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[2013] ZASCA 157
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Standard Bank of South Africa Ltd v 3MFuture Africa (Pty) Ltd (47/2013) [2013] ZASCA 157; 2013 BIP 128 (SCA) (22 November 2013)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 47/2013
Not reportable
In the matter between:
THE STANDARD BANK OF SOUTH
AFRICA LTD
...........................................................................
First
Appellant
MTN GROUP LTD
..............................................................
Second
Appellant
OLTIO (PTY) LTD
................................................................
Third
Appellant
(FORMERLY MTN MOBILE MONEY SA
(PTY) LTD
and
3MFUTURE AFRICA (PTY) LTD
...............................................
Respondent
Neutral citation:
The
Standard Bank of SA v 3MFuture Africa
(47/2013)
[2013] ZASCA 157
(22 NOVEMBER 2013)
Coram:
NUGENT, LEWIS,
BOSIELO and SHONGWE JJA and SWAIN AJA
Heard:
4 NOVEMBER 2013
Delivered: 22 NOVEMBER 2013
Summary: Patents –
revocation for want of novelty – test to be applied reiterated
– whether claims anticipated.
___________________________________________________________
ORDER
___________________________________________________________
On appeal from North Gauteng High
Court (Makgoka J sitting as court of first instance).
1. The appeal is upheld with
costs that include the costs of two counsel.
2. The order of the court below
is set aside and replaced with the following:
‘
(a) The plaintiff’s
action is dismissed.
(b) The defendants’
counterclaims are granted and South African Patent No. 2002/2337 is
revoked.
(c) The plaintiff is ordered to
pay the costs of the first defendant, and the costs of the second and
third defendants, in the action
and the counterclaims, including in
each case the costs of two counsel.’
___________________________________________________________
JUDGMENT
___________________________________________________________
NUGENT JA (LEWIS, BOSIELO and
SHONGWE JJA and SWAIN AJA CONCURRING)
[1] The Standard Bank of South
Africa Ltd – the first appellant – is a well-known
commercial bank. Through various associated
companies MTN Group
Limited – the second appellant – operates a network that
allows for wireless communication. Mobile
Telephone Networks Holdings
(Pty) Ltd is a subsidiary of MTN Group. It and Standard Bank are
equal owners of MTN Mobile Money Holdings
(Pty) of which Oltio (Pty)
Ltd – the third appellant – is a subsidiary.
[2] For some time Oltio operated
a system known as MTN Mobile Money. The operation of the system was
relinquished by Oltio in October
2011 and was thereafter operated by
Standard Bank through one of its divisions.
[3] The respondent –
3MFuture (Pty) Ltd – is the registered proprietor of South
African Patent No. 2002/2337 entitled
‘Transaction
Authorisation System’. Alleging the MTN Mobile Money system
infringed its patent, it launched proceedings
in the Court of the
Commissioner of Patents, alleging that all the appellants were
infringing, either directly or indirectly, and
claiming an interdict
and an enquiry into damages, alternatively a reasonable royalty. All
three appellants denied infringement,
and also counterclaimed for
revocation of the patent.
[4] By the time the matter came
to trial Standard Bank had terminated the allegedly infringing
features of MTN Mobile Money (on
13 January 2012) and the claim for
an interdict fell away. 3MFuture had also confined itself to only
three claims of the patent
– claims 17, 18 and 19 –
apparently accepting that the early claims were revocable. The
Commissioner of Patents (Makgoka
J) found the three claims were
valid, and that they had been infringed, and he made what was in
effect a declaratory order to that
effect.
[5] The Commissioner also made an
order provisionally revoking the patent, subject to 3MFuture applying
to amend it, and ordered
that it should be decided at the hearing of
such application whether or not the revocation order was to come into
effect. We were
informed from the bar that the patent has now been
amended by the deletion of all but claims 17, 18 and 19. I mention
that only
for completeness because it is not material to this appeal.
[6] The appellants now appeal
against the declaratory order, and against the order for costs, with
the leave of the Commissioner.
[7] Under the
Patents Act 57 of
1978
a patent may be granted for an invention only if – amongst
other things – the invention is new and involves an inventive
step.
1
A patent granted for an invention
that does not meet those criteria may be revoked.
2
Anything that consists of a
method of doing business as such is not an invention,
3
and if a patent has been granted
for such a method it may similarly be revoked. In this case the
appellants claimed revocation of
the patent on all three grounds –
that the claimed invention was not novel, if it was novel it was not
inventive, and in
any event it was not an invention because it
comprised a method of doing business as such. I assume for present
purposes that the
method is indeed an invention, and need only deal
with the objection against novelty, because I consider it to be
decisive of the
appeal, which means lack of inventiveness does not
arise.
[8] An invention is deemed to be
new if it does not form part of the state of the art immediately
before the priority date of any
claim to the invention.
4
The state of the art includes all
matter that has been made available to the public, whether in the
Republic or elsewhere, by written
description.
5
In this court 3MFuture relied on
three patents granted in the United States on various dates preceding
the priority date of the
patent in suit to support their contention
that the invention had been anticipated but I need refer only to one
––
United States Patent No. 5,513,250 entitled ‘Telephone
Based Credit Card Protection’ dated 30 April 1996
(‘McAllister’).
It is not disputed that if the invention
in claim 17 has been anticipated by McAllister, and is thus liable to
be revoked, then
the same fate befalls claims 18 and 19, and I deal
hereafter only with that claim.
[9] The classic formulation of
the test to be applied when asking whether an invention has been
anticipated (whether the invention
is ‘novel’ or ‘new’)
is that expressed by Trollip JA in
Gentiruco
AG v Firestone SA (Pty) Ltd.
6
That test was formulated in
relation to the Patents Act 9 of 1916, which excluded from the scope
of an invention
anything
that had been ‘patented or described in any printed
publication’, whereas the present statute includes in the
state
of the art all matter that has ‘been made available to the
public by written or oral description’, but that distinction
is
immaterial to the principles espoused in
Gentiruco,
in which the learned judge said
the following:
‘
[The
objection of anticipation] relates to the claims and not the
description of the invention in the body of the specification….
Hence the particular claim must be construed to ascertain its
essential constituent elements or integers. For the purpose of this
objection the claim so construed is assumed to be inventive….
The prior printed publication or patent alleged to be anticipatory
is
then construed … The two documents are then compared to
ascertain whether … the prior printed publication “describes”,
the same process, etc., as that claimed. … In regard to a
prior publication, the ordinary meaning of “describe”
means
“
to
set forth in words or recite the characteristics of”
…
Hence
for it to “describe” the invented process etc., it must
set forth or recite at least its essential integers in
such a way
that the same or substantially the same process is identifiable or
perceptible and hence made known, or the same or
substantially the
same thing can be made, from that description.’
7
[10] The manner in which a patent
specification is to be construed, as it was stated in
Gentiruco
,
has been applied on many occasions, but it bears repeating. To
ascertain the meaning of the specification
‘
the
words must be read grammatically and in their ordinary sense.
Technical words of the art or science involved in the invention
must
also be given their ordinary meaning, i.e., as they are ordinarily
understood in the particular art or science, to prove which
extrinsic
evidence is admissible and usually necessary….
The specification,
like any other document, must be read as a whole … [If] on
such a reading it appears that a word or expression
is used, not in
its ordinary sense, but with some special connotation, it must be
given that meaning. Indeed, the specification
may occasionally define
a particular word or expression with the intention that it should
bear that meaning in its body or claims,
thereby providing its own
dictionary for its interpretation.… [If] a word or expression
is susceptible of some flexibility
in its ordinary connotation, it
should be interpreted so as to conform with and not to be
inconsistent with or repugnant to the
rest of the specification….
[The meaning of the
claims] as ascertained from their own language, must prevail over the
rest of the specification…Of course
it may appear from reading
the specification as a whole, as stated above, that certain words or
expressions in the claims are affected
or defined by what is said in
the body of the specification. The language of the claims must then
be construed accordingly …
If the meaning of a claim so
ascertained is clear and unambiguous, it is decisive, and cannot be
restricted or extended by anything
else stated in the body or title
of the specification … On the other hand, if it is unambiguous
(in the wide sense), the
body and title of the specification must be
invoked to ascertain whether at least a reasonably certain meaning
can be given to
the claim’.
8
[11] To that must be added what
was said by this court in
Aktiebolaget
Hässle v Triomed (Pty) Ltd,
9
repeating what had been said in
earlier decisions, which is that those principles of construction are
to be applied purposively,
meaning they are to be directed towards
distinguishing the essential from the non-essential elements of the
invention, so as to
extract from the language the essence, or the
essential elements, or the ‘pith and marrow’, of the
invention, thereby
achieving the purpose of a patent specification –
which is to inform ‘those likely to have a practical interest
in
the subject matter of his invention … that [the inventor]
claims to be the essential features of the new product or process
for
which the letters patent grant him a monopoly’.
10
Catnic Components
provides an illustration of what
that means, with reference to the facts in
C
Van Der Lely NV v Bamfords Ltd
:
11
it pointed out that the
‘hindmost’ wheel of a rake cannot as a matter of
linguistics mean the ‘foremost’
wheel, but that that
‘left open the question whether the patentee had made his
reference to the “hindmost” (rather
than any other
wheels) … an essential feature of the monopoly that he
claimed’.
12
[12] As this court said later in
Vari-Deals 101 (Pty)
Ltd v Sunsmart Products (Pty) Ltd
,
13
that approach to construction of
a patent specification
‘
did
not change the law relating to construction, but it certainly
restricted the scope for contesting litigants to indulge in
‘meticulous
verbal analysis’ of specifications and claims
– usually to an extent which would have been inconceivable to
the ordinary
skilled addressee reading the patent to ascertain the
invention and the ambit of protection claimed.’
14
[13] Considerable evidence was
given by two experts in this case – one for either side. While
that evidence is informative,
and in some respects instructive, much
of it constituted, or was founded upon, the opinions of the witnesses
as to the meaning
of the claim, and to whether it had been
anticipated, which is not admissible. The meaning to be given to a
claim, and whether
the claim has been anticipated by prior
disclosure, are not matters for expert opinion, but are matters for a
court to decide,
albeit that a court, in deciding those questions,
will often need to be guided by experts on the state of the art.
[14] The claimed invention in
this case relates to electronic forms of making payments to suppliers
of goods or services from a
bank account. At one time those would
generally be effected by issuing cheques. The age of electronic
communication has changed
all that by eliminating the paper and
enabling the exchange of money to occur in seconds, but the essential
principles remain the
same.
[15] Payment is now most commonly
made either through the use of a bank card, on which details of the
bank account are embedded,
or by transferring money electronically
through the internet. When using the former method an account holder
will typically present
the card to the supplier, who will insert it
in a device that will transmit the information electronically to an
electronic facility
that manages the customer’s bank account,
in effect instructing the bank to make payment to the bank account of
the supplier.
The information will usually pass, in one way or
another, through an authorisation facility, which will interrogate
whether the
instruction meets certain criteria, before the payment is
made. In the case of a credit card the criterion will typically be
whether
the transaction falls within the credit limit agreed upon
with the bank, and in the case of a debit card whether there are
sufficient
funds in the account, and also, in both cases, whether the
card has been reported lost or stolen. If the relevant criteria are
met then the instruction will be given effect to by debiting the
account holder’s account, and the supplier’s account
will
simultaneously be credited. A bank account holder might also make
payments direct to the bank account of a supplier through
use of the
internet, in effect instructing his or her bank electronically to
effect the transfer.
[16] These impersonal methods of
conducting financial transactions have opened up new fields for those
whose business it is to steal
and defraud. The specification explains
that typically for transactions of that nature only the bank account
details – such
as the credit or debit card number – are
required to effect the transaction. Thus once those details have been
acquired they
are capable of being used to conduct unauthorised
transactions. An object of the invention is to provide a means for
and a method
of combating that problem.
[17] The question that arises for
decision is decidedly narrow and calls for no examination of the
science through which the object
is achieved. The body of the
specification describes the invention as follows:
‘
Broadly,
according to the invention, there is provided a data processing
system that includes
an account status
database having a record of a status of at least one bank account,
said status designating the bank account as
either enabled or
disabled;
an account holder
interface connectable to the account status database which provides
an account holder with an account status altering
facility, for
allowing the account holder to change the designated status of the
bank account’.
What is meant by the account
being ‘enabled’ and ‘disabled’ is explained
as follows:
‘
By
“enabled” is meant, that transactions performed using the
bank account are authorised, and by “disabled”
is meant,
that transactions performed using the bank account are unauthorised.’
[18] That describes through
imagery the effect of what is brought about by the electronic
workings of the system – which is
that an account holder is
able from a remote device (typically a mobile telephone or a
computer) to bring about a block on the
processing of payment
instructions, and also to remove the block, thereby enabling the
account holder to determine what transactions
should be processed.
[19] The invention is claimed in
claim 17 as follows:
‘
A
method of authorising a transaction, the method including selectively
designating a bank account status as enabled or disabled,
on the
instruction of an account holder issued from a remote device, thereby
to selectively authorise transactions performed using
the bank
account; and recording the status of the bank account in an account
status database’.
[20] The invention disclosed by
McAllister is similarly directed at reducing the potential for fraud
through misuse of bank cards
to effect financial transactions. It is
summarised in the specification as follows:
‘
The
present invention provides a system and method for assuring added
security in the use of credit or debit cards using a unique
methodology adapted to be implemented by largely existing facilities
in a public switched telephone network having an advanced
intelligent
signalling network and one or more intelligent peripheral platforms.
According to one version of the invention the
credit card holder
subscribes to a security service … The credit card holder may
subscribe to the new service in a convenient
manner through his
residence telephone to set up a Personal Identification Number (PIN)
and/or a voice print or template to control
his credit card use.
Having subscribed to the service and established such a PIN and voice
template the card holder may then utilize
the credit card security
procedure of the invention. Prior to use of the card the card holder
accesses the security system by telephone,
preferably but not
necessarily his residence telephone, and effects verification by the
preestablished PIN or voice template or
both. Following such
verification the card holder establishes or sets at least one and
preferably two or more of the following
parameters:
A stated time frame
during which the card will be activated, for example, for the next
three hours.
A dollar limit on
the purchasing power of the card during that time.
A geographical area
or location wherein the card will be activated. This may be a
central office or NXX area, a country, city,
state or zip code area,
or the like.
A temporary PIN
which the subscriber desires to have applicable under the
restrictions set under 1, 2 and 3 above.
A voice
verification using the preestablished template.
Following the
establishment or setting of these parameters the point-of-sale
authorization or usability of the credit card then
will be subject to
those restrictions and will be activated only if all such
restrictions are satisfied.’
[21] It is not disputed that the
telephone that is used by the card holder to set the parameters
within which the card may be used
is a ‘remote device’ as
contemplated by the invention in suit. Moreover, the ‘activation’
of the card and
the ‘enablement’ of the bank account in
the two inventions respectively come to much the same thing –
in both
cases they describe the account holder having taken steps
that permitted transactions to be processed. The invention in suit is
said to be novel in only one narrow respect.
[22] It was submitted on behalf
of the appellants that McAllister provides a method for restricting
transactions to those that occur
within a particular window –
whether that be a window of time, or of geographical location, or of
the monetary amount of
the transaction – while the invention of
claim 17 is a method that confines itself to enabling the account for
only a single
transaction. Once the particular transaction is
performed, so it was submitted, the invention calls for the status of
the bank
account to revert to being disabled, requiring it again to
be enabled for the next transaction. As it was described in
colloquial
terms, the invention allows for, and at the same time is
confined to, the account being ‘switched on’ by the
account
holder for a single transaction only, which is not described
by McAllister.
[23] It is not entirely clear to
me that the method of McAllister does not allow for an account to be
‘switched on’
and ‘switched off’ (I use these
terms interchangeably with ‘enabled’ and ‘disabled’)
at the
instance of the account holder for a single transaction –
so far as it describes as one of the parameters the use of a
temporary
PIN – but I will assume it does not.
[24] Clearly the invention of
claim 17 allows for the method to be used so as to permit only a
single transaction in that way –
indeed, using it in that way
provides the most effective protection – but that is beside the
point. The question before us
is not whether it might be used in that
way, but instead, whether the invention is confined to that use, or
whether it might also
be used to ‘switch on’ the account
for multiple transactions. That is a matter solely for construction
of the claim.
[25] 3MFuture’s contention
that the claim is to an authorisation method that is confined to a
single transaction is founded
upon the word ‘selectively’
as it is used in the claim (‘selectively designating a bank
account status as enabled
or disabled’ …. thereby to
‘selectively authorise transactions’) conjoined with the
use of the singular
in the opening line (‘a method of
authorising a transaction). Together they convey, so it was
submitted, that the claim is
to a method for authorising only single
transactions.
[26] I do not think that is a
correct construction of the claim. To ‘select’ means to
‘choose or pick out in preference
to another or others’.
15
The word does not purport to
quantify what is picked out or chosen. What it conveys is only that
that there has been a ‘picking
out’. If there are only
two items from which to select, then making a selection necessarily
means picking out only one, but
that is a function of the
circumstances in which the word is applied.
[27] Thus to ‘selectively’
designate the status of a bank account as ‘enabled’ or
‘disabled’
– the language of the claim –
necessarily means picking out one designation in preference to the
other, because there
are only two. But to ‘selectively
authorise transactions’ is not similarly confined to picking
out only one transaction
– there being any number of
transactions that are capable of being picked out in preference to
any number of others. One
might pick out a single transaction to
authorise, or one might instead pick out any number of transactions,
and in both cases one
has ‘selectively’ authorised the
transaction or transactions, as the case may be. In short,
‘selectively’
does not correspond with ‘singly’
(or ‘discretely’ or ‘one by one’), which is
what the construction
advanced by 3MFuture suggests.
[28] The method that is claimed,
when the language is cast in simplified form, is a method by which an
account holder authorises
transactions according to a selection he or
she has made, which is brought about by him or her issuing an
instruction from a remote
device so as to select between the account
being designated enabled or being designated disabled.
[29] That seems to me to
accurately reflect the ordinary meaning of the language used in the
claim. I do not think the language
is capable of claiming a method
that is confined to authorising transactions ‘singly’ or
‘discretely’ or
‘one by one’ when a word has
been chosen that does not have that meaning.
[30] As for the reference to ‘a
transaction’ (the singular) in the opening line, I do not
consider that to be significant.
Whether the account holder has
chosen to enable the account so as to perform one transaction, or to
perform two transactions or
more, in each case the method is one for
authorising the particular transaction performed. But in any event,
that seems to me to
be the kind of ‘meticulous verbal analysis’
that modern construction eschews. I can see no reason why the
inventor
should have intended to confine the method to single
transactions alone, and none has been suggested. Counsel for 3MFuture
submitted
that what he called the ‘beauty of the invention’
lay in the fact that it allowed an account holder to ‘switch
on’ the account immediately before a transaction, and then
immediately switch it off, thereby having maximum protection.
No
doubt that is the most effective use of the method but that is no
reason to conclude that the inventor intended the method to
be used
only in that limited way. On the contrary, the essence of the
invention lies in the words that follow upon the opening
line, which
make it clear the invention is for authorising transactions of the
account holder’s selection – which might
be one
transaction or it might be more.
[31] In my view the method that
is claimed is not confined to authorising only single transactions
but extends to authorising multiple
transactions at the selection of
the account holder. That being a method anticipated by the prior art
of McAllister, claim 17 and,
by extension, claims 18 and 19, are
invalid and fall to be revoked.
16
For that reason it is not
necessary to consider whether the method is indeed an invention, nor
whether the claim was infringed.
[32] The following orders are
made:
1. The appeal is upheld with
costs that include the costs of two counsel.
2. The order of the court below
is set aside and replaced with the following:
‘
(a) The plaintiff’s
action is dismissed.
(b) The defendants’
counterclaims are granted and South African Patent No. 2002/2337 is
revoked.
(c) The plaintiff is ordered to
pay the costs of the first defendant, and the costs of the second and
third defendants, in the action
and the counterclaims, including in
each case the costs of two counsel.’
________________
R W NUGENT
JUDGE OF APPEAL
APPEARANCES:
For
appellants: L Bowman SC
G
Marriott
Instructed
by:
For
1
st
appellant: Adams & Adams, Pretoria
For 2
nd
& 3
rd
appellants: Spoor & Fischer, Pretoria
For
all appellants Honey Attorneys, Bloemfontein
For
respondent: C E Puckrin SC
A
B S Franklin SC
R
Michau SC
Instructed
by:
Stemela & Lubbe Inc, Pretoria
McIntyre
& Van der Post, Bloemfontein
1
Section
25(1).
2
Section
61(1)(
c
).
3
Section
25(2)(
e
) read with s 25(3).
4
Section
25(5).
5
Section
25(6).
6
Gentiruco
AG v Firestone SA (Pty) Ltd
1972 (1) SA 589
(A).
7
At
646 B-F.
8
At
614C – 615G.
9
Hässle
v Triomed (Pty) Ltd
2003 (1) SA 155
(SCA).
10
Per
Lord Diplock in
Catnic Components Limited v Hill and Smith
Limited
[1982] RPC 183
at 242.
11
C
Van Der Lely NV v Bamfords Ltd
[1963] RPC 61.
12
Catnic
Components
, at 242.
13
Vari
Deals 101 (Pty) Ltd v Sunsmart Products (Pty) Ltd
2008 (3) SA
447
(SCA).
14
At
453H – 454A.
15
Shorter
Oxford English Dictionary.
16
Timothy
Donald Burrell
Burrell’s South
African Patent and Design Law
3ed para
4.71.2.