A recent UK High Court action involving Nestec and Dualit (Nestec SA & Others v Dualit Ltd & Others [2013] EWHC 923 – the “Nestec” case) has caused a stir in the patent world, largely down to a ruling that some of Nestec’s patent claims lacked novelty over their priority document.
The Nestec case is also interesting because of its exploration of the issue of indirect infringement, that is the question of whether a patent claim is infringed in cases where the defending party has provided only part of the claimed invention. The issue of indirect infringement is particularly relevant to the consumables market, in which third parties may make and sell replacement parts or components for use with a machine or device made by another. Recent examples include replacement containers for bulk handling devices and now, capsules for coffee machines.
Background
Nestec are the proprietors of a UK patent covering “a [coffee] extraction system comprising a device for the extraction of a capsule (e.g. a Nespresso machine) and a capsule that can be extracted in the device (the coffee capsule itself)”. Dualit supply coffee capsules that are compatible with the Nespresso machines, but do not make or sell the capsule extraction system.
Nestec alleged that Dualit indirectly infringed Nestec’s patent claims by supplying non-Nestec capsules to owners of a Nespresso machine. To decide the question of indirect infringement, Justice Arnold had to assess the facts of the case in respect of four of the key criteria in Sections 60(2) and 60(3) of the UK Patents Act, namely:
- Is an owner of a Nespresso machine, who purchases Dualit capsules, licensed or entitled to work the invention?
- Are the Dualit capsules a “means relating to an essential element of the invention”?
- Are the Dualit capsules “staple commercial products”?
- Are the Dualit capsules “means suitable for putting the invention into effect”?
An answer of No to questions 1) and 3), and Yes to questions 2) and 4) would indicate indirect infringement. The guidance in relation to each question is set out below as it is worthy of review.
Is An Owner Of A Nespresso Machine, Who Purchases Dualit Capsules, Licensed Or Entitled To Work The Invention?
The answer to this question depended on whether a Nespresso machine owner had an implied licence from Nestec to use the machine in any way they pleased, including using it with compatible non-Nestec capsules. Dualit argued that Nestec had not imposed any legal restrictions on purchasers of Nespresso machines and that, in accordance with United Wire [2001] RPC 24, “a person who has acquired the product with the consent of the patentee may use or dispose of it in any way he pleases…”. Nestec countered this and argued that, whilst purchasers were free to use the machines as they pleased, there was no implied license to work an invention that extends beyond the machine itself, and in particular inventions relating to the capsule. Thus, the capsules were fair game for the infringement action.
Perhaps unsurprisingly, Justice Arnold sided with Dualit on this point, succinctly stating that “the purpose of the machine is to make coffee. In order to use the machine for its intended purpose, the purchaser must be impliedly licensed to obtain and use capsules with the machine. Otherwise it would be useless”. Accordingly, an owner of a Nespresso machine did have an implied license to acquire and use non-Nestec capsules with their machine.
Are The Dualit Capsules A “Means Relating To An Essential Element Of The Invention”?
With no clear UK case law for this point, Justice Arnold sought guidance from courts in other European countries. This seems to be an increasingly common (and seemingly sensible) approach for UK patent judges in such situations.
Taking favour with the German approach – which holds that (i) the means in question must contribute to implementing the technical teaching of the invention and (ii) the means must not be of completely subordinate importance – Justice Arnold concluded that the capsules were indeed means relating to an essential element of claim 1. This was because the capsules were required to have a guide edge in the form of a flange, which played a significant role in the way the invention works. Without such a feature, it seems that the capsules may have been considered a non-essential element of the invention.
Are The Dualit Capsules “Staple Commercial Products”?
The next question to consider was whether the capsules were staple commercial products; if they were, there could be no indirect infringement by Dualit.
Taking various case law into consideration, Justice Arnold settled on the definition in Northern Territory of Australia v Collins [2008] HCA 49; namely “that in order to qualify as a staple commercial product, the product must ordinarily be one which is supplied commercially for a variety of uses”. In the present case, the Dualit capsules were initially supplied for specific use with Nespresso machines, and no other use was available. Dualit subsequently introduced their own machines which accept Dualit capsules (amongst others), meaning that their capsules can be used with non-Nestec machines.
It seems that Dualit tried to argue that this subsequent ‘alternative use’ brought their capsules into the above definition of staple commercial products, and therefore exempted them from infringement. This raised the interesting question of: when should an article be assessed for its qualification as a staple commercial product – at the date of the patent or at the date of the alleged infringement?
Ultimately, Justice Arnold did not need to directly answer this question. Instead, he concluded that, irrespective of any subsequent alternative use presented by Dualit, Dualit’s capsules were still limited to use with a small number of specific coffee machines, and therefore could not be considered available for “a variety of uses”. Accordingly, the Dualit capsules were not considered staple commercial products.
Are The Dualit Capsules “Means Suitable For Putting The Invention Into Effect”?
This was perhaps the most noteworthy section of Nestec, as the answer to the question depends on whether a person who purchases a Dualit capsule for use with their Nespresso machine can be considered to “make” a system falling within the claim of Nestec’s patent.
The question of what does and does not constitutes “making” has been considered at length by the UK courts, and was most recently reviewed by the Supreme Court in Schutz vs Werit (The “Schutz” case) in March 2013. Nestec is the first case to address “making” since the Schutz ruling, and it presented a clear indication that the multi-factoral approach set out in Schutz will be followed. Using a near replica of the steps set out in Schutz, Justice Arnold concluded that:
- the capsule is an entirely subsidiary part of the system, based on the fact that: (i) the machines sell for hundreds of pounds, where as the capsules sell for 20-30p, (ii) the machines are intended to last for years, whereas the capsules are used once and then discarded, (iii) the capsules contain a perishable commodity, (iv) the machine can move/function without the presence of the capsule, and (v) the machine’s economic value does not depend on the presence of a capsule;
- the machines and capsules have independent commercial existence;
- as the capsules are consumables, a purchaser would assume they are entitled to obtain any capsule;
- the capsule does not embody the inventive concept of the patent; the invention is all about the way in which the machine works;
- the owner of the machine is not repairing or making the patented invention by obtaining a capsule for use with machine.
Justice Arnold therefore concluded that the supply of the Dualit capsules did not lead to “making” of the claimed system, and therefore that Dualit did not indirectly infringe Nestec’s patent.
Conclusion
The decision appears to be consistent with previous decisions in the UK courts, and continues to emphasise the difficulty that patent owners have in demonstrating indirect infringement where the product relates to consumables. This is further enhanced by Justice Arnold’s comment that “the fact the claims require the presence of a capsule is an artefact of clever claim drafting. In my view, it may be inferred that the reason why the granted claims require the presence of the capsule (whereas the claims in the Priority Document did not) is precisely in order to enable Nestec to argue that the mere supply of capsules constitutes an infringement and thus to enable Nestec to continue to control the market in capsules..”. Stern words of warning to savvy IP practitioners.
Of course, this does not signal the end of IP protection for producers of consumable products. If the consumable product (or any component thereof) possesses a feature which itself could be subject to patent protection, this could avoid the need to demonstrate indirect infringement entirely.
Great care should therefore be taken when assessing potential patentability of any new consumable product in case that product could itself be made the subject of a patent application.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking before any action in reliance on it.
Author
Duncan Nevett
Partner
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