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The Second Opinion: When is Recycling a Bad Thing? When it constitutes Patent Infringement…

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in The Second Opinion
Anthony Alexander

Popular sentiment and public policy have, in recent years, resoundingly accepted the inherent virtue of recycling, repairing and reusing consumer products, rather than simply throwing them away.   A recent ruling of the U.K. Supreme Court provides a useful reminder that, when the recycled product is protected by patent, the recycler must proceed with caution.

In Schutz (UK) Limited v. Werit (UK) Limited, [2013] UKSC 16, the question for the Court was whether a patent was infringed in circumstances where a recycler (unrelated to the patentee) replaced a worn-out component of the patented product with a new part (not manufactured by the patentee), and resold the product in its repaired form.  If, in thus replacing the worn-out part, the recycler could be said to be “making” the resulting product, the recycler’s conduct will constitute actionable patent infringement.  

As the Court made clear, the line between innocent “repairing” and actionable “making” is highly contextual: “[I]t is a matter of degree, to be assessed in each case, whether replacing a worn or damaged part of a patented article amounts to ‘making’ the patented article” (see para. 58).

The patented product at issue was an “intermediate bulk container” (or “IBC”) used to ship large quantities of liquid.  The IBC consisted of two components: (i) a rigid “cage” to provide protection and support, and (ii) a more flexible “bottle” (placed within the cage) which actually carried the liquid in question.  The inventiveness of the plaintiff’s patent focused principally on improvements which it had made to the cage, rather than to the bottle.

The defendant was in the business of obtaining used IBCs, which had been discarded or sold by the plaintiff’s customers.  The defendant would retain and reuse the original cage, but would replace the worn-out bottle with a new bottle (of the defendant’s own design and manufacture).  The recycled IBC would then be sold by the defendant in competition with the plaintiff.

The Supreme Court ultimately concluded that, while “the issue is by no means clear” (para. 77), the particular facts of the case did not justify a finding of infringement:

     [78]     Deciding whether a particular activity involves “making” the patented article involves…an exercise in judgment…   [I]n this case, it appears to me that it is a classic example of identifying the various factors which apply on the particular facts, and, after weighing them all up, concluding, as a matter of judgment, whether the alleged infringer does or does not “make” the patented article. In the present case, given that (a) the bottle (i) is a freestanding, replaceable component of the patented article, (ii) has no connection with the claimed inventive concept, (iii) has a much shorter life expectancy than the other, inventive, component [the cage], (iv) cannot be described as the main component of the article, and (b) apart from replacing it, [the recycler] does no additional work to the article beyond routine repairs, I am of the view that, in carrying out this work, [the recycler] does not “make” the patented article.

As the Court confirmed, a different result will apply in circumstances where (i) the replaced part is integrally connected to the retained part, so that the act of replacement requires ”demolition” of the original product, (ii) the replaced part was subjected to significant improvement work, (iii) the inventive concept either largely resided in the replaced part or was closely connected to that part, and (iv) the work could reasonably be described as “manufacture” (see para. 71).   As the Court noted, these had been the facts of the earlier House of Lords ruling in United Wire Limited v. Screen Repair Services (Scotland) Limited, [2000] UKHL 42, where infringement had been found against a recycler/repairer of a patented product.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions.  The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.