In a recent order issued by the Munich Local Division (LD) of the UPC (ORD_46277/2024 ACT_9216/2024), a preliminary injunction was awarded to prevent the ongoing distribution of a software development kit (SDK). The supply of the SDK was found to be an indirect (rather than direct) infringement of the patent claims because the SDK allowed the defendant’s customers to create a software program, which makes use of the technical teaching of the claimed invention. The order also sets out in what circumstances a relative or absolute prohibition might be imposed in the case of indirect infringement, and confirms the Munich LD’s expectations for Applicants and Defendants in applications for provisional measures.
Facts of the Case
The case involves a dispute between Hand Held Products, Inc. and Scandit AG over the alleged infringement of a European patent with unitary effect, EP3866051B1 (EP051), which relates to digital devices for reading decodable characters such as barcodes.
The claims of EP051 are directed to devices and methods for reading decodable characters (like barcodes) using a camera, displaying the decoded information on a screen, and associating the decoded characters with product images retrieved from a database. EP051 has two independent claims: Claim 1 defines an indicia-reading device, while claim 10 defines an indicia-reading method on an indicia-reading device. Each of the independent claims defined the same specific software operations by which the decodable character is read, and information is displayed.
The applicant, Hand Held Products, Inc. (HHP), part of the Honeywell group, specialises in barcode scanners, computer devices, and related technology. The defendant, Scandit AG, is a Swiss technology company that develops and distributes software for automated barcode scanning.
One of Scandit’s key products is the Data Capture Software Development Kit (SDK), which includes the “BarcodeTrackingAdvancedOverlay” functionality that allows users to scan barcodes and display related product images on a device’s screen.
EP051 was granted on February 21, 2024, and on the same day, HHP filed an application at the Munich LD for provisional measures, in particular a preliminary injunction, to stop Scandit’s alleged infringing activities.
Applicant’s Position
HHP claimed that Scandit’s Data Capture SDK both directly and indirectly infringed the patent. Specifically, HHP alleged that the SDK allows users to create software that replicates the patented functions, including the ability to display product images associated with scanned barcodes.
As evidence, HHP relied on documentation for the SDK and promotional videos produced by Scandit, which HHP said demonstrated how the SDK could be used in a manner that allegedly infringed the patent.
In particular, in the videos, software was demonstrated in which a product image (e.g., a representation of a screw, or an image of headphones) could be displayed above, or partially overlapped with, a labelled barcode.
These videos, in combination with the SDK documentation, were used to argue that the SDK enabled users to create software that infringed the patent.
HHP sought a preliminary injunction to prevent Scandit AG from offering and distributing this SDK across the unitary patent territories. HHP argued that the balance of interests justified the award of an injunction because Scandit’s actions were causing significant damage, including loss of market share, which could not be compensated purely in monetary terms. HHP highlighted that Scandit’s technology was widely used, with their SDK being utilized on over 150 million devices globally.
Defendant’s Position
Scandit argued that the SDK does not directly infringe the patent because it is not an independently executable program but is instead a toolkit that requires further customisation by the user. Additionally, Scandit claimed that the software shown in promotional videos is for demonstration purposes only and does not reflect an actual program that infringes the patent. Scandit argued that it is not responsible for the actions of its customers and that, if HHP’s position on direct infringement was followed, then there would be no meaningful difference between direct and indirect infringement, because almost every indirect infringement would constitute a direct infringement.
Scandit also contended that the SDK does not inherently contain product images or databases necessary for infringing the patent. Instead, it allows for a wide range of programming options, some of which may not infringe the patent at all. On that basis, Scandit denied indirectly infringing the patent.
Scandit also asserted that an injunction is not justified because of the likelihood that the patent would be held invalid in the proceedings on the merits, for reasons of lack of novelty over two existing apps, or lack of inventive step over an earlier Japanese patent publication.
Scandit also argued that HHP had shown unreasonable delay in bringing its action because the features of the SDK and Scandit’s activities were known to HHP since November 2022, and no action had been taken against the SDK under US patents which had been granted much earlier than the European patent.
Scandit said that, on the basis of a balance of interests, halting the SDK’s distribution would cause significant disruption to its business and to its customers, who rely on the SDK for various non-infringing uses.
Outcome
The Court decided to award a preliminary injunction, with an absolute prohibition on Scandit’s distribution of the SDK, finding that the claims of EP510 are likely indirectly infringed by the SDK.
The reasons in the order touch on some important legal points.
Direct vs. Indirect Patent Infringement: The Court found that, with the SDK, Scandit was supplying ‘an essential means’ for the invention, but noted that it was Scandit’s customers who supplied the required hardware and software. The SDK enables the customer to develop the operating software, which would infringe the claims of the patent.
The Court discussed the criteria under which a direct infringement of a device claim can be infringed. It emphasised that a direct infringement may occur when a patent infringer “effectively appropriates the actions of its customer in a manner that constitutes ‘an extended workbench’ and it would be inequitable from a valuation point of view to hold the infringer liable only for an indirect patent infringement”.
The Court stated that liability for direct patent infringement should only be considered if it is certain that an infringing device will be assembled – the court gave the example of a kit of parts which is provided to a customer along with instructions – and where it is only possible to assemble the parts into an infringing device.
The Court found that, while the SDK could be used by the customer to manufacture an infringing device (particularly in view of the videos and documentation provided by Scandit), there were many options open to the customer for using the SDK to ‘assemble’ a non-infringing device. Thus, there is not the required concreteness that a patent-infringing device would be created by the customer.
On this basis, it could not be held that the provision of an SDK would lead to an infringement in the way that might make Scandit liable for direct infringement of the patent. The Court therefore found that provision of the SDK constituted (only) an indirect infringement.
Injunction Standards: When considering an injunction for contributory patent infringement, there must be a determination as to whether it is proper to impose an absolute prohibition (i.e. an injunction against supply of the SDK) or a relative prohibition (i.e. a requirement that the SDK should be supplied only with instructions not to use it in a way which would directly infringe the patent).
The Court determined that this decision depends on:
- whether the infringer (i.e. Scandit) can still offer or supply the essential means (i.e. the SDK) for non-infringing purposes,
- whether the risk of direct patent infringement by the customers can be sufficiently mitigated by warnings, and
- whether and with what effort it appears possible to redesign the means in such a way that it is deprived of its suitability for use in accordance with the patent.
The Court acknowledged that Scandit could remove the disputed patent-infringing functionality from its SDK through an update without rendering the SDK unusable. The SDK would still offer numerous non-infringing features.
Given the challenges of controlling how a large number of its customers use the software, the Court deemed it justified to impose an absolute prohibition on the infringing functionality. This means that Scandit must ensure the SDK no longer includes the disputed feature, rather than just relying on controlling customer behaviour (with warnings or the like).
Limitations on Examination of Validity in Preliminary Injunction Proceedings: The Courthighlighted the limitations of preliminary injunction proceedings, particularly regarding the examination of patent validity. It stressed that the number of arguments against the patent’s validity must be limited to the three strongest arguments from the opponent, as a comprehensive examination of the legal questions in summary proceedings is not feasible.
The basis for limiting the proceedings was given as follows: “The court can either examine a question of law or not. If the court decides to examine the question, it will do so comprehensively. The only way to take account of the summary nature of the proceedings is therefore to reduce the number of questions of law to be fully examined in this way.”
In other words, the Court sought to comprehensively examine a narrow number of validity attacks (rather than, say, more superficially examine a large number of attacks). The Court noted that it is the defendant’s responsibility to challenge the presumption of validity, and it is therefore reasonable to ask the defendant to select the three arguments to be examined in detail.
The Court noted that this approach is in line with that applied by the Courtin other cases before the Munich LD (UPC_CFI_443/2023 ACT_589207/2023 of 21 May 2024).
In the present case, none of the attacks selected by Scandit were found to be prima facie prejudicial to the validity of the patent.
Urgency in Injunctions: The Court addressed the urgency required for preliminary injunctions. The Court found that HHP had met the urgency requirements primarily because it filed the request immediately after the patent in dispute was granted on February 21, 2024. The Court noted that the application was made “at the earliest possible date and without undue delay,” which satisfied the urgency criterion under Rule 211.4 of the Unified Patent Court Rules of Procedure.
The Court also noted that while other LDs (e.g. Düsseldorf) considers it appropriate to require any request for provisional measures to be filed within one month, the Munich LD will continue to adhere to the principle that, as soon as the applicant has all the knowledge and documents that reliably enable a promising legal action, an application for provisional measures must be filed within two months. This two-month period was established by the Munich LD in previous cases (UPC_CFI_443/2023 ACT_589207/2023).
Interestingly, the Court did acknowledge the ability of HHP to assert parallel patent rights in court in the US, but noted that it is known that, under US case law, injunctive relief is generally obtained only in exceptional cases, even in main proceedings. The implication seems to be that, because injunctive relief was effectively not available in the US to HHP, it was reasonable that HPP chose not to seek it there. Additionally, the Court noted that a possible injunction issued by a US court would also have no effect on the territory of the contracting member states of the UPCA.
Outcome and Balance of Interests: The Court concluded that the applicant’s rights were being infringed indirectly by the defendant’s actions, particularly through the offer and distribution of the software development kit (SDK) that could lead to the creation of patent-infringing software. However, it did not establish a direct infringement of the patent. The Court balanced the interests of both parties, considering the potential harm to the applicant if the injunction were not granted and the potential disruption to the defendant’s business if it were. The Court issued an order partially granting the applicant’s request for an injunction against the defendant, in particular ordering that Scandit refrain from distributing its SDK with the disputed functionality.
Conclusion
The key takeaways from this order are:
- Even for a patent which requires a method or a device characterised by a particular sequence of software operations, in principle that patent can be infringed by the supply of a software development kit (SDK) which a third party can use to develop software in a patent-infringing device, or that would implement a patented method.
- In deciding whether an alleged infringer is liable for direct infringement in supplying means essential to the invention, it is not sufficient that the means could be used by a third party to infringe the claims, rather it must be certain that an infringement would occur. In particular, where means essential to the invention are supplied by an alleged infringer to third parties, direct infringement can be acknowledged only if those means can only be assembled into a patent-infringing device. The possibility to put the means to use in a non-infringing way supports the limit of liability of the alleged infringer to indirect infringement.
- To meet the urgency requirements for provisional measures, the Munich LD expects an application to be brought within two months of the Patentee being in a position to act.
- In a defence to an application for provisional measures, a defendant will be expected (by the Munich LD at least) to identify its three best invalidity attacks.
- The decision as to whether a preliminary injunction will be awarded as an absolute prohibition will depend on a number of factors including whether the infringer can still offer or supply the essential means for non-infringing purposes, whether the risk of direct patent infringement by the customers can be sufficiently mitigated by warnings, and whether and with what effort it appears possible to redesign the means.
