Infringement wiped out

It is an infrequent but real pleasure for a litigant to face an opponent who does not fight and does not bring any contradiction to the litigant’s case. But I guess the pleasure is considerably reduced when the opponent in question is a Chinese infringer which vanishes from the radar and might always reappear later in another form.

It seems that the wiper business of the Valeo group was confronted with this situation, as suggested by two judgments from the Cour d’appel de Paris dated April 14, 2015 against two Chinese companies which did not even appoint a lawyer to defend them.

At first instance, both companies were found guilty of infringement of the French part of European patent No. EP 1486134. In one of these cases, the defendant was in addition found guilty of infringing two trademarks as well as of passing off. This looks more like organized piracy than conventional patent infringement.

However, the first instance judges rejected two further infringement claims based on patents No. EP 1485280 (EP’280) and  EP 1565359 (EP’359). Valeo appealed, and the Cour d’appel partly reversed the first instance decisions, finding in favor of the claimants.

This gives us the opportunity to look at how French courts appraise contributory infringement. The relevant legal provision is article L. 613-4 of the Code de la propriété intellectuelle:

Unless the patent proprietor consents, the supply or offer to supply, on the French territory, to another person than those entitled to work the patented invention, of means for implementing this invention on this territory, in relation with an essential element thereof, is also prohibited, when the third party knows or circumstances make it obvious that these means are suitable and intended for this implementation. 

Claim 1 of the EP’280 patent reads as follows:

Wiper device (10), particularly for wiping vehicle windscreens, comprising a drivable wiper arm (14), with a flat wiper blade (16) positionable on the wiper arm (14), which (wiper blade) comprises a wiping rubber (18), the support elements (20) bearing the wiping rubber (18), which (support elements) may preferably be designed in the form of strip-like elongated spring rails and means of connection for connection to the free end (12) of the wiper arm (14), wherein the means of connection comprise a carrier element (22) firmly arranged on the support elements (20) and a connecting element (24) arranged to be partially pivotable in relation to the carrier element (22) and the connecting element (24) is detachably connectable to the free end (12) of the wiper arm (14), characterized in that the free end (12) of the wiper arm (14) presents several, preferably two, tongues (30, 32) extending in the longitudinal direction, which in the installed state engage in tongue receptacles (34, 36) provided on the connecting element (24) and that the tongues (30, 32) are designed in one piece with the free end (12) of the wiper arm (14) and project at least in sections in the direction facing the windscreen.

So, the claim is directed to a wiper device made of several elements, including a so-called “connecting element“. The mention and characterization of the connecting element are underlined above. The defendants marketed wiper connectors in France having the same features as the connecting element of the above claim.

The first instance judges had rejected the infringement claim by simply noting that the products marketed by the defendants did not reproduce all the features of claim 1 of EP’280, since said defendants did not market wiper arms compatible with the (infringing) connecting element.

I would have loved to illustrate this post with Eiffel tower wipers but strangely enough it seems like nobody had the idea of patenting them.

I would have loved to illustrate this post with Eiffel tower wipers but strangely enough it seems like nobody had the idea of patenting them.

This was certainly an incomplete reasoning, since the existence of contributory infringement does not require that the infringer markets all parts of the claimed product, even separately. It is only necessary that the infringer markets one part of the claimed product, provided that this part represents means for implementing the invention in relation with an essential element thereof.

The appeal judges thus held differently. Quoting from one of the two appeal judgments:

[…] The connecting element (24) contributes to the result of the main claim of the patented invention, which is to offer a wiper device comprising a wiper blade arranged on a wiper arm (14) the free end (12) of which comprises two tongues (30, 32) arranged in tongue receptacles (34, 36) provided to that end on this connecting element; this element therefore is a means for implementing the patented invention, relating to an essential element of the invention. 

This finding seems to make perfect sense because, looking at the claimed wiper device, if we leave aside features which are probably common to most wipers (such as the presence of a drivable wiper arm with a wiper blade comprising a wiper rubber, etc.), the features which seem to be really characteristic of the invention are, on the one hand, the presence of tongues on the free end of the wiper arm, and on the other hand the presence of corresponding tongue receptacles on the connecting element.

In other terms, the invention really is about a particular manner of connecting the connecting element to the wiper arm (at least, this is what is reflected in the characterizing portion of the claim).

Therefore, the connecting element having the right shape and connecting features does indeed relate to (or even, is) an essential, i.e. original, problem-solving, element of the invention.

Turning now to the other patent, EP’359, the main claim is the following:

Device (10) for detachably connecting a wiper blade (12) with a drivable wiper arm (14), with the wiper blade (12) having a wiping strip (16) facing the screen to be wiped, at least one strip-like elongated carrier element (18, 20), a slider element (22) connected to the carrier element (18, 20) and an oscillatably mounted connecting element (24) on the slider element for connection to a coupling section (26) of the wiper arm, characterized in that the coupling section (26) has a tongue-like insertion section (28), the connecting element (24) has a receptacle (30) for the insertion section (28) and the coupling section (26) and the connecting element (24) have securing sections (42, 56) for mutual permanent connection, wherein in order to achieve a preinstallation position in which the longitudinal axis of the wiper arm (14) and the longitudinal axis of the connecting element (24) form an angle a in the range of approx. 10° to 100°, the insertion section (28) can be broadly linearly (64) inserted into the receptacle (30) and wherein in order to achieve a final installation position the wiper arm (14) and the connecting section (24) are pivoted towards each other around the contact area between the insertion section/receptacle until the securing sections (40, 42, 56) allow a mutually permanent connection.

What is important to note in this claim, beside the word “oscillatably” which is probably a challenge to most automatic spelling correction softwares (the original claim was in the German language, which may be an explanation), is the features which characterize the connecting element, which I have underlined.

Again, the defendants marketed a connecting element similar to the one recited in the claim, under reference Q-P in one case (the connecting element infringing EP’280 being referenced as Q-B), and under reference FG9 in the other case (the connecting element infringing EP’280 being referenced as FG7)…

And again, the court found that the connecting element was “a means for implementing the patented invention relating to an essential element of the invention“.

This makes a lot of sense just like in the EP’280 case, as this is still a plug/socket type of invention, wherein the innovative features relate to the way two elements are connected together. Therefore, the invention is embodied both in the plug and in the socket – or, in this case, both in the wiper arm and in the connecting element.

In both of its orders, the Cour d’appel pronounced an injunction and awarded damages to the claimants, as expected.

But, most interestingly, the judges additionally ordered that the infringing products be seized and remitted to the claimants. This measure is not very often ordered and it is certainly attributable to the unusual context of the case. In particular, the judges may have thought that it would not be easy for the claimants to recover the ordered damages from the foreign defendants, so that a seizure was probably necessary as a form or relief.


CASE REFERENCE: Cour d’appel de Paris, Pôle 5 chambre 1, April 14, 2015, SASU Valeo Systèmes d’Essuyage, Valeo Wischersysteme GmbH & SASU Valeo Service v. Ningbo Youngsun Auto Parts Co. Ltd., RG No. 13/15794; Cour d’appel de Paris, Pôle 5 chambre 1, April 14, 2015, SASU Valeo Systèmes d’Essuyage, Valeo Wischersysteme GmbH & SASU Valeo Service v. Qeep Auto Spare Parts Ltd., RG No. 13/15800.

A toll on Bell

Acts of infringement are broadly defined under French law, and this definition was further expanded in 2014. If we consider direct infringement of a product, article L. 613-3 (a) of the Code de la propriété intellectuelle defines the acts that are prohibited without the consent of the patent proprietor as:

making, offering, putting on the market, using, importing, exporting, transshipping or possessing for these purposes the product which is the subject-matter of the patent.  

Exporting and transshipping are the two terms which were added in 2014. However, the most interesting terms for the purposes of a legal discussion are probably “offering” and “putting on the market“, as they leave quite a bit of room for interpretation, one recent example being an infringement case brought by Eurocopter, later renamed Airbus Helicopters, against the U.S. group Bell Helicopter, based on French patent No. FR 2749561 directed to a landing gear with skids.

In 2012, the Paris Tribunal de Grande Instance (TGI) rejected all infringement claims, as well as all invalidity counterclaims.

In 2015, the Paris Cour d’appel partly reversed, upholding the validity part of the first instance judgment but reaching a different conclusion on infringement. In particular, the appeal judges had a broader view than the first instance judges on what can constitute an offer for sale.

In 2005, Bell Helicopter presented a first version of a helicopter called Bell 429 to the public:

  • by including it in their catalogue;
  • by showing a model in September 2005 in the good town of Toussus le Noble, which was reported on the website of a helicopter enthusiast (Bell argued that this was a confidential presentation);
  • by putting it up on the website of Rotor & Aircraft, their distributor in France.

The Bell 429, first version, incorporated the claimed landing gear, and this does not seem to have been contested by the defendant:

This literal reproduction was admitted when Mr. Robert G., structure manager of Bell Helicopter, was cross-examined during the Canadian proceedings and it is not challenged by Bell Helicopter Textron in the present proceedings. 

But, said Bell, this first version of Bell 429 was a prototype. The TGI agreed, and noted in particular that when this first version was presented in France, it was not yet approved for sale.

But the Cour d’appel took a different view:

Since this was a prototype, only Bell Helicopter Textron can be responsible for the presentation to the public, which they do not deny. They state that the presentation of September 15, 2005 was confidential. But the public was aware of it, since a third party mentioned it. The fact that this website was not updated has no influence on the validity of the offer made at this date, since the prototype was presented on an internet website accessible from France by a company representing Bell Helicopter Textron in France. 

[…]

Offering for sale extends to any material operation aiming at putting a product in contact with potential customers, at preparing a commercial launch, even if said product, which in the present case was not yet approved, could not be marketed. Indeed, this presentation of a competitor’s product in France may turn away part of the competitor’s customers. In fact, this presentation in France was preceded by presentations at the Heli-Expo congress in Houston, USA and at the annual forum of the American Helicopter Society in Montreal, Canada; and it was followed by short-term marketing of the second version apparatus, the approval of this second version having been obtained partly based on tests made on the first version. 

This offer, in these circumstances, is an act of infringement. 

So, even without any sale, and even if no sale is even possible because the product is not yet approved for sale, a presentation of the product to the public in France is an act of infringement if it can be analyzed as part of a preparation for future marketing. This seems to make sense, as it is certainly possible to start attracting customers even before the first product is actually sold.

Bell developed another line of defense based on article L. 613-5 of the Code, which provides a list of exemptions:

The rights conferred by the patent do not extend: 

a) To acts performed in a private context and for non-commercial purposes; 

b) To experimental acts concerning the subject-matter of the patented invention. 

[…]

However, this line of defense was dismissed by the court, since Bell could not prove that any scientific experimentation had been performed. Therefore, the presentation was deemed commercial in nature.

Having dealt with the first version of the Bell 429 helicopter, the court turned to the second version, which appears to have been designed as a workaround of the Airbus patent. The second version was approved for sale in 2009.

The efficacy of the workaround was put to the test in front of the court – and it failed.

The claimed landing gear was in particular characterized by the presence of skids comprising, in the front, a double curvature inclined transition zone, transversely oriented with respect to longitudinal support stretches, and forming an integrated front cross-piece, offset relative to a front delimitation of a plane of contact of the longitudinal support stretches.

Bell’s non-infringement argument was that there was no cross-piece structurally integrated to the landing gear. Instead, there was a cross-piece fixed owing to connecting sleeves. In addition, the gear was longer toward the front, so that there was no offset of the cross-piece relative to the front delimitation of a plane of contact. Finally, the technical advantages offered by the patent were not achieved, as in particular the weight of the landing gear was increased in this second version of Bell 429.

But the court held that there was still a double curvature inclined transition zone in the second version. Although a piece had been added in the front, the claim did not require the cross-piece to be at the front end of the gear, but only required the cross-piece to be offset relative to a front delimitation of the plane of contact, which was still the case. Regarding the structural integration of the cross-piece, the court noted that said cross-piece formed “a functional set” with the skids, so as to transmit mechanical constraints.

According to the court,

This configuration differs from classical landing gears, the cross-pieces of which are fixed with connecting sleeves and do not form a functional set. 

Without having access to the evidence, it is of course difficult to know whether the assessment made by the court is technically correct or not. But what is remarkable anyway is that the fact that the configuration of the infringing device was similar to that of the claimed invention, while at the same time different from conventional devices, appears to have been a key factor.

But the actual test that French courts are supposed to apply relies on a functional analysis, which is why the Cour d’appel also looked at the function of patented features and investigated whether those were (i) reproduced by the Bell 429, second version, and (ii) could be protected per se (irrespective of the claim wording).

According to the patent, deformations are present on the inclined transition zones, that is, as a whole, and not only on the curves. This technical effect is also reproduced on the second version of the landing gear of the Bell 429 apparatus from Bell Helicopter Textron, as indicated by Mr. PPL who states that the deformations are present essentially regularly on the whole transition zone, the zone with the largest level of constraints being where the cross-piece is fixed on the apparatus. 

[…]

The Airbus Helicopters patent covers, contrary to what is stated by Bell Helicopter Textron (namely that the implemented functions were known from the prior art), novel technical functions (front cross-piece with double curvature inclined transition zones, offset, which works in flexion on several planes and in torsion, related to the structure of the apparatus which transmits part of the constraints towards the skids), consisting in addressing the problem of resonance on the ground, by a better adsorption of forces upon landing. 

The documents communicated by Bell Helicopter Textron to demonstrate that the functions performed by the inclined transition zones of the Airbus Helicopters’ patent would be known from prior art landing gears are not relevant as these documents relate to conventional landing gears which do not have an inclined transition zone and work, unlike the invention, in flexion in only one plane, and it was previously stated that this invention is novel and particularly innovative. 

Quite interestingly, the patent proprietor conducted numerical simulations to demonstrate that the second version behaved similarly to the claimed invention in terms of energy adsorption. These numerical simulations were very criticized by the defendant, but the court did find them convincing.

Also, Bell had apparently submitted that the landing gear, second version, behaved similarly to the landing gear, first version, in the approval procedure for the helicopter in Canada.

The overall conclusion was thus the following:

This second version, despite the presence of a connecting sleeve on the first transition zone, and the addition of an element at the front end of the skid, has the same functions for the same result as the invention, and it is irrelevant that this result is not of the same level of sophistication as the invention’s. It should be noted that this modification of the first version was quickly implemented, apparently so as to react to the infringement lawsuit against the Canadian Bell company, a degraded embodiment making it possible to try to conceal the copying. 

In other terms, the second version was found to infringe the patent as well.

For whom the bell tolls.
For whom the bell tolls.

Another noteworthy aspect of the judgment is that statements and evidence from the parallel proceedings in Canada were abundantly referred to, which is not really usual. Very often, judges do take interest in foreign proceedings but they do not directly cite them. However, in this case, they took note of some relevant statements:

Mr. Robert G., manager at Bell Helicopter Textron, who was heard during the Canadian proceedings, acknowledged in front of the court that this modification was determined further to some quick thinking in order to give the second version of the landing gear a behavior identical to the first version. 

So the takeaway message for defendants could well be that a workaround supposed to work in the same way as a claimed invention is at a risk of being found infringing under the doctrine of equivalence. Unless of course the application of this doctrine can be ruled out because the technical functions at stake are already known from the prior art. At the very least, extreme caution is thus required at the time of the design-around.

As for this litigation, this is probably not the end of the story. First, a petition to the Cour de cassation (supreme court) is very likely in a high stake case such as this one. Second, the quantum of damages still needs to be determined. So, unless the parties settle (which is always an option, especially in the context of multinational litigation), we should hear again about Airbus Helicopters and Bell.


CASE REFERENCE: Cour d’appel de Paris, Pôle 5 chambre 2, March 20, 2015, Airbus Helicopters v. Bell Helicopter Textron Inc. et al., RG No. 13/00552.

Hardcore litigation

A few years back, it was a common thought that standard-essential patents (SEPs) are the jewel in the crown of a telecom IP portfolio. SEPs are patents that are mandatory to work for the implementation of an industry standard, such as for instance the GSM (2G), UMTS (3G) or LTE (4G) standards in the telecom industry. Because it is not possible to make and market devices which do not implement the relevant standards, SEPs may seem like the perfect tool for putting pressure on potential licensees because any non-infringement defense is supposed to be made more difficult.

But nowadays, SEPs probably look much less powerful than they used to.

First of all, patent owners have to abide by the rules of standards-setting organizations, which require them to offer licenses on FRAND (Fair, Reasonable And Non Discriminatory) terms. Defendants have questioned whether it is allowable at all to enforce FRAND-encumbered IP rights against third parties, especially when it comes to the mother of all remedies, namely injunctive relief. This FRAND defense has given rise to complex legal discussions (revolving in particular around the issue of what is a willing or unwilling licensee) which have culminated in the CJEU.

But more fundamentally, the overall outcome of the many smartphone patent wars which have been waged in the past few years, both based on SEPs and on non-SEPs, is far from being positive for patent owners – despite a few resounding wins. Therefore, it seems that SEPs did not deliver on their promise of being easier to win on by practically excluding any non-infringement challenge.

Although SEP litigation has been much more abundant in Germany and the U.S. than in France, one case decided on last year confirms this global trend in a spectacular fashion.

Core Wireless Licensing is a monetizing entity holding a portfolio of more than 2,000 patents acquired from prolific patent applicant Nokia. The majority of these patents were declared as essential for the 2G, 3G and/or 4G standards at the ETSI (European Telecomunications Standards Institute). Core negotiated a license on this portfolio with the Korean giant LG Electronics between 2012 and 2014, without success.

In 2014, Core started legal action in France against LG. Core did not request an injunction but requested that the court should award damages for the past as well as force LG into a license and set the level of royalties for the future.

It is not possible in practice to ask a court to look at an entire portfolio of hundreds or thousands of patents. On the other hand, Core did need a finding of infringement in order to get the court to issue the requested order.

Thus, Core selected a group of five SEPs from the portfolio and claimed that these five patents were infringed by LG.

Why five patents and not just one? Well, the rationale may have been that every single patent is at a risk of being found invalid, or not infringed. But the more patents you pile up, the more unlikely it becomes, on a purely statistical standpoint, that they will all be found invalid or not infringed. The defendant needs to fend off all patents in order to win, while the plaintiff only needs one to get through. So, was this indeed a rock-solid strategy?

The answer is no.

The Tribunal de Grande Instance (TGI), defying the odds, held that there was no evidence of infringement of any of the five SEPs, and rejected all of Core’s requests.

I know that it is always much easier to explain why a strategy failed after the facts, but in my view there are two main circumstances which may account for this prima facie surprising outcome.

Contrary to what you could think, telecom litigation is not always kawaii.
Contrary to what you could think, telecom litigation is not always kawaii.

The first circumstance is that Core requested accelerated proceedings. Note that these were proceedings on the merits, and not proceedings for obtaining a provisional order. But the claimant did request and obtain an extremely tight schedule based on the alleged urgency of the case. Practically speaking, the judge immediately set a date for the trial at the onset of the action: the complaint was served on LG on September 30, 2014, and the pleadings hearing took place on January 16, 2015, the latest written submissions of the parties having been filed respectively four days and one day before that date…

This is as much of a rocket docket as you can possibly think of.

The second circumstance is that the case was extremely complex. Both on a legal standpoint, with five patents at stake and thus five separate validity and infringement discussions, plus a FRAND defense, plus an exhaustion defense based on alleged pass-through rights from the electronic chip manufacturer Qualcomm; and on a technical standpoint, because the five patents were rather abstract and difficult to grasp for a non-specialist.

We can easily imagine that the French judges, with no technical education and no technical assistance whatsoever, confronted with probably hundreds of pages of written submissions to digest containing highly sophisticated developments on signal processing, having heard oral explanations for a couple of hours at best, and having dozens of other cases on their desks to review in the same period of time, were faced with an insurmountable task.

This is reflected in the decision itself. If we take the first patent in the list, one issue with respect to infringement related to two steps in a process which appeared to be in a different order in the patent claims and in the technical specification for the UMTS standard which was relied upon by the plaintiff as evidence of infringement. The court held:

However, as rightly put by the defendants, contending that the operations of data propagation and power modification can be performed in any order in the 3GPP TS 25.213 V.11.4.0 specification is a statement that is not confirmed or justified by any evidence. 

More generally, any claimant has the burden of proving its case. It is indisputable that Core have limited themselves, in order to show that the 786 patent is essential, to filing an analysis drafted by an expert that they have hired and selected, without proceeding in a meticulous, precise and understandable way with demonstrating that the reduction in power described by the patent is necessarily reproduced by all cell phones implementing the 3GPP TS 25.213 V.11.4.0 and 3GPP TS 25.302 V10.0.0 specifications. It should be added that infringement by equivalence requires another demonstration, namely that other means can be used to implement the same patentable result, which is not present either.   

The court’s findings on the other four patents were similar: each time, the court stated that the defendants’ non-infringement defense had not been clearly proven wrong by the claimant.

The bottom line is that demonstrating that an SEP is infringed is not a piece of cake – since a declaration at the relevant standards-setting organization that the patent is or may be essential cannot be taken for granted, as the organization does not check whether this is indeed the case. So, any declaration of essentiality notwithstanding, the burden of proof remains on the patent proprietor to demonstrate infringement, and the TGI’s decision reminds us that it is a heavy one.

Indeed, the wording and technical explanations used in a patent are usually very different from the wording and technical explanations used in a standard specification. Again, unless you are a specialist in signal processing, it can prove difficult to get your bearings.

So, is there any solution at all for telecom patent owners – except waiting for the advent of the UPC, which will likely have more resources and be better equipped for handling complex litigation of this kind, notably owing to the presence of technical judges?

Well, there may be one. Article L. 615-20 of the Code de la propriété intellectuelle provides that the court may

either ex officio or upon request of a party, appoint any consultant for following the proceedings from the case management, and be present at the hearing. The consultant can be authorized to ask questions to their parties or their representatives. 

Judges without any technical background can thus get assistance from a technically skilled consultant in order to make a better-informed decision on a case.

This option has seldom been used by courts and litigants. Does it add a layer of procedural complexity to a case? Yes. Is the outcome of the case highly dependent on the consultant’s skills, not only on the technical standpoint, but also in terms of understanding the patent law issues which are really at stake for the court? Certainly. So, isn’t this a solution which is far from ideal? I would agree, but it could also be the only acceptable one in this particular context.

To finish on the Core case, the court rejected all claims and counterclaims. The invalidity counterclaims were not examined as they were submitted in an auxiliary manner. The court also held that there was no need for setting a FRAND royalty rate in the absence of demonstration of the essential character of the patents; and that there was no need to force Core to file the Nokia / Qualcomm license agreement, again in view of the essentiality finding. Furthermore, the court rejected LG’s counterclaim for damages based on Core’s alleged bad faith in the negotiations, as well as LG’s counterclaims for abuse of dominant position and for abuse of procedure.

The court’s position on the negotiations between the parties is actually noteworthy:

[…] the negotiations between the parties lasted for more than two years, which tends to show that neither of them behaved with enough bad faith to prompt the other one to stop this phase. 

Besides, the parties blame each other so that the court, which does not know everything about these negotiations, is not in a position to state that bad faith is more on one side than the other. 

Again, the message is clear: each party should prove its case, and allegations will not suffice.


CASE REFERENCE: Tribunal de Grande Instance de Paris, 3ème chambre, 2ème section, April 17, 2015, Core Wireless Licensing Sàrl v. LG Electronics France & LG Electronics Inc., RG No. 14/14124.

Cook’in cooked

There is nothing like home-made food. Unfortunately, it seems like kitchens are never roomy enough to accommodate all those nice and fancy appliances for making soups, ice creams, bread, fondue and all that jazz. But as far as courtrooms go, some extra space can always be found for new kitchen appliance lawsuits.

In two previous posts, I discussed a case brought by Vorwerk & Co. Interholding GmbH against various companies responsible for the marketing of food processors of the MyCook brand in France. This case was indeed a good example of how patent infringement damages can be computed in our country.

It turns out that another case was also brought in parallel by the same company, based on the same patent, against other defendants (Guy Demarle Grand Public SAS et al.) responsible for the marketing of another food processor branded as Cook’in. Cook’in was held by the Paris Tribunal de Grande Instance (TGI) as infringing Vorwerk’s patent, just like MyCook – although readers may recall that the appeal judgment on the merits in the MyCook case was set aside by the Cour de Cassation for procedural reasons, so that the Cour d’appel will have to reconsider the issue afresh.

The reasoning adopted by the TGI on the question of infringement in the Cook’in case is very similar to that previously adopted by the TGI and the Cour d’appel in the MyCook case. So, in a way, the recent Cook’in TGI decision is not really surprising; but the decision is a very interesting example of how the doctrine of equivalence is applied in France.

According to well-established case law, two technical means are deemed equivalent if they are of a different form, but perform a same function for a similar result. An additional condition is that the function in question must be protectable.

In this case, claim 1 of the patent reads as follows:

Kitchen machine with a stirrer vessel and a drive for an agitator in the stirrer vessel, wherein the stirrer vessel in its lower region can be heated up, wherein the stirrer vessel is covered by an inserted lid, characterised in that on the inserted lid is arranged a top piece which has a perforated bottom for preparation by steaming of foods, wherein the perforations are formed in a cooking material support of the bottom of the top piece and condensate or moisture formed is conducted back into the stirrer vessel.

This claim was not literally infringed by the Cook’in apparatus for the following reason, according to the court:

The Cook’in machine of the defendants differs from the kitchen machine of the patent in that it does not comprise a lid between the stirrer vessel and the perforated element for steam cooking. This latter element comprises a flange in its lower part on which a seal is arranged, which makes it possible to directly attach it on the stirrer vessel.

The court then made a comparison between how the Cook’in apparatus operates and how the patented machine operates and, applying the traditional test, came to the conclusion that the different technical means that are used did in fact have the same function for a similar result:

[…] Even though the Cook’in machine does not have the insertable lid as taught by claim 1 […], the embossed annular part of the vapor bowl associated with the seal disposed on the periphery provides a means of a [different] form which has the same function, namely ensuring that the cap is above the stirrer vessel, for the same result, i.e. making vapors rise from the stirrer vessel to the upper part of the cap through the dedicated openings and reintroducing the condensates into the stirrer vessel. 

Various arguments were put forward by the defendants in order to show that the Cook’in apparatus did not operate in the same way as the claimed invention, but those were not deemed persuasive by the court.

The defendants also argued that the “inserted lid” feature in claim 1 was an essential feature of the invention which necessarily had to be reproduced in order for the patent to be infringed.

The interesting point about this argument is that this feature of the “inserted lid” was not present in claim 1 as filed and was added during prosecution. So, can the doctrine of equivalence be used at all in this situation? Yes, said the court. The fact that a feature was added during prosecution does not preclude a finding of infringement by equivalence on this very feature:

Vorwerk modified its claim by adding a lid, and the EPO examiner considered that the arrangement of the steam cooking container over the lid was a novel and inventive arrangement. 

Nevertheless, such novelty and inventiveness were acknowledged relative to a prior art where the pierced basket for steam cooking was positioned below the lid. 

Therefore, what was considered as novel and inventive was not so much the presence of the lid, but rather the fact that the steam cooking part was positioned above the stirrer and heating vessel. 

Thus, the scope of claim 1 does not prevent a possible infringement despite the absence of the intermediate lid, if it is established that the means of the Cook’in machine have the same functions for the same result as those of the patent. 

The analysis made by the court here relates to the second part of the equivalence test set forth above, i.e. whether the function of the equivalent means was “protectable“. In the present case, it seems that the function was protectable because the general idea of having a steam cooking recipient arranged above a stirrer vessel was a novel and inventive concept.

There are some devices in which the presence of a lid is absolutly essential.
There are some devices in which the presence of a lid is absolutly essential.

The bottom line of the court’s approach (which is indeed the traditional approach in France) is therefore to assess what the contribution of the invention to the art really is about. A third party’s product implementing the same inventive concept in a different manner will be held infringing, irrespective of the exact claim wording selected by the drafter.

Another interesting point to note about this decision is the computation of damages. Contrary to the parallel Vorwerk v. Taurus litigation, the court (in a different composition) did not appoint an expert but directly proceeded with the assessment of damages. The result of this assessment was similar but not exactly identical to the one made in Vorwerk v. Taurus.

The main point which was discussed was, again, the rate of the indemnifying royalty to be applied. The court was apparently unconvinced by the submissions of either party in this respect and therefore they preferred to rely on the expert’s report from the other case. Although the defendants were different and the infringing device was different, the rationale for determining the proper rate could indeed be applied in a similar manner.

The court noted that three options for the indemnifying royalty rate were offered by the expert, namely 1.5%, 3% and 4.5%. The court explicitly approved the methodology used by the expert, and then came up with its own figure without any clear justification:

In view of the above, in view of the profits made by the defendants, of the advantageous economic situation of [the defendants] due to the marketing of the patented invention without a license, the court can assess the harm suffered without granting the request for additional information, and the indemnifying royalty rate should be fixed to 4%.  

This figure of 4% does not correspond to any of the three options proposed by the expert in Vorwerk v. Taurus, although it is indeed within the expert’s range. But, more importantly, this is not the same figure as the one selected by the court in Vorwerk v. Taurus where a rate of 3% was ultimately chosen by the court! (Again, the composition of the court was different.) Unfortunately, there is no explanation as to why the Cook’in infringement is worth one third more than the MyCook infringement.

At the very least, this inconsistency should be a reminder that courts have a fairly wide discretionary power when it comes to determining the quantum of damages.


CASE REFERENCE: Tribunal de Grande Instance de Paris, 3ème chambre, 4ème section, July 2, 2015, Vorwerk & Co. Interholding GmbH v. SAS Guy Demarle Public et al., RG No. 12/11488.

 

Quel dommage – part 2

In this second post on damages assessment in the Vorwerk v. Taurus case, I will focus on the computation of the royalty rate used for the assessment of damages (the first part of the story is here).

According to established case law, the rate used for assessing damages needs to be based on a reasonable royalty rate that the parties would have agreed on, had they negotiated a license agreement, but then a multiplying factor needs to be applied to the basic royalty rate. This is often termed an indemnifying royalty.

Some believe that, according to a fundamental principle of civil law, damages cannot have a punitive nature as they are meant to repair a harm suffered by a victim (“all the harm, but not more than the harm”). Thus, an indemnifying royalty simply reflects the fact that a defendant found guilty of infringement would not be in a normal bargaining position and would be put at a disadvantage at the negotiation table.

Others are of the opinion that an indemnifying royalty is necessarily punitive in nature. This line of thought in fact seems to be consistent with what the court itself suggests in the Vorwerk damages decision:

[…] One should take into account the detrimental situation that the patent proprietor is in, since they have to put up with an exploitation of the invention that they have not decided. It would thus be unfair to simply apply a royalty rate equivalent to the one that they would have agreed on if they had negotiated a license agreement.

In the case at hand, the court was confronted with three different calculations of a royalty rate.

The first calculation was the expert’s: the defendants’ operating margin before taxes is 9.6%. A normal royalty rate should thus be 25% of this figure, so approximately 2.5%. However, this rate should further be cut in half and then rounded up to 1.5%, taking into account the fact that the importance of the patent was not paramount for marketing the food processors at stake. Then, three possible multiplying factors were offered by the expert to the court, namely 1 (which is not much of a multiplying factor), 2 or 3.

The second calculation was the plaintiff’s: the main difference between this calculation and the expert’s is that the plaintiff requested that the rate be calculated based on the defendants’ contribution margin, which was assessed to be significantly higher than the operating margin before taxes, at 22%. According to the plaintiff, some fixed costs were erroneously deduced by the expert from the margin, since the defendants would have supported these fixed costs anyway.

Then, the plaintiff suggested a royalty rate of 25 to 33% of the above margin, to which a true multiplying factor should be applied. The plaintiff disagreed with the expert’s finding regarding the lesser importance of the patent for the food processors at stake. But on the other hand, they agreed that those food processors in which the infringing steam-cooking cover was only optional (namely the Mycook Pro series) should be subjected to a lower overall rate than food processors in which the infringing steam-cooking cover was mandatory (the Mycook series).

Last (and least, in terms of figures), the defendants’ calculation was based on the proposition that the royalty rate should not be based on the overall turnover of the complete food processors, but rather on the turnover attributable to the steam-cooking cover. The price of the cover represents approximately 8% of the overall price. As far as the royalty rate itself is concerned, Taurus sided with the expert’s proposition of 2.5% to be cut in half – so, 1.25% without any rounding up. Taurus objected to any multiplying factor, by relying on the principle recalled above that there cannot be punitive damages under French law, and by adding that Vorwerk did not suffer from any negative consequence in the absence of evidence of any direct or indirect exploitation of the patent.

A calculator of royalty rates
A calculator of royalty rates

So, in summary, the three royalty rates offered to the court were:

  • 13% for the Mycook processors and 6.5% for the Mycook Pro processors (patentee);
  • 1.5, 3 or 4.5% for all processors, depending on the indemnifying multiplying factor (expert); and
  • 0.1% for all processors, if my math is correct: 1.25 % times 8 % (defendant).

The court selected the middle option, namely the expert’s. And among the three possibilities offered by the expert, they chose again the middle one, namely the 3% rate.

In particular, the court agreed with the selection of the operating margin, and with the proposition that 25% of this margin should represent a valid starting point for the royalty rate. Said the court, this coefficient of 25%

represents an allocation key which is commonly accepted in terms of patent licensing. 

It is indeed common thinking in patent licensing that approximately one fourth to one third of the profit made by the licensee owing to the invention should be paid back to the licensor, while the licensee should keep the rest of the profit. It is rather comforting that the court adopted this real-world pragmatic approach.

The court also agreed with the reduction of the rate suggested by the expert:

[…] In the marketing of the food processors at stake, the part taken by the exploitation of the patent itself needs to be put into perspective and reduced since other intangible assets may have contributed to the sales of these products.

Again, this looks like a sound approach. Traditional French case law on computation of damages was mainly established in situations wherein one invention equals one patent equals one product. But this probably no longer correctly reflects the current state of affairs, IP-wise. Even though food processors are not smartphones which incorporate technologies protected by thousands of patents, it seems plausible that they may incorporate a number of patented inventions – not to mention other sources of value.

Finally, the court applied a multiplying punitive-like factor of 2, apparently trying to strike a balance between a low factor which would be unfair to the patentee who did not agree to the exploitation of their patent, and a high factor which would also be unfair since the patentee did not clearly explain how the patent is directly or indirectly exploited by them and thus how there could be additional economic harm.

As mentioned in the first post on this topic, an additional amount of 6,255 euros was also awarded in terms of financial harm. This additional amount was calculated by the expert (with the approval of the court) based on the long-term interest rate in Germany, and was meant to compensate for the accrued interest that the claimant should have earned based on the collected royalties.

It would be interesting to see whether readers believe that other national courts in other European countries would have likely come up with the same kind of figure or whether there are any marked differences of approaches.


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.