England and Wales High Court (Patents Court) Decisions

Menashe Business Mercantile Ltd. & Anor v William Hill Organization Ltd. [2002] EWHC 397 (Patents) (15th March, 2002)

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		15 March 2002

Jacob J

1. The claimants own a patent (No. EP 0625760) for a gaming system. The claims call for a host computer, terminal computer(s), a communication means between them and a program means for operating the terminal computer. So the two computers are connected. The claims spell out more details about each computer, the communication means and the program. For present purposes the details do not matter.
2. The defendants are bookmakers. They operate a gaming system available to punters in the UK who have a computer. The punters are supplied with a program, either by a CD or by downloading from the net. This turns the punter's computer into a terminal computer for the defendants' system. When it is in communication via the net with the defendants' host computer the claimants say the whole system falls within the patent.
3. Whether that is so does not, at present, matter. The defendants take a short point. They say they cannot infringe. Patent law does not catch them because they have put their host computer abroad (now in Curaçao in the Netherlands Antilles, formerly in Antigua). The claimants say "not so". They say the supply within the UK to the punters of the computer program amounts to infringement under s.60(2) of the Patents Act 1977.
4. So the parties ask me to determine a point of law. The agreed point is as follows:

"Is it a defence to the claim under s.60(2) of the Patents Act 1977, if otherwise good, that the host computer claimed in the patent in suit is not present in the UK, but is connected to the rest of the apparatus claimed in the patent."

5. Section 60 is entitled "meaning of infringement". ss. (1) (2) and (3) provide as follows:

(1) Subject to the provisions of this section, a person infringes a patent for an invention if, but only if, while the patent is in force, he does any of the following things in the United Kingdom in relation to the invention without the consent of the proprietor of the patent, that is to say –

(a) where the invention is a product, he makes, disposes of, offers to dispose of, uses or imports the product or keeps it whether for disposal or otherwise;

(b) where the invention is a process, he uses the process or he offers it for use in the United Kingdom when he knows, or it is obvious to a reasonable person in the circumstances, that its use there without the consent of the proprietor would be an infringement of the patent;

(c) where the invention is a process, he disposes of, offers to dispose of, uses or imports any product obtained directly by means of that process or keeps any such product whether for disposal or otherwise.

(2) Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom.

(3) Subsection (2) above shall not apply to the supply or offer of a staple commercial product unless the supply or the offer is made for the purpose of inducing the person supplied or, as the case may be, the person to whom the offer is made to do an act which constitutes an infringement of the patent by virtue of subsection (1) above.

6. Section 60 is one of those sections which, by s. 130(7) is declared to be "so framed as have, as nearly as practicable, the same effects in the UK as the corresponding provisions of the European Patent Convention (EPC), the Community Patent Convention (CPC), and the Patent Co-operation Treaty (PCT)." Practically speaking therefore one can go directly to the corresponding treaty provision and construe that. Our provision will have the same meaning. Only if it is said that the UK provision actually departs from the Treaty does one have to look at the language of the UK Act to see if that was really meant. No one has ever found a departure from the corresponding Treaty provision. Neither side suggests such a departure in this case.
7. It also follows that one does not adopt the rather strict or linguistic approach to construction which might be called for in a freestanding UK Act. Rather one uses the approach used for the construction of international treaties. It is teleological, not strictly grammatical. What matters is the spirit and intendment - the purpose. And one can have regard to authentic versions of the Treaty in other languages. Also to any travaux preparatoire.
8. The corresponding provision to s.60(2) is Art.26.1 of the CPC. It is entitled "Prohibition of Indirect Use of the Invention." It says:

"A Community patent shall also confer on its proprietor the right to prevent all third parties not having his consent from supplying or offering to supply within the territories of the Contracting States a person, other than a party entitled to exploit the patented invention, with means relating to an essential element of the invention, for putting it into effect therein, when the third party knows, or it is obvious to him in the circumstances, that these means are suitable and intended for putting that invention into effect."

9. Mr Prescott QC for the claimants says the supply of the computer programs in the UK falls within s.60(2); that it is "supplying …. within the UK a person … with means relating to an essential element of the invention, for putting it into effect in the UK". Mr Carr QC for the defendants accepts (for present purposes) that the supply of the program is within the UK and that it is an essential element of the invention. But, says he, it is not for putting the invention into effect in the UK. For that you would need the claimed combination (host and terminal) to be in the UK.
10. Mr Prescott fastens on the words "effect in the UK". That is not the same as saying the invention must actually be used in the UK. It is sufficient if there is the effect of use here. As a practical business matter William Hill are using the effect of the invention here.
11. Further says Mr Prescott, if he were wrong there would be an enormous hole in the internationally agreed rules for infringement. His skeleton argument demonstrates the hole in the following way:

"Take the case of a someone who installs and sells a telecommunications apparatus which straddles the French-German border. Suppose the patent claim calls for integers A + B. Both are essential integers. But A is in France and B is in Germany. If WH are right, no infringement. We respectfully submit it obviously would be infringement – else it would offend common sense. That cannot be what the framers of the Convention intended. It is not purposive construction. We could give many other examples, and of great commercial and industrial importance. For instance, a constellation of satellites, not all passing over the UK at once, and a downlink here."

12. Moreover, says Mr Prescott, the other language versions of the Treaty are not inconsistent with his argument. They read as follows:

French: “de mise en oeuvre, sur ce territoire, de cette invention”;

German: “zur Benutzung der Erfindung in diesem Gebiet”;

Italian: “per utilizarre, in tale territorio, l’invenzione”;

Spanish: “para llevarla en efecto en dicho territorio”;

Portuguese: “para executar, nesse território, a referida invencão”.”.

He submits that none of these phrases compels the notion that the complete apparatus necessarily resides in any particular country. They are at least equally consistent with the notion of getting the invention to work so that its effect is enjoyed in the appropriate Territory. So, submits Mr Prescott, no version of the Treaty precludes his construction.

13. Next Mr Prescott prays in aid a second-order argument - an argument based on working back from other provisions. He says look at the exception to Art 26.1 for the supply of staple commercial products. Art 26.2 says:

"Paragraph 1 shall not apply when the means are staple commercial products, except where the third party induces the person supplied to commit acts prohibited by Article 25”.

Art. 25 sets out the rules for direct infringement, which are territorial. You are only liable for selling a staple commercial product if you induce a primary infringer to infringe within the territory. The contrast is between a direct reference to primary infringement (i.e. Art 25) and a reference to putting the invention into effect within the territory. The latter, submits Mr Prescott, conveys a wider notion.

14. Mr Prescott also prays in aid the philosophy of infringement to be found in the EPC Art.69 and its well-known Protocol. The EPC and CPC were drafted at the same time and they should be construed together at least so far as ascertaining their general purpose. The key provision of the Protocol demands "a fair protection for the patentee". There would be nothing fair if UK punters were using the system yet it were held the system was not being put into effect here.
15. He closes with a flourish:

"The system is what is claimed in the patent. It actually claims ‘a system’. Therefore it makes sense to speak of the invention being put into effect in this country. If not in this country, then where?"

16. Mr Carr QC for William Hill ripostes by pointing to the double reference to "United Kingdom" in s.60(2). This corresponds to the EPC's use of "territories of the Contracting States" and "therein" - again a double use. Moreover he points out that the second use is particularly deliberate having received specific consideration during the treaty negotiations. "Therein" was specifically added to an earlier draft on the suggestion of the AIPPI.
17. Mr Carr realised the force of Mr Prescott's "hole" point. He sought to answer it by saying that it was a hole which, if the patentee's agent had been more ingenious, could have been plugged. All the agent had to do was to insert separate claims to the terminal and the host computers. Mr Carr handed me claims for the terminal and host which, he said, would have done the job. They took the form "A terminal (host) computer for using in a gaming system [then defined], the terminal computer comprising ….”. And he answered Mr Prescott's flourish by saying that in the case of the system claim the invention was not put into effect in any one country.
18. Mr Carr also had a second order argument. He relied on the ships and aircraft exemption contained in s.60(5)(d) - itself derived from Art 27(d) of the CPC though it is expressed in the UK Act in unnecessarily different language. This exempts from infringement use of an invention on board a vessel temporarily within the waters of a Contracting State. Suppose, submitted Mr Carr, a man supplied a "means essential" to such a ship. There would be no infringement on board - so why would the supplier be an infringer? Yet he would be if the patentees were right.
19. Mr Carr's main point, however, was that to give into effect in the UK the wide meaning suggested by the patentees would be far too uncertain. What effect would do? Receipt of money here? You would have to look at the effect in a wide range of cases and it would be quite uncertain what sort of effect (financial, economic, direct or indirect) would count.
20. I have no hesitation in accepting the arguments of Mr Prescott and rejecting those of Mr Carr. I do so without regret. Any other result would be monstrous - allowing a defendant to use supposed cross-border problems to avoid infringement of a system anywhere. My detailed reasons for rejecting Mr Carr's argument follow.
21. First the double reference to the UK. Mr Carr overlooks the fact that the second reference (into effect in the UK) looks to effect within the UK not use within the UK. The fact that second reference ("therein") was added during the negotiations is understandable but irrelevant. All that did was to identify the territory within which the effect was to identified - to make sure that both the supply of the essential means and its effect were within the same territory. Mr Prescott's second order point is telling - why speak of "putting invention into effect in the UK" if you simply meant "infringe the UK patent." I can see no purposive construction of the Treaty which would make sense in this context.
22. Next, the hole. I do not think Mr Carr's answer is either rational or correct. The patentee's invention is in substance the combination of elements. It is the system. To say that a claim to the heart of the inventive concept would not suffice to provide protection is to suggest that patentees should play games with the patent system. Here the game is to pretend that the invention is a terminal when programmed whereas really the invention is a system. Moreover the argument is flawed. It is trite patent law that individual items of a combination may be old or obvious, yet the combination not.
23. As to Mr Carr's argument about ships, I find that fanciful. I called it a second order argument. More accurately I think it is well down the order to second - construing a main provision by way of a very minor exception is hardly ever productive, especially in the context of an international Treaty. In this case in any event it is wrong: the point of the exemption is to exempt the use of the invention on board, not to exempt suppliers. A ship which came to the UK temporarily for repairs would not infringe, but someone who supplied a device which was an essential element of an invention used on board would infringe.
24. Finally there is Mr Carr's "uncertainty" argument - that if "effect" meant any effect it was too vague. Mr Prescott shrewdly noticed a parallel with the Brussels Convention, Art. 5(3). This confers tort jurisdiction on a court in a Member State where "the harmful event occurred." If anything that is a vaguer test than "effect" yet it has proved reasonably workable. In any event, just because there may be borderline cases of difficulty is no reason for not holding that an obvious case falls within the rule. No businessman would think for moment that the effect of the invention is not within the UK when the whole point of the defendants’ system is to get UK punters to play their system.
25. Accordingly I reject this defence. The answer to the question is "no." I order that the appropriate paragraphs of the pleading be struck out. If William Hill have a defence it must be that they are not using a system within the claims of the patent or that the patent is invalid. The wheeze of putting the host computer abroad is of no help to them.