The Market Court and an Interim Injunction (Alleged Utility Model Registration in Bad Faith)

Background

In November 2012, a company B (B) filed a utility model application for an invention 'Attachment arrangement'. The invention consisted of independent claim 1 and dependent claims 2-5. The Finnish Patent and Registration Office (PRH) registered the utility model (no. 9968) on 28 January 2013. 

Utility Model Registration no. 9968.

In 2014, a company A (A) lodged an invalidity claim against the registered utility model. The A provided prior art documents D1-D8. In 2015, the A added a prior art document D9. Basically the A wanted to prove that it has been selling an apparatus that is identical with the utility model and that these sales have occurred before the B filed the utility model application in 2012. 

In 2015, PRH confirmed in its decision that the documents D2-D4 and D9 cover the apparatus described in the claim 1 of the registered utility model no. 9968. However, PRH decided to reject the invalidation claim because the documents D2-D4 and D9 are based on a communication between two companies and an internal activity in those companies. This kind of communication or activity is not considered to be a material that has become available to the public. 

The documents D2-D4 provided proof of how the A has ordered a company C (C)  to manufacture and deliver a mold of an apparatus that is, allegedly, similar to the apparatus described in the claim 1 of the registered utility model. In the document D9, the A provided evidence of how it has started to manufacture the apparatus based on a mold ordered from the C and provided information on the sales of that apparatus. All this had occurred before the B filed the utility model application in 2012. 

---

In 2016, the A brought an action for an interim injunction against the B in the Market Court. The A requested the court to order that a bailiff, or an expert on behalf of the bailiff, will carry out the following measures in the business premises of the B:

1. Investigate and copy or otherwise preserve:

a) the received and sent emails, including attachments, inter alia, (i) between the B and the C.

b) electronic documents and other files regarding the registered utility model no. 9968 or regarding other apparatus similar to the utility model.

2. Seize the physical papers and drawings regarding the registered utility model no. 9968 or regarding other apparatus similar to the utility model.

3. Seize all the prototypes, if the B has such, that the C has manufactured for the A.

Furthermore, the A requested the court to order the injunction without giving the B opportunity to be heard.

The Market Court issued its decision 325/16 on 3 June 2016.

The Market Court

The court first clarified the legal basis of the interim injunction application.

According to section 1 paragraph 2 of the Act on Securing Evidence in Civil Matters concerning Industrial Rights and Copyrights (344/2000), the Act is applied to a situation in which, inter alia, an entrepreneur has unjustifiably used or revealed a business secret, a technical model or technical instructions.

According to section 2 of the Act, the court can give a seizure order concerning any material that can have a significance in the case in question. The opposing party shall not suffer undue inconvenience in comparison with the benefit to be secured (comparison of interest / unreasonable inconvenience). According to section 3 of the Act, the rightholder needs to demonstrate that it is probable that he or she has a right that is enforceable against the opposing party, and the right is being infringed or that such infringement is imminent (claim requirement). Furthermore, there is a danger that the opposing party, or the one who has the material, conceals, destroys or hands over the evidence or in some other manner endangers the preservation of the evidence (danger requirement).

According to Government Bill 119/1999 of the Act, the applicant has to specify the object of the injunction. One has to know what to look for during the enforcement of the injunction. Furthermore, the specification is needed so that the court can assess whether the object has a significance as an evidence. The applicant has to specify the object of the injunction so precisely that the bailiff can carry out the enforcement without further consideration.

According to section 4 of the Act, the court can, on request, order the interim injunction without giving the defendant opportunity to be heard, if the purpose of the injunction is otherwise endangered.

According to section 5 paragraph 1 of the Act, a bailiff can use, if necessary, an unchallengeable expert. The applicant of the injunction, or his/her representative, can act as an expert if it is likely that he/she will not unjustifiably obtain any other business or trade secrets. 

1. Claim requirement

The A provided evidence that the figure eight of the registered utility model no. 9968 is identical with the drawings that the A sent to the C in 2010. The court stated that the A has an enforceable right against the B and the claim requirement is therefore fulfilled. The court stated also that at least part of the material, targeted by the injunction, has a significance in the case.

The A argued that the B has received material from the C and used it in the utility model application. Therefore, the email correspondence between the B and the C may have a significance as an evidence. The court agreed and stated that the relevant time period is between 2010 and 28 November 2012.

Otherwise the court rejected the requests no. 1-3 because it could not evaluate whether the material targeted in those requests would have a significance regarding the unjustifiable use or reveal of a technical model, i.e. the requests were not specific enough. 

Utility Model Registration no. 9968, Fig. 8.

2. Danger requirement

The court referred to earlier Supreme Court rulings 1994:132 and 1994:133 where the Supreme Court has ruled that the danger requirement is fulfilled if the danger is not very improbable based on the circumstances in the case. 

According to the A, it is likely that the B has some of the targeted material described in the interim injunction application. Taking into account the alleged bad faith behavior described above, there is a danger that the B conceals, destroys or hands over the evidence or in some other manner endangers the preservation of the evidence before the main proceedings. The court agreed and stated that the danger requirement is sufficiently fulfilled.

3. Comparison of interest / unreasonable inconvenience

The court considered that, as mentioned above, it is justifiable to order the interim injunction only regarding the request 1 (a)(i), i.e. the email correspondence, including attachments, between the B and the C between 2010 and 28 November 2012. Furthermore, the material is ordered to be left in the bailiff's possession. Since the injunction is ordered in a restrictive form like this, the opposing party B is not going to suffer undue inconvenience in comparison with the benefit to be secured. The comparison of interest / unreasonable inconvenience requirement is thus fulfilled.

The court also considered that there is a reason to order the interim injunction without giving the defendant opportunity to be heard.

---

Therefore, the Market Court ordered a bailiff to carry out the following measure in the business premises of the B:

- Investigate and copy or otherwise preserve the received and sent emails, including attachments, between the B and the C between 2010 and 28 November 2012.

The bailiff can use, if it is necessary, an unchallengeable expert who is obliged to follow the rules of confidentiality and prohibition of exploitation.

Enforcement and security

A prerequisite for the entry into force of the interim injunction is that the applicant applies for enforcement of a precautionary measure as provided in chapter 8 of the Enforcement Code (705/2007).

According to chapter 8 section 2 paragraph 1 of the Enforcement Code, enforcement of a precautionary measure requires that the applicant lodges with the bailiff security for loss that the respondent may incur as a result of the precautionary measure.

The A has to apply the enforcement not later than 13 June 2016. Furthermore, the A has to deliver a document covering the description and results of the enforcement not later than 20 June 2016.

The Market Court: Utility Model for Laser Treatment Lacked Novelty

A utility model is similar to a patent. However, there are some differences. One key difference is that many registration authorities, like the Finnish Patent and Registration Office (PRH), do not automatically examine the requirements of novelty and inventiveness. The examination of those requirements is necessary only if an invalidity claim is raised in relation to those requirements.

The examination of novelty became the decisive factor in the Market Court decision 336/16 of 7 June 2016.

Background

In February 2012, the Board of Trustees of the Leland Stanford Junior University (LSJU) filed a utility model application for an invention 'Patterned laser treatment of the retina'. The invention consisted of independent claim 1 and dependent claims 2-20. The application was converted from a European Patent Application, filed on 2 December 2004. 

PRH registered the utility model (no. 9630) on 19 April 2012. 

Drawing of the invention.
Application no. U20124034.

Valon Lasers Oy (VL) lodged an invalidation claim based on section 19 of the Act of Utility Model Rights (800/1991). The section 19 provides that a utility model registration shall be declared wholly or partially invalid in response to a request to that effect, if, inter alia, the registration relates to an invention that is not new and/or lacks the required inventiveness. VL cited the following prior art documents:

- D1: US 2003179344 A, 25 September 2003

- D2: JP 2001149403 A2, 05 June 2001

PRH accepted the invalidation claim and revoked the utility model on 31 July 2014. According to PRH, all the features in the claim 1 are found in both prior art documents (D1 and D2) although the solutions in the documents are slightly different in practice.

The Market Court

LSJU appealed to the Market Court and requested that the decision of PRH will be reversed. Furthermore, LSJU requested that the Market Court upholds the registration of the utility model no. 9630 in accordance with claims the appellant has provided to the Market Court on 8 December 2014 (independent claim 1 and dependent claims 2-18).

Here is a translation of the independent claim 1, amended on 8 December 2014 (FinnIPR translation with the help of EP20040812972): 

1. A system for laser treatment of the retina of an eye of a patient, the system comprising: 

an alignment source (411) producing an alignment beam that provides a visible alignment pattern comprising a plurality of separated spots projected onto said retina; and 

a laser source (413) producing, responding to an operator action, a laser beam for providing doses of laser energy to at least two treatment locations on said retina where the said spots are,

characterised in that the said treatment locations are spaced apart, and that the system comprises a scanner for moving the laser beam from one of said treatment locations to another of said treatment locations, and wherein said scanner moves the alignment beam from one of said separated spots to another of said separated spots, and for providing all of said doses of laser energy to said treatment locations substantially sequentially, and in less than about 1 second.

VL, on the other hand, argued that:

1) the appellant should have provided the amended claims already in the proceedings at PRH. Therefore, the amended claims should be dismissed. 

2) the invention is, according to the independent claim 1, merely a process and therefore not registrable. 

3) the amended independent claim 1 and the description include matter that is not disclosed in the original application. 

4) the independent claim 1 of the invention is not presented precisely enough and that the description of the invention is not sufficiently clear to enable a person skilled in the art to carry out the invention. 

5) the invention is not new and/or it lacks the required inventiveness.

The Market Court issued its decision 336/16 on 7 June 2016. 

1) Was LSJU able to amend the claims in the proceedings at the Market Court?

The Market Court started its analysis by stating that one has to seek answer from the Administrative Judicial Procedure Act (586/1996) since neither the Market Court Proceedings Act (100/2013), Act on Utility Model Rights nor the Act on the Finnish Patent and Registration Office (578/2013) have rules that restrict the appellant from presenting new grounds during the appeal proceedings.

Section 27 paragraph 2 of the Administrative Judicial Procedure Act provides that, after the end of the appeal period, the appellant may present new grounds in support of his appeal, unless the matter as a result changes in nature. The court ruled that this applicable rule does not prevent the appellant from providing new amended claims during the appeal to the Market Court.

2. Is the invention merely a process?

According to section 1 paragraph 4 sub-paragraph 3 of the Act on Utility Model Rights, utility model rights shall not be granted for processes.

VL had argued that the invention is merely a process because of the following statement in the independent claim 1:

"providing all of said doses of laser energy to said treatment locations -- in less than about 1 second".

The court ruled that the feature mentioned above is a so-called functional feature. The court continued by stating that it is possible to use functional features in product or apparatus claims. The court concluded that the independent claim 1 is clearly an apparatus claim, not a process claim.

3. Does the amended independent claim 1 and the description include matter that is not disclosed in the original application?

According to section 11 of the Act on Utility Model Rights, a utility model application may not be amended in such a way that a utility model right is claimed for matter not disclosed in the original application.

VL argued that the statement in the independent claim 1, which mentions that the treatment locations are apart, is not disclosed in the original application. 

The court disagreed and stated that the original description includes drawings that demonstrate how the treatment locations are apart.

4. Is the independent claim 1 of the invention presented precisely enough and is the description of the invention sufficiently clear to enable a person skilled in the art to carry out the invention?

According to section 6 paragraph 2 of the Act on Utility Model Rights, the application shall contain a description of the invention, accompanied by drawings where necessary, and a precise statement of the subject matter for which utility model right protection is sought (a claim). Furthermore, the description shall be sufficiently clear to enable a person skilled in the art to carry out the invention with the guidance thereof.

VL argued that according to the description, the treatment locations could be bigger than the alignment spots and therefore, according to VL, the treatment locations could be partially overlapping each other if their corresponding spots are close to each other and if the treatment locations are bigger in relation to the said spots. This would contradict the independent claim 1, which mentions that the treatment locations are apart.

The court stated that the description of the invention does not mention that the treatment locations could be partially overlapping. The statement in the independent claim, which mentions that the treatment locations are apart, is therefore consistent with the description and it is presented precisely enough.

5. Is the invention new and does it have the required inventiveness?

According to section 2 paragraph 1 of the Act on Utility Model Rights, an invention must be new in relation to what was known before the filing date of the utility model right application and must differ essentially therefrom.

VL argued that the independent claim 1 is not new in light of the prior art documents D1 and D2.

The court stated that the D1 does not include a feature where an alignment beam provides a visible alignment pattern comprised of several separate spots. The invention, as presented in the independent claim 1, is therefore new in light of prior art document D1.

The court then analysed the prior art document D2. According to the court, there are some differences between the treatment presented in the independent claim 1 and the treatment presented in D2. The court ruled, however, that the functional features, mainly the separate treatments spots, are not able to add to the independent claim 1 any technical features, which would differentiate the independent claim 1 from the prior art D2.

The court ruled that the invention is not new in relation to what was known before the filing date of the utility model right application and it does not differ essentially therefrom.

Therefore, the invention is not registrable.

The appeal was dismissed.