Double Dipping - Zeist 12 March 20081

Double Dipping - Zeist 12 March 20082

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

Double Dipping - Zeist 12 March 20083

Double DippingKan 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

Double Dipping - Zeist 12 March 20084

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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(Explicit) License given to:• Make• Have made• Use• Sell

System of 1-Y components

Patent Claims1-X features

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A cursory Introduction to Case Law in the USA and Germany

Double Dipping - Zeist 12 March 20088

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.,)

• Only applies to sales in the US (Fuji Photo Film)

Double Dipping - Zeist 12 March 20089

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

Double Dipping - Zeist 12 March 200810

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

Double Dipping - Zeist 12 March 200811

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

Double Dipping - Zeist 12 March 200814

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’’

Double Dipping - Zeist 12 March 200815

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

Double Dipping - Zeist 12 March 200816

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

Double Dipping - Zeist 12 March 200820

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