In a recent decision of August 2024, the Unified Patent Court’s Munich Local Division issued a preliminary injunction preventing Scandit AG from selling its software development kit, which was found to be suitable and intended for an operating system or for developing an operating system for patent-infringing barcode scanning devices. The decision is the first to address the distinction between direct and indirect infringement, offering several key in-sights into the doctrines of infringement before the UPC.
The plaintiff Hand Held Products Inc. was acquired in 2007 by
Fortune 500 company Hon-eywell International Inc. and does business as
Honeywell Scanning & Mobility («Honey-well»). Honeywell has a broad
patent portfolio relating to barcode scanning equipment and technology
and is regularly active in global patent litigation.
The patent in
dispute pertains to devices, methods and computer programs for
processing multiple decodable indicia – in particular barcodes.
According to claim 1, the device locates and decodes barcodes within a
captured image, displays the image and visually marks the barcode within
the image and can display a product image representing the decoded
bar-code. Patent claim 10 pertains to a computer program claim executed
by such a barcode-reading device.
The defendant, Swiss technology company Scandit AG, develops
computer vision and augmented reality solutions for use on
camera-equipped devices. Scandit's customers in-clude some of the
world's largest retailers, underlining the commercial significance of
the case. The accused product «Data Capture SDK» is a software
development kit (SDK) with a library of functions, including
«BarcodeTrackingAdvancedOverlay». This function allows the user, after
scanning a barcode, to see a visual representation of information
associated with the barcode above, beside to or covering the barcode on
the display of the reader.
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Patent figure 9 of EP3866051B1 showing a product image highlight R608 associated with decoded message data of the barcode representation R208. |
Scandit’s promotional material showing a device displaying a barcode superimposed by a product image.
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Honeywell sued for both direct and indirect infringement. In its
main Request, the plaintiff sought to enjoin the use of the
barcode-reading devices according to patent claim 1, whereas in an
alternative Request, the plaintiff requested to enjoin the use of
software that is suitable and intended for barcode-reading devices
according to patent claim 1. The UPC corrected this request in its
ruling in that software, namely the SDK, that is suitable and intended
as operating software or for developing an operating system for such
devices was deemed to be covered by this formulation. The second Request
based on an indirect infringement of claim 10.
With respect to direct patent infringement, Honeywell argued that the fact that Scandit’s customers had to develop a software realizing the features of the patent claim from the SDK and then execute it on an electronic device was irrelevant. Direct infringement occurs when the infringer delivers a product in parts and instructs its customers to assemble those individual parts into a patent-infringing construction. The software developed with the SDK could be executed on almost any smartphone and tablet and the customers did not require any special hardware. The modular concept of an SDK also inherently means that the customers do not need to use every function that the modules offer.
In contrast, Scandit contended that a direct infringement was not established given that the SDK was not an executable computer software, and as such could not fulfill the features of the claim, for instance the SDK cannot capture, localize, decode or mark barcodes.
The Local Division of Munich held that there is sufficient degree of certainty that claim 1 is directly but not indirectly infringed. The SDK is a mean relating to an essential element of the invention. With the program library, customers of the defendant are able to develop software programs which are making use literally of the teaching of patent claim 1 and 10. Scandit provides the SDK to its customers despite knowing that these means are able and intended for using the invention, as evidenced by promotional videos.
Nevertheless, direct infringement was not deemed established. With the SDK, Scandit only delivers an essential mean for implementing the invention according to claim 1. Scandit neither delivers the required hardware nor software; rather, the customers must provide the hardware, the product images, the barcodes and develop the operating software with the help of the SDK.
The Local Division of Munich referred to national patent case law recognizing direct infringement when an infringer makes the actions of its customers his own via an extended workbench. In such instances, it may be inequitable to hold the infringer liable for indirect infringement only. The boundaries drawn by the legislator with regard to the legal consequences of direct and indirect infringement must be recognized and direct infringement only assumed in instances where a concretely outlined completion of the patent-infringing device is to be expected with certainty. This is illustratively the case when a building kit with assembly instructions is delivered to customers and the overall device will not function if assembled differently.
In the present case, it is possible that customers make use of the
library of the SDK to develop a patent-infringing overall device. Due to
the vast number of divergent possibilities in programming and
assembling hardware components, this is not given with the necessary
concreteness.
The Local Division of Munich also clarified that in case of injunctions prohibiting indirect patent infringement, the court had to specify whether a relative or absolute prohibition of the manufacturing and sales should be issued in view of the possibilities of the infringer to offer the essential means to non-infringing purposes. This depends on whether the risk of direct patent infringement may be sufficiently averted by a warning and whether – and at what expense – the means can be redesigned for non-infringing use.
The «BarcodeTrackingAdvancedOverlay» function could be uninstalled from the program library with a software update. The SDK would not become unusable but would offer a large number of non-infringing functionalities. Furthermore, it is difficult to monitor the actions of Scandit's customers, since most of the software development using the SDK is done in-house. An absolute injunction was therefore considered justified, so that the SDK has to be modified before further sale.
In the present case, it is possible that customers make use of the
library of the SDK to develop a patent-infringing overall device. Due to
the vast number of divergent possibilities in programming and
assembling hardware components, this is not given with the necessary
concreteness.
The Local Division of Munich also clarified that in case of injunctions prohibiting indirect patent infringement, the court had to specify whether a relative or absolute prohibition of the manufacturing and sales should be issued in view of the possibilities of the in-fringer to offer the essential means to non-infringing purposes. This depends on whether the risk of direct patent infringement may be sufficiently averted by a warning and whether – and at what expense – the means can be redesigned for non-infringing use.
The Local Division of Munich also clarified that in case of
injunctions prohibiting indirect patent infringement, the court had to
specify whether a relative or absolute prohibition of the manufacturing
and sales should be issued in view of the possibilities of the
in-fringer to offer the essential means to non-infringing purposes. This
depends on whether the risk of direct patent infringement may be
sufficiently averted by a warning and whether - and at what expense -
the means can be redesigned for non-infringing use.
The BarcodeTrackingAdvancedOverlay function could be uninstalled
from the program library with a software update. The SDK would not
become unusable but would offer a large number of non-infringing
functionalities. Furthermore, it is difficult to monitor the actions of
Scandit's customers, since most of the software development using the
SDK is done in-house. An absolute injunction was therefore considered
justified, so that the SDK has to be modified before further sale.
German courts recognize that patent infringers having a patent-infringing device built by a third parts can commit direct patent infringement, in particular if he provides instructions or supervises the work and inspects the finished device (BGH, GRUR 1958, 179 (182) – «Resin», OLG Düsseldorf, 22 March 2007 - I-2 U 128/05 – «Loom-Möbel»). In order to es-tablish direct patent infringement, (older) Swiss case law requires a behavior equivalent to the manufacture of the entire device, where only a non-relevant step must be performed by a third-party. For example, the manufacturer of an overall device would be the person sup-plying all parts and only leaving a straightforward assembly to its customers (HGer ZH, 22. October 1998, HG 960 190 – «Tubenkopf»).
SDK comprise collections of software routines and utilities helping programmers write an application. As such, they are incapable of performing the steps of asserted soft-ware-related patent claims. Customers purchase SDK because their software integrates with it and their devices, and they will be the one developing software running on a device practicing the invention, for instance, a barcode-scanning IPhone. Therefore, it appears that as long as SDK have non-infringing uses –with libraries and API including unrelated functions – respectively as long as the SDK is not specifically adapted to infringe a patent claim, both UPC, Swiss and German courts will rule against direct patent infringement.
Some consequences of a classification as direct or indirect damages have already been clarified in this first decision. In line with German case law (BGH, GRUR 2006, 839, 842 – «Deckenheizung»; BGH, GRUR 2007, 679, 685 – «Haubenstretchautomat»), courts must decide whether an absolute manufacturing and sales ban is necessary or if warning signs are sufficient to prevent patent infringement in the sense of a relative ban.
Claiming and identifying damages for indirect infringement is inherently complex in prac-tice, and it will be of significant interest to observe the manner in which the UPC addresses damages calculations, should this case be pursued until this juncture. Dozens of customers have purchased the SDK – some may have built patent-infringing barcode reading devices, others may have never utilized the «BarcodeTrackingAdvancedOverlay» function. Under German law, the damages to be compensated by the indirect infringer are limited to the acts of direct infringement of the patents (BGH, GRUR 2005 – Antriebsscheibenaufzug, for a similar approach in the US, see Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc. 76 F.3d 1348 (Fed. Cir. 2009)). Damages should thus only be received on devices pro-grammed for barcode reading, rather than on each SDK sale. Should the UPC follow this approach, the consequences of a classification indirect damages are substantial and will force Honeywell – should it prevail on the merits – to engage in extensive proof of infringement.
