Yorikatsu Hohokabe Senior Advisor OBLON Gaikokuho Jimu Bengoshi Jimusho Tokyo, Japan
Hideaki Kobayashi Attorney-at-Law OHNO & PARTNERS Tokyo, Japan
Dirk Schüßler-Langeheine Attorney-at-Law Hoffmann Eitle Munich, GermanyGlobal IP practitioners need to know what is hap pening in major market segments to protect and enforce their IP rights for their business activities or their clients’ business activities, given the most recent case decisions. They may need to change their IP strategy for better accommodation in such a legal environment to increase present and future business competitiveness.
This workshop session, which was scheduled as Workshop No. 11 at the LESI Annual Conference 2024 (Madrid) on April 30, 2024, provided information regarding the latest case decisions in the U.S., Europe and Japan. This panel was originally planned to be moderated by Dr. Yorikatsu Hohokabe, but was actually run as jointly moderated by Yorikatsu, followed by Dr. Dirk Schüßler-Langeheine.
Panel:
• Dr. Yorikatsu Hohokabe, Senior Advisor, OBLON - co-moderator
• Dr. Dirk Schüßler-Langeheine,* Attorney, Hoffman Eitle - co-moderator
• Mr. Hideaki Kobayashi, Attorney, OHNO & Partners
*Special thanks to Yuki Onoe, Patent Attorney, and Frank J. West, Attorney at Law and CLP, both Oblon, McClelland, Maier & Neustadt, L.L.P. for their support of the U.S. part of the presentation at the workshop and of this manuscript. Also, special thanks to Dr. Maximilian Konrad, German Attorney-at-Law, Hoffmann Eitle, for his support of the European part of the presentation at the workshop and of this manuscript.
Importance of Inventorship—Signicant impact on patent infringement litigation learned from U.S. case decisions.
Three recent case decisions were addressed:
Background
Hormel was working on a project to improve its microwave cooking process for precooked bacon. Hormel employees met with David Howard, an employee of Unitherm, the predecessor of HIP, to discuss the potential processes and HIP’s cooking equipment. Eventually, HIP and Hormel entered into a joint agreement to develop an oven having a two-step cooking process; the first step to preheat the meat and then a higher temperature cooking step.
Hormel conducted testing on its own that eventually resulted in a two-step cooking process; the first step involving
preheating the meat in a microwave oven and the second step involved cooking the meat in a superheated steam oven.
Hormel filed a patent application on this two-step cooking process that named only its own employees as inventors. The claims of the issued patent recite the use of a microwave oven, infrared oven or hot air for the preheated step.
District Court
HIP sued Hormel, asserting that Howard was a joint inventor, and that HIP was a co-owner of the patent. Among other reasons, HIP asserted Howard was a co-inventor based upon the contribution of the idea of using an infrared oven in the preheating step. Howard alleged that during the collaboration he suggested the use of an infrared oven in the preheating step.
The district court found that Howard was an inventor solely based upon the contribution of the infrared preheating step, and that Howard’s conception of that idea was confirmed by a Hormel inventor.
Federal Circuit
Hormel appealed, arguing:
• the infrared preheating step was well known and part of the state of the art;
• the contribution of the infrared preheating step is insignificant when measured against the scope of the full invention; and
• there was not sufficient corroboration of Howard’s contribution.
HIP argued:
• While infrared preheating may have been disclosed in a prior patent publication, the publication was obscure and not widely known and therefore did not form part of the state of the art.
• The district court found that Howard’s contribution was significant enough to warrant him being a joint inventor.
The Federal Circuit found:
• That Howard’s contribution was insignificant when compared to the full scope of the invention, and he was not an inventor because:
• Infrared preheating is only mentioned once in the specification as an alternative to the use of a microwave oven.
• It is only mentioned once in a single dependent claim as an option in a Markush group for preheating.
• Preheating in microwave ovens is extensively disclosed and claimed and all figures and examples only disclose the use of a microwave oven in the preheating step.
Lessons Learned:
Contribution insignificant in comparison to full invention
• While a court may correct inventorship after issuance, the procedure is adversarial and expensive.
• The scope and quality of the alleged contributions incomparison to the scope of the claimed subject matter will influence the inventorship determination.
• During prosecution, to avoid claims of joint inventorship, the applicant should carefully draft claims to exclude the contributions of others. Alternatively, as here, claims of co-inventorship may be diminished by making the potential contributions of others to be optional limitations that do not feature prominently in multiple claims or the specification.
• Note the Federal Circuit made its decision solely on the basis of the significance of the contribution and did not rule on Hormel’s arguments regarding whether Howard’s contributions were merely a recognition of the state of the art or whether there was insufficient corroboration.
• While the panel did not rule on these specific arguments, the facts alleged may have influenced the panel’s decision regarding the significance of the contribution.
Background
Blue Gentian sued Tristar for infringement of design and utility patents related to an expandable water hose.
Tristar was a licensee of patents owned by Ragner Technology Corporation and counterclaimed to correct inventorship of all patents-in-suit to name the owner of Ragner Technology Corporation, Mr. Ragner, as an inventor of all of Blue Gentian’s asserted patents.
Ragner Technology Corporation had been seeking investors to bring an expandable hose to the market. Mr. Ragner met with Mr. Berardi, the founder of Blue Gentian and the sole named inventor on all the patents-in-suit, to seek investment.
Mr. Ragner has a BS in physics and a MS in aerospace engineering and had designed many expandable hose prototypes and was a named inventor on patents for expandable hoses. Mr. Berardi has a degree in sociology and at the time of the meeting had no experience designing or constructing hoses.
Before the meeting, Mr. Berardi watched a video demonstrating Mr. Ragner’s expandable hose product. He testified that after watching the video he conceived of his invention. During the meeting, Mr. Ragner also provided a document detailing the manufacturing process for his expandable hose and its internal components. Mr. Ragner also demonstrated a prototype at the meeting.
Mr. Ragner testified that Mr. Berardi asked whether a wire spring in the hose could be replaced with elastic and Mr. Ragner responded by saying that his frst two prototypes were constructed using inner surgical tubing for the retracting force rather than a spring.
Shortly after that meeting, Mr. Berardi went to Home Depot to buy supplies to build his first prototype similar to the prototypes described by Mr. Ragner having an inner elastic tube to provide a retracting force and an outer tube that water ran through.
Mr. Berardi filed his first patent application within three months of the meeting and listed himself as the sole inventor.
District Court
After an evidentiary hearing where this information was disclosed, the district court granted judgment in favor of Tristar and ordered that Mr. Ragner should be listed as an inventor on all patents-in-suit, effectively nullifying Blue Gentian’s claims of infringement since Tristar was a licensee of Mr. Ragner’s patent rights to expandable hoses.
Federal Circuit
The Federal Circuit affirmed the district courts’ finding that Mr. Ragner should be listed as an inventor because he had contributed to the conception of at least one claim in each asserted patent, and that Mr. Ragner’s contributions were what permitted Mr. Berardi to overcome prior art rejections. The Federal Circuit further found that his testimony was sufficiently corroborated by his knowledge of expandable hoses and documentary evidence predating the meeting.
The Court further found that the detailed information communicated during the meeting were sufficient to show that he conceived at least part of the claimed invention(s) and communicated those aspects of the invention to Mr. Berardi.
Lessons Learned:
Inventor need not have contributed to every claim or to all aspects of claims.
• It is possible to challenge inventorship/ownership as a strategy to negate infringement allegations.
Background
Ono Pharmaceuticals obtained six patents related to a method of treating cancer by administering antibodies targeting speciic receptor-ligand interactions on T cells. Ono Pharmaceuticals’ application only listed a professor at Kyoto University, Dr. Honjo, and other researchers in Japan, as inventors.
Dana-Farber filed suit alleging that one of its employees, Dr. Freeman, and an employee of the Genetics Institute, Dr. Wood, who had shared information from its investigations on similar subject matter with Dr. Honjo, should also have been named as inventors on Ono Pharmaceuticals’ patents.
District Court
The district court found that Drs. Wood and Freeman had made significant contributions to all six of Ono Pharmaceuticals’ patents and that they should have been named as inventors on all six patents.
Federal Circuit
The Federal Circuit found that Dr. Wood and Dr. Freeman did not participate in all experiments that led to the conception of the claimed invention, but that does not negate their overall contributions.
Ono’s argument that Dr. Wood’s and Dr. Freeman’s contributions were speculative because the experiments were not in vivo is misplaced.
Inventorship is determined by conception which occurs when an idea is definite and permanent enough that POSITA would understand the invention.
The inventor need not know if the invention will work for the intended purpose for conception, that is part of reduction to practice.
The non-obviousness of Ono’s patent claims over Dr. Wood’s and Dr. Freeman’s provisional application is not relevant to whether they made significant contributions to the claimed inventions in the Ono patents.
Joint invention is not negated by a public disclosure of less than the complete invention. Complex inventions are often the result of partial contributions to conception over a period of time and there is no reason to discount genuine contributions because a portion of the work was disclosed prior to the complete conception of the invention.
The documentary record corroborates Dr. Wood’s and Dr. Freeman’s contributions and communication of those contributions to Dr. Honjo.
Dr. Wood and Dr. Freeman are joint inventors.
Lessons Learned:
Not every inventor contributes equally
• Informal collaboration between researchers at different organizations may unintentionally result in joint inventions.
• Public disclosure of less than the complete invention does not nullify an inventor’s contributions.
• Joint inventors need not contribute equally to the conception of the invention.
Comments in Summary
• Inventorship in the United States is very important and must be accurately assessed at the time a patent application is filed.
• U.S. inventorship determination requires an understanding of the scope of the invention under U.S. law and the significance of the contribution of each alleged contributor.
• Improper inventorship may result in unnecessary and expensive litigation that could invalidate the patent, nullify claims of infringement, create co-ownership issues, and result in awards of damages.
• Communicating information regarding the state of the art or other information well known in the art is not an inventive conception entitling one to be an inventor.
• Claims of joint inventorship must be corroborated and proven by clear and convincing evidence.
• It may be possible to avoid claims of joint inventorship by limiting the scope of claims and the disclosure in a specification.
This case relates to cross-border infringement. The patented claim recites a comment delivery system comprising a server and a user terminal. In the accused system, the server located in the U.S. sends HTML Files to user terminals in Japan. The Tokyo District Court found that the whole system satisfies all elements of the patented claim, but dismissed the patentee’s claim because the “comment delivery system” is not produced in Japan. The district court held that, in order to qualify as “production” of the system, it is necessary to create a new product in Japan that satisfies all the constituent requirements of a patented invention.
In appeal, the IP High Court reversed TDC’s judgment and granted injunction and damage compensation. IP High Court held that, in the case wherein the server exists outside Japan, the following factors should be considered in finding “production of the system” in Japan: (i) specific manner of said act; (ii) the function and role played by the elements, which exist in Japan, from among the elements constituting said system; (iii) the place where the effect of said invention can be obtained from the use of said system; and (iv) the effect of such use to the economic interests of the patent holder of the invention. In this particular case, the IP High Court found “production” in the territory of Japan at the time when a HTML file is transferred to the user terminals in Japan.
In the event of including activity outside Japan, the court recently tends to consider circumstances to decide whether or not they constitute infringement of a JP patent (e.g., IP High Court, 2022/7/20 [Video delivery program]; Tokyo District Court, 2020/9/24 [Monosodium glutamate]). In a network-related invention, it is not easy to avoid infringement by simply providing a server outside of Japan, so it may be necessary to consider licensing of network-related patents even if the server is not located in Japan.
This case is an appeal to JPO’s decision of invalidating all claims, rejecting a claim amendment request. The independent claim provides “A composition comprising HFO1234yf, HFC-254eb, and HFC-245cb (except for a composition comprising 1 percent by weight or more of HCFC-225cb).” (underline amended). JPO held that the specification has no description (including the amount) of HCFC-225cb, so the claim amendment introduces a new technical matter (thus not allowed under JP patent law).
The IP High Court reversed JPO’s decision, holding that the claim amendment request is allowable, holding that claim amendment excluding a composition comprising 1 percent by weight or more of HCFC-225cb cannot be deemed to cause any change in the technical matters (i.e., a new technical matter is not added). The IP High Court further held that JP patent law does not require to exclude only a portion identical to the invention of the prior application.
Lessons Learned
It is possible to easily overcome a rejection if the “excluded” feature is an essential component of the prior reference, and such “excluded-type” claims are increasing in Japan. The requirement for claim amendment after issuance is not so strict in Japan, so claim amendment is an effective method to overcome prior references for a patentee.
In September 2023 the Unified Patent Court issued one of its first decisions in provisional injunction proceedings, which also touched upon an element of cross-border infringement. In the 10xGenomics v. Nanostring Technologies case,** the defendant raised the non-infringement argument that part of the contested analytical method was performed by cloud-computing outside of the UPC territory.
The UPC Munich Local Division however, rejected this defense, stating that the data analysis steps conducted by cloud-computing abroad were merely additional analytical steps for the sake of the commercial product offered by the defendant, but not part of the patent protected method. Insofar as the patent claim described these further steps as part of the purpose of the patent protected analytical method, this description of mere purpose was irrelevant for determining a patent infringement.
While the case continued at the appeal stage and was decided by the UPC Court of Appeal, it did not (have to) deal with the impact of the extraterritorial cloud-computing element as the requested PI was already denied by the Court of Appeal for other reasons.
Lessons Learned
While the UPC has not decided on the scope of liability for acts (partly) conducted outside the territory of patent protection thus far, the first instance decision of the Munich Local Division seems to suggest that cloud-computing abroad as such does not present infringement, at least if the cloud-computing step is not material for the question of patent infringement.
**UPC CFI 2/2023, for a detailed case report see also https://www.hofmanneitle.com/ja/news/2024-01-03-case-
report-cfi-2-2023.
In the Ultrasonic Transducer case decided by the German Federal Court of Justice*** the defendant supplied ultrasonic transducers from Taiwan to numerous customers worldwide, including a Renault/Dacia production facility in Morocco.
The plaintiff informed the defendant by an authorization request that Renault/Dacia vehicles produced in the Morocco factory with the transducers supplied by the defendant are offered and supplied in Germany. After the receipt of this letter by the defendant, vehicles containing the transducer continued to be offered and supplied in Germany.
In general, liability for patent infringement does not require that the defendant performs one of the patent infringing acts specified in Section 9 sentence 2 of the German Patent Act by itself.**** Rather, a party can be held liable for (contributing to) patent infringement when it merely causes the infringement of the IP right by not preventing an infringement of IP rights by a third party which they have facilitated, although such act to prevent infringement could have been expected from them.*****
A foreign-based supplier of a product protected by a domestic patent who supplies a product to a customer who is also based abroad is not automatically obligated to check or monitor the further use of the supplied goods by the customer. However, such an inspection or monitoring obligation may arise if there are specific indications for the supplier that an onward delivery to the domestic market appears likely.******
Such specific indications may arise, for example, from circumstances such as:
• The supplier has obtained knowledge of an actual or imminent delivery in Germany,
• The quantity purchased is so large that it can hardly be distributed exclusively on markets without intellectual property rights,
• The purchasing behaviour correlates conspicuously with a perceptible and potentially infringing activity of the purchaser on the domestic market.
In the Ultrasonic Transducer case, the specific indications for the defendant were
• The plaintiff's letter to the defendant, stating that the converters are used for Dacia Lodgy vehicles in Germany, and
• The geographical location of the production facility in Morocco, which made it obvious that Renault/Dacia would supply vehicles with the transducers to the EU.
In this context, it is irrelevant whether the initial letter sent to the defendant was a request for authorization or a warning letter. It is rather only important that the information triggering the legal obligation to take further action is transmitted.
The scope of the injunction (and the liability for infringement) is limited to recipients of the infringing products domiciled abroad for whom there are specific indications for the supplier that the relevant products are delivered onward to Germany. In the case at hand, the Federal Court of Justice therefore considered the extension of the injunction to deliveries to all Renault/Dacia group companies as too broad, as there may also be group companies manufacturing parking systems or cars which are not supplied to Germany.
Lessons Learned
If a foreign-based supplier delivers a patent-infringing product to a foreign-based customer, who then puts the product on the market in Germany, the foreign-based supplier may still be liable for patent infringement in Germany if the supplier has obtained positive knowledge of the onward delivery to Germany or if this onward delivery is highly likely based on the circumstances of the case.
***German Federal Court of Justice, X ZR 47/19.
****German Federal Court of Justice, X ZR 53/8 –Ethofumesat.
*****German Federal Court of Justice, X ZR 156/97–Räumschild.
******German Federal Court of Justice, X ZR 120/15–Abdichtsystem.
In the Cup Dispenser case,******* the Higher Regional Court (HRC) Dusseldorf had to address questions of patent exhaustion for a patent protected cup dispenser, which was part of a beverage vending machine that was first leased to an operating company and then taken out of service and handed over to a waste disposal (recycling) company, which instead of destroying it sold it to the defendant.
According to the standing case law of the German Federal Court of Justice, exhaustion occurs for embodiments of the patent protected product which are put on the market by the patent proprietor or with their consent.
The putting on the market of the beverage vending machine by way of leasing (i.e., without a transfer of ownership) did not exhaust the patent rights, as a temporary transfer of use rights does not realize the market value of the invention.
The operation of the machine could in theory cause exhaustion if the technical condition of the entire device has deteriorated to such an extent that it can no longer be used. The full economic value of the patent would then have been obtained by the patent holder, which justifies exhaustion. In the case at hand the beverage vending machine was however still fully functional and only taken out of use due to signs of wear.
The patent proprietor then handed the beverage vending machine over to the waste disposal company, which sold it to the defendant. In principle the transfer of a patent-protected embodiment to a third party leads to exhaustion as the patent proprietor no longer has any control over its fate. In this case, an exception might however apply if it had been contractually agreed upon that the waste disposal company had to destroy the machine. The waste disposal company would then only act as an “extended workbench” of the patent proprietor, destroying the machine in place
of the patent proprietor.
However, there was no such contractual agreement to destroy the machine, and the waste disposal company was therefore free to recycle the still fully functional beverage vending machine by selling it. The buyer of the machine and defendant in the Cup Dispenser case could therefore invoke the principle of exhaustion and was not liable for patent infringement. To prevent exhaustion, the patent proprietor should have contractually ensured that the machine would be destroyed.
Lessons Learned
In case of a hand-over of a patent-protected machine to a third party (such as a waste disposal company), it has to be contractually made sure that the machine will be destroyed. Otherwise, the hand-over will cause patent exhaustion, and the third party will be free to resell the patent-protected machine.
*******Higher Regional Court Dusseldorf, 2 U 39/21, GRUR 2023, 394.
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