Swiss transfer eludes damages limits in Siemens patent victory

Siemens has won a patent infringement case against a fire alarm company over its protective coating technology for printed circuit boards. The German electronics giant will be awarded damages partly because of a gap in the law.

Thorn Security had argued that Siemens should not be awarded damages for the period before the patent was transferred to it because it had not specifically registered the patents. But judge Justice Mann in the High Court found that a peculiarity of Swiss law and a quirk in the language of UK law meant that damages could predate that transfer.

It was a merger of Swiss companies that brought the patent under dispute into Siemens' ownership. The Patents Act says that if a company fails to register a patent then it cannot claim damages for a period before it does register ownership of it.

Thorn claimed, therefore, that Siemens should not be entitled to damages for the period before February 2002. The Patents Act refers to the assignment or assignation of patents.

Justice Mann found, though, that the legal technicality through which the patents were transferred in the 1998 merger is not covered by the Patents Act.

"The actual transfer took effect as a transfer by operation of law, under the Swiss doctrine of Universal Succession," he said. "At that point the assignment or transfer of the patent took effect by operation of law."

"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'."

Mann said that the peculiarities of this transfer meant that it was not covered by the Act's limit of damages. "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 [Patent Act] 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."

The court found that Thorn did infringe Siemens' patent for the coating of circuit boards. Thorn had argued that the patent itself was invalid because it was an obvious extension of technology that already existed, or prior art.

It said that a patent held by Toshiba covered similar board-coating territory. While Thorn admitted that Siemens' technology was slightly different, it said that those differences were obvious developments of what is contained in Toshiba, and so should not be protectable by a patent.

Mann said that he would hear further arguments from the two sides in the dispute as to what the consequences of his ruling should be.