Judgment of the Federal Supreme Court, Germany, 24 October 2017, docket no. X ZR 55/16, ‘Drum Unit’

With its milestone ‘Drum Unit’decision, the German Federal Supreme Court revisits its case law on the exhaustion of patent rights, and in particular, on the delimitation of ‘permissible use’ on the one hand and the ‘unlawful (re-)making’ of a patented product on the other.

The case relates to the ‘(re-)manufacturing’ of toner cartridges for laser printers. The defendant collects used original toner cartridges within the European Economic Area, strips them down and disassembles the photoelectric drum unit contained therein into a photoelectric drum and a coupling member. In a first step, the worn photoelectric drum is disposed of and then the coupling member of the original cartridge is connected to another photoelectric drum in order to create a ‘new’ drum unit. The patent in suit was directed to a drum unit, including a photoelectric drum and a coupling member.

The patent owner does not offer and trade drum units according to the asserted patent claim as such, but only as a component of a toner cartridge.

The Supreme Court overturned the decisions of the Düsseldorf trial courts and dismissed the complaint in its entirety. The Supreme Court refers to its established case law, according to which the test for differentiating between ‘permissible use’ on the one hand and the ‘unlawful (re-)making of a (new) patented product’ on the other, is whether or not the activity in question maintains the ‘identity’ of the product that was put on the market with the patent owner’s consent.

As is now clarified by the Supreme Court, the starting point for this test is always the product covered by the patent claim. This holds true irrespective of whether or not the claimed product is traded as such, or whether a patent (by a different claim) also protects the unit that is in fact traded on the market. Thus, what had to be assessed in the case in hand was only whether the replacement of the photoelectric drum by the defendant must be considered as an actof repair within the ‘permissible use’ of the claimed drum unit.

Starting from there, the Supreme Court in fact deviated by 180 degrees from its recent case law established in its decision ‘Pallet Container II’ (decision of 17 July 2012, docket no. X ZR 97/11). In this decision, the Supreme Court had opined that for differentiating between ‘permissible use’ and the ‘unlawful (re-)making’ of a patented product, one has to focus primarily on whether or not the relevant consumers of the patented product perceive the measure as an act of ‘repair’, which preserves the identity of that product (= ‘primacy of the consumers’ perception’). The perception of the relevant consumers is thereby mainly influenced by the fact whether the replaced part (here: the photoelectric drum) has – in view of the asserted patent claim (here: the drum unit) – the predominant commercial value compared to the other parts of the asserted patent claim (here: the coupling element). Based on the case law ‘Pallet Container II’, the Düsseldorf Courts had come to the logical conclusion that replacing the photoelectric drum is a ‘(re-)making’ of the patented drum unit.

However, in its current decision, the Supreme Court concluded that the ‘primacy of the consumers’ perception’ is inapplicable for such cases where such perception does not exist with respect to the patented product, since such product is not traded on the market. The approach of the Düsseldorf trial courts to derive a ‘fictive consumers’ perception’ in such situation (here: for the claimed drum unit) was unambiguously rejected by the Supreme Court.
The Supreme Court held that in such cases where the claimed product is not offered on the market it is only decisive whether the advantages and benefits of the patented invention are incorporated in the exchanged part (here: the photoelectric drum) instead of the remaining parts of the product covered by the asserted patent claim (here: the coupling member). Only if this is the case, then exchanging such part is an unlawful ‘(re-)manufacturing’ of the patented product.

This test is a very high hurdle to overcome and will lead in most cases to the result that a ‘permissible use’ instead of an ‘unlawful (re-)making of a (new) patented product’ is given. One may follow from the decision ‘Drum Unit’ that within the balancing of interests of the patent owner on the one hand and of the user on the other, the Supreme Court is seeking to give more weight to the question of whether the benefits of the invention are realized anew as a result of the activity at issue (namely, the replacement of components of a product protected by the patent claim). Should this hold true, it is likely that the Supreme Court may add further limitations to the ‘primacy of the consumers’ perception’ in the future.

A full copy of the decision can be found here.

Reported by: Philipp Rastemborski and Tobias Wuttke, Meissner Bolte