Transcript IP Due Diligence

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Double Dipping - Zeist 12 March 2008
Double dipping?
Kan de octrooihouder iedere conclusie van zijn octrooi
afzonderlijk in licentie geven ?
Voorzitter: Dr. Koenraad Wuyts, Chief Intellectual Property Officer KPN
Nee: Mr. Wouter Pors, Bird & Bird
Ja: Mr. Bart van den Broek, Howrey
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Double Dipping - Zeist 12 March 2008
Double Dipping
Kan de octrooihouder iedere conclusie van zijn octrooi afzonderlijk in licentie
geven ?
Double Dipping
Exhaustion
Indirect Infringement
Free Movement of Goods (in EP)
Antitrust Concerns ( Extension of monopoly beyond)
Misuse of Patent Rights
Contract Law
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IPR Value ?
The Consumer hates IPR !
Free music / Free movies / Generic drugs / Cheap goods / No
software patents / Patent Breaking
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What does this all apply to ?
Nokia - Qualcomm
Handset made of: a (few) Chip(set)s + Cage + Software + …
Car Industry
Car made of: Engine + Wheels + Steering wheel + Cage + Seat + …
• Have Made Rights
• ODM manufacturing
# Compounds in a Carrier Solution
Etc.
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Patent Claims
1-X features
(Explicit) License given to:
• Make
• Have made
• Use
• Sell
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System of
1-Y components
A cursory Introduction to Case Law in the USA and Germany
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Case Law USA
Patent Exhaustion in the US
•
Was juridically created to prevent Patent Owners from collecting Patent
Licensing Royalties from Multiple Entities in one Supply Chain for use of the
same Patented Invention (‘double dipping’)
The last 15 years, the courts have created several Exceptions
•
Only applies to unconditional Sales (LG Electronics, Inc. v. Bizcom Electronics, Inc.)
•
Does not apply to method Claims (LG Electronics ; Bandag, Inc., v. Al Bolser’s Tire Stores,
Inc.,)
•
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Only applies to sales in the US (Fuji Photo Film)
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Avoid the doctrine of patent exhaustion by making the
sale conditional or by drafting some of the patent claims as
method claims.
Also:
• Sales by a licensed component maker abroad will not trigger patent
exhaustion
• The patent owner can still sue the downstream entities in the supply chain
selling the higher end system products in the US
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However… the pendulum is swinging back ?
U.S. Supreme Court reconsidering the exceptions
Quanta Computer, Inc. v. LG Electronics, Inc.
• Reconsidering whether a patent owner may preserve infringement claims
against downstream users of licensed products
• Reconsidering whether the doctrine of patent exhaustion applies to the method
claims
• They may conclude that sales of an essential component as to the claims is still
enough to exhaust the patent rights in other system that incorporate the chip
The Supreme Court is expected to decide the Quanta
case by the end of June 2008. The questions by the Justices suggested
that the Court may (likely) revive the doctrine of patent exhaustion in
the U.S. by limiting the juridically created exceptions
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Indirect Infringement
United States Court of Appeals for the Federal Circuit
BMC Resources Inc. v. Paymentech
September 20, 2007, Decided
• Indirect infringement requires, as a predicate, a finding that some
party amongst the accused actors has committed the entire act of
direct infringement.
• A party cannot avoid infringement, however, simply by contracting
out steps of a patented process to another entity. In those cases, the
party in control still would be liable for direct infringement.
• Solve this issue by proper claim drafting one claim on one single
economic entity in the claim
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Case Law Germany
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• Exhaustion No written Rule in the Patent Act but an established
principle under case law and binding as customary law
• Exhaustion applies to both direct and indirect infringement
 Joint Infringement fully alive
 Reason: Patentee who has placed the Object into Circulation has
received a sufficient Remuneration of his Invention
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Method Claims / Patents (1)
Patentee has a process patent and a device patent
• BGH, Handhabungsgerät (GRUR 1998, 130, 132):
Obiter dictum in a patent nullity case –
,,if a Patentee places a patented Device into Circulation, then he is not
allowed to prohibit to the Purchaser to use the Device the Way it is
intended to be used’’
• BGH, Bauschuttersortieranlage (GRUR 2001, 407, 409):
,,if a Patentee sells a patented device which applies – when regularly
used – a patented process, then he implicitly consents to the use of the
patented process’’
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Method Claims / Patents (2)
• LG Düsseldorf, Levitationsmaschine (Mitt. 1999, 179):
Patent infringement case –
,,if the Patentee places a Device into Circulation which applies – if it
is used the way it is intended to be used the Patentee’s Method,
then the Method Claim is exhausted’’
! Other opinions
• Reichsgericht, Tetzner
• Kraβer, Busse, Schricker
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Patentee has a process patent but no Device Patent
• No exhaustion of the process patent when device placed into
circulation (BGH, GRUR 1998, 130 – Handhabungsgerat; GRUR 1980, 38
(Fullplastverfahren), GRUR 2001, 223 – Bodenwaschanlage)
• Consent or not is a matter of Contract (Interpretation)
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Indirect Infringement
• Landgericht Dusseldorf, 13-02-2007
• Bundesgerichthof GRUR 2004 758 / GRUR 2005, 848
• Essential Means: Adapted for functional cooperation with the essential
parts of the invention
• Specific Claim = Handset
• Only if all essential parts (as to the patent claim) within the handset are
licensed
 Only then exhaustion
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! The Questions for Today !
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1) Can we avoid exhaustion by careful contract drafting?
• Non-Assert Commitment safe ?
• License limited to ONLY
– Make
– ⊕ ⊝ have made
– Sales
– Use
• Territorial Limitations ?
– Component manufacturing USA
– System assembly KR
– Use/Sale EP
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2) Indirect Infringement: Exhaustion yes or no ?
• ‘’Überhaupt’’ Exhaustion for Indirect Infringement ?
– System is licensed (downstream)
– Components are licensed (upstream)
• Exhaustion of System by 1 or all of the Essential Components License ?
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3) Double dipping allowed in case of process/ device
differentiation ?
• What if the Method Claim is a mere remedy of the Device Claim ?
• What if the Method Claim does not contain any (additional) technical
Feature and therefore is a Business Method
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