Siemens Schweiz AG v Thorn Security Ltd

This is a patent action in which the claimant asserts its patent against the defendant and alleges infringement in respect of a coating for printed circuit boards (“PCBs”). The defendant seeks to have the patent revoked on the basis of obviousness over one particular piece of prior art. The obviousness case shrank during the course of the trial. A claim of obviousness over common general knowledge and over a second piece of prior art was abandoned at the end of the evidence. As well as what might be called the normal sort of issues that arise in these sort of cases, there are also issues relating to competing translations of the patent (whose original text was German), and in relation to section 68 of the Patents Act 1997 (the effect of non-registration of ownership of the patent after mergers of the owning companies in Switzerland). The claimant was represented by Miss Heather Lawrence; the defendant was represented by Mr Iain Purvis QC.

The patent is a European Patent, No EP 0577094 B1. It was filed in German, which became “the language of the proceedings” for the purposes of section 80 of the 1977 Act. An English translation was filed under section 77. Because issues arise as to differences in the translation it will be necessary to consider both. However, the issues concern only the effect of two particular words, and for the purposes of describing the patent I can use the English version and the English wording.

The patent describes the invention as follows:

“The invention concerns a printed circuit board, having a protective coating made from an electrically insulating, thermoplastic material, and a process for manufacturing such a printed circuit board with protective coating."

The claims so far as relevant are as follows:

“1.

Printed circuit board for electronic modules, having a protective coating made from an electrically insulating, thermoplastic material, the protective coating consisting of a plastic film made from an electrically insulating, thermoplastic material to which wax is added to improve its flow properties, said wax at the same time facilitating through-plating and soldering operations through the protective coating, and the geometrical shape of the plastic film corresponds to the area of the printed circuit board to be protected, and the film is fused onto the printed circuit board by the action of heat, so that it covers the printed circuit board in a virtually air-tight and moisture-proof manner." [Again the italicised are words in relation to which questions of meaning arise, and the effect of differences when compared with the German; the underlined words are words in relation to which there is an issue as to whether or not they form a part of the claim.]

….

4.

Printed circuit board with protective coating according to one of Claims 1 to 3, characterised in that the plastic film has openings for components to be left free-standing on the printed circuit board.

….

6.

Process for manufacturing a printed circuit board with protective coating and according to one of Claims 1 to 5, in which in a first process step (B) the plastic film is formed into the geometrical shape corresponding to the area of the printed circuit board to be protected, and in a following step (C) is placed on the surface of the printed circuit board, and in a final step (D) is fused onto the printed circuit board under the action of heat.”

The claimants allege that the defendant infringes its patent by applying a film to a PCB. The board is used in one of its fire alarm systems. I was shown a finished product, albeit one on which certain experiments were carried out for the purposes of this action. It is a smallish board which is square but with the corners cut off. It has a large number of small surface-mounted components on it, most of which protrude only a small amount above the surface but 3 or 4 of which protrude more significantly. The board is covered by a thin plastic-feeling film whose shape corresponds largely to the shape of the board (though it is slightly smaller, so it does not go to the edges), but there is a cut out shape corresponding to a band of 5 small connectors, three “holes” through which three surface-mounted cylindrical modules protrude, and 5 holes corresponding to 6 holes on the board which are 3 or 4 mm in diameter with 1mm surrounding metal rings (save for one hole which has no surrounding metal ring).

The defendant’s amended Production Process Description describes how the process of applying the coating film to the board is carried out. The following are the material points emerging from it:

The claimant claims that the defendant infringes the patent by making and disposing of its boards, because the boards infringe the claims and because the manufacturing process infringes. Key to this allegation are that the covering is a film, that it contains wax, that the wax facilitates “through-plating and soldering” and improves flow qualities, and that the manufacturing process involves heating, pressing and fusing the film on to the boards so that they adhere. That it is a film is not disputed. The other aspects are. I shall return to this in more detail when I consider the issues of infringement.

I heard oral evidence from three technical experts, one Swiss legal expert and two translators.

One of the technical experts was called to deal with experiments. The other two of the three technical experts were called to deal with the meaning of certain words in the patent, common general knowledge and the prior art. They gave evidence relating to the “skilled person” in relation to these matters, as well as certain technical matters relating to the invention. Much of their evidence became irrelevant in the light of the abandonments by the defendant at the end of the evidence. The technical experts were as follows:

There was also evidence from two translators – Miss Amanda Conrad for the defendant and Mr Neil Simpkin for the claimant. Both were thoughtful and careful about their evidence, and impressed me about how they went about their task of providing translations in a technical area.

As if it were not difficult enough construing a patent in one language, this case presented the problem of having to construe it in two, because of the status of the English translation of the German “original” and a perceived difference between the meaning and effect of words used in the two languages. I have highlighted the relevant differences above. Apart from those words there were no perceived relevant differences in wording or effect, so apart from those words I was able to work from the English translation as if it were for all purposes the governing document even though, for reasons which will appear, strictly speaking it was not.

The status of the two documents is governed by section 80 of the 1977 Act. Subsections (1) and (2) read as follows:

“(1)

Subject to subsection (2) below, the text of a European patent or application for such a patent in the language of the proceedings, that is to say, the language in which proceedings relating to the patent or the application are to be conducted before the European Patent office, shall be the authentic text for the purposes of any domestic proceedings, that is to say, any proceedings relating to the patent or application before the comptroller or the court.

(2)

Where the language of the proceedings is French or German, a translation into English of the specification of the patent under section 77 above or of the claims of the application under section 78 above shall be treated as the authentic text for the purpose of any domestic proceedings, other than proceedings for the revocation of the patent, if the patent or application as translated into English confers protection which is narrower than that conferred by it in French or German.”

This sort of structured approach is necessary in order to keep the two versions distinct where questions of construction arise. As I have said, the parties in the case before me sought to use the wording in one language version (the German) in order to construe the language of the other (the English). That approach is not permissible. If there is a dispute as to meaning then that has to be sorted out by reference to the one language version only.

I have indicated above the words in respect of which questions of construction arise. One of those words (“through-plating”) arises in part of Claim 1 which is descriptive and enclosed by commas. I have underlined it in the extract set out above. Miss Lawrence invited me to disregard those words on the footing that they were “surplusage” and not part of the claim. If she is right about that then one of the questions of construction (viz the meaning of “through-plating”) does not arise.

Miss Lawrence made her submissions on this point on the basis of PCME v Goyen Controls [1999] FSR 801. In that case Laddie J was faced with a patent in which the relevant claim was:

“A method for detecting particles [by a given method] to provide an indication of the particle flow into the gas flow wherein, in order to reduce the effect of variations in ‘gas float related variables’ other than those relating to particle flow, an alternating component in the signal …”

At paragraph 13 of his judgment Laddie J said:

“13.

A number of features of the invention and these claims should be noted at the outset. The words "in order to reduce the effect of variations in "gas float related variables" other than those relating to particle flow" in claim 1 and their equivalent in claim 18 are surplusage. As the plaintiff accepted, they do no more than describe the alleged benefits of using the alternating component from the signal. They do not limit the scope of the claims.”

Miss Lawrence said the same was true of the comparable words in Claim 1 in the present case. It is not clear to me on the facts of PCME how it was that the words were thought to be surplusage. The matter seems to have been the subject of a concession (though the attitude of the defendants is not apparent from the report). The use of the word “surplusage” suggests that Laddie took the view that the words were not capable of limiting the patent, though if that was the case then I do not see why it is worth making the point that he made about them – they could simply have been ignored. If they were capable of limiting the patent then I would have thought that the relevant question would have been whether as a matter of construction they were intended to do so, in which case I would have expected Laddie J’s formulation to have been slightly different.

But be all that as it may, I do not consider that the same point operates in relation to the relevant words Claim 1 of the patent in suit. The words do not merely “describe the alleged benefits”. They do describe some of the benefits and objects of the patent, but not all of them, in addition to (“at the same time [as]”) the improvement of flow properties. They are as much a part of the claim as the words “to improve its flow properties”. They describe a feature of the invention, and cannot fairly be regarded as “mere surplusage”. Not only does that appear from the structure of the Claim itself; it also appears from other parts of the specification. It is expressed as a “further object” of the invention that the elements can be “measured through the protective coating and individual components can be replaced even after the protective coating has been completed”. The inability to do that is one of the expressed disadvantages of the prior art referred to below (“Toshiba”), and thus this object is one of the things that means that the invention is said not to have the disadvantage of the prior art. In the light of that I do not think that the expression of this feature in the claim (which repeats identical wording in the description, which is said to “achieve these objects”, which include the object that I have just referred to) can be disregarded as mere surplusage.

In those circumstances the words are important and the meaning of “through-plating” has to be determined.

Having set out how one goes about construing the documents, it is now necessary to construe the patents in the case before me. I have identified the words in relation to which issues arise. I shall start with the English because it is easier to describe the disputes that arise in relation to one’s native tongue. I can then describe the disputes that arise in relation to the German in the same sort of terms but bearing firmly in mind that it will at that stage be the German document that I am construing, and that I am doing so without reference to the English translation.

The first dispute that arises is as to the meaning of “through-plating” in claim 1. There are said to be two candidates for what this means:

The patent has to be construed as if viewed through the eyes of the skilled man. Dr Pecht and Mr Godfrey gave evidence of how the expression (which seems on its face to be a technical one) would strike that person. They both accepted that the expression “through-hole plating” was a term of art which would be known to that man. However, they did not agree as to whether that meaning (Meaning A) should be given to the words in the patent.

Dr Pecht said that the term “through-plating” was not a technical expression which was known to the industry. His evidence in chief was to the effect that the expression (without the hyphen) was used in the sense of Meaning A by a few non-technical people (according to the literature he had identified), but he denied that that usage was common or well-known. But he said that even if it was on occasions used in that sense, technically it made no practical sense to construe it in the sense of Meaning A. One could not see any practical way in which making vias was “facilitated”. Apart from anything else, making vias was something one did in the manufacturing of the board itself. He preferred meaning B.

Mr Godfrey’s evidence was different. He seems to have taken the expression “through-plating” to bear Meaning A, though his report does not expressly deal with industry usage of the term. In his report he referred to the concept of a “through plated” hole (which is not the same as the expression in the patent) as being one within Meaning A. However, he accepted that in the context of this patent Meaning A did not make any sense in technical terms. There was no suggestion in the specification that it would or could be done, and he did not think it could. However, he also did not think that Meaning B made practical sense either, because while he agreed with Dr Pecht that the word “plating” could naturally mean the process of preparing a PCB for soldering (by, for instance, placing solder there) he thought that the film would prevent such a plating exercise unless it were removed first. He therefore thought that Dr Pecht’s Meaning B did not make any technical or practical sense either.

I think that the technical evidence does not show an established usage of the phrase “through-plating”, particularly in 1992. Mr Purvis himself did an internet search which established that there was some limited use of the expression to mean Meaning A, but it is only limited and was not widespread. Some of Mr Purvis’s search results demonstrated the use of different versions of the combination of the words “through”, “hole” and “plating”, and different adjectival forms of the last of those (eg “plated”). Care must be taken not to vest that sort of evidence with too much significance. Mr Godfrey took the expression to mean Meaning A, but he did not say that that was an accepted meaning. The main thrust of his evidence was that it was not.

Accordingly, I should treat Meaning A as being a possible meaning, but not the inevitable (or a standard) one. Meaning B is, as a matter of linguistics, possible as well. Both are challenged as making no practical sense. There are no other candidates as to its meaning, so I shall have to consider other factors in order to decide which of the two meanings (if either) is the right one.

The approach I should adopt to construction is that set out by Pumfrey J in Halliburton v Smith [2005] EWHC 1623 (slightly refining earlier pronouncements on the topic). The relevant passage is set out in Terrell on Patents, 16^th Edn at para 6-40. It is unnecessary to set it out in this judgment. For present purposes I bear in mind the following key points:

In addition, an observation of Aldous J in Rediffusion Simulation v Link Miles [1993] FSR 369 at 388 is pertinent to the present case:

“The specification should be read through the eyes of the skilled addressee, attempting to give it a practical meaning.”

Practicalities play a significant part in construing the patent in suit.

Having heard the evidence, I am satisfied that the term “through-plating” was not, in 1992, a clearly established term of art in the sense of being a shorthand for Meaning A. Meaning A would be a possible meaning that would occur to the skilled man. Nevertheless he would be likely to be puzzled by it, as the evidence of both Dr Pecht and Mr Godfrey showed. So far as the patent refers to or contemplates exercises to be carried out in relation to the PCB after coating, it contemplates repair exercises. The creation of a via is not such an exercise – it will have been done during the initial construction. It is not at all apparent why it would occur to anyone to create a via after the coating was applied. Meaning A looks very odd in the context of the patent, and to give effect to it would be give the words a meaning which would seem to be devoid of any practical significance.

Meaning B presents different problems. “Plating” is a well-known term, and a well-known technique. When combined with the word “through”, however, it is not an established term of art. The combination suggests carrying out a plating operation through something, and Meaning B, in the sense of carrying out a plating operation through the film, is a tenable meaning linguistically. The experts differ as to whether it could be sensibly carried out, but I think that the skilled man would, when viewing the patent, consider it as a technical possibility that would have occurred to the patentee. This meaning makes more sense in the context of the patent. The reference to the Toshiba prior art in the patent describes one of its disadvantages as being that:

“no more measurements can be made on the individual parts of the circuit and no modules can be replaced at a later date.”

The invention is described as not having the disadvantages of the prior art, and one if its further objects is:

“to form the protective coating in such a way that during the entire life of the printed circuit boards, individual circuit elements can be measured through the protective coating and individual components can be replaced even after the protective coating has been completed.”

That extract indicates two things. First, it envisages operations taking place through the coating (albeit in the context of the measurement of something), and second it envisages some form of repairing operations, at least in terms of replacement of components. The replacement of components might require “plating” in order to fix the replacement. The concept of being able to go through the coating to effect repairs is therefore something underlying the patent. In that context Meaning B has a contextual significance that Meaning A does not.

It is because of the contextual reality, and because of the possibility of plating “through” the coating having a practical significance as well, that I consider that Meaning B is to be preferred over Meaning A. The principles of construction that I have referred to above drive one in that direction. I do not consider it likely that the patentee intended to refer to a technical act that no-one can make practical sense of (creating vias) even if the words are capable of bearing that meaning. Meaning B makes more sense as a practical matter, and fits into the context better too. The words should therefore be construed in the sense of Meaning B.

Next I have to turn to a dispute as to the meaning of fused. The dispute between the parties here is as to whether the word means “melted” in the sense of being reduced to a liquid state (Thorn’s contention) , or whether it connotes a bonding resulting from a softening from the application of heat, short of being reduced to a liquid state. The same issue arises in relation to the German equivalent in the authentic German text, and many identical points arise on each of them, but I need to consider each word separately. In what follows, unless the contrary appears I shall use the word “melt” to mean reduced to a liquid state.

Siemens says that “fused” does not mean melt. The word is intended to describe the process of achieving a bond by softening sufficiently by heat in order to achieve that. Various matters are relied on in support of that. Apart from the fact that “melt” is not used, it is said it would be obvious to the skilled man that liquifying the film would not achieve the object of the invention because the liquid would flow off the very surfaces that were intended to remain coated, and especially the sharp-edged ones. The description of the film describes the choice of thickness thus:

“The film thickness is chosen so that irregularities on the printed conductor, and especially solder spikes, are reliably coated without tearing the film during fusing.”

It is said that liquids do not tear, so it is implicit in this extract that the film remains in what is to be regarded as a solid (unmelted) state. Again, the description describes the advantages of the film over the previous methods of producing conformal coating (which were generally applications of liquids), one of which is that the coating can be applied “with uniform layer thickness”. If it were to be melted into a liquid state it would not be of a uniform thickness. Dictionary definitions were deployed to demonstrate that while “fused” might mean “melt”, it did not necessarily have to.

Thorn disputed that. Mr Purvis relied on other parts of the patent, and in particular the preferred embodiment set out above which involved softening by heat, pressing and then a further application of heat in order to fuse. He relied on the explicit reference to softening when contrasted with fusing, which he said indicated that something more than softening must have been intended. That additional thing must be melting, or in the language of his skeleton argument “it must be sufficiently melted” that it flows easily round the components without needing to be pressed into place and then adheres as a result. If fused in the sense of “bond” had been intended, then “bond” would have been used. The mindset of the industry until that time was that conformal coatings were expected to adhere as a liquid; that is what the skilled man would expect to have to do with the film in the patent in suit. Furthermore, the particular material identified in the patent as being suitable is identified by its manufacturers as a “hot melt adhesive”, and the job of a hot melt adhesive is to melt – it would be expected to do so. The patent gives both a softening point (100°C) and a melting point (120°C to 170°C) for the likely material; Mr Purvis said it was hard to see why the latter was mentioned if melting was not anticipated.

Construing the patent properly, and in particular through the eyes of the skilled man, it seems to me that the claimant is right in its construction of “fused”. Dictionaries can be used to support either case, but the physical realities, as the skilled man would see them, seem to me to provide the answer to this point. Since the objective is to produce a coating of uniform thickness, he would understand that to make the coating liquid would be unlikely to achieve that. The liquid would tend to flow down off the components, and pool on the board, or even flow off the board (the extent of this would presumably depend on the viscosity of the liquid). As Prof Ehrenstein said, plastics of this type do not have a clear “melting point” anyway – before becoming liquid they have a state (described by him as an “entropy elastic” state) in which it becomes softer and softer before turning into a liquid. While the skilled man would not pick up that degree of scientific precision from the patent, he would not understand that he would necessarily have to heat the film to melting (fully liquid) point. He would understand that if he heated the film he would be able to produce softening and ultimately a close adherence to the board and components by the application of heat. The preferred embodiment relied on by Mr Purvis does not inevitably involve melting in its last step. It involves something going beyond the original softening, but not necessarily full melting. Mr Godfrey accepted that the patent is describing a process in which the film is rendered “flowable”, so that it can wet the relevant surfaces, but not as far as a liquid state. Questions of construction are, of course, a matter for me, and not for him, but I agree with him. He explained that hot melt adhesives (one of which is referred to in the patent) do not actually melt – they gradually soften and become liquid. They can wet the surface without being a liquid. In the case of the patent in suit, they then adhere to the board. That process, in my view, is what the patent is referring to. Liquifying is not an essential part of the process.

The German text of this patent uses this word where the English uses “through-plating”. So far as validity is concerned, this is the relevant word. So far as infringement is concerned it is also the relevant word unless the English word is narrower. I therefore have to consider its meaning. As I have observed above, in this connection I had the assistance of translators.

It was common ground that the word has two components – “durch” meaning “through”, and “kontaktierung” meaning contacting. Compositely, therefore, it means “through-contacting”. It is also common ground that it has a “term of art” meaning in German – technical dictionaries show that it means “through hole plating” in the sense described above (Meaning A). In her witness statement Miss Conrad for the defendant stopped there, and said that that was how she would translate it. She acknowledged that one had to translate a word in context, but took the context of this word to be its application to printed circuit boards. In that context the technical meaning was the one she preferred; she acknowledged that there was no other context within the patent itself which pointed in that direction.

Mr Simpkin, for the claimant, looked more into the actual context of the patent. He acknowledged that Meaning A was one meaning of the word, but sought to investigate the extent to which there might be another meaning which made sense, or more sense, in the context of the patent. He expressed the view (so far as it was permissible for him to do so) that a more general form of contacting through the medium was appropriate, in the light of the reference to “measuring” and the replacement of individual components through the protective coating (see the extract cited above from the English version). In other words, he favoured a meaning which gave the expression a general meaning of “contacting through”, rather than the term of art.

I shall call this meaning of the German word Meaning C, the meaning being “the ability to make contact through the coating”. One of the examples given at the hearing was the ability to take electrical measurements through the coating using the needles attached to a multimeter, but this meaning was not said to be confined to that. It was said to cover other forms of making contact with the board, or its components, “through” the coating – pushing a soldering iron through to solder a track or component, to give another example.

It will be noted that no reference is made to Meaning B in the context of the German document. That is because it was not asserted that “Durchkontaktierung” was capable of bearing that meaning. Accordingly, so far as the German document is concerned, the choice is between Meaning A and Meaning C.

All that I have said above about the oddness of Meaning A in the context of the English document applies in relation to the German. It is true that in this case we have an expression that has a clear technical meaning (Meaning A) in German but the process of construction does not merely involve the slavish application of meanings, whether clearly established or not. If it is apparent that there is a viable alternative meaning, and if other factors point towards that alternative, then the words can be held to bear that meaning even in the face of a clearly established technical and industrial practice. The oddness of Meaning A in this context is the same as in the context of the English document. There remains no apparent basis on which vias could be facilitated, or why they are relevant to the invention. On the other hand, the ability to “contact” the board and components “through” the coating is a concept which has more apparent significance. The patent contains a reference to the ability to replace components. It also refers to an object being to enable “individual circuit elements [to] be measured”. That is a word taken from the English version, but no-one queried the translation. It must be taken to mean something like “tested” or “measured electrically”, and I have already referred above to the manner in which that might be done. It therefore seems to me that Meaning C is more consonant with the patent as a whole, and I find that that is what “Durchkontaktierung” means and signifies in the authoritative German text.

The translators agreed that this word is a participle of the verb “aufschmelzen”. This word has as its route the verb “schmelzen (to melt). “Auf” by itself means “on” (at least in this context). The dispute comes as to whether, in its context, it really means “melt”, in the sense of being reduced to a liquid.

Miss Conrad’s evidence was that schmelzen means melt, and the addition of “auf” did no more than add a positional prefix. It did not provide any basis for detracting from the normal meaning of “schmelzen”. While the composite word might have connotations of bonding or attaching or “fusing” (to use a word that she accepted she had seen as a translation in this context) in the context of ceramics, she had not come across it bearing that meaning in the context of plastics. “Anschmelzen” would be appropriate to describe a partial melting. She could not readily think of a single word that could be used to describe the process of partially melting and bonding, though there were words which could more appropriately have been used merely for bonding. She produced various dictionaries containing terms used in the plastics and sealing industries which defined the verb as meaning “melt”, though one more general dictionary added the word “fuse”.

Mr Simpkin did not accept that “aufschmelzen” was a synonym for melt. He drew attention to others parts of the specification where “schmelzen” without the prefix “auf” clearly meant melt (in the liquifying sense) and said that “aufschmelzen” had to be placed in that context. “Aufschmelzen” was a different word from “schmelzen”, albeit derived from the same stem. He produced dictionaries in which the word was translated (with or without alternatives) as “fusing” and not “melting”. He considered that the “auf” prefix connoted a greater qualification than the positional one of indicating where melted film was supposed to go (“on” the board and components). It qualified the whole process, and meant that the conjunction of film and PCB could be achieved by something short of melting in the liquifying sense.

I remind myself that the exercise which I have to conduct is to ascertain what is meant by the German word without reference to the English translation. I have to understand the meaning of the words used by means of the same tests as to construction as apply to a patent written in English, but with the added factor of seeking to pick up nuances via translations which are, inevitably, not always precise. Accordingly, the problem of translation in this case is bound up with construction. It is not just a question of trying to find the right English word by looking at a dictionary. I have to find the right concept, which can be reflected in an English word or words but which is not bound by a slavish translation process.

It can certainly be said that at first sight the German word “aufgeschmolzen” has a close connection with schmelzen, and therefore with the concept of melting to liquid form. The connection is closer than that between the English words “melt” and “fuse”, of which latter words it can at least be said that they do not share a root. However, as in all matters of patent construction, the word has to be put in its overall context. In practical terms there are the same problems with construing “aufgeschmolzen” as meaning melting to a liquid state as I have referred to above in relation to construing “fused”. I think all those factors come together to produce a context in which the process described by the word stops short of necessarily meaning melting to liquid state. I accept the thrust of Mr Simpkin’s evidence when he said that adding the prefix “auf” provided an indication of a qualification of the concept of melting, though the principle driver towards my conclusion is the context of the practicalities as they would appear to the skilled man, and the remainder of the patent.

I therefore find that the word “aufgeschmolzen” in the German patent has the same meaning as I have given to “fused” in the English translation. No question therefore arises as to whether the English is “narrower” than the German for the purposes of the infringement claim.

The original attack on the validity of the patent was on the basis of obviousness over common general knowledge and a patent called Weigert, as well as obviousness over a patent called Toshiba. The first two grounds were abandoned after the evidence, leaving only the question of obviousness over Toshiba.

Toshiba is a Japanese patent (No. 60209884A), published on 22^nd October 1985. Its purpose is:

“To improve the reliability of electric connection by melt-fixing a circuit board and a cover sheet consisting of a thermoplastic synthetic resin, where through holes which can be fitted to input/output terminals of the circuit board are formed in accordance with these terminals, into one body by heating and pressuring.”

The specification describes a credit card-type device (“an IC card”) with a conductor pattern formed on the surface of an insulating substrate, input/ouput terminals connected to it and projecting outwards, and IC chips connected to the conductor pattern. The chip is more secure and has greater capacity than a magnetic strip, but the need to produce terminals in the same plane as the surface of the card is said to make manufacture more difficult. Furthermore, IC chips fixed to the substrate but projecting above it are vulnerable to pressure applied in fixing a covering layer. In order to overcome these disadvantages, while providing a protective layer for the chips and circuitry, the invention provides for the recessing of the chip on the substrate so that it sits below the level of the top of the substrate, and for a covering layer with holes coinciding with the terminals to be fixed to it. The projection of the terminals is such that when the covering layer is applied they lie flush with the top of the covering layer. The covering layer is a coversheet fixed by heating and pressing, but since the sensitive IC chip is in a recess in the layer below, the pressure does not bear directly on it. The coversheet is made of “a thermoplastic synthetic resin such as a vinyl chloride resin”.

Thorn says that Toshiba contains most of the elements of the invention in the patent in suit, and what is not specified is obvious. It contains a printed circuit board, is said to contain modules, has a protective coating made from electrically insulating thermoplastic material, the geometric shape corresponds to the area of the PCB to be protected (ie all of it) and the film is “fused” or “aufgeschmolzen” by the action of heat. It provides a virtually air-tight and moisture proof cover. The specification does not require the addition of wax (cf the patent) but lubricants, including wax, were said to be common additives to thermoplastics, and would be likely to be in a product chosen for testing to see if it would work, so this additional matter is covered by obviousness.

There are in my view a number of problems with the attempt to equate various aspects of the patent in suit with the features of the inventions in Toshiba. While the overarching idea of protection is common to both, they are really looking in different directions. The patent in suit seeks to apply a conformal coating to a PCB with projecting components. The Toshiba patent protects an electrical component by recessing it in its carrying substrate and then putting a rigid lid over it. Flow properties, and the introduction wax to achieve it, are no part of Toshiba. Other similar points can be made. However, I do not need to develop these matters because the patent contains one important integer which is not reproduced in Toshiba and which it is not said was an obvious extension of it. That integer is the “facilitating” integer identified by underlining above. I have already ruled that it forms part of Claim 1, and cannot be rejected as mere surplusage. Mr Purvis accepts that this integer was not present in Toshiba. It indicates that one of the purposes and effects of the invention is to allow access to the surface of the PCB, and to its components. It was accepted that one of the points of the cover layer in Toshiba was to prevent such access. It was to seal the IC and its circuits from the outside world in all circumstances. There is no way in which the Toshiba covering layer “facilitated” any through-access (to use a neutral term) to the board, whether with a soldering iron or anything else. For that reason, therefore, the attack on validity based on obviousness over Toshiba fails.

Siemens maintains that the Thorn boards, and the Thorn process, infringe the patent. It is said that every integer of the patent in suit is present in them. Thorn accepted some, but disputed others. I shall concentrate on those that are in dispute. However, before doing so I have to return to the construction of the patent and the differences between the German and English versions. Section 80 has the effect that the German text is authoritative unless the English is narrower. There is no difference between them on the effect of “fused” and “aufgeschmolzen”, so for the sake of convenience I will work from the English text in that respect (because it is English, and not because it is authoritative). However, there is a difference between “Durchkontaktierung” and “through-plating”, so I have to decide whether the English confers protection which is “narrower” than the German. This involves comparing Meaning B and Meaning C.

What is referred to within meaning B is one particular activity which has to take place “through” the coating. It is the activity of “plating”, or preparing the surface for soldering. Meaning C ostensibly covers a wide range of activities involving making contact with the board and components generally, again “through” the coating. The activity within meaning B seems to me to be one of the activities that could be thus carried out. I cannot see, and no-one was in the end able to suggest, what activities would fall within Meaning B which would not also fall within Meaning C. In those circumstances Meaning B affords narrower protection than Meaning C, and is therefore the authoritative version within section 80(2).

It was accepted that the Thorn product and process involved a PCB with a protective coating made from an electrically insulating plastic material (a film), made from an electrically insulating plastic material to which a wax was added (the material already had wax in it). Thus far the integers of claim 1 were present in the Thorn product and process. The first point of difference arose over whether the wax improved the flow properties of the coating. Siemens’ case was that it did. Prof Ehrenstein carried out experiments which involved assessing the reduction of the complex viscosity attributable to added wax in various temperature ranges. I do not need to set out the nature of those experiments and their results. As a result of initial admissions in the proceedings, and as a result of what Mr Godfrey was prepared in cross-examination to concede those experiments showed, I find that the presence of the wax improved the flow properties of the plastic film used by Thorn at the temperatures at which Thorn carried out its process, and at higher temperatures at which the initial experiments took place. In his cross-examination Mr Godfrey accepted that wax in the film would improve the flow properties of the film generally. Accordingly I find that this integer was present in the Thorn product and process.

The next disputed integer is more troublesome and difficult to resolve. It is the underlined passage above. I have to determine this on the footing that it is Meaning B that is the operative meaning of “through-plating”. The question is whether Thorn’s film is such that the wax facilitates through-plating and soldering operations through the coating. The essence of this part of Siemens’ case is that repairs on the board are made easier because the wax makes the plastic softer, makes it melt (in the sense of softening at a lower temperature than would otherwise be the case), improves its flow properties and improves its wetting abilities, with the effect that if one carries out a repair activity on a coated board or component, the coating is more easily penetrated, and flows back more readily to the disturbed area. This is particularly so where the repair activity involves a soldering iron. Siemens says that this has been demonstrated by its experiments and is inherent in the improvement of the flow properties of the film which is brought about by the presence of the wax. If one reduces viscosity and improves the wetting ability, pushing something through the coating is going to be facilitated and the wax is better able to “flow back” after the penetration has ended.

One additional small point of construction arises at this point in relation to the word “facilitating”, though it is not one in relation to which I received a lot of submissions. It arises for this reason. One of Siemens’ points of facilitation was that it was easier to push a hot soldering iron through. Mr Godfrey made the point that wax would not make a practical difference to that exercise. The melting point of a thermoplastic material is always going to be a long way below the temperature of a hot soldering iron, so that it is always going to melt out of the way of the iron as it is pushed into the coating whether or not it has wax in. The wax might lower the melting point of the material, but you would not notice any difference in the ease of penetration arising out of that because it all happens with roughly the same speed so far as the user (the skilled man) is concerned.

I accept that evidence, so far as it relates to soldering with a normally hot soldering iron (as opposed to more specialist cooler soldering also referred to by Mr Godfrey). Miss Lawrence said that that did not make any difference to whether the exercise was “facilitated”. As long as there was some physical effect, the activity was “facilitated”. I do not agree. The essence of “facilitating” is making something easier. If there is a physical difference in the speed of an activity or phenomenon, but that does not impact in any practical or significant way on a human participant, then I do not think that the activity has been made easier, or that the phenomenon has become easier to observe or achieve. The concept of “facilitating” carries with it the element of practical benefits, and practical benefits have to be appreciated in some way by the practical user. A scientifically measurable difference in speed which has no practical consequence does not qualify. That determination does not by any means deal with the whole of the argument on the facilitation wording, but it takes out of play one of Miss Lawrence’s heads of facilitation, albeit quite a narrow one.

Accordingly, it is open to Siemens to rely on practical means by which “through-plating” and soldering “through” the coating are made easier in a practical sense. It relies on various features in addition to the mere ease of penetration with a soldering iron. It relies on an easier flowing (moving out of the way) when a soldering iron is pushed through; it relies on a flow-back when the heat is withdrawn; it is said that even if a normal soldering iron can push through the waxed and waxless coating in a manner which is not visibly different, nevertheless if one used a soldering iron at a lower temperature then one would notice the difference in ease of penetration (a point which emerged in the evidence of Mr Godfrey); and that burning and marking would be less because of he lower temperature at which the coating moved out of the way. All those are relied on as part of “facilitating”.

I consider that, as a matter of construction, those matters can be relied on as part of facilitating through-plating and soldering. The words are, in my view, there in the context of a repair, and to a skilled man his through-plating and soldering are facilitated if those factors are there. The speed of penetration is obvious as a facilitating factor (if practically significant). The easier flowing away from the site is helpful in practice – it gets the coating out of the way of the repair exercise. The flowing back, if present, helps to heal, and again facilitates the exercises of through-plating and soldering in the context in which the skilled man would understand that they would occur.

With that point out of the way, I turn to consider whether they have been demonstrated in terms of the infringement allegation made against Thorn’s board. The evidence in this respect comprises an experiment on the board (Experiment 3) and experiments carried out on the material used by Thorn.

In Experiment 3 the following exercises were carried out on one of Thorn’s boards, coated with the allegedly infringing coating:

The board thus worked on was exposed to a corrosive atmosphere comprising humidity and SO₂ gas for 25 days. It was said that in all cases of penetration of the coating it had continued to protect against corrosion, in contrast with a plainly uncoated spot which showed heavy signs of corrosion. This was said to demonstrate that the coating was still in place and protecting the board. It was also said that it could be seen that the coating still existed on or around the soldered parts, having flowed back after (or not been completely removed in the course of) the penetrations.

There are problems with Experiment 3, and in particular those parts of it involving the soldering iron. It was not carried out by Prof Ehrenstein, or by Dr Pecht. It was done by Siemens itself. It was not subject to the same scientific controls and inspections as would have been the case had Prof Ehrenstein conducted the experiments with the scientific rigour that I would expect from him. There was some equivocation as to whether the board was inspected by Prof Ehrenstein after the experiment was concluded. In the witness box Dr Ehrenstein said that one would have to use a microscope to see whether there was in fact any corrosion in the soldered or penetrated parts, and no-one looked with a microscope. Since he did not know the metallic material from which the apparently corroded annuli were made he could not express a view as to the cause of the corrosion there. The only photographs that he saw of the board were in black and white. If he did see the board, he did not submit it to close or scientific inspection. He had the chance to comment on the physical board in court, but there are obvious limits to the amount of scientific inspection that can be carried out in the witness box. Dr Pecht’s report says that he saw the board and it was apparent from his inspections (not particularised) that “the coating is effective in protecting the circuit board from corrosion”. Furthermore, there was no control in the form of a board covered by a coating without the wax in it. There was therefore no observed difference between two such coatings.

I therefore have to approach the results of that experiment, and the conclusions to be drawn from it, with particular caution, and since it is central to the alleged infringement in relation to this integer of Claim 1, the same goes for the whole of this aspect of the infringement allegation.

I make the following findings about the experiment and the evidence related to it:

The expert evidence relating to the experiment is, on analysis not very helpful in taking Experiment 3 much further:

Dr Pecht did see the board on which the experiment was carried out, as well as the photographs that were in evidence. He concludes that:

“It is apparent from these inspections that the coating is effective in protecting the circuit board from corrosion … through-plating and soldering operations have been conducted on the Defendant’s printed circuit board (by Experiment 3) without causing damage to the protective characteristics of the coating.”

His inspection was therefore as to the corrosion, and he did not carry out a separate physical inspection in order to see whether there was other evidence of the facilitation of through-plating and soldering operations by ease of removal and re-sealing (which is the essence of the claimant’s case on this point). He also makes observations on a process description provided by Thorn, to which I shall come shortly.

I therefore consider that few useful conclusions can be drawn from Experiment 3. I do not consider it has been established, via the corrosion test, that Thorn’s coating parted more easily and healed itself more easily than a wax-less product.

However, experiment 3 is not the totality of Siemens’ case on this point. Reliance is also placed on expert evidence as to the tendencies and properties of the material as would be expected bearing in mind its constituent parts, and particularly the wax. It was said that the wax lowers the melting or softening point of the material, reduces its viscosity, increase its wetting capability and lowers its surface tension, and that those qualities would mean that operating at a theoretical level, and without necessarily requiring actual demonstration experimentally, it would facilitate through-plating and soldering by melting more easily and flowing back to preserve its protective qualities as a covering for the board and its components.

At the end of the day the evidence of the experts demonstrated that a thermoplastic film with wax would have the inherent qualities that I have referred to when compared with a thermoplastic film without those qualities – it would have a lower softening point, reduced viscosity, increased wetting capability and lower surface tension. Mr Godfrey essentially accepted all those points. The experts did not, however, agree that these qualities facilitated through-plating or soldering, in the sense of improving the conduct of those activities when compared with a wax-less thermoplastic.

Dr Pecht also seems to place some reliance on a product and process description provided by Thorn. Part of that document describes a repair process during which the sealant is partially removed by melting it locally with a hot air gun. This leaves a “hole” down to component level, and “component(s) can be removed and new component(s) fitted through any remaining thin layer of polyolefin material without the need for totally cleaning the area to be repaired down to the surface of the PCB … After the new component(s) has (have) been fitted, the repair is completed by adding a partial polyolefin sealing patch on the affected area of the PCB.” Dr Pecht relies on this in a paragraph in his second report in which he deals with infringement. He seems to be saying that the fact that Thorn carried out their soldering operation in the manner described, and the fact that Thorn said that there was a residue of wax remaining, meant that there was material from which it can be said that soldering and through-plating were facilitated. I find that that reliance is somewhat misplaced. There is no direct evidence that the wax made either process (melting or soldering) easier when compared with a wax-less product (because no comparative experiments were undertaken), and Thorn does not rely on self-sealing because it introduces a patch. There was no evidence as to whether a patch was or would be easier to apply because of the presence of wax. This is therefore not direct evidence of facilitation.

There was one further relevant piece of evidence on this. I have referred above to Mr Godfrey’s view that, in terms of facilitating penetration by a hot soldering iron, the wax did not achieve that because in practical terms a hot soldering iron would go through both types of film with the same ease. He was prepared to qualify that in one respect. If one used a lower temperature soldering iron, by which I assume he meant one lower than a standard iron, then there would be a noticeable difference on the extent to which the coating moved out of the way when comparing the waxed with the wax-less coating.

With that evidence in mind, I have to determine whether Thorn have infringed the facilitation integer. The evidence is in an unsatisfactory state. There is evidence about the general qualities of the Thorn waxed product when compared with the wax-less product, and there is general evidence about the sort of qualities that the two products have in terms of viscosity, wetting ability and so on. However, proof of infringement depends in this case, and in relation to the point currently in issue, on its being established that the Thorn product actually has a certain (facilitating) quality. The only experiment which sought to address that point directly was Experiment 3, and for the reasons given above it did not achieve the result contended for by Siemens. I was not given any explanation as to why experiments going more directly to the effects of penetration, through-plating and soldering were not carried out, or why presumably simple visual observations of the experimented-on board were not carried out. Siemens is therefore thrown back on such conclusions about the Thorn product as can be safely and properly drawn from evidence as to the general nature of the product and as to the views of the experts as to how they would expect it to perform when certain operations were carried out. Since those matters could in my opinion have been more directly addressed by experimentation or observation, and since Siemens has the factual burden of proof on this issue, I approach the exercise with caution so far as Siemens’ submissions are concerned.

Based on all that evidence I make the following findings and determinations on facilitation of through-contacting and soldering through the coating, and bearing in mind my conclusions as to the importance of a beneficial practical effect before anything can be said to have been “facilitated”:

In the light of those factual conclusions it is therefore necessary to consider whether it has been established that the inclusion of wax in Thorn’s product “facilitates” through-plating or soldering through the coating in the sense on which those concepts are used in the patent in suit. Siemens’ case on this has two limbs – the facilitation of invading the coating, and the healing qualities afterwards. The second of those limbs has not been established. It has not been established that Thorn’s coating heals in a material sense. The first, however, has. I consider that the body of evidence as to the general properties of the Thorn product is just sufficient to demonstrate that in use it has the quality of allowing easier access to the board and components through the coating because it can be had at lower temperatures, and with less risk of heat damage to the coating. This is a real practical benefit, and the quality facilitates the two exercises of through-plating and soldering through the coating – it makes it easier to achieve.

The third disputed integer is:

“the film is fused on to the printed circuit board by the action of heat”.

Siemens’ case is that by the end of the trial the clear evidence was that film was applied to the Thorn board in a softened state at the temperature range of 50º - 80º in a softened state, and that once it is found that “fused” does not require the film to be reduced to a melted (liquid) state then it must follow that Thorn infringed this integer. It matters not that it is assisted by other processes. Thorn’s case was that infringement was not proved, because it was not demonstrated that there would have been fusion in the relevant sense without the application of the additional forces of pressure and vacuum. It had not been proved that it would flow and adhere of its own accord without the additional factors.

Yet again this part of the case is bedevilled by a failure to carry out more direct experiments to prove the point in issue, so that the claimant’s case is dependent on evidence of how the experts would expect the product to behave under certain circumstances rather than direct evidence of how it did behave under the conditions in question. It was certainly proved that by the time the Thorn film reached 50ºC it had started to melt in the sense of becoming flexible. The hotter it got, the softer it got. Its flow properties improved. What was not demonstrated was that if placed over a board it would flow unassisted at temperatures within the range so as to adhere to the board and furthermore to achieve a virtually air-tight and moisture proof seal. If it had been proved that the application of the temperature alone would inevitably have had those effects and results then the assistance of pressure and vacuum would not have prevented infringement. However, that was not done. But for one point we are left to ascertain the effect of the heat from inferences from the general properties of the product.

That one point is paragraph (i) of Thorn’s product and process description, set out above. It seems to me that on the true construction of the patent the application of heat in this integer is to achieve two things. First, it causes a melting (softening) so that the film comes into close conformal contact with the board and its population, and second it gives rise to adhesion so that it stays there. In Claim 1 those two things are produced by the effect of heat alone. In Claim 10 there is a prior step of pressing on to the modules by means of a silicone plug to produce a tight fitting topography and displace residual air, and then as a final process there is fusion under the action of further hearing, but the last step is the same – the final step of producing a conformal coating and adhesion is achieved by heating. This is borne out by one of the preferred embodiments in the specification, which essentially describes the events in Claim 10. If one turns to paragraph (i) of the product and process description one finds both those factors described as part of the Thorn process – the temperature is maintained at 50º - 80º “to achieve good adhesion to the printed circuit board and adopt the contour of the various SM components”. That seems to me to be describing this integer. Thorn is there describing the significance of the heat – it is the heat that achieves the final desired result. It is true that the pressure is also described as making the film adhere to the contour of the PCB, but I consider that when the process is put together in the proper sequence it is the heat that does the final job, as described in claim 1 (and, incidentally, in Claim 10).

Accordingly I find this claim infringed.

In the circumstances I find in favour of the claimants on infringement of Claim 1. In those circumstances there is no need to go on and consider the other claims, which did not figure very largely in the debate in any event.

This point arises because the Siemens’ title is derived through transfers of ownership of the patent in suit effected as a result of Swiss merger proceedings and for part of the intervening period the then owning companies were not registered as owner. This gives rise to points arising under sections 33 and 68 of the Patents Act 1977.

Until a recent amendment, section 68 provided:

“68 Where by virtue of a transaction, instrument or event to which section 33 above applies a person becomes the proprietor or one of the proprietors or an exclusive licensee of a patent found that the patent is subsequently infringed, the court or the comptroller shall not award him damages or order that he be given an account of the profits in respect of such a subsequent infringement occurring before the transaction, instrument or event is registered unless –

(a)

the transaction, instrument or event is registered within the period of six months beginning with its date; or

(b)

the court or the comptroller is satisfied that it was not practicable to register the transaction, instrument or event before the end of that period and that it was registered as soon as practicable thereafter.”

The events to which section 33 applies are set out in section 33(3). Its material provisions are as follows:

“This section applies to the following transactions, instrument and events:-

(a)

the assignment or assignation of a patent or application for a patent, or a right in it;

(b)

the mortgage of a patent or application or the granting of security over it;

(c)

the grant, assignment or assignation of a licence or sublicense or mortgage of a licence or sublicense and a patent application;

(d)

the death of the proprietor or one of the proprietors of a such patent or application or any person having a right in or under a patent or application and the vesting by an assent of the personal representatives of a patent, application or any such right; and

(e)

any order or directions of equal or other competent authority –

(i)

transferring a patent or application or any right in or under it to any person; or

(ii)

that an application should proceed in the name of any person;

and in either case the event by virtue of which the court or authority had power to make such order or to give any such directions.”

I shall deal below with the detail of what happened on each of the relevant occasions. The effect of the first two mergers was not registered until 25^th February 2002. The third merger was registered within the required 6 month period.

Thorn maintains that all three mergers are events to which section 33 of the Act applies, and that accordingly Siemens is not entitled to any damages or an account of profits in respect of any period before 25^th February 2002. Siemens’ riposte to this is twofold. First, it relies on the amended form and says that the bar no longer applies; and second it says that in any event the first two mergers were not events to which section 33 applies.

The first question is to what extent the new section 68 is retrospective in its effect. Does it, as Siemens maintains, have effect in relation to the history of this matter so that the only consequence to it of non-registration is that it be deprived of costs and expenses as opposed to damages, or does it still govern in relation to the first two mergers so as to be a bar to damages (subject, of course, to those mergers falling within section 33)? The claim form in these proceedings was issued in June 2004, so if Siemens is right then the effect of the amendment is to remove a defence which had been available to Thorn for almost 2 years of the life of these proceedings.

Looking at the matter without reference for the moment to the European genesis of the amendment, I consider that Siemens’ argument fails. The first step must be to put section 68 in its proper context, and the principal element of that context is section 61 which confers a right to damages:

“61(1) Subject to the following provisions of this Part of this Act, civil proceedings may be brought in the court by a proprietor of a patent in respect of any act alleged to infringe the patent and … in those proceedings a claim may be made –

…

(c)

For damages in respect of the infringement.

(d)

… an account of … profits”.

That is the statutorily conferred right. The right is said to be “subject to the following provisions of [that] Part of the Act”. Section 68 is in that part as, of course, is section 61(2). That latter subsection provides:

“The court shall not, in respect of the infringement, both award the proprietor of a patent damages and order that he shall be given an account of the profits.”

In saying “the court shall not” the statute is setting limits on the damages (or profits) that can be claimed – it is a qualification of the right to damages, and it is one of the things to which that right is expressly subject pursuant to the opening words of section 61(1). Section 68 is similar in its effect. Its relevant wording is similar to section 61(1) – “the court shall not award him damages” – and its effect is the same. It amounts to a substantive qualification on the right to damages.

Accordingly, when the infringements took place the right to damages was qualified by the provisions of section 68. Where the facts were such as to invoke it, the infringements did not give rise to a damages claim, and Thorn were not liable to such a claim.

Section 68 was then amended. The right to damages in respect of an infringement is no longer qualified by it. But there is nothing in its wording to suggest that previously accrued rights have been expanded by an increase in the scope of the damages that can be claimed. The section does not merely remove some procedural bar to the claim to damages. It makes a change in the substantive law. As a matter of construction I find it hard to see how it can affect previously accrued rights (or obligations).

If there were any doubt about it that doubt would be removed by the operation of the presumption against the retrospective effect of legislation.

“A statute is retrospective if it takes away or impairs a vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability, in regard to events already passed.” (per Lord Brightman in Yew Bon Tew v Kenderaan Bas Mara [1982] AC 553 @ 558G)

There can be no doubt that if the new section 68 were to have the effect contended for by Siemens it would have retrospective effect. It would enlarge a right to damages beyond that which had hitherto existed, would have imposed a corresponding duty on Thorn and would have taken away a limitation on liability which was clearly vested in Thorn. The presumption therefore operates. There is nothing whatsoever in the wording of the statute or the amending regulation that would go to rebut the presumption.

However, it is also necessary to look at the European genesis of the provision. It is common ground that it has its origins in the Enforcement Directive, though I confess I have looked in vain for a clear provision which it is intended to implement. Be that as it may, Miss Lawrence took me to various provisions of the Directive which are said to have required the enactment of the new section 68. None of them, and no other provision of the Directive, requires the new enactment to have any form of retrospective effect, and certainly not the sort of retrospective effect that Miss Lawrence’s case requires.

Miss Lawrence sought to make something of the fact that at the date of commencement of these proceedings the Directive was in force. However, it did not have direct effect at the time, and I do not see how it assists her. She also relies on Bayerische Motorenwerke AG v Deenik ([1998] ETMR 348 (an Opinion of the Advocate-General) in support of a proposition that member states are not free to adopt any transitional provisions other than those expressly provided for by the Directive. Whether that is correct or not, the problem in this case is that there are no transitional provisions, not that there are inconsistent provisions. In the absence of such provisions the amending legislation and the new statute have to be construed in order to ascertain their effect. The result of that exercise is that set out above. The new section 68 has no retrospective effect relevant to this case. The old section 68 operates in relation to the damages claim (so far as the facts allow).

I turn therefore to the facts. In order for section 68 to operate for the benefit of the defendant it has to point to a transaction or event in section 33. Mr Purvis says that the facts demonstrate either an assignment within the meaning of subsection 3(a), or an order of direction under subsection (3)(e). The dispositions in question took effect under Swiss merger law, of which evidence was given by Prof von der Crone. Merger transactions do not always involve documents in the nature of clear assignments of identifiable patents, so the nature and effect of the transaction has to be looked at in order to see whether there is nonetheless something which comes within the section – see Tamglass Ltd v Luoyang North Glass Technology Co Ltd (No 3) [2006] FSR 622.

In 2004 the Swiss procedure for effecting mergers of companies changed, but the relevant mergers in this case took place before then and under older provisions and practices. Based on the evidence of Prof von der Crone I find the following procedures and mechanics operated:

The Swiss Doctrine of Universal Succession is a process by which, by operation of law, the assets and liabilities of one body become the assets and liabilities of another. All rights and obligations of the transferor company are moved into another without the need for “special acts of assignment” (to use words adopted by the Professor). It has its origins in the law of inheritance, under which the assets and liabilities of the deceased vest in a person whom the Professor described as “the inheritor”. In that case too it works by operation of law.

The documentation relevant to the two relevant mergers was in evidence in this case. It can be briefly described. For the first merger (Elektrowatt/Cerberus) the merger agreement recites that the parties (the two companies) wish to merge, and records:

“The parties therefore agree as follows:

1.

Elektrowatt shall take over from Cerberus its entire net worth with all assets and liabilities by universal succession by means of a merger (annexion) as defined in art 748 OR.

…

3.

The merger is undertaken on the basis of the merger balance sheet of Cerberus as at 1^st October 1997, which forms an integral part of this Agreement (appended). According to [its] balance sheet, Cerberus has the following assets and liabilities [and they are then shortly set out, in generalised categories].

4.

Cerberus undertakes to transfer its company assets including all assets and liabilities according to art 748 OR to Elektrowatt, effective on the date of takeover, and Eletrowatt undertakes to take over these company assets on the same date by means of universal succession.

…

10.

This agreement is entered into subject to approval by the competent executive organs of Eletrowatt & Cerberus. Both parties undertake to carry out all the actions necessary for approval and implementation of this Agreement. In particular, Cerberus shall call an extraordinary general meeting for this purpose. Both parties shall attend to registering these resolutions in the Commercial Register.”

In the appended balance sheets there is an entry “Patents and developments” to which a value of 1Fr is attributed.

The first merger is recorded in an entry in the Commercial Register in an entry dated 20^th April 1998 and which records that “assets … were transferred to the company by means of universal succession in accordance with the merger agreement of 30.3.98 and the merger balance sheet as at 01.10.97”.

A merger agreement between Elektrowatt (under its new name Siemens Building Technologies AG) and Siemens Beteiligungen AG records:

“The parties conclude the following merger agreement:

1.

Siemens Beteiligungen AG shall take over from Siemens Building Technologies AG its entire net worth with all assets and liabilities by means of universal succession by way of merger (annexation) as defined in Art 748 of the Swiss Code of Obligations.

3.

The merger is undertaken on the basis of the merger balance sheets of Siemens Building Technologies AG as at 1^st October 1999, which forms an integral part of this Agreement (appended).

5.

Siemens Building Technologies AG undertakes to transfer its full net worth with assets and liabilities as defined in Art 748 OR with effect from the date of the takeover (1^st October 1999) to Siemens Beteiligungen AG and Siemens Beteiligungen AG undertakes to take over this full net worth with assets and liabilities with effect from the same date by means of universal succession.”

Again, the balance sheet shows “Patents and developments” valued at 1Fr. There is an entry on the Commercial Register which is in the same form as that already set out for the first merger. Each merger had the necessary meeting approvals.

Thus the two relevant mergers followed a form which complied with the theoretical mechanism identified by Prof von der Crone. There was a merger agreement, which in terms dealt with a transfer of assets, there were necessary meetings and there were entries on the register. Reference was made to the transfer being by way of universal succession.

It is clear to me, and I find, that the dispositive mechanism in this case is not the written merger agreement. Prof von der Crone made it clear that this agreement was central to the scheme, but in my view it is, at least by itself, no more than an agreement to transfer. The actual transfer took effect as a transfer by operation of law, under the Swiss doctrine of Universal Succession. Until then there was no more than an agreement to bring about a transfer, followed by meetings which conferred the necessary authority and which are a necessary procedural step. If one asked at that stage whether there was a transfer the answer must be no. It is not as though there was a transfer which was awaiting the fulfilment of some condition subsequent. Things had not got that far. There was merely an agreement to bring something about. An English legal analogy would be an agreement to transfer property which was in due course to be completed by a separate step which actually had the dispositive effect – for example, a conveyance or transfer of land. The further step in the case of the Swiss mechanism is the entry in the commercial register, which triggered the operation of the universal succession rules. At that point the assignment or transfer of the patent took effect by operation of law. This last point was not, as Mr Purvis put it, a “rubber stamping operation”. It may have been a step which the parties were bound to bring about, but it was nonetheless a separate step with separate and real legal effects and consequences.

Prof von der Crone fairly pointed out that there was one Swiss case which seemed to indicate that a transfer took place at or by the time of the merger agreement (the case bears the reference BGE 108 1b 454 – X AG v The Federal Tax authorities). His firmly held view, which he said was generally shared, was that the case was wrong so to hold or indicate. While his personal view on the point was challenged in cross-examination, Thorn did not adduce any evidence of its own on Swiss law, and I prefer the view of Prof von der Crone on this case.

It is now necessary to see whether any of that material brings the matter within either of the two candidates for events under section 33(3). The first candidate is “assignment”. Is there an assignment in those facts. A similar point arose in the Tamglass case referred to above. That case involved the passing of a patent through various corporate hands by means of Finnish merger (and demerger) law. I held that the operative mechanism in that case was a transfer by means of the operation of a statute. I also held that “assignment” in section 33(3) meant something in the nature of an inter partes consensual document, which was distinct from transfers by operation of law.

Mr Purvis did not seek to say that my approach and decision in Tamglass were wrong or otherwise seek to argue against the case. Rather, he sought to say the facts of the present case were sufficiently different that the result should be different. At the same time he invited me to take a fairly generous approach to the construction of section 33 and to find that transactions, instruments or events which effect the transfer of a patent from one entity to another are within the section rather than outside it, especially bearing in mind the purpose of section 68 (which relies on section 33) as stated by Jacob LJ in LG Electronics v NCR Financial Solutions Group Ltd [2003] 428 at 432

“ Defendants are entitled to know who might own the patent. … People need to know who is on the register. This section is aimed at making the people who owned the monopolies get on the register. If they do not, they lose their rights to damages and they do not have a right to sell the right to damages to someone else.”

It would be absurd if the transfer of a patent as part of the transfer of all the assets of a business were outside section 33 but a transfer of an individual patent or a group of patents were within it.

What Mr Purvis is relying on in some of these submissions is that it is not easy to identify why a case such as Tamglass or the present case should fall outside section 33. I agree with him, and I expressed my discomfort with my conclusions in Tamglass in the Tamglass decision itself. My discomfort has not abated. However, the words of the statute are what they are, and if those words do not catch a given situation then they do not catch it. I have reconsidered briefly my reasoning in Tamglass, and would not wish to change it. I would also observe that the absurdity relied on by Mr Purvis does not address the right point. The point in Tamglass is not that a bulk transfer escapes section 33 when a less-than-bulk transfer does not. It is not quantity that matters; it is the mechanism. An express consensual bilateral document that transfers all the patents owned by a company would be as much of an assignment as one that transferred a single document. That does not encapsulate the distinction that is said to exist in the present case, which turns on mechanism.

Proceeding, then, to the facts of this case, Mr Purvis then seeks to bring it within my interpretation of assignment in Tamglass, and to distinguish Tamglass itself, by saying that in the present case there is something in the nature of a consensual document in the form of the merger agreement. He relies on evidence of Prof von der Crone to the effect that the transfer of the assets and liabilities under the doctrine of Universal Succession is “based on the Merger Agreement”, and the agreement is “the indispensable basis of every merger”. The focus of these submissions was on the merger agreement. Here, said Mr Purvis, was something in the nature of a consensual bilateral document, and by steps taken in that agreed transaction property has passed. He stressed the oddity of treating this transaction as something different from the other transactions within section 33.

I have considerable sympathy with Mr Purvis’s appeals to the oddity of the situation. I agree that the end result of the merger arrangements was the same as if there had been a recognisable documentary assignment of all the patents. However, the same can be said to be true of the events in section 33(3)(d) (death and assent), or (e), yet they are specifically provided for. The fact of the matter is that, on analysis, the transfer of the patent did not take effect under a consensual document. It took place pursuant to such a document, but that is different. The merger agreements provided that transfers should take place, and bound the parties to bring them about. That merger required the transfer of assets, but the agreement remained an agreement to transfer, and not the transfer itself. The transfer took place separately, by means of something that is juridically different, namely the operation of the doctrine of Universal Succession. It was a transfer by operation of law. That label might not matter much of itself, but the transferring event was not in the nature of a bilateral consensual document. Since, in my view, an “assignment” within section 33(3)(a) is of the nature described in the Tamglass judgment, this transfer does not fall within the meaning of the word. I would agree that it is not easy to discern a policy reason why the present situation should fall outside the regimes of sections 33 and 68, but certain words have been used, with certain consequences, with the result that there is an apparent lacuna. Accordingly Thorn’s case on this point fails.

Thorn’s alternative case is that the transfer took place by an order or direction of a competent authority. This can be shortly dealt with. No authority ordered or directed anything. The evidence is plain. The registering authorities received the information relating to the mergers and entered it on to the register. Their function was administrative, not directive. The authorities did not direct that anything should happen. They merely made an entry which they were obliged to make, and which had certain legal consequences. This point, too, fails.

Accordingly I find for the claimant on the question of validity and infringement, and any damages recoverable are not limited by section 68 of the Patents Act 1977. I shall hear the parties further as to the consequences of that ruling.