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TATA STEEL v ARCELORMITTAL, District Court of Luxemburg, 17 July 2019

ARCELORMITTAL has submitted a patent application (EP 2 906 734) on “A method for manufacturing a metal sheet with a ZnAl [Zinalium, a zinc-based metal] coating and with optimized drying, corresponding metal sheet part and vehicle”, as well as a divisional patent application (EP 3 056 581).

TATA STEEL claimed to have a right of co-ownership on these patent applications. In subordinate order, it claimed an unlimited and royalty free license, or at least, to be authorized to continue using the elements of the invention that it was already using, notwithstanding the patent applications.

ARCELORMITTAL contested all claims and filed a counterclaim requesting damages for the profits lost since the grant of its patents was delayed by the introduction of these proceedings.

1. Co-ownership

Between 2000 and 2003 TATA STEEL and ARCELORMITTAL were members of a Belgian research center called “Centre de recherches metallurgiques” (CRM) in the domain of metallurgic fabication processes and fabricated products.

Furthermore, TATA STEEL and ARCELORMITTAL concluded an R&D agreement to install a virtual research center (VRC), to enhance their collaboration on 16 specific CRM projects and to share the results thereof.

One of the VRC projects was project ‘VRC 0211’ relating to “zinc coating of reduced thickness and of higher spinning speed”. The project regards the galvanizing process which consists of covering pieces of metal with a zinc layer.

In the context of project VRC 0211 Mrs. Sylvia Meijer, an employee of TATA STEEL, ran multiple tests and recorded her findings in a report. TATA STEEL claimed that the research conducted by (the employee of) TATA STEEL in the context of project VRC 0211 had enabled ARCELORMITTAL to obtain the technical result claimed in its patent application n° ‘734 and that therefore TATA STEEL had contributed to the claimed invention. It therefore claimed co-ownership.

Since the research was conducted in Belgium under the logistic support of a Belgian association, the court ruled that the issue of co-ownership should be settled according to Belgian law.

a. Violation of a legal obligation

Firstly, TATA STEEL claims a violation of a legal obligation, i.e. the co-ownership right to be attributed to the person that contributed to the invention. According to Belgian law, to qualify as a co-owner a ‘substantial contribution’ to the development of the invention has to have been made by that person.

The court determined that the work done by the employee of TATA STEEL was limited to a series of tests and the observation of the results thereof. The report resulting therefrom did not provide a precise solution to any problem. In addition, TATA STEEL did not demonstrate that the report was useful for the development of the claimed invention nor that the similarities between the report and the invention would not be coincidental.

Moreover, the problem to be solved in project VRC 0211 was different than the one solved in the patent application. While project VRC 0211 aimed to reduce the thickness of the galvanization layer, the patent application provides a solution to reduce the waving of the galvanization layer. TATA STEEL did not provide evidence that there is an intrinsic link between these two aspects or that a difference in thickness of the layer would influence the degree of waving of this layer.

b. Violation of a contractual obligation

Secondly, TATA STEEL claims co-ownership rights pursuant to the agreements in the context of the CRM and the VRC.

The court determined that neither the bylaws of the CRM nor the R&D agreement regulate the ownership of patents, which is therefore governed by the general principles of law. According to these general principles, it cannot be held that TATA STEEL is co-owner of the invention.

For the above reasons the court rejected TATA STEEL’s claims of co-ownership of the patent application EP‘734. TATA STEEL did not invoke separate arguments concerning the divisional patent application. Its claim regarding co-ownership of the divisional application was therefore also rejected.

2. License

TATA STEEL argued that it should be granted an unlimited and royalty free license to use the claimed invention, or, that it had the right to continue using the research as formulated in the report, like it had been doing in the past, notwithstanding the patent applications.

The internal rules of the CRM provide that the results of the collective research would be available for members free of charge and that all members that registered for a specific research project would automatically be granted a free user license to all patents that would possibly be held by members of the CRM relating to inventions done and knowhow acquired in the context of the collective research.

However, the court found that there is no demonstrated link between the VRC projects and the invention claimed by ARCELORMITTAL in its patent applications. Therefore, TATA STEEL is not entitled to any user or other rights resulting from the contractual relationship with ARCELORMITTAL in the context of the VRC.

Regarding TATA STEEL’s claim to be authorized to continue using elements of the claimed invention, the court decided that this claim is premature and does not lie within its jurisdiction but should be addressed before the EPO if the patents are granted.

3. Counterclaim

Finally, the court rejected ARCELORMITTAL’s counterclaim for damages as it was not demonstrated that TATA STEEL had intentionally delayed the grant of the patents by introducing the proceedings.

A copy of the judgment (in French) can be read here.

Headnote: Stanislas Roux-Vaillard, Hogan Lovells