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England and Wales High Court (Patents Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Patents Court) Decisions >> Parainen Pearl Shipping Ltd & Ors v Kristian Gerhard Jebsen Skipsrederi AS & Ors  EWHC 2628 (Pat) (11 October 2018)
Cite as:  EWHC 2628 (Pat)
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BUSINESS AND PROPERTY COURTS
INTELLECTUAL PROPERTY LIST (CHANCERY DIVISION)
Fetter Lane, London, EC4A 1NL
B e f o r e :
| PARAINEN PEARL SHIPPING LIMITED
SMT SHIPPING (CYPRUS) LIMITED
EUREKA SHIPPING LIMITED
|- and -
|KRISTIAN GERHARD JEBSEN SKIPSREDERI AS
KGJS CEMENT AS
KGJ CEMENT AS
James Abrahams QC and Kathryn Pickard (instructed by Bristows LLP) for the Defendants
Hearing dates: 17-21, 25 September 2018
Crown Copyright ©
MR JUSTICE ARNOLD :
|Experts on Norwegian maritime insurance law||20-22|
|Screw pump system||29|
|Construction of claim 1||50-51|
|Mr Humlestøl's list of components||52-58|
|The facts concerning the Vessel||59-127|
|Purchase and conversion of the Vessel by the Defendants||59-60|
|The insurance settlement||64-75|
|Purchase of the Vessel by Cemet||76-84|
|The condition of the Vessel and the System at the date of the MoA||85-92|
|Work carried out by Cemet on the Vessel and the System||93-94|
|Purchase of the Vessel by Esmenet||95-98|
|Work carried out by Esmenet on the Vessel and the System||99-110|
|The Defendants decide not to purchase the Vessel||111-116|
|Purchase of the Vessel by the Claimants||117-126|
|Work carried out on the System by the Claimants||127|
|The correct approach to the issues of exhaustion and manufacture or repair||128-132|
|Manufacture or repair?||133-172|
|Life expectancy of components||155-158|
|Subsidiary or substantial components||159|
|The inventive concept||161|
|Assessment: the insurance settlement||178-186|
|Assessment: the MoA||186-196|
|Summary of principal conclusions||210|
Experts on Norwegian maritime insurance law
Vertical screw system
Screw pump system
"a system and method for unloading a powdery cargo from a ship, the system comprising a ship, wherein the ship comprises one or more cargo holds in which the bottom tapers down towards a central point in the cargo hold, and also a fluidisation arrangement for fluidisation of the powdery cargo in the cargo hold so that the cargo flows towards said central point in the cargo hold, the system further comprising a pneumatic unloading pump being arranged in or adjacent the central point in the cargo hold at least partially below the bottom of the cargo hold, and that the pump is arranged to directly receive the fluidised powdery cargo."
"Common to all pneumatic unloading systems that are installed on board a vessel is that the unloading process itself is carried out in three operations on board before the cargo is delivered through the pipeline to an installation ashore".
i) Step 1 centralisation of cement: the cement in the cargo holds must be brought to a central point at the bottom of the cargo hold (or at an equivalent point outside of the cargo hold). A property of cement is that when mixed with air it behaves like a liquid. It is common, therefore, for the cargo hold bottoms to have an incline and be fitted with fluidisation panels, through which air can be blown to fluidise the cement so that it flows to the lowest point.
ii) Step 2 transport to pumps: the cement has to be transported from the lowest point of the cargo hold (or equivalent point outside the cargo hold) to the unloading pumps. This may be done either by use of a vacuum system, which sucks the cement up to a filter tank and then drops it down into an unloading pump, or by use of a mechanical system (e.g. a screw conveyor) to lift the cement into a hopper tank before dumping it into an unloading pump.
iii) Step 3 blowing ashore: once the unloading pump is filled with cement, the inlet is closed and compressed air added. Once pressurised, the outlet is opened and the cement blown ashore.
"…to promote a pressure tank pump with side filling and which can be placed centrally in the bottom on a ship carrying cement. The present pump can, as a result of this, be directly filled from the cargo hold without the use of energy."
Further advantages and objects are described at -.
"…is primarily that step two has been removed. This is achieved by placing a newly developed unloading tank centrally under or in the cargo hold bottom. When the cement in the cargo hold is fluidised, the cement flows into the pump which is therefore filled due to gravitational forces. The patent-applied unloading appliance described here has consequently only two sequences in the unloading chain which use energy, i.e. fluidisation of the cement in the cargo holds and transportation of the cement via unloading lines to the receiving installation. All other pneumatic, pressurised unloading appliances have at least one sequence more in the unloading chain that uses energy."
"Powdery cargo that has become fixed in the pump can be air-flushed or broken up with the help of air from a number of nozzles fitted internally in the pump, as the nozzles are supplied air via an inlet in the pump."
[Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture]/
"Steering systems for control of supply/discharge of cargo in the pump, supply/venting of air in the pump and supply of air to the fluidisation arrangements will, in the main, be comprised of known systems and will not be explained in more detail in that these are regarded as known by one skilled in the arts."
" System for unloading of a powdery cargo from a ship,
 the system comprising a ship,
 the ship comprising one or more cargo holds with a cargo hold bottom which tapers towards a central point in the cargo hold,
 and also a fluidisation arrangement for fluidising the powdery cargo in the cargo hold such that the cargo flows towards said central point in the cargo hold,
 the system further comprising a pneumatic unloading pump being arranged in or adjacent the central point in the cargo hold at least partially under the bottom of the cargo hold
 and that the unloading pump is set up to directly receive the fluidised powdery cargo,
characterised in that
 the unloading pump is a pressure tank pump,
 where the side wall of the pump comprises at least one inlet for the powdery cargo, with the inlet at height corresponding with the cargo bottom,
 wherein the powdery cargo, with the help of the gravitational forces, flows into the pump and fills the pump completely or to a level corresponding to that of the cargo hold,
 and that the pump after filling is arranged to be pressurised to blow said cargo ashore."
i) Claim 2 – the unloading pump of claim 1 has a pump housing.
ii) Claim 3 – the fluidisation arrangement of claim 1 is "at least partially formed" in that the bottom of the hold comprises a number of valves/panels for supply of air for fluidisation in the cargo hold.
iii) Claim 4 – the inlet of the unloading pump of claim 2 comprises a closing valve.
iv) Claim 5 – the unloading pump of any preceding claim has at least one unloading outlet for transport of cargo ashore via a pipeline and at least one compressed air inlet to pressurise the pump and to supply compressed air during unloading, where the inlet ends internally in the unloading outlet.
v) Claim 6 – the unloading pump of claim 5 has at least one air opening for venting air during filling of the pump with powdery cargo. It appears that the opening and venting must be temporary, during filling.
vi) Claim 7 – the unloading pump of claim 5 or 6 has at least one inlet for supply of fluidisation air to internal fluidisation panels in a lower part of the pump (i.e. the pump has a fluidisation arrangement).
vii) Claim 8 – the unloading pump of claim 5, 6 or 7 has at least one inlet for supply of air to nozzles arranged internally on the side wall of the pump, set up to air-flush the powdery cargo that may have become stuck in the pump (i.e. the air-flushing nozzles).
Construction of claim 1
Mr Humlestøl's list of components
i) Components in the pre-characterising portion of claim 1:a) Cargo holds (A).b) Cargo hold bottom which tapers towards a central point in the cargo hold (B).c) Fluidisation arrangement for fluidising the powdery cargo in the cargo hold such that the cargo flows towards said central point in the cargo hold (see (g) below).d) A pneumatic unloading pump which is a pressure tank pump (also referred to as a blow tank) arranged in or adjacent the central point in the cargo hold at least partially under the bottom of the cargo hold and set up to directly receive the fluidised powdery cargo (H).
ii) Components in the characterising portion of claim 1:e) The side wall of the pump has at least one inlet for the powdery cargo, with the inlet at height corresponding with the cargo hold bottom (part of J).
iii) Components in the characterising portions of the other claims:f) Pump housing (I).g) Fluidisation arrangement is at least partially at the bottom of the hold and has a number of valves (65 Ghibson valves) (C) and panels (E) for supply of air for fluidisation.h) The inlet of the unloading pump has a closing valve (Warman H valve) (part of J).i) The unloading pump has at least one unloading outlet for transport of cargo ashore via a pipeline (part of S) and at least one compressed air inlet (T) to pressurise the pump, where the inlet ends internally in the unloading outlet.j) The unloading pump has at least one air opening for venting air during filling (Warman V valves, which were replaced with Larox valves by the Claimants, as explained below) (K).k) The unloading pump has at least one inlet (part of L) for supply of fluidisation air to internal fluidisation panels (M) in a lower part of the pump.l) The unloading pump has at least one inlet for supply of air to nozzles ("umbrella nozzles") (part of P) arranged internally on the side wall of the pump or centrally, set up to air-flush the powdery cargo that may have become stuck in the pump.
iv) Other components not mentioned in the claims:m) Actuators (part of C, J, K, L, S).n) Air pipes for fluidisation of the cargo hold (D)).o) Nuts, bolts and fixation bars for fluidisation panels in cargo holds (F).p) Air blowers for supplying fluidisation air (G)).q) Nuts, bolts and fixation bars for fluidisation panels in the blow tanks (N).r) Air pipes to the blow tanks (O).s) Compressors (Q).t) Compressor engines (Volvo Penta engines) (R).u) Electrical system (including auxiliary engines, solenoid valves, cables, cargo control panel) (U).
The facts concerning the Vessel
Purchase and conversion of the Vessel by the Defendants
The insurance settlement
i) A Hull & Machinery ("H&M") insurance policy, for which the lead insurer was Codan Forsikring A/S ("Codan"). This policy also included Hull Interest insurance and Freight Interest insurance. H&M insurance covers the assured for damage to the vessel and equipment on board, Hull Interest insurance is additional insurance in respect of the hull against total loss only and Freight Interest insurance is an additional insurance in respect of freight, also against total loss only. This can result in insurance for the vessel against total loss of up to 150% of the market value of the vessel.
ii) A Protection & Indemnity ("P&I") insurance policy with Assuranceforeningen Gard ("Gard"). Generally speaking, P&I insurance covers third party liability and also oil pollution and wreck removal.
"1. Upon payment of compensation for damage or total loss, the insurer is subrogated to the assured's rights in the object insured or such parts of the object insured as he has indemnified, unless he, no later than the time of payment, waives this right. §2-4 shall apply correspondingly.
2. In the event of a total loss, the assured shall furnish the insurer with title to the object insured and hand over all documents that are material to him as owner. Costs incurred in this connection shall be borne by the insurer."
"1. The assured may claim compensation for a total loss if the conditions for condemnation of the ship are met.
2. The conditions for condemnation are met when casualty damage is so extensive that the cost of repairing the ship will amount to at least 80% of the insurable value, or of the value of the ship after repairs if the latter is higher than the insurable value. If two or more insurances have been effected against the same perils but with different valuations, the highest valuation shall form the basis of the calculation."
"We confirm that the [Vessel] is a total loss as per NMIP § 11-3 and that compensation will be paid according to the regulations of the Plan if and when it is established that the average is recoverable which we need some time to decide. We are still waiting for some documentation of relevance in this regard.
If the average is deemed as recoverable all rights to the vessel which follows from section 5-19 of the Plan will be waived. This implies that you in relation to the H & M Insurers are free to dispose of the vessel.
We notice that payment also is requested under the Hull- and Freight Interest Insurances. We will revert to this when the coverage has been finally decided."
"The Owners have … declared the vessel a total loss as per NMIP §11-3 and requested payment of the sum insured.
Leading Underwriters have accepted the the [sic] declaration of total loss and renounced the rights under §5-19 to take over the vessel."
Purchase of the Vessel by Cemet
"The Owners and P&I Insurers Gard of [the Vessel] is considering to offer the vessel for sale in damaged condition on an 'as is, where is' basis.
There is a cement discharging system onboard consisting of three blow tanks fitted in a longitudinal tunnel in the bottom centre of the vessel….
There has been water ingress at the bottom of all cargo holds, and there is hardened cement on all tank tops. There has been water on top of cargo holds no. 2S, no. 3P&S and all three blow tanks have been flooded. It is likely that cement lumps and hardened cement will remain on board."
"The Buyers undertake not to use or re-commission the Vessel as a pneumatic cement carrier. If the Vessel is re-sold before conversion to bulk carrier, Sellers to have 1st right of refusal. Sellers have the right to verify by inspection that the Vessel is de-commissioned as a pneumatic cement carrier and that the three cement pumps/pressure vessels are destroyed."
The condition of the Vessel and the System at the date of the MoA
Work carried out by Cemet on the Vessel and the System
i) Cemet had done work on the electrical system, steel works on the hull and cleaning/removal of cement in the tanks, but there was still some hardened cement left.
ii) The fluidisation canvas needed to be more or less entirely replaced.
Purchase of the Vessel by Esmenet
i) On 30 December 2009 John Solberg of the Defendants emailed Mr Steimler drawing attention to clause 18 of the MoA.
ii) On 18 January 2010 Mr Steimler forwarded to Mr Solberg an email from Mr Dehni informing him, among other things, that the Defendants were welcome to visit the Vessel and that the intention was to convert it to a bulk carrier which would take three months.
iii) By email dated 21 January 2010 Mr Solberg informed Mr Steimler that the Defendants were not interested in purchasing the Vessel, but wished to be informed when the repairs had been completed or when the Vessel was put on the market so that they could exercise their option to verify destruction of the cement handling system.
Work carried out by Esmenet on the Vessel and the System
i) Some of the cargo holds had been completely sandblasted and painted (with all cement removed from those Mr Jakobsen saw) and new fluidisation canvas was about to be installed.
ii) The blow tanks had been cleared of cement, although there was still some water/cement in the bottoms. The inlet/outlets from the tanks had been cleaned.
iii) The compressor motors had been run. The auxiliary motors also looked good, but the main motor looked a bit shabby.
iv) The cabling had not been replaced.
i) "The machinery and components in the cargo handling MCC/PLC as well as the solenoid valve boxes had already been replaced or repaired"; and
ii) "in general most of the valves below deck (pump rooms, holds and pipe tunnels) had also been replaced or repaired".
i) Pumps (i.e. blow tanks) numbers 1 and 3 worked satisfactorily, although to get pump number 3 going five new solenoid valves had to be installed.
ii) There were several leakage points, where gaskets or a sufficient quantity of bolts were lacking. As a result, the tunnel was filled with cement dust from the fluidisation of the cargo holds.
iii) There were problems with continuity in the electrical/signal system due to the cable and connecting terminals having been exposed to seawater. This condition had worsened since April 2010, and Carmatec assumed that in the end all the cables would have to be replaced.
iv) During the testing of the machinery prior to unloading, problems with all the compressors were discovered, due to them having been serviced and incorrectly assembled during overhaul in Turkey. They ran well at first, but were damaged during testing and found to be beyond repair during later inspection. Therefore alternative rental compressors were used, but due to their smaller size the cement came out at a low rate.
v) After a few hours of operation, a temporary discharge hose being used failed and therefore the operation had to be stopped. Carmatec understood that the Vessel eventually had to leave the port with cargo still onboard.
The Defendants decide not to purchase the Vessel
i) Cargo holds:a) 170 tonnes of cargo was left on board (loose cement left over from the abortive discharge by Esmenet).b) The uneven level of the cargo indicated problems with some fluidisation panels.c) All the fluidisation canvas had been changed.
ii) Blow tanks:a) New canvas had been installed.b) All pipes had been cleaned, but it was not possible to verify the quality of this work.c) Valves on the blow tanks were in operational condition, but the signalling was not working on all the valves.
iii) Void spaces: no work had been done in this area and the fluidisation valves didn't have any signs indicating they had been overhauled.
iv) Cargo control room:a) A new computer had been supplied by Carmatec.b) A selection of valves was operated using a touch screen, but some were not responding. Signalling was a problem with several valves.c) Manual panels had been cleaned inside, but were not 100% operational.
v) Cargo machinery room:a) All three compressors had been disassembled due to breakdown.b) All three Volvo Penta engines tested ok.c) All panels for control and starting had been changed.d) All three blowers were tested and running ok, although one was not building up enough pressure due to the relief valve not closing after start.
Purchase of the Vessel by the Claimants
i) It was a good ship and he had recommended that the Defendants re-purchase it.
ii) The Defendants had sold the Vessel to Cemet with some sort of right of first refusal to buy it back, but that the Defendants had inspected the Vessel twice between 2010 and 2011 and decided not to repurchase it and had not objected to the marketing of the Vessel for use as a pneumatic cement carrier.
iii) The Defendants had applied for a patent in relation to the System, but took the view that it would be difficult to obtain, and it had not yet been granted.
Work carried out on the System by the Claimants
i) Cargo holds (A) and hold bottoms (B): These were structurally sound. As noted above, the loose cement leftover from when Esmenet transported cargo was removed.
ii) Fluidisation valves for the cargo holds (C): Mr Sienkiewicz's evidence, which is supported by the relevant entry in the invoice from the shipyard, was that the 65 Ghibson valves were cleaned and re-fitted. The Defendants contend that it is more likely that the valves were replaced, relying upon evidence that the cost would have been about the same. Mr Sienkiewicz very fairly accepted that that was a theoretical possibility, but in my judgment the invoice is the best evidence as to what was actually done.
iii) Air pipes for fluidisation of the cargo hold (D): These were taken apart, cleaned and put back together again. In addition, the alignment of the air fluidisation channels in the cargo holds was changed to avoid damage to the fluidisation panels.
iv) Fluidisation panels in the cargo holds (E) and blow tanks (M): All 144 panels in the holds and 27 panels in the tanks were replaced (again).
v) Fixation bars for fluidisation panels in the cargo holds (F) and the blow tanks (N): All the rubber bars below the canvas in the tanks were replaced and a significant number in the holds. The majority of the steel bars above the canvas in the tanks were replaced and a significant number in the holds, the remainder being cleaned and refitted. About 600 out of the 24,000-odd nuts and bolts were replaced.
vi) Air blowers (G): These were overhauled, i.e. opened and inspected, bearings and filters renewed where necessary, components greased and then closed.
vii) Blow tanks (H): A thin layer of hardened cement was removed and a small hole at the top of blow tank 2 was sealed.
viii) Cargo inlets to the blow tank (J): The Warman 400 valves were cleaned, new rubber liners were installed and the valves refitted.
ix) Ventilation line and valve for the blow tank (K): The three Warman 200 ventilation valves (one for each tank) were replaced with Larox valves.
x) Fluidisation air inlet for blow tanks (L): The valves and actuators were replaced and some of the pipes.
xi) Air pipes to the blow tank (O): These were dismantled, cleaned and put back together again.
xii) Inlet for supply of air to nozzle in each blow tank (P): Nozzles were fitted (having apparently been removed by Cemet or Esmenet).
xiii) Compressors (Q): All three compressors were replaced, as they had not been properly maintained.
xiv) Compressor engines (R): The Volvo Penta engines were overhauled, with any part showing wear being replaced. Replaced parts included the silencers and pneumatic starters. Mr Sienkiewicz agreed that quite a substantial proportion of each engine was replaced.
xv) Unloading outlet and discharge pipe (S): These were dismantled, cleaned and refitted. Some welding supports were replaced with flanges.
xvi) Compressed air inlet (booster air) (T): These were taken apart, hardened cement removed and refitted.
xvii) Electrical arrangements (U): An IT company called CITASys replaced the PLC and installed new software. Mr Sienkiewicz explained that one of the reasons for the new software was that the Claimants installed a new touchscreen panel to operate the System. Some of the wiring was replaced, but Mr Sienkiewicz was not able to say how much. The auxiliary engines were overhauled.
The correct approach to the issues of exhaustion and manufacture or repair
Manufacture or repair?
"… in this case the Court of Appeal was in my opinion entitled to substitute its own evaluation because I think, with great respect to the judge, that he did not correctly identify the patented product. He said that the frame was an important part of the assembly and that the defendants had prolonged 'the screen's useful life'. It is quite true that the defendants prolonged the useful life of the frame. It would otherwise presumably have been scrapped. But the screen was the combination of frame and meshes pre-tensioned by attachment with adhesive according to the invention. That product ceased to exist when the meshes were removed and the frame stripped down to the bare metal. What remained at that stage was merely an important component, a skeleton or chassis, from which a new screen could be made."
"26. … First, the word 'makes' must be given a meaning which, as a matter of ordinary language, it can reasonably bear. Secondly, it is not a term of art: like many English words, it does not have a precise meaning. Thirdly, it will inevitably be a matter of fact and degree in many cases whether an activity involves 'making' an article, or whether it falls short of that.
27. Fourthly, the word 'makes' must be interpreted in a practical way, by reference to the facts of the particular case. Fifthly, however, there is a need for clarity and certainty for patentees and others, and for those advising them. Sixthly, it should be borne in mind that the word applies to patents for all sorts of products, from machinery to chemical compounds. Seventhly, one should bear in mind, at least as part of the background, the need to protect the patentee's monopoly while not stifling reasonable competition.
28. Eighthly, the word 'makes' must be interpreted bearing in mind that the precise scope of a claim may be a matter almost of happenstance in the context of the question whether the alleged infringer 'makes' the claimed product. Lord Diplock described the specification of a patent as 'a unilateral statement by the patentee, in words of his own choosing' by which he states 'what he claims to be the essential features of the new product' – Catnic Components Ltd v Hill & Smith Ltd  RPC 183, 242. As Lord Hoffmann explained in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd  UKHL 46,  1 All ER 667,  RPC 169, para 21, a claim is, or at least should be drafted 'not only … in the interest of others who need to know the area "within which they will be trespassers" but also in the interests of the patentee, who needs to be able to make it clear that he lays no claim to prior art or insufficiently enabled products'. As Lord Hoffmann went on to explain in para 35, all sorts of factors, only some of which may appear to be rational, can influence the person drafting a claim.
29. Ninthly, where, as here, there is a decision (United Wire) of the House of Lords or this court on the meaning of the word, it cannot be departed from save for very good reasons indeed. Finally, particularly given that section 60 (like section 125) is one of the sections mentioned in section 130(7) of the 1977 Act, the word should be interpreted bearing in mind that it is included in a provision which is intended to be part of a scheme which applies in many other jurisdictions."
"50. The mere fact that an activity involves replacing a constituent part of an article does not mean that the activity involves 'making' of a new article rather than constituting a repair of the original article. Repair of an item frequently involves replacement of one or some of its constituents. If there are broken tiles on a roof, the replacement of those tiles is properly described as repairing the roof, and such replacements could not be said to involve rebuilding, or 'making', the roof. Indeed, replacing the whole of a deteriorated roof of a building could be regarded as repairing the building, taken as a whole, rather than reconstructing the building. There are many cases concerned with repairing obligations in leases which illustrate this point …
51. In the more directly relevant context of chattels rather than buildings, the normal use of 'making' and 'repairing' demonstrates the same point. Works to a ship or a motor car, which involve removal and replacement of defective significant constituent parts, could be substantial in terms of physical extent, structural significance, and financial cost, without amounting to 'making' a ship or motor car, as a matter of ordinary language: in such a case, they would be 'repair' of the existing ship or motor car. …"
"Deciding whether a particular activity involves 'making' the patented article involves, as Lord Bingham said, an exercise in judgment, or, in Lord Hoffmann's words, it is a matter of fact and degree. In some such cases, one can say that the answer is clear; in other cases, one can identify a single clinching factor. However, in this case, it appears to me that it is a classic example of identifying the various factors which apply on the particular facts, and, after weighing them all up, concluding, as a matter of judgment, whether the alleged infringer does or does not 'make' the patented article. In the present case, given that (a) the bottle (i) is a freestanding, replaceable component of the patented article, (ii) has no connection with the claimed inventive concept, (iii) has a much shorter life expectancy than the other, inventive, component, (iv) cannot be described as the main component of the article, and (b) apart from replacing it, Delta does no additional work to the article beyond routine repairs, I am of the view that, in carrying out this work, Delta does not 'make' the patented article."
i) The fluidisation panels in the cargo holds and blow tanks (E and M). Being made of canvas, the fluidisation panels are vulnerable to wear and tear, and therefore it is to be expected that individual panels will need repair or replacement from time to time. The maintenance records from the Cyprus Cement show that in 2008 alone panels were repaired or replaced on 12 occasions. Nevertheless, one would not expect to have to replace all of the fluidisation panels in one go as a result of ordinary wear and tear.
ii) The fixation bars for the fluidisation panels (F and N). Again, one would expect to have to replace some of these from time to time, but not all of the rubber bars and significant numbers of metal bars at one time.
iii) The ventilation valves (K). As noted above, the Claimants replaced the Warman 200 valves with Larox valves. While replacement of these valves would not be expected, Mr Humlestøl gave evidence that the Defendants had made the same change on the Cyprus Cement because the Larox valves were better (but not superior in any way that is relevant to the invention).
iv) The compressors (Q). These would be expected to require regular maintenance, but not replacement.
v) The control system (part of U).
"We purchased the vessel, towed her to Tuzla and spent 3-4 months upgrading her from top to bottom.
The cargo system has been completely overhauled and renewed. 3 new Arzen compressors and new canvas in all cargo holds.
The vessel is a good and strong Ice class 1A ship and with the upgrading she is in fact a new ship."
"In relation to patents, the specific subject matter of the industrial property is the guarantee that the patentee, to reward the creative effort of the inventor, has the exclusive right to use an invention with a view to manufacturing industrial products and putting them into circulation for the first time, either directly or by the grant of licences to third parties, as well as the right to oppose infringements."
The CJEU's judgment in Case 187/80 Merck & Co Inv v Stephar BV  ECR 2063 at  is to the same effect.
"39. In the present case, it is not disputed that, where he sells goods bearing his trade mark to a third party in the EEA, the proprietor puts those goods on the market within the meaning of Article 7(1) of the Directive.
40. A sale which allows the proprietor to realise the economic value of his trade mark exhausts the exclusive rights conferred by the Directive, more particularly the right to prohibit the acquiring third party from reselling the goods.
41. On the other hand, where the proprietor imports his goods with a view to selling them in the EEA or offers them for sale in the EEA, he does not put them on the market within the meaning of Article 7(1) of the Directive.
42. Such acts do not transfer to third parties the right to dispose of the goods bearing the trade mark. They do not allow the proprietor to realise the economic value of the trade mark. Even after such acts, the proprietor retains his interest in maintaining complete control over the goods bearing his trade mark, in order in particular to ensure their quality."
"53. Exhaustion occurs solely by virtue of the putting on the market in the EEA by the proprietor.
54. Any stipulation, in the act of sale effecting the first putting on the market in the EEA, of territorial restrictions on the right to resell the goods concerns only the relations between the parties to that act.
55. It cannot preclude the exhaustion provided for by the Directive."
Assessment: the insurance settlement
Assessment: the MoA
"(1) The Buyers undertake not to use or re-commission the Vessel as a pneumatic cement carrier.
(2) If the Vessel is re-sold before conversion to bulk carrier, Sellers to have 1st right of refusal.
(3) Sellers have the right to verify by inspection that the Vessel is de-commissioned as pneumatic cement carrier and that the three cement pumps/pressure vessels are destroyed."
"154. Where a patentee sells a patented product, then, absent an agreement to the contrary, the purchaser has the right to dispose of the product. If the sale is abroad, the purchaser's rights extend to importing the product into the UK and selling it here. This was established by the well-known case of Betts v Willmott ...1870–71) LR 6 Ch App 239. In that case Betts owned both English and French patents for the same invention. He claimed that his English patent had been infringed by Willmott. It appeared that the infringing articles had been manufactured by a factory owned by Betts in France (or, at least, Betts could not prove that this was not the case). Betts argued that, if he sold a patented article in France, it was for the French market and that did not justify a person buying that article in France and importing it into England. Lord Hatherley L.C. held that in these circumstances the use of the invention in England had been authorised by Betts. As he said in a much-cited passage at 245:
'But where a man carries on the two manufactories himself, and himself disposes of the article abroad, unless it can be shewn, not that there is some clear injunction to his agents, but that there is some clear communication to the party to whom the article is sold, I apprehend that, inasmuch as he has the right of vending the goods in France or Belgium or England, or in any other quarter of the globe, he transfers with the goods necessarily the license to use them wherever the purchaser pleases. When a man has purchased an article he expects to have the control of it, and there must be some clear and explicit agreement to the contrary to justify the vendor in saying that he has not given the purchaser his license to sell the article, or to use it wherever he pleases as against himself.'
155. As Lord Hoffmann pointed out in United Wire v Screen Repair Services  RPC 24 at -, this reasoning amounts to saying that the patentee has impliedly licensed the acts complained of, but an alternative explanation adopted by some other legal systems is that of exhaustion of rights. As Lord Hoffmann noted:
'The difference in the two theories is that an implied licence may be excluded by express contrary agreement or made subject to conditions while the exhaustion doctrine leaves no patent rights to be enforced.'
156. As a result of this distinction, the patentee may exclude such an implied licence by expressly limiting the rights granted to the purchaser. To be effective, however, this limitation must be notified to subsequent purchasers of the goods. As Jacob J. stated in Roussel Uclaf v Hockley International  RPC 441 at p.443:
'It is the law that where the patentee supplies his product and at the time of the supply informs the person supplied (normally via the contract) that there are limitations as to what may be done with the product supplied then, provided those terms are brought home first to the person originally supplied and, second, to subsequent dealers in the product, no licence to carry out or do any act outside the terms of the licence runs with the goods. If no limited licence is imposed on them at the time of the first supply no amount of notice thereafter either to the original supplyee (if that is the appropriate word) or persons who derive title from him can turn the general licence into a limited licence.'"
"The sale of a patented article cannot confer an implied licence to make another or exhaust the right of the patentee to prevent others from being made."
"First, A makes a false representation of fact to B… Second, in making the representation, A intended or knew that it was likely to be acted upon. Third, B, believing the representation, acts to its detriment in reliance on the representation. Fourth, A subsequently seeks to deny the truth of the representation. Fifth, no defence to the estoppel can be raised by A".
Summary of principal conclusions
i) the work that was done to the System by Cemet, Esmenet and the Claimants did not amount to manufacture of a new System, but rather to repair of the existing System;
ii) the Defendants did not exhaust their rights under the Patent by entering into the insurance settlement;
iii) the Defendants did exhaust their rights under the Patent by selling the Vessel pursuant to the MoA;
iv) if the Defendants did not exhaust their rights under the Patent, they did not impliedly licence the use of the System by the Claimants; and
v) if the Defendants did not exhaust their rights under the Patent, they are not estopped from enforcing the Patent against the Claimants.