IP Report 2010/V

Reported by Peter J. A. Munzinger

The inventor acquires a right in a confidentially materialized teaching of a technical nature when such teaching was made the subject matter of a patent application, independently of the patentability of that subject matter. The applicant or owner of the patent has to surrender to the inventor the value of its use of the invention which he has made in the preferential situation of having know- ledge of the invention, and/or of being the applicant or owner of a corresponding patent.

The present decision concerns an employee invention which was not claimed by the employer (under the recently reformed German Employee Invention Act it was previously possible for the employer to effect the transfer of the rights in and to an invention made by an employee by a unilateral declaration known as the claiming of the invention rights, in German “Inanspruchnahme”; the current law however provides for an automatic transfer of these rights). The employer filed a patent application which was later – upon appeal – finally rejected by the Federal Patent Court as being non-patentable.

The German Employee Invention Act normally provides for an appropriate compensation of an inventor whose invention was announced to the employer, and then claimed by the employer within a period of four months, particularly if it was also used by the employer. In the absence of a valid claiming of the invention, the rights in the invention rest with the employee (“freed invention”), but the inventor is not entitled to receive compensation under the Employee Invention Act.

The owner of the rights in a freed invention, under the legal situation so far, would have to either file for a patent himself, and could then proceed against the employer for patent infringement, or has a claim for unjust enrichment, if the employer obtains a patent and uses the invention.

As the invention was not claimed by the employer in the case at hand, and since a patent was finally not granted, the inventor would neither be entitled to an employee inventor’s compensation, nor to any payments for unjust enrichment under the practice so far.

The present decision clarifies the rights of the inventor during the period of time from the disclosure of the invention (which requires a statement under exclusion of the public) until a patent application is finally rejected.

The court points out that the mere knowledge of an invention, as well as the factual position of being an applicant or owner of a patent, are preferential situations which the applicant of a patent received from the inventor. This preferential situation remains until a patent application has finally been rejected or a patent has finally been revoked.

This is consistent according to the findings of the decision with the current practice regarding licence agreements where the royalties are to be paid until a patent is finally not granted or invalidated. Likewise, it is in line with the practice regarding claims for vindication of patents which do not require any finding of patentability of the technical teaching.

During that period the inventor has a right to be rewarded for the value of said preferential situation which he has granted to any third party.

Remarks

The decision seems to mainly strengthen the rights of employee inventors whose inventions were not claimed, and establishes a clear right of the inventor to receive compensation under the principles of unjust enrichment even if the invention later turns out to be non-patentable. Such claim depends on the existence of a patent application, but it remains unclear at which point in time the rights to the invention end in case a patent was never sought.

One should expect, in any event, that such compensation will be adapted appropriately to the true value of the preferential situation created by the possible invention. In no way should the concept of a reasonable royalty be simply extended to these situations without considering the particular circumstances and any possible weakness of the invention or even the established non-patentability. It is certainly not in the interest of employers of inventors to pay royalties for “using” the advantages of nonpatentable putative inventions over a longer period, nor is this desirable for the economy as a whole. Employers may thus feel forced to obtain very quick final rejections for doubtful patent applications.

Reported by Joachim Mader

If the patent court rejects a nullity suit as being unfounded, the defendant may join the appeal of the nullity plaintiff with the aim to reject the nullity suit as inadmissible by arguing that the nullity plaintiff acts as a straw man of an earlier nullity plaintiff and is thus excluded from filing a nullity suit for the same reasons as the earlier nullity plaintiff himself.

If the prior art stagnated before the priority date of a new invention for a long time, it is always a question of the individual case (here: particularly long development cycles in the relevant technical field), whether this can be seen as a hint that the new invention was not obvious for the skilled person in view of the prior art.

According to Section 99 PatG (German Patent Act) in combination with Section 325 ZPO (German Civil Procedure Act) the results of an earlier nullity suit are usually binding for the plaintiff. Therefore, the same plaintiff is prevented from filing a second nullity suit based on the grounds of the earlier nullity suit. Generally, nullity suits may also be filed by a straw man acting for the “real” plaintiff. However, this approach is not admissible if the “real” plaintiff was excluded from filing a nullity suit himself, as for example in the above-mentioned case, i.e. if an earlier, legally binding decision exists.

In the decided case, company S (in the following: S) had already filed a nullity suit in the year 2002 against the German part of a European patent (EP 548 723 B2) and a legally binding court decision existed for this earlier nullity suit. Therefore, S was prevented from filing a second nullity suit based on the same grounds

for nullification. In 2007, a member of the board of S filed a (second) nullity suit in his own name. The defendant (i.e. the patent proprietor) argued that this constituted a case of an unallowed straw man, since, first, the plaintiff (i.e. the member of the board) did not have any personal interest in the case and, second, S bore the cost risk of the proceedings.

According to the Federal Supreme Court, however, in the present constellation the member of the board could not be considered as a straw man, since a real risk existed that the member of the board may be subjected to claims of the patent proprietor, e.g. for patent infringement. Notably, under German practice, Board members may be – to some extent – personally liable for patent infringing activities of their companies.

In a second aspect of the decided case, the Federal Supreme Court decided on the question of inventiveness of the subject matter of the patent-in-suit. The proprietor argued that the prior art documents cited in the proceedings were published a relatively long time before the priority date of the patent-in-suit and that the skilled person therefore would not have considered the same.

In this respect, the Federal Supreme Court found that this question always depended on the individual case and that in the present case the development cycles in the art extended for very long periods. This assumption was backed by the prior art cited in the introductory part of the patent-in-suit, in which likewise relatively old documents were discussed. On these grounds, the Federal Supreme Court concluded that it was a characteristic of the relevant technical field that the technological development progressed only slowly.

Thus, the skilled person would have also considered the teaching of the older prior art documents cited and the Federal Supreme Court upheld the patent in restricted form.

Remarks

With the reported decision, the Federal Supreme Court offers a convenient possibility to avoid admissibility problems in cases where a straw man is used to file a nullity suit for a third party that is prevented from filing a nullity suit itself. In the light of the present decision it appears that the admissibility is given if and as long as the straw man may have an own justified interest in filing the nullity lawsuit, e.g. because he may be personally subjected to patent infringement claims of the patent proprietor.

Reported by Stefan Bianchin

Once more, the German Federal Patent Court decided that the subsidiarity principle as stated in Section 81 par. 2 PatG (German Patent Act) is also applicable with respect to European patents and opposition proceedings before the European Patent Office (EPO) and is not limited to German patents and opposition proceedings before the Federal Patent Court. Therefore, independent of whether the case is about a German patent or a German part of a European patent, according to the subsidiarity principle a nullity action against the patent is inadmissible as long as an opposition against the patent may still be filed or is still pending.

This was also true if a nullity action against a German part of a European patent is only based on post-published national prior art documents in the sense of Section 3 par. 2 no. 1 PatG, i.e. which according to Article 54 par. 3 EPC are not considered in the opposition proceedings before the EPO. Only in case the post-published national prior art document was identical with the attacked German part of the European  patent a nullity action against the German part of a European patent was admissible, and also if opposition proceedings are still pending (cf. decision of October 20, 2006 – Case 3 Ni 7/06 – “Schlauchbeutel/Tubular bag”).

In the decided case, the plaintiff filed a nullity action against a German part of a European patent before the Federal Patent Court while an opposition against this European patent before the EPO was still pending. The plaintiff stated that the subsidiarity principle according to Section 81 par. 2 PatG was – for reasons of effective

legal protection – not applicable in the present case, since the nullity action was only based on post-published prior art documents in the sense of Section 3 par. 2 no. 1 PatG and which, according to Article 54 par. 3 EPC, could not be considered in pending opposition proceedings.

The Court did not follow this argumentation and pointed out that the intention of the subsidiarity principle according to Section 81 par. 2 PatG was to prevent that different decisions with respect to the same patent occur, and that this also applied in the present case, i.e. with respect to a German part of a European patent. Thus, in order to prevent diverging decisions, the Court had to wait for the completion of the opposition proceedings before the EPO, as only then it becomes definite whether and to what extent the European patent stays in force. Thereafter, it could be decided whether the national post-published prior art document in the sense of Section 3 par. 2 no. 1 PatG was still novelty destroying with respect to the subjectmatter of the attacked German part of the European patent. Only if the post-published prior art document in the sense of Section 3 par. 2 no. 1 PatG was identical with the attacked German part of the European patent, an exception of the subsidiarity principle according to Section 81 par. 2 PatG could be made, since in this case it was clear that, independent of the results of the opposition proceedings before the EPO, the patentee could by no means limit its patent against such an identical post-published prior art document and, thus, the German part of the European patent would be revoked anyway (cf. decision of October 20, 2006 – Case 3 Ni 7/06 – “Schlauchbeutel/Tubular bag”).

Remarks

As a result, beside the rare exception that a post-published German prior art document is identical with the attacked German part of the European patent (cf. decision of October 20, 2006 – Case 3 Ni 7/06 – “Schlauchbeutel/ Tubular bag”), for the time being, the Federal Patent Court does not allow any further exceptions to the subsidiarity principle according to section 81 par. 2 PatG. According to the Federal Patent Court, for reasons of legal certainty, one has to accept that possibly highly relevant postpublished prior art documents in the sense of section 3 par. 2 no. 1 PatG are only considered after opposition proceedings before the EPO have been completed, even if this takes several years.

Reported by Dr. Stefan V. Steinbrener

Although not categorically excluded, computer-implemented inventions predominantly involving aspects of business methods or financial transactions have hardly been found patentable by the boards of appeal. In virtually all of the available cases, the underlying business or financial concept, as innovative as it might be, was considered to relate to non-patentable subject-matter “as such” so that it could legitimately be split off and ignored when assessing inventive step. The remaining technical aspects then regularly related to a straightforward automation by conventional technical means, leading to a conclusion of obviousness. In so far, any positive result reached by a board of appeal in this respect should attract the attention of interested circles.

The Examining Division adopted the above approach when refusing the European patent application underlying Case T 1051/07. The Division held that an admissible claim 1 according to an auxiliary request related to financial transactions by the subscribers of portable terminals (e.g. mobile phones). A virtual mobile account was issued to each subscriber and administratively managed by a service provider on a host computer, where the mobile account was stored in a data base. Transactions with said mobile account were effectuated between a real bank account of the subscriber and intermediate accounts, the so-called juridical body accounts, of the service provider at the respective bank (“juridical body bank account”) and in said data base of the host computer (“juridical body service account”). Money transfers between the subscriber's bank and mobile accounts were

administered in the data base via said juridical body accounts. In the Division's eyes, the claimed subject-matter basically related to the organisational, procedural or administrative aspects of such financial transactions and therefore concerned a business and administrative method rather then an invention within the meaning of Article 52(1) EPC. The implementation of said transaction method in a technical infrastructure involved the following technical features: a database, an interface, a control unit, a communication network and a settlement system. The technical infrastructure would be put in place by the person skilled in the art of payment systems without any inventive skill and was, moreover, common knowledge in banking systems and mobile phone technology. Even if a document was considered for assessing inventive step of the claimed subject matter, it was also obvious since the only difference was the introduction of virtual or juridical accounts that only related to administrative, banking and accounting procedures and did not affect the technical architecture.

The Division's findings were, however, not confirmed in subsequent appeal proceedings. Following a proposal by the Board in its summons to oral proceedings, the appellant included a two-step money transfer in claim 1 of an auxiliary request, a first transfer between a first intermediate account (“bank account of the juridical body providing the financial transaction” corresponding to the “juridical body bank account”) and a bank account of the subscriber, and a second transfer between a second intermediate account (“service account of the juridical body providing the financial transaction service” corresponding to the “juridical body service account”) and the mobile account of the subscriber. This two-step money transfer was then substantially maintained in the single independent system claim submitted at the oral proceedings before the Board. Any necessary alignment of the two intermediate accounts is not mentioned in the claim, hence it must be considered to be more or less implied.

In its decision, the Board determined the most relevant prior art to be a document which already disclosed a secure payment system allowing a user to pay, e.g. by means of a mobile phone, a service provider via a user account on a host computer, however without mentioning any details of the money transfer to this account. The features distinguishing the claimed subjectmatter from this prior art (i.e. in substance the provider host comprising a subscriber service interface receiving and transmitting transaction requests; a transaction service interface transmitting the requests via a financial network to a bank to perform the money transfer between the subscriber and provider bank accounts; and a data base where the money was loaded to the mobile account of the subscriber via a service account of the provider) were found to

allow a subscriber to load money on his account in the host computer. The objective problem was therefore to provide a system with means allowing a user to load money on his account in the host computer (or realise money from his account). As none of the available documents addressed this problem to be solved or contained any indication as to its solution, the subject-matter of claim 1 was not considered to be obvious to a person skilled in the art.

The Board then felt obliged to also deal briefly with the objections raised by the Examining Division. Although the Board generally agreed that reloading the host computer account fundamentally constituted (part of) a business method and thus would lack technical character, the claimed subject-matter was not confined to merely reciting an administrative banking procedure alongside straightforward technical means for its implementation, but rather provided a technical solution, involving technical means to the technical problem of how to reload such an account. This solution was, as discussed above, not considered obvious, leading to the grant of a patent.

Remarks

In accordance with established jurisprudence, the claimed subject-matter manifestly has technical character. Whether or not the claimed loading procedure contributes to the technical character appears to be a more delicate issue. The protocol steps for executing this procedure were considered by the Examining Division to lie entirely in the business domain, whereas the Board, though agreeing in part, appears to rely in essence on some kind of close interaction or interrelationship between those steps and the technical environment. Highlighting such interaction therefore seems to be of crucial importance for applicants.

The argument given in respect of technicality is rather summary and leaves it open whether the Board based its finding on specific aspects of the case (e.g. by judging that the two-step money transfer via intermediate accounts did not primarily result from economic circumstances, such as the fact that different economic entities having competing interests of business control were involved in the transaction) or whether the Board's finding might claim a more general applicability. The emphasis on “how” a technical problem is solved would only appear to become a decisive criterion if the solution might also be based on non-technical aspects.

Reported by Dr. Sorel Stan and Dr. Rudolf Teschemacher

After refusal of an application, a divisional application may be filed until the end of the time limit for filing an appeal, even if no appeal is filed.

In the reported case, the parent application was refused by a decision rendered orally by the Examining Division at the end of oral proceedings. A few weeks later the applicant filed a relating divisional application. Subsequently, the decision to refuse the parent application was notified to the applicant in writing. The applicant did not appeal.

After the time limit for filing an appeal had expired, the Receiving Section decided that the divisional application had not been validly filed. Since a decision given orally becomes effective by virtue of it being pronounced (cf. G 12/91, OJ EPO 1994, 285, pt. 2 of the reasons), the Receiving Section concluded that the parent application was no longer “pending” within the meaning of Rule 25 EPC 1973 (new Rule 36 EPC) when the divisional application was filed. In doing so, the Receiving Section acted in accordance with consistent EPO practice (Guidelines for Examination in the EPO, A-IV, 1.1.1.1) and case law.

The applicant appealed. On his auxiliary request, the Legal Board of Appeal, in its interlocutory decision J 2/08 (OJ EPO 2010, 100), referred the following question to the Enlarged Board of Appeal:

 “Is an application which has been refused by a decision of the Examining Division thereafter still pending within the meaning of Rule 25 EPC 1973 (Rule 36(1) EPC) until the expiry of the time limit for filing a notice of appeal, when no appeal has been filed?”

At the outset, the Enlarged Board of Appeal notes that the EPC distinguishes between a “pending patent application” and “pending proceedings”. A patent application is pending as long as substantive rights can be derived from it. Article 67(4) EPC indicates clearly until when such substantive rights deriving from a European patent application are in existence if a patent is not granted. In particular, it provides that the application shall be deemed never to have had the effects of provisional protection when it has been withdrawn, when it is deemed to be withdrawn or “finally refused”. Therefore, substantive rights of the applicant under Article 67 EPC may continue to exist after refusal of the application until the decision to refuse becomes final, because third parties using the invention before the decision to refuse it has become final incur the risk of becoming liable under national law.

In an obiter dictum, the decision addresses the different situation of the grant of the patent. The Enlarged Board of Appeal notes that in this case the pending status of the application normally ceases on the day before the mention of the grant is published since substantive rights are no longer derived from the application, but now derive from the granted patent.

As a result, the Enlarged Board of Appeal answered the question as follows:

 “In the case where no appeal is filed, a European patent application which has been refused by a decision of the Examining Division is thereafter pending within the meaning of Rule 25 EPC 1973 (Rule 36(1) EPC) until the expiry of the time limit for filing a notice of appeal.”

Remarks

Given the increase in the number of oral proceedings before the Examining Divisions as experienced by applicants lately, one consequence of practical relevance is that the applicant does not have to file a divisional application only as a precautionary measure before the oral proceedings, just in case the application is refused and no appeal is filed (as required by the previous EPO practice). Now the applicant has the option

of filing a divisional application during the two month appeal period (cf. Article 108 EPC, first sentence) running from the notification of the written decision, provided the time limits under new Rule 36(1)(a),(b) EPC have not expired. The decision simplifies the procedure and increases legal certainty. In addition, it is in line with German practice, as set out in detail in the referring decision J 2/08.