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Malaysia: Court of Appeal Overruled High Court’s Decision

26th September, 2013

In the case of Cadware Sdn Bhd v Ronic Corporation, the Court of Appeal of Malaysia set aside the order of the High Court and declared that Cadware Sdn Bhd had not infringed Ronic Corporation’s Malaysian patent.

Cadware Sdn Bhd (hereinafter referred to as “the Appellant”) manufactures and distributes a soya milk machine product called “One Touch Energy Maker” (hereinafter referred to as “the Appellant’s Product”).

Ronic Corporation (hereinafter referred to as “the Respondent”) has patented an invention entitled “Device for Sensing and Alarming the Absence of Water in a Home Machine for Manufacturing Soybean Milk, Watery Bean Curd and Bean Curd” as Malaysian Patent No. MY-134058-A (hereinafter referred to as “the Respondent’s Patent”). The Respondent commenced the infringement action against the Appellant in the High Court in March 2012 where the High Court declared that the Appellant had infringed the Respondent’s Patent. The Appellant, subsequently, appealed the decision of High Court in the Court of Appeal.

The Respondent’s Patent describes a machine for manufacturing soybean milk etc., where the machine operates only when it contains water. The circuit disclosed in the Respondent’s Patent includes a first switching transistor which gets turned off in the absence of water, thereby triggering an alarm.

The Appellant’s Product, on the other hand, operates under a circuitry similar to the circuit described in the Respondent’s Patent; however, the only difference is that the Appellant’s Product does not feature the first switching transistor.

The High Court had adjudged that this variant did not have a substantial effect on the working and both the circuits, with or without the transistor, functioned in the same way. Hence the High Court, on the balance of probabilities, ruled that the Appellant’s Product, having used a circuit which was identical to and functioned in the same way as the circuit in the Respondent’s Patent, had infringed the Respondent’s Patent.

The Court of Appeal noted that in the Appellant’s Product, the alarm would be triggered when the water went below a certain level. In other words, the circuitry in the Appellant’s Product was designed to detect the threshold water level, and the alarm would be triggered even if there was water present.

The Court of Appeal further stated that the High Court did not examine the Respondent’s claim of infringement in accordance with the correct principle of law: the doctrine of purposive construction which focuses on giving patent specification a purposive construction rather than deriving a purely literal meaning. In accordance with the doctrine of purposive construction, in order to establish infringement, the court needs to ask itself a series of three questions: (a) does the variant have any material effect on the way the invention works? If no, (b) would the immaterial variant have been obvious at the date of the publication of the patent to a reader skilled in the art? If yes, (c) would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention? If no, infringement can be established.

The Court of Appeal conceded that the High Court merely focused at the way the entire circuitry functioned, rather than focusing on the variant, namely the first switching transistor.  The Court of Appeal further held that the High Court had failed to consider the Respondent’s submission that the first switching transistor was an essential feature of the invention and its absence would cause the invention to work in the reverse order; that is, in the absence of the first switching transistor, the alarm in the Respondent’s Patent would be triggered when there was water in the machine whereas the alarm was designed to be activated only when there was no water in the machine. The Court of Appeal concluded that this amounted to the variant having a material effect on the invention which the High Court had earlier neglected.

Based on the above grounds, the Court of Appeal adjudged that the Respondent had failed to discharge its onus of proving any infringement, and subsequently overturned the decision of the High Court and declared the Appellant free from having committed a patent infringement.

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