Smart Meter Patent gets Read

A recent Patents Court Judgement has some interesting points of potential relevance to patents for the Internet of Things and trials or beta tests. It is also an example of the relatively rare, for the UK at least, phenomenon of troll litigation.

In Meter-Tech LLC v British Gas Trading, BG were accused of infringing Meter-Tech’s patent for a smart meter and in turn sought revocation of the patent. Meter-Tech LLC is a US corporation who sued BG as the exclusive licensee of another US entity, Vanclare SE LLC. Vanclare had bought the patent for £160,000 (including equivalents in some jurisdictions) from the administrators of the original applicant – Secure Electrans Limited. The price of £160,000 seems quite large but Meter-Tech valued their claim against BG at well over £10 million, potentially up to £30 million. Since there is no sign of Meter-Tech or Vanclare manufacturing anything, it seems clear that the purchase and licence of this patent was a pure investment in potential litigation. One that so far has failed to pay off as the patent was held invalid.

The alleged invention concerned pre-payment meters with a cellular wireless connection and aimed to enable credit to be added to a meter without the user needing to feed it cash, or carry a smart key or card between the meter and the retailer where credit is added. The judge summarised the invention as:

to use the unique identity of the meter to identify the meter to which payment is to be credited, use the digital cellular number to communicate with the relevant meter and use a system of cross referencing the unique identity of the meter with the digital cellular number in a database.

The prior art brought by BG against the patent was pretty close and the key argument on inventive step concerned use of the meter serial number (MSN), rather than a customer account number, to identify the meter, which the Judge held to be obvious.

In spite of having found the patent to be invalid, the Judgment considers at length issues of infringement which provide a couple of interesting points. This is standard practice in UK Court Judgments – if the finding that the patent is invalid were to be overturned on appeal, the parties would not need to start again in relation to the issues of infringement.

The claims of the patent were directed to “A pre-payment energy supply system including a pre-payment utility meter”. Most smart meters of course are capable of operating in both credit mode and pre-payment mode so the question arose as to whether a meter that is capable of operating in pre-payment mode, but with that mode not activated, is “a pre-payment utility meter”. The judge held that it is, in part it seems because of the presence of firmware and hardware (a switch to interrupt supply) to enable the pre-payment mode to be activated remotely.

This point has implications for many IoT devices which may be built around SoCs having functions that are not presently required but are still capable of activation. To avoid infringement of patents relating to inactive features, it may be necessary to ensure that those features are permanently disabled.

The second interesting point on infringement relates to the experimental use defence: it is not an infringement of a patent to do things “for experimental purposes relating to the subject matter of the invention”. In the present case, some of the alleged infringements were denoted as trials but were on a significant scale. Thus the issue arose as to whether the trials really were experiments “relating to the subject matter of the invention”. The case law says that a trial having multiple purposes may still benefit from the defence, depending on the overall balance of its purpose. A trial aimed at determining whether an invention works or at finding information to advance the design is more likely to benefit from the defence. A trial aimed at demonstrating a product works for regulatory purposes or determining whether a product is commercially viable is less likely.

In this case, the judge decided that one trial was an experiment, rather than a demonstration, but was not intended to find out anything related to the subject matter of the invention and so not entitled to the defence. The factors supporting the latter conclusion were that it was a test of suitability of “a ready-made system” and not “genuine research relating to the development of metering”. Evidence and the Judge’s findings in relation to another trial were confidential and are not included in the Judgment. This illustrates that the experimental use defence cannot be regarded as a broad safety blanket for trials or beta tests but the aims of such trails must be considered in detail.

Given the money at stake, an appeal seems likely and we shall watch for it with interest. The full judgment (451 paragraphs) is available at http://www.bailii.org/ew/cases/EWHC/Patents/2016/2278.html.

Written by John Leeming, Partner, J A Kemp

John Leeming, J A Kemp

John is a Partner and Patent Attorney at J A Kemp with specialisms in semiconductors, software, optics and designs. With over 25 years of professional experience, John’s clients range from large multinationals to start-ups, including firms that have successfully progressed beyond the early stages to develop extensive patent filing programmes. He is the primary contact at J A Kemp for UK and Community Registered Design matters. LinkedIn

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