1 October 2011Jurisdiction reportsMichiel Rijsdijk

The importance of secrecy

A patentable invention needs to meet the requirements of novelty, inventive step and industrial applicability. If it fails to meet one of these requirements, then a patent will not be granted or it will be open to a cancellation claim.

Not only can the discovery of prior art cause an invention to lose its novelty, public use of the invention can endanger an invention’s novelty too, even if the use is only on a small scale.

The question in such cases is not whether the invention becomes known to ‘experts’, the question is whether the invention becomes freely accessible. However, public disclosure of an invention cannot harm its novelty if the parties with access to the invention are sworn to secrecy and do not breach that obligation.

The Dutch Court of Appeal in The Hague recently made an interesting ruling on this subject. The Dutch company Scafom sold a patented scaffolding beam and connection head. The European patent, owned by the German company WL, was granted in the Netherlands on September 27, 1990.

In the main action, Scafom sought the cancellation of the Dutch part of the patent, among others, on the ground of lack of novelty through prior public use. In a counterclaim, WL requested a declaration that Scafom had infringed the patent and a ban on the use of the patent by Scafom. The district court turned down Scafom’s claims and granted those of WL.

On appeal, Scafom contested the consideration of the district court that although the connection heads were manufactured before the priority date of October 19, 1989, the invention had not became publicly accessible because WL assumed that the employees of the manufacturing company were obliged to treat all they knew of the invention with confidence.

"NOT ONLY CAN THE DISCOVERY OF THE ART CAUSE AN INVENTION TO LOSE ITS NOVELTY, PUBLIC USE OF THE INVENTION CAN ENDANGER AN INVENTION'S NOVELTY TOO, EVEN IF THE USE IS ON A SMALL SCALE."

A fact in this case is that the manufacturing company Woeste had manufactured more than 500,000 connection heads between March 1989 and October 1989.

WL did not contest that these connection heads were identical to the patented connection heads. The production of the manufacturing mould and the polishing of the connection heads were outsourced by Woeste to other companies.

The produced connection heads were kept in open boxes, making them visible even during their transport to Woeste. The employees of Woeste and the other companies could freely access the connection heads and study them in detail.

Additionally, Woeste was freely accessible to third parties, such as its clients. The same counts for the clients of the other companies. WL stated that a secrecy obligation existed in the relationship between WL and Woeste, and between Woeste and the other companies. Scaform contested this statement.

As Woeste and the other companies are German companies, the existence of a confidentiality obligation is ruled by German law. According to German law, such an obligation can be agreed explicitly, implicitly or can follow from the circumstances of the case, such as another party’s own interest in the confidentiality obligation. A fact of importance in the latter case is whether the other party knew that the confidentiality obligation covered a new product.

In this case, there was no explicit agreement. It is a fact that the connection heads were openly transported and kept visible. The appeal court said that those facts cannot lead to an implicit confidentiality obligation. Neither Woeste nor the other companies knew or had to know that it was a new type of connection head.

Based on the aforementioned, the court of appeal considered that there was no obligation of secrecy and that the employees and clients of Woeste and the other companies could be regarded as ‘members of the public’ as defined in the EPO Guidelines D-V 3.1.3.1. Therefore, the invention had become publicly accessible before the priority date. The court cancelled the patent for lack of novelty and rejected the counterclaims.

This decision emphasises the importance of clear communication with clients about what they can and cannot do with their invention before a patent is granted. In any case, it is wise to provide solid confidentiality agreements for parties to sign before entering into business that is related to new inventions or pending patents.

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