicant was aware of a possible novelty challenge due to the April 1997 article and thus sought to preserve evidence that the article was not prior art. This does not look particularly suspicious.

Finally and more importantly, the court stated that

This statement was not accompanied by any further evidence confirming the publication delay and was not supplemented by other documents from the edition services. 

So, one isolated piece of evidence was not sufficient for the court in view of the basic and natural presumption that a journal issue dated April 1997 was indeed published during that month.

Now, here comes the conundrum that I mentioned at the beginning of this post. The court noted in passing that

The fact that the examining division of the EPO in the context of the examination of the patent acknowledged the date of June 19, 1997 is not sufficient to convince the court. 

I was curious about this acknowledgment by the examining division, and I therefore looked at the file wrapper of the patent as well as of the priority application (which was also a European application). In both cases, the article is cited in the search report in category X (highly relevant prior art). But then, in subsequent communications from the examining division, it is indeed acknowledged that this document was published on June 19, 1997 and is thus not prior art.

I wondered whether the EPO databases contained additional information on the publication date of the article; and if such additional information existed somewhere, I wondered why the patent proprietor did not make use of the information to strengthen its case.

But upon closer inspection, what actually happened is probably less remarkable. The first document in which the statement by the examiner can be found is the international preliminary examination report (IPER) issued in connection with the PCT application on which EP’944 was based. The exchanges between the applicant and the EPO in its capacity of IPEA (international preliminary examination authority) are not accessible online but it can be assumed that the applicant filed the faxes of January 1998 and made the argument that in view in particular of the first fax, the actual publication date was June 19, 1997. The examiner was likely convinced, which led to the statement in the IPER. This statement was then later repeated in communications from the examining division, not only in the EP’944 examination proceedings, but also in the corresponding examination proceedings in connection with the priority application (which initially puzzled me).

So if my assumption is correct and if the mystery is indeed solved, it simply means that the examining division reached a different conclusion from the French court based on the same evidence – business as usual.

At any rate, the three independent claims were invalidated for lack of novelty in view of the inventor’s article, as well as dependent claims 5 and 6. Dependent claim 4 was found to lack an inventive step over the same disclosure.

The court did not stop there and committed what some professors at the CEIPI patent course like to call overkilling.

Namely, the main claims were also found to lack an inventive step irrespective of the disputed article.

The reasoning in the decision is relatively short in this respect, but it seems that a veterinary thesis published in 1991 was very relevant as it disclosed a plate impregnated with cypermethrin (a pyrethroid) as a means for preventing phlebotomine bites, in the context of leishmaniosis prophylaxis. The only difference between the claimed invention and this disclosure was the impregnation of a dog collar instead of a plate. This was seen by the judges as an obvious development since impregnated dog collars have been known for a long time.

It is also noted in the decision that the German part of EP’944 was revoked by the Bundespatentgericht in April 2015. Furthermore, a parallel lawsuit is pending in front of the Turin court, and the court-appointed expert issued a report in which the patent was considered to lack an inventive step. It seems that the French court has relied on this report to some extent in its own analysis. So, as far as one can tell from the decision, Bayer seems to be sweeping the board across Europe.

But Intervet will certainly get another shot on appeal.

Indeed, it can be seen from the European patent register that a central request for limitation of the patent was filed in July and is currently pending. One main request and two auxiliary requests were filed. Independent claims 2 and 3 were deleted and independent claim 1 was inter alia restricted to a particular compound, deltamethrin.

If the limitation is accepted by the EPO, I guess the court of appeal will have to look at the case starting from scratch…


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre, 4ème section, April 14, 2016, SAS Bayer Healthcare & Bayer Animal Health GmbH v. Intervet International BV, RG No.14/05992.

Terminal lawsuit

Standard-essential patent (SEP) litigation is something of a venture, as already illustrated in a previous post. The “terminal lawsuit” reported in today’s post provides yet further illustration. In fact, not only was this a lawsuit on a terminal, namely an electronic payment terminal, but it also turned out to be terminal for the patent proprietor’s business strategy.

The story begins, as always in such a case, with licence negotiations between a patent proprietor, Koninklijke KPN NV, which I will be happy to simply refer to as KPN, and another big player, France-based Ingenico Group. The standard at stake is the EMV standard, which stands for Europay, Mastercard, Visa. Self-understandably, this is a standard relating to payment cards, payment terminals, and the protocols according to which they interact together.

KPN owns European patent EP 0873554. Ingenico manufactures and markets EMV-compliant payment terminals and KPN argued that the patent is implemented by the EMV standard. KPN sued Ingenico for infringement in front of the Paris Tribunal de grande instance after the licence negotiations failed.

In short, KPN lost. For the long story, we need to refer to the very detailed judgment which is dated April 14, 2016.

A key part of the discussion relates to the determination of the scope of protection of the patent. The judgment contains a number of interesting (albeit sometimes controversial) statements in this respect.

Here is claim 1 of the patent. Not exactly an easy read, but we have seen worse, haven’t we:

Method of protectedly performing a transaction using an electronic payment means and a payment station, the method comprising:

– an initial step, in which:

– the payment station transfers a first random value to the payment means,

– the payment means, in response to said first random value, transfers a first authentication code to the payment station, which authentication code is determined on the basis of at least a first start value, a first random value and first transaction data of the payment means using a predetermined process, the process further producing a first end value,

– a further step, in which:

– the payment station transfers a second random value to the payment means,

– the payment means transfers a second authentication code to the payment station, which authentication code is determined on the basis of at least a second start value, the second random value and second transaction data of the payment means using said process, the second start value being based on the first end value.

The scope of claim 1 was in dispute. Claim 1 generically mentions an “electronic payment means”. But the defendant argued that the term should be construed as only covering a card containing units to be debited, and not other electronic cards such as bank cards.

This claim construction was of course vigorously fought by the plaintiff, since the allegedly infringing payment terminals were used with bank cards. Said KPN:

[…] The embodiment mentioned in the description concerning prepayment electronic cards does not restrict the scope of the invention, which relates to any payment mode using a chip card such as a bank card. The transfer of the balance can be omitted or replaced by an acknowledgment receipt or by a card authentication. […] In the claims as well as the description and drawings, in particular Figure 1 which shows a chip card used to make a payment in a shop and connected to the card carrier’s bank and the shopkeeper’s bank, the expression “electronic payment means” encompasses any type of chip card and not only a prepaid, rechargeable card. This expression, […] just like the terms “chip card” or “smart card”, covers any type of payment card, including bank cards. 

The court started with making a few general remarks on claim interpretation. The following passage in particular, on claim drafting, caught my attention and might leave some patent attorneys flabbergasted:

[…] The structure of the claim is essential for determining the […] scope of protection afforded by the right. The claim preamble sets forth the state of the art, whereas the characterizing part, introduced by the words “characterized in that”, sets out the elements which make up the invention, namely the novel and inventive means taken in their form and function, which apply to the object comprised in the state of the art and benefit from exclusive protection. The characterizing part is only considered “in relation” with the preamble because the latter is the support for the former, and because the means for which protection is claimed apply to the product described in the preamble. This relation, just like the interpretation which is made in the light of the description and drawings, does not result in an extension of protection to elements which cannot benefit from a monopoly for they are comprised in the state of the art; but it identifies the concrete subject-matter of the means which make up the invention. The violation of the exclusive right is in fact characterized not by the reproduction of elements in the preamble but by that of the means claimed in the characterizing part

Many professionals (including myself) are uncomfortable with the idea that the interpretation of a claim should depend on where in the claim the “characterized in that” phrase is placed. The division of the claim into two parts may not necessarily accurately reflect the contribution of the invention to the art: only one piece of prior art is usually taken into account when drafting a two-part claim; the applicant may not agree with the characterizing portion demanded by the examiner but may not have a lot of leeway to challenge his/her position; etc.

Although it makes perfect sense for the court to focus on what the invention is really about, relying on the two-part form to perform this analysis could lead to unfair outcomes.

The court regretted that, in the present case, “the structure of claim 1 does not comply with the implementing regulations since it does not comprise a clearly stated characterizing part“. The court seems to have overlooked that R. 43 EPC explicitly provides that the two-part form should be used “wherever appropriate“, as opposed to in all circumstances. The Guidelines for examination provide a number of examples in which it is not appropriate to use the two-part form.

Actually, after reading this judgment, I think it is certainly advisable to avoid casting a claim into a two-part form whenever possible since this may unduly restrict claim interpretation in subsequent litigation.

The court then turned to a detailed analysis of the contents of the description of the patent.

In passing, the court noted that the file wrapper should not be taken into account in the claim construction process:

[…] Examination proceedings and potential variations between the application and the granted patent are irrelevant in the context of analyzing the scope of the patent, which is solely made considering the latter, because on the one hand it defines the protection from the publication under article 64 of the Convention (since the protection conferred by article 67 to the patent application is only temporary) and on the other hand legal certainty explicitly mentioned in the interpretative protocol of article 69 demands that third parties can determine the extent of protection solely based on reading the patent without having to embark on uncertain interpretation of the applicant’s intent in view of modifications made since filing. 

Makes sense. Although, shouldn’t a distinction be made between statements made by patentees during prosecution that third parties may want to rely on vs. self-serving statements?

Anyway, back to the (complex) analysis of the description and drawings.

The court came to the conclusion that the invention is about a closed dialogue between the card and the terminal, as opposed to one which would include a bank server – as would be the case if the electronic payment means were a bank card.

One of the main arguments raised by the patent proprietor was probably that Fig.1 of the patent does schematically show the interaction of the card and terminal with respective banks. Here is what the court had to say about the drawing:

[Fig. 1] is not explained an the dotted line between the card or terminal and the bank is not defined. The association between the card and the bank and the one between the terminal and the bank are not understandable. The only exchanges described are those between the card and the terminal and then between the banks, which take place respectively during and after the transaction phase […]. And, the sentence “During a transaction there basically does not take place communication between the payment station and the payment institution in question (so-called offline system)” means that there is absolutely no exchange between the card or terminal and the bank, not only because it is defined by the expression between brackets, but also because the sentence is a reminder of the risks of abuse attributable to this lack of communication […].  

And so here is the overall conclusion:

Thus the sole payment means contemplated in claim 1 […] is a card comprising a balance of units to be debited or credited and not a bank card. The fact that the latter is also a payment means and is designated under this generic name in the EMV specifications is irrelevant. The transaction data transferred to the terminal is restricted (with the exception of authentication codes) to the balance on the card. Consequently, the protection of the process does not extend to securing bank card transactions, which necessitates an open and more complex dialogue.  

So all of this did not bode well for the patentee’s infringement claim, since Ingenico’s terminals are meant to be used for payments via bank cards.

They did preserve the patent though, as Ingenico’s counterclaim for invalidity was unsuccessful.

Among others, an auxiliary objection of extension of subject-matter was raised in case the court were to retain a broad interpretation of claim 1. That is a “squeeze“-type, either-I-am-not-infringing-the-patent-or-there-was-some-extension-of-subject-matter-but-you-cannot-have-it-both-ways-type of argument. The court bought the narrow claim interpretation and accordingly rejected the auxiliary objection.

Credit card: the nightmare of teleshopping addicts.
Suggestion for a crosswords definition of electronic payment means: the nightmare of teleshopping addicts.

A few more words on the infringement part of the judgment. First, the court noted a technical difference between the subject-matter of claim 1 and the EMV standard – which I am not going to comment on.

Second, and more interestingly, the court held that there was no contributory infringement anyway, irrespective of whether the patent was implemented in the standard.

The court stated that the statutory provisions on contributory infringement need to be appraised in a very strict manner. In particular, there can only be contributory infringement if “means for implementing the invention […], relating to an essential element thereof” are supplied by the alleged infringer.

Ingenico is accused of selling payment terminals compliant to standards which implement the patented process. […] The essential element [of the invention] lies in the dependence between the second authentication code and the first one. It is the sole novel and inventive element which provides the desired security. And it is exclusively performed by the undefined and unclaimed function of the card. […] The role of the terminal is limited to sending the card a random value to initiate the authentication step. This phase was known from the prior art and is not novel. 

It is true that the first final value is calculated partly based on this random value. But the essential element does not lie in this use but in the conservation of the cryptographic residue from the processing as a first final value, which is the basis for the second code. The terminal is not involved in this process. The fact that it is mentioned in claim 1 (in the part which should actually have been the preamble) is irrelevant. 

The invention covered by claim 1 is implemented by the function of the card, which is the subject-matter of product claims. It is not implemented by the terminal […]. 

Therefore, no matter whether the claims are reproduced (literally or by equivalence) by the EMV standards, the means supplied by Ingenico, i.e. the terminal, cannot generate the result of the invention and does not relate to a constitutive element thereof. 

The way I understand French case law, very schematically, contributory infringement applies if an invention is made of two interacting parts, for instance the wipers discussed here. But if the novel and inventive features of the invention lie in one element only, and if someone then supplies another element to be used with the former, there is no infringement.

I think the case law is clear in this respect, which is certainly a very good thing.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 1ère section, April 14, 2016, Koninklijke KPN NV v. SA Ingenico Group, RG No. 14/11998.

Take the long way home

Some critics of IP French courts sometimes complain that judges have a tendency to take shortcuts and to always look for the easy way out of a case instead of dealing with all difficult questions. Today’s case may prove them wrong, as the court took the long way home instead of the short one, by combining three pieces of prior art in order to arrive at a finding of lack of inventive step – although two or even one would probably have been sufficient.

Italian company Imball Center Srl sued two subsidiaries from the same group ITM Entreprises (hereafter collectively referred to as ITM) for infringement of the French part of European patent EP 1885622 (EP’622). The patent relates to a thermal bag for food, and ITM was accused of providing infringing bags to French retailer Intermarché.

ITM filed a nullity counterclaim on the grounds of lack of novelty and lack of inventive step.

Claim 1 of the patent reads as follows:

A thermal bag made of thermally insulating composite material folded to form a bottom and welded along lateral borders to form a body of the bag with a mouth at the level of which a handle is applied, said handle having a closing device for said mouth, said composite material defining a bottom folded in an accordion-like fashion opposite the mouth of the bag, and said handle having a shorter length than the length of said mouth when the bag is in the flattened position; characterized in that a laminar stiffening element of the accordion-like bottom is disposed inside the bag. 

The lack of novelty argument was based on four thermal bags on sale before the priority date of the patent, respectively called the Intermarché orange bag, the Intermarché red bag, the Carrefour bag and the Thiriet bag.

The court accepted that all bags were prior art, relying on a variety of evidence: catalogues, affidavits, orders, etc. Interestingly, indirect evidence was also relied on in order to prove the date of some bags, such as the presence of an old logo on a bag, or the presence of a phone number in a format no longer in use for years.

However, the court held that the thermal bags in question did not have a bottom folded in an accordion-like fashion, as required by the main claim of the patent. Since the judgment is relatively concise on this aspect, it is not entirely clear whether the prior art bags clearly had a different type of bottom, or whether there was simply not enough evidence that the prior art bags had a bottom as claimed. Anyway, as already explained in a previous post, providing a perfect demonstration in the context of a public prior use is often extremely challenging.

Concerning inventive step – which turned out to be the patent’s killer – the court first noted that the parties agreed on the fact that a so-called Link patent was the closest prior art.

The claimed invention seems to differ from the Link patent due to (i) the bottom folded in an accordion-like fashion, as well as (ii) the presence of the laminar stiffening element.

The court then turned to another reference, called the Moravek patent, which disclosed distinguishing feature (ii), i.e. the laminar stiffening element. The court used a problem and solution-type of reasoning as regards the combination of Link and Moravek:

[…] Although the invention of the Moravek patent differs from the one proposed by the EP’622 patent in that it does not disclose an insulated bag made of a thermally insulating composite material and does not disclose a bottom folded in an accordion-like fashion […], the skilled person, confronted with the technical difficulty of improving the convenience of the insulated bag, would be enticed to refer to the Moravek patent, the objective of which is precisely to allow the support of the bag’s opening during the introduction of produce into the bag on a sales counter, with a strengthening panel mounted on a pivot which is lowered when the bag is opened owing to air pressure. 

OK, and what about the accordion-like bottom? Well the court said the skilled person would turn to the bags on sale before the priority date, and it particular to the Intermarché red bag. But wait a minute, didn’t the court previously state that these bags did not disclose the accordion-like folded bottom? Yes indeed, but at this point the court added that the Intermarché red bag had a folded bottom which was strictly equivalent to an accordion-like one:

[…] It is a fact that the Intermarché red bag comprises folds at the bottom, in order to form this bottom, although the configuration of the folds is not strictly identical to that provided in EP’622. However, although this difference results in the novelty of the invention as stated above, it is not sufficient in itself to characterize an inventive step for the skilled person whereas the purpose of the feature is identical and it provides the same effects. 

[…] It should be noted that the red Intermarché bag, as it is designed, can perfectly be folded into an accordion shape, so that this feature, although it is the result of an additional manual operation as set out by Imball, is reproduced by the bag. Therefore, the skilled person reading the prior art, with common general knowledge, was able to achieve this result without any inventive step by simply looking at and handling products on the market. 

I started this post by saying that the court had taken the long way rather than the short one. Actually, it seems to me that it would have been much easier to start from the Intermarché red bag as the closest prior art, and to simply state that the sole distinguishing feature of the claimed invention was the shape of the folds at the bottom of the bag, which was obvious to achieve for the skilled person using his or her basic skills and common general knowledge. The way I understand the case, Link and Moravek were not necessary for the reasoning.

As a reminder, French courts are strictly bound by the submissions of the parties, and may not really come up with a reasoning of their own. In this case, it seems that the Link patent was considered as the closest prior art by both parties. So it may well be the defendant who actually took the long way – maybe out of fear of contradicting their novelty challenge, but I am just speculating.

The shortest way?
The shortest way?

Now, two other notable points in this judgment.

First, the court also revoked a number of dependent claims, also for lack of inventive step. For most of those, it seems that the Intermarché prior use already disclosed the claimed features – although the court also referred to further prior art references such as a Martineau patent or a Pakzad patent, in a superfluous manner.

Second, although the patent infringement claim obviously failed due to the revocation of the patent, the court did however find the defendant guilty of unfair competition and awarded 500,000 euros of damages to Imball.

The facts were the following: until February 2012, Imball supplied insulated bags according to the EP’622 patent to ITM. Then ITM stopped the business relationship with Imball and started buying bags from a Malaysian company, L&A Packaging. The Malaysian bags marketed in France by ITM were very similar to Imball’s own patented bags. The court also noted that ITM had the complete specifications of Imball’s bags in its hands and had even asked Imball for samples a few months before the end of the supply relationship, for evaluation and testing purposes – which, in retrospect, may look a little bit like a smoking gun.

The court held:

Therefore the defendant had all the information on the characteristics of the bags made by Imball, and decided, simultaneously with the end of the business relationship with Imball, to get supplies from L&A Packaging so as to market bags at a lower cost. They were aware that said bags were a quasi-literal reproduction of the bags produced by Imball. The manufacturer was necessarily able to benefit from Imball’s know how. This characterizes a disloyal attitude, because it led to knowlingly put a large quantity of quasi-identical products on the market resulting in an obvious confusion with Imball’s products. 

In this respect, the mere fact that the bags sold by the defendants have an Intermarché logo is not enough to avoid the risk of confusion. The risk of confusion must be assessed, on the one hand, from the perspective of the public at stake, i.e. in this case professionals in the field, such as those purchasing bags to market them in their distribution network, and not consumers; and on the other hand in view of the technical similarity of the products, which is established in this case, independently of the logo with which they are effectively marketed. 

Most patent infringement complaints comprise an ancillary unfair competition claim. The latter very often fails if the main infringement claim is successful, as the facts underlying both claims are generally similar, whereas case law demands different facts. Nevertheless, an unfair competition claim can be a valuable fallback claim if the infringement claim fails, and if some actual copying has taken place.

Interestingly, in today’s case the evidence for the acts of unfair competition was obtained during a patent infringement seizure. I am always somewhat surprised that this procedure, which is supposed to be exceptional and therefore strictly limited by its purpose (the demonstration of an alleged patent infringement), can be later used to support a different claim.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre, 2ème section, March 11, 2016, Imball Center v. Consommables Et Matériels & ITM Alimentaire International, RG No. 13/12818.