The burden of proof. A concept with a well-deserved name.
It can indeed be a real burden for a patent proprietor to find clear and convincing evidence that a patent is infringed; or for a defendant to find clear and convincing evidence that the invention was disclosed by the proprietor before the filing date.
The case discussed today illustrates both situations.
In this case, all litigants are from the Toulouse area. Construction Machines Automatiques Spéciales (CMAS) owns French patent No. FR 2755655, filed in 1996, which expired during litigation. The patent relates to a carton making machine.
The main defendants are: LB Pack, a company created in 2012 a few kilometers away from CMAS; and two ex-employees of CMAS, who also happen to be the founders of LB Pack.
CMAS filed claims of patent infringement and unfair competition against these three defendants. The defendants counterclaimed inter alia for patent nullity.
The first notable question raised in this case is whether the nullity counterclaim was time-barred.
As reported last week, the statute of limitations will no longer be applicable to any patent nullity claim if and when the UPC Agreement enters into force. But in the meantime we have to continue dealing with it and the legal uncertainty that it entails.
Quite surprisingly, the court disposed of this issue in a short paragraph, briefly noting, as if it were self-evident, that the statute of limitations is not applicable to nullity claims when they are raised as counterclaims.
An interesting development indeed, as it was previously held in other cases that nullity counterclaims are to be treated in the same manner as direct nullity claims – with the caveat that, if a defendant is time-barred, nullity can always be raised as a defense (exception) to the effect that the patent should not be enforceable against them, even if the patent is not formally revoked.
Stay tuned to check whether this new approach will hold.
The main invalidity argument raised by LB Pack et al. was that CMAS (formerly CMA) had disclosed the invention before filing by showing and selling so-called Minicompact machines.
By way of an interesting strategy, the defendants requested and obtained an ex parte order from a judge allowing them to perform an inspection by a bailiff with a third party, the company Stendhal, that had bought a Minicompact machine in 1995.
The bailiff’s report proved the acquisition of the machine before the filing date of the patent. But the court was not convinced that this machine anticipated the patent claims. The main reason for this was that the machine was subjected to several servicing operations since 1995, including an important compliance operation in 2004, performed by CMAS. In other terms, the court believed that the machine may have been altered, and that the copy inspected by the bailiff during litigation may not be representative of the machine bought in 1995. Thus, the benefit of the doubt was given to the patent proprietor – who was apparently not required to demonstrate that they had indeed modified the machine in a way which would be relevant to the patent in suit.
The patent was thus declared valid.
Turning now to infringement, the shoe was on the the other foot.
An infringement seizure report had been drawn up by a bailiff. This proved that LB Pack had sold one machine to a third party, Sicaf. But the issue was the description of the allegedly infringing machine.
In fact, the bailiff was only able to inspect an unfinished machine, not yet operational, and with some parts not yet assembled. But, said the court, analyzing whether the characterizing portion of the main claim of the patent was implemented by LB Pack could only be done based on a fully assembled machine.
The other documents and evidence found by CMAS did not make it possible to know whether the subject-matter of the patent claims was implemented or not.
As a result, the infringement claim was rejected.
That said, the defendants were not off the hook, as they were found guilty of unfair competition.
It turns out that the bailiff conducting the infringement seizure found evidence that the two ex-employees who founded LB Pack had extensively copied business and technical information belonging to CMAS before leaving. Also, at the time they left the company, they had accessed and taken advantage of one CAD license belonging to CMAS.
The assessment of the court as to the consequences of these illegal actions was then the following:
Even if it is not demonstrated that LB Pack makes and markets machines which infringe CMAS’ patent, it remains that all the saved technical data belonging to CMAS necessarily and unjustifiably made it easier to create new machines which could be very quickly put on the market by LB Pack as from 2013, on the same market, which conferred them an undue competitive advantage.
Finally, it can be derived from the invoices annexed to the infringement seizure report that, owing to the customer and prospect files copied on the laptop of Mr. […], it was easier for LB Pack to solicit customers and thus market its machine more easily notably with Schneider and Durlin which were already customers of CMAS. The misappropriation of customers is thus demonstrated and is an act of unfair competition and free-riding. In view of the invoices from LB Pack seized by the bailiff, the court knows that 3 machines were sold starting from July 2013 for an amount of 235,000 euros, notably to Sicaf, which was a prospect of CMAS, and that maintenance services were also sold to Schneider and Durlin, customers of CMAS.
Therefore, the acts of unfair competition and free-riding are serious and repeated and the compensation for the harm caused should be set to 80,000 euros.
One remark here is that an infringement seizure is a procedure specifically intended to gather evidence of patent infringement. However, even in the absence of patent infringement, the evidence found during the seizure can be used against the defendant with respect to other claims, notably in relation with unfair competition.
CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 4ème section, March 15, 2008, SARL Construction Machines Automatiques Spéciales v. SARL LB Pack et al., RG No. 14/16600.