DANGEROUS LETTERS OF INTENT
Oct 2010: Müller supplies dairy products and RTS supplies and installs machinery for packaging food products. Müller selected RTS to supply it with a system to package yoghurt pots and start was agreed under a letter of intent that set out the full contract sum and it also stated that the final contract would be based on Müller’s amended form of MF1 and for a limited four-week “initial” period. Negotiations dragged and the initial period came and went and the letter of intent was not issued. RTS worked and Müller paid until a dispute aose. RTS refused to finish installing the equipment. Mr Justice Clarke of Technology and Construction Court found that the letter of intent had expired at the end of the initial period and did not govern the relationship between the parties thereafter. It also decided that as the parties continued to carry out works after the letter of intent had expired, they intended to create legal relations and enter into a contract but was not the MF1 terms but one that excluded some of the MF/1 terms (limited contract). RTS now argued that no contract was concluded after the letter of intent expired and as there was no formal contract RTS was entitled to bring a quantum meruit claim. The Court of Appeal decided that there was no contract between the parties because the MF1 terms included a “subject to contract” clause and therefore that no contract was formed. The Supreme Court confirmed that the letter of intent had expired at the end of the initial period; and conduct thereafter suggested that parties intended to enter into a contract and amounted to a waiver of the “subject to contract” clause and that therefore the full MF1 had been entered into.
Comment: Three separate court proceedings! Three different decisions! Make sure letters of intent are for (i) a limited scope of works and (ii) a limited period of time and (iii) for a limited maximum sum and (iv) must specify what will happen when the letter expires and the default position if the expected position does not occur.
RTS Flexible Systems Limited v Molkerei Alois Müller Gmbh & Company KG (UK Production) (2010). (The Müller case)
Europe-wide Contract Law ProposedOn 1 July 2010 the European Commission published a Green Paper setting out policy options for introducing a European contract law for consumers and businesses.
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Research in Motion UK Ltd v Motorola Inc, Ch Div (Arnold J), 3/2/10
Motorola’s European patent concerning a messaging gateway system was invalid as lacking an inventive step, and was not infringed by two systems operated by the claimant under the well-known BlackBerry trade mark.
Court: High Court (Patents Court) (England and Wales)
Red Spider Technology v Omega Completions Technology, Ch Div (Mann J), 21/1/10
Red Spider Technology v Omega Completions Technology, Ch Div (Mann J), 21/1/10
Claims for infringement of a patent concerning a water-based injection valve for use in oilfield exploration, and for infringement of design right in the valve, both failed. Further, the patent was invalid for anticipation and obviousness.
Properly construed, the patent did not claim the feature relied on. Further, the priority document relied on did not disclose all the integers of Claim 1, and so the sale of the valve by the patentee before the patent application date anticipated the patent. Further, the invention was obvious over the common general knowledge and a piece of prior art.
The defendant’s reproduction of the valve by working from the patent drawings was not copying of the valve design for design right purposes because the ideas taken were at a high level of abstraction.
Court: No court set yet
Folding Attic Stairs Ltd v Loft Stairs Co Ltd & Anr, Ch Div (Peter Prescott QC), 9/6/09
Folding Attic Stairs Ltd v Loft Stairs Co Ltd & Anr, Ch Div (Peter Prescott QC), 9/6/09
The claimant’s patent for a process for manufacturing a folding stairway was valid and infringed. Before the priority date of the patent, the claimant had allowed a minister and a photographer onto its premises where they were able to see the product under development. This was quite different to displaying the test unit in a public place, and did not deprive the patent of novelty or inventiveness. The individuals who viewed the test unit were not skilled in the art or interested in manufacturing folding stairs. Also the test unit did not disclose or render obvious all aspects of the patent claim.
Court: High Court (Patents Court) (England and Wales)
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The German BGH decided on 12 May 2010 that a private individual left his home WiFi router unsecured (on factory default settings) could be forced to close his router. An unknown 3rd party downloaded a copyright protected piece of music using the unsecured WiFi spot and the owner could show that he was, at the time of the download, on vacation.
The owner of the copyright in the song sued for copyright infringement, asking for an injunction and financial damages. The first instance court both issued an injunction and found the owner of the WiFi spot liable to pay damges. The second instance court reversed and dismissed the claim of the copyright holder.
The German Supreme Court (BGH) distinguished between the injunction and the financial damages: the owner of the WiFi spot could be enjoined to secure his WiFi, but was not liable for financial damages.
The BGH decided that the owner was not required to use the latest, state of the art security technology to secure his WiFi router, but at the time of the installation common precautions against the use of the WiFi spot by unknown third parties had to be taken (i.e. some form of security must be put into place) and therefore defendant could be forced to take the necessary precautions.
The Court also discussed that if a password was used but was defeated, the owner was not liable.
GBH held the WiFi owner liable for the legal costs for the lawyer's letter from the copyright owner as a "Störer", but not a "Täter" (i.e. as a facilitator but not an infringer, i.e. not personally committing the infringement) and found that the WiFi owner did not aid or abet copyright infringement, because he lacked the necessary intent to support the infringement and therefore, he could not be held liable for financial damages.
Cranway Ltd v Playtech Ltd & Ors [2009] EWHC 1588
Cranway Ltd v Playtech Ltd & Ors [2009] EWHC 1588 (Pat) (07 July 2009)
A patent concerning a home computer gaming system was revoked on grounds of (1) lack of novelty in light of the prior art; (2) obviousness over the common general knowledge and prior art; and (3) consisting wholly of excluded matter under s.1(2) of the Patents Act 1977, the subject matter being a computer program not claiming a technical effect.
Court: High Court (Patents Court) (England and Wales)
FNM Corporation Ltd v Drammock International Ltd & Anor [2009] EWHC 1294 (Pat) (15 June 2009)
FNM Corporation Ltd v Drammock International Ltd & Anor [2009] EWHC 1294 (Pat) (15 June 2009)
A patent claiming an aerosol spray containing water and dimethyl ether was invalid for lack of novelty and obviousness in light of prior art and common general knowledge. Communications from the claimant and its solicitors conveyed threats of proceedings for patent infringement but were protected by s.70(2A)(b) of the Patents Act 1977 because the claimant did not have reason to suspect that the patent was invalid at the time of the threats.
Court: High Court (Chancery Division) (England and Wales)
