Bedding Holdings Limited V. INEC & 5 Ors: Patent trolls and why I do not agree with the decision of the court

On Tuesday 28 January 2014, the court in the case of Bedding Holding Limited v. INEC & 5 others, found INEC guilty of infringing the patent rights to a process belonging to Bedding Holding Limited (BHL). The patents in question relate to the process and application of Direct Data Capture (DDC) machines for the compilation and collection of various biometric information and are covered by patents granted under the Patent and Designs Act (the Act).

The background facts are that BHL sued INEC and 5 others at the Federal High Court (the Court) for infringing its Patent Right No. RP 16642 relating to Electronic Collapsible Transparent Ballot Boxes, and Patent Rights No. RP NG/P/2010/202 in respect of Proof of Address System/Scheme (PASS) (I refer to Patent Right No. RP 16642 and Patent Right No. RP NG/P/2010/202 collectively as the “Patents”). The Court in arriving at its decision held that the Defendants violated the Patents and consequently made a declaration inter alia that BHL is entitled to 50% of the total contract sum amounting to N17, 258, 820, 000. 00 (Seventeen Billion, Two Hundred and Fifty Eight Million, Eight Hundred and Twenty Thousand Naira Only) as the minimum reasonable royalty accruable for the infringement committed by INEC and the other Defendants.

  In this article, I explain below with reasons why I do not agree with the decision of the Court in this case. I also conclude by stating that the decision of the Court in this case will impact negatively on Nigeria’s nascent tech-ecosystem by encouraging patent trolls.

1. BHL did not identify the particular claims contained in the Patents that were allegedly infringed

Whether or not a patent is infringed depends on the identification of the claims contained in the Patent in accordance with Section 6 (2) of the Act. Section 6 (2) of the Act provides that: The scope of the protection conferred by a patent shall be determined by the terms of the claims; and the description (and the plans and drawings, if any) included in the patent shall be used to interpret the claims, accordingly the question of patent infringement will ultimately depend on the identification of these claims.

According to Lord Russell in Electric & Musical Industries Ltd v Lissen Ltd (1939) 56 RPC 23, “the function of the claims is to define clearly and with precision the monopoly claimed so that others may know the exact boundaries of the area in which, if they venture therein, they will be trespassers”. In Codex Corporation v Racal-Milgo Ltd [1983] RPC 369 at page 381, the Court of Appeal held that one should not look only to the essence or principle of a patent in suit and hold there have been an infringement merely because that essence of principle has been made use of by the  alleged infringer. 

The importance of the claims in patent infringement proceedings has also been reaffirmed by the Nigerian case of James Oitomen Agboronto v. Grain Haulage [1997-2003] 4 I.P.L.R 177,where the court stated that a plaintiff who desires to succeed in a patent claim has to show inter alia that the act of the infringement has been covered by a valid claim of the plaintiff’s patent (underlining for emphasis). 

My review of the decision indicates that BHL did not identify the particular claim(s) contained in the Patents that were allegedly infringed. On this basis, it is my view that failure of BHL to identify the particular claims allegedly infringed makes it impossible determine the exact scope of the protection granted by the Patents, not to mention of reaching a definite legal conclusion that the said Patents were actually infringed. 

2. BHL did not make a clear showing that the allegedly infringing DDC machines applies the same process protected by his Patents

BHL averred in paragraph 19 of his statement of claim that he is “not claiming to have a patent over the voter’s register per se or the DDC Machines, but the process of the application of the said DDC machines…and application of the said products to produce the Voter’s Register.” BHL further averred in paragraph 20 of his statement of claim that; …inasmuch as the end result is to provide the names, age, sex, photographs, address, unit, ward, town, local government, state etc of voters, the process and the combined application of the means of achieving this, serious infringes on the said process and application of the Plaintiff’s patents for the compilation and production of the Voter’s Register. 

These averments by BHL brings the patent infringement allegations against the Defendants within the scope of the first part of Section 6 (1) (b) of the Act which states that: A patent confers upon the patentee the right to preclude any other person from doing any of the following acts-where the patent has been granted in respect of a process, the act of applying the process. In other words, in this case the process Patents owned by BHL can only be infringed by the act of applying the process.

Beyond the “formulaic recital” of the basic elements of infringing a process patent under the Act, BHL did not show by material facts supported by “clear and convincing” evidence how the Defendants’ applied his patented process in the deployment of the DCC machines for the election process, or how the Defendants’ conduct in deploying the DCC machines for the election process is identical to his own patented process. Thus, BHL in this case failed to plead the infringement of his patented process with sufficient detail. The Court of Appeal in the case of Arewa Textiles Plc & Others v. Finetex Limited (2003) 7 NWLR 322 at 351 – 352 has this to say concerning the infringement of a process patent; The claim herein being one of process or method and not one of product, it is incumbent on the [plaintiff] to adduce evidence showing that the first [defendant] adopted a process similar to its own…

In the absence of such material facts backed by evidence in this regard, I do not see how the Court could have rightly held that; The plaintiff has established by overwhelming evidence that his patents rights have been infringed on.

3. The Court misconstrued the meaning of “new” or “novelty” in the Act

My review of the decision indicates that the 1st, 2nd and 4th Defendants in their respective statements of defence set out facts challenging the novelty of the Patents. They also adduced evidence of prior art and canvassed legal arguments to sustain this challenge. Accordingly, the novelty of the Patents was thrown up for determination before the Court.

Section 1 (2) (a) of the Act states that an invention is new if it does not form part of the state of the art. Section 1 (3) defines the “art” to mean the art or field of knowledge to which an invention relates and “the state of the art” means everything concerning that art or field of knowledge which has been made available to the public anywhere and at any time whatever (by means of a written or oral description, by use or in any other way) before the date of the filing of the patent application relating to the invention… Therefore, novelty is really a question of whether the invention is “new” or has been “anticipated” for example, by a previous patent, or by publication or use. 

In resolving this issue, the Court wrongly proceeded to affirm the novelty (validity) of the Patents because BHL was able to establish that he owns the Patents, and Defendants failed to prove otherwise. In this regard, the Court misconstrues novelty to mean proof of existence (and/or ownership) of a patent right rather than whether the invention (or process) subject to that patent right is new, or is anticipated by prior art. 

CONCLUSION

I also note that the precedent set by the decision of the Court will give rise to a new breed of patent trolls (Wikipedia defines a patent troll as a person or company who enforces patent rights against accused infringers in an attempt to extort licensing fees) who will apply to patent just about anything patentable under the sun in other to claim ownership to the invention, (rather than proving novelty) in accordance with the decision of the Court. This is especially so because the Act does not require patent examiners to conduct a substantive examination as to whether the invention (contained in the patent application) is in fact patentable, thus giving patent trolls the ability to “game” the patent system in Nigeria.

Such scenarios occurring in Nigeria is likely to retard innovation. On this basis and for the reasons stated above, it becomes necessary that the decision of the Court is reviewed by a higher court and that the Act is urgently reformed to drive innovation in Nigeria’s nascent tech-ecosystem. 

Chukwuyere is a Solicitor at Streamsowers & Köhn.