Schütz (UK) Ltd v Werit UK Limited  UKSC 16
The Supreme Court has overturned part of a Court of Appeal ruling on the infringement of a patent relating to large liquid containers. In doing so, it has provided some much needed guidance on when replacing part of a larger patented article constitutes an act of patent infringement.
The dispute concerned Intermediate Bulk Containers ("IBCs"). IBCs are large containers used to transport liquids (typically around 1000 litres in volume) and comprise a removable inner-bottle and an outer-cage, which rests on top of a pallet. The life expectancy of the inner-bottles is generally shorter than that of the outer-cages. Inner-bottles may also be contaminated, for example, if a chemical has been transported, meaning it is not practical to re-use it. A practice of cross-bottling, which involved retaining the outer-cage and replacing the inner-bottle, had therefore developed.
The Claimant ("Schütz ") was a manufacturer of IBCs and exclusive licensee of a number of patents relating to IBCs. The Defendant ("Werit") was a supplier of replacement inner-bottles which were retrofitted to existing Schütz cages by a third party, Delta Containers Limited ("Delta"). Schütz subsequently sued Werit for supplying the inner-bottles to Delta.
Following the leading House of Lords decision in United Wire Limited v Screen Repairs Services, the key question for the Court to answer was whether Delta's acts of replacing the inner-bottle amounted to the making of an IBC; an act of primary infringement under s.60(1)(a) Patents Act 1977. If they did, Werit's supply would amount to contributory infringement under s.60(2). Unfortunately, little guidance was given in the United Wire judgment as to how the Courts should tackle this question.
At first instance, Floyd J held that the correct approach was to ask whether, after removing the part in question, did what was left embody the whole of the inventive concept of the claim. As it had been established that the inventive concept was wholly embodied in the way in which the metal cage was constructed, Delta had not made the patented article by replacing a Schütz inner-bottle with a Werit inner-bottle.
Schütz appealed to the Court of Appeal where Jacob LJ reversed the lower Court's decision and held that it was inappropriate to determine this issue solely in relation to the inventive concept of the claim. Instead, the whole claim must be considered. A complete IBC was claimed in the claim in question and, as the IBC ceased to exist when the inner-bottle was removed, Jacob LJ held that replacement of the inner-bottle must therefore constitute making of the patented article. Werit subsequently appealed to the Supreme Court.
Supreme Court decision
The Supreme Court unanimously allowed Werit's appeal.
Lord Neuberger (who gave the unanimous judgment) agreed that the key question to be answered, as identified in United Wire and the lower courts, was whether Delta had "made" the patented article. Neither of the Courts below had taken the correct approach. Floyd J's approach was over-simplified and was inconsistent with United Wire. On the other hand, the Court of Appeal was too ready to accept that the outcome should be governed by United Wire and did not recognise that the question of what constitutes "making" of a patented article is dependent upon the specific facts of each case. The correct approach involved an exercise in judgment and was a matter of fact and degree. It was also legitimate and helpful to consider whether the inner-bottle was so subsidiary a part of the patented article that its replacement did not involve making the IBC.
In this case, factors in support of the inner-bottle being more than subsidiary were that: (a) it was clearly a necessary and integral part of the IBC, (the only other components were the cage and pallet); and (b) it was also a substantial part of the IBC, (it was physically large with a surface area greater than that of the cage).
However, other factors suggested that the bottle was a relatively subsidiary part of the IBC:
- the bottle did not include any aspect of the inventive concept of the patent, or have a function closely connected with that concept;
- the bottle was relatively perishable and had a significantly lower life expectancy than the cage (the inventive component of the IBC);
- the bottle was easily replaceable and, in light of the lower life expectancy, a purchaser of an IBC might therefore expect to replace the bottle; and
- the bottle was a freestanding, replaceable component of the patented article which did not include or relate to the inventive concept; removal of which did not cause the patented article to cease to exist.
In weighing up these competing factors, Lord Neuberger concluded that Delta did not "make" the patented article by replacing the Schütz bottle with a Werit one.
The key test as stated in United Wire remains; when does replacement of a part constitute "making" of a patented article. However, this decision gives much needed guidance as to how the Courts should approach answering this question, and what specific considerations can be taken into account. It also shows that replacement of a necessary and substantial claimed feature of a patented article will not necessarily result in an infringement.
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