Thursday, 6 December 2012

Balancing the weight of patent infringement and damages

Author: Christopher Hayes (Palmyra Chambers, Warrington)

Schenk Rotec GmbH v Universal Balancing Limited [2012] EWHC 1920 (Pat), Patents Court, England and Wales, 12 July 2012

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps173, first published online: December 4, 2012

This note looks at the application of the relatively rarely-used defence to patent infringement of prior use and the defence to damages for infringement on the basis that the infringer was not reasonably aware of the existence of the patent.

Legal context

Section 64 of the UK Patents Act provides a defence to patent infringement and also a right to continue performing the same acts where the infringer had, in good faith, begun performance of the infringing acts before the priority date of the patent or that they had made serious and effective preparations to do so by the priority date of the patent.

Section 62(1) of the same Act makes provisions that, where a patent has been infringed, no damages shall be awarded where the infringer can prove that he was not aware, and had no reasonable grounds for supposing that the patent existed. Section 62 adds that merely affixing the word patent or patented or similar to a product is insufficient to provide reasonable grounds unless it is also accompanied by the patent number.


Schenck was the owner of European Patent (UK) 1 520 161. The patent relates to a balancing machine with a gripper-like device for affixing balancing weights to propeller shafts or rotors and was granted on 12 September 2007 having a priority date of 4 July 2002. Universal Balancing supplied a balancing machine, referred to in the judgment as the Green Machine, to a third party, GKN, in 2001. This machine was built on a Schenck base supplied by GKN. In 2002 a second machine was supplied to GKN from Universal Balance, again built on an old Schenck base; this is referred to as the Blue Machine in the judgment. In about March 2004 Universal Balancing sold its machines under the Name KISS-234, rather than product numbers as it had done previously.

Schenck produced a brochure which was available on its website from around 2003 which referred to ‘patented unbalance correction’ but did not make reference to any patent number. There was no evidence that Universal Balancing had seen the brochure, although ultimately the judge did not consider sight of the brochure relevant. In 2004–2005 Schenck sent a copy of the patent to GKN, but not to Universal Balancing.

In July 2010, a meeting took place between senior officers of both parties. At this meeting, the existence of the patent in suit was raised by Schenck. This was the first indication that Universal Balancing had of the patent. Universal Balancing's evidence was that they did not actively monitor competitors' patents or designs.

Having construed the patent, the judge found that the patent in suit was not anticipated, nor was it obvious. He then turned to infringement. In short, the KISS-234 machine was held to infringe. An important element of the judge's reasoning was the presence of two lower electrodes in the KISS-234 machine which allowed it to act as a gripper-like device to enable the rotor to receive a plurality of weights, which was also a feature of the patent. In contrast, the single lower electrode of the Green Machine would not have acted as a gripper-like device to allow the rotor to receive a plurality of weights, and for this reason the Green Machine would not infringe the patent. Accordingly, the judge turned to the defences under ss 64 and 62.


Universal Balancing contended that all of its machines from the Green Machine through to KISS-234 were essentially the same. KISS-234 merely reflected a change in the name of the machine, and there were no fundamental differences between it and the earlier machines. In support of this, Universal Balancing contended that in its opinion there were no patentable differences between the Green Machine and KISS-234. In effect, the sale of the KISS-234 was the same act as that which commenced with the sale of the Green Machine, which was undoubtedly before the priority date. In the alternative, Universal Balancing contended that the sale of the Green Machine represented serious and effective preparations for the sale of KISS-234, so as to engage the defence under this limb as well.

The judge, however, held that the Green Machine did not fall within the claims of the patent and that, therefore, s 64 was not, by definition, engaged. The acts of infringement relate to the manufacture and sale of the KISS-234 machine, so the defence turns on whether the sale of the Green Machine amounts to serious and effective preparations for the sale of the KISS-234 machine.

There was no evidence that Universal Balancing had fitted a second electrode or had contemplated fitting a second electrode to any of the Green Machines it sold before the priority date. The Green Machine did not therefore operate in the same way as the KISS-234 machine; they were different products. As a result, the judge found that the act of making and selling the Green Machine was not the same act as making and selling the KISS-234 machine. On this basis, the manufacture and sale of the Green Machine could not be serious and effective preparations for the sale of the KISS-234 machine. Accordingly, Universal Balancing failed to engage the s 64 defence.

Universal Balancing contended that damages should not be available prior to the meeting in July 2010, as this was the first time Universal Balancing knew of the patent's existence. The judge found that the area was a relatively patent-poor technological sphere, with a limited number of competitors and that the scope for patentable developments was relatively small.

Against this background, Universal Balancing did not believe that they needed to have active oversight of competitor's patents portfolios. In the circumstances, the judge rejected the assertion that Universal Balancing should have engaged patent attorneys to perform patent searches which would have identified the patent. As a result, the judge held that Universal Balancing could avail itself of s 62 and that no damages for infringement could be recovered in respect of infringing acts that took place before the meeting in July 2010.

Practical significance

This case confirms the very narrow application of the s 64 defence in the UK. In order to satisfy the statutory criteria, the acts relied on by the defendant pre-priority must be essentially identical to the acts carried out post-priority. What is clear from this case is that, when the courts are assessing the similarity of the acts pre- and post-priority, they will view that similarity very narrowly. The practical result is that, for a defendant, it will often be factually very difficult to demonstrate sufficient similarity where the acts differ between the pre-priority act and the alleged infringing act.

The judgment also raises interesting issues in relation to the s 62 defence and in particular in relation to steps which it would have been reasonable for the defendant to take. On the facts, the judge held that it would not have been reasonable to expect Universal Balancing to engage attorneys and conduct clearance searches, due to the area being patent-poor with limited scope for technical improvements.

However, the corollary of this reasoning is that s 62 is unlikely to be available in the same circumstances to companies with in-house patent attorneys, or in patent-rich areas where such companies are likely to have the resources. More importantly, the expectation that there are likely to be competing patents in the milieu and are all too aware of the need to perform clearance searches in areas of interest.

This decision also provides salutary guidance for patentees, who, if in doubt, should furnish information about key patents to their competitors, ideally a copy of the patent itself, to guard against the possibility that a successful claim for infringement is not met with a plea under s 62.

1 comment:

  1. This is indeed a beautifully crafted casement. However, I suggest the author goes our little further than is justified in suggesting that the judge's reasoning can be intended by corollary to imply an obligation on those with sufficient resources to carry out clearance searches. The obligation is on the patent holder to disseminate the news of his monopoly amongst his competitors.