Friday, 31 July 2015

IP litigation in the UK: on the increase, thanks to IPEC

[Note: a slightly longer version of this post appears on yesterday's IPKat weblog, here]. Back in March, PatLit posted "Patent litigation in England and Wales 2007-2013: is it a predictor for UPC behaviour?", here, having received from Luke McDonagh some fascinating information and thoughts relating to current IP litigation research in the UK.  This has now been followed by the publication of a 53-page UK Intellectual Property Office-commissioned report, Evaluation of the Reforms of the Intellectual Property Enterprise Court 2010-2013, published on Wednesday and accessible via this link. As Luke explains:
In this report, which I co-authored with two economists, Christian Helmers and Yassine Lefouili, our task was to examine the impact of the 2010­-2013 reforms undertaken at the former Patents County Court (PCC), now the Intellectual Property Enterprise Court (IPEC). The primary aims of the reforms were to streamline litigation procedures and reduce litigation costs, and thereby increase access to justice for IP litigants, particularly for individual claimants and SMEs who had previously found the PCC an expensive and unwieldy litigation venue. The reforms introduced a number of changes -- staggered over the period 2010-­2013 -- including a cap on recoverable costs and damages, a reduction of the length as well as complexity of court actions, and the reconstitution of the PCC -- a county court -- as the specialist IPEC within the Chancery Division of the High Court.

In our report we assess the reforms both quantitatively and qualitatively. In our quantitative case counts we find that there has been a large increase in the quantity of IP cases filed at the IPEC post-reforms, and via a comparative study of IP cases at the High Court (HC) and Patents Court (PHC) we show that with the exception of patent cases, there has not been a corresponding increase in cases at the higher level.
We find quantitative and qualitative evidence that the costs cap and active case management by the IPEC judge have been the most influential reforms with respect to the large increase in cases filed at the IPEC post-reforms. We also note that case filings by SMEs have increased substantially following the reforms, fulfilling one of the key aims of the reforms. Importantly, we find that this effect is driven by changes at the extensive (more claimants) and intensive (more cases per claimant) margins of litigation behaviour at the IPEC. Finally, we provide a theoretical model that allows us to gauge the effect of the reforms on those IP disputes that never reach a court. Our theoretical predictions suggest that in addition to encouraging more IPEC case filings, the reforms have had the effect of increasing the quantity of out-of-court settlements as well.
This all suggests that the experiments in reformatting, restructuring and rebranding have paid off. The period in question stops before the Small Claims track started gathering its current momentum, so there may be even better news to come when use of the IPEC is next reviewed.

Wednesday, 29 July 2015

The New European Patent: a new title

The New European Patent, by Alfredo Ilardi, has recently been published by Hart Publishing, now part of the Bloomsbury Publishing.  According to the publishers:
On 17 December 2012, following a complex negotiation which lasted 12 years, the European Parliament adopted Regulations (EU) 1257/2012 and 1260/2012 and the text of the Agreement on a Unified Patent Court (UPC Agreement). These instruments institute the ‘European patent with unitary effect’, the first unified system for the protection of inventions within the European Union. The two Regulations will be applicable after the entry into force of the UPC Agreement, which was signed on 19 February 2013 by 24 Member States of the European Union. 
This book traces the evolution of the idea behind the institution of the European patent with unitary effect, including a comparative analysis of the existing parallel regional and international procedures for the protection of inventions. It presents a synthesis of the different phases of the negotiations which led to the adoption of the first unitary patent system within the European Union. In addition it examines the provisions of the two Regulations, of the UPC Agreement and of the jurisdictional system under Brussels I Regulation. Finally, it reproduces in the Appendix the texts of Regulations (EU) 1257 and 1260/2012 and of the UPC Agreement.
This is not a practitioners' guide; the author is a former Head of the World Intellectual Property Organization's Collection of Laws and Treaties. More than half of it (and it is a slim volume) is taken up with Appendices that can be freely downloaded from the internet.  It would have good to publish the substantive part of this book, giving a somewhat official view of the evolution of the new European patent package, as a stand-alone item, with soft covers and at a fraction of the £65 which is being asked for it.

Details: ix + 150 pages; hardback ISBN 978184946833. Price £65. Book's web page here

Tuesday, 28 July 2015

Coming soon: the new Spanish Patent Act

From our friend and occasional contributor Ignacio Marqués Jarque (Abogado, IP/IT, Baker & McKenzie Barcelona, S.L.P.) and his colleague Silvia Saenz de Ormijana comes this very helpful summary of the new Spanish Patent Act. Many thanks, Ignacio and Silvia!
On 25 July the Spanish Official State Gazette published the new Spanish Patent Act (“Act 24/2015, on Patents”), which amends the still in force 1986 Spanish Patent Act (enacted the same year Spain became a full member of the European Economic Community).

The reforms responds to the legislators' wish
* to adapt the existent patent statute to the new technological developments* to harmonize the Spanish regulatory framework with the European principles set forth in the European Patent Convention*  to simplify and speed up the protection of inventions,  and
 to strengthen legal security and provide for "solid titles" to inventors.
The New Patent Act will enter into force on 1 April 2017, so Spanish industry and legal practitioners will have plenty of time to adapt to the upcoming legislation.

Acknowledging that there is no rush, time has finally come to start digesting the contents of the new Act, which introduces remarkable chances to the traditional patent landscape in Spain. 
This piece (humble in intention) aims to summarize some of the new statute's main developments. As there is a wealth of noticeable changes, so we will be only focusing in those that we consider more relevant without any intention to exhaust the topic … we will have more that 18 months to revisit the issue anyhow! So here we go: 
1.      For the first time, and together with the "traditional" patents and utility models, supplementary protection certificates for medicines and phytosanitary products are included in the list of legal titles granted by the Spanish Patents and Trade Marks Office ("SPTO") for the protection of industrial inventions. (Section 1). 
2.      In order to assess novelty, the six months grace period that is currently granted to the applicant to test the invention where said test does not imply commercial exploitation or offering of the invention (a Spanish peculiarity) is now suppressed. 
3.      The new Act establishes a rebuttable presumption in favour of the employer to claim inventions applied for registration by the employee within a year following expiry of the employment or service relationship. According to the current Patent Act, such inventions could be claimed by the employer in all cases ("iuris et de iure" presumption, Section 19). 
4.      The new Act establishes one single administrative procedure for the grant of patents entailing prior examination on the merits. By doing so, the new Act eliminates the (traditional) possibility to choose between (i) the so-called "general granting procedure" (with no prior examination) and (ii) the much less used granting procedure with prior examination (Sections 36 and 39). The establishment of a "single road" to registration (entailing prior examination in all cases) will be quite an important trend-changing development; according to the SPTO's reports, less that a 10% of the patents applied for in Spain in 2014 were issued with prior examination. 
5.      The traditional system of pre-grant oppositions will be replaced with a post-grant opposition system (EPO alike). Under the new Act, third interested parties will have a six month period to oppose the patent after the publication of its grant. Nevertheless, third-party observations regarding the patentability of the invention might still be filed  (Section 43). 
6.      In accordance with the recent case law set by the Spanish Supreme Court, the Act regulates separately (i) the experimental use exception, which excludes from the scope of the patent protection those acts performed with  experimental purposes and (ii) the "Bolar provision" (performing studies and trials needed for obtaining authorization for the commercialization of pharmaceutical drugs is also excluded from patent  enforcement  - Section 61). 
7.      Without prejudice to collect damages deriving from the patent infringement, "coercive" daily fines are envisaged and will be imposed to condemned infringers as a measure to force the voluntary fulfillment of civil patent infringement judgments. The amount of these daily fines will be determined in the enforcement of the judgment (Section 74.4). 
8.      Two new situations are added to the cases that determine the grant of compulsory licenses (Sections 91 and subsequent sections):
a.      When there is a need to bring to an end anti-competitive practices, declared as such by a final administrative decision or judgment. 
b.      Within the frame of the manufacture of pharmaceutical drugs for export to countries with public health issues, pursuant to Regulation (EC) no. 816/2006, of the European Parliament and the Council of 17 May.
9.      The patentee will be allowed to revoke or limit the scope of his/her patent by modifying its claims at any time during the patent lifespan (which also covers the validity period of the supplementary protection certificate) (Section 105). 
10.  The power of instituting legal actions is acknowledged not only to the patentee, but also to those who can evidence that of having applied for the recordation of the legal instrument (i.e. deed or contract) from which his/her right to file actions derives (Section 117). 
11.  In an unprecedented exemption to the general rule in civil proceedings, the defendant ("alleged infringer") will be granted a two month term to answer the claim /file a counter claim (Section 119). General principle under Spanish law is that defendants in civil litigation have 20 working days to prepare their defense and file all relevant documents to sustain their case.
This noticeable amendment -says the new Act- aims to ensure the principle of defense by adapting procedural deadlines to the "reality of patent litigation", where technical expertises have a decisive role.   
12.  In patent cancellation proceedings where the parties have submitted contradictory expertises, the Judge might decide to request the SPTO the issuance of a non-binding "technical expertise" on the controversial technical issues. The author of such expertise might be called to witness at the trial (Section 120.7). 
13.  For "pre-litigation discovery proceedings" (filed by patentee in order to learn facts or data that are critical to sustain the complaint in a later stage), it is expressly foreseen that investigated party ("future defendant" in the deriving patent litigation) will not be notified of the pendency of such proceedings in order not to frustrate its outcome (Section 124.1). 
14.  For the first time in statutory law, the new Act introduces the possibility for parties foreseeing that will be subject to subsequent interim relief applied inaudita parte to submit the so called "preventive briefs/writs" (Section 132). 
15.  Prior conciliation (mediation) before the SPTO in employment-related inventions is no longer compulsory, but is subject to an agreement between the interested parties (Section 133). 
16.  Utility model protection (until now it seemed quite restricted to mechanical inventions) will now be available for any inventions "capable of industrial application" that consist of providing an object or product of a configuration, structure of composition which results in a "noticeable advantage" in its use or manufacturing process (Section 137 and subsequent sections). 
The state of the art relevant to determine whether a utility model is new and implies an inventive step will consist of everything which prior to the date of submission of the application of the utility model has been made available to the public in Spain or abroad by means of written or oral description or by any other means (same with patents). 
The required level of inventive step, however, seems lower as it will only require that the applied utility model does not derive from the relevant state of the art "in a very evident manner" for the person skilled in the art. This lowered level of inventive step justifies a different duration (10 years compared with the 20 years granted to the patentee). 
Given that utility models will still be granted without examination of the merits (and oppositions will be pre-grant), owners aiming to enforce a utility model granted under the new Act will have to provide for a search report on the state of the art (this being a pre-requisite for the enforcement claim to be processed).

Sunday, 26 July 2015

Obviousness -- not for experts

PatLit has just heard from our friend Colm Ahern (Elzaburu, Madrid) about the latest development involving patent litigation in Spain -- a development which some readers will welcome and others will dread. He writes:
A task for experts -- or for judges?
The Spanish Supreme Court has ruled that the question of obviousness in inventive step is a legal matter, in a judgment of 18 June which was notified just last week. This is an important development for a Court which has traditionally refused to review this matter on the grounds that it was factual and could only be reopened where the ruling of the lower court was shown to be completely irrational. The lack of binding case-law meant that the appeal courts in Spain’s seventeen different regions could adopt widely different approaches.

The author of this judgment is Justice Sancho Gargallo. It is just the latest in a rapidly increasing body of Supreme Court patent case-law which is being led by a number of judges who, like him, have been promoted in the last few years from the Barcelona Appeal Court. A binding precedent has now been created as the ruling confirms the doctrine initially set out in the judgment of 14 April by the same author. It has far-reaching implications for both judges and lawyers, who have traditionally tended to leave the question of obviousness to expert witnesses, a quite extraordinary situation if one considers that these cannot be expected to have anything more than a superficial knowledge of the law. We can now expect to see not only a growing body of Supreme Court case law but also far more lively exchanges at first and second instance.

It is worth noting that the BGH similarly declared that obviousness was a legal question in 2006 (vorausbezahlte Telefongespräche and Demonstrationsschrank). This led it to instruct the German courts in 2010 to take the rulings of other contracting member states and of the EPO into account when deciding the question of obviousness for the same European patent (Walzenformgebungsmaschine).
PatLit has asked Colm for a copy of the decision and will make it available as soon as possible.

Friday, 24 July 2015

Legality of UPC opt-out fees: Ingve is not alone

Verdict on the UPC opt-out fee ...?
Yesterday PatLit drew the attention of readers to this article by German IP practitioner and scholar Ingve Stjerna on the doubtful legality of the proposal to charge prospective patent litigants in Europe for exercising their right to opt out of using the Unified Patent Court (UPC).  Well, it seems that Ingve is not alone.  This blogger has now learned that Benedikt Migdal, of leading British IP practice Bristows, has also questioned the legal basis for this fee on the Bristows UPC Blog, here.

PatLit agrees that the legality of the opt-out fee should be carefully reconsidered. Apart from its plainly dubious legal basis, it is surely wrong in principle and does, as Ingve indicates, suggest that those responsible for the UPC have little confidence in its attractiveness to users if it has to penalise them for not using it.

Any old judge can handle a patent-related contract action, rules court

Medical Research Council v Celltech R&D Ltd, an extempore judgment of Mr Justice Nugee in the Chancery Division of the High Court, England and Wales, on 7 July, is noted on the subscription-only Lawtel service. It's another instructive case as to the court on which an action should be allowed to proceed. Usually the argument is as to whether an action should be heard before the more expensive and high-powered Patents Court or its cheaper, less formal and generally swifter Intellectual Property Enterprise Court. This time, however, the discussion focused on whether the action should be placed before the specialist Patents Court or left on the High Court's General List.  As a contract dispute it could be expected to be heard on the General List, but as a dispute involving patents it could be said to belong to the Patents Court.

The background goes like this: the MRC had licensed Celltech to use inventions covered by a number of patents and applications in various geographic regions, the inventions being in the field of recombinant antibodies and methods for their production, including altered antibody binding sites. Under the patents, Celltech was obliged to pay royalties on the sale of relevant products by itself or one of its affiliates; it was not in dispute that this arrangement included sales by sublicensees.

In 1997, this royalty-bearing patent licence was amended, adding a proviso to the scope of the obligation to pay royalties. Celltech then granted a sublicence to a US company, which in turn granted licences to two other pharma companies. Those two pharma companies then developed two antibody products which they sold in the US. Said the MRC, in addition to royalties already paid by Celltech, royalties at one per cent of the net proceeds of all of those sales during a particular time period were outstanding under the amended licence agreement. The amount outstanding was said to be US$44 million, exclusive of interest, at the issue of these proceedings.

Celltech argued that the proceedings potentially raised complex issues that should be determined in the Patents Court. In particular, a Patents Court judge would more securely and easily resolve questions concerning the construction of the patent licence agreement as well as questions of US patent law, if necessary; case management, including requests for further information, would be better dealt with in the Patents Court rather than the General List. The MRC disagreed:what the court had to look at initially was the construction of the agreement and an estoppel argument, since the agreement had been operative for several years: these were suitable for the General List. Celltech hadn't argued that the products did not fall within the patents and there was no substantial technical dispute. If one did arise, the matter could be looked at again, The MRC also invoked section 62(1) of the Senior Courts Act 1981, in respect of matters that did not arise under the Patents Act 1977.

Nugee J refused the application to list the action with the Patents Court.  In his view:

* In due course there could be a dispute about which products fell within the claims of the existing US patent, but the court did not yet have the material from which it could conclude that something was bound to, or likely to, be in issue;

* The case might be disposed of entirely in relation to questions of contractual construction, fact and the estoppel plea. None of those things gave rise to the need to decide the highly technical issue of which drugs fell within the subsisting patents and nothing before the court indicated that that was something likely, let alone bound, to be in dispute.

* This being so, it was prima facie inappropriate for this action to proceed in the Patents Court -- which would have the practical effect of having the action heard by one of two full-time specialist patent judges, or a deputy judge, which were scarce judicial resources.

* The fact that it might be easier, quicker and sounder for a patents judge to construe licences did not of itself justify the order sought, since construing a patent licence did not require the level of expertise required to decide a patent action.

* There was no reason for thinking that case management issues had to be decided by a Patents Court judge rather than experienced masters in the General List.

Nugee J added obiter that the list of matters that had to be heard in the Patents Court under s.62(1) of the 1981 Act was not exhaustive: it could be that the natural meaning of s.62(1) was that the only proceedings that could be commenced in the Patents Court were those specified, but the practical consequence would be so inconvenient that the word "only" should not be read in.

Thursday, 23 July 2015

The Unified Patent Court and pay-to-opt-out: a critical analysis

If only it were so easy!
From our friend and German intellectual property attorney Ingve Stjerna comes information that he has now had the chance to take a closer look at the planned fee for an opt-out from the competence of the Unified Patent Court; he has thoughtfully summarised his findings with regard to the proposal's legality in "“Unitary patent” and court system – Urgently needed: A legal basis for the opt-out fee", a highly readable four-page paper which you can read in English or in German.

What is the outlook for European patent litigation in light of the planned fee structure? Ingve explains:
The approach of trying to foster the adequate utilization of a newly created court system by making the use of a concurrent judicial competence dependent on the payment of a fee does not really show great trust and confidence of the Contracting Parties as to its expected acceptance. Vice versa, this feeds and increases the skepticism among the users.

This approach becomes fully bizarre as regards patents and patent applications which were granted or applied for prior to the entry into force of the UPCA and thus at a time at which the new court system which they are now meant to be subjected to retroactively, has not even been existing. Such protective rights stand under the previous regime of legal protection, this should continue to be available for them free of charge.

Already due to these manifest doubts in the lawfulness of an opt-out fee under constitutional law its collection should be abstained from entirely, all the more since the confidence in the Unified Patent Court expressed by such step would be an important signal to the user circles. However, this is not to be expected. Therefore, the constitutionality of such fee and of the Agreement purportedly providing for its collection may possibly have to be discussed in the future.

"Before we go to trial, can you explain how you're construction your claims?"

News of Electromagnetic GeoServices ASA v Petroleum Geo-Services ASA & others, an extempore Patents Court, England and Wales, ruling of Mr Justice Mann on 21 July, comes via a short Lawtel note.

This action for patent infringement seems to have attracted quite a bit of pre-trial skirmishing since the court had previously ruled that the claimant patent owner did not have to serve a further pleading giving particulars of the alleged infringement because its construction of the allegedly infringed patent could actually be discerned from earlier correspondence between the parties. Subsequently the claimant wrote to the defendants, indicating a change of stance on its case as to the construction of its patent. At the point the alleged infringers applied for an order that the claimant patent owner provide them with further information in relation to its case on claim construction on the ground that the claim of infringement was now unclear. While this application was granted, Mann J however held that it was not appropriate for him to require the claimant to answer a certain specific question in pleaded form because it was too early in the proceedings to do so and the defendants did not need to know the claimant's answer to their question in order to be able to advance their own case.

Said Mann J, while there was nothing wrong in principle in isolating and defining issues as to claim construction in pleaded form, there were obvious problems in defining construction issues in such a way at too early a stage in proceedings. Claim construction could not be considered in the abstract, but had to be viewed in a context -- and the views of experts would inevitably form an important part of the background against which claim construction should be considered. Large parts of the relevant factual background in any given case would not be apparent at too early a stage, especially where the background was complex, as in the case here.

Friday, 17 July 2015

18th draft of UPC rules "well received"

Via William Jensen (Marks&Clerk solicitors) comes this link to some exciting news for those who are itching to get litigating in Europe's experimental Unified Patent Court (UPC). This latest information reads thus:

The 10th meeting of the Preparatory Committee was held at the Hungarian Permanent Representation to the European Union at the 10th of July. At the meeting the 18th draft of the Rules of Procedure were presented by Johannes Karcher, coordinator of the Legal Framework working group, and Kevin Mooney, Chair of the Drafting Committee. The draft was very well received by the Committee and even if there is one or two items still to settle it was concluded that the Committee expect to agree on a final set of Rules at its meeting in October. The Committee then went on to agree the draft Protocol on Provisional Application of parts of the Agreement on a Unified Patent Court. The Protocol will be opened for signature in the autumn at a date later to be announced.
The Committee also discussed the salary package of the judges, the privileges and immunities of the UPC and the division of costs and responsibilities of the UPC and the hosting Member States. Neil Feinson, coordinator for the IT workstream also confirmed that the contracts for the IT work had been awarded to T-Systems for the hosting work, Miggle for development of the website and Net Services Spa for the case management development.
The next meeting of the Committee will take place on 3 September 2015.
Frustratingly, there was neither a link to the 18th draft nor a conveniently attached Word or pdf document, which leaves us all wondering what the 18th draft looks like. This blogger has no doubt that many people will be sad to see the back of the 17th draft, with which they have been gradually familiarising themselves; he hopes that, if the 17th and 18th drafts are not entirely dissimilar -- as he suspects will be the case -- someone will prepare a handy concordance.