European Central Bank v Document Security Systems Inc.

JurisdictionEngland & Wales
JudgeLord Justice Jacob
Judgment Date19 March 2008
Neutral Citation[2008] EWCA Civ 192
Date19 March 2008
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A3/2007/0879

[2008] EWCA Civ 192

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION (PATENTS COURT)

The Hon Mr Justice Kitchin

HC06C01151

Before:

lord Justice Jacob

Lord Justice Lloyd

Sir John Chadwick

Case No: A3/2007/0879

Between
European Central Bank
Claimant Respondent
and
Document Security Systems Incorporated (a Company Incorporated under the Laws of the State of New York, USA)
Defendant/Appellant

Simon Thorley QC and Miles Copeland (instructed by Bird & Bird) for the Claimant/Respondent

Piers Acland (instructed by McDermott Will & Emery UK LLP) for the Defendant/Appellant

Hearing dates: 5/6/7 February 2008

Lord Justice Jacob (giving the judgment of the court):

1

Kitchin J, by his judgment of 26 th March 2007, [2007] EWHC 600 (Pat), on the application of the European Central Bank (“the ECB”), held that Document Security Systems Inc.'s (“DSS”) EP UK 0 455 750 was invalid. So he ordered its revocation. He did so on the ground of added matter. He rejected attacks of anticipation and obviousness.

2

DSS appealed the finding of added matter. The ECB challenged the findings of non-obviousness but only on a contingent, “squeeze”, basis: that if the man skilled in the art had sufficient common general knowledge and was clever enough to deduce what was claimed in the granted patent simply from the specification as filed, then the claimed invention would be obvious to him over the cited prior art. After we had heard argument we concluded that it was not necessary to consider this alternative basis of attack. So also with the cross-appeal about the rejection of the finding of anticipation.

3

Before we proceed further, it is worth briefly recording the position about the litigation concerning the sister patents in other European countries. DSS contend that the patent in suit and its sister patents are infringed by euro banknotes. Imaginatively but overoptimistically it tried to bring central proceedings before the Court of First Instance of the EU. On 5 th September 2007, that Court held, not surprisingly, it had no jurisdiction to hear patent infringement proceedings even against an EU institution, case T-295/05.

4

Meanwhile the ECB had started revocation proceedings in France, Germany, the Netherlands, Spain, Italy, Belgium, Luxembourg and Austria. These are ongoing. We were given an update of the position in each country. In Germany and France there have been first instance decisions. None of the other proceedings have got that far. Kitchin J's decision came first. The German Federal Patent Court (the Bundespatentgericht) did not agree with him by a decision of 27 th March 2007. It held the patent valid. Then, on 9 th January 2008, the French Court (le Tribunal de Grande Instance de Paris) agreed with Kitchin J and disagreed with the German Court. On 12 March 2008 the Dutch Court agreed with the German Court. In sporting terms, the score is currently 2–2 to the ECB at first instance level.

5

All this is deeply regrettable. It illustrates yet again the need for a one-stop patent shop (with a ground floor department for first instance and a first floor department for second instance) for those who have Europe-wide businesses. The case illustrates another point too: Kitchin J records at [88] that “the positions adopted by DSS before this Court and the CFI are radically different.” As he went on to say:

This case therefore seems to me to be a very powerful illustration of why it is desirable to try infringement and validity issues together, where at all possible. If they are tried separately it is all too easy for the patentee to argue for a narrow interpretation of his claim when defending it but an expansive interpretation when asserting infringement.

Professor Mario Franzosi likens a patentee to an Angora cat. When validity is challenged, the patentee says his patent is very small: the cat with its fur smoothed down, cuddly and sleepy. But when the patentee goes on the attack, the fur bristles, the cat is twice the size with teeth bared and eyes ablaze.

6

So much is by-the-by. The key question before us was whether there was added matter. We indicated to the parties at the oral hearing that we thought Kitchin J was right on this point and so did not go to consider obviousness. These are our reasons for upholding Kitchin J. Before we turn to them, we would like to pay a particular tribute to the oral argument of Mr Piers Acland for DSS. It was both concise and precise. The fact that we do not accept it is beside the point. We do not think DSS's case could have been advanced more cogently.

General Technical Background

7

Kitchin J set this out at [6]-[35]. There was no quarrel with any of this, so we borrow it wholesale:

Security printing

[6] Security printing is the field of the printing industry that deals with the printing of items of value such as banknotes, travellers' cheques, passports, stock certificates, postage stamps and identity cards. The goal of security printing is to ensure that original documents can be authenticated, the production of counterfeits is made as difficult as possible and that counterfeits are readily detectable. A number of techniques and materials have been developed over the years to try to ensure that the security printing industry remains ahead of counterfeiters as copying technology has evolved. By 1989, common and well known techniques and materials included the following:

(i) Specialised substrate materials. Banknotes were generally made of good quality paper. Sometimes high quality 100% rag paper was used which is dull when seen under ultra violet light. Coloured fibres and threads were embedded to give the paper added individuality.

(ii) Specialised inks such as magnetic and fluorescent inks which were difficult and expensive to obtain.

(ii) Watermarks which were first introduced in Bologna, Italy in 1282 and have been commonly used in security printing ever since. Watermarks are made either by varying the thickness of the paper in a mould while it is being made, or by impressing a water coated metal stamp or 'dandy roll' onto the paper during manufacturing.

(iv) Printed patterns made using sophisticated and expensive printing techniques such as intaglio printing, which I explain later in this section. These could print with an extremely accurate register and in fine detail.

(v) Iridescent foils and structures such as holograms which display a colour or image change when viewed from different angles.

(vi) Unique serial numbers which make counterfeiting more time consuming and counterfeit notes easier to identify and track.

(vii) Banknotes printed with fine alignment between the printing on each side of the note. Accurate imitation was difficult without printing machinery and technology not readily available to the counterfeiter.

(viii) Screen traps designed to create a moiré pattern when a note is reproduced, as I shall explain.

Printing techniques

[7] Letterpress printing. This is a printing technique which has been used since the 13 th century. The figures or digits to be printed are raised up from the surface of the printing plate, rather than engraved into it. The plate is then inked and pressed against the printing substrate to obtain the image. It is still used today for printing serial numbers on banknotes.

[8] Intaglio printing. Intaglio is a printing technique in which the image to be printed is incised into the surface of a metal plate, typically made from copper or zinc. The incisions may be engraved into the plate by hand or laser or may be etched by the action of an acid.

[9] To print from an intaglio plate, the surface is covered in ink and the excess is wiped away leaving it only in the incisions. The substrate is then brought into contact with the plate and both are run through a printing press under very high pressure. The press 'draws' the ink from the incisions by a combination of pressure, osmosis, and electrostatic pull, thus transferring the ink from the plate onto the substrate to form the print. Intaglio printing is commonly used in the production of banknotes, often in combination with other printing methods. It creates a unique texture on the printed copy that is difficult to replicate.

[10] Offset lithography. Lithography is based upon the repulsion of oil and water, with the image drawn onto a surface and treated in such a way as to retain ink, whilst the non image areas are chemically treated to accept water and repel ink. In offset lithography the inked image is transferred (“offset”) from the printing plate to a rubber cylinder and then to the printing substrate. A number of separate plates with different colours can be superimposed to create the final image. The technique is illustrated in the figure below:

[11] Banknote printing often uses a variation of the technique called dry offset printing. This is similar to offset lithography in that a rubber blanket is used to carry the image from the printing plate to the printing substrate. The image areas on the printing plate are raised above the surface of the plate, much like letterpress printing. Ink is distributed through a series of rollers and onto the raised surface of the plate. The plate transfers the image to the blanket, which then prints the image on the substrate. In banknote technology, offset printing is exploited to print security inks that do not easily emulsify, such as UV fluorescent inks.

[12] All the techniques I have described are very expensive to operate. Other printing techniques have therefore been developed to allow printing on smaller commercial and...

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