January/February 2015
IP Litigator
By Jason E. Stach; Leythem A. Wall
Authored by Mary E. Chlebowski, Ph.D.; Jason E. Stach; and Leythem A. Wall
Coming changes in Europe will have a dramatic impact on how attorneys manage global patent portfolios and litigation. Global patent enforcement efforts are challenging due to the differences in patent systems throughout the world. Despite largely centralizing its patent examination, Europe suffers these same enforcement challenges. Each country has its own courts to hear patent cases and each country applies its own procedural and substantive laws. Now, after years of failed attempts, Europe is on the brink of creating a centralized patent court system—the European Union Unified Patent Court. The new regime will offer a unified set of substantive and procedural laws that should simplify patent litigation throughout most of Europe, giving attorneys new options for obtaining and enforcing their global patent portfolios.
Each European country has its own courts to address patent cases, and unlike the United States, there is no common appeals court to ensure uniformity in the law (though questions on points of law can be put forward to the Court of Justice of the European Union much as referrals to the U.S. Supreme Court). Procedurally, some countries, including Germany, Austria, and Hungary, have bifurcated systems where infringement and validity are assessed by different courts. Other countries address both issues in the same case. The United Kingdom and others have special patent courts and technically qualified judges while others do not. While some countries offer extensive discovery (e.g., Ireland), others have limited or no discovery. Some countries allow live testimony during hearings (e.g., the United Kingdom); others do not. Some recognize an attorney-client privilege (e.g., the Netherlands) and others do not. Some countries process cases in 12 months or less (e.g., Germany). Other countries can take years.
In addition to procedural differences, the substantive law varies depending on the country. For example, Germany recognizes a doctrine of equivalents whereas the United Kingdom does not. Dosage regimes are considered patentable in most European states but not in French courts. Courts in Italy have ruled that chemical intermediates are not patentable. The complexity and related cost that these differences impose on enforcing patents in Europe has led many companies not to enforce their rights or to pursue more limited enforcement strategies.
In February 2013, 25 EU member states signed an intergovernmental agreement to create a Unified Patent Court (UPC), which would be a new specialized patent court common to participating states. [Unified Patent Court Agreement (16351/12). See http://www.unified-patent-court.org/images/documents/upc-agreement.pdf.] When obtaining patents, inventors will have the option of obtaining a new unitary patent or the currently-offered European bundle patent, both of which would be examined and issued by the European Patent Office (EPO). [The unitary patent will be available once 13 member states, including the United Kingdom, France, and Germany, have ratified the UPC agreement. The patent is intended to be a lower cost alternative to obtaining and maintaining the bundle of patents currently issued by the EPO, which must be renewed annually in each country and are subject to national translation and validation requirements. See http://www.upc.documents.eu.com/PDFs/2012-12-17_Regul_1257-2012_Enhanced_coop_creation_Unitary_patent.pdf and http://www.upc.documents.eu.com/PDFs/2012-12-17_Regul_1260-2012_Enhanced_coop_Unitary_patent_translation.pdf.] The UPC would hear disputes regarding the validity and infringement of both of these types of patents.
A primary objective of the UPC is to create a single court system that uses the same procedures, has experienced judges, and provides for a common appeal system. This single court system will comprise a Court of First Instance with a Central Division and several national (local) or regional divisions. The Central Division will have three locations devoted to specific technologies, with London handling life sciences, Munich addressing mechanical engineering, and Paris overseeing electronics. Each court in the system will have standardized procedures currently defined by the 17th draft of the Rules of Procedure of the Unified Patent Court. [http://www.unified-patent-court.org/images/documents/UPC_Rules_of_Procedure_17th_Draft.pdf.] A common Court of Appeal will be based in Luxembourg.
The Court of First Instance will comprise three legally qualified judges and, if deemed necessary, a fourth technically qualified judge. The Court of Appeal will consist of three legally qualified judges and two technically qualified judges. To add to the international flavor, the judges cannot all be from the state(s) hosting that local, regional, or central division.
Generally speaking, central revocation actions will be brought before the Central Division and infringement actions before the local or regional divisions. However, depending on whether the revocation action is a counterclaim stemming from a UPC infringement action or vice versa, it is possible that both revocation and infringement may be heard at the Central Division or even at a local or regional division. For example, if a party raises a revocation counterclaim at the local division in an infringement action, the local division could handle both revocation and infringement, send the revocation action to the Central Division but still handle the infringement action, or send the entire case over to the Central Division. This potential for bifurcation depending on the local/regional division's preference has raised speculation of possible forum shopping, much like the concerns that are sometimes raised in the United States. However, these concerns largely may be addressed by having a common Court of Appeal. Theoretically, all divisions of the Court of First Instance UPC will be relying on the same law.
Article 24 of the UPC Agreement specifies the law to be employed by the UPC. It states that a court shall base its decisions on EU Law, the UPC Agreement, the European Patent Convention, other international agreements relating to patents binding on contracting member states, and national law. However, Article 65 of the UPC Agreement governs decisions on validity and states that a patent can only be revoked based on Articles 138(1) and 139(2) of the European Patent Convention. In other words, the validity of patents before the UPC will be governed by European Patent Convention law, which is the same law that the EPO currently applies in prosecution and opposition proceedings. This provides some certainty for European patent attorneys about how the UPC is likely to interpret patent validity. Some uncertainty remains, however, because some judges are not technically qualified or have only had experience with their national laws rather than with the European Patent Convention.
If there are corresponding proceedings at the EPO, UPC proceedings may be suspended and the EPO proceedings may be accelerated. In general, the UPC will strive to conclude proceedings within 12 months. This is well above the average speed across the different countries in Europe.
One dramatic difference between the UPC and the United States is that the UPC will permit a patentee to amend its claims and even supply "auxiliary" claim sets for consideration in a revocation action as well as an enforcement action when also defending against a counterclaim for revocation. This practice currently is acceptable in EPO opposition proceedings and certain European countries. In these situations, if a court finds the claims invalid, the patentee may request consideration of alternative claims that a court might find patentable.
The UPC generally provides clarity and uniformity in other areas as well, although differences in implementation could still exist. For example, proceedings in the Central Division will be in the language of the patent, which will be English, French, or German. The language employed by the local and regional divisions, however, will be an official EU language designated by that division. Several states and proposed regional divisions already have indicated that they would offer English as a language of proceedings.
Discovery rules also are unified, at least in theory, by the UPC Agreement and Rules of Procedure. [See, e.g., Article 53 of the UPC Agreement; Rule 190 of 17th draft of the Rules of Procedure of the UPC.] When a party makes a proper case for it, the Court may order the production of evidence from another party. The requesting party must specify the evidence to be produced. The scope of discovery in practice remains to be seen, however, as there may be differences depending on which local or regional division is ordering the discovery. It will be some time before the appellate court is able to settle on a set of generally applicable procedures.
Finally, under the UPC, both lawyers and patent attorneys will be able to claim privilege—even if they are not authorized representatives before the UPC. [See Rule 287 of the 17th draft of the Rules of Procedures of the UPC.] This protection appears to extend to lawyers outside the European Union and those working as in-house counsel. Privilege law can be nuanced and complex, so this is another area where the appellate court may have a significant role in establishing uniformity across jurisdictions.
From a U.S. litigator's perspective, the main advantage of the UPC is that it would allow easier coordination of litigation strategies in European countries. The UPC would reduce the number of substantive differences in patent law both between Europe and the United States as well as among European nations. A uniformly recognized privilege law also could allay concerns of U.S. litigators that their otherwise privileged communications could be discoverable in a European litigation. Having a single discovery system could allow companies to keep costs down by not having to produce different types and amounts of documents in each country.
These features all suggest that patentees may be more willing to enforce European patent rights under the new system. A number of other factors, however, either weigh against enforcement or could go either way depending on the strength of the case. For example, the presence of technically trained judges could weigh for or against a party depending on the technical merits of one's case. If a party has a weaker case, it may be more interested in litigating in individual countries than throughout all countries where the UPC may have jurisdiction. While winning means winning everywhere, the same is true for losing.
Implementing the UPC will not eliminate all inconsistencies in European enforcement. As noted earlier, there would be some discretion for procedural matters, such as bifurcation, that may not permanently erase the practice of forum shopping. Not all EU countries have signed on to the UPC (e.g., Spain and Poland) and countries outside the European Union (e.g., Switzerland and Norway) will not be able to sign on to the UPC. Attorneys will still have to coordinate litigation in those forums separately. It is unclear how, if at all, a ruling by the UPC will influence the non-participating national courts.
Overall, the UPC is likely to benefit U.S. litigators by allowing easier coordination of litigation strategies and procedures. Businesses also may prefer the UPC system to reduce costs compared to pan-European litigation in numerous national courts. Ratification is well under way, with Austria, Belgium, Denmark, France, Malta, and Sweden already completing all necessary steps. After the United Kingdom, Germany, and five more EU countries ratify the agreements establishing the UPC, European patent litigation likely will never be the same.
Reprinted with permission from the IP Litigator, published by Aspen Law and Business. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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