Success at the Federal Court of Justice
19 April 2023
The Federal Court of Justice (Bundesgerichtshof, BGH) comments on the extent to which the installation of spare parts leads to a new production displacing the exhaustion effect.
On 8 November 2022, the Federal Court of Justice delivered its judgement (8 November 2022, X ZR 10/20) in the legal dispute concerning the question of a new production displacing the exhaustion effect, in which it overturned the decisions of the lower courts and dismissed the action in its entirety. In doing so, it followed the submissions of the defendants’ representatives from Withers & Rogers, patent attorney Dr Ernst-Ulrich Wittmann and attorney at law Ute Pfaller.
The subject of the dispute was the distribution by the defendant of brake pad sets which are suitable as spare parts for patent-protected disc brake models manufactured by the plaintiff. The installation accessories supplied included two wear plates. The plaintiff considered this to be an indirect infringement of the patent in suit.
Düsseldorf Regional Court (Landgericht, LG) ruled at first instance (decision of 07.02. 2019 – 4C O 98/17) that even when a wear part is replaced, it should be considered a new production – and thus a patent-relevant act of use – since it was precisely the contested wear plates that were deemed to have copied the disclosed invention, because the maintenance of the generic brake was considerably simplified by the wear plates according to the claims, as only the plates, which are comparatively easy to remove and re-install, needed to be replaced, but not the brake carrier as such.
It was therefore precisely the contested embodiment that was responsible for the advantage disclosed in the patent and the solution to the (partial) task of facilitating maintenance.
The Court of Appeal did not rule differently at the next instance (Oberlandesgericht, OLG Düsseldorf, 23.01.2020 – I-2 U 13/19).
The installation of the wear plates sold by the defendant as spare parts for disc brakes manufactured by the plaintiff resulted in a disc brake directly using the patent with all the features of the patent claims.
The distribution of the contested wear plates constituted an indirect infringement of the patent in suit, since they were an essential element of the patent-protected invention, having been expressly mentioned in the characterising part of the main claim and making a significant contribution to the solution.
This assessment did not withstand the legal review in one key area.
Contrary to the Court of Appeal’s view, the principle of exhaustion precluded the plaintiff from opposing the use of the contested wear plates in brakes that had been put on the market with the plaintiff’s consent.
The lawful acquirers, as well as subsequent third-party acquirers – including competitors of the patent proprietor – were entitled to use these copies for their intended purpose, to sell them to third parties or to offer them to third parties for one of these purposes.
Intended use included maintaining and restoring usability if the function or performance of the specific specimen was impaired or suspended in whole or in part by wear, damage or another reason. In contrast, intended use did not include all measures that resulted in re-manufacturing a product according to the patent, because the patent proprietor’s exclusive right to manufacture was not exhausted when a copy of the product according to the patent was placed on the market for the first time.
Contrary to the opinion of the Court of Appeal, a new production was also not to be affirmed because of the technical effects of the contested parts.
According to the case law of the Federal Court of Justice, the distinction between intended use and new production was primarily determined by whether the measures taken preserved the identity of the specific copy of a patented product that had already been put on the market or whether they amounted to the creation of a new copy of the patented product.
In order to assess this question, it was necessary to weigh up the legitimate interests of the patent proprietor in the commercial exploitation of the invention on the one hand and the legitimate interests of the customer in the unrestricted use of the specific invented product put on the market on the other hand, taking into account the characteristics of the patent-protected product.
Even if the contested wear parts belonged to the parts in which these effects according to the invention were reflected, their replacement did not lead to a new production.
The sole technical effect of the contested wear parts was that they wore out and thus counteracted wear of the firmly welded-on brake carrier. This effect was not sufficient to affirm a new production.
The replacement of a component designed as a wear part and limited to this function did not add any technical function to the product concerned. In fact, the conditions for the product to achieve the intended long-service lifetime were merely created again. However, maintaining the intended lifetime was one of the acts which a lawful acquirer and his successors were in principle entitled to do.
This right could be limited, however, if the replacement of a wear part led to the technical effects of the invention, which had been lost or limited due to wear, being brought about again or made possible. However, this exception could not apply if the technical effect of the replaced part consisted solely in maintaining the usability of the product as a whole by forming it as a wear part.
Here, the Federal Court of Justice took an evaluative view based on patent law considerations and found an appropriate balance between the legitimate interests of the patent proprietor in the economic exploitation of the invention and the legitimate interests of the customer in the unrestricted use of the product which has been put on the market.
If a user were prevented from replacing a wear part simply because the wear of this part would belong to the effects of the invention without having any further effects beyond that, this would lead to an excessive impairment of the legitimate interests of rightful purchasers.
The decision of the Federal Court of Justice therefore now also brings certainty for the purchasers with regard to the use and installation of spare parts.