The first decision of the FPC on international patent exhaustion

Case No. S2016_006 ¦ Decision of 14 July 2016 ¦ “Geräuscharmer Turbolader: Abweisung Massnahmebegehren; ungenügende Substantiierung einer Patentverletzung; Erschöpfung gemäss Art. 9a Abs. 4 PatG eingetreten”

Hyundai_Motor_Company_logo.svgPrice differentiation for various markets is a common phenomenon, for a broad range of products. Evidently, grey-market import to high-price countries like Switzerland is the natural enemy of any price differentiation strategy. The extent of warranties may of course be less favorable and various services might be excluded; see the notes on e.g. Hyundai’s Swiss website. But the price advantage on the grey-market for sure is the decisive criterion for a lot of customers.

The setup of this case is as follows: A car had been originally delivered from the Korean manufacturer to a retailer in Macedonia. However, this car went into the grey-market and was then offered for sale in Switzerland. The car manufacturer alleged that the import and offer for sale in Switzerland infringed his patent in Switzerland, and consequently sought for injunctive relief as a preliminary measure.

KIA_logo2.svgFrom the wording recited in the decision it is clear that EP 2 878 786 B1 is at stake; see EPO Register and Swissreg for further details. Registered patent owners are Hyundai Motor Company and Kia Motors Corporation. EP’786 pertains to a turbocharger, more precisely to an apparatus for circulating a coolant in a turbocharger. The sole independent claim reads as follows:

An apparatus for circulating a coolant in a turbocharger (20) to prevent noise made by a coolant flowing into the turbocharger (20), comprising:

a first coolant line (12) for supplying the coolant to the turbocharger (20) from a water pump (10) driven by an engine (30), and configured to form a first flow resistance member to increase flow resistance to the coolant flowing through the first coolant line (12),

the apparatus further comprises a second coolant line (22) for circulating the coolant from the turbocharger (20) to the engine (30) and a second flow resistance member that is disposed in the second coolant line (22) and increases flow resistance against the coolant flowing through the second coolant line (22),

wherein the second flow resistance member includes an orifice (24) that has an inner diameter smaller than an inner diameter of the second coolant line (22) and is disposed at an end of the second coolant line (22), characterized in that by means of the first coolant line and the second coolant line the coolant is structurally stopped from flowing into the high-temperature turbocharger (20) in an idling state of the engine (30) when a vehicle is started again.

A first aspect of the decision deals with the wording of the requests. The first request identified a single car by its vehicle identification number, VIN. This wording was formally acceptable. However, a second request only identified cars in generic terms by their model numbers, without reciting any technical features at all. The FPC again emphasized that a model number cannot replace the detailed description of the technical features of the allegedly infringing product; see decision 131 III 70 of the Supreme Court, r 3.6 and S2012_002. Thus, the FPC did not consider the second request at all.

A second aspect of the decision deals with the substantiation of the alleged infringement. The claimant apparently only referred to a privately commissioned opinion obtained from the plaintiff’s patent attorney, and this opinion was referred to as a piece of evidence. However, the FPC emphasized that a privately commissioned opinion is no piece of evidence; see decision 141 III 433 of the Supreme Court, r 2.5.2 and 2.5.3. Facts and arguments are not considered if they are not elaborated in the writ itself to sufficient extent — mere reference to an annex is not sufficient; O2012_022, r 10.4.

Eine Patentverletzung kann nur dadurch substantiiert begründet werden, dass — und zwar in der Rechtsschrift selbst — dargelegt wird, wie die einzelnen Merkmale des Patentanspruchs in der angegriffenen Ausführungsform konkret technisch umgesetzt werden. Daran fehlt es hier gänzlich. […] Vorbringen, die sich lediglich aus einer Beilage zu einer Rechtsschrift ergeben, von der Partei aber in der Rechtsschrift selbst nicht hinreichend detailliert behauptet werden, sind unbeachtlich.

The first (formally allowable) request was dismissed already for this reason alone. One could have closed the docket at this stage. But Mr Brändle took the opportunity to also discuss the question of exhaustion of the patent for the very first time — we would have missed the highlight of the decision if he hadn’t done so. The international exhaustion of a patent is codified in Art. 9a(4) PatA; it reads as follows (emphasis added):

If the proprietor of the patent has placed patent-protected goods on the market outside the European Economic Area or consented to their placing on the market outside the European Economic Area and if the patent protection for the functional characteristics of the goods is only of subordinate importance, the goods may be imported commercially. Subordinate importance is presumed unless the proprietor of the patent provides prima facie evidence to the contrary.

I have awaited a decision on this elastic clause since it was enacted in 2009 — and here it is. In an attempt to comply with the second sentence of Art. 9a(4) PatA, the claimant expanded on the importance of the patent protection for the turbochargers in the cars. If this arrangement wasn’t there, risks were severe: increased exposure to noise, loss of power of the engine, damage of components due to overheating, and reduced safety.

But what does the patent itself say? Paragraph [0007] (emphasis added) of EP’786 holds that

[t]he present invention has been made in an effort to provide an apparatus for circulating a coolant in a turbocharger which prevents factors causing noise made by a coolant flowing into a turbocharger by structurally stopping the coolant from flowing into a hot turbocharger in idling state of a vehicle that is started again.

Noise reduction is mentioned here, but not the other effects to which the claimant referred. The FPC concluded that the claimant’s submission deviated from the facts. If the absence of the patented arrangement indeed had such severe effects the claimant could not have marketed any turbocharged vehicles before. Noise reduction is a nice-to-have feature, and thus most likely only of subordinate importance. Concluding, the FPC held that international exhaustion of the patent had occured and that the (first) request had to be dismissed also for this reason.

Diese Sachverhaltsdarstellung weicht offensichtlich nach dem Ergebnis schielend von den tatsächlichen Gegebenheiten ab. […] Kurz, das Patent bezweckt die Verhinderung von gewissen Geräuschen im Leerlauf nach dem Neustart des Wagens, wie das auch Anspruch 1 ausdrücklich besagt, mehr nicht. Entsprechend mag die Vorrichtung zwar “nice to have” sein, aber damit dürfte dem Patentschutz für die funktionelle Beschaffenheit der Ware nur untergeordnete Bedeutung zukommen; jedenfalls ist es der Klägerin nicht gelungen, das Gegenteil glaubhaft zu machen.

Is it really that easy? Frankly speaking, I am not fully convinced. A lot of questions come to my mind: What actually is the functional characteristic of the turbocharged vehicle? Just to somehow fulfil the purpose of a car in the sense of providing a transport means from A to B, irrespective of any noise exposure? Or, maybe, to provide a transport means with maximum noise reduction? In my perception, noise reduction / cancellation is an ongoing concern nowadays. In a nutshell, the noise of the circulating coolant is eliminated according to the claim by literally stopping the coolant flow into a hot turbocharger in idling state of the vehicle. No flow, no noise. Is that maybe a USP? And even if the invention has been made in an effort to prevent noise, it might well have further effects beyond mere noise reduction when embodied in a car. So many questions, so little information.

The decision is still appealable to the Supreme Court, but this most interesting part of the decision might unfortunately not even be decisive in view of the lack of substantiation.

Reported by Martin WILMING

BIBLIOGRAPHY

Case No. S2016_006 ¦ Decision of 14 July 2016 ¦ “Geräuscharmer Turbolader: Abweisung Massnahmebegehren; ungenügende Substantiierung einer Patentverletzung; Erschöpfung gemäss Art. 9a Abs. 4 PatG eingetreten”

(n/a) ./. (n/a)

Subject(s):

  • Request for preliminary measures (without hearing the defendant beforehand)
  • Geräuscharmer Turbolader

Composition of the Board of the FPC:

  • Dr. Dieter BRÄNDLE

Court Secretary:

  • Susanne ANDERHALDEN

Representative(s) of claimant:

  • Dr. Stefan KOHLER (Vischer)
  • Manuel BLAETTLER (Vischer)
  • Björn SOMMER (VJP), assisting in patent matters

Representative(s) of defendant:

  • (n/a)

FULLTEXT OF THE DECISION

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3 Replies to “The first decision of the FPC on international patent exhaustion”

  1. This proves how poorly Art. 9a (4) is conceived. It’s really only a fig leaf. One should have just codified international exhaustion. I bet no patentee will ever be able to overcome the assumption that patent protection is only of subordinate importance for the functional characteristics of the good. This is pretty obvious from an example given in the legislative process by Thomas Müller (07.3752): Import of a bicycle must not be prohibited if only the braking system is patented. “ONLY” the braking system?! A pretty essential part of a bicycle, isn’t it? I would have had some sympathy for the grip on the handlebar, or the bottleholder. But the braking system? I am wondering which part of a bicycle should be patented to pass this test. The wheel? No bicycle, no car will ever pass this test. Just face it: Practically, it’s a regime of international exhaustion.

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