Saturday, June 05, 2010

Liability of a Shipping Company That Delivers Patent Infringing Products

Injunctive remedy against intermediaries is one of the key elements of the ACTA proposals. The intermediaries under ACTA are defined as broadly as to encompass entities whose services are used by a third party to infringe an intellectual property rights (Articles 2.X and 2.5.X)). The language came from the European Directive on IPR  enforcement (Articles 8, 9 and 11 of Directive 2004/48/EC) and aims to go beyond Internet service providers and their liability of third party’s copyright infringement.

While the scope of the intermediaries may vary from jurisdictions, the German Federal Court paved the way for a far-reaching expansion of its application. Last year, the German Court granted an injunctive relief against a shipping agent who has delivered allegedly patent infringing MP3 players.

This case involves a German subsidiary of T.N.V., who provides an express shipping service. On behalf of its client, the defendant has imported allegedly patent infringing MP3 players from China. But the products were confiscated by the German Customs Office upon the request of the plaintiff (an exclusive patent licensee). The plaintiff sought a defendant’s consent on the destruction of the confiscated products. The defendant objected to the allegation on a ground that it, as a shipping company, has no general duty to review its client’s products as to a patent infringement. However, the German Supreme Court rejected this argument and held that the shipping company is liable when it is advised of a specific property right and becomes to know an infringement of the right. In other words, the confiscation by the German Customs Office is sufficient to establish that the shipping agent has knowledge of a patent infringement.

According to Section 139(1) of the German Patent Act, any person who exploits an invention without authorisation may be sued by the injured party to enjoin such use. Further, Section 140a (1) of the German Patent Act provides that “In the cases covered by Section 139, the injured party may require destruction of the product that is the subject matter of the patent and that is in the possession of the infringer or is his property unless the infringing nature of the product can be removed in some other way and its destruction would be disproportionate in the individual case for the infringer or the owner.” In this case, the German Court viewed that the shipping agent is an owner within the meaning of Section 140(a) of the German Patent Act in a sense that he has at least an indirect possession of the MP3 player.

Decision in German is here and a summary in English provided by Mr. Bardehle Pagenberg is here.

* Unlike the Directive 2004/48/EC, the EU-Korea FTA excludes patent from the injunctive relief against the intermediaries (Article 10.48(2) “Each Party shall also ensure that right holders are in a position to apply for an injunction against intermediaries whose services are being used by a third party to infringe copyright, related right, trademarks or geographical indications.”) Footnote 21 of the EU-Korea FTA "the scope of “intermediary” is determined in each Party’s legislation, but shall include those who deliver or distribute  infringing goods, and also where appropriate, include online service providers.” This injunctive remedy against the intermediaries is also applied in the form of interlocutory injunction (Article 10.46(1))."

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