Schutz (UK) Ltd and Others v Delta Containers Ltd (No 1)

JurisdictionEngland & Wales
JudgeTHE HON MR JUSTICE FLOYD,Mr Justice Floyd
Judgment Date31 March 2010
Neutral Citation[2010] EWHC 660 (Pat)
CourtChancery Division (Patents Court)
Date31 March 2010
Docket NumberCase No: HC08C02241

[2010] EWHC 660 (Pat)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

PATENTS COURT

Before: The Hon Mr Justice Floyd

Case No: HC08C02241

Between
Schütz (U.K.) Limited
Claimant
and
(1) Werit UK Limited
(2) Protechna SA
Defendants

Richard Meade QC and Lindsay Lane (instructed by Denton Wilde Sapte) for the Claimant

Simon Thorley QC and Thomas Mitcheson (instructed by Lovells) for the First Defendant

Hearing dates: 3–5 and 8–9 and 11–12 March 2010

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

THE HON MR JUSTICE FLOYD Mr Justice Floyd

Mr Justice Floyd:

Contents

Paragraph numbers

Introduction

1–6

IBCs and their regulation

7–11

The market in IBCs and the activities of Delta

12–14

The issues

15–16

The patents in suit

307

17–21

967

22–25

Fact witnesses

26–29

Expert witnesses

30–33

The skilled addressee

34–38

Common general knowledge

39–53

Types of IBC

40

The Ve-We

41–46

Resistance welding

47–48

The 4-point weld

49–50

Climbing

51–53

Issues of construction

54–78

307

55–78

double-walled indentations

55–56

“build-up of metal corresponding to four times..”

57–63

“common tangential planes”

64–70

967

71–78

“double-walled”

71–72

“quadruple lattice bar wall thickness”

73

“central raised part…”

74

Integer F

75–78

Infringement

79–102

307 infringement – claim features

80–94

“four times..” and “double walled”

80–82

“common tangential planes”

83–94

967 infringement – claim features

95–102

“quadruple lattice bar wall thickness”

95

“central raised portion…”

96–97

Integer F

98–102

Validity of 307

103–142

Lack of inventive step of 307

104–105

Disclosure of Schneider

106–111

Disclosure of the ARO Brochure

112–115

Werit's obviousness attacks

116–138

From Schneider

120–131

From the Ve-We

132–138

Insufficiency of 307

139- 142

Validity of 967

143–169

Insufficiency of 967 and infringement of Integer F

144–161

Simple mechanics

148–149

Werit's FEA experiment

150–156

Schütz's DIC experiment

157–161

Conclusion on insufficiency of 967

162

Lack of inventive step of 967

163–164

Added Matter 967

165–169

Has Delta “made” the alleged infringements of 307 and 967?

170–208

Law

170–200

Facts

201–205

Conclusion on “making”

206–208

Is the bottle essential means of either patent?

209

Has Schütz exhausted its rights, or impliedly licensed Delta?

210

Does Werit have a defence under section 44 of the Act?

211–224

Conclusions

225–227

Introduction

1

According to Greek legend (as reported by Plutarch):

“The ship wherein Theseus and the youth of Athens returned [from Crete] … was preserved by the Athenians down even to the time of Demetrius Phalereus, for they took away the old planks as they decayed, putting in new and stronger timber in their place, insomuch that this ship became a standing example among the philosophers, for the logical question of things that grow; one side holding that the ship remained the same, and the other contending that it was not the same.”

2

This paradox, like that of George Washington's axe with its three new handles and two new heads, has divided philosophers for centuries. One of the issues which divides the parties to the present patent action is whether the acts of infringement relied on amount to making a new product, or merely replacing parts in an old one.

3

The claimant, Schütz (U.K.) Limited (“Schütz”), originally brought this action for infringement as exclusive licensee under three European Patents (UK) belonging to the second defendant, Protechna S.A. (“Protechna”). Protechna has taken no active role in the action, but is joined simply because it is the proprietor of the patents, pursuant to section 67(3) of the Patents Act 1977 (“the Act”). The defendant is Werit (UK) Limited (“Werit”). Werit contends, in the usual way, that its activities do not infringe, and that the patents are invalid in any event.

4

The patents which remain in suit are European Patents (UK) 0 370 307 (“307”) and 0 734 967 (“967”). The third, EP(UK) 0 673 846 (“846”), which is now accepted to be invalid, was abandoned shortly before trial. The patents all relate to intermediate bulk containers (IBCs). These consist of an outer protective cage and a removable plastic inner bottle capable of holding 1000 litres of material.

5

The unusual features of the action are these. Firstly, Werit's infringement is alleged to consist of supplying its own plastic bottles to be retrofitted by a third party, Delta Containers Limited (“Delta”), into second hand Schütz cages. This is alleged to amount to contributory infringement within section 60(2) of the Act. The issues of whether the alleged infringements fall within the scope of the claims thus turn on whether Schütz's cage falls within its own patents. Secondly, Werit maintain that Delta's acts of primary infringement relied on are not infringements because they do not amount to “making” the patented product. Thirdly there is a special, partial defence to damages which arises out of an agreement made between Protechna and Schütz, which is said to contravene section 44 of the Act.

6

Mr Richard Meade QC and Ms Lindsay Lane argued the case for Schütz. Mr Simon Thorley QC and Mr Thomas Mitcheson argued the case for Werit.

IBCs and their regulation

7

Early IBCs with plastic inner bottles were made with thin sheet steel. An example is the Schütz Ein-Weg Container first sold in 1980, shown below. As the name suggests, these were single-use containers: it was not possible to replace the inner bottle.

8

Later, Sotralentz and Mauser introduced open composite IBCs, with an outer cage consisting of horizontal and vertical solid metal wires. The Solatrentz is depicted below:

9

When hazardous substances are carried in the IBC, their transport by road is now regulated by the Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations 2009. These are based on the European Agreement concerning International Carriage of Dangerous Goods by Road, based on UN model regulations. These require that an IBC intended for carriage of dangerous goods must correspond to a successfully tested design type which has been approved by a relevant national authority. If passed, the IBC is awarded a UN approval certificate. The testing is conducted on the combination of cage and bottle.

10

IBCs can be single or multi-use. When the bottle is no longer usable it has to be replaced. New bottles are available from the manufacturer of the cage. Replacement with an OEM bottle is called “re-bottling”. Cross-bottling is the practice of inserting one manufacturer's bottle into another manufacturer's cage. The industry is divided over whether this is a good thing, because the bottle and cage are not specifically made for one another. So, for example, stabilising loops in the top of the bottle do not match up with bars on the cage. Or the bottle may not fit in such a way that it will drain properly without tipping. Companies which undertake re-bottling or cross-bottling are called “reconditioners”. There is undoubtedly a market for such products: hence this action.

11

A cross-bottled IBC cannot be used under the Regulations for dangerous goods unless the specific combination has an approval certificate. The certificate for the original manufacturer's bottle and cage combination will not do.

The market in IBCs and the activities of Delta

12

IBCs move from the manufacturer (like Schütz or Werit) to a purchaser (a filler) who then uses the IBC to send product to an end user. Fillers could be large chemical companies such as Dow. End users mentioned in the evidence could be Coca Cola, L'Oreal, Roche or GlaxoSmithKline.

13

Delta acquire used IBCs from end users. They remove the old bottle, execute any necessary repairs to the cage and fit a new bottle. The resulting IBC is then sold on the market. Although some of these IBCs may find their way back to the original purchaser/filler, there is no reason why this should be so. In short, the IBCs produced in this way by Delta are sold on the open market in competition with the manufacturer.

14

The present action arises because Werit sell Werit bottles to Delta who cross-bottle them into Schütz cages and sell them to fillers. Schütz has also sued Delta for, amongst other things, patent infringement. That action has been stayed to await the outcome of this action on the patent issues

The issues

15

The issues which arises are these:

i) are the Patents valid?

ii) do Schütz's IBCs cross-bottled with Werit bottles fall within the scope of the Patents?

iii) is cross-bottling “making” the patented product of either patent?

iv) is supplying the Werit bottle for cross-bottling the supply of a means essential within section 60(2) of the Act?

v) Does Schütz exhaust its rights under the Patents or grant an implied licence when it first sells the IBCs which are re-conditioned;

vi) Does the Protechna Agreement mean that Schütz cannot enforce its rights in the Patents for the relevant period?

16

Issues (iii), (iv) and (v) form a group of issues. Mr Thorley's argument did not focus on issues (iv) and (v). He nailed his colours to issue (iii) rather than (iv), submitting that he could succeed on issue (iii) even if the bottle was an essential means, but that if he failed on issue (iii), then the bottle was likely to be an essential means. Equally he recognised that if he...

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