UPC Holds Director Liable For Infringement, Confirms That Limitation Periods Do Not Apply To Injunctive Relief And Examines "Consent" And Exhaustion Defences

The Dusseldorf Local Division (LD) of the UPC has found the managing director (MD) of an infringing company liable for the infringement as an "accomplice" co-infringer due to his level of involvement in the company's infringing activities.

In Evac Oy v Shanghai VacDrain (relating to a patent for a vacuum wastewater system) the Dusseldorf LD also held that 

• unlike financial compensation, there was no limitation period for injunctions; 
• consent could not be implied via test purchases and supplier arrangements; and 
• the law of exhaustion from Art 29 EPC could be applied. 

Read more on all these issues addressed by the UPC below.

Director's liability: The court applied the assessment considerations set out by the UPC Court of Appeal (CoA) in Philip v Belkin (see our blog post here) coming to the conclusion that the MD was personally liable for the following reasons: 

• He was a director and majority shareholder of one of the defendant companies (first defendant) which was found liable for infringement and was directly involved in the operational business and the sale of the contested embodiment by the first defendant,
• He had personally signed the invoices in each instance in connection with the test purchases carried out in China. "Even if these test purchases in China do not in themselves constitute an infringement of the patent in dispute, this conduct nevertheless demonstrates that his position extends beyond that of a typical managing director or director."
• He was "actively involved in the operational business and the sale of the contested embodiment by the first defendant. This justifies classifying him as an accomplice to the patent infringement committed by the first defendant."
• His involvement went beyond a normal MD role. 

Whilst the CoA's decision in Philips v Belkin (where the directors involved were held not to be liable) provided some comfort to directors, this latest decision should make directors consider their involvement in their companies' actions carefully, in particular where they are a majority shareholder. An active (and knowing) involvement in infringement will risk a finding of personal liability. 

No limitation period for injunctions: This decision of the Dusseldorf LD is also of interest for its confirmation that the limitation period applicable to financial compensation does not apply to injunctive relief, the former being backward-looking but injunction considerations being forward-looking. 

Consent not implied through commercial arrangements: The court also discussed whether the supply of an item via a test purchase constituted "consent" by the patentee and held that it did not. Even if (as the defendants contended) there was a supply arrangement between the parties under which the first defendant (a Chinese company) acted as supplier to the claimant (a German company) no consent on the part of the claimant to supplies to third parties could be inferred from this.

Exhaustion defence not made out: The court referred to the exhaustion of rights principle under Art 29 EPC where goods that are put on the EU market with consent the purchaser may be used by the purchaser for their lawful purpose, which includes a right to repair it. However this does not include measures that amount to manufacture of a product in accordance with the patent. Whether replacement of parts is permitted depends on whether it is a normal, expected lifecycle repair creating a legitimate expectation of reuse. Exceptionally, where the invention’s effect lies in the replaced part, replacement effectively recreates the invention and defeats exhaustion. Here the court found that the replacement of a key part of the patented invention was not covered by this exhaustion doctrine. 

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