Quel dommage – part 1

As interesting as revocation verdicts may be, patents are sometimes found valid and even infringed.

In such a case, a court in France has two main options for determining the amount of damages: either they decide on the quantum in the same ruling in which the patent is found valid and infringed, or they decide on validity and infringement first and then appoint an expert with the task of making a recommendation to them; it is in view of the expert’s report and of further submissions of the parties that the court then determines the quantum.

Damages computation tends to be more detailed and better reasoned in cases of the second category than cases of the first category. Therefore, I thought it would be interesting to have a closer look at one recent case where use was made of an expert, as an example of computation methodology.

On January 11, 2011, the Paris Tribunal de Grande Instance (TGI) held that Electrodomesticos Taurus SL and other codefendants infringed a European patent owned by Vorwerk & Co. Interholdings GmbH by inter alia importing food processors of the brands Mycook and Mycook Pro into France and marketing those on French territory. The TGI appointed an expert and entrusted him with the task of estimating the proper amount of damages.

This second part of the procedure led to another judgment handed down on September 26, 2014 – yes, this is three and a half years later I am afraid. In this judgment, Vorwerk was awarded 127,367 euros of damages corresponding to lost profits, and 6,255 euros corresponding to financial harm. However, since they had already been awarded 310,000 euros as a provision on damages, they in fact had to pay the difference back to the defendants.

This is probably not the end of the story though, since:

  • there may be an appeal pending further to the ruling of September 26, 2014 (any information that readers may have on this question would be welcome);
  • although the initial validity and infringement verdict was confirmed on appeal on February 15, 2013, the Cour de cassation (supreme court) set aside the appeal judgment on November 25, 2014, due to some procedural violation during the appeal proceedings, and remitted the case back to the Cour d’appel in a different composition.

So, on the procedural standpoint, this is a relatively unusual and interesting situation indeed.

Anyway, let’s go back to this amount of damages of 127,367 euros and how it was reasoned by the court.

Vorwerk had not been working the patent itself – although other companies of the same group had apparently been. Therefore, the “lost profits” that they claimed were in fact lost royalties.

In order to assess these lost royalties, a classical two-step process was applied: first, the turnover generated by the infringement (or “infringing mass”) was calculated; second, the royalty rate was assessed.

As to the first step, the court defined the starting point and the end point of the period of time during which infringement took place. The end point was the date of the first judgment on validity and infringement. The plaintiff requested that posterior acts be also taken into account but this request was denied since such posterior acts were prohibited by the injunction pronounced in the first judgment, so that any breach of the injunction should give rise to specific remedies (to be recovered in different proceedings).

The starting point was taken to be three years prior to the commencement of the legal proceedings against the defendants, in keeping with the French statute of limitation (the limitation period has now been extended to 5 years according to new legislation).

One interesting defense raised by some of the codefendants was that they were not “direct infringers so that the starting point should be postponed as far as they were concerned. Under French law, manufacturers or importers of infringing products are defined as direct infringers and are therefore liable for the infringement regardless of whether they were aware of it. In contrast, distributors, users or marketers of infringing products are liable only insofar as they are aware of the infringement – provided that they are different from the manufacturers / importers.

Here, there were four codefendants: two Spanish companies and two French companies. The two French companies argued that they were not direct infringers, and therefore were only liable when they became aware of the infringement, that is when legal proceedings were started against them.

This argument was unsuccessful, as the court did not want to make any difference between the defendants:

It obviously derives from the judgment of January 14, 2011 that the court held Taurus France and Lacor Export [the French companies] liable for the importation acts and did not distinguish their case from that of Taurus Spain and Lacor Spain [the Spanish companies].

Besides, even though these companies are incorporated under French law and are located in France, it results from the statements provided by the defendants to the expert that Taurus France exclusively buys from Taurus Spain, and that Lacor Export handles order placed in France for Lacor Spain, so that they are co-authors of the acts of importation.

Therefore they are liable regardless of any awareness. Consequently, the starting point for the infringement period should be three years prior to the commencement of legal proceedings against each company, as posited by the expert.

The exact date of the starting point was not the same for all companies as legal proceedings were started against them at different points in time, but the take-away message here is that indirect infringers (such as marketers or distributors) having close ties with direct infringers (manufacturers or importers) are not viewed as actual indirect infringers but rather as co-authors of the acts of direct infringement.

Then the court turned to the determination of which articles were infringing. Here, one issue was that some food processors were sold with a steam cooking cover while others were not. The court analyzed the first judgment and deduced from this judgment that the patent infringement was related to the presence of the steam cooking cover. Food processors sold without a steam cooking cover were not infringing. On the other hand, the defendants also marketed steam cooking covers independently of (the main part of) the food processors.

A steam cooking cover for humans.
A steam cooking cover for humans

The court decided that the number of infringing articles corresponded to the sum of (1) food processors sold with a steam cooking cover and (2) steam cooking covers sold separately. The court’s reasoning was that standalone steam cooking covers were necessarily meant to be used with food processors previously sold without a cover. Therefore, the sum of (1) and (2) should indeed be equal to the number of cover-equipped food processors held by end users.

Based on the definition of the relevant period of time and of the relevant articles, the court was able to compute the overall turnover generated by the infringement – based on the numbers provided in the expert’s report.

In the second post on this topic, we will look at the second main step of damages assessment, namely the computation of the royalty rate.

CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre, 2ème section, September 26, 2014, Vorwerk & Co. Interholding GmbH v. Electrodomesticos Taurus SL, Lacor Export, Lacor Menaje Profesional SL & Taurus France. RG No. 2008/10729.

Red card for Orange

In a previous post, I gave an example of a French patent which was revoked because it was considered as not relating to an invention but to a mere discovery.

Still on the subject of patent eligibility, the same section of the Paris Tribunal de Grande Instance (TGI), chaired by the same presiding judge, Ms. Courboulay, confirmed their relatively harsh stance on this topic, this time in relation with a computer-implemented invention. The judgment was already reported on the Blog du droit européen des brevets but since it is really remarkable I thought it would be worth mentioning it here as well, just in case some readers missed it.

The telecommunications giant Orange brought an infringement action against its competitor Free, based on European patent No. EP 2044797. Unsurprisingly, Free filed a revocation counterclaim, and, as the title of this post suggests, Orange lost the case. Indeed, the court revoked all of the patent claims which were asserted by Orange.

Some of these claims were held invalid due to lack of novelty, but this is not the part of the decision which I would like to discuss. I would like to focus on claims 12, 13, 14 and 15.

Claim 12 read as follows:

Computer program product downloadable from a communication network and/or stored on a computer-readable medium and/or executable by a microprocessor of a mobile terminal (2) including means for detecting the radio field (160) of a base station (16) of a home local area network (150), said home local area network including one or more home equipments (11-14) connected to a home gateway (15), said mobile terminal (2) including means for exchanging data with said gateway via a radio link with the base station (16), characterized in that it includes program code instructions for sending to said home gateway (15), in response to detection of the radio field (160), information relating to the establishment of a multimedia session in progress between said mobile terminal (2) and an applicative system (20), and in that it further includes program code instructions for displaying a list of home equipments sent by the home gateway (15) and means for selecting at least one home equipment (11; 12; 13; 14) in said list.

The court was apparently not very happy with how this claim was drafted. They stated:

Article 52 EPC is perfectly clear and does not require any interpretation: programs for computers as such are excluded from patentability, and this is because they are protected by copyright.  

The emphasis on “as such” was put by the court, and the way I understand it, the expression was interpreted as meaning that programs for computers are “inherently” or “absolutely” excluded from patentability.

But, wait a minute, isn’t this understanding completely at odds with the position taken by the Boards of appeal of the EPO? After all, the Enlarged Board of Appeal, in its opinion G 3/08 on computer programs, stated that:

The present position of the case law is thus that […] a claim in the area of computer programs can avoid exclusion under Articles 52(2)(c) and (3) EPC merely by explicitly mentioning the use of a computer or a computer-readable storage medium (reasons, 10.13).

In other terms, according to the case law that the Enlarged Board endorsed, the wording “as such” in Article 52 means quite the opposite to what the TGI believes, i.e. it means that only pure computer programs can possibly be excluded from patentability, but any mention of a technical feature such as a computer or a storage medium is sufficient to escape exclusion from patentability. To make this easier to understand, the Enlarged Board made a comparison between computer programs and pictures (also excluded from patentability as such), which can be printed on a (patentable) physical support:

a claim to a computer implemented method or a computer program on a computer-readable storage medium will never fall within the exclusion of claimed subject-matter under Articles 52(2) and (3) EPC, just as a claim to a picture on a cup will also never fall under this exclusion.

The TGI was evidently well aware of the EPO case law on the issue but was unimpressed:

It cannot be validly argued, as the sole defense to deny nullity of these two claims, that the practice of the EPO is to admit claims to programs for computers by calling them ‘program-products’.

In fact, it cannot be accepted that a mere trick of language would make it possible to grant patents contra legem. Indeed, the grant of patents to computer programs, even if they are called program products, is not supported by any statute or by any difficulty of interpretation of the EPC, and on the contrary those are clearly excluded as such from patentability.

Claims 13 and 14 contained the same wording of “computer program product” as claim 12 and they were therefore smashed for the same reason.

As for claim 15, it was directed to a “storage medium storing the program according to any one of claims 12 to 14”, but the court found that this does not make any difference:

In this case, and in view of the way claim 15 of the EP’797 patent is drafted, it appears that the storage medium does not have any particular technical feature. It is again a dressing which does not make it possible to escape the exclusion from patentability which concerns computer programs. There is in fact no more information on this storage medium in the description of the patent, and Orange has obtained a protection and the consequent monopoly on an object the only function of which is to contain computer programs which are excluded from patentability.

Claim 15 was therefore canceled as well.

A storage medium suitable for storing non-inventions.

Scathing comments in a ruling often add some spice to it, and Ms. Courboulay did not skimp on those. In this respect, her statement on the EPO’s contra legem practice of granting patents to computer program products is nothing short of astonishing. I will leave it up to the readership to decide for themselves whether the red card mentioned in the title of this post should in fact be shown to her court rather than to the claimant.

But beyond this parfum de scandale, applicants should keep in mind that, at least according to latest case law, claims directed to computer programs seem to be simply outlawed in France. Therefore, they should definitely include method claims in their French or European applications if they want the novelty and inventive step of their inventions to be assessed at all.

In view of the very firm stance taken by the court in Orange, I would not bet on any argumentation advocating the technical character of computer program inventions in front of the TGI.

As to the significant discrepancy between French case law and EPO practice, there are other striking examples (not just in the software field), and I will probably come back to this issue in future posts.

CASE REFERENCE: Tribunal de Grande Instance de Paris, 3ème chambre, 1ère section, SA Orange v. SAS Free & SAS Freebox, June 18, 2015, RG No. 14/05735.

Revocation out of thin air

Patent eligibility has been quite a hot topic in the U.S. since the Alice, Myriad and Mayo Supreme Court decisions. Whether a patent simply attempts to preempt an abstract idea or a law of nature or whether it is truly directed to an application of those – worthy of patent monopoly – is, as far as I can understand, the million-dollar question that everyone now has to struggle with on the other side of the Atlantic, and will have to struggle with in the foreseeable future.

Over here, on the Old Continent, things look pretty different, on the face of it. The EPO has set a low threshold for the so-called “technical character” requirement, actually such a low threshold that it is barely a threshold at all. Of course, this is not the end of the story, because “non-technical features as such, do not provide a technical contribution to the prior art and are thus ignored in assessing inventive step” as the November 2014, soon-to-be-revised Guidelines for examination nicely put it. So, inventive step can be a real challenge, but patent eligibility is at least one concern that applicants can forget about, right?

Well, we may have to think again, in view of a judgment from the Paris Tribunal de Grande Instance (TGI) of July 3, 2014.

This case is an action for revocation brought by a company named Evinerude against French patent No. FR 2822237 assigned to Aair Lichens. According to the first and only claim of the patent, the invention relates to the use of lichens exposed to sources of emission of chlorinated compounds, and used in the form of transplants or cultivars, for making quantitative measurements of polychlorodibenzodioxine (PCDD) or polychlorodibenzofurane (PCDF) compounds and evaluating their impact on the environment.

Indeed, it turns out that lichens are good indicators of the presence of PCDD and PCDF air pollutants. Thus, by measuring the amount of these chemicals in lichen samples, it is possible to evaluate the level of atmospheric pollution that they have been exposed to.

An elegant breathing device which could become handy in case of a polychlorodibenzodioxine or polychlorodibenzofurane leak.
An elegant breathing device which could become handy in case of a polychlorodibenzodioxine or polychlorodibenzofurane leak.

It looks like the PCDD and PCDF-loaded Parisian air was not favorable to Atlantic coast-based Aair Lichens, since the TGI revoked the patent based on Article L.611-10 of the Code de la Propriété Intellectuelle, which mirrors Article 52 of the European Patent Convention and provides a list of things which are not inventions, discoveries being the first item in the list.

The court started by recalling the long-standing principle that

A mere discovery cannot be patentable. Actually, the discovery preexists man’s intervention, whereas the invention is the result thereof. A discovery thus does not bring any novelty to the state of the art since it is at the stage of sheer knowledge. However, although the subject-matter of a discovery is not patentable, a practical application can give rise to the grant of a patent.

In this case, the invention relied on the discovery of a natural phenomenon, namely the absorption of PCDD and PCDF compounds present in the ambient air by lichens. The patent proprietor’s position was however that the patent was not directed to this discovery per se but rather to process steps of measuring the amounts of these chlorinated compounds in lichens and then evaluating their impact on the environment. But the court was not convinced, and replied as follows:

As it is drafted, the only claim of the patent does not protect the process steps but merely the statement that measurements can be made to evaluate the impact on the environment, which is not a process invention. The technical means for carrying out this statement could be protectable if they were described and claimed as such.

The patent was thus revoked.

To me, this looks more like a US-type approach than an EPO-type approach. After all, it seems that the court’s reasoning could be applied in a similar manner to many use claims which are routinely granted by the EPO.

An important caveat is that the patent at stake was somewhat light, with four pages of description and a single claim. It appears from the file wrapper that the application was drafted and prosecuted by the inventor himself, which is always risky. In fact, it is not every day that one comes across a claim starting with the words “the invention relates to”. The text does contain an example of measures performed in samples taken from various geographical areas, but there are no detailed explanations in the text on a possible process to be implemented. Also, the court noted that the skilled person, at the filing date, already knew that the pollution of a site by PCDDs and PCDFs results in atmospheric contamination, and that these compounds are easily absorbed by plants such as lichens [sic, I am not sure lichens can be considered as plants] so that these are good pollution indicators.

In other terms, one could infer from the court’s findings that the patent could also have been revoked for insufficiency of disclosure or lack of novelty or inventive step.

It is difficult to assess to what extent these flaws played a part in the TGI’s decision. Would the situation have been different if the patent had contained more technical information or if the prior art had been less relevant? It is certainly possible. But on the other hand, the way the claim was drafted did seem to play a critical part in the decision.

Therefore, when an invention relates to an application of a natural phenomenon, applicants would be well advised to draft at least some claims reciting the invention in terms of practical process steps and not just use claims broadly covering the basic concept of the invention.

CASE REFERENCE: Tribunal de Grande Instance de Paris, 3ème chambre, 1ère section, Evinerude SARL v. Philippe Giraudeau & SARL Aair Lichens, July 3, 2014, RG No. 10/14406.