1. Double Dipping - Zeist 12 March 2008 0

2. 1 Double dipping? Kan de octrooihouder iedere conclusie van zijn octrooi afzonderlijk in licentie geven ? Voorzitter: Dr. Koenraad Wuyts, Chief Intellectual Property Officer KPN Nee: Mr. Wouter Pors, Bird & Bird Ja: Mr. Bart van den Broek, Howrey

3. Double Dipping - Zeist 12 March 2008 2 Double Dipping Kan de octrooihouder iedere conclusie van zijn octrooi afzonderlijk in licentie geven ?  Double Dipping  Exhaustion  Indirect Infringement  Free Movement of Goods (in EP)  Antitrust Concerns (  Extension of monopoly beyond)  Misuse of Patent Rights  Contract Law

4. Double Dipping - Zeist 12 March 2008 3 IPR Value ? The Consumer hates IPR ! Free music / Free movies / Generic drugs / Cheap goods / No software patents / Patent Breaking

5. Double Dipping - Zeist 12 March 2008 4 What does this all apply to ? Nokia - Qualcomm Handset made of: a (few) Chip(set)s + Cage + Software + … Car Industry Car made of: Engine + Wheels + Steering wheel + Cage + Seat + … Have Made Rights ODM manufacturing # Compounds in a Carrier Solution Etc.

6. Double Dipping - Zeist 12 March 2008 5 (Explicit) License given to: Make Have made Use Sell System of 1-Y components Patent Claims 1-X features

7. Double Dipping - Zeist 12 March 2008 6 A cursory Introduction to Case Law in the USA and Germany

8. Double Dipping - Zeist 12 March 2008 7 Case Law USA Patent Exhaustion in the US Was juridically created to prevent Patent Owners from collecting Patent Licensing Royalties from Multiple Entities in one Supply Chain for use of the same Patented Invention (‘double dipping’) The last 15 years, the courts have created several Exceptions Only applies to unconditional Sales (LG Electronics, Inc. v. Bizcom Electronics, Inc.) Does not apply to method Claims (LG Electronics ; Bandag, Inc., v. Al Bolser’s Tire Stores, Inc.,) Only applies to sales in the US (Fuji Photo Film)

9. Double Dipping - Zeist 12 March 2008 8 Avoid the doctrine of patent exhaustion by making the sale conditional or by drafting some of the patent claims as method claims. Also: Sales by a licensed component maker abroad will not trigger patent exhaustion The patent owner can still sue the downstream entities in the supply chain selling the higher end system products in the US

10. Double Dipping - Zeist 12 March 2008 9 However… the pendulum is swinging back ? U.S. Supreme Court reconsidering the exceptions Quanta Computer, Inc. v. LG Electronics, Inc. Reconsidering whether a patent owner may preserve infringement claims against downstream users of licensed products Reconsidering whether the doctrine of patent exhaustion applies to the method claims They may conclude that sales of an essential component as to the claims is still enough to exhaust the patent rights in other system that incorporate the chip The Supreme Court is expected to decide the Quanta case by the end of June 2008. The questions by the Justices suggested that the Court may (likely) revive the doctrine of patent exhaustion in the U.S. by limiting the juridically created exceptions

11. Double Dipping - Zeist 12 March 2008 10 Indirect Infringement United States Court of Appeals for the Federal Circuit BMC Resources Inc. v. Paymentech September 20, 2007, Decided Indirect infringement requires, as a predicate, a finding that some party amongst the accused actors has committed the entire act of direct infringement. A party cannot avoid infringement, however, simply by contracting out steps of a patented process to another entity. In those cases, the party in control still would be liable for direct infringement. Solve this issue by proper claim drafting one claim on one single economic entity in the claim

12. Double Dipping - Zeist 12 March 2008 11 Case Law Germany

13. Double Dipping - Zeist 12 March 2008 12 Exhaustion No written Rule in the Patent Act but an established principle under case law and binding as customary law Exhaustion applies to both direct and indirect infringement  Joint Infringement fully alive  Reason: Patentee who has placed the Object into Circulation has received a sufficient Remuneration of his Invention

14. Double Dipping - Zeist 12 March 2008 13 Method Claims / Patents (1) Patentee has a process patent and a device patent BGH, Handhabungsgerät (GRUR 1998, 130, 132): Obiter dictum in a patent nullity case –,,if a Patentee places a patented Device into Circulation, then he is not allowed to prohibit to the Purchaser to use the Device the Way it is intended to be used’’ BGH, Bauschuttersortieranlage (GRUR 2001, 407, 409):,,if a Patentee sells a patented device which applies – when regularly used – a patented process, then he implicitly consents to the use of the patented process’’

15. Double Dipping - Zeist 12 March 2008 14 Method Claims / Patents (2) LG Düsseldorf, Levitationsmaschine (Mitt. 1999, 179): Patent infringement case –,,if the Patentee places a Device into Circulation which applies – if it is used the way it is intended to be used the Patentee’s Method, then the Method Claim is exhausted’’ ! Other opinions Reichsgericht, Tetzner Kraβer, Busse, Schricker

16. Double Dipping - Zeist 12 March 2008 15 Patentee has a process patent but no Device Patent No exhaustion of the process patent when device placed into circulation (BGH, GRUR 1998, 130 – Handhabungsgerat; GRUR 1980, 38 (Fullplastverfahren), GRUR 2001, 223 – Bodenwaschanlage) Consent or not is a matter of Contract (Interpretation)

17. Double Dipping - Zeist 12 March 2008 16 Indirect Infringement Landgericht Dusseldorf, 13-02-2007 Bundesgerichthof GRUR 2004 758 / GRUR 2005, 848 Essential Means: Adapted for functional cooperation with the essential parts of the invention Specific Claim = Handset Only if all essential parts (as to the patent claim) within the handset are licensed  Only then exhaustion

18. Double Dipping - Zeist 12 March 2008 17 ! The Questions for Today !

19. Double Dipping - Zeist 12 March 2008 18 1) Can we avoid exhaustion by careful contract drafting? Non-Assert Commitment safe ? License limited to ONLY –Make – ⊕ ⊝ have made –Sales –Use Territorial Limitations ? –Component manufacturing USA –System assembly KR –Use/Sale EP

20. Double Dipping - Zeist 12 March 2008 19 2) Indirect Infringement: Exhaustion yes or no ? ‘’Überhaupt’’ Exhaustion for Indirect Infringement ? –System is licensed (downstream) –Components are licensed (upstream) Exhaustion of System by 1 or all of the Essential Components License ?

21. Double Dipping - Zeist 12 March 2008 20 3) Double dipping allowed in case of process/ device differentiation ? What if the Method Claim is a mere remedy of the Device Claim ? What if the Method Claim does not contain any (additional) technical Feature and therefore is a Business Method