Patent Enforcement Worldwide: Writings in Honour of Dieter Stauder 9781782257653, 9781849467094

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PREFACE TO THE FIRST EDITION (OCTOBER 2000) Dieter Stauder, in the honour of whose 60th birthday the following contributions were written, was among the first to realise the importance of enforcement for an effective protection of patent rights. His dissertation on “Patent Infringement in International Commerce”, published in 1975, takes up a subject that Dieter Stauder subsequently elaborated in numerous articles and case comments. His groundbreaking fact-finding study on “Patent Infringement Procedure in Germany, the UK, France and Italy” (in German), published in 1988, analyses numerous actual court files from these four countries and highlights the need for harmonisation. Convinced of the latter goal, Dieter Stauder helped to initiate the Symposia of European Patent Judges in 1982, the results of which have been regularly reprinted in this journal. His academic work is crowned by his revision of Romuald Singer’s Commentary on the European Patent Convention. Dieter Stauder, engaging personality and fascinating teacher, currently heads the International Section of Strasbourg’s CEIPI—for many years to come, we hope. Als einer der Ersten hat Dieter Stauder, dem die folgenden Beiträge zum 60. Geburtstag gewidmet sind, die Bedeutung der Rechtsdurchsetzung für einen wirksamen Schutz von Patenten erkannt. Dem Thema seiner im Jahre 1975 veröffentlichten Dissertation zur “Patentverletzung im grenzüberschreitenden Wirtschaftsverkehr” ist Dieter Stauder im folgenden noch in zahlreichen Veröffentlichungen nachgegangen. Seine grundlegende rechtstatsächliche Studie zum “Patent- und Gebrauchsmusterverletzungsverfahren in der Bundesrepublik Deutschland, Großbritannien, Frankreich und Italien” von 1988 analysiert zahlreiche Gerichtsakten und macht den Harmonisierungsbedarf in Europa deutlich. Harmonisierung und Informationsaustausch sind auch das Ziel der von Dieter Stauder 1982 mitbegründeten Symposia europäischer Patentrichter, die regelmäßig in dieser Zeitschrift abgedruckt worden sind. Sein eigenes Geburtstagsgeschenk hat sich Dieter Stauder mit der Neubearbeitung des Singerschen Kommentars zum EPÜ gemacht. Dieter Stauder, charmanter Pfälzer und mitreißender Redner, ist derzeit Direktor der internationalen Abteilung des CEIPI in Straßburg—hoffentlich ad multos annos. C’est en l’honneur de Dieter Stauder et de son 60ème anniversaire que ces articles ont été réunis. Parmi l’un des premiers, Dieter Stauder a su reconnaître l’importance que revêt la mise en oeuvre effective du droit des brevets dans le besoin d’assurer une meilleure protection de ces droits. Cet engouement naissait avec sa thèse, publiée en 1975, qui traitait de „Contrefaçon de brevet et échanges économiques transfrontaliers“, et se poursuit encore aujourd’hui au travers de nombreuses publications. L’une de ses plus grandes oeuvres, d’ailleurs, „Etude de droit comparé sur le procès de la contrefaçon de brevet et des dessins et des modèles en République Fédérale d’Allemagne, Grande Bretagne, France et Italie“, parue en 1988, mettait en relief la nécessité d’un travail d’harmonisation au sein de l’Europe.

vi

Preface

Membre fondateur du Colloque des juges européens des brevets, Directeur de la Section Internationale du CEIPI, Dieter Stauder s’est déjà offert son propre cadeau d’anniversaire: la nouvelle édition du commentaire Singer/Stauder sur la Convention sur le brevet européen. Charmant orateur, professeur admiré, directeur au caractère enjoué, et espérons le, pour longtemps encore, ceci est un hommage bien mérité. Christopher Heath Laurence Petit

PREFACE A Festschrift, a German tradition that has also made its way into international academia, is normally a one-off event. Second or third editions are rather uncommon. The ‘Festschrift Dieter Stauder/Writings in Honour of Dieter Stauder/Mélanges dédiés à Dieter Stauder’ was published in its first edition under the title ‘Patent Enforcement in Selected Countries’ as a special issue of IIC in October 2000 (31 IIC 625–770), and in its second edition as an IIC-Studies publication ‘Patent Enforcement Worldwide’ in 2005. Issues concerning patent enforcement had been the focus of Dieter Stauder’s academic oeuvre since his first publications in the mid-1970s. Perhaps due to the difficulty of the topic as such, positioned somewhere between substantive and procedural law, it has received a broader academic interest only in the last 20 years. This may explain the success of the Festschrift: the first edition sold 1500 copies in its English version, and was translated into French (‘La défense des droits de la propriété industrielle en Europe, aux États Unis et au Japon’, CEIPI publication No 48, Litec, Strasbourg 2001), Spanish (‘La observancia del derecho de patentes’, LexisNexis Depalma, Buenos Aires 2003) and Japanese (‘Shuyōkoku ni okeru tokkyoken kōshi’, Keizai sangyō chōsakei, Tokyo 2003). This third edition comes after a decade of significant changes: the implementation of the European Enforcement Directive, the preparations for a Community Patent Court, the establishment of specialised intellectual property courts in many countries, the discussions about patent trolls, injunctive relief and patent abuse. While these developments have added quality to court decisions in this field, they have also fostered a critical discussion on the patent system in general. Even though there are significant differences in national enforcement practice, the general picture is that patentees rarely stand a better-than-even chance of a court finding their patents valid and infringed. High invalidation rates upon review by the patent offices and the courts add a degree of legal uncertainty that in other fields of law would be considered unacceptable. In light of the various developments in this field, almost all national reports had to be significantly rewritten for this edition. Two comparative chapters have been added to deal with, respectively, international aspects of patent litigation, and border enforcement. Two country chapters have been dropped—Hungary and the Czech Republic—while three have been added: Turkey, India and Taiwan. While many of the contributors to the first and second editions continue to be on board, others have had to decline the invitation for a third edition for personal or professional reasons. Amongst these, I would like to pay particular tribute to my friend Laurence Petit, with whom I co-edited the first two editions. Finally, I would like to thank Dr Viola Prifti for the laborious task of preparing the table of contents and the case index, and Rob Crossley, for his copy-editing of the manuscript. Christopher Heath, Munich, October 2015

DETAILED CONTENTS Preface to the First Edition .........................................................................................................v Preface ..................................................................................................................................... vii Summary Contents .................................................................................................................. ix Authors and Editors .............................................................................................................xxxv Table of Cases .......................................................................................................................... xli

Part A: Patent Enforcement in International Agreements 1. Comparative Overview and the TRIPS Enforcement Provisions ....................................3 Christopher Heath and Thomas F Cotter A. Introduction ...............................................................................................................3 B. Enforcement and International Law .........................................................................6 I. General ..............................................................................................................6 II. Difficulty of Uniform Rules .............................................................................7 III. History of TRIPS and Enforcement .................................................................8 C. TRIPS—General Principles of Enforcement: Articles 41 and 42 ............................9 I. Procedures in General ......................................................................................9 II. Principles Laid Down in Article 41 ................................................................10 1. Article 41(1) .............................................................................................10 2. Article 41(2) .............................................................................................12 3. Article 41(3) .............................................................................................14 4. Article 41(4) .............................................................................................14 III. Article 42 .........................................................................................................15 D. Rules for Obtaining Evidence: Articles 43 and 50(1)(b) ........................................15 I. TRIPS Provisions Articles 43 and 50(1)(b) ...................................................15 II. Further Interim Measures ..............................................................................17 1. The UK .....................................................................................................17 2. The German Auskunftsanspruch .............................................................18 3. Obtaining Evidence in Japan...................................................................18 E. Interim Injunctions: Article 50 ................................................................................19 I. Provisional Measures to Prevent Infringement, Article 50 of TRIPS .........................................................................................19 II. The Balance of Probability .............................................................................21 III. Practice in Selected Countries ........................................................................22 1. US .............................................................................................................22 2. UK.............................................................................................................22 3. Germany ...................................................................................................22 4. France .......................................................................................................23

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Detailed Table of Contents 5. The Netherlands ......................................................................................23 6. Japan .........................................................................................................23 7. In General.................................................................................................24 F. The Main Action ......................................................................................................24 G. European Issues ........................................................................................................27 I. Personalities ....................................................................................................27 II. Institutions ......................................................................................................28 III. Existing Legal Framework ..............................................................................30 H. Final Measures: Articles 44–48 ................................................................................31 I. Injunctive Relief, Article 44 ............................................................................31 II. Damages, Articles 45, 48 .................................................................................33 1. The US ......................................................................................................34 2. Japan .........................................................................................................36 3. Germany ...................................................................................................37 4. The UK .....................................................................................................41 5. France .......................................................................................................43 6. Other Countries .......................................................................................45 7. Attorneys’ Fees, Article 48 .......................................................................45 III. The Right of Information/Auskunftsanspruch, Article 47.............................46 IV. Other Remedies, Article 46 .............................................................................47 I. Administrative Measures, Articles 49, 51–60 ..........................................................47 I. TRIPS, Article 49.............................................................................................47 II. Border Measures, Articles 51–60 ....................................................................48 J. Criminal Measures, Article 61 .................................................................................52 K. List of Literature .......................................................................................................53 Part B: Patent Enforcement in Europe

2. The European Union: Jurisdiction, Cross-border-Cases, Enforcement Directive and Unified Patent Court..........................................................57 Tilman Müller-Stoy and Jörg Wahl A. Introduction .............................................................................................................57 B. Jurisdiction ...............................................................................................................58 I. Introduction ....................................................................................................58 II. Jurisdiction Based on Domicile (actor sequitur forum rei) ...........................58 III. Jurisdiction Based on the Place of Infringement (forum delicti commissi) ..................................................................................60 IV. Jurisdiction Based on Connected Claims/Plurality of Defendants ..............61 V. The So-called ‘Torpedo’ Action ......................................................................63 C. Taking of Evidence in the EU in Cross-border Scenarios ......................................65 D. Enforcement Directive .............................................................................................67 E. Unified Patent Court ................................................................................................69 I. Introduction ....................................................................................................69 II. UPR .................................................................................................................71 III. UPTR ...............................................................................................................71 IV. UPCA...............................................................................................................72

Detailed Table of Contents xiii V.

VI. VII.

Unified Patent Court (UPC) .........................................................................72 1. Organisation ...........................................................................................72 2. Competence ............................................................................................72 3. The Judges...............................................................................................73 4. Procedure ................................................................................................74 a. Language of Proceedings ................................................................74 b. Rules of Procedure ..........................................................................74 c. Appeal Procedure—Basic Outline..................................................76 5. Court Fees ...............................................................................................76 The Future Role of the European Court of Justice (ECJ)............................77 National Jurisdiction or Unified Patent Court? ...........................................77

3. Patent Enforcement in the United Kingdom ..................................................................81 Christopher Rennie-Smith A. General......................................................................................................................81 I. Background....................................................................................................81 II. History and Tradition ...................................................................................82 III. Lawyers, Patent Attorneys and Judges ..........................................................84 B. Problems Related to the Enforcement of Patent Rights .........................................85 I. Types of Action ..............................................................................................85 1. Actions by Patentees—Patent Infringement, Limitation .....................85 2. Actions by Others—Revocation, Declaration of Non-Infringement, Threats ...................................................................86 II. Parties .............................................................................................................87 III. Courts and Jurisdiction .................................................................................87 1. Three Jurisdictions .................................................................................87 2. Patent Courts in England.......................................................................89 3. Transnational Jurisdiction .....................................................................91 IV. Pre-Action Procedures ..................................................................................91 1. Patent Office Opinions...........................................................................91 2. Interim Injunctions ................................................................................92 3. Discovery of Names ...............................................................................94 4. Preservation of Assets ............................................................................94 5. Preservation of Evidence and Provision of Information .....................95 6. Blocking Injunctions ..............................................................................96 7. Other Pre-Action Procedures ................................................................97 V. The Course of an Action ...............................................................................97 1. Statements and Particulars of Case .......................................................97 2. Admissions..............................................................................................98 3. Case Management: Directions ...............................................................99 4. Disclosure of Documents ......................................................................99 5. Witnesses ..............................................................................................100 6. Experiments and Expert Evidence.......................................................100 7. Other Evidence Provisions ...................................................................101 VI. Types of Infringement .................................................................................101

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Detailed Table of Contents VII.

Remedies for Infringement........................................................................102 1. Injunctions ..........................................................................................103 2. Monetary Remedies ............................................................................104 3. Other Relief .........................................................................................105 4. Summary Judgment ............................................................................106 VIII. Defences......................................................................................................106 1. Denial of Infringement, Statutory Defences, Invalidity ....................106 2. Licences, No Exhaustion of Rights.....................................................106 3. Defence of Invalidity: Stays Pending EPO Proceedings ....................107 IX. ‘Wrongful Enforcement’ ............................................................................108 X. Costs ...........................................................................................................109 C. Conclusion..............................................................................................................109 4. Patent Enforcement in Germany...................................................................................111 Christian Osterrieth A. Characteristics of the German System ..................................................................111 I. Bifurcation..................................................................................................111 II. Written Procedure......................................................................................113 III. Hearings and Decisions .............................................................................113 1. Düsseldorf ...........................................................................................114 2. Mannheim ...........................................................................................114 3. Munich ................................................................................................115 4. Style of Decisions ................................................................................115 5. Statistics ...............................................................................................115 B. Problems Related to the Enforcement of Patent Rights .......................................116 I. Types of Action ..........................................................................................116 1. By the Patentee ....................................................................................116 a. Infringement Action ....................................................................116 b. Customs Actions (Border Seizures) ............................................116 2. By the Defendant ................................................................................117 a. Declaration of Non-Infringement ..............................................117 b. Torpedo Action ............................................................................117 c. Nullity Suit ...................................................................................118 II. Competent Parties .....................................................................................118 1. The Claimant ......................................................................................118 a. Patentee ........................................................................................118 b. Exclusive Licensee ........................................................................119 c. Non-Exclusive Licensee ...............................................................119 2. The Defendant ....................................................................................119 a. Direct Infringers ..........................................................................119 b. Contributory Infringer ................................................................120 c. Interferer (‘Störer’) .......................................................................120 III. The Competent Court ...............................................................................121 1. Ordinary Courts .................................................................................121 2. The Federal Patent Court ...................................................................122 3. Appeals ................................................................................................122

Detailed Table of Contents xv IV.

V. VI.

VII.

VIII.

IX.

X.

Preparation for Trial/Preliminary Measures.............................................124 1. Measures to Preserve Evidence/Discovery .........................................124 2. Preliminary Injunctions .....................................................................125 3. Warning Letters ...................................................................................127 The Trial in Ordinary Proceedings............................................................127 Types of Infringement ...............................................................................128 1. In General ............................................................................................128 2. Claim Interpretation ...........................................................................129 3. Literal Infringement ...........................................................................130 4. Equivalent Infringement ....................................................................130 5. Contributory Infringement ................................................................131 Remedies ....................................................................................................132 1. Injunctive Relief ..................................................................................132 2. Damages ..............................................................................................133 3. Compensation Claim for Published Patent Applications .................135 4. Claim for Destruction ........................................................................135 5. Claim for Recall ..................................................................................135 6. Claim for Information and Rendering of Account ...........................136 7. Claim for Publication of Court Decision ..........................................137 Defences......................................................................................................137 1. No Defence of Invalidity ....................................................................137 2. Prohibition of Double Protection ......................................................137 3. Non-Infringement ..............................................................................137 4. Co-Ownership ....................................................................................138 5. Prior User Rights.................................................................................138 6. Standard Patents .................................................................................139 7. Exhaustion...........................................................................................140 Enforcement and ‘Wrongful Enforcement’...............................................140 1. Preliminary Enforcement ...................................................................140 2. Subsequent Invalidity of the Patent ...................................................141 3. Unjustified Warning Letters ...............................................................141 Costs ...........................................................................................................141 1. Value of a Court Case .........................................................................141 2. Statutory Minimum Fees and Reimbursement of Costs ..................142

5. Patent Enforcement in France .......................................................................................145 Isabelle Romet, Amandine Métier and Dora Talvard A. Brief Outline of the Patent System ........................................................................145 I. Legislative Framework ...............................................................................145 II. Court System ..............................................................................................146 III. The Profession ............................................................................................146 B. Problems Related to the Enforcement of Patent Rights .......................................147 I. Types of Action ..........................................................................................147 1. Actions Available to the Patentee .......................................................147 a. Infringement Action ....................................................................147 b. Customs Measures .......................................................................148

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Detailed Table of Contents 2. Actions Available to Third Parties ......................................................149 a. Revocation Action........................................................................149 b. Opposition ...................................................................................152 c. Declaration of Non-Infringement ..............................................152 d. Action Against Threats ................................................................153 II. Competent Parties .....................................................................................153 III. Competent Court .......................................................................................154 IV. Preparations for Trial .................................................................................155 1. Limitation............................................................................................155 2. Warning Letters ...................................................................................156 3. Saisie-contrefaçon ................................................................................156 4. Preliminary Injunctions .....................................................................159 V. The Trial .....................................................................................................162 1. First Instance Proceedings ..................................................................162 2. Appeal Proceedings .............................................................................164 3. Proceedings Before the Cour de cassation .........................................165 4. Hearings ..............................................................................................165 VI. Types of Infringement ...............................................................................166 1. Direct and Indirect Infringement ......................................................166 2. Literal Infringement and Infringement by Equivalents ....................167 VII. Remedies ....................................................................................................169 1. Injunctive Relief ..................................................................................169 2. Damages ..............................................................................................169 3. Recall, Confiscation, Destruction, Publication..................................170 VIII. Exceptions and Defences to Infringement ................................................171 1. Invalidity .............................................................................................171 2. Exceptions to Exclusive Use................................................................171 3. Exhaustion...........................................................................................172 4. Prior Personal Possession ...................................................................172 5. FRAND Defence .................................................................................172 IX. Wrongful Enforcement ..............................................................................173 1. Patent Declared Invalid after the Enforcement of a Preliminary Injunction................................................................173 2. Patent Declared Invalid after a Final Decision Ordering the Payment of Damages....................................................173 3. Remedies Against Unjustified Threats of Alleged Infringement ..........................................................................174 X. Costs ..............................................................................................................174 C. Annex: Statistics on French Patent Litigation .......................................................175 I. Number of Patent Decisions Handed down by the French Courts for the Period 2000–14 .....................................................175 II. Number of Preliminary Injunctions Requested and Granted for the Period 2000–14 ................................................................176

Detailed Table of Contents xvii III. IV.

Nature of Cases among the Decisions Handed Down in First Instance and on Appeal .....................................................177 Winning Rates in First Instance and on Appeal .......................................178

6. Patent Enforcement in the Netherlands .......................................................................181 Jan J Brinkhof and Anselm Kamperman Sanders A. Introduction and Brief Outline of the System ......................................................181 I. Introduction ...............................................................................................181 II. Judges..........................................................................................................181 III. Patent Attorneys and Patent Lawyers ........................................................183 B. Problems Related to Enforcement of Patent Rights .............................................185 I. Types of Action ..........................................................................................185 II. Competent Parties .....................................................................................186 III. Competent Courts .....................................................................................186 1. National Jurisdiction ..........................................................................186 2. International Jurisdiction ...................................................................186 IV. Preparation for Trial—Preliminary Measures ..........................................190 1. Obtaining Evidence ............................................................................190 2. Kort geding ...........................................................................................191 V. The Trial .....................................................................................................193 VI. Types of Infringement ...............................................................................194 1. Direct and Indirect Infringement ......................................................194 2. Literal and Equivalent Infringement .................................................195 VII. Defences......................................................................................................196 1. Invalidity .............................................................................................196 2. Exhaustion...........................................................................................197 3. Research and Other Exceptions..........................................................198 VIII. Remedies ....................................................................................................199 1. Injunctive Relief, Information and Destruction ...............................199 2. Damages ..............................................................................................200 IX. Wrongful Enforcement ..............................................................................201 X. Costs ...........................................................................................................201 C. Final Remarks .........................................................................................................202 D. Literature ................................................................................................................202 7. Patent Enforcement in Italy ...........................................................................................205 Giovanni Casucci A. The System of Civil Procedure in General ............................................................205 I. Introduction ...............................................................................................205 II. Structure .....................................................................................................205 1. First Instance .......................................................................................205 2. Appeal ..................................................................................................206 3. Supreme Court....................................................................................207 4. The Profession.....................................................................................207

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Detailed Table of Contents III.

Patent Enforcement ...................................................................................208 1. Supra-national Law, Regulations and National Enforcement ........................................................................208 2. Requests for Urgent Relief as the Preferred Remedy.........................208 3. The ‘Presumption of Invalidity’ of an Italian Patent.........................208 4. Technical Issues ...................................................................................209 B. Problems Related to the Enforcement of Patent Rights .......................................210 I. Type of Action ............................................................................................210 II. Competent Parties .....................................................................................210 III. Competent Court .......................................................................................212 IV. Preparation for Trial: Preliminary/Interim Measures ..............................213 1. Descrizione ...........................................................................................213 2. Sequestro ..............................................................................................214 3. Inibitoria ..............................................................................................215 4. Publication ..........................................................................................215 5. Requirements ......................................................................................215 V. The Trial .....................................................................................................216 VI. Types of Infringement ...............................................................................218 VII. Remedies ....................................................................................................219 1. Injunctive Relief ..................................................................................219 2. Damages ..............................................................................................219 VIII. Defences......................................................................................................221 IX. Wrongful Enforcement ..............................................................................222 X. Costs ...........................................................................................................223 C. Final Remarks .........................................................................................................223 8. Patent Enforcement in Poland ......................................................................................225 Janusz Fiolka A. History ....................................................................................................................225 I. Beginnings of Intellectual Property Protection in Poland .......................225 II. The Current IP System ..............................................................................227 1. Civil Law ..............................................................................................227 2. The Constitution and International Agreements ..............................228 3. Transitory Provisions ..........................................................................232 III. The Profession ............................................................................................233 1. Advocates.............................................................................................233 2. Legal Advisers ......................................................................................234 3. Patent Attorneys ..................................................................................234 B. Problems Related to the Enforcement of Patents .................................................235 I. Types of Action ..........................................................................................235 1. Civil Infringement Action ..................................................................235 2. Administrative (Border) Measures of Patent Enforcement ..............235 3. Patent Invalidity Procedures before the Patent Office ......................235 II. Competent Parties .....................................................................................237

Detailed Table of Contents xix III.

IV.

V.

VI.

VII.

VIII.

IX. X. XI. XII.

Courts and Jurisdiction .............................................................................238 1. In General ............................................................................................238 2. Procedures in Commercial Matters ...................................................238 3. Style of Decisions ................................................................................239 4. National Jurisdiction ..........................................................................239 5. Double and Transborder Litigation ...................................................240 Preparation for the Trial ............................................................................241 1. Measures to Preserve Evidence ...........................................................241 2. Warning Letters ...................................................................................241 3. Interim Injunctions ............................................................................242 The Trial .....................................................................................................242 1. In General ............................................................................................242 2. Expert Opinions..................................................................................243 3. Appeals ................................................................................................243 4. Cassation (kasacja) .............................................................................243 Types of Infringement ...............................................................................244 1. Literal Infringement and Infringement by Equivalents in Patent Matters.............................................................244 2. Protection of Process Patents .............................................................245 Remedies ....................................................................................................246 1. Injunctive Relief ..................................................................................246 2. Claims for Infringer’s Profits and Damages ......................................246 3. Destruction of Infringing Goods .......................................................247 4. Publication of Court Decision ...........................................................247 Defences......................................................................................................247 1. Non-Infringement ..............................................................................247 2. Invalidity .............................................................................................247 3. Time Bar ..............................................................................................248 4. Other Defences....................................................................................249 Wrongful Enforcement ..............................................................................250 Costs ...........................................................................................................251 Outlook ......................................................................................................251 Conclusion .................................................................................................253

9. Patent Enforcement in Switzerland...............................................................................255 Fritz Blumer A. System of Civil Procedure ......................................................................................255 I. System of Civil Litigation ..........................................................................255 II. Swiss Federal Patent Court ........................................................................256 1. Historical Background ........................................................................256 2. Organisation of the Federal Patent Court .........................................257 III. The Profession ............................................................................................258 B. Enforcement of Patent Rights................................................................................259 I. Types of Action ..........................................................................................259 1. Civil Proceedings ................................................................................259 2. Customs Actions .................................................................................260 3. Criminal Proceedings .........................................................................260

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Detailed Table of Contents II.

III.

IV.

V.

VI.

VII.

VIII.

IX. X.

Competent Parties....................................................................................261 1. Plaintiff ..............................................................................................261 2. Defendant ..........................................................................................262 Competent Court .....................................................................................262 1. Subject Matter Jurisdiction of the Federal Patent Court .........................................................................262 2. International Jurisdiction .................................................................263 Preparation for Trial ................................................................................266 1. Warning Letters .................................................................................266 2. Protective Letters ...............................................................................266 3. Summary Proceedings Leading to Preliminary Measures .......................................................................267 4. Ex parte Preliminary Measures ........................................................268 The Trial ...................................................................................................268 1. Language of the Proceedings ............................................................268 2. Exchange of Written Submissions ....................................................269 3. Instruction Hearing ..........................................................................270 4. Taking of Evidence ............................................................................271 5. Main Hearing ....................................................................................271 Types of Infringement .............................................................................272 1. Effects of the Patent ..........................................................................272 2. Scope of Protection ...........................................................................273 Remedies...................................................................................................274 1. Injunctive Relief ................................................................................274 2. Damages/Restitution of Profits ........................................................275 3. Actions for Declaration ....................................................................277 Defences....................................................................................................277 1. Invalidity of the Patent in Suit..........................................................277 2. Exhaustion of Rights.........................................................................278 3. Statute of Limitation, Laches............................................................279 4. General Exceptions to the Effects of the Patent...............................279 Wrongful Enforcement ............................................................................281 Costs .........................................................................................................281 1. Court Fees .........................................................................................281 2. Costs for Attorneys (Party Costs).....................................................282 3. Legal Aid ............................................................................................283

10. Patent Enforcement in Turkey.....................................................................................285 Türkay Alica A. Introduction and Civil Law Enforcement in Turkey ..........................................285 I. History ......................................................................................................285 II. The Basic Features of Civil Procedure ....................................................286 III. Principles of Civil Procedure ...................................................................287 IV. Industrial Property Rights in General.....................................................288 V. Patent Rights in Particular .......................................................................289 VI. Representation in Patent Enforcement ...................................................290

Detailed Table of Contents xxi B.

Problems related to the Enforcement of Patent Rights ........................................291 I. Types of Actions ............................................................................................291 1. In General...............................................................................................291 2. Infringement Action ..............................................................................292 3. Customs Action......................................................................................292 4. Actions against Decisions of TPI ..........................................................292 5. Actions for Declaration of Non-Infringement .....................................293 II. Competent Parties ........................................................................................293 1. The Plaintiff ...........................................................................................293 a. Patent Owner ..................................................................................294 b. Co-Ownership of Patents ...............................................................294 c. Licensees ..........................................................................................294 2. The Defendant .......................................................................................294 III. Courts and Jurisdiction ................................................................................295 1. The Court System ..................................................................................295 2. Jurisdiction .............................................................................................296 3. Judges and Decisions .............................................................................297 IV. Preparation for Trial .....................................................................................298 1. In General...............................................................................................298 2. Interim Protection Measures.................................................................298 a. Obtaining and Preserving Evidence ..............................................298 b. Preliminary Injunctions .................................................................299 c. Customs Measures ..........................................................................300 d. Other Interim Measures .................................................................300 V. The Main Action ...........................................................................................301 1. In General...............................................................................................301 2. Procedures in the Main Action .............................................................301 3. Obtaining and Introducing Evidence ...................................................303 4. Experts ....................................................................................................304 VI. Types of Infringement ..................................................................................305 1. Direct Infringement ...............................................................................305 2. Indirect and Contributory Infringement .............................................305 3. Infringement and Presumptions for Process Patents...........................305 4. Claim Interpretation..............................................................................306 5. Literal and Equivalent Infringement ....................................................306 VII. Remedies .......................................................................................................307 1. In General...............................................................................................307 2. Damages .................................................................................................307 VIII. Defences ........................................................................................................308 1. In General...............................................................................................308 2. Request for Revocation as a Counterclaim ...........................................309 IX. Wrongful Enforcement .................................................................................309 X. Court Costs and Attorney Fees ....................................................................310

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Detailed Table of Contents Part C: Patent Enforcement in Asia

11. Patent Enforcement in China ......................................................................................315 Thomas Pattloch A. Chinese Courts and Civil Procedure ...................................................................315 I. Civil Litigation System ................................................................................315 II. Patent Law Policy and Interpretation ........................................................316 III. Institutions ..................................................................................................318 1. SIPO and its Local Branches, the IP Bureaux .....................................318 2. Special Case: Enforcement of Patents at Trade Fairs..........................319 3. Customs ................................................................................................319 4. Courts—Bifurcated Procedure............................................................319 IV. The Profession .............................................................................................320 B. Problems Related to the Enforcement of Patent Rights .....................................321 I. Types of Action ...........................................................................................321 1. Civil Enforcement in Chinese Courts .................................................321 a. Jurisdiction ....................................................................................321 b. No Pre-Determination by Administrative Decision ...................322 c. Non-Infringement Declaratory Action........................................322 2. Administrative Patent Litigation .........................................................322 3. Customs ................................................................................................322 4. Administrative Patent Enforcement....................................................323 II. Competent Parties ......................................................................................325 III. The Competent Court ................................................................................326 1. Jurisdiction ...........................................................................................326 2. Competent Level and Court Division.................................................327 3. 3 in 1 System ........................................................................................327 4. Expertise of Judges ...............................................................................327 5. Mediation/Settlements ........................................................................328 6. Arbitration of Patent Matters ..............................................................328 IV. Preparation for Trial ...................................................................................329 1. Evidence Preservation Orders .............................................................329 2. Evidence Collection by the Court .......................................................330 3. Evidence and Translation ....................................................................330 4. Pre-Trial/Interim Injunctions .............................................................330 a. Procedure ......................................................................................330 b. Legal Requirements ......................................................................331 c. No Suspension ..............................................................................331 5. Asset Freezing/Property Preservation Order ......................................331 6. Warning Letters ....................................................................................331 V. The Trial ......................................................................................................332 1. Principles ..............................................................................................332 2. Procedure .............................................................................................332 a. Evidence ........................................................................................333 b. New Evidence ................................................................................333 c. Expert Witnesses ...........................................................................334 d. Expert Opinion .............................................................................334

Detailed Table of Contents xxiii

VI.

VII.

VIII.

IX.

X.

3. Appeal/Retrial ...................................................................................334 4. Procedure before the PRB.................................................................335 5. Stay of Infringement Proceedings ....................................................336 Types of Infringement .............................................................................336 1. Determination of Infringement—Important Principles ................336 a. All-element Doctrine .................................................................336 b. Doctrine of Equivalents .............................................................337 c. Public Domain ...........................................................................337 d. File History Estoppel .................................................................337 2. Claim Interpretation .........................................................................338 a. Patent Acting as its Own Dictionary .........................................338 b. POSA ..........................................................................................338 c. Functional Features....................................................................338 d. Embodiments .............................................................................338 e. Comparison of Technical Features............................................339 f. Additional Technical Features ...................................................339 g. Process Patents ...........................................................................339 h. Reverse Burden of Proof ............................................................339 3. Infringement .....................................................................................340 Remedies...................................................................................................340 1. Injunction ..........................................................................................340 2. Compensation ...................................................................................341 a. Damages .....................................................................................341 b. Statutory Damages .....................................................................342 c. Reimbursement of Reasonable Expenses..................................343 d. Compensation for Use prior to Grant ......................................343 3. Destruction of Moulds and Equipment ..........................................343 4. Apologies/Publication of Decision ..................................................343 Defences....................................................................................................344 1. Exhaustion of Rights.........................................................................344 2. Prior Use ............................................................................................344 3. Goods in Transit................................................................................344 4. Scientific Research.............................................................................344 5. Bolar Provisions ................................................................................345 6. Prior Art Defence ..............................................................................345 7. Seller as Innocent Infringer ..............................................................346 8. Limitation ..........................................................................................346 ‘Wrongful Enforcement’ ..........................................................................346 1. Abuse of Patent Right .......................................................................346 2. Invalid Patent ....................................................................................347 Costs .........................................................................................................347

12. Patent Enforcement in Taiwan ....................................................................................349 Ming-Yan Shieh and Su-Hua Lee A. Brief Outline of the System of Civil Procedure ..................................................349 I. Introduction .............................................................................................349 II. Development of the Patent Act ...............................................................349

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Detailed Table of Contents III. Patent Prosecution Procedure ......................................................................350 IV. The Profession...............................................................................................351 V. Lawyers and Patent Attorneys ......................................................................351 B. Problems Related to the Enforcement of Patent Rights .......................................353 I. Types of Action .............................................................................................353 1. By the Patentee .......................................................................................353 a. Ordinary Infringement Action.......................................................353 b. Border Protection Measures for Patents ........................................353 2. By the Defendant ...................................................................................354 a. Opposition against a Granted Patent ............................................354 b. Invalidation Procedure ...................................................................354 c. Determination of Scope/Action for Ascertaining Non-Infringement? ...................................................355 II. Competent Parties ........................................................................................356 1. Plaintiff ...................................................................................................356 2. Defendant ...............................................................................................357 III. Courts and Jurisdiction ................................................................................357 1. Domestic Jurisdiction ............................................................................357 2. International Jurisdiction ......................................................................359 3. Judges and Technical Examination Officers .........................................359 4. Technical Experts ...................................................................................360 5. Appeals ...................................................................................................361 IV. Preparation for Trial .....................................................................................363 1. Preservation of Evidence .......................................................................363 2. Interim Relief .........................................................................................364 V. The Trial ........................................................................................................365 1. Course of Proceedings ...........................................................................365 2. Statistics ..................................................................................................368 3. Technical Assessment of Infringement .................................................369 4. Success Rate............................................................................................369 VI. Types of Infringing Acts ...............................................................................371 1. Direct and Indirect Infringement .........................................................371 2. Literal and Equivalent Infringement ....................................................371 VII. Remedies .......................................................................................................372 1. In General...............................................................................................372 2. Injunctions .............................................................................................372 3. Compensatory Damages .......................................................................372 4. Punitive Damages ..................................................................................373 5. Statistics on Patent Damages.................................................................374 6. Further Considerations .........................................................................375 VIII. Defences ........................................................................................................377 1. In General...............................................................................................377 2. The Invalidity Defence ..........................................................................377 IX. Wrongful Enforcement .................................................................................378 1. In General...............................................................................................378 2. Dysfunctional Use of the Patent System ...............................................380

Detailed Table of Contents xxv X. XI.

Costs ...........................................................................................................380 Conclusion and Outlook ...........................................................................381

13. Patent Enforcement in Japan .......................................................................................383 Christopher Heath A. Civil Law Enforcement in Japan in General........................................................383 I. Civil Procedure, Law Enforcement and Legal Consciousness .................383 II. Patent System and Industrial Policy .........................................................385 III. Enforcement Procedures ...........................................................................386 1. In General ...........................................................................................386 2. Civil Courts .........................................................................................386 3. Professional Representatives ..............................................................387 B. Problems Related to the Enforcement of Patent Rights .....................................387 I. Types of Action ..........................................................................................387 1. By the Patentee ....................................................................................387 a. Infringement Action ....................................................................387 b. Customs Action ...........................................................................387 c. Correction Trial ...........................................................................388 2. By Third Parties ..................................................................................388 a. Opposition/Revocation Action ...................................................388 b. Declaration of Non-Infringement ..............................................388 c. Determination of Scope ..............................................................389 d. Misappropriation of an Invention ..............................................389 e. Suit for Proper Remuneration for an Employee’s Invention ..................................................................389 II. Competent Parties .....................................................................................389 1. The Plaintiff ........................................................................................389 2. Co-owners of Patents .........................................................................390 3. Licensees ..............................................................................................390 4. The Defendant ....................................................................................391 III. Jurisdiction, Applicable Law and Courts ..................................................391 1. National Jurisdiction ..........................................................................391 2. International Jurisdiction ...................................................................393 IV. Preparation for Trial ..................................................................................395 1. General Matters ..................................................................................395 2. Preliminary and Provisional Measures ..............................................396 V. The Trial .....................................................................................................397 VI. Types of Infringement ...............................................................................399 1. Direct and Indirect Infringement ......................................................399 2. Literal and Equivalent Infringement .................................................399 VII. Remedies ....................................................................................................401 1. Injunctive Relief ..................................................................................401 2. Damages ..............................................................................................401 a. Calculation of Damages ..............................................................402 b. Infringer’s Profits .........................................................................404 c. Ordinary Licensing Fee ...............................................................406 3. Seizure/Destruction ............................................................................406

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Detailed Table of Contents VIII.

IX.

X. XI. XII.

Defences....................................................................................................407 1. Non-Infringement ............................................................................407 a. Statutory Licences ......................................................................407 b. Experimental Research ..............................................................407 c. Exhaustion..................................................................................408 2. The Defence of Invalidity .................................................................408 3. Standard Patents ...............................................................................412 ‘Wrongful Enforcement’ ..........................................................................412 1. Post-Infringement Invalidity ............................................................412 2. Warning Letters to Suppliers or Customers.....................................413 Costs .........................................................................................................415 Statistics ....................................................................................................416 Academic Writings in English and German ...........................................419

14. Patent Enforcement in Korea ......................................................................................421 Byungil Kim A. General Issues .......................................................................................................421 B. Enforcement of Patent Rights in Particular ........................................................422 I. Types of Action.........................................................................................422 II. Parties to an Infringement Action ...........................................................422 III. Jurisdiction ...............................................................................................423 IV. Preliminary Measures ..............................................................................425 V. The Main Action ......................................................................................427 1. Warning Letters .................................................................................427 2. Procedures in the Main Action.........................................................427 VI. Types of Infringement .............................................................................428 VII. Remedies...................................................................................................430 1. Civil Remedies ...................................................................................430 a. Injunctive Relief .........................................................................431 b. Damage Claims ..........................................................................431 2. Criminal Sanctions ...........................................................................432 VIII. Defences....................................................................................................432 1. Non-Infringement ............................................................................432 2. Abuse of Patent Right .......................................................................433 3. Invalidation Action ...........................................................................434 4. Confirmation of Scope .....................................................................435 IX. ‘Wrongful Enforcement’ ..........................................................................435 X. Costs .........................................................................................................435 XI. Conclusion ...............................................................................................436 15. Patent Enforcement in India .......................................................................................437 Hemant Singh A. Outline of the Indian Legal System .....................................................................437 I. Indian Constitution and the Patents Act 1970 .......................................437 II. Judicial System .........................................................................................437

Detailed Table of Contents xxvii III.

B.

Indian Legal System......................................................................................438 1. Civil Procedure ......................................................................................438 a. Institution of Suit and Pre-Trial Stage ...........................................438 b. Trial Stage ........................................................................................438 c. Judgment .........................................................................................438 d. Post-Suit ..........................................................................................439 2. Courts and Style of Adjudication .........................................................439 3. Intellectual Property Appellate Board (‘IPAB’) ....................................439 4. Jurisdiction to Decide the Issue of Invalidity .......................................439 5. Style of Decisions ...................................................................................439 IV. IP Profession .................................................................................................440 Enforcement of Patent IP Rights ...........................................................................440 I. Types of Action .............................................................................................440 1. Infringement of Patent ..........................................................................440 2. Importation of Patented Products: Customs .......................................440 3. Intellectual Property Rights (Imported Goods) Enforcement Rules 2007 ........................................................................441 4. By a Third Party .....................................................................................441 5. Pre-Grant Opposition ...........................................................................442 6. Post-Grant Opposition ..........................................................................442 7. Revocation..............................................................................................443 8. Choice of Forum for Revocation ..........................................................444 9. Declaration of Non-Infringement ........................................................445 II. Competent Parties ........................................................................................446 1. Who may Sue? ........................................................................................446 2. Who may be Sued? .................................................................................446 III. The Competent Court ..................................................................................447 IV. Preparation for Trial .....................................................................................447 1. Pleadings ................................................................................................447 2. Documentary Evidence .........................................................................448 3. Preliminary Injunction ..........................................................................448 4. Prima Facie Validity and Credible Challenge .......................................450 5. Obviousness ...........................................................................................450 6. Discoveries .............................................................................................451 V. The Trial ........................................................................................................451 1. Presenting Testimony ............................................................................451 2. Presentation of Evidence .......................................................................451 3. The Role of Experts ...............................................................................452 4. Who Qualifies as an Expert ...................................................................452 5. Extent of Relevance of Expert’s Evidence .............................................454 6. Documentary Evidence .........................................................................455 7. Discovery and Production of Documents ............................................455 VI. Types of Infringement ..................................................................................456 1. Direct and Indirect Infringement .........................................................456 2. Test for Infringement .............................................................................456 3. Claim Construction ...............................................................................458

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Detailed Table of Contents VII. VIII.

IX. X.

Remedies...................................................................................................458 1. Injunction ........................................................................................458 Defences....................................................................................................458 1. Non-Infringement...........................................................................458 2. Gillette Defence ...............................................................................459 3. Statutory Exceptions .......................................................................459 4. Activities not Amounting to Infringement ....................................459 5. By the Government .........................................................................460 6. Research and Analysis .....................................................................460 7. Bolar Exemption .............................................................................460 8. Use on Foreign Vessels ....................................................................460 9. Onus of Proof ..................................................................................461 10. Invalidity ..........................................................................................461 11. Anticipation.....................................................................................462 12. Prior Publication .............................................................................462 13. Section 3(d): New Form of Known Substance ..............................463 14. Obviousness ....................................................................................463 15. Non-Disclosure of Corresponding Application—Breach of Section 8 ..................................................464 16. Non-Working of Patent ..................................................................465 17. Standard Essential Patent................................................................465 18. SEP vis-à-vis Competition Laws ....................................................466 19. The Competition Act ......................................................................466 20. The Patents Act................................................................................467 21. Compulsory Licence .......................................................................467 Wrongful Enforcement—Groundless Threats .......................................469 Costs .........................................................................................................469 Part D: Patent Enforcement in the Americas

16. Patent Enforcement in the United States ....................................................................473 Timothy Maloney A. General Considerations .......................................................................................473 I. The Nature of US Patent Rights ..............................................................473 II. The Duty of Candour ..............................................................................473 III. The System of Civil Procedure ................................................................474 1. The Trial Courts ................................................................................474 2. The International Trade Commission .............................................475 3. The Patent Trial and Appeals Board.................................................475 4. The Courts of Appeal........................................................................476 a. The US Court of Appeals for the Federal Circuit............................................................................476 b. The US Supreme Court .............................................................476 5. The Profession ...................................................................................477

Detailed Table of Contents xxix B.

Problems Related to the Enforcement of Patent Rights .......................................477 I. Types of Action .............................................................................................477 1. PTO Procedures .....................................................................................477 a. Reissue Proceedings ........................................................................478 b. Re-Examination Proceedings .........................................................478 c. Post-Grant and Inter Partes Review...............................................479 d. Supplemental Examination ............................................................480 2. Ordinary Infringement Proceedings.....................................................480 3. ITC Proceedings .....................................................................................480 II. Strategic Considerations...............................................................................480 III. Competent Court and Competent Parties—The Commencement of an Action ......................................................................481 1. The Competent Court ...........................................................................482 2. The Competent Parties ..........................................................................483 a. Plaintiffs in Suits to Enforce Patents ..............................................483 b. Defendants in Suits to Enforce Patents..........................................485 c. Declaratory Judgment Plaintiffs ....................................................488 3. The Pleadings .........................................................................................489 a. The Complaint ................................................................................489 b. The Response to the Complaint.....................................................489 IV. Preparation for Trial .....................................................................................490 1. The Phase of Discovery .........................................................................490 a. Matters Discoverable ......................................................................490 b. Privileges and Immunities..............................................................491 c. Discovery Methods .........................................................................493 2. Preliminary Injunctions ........................................................................495 3. Claim Construction Proceedings ..........................................................495 a. Rules for Interpreting Claims.........................................................496 b. Procedures for Interpreting Claims ...............................................497 4. Summary Judgments .............................................................................497 V. Trial ................................................................................................................499 1. The Use of Juries ....................................................................................499 2. Trial Procedure .......................................................................................500 VI. Types of Infringement—Primary Claims ....................................................502 1. Literal Infringement ..............................................................................502 2. Infringement under the Doctrine of Equivalents ................................503 3. Direct Infringement ...............................................................................504 4. Indirect Infringement ............................................................................505 5. Wilful Infringement ...............................................................................506 VII. Remedies .......................................................................................................507 1. Injunctive Relief .....................................................................................507 2. Damages .................................................................................................507 VIII. Primary Defences to Infringement ..............................................................509 IX. Appeal ............................................................................................................511 X. Litigation Expense ........................................................................................512 XI. Wrongful Enforcement .................................................................................514

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Detailed Table of Contents

17. Patent Enforcement in Brazil.......................................................................................515 Filipe Fischmann A. Introduction and Outline of the System .............................................................515 B. Selected Issues of the Civil Enforcement of Patents ...........................................517 I. Types of Action.........................................................................................517 1. Enforcement Before the Courts: Infringement, Revocation and Preliminary Measures ....................517 2. Administrative Enforcement: Post-Grant Opposition ....................518 II. Parties to the Proceedings ........................................................................518 1. Patentee and Licensee .......................................................................518 2. Alleged Infringer and ‘Persons with Legitimate Interest’ ................518 3. INPI ...................................................................................................519 4. Public Prosecutor’s Office .................................................................519 III. Competent Courts and Specialised Courts ............................................520 IV. Preliminary Measures ..............................................................................521 V. The Trial ...................................................................................................522 1. First Instance Infringement Proceedings .........................................522 2. First Instance Revocation Proceedings ............................................524 3. Appeals ..............................................................................................525 VI. Types of Infringement .............................................................................526 VII. Remedies...................................................................................................526 VIII. Defences, Interaction of Infringement and Revocation Proceedings and Interplay of Competition Law and Patent Law ..........528 1. Privileged Acts, Exhaustion and Limitation Periods .......................528 2. Invalidity and Interaction Among Infringement and Revocation Proceedings ....................................................................529 3. Patent Enforcement and Competition Law .....................................532 a. Compulsory Licensing and Competition Law .........................532 b. Fraud in the Procurement of a Patent and Sham Litigation ..........................................................................533 IX. Wrongful Patent Enforcement.................................................................534 X. Costs and Cost Orders .............................................................................534 C. Final Remarks .......................................................................................................535 18. Patent Enforcement in Argentina ................................................................................537 Mónica Witthaus A. Introduction: Brief Outline of the System of Civil Procedure ...........................537 B. Problems Related to Patent Enforcement ...........................................................538 I. Types of Actions .......................................................................................538 1. Actions by the Patentee .....................................................................538 a. Cessation of Use of the Patent by the Alleged Infringer ..........538 b. Claims for Damages According to the Provisions of the Patent Act and the Argentinean Civil Code ...................539 2. Defendant’s Actions ..........................................................................539 a. Patent Nullity Claim ..................................................................539 b. Expired Patent Claim .................................................................539

Detailed Table of Contents xxxi

II.

III. IV.

V.

VI. VII. VIII.

IX.

X.

3. Actions Available to Both Parties: ....................................................539 a. Actions Seeking a Declaratory Judgment .................................539 Competent Parties....................................................................................540 1. Patent Holders and Licensees ...........................................................540 2. Owners of Patent Applications and Unpatented Inventions .....................................................................541 a. Owner of a Patent Application ..................................................541 b. ‘Whoever Breaches the Secrecy Obligation Imposed by this Law’ .................................................................543 c. Owner of an Unprotected Invention ........................................543 3. Direct Infringers................................................................................544 4. Contributory Infringers ....................................................................544 Competent Courts ...................................................................................544 Preparation for Trial: Interim Relief and Advance Proof .......................545 1. Importance ........................................................................................545 2. Relief Provided Under the Patent Act ..............................................545 3. Expiry of Interim Relief and Prior Mediation .................................550 a. Cessation of Exploitation ..........................................................550 b. Border Measures ........................................................................551 4. Provisional Measures Provided Under TRIPS .................................551 5. Other Provisional Measures .............................................................551 a. The National Code of Civil and Commercial Procedure ..............................................................551 6. Measures of Advance Proof ..............................................................552 The Judicial Proceedings..........................................................................552 1. Civil Proceedings...............................................................................552 a. First Instance: Petition, Submission of Demurrers, Defence Pleadings and Counterclaim, Proof, Judgment and Execution of Judgment .......................................................553 b. Second Instance .........................................................................554 Types of Infringement .............................................................................555 Damages ...................................................................................................556 Defences....................................................................................................560 1. Pleas Based on the Patent Act and Case Law ...................................560 2. Formal Defences................................................................................563 Wrongful Enforcement ............................................................................563 1. Interim Relief Measures ....................................................................563 2. Civil Code Provisions .......................................................................563 3. Act on Protection of Competition ...................................................563 Costs .........................................................................................................564 Part E: International and Comparative Issues

19. The Extraterritorial Enforcement of Patent Rights ....................................................569 Marketa Trimble A. Introduction .........................................................................................................569

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Detailed Table of Contents B.

Foreign Patents in National Courts .....................................................................570 I. Infringements of Foreign Patents (With Adjudication of Validity) .........570 II. Infringements of Foreign Patents (Without Adjudication of Validity) ...................................................................................................572 C. Extraterritorial Application of National Patent Laws .........................................576 I. The Extraterritorial Reach of National Patent Laws .................................576 II. Localisation as a Means of Extending the Reach of National Patent Laws ..................................................................................578 III. Extraterritorial Remedies ...........................................................................580 IV. Extraterritorial Enforcement of Remedies ................................................582 V. Res Judicata, Collateral Estoppel and Foreign Patents ..............................583 D. Conclusion ............................................................................................................584

20. Border Measures in Europe, Japan and the US ..........................................................587 Anja Petersen-Padberg A. Introduction .........................................................................................................587 B. Border Measures in the European Union............................................................588 I. Overview......................................................................................................588 1. Applicable Law .....................................................................................588 2. Statistics ................................................................................................589 II. Scope ............................................................................................................590 1. Intellectual Property Rights Subject to Border Measures in Europe .............................................................................590 2. Customs Situations ..............................................................................591 3. Parallel Imports and Personal Luggage...............................................592 III. Application ..................................................................................................593 1. Application Standard Form .................................................................593 2. Competent Public Authority ...............................................................593 3. Entitlement...........................................................................................593 4. Required Information..........................................................................593 5. Importers Have no Right to be Heard ................................................595 6. Processing Time ...................................................................................596 7. Validity..................................................................................................596 8. Updates, Amendments, Special Alerts ................................................596 9. Costs .....................................................................................................596 IV. Customs Action ...........................................................................................597 1. General .................................................................................................597 2. Suspicion of Infringement...................................................................597 3. Consultation.........................................................................................598 4. Notification ..........................................................................................598 5. Right to Inspection ..............................................................................598 V. ‘Basic Procedure’ .........................................................................................599 1. Notification ..........................................................................................599 2. Confirmation of Patent Right Infringement by the Patentee ..........................................................................................599

Detailed Table of Contents xxxiii 3. Written Agreement of the Importer or Holder of the Goods ..........................................................................................599 4. Objection to Destruction .................................................................600 5. Initiation of Proceedings to Determine Whether a Patent Right has been Infringed ....................................................600 6. Release of Goods ...............................................................................600 7. Destruction of the Goods .................................................................601 VI. Early Release of the Goods by Posting a Bond .......................................601 VII. Liability .....................................................................................................603 1. Liability of Customs Authorities ......................................................603 2. Liability of the Patentee ....................................................................603 C. Border Measures in Japan ....................................................................................604 I. Overview...................................................................................................604 II. Prerequisites .............................................................................................607 1. Customs Situations ...........................................................................607 2. Entitlement ........................................................................................607 3. Application ........................................................................................607 a. Content of Application ..............................................................607 b. Publication of Application/Notice to Importer .......................608 c. Grant or Rejection—Expert Group Opinion ...........................608 d. Processing Time .........................................................................609 e. Costs ...........................................................................................609 4. Customs Action (Suspension of Import) ........................................609 5. Liability ..............................................................................................611 D. Border Measures in the US ..................................................................................611 I. Overview...................................................................................................611 II. Pre-Institution Investigation ...................................................................614 III. Intervention ..............................................................................................614 IV. Investigation Procedures..........................................................................614 V. Remedies...................................................................................................615 VI. Temporary Relief ......................................................................................616 VII. Review by the Commission .....................................................................617 VIII. Presidential Review ..................................................................................617 IX. Settlement .................................................................................................617 X. Appeal .......................................................................................................618 XI. Parallel Court Actions ..............................................................................619 XII. Processing Time of Investigation Proceedings .......................................619 XIII. Clearing-the-Way Requests .....................................................................619 XIV. US Customs and Border Protection Procedures ....................................619 E. Summary ..............................................................................................................620

Index ......................................................................................................................................623

AUTHORS AND EDITORS Türkay Alıca (1965) studied law at the Universities of Ankara and Istanbul (LLM). He worked as public prosecutor for five years and reporting judge for eight years in the Supreme Court. He attended a one-year education programme on IP between 2002–03 in several institutions in Europe, was appointed as a specialist judge at the Criminal Court of Intellectual and Industrial Rights, Ankara, and has been working at the Civil Court of Intellectual and Industrial Rights since 2007. Türkay Alıca has written several articles on IP and is also co-writer of Commentary on Turkish Copyright Law published in 2013, and a member of Intellectual Property Judges Association (IPJA) and Circle of Trademark Judges (CET-J). He can be reached by email at [email protected]. Fritz Blumer (1960) studied electrical engineering at the Swiss Federal Institute of Technology (ETH Zurich, Diploma 1986) and, after some years of practice in engineering, law at the University of St Gallen (PhD 1996). Before and after being admitted to the Swiss bar in 1996, he worked for about 12 years in a Zurich law firm. Both in his publications and professional activities, he has focused on procedural law and IP, in particular patent law. Since 2008, he has been a Member of the Boards of Appeal at the European Patent Office in Munich. He can be reached by email at [email protected]. Jan J Brinkhof advises on European patent law. Jan is an emeritus Professor of Industrial Property Law at the University of Utrecht. He has litigated, judged and arbitrated in patent and trade mark disputes. Jan was a judge from 1976 to 2000 (lastly Presiding Judge of the IP Chamber of the Court of Appeal of The Hague); he was also an external member of the Enlarged Board of Appeal of the European Patent Office (1992–2000); Partner at Stibbe (2000–04) and was also a co-founder of Brinkhof (2005). Jan has published widely about European patent and trade mark law. In Chambers Europe Jan is recommended as ‘the leading light for the new generation of Dutch patent lawyers’ (2009). He can be reached at jan. [email protected]. Giovanni Francesco Casucci (1966) has been an IP litigator in Italy since 1992. From 1999 to 2005 he was the director of a Masters programme in IP Management at the Politecnico di Milano University. Since 2008, he has been director of the Masters programme of ICE (Italian Trade Commission) on IP and China (‘Ideacina’) and member of the faculty of the MBA programs of MIP Politecnico di Milano. From 2011 to 2013, he was Coordinator of the Commissions ‘Design’ and ‘Trade Fairs’ at CNAC (National Authority for AntiCounterfeiting). Past Counsel for the IP department of Clifford Chance, Giovanni was the founder of the Italian branch of Bardehle Pagenberg in Italy. Giovanni is the author of several publications on IP rights and is active in several training courses on IP. He was active in the training seminars in China within the IPR2 program and is currently cooperating with the EU China IPR Helpdesk as well the IP Key Program. He can be reached by email at [email protected].

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Authors and Editors

Thomas F Cotter is the Briggs and Morgan Professor of Law at the University of Minnesota Law School. He previously served on law faculties at the University of Florida and at Washington and Lee University. Professor Cotter’s principal teaching and research interests are in the fields of intellectual property, anti-trust, and law and economics. He has authored or co-authored four books and over 50 other scholarly works, and publishes the Comparative Patent Remedies blog. He can be reached by email at [email protected]. Janusz Fiolka (1949) studied at the Jagiellonian University, Cracow. In 1971 he received the First Prize in the Competition for the Best Master Thesis in the Field of Industrial Property Protection announced by Polish Patent Office; subsequently, he was Research Fellow in Intellectual Property, Jagiellonian University, Cracow; former Member of the Editorial Board of Copyright World, London; former research fellow, Max Planck Institute for Patent, Copyright and Competition Law in Munich; former lecturer in Intellectual Property Law at the Warsaw Business School (Polish Academy of Sciences); former Arbitrator of the Arbitration Court, Polish Economic Chamber, Warsaw; former Reporter of Polish National Group of AIPPI and Chair of AIPPI Special Committee Q224 Enforcement; member of Prof Dr Manfred Rehbinder Arbeitskreis Geschichte des Urheberrechts, patent and trade mark attorney in Cracow, Poland. He can be reached by email at [email protected]. Filipe Fischmann studied law at the Universities of São Paulo (USP) and Munich (LMU). He is Program Director of the Munich Intellectual Property Law Center (MIPLC) and Research Fellow of the Max Planck Institute for Innovation and Competition. Before returning to Munich to pursue his LLM and PhD studies, he practiced law in São Paulo. He can be reached by email at [email protected]. Christopher Heath (1964) studied at the Universities of Konstanz, Edinburgh and the LSE. He lived and worked in Japan for three years, and between 1992 and 2005 headed the Asian Department of the Max Planck Institute for Patent, Copyright and Competition Law in Munich. Christopher Heath, who wrote his PhD thesis on Japanese unfair competition prevention law, is a Member of the Boards of Appeal at the European Patent Office in Munich and co-editor of IIC. He can be reached by email at [email protected]. Anselm Kamperman Sanders (1968) is Professor of Intellectual Property Law, Director of the Advanced Masters Intellectual Property Law and Knowledge Management (IPKM LLM/MSc), and Academic Director of the Institute for Globalisation and International Regulation (IGIR) at Maastricht University, the Netherlands. He acts as Academic Codirector of the Annual Intellectual Property Law School and IP Seminar of the Institute for European Studies of Macau (IEEM), Macau SAR, China and is Adjunct Professor at Jinan University Law School, Guangzhou, China. Anselm holds a PhD from the Centre for Commercial Law Studies, Queen Mary, University of London, where he worked as a Marie Curie Fellow before joining Maastricht University in 1995. He is a member of the European Commission expert group on development and implications of patent law in the field of biotechnology and genetic engineering. He can be reached by email at a.kampermansanders@ maastrichtuniversity.nl.

Authors and Editors

xxxvii

Byungil Kim is Professor of Intellectual Property Law, Hanyang University Law School, Korea. He is also the Co-Director of Hanyang IP & Information Law Centre, Hanyang University and the Co-President of Korea Association for Infomedia Law. Prior to taking a position at Hanyang, he conducted research at the Universities of Munich, Houston and Oxford. He holds a Dr jur (LMU, Munich German), LLM (Yonsei University) and a DBA (Yonsei University). His research focuses on patent law, competition law, information law and licensing law. He can be reached by email at [email protected]; [email protected]. Su-Hua Lee (1971) received her Bachelor of Laws from National Taipei University (NTPU) and Master of Laws (Magister iuris comparativi, M.iur Comp) from Rheinischen FriedrichWilhelms-Universität Bonn, and earned the Doctor of Laws from National Taiwan University in 2006. From 2007 to 2010 she was assistant professor at the Institute of Law for Science and Technology, National Tsing Hua University and since then has been Professor of Law at NTPU. Professor Lee’s specialised fields include intellectual property law, biotechnology and pharmaceutical law, fair trade law and civil law. She can be reached by email at [email protected]. Timothy Maloney is a trial attorney at Fitch, Even, Tabin & Flannery LLP in Chicago; www. fitcheven.com. His practice entails all aspects of intellectual property enforcement and defence, with an emphasis on multi-party, multi-forum, complex patent litigation. He has tried numerous cases to judges and juries, involving disputes regarding patent infringement, trade secret theft, breach of licence agreement and unfair competition. He also regularly represents clients in appeals to the US Court of Appeals for the Federal Circuit. He has published a number or articles and given presentations worldwide regarding the enforcement of US patent rights. He holds a JD from the University of Illinois College of Law and a BS in Chemical Engineering from the University of Illinois. He can be reached by email at [email protected]. Amandine Métier (1981) joined Véron & Associés in 2006 as soon as she was admitted to the Paris bar. She specialised in intellectual property since before law school, through the Industrial Property Law Master 2 of the University Pantheon-Assas Paris II. She became a partner with Véron & Associés in 2013. Like all the 12 lawyers of the firm, Amandine Métier works in all technical fields. However, she has gained special expertise in the field of telecoms and FRAND licences through some of the highest profile cases disputed in France. She is also active in the pharmaceutical field, in chemistry and in mechanics. She lectures about patent litigation in the Intellectual Property Master 2 at the University of Lyon III as well as in various conferences and seminars. She can be reached by email at amandine. [email protected]. Tilman Müller-Stoy (1976) is a partner with Bardehle Pagenberg and focuses on German patent litigation. He represents clients in patent infringement suits and in (parallel) invalidation and opposition proceedings. He regularly acts as lead Counsel in multi-jurisdictional patent infringement suits (often relating to the US and to industrial standards, Japan, UK, France, the Netherlands, Italy) and preliminary injunction proceedings for patent

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infringement, as well as in entitlement proceedings concerning the transfer of patent rights due to unlawful usurpation. He can be reached by email at [email protected]. Christian Osterrieth (1957) is a partner with law firm Reimann Osterrieth Köhler Haft and focuses on German patent litigation. His studied at the University of Konstanz and the University of Paris II. He is an honorary professor at the University of Konstanz and visiting professor at the Universities of Strasbourg (CEIPI) and Haifa, Israel. He can be reached by email at [email protected]. Thomas Pattloch specialises in industrial property rights and technology transfer with a particular focus on China. He advises on all aspects of Chinese industrial property and copyright law, including patent and trademark enforcement, strategic assistance for clients in particularly sensitive fields of technology, competition-related aspects of licence agreements and R&D projects. Thomas completed his PhD at the University of Passau with a thesis on Chinese IP rights. He was a research assistant with the Asia department of the Max Planck Institute for Foreign and International Patent, Copyright and Competition Law in Munich. Thomas practised law in Shanghai, and before joining Taylor Wessing, was the European Commission’s IP Officer in Beijing for five years. A speaker of Mandarin, Thomas maintains close links to Chinese authorities and institutions. He can be reached by email at [email protected]. Anja Petersen-Padberg studied law and Japanese studies at the University of Hamburg and Japanese law at the Waseda University (Tokyo) and the Asian Department of the Max Planck Institute for Patent, Copyright and Competition Law in Munich. Anja holds a PhD from the University Cologne (JaDe award 2005). After judicial training with a focus on IP matters and the second state examination in Hamburg, she worked as an attorney-at-law at Hoffmann Eitle patent attorneys and attorneys-at-law in Munich with a focus in patent and licensing matters, border measures related to patents, employees’ invention law and Japanrelated matters for more than 15 years; she is presently working in the legal department of a large Japanese manufacturer of electronic components in Munich. Anja is author of a commentary on the Border Enforcement Regulation, EU/608/2013. She can be reached by email at [email protected]. Christopher Rennie-Smith (1949) studied law at Cambridge University and comparative law at the Vrije Universiteit in Amsterdam, and then lectured in law at Sheffield University before being admitted to practice as an English solicitor in 1978. He practised in London for over 20 years, specialising in intellectual property litigation. In 1999, he was appointed a member of the Boards of Appeal at the European Patent Office in Munich, becoming a member of the Enlarged Board of Appeal in 2005 and a technical board chairman in 2010. He has lectured regularly in patent law since 2001, and from 2007 onwards was also involved in judicial training for both new members of the Boards of Appeal and judges from European national courts. Christopher retired from the Boards of Appeal in April 2014 and now advises on all aspects of EPO proceedings and procedure, acts as an arbitrator in IP disputes, and continues to be actively involved in teaching and training in patent law and procedure. He can be reached by email at [email protected].

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Isabelle Romet (1964) was admitted to the bar in 1988. She is a partner with the French firm Véron & Associés, which she co-founded, whose motto is 100 per cent patent litigation. She studied law at the Universities of Grenoble and Montpellier and at the Franklin Pierce Law Center, USA. Like the 12 other lawyers of the firm, she is active in all technical fields. However, she has developed a special expertise in life sciences and chemistry. Her experience in the field of pharmaceuticals goes with a focus on supplementary protection certificates. She is also active in mechanics, electricity, telecoms and electronics. She lectures on patent litigation at Sciences Po Paris, various intellectual property centres (such as Centre Paul Roubier in Lyon), international conferences and private seminars. She is a coauthor of the book Saisie-Contrefaçon, published by French publisher Dalloz and edited by Pierre Véron (3rd edition, 2012). She can be reached by email at [email protected]. Ming-Yan Shieh (1957) received both his Bachelor of Laws and Master of Laws from National Taiwan University (NTU), and earned the Doctor of Laws from Munich University in 1990, since when he has been Professor of Law at NTU. Professor Shieh was visiting scholar at Columbia University (2007). His specialist fields include intellectual law, fair trade law, internet law and civil law. Over the years, he has published many books as well as over 100 articles in various journals. Since August 2012, Professor Shieh has assumed the position of the Dean of College of Law at NTU. He can be reached by email at shieh@ntu. edu.tw. Hemant Singh is a well-known IP litigator in India as well as Managing Partner and founder member of a leading intellectual property law firm, Inttl Advocare. He is a Litigation Counsel as well as a registered Patent Agent and has been the lead Counsel in several landmark IP cases. With a diverse worldwide clientele, he advises and represents Fortune 100 and 500 companies. He has been appointed by INTA to represent it in their first ever Amicus brief before the Supreme Court of India in the Samsung Parallel Imports case. He has handled over 1800 IP litigation matters in various courts and argued complex legal issues in the field of intellectual property. He can be reached by email at [email protected]. Dora Talvard (1986) has been a member of the Paris bar since 2013. She is an associate of the French patent law firm Véron & Associés, whose activity is entirely devoted to patent litigation. She obtained a Master 2 degree in intellectual property law at the Centre for International Intellectual Property Studies (CEIPI), University of Strasbourg, after a Master 1 degree in international law at University Paris I Panthéon-Sorbonne. Like the 12 other lawyers of the firm, she is active in all technical fields, with a focus on pharmaceutical cases and supplementary protection certificates. She lectures about patent litigation in the Intellectual Property Master 2 at the University of Lyon III. She can be reached by email at [email protected]. Marketa Trimble (1973) holds two doctoral degrees in law, a PhD from the Law School of Charles University in Prague and a JSD from Stanford Law School. She has worked as a lawyer for the governments of the Czech Republic and the European Union, and is currently Professor of Law at the William S Boyd School of Law at the University of Nevada, Las Vegas, where she teaches a variety of intellectual property law courses, including international

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intellectual property law, and conflict of laws. In her research she focuses on the intersection of intellectual property law and private international law; among the many works she has authored is a book on cross-border enforcement of patents, and she co-authors a leading US casebook on international intellectual property law. She can be reached by email at [email protected]. Jörg Wahl (1978) is a partner with Bardehle Pagenberg and focuses on German patent litigation. He represents clients in patent infringement suits and in (parallel) invalidation and opposition proceedings. He is regularly active as lead Counsel in multijurisdictional patent infringement suits (often relating to the US and other countries) and preliminary injunction proceedings for patent infringement. He can be reached by email at [email protected]. Mónica Witthaus is Professor of Industrial Property Law at the University of Buenos Aires Law School and the WIPO-INPI Universidad Austral Regional Master in Intellectual Property. She received scholarships from the Max Planck Institute for Intellectual Property and Competition Law and the WIPO–WTO Colloquium for teachers of intellectual property. She was a stagiaire at the EPO (Patent Law Direction) and participated in the Harvard Law School Negotiation Workshop. Mónica is author of articles on intellectual property law, particularly patent law and has given speeches and presentations at seminars and congresses on intellectual property law. She is the founder of the law firm Estudio Witthaus & Asociados, which specialises in intellectual property. She can be reached by email at [email protected].

TABLE OF CASES Argentina 22 December 1932, Federal Capital Court of Appeals, published in Jurisprudencia Argentina, 40-348 ........................................................................................... 18/108 22 July 1969, Supreme Court of Justice (CSJN), Fallos, and 7:290—Chinchilla v Bosini .................................................................................................... 18/31 22 March 1972, Division I of the Civil and Commercial Federal Court of Appeal, case 884 ............................................................................................... 18/110 National Federal Civil and Commercial Chamber, Division III, JA, 1981-IV-240—Antonio Delgado SA v Alvitos, José M et al ...................................................... 18/108 22 August 1977, Federal Appeals Chamber of Córdoba, Civil and Commercial Division, LL, 1980-A-274—Brunello Américo ..................................... 18/108 24 February 1981 National Federal Civil and Commercial Chamber, Division III, JA, 1981-IV-240—Antonio Delgado SA v Alvitos, José M et al ........................... 18/108 2 July 1985, National Federal Civil and Commercial Chamber of Appeals, Division II, Jurisprudencia Argentina 1986-I-346—Relojes Rolex Argentina SA v Joyería Vía Florida ............................................................................................. 18/108 19 September 1985, National Federal Civil and Commercial Chamber of Appeal, Division III, case 2020................................................................................................ 18/108 18 October 1985, Civil and Commercial Federal Court of Appeal, Division I, case 3139 .................................................................................................. 18/110 29 October 1985, National Federal Civil and Commercial Chamber of Appeal, Division III, case 3544—Vallejo Jiménez, Félix v Traverso Rossi, Ulises Héctor .......................................................................................... 18/108 3 October 1987, Civil and Commercial Federal Court of Appeal, Division I, case 4970 .................................................................................................. 18/110 9 April 1990, Civil and Commercial Federal Court of Appeal, Division I, case 7491 .................................................................................................................... 18/110 30 July 1991, National Civil and Commercial Federal Court, Division II, case 8358—Merrell Dow Pharmaceuticals Inc C/Gerardo Ramon Y Cia SAIC S/ Op Reg Marca Dow Pharmaceuticals C/Gerardo Ramon Y Cia SAIC S/Caducidad Rinoler ................................................................ 18/120 30 October 1992, National Federal Civil and Commercial Chamber of Appeal, Division II, case 8072—Zugolan SA v Ancase SA .................................................... 18/108 3 March 1995, National Federal Civil and Commercial Chamber of Appeal, Division III, case 7695/91—Quimarco SAIC v Dimaca SRL et al ........................... 18/108 5 August 1995, Civil and Commercial Federal Court of Appeal, case 7695 .................................. 18/113 2 April 1996, National Federal Civil and Commercial Chamber of Appeals, Division II, case 50 903/95—Benítez, Héctor Pedro v Gaya, Miguel et al .............................................................................................. 18/115, 18/121 29 May 1997, Civil and Commercial Federal Court of Appeals Division I, case 1440/97 .............................................................................................. 18/69 16 December 1997, National Civil Chamber, Division I, case 1048677—Neyra, José Alberto v Botello Miguel .................................................................. 18/92

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10 February 1998, National Civil and Commercial Federal Court, Division II, case 11 767—IPESA SA v Nissan Chemical Industries Ltda ................................. 18/120 10 February 1998, Federal Civil and Commercial Chamber, Division I, case 22 524—Order de Jaijel, Fanny et al v Tesis Grupo Editorial Norma ........................................................................................................ 18/73 20 May 1999, National Federal Civil and Commercial Chamber of Appeals, Division III, case 1191/98—Continental Plast v Terlizzi SAIC .............................. 18/131 6 July 1999, National Federal Civil and Commercial Chamber of Appeals, Division II, case 172/99—American Cyanamid Company et al v IPESA SA ............................................................................................................ 18/74 5 April 2001, Federal Civil and Commercial Chamber of Appeals, Division 1, case no 2024/2001—Mayo Marcos, Daniel v Pelikan SA on Appeal Plea ............................................................................................................. 18/73 11 July 2001, Federal Civil and Commercial Chamber of Appeals, Division II, case no 11 018—Bodega Navarro Correas SA .......................................................... 18/73 12 February 2002, National Federal Civil and Commercial Appeal Chamber Division II, case 7809/2001—Bayer AG v Agtrol Internac Arg SA ............................. 18/51 1 August 2003, Commercial Federal Court of Appeals Division II, case 7067/02 ................................................................................................................................... 18/69 30 June 2005, Civil and Commercial Federal Court of Appeals Division I, case 3925/05 ................................................................................................................................... 18/69 20 September 2005, Civil and Commercial Federal Court of Appeals, Division I, case 4432/2005 ............................................................................................................. 18/71 22 May 2007, Civil and Commercial Federal Court of Appeal, Division I, case 1412/07 ................................................................................................................. 18/68 23 October 2008, Civil and Commercial Federal Court of Appeal, case 8.117/06 ................................................................................................................................ 18/113 12 November 2009, Civil and Commercial Federal Court of Appeal, case 6631/2003 ............................................................................................................................. 18/111 28 December 2010 Civil and Commercial Federal Court of Appeals, Division II, case 2373/2003—Merial Ltd’ v Calvo, Ricardo H et al ........................................... 18/110 21 December 2010, Civil and Commercial Federal Court of Appeal, case 4252/08—Merial Limited v Pharmavet SA .............................................................. 18/25, 18/113 28 December 2010, National Civil and Commercial Federal Court Civil and Commercial Federal Court of Appeals, ditto, 2 July 1985, La Ley 1986-E-703; Jurisprudencia Argentina 1986-I-346—Relojes Rolex Argentina SA v Joyería Vía Florida ................................................................................... 18/108 3 July 2012, Civil and Commercial Federal Court of Appeal, Division III, case 11.565/07 ........................................................................................................... 18/32 25 October 2012, Civil and Commercial Federal Court of Appeal, Division I, case 4567/07 ................................................................................................................. 18/24 8 February 2013, Civil and Commercial Federal Court of Appeal, case 11847/09—Sanofi Aventis v Sandoz SA .............................................................................. 18/113 18 June 2013, Civil and Commercial Federal Court of Appeals, Division I, case 1412/2007 ............................................................................................................. 18/70 Australia Potter v Broken Hill Pty Co Ltd, High Court of Australia, 20 March 1906, (1905) VLR 612, affd (1906) 3 CLR 479 ......................................................................................... 19/4

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Belgium 21 May 2000, Brussels Court of First Instance, No 2000/857/A—Röhm Enzyme GmbH v DSM NV .................................................................................................... 2/24, 19/9 Brazil 18 May 1953, Supreme Court, case RE 22017—SP .......................................................................... 17/42 7 December 2004, Superior Appeal Court, case REsp 685.560—RS ............................................... 17/23 7 December 2004, Superior Appeal Court, case REsp 1.188.105—RJ ............................................ 17/53 19 September 2006, Superior Appeal Court, case REsp 742.428—DF............................................ 17/59 25 September 2006, Regional Federal Appeal Court for the Third Region, case 2006.03.00.049987-0 .............................................................................................................. 17/34 14 September 2007, Regional Federal Appeal Court for the First Region, case 2003.01.00.009323-9/DF........................................................................................................ 17/13 11 December 2007, Regional Federal Appeal Court for the Second Region, case 2004.51.01.506840-0 .............................................................................................................. 17/17 24 June 2008, Supreme Court, case AgRg of the RE 232.472-9—SP................................................. 17/5 14 October 2008, Regional Federal Appeal Court for the Second Region, case 2006.02.01.005336-9/RJ ......................................................................................................... 17/25 13 July 2009, Regional Federal Appeal Court for the Third Region, case 2007.03.00.096440-6 .............................................................................................................. 17/25 18 August 2009, Superior Appeal Court, case REsp 721.614—RJ ................................................... 17/15 28 April 2010, Administrative Council for Economic Defence, case 08012.005727/2006-50 ........................................................................................................... 17/66 25 May 2010, Regional Federal Appeal Court for the Second Region, case 2009.02.01.013468-1 .............................................................................................................. 17/25 15 December 2010, Administrative Council for Economic Defence, case 08012.004283/2000-40 ........................................................................................................... 17/67 31 May 2011, Regional Federal Appeal Court for the Second Region, case 2011.02.01.002405-5 .............................................................................................................. 17/25 27 September 2011, Regional Federal Appeal Court for the Second Region, case 2007.51.01.800454-8 .............................................................................................................. 17/15 11 October 2011, São Paulo Appeal Court, case AI 0166333-59.2011.8.26.0000 ........................... 17/23 9 November 2011, Superior Appeal Court, case AgRg of the CC 115.032- MT ............................. 17/54 22 November 2011, Superior Appeal Court, case REsp 1.263.187—SP .......................................... 17/23 13 March 2012, Superior Appeal Court, case REsp 1.132.149—PR ................................................ 17/56 19 June 2012, Superior Appeal Court, case REsp 1.322.718—SP .................................................... 17/57 30 October 2012, São Paulo Appeal Court, case AI 0151180-49.2012.8.26.0000 ........................... 17/23 11 December 2012, Superior Appeal Court, case REsp 1.251.646—RJ .......................................... 17/57 26 March 2013, Regional Federal Appeal Court for the Third Region, case 2005.61.05.900003-9 .............................................................................................................. 17/15 5 June 2013, São Paulo Appeal Court, case 0104698-55.2008.8.26.0009 ........................................ 17/57 17 July 2013, Supreme Court, case ADI 5017 MC/DF ....................................................................... 17/5 19 August 2013, Rio de Janeiro Appeal Court, case 0045233-64.2013.8.19.0000 ........................... 17/57 19 February 2014, Rio de Janeiro Appeal Court, case AI 0065666-89.2013.8.19.0000................... 17/23 29 May 2014, São Paulo Appeal Court, case 0001914-38.2001.8.26.0108....................................... 17/42 7 July 2014, São Paulo Appeal Court, case AI 0036246-44.2013.8.26.0000..................................... 17/23 14 August 2014, São Paulo Appeal Court, case AI 2078982-09.2014.8.26.0000 ............................. 17/42 4 November 2014, São Paulo Appeal Court, case 9175306-15.2009.8.26.0000 .............................. 17/42 18 November 2014, São Paulo Appeal Court, case 0006701-29.2005.8.26.0510 ............................ 17/57

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25 November 2014, São Paulo Appeal Court, case 0614245-61.2000.8.26.0100 ............................ 18/42 9 December 2014, São Paulo Appeal Court, case AI 2157932-32.2014.8.26.000 ............................ 18/24 11 December 2014, Regional Federal Appeal Court for the Second Region, case 2013.02.01.001581-6 .............................................................................................................. 18/53 Canada 8 July 2009, Federal Court of Canada—Ratiopharm v Pfizer Ltd ..................................................... 1/23 China Andrew Inc v PRB and Wu Huiyin, Beijing High Court Xingzhongzi (2008) No 682 ........................................................................................................ 11/112 Astellas Pharma Inc v List Pharmaceutical et al, Supreme Court (2013) Minshenzi No 261 ................................................................................................... 11/69, 11/91 Beijng Yingtelai Morgan Thermal Ceramics Textile Co Ltd v Beijing Deyuan Kuaijie Windows and Doors Factory, Beijing High Court (2009) Minzhongzi No 4721 ...................................................................... 11/113 China Environmental Project Technology Corporation v Fujikasui Engineering Co Ltd, Huayang Electric Power Co Ltd rendered on 21 Dec 2009, Supreme Court (2008) Minsan Zhongzi No 8................................ 11/128 Honda Technology Industry Co Ltd v Shijiazhuan Shuanhuang Automobile Co Ltd, Supreme Court (2012) Minsan Zhongzi No 1 ........................................... 11/27 Ju Aijun v Gubeichun Co ................................................................................................................ 11/145 Kohler Co v Shanghai Bravat Sanitary Equipment Co Ltd, Beijing High Court (2009) Minzhonzi No 1553 ........................................................................ 11/157 Lerado v Tongba, Supreme Court (2013) Mintizi No 116 ............................................................. 11/129 Lesheros v Chen Shundi et al, Supreme Court, Mintizi No 225 .................................................... 11/122 Motorola (USA) Inc v Fu Lianhua, Beijing Zhongtian Shenzhou Communication Market Ltd, Beijing No 1 Intermediate People’s Court (2007) Minchuzi No 417 .................................................................................................. 11/144 OBE-Werk Ohnmacht und Baumgärtner GmbH & Co KG v Zhejiang Kanghua Glasses Co, Supreme Court (2008) Min Shen No 980 ............................................... 11/122 Qiu v Shenzhen Citxy Investment Co Ltd (2010) No 158 ............................................................. 11/148 Sankyo (Japan) Co Ltd and Shanghai Sankyo Pharmaceutical Co Ltd v Beijing Wansheng Pharmaceutical Co Ltd, Beijing Intermediate People’s Court (2006) Minchuzi No 4134 .................................................................................. 11/155 Seiko Epson v PRB, Supreme Court (2010) ZhixingZi No 53-1 ...................................... 11/112, 11/115 Schütz Werke GmbH & Co KG v Shanghai Packaging Container Co Ltd, Shanghai High Court (2004) Minsan Zhi Zhongzi No 90 ........................................................ 11/113 Shenzhen Jieshun Science and Technology Industrial Co Ltd v Zhejiang Dongyang City Guangke Construction Intelligent Engineering Co Ltd, Jiangsu High People’s Court (2010) Zhiming Zhongzi No 0125 ................................. 11/125 Song Zhi’an v Wuxi Furnace Factory, cited by Li Jian, Patent Law § 16.32 .................................... 11/47 Yuan Lizhong v Yangzhong City Tongfa Pneumatic Valve Actuators Factory, Yangzhong City Tongfa Industrial Co Ltd, Nanjing Intermediate People’s Court (2003) Minsan Chuzi No 188 ........................................................................................... 11/163 Xinyu v Monkey King Co Ltd, Supreme Court (2013) Minshen Zi No 1201 ............................... 11/121 Zhengzhou Runda, Chen Tingrong v Hubei Jieda et al, Supreme Court (2013) Mintizi No 16 ..................................................................................................................... 11/50 Zhongyu Co v Jiuying Co Ltd, Supreme Court (2012) Min Ti No 306 ........................................ 11/115

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EU 31 October 1974, ECJ, (Case 15/74), (1974) ECR 1147—Centrafarm BV and Adriaan De Peijper v Sterling Drug Inc ............................................................................. 6/67 30 November 1976, ECJ, (Case 21/76)—Bier v Mines de Potasse d’Alsace ........................................................................................................................... 2/13 27 September 1988, ECJ, (Case 189/87), (1988) ECR 5565 ............................................................... 6/31 7 March 1995, ECJ, (Case 68/93), (1995) ECR 415, 29 IIC 96 (1998)—Fiona Shevill v Presse Alliance .......................................................................2/13, 6/28, 9/32 16 June 1998, ECJ (C-53/96), (1998) ECR I-3603, 1999 Nederlandse Jurisprudentie (NJ) 240—Hermès, 30 IIC 292 (1999) .................................................................. 6/43 16 July 1998, ECJ (Case C-355/96), Silhouette International Schmied v Hartlauer Handelsgesellschaft, 29 IIC 920 [1998]—Silhouette ................................ 1/130 17 November 1998, ECJ, (C-391/95), (1998) ECR I-7091—Van Uden ................................... 6/34, 6/35 14 October 1999, ECJ, (Case C-223/98), 31 IIC 591 [2000]—In re Adidas .................................... 1/133 6 April 2000, ECJ, (Case C-383/98) The Polo/Lauren Company LP v PT Dwidua Langgeng Pratama International Freight Forwarders, 32 IIC 209 [2001]—Polo/Lauren .................................................................................................. 1/135 14 December 2000, ECJ, joined cases C-300/98 and C-392/98, (2000) ECR I-11307—Tuk v Dior and Assco v Layher .................................................................. 6/37 9 December 2003, ECJ, (Case 116/02)—Gasser v Misat .................................................................... 2/43 27 April 2004, ECJ, (Case 159/02)—Turner ....................................................................................... 2/21 28 April 2005, ECJ, (Case 104/03)—St Paul Dairy ............................................................................. 2/27 13 July 2006, ECJ, (Case 4/03)—GAT v LuK ............................................................2/9, 5/57, 6/31, 6/33, 9/33, 19/6, 19/12 13 July 2006, ECJ, (Case 539/03)—Roche v Primus .........................................................2/17, 5/57, 6/31 9 November 2006, ECJ, (Case 281/05)—Montex Holdings............................................................. 20/10 11 January 2007, ECHR, Anheuser Busch v Portugal, 39 IIC 739 ....................................................... 1/3 11 October 2007, ECJ, (Case 98/06)—Freeport v Arnoldson ..........................................2/16, 6/31, 6/33 18 July 2007, ECJ, (Case 175/06)—Tedesco v Tomasoni Fittings Srl and RWO Marine Equipment Ltd .................................................................................... 2/27, 7/46 18 October 2005, ECJ, (Case 405/03)—Class International ............................................................ 20/10 16 July 2009, ECJ, (Case 189/08)—Zuid-Chemie v Philippo’s Mineralenfabriek ............................................................................................................ 2/13 1 December 2011, ECJ, (Case 145/10)—Painer v Standard Verlags .................................................. 6/31 1 December 2011, ECJ, joined cases 446/09 and 495/09—Nokia v HMRC/Philips v Lucheng .......................................................................................... 5/25, 6/22, 19/37, 20/10, 20/11 1 December 2011, ECJ, joined cases 446/09 and 495/09—Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Company Ltd.......................................... 1/135 19 April 2012, ECJ, (Case 523/10)—Wintersteiger v Products 4U .................................................... 2/13 12 July 2012, ECJ, (Case 616/10)—Solvay v Honeywell.................................................. 2/10, 2/18, 2/24, 5/57, 6/31, 6/33, 6/38, 9/35, 19/15, 19/33 6 September 2012, ECJ, (Case 170/11)—Lippens and others ............................................................ 2/28 25 October 2012, ECJ, (Case 133/11)—Folien Fischer v Ritrama ...................................2/22, 2/14, 5/44 6 December 2012, ECJ, (Case C-457/10 P)—Astra Zeneca v Commission ...................................... 1/23 21 February 2013, ECJ, (Case 332/11)—Prorail ................................................................................. 2/28 16 May 2013, ECJ, (Case 228/11)—Melzer v MF Global UK Ltd...................................................... 2/15 3 April 2014, ECJ, (Case 438/12) NJW 2014, 1871—Irmengard Weber v Mechthilde Weber .................................................................................................... 2/22, 2/24

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9 April 2014, ECJ, (Case 583/12)—Sintax Trading OÜ/Maksu ja Tollia ......................................... 20/51 16 July 2015, CJEU, (Case C-170/13)—Huawei Technologies v ZTE Tech GmbH .............................................................................................................................. 1/80 EPO 11 December 1989, EPO Enlarged Board of Appeals, OJ 1990, 93—Friction Reducing Addition ......................................................................................... 1/13, 1/127 24 July 1996, EPO Enlarged Board of Appeal, OJ 1996, 649 .............................................................. 1/29 10 December 1999, EPO Enlarged Board of Appeal, 32 IIC 545 (2002) ........................................... 1/29 4 February 2014, T 2221/10 Culturing Stem Cells/Technikon .......................................................... 1/74 17 February 2015, EPO Enlarged Board of Appeal, case R 2/14........................................................ 1/29 France 2 March 1971, Paris Appeal Court, Dalloz 1972, 45 ....................................................................... 1/1193 26 January 1993, Cass Com, PIBD 1993, No 542-III-256—Hovione, Sarget and Plantier v Pfizer ........................................................................................................... 5/147 17 January 1996, CA Paris, PIBD 1996, No 608-III-178—Seeg and Stockvis v Kimberley Clark ..................................................................................................... 5/58 13 March 1996, CA Paris, PIBD 1996, No 612-III-299—Jardouy v Laboratoires d’études et de recherches chimiques ......................................................................... 5/75 28 June 1996, CA Paris, PIBD 1996, No 621-III-583—Brutsaert v Fiamma .................................... 5/73 22 November 1996, TGI Paris, PIBD 1997, No 628-III-139—Jean-Paul Biberian v CEA and Pixtech ............................................................................................................ 5/43 19 September 1997, TGI Paris, PIBD 1998, No 645-III-4—Aktiebolaget Hassle and Laboratoires Astra France v Chong Kun Dang.......................................................... 5/135 19 November 1997, CA Paris, PIBD 1998, No 647-III-69—Aktiebolaget Hassle and Laboratoires Astra France v Lek DD Ljubljana .............................................. 1/118, 5/135 30 January 2001, Cass Com, Lek DD Ljubljana v Aktiebolaget Hassle and Laboratoires Astra France, PIBD 2001, No 723-III-329 ....................................................... 5/135 4 February 2002, CA Douai, Annales de la Propriété Industrielle, 2002, page 173—Dow France v Rhodia........................................................................................... 1/33, 5/69 3 June 2003, Cass Com, PIBD 2003, No 774-III-557—Diffusion des ébénistes contemportains Roméo v Gélineau Xavier .............................................................. 5/73 5 November 2003, TGI Paris, RG No 00/11073—Djikstra Plastics v Saier Verpackungstechnik ................................................................................................................ 5/44 29 September 2004, TGI Paris, RG No 00/14083—Al Khouri Fallouh v L’Oréal, CNRS and Lancôme ........................................................................................................ 5/149 9 February 2005, TGI Paris, PIBD 2005, No 809-III-335—Atral and Diagral v Cedom and Leroy Merlin .............................................................................................. 5/163 9 February 2006, TGI Paris, PIBD 2006, No 830-III-350—Neopost and Satas v PFE International, Innovacourrier and Paper Handling ................................................... 5/43 18 October 2006, TGI Paris, PIBD 2007, No 845-III-82—Odysée Environnements v Henkel Concorde.............................................................................................. 5/69 22 December 2006, TGI Paris,PIBD 2007, No 848-III-201—Evysio v Abbott and Guidant ....................................................................................................................... 5/135 12 June 2007, Cass Com, PIBD 2007, No 858-III-521—Normalu and Scherrer v Newmat = 39 IIC 354 (2008)—False Ceiling ............................................. 1/22, 5/183 14 January 2009, TGI Paris, PIBD 2009, No 901-III-1267—Abbott v Evysio Medical Devices .................................................................................................................... 5/41

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6 October 2009, TGI Paris, PIBD 2010, No 914-III-161—Teva v Sepracor ...................................... 5/34 12 February 2010, TGI Paris, RG No 10/51453—EI Du Pont de Nemours Merck Sharp & Dohme-chibret v Mylan and Qualimed, English translation available on www.frenchpatentcaselaw.info/ ................................................. 5/83 3 March 2010, TGI Paris, RG No 07/13504—Novartis and Ciba Vision v Johnson & Johnson and Ethicon, English translation available on www.frenchpatentcaselaw.info/ ................................................................................ 5/163 28 September 2010, TGI Paris, PIBD 2010, No 930-III-815—Actavis and Alfred E Tiefenbacher v Merck, Sharp & Dohme, English translation available on www.frenchpatentcaselaw.info/ ............................................................... 5/32 28 September 2010, Paris District Court, 42 IIC 474 (2011)—Dosage Regime/Finasteride .......................................................................................................................... 1/73 9 November 2010, TGI Paris, RG No 09/12713—Teva v Merck, Sharp & Dohme ............................................................................................................................... 5/34 28 January 2011, TGI Paris, RG No 11/50892—Novartis v Actavis, English translation available on www.frenchpatentcaselaw.info/ ................................................. 5/83 15 March 2011, CA Paris, PIBD 2011, No 943-III-45151453—EI Du Pont de Nemours and Merck Sharp & Dohme-chibret v Mylan and Qualimed ....................................................................................................................... 5/83 17 June 2011, CA Paris, RG No 09/09418—Salomon v Merrell and Wolverine Worldwide ............................................................................................................. 5/149 1 July 2011, CA Paris, PIBD 2011, No 948-III-598—Teva v Directeur général de l’INPI and Eli Lilly ........................................................................................ 5/59 16 September 2011, CA Paris, PIBD 2011, No 951-III-692—Novartis v Actavis ............................. 5/83 27 October 2011, TGI Paris—Sanofi and Zentiva v Novartis ............................................................ 5/86 31 October 2011, RG No11/15302, Sanofi and Zentiva v Novartis ................................................... 5/86 8 December 2011, TGI Paris, PIBD 2011, No 956-III-118—Samsung v Apple, English translation available on www.frenchpatentcaselaw.info/ .................................... 5/177 17 February 2012, CA Paris, RG No 11/09940—Merial v Omnipharm, English translation available on www.frenchpatentcaselaw.info/ ................................................. 5/29 17 February 2012, Cass Com, PIBD 2012, No 959-III-233 = 43 IIC 712 (2012)—Reginald Wehrkamp-Richter v Louis Paul Guitay and LPG Systems, English translation available on www.frenchpatentcaselaw.info/ ............... 1/22, 5/182 20 March 2012, TGI Paris, RG No 09/12706—Eli Lilly v Teva .......................................................... 5/34 21 March 2012, CA Paris, PIBD 2012, No 963-III-372—Novartis v Mylan and Qualimed, English translation available on www.frenchpatentcaselaw.info/ ........................................................................................ 5/82, 5/84 6 July 2012, TGI Paris, PIBD 2012, No 968-III-567—Mc Neil v Laboratoire Pierre Fabre, Pierre Fabre Médicament Production and Diététique et Pharmacie ........................................................................................................... 5/82 26 September 2012, CA Paris, PIBD 2012, No 972-III-735—Beaba v Seb France and Tefal ...................................................................................................................... 5/149 3 October 2012, TGI Paris, PIBD 2012, No 974-III-816—Sanofi v Teva, English translation available on www.frenchpatentcaselaw.info/ ............................... 5/81, 5/82 11 December 2012, CA Paris, PIBD 2013, No 978-III-977—Sanofi and Zentiva v Novartis, 45 IIC 945—Valsartan .................................................................... 1/48, 5/86 11 January 2013, TGI Paris, RG No 11/02631—Sanofi-Aventis v Philippe Perovitch and Marc Maury............................................................................................... 5/34 15 January 2013, Cass Com PIBD 2013, No 979-III-1005—Novartis v Actavis, English translation available on www.frenchpatentcaselaw.info/ .................................... 5/83

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17 January 2013, TGI Paris, RG No 12/11634—Uretek v Sols et Fondations ................................... 5/83 23 January 2013, CA Paris, RG No 10/13867—TYC Europe v Valeo .............................................. 5/161 24 January 2013, TGI Paris, RG No 10/14541—Hydr Am v Gimaex and Weber Hydraulik ...................................................................................................... 5/161 11 February 2013, Cass Com, PIBD 2003, No 981-III-1089—Vetrotech v Interver, English translation available on www.frenchpatentcaselaw.info/ .................................. 5/75 28 February 2013, TGI Paris, PIBD 2013, No 988-III-1328—Sanofi v Mylan, English translation available on www.frenchpatentcaselaw.info/ ..................................... 5/34 6 March 2013, CA Paris, PIBD 2013, No 983-III-1150—Sebban v Barilla ....................................... 5/29 14 March 2013, TGI Paris, RG No 11/08727—Chomarat Textiles Industries v Saertex .......................................................................................................................... 5/35 16 April 2013, Cass Com, PIBD 2013, No 986-III-1243—Cycles Lapierre and Lesage v Decathlon and Promiles ........................................................................... 5/149 25 April 2013, TGI Paris, RG No 10/14406—Evinerude v Gireaudeau and Aair Lichens ..................................................................................................................... 5/29, 5/30 23 May 2013, CA Paris, PIBD 2013, No 989-III-1363 ............................................................... 5/81, 5/82 6 June 2013, TGI Paris, PIBD 2013, No 992-III-1456—Balipro v Vinmer ..................................... 5/174 20 June 2013, TGI Paris, PIBD 2013, No 993-III-1512—Vorwerk v Domar and Guy Demarle ....................................................................................................... 5/88, 5/89 11 October 2013, TGI Paris, RG No 11/14587—Saint Dizier Environnement v Materiel Santé Environnement and CME ...................................................... 5/161 14 November 2013, TGI Paris, No 11/16713—Time Sport International v JCR, RG................................................................................................................. 5/161 22 November 2013, TGI Paris, RG No 10/10117—Manitou v Haulotte.............................. 5/147, 5/149 29 November 2013, TGI Paris, RG No 12/14922—Telefonaktiebolaget v TCT Mobile .................................................................................................................................... 5/177 16 January 2014, TGI Paris, RG No 11/14921—Moba v Erric .......................................................... 5/51 31 January 2014, CA Paris, PIBD 2014, No 1003-III-265—Laboratoires Negma v Biogaran and Laboratoire Medidom............................................................................. 5/181 7 March 2014, TGI Paris, RG No 13/10111—Depoortere v Dehondt Technologies ..................................................................................................................... 5/88 12 March 2014, CA Paris, RG No 12/07203—Eli Lilly v Teva ........................................................... 5/34 20 March 2014, TGI Paris, RG No 11/07903—Muller v Alpha Confort and Texas de France ........................................................................................................... 5/51 3 April 2014, TGI Paris, PIBD 2014, No 1010-III-597—Société d’équipement pour l’environnement v Rabaud ................................................................ 5/147, 5/150 5 June 2014, TGI Paris, RG No 12/10282—E Bickel Maschinen Apparatebau v Newmat ................................................................................................................... 5/29 23 June 2014, TGI Paris, RG No 14/54903—Mylan v Gedeon Richter .................................... 5/82, 5/83 16 September 2014, Cass Com, PIBD 2014, No 1016-III-836—Sanofi and Zentiva v Novartis ........................................................................................................... 1/48, 5/86 23 September 2014, CA Paris, RG No 13/01377—Gaztransport and Technigaz v Chantier de l’Atlantique....................................................................................... 5/35 6 November 2014, TGI Paris, PIBD 2015, No 1020-III-43—Raccords et Plastiques Nicoll v MEP .............................................................................................................. 5/30 21 November 2014, TGI Paris, RG No 10/14073—Ethypharm v Astra Zeneca and Cipla .................................................................................................................... 5/36 5 December 2014, TGI Paris, RG No 12/13507—Akzo Nobel and MSD v Teva Santé, Ratiopharm, Merckle and Cemelog ................................................................ 5/32

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15 December 2014, TGI Paris, RG No 14/58023—Sanofi-Aventis Deutschland v Lilly France, English translation available on www.frenchpatentcaselaw.info/ ............................................................................................... 5/172 19 December 2014, CA Paris, RG No 12/13999—Newmat v Clipso Productions ......................... 5/184 30 January 2015, CA Paris, RG No 10/23603—Merck Sharp & Dohme v Actavis ........................... 5/32 20 March 2015, CA Paris, RG No 13/00552—Airbus Helicopters v Bell Helicopter Textron Inc and Textron Canada Ltd .................................................................. 5/150 Germany 5 May 1888, Imperial Supreme Court, I 86/88, RGZ 22, 165 .......................................................... 19/28 8 June 1895, Imperial Supreme Court, RGZ 35, 63 ............................................................................ 1/96 31 December 1898, Imperial Supreme Court, RGZ 43, 56 ................................................................ 1/96 13 April 1910, Berlin Royal District Court, Mitteilungen 1910, 120 ................................................. 1/43 8 March 1919, Kammergericht Berlin, GRUR 1919, 179 ................................................................... 1/41 29 March 1919, Imperial Supreme Court, RGZ 95, 220 .................................................................... 1/99 23 February 1920, Imperial Supreme Court, GRUR 1920, 103 ......................................................... 1/99 29 March 1930, Imperial Supreme Court, MuW 30, 372................................................................... 1/63 22 October 1930, Imperial Supreme Court, RGZ 130, 108.............................................................. 1/101 9 January 1933, Imperial Supreme Court, GRUR 1933, 288 ........................................................... 1/137 28 January 1933, Imperial Supreme Court, GRUR 1933, 292 ......................................................... 1/100 25 October 1939, Berlin District Court, GRUR 1940, 32 ................................................................... 1/99 7 April 1941, Imperial Supreme Court, RGZ 156, 65 ......................................................................... 1/99 12 July 1955, Federal Supreme Court, 1955 GRUR 573—Kabelschelle ............................................ 4/36 14 June 1957, Federal Supreme Court, 1958 GRUR 134—Milchkanne............................................ 4/36 16 March 1959, Federal Supreme Court, BGHZ 29, 393 ................................................................... 1/99 29 March 1960, Federal Supreme Court, I ZR 109/58, 1960 GRUR 423—Kreuzbodenventilsäcke ................................................................................... 19/23 21 June 1960, Federal Supreme Court, 1960 GRUR 546—Bierhahn .............................................. 4/156 13 March 1962, Federal Supreme Court, 1962 GRUR 401—Kreuzbodenventilsäcke II ........................................................................................... 1/84, 4/127 29 May 1962, Federal Supreme Court, GRUR 1962, 509—Dia-Rähmchen II ................................................................................................................. 1/101 21 May 1963, Federal Supreme Court, 1963 NJW 2370—Taxilan .................................................. 4/157 30 April 1964, Federal Supreme Court, 1964 GRUR 496—Formsand II ........................................ 4/156 12 January 1966, Federal Supreme Court, BGHZ 44, 372—Meßmer-Tee II .................................. 1/100 20 August 1968, Braunschweig District Court, GRUR 1971, 28—Abkantpresse ............................. 1/43 15 October 1969, Federal Supreme Court, GRUR 1970, 189........................................................... 1/100 27 November 1969, Federal Supreme Court, GRUR 1970, 296—Allzweck Landmaschine ...................................................................................................... 1/100 14 July 1970, Federal Supreme Court, X ZR 4/65, 1971 GRUR 78, 80—Dia-Rähmchen V ................................................................................................................... 19/28 8 October 1971, Federal Supreme Court, 1972 GRUR 189—Wandsteckdose II ................................................................................................................... 2/36 10 March 1972, Federal Supreme Court, BGHZ 59, 286—Double Tariff .......................................................................................................................... 1/96 6 December 1974, Federal Supreme Court, GRUR 1975, 434 ........................................................... 1/97 3 June 1976, Federal Supreme Court, 1976 GRUR 579—Tylosin ................................................... 4/163 30 November 1976, Federal Supreme Court, X ZR 81/72, GRUR 1977, 250, 252—Kunststoffhohlprofil ............................................................................... 19/28

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6 March 1980, Federal Supreme Court, BGHZ 77, 16 = 1980 GRUR 841—Tolbutamid ........................................................................................................ 1/97, 2/36 6 March 1980, Düsseldorf Appeal Court, 1980 Mitt 117 ................................................................... 4/81 17 April 1980, Düsseldorf Appeal Court, GRUR 1981, 45 ................................................................. 1/98 17 August 1981, Düsseldorf High Court, Gewerblicher Rechtsschutz und Urheberrecht (GRUR) 1983, 741—Interest in Secrecy and Right of Inspection I................................................................................................................. 1/36 24 November 1981, Federal Supreme Court, 1982 GRUR 301—Kunststoffhohlprofil II................................................................................................ 1/98, 4/126 8 January 1985, Federal Supreme Court, 18 IIC 108 (1987)—Pressure Beam ................................. 13/4 8 January 1985, German Supreme Court, 1985 GRUR 512—Druckbalken ..................................... 1/43 29 April 1986, Federal Supreme Court, 1986 GRUR 803, 28 IIC 795 (1987)—Formstein/ Moulded curbstone ....................................................... 1/63, 4/148, 9/58, 10/96 11 November 1986, Federal Supreme Court, 1987 GRUR 284—Transportfahrzeug ................................................................................................................... 4/5 3 November 1988, Federal Supreme Court, 1989 GRUR 187—Kreiselegge II .......................................................................................................................... 4/28 21 February 1989, Federal Supreme Court, BGHZ 107, 46 ............................................................... 1/96 11 April 1989, Federal Supreme Court, 1989 GRUR 411—Offenend-Spinnmaschine ........................................................................................ 4/134, 4/144 16 March 1990, Cologne Appeal Court, GRUR 1991, 60—Rolex-Imitation ..................................................................................................................... 1/101 24 September 1991, Federal Supreme Court, 1992 GRUR 40—Beheizbarer Atemluftschlauch ................................................................................... 4/106, 4/113 18 February 1992, Federal Supreme Court, 1992 GRUR 599—Teleskopzylinder .................................................................................... 1/98, 4/133 9 April 1992, Federal Supreme Court, GRUR 1992, 530 .................................................................... 1/99 4 June 1992, Federal Supreme Court, IX ZR 149/91, 118 BGHZ 312, 1993...................................................................................................................... 19/38 17 June 1992, Federal Supreme Court, GRUR 1993, 55—Tchibo/Rolex II ........................................................................................................................ 1/97 26 January 1993, Federal Supreme Court, 1993 GRUR 460—Wandabstreifer ..................................................................................................................... 4/125 22 April 1993, Federal Supreme Court, 1993 GRUR 757—Kollektion Holiday................................................................................................................. 2/36 1 February 1994, Düsseldorf District Court, 4 O 193/87................................................................. 19/22 15 November 1994, Federal Supreme Court, BGHZ 128, 1 et seq = NJW 1995, 861—Caroline von Monaco I.................................................................... 12/85 20 December 1994, Federal Supreme Court, 1995 GRUR 338—Kleiderbügel ................................. 4/40 17 January 1995, Federal Supreme Court, 1995 GRUR 330—Elektrische Steckverbidung ................................................................................................. 4/108 30 May 1995, Federal Supreme Court—Steuereinrichtung II ........................................................... 1/99 4 February 1997, Federal Supreme Court, 1997 GRUR 454—Kabeldurchführung ............................................................................................................. 4/149 19 March 1997, Appeal Court Munich, WRP 1997, 975—Grenzbeschlagnahme .......................................................................................................... 20/52 17 February 1999, Federal Supreme Court, 1999 GRUR 914—Kontaktfederblock ............................................................................................................... 4/149 20 May 1999, Düsseldorf District Court, GRUR 2000, 309—Teigportioniervorrichtung .................................................................................................... 1/98

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2 March 1999, Federal Supreme Court, 1999 GRUR 909—Spannschraube................................... 4/104 1 June 1999, Düsseldorf District Court, GRUR 2000, 690— Reaktanzschleife ................................ 1/98 5 October 1999, Federal Tax Court, case VII R88/98 ....................................................................... 1/130 7 October 1999, Federal Finance Court, 2000 GRUR Int 780—Jockey .......................................... 20/13 14 December 1999, Federal Supreme Court, 2000 GRUR 299—Karate ......................................... 4/163 24 February 2000, Munich Appeal Court, 2001 Mitt 85—Wegfall der Dringlichkeit .............................................................................................................................. 4/81 14 March 2000, Federal Supreme Court, GRUR 2000, 685 ............................................................... 1/98 10 October 2000, Federal Supreme Court, 2001 GRUR 228—Luftheizgerät ........................................................................................................................ 4/116 2 November 2000, Federal Supreme Court, 2001 GRUR 329—Gemeinkostenanteil .......................................................................................1/101, 4/128, 12/84 31 May 2001, Düsseldorf District Court, 4 O 128/00 ...................................................................... 19/14 18 October 2001, Federal Supreme Court, 2002 Mitt 251—Meißner Dekor ..................................................................................................... 4/48 13 November 2001, Federal Supreme Court, 2002 GRUR 231—Biegevorrichtung ............................................................................................ 4/159 8 February 2002, Mannheim District Court, 7 O 235/01 .................................................................. 19/9 26 February 2002, Federal Supreme Court, 2002 GRUR 559—Funkuhr.................................................................................................. 4/44, 19/22 12 March 2002, Federal Supreme Court, 2002 GRUR 511—Kunststoffrohrteil................................................................................. 4/109, 10/95 12 March 2002, Federal Supreme Court, 2002 GRUR 515, 519—Schneidmesser I and II .......................................................................................................... 9/57 2 May 2002, 2002 GRUR 1046—Faxkarte ................................................................................. 1/37, 2/43 19 December 2002, Düsseldorf Regional Court, InstGE 3, 8—Cholesterin-Test ............................................................................................................ 4/150, 19/16 4 May 2004, Federal Supreme Court, 2004 GRUR 758—Flügelradzähler ................................................................................................4/43, 4/114, 19/28 23 June 2004, München I District Court, 21 O 6421/01—Messeangebot ins Ausland I ................................................................................................................................... 19/23 7 July 2004, Federal Supreme Court, 2004 GRUR 21023—Bodenseitige Vereinzelungsvorrichtung ............................................................................................................. 4/103 18 August 2005, Appeal Court Cologne, 2005 GRUR-RR 342—Lagerkosten nach Grenzbeschlagnahme............................................................................................................ 20/34 22 March 2005, Federal Supreme Court, 2005 GRUR 663—Gummielastische Masse II................................................................................................... 4/154 22 November 2005, Federal Supreme Court, GRUR 2006, 570—Extracoronales Geschiebe.................................................................................................... 20/57 7 June 2005, Federal Supreme Court, 2005 GRUR 848—Antriebsscheibenaufzug ........................................................................................... 4/116, 4/130 11 October 2005, Federal Supreme Court, 2006 GRUR 131—Seitenspiegel ......................................................................................................................... 4/107 3 May 2006, Federal Supreme Court, 2006 GRUR 837—Laufkranz ............................................................................................................................. 4/163 11 May 2006, Düsseldorf Appeal Court, 2 U 86/05—Restitutionsklage II ............................ 1/22, 4/168 28 September 2006, Düsseldorf Appeal Court, I-2 U 93/04 .............................................................. 4/39 9 January 2007, Federal Supreme Court, 2007 GRUR 679—Haubenstrechautomat ...................................................................................4/117, 4/130, 4/140 30 January 2007, Federal Supreme Court, 2007 GRUR 313—Funkuhr II ........................................................................................................4/46, 4/115, 19/22

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27 February 2007, Federal Supreme Court, 2007 GRUR 773—Rohrschweißverfahren .............................................................................................. 4/114, 19/32 27 February 2007, Federal Supreme Court, 2007 GRUR 769—Pipettensystem .......................................................................................................... 4/114, 4/163 31 May 2007, Federal Supreme Court, 2007 GRUR 1059—Zerfallszeitmessgerät.......................................................................................................... 4/112 9 August 2007, Düsseldorf Appeal Court, 2 U 49/06—Spundfass II .............................................. 4/168 20 May 2008, Federal Supreme Court, 2008 GRUR 896—Tintenpatrone ...................................... 4/132 5 June 2008, Regional Court Düsseldorf, 4a O 27/07, 40 IIC 96 (2009)—Pre-laminated Multi-Layer Band..................................................................... 2/23 8 October 2008, Düsseldorf Regional Court, InstGE 10, 129—Druckerpatrone II ....................... 4/161 6 May 2009, Federal Supreme Court, 2009 GRUR 694—Orange-Book-Standard ........................ 4/160 19 June 2008, Düsseldorf District Court, InstGE 9, 130—Druckbogenstabilisierer ................................................................................20/59, 20/65, 20/68 19 June 2008, Düsseldorf District Court, BeckRS 2009, 10949—Eingriff in den eingerichteten und ausgeübten Gewerbebetrieb durch Grenzbeschlagnahme .......................................................................................................... 20/65 8 July 2009, Appeal Court Karlsruhe, docket 6 U 61/09, GRUR-RR 2009, 442—Vorläufiger Rechtsschutz ................................................................................................... 20/144 27 July 2009, Stuttgart Appeal Court, 5 U 39/09 .............................................................................. 19/38 10 September 2009, Federal Supreme Court, 2010 GRUR 47—Füllstoff ....................................... 4/156 17 September 2009, Federal Supreme Court, 2009 GRUR 1142—MP3-Player-Import .........................................................................................4/45, 4/48, 4/151 16 November 2009, Federal Supreme Court, 2010 GRUR 318—Lichtbogenschnürung............................................................................................................ 2/37 10 December 2009, Düsseldorf Appeal Court, 2 U 51/08—Prepaid-Karten II .............................. 19/32 29 April 2010, Düsseldorf Appeal Court, docket I 2 U 126/09, Mitt 20011, 193—Harnkatheterset ............................................................................................. 20/144 29 July 2010, Federal Supreme Court, 2010 GRUR 996—Bordako ..................................... 4/122, 4/168 11 November 2010, Düsseldorf Appeal Court, 20011 GRUR-RR 122—Tintenpatronen .................................................................................................................... 4/168 16 December 2010, Federal Supreme Court, 2011 GRUR 364—Steroidbeladene Körner....................................................................................................... 4/166 24 February 2011, Düsseldorf Appeal Court, I-2 U 102/09 ............................................................. 19/28 13 November 2011, Düsseldorf Appeal Court, InstGE 12, 261—Fernsehmenü-Steuerung ....................................................................................................... 4/39 25 January 2011, Federal Supreme Court, 2011 GRUR 411—Raffvorhang............................................................................................................................ 4/28 22 February 2011, Federal Supreme Court, 2011 GRUR 662—Patentstreitsache .................................................................................................................... 4/49 5 April 2011, Federal Supreme Court, 2011 GRUR 711—Cinch-Stecker .............................................................................................................. 4/38, 4/131 10 May 2011, Federal Supreme Court, 2011 GRUR 701—Okklusionsvorrichtung ............................................................................................ 4/105, 4/111 12 July 2011, Federal Supreme Court, 2011 GRUR 995—Besonderer Mechanismus ..................................................................................................... 4/33 29 September 2011, Federal Supreme Court, 2012 MDR 182 ........................................................... 4/42 6 March 2012, Federal Supreme Court, 2012 GRUR 482—Pfeffersäckchen .................................. 4/103 15 March 2012, Federal Supreme Court, docket I ZR 52/10—Converse I...................................... 20/13 29 March 2012, Düsseldorf District Court, 4a O 17/11 ................................................................... 19/31

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29 November 2012, Higher Regional Court Oldenburg, 8 W 102/12, BeckRS 2012, 25081 ......................................................................................................................... 2/28 7 May 2013, Federal Supreme Court, 2013 GRUR 713—Fräsverfahren ........................................... 4/39 4 March 2014, Düsseldorf Appeal Court, I-2 W 6/13 ...................................................................... 19/26 4 March 2014, Higher Regional Court Düsseldorf, I-2 W 6/13, BeckRS 2014, 13989 ......................................................................................................................... 2/23 25 June 2014, Federal Supreme Court, 2014 GRUR 1189—Transitwaren ........................................ 4/29 24 July 2012, German Supreme Court, 2012 GRUR 1226—Flaschenträger ................................... 12/85 25 June 2014, German Federal Supreme Court, docket X ZR 72/13, GRUR 2014, 1189—Electric Kettle ............................................................................................... 20/11 8 July 2014, German Federal Supreme Court, 46 IIC 249 (2015)—Nicht zu ersetzender Nachteil .......................................................................................... 1/63 7 August 2014, Düsseldorf Appeal Court, 2014 GRUR 1190—Sektionaltorantrieb ............................................................................................................ 4/154 15 October 2014, Düsseldorf District Court, docket 2a O 306/13 .................................................. 20/13 India 3M Innovative Properties Co. v Venus Safety & Health Pvt Ltd 2014 (59) PTC 370 ......................................................................................................................... 15/97 Anvar PV v PK Basheer 2014 (10) SCC 473 ..................................................................................... 15/80 Bacyrus Europe Ltd. v Vulcan Industries Engineering 2005 (30) PTC 279 (Cal)........................... 15/61 Bayer v Controller of Patents OA/35/2012/PT/MUM (IPAB) ....................................................... 15/129 BDR Pharmaceuticals International Pvt Ltd v Bristol Myers Squibb Company (CLA No 1 of 2013) (Controller of Patents) ................................................ 15/130 Billcare Ltd v Amartara Private Ltd 2007 (34) PTC 419 (Del) ...................................................... 15/106 Biswanath Prasad Radhey Shyam v Hindustan Metal Industries AIR 1982 SC 1444 ............................................................................................................. 15/89, 15/109 Biswanath Prasad Radhey Shyam v Hindustan Metal Industries 1979 (2) SCC 511 ........................................................................................................................... 15/63 Brystol Myers Squib Company v VC Bhutada 2013 (56) PTC 268 (Del)........................................ 15/50 Central Excise Dept v Somasundaram 1980 CrLJ 553 (Kar) ........................................................... 15/69 Chemtura Corp v Union of India 2009 (41) PTC 260 (Del) ......................................................... 15/111 Dr Aloys Wobben v Yogesh Mehra AIR 2014 SC 2210 ..................................................................... 15/31 FDC Limited v FMRAI AIR 2003 Bom 371 ...................................................................................... 15/66 F Hoffman La-Roche & Anr v Cipla Ltd 2008 (37) PTC 71 (Del) ........................................................................................................15/62, 15/109, 15/112 F Hoffman La-Roche & Anr v Cipla Ltd 2009 (40) PTC 125 (Del) ........................................................................................................................ 15/62 F Hoffman La-Roche Ltd &Anr v Cipla Ltd 2012 (52) PTC 1 (Del) ....................................................................................................15/91, 15/96, 15/109 Frank Xavier Huemer v New Yash Engineers AIR 1997 Delhi 79 .................................................. 15/113 Hindustan Lever Limited v Godrej Soaps Limited & Ors AIR 1996 Cal 367 ................................................................................................................ 15/23, 15/90 Intex Technologies (India) Limited v Telefonaktiebolaget LM Ericsson Case No 76/ 2013 (CCI) ........................................................................................ 15/122 Koninklijke Philips Electronics v Sukesh Behl 2013 (56) PTC 570 (Del) ..................................... 15/111 LG Electronics India Pvt Ltd v Bharat Bhogilal Patel & Ors 2012 (51) PTC 513 (Del) ............................................................................................................... 15/17 LG Electronics v Bharat Bhogilal Patel & Ors 2014 (59) PTC 370 (Del) ...................................... 15/132

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Malay Kumar Ganguly v Dr Sukumar Mukherjee AIR 2000 SC 1162 ............................................ 15/79 Merck v Glenmark 2013 (54) PTC 452 (Del) ........................................................................ 15/54, 15/92 Micromax Informatics Limited v Telefonaktiebolaget LM Ericsson Case No 50/2013 (CCI) ......................................................................................... 15/122 ML Sethi v R P Kapur AIR 1972 (SC) 2379 ........................................................................... 15/82, 15/83 Natco v Bayer (CLA No 1 of 2011) (Controller of Patents)........................................................... 15/128 Novartis AG v Union of India AIR 2013 SC 1311 ............................................................. 15/107, 15/108 Pope Alliance v Spanish River AIR 1929 PC 38 .............................................................................. 15/106 Raj Prakash v Mangat Ram AIR 1978 Del 1 .......................................................................... 15/87, 15/88 Salem Advocate Bar Association v Union of India AIR 2003 SC 189............................................ 15/133 Salem Advocate Bar Association v Union of India AIR 2005 SC 3533............................................ 15/66 Sivaswamy v Vestergaard 2010 (42) PTC 273 (Del) ......................................................................... 15/64 State of HP v Jai Lal AIR 1999 SC 3318 ............................................................................................ 15/69 Strix Ltd v Maharaja Appliances Ltd MIPR 2010 (1) 181 ................................................................ 15/62 Telefonaktiebolaget LM Ericsson v Competition Commission of India WP (C) No 464 of 2014 (Delhi High Court) .................................................................... 15/123 Telefonaktiebolaget LM Ericsson v Intex Technologies India Ltd CS (OS) No 1045 of 2014 (Delhi High Court) .......................................................................... 15/123 Telefonaktiebolaget LM Ericsson v Mercury Electronics and Anr CS (OS) No 442 of 2013 (Delhi High Court) ................................................................. 15/18, 15/123 Telefonaktiebolaget LM Ericsson v Union of India & Ors 194 (201) DLT 248 ......................................................................................................................... 15/18 Telemecanique v Schneider Electric 94 (2001) DLT 861................................................................ 15/113 Ten XC Wireless v Mobi Antenna 2011 (48) PTC 426 (Del) ......................................................... 15/133 TVS Motor Co Ltd v Bajaj Auto Ltd 2009 (40) PTC 689 (Mad) ..................................................... 15/95 Vringo Infrastructure Inc & Anr v Indiamart Intermesh Ltd & Ors 2014 (60) PTC 437 (Del) ............................................................................................. 15/70 Vringo Infrastructure Inc & Anr v Indiamart Intermesh Ltd & Ors 2014 in FAO (OS) No 369/2014 .................................................................................. 15/73 Wander v Antox 1990 Supp (1) SCC 727.......................................................................................... 15/56 Italy Case no 3387/1956, Supreme Court.................................................................................................... 7/69 21 March 2002, District Milan Court—Dade v Chiron..................................................................... 7/33 3 April 2003, Supreme Court, 2004 GRUR Int 876—Omeprazole ................................................. 19/23 13 May 2003, District Turin Court—GPC v Filterwerk Mann.......................................................... 7/33 19 December 2003, Supreme Court, 2005 GRUR Int 264—B.L. Macchine automatiche spa v Windmöller & Holscher K ............................................. 2/21 8 August 2007, District Milan Court................................................................................................... 7/68 10 March 2009, District Turin Court .................................................................................................. 7/70 5 January 2012, District Milan Court—Samsung/Apple ................................................................... 7/72 13 May 2012, District Turin Court...................................................................................................... 7/70 15 June 2012, Turin Appeal Court ...................................................................................................... 7/70 10 June 2013, Supreme Court No 14508/13, 45 IIC 822 (2014)—Italian Torpedo/General Hospital Corporation and Palomar Medical Technologies Inc v Asclepion Laser Technologies GmbH ......................................................................................................2/14, 2/22, 7/34 16 January 2014, Milan Court, RG 48495/2011—Schindler v Otis.......................................... 2/22, 7/34

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Japan 23 April 1917, Imperial Supreme Court, 23 Minroku 654............................................................... 13/88 12 June 1953, Tokyo District Court, 4–6 Kakyu Minshû 847 .......................................................... 13/36 4 July 1956, Supreme Court, 10-7 Mihshû 705 ................................................................................ 1/126 26 December 1964, Osaka District Court, 15-12 GeMin 3121—Polypropylene ............................ 13/26 4 April 1968, Supreme Court, 22-4 Minshû 816 .............................................................................. 13/86 24 December 1968, Supreme Court, 230 Hanrei Times 173 ........................................................... 13/50 27 February 1970, Osaka District Court, 2 IIC 325 (1971)—Parker............................................. 13/101 10 March 1976, Supreme Court, 30-2 Minshû 79—Knitting Machine .......................................... 13/86 26 November 1976, Nagoya District Court, 852 Hanrei Jihō 95 ..................................................... 13/88 29 June 1979, Osaka District Court, Tokyo Kanri Bessatsu 554 (1979) ........................................ 13/101 27 March 1981, Osaka District Court, 13-1 Mutaishû 336 .............................................................. 13/66 21 December 1982, Kobe District Court, 14-3 Mutaishû 813—Dorothee Bis ............................... 13/86 28 September 1983, Tokyo District Court, 15-3 Mutaishû .............................................................. 13/23 23 December 1983, Tokyo District Court, 15-3 Mutaishû 844 ........................................................ 13/23 6 April 1984, Tokyo District Court, 525 Hanrei Times 314 (1985)—Crystal ................................. 13/78 26 April 1984, Osaka District Court, 16-1 Mutaishû 282 ................................................................ 13/23 29 May 1984, Supreme Court, 530 Hanrei Times 97—American Football Symbol Mark ...................................................................................................... 1/122, 13/103 22 March 1985, Yokohama District Court, 566 Hanrei Times 275—Chanel Handbag .................................................................................................................... 1/95 20 June 1986, Osaka High Court, 18-2 Mutaishû 15—Permabrush ............................................... 13/26 10 March 1987, Tokyo District Court, 1265 Hanrei Jihō 103 (1988)—ICS .................................... 13/66 23 March 1987, Kobe District Court, 19-1 Mutaishû 72—Love Hotel Chanel ................................ 1/95 10 July 1987, Tokyo District Court, 20 IIC 91 (1989)—Monsanto ................................................. 13/82 24 April 1989, Osaka District Court, 21-1 Mutaishû 271—Crushing Device ................................ 13/27 28 December 1989, Tokyo District Court, 21-3 Mutaishû 1073 (1989)—Cable Cover I .................................................................................................................. 13/79 9 February 1990, Tokyo District Court, 1347 Hanrei Jihō 111 ........................................................ 13/65 20 June 1990, Supreme Court, 25 IIC 118 (1994)—Popeye Scarves III .......................................... 13/86 23 June 1991, Supreme Court, 24 IIC 523 (1993)—Evidence of Trade Mark Use ........................... 1/29 31 July 1991, Nagoya District Court, 15 Tokkyo Kenkyû 3 .............................................................. 13/86 16 September 1991, Tokyo High Court, 24 IIC 391 (1993)—Liquid Fuel Component, Hanrei license hô 521 (Tokyo 2000), ................................................... 13/38, 13/40 24 September 1991, Tokyo District Court, 35 Japanese Annual of International Law 175 (1992)—Manufacture of Coated Copper ............................................... 13/39 20 November 1992, Supreme Court, 1050 Jurist 180, AIPPI Journal of the Japanese Group International Edition, 3/1993, 98 ............................................................ 13/23 25 February 1993, Osaka District Court, 25-1 Chizaishû 56—Jimmy’z; in Tokyo District Court, 31 October 2001, 15 Law & Technology 92 (2002) ............................. 13/66 25 February 1993, Tokyo High Court, 25-1 Chizaishû 33 (1993)—Cable Cover II ................................................................................................................. 13/79 14 March 1993, Tokyo High Court, Patent 12/1993, 117 ................................................................. 13/24 24 March 1993, Tokyo District Court, 26 IIC 566 (1995)—Type Chanel No 5 .................................................................................................. 1/93, 13/66 25 March 1993, Osaka District Court, Patent 11/1994 .................................................................... 13/86 9 September 1993, Tokyo High Court, 1485 Hanrei Jihō 116 (1994), 27 IIC 108 (1996)—Cylindrical Cutter......................................................................................... 13/28

lvi

Table of Cases

30 November 1993, Osaka High Court, 25-3 Chizaishû 476 (1993)—Aluminium Wheels......................................................................................................... 13/79 27 January 1994, Tokyo High Court, Patent, 12/1994, 119 .............................................................. 13/24 31 January 1994, Tokyo District Court, 26-1 Chizaishû 1—Pacman .............................................. 13/73 16 July 1994, Nagoya District Court, 225 Hanketsu Sokuhô, No 6520 ........................................... 13/25 29 July 1994, Tokyo District Court, 1513 Hanrei Jihō 155 (1995)................................................... 13/27 7 March 1995, Supreme Court, 1527 Hanrei Jihō 146 (1995)—Magnetic Treatment Device ........................................................................................................................... 13/24 Tokyo High Court, 23 March 1995, 27-1 Chizaishû 171—Snack Chanel II ..................................... 1/94 24 March 1995, Tokyo District Court, 1995 AIPPI Japan English edition 238—Air Filter .................................................................................................................. 13/65 8 June 1995, Supreme Court, 30 IIC 223 (1999)—Wall Street Journal II/III ................................. 13/62 1 July 1995, Tokyo District Court, 27 IIC 570 (1996)—Beauty and the Beast ............................. 13/101 16 March 1996, Nagoya High Court, 28 IIC 398 (1997)—Clinical Trials ....................................... 13/82 30 March 1996, Tokyo District Court, 1585 Hanrei Jihō 106 (1996) .............................................. 13/74 23 May 1996, Tokyo High Court, 1570 Hanrei Jihô 103 (1996) ...................................................... 13/27 18 October 1996, Tokyo District Court, 1585 Hanrei Jihō 106—Concrete Steel Rod .............................................................................................................. 13/75 20 May 1997, Tokyo High Court, 30 IIC 452 (1999)—Sale of Pharmaceuticals.........................................................................................................1/25, 1/37, 13/4 1 July 1997, Supreme Court, 29 IIC 331 (1998)—BBS Car Wheels ................................................ 13/83 11 July 1997, Supreme Court, 30 IIC 485 (1999)—Punitive Damages .................................. 1/95, 13/64 11 July 1997, Supreme Court, 1993 (O) no 1762, 51 Minshû 2537—Saikō Saibansho ................................................................................................................. 19/38 24 February 1998, 30 IIC 443 (1999)—Ball Spline Bearing III .............................................. 13/5, 13/59 30 March 1998, Tokyo District Court, 1646 Hanrei Jihō 143 (1998) .............................................. 13/76 31 March 1998, Tokyo High Court, 30 IIC 454 (1999)—Procaterole ............................................. 13/82 17 September 1998, Osaka District Court, 282 Hanketsu Sokuhō 17—Toaster ................................................................................................................1/93, 13/66, 13/71 7 October 1998, Tokyo District Court, 1657 Hanrei Jihō 122 (1999)—Recharging System ................................................................................................. 1/93, 13/69 12 October 1998, Tokyo District Court, 30 IIC 457 (1999)—Cimetidine ................................................................................................13/65, 13/66, 13/69 9 March 1999, Supreme Court, 53-3 Minshû 303—Rectangular Steel Pipe................................... 13/86 16 April 1999, Supreme Court, 30 IIC 448 (1999)—Clinical Trials III ........................................... 13/82 22 April 1999, Tokyo District Court, 1691 Hanrei Jihô 131 (2000) ................................................ 13/36 22 April 1999, Supreme Court, 1675 Hanrei Jihô 115—Calendar .................................................. 13/86 8 June 1999, Supreme Court, 16 Law & Technology 72—Ultraman............................................... 13/37 15 June 1999, Tokyo High Court, 1697 Hanrei Jihô 96 (2000)—Heatbank System ................................................................................................... 1/87, 13/66 13 July 1999, Tokyo High Court, 1696 Hanrei Jihō 137—Karaoke ................................................. 13/77 16 July 1999, Supreme Court, 1686 Hanrei Jihō 104—Product-by-Process ........................ 13/63, 13/79 27 January 2000, Tokyo High Court, 1711 Hanrei Jihô 131 (2000) = 2001 GRUR Int 83 ......................................................................................1/64, 12/66, 13/36 11 April 2000, Supreme Court, 35 IIC 91 (2004) = 2004 GRUR Int 154 ........................................ 13/87 14 July 2000, Tokyo District Court, 1734 Hanrei Jihō 121............................................................... 13/89 5 September 2000, Osaka District Court (unreported) ................................................................... 13/89 27 September 2000, Tokyo District Court, 1735 Hanrei Jihō 122 ................................................... 13/89 1 December 2000, Osaka High Court, 1072 Hanrei Times 234....................................................... 13/83 30 January 2001, Tokyo District Court (unreported) ...................................................................... 13/89

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lvii

25 April 2001, Tokyo District Court (unreported)........................................................................... 13/89 14 May 2001, Tokyo District Court, 34 IIC 554 (2003)—Medicine for Reducing Eye Pressure ............................................................................................................. 13/27 21 September 2001, Osaka District Court, 1785 Hanrei Jihō 78 (2002) = 35 IIC 324 (2004)—Jurisdiction in Patent Matters ...................................................... 13/29 31 October 2001, Tokyo District Court, 15 Law & Technology 92 (2002) ........................... 13/66, 13/74 4 December 2001, Osaka District Court, 34 IIC 203 (2003)—Cogwheel ......................................... 13/4 31 January 2002, Tokyo District Court, 35 IIC 1110 (2004)—Tonttu ............................................ 13/26 19 March 2002, Tokyo District Court, 34 IIC 965 (2003)—Pachinko Slot Machine .................................................................................................................................. 13/66 25 March 2002, Supreme Court, 35 IIC 686 (2004)—Pachinko Device .............................13/20; 13/24 29 August 2002, Tokyo High Court, 37 IIC 758 (2006)—Warning Letter/Metallic Powder ................................................................................................................ 13/101 31 October 2002, Tokyo High Court, 2003 AIPPI Japan English Edition 359—Anti-Allergic Agent .................................................................................................. 13/3 26 September 2002, Supreme Court, case no 2000 Jurist 580—Fujimoto v Neuron Co Ltd = ZJapanR/Journal of Japanese Law 16 (2004), 251 = 19 Law & Technology 81 (2003) .............................................................................. 13/36, 19/24 16 October 2003, Tokyo District Court 1874 Hanrei Jihô 23 = 1151 Hanrei Times 109—Sango Fossile Powder ................................................................................... 13/37 29 October 2003, Tokyo High Court................................................................................................. 13/66 26 December 2003, Tokyo District Court, 1851 Hanrei Jihō 138—Filling Machine .................................................................................................................... 13/73 15 March 2004, Tokyo District Court, 39 IIC 247 (2008)—Water Pellets ....................... 13/101, 13/102 31 March 2004, Tokyo District Court—School Bags ..................................................................... 13/102 26 July 2004, Osaka District Court, 37 IIC 480 (2006)—NuBra ..................................................... 13/26 15 October 2004, Osaka High Court; 1912 Hanrei Jihō 106–18 = 39 IIC 228 (2008) ............................................................................................. 13/50, 13/100 19 October 2004, Tokyo High Court, 39 IIC 121 (2008)—Kojima/Yamada................................. 13/101 31 January 2005, Tokyo High Court, 135 Chizai Kenkyû 15–20 ................................................... 13/100 29 March 2005, Osaka High Court; 2006 GRUR Int 616 = 39 IIC 228 (2008).................. 13/50, 13/100 17 June 2005, Supreme Court, 37 IIC 221 (2006)—FlexX .............................................................. 13/22 30 September 2005, IP High Court, 1904 Hanrei Jihō 47—Ichitaro ............................................... 13/57 21 October 2005, Tokyo District Court, 2007 IIC 841 ..................................................................... 13/35 6 July 2006, Tokyo District Court, 39 IIC 374 (2008)—Fish Food................................................ 13/102 15 September 2006, Tokyo District Court, 1973 Hanrei Jihō 131 ................................................... 13/53 25 September 2006, IP High Court, 42 IIC 858 (2011)—Massage Chair .............................. 1/92, 13/67 28 September 2006, IP High Court—Device for Displaying Figures .............................................. 13/58 8 August 2006, Tokyo District Court—Coat Hanger Clip ............................................................. 13/102 27 February 2007, Tokyo District Court, Case No H15(wa)16924 ................................................. 19/28 19 September 2007, Tokyo District Court, www.ip.courts.go.jp ..................................................... 13/68 14 December 2007, Tokyo District Court, 2010 GRUR Int 249—Eyeglasses ............................................................................................................................. 13/27 8 November 2007, Supreme Court, 39 IIC 982 (2008)—Canon Ink Cartridge ....................................................................................................................... 13/56, 13/83 18 April 2008, Osaka District Court, 2010 GRUR Int 79 = 1287 Hanrei Times 220 .................................................................................................................. 13/4, 13/53 24 April 2008, Supreme Court, 40 IIC 721 (2009)—Knife-Processing Device ................................................................................................. 13/92 10 July 2008, Supreme Court, 2009 GRUR Int 623 ............................................................... 13/17, 13/96

lviii

Table of Cases

25 December 2008, Osaka District Court, 2010 GRUR Int 80 = 1287 Hanrei Times 227 .......................................................................................... 13/4, 13/53 27 January 2009, Supreme Court, 41 IIC 858 (2010)—Secrecy Order .................................. 13/4, 13/49 29 June 2009, IP High Court, 43 IIC 476 (2012)—Hollow Golf Club Head .................................. 13/59 8 October 2009, Tokyo District Court, 42 IIC 860 (2011)—Kyucal....................................... 1/93, 13/74 27 April 2010, IP High Court—K.K. Kotobuki v Japan Post ........................................................... 13/94 27 May 2010, IP High Court, www.ip.courts.go.jp .......................................................................... 13/76 7 September 2011, IP High Court—Rice Cakes ............................................................................... 13/58 22 December 2011, IP High Court, www.ip.courts.go.jp................................................................. 13/66 24 January 2012, IP High Court, www.ip.courts.go.jp .......................................................... 13/66, 13/70 27 January 2012, IP High Court, 2144 Hanrei Jihō 51 ..................................................................... 13/58 22 March 2012, Osaka District Court, 2014 GRUR Int 567—Heating Furnace........................................................................................................ 13/27, 19/28 22 March 2012, IP High Court, www.ip.courts.go.jp ....................................................................... 13/69 26 June 2012, IP High Court—Telephone Transmitter ................................................................... 13/58 27 December 2012, Osaka District Court, AIPPI Japan Journal (English Edition) 2013, 160 ........................................................................................................... 13/57 1 February 2013, IP High Court, 2015 GRUR Int 237—Diaper Disposal ................1/104, 13/66, 13/74 28 February 2013, Tokyo District Court—Diabetis Treatment ....................................................... 13/57 28 February 2013, Osaka District Court, www.ip.courts.go.jp ........................................................ 13/66 25 March 2013, IP High Court, 40 AIPPI Japan English Edition 20 (2015) ................................. 13/102 25 September 2013, Tokyo District Court, www.ip.courts.go.jp ..................................................... 13/66 16 January 2014, Osaka District Court, English summary in 2014 AIPPI Journal Japanese Group 377 ............................................................................................... 13/83 16 May 2014, IP High Court, 46 IIC 116 (2015)—Apple v Samsung/FRAND Licence .................................................................................................... 1/80, 13/97 16 May 2014, IP High Court, 46 IIC 124 (2015)—Samsung v Apple /Standard Patent and Abuse of Rights ...................................................................... 1/80, 13/97 Korea 26 February 1980, Supreme Court 79 Da 2138, 2139 ...................................................................... 14/24 25 November 1980, Supreme Court 80 Da 730 ................................................................................ 14/24 1 April 1981, Korean Supreme Court, 89 Hunma 160 ..................................................................... 1/127 26 July 1983, Supreme Court, 81 Hu 56............................................................................................ 14/54 25 March 1986, Supreme Court, 84 Hu 6 ......................................................................................... 14/62 12 April 1988, Supreme Court, 87 Daka 90—Aero Chemie ............................................................ 14/45 14 June1988, Supreme Court 87 Daka 1450 ..................................................................................... 14/42 27 June 1990, Seoul High Court, 88 Na 23020 ................................................................................. 14/48 1 April 1991, Constitutional Court, 89 Hunma 160......................................................................... 14/42 12 September 1991, Seoul Criminal District Court, 91 No 3825 .................................................... 14/27 2 June 1992, Supreme Court, 91 Ma 540 ............................................................................... 10/20, 14/55 12 February 1993, Supreme Court, 92 Da 40563 ............................................................................. 14/20 12 October 1993, Supreme Court, 91 Hu 1908 ................................................................................ 14/35 27 March 1995, Seoul District Court, 94 Kahab 12987 .................................................................... 14/45 30 July 1996, Supreme Court, 96 Hu 375.......................................................................................... 14/62 20 September 1996, Supreme Court, 96 Hu 665 .............................................................................. 14/62 28 September 1996, Constitutional Court, 92 Hunga 11 and No 93 Hunga 8, 9, 10 ....................................................................................................................... 1/29 7 November 1996, Supreme Court, 96 Ma 365—Samsung Electronics v Sung-Kyu Cho ................................................................................................................................ 14/33

Table of Cases

lix

27 August 1998, Patent Court 98 Heo 4395 ...................................................................................... 14/36 17 September 1998, Patent Court 98 Heo 2160................................................................................ 14/36 12 March 1999, Supreme Court 97 Hu 2163 .................................................................................... 14/36 28 July 2000, Supreme Court, 97 Hu 2200............................................................................. 14/36, 14/37 14 June 2002, Supreme Court, 2000 Hu 2712 .................................................................................. 14/38 11 March 2003, Supreme Court, 2000 Da 48272.............................................................................. 14/57 12 December 2003, Supreme Court, 2002 Hu 2181 ......................................................................... 14/38 26 March 2004, Supreme Court, 2001 Da 72081.............................................................................. 14/57 28 October 2004, Supreme Court, 2000 Da 69194 ........................................................................... 14/58 28 December 2004, Supreme Court, 2006 GRUR Int 617 ............................................................... 13/85 25 June 2009, 2007 Hu 3806 ................................................................................................... 14/36, 14/37 15 October 2009, 2009 Da 46712 ...................................................................................................... 14/37 24 December 2009, 2007 Da 66422 ................................................................................................... 14/37 27 May 2010, 2010 Hu 296 ................................................................................................................ 14/37 Netherlands 3 January 1964, Supreme Court, NJ 1964, 445—Lexington .............................................................. 6/49 16 November 1984, Supreme Court, NJ 1985, 547—Ciba Geigy v Voorbraak .........................................................................................................1/48, 6/77, 6/84 27 November 1987, Supreme Court, NJ 1988, 722—Cloé v Peeters ................................................. 6/75 23 February 1990, Supreme Court, NJ 1990, 664—Hameco v SKF .................................................. 6/75 9 November 1990, Supreme Court, NJ 1991, 169—Dupont v Globe ............................................... 6/80 26 March 1991, Smulders v Tripod Transport Technology BV, Case 91/223 KG, BIE 1993, 56 ....................................................................................................... 19/28 2 December 1991, Alkmaar District Court, BIE 1992, 12 .................................................................. 6/54 18 December 1992, Supreme Court, BIE 1993, 81—ICI v Medicopharma ...................................... 6/69 13 January 1995, Supreme Court, 391 (Ciba Geigy v Oté Optics), 28 IIC 748 (1995)—Contact Lens Liquid ....................................................................................... 6/58 21 April 1995, Supreme Court, 1996 NJ 462—Boehringer, 29 IIC 699 (1998)—Recormon ....................................................................................................... 6/44 23 June 1995, Supreme Court, NJ 1996, 463 or BIE 1995, 33—ARS v Organon ........................................................................................................................ 6/70 9 February 1996, Supreme Court, NJ 1988, 2—Spiro v Flamco ............................................... 6/51, 6/60 12 September 1996, The Hague Appeal Court, IER 1996, 237 ................................................. 1/56, 6/47 21 January 1998, The Hague Appeal Court, IER 1998, 135—Evans v Chiron .....................................................................................................6/29, 6/30, 6/37 23 April 1998, The Hague Appeal Court, 1998 IER 286—Expandable Grafts v Boston Scientific .................................................................................... 2/17, 6/31, 6/32, 6/33 23 April 1998, The Hague Appeal Court, 1999 FSR 352—Palmaz v Boston Scientific BV ............................................................................................ 19/14 23 December 1998, The Hague District Court, Bijblad bij de Industriële Eigendom (BIE) 1999, 39—Chiron v Roche ............................................................... 6/28 30 March 2000, The Hague Appeal Court, BIE 2003, 99—Van Bentum v Kool............................... 6/59 14 April 2000, Supreme Court, NJ 2000, 489—HBS v Danestyle...................................................... 6/75 22 March 2002, Supreme Court, BIE 2003, 100—Van Bentum v Kool............................................. 6/59 3 July 2003, The Hague Appeal Court, BIE 2003, 88—Medinol v Cordis......................................... 6/34 5 August 2004, The Hague District Court, IER 2004, 95—Medinol v Cordis .................................. 6/34 28 October 2003, The Hague Appeal Court, IER 2004, 95—Medinol v Cordis ............................... 6/34 31 October 2003, Supreme Court, BIE 2004, 47—Sara Lee v Intergro ............................................. 6/56 19 December 2003, Supreme Court, BIE 2004, 4–5—Roche v Primus ............................................. 6/79

lx

Table of Cases

5 August 2004, The Hague Appeal Court, IER 2004, 95—Medinol v Cordis ................................... 6/34 19 March 2004, Supreme Court (C02/110HR)—Philips v Postech and Princo ............................. 1/135 13 July 2005, The Hague District Court (02/2947)—Philips v Furness and Princo....................... 1/135 29 September 2006, Supreme Court, NJ 2008, 120—CFS Bakel v Stork Titan ................................ 6/84 17 January 2007, The Hague District Court, BIE 2007, 474—Conor v Angiotech .......................... 6/70 1 June 2007, Arnhem District Court, BIE 2008, 2—Synthon v Astellas Pharma.............................. 6/38 6 August 2007, Den Bosch District Court, LJN BB1252—United Kingdom v Total Backup ................................................................................................................. 6/85 15 February 2008, Supreme Court, NJ 2008, 450—Rockwool .......................................................... 6/62 30 May 2008, Supreme Court, NJ 2008, 556—Erven Endstra v Nieuw Amsterdam ........................................................................................................................... 6/85 16 July 2008, The Hague Appeal Court, BIE 2009, 48—Bettacare v H3 ........................................... 6/38 18 July 2008, Hague District Court (311378/KG ZA 08-617)—Sosecal v Sisvel .............................................................................................................. 1/135 29 September 2009, The Hague District Court, IER 2000, 8—DSM v Novo ................................... 6/21 17 March 2010, The Hague District Court, BIE 2010, 52—Philips v SK Kassetten ............................................................................................................. 6/73 30 March 2010, The Hague Appeal Court, IER 2010, 58—Bébécar v Maxi Miliaan .................................................................................................. 6/60, 6/61 10 March 2011, The Hague District Court, IE Forum 10281—Apple v Samsung ............................................................................................................... 6/73 10 March 2011, The Hague District Court, IE Forum 9463—Sony v LG ......................................... 6/73 14 October 2011, The Hague District Court, IER 2012, 10—Apple v Samsung .............................. 6/73 24 January 2012, The Hague Appeal Court, IE Forum 10819—Apple v Samsung .......................... 6/73 25 May 2012, Supreme Court, IER 2012, 58—AGA v Occlutech ...................................................... 6/59 22 June 2012, Supreme Court, IER 2012, 59; 45 IIC 973 (2014)—Pharmacy v Glaxo/G—Standard ..................................................................................... 6/55 12 July 2012, The Hague Appeal Court, Landelijk Jurisprudentie Nummer (LJN) BR1364—Yellow Page Marketing v Yell ............................................................... 6/34 15 August 2012, Utrecht Court, KG ZA 12-559—Boehringer Ingelheim v Teva .............................................................................................................................. 2/10 23 April 2013, The Hague Appeal Court, IEPT20130423—APE v PTC ........................................... 6/38 14 March 2012, Nos 11-2212, 11-2213, 11-2215 (Samsung Elecs Co v Apple Inc) (Neth) .................................................................................................................... 1/80 April 2014, Supreme Court, BIE 2014, 39—Medinol v Abbott ......................................................... 6/59 20 May 2014, The Hague Appeal Court, LJN 200.096.074/01—Apple v Samsung .......................... 6/34 10 June 2014, The Hague Court of Appeal, BIE 2014, 48—Sandoz v AstraZeneca.......................... 6/62 18 June 2014, The Hague District Court, IE Forum 13955—MBI v Shimano ................................. 6/59 23 July 2014, The Hague District Court, IE Forum 14076—Bayer v Sandoz ................................... 6/59 3 October 2014, Supreme Court, BIE 2014, 62—Leo Pharma v Sandoz .......................................... 6/62 24 October 2014, The Hague President District Court, IEF 14323—ZTE v Vringo ........................ 6/73 13 February 2015, Supreme Court, IE Forum 14652—Leiseplein Beheer v Red Bull ...................... 6/85 Poland 3 February 1970, Supreme Court No 615/69, Gazeta Sądowa i Penitencjarna, (20/1970) ................................................................................................................. 8/90 22 October 1974, Supreme Court, Orzecznictwo Sądu Najwyższego (1975), No 10–11, item 153 ............................................................................................................. 8/98

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lxi

23 June 1977, Supreme Court, Case No V PZP 1/77 .......................................................................... 8/90 24 November 1978, Supreme Court, Case No IV PR 288/78, OSPIKA 1979 ................................................................................................................................... 8/90 12 March 1987, Supreme Court, Case No III PRN 5/86, OSPIKA 1988, issue 3, item 47 ................................................................................................................................. 8/90 14 June 1988, Supreme Court No II CR 367/87, Orzecznictwo Sądów Polskich i Komisji Arbitrażowych (OSPiKA), item 328 (9/1990) ..................................... 8/42 30 September 1994, Supreme Court, No 109/94, Orzecznictwo Sądów Polskich (OSNC), item 18 (1995) ....................................................................................... 8/42 30 January 1998, Cracow District Court, Case No IX GC 536/96 ..................................................... 8/91 February 2001, File No III SA 2339/99, Przegląd Podatkowy (Tax Review), 2001/11/63 ........................................................................................................................................ 8/20 11 July 2001, CA Court (NSA) File No V SA 3738/00, LEX Base No 51274 ..................................... 8/20 23 August 2001, Supreme Court, No N III CZP 43/01, Orzecznictwo Sądów Polskich 2002, issue 5, item 60 ........................................................................................... 8/58 6 September 2001, File No V SA 165/01, LEX Base No 51 270, the CA Court (NSA) ........................................................................................................................ 8/20 5 November 2001, District Administrative Court in Warsaw, File No II SA 3598/03....................................................................................................................... 8/23 20 December 2001, Supreme Court, File No II CKN 1440/00, Lex Base 53 131 ................................................................................................................................ 8/25 21 May 2002, CA Court (NSA) No II SA 4033/01, Wokanda 2002/12/39 ........................................ 8/20 8 February 2006, Central Administrative Court, File No II GSK 54/05 ............................................ 8/23 19 October 2006, Supreme Court, Case No V CSK 125/06 .................................................... 8/23, 8/109 21 November 2008, Supreme Court, No V CSK 2013/08 .................................................................. 8/26 21 November 2008, Supreme Court, Case No V CSK 213/08............................................................ 8/91 26 June 2009, District Administrative Court in Warsaw, File No VI SA/Wa 1707/12............................................................................................................... 8/20 9 September 2009, District Administrative Court in Warsaw, File No VI SA/Wa 132/09................................................................................................................. 8/21 21 March 2012, Central Administrative Court, No II GSK 300/11 .......................................... 8/56, 8/92 26.04.2013, Appeal Court Danzig ....................................................................................................... 8/20 20 June 2006, Central Administrative Court, File No 348/12 ............................................................ 8/44 23 October 2013, Supreme Court, Case No IV CSK 92/13 .............................................................. 8/106 13 May 2014, Supreme Court, File No I PZ 7/14 ............................................................................. 8/105 Sweden 14 June 2000, Högsta Domstolen, Sweden, 2001 GRUR Int 178—Flootek ...................................... 2/21 Switzerland 2 March 1971, Federal Supreme Court, BGE 97 II 93 ........................................................................ 9/62 16 March 1971, Federal Supreme Court, BGE 97 II 169 .................................................................... 9/64 7 June 1974, Federal Supreme Court, BGE 100 II 237 ....................................................................... 9/53 7 June 1989, Federal Supreme Court, BGE 115 II 279 .............................................................. 9/53, 9/54 16 November 1989, Federal Supreme Court, BGE 115 II 490 ........................................................... 9/58 18 January 1990, Federal Supreme Court, SMI 1991, 198—Doxycyclin........................................... 9/57 24 January 1990, Federal Supreme Court, BGE 116 II 196 ................................................................ 9/22 6 June 1990, Federal Supreme Court, BGE 116 II 357 ....................................................................... 9/60 10 July 1990, Zurich Commercial Court, SMI 1992, 253—PR—Lagersystem ................................ 9/57

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Table of Cases

3 December 1991, Zurich Commercial Court, SMI 1992, 303—Werkzeughalterspindeln II .................................................................................................... 9/55 12 February 1996, Federal Supreme Court, BGE 122 III 81 .............................................................. 9/53 23 October 1996, Federal Supreme Court, BGE 122 III 469—Chanel.............................................. 9/71 20 July 1998, Federal Court, BGE 124 III 321 ..................................................................................... 9/71 9 December 1998, Federal Supreme Court, BGE 125 III 29 .............................................................. 9/49 2 August 1999, Federal Supreme Court, BGE 125 III 346 .................................................................. 9/32 7 December 1999, Federal Supreme Court, BGE 125 III 129 ............................................................ 9/71 17 July 2000, Federal Supreme Court, BGE 126 III 382 ..................................................................... 9/73 17 August 2001, Federal Supreme Court, 2001, 749—Palettenförderer............................................ 9/58 21 February 2003, Federal Supreme Court, BGE 129 III 295 ............................................................ 9/32 3 July 2003, Federal Supreme Court, BGE 129 III 422 ....................................................................... 9/64 21 July 2003, Federal Supreme Court, BGE 129 III 588 ..................................................................... 9/24 4 October 2004, Federal Supreme Court, BGE 131 III 76.................................................................. 9/29 8 October 2004, Federal Supreme Court, BGE 131 III 70.................................................................. 9/62 19 December 2005, Federal Supreme Court, BGE 132 III 379 .......................................................... 9/63 13 October 2006, Zurich Commercial Court, 2006, 854.................................................................... 9/34 23 October 2006, Federal Supreme Court, BGE 132 III 778.............................................................. 9/32 3 March 2008, Federal Supreme Court, BGE 134 III 306 .................................................................. 9/64 10 June 2008, Federal Supreme Court, 2008, 820—Radiatoren ........................................................ 9/74 4 March 2011, Federal Supreme Court, OJ EPO 2011, 452 ............................................................... 1/73 2 February 2012, Federal Patent Court, S2012_003 ........................................................................... 9/39 21 May 2013, Federal Patent Court, O2012_039 ................................................................................ 9/44 2 February 2012, Federal Patent Court, S2012_003 ........................................................................... 9/62 13 June 2012, Federal Patent Court, S2012_005 ........................................................................ 9/38, 9/39 14 June 2012, Federal Patent Court, S2012_007 ................................................................................. 9/40 24 August 2012, Federal Patent Court, O2012_004............................................................................ 9/62 21 November 2012, Federal Patent Court, S2012_011 ....................................................................... 9/39 13 February 2013, Federal Patent Court, O2012_036 ........................................................................ 9/65 21 March 2013, Federal Patent Court, S2013_001 ............................................................................. 9/57 14 August 2013, Federal Patent Court, O2013_007............................................................................ 9/65 27 August 2013, Federal Supreme Court, BGE 139 III 433 .................................................................. 9/8 30 August 2013, Federal Patent Court, S2013_008.................................................................... 9/40, 9/41 19 March 2014, Federal Patent Court, O2013_007 ..........................................................9/63, 9/64, 9/65 11 July 2014, Federal Patent Court, S2013_011 .................................................................................. 9/29 6 October 2014, Federal Patent Court, S2014_006.................................................................... 9/38, 9/60 Taiwan 26 July 2007, Supreme Court, 2007 Tai-Shan-Tze No 1658 ............................................................. 12/26 28 October 2008, IP Court Civil decision, 2008-Min-Zhuan-Su-5................................................. 12/69 4 November 2008, IP Court Civil Decision, 2008 Ming-Zhuan-Su-Tze No 15 .............................. 12/23 24 February 2009, IP Court Civil Decision, 2008 Ming-Zhuan-Su-Tze No 55 .............................. 12/23 30 November 2010, IP Court Civil Decision, 2010 Ming-Zhuan-Su-Tze No 90 ............................ 12/94 2 December 2010, IP Court, Civil Decision, 2010 Ming-Gunn-Shan-Tze No 3 ............................. 12/96 24 May 2011, IP Court Civil Decision, 2010 Ming-Zhuan-Su-Tze No 166 .................................... 12/23 Turkey 4 October 2007, 11th Chamber of Supreme Court, decision No 2006/3973, 2007/12431 ..................................................................................................................................... 10/32

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11 November 2008, 11th Chamber of Supreme Court, decision No 2007/9478, 2008/12645 ............................................................................................................ 10/31 1 June 2009, 11th Chamber of Supreme Court, decision No 2008/2506, 2009/6654 ....................................................................................................................................... 10/31 4 March 2013, 11th Chamber of Supreme Court, decision No 2012/3290, 2013/3591 ....................................................................................................................................... 10/22 27 March 2013, Civil General Assembly of Supreme Court, decision No 2013/11-209, 2013/399 .......................................................................................................... 10/108 United Kingdom Actavis Group HF v Eli Lilly and Co, English High Court (Patents Court), 27 November 2012, (2012) EWHC 3316 (Pat) ...................................................................... 2/12, 19/3 Actavis Group HF v Eli Lilly & Co, Court of Appeal, 21 May 2013, (2013) EWCA Civ 517 ..................................................................................................................... 3/27 Actavis Group PTC EHF v Pharmacia LLC, Patents Court, 11 July 2014 (2014) EWHC 2265 (Pat) and 24 July 2014 (2014) EWHC 2611 (Pat) ........................................ 2/89 Actavis UK Limited v Eli Lilly & Co, English High Court of Justice, 15 May 2014, (2014) EWHC 1511 (Pat) ...................................................................3/26, 19/17, 19/42 American Cyanamid v Ethicon, House of Lords, 5 February 1975, (1975) AC 396 .................................................................................................................................. 3/34 Anton Piller KG v Manufacturing Process Ltd & Others, Court of Appeal, 8 December 1975 (1975) EWCA Civ 12 = 1976 RPC 719 = [1976] 1 All ER 782 ..................................................................................................................1/35, 3/42, 15/60 Baldock v Addison, English High Court, 22 June 1994, [1995] 3 All ER 437 ........................................................................................................................ 1/105 Betts v Wilmott (1870–71) LR 6 Ch App 239 ................................................................................... 15/98 British Celanese Ltd v Courtaulds Ltd (52) RPC 171 ...................................................................... 15/78 Brooks v Steele and Currie (14) RPC 46 ........................................................................................... 15/77 Cartier International AG and others v British Sky Broadcasting Limited and others, Chancery Division, 17 October 2014 (2014) EWHC 3354 (Ch) ............................... 3/47 Catnic Components Ltd v Hill & Smith Ltd, English High Court, 16 March 1983, [1983] FSR 512 .................................................................................................... 1/108 Catnic Components Ltd v Hill & Smith Ltd, House of Lords (1982) RPC 183................................ 3/70 Celanese International v BP Chemicals, UK Patents Court [1999] RPC 203 ................................. 1/111 Coin Controls Ltd v Suzo International, English High Court of Justice, 26 March 1997, (1997) 3 All ER 45 ................................................................................................. 19/9 Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] UKHL 49, [2008] RPC 28 ................................................................................................................ 1/72 European Central Bank v DSS[2008] EWCA Civ 192, Court of Appeal, decision of 19 August 2008.............................................................................................................. 1/61 Fresenius Kabi Deutschland GmbH v Carefusion 303 Inc, 8 November 2011, (2011) EWCA Civ 1288 .................................................................................... 3/52 Fort Dodge Animal Health Ltd v Akzo Nobel NV, English Court of Appeal, 20 October 1997, (1998) FSR 222, 29 IIC 927 ..............................................2/9, 6/32, 19/9 General Tyre v Firestone, English House of Lords, 16 April 1975, [1976] RPC 197 ................................................................................................................... 1/104, 1/110 Gerber Garment Technology Inc v Lectra Systems Ltd, Patents Court, 20 March 1995, [1995] RPC 383 ................................................................................................... 1/108 Gillette Safety Razor v Anglo American Trading Co 1913 (30) RPC 465 ....................................... 15/97 Glaxo Group Ltd v Genentech Inc, Court of Appeal, 31 January 2008 (2008) EWCA Civ 23 ....................................................................................................................... 3/86

lxiv

Table of Cases

Grimme Maschinenfabrik GmbH & Co KG v Scott, English Court of Appeal (Civil Division), 15 October 2010, (2010) EWCA Civ 1110 ....................................... 19/42 Halliburton Energy Services, Inc v Smith International (North Sea) Limited, 24 November 2006, (2006) EWCA Civ 1599 ................................................................... 3/11 Hollister Inc v Medik Ostomy Supplies Ltd, [2012] EWCA Civ 1419 (Ct App) (Eng) ...................................................................................................................... 1/111 HTC Europe Co Ltd v Apple Inc, English High Court (Patents Court), 19 September 2011, (2011) EWHC 2396 (Pat) ............................................................................ 19/42 HTC Corporation v Nokia Corporation, Patents Court, 30 October 2013 (2013) EWHC 3247 (Pat) ....................................................................................................... 3/84 Ipcom GmbH & Co KG v HTC Europe Co Limited, 21 November 2013, (2013) EWCA Civ 1496 ................................................................................................................... 3/86 Island Records Limited v Tring International Limited and Another, Chancery Division, 12 April 1995, (1995) EWHC 8 (Ch) .................................................. 1/106, 3/76 Kennametal Inc v Pramet Tools SRO and Another, Patents Court, 1 April 2014, (2014) EWHC 1438 (Pat) .......................................................................................... 3/13 Kirin-Amgen Inc & Ors v Hoechst Marion Roussel Ltd & Ors, (2004) UKHL 46 ................................................................................................................... 3/70, 10/96 Mareva Compania Naviera SA v International Bulkcarriers, Court of Appeal, 23 June 1975 (1975) 2 Lloyd’s Rep 509, (1980) 1 All ER 213 ............................ 3/39 Menashe Business Mercantile Ltd v William Hill Organization Ltd, English Court of Appeal (Civil Division), 28 November 2002, (2002) EWCA Civ 1702 ................................................................................................................. 19/31 Motion UK Ltd v Inpro Licensing SARL, 16 June 2005, (2005) EWHC 1292 (Pat) .............................................................................................................. 19/42 Nampak Plastics Europe Limited v Alpla UK Limited, Patents Court, 3 July 2014 (2014) EWHC 2196 (Pat) ............................................................................................. 3/82 Nampak Plastics Europe Limited v Alpla UK Limited, Court of Appeal, 9 October 2014 (2014) EWCA Civ 1293 ......................................................................................... 3/82 Norwich Pharmacal v Commissioners of Customs and Excise, House of Lords, 26 June 1973, (1973) UKHL 6 ............................................................................. 3/38 Novartis AG v Hospira UK Limited, Court of Appeal, 22 May 2013, (2013) EWCA Civ 583 ..................................................................................................................... 3/37 Oystertec plc v Edward Evans Barker, Patents Court, 14 November 2002, (2002) EWHC 2324 (Pat) ................................................................................................................ 3/14 Plastus Kreativ AB v Minnesota Mining and Manufacturing Co, English High Court, 1 January 1995, (1995) RPC 438 .................................................................. 19/3 Research in Motion UK Ltd v Visto Corp, English Court of Appeal (Civil Division), 6 March 2008, (2008) EWCA Civ 153 ............................................................... 19/34 Rotocrop International Ltd v Genbourne Ltd, (1982) FSR 241 ...................................................... 19/29 Roussel Uclaf SA v Hockley International Ltd, Patents Court (1996) RPC 441 ................................................................................................................................ 3/84 SanDisk v Philips et al, High Court of Justice, 27 February 2007, (2007) EWHC 332 (Ch) ..........................................................................................20/24, 20/65, 20/69 Samsung Electronics (UK) Ltd v Apple Inc, Court of Appeal, 18 October 2012, (2012) EWCA Civ 1339 ...................................................................................... 3/82 Smith & Nephew plc and Another v Convatec Technologies Inc, Patents Court, 12 December 2013, (2013) EWHC 3955 (Pat) ...................................................... 3/73 Smithkline Beecham plc and Another v Apotex Europe Limited and Others, Court of Appeal, 29 November 2004, (2004) EWCA Civ 1568 ........................................ 3/62

Table of Cases

lxv

Satyam Computer Services Ltd v Upaid Systems Ltd, English Court of Appeal (Civil Division), 9 May 2008, (2008) EWHC 31 (Comm)................................. 19/3 Steers v Rogers, (1893) AC 232.......................................................................................................... 13/24 SmithKline Beecham v Generics , English Patents Court, 23 October 2001, Patent World, March 2002, 8.............................................................................. 1/60 Twentieth Century Fox Film Corp v British Telecommunications plc, Chancery Division, 28 July 2011, (2011) EWHC 1981 (Ch) ......................................................... 3/47 UK House of Lords, Kuddus v Chief Constable of Leicestershire Constabulary, [2001] UKHL 29 .................................................................................................... 1/112 Ultraframe (UK) Ltd v Eurocell Bldg Plastics Ltd, [2006] EWHC (Pat) 1344 (Pats Ct) (Eng)................................................................................................ 1/108 United Horse-Shoe & Nail Co v John Stewart & Co, (1888) LR 13 App Cas 401 ............................................................................................................. 1/109 United Wire Ltd v Screen Repair Services (Scotland) Ltd, House of lords, 20 July 2000, (2001) RPC 24 ................................................................................. 3/84 Universal Thermosensors v Hibben, Court of Appeal, 8 July 1992, (1992) 1 WLR 840 ................................................................................................................... 3/45, 3/69 Vincent v Cole 1828 M&M 258 ......................................................................................................... 15/81 Virgin Atlantic v Premium Aircraft, Court of Appeal, 21 December 2009, (2009) EWCA Civ 1513 ................................................................................................................... 3/74 Virgin Atlantic Airways Ltd v Delta Airways, Inc, English High Court of Justice, 30 November 2010, (2010) EWHC 3094 (Pat)................................................. 19/29, 19/30 Virgin Atlantic Airways Ltd v Delta Air Lines Inc, English Court of Appeal, 23 February 2011, (2011) EWCA Civ 162 ....................................................................... 19/30 Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd, UK Supreme Court, 3 July 2013, (2013) UKSC 46 ........................................................................... 1/22, 3/79, 19/21, 19/30 Warner-Lambert Company, LLC v Actavis Group PTC EHF and others, Patents Court, 2 March 2015, (2015) EWHC 485 (Pat) ................................................................ 3/48 Windsurfing International v Tabur Marine 1985 RPC 59 ............................................................. 15/109 United States 3M Company v Asia Sun (Taiwan), Inc, case No 2:04-cv-00417-TJW, ED Tex ............................................................................................................................................ 19/49 AB Dick Co v Burroughs Corp, 713 F.2d 700 (Fed Cir1983)........................................................... 19/62 Advanced Cardiovascular Systems Inc v C R Baird Inc, 25 U.S.P.Q.2d 1354 (ND Cal 1992) ............................................................................................... 16/81 Akamai Techs, Inc v Limelight Networks, 692 F.3d 1301 (Fed Cir 2012) (en banc) ......................................................................................................................... 16/138, 16/139 Alexsam, Inc v IDT Corp, 715 F.3d 1336 (Fed Cir 2013) ................................................................. 16/96 Alice Corp v CLS Bank Int’l, 134 S.Ct. 2347, 573 U.S. ___ (2014) ..................................... 16/16, 16/164 American Medical Systems Inc v Medical Engineering Corporation, 4 October 1993, 6 F.3d 1523 (Fed Cir 1993) ................................................................................... 1/89 Apple Inc v Motorola, Inc, 757 F.3d 1286 (Fed Cir 2014) ................................................................ 19/41 Aro Manufacturing Co, Inc v Convertible Top Replacement Co, Inc, 365 U.S. 336 (1961)................................................................................................................. 16/54 Arris Group, Inc v British Telecomm PLC, 639 F.3d 1368 (Fed Cir 2011) ...................................... 16/67 Arrowhead Indus Water Inc v Ecolochem Inc, 846 F.2d 731 (Fed Cir 1988) .................................. 16/66 Ashcroft v Iqbal, 556 U.S. 662 (2009) ............................................................................................... 16/72 Atari, Inc v JS&A Group, Inc, 747 F.2d 1422 (Fed Cir 1984) ........................................................... 16/15

lxvi

Table of Cases

Baker-Bauman v Walker, Not Reported in F.Supp.2d 2007 WL 1026436 (SD Ohio 2007) ................................................................................................................................ 19/7 Bard Peripheral Vascular, Inc v WL Gore & Assocs, Inc, 682 F.3d 1003 (Fed Cir 2012) .............................................................................................................................. 16/145 Bear Creek Techs, Inc, In re, 858 F. Supp. 2d 1375 (MDL 2012) ..................................................... 16/64 Bell Atlantic Corp v Twombly, 550 U.S. 544 (2007) ......................................................................... 16/72 Beverly Hills Fan Co v Royal Sovereign Corp, 21 F.3d 1558 (Fed Cir 1994) ................................... 16/42 BIC Leisure Products v Windsurfing International, 1 F.3d 1214 (Fed Cir 1993) .................................................................................................................................. 1/87 Bilski v Kappos, 561 U.S. 593 (2010).................................................................................... 16/16, 16/164 BMC Res, Inc v Paymentech, LP, 498 F.3d 1373 (Fed Cir 2007) .................................................... 16/138 CANVS Corporation v US, 2014 WL 4792943 (Fed Cl 2014) ......................................................... 19/10 Cardiac Pacemakers, Inc v St Jude Medical, Inc, 576 F.3d 1348 (Fed Cir 2009) .................. 19/21, 19/32 Carella v Starlight Archery & ProLine Co, 804 F.2d 135 (Fed Cir 1986) ....................................... 16/151 Caterpillar Tractor Co v Berco, SPA, 714 F.2d 1110 (Fed Cir 1983) ................................................ 19/41 Centillion Data Sys, LLC v Qwest Commc’ns Int’l, Inc, 631 F.3d 1279 (Fed Cir 2011) .............................................................................................................................. 16/138 Certain Airless Paint Spray Pumps and Components Thereof, US ITC, US ITC, Pub 1199, Comm’n Op 18, Inv No 337-TA-90 (Nov 1981), 1981 LEXIS 167 at *30 ................................................................................................................. 20/124 Certain Erasable Programmable Read-Only Memories, Components (…), US ITC, US ITC, Pu. 2196, Inv No 337-TA-276 at 125 (May 1989) ........................................................................................................................ 20/122 Chalumeau Power Sys LLC v Alcatel-Lucent, No 11-1175 (D Del 12 September 2014) ......................................................................................................... 16/180 Commil USA LLC v Cisco Sys, Inc, 720 F.3d 1361 (Fed Cir 2013), cert granted, 190 L. Ed. 2d 474 (2014) .......................................................................................... 16/60 Crown Packaging Tech, Inc v Rexam Beverage Can Co, 559 F.3d 1308, 1316–17 (Fed Cir 2009) ................................................................................................................... 1/89 Crystal Semiconductor Corp v Tritech Microelectronics Int’l, Inc, 246 F.3d 1336 (Fed Cir 2001) ................................................................................................. 19/22 Cybor Corp v FAS Tech Inc, 138 F.3d 1448 (Fed Cir 1998) ........................................................... 16/168 Cuno Inc v Pall Corp, 729 F.Supp. 234 (EDNY 1989) ...................................................................... 19/42 Daubert v Merrell Dow Pharmaceuticals, Inc, 509 U.S. 579 (1993).............................................. 16/125 Decca Ltd v US, 210 Ct Cl 546 (Ct Cl 1976) ..................................................................................... 19/31 Ditto, Inc v Minnesota Min & Mfg Co, 336 F.2d 67 (8th Cir 1964) ................................................ 19/41 DSU Medical Corp v JMS Co, Ltd, 471 F.3d 1293 (Fed Cir 2006)................................................. 16/142 Dubost v United States PTO, 777 F.2d 1561 (Fed Cir 1985) ............................................................ 16/15 eBay Inc v MercExchange, LLC, 547 U.S. 388 (2006) .................................................... 1/80, 9/61, 16/16, 16/148, 20/111 Enzo APA & Sons, Inc v Geapag AG, 134 F.3d 1090 (Fed Cir 1998) ............................................... 16/49 ePlus, Inc v Lawson Software, Inc, 760 F.3d 1350 (Fed Cir 2014) ................................................... 19/13 Ericsson, Inc v D-Link Sys, Inc, Nos 2013-1625, -1631, -1632, -1633 (Fed Cir Dec 4, 2014) ..................................................................................................................... 16/60 Exergen Corp v Wal-Mart Stores, Inc, 575 F.3d 1312 (Fed Cir 2009) ............................................. 16/74 Fairchild Semiconductor Corp v Third Dimension (3D) Semiconductor, Inc, D Me, 2:08-cv-00158-DBH ......................................................................... 19/17 Federal Circuit, 545 F.3d 1340 (Fed Cir 2008) ................................................................................ 20/122 Federal Supreme Court, 6 May 2010, 42 IIC 367—Machine Unit .................................................... 1/73 Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co, Ltd, 234 F.3d 558 (Fed Cir 1999), remanded and vacated, 535 U.S. 722 (2002) .................................................... 16/134

Table of Cases

lxvii

Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co, Ltd, 535 U.S. 722 (2002) ........................................................................................................... 10/95, 16/135 Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co, Ltd, 344 F.3d 1359 (Fed Cir 2003) ...................................................................................................... 16/136 Fonar Corp v General Electric, 107 F.3d 1543 (Fed Cir 1997)........................................................... 1/87 Frazier Indus Co, Inc v Advance Storage Prods, 33 U.S.P.Q.2d 1702 (CD Cal 1994) ............................................................................................... 16/82 Fromson v Western Litho Plate & Supply Co, 853 F.2d 1568 (Fed Cir 1988) ................................................................................................................................ 16/84 FTC v Actavis, Inc, 570 U.S. ___ (2013).............................................................................................. 1/23 Genentech Inc v Eli Lilly & Co, 998 F.2d 931 (Fed Cir 1993) .......................................................... 16/69 Gerber Garment Tech, Inc v Lectra Systems, Inc, 916 F.2d 683 (Fed Cir 1990) ................................................................................................................. 16/167, 16/168 Gillette Co v Energizer Holdings, Inc, 405 F.3d 1367, 1374 (Fed Cir 2005) ................................................................................................................................ 19/41 Global-Tech Appliances, Inc v SEB S, 131 S.Ct. 2060, 563 U.S. ___ (2011) .................................. 16/142 Gottschalk v Benson, 409 U.S. 63 (1972) ........................................................................................ 16/164 Graver Tank & Mfg Co v Linde Air Prods Co, 339 U.S. 605 (1950) ................................................ 10/95 Gunn v Minton, 133 S.Ct. 1059, 1065, 568 U.S. ___ (2013) ............................................................ 16/15 Gyromat Corp v Champion Spark Plug Co, 735 F.2d 549 (Fed Cir 1984).................................... 16/151 Halo Electronics, Inc v Pulse Electronics, Inc 769 F.3d 1371 (Fed Cir 2014)....................... 19/23, 19/27 Halo Elecs, Inc v Pulse Elecs, Inc, Nos 2013–1472, 2013–1656, 2015 WL 1283767 at *2 (Fed Cir 23 March 2015) ......................................................................... 1/83 Highmark Inc v Allcare Health Management System Inc, 134 S.Ct. 1744, 572 U.S. ___ (2014) ................................................................................. 1/122, 16/179 Hilton Davis Chemical Co v Warner-Jenkinson Co, Inc, 62 F.2d 1512 (Fed Cir 1995) ........................................................................................................ 16/132 Home Gambling Network Inc v Piche, No 2:05-CV-610 (D Nev 22 May 2014) .................................................................................................................. 16/180 Honeywell Int’l Inc v Acer America Corp, 655 F.Supp.2d 650 (ED Tex 2009) ................................................................................................................................ 19/22 Illinois Tool Works v Independent Ink, Inc, 547 U.S. 28, 44 (2006).................................................... 1/5 Infrastructure Defense Technologies, LLC v US, 81 Fed.Cl. 375, 400 (Fed Cl 2008)............................................................................................................................. 19/7 Innogenetics, NV v Abbott Labs, 512 F.3d 1363 (Fed Cir 2008) ..................................................... 16/93 In re Innovatio IP Ventures, LLC Patent Litig, Case No 11 C 9308, 2013 WL 5593609 at *20, 29 (ND Ill 3 October 2013)................................................................... 1/85 In re Seagate Tech, LLC, 497 F.3d 1360, 1371 (Fed Cir 2007) (en banc) ........................................... 1/85 Int’l Rectifier Corp v Samsung Electronics Co, Ltd, 361 F.3d 1355 (Fed Cir 2004) ................................................................................................................................ 19/34 Intel Corp v Advanced Micro devices, Inc, 542 U.S. 241 (2004) ....................................................... 2/29 Jan K Voda v Cordis Corporation, 476 F.3d 887 (Fed Cir 2007) .............................................. 19/4, 19/7 Johns Hopkins University v CellPro, Inc, 152 F.3d 1342 (Fed Cir 1998) ........................................ 19/34 Kahn v General Motors Corp, 889 F.2d 1078 (Fed Cir 1989) .......................................................... 16/69 Katz v Lear Siegler, Inc, 909 F.2d 1459 (Fed Cir 1990) ..................................................................... 16/56 Kilopass Technology Inc v Sidense Corp, No C10-02066 (ND Cal 12 August 2014) ............................................................................................................ 16/180 King Instruments Corp v Otari Corp,767 F.2d 853 (Fed Cir 1985) .................................................. 1/87 KSR Int’l Co v Teleflex, Inc, 550 U.S. 398 (2007) ............................................. 16/9, 16/83, 16/84, 16/85 LaserDynamics, Inc v Quanta Computer, Inc, 694 F.3d 51 (Fed Cir 2012) ..................................................................................................................... 1/88, 16/154

lxviii

Table of Cases

Le Roy v Tatham, 14 How 156 (1853) ............................................................................................. 16/164 Limelight Networks v Akamai Techs, Inc, 134 S.Ct. 2111, 572 U.S. ___ (2014) ................................................................................... 16/16, 16/59, 16/141, 19/22 Litecubes, LLC v Northern Light Products, Inc, 523 F.3d 1353, 1369 (Fed Cir 2008) ............................................................................................................ 19/27, 19/34 Lucent Information Mgmt, Inc v Lucent Techs, Inc, 186 F.3d 311 (3d Cir 1999) ............................................................................................................ 16/84 Lucent Techs, Inc v Gateway, Inc, 580 F.3d 1301 (Fed Cir 2009) ................................................... 16/156 Mannington Mills, Inc v Congoleum Corp, 592 F.2d 1287 (3d Cir 1979) ........................................ 19/4 Markman v Westview Instr, Inc, 52 F.3d 967 (Fed Cir 1995) .................................................................................................................. 16/98, 16/128, 16/166, 20/135 Mars, Inc v Kabushiki-Kaisha Nippon Conlox, 24 F.3d 1368 (Fed Cir 1994) .................................................................................................................................. 16/8 Mas-Hamilton Group v LaGard, Inc, 156 F.3d 1206 (Fed Cir 1998) .............................................. 16/46 Mayo Collaborative Serv v Prometheus Labs, Inc, 566 U.S. 10 (2012) ........................................... 16/16 MedImmune Inc v Genentech Inc, 549 U.S. 118 (2007)....................................................... 10/13, 16/67 Medtronic, Inc v Daig Corp, 789 F.2d 903 (Fed Cir 1986)............................................................... 19/41 MEMC Electronic Materials, Inc v Mitsubishi Materials Silicon Corp, 420 F.3d 1369 (Fed Cir 2005) ........................................................................................................ 19/27 Merck & Co, Inc v Teva Pharmaceuticals USA, Inc, 288 F.Supp.2d 601 (D Del 2003) .................................................................................................................................. 19/41 Merial Ltd v Cipla Ltd, 681 F.3d 1283 (Fed Cir 2012) ...................................................................... 19/34 Microsoft Corp v AT&T Corp, 550 U.S. 437 (2007)......................................................................... 16/16 Microsoft Corp v i4i Limited Partnership, 131 S.Ct. 2238, 564 U.S. ___ (2011) ..................................................................................................................... 16/122 Microsoft Corp v Motorola, Inc, 696 F.3d 872 (9th Cir 2012) ........................................................ 19/39 Mikohn Gaming Corp v Acres Gaming, Inc, 165 F.3d 891 (Fed Cir 1998) ................................... 16/182 Miles Labs, Inc v Shandon Inc, 997 F.2d 870 (Fed Cir 1993)......................................................... 16/167 Muniauction, Inc v Thomson Corp, 532 F.3d 1318 (Fed Cir 2008) .............................................. 16/138 Northlake Marketing & Supply Inc v Glaverbel SA, 986 F.Supp. 471 (ND Ill1997) ................................................................................................................................... 19/41 NTP, Inc v Research in Motion Ltd, 418 F.3d 1282 (Fed Cir 2005) ................................................. 19/31 O2 Micro Int’l Ltd v Beyond Innovation Technology Co, Ltd, 521 F.3d 1351 (Fed Cir 2008) ........................................................................................................ 19/34 Oneac Corp v Raychem Corp, 20 F.Supp.2d 1233 (ND Ill 1998) .................................................... 19/41 Octane Fitness, LLC v ICON Health & Fitness, Inc, 134 S.Ct. 1749, 572 U.S. ___ (2014) ................................................................................. 1/122, 16/179 Ortho Pharm Corp v Genetics Inst, Inc, 52 F.3d 1026 (Fed Cir 1995)................................. 16/48, 16/50 Outside the Box Innovations v Travel Caddy, Inc, 695 F.3d 1285 (Fed Cir 2012) ...................................................................................................... 16/109 Palumbo v Don-Joy Co, 762 F.2d 969 (Fed Cir 1985) .................................................................... 16/106 Panduit Corp v Stahlin Brothers Fiberworks, 575 F.2d 1152 (6th Cir 1978) .................................... 1/86 Paragon Podiatry Lab, Inc v KLM Labs, Inc, 984 F.2d 1182 (Fed Cir 1993) ................................. 16/166 Parker v Flook, 437 U.S. 584 (1978) ................................................................................................ 16/164 Parker v Prudential Ins Co of Am, 900 F.2d 772 (4th Cir 1990)...................................................... 16/84 Pfizer, Inc v Ranbaxy Laboratories Ltd, 457 F.3d 1284 (Fed Cir 2006) ................................................................................................................................ 19/41 Phillips v AWH Corp, 415 F.3d 1303 (Fed Cir 2005) (en banc) ...........................16/99, 16/100, 16/101 Prima Tek II LLC v Leong, case No 3 04-cv-00214-MJR-CJP, SD Ill............................................... 19/34

Table of Cases

lxix

Procter & Gamble Co v Paragon Trade Brands, Inc, 917 F. Supp. 305 (D Del 1995) ....................................................................................................... 16/46 Quanta Computer, Inc v LG Elecs, Inc, 553 U.S. 617 (2008) ........................................................... 16/16 Read Corporation v Portec, 10 July 1992, 970 F.2d 816 (Fed Cir 1992) ............................................ 1/83 Red Wing Shoe Co v Hockerson-Halberstadt, Inc, 148 F.3d 1355 (Fed Cir 1998) ......................... 16/42 Richardson v Suzuki Motor Co, 868 F.2d 1226 (Fed Cir 1989) ..................................................... 16/148 Rite-Hite Corp v Kelley Co, 56 F.3d 1538 (Fed Cir 1995) ............................................1/87, 13/66, 16/50 SanDisk Corp v STMicroelectronics Inc, 480 F.3d 1372 (Fed Cir 2007)......................................... 16/67 Schwartzkopf Dev Corp v Ti-Coating, Inc, 800 F.2d 240 (Fed Cir 1986) ....................................... 16/15 Seagate Tech, LLC, In re, 497 F.3d 1360 (Fed Cir 2007) (en banc) ..................................... 16/85, 16/145 Spalding Sports Worldwide Inc, In re, 203 F.3d 800 (Fed Cir 2000) ............................................... 16/81 Spine Solutions, Inc v Medtronic Sofamor Danek USA, Inc, 620 F.3d 1305 (Fed Cir 2010) ...................................................................................................... 16/145 SRI Int’l v Matsushita Elec Corp of Am, 775 F.2d 1107 (Fed Cir 1985) (en banc)....................... 16/113 State Indus v Mor-Flo Indus, 883 F.2d 1573 (Fed Cir 1989).............................................................. 1/87 STC.UNM v Intel Corp, 767 F.3d 1351 (Fed Cir 2014).................................................................... 16/48 Teva Pharms USA Inc v Novartis Pharms Corp, 482 F.3d 1330 (Fed Cir 2007) ............................. 16/68 Textile Prods, Inc v Mead Corp, 134 F.3d 1481 (Fed Cir 1998) ....................................................... 16/49 The Laitram Corp v Deepsouth Packing Co, 406 U.S. 518 (1972) .................................................. 19/21 Therasense, Inc v Becton, Dickinson & Co, 649 F.3d 1276 (Fed Cir 2011) (en banc) .................................................................................................. 16/74, 16/163 TI Group Automotive Systems (North America), Inc v VDO North America, LLC, 375 F.3d 1126 (Fed Cir 2004) .................................................................... 19/41 Timely Products Corp v Arron, 523 F.2d 288 (2d Cir 1975) ........................................................... 19/41 Titan Tire Corp v Case New Holland, Inc, 566 F.3d 1372, 1375–76 (Fed Cir 2009) (quoting Winter v Nat Res Def Council, Inc, 129 S.Ct. 365, 374 (2008)) ............................................................................................................... 1/52 Transocean Offshore Deepwater Drilling, Inc v Maersk Contractors USA, Inc, 617 F.3d 1296 (Fed Cir 2010) ................................................................................................. 19/23 Underhill v Hernandez, 168 U.S. 250 (1897) ...................................................................................... 19/4 Underwater Devices Inc v Morrison-Knudsen Co, 717 F.2d 1380 (Fed Cir 1983) ................................................................................................................................ 16/84 Uniloc USA, Inc v Microsoft Corp, 632 F.3d 1292 (Fed Cir 2011) ..........................1/87, 16/153, 16/154 VirnetX, Inc v Cisco Systems, Inc, No 2013-1489, slip op (Fed Cir 16 September 2014) ...................................................................................................... 16/156 VirtualAgility Inc v Salesforce.com, 759 F.3d 1307 (Fed Cir 2014) ................................................. 19/10 Vitronics Corp v Conceptronic, Inc, 90 F.3d 1576 (Fed Cir 1996) ................................................ 16/102 Warner-Jenkinson Co, Inc v Hilton Davis Chemical Co, 520 U.S. 17, 28–29 (1997) ............................................................................................... 16/132, 16/167 Wilson Sporting Goods Co v David Geoffrey & Assoc, 904 F.2d 677 (Fed Cir 1990) ........................................................................................................ 16/133 Yarway Corp v Eur-Control USA, Inc, 775 F.2d 268 (Fed Cir 1985) ............................................... 16/15 Zenith Electronics Corp v Exzec, Inc, 182 F.3d 1340 (Fed Cir 1999) ............................................ 16/182 Zubulake v UBS Warburg, LLC, 382 F. Supp. 2d 536 (SDNY 2005)..................................... 16/88, 16/96 WTO 20 March 2001, World Trade Dispute Settlement, EC—Enforcement of Intellectual Property Rights for Motion Pictures and Television Programmes, WT//DS124/2 ............................................................................................ 1/1

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Table of Cases

2 January 2002, US—Section 211 Appropriation Act (2002), WT//DS 176/AB/R............................. 1/1 11 December 2006, EC—Selected Customs Matters (2006), WT/DS315/R ..................................... 1/29 26 January 2009, World Trade Dispute Settlement, China-Intellectual Property Rights (2009), WT/DS362/R.............................................................................................. 1/1 11 May 2010, World Trade Dispute Settlement, India v the European Union and the Netherlands (WT/DS408/1)—European Union and a Member State—Seizure of Generic Drugs in Transit.................................................................. 6/22 12 May 2010, World Trade Dispute Settlement, Brazil v the European Union and the Netherlands (WT/DS409/1)—European Union and a Member State—Seizure of Generic Drugs in Transit.................................................................. 6/22

1 Comparative Overview and the TRIPS Enforcement Provisions CHRISTOPHER HEATH AND THOMAS F COTTER

A. Introduction 1

This chapter is intended to provide a comparative1 overview of national enforcement mechanisms in light of the TRIPS requirements specified in Articles 41–50. Leaving aside the WTO cases on certain aspects of enforcement,2 there is no ‘international’ case law on this issue, and since enforcement mechanisms by their very nature are subject to national law, the TRIPS provisions can only be interpreted in a meaningful manner by making reference to the enforcement mechanisms of individual countries. The TRIPS provisions are not commented on in the order they appear in the Agreement, but rather in the sequence of civil procedure: although the final measures of injunctive relief, damages and other remedies (TRIPS, arts 44–46) in the TRIPS Agreement precede the provision on interim injunctions (art 50), the latter, due to their nature, have to be decided by a court prior to deciding on final measures.

1 Commentaries on the TRIPS Agreement tend to interpret the provisions based on the Vienna Convention on the Law of Treaties, the WTO negotiating history and the interpretation given by the WTO Dispute Resolution Panel. This is an interpretation of international law based on international law. Particularly for the enforcement provisions, these are difficult to understand without a comparative background as to the practice in different Member States. A comparative approach therefore helps to evaluate issues such as interim measures or damages in the domestic contexts where they are actually applied, and to understand that concepts of fairness or effective protection are often determined by cultural preferences: while in the US, a profound and lengthy discovery may be regarded as serving justice, countries such as Germany, France or the Netherlands rather focus on fairness through efficiency and speedy interim measures. China, Japan and the EPO’s Boards of Appeal offer court-managed, wellstructured trials that leave little room for cross-examination of witnesses and experts, thereby emphasising a pragmatic approach. In all these cases, it is difficult to argue that one approach is better than the other, but it is important to realise that these differences exist and that they are most likely here to stay. The last book on IP rights that offered an uncompromisingly comparative approach to the subject matter was Stephen Ladas’ treatise on Patents, Trademarks and Related Rights, 3 vols (Harvard University Press, 1975). 2 Namely the case China-Intellectual Property Rights (2009), WT/DS362/R provides some definitions such as ‘effective action’, a term found in TRIPS, art 41(1). Also in the case EC-Enforcement of Intellectual Property Rights for Motion Pictures and Television Programmes (2001), WT//DS124/2, an agreement was reached on the ‘effective enforcement’ against piracy by directly closing a number of Greek television stations. Finally, the panel in US-Section 211 Appropriation Act (2002) WT//DS 176/AB/R held that effective remedies under national law were those that ‘open the possibility of a genuine remedy for the complainant’.

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2

The term ‘enforcement’ just as the term ‘intellectual property’ is considerably new. ‘Enforcement’ is not a term that would find equivalents in other languages, for which reason it has been difficult to translate. The French may talk about ‘la mise en œuvre’, yet it does not have quite the same ring to it. The German term ‘Rechtsdurchsetzung’ comes close to enforcement, yet would not only refer to acts against an infringement. ‘Enforcement’ as understood in the modern sense and by the TRIPS Agreement does not relate to any acts necessary for obtaining an IP right, but for putting an end to infringing acts in order to render the IP right effective. 3 ‘Enforcement’ does not necessarily determine the means of action. These can be civil, criminal or administrative. Civil because private rights are at stake:3 patents, trade marks and copyrights may have their administrative sides, particularly where a granting process is involved, yet thereafter would become property rights of sorts, enforcement of which would also be predominantly civil. But just as acts of vandalism or theft represent criminal offences violating private property, IP infringement may also qualify as a criminal offence, for example, where committed on a professional scale.4 Administrative enforcement, for example, by the Patent and Trade Mark Offices, may have advantages due to the often complex nature of IP rights. Administrative agencies that have to determine registrability of an IP right may also be well qualified to determine its scope for the purposes of enforcement.5 Furthermore, there are no alternatives to administrative enforcement in areas exclusively handled by the administration. For IP matters, this is particularly the case where the export and import of goods is concerned. Border control is thus one of the most important fields of administrative IP enforcement, although some countries, notably the US, have developed a border enforcement system that is in all respects ‘judicial’; see chapter twenty. 4 The manner of enforcement is also determined by the complexity of the subject matter. Looking at a patent infringement case in, for example, the UK, an impressive number of highly paid specialists are involved: the judge, two senior barristers (QC) on both sides, aided by two junior barristers. The barristers have been instructed by solicitors, and we may thus well find two solicitors on each side. Because of the technical nature of the patent, barristers and solicitors may be assisted by patent attorneys and/or

3 According to the Preamble to the TRIPS Agreement, IP rights are private rights. As such, they have also been recognised by the European Court of Human Rights (‘ECHR’), Anheuser Busch v Portugal, decision of 11 January 2007, 39 IIC 739. 4 However, a number of free trade agreements, eg the US-Singapore Free Trade Agreement, require the introduction of criminal offences even beyond what TRIPS would require. It is questionable if this would lead to an effective strengthening of IP rights. See also section IX. In any event, the ‘TRIPS-plus’ provisions found in these free trade agreements generally have not imposed additional requirements relating to patent enforcement, although art 10.67 of the EU-South Korea Free Trade Agreement does extend border measures to patented goods. 5 Administrative enforcement mechanisms against infringement can particularly be found in Asia. In Vietnam and China, civil enforcement was not even available until a few years ago. In Korea and Japan, the Patent Office can be asked to determine the scope of a patent right in infringement procedures, an avenue fairly common in Korea, but not in Japan. In the Philippines, the Patent Office offers a forum for handling IP disputes that many right owners find preferable to court proceedings owing to the expedited nature of proceedings.

Comparative Overview and the TRIPS 5 technical experts. The patentee, often accompanied, would be represented by the head of his patent department. Determining infringement therefore becomes complex, time consuming and costly. It is not least for this reason that most countries would prefer to leave IP enforcement to the initiative of private parties, for example, by decriminalising infringements6 or by the public prosecution refusing to take up cases.7 5 Finally, ‘enforcement’ does not refer to any specific remedy. Remedies could be administrative fines, criminal fines or prison terms, or civil remedies such as injunctions (TRIPS, art 44), compensation (TRIPS, art 45), destruction of infringing goods or an apology (TRIPS, art 46). Of all these, the most sought after is the injunction. An injunction is meant to put an end to acts of infringement. The importance of injunctive relief for IP infringement stems from three factors: first, to avoid further market confusion and thereby the erosion of the IP owner’s competitive position where cases of trade marks or unfair competition are concerned. Second, by upholding the IP owner’s monopoly which (at least for patents and copyrights) has only been granted for a limited period of time: if any infringer could get away with monetary compensation, the IP right would lose its function of excluding all others but the owner from its use. It is only the exclusivity that allows the IP owner to charge a monopoly rent for the protected product.8 Third, injunctive relief is often the most effective remedy, as damage claims are often difficult to prove.9 6 Last but not least, IP infringement has increasingly become a matter of strategy and tactics. In the same way as strategies for registering IP rights have developed,10 enforcement has also become an increasingly complex pattern in the commercial strategies of a company.11

6 eg in Taiwan, patent infringement under the revised 2001 Patent Act is no longer a criminal offence, which means that patentees have to rely on private enforcement. 7 While in Germany the first half century of patent law between 1877 and 1917 was dominated by the criminal enforcement of patents, subsequent cases have been almost exclusively civil and reflect the attitude that public prosecution should only take place where public interests are indeed at stake: see section IX. 8 To be sure, most patents and copyrights do not enable the owner to exercise monopoly power in an economically meaningful sense, a point the US Supreme Court explicitly recognised in Illinois Tool Works v Independent Ink, Inc, 547 U.S. 28, 44 (2006) (stating that ‘the vast majority of academic literature recognizes that a patent does not necessarily confer market power’). Moreover, many patent owners do not use their patents to exclude others but rather to obtain licensing revenue, a circumstance that in the United States inclines courts toward denying injunctive relief (as discussed below, and in ch 16). From a purely economic standpoint, perhaps the best argument in favour of protecting patent rights by means of injunctive relief is that (compared with awards of ongoing royalties) injunctions often, though not always, conserve on adjudication and error costs. See T Cotter, Comparative Patent Remedies: A Legal and Economic Analysis (Oxford University Press, 2013) 53–55. 9 Traditionally, injunctive relief has been of right in civil law countries, and a discretionary remedy in common law countries. The discretionary nature of injunctive relief has made it easier for countries such as the US to deny such remedy in cases of perceived abuse, namely by non-producing entities (‘trolls’), or in case of patents integrated in standards. While the rate of patent infringement cases where injunctive relief is granted has fallen to 75% in the US, German courts have been largely deaf to arguments based on patent abuse (see ch 4). 10 eg G Rahn, ‘Patentstrategien japanischer Unternehmen (Patent Strategies of Japanese Enterprises)’ (1994) GRUR Int 377. 11 eg K Moore, T Holbrook, J Murphy, Patent Litigation and Strategy 4th edn (West, 2013).

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B. Enforcement and International Law I. General 7

Neither in terminology nor in substance did ‘enforcement’ find its way into international agreements on IP rights prior to TRIPS. Articles 9 and 10 of the Paris Convention contain some rudimentary rules on ‘seizure on importation’, an administrative remedy that can also be found in the Madrid Arrangement for the Repression of False and Deceptive Indications of Source on Goods of 1891. But ensuring seizure upon importation was merely meant to plug a hole in most domestic legislation that did not give special rights of importation and thus made it difficult for the right owner to act on his own behalf in this respect. Furthermore, some provisions of the Paris Convention refer to ‘effective’ remedies, for example, Article 10bis (‘effective protection against all acts of unfair competition’).12 More is not specified in the Convention, however, and the above provisions were regarded as of ‘platonic character’.13 8 In addition, there are a number of conventions that deal with the effects of legal disputes. For example the Brussels14 and Lugano15 Conventions on jurisdiction lay down uniform rules for the EU and EFTA countries regarding jurisdiction within Europe, and with the purpose of avoiding double litigation. Finally, the Hague Agreements16 concern assistance in civil procedures. 9 The scarcity of international rules concerning enforcement stands in marked contrast to what has been achieved in the field of obtaining IP rights. Here, a great number of international conventions facilitate the international filing for patents and trade marks: the Paris Convention of 1883 grants a priority period of one year to patents and utility models, and six months to designs and trade marks; the Patent Cooperation Treaty of 1970 defers the requirements of translation and national filing in other countries for another 20 months beyond the one year priority interval in order to provide the applicant with a preliminary search and (for some countries) examination; the Patent Law Treaty 2000 further streamlines formalities of the application procedure. In the field of trade marks, the Madrid Agreement of 1891 and the Madrid Protocol of 1989

12 Art 10ter also refers to remedies, yet does not specify which are the ‘appropriate legal remedies to repress effectively all the acts referred to in Articles 9, 10 and 10bis’. The obligations thus remain vague. 13 A Osterrieth, Die Haager Konferenz 1925 (1926) 75. 14 Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters of 27 September 1968, available at http://curia.europa.eu/common/recdoc/convention/en/c-textes/brux-idx.htm. This was replaced by the Council Regulation (EC) 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ L12/1, which itself has since been replaced by (EC) Regulation 1215/2012. 15 Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters of 16 September 1988, available at: www.curia.eu. The Convention was signed between the then EC Member States and Norway, Austria, Switzerland, Finland and Sweden. The non-EC members explicitly acknowledged the ECJ’s role in interpreting the Convention. 16 Hague Convention on Private International Law of 17 July 1905, www.hcch.net (French only); Hague Convention on Civil Procedure of 1 March 1954 (www.hcch.net); Hague Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil or Commercial Matters of 15 November 1965 (www.hcch.net); Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters of 18 March 1970 (www.hcch.net).

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both allow the applicant to obtain protection in other countries on the basis of just one international filing; the Trade Mark Law Treaty of 1994 streamlines application procedures in making certain formal requirements such as the number of copies to be supplied to national patent offices more uniform; and the Nice Agreement of 1957 on the classification of marks provides trade mark applicants with a uniform catalogue of goods and services used and applied by all domestic patent offices (the Nice Agreement has 84 members, yet is adhered to by a number of other countries, too). There is thus a marked contrast between efforts to facilitate and harmonise filing procedures on the one hand and enforcement procedures on the other.

II. Difficulty of Uniform Rules 11

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There are a number of reasons why it has been easier to harmonise rules for obtaining IP rights than for enforcing them. For one, the basic rules laid down in 1883 by the Paris Convention were negotiated between a very limited number of countries. They required the founding members to change parts of their industrial property laws, yet left most of the application procedures untouched. To this day, there are huge differences in granting procedures, namely between countries that conduct a substantive examination for patents and trade marks (eg Japan, the US, the UK and Germany) and those countries with a mere registration system (eg France and Italy). When discussions on a uniform system of industrial property rights started back in 1873, it soon became apparent that a uniform system of world patents or trade marks could not be achieved at that stage owing to the national differences in granting and enforcing IP rights. This can also be observed at a European level where the agreement on a European Patent Office (EPO) dates back to 1973 (European Patent Convention), while an agreement on a Community Patent Court has only been reached in 2013, that is, some 40 years later (for details, see chapter two). Next, it was to the advantage of the IP system and its users that granting procedures were undertaken by specialised offices outside the general administration. This meant that harmonising certain principles of application procedure could be undertaken without any repercussions towards the system of administrative law in general. Enforcement procedures on the other hand could not claim such advantage. Rather, civil enforcement in each country is deeply steeped in the domestic system of civil procedure in general. A uniform system of enforcement would have meant specific courts only dealing with such matters—an impractical solution for countries where only a very limited number of IP lawsuits are raised.17 A certain harmonisation in matters of infringement only became necessary where uniform patents were granted for several countries, for example, by an institution such as the EPO. Here, the scope of patent rights had to be specified both for the granting

17 Within the last decade, however, an increasing number of countries have either established specialised IP courts (eg England and Wales, Switzerland) or enacted policies under which all or most patent infringement suits are litigated in 1 or 2 courts (eg France and Japan; 3 in the case of Turkey). The US does not have specialised patent trial courts, but (like Japan) it does have a specialised appellate court for such matters. The quality of patent decisions is often a tribute to the specialised nature of such courts.

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Christopher Heath and Thomas F Cotter authority and the courts (European Patent Convention, art 69). It is not possible for a granting authority to grant patents without knowing how these patents will be interpreted by national courts.18 This should also be borne in mind where countries are thinking of a reciprocal recognition of patent rights: this only makes sense where the patentee and the granting authority can be certain of the scope given to the patent in such other country.19 Just to mention some of the issues that a harmonisation of enforcement procedures in civil matters would have to encompass: availability of pre-trial measures; contents of the initial claim; service of such claim and other documents submitted to the court; rules of jurisdiction; rules for obtaining and interpreting evidence; role of the judge and the legal representatives in an action; rules on who should have standing to sue; powers of legal representatives and rules on who would be capable of being a legal representative (patent attorneys?); rules for interim measures; rules on how a trial should be conducted; rules on the interpretation of IP rights; relationship between infringement and nullity; rules on what remedies would be available; rules on appeals.20 The TRIPS Agreement was the first that tried to set some form of minimum rules for a number of issues mentioned.

III. History of TRIPS and Enforcement 15

Interestingly enough, the starting point for including IP rights into the framework of international trade of the GATT Agreement were increasing numbers of pirated or counterfeited goods (for a definition, see below section VIII) on markets all over the world. The initial attempt was thus limited to a framework to stop dealing in counterfeit goods.21 Subsequent negotiations broadened this mandate. As a preparation to a coming GATT round, a 1982 Ministerial Declaration recommended to examine the question of counterfeit goods with a view to determining the appropriateness of joint action in the GATT framework on the trade aspects of commercial counterfeiting, and if such joint action is found to be appropriate, the modalities for such action, having full regard to the competence of other international organisations. For the purposes of such examination, the Contracting Parties request the Director-General to hold consultations with the Director-General of WIPO in order to clarify the legal and institutional aspects involved.22

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Opposition to such mandate came particularly from Brazil and India with two arguments: first, international trade should deal with tangible rather than intangible goods,

18 As was highlighted by the decision of the EPO’s Enlarged Board of Appeal of 11 December 1989, OJ 1990, 93—‘Mobil Oil III’. 19 An issue that is conveniently overlooked by the proponents of international patent harmonization: C Heath, ‘Harmonisation of International Patent Law?’ (2008) 39 IIC 210. 20 An attempt at harmonising some of these issues has been made by the EC Enforcement Directive, see ch 2 for details. 21 Agreement on Measures to Discourage the Importation of Counterfeit Goods, GATT Document L/4817 of 31 July 1979, reprinted in 12 IIC 201 [1981]. 22 38th Session at Ministerial Level Ministerial Declaration, reprinted in GATT, BISD 30th Supplement, 19 (1983).

Comparative Overview and the TRIPS 9 and, second, WIPO should handle all issues of intellectual property.23 Further negotiations, particularly in the first half of 1986 finally led to the inclusion of both IP rights and services in the new GATT Round that was opened on 20 September 1986 in Punta del Este, Uruguay. In the Common Declaration of 20 September 1986, the mandate to negotiate matters of IP rights was outlined as follows: In order to reduce the distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade, the negotiations shall aim to clarify GATT provisions and elaborate as appropriate new rules and disciplines. Negotiations shall aim to develop a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods, taking into account work already undertaken in the GATT. These negotiations shall be without prejudice to other complementary initiatives that may be taken in the World International Property Organization and elsewhere to deal with these matters.24

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The Ministerial Declaration set the tone for the following negotiations between the opening on 20 September 1986 and the eventual conclusion of the WTO/TRIPS Agreement in Marrakech, Morocco, on 15 April 1994. While the first phase of the negotiations in 1986/87 concerned aspects of counterfeiting and piracy including border measures,25 a number of European countries wanted IP rights to be strengthened in general.26 As a consequence, not only border measures on counterfeit goods, but the whole framework of IP rights became part of the WTO Agreement.27

C. TRIPS—General Principles of Enforcement: Articles 41 and 42 I. Procedures in General 19

Given the fact that the TRIPS Agreement developed out of a framework to combat piracy and counterfeiting, it is no coincidence that one whole part (Part III) of the agreement is dedicated to enforcement, and that this part with 20 provisions is far

23 A Bradley, ‘Intellectual Property Rights, Investment and Trade in Services in the Uruguay Round’ (1987) 23 Stanford Journal of International Law 57, 66. 24 Ministerial Declaration on the Uruguay Round, GATT Document No MIN.DEC (20 September 1986). 25 J Ross/J Wasserman, Trade Related Aspects of Intellectual Property Rights in T Stewart (ed), The GATT Uruguay Round: A Negotiating History (1986–1992), vol II (Kluwer, 1993) 22. 26 ibid 24, citing the 1988 proposals of the Nordic countries and the EC. 27 This is not to say that there was not a significant portion of lobbying from rights owners’ groups involved that saw the chance to impose high standards of protection on often unwitting developing countries: A Koury Menescal, ‘Those behind the TRIPS Agreement—the Influence of ICC and AIPPI on Intellectual Property Agreements’ [2005] IPQ 155.

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Christopher Heath and Thomas F Cotter more detailed than the provisions on, for example, patents. The high number of provisions also reflects the lack of harmonisation or minimum standards in this area, and the diversity in domestic enforcement systems as described under section II above. The emphasis of the TRIPS provisions lies in rules for civil enforcement (arts 42–48, 50) and administrative measures by way of border enforcement (arts 51–60). Article 49 clarifies the fact that infringement can also be dealt with administratively, yet under the same rules as laid down for civil procedures. The structure of Articles 42–49 also illustrates that civil enforcement of infringement is regarded as clearly preferable to administrative enforcement. Finally, criminal measures are only mentioned in Article 61 and need only be provided for in cases of wilful infringement of patents or copyrights on a commercial scale. This reflects the experience of developed countries that criminal enforcement does not provide a viable alternative to civil procedure.

II. Principles Laid Down in Article 41 1. Article 41(1) 20

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Article 41(1) requires members to provide a legal framework for effective action against any act of infringement. Such remedies shall be effective against infringing acts, yet also provide safeguards against abuse. In addition, remedies shall constitute a deterrent to further infringement. Already this is difficult to understand, as there is no requirement to provide for punitive sanctions under civil enforcement. Article 45(1) states that damages shall be adequate to compensate for the injury, yet this would not have a deterrent effect.28 As a deterrent, one can imagine having the infringer pay at least the IP owner’s legal expenses, including attorney’s fees, something that has been common practice in many European countries, and was recently reinvigorated in the US. This is set down in Article 45(2) yet only as an optional provision. Within the context of TRIPS, it is thus far from clear what remedies are considered to be deterrent. From an economic point of view, deterrent remedies must be those that go beyond what a lawful user has to invest. If damages are compensatory rather than punitive, damages alone can hardly serve as a deterrent. Burdening the losing party with the winning side’s attorney’s fees may have a deterrent effect, yet is not mandatory under TRIPS. Providing criminal sanctions can serve as a deterrent, yet is only required in special circumstances as mentioned below (section IX). Only injunctive relief is a remedy that a lawful user such as a licensee would not have to face. The ‘safeguard against abuse’ as mentioned in Article 41(1) is further specified in Article 48 and seems to refer to an objective concept of ‘wrongful enforcement’29 departing from the normal function of enforcement and turning it into a perversion of the course of justice.30 There are objective cases that may (or even should) give rise

28 Although some countries increase the award of an ordinary licensing fee in order to account for the fact that the infringer should not benefit from the same conditions as a lawful licensee. This is the case for Italy, see ch 7, and China, see ch 11. 29 See C Heath, ‘Wrongful Patent Enforcement’ (2008) 39 IIC 307. 30 D Gervais, The TRIPS Agreement 2nd edn (Sweet & Maxwell, 2003) margin note 2.412.

Comparative Overview and the TRIPS 11 to a damage claim by the defendant: one is the execution of interim measures that subsequently turn out to be wrong. This case is explicitly mentioned in Article 9(7) of the European Enforcement Directive, and seems uncontroversial:31 Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order to applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by such measures.

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More controversial is the question of what should happen when a patent is revoked after a successful infringement action. For a number of countries, the answer is: nothing (France;32 Japan;33 Italy34 (when the decision has already been executed); Turkey and China unless the patentee has acted in bad faith), while other countries allow a re-opening of the previous infringement proceedings (Germany;35 the UK36). Clear cases of malicious enforcement are not easy to find, though. The enforcement of a clearly invalid patent may be one.37 Patent extensions may be abusive when based on incorrect information.38 A misuse by patent enforcement strategies was mentioned in the European Sector Inquiry of the Pharmaceutical Industry’s Final Report as of 8 July 200939 with respect to litigation by pharmaceutical companies in order to delay marketing approval or market entry of generic drugs, or by settlements in the course of litigation.40 ‘Abuse’ can also refer to excessive requests for customs seizure that at least in Europe is relatively ‘risk free’ for a period of up to 10 days, often enough to prevent goods from being exhibited at a fair or to interfere with time-sensitive sales (see chapter twenty for details). Acts of (objectively) wrongful enforcement can also be the dispatch of warning letters to customers or suppliers of the (alleged) primary infringer where these letters subsequently proved wrong.

31 See Directive 2004/48/EC of the European Parliament and of the Council of April 29, 2004 on the Enforcement of Intellectual Property Rights, 2004 OJ (L 195) 16 (EC). In fact, only in Italy does such damage claim face insurmountable obstacles because the damage claim requires proof of bad faith by the court ordering the interim relief. See Casucci in ch 7 of this book. This is the more problematic since in Italy, interim measures can be requested even based on a mere patent application. It thus appears that not only has Italy not properly implemented art 9(7) of the European Enforcement Directive, but may also not be in line with the TRIPS provisions. 32 French Supreme Court, decision of 17 February 2012, 43 IIC 472 (2012) with comment by Agé and Moreira. 33 Patent Act, s 104quater (inserted in 2012). It is different where the defendant has not yet paid: French Supreme Court, 12 June 2007, 39 IIC 354 (2008)—‘False Ceiling’. 34 Italian Industrial Property Code, s 77 stipulates ‘The declaration of nullity of a patent has a retroactive effect, yet does not affect: a) Measures already carried out for the enforcement of final decisions in infringement matters’. 35 Düsseldorf Appeal Court, Decision of 11 May 2006—Restitutionsklage III, 39 IIC 355 (2008). 36 Virgin Atlantic Airways v Zodiac Seats, Supreme Court, 3 July 2013 [2013] UKSC 46. 37 Canadian decision Ratiopharm v Pfizer Ltd, Federal Court of Canada, 8 July 2009, where the company’s patent department against better knowledge described the selection of one compound as ‘unique’, ‘outstanding’ and ‘particularly suitable’. 38 ECJ, 6 December 2012, Case C-457/10 P Astra Zeneca v Commission, upholding a Commission ruling of 15 June 2005 against Astra Zeneca for supplying misleading information to the authorities and thereby obtaining a supplementary protection certificate. 39 http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/communication_en.pdf. 40 For the US, this has been discussed in the Supreme Court case FTC v Actavis, Inc, 570 U.S. ___ (2013).

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2. Article 41(2) 24

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Article 41(2) lays down the basic principles of procedure. These shall be fair and equitable, not unnecessarily complicated or costly, nor entail unreasonable time limits or unwarranted delays. In the wording ‘fair and equitable’, we find the general principle of checks and balances that permeates the enforcement section. The notion comprises equal treatment (mentioned in TRIPS, art 3 as national treatment) and would arguably not be met by an enforcement system that tends to discriminate against foreigners. But it also alludes to procedural principles such as the right to be heard. Remedies shall be effective, yet take into account the position of both IP owner and alleged infringer. The infringer shall neither be able to continue with his activities undisturbed, nor shall the IP owner be able to harass third parties or initiate unwarranted complaints. The other requirements regarding complexity and delay may be understood in light of what was explained above. By their very nature, IP suits are often complicated. The often necessary involvement of specialists is costly, and the complexity makes delays not uncommon. And still, there are huge discrepancies between certain jurisdictions. Perhaps the most costly IP suits are litigated in the UK and the US. In the latter jurisdiction, an IP lawsuit with an average value of US$1 million at risk would cost an average of US$970,000 through the end of the suit.41 In Germany, a comparable lawsuit would only cost a tenth as much.42 The average duration of a patent infringement suit in Italy is three years,43 while in Japan it stands at about 14 months.44 Fair and equitable procedures may also encompass some other basic principles. Every party should have the right to be heard and be properly represented in court. Intellectual property being a relatively new subject, many countries have a shortage of qualified lawyers in this field, making professional representation difficult. Also the rules of evidence and the burden of proof should be fair and equitable. In this respect, one rule can be found in Article 34 which regards process patents. If the alleged infringer uses a process that the patentee suspects to be covered by the patent, it shall be up to the alleged infringer to prove the contrary. This applies where the final products obtained are identical and the product obtained by the patented process is new and the patentee has made reasonable efforts to enquire about the alleged infringer’s process. But fairness also requires the defendant to be protected, particularly where his own trade secrets are concerned. A number of provisions specifically require such protection, even in cases where the information is vital to the IP owner’s case. Article 34(3) requires the legitimate interests of the defendant in protecting his manufacturing and business secrets to be taken into account, and Article 43 requires member states to provide conditions which ensure the protection of confidential information in cases where the defendant is ordered to present evidence. And finally, Article 42 requires

41 AIPLA’s 2013 Report of the Economic Survey, 34, I-129 (reporting, under the heading ‘Patent Infringement Litigation, All Varieties’ with less than $1 million at risk, the following: mean litigation costs through end of discovery of $530,000, median litigation costs through end of discovery of $350,000, mean litigation costs ‘inclusive, all costs’ of $968,000, and median litigation costs ‘inclusive, all costs’ of $700,000). 42 Osterrieth, ch 4 of this book. 43 Casucci, ch 7 of this book. 44 Heath, ch 13 of this book.

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‘means to identify and protect confidential information’. Balancing the plaintiff ’s and the defendant’s interests in cases where trade secrets are involved is particularly difficult. The courts in most countries can order in camera proceedings which exclude the public from oral hearings. The court can further order the documents of the case to be accessible only to a limited number of persons45 and impose so-called ‘gagging orders’ on either party.46 Where the defendant has to produce evidence and claims that trade secrets are at stake, the court must ensure that such an estoppel is not frivolous.47 Thus, a number of jurisdictions require the relevant documents to be inspected by the judge so as to determine to what extent trade secrets are indeed involved.48 Finally, fair and equitable procedures would also require a certain proficiency of judges in deciding IP cases. Owing to the specific nature of IP rights, special knowledge and experience in this field is vital in order to ensure timely and well-reasoned decisions. In this respect, Article 41(5) provides that there is no obligation to set up special IP courts. Until recently, such courts in fact rarely existed for cases of infringement, although they have started to become more common over the last decade or so, as has been mentioned above.49 Many countries, however, have started to limit jurisdiction to only one court (France, Switzerland), or two courts (the UK, or Japan). Japan now has specific IP divisions at the district courts Tokyo and Osaka that have exclusive jurisdiction over patent matters, while the IP High Court in Tokyo has exclusive jurisdiction for all patent appeals, including both infringement cases and patent office decisions.50 In Indonesia, the commercial courts have been given exclusive jurisdiction over IP infringement suits.51 Not all countries have taken such steps, however. In Italy, until 2004 every one of the about 160 district courts could hear IP cases, making specialised knowledge of the judge unlikely. That the number of competent patent courts now stands at 22 does not make matters much better.52 But even with specialised courts or special divisions, judges will require a number of years of expertise in

eg Japanese Patent Act, s 105quater. eg UK Civil Procedure Rules 1998, pt 31.22. 47 eg Tokyo High Court, 20 May 1997, 30 IIC 452 [1999]—‘Sale of Pharmaceuticals’: ‘The intention of protecting trade secrets is not a legitimate reason for refusing an order to produce documents relevant to the other party’. See also below. 48 Such a rule is now contained in the Japanese Patent Act, s 105(2). Where evidence is obtained by search orders, similar safeguards are provided by the English Anton Piller (now search) order and the French saisiecontrefaçon. For details, see below. 49 In 1999, Thailand set up a special Intellectual Property and International Trade Court in Bangkok which consists of about 30 full-time and 100 part-time judges: Ariyanuntaka (1999) 30 IIC 360. In the US, there is no special IP court in the first instance. The Court of Appeals of the Federal Circuit, however, hears all appeals in patent infringement cases as well as appeals from administrative decisions by the USPTO. In addition, some countries provide for specific ‘patent courts’ which do not deal with infringement, but with nullity and revocation of IP rights, thereby functioning as appeal institutions of the patent offices. This is the case for Germany and Korea. Both countries have in common that the ordinary courts cannot invalidate patents in infringement actions. Yet, Korea is considering an amendment to its patent law whereby the Patent Court should also receive jurisdiction over patent infringement cases. 50 Heath, ch 13 of this book. 51 C Antons, ‘Intellectual Property Law in Indonesia’ in C Heath (ed), Intellectual Property Law in Asia (Kluwer Law, 2002). 52 Casucci, ch 7 of this book. 46

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Christopher Heath and Thomas F Cotter the field and should thus not be transferred too frequently—something that nonetheless happens in Japan and France. Such specialised judges could also be given sufficient career opportunities as an incentive for such specialisation. Judicial expertise is perhaps the most important guarantee for a successful enforcement of IP rights. In this respect, Turkey is a good model: prior to setting up the specialised IP courts in Ankara, Istanbul and Izmir, eight future IP judges received a one-year training in various European institutions. Judicial expertise is also the main argument for a bifurcation of infringement and validity proceedings. Divisions of the German Federal Patent Court, and the Boards of Appeal of the EPO, operate with both legally and technically trained judges, while cases are argued mostly by patent attorneys, thereby making technical experts unnecessary. Courts that hear both issues of validity and infringement normally operate with legally trained judges who need to get their expertise either from technical assistants (a common model in East Asia), or from court-appointed experts (Italy, France, Turkey). In common law jurisdictions (the UK and the US), an extensive cross-examination of experts put forward by the parties often helps the judges to grapple with the technical angle of a case. Finally, Switzerland for its Patent Court has opted for a hybrid model of full-time legal judges and part-time technical judges, something that is also envisaged for the future Community Patent Court. Where technical experts are recruited amongst members of the patent bar, this may lead to issues of partiality, an aspect that is further discussed in chapter nine (Switzerland) for part-time judges and chapter seven (Italy) for court-appointed experts.

3. Article 41(3) 28

Article 41(3) specifies two further requirements of fair procedure. First, decisions preferably shall be in writing and reasoned, and, second, decisions shall only be based on grounds that the parties had an opportunity to comment on. Having established such a principle, the former part of the provision is optional, as are so many in the section on enforcement. While this may be deplorable, one should bear in mind that this is the first international agreement with a section on enforcement, and there are thus no previous agreements or minimum standards which could have been built upon. The requirement of a decision in writing that should be served on both parties could even be broadened. It is regrettable that in many countries, IP decisions are not properly published, making it difficult for users of the IP system to anticipate the results of a possible lawsuit. In addition, publication of decisions also allows academic discussion and international comparison.

4. Article 41(4) 29

Article 41(4) lays down a very important principle, particularly for those IP rights that are granted by administrative authorities: the right of judicial review of all final administrative decisions, and a right of appeal against any court decision at least regarding the legal aspects. The provision does not use the word ‘court’, but ‘judicial authority’. Arguably, this includes such quasi-judicial bodies as the EPO’s Board of

Comparative Overview and the TRIPS 15 Appeals.53 That means the judicial review of final administrative decisions must not be confined to legal aspects, but also the facts of the case.54

III. Article 42 30

Article 42 of TRIPS specifies the above-mentioned general principles for civil procedures. Even in countries with a prevalence of administrative proceedings, civil procedures have to be made available. This required changes in domestic legislation, particularly for China which had a strong tradition of administrative enforcement.55 The further requirements of Article 42 have been mentioned above (protection of confidential information) or will be elaborated below in the context of interim procedures (written notice etc).

D. Rules for Obtaining Evidence: Articles 43 and 50(1)(b) I. TRIPS Provisions Articles 43 and 50(1)(b) 31

More cases may be lost for want of sufficient evidence than for points of substantive law. Issues of evidence feature so prominently in IP cases because of the very subject matter in question. If and to what extent there is damage to tangible property might be subject of debate between experts, but is rarely a problem of available evidence. This is completely different in the world of intangible rights. If a competitor produces goods

53 See EPO Enlarged Board of Appeal, 24 July 1996, OJ 1996, 649; EPO Enlarged Board of Appeal, 10 December 1999, 32 IIC 545 [2002]. But see C Correa, Trade Related Aspects of Intellectual Property Rights: A Commentary on the TRIPs Agreement (Oxford University Press, 2007) 416 noting that art 62(5) of TRIPS explicitly appears to distinguish between judicial and quasi-judicial authority, and asserting that art 41(4) ‘clearly seems to exclude the intervention of administrative authorities, such as an appeal board of a patent office, even if attributed quasi-judicial competence, because the notion of “judicial” refers to a court of law’. It is true that most national boards of appeal do not enjoy judicial independence and should therefore not be regarded as judicial authorities, while the Boards of Appeal of the EPO have been likened to ‘judges in all but name’ and have their judicial independence enshrined in art 23 of the EPC. The issue is of some importance as there is no appeal against decisions by the EPO Boards of Appeal, and failure to comply with art 41(4) of TRIPS would require the EPO Member States to amend the EPC. The latter has also been suggested in a decision of the Enlarged Board of Appeal, case R 2/14 of 17 February 2015, point 39.1 of the reasons. For a definition of ‘independent’, see J Malbon/C Lawson/M Davidson, The WTO Agreement on TRIPS (Elgar, 2014) 631, who cite the definition as mentioned in case EC—Selected Customs Matters (2006) WT/DS315/R as ‘free of control or influence from the administrative agencies whose decisions are subject of review’. 54 This position was at least taken by the Korean Constitutional Court, 28 September 1996, 92 Hunga 11 and No 93 Hunga 8, 9, 10, interpreting a similarly worded constitutional requirement. The Supreme Court’s decision led to the setting up of the Korean Patent Court. The Japanese system of appeals against decisions rendered by the Patent Office was already amended in 1948 in order to comply with constitutional requirements. The courts have consistently held that in appeal proceedings, the courts can hear all arguments of fact de novo: Japanese Supreme Court, 23 June 1991, 24 IIC 523 [1993]—‘Evidence of Trade Mark Use’. 55 See Pattloch, ch 11 of this book.

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Christopher Heath and Thomas F Cotter that infringe another’s patent this would rarely be obvious at first sight. How many infringing goods have been produced and marketed is an issue that can practically only be answered by the inspection of documents in the possession of the infringer. If the infringer has made a profit from such activity, such profit can rarely be determined without further details of the infringer’s commercial transactions. For all these reasons, the question of evidence in IP cases basically relates to obtaining evidence in the possession of the other party. It is this question that is addressed by Article 43 of the TRIPS Agreement. Taking into account the above-mentioned problems, the plaintiff has to furnish conclusive proof of the infringement and (where relevant) its scope. But in doing so, the plaintiff is not necessarily confined to the evidence he himself can furnish. Rather, the defendant has to comply with orders for submitting relevant evidence, even if this would mean self-incrimination. Article 50(1)(b) of TRIPS recognises the importance of an order for preserving such evidence if there is a danger that it might otherwise disappear. Particularly because such evidence may well be self-incriminating, defendants may wish to destroy it as soon as they feel pursued. Experience with the production of documents by the defendant has been developed particularly in four countries: the UK, the US, France and Italy. Requirements and scope of the available measures for obtaining evidence are different in all four jurisdictions, however. The US discovery is available in all sorts of proceedings, and requires the other party to supply a myriad of documents. While the discovery is meant as a preparation for trial, it is not a surprise measure, and it takes place without the intervention of a bailiff. According to Maloney (chapter sixteen), extensive and invasive discovery is a hallmark of US patent litigation. The rules relating to discovery encourage full disclosure by the parties to avoid potentially unfair surprises at trial. In practice, this rarely occurs without significant fights between the parties regarding their respective discovery obligations. The scope of permissible discovery is broad. Rule 26(b)(1) allows a party to seek from its opponent or a non-party any information that is not protected by a recognised privilege and is either relevant to an issue in the case or appears ‘reasonably calculated’ to lead to admissible relevant evidence. The French saisie-contrefaçon was first introduced in the Patent Act 1844 and is an interim order available ex parte. It is different from the UK and Italian discovery orders because the patentee is not required to furnish prima facie evidence of infringement to get the saisie-contrefaçon order.56 The inspection is carried out by a bailiff, and the party requesting the saisie may not be present. Depending on the scope of the order, the bailiff may either only inspect, or also take samples. The Italian descrizione differs from its French model in that the patentee has to show a high probability of success for an infringement action, which includes an evaluation of the patent’s validity. The representative of the patentee can be present while the order is carried out by the bailiff. Different from France, the court may also order seizure of the complete stock.

56 This principle has been pointed out by the Douai Appeal Court, 4 February 2002, 2002 Annales de la propriété industrielle 17.

Comparative Overview and the TRIPS 17 35

In the UK, the Anton Piller order was developed particularly for IP cases and consisted essentially of an ex parte court order to give the other party access to the defendant’s premises. Later, an English judge hesitated on one occasion to grant such an order for obtaining evidence because it seems to me that [such] an order on the lines sought might become an instrument of oppression, particularly in a case where a plaintiff of big standing and deep pocket is ranged against a small man who is alleged on the evidence of one side only to have infringed the plaintiff ’s rights.57

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In addition, by such order the applicant may obtain knowledge of the defendant’s business secrets without any justified reason whatsoever. According to the Düsseldorf High Court, In patent matters, there is no duty to present an object or to permit its inspection according to Sec. 809 German Civil Code in cases where the respondent invokes business secrets in a field that would become apparent upon presentation for inspection, and if the subject matter and the circumstances make it likely that such business secrets exist.58

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Belatedly, however, even civil law jurisdictions have realised that invoking business secrets by the defendant may be frivolous in itself if invariably used to frustrate the applicant’s right of inspection: The intention of protecting trade secrets is not a legitimate reason for withholding relevant documents that may be of importance to the other side. Yet, in order to avoid an unnecessary disclosure of trade secrets, the court should take the necessary steps in each individual case so that no unnecessary damage is done.59

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Granting the request for obtaining evidence, and properly limiting its extent is thus a difficult but necessary judicial task in order to accommodate the interests of both sides. Article 7(1) of the European Enforcement Directive has obliged Member States to introduce proper proceedings for discovery.

II. Further Interim Measures 1. The UK 39

Apart from the search order, English law knows a number of preliminary measures aimed at the preservation of a certain status quo or the enabling of an action against third parties. Preservation of the status quo can be obtained by so-called Mareva injunctions or freezing orders that shall prevent the disappearance of the defendant’s

57 Brightman, quoted in Anton Piller KG v Manufacturing Processes Ltd and others, English Court of Appeal, 8 December 1975, [1976] 1 All ER 782. 58 Düsseldorf High Court, 17 August 1981, Gewerblicher Rechtsschutz und Urheberrecht (GRUR) 1983, 741—‘Interest in Secrecy and Right of Inspection I’. 59 Tokyo High Court, 20 May 1997, 1601 Hanrei Jihō 143 (1997) = 30 IIC 452 [1999]—‘Sale of Pharmaceuticals’.

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Christopher Heath and Thomas F Cotter assets, for example, off-shore.60 If it is feared that the defendant himself or a vital witness could make a dash out of the country, a so-called ne exeat regnum order can be issued.

2. The German Auskunftsanspruch 40

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Like most civil law systems, the German Code of Civil Procedure (‘CCP’) allows for a request for securing evidence both prior to or during trial (CCP, s 485). If the request is made prior to the main suit, the courts require the likelihood of success in the main action. Section 810 of the CCP allows inspection of a document under certain circumstances, for example, it was drafted in the interest of the plaintiff, certifies a legal relationship between the plaintiff and a third person or concerns notes about legal acts between the plaintiff and another person. None of these alternatives is particularly helpful when it comes to proving infringement in IP litigation matters.61 In addition, section 810 of the CCP is quite explicit in stipulating that the court can only order a document to be presented if the plaintiff has a right to see such document. Section 809 of the CCP allows a right of inspection under certain circumstances. The provision reads as follows: He who has a claim against a person in possession of a certain object in regard of such object, or who wants to obtain certainty if he has such a claim, can request that the person in possession of such object presents it for inspection or permits inspection to the extent that such inspection of the object is of interest for the above-mentioned reasons.

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This provision was interpreted somewhat narrowly by the courts62 and by academic literature.63 Not least guided by Dieter Stauder,64 a leading decision of the German Federal Supreme Court makes the provision indeed a meaningful tool of discovery.65 Finally, the Anti-Piracy Law of 1990 marked the beginning of a right of information (Auskunftsanspruch) in Germany regarding the names of the infringers, suppliers and customers.66 This right can also be exercised in the interim, and is reinforced by monetary fines in cases of non-compliance, which is considered contempt of court.

3. Obtaining Evidence in Japan 45

The Japanese Code of Civil Procedure in section 234 in connection with the Rules of Civil Procedure, sections 152–154, almost literally replicate the German provisions on securing evidence. In addition, sections 219–223 specify situations where a party

60 A very drastic remedy: T Willoughby/S Connal, ‘The Mareva Injunction: A Cruel Tyranny?’ [1997] European Intellectual Property Rights 479. First decided in English Court of Appeal, Mareva Compania Naviera v International Bulk Carriers, 29 January 1980, [1980] 1 All ER 213. 61 Kammergericht Berlin, 8 March 1919, GRUR 1919, 179. 62 Berlin Royal District Court, 13 April 1910, Mitteilungen 1910, 120; Braunschweig District Court, 20 August 1968, GRUR 1971, 28—‘Abkantpresse’; German Supreme Court, 8 January 1985, GRUR 1985, 512—‘Druckbalken’. 63 H Isay, Patentgesetz 6th edn (1932), § 4 note 68: ‘Complete annihilation of trade secrets’. 64 Comment on the German Supreme Court Decision, GRUR 1985, 517. 65 German Federal Supreme Court, 2 May 2002, 34 IIC 331 (2003)—‘Fax Card’. 66 For an in-depth discussion on the Auskunftsanspruch, see K Oppermann, Geld oder Leben—Der Auskunftsanspruch in Extremsituationen (‘Money or Else—The Right of Information under Pressure’) (Stämpflipresse, 1997).

Comparative Overview and the TRIPS 19 can be requested to produce documents, a claim limited to those circumstances mentioned above for Germany. Perhaps in light of heavy US criticism on the shortcomings of the Japanese discovery procedure (or the absence thereof), the new Code of Civil Procedure, in force since January 1998, now contains a new provision for a certain pretrial discovery. Here, section 163 reads as follows: A party may, during the pendency of a suit, inquire in writing of the adversary party about matters which are necessary for the preparation of assertions or proof, requesting written responses within an appropriate period to be designated by such party. However, this shall not apply to cases where such inquiry comes under any of the following items. i. ii. iii. iv. v. vi.

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inquiry which is not concrete or particular inquiry which insults or embarrasses the adversary party inquiry which duplicates an inquiry which has already been made inquiry which requests an opinion inquiry which requires undue expense or time for the adversary party to answer inquiry regarding matters similar to such matters as to which testimony may be refused in accordance with the provisions of Sec. 196 or 197.

It seems that the above procedure has rarely been used. Rules for the burden of proof seem to have become far more important, namely in cases where the defendant categorically denies infringement without giving details.

E. Interim Injunctions: Article 50 47

Interim measures under Article 50 of TRIPS can be requested either to preserve relevant evidence (art 50(1)(b), see above), or to prevent an infringement from occurring (art 50(1)(a)).

I. Provisional Measures to Prevent Infringement, Article 50 of TRIPS 48

Interim (provisional) injunctions are perhaps the sharpest sword amongst the IP owner’s weapons. Due to their provisional nature, they also spell danger: because of time constraints and limits of presenting evidence, the interim decision may not stand up to the scrutiny of a main action. Here again, the interests of both plaintiff and defendant will have to be properly balanced in order to find equitable solutions. These will not least depend upon the IP right in question. In cases of an alleged trade mark infringement, refusing interim measures may cause irreparable harm to the trade mark owner due to market confusion which intensifies every day infringing products are marketed. These considerations are far less relevant in the cases of patents or copyrights, although timely remedies are important here, as the duration of the right is limited.67 On the other hand, the defendant may suffer irreparable loss if

67 An excellent example of how to balance competing interests for an alleged infringement occurring 17 days before the expiry of the patent is the French Valsartan decision, CA Paris, 11 December 2012, 45 IIC 945—‘Valsartan’.

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Christopher Heath and Thomas F Cotter production lines are shut down, employees made redundant and market share is lost without the reasonable prospect that in case the interim decision proves unfounded, such measures can be undone. The considerations contained in Article 50 of TRIPS in this respect can be summarised as follows: 1. The provision does not specify the necessary requirements for issuing provisional measures. Thus, countries are free to specify such requirements in their domestic legislation, for example, a high likelihood of infringement (as explained under section V.2) or the question of who is in a better position to compensate possible damages (as elaborated on under section V.3).68 Article 50(2) specifies, however, that interim measures must be available in procedures where both sides have had the opportunity to be heard or ex parte, that is, upon a request of one side without hearing the other. The latter shall be available ‘where any delay is likely to cause irreparable harm to the right holder’. One can thus infer that while urgency is required for an ordinary interim injunction, ex parte injunctions require an even higher degree thereof. 2. The right owner has to supply all available evidence together with his request. The evidence shall indicate both the fact that the applicant is indeed the owner of the IP right, and that the right has been infringed or is likely to be infringed soon. Article 50(3) is silent on the question as to what extent evidence regarding the validity of the IP right has to be furnished as well. In many jurisdictions, the question of validity also plays a role in determining whether the patentee has a good case: France, Italy and Japan are examples. As mentioned above, Article 50(3) does not specify the relationship between irreparable harm and likelihood of infringement. 3. The provision also contains specific safeguards for the defendant. For one, the court must have the discretion to order the applicant to provide a security ‘sufficient to protect the defendant and to prevent abuse’. The right of a defendant to claim damages in cases where the provisional measure is later revoked is enshrined in Article 50(7). As mentioned above, Italy does not comply with this provision, as a damage claim requires proof of bad faith. Appropriately, this right of compensation must be available even where there is no fault on the side of the plaintiff: after all, the plaintiff entertains a calculated risk when requesting and enforcing a provisional measure.69

The decision was upheld by the French Supreme Court, 16 September 2014, PIBD 2014, No 1016-III-836. Here, the Court held that even such a short period of time allowed for an inter partes hearing: ‘it should not be forgotten that there exists an urgent inter partes procedure that even in a brief interval allows for the other party to be heard. The courts are able to set dates for oral hearings in such cases even on weekends and bank holidays, and that school holidays do not compromise this at all, in particular in the month of November when there are no court holidays’. 68 See eg C Correa, Trade Related Aspects of Intellectual Property Rights (n 53) 434 stating that art 50 ‘defines the results to be achieved rather than the conditions to do so. This leaves Members considerable leeway to implement the granting of provisional measures and, particularly, to determine the requirements to be imposed in accordance with each national legal system’. 69 So interpreted, eg in the German Code of Civil Procedures s 945; Direction 25 English Civil Procedure Rules; Dutch Supreme Court, 16 November 1984, 1985 Nederlandse Jurisprudentie 547 (Ciba Geigy v Voorbraak). This is also the position under the EU Enforcement Directive, art 9(7).

Comparative Overview and the TRIPS 21 4. Where a decision has been rendered ex parte, the opposition has to be notified without delay and a review of this decision shall be available to the defendant within a reasonable period of time (art 50(4)). Where an inter partes measure has been made, the main action shall be initiated within a reasonable period of time not exceeding 20 working days or 31 calendar days (art 50(6).70 The latter provision is misguided in view of the practice in many countries: particularly in matters of trade marks and unfair competition, an interim decision often settles the matter for good.71 And while the Netherlands now requires the patentee to initiate subsequent proceedings within 30 days (Code of Civil Procedure, s 1019(i)), in order to implement Article 9(5) of the Enforcement Directive, there is still no corresponding obligation to do so in Germany.

II. The Balance of Probability 49

Most countries require the following elements for issuing interim injunctions: 1. Urgency. Urgency means that, but for the injunction, the IP owner would suffer substantial damages or disadvantages. Urgency may exist both in cases in which damage had already occurred and is likely to continue, and in cases where the damage has not yet occurred, but is likely to occur in the near future. 2. Likelihood that the IP right is valid and infringed. Such likelihood can be proven more easily in cases of trade mark infringement than in cases of patent infringement where difficult technical questions are involved.

50

The requirement of showing a good case can be considered as a basic issue of justice: no defendant shall be made subject to a measure that presumably would not stand up to a proper trial. Or, put differently, the plaintiff cannot have a legal interest in obtaining a measure that he is unlikely to obtain in proper procedures on the merit. The disadvantage of this approach becomes evident in patent cases. Owing to the highly technical and complex nature of infringement procedures, it is often very difficult for the patentee to show a good case both in respect of validity and infringement. The practice in several countries has therefore shifted to accelerated main proceedings (see below).

70 More precisely, art 50(6) states that provisional measures ‘shall, upon request by the defendant, be revoked or otherwise cease to have effect, if proceedings leading to a decision on the merits of the case are not initiated within a reasonable period, to be determined by the judicial authority ordering the measures where a Member’s law so permits or, in the absence of such a determination, not to exceed 20 working days or 31 calendar days, whichever is longer’. There is a division of opinion among the commentators as to whether the 20/31 day period constitutes an upper limit on the ‘reasonable period’, or whether the ‘reasonable period’ could be longer if authorised under domestic law. See Stoll/Busche/Arend (eds), WTO—Trade-Related Aspects of Intellectual Property Rights (Martinus Nijhoff Publishers, 2009) 748. 71 See E Bastian/R Knaak, ‘Trade Mark Infringement Proceedings in the Countries of the European Union’ (1995) 26 IIC 149: the authors arrive at the following figures for interim procedures that conclude the case: 80% for the UK, 65% for the Netherlands, more than 50% for Belgium, 50% for Germany, but only 5% for France and Italy.

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III. Practice in Selected Countries 51

Just as in the main action (see below section VI), interim procedures very much depend on the country, not only in respect to the requirements for granting interim relief.

1. US 52

In the US, the preliminary injunction is considered an extraordinary remedy, to be granted only when monetary damages cannot make a patent owner whole. To obtain a preliminary injunction, the patent owner must show: ‘[1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest’.72

These are granted only in a minority of cases in which they are sought, as the showing required for injunctive relief is often difficult to make at an early stage of the proceeding before liability is established.

2. UK 53

In the UK, procedures before either the Patents Court or the Intellectual Property Enterprise Court are now so fast that requests for interim injunctions have become less frequent. A typical case for the principles applied to interim injunctions is SmithKline Beecham v Generics (UK).73 Here, the injunction was granted because the plaintiff had a good arguable case and damages would not be an adequate remedy at trial. Owing to the complexity of the matter, the Court held that it was impossible to determine the relative strengths of the parties’ contentions. However, given the well-known fact that once exposed to competition, the price of a patented drug would spiral down very quickly, damages were unable to compensate the plaintiff for loss of market share from which it would be unable to recover. The Court also concluded that the defendant’s damages would be unquantifiable if the injunction was granted. Yet, the only thing I think I can say with some certainty is that the order of damage to the claimant is likely to be a good deal greater than that to the defendant…[because] claimant’s damage is more unquantifiable than that of the defendants, but both are unquantifiable. There are degrees of unquantifiability, just as there are degrees of infinity.

3. Germany 54

In Germany, cases of interim relief in patent actions are also infrequent owing to the difficulty of showing a good case in technically complicated matters. The requirement

72 Titan Tire Corp v Case New Holland, Inc, 566 F.3d 1372, 1375–76 (Fed Cir 2009) (quoting Winter v Nat Res Def Council, Inc, 129 S. Ct. 365, 374 (2008)). 73 English Patents Court, SmithKline Beecham v Generics (UK), 23 October 2001, Patent World, March 2002, 8.

Comparative Overview and the TRIPS 23 of urgency is strictly interpreted and requires the IP owner to act quickly, according to some courts within one month’s time limit.74 A successful request requires a clear infringement—though not necessarily a simple technology—and a confirmation of the patent’s validity beyond the mere act of granting the patent. This is typically the case once the patent has successfully survived opposition or nullity proceedings and has thereby proven to be solid, even if such decisions are subject to appeal or new validity attacks could be launched.75 Thus, one should be aware that although the estoppel of invalidity cannot be raised in ordinary proceedings, consideration to this aspect is given in interim proceedings. In order to avoid an ex parte interim injunction, potential defendants can submit a ‘protective letter’ (‘Schutzschrift’) to the court where such request is likely to be made (there are four courts where patent cases are frequently litigated in Germany), which is a kind of anticipated defence and which may persuade the court to set an inter partes hearing instead of granting the injunction ex parte.

4. France 55

In France, interim injunctions can be requested under Article 615-3 of the Industrial Property Code (in the new version as of 2007), yet seem to be rarely granted. In judging the balance of probabilities, the judge would have to take into account the likelihood of infringement, the strength of the underlying IP right, and the defences by the alleged infringer. Italy has comparable rules. France has a special expedited inter partes procedure in order to accommodate the interests of both parties.

5. The Netherlands 56

The Dutch kort geding comes closer to a pre-emptive decision on the merits and is carried out according to a very strict timetable, normally within two to three months. Although urgency is also required here, the courts do not interpret this too strictly, and even in patent cases, about half of all cases are decided by kort geding procedures.76

6. Japan 57

74

Finally, the Japanese procedure in the interim comes closer to an expedited trial on the merits, with hearings being conducted in an interval of two weeks rather than one month, as would be the case in the main action. The main advantage of interim proceedings is to exert increased pressure on the defendant, and to obtain an order that can be immediately enforced (which in ordinary proceedings is not the case until the decision becomes final).

Which would be the case for Munich and Düsseldorf. T Kühnen, Handbuch der Patentverletzung, 7th edn (Heymanns, 2014) recitals 2029 and 2037. 76 Kort geding procedures have become less popular with IP owners after the courts have started to give more consideration to the defendant’s interests: Hague Court of Appeal, Hoffman-Laroche v Orgonen, 12 September 1996, 1996 Intellectuelle Eigendom en Reclamerecht 237. 75

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7. In General 58

In all of the above countries except the Netherlands, the successful applicant is requested to post security. Injunctive relief is normally accompanied by an order that sets a fine in cases where the injunction is breached by the defendant. All countries allow an appeal either against grant or rejection of an interim injunction.

F. The Main Action 59

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Interestingly enough, the TRIPS Agreement is silent on the main part of the infringement procedure: the actual trial. This is understandable given the fact that procedures are vastly different from country to country, and hardly show any common denominator beyond what could be considered as constitutional requirements such as the right to be properly heard. The actual trial of course depends on how the previous steps of procedure (eg means of discovery) are shaped, and what kind of defences the alleged infringer is allowed to introduce. Further, the trial is very much influenced by the position of the judge and the educational background of judges in general: where a case has to be argued before a lay jury, different argumentative skills are required than if the case was decided by a panel of technically and legally trained professionals. While common law jurisdictions tend to ‘hear’ a case, civil law systems put more emphasis on written proceedings and an exchange of briefs. Perhaps with the exception of Italy, most industrialised countries have managed to conclude infringement proceedings within a relatively short period of time (12–16 months) thanks to new rules on jurisdiction (fewer courts can hear patent cases), greater judicial expertise and more stringent case management. According to a recent study covering European countries,77 first instance infringement proceedings were concluded within nine months in Germany, 10 months in the Netherlands, 11 months in the UK and almost 20 months in France. A parallel invalidity action in Germany takes longer, however (median 15 months). First instance proceedings in Japan take about 15 months. In the US, proceedings take much longer due to the discovery phase, and the percentage of those cases that actually go to trial is rather low (2 per cent). Patent infringement procedures in each jurisdiction have their specific flavour that is not always explicable by facts and figures. As to the sheer number of patent infringement cases, China takes the lead with more than 9000 infringement actions before the courts, and 4500 before the administrative IP Bureaux78 (even if only looking at invention patents, as also utility models and design rights are called patents in China). This is followed by the US with about 6000 patent suits (of these, 98 per cent do not make it to trial, which may have to do with the discovery phase, or the costs involved).79

77 K Cremers, M Ernicke, F Gaessler, D Harhoff, C Helmers, L McDonagh, P Schliessler and N van Zeebroeck, ‘Patent Litigation in Europe’ (2013) SSRN paper http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2333617. 78 www.chinaipr.gov.cn/casesarticle/cases/caseothers/201501/1852880_1.html. 79 According to T Maloney, ‘the median cost of a medium size patent lawsuit is approximately $3.5 million through trial’: American Intellectual Property Law Association, Report of Economic Survey (2013).

Comparative Overview and the TRIPS 25 then Germany with about 1000 cases (difficult to collect statistical data),80 150 cases in Japan (plus about 450 appeals against Patent Office decisions), and less than 100 cases in France, the Netherlands and the UK. Still, the impact of UK decisions due to their clear style and persuasive nature for other common law countries is disproportionately high (while most Chinese decisions cannot even be traced). French decisions may have less of an impact because they are very difficult to read. They must be written in one sentence, and French law students spend their first two years of university getting accustomed to such style. In terms of public access, decisions from the UK and the US are freely and almost immediately available (and so are the videotaped arguments of cases before the US Supreme Court), while German decisions prior to publication delete the names of the parties, and do not show up in a central database. In Brazil, even the individual opinions of judges are published as soon as the file is passed on (the Brazilian Supreme Court even has its own radio station and regularly broadcasts reports on its decisions). For the roughly 2000 annual decisions of the Boards of Appeal of the EPO (issues of patentability only), not only the decision, but the whole file is accessible online. The Japanese IP High Court now regularly publishes English translations of its decisions. European judges now regularly cite decisions from other European jurisdictions, and judges know each other. Also in civil law countries, patent judges have taken a higher profile. In Japan, the two leading IP judges at the time, Mimura and Iimura, were voted amongst the five most popular judges in Japan. And yet, despite frequent encounters, mutual respect and recognition, striking differences remain: patentees can hardly win a case in Taiwan; the approach to validity81 and infringement is strikingly different even amongst European jurisdictions.82 In the US, decisions on patent infringement are made by jurors selected from the general population who are normally unfamiliar with patent law. In Italy and Poland, even patent applications can be provisionally enforced, with little in the way of safeguards if this turns out to be wrong. Germany is patentee-friendly when it comes to remedies: injunctive relief and claims of recall are granted with rigidity and without considerations for a balancing of interests. One could go on. Important to note is that these national characteristics are often based on a certain legal mentality that should be appreciated in order to understand the enforcement system as a whole.

80 Cremers and others, ‘Patent Litigation in Europe’ (n 77) describe their efforts to obtain reliable data: ‘In Munich, the identification of patent cases was done based on handwritten lists created by judges’ (34). The study shows the difficulty in evaluating statistical data. Sometimes, figures relate to suits that are raised, sometimes to decisions. 81 See the comments of Jacob, LJ in the UK Court of Appeal decision of 19 August 2008, European Central Bank v DSS [2008] EWCA Civ 192: ‘Meanwhile the ECB had started revocation proceedings in France, Germany, the Netherlands, Spain, Italy, Belgium, Luxembourg and Austria. These are ongoing. We were given an update of the position in each country. In Germany and France there have been first instance decisions. None of the other proceedings have got that far. Kitchin J’s decision came first. The German Federal Patent Court (the Bundespatentgericht) did not agree with him by a decision of 27th March 2007. It held the patent valid. Then, on 9th January 2008, the French Court (le Tribunal de Grande Instance de Paris) agreed with Kitchin J and disagreed with the German Court. On 12 March 2008 the Dutch Court agreed with the German Court. In sporting terms, the score is currently 2-2 to the ECB at first instance level’. 82 Cremers and others (n 77) 47.

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Table 1: Outcomes for Infringement and Revocation Claims Outcome Claim Infringement

Revocation

62

63

Infringed

Not infringed

Revoked

Settled

#

%

#

%

#

%

#

%

DE

1165

22.0%

521

9.9%

296

5.6%

2,434

46.1%

FR

47

5.6%

630

74.9%

27

3.2%

137

16.3%

NL

94

36.0%

137

52.5%

23

8.8%

7

2.7%

UK

16

14.7%

11

10.1%

28

25.7%

36

33.0%

DE

208

7.0%

298

10.0%

574

19.3%

1059

35.6%

FR

0

0.0%

45

66.2%

11

16.2%

12

17.6%

NL

0

0.0%

11

26.8%

29

70.7%

1

2.4%

UK

3

3.7%

15

18.5%

34

42.0%

21

25.9%

Bifurcated jurisdictions tend to have a more stringent procedure, as the estoppel or counterclaim for invalidity is not allowed. This would be the case for Germany, China, Poland and also Brazil. In Japan, Korea and Taiwan, the courts can hold patents invalid inter partes, but not invalidate them, a strangely hybrid approach with lots of problems of its own. Bifurcation finds its justification in the clear separation of administrative and civil law (for which reason the doctrine has always remained alien to common law). Practical reasons for such a double track lie in the different composition of the judicial bodies that decide about validity on the one hand, and infringement on the other. Bifurcation has two negative side-effects, however. For one, different stories may be told in infringement and validity proceedings.83 Second, from a common sense point of view it is difficult to digest that the patentee should be allowed to enforce a patent that should never have been granted in the first place, and that, if invalidated, is considered never to have existed. Jurisdictions embracing the bifurcation system have reacted to these concerns in various ways: in Germany, all attempts to introduce the estoppel of the ‘free state of the art’, or the estoppel that the defendant was merely working in the public domain have been stonewalled by the courts.84 Only in 1986 did the Federal Supreme Court allow what is now known as the ‘Formstein’ defence,85 which, not unlike the UK ‘Gillette’ defence allows the defendant to argue that the allegedly

83 ‘Professor Mario Franzosi likens a patentee to an Angora cat. When validity is challenged, the patentee says his patent is very small: the cat with its fur smoothed down, cuddly and sleepy. But when the patentee goes on the attack, the fur bristles, the cat is twice the size with teeth bared and eyes ablaze’.—Jacob, LJ in European Central Bank v DSS (n 81). 84 Imperial Supreme Court, 29 March 1930, MuW 30, 372. See also H Isay, Patentgesetz (n 63) 275/276. Yet, it borders on the incomprehensible where the Federal Supreme Court, decision of 8 July 2014, 46 IIC 249 (2015)— ‘Nicht zu ersetzender Nachteil’ refuses a stay in the execution of a decision where the patent has been revoked in parallel invalidation proceedings, yet without this decision having become final. 85 Federal Supreme Court, 29 April 1986, 1986 GRUR 803 = 28 IIC 795 (1987)—‘Formstein’/‘Moulded curbstone’.

Comparative Overview and the TRIPS 27

64

65

infringing embodiment is closer to the state of the art than to the patented teaching. This defence is only available against the allegation of equivalent infringement, while in Mainland China, this defence can also be raised where literal infringement is alleged. In Japan, Korea and Taiwan, the estoppel goes further and allows the defendant to argue that there are grounds why the patent at issue should be invalid. In Japan, this defence was first admitted in the ‘Kilby’ decision86 with the argument that enforcing an ‘obviously’ invalid patent would be contrary to good morals. Meanwhile, it is no longer necessary that the invalidity is ‘obvious’, and any reason for invalidity can be invoked. This is the same in Taiwan, while in Korea, there is conflicting case law as to whether only lack of novelty, or also lack of inventive step can be argued. Particularly the interplay between court proceedings and proceedings before the Patent Offices (that can invalidate patents) becomes very complicated in these jurisdictions, and has not yet been satisfactorily solved. In the European context, the central limitation proceedings before the EPO according to Article 105(a) of the European Patent Convention (EPC) have given the patentee a new tactical weapon in order to avoid an outright revocation of the patent in national infringement procedures. The defendant is thereby confronted with a moving target and may have to argue a different state of art once limitation proceedings have been successfully concluded. This issue is further addressed in the chapters on the UK and Italy.

G. European Issues 66

Intra-European IP issues are highly complex. Historical, cultural, economic and linguistic factors all have left their imprint on the rocky road towards a harmonised European patent system. This section briefly looks at personalities, institutions and the existing legal framework.

I. Personalities 67

86

Europe is the cradle for the attempts to set up an international system of industrial property rights—not as a European project, but one of global dimensions. Well into the 1970s, Europe and Europeans were the driving force behind international agreements on industrial property law, and behind the foundation and development of organisations such as the WIPO and the AIPPI (Association Internationale pour la Protection de la Propriété Intellectuelle). This certainly had to do with industrial development and the importance of industrial property rights for economic development. But it is equally true that the personalities behind these developments because of their European origin, not unlike musicians, had a perception of cultural diversity

Japanese Supreme Court, 11 April 2000, 35 IIC 91 (2004)—‘Kilby’.

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Christopher Heath and Thomas F Cotter that allowed them to reach across borders and build common structures. Three of them, Arpad Bogsch, the second president of the WIPO, Friedrich Zoll, the ‘inventor’ of Article 10bis of the Paris Convention,87 and Stojan Pretnar, the staunch defender of the interests of developing countries, came from Austria-Hungary, the multi-ethnical country par excellence. Albert Osterrieth, the co-founder of AIPPI, was born in Strasbourg and equally at ease with the German and French culture and language. Stephen Ladas and Rudolf Callmann, whom many consider Americans, came from Europe. Ladas was a Greek diplomat whose treatise on the ‘The Exchange of Minorities’ (1932) is sad testimony of political blindness, ethnic cleansing and political disdain between nations. Rudolf Callmann was a brilliant German attorney and legal writer who made it his mission to introduce the concept of ‘unfair competition’ to the US.88 Bob van Bentham, the first president of the EPO who grew up in the melting pot of Dutch Batavia and lived through the Second World War, saw a unified European patent as part of a desirable and necessary European integration. When looking beyond Europe, one needs to mention Korekiyo Takahashi who almost single-handedly wrote the first Japanese IP laws, again based on the cultural insights that he gained when clandestinely travelling to the US.

II. Institutions 68

69

Despite years of European patent harmonisation, uniformity is not yet in sight. Patent enforcement in Europe is currently handled by national courts, the European Court of Justice, and, as far as invalidation is concerned, the Opposition Divisions and Boards of Appeal of the EPO. And while the EPO has been operative for almost 40 years, a corresponding European Patent Court may only come into operation in the near future. The EPO is not an EU institution, yet because its decisions may significantly impact any national infringement proceedings in case the patent is amended or revoked, the relationship between the above institutions requires some clarification. The Boards of Appeal of the EPO do not decide about cases of infringement (an issue decided by national courts), or cases where the rights over a patent or a patent application are disputed. Decisions of the Boards of Appeal are final (with limited exceptions) and cannot be appealed to any court. The Enlarged Board of Appeal is not a further instance of appeal (save for procedural violations, EPC, art 112(a)), and decides questions that have been referred either by a Board of Appeal, or the President of the Patent Office, in cases where the jurisprudence of the Boards of Appeal is not uniform, or where a Board would like to deviate from previous settled case law or a previous decision of the Enlarged Board of Appeal. The Boards of Appeal render about 2000 decisions per year (2012: 2023 cases settled) and normally sit in panels of three, one legal judge and two technical judges. The Boards of Appeal are not bound by the decisions of national courts, or the decisions of the European Court of Justice, but only

87 F Zoll, ‘Aus meinen Studien über die Bekämpfung des unlauteren Wettbewerbes und über das Recht am Unternehmen’ in M Mintz (ed) Festschrift für Hermann Isay (Vahlen, 1933) 229. 88 R Callmann’s study ‘Unjust Enrichment in Unfair Competition’ (1942) 55 Harvard Law Review 595 is one of the all-time classics on unfair competition law.

Comparative Overview and the TRIPS 29

70

71

72

by decisions of the Enlarged Board of Appeal. There are 28 Boards of Appeal, and 171 judges (31 December 2011) The European Court of Justice (‘ECJ’, now ‘CJEU’) has jurisdiction over the interpretation of Directives and Regulations of the European Community. In the field of patents, these are currently the Directive on Biotechnological Inventions and the Directives on Supplementary Protection Certificates (see below section VII.3). The court decides these issues when a case is referred to it by a national court. Decisions of the ECJ are binding upon the institutions of the European Union (namely the Commission), upon national courts and upon the Union’s member States. Decisions have no binding effect upon the Boards of Appeal, even when rendered in an issue of patentability (namely for biotechnological inventions). Yet all Member States of the European Union are also member States of the European Patent Convention, making divergent decisions undesirable. National courts in the European Union have jurisdiction over matters of patent infringement and the validity of national patents, and European patents that have been granted by the EPO and have subsequently obtained the status of national patents in the individual Member States. National courts of EU Member States are bound by decisions of the ECJ. Whether they are bound by decisions of the Boards of Appeal or the Enlarged Board of Appeal, has not been answered uniformly. As to the binding effect or persuasive authority of the Boards’ of Appeal decisions on national courts, the position is the following: while national courts should normally follow the established jurisprudence of the EPO, that does not mean that we should regard the reasoning in each decision of the Board as effectively binding on us. There will no doubt sometimes be a Board decision which a national court considers may take the law in an inappropriate direction, misapplies previous EPO jurisprudence, or fails to take a relevant argument into account. In such cases, the national court may well think it right not to apply the reasoning in the particular decision. While consistency of approach is important, there has to be room for dialogue between a national court and the EPO (as well as between national courts themselves). Nonetheless, where the Board has adopted a consistent approach to an issue in a number of decisions, it would require very unusual facts to justify a national court not following that approach.89

73

A similar approach has been taken by the Swiss90 and the German91 courts, while the French courts have taken a different position: French national courts are not bound by the decisions of the EPO (that is not a jurisdiction) (and that in contrast to the decisions of the European Court of Justice are not binding upon national courts) in the sense that even the decisions of the Enlarged Board of Appeal are mere indications of the analysis undertaken by the EPO in order to grant European patents. This is no different from the decisions of national courts of other European Member States that nourish the legal debate by explaining the reasons why a certain jurisdiction takes a certain view on points of law that come before the national courts, but their decisions are not binding upon the national courts of other Member States.92

89 UK House of Lords, 4 July 2008, Conor Medsystems Inc v Angiotech Pharmaceuticals Inc, [2008] UKHL 49, [2008] RPC 28. 90 Swiss Federal Supreme Court, 4 March 2011, OJ EPO 2011, 452. 91 German Federal Supreme Court, 6 May 2010, 42 IIC 367—‘Machine Unit’. 92 Paris District Court, 28 September 2010, 42 IIC 474 (2011)—‘Dosage Regime/Finasteride’.

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Christopher Heath and Thomas F Cotter

74

The relationship between the boards and the ECJ has been summarised in a recent decision:93 The EPO as an international organisation with its separate legal order is not a member of the EU. According to Article 23(3) EPC, in their decisions, the members of the Boards of Appeal shall not be bound by any instructions and shall comply only with the provisions of the EPC. In point (7) of the reasons for its decision G 2/06 the Enlarged Board of Appeal concluded that neither it nor any Board of Appeal of the EPO, has the power to bind itself to follow a ruling of the ECJ on the interpretation of Article 6(2)(c) of the Directive and apply this to Rule 28(c) EPC. But, although judgements of the ECJ are not legally binding on the EPO or its boards of appeal, they should be considered as being persuasive. The EPO (see Notice dated 1 July 1999 concerning the amendment of the Implementing Regulations to the European Patent Convention, OJ EPO 1999, page 573) and the Boards of Appeal (see decision of the Enlarged Board of Appeal G 5/83, OJ EPO 1985, 64) have acknowledged the need for uniformity in harmonised European patent law. The Contracting States to the EPC, including those not members of the EU, agreed to adopt the wording of Biotech Directive 98/44/EC in the Implementing Regulations of the EPC and, under Rule 26(1) EPC, accepted that the Directive shall be used as a supplementary means of interpretation. The board observes that its decision in the present case, which is based on the decision G 2/06 of the Enlarged Board of Appeal, and which states that inventions which make use of HES cells obtained by de novo destruction of human embryos or of publicly available HES cell lines which were initially derived by a process resulting in the destruction of the human embryos are excluded from patentability under the provisions of Article 53(a) EPC in combination with Rule 28(c) EPC, is in line with decision C-34/10 of the ECJ.

75

Summing up, it appears that national courts dealing with issues of patentability would look closely to the practice of the Boards of Appeal, and that at least in decisions of the Enlarged Board of Appeal, an extensive comparative research is done in order to establish the case law in other Member States. The Boards may be independent, but there is interdependence with the decisions of national courts and the European Court of Justice.

III. Existing Legal Framework 76

77

93

The European Patent Convention is not an instrument of EU law, yet is the basis for the central grant of a European patent that can be validated in all EU Member States. Upon grant, the European patent is then transformed into a bundle of national patents that as of yet can only be enforced and invalidated on a country-by-country basis. Exceptions to this rule are the central procedures for opposition, appeal and limitation. Instruments of Community law are the Directive on Biotechnological Inventions 98/44/EC, the Directives on Supplementary Protection Certificates 2001/82 and 2001/83, and, most recently, the Regulation (EU) No 1257/2012 on the creation of unitary patent protection. Despite a good number of referrals regarding the interpretation of the above Directives, the role of the ECJ in interpreting substantive patent law has remained rather limited. This is somewhat different in the area of patent enforcement owing to the Enforcement Directive 2004/48, the Customs Regulation Decision T 2221/10 of 4 February 2014, ‘Culturing Stem Cells/Technikon’.

Comparative Overview and the TRIPS 31

78

608/2013, and, most importantly, the Brussels Regulation 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. One of the purposes of the latter Regulation is to avoid double litigation over the same subject matter in different countries of the EU. Given that European patents as of yet are national patents and under the principle of territoriality independent of each other, a good deal of controversy has centred around the availability of cross-border measures, be it by the patentee (cross-border injunctions) or by the alleged infringer (declaration of non-infringement of the patent for various Member States, dubbed ‘torpedo’). The estoppel or counterclaim of invalidity further complicated matters. These issues are further addressed in chapters two, six and seven. Issues involving international jurisdiction outside the European framework are addressed in chapter nineteen, and border measures in chapter twenty.

H. Final Measures: Articles 44–48 79

The TRIPS Agreement mentions a number of final measures that have to be provided: injunctions in Article 44, damages in Article 45, destruction of infringing goods in Article 46 and the right of information in Article 47.

I. Injunctive Relief, Article 44 80

Injunctive relief is the most sought after remedy in infringement cases. In most countries, the prevailing patent owner is almost always entitled to an injunction, absent very unusual circumstances such as the infringer’s successful invocation of a competition law based defence or the defence of abuse of right.94 Injunctive relief is discretionary in the United Kingdom and other Commonwealth countries but nevertheless

94 In recent years, defendants sometimes have invoked these defences in cases involving standard essential patents (SEPs). The European Commission, for example, recently concluded that owners of SEPs who have committed to license those patents on fair, reasonable, and nondiscriminatory (FRAND) terms may engage in an abuse of dominant position in violation of European competition law if they seek injunctive relief against willing licensees. See European Commission, Press Release, ‘Antitrust: Commission Accepts Legally Binding Commitments by Samsung Electronics on Standard Essential Patent Injunctions’ (29 April 2014), available at: http://europa.eu/rapid/press-release_IP-14-490_en.htm; European Commission, Press Release, Antitrust: ‘Commission Finds That Motorola Mobility Infringed EU Competition Rules by Misusing Standard Essential Patents’ (20 April 2014) available at: http://europa.eu/rapid/press-release_IP-14-489_en.htm; European Commission, Memo, ‘Antitrust Decisions on Standard Essential Patents (SEPs)—Motorola Mobility and Samsung Electronics—Frequently Asked Questions’ (29 April 2014) available at: http://europa.eu/rapid/press-release_ MEMO-14-322_en.htm. Now confirmed by CJEU, 16 July 2015, case C-170/13, Huawei Technologies v ZTE GmbH. Also courts in Japan and the Netherlands have held that SEP owners sometimes may be barred from obtaining injunctions under the abuse of right doctrine if they do not honour their FRAND commitments. See Samsung Elecs Co v Apple Japan LLC, 2013(Ne)10043, Appeal Case of Seeking Declaratory Judgment of Absence of Obligation; 2013(Ra)10007, Japanese IP High Court, 16 May 2014, 46 IIC 116 (2015); Appeal Case against a Ruling that Dismissed a Petition for Injunction against Patent Infringement; 2013(Ra)10008 Appeal Case against a Ruling that Dismissed a Petition for Injunction against Patent Infringement (Japanese IP High Court (Grand Panel), 16 May 2014, 46 IIC 124 (2015)), English translation also available at: www.ip.courts.go.jp/eng/

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Christopher Heath and Thomas F Cotter is awarded in the vast majority of IP infringement matters.95 In the United States, however, the Supreme Court’s 2006 in eBay Inc v MercExchange, LLC altered the longstanding practice of awarding the prevailing patent owner an injunction absent exceptional circumstances, holding instead that a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.96

81

As discussed in greater detail in chapter sixteen, courts in the US now award injunctions to prevailing patent owners approximately 75 per cent of the time; patent assertion entities in particular are unlikely to be awarded injunctions. Whether the US practice is consistent with TRIPS Article 44 has been a matter of some debate. Article 44(1) states that ‘judicial authorities shall have the authority to order a party to desist from an infringement’, though Members are not obliged to accord such authority in respect of protected subject matter acquired or ordered by a person prior to knowing or having reasonable grounds to know that dealing in such subject matter would entail the infringement of an intellectual property right.

Article 44(2) continues that Notwithstanding the other provisions of this Part and provided that the provisions of Part II specifically addressing use by governments, or by third parties authorized by a government, without the authorization of the right holder are complied with, Members may limit the remedies available against such use to payment of remuneration in accordance with subparagraph (h) of Article 31. In other cases, the remedies under this Part shall apply or, where these remedies are inconsistent with a Member’s law, declaratory judgments and adequate compensation shall be available.

Professor Cotropia argues that eBay nevertheless is consistent with TRIPS, either because (1) eBay’s four factors map onto the three factors set forth in TRIPS, Article 30 for exceptions to patent rights,97 or (2) the post-eBay practice of awarding an ongoing royalty for infringement satisfies TRIPS Article 44(2).98 hanrei/g_panel/index.html; Rechtbank ‘s-Gravenhage, 14 March, 2012, Nos. 11-2212, 11-2213, 11-2215 (Samsung Elecs Co v Apple Inc) (Neth) available at: http://uitspraken.rechtspraak.nl/inziendocument?id=ECLI: NL:RBSGR:2012:BV8871. 95 See T Cotter, Comparative Patent Remedies (n 8) 179–82; Lundie-Smith & Moss, ‘Bard v. Gore: To Injunct, or Not to Injunct, What Is the Question? Is It Right to Reward an Infringer for Successfully Exploiting a Patent?’ (2013) 8 Journal of Intellectual Property Law & Practice 359. 96 547 U.S. 388, 391 (2006). These standards now apply in other cases as well, including copyright and trade mark matters. 97 See TRIPS, art 30 (‘Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties’). 98 Cotropia, ‘Compulsory Licensing Under TRIPs and the Supreme Court of the United States’ Decision in eBay v. MercExchange’ in T Takenaka (ed), Patent Law and Theory: A Handbook of Contemporary Research (Edward Elgar, 2008) 557. Cotropria also argues that eBay is consistent with general TRIPS principles as set forth in art 8.

Comparative Overview and the TRIPS 33 82

Ordinarily, an order for injunctive relief is accompanied by a fine that is imposed in the case of contravention. Countries nevertheless follow different rules on how to word the injunction. While in some countries, it is sufficient for the plaintiff to request the defendant to cease further infringement, other countries require the plaintiff to request a far more detailed order.99 Thus, in a patent infringement case, the plaintiff would have to describe the infringing act and request cessation thereof, sometimes including possible equivalents. In the case of trade marks, the plaintiff would be requested to describe exactly which part of the infringing mark the defendant should no longer use. In general, it is preferable that the request for injunctive relief be particularly tailored to the infringing act. After all, the IP right as such already excludes third parties from using it. If the defendant has unlawfully used the IP right in a certain manner, the remedy should reflect the infringement rather than be a request for lawful behaviour in general, as this could be requested from anyone. It is perhaps not a good idea to limit the injunctive order to a certain infringing type or series, for example ‘The defendant may no longer produce a washing machine of type XY’, as this would allow the defendant to merely rename the type or series and continue the infringing activity.

II. Damages, Articles 45, 48 83

84

The calculation of damages is notoriously difficult in IP matters. In most countries, damages are meant ‘to compensate for the injury the right holder has suffered because of an infringement of his intellectual property right’ (TRIPS, art 45(1)). Most countries would thus regard damages as compensatory rather than punitive. In the US, cases of wilful infringement may make the infringer liable for enhanced damage awards ‘up to three times the amount found or assessed’.100 The difficulty of assessing damages is mitigated by the fact that in a good many jurisdictions, the parties settle their case after an infringement is established.101 It is now

99 For discussion of the law and judicial practice in the United States regarding the content of injunctive orders in patent cases, see Golden, ‘Injunctions as More (or Less) than “Off Switches”: Patent Infringement Injunctions’ Scope’ (2012) 90 Texas Law Review 1399. 100 35 U.S.C. § 284. In recent years, however, US courts have narrowed the definition of ‘wilful infringement’ by requiring the patentee to prove ‘that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent…. If this threshold objective standard is satisfied, the patentee must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer’. In re Seagate Tech, LLC, 497 F.3d 1360, 1371 (Fed Cir 2007) (en banc). (Some recent opinions nevertheless question whether the above standard is consistent with the US Supreme Court’s 2014 decisions permitting greater use of awards of attorneys’ fees, insofar as US law has tended to apply parallel standards for awards of enhanced damages and attorneys’ fees. See eg Halo Elecs, Inc v Pulse Elecs, Inc, Nos 2013–1472, 2013–1656, 2015 WL 1283767, at *2 (Fed Cir 23 March 2015) (O’Malley, J, dissenting). When an infringement is determined to be wilful, courts consider various factors to determine whether and if so by what amount (up to three times) to enhance the damages award. See Read Corporation v Portec, 10 July 1992, 970 F.2d 816 (Fed Cir 1992). 101 eg in Germany, there is a scarcity of decisions on the calculation of damages due to the fact that an interim decision on the infringement as such would cause most parties to settle, particularly as the plaintiff can request all necessary details for the calculation of, eg the infringer’s profits: Civil Code, s 259. A claim for details is regularly made as a preparation of the damage claim and recognised by the courts as such: Federal Supreme Court, 13 March 1962, GRUR 1962, 398—‘Kreuzbodenventilsäcke II’. In France, the fact that courts could order a gross damage amount to be immediately enforceable is an incentive for settling the case.

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Christopher Heath and Thomas F Cotter common practice in most countries to calculate damages either on the basis of the damages incurred, the infringer’s profits or a reasonable royalty. The rationale behind these methods of calculation is the following: damages are often difficult to quantify. They would include lost sales (difficult to prove causality in competitive markets, however), loss of reputation, sometimes market confusion and consequences of such direct damages, for example, the closure of production sites. Calculating these damages is often difficult and time consuming. It is often easier to calculate damages according to the principles of unjust enrichment. Unjust enrichment would allow the right owner to claim what the infringer has obtained by using an economic position exclusively allocated to the right owner. This is particularly apparent in the case of an ordinary licensing fee: the infringer should at least pay what would have been due had the infringer tried to act lawfully, that is, had he tried to obtain permission to use the right. Yet it is clear that such ordinary licensing fee can only be the bottom line: if an infringer only had to pay an ordinary licensing fee, there would be little incentive for lawful behaviour (other than the risk of having to defend oneself in an infringement suit), even more so in cases where the right owner would not have granted a licence in the first place. This is different for the claim of the infringer’s profits. Also these, it can be argued, have been obtained at the right owner’s expense, at least to the extent that without the infringement, those profits should have gone to the right owner. Some examples from national court decisions may illustrate the point.

1. The US 85

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35 USC §284 awards damages for infringement ‘in no event less than a reasonable royalty’. Although a trial for establishing infringement sometimes precedes a trial for damages, usually both matters are decided during the same proceeding.102 If the IP owner claims more than reasonable royalties, an expert witness would often be heard as to the exact amount. Lost profits can be claimed upon proof of the following: 1. demand for the patented product; 2. absence of competing and non-infringing products; 3. ability of the IP owner to actually market the quantity of goods for which lost profits are claimed; and 4. the amount of profit that would have been made in the absence of infringement.103

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Lost profits may even be claimed for lost sales of products not incorporating the patented invention.104 Where several competing products are on the market, lost profits

102 On rare occasions, courts may engage in a ‘reverse bifurcation’, holding a trial on damages first. See eg In re Innovatio IP Ventures, LLC Patent Litig, Case No 11 C 9308, 2013 WL 5593609 at *20, 29 (ND Ill 3 October 2013). 103 Panduit Corp v Stahlin Brothers Fiberworks, 575 F.2d 1152 (6th Cir 1978). 104 Rite-Hite Corp v Kelley Co, 56 F.3d 1538 (Fed Cir 1995) (en banc): here, the patentee held parallel patents for comparable inventions, one of which was used but not infringed, the other of which was not used but infringed. Owing to the infringement, sales of products manufactured under the patent that was not infringed had dropped. The Court found the loss foreseeable and therefore recoverable. Some commentators have been critical of this result, however, on the ground that lost profits should be attributable to the achievement that the patent represents. There is a comparable decision in Japan: Tokyo High Court, 15 June 1999, 1697 Hanrei Jihô 96 (2000)—HeatBank System: Here the patentee held patents A and B, made its turnover by exploiting patent A, while

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are limited to the difference between actual market share and market share that would have been realised but for the infringement, plus a reasonable royalty on all products sold beyond this figure.105 The same decision, however, also affirms the recoverability of damages for the loss of sales of non-patented parts of a patented invention (entire market value).106 The decisive question is whether the patentee can reasonably expect the sale of non-patented components together with the sale of the patented component.107 In a competitive market, it is not sufficient merely to compare market shares before and after infringement. Rather, competition must be measured subjectively, ie it must be established that consumers had actually diverted their demand. This is not the case where the products may be objectively competing, yet target different consumer groups.108 If lost profits cannot be shown, the patentee is entitled to a reasonable royalty. This is calculated as the amount a person would have been willing to pay as a royalty in a hypothetical negotiation at the time infringement began. The hypothetical negotiation is said to occur with both parties assuming that the patent is valid and infringed. Some of the factors normally considered in determining the reasonable royalty include: the commercial benefits of the invention and the extent of its use by the infringer; whether acceptable non-infringing alternatives were available; the infringer’s expected profit; whether the licence would have been exclusive; and actual established royalties under the patent or in the particular field. The Federal Circuit has shown particular interest in reasonable royalty damages in recent years, rejecting speculative and overreaching theories in favour of more rigorous economic analysis closely tied to the claimed technology and its use by the defendant. For example, a conventional practice among damages experts of assuming the infringer’s willingness to pay roughly 25 per cent of its infringing profits as a royalty was struck down as arbitrary and speculative.109 Where the asserted patent claims relate to only one feature of a multi-component product, however, it may be improper to use the entire product revenue as the royalty base.110 The market value of the entire product should be used as the royalty base only if the patented feature drives the demand for an entire multi-component product.111 In other words, the patented feature must be what motivates consumers to buy the product.

the infringer used the technology of patent B, which then led to a drop in sales of the patentee’s products using technology A. The Court calculated the losses in accordance with the plaintiff ’s market share of 60% even though the patentee did not use the patented technology to manufacture its products that were in competition with the infringing products of the defendant. 105

State Indus v Mor-Flo Indus, 883 F.2d 1573 (Fed Cir 1989). See also Fonar Corp v General Electric, 107 F.3d 1543 (Fed Cir 1997): if the infringer uses the advantage of the patented device, this carries the presumption of consumer demand for the whole product. 107 King Instruments Corp v Otari Corp, 767 F.2d 853 (Fed Cir 1985). 108 BIC Leisure Products v Windsurfing International, 1 F.3d 1214 (Fed Cir 1993) for the case of up-market and rather down-market surfboards. 109 Uniloc USA, Inc v Microsoft Corp, 632 F.3d 1292, 1318 (Fed Cir 2011). 110 See eg LaserDynamics, Inc v Quanta Computer, Inc, 694 F.3d 51, 56 (Fed Cir 2012); Uniloc, 632 F.3d at 1318. 111 LaserDynamics (n 110), 694 F.3d at 68. 106

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35 USC § 287 often makes a damages award conditional on a proper marking of the product (patented, trade marked) or other knowledge of the infringer about the IP right. Failure to properly mark the products can lead to a loss of damages.112 Thus, while providing IP owners with the possibility of obtaining multiple damages in cases of wilful infringement, the US system has also significant limits to damage awards. First, it does not allow the owner of a patent on a new invention to claim the infringer’s profits,113 and, second, it makes damages conditional on a proper marking of the products. Further, it provides for reimbursement of attorneys’ fees only in exceptional circumstances, these being normally wilful infringement.

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2. Japan 91

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Although Article 709 of the Japanese Civil Code states that ‘A person who has intentionally or negligently infringed any right of others, or legally protected interest of others, shall be liable to compensate any damages resulting in consequence’, the difficulty patent owners faced in proving damages and causation in accordance with this provision prompted the Diet to include in the 1959 Patent Act (and subsequent amendments thereto) certain presumptions intended to reduce the patent owner’s burden. In its current version, Article 102 of the Patent Act provides, first, that a patent owner may recover the amount of profit per unit of articles which would have been sold by the patentee … if there had been no such act of infringement, multiplied by the quantity … of articles assigned by the infringer

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subject to potential reductions if the patentee lacked the capacity to make the specified number of articles.114 Although some decisions have declined to consider whether the defendant might have remained in the market (and thus deprived the patent owner of a profit) by using a non-infringing alternative instead of the patented invention, more recent case law has been more receptive to this consideration.115 Second, as an alternative, a court may presume that the patent owners’ damages equate to ‘the amount of profits earned by the infringer’. Although the dominant view at one time was that the infringer’s profits could not be claimed where the patent right in question was not used,116 more recent decisions have held that this is not the case.117

112 eg American Medical Systems Inc v Medical Engineering Corporation, 4 October 1993, 6 F.3d 1523 (Fed Cir 1993). The marking requirement does not apply with respect to process patents, however. See eg Crown Packaging Tech, Inc v Rexam Beverage Can Co, 559 F.3d 1308, 1316–17 (Fed Cir 2009). 113 Design patent owners may obtain this remedy, however, see 35 U.S.C. § 289, as can under some circumstances owners of infringed copyrights, trade marks, and trade secrets. 114 Japan Patent Act, s 102(1). Case law holds that this article is also applicable where the lost sales are attributable to a different (but unexploited) patent of the patentee; see above. 115 See IP High Court, 25 September 2006, Hei 17(ne) 10047—‘Massage Chair’, 42 IIC 858 (2011). 116 eg Osaka District Court, 25 February 1993, 25-1 Chizaishû 56—‘Jimmy’z’. 117 Tokyo District Court, 8 October 2009, Kureha K.K. v Nichiiko Pharma K.K. ‘Kyucal’, 42 IIC 860 (2011). In the Aprica decision (IP High Court (Grand Panel), 1 February 2013, 2012 (Ne) 10015—Sangenic Int’l Ltd v Aprica Children’s Products Inc), the Court at least clarified that a use of the patented technology by the licensee qualified as use by the patentee, which is in fact a correction of the mistaken decision Tokyo District Court, Decision of 24 March 1993, 26 IIC 556—‘Type Chanel No. 5’.

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The infringer can deduct from his profits the expenses incurred.118 If the infringer’s figures for pure profits seem unrealistically low, the court would simply multiply the infringer’s turnover with the IP owner’s normal profits, which patent law already provides for on a statutory basis.119 As a third possibility, the court may award ‘the amount the patentee … would have been entitled to receive for the working of the patented invention’. Requesting damages in the amount of a licensing fee is the fallback provision in cases where neither the patent owner’s own damages nor the infringer’s profits can be proven.120 Prior to a 1998 amendment, the statutory language included the word ‘ordinarily’ (tsujo no); courts tended to award ‘ordinary’ licensing fees that were rather low, based on the Inventors’ Association’s figures for contractually negotiated licensing rates in domestic agreements. Since the deletion of the word ‘ordinarily’, the courts (at least in patent cases) no longer feel obligated to award only an ‘ordinary’ licensing fee, and the case law indicates that the courts have become more assertive in arriving at higher figures.121 The plaintiff also can also claim damages for loss of reputation122 or market confusion,123 though in patent cases such damages are rarely if ever awarded. Moreover, in Japan (as in many countries) damages are understood as monetary compensation and may not be punitive.124

3. Germany 96

In Germany, damages claims for the infringement of IP rights are now statute based, for example, section 139 of the Patent Act. However, no specific method of calculation is given, reflecting the fact that such damage claims have always been a traditional remedy under tort law, and those for IP rights thus follow the same tort law principles. Apart from tort law, the courts also use unjust enrichment as a basis for calculating an appropriate licensing fee, and action without mandate (Geschäftsführung ohne Auftrag) to properly calculate and delineate damages based on the infringer’s profits. The three calculation methods (the right owner’s own damages, infringer’s profit and reasonable licence) date back to the nineteenth century and were developed by the Imperial

118 The infringer’s turnover is a presumption for his profits unless otherwise proven: Tokyo District Court, 7 October 1998, 1657 Hanrei Jihō 122—‘Recharging System’. For further discussion of costs that may or may not be deducted from either the plaintiff ’s or the defendant’s revenue to arrive at a profits figure, see Nakamura, ‘Recent Trends in Court Judgments Concerning Damages in Japanese Patent Infringement Litigations’ (2014) 39 AIPPI Journal Japanese Group (English edn) 389. 119 Osaka District Court, 17 September 1998, 282 Hanketsu Sokuhō 17—‘Toaster’. 120 It is thus perhaps mistaken if Tokyo High Court, 23 March 1995, 27-1 Chizaishû 171—‘Snack Chanel II’, denies the right owner a statutory licensing fee based on the reasoning that a licence would never have been granted. At least the Court granted damages for loss of reputation. 121 See eg Second Subcommittee of the Second Patent Committee, ‘Predictability of Monetary Damages under Article 102(3) of the Japanese Patent Law’ (2014) 64 Intellectual Property Management 219; Cotter (n 8). cf Nakamura, Recent Trends in Court Judgments (n 118). 122 eg Kobe District Court, 23 March 1987, 19-1 Mutaishû 72—‘Love Hotel Chanel’. The amount tends to be low, however: between 1 and 3 million Yen. 123 These cases are rare, however, and the amount is not significant, either: Yokohama District Court, 22 March 1985, 566 Hanrei Times 275—‘Chanel Handbag’ (1 million Yen). 124 Supreme Court, 11 July 1997, 30 IIC 480 [1999]—‘Punitive Damages’. Foreign decisions awarding punitive damages may not be enforced in Japan, either.

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Christopher Heath and Thomas F Cotter Commercial Court (‘Reichsoberhandelsgericht’) for cases of copyright infringement. These principles were affirmed by the Imperial Supreme Court in two decisions of 1895125 and 1898.126 Damages are meant to restore the status quo ante, and may thus not be punitive, the exception being copyright infringements.127 Apart from monetary damages, the courts can also order other forms of restitution, for example, delayed market entry if an unlawful time advantage has been achieved by the infringement.128 Proof of actual damages can be alleviated by section 287 of the Code of Civil Procedure, which gives the court a certain discretion in assessing damages. Such discretion, however, can only be used once the IP owner has tried everything possible to specify the damages incurred.129 The three methods of calculation can often lead to different damage amounts.130 The plaintiff has the choice which method to apply, and may even first sue for an inspection of the relevant commercial documents in the possession of the defendants before deciding how to proceed.131 Furthermore, the calculation of damages according to a reasonable licensing fee does not preclude the plaintiff from claiming additional damages, as the licensing fee is only regarded as a minimum amount.132 The most common form of claiming damages is the reasonable royalty, for three reasons. First, this is the only agreeable form of damages where an agreement can be reached. And in most cases an agreement is reached after the court has found for infringement. Second, the other two forms of calculation require far greater efforts by the right owner. Third, many right owners do not wish to lay open their internal cost structures. In addition, to the extent that the claim is based on unjust enrichment (where no negligence is necessary, and where the time bar is 30 rather than three years), the amount that can be claimed is also an ordinary licensing fee133 that is calculated in the same way as under a damage claim.134 In fact, the reason why an appropriate licensing fee is awarded is far closer to the doctrine of unjust enrichment: by using what is exclusively allocated to someone else, the infringer enriches himself at the right owner’s expense. The basis of the calculation is a percentage of the infringing product’s sales price. It is immaterial in this respect that the product has perhaps been sold at a far lower price than the right owner would have wanted, in particular because otherwise it could not be reasonably assumed that the infringer had indeed sold the same quantity of goods at a higher price.135 The courts are given considerable

Imperial Supreme Court, 8 June 1895, RGZ 35, 63. Imperial Supreme Court, 31 December 1898, RGZ 43, 56. 127 In copyright infringement cases, damages are doubled in order to reflect the continuous monitoring efforts of the collecting societies: Federal Supreme Court, 10 March 1972, BGHZ 59, 286—‘Double Tariff ’. 128 Federal Supreme Court, 21 February 1989, BGHZ 107, 46. 129 Federal Supreme Court, 6 March 1980, BGHZ 77, 16 =, GRUR 1980, 841—‘Tolbutamid’. 130 But see T Meier-Beck, ‘Schadenskompensation bei der Verletzung gewerblicher Schutzrechte nach dem Durchsetzungsgesetz’ (2012) WRP 503 (arguing that, in principle, the three methods should converge). 131 Federal Supreme Court, 6 December 1974, GRUR 1975, 434; Federal Supreme Court, 17 June 1992, GRUR 1993, 55—‘Tchibo-Rolex II’. 132 Federal Supreme Court, 6 March 1980, BGHZ 77, 16 =, GRUR 1980, 841— ‘Tolbutamid’. 133 Federal Supreme Court, 24 November 1981, GRUR 1982, 301—‘Kunststoffhohlprofil II’. 134 Federal Supreme Court, 18 February 1992, GRUR 1992, 599—‘Teleskopzylinder’. 135 Federal Supreme Court, 6 March 1980, BGHZ 77, 16. 126

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discretion in the calculation of the licensing fee. One may take into account the commercial importance of the invention, the average licensing fees in the respective technical field (for patents) or comparable marks (for trade marks), but in any case the actual infringement case has to be compared to the situation of a contractual licence. If in the latter case the licensor would receive additional benefits, for example, by sharing marketing information, this can be a reason for awarding an increased royalty rate against an infringer.136 The overarching framework for determining a reasonable royalty, however, is somewhat comparable to that used in the United States, namely ‘what the parties would have agreed to, as of the date of the hypothetical agreement, if they had foreseen the future development and the duration and amount of use of the patent’.137 In addition, courts sometimes adjust the royalty upwards to reflect the fact that an infringer does not bear all of the risks that a real-world licensee would bear.138 According to section 249 of the German Civil Code, lost profits can be claimed as the difference between profits but for the infringing act and profits actually made, for example, as a loss of turnover.139 This method of calculation requires proof of the causal link between the infringing act and the lost profits, while the burden of proof is on the right owner. Only if the right owner has furnished all facts in his possession can the court make an educated guess according to section 287 of the Code of Civil Procedure.140 It is assumed that the right owner has lost sales in the amount of what the infringer has achieved by the sale of the infringing goods.141 However, this assumption depends on to what extent potential buyers would have directed their orders towards the right owner, and in this respect third parties offering competing and non-infringing products have to be taken into account.142 While the right owner does not have to prove every single sale he would have made but for the infringement, he has to show what would have been sold in the normal course of events, ie if sales would have continued in the same manner, increased or decreased with a certain likelihood.143 General overheads cannot be included in lost profits, while costs for research and development can be taken into account to the extent that such costs could have been set off by the profits made for the very product that was subject to the infringement.144 In the case of composite products, damages for lost sales can be claimed to the extent that these would have been sold together with the patented article.145

Düsseldorf Appeal Court, 17 April 1980, GRUR 1981, 45. Federal Supreme Court, 14 March 2000, GRUR 2000, 685. 138 Düsseldorf District Court, 1 June 1999, GRUR 2000, 690—Reaktanzschleife; Düsseldorf District Court, 20 May 1999, GRUR 2000, 309—Teigportioniervorrichtung. 139 Imperial Supreme Court, 7 April 1941, RGZ 156, 65. 140 Imperial Supreme Court, 23 February 1920, GRUR 1920, 103; Federal Supreme Court, 6 March 1980, ‘Tolbutamid’ (n 129). 141 Imperial Supreme Court, 29 March 1919, RGZ 95, 220. 142 Berlin District Court, 25 October 1939, GRUR 1940, 32. 143 Federal Supreme Court, 16 March 1959, BGHZ 29, 393; Federal Supreme Court, GRUR 1979, 869; Federal Supreme Court, 9 April 1992, GRUR 1992, 530. 144 ‘Tolbutamid’ (n 129). 145 Federal Supreme Court, 30 May 1995—‘Steuereinrichtung II’. 137

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Christopher Heath and Thomas F Cotter German law is fairly generous (but also very precise) in awarding attorneys’ and patent attorneys fees (see below). Pre-trial costs are always recoverable as damages,146 which has led to a formidable business model for attorneys who can charge the addressee of a warning letter even in the event that no action is subsequently raised in court. Damages for market confusion or loss of reputation are also acknowledged forms of damages.147 The right owner’s own damages are equivalent to an ordinary licensing fee in cases where the right owner has chosen to exploit the IP right only by licensing.148 Finally, the infringer’s profits can be claimed based on the assumption that the infringer engaged in a business that only the right owner could have lawfully conducted, and for that reason should surrender to the right owner all the profits made from such business.149 According to some precedents, the infringer’s profits cannot be claimed where the right owner would definitely not have used the right at all, while it is insufficient that the right was not actually used.150 Obviously, the claim for the infringer’s profits fails if the infringer has not actually made a profit, a fact that can be ascertained by an inspection of the relevant commercial documents prior to raising such claim. However, the infringer’s profits can only be claimed to the extent that such profit was actually made from using the infringed right. Other factors such as adroit advertising, quality, size of the distribution system, reputation of the selling enterprise, special commercial relationships or other factors unrelated to the infringed right bear no conditional relationship to the infringed right and thus cannot be claimed as profits by the plaintiff.151 Profits made from articles unrelated to the patent infringement can only be claimed under exceptional circumstances. In one case, a patent for slide frames was infringed, and the infringer distributed the slide frames as a free gift together with his cameras. The Court held that part of the profit made from such cameras could count as the infringer’s profits.152 Awards of infringer’s profits appear to have taken on additional importance following the Federal Supreme Court’s 2000 Gemeinkostenanteil decision, holding that the infringer normally is not entitled to deduct any portion of its overhead that would have been incurred even in the absence of infringement.153 Characteristic for the German method of damage calculation is the necessity of exact calculation mandated by the proportional reimbursement of attorneys’ fees (see below): a right owner who claims more than he actually receives in the end partially loses his case and thus has to reimburse the other party for part of the attorneys’ fees proportional to the percentage to which the claim is upheld. While the courts are

Federal Supreme Court, 15 October 1969, GRUR 1970, 189. Federal Supreme Court, 12 January 1966, BGHZ 44, 372—‘Meßmer-Tee II’; Imperial Supreme Court, 28 January 1933, GRUR 1933, 292. 148 Federal Supreme Court, 27 November 1969, GRUR 1970, 296—‘Allzweck Landmaschine’. 149 eg Imperial Supreme Court, 22 October 1930, RGZ 130, 108; Federal Supreme Court, 29 May 1962, GRUR 1962, 509—‘Dia-Rähmchen II’. 150 Imperial Supreme Court, 22 October 1930, RGZ 130, 108. For more recent discussion of whether awards of an infringer’s profits are or should be available to non-practising entities, see A Walz, ‘Patentverletzungen im Lichte des Kartellrechts: In Sachen Europäische Kommission gegen Orange-Book’ (2013) GRUR Int 718. 151 Cologne Appeal Court, 16 March 1990, GRUR 1991, 60—‘Rolex-Imitation’; ‘Tchibo/Rolex II’ (n 131). 152 ‘Dia-Rähmchen II’ (n 149). 153 German Federal Supreme Court, 2 November 2000, 33 IIC 900—‘Gemeinkostenanteil’. 147

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given a significant amount of leeway in the calculation of damages, punitive elements of calculation can only be found in copyright cases. Just as in the US, the right owner may claim commercial interest rates on the damages or the royalty rate unreasonably withheld during the time of infringement. Unlike the case in the US, however, interest is not compounded.

4. The UK 104

Damage compensation for the infringement of IP rights is now statute based. Damages were introduced as an equitable remedy by the Chancery Amendment Act 1858 (Lord Cairns’ Act) which conferred on the courts of equity jurisdiction for damages in addition to or in lieu of an injunction or other specific equitable relief. The proper function of damages has been described as follows: As in the case of any other tort (leaving aside cases where exemplary damages can be given) the object of damages is to compensate for loss or injury. The general rule at any rate in relation to ‘economic’ torts is that the measure of damages is to be, so far as possible, that sum of money which will put the injured party in the same position as he would have been in if he had not sustained the wrong. In the case of infringement of a patent, an alternative remedy at the option of the plaintiff exists by way of an account of profits made by the infringer. There are two essential principles in valuing that claim: First, that the plaintiffs have the burden of proving their loss; second, that the defendants be wrong-doers, damages should be liberally assessed, but that the object is to compensate the plaintiffs and not punish the defendants. These elemental principles have been applied in numerous cases of infringements of patents. Naturally their application varies from place to place.154

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Decisions on damages are infrequent, and would normally be reached only after a trial on the merits of the case has been concluded: Split trials are very frequently directed, and this is particularly so in intellectual property cases. A split trial is plainly called for in the interest of saving costs. Documents relevant only to quantum are not relevant to the issue of liability.155

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154 155 156 157

Damages can thus be claimed either as the right owner’s own damages or as the infringer’s profits. An ordinary licensing fee would be considered as the right owner’s damages and is awarded in cases where sales by the infringer would not have been made by the right owner. After a decision on the merits, the right owner has to decide whether to seek an inquiry as to damages or an account of the infringer’s profits. The decision can be delayed until after a review of the defendant’s commercial documents.156 The most important modern case on lost profits awards is Gerber Garment Technology v Lectra Systems,157 in which the Court states as a general principle that the right holder is entitled to recover any reasonably foreseeable loss caused by the infringement and not otherwise precluded by public policy. In principle, such losses may

English House of Lords, General Tyre v Firestone, 16 April 1975, [1976] RPC 197. English High Court, Baldock v Addison, 22 June 1994, [1995] 3 All ER 437. English High Court, Island Records Ltd v Tring International, 12 April 1995, [1995] 3 All ER 444. English Court of Appeal, 18 December 1996, [1997] RPC 443, 452–56.

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Christopher Heath and Thomas F Cotter include not only lost profits on lost sales, but also damages for price erosion and socalled springboard damages.158 It is well known, however, that computing the right owner’s own losses is a difficult matter: The court must estimate what were the chances that a particular thing would have happened if there had been no infringement and reflect those chances in the amount of damages awarded, and could do no better than reach a figure based on the general impression received from the evidence as a whole.159

The burden of proof in this respect is facilitated by two factors: 1. once the existence of infringing articles has been proven, at least some loss of sales can be assumed. If the evidence showed a reasonable commercial exploitation of the genuine product, a comparison of the actual sales with the expectation of future ones could be taken as a measure for such loss; and 2. damages would be assessed on the basis that every sale made by the infringer was a lost sale, and the proprietor would be compensated for the lost profit on such sale. However, the latter method can only be reasonably applied in cases where the right owner has a reasonably large market share: in Catnic Components Ltd v Hill & Smith Ltd,160 the right owner’s market share was 90 per cent and the Court thus computed 90 per cent of the infringer’s sales as lost sales of the right owner. In addition, such assumption can only be applied where the right owner actually has the marketing capacity for the production of articles the lost sales of which shall be calculated as damages. For sales the infringer made, but the right owner could not or would not have made, a reasonable royalty shall be paid. 109

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Contrary to practice in the US, however, the fact that infringer could have competed by using a non-infringing alternative is not taken into account in computing lost profits.161 A reasonable royalty can be claimed instead of the right owner’s own damages in cases where the right owner could not or would not have made the infringer’s sales, or where the right owner opts for such calculation method. To the extent that there is sufficient discovery as to the right owner’s profit margins, these would be taken into account in arriving at an appropriate licensing fee. The court would also add possible benefits from the sale of accompanied articles not covered by the IP right for which the infringer could also make a profit. In Gerber v Lectra, for example, the trial court arrived at a royalty rate of 15 per cent where it was established that the right owner would have made a 60 per cent profit from his sales. Comparable to practice in the US and Germany, the goal is to estimate the ‘royalty a willing licensee would have been prepared to pay and a willing licensor to’ accept.162

See Patents Court, Ultraframe (UK) Ltd v Eurocell Bldg Plastics Ltd, 9 June 2006, [2006] EWHC (Pat) 1344. Patents Court, Gerber Garment Technology Inc v Lectra Systems Ltd, 20 March 1995 [1995] RPC 383. This is the trial court opinion in the above-mentioned Gerber case. 160 English High Court, 16 March 1983, [1983] FSR 512. 161 UK House of Lords, United Horse-Shoe & Nail Co v John Stewart & Co, 12 March 1888, (1888) LR 13 App Cas 401 (appeal taken from Scot). For critique, see Cotter (n 8) 187–91. 162 UK House of Lords, General Tyre and Rubber Co Ltd v Firestone Tyre & Rubber Co Ltd, 16 April 1975, [1975] FSR 273, 292–93 (opinion of Lord Salmon). 159

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As to the claim for account of profits by the infringer, this is an equitable remedy at the discretion of the court. Until recently, such an account has rarely been requested owing to the difficulty in computation and the possibility that such computation would show little or no profits by the infringer, thereby making any recovery impossible. Nevertheless, the claim has experienced a modest revival since the Patent Court’s 1998 decision in Celanese Int’l Corp v BP Chemicals Ltd.163 Although the Court concluded that, under the United Horse Shoe precedent cited above, it could not take into account the defendant’s ability to earn a comparable profit from the use of a noninfringing alternative, the court awarded the patent owner £567,840 (only 0.3 per cent of the amount it sought) based on its conclusion that the defendant earned no profit from the production occurring at one of its plants, and that only 0.6 per cent of the gross profit earned at the other plant was attributable to the patented process. In a more recent decision involving an accounting of profits for trade mark infringement, the Court of Appeal (like the German Federal Supreme Court in Gemeinkostenanteil) held that for purposes of calculating the defendant’s profit there should be no deduction of allocable overheads; rather, the defendant must show that the deducted costs are properly attributable to the production of the infringing merchandise.164 Whether punitive damages could be awarded in a patent case remains to be seen. Although the judge in the Catnic case cited above interpreted the 1964 House of Lords decision in Rookes v Barnard as precluding punitive damages for torts such as patent infringement in which such damages had not been awarded prior to that date, a subsequent House of Lords decision rejected that interpretation of Rookes.165 The possibility therefore arises that a court in the UK someday could award punitive damages for a particularly egregious act of infringement. English cases on damages calculation nevertheless remain relatively rare and seem to require enormous efforts of time and money, thus strongly discouraging litigation in this respect. As in Germany, interim decisions on the merits are regarded as the most efficient way of dispensing with damage litigation, as the parties would then be expected to settle.

5. France 114

The French Intellectual Property Code’s provision on patent damages has been amended twice in recent years, first following the 2004 Enforcement Directive and again in early 2014. The current law thus permits the court, in assessing damages and interest, to take into account ‘loss of profit and the loss sustained by the injured party’; ‘the moral prejudice incurred by the latter’; and ‘the profits realised by the infringer, including the savings of intellectual, material, and promotional investments which the later has derived from the infringement’.

163 Patents Court, 26 October 1998, [1999] RPC 203. Accountings of profits for patent infringement are frequently awarded in Canada, however, and occasionally in other Commonwealth countries such as Australia. 164 English Court of Appeal, Hollister Inc v Medik Ostomy Supplies Ltd, 9 November 2012, [2012] EWCA Civ 1419. 165 UK House of Lords, Kuddus v Chief Constable of Leicestershire Constabulary, 7 June 2001, [2001] UKHL 29.

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Christopher Heath and Thomas F Cotter In addition, if the court determines that the resulting amounts do not make good the entirety of the prejudice suffered by the injured party, it orders to the profit of the latter the confiscation of all or part of the revenue procured by the infringement. However, the court may, alternatively, upon request by the injured party, award damages as a lump sum. This amount is higher than the royalties or fees that would have been due if the infringer had requested authorisation for the use of the right infringed. This amount is not exclusive of the compensation for the moral prejudice suffered by the injured party.166 The new law may (or may not) make awards of infringer’s profits—which French law prior to the Directive did not allow, and the availability of which since then has resulted in conflicting decisions—more common.167 In estimating lost profits, French courts typically estimate how many sales of the patented product the right holder would have made, absent the infringement, the price at which he would have made those sales and the right holder’s profit margin. In addition, the court will take into account additional or spare parts for the infringing goods to the extent that these would add to ‘the whole infringement value’ (le tout commercial). This is the case where the infringing object would not be sold independently from such parts.168 The loss of turnover is determined by various factors which are applied quite flexibly, such as the quality of inventive step of the patented products. When the rule of le tout commercial is applied only those profits are taken into account that measure the relative value of the invention in the assembled product. Yet, other elements can also be of importance, such as the market position of the patentee.169 If, on the other hand, the patentee does not exploit the patented invention, damages are usually calculated on the basis of a licensing fee which the infringer would have had to pay in order to use the invention lawfully. Neither can the patentee, who does not exploit the patent, claim any damages incurred by his licensee,170 who in such cases could intervene in the infringement action in order to claim damages on his own behalf. In such cases, the extent of the infringement is calculated on the basis of the infringer’s turnover multiplied by a percentage determined by the court as compensatory fee.171 As is sometimes the case in Germany, French courts also sometimes increase the royalty in consideration of the fact that the infringer avoids some of the

Law No 2014-315 of March 11, 2014, amending IPC art 615-7. Buffet Delmas d’Autane & Fabre, ‘Nouveautés, clarifications, carences et incertitudes du dispositif de lutte contre la contrefaçon tel que renforcé par la loi no 2014-315 du 11 mars 2014’ (May 2014) Propriété Industrielle 10. 168 The above principle was established by a decision of the Cassation Court in 1897 and affirmed in subsequent decisions. See eg, Paris Appeal Court of 19 November 1997, PIBD 1998, No. 651, III, 189. 169 L 615–7 IP Code as of 11 March 2014 now specifies the following: ‘To set the amount of damages, the court distinctly takes into account: the negative economic consequences of the infringement, including the loss of earnings and any loss suffered by the injured party, the moral prejudice caused to the latter and the profits made by the infringer, including the savings in intellectual, material and promotional investments that it achieved from the infringement’. 170 Decision of the Paris Appeal Court, 2 March 1971, Dalloz 1972, 45, also reprinted in ‘Les innovations de la loi du 2 janvier 1968 en matière de brevets d’invention’ (‘The New Patent Act of 2 January 1968’) Strasbourg Colloquium, 23 to 25 September 1971 (Collection CEIPI, Litec 1972) 194/95. 171 The court would take into account already existing licensing agreements for the same invention, licensing rates in the same field of technology or simply make an informed guess. 167

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risks that a real licensee would face.172 The new damages law cited above appears to approve this practice. Attorneys’ fees are also generally awarded, along with postjudgment (but not pre-judgment) interest.173 An empirical study of French patent litigation from 2000 to 2009 reported average and median awards of, respectively, €220,000 and €40,000.174 A more recent study covering 2010–13 reports that in 67 per cent of French patent infringement cases sampled in which damages were awarded the amount was less than €50,000, and in only 11 per cent was it above €500,000.175

6. Other Countries 121

Most other countries permit awards of lost profits, reasonable royalties and accountings of profits, though often the case law is less developed owing to the relatively small number of litigated actions. China also permits awards of ‘statutory’ damages for patent infringement ranging from 10,000 to 1 million Chinese Yuan. This remedy is used for patent infringement in China in about 95 per cent of all cases.176 China also permits damages enhancements for reasonable royalties and is considering authorising treble damages for wilful infringement. Taiwan recently reintroduced treble damages for intentional infringement, after briefly eliminating the availability of this remedy in 2013. Korea has adopted the Japanese way of calculating damages by multiplying the infringer’s turnover with the right owner’s profits on such turnover for patents, trade marks and matters of unfair competition matters.

7. Attorneys’ Fees, Article 48 122

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As has been mentioned above, the United States would grant attorneys’ fees only in exceptional cases, such as cases of wilful infringement.177 In Japan, the losing party has to bear all court costs, yet attorneys’ fees have to be borne by each side and only in exceptional circumstances be (partly) awarded as damages where particularly difficult legal questions were involved.178 In Germany, attorneys’ fees plus the fees for patent attorneys in cases of, for example, patent infringement would be part of the

See Cotter (n 8) 270 and fn 170 (citing cases and academic commentary, some of it critical of the practice). ibid 276 and fnn 210 and 211. 174 P Véron, ‘Le contentieux des brevets d’invention en France: Étude statistique 2000-2009’, available at: www.veron.com/publications/Colloques/Stats_contentieux_brevets_France_2000-2009_Veron_et_Associes. pdf?card=707. 175 République Français, Ministère du Redressement Productifs, Les Dommage et Interet Alloués dans le Cadre des Actions en Contrefaçon: Étude Comparéé en France, au Royaume-Uni, et an Allemagne (January 2014). 176 See Cotter (n 8) 355-60 (citing sources). 177 In two recent decisions, however, the Supreme Court expanded the definition of ‘exceptional circumstances’ to some degree and provided greater latitude for fee awards. See Octane Fitness, LLC v Icon Health & Fitness, Inc, 134 S. Ct. 1749 (2014) (stating that ‘an “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstance’); Highmark Inc v Allcare Health Management System, Inc, 134 S. Ct. 1744 (2014). 178 eg Supreme Court, 29 May 1984, 530 Hanrei Times 97—‘American Football Symbol Mark’. Amounts tend to be low, eg 1 million Yen, and would not represent market rates. 173

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Christopher Heath and Thomas F Cotter litigation expenses which have to be borne by the losing party. However, costs are awarded proportionate to the plaintiff ’s request. If the plaintiff requests €1 million Euro in damages, and the court only awards €600,000, the costs would be split 60:40. An attorney who negligently claims too much would be liable for professional malpractice. Also for this reason German attorneys tend to calculate damage amounts as precisely as possible. In the United Kingdom, courts normally award attorneys’ fees but even successful patent owners cannot expect to recover the entirety of their incurred costs and fees.179 The above patterns show a fairly complex picture. They reflect the difficulty that has already been mentioned above. On the one side, damages should compensate the right owner for an infringement suffered. On the other hand, they should also to some extent constitute a deterrent to further infringement. Particularly in countries where damages are meant to be compensatory rather than punitive, both are difficult to reconcile. Yet one should note that the pattern of damage compensation becomes more diverse than just the distinction between punitive damages and compensatory ones. Few countries permit awards of enhanced or punitive damages for infringement, though compensation for copyright infringement in Germany comes close to a punitive sanction in that the double amount of compensation is explained by the additional monitoring costs of collecting societies. Further, Japan and Korea have now opted for a new way of calculating damages by combining the infringer’s turnover with the right owner’s profits. This, however, is extremely difficult to reconcile with traditional principles of tort law where damages must relate to what the right owner could have achieved but for the infringement.

III. The Right of Information/Auskunftsanspruch, Article 47 124

Article 47 of the TRIPS Agreement requires the courts to order the infringer to inform the right holder of the identity of third persons involved in production and distribution. It has been mentioned above that such a claim is supported in Germany under the Auskunftsanspruch and in Great Britain under the Anton Piller Order, and something comparable would appear to be required in other EU countries as a result of the Enforcement Directive. In other countries, such a right seems to be more difficult to enforce. In Germany, the requirement to name suppliers and distributors is carried further by the possibility of obliging the defendant and even third parties to recall goods already in the channels of commercial distribution. The costs of this rather onerous obligation has to be borne by the infringer. Also in France, such remedy is available, although the courts normally refrain from such order, as it seriously interferes with trade.

179 See Cotter (n 8) 209 fn 147, 276 fn 210 (citing sources estimating the percentage of fees recovered in the UK and other countries).

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The other remedies as mentioned in Article 46 of TRIPS most importantly constitute the destruction of infringing goods. In that respect, Article 46 clarifies that in case of a trade mark infringement, it is not sufficient simply to have the infringing marks removed, for example, from T-shirts. Rather, such goods should be destroyed in toto or at least disposed of outside the channels of commerce. Not infrequently, videos are shown where huge steamrollers destroy infringing goods such as watches. Other possible remedies include apologies or the publication of the decision in a newspaper. According to the Japanese Supreme Court, requiring an apology from the infringer is not unconstitutional.180 The Korean Supreme Court has held the contrary.181

I. Administrative Measures, Articles 49, 51–60 I. TRIPS, Article 49 127

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The TRIPS Agreement attaches far more importance to civil than to administrative measures, at least to the extent that they relate to infringement procedures. Article 42 of TRIPS holds that right holders should be able to resort to civil judicial procedures. This should make clear that enforcement of IP rights is basically seen as a conflict between two parties and not an object of public concern. It thus appears that Article 49 only refers to administrative procedures offered in addition to civil ones. In fact, very few countries offer infringement procedures through the administration, for example, Vietnam182 and China.183 These countries traditionally have entrusted the national patent offices with IP enforcement. This certainly has the advantage of a competent forum. It has been mentioned above that one of the greatest difficulties in enforcement is the training of judges in specific areas in this difficult field of law. The patent offices, on the other hand, are far more familiar with industrial property law as such. It is equally clear that training and experience in granting industrial property rights does not necessarily qualify for their enforcement. After all, patent offices are not called upon to interpret the scope of an industrial property right in light of an

Supreme Court, 4 July 1956, 10-7 Mihshû 705. Korean Supreme Court, 1 April 1981, 89 Hunma 160. For further discussion of ‘other remedies’ in selected countries, see the country reports in response to AIPPI Q236: Relief in IP Proceedings Other than Injunctions or Damages, available at: www.aippi.org/?sel=questions&sub=listingcommittees&viewQ=236#236. 182 For details, see C Heath, ‘Industrial Property Protection in Vietnam’ (1999) 30 IIC 419. 183 X Liu, ‘Enforcement of Intellectual Property Rights in the People’s Republic of China’ (2001) IIC 141. T Pattloch in ch 13 mentions about 5000 patent lawsuits raised annually before the administrative authorities. This is half of the number of patent infringement actions raised before the courts in China. 181

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Christopher Heath and Thomas F Cotter alleged infringement, but only in order to determine the requirements of grant.184 Thus, the patent offices should be aware how courts interpret industrial property rights, but should not do so themselves.185 Outside Asia, involvement of the administration in the enforcement of IP rights is uncommon. Yet, it should be mentioned that with the agreement of both parties, also the UK Comptroller of Patents can hear infringement cases. The advantages of such procedure are the significantly lower costs, and the possibility of having the possible counterclaim of invalidity heard before a technically well-versed forum.

II. Border Measures, Articles 51–60 129

Of far greater importance are border measures that the TRIPS Agreement regulates in considerable detail under Articles 51–60.186 It has been mentioned above that the TRIPS Agreement developed out of a proposed international agreement on border measures regarding infringing goods. This, in turn, finds its justification and reasoning in previous international agreements that stipulate certain remedies of seizure, in particular the Madrid Arrangement for the Repression of False or Deceptive Indications of Source on Goods, which dates back to the year 1891. Border measures have to be provided only for certain infringing goods, however: Article 51 only mentions counterfeit trade mark or pirated copyright goods. It is thus necessary to interpret these terms. The TRIPS Agreement itself gives the following definitions: Counterfeit trade mark goods shall mean any goods, including packaging, bearing without authorisation a trade mark which is identical to the trade mark validly registered in respect of such goods, or which cannot be distinguished in its essential aspect from such a trade mark, and which thereby infringes the rights of the owner of the trade mark in question under the law of the country of importation. Pirated copyright goods shall mean any goods which are copies made without the consent of the right holder or person duly authorised by him in the country of production and which are made directly or indirectly from an article where the making of that copy would have constituted an infringement of a copyright or a related right under the law of the country of importation.

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This, for one, excludes the whole range of articles that might infringe other rights than trade marks or copyrights, for example, patents. Measures have thus only to be provided for infringing trade mark and copyright goods. But even here, not all goods that are infringing necessarily fall under the TRIPS definition. A good many

184 However, some countries allow domestic patent offices to render opinions on the scope of an industrial property right. This is namely the case for Korea and Japan, eg Japanese Patent Act, ss 71 and 71bis: ‘A request for interpretation may be made to the Patent Office with respect to the technical scope of a patented invention’. However, only in Korea does this system actually appear to be used: See Yang, ‘Enforcement of Intellectual Property Rights in Korea’ in K Chang and others, Intellectual Property Law in Korea (Kluwer Law International, 2003). 185 eg EPO, Enlarged Board of Appeals, 11 December 1989, EPO Official Journal 1990, 93—‘Friction Reducing Addition’. 186 The comments above are of a more general nature. For an in-depth comparison of customs procedures in Europe, Japan and the US, see ch 20 by A Petersen-Padberg.

Comparative Overview and the TRIPS 49 countries consider the parallel importation of goods made by the right owner or with his consent abroad as an infringement of domestic IP rights.187 These goods, however, may be infringing yet do not require border measures, as they have been produced with the authorisation of the right owner.188 Finally, another aspect merits attention. The criteria ‘without authorisation’ or ‘without consent’ are not without problems. This may be exemplified by the following case: the trade mark owner permits a licensee to produce 1000 items per day to which the trade mark may be attached. During the licensing period, however, the licensee regularly produces ‘overruns’ that he disposes of in different commercial channels than the 1000 ‘official’ items. Or in a copyright case, the licensee receives permission to print 1000 copies of a certain book within a given period of time. However, he produces 2000. In both cases, the licensee produces the licensed goods or copies within the licensing period, yet disobeys limitations on the quantity of items that may be produced. Would these overruns be infringing under the TRIPS definition or would these qualify as legitimate goods produced contrary to contractual arrangements and thus only give rise to a contractual dispute between licensor and licensee? The TRIPS Agreement can give no definite answer to this question. It is easy to see that items produced after the licensing period would count as infringement. Here, the licensor’s authorisation is notably absent. On the other hand, not every breach of licensing agreement should render the goods produced as infringing. Goods certainly do not become infringing because the licensee does not comply with all the terms of the licensing agreement, for example, does not properly pay his licensing fees, does not purchase the required raw materials, etc. Similar to the above-mentioned factors, third parties are unable to distinguish goods manufactured in compliance with an existing licensing agreement, or beyond it. In the same manner as a third party, for example, customs could not distinguish between goods produced under a licence where the licensee duly pays his fees, a customs officer could not distinguish between daylight production and nightly overruns. On the other hand, border measures do not require the possibility of distinguishing infringing from non-infringing goods. According to this author, the distinction should be made as follows: once a licensing agreement has come to an end, the licensor has a legitimate interest in no longer being associated with any goods being produced by the licensee and passed off as those of the licensor. In that respect, a licensing agreement that has been terminated or come to an end is no different than one that has never been concluded at all. Yet once the licensor gives his authorisation to the licensee for items being produced bearing a certain trade mark or containing certain copyright material, this authorisation for third parties means that all goods produced by the licensee have been authorised. Third parties, after all, hardly have an opportunity to look at the licensing agreement in order to detect what amount of goods the licensee is allowed to produce. In the absence of any publicity of

187 Particularly in the EU countries, parallel importation of trademarked goods from outside the Community is considered infringing: ECJ, 16 July 1998, Case C-355/96 Silhouette International Schmied v Hartlauer Handelsgesellschaft. 188 In European countries, right owners would be allowed to invoke border measures against such goods, however: For Germany, eg Bundesfinanzgericht (Federal Tax Court), 5 October 1999, case VII R88/98. The basis of action is domestic customs law rather than European law, however.

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Christopher Heath and Thomas F Cotter restriction, overruns should qualify as a breach of contract and be actionable as such, but not as an IP infringement. The procedures set out under the TRIPS Agreement for the seizure of allegedly infringing goods at the border are fairly straightforward. Either the owner of a copyright or trade mark prophylactically asks customs to detain infringing goods, or the goods are detained by customs at their own initiative and the owner of the trade mark or copyright in question thereafter applies for their continued detention. Customs are the first to come into contact with imported goods, and it is certainly important to have such infringing goods seized already at the border before they disappear into national distribution channels. It is for that reason that the TRIPS Agreement has introduced a right of importation. In the absence of such right, customs would have no means of seizing infringing goods, as only their commercial distribution would amount to an infringement. Thus, the right of importation is vital for customs procedures, but says nothing about, for example, the lawfulness of parallel imports.189 In the case of industrial property rights, many countries offer right owners the possibility of listing their registered rights with customs once they suspect that infringing goods might be imported. Owing to the high and increasing level of international trade, the chances of customs detecting infringing goods on their own initiative are limited. Most successful operations dealing with the seizure of infringing goods occur once the right owner has received information about an impending shipment of infringing goods and cooperates with customs for the seizure of such goods. Action by the competent courts or administrative authorities to suspend the release of goods has to be taken if a right holder has ‘valid grounds for suspecting’ infringement and is able to present ‘adequate evidence’ that infringing goods will be imported (art 52). These requirements are both for a general application to customs (art 52), as well as for cases where the actual importation of infringing goods is suspected. Because border measures by their very nature are preliminary and may prove unfounded, customs can require right owners to provide security (art 52). The security is meant to indemnify the importer in cases where the measure has been mistakenly applied, yet shall not act as a deterrent to the request for customs measures (art 53(1)). Once the goods have been detailed at the request of the right owner or at customs’ initiative subsequently backed up by the right owner’s endorsement, Articles 53 and 54 specify what kind of procedure should follow. As detention by customs is preliminary, Article 55 mandates that the right owner must initiate the main action of infringement within 10 working days of the detention, otherwise the goods will be released. It is quite clear that the burden to prove infringement is with the right owner. The 10-working-day period may seem short, yet it is justified insofar as the importer had no opportunity to be heard while detention was effected. Thus, customs seizure is an explicit case of an ex parte measure, and Article 50 provides the defendant with similar safeguards. In order to verify an infringement claim, Article 57 confers upon the right owner a right of inspection and subsequent release of the

C Heath, ‘Parallel Imports and International Trade’ (1997) 28 IIC 623.

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name and address of the importer.190 Under Article 58, countries also may require customs officials to act ex officio, subject to the above procedural protections, where they have acquired prima facie evidence that a right is being infringer. Article 59 requires counties to authorise the destruction or disposal of infringing goods as per Article 46. Of course, instead of defending an infringement action, it is quite common for importers to ‘abandon’ their shipments once detention has been ordered. Thus, countries may enact legislation to provide for simplified destruction procedures in these cases, although TRIPS is silent on this matter. So far, the TRIPS border measures provisions have been the subject of only one WTO Panel Report. In 2007, the United States requested the formation of a panel to determine, among other matters, whether (1) China was obligated to apply the remedies set forth in Article 59 to infringing goods intended for both importation and exportation; and (2) whether China violated Articles 46 and 59 by auctioning off certain detained and abandoned goods after the simple removal of the counterfeit trade mark. In 2009, the panel published its report, finding that Article 59 does not apply to export goods because Article 51 makes any such extension optional; but that China did violate Article 46, which states that ‘the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce’. The provisions of the TRIPS Agreement leave open what shall be defined as an act of ‘importation’, in particular if the transit of goods would qualify as such. Although the European Court of Justice so ruled in a 2000 judgment,191 more recently it has held that the mere transit of allegedly infringing goods from one non-Member State to another non-Member State does not violate EU law, absent evidence that the goods are intended to be diverted to EU consumers.192 As a consequence, the EU amended its Customs Regulation with effect from 1 January 2014. Brazil and India, which previously had requested consultations with the WTO concerning the detention in the Netherlands of patented pharmaceuticals en route from India to Brazil (in which countries the products were not patented), have not pursued the matter further.193 Finally, Article 60 of TRIPS exempts the importation of objects for personal consumption from the above-mentioned rules. Even without such explicit mention, it stands to reason that IP rights give rights of commercial exploitation, and acts of private use, as would also be a private importation, in many countries would not be deemed infringing at any rate.

190 Here, the European Court of Justice has ruled on an instructive case where the Swedish authorities refused to provide such details: ECJ, 14 October 1999, Case C-223/98 Adidas AG. 191 ECJ, 6 April 2000, Case C-383/98 The Polo/Lauren Company LP v PT Dwidua Langgeng Pratama International Freight Forwarders. 192 CJEU, 1 December 2011, Cases C-446/09 and C-495/09 Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Company Ltd. 193 Malbon/Lawson/Davison, The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights: A Commentary (n 53) 683 (stating that ‘the interpretation was never finally resolved leaving open claims both for and against applying the procedures to goods in transit’). One should also note that art 9 of the Paris Convention was clearly drafted in the understanding that ‘transit’ was different from ‘import’ and ‘export’: Actes de la Conférence de Bruxelles (1897) at 248. Arguably, including ‘transit’ in the list of infringing acts (as was proposed

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J. Criminal Measures, Article 61 137

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Finally, the TRIPS Agreement mentions criminal procedures as one method of enforcement. Only one provision is dedicated to criminal procedures (art 61), thus indicating the TRIPS Agreement’s preference for civil enforcement. Criminal procedures even appear less important than administrative ones, thereby reflecting the reality in developed, rather than developing countries. In developed countries, criminal enforcement of IP rights is rare, and if used at all, limited to infringements of trade marks and copyrights. France is a country that to a certain extent uses criminal enforcement of trade mark rights, while for patents, the following statement should be true for all industrialised countries: ‘For 134 years, criminal protection against infringements has basically brought about nothing’.194 This is no different for, for example, Germany, where criminal enforcement was the prevailing method in the first 40 years after patent protection was introduced, but subsequently fell into disuse, the last published case dating back to 1933.195 Criminal enforcement becomes more important where the civil enforcement system shows considerable shortcomings, for example, with respect to obtaining evidence. Here, right owners prefer to resort to criminal procedure in order to obtain evidence that under civil procedures could not be obtained.196 The TRIPS Agreement only requires members to provide for criminal sanctions in the case of wilful trade mark counterfeiting or copyright piracy on a commercial scale. Relevant to this matter, in the US-China WTO dispute referenced above the US also claimed that China violated Article 61 by exempting from criminal liability goods falling below a certain numerical value threshold. The panel concluded that the US had failed to prove that China’s thresholds were so high that they exempted certain acts of counterfeiting or piracy occurring on a commercial scale.

in the ACTA Agreement), interpreting ‘transit’ as ‘importation’, or applying the so-called ‘manufacturing fiction’ to goods in transit (as the Dutch courts did: starting with the Dutch Supreme Court decision of 19 March 2004 (C02/110HR), Philips v Postech and Princo (transit of patented goods—CDs—from Taiwan to Belgium and Switzerland); followed by The Hague District Court, 13 July 2005 (02/2947), Philips v Furness and Princo (transit of patented goods—CDs—from Taiwan to Switzerland); and the Hague District Court, 18 July 2008 (311378/KG ZA 08-617), Sosecal v Sisvel (transit of patented goods—MP3 players—from China to Brazil)) would be difficult to reconcile with the GATT principle of freedom of transit (art V): C Heath, ‘Customs Seizure, Transit and Trade’ (2010) 41 IIC 881. 194 J Mousseron, ‘Droit des brevets et loi du 26 novembre 1990’ (‘Patent Law and Act of 26 November 1990’) (1991) La semaine juridique (JCP) édition Entreprise (E) 139. 195 Imperial Supreme Court, 9 January 1933, GRUR 1933, 288. 196 An example would be, eg Taiwan prior to 2003 when patent infringement was decriminalised: generally, criminal actions were seen as more effective for IPR enforcement given the low civil penalties, relative lack of discovery tools and the history of delay and procedural hurdles in IPR cases: Eastwood/Chen/Weng, ‘Intellectual Property Law in Taiwan’ in Heath, Intellectual Property Law in Asia (n 51) 92.

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K. List of Literature AIPLA, 2013 Report of the Economic Survey A Bradley, ‘Intellectual Property Rights, Investment and Trade in Services in the Uruguay Round’ (1987) 23 Stanford Journal of International Law 57, 66 C Correa, Trade Related Aspects of Intellectual Property Rights: A Commentary on the TRIPs Agreement (Oxford University Press, 2007) T Cotter, Comparative Patent Remedies: A Legal and Economic Analysis (Oxford University Press, 2013) K Cremers, M Ernicke, F Gaessler, D Harhoff, C Helmers, L McDonagh, P Schliessler and N van Zeebroeck, ‘Patent Litigation in Europe, 2013’ SSRN paper http://papers.ssrn.com/sol3/papers. cfm?abstract_id=2333617 D Gervais, The TRIPS Agreement—Drafting History and Analysis 2nd edn (Sweet & Maxwell, 2003) C Heath, ‘Parallel Imports and International Trade’ (1997) 28 IIC 623 ——‘Customs Seizure, Transit and Trade’ (2010) 41 IIC 881 A Koury Menescal, ‘Those behind the TRIPS Agreement—the Influence of ICC and AIPPI on Intellectual Property Agreements’ (2005) IPQ 155 J Malbon/C Lawson/M Davidson, The WTO Agreement on TRIPS (Edward Elgar, 2014) K Moore/T Holbrook/J Murphy, Patent Litigation and Strategy 4th edn (West Academic Publishing, 2013) G Rahn, ‘Patentstrategien japanischer Unternehmen (Patent Strategies of Japanese Enterprises)’ (1994) GRUR Int 377 République Française, Ministère du Redressement Productifs, Les Dommage et Interet Alloués dans le Cadre des Actions en Contrefaçon: Étude Comparéé en France, au Royaume-Uni, et en Allemagne (January 2014) J Ross/J Wasserman, Trade Related Aspects of Intellectual Property Rights in: in T Stewart (ed), The GATT Uruguay Round: A Negotiating History (1986–1992), vol II (Kluwer, 1993) G Tritton, Intellectual Property in Europe 4th edn (Sweet & Maxwell, 2014) E Wadlow, Enforcement of Intellectual Property in European and International Law (Sweet & Maxwell, 1998) WTO, Trade-Related Aspects of Intellectual Property Rights (Stoll/Busche/Arend eds, Martinus Nijhoff Publishers, 2009)

2 The European Union: Jurisdiction, Cross-border-Cases, Enforcement Directive and Unified Patent Court TILMAN MÜLLER-STOY AND JÖRG WAHL

A. Introduction 1 It is not difficult to imagine the problems a company with its seat outside Europe faces in the case of an action for infringement of a patent in Europe. There are two scenarios to think of in this respect. One is that the company is proprietor of a European patent in certain countries which are party to the European Patent Convention (‘EPC’). The patent proprietor learns that its patent in Europe has been infringed in all or some of these countries. The other scenario is that a company with a seat outside Europe learns that an infringement action is being taken against its subsidiaries in Europe, possibly even against itself, or against companies selling its product in Europe, for example, by way of a warning letter or even by way of an action for infringement of the patent in a court in Europe. 2 Both scenarios make it necessary to understand the special situation in Europe. In the first case, the patent owner is interested in knowing the prospects of success and the risks involved in an action in Europe. The questions concern the quality of the courts, the possible choice of courts, the predictability in view of case law, the duration and costs of the proceedings, the reliability of the local lawyers and patent attorneys and also, of course, the chances of success of bringing a complaint. If a non-European company receives a warning letter or is sued it will want to know whether it can do anything against this threat, in particular in view of the law on jurisdiction in Europe. Further it will want to know what the consequences of a decision are should the court find it liable for infringing a patent. In this context, as an alleged infringer, it will finally be particularly interested in knowing how to challenge the validity of the European patent based on which the claim was made. 3 To an observer of Europe, the political map of this continent has the appearance of a ‘patchwork quilt’. This equally applies to the European patent and jurisdiction. After grant, the European patent splits into independent territorial, national parts. Moreover, the courts dealing with patent litigation (infringement and validity) are the national courts of the individual European countries. Albeit this is no unfamiliar aspect, it does entail an irritating element: the European patent comes into force being based on one

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application and by way of one act of grant, but ends up in the territorial (national) sphere of the countries that are party to the EPC. 4 In view of the territoriality (limitation to national effect) of patents in Europe, many legal instruments address the problems arising in this context, like, for example, the Brussels I Regulation/Lugano Convention regarding jurisdiction, the Evidence Regulation regarding the taking of evidence in cross border scenarios, the Enforcement Directive aiming at ensuring a specific minimum legal standard in IP in the Member States of the European Union, and finally the legal instruments on the exciting project of creating a Unified Patent Court and a unitary patent. In the following, these instruments are explained in some more detail.

B. Jurisdiction I. Introduction 5

The question of jurisdiction in Europe in the first place is a question of international jurisdiction, as there is no unified court system in Europe (yet; see for details on the Unified Patent Court, section E below) for patent infringement actions, ie the independent jurisdictions of the sovereign European countries compete. With regard to national patents (ie patents not based on the European Patent Convention1 or the Regulation on the unitary patent2 being subject to the future unified court system), this will not change once the Unified Patent Court commences its work. 6 The question of international jurisdiction arises for example for a patentee in the following scenario: A patentee, domiciled in Germany, is the owner of a European patent with national parts among others in France. Company A, domiciled in Germany, sells allegedly infringing products in France. Can the patentee sue Company A for infringing the French part of the European patent before a German court?

II. Jurisdiction Based on Domicile (actor sequitur forum rei) 7

The legal basis for determining jurisdiction in the EU3 is Regulation (EU) No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (‘Brussels I Regulation’), which entered into force on 10 January 2015, replacing the previous Regulation (EC) No 44/2001 of 22 December 2000 (‘ex Brussels I Regulation’).

1 Convention on the Grant of European Patents of 5 October 1973 as revised by the Act revising Article 63 EPC of 17 December 1991 and the Act revising the EPC of 29 November 2000. 2 Regulation (EU) No 1257/2012 of the European Parliament and the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection. 3 Member States in the sense of the Revised Brussels Regulation are the member states of the European Union except for Denmark (for Denmark currently the old Brussels I Regulation remains in force in view of the Agreement

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The general rule of jurisdiction is that a person domiciled in a Member State shall be sued for patent infringement in the courts of the said Member State (Brussels I Regulation, art 4(1)). The determination of whether a natural party is domiciled in a Member State follows the national laws of the Member State whose courts are seized (Brussels I Regulation, art 62(1)). The domicile of a company or of another legal person, according to Article 63 of the Brussels I Regulation, is where it has its statutory seat, its central administration, or its principal place of business. As an exception hereto, regardless of the domicile of a defendant (cf Brussels I Regulation, art 6(1)), in proceedings concerning the registration or validity of, for example, patents, the courts of the Member State where the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place (Brussels I Regulation, art 24(4)) have exclusive jurisdiction. Following the GAT/LuK decision of the Court of Justice of the European Union4 (‘ECJ’), the Brussels I Regulation now explicitly clarifies in Article 24(4) that this shall apply regardless of whether the issue is raised by way of an action (counterclaim) or as a defence.5 Regarding European patents under the European Patent Convention, the said Article 24 provides that the courts of the Member State for which the European patent was granted have exclusive jurisdiction in proceedings concerning validity. If an issue of validity is raised, the court seised of the matter which does not have exclusive jurisdiction under Article 24 of the Brussels I Regulation shall on its own motion declare that it has no jurisdiction (Brussels I Regulation, art 27). While it could be argued that the GAT/LuK decision of the ECJ did not rule whether a request for staying infringement proceedings in view of pending separate patent invalidity proceedings is covered, such an approach clearly contravenes the spirit of the said decision. In other words, the GAT/LuK decision, and accordingly also Article 24(4) of the Brussels I Regulation, must be understood to also apply to the German approach of (only) requesting the stay of infringement proceedings. See, however, chapter six on ‘Patent Enforcement in the Netherlands’ in this book for a different opinion. In its Solvay decision6 on Article 22(4) of the ex Brussels I Regulation (now art 24), the ECJ found that the exclusive jurisdiction rules in the case of invalidity questions of the said Article 22 do not apply in cases of provisional measures coming under Article 31 of the ex Brussels I Regulation (now art 35). Thus, in proceedings coming under Article 31 of the ex Brussels I Regulation, raising an objection of invalidity of the asserted patent will not lead to the exclusive international jurisdiction of the courts of the Member State for which the patent was granted. As these provisions in essence correspond to Article 24(4) respectively Article 35 of the Brussels I Regulation, it can be assumed that the said findings of the ECJ are still applicable. Applying the findings

of 19 October 2005, OJ L 299/62 of 16 November 2005). In relation to the EFTA states (currently relevant for Iceland, Norway and Switzerland) the parallel Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters of 30 October 2007 (‘Lugano Convention’) is to be applied. 4

ECJ of 13 July 2006, C-4/03 (GAT/LuK). This essentially corresponds to the situation in the UK: CA of 27 October 1997, Fort Dodge Animal Health Ltd v Akzo Novel NV [1998] FSR 22 and 237. 6 ECJ of 12 July 2012, C-616/10 (Solvay v Honeywell). 5

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Tilman Müller-Stoy and Jörg Wahl of the Solvay decision, for example the Rechtbank Utrecht found that ‘kort geding’ proceedings in the Netherlands are such provisional proceedings and consequently issued a preliminary injunction based on the infringement of a Portuguese patent.7 Thus, the Solvay decision appears to have ended a longstanding discussion on the relationship between the exclusive jurisdiction provision for validity matters and the provision for jurisdiction over provisional measures, at least from a practical point of view. Finally, an exemption from the above outlined rules may be achieved by the parties agreeing on a jurisdiction of a specific Member State in accordance with Article 25 of the Brussels I Regulation. Reverting to the above example, this means that the patentee indeed may sue Company A in Germany for infringing the French part of the European patent. However, in proceedings on the merits before the German courts, the action would become inadmissible as soon as Company A, the defendant, raises the issue of invalidity in a substantiated manner. Therefore, unless there is an agreement between the parties on international jurisdiction, in the above scenario in proceedings on the merits, the patentee should sue Company A before the French courts having exclusive international jurisdiction for invalidity questions (Brussels I Regulation, art, 24(4)). In preliminary injunction proceedings before the German court, assuming that these are to be considered as provisional measures under Article 35 of the Brussels I Regulation, however, the action should remain admissible.

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If the defendant is not domiciled in a Member State, jurisdiction is determined by the law of the Member States of the courts seized of a matter, subject to Articles 24 and 25 (cf Brussels I Regulation, art 6(1)). In other words, if a defendant is not domiciled in an EU Member State and if no defence of invalidity of the patent is raised (and if there is no agreement on jurisdiction), following its national rules, the national court may find itself competent to decide cross-border subject matters, like, for example, a negative declaratory action seeking a declaration of non-infringement of several national parts of a European patent.8

III. Jurisdiction Based on the Place of Infringement (forum delicti commissi) 13

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A person domiciled in a Member State may be sued in another Member State in matters relating to tort, delict or quasi-delict (like eg patent infringement) in the courts for the place where the harmful event occurred or may occur (Brussels I Regulation, art 7(2)) which corresponds with the previous rules of ex Brussels I Regulation, art 5(3)).9 This includes both the place where the damage occurred and the place of the event giving rise to it, so that the plaintiff is allowed to sue in either place under Article 7 of the

Rechtbank Utrecht of 15 August 2012, KG ZA 12-559 (Boehringer Ingelheim v Teva). cf eg High Court of Justice Chancery Division of 27 November 2012, [2012] EWHC 3316 (Pat) (Actavis v Eli Lilly). 9 Luginbühl/Stauder, ‘Die Anwendung der revidierten Zuständigkeitsregeln nach der Brüssel I-Verordnung auf Klagen in Patentsachen’ (2014) GRUR Int 885; cf for the applicability of previous case law also ECJ of 16 July 2009, C-189/08 (Zuid-Chemie v Philippo’s Mineralenfabriek). 8

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Brussels I Regulation.10 The latter grants jurisdiction only for the (national) court to rule on the harm caused in the country of that court (so-called Shevill doctrine established by the ECJ).11 Notably, the Brussels I Regulation departs from the Shevill doctrine as far as cases to be heard before a common court (eg the Unified Patent Court) are concerned.12 In its Folien Fischer decision13 (without giving up the Shevill doctrine; in fact, it is not mentioned at all), the ECJ ruled that the forum delicti commissi is not only available to positive patent infringement actions but also to negative declaratory actions seeking a finding of non-infringement. Based thereon, the Italian Corte di Cassazione (Italian Supreme Court) recently ruled that the Italian courts have international jurisdiction for a declaration of non-infringement as courts for the place where the harmful event may occur also for a German part of a European patent14 (it does not follow from this Italian decision whether a defence of validity was raised or not; thus, it remains unclear whether the Italian view would remain the same in a case where the exclusive jurisdiction rule of Article 24(4) of the Brussels I Regulation applies). In view of the short reasoning of this decision, it appears to be in contradiction to the Shevill doctrine (assuming this doctrine is to be applied also in case of actions seeking a declaration of non-infringement as a mirror of a positive action the other way round). In any event, as this decision is binding on the Italian courts, it may revive the possibility of what is known as the Italian Torpedo (cf also below section B.V). However, subsequent decisions of the lower courts in Italy seem to have disregarded this decision despite its binding force. For details, see chapter seven on ‘Patent Enforcement in Italy’ in this book. Finally, in its Melzer decision,15 the ECJ clarified that Article 5(3) of the ex Brussels I Regulation (now art 7(2)) does not allow the courts of the place where the harmful event occurred to assume jurisdiction over a presumed perpetrator of that damage who has not acted within the jurisdiction of the court seized. In other words, where Perpetrator A (who acted and is domiciled in the UK) and Perpetrator B (who acted and is domiciled in Germany) cooperated in causing the damage, it is not possible to sue Perpetrator A before the German court which would have jurisdiction over a case against Perpetrator B (unless Perpetrator B is sued before the said court as well, cf below), contrary to national German practice.

IV. Jurisdiction Based on Connected Claims/Plurality of Defendants 16

A person domiciled in a Member State may also be sued where he is one of a number of defendants, in the courts for the place where any one of them is domiciled (Brussels I

10 cf ECJ of 30 November 1976, C-21/76 (Bier v Mines de Potasse d’Alsace); ECJ of 19 April 2012, C-523/10 (Wintersteiger v Products 4U). 11 cf ECJ of 7 March 1995, C-68/93 (Shevill v Press Alliance SA); Geimer in Zoeller: ZPO, 28th edn, app I, art 5 EuGVVO, margin number 32a. 12 Brussels I Regulation, art 71b (2), resp Regulation (EU) No 542/2014, art 1. 13 ECJ of 25 October 2012, C-133/11 (Folien Fischer et al v Ritrama). 14 Corte di Cassazione of 10 June 2013, N 14508/13, IIC 2014, 822 (General Hospital Corporation and Palomar Medical Technologies Inc v Asclepion Laser Technologies GmbH). 15 ECJ of 16 May 2013, C-228/11 (Melzer v MF Global UK Ltd).

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Tilman Müller-Stoy and Jörg Wahl Regulation, art 8). This, however, is only if the asserted claims are so closely connected that it is expedient to hear and determine them together in order to avoid irreconcilable judgments resulting from different courts/jurisdictions (Brussels I Regulation, art 8(1)). This provision corresponds to the previous wording in the ex Brussels I Regulation which incorporated the findings of the ECJ decision Kalfelis v Schröder.16 The connection addressed in Article 8 of the Brussels I Regulation, does not require that the claims are based on the same cause of action (‘Rechtsgrundlage’, legal basis).17 In the past, based on the previous provisions on jurisdiction for connected claims, the Dutch courts, for example, assumed jurisdiction not only for actions against a company infringing abroad and domiciled in the Netherlands, but also against the subsidiaries domiciled in other Member States.18 This so-called ‘Spider-in-the-web’ doctrine could no longer be applied after the ECJ ruling in Roche v Primus19 in 2006. That is, the connection requirement of Article 8(1) of the Brussels I Regulation (ex Brussels I Regulation, art 6) is not met in a case of European patent infringement proceedings involving a number of companies established in various Contracting States in respect of acts committed in one or more of those States even where those companies, which belong to the same group, may have acted in an identical or similar manner in accordance with a common policy elaborated by one of them.20 In other words, Article 8 of the Brussels I Regulation is generally not available in order to assert infringement of, for example, both the German and the French part of a European patent in the same proceedings.21 In its Solvay decision,22 the ECJ specified that Article 6(1) of the ex Brussels I Regulation is to be interpreted as meaning that a situation where two or more companies established in different Member States, in proceedings pending before a court of one of those Member States, are each separately accused of committing an infringement of the same national part of a European patent which is in force in yet another Member State by virtue of their performance of reserved actions with regard to the same product, is capable of leading to ‘irreconcilable judgments’ resulting from separate proceedings as referred to in that provision.

In other words, by way of example, two or more companies domiciled in different Member States and infringing the same French part of a European patent may be sued before the same court in one action in accordance with Article 6 of the ex Brussels I Regulation if the two or more companies committed the same infringing act in the same Member State.23 Thus, the ECJ confirmed its approach to severely limit the former ‘Spider-in-the-web’ doctrine.

16

cf ECJ of 27 September 1988, C-189/97. cf ECJ of 11 October 2007, C-98/06 (Freeport v Arnoldsson) on the ex Brussels I Regulation, art 6. 18 cf Court of Appeal The Hague, 23 April 1998 (Expandable Grafts Partnership v Boston Scientific). 19 ECJ of 13 July 2006, C-539/03 (Roche v Primus). 20 ibid. 21 Schnichels/Stege, ‘Die Entwicklung des europäischen Zivilprozessrechts im Bereich der EuGVVO im Jahr 2012’ (2013) EuZW 809. 22 Solvay v Honeywell (n 6). 23 cf Schnichels/Stege, ‘Die Entwicklung des europäischen Zivilprozessrechts im Bereich der EuGVVO im Jahr 2012’ (n 20). 17

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V. The So-called ‘Torpedo’ Action 19

The so-called ‘Torpedo’ action concerns for example the following situation: The owner of a German part of a European patent sent a warning letter to Company E for infringing the German part of the European patent by selling its products in Germany. As a consequence, Company E files a negative declaratory action before an Italian court against the owner, seeking a declaration of non-infringement of the German part of the European patent.

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By doing so, Company E aims at blocking proceedings before the (usually quick) German courts in view of Article 29(1) of the Brussels I Regulation (corresponding to ex Brussels I Regulation, art 27) which in cases of actions pending in parallel in different Member States requires that any court other than the court first seized shall of its own motion stay proceedings (objection of lis pendens). It is to be noted that Article 29 of the Brussels I Regulation applies irrespective of the domicile of the parties involved in the dispute. Decisive for Article 29 is only that there are two civil proceedings pending in parallel in two different Member States (typically, the first one is a negative declaratory action brought by the potential infringer, the second one a positive patent infringement action brought by the patentee) between the same parties regarding the same cause of action. The strategy of the potential infringer here is to first involve the courts of a Member State which are known to take a long time before reaching a decision. In the past, jurisdictions named in this context were typically the courts of Belgium and Italy. As a consequence, until, for example, the Italian court finally established that it had no jurisdiction (years later, maybe), the owner could not proceed with its action against the potential infringer before courts actually having jurisdiction, so that the owner was delayed in enforcing its rights by several years. Different national courts made differing attempts to overcome this problem of forum shopping. It was, for example, ruled that such a negative declaratory action would be an abuse of law and that the question of admissibility should be decided separately and earlier on in the course of the proceedings.24 However, the ECJ25 ruled that from this automatic obligation to stay proceedings, the later-seized court cannot deviate even if the earlier negative declaratory action was filed in bad faith only aiming at blocking regular proceedings before the truly competent court. In German academic writings, it is opined that this case law of the ECJ would not hinder a national court from refusing to suspend proceedings under Article 29 of the Brussels I Regulation because the ECJ decisions in question had not dealt with patents (but rather with real estate). The ECJ could further not be applied to cases in which concrete facts had been established as to the excessively long duration of the proceedings before the court first seized.26 Finally, following Article 6(1) of the European Convention on Human Rights, also the plaintiff of the later proceedings (ie the patentee) was entitled to proceedings ‘within reasonable time by an independent and impartial tribunal established by law’.27 Other courts denied its international jurisdiction in cases where the potential infringer for cf eg Tribunal de première instance de Bruxelles of 12 May 2000 (Röhm Enzyme). ECJ of 9 December 2003, C-116/02 (Gasser v Misat); cf also ECJ of 27 April 2004, C-159/02 (Turner). Kühnen in Handbuch der Patentverletzung 7th edn, margin number 1564. ibid.

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Tilman Müller-Stoy and Jörg Wahl its negative declaratory action argued that only the court first seized had international jurisdiction based on the forum delicti commissi (ex Brussels I Regulation, art 5(3); now Brussels I Regulation, art 7(2)) because such an action would seek to establish that it is about a licit act while Article 5(3) of the ex Brussels I Regulation would only cover illicit acts.28 In any event, the ECJ in its Folien Fischer decision of 25 October 201229 in the field of claims based on anti-trust law ruled that the forum delicti commissi was available to negative declaratory actions. Based thereon, the Italian Supreme Court took an opportunity to change its position and in a decision of 10 June 2013 ruled that the Italian courts had (international) jurisdiction over an action for the declaration of noninfringement of a European patent sought by a foreign-based company (Germany) against another foreign-based company (USA) also with respect to the non-Italian parts of the European patent.30 Whether this decision actually may lead to a revival of the Italian Torpedo remains to be seen. The ECJ recently held in Weber v Weber,31 a matter relating to real estate, that the exclusive jurisdiction of Article 22(1) of the ex Brussels I Regulation (now Brussels I Regulation, art 24(1)) overrides the obligation to stay proceedings under Article 27 of the ex Brussels I Regulation (now Brussels I Regulation, art 29). The question arises with regard to patent cases whether an action seeking a declaration of non-infringement can be considered as ‘proceedings concerned with the registration or validity of patents’ in the sense of Article 24(4) of the Brussels I Regulation, leading to exclusive jurisdiction of the Member State for which the patent is granted, even if the potential infringer does not explicitly argue invalidity in its negative action. An argument could be made here that the question of non-infringement could not be answered—at least in cases where there is infringement—without examining the validity of the patent. It would be up to the ECJ to clarify whether such a line of argument was possible without any party raising any kind of objection against the validity of the patent in suit. And while the above-mentioned decision of the Italian Supreme Court32 should have binding effect on the lower Italian instance courts, the Italian instance courts specialised in IP matters appear to openly disagree with the view taken by the Italian Supreme Court. Accordingly, the Milan District Court in a decision of 16 January 2014 held that the Italian courts did not have jurisdiction to hear an action for a declaration of non-infringement regarding the non-Italian parts of a European patent.33 But as long as the Italian court system allows for significant delays until a binding decision on jurisdiction is issued, an Italian torpedo always remains a possibility.

28 eg Corte di Cassazione, Italy, decision of 19 December 2003, GRUR Int. 2005, 264 (B.L. Macchine automatiche spa v Windmöller & Holscher K); Högsta Domstolen, Sweden, decision of 14 June 2000, GRUR Int 2001, 178 (Flootek). 29 Folien Fischer et al v Ritrama (n 13). 30 Corte di Cassazione of 10 June 2013, N. 14508/13, IIC 2014, 822 (General Hospital Corporation and Palomar Medical Technologies Inc v Asclepion Laser Technologies GmbH). 31 ECJ of 3 April 2014, C-438/12 (Irmengard Weber v Mechthilde Weber), NJW 2014, 1871. 32 Corte di Cassazione of 10 June 2013, N. 14508/13, 45 IIC 822 (2014)—‘Italian Torpedo’ (General Hospital Corporation and Palomar Medical Technologies Inc/Asclepion Laser Technologies GmbH). 33 Tribunale di Milano of 16 January 2014, R.G. 48495/2011 (Schindler v Otis). For further details on this decision, see ch 7 on Patent Enforcement in Italy in this book.

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Another way out of Torpedo issues can be—where possible—to make sure that the later infringement action is not between the ‘same parties’ as required by Article 24(4) of the Brussels I Regulation, be it on the side of the plaintiff (ie the patent owner)34 or the side of the defendant (potential infringer).35 It is also worth noting that any kind of Torpedoes may only block or delay proceedings on the merits, ie actions for provisional measures under Article 35 of the Brussels I Regulation remain unaffected.36 This is also a logical consequence of the ECJ’s finding that Article 31 of the ex Brussels I Regulation (now Brussels I Regulation, art 35) overrides Article 22 of the ex Brussels I Regulation37 and that Article 22 of the ex Brussels I Regulation overrides Article 27 of the ex Brussels I Regulation.38 Finally, from a practitioner’s perspective, while Torpedoes still remain a threat (or an option), it appears that such an instrument is lodged very rarely in practice. Reasons for this could be the current economic environment or even a change in perception (many clients might be more interested in a quick final solution than in playing for time).

C. Taking of Evidence in the EU in Cross-border Scenarios 26

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The question of taking evidence abroad arises, for example, where the plaintiff in patent infringement proceedings in Germany has no access to evidence located in a different EU Member State (be it a witness or documents/devices in possession of the defendant). In such scenarios, Regulation (EC) 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters (the ‘Evidence Regulation’) is applicable. It has been in force since 1 January 2004 and is directly applicable in all Member States except for Denmark. The Evidence Regulation in essence provides for two different tracks of taking evidence in an EU Member State upon request of the court handling the patent infringement proceedings (in the above example the German court, the so-called requesting court): one is the taking of evidence by the requested court (ie the court of the EU Member State where the evidence is located) governed by the provisions of Section 3 of the Evidence Regulation; the other is the direct taking of evidence by the requesting court governed by Section 4 of the Evidence Regulation. An important if not decisive difference for the use of the options in practice is that only Section 3 of the Evidence Regulation allows imposing coercive measures in a case where, for example, the witness is not willing to testify. Whether and when a court handling, for example, patent infringement proceedings may lodge a request (no matter for which option) is governed by the national law of Regional Court Düsseldorf of 5 June 2008, 4a O 27/07, IIC 2009, 96 (Pre-laminated Multi-Layer Band). Higher Regional Court Düsseldorf of 4 March 2014, I-2 W 6/13, BeckRS 2014, 13989. eg Münchener Kommentar, ZPO, 4th edn, EuGVO, art 31, margin number 8 with further references. Solvay v Honeywell (n 6). Irmengard Weber v Mechthilde Weber (n 30).

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Tilman Müller-Stoy and Jörg Wahl the requesting court.39 The taking of evidence by the requested court is governed by the lex fori of that court (Evidence Regulation, art 10(2)). However, the requesting court may call for the request to be executed in accordance with a special procedure provided for by the lex fori of the requesting court (Evidence Regulation, art 10(3)). The requested court shall comply with such a requirement unless this procedure is incompatible with the law of the Member State of the requested court or by reason of major practical difficulties (Evidence Regulation, art 10(3)). In this context, it has been discussed whether this would allow ‘exporting’, for example the Italian ‘descrizione’ or the French ‘saisie’, into Member States with less effective measures. It seems that this has still not been clarified on a European level. The Opinion of the Advocate General in C-175/06 suggests that a ‘descrizione’ is considered a measure of taking evidence in the sense of Article 1 of the Evidence Regulation, in particular in the light of the St Paul Dairy decision of the ECJ,40 however, the requested court may not execute such request if there are grounds for refusal in the sense of the Evidence Regulation.41 Unfortunately, this case was terminated before the ECJ could give a ruling. In practice, the Evidence Regulation is of minor importance and rarely applied by courts and practitioners in patent infringement cases.42 Reasons for this may be—in a setting of globalised markets with internet offers and worldwide distribution of goods—that evidence is readily available in many cases in the jurisdiction seized with a matter, that the right holders choose (in suitable cases) European jurisdictions which offer discovery, or even that courts accept evidence obtained from abroad without following the provisions of the Evidence Regulation.43 Finally, the Evidence Regulation is not mandatory in cases of evidence being located in another Member State.44 Thus, the national courts seized with a matter may use their own procedural measures in order to obtain evidence, even if located in another Member State. Against this background, the scope of application of the Evidence Regulation in patent infringement cases remains doubtful. After all, the implementation of Directive 2004/48/EC of 29 April 2004 (the ‘Enforcement Directive’), including measures on obtaining evidence, may have made its contribution to this by rendering the national systems of many Member States more attractive in this regard. In cases of the evidence being located in the US, discovery under 28 U.S.C. § 1782 is becoming more and more important. This provision provides discovery assistance to litigants or other ‘interested persons’ in proceedings before non-US tribunals and to the tribunals themselves.45 The discovery may be directed even against third parties who are not involved in the foreign proceedings.

Grabinski in Festschrift für Tilman Schilling (2007) 197. cf ECJ of 28 April 2005, C-104/03 (St Paul Dairy). 41 cf Opinion of Advocate General Mrs Kokott of 18 July 2007 in C-175/06 (Tedesco v Tomasoni Fittings Srl and RWO Marine Equipment Ltd). 42 The rare application of the Evidence Regulation has been criticised by the European Parliament in its Resolution of 10 March 2009 (2010/C 87 E/05). 43 cf eg Higher Regional Court Oldenburg of 29 November 2012, 8 W 102/12, BeckRS 2012, 25081 as to evidence in form of an expert. 44 cf ECJ of 6 September 2012, C-170/11 (Lippens and others), a ruling with regard witness testimony; similarly with regard to expert evidence ECJ of 21 February 2013, C-332/11 (Prorail). 45 cf for details United States Supreme Court of 21 June 2004, 542 U.S. 241 (2004)—Intel Corp v Advanced Micro devices, Inc; Schönknecht, ‘Beweisbeschaffung in den USA zur Verwendung in deutschen Verfahren’ (2011) GRUR Int 1000. 40

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D. Enforcement Directive 30 31

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The Enforcement Directive aims at harmonising the (back then) existing significant differences in enforcing IP rights in the different Member States. While the Directive acknowledges the progress made in enforcement standards due to the TRIPS Agreement, Recital (7) of the Directive stresses that ‘there are still major disparities as regards the means of enforcing intellectual property rights’. These, as is stated in Recital (8), ‘are prejudicial to the proper functioning of the internal market and make it impossible to ensure that IP rights enjoy an equivalent level of protection throughout the Community’. For that reason, the Directive aims at a ‘high, equivalent and homogeneous level of protection in the internal market’ (Recital (10)). In substance, the Directive requires implementation of those instruments that the Commission perceived most useful in combating IP infringement in the national context. The Directive may thus be described as a collection of ‘best’ or ‘most efficient’ practices. The Directive does not introduce new measures or instruments that could not be found in any of the Member States, for example punitive damages. Particular emphasis is given to preliminary measures and the preservation and obtaining of evidence. Accordingly, the Enforcement Directive provided for the Member States to implement certain minimum standards, in particular regarding 1. 2. 3. 4. 5.

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the obtaining/taking of evidence (arts 6 and 7); the right of information (the ‘Auskunftsanspruch’) (art 8); provisional and precautionary measures (art 9); final sanctions (arts 10–14); and the calculation of damages (art 13).

The Enforcement Directive was not implemented as quickly as intended.46 Most of the Member States were late, among them Belgium, France, Germany, Luxembourg, the Netherlands and Sweden, to name a few. While the last of these countries implemented the Directive in 2009 (Luxembourg), it appears that Greece has still not implemented the Enforcement Directive in its entirety, but in essence only with regard to copyright47 and trade mark law.48 Of course, as the Enforcement Directive left some leeway as to the extent and the means of implementation, and as the interpretation of the different national instruments has not been harmonised by the ECJ, the national systems still differ in many details. For example, while the right of information in Article 8 of the Enforcement Directive is limited to activities on a commercial scale when the request is not directed against the infringer, Denmark, Estonia, Greece, France, Lithuania and the Slovak Republic,

46 Only 5 Member States (Denmark, Hungary, Italy, Slovenia and the UK) complied with the deadline of 26 April 2006; Annex 1 to Commission Staff Working Document of 22 December 2010, SEC(2010) 1589. 47 cf ibid. 48 cf Lyberis, ‘New Trademark Law in Greece of 19 April 2012’, available at: www.ecta.org in conjunction with the national implementation measures listed under eur-lex.europa.eu.

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Tilman Müller-Stoy and Jörg Wahl for example, have gone beyond this commercial scale limitation.49 Another example in the same direction is provision on lump sum damages (Enforcement Directive, art 13). Beyond the requirements of the Enforcement Directive, Austria, Belgium, Greece, Czech Republic, Lithuania, Poland, Romania and Slovenia, for example, enacted provisions allowing for multiple damages awards, which however may be available only for copyright infringements or in cases of bad faith.50 As to damages, in Germany the minimum requirements of Article 13 were implemented with regard to patents in section 139(2) of the German Patent Act (three alternative calculation methods: lost profits of right holder, infringer’s profits, or reasonable royalty). As this had been longstanding court practice, the amendment did not mean any change in practice, however.51 The right holder may freely choose between the three alternatives, while cumulative assertion is not allowed.52 However, other damages as far they are not covered by the three calculation methods may be asserted (eg legal costs, costs for warning letters, so-called ‘Marktverwirrungsschaden’53).54 The German implementation of Article 13(1) thus does not recognise any kind of punitive or multiple damages. The discussions55 in this direction are still ongoing; however, they appear to have not gained acceptance in the practice of the German courts. In France, prior to the Enforcement Directive, the compensation for damages was assessed essentially by way of looking at the lost profits and the loss suffered by the right holder (‘commercial damage’, French Civil Code, art 1149).56 By law of 29 October 2007, also the concepts of assessing damages by way of the infringer’s profit or reasonable royalty were introduced in France. In Italy, the three calculation methods of Article 13(1) of the Enforcement Directive were implemented in Article 125 of the Codice della Proprietà Industriale (‘CPC’) in 2006.57 In addition, also damage awards on an equitable basis may be cumulatively granted.58 Further, Article 7 of the Enforcement Directive, requiring the Member States to implement measures for preserving evidence at the outset of proceedings on the merits, did not lead to uniform measures across the Member States. Instead, each country has its very own tool following its specific legal landscape. For example, the French have their sweeping instrument of the ‘saisie-contrefaçon’ the British that of the Anton Piller

Annex 1 to Commission Staff Working Document of 22 December 2010, SEC(2010) 1589, p 5. ibid. 51 cf Bundesgerichtshof of 8 October 1971, GRUR 1972, 189—Wandsteckdose II; of 6 March 1980, GRUR 1980, 841—Tobultamid. 52 cf Bundesgerichtshof of 22 April 1993, GRUR 1993, 757—Kollektion Holiday. 53 ie damage resulting from market confusion. 54 cf Voß/Kühnen in Schulte, Patentgesetz 9th edn, s 139, margin number 99. 55 cf eg v Ungern-Sternberg, ‘Einwirkung der Durchsetzungsrichtlinie auf das deutsche Schadensersatzrecht’, (2009) GRUR 460; ‘Stellungnahme zu COM(2010) 779 endg. vom 22. Dezember 2010 zur Anwendung der Richtlinie 2004/48/EG des Europäischen Parlaments und des Rates vom 29. April 2004 zur Durchsetzung der Rechte des geistigen Eigentums’ (2011) GRUR 604. 56 cf Benhamou, ‘Compensation of Damages for Infringements of Intellectual Property Rights in France, Under Directive 2004/48/EC and Its Transposition Law—New Notions?’ (2009) IIC 125. 57 cf for details Gozzi, ‘Deliktsrechtliche und bereicherungsrechtliche Ansprüche aus der Verletzung von Rechten des gewerblichen Eigentums nach dem italienischen Codice della proprietà industriale—Die Umsetzung des Art. 13 der RL 2004/48/EG zur Durchsetzung der Rechte des geistigen Eigentums’ (2008) GRUR Int 31. 58 Hassan, ‘Damage Compensation for Infringements of Industrial Property Rights in Italy’ (2010) IIC 753 with further references. 50

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Order (now: inspection order), both forming a basis for the provisions of Article 7 of the Enforcement Directive.59 In Italy, the ‘descrizione’ is now implemented in Article 129 of the CPC. While these tools do have quite some history in countries like France, Belgium, Italy and the UK, in countries like Germany and the Netherlands new tools needed to be implemented. In Germany, following the Faxkarte decision of the German Federal Court of Justice of 2002,60 the courts started to develop measures (the so-called ‘Besichtigungsverfahren’) to provide an inspection claim allowing to preserve (and/or obtain) evidence prior to actual proceedings on the merits. Later, in 2008, such material claim for inspection with regard to granted patents was finally implemented in Section 140c of the German Patent Act. Procedural aspects, in particular on measures taking into account confidentiality interests of the parties, are outlined in the Lichtbogenschnürung decision of the German Federal Court of Justice,61 for example allowing the courts to subject attorneys to secrecy even vis-à-vis their own client. Finally, as also the laws of the Netherlands did not stipulate any specific measures for preserving and seizing of evidence62 prior to proceedings on the merits, such measures were implemented in Article 1019(b)–(d) of the Dutch Code of Civil Procedure63 in 2007.64 In summary, the Enforcement Directive led to significant improvements in many Member States and helped establish a minimum standard of IP protection and enforcement throughout (most of) the Member States with regard to patent infringement proceedings (for further details of the situation in the UK, Germany, France, Italy, the Netherlands, Switzerland and Poland, see the respective national chapters in this book). Given this harmonisation, uncertainty when going from one jurisdiction to another has decreased. Whether and to what extent further measures of harmonisation should be taken will certainly be strongly influenced by the acceptance and practice of the new (future) Unified Patent Court.

E. Unified Patent Court I. Introduction 39

The basis for the unified patent court system is the European patent with unitary effect (in short, unitary patent). Whereas the unitary patent is a creation of the European Union, it is fundamentally different from the other industrial property titles of the EU, the Community trade mark, the Community design and the Community plant variety: it is not granted by an EU agency but by the European Patent Office (‘EPO’).

59 Sujecki, ‘Zur Implementierung der Durchsetzungsrichtlinie in das niederländische Recht’ (2011) GRUR Int 28. 60 Bundesgerichtshof of 2 May 2002, GRUR 2002, 1046—Faxkarte. 61 Bundesgerichtshof of 16 November 2009, GRUR 2010, 318—Lichtbogenschnürung. 62 Sujecki, ‘Zur Implementierung der Durchsetzungsrichtlinie in das niederländische Recht’ (n 58) 28. 63 Wetboek van Burgerlijke Rechtsvordering. 64 cf Sujecki (n 58) 28.

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Various attempts to create a Community patent, ie a patent of the Union which is selfcontained in respect of grant and validity, have been made since the late-1950s and turned out to be in vain. Over the decades, the major contested issues were a common court system and the language problem, which is always a delicate question in Europe, namely regarding the question into which languages the patent has to be translated. Eventually, two developments made it possible to overcome the obstacles on the way to a unitary patent for the Union: First, the possibility of ‘enhanced cooperation’ among a group of EU States, created by the Treaty of Amsterdam for situations in which not all EU States are prepared to cooperate. It makes progress possible, even if unanimity cannot be reached. Second, the decision to connect the new EU title in the simplest manner with the grant proceedings before the EPO and to design it as a mere option for the applicant. The creation of the unitary patent required three legislative acts65 which constitute the patent-reform package, that is

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— the Regulation on the unitary patent (UPR); — the Regulation on the language regime for the unitary patent (UPTR); and — the Agreement on a Unified Patent Court (UPCA). 44

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The two Regulations were published on 31 December 2012. The Agreement was signed by 24 of the then 27 EU States on 19 February 2013. The patent reform package does not involve any change for non-EU Member States. They stay with the European bundle patent and the jurisdiction of the national courts. A special situation has existed for Italy which had signed the UPCA but had not initially participated in the enhanced cooperation. The situation is the other way around for Poland, which participates in enhanced cooperation, but has not signed the UPCA. Whereas the UPCA may enter into force for Italy even without enhanced cooperation, the two Regulations will not be applicable to Poland without entry into force of the UPCA. Both Regulations, the UPR and UPTR, entered into force on 20 January 2013. The UPCA will enter into force: — on the first day of the fourth month after ratification by 13 Member States, including Germany, France and the United Kingdom; or — on the first day of the fourth month after the date of entry into force of the amendments to Regulation (EU) Brussels I in order to adapt it to the UPCA, whichever is later.

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Both Regulations make a significant distinction between entering into force and application. Whereas they have already entered into force, they are not applicable until the UPCA will have entered into force. This means that the patent reform package will be applicable only as a whole. Considering the progress made so far, the only requirement still lacking for the entry into force is the necessary ratification by the 13 States. Even

65 OJ EPO 2013, 287; Regulation (EU) No 1257/2012 of the European Parliament and the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection and Council Regulation (EU) No 1260/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements, OJ L 361 of 31 December 2012, p 1 and p 89; out of the 25 countries participating in the enhanced cooperation, Poland has not signed so far. Italy and Spain are not participating in the enhanced cooperation, but Italy signed the Agreement nonetheless.

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after entry into force of the UPCA, the unitary effect of a unitary patent will be restricted to those Member States for which the Unified Patent Court has acquired jurisdiction at the date of registration of the unitary effect of the respective European patent. This means that there will be no unitary effect for States participating in the enhanced cooperation which have not yet ratified the UPCA after its entry into force.

II. UPR 47

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The UPR governs in particular the creation, the validity and the effects of the unitary patent. Unitary patent protection is offered to the applicant as an option which is an alternative to the traditional and well-established European bundle patent having the effect of a national patent in the designated Contracting States. This option can be chosen at the end of the grant proceedings. Thus, the course of procedure for applying for a patent and examination of the application remains exactly the same. After publication of the mention of the grant, the applicant has one month within which to decide whether to file a request for a unitary patent. If such a request is not filed, the effect of the bundle patent persists. The unitary patent shall have a unitary character. It shall provide uniform protection and can only be limited, transferred or revoked, or lapse, in respect of all the States in which it has taken effect. With respect to validity, the grounds for revocation pursuant to Article 138(1) (a) to (c) of the EPC apply, which are identical to the grounds for opposition.

III. UPTR 49

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A European patent application may be filed in any language. If it is not filed in one of the official languages of the EPO, ie English, French or German, a translation in one of these languages has to be filed. The language of the translation becomes the language of the proceedings, ie the language in which the proceedings are conducted and in which the patent is granted. Before grant, translations of the claims in the two official languages other than the language of the proceedings have to be filed. This language regime remains the same for the unitary patent. In case of an infringement dispute, the patentee has to provide the alleged infringer at his request with a full translation of the unitary patent in the language of the State of the alleged infringement or the State of the alleged infringer’s domicile. In addition, the competent court may require a full translation in the language used in the proceedings before that court. As a rule, no further translations are necessary; in particular not for validating the patent in the States in which the unitary patent has taken effect. However, for a transitional period, a full translation of the specification has to be filed with the request for unitary protection. If the patent was granted in German or French, the translation has to be in English; if the patent was granted in English, the translation may be filed in any other official language of the Union. The transitional period will be 6 to 12 years.

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IV. UPCA 52

The UPCA establishes the Unified Patent Court as a common court for the Member States to the Agreement comprising two instances. The Member States confer on the Court the exclusive competence for actions for infringement of the unitary patent (see further details below).

V. Unified Patent Court (UPC) 1. Organisation 53

The Court of First Instance comprises three types of divisions: — the central division; — local divisions set up upon request of a Member State; and — regional divisions set up upon request of two or more Member States.

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The seat of the central division was one of the most controversial political issues. Finally, a compromise was reached and the seat will be in Paris and two sections will be established in London and Munich. The cases will be distributed within the central division on the basis of the Sections of the International Patent Classification. Cases in Section A (human necessities) and Section C (chemistry) are allocated to London, cases in Section F (mechanical engineering, lighting, heating, weapons, blasting) are allocated to Munich and all other cases are to be handled in Paris. It is up to the signatory States to decide in which States local and regional divisions will be set up. Not all States have finally made up their mind. In Germany, there will be four local divisions in Dusseldorf, Hamburg, Mannheim and Munich. Austria, Belgium, Denmark, Finland, France, Ireland, the Netherlands and the United Kingdom each plan to set up one local division. Sweden, Estonia, Latvia and Lithuania have concluded an agreement on the creation of a Nordic-Baltic division having its seat in Stockholm. Further regional divisions may be set up for the Czech Republic and Slovakia as well as for Bulgaria, Cyprus, Greece and Romania. The seat of the Court of Appeal is Luxembourg. A third instance dealing only with questions of law is not foreseen. Contested questions of the interpretation of EU law have to be clarified by preliminary rulings of the European Court of Justice.

2. Competence 57

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The Member States confer on the UPC the exclusive jurisdiction for litigation in respect of European patents, ie not only in respect of unitary patents but also in respect of European bundle patents and supplementary protection certificates based on such patents. The main competence concerns infringement cases and the question of validity. Within the Court of First Instance, the local or regional division of the State of the alleged infringement and those of the State of the residence of the defendant are competent. If there is no local or regional division for the respective Member State, or if the defendant has no residence within the Member States, the central division is also competent.

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Only the central division is competent for actions for revocation and for declarations of non-infringement. A counterclaim for revocation may be raised before the division before which an infringement action is pending; this may be a local, a regional or the central division. Having heard the parties, a local or regional division may — proceed with both the action for infringement and with the counterclaim for revocation; — refer the counterclaim for revocation to the central division with the possibility of staying the proceedings; or — with the agreement of the parties, refer the whole case to the central division.

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If the local or regional division proceeds with the revocation case itself, it is enlarged by a technically qualified judge. In case an action for revocation is pending before the central division, a local or regional division remains competent for a subsequent infringement case. In parallel, also the central division is competent. After an action for declaration of non-infringement before the central division, an action for infringement can be brought before a local or regional division with the consequence that the proceedings before the central division shall be stayed. If opposition or limitation proceedings are pending before the EPO, the Court may stay its proceedings, without being obliged to do so. This means that—different from, for example, German law—opposition proceedings do not block the possibility of filing an action for revocation. There exists a transitional arrangement which only applies to European bundle patents and not to unitary patents. During the transitional period, there is a concurring jurisdiction of the national courts. In addition, the applicant or patent proprietor may exclude the exclusive jurisdiction of the UPC up to one month before the end of the transitional period (seven years which can be extended up to 14 years; a so-called optout). The declaration is to be submitted to the Registry of the Court and is entered into the Register of the Court. The UPCA does not explicitly exclude that the UPC retains concurrent jurisdiction after an opt-out; however, this may be concluded from the purpose of provision. The declaration may also be withdrawn (opt-in). Attention has to be drawn to the fact that the jurisdiction of the UPC is not limited to European bundle patents granted after the entry into force of the UPCA. Rather, it also comprises patents granted before and valid for the States in which the UPCA has become effective. Thus, at the entry into force of the UPCA, the patentee has to check his whole portfolio of European patents whether he wants to exclude the jurisdiction of the UPC.

3. The Judges 63 64

Any panels of the UPC shall have a multinational composition and shall be chaired by a legally qualified judge. As a rule, the panels of the local divisions sit in a composition of three legally qualified judges. Two of them have to be nationals of the State for which the division is set up if this State has 50 or more patent cases per year; otherwise, there is only one judge from this State. The additional judges are allocated from the pool of judges. This applies to the regional divisions with the proviso that two judges always come from the region. Upon request of a party, any panel of a local or regional division requests

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Tilman Müller-Stoy and Jörg Wahl the allocation of a technically qualified judge. It may make such a request of its own motion. The central division sits in a composition of two legally qualified judges of different nationality and a technically qualified judge. The Court of Appeal sits in a composition of three legally qualified and two technically qualified judges. All legally and technically qualified judges of the Court of First Instance are members of the pool of judges. The technically qualified members of the pool are also available to the Court of Appeal. The judges may be full-time or part-time judges. The members of the pool of judges are not yet appointed. Their qualification will be of decisive influence on the success of the unitary patent system as a whole. The Administrative Committee foreseen in the UPCA decides on the appointment of the judges. It takes its decisions on the basis of a list of candidates established by an Advisory Committee comprising patent judges and practitioners experienced in patent law and patent litigation. In respect of the eligibility criteria, the UPCA sets a high yardstick, at least at first glance. Judges shall ensure the highest standards of competence and shall have proven experience in the field of patent litigation. On closer inspection, the Draft Statute annexed to the Agreement puts this requirement into perspective: The necessary experience may be acquired by training foreseen in the Statute. As usual in EU institutions, the principle of geographical distribution is a very important selection criterion. Legally qualified judges shall possess the qualifications required by national law for appointment to judicial offices. Technically qualified judges have to have a university degree and proven expertise in a field of technology. The first president of the Court is expected to be French.

4. Procedure a. Language of Proceedings 69

As a rule, the language of proceedings before a local or regional division is the official language of the State hosting the division. The respective State may allow the use of additional languages. The majority of States will allow the use of English as an additional language. This takes into account that two-thirds of the European patents are granted in English. With the agreement of the division, the parties may choose the language of the granted patent. If the Court disagrees, the parties may request that the case be referred to the central division. The language of the proceedings before the central division is the language of the granted patent. Before the Court of Appeal, the language of the proceedings remains the same as in first instance proceedings, unless the parties agree on the use of the language of the granted patent.

b. Rules of Procedure 70

It is the task of the Administrative Committee to adopt the Rules of Procedure of the UPC on the basis of a broad consultation with the stakeholders. The present draft, which already considers the results of a public consultation, comprises some 382 rules concerning inter alia the different stages of the proceedings, the role of the judge rapporteur, the case management by the judge rapporteur and the chairman, the means of evidence and the conduct of oral proceedings.

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aa. Stages of the Proceedings 71

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Proceedings before the Court of First Instance consist of several stages. The first stage consists of written proceedings in which normally two briefs from each side are exchanged within a rather strict timetable. The pleadings are to be submitted in electronic form, unless this is not possible for any reason. This stage is conducted by the judge rapporteur who may in reasoned cases allow exceptions from the given time schedule, eg allow extension for time limits. The written proceedings should normally not exceed eight to nine months. The second stage is the interim procedure, also conducted by the judge rapporteur. Its aim is to comprehensively prepare the case for the oral hearing and to clarify the position of the parties in respect of the contested relevant main issues. To this end, the judge rapporteur may hold an interim conference which may take place as a telephone or video conference. This stage should be finished within three months. As the next step, the judge rapporteur summons the parties to the oral hearing and informs the presiding judge of the closure of the interim procedure. From this point in time, the presiding judge takes over the management of the case. The oral hearing takes place before the whole panel and should be completed within one day. The decision on the merits of the case should be given as soon as possible after the oral hearing; in exceptional cases it may be pronounced immediately after the oral hearing. The written and reasoned decision on the merits should be issued within six weeks from the oral hearing. Taking the timing of these stages together means that a first instance litigation is envisaged to take roughly one year in total.

bb. Bifurcation 75

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As mentioned, the local or regional division at which the action for infringement is pending may deal with the counterclaim for revocation, refer it to the central division or refer the whole case to the central division. The defendant has to include in his statement of counterclaim a statement of his position in respect of these alternatives. In the same way, the plaintiff has to state his position in respect of these alternatives in his defence to the counterclaim. After the closure of the written procedure, the panel decides how to proceed with the case. An oral procedure is not foreseen for this purpose. In case the division proceeds with infringement as well as with validity, the judge rapporteur requests the allocation of a technically qualified judge if this has not already been done. If the counterclaim for revocation is referred to the central division, the action for infringement is stayed, provided there is a high likelihood of invalidity. Otherwise, the decision on staying the infringement procedure is within the discretion of the Court. If the action for infringement is not stayed, the Court may render its decision under the condition that the patent is not held invalid in parallel proceedings. It is possible that, at least at the outset, divisions in different States or regions, as the case may be, will treat these questions differently. In Germany, for quite a long time there has been the tradition of dealing with infringement and validity in separate proceedings before the Civil Court and the Federal Patent Court. So far, infringement proceedings have only been stayed if the Civil Court has seen a high likelihood of

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Tilman Müller-Stoy and Jörg Wahl revocation, which has rarely been the case. Some comments of German judges indicate that a referral to the central division, ie bifurcation, might not become a very significant option in the German local divisions.

cc. Evidence 78

In proceedings before the UPC, any means of evidence may be relied on, in particular documents, whether written or drawn, photographs, expert reports, affidavits, physical objects, and audio or video recordings. Evidence may also be obtained by hearing witnesses and party/court experts. The UPC may order a party to the proceedings and even a third party to produce evidence. Such an order may be requested by a party which has submitted reasonable and plausible evidence in support of its claims and has specified evidence which lies within the control of another party. If a party fails to comply with an order to produce evidence this has to be taken into account in the Court’s decision. The UPC may also order the preservation of evidence, like the inspection of physical objects or premises and the taking of samples. It may also order provisional measures like the seizure of allegedly infringing goods and the materials for producing such goods; also freezing orders are possible. Under particular circumstances, such orders may be given without hearing the defendant. However, a US-type pre-trial discovery is not foreseen.

c. Appeal Procedure—Basic Outline 79

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All final decisions and orders of the Court of First Instance are subject to appeal. Any party may appeal if it is adversely affected, ie if its requests turned out to be unsuccessful. The statement of appeal against a final decision has to be filed within two months and the statement of grounds of appeal within four months of its notification. The appeal may be based on points of law and points of fact. New facts and evidence may only be introduced where the submission thereof could not reasonably have been expected during first instance proceedings. An appeal has no suspensive effect unless the Court of Appeal decides otherwise on a party’s request. In principle, the conduct of appeal proceedings is similar to first instance proceedings. Also in second instance, the judge rapporteur prepares the case for the oral hearing. At the end of the proceedings, the Court of Appeal takes a decision on the merits of the case. In exceptional cases, the Court may refer the case back to the Court of First Instance. Procedural orders are subject to appeal if the Court of First Instance grants leave. If a request to grant leave is refused, a request for a discretionary review to the Court of Appeal may be allowed. The details are still under discussion.

5. Court Fees 81

In proceedings before the UPC, court fees have to be paid. Concrete amounts are not yet known; the level of the fees has to be fixed by the Administrative Committee. The UPCA contains principles for fixing the fees. They will consist of a fixed fee, combined with a value-based fee. Natural persons, unable to meet the costs of the proceedings, may apply for legal aid. Support measures for SMEs are possible.

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VI. The Future Role of the European Court of Justice (ECJ) 82

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The UPR and UPTR are legal instruments of the legal order of the EU. It is the primary role of the ECJ to interpret the Union law. Therefore, the UPCA stipulates that the UPC is obliged, in the same way as a national court, to request preliminary rulings of the ECJ in order to clarify questions concerning the interpretation of EU law. The draft of the UPR in Articles 6 to 8 contained definitions of the acts against which the patent provides protection. This resulted in concerns relating to the involvement of the ECJ in the interpretation of the substantive law on patent infringement. These were expressed by national patent judges and representatives of interested circles in view of the highly specialised character of this matter. This question was on the verge of letting the whole project fail at the very last minute, even after the Heads of State had come to an agreement. Neither the Parliament, which wanted to maintain these provisions, nor the Council of Ministers, which wanted them to be deleted, seemed prepared to give in. Eventually, a compromise was found according to which Article 5(3) of the UPR refers to the applicable national law in respect of the acts against which the patent provides protection. This ‘national law’ is to be found for the Member States of the UPCA in Article 25 et seq of the Agreement defining the privileged acts and their limitations. Considering Article 5(3) of the UPR and its reference to common treaty law, it is an open question whether or not this compromise can achieve its objective to keep the law of patent infringement separate from EU law.

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It will be a key question for the success of the unitary patent to what degree patentees are prepared to place confidence in the new court system. In this respect, the principle derived from experience may apply that the known even with its weaknesses appears more trustworthy than the unknown. In particular, patentees in countries with experienced and established patent courts may be inclined to follow such tendency. A further aspect in this regard is that the unitary patent system is as of its start not really a uniform European system, as the system will enter into force even if not all Member States have ratified the UPCA (13 Member States including Germany, France and the UK are sufficient). The unitary patent will only apply in the Member States that have already ratified the UPCA at the date of registration of the unitary effect. Some Member States of the EPC are not EU Member States, eg Switzerland and Turkey, so that there will be no unitary patent covering these States. And finally, the possibility of opting out for existing European patent may further decrease the number of cases which make it to the UPC in the first years of the system. In any event, for the patentee, the route to the UPC has the advantage that he can enforce the unitary patent and the European bundle patent in one single procedure with effect in all States for which the UPCA has entered into force. Whereas this increases the economic impact of the patent, it implies at the same time the indispensable risk that the patent may be invalidated in one single procedure for its whole territory, be it in isolated revocation proceedings or in infringement proceedings in which a counterclaim for revocation has been raised. After revocation, there is still a second chance in appeal proceedings before the Court of Appeal in Luxembourg. However,

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Tilman Müller-Stoy and Jörg Wahl different from the present situation, there is no chance to save the patent in another country before another court. Establishing local and regional divisions serves the purpose of integrating existing systems. According to an enquiry of the Commission preceding the work on the unitary patent, more than 90 per cent of the then estimated 1500–2000 patent cases in the Union were litigated before the courts in Germany, England, France and the Netherlands. This means on the one hand that in the majority of countries there were no courts with judges experienced in patent matters, and on the other hand that there are human resources in the said four countries which can be used for a common court, the majority in Germany. These resources are especially used by the provision in the UPCA according to which local divisions in a country with more than 50 patent cases per year sit in a composition of two judges from this country and one judge from another country. To a large extent, it is within the control of the patentee before which local division litigation takes place. He has the choice between the residence of the defendant and the place of infringement. Even if the alleged infringer files an action for declaration of non-infringement at the central division, the patentee may have the case treated at a local or regional division by filing an action for infringement at the competent division of his choice himself. This possibility also exists if the alleged infringer files an action for revocation at the central division. Whereas it is within the discretion of the local or regional division to refer a revocation case to the central division, it cannot refer the infringement action to the central division, unless both parties agree. Before the central division, the plaintiff can hardly expect to have judges coming from his national jurisdiction. Here, the principle of geographical distribution of staff will have a significant effect because it can be applied to the local and regional division only to a limited extent. In the latter divisions, there will be a majority of judges from countries with experienced national patent courts. This will have the consequence that more judges from other countries will sit in the central division. In this respect, it has to be noted that according to the UPCA, a regional division has to refer the case to the central division at the defendant’s request if the alleged infringement has occurred in the territories of three or more regional divisions. This may make the regional divisions less attractive and have the consequence that the local divisions are preferred for infringement actions. In view of all of these considerations, it remains to be seen whether the unitary patent system will be a success as of its beginning. It clearly gives additional options to patent owners, but also carries risks which are hard to determine at the moment. Therefore, and in view of the expected fees for using the system, some companies are seriously considering or have even started alternative patent filing strategies, in particular national filings in case that coverage is only needed for a small number of Member States. Most of the fees of the system are still unclear. However, with respect to the renewal fees for the unitary patent, a proposal from the President to the Select Committee of the Administrative Council was published in March 2015. The proposal differentiates between three stages for assessing the fees. The first stage is years three to five, calculated from the filing date. For this stage, the fees for the unitary patent correspond to the renewal fees to be paid for a pending European patent application (internal renewal fees—‘IRF’). The third stage is from

The European Union

93

79

year 10 on, for which the fees for the unitary patent correspond to the total sum of national renewal fees payable in the states in which European are most frequently validated (TOP level). The second stage is from year six to year nine for which a transitional level applies, a level between the IRF level and the year 10 level. In addition, renewal fees have to be paid for the second year for which no renewal fee for a pending European patent application has to be paid. Considering the length of examination proceedings, this seems to be a theoretical case. On this basis, the proposal contains two fee schedules differing from year 10 onwards. The first proposal is based on current renewal fees for four countries (TOP 4 level); the second one is based on current renewal fees for five countries (TOP 5 level). The TOP 5 proposal includes a fee reduction for privileged applicants, in particular SMEs. At present, many applicants validate the patent in three Member States. Therefore, Table 1 compares the two proposals and the total of renewal fees to be paid for granted

Table 1: Comparative Schedule of Renewal Fees Year

TOP 5

2

350

350

0

0

3

465

465

106

1298

4

580

580

106

1874

5

810

810

226

2545

6

855

880

327

3271

7

900

950

427

3886

8

970

1110

550

4625

9

1020

1260

670

5513

10

1175

1475

800

6416

11

1460

1790

985

7424

12

1775

2140

1120

8473

13

2105

2510

1440

9594

14

2455

2895

1695

10741

15

2830

3300

1980

11917

16

3240

3740

2295

13369

17

3640

4175

2605

14753

18

4055

4630

2925

16065

19

4455

5065

3235

17660

20 Total

DE/FR/UK

25 MS66

TOP 4

4855

5500

3540

19197

37995

43625

25032

158621

66 The amounts for DE/FR/UK are taken from the EPO brochure ‘National Law Relating to the EPC’, GBP calculated at €1.4 and rounded up or down at intervals of €5. In the UK, no renewal fees have to be paid for the 3rd and 4th year. The amounts in the other columns are taken as reproduced by IPKat from the President’s document.

80

94

95

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Tilman Müller-Stoy and Jörg Wahl patents in all 25 participating Member States as stated in the document, as well as the total of renewal fees to be paid in France, Germany and the United Kingdom. The amounts in the column DE/FR/UK apply in the same way for national patents and the national parts of a European bundle patent. At the application stage, the situation is different: an applicant filing national applications has to pay the national renewal fees in the column DE/FR/UK, whereas the European applicant has to pay the renewal fees for the single European application, which are identical to the amounts in columns TOP 4 and TOP 5 for the years three to five. Assuming that a European patent is granted at the statistical average in the course of year four, a typical applicant has to pay renewal fees for the pending European application for years three and four corresponding to the identical amounts in columns TOP 4 and TOP 5. After grant, if he requests a unitary patent, the alternatives in columns TOP 4 and TOP 5 remain applicable. However, if he proceeds with the European bundle patent, he switches for year five and the following years to the national renewal fees in column DE/FR/UK. An applicant filing national patents is in column DE/FR/ UK from the outset. For a patent granted in the course of year four, the renewal fees for the application and the patent total over the 20 years’ full term of the patent, as follows:

Table 2: Renewal fees over the 20 years’ full term

TOP 4

Unitary patent TOP 5

European bundle patent for DE/FR/UK

National patents in DE/FR/UK

37645

43275

25865

25032

97

The figures are only preliminary because the formal decision on the amounts has to be taken by the Administrative Council’s Select Committee. For a relevant comparison, it has to be kept in mind that the proposal does not differentiate between different stages of implementation of the unitary patent system. Therefore, the full amount of the renewal fees has to be paid even if the unitary patents registered in the starting period cover for their full term only the 13 participating States necessary for entry into force of the UPCA. As to the EPO’s previous announcement that ‘the fees will be higher than many would hope but lower than some might fear’, at least the first part of the prediction seems to be becoming reality. As an isolated factor, the envisaged level of the renewal fees will only attract a small minority of users of the European patent system validating at present in a high number of participating Member States. In respect of the ‘average applicants’, the decisive question will be to what extent they are prepared to pay some 46 per cent or 67 per cent more, depending on the Selection Committee’s decision, for a considerably larger number of States in which they enjoy protection. Compared to national patents, the renewal fees for the unitary patent are 50 per cent or 73 per cent higher, depending on the alternative TOP 4 or TOP 5.

3 Patent Enforcement in the United Kingdom CHRISTOPHER RENNIE-SMITH*

A. General I. Background1 1

In the previous edition of this work, published in 2005 and reflecting the position in 2004, the learned authors of this chapter began by observing that, as the Community Patent was then coming closer to reality, differences between the process and usage of patent litigation in different European countries needed to be examined afresh. ‘Today’ they continued (meaning then), European patents, granted by the European Patent Office (‘EPO’), take effect separately in each state designated in the application and each is enforceable under the patent law of that state. The Community Patent is to be enforced in separate Community tribunals and in some eclectic manner they will need procedural structures which measure up fully to the requirements of fairness and efficacy enjoined by the TRIPS Agreement, Article 41.2

2

3

After a brief review of the historical development of patent litigation in England, the traditional features of such litigation,3 and the legacy of the accusatorial nature of English litigation, they came to the reforms of litigation introduced from 1999 onwards and concluded that there had been ‘enough of a change in climate and procedure to make the new conditions of English patent litigation the main subject of this article’.4 Now, some 10 years on, those reforms have become norms and many of the features of patent litigation familiar to practitioners in the 1980s and 1990s have either become aspects of history or have been changed substantially, in some cases fundamentally. Thus this new description of the enforcement of patent rights in the United Kingdom

* This contribution is intended as an introduction to the system of patent enforcement in the United Kingdom and not as a detailed commentary on either substantive or procedural law or practice for which the reader is directed to F Clark, Sir R Jacob, WR Cornish, G Hamer and T Moody-Stuart, Encyclopaedia of United Kingdom and European Patent Law (Sweet & Maxwell, London, 2015) or R Miller, G Burkill, Sir C Birss and D Campbell, Terrell on the Law of Patents 17th edn (Sweet & Maxwell, London, 2010). 1 Throughout this chapter ‘patents’ will be used to include also supplementary protection certificates (SPCs). 2 p 87. 3 Such as patent judges with a technical education and the recruitment of judges from among practising lawyers. 4 p 93.

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Christopher Rennie-Smith takes what was seen in 2004 as the ‘brave new world’ of a radically reformed litigation system as now established and accepted. Further, while there is still no Community patent enforced in Community tribunals, agreement has now been concluded among the majority of the Member States of the European Union for the creation of a European Patent with Unitary Effect and a Unified Patent Court (‘UPC’)5 with jurisdiction over the infringement and validity of such unitary patents and, to some extent yet to be fully ascertained,6 the ‘classic’ European patents granted by the EPO for states designated in the corresponding applications. At the time of writing the rules of procedure of the new court have reached their seventeenth edition and several other aspects of the new regime are being debated and planned. While it is still unclear either when the first unitary patents may be applied for or when the new court may begin operation,7 it seems now to be a matter of an uncertain date rather than mere hope or speculation. What is certain however is that the UPC will necessarily draw on the legal systems and traditions of all, or at least all of the principal, EU States and, in the case of the United Kingdom, that will be the current system in which the ‘new’ conditions of English patent litigation which were the main subject of the corresponding chapter in the previous edition have become the established conditions and thus the basis for this chapter.

II. History and Tradition 4 It is well known that until 1876 England had two divergent court systems, the Courts of Common Law descended from the medieval royal court and whose procedure was founded on a complex range of causes of action requiring an intricate form of written pleadings and in which jury trials were the norm; and the Court of Chancery which had developed a separate system of equity as a more flexible alternative to the common law and which did not have a tradition of juries. The two separate systems were combined by the Supreme Court of Judicature Act 1873 which replaced the former courts with a High Court with three divisions and a Court of Appeal. From 1876 patent actions were heard in the Chancery Division of the new High Court which inherited the non-jury tradition of the Court of Chancery and from then juries ceased to be a feature of patent litigation.8 Since decisions on technical issues, often of considerable complexity, were no longer

5 The unitary patent is provided for in the European Parliament and Council Regulation of 17 December 2012 (EU) No 1257/2012 and the related Council Regulation of the same date regarding translation arrangements (EU) No 1260/2012. They entered into force on 20 January 2013 but will only apply from the date of entry into force of the Agreement on a Unified Patent Court. That Agreement was signed by 25 EU States on 19 February 2013 and will enter into force once ratified by 13 of those States including France, Germany and the United Kingdom. At the date of writing, 6 States have ratified. 6 Because there will be a scheme of ‘opting out’ existing European patents and it is uncertain whether some, or many, proprietors will exercise the opt-out or not. 7 ‘The Court will not be ready before the end of 2015’—Roadmap of the Preparatory Committee of the Unified Patent Court, updated September 2014, available at: www.unified-patent-court.org/images/documents/ roadmap-201409.pdf; ‘due to come into being during 2016’—Examining Patent Cases at the Patents Court and Intellectual Property Enterprise Court 2007–2013 (UKIPO, March 2015) 1, available at: www.gov.uk/government/ uploads/system/uploads/attachment_data/file/413693/Examing_Patent_Cases_at_the_Patents_Court_and_IP_ Enterprise_Court_2007-2___.pdf. 8 Unlike the position in the United States which, having become independent in the previous century, inherited the major features of the English system as it was some time before the 1873 legislation. Juries are still today a feature of US patent litigation.

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entrusted to juries, the judges took on this function. Thus, in the absence of courtappointed technical experts as in many other countries, the English system has required that its patent judges have technical ability, a requirement satisfied by another tradition of the English system, namely the recruitment of judges from practising lawyers.9 5 A feature of English civil procedure present throughout its history has been that it is accusatorial in nature, rather than inquisitorial. Thus the court merely decides between opposing parties after hearing their submissions and hearing and reading their evidence, and the conduct of the proceedings is left largely in the hands of the parties (which in practice means in the hands of their legal representatives) who accuse each other or defend themselves against accusation as they elect. Therefore traditionally in England the role of judges has been more passive and that of lawyers more active than in an inquisitorial system in which the court seeks to establish the truth by pursuing its own lines of inquiry. The accusatorial system allowed the development of procedures which to a large extent characterised English litigation and led to the long length and the high cost of cases, both of which were well known as being greater than in other systems. Such procedures included the discovery of documents—which required parties to search their records for, list and then allow inspection of all papers in their possession which were relevant to the issues in a case—and the examination and cross-examination of witnesses in court. The large extent of these procedures is now largely a matter of history. Discovery is now at most limited to certain documents or replaced by other means of evidence,10 and witness evidence is primarily given by written statements and only questions about those statements (or cross-examination) takes place in court.11 6 The changes in procedure which have curtailed the more extravagant features of the accusatorial system have been achieved by wide-ranging changes in the rules of procedure governing civil proceedings in England. The Civil Procedure Rules (‘CPR’)12 introduced in 1999, colloquially called the Woolf reforms,13 have had the effect of making judges control litigation before them. The very first provision of the CPR contains the so-called ‘overriding objective’ which sets the tone: (1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.14

As the previous edition observed,15 this has turned English litigation in the direction of the inquisitorial system by making judges managers of litigation. In the case of patent litigation, some measures in the same spirit had already been taken before the Woolf reforms came into operation. The system itself, however, remains at heart accusatorial rather than inquisitorial, since judges are still required to decide cases on the evidence and arguments put to them and not to make their own search for the correct result.

7

9

See section A.III. See section B.V.4. 11 See section B.V.5. 12 The CPR are ordered by parts relating to subject matter; each part has a number of rules and one or more Practice Directions (‘PD’). 13 Named after Lord Woolf, then Master of the Rolls (the head judge of the Chancery Division), whose proposals in the report Access to Justice Final Report, July 1996, led to the CPR. 14 CPR 1.1(1). The next provision, 1.1(2), details the overriding objective as inter alia ensuring that the parties are on an equal footing, that the case is dealt with expeditiously and fairly and allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases. 15 p 92. 10

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Christopher Rennie-Smith

III. Lawyers, Patent Attorneys and Judges 8

9

10

16

It is well known that in England there are two branches of the legal profession, solicitors and barristers. In litigation, solicitors were traditionally responsible for taking parties’ instructions, preparing documents and evidence, communications with the court and other parties and instructing barristers to whom parties had no direct access. Barristers traditionally were responsible for the presentation of cases in court, both as to advocacy and cross-examination of witnesses, although they would also draft the ‘pleadings’—the formal statements of parties’ cases. Until relatively recently, only barristers were appointed as judges of the High Court and, since appointments to the appellate courts are made by promotion from the High Court, all senior judges including those hearing patent cases were former barristers. Patent attorneys have always drafted, filed and prosecuted patent applications, advised their clients about patent rights including infringement and, like solicitors, instructed barristers. Knowing more about a patent than a claimant’s solicitor or barrister at the outset of litigation, and having a thorough background to the patent and its surrounding art, patent attorneys have frequently formed part of the litigation ‘team’ together with the lawyers. While all these traditional roles largely remain, many of the barriers between them have been removed or modified in recent years. Solicitors as well as barristers can and have been appointed as judges of the High Court and above. Barristers can in certain circumstances be instructed directly by members of the public. Solicitors can, on obtaining the necessary additional qualifications, appear as advocates in all courts and patent attorneys, again with the appropriate qualification, can conduct litigation (and may soon appear as advocates) in the High Court and above. In the Intellectual Property Enterprise Court (‘IPEC’)16 barristers, solicitors and patent attorneys all have rights of audience. Another trend underlying these changes is that a number of firms of IP solicitors and patent attorneys now have, respectively, patent attorneys or litigation solicitors as partners or employees. That all these changes of function resulting in overlapping roles in the patent litigation system have been effected without any merger of the professions or major changes in professional qualification may be considered a typically English arrangement. It has already been mentioned that judges are recruited from the ranks of lawyers, traditionally and still largely from the bar. Barristers specialising in intellectual property have long tended to come to the legal profession after studying technical or scientific subjects to university degree level. A period of possibly two decades or more spent appearing in patent cases means that those then appointed to the Patents Court bench usually have a remarkable combination of legal and technical knowledge and skills.17 For many years only one or two such barristers were appointed and they alone were nominated as judges of the Patents Court. In recent years that court has had many more judges,18 some of whom do not have the scientific or technical background but

See section B.III.2. Similarly IP solicitors increasingly have a scientific education and patent attorneys must have, so the appointment of specialist patent judges from those professions in future can be expected. 18 Currently nine—see B.III.2 and n 51 below. 17

Patent Enforcement in the United Kingdom

11

85

who are capable of mastering some technically less complex cases. This has led to the grading of patent cases by technical complexity, with the most complex being assigned to the judges with a background of patent law when in practice. Mention must also be made of scientific advisors appointed by the court. Although rarely appointed, the English courts have had the power to do so since 1883. The role of scientific advisors is different from that of technical experts instructed by courts in other countries to consider and report on a patent and its infringement or validity. A scientific advisor assists the court by advising the judge, or judges in an appeal court, on the technology in question and on technical issues referred to the advisor by the court. The CPR provide19 that he or she assists the court and takes such part in the proceedings as the court directs. The court may direct the assessor to prepare a report for it on any matter at issue in the proceedings and to attend the trial to advise the court. If the advisor prepares a report for the court before the trial, the court sends a copy to the parties who may use it at the trial. That more use is not made of scientific advisors is largely due to the fact that English patent judges themselves have a technical background.20

B. Problems Related to the Enforcement of Patent Rights I. Types of Action 1. Actions by Patentees—Patent Infringement, Limitation 12

13

19

The action for patent infringement is the commonest form of patent proceeding commenced in the English courts, though according to a recently published survey only ahead of revocation actions by a relatively small margin.21 The distinction is perhaps of no great significance as many infringement actions provoke a defence and/or counterclaim for revocation of the patent in suit22 on the grounds that it is invalid. The basis of patent infringement proceedings is considered in more detail below.23 A patentee may apply at any time, other than when opposition proceedings are pending, to limit his European patent by amendment of the claims.24 While amendment is also possible in English proceedings, the advantages of central limitation proceedings are that the successful amendments will have effect in all the States designated in the European patent and that amendment can be achieved in the absence of any national

CPR 35.15. An interesting review of both the history of and the law relating to the use of scientific advisors can be found in the Court of Appeal decision in Halliburton Energy Services, Inc, v Smith International (North Sea) Limited, 24 November 2006 [2006] EWCA Civ 1599. 21 In the 7 years 2007–13, 226 infringement and 176 revocation actions were commenced in the Patents Court. The corresponding figures for the IPEC (and its predecessor the Patents County Court) were 72 and 10. See the report Examining Patent Cases at the Patents Court and Intellectual Property Enterprise Court 2007–2013 published by UKIPO, March 2015, at 13 (see n 7 above). 22 In the same seven years (see n 21), in 149 Patents Court and 42 IPEC/PCC cases. ibid 14. 23 See section B.VI. 24 Or indeed to revoke his own patent—EPC, arts 105(a)–105(c). 20

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Christopher Rennie-Smith proceedings. Matters become more complicated, however, when a patentee applies for central limitation during or after national proceedings as two recent English decisions show. In the first, the Court of Appeal allowed an application by a patentee for adjournment of its appeal against revocation of two patents pending the outcome of its application to the EPO for central amendment because refusal of the adjournment might have resulted in the appeal proceeding on what might turn out to have been a false basis, with all the consequential waste of costs and time that would entail.25 In the second, an adjournment pending a central limitation application was refused because there was no pending appeal.26 The Patents Court held that this was completely different because the revocation decision was final and not suspended pending an appeal.

2. Actions by Others—Revocation, Declaration of Non-Infringement, Threats 14

15

It is of course open to a party to commence proceedings for revocation of a patent,27 or for a declaration that his activities do not infringe a patent,28 without being the target of infringement proceedings. While such actions can be commenced by those who have no apparent interest in the matter,29 they are usually brought by competitors of patentees who are planning to enter the market and who wish to ‘clear the way’ in advance of doing so. Just as infringement actions often provoke revocation counterclaims, so the reaction to revocation actions is often a counterclaim of infringement, if only on a quia timet basis.30 It is of course also open to anyone to oppose a European patent within nine months of grant by commencing opposition proceedings in the EPO and the ensuing possibility of parallel invalidity proceedings in both the EPO and the UK courts gives rise to issues of staying the national proceedings.31 Since this chapter is focused on patent enforcement, we shall not consider other proceedings relating to patents32 with one curious exception which interconnects with infringement. It is itself actionable to make groundless threats of proceedings for patent infringement,33 although not in the case of an alleged primary infringer such as an importer or manufacturer. While ‘a mere notification of the existence of a patent’ cannot be a threat, this provision can make the writing of warning letters by or on behalf of a patent proprietor a risky business. Of course, if the recipient of a warning sues for what he considers groundless threats, the defence and/or counterclaim of the proprietor (or other author of the warning) will usually be that the patent has in fact been infringed, so that in effect an infringement action rises ‘in reverse’ and a threats action then to a large extent follows a similar course to a normal infringement action.

25 Samsung Electronics Co Ltd v Apple Retail UK Ltd and Another, Court of Appeal, 11 March 2014 [2014] EWCA Civ 250. 26 Kennametal Inc v Pramet Tools SRO and Another, Patents Court, 1 April 2014 [2014] EWHC 1438 (Pat). 27 Patents Act 1977, s 72. 28 ibid, s 71—the party seeking a declaration must first tell the patentee what he intends and ask for an acknowledgement that he will not infringe and show that the patentee has refused or failed to do so. 29 Oystertec plc v Edward Evans Barker, Patents Court, 14 November 2002 [2002] EWHC 2324 (Pat). 30 See section B.VII.1. A quia timet action is one to prevent an anticipated infringement which has yet to take place. 31 See section B.VIII.3. 32 Such as ownership disputes or employee invention claims. 33 Patents Act 1977, s 70.

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Similar threats provisions exist in the legislation governing other IP rights and all such provisions were the subject of a review by the Law Commission which reported in 2014.34 Its recommendations included exempting lawyers and patent attorneys as defendants in threats actions. The government has indicated that it broadly agrees with the recommendations.35

II. Parties 16

17

Proceedings36 alleging infringement of a patent may be instituted by the proprietor or joint proprietors of the patent or by an exclusive licensee under the patent.37 If a proprietor refuses to join an action begun by an exclusive licensee as a joint claimant, the licensee must join him as a defendant, in order to ensure the proprietor is party to the proceedings.38 The claim may extend to damages for acts done between early publication of the patent application and the subsequent grant of the patent, but only if the acts would infringe the claims contained in both.39 A claim of patent infringement may be made against any person who is alleged to have performed an act of infringement under the terms of section 60 of the Patents Act 1977.40 Such acts may actually have been performed by the defendant or by his employees or agents, and in the case of a legal person that will be the case. Moreover, those who collaborate in or instigate infringement by others may also be accused of the infringement as a joint tortfeasor, or at least alleged to be liable for the general torts of conspiring or inducing the unlawful acts of infringement. The director of a company or other driving force behind a corporate entity may be held personally liable if he expressly authorised or directed the infringing acts of the company he directs.41

III. Courts and Jurisdiction 1. Three Jurisdictions 18

34

It has already been difficult, and strictly speaking inaccurate, to write of patent enforcement in the United Kingdom while referring only to England. The United Kingdom

Law Commission, Patents, Trade Marks and Design Rights: Groundless Threats (Law Com No 346, 2014). The Government’s Response to the Law Commission’s Report (Law Com No 346) Patents, Trade Marks and Design Rights: Groundless Threats issued on 26 February 2015, available at: www.gov.uk/government/publications/ patents-trade-marks-and-design-rights-groundless-threats. 36 In English litigation the party bringing proceedings, and thus initially at least making the complaint, is called the claimant. This replaced the earlier term ‘plaintiff ’ under the Woolf reforms. The party against whom the action is brought, and thus defending the case, is called the defendant. In Scots procedure, the corresponding terms are pursuer and defender. 37 Patents Act 1977, ss 61, 66 and 67. 38 And similarly in the case of a joint proprietor declining to be a co-claimant, see Patents Act 1977, ss 66(2) and 67(3). 39 Patents Act 1977, s 69. A claim may only be made after grant of the patent. 40 See section B.VI. 41 Details of such forms of tortious liability lie outside the scope of this chapter. A suitable introduction would be M Jones, A Dugdale and M Simpson, Clerk & Lindsell on Torts 21st edn (Sweet & Maxwell, London, 2014) chs 4 and 5. 35

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19

42

Christopher Rennie-Smith has three jurisdictions: England and Wales,42 Scotland and Northern Ireland. All three jurisdictions have courts of first instance and first appeal which are competent to hear patent cases. A second appeal from all three jurisdictions lies to the Supreme Court43 which has judges drawn from all three jurisdictions. Court procedure in Northern Ireland is so similar to that of England that no separate treatment is necessary for the purposes of this article. However, Scots procedure is far from similar so, although the substantive law of patents (and indeed all intellectual property) is the same in Scotland as in the rest of the United Kingdom, it would be misleading to portray the English system as applicable to the whole of the United Kingdom. Those needing to bring or defend proceedings in the Scots courts will have to refer to the Scots rules of procedure44 and require advice from Scots lawyers.45 It is significant that Scotland has recently introduced new rules of procedure for IP cases which, in common with the English procedures detailed below, ‘provide for much earlier judge-led case management and intervention’.46 It is still true that, as the previous edition noted,47 patent cases are only occasionally brought in the Scots or Northern Irish courts but the possibility cannot be overlooked. The choice of jurisdiction within the United Kingdom is usually dictated by the location of the infringement;48 so if the only act of infringement known to the patent proprietor has taken place in England, only the English courts have jurisdiction and so on. There may be exceptions, such as where a patentee can allege a threat of infringement in one jurisdiction on the basis of evidence in another. Thus a claim could be brought in the English courts for a quia timet49 injunction to prevent the sale in England of allegedly infringing goods known or suspected to be in production in Scotland, although the more effective course might be to petition the Scots courts for an interim interdict50 to halt the actual production. The same geographical principle applies to the relief to be obtained in each jurisdiction; thus, an injunction granted by an English court will not per se have any effect outside England and Wales. However, as a practical matter, a decision of an English court in a patent action will effectively decide the matter for the whole United Kingdom because of the relative size and economic significance of England and the fact that only England has specialist patent judges and the rest of this chapter describes the position regarding patent enforcement in England.

Referred to in this chapter as England for short and no other reason. Which replaced the former highest appeal court, the House of Lords, from 1 October 2009. 44 For a helpful introduction, see R Buchan and G Grassie, ‘Scotland’s New Regime for Effective Intellectual Property Dispute Resolution’ (2013) 8(5) Journal of Intellectual Property Law & Practice 383. 45 Scotland, like England, has a divided legal profession consisting of solicitors and advocates whose roles correspond to those of solicitors and barristers in England. However, the patent attorney profession embraces the whole of the United Kingdom. 46 Buchan and Grassie, ‘Scotland’s New Regime’ (n 44) 384. 47 See p 88, fn 4. 48 Strictly speaking the domicile of the defendant—see Civil Jurisdiction and Judgments Act 1982, s 16 and sch 4. 49 An injunction to prevent an anticipated infringement which has yet to take place. In relation to injunctions, see section B.VII.1. 50 The equivalent remedy to an interim injunction in England—see section B.IV.2. 43

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2. Patent Courts in England 20

21

22

23

51

England offers patent litigants a choice of three first instance tribunals—two courts and the Patent Office—in which to commence proceedings either for infringement (which usually provokes a counterclaim of invalidity) or for revocation. The Chancery Division of the High Court has had a patent jurisdiction since the institutional court reforms of the 1870s. Since 1949, there has been a sub-division (known as a ‘special list’) of the Chancery Division called the Patents Court with originally one and now nine judges allocated to hear cases in that list. Not all of these judges will have had a background in patent legal practice and Patents Court cases are now classified by tiers of technical difficulty and cases in the most complex tiers are assigned to the judges51 with patent law experience in practice. The alternative court to the Patents Court is the Intellectual Property Enterprise Court (‘IPEC’) which, although also a special list of the High Court, exists to provide a lowcost and procedurally simplified court for individuals and small and medium-sized businesses to litigate their IP rights. The IPEC is the successor to the Patents County Court (‘PCC’) which was introduced in 1989 and sat in London although it had the ability to sit elsewhere in England. Although not part of the High Court, for much of its life there was no statutory division of claims between the Patents Court and the PCC and, worse, the same level of costs were allowed in the PCC as in the High Court. As a result for many years the PCC offered little advantage over the Patents Court. Indeed, there was a noticeable volume of subsidiary litigation as parties argued over applications to transfer cases between the two courts. The position was much improved by the introduction of a statutory limitation of the PCC’s jurisdiction to damages of £500,00052 and by the introduction of a costs cap of £50,000 for PCC cases.53 In 2013, the PCC was renamed as the IPEC and made a part of the High Court. For several years it has had an appreciable volume of cases, though patent cases only account for a minority. Whereas the previous edition concluded,54 correctly at the time, that there was so little difference between the two courts in the cost or speed of litigating that it devoted its attention to patent enforcement in the High Court, the role of the IPEC is now of sufficient significance that consideration must be given to its use for any cases which have a low monetary value or in which the parties do not have the means to fund proceedings in the Patents Court.55 Before passing on to appeals, mention must be made of the first instance jurisdiction of the British Patent Office, which now operates under the name United Kingdom Intellectual Property Office (‘UKIPO’). Strictly speaking the deciding body is the chief executive of UKIPO, whose formal name is the Comptroller of Patents, but

Currently two, Arnold and Birss, JJ. CPR 63.17A, unless the parties agree otherwise. 53 CPR 45.30–45.32. 54 p 89. 55 An outline of IPEC proceedings can be found in the Intellectual Property Enterprise Court Guide issued by HM Courts & Tribunals Service, April 2014. Those contemplating or conducting IPEC proceedings are directed to A Fox, The Intellectual Property Enterprise Court: Practice & Procedure (Sweet & Maxwell, London, 2014). 52

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Christopher Rennie-Smith in practice the proceedings are conducted by UKIPO hearing officers who have a technical background and additional training in legal procedure. As well as disputes about issues such as entitlement to patents, employee compensation and compulsory licences, the Comptroller has the power to hear and settle invalidity and infringement claims though, in the case of infringement, only if both the proprietor and the alleged infringer agree. In practice of course, an infringement case frequently leads to a validity dispute as well. Further, since the Comptroller can only grant more limited relief than the courts for infringement and since the costs awarded in Patent Office proceedings are much lower than those awarded in the courts, it is very rare for infringement cases to be brought in the Patent Office. Possible advantages could be that the proceedings would not take long,56 and that the costs might be lower than in court proceedings.57 Perhaps the most likely manner in which validity and/or infringement might be litigated in the Patent Office is as a result of a Patent Office opinion.58 An appeal against a decision of the Comptroller lies to the Patents Court.59 An appeal lies from both the Patents Court and the IPEC to the Court of Appeal. While an appeal may be made against findings of either law or facts, it is necessary to obtain leave to bring an appeal, either from the first instance judge or from a single judge of the Court of Appeal itself. The test for granting leave to appeal is whether the appeal has a real prospect of success or if there is some other compelling reason why the appeal should be heard.60 Appeals are heard by benches of three judges, known as Lords Justices of Appeal, and in a patent appeal there will usually be one judge with experience as a patent judge in the High Court.61 An appeal is not a re-hearing, witnesses will not be recalled and findings of evidence will usually be taken as found by the first instance judge. The appeal examines whether the judge correctly applied the law to those facts which often leaves considerable scope for arguments about, for example, the proper interpretation of the patent claims, the assessment of validity in light of the prior art, and the ability of a skilled person to perform the invention following the instructions in the specification. From the Court of Appeal a further appeal lies, on points of law only, to the Supreme Court. This is the only court with a jurisdiction covering the entire United Kingdom as it also hears appeals from Scotland and Northern Ireland and has at least one judge from each of those jurisdictions in its membership. An appeal will only be entertained if the Supreme Court itself gives leave. The Supreme Court usually sits in benches of five (although it can be more) and in a patent case this usually includes a judge with experience of patent cases, either as a former Patents Court judge who was previously a patent lawyer or as a judge who has mastered patent law while on the bench.62

But this is relative as court patent proceedings are now processed far more swiftly than in the past. eg a patent attorney might handle the case on his or her own, or with just a junior barrister. However, this is now also possible in the IPEC. 58 See section B.IV.1. 59 Patents Act 1977, s 97. 60 CPR 52.3(6). 61 Currently there are two former Patents Court judges, both with previous experience in patent law practice, in the Court of Appeal, Kitchin and Floyd, LJJ. 62 As has Lord Neuberger, the current President of the Supreme Court. Lord Hodge, one of the Supreme Court’s two Scottish judges, was previously a Scottish IP judge. 57

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3. Transnational Jurisdiction 26

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The previous edition of this chapter covered this topic in some detail,63 not least because the then recent activity of the courts of the Netherlands in granting crossborder injunctions in proceedings on European patents was, if not still in full swing, a recent memory. That has now become largely a subject for legal historians and the imminent pan-European jurisdiction of the UPC may make it redundant. However, it remains important to remember that the rules of the EC Judgments Regulation conferring jurisdiction primarily on the courts of a defendant’s domicile have a single but significant provision relating to IP rights64 under which proceedings concerned with the registration or validity of a patent or similar right fall within the exclusive jurisdiction of the country granting that right. Thus in principle the United Kingdom courts will not entertain actions touching on the validity of patents in other EU countries, including countries designated together with the United Kingdom in the same European patent granted by the EPO. As has been mentioned, the majority of patent infringement actions provoke a plea of invalidity by way of defence and/or counterclaim and the United Kingdom courts treat such cases as validity cases coming within the exclusive jurisdiction of the granting State. Thus disputes over the infringement of an identical European patent in another designated country will not be heard in the United Kingdom if, in that other country, validity is in issue. That the opposite is true is illustrated by a recent action for a declaration of noninfringement of a pharmaceutical patent by a generics manufacturer intending to enter the market with a product using an active ingredient related to but not identical to the patented product.65 The claimant sought a declaration not only in respect of the European patent as designated for the United Kingdom patent but also in respect of the corresponding French, Spanish, German and Italian designations. However, the claimant did not attack the validity of the patent, even though the patentee counterclaimed for infringement of the patent in the United Kingdom. The English Patents Court tried the action in respect of the British, French, Spanish and Italian designations,66 applying French, Spanish and Italian law as appropriate, and granted a declaration of non-infringement in respect of all four designated countries.67

IV. Pre-Action Procedures 1. Patent Office Opinions 28

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UKIPO offers the service of providing an opinion from a senior examiner about the infringement or validity of a UK or European patent.68 The opinion is not binding

See 95–99. EC Regulation 44/2001 of 22 December 2000 on the Recognition and Enforcement of Judgments, art 24(4). 65 Actavis UK Ltd & Others v Eli Lilly & Company, Patents Court, 15 May 2014 [2014] EWHC 1511 (Pat). 66 The German issue fell away because the patentee brought an action against the claimant in a German court. 67 It should be added (1) that matters might have evolved differently if the patentee, a US corporation with a place of business in the United Kingdom, had succeeded on issues relating to the service of the proceedings—see Actavis Group hf v Eli Lilly & Company, Court of Appeal, 21 May 2013 [2013] EWCA Civ 517; and (2) that at the time of writing an appeal against the decision has been heard and judgment is awaited. 68 Patents Act 1977, ss 74A, 74B, as amended by the Intellectual Property Act 2014, s 16. 64

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Christopher Rennie-Smith so court proceedings can follow. Anyone can request an opinion, although a patent proprietor or competitor is most likely to do so. The clear advantages of the opinion process, particularly for businesses of limited means, are that an independent view of infringement and/or validity is obtained quickly and at a modest cost. The request is made by paying a fee (currently £200) and supplying to UKIPO a written statement of facts and arguments, copies of any evidence or other documents referred to in the statement, and information about any pending or completed UK or EPO proceedings and anyone known to have an interest. A request may be refused (eg when the issue has been decided before) but if not UKIPO sends the request to other interested parties and advertises it online so others can make observations within four weeks of the date of advertisement. Any material filed in relation to an opinion may be open to public inspection on the UKIPO website. The person who filed the request then has two weeks to file observations in reply which are not copied to others but are taken into account. The opinion is then produced and advertised and sent to the requester and (unless one of them is the requester) the patent proprietor and any exclusive licensee, and also to anyone who filed observations. The process takes no more than three months. If a UKIPO opinion is to the effect a patent is invalid it may begin proceedings to revoke it. In that case the patent proprietor or an exclusive licensee can apply for a review of the opinion, as either of them can if he otherwise disagrees with the opinion. A review consists of proceedings within UKIPO and can result in the opinion being either upheld or set aside. Apart from a review, a patentee threatened with revocation can file arguments against and/or amend the patent. A patentee or exclusive licensee can appeal to the Patents Court against a decision either to revoke a patent or to uphold an adverse opinion. We shall now turn to pre-action procedures in court proceedings.

2. Interim Injunctions 32

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A temporary injunction, which may halt the allegedly infringing activity and remove the defendant from the market until the trial of the action, is a naturally attractive target to any claimant. There is also an attraction for both claimants and defendants in relatively swift proceedings at the outset of an action in which most of the major issues in the case will be canvassed and, although not finally decided, given some weight in an interim decision which will inevitably cause the parties to reflect on the costs and risks of the case going further. Before the reforms in English litigation,69 one effect of which was to reduce considerably the time which elapses from commencement of an action until the judgment at trial, the fact that the duration of an interim injunction might be measured in years rather than months was a further incentive to seek, or to resist, orders for such injunctions. However, the increasing trend to shorter and simpler proceedings has noticeably reduced the number of applications for such injunctions. The principles applied to such applications are, however, important, not least because they underlie not just

See section A.II.

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applications for orders that a defendant cease a particular activity but all forms of injunction prior to one granted after trial. The decision of the House of Lords in 1975 in American Cyanamid v Ethicon70 departed from the previous principles which had required a claimant to establish a prima facie case which, in patent cases, was not often achieved. On the new principles the claimant is required only to satisfy the court that he has an arguable case and then, if that is established, the court moves on to consider the so-called balance of convenience—the advantages and disadvantages of restraining the defendant until the trial. The underlying effect of this shift has been to make the outcome of an application to the court for an interim injunction depend much more upon the respective commercial positions of the claimant and defendant. If the patent underpins the patentee’s major business activity, the defendant’s competition may be specially damaging and this may be a reason in favour of an injunction until trial of the action. On the other hand, if the patent has already been so successful that the defendant’s operation is unlikely to inflict major commercial damage, then the latter may be allowed to continue. The effect of the emphasis since 1975 upon the balance of convenience was to increase the prospect of an interim injunction in patent cases; however, as mentioned above, more recent developments have reduced the frequency with which they are sought. As a condition of the grant of an interim injunction, a claimant must give a crossundertaking in damages71—he must undertake that, if his claim is not upheld at the subsequent trial, he will compensate the innocent defendant for losses incurred as a result of the interim injunction. Such losses may not be confined to lost sales but could, for example, include loss of business reputation or lost opportunity to extend into the market. If there is doubt whether the claimant will be able to pay such damages if he loses at trial, he may need to undertake to procure a bank guarantee. The need to give such a cross-undertaking, and the claimant’s likely ability, or alleged inability, to meet his potential liability on the cross-undertaking is frequently a significant factor in deciding applications for interim injunctions, or in deterring an application by a claimant with a doubtful case which might otherwise be advanced as arguable in the hope of shutting down the defendant’s activity and ending the case early. In a similar manner to an interim injunction pending trial, an injunction pending appeal may be granted to an appellant who gives a cross-undertaking in damages. The principles to be applied were helpfully summarised recently by the Court of Appeal.72 In place of an arguable case, the appellant must satisfy the court that the appeal has a real prospect of success. If so satisfied, it will not usually be useful to form a view as to how much stronger the prospects of appeal are, or to attempt to give weight to that view in assessing the balance of convenience. It does not follow automatically from the fact that an interim injunction has or would have been granted before trial that an injunction pending appeal should be granted. The court must assess all the relevant circumstances following judgment, including the period of time before any appeal is

5 February 1975 [1975] AC 396. CPR PD 25A.5.1 (1). Novartis AG v Hospira UK Limited, Court of Appeal, 22 May 2013 [2013] EWCA Civ 583.

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Christopher Rennie-Smith likely to be heard and the balance of hardship to each party if an injunction is refused or granted. The grant of an injunction is not limited to the case where its refusal would render an appeal nugatory—that is merely the extreme end of a spectrum of possible situations in which the injustice to each side must be balanced. The court should endeavour to arrange matters so that the Court of Appeal is best able to do justice between the parties once the appeal has been heard.

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A difficulty sometimes encountered by the owner of an IP right faced with infringement is that, while the infringement is evident or at least suspected, the identity of those responsible is unclear or unknown. The House of Lords decided in 1973 that the courts may order a person who is not himself a wrongdoer to disclose the names of or other information about wrongdoers so that proceedings may be instituted against them. In that case,73 a patentee discovered from government statistics that pharmaceuticals falling within its patent were being imported into Britain, but it could not find out by whom. The Commissioners of Customs and Excise, who had published the information, were ordered to reveal the importer’s name. Their protest that, if they could not keep the name confidential, they would themselves be fed false information, fell upon deaf ears. Such an application for discovery of names can be equally useful against a private party such as a company which transports or warehouses infringing goods but which has no deeper connection with their distribution. While it is not liable for infringement of the patent, it may be ordered to disclose the names of its customers who have used their services to carry or store infringing goods. The grant of such orders is now governed by a rule of procedure74 which makes specific provision for disclosure by a non-party, who need no longer be made a party to the proceedings. The interim injunction principles of arguable case and balance of convenience apply.75 Further, since the application is made ex parte without notice to the non-party, the applicant has a duty to make a full and candid disclosure of the whole matter which must include any factors adverse to him. The power to make such orders is discretionary and should not be used where the result would be unduly oppressive.

4. Preservation of Assets 40

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The courts may in appropriate circumstances grant injunctions, now termed ‘freezing orders’ but often referred to by their former name of Mareva76 injunctions, aimed at defendants who might otherwise dispose of assets or move them abroad, leaving little or nothing behind from which to satisfy any judgment against them. While these orders have been used in a great variety of litigation, they have been important in the

Norwich Pharmacal v Commissioners of Customs and Excise, House of Lords, 26 June 1973 [1973] UKHL 6. CPR 31.17. 75 See section B.IV.2. 76 After the first case in which such an order was made—Mareva Compania Naviera SA v International Bulkcarriers, Court of Appeal, 23 June 1975 [1975] 2 Lloyd’s Rep 509 [1980] 1 All ER 213. 74

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sphere of intellectual property when directed against persons suspected of profiting extensively from infringement. Typically such an order freezes the assets of such a defendant (eg preventing the operation of bank accounts or the sale of houses) while permitting him a limited amount of funds for his living expenses and legal costs. While such orders can be highly effective, they can also have a devastating effect on defendants who may find their business credibility destroyed at the outset of the proceedings and long before any finding of liability. It is axiomatic that such freezing orders are made on a discretionary basis. Again, the interim injunction principles of arguable case and balance of convenience apply. An application77 is necessarily made ex parte and in a closed session of the court, since notice might allow the very disposal of the assets which the order is designed to prevent. The duty of full disclosure also applies and the claimant must give a cross-undertaking in damages which, if his suspicions prove incorrect, may make it a very costly venture. The order is usually made only for a very limited duration until a ‘return date’ in the court when both parties are present and the case for freezing the defendant’s assets can be re-assessed, usually in the light of a statement by the defendant of his assets which the original ex parte order will have directed him to make.

5. Preservation of Evidence and Provision of Information 42

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The courts may also grant injunctions now termed ‘search orders’ but still often referred to by their original name of Anton Piller78 orders. These orders are also applied for on applications held in closed session of which defendants have no notice, the whole object being to spring a surprise. Such an order will require the defendant to admit the claimant and, all-importantly, the claimant’s solicitor in to his premises in order 1. to inspect the defendant’s premises and seize, copy or photograph material demonstrating the alleged infringement; 2. to print out infringing computer programs or data and to deliver up infringing goods, and keep infringing stock or incriminating papers; and 3. in many cases, to require answers to questions concerning sources of supply or the subsequent destination of illicit material.

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To obtain this relief,79 the claimant must satisfy the court that there is an extremely strong prima facie case of infringement (thus the arguable case criterion is applied stringently), that the damage is likely to be very serious, and that the defendant possesses incriminating articles or documents which otherwise may be destroyed or removed before any application inter partes can be made. Yet again, a cross-undertaking in damages must be given which may rebound on the claimant if his suspicions prove incorrect, and an early ‘return date’ in court for all parties is set at which the position can be reviewed.

CPR 25.1(1)(f) and PD 25A.6 and the annexed specimen order. After the first case in which such an order was made—Anton Piller KG v Manufacturing Processes Ltd & Others, Court of Appeal, 8 December 1975 [1975] EWCA Civ 12. 79 CPR 25.1(1)(c) and (h) and PD 25A.7 and the annexed specimen order. 78

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Search orders are necessarily a rough instrument which may be highly effective. By their nature they are more likely to be used and to be effective against rogue infringers in consumer goods fields, where other IP rights such as trade marks and copyright are concerned, than in patent infringement cases. The courts are very much in the hands of the claimant’s legal representatives and those who procure the preliminary evidence by test purchases or covert surveillance and the cross-undertaking in damages may not necessarily compensate for the shock of a sudden invasion of a business. Undertakings to notify defendants of what is required of them and of their right to take legal advice before complying have been built into the order. A considerable burden of responsibility rests on the claimant’s solicitor who has to attend the service and execution of the order in his capacity as an officer of the court while at the same time acting for the claimant and having prepared, and maybe proposed, the application. The procedure was rightly tightened up in 1994,80 notably by requiring that an independent supervising solicitor accompany the inspection party and serve the order on the defendant. That of course has increased the costs of search orders considerably, with the possibly beneficial effect that they are less frequently used. In addition to their special provisions, both freezing orders and search orders will contain interim injunctions restraining defendants from infringing activity until the ‘return date’.

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A recent development of English law has been the granting of injunctions which order internet service providers (‘ISPs’) to block access to websites which offer infringing goods to consumers. The first such injunctions were granted in relation to copyright infringement and, in those cases,81 the courts held they had a statutory jurisdiction to make such orders under the UK’s statutory copyright law as amended to comply with EU legislation.82 Similar orders have more recently been made in an action brought by proprietors of trade marks against ISPs. While there is no legislation corresponding to that available to copyright owners, the court held83 that it could issue similar blocking orders under its general jurisdiction to grant injunctions either as provided by domestic legislation alone84 or under that legislation as interpreted in the light of the EU Enforcement Directive.85 There seems no reason why such orders could not also be made on the application of a patent proprietor, although goods which infringe patents are less likely to be offered for sale to consumers over the internet.

In Universal Thermosensors v Hibben, Court of Appeal, 8 July 1992 [1992] 1 WLR 840. eg Twentieth Century Fox Film Corp v British Telecommunications plc, Chancery Division, 28 July 2011 [2011] EWHC 1981 (Ch). 82 Section 97A of the Copyright, Designs and Patents Act 1988, which implements art 8(3) of European Parliament and Council Directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (‘the Information Society Directive’). 83 Cartier International AG and others v British Sky Broadcasting Limited and others, Chancery Division, 17 October 2014 [2014] EWHC 3354 (Ch). 84 Section 37(1) of the Senior Courts Act 1981 (previously known as the Supreme Court Act 1981). 85 Art 11 of the European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights (‘the Enforcement Directive’). The directive has been implemented into United Kingdom law by the Intellectual Property (Enforcement, etc.) Regulations 2006 (SI 2006/1028). 81

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7. Other Pre-Action Procedures 48

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Other orders which may be applied for both before and after infringement proceedings have been commenced86 include orders for inspection, for taking samples of or carrying out experiments on property, for delivery up of specific items and for disclosure of particular documents. The use of such orders, including orders against third parties, seems to be adaptable to all possible circumstances. A recent example was an order, made in an action on a pharmaceutical patent covering a composition only when used to treat pain, directing the National Health Service to issue guidance to doctors to use the patentee’s brand name when prescribing medicine containing the composition for pain relief and the generic name when prescribing for other conditions.87 As with all interim measures, the making of such orders is discretionary, the principles of arguable case and balance of convenience apply, and the applicant will have to give a cross-undertaking in damages which may be for the benefit of parties other than the alleged infringer.88

V. The Course of an Action 50

Whereas one or more of the various pre-action measures may be used in some cases, the following steps occur in all litigation in the Patents Court.89

1. Statements and Particulars of Case90 51

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Proceedings for patent infringement91 are commenced by serving on the defendant a claim form prepared by the claimant and issued in the court.92 The form identifies the parties and the relief which the claimant seeks. The written pleading setting out the claimant’s case is known as his ‘statement of case’ and must be a concise statement of the facts on which the claimant relies. It is preferably served on the defendant at the same time as the claim form. Copies of all documents referred to in the claimant’s statement of case should also be served on the defendant with the statement. Further the statement of case will be supplemented by Particulars of Infringement which are also served with the statement. The particulars should state which claims of the patent are alleged to be infringed and give at least one example of each type of alleged infringement.

CPR 25.1(1) lists many possible orders. Warner-Lambert Company, LLC v Actavis Group PTC EHF and others, Patents Court, 2 March 2015 [2015] EWHC 485 (Pat). 88 Such as, in the case of a freezing order, the alleged infringer’s bank upon which the order may be served. CPR PD 25.5.1(2). 89 In addition to the other provisions of the CPR, those of pt 63 and PD 63 relating to IP claims apply to patent actions. Pt 63 also contains provisions relating to IPEC proceedings. 90 CPR pt 7. 91 Or for a declaration of invalidity of a patent or a claim of unwarranted threats—see sections B.I.I and 2. 92 ‘Issued’ means sealed with the court’s stamp, payment of a court fee and entry in the court record. 87

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The defendant must answer the claim form by filing with the court an acknowledgment of service.93 His written pleading, also known as his statement of case, is governed by provisions which are largely a mirror image of those governing the claimant’s statement of case. His statement must give reasons for any denials of the allegations in the claimant’s statement and put forward any different versions of facts on which he wishes to rely. Where, as is usual,94 the defendant wishes to challenge the validity of the patent, either as a defence or in a separate counterclaim or both, Particulars of Objections to Validity must be served, stating every ground (such as lack of novelty or insufficiency of the description) on which the challenge is based. The defendant must serve these particulars within 42 days of the service on him of the claim form. This period is longer than that usually allowed for service of a defendant’s case in recognition of the time a defendant may require to investigate issues of validity. Whereas prior art documents are if anything easier to locate now in the digital age than formerly, investigating and obtaining evidence of prior use or prior disclosure may still take some time.95 If a defendant’s statement (often called by its former name of ‘defence’) raises new issues in the case—a prime example would be invalidity of the patent—the claimant may serve a further written statement answering those allegations, which is known as the reply (to the defence) or defence to counterclaim if the defendant counterclaimed for revocation. Both claimant and defendant must verify their statements of case by a statement of truth, which must be made by an officer of the company (or the individual party, if a natural person) rather than by a legal advisor.

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2. Admissions 55

A party should only challenge those of the allegations against him upon which he wishes to take issue. Otherwise each party should admit allegations, which has the effect of limiting the issues in dispute. The CPR require admissions to be made at an early stage, in the defence (in which case the admissions must be made within 14 days from the service of the claim form) or in the reply.96 Allegations which have not been admitted may then be the subject of a Notice to Admit Facts97 served by one party on the other. In addition to possibly limiting the issues by extracting further admissions, this also amounts to a costs challenge. If the party called on to admit a fact does not do so and the other party subsequently succeeds in proving that fact at the trial, the non-admitting party may later be ordered to pay the other’s costs of proving the fact regardless of the overall outcome of the case.

93 And should at this point challenge service (eg if the defendant is a foreign company not served in the prescribed manner); see CPR pt 11. 94 See section B.I.1. 95 The previous practice of penalising a defendant who, after the 42-day deadline, amended his case to raise a new objection to validity which the patentee then acknowledged by consenting to revocation, by ordering the defendant to pay all the patentee’s costs incurred after service of the original particulars of objection, has now been emphatically disapproved by the Court of Appeal—Fresenius Kabi Deutschland GmbH v Carefusion 303 Inc, 8 November 2011 [2011] EWCA Civ 1288. 96 CPR 14.2. 97 CPR 32.18.

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3. Case Management: Directions 56

A claimant in patent proceedings must apply for directions within 14 days after the defendant has acknowledged service of the claim form or served his defence. The latter is advisable since the issues in dispute are then at least apparent from the written statements. The judge to whom the case is assigned will hold a case management conference (‘CMC’)98 to consider such issues as: whether the claimant’s case is clear, what disclosure of documents is necessary, what and how expert evidence is to be obtained, the factual evidence to be disclosed and whether there are any preliminary issues which can be heard and may therefore limit the scope of the trial. The judge will then make directions requiring the parties to take various steps to prepare the case for trial and set a timetable for those steps. The timetable will be strictly adhered to so each party must come to the CMC aware of the time he may require for each step which may be the subject of a direction. The judge will also consider at the CMC whether a scientific advisor should be appointed to assist the court.99 The CMC is one of the most important ways in which judges have been empowered to control litigation.100 It has led to the specialist judges using their many years of experience as patent barristers to intervene and persuade the parties to limit the issues between them and to reduce to the minimum the level of disclosure. However, one problem arising from this judicial intervention is that the parties must prepare for any point which may conceivably be raised at the CMC and costs of the CMC itself may thereby be increased.

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4. Disclosure of Documents 58

Once the issues have been delineated by the parties’ statements, the use of admissions and the CMC, the parties will have to give disclosure of documents. Prior to the litigation reforms English proceedings were celebrated for the wide-ranging discovery of documents. The current regime is far different. A party is required to disclose only: 1. those documents on which he relies; 2. documents which adversely affect his own or another’s case or which support another party’s case, and 3. other documents which he is required to disclose by a practice direction. However, in patent infringement actions no disclosure is required101 of documents relating to

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1. infringement of a patent by a product or process, provided that the alleged infringer serves full particulars of the product or process alleged to infringe; 2. any ground on which the validity of the patent is put in issue, except documents which came into existence within the period beginning two years before the earliest claimed priority and ending two years after that date, and 3. the issue of commercial success, provided that full particulars are served in a schedule directed by the court. 98 99 100 101

In patent cases CPR 63.8 and PD 63.5 apply. CPR pt 35. See section A.II. CPR PD 63.6.1.

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Christopher Rennie-Smith These exemptions considerably reduce the volume of disclosure required in patent proceedings. The thrust of the provisions is to make the parties describe in one document what would previously have to be gleaned from any number of documents and might even then be incomplete. For example, in a case of alleged infringement of a process claim, the defendant, who naturally denies infringement, must now produce a description of his process instead of searching for, listing, giving inspection of and finally making copies for all parties and the court of all the documents in his possession which touch upon the process. It also avoids many of the difficulties surrounding the disclosure of documents which are either confidential or, if not confidential, of potential value to another party who may be a commercial competitor.

5. Witnesses 61

Apart from expert witnesses (dealt with immediately below), oral testimony plays a relatively low-key role in patent proceedings. The basic facts are rarely in dispute as such; it is their significance as infringements or not which counts. Documentary evidence, particularly prior art, also plays a larger role in patent cases than in many other types of litigation. Witness evidence is given primarily by way of signed statements which are exchanged at a point in time usually set at the CMC and then the parties are allowed to cross-examine each other’s witnesses at the trial.

6. Experiments and Expert Evidence 62

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Where experiments are required to prove a fact, the party requiring them must serve a notice giving full details of the experiments. The other party has 21 days in which to serve a notice stating whether or not he admits each fact sought to be proved. If the court allows the use of experiments it will require the party wishing to conduct them to permit representatives of the other party to inspect repeats of the experiments.102 These provisions have the effect of making such experiments relatively rare.103 Detailed expert evidence has always been a feature of English patent litigation. Such evidence is now limited by the CPR to what is reasonably required to resolve the issues in the proceedings and is nearly always produced primarily in the form of reports from experts on each side prepared on the basis of instructions which are themselves open to disclosure. Although chosen and engaged and paid by a party, an expert’s duty is to the court and not to that party. An expert witness is open to examination at the trial by either side.104 While the post-reform rules have reduced the extent of the role of experts, the aim envisaged in the Woolf report of limiting the parties to appointing a single joint expert rarely happens.

CPR PD 63.7. cf EPO proceedings where reports of unwitnessed, and often less than detailed, experiments are often filed. Parties in English patent cases may have taken to heart the criticism of ‘litigation chemistry’ in Smithkline Beecham plc and Another v Apotex Europe Limited and Others, Court of Appeal, 29 November 2004 [2004] EWCA Civ 1568. 104 He or she therefore has a quite different function from a court-appointed scientific advisor who sits with and advises the court itself—see section A.III. 103

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101

From 1 April 2013 the CPR105 have allowed the parties’ experts to give ‘concurrent evidence’ by sitting in the court’s witness box together while the judge leads a discussion between them.106 This approach is thought to encourage an open and frank discussion between both sides. It certainly differs from the traditional cross-examination, since the parties’ barristers no longer control the way in which the experts give their evidence.

7. Other Evidence Provisions 65

66

67

The court may direct107 the issues on which it requires evidence, the nature of that evidence and may limit cross-examination. Not less than two days before trial in the Patents Court, each party must lodge a certificate estimating the length of its oral submissions, of its examination in chief of its own witnesses and of cross-examination.108 If these estimates start to be overrun in the course of a trial, the judge may ‘guillotine’ the advocate’s time accordingly. The CPR also provides for reading guides (comprising the agreed basic documents, and setting out the issues and documents in order) and, in complex cases, for technical primers (containing an agreed background summary of the basic technology).109 The cumulative effect of these provisions limiting evidence and the interventionist role now assigned to the judges means that patent trials, be they as to validity and/ or infringement, are much shorter than in the past and can last on average less than a week. This has naturally led to a reduction in the overall cost of patent litigation.110

VI. Types of Infringement 68

69

105 106 107 108 109 110 111 112

Acts of infringement may be direct or indirect. Direct acts include importing, making, keeping and disposing of products (in the case of a product or product by process invention), or using a process (in the case of a process invention), or offering to do any of those acts, in every case in the United Kingdom.111 Indirect acts include supplying or offering to supply any means, relating to an essential element of the invention, for putting the invention into effect when the infringer knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom.112 In any event, the acts must be done without the consent of the patent proprietor. The exact nature of the infringing acts can be the subject of some uncertainty, depending on the facts and in particular the location of the ‘effect’. A recent example arose from a series of actions concerning alleged infringement of patents relating to aircraft seats.

CPR PD 35.11. The technique, colloquially called ‘hot tubbing’, originated in Australian litigation. CPR 32.1(1). CPR PD 63.9. CPR 63.5.10(2) Which nonetheless remains expensive—see section B.X. Patents Act 1977, s 60(1). ibid, s 60(2).

102

70

Christopher Rennie-Smith In one action113 the patentee sued a United States airline which had purchased seats from a British manufacturer, the seats having been supplied in parts to the airline which then assembled and fitted them into its aircraft in the United States. The patentee did not allege indirect infringement since that required a double territorial requirement to be satisfied: both the supply or offer for supply of the ‘means relating to an essential element of the invention’ must take place in the United Kingdom and the means must be suitable for putting, and intended to put, the invention into effect in the United Kingdom. The latter could not apply to a kit of parts made and supplied in the United Kingdom for assembly in the United States. So the patentee alleged direct infringement but unsuccessfully as this also requires the infringing acts to be performed in the United Kingdom. The fact that the manufacturer had made and supplied the airline seat units which could be assembled and arranged on an aircraft in the claimed manner was not enough, since the airline obtained the aircraft from elsewhere and the seat units were assembled and arranged on the aircraft outside the United Kingdom. The extent of infringement is ascertained by interpretation of the patent claims and the application by such interpretation to the facts of the alleged infringement. The traditional approach of the courts was to construe claims according to their natural and ordinary meaning. This was changed in a House of Lords decision114 in 1982 in which it was famously said that a patent specification should be given a purposive construction rather than a purely literal one. A purposive construction is one which seeks to interpret the language of the patent as the skilled person would understand the author of the patent to have meant his words. While this may in principle allow more acts to be considered infringements than previously, English law has set its face against a doctrine of equivalents as found, for example, in German patent law.115

VII. Remedies for Infringement 71

The following remedies may be awarded to a claimant who has succeeded in establishing infringement of his patent: 1. an injunction against future infringements, whether there has already been infringing activity or where it is threatened; 2. compensation by damages for the injury to the claimant or an account of profits made by the defendant from its wrongful acts; and 3. delivery up to the claimant or destruction by the defendant of infringing material.

113

Virgin Atlantic Airways Limited v Delta Airways, Inc, Patents Court, 30 November 2010 [2010] EWHC 3094

(Pat). 114

Catnic Components Ltd v Hill & Smith Ltd, House of Lords [1982] RPC 183. In Kirin-Amgen Inc and others v Hoechst Marion Roussel Limited and others, House of Lords, 21 October 2004 [2004] UKHL 46, Lord Hoffmann expressed the view that the principle of purposive construction adopted in 1982 was the UK’s alternative approach to a doctrine of equivalents, the two alternatives both being means to avoid literal interpretation. 115

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The court may also, depending on the circumstances of the case, order a certificate of contested validity of the patent in suit and publication of its decision. The successful party will also usually be awarded an order for payment of its legal costs by the unsuccessful party.

1. Injunctions 72

73

74

116

An injunction made following judgment after trial will ordinarily be permanent, so as to last as long as the patent remains in force. It is an inherently discretionary remedy, stemming from the equitable jurisdiction of the former Court of Chancery.116 One basis for exercise of the discretionary remedy is to protect a legal or equitable right and a claimant who has succeeded in establishing that the defendant has infringed, or may in future infringe,117 his patent is clearly able to demonstrate both a right and the need to protect it against further contravention by an injunction. Being a discretionary remedy an injunction, although almost invariably sought in patent (and other IP) infringement cases, is not granted automatically and may, in exceptional circumstances, be refused or granted only in modified form. For example, an injunction was refused when a patentee established that the defendant had infringed the patent in suit only in performing four development experiments but not in its commercial production process. Data obtained from the experiments was used in the defendant’s application for regulatory approval to use a CE mark and the claimant argued that this warranted an injunction as a form of ‘springboard relief ’ since the infringing experiments gave the non-infringing product an unfair early advantage: the injunction should last for as long as that advantage had. After observing that an injunction would prevent the sale of a product which did not and never would have infringed a valid patent, the Court concluded that, since the defendant had refrained from selling until the judgment, a period as long as any ‘springboard’ advantage had lasted, an injunction should not be granted.118 As an example of a modified injunction, reference may be made to another case in the series of actions concerning aircraft seats.119 After a finding of infringement the seat manufacturer sought to avoid an injunction in respect of a limited number of seats which it had, knowing of the claimant’s patent, contracted to sell to an airline. The Court of Appeal acknowledged both that the Supreme Court might give leave to appeal and that an appeal was pending in the EPO. The court permitted what it termed a ‘carve-out’ from the usual form of injunction to permit the supply of the seats in question but on the condition of a number of undertakings related to the circumstances of the case. The question was one of balance of convenience but not as in the case of an application for an interim injunctions pending trial120 where the patentee has yet to establish his right. After success at trial the patentee has prima facie done that so, when an appeal is pending, he will obtain an injunction provided he

See section A.II. In which case the injunction is known as a quia timet injunction. 118 Smith & Nephew plc and Another v Convatec Technologies Inc, Patents Court, 12 December 2013 [2013] EWHC 3955 (Pat). 119 Virgin Atlantic v Premium Aircraft, Court of Appeal, 21 December 2009 [2009] EWCA Civ 1513. 120 See section B.IV.2. 117

104

Christopher Rennie-Smith gives a cross-undertaking to pay damages if the defendant’s appeal should succeed.121 If there was no possibility of appeal, any derogation from a permanent injunction becomes permission to do an unarguably infringing act but even then English law is not ‘absolutist’ and an injunction is still discretionary. Additionally Article 3 of the Enforcement Directive122 now requires that remedies must be proportionate.

2. Monetary Remedies 75

76

A successful claimant is awarded a choice of two methods of recovering compensation for the defendant’s infringement—an inquiry as to damages or an account of profits. Whichever option is chosen entails further proceedings, culminating in a further hearing, in which either the damages are assessed or the profits calculated. The difference is both conceptual and practical. At the conceptual level, damages are intended to restore the claimant to the position he would have occupied but for the defendant’s infringement, whereas an account is intended to make the defendant disgorge the profits he has made by his wrongdoing and account for those profits to the claimant. Damages are allowable as of right, provided they can be proved, but an account is an equitable and therefore discretionary remedy which can in principle be defeated by an equitable defence such as delay. At the practical level, an account might give the claimant a windfall if the defendant has made larger profits than expected. Traditionally a claimant had to make his option in ignorance of the defendant’s true level of infringing business and would therefore tend to opt for damages since at least he could claim for particular losses he had, or could argue he had, incurred in addition to simple lost sales based on such information about the defendant’s sales as he could establish in the inquiry.123 However the English courts now allow a successful claimant to defer his choice until after the defendant has made some disclosure of his infringing trade; the plaintiff is not entitled to know exactly the amount of any damages or profits to which he is entitled, but only to such information as the court considers to be a fair basis in the circumstances of the particular case for an election.124

77

121

The honesty of the defendant, or the completeness of his records, may therefore be a significant factor in either an inquiry or an account. Damages can represent not just lost sales but may also, depending on the facts, cover losses such as the lowering of prices to maintain a market position threatened by the infringement. The basis of calculation will also depend on the circumstances. If the claimant has licensees, or if licensing is common in the trade in question, then his or the trade’s typical licence terms may form the basis, possibly with an addition to reflect the defendant’s failure to seek a licence. If there is no comparable licensing activity, the court will arrive at an amount by the best means it can.

ibid. 2004/48/EC of 29 April 2004. See n 85 above. 123 The instances of infringement pleaded in the claimant’s statement of case and particulars of infringement will usually have been only examples of sales or other dealings which happened to be known to the claimant and in some cases the result of test purchases designed to establish the existence of infringement. 124 Island Records Limited v Tring International Limited and Another, Chancery Division, 12 April 1995 [1995] EWHC 8 (Ch). 122

Patent Enforcement in the United Kingdom 78

105

In a major departure from previous practice, the Supreme Court has recently ruled that a successful claimant may not pursue his claim to damages if, after judgment in his favour in a United Kingdom court, his patent is in EPO proceedings revoked or amended to a form which no longer supports the finding of infringement. In the case in question, the subsequent EPO decision amended the patent in suit so as to remove the claims which the English court had found infringed.125

3. Other Relief 79

80

81

125

An infringing defendant will be ordered to deliver up to the claimant or to destroy all infringing goods and other materials relating to his infringement, such as advertisements of the infringing goods. In either event, the defendant is required to confirm in a statement of truth (formerly to swear an affidavit) that he has delivered up or destroyed all such goods and materials and has none left in his possession. If he makes delivery to the claimant, such delivery is for destruction and the claimant is required to destroy the delivered goods and not to sell them as his own. In the event that a defendant has challenged the validity of a patent and the challenge has not succeeded, the claimant patentee can ask the court for a certificate of contested validity which acts as a deterrent to future invalidity allegations by others and, if a later challenger fails in such an attack, he will be ordered to pay the patentee’s costs on an indemnity basis.126 Additionally, the Enforcement Directive127 allows the courts to order, at the request of the claimant and at the cost of the defendant, ‘appropriate measures for the dissemination of the information concerning the decision, including displaying the decision and publishing it in full or in part’. In a Community registered design case, Samsung sued for a declaration of non-infringement and Apple, in a counterclaim for infringement, sought a publicity order under the Enforcement Directive. In an interesting if ironic twist, after finding in favour of Samsung the trial judge made a publicity order against Apple requiring it to publicise the decision by a notice and hyperlink on its website, an order upheld on appeal.128 Although inspired by the Enforcement Directive, such a ‘reverse’ publicity order could not be made under that directive which only provided for publicity orders for owners of IP rights. The jurisdiction to make such an order was held to be the general power to grant injunctions to protect a right,129 in this case as an adjunct to a declaration of non-infringement where the publicity order would meet a real need to dispel commercial uncertainty.

Virgin Atlantic Airways Limited v Zodiac Seats UK Limited, Supreme Court, 3 July 2013 [2013] UKSC 46. Patents Act 1977, s 65(2). Costs on the indemnity basis are the costs a party actually pays his lawyers as opposed to the lesser amount usually ordered to be paid by the losing party to the successful party. 127 2004/48/EC of 29 April 2004, art 15. See n 85 above. And see also CPR PD 63.26.1. 128 Samsung Electronics (UK) Ltd v Apple Inc, Court of Appeal, 18 October 2012 [2012] EWCA Civ 1339. 129 See section B.VII.I. 126

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Christopher Rennie-Smith

4. Summary Judgment 82

Mention must be made briefly of the possibility for either party to a patent dispute to apply for summary judgment—that is, for judgment without a full trial. The court may do this if it considers that a claimant or defendant has no real prospect of success on either the action or an issue in the action and that there is no other compelling reason why the case or issue should be disposed of at a trial.130 Whereas patent actions might once have been considered too complex, either as to technical facts or law or both, to be the subject of summary judgment, that is no longer necessarily the case. The Patents Court recently gave judgment in favour of a defendant which counterclaimed for a declaration of non-infringement. After observing that summary judgment has not always been suitable in patent cases, and reviewing the case law in that respect, the judge proceeded to assess the defendant’s product in the light of the claims of the claimant’s patent and found that it did not infringe.131 The decision has been subsequently upheld on appeal.132

VIII. Defences 1. Denial of Infringement, Statutory Defences, Invalidity 83

A defendant in an infringement action may assert in his defence that his activities do not amount to an infringement because they do not fall within the scope of the patent as defined by its claims, a plea which will call for the interpretation of the claims so as to ascertain their scope.133 He may also assert that his actions do not amount to an infringing activity—in as much as they do not amount to an act of infringement as outlined above134—or that they fall within one of the specific defences, such as use for experimental purposes.135 Equally, and this occurs in the majority of infringement actions, the defendant may assert that the patent is invalid either by way of defence to the allegation of infringement and/or by a counterclaim for revocation.136

2. Licences, No Exhaustion of Rights 84

130

A defendant may argue that he derives title to infringing goods in his possession from a third party who had a right to sell them, under either an actual or implied licence from the patentee or a licensee of the patentee.137 The starting point is that English law only makes infringements of acts which are done without the consent of the patent

CPR 24.2. Nampak Plastics Europe Limited v Alpla UK Limited, Patents Court, 3 July 2014 [2014] EWHC 2196 (Pat). 132 Nampak Plastics Europe Limited v Alpla UK Limited, Court of Appeal, 9 October 2014 [2014] EWCA Civ 1293. 133 EPC, art 69 and its protocol; Patents Act 1977, s 125. 134 See section B.VI. 135 Patents Act 1977, s 60(5) lists a number of such acts which would otherwise be infringements. 136 ibid, s 74. 137 For an example, though one with some complicated law and facts, see HTC Corporation v Nokia Corporation, Patents Court, 30 October 2013 [2013] EWHC 3247 (Pat); [148]–[170] contain a good summary of the law on this point in more detail than can be given here. 131

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proprietor.138 If the proprietor sells patented goods to a purchaser with a limitation as to their subsequent use or resale then, if both that purchaser and subsequent purchasers from him have notice of the limitation, acts outside that limitation will infringe. From a defendant’s point of view, the opposite is also true—if he has no notice of a limitation, he is free to use the goods as he sees fit.139 An alternative analysis provided by other legal systems is that the patent rights are exhausted, the difference being that an implied licence may be excluded by express agreement or made subject to conditions while the exhaustion doctrine leaves no patent rights to be enforced.140

3. Defence of Invalidity: Stays Pending EPO Proceedings 85

86

87

138

Not infrequently it happens that a European patent which is the subject of an infringement action is also the subject of opposition proceedings in the EPO, either because the alleged infringer and/or others have already commenced opposition there or because, following a warning from the patentee or the commencement of an infringement action, the defendant has intervened in EPO opposition proceedings.141 The different procedures in the EPO, and in particular the longer timescale to reach a final decision there, make the prospect of obtaining a stay of the national infringement proceedings attractive for a party accused of infringement. Further, there is the economic argument that concentrating on the EPO proceedings which—if revocation is the result—will resolve all issues for all designated countries and save costs. The principles to be employed by the English courts when faced with an application for a stay pending the outcome of an EPO opposition were set out in guidance produced by the Court of Appeal in late 2013 in Ipcom GmbH & Co KG v HTC Europe Co Limited142 following an indication in a Supreme Court judgement143 that the previous such guidance144 might be revised. The decision is always a discretionary one and the discretion is very wide and should be exercised to achieve a balance of justice between the parties in all the relevant circumstances of the particular case. It should be remembered that the possibility of concurrent proceedings contesting the validity of a patent granted by the EPO is inherent in the system established by the EPC and also that national courts exercise exclusive jurisdiction on infringement issues. If there are no other factors, a stay of the national proceedings is the default option: there is no purpose in pursuing two sets of proceedings simply because the EPC allows for it. It is for the party resisting the grant of the stay to show why it should not be granted.

See section B.VI. Roussel Uclaf SA v Hockley International Ltd, Patents Court [1996] RPC 441, 443. See Lord Hoffmann in United Wire Ltd v Screen Repair Services (Scotland) Ltd, House of Lords, 20 July 2000 [2001] RPC 24 at [68]–[69]. 141 See EPC, art 105. 142 Ipcom GmbH & Co KG v HTC Europe Co Limited, 21 November 2013 [2013] EWCA Civ 1496; see [38]. 143 Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd, 3 July 2013 [2013] UKSC 46. 144 Glaxo Group Ltd v Genentech Inc, Court of Appeal, 31 January 2008 [2008] EWCA Civ 23. 139 140

108 88

Christopher Rennie-Smith There are of course few cases where there are no other factors and the Court of Appeal then indicated those which should be considered: 1. The extent to which refusal of a stay would irrevocably deprive a party of a benefit which the concurrent jurisdiction of the EPO and the national court is intended to confer. Thus, if allowing the national court to proceed might allow the patentee to obtain monetary compensation which is not repayable if the patent is subsequently revoked, this would weigh heavily in favour of a stay.145 However, this factor might be mitigated by the offer of suitable undertakings to repay. 2. Whether commercial certainty would be achieved at a considerably earlier date in the UK proceedings than in the EPO. While certainty cannot be reached everywhere until the EPO proceedings are finally resolved, some certainty, sooner rather than later, and somewhere, such as in the UK rather than nowhere, is preferable to continuing uncertainty everywhere. 3. Whether the resolution of the national proceedings, whilst not finally resolving everything, may by deciding some important issues promote settlement. 4. The length of time that the national and EPO proceedings respectively may take. This needs to be considered in conjunction with the prejudice which any party will suffer from the delay, and lack of certainty, and what the national proceedings can achieve in terms of certainty. 5. The public interest in dispelling the uncertainty surrounding the validity of the patent monopoly. 6. The risk of wasted costs, although early resolution factors will normally outweigh this.

89

Lastly, the Court of Appeal observed that an application for a stay should not become a mini-trial of the various factors but a critical examination of the parties’ assertions at a relatively high level of generality. A good example of the balancing of the various factors contained in the Ipcom guidelines can be seen in Actavis Group PTC EHF v Pharmacia LLC in which a stay was initially refused and then subsequently allowed when the patentee offered amended undertakings.146

IX. ‘Wrongful Enforcement’ 90

145

Examples of ‘wrongful enforcement’ in English patent litigation include the grant of an interim injunction at the outset of a case in which the claimant is ultimately unsuccessful—in which case the claimant will have to pay damages to the defendant on the cross-undertaking he gave as a condition of the grant of the injunction.147 Such damages are assessed by an inquiry as to damages148 and the claimant will usually be ordered to pay the defendant his costs of that inquiry as well as his costs of the action.

See section B.VII.2. Actavis Group PTC EHF v Pharmacia LLC, Patents Court, 11 July 2014 [2014] EWHC 2265 (Pat) and 24 July 2014 [2014] EWHC 2611 (Pat). 147 See section B.IV.2. 148 See section B.VII.2. 146

Patent Enforcement in the United Kingdom 91

92

109

We have already seen that a successful claimant may find his damages disappear if the European patent on which he has successfully sued is subsequently amended in EPO opposition proceedings so as to remove the basis of the judgment he obtained.149 We have also seen that UK patent law provides an action for unwarranted threats of patent infringement.150 A successful claimant in a threats action will usually obtain an injunction against any repetition of the threats and possibly damages if, for example, the threats can be shown to have caused him a loss of business.

X. Costs 93

94

Although an order to one party to pay another party’s costs is always discretionary, an English court will usually order the losing party to pay the successful party’s costs of the proceedings. These will rarely amount to the costs actually incurred but can in a patent action be sufficiently high that the prospect of paying such costs in the event of losing, and of meeting one’s own costs in addition, can be a major factor in settling proceedings. The principles of and procedure for assessing costs form an area of law of some detail and complexity.151 While costs in patent actions are increasingly assessed on an issue basis—thus, for example, one party might be ordered to pay the other’s costs of validity while the costs of infringement are ordered to be paid in the other direction—it is still the case that the losing party usually pays more overall than the successful party. In any event the costs of patent litigation in England remain, despite the recent and successful reforms, very high. One study based on cases between 2000 and 2008 found that ‘most cases that ended with a judgment, and for which we have data, report total costs in the region between £1 million and £6 million’.152 Even as the aggregate of actual costs incurred on both sides to a dispute, rather than just the costs ordered to be paid by one party to another, sums of that order are such as to make even well-endowed litigants pause.

C. Conclusion 95

149

The reformed English civil litigation system in which judges act as managers of the cases before them has now been proved by over 15 years’ use and has made some particularly significant reductions in the time and complexity of patent proceedings. However, the cost of patent litigation in the UK remains high by comparison with other European countries and, with the reductions in time and complexity, the level

ibid. See section B.I.2. 151 The English litigation practitioner will usually refer to Cook on Costs (LexisNexis Butterworths, 2014), of which an updated version is usually issued annually. 152 C Helmers and L McDonagh, ‘Patent Litigation in the UK’, LSE Law, Society and Economy Working Paper 12/2012, 20–25. 150

110

Christopher Rennie-Smith of costs needs to be reduced. It can certainly be argued that current costs would have been even higher without the reforms and that the IPEC offers a cheaper alternative for those who find costs a general deterrent to patent proceedings. However, we are about to enter the uncharted territory of the new system of the unitary patent and the UPC and, as remarked in opening, the contribution which the UK can make to that system will be based on its current system of simplified patent litigation. One of the major uncertainties of the new system is what it may cost its users and it would be unfortunate if the UK contribution to that new system is less than it could be because it is associated with high cost.

4 Patent Enforcement in Germany CHRISTIAN OSTERRIETH*

A. Characteristics of the German System 1

The German court system for patent disputes is characterised by two particular features: First, its separation of court proceedings concerning the validity of patents on the one hand and all other patent-related disputes on the other hand, in particular infringement disputes (bifurcation, see in more detail below).1 And, secondly, its reliance on written proceedings.

I. Bifurcation 2

Due to the principle of bifurcation, patent cases are considered regular civil law disputes for which basically the same procedural and legal rules apply as for disputes in other civil law matters, for example in tort cases.2 The only exception to this are patent validity disputes, being assigned to a specialised branch of courts—the Federal Patent Court (‘Bundespatentgericht’) as first instance for validity proceedings, see section 65 of the German Patent Act, and in accordance with section 110(1) of the, German Patent Act the Federal Court of Justice (‘Bundesgerichtshof ’) as appeal court for validity proceedings. 3 In practice, bifurcation means that infringement and validity proceedings are separated (so-called principle of separation or bifurcation = ‘Trennungsprinzip’). This limits the scope of review the infringement court is allowed to apply: as the patent has only been granted after extensive review during prosecution, the patent is presumed to be valid and validity cannot be contested in the course of infringement proceedings (this is slightly different for utility models which are not dealt with here).3 The defendant can file a separate nullity action (at a different court, the Federal Patent Court) or—but only

* The author would like to thank Frau Eva Thörner and Herrn Dr Stefan Richter for their support in writing this chapter. 1 Muenster-Horstkotte, Das Trennungsprinzip im deutschen Patentsystem—Probleme und Lösungsmöglichkeiten MittdtPatA, 2012 4. 2 Busse-Kaess, Patentgesetz 7th edn (2013), before § 143 recital 1. 3 Pitz, Patentverletzungsverfahren 2nd edn (2010) recital 138.

112

Christian Osterrieth within three months after grant of the patent—an opposition for genuinely German patents with the German Patent and Trademark Office (‘DPMA’), or—but only within nine months after grant of the patent—for European patents with the European Patent Office (‘EPO’), both in Munich, in the following all jointly referred to as ‘nullity action’. Such nullity actions will take place in parallel to the infringement proceedings (socalled bifurcated system). However, they will typically take 18 to 24 months and thus longer than the infringement proceedings. In other words: there may be an enforceable first instance decision in infringement proceedings, while the validity side is still open. The infringement court may stay the proceedings with regard to pending nullity proceedings. This, however, will only happen if the court considers the likelihood of invalidity to be very high.4 The latter will typically be the case if new, novelty-destroying prior art is presented, which had not been considered during prosecution.5 In practice, the Regional Court of Düsseldorf rarely stays infringement proceedings (maybe 10 per cent of all cases; however, there are no official statistics). The Regional Court of Mannheim is a little less reluctant to stay the proceedings. The Mannheim Court stays (at a guess; there are no official statistics here either) maybe in 20 per cent of the proceedings. If the first instance court finds infringement and no high likelihood of invalidity, it will issue, among others, a cease and desist order. Provided that the claimant posts a bank security typically of an amount similar to the value in dispute, the claimant can enforce such decision even if it is appealed. This means the defendant must stop all infringing acts immediately. Section 83(1) of the Patent Act requires that the Federal Patent Court formally indicates to the parties to the nullity proceedings as early as possible which aspects may be essential for the case. Such notice may also contain a preliminary evaluation of the case.6 If such notice is given before the oral hearing on the merits in the infringement proceedings and if such notice shows that the Federal Patent Court deems the patent invalid, the infringement court may be less reluctant to stay the case. In order to reduce the likelihood of a stay in the infringement proceedings, the claimant should not file auxiliary requests based on the narrower dependent claims of the patent. Owing to the fact that an auxiliary request may only be granted if it has been established that the main petition is unfounded, such combination cannot avoid any stay. Rather, the claimant should decide to limit its request in the action unconditionally to the combination of claims that is expected to be valid. If the defendant should then be able to present prior art which is novelty destroying with respect to one of the claims, the court will not stay the case if such prior art does not affect novelty and inventive step of all of the other claims. However, the standard of review under such circumstances is stricter, as the presumption of validity established by the grant of the patent is no longer justified if the original independent claim is no longer maintained.7

4 5

6

7

8

4 5 6 7

Kraßer, Patentrecht 6th edn (2009) § 36 VII. Federal Court of Justice (BGH), 11 November 1986, GRUR 1987, 284—Transportfahrzeug. Schulte-Voit, Patentgesetz mit EPÜ 9th edn (2014) § 83 recital 6. Kühnen, Handbuch der Patentverletzung 7th edn (2014) recital 1882 et seq.

Patent Enforcement in Germany 113 9

In general, the infringement courts may only rely on the claims that are actually defended in parallel nullity proceedings. That means that if the patentee is only defending a limited version of the claims in validity proceedings, only that limited version (or an even narrower version) of the claims can be the basis for an infringement decision. That is because in case of a merely limited defence, invalidation of the patent in part is certain.

II. Written Procedure 10

11

12

The second characteristic feature of German patent infringement proceedings compared to such proceedings in many other jurisdictions is that the proceedings are mainly in writing. Even though there is an oral hearing at a rather late stage of the proceedings (cf the timeline below), such hearing is comparatively short: There is typically only one day scheduled for the hearing. The hearing itself may take one hour to a maximum of approximately five hours in very complex cases. The purpose of the hearing is not to present all facts and legal arguments to the court and discuss them thoroughly. The court will rather go directly to the crucial and disputed aspects of the case and allow the parties to further discuss the issues that may decide the case. Such short hearings need in-depth preparation in writing. Therefore, the parties are obliged to present all facts and legal arguments as well as, for example, expert opinions prior to the hearing. If facts and arguments are not presented as early as possible, the court may decide that the party is precluded from presenting such facts if there is no plausible excuse for the delay. Courts are usually quite strict in that respect. An action filed with the court must be conclusive. That means that it must—besides correct applications for specific types of relief—present all facts that are required for the court to find that the claimant in fact has the asserted claim. The claimant need not anticipate and address all objections that the defendant might raise at a later stage. But he must address all requirements of a claim. That means in particular that the claimant must show ownership of the patent his claim is based on. He shall further introduce the teaching of such patent to the court, typically by providing a feature analysis. He must further allege by which acts the defendant has infringed the patent. That requires allegations concerning the configuration and condition of the supposedly infringing device. The claimant must further allege which particular acts the defendant committed with respect to such device, for example, whether he made it, offered it or put it on the market. The claimant shall further argue by what means such device makes use of the teaching of the patent, ie he must demonstrate how the attacked device or method fulfills the features of the patent claim. He must further show that the court has jurisdiction. For all such facts, the claimant must offer evidence.

III. Hearings and Decisions 13

Most patent cases are heard by the district courts of Düsseldorf, Mannheim or Munich. Their hearing practices differ, however.

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1. Düsseldorf 14

Under the current Düsseldorf practice a possible timeline could be described as consist of: 1. 2. 3. 4. 5. 6. 7.

filing of action; serving of action on defendant; formal first oral hearing (six weeks after service); defence by defendant (four to five months after first hearing); replication by claimant (four to five months after filing of defence); rejoinder by defendant (four to five months after filing of replication; oral hearing on the merits (two to four weeks after filing of rejoinder; currently, about 14 months after filing); 8. announcement of the decision (two to four weeks after oral hearing on merits). 15

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The formal first oral hearing is usually held about six weeks after service of the action. It is typically quite short (a few minutes). It mainly serves for setting deadlines for the defence writ and further written pleadings on the merits, as well as a date for the main oral hearing. Furthermore, certain formal issues (eg regarding the jurisdiction of the court) can—and partly have to be—raised at this stage. The deadlines for the writs—defence, replication, rejoinder—are typically set to four to five months. Thus, the oral hearing on the merits is usually held about 12–15 months after the formal first hearing (currently, about 14 months after filing). At this oral hearing on the merits (and only then), the court will discuss both infringement and likelihood of a stay. Nevertheless, the court expects that—to the extent possible— all offence and defence arguments be raised with defendant’s first response after the formal early hearing. This is because by doing so, the court sees a better chance that all arguments can be discussed by both parties in writing well before the hearing and hence allow for a better preparation of the hearing. Upon such hearing, the court will decide whether to dismiss the action, grant the claimant’s motion, stay the case or issue an order for evidence by hearing witnesses or appointing a court expert.

2. Mannheim 18

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The Regional Court Mannheim also has two chambers dealing mostly with patent cases. In sum, both chambers handle about 280 patent infringement cases per year. Mannheim is rather fast: an enforceable judgment can be obtained within seven to eight months. The Mannheim practice deviates from the Düsseldorf practice with respect to some aspects: the Mannheim Court typically does not set out a strict schedule for the filing of writs at the beginning of the proceedings. There is only a deadline for the filing of the first defence writ by the defendant. This deadline is usually quite short compared to Düsseldorf (eight to ten weeks). After the filing of such defence, each party is free to file further writs at any time before the oral hearing on the merits. This makes the whole course of the proceedings less predictable as far as timing is concerned. In some cases, the majority of written correspondence is produced only days before the oral hearing.

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The time until an oral hearing on the merits can be significantly shorter (approximately six to eight months after filing of the action) than in Düsseldorf (approximately 14–18 months). Just as the Düsseldorf Court, the Mannheim Court usually issues a decision within two to four weeks after the oral hearing on the merits. However, the Mannheim Court allows for the filing of further writs even after the oral hearing which may address aspects that could not be discussed thoroughly during the hearing. This may—in some cases—lead to an exchange of several further writs by each party which can delay the rendering of a decision by the court.

3. Munich 21

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The proceedings before the Regional Court Munich I deviates from the Regional Court Düsseldorf insofar as the early oral hearing is not held before the exchange of briefs, but rather after defendant has filed its defence brief, ie after the first round of briefs has been exchanged (statement of claim and defence brief). In the said early oral hearing, the merits of the case are discussed in detail. This hearing is supposed to clarify questions of claim construction and identify questions of fact that still need clarification by the parties. The said hearing is followed by a further round of briefs and finally by the main hearing on the merits. The total timeline of the said proceedings is in the range of the proceedings in Düsseldorf and may vary significantly, depending on the workload of the two chambers.

4. Style of Decisions 23

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The form of a German decision is to a large degree predetermined by section 313 of the Code of Civil Procedure. Besides the formalities the judgment has especially, in this order, to include operative provisions, the merits of the case and the reasons on which the ruling is based. The operative provisions represent the substance of the judgment, ie the legal consequences following from the merits of the case. The latter are also structured in a predetermined way including mainly, in this order, the undisputed facts, the disputed facts presented by the claimant, the claims, the disputed facts presented by the defendant and the course of the proceedings. Finally, the reasons on which the ruling is based are explained. Often the court extensively relies on and even quotes literature. When published, the judgments are anonymised, ie the designations of the parties are not made public. Judgments of the Federal Court of Justice can be found on its website www.bundesgerichtshof.de. Decisions of the lower courts may be published in databases of the provinces. The province with the most decisions in the area of patent law, North Rhine-Westphalia, publishes its decisions on http://www.justiz.nrw.de/ Bibliothek/nrwe2/index.php. Baden Württemberg as the province of the second most important Regional Court Mannheim runs the database http://lrbw.juris.de/cgi-bin/ laender_rechtsprechung/list.py?Gericht=bw&Art=en.

5. Statistics 25

In Germany, more than 1300 cases in the field of patent law and utility model law are filed per year. The most important courts are the regional courts of Düsseldorf,

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B. Problems Related to the Enforcement of Patent Rights I. Types of Action 1. By the Patentee a. Infringement Action 26

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The most common type of action, which was also explained in detail above, is the infringement action as a regular main action. The typical requests are for injunctive relief and damages. In addition, patentees may ask that infringing products be removed from the distribution chain, that the infringer recall all infringing products from his respective customers and that infringing products still in the infringer’s possession be destroyed. Section 145 of the Patent Act stipulates the requirement that claims directed against the same or substantially identical infringing acts but based on different patents must be asserted in the same action. If the same infringing act that was already subject to prior infringement proceedings is later used as the basis for another infringement action, the said action will be dismissed as inadmissible according to section 145 of the Patent Act. That means that such additional claims based on different patents can only be asserted as long as the original action is still pending (even on appeal) and can be extended to the said new patents. The requirements for ‘the same’ or a ‘substantially identical’ infringing act are rather strict: That is only the case if the second claim relies on the same features as the original action, but comprises additional or alternative features which are technically so closely related to the original claim that it is evident that they should be discussed in the same proceedings. It is not sufficient if only parts of a device that was subject to earlier proceedings are also relevant for later proceedings.9

b. Customs Actions (Border Seizures) 29

For products imported from outside the European Union, the patentee may request customs authorities to search for and seize infringing products entering (but not transiting) Germany.10 Such request can either be based on the European procedure (EU Regulation No 608/2013 as of 12 June 2013 which is supplemented by the Patent

8 It is quite difficult to obtain exact data; for the numbers for 2011 (exact numbers for the Regional Court Düsseldorf, estimated numbers for the other regional courts) see Kühnen, ‘Die Durchsetzung von Patenten in der EU—Standortbestimmung vor Einführung des europäischen Patentgerichts’ (2013) 592, 597. 9 Federal Court of Justice (BGH), 3 November 1988, GRUR 1989, 187—Kreiselegge II; Federal Court of Justice (BGH), 25 January 2011, GRUR 2011, 411—Raffvorhang. 10 Kühnen, (n 7) recitals 530 et seq; Federal Court of Justice (BGH), 25 June 2014, GRUR 2014, 1189— Transitwaren.

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Act, s 142(b)11) or on the national border seizure procedure, for example according to section 142(a) of the Patent Act.12 Products that are found and seized based on such request are retained and not released to their recipient. If both parties—patentee and owner/recipient of the products— consent within 10 business days, customs authorities may destroy the respective goods. If such consent is refused, the patentee is required to launch proceedings for assessment of infringement. Such proceedings are, in particular, infringement actions and PI proceedings. If such proceedings are not launched within 10 days (they may also be already pending when the request is filed), the goods are released. If such proceedings are pending or launched within 10 business days, the goods remain in the custom authorities’ custody until the said infringement proceedings are concluded.13 However, the owner/recipient may request release of the said products by payment of a security. In most cases, border seizures can therefore only delay the release of the products concerned, but can, as such, not permanently prevent that infringing products enter the European Union, unless an enforceable infringement decision confirming infringement has already been obtained. If the corresponding infringement proceedings should not be successful, the patentee is liable for damages caused by the unjustified retaining of the respective products.14

2. By the Defendant a. Declaration of Non-Infringement 33

Such action is basically an infringement action with inverted procedural roles, yet in most cases makes little sense, as a negative outcome would implicitly confirm infringement. It can make sense, however, if a reliable freedom to operate confirmation is required for future investments or for strategic reasons, for example, where the patentee is continuously threatening to file an infringement action but is apparently reluctant to actually do so. For such action it is required that the patentee alleges or claims (eg in correspondence between the parties) that a product infringes the respective patent. It is not required, however, that the patentee threatens to sue.15 Such allegations of infringement may also entitle the addressee to intervene in pending opposition or appeal proceedings before the EPO (EPC, art 105).

b. Torpedo Action 34

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A torpedo is a means for delaying infringement proceedings in Germany. A torpedo is an option in international infringement cases, ie where a European patent is concerned having valid counterparts in Germany and other countries. The concept of a torpedo is based on Article 29 of the European Convention on Jurisdiction and the Enforcement of Judgment.16 Further details are provided in chapters two (European Union) and seven (Italy).

Kühnen (n 7) recital 530. ibid recital 530. 13 ibid recitals 566 et seq. 14 ibid recitals 588 et seq. 15 Federal Court of Justice (BGH), 12 July 2011, GRUR 2011, 995—Besonderer Mechanismus. 16 Both, Council Regulation (EC) 44/2001 dated 16 January 2011 and Regulation (EU) No 1215/2012 dated 12 December 2012 which replaces the aforementioned Regulation 44/2011 by 10 January 2015. 12

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c. Nullity Suit 35

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The most common means of defence against alleged patent infringement is a nullity action to be filed at the Federal Patent Court (‘Bundespatentgericht’) in Munich or, in the alternative, an opposition if still admissible. Whereas oppositions are only admissible within a short timeframe after grant of the patent, a nullity action is admissible at any time and without any particular requirements: anybody is entitled to challenge the patent’s validity as anybody is obliged to comply with the exclusivity right granted therein. Only after expiry of a patent—ie in situations where anybody is generally free to use the invention—must a nullity claimant show a particular legal interest in invalidating an expired patent. That is always the case if the respective party is sued for payment of past damages based on said expired patent. One should be aware, however, that German nullity proceedings cannot be filed as long as opposition or appeal proceedings for the corresponding European patent are still pending before the European Patent Office (Patent Act, s 81(3)). This is somewhat mitigated by the possibility of intervening in an ongoing opposition or appeal (EPC, art 105). Final decisions nullifying a patent in part or entirely are effective inter omnes, ie the protective scope of the patent is narrowed or removed for the benefit of anybody and not just the nullity claimant.17

II. Competent Parties 1. The Claimant 37

Entitled to sue with regard to infringements of a patent are the patentee, the exclusive licensee and, under certain conditions the non-exclusive licensee.

a. Patentee 38

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The patentee is entitled to sue because of an infringement of his patent even once he has granted an exclusive licence if the patentee continuously benefits from the exercise of rights under the licence, for example because the patentee as the sole shareholder of the exclusive licensee benefits from its profit.18 If there is a plurality of patentees, each of them can enforce the rights under the patent19 or they can file a collective action. Entitlement is proven by an extract from the German register of the German Patent and Trademark Office. In the case that the patent has been transferred and the register has not yet been changed, only the former owner is capable of enforcing the rights under the patent.20 According to a recent decision of the Düsseldorf Appeal Court, the claimant can only claim the damages of the

17 Federal Court of Justice (BGH), 12 July 1955, GRUR 1955, 573—Kabelschelle; Federal Court of Justice (BGH), 14 June 1957, GRUR 1958, 134, 136—Milchkanne; Schulte-Moufang, Patentgesetz mit EPÜ 9th edn (2014) § 21 recital 110. 18 Federal Court of Justice (BGH), 5 April 2011, GRUR 2011, 711, 712—Cinch-Stecker. 19 Benkard-Rogge/Grabinski, Patentgesetz, Gebrauchsmustergesetz 10th edn (2006) § 139 recital 16; Kühnen (n 7) recital 976. 20 Appeal Court Düsseldorf, 28 September 2006—I-2 U 93/04.

Patent Enforcement in Germany 119 patentee as registered. This means that after a transfer of the patent the new patentee can claim its own damages only for the time after he has been registered even if the patent has been transferred earlier.21 The jurisprudence of the Federal Supreme Court is different.22 b. Exclusive Licensee 40

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The exclusive licensee can sue against an infringer of the licensed patent. However, it is common that a licence may be limited in time, geographically or to certain types of use. The owner of an exclusive but limited licence has the capacity to sue insofar as he is infringed in his rights of use.23 It is not clear whether ‘exclusivity’ requires that even the patentee himself is not allowed to use the patent besides the exclusive licensee. It can be supposed that the exclusive licensee is still capable of suing if the patentee may only use the patent upon consultation and agreement of the exclusive licensee because in that case the patentee has a status equal to a sub-licensee.24

c. Non-Exclusive Licensee 42

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The non-exclusive licensee himself has no claim for injunction or destruction, but can only sue in its own name on behalf of the licensor upon authorisation (which should be filed together with the claim). The licensee has an own legal interest in the enforcement of the infringed rights, as the turnover of the infringer normally limits the turnover of the licensee.25 As to claims for accounting, damages and compensation, the non-exclusive licensee does not have a legal interest of its own. Its own damages cannot be claimed against the infringer.26 Therefore, the non-exclusive licensee can only claim the licensor’s claims on condition that these have been assigned, or upon authorisation. In accordance with the authorisation agreement between the licensee and the licensor, the licensee can either demand payment to himself or to the licensor.27 Parallel to the authorised licensee, the licensor may not sue in parallel.

2. The Defendant a. Direct Infringers 44

Generally, anyone is a direct infringer whose behaviour has been necessary and essential for the infringement according to section 9 of the German Patent Act.28 Anyone who supports an intentionally committed infringement as instigator or abettor is also

21 Appeal Court Düsseldorf, 13 January 2011, InstGE 12, 261—Fernsehmenü-Steuerung; Kühnen (n 7) recitals 952 et seq. 22 Federal Court of Justice (BGH), 7 May 2013, GRUR 2013, 713, 716—Fräsverfahren. 23 Federal Court of Justice (BGH), 20 December 1994, GRUR 1995, 338, 340—Kleiderbügel. 24 Kühnen (n 7) recital 984. 25 Federal Court of Justice (BGH), 29 September 2011, MDR 2012, 182. 26 Federal Court of Justice (BGH), 4 May 2004, GRUR 2004, 758, 763—Flügelradzähler. 27 Kühnen (n 7) recital 994. 28 Federal Court of Justice (BGH), 26 February 2002, GRUR 2002, 599—Funkuhr.

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Christian Osterrieth liable as direct infringer if he himself acts intentionally with regard to the supporting action as well as to the concrete infringing action itself. Furthermore, liability can even follow from objectively facilitating or supporting a patent infringement committed by a third party if one knows or could have known with reasonable effort that the behaviour of the third party infringes the patent.29 However, this requires that the facilitating or supporting behaviour infringes a legal duty which, at least inter alia, protects the infringed patent rights and which would have prevented the infringement if it had been observed. Whether there is a duty to prevent the infringement has to be assessed in each particular case with regard to the relevant interests. One has to consider on the one hand the need for protection of the patentee and on the other hand whether the behaviour preventing the infringement can reasonably be demanded.30 However, this wide interpretation of direct infringement according to section 9 of the German Patent Act must not have the effect that so-called ‘necessary participants’ are considered to infringe. This applies, for example, with regard to the purchaser of an infringing product who is not considered to participate in placing the infringing product on the market according to section 9 of the German Patent Act.31 Furthermore, the wide interpretation of section 9 of the German Patent Act does not apply in situations of contributory infringement according to section 10 of the German Patent Act because otherwise the legislative content of this regulation would be circumvented.32

b. Contributory Infringer 47

With regard to contributory infringers, the same principles apply. Anyone is liable according to section 10 of the German Patent Act who meets the requirements by his own behaviour, through others, together with others or as instigator or abettor (with regard to the requirements of section 10 of the German Patent Act see below section VI.5).

c. Interferer (‘Störer’) 48

A potential addressee of an injunction is the so-called interferer, who, however, cannot be made liable for damages.33 This is a person who is not the perpetrator of the infringement but has nevertheless caused it. This category applies, for example, with regard to the owner of an internet connection who allows a third party to use the connection. If this third party commits an infringement via this connection, the owner may be liable. However, a liability because of interference requires not only causing the infringement but also the lack of a due diligence. Most cases in which liability because of interference can occur, for example, are with regard to operators of ecommerce

29 Federal Court of Justice (BGH), 17 September 2009, GRUR 2009, 1142, 1145 = 41 IIC 471 (2010)— MP3-Player-Import. 30 ibid 1146. 31 Federal Court of Justice (BGH), 30 January 2007, GRUR 2007, 313, 314—Funkuhr II. 32 ibid 314 et seq 33 Federal Court of Justice (BGH), 18 October 2001, Mitt 2002, 251—Meißner Dekor.

Patent Enforcement in Germany 121 platforms, file hosters, access providers, domain providers and carriers34 whose services are used by third parties for infringing actions.35

III. The Competent Court 1. Ordinary Courts 49

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Patent cases—as long as they do not concern validity and thus fall within the jurisdiction of the ordinary courts rather than the jurisdiction of the Federal Patent Court—are explicitly assigned to the district courts (‘Landgerichte’) according to section 143(1) of the Patent Act. Out of the 115 German district courts, the German States under section 143(2) of the Patent Act have limited jurisdiction to 12 district courts as competent to hear patent cases, ie cases based on patent rights. Yet, a dispute would not be considered a ‘patent dispute’ merely because contractual claims are asserted which allegedly grant the claimant the right to ask for transfer of the ownership over certain patents.36 Which Regional Court has local jurisdiction for a case is determined according to general principles of civil procedure: A case may in particular be filed at the Regional Court of the district where the defendant has his regular place of residence or business (Code of Civil Procedure, ss 12 and 17) and—because infringing acts qualify as torts37—at any Regional Court if an infringing act was allegedly committed in the said court’s district (Code of Civil Procedure, s 32). If the said requirements are fulfilled by more than one court, the claimant may choose where to bring his action (forum shopping).38 In particular, in cases where allegedly infringing products are offered via internet websites accessible from anywhere within Germany, the claimant could choose any Regional Court based on section 32 of the Code of Civil Procedure. Not all of the said courts handle large numbers of patent cases, however. By far most of the cases are heard by the Regional Court Düsseldorf, followed by the Regional Court Mannheim. Less, but still a significant number of cases is heard by the Regional Court Munich I and the Regional Court Hamburg. Typically, all patent matters are concentrated in one chamber of the respective district court. In courts where many patent cases are heard on a regular basis, more than one patent chamber exists: The Regional Court Düsseldorf has three patent chambers, the Regional Courts in Mannheim, Hamburg and Munich each have two. While cases may be heard by a single judge (Code of Civil Procedure, s 348(a)) due to the complexity of patent cases, the courts almost never make use of that option.

34 cf MP3-Player-Import (n 29); however, in this decision the Federal Court of Justice made not clear whether the defendant was considered to be perpetrator or interferer; nevertheless, it was stated that who negligently contributes to a patent infringement is liable. 35 Kühnen (n 7) recitals 1020 et seq; Heath, ‘Intellectual Property Liability of Consumers, Facilitators and Intermediaries: The Case of Patents’ in Heath/Kamperman Sanders, Intellectual Property Liability of Consumers, Facilitators and Intermediaries (Kluwer Law, 2012) 195–217. 36 Federal Court of Justice (BGH), 22 February 2011, GRUR 2011, 662—Patentstreitsache. 37 Mes, Patentgestz 3rd edn (2011) § 9 recital 116. 38 Zoeller-Vollkommer, ZPO 30th edn (2014) § 32 recitals 16 et seq; Thomas/Putzo-Huesstege, ZPO 35th edn (2014) § 32 recital 7.

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Christian Osterrieth Nevertheless, even a panel of three judges always assigns the case to one reporting judge (which can also be the presiding judge) who prepares the case, introduces it to the other members of the chamber and drafts the judgment, subject to approval by the entire chamber’s vote. German judges (except for those at the Federal Patent Court) typically have no technical background. However, due to the fact that only few Regional Courts have exclusive jurisdiction for patent disputes, judges who are members of patent chambers at such said courts typically gain significant technical experience and knowledge due to their continuous work on several patent matters. All judges with some exceptions at the Federal Supreme Court are career judges that usually enter the judicial service directly after graduation. In patent infringement lawsuits, the formal conduct of the case is statutorily vested in the attorney-at-law. Patent attorneys may (and usually do) collaborate in the proceedings in order to provide specific expertise in the technical field concerned and in related legal issues. They are also usually involved with respect to parallel nullity proceedings. Courts consider such joint collaborate work of attorneys and patent attorneys necessary for the lawsuit. Therefore, the prevailing party may claim compensation for the statutory fees of both of them (see below section X).

2. The Federal Patent Court 57

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The Federal Patent Court with exclusive jurisdiction over patent nullity actions was established in 1961 as an independent federal court having its seat in the same city as the Federal Patent Office (see Patent Act, s 65(1)), that is, Munich. Judges at the Federal Patent Court are required to be either qualified as lawyers, same as judges at other courts, or to be technically qualified in a particular technical field, (see Patent Act, s 65(2)), have practical technical experience and sufficient legal knowledge. The particular requirements correspond to the requirements for patent examiners set forth in section 26(3) of the Patent Act (see Patent Act, s 65(2)). The composition of the panels of judges (here: Senates) depends on the particular procedure. For nullity proceedings according to sections 81 and 84 of the Patent Act, the Senate is composed of five members, namely one legally qualified member being the presiding judge, one further legally qualified member, and three technically qualified members.

3. Appeals 60

Appeal Courts hear cases in Senates, each consisting of three judges. The said judges are typically (but not necessarily) more senior than judges in first instance courts, but have the same formal qualification, ie they are fully qualified lawyers but not technically trained. Same as in first instance, there are usually specialised patent Senates at the Appeal Courts where patent cases are concentrated. Typically, all patent appeals are assigned to the same Senate. Only the Appeal Court Düsseldorf, which hears the appeals from the Regional Court Düsseldorf, has recently established a second Senate for appeals in patent matters due to the high workload of the existing patent Senate.

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The appeal concerns questions of fact and law, ie the appeal courts may take evidence in order to correct facts that were erroneously ascertained assumed by the first instance court. However, as a general rule, new facts presented by a party on appeal for the first time may only be taken into consideration if they could not have been presented earlier. For that reason, facts that could have been introduced in first instance, but were not without sufficient excuse, must be disregarded by the Appeal Court (Code of Civil Procedure, s 531). Also first instance nullity proceedings before the Federal Patent Court may be appealed. The appellate court (=second instance court) here is the Federal Court of Justice— the same court (and even the same senate of that court) which acts as third instance court in infringement proceedings. Thus, both tracks of the bifurcated system—the infringement track and the validity track—end before the same panel. Appeal decisions in infringement cases are subject to a further appeal on points of law only if leave of appeal is granted, for example, if the legal matter is of fundamental significance or if the further development of the law or the interest in securing uniform adjudication require a decision of the court hearing the appeal on points of law (Code of Civil Procedure, s 543). Appeals on points of law in patent cases are heard by the Xth Senate of the Federal Court of Justice (‘Bundesgerichtshof ’ or ‘BGH’). The Federal Court of Justice is Germany’s highest court for civil law matters and located in Karlsruhe. If the Appeal Court has not allowed the appeal on points of law, a complaint against the said denial of leave to appeal can be filed with the Federal Court of Justice and it will review whether the requirements for admission are fulfilled. The Senates at the Federal Court of Justice consist of five experienced judges. As indicated by its name, the appeal on points of law does not allow taking evidence. In case the Federal Court of Justice should find that evidence was taken in a procedurally erroneous way or if evidence was not taken although it was required, the case is assigned back to the previous instance which may then take the required evidence and review the case on the basis of the legal guidelines given by the Federal Court of Justice. For appeals on points of law, only attorneys-at-law admitted to a special, exclusive bar are allowed to conduct the appeal proceedings. Such attorneys are not entitled to appear in first and second instance, but they exclusively handle appeals on points of law at the Federal Court of Justice. Currently, only 46 attorneys are admitted to plead before the Federal Court of Justice.39 Some of them have special experience and a particular focus, inter alia, on patent law. It is noteworthy that the Xth Senate of the Federal Court of Justice does not only hear appeals on points of law in patent infringement cases, but this Senate is at the same time the regular appeal court—ie also on points of fact—for appeals against validity decisions of the Federal Patent Court (Patent Act, s 110). That means that in the end, both bifurcated paths for validity and infringement are reunited at the final level at the Federal Court of Justice and the final decision on validity and infringement will be made by the same court and even the same panel of that court. In contrast to third instance infringement proceedings, regular attorneys and patent attorneys may appear

39 This is the number as of 23 January 2015, cf www.bundesgerichtshof.de/DE/BGH/Rechtsanwaelte/ rechtsanwaelte_node.html.

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Christian Osterrieth before the Federal Court of Justice in these proceedings. As these proceedings are second and not third instance proceedings, also questions of fact and not only questions of law may be reconsidered by the court here and the court may take evidence.

IV. Preparation for Trial/Preliminary Measures 1. Measures to Preserve Evidence/Discovery 69

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Under German law, there is no such thing as pre-trial discovery. That means that there are very limited options for forcing the other party to produce evidence. However, one opportunity to get access to evidence to which actually only the defendant has access is by a claim for inspection according to section 140(c) of the Patent Act. According to this provision, a potential infringer must allow the claimant to inspect the allegedly infringing device and present relevant documents for inspection. This also covers software source code if the way the device works can only be assessed by examination of the software run be the device. Such claim for inspection can be asserted by any person who claims any rights based on the illegitimate use of the invention, in particular the patentee or a licensee.40 The claim for inspection requires that there is a reasonable likelihood of infringement, ie it is not necessary that infringement is certain and it is also not necessary that it is more likely than not, but there must be a significant chance that the defendant unlawfully uses the patented invention.41 This likelihood must be demonstrated by the claimant. There are different ways how to enforce such claim for inspection. One well-established practice is very fast and efficient for potential claimants: The claim for inspection based on a specific patent may be granted in preliminary injunction proceedings upon request of the patentee. By issuing a preliminary injunction, the court may order the potentially infringing defendant to allow a court-appointed expert and claimant’s attorneys to enter the defendant’s premises and inspect a device. The court may further order the defendant that specific documents must be presented to the expert.42 In the same decision, the court may order a formal procedure on the independent taking of evidence.43 In this procedure, evidence with respect to a certain factual question may be taken in a formal manner, before a respective main action has been filed. Such evidence would be expert evidence where the expert would inspect the device and/or the source code and render a written report summarising the relevant facts and concluding whether this constitutes infringement of the patent. Thus, the independent evidence procedure is ordered for taking evidence which can formally be used in later infringement proceedings, and the preliminary injunction is granted in order to make sure that the defendant must allow the expert to enter the premises and present the relevant items and documents.

Kühnen (n 7) recital 363. ibid recital 366. Busse-Keukenschrijver/Kaess, Patentgesetz (n 2) § 140c recitals 21 et seq. Kühnen (n 7) recital 423; Busse-Keukenschrijver/Kaess (n 2) § 140c recital 23.

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The expert is a court-appointed neutral expert. However, the court typically follows suggestions made by the claimant/applicant in his request. Such expert is obliged to keep all facts collected during the inspection confidential, including towards the claimant. If the claimant’s attorneys are allowed to be present during the inspection, they are also subject to this confidentiality requirement, ie they may not even report to their client with respect to the subject of the inspection. The expert will write a report which is submitted to the court. The defendant will then have the chance to assert trade secrets or other reasons why the report should not be released to the claimant. The court will then decide whether passages of the report need to be redacted and/or whether the report may be released.44 Once it is released, the attorneys are released from their confidentiality obligation and may report to their clients and also make the report available to them. The expert report can then be used as formal evidence in later infringement proceedings. Should the defendant not comply with the inspection order and, for example, not allow the expert to enter his premises and/or not present the ordered documents, the procedural rules of frustration of evidence apply: This basically means that in later infringement proceedings, the court may deem the claimant’s factual allegations to be true. However, this may only be considered in the event that, despite a judicial search warrant, the inspection is obstructed.45 Inspection proceedings are typically quite fast. Section 140(c) of the Patent Act allows use of the preliminary injunction proceedings although the regular requirements for this (urgency, no anticipation of the main proceedings) are not met. If the court issues the preliminary injunction ex parte, the preliminary injunction can be obtained within a few days. Enforcement of such injunction is subject to the claimant/applicant and must be performed within 30 days after grant of the injunction. In theory, this can be done on the same day as the injunction is granted. If an expert is appointed who is willing and able to write the report quickly, the report can be submitted to the court within a few weeks. A subsequent procedure with respect to a release of the report may take some further weeks. Ideally, such proceedings can be concluded within three months. If the subject matter of the expert report is complex and if the device cannot be inspected directly but must be produced/provided by the defendant, this may cause some delay. Should the defendant not cooperate as required and not produce the source code as ordered, measures of compliance such as fines and detention may be applied. If this is not successful, the principles of frustration of evidence apply. In sum, inspection proceedings may be a useful way to get hold of required source code.

2. Preliminary Injunctions 78

44 45 46

In cases where urgent relief is required, the patentee may file a request for a preliminary injunction (‘PI’) normally to request injunctive relief, while a claim for destruction cannot be granted in PI proceedings.46

Busse-Keukenschrijver/Kaess (n 2) § 140c recitals 30 et seq. Schulte-Rinken/Kühnen, Patentgesetz mit EPÜ 9th edn (2014) § 140c recital 66. Busse-Kaess, Patentgesetz (n 2) § 140a recital 25, in some cases however sequestration is admissible.

126 79

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Christian Osterrieth As a PI also severely impairs the rights of the alleged infringer if there is in fact no infringement, the requirements for rendering a PI are rather strict. Infringement and validity of the patent must be obvious, ie the likelihood that the PI decision could turn out to be wrong because the main proceedings reveal that the patent is not infringed or because validity proceedings reveal that the patent is not valid, must be very low.47 Whether these requirements are met is subject to the court’s discretion. However, as a general rule, this requires a clear infringement—though not necessarily a simple technology—and a confirmation of the patent’s validity beyond the mere act of granting the patent. This is typically the case once the patent has successfully survived opposition or nullity proceedings and has thereby proven to be solid, even if such decisions are subject to appeal or new validity attacks could be launched.48 Apart from the said confidence in the existence of the patentee’s claim, the grant of a PI requires urgency. This is not the case if the patentee could have filed his request for grant of the PI much earlier than he did. The typical threshold applied by most courts is approximately four weeks after the patentee has become aware of all relevant circumstances of the case, in particular of the allegedly infringing product and infringing acts with regard thereto.49 However, even if a first four-week period has passed, changes of the circumstances may re-establish urgency. Such changes may be, for example, infringing acts of a special quality, in particular presentations of infringing products at trade fairs and similar exhibitions, (re-)confirmation of the patent’s validity in validity proceedings, or the introduction of new infringing products by the alleged infringer. PI proceedings can be conducted ex parte or inter partes. If the requirements for granting a PI are clearly fulfilled (literal patent infringement and sufficient evidence, validity confirmed by opposition or invalidity proceedings, urgency) and the need for urgent relief is severe, the court may grant the PI without giving the defendant the chance to be heard, ie ex parte. In that case, the PI can be granted within days or in very urgent cases even hours. However, generally, the court will not grant the PI without hearing the defendant. This applies particularly if the defendant has not been informed about the accusation of infringement before by a warning letter. The scheduling of the oral proceedings is at the discretion of the court. Generally, it will take a few weeks.50 A possible protective defence against PIs is to file a so-called protective letter (Schutzschrift). A party who wants to prevent an adverse PI may deposit a protective letter at the court explaining the factual and legal situation from its point of view and why it is of the opinion that a PI must not be granted or at least not ex parte. It is important to know that the protective letter will only be considered by the court where it has been deposited. As in patent matters often all German courts are competent (see above section II.1) and therefore a possible forum for an application for a PI, one should carefully consider where to file protective letters. When important fairs take place, the courts are normally well prepared and very cooperative. They establish on-call duties, sometimes even on site, so that in urgent cases

Kühnen (n 7) recital 2029. ibid recitals 2029 and 2037. 49 ibid recitals 2095 et seq; Appeal Court Düsseldorf, 6 March 1980, Mitt 1980, 117; Appeal Court Munich, 24 February 2000, Mitt 2001, 85, 89. 50 ibid recital 2131. 48

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86 87

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PIs can be obtained within a very short time. PIs can be served at the fair stall itself so that the defendant must stop the infringing action, ie exhibiting the infringing products or the distribution of infringing advertisement. The decision to grant or refuse a PI is subject to appeal, regardless of whether the defendant was heard or not. If a PI is granted, the patentee is required to enforce it within 30 days by formally serving it on the defendant and posting a security if required by the court’s decision. If the PI is not enforced within 30 days, it becomes ineffective. Once enforced, the PI remains in force until either lifted on appeal or until a regular first instance judgment is obtained.

3. Warning Letters 89 90

91

In many fields of IP law, warning letters are a common way to request infringers to stop infringement. In patent cases, that is also possible but less common. In general, the main purpose of a warning letter is to avoid negative consequences with regard to the costs of potential court proceedings: If the defendant was not given warning in advance and/or has in no other way provoked litigation, and immediately acknowledges a claim brought forward in an action, the claimant bears all costs of the court proceedings despite the action being entirely successful. This result can be avoided if the alleged infringer is given warning in advance, asked to stop infringement and consents to cease and desist upon payment of a penalty in case of violation.51 However, the use of warning letters has disadvantages, in particular that giving the infringer notice of a potential infringement action to be launched in the future may give him time to file a torpedo action and thereby delay the case for a significant period of time (see above). Further, the infringer will have more time to prepare and file an opposition or nullity action against the patent. Such advantage in timing may jeopardise the advantages of bifurcation and give the infringer the chance to obtain a first instance decision on validity before the infringement decision (depending on the particular timeline of the proceedings concerned).52

V. The Trial in Ordinary Proceedings 92

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The course of infringement proceedings has been explained above for the three main courts where patent infringement is litigated: Düsseldorf, Mannheim and Munich. Nonetheless, one issue should be added that bears particular importance in patent matters: expert evidence. The courts expect the parties to prepare and present the facts of the case, in particular the technical issues, in a way that allows the court to decide the case based on its own technical knowledge. Only if that is not possible—in approximately 15–20 per cent of the cases—will the court take evidence by appointing an expert. Even though the judges are not technically trained, they are experienced enough even for technically ibid recitals 724 et seq. Haedicke/Timmann/Zigann, Handbuch des Patentrechts 1st edn (2012) § 11 recital 60.

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Christian Osterrieth complex cases. Hence, they are normally in a position to understand the subject matter involved and at least feel no need for external expertise. However, if an expert is appointed, the case will be easily delayed by one to two years, or even more. This is because, first of all, both parties have to agree upon an expert (normally three to six months is required) and, secondly, the expert is usually a busy university professor who needs time, quite frequently more than one year, to respond to the questions. Finally, when the court receives the expert reports, new oral hearings on the merits are scheduled, usually another six to eight months after the report has been delivered. This provides a further incentive in particular for the claimant to make sure that the facts are presented in a conclusive, well-organised and understandable way.

VI. Types of Infringement 1. In General 95

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The German Patent Act recognises two types of infringement: direct infringement according to section 9 of the German Patent Act and contributory infringement according to section 10 of the German Patent Act. According to section 9, sentence 2, no 1 of the German Patent Act a third party must not, without the consent of the patentee, make, offer, put on the market or use an infringing product nor import or possess such a product for such purposes. A product is made according to section 9, sentence 2, no 1 of the German Patent Act if a new embodiment showing all features of the patented invention is manufactured so that the manufacturer affects the patentee’s monopoly. In this respect, one has to differentiate between repair or modification of a given embodiment, and manufacture of a new one.53 The prohibition of ‘offering’ a product according to the patent is quite strict and includes all actions conducted domestically which give an objective observer the impression that the respective product can be purchased. It is not required that the product itself is already brought into the country or is even existent. It is also irrelevant whether the offering party itself produces the product or whether it is purchased by a third party. It is also an infringement if only the offer, but not the envisaged sale takes place during the life span of the patent.54 Putting a product on the market requires that the embodiment of the patented invention is transferred to a third party so that now this third party may do with the product as it pleases, ie can use or resell the product.55 However, a transfer of ownership is not necessary. Intentionally putting a product on the market refers to and includes all acts of commercial marketing. In addition, even the mere possession or import are infringing if they serve the purpose of conducting one of the above-mentioned infringing actions according to section 9, sentence 2, no 1 of the German Patent Act. cf Kühnen (n 7) 190 et seq. ibid recitals 195 et seq. ibid recital 219.

Patent Enforcement in Germany 129 101

With regard to process claims (see Patent Act, s 9, sentence 2, no 1) it is forbidden to use the patented process without the consent of the patentee. If a third party knows or it is obvious from the circumstances that the use of the process is prohibited, it must not offer this process for use in Germany. Pursuant to section 9, sentence 2, no 3 of the German Patent Act it is also prohibited to offer, to put on the market, to use or to import or possess for such purposes a product produced directly by a patented process.

2. Claim Interpretation 102 103

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For claim interpretation, German law in section 14 of the Patent Act follows Article 69 of the EPC. The wording of the claims must not be interpreted from the view of a linguist. Decisive is rather the view of a person skilled in the art so that one has to consider the common professional knowledge in the specific technical field as well as the knowledge, experience and skills of an average person working in this field.56 However, this fictive person skilled in the art is not necessarily one person but could be a (fictive) team of specialists that would normally work on the technical problem solved by the patented invention.57 On this basis it has to be determined what is disclosed by the claims. What is disclosed by the description and the drawings has to be considered as far as it is reflected somehow in the claims and serves for clarifying the meaning of the claims’ wording. Technical terms in the claims have to be interpreted as the person skilled in the art would understand them taking into account the whole content of the patent and the objectively disclosed technical solution. This even applies if the meaning so identified is different from the current language. The patent is its own dictionary with regard to the terms of the claims.58 In case of contradictions between the claims and the description, the claims are decisive so that parts of the description which are not reflected by the claims are of no relevance for the scope of protection.59 In principle, the prosecution history estoppel is not applied in German patent law. This means that statements of the parties during the granting procedure have no relevance for the interpretation of the granted patent.60 However, if it is not certain whether there is a contradiction between the wording of the claims and the specification of the patent, this uncertainty may be solved by referring to the history of the granting procedure. If the claims have been amended during the procedure so as to exclude a working example, this can be decisive for the interpretation.61

56 Federal Court of Justice (BGH), 7 September 2004, GRUR 2004, 1023, 1025—Bodenseitige Vereinzelungsvorrichtung. 57 Federal Court of Justice (BGH), 6 March 2012, GRUR 2012, 482, 484—Pfeffersäckchen. 58 Federal Court of Justice (BGH), 2 March 1999, GRUR 1999, 909, 912—Spannschraube. 59 Federal Court of Justice (BGH), 10 May 2011, GRUR 2011, 701, 703 42 IIC 851 (2011)— Okklusionsvorrichtung; Osterrieth, Patentrecht, 5th edn (2015) recital 924. 60 Federal Court of Justice (BGH), 24 September 1991, GRUR 1992, 40—Beheizbarer Atemluftschlauch. 61 Meier-Beck, ‘Die Rechtsprechung des Bundesgerichtshof zum Patent- und Gebrauchsmusterrecht im Jahr 2011’ (2012) GRUR 1177, 1181.

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The interpretation of the claims has to be carried out by the court, not an expert. The court may only rely on expert opinions insofar as the understanding of the person skilled in the art has to be the basis of interpretation. Therefore, the judge may ask the expert, for example, how a skilled person would understand the specific terms or what was included in the state of the art at the date of priority.62

3. Literal Infringement 108

German law distinguishes between literal infringement and infringement by equivalent means. There is only a literal infringement if each single technical feature of the patent claim is realised, or if the attacked embodiment uses solutions which the person skilled in the art automatically and without thinking identifies as a possible replacement of a feature according to the patent.63

4. Equivalent Infringement 109

According to the Federal Court of Justice, an equivalent infringement requires the fulfilment of a test that has three steps: 1. The alternative solution of the infringer must have an identical technical effect as the solution according to the patent. 2. Using the common general knowledge available at the time of the patent’s priority, the modifications of the equivalent solution must have been perceptible, ie the person skilled in the art would have realised the modifications as a possible alternative. 3. Only solutions which the person skilled in the art takes into consideration on the basis of the teaching of the patent and which are technically equivalent can be equivalents. The equivalent solution has to apply the solution of the patented invention.64

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However, the German courts handle the principle of equivalents quite restrictively. For example, if the specification discloses a broader teaching than the claims of a patent, the embodiments only disclosed in the specification cannot be equivalent embodiments, as the person skilled in the art will understand that the latter are not of equivalent value.65 Furthermore, the principle of equivalents does not have the consequence that alternative solutions which do not embody all features mentioned in the claims could be equivalents.66 If the applicant has included a feature in the claim a person skilled in the art will understand that this feature is important for the teaching of the patent. However, there can still be an equivalent infringement if several features according to the claims are realised only by one component within the attacked embodiment.

Federal Court of Justice (BGH), 11 October 2005, GRUR 2006, 131—Seitenspiegel. Federal Court of Justice (BGH), 17 January 1995, GRUR 1995, 330, 332—Elektrische Steckverbindung. Federal Court of Justice (BGH), 12 March 2002, GRUR 2002, 511—Kunststroffrohrteil. Okklusionsvorrichtung (n 59) 705. Federal Court of Justice (BGH), 31 May 2007, GRUR 2007, 1059, 1063—Zerfallszeitmessgerät.

Patent Enforcement in Germany 131

5. Contributory Infringement 113

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Contributory infringement under section 10(1) of the German Patent Act protects against the offer or supply of means relating to an essential element of the patented invention. It does not require that this offer or supply actually results in a direct infringement.67 The criterion of a ‘means’ has to be constructed broadly. The criterion of ‘relating to an essential element of said invention’, however, has to be construed narrowly: Only those means come into question that technically relate to an essential element of the invention which is part of the technical solution. According to the jurisprudence it is sufficient that the means interacts with an essential element of the invention when realising the patented invention.68 Generally, a device mentioned in the claims is considered to be essential for the invention.69 However, this does not apply with regard to means that do not contribute at all to the realisation of the invention, are of purely marginal importance or can be regarded as a replacement part.70 Otherwise the patentee could randomly extend the protection of the patent by including a multitude of features not necessary for the invention. A contributory infringement requires a ‘double domestic nexus’. Not only the offer or the supply by the contributory infringer but also the intended use has to take place in Germany. However, from this does not follow that any supply to a foreign country is always non-infringing. If means are supplied from Germany to a foreign country where these are used for the production of an infringing embodiment which is meant to be re-imported into Germany, the means is supplied for an infringing use in Germany and section 10 of the German Patent Act applies.71 The subjective element of section 10 of the German Patent Act requires that the provider or the supplier of the means knows or that it is obvious that the means are on the one hand suitable and on the other hand intended for use in the patented invention. According to consistent case law, the intention to use the means for the invention has to be determined with regard to the intention of the purchaser of the means. The supplier has to have positive knowledge of the intention of the purchase, while the patentee has to prove both, the intention of the purchaser and the knowledge of the supplier, which is often very difficult. Therefore, the requirements of section 10(1) of the German Patent Act are also met if it is obvious from the circumstances that the purchaser has the intention to use the means for the invention. This is the case if the intention of the purchaser is sufficiently clear to the supplier. For proving the intention of the purchaser and the knowledge of the supplier, the patentee can rely on common sense.72 This applies in particular if the supplier’s leaflets or manuals

Beheizbarer Atemluftschlauch (n 60) 42. Federal Court of Justice (BGH), 4 May 2004, GRUR 2004, 758, 760 et seq—Flügelradzähler. Federal Court of Justice (BGH), 27 February 2007, GRUR 2007, 773, 775 = 39 IIC 106 (2008)— Rohrschweißverfahren. 70 Federal Court of Justice (BGH), 27 February 2007, GRUR 2007, 769, 771—Pipettensystem; Federal Supreme Court (BGH), 17 July 2012, 44 IIC 351 (2013)—‘Palettenbehälter II’. 71 Funkuhr II (n 31) 315. 72 Federal Court of Justice (BGH), 10 October 2000, GRUR 2001, 228, 231—Luftheizgerät. 68 69

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Christian Osterrieth mention the infringing use of the supplied means,73 or if the offered or supplied means can exclusively be used for the patented invention.74 It has to be considered that in most cases the offered or supplied means can also be used in a non-infringing way. Therefore, the patentee does not have a claim for injunction in total but can only demand a limited injunction, for example that the provider or supplier takes the necessary measures to prevent an infringing use of the means through his purchasers. Generally, the least severe among equally effective measures has to be taken. It is not sufficient that the supplier informs the purchaser that a certain use of the supplied means will infringe the patent, as it cannot be guaranteed that the competent person will take notice. The mere information therefore cannot replace, but only complement other measures.75 Such information can even be counterproductive, as the purchaser is informed of the possibility of the use according to the patent.76 However, cases in which the patentee can demand the supplier to force the purchasers to conclude an agreement about a contractual penalty are very rare as this may have the same effect as an injunction in total.77 If it is possible and does not restrict the purchaser’s ability to use the product outside the patent, the supplied means may have to be redesigned so that it is no longer suitable for the use of the invention.78

VII. Remedies 1. Injunctive Relief 118

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According to section 139(1) of the German Patent Act, the patentee can claim injunctive relief in case of an infringement pursuant to sections 9 to 13 of the German Patent Act. In contrast to other jurisdictions, in Germany injunctive relief is not a discretionary remedy, but is generally granted as of law. It is irrelevant whether the infringer has acted with fault, ie intent or negligence. Also, there is no proportionality test so that even in the case of claimants that do not use the patented invention themselves, but have only financial interests (so-called ‘patent trolls’ or non-producing entities), the injunction is granted. Furthermore, it is not even necessary that the defendant has already infringed the patent; it suffices that the infringement is imminent (so-called ‘danger of first infringement’). In most cases, however, the patentee will not sue a third party before there is an actual infringement. If an infringement has already occurred, it is presumed

Federal Court of Justice (BGH), 7 June 2005, GRUR 2005, 848, 853—Antriebsscheibenaufzug. Meier-Beck, ‘The Judicial Practice of the German Federal Supreme Court on Patent and Utility Model Law in 2007’ (2009) 40 IIC 434, 445. 75 Federal Court of Justice (BGH), 9 January 2007, GRUR 2007, 679—Haubenstretchautomat. 76 Meier-Beck (n 74) 445. 77 Haubenstretchautomat (n 75). 78 Meier-Beck (n 74) 446. This is problematic because in this case the supplier is effectively forced to stop doing what should be in the public domain. 74

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that there is a danger of repetition so that the patentee does not even need proof of further infringement. The wording of the injunction normally corresponds to the wording of the infringed patent claim and has to be interpreted based on the reasoning of the judgment. The situation is different with regard to an equivalent infringement where the wording of the injunction will only repeat the features literally infringed. The features that are only infringed by equivalent means have to refer to the characteristics of the attacked embodiment that justify the finding of an equivalent infringement.79 The injunction is granted for an unlimited period of time. However, as it is granted on the basis of a valid patent, it is inherently limited to the period for which the patent is still valid, ie until the protection period ends or the patent lapses for other reasons.80

2. Damages 123

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79 80 81 82 83 84

The claim for compensation of damages is based on section 139(2) of the German Patent Act. The patentee in the initial claim typically does not request payment of a particular amount of damages, as the said amount in most cases can only be assessed after the defendant has rendered an account of profits.81 However, there may also be actions for damages only, in particular if the patent has expired. Rendering account about past sales, offers and deliveries therefore is a claim that is usually asserted together with the request for injunctive relief and declaration of the defendant’s obligation to pay damages. It is supposed to provide the patentee with the information necessary for asking for a particular amount of damages at a later stage. The exact information on the amount of damages being claimed may be reserved until the accounts have been presented by the defendant. In a second step, the claimant may claim for a specific amount of damages (so-called ‘action by stages’). A damage claim requires that the infringer has acted with fault, ie intentionally or negligently,82 although this is presumed at least one month after the grant of the patent has been published. The claimant can choose between three methods of calculation: licence analogy, infringer’s profits and lost profits. In the course of the proceedings concerning the amount of the damages, the claimant can change the chosen method of calculation until the final decision of the court.83 Damages are compensatory in nature and not meant as a punishment or deterrent. According to the so-called ‘licence analogy’, the claimant can demand a reasonable licence fee from the infringer. Reasonable is a licence fee upon which reasonable parties would have agreed if they had known the development of the market and the extent of the use of the invention.84 This method facilitates the calculation of damages for the claimant who often does not use the invention himself and therefore Kühnen (n 7) recitals 1135 et seq. Federal Court of Justice (BGH), 29 July 2010, GRUR 2010, 996—Bordako. Kühnen (n 7) recital 1232. Federal Court of Justice (BGH), 26 January 1993, GRUR 1993, 460, 464—Wandabstreifer. Federal Court of Justice (BGH), 24 November 1981, GRUR 1982, 301, 302—Kunststoffhohlprofil II. Federal Court of Justice (BGH), 13 March 1962, GRUR 1962, 401, 404—Kreuzbodenventilsäcke III.

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Christian Osterrieth cannot claim his own damages. According to section 287(1) of the German Code of Civil Procedure, the court decides pursuant to its own estimate if the parties do not agree on this point. The starting point is usually a fee as normally paid for a nonexclusive licence in the respective business. The licence fee determined by the court can be slightly higher than the usual licence fee. Inter alia, the court can take into consideration that different from a licensee, the infringer has no contractual obligations and does not bear the risk of paying licence fees for an invalid patent.85 The calculation of damages with regard to the infringer’s profits is expressly mentioned in section 139(2)(ii) of the German Patent Act. It is based on the fiction that the claimant has lost profits in the amount of the profit which the infringer has made by using the patented invention. In accordance with section 287 of the German Code of Civil Procedure, the court has to assess the amount of the infringer’s profit obtained by the use of the patented invention. The causality has to be proven by the claimant. As far as the infringer’s profit is caused by other factors, the court has to consider this in favour of the infringer. The profit has to be calculated by deducting the infringer’s costs from his turnover. However, the overhead costs of the infringer can only be deducted if they are directly attributed to the infringing product.86 If the claimant decides to claim his own damages (loss of sales but for the infringement), he has to disclose his calculation of profits. Furthermore, the claimant has to prove the causality of the infringement for his loss of profits which in most cases is very difficult. In the case of contributory infringement, there is only a claim for damages if there are damages caused by a direct infringement.87 However, in order to compensate these damages the claimant can also demand the contributory infringer’s profit.88 If the infringed patent is subject to an exclusive licence, the patentee has a claim for damages if he economically benefits from the profit of the licensee. This is the case even if the patentee is the sole shareholder of the licensee. In this case, he has to claim that the infringer is put in the same position in which he would be without the infringement.89 Both the patentee and the licensee can claim their respective damages. Generally, both can choose between the three methods of calculation mentioned above. However, the infringer has to pay complete damage compensation only once. If the licensee and the patentee claim their damages separately, they have to show which proportion of the damages their losses make up.90 Therefore, it is much easier if they claim their damages together and divide the amount afterwards. Beside the claims pursuant to the German Patent Act, the general rules under civil law are still applicable. This especially applies with regard to the claim for unjust enrichment according to section 812(1) of the German Civil Code. As the benefits of use cannot be returned in nature, the user of the invention has to pay compensation

Kühnen (n 7), recitals 2628 et seq. Federal Court of Justice (BGH), 2 November 2000, GRUR 2001, 329, 330 et seq—Gemeinkostenanteil. 87 Antriebsscheibenaufzug (n 73) 854. 88 Haubenstretchautomat (n 75) 684; Benkard-Scharen, Patentgesetz, Gebrauchsmustergesetz 10th edn (2006) § 10 recital 25. 89 Federal Court of Justice (BGH), 5 April 2011, GRUR 2011, 711, 713—Cinch-Stecker. 90 Federal Court of Justice (BGH), 20 May 2008, GRUR 2008, 896, 900—Tintenpatrone. 86

Patent Enforcement in Germany 135 according to section 818(2) of the German Civil Code, which amounts to a reasonable licence fee.91

3. Compensation Claim for Published Patent Applications 134

From the date of the publication of the application, the applicant can claim compensation for the use of the invention (but cannot seek injunctive relief). Such compensation cannot amount to the actual damages or the user’s profit, but rather to a reasonable licence fee so that the licence analogy is applied.92

4. Claim for Destruction 135

According to section 140(a)(1) of the German Patent Act, the claimant can demand the infringer to destroy the infringing products. This claim applies with regard to infringing products which are in the possession or ownership of the infringer. It also applies with regard to materials and apparatuses in the ownership (in this context possession is not sufficient) of the infringer that served predominantly to make these products. The claim for destruction is precluded if it would be disproportionate in the case at issue. This is the case if either future infringement can be eliminated in another way or if it is disproportionate because of the interests of the infringer and the (possibly not identical) owner of the products.93

5. Claim for Recall 136

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Section 140(a)(3) of the German Patent Act gives the infringed party the right to request a recall of the infringing products against the infringer. The subject of the claim for recall is an embodiment which is infringing the patent or which is directly produced by a patented process and which has been put on the market during the term of the patent. The claim applies with regard to products within the distribution channels, but not with regard to products already abroad or in the hands of the private end user. The claim for recall requires only an unlawful infringement, while fault is not necessary. The legal consequence of a claim for recall is either the recall of the products or the definitive removal of the products from the distribution channels. Recall means the serious request towards the possessing third party to surrender the infringing product and not to distribute it henceforth. If this is not sufficient to eliminate further infringement, then to request the third party to return the infringing product to the infringer.94 The definitive removal of the products from the distribution channels can only be achieved if it is possible for the infringer to take the products back or initiate their destruction, if necessary against the intentions of the possessing third party.95

Federal Court of Justice (BGH), 18 February 1992, GRUR 1992, 599, 600—Teleskopzylinder. Federal Court of Justice (BGH), 11 April 1989, GRUR 1989, 411, 413—Offenend-Spinnmaschine. Kühnen (n 7) recital 1400. ibid recitals 1439 et seq; Schulte-Voß/Kühnen, Patentgesetz 9th edn (2014) § 140a recital 31. Kühnen (n 7) recitals 1446 et seq; Schulte-Voß/Kühnen, Patentgesetz (n 94) § 140a recital 34.

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The costs of the recall and the definitive removal from the distribution channels are borne by the infringer.96 The recall must not be disproportionate with regard to the parties’ legitimate interests.

6. Claim for Information and Rendering of Account 139

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142 143 144

96

Section 140(b) of the German Patent Act gives the infringed party a claim for information concerning the origin and the distribution channel of the used infringing products. The patentee shall thereby be in a position to sue further infringers regarding directly infringing products, products directly produced by a patented process and products relating to an essential element of the invention (contributory infringement). The defendant of the claim for information can be the infringer (German Patent Act, s 140(b)(1)) or a third party ( German Patent Act, s 140(b)(2)). However, the claim against a third party has further requirements: the infringement has to be obvious or the injured party must have filed a legal action against the infringer. Then, the claimant can demand information from any person that has had infringing products in its possession (no 1), made use of infringing services (no 2), provided services used for infringing acts (no 3), or participated according to the statement of one of the persons referred to in nos 1, 2 or 3, in the manufacture, production or distribution of the said products or the provision of the said services. The provision also applies to contributory infringers.97 The claim concerns information on the names and addresses of the manufacturers, suppliers and other previous possessors of the products or users of the services as well as the commercial customers and sales outlets, for which the said products were intended, and the quantities of products manufactured, delivered, received or ordered as well as the prices paid for the respective products or services. The infringer has to furnish the information at his own expense, a third party at the expense of the patentee. Giving false or incomplete information leads to a claim for damages against the obligated party who acts intentionally or with gross negligence. Besides the claim for information according to section 140(b) of the German Patent Act, the infringed person has the general claim for rendering of account pursuant to sections 242 and 259 of the German Civil Code as to produced amounts and the time of production, each supply with the supplied amount, the time of supply, the prices as well as names and addresses of the purchasers; each offer with the offered amounts, the time of the offer, the prices as well as the names and addresses of those who offered the products; the advertisement with the used medium, circulation figures, the time and area of distribution.98 If the claim is based on the infringer’s profit, the infringer also has to inform the claimant about his actual costs and his profits.99

Kühnen (n 7) recital 1450; Busse-Kaess (n 2) § 140a recital 34. Haubenstretchautomat (n 75) 684 et seq. 98 Kühnen (n 7) recitals 1367 et seq. 99 Federal Court of Justice (BGH), 11 April 1989, GRUR 1989, 411, 413—Offenend-Spinnenmaschine; Busse-Kaess (n 2) § 140b recital 62; Kühnen (n 7) recital 1372. 97

Patent Enforcement in Germany 137

7. Claim for Publication of Court Decision 145

The prevailing party of the infringement proceedings can, according to section 140(e) of the German Patent Act, demand that it may make the judgment public at the expense of the losing party if the prevailing party has a legitimate interest.

VIII. Defences 146

In the following, the most important defences against a claim for patent infringement shall be mentioned. As the defendant relies on the defences, he generally bears the burden of proof.

1. No Defence of Invalidity 147

148

149

Owing to the bifurcated system in Germany, invalidity cannot be invoked as a defence in ordinary infringement proceedings. Yet, likelihood of invalidity may be relied on to a certain extent in interim proceedings. Only with regard to equivalent infringement does the jurisdiction allow the defendant to rely on the argument that the allegedly infringing embodiment was known in the state of the art at the priority date, respectively that it was obvious from the state of the art at the priority date.100 This so-called ‘Formstein defence’ does not mean that the patent has been wrongly granted.101 It simply means that the allegedly infringing product is closer to the state of the art at the filing/priority date than to the patented teaching. For the same reason, the defendant cannot raise the ‘Formstein defence’ against literal infringement.

2. Prohibition of Double Protection 150

If the patent in suit is a German patent, the defendant may be able to argue that the patent in suit has lost its effect because the invention is also protected by a European Patent with the same priority (Law on International Patent, art II, s 8). The loss of effect does not occur before the opposition term of the European Patent has expired or opposition proceedings have been completed. Furthermore, it only occurs to the extent that the invention protected by the European Patent is the same as the one protected by the German patent and the European patent provides an equal level of protection.102

3. Non-Infringement 151

100

The defendant can deny the infringement of the patent in suit due to the fact that the allegedly infringing embodiment falls outside the scope of the patent. In such case, the defendant has to substantiate this statement by a careful claim analysis or by

Federal Court of Justice (BGH), 29 April 1986, GRUR 1986, 803, 805 et seq—Formstein. Federal Court of Justice (BGH), 4 February 1997, GRUR 1997, 454, 457—Kabeldurchführung; Federal Court of Justice (BGH), 17 February 1999, GRUR 1999, 914, 916—Kontaktfederblock. 102 Regional Court Düsseldorf, 19 December 2002, InstGE 3, 8—Cholesterin-Test; Kühnen (n 7) recital 1591. 101

138

152

153

Christian Osterrieth truthfully explaining all necessary facts. His statement has to be the more substantiated the more substantiated the pleading of the claimant is. Pleading ignorance pursuant to section 138(4) of the German Patent Act with regard to the characteristics of the attacked embodiment is not possible except if the relevant facts do not concern the defendant’s behaviour and are not subject to his perception. Furthermore, the defendant has obligations of investigation with regard to information available within the scope of his operations and responsibility. He has to consult those persons that have acted under his guidance, supervision or responsibility.103 This does not apply to carriers or warehouse keepers who have no possibility of claiming information from their customers. A dealer, however, cannot rely on ignorance. Even if he himself does not know how the attacked embodiments are composed, he can always order an expert opinion unless this is out of his financial reach.104 For a process patent, the defendant can rely on the fact that the product obtained by the patented method is not new, that his product is not equal to the one obtained by the patented method or that his product may be equal but nevertheless not obtained by the patented method. For the ‘Formstein’ defence against equivalent infringement, see above.

4. Co-Ownership 154

The right of co-owners to use the patent is governed by section 743(2) of the German Federal Code.105 According to this rule, each co-owner has the right to use the patent as long as he does not impair the use of the other co-owners. This applies as long as the co-owners have not by way of an agreement or a majority vote regulated the use and the claim for such a majority vote has not been asserted according to section 745(1) and (2) German Federal Code.106 Within this framework, a co-owner who is sued by another co-owner can rely on his right to use the patent. There is no claim for damages, either.107

5. Prior User Rights 155

156

103

According to section 12 of the German Patent Act, a ‘patent shall have no effect against a person who, at the time of filing the application, had already begun to use the invention in Germany, or had made the necessary arrangements to do so’. Such prior use gives the entitled person the right to continue the use of the invention for the needs of his own business in his own workshops or the workshops of others. The right of prior use is connected with the business so that it can only be inherited or transferred together with the business. Prerequisites for the right of prior use are, on the one hand, the possession of the complete invention108 and, on the other hand, the use of the invention or at least

MP3-Player-Import (n 29) 1143. Kühnen (n 7) recital 1602. 105 Federal Court of Justice (BGH), 22 March 2005, GRUR 2005, 663—gummielastische Masse II. 106 ibid. 107 With regard to claims for compensation between co-owners see Appeal Court Düsseldorf, 7 August 2014, GRUR 2014, 1190—Sektionaltorantrieb. 108 Federal Court of Justice (BGH), 30 April 1964, GRUR 1964, 496—Formsand II. 104

Patent Enforcement in Germany 139

157

158

159

preparations for use. The decisive point in time is the priority date of the patent. Possession of the complete invention requires that the user has realised the inventive idea, ie the technical problem and its solution. Only then is the invention objectively finalised.109 Where possession of the invention has been obtained in the context of a contract, the contract sets out the rights of the parties with regard to the invention.110 Preparations for use require that they are intended for the use of the invention and reliably show the intention to start use immediately.111 According to the prevailing opinion, the right of prior use requires that the prior use has been of a commercial character.112 The use and the arrangements have to take place in Germany. An indirect prior use gives a right to use the invention indirectly, so that offering or supplying according to section 10 of the German Patent Act do not represent a contributory infringement. However, if the purchaser himself directly infringes the patent, he does not participate in the right of prior use of the supplier.113 The scope of the right to use the invention is limited to the scope of the prior use; further developments beyond the prior use which interfere with the invention are not included.114 Furthermore, a former trader may not start producing embodiments according to the invention.115

6. Standard Patents 160

161

162

109

The patentee can be obliged to give the alleged infringer of the patent a compulsory licence under anti-trust law. In this case, in the infringement proceedings the alleged infringer can raise the objection that it is an abuse of a dominant market position if the patentee refuses to grant the licence under non-interfering and nondiscriminatory conditions.116 Generally, the defendant has to make an acceptable licence offer before he can rely on anti-trust law.117 An exception may apply with regard to standard essential patents in relation to which the patentee has made an undertaking to grant licences on FRAND terms and the defendant is a willing licensee.118 Where invoked successfully, the patentee has no claim for injunctive relief, while the claim for damages is limited to a reasonable licence fee.119 When compared to other jurisdictions, the conditions for a FRAND defence seem to be rather strict in Germany. Neither have German courts questioned the claim for injunctive relief in cases where suits have been filed by patent trolls.

Federal Court of Justice (BGH), 21 June 1960, GRUR 1960, 546, 548—Bierhahn. Federal Court of Justice (BGH), 10 September 2009, GRUR 2010, 47, 49—Füllstoff. 111 Federal Court of Justice (BGH), 21 May 1963, NJW 1963, 2370, 2371—Taxilan. 112 Benkard-Rogge, Patentgesetz, Gebrauchsmustergesetz 10th edn (2006) § 12 recital 10; different opinion: Osterrieth, Patentrecht (n 59) recital 646; however, effectively there is no difference between both opinions as private use is always privileged according to sec 11 no 11 of the German Patent Act. 113 Kraßer, Patentrecht (n 4) § 34 II (c) 2. 114 Federal Court of Justice (BGH), 13 November 2001, GRUR 2002, 231, 234—Biegevorrichtung. 115 Osterrieth (n 59) recital 648. 116 Federal Court of Justice (BGH), 6 May 2009, GRUR 2009, 694, 695 et seq—Orange-Book-Standard. 117 Regional Court Düsseldorf, 8 October 2008, InstGE 10, 129—Druckerpatrone II. 118 See Opinion of Advocate General Wathelet of 20 November 2014, case C-170/13, recital 85—Huawei Technologies Co Ltd /ZTE Corp, ZTE Deutschland GmbH. 119 Kühnen (n 7) recitals 1675 et seq. 110

140

Christian Osterrieth

7. Exhaustion 163

According to the principle of exhaustion, embodiments of the invention which have been put on the German or EU120 market by the patentee or with the consent of the patentee no longer fall within the monopoly of the patentee. Consequently, the patentee cannot control the further channels of distribution and the use of these embodiments does not represent an infringement. Exhaustion cannot be avoided by contract. The distinction between repairing an (exhausted) product and reconstructing it depends on the specific characteristics, effects and advantages of the invention, and whether the identity of the embodiment has been preserved.121

IX. Enforcement and ‘Wrongful Enforcement’ 1. Preliminary Enforcement 164

165

166

167

A German patent infringement action is typically directed to a cease and desist order, the defendant’s obligation to render account and to a declaratory decision that the defendant has to pay damages. On the basis of the defendant’s account, the claimant can assess damages and—if no settlement takes place—initiate separate proceedings in this regard at a later stage. A first instance judgment is typically preliminarily enforceable with respect to a requested injunction. That means the infringer must cease and desist from manufacturing, importing, offering and selling all infringing goods within Germany. Such injunction can be enforced by administrative fines of up to €250,000 per violation of the injunction and/or by arresting the defendant’s board members. Preliminary enforceability means that the injunction may be enforced even before and during appeal. Only if the Appellate Court revokes the first instance judgment at the end of appellate proceedings and finds lack of infringement, the injunction becomes invalid. Preliminary enforcement is a very effective option for claimants, but it bears a cost risk: he who preliminarily enforces a first instance judgment is liable for damages to the opposing party if the judgment should be revoked on appeal (German Civil Code of Procedure, s 717(2)). However, this does not apply if the claimant has made preparations for the enforcement, but declared that he would not actually enforce his rights.122 In order to make sure that damages can be paid to the defendant in case of preliminary enforcement and later revocation of the first instance judgment, the claimant is required to deposit a sufficient security before he can preliminarily enforce the judgment. The amount of security depends on the expected damages suffered by the defendant if the judgment is enforced and later reversed. The security amount necessary is usually similar to the value in dispute (‘VID’). If the enforcement of the judgment could cause harm that cannot be compensated by payment of damages, the court may allow the defendant to avert enforcement by depositing a security himself.

120 Federal Court of Justice (BGH), 3 June 1976, GRUR 1976, 579, 582—Tylosin; Federal Court of Justice (BGH), 14 December 1999, GRUR 2000, 299—Karate. 121 Federal Court of Justice (BGH), 3 May 2006, GRUR 2006, 837, 838—Laufkranz; Pipettensystem (n 70) 772. 122 Federal Court of Justice (BGH), 16 December 2010, GRUR 2011, 364—Steroidbeladene Körner.

Patent Enforcement in Germany 141

2. Subsequent Invalidity of the Patent 168

If the patent in suit becomes invalid after the infringement proceedings have already been ended in favour of the patentee, the defendant can claim restitution with regard to his damages caused by the enforcement of the judgment or his costs of litigation. According to the jurisprudence, the basis for such a claim is section 580(6) of the German Civil Code of Procedure.123 This applies with regard to the case that the patent becomes invalid ex tunc as well as to the case that it becomes invalid ex nunc, in each case for the respective period of time.124 However, this only applies if the decision declaring the patent invalid is final.125 Before the invalidity decision is final, an action based on section 580(6) of the German Civil Code of Procedure is not admissible, not even in the case that a final invalidity decision cannot be expected before the period for bringing the action has expired.126 The claim imposes a nofault liability on the patentee. The necessity of such a claim is the consequence of the German bifurcated patent system that bears the risk of materially incorrect infringement decisions.

3. Unjustified Warning Letters 169

If the patentee sends an unjustified warning letter falsely accusing another party of a patent infringement, such other party can claim for injunction and for damages if the patentee is liable, ie has not carefully reviewed the question of infringement and validity. If the warning letter is directed to purchasers of allegedly infringing products, also the supplier of these products can have a claim for injunction and for damages.127

X. Costs 1. Value of a Court Case 170

123

When filing an action, the claimant must give an estimate as to the VID as of the date of filing (see Code of Civil Procedure, s 4). The VID depends on the financial interest involved in the case. In patent law cases, this is mainly the sum of the financial interest in the cease and desist order and the damages caused by the infringing acts. Further (minor) contributions to the VID are made by additional claims for rendering account in order to assess damages, as well as for recall and destruction of infringing devices. As the amount of damages caused by infringement can typically not be assessed before rendering of account by the defendant, the claimant must simply provide a reasonable estimate of the damages suffered in order to specify the VID.

Appeal Court Düsseldorf, 11 May 2006, case 2 U 86/05—Restitutionsklage II. Bordako (n 80) 998. 125 Appeal Court Düsseldorf, 9 August 2007, case 2 U 49/06—Spundfass II; Appeal Court Düsseldorf, 11 November 2010, GRUR-RR 2011, 122—Tintenpatronen. 126 Appeal Court Düsseldorf, 11 November 2010, GRUR-RR 2011, 122—Tintenpatronen (n 126). 127 Schulte-Voß/Kühnen (n 94) § 139, recitals 209 et seq. 124

142

Christian Osterrieth

171

Such value is the basis for the calculation of the court fees. The claimant must advance such fees, otherwise the court will not serve the statement of claim on the defendant. The VID is further the basis for the calculation of the minimum attorneys’ and patent attorneys’ fees. Finally, the VID is typically the relevant basis for the amount of security that must be provided if the claimant wants to provisionally enforce the judgment. However, the estimate made by the claimant is merely a provisional one. The final figure will be fixed by the court at the end of the proceedings. A standard figure for average patent infringement cases is a VID of €1–5 million. The statutory maximum VID is €100 million in total and €30 million per defendant. The VID has significant impact on the costs of litigation. The VID before the Federal Patent Court is determined by objective value of the patent, ie the public interest in the invalidation of the patent. This includes the common value of the patent, ie the returns that can be expected until the expiration of the patent, and the claims for damages in the past insofar as the patentee enforces them.128

172

2. Statutory Minimum Fees and Reimbursement of Costs 173

174

175

The minimum costs of litigation in Germany are statutorily regulated. This applies to court fees as well as to attorneys’ and patent attorneys’ fees. Attorneys and patent attorneys are not allowed to charge less than the statutory minimum fees. Thus, fees contractually agreed upon (eg on an hourly basis) may be higher, but not lower than the statutory fees. In contrast to other jurisdictions, the party who loses the lawsuit bears the total costs including attorneys’ and patent attorneys’ fees of the prevailing party, but only the amount of statutory minimum fees. Higher contractual attorneys’ fees are not subject to compensation. Thus, the party who entirely loses the lawsuit bears the court fees, the fees for its own attorneys and patent attorneys and the statutory minimum fees of defendant’s attorney and patent attorney. The following figures can therefore be understood as a preliminary estimate of the cost risks induced by litigation (figures rounded to full thousand EUR, VAT not included):

Table 1: First Instance Infringement Proceedings VID (€)

Court

Attorney claimant

Patent attorney claimant

Attorney defendant

Patent attorney defendant

Total

1 million

16k

12k

12k

12k

12k

64k

5 million

59k

42k

42k

42k

42k

227k

10 million

113k

79.5k

79.5k

79.5k

79.5k

431k

30 million

329k

229k

229k

229k

229k

1245k

128

ibid § 2 ‘Patent Costs Law’, recitals 34 et seq.

Patent Enforcement in Germany 143 Table 2: Appellate Infringement Proceedings VID (€)

Court

1 million

21k

13.5k

13.5k

13.5k

13.5k

75k

5 million

79k

47k

47k

47k

47k

267k

10 million

151k

89k

89k

89k

89k

507k

30 million

439k

257k

257k

257k

257k

1467k

Attorney claimant

Patent attorney claimant

Attorney defendant

Patent attorney defendant

Total

Table 3: Appeal on Points of Law in Infringement Proceedings (Federal Court of Justice, Karlsruhe) VID (€)

Court

Attorney claimant

Patent attorney claimant

1 million

26.5k

18k

not admitted

18k

not admitted

62.5k

5 million

98.5k

63.5k

not admitted

63.5k

not admitted

225.5k

10 million

157k

142,5k

not admitted

142,5k

not admitted

442k

30 million

548.5k

348.5k

not admitted

348.5k

not admitted

1245.5k

Attorney defendant

Patent attorney defendant

Total

Table 4: First Instance Nullity Proceedings (Federal Patent Court, Munich) VID (€) 1 million

Court 24k

Attorney claimant

Patent attorney claimant

12k

12k

Attorney defendant 12k

Patent attorney defendant 12k

Total 72k

5 million

89k

42k

42k

42k

42k

257k

10 million

170k

79.5k

79.5k

79.5k

79.5k

488k

30 million

494k

229k

229k

229k

229k

1410k

Table 5: Appellate Nullity Proceedings (Federal Court of Justice, Karlsruhe) VID (€)

Court

Attorney claimant

Patent attorney claimant

Attorney defendant

Patent attorney defendant

Total

1 million

32k

13.5k

13.5k

13.5k

13.5k

86k

5 million

118.5k

47k

47k

47k

47k

306.5k

10 million

226.5k

89k

89k

89k

89k

582.5k

30 million

658.5k

257k

257k

257k

257k

1686.5k

5 Patent Enforcement in France ISABELLE ROMET, AMANDINE MÉTIER AND DORA TALVARD

A. Brief Outline of the Patent System I. Legislative Framework 1

France is a civil law country with a long tradition of patent law. The first Act relating to patents dates back to 1791,1 replaced successively by the acts of 1844,2 19683 and 1978.4 The latter was slightly amended in 1990.5 The Intellectual Property Code (IPC), combining the provisions relating to all subjects of IP law, including patent law, was enacted in 1992, with the provisions concerning patent law codified under Articles L. 611-1 to L. 623-35 for statutory provisions and R. 611-1 to D. 631-2 for implementation decrees. The provisions relating to patents have been amended several times in the past few years, namely in order to make national law comply with international treaties6 and to implement European Union directives.7 In particular, the Act of 29 October 20078 implementing Directive (EC) No 2004/489 introduced important changes in national law. French patent law was modified again very recently by an Act of 11 March 2014.10 2 France comes in second position among all European countries, right after Germany, regarding the number of decisions handed down in patent matters, with an average of 140 decisions on the merits each year (approximately 80 in first instance, 40 on appeal and 20 on recourse before the ‘Cour de cassation’, the highest civil court). 3 French case law on patent matters is thus abundant and covers all issues, including damages, contrary to other countries where parties often settle at an earlier stage of the proceedings. 1

Act of 7 January 1791. Act of 5 July 1844 on patent law. 3 Act No 68–1 of 2 January 1968 aimed at adding value to the inventive step and modifying the patent regime. 4 Act No 78–742 of 13 July 1978 modifying and supplementing Act No 68–1 of 2 January 1968. 5 Act No 90–1052 of 26 November 1990 relating to industrial property. 6 eg Act No 96–1106 of 18 December 1996 harmonised French law with the provisions of the Agreement on Trade–Related Aspects of Intellectual Property Rights (‘TRIPS Agreement’), corresponding to annex 1C of the Marrakesh Agreement Establishing the World Trade Organization of 15 April 1994. 7 eg Act No 2004–800 of 6 August 2004 relating to bioethics, transposing Directive (EC) No 98/4 4 of 6 July 1998 on the legal protection of biotechnological inventions. 8 Act No 2007–1544 of 29 October 2007 on the fight against infringement. 9 Directive (EC) No 2004/4 8 of 29 April 2004 on the Enforcement of Intellectual Property Rights. 10 Act No 2014–315 of 11 March 2014 reinforcing the fight against infringement. 2

146 4

Isabelle Romet, Amandine Métier, Dora Talvard Contrary to common law countries, the rule of precedent does not apply in France as such. However, case law constitutes a source of law, with an impact, for each decision, varying notably according to the position of the court in the hierarchy of French courts. Therefore, the thorough study of case law is important as it sheds light on the interpretation of the applicable provisions and gives indications about the current trends of the courts.

II. Court System 5 6

Patent disputes are handled by civil courts and governed from a procedural point of view by the Code of Civil Procedure (‘CCP’).11 The main features of the proceedings at the three levels of the court system, namely first instance, appeal and recourse before the ‘Cour de cassation’, the highest civil court, will be explained successively in section V concerning trial, it being noted that the same courts deal with validity and infringement, as opposed, for example, to the German system.

III. The Profession 7

8 9

10

Patent law practitioners include representatives before the French and the European patent offices (patent attorneys) and attorneys-at-law (avocats) who often work together in the framework of patent disputes, as they have complementary roles. Representatives before the French12 and European patent offices have a technical background and are trained and qualified to represent their clients before these offices. Attorneys-at-law, ie avocats, are qualified to give legal advice and represent their clients before the French courts. Only avocats have the right to represent parties in courts where representation is mandatory, including the ‘tribunal de grande instance’ and the ‘cour d’appel’. Juristes, that is, lawyers who have not passed the bar examination or no longer belong to the bar, cannot represent parties in courts where representation is mandatory. French judges have a legal background; there are no ‘technical judges’ sitting in French courts to hear patent cases. In order to qualify as a judge, candidates have to pass a national competition for access to the ‘Ecole Nationale de la Magistrature’ (‘ENM’) in Bordeaux; the training in this school lasts 31 months. At the end of their training, judges can be appointed to any of the various national courts depending on their ranking in the final examination. During their careers, judges are promoted to different courts and court levels; thus, judges rarely stay more than a few years in chambers specialised in patent law, with some exceptions due to personal choices.

11 Infringement also constitutes a criminal offence and may give rise to criminal proceedings; however, this option is almost never chosen by the patentee because criminal proceedings are usually not the most appropriate for patent infringement actions, notably due to the complexity of this type of case. 12 Strictly speaking, the French title ‘conseil en propriété industrielle’ is reserved to professionals qualified before the French Patent Office.

Patent Enforcement in France

147

B. Problems Related to the Enforcement of Patent Rights 11

Only the actions relating to enforcement will be presented hereafter, it being noted that other actions such as entitlement and contractual actions are also available in respect of patent matters.

I. Types of Action 12

Actions available to the patentee will be presented before considering those available to third parties.

1. Actions Available to the Patentee 13

The patentee can start an infringement action. He can also request custom measures.

a. Infringement Action 14 15 16 17

18

13 14 15

About 75 per cent of the decisions handed down in patent cases on the merits concern infringement actions in first instance, and 65 per cent on appeal. A patentee, and under certain conditions its exclusive licensee,13 can start an infringement action. Infringing acts are listed in Articles L. 613-3 and L. 613-4 of the IPC and presented in further details in section VI concerning the types of infringement. As a general principle, the burden of proving infringement is on the plaintiff,14 with an exception when the asserted patent relates to a process. However, the reversal of the burden of proof for process patents is possible only under the very specific circumstances provided by the IPC:15 the patent needs to cover a process for obtaining a product; and the defendant may be ordered to prove that the process he used to obtain an identical product differs from the patented process only if the product obtained with the patented process is new or if there is a high probability that the identical accused product was obtained by the patented process. Infringement can be proven by any means. Very often, a preliminary step to gather evidence before starting an infringement action consists in a saisie-contrefaçon (see below section B.IV.3 relating to preparation for trial). Other means of evidence include the production of publicly available documents and products: to avoid discussion about their evidentiary value, a bailiff needs to be involved to prepare a report describing the conditions in which they were obtained (for example, a report about the purchase of a product in a shop or about the information available on a website). Statements by third parties can also be produced, but their probative force may be disputed.

The conditions to be met by the exclusive licensee are presented in section II. The one who alleges a fact has to prove it. IPC, art L. 615–5–1.

148 19

Isabelle Romet, Amandine Métier, Dora Talvard By Act of 11 March 2014,16 the limitation period for acts of infringement was increased from three to five years.17 In terms of statistics, almost 50 per cent of the patents which are found valid are found infringed in first instance (see statistics on French patent litigation for the period 2000–14 in C, Annex).18

b. Customs Measures 20 21

22

23

24

Customs measures may be most useful to detect the arrival in France of infringing goods. For the time being, French customs only apply the Regulation (EU) No 608/2013,19 which is limited to the introduction of products coming from a country which is not a member of the European Union. However, the new provisions introduced in French law on 11 March 2014 and codified under Article L. 614-32 of the IPC will make it possible to request French customs measures for products coming from another European country. These provisions will enter into force as soon as the implementing decrees are adopted. The measures provided by the Act of 11 March 2014 against products coming from another European country are very similar to those already provided against products coming from outside the European Union by Regulation (EU) No 608/2013. They can be summarised as follows: — the customs authorities intervene in principle upon a prior written request of the patentee, which should contain all relevant information and documents to enable the customs authorities to identify as easily as possible the infringing product (ie name of the possible infringers, name and description of the accused products and of the genuine product, likely transportation means); in exceptional cases, customs authorities can intervene at their own initiative; — when the introduction of an accused product into France is detected by customs authorities, the latter immediately communicate information to the patentee relating to the nature and actual, or estimated, quantity of the goods; — the customs authorities keep the infringing goods for 10 days from this notification (increased by 10 days in exceptional cases and reduced to three days in the case of perishable goods); — this time period enables the patentee to (1) perform a saisie-contrefaçon on the premises of the customs authorities in order to collect infringement evidence; or (2) obtain provisional measures from the court; or (3) initiate proceedings before a court; — the detention order shall be lifted as of right if the patentee fails, within the specified period of time following the notification of the detention order, to justify

16

Act No 2014–315 of 11 March 2014 reinforcing the fight against infringement. IPC, art L. 615–8. 18 The rate is about 50% for French patents and about 43% for the French designation of European patents. This difference results mainly from the fact that French patents are often broader than European patents due to the limited powers of the French Patent Office regarding the examination of patent applications: as a result, French patents are found invalid more frequently than the French designation of European patents but, when valid, they are found infringed more often. 19 Regulation (EU) No 608/2013 of 12 June 2013 concerning customs enforcement of intellectual property rights and repealing Council Regulation (EC) No 1383/2 003. 17

Patent Enforcement in France

149

that he obtained provisional measures or started an action before a court (performing a saisie-contrefaçon is not sufficient to avoid the release of goods); — on the contrary, if the patentee proves that he took one of the above-mentioned measures, the customs authorities keep the products (or, in some very specific circumstances, decide to destroy them); — however, the owner of the detained goods, to whom the detention is also notified, is entitled to request the release of the goods. 25

As a result, customs measures are temporary (except when they lead to the destruction of the product) and should be considered mainly as a tool to detect infringement and allow the patentee to collect infringement evidence before the release of the goods.20

2. Actions Available to Third Parties 26

The most frequent initiative of a third party is a revocation action (a). Opposition against the grant of the French patent is not possible (b). Declaration of non-infringement is not frequent in France because its requirements make it unattractive (c). The patentee sending abusive threats may be sued on the grounds of classical tort law (d).

a. Revocation Action 27 28 29

30

Only about 5 per cent of the decisions handed down in patent cases on the merits concern revocation actions in first instance and on appeal. The revocation of a patent has an erga omnes effect. In accordance with the principle ‘no interest, no action’,21 the revocation of a patent can be requested by any third party having a legitimate interest. The threshold to show interest was traditionally low, but some recent decisions have raised the bar and considered that, in the particular circumstances of the case, the claimant had no standing to bring an action for the revocation of a patent because he had not sufficiently established its intention and ability to exploit the disputed patent.22 Recently, a controversy arose about the starting point of the time limit to initiate a revocation action. This debate follows the adoption of a new time limitation of five years from the date upon which the owner of a right becomes aware or should have

20 The new art L. 614–32 of the IPC is in line with the Nokia and Philips decision of the CJEU of 1 December 2011 (C–446/09) by providing that the customs measures do not apply to goods in transit aimed at being exported outside the European Union (although the new art L. 613–3 (a) adds trans-shipment, that is, transit on the soil of the European Union of goods from countries outside the European Union, to the destination of countries outside the European Union, to the list of infringement acts). 21 CCP, art 31. 22 CA Paris, 17 February 2012, Merial v Omnipharm, RG No11/09940, English translation available at www. frenchpatentcaselaw.info/: this decision concerns the specific scenario of a revocation action initiated by a ‘straw man’. CA Paris, 6 March 2013, Sebban v Barilla, PIBD 2013, No 983–III–1150: the action was dismissed as not admissible on the grounds that the plaintiff did not prove preparatory acts, nor serious plans, to exploit a product identical or similar to the claims. TGI Paris, 5 June 2014, E. Bickel Maschinen Apparatebau v Newmat, RG No 12/10282: in this case, the tribunal considered that the action was not admissible because the plaintiff had no activity in the field of the patent (stretch ceilings). TGI Paris, 25 April 2013, Evinerude v Gireaudeau and Aair Lichens, RG No 10/14406: the tribunal considered that the action was admissible because the plaintiff was a competitor and received a warning letter from the patentee.

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Isabelle Romet, Amandine Métier, Dora Talvard become aware of the facts entitling him to do so.23 This time limit is considered by case law as applicable to revocation actions. In a first decision of 25 April 2013, the tribunal de grande instance de Paris (TGI Paris)24 held that the limitation period was triggered by the publication of the patent application,25 which was highly disputable. A second decision of 6 November 2014 by the same section of the tribunal adopted a more reasonable approach considering that the starting point of the time limit should be assessed in concreto (in this specific case, the relevant event was considered to be the warning letter sent by the patentee).26 Concerning the invalidity grounds, Article L. 614-12 of the IPC provides that Article 138(1) of the European Patent Convention (‘EPC’)27 defines the invalidity grounds available against the French designation of a European patent, whereas Article L. 613-25 of the IPC28 lists the grounds of invalidity of a French patent. French case law about validity is very similar to the case law as developed by the European Patent Office (‘EPO’); a few differences are worth mentioning, relating to patent eligibility, sufficiency, inventive step and patent entitlement. About patent eligibility, two main decisions disagreed with the EPO’s position on the patentability of dosage forms in the pharmaceutical field: they admitted that it is possible to claim a new dosage of a known substance for the treatment of a new disease, but considered that a new dosage form of a known substance for the treatment of the same illness should not be patentable because the choice of dosage for a drug falls under the exclusive responsibility of the physician, in consideration of the specificities of his patient, notwithstanding the indications given by the pharmaceutical laboratory on the drug leaflet, so that dosage claims would amount to seeking protection for

23 Art 2224 of the CC, amended by the Act No 2008–561 of 17 June 2008 reads: ‘The right to initiate personal actions and real actions based on movable assets lapse five years after the date at which the owner of a right becomes aware or should have been aware of the facts entitling him to do so’. 24 The acronym ‘TGI’ stands for ‘Tribunal de Grande Instance’ and may be equated to a High Court in the UK, a Landgericht in Germany, a Tribunale in Italy or a Rechtbank in the Netherlands. 25 Evinerude v Philippe Giraudeau and Aair Lichens (n 22). 26 TGI Paris, 6 November 2014, Raccords et Plastiques Nicoll v MEP, PIBD 2015, No 1020–III–43. 27 EPC, art 138(1): Subject to article 139, a European patent may be revoked with effect for a Contracting State only on the grounds that:

(a) the subject-matter of the European patent is not patentable under articles 52 to 57; (b) the European patent does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art; (c) the subject-matter of the European patent extends beyond the content of the application as filed or, if the patent was granted on a divisional application or on a new application filed under article 61, beyond the content of the earlier application as filed; (d) the protection conferred by the European patent has been extended; or (e) the proprietor of the European patent is not entitled under article 60, paragraph 1. 28

IPC, art L. 613–25(1): A patent shall be revoked by court decision: (a) If its subject matter is not patentable within the terms of articles L. 611–10, L. 611–11 and L. 611–13 to L. 611–19; (b) If it does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art; (c) If its subject matter extends beyond the content of the patent application as filed, or if it was granted on a divisional application, beyond the content of the earlier application as filed. (d) If, after the limitation, the extent of the protection conferred by the patent has been increased.

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a therapeutic method.29 However, the decision of the CA Paris30 of 30 January 2015 affirming the decision of 28 September 2010 about finasteride31 adopted a different reasoning: it recognised the patentability of a new dosage for the same therapeutic indication provided this new dosage reflects a different technical teaching, which was not considered to be the case in this matter.32 About inventive step, the French courts’ reasoning is based on the technical problem solved by the patent and the closest prior art, but remains less formal than the problem solution approach followed by the EPO. About sufficiency, French case law comprises a few decisions33 in the pharmaceutical field finding a claim invalid on the grounds that it would be ‘speculative’. According to these decisions, in the pharmaceutical field, the sufficiency of disclosure of a drug invention requires the indication of pharmacological properties and of one or several therapeutic uses in the description which should contain technical information in support, such as experimental data or plausible explanations. However, this approach was not shared by all judges and there are other decisions which refused to apply these criteria.34 Lastly, about patent entitlement, it should be noted that Article 138, § 1 (e) of the EPC, namely the absence of right to the European patent according to Article 60, § 1 of the same text, can be invoked only by the inventor, and not by third parties.35 In terms of statistics, patents are held invalid in France in 23 per cent of the cases as far as French designations of European patents are concerned, and in 34 per cent of the cases for French patents in first instance (these statistics concern both revocation actions and revocation counterclaims lodged in the framework of infringement proceedings) (see statistics on French patent litigation for the period 2000–14 in C, Annex).

29 TGI Paris, 5 December 2014, Akzo Nobel and MSD v Teva Santé, Ratiopharm, Merckle and Cemelog, RG No 12/13507. 30 The acronym ‘CA’ stands for Cour d’Appel and can be equated to the UK Court of Appeal, the Italian Corte d’Appello or the German Oberlandesgericht. 31 TGI Paris, 28 September 2010, Actavis and Alfred E Tiefenbacher v Merck, Sharp & Dohme, PIBD 2010, No 930–III–815, English translation available: at www.frenchpatentcaselaw.info/ and 42 IIC 774 (2011)—‘Finasteride’. 32 CA Paris, 30 January 2015, Merck Sharp & Dohme v Actavis, RG No 10/23603. 33 Decisions finding patents invalid for insufficiency on the grounds that they are ‘speculative’: TGI Paris, 28 February 2013, Sanofi v Mylan, PIBD 2013, No 988–III–1328, English translation available at: www.frenchpatentcaselaw.info/; TGI Paris, 6 October 2009, Teva v Sepracor, PIBD 2010, No 914–III–161; TGI Paris, 9 November 2010, Teva v Merck, Sharp & Dohme, RG No 09/12713.

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Decisions applying the same criteria but finding the requirement met: CA Paris, 12 March 2014, Eli Lilly v Teva, RG No 12/07203 (affirming TGI Paris, 20 March 2012, RG No 09/12706). TGI Paris, 11 January 2013, Sanofi-Aventis v Philippe Perovitch and Marc Maury, RG No 11/02631: ‘The inventors have no obligation to fulfil sufficiency by performing tests or experiments proving the real efficacy of the invention and to include them in the patent’. ‘The dispute of the real therapeutic effect of the described invention pertains to novelty or inventive step, and not sufficiency’.

TGI Paris, 21 November 2014, Ethypharm v Astra Zeneca and Cipla, RG No 10/14073: the speculation argument was raised to support insufficiency and inventive step attacks, but was not adopted by the Court. TGI Paris, 14 March 2013, Chomarat Textiles Industries v Saertex, RG No 11/08727. CA Paris, 23 September 2014, Gaztransport and Technigaz v Chantier de l’Atlantique, RG No 13/01377.

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b. Opposition 37 38

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No opposition proceedings exist against the grant of a French patent by the French Patent Office. In case of an opposition pending before the EPO against a European patent whose French designation is the subject matter of a dispute before the French courts, any party may request a stay of the proceedings until the decision of the Opposition Division or until the end of the opposition proceedings; the court is free to decide to grant the stay or to refuse it, the recent tendency being to continue the French proceedings despite the opposition in order to avoid slowing them down. When examining the validity of a European patent in dispute, French courts take into consideration the decision(s) of the EPO in the opposition proceedings, but are not bound thereby and sometimes reach a different conclusion.

c. Declaration of Non-Infringement 40

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A third party who wants to ensure its freedom to operate with respect to a patent can initiate proceedings for declaration of non-infringement. The action for declaration of non-infringement is subject to two conditions. First, Article L. 615-9 of the IPC36 governing declarations of non-infringement, sets an admissibility requirement by requesting that the claimant ‘proves exploiting on the territory of a Member State of the European Economic Community, or making effective and serious preparations to that effect’; this requirement is construed by French case law as implying manufacturing acts—or preparation thereof—in at least one country of the European Union.37 On the other hand, an action for a non-infringement declaration is subject to a prelitigation phase. The party seeking a non-infringement declaration must send the patentee a description of the product—or process—at issue and request its position. The patentee has three months to give its opinion as to whether the described product falls under the scope of the patent at issue. The action for a non-infringement declaration can be started only either in the case of a negative reply from the patentee during the three-month period, or after the expiry of the three-month period in the absence of any reply from the patentee. IPC, art L. 615–9: Any person who proves exploiting on the territory of a Member State of the European Economic Community, or making effective and serious preparations to that effect, may invite the owner of a patent to take position on such an exploitation, the description of which shall be communicated to it, with respect to its title. If such person disputes the reply that is given to it or if the owner of the patent has not taken position within a period of three months, it may bring the owner of the patent before the court for a decision on whether the patent constitutes an obstacle to the exploitation in question, without prejudice to any proceedings for the nullity of the patent or subsequent infringement proceedings if the exploitation is not carried out in accordance with the conditions specified in the description referred to in the above paragraph.

37 TGI Paris, 14 January 2009, Abbott v Evysio Medical Devices, PIBD 2009, No 901–III–1267: this decision held that the company Abbott Ireland which made serious and effective preparatory acts in Ireland had standing to initiate a declaration of non-infringement action, contrary to Abbott France whose activity was limited to importing and marketing the products on the French territory.

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It was accepted by case law that a request for declaration of non-infringement can be presented as a counterclaim to a revocation action;38 in such case, the pre-litigation steps are not compulsory. Concerning jurisdiction, the TGI Paris held that a declaration of non-infringement against a defendant whose domicile is not in France may be sought for acts performed or contemplated in France,39 but not abroad, which is also the position of the Court of Justice of the European Union.40 In practice, declaration of non-infringement actions are rarely initiated, as they give an advantage to the patentee by informing him of his competitor’s commercial plans and place him in the position to present a counterclaim for infringement.

d. Action Against Threats 46

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An action for unfair competition, based on general liability law stemming from Article 1382 of the Civil Code (‘CC’), can be brought against the patentee who sent unjustified warning letters, in particular when these letters are sent to clients of the defendant before there is any decision on the merits of the infringement. A claim for unfair competition is within the jurisdiction of the TGI Paris when it is presented in the framework of patent infringement proceedings, whereas an independent unfair competition claim lies within the jurisdiction of the commercial courts.

II. Competent Parties 48 49

According to Article L. 615-2 of the IPC,41 ‘infringement proceedings shall be instituted by the owner of the patent’. Unless otherwise provided for in the licensing agreement, the exclusive licensee is also admissible to initiate infringement proceedings, on condition that ‘after being placed on notice, the owner of the patent does not institute such proceedings’; the patent holder is admissible to intervene in the proceedings started by the exclusive licensee.

38 TGI Paris, 22 November 1996, Jean-Paul Biberian v CEA and Pixtech, PIBD 1997, No 628–III–139. TGI Paris, 9 February 2006, Neopost and Satas v PFE International, Innovacourrier and Paper Handling, PIBD 2006, No 830–III–350. 39 TGI Paris, 5 November 2003, Dijkstra Plastics v Saier Verpackungstechnik, RG No 00/11073. 40 CJEU, 25 October 2012, Folien Fischer v Ritrama, C–133/11. 41 IPC, art L. 615–2:

Infringement proceedings shall be instituted by the owner of the patent. However, the beneficiary of an exclusive exploitation right may, unless otherwise provided for in the licence contract, institute infringement proceedings if, after being placed on notice, the owner of the patent does not institute such proceedings. The patentee shall be entitled to take part in the infringement proceedings instituted by the licensee under the foregoing paragraph. The holder of a compulsory license or a public interest licence as referred to in articles L. 613–11, L. 613–15, L. 613–17, L. 613–17–1 and L. 613–19, may institute infringement proceedings if, after it has been placed on notice, the owner of the patent does not institute such proceedings. Any licensee shall be entitled to take part in the infringement proceedings instituted by the patentee in order to obtain compensation for damage it has personally sustained.

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Isabelle Romet, Amandine Métier, Dora Talvard A non-exclusive licensee is not admissible to initiate the action but can intervene in the proceedings ‘in order to obtain compensation for damage it has personally sustained’. Since the modification of Article L. 613-9 of the IPC by the Act of 4 August 2008,42 it is no longer required that the licence agreement be registered in the national patent register (in French, ‘registre national des brevets’ or ‘RNB’) in order to intervene in the proceedings. However, it remains highly recommended to record the licence in light of recent decisions which considered that this remains a condition to claim damages.43

III. Competent Court 52

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In first instance, the TGI Paris, and on appeal, the CA Paris, have exclusive jurisdiction to decide on actions in matters of patent, supplementary protection certificates, as well as utility certificates and topographies of semiconductors,44 including all matters involving validity, infringement, entitlement and related unfair competition claims. This exclusive jurisdiction is without prejudice to the jurisdiction of the other competent courts with respect to purely contractual matters. Patent matters can also be submitted to the jurisdiction of arbitrators, with the exception of issues of public order, such as the validity of a patent; however, the validity of a patent can be discussed as an incidental question in the framework of arbitration, being specified that the decision will have effect only between the parties and not erga omnes. With respect to private international law, the jurisdiction of the French courts is governed inter alia by (1) Regulation No1215/2012,45 in case the defendant is domiciled in the European Union (except in Denmark); (2) the 1968 Brussels Convention when the defendant is domiciled in Denmark; (3) the 1988 Lugano Convention when the defendant is from a non–EU Member State signatory of the said convention, namely Liechtenstein, Iceland, Norway and Switzerland; or (4) other international conventions. Should no international convention apply, French provisions of the CC provide that a French citizen or a company domiciled in France may always be sued in France (CC, art 15) and that a French citizen or a company domiciled in France may always initiate proceedings before a French court when the tort is committed in France (CC, art 14). It results from these provisions that French courts have jurisdiction to decide on: — the validity of French patents or the French designation of European patents46 (but not of foreign patents); and

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Act No 2008–776 of 4 August 2008. TGI Paris, 16 January 2014, Moba v Erric, RG No 11/14921. TGI Paris, 20 March 2014, Muller v Alpha Confort and Texas de France, RG No 11/07903. 44 IPC, art L. 615–17 provides that ‘civil actions and claims relating to patents, including when they also concern a related unfair competition issue, shall be exclusively presented before the tribunaux de grande instance’ and art D. 631–2 of the IPC and D. 211–6 of the judicial organisation specify that the tribunal de grande instance de Paris has exclusive jurisdiction. 45 Regulation No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (‘Brussels I Regulation recast’), replacing since 10 January 2015 Regulation No 44/2001 (‘Brussels I Regulation’). 46 Brussels I Regulation recast (Regulation No 1215/2012) art 24(4). 43

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— acts of infringement committed on the French territory,47 or abroad by an infringer based in France.48

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However, in practice, patentees do not request that the court decide on infringement of a foreign patent, because the proceedings would be stayed in case of a dispute about the validity of the foreign patent: this results from the rule that a French court cannot decide on the validity of a foreign patent. The above-mentioned private international law provisions can give French courts the jurisdiction of issuing cross-border injunctions, in other words, injunctions having effect in foreign countries (for example, an action initiated against a French company selling infringing goods in several countries in which the patent is in force). However, French courts should apply the decisions of the Court of Justice of the European Union.49 The issue regarding whether an act of infringement has been committed on the French territory has been the subject of numerous court decisions, in particular with respect to acts of importation, offers on the internet, or goods in transit. With respect to importation of goods from a foreign country to France, case law considers that both the person abroad selling the goods (exporting to France) and the person in France purchasing the goods (importing to France) are liable for infringement in France.50 The offer of goods on the internet is considered to be an offer in France only if circumstances show that the website is oriented toward the French market—for example, if the website is in French, if prices are given in Euros, or if French distributors are mentioned.

IV. Preparations for Trial 1. Limitation 59

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The patentee can request the limitation of a French patent51 or of the French designation of a European patent52 before the French Patent Office. He can also request the central limitation of a European patent before the EPO. This is a possible pre-litigation step when it appears that the claims are too broad and should be reinforced. This limitation can also be done in the framework of revocation proceedings or infringement proceedings with a counterclaim for revocation, at any stage of the proceedings; a stay of the proceedings can be requested pending a decision on the limitation and is usually granted unless the balance of interest considering all the circumstances of the case is in favour of the continuation of the proceedings.

ibid, art 7(2). ibid, art 6(1). esp Gat v Luk, case C–4/03; Primus v Roche, case C–539/03; or Solvay v Honeywell, case C–616/10. CA Paris, 17 January 1996, Seeg and Stockvis v Kimberley Clark, PIBD 1996, No 608–III–178. IPC, arts L. 613–24 and L. 613–25 (d). CA Paris, 1 July 2011, Teva v Directeur général de l’INPI and Eli Lilly, PIBD 2011, No 948–III–598.

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Isabelle Romet, Amandine Métier, Dora Talvard Requests for claim limitation before the French Patent Office are frequent and case law about this subject is quite abundant.

2. Warning Letters 63

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Warning letters may be sent prior to an infringement action. However, they are not a prerequisite as it is not compulsory to give notice before starting infringement proceedings. Often, third parties receiving a warning letter do not reply or reply in vague terms; in any case, the absence of a reply is not a proof of bad faith or infringement. Warning letters are, however, compulsory in the limited number of situations where liability of a third party is conditional upon its knowledge of the infringement; these acts are listed in section VI relating to infringement. They must be drafted carefully, especially when sent to clients of the alleged infringer, to avoid the risk of being considered a wrongful threat.

3. Saisie-contrefaçon 66

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Saisie-contrefaçon,53 governed by Article L. 615-5 of the IPC, is a probative measure allowing a patentee54 to have a bailiff conduct investigations on the premises of the seized party in order to gather evidence of the alleged infringement. A saisie-contrefaçon can be performed on the basis of a French patent, or patent application, or the French designation of a European patent or patent application; in application of Article 35 of Regulation No 1215/2012,55 a measure very similar to saisie-contrefaçon, but on different legal grounds, should be possible on the basis of a foreign patent or patent application, to gather evidence of infringement for an infringement action taking place in another Member State of the European Union. The saisie-contrefaçon must be authorised by the President of the TGI Paris in a court order (in French, ordonnance). To this end, an ex parte petition (in French, requête) is filed by the petitioner’s attorney-at-law and presented to the judge during a short hearing. The defendant is informed neither of the petition nor of the order authorising the saisie-contrefaçon until the saisie-contrefaçon is carried out, as the element of surprise is a condition of the efficacy of the measure. The authorisation to perform the saisie-contrefaçon is granted if the applicant proves that he is the owner or the exclusive licensee56 of the patent invoked and that the patent is in force; the petitioner does not have to bring prima facie evidence of the alleged infringement, as the purpose of the saisie-contrefaçon is precisely to gather proof of

53 For more details about saisie-contrefaçon, see P Véron (ed), Saisie-contrefaçon 3rd edn (Dalloz Référence, 2012). 54 Or the exclusive licensee provided he meets the conditions presented in section II. 55 Brussels I recast (n 45) provides: ‘Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that Member State, even if the courts of another Member State have jurisdiction as to the substance of the matter’. 56 To be entitled to request a saisie-contrefaçon, the licensee has to meet the same conditions as for starting an infringement action (which are described in section B.II).

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infringement,57 and has solely to present to the judge his reasons to believe that his patent may be infringed by the accused products. The judge has the power to determine the extent of the order which defines the powers of the bailiff, in particular, the possibility to describe the accused product or process (in French, saisie descriptive), the nature of the documents which may be seized (by photocopy), the number or quantity of samples that can be seized physically (in French, saisie réelle)58 and the terms that can be used to search for information in the IT system of the seized party; the judge may also order the plaintiff to lodge a security or a bond, but in practice this is exceptional. On the date of the saisie-contrefaçon, the bailiff, most often accompanied by a conseil en propriété industrielle and an IT expert, both chosen by the patentee but authorised in the court order, can enter the premises of the alleged infringer and, within the limits of the court order, examine the allegedly infringing product or process, describe it, be supplied with samples and make copies of technical, accounting and financial documents relating to the infringement. The bailiff must act within the scope of the court order, otherwise the operations would be held invalid. During the saisie-contrefaçon, the seized party can request that the bailiff place the documents or other items it deems confidential in a sealed envelope and to keep the latter until a court decision or an agreement of the parties as to the destination and use of its content; it will then be up to the patent holder to refer to the judge and request the appointment of an expert to sort out the documents or other items: those that are confidential and useful for proving infringement, which will be transmitted to the plaintiff, and the documents that are confidential and not related to the infringement, which will not be transmitted to the plaintiff. The parties may also decide to organise the sorting out of the seized elements themselves. When performing the saisie-contrefaçon, the bailiff drafts a report describing the operations performed. The seized party can request that the bailiff add some comments as well. The bailiff has to serve a copy of this report on the seized party: this is done either at the end of his investigations or a few days later, notably if this time extension is authorised by the court order. The plaintiff has to start an action on the merits within 31 calendar days, or 20 working days if that is longer, as of the day of the saisie-contrefaçon; otherwise, the saisie-contrefaçon is void,59 entailing that the plaintiff cannot use any element obtained during the saisie-contrefaçon. In other words, when a saisie-contrefaçon is found invalid, the court cannot take into account any of the samples, documents or information gathered; likewise, the bailiff ’s report cannot be considered. The seized party can refer to the judge who issued the order authorising the saisiecontrefaçon to obtain the retroactive revocation or amendment of the order in the framework of inter partes proceedings if it deems that the order or some measures

CA Douai, 4 February 2002, Dow France v Rhodia, Annales de la Propriété Industrielle, 2002, 173. TGI Paris, 18 October 2006, Odysée Environnements v Henkel Concorde, PIBD 2007, No 845–III–82. 58 ‘Saisie réelle’ refers to the seizure of samples for proving infringement; it is not possible to seize the whole stock. 59 CA Paris, 28 June 1996, Brutsaert v Fiamma, PIBD 1996, No 621–III–583. Cass Com, 3 June 2003, Diffusion des ébénistes contemportains Roméo v Gélineau Xavier, PIBD 2003, No 774–III–557.

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Isabelle Romet, Amandine Métier, Dora Talvard should not have been granted;60 he can also challenge the validity of the saisie-contrefaçon operations within the framework of proceedings on the merits. The saisie-contrefaçon is a sensitive measure to the extent that it permits investigations carried out on an alleged infringer’s premises. The saisie-contrefaçon must remain an exclusively probative measure and the claimant must refrain from abusing the procedure and must use the saisie-contrefaçon with restraint and discernment. An abusive exercise by a patentee of its right to carry out a saisie-contrefaçon entails its liability under French tort law (CC, art 1382).61 A saisie-contrefaçon could be found abusive, for example, when performed without necessity on a tradeshow, causing commercial trouble,62 or when a claimant has taken advantage of the saisie-contrefaçon to access confidential information which has no relation to the alleged infringement, or when an unjustified number of saisies-contrefaçon was carried out, or when a patentee carried out a saisie-contrefaçon in circumstances in which there was no possibility of the patentee mistaking the extent of its rights; in any case, the seized party has to prove that a fault, resulting in a harm, was committed. Saisie-contrefaçon is a preliminary step in almost all patent cases, as it is the most efficient tool to gather evidence of infringement; around 600 saisies-contrefaçon are ordered each year in France for all IP matters. Also, Article L. 615-5-2 of the IPC provides that the patent holder can request that the court order the defendant or third parties to provide information on the origin and distribution networks of the allegedly infringing products (right of information). This request for right of information can be filed although no saisie-contrefaçon has been performed (as explicitly stated by the act of 11 March 2014,63 creating new Article L. 615-5-1-1 of the IPC).

60 TGI Paris, 29 November 2013, HTC v Nokia, RG No 13/15971, English translation available at: www.frenchpatentcaselaw.info/: HTC argued that Nokia did not comply with its obligation of loyalty when presenting its petition for a saisie-contrefaçon, because it did not inform the judge of a contract between Nokia and Qualcomm on which HTC relied to argue that Nokia’s rights were exhausted; however, the judge considered that the issue of an alleged exhaustion of rights pertained to a defence on the merits and that the facts mentioned by HTC were not relevant to decide upon Nokia’s saisie-contrefaçon request; as a result, it was found that Nokia did not breach its loyalty obligation. 61 Cass Com, 11 February 2013, Vetrotech v Interver, PIBD 2003, No 981–III–1089, English translation available at: www.frenchpatentcaselaw.info/: in this decision, the Cour de Cassation approved the cour d’appel for holding the patentee liable for abuse of process on the grounds that the patentee unduly obtained information on the manufacturing process of a direct competitor because the bailiff acted beyond his powers by asking 24 questions of the seized party, which made the saisie-contrefaçon similar to a search. 62 CA Paris, 13 March 1996, Jardouy v Laboratoires d’études et de recherches chimiques, PIBD 1996, No 612–III–299: a saisie-contrefaçon performed at a tradeshow was found abusive because it was the fourth one carried out by the patentee without necessity; the court held that the claimant was already in possession of all required evidence as a result of the three saisies-contrefaçon previously carried out. 63 Act No 315–2014 of 11 March 2014.

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4. Preliminary Injunctions 78 79

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Preliminary injunction proceedings are governed by Article L. 615-3 of the IPC.64 Preliminary injunction proceedings were first introduced into French law in 1984,65 but were very exceptional owing to the very strict conditions set by the law. The provisions governing preliminary injunction proceedings were amended in 199066 to lower the requirements, but the number of preliminary injunctions remained very low (around five preliminary injunctions requested and one granted per year over the time period 1984–2004).67 The current version of Article L. 615-3 of the IPC results from the Act of 29 October 2007. Preliminary injunction proceedings are now slightly more frequent, but the judges remain very cautious to avoid ordering a preliminary injunction on the basis of a patent later found invalid or not infringed. The statistics based on the available

IPC, art L. 615–3: Any person with authority to bring an action for infringement may, in preliminary proceedings request the competent civil court to order, under a penalty of a daily fine if necessary, against the alleged infringer or intermediaries whose services it uses, any measure aimed at preventing an infringement about to be committed against rights conferred by the title or aimed at stopping any further allegedly infringing act. The competent civil court may also order ex parte urgent measures when the circumstances require that such measures should not be taken in the presence of both parties, in particular when any delay would be likely to cause an irreparable damage to the claimant. The court, in preliminary or ex parte proceedings, may order the requested measures only if evidence, reasonably accessible to the claimant, make it likely that its rights are infringed or that such infringement is about to be committed. The court may enjoin the carrying out of the allegedly infringing acts, condition it on the furnishing of security to ensure, if necessary, the claimant’s compensation or may order the seizure or the remittance to a third person of the products allegedly infringing the rights conferred by the title, to prevent their introduction or circulation in the channels of commerce. If the claimant can give reasons that circumstances are likely to compromise the payment of damages, the court shall order the sequestration of the alleged infringer’s movable or immovable assets, including the freezing of the bank accounts and other assets, under the general rules of law. To determine the goods likely to be seized, the court may order the submission of banking, financial, accounting or commercial documents or the access to relevant data. The court may also award an advance payment to the claimant when the damage suffered cannot be seriously disputed. The court, in preliminary or ex parte proceedings, may condition the implementation of the measures it has ordered on the furnishing of security by the claimant to ensure, if necessary, the claimant’s compensation if the infringement proceedings are subsequently held unfounded or if the measures are void. When the measures taken to stop the infringement of rights are ordered before the commencement of proceedings on the merits, the claimant shall institute legal proceedings, either by civil action or criminal action, within a period of time set by regulation. Failing that, upon the defendant’s request and without its having to justify its application, the measures ordered are void, without prejudice to the damages which may be claimed.

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Isabelle Romet, Amandine Métier, Dora Talvard data68 indicate that, since 2008, on average eight preliminary injunction proceedings are started each year, with three preliminary injunctions granted in first instance. Preliminary injunction proceedings can be initiated to stop acts of infringement or to prevent imminent infringement; they can be started either before or after the beginning of an infringement action on the merits. Most often, the requested measure is a preliminary injunction, under threat of a penalty, prohibiting the defendant from continuing the alleged acts of infringement; other complementary measures can be requested such as the placement under seal of the accused products69 and the recall of the products from the distribution channels, the latter being granted only in exceptional cases, as it entails serious consequences for the defendant. Article L. 615-3 provides that preliminary injunctions can be ordered ‘only if evidence, reasonably accessible to the claimant, make it likely that its rights are infringed or that such infringement is about to be committed’; to decide on the likelihood of infringement, the judge in charge of the preliminary injunction proceedings takes into consideration the arguments of the parties as to the alleged infringement and also as to the validity of the asserted patent. When reviewing the validity of the patent, some decisions assess whether the title is ‘obviously invalid’,70 whereas other decisions use the standard of ‘a serious dispute about validity’;71 however, in practice, despite a difference of wording, the assessment of validity in all cases leads to a quite thorough review of the validity of the patent. The balance of interests between the damage which may be caused by the infringement to the patentee and the damage which may be suffered by the defendant in the case of a preliminary injunction reversed at a later stage, is more and more often taken into account by the judges.72

68 The available data concerning preliminary injunction orders in patent cases are not complete, contrary to the data concerning proceedings on the merits. 69 TGI Paris, 3 October 2012, Sanofi v Teva, PIBD 2012, No 974–III–816, ordering a preliminary injunction later reversed by CA Paris, 23 May 2013, PIBD 2013, No 989–III–1363. 70 CA Paris, 21 March 2012, Novartis v Mylan and Qualimed, PIBD 2012, No 963–III–372, English translation available at: www.frenchpatentcaselaw.info/, reversing the first instance decision and ordering a preliminary injunction. TGI Paris, 6 July 2012, Mc Neil v Laboratoire Pierre Fabre, Pierre Fabre Médicament Production and Diététique et Pharmacie, PIBD 2012, No 968–III–567, ordering a preliminary injunction. Sanofi v Teva Santé (n 69), English translation available at: www.frenchpatentcaselaw.info/, ordering a preliminary injunction later reversed by CA Paris, 23 May 2013, PIBD 2013, No 989–III–1363. 71 TGI Paris, 23 June 2014, Mylan v Gedeon Richter, RG No 14/54903. 72 This approach started with the decision TGI Paris, presiding judge, 12 February 2010, EI Du Pont de Nemours and Merck Sharp & Dohme-chibret v Mylan and Qualimed, RG No 10/51453, English translation available at: www. frenchpatentcaselaw.info/, granting a preliminary injunction, affirmed by CA Paris, 15 March 2011, PIBD 2011, No 943–III–451, English translation available at: www.frenchpatentcaselaw.info/, relating to Losartan, where the judge ruled as follows:

The Judge in preliminary proceedings should, when confronted with a serious dispute, weigh opposing interests so as to ensure that a balance between the rights of the parties is maintained, that is, between the seriousness of an imminent damage and its potential compensation and the seriousness of the prohibition measure sought. See also TGI Paris, presiding judge, 28 January 2011, Novartis v Actavis, RG No 11/50892, English translation available at: www.frenchpatentcaselaw.info, reversed by CA Paris, 16 September 2011, PIBD 2011, No 951–III–692, English translation available at: www.frenchpatentcaselaw.info, quashed by Cass Com 15 January 2013, Novartis v Actavis, PIBD 2013, No 979–III–1005, English translation available at: www.frenchpatentcaselaw.info. TGI Paris, 17 January 2013, Uretek v Sols et Fondations, RG No 12/11634, recalling the principle (decision granting a preliminary injunction). Gedeon Richter v Mylan (n 71) recalling the principle (decision refusing the preliminary injunction).

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It is quite exceptional to see the judges take into account whether the defendant started revocation or declaration of non-infringement actions prior to the launch of its product.73 However, this factor has a limited impact since the ‘clear the way’ doctrine is not applied in France as such. Contrary to some other countries, there is no requirement regarding the time period elapsed between the knowledge of infringement and the request for a preliminary injunction, nor a requirement for urgency; however, in practice, the judges may be more favourable to granting an injunction in case of urgency. According to Article L. 615-3 of the IPC, preliminary relief proceedings can be inter partes or ex parte. However, in almost all cases, preliminary relief proceedings take place inter partes. Ex parte proceedings are exceptional and take place only in case of extreme urgency, when a delay would cause irreparable harm to the patentee.74 With respect to the procedural aspects of preliminary injunction proceedings, the first step for the plaintiff is to request a date for an oral hearing from the court which has to be indicated in the summons to be served on the defendant. Sometimes, a calendar for the exchange of pleadings is also set by the court, but this is not always the case. In practice, the defendant files a pleading in reply, often followed by a last exchange of pleadings before the oral hearing. But, contrary to the proceedings on the merits, preliminary injunction proceedings are oral proceedings and the parties’ arguments are not limited by their written explanations. No scheduling conference takes place in the framework of preliminary injunction proceedings. Preliminary injunction proceedings are heard by a single judge of the third section of the tribunal, either a delegate of the President of the tribunal if started before any proceedings on the merits, or the judge in charge of case management if infringement proceedings on the merits are already pending.75

73 For an example of such an exceptional decision, see Novartis v Mylan and Qualimed (n 70) English translation available at: www.frenchpatentcaselaw.info. 74 Cass Com, 16 September 2014, Sanofi and Zentiva v Novartis, PIBD 2014, No 1016–III–836: this decision affirmed the decision of the CA Paris, 11 December 2012, PIBD 2013, No 978–III–977, English translation available at: www.frenchpatentcaselaw.info/, which revoked the ex parte preliminary injunction granted against Sanofi by an ex parte order of the presiding judge of the TGI Paris of 27 October 2011, confirmed by the presiding judge of the TGI Paris on 31 October 2011, RG No 11/15302, on the grounds that the urgency condition to obtain a preliminary injunction ex parte was not fulfilled as the plaintiff could have initiated speedy inter partes proceedings even within the 17-day timeframe remaining before the expiry of its supplementary protection certificate, and that the risk of an irreparable harm that would have been caused by a delay in obtaining an injunction was not demonstrated. The CA held that:

Considering however that one might remind them that there exist preliminary proceedings with an emergency motion to be heard on very short notice that make it possible to respect due process in a short timeframe; that moreover, jurisdictions may grant urgent hearing dates on weekends or on holidays and that school holidays have no bearing on this possibility, much less in November when there are no court holidays; that the truth of the matter is demonstrated by the fact that immediately after the injunction order, the defendants immediately submitted to the Judge a petition, which was admitted, for an urgent hearing of their revocation request; that the Judge heard the parties on 29 October 2011 and rendered his judgment on 31 October 2011, exactly 14 days before the expiry of the SPC; that the cour d’appel notes that 29 October was a Saturday and that the day of deliberations was the eve of a public holiday. 75 TGI Paris, 20 June 2013, Vorwerk v Domar and Guy Demarle, PIBD 2013, No 993–III–1512; TGI Paris, 7 March 2014, Depoortere v Dehondt Technologies, RG No 13/10111.

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Isabelle Romet, Amandine Métier, Dora Talvard The decision, in the form of an order (in French, ordonnance), is issued a few weeks or days after the oral hearing, according to the urgency of the matter. The order can be appealed before the cour d’appel, being noted that it can be appealed only together with the decision on the merits if it was handed down by the judge in charge of the case management.76 Decisions in preliminary injunction proceedings are immediately enforceable, notwithstanding an appeal, being noted that the party enforcing a preliminary injunction has to compensate the other party automatically in case it is later reversed.77 Appeals in preliminary injunction proceedings take on average six months. Here, the time limit for filing the formal notice of appeal is only 15 days as of the date of service, also extended by two months for a party domiciled abroad. Contrary to the first instance, preliminary injunction proceedings are heard by a full panel of three judges on appeal. The decision of the cour d’appel is issued within a few weeks after the oral hearing. French law does not provide for the possibility of filing protective letters (‘Schutzschrift’) with the courts as a preventive measure to anticipate ex parte preliminary injunction proceedings, as would be the case in Germany and Switzerland. However, the party against which an ex parte preliminary injunction is granted can refer to the judge to request the revocation of the order in the framework of inter partes proceedings. If preliminary injunction measures are ordered before the commencement of proceedings on the merits, Article R. 615-1 of the IPC provides that the plaintiff has to start proceedings within 31 calendar days or 20 working days, whichever is the longest, from the date of the preliminary injunction order.

V. The Trial 1. First Instance Proceedings 95

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In first instance, the TGI Paris has exclusive jurisdiction to decide on patent matters;78 it comprises a specialised chamber, the third chamber, dealing with IP law, including patent law, with four panels of three judges. An average of about 200 decisions, including 80 decisions on the merits, are issued each year in patent matters by the TGI Paris. Proceedings on the merits last about 18 months on average in the first instance. They are mainly in writing. A court action always starts with the service of summons presenting the claims of the plaintiff and its arguments in support thereof, in fact and in law.79 The summons has to be detailed enough to allow the defendant to know precisely the claims and grounds of the plaintiff; the summons must also enable the court to make a decision on this

Vorwerk v Domar and Guy Demarle (n 75). Section B.IX concerning wrongful enforcement provides more details on the liability of the party who enforced a preliminary injunction order, later reversed. 78 Initially, 10 tribunaux de grande instance had jurisdiction with respect to patent matters; this number was reduced to 7 in 2005 and the decree No 2009–1025 of 9 October 2009 centralised patent matters within the exclusive jurisdiction of the tribunal de grande instance de Paris. 79 CCP, art 56. 77

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sole basis in case the defendant does not appear before the court. Thus, in an infringement action, the summons presents the asserted patent claims and the reasons why the accused product is deemed infringing; in a revocation action, the summons puts forward the grounds for invalidity. In the absence of sufficient information, the summons can be held void by the court. The explanations of the parties can be supplemented in the pleadings exchanged later and, in first instance, new claims can be added until the last pleadings. On appeal, the situation is slightly different as only new arguments can be asserted, but not new claims. Both in first instance and appeal proceedings on the merits, only the last pleading filed by a party is taken into account by the court and is considered as containing all the explanations of the parties (in French, conclusions récapitulatives); thus, the explanations contained in previous pleadings, but not reiterated are deemed abandoned. As a result of this rule, it has become usual to file consolidated pleadings, prepared by amending and supplementing the previous ones. In support of the arguments presented in their pleadings, the parties adduce exhibits which have to be translated into French if drafted in another language. The exhibits are referred to in the pleadings; they are communicated to the other party’s attorneyat-law together with an exhibits list. In the absence of witnesses and experts witnesses in French litigation, the pleadings prepared and filed by the attorneys-at-law contain all the arguments of the parties, both relating to facts, technical and legal issues. This is why French pleadings are often quite long and may reach 100 or even 200 pages. The plaintiff makes a bailiff serve summons (in French, assignation), presenting its claims, on the defendant. Once served, the summons has to be filed with the court by the attorney-at-law for the plaintiff to be recorded on the cause list of pending cases. In proceedings on the merits before the tribunal de grande instance, representation by an attorney-at-law is mandatory and the attorney-at-law of the defendant has to inform the attorney-at-law for the plaintiff as well as the court of his designation by filing a formal appearance within 15 days from the date of the summons, extended by two months for defendants domiciled abroad. The parties are then convened to a scheduling conference with a judge of the section in charge of the case who will supervise the progress of the proceedings. During this meeting, the date for the defendant’s pleading (in French, conclusions) presenting its defence and possible counterclaims is set. Several scheduling conferences take place during the proceedings to discuss the progress of the case and the calendar. In general, two or three exchanges of pleadings occur. The exchange of pleadings and exhibits is closed a few weeks before the date of the oral hearing. Some procedural aspects, such as admissibility issues or a request for a stay of the proceedings, can be heard independently from the merits of the case at an early stage of the proceedings, either before the judge in charge of the progress of the case or the full tribunal, depending on the legal issues raised; on the other hand, patent construction is never decided as a preliminary issue, but together with validity and infringement in the judgment issued after the final hearing. The final oral hearing takes place before a full panel of three judges, except as otherwise agreed by the parties. At the oral hearing, the attorneys-at-law of the parties are bound by the arguments presented in their pleadings and cannot raise new ones.

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The judgment is handed down about two months after the oral hearing in most cases and within a few weeks in fast-track proceedings, depending on the urgency and the complexity of the case. The judgment presents the background of the dispute, the detailed grounds for the decision and, in an operative part, the decision reached, together with the remedies if any. Enforceability of first instance decisions on the merits is in principle suspended pending appeal unless the tribunal decides otherwise, which, in practice, is often the case. For urgent cases, it is possible to request the authorisation of the presiding judge of the tribunal to serve summons for fast-track proceedings (in French, procédure à jour fixe) which last between six to eight months on average, with a decision on the merits handed down within a few weeks of the hearing. The advantage of these proceedings is to obtain a decision on the merits in a very short time, as compared to regular proceedings, but its drawback is that it leaves only little time for the parties to prepare their pleadings in reply and that the number of exchange of pleadings is limited. First instance decisions can be appealed without leave or permission before the cour d’appel.

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The cour d’appel de Paris has exclusive jurisdiction with respect to patent disputes. It also decides the appeals against the decisions of the director of the ‘Institut national de la propriété industrielle’ (‘INPI’), the French Patent Office, such as decisions relating to requests for claim limitation. The fifth division of the cour d’appel, specialised in IP law, comprising two chambers of three judges, deals with the cases on the merits, including the appeals against the decisions of the French Patent Office; the first division, which is not exclusively dedicated to IP matters, is in charge of the appeals in preliminary injunction proceedings. Between 2000 and 2014, an average of about 80 decisions, including 45 decisions on the merits, has been issued each year in patent matters by the CA Paris (see statistics on French patent litigation for the period 2000–14 in C, Annex). Contrary to some countries like the United Kingdom, and similar to Germany, the cour d’appel hears the cases de novo, as to the facts and to the points of law. New claims cannot be presented in appeal but new arguments can be presented and new exhibits produced. The cour d’appel can either affirm or reverse the first-instance decision, in whole or in part. Appeal proceedings on the merits last two years on average. On the merits, the time limit for filing the formal notice of appeal is one month as of the service of the decision, extended by two months for a party domiciled abroad, or two years as of the date of the decision in the absence of service. As for first instance proceedings, a judge in charge of the case management is appointed to supervise the progress of the proceedings. The time limits for the first exchange of pleadings are set by the CCP and are strictly binding: since 1 January 2011, the time limit to file the appeal pleading as of the date

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of the formal notice of appeal is three months, extended by two months for an appellant domiciled abroad, and the time limit for the other party’s reply is two months, also extended by two months for those domiciled abroad. The decision of the cour d’appel (in French, ‘arrêt’) is issued about two months after the oral hearing.

3. Proceedings Before the Cour de cassation 120 121 122

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Finally, the Cour de cassation is the highest civil court and considers only points of law. Patent cases are decided by its commercial chamber. A recourse before the Cour de cassation does not require any leave or permission and does not suspend the enforcement of the decision. The proceedings are only in writing and the pleadings are drafted and filed by specialised attorneys-at-law called avocats à la Cour de cassation or avocats aux conseils (there are about 100 avocats aux conseils in France but only a few of them have experience in patent cases). The Cour de cassation can either dismiss the recourse, in which case the appealed decision becomes final, or quash the decision and remand the case to the cour d’appel in a different composition. The proceedings last between 18 to 24 months. On average, between 2000 and 2014, 20 decisions have been issued each year in patent matters by the Cour de cassation. France is a civil law country, applying statutory law, and the courts are not bound by prior decisions on the same issues; however, the courts take them in consideration, in particular the decisions on points of law issued by the Cour de cassation which has a harmonisation role.

4. Hearings 127

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The duration of the final oral hearing varies from one case to the other, depending on complexity, but in general is limited to three to four hours for one patent case, except in exceptional cases where the oral hearing can last a full day. At the oral hearing, the attorneys-at-law for the claimant and the defendant present their claims and arguments in turn; the judges often ask questions and seek explanations about the issues they deem the most relevant. Unlike the American and English systems, the oral hearing does not include expert and witness examinations and the parties or their experts are never heard by the court (although this would be possible under the rules of civil procedure). The parties can produce written expert reports, prepared by independent experts of their choice, in support of their explanations on validity and infringement, which will be considered by the judge as elements of evidence among others; in practice, the parties’ experts are never heard by the court nor cross-examined by the other party. Upon the request of a party, the court may designate an expert to clarify a technical issue defined by the court; the court-appointed expert holds meetings with the parties and receives their written explanations, before preparing a report which is handed to the court. However, experts shall not give any opinion as to legal issues,

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VI. Types of Infringement 132

The acts constituting infringement must be presented (1) before explaining how infringement is assessed (2) and listing the exempted acts (3).

1. Direct and Indirect Infringement 133

Acts of direct infringement of a patent covering a product are exhaustively listed by Article L. 613-3 of the IPC: Are prohibited, in the absence of consent of the owner of the patent: a) The manufacture, offer, putting on the market, use, import, export, trans-shipment, or the holding for the above-mentioned purposes of the product that is the subject of the patent; b) The utilisation of a process subject of the patent or, when the third party knows or when the circumstances make it clear that the use of the process is prohibited without the consent of the owner of the patent, the offer of its use on French territory; c) The offer, the putting on the market use, import, export, transhipment or holding for the above-mentioned purpose of the product directly obtained by the process subject of the patent.

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Accordingly, the acts of manufacture, offer, putting on the market, use, import, export, trans-shipment of a product protected by a patent are prohibited per se, whereas the act of holding is prohibited only when done for one of the preceding purposes. Acts of offering and putting on the market have been construed broadly by case law as encompassing acts putting a product into contact with the public, even when the product is not available in France, unless it is explicitly indicated that the product is not available to the public in France and in any other country covered by a patent.80 The use of a patented process is also prohibited, as well as its offer for use subject to the territorial requirement that the offer relates to use on the French territory.

80 TGI Paris, 3rd chamber, 19 September 1997, Aktiebolaget Hassle and Laboratoires Astra France v Chong Kun Dang, PIBD 1998, No 645–III–4: this decision construed broadly the terms ‘putting into the market’ of art L. 613–3 of the IPC as encompassing the circulation of any document putting a product into contact with the market. CA Paris, 19 November 1997, Aktiebolaget Hassle and Laboratoires Astra France v Lek DD Ljubljana, PIBD 1998, No 647–III–69 and Cass Com, 30 January 2001, Lek DD Ljubljana v Aktiebolaget Hassle and Laboratoires Astra France, PIBD 2001, No 723–III–329: the Court held that Lek was liable for infringement because it presented documents concerning a drug at an exhibition and thus, although Lek did not offer the product for sale at the exhibition, the drug was presented to potential clients who could engage in business with Lek. TGI Paris, 22 December 2006, Evysio v Abbott and Guidant, PIBD 2007, No 848–III–201: this decision held that art L. 613–3 of the IPC ‘encompasses any act intended to put a product in contact with a relevant public and it covers any presentation of the product even if the marketing is not immediately effective’.

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Acts of indirect infringement, or contributory infringement, are defined by Article L. 613-4 prohibiting the supply or offer to supply, on French territory, to a person other than a person entitled to exploit the patented invention, the means of implementing, on that territory, the invention with respect to an essential element thereof where the third party knows, or it is obvious from the circumstances, that such means are suitable for putting and are intended to put the invention into effect.

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Accordingly, contributory infringement contains a double territorial requirement: the means must be supplied on the French territory, for use within that territory. Unlike case law in other countries such as Germany, French judges have not accepted, at least for the time being, that this double territorial requirement be met when the infringing means are supplied abroad and the supplier is aware or should be aware that the final product is intended to come back to France. Article L. 613-4 § 2 specifies that the supply of staple commercial products amounts to contributory infringement when the supplier induces the person supplied to commit infringement acts prohibited by Article L. 613-3. As far as liability is concerned, a distinction has to be made between primary and secondary infringers: —

acts of manufacture and importation of an infringing product trigger the liability of the infringer, irrespective of its good faith; — acts of offering for sale, putting on the market, use, holding with a view to use or putting on the market an infringing product, committed by a person other than the manufacturer or the importer, require the proof that they have acted with knowledge of the alleged infringement.81 141

Concerning a patented process, its use triggers liability irrespective of the good faith of its user; however, the offer for use of a patented process can be held infringing only upon the demonstration that the third party offering it knew or should have known that its use was prohibited.82

2. Literal Infringement and Infringement by Equivalents 142 143

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French courts have the reputation of having a broad concept of infringement,83 which remains true. Case law and academic writers distinguish three main forms of infringement: literal infringement (contrefaçon à l’identique), infringement by reproduction of the essential means (contrefaçon par reproduction des moyens essentiels) and infringement under the doctrine of equivalents (contrefaçon par equivalence). Literal infringement corresponds to the reproduction of each and every feature of the claim, taken in its structure, function and result. Infringement by reproduction of the essential means of the patented invention consists in the reproduction of the new and inventive means which are necessary to IPC, art L. 615–1. ibid, art L. 613–3. P Véron, ‘France v. the Rest of the World’ Patent World (November 2001).

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Isabelle Romet, Amandine Métier, Dora Talvard perform the function of the invention, despite minor differences. Thus, a feature will be considered as essential if it is demonstrated that the claim would be invalid without the said feature and/or that the patented product would not work without the said feature. As a result, it is of paramount importance for determining the essential features of a patent to study prior art. The non-reproduction of an essential feature of the claim does not close the discussion about infringement: the patentee should be expected to request the court to examine whether the claim is reproduced by equivalents. Under the doctrine of equivalents, means which differ from the patented means by their structure are infringing if they perform the same function for the same result: — the ‘function’ designates the primary technical effect (which can be defined as the effect directly and immediately produced by the implementation of the patented means) and should be distinguished from the advantages of the invention;84 — the ‘result’ is defined as the advantages provided by the means; it should be pointed out that two means are considered as having the same result when they have a result of the same nature, so that two means will be considered as having the same result despite a difference in quality or degree.85

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It happens that French judges also take into account the way the patented means perform their function. The doctrine of equivalents can apply only if the claimed means perform a novel function: — if the claimed means differ from prior art only by their structure, then the scope of the claim is limited to the claimed structure (or variants reproducing its essential features): the doctrine of equivalents cannot apply;86 — if the claimed means differ from prior art not only by their structure, but also by their function, the scope of the claims extends to any other structure performing the same function for the same result: in this case, the claim is said to cover ‘general means’ (moyen général) and the doctrine of equivalents can apply. It should be pointed out that French judges do not take into account whether the accused variant was obvious for the man skilled in the art:87 the fact that the

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Cass Com, 26 January 1993, Hovione, Sarget and Plantier v Pfizer, PIBD 1993, No 542–III–256. Until recently, French case law considered that the result obtained by the means at issue had to be similar, without necessarily being identical: as a consequence, the result could be of a different quality (less perfect, or higher or poorer) or of a different degree than the result obtained by the patented means. However, a few recent decisions considered that the result shall be of ‘the same nature and of identical quality and efficacy’ (TGI Paris, 3 April 2014, Société d’équipement pour l’environnement v Rabaud, PIBD 2014, No 1010–III–597 and TGI Paris, 22 November 2013, Manitou v Haulotte, RG No 10/10117). 86 Cass Com, 16 April 2013, Cycles Lapierre and Lesage v Decathlon and Promiles, PIBD 2013, No 986–III–1243. CA Paris, 26 September 2012, Beaba v Seb France and Tefal, PIBD 2012, No 972–III–735. CA Paris, 17 June 2011, Salomon v Merrell and Wolverine Worldwide, RG No 09/09418. 87 eg the decision of the TGI Paris, 29 September 2004, Al Khouri Fallouh v L’Oréal, CNRS and Lancôme, RG No 00/14083, recalled that obviousness is not taken into account: 85

That it does not matter much, concerning the discussion on the infringement, that the skilled person can replace—based on Mr Al Khouri’s patent—the alkyl monomers by polymers, since this criterion is only relevant, as pointed out by the defendants, for assessing the inventive step of a patent and therefore its validity and not for deciding whether there is an infringement or not.

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accused means constitute an improvement of the patent is not a reason for excluding infringement.88 Furthermore, in general, French judges do not take into account whether the patentee intended to cover the accused variant. Nevertheless, the doctrine of equivalents does not apply when the patent explicitly and unambiguously excludes the variant from its scope, or when the variant goes directly and unambiguously against the teaching of the patent. The doctrine of equivalents thus continues to be applied,89 and France still deserves its reputation of having a patent-friendly approach towards infringement.

VII. Remedies 151

Injunctions remain a right (1) and damages are frequently awarded (2); while the recall from the channels of commerce remains rare, the publication of the decision and the confiscation and destruction of stocks are common (3).

1. Injunctive Relief 152 153 154

Permanent injunctions are a remedy as of right rather than at the discretion of the court. There is no specific requirement to obtain a permanent injunction. As soon as the infringement is recognised by the court, an injunction is automatically ordered.

2. Damages 155 156 157

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In addition to an injunction, the main remedy for patent infringement in France lies in the awarding of damages. In France, the damages awarded tend to compensate the damage actually suffered: there are no punitive damages. In the past, the rules regarding the calculation of damages used to depend on whether the plaintiff was exploiting the patented product or process, or not. The plaintiffs exploiting the patent were entitled to claim lost profits; the others could claim only a reasonable royalty (increased by a few points to take into account that the licence is not voluntary) based on the infringing turnover. Claiming damages for lost profits requires determining the number of lost sales (the additional sales the patentee or licensee would have made but for the infringement) and the incremental profit margin that the patentee or the licensee would have made on these sales. The above calculation rules were created by case law.

A recent example of infringing improvement is provided by Manitou v Haulotte (n 85). TGI Paris, 3 April 2014, Société d’équipement pour l’environnement v Rabaud, PIBD 2014, No 1010–III–597. CA Paris, 20 March 2015, Airbus Helicopters v Bell Helicopter Textron Inc and Textron Canada Ltd, RG No 13/00552. 89

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160

However, this well-established case law evolved with the adoption of new rules in article L. 615–7 of the IPC in 2009, which was recently modified by the act of 11 March 2014.90 The article now reads as follows: To set the amount of damages, the court distinctly takes into account: the negative economic consequences of the infringement, including the loss of earnings and any loss suffered by the injured party, the moral prejudice caused to the latter and the profits made by the infringer, including the savings in intellectual, material and promotional investments that it achieved from the infringement.

161

162 163

164

The place of the infringer’s profits in the calculation of damages is not yet clear in case law. Some decisions have considered that the claimant can be granted the infringer’s profits,91 while others take a different position.92 However, it should remain in the traditional French concept of the awarding of damages to compensate for prejudice, but not for more than prejudice. A few decisions have held that it is possible for persons who are neither the patentee nor the licensee, such as the distributors of products using the patent, to claim compensation for the damage caused by the acts which constitute infringement acts vis-à-vis patent right owners. In these cases, the claim is not based on Article L. 615-7 of the IPC, but on unfair competition (namely CC, art 1382), which requires that a fault (here an act constituting infringement vis-à-vis patent rights owner), a damage and a link between the fault and the damage be evidenced.93 The liability and the quantum of damages are usually decided in separate proceedings. But a recent tendency of the TGI Paris shows that the judges are increasingly inclined to deal with quantum together with liability. As a result, it becomes of paramount importance to adduce elements for the calculation of damages in the course of the liability phase of the infringement proceedings, while, in the past, this used to be useful only to obtain an advance on damages and to invite the court to open a second phase of the proceedings in relation to damages.

3. Recall, Confiscation, Destruction, Publication 165

166

90

Article L. 615-7-1 of the IPC makes it possible for the plaintiff to request the recall of infringing products from the channels of commerce as well as the confiscation and destruction thereof. However, the recall from the channels of commerce is not frequently ordered since it has very severe consequences not only on the infringer itself but also on its distributors. The publication of the judgment, in magazines, newspapers or on the internet at the expense of the infringer is also referred to in this article as a possible remedy when

Act No 2014–315 of 11 March 2014. CA Paris, 23 January 2013, TYC Europe v Valeo, RG No 10/13867. TGI Paris, 24 January 2013, Hydr Am v Gimaex and Weber Hydraulik, RG No 10/14541. TGI Paris, 14 November 2013, Time Sport International v JCR, RG No 11/16713. 92 TGI Paris, 11 October 2013, Saint Dizier Environnement v Materiel Santé Environnement and CME, RG No 11/14587. 93 TGI Paris, 9 February 2005, Atral and Diagral v Cedom and Leroy Merlin, PIBD 2005, No 809–III–335. TGI Paris, 3 March 2010, Novartis and Ciba Vision v Johnson & Johnson and Ethicon, RG No 07/13504, English translation available at: www.frenchpatentcaselaw.info/. 91

Patent Enforcement in France

167 168

171

the court ascertains infringement. Such a publication is frequently authorised by the court, which also indicates the maximum cost for the defendant. In French proceedings, defences to patent infringement claims are mainly invalidity counterclaims and non-infringement arguments. But there are also specific defences to patent infringement proceedings that can be raised under certain circumstances.

VIII. Exceptions and Defences to Infringement 169

The first and foremost defence is the invalidity of the patent (1). But even a valid patent cannot be enforced in specific cases where the defendant successfully raises infringement exemptions (2), exhaustion of rights (3) or prior personal possession (4). In recent years, defendants have also raised a ‘FRAND defence’ for the so-called essential patents, ie patents whose teachings are integrated in a standard so that any product complying with the standard necessarily implements the patent (5).

1. Invalidity 170

The validity of the patent is challenged in around 75 per cent of patent infringement proceedings. And once challenged, validity is first dealt with by the judge; infringement will be considered in the decision of the court only if the patent is held valid.

2. Exceptions to Exclusive Use 171

Article L. 613-5 of the IPC sets out a list of exempted acts: a) Acts done privately and for non-commercial purposes; b) Acts done for experimental purposes relating to the subject matter of the patented invention; c) The extemporaneous preparation in a pharmacy of a medicine for an individual in accordance with a medical prescription or acts concerning the medicine so prepared. d) The studies and assays required to obtain a market authorisation for a medicine, as well as the acts necessary to their completion and for obtaining the market authorisation

172

Article L. 613-5 d) corresponds to the French ‘Bolar exemption’ resulting from the introduction into French law of the exception provided for in Article 10(6) of Directive No 2001/83/EC of 6 November 2001.94 The French Bolar exemption is drafted broadly. The wording ‘a marketing authorisation’ suggests that it is not limited to marketing authorisations for generic and biosimilar drugs, but also applies for innovator drugs and that it applies not only to the acts performed to obtain a marketing authorisation for France or countries within the European Union, but also for other countries; the latter point was confirmed by a decision of 15 December 2014.95

94 Directive No 2001/83/EC of 6 November 2001 establishing a Community code for medicinal products for human use as amended by Directive 2004/27/EC of 31 March 2004. 95 TGI Paris, presiding judge, 15 December 2014, Sanofi-Aventis Deutschland v Lilly France, RG No 14/58023, English translation available at: www.frenchpatentcaselaw.info/.

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3. Exhaustion 173

According to Article L. 613-6 of the IPC, the introduction of the patented product within the European Economic Area by the patentee or with the patentee’s consent exhausts the patentee’s rights. European and French case law requires that there be express consent of the patentee, and evidence of this express consent must be provided by the party claiming exhaustion. There is no concept of world-wide exhaustion of rights as far as France is concerned.

4. Prior Personal Possession 174

Prior personal possession is defined by Article L. 613-7 of the IPC. It offers the possibility for the person in possession of the invention before the date of the filing of the patent to continue exploiting the invention. But several conditions must be fulfilled in order to rely on prior personal possession exception, which are strictly applied by French courts. First, to show that he was in possession of the invention, one has to demonstrate at least that he had the knowledge of the invention at the priority date of the patent, which does not require actually making use of the invention. The invention must also have been obtained in good faith (ie not by fraud). In addition, the prior personal possession exception is subject to a territorial condition: the invention must have been in possession of the defendant in France. Finally, the prior possession is personal: the right to exploit the patent would not benefit any other entity of the group of companies to which the defendant belongs. As these conditions are strictly assessed by the courts, prior personal possession is rarely accepted in France.96

5. FRAND Defence 175

176

The FRAND defence is common in infringement proceedings where a standard essential patent is concerned, such as in the telecommunications industry, ie the patented teaching is necessarily implemented when the standard is complied with. In general, standard essential patent owners are invited by the standardisation body to undertake to grant a licence on fair, reasonable and non-discriminatory (‘FRAND’) terms to any third party who wants to implement the standard to which patent has been declared essential. Patent owners may seek to enforce their patent by requesting an injunction in case the negotiation of the FRAND licence fails or is ongoing. In such a scenario, the defendant may explain that the patentee has promised a licence and that the FRAND royalty should be decided by the court. Defendants also frequently invoke competition law, in particular the abuse of a dominant position according to Article 102 of the Treaty on the Functioning of the European Union, in order to avoid an injunction. The European Commission has indicated that seeking an injunction is not per se characterising an abuse as such, but may be considered an abuse in specific circumstances.

96 For an example of accepted defence of prior personal possession, see TGI Paris, 6 June 2013, Balipro v Vinmer, PIBD 2013, No 992–III–1456.

Patent Enforcement in France 177

173

French judges have not had the opportunity to give decisions on the merits on this issue, but they denied preliminary injunctions in cases involving standard essential patents in view of their specific circumstances.97 The upcoming decision pending before the Court of Justice of the European Union in the Huawei v ZTE case98 will surely give guidance to French judges in this respect.

IX. Wrongful Enforcement 178

Three scenarios are considered hereafter: when a patent is declared invalid after the enforcement of a preliminary injunction, when a patent is declared invalid after a successful infringement decision has become final, and when warning letters are sent on the basis of a patent which turns out to be invalid or not infringed.

1. Patent Declared Invalid after the Enforcement of a Preliminary Injunction 179

180

181

In France, when an infringer has been subject to an injunction on the basis of a patent which finally turns out to be invalid, this ‘former’ infringer is entitled to damages because of the enforcement of the injunction. This claim is based on Article L. 111-10 of the Code of Civil Enforcement Procedure (CCEP) establishing a strict and automatic liability against a party enforcing a judgment of a first-instance court. In a decision of 31 January 2014 from the CA Paris,99 in the context of a preliminary injunction handed down against a generic company on the basis of a patent finally held invalid, the judges assessed the damage suffered by taking into consideration: the expenses incurred for the recall of the products, the lost profits due to the lost sales for the time period when the injunction was in force and the delay in the remarketing of the generic drugs.

2. Patent Declared Invalid after a Final Decision Ordering the Payment of Damages 182

In the scenario where a patent was revoked after a final decision finding infringement and ordering the payment of damages to the patentee, the Cour de cassation approved, in a decision of 17 February 2012, the decision of the cour d’appel holding that the damages already paid in accordance with an irrevocable decision should not be reimbursed.100

97 TGI Paris, 8 December 2011, Samsung v Apple, PIBD 2011, No 956–III–118, English translation available at www.frenchpatentcaselaw.info/: preliminary injunction was denied because of the likelihood of the exhaustion of Samsung’s rights. Also TGI Paris, 29 November 2013, Telefonaktiebolaget v TCT Mobile, RG No 12/14922: preliminary injunction was denied in order not to confer an unjustified advantage to the patentee who was in licence negotiations with the defendant. 98 Opinion of Advocate General Wathelet delivered on 20 November 2014 in the case Huawei v ZTE, C–170/13 pending before the CJEU. 99 CA Paris, 31 January 2014, Laboratoires Negma v Biogaran and Laboratoire Medidom, PIBD 2014, No 1003– III–265: the damage was assessed in this case at €3,500,000. 100 Cass Com, 17 February 2012, Reginald Wehrkamp-Richter v Louis Paul Guitay and LPG Systems, PIBD 2012, No 959–III–233 and 43, IIC 712 (2012) commented by S Agé and M Mendes Moreira (English translation also available at: www.frenchpatentcaselaw.info/.

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183

In an earlier decision of 12 June 2007, the Cour de cassation approved the decision of the cour d’appel ordering the reimbursement of damages to the defendant found liable for infringement in first instance, following a decision finding the patent invalid in parallel proceedings.101 However, unlike the case in the previous section, the decision about infringement had not yet become final.

3. Remedies Against Unjustified Threats of Alleged Infringement 184

Damages can also be obtained by the defendant because of warning letters sent to his clients in order to inform them of the alleged infringement, when no infringement is found. Damages are awarded on the basis of abuse of process (application of the general rule on tort of Article 1382 of the CC) only in particular cases, notably when the patentee’s intention to harm is evidenced.102

X. Costs 185 186

187

188

Court costs are nominal in France. As far as attorneys’ fees or bailiff ’s disbursement (in the case of a saisie-contrefaçon for example) are concerned, it is required that the losing party shall reimburse part thereof to the winning party. There is no specific rule as to the level of recovery of the fees: it is up to the discretion of the judges. Usually it may represent one- to two-thirds of the actual costs. The amount is set within the judgment on the merits, as there are no separate proceedings on costs. The budget for patent litigation varies from case to case, depending on the technical difficulty, the interests at stake, the pugnacity of the parties, the number of patents involved and also the expertise of the avocats and conseils en propriété industrielle involved. Most of the time, avocats and conseils en propriété industrielle bill on a time basis. It is impossible to indicate a typical budget. Only indicative ranges can be mentioned for first instance: — €50,000 to €100,000 for simple matters; — €100,000 to €250,000 for matters of average difficulty; — €200,000 to €500,000 for complex matters and high interests at stake.

189

These relatively low figures compared to patent litigation in the UK are mainly due to the rules of civil procedure, in particular the absence of disclosure, examination and cross-examination of experts and witnesses and a relatively short trial.

101 Cass Com, 12 June 2007, Normalu and Scherrer v Newmat, PIBD 2007, No 858–III–521, 39 IIC 354 (2008)— ‘False Ceiling’. 102 CA Paris, 19 December 2014, Newmat v Clipso Productions, RG No 12/13999.

Table 1 presents the total number of all decisions relating to patents (all categories included) handed down each year for the period 2000 to 2014 by the TGI Paris, CA Paris and Cour de cassation:

15

Cour de cassation 274

24

65

185

268

21

68

179

252

23

76

153

304

17

85

202

326

12

86

228

306

28

76

202

245

25

64

156

2008

326

23

81

222

2009

317

21

97

199

2010

307

31

84

192

2011

309

18

91

200

2012

335

23

94

218

2013

251

19

74

158

2014

4313

314

1175

2824

Total

288

21

78

188

Average

Table 2 presents the number of patent decisions on the merits handed down each year for the period 2000 to 2014 by the TGI Paris, CA Paris and Cour de cassation:

248

14

69

165

2006 2007

15

Cour de cassation

135

43

CA Paris

Total

77

TGI Paris

137

14

34

89

137

24

44

69

132

21

35

76

136

23

52

61

139

17

59

63

2000 2001 2002 2003 2004 2005

161

12

60

89

2006

153

28

41

84

138

25

44

69

166

23

43

100

148

21

40

87

2007 2008 2009 2010

131

31

34

66

147

18

44

85

149

23

38

88

2011 2012 2013

118

19

42

57

2014

2127

314

653

1160

Total

142

21

44

77

Average

Table 2: Number of Decisions on the Merits Handed down each Year for the Period 2000 to 2014 by the TGI Paris, CA Paris and Cour de cassation

191

245

65

CA Paris

Total

165

TGI Paris

2000 2001 2002 2003 2004 2005

Table 1: Total Number of all Decisions Handed down each Year for the Period 2000 to 2014 by the TGI Paris, CA Paris and Cour de cassation

190

I. Number of Patent Decisions Handed down by the French Courts for the Period 2000–14

C. Annex: Statistics on French Patent Litigation

Patent Enforcement in France 175

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II. Number of Preliminary Injunctions Requested and Granted for the Period 2000–14 192

It should be noted that data concerning preliminary injunctions in patent cases are not exhaustive as, contrary to decisions on the merits, not all the decisions are available. Figure 1 presents the number of preliminary injunctions requested and granted in first instance for the period 2000–14:

193

Preliminary injunction request

Preliminary injunction granted

14

13

12

11

10

9 8

8

8 6

6

0

6 5

4

4 2

8

4 3

3 2

3

1

3

3

2

2

1

4

4 3

2

1

1 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1

Figure 1: Number of Preliminary Injunctions Granted in First Instance for the Period 2000–14

194

Figure 2 presents the number of preliminary injunctions requested and granted on appeal for the period 2000–14:

Preliminary injunction request

Preliminary injunction granted

6 5

5

4

4 3

3 2 2

2 1

1

4

4

3 2

3

2 1

1

3 2

1

3

3

2 1

1 1

1 0

0 0 0 0 0 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Figure 2: Number of Preliminary Injunctions Granted on Appeal for the Period 2000–14

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III. Nature of Cases among the Decisions Handed Down in First Instance and on Appeal 195

Figure 3 illustrates the nature of cases among the decisions on the merits handed down by the TGI Paris for the period 2000–14:

Patent revocation (excluding infringement) 5%

Others 3% 2000–2014

Claim of ownership 5% Employees’ inventions 6%

Contract 7%

Infringement 74%

Figure 3: Nature of Cases among the Decisions on the Merits Handed down by the TGI Paris for the Period 2000–14

196

Figure 4 illustrates the nature of cases among the decisions on the merits handed down by the CA Paris for the period 2000–14 (appeals against the decisions of the French Patent Office are not included): Claim of ownership 4% Patent revocation (excluding infringement) 5%

2000–2014

Employees’ inventions 6% Others 7%

Contract 14%

Infringement 65%

Figure 4: Nature of Cases among the Decisions on the Merits Handed down by the CA Paris for the Period 2000–14

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IV. Winning Rates in First Instance and on Appeal 197

Figures 5 and 6 illustrate the outcome of the decisions about validity and infringement of, respectively, French patents and French designations of European patents, handed down in first instance for the time period 2000–14:

Patents valid and infringed 29%

Patents held invalid 34%

Patents valid and not infringed 37%

French patents 2000–2014 (531 patents)

Figure 5: Outcome of the Decisions about Validity and Infringement of French Patents Handed down in First Instance for the Period 2000–14

Patents held invalid 23% Patents valid and infringed 38%

Patents valid and not infringed 39% European patents 2000–2014 (464 patents)

Figure 6: Outcome of the Decisions about Validity and Infringement of the French Designation of European Patents Handed down in First Instance for the Period 2000–14

198

Figures 7 and 8 illustrate the outcome of the decisions about validity and infringement of, respectively, French patents and French designations of European patents handed down on appeal for the time period 2000–14:

Patent Enforcement in France

Patents valid and infringed 28%

179

Patents held invalid 35%

Patents valid and not infringed 36%

French patents 2000–2014 (308 patents)

Figure 7: Outcome of the Decisions about Validity and Infringement of French Patents Handed down on Appeal for the Period 2000–14

Patents valid and infringed 33%

Patents held invalid 23%

Patents valid and not infringed 45%

European patents 2000–2014 (166 patents)

Figure 8: Outcome of the Decisions about Validity and Infringement of the French Designation of European Patents Handed down on Appeal for the Period 2000–14

6 Patent Enforcement in the Netherlands JAN J BRINKHOF AND ANSELM KAMPERMAN SANDERS

A. Introduction and Brief Outline of the System I. Introduction 1

This contribution provides an updated account on how patent rights are enforced in the Netherlands. Dutch patents have an effect in the territories of the Kingdom of the Netherlands in Europe and the Dutch Caribbean (Bonaire, Sint Eustatius and Saba), as well as its overseas territories Curaçao, Sint Maarten1 and, in a limited fashion, Aruba.2 Since 4 April 2007, European patents may also have application pursuant to article 168 of the European Patent Convention (‘EPC’) in the territories above-mentioned, except for Aruba. 2 Prior to addressing the issue of enforcement of a patent, it is of importance to realise how Dutch patents are registered. In 1985, the Dutch system changed from a preexamination to a registration system with a novelty search. A Dutch patent is published together with a report that encompasses the results of the prior art search. Since 2006, this report also contains a written opinion indicating the relevance of the state of the art for the validity of the patent. This is to the benefit of third parties, who may later wish to challenge the validity of the patent, or argue non-infringement.

II. Judges 3

Disputes concerning infringement and nullity of patents are judged in the Netherlands by judges who share the same background with other members of the judiciary. Patent judges and do not have to meet special requirements. They are part of the ‘Rechtbank’ (District Court), the ‘Gerechtshof ’ (Court of Appeal) and the ‘Hoge Raad’ (Supreme Court of the Netherlands). In practice, judges who deal with patent cases also deal with disputes in other fields of intellectual property such as trade mark law, design law, copyright law and the law of unfair competition. In general, there is always some 1

Dutch Patent Act 1995 (PA 1995) arts 49(1), 53(4), 55, 57(2), 73(1), 74. PA 1995, arts 113–114 dealing specifically with issues of confidentiality related to patent applications and defence-related patents. 2

182

4

5

6

7

8

9

Jan J Brinkhof and Anselm Kamperman Sanders time left for ‘ordinary’ civil proceedings. One could say that patent judges are so-called semi-professionals. Since 1987, The Hague District Court has exclusive jurisdiction in cases of disputes concerning infringement and nullity of patents. The consequence is that such disputes in all of the instances are judged in The Hague only, by the District Court, the Court of Appeal and Supreme Court of the Netherlands. Prior to 1987, the judges in The Hague were exclusively competent in nullity cases only. Infringement cases were judged in all of the 19 district courts. Disputes concerning employees’ inventions are regarded as pertaining to labour law. These are judged by the ‘Kantonrechter’3 who generally deals with minor criminal and civil cases and enjoys special competence regarding labour disputes. Otherwise the exclusive competence of the courts in The Hague in patent cases is an expression of the view of the legislature that concentration will at least result in judges becoming more experienced and hopefully also more professional. There is a continuing trend towards concentrating cases concerning intellectual property in The Hague. The judges in The Hague are, for example, exclusively competent in certain disputes concerning trade marks and neighbouring rights. The District Court and the Court of Appeal in The Hague are designated respectively as the court of first instance and the court of second instance responsible for dealing with disputes regarding Community trade marks, Community designs, Community plant variety rights and cases related to compensatory regimes for neighbouring rights and home copy levies. In the Netherlands, the number of judges dealing with patent cases is small. Lawyers, public servants of ministries, members of the Netherlands Patent Office4 and university lecturers can function as deputy judges. The judges of the Supreme Court are regarded as generalists. The patent judges themselves are convinced that specialisation is inevitable as it takes much time to become acquainted with this field of law. Furthermore, since patent cases are almost exclusively pleaded by specialised lawyers, it would be undesirable if judges were to lag behind these lawyers with regard to expertise. If they do not keep up, there is a risk that they will not completely understand the pleadings and arguments of the lawyers and will be unable to assess them correctly. Inconsistent and inaccurate judgments might be the result. The court presidents and the boards responsible for the distribution of cases are not always aware of the special nature of patent disputes. Sometimes they do not realise that dealing with patent cases is more difficult and time consuming than the average civil case. This fact is not always taken into account when standards are set for the number of disputes judges are required to hear. There is also some concern about the recruitment of judges interested in patent cases and about their ability to obtain a sufficiently high level of knowledge and experience. Neither is it recommendable for judges to transfer too quickly to other sectors of the courts, as the return on investment in study and courses is rather inefficient. Dutch courts would render an average of 80 decisions per year on patent infringements.

3 Since the fundamental revision of the Code of Civil Procedure (2002) the Kantonrechter is no longer a judge of a special local court but a judge with special tasks within the Rechtbank. The purpose of the revision is to make the civil proceedings more efficient, less formal and complicated, while the judges should play a more active role. 4 The ‘Octrooicentrum Nederland’ (‘OCNL’), which is part of the Ministry of Economic Affairs; see http:// register.octrooicentrum.nl/register/searchform.

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III. Patent Attorneys and Patent Lawyers 10

11

12 13

14

15

In patent proceedings patent attorneys play an important role.5 Patent attorneys can be employees or independent professionals. Which type of patent attorney acts in a proceeding depends on the size of the companies involved. Only larger companies have their own patent departments. Often parties submit reports of their patent attorneys in the proceedings. In these reports patent attorneys give their opinion on infringement and validity of the patent. It is not exceptional that patent attorneys give their oral opinion during the hearing. This was allowed by law in 1995 (Dutch Patent Act 1910, art 54(3), now Patent Act 1995, art 82).6 It will not come as a surprise that the reports of the patent attorneys of the parties will typically contradict each other. Patent attorneys play a major role during the oral pleadings in presenting their oral opinion under the supervision of a lawyer. In general, these lawyers are specialised in the field of industrial property. Some lawyers deal mainly with patent cases. The number of patent lawyers is rather limited, and they know each other. All parties are allowed to conduct their own oral pleadings, though this rarely happens, and aptly so, since oral pleadings are an art. The Code of Civil Procedure contains no special procedures regarding patent disputes, but does contain provisions on intellectual property. The PA includes some particular provisions related to civil enforcement,7 and for rare cases of wilful or intentional patent infringement criminal enforcement is available.8 In practice, some special procedures have also developed. The Code of Civil Procedure has two main procedures for contentious disputes: the proceedings on the merits and summary proceedings. The implementation of the Enforcement Directive 2004/489 resulted in the inclusion of specific IP provisions in the Code of Civil Procedure (art 1019), which are echoed in Articles 70–74 of the PA 1995, and there are rules on accelerated proceedings in patent cases.10 Proceedings on the merits are mainly in writing. The basic structure is as follows. The plaintiff issues a writ of summons in which he summons the defendant to appear before the judge at a certain time. In this writ, the plaintiff indicates what he will claim on the day of appearance. Furthermore, the writ indicates extensively the legal and factual basis for the claim. Since the revision of the Code of Civil Procedure in 2002, the plaintiff has also the duty to mention the defence of the defendant if he is aware of it. In general, the plaintiff and the defendant are bound to disclose all the relevant information as early as possible. If the defendant decides to put forward a defence, he files a written reply. At the same time, the defendant could formulate a counterclaim. Subsequent to the defendant’s reply, the judge is obliged to examine on his own motion

5 ‘The Netherlands Institute of Patent Attorneys’ is the professional organisation of all patent attorneys in the Netherlands; see www.en.octrooigemachtigde.nl. 6 Hereinafter PA 1910, or PA 1995 respectively. 7 PA 1995, arts 70–74. 8 ibid, art 79, with also in these criminal cases exclusive jurisdiction for the District Court The Hague. 9 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L195/16. 10 ‘Reglement Versneld Regime in Octrooizaken’ (‘VRO’) available at: www.rechtspraak.nl/.

184

16

17

18 19

20

Jan J Brinkhof and Anselm Kamperman Sanders whether the case is suitable for a hearing during which parties can give information and try to secure an amicable settlement (art 131 in connection with arts 87 and 88 of the Code of Civil Procedure). During this hearing the judge is at the very least passive. Many disputes are settled completely or partially during these hearings. In patent cases such hearings do not occur very often. Usually the judge allows the plaintiff to hand in a counterplea. Generally, this opportunity is used by the plaintiff. Finally, the defendant can draft a rejoinder. The parties can then request a judgment or pleadings. During the pleadings stage, the legal aspects of a case are normally explained. In ordinary cases, pleadings are exceptional; in patent cases pleadings are the norm. In practice, the rules of the district courts and courts of appeal regarding procedure have been harmonised. These rules restrict the possibilities for the parties to slow down the proceedings, and have streamlined the proceedings themselves. Accelerated proceedings have been introduced in patent cases on the merits in a response to complaints about slow proceedings. Characteristic in patent litigation is that at the beginning of the proceedings, a strict timetable is set for the exchange of documents and the hearings, limiting the timeframe for the trial typically to six months from the moment the order for streamlining is issued. Furthermore, there are rules with regard to the submission of documents. The intention is to know beforehand when the court will deliver its decision. One has to realise that it is often not possible to hand down a final judgment. It may be necessary to hear witnesses or to have the written opinion of experts. In general, decisions can be appealed. On appeal, mistakes can be rectified, and it amounts to a full review on the law and the facts. Parties can reduce the extent of the dispute on appeal. Often the case is dealt with de novo. A final appeal can be brought before the Supreme Court on matters of law only. An infringement action on the merits takes about 12 months until a decision is reached. Accelerated procedures bring this down to eight months, while the kort geding might take two to three months. For appeals, these take an average of 12 months for normal and eight months for accelerated proceedings. A final appeal adds between one and two years. It will be interesting to see how the Dutch litigation practice will develop in light of the Unified Patent and Unified Patent Court Agreement. The language regime11 related to the unitary patent12 may have an impact on the entire patent practice at The Hague,13 since it is foreseen that a UPC Local Division will be located there. This means that there may be a significant pressure to allow English to become an admissible language for all proceedings. Presently, a Dutch patent application may already be filed in English, provided the claims are available in the Dutch language. From the perspective of access to justice and attractiveness of the courts in The Hague for resolving patent disputes, this should in fact be treated as an opportunity, rather than a problem.

11 Council Regulation 1260/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements, OJ L361/89. 12 Regulation 1257/2012 of the European Parliament and of the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection, OJ L361/1. 13 See in this light also the as yet still to be established rules of procedure of the UPC at: www.unified-patentcourt.org.

Patent Enforcement in the Netherlands

185

B. Problems Related to Enforcement of Patent Rights I. Types of Action 21

22

14

Actions can be initiated by the patentee in relation to any infringement, both direct14 and indirect.15 Dutch courts will also accept claims for a declaration of non-infringement brought by any third party in relation to a Dutch patent. Since provisional relief is not suitable to obtain a declaration of non-infringement, such a claim should be brought through proceedings on the merits, and best through the accelerated procedure. In any event, the Netherlands is not the ideal jurisdiction for the launch of a torpedo in an attempt to stay proceedings elsewhere. Conversely, when confronted with a typical Italian or Belgian torpedo, a Dutch court may refuse to stay proceedings if it deems the action to be an abuse of procedural law. This is so if it views the sole purpose of the torpedo action to be harmful to the interests of the patentee, serving a purpose other than for which the jurisdiction abroad was granted, or not to be in the interest of either party.16 In rare cases of wilful or intentional patent infringement, criminal enforcement may be available for up to six months’ imprisonment and/or a fine. The patentee can request the procedure. In relation to border enforcement, the patentee can rely on the EU Customs Regulation No 608/2013,17 although Dutch practice has been reined in by the ‘Guidelines of the European Commission concerning the Enforcement by EU customs authorities of IP rights with regard to goods, in particular medicines, in transit through the EU’.18 The decisions of the Court of Justice of the European Union (‘CJEU’)19 in Philips and Nokia20 have curtailed the Dutch practice that relied on a socalled manufacturing fiction to assess whether goods in transit would infringe a Dutch patent, thus allowing a patentee to use the Customs Regulation to seize these goods even though these were legitimately produced in the country of origin, and could be legally imported into the country of final destination. The seizure of medicines in transit from India to Brazil in the Rotterdam harbour and various airports even caused India21 and Brazil22 to request WTO consultations in May 2010.

PA 1995, art 70. ibid, art 73. 16 District Court The Hague, 29 September 2009, Intellectuele Eigendom en Reclamerecht (IER) 2000, 8 (DSM v Novo). 17 Regulation 608/2013 of the European Parliament and of the Council of 12 June 2013 concerning customs enforcement of intellectual property rights, OJ L191/15. 18 The Guidelines on customs enforcement are available at: http://ec.europa.eu/taxation_customs/resources/ documents/customs/customs_controls/counterfeit_piracy/legislation/guidelines_on_transit_en.pdf. 19 Court of Justice of the European Union (‘CJEU’) is term that shall be used hereafter to describe both the European Court of Justice and the Court of Justice of the European Union. 20 CJEU, 1 December 2011, joined cases C-446/09 (Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Co) and C-495/09 (Nokia Corporation v Her Majesty’s Commissioners of Revenue and Customs) ECLI: EU:C:2011:796 and ECLI:EU:C:2011:9. 21 See the request for consultation WT/DS408/1, in which India alleges that these actions are inconsistent with the obligations of the European Union and the Netherlands under arts V and X of GATT 1994 and under arts 28 read together with art 2, arts 41 and 42, and art 31 of TRIPS, read together with the provisions of the August 2003 Decision on TRIPS and Public Health. 22 See similarly Brazil’s request for consultation on the seizure of Generic Drugs in Transit: WT/DS409/1. 15

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II. Competent Parties 23

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Because of the fact that most procedures involve infringement, plaintiffs in most cases are the patentees.23 Licensees are not allowed to commence infringement proceedings except by an agreement with the patentee. Otherwise, the licensee can participate in the process when the patentee claims damages or surrender of profits in the name of the licensee. It is possible that infringement disputes are commenced by persons other than the patentee. This happens when someone wants to obtain a declaration of non-infringement. Such claims are mentioned separately in the Patent Act.24 These types of infringement procedure are rather rare.

III. Competent Courts 1. National Jurisdiction 25

As mentioned earlier, The Hague District Court is exclusively competent to judge disputes concerning infringement and nullity of patents, both based on the PA 1910, the PA 1995 or patents granted by the European Patent Office.25 The Hague Court of Appeal is exclusively competent for appeals.

2. International Jurisdiction 26

27 28

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Even if the judge bases his competence on the Brussels Convention, the Regulation on Jurisdiction and the Enforcement of Judgments or the Lugano Convention26 and suit is brought at the place of domicile of the defendant (Regulation, art 2) or the place where the harmful event occurred (Regulation, art 5(3)), it is likely that The Hague District Court is exclusively competent, even if the place of residence or the place of damages is outside the district of The Hague. This has not been finally decided upon, but corresponds with the rationale of concentrating patent cases in The Hague. In recent years, there has been much discussion about the opinions of Dutch courts concerning international jurisdiction. If in a dispute the Regulation is applicable and if the defendant has his place of domicile in the Netherlands, then according to the Dutch courts, there is jurisdiction based on Article 2 of the Regulation. When the defendant is a legal entity, Article 60 of the Regulation is applicable. This Article refers to international private law. According to Dutch international private law, the place of domicile of a legal entity is not the ‘siège réel’ but the registered seat.27 If the patentee is of the opinion that a defendant having

PA 1995, art 70(1). ibid, art 80(2). 25 PA 1910, art 54; PA 1995, art 80. 26 Regulation 1215/2012 of the European Parliament and Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ L351/1. Hereafter reference is only made to the Regulation. 27 Court of Appeal The Hague, 23 April 1998, IER 1998, 286 (Expandable Grafts v Boston Scientific). 24

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his place of domicile abroad infringes a Dutch patent, the Dutch judge has international jurisdiction on the basis of Article 5(3) of the Regulation. In the Netherlands it has been assumed that international jurisdiction is restricted to cases of an (imminent) infringement of a Dutch patent.28 This is in accordance with the judgment of the Court of Justice of the European Union in Shevill v Presse Alliance.29 Article 5(3) of the Regulation is interpreted narrowly by the Court of Appeal. The Court of Appeal is of the opinion that this provision is not applicable to requests for a declaration of non-infringement of a Dutch/European patent against a foreign defendant.30 Of course, one could argue that the defendant has the opportunity to summon the plaintiff based on Article 5(3) of the Regulation for the infringement of a Dutch/European patent before the Dutch judge, and the declaration of noninfringement is a mirror image thereto, and thus the plaintiff can summon the defendant before a Dutch judge to obtain a declaration of non-infringement. The Hague Court of Appeal did not agree with this. The Court of Appeal held that Article 5(3) of the Regulation is an exception to the general rule of Article 2 and has to be interpreted narrowly. The Court of Appeal found support for its view in Article 14(5) of the Protocol on the Settlement of Litigation concerning the Infringement and Validity of Community Patents.31 There has been much discussion about Article 6(1) of the Regulation. At first sight this article seems to lend itself to forum shopping by the patentee who is confronted with the infringement of parallel patents derived from a single European patent by a multinational with subsidiaries in several Member States. An example can explain this. Assume that a European patent has been granted to Philips in which all Member States are designated. Assume furthermore that Philips takes the view that Siemens infringes the parallel patent rights, for example in the Netherlands, Germany, France and the United Kingdom. Siemens has subsidiaries in all of these countries. Can Philips summon Siemens Germany, Siemens the Netherlands, Siemens France and Siemens UK jointly before a Dutch, German, French or English court based on Article 6(1) of the Regulation and require all those Siemens companies to stop infringing the parallel patents in all these countries? The District Court The Hague answered this question in the affirmative. The District Court attached much significance to the rationale of Article 6(1) of the Regulation—avoiding irreconcilable decisions—and to the character of a European patent.32 Possibly heeding criticism from German and British judges, The Hague Court of Appeal decided in Expandable Grafts v Boston Scientific that this interpretation was too broad. The Court of Appeal assumed that a European patent was not a single patent valid for all countries it has been granted for, but rather that it consists of a bundle of national patents. These separate national patents have much in common as they were granted in a single procedure at the European Patent Office in compliance with the

28 See eg District Court The Hague, 23 December 1998, Bijblad bij de Industriële Eigendom (BIE) 1999, 39 (Chiron v Roche). 29 CJEU, 7 March 1995, (C-68/93) [1995] ECR I—415, 29 IIC 96 (1998) (Shevill v Presse Alliance). 30 Court of Appeal The Hague, 21 January 1998, IER 1998, 135 (Evans v Chiron). 31 ibid. 32 ibid.

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Jan J Brinkhof and Anselm Kamperman Sanders provisions and rules of the European Patent Convention, and subsequently subject to harmonised but not identical national patent laws (EPC, arts 2(2) and 64(1)). On Article 6(1) of the Regulation the Court of Appeal ruled that the literal text of this provision does seem to allow a plaintiff to summon defendants from different countries before a judge in a country chosen by the plaintiff. The plaintiff seems to have as many choices as the number of Member States where the defendants have their domiciles. The Court of Appeal disagreed with the result, however, and referred the question to the Court of Justice of the European Union. In Kalfelis v Schröder,33 the European Court ruled ‘that there must be a connection between the claims against all parties’. Furthermore, the Court of Appeal considered whether there was such a connection where the owner of a Dutch patent from a bundle of European patents requested an injunction against a defendant domiciled in the Netherlands who put certain products on the market, and against a defendant domiciled in France who was allegedly infringing a French patent from the same bundle by putting an identical product onto the French market. The Court of Appeal answered this question negatively. Even if judgments in the Netherlands and France were different—which is possible notwithstanding the fact that the same rules of substantive patent law apply—the decisions cannot be said to be irreconcilable with each other. The national patents of a European bundle of patents exist independently of each other. Therefore, it is possible that one patent from a bundle is revoked and the others are not. Furthermore, the scope of protection can be different. Patents resulting from a European patent have their past in common, but not their future. In the example discussed here, the patentee who wants to stop infringement of his patents in France and the Netherlands is forced to commence procedures in both countries with the risk that the outcome in both countries may be different. However, with regard to the fundamental meaning of Article 2 of the Regulation and the exceptional character of Article 6, the interests of the defendant summoned before a judge in a country of his domicile or seat is more important than the trouble the patentee incurs, particularly taking into account that diverging decisions are within the nature of a European patent. This might be different in the abovementioned example where the parties belong to the same undertaking. When different subsidiaries which belong to the same company market identical products on different markets, this has to be considered as one common action based on a common business strategy. A proper administration of justice requires a simultaneous examination and judgment in such a situation. This should be permissible under Article 6. However, it does not mean that the plaintiff has the choice of summoning all the subsidiaries of the business concerned before the court where one subsidiary is located. According to the Court of Appeal, this would be contrary to legal certainty. An interpretation of Articles 2 and 6 in accordance with Article 5(3), which require the plaintiff to bring the suit where the business concern’s headquarters are located, might be the most preferable. The claims and the court are most closely connected here. The advantage of this solution is that only one forum has jurisdiction, and therefore the possibilities of forum shopping are reduced. The Court of Justice of the European Union in the case

33

CJEU, 27 September 1988, (C-189/87) [1988] ECR 5565.

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Roche v Primus34 on 13 July 2006 arrived at an even narrower interpretation of Article 6(1) of the Regulation, ruling that several foreign companies cannot be sued together with one local company before a single national court on the basis of this provision. This has been seen as the death of the Dutch ‘spider-in-the-web’ doctrine. The CJEU has since departed from Primus v Roche by expanding the scope of application of Article 6(1) in Solvay v Honeywell35 and to allow foreign defendants to be sued as joint tortfeasors in relation to (an) infringement(s) they are suspected of having committed in the same country or countries. Article 22(4) of the Regulation has been interpreted by the Dutch courts as not permitting them to revoke a foreign patent. Yet, Articles 25 and 22(4) are not understood to mean that Dutch courts no longer have jurisdiction over an infringement case involving a foreign patent when the estoppel/counterclaim of nullity is raised.36 This is contrary to the opinions of the English High Court and Court of Appeal.37 The Dutch courts in this case will stay the proceedings until the foreign judge (or patent office) has decided on revocation, unless the claim for revocation of the patent clearly has no chance of succeeding.38 Since the Court of Justice of the European Union in Solvay v Honeywell39 has expanded the possibilities for cross-border injunctions,40 a Dutch judge can once more, as part of a request for cross-border provisional measures, form an opinion on the relevance of the nullity arguments raised in a counterclaim in relation to a foreign patent. When a Dutch judge has international jurisdiction in proceedings on the merits based on the Regulation, he also has jurisdiction in the kort geding.41 This means that a judge in kort geding can issue orders and injunctions with respect to foreign patents. When the defendant argues that the foreign patent is invalid, the presiding judge will hesitate before granting an injunction against infringement. The District Court has taken the position that it has no cross-border jurisdiction in kort geding.42 Yet in Yellow Page Marketing v Yell,43 the Court of Appeal The Hague, though holding that the rule on exclusive jurisdiction of Article 22(4) of the Brussels Regulation does not sit well with

34 CJEU, 13 July 2006, (Case C-539/03) (Roche v Primus); see also CJEU, 13 July 2006, (Case C-4/03) (GAT v LuK), reaching a similar decision in respect of art 22(4) of the Brussels Regulation. 35 CJEU, 12 July 2012, (Case C-616/10) (Solvay v Honeywell); see also CJEU, 11 October 2007 (Case C-98/06) (Freeport v Arnoldson) and CJEU, 1 December 2011 (Case C-145/10) (Painer v Standard Verlags). 36 Expandable Grafts v Boston Scientific (n 25). 37 [1998] FSR 222, 29 IIC 927 (1998) (Fort Dodge v Akzo). 38 Expandable Grafts v Boston Scientific (n 27). 39 See n 35 above. 40 See in this respect GAT v LuK (n 34). 41 cf CJEU, 17 November 1998, (C-391/95), [1998] ECR I-7091 (Van Uden) [19]. 42 It seems that the District Court has become more cautious in granting cross-border injunctions. See Court of Appeal The Hague, 3 July 2003, BIE 2003, 88 (Medinol v Cordis), which was of the opinion that cross-border injunctions should not be ordered when there is no literal infringement but infringement on the basis of the doctrine of equivalence. Subsequently it denied a cross-border application of the Dutch injunction on 28 October 2003, and the District Court The Hague on 5 August 2004, IER 2004, 95 (Medinol v Cordis) ordered the patentee to refrain from initiating further infringement proceedings pending opposition against the validity of the European patents in question. 43 Court of Appeal The Hague, 12 July 2012, Landelijk Jurisprudentie Nummer (LJN) BR1364 (Yellow Page Marketing v Yell).

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Jan J Brinkhof and Anselm Kamperman Sanders the nature of a provisional measure, held that the presiding judge can nevertheless make a preliminary judgment on the likely success of the invalidity claim raised.44 Based on Article 31 of the Regulation, the presiding judge can even grant a provisional order in cases where the judge in the proceedings on the merits is not internationally competent. The judge here assumes that the provisional order will only have effect in the Netherlands.45 In this case, the judge will also hesitate before granting injunctive relief when the defendant argues invalidity of the patent. A problem for which there is currently no solution is the so-called ‘torpedo’. An example is the following situation. A company fears that it will be sued for infringement of parallel patents from a European application. It starts proceedings against the patentee by way of a cross-border declaration of non-infringement. It prefers to bring the case before a forum that presumably does not provide an expeditious procedure because the judicial apparatus has become clogged. What happens if the patentee subsequently summons the potential infringer before the Dutch courts? The Dutch judge assumes that Article 27 of the Regulation (lis alibi pendens) forces him to stay proceedings until the foreign judge has rendered a decision concerning his international jurisdiction as to a cross-border declaration of non-infringement; this principle is known as the torpedo. It is hoped that there will soon be a preliminary question addressed to the Court of Justice of the European Union about international competence concerning cross-border decisions for non-infringement. The torpedo can only be used where a national judge declares himself competent to hand down such decisions.46

IV. Preparation for Trial—Preliminary Measures 1. Obtaining Evidence 38

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In Dutch law a measure such as the Belgian or French ‘saisie-contrefaçon’ was unknown prior to the implementation of the Enforcement Directive 2004/48. Neither was discovery. Articles 1019 to 1019(j) of the Code of Civil Procedure implemented the Enforcement Directive 2004/48 so as to enable the preservation of evidence located in the Netherlands, even if this relates to foreign IP rights.47 Pursuant to Article 46 of the TRIPS Agreement, Article 70(6) of the PA 1995 allows the patentee to request the seizure or destruction of any infringing products. Furthermore, the patentee can request the confiscation of materials and equipment principally used for the production of those products.48

See in this respect also Court of Appeal The Hague, 20 May 2014, LJN 200.096.074/01 (Apple v Samsung). See CJEU in Van Uden (n 41) [37]–[41]. 46 Court of Appeal The Hague, 21 January 1998, IER1998, 135 (Evans v Chiron) held that it has no international jurisdiction as to claims against foreign defendants for a cross-border declaration of non-infringement. 47 President District Court Arnhem, 1 June 2007, BIE 2008, 2 (Synthon v Astellas Pharma); Court of Appeal The Hague, 16 July 2008, BIE 2009, 48 (Bettacare v H3); Court of Appeal The Hague, 23 April 2013, IEPT20130423 (APE v PTC), holding that Solvay v Honeywell raises questions on jurisdiction, but that in case of a cross-border nullity defence the Dutch court can assume jurisdiction based on 31 Brussels Regulation, art 31. Art 22(4) of the Brussels Regulation does not stand in the way of this possibility as long as any measure awarded is provisional. 48 Remarkably enough, the PA 1910 had not been changed in this respect. 45

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The patentee can request the court to hear witnesses as to the facts and circumstances which are of importance for determining infringement and nullity before commencing infringement proceedings, and before the defendant commences revocation proceedings. The general rules for the testimony of witness hearings (Code of Civil Procedure, arts 186–193) apply to these cases. Since 1987, the patentee and third parties may also request the court to order an expert opinion or a provisional visit and inspection before commencing proceedings (Code of Civil Procedure, arts 202–207). These procedures are rarely used, however, perhaps owing to a lack of awareness by practitioners. Exploring them might be worthwhile, however.

2. Kort geding 41

Apart from proceedings on the merits, the Code of Civil Procedure contains provisions concerning the ‘kort geding’. The kort geding (sometimes referred to in English as summary or abbreviated proceedings) originates from the French ‘référé’, but has developed separately. In urgent cases, the presiding judge can be asked to grant a provisional measure. The procedure is extremely simple. The plaintiff serves a writ of summons for the defendant to appear at a certain date before the President of the court. The writ of summons contains the claim of the plaintiff and a concise indication of the basis of the claims. During the hearings there is an oral explanation from the plaintiff where the defendant can defend himself. The presiding judge gives his written decision with the grounds therefor within one or two weeks. Appeal and final appeal are possible. The most important characteristics of kort geding are: — the procedure is informal; — the presiding judge is proactive and tries to reach practical solutions with the parties; — legal rules of evidence do not apply to the kort geding; — orders or injunctions are strengthened by ‘dwangsom’ (French: ‘astreinte’; German: ‘Zwangsgeld’), penalty sums to be paid to the plaintiff by the defendant who breaches the orders or injunctions; and — appeal does not suspend the execution of the judgment.

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The Hague District Court has also adopted special rules in relation to ‘grijsmaking’ (greying) of conservatory measures requested in the context of preservation of evidence, taking samples and bailiff ’s description, as well as in cases of where immediate relief is requested by means of ex parte provisional and precautionary measures (Code of Civil Procedure, art 1019(b)–(d) and (e)). Any third party may submit written objections, accompanied by the necessary evidence, against the award of such measures. This also means that the judge will check whether such a grijsmaking has been submitted prior to the submission of the plaintiff ’s request for such measures. A grijsmaking will lose its validity after six months of filing, but may be renewed by email.49 In general, the law does not require proceedings on the merits after the kort geding. However in patent cases (and in cases concerning intellectual property rights mentioned in the TRIPS Agreement) this is different. If injunctions are granted, the judge The email address is: [email protected].

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Jan J Brinkhof and Anselm Kamperman Sanders determines a reasonable period within which the plaintiff should commence proceedings on the merits (Code of Civil Procedure, art 1019(i)). The provisional measures cease to have effect if proceedings leading to a decision on the merits of the case are not initiated within that period. This Article was incorporated in the Code of Civil Procedure after the CJEU ruled that the Dutch kort geding is a provisional measure within the meaning of Article 50(6) of the TRIPS Agreement50 and after the CJEU ruled that national courts should interpret their law as much as possible in conformity with Article 50(6) of the TRIPS Agreement.51 The President usually makes a prognosis on the outcome of the proceedings on the merits.52 This outcome and the balancing of the interests of the parties are decisive for the question of whether an immediate measure is appropriate. The presiding judge uses the kort geding to a large extent to meet the requirements of speedy justice. The legal requirement of urgency is not interpreted very strictly, and it seldom happens that a President refers the parties to proceedings on the merits. For patent cases the kort geding is inviting and in fact is used in about half of all cases although there has been a shift to proceedings on the merits since the introduction of Article 1019(i) of the Code of Civil Procedure. A patentee who sees that his patent is infringed wants to stop this infringement as soon as possible. An injunction strengthened with an ‘astreinte’ can effectively remove an infringer from the market. An advantage of expeditious injunctions is that complicated proceedings concerning damages can be avoided. The kort geding contains some risks. Sufficient attention is not always paid to the complexity of the facts of the case. This can be a huge disadvantage for the defendant. The plaintiff can prepare the case thoroughly and choose the right moment to commence the proceedings. The defendant has no choice but to be ready with his defence in a few weeks’ time. The defendant will not always succeed in replying adequately to the legal and factual aspects. In the Hoffmann La Roche v Organon case, the Court of Appeal tried to tighten the reins.53 This judgment resulted in parties opting more frequently for proceedings on the merits. However, the District Court The Hague for some time has been aware of the abovementioned disadvantages of the kort geding. The District Court The Hague started an experiment for factually and technically difficult cases to accept the exchange of documents before the oral hearings (kort geding with written phase). Such a kort geding is quite similar to proceedings on the merits. The kort geding with written phase has gained in popularity. So much so that the judge will ab initio determine the dates on which conclusions and productions have to be delivered and when pleadings will take place. The question arises whether it is appropriate to create a special kort geding for certain types of cases. Are patentees given preference over other litigants? It is better to act according to the intention of the legislature: if the dispute is too complicated,

50 CJEU, 16 June 1998, (C-53/96), [1998] ECR I-3603, 1999 Nederlandse Jurisprudentie (NJ) 240 (Hermès), 30 IIC 292 (1999). 51 CJEU, 14 December 2000, (C-300/98, C-392/98), [2000] ECR I-11307 (Tuk v Dior) and (Assco v Layher). 52 See eg Supreme Court of the Netherlands, 21 April 1995, 1996 NJ 462 (Boehringer), 29 IIC 699 (1998) (Recormon). 53 Court of Appeal The Hague, 12 September 1996, IER 1996, 237.

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proceedings on the merits will be required. Accelerated proceedings on the merits are a better alternative, as practice shows. Patentees increasingly use this possibility. Therefore the court now has the problem that it can hardly deal with all the cases in due time.

V. The Trial 49

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54 55 56

Traditionally, the writ of summons is rather brief as to the legal basis of the claims.54 What is actually being claimed is described comprehensively. Where injunctive relief is claimed, a general wording is sufficient: the patentee requests the judge to stop the defendant from infringing his patent. When the judge grants this claim, he normally renders an injunction in such general terms without a more detailed description of the infringement. The Supreme Court of the Netherlands concurred with this approach.55 The scope of such a general injunction is limited to acts that doubtlessly infringe the patent, inter alia, by taking into account the grounds on which the judgment is based. Also the reply to the writ used to be rather brief.56 The written summary of arguments forms part of the procedural documents. The pleadings in a trial follow after the parties have exchanged the written documents. The pleadings are conducted by lawyers rather than patent attorneys. Occasionally, patent attorneys will give their opinion. The participation of the judge during the pleadings largely depends on his personality. Some judges are proactive: they ask questions and request that lawyers clarify or explain certain issues. Judges also ask the parties whether they intend to uphold their assertions, claims and defences in full. Some judges ask whether the parties can reach agreement on the whole dispute or parts thereof. Other judges are more passive. They take the view that it is not their task to be active during civil proceedings: the parties determine the scope of the legal dispute, judges render a decision. Without any doubt, the number of proactive judges is increasing. The legislature has given judges more leeway in taking an active role in proceedings. The judges can summon the parties in order to request information and to try to settle the dispute amicably (Code of Civil Procedure, arts 87 and 88). The judge can request the parties to exchange certain documents. Furthermore, the judge can require evidence as regards certain assertions that are the subject of dispute. There can be evidence by exchanging written documents, but normally witnesses are heard under oath. Normally the judge starts examining the witnesses, followed by questions of counsel for the plaintiff and defence. The witnesses’ testimonies are included in the official court report. The judge can also ask independent experts to testify. In practice, the parties make suggestions as to the experts to be appointed, and the questions to be answered by them. After submitting the (normally) written report, the parties may submit their written

This has changed since the revision of the Code of Civil Procedure in 2002. Supreme Court of the Netherlands, 3 January 1964, NJ 1964, 445 (Lexington). This has changed since the revision of the Code of Civil Procedure in 2002.

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Jan J Brinkhof and Anselm Kamperman Sanders comments. The judge can set a hearing for the experts to explain their report and the parties to raise questions. Experts are often appointed when the inventive step of an invention is in dispute. Hearing witnesses would be necessary when infringement and prior use is in dispute. Disputes involving the infringement of a patented process create the most problems. The possible infringer here would like to avoid the evidence of witnesses who may inform the patentee about the defendant’s trade secrets.

VI. Types of Infringement 1. Direct and Indirect Infringement 54

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The patentee has recourse in relation to both direct and indirect patent infringement. The only limitation being that the defendant is engaging in activities ‘in or for a business’, which is interpreted broadly and includes all professional activities, including those employed by universities and governmental or administrative activities.57 Article 53 of the PA 1995 describes a broad range of activities that fall within the exclusive right of the patentee, enabling him to take action against all those who: ‘make, use, put on the market or resell, hire out or deliver the patented product, or otherwise deal in it in or for his business, or offer, import or stock it for any of those purposes; or who use the patented process in or for his business or use, put on the market, or resell, hire out or deliver the product obtained directly as a result of the use of the patented process, or otherwise deal in it in or for his business, or offer, import or stock it for any of those purposes.’ The act of ‘offer for sale’ is interpreted rather broadly and seems to include all sorts of preparatory acts.58 According to Article 73 of the PA 1995 a patent can also be enforced against commercial parties that offer or supply in the Netherlands, from within or from outside of the territory, the patented invention or the means for the application of the invention in respect of an essential part of the invention to parties that are not entitled to use the patented invention. ‘Essential means’ cover parts, raw materials and all other elements that may be used in the application of the invention. Only products that are generally available in the market are excluded, unless the supply or offer of these is accompanied by an incitement to infringe the patent. In assessing the essentiality of the means, all elements contained in the claims will be taken into consideration and will in principle be deemed essential. In 2003, the Supreme Court of the Netherlands limited the hitherto wide scope of indirect infringement. In Sara Lee v Intergro,59 a case involving Sara Lee’s Senseo coffee machine enclosure patent (later revoked), it held that for the establishment of indirect infringement, it is not sufficient for the element (coffee pouches) to be essential for the execution of the patent. Rather, only elements that differentiate the patented technology from the state of the art can be considered essential. Since

57 See District Court Alkmaar, 2 December 1991, BIE 1992, 12, holding that activities related to winding down a bankrupt company are still deemed to be ‘in or for his business’. 58 Supreme Court of the Netherlands, 22 June 2012, IER 2012, 59; 45 IIC 973—(Pharmacy v Glaxo) ‘G—Standard’. 59 Supreme Court of the Netherlands, 31 October 2003, BIE 2004, 47 (Sara Lee v Intergro).

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ground coffee in pouches was not considered novel in any way, the offer for sale of coffee pouches for use in the Senseo coffee machines without Sara Lee’s authorisation was not held to be indirectly infringing upon its patent.

2. Literal and Equivalent Infringement 57

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In infringement proceedings the main question is generally whether the product or the process is within the ambit of the scope of the patent. Case law is based on the Protocol on the interpretation of Article 69 of the EPC. Judges try to find a balance between fair protection of the patentee and a reasonable degree of legal certainty for third parties. Judges of the District Court and Court of Appeal are interested in the decisions of their foreign colleagues. They try to arrive at the same results. The traditional view held by Dutch courts was to determine the scope of patent protection by the ‘doctrine of the essence of the invention’. Under this doctrine, the patent claims were not of vital importance. A broad scope of protection was given in accordance with the former German approach. This approach could not be reconciled with Article 69 of the EPC, and the Supreme Court changed course in a 1995 decision.60 The Supreme Court acknowledged that the ‘doctrine of the essence of the invention’ did not sufficiently take into account legal certainty for the benefit of third parties. Based on the Protocol, the scope of patent protection could not be based solely on this doctrine. Equivalent variants can be covered by patent protection if, under the formula employed in American case law, these have ‘substantially the same function, way and result’. The American ‘all elements rule’ is also applied in Dutch law.61 An equivalent variant is not per se covered by the scope of protection. In 2000, the Court of Appeal held that the doctrine of equivalence is determined by the Protocol and cannot be used to remedy imprecisely worded patent claims.62 The Supreme Court did not concur. According to the Supreme Court, the Court of Appeal’s ruling that it would not be fair, in the event that the claim has been carelessly drafted, to afford protection to the patentee for the obvious equivalent embodiments that were known at the time the claim was drafted cannot be reconciled with the third sentence of the Protocol on the Interpretation of Article 69 of the EPC.63 In AGA v Occlutech,64 the Supreme Court of the Netherlands not only reaffirmed that the ‘essence of the invention’ is a mere point of view and not a point of departure for the assessment of infringement, but also introduced the principle that what is disclosed but not claimed is disclaimed. Equivalence protection after grant does therefore not include subject matter given up during substantive prosecution of the patent application. The teaching of the essence of the invention

60 Supreme Court of the Netherlands, 13 January 1995, 391 (Ciba Geigy v Oté Optics), 28 IIC 748 (1995) (Contact Lens Liquid). 61 See in this respect art 2 of the Protocol on the Interpretation of art 69 EPC 2000, which entered into force in December 2007: ‘Equivalents—For the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims’. Note that the majority of the cases cited in this section stem from before the EPC 2000. 62 Court of Appeal The Hague, 30 March 2000, BIE 2003, 99 (Van Bentum v Kool). 63 Supreme Court of the Netherlands, 22 March 2002, BIE 2003, 100 (Van Bentum v Kool). 64 Supreme Court of the Netherlands, 25 May 2012, IER 2012, 58 (AGA v Occlutech).

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Jan J Brinkhof and Anselm Kamperman Sanders (het wezen van de uitvinding) is, however, never far from the minds of the judges, so it seems. In Medinol v Abbott,65 the Supreme Court of the Netherlands references the meaning of the essence of the invention lying behind the literal wording of the conclusions as a point of view, while distinguishing between the interpretation of the patent at two points in time: (1) that of the establishment of the scope of the patent at the time of filing or priority date; and (2) that of establishing infringement where the circumstances at the time the infringement took place can also be taken into account. The Court of Appeal has taken this decision as an opportunity to introduce a so-called ‘context-bound interpretation’,66 according to which the scope of the patent will have to be established based on the perspective of the person skilled in the art at the first date, and taking into consideration the known equivalents at that moment in time. This reduces the scope of the doctrine of equivalence to those variations that were not yet foreseeable on the first date.

VII. Defences 1. Invalidity 60

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In infringement proceedings some defences are obvious: the defendant will argue that there has been no infringement. A revocation argument can be raised as an estoppel or as a counterclaim aimed at the complete or partial revocation of the patent. In the first case, the infringement suit would simply be dismissed, as infringing an invalid patent is impossible. In the second case, which is more common, the judge would declare the patent completely or partially invalid, erga omnes, apart from discussing the infringement claim. In general, the judge will concentrate on questions of validity before determining the question of infringement. Since the coming into force of the EPC 2000 in 2007, there is an alignment of Dutch practice with Article 138(3) of the EPC in respect of the possibility to limit the patent through amendment of the claims. Prior to 2007, the Supreme Court of the Netherlands had imposed quite a number of limitations on the possibility to amend the claims,67 in essence condemning the patentee for not having been diligent enough in demarcating the boundaries of the valid parts of the patent in context of the relevant state of the art. It regularly occurs that proceedings for the revocation of a parallel patent from the bundle of European patents are commenced in another country or before the European Patent Office while an infringement action is pending in the Netherlands. The Dutch judge has several options in such a situation. He can stay the counterclaim of revocation until another judge has decided on the matter of validity. The judge is not obliged to do this, however, and can decide without having regard to cases pending in other countries. When revocation is used as a defence in kort geding, the judge can

Supreme Court of the Netherlands, 4 April 2014, BIE 2014, 39 (Medinol v Abbott). District Court The Hague, 18 June 2014, IE Forum 13955 (MBI v Shimano); and District Court The Hague, 23 July 2014, IE Forum 14076 (Bayer v Sandoz). 67 See the superseding effect of Court of Appeal The Hague 30 March 2010, IER 2010, 58 (Bébécar v Maxi Miliaan) over the Supreme Court of the Netherlands, 9 February 1996, NJ 1988, 2 (Spiro v Flamco). 66

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assess whether the patent is likely to be revoked. When there is a real possibility that the patent will be revoked, the judge will refuse the request for an injunction.68 In revocation proceedings, the question of inventive step almost always has to be answered. Here, the ‘problem-solution’ approach is used.69 Judges are aware of the disadvantages of this approach, which is, ‘tainted with hindsight’,70 or ‘rückwärts schauende Betrachtungsweise’.71 The Supreme Court of the Netherlands has addressed this issue in a number of cases,72 and tried, in assessing inventive step, to reduce the importance of the question as to what the average person skilled in the art would have arrived at in favour of a more objective measure whether the solution presented logically follows from the state of the art.73 When dealing with the question of inventive step, the judge will regularly ask an independent expert to compile a report. The judge will ask the parties for advice on such expertise. Defendants who come up with the same revocation arguments as they have raised without success in opposition procedures or in revocation procedures in foreign countries cannot hope to succeed. It would be necessary to convince the judge that the Opposition Division, the Technical Board of Appeal or the foreign court erred in their decision. Of course, other grounds for revocation under article 138 of the EPC can also be invoked. It should be further mentioned that Article 56 of the PA 1910 and Article 87 of the PA 1995 require the Netherlands Patent Office (‘OCNL’) to provide the judge with all the information and technical advice necessary in adjudicating a certain case. Such advice and information are deemed equivalent to a technical expertise under Articles 194–200 of the Code of Civil Procedure. Such requests are mostly for foreign patents. The advantages are the independence of the Patent Office, and the fact that no additional costs are incurred. It should be noted that the European Patent Office is sometimes asked for advice based on Article 25 of the EPC. When the patent covers a product, infringing devices would normally be in circulation. It is more difficult when the patentee claims that the defendant infringes a patented process: when the allegation is denied, the patentee has to furnish proof.

2. Exhaustion 67

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According to Article 53(5) of the PA 1995, the rights of the patentee are exhausted once a product has been put on the market by the patentee or with his consent. The market is defined as that of the Netherlands, Curaçao, Sint Maarten, or one of the Member States of the EU or an EEA Member. Exhaustion is therefore not world-wide,

See section IV.2 ‘Kort geding’ above. See Guidelines for Examination of the EPO, G-VII, 5. Problem-and-solution approach. Singer, The European Patent Convention, No 56.05 (revised English edition by Lunzer, London, Sweet & Maxwell, 1995). 71 Singer/Stauder, Europäisches Patentübereinkommen 6th edn (Cologne, Heymanns, 2013), No 56.57. 72 Supreme Court of the Netherlands, 15 February 2008, NJ 2008, 450 (Rockwool); and Supreme Court of the Netherlands, 3 October 2014, BIE 2014, 62 (Leo Pharma v Sandoz) as to the motivation of the inventor. 73 See also Court of Appeal The Hague, 10 June 2014, BIE 2014, 48 (Sandoz v AstraZeneca). 69 70

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Jan J Brinkhof and Anselm Kamperman Sanders but EEA-wide with some overseas extensions. The Dutch provisions on exhaustion are read and applied in accordance with the ruling of the CJEU in Centrafarm v Sterling Drug.74

3. Research and Other Exceptions 68

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According to Article 53(1) of the PA, patents cannot be enforced against persons acting in a private capacity or conducting scientific research. The exemption provided for such private and/or non-commercial use, or experimental use and/or scientific research is, however, limited according to the provision in Article 53(3) of the PA and must be construed narrowly. This means that the private and non-commercial acts cannot take place in the context of business (see above). Similarly, experimental use or scientific research may only be justified if the aim of the research is to investigate whether the invention can be put into practice or can be improved,75 or to determine whether or not it is profitable to obtain a licence from the patent holder. This latter option is then also available for professional parties. Research is thus limited ‘on the invention’ for the purpose of determining: (1) how the patented invention works; (2) the scope of the patented invention; (3) the validity of the claims; (4) whether there is scope for an improvement to the patented invention; (5) whether there is scope to invent around the patented invention; and (6) genuine scientific research. Article 53(3) of the PA 1995 was held not to be an adequate provision76 to cater for research that has a commercial objective, such as clinical trials. An amendment to the PA 1995 introduced in Article 53(4) a so-called ‘Bolar exception’, which came into force on 1 February 2007. On the basis of this provision, producers of generic medicines are permitted to submit their product for bio-equivalence testing prior to expiry of the patent or a supplementary protection certificate in order to obtain market authorisation.77 In relation to biotechnology, Articles 53(a)(b)(c) of the PA 1995 implemented the Biotechnology Directive 98/44/EC,78 and since 1 July 2014, through the addition of Article 53(b)(2), it has a limited breeder’s exemption, meaning that patented material can be used for the purpose of breeding, discovery and development of other plant varieties. The exemption is limited in that commercialisation of materials containing the patented invention does not fall within the scope of this exemption.

74 CJEU, 31 October 1974, (Case 15/74), [1974] ECR 1147 (Centrafarm BV and Adriaan De Peijper v Sterling Drug Inc,). 75 Supreme Court of the Netherlands, 18 December 1992, BIE 1993, 81 (ICI v Medicopharma). 76 Supreme Court of the Netherlands, 23 June 1995, NJ 1996, 463 or BIE 1995, 33 (ARS v Organon); and District Court The Hague 17 January 2007, BIE 2007, 474 (Conor v Angiotech). 77 PA 1995, art 53(4): The performance of necessary studies, tests and experiments in connection with the application of art 10(1) to (4) of Directive 2001/83/EC on the Community Code relating to medicinal products for human use (OJ L311/67) or art 13(1) to (5) of Directive 2001/82/EC on the Community Code relating to veterinary medicinal products (OJ L311/1) and the ensuing practical requirements shall not be deemed to constitute an infringement of patents relating to medicinal products for human use or medicinal products for veterinary use, respectively. 78 Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions, OJ L213/13.

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VIII. Remedies 1. Injunctive Relief, Information and Destruction 72

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In almost all cases, the patentee requests an injunction against the infringer (PA 1910, art 43(1), PA 1995, art 70(1), Civil Code, art 3:296). Generally, such a claim is coupled with a request for a ‘dwangsom’ (French: ‘astreinte’; German: ‘Zwangsgeld’) under Article 611(a) of the Code of Civil Procedure, obliging the infringer to pay a judicially imposed sum to the patentee for every day he acts in contempt of the injunction, or for every infringing product manufactured or used in contempt of that injunction. Therefore, an injunction is an effective means for stopping infringements. Once a patent has become part of a technical standard, or has obtained the status of a de facto standard, however, the exercise of one’s patent rights may be limited79 by the obligation to license on reasonable and non-discriminatory terms. In any event if a patentee has undertaken to issue a FRAND licence, he cannot sue for infringement. The application of this principle can be seen in the Samsung and Apple battles, where the parties were still negotiating the terms of a licence for the use of standard Samsung technology in Apple products when Samsung requested an injunction.80 Another case involves the attempted border seizure of Sony Playstation 3 over alleged infringement of one of the standardised Blu-ray technology patents, where LG and Sony were both members of the Blu-ray consortium.81 A key element in the discussion on the abusive behaviour of patentees has become the question whether the alleged infringer is willing to conclude a FRAND licence. In this situation not making a (counter) offer or otherwise remaining silent even though FRAND is on offer can be construed as unwillingness.82 In order to implement Article 46 of the TRIPS Agreement, PA 1995 (in Article 70(6))83 allows for the confiscation or destruction of any objects infringing the patent, together with confiscation of materials and equipment that are used for the production of objects that are infringing. The following remedies are not specifically mentioned in the PA but are recognised in case law and have in part also been dealt with through the implementation of the Enforcement Directive 2004/48 in Title 15, most notably Article 1019(a)–(d) of the Code of Civil Procedure: — order to withdraw infringing products:84 — order to submit a list of customers;85

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District Court The Hague, 17 March 2010, BIE 2010, 52 (Philips v SK Kassetten). President District Court The Hague, 10 March 2011, IE Forum 10281 (Apple v Samsung); District Court The Hague, 14 October 2011, IER 2012, 10 (Apple v. Samsung); Court of Appeal The Hague, 24 January 2012, IE Forum 10819 (Apple v Samsung). 81 District Court The Hague, 10 March 2011, IE Forum 9463 (Sony v LG). 82 President District Court The Hague, 24 October 2014, IEF 14323 (ZTE v Vringo), who refused ZTE’s request to release UMTS products on account of the fact that ZTE appeared to be an unwilling licensee. 83 The PA 1910 does not contain a comparable provision. 84 Supreme Court of the Netherlands, 23 February 1990, NJ 1990, 664 (Hameco v SKF). 85 See n 32. 80

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Jan J Brinkhof and Anselm Kamperman Sanders — order to submit invoices and data concerning stock, prices and the like; — order to name the supplier;86 — order to publish the decision in a newspaper or a magazine;

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order to pay an advance on damages.87 Granting these orders is discretionary and will be done by balancing the interests of the parties. Regrettably, it has become almost standard practice to claim all possible forms of relief in every case. One cannot but escape the impression that models for writs of summons are copied indiscriminately. Patentees seem to be unable to distinguish between everyday competitors and pirates. In general, the request for provisional execution of a decision is very common and granted even if there is an appeal. Whoever executes a decision in kort geding and subsequently gets the case dismissed in proceedings on the merits is responsible for any damages.88 It is not usual for the infringer to require the plaintiff to post a bond as security when provisionally enforcing a decision. The party against whom judgment has been given has to pay the costs of the proceedings of the defendant. These are only a small part of the actual costs that are not recoverable. Costs are calculated based on the acts of procedure and the financial interests involved. An advantage of this reimbursement scheme can be that costs are not much of an issue when encouraging an amicable settlement. In general, the parties agree to pay their own costs when a dispute is settled.

2. Damages 79

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A claim for damages or payment of profits requires an intentional infringement of the patent. It is not sufficient that the supposed infringer is aware of the patent’s existence. Rather, he must be aware of infringing the patent, which is a question of intent. It is questionable whether this legal rule is in conformity with Article 45(1) of the TRIPS Agreement, which contains less strict conditions for liability (‘had reasonable grounds to know’). The Supreme Court of the Netherlands has decided that the courts should directly apply Article 45(1) of the TRIPS Agreement.89 Adducing intentional infringement is difficult. The legislature has gone some way to ease the patentee’s burden of proof in that intentional infringement is assumed when the infringer is alerted by a bailiff ’s notification that he is infringing the patent (PA 1910, art 43(2); PA 1995, art 73(3)). Such notification can be issued before the proceedings commence or before receipt of a writ of summons. The PA 1910 allows for a claim of damages (which could be the damages actually incurred or an ordinary licensing fee) or, in the alternative, the infringer’s profits (PA 1910, art 43(3)). The rationale for this provision is to ease the patentee’s burden

Supreme Court of the Netherlands, 27 November 1987, NJ 1988, 722 (Cloé v Peeters). See in this respect s 1019(h) of the Code of Civil Procedure, stipulating that the losing party will bear all the costs of proceedings. See however, the Supreme Court of the Netherlands, 14 April 2000, NJ 2000, 489 (HBS v Danestyle), holding that in the award of an advance on damages as part of a preliminary order restraint should be exercised. 88 Supreme Court of the Netherlands, 16 November 1984, NJ 1985, 547 (Ciba Geigy v Voorbraak). 89 Supreme Court of the Netherlands 19 December 2003, BIE 2004, 4–5 (Roche v Primus). 87

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of proof as the infringer has to render his account, and prevent the infringer from keeping the profits. The patentee does not have to make a preliminary choice,90 as both can be requested, and the higher amount of the two is awarded. The corresponding section of the PA 1995, article 70(5), is worded differently. Here, damages and payment of profits can be claimed. It looks as if the judge can award both claims cumulatively. But this is not likely.91 Parties seem to be able to discuss various concepts of ‘profits’ ad nauseam and the courts have not provided much case law on damages and the relinquishment of profits. In most cases, the parties reach a settlement after the question of liability is settled and the defendant is ordered to pay damages in principle. Therefore, there are no clear guidelines, not even on the calculation of an ordinary licensing fee. This is remarkable, since judges seem to refer to ‘licensing fees customary in the field’ as a point of departure. The absence of guidelines might explain why parties prefer to settle the issue of damages among themselves. Judges welcome this practice. It saves difficult and time-consuming proceedings. But, from the point of view of legal certainty and equality before the law, this situation is certainly undesirable.

IX. Wrongful Enforcement 83

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Owing to the wide application of the scope of the patentee’s rights and the number of persons that can be addressed for an infringement, a patentee who is not so certain about the strength of his patent may choose to skip the competitor, but will rather seek to go after purchaser/(re-)sellers suppliers or even landlords. However, in case of subsequent invalidity of the patent, only the effects of provisional measures executed can be reversed. Equally, persons who have ceased activities upon the summation by an apparent pretend-patentee can later claim damages. In relation to all measures and final remedies (damages paid, etc) stemming from a decision on the merits, no retroactive effect is available.92 The Supreme Court of the Netherlands has implemented further limits holding that a patentee acting on a patent that is subsequently declared invalid has not acted unlawfully in asserting his rights unless ‘he knows, or ought to be aware, that there is a serious, not negligible chance that the patent will not be maintained in opposition or revocation proceedings’.93 There is, therefore, only limited recourse in response to groundless threats.94

X. Costs 85 90

Based on article 1019(h) of the Code of Civil Procedure, all costs including those of the bailiffs, lawyers’ fees, travel and accommodation costs, etc95 can be claimed from

Supreme Court of the Netherlands, 9 November 1990, NJ 1991, 169 (Dupont v Globe). cf Supreme Court of the Netherlands, 14 April 2000, NJ 2000, 489 (H.B.S. Trading v Danestyle), with respect to Copyright Act, art 27(a), a provision that is worded in similar fashion. 92 PA 1995, art 75. 93 Supreme Court of the Netherlands, 29 September 2006, NJ 2008, 120 (CFS Bakel v Stork Titan). 94 See also Supreme Court of the Netherlands, 16 November 1984, NJ 1985, 547 (Ciba Geigy v Voorbraak). 95 Supreme Court of the Netherlands, 13 February 2015, IE Forum 14652 (Leiseplein Beheer v Red Bull). 91

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Jan J Brinkhof and Anselm Kamperman Sanders the losing party.96 Since 2008, standard costs are contained in the regularly updated ‘Indicatietarieven IE zaken’.97 The judge will have some discretion in applying these standard tariffs, and will also subject any claims made to a test of reasonableness.98 It is clear, however, that the application of the rules on costs have in practice led to riskaverse behaviour in relation to cases that do not concern evident infringements.

C. Final Remarks 86

In this chapter, the enforcement of patent rights in court proceedings was discussed. It is of course possible to settle disputes by arbitration. However, this happens very rarely. But maybe something is changing. The move from the essence of the invention to the context-bound teaching and the cross-border injunction practice show significant pendulum swings can take place. The accelerated proceedings for kort geding and cases on the merits ensure that The Netherlands offer an attractive forum to initiate patent cases, especially if cross-border relief is sought. It will be interesting to see how The Hague courts adapt to taking a role as a UPC Local Division.

D. Literature H Bertrams, ‘The Cross-border Prohibitory Injunction in Dutch Patent Law’ (1995) 26 International Review of Intellectual Property and Competition Law 625 A Brenninkmeijer, ‘Judicial Organization’ in JMJ Chorus and others (eds), Introduction to Dutch Law 4th edn (The Hague/London/Boston, Kluwer Law International, 2006) 53 J Brinkhof, ‘Summary Proceedings and other Provisional Measures in Connection with Patent Infringements’ (1993) 24 International Review of Intellectual Property and Competition Law 762 ——, ‘Between Speed and Thoroughness: the Dutch “kort geding” Procedure in Patent Cases’ (1996) European Intellectual Property Review 499 ——, ‘Cross-border Injunctions: a Blessing or a Curse’ in WP Heere (ed), International Law and the Hague’s 750th Anniversary (The Hague, Asser Press, 1999) 103–10 ——, ‘Dutch Courage? European Court of Justice Case C-539/03, 13 July 2006 (Roche/Primus)’ in B van den Broek and others (eds), Willem Hoyng Litigator (Amsterdam, deLex, 2013) 356 S Dack, ‘Solvay/Honeywell—a Sleeping Beauty’ in B van den Broek and others (eds), Willem Hoyng Litigator (Amsterdam, deLex, 2013) 384

96 On the structuring of the request, the Dutch Supreme Court issued guidelines that should be observed, see Supreme Court of the Netherlands, 30 May 2008, NJ 2008, 556 (Erven Endstra v Nieuw Amsterdam) [5.4.1]. 97 Version 2014 available at: www.rechtspraak.nl/Procedures/Landelijke-regelingen/Sector-civiel-recht/ Documents/Indicatietarieven-2014.pdf. 98 President District Court Den Bosch, 6 August 2007, LJN BB1252 (United Kingdom v Total Backup), otherwise known as ‘L’affaire della Trattoria’, Boek.9, 4750. This involved a case where on a simple IP matter an expensive QC was flown from the UK in and feted with an expensive dinner in an Italian restaurant. Fees and bills were deemed excessive and the winning party was admonished for abuse of the system. Exceptionally the names of counsel were not made public.

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F Eijsvogels, A Kupecz and B Pinckaers, ‘30 Jaar Octrooirecht’ (2014) Intellectuele Eigendom en Reclamerecht 267. Ch Gielen and others, Kort Begrip van het Intellectuele Eigendomsrecht (Deventer, Kluwer, 2011) T Huydecoper, ‘Fair Protection’ in B van den Broek and others (eds), Willem Hoyng Litigator (Amsterdam, deLex, 2013) 46 B van Kaam, B Le Poole and J Schaap, ‘Het Bodem Kort Geding in IE-geschillen’ 16 August 2013, www.ie-forum.nl L Kelkensberger and J Bremer, ‘Inbreuk vs Nietigheid in Grensoverschrijdende Gevallen; Is de Nederlandse Octrooirechter Bevoegd? ’ (2014) Berichten Industriële Eigendom 206 A van Oorschot, ‘Bevoegdheid Grensoverschrijdende Voorlopige Voorziening Reactie op Kelkensberg en Bremer: Inbreuk vs. Nietigheid in Grensoverschrijdende Gevallen; is de Nederlandse Octrooirechter Bevoegd?’ (2014) Berichten Industriële Eigendom 40 T Powell, ‘Liability for Patentees who Invoke Invalid Patents against Competitors or their Consumers?’ in B van den Broek and others (eds), Willem Hoyng Litigator (Amsterdam, deLex, 2013) 118 H Snijders, ‘Civil Procedure’ in JMJ Chorus and others (eds), Introduction to Dutch Law 4th edn (The Hague/London/Boston, Kluwer Law International, 2006) 241 P Véron and N Bouche, ‘National Measures for Preserving Evidence for Foreign Intellectual Property Rights (Towards a Crossborder Saisie-contrefaçon?)’ in B van den Broek and others (eds), Willem Hoyng Litigator (Amsterdam, deLex, 2013) 406 C Wadlow, Enforcement of Intellectual Property in European and International Law (London, Sweet & Maxwell, 1998)

7 Patent Enforcement in Italy GIOVANNI CASUCCI

A. The System of Civil Procedure in General I. Introduction 1

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The Italian system of industrial property litigation is characterised by the ‘continental civilistic approach’. That means a strict compliance with the formalities regulated by the domestic Code of Civil Procedure. The disadvantage of this system is that there is a substantial risk of the action being dismissed by the judge for reasons of formality. In general, patent enforcement is managed in Italy via civil litigation. In principle, even criminal enforcement is available.1 Criminal liability for an IP infringement strictly depends on the evidence of consciousness of the infringement by the alleged infringer. Therefore, in the case of patents, it is very difficult to collect such evidence (for trade marks or designs it is obviously easier), and frequently a lengthy trial will be concluded without a guilty verdict, even though the infringement has been technically proven. The opportunity to benefit from criminal enforcement is usually better for border enforcement under the latest EC Regulation 608/13. For reasons of urgency, it could be easier to file a criminal complaint rather than to serve a writ of summons within the deadline of the 10 days available. Nevertheless, even in these cases, it is more than recommended to initiate a subsequent and parallel civil litigation in order to uphold the customs suspension order.

II. Structure 3

The structure of the national system of civil justice is organised in three tiers:

1. First Instance 4

According to section 16 of the Law of 12 December 2002 No 273, the government received the task of creating 12 courts having sections specialising in IP rights by

1 According to s 127 of the Italian Industrial Property Code (Codice della Proprietà Industriale, Decreto Legislativo 10/02/2005, no 30 as amended by Legge 97/2013).

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Giovanni Casucci Accordingly,2 as of 1 July 2003 12 courts were selected to manage all national IP litigation according to territorial jurisdiction. Recently (with the Law D.L. 24 January 2012, No 1) such list was broadened to 22.3 More curiously, with Law no 9/14 of 2014 a new provision defined a new distribution of jurisdiction in cases where a foreign party (juridical or personal) was involved in the litigation: only 11 courts are now competent for IP matters.4 So, in order to manage a ‘forum shopping’ strategy in Italy, even the nationality of one of the party plays a role, as will be further explained below. The law confers on the IP Courts (22, or 11) the exclusive jurisdiction over the judicial enforcement of national and community trade marks, undisclosed information (know-how/trade secrets) patents, plant varieties, utility models, registered and unregistered designs, copyrights and unfair competition cases including ‘anti-trust defences’. The first instance courts are those usually managing provisional measures, as will be described further below. Thanks to this institutional approach, the IP judiciary, coordinated by two very renowned judges, Mrs Marina Tavassi and Mr Massimo Scuffi, decided to publish a collection of all decisions rendered from 1 July 2003 onwards. This collection provides a summary of the decisions edited in Italian and English, while the full decision in Italian is available at the web site DARTS.5 The average length of a first instance case is about three years.

2. Appeal 10

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The appeal procedure maintains the structure of a collegial body of three judges to review the decisions rendered by the courts of first instance. Both questions of law and of fact can be freshly dealt with by the competent Court of Appeal (‘Corte d’Appello’). While it is not possible to change the writ requests (‘domande’) as raised in the first instance, it is possible to ask for an instructing phase aimed at examining evidence not completely or only superficially examined in the first instance. There are 26 courts of appeal in Italy. Of these, the 22 ‘specialised’ courts will exclusively manage also the appeal phase for the domestic parties’ cases, while only 11 will manage the foreign parties’ cases. The average length of the appeal proceedings is about two to three years. It is quite evident that such a system is really far from offering an effective specialisation of judges dealing with IP cases, in particular in patent issues. Nevertheless, we may take into consideration the fact that only a few courts are usually involved in patent litigation: Milan, Turin, Venice and Rome, in terms of cases per year. This is quite similar to what happens in Germany, where, despite the fact that jurisdiction for patent matters is vested in 12 ‘Landgerichte’, only three or four of them actually deal with patent matters: Düsseldorf, Mannheim, Munich and, more recently, Hamburg.

2 By Decree no 168 of 27 June 2003, 12 courts in the following towns were designated: Bari, Bologna, Catania, Florence, Genoa, Milan, Naples, Palermo, Rome, Turin, Trieste and Venice. 3 Ancona, L’Aquila, Bari, Bologna, Bolzano, Brescia, Cagliari, Campobasso, Catania, Catanzaro, Florence, Genoa, Milan, Naples, Palermo, Perugia, Potenza, Rome, Trento, Turin, Trieste, Venice. 4 The current ‘foreign’ IP courts are: Bari, Bolzano, Cagliari, Catania, Genoa, Milan, Naples, Rome, Trento, Turin and Venice. 5 A link to the related website will be available at: https://app.darts-ip.com.

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The significant difference between the two countries is that in Italy, any court can declare a patent null and void by way of a counterclaim, while in Germany, owing to the bifurcation of infringement and validity, validity can only be argued before a centralised authority: the ‘Bundespatentgericht’.

3. Supreme Court 14

The Supreme Court (‘Corte di Cassazione’) is located in Rome and its aim is to review the decisions rendered by the lower courts exclusively on matters of law. An appeal court’s decision can be overturned only for an incorrect interpretation of the law, and would thus be remanded to the lower court. If the question does not require a new evaluation of the evidence or interpretation of the facts, the Supreme Court will decide the matter directly without referring the case back. This court is also competent to decide on conflicts concerning jurisdiction or competence arising among lower courts. The decisions of the Supreme Court are final and can be reviewed only in exceptional cases. The average length of Supreme Court proceedings is about two years.

4. The Profession 15 16

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There is no distinction between normal lawyers and those specialised in IP. All of them can plead a case before one of the specialised courts. In practice, only attorneys with a strong reputation in IP matters are frequently involved in IP litigation, particularly for patent cases. In Italy, fewer than 100 professionals (within fewer than 20 law firms) are regularly involved in patent litigation. Of these, even fewer are internationally recognised.6 Only attorneys admitted to the Supreme Court may argue cases there. The power of attorney shall be in writing and, if it is not general, must be part of the writ of summons/preliminary measure application. The power of attorney may cover both first instance and appeal. For the Supreme Court, it is necessary to file a new special power of attorney. In case a foreign (not EU resident) natural person or a company, citizen of or with registered office in a member country of the Hague Convention of 5 October 1961, wants to act in Italy, the power of attorney must be apostilled under the procedure set forth in the Hague Convention. The proxy shall be legalised and notarised according to the national provisions of the country.7 A patent attorney may be (and usually is) involved in a patent litigation case as a patent expert in order to manage the court expert phase, typically provided by the judge in a litigation (at the preliminary measures phase and/or at the ordinary proceeding) in order to evaluate the validity and infringement issues. The judge usually appoints a patent attorney having experience and reputation in the specific field concerned as court expert. Such situation may generate doubts as to impartiality, given that the patent attorney in other proceedings may be involved as party expert, too. Usually it is

6 Just in order to give an indication, the Italian Members of the EPLAW association are just 14, while according to Chambers & Partners or Legal 500, Italian patent litigators number around 30 to 40. 7 According to EC Regulation 1348/2000, art 4(4), the attachment of an apostille is not necessary for EU Member States, except for Denmark.

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Giovanni Casucci the duty of the party’s lawyers to highlight any possible conflict of interest situation, and the more experienced judges in some case offer the parties the possibility to agree on a specific patent attorney commonly accepted (as happens with the selection of a unique technical arbitrator in the arbitration proceedings). There are around 407 patent attorneys (external professionals and ‘in house’) admitted to the National Council of Patent Attorneys8 and 507 qualified European Patent Attorneys.9 Nevertheless, not all of them are qualified European Patent Attorneys through the European Patent Office (‘EPO’) examination:10 according to the EPO database, the number of successful candidates via examination is 388.11

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III. Patent Enforcement 20

There are several elements that should be considered when drawing up a patent enforcement strategy.

1. Supra-national Law, Regulations and National Enforcement 21

In the less experienced courts, there is always a risk that the judge will not apply the European Patent Convention (‘EPC’) and the EU legislation according to the generally accepted European interpretation, and as implemented into Italian law. The consequences are easily understandable. It is thus essential for the attorney in litigation briefs and during the hearings to specifically point out12 supra-national regulations, their interpretation by the relevant authorities and the risk of conflicting interpretations.

2. Requests for Urgent Relief as the Preferred Remedy 22

Usually, the enforcement of patents is characterised by the patentee’s interest in obtaining preliminary measures like evidence collection and interim injunctions. That reveals the main significance and relevance of preliminary measures for patent enforcement in Italy.

3. The ‘Presumption of Invalidity’ of an Italian Patent 23

Italian patents are granted without substantive examination. The evaluation of the validity of a national patent or an international patent designating Italy is within the competence of the judicial authority in the case of litigation. This situation (in addition to the fact that Italian patent applications have only recently been partially

8

See the website www.ordine-brevetti.it. See www.epo.org/applying/online-services/representatives.html. 10 The remainder are admitted trough the so called ‘grandfather clause’. 11 See www.epo.org/learning-events/eqe/successful-candidates.html. 12 The sentence Jura novit curia thus does not mirror reality, although formally, it cannot be called into question that the judge is knowledgeable about the law. 9

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published) tends to encourage the prejudice among experts and judges that an Italian patent cannot benefit from the presumption of validity stipulated by law. Several cases in the past have shown that many domestic patents were enforced, while in fact during litigation it was easily discovered that these patents were completely null and void for lack of novelty or inventive step. Therefore, judges do not easily grant ex parte injunctions so as to avoid the risk of undue damage to the defendant. The situation is considerably different for European patents designating Italy due to their substantive examination. In any event, even during interim injunction proceedings, the judges are always appointing a court expert in order to verify, first, the validity of the patent and, second, the question of infringement. It is worth noting that the Italian Patent Office (‘UIBM’) only recently established a publicly accessible database in order to verify the existence and the status of registered IP rights (patents, utility models, trade marks and industrial designs). This database13 offers the possibility of retrieving information about a patent in relation to the ‘bibliographic data’, yet without any online access to the specification, drawings and claims. In order to get such information, therefore, the only option is to make the ‘pilgrimage to the UIBM office in Rome and ask for a paper copy of the application. As regards the status of the patent, namely whether the annuities have been paid, the UIBM in the past has not been able to provide information as to whether the taxes were duly paid. The only possibility has thus been to ask the patent holder or representative to provide evidence of payment. This situation has recently improved for European patents based on an Italian priority: the Italian tax authorities now send to the EPO the listing of the payments made in relation to the specific patent applications and grants. Updates on the legal status of each patent can be accessed in ESPACENET, while the national database is not updated regularly.

4. Technical Issues 26

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Patent litigation usually involves technical issues that cannot be handled easily without special expertise in the sector concerned (eg biotechnology, chemistry or electronics). Technical cases are normally difficult for judges (having only a legal background) to decide without the assistance of technical experts. Even if such assistance takes time and may appear incompatible with the aim of preliminary proceedings, the current judicial practice is usually to appoint a technical expert so as to give expertise within a short period of time in order to give the court an idea about patent validity and infringement. This enables the court to decide on the request for a provisional measure in technically complicated cases within an acceptable timeframe (around six to nine months for patent cases).

www.uibm.gov.it/dati.

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B. Problems Related to the Enforcement of Patent Rights I. Type of Action 27

The specific actions related to patents are: 1. actions against an alleged infringer (enforcement action), including the actions in confirmation to the border measures eventually adopted; and 2. actions against the patent holder (defensive action), including the nullity direct action and the non-infringement declaratory actions. These two kinds of actions, of course, have different claimants, different interests and different fora.

II. Competent Parties 28

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The claimant, according to the above-mentioned classification, could be (1) the patent owner for an enforcement action; or (2) any third party different from the patent owner for a defensive action. According to (1) (enforcement action), the right to commence an action would normally be vested in the patentee. Nevertheless, this right could also be conferred to a licensee by agreement, or could be invoked by the exclusive licensee in cases where the patent owner does not intervene to defend the patent infringement in the licensee’s territory. It is very important to note the fact that in Italy the enforcement of patent or any other registered right can be initiated even during the application period (if before the publication—ie within 18 months after the priority date—with a mandatory warning letter giving notice of the existing patent application). This is a significant difference in comparison with other countries (eg Germany and the UK), where it is impossible to enforce a patent before grant.14 An action for patent infringement can thus be made on the basis of an application already if such application has been published or otherwise brought to the attention of the alleged infringer. According to (2) (defensive action), the claimant could be any party interested in a declaration of nullity or in a declaration of non-infringement. Also a licensee may be interested in contesting the validity of the patent that is the object of a licence.15 In principle, also the Public Prosecutor could be entitled to ask for nullification or forfeiture of a patent.16 Defensive actions, mainly of non-infringement, are well known as ‘torpedo’17 actions. This type of action is based on the rule of lis pendens according to the Lugano and

14 For that reason, complex litigation strategies may start in Italy at the early stages of a patent in order to react immediately to multi-country infringement cases. 15 According to the EU Technology Transfer Regulation 316/2014 a clause prohibiting the licensee from challenging the patent validity is considered an ‘excluded restriction’ (art 5). 16 Industrial Property Code, s 122. 17 The ‘inventor’ of this strategy was Prof Mario Franzosi, whose article, ‘Worldwide Patent Litigation and the Italian Torpedo’ was published in [1997] European Intellectual Property Review 7.

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former Brussels Conventions.18 The practical advantage deriving from such actions is to try to freeze the enforcement actions in ‘speedy’ countries by moving first with a defensive action (mainly of non-infringement) in a ‘slow’ country. Accordingly, in this case, the second action (by the right owner) in principle has to be suspended until the (very slow) decision of the first seized court.19 This strategy (mainly implemented in Italy and Belgium) was not greeted enthusiastically and recently several Italian courts have denied jurisdiction in cross-border cases. In particular, in one case20 concerning an action for declaration of non-infringement of a European patent with respect to several designated states, the Court of Milan denied jurisdiction on the basis of Article 5(3) of the Brussels Convention with regard to the foreign parts of the European patent, limiting its competence over the Italian portion of the European patent concerned. More recently, the Supreme Court (Grand Chamber) made a very unexpected turnaround decision according to which the Italian courts may assert jurisdiction over a request for a declaration of patent non-infringement of both the Italian and German parts of two European patents, although all parties were foreigners and one of the patents in question was not an Italian patent.21 This revirement was immediately contested by the first instance courts, in particular by a recent Court of Milan decision22 asserting: Even assuming the application of Article 5, paragraph three, of EC Regulation no. 44/2001 (a corresponding provision being contained in the text of the Brussels Convention)

the Court reasoned according to which, in matters relating to tort, delict or quasi-delict, a person domiciled in a Member State may be sued in another Member State, before the courts of the place where the harmful event ‘has occurred or may occur’ (in the text of Regulation EC/44/2001), it is not possible to assert the jurisdiction of Italian courts to hear an action for the negative declaration of infringement of non-Italian portions of (omissis)’s European patents. In particular, this Court emphasises that Italy may be the locus commissi delicti (meaning both the harmful act and the harmful effect) only for the infringement of the Italian portion of a European patent, while is not conceivable a current or potential damage occurring in Italy arising from the alleged infringement of the Spanish portion of the (omissis)’s patents. In fact, every national fraction of a European patent produces its effects only on the territory of the State to which it pertains and can be said to be infringed only in that territory.

18 Art 21 provides that when the same action is pending before a court of a Member State, the court of another Member State subsequently seized must, on its own motion (ex officio), decline jurisdiction. The case should be pending between the same parties and have the same object and the same cause of action. Art 22 says that when the two cases are not identical but related, the second court may suspend the proceeding. EC Regulation 44/2001 (now updated as 1215/2012) implemented the provisions contained in the Brussels Convention which are now binding for all Member States with some slight amendments. 19 The term ‘torpedo’ was in fact selected by Franzosi in order to express the peculiar concept of the speediness of this strategy: ‘It is a well-known principle of sea warfare that an escorted convoy should travel at the speed of the slowest ship. If the various ships travel at their own speed, there will be no convoy and no unity’. 20 Court of Milan, 21 March 2002, Dade v Chiron. The same approach was adopted by the Court of Turin, 13 May 2003, GPC v Filterwerk Mann. 21 Italian Supreme Court, 10 June 2013, General Hospital v Asclepion, 45 IIC 822 (2014)—‘Italian Torpedo’. 22 Court of Milan, 27 January 2014, Schindler v Otis.

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Giovanni Casucci A new Supreme Court decision should therefore be expected in the next couple of years. The defendant under (1) could be any third party infringing the patent, or under (2) the patent owner. Under (1) (enforcement action), the defendant would normally be the infringer. In Italy, the infringer could be any person involved in the infringement (also the local distributor, the retailer, the importer). So, normally, suits are directed towards the retailer and the main infringer. Under (2) (defensive action), the defendant would be the patent owner.

III. Competent Court 38 39

The existence of the specialised IP courts to a certain extent limits the territorial choice among the competent courts following the previously mentioned criteria. There are, therefore, four possible fora: 1. 2. 3. 4.

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the forum of the defendant; the forum of the infringement; the forum of the nullity action; and the forum of declaration of non-infringement.

Alternative (1) concerns an infringement action that can always be initiated at the domicile of the defendant. Alternative (2) concerns an infringement action that allows the claimant to pursue a so-called ‘forum shopping’ strategy, trying to find the most convenient forum (for any reason: distance, experience of the court, etc). In any case, a mandatory infringement forum is the one related to the customs entry place where the border control authorities found the presence of allegedly infringing products. Alternative (3) is a case of a defensive action aggressing as first the validity of the patent makes it mandatory to sue the defendant (patentee) in the forum related to the elected domicile, normally of the patent attorney who filed the patent.23 Alternative (4) normally allows the claim to be raised at the forum of the claimant, as a declarative action of non-infringement could be filed either in the forum of the defendant or where the possible damage deriving from an infringement action (allegedly groundless) might occur. The possibility of choosing the most convenient court for one’s action has several consequences. First, sending a warning letter could entitle the recipient to start a defensive action against the patentee in his own forum. Therefore, it must now be viewed as preferable in Italy to avoid any previous warning and to file for preliminary measures in the forum considered most convenient to the patentee. The Italian IP Code expressly provides for the possibility of filing a request of noninfringement even via preliminary proceedings (s 120.6bis).

Italian IP Code, s 120.3.

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IV. Preparation for Trial: Preliminary/Interim Measures 43

As mentioned above, the most important action related to patent enforcement is the action for preliminary/interim measures. In Italy, there are three different types of actions:

1. Descrizione 44

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This judicial order24 is quite exceptional in the European Union. Only in France, can analogous proceedings be found (saisie-description). The ‘description’ is an order granted by a judge of the competent court authorising the claimant (assisted by the bailiff, possibly by a court expert and usually together with a photographer) to inspect and describe the allegedly infringing products/processes. Italian jurisprudence interprets the concept of ‘evidence of the infringement’ very broadly, extending the power of the bailiff even to the collection of documentary and accountancy evidence of the business related to the alleged infringement. Such approach is particularly useful and significant in the enforcement strategy because it offers the opportunity to collect ex parte all the elements to quantify the damages suffered, without the risk of manipulation that is typical during the main proceedings. Such an approach is perfectly in line with the policy envisaged by EC Directive 48/2004, Art 7. There is also the possibility of obtaining an order in Italy for execution in other Community countries by virtue of EC Regulation 1206/01 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters. According to this Regulation, it is possible for a court of a Member State to request the competent court of another Member State to collect evidence.25 The requesting court may call for the request to be executed in accordance with a special procedure provided by the law of the court’s own country (ie a descrizione order), and if so provided by the law of that country, the parties, and, if any, their representatives, have the right to be present at the taking of evidence by the requested court. What could have become a very significant precedent by the ECJ in Tedesco v RWO,26 never came to a final decision, but generated a very clear statement by the Advocate General: Measures for the preservation and obtaining of evidence such as an order for the description of goods in accordance with Articles 128 and 130 of the Italian Codice della Proprietà Industriale constitute measures for the taking of evidence which, in accordance with Article 1 of Council Regulation (EC) No 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters, fall within the scope of application thereof and which at the request of the court of one Member State a court of another Member State must execute, unless grounds for refusal exist.

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ibid, s 129. This specific strategy (called ‘Italian Intruder’) to use the descrizione and the EC Regulation 1206/01 as a real strategic tool in IP enforcement was announced by the author at the CEIPI 40th annual conference in Strasbourg, 23 April 2004. 26 ECJ, case C 175/06 Tedesco v RWO, Conclusions of the Advocate General of July 18th 2007. 25

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Giovanni Casucci The right for the parties to be present is one of the major differences from the French system, where the parties are not allowed to participate in the saisie-description proceedings. The oral proceedings will contain a detailed description of the operation and the evidence collected. The aim and use of this procedure is to collect official evidence of infringement for the purpose of making use of it during the trial. Normally, the order can be obtained ex parte (inaudita altera parte) if there is a risk that the defendant may remove all evidence of the allegedly infringing goods. Normally, no bond is requested. Requests for a description are frequently made during exhibitions or trade fairs, because no civil seizure is allowed in these places.27 After the order for a description is issued, the claimant has 30 days to summon the defendant for an ordinary trial. If this deadline is missed, all the evidence collected will be invalid and cannot be used for any future procedure.

2. Sequestro 49

The seizure28 is an order granted by the competent judge, authorising the claimant to search and seize all the allegedly infringing goods and all the means for their production. The order does not require the infringer to stop production or sale, but simply freezes the products found. A seizure is carried out by a bailiff with the participation of the claimant for the correct identification of the goods in question. A seizure can be repeated also in places different from the offices of the defendant within a period of 30 days from the order being granted. The seizure can also be directed against third parties in possession of the allegedly infringing goods, unless these are meant for private use only. This order can also be granted ex parte, whereupon29 the judge has to fix a hearing, obliging the applicant to notify the defendant about the hearing within eight days, during which time the seizure can be carried out. At the hearing, the judge has to affirm, modify or revoke the order. De facto it is presently very unusual to obtain ex parte seizures. Normally, the judge will fix a hearing for an inter partes discussion of the case, giving the defendant short notice to organise his defence. After the hearing the judge could either set a time for rendering a decision or fix another hearing for an exchange of pleadings between the two parties. If the matter is complicated, the judge could appoint a court expert to assist the court in the technical matters involved. The function of a seizure order is a double one: to acquire evidence of the infringement, and to stop the circulation of infringing goods. For the latter reason, a seizure cannot be limited to some samples, but has to cover all allegedly infringing goods.

27 Partly as a response thereto, it has now become common to contractually oblige participants of trade fairs to agree to a dispute resolution mechanism that envisages seizures and inter partes procedures that may result in injunction orders by the organisers of the fair. 28 Italian IP Code, s 129. 29 Code of Civil Procedure, s 669sexies.

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3. Inibitoria 50

The injunction30 is an order of the court to cease and desist from using the product or process allegedly infringing the patent by manufacture, promotion, distribution etc. Since the implementation of the TRIPS Agreement, it is now possible to obtain an injunction also on a preliminary basis. The court can also be requested to impose ‘astreintes’ (monetary fines) in case of contempt. Contempt of an injunction granted by the court also constitutes a criminal offence.31

4. Publication 51

According to section 126 of the Italian IP Code, Italian courts have, upon request of the applicant, the power to grant an authorisation to publish the order issued. According to part of the doctrine and some case law, publication would amount to a compensatory measure, but is still possible during the summary proceedings. The possibility of being granted authorisation to publish the order very much depends on the facts of the dispute.

5. Requirements 52

All the above preliminary measures require two fundamental conditions: —

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fumus boni juris: the need to show that, on the balance of probabilities, the patent is valid and infringed. There is no need to furnish full evidence, and it is sufficient to show an acceptable likelihood of a good case; and periculum in mora: urgency. It is necessary to demonstrate that the delay incurred in ordinary litigation will generate an irrecoverable loss. Such requirement is very broadly interpreted by recent jurisprudence, justifying any measure if the infringement is still pending (also after several months or even years).

It is very important to point out that for a request of preliminary measures, mainly for seizure and injunctive relief, it is necessary in the complaint to anticipate the claims that will be raised in the ordinary action32 subsequent to the interim procedure. A failure in this respect could cause the preliminary action to be dismissed. The order granting the preliminary measure (ordinanza) should fix a peremptory deadline not exceeding 30 days for instituting the ordinary action.33 It is possible that the judge in granting the order will require the applicant to post a security for guarantee of possible damages. If the claimant does not comply herewith, the order will not take effect. The decision of the judge concerning the request for preliminary measures (grant or refusal) could be appealed (reclamo) within 15 days from the first decision. The appeal will be decided by a panel of three judges of the tribunal of first instance. These judges should re-examine all issues. Against the decision of the panel, there is no further appeal. Italian IP Code, s 131. Criminal Code, s 388: ‘Malicious failure to execute a judicial order’. Code of Civil Procedure, s 669bis and 669sexies. ibid, s 669octies.

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Giovanni Casucci Nevertheless, and due to the fact that the matter concerns a specific case of urgency, it is possible to file a new request once new facts or new juridical reasons have come to light that justify an order.34 Obtaining a preliminary measure normally opens the way for a settlement.

V. The Trial 56

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An ordinary action normally starts with the filing and notification of the writ of summons (atto di citazione) asking the defendant to appear at a given hearing, no sooner than 90 days from the date of service for a national defendant and 150 days for a foreign one. The writ of summons should contain all the facts, legal arguments and evidence used or relied on during trial. Finally, the writ must contain a precise claim. The writ of summons and claim delimit the subject matter of the litigation. It is not allowed to extend the claim or to introduce new arguments or means of evidence during trial.35 The defendant must file his defence at least 20 days before the date of the hearing if he makes a counterclaim.36 There are three types of hearings: —

the first hearing (udienza di prima comparizione) is normally meant to make sure that the formalities of the suit set forth by law are properly complied with (duly served writ, complying with the deadline for filing the defence, etc); — the second hearing gives both parties the opportunity to define their claims and points at issue; — only with the third hearing will the judges start to weigh the evidence offered by the parties and start the real trial. 59

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Civil procedures in Italy are based on written pleadings rather than oral arguments. Therefore, the main work of the attorney is related to drafting written briefs. Nevertheless, in preliminary proceedings, the oral hearing usually plays a decisive role in order to present arguments to the judge. With the implementation of the TRIPS Agreement, a new provision was added to the Italian Patent Act. Section 77 (now the Italian IP Code, s 121bis) provides that if one party relies on specific documents for its claims and information or documents in the possession of the other party that could confirm this claim, the judge could be asked to order such documents to be produced, or a questionnaire to be answered. A request can also be based on the ‘right of information’ about third parties involved in the counterfeiting activities. The judge could request compliance with measures necessary to protect confidential information. The above provision for obtaining evidence

ibid, s 669septies. The Code of Civil Procedure, s 184 allows for a period before trial for the claimant to review his claim or requests for evidence in view of the defendant’s statements of evidence. After this opportunity, no more changes will be allowed. Nevertheless, the party not complying with the time limits could ask the judge for an extension under exceptional circumstances. 36 This deadline only applies to counterclaims of the defendant, not for ordinary defences asking for the action to be dismissed. 35

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is seldom applied. Non-compliance with the request of the judge is sanctioned by section 127 applying the Criminal Code, section 372 (fake deposition). In patent litigation, the judge usually appoints an expert, ‘Consulenza Tecnica d’Ufficio’ (CTU), to give his opinion in a special expertise phase. The expert is normally selected from among a list of patent attorneys with experience in the specific field of the case. The judge appointing the expert defines the specific questions that should be answered. In doing so, the expert is given wide powers to investigate the case. The expert could thus examine the products, inspect the production site, make experiments for testing the contents and characteristics of the concerned products/process, etc. Under section 121.5 of the Italian IP Code the expert may receive documents relevant to the questions posed by the judge even if these documents had not been submitted to the court previously.37 During this phase, the expert will also examine technical briefs by the patent attorneys of both parties. Upon conclusion of his examination, the expert will deliver his opinion to the judge. The expert’s advice can be contested by the parties and the expert may be asked for any clarification of or addition to his opinion by the judge. Such clarification may be rendered via a technical court hearing with the presence of all the parties (quite unusual) or via the assignment of a specific question to be answered in writing by the court expert in a second opinion. While not frequent, the expert could also be replaced by another expert. It might be useful to note that the judge is not bound by the expert’s advice and though unusual in practice, he could decide differently from what the expert has suggested. After the CTU phase, the judge will ask the parties to submit their briefs summing up all technical and legal questions in view of the results of the expert’s opinion. Normally, after these briefs, the parties have to file their final conclusions (precisazione delle conclusioni), after which both parties have 60 days to file their final pleadings (comparse conclusionali) and 20 days to file the final comments (memorie di replica). Upon the parties’ request, the judge will fix a final hearing and render a decision, normally within 60 days of the receipt of the final pleadings or this hearing. Italian courts do not provide a guarantee of an ‘on schedule’ service for the proceedings except in particular circumstances. The average length of a suit in the first instance is about two to three years. In some courts, the delay might be less. In a proceeding where invalidity is raised as a counterclaim, the owner of the patent has the right to submit to the court, at any stage or instance, modified claims that remain within the limits of the content of the patent application as initially filed and that do not extend the protection conferred by the patent granted. When there is both a limitation of the European patent following a limitation procedure in accordance with the EPC, and a limitation of the same European patent with effect in Italy following a national procedure, the scope of protection conferred by the patent is determined by taking into account each of the limitations established. The Italian Patent and Trademark Office shall publish the notice of the limitation of the patent in

37 According to a restrictive interpretation of the provision at issue, the court expert is allowed to take into consideration documents other than those already filed during the previous part of the proceedings only if those documents are provided by the parties. In other words, the court expert is not allowed to search and examine documents on his/her own initiative, but shall limit his/her investigation to the documents provided by the parties.

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Giovanni Casucci the Official database (www.uibm.gov.it/uibm/dati/). The Italian jurisprudence is still uncertain about the effects of such a limitation. Personally, I believe that Article 68 of the EPC38 shall guide any local interpretation. In my opinion, such a rule is very clear: every limitation must be considered as effective from the outset. Looking at the domestic provisions, section 79.3 of the Italian IP Code lacks any indication about the effects of the limitation, so we need to determine the beginning of its existence for both the legal effects and the opposability, which are two different matters. It is fairly well known that the right starts its origin from the grant, while its effects are opposable afterwards with the public availability of the application. This is the balance between the interests to protect third parties and the interests of the patentee. Therefore, I find questionable that this provision prescribes that the legal effects of any limitation will act only for the future.

VI. Types of Infringement 67

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According to section 52.3 of the Italian IP Code, to determine the scope of protection granted by the patent, it must be interpreted so as to give fair protection to the holder and a reasonable legal certainty for third parties. In practice, this means that every element that is equivalent to an element indicated in the claims shall be taken into account. The majority of Italian jurisprudence follows the British approach of the Catnic test.39 Usually such evaluation, even if motivated by the judge, is supported in advance by the court expert opinion. Contributory infringement is enshrined in doctrine and in case law40 and stipulated under section 85 of the Italian Inventions Act and, since 2006, in section 124.4 of the Italian IP Code: from such regulations, it emerges that the exclusive patent right includes the preparation and the supply of the means which are uniquely dedicated to the implementation of the invention. Counterfeiting activity has been recognised by eminent Italian jurisprudence and doctrine for the sale of spare parts and replacement items not covered by a patent, but addressed to work within a patented structure or within the scope of a patented process.41

38 ‘The European patent application and the resulting European patent shall be deemed not to have had, from the outset, the effects specified in Articles 64 and 67, to the extent that the patent has been revoked or limited in opposition, limitation or revocation proceedings’. 39 The Court of Milan held that the equivalents doctrine requires the check of the identity of the function, the means and the result of the patent, as well as the obviousness of the modification improved by the solution the subject of the patent (Court of Milan, 8 August 2007). 40 The Supreme Court had ruled that ‘an infringement of the patent for an invention occurs with the industrial manufacturing and trading of parts of the patented machine, even whether or not patentable or fallen into the public domain, if the manufacturing and marketing is made with reference to the patented machine and if such parts are uniquely addressed to be used in infringement of the patent’ (Cass Civ, case no 3387/1956). 41 The Court of Turin has been asked several times to decide on cases of contributory infringement with different results: in the recent past (10 March 2009), the Court stated that ‘a patent process infringement occurs with the creation of a system able to fulfil the same process and whose features are not necessary for uses different from

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VII. Remedies 1. Injunctive Relief 71

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While injunctive relief is a statutory right the grant of which is not discretionary, a recent approach should be reported based on the balance of interests of the parties in relation to the nature of the technology involved. Milan Court introduced a new approach declaring that the IP owner cannot necessarily exploit all its rights against third parties in case of mandatory use of the patented technology: the prejudice that Samsung would suffer if the preliminary measures would be rejected during the present phase, would exclusively consist—as previously described in the preceding paragraphs—of the amount of the royalties not received, assuming the claimant’s position on the infringement will be confirmed on the merits of the case. It is correct to assert that the alleged prejudice of Samsung can be considered as a mere credit right that can be adequately satisfied at the end of the proceedings on the merit.42

2. Damages 73

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In assessing damages, the Italian jurisprudence has recently started to become stricter. The claimant should provide clear evidence about the actual damages suffered and the loss of profits. During the expert stage, one part is devoted to the assessment of damages. Normally, an expert on accountancy is appointed who often does not deal with the evaluation of patent. There is a risk that this opinion is limited to evaluating the sales of infringing goods. If the commercial books or documents are unclear and do not permit an identification of the goods, such an analysis might be completely frustrating and ridiculous. That is why the descrizione could play a decisive role, as evidence of infringement is collected by surprise, without many possibilities to hide documents. In Italy, the assessment and quantification of damages is usually carried out during the proceedings on the merit, after the assessment of the IP infringement (at the end of the so-called ‘an’ (‘whether’) phase of the proceedings meant to establish whether there is infringement), in a phase called the ‘quantum’ phase. Owing to the non-contractual nature of an IP infringement, the claim for damage compensation is subject to prescription (statutory limitation): in case of a preliminary objection from the alleged infringer, the period of refundable damages to take into account is five years prior to the related claim. The burden of proof for damages rests on the claimant.

the illicit one’; the same Court denied the existence of a contributory infringement in a well-known case related to coffee capsules: ‘the total uncertainty of the characteristics of the capsules in all three patents here claimed precludes to hold that the capsules are uniquely designed to achieve the contributory infringement of the patents, reproducing an element—not covered by patents and not adequately described and identified in the patents— with which the claimed devices are called to interact’ (injunction order of 13 May 2012 and appeal decree of 15 June 2012). 42

District Court of Milan, Samsung/Apple, preliminary decision of 5 January 2012.

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Giovanni Casucci The compensation for damages is limited to gross negligence and wilful misconduct. In any case, given that the Italian IP Code grants a presumption of knowledge of the existence of registered IP rights, cases in which the infringer is able to prove his good faith are very uncommon. While in the past, the courts held that there could not be infringement without damages, recently the evaluation of evidence regarding effective damages suffered by the IP owner has become stricter. In any case, the judge will apply various options (methods) available for the assessment of damages in order to exercise a ‘balance of interest’: but also in case of a good faith infringement, the judge will award a certain amount of damages in order to obtain a deterrent effect. Under Italian law, alternative methods to assess damages are stipulated under section 125 of the Italian IP Code. These methods of calculation are substantially in line with the EU Enforcement Directive: — s 125.1 actual damages in terms of loss of profits/undue profits and moral damages; — s 125.2 reasonable royalty (subsidiary method); — s 125.3 account of the infringer’s profits.

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Section 125 is a specific rule of the general clause provided by sections 2043 and 2056 of the Italian Civil Code, which covers the compensation for the damages arisen from torts. According to section 125.1 of the Italian IP Code, compensation must take into account the negative economic consequences, such as loss of profits, benefits of the infringer and moral damage. This rule refers to the Italian Civil Code’s provisions of sections 1223, 1226 and 1227 which provide two specific criteria for the compensation for damages: actual damages and lost profits. Actual damages include economic damages borne by the claimant to obtain evidence of counterfeiting and to protect IP assets judicially and extra-judicially, including legal and technical fees (expert reports, market research, private investigations, as plaintiff in criminal proceedings), and the costs of neutralising the infringement, such as additional expenses for promotional activities (advertising, warnings through the media). Lost profits include any other damages that the IP owner can prove, ie the failure to acquire economic advantages, and in particular the lost sales of the original products, also taking into account the profits of the infringer. To obtain compensation for the loss of profits, the claimant must demonstrate: — an existing demand for the infringed product; — the unavailability of effective substitutes for the patented product suitable to meet demand; — an adequate organisation for the production and sale of the protected product, designed to meet the demand of the infringer’s clients; — reasonable causality, meaning that the infringing sales should have been replacing the sales of the original goods and for that reason generating a loss of profits for the IP owner.

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Given that the proof of a loss (or a failure to increase) in sales is not always easy to demonstrate as univocally related to the infringement, the courts usually use a lump sum

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criterion, applying an equitable evaluation, which is expressly foreseen in section 125 of the IP Code. When it is clearly proven that the decrease in sales is univocally due to the market presence of counterfeiting products, the amount of the damages results from the multiplication of the infringer’s products sold by the original product’s EBITDA (obtained by deducting from the revenues lost the sale price customarily applied by the owner (times) units of product sold minus the amount of so-called incremental costs: ie those costs that the owner would incur in the case of production of those goods). As a subsidiary criterion, lost profits are determined as an amount not inferior to the royalties that the infringer would have been bound to pay if he had obtained a licence from the holder of the right. The so-called fair price of consent to be charged to the infringer by way of compensation should be higher than that of the market (depending on the field of industry in which the invention is exploited) due to the fact that an infringer should not benefit from the same treatment as a licensee. So, frequently the courts, once they have defined the reasonable royalty rate, proceed to its duplication as a deterrent effect. The method of equitable damages applies: 1. in the absence of clear evidence of lost profits and profits of the infringer as well as the exact number of infringing goods and the identification of an equitable royalty; or 2. when the assessment of the applied royalty is not consistent with the market situation (evidently excessive).

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94 95

Only upon specific request of the IP owner may the court order the disgorgement of the infringer’s profits. The disgorgement of the infringer’s profits may be requested as an alternative to the reimbursement of lost profits, or where the infringer’s profits exceed this form of reimbursement. In the absence of certain elements to determine the loss of profits of the IP owner, this is a valid and objective criterion to assess damages. In this case, evidence of a wilful infringement or gross negligence is required. In any case, the calculation of the profits gained by the infringer becomes crucial in establishing both the loss of profits of the IP owner, and the surrender of profits of the infringer. As a further damage item, whether proven or easily inferable, and upon a specific claim from the plaintiff, the court will condemn the infringer to the compensation for the moral prejudice suffered by the IP owner. Usually, this kind of compensation for the ‘moral damage’ amounts to 50 per cent of the sum calculated by the court as lost profits of the IP owner. According to section 126 of the IP Code, the court may order, in whole or in part, publication of the decision in one or more newspapers at the expense of the infringer.

VIII. Defences 96

The typical defence is to argue the lack of validity of the patent, and the lack of infringement, based on the procedural strategies already explained.

222 97

Giovanni Casucci Further defences are: — — — — —

the lack of legal interest of the claimant to bring an action; the lack of the standing of the claimant or of the defendant to sue; the lack of national validation of the Italian part of the European patent; the forfeiture of the patent due to the lack of payments of fees; the exhaustion of the patent right: according to the general principle under section 5 of the Italian IP Code, the exclusive right conferred by a patent is exhausted once the products incorporating the patent have been put on the EEA market by the owner or with his consent. The proof of the exhaustion rests on the defendant, unless the owner of the patent uses exclusive or selective distribution channels for the sale of the patented products.

IX. Wrongful Enforcement 98 99

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The invalidation of a patent does not generate specific damages to be compensated. In case of an interim injunction issued based on a patent subsequently revoked, Article 9(7) of the Enforcement Directive43 should mandate compensation in case enforcement of the injunction has led to damages. Unfortunately, at the moment, there is no clear case law applying such approach. This is deplorable, as it should be very important as a deterrent to abusive enforcement cases. Under the Italian system, the injunctive order is not granted ‘at risks and perils’ of the claimant, but directly by the judicial authority that is not considered liable in case the interim order is subsequently repealed because there is no infringement, or because the patent is revoked. Given the presumption of validity (even for a pending patent application) and the Italian general rules (Italian Civil Code, s 2043) that recognise the existence of damages only in case of specific intention or negligence, it is indeed burdensome to ascertain liability of an injunction granted by the judge on the basis of a patent considered valid (at the time of the injunction). In the light of the above, the defendant cannot recover the damages already paid, but is entitled to withhold the damages not yet paid (IP Code, s 77). Once the patent is revoked, the injunction order does not automatically lose effect due to the fact that the ordinary rules of civil procedure request a specific instance for revocation filed by the defendant and a subsequent granting decree of the judge: usually, with the revocation of the patent (at the end of the proceedings on the merit), the judge automatically declares the revocation of the injunction order. This is of course not the case where the patent is revoked before the EPO. Here, the defendant has to make a specific request to the court for the injunction to be lifted. The sending of warning letters to customers or suppliers of the alleged infringer based on a patent a posteriori declared invalid or not infringed, may constitute a circumstance of unfair competition under section 2598.3 of the Italian Civil Code and

43 Art 9(7): ‘Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by those measures’.

Patent Enforcement in Italy 223 a basis to claim damages if the customers or suppliers have stopped the purchase and sale of the allegedly infringed goods due to the warning letter.

X. Costs 103

The current costs for a patent litigation in Italy involve the following factors: — fees to be the paid to the court system: €500 for preliminary proceedings and €1500/3000 for the ordinary proceedings; — lawyers’ fees: average €50,000; — patent attorneys fees: average €10,000; — court patent expert fees: average €8000; and — court economist fees: average €10,000.

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Unfortunately, despite the clear recommendation of Article 14 of the Enforcement Directive,44 the Italian courts never order the effective costs suffered by the winning party, usually awarding less than 40 per cent of the overall value.

C. Final Remarks 105

106

The Italian system of IP enforcement may offer some interesting tools. An appropriate use of the procedural rules (enforcement also during the application period) and the specific judicial preliminary measures (the descrizione order, covering also the infringer’s business information) may offer some strategic advantages in complex enforcement strategies. At present, a successful strategy for patent enforcement in Italy should take into account the appropriate selection of the competent court with a clear strategy involving interim measures as a starting point for the civil litigation.

44 Art 14—Legal costs: ‘Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this’.

8 Patent Enforcement in Poland JANUSZ FIOLKA

A. History I. Beginnings of Intellectual Property Protection in Poland 1

The first known inventor’s privilege was granted between 1418–21 by the Polish Crown to a man called Piotr (Peter), who declared that he would build and demonstrate the work of a machine for removing water from mines. The machine would enable the work of 20 horses to be performed by the work of 12 skilled men. So, using today’s language, the machine would give one man the power of 1.5 horses—not a bad achievement. The background of the invention was obvious. It was, of course, much easier to take 12 men to the mine than 20 horses. Under the privilege, Piotr had to offer the machine to every mine. As remuneration, every mine using the machine, or which was dried by using the machine, should pay to Piotr four grzywny per week, that is, four units of the currency in circulation in Poland at the time.1 This income could be transferred or inherited by other persons and was not limited in time. The miners could use the traditional methods of drying mines, but without the permission of Piotr, nobody could use his art.2 2 Piotr was a carpenter, because at that time machines such as water pumps were constructed from wood. The granting of the privilege to Piotr was supported by the burghers of Olkusz, which was at that time a major centre of silver mining in Poland. 3 Piotr’s remuneration at that time was a significant amount. Four grzywna per week amounted to 208 grzywna per year. At the same time, the yearly income of professors at Cracow’s university3 was 20 grzywna. So, in five weeks, Piotr received remuneration

1 At the beginning, grzywna in Poland was a measure of amount equal to 234 grams, so one grzywna was more or less equivalent to a German mark. Under the monetary reform introduced in 1300 by the Czech King Waclaw I, 48 Prague grosz (cent) were produced from one grzywna of silver. Prague grosz dominated in monetary circulation in Poland at that time. So grzywna become a monetary unit equal to 48 Prague grosz. 2 Wyrozumski, ‘Zagadnienie początków prawnej ochrony wynalazku w Polsce’ (‘Problems at the Beginnings of Legal Protection of Invention in Poland’) (1978) 18 Zeszyty Naukowe Uniwersytetu Jagiellońskiego, Prace z wynalazczości i ochrony własności intelekltualnej (‘Scientific Bulletin of Jagiellonian University, Works on Inventiveness and Protection of Intellectual Property’) 24–25, who is quoting Liber cancellariae Stanislai Ciołek, vol I (Caro, Vienna, 1874) No 99. 3 Cracow’s university was established in 1364 by Polish King Casimir the Great and, after his death in 1370, ceased to exist. In 1400, Jagiello, King of Poland and Lithuania, renewed the university, which is now known as the Jagiellonian University.

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equal to the yearly income of a Cracow university professor. The Polish King Jagiello, who for the renewal of Cracow’s university in 1401 bought a house in the centre of Cracow, paid 600 grzywna. One year’s remuneration would have enabled Piotr to buy one-third of that house in central Cracow. At that time, Cracow was the capital of a multinational empire spreading from the Black Sea to the Baltic Sea up to the Gulf of Finland. 4 There is no historical evidence as to how many mines used Piotr’s water pumps, but during the fifteenth century four more privileges similar to Piotr’s were granted by the king of Poland. This demonstrates established practice and the fact that Piotr’s privilege was not a document lacking in practical significance. 5 Among other privileges granted by the king at that time, the privilege of 1487 granted to Jan Turzo from Cracow and Kilian Stand from Nurnberg is especially interesting. Through that privilege, the King of Poland granted a monopoly for the construction and design of new machines for the removal of water from mines. Under the text of the privilege, nobody else had the right to construct and design the same or similar machines.4 Thus it seems that already in the fifteenth century, the significance of a proper definition of the invention’s scope as covered by the privilege was observed, and the theory of equivalency reduced to practice. In that privilege, the inventors’ remuneration rose to 10 grzywna per week, making it 2.5 times higher than that of the first privilege granted to Piotr. The fact that the remuneration was raised demonstrates that inventions covered by the privilege were used, and that they generated revenues for those mines using them. 6 At the end of eighteenth century, Poland had lost its independence and was to reemerge as an independent state only after the First World War. The Treaty of Versailles obliged Poland to join the Paris Convention so as to facilitate Poland’s participation in world trade.5 Soon after, the Patent Office of the Polish Republic was created6 and the first statutes relating to the protection of IP were passed by the Polish Parliament (‘Sejm’). The statutes were heavily influenced by Dr Fryderyk Zoll, professor of Jagiellonian University and drafter of Article 10bis of the Paris Convention. Zoll was member of the Polish delegation to the 1925 Paris Convention revision conference at The Hague, and his statements seem to have influenced decisions taken at the conference.7 Highly unusually, Zoll’s report, which he presented during the conference, was published in the conference materials.8 J Wyrozumski, ‘Zagadnienie początków prawnej ochrony wynalazku w Polsce’ (n 2) 26. The Polish Government Declaration on Poland’s accession to the international association for protection of industrial property, Official Gazette of 4 February 1922, No 8, item 58, states, that ‘in execution of s 19 of Annex No I to the Treaty between the Allied and Confederate Countries, signed in Versailles on 28 June 1919, ratified by Poland on 31 July 1919 … the Polish government has notified accession of Poland to the Paris Convention … as revised in Washington on 2 June 1911’. 6 Provisional Decree of 13 December 1918 on the Patent Office, Official Gazette No 21, item 66. According to data published on the website of the Polish Patent Office, www.uprp.pl, ‘the Patent Office of the Republic of Poland was established on December 28, 1918. Poland already entered into the Paris Convention for the Protection of Industrial Property on November 10, 1919, joining international cooperation in this field. The first registration of a trade mark took place on April 11, 1924, and the first patent was granted on April 24, 1924’. 7 SP Ladas, Patents, Trademarks and Related Rights—National and International Protection vol III (Harvard University Press, Cambridge, Mass, 1975) 1678–79, 1686. 8 Union internationale pour de la protection de la propriété industrielle. Actes de la réunié á Conférence de La Haye du 8 octobre au 6 novembre 1925; S Kosiński, ‘Życie i działalność Fryderyk Zolla’ in Fryderyk Zoll 1865–1948 4 5

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Professor Zoll passed on his vision of IP protection to many of his pupils, most notably to Professor Stefan Grzybowski (1902–2003), who in 1971 set up The Institute of Inventiveness and Protection of Intellectual Property, which became a leading centre of research in intellectual property in Central and Eastern Europe, having contacts with many scientific institutions in foreign countries, particularly the Max Planck Institute for Intellectual Property Protection in Munich. Following the 1989 Solidarity revolution and the fall of the Berlin Wall, on 21 March 1990, during the first visit of Polish Prime Minister Tadeusz Mazowiecki to the USA, the Polish–American Treaty on Commercial and Economic Relations was signed. In that Treaty Poland was obliged to improve IP protection by inter alia introducing copyright protection to computer programs, product protection to chemical and pharmaceutical products, chip protection and unfair competition protection. This was to be implemented by the end of 1992. Afterwards, the Mazowiecki Government faced staunch criticism in Poland for having signed this Treaty. Many leading academics in Poland argued at the time that the Polish economy was not prepared for such radical changes, particularly the introduction of product protection for pharmaceuticals. Such worries proved unfounded. Polish industry, especially the pharmaceutical industry, is prospering and there is no evidence that product protection for pharmaceuticals has hampered it. In 1994, Poland applied for EU membership, which started the process of unification of Polish law with the laws of the EU. After 10 years of intensive work on the harmonisation of Polish law with the laws of the EU, in 2004 Poland, together with nine other countries, joined the EU and the European Patent Convention (‘EPC’).

8

9

II. The Current IP System 1. Civil Law 10

The German Civil Code had the strongest influence on a uniform system of civil law in Poland after 1918. This is also true for the industrial property system, as Poland, like Germany, is one of the few countries in which courts in patent infringement cases may not invalidate patents, this being in the exclusive competence of the Patent Office. On 30 June 2000, the Polish Parliament enacted the new Industrial Property Code (‘IPC’), replacing the Patent Act of 1972,9 the Trade Mark Act of 1985,10 the Computer Chip Protection Act of 199211 and the Patent Office Act of 1962.12 The aim was to unite all aspects of industrial property into one single act. This has not been achieved

11

Prawnik—Uczony—Kodyfikator (Life and activity of Fryderyk Zoll 1865-1948 Lawyer—Learned—Lawmaker) (Cracow, 1994) 13; J Fiolka, ‘Wpływ Fryderyka na rozwój ustawodawstwa dotyczącego zwalczania nieuczciwej konkurencji oraz patentów i znaków towarowych’ (Fryderyk Zoll influence on development of unfair competition, patents and trademarks legislation) in Fryderyk Zoll 1865–1948, ibid59. 9 10 11 12

Dziennik Ustaw (Official Gazette, ‘Dz.U.’) 1993, No 26, item 117. ibid No 5, item 16. ibid No 100, item 498. ibid No 26, item 118.

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Janusz Fiolka completely, since the repression of unfair competition still falls within the scope of the Unfair Competition Repression Act of 1993.13 On 14 March 2003, the law on filing European patent applications and effects of European patents in the Polish Republic was enacted.14 The law entered into force on the day of accession of Poland to EPC. According to this law, European patents granted by the EPO have the same effect in Poland as patents granted by the Polish Patent Office after their validation in Poland. Validation requires a translation into the Polish language to be submitted to the Polish Patent Office within three months of publication of mention of the grant. The term for providing a translation into the Polish language cannot be extended (art 6(2)). The EPC provides for the possibility of restoring a loss of right in exceptional cases when, despite due care, the applicant was unable to fulfil its obligations (art 122). This of course raises the question, which provisions will prevail, the EPC or the Law of 2003 regarding the failure to provide a translation of the European patent into the Polish language. The Polish Patent Office is against an application of the Article 122 of the EPC for this matter. As of yet, there has been no court decision addressing this question. The translation of the European patent into the Polish language shall, except for invalidity proceedings against a European patent, be regarded as the authentic text. In the case of a European patent application, there is a possibility of obtaining provisional protection and pursuing a patent infringement before a patent is granted, namely after the publication of a translation of the patent claims into the Polish language in the official gazette ‘Biuletyn Urzędu Patentowego’. In contrast thereto, Polish national patents may not be enforced prior to grant, and this is the main difference between these two kinds of patents. On the other hand, the penalty fee for the late payment of maintenance fees in Poland is only 30 per cent, while in the EPO it is 50 per cent. Applicants in this respect will prefer the application of Polish law. There are a lot of questions regarding opposition and nullification of European patents before the EPO and the Polish Patent Office, and, frankly speaking, it is hard to say which provisions will prevail. One example will suffice: under Polish law, a limitation of the patent during the nullification procedure is not possible, while under the ECP there is such a possibility.

2. The Constitution and International Agreements 15

The new Polish Constitution of 17 October 1997,15 replacing that of 1952, outlines rights and liberties which may have an impact on patent enforcement.

13 ibid No 47, item 211 with later amendments. The draft of this law was prepared by a team of IP researchers using the experience gained during long-term Max Planck fellowships. That is why prevailing opinion holds that the Polish Unfair Repression Competition Act of 1993 is in fact codified jurisprudence of the German courts in this field. 14 Dz.U. 2003, No 65, item 598, change regarding art 2 Dz.U. 2007, No 136, item 958. 15 Dz.U. 1977, No 78, item 483.

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Table 1: The System of Patent Enforcement in Poland Constitution of Polish Republic of 1977 International agreements to which Poland is a party The Industrial Property Code of 2000/The Law of Inventive Activity of 1972 (see II. 3 below) Enforcement before common courts

Enforcement before the Patent Office (‘PO’)

Enforcement before the Customs Office (‘CO’)

Regulations

Civil Code of 1964 and Code of Civil Procedure of 1964

Administrative Code of 1980

Commission Regulation (EC) No 1891/2004 of 21 October 2004

Questions

Patent infringement and civil sanctions of patent infringement

Nullification and exemptions from patent right

Border measures (temporary seizure of goods at the border during customs clearance)

Instances

1st District court judgment, appeal to 2nd Appellate Court 3rd Cassation (II level appeal) to Supreme Court

1st Decision of PO 2nd PO 3rd Appeal to Administrative Court 4th Extraordinary Appeal Measures to Supreme Administrative Court

1st Decision of Customs Chamber in Warsaw 2nd Appeal to Administrative Court

16

Of particular importance for IP enforcement in Poland are Articles 9 and 91: Article 9 obliges the State to observe international law; and — under Article 91(1), international treaties, once published in the Official Gazette of the Polish Republic, become part of the Polish domestic legal system and are directly applicable unless further legislation is required. Such treaties take precedence over domestic law.

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18

These provisions thus provide the constitutional basis for the courts to directly apply properly ratified and published international conventions or the law of international organisations as domestic law. Other administrative institutions, such as the Patent Office, must also do so. However, there are some problems. The IPC of 30 June 2000 provides some different regulations in this respect. Article 5 provides that a foreign law subject may enjoy protection emerging from the IPC under international treaties, provided that this is not contrary to international treaties under the rule of reciprocity. Conditions of reciprocity for proceedings before the Polish Patent Office are determined by the President of the Polish Patent Office in consultation with the proper minister. There have been no such reported cases in Poland, but in case of lack of reciprocity the foreign subjects may be denied certain rights in Poland. As the IPC also regulates to some extent enforcement proceedings before civil courts, the rules provided for in Article 5 also apply to those proceedings.

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Janusz Fiolka Yet under section 6 of the Polish Language Act, international agreements ratified by Poland should have a Polish language version, which should constitute the basis for their interpretation, unless the provisions of a law state otherwise.16 Poland has recently joined many international agreements. Currently, publication of the text in the Official Journal is only in the Polish language. Previously, the Official Gazette published both the Polish and foreign language versions. The problem of application of Polish language in legal circulation was discussed during the accession of Poland to the EU, namely whether existing regulation regarding Polish language is in line with Articles 28–30 of the EU Treaty. The Management Board of Polish Language Council 17 in the opinion published in 2002 took the point of view that regulations existing in Poland are more liberal than provisions of the existing French law on the application of French language.18 That is why the Polish Language Council are of the opinion that no changes are needed, as new EU Member States should have no bigger obligations than existing EU Member States. So no changes were made. However in practice, the existing regulation is causing some problems. In 2002, the Central Administrative Court (‘CA’) (‘Naczelny Sąd Administracyjny’)19 overturned a decision by the Patent Office to refuse an international registration under the Madrid Agreement, as the Patent Office’s decision concerning the refusal was based on objections made in French. According to the Court, all official acts of public offices should be made in Polish, and the use of French constituted a major legal deficiency, which justified declaring this decision as null and void. Similar views have been expressed in other decisions.20 In 2007, an amendment of the law of industrial property was made, which provided in Article 4(2) that an international agreement or the provisions of European Union laws binding and directly applicable in all Member States shall indicate in particular the language of the proceedings for the grant of protection and the language in which documentation of a patent, utility model, industrial design, trade mark, geographical indication and topography of integrated circuits applications should be drawn up. This should solve the language problem. But there are still a lot of court decisions regarding customs law, tax law or public procurement

16 The Law of 7 October 1999 on Polish language with later amendments, consolidated text Dz.U. 2011, item 224. This law provides, in s 8, that ‘if a party of an agreement, which execution will take place in Poland is a Polish subject, the agreement shall be executed in the Polish language’ with some exception to foreigners (s 8.1). The agreement executed in the Polish language may have a version, or versions, in a foreign language. Unless the parties to the agreement provided otherwise the interpretation of such agreement shall be done under the Polish version. 17 This body was established by art 13 of the Law on Polish Language as an advisory committee on matters of the Polish language, having status of Problem Committee of Polish Academy of Sciences under art 34 of the Law of 25 April 1997 on Polish Academy of Sciences, Dz.U. 1997, No 75, item 469. 18 Loi n. 94-665 du 4 out 1994 relative à l’empoi de la lanque francaise, Journal Officiel de la Republique Française oaut 1994. 19 CA Court (NSA) decision of 21 May 2002, File No II SA 4033/01, Wokanda 2002/12/39. 20 See CA Court (NSA) decisions of 11 July 2001, File No V SA 3738/00, LEX Base No 51274; and February 2001, File No III SA 2339/99, Przegląd Podatkowy (Tax Review), 2001/11/63, in which the decisions under appeal were declared invalid, because the files of the case referred to documents in a foreign language. In a decision of 6 September 2001, File No V SA 165/01, LEX Base No 51 270, the CA Court (NSA) took the view that statements presented to Polish institutions must be made in the Polish language. The fact that a given person did not know the Polish language did not justify a non-compliance with the deadline to launch an appeal by that person.

Patent Enforcement in Poland

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law, in which the courts have taken a position that sworn translations into the Polish language of foreign documents used in the procedure are mandatory.21 The situation was the same regarding a decision of the Polish Patent Office refusing the grant of a patent. Owing to the fact that in the files of the case there were no sworn translations of the foreign patent, the decision refusing to grant the patent was overturned by the District Administrative Court in Warsaw.22 This situation has led to attempts to force the applicants to pay for the cost of sworn-in translations of foreign patents and other documents used during patent application processes, but as of yet no such bill has been passed. Of course it may happen that there is a mistake in sworn translation provided by a party. Sworn translators in Poland are usually graduates of linguistic departments of a university and have little experience with complicated terminology of a specific technical field, which, for example in patent descriptions, is a common case. There have been a few cases in which problem of errors in sworn translation were addressed. In a decision of 5 September 2012, the District Administrative Court in Warsaw (CA) in re trademark TAURUS23 addressed the following problem. In 29 July 2005 there was and international registration of a trademark TAURUS made by an Austrian company and Poland was one of the countries in which protection was requested. There was an earlier registration of the same mark valid in Poland also made by an Austrian company. The Polish Patent Office refused to accept in Poland the new international registration of the TAURUS trademark, opposing its earlier registration. So the applicant of the new registration asked for a declaration that the old trademark TAURUS expired in Poland due to non-use and provided to the Polish Patent Office an excerpt from the register of companies in Austria stating that this company was deleted from the register of companies in 2001 with sworn translation into Polish language. However in the sworn translation from German into Polish, it was mistakenly stated that the company was deleted from the register in 2007, not in 2001. So the Polish Patent Office refused to accept in the registration of the new application in Poland. After a refusal decision the new applicant asked for a correction to be made to the mistake by the sworn translator, however the Polish Patent Office refused to correct the decision regarding refusal of accepting the new registration, because according to Polish Patent Office point of view the mistake was made by a third party not by the Polish Patent Office, which can only correct its own mistakes. After appeal the CA decided that Polish Patent Office should compare the sworn-in translation with the original in German and notice the mistake. That is why the decision refusing to accept the new international registration of TAURUS trademark was nullified by the CA. A similar case happened regarding the public procurement procedure in a hospital for delivery of gloves resistant to hydrochloric acid, in which there was an offer with a document in English describing results of resistance test with a sworn translation into

21 See eg decision of District Administrative Court in Warsaw of 26 June 2009, File No VI SA/Wa 1707/12; District Administrative Court in Warsaw of 26.06.2009, File No III SA/Wa 378/09 regarding VAT declaration; Appeal Court in Gdańsk of 26 April 2013 stating that justification of decision in criminal cases should be made in Polish language. 22 Decision of District Administrative Court in Warsaw of 9 September 2009, File No VI SA/Wa 132/09; Decision of District Administrative Court in Warsaw of 4 April 2010, File No VI SA/Wa 327/10. 23 File No VI SA/Wa 769/12.

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Janusz Fiolka Polish. However in the sworn translation, in some places ‘sulfuric acid’ was written instead of ‘hydrochloric acid’. So the offer was dismissed despite the fact that it was the best offer, and that the applicant explained that the enclosed document in English presented results of hydrochloric acid resistance tests and provided again sworn translation, this time without mistakes. The applicant launched an appeal. The Appeal Board of Public Procurement Office in the decision of 13 June 2014 accepted the appeal and nullified the dismissal decision.24 One should mention that regarding language problems there is a precedent going in the right direction. In 2013 after heated debate, the amendment to the aviation law of 2002 was passed by allowing foreign subjects to file in English language documents and notification to the President of Civil Aviation Authority,25 who has the right to ask for translations. The justification of this amendment was that these documents are standard documents and usually in civil aviation there’s very little time to make translations. Poland has joined many international conventions in the field of protection of industrial property. TRIPS was ratified by a declaration of the Polish Government of 31 July 1995, and entered into force on 1 July 1995. However, five months after ratification, Poland sent a notification to the WTO deferring the entry of its provisions for four years, or until 1 January 2000.26 Of course this begs the question as to when TRIPS actually came into force in Poland. According to the prevalent view in the Polish literature, the Polish Government had the power to retroactively defer entry.27 The final word in this matter will belong to the courts. One should point out here two court decisions regarding the prolongation of the term of patent protection from 15 years (prior to the 1993 amendment) to 20 years under Article 33 of TRIPS.28 Such extension based on TRIPS was affirmed by the Central Administrative Court, despite the fact the Polish Patent Office and the District Administrative Court took an opposing view.

3. Transitory Provisions 24

According to the transitional provisions of the IPC, rights granted in respect of inventions, utility models, ornamental designs, topographies of integrated circuits, trade marks and rationalisation proposals existing at the time of entry into force of this Act, shall remain in force. To these rights the previous provisions are applicable, unless the provisions of this Part stipulate otherwise (s 315(1)).

24

File No KIO 1108/14 published on the website www.uzp.gov.pl/cmsws/page/GetFile1.aspx?attid=7807. Dz. U. 2012, item 933. 26 The Polish Government notification to WTO dated 27 December 1995. Barta and Markiewicz, Prawo autorskie w Światowej Organizacji Handlu (‘Copyright in World Trade Organisation’) (1996) 74–75. 27 ibid 75. 28 District Administrative Court in Warsaw decision of 5 November 2001, File No II SA 3598/03, which held that TRIPS entered into force in Poland on 1 January 2000, as opposed to arts 3, 4 and 5, which entered into force on 1 July 1995. This decision was overturned by the Central Administrative Court decision of 8 February 2006, File No II GSK 54/05, which took the view that TRIPS entered into force in Poland on 1 July 1995. The same point of view was taken by the Supreme Court decision of 19 October 2006, Case No V CSK 125/06 relating to Respiridone/Risset. 25

Patent Enforcement in Poland 25

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Furthermore, ‘legal relationships established prior to the entry into force of this Law shall continue to be governed by the previous provisions’ (s 315(2)). This was confirmed by a decision of the Supreme Court.29 In the case of patents granted before 22 August 2001,30 the provisions of the Law of 1972 on inventive activity31 shall apply. As patent protection in Poland since 1993 lasts for a maximum of 20 years, this problem of double protection standards is decreasing and will cease in 2021 at the latest. However, even in 2008 a Supreme Court decision regarding patent infringement and the payment of damages was based on a 1972 law on inventive activity, and not on the 2000 IPC.32 Furthermore, the 1972 Act did not deal with the rule of exhaustion, the defence of clinical trials for marketing approval, and gave the Patent Office the right to declare a certain product or process non-infringing.

III. The Profession 28

29

Representation before the courts is not mandatory. The only exemption constitutes proceedings before the Supreme Court, where representation by professional representatives, such as advocates or legal advisors, is mandatory.33 Legal representation in patent infringement matters is somewhat complicated by the fact that there are three different kinds of representatives in legal matters: advocates, legal advisors and patent attorneys.

1. Advocates 30

The profession of advocates (Adwokaci) is governed by the Advocates Act 1982.34 Advocates may represent a party before the courts and all administrative offices with the exception of the Patent Office, where the new IPC stipulates exclusive rights of representation for patent attorneys. There is no recognised specialisation of advocates, who must have a graduate degree in law, carry out a three-and-a-half-year training period, and pass the bar exam. In 1990, there were 6902 advocates, in 1999, 7166.35 This number was almost unchanged until 2007. After liberalisation of the rules of accession to the advocate profession, the number of advocates at the end of 2012 rose to 12,559.36 Further, there are currently 6135 trainees, who after their three-and-ahalf-year training could pass the bar examination.37 This rapidly increasing number

29 Supreme Court decision of 20 December 2001, File No II CKN 1440/00, published in the Lex Base under item 53 131. 30 According to s 327, the industrial property law entered into force 3 months after the date of its publication in the Official Gazette. 31 The Law of 17 October 1972 on inventive activity has been amended many times. The last consolidated text was published in Dz.U. 1993, No 26, item 117. 32 Supreme Court decision of 21 November 2008, No V CSK 2013/08. 33 CCP, art 871. 34 Dz.U. 1982, No 16, item 124, amended several times. 35 Statistical Yearbook of the Republic of Poland, 2000, 90. 36 Statistical Yearbook of the Republic of Poland, 2013, 188. 37 ibid.

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2. Legal Advisers 31

32

The profession of legal advisors (Radcowie Prawni) is governed by the 1982 Legal Advisors Act.39 The origin of this profession dates back to a time when legal counsel was employed by State-owned enterprises. When State-owned enterprises dwindled owing to bankruptcy or privatisation during the 1990s, legal advisors received broader powers of representation. They may now represent business entities or natural persons in all court cases. Requirements are similar to those for attorneys, namely a graduate degree in law, a three-and-a-half-year training period, and an examination, but they may be employed under an employment contract. This is now the only distinction from advocates, who cannot be employed under an employment contract by a company. At the end of 2007, there were 18,853 legal advisors in Poland. In 2012, this number had risen almost by half, to 27,054.40

3. Patent Attorneys 33

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The profession of patent attorneys (Rzecznicy Patentowi) is now governed by the new Patent Attorneys Act of 11 April 2001.41 Patent attorneys have an exclusive right of representation before the Patent Office, and may represent parties in infringement procedures before the ordinary courts. As such, they enjoy equal rights as attorneys, excluding launching appeals to the Supreme Court in industrial property protection cases. Before the Supreme Court, representation by advocates or legal advisors is mandatory (Code of Civil Procedure 1964, ‘CCP’, art 871), yet in the current discussion on representation there is the view that representation of the parties before Supreme Court by patent attorneys should be re-established. Professional requirements for patent attorneys are a graduate degree in law or natural sciences, a three-and-a-half-year training period, and an examination. Although no official statistics are available, the number of practising patent attorneys is an estimated 1000. 296 of them are European patent attorneys, as well.

38 Ministry of Justice, Analiza wyników egzaminów wstępnych na aplikację adwokacką, radcowska, notarialna oraz egzaminu konkursowego na aplikację komorniczą (Analysis of results of entry examinations for advocates, legal advisors, notary and public exector traing) (27 September 2014), published on the Ministry of Justice website. 39 Dz.U. 1982, No 19, item 145 amended several times. 40 Sejm Official Paper No 2415. 41 Consolidated text with amendments Dz.U. 2011, No 155, item 925. The law entered into force on 22 August 2001 to replace the law on patent attorneys of 1993, and has been amended several times.

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B. Problems Related to the Enforcement of Patents I. Types of Action 1. Civil Infringement Action 35

36

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Civil litigation in Poland is governed by the provisions of the 1964 Polish Code of Civil Procedure (‘Kodeks postępowania cywilnego’), as amended. With its 1153 sections, the CCP is a rather complex piece of legislation. These provisions are supplemented by Articles 280–295 of the IPC of 2000, which, among others things, introduced into Polish law Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of IP rights.42 International agreements relating to the enforcement of patents are directly applied, especially TRIPS, but also the EPC, the above-mentioned Directive 2004/48/EC and others, so there is a possibility to call rely on these provisions in support of party claims. The infringement action by the patentee is explained in detail below.

2. Administrative (Border) Measures of Patent Enforcement 38

39

There is a possibility of asking the Director of the Customs Chamber in Warsaw to seize goods at the border during customs clearance if the goods violate patent rights. This is now regulated by European Border Measures Regulation (EU/608/2013)43 in force as of 1 January 2014 as a part of the European customs regime.44 The protection is granted for a period of up to 12 months. The allegedly infringing goods may be seized, after which the right owner will be informed and is obliged to launch infringement procedures before the court.

3. Patent Invalidity Procedures before the Patent Office 40

42

As a characteristic of patent litigation in Poland, jurisdiction for infringement and nullity/invalidation procedures are split. The Patent Act 1972 gave the Patent Office exclusive jurisdiction over the invalidation of patent rights. In cases where the defendant wished to raise the estoppel of invalidity in an infringement action, a separate action before the Patent Office had to be launched to this end, whereupon the court would stay proceedings. The Patent Office’s decision was binding on the courts. In addition, the Patent Office could also be requested to issue declaratory decisions on infringement. For this reason, most cases concerning patent infringement were decided before the Patent Office in determination-of-scope procedures, rather than before the courts.

OJ L 195/16. Regulation (EU) No 608/2013 of the European Parliament and of the Council of 12 June 2013, concerning customs enforcement of intellectual property rights and repealing Council Regulation (EC) No 1383/2003, OJ L 181, 15 et seq. This Regulation replaces Regulation EC/1383/2003. 44 Regulation (EEC) No 2913/92 of the European Parliament and the Council establishing the Community Customs Code, OJ L 117, 13 et seq. 43

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Janusz Fiolka The IPC 2000 maintains the split jurisdiction between infringement and invalidity, yet abolishes determination-of-scope procedures.45 Thus, only the courts are competent to decide if a given embodiment is infringing. This otherwise clear-cut picture has been somewhat obscured by two Supreme Court decisions in matters of trade mark law, which may be applied mutatis mutandis to patent enforcement. In the first decision, Interagra I,46 the Court avoided the problem of having to call a trade mark unenforceable vis-à-vis similar use by way of a trade name in holding that the use of a trade name per se did not infringe upon another’s trade mark right. In the Cogito47 case, the Court went even further in that direction. The defendant to the case was the Cogito company, which had traded in computer services and obtained a fairly prominent position in the market, yet without ever registering its company name as a trade mark. The plaintiff was a former employee of that company who established his own company under the name Informatic Company Cogito and registered the word trade mark COGITO, subsequently asking the defendant to refrain from using that name henceforth. While the first instance court, persuaded by the fact of registration, granted the plaintiff ’s request, the Court of Appeal referred the matter to the Supreme Court. In a highly unusual ruling, the Supreme Court declined to decide the case outright, but gave the opinion that the fact of registration of a mark should not exclude the possibility of the court investigating if the owner of such mark had indeed a right of use. After all, a trade mark was only a ‘formal right’. Even more unusually, the Supreme Court explicitly stated that the above opinion was not binding on the Appeal Court (which of course followed the ruling). The ruling was subsequently criticised.48 Others wanted to extend the ruling even further and argued that a patent right too was only a ‘formal right’ giving the court the competence of refusing to enforce an invalid patent.49 As of now no court decision has addressed this problem. It could be argued that the court decision on Interagra I, demonstrating as it did that dishonest practices could not be enforced in the courts, had an influence on this issue, as cases related to strict understanding of the first-tofile principle in the gaining of IP rights are now rare. According to section 255 of the IPC, the Patent Office is competent to invalidate a patent, a right of protection or a right in registration. According to a 2013 court decision, the Patent Office is not competent to determine the validity of an agreement, which constitutes the basis for an entry into the register of patents, especially when

45 Besler, ‘Sprawy o ustalenie, ze wskazana produkcja nie jest objeta okreslonym patentem’ (‘Cases for the Determination if a Given Production Is Not Covered by a Given Patent’) Ksiega pamiatkowa z okazji 80-lecia rzecznictwa patentowego w Polsce (‘Commemorative issue 80th Anniversary of Patent Agents in Poland’) (2001) 287 46 Supreme Court decision of 14 June 1988, File No II CR 367/87, Orzecznictwo Sądów Polskich i Komisji Arbitrażowych (‘OSPiKA’), item 328, [9/1990] with approving comments by Kępiński. 47 Supreme Court decision of 30 September 1994, File No 109/94, Orzecznictwo Sądów Polskich (‘OSNC’), item 18, [1995]. 48 See the comments by Supreme Court Judge Żyznowski, ‘Ochrona nazwy (firmy) i dochodzenie roszczeń na drodze sądowej’ (‘Protection of a Trade Name and Enforcing Claims Before Courts’) (1996) Aktualne problemy ochrony własności przemysłowej w przemyśle farmaceutycznym (Current Problems of Protection of Industrial Property in the Pharmaceutical Industry) seminar proceedings 41–42. 49 Such view is taken by Traple, ‘Naruszenie patentu a teoria ekwiwalentów’ (‘Patent Infringement and the Theory of Equivalents)’ in Ksiega pamiatkowa z okazji 80-lecia rzecznictwa patentowego w Polsce (n 40) 111, but without mentioning the Cogito case.

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47

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the agreement is subject of a conflict between the parties. In such a case, the scope and validity of the agreement is a matter that must be decided by a court, not by the Patent Office.50 Representation before the Patent Office is not mandatory. However, persons or entities not domiciled or located in Poland must be represented by a patent attorney (IPC, s 235(3)). This applies to the payment of maintenance fees, too. Power of attorney must be given in writing. Without proper power of attorney the act done may be declared null and void. The question of representation before the Patent Office is quite unusual. According to section 236, the representatives of a party in proceedings before the Patent Office in matters connected with filing and maintaining protection of inventions may only be patent attorneys. The Central Attorney’s Council (‘Naczelna Rada Adwokacka’) argued before the Constitutional Tribunal that this provision was unconstitutional. The Constitutional Tribunal rejected the petition. However, it limited the application of section 236 to filing procedures and accepted the right of advocates and legal advisors to represent the parties in so-called adversarial proceedings (postępowanie sporne), where the nullification of a patent is decided.51 However, the battle on representation is still pending in the Polish Parliament. Advocates and legal advisors are also seeking to have the right to represent parties before the Patent Office in proceedings relating to granting patents, trade marks and industrial designs, and it seems that their arguments are gaining some ground. On 25 June 2015 the Polish Parliament passed a bill which give the advocates and legal advisers the right to represent parties before the Patent Office in matters related to trademarks, which of course is a big setback to patent agents. The bill is waiting for the signature of the Polish President, which seems to be a formality, and after publication in the official journal of laws (Dziennik Ustaw) it will become a binding law. On the other hand, advocates and legal advisers seem to have little interest in the new Unified EU Patent Court, which is hard to understand. The Patent Office renders an adversarial decision by a panel of three experts. The president of the panel should have legal training (as a judge, attorney, legal advisor or public prosecutor). The other two members of the panel are experts from the Patent Office and representatives of technical associations, both usually having a technical background. The decisions are steadily improving and judgments of the EU Court of Justice are frequently cited, which of course leads to the harmonisation of jurisprudence. A Patent Office decision may be appealed to the Appeal Board and then to the Administrative Court in Warsaw with an extraordinary appeal to the Central Administrative Court.

II. Competent Parties 49

50 51

Apart from the right owner, the exclusive, registered licensee may also launch an action of infringement, unless the licensing agreement provides otherwise (IPC, s 76(6)).

Central Administrative Court decision of 20 June 2013, File No 348/12. Constitutional Tribunal decision of 21 May 2002, File No K 30/01, OTK-A 2002/3/32.

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Janusz Fiolka Should the licensee not comply with the conditions stipulated in the licensing agreement, the licensor may sue the licensee for breach of contract. Such regulation exists in relation to trade marks (IPC, s 296(4)), but it seems that it could be applied mutatis mutandis to patent infringement. In case of direct infringement, the infringer may be sued. In addition, section 422 of the Civil Code also makes contributory infringement actionable, as well as inducement to infringement, or making profit from infringement. However, until now there has been no case of contributory infringement in Poland and there are some opinions that such possibility does not exist.

III. Courts and Jurisdiction 1. In General 52

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National jurisdiction can be ascertained where the defendant of a suit is domiciled in Poland or where a Polish IP right is infringed. Contracts with a choice of law clause that exclude Polish jurisdiction are enforceable unless the jurisdiction is exclusive. The Polish Patent Office has exclusive jurisdiction in cases of revoking or invalidating IP rights granted in Poland.

2. Procedures in Commercial Matters 54

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The 1989 amendment to the CCP introduced a separate procedure for the civil enforcement of commercial matters in section 479(1)–(27) and establishes that commercial courts have jurisdiction over commercial cases. The purpose of introducing special procedures in commercial matters was to speed up procedures, which according to section 479(16), should not take more than three months from the time of raising the claim to the final decision. Within the framework of commercial cases, those related to the conclusion, amendment or rescission of agreements and their interpretation should be heard as priority cases. The reality is somewhat different, however. Since the courts are clogged with cases, a first instance decision cannot be expected within less than one year, and in extreme cases can take up to five years.52 To shorten this, section 479(12)(i) was introduced in 200053 and requires the plaintiff to present all statements and evidence in support of their claim at the beginning. The plaintiff may not present new statements or evidence during the procedure, unless he proves that the necessity to introduce them became apparent only after launching the petition. There have been no court decisions confirming this practice yet. Section 479(12)(i) does not define statements (twierdzenia). For instance, if the plaintiff in the petition has asked only for injunctive relief, the question remains as to whether he could later expand his petition and ask also for damages. However, these reforms were abandoned in 2012, when the provisions for a separate procedure for the civil

52 See Fiolka, Bolek and Lolek, ‘Court Decision’ (2001) 108 Copyright World 10. But the situation has not improved much since then. 53 Dz.U. No 48, item 554.

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enforcement of commercial matters in section 479(1)—(27) were deleted. Now, there is only one civil procedure; however, some characteristics of proceedings in commercial matters remain. For example, the court may now ask a party to provide all evidence and statements within 14 days. Failure to do so may result in dismissing the evidence and statements made after this dealine.

3. Style of Decisions 56

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While the judge of course enjoys independence in rendering decisions, precedents such as previous decisions of the Supreme Court in similar cases will be followed. Also appeal court decisions of the same district will be taken into account. To some extent, this also applies to decisions of other courts in similar cases, particularly if consistent with other rulings or views expressed in academic writings. In cases where proceedings take place in a number of countries in parallel, the court may even consider court judgments from these countries, particularly from the economic leaders, and especially the EU countries. Judgements of EU court of Justice will be followed strictly.54 In a 1996 amendment to the CCP, section 3.2 was deleted which obliged the court to examine ex officio. The aim of this change was to free the court from collecting evidence in the case.55 Since this change, the court may rely only on evidence presented by the parties. However it still happens that the court ex officio orders the production of evidence.

4. National Jurisdiction 58 59

IP infringement cases are heard at first instance by district courts. Jurisdiction is determined by the domicile or business establishment of the defendant (CCP, ss 27 and 30). In addition, jurisdiction can be based on one of the following factors: 1. a claim for monetary compensation can be launched before a court in the district in which the defendant has a business enterprise to the extent that the claim is linked to the enterprise’s activity (CCP, s 33); 2. claims related to the existence, execution or nullification of an agreement at the court of the place where performance is due (CCP, s 34); 3. in cases arising from a tort, the court of the place where such unlawful act took effect (CCP, s 35); and 4. in case several rules of jurisdiction apply, the plaintiff has the right to choose the forum (CCP, s 43).

54 Central Administrative Court, decision of 21 March 2012, File No II GSK 300/11 relating to the patentability of computer-implemented inventions under the EPC and Polish law, in which the Court cited ECJ decisions regarding the uniformity of the common market in re Poseidon Chartering BV, C-3/04, [16], re Confederation Española de Empresarions de Estaciones de Servicion, C-217/05, [20] and re Leur Bloem C-28/05, [32] and held that it shared the point of view of these decisions. For this reason, the provisions in Polish law related to computerimplemented inventions should be interpreted in the same way as by the EPO. 55 Szymański and Pietrzak, Kodeks postępowania cywilnego po nowelizacji z dnia 1 marca 1996 (‘Civil Procedure Code After the Revision of 1 March 1996’) (Warsaw, Twitter Publishing House, 1996) 30.

240 60 61

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Janusz Fiolka Since in patent infringement matters often one of the special rules of jurisdiction mentioned above will apply, the plaintiff has a choice of several fora. Procedures in first instance are heard by one judge (CCP, s 47(3)), appeal proceedings by a panel of three judges. One is the president of the panel, the second is the referent judge, the third one is the ‘sleeping judge’. The final appeal before the Supreme Court is also heard by three judges (CCP, s 39810). All judges are professionals with a legal background, yet with no specific technical knowledge.

5. Double and Transborder Litigation 63

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Generally speaking, Polish courts and Polish entrepreneurs have little experience of issues concerning the enforcing of industrial property rights of foreign subjects, questions of jurisdiction, or recognition and enforcement of foreign judgments. Since 1 January 2000, Poland has been a member of the 1988 Lugano Convention on jurisdiction and recognition and enforcement of foreign judgments in civil and commercial matters, which now is replaced by Regulation (EU) No 1215/2012 of the EU Parliament and of the Council of 12 December 2012 on jurisdiction and recognition and enforcement of judgments in civil and commercial matters.56 The Convention has evoked the interest of legal commentators and writers in Poland;57 however, there have as yet been few known court precedents. In a decision of 23 August 2001, the Supreme Court held that in a case in which the parties were bound by an agreement stipulating exclusive jurisdiction of a foreign country, the Polish court could not declare lack of domestic jurisdiction before the petition was served on the defendant.58 In a decision of 6 April 2001, the Supreme Court dismissed a motion for lifting a temporary injunction against four companies, two of which were seated in Germany and two in Poland. In this case, the suit was launched in the Court of Cologne, Germany. The plaintiff asked for a declaratory judgment that under the contract he had bought stocks on behalf of these four companies. In a motion for granting temporary measures to preserve the assets, the plaintiff asked the Polish court to seize the stocks of the two Polish companies so that these could not be sold, and to nominate the guardian of these stocks. The Supreme Court pointed out that, even before the Lugano Convention, lack of domestic jurisdiction in the main action did not constitute an obstacle to hearing a motion for granting temporary measures of preservation.59 However, due to the fact that the main action had been decided by the Court of Cologne, this court was

OJ L 351 2012 2015. See eg Wietz, Konwencja z Lugano, Wykonalność Zagranicznych Orzeczeń przed Sądami Polskimi (‘Lugano Conventions, Execution of Foreign Court Decisions before Polish Courts’) (Warsaw, 2002); or Włosińska, Odmowa Uznania Zagranicznego Orzeczenia Sądowego w Świetle Postanowień Konwencji Lugańsiej (‘Refusal of Recognition of Foreign Court Decisions in the Lugano Convention’) (Zakamycze, 2002); Polish National Group Rapport to Q 174 by Fiolka, www.aippi.org. 58 Supreme Court decision of 23 August 2001, File No N III CZP 43/01, Orzecznictwo Sądów Polskich 2002, issue 5, item 60 with positive comments by Ciszewski. 59 Supreme Court decision of 18 February 1993, I CRN 6/93, OSNCP 1993, issue 11, item 204. 57

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also competent for granting a temporary measure for preservation. Thus the Polish courts could not exercise jurisdiction. There is also no known court precedent regarding the question as to whether the Polish domestic courts can assume jurisdiction to decide on patent infringements. According to section 1103 of the CCP, the decisive factor would be whether the defendant is domiciled or has its headquarters in Poland.

IV. Preparation for the Trial 1. Measures to Preserve Evidence 68

69 70 71

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Measures to preserve evidence in patent infringement cases are now regulated in section 2861 of the Industrial Property Code, yet interim injunctions are contained in sections 733, 742 and 744–746 of the CCP, and are applied mutatis mutandis. Even before raising an action, the plaintiff may ask the court to preserve evidence if there is the danger that the evidence would otherwise be removed or destroyed. Requests for preserving evidence should be made before the court that is competent to hear the main action, or where the infringer conducts his activity or has his estate. The court should give its decision within three days and in complicated cases within seven days. The request should be aimed at securing the evidence, and securing the claims by providing necessary information on the origin and distribution networks of the goods or services which infringe the patent, supplementary protection right, right of protection or right in registration, where the likelihood of infringement of these rights is significant. The sought and delivered information shall comprise the names and addresses of the producers, manufacturers, distributors, suppliers and other previous holders of the goods or services which infringe the patent, as well as the intended wholesalers or retailers of the goods or services, information on the quantities of the produced, manufactured, delivered, received or ordered goods or services which infringe the patent, and the price obtained for the goods or services in question. When admitting evidence or examining requests for information, the court shall protect confidential information of the entrepreneur and other confidential information protected by virtue of law. The obligation for providing information may be waived in respect of any person, who as a witness might, under the provisions of the CCP, refuse to testify or answer the questions posed.

2. Warning Letters 75

In a previous regulation, the relevant provisions of the CCP in commercial cases require the plaintiff to disclose all documents related to voluntary attempts to settle the case, and to the defendant’s position in this matter (s 479(12)). This provision is no longer in force, but the plaintiff may still make voluntary attempts to settle the case.

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3. Interim Injunctions 76

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Interim injunctions are regulated in great detail in sections 2861 IPC and sections 733, 742 and 744–757 of the CCP. Interim injunctions are granted on the balance of probabilities and on the plaintiff proving a demonstrable loss if the injunction were not granted. An injunction may also be granted in order to safeguard the execution of the judgment, yet may not be aimed at satisfying what the main action should provide. Requests for issuing an interim injunction do not necessarily require launching a petition. However, if the interim injunction is granted before launching of the infringement petition, the patent owner will be obliged to launch the same within 14 days; otherwise the interim measure will lapse. Somewhat different rules on interim injunctions can be found in section 21 of the Unfair Competition Repression Act and section 80 of the Copyright Act. Under these provisions, it is not clear if the court has a right to investigate the validity of the claim. Of course, these provisions may be applied mutatis mutandis in patent cases. It is quite common that a patent infringement case begins with an interim injunction prohibiting questionable use or sale of the patented device. This is a relatively easy matter, as the injunction is granted without hearing the defendant and is based only on arguments presented by plaintiff. The defendant has the right to appeal, which is normally decided within six months.

V. The Trial 1. In General 79

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The trial is the stage at which the parties can present their claims and evidence is heard. The trial starts with a presentation of the plaintiff ’s petition, and the defendant’s reply. The judge takes an active role in the proceedings and decides on their course. It is the judge, who admits or denies the evidences. Court sessions may last between half an hour and several hours, depending on the case. The current caseload of judges is daunting. According to the latest statistics published by the Ministry of Justice,60 the number of commercial cases, ie cases between parties conducting commercial activity, rose from 1 million in 2010 to 1.53 million in 2014, so almost by half. The number of judges in courts in the same period is more or less unchanged.61 It is difficult to estimate the number of patent cases in Poland, as this is not evident from the published statistics. From statistics published by the Ministry of Justice it would seem that the average time for dealing with commercial cases in the first instance results is 4.7 months.62 This is not true in patent cases, where generally a first instance decision cannot be expected before 12 months, as usually an expert opinion is required, which takes at least half a year.

60 Ministerstwo Sprawiedliwości, Raport z działalności sądów powszechnych w latach 2010–2014 (Report on civil court activity), available at: http://isws.ms.gov.pl/pl/baza-statystyczna/publikacje/. 61 PAP info 16 March 2013. 62 Ministerstwo Sprawiedliwości, Analiza przewlekłości postepowania 2010–2014 (Analysis of direction of proceedings 2010–14), available at: http://isws.ms.gov.pl/pl/baza-statystyczna/publikacje/.

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2. Expert Opinions 81

In appropriate cases, the judge can order expert evidence to be heard, which is the norm in IP cases when technical knowledge is required. Experts may be appointed by the court among persons skilled in the art, often from research institutes, universities or other scientific institutions. The parties may present their own experts and expert opinions, yet the court is free to weigh the importance of such expertise. The court will normally follow the opinion of the court-appointed expert. A party dissatisfied with such expertise may request that the court appoint a second expert. The court may refuse the request for a second expert, if it was made only to prolong proceedings.

3. Appeals 82

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Every party to a first instance court decision has the right to launch an appeal to the Appeal Court (CCP, s 367). The deadline is 14 days from receiving written justification of the first instance decision, or, if the party did not ask for written justification within seven days of announcement of the decision, 21 days from the announcement (CCP, s 369(1)). An appeal after expiry of the deadline will be rejected, unless the term to launch the appeal is restituted. Grounds for appeal are violations of substantive laws or procedure. The appeal court will hear the case only within the motions contained in the appeal, but will take into account ex officio the fact that the proceedings were null and void (s 378). The appeal court will take into account evidence collected by the court of first instance. New facts and evidence may presented only if this was not possible before the first instance court, or the need to present these only emerged after the first instance proceedings were closed. In the appeal proceedings, new claims may not be launched (s 383). There is no court decision explaining what the court should do in a case of a central limitation procedure under the EPC, which would take place during the appeal proceedings. Perhaps in such a case, the court hearing the appeal will stay the infringement proceedings until the central limitation procedure under the EPC is completed. The appeal is heard by the panel of three judges. Appeal proceedings are much speedier, as usually there is only one relatively short trial, after which the decision is announced. There is a reformationis in peius bar. As a rule, the appeal court will decide de novo if it is accepting the appeal (s 386). In case the first instance decision is overturned, the case is remanded back. In addition to these options, the appeal court may revoke the first instance decision and transfer the case back to the first instance court only if the latter did not decide on the merits of the case (nie rozpoznał istoty sprawy) or where evidence has to be taken again. The appeal court decision is immediately executable, unless it defers its execution or requires the plaintiff to place a deposit (s 388). The appeal court may refer the case to the Supreme Court.

4. Cassation (kasacja) 87

From the appeal court decision, there is a second stage appeal to Supreme Court (CCP, s 398). In civil matters, the minimal value of the case for cassation is 50,000 Polish zlotys (PLN) (less than €12,500). The term for launching a cassation appeal is two months from the date of delivery of the decision together with its reasons.

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Janusz Fiolka The Supreme Court is not obliged to hear all the cassations. Only if the case presents the following issues will the cassation be taken into account by the Supreme Court (s 3989): 1. there is a major legal problem; 2. there is a need for interpretation of provisions which are not precise or cause a difference in jurisprudence; 3. the proceedings are null and void; and 4. the cassation is evidently justified.

89

The question of whether the Supreme Court will accept the cassation for hearing is decided by one judge in the ex parte proceeding. According to unofficial statistics, only 25–30 per cent of cassation cases are heard by the Supreme Court. This situation has been widely criticised. It usually takes one year to get a pre-trial cassation decision.

VI. Types of Infringement 1. Literal Infringement and Infringement by Equivalents in Patent Matters 90

Section 63(2) of the IPC provides that the scope of a patent is determined by the claims, while descriptions and drawings may be used as a means of interpretation. As of now, there are only a few court precedents regarding the doctrine of equivalents. In a Supreme Court decision of 1970, the court held that also a partial use of the patented claims in a certain embodiment would constitute an infringement.63 In that case, not all elements of the patented device were used. According to the Court, the question of infringement depended more on the relative importance of the given element in comparison to the whole invention, and the use of such element in the production process, rather than the fact that all elements had to be used. It would indeed constitute a patent infringement if an element was used that could be interpreted as so vital to the whole invention that it constituted the essence thereof. Apart from this decision, cases where patent claims are interpreted are rather rare, and mostly connected to questions regarding the proper remuneration of employed inventors.64 These cases often centre on the question of whether and to what extent the patented invention was used. Here, the courts were very restrictive and adopted a very literal interpretation of patent claims. In addition, all elements of the patent had to be used in order to constitute infringement, while partial use was not deemed infringing, with the consequence that the inventor had no right to remuneration.65

63 Supreme Court decision of 3 February 1970, File No 615/69, Gazeta Sądowa i Penitencjarna, [20/1970]. Excerpts of this decision are cited in Szwaja, Prawo wynalazcze. Przepisy, orzecznictwo, piśmiennictwo, objaśnienia (‘Law on Inventive Activity. Provisions, Jurisprudence, Literature, Comments’) (Warsaw, 1978) 276–77. 64 The Polish patent law adopted a system for employees’ inventions similar to the German one. The employed inventor of a patented invention in use had a right to remuneration, the amount of which was fixed by law. 65 Supreme Court, enlarged panel, decision of 23 June 1977, Case No V PZP 1/77; Supreme Court, decision of 24 November 1978, Case No IV PR 288/78, OSPIKA 1979; Supreme Court, enlarged panel, decision of 12 March 1987, Case No III PRN 5/86, OSPIKA 1988, issue 3, item 47,

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In another decision regarding patent infringement taken by the Cracow District Court, the Court held that the doctrine of equivalents was not good law in Poland.66 However, the Supreme Court in one decision did not exclude application of the theory of equivalency, but took the view that the technical means in a patent claim and in the allegedly infringing device were so different that no equivalency could be found.67 However, it should be pointed out that the role of domestic legislation in Poland is declining. In recent legal publications in Poland, the prevailing view is that regarding the scope of patent protection, the EPC and its Protocol on the interpretation of Article 69 should be directly applied, despite the fact that the Protocol is not part of Polish domestic legislation.68 The Central Administrative Court went in this direction in a decision of 201269 when taking the view that as the Polish national provisions regarding patentability of inventions were the same as requirements of the EPC of 1973, they should be interpreted in the same way as the provisions of the EPC. The case related to the patentability of computer-implemented inventions. Section 24 of the Polish IPC has the same wording as Article 52 of the EPC. The Polish Patent Office refused to grant a patent on a computer-implemented invention, arguing that the subject matter of the application had no technical character. The Central Administrative Court in this decision found that the Polish Patent Office had violated Article 27(1) of TRIPS and overturned the decision. It should be noticed that the same problem exists with OHIM decisions regarding the registration of Community trade marks. Legal regulation of Community trade marks is the same as in the Polish IPC, so in applying the view presented above, the Polish Patent Office should follow the decisions of OHIM regarding Community trade marks.

2. Protection of Process Patents 94

66

A patent granted for a process of manufacture does not only cover that process, but also the products obtained directly therefrom (IPC, s 64(1)). Where a patent covers a new product, or where a patent owner proves that, despite reasonable efforts, he was unable to identify the exact process of manufacture used by another person, the product which could reasonably have been obtained by means of the patented process shall be deemed to have in fact been obtained by that process (IPC, s 64(1)). This provision established a legal presumption, which could be overruled by proof to the contrary to be provided by the alleged infringer. In the absence of proof to the contrary, the legitimate interests of defendants in protecting their manufacturing and business secrets shall be taken into account. This in effect means a reversal of the burden of proof, in that the alleged infringer has to prove that the product was manufactured by a different process (IPC, s 64(3)).

Cracow District Court, decision of 30 January 1998, Case No IX GC 536/96. Supreme Court decision of 21 November 2008, Case No V CSK 213/08, published in Supreme Court decisions data base, available at: www.sn.pl. 68 M du Vall, Prawo patentowe ( Warsaw, 2008) 155, 240; M du Vall in System prawa prywatnego. Prawo własności przemysłowej vol 14a (Warsaw, 2012) 245; E Traple in Prawo własności przemysłowej (Warsaw, 2012) 762 et seq. 69 Central Administrative Court decision of 21 March 2012, File No II GSK 300/11 published on the www.nsa. pl. The CAC is supervising decisions of Polish Patent Office regarding patentability of inventions. For more on this decision, see n 51. 67

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VII. Remedies 95

The remedies available in cases of IP infringement were established a long time ago, both under general civil law as well as in the separate IP statutes. They are now contained in sections 287 and 296 of the IPC. Due to the scarcity of decisions in the field of IP infringement, a lot of ambiguities remain in this area. Essentially, five types of remedy are available.

1. Injunctive Relief 96

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Injunctive relief is the most basic remedy in cases of infringement, as in most cases the IP owner is primarily interested in preventing further acts of infringement. Practice shows that IP owners tend to initiate a claim for injunctive relief as a first stage of a dispute, and only subsequently claim other remedies such as damages once the active infringement has been established.70 There are also tactical reasons for such procedure, for example compared to the court fees involved in claiming damages or unjust enrichment, the fairly moderate court fees for claiming injunctive relief only 150€, instead of what comes to 5 per cent of the claimed sum, and no more than 100,000 PLN (some €25,000). In addition, the plaintiff can expect far speedier proceedings if the question of infringement as such is all that has to be determined. Claiming damages or lost profits often involves lengthier court proceedings and far more evidence. However, the court may refuse to grant an injunction, and may instead order the infringer to pay justified remuneration to the patentee, if the injunction would be too severe to the infringer and payment of the remuneration properly satisfies the interests of the patentee.

2. Claims for Infringer’s Profits and Damages 98

The patent owner may claim the profits emerging from the infringement. Where the infringement was deliberate, damages can be claimed simultaneously, provided that the amount of one claim is subtracted from the other, in other words that the claim for the infringer’s profits lowers the IP owner’s damages and vice versa.71 Apart from the Industrial Property Code, the above-mentioned damage claims can also be based on section 415 et seq of the Civil Code (reimbursement of damages) and section 405 et seq (unjust enrichment). Damages suffered by the IP owner relate both to direct damages and lost profits. The patent owner may request reimbursement of damages according to general rules under section 415 et seq of the Civil Code, or by asking the infringer to pay a sum equal to the licence fee, or other justified remuneration.

70 Tomaszek, ‘Zabezpieczenie roszczeń niepieniężnych w sprawach o naruszenie prawa z rejestracji znaków towarowych’ (‘Interim Injunctions of Non-Pecuniary Claims in Trade Mark Registration Rights Violations Cases’) (1994) 8 Monitor Prawniczy (MP) 4. 71 This doctrine was endorsed by the Supreme Court, decision of 22 October 1974 published in Orzecznictwo Sądu Najwyższego (1975), No 10–11, item 153. The view is shared by Markiewicz and Barta in Ustawa o prawie autorskim i prawach pokrewnych. Komentarz (‘Copyright and Related Rights. Commentary’) 512–13 (Warsaw, 2001). Both relate to copyright infringement.

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3. Destruction of Infringing Goods 99

The destruction of goods, although available as a remedy, has not been well received by the public at large. In those few cases where the destruction of counterfeit goods was ordered, press reports were extremely hostile and recommended that these goods should rather be distributed among the homeless or poor. These arguments, of course, have gained weight with the transformation of the economy that has widened income disparities. In a very early case of counterfeit goods, the Supreme Court ordered the infringing labels removed from all goods produced by the defendant, already sold or not.72 The possibility of having the decision executed in relation to those goods already sold to retailers was more than doubtful and attracted much criticism.

4. Publication of Court Decision 100

According to the explicit provision of section 287(2) of the IPC, the court finding infringement may, acting under a motion of the patent owner, decide to publish the decision in whole or in part, or publish only the information on the decision. The publication and its scope will be decided by the court.

VIII. Defences 1. Non-Infringement 101

102

The most common defence, of course, is that of non-infringement, based in some cases on the defendant’s own IP right. It often happens that the infringer has a protection certificate on a utility model with respect to the allegedly infringing object (świadectwo ochronne na wzór użytkowy), which is easy to obtain, since a utility model in Poland should be new and useful. In contrast to a patent, there is no requirement of an inventive step. For this reason it is difficult to invalidate a protection certificate on a utility model. It has been pointed out above that contesting an IP right in court is difficult due to the Patent Office’s jurisdiction over the matter. In one case, the Supreme Court has indicated that it might accept the estoppel of abuse of right where such right was obviously obtained contrary to the provisions of law (see the above Cogito decision).

2. Invalidity 103

72

Polish courts do not have jurisdiction to invalidate a patent, utility model or trade mark. Thus, the defendant cannot raise the estoppel of invalidity in infringement procedures, but can only initiate an invalidation action before the Patent Office. Decisions of the Patent Office may be challenged before the Warsaw Administrative Court with further appeal to the Central Administrative Court. The Administrative Court decides absolutely on the case, but may only accept the decision or nullify it Dz.U. 2003, No 65, item 598 and Dz.U. 2007, No 136, item 958 changing art 2.

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Janusz Fiolka and send it back to the Patent Office for renewed decision, after which there is again a possibility to appeal. This extends the length of the proceedings, as one instance can take between six months and one year. Only in rather exceptional cases in which there was no violation of procedure, but only an incorrect application of material law will the Central Administrative Court decide the case on its own, taking the facts established by the Warsaw Administrative Court.

3. Time Bar 104

An infringement action can be raised before the patent is granted, but will be suspended up to that time. The exception is provided for in Article 4(2) of the Law of 2003 on the filing of European patent applications and the effects of European patents in the Republic of Poland.73 According to this provision, if the patent infringement claims derive from a publication of the mention that a European patent application was filed, the claims shall only be enforceable from the date of publication in the official gazette ‘Biuletyn Urzędu Patentowego’ of a communication stating that a translation into the Polish language of the patent claims of the European patent application has been filed by the applicant in the Polish Patent Office. 105 There is no case against infringement prior to the publication of the application or other knowledge by the infringer. An action for infringement can only be raised within three years from the time the plaintiff obtains knowledge of the infringement and infringer. The period of three years is counted separately for each act of infringement, which in practice often means not the action being barred as such, but the plaintiff being able to ask for damages for only the last three years. However, there is an absolute time bar of five years from the date of infringement. If the action is based on unfair competition law, the relative time bar of three years is the same, but the action can be raised within 10 years from the date of infringement if the plaintiff had no knowledge of the infringement or infringer previously. It should be mentioned that the time bar applies equally to injunction claims. In one decision, the Supreme Court stated that even injunction claims are of pecuniary character which is why the court fee should be 5 per cent of the claimed sum, not €150 as in case of injunction claims.74 The plaintiff wanted the court to order an injunction against the defendant. The Supreme Court was interested in the court fees and decided that these claims were of pecuniary character. However, all claims of pecuniary character have prescription rules. The period of prescription for patent infringement is three years from the date where the right holder obtains knowledge of the infringement and the infringer, at the latest five years after the infringement had occurred. The period of prescription shall be suspended for the time between the filing of the patent application with the Patent Office and the grant of the patent. Arguably, the decision of the Supreme Court is mistaken, and the court simply did not see these consequences of its decision: There is simply no time bar for requesting an injunction against an ongoing infringement. 73 74

Dz.U. 2003, No 65, item 598 and Dz.U. 2007, No 136, item 958 changing art 2. Supreme Court decision of 13 May 2014, File No I PZ 7/14.

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4. Other Defences 106

Article 69 of the IPC specifies exemptions from patent exclusivity. The following shall not be considered acts of infringement of a patent: 1. the exploitation of an invention concerning means of transport or their parts or accessories, temporarily located on the territory of the Republic of Poland, or concerning articles which are in transit through its territory. This is so called transit exemption, which in Poland is broader than the transit exemption provided by the Paris Convention; 2. the exploitation of an invention for national purposes, to a necessary extent, without the exclusive right, where it is has been found indispensable to prevent or eliminate a state of emergency relating to vital interests of the State, in particular to security or public order; 3. employing of an invention for search and experimental purposes, for the evaluation thereof, analysis or teaching; 4. the exploitation of an invention to a necessary extent, for the purpose of performing the acts as required under the provisions of law for obtaining registration or authorisation, being, due to the intended use thereof, requisite for certain products to be allowed for putting them on the market, in particular those being pharmaceutical products. This is the so-called ‘Bolar’ exemption. In a decision of 2013, the Supreme Court decided that the Bolar exemption does not cover the producing of a patented substance by a producer who is not intending to obtain marketing approval but who has produced the substance and sold it to another person, who does intend to obtain marketing approval.75 One can doubt that this decision was correct, as the product was not designated for patients on the market, but the intended use was for conducting searches needed to obtain registration or authorisation; 5. the extemporaneous preparation of a medicine in a pharmacy upon a physician’s prescription. The open question is if this provision applies at least mutatis mutandis to patents for second medical indications of pharmaceutical products. If a pharmacy may prepare a medicine upon a physician’s prescription and this does not constitute a patent infringement, then selling pharmaceutical products prescribed for second medical indications perhaps also does not constitute patent infringement, be it by the pharmacy, or by physician who prescribed it.

107

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75

Other defences include the right of the defendant based on a contractual or compulsory licence, or based on prior user rights.76 A claim also exists against an impostor who wrongfully applied for a patent. This claim can only be raised by the person who would be entitled to the patent, however. The defendant can further rely on exhaustion if the patented or trade-marked goods were brought into circulation by the IP owner or with his consent either in Poland or the territory of the European Economic Area.

Supreme Court decision of 23 October 2013, Case No IV CSK 92/13. See J Fiolka, Zakres prawa z patentu w polskim prawie wynalazczym (Scope of patent in Polish inventive activity law) ZNUJ, Z 39, (Warsaw—Cracow, 1985) 102 et seq. 76

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Finally, one can argue that laws in Poland are contrary to the provisions of international agreements regarding enforcement. This is evident from the Risset case. Risset was a generic product of respiridone, which was protected by a process patent in Poland. After the Bush-Mazowiecki Treaty, Poland was obliged to introduce pharmaceutical patent product protection also in cases of inventions already protected in Poland by a process patent. Poland introduced this protection in 1993 by creating the exclusive right to ‘production and selling of chemical compound’.77 The condition for converting a process patent into a product patent was that the owner shall produce the compound in Poland in the scope of fulfilling the needs of the national market. The respiridone substance producer obtained a converted patent in Poland, but did not produce the substance in Poland, rather importing it from abroad. The generic producer started to sell his product in Poland, which then led to the patent infringement case. In the decision of 2006,78 the Supreme Court took the view that earlier provisions had been invalidated by Article 27(1) of TRIPS, which forbids discrimination of patents due to their place of production. The Supreme Court stated that Article 4 of the 1992 Law had lost its validity from the date of ratification of TRIPS in Poland, on 31 July 1995,79 in terms of the provision’s requirement of production of the patented substance in Poland.

IX. Wrongful Enforcement 110

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It is possible that after enforcement of a patent, this same patent is declared null and void. Such a case is not directly regulated in Polish law. A very similar case is regulated by Article 290 and Article 291 of the IPC. Article 290 deals with situations in which a patent is granted to a person who is not the genuine inventor of the item. The person actually entitled to the patent may demand that the person who wrongfully applied for the patent, or was granted same, surrender the unlawfully obtained profits and redress the damage, in accordance with the general principles of law, so in accordance with above-mentioned Article 405 of the CC, or Article 417 of the CC. Article 291 IPC provides that, unless otherwise agreed between the parties, in the event of the invalidation of the patent, an acquirer, a licensee or any other person on behalf of which the holder of the patent disposed of his right against payment, shall be entitled to reimbursement of such payment and to redress of damage, in accordance with the general rules of law. The disposer may, however, deduct any profits obtained by the acquirer as a result of the exploitation of the invention before the invalidation of the patent; where the profits exceed the payment and the damages sought, the disposer shall be exempted from liability.

77 Art 4 of the Law of 20 November 1992, on amendment of the Law of Inventive Activity of 1972, Dz.U. 1992, No 4, item 14, which came into force on 15 January 1993. 78 Supreme Court, decision of 19 October 2006, Case No V CSK 125/06. 79 Dz.U. 1996, No 32, item 143.

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These provisions may be applied mutatis mutandis to wrongful enforcement; however, as yet there has been no court decision in this respect.

X. Costs 114

As a general rule under Polish civil procedure, the losing party has to pay all the costs of the case. These costs relate to the court fees, the remuneration of court experts, attorneys’ fees and other costs related to the case, eg translator fees. However, in the case of reimbursement of attorneys’ fees, one should mention that the costs ordered for reimbursement and the actual costs incurred often differ widely. Attorneys are normally paid by the hour, sometimes to an amount of between €100 and €400, and it stands to reason that the courts do not oblige the losing party to pay these, but rather the costs that an attorney would charge according to the official schedule of attorney, legal advisor or patent attorney fees.

XI. Outlook 115

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One of the priorities of the Polish EU Presidency in the second half of 2011 was reviving the projects for a unitary European patent and Unified Patent Court, and bringing them to a successful end. The projects were supported by the Deputy Prime Minister, who was responsible for the national economy and represented the Farmers’ Party in the Polish Government. For the Farmers’ Party, unified patents were not a threat, as Polish agriculture is very traditional, and the issue of their validity in Poland was therefore irrelevant. Intensive work on the new agreements in December 2012 almost ended with the conclusion of these treaties. The diplomatic conference was called off at the last moment, as there was no agreement between the Member States as to the seat of the new European Patent Court. The projects were met with a very hostile reaction by the Polish Patent Attorneys Chamber and the Polish Patent Office. For a long time, the Polish Patent Office has been supporting the establishment of a separate industrial property court or IP court in Poland, and it has no intention of abandoning this objective. On the other hand, a declining number of Polish patent applications to the Polish Patent Office has been observed. This process will accelerate if the unitary patent comes into force in Poland, and thus the role of the PPO will be reduced further. The political balance in Poland today is particularly fragile. There are two major parties, and each of them has some 30 per cent of voters’ support. Polls frequently show that the preferences of voters are changing and volatile, meaning that the situation of the current Polish Government is not comfortable. This is despite the fact that the same government (an alliance of the Democratic Platform and the Farmers’ Party) has now been in office for eight years, which is a unique situation in Poland. During the work on the unitary European patent and Unified Patent Court for the EU, widespread protests against the Anti-Counterfeiting Trade Agreement forced the Polish Government to suspend its support to same. This fact encouraged the opponents of a unitary European patent and Unified Patent Court to launch massive

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Janusz Fiolka attacks against these agreements. On an international level, these agreements have many opponents, too. Many articles critical of the new agreements have been published in Poland.80 Leading academics published an open letter in which they warned the Polish Government on the negative effects of the new agreements for the Polish economy.81 The opponents pointed out that the sharp increase in the number of European patents valid in Poland would hamper the national economy, as Polish industry was not prepared to face competition from leading industrial countries having a lot of European patents. One of the leading Polish IP experts has even claimed that the new EU Unified Patent Court would be contrary to the Polish Constitution.82 There were also some opposing opinions, but these did not influence the Polish Government.83 The debate on the unitary European patent and Unified Patent Court was also wielded in Polish Parliament on the forum of its Innovation and Modern Technologies Commission. The Polish Government was asked by the Commission to investigate the cost of introducing these new agreements. The government asked the firm Deloitte for an evaluation of the impact of the new agreements on the national economy. Deloitte in its opinion of 201284 took the view that joining the unitary European patent and Unified Patent Court would cost the national economy 53 billion PLN (€13.25 billion) in a 20-year perspective and 79.4 billion PLN (€19.85 billion)85 in a 30-year perspective. This opinion was completely unfounded, as in 2012 the costs of a new system were not known, so their impact on the Polish economy could not be estimated.

80 See A Nowicka, ‘Omówienie stanu ratyfikacji porozumienia w sprawie jednolitej ochrony’, referat wygłoszony na konferencji System ochrony własności przemysłowej w Polsce a możliwości rozwoju gospodarczego zorganizowanej w dniu (6 May 2014) r. w Sejmie (Delibarations on the state of ratification of uniform protection’); A Nowicka, Patent europejski o jednolitym skutku—konstrukcja prawna i treść (Unified European Patent—legal contruction and contents) (RPEiS, 2013), z 4, 19 et seq; R Skubisz, Opinia prawna na temat jednolitej ochrony patentowej w Unii Europejskiej z punktu widzenia Polski, (Opinion on unified patent in EU from Polish point of view) 75 et seq; A Nowicka, Ekspertyza prawna na temat jednolitej ochrony patentowej w Unii Europejskiej z punktu widzenia Polski (Expertise on uniform patent protection in EU), tamże, 93 et seq; A Nowicka, ‘Niepowodzenia prób ustanowienia patentu Unii Europejskiej. Kontrowersje dotyczące wprowadzenia wzmocnionej współpracy grupy państwa członkowskich w dziedzinie utworzenia jednolitej ochrony patentowej’ (‘Bust of attempts establishment of uniform patent in EU’) (w:) System Prawa Prywatnego vol 14a Prawo własności przemysłowej pod red. R.Skubisza (Warsaw, 2012) 184–98. 81 Open letter signed by S Sołtysiński, A Szajkowski, J Szwaja, R Markiewicz, A Nowicka and R Skubisz, published in May 2012 on the website of the Polish Patent Attorneys Chamber www.rzecznikpatentowy.pl. 82 S Sołtysiński, ‘O projekcie jednolitej ochrony patentowej w Unii Europejskiej’ in Problemy polskiego i europejskiego prawa prywatnego—Księga Pamiątkowa Profesora Marianna Kępińskiego (Problems of EU private law—commemoraion book of Marian Kępiński) (Lex Wolters Kluwer Business, Warsaw, 2012) 401 et seq. 83 M Łazewski, ‘Analiza aspektów gospodarczych, społecznych i prawnych, dotycząca patentu jednolitego i ewentualnych możliwości związanych z wdrożeniem przepisów o patencie jednolitym’ (‘Analysis of economic, social and legal aspects of uniform patent and a would be option regarding reduction into prictice uniform patent’), opinion dated 2008 prepared for Ministry of Economy, http://kramarz.pl/Patent_jednolity_wspolnotowy.pdf; K Szczepanowska-Kozłowska, ‘Korzyści, szanse i zagrożenia wynikające z jednolitego systemu ochrony patentowej dla jednostek naukowych’ (‘Advantages, chances anad dangeres emerging from uniform), opinion dated 25 June 2012 prepared for Ministry of Science and Higher Education; J Fiolka, Wspólny sąd patentowy dla Unii Europejskiej (Cz. 1) (Palestra, 5–6/2013) 71–78. 84 Deloitte opinion dated 1 October 2012, Analiza w sprawie potencjalnych skutków gospodarczych wprowadzenia w Polsce systemu jednolitej ochrony patentowej (‘Analysis of potential economic results introduction in Poland of uniform patent protection’) published on www.gov.pl. 85 These calculations are made at an exchange rate of €1 = 4 PLN.

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The authors of the Deloitte study made some assessments such as, for example, that 50 per cent of the maintenance fees charged by the Polish Patent Office constitute revenues for the State budget.86 That was not true. In 2012, revenues of the Polish Patent Office were only 18.65 per cent higher than its operational costs and this was easy to check, as it is written each year in the State budget law.87 Another false assumption made by the Deloitte was the number of patents valid in Poland and the revenues emerging from these maintenance fees, the number of licences, the number of patent infringement cases, the cost of maintaining patents, and the cost of patent infringement cases, and presented this data in 20- and 30-year perspectives. This was quite misleading, as for instance guessing the number of patents in 20, or 30 years’ time is pure speculation, not a scientifically based assessment. The same relates to patent infringement cases, number of licence agreements, and so on. On the other hand, after 20 or 30 years the 2012 Deloitte opinion will doubtless be forgotten, if indeed the firm is still in existence by then. The Arthur Andersen/Enron case is very illustrative in this respect.88 In this discussion, foreign authors’ opinions and reservations were quoted, for instance the Max Planck Institute for Intellectual Property and Competition Law Research Paper No 12-03, ‘The Unitary Patent Package: Twelve Reasons for Concern, published online’.89 These attacks were successful. Poland did not sign the agreements on the unitary European patent and Unified Patent Court, although from time to time there are some declarations of government officials that this decision is not final and may be changed. So it cannot be ruled out that, one day, Poland will join these agreements especially taking into account that Italy has declared its intention to join the unitary European patent and Unified Patent Court.90

XII. Conclusion 125

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While the enforcement of patent rights in Poland is certainly not easy, it is not impossible. It requires time and patience, but is steadily improving, due to the fact that it is influenced by European law and decisions of the Court of Justice of the European Union.

See Deloitte opinion (n 80) 47. According to the State Budget for 2012 Law, Dz.U. 2012, item 273, the planned revenues of the Polish Patent Office were 58 million PLN (€14.5 million) and the operational costs of the PPO were 47,187 million PLN (€11.79 million). 88 Enron was a US company. Its bankruptcy cost shareholders $10 billion. Enron’s auditor, Arthur Andersen for years helped to hide that ENRON was losing money. At the end when a four billion dollar loss was made public, ENRON collapsed and Arthur Andersen almost ceased to exist. Now, it has some limited activity in US. The ‘case is very illustrative’ relates to the impact of false or wrong opinions on a company’s future existence. 89 www.ip.mpg.de/fileadmin/templates/pdf/MPI-IP_Twelve-Reasons_2012-10-17_04.pdf. 90 B Battistelli blog, 22 May 2015: ‘Italy considers joining the unitary patent’, http://blog.epo.org/ unitary-patent-2/italy-considers-joining-the-unitary-patent. 87

9 Patent Enforcement in Switzerland FRITZ BLUMER

A. System of Civil Procedure I. System of Civil Litigation 1

Even though the legislation in the field of substantive civil law had been a responsibility of the confederation since the early-twentieth century, the legislation in the field of civil procedure together with the organisation of the court system (except for the Federal Supreme Court) remained within the responsibility of the individual cantons. The systems of civil procedures differed widely from canton to canton, the legislation being influenced mostly by French, German and/or local traditions. Only when the Swiss judicial system was substantially reformed around 2000, was a federal competence for legislation in the field of civil procedure and for establishing federal judicial authorities established.1 Under the new federal competences, the Swiss Civil Procedure Code was drafted and entered into force on 1 January 2011, and the Swiss Federal Patent Court was established under the Patent Court Act2 and opened on 1 January 2012. 2 Judgments of the higher courts of the cantons and of the Federal Patent Court are subject to appeal to the Swiss Federal Supreme Court. The Federal Supreme Court only decides issues of law; the determination of facts by the lower courts may be reviewed only under exceptional circumstances.3 In particular, facts established by the Federal Patent Court in the context of patent infringement and invalidity proceedings (including the opinions of court-appointed experts) are not subject to review in proceedings before the Federal Supreme Court.4 Since the Federal Patent Court acts as first instance court for patent matters, this means that there is only one instance carrying out full examination of claims under the Patent Act of 25 June 1954. 3 Under the Patent Protection Treaty between Switzerland and the Principality of Liechtenstein, the two jurisdictions constitute a uniform patent territory, which means that, inter alia, in European patent applications and Patent Cooperation Treaty 1

Arts 122 and 191(a) of the Federal Constitution as amended/established per popular vote of 12 March 2000. Art 27 of the Federal Act of 20 March 2009 on the Federal Patent Court (‘Patent Court Act’). 3 Federal Supreme Court Act (‘Bundesgerichtsgesetz’) arts 95 and 97. 4 Before the Federal Supreme Court Act entered into force in 2007, the Federal Supreme Court could review the determination of technical facts in patent matters by the then competent cantonal courts (Federal Act on the Organisation of the Federal Judiciary of 16 December 1943, art 76). 2

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Fritz Blumer applications both countries must be jointly denominated or selected.5 Thus, in patent matters only, the Principality of Liechtenstein has a common court structure with Switzerland. Appeals against Liechtenstein judgments in patent matters can be filed with the Swiss Federal Supreme Court.

II. Swiss Federal Patent Court 1. Historical Background 4

The patent litigation system in Switzerland was fragmented and heterogeneous when one cantonal court in each of the 26 cantons was competent for civil actions under the Patent Act. Whereas certain cantons (notably Zurich) had Commercial Courts which regularly dealt with patent proceedings, courts in other cantons had little or no experience in patent matters.6 5 Proposals for the establishment of specialised courts for patent and other IP matters were made as early as 1906/07.7 The establishment of a specialised federal court for patent matters was repeatedly discussed, in particular in the context of the drafting of the Patent Act of 1954.8 However, only after the constitutional obstacles against federal first instance courts in civil matters were removed in 2000, did the drafting of the legislation on a federal patent court start. It was clear from the beginning that there should be only one specialised patent court having jurisdiction for the whole of Switzerland. After a preliminary draft of the Patent Court Act was presented, all stakeholders were invited to comment, and the project was supported by a clear majority of the commentators.9 6 Among the most discussed topics in the legislative process were cost issues. The new court was expected to finance itself as much as possible by court fees.10 In the same context, the number of permanent (ie full-time) judges was addressed and finally limited to two in Article 8(2) of the Patent Court Act. Other focal points of the discussions were the right of patent attorneys to represent parties before the new court and the compatibility of other professional activities of non-permanent judges with their judicial function.11 The political debate around the seat of the new court was settled by tying its seat to the seat of the Federal Administrative Court; the Federal Patent Court is

5 Treaty between the Swiss Confederation and the Principality of Liechtenstein on Patent Protection of 22 December 1978 (OJ EPO 1980, 407). See also P Heinrich, PatG/EPÜ (‘Commentary in Synoptic Representation’) 2nd edn (Bern, 2010) art 1 N 185 et seq. 6 See D Brändle, ‘Eidgenössisches Patentgericht erster Instanz—Fluch oder Segen?’ in Kur/Luginbühl/Waage (eds), ‘… und sie bewegt sich doch ! ’ Patent Law on the Move, Festschrift für Gert Kolle und Dieter Stauder (Cologne, 2005) 301, 303; M Lutz in Calame/Hess-Blumer/Stieger (eds), Patentgerichtsgesetz (PatGG) Kommentar (‘Commentary Patent Court Act’) (Basel, 2013) Einleitung/Geschichtliches No 37; M Ritscher, ‘Patent Litigation Systems: Patent Litigation in Switzerland—At the Brink of a New Era‘ in Schüssler-Langeheine/Hansen (eds), Patent Practice in Japan and Europe: Liber Amicorum for Guntram Rahn (Alphen aan den Rijn, 2011) 211, 211. 7 See CP Rigamonti, ‘The New Swiss Patent Litigation System’ (2011) 2 jipitec 3, para 4. 8 See Lutz, ‘Commentary Patent Court Act’ (n 6), Einleitung/Geschichtliches N 13. 9 See T Calame, ‘Commentary Patent Court Act’ (n 6), Einleitung/Entstehungsgeschichte des PatGG N 10 et seq. 10 See Botschaft zum Patentgerichtsgesetz vom 7 Dezember 2007 (Bundesblatt, 2008) 455, 467. 11 See Calame, ‘Commentary Patent Court Act’ (n 6) Einleitung/Entstehungsgeschichte des PatGG N 22, 46.

Patent Enforcement in Switzerland 257 therefore located in St Gallen in Eastern Switzerland.12 After the Patent Court Act was finalised in March 2009 and the necessary preparatory work (including the appointment of judges and the drafting of ancillary legislation) was completed, the Federal Patent Court opened in January 2012. Under the transitional provisions of the Patent Court Act (art 41), the new court had to take over the patent cases that were pending before the cantonal courts to the extent that the main hearing had not yet been held in such proceedings.13

2. Organisation of the Federal Patent Court 7

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In continuation of the tradition established by the Commercial Courts, which were competent for patent matters before 2012, the Federal Patent Court is set up as a court with both judges with legal training and judges with technical training.14 While the number of permanent judges is limited to two, the Court is also staffed with a ‘sufficient number’ of non-permanent judges. The majority of non-permanent judges must possess technical training.15 All technical fields of expertise and Switzerland’s official languages should be appropriately represented.16 At the end of 2013, the Court comprised 36 non-permanent judges, 25 possessing technical training and 11 possessing legal training.17 Most non-permanent judges are active attorneys (legally qualified judges) or patent attorneys (technically qualified judges).18 The involvement of practising lawyers and patent attorneys as part-time judges necessarily invokes the risk of conflicts of interest. In addition to the general rules on recusal in the Civil Procedure Code,19 the Patent Court Act specifically refers to the non-permanent judges of the Federal Patent Court. They shall recuse themselves in proceedings where another member of the judge’s law firm or patent law firm or another employee of the judge’s employer represents one of the parties.20 The Court further specified the rules on recusal in its ‘Guidelines on Independence’. In its first year, the Court was confronted with a conflict of interest situation which gave rise to a leading decision of the Federal Supreme Court. A patent attorney working in the same patent law firm as a technically qualified non-permanent judge acting in a high-profile infringement case (judge R) was representing a sister company of the defendant in trade mark issues. In accordance with the ‘Guidelines on Independence’, judge R informed the Court of the situation, and the president of the Court informed the parties accordingly. The plaintiff then challenged judge R and requested that he be replaced. The request was rejected by the Federal Patent Court, but on appeal of the plaintiff, the Federal Supreme Court decided that the situation led to a suspicion of partiality and that judge R had to decline

12 Patent Court Act, art 6; Federal Act on the Federal Administrative Court of 17 June 2005, art 4; see also Rigamonti, ‘The New Swiss Patent Litigation System’ (n 7) para 12. 13 See also Guidelines on Proceedings before the Federal Patent Court, art 10. 14 Patent Court Act, art 8(1); see F Blumer, ‘Commentary Patent Court Act’ (n 6) art 8 N 5 et seq. 15 Patent Court Act, art 8(2). 16 ibid, art 9(3). 17 Geschäftsbericht 2014 Bundespatentgericht (available at: www.bundespatentgericht.ch) 85. 18 See the list of judges available at www.bundespatentgericht.ch which also shows the professional affiliation of judges. 19 See Civil Procedure Code, art 47 (‘Grounds for recusal’). 20 Patent Court Act, art 28.

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Fritz Blumer his participation in the case.21 As a consequence, the ‘Guidelines on Independence’ were revised.22 The panels in individual cases are composed of three members as a general rule, of whom at least one member must possess technical training and one member legal training.23 The technically trained judges are appointed according to the technical field of expertise required in the specific dispute.24 The panel may consist of five members ‘where this is in the interest of the further development of the law or the uniform application of the law’.25 The Court makes use of this possibility in most of its regular proceedings.26 The purpose of uniform application of the law is also served by the rule that at least one permanent judge must always sit on a panel.27 Certain decisions may be taken by the president of the Court alone, in particular decisions on provisional measures (preliminary injunctions, pre-trial taking of evidence etc).28 However, where the understanding of a technical matter is of particular significance in view of such decisions, the decision must be taken by a panel of three judges.29 The proceedings before the Federal Patent Court are governed by the Civil Procedure Code unless the Patent Act or the Patent Court Act contain specific rules which deviate from the Civil Procedure Code.30 In order to detail the procedural rules in the Patent Court Act and the Civil Procedure Code, the Federal Patent Court issued guidelines aiming at ensuring efficient and predictable proceedings.31 Based on an authorisation under Article 20(3) of the Patent Court Act, the Court further issued, inter alia, Guidelines on Independence,32 regulations on litigation costs and ‘Regulations on the Federal Patent Court’.33

III. The Profession 11

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Professional representation of parties in civil proceedings is, as a principle, limited to lawyers admitted to the Swiss bars.34 Any lawyer who has been admitted to the bar of one canton may represent parties in proceedings before all civil courts in Switzerland, including the Federal Patent Court and the Federal Supreme Court. However, only a small number of lawyers regularly deal with patent cases.

Federal Supreme Court of 27 August 2013, BGE 139 III 433. Both versions of the Guidelines on Independence (effective before and after 1 January 2015) are available at: www.bundespatentgericht.ch. 23 Patent Court Act, art 21(1). 24 ibid, art 21(4). 25 ibid, art 21(2). 26 See Geschäftsbericht 2012, 98, Geschäftsbericht 2013, 96 and Geschäftsbericht 2014, 96 (available at: www.bundespatentgericht.ch). 27 See Patent Court Act, art 21(5). 28 ibid, art 23(1). 29 ibid, art 23(3). 30 ibid, art 27. 31 Guidelines on Proceedings before the Federal Patent Court (available at: www.bundespatentgericht.ch) (‘FPC Guidelines on Proceedings’) art 1(1), 1(3). 32 See n 22. 33 Regulations on Litigation Costs at the Federal Patent Court of 28 September 2011 (‘CostR-PatC’), Regulations on the Federal Patent Court of 28 September 2011 (‘PR-PatC’), both available at: www.bundespatentgericht.ch. 34 Civil Procedure Code, art 68(2). 22

Patent Enforcement in Switzerland 259 12

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In proceedings concerning the validity of a patent, patent attorneys who are registered in the Swiss Patent Attorney Register may also represent parties before the Federal Patent Court provided that they engage in independent practice.35 The distinction between proceedings concerning the validity of a patent and all other proceedings mirrors, to some extent, the situation in Germany where patent attorneys may represent clients in invalidity proceedings before the German ‘Bundespatentgericht’ but not in infringement proceedings before the ordinary civil courts.36 Registered patent attorneys shall, however, be given the opportunity to present technical arguments concerning the facts of the case in all proceedings before the Federal Patent Court.37 The Swiss Patent Attorney Register was established only under the Patent Attorney Act which became effective in July 2011. Before this date, the profession of patent attorneys was not regulated on a national level even though Switzerland was among the first Member States of the European Patent Convention (‘EPC’) and for decades has had a large community of European patent attorneys. Under the Patent Attorney Act, every person professionally acting as ‘patent attorney’ must (1) possess a recognised higher education qualification in natural sciences or engineering; (2) have passed the Swiss Federal Patent Attorney Examination or a recognised foreign patent attorney examination; (3) have completed practical training; (4) possess at least an address for service in Switzerland; and (5) be registered in the Patent Attorney Register.38 Under the transitional provisions of the Patent Attorney Act, persons who have worked for more than six years (or three years for European patent attorneys) professionally as a patent attorney on a full-time basis in Switzerland before 1 July 2011 could be registered under more favourable terms.39

B. Enforcement of Patent Rights I. Types of Action 1. Civil Proceedings 14

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Swiss civil proceedings in patent matters are characterised, on the one hand, by the competence of a single specialised court for patent matters which decides in mixed compositions of legally qualified and technically qualified judges.40 On the other hand, patent litigation is not subject to so-called ‘bifurcation’ (ie separate jurisdiction for invalidity proceedings and infringement actions). The Federal Patent Court decides on the validity and on the infringement of a patent in the same proceedings. Since the

Patent Court Act, art 29(2); Federal Act of 20 March 2009 on Patent Attorneys (‘Patent Attorney Act’) art 2. See T Bremi in ‘Commentary Patent Court Act’ (n 6) art 29 N 4 et seq. Patent Court Act, art 29(3). See W Stieger, ‘Prozessieren über Immaterialgüterrechte in der Schweiz: Ein Quantensprung steht bevor’ 2010 (7) GRUR Int 574, 580. 38 Patent Attorney Act, art 2. The Patent Attorney Register is available at the website of the Swiss Federal Institute of Intellectual Property (IPI) (www.ige.ch). 39 See ibid, art 19. 40 Federal Patent Court, see section A.II. 36 37

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Fritz Blumer Federal Patent Court became operative only in 2012 and since the applicable procedural law in many respects differs significantly from the procedural laws applied by the cantonal courts before 2012, the practical experience with the new system is limited and a relevant body of case law has yet to develop. However, the new court is generally seen to have had a good start and the patent community in Switzerland is confident that the new system will live up to expectations. As a non-member of the EU, Switzerland has to rely on its own instruments for patent disputes as it is excluded from the jurisdiction of the future Unified Patent Court.

2. Customs Actions 15

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In the course of the 2007 revision of the Patent Act, a new section ‘Assistance Provided by the Customs Administration’ was introduced.41 Before the said revision, ‘border measures’ in terms of Articles 51–60 of TRIPS were available only under trade mark, copyright and design law, but not under patent law.42 The new provisions concerning border measures under patent law were drafted with a view to the existing Swiss provisions concerning other IP rights and to the EU Customs Directive.43 If a patent proprietor has clear indications of the imminent import, export, or transit of goods which infringe a patent, he may request the customs administration to refuse the release of the potentially infringing goods.44 The customs administration may even withhold goods ex officio if there is a suspicion of the imminent import, export or transit of patent infringing goods.45 Customs actions do not serve as an alternative to civil actions but only to secure claims to be made in civil proceedings. The customs administration withholds goods for 10 working days only in order to allow the applicant to obtain preliminary measures.46

3. Criminal Proceedings 17

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Criminal proceedings can be instituted in connection with any wilful infringement upon request of the ‘injured party’ (ie the patent owner); possible criminal sanctions are monetary penalties and imprisonment of up to one year (five years if the offender acts for commercial gain).47 The right to request criminal proceedings is barred

Patent Act, art 86a–86k, in force since 1 July 2008. See Trade Mark Act, arts 70–72, Copyright Act, arts 75–77, Design Act, arts 46–49. TRIPS, art 51 requires Member States to introduce border measures only in connection with the importation of counterfeit trade mark or pirated copyright goods but allows Member States to introduce border measures in connection with other IP rights. 43 Council Regulation (EC) No 1383/2003 of 22 July 2003 concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights [2003] OJ/L 196/7. See Botschaft zur Änderung des Patentgesetzes vom 23 November 2005 (Bundesblatt, 2006) 1, 36 et seq and 120 et seq. 44 Patent Act, art 86(b)(1). 45 ibid, art 86(a)(1). In patent cases, it is expected that ex officio customs actions will remain exceptional, see Heinrich, ‘Commentary’ (n 5) art 86a N 6, K Märki/J Haudenschild in Weinmann/Münch/Herren (eds), Schweizer IP-Handbuch (Basel, 2013) (‘Schweizer IP-Handbuch’) § 38 N 7; Pedrazzini/Hilti, Europäisches und schweizerisches Patent- und Patentprozessrecht 3rd edn (Bern, 2008) 509. 46 Patent Act, art 86. Where justified, the goods may be withhold for up to 10 additional working days (Patent Act, art 86(c)(3)). 47 ibid, art 81(1), (3). 42

Patent Enforcement in Switzerland 261

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six months after the injured party had knowledge of the identity of the offender.48 Criminal proceedings are practically relevant, for example, in cases where individuals dealing with counterfeit goods frequently change the legal entities used for the counterfeit trade or where individuals use foreign legal entities that are difficult to sue for practical reasons. Criminal proceedings provide strong measures to procure evidence (such as seizures), and some of the competent authorities have good resources to take such steps. If an offender acts for commercial gain, he shall be prosecuted ex officio.49 Prosecution ex officio means that the six-month time limit for requesting criminal proceedings does not apply. On the other hand, it means that criminal proceedings can no longer be terminated by the plaintiff, which makes it more difficult to settle a dispute amicably. It may well be that criminal proceedings will become less relevant in the future. On the one hand, the overall efficiency of the civil litigation system in patent matters has improved since the Federal Patent Court became operative in 2012. On the other hand, the Patent Act provides for new measures to secure evidence in civil proceedings.50 As only valid patents can lead to a criminal conviction of an infringer, the defence of invalidity of the patent can be raised in criminal proceedings. The criminal court may allow the alleged infringer an appropriate time limit to bring an invalidity action. If the patent had been granted without examination with regard to novelty and inventive step (national Swiss patents) and if the court has any doubt as to the validity of the patent, or if the alleged infringer has provided prima facie evidence that the invalidity defence appears justified, the court may allow the injured party an appropriate period to file an action for declaration of the validity of the patent.51 These links between criminal and civil proceedings may force the parties in criminal proceedings into civil proceedings which usually incur much higher costs than criminal proceedings.

II. Competent Parties 1. Plaintiff 20

48

As a general rule, only the owner of a patent is entitled to file an action against an infringer. However, it must be noted that the registered owner is not necessarily the actual owner, since the registration of an owner (eg after an assignment) is merely of a declaratory nature.52 Consequently, after the assignment of a patent the unregistered new owner is authorised to bring an action if he can prove the assignment with appropriate written evidence.53 In case of joint ownership, any co-owner is authorised to bring an infringement action.54

ibid, art 81(2). ibid, art 81(3). 50 See ibid, art 77(1) as amended per 1 January 2012; see section B.IV.3. 51 ibid, art 86(2). 52 Under Patent Act, art 33(3) a patent may be transferred without the transfer being recorded in the Patent Register. 53 Under Patent Act, art 33(2bis) the contractual assignment of a patent application or patent is valid only if evidenced in writing. 54 ibid, art 33(2). 49

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Fritz Blumer The licensee’s right of action has been explicitly recognised in the Patent Act since 2008. Under Article 75 of the Patent Act, ‘any person who holds an exclusive licence, irrespective of the registration of the licence in the Register, is entitled to bring an action (…) independently, provided this is not expressly excluded by the licence agreement’. Invalidity actions can be brought only by persons having a ‘proven interest’.55 If no such interest can be demonstrated, the action is rejected as inadmissible. However, there is a low threshold for such interest. It is generally recognised if the plaintiff can demonstrate that his economic activities may be hindered by the patent.56

2. Defendant 23

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Any person who ‘unlawfully utilises’ a patented invention may be sued under Article 66(a) of the Patent Act in infringement proceedings. Any party in a chain of suppliers and resellers can be a defendant. Under Article 66(d) of the Patent Act, any person who abets any of the offences referred to in Article 66(a) through (c), participates in them, or aids or facilitates such offences, is liable as a participant to a patent infringement. Such participation is considered unlawful only if the main offence (which is supported in some way by the participant) is unlawful. The Swiss concept of participation in a patent infringement differs from the German concept of indirect infringement under § 10 of the German Patent Act insofar as indirect patent infringement under German law can be committed even if there is no unlawful ‘direct’ infringement. If the direct infringement occurs outside Switzerland, the participants are not liable under Swiss patent law even if their participating acts are committed in Switzerland.57 Invalidity actions can be brought against the registered owner in any case. Even if the patent has been assigned to a third party, actions may be brought against the former (ie registered) proprietor of the patent before the assignment is recorded.58

III. Competent Court 1. Subject Matter Jurisdiction of the Federal Patent Court 26

Under Article 26(1)(a) of the Patent Court Act, the Federal Patent Court has exclusive jurisdiction over validity and infringement disputes and actions for issuing a licence in respect of patents. Validity disputes include not only invalidity actions against the patent owner but also, inter alia, actions for declaratory judgment on the validity of a patent which may be instituted by the patent owner.59 Infringement disputes may be separated into actions aiming at stopping an infringement and actions for restitution of the effects of an infringement. The first group encompasses actions for injunction

55 ibid, art 28. The situation is different, eg, in Germany where invalidity actions under s 81 of the German Patent Act may be brought by any person. 56 Federal Supreme Court of 24 January 1990, BGE 116 II 196. 57 Federal Supreme Court of 21 July 2003, BGE 129 III 588. 58 Patent Act, art 33(3). 59 ibid, art 74(1); W Stieger in ‘Commentary Patent Court Act’ (n 6) art 26 N 44.

Patent Enforcement in Switzerland 263

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or remedy of an unlawful situation; the second group includes actions for damages, restitution of profits etc.60 With respect to the term ‘actions for issuing a licence in respect of patents’ in Article 26(1)(a) of the Patent Act, it is not entirely clear whether the exclusive jurisdiction only applies to actions for issuing compulsory licences under Article 36 et seq of the Patent Act.61 The exclusive jurisdiction also extends to ‘preliminary measures before an action as defined in letter a) becomes pending’.62 The Federal Patent Court under Article 26(2) of the Patent Court Act has nonexclusive jurisdiction for other patent-related civil actions such as actions concerning the right to a patent or to its assignment. Such actions may, at the plaintiff ’s choice, either be filed with the Federal Patent Court or with any civil court having jurisdiction. The term ‘other civil actions that have a factual connection to patents’ as used in Article 26(2) of the Patent Court Act is to be interpreted broadly and may also cover, for example, licence agreements or research agreements.63 To the extent Swiss courts have jurisdiction for disputes concerning foreign patents, the Federal Patent Court is competent for disputes concerning foreign patents (ie national patents or European patents valid in other Contracting States of the EPC).64

2. International Jurisdiction 29

30

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The determination of the competent Swiss court became a non-issue when the Federal Patent Court was established as the sole court competent for patent cases in Switzerland. In domestic cases, the Federal Patent Court always has jurisdiction if the disputed matter falls within the subject matter jurisdiction of this court.65 In an international context, where one or more parties have their domicile outside of Switzerland and/or where the IP right in dispute is applied for or registered for a territory outside Switzerland,66 jurisdiction of the Swiss courts in IP cases is governed by Article 109 of the Swiss Federal Act on International Private Law (‘FAIPL’). Under this provision, the Federal Patent Court has jurisdiction for disputes concerning the validity or the registration of patents in Switzerland (Swiss national patents or European patents having effect in Switzerland), whether or not the defendant is domiciled in Switzerland.67 For infringement proceedings, the Federal Patent Court has jurisdiction if the defendant is domiciled or has its place of residence in Switzerland or if the infringement occurred in Switzerland.68 For most practical purposes, Switzerland can be considered to be part of the European system of jurisdiction and recognition of foreign judgments in civil and commercial

Patent Act, arts 72 and 73; Stieger in ‘Commentary Patent Court Act’ (n 6) art 26 N 51 et seq. See Stieger in ‘Commentary Patent Court Act’ (n 6) art 26 N 56 et seq. 62 Patent Court Act, art 26(1)(b). 63 See Stieger, ‘Commentary Patent Court Act’ (n 6), art 26 N 94 et seq. 64 See ibid, art 26 N 19 et seq. 65 See section B.III.1. 66 Federal Supreme Court of 4 October 2004, BGE 131 III 76; Federal Patent Court of 11 July 2014, S2013_011; F Blumer in Dasser/Oberhammer, Lugano-Übereinkommen, Stämpflis Handkommentar 2nd edn (Bern, 2011) (‘Commentary Lugano Convention’) art 22 N 127. 67 FAIPL, art 109(1) as revised per 1 July 2008. 68 ibid, art 109(2) as revised per 1 July 2008. 61

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Fritz Blumer matters as originally established by the Brussels Convention in 1968.69 This system was extended to most Member States of the EFTA (European Free Trade Association), including Switzerland, under the Lugano Convention of 1988,70 which is referred to as a ‘parallel convention’ to the Brussels Convention. In 2002, the Brussels Convention was replaced by the EU Regulation No 44/2001 (Brussels Regulation)71 of which a revised version (EU Regulation No 1215/2012)72 entered into force in January 2015. The Lugano Convention always remained in force between Switzerland and the States that are both members to the EU and signatories to the Lugano Convention. The Lugano Convention was amended in 2007 in order to adapt it in most parts to the Brussels Regulation;73 the amended Lugano Convention74 entered into force for Switzerland on 1 January 2011. Another amendment of the Lugano Convention which should adapt it to the revised Brussels Regulation (1215/2012) is being discussed. As the texts of the Lugano Convention and the Brussels Regulation did not evolve in a completely parallel and synchronous manner, the parallel provisions of both instruments may differ not only in their numbering but also in their content.75 The European Court of Justice can review the national courts’ interpretation of the Brussels Regulation; however, there is no appellate court on an international level to secure uniform application of the Lugano Convention. To minimise the risk of different interpretations between the Brussels Regulation and the Lugano Convention, Protocol 2 to the Lugano Convention requires that any court applying the Convention takes account of the principles laid down in any relevant decision delivered by courts of other Contracting States and by the European Court of Justice.76 Through this mechanism, the interpretation of the Brussels Regulation by the European Court of Justice is relevant for the interpretation of the Lugano Convention; Swiss courts often refer to the case law of the European Court of Justice and to the respective literature. The provisions on jurisdiction of the Lugano Convention are applicable if the defendant is domiciled in a Contracting State, such rules prevail over the respective provisions of the FAIPL.77 The general rule under Article 2 of the Lugano Convention provides for jurisdiction of the courts of the Contracting State where the defendant is domiciled. As there is only one Swiss court competent for patent matters in Switzerland, this provision directly establishes the jurisdiction of the Federal Patent Court for patent cases against defendants domiciled in Switzerland. Such jurisdiction is generally understood to be ‘comprehensive’, ie the court competent under Article 2 of the Lugano Convention has jurisdiction to hear cases based on Swiss patent rights

69 Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters of 27 September 1968, 1988 OJ C 27, 1. 70 Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters of 16 September 1988 (Lugano Convention 1988), 1988 OJ L 319, 9. 71 2001 OJ L 12, 1. 72 2012 OJL 351, 1. 73 See Dasser in ‘Commentary Lugano Convention’ (n 66), before art 1 N 11 et seq. 74 Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters of 30 October 2007 (Lugano Convention 2007), 2007 OJ L 339, 3. 75 See Lugano Convention 2007, art 44(2); EU Regulation No 44/2001, art 22(4); EU Regulation No 1215/2012, art 24(4). 76 Art 1(1) Protocol 2 on the uniform interpretation of the Convention and on the Standing Committee. 77 Lugano Convention, arts 2 and 3; FAIPL, art 1(2).

Patent Enforcement in Switzerland 265 as well as cases based on foreign patent rights. This jurisdiction also applies for actions for negative declaration.78 If a defendant is domiciled in another Contracting State to the Lugano Convention, ‘the courts where the harmful event occurred or may occur’ have jurisdiction under Article 5(3) (jurisdiction in tort matters). The jurisdiction of Swiss courts based on Article 5(3) of the Lugano Convention is limited to claims based on the infringement of Swiss patent rights.79 It may apply also to actions seeking a declaration of non-infringement (jurisdiction at the ‘place of non-infringement’).80 Another exception to the general rule under Article 2 of the Lugano Convention (jurisdiction at the defendant’s domicile) is Article 6(1) which provides for jurisdiction of a Contracting State over a defendant in another Contracting State where he is one of a number of defendants in the courts for the place where any of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

33

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In the field of patent litigation, Article 6(1) has been applied to joint defendants who sold identical products in different Contracting States, thereby infringing the same European patent in different Contracting States.81 Under Article 22(4) of the Lugano Convention, courts in the State where the registration of a patent has been applied for, has taken place or is deemed to have taken place (in particular, under the EPC) have exclusive jurisdiction for proceedings concerning the validity of the patent ‘irrespective of whether the [invalidity] issue is raised by way of an action or as a defence’. The reference to invalidity defences was not part of the parallel provision of Article 22(4) of EU Regulation No 44/2001. It was introduced into the revised Lugano Convention in order to reflect the ‘GAT/LuK’ decision of the European Court of Justice.82 The applicability of the exclusive jurisdiction for invalidity actions to mere invalidity defences severely restricts the possibility of so-called ‘cross-border jurisdiction’ (ie jurisdiction of a court outside the State in or for which a patent is registered)83 since any court exercising jurisdiction over the infringement of a foreign patent may lose its jurisdiction if the defendant raises an invalidity defence. After GAT/LuK denied the possibility to examine invalidity defences concerning patents valid in other jurisdictions, courts in different European jurisdictions explored different ways of how to react to invalidity defences in cross-border infringement proceedings.84 In a case concerning the infringement of a Community trade mark,

78 Federal Supreme Court of 23 October 2006, BGE 132 III 778; Federal Supreme Court of 21 February 2003, BGE 129 III 295. 79 Federal Supreme Court of 23 October 2006, BGE 132 III 778; K Schindler Bühler in ‘Commentary Patent Court Act’ (n 6), Vorbemerkungen zum 4. Kapitel, N 11; see also ECJ, 7 March 1995, Fiona Shevill v Presse Alliance (Case 68/93), 1995 ECR 415. 80 See Federal Supreme Court of 2 August 1999, BGE 125 III 346 (jurisdiction at the place of an alleged tort for negative declaration concerning damages). 81 Schindler Bühler in ‘Commentary Patent Court Act’ (n 6) Vorbemerkungen zum 4. Kapitel, N 15 et seq. 82 ECJ, 13 July 2006, Gesellschaft für Antriebstechnik/Lamellen und Kupplungsbau (Case 4/03), 2006 ECR 457; see F Blumer in ‘Commentary Lugano Convention’ (n 66) art 22 N 119 et seq. The reference to invalidity defences was meanwhile introduced into the parallel provision of the Brussels Regulation (EU Regulation No 1215/2012, art 24(4)). 83 See Schindler Bühler in ‘Commentary Patent Court Act’ (n 6) Vorbemerkungen zum 4. Kapitel, N 8. 84 ibid, Vorbemerkungen zum 4. Kapitel, N 49 et seq.

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Fritz Blumer the Zurich Commercial Court suspended the proceedings after the invalidity defence was raised and set a deadline for the defendant to file an invalidity action before the competent authority within the EU. The Court announced that, if the defendant failed to institute such action in due time, the infringement proceedings would be resumed and the invalidity defence would not be taken into account.85 While Gat/LuK and the consequential amendment of the Lugano Convention led to considerable uncertainty about the future of cross-border litigation, cross-border proceedings remain possible in the context of provisional measures even if the court has no jurisdiction under the Lugano Convention.86

IV. Preparation for Trial 1. Warning Letters 36

It is common practice to ask the alleged infringer in a warning letter to stop the asserted infringement actions. However, the plaintiff need not warn the defendant before instituting an infringement action; a warning letter may trigger an action for negative declaration of non-infringement and provide the alleged infringer with the legal interest for filing such an action.87 On the other hand, not warning the alleged infringer before filing an infringement action could result in additional costs to the plaintiff if such behaviour causes unnecessary efforts on the side of the defendant who may have voluntarily stopped the infringing actions after receiving a warning letter.88

2. Protective Letters 37

As a countermeasure to ex parte preliminary injunctions, the instrument of protective letters (‘Schutzschrift’) has become an established practice in Swiss courts. In a protective letter, the potential defendant presents a summary of arguments to defend against the expected allegations of infringement and offers to be available for a hearing or a counterstatement on preliminary measures on short notice, should the prospective plaintiff file a motion for preliminary measures. Before the Swiss law on civil procedure was unified, the admissibility and the effect of protective letters varied from canton to canton.89 Under the new Civil Procedure Code, protective letters are explicitly acknowledged. Under Article 270(1) of the Civil Procedure Code, any person who has reason to believe that an ex parte interim measure or any other measure against him or her will be applied for without prior hearing, may set out his or her position in advance by filing a protective letter. The opposing party is served with the

85 Zurich Commercial Court of 13 October 2006, 2006, 854; A Hess-Blumer, ‘Crossborder Litigation—und sie lebt doch!’ (2006) 882. 86 Lugano Convention, art 31; see Schindler Bühler in ‘Commentary Patent Court Act’ (n 6) Vorbemerkungen zum 4. Kapitel, N 60 et seq; Blumer in Commentary Lugano Convention (n 66) art 22 N 122 et seq; ECJ, 12 July 2012, Solvay/Honeywell (Case 616/10), ECR I-0000. 87 See section B.VII.3. 88 See Order of the President of the Federal Patent Court of 23 September 2014, O2014_012 (‘Klageüberfall’), referring to the Civil Procedure Code, art 107(1)(f). 89 See Heinrich (n 5) art 77 N 73.

Patent Enforcement in Switzerland 267 protective letter only if he or she initiates the relevant proceedings, and the protective letter becomes ineffective six months after its filing.90 The Federal Patent Court specified the requirements for protective letters with respect to the parties on whose behalf protective letters may be filed and with respect to the opposing parties.91

3. Summary Proceedings Leading to Preliminary Measures 38

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Under the general principles of procedural law, a court shall order interim measures if the applicant credibly shows that (1) a right to which he or she is entitled has been violated or a violation is anticipated; and (2) the violation threatens to cause not easily reparable harm to the applicant.92 An alleged fact is ‘credibly shown’ if there is prima facie or preponderant evidence in the judge’s view, ie if not all doubts could be removed. For the other party, it is also sufficient to credibly show any facts supporting its defences. In addition, there must be some urgency, and the measure to be ordered has to be proportional.93 As a general rule, the adverse party is heard before any interim measure is ordered.94 However, the court normally does not order a second exchange of briefs.95 While the Civil Procedure Code refers to, inter alia, injunctions and ‘an order to remedy an unlawful situation’ as specific interim measures, Article 77 of the Patent Act contains a more specific list of measures including ‘measures to secure evidence, to preserve the existing state of affairs or to provisionally enforce claims for injunctive relief and remedy’.96 Whereas preliminary measures are likely to become the most ordered interim measures also in proceedings before the Federal Patent Court, any necessary measure may be ordered if a party provides prima facie evidence of an actual or impending violation of its rights.97 In the context of providing prima facie evidence, the validity of the patent in suit may be examined whereby the Court may rely on the expert opinion of a technically trained judge.98 When preliminary injunctions are requested, it is essential for the plaintiff to address precisely the allegedly infringing actions in the request.99 Under Article 77(1)(b) of the Patent Act, the Court may order ‘a precise description’ of (1) ‘the allegedly unlawful processes used’ or (2) of ‘the allegedly unlawful products manufactured as well as the means used to manufacture them’. This new provision is in part modelled on the French ‘saisie-description’ and has been unofficially labelled

Civil Procedure Code, art 270(2) and (3). President of the Federal Patent Court of 27 August 2012, D2012_019. See S Kohler/D Bosshard, ‘Vorsorgliche Massnahmen beim Bundespatentgericht—Erste Regeln und Tendenzen’ (2014) 51, 56. 92 Civil Procedure Code, art 261(1). 93 Federal Patent Court of 13 June 2012, S2012_005; Federal Patent Court of 6 October 2014, S2014_006. 94 Civil Procedure Act, art 253. For ex parte interim measures see section B.IV.4. 95 See Kohler/Bosshard (n 91) 55. 96 Patent Act, art 77(1)(a). 97 See Federal Patent Court of 13 June 2012, S2012_005 (order prohibiting public allegations that the defendant is not the rightful owner of a patent). 98 See Federal Patent Court of 21 November 2012, S2012_011; Civil Procedure Code, art 183(3); Patent Court Act, art 37(3). 99 See section B.VII.1; Federal Patent Court of 2 February 2012, S2012_003. 91

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Fritz Blumer ‘saisie helvétique’.100 The procedure for making the description, with or without seizure, is to be carried out by a member of the Federal Patent Court, who may call on the assistance of an expert if necessary.101 In order to safeguard manufacturing or trade secrets of the defendant, the plaintiff may be excluded from participating in the procedure for making the description.102 The Court may allow that, instead of the plaintiff, the plaintiff ’s attorney and/or patent attorney may take part in the saisie hélvetique.103

4. Ex parte Preliminary Measures 41

In cases of special urgency, and in particular where there is a risk that the enforcement of the measure will be frustrated, the Court may order the interim measure immediately and without hearing the opposing party.104 The risk that a measure will be frustrated is particularly pertinent in the context of pre-trial taking of evidence.105 If ex parte measures are requested because of ‘special urgency’, the plaintiff has to act immediately. There is no fixed deadline for filing such request but the Federal Patent Court in an obiter dictum indicated that the plaintiff should act within one or two weeks after learning of the grounds for the measures; after a delay of seven weeks the ‘special urgency’ was not acknowledged any more in the specific case.106

V. The Trial 1. Language of the Proceedings 42

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Under Article 36(1) of the Patent Court Act, the Court shall designate one official language (ie German, French or Italian) as the language of the proceedings. The language of the parties shall be taken into consideration where it is an official language. As a general rule, the language of the statement of claim is selected where it is one of Switzerland’s official languages.107 In motions and oral hearings, each of the parties may express itself in the official language of its choice, irrespective of the language of the proceedings.108 The parties may also use English ‘provided that the Court and the parties give their consent’.109 The Federal Patent Court’s Guidelines on Proceedings just require the written agreement of the parties, which implies that the Federal Patent Court will not opposed

100 See Rigamonti (n 7) para 56 et seq; M Schweizer, ‘Der Anspruch auf genaue Beschreibung gemäss Art. 77 PatG—Gedanken eines Mitglieds des Bundespatentgerichts’ (2010) 930. 101 Patent Act, art 77(3). 102 ibid, art 77(4). 103 See Federal Patent Court of 14 June 2012, S2012_007; Federal Patent Court of 30 August 2013, S2013_008. 104 Civil Procedure Code, art 265(1). 105 See Federal Patent Court of 30 August 2013, S2013_008 (description under Patent Act, art 77(3) ordered as an ex parte measure). 106 President of the Federal Patent Court of 12 June 2012, S2012_009. 107 FPC Guidelines on Proceedings (n 31) art 6(1). 108 Patent Court Act, art 36(2); FPC Guidelines on Proceedings (n 31) art (2). The latter provision also requires notification no later than three weeks prior to a hearing if a party wishes to use another official language in a hearing than the language of the proceedings. 109 Patent Court Act, art 36(3).

Patent Enforcement in Switzerland 269 to the use of English if the parties agree to use it.110 By agreeing on the use of English, the parties renounce the use of the official languages in the future proceedings.111 However, the judgment and procedural rulings are drafted in the official language established as the language of the proceedings in any case.112 Thus English may not be the language of the proceedings. The rules on the use of English in the Patent Court Act establish the first possibility to use English in Swiss court proceedings.113 They include special provisions for the submission of English language documents, which should render translations in an official language of such documents unnecessary in most cases.114

2. Exchange of Written Submissions 44

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Civil proceedings concerning patents are, like any civil proceedings, initiated by a written statement of claims.115 This statement has to include, apart from certain formal information, the prayers for relief, the allegations of fact and notice of the evidence offered for each allegation of fact.116 When the Court serves the defendant with the statement of claim, it sets a deadline for filing a written statement of defence. In the statement of defence, for which similar requirements apply as to the statement of claim, the defendant has to state which of the plaintiff ’s factual allegations are accepted and which are disputed.117 Counterclaims need to be filed in the statement of defence.118 The first exchange of written submissions (statement of claim and statement of defence) is usually followed by a second exchange of written submissions, the ‘Replik’ (reply) of the plaintiff and the ‘Duplik’ (rejoinder) filed by the defendant. However, the second exchange of written submissions is ordered by the Court only ‘if the circumstances so require’.119 The Court may also limit the subject matter of the second exchange of written submissions.120 Parties may not file submissions without having been asked by the Court to do so.121 As a consequence, the parties have to present all their claims, factual allegations and arguments in the first exchange of written submissions. For proceedings before the Federal Patent Court, special requirements apply under its Guidelines on Proceedings for the parties’ submissions. In particular, short time limits of four or six weeks apply for the submission of the statement of defence and of the further written submissions.122 Moreover, a list of exhibits is required as well as

F Thouvenin in ‘Commentary Patent Court Act’ (n 6) art 36 N 16. President of the Federal Patent Court of 30 July 2012, O2012_037. Patent Court Act, art 36(3); FPC Guidelines on Proceedings (n 31) art 6(3). 113 See Thouvenin in ‘Commentary Patent Court Act’ (n 6) art 36 N 15. 114 See Patent Court Act, art 36(4); FPC Guidelines on Proceedings (n 31) art 6(4); see also Thouvenin in ‘Commentary Patent Court Act’ (n 6) art 36 N 20 et seq. 115 Civil Procedure Code, art 220. 116 ibid, art 221(1). 117 ibid, art 222(1) and (2). 118 ibid, art 224(1). In patent infringement proceedings, the counterclaim usually concerns the declaration of invalidity of the patent (see section B.VIII.1). Accordingly, in invalidity proceedings, the defendant (ie the patent owner) may file a counterclaim based on the infringement of the patent (eg damage claims). 119 ibid, art 225. 120 See eg Federal Patent Court of 21 May 2013, O2012_039. 121 ibid. 122 FPC Guidelines on Proceedings (n 31) art 7(3). 111 112

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Fritz Blumer an exhibit setting out the feature analysis if such feature analysis is performed for the patent in suit.123 If injunctive relief is sought, special attention needs to be paid to the wording of the request for an injunction.124

3. Instruction Hearing 46

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Under Article 226 of the Civil Procedure Code, the Court may hold instruction hearings at any time during the proceedings in order to discuss the matter in dispute in an informal manner, to complete the facts, to attempt to reach an agreement and to prepare for the main hearing.125 The Guidelines on Proceedings of the Federal Patent Court foresee such instruction hearings upon receiving the statement of defence, or, in the case of a counterclaim, upon receiving the reply and defence to the counterclaim.126 The detailed rules on instruction hearings in the Guidelines on Proceedings are, at least in part, modelled after the hearings held at the Zurich Commercial Court when it was competent to hear patent cases (‘Referentenaudienzen’). It is expected that the instruction hearings before the Federal Patent Court will facilitate as many settlements as the hearings at the Zurich Commercial Court.127 The first annual reports of the Federal Patent Court indicate that a very high number of cases could be terminated with an agreement between the parties, which indicates that many instruction hearings are successful.128 The instruction hearing typically consists of two parts: during the first part, the Court delegation discusses with the parties the matter at issue, asks questions where the parties’ submissions are unclear, and provides substantiation advice. Evidence may also be accepted and minutes are taken. During the second part, the Court delegation explains its preliminary assessment of the matter in dispute off the record and attempts to bring about a settlement between the parties. The parties and the Court are prohibited from subsequently invoking any submissions made during this second part of the hearing; it serves exclusively to bring about a settlement.129 No pleadings are usually presented during a preparatory hearing. Where no settlement can be reached, a schedule is established for the further proceedings, followed by a continued exchange of briefs.130 The Court delegation taking part in the instruction hearing includes the designated specialist judge. The parties are obliged to appear in person even when they are represented by legal counsel. Legal entities shall appoint one or more management members to appear who are informed of the matter in dispute and are authorised to enter into a settlement. Where these obligations are disregarded, the hearing may be discontinued, with costs and damages being charged to the offending party.131

ibid, arts 2(2) and 3(1). See section B.VII.1. Civil Procedure Code, art 226(1) and (2). 126 FPC Guidelines on Proceedings (n 31) art 8(1). The English version of the Guidelines as published by the Federal Patent Court uses the term ‘preparatory hearing’ while the German version uses the term ‘Instruktionsverhandlung’ as in the Civil Procedure Code, art 226. 127 See Rigamonti (n 7) para 39. 128 See Geschäftsbericht 2014 (available at: www.bundespatentgericht.ch) 86, Geschäftsbericht 2013, 90; Geschäftsbericht 2012, 94. 129 FPC Guidelines on Proceedings (n 31) art 8(4). 130 ibid, art 8(6). 131 ibid, art 8(3) and (5). 124 125

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4. Taking of Evidence 49

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In proceedings concerning the infringement and/or validity of patents, the opinions of court-appointed experts are the most relevant instruments of evidence. In 1998, the Federal Supreme Court decided that only in exceptional cases can the Court decide technical issues in patent proceedings without hearing an expert or an expert judge.132 While the rules of the Civil Procedure Code on the hearing of experts are generally applicable, the Patent Court Act foresees that experts shall submit their opinions in writing and that the parties shall be afforded an opportunity to submit their position on the opinion in writing.133 Another special provision in the Patent Court Act concerns the expert opinion of the technically trained judge having specific expertise (‘Fachrichtervotum’). The possibility to use the technical expertise of judges may make outside expert opinions superfluous in many cases.134 On the other hand, there is a risk that the judge’s expertise is used in the proceedings in a non-transparent manner beyond the control of the parties.135 In order to enhance transparency, Article 37(3) of the Patent Court Act stipulates that the judge’s expert opinion shall be entered in the Court record and that the parties shall be given an opportunity to submit their position on the Court record.136 Parties’ expert opinions (ie opinions rendered by experts selected and paid by one or more of the parties) are not considered evidence under the Civil Procedure Code. However, according to the case law of the Federal Supreme Court, parties’ expert opinions are parties’ allegations which may not be considered completely irrelevant during the evaluation of the evidence.137 The Federal Patent Court admits parties’ expert opinions as substantiated allegations of the parties which have to be addressed in the Court’s reasons for its decision. Parties’ expert opinions may cast doubt on the opinion rendered by the Court-appointed expert and may trigger the commissioning of another opinion of a Court-appointed expert.138

5. Main Hearing 52

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As a last step in the proceedings, the parties are invited to a main hearing where they can plead their case. The Court may also take evidence. However, if there was a second round of written submissions and/or an instruction hearing, new facts and new evidence are only admitted under certain (restrictive) conditions.139 In their closing submissions, the parties may comment on the evidence and on the merits of the case.140

Federal Supreme Court of 9 December 1998, BGE 125 III 29. Patent Court Act, art 37(1) and (2). See Civil Procedure Code, art 183 et seq. Under the Civil Procedure Code, art 187, an expert may submit his or her opinion in writing or present it orally. 134 See Stieger, ‘Prozessieren über Immaterialgüterrechte in der Schweiz: Ein Quantensprung steht bevor’ (n 37) 586. 135 See A Hess-Blumer in ‘Commentary Patent Court Act’ (n 6) Vorbemerkungen zum 6. Und 7. Abschnitt, N125. 136 See eg President of the Federal Patent Court of 29 May 2013, O2012_013. 137 See Hess-Blumer in ‘Commentary Patent Court Act’ (n 6) Vorbemerkungen zum 6. und 7. Abschnitt, N 114 et seq. 138 See President of the Federal Patent Court of 3 May 2012, O2012_022. 139 See Civil Procedure Code, arts 228 and 229. 140 ibid, art 231(1). 133

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Fritz Blumer While the Civil Procedure Code foresees that the parties may only jointly request that written party submissions can be filed, a prevailing special provision in Article 38 of the Patent Court Act states that the Federal Patent Court shall give the parties the opportunity to comment in writing on the result of the taking of evidence if such opportunity is requested by at least one party.141 This provision should avoid that parties immediately have to respond to extensive evidence (eg prior art documents) which may be presented at the main hearing.142 The parties may jointly agree to dispense with the main hearing.143

VI. Types of Infringement 1. Effects of the Patent 53

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According to Article 8 of the Patent Act, the patent confers on its proprietor ‘the right to prohibit others from commercially using the invention’.144 Such use ‘includes, in particular, manufacturing, storage, offering, placing on the market, importing, exporting and carrying in transit, as well as possession for any of these purposes’.145 Placing on the market includes any act which implies a change or transfer of the physical control over the patented goods.146 The effects of Swiss patents are strictly limited to the national territory of Switzerland. Any use must take place in Switzerland. Patented products must come into contact with Swiss territory and patented processes must, at least in part, be carried out in Switzerland.147 If patented products do not get onto Swiss territory and only the sales contracts for such goods are concluded in Switzerland, no infringement of the Swiss patent occurs.148 Carrying patented goods in transit was not considered to be use of a patent before Article 8 of the Patent Act was amended in 2008 in cases where transit was not related to any change of physical control over the goods in transit.149 Carrying in transit was introduced in the list of uses in 2008 to prevent Switzerland from becoming a transit country for pirated goods.150 However, carrying in transit may only be prohibited if the proprietor of the patent is permitted to prohibit importation into the country of destination.151

ibid, art 232(2); Patent Court Act, art 38. See D Stauber in ‘Commentary Patent Court Act’ (n 6) art 38 N 7. 143 Civil Procedure Code, art 233. 144 Patent Act, art 8(1), as amended per 1 July 2008. 145 ibid, art 8(2), as amended per 1 July 2008. The non-exhaustive list of uses was adapted to art 28 of the TRIPS-Agreement, in particular, by including the reference to importing; see F Blumer, Schweizer IP-Handbuch (n 45) § 15 N 7.1. 146 Federal Supreme Court of 7 June 1989, BGE 115 II 279. 147 Federal Supreme Court of 7 December 1999, BGE 126 III 129; Federal Supreme Court of 12 February 1996, BGE 122 III 81. 148 Federal Supreme Court of 7 June 1974, BGE 100 II 237. 149 Federal Supreme Court of 7 June 1989, BGE 115 II 279. 150 Botschaft zur Änderung des Patentgesetzes vom 23 November 2005 (n 43) 118. 151 Patent Act, art 8(3), as amended per 1 July 2008. 142

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2. Scope of Protection 55

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Swiss patent tradition makes a distinction between literal infringement (‘Nachmachung’) and imitation (‘Nachahmung’) that may include equivalent infringements and infringements where one or more of the features of the patent claim are not realised.152 Despite the distinction made between literal infringements and imitations, the wording of the Swiss provisions related to claim interpretation is very similar to Article 69 of the EPC. Pursuant to Article 51(2) of the Patent Act, the claims shall determine the extent of the protection conferred by the patent (scope of protection). The description and the drawings shall be used for the interpretation of the claim.153 The Zurich Commercial Court154 directly applied Article 69 of the EPC to determine the scope of protection of a European patent.155 In the same decision, the Court left open whether Article 69 of the EPC should be applied to national patents but pointed out that the Swiss provisions on the scope of protection should apply in the same way as Article 69 of the EPC. The interpretation of the patent claims under Article 51 of the Patent Act and Article 69 of the EPC can be described as a two-step undertaking. In a first step, the meaning of the patent claims (as understood by the person skilled in the art) is determined to establish the subject matter of the patent claims. In a second step, the (hypothetical) person skilled in the art brings its understanding of the subject matter of the claims in relation to the alleged infringement, taking into account that certain features of the claim may be omitted or replaced by alternative features.156 In view of any infringement proceedings, it is generally useful to draft a ‘feature analysis’ listing all the features of the relevant patent claim.157 Its comparison with the potentially infringing product or process facilitates the analysis as to which features are literally present, which are missing and which may present as an equivalent. According to Swiss case law there is an equivalent infringement if a product or process in which one or more features of the patent claim are not realised but replaced by other features which, in the context of the patented solution, perform the same function as the claimed features. In addition to this first criterion, it has to be examined whether the replacing features could be found by the skilled person without inventive activity (second equivalence criterion).158 If one or more features of the relevant patent claim are not realised in a literal or equivalent manner, a product or process may still infringe if only ‘irrelevant’ features are missing. An infringement is found if all features are used which in their combination contribute to solution of the technical problem.159

152 See ibid, art 66(a) (‘imitation is also deemed to constitute use’); Pedrazzini/Hilti, Europäisches und schweizerisches Patent- und Patentprozessrecht (n 45) 355 et seq. 153 ibid, art 51(3). 154 Handelsgericht des Kantons Zürich, the Swiss court dealing with the largest number of patent matters before the Federal Patent Court was established, see section A.II.1. 155 Zurich Commercial Court of 3 December 1991—Werkzeughalterspindeln II, SMI 1992, 303. 156 See Pedrazzini/Hilti (n 45), 352; Blumer, Schweizer IP-Handbuch (n 45) § 15 N 16.1. 157 The feature analysis is explicitly referred in the FPC Guidelines on Proceedings (above n 31) art 3; see also section B.V.2. 158 Federal Patent Court of 21 March 2013, S2013_001. In its analysis, the Federal Patent Court referred, inter alia, to the ‘Schneidmesser’ decisions of the German Federal Supreme Court (Schneidmesser I and II of 12 March 2002, GRUR 2002, 515 and 519). See also Federal Supreme Court of 18 January 1990—Doxycyclin, SMI 1991, 198. 159 Zurich Commercial Court of 10 July 1990—PR-Lagersystem, SMI 1992, 253.

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Fritz Blumer Accordingly, all features not contributing to the technical success of a claimed invention would be considered irrelevant.160 In a decision issued by the Federal Supreme Court in 1989, the defence was allowed that the alleged infringement was not patentable in view of the prior art.161 According to this decision, the defendant may not only argue that the alleged infringement is conditioned by the prior art but he may also argue that the accused embodiment would not constitute a patentable invention over the prior art. The decision explicitly refers to the German ‘Formstein’ decision of 1986.162 In a later decision, the Federal Supreme Court concluded that the prior art had to be considered when determining whether an imitation falls within the scope of protection or whether it may not be covered by the scope of protection because it was disclosed or made obvious by the prior art.163 The relevant language version for the determination of the scope of protection of a European patent is the language of the proceedings before the European Patent Office (‘EPO’).164 When the so-called ‘London Agreement’165 entered into force for Switzerland in 2008 and the requirement to provide a translation of the patent if it had not been published in a Swiss official language was abolished, the former provisions related to the effect of such translation issued under Article 70(3) of the EPC were deleted from the Patent Act.166

VII. Remedies 1. Injunctive Relief 60

160 161 162 163 164 165 166 167 168

In the Swiss court practice, injunctive relief has always been more relevant than any other remedy, such as damages. As damages are available only after separate evidence proceedings and in an amount not exceeding the actual loss incurred or the actual profit made by the infringer, the plaintiff regularly concentrates on obtaining an injunction as early as possible and as broadly as possible. Under Article 72 of the Patent Act, ‘[a]ny person who is threatened with or has his rights infringed (…) may demand an injunction or that the unlawful situation be remedied’. As this wording already implies, the legal interest in obtaining injunctive relief is to be acknowledged if an infringement is imminent (eg very likely to occur). If an infringement has occurred already, it is assumed that the infringement will be repeated.167 The legal interest in an injunction may cease to exist after the defendant acknowledges the plaintiff ’s claims and enters into an obligation not to continue the infringing activities.168

See also Blumer, Schweizer IP-Handbuch (n 45) § 15 N 17.2. Federal Supreme Court of 16 November 1989, BGE 115 II 490. German Federal Supreme Court of 29 April 1986—Formstein, GRUR 1986, 803. Federal Supreme Court of 17 August 2001—Palettenförderer 2001, 749. EPC, art 70(1). Agreement dated 17 October 2000 on the application of Article 65 EPC, OJ EPO 2001, 550. Patent Act, arts 112–116 (effective before 1 May 2008). Federal Supreme Court of 6 June 1990, BGE 116 II 357; Federal Patent Court of 6 October 2014, S2014_006. Federal Supreme Court of 6 June 1990, BGE 116 II 357; see Heinrich (n 5) art 72 N 20 et seq.

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In the context of the discussions of the ‘eBay’ decision of the US Supreme Court,169 the question was asked whether there is an unconditional right to an injunction against any infringer in Switzerland. However, it has been argued that the legal situation in Switzerland differs from the situation in the United States in many respects and that the claims made by so-called non-practising entities or ‘patent trolls’ pose much less of a problem in Switzerland. In truly exceptional situations, an injunction could be avoided in Swiss proceedings by establishing a compulsory licence or by the prohibition of the abuse of rights under Article 2 of the Swiss Civil Code.170 Practical problems for the plaintiff seeking injunctive relief often arise when the request for an injunction must be worded. Court orders are usually based on the formal requests and motions worded by the parties. A cease and desist order must be worded in a way that the competent judge may enforce it without another assessment of the defendant’s behaviour on the merits.171 The plaintiff seeking injunctive relief is therefore required to word the motions in a way that they might be converted into an enforceable order by the Court. In many cases, it is not enough to use the wording of the patent claim.172 The defendant may use only one embodiment of an apparatus defined in the patent claim, in which case the plaintiff may have no legal interest in obtaining injunctive relief covering all embodiments protected by the patent claim. Deviations from the wording of the patent claim in the cease and desist order can also be necessary if the defendant is accused of an equivalent infringement. In this case, the wording of the cease and desist order should take into account the allegedly equivalent features in order to allow an enforcement without assessment of the merits. The drafter of the request for an injunction first has to establish a detailed feature analysis of the claim and then describe in the request the specific embodiment as realised by the infringer for every claimed feature.173 Trade names or type numbers of products etc may not replace the exact technical description of the infringing products as they may easily be changed by the infringer.174 Insufficient wording of the request for a cease and desist order may lead to the inadmissibility of the request.175

2. Damages/Restitution of Profits 63

Under Article 73 of the Patent Act, ‘any person who performs an act referred to in Article 66 either wilfully or through negligence shall be required to pay damages to the injured party according to the provisions of the Code of Obligations’. Most disputes about whether the defendant was at fault turn around his or her knowledge of the patent.176 Even though there is no general obligation to research the patent

169 eBay Inc v MercExchange, LL C, 547 U.S. 388 (2006). In this case where the plaintiff did not practise the patented invention, the Supreme Court found that an injunction should not be automatically granted against any infringer. 170 See A Hess-Blumer, ‘Patent Trolls—eine Analyse nach Schweizer Recht’ (2009) 851. 171 Federal Supreme Court of 2 March 1971, BGE 97 II 93; Federal Patent Court of 24 August 2012, O2012_004. 172 Federal Supreme Court of 8 October 2004, BGE 131 III 70. 173 President of the Federal Patent Court of 7 March 2012, S2012_002. 174 Federal Patent Court of 2 February 2012, S2012_003; Federal Supreme Court of 8 October 2004, BGE 131 III 70. 175 Federal Patent Court of 24 August 2012, O2012_004. 176 M Schweizer, ‘Zivilrechtliches Verschulden bei der Verletzung von Schutzrechten’ (2015) 1, 3.

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Fritz Blumer situation in every case, the required standard of care is high.177 If there is any reason to be suspicious, an analysis of the patent situation must be made.178 In any case, a sufficiently specified warning letter which includes details of the patent and the allegedly infringing actions ensures that the infringer, at least after receipt of the warning letter, acts at fault.179 As to the amount of damages, there are three possibilities to establish the damage caused by patent infringement, namely establishing the effective or direct loss, the licence analogy and the analogy drawn from the infringer’s profits.180 The party injured by an infringement may choose between damages and the restitution of the infringer’s profits. Both claims exist independently of each other but they exclude each other.181 The plaintiff may claim both damages and restitution of the infringer’s profits as alternatives and may choose between the two after the amounts of damages and of the infringer’s profits have been determined in evidence proceedings. The legal basis for the restitution of profits is Article 423 of the Code of Obligations (business conducted in the agent’s interest). If the infringer acted in bad faith, the entire profit made as a result of the infringing actions is subject to restitution.182 The relevant profit is defined by the difference between the actual assets of the infringer and the value of his assets had the infringement not taken place. From any revenues made in connection with infringing products, the expenses related to the infringing actions may be deducted.183 In the absence of bad faith, restitution of profits may still be claimed under Article 62 of the Code of Obligations (restitution of unjust enrichment).184 However, there are still uncertainties with respect to the conditions applicable to claims under Articles 423 and 62 of the Code of Obligations. As damage claims cannot normally be quantified at the beginning of infringement proceedings, claims for damages or restitution of profits need to be made as action for an unquantified debt. Once evidence is taken or required information is furnished by the defendant, the plaintiff must quantify the debt claim as soon as he or she is able to do so.185 These two-step proceedings regularly involve a first judgment (partial judgment) in which the Court, after finding that a patent is valid and infringed, orders the provision of accounting information concerning the infringing actions. After separate proceedings concerning these facts, the amount of damages or profits to be restituted is fixed in the Court’s final judgment.186

ibid 5. Federal Patent Court of 19 March 2014, O2013_007. 179 Schweizer, ‘Zivilrechtliches Verschulden bei der Verletzung von Schutzrechten’ (n 176) 6. 180 Federal Supreme Court of 19 December 2005, BGE 132 III 379. 181 Federal Supreme Court of 16 March 1971, BGE 97 II 169. 182 Federal Supreme Court of 3 July 2003, BGE 129 III 422; Federal Patent Court of 19 March 2014, O2013_007; see Schweizer (n 176) 6. 183 See Federal Supreme Court of 3 March 2008, BGE 134 III 306. 184 See Heinrich (n 5) art 73 N 67 et seq. 185 Civil Procedure Code, art 85(1) and (2). Before the Civil Procedure Code entered into force in 2011, Patent Act, art 73(2) foresaw similar two-step procedures (‘Stufenklage’). 186 See eg the partial judgment of the Federal Patent Court of 13 February 2013, O2012_036. See also the partial judgment of the Federal Patent Court of 14 August 2013, O2013_007, and the corresponding final judgment of 19 March 2014, O2013_007. 178

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3. Actions for Declaration 66

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Under Article 74 of the Patent Act, any person demonstrating an interest may bring an action to obtain a declaratory judgment on the existence or non-existence of a circumstance or legal relationship governed by the Patent Act. The non-exhaustive list of specific actions refers, inter alia, to declarations that a defendant has infringed a patent or that a plaintiff has not infringed (action for declaration of non-infringement).187 While an action for declaration of a patent’s validity is possible under Article 74(1) of the Patent Act, the declaration of invalidity (nullity action) is subject to special provisions in Article 26 of the Patent Act.188 A legal interest in a declaratory judgment is usually acknowledged if all of the following conditions are met: (1) the legal position of the defendant is uncertain, unsecured or endangered; (2) the ongoing uncertainty is unbearable for the plaintiff; and (3) the uncertainty cannot be eliminated by means other than a declaratory action.189

VIII. Defences 1. Invalidity of the Patent in Suit 68

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The Federal Patent Court is competent both for claims for a declaration of invalidity of a patent and for claims against an infringer. The defendant in infringement proceedings may choose between filing a claim or counterclaim for the declaration of nullity of the patent in suit,190 or raising the invalidity of the patent as a mere defence in the infringement proceedings. If a counterclaim is made or if independent invalidity proceedings are instituted, a judgment finding the patent to be invalid leads to the deletion of the patent from the register and has effect erga omnes. If the Court finds the patent to be invalid after a defence of invalidity, the infringement claims (for injunctive relief, damages etc) are barred but the finding of invalidity has effect only inter partes. When choosing between a counterclaim for invalidity and an invalidity defence, the defendant may take into account that an invalidity defence does not affect the value in dispute of the infringement claim. A counterclaim for declaration of invalidity, on the other hand, is attributed a separate value in dispute that may well exceed the value of the infringement claims. The grounds for invalidity of a patent (either a Swiss national patent or the Swiss part of a European patent) are listed in Article 26 of the Patent Act. Because of the harmonisation with the EPC, the list of grounds for invalidity basically follows the list of grounds for revocation in Article 138 of the EPC. However, the extension of the protection conferred by the patent (EPC, art 138(c)) is no ground for invalidity under Swiss law. Under Article 128 of the Patent Act, the Court may suspend the proceedings, and in particular defer the judgment, when the validity of a European patent has been contested and either one of the parties gives proof that an opposition may yet be filed Patent Act, art 74(2) and (3). See section B.VIII.1. See Heinrich (n 5) art 74 N 6. Nullity action under Patent Act, art 26.

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Fritz Blumer with the EPO or that a final decision has not been taken on the subject of an opposition already filed. When deciding on a requested suspension, the Court should exercise its discretion with a view to the likelihood of success of the opposition and/or with a view to the avoidance of unnecessary procedural steps. The provision on the suspension of proceedings applies to any civil proceedings, including summary proceedings. However, proceedings concerning preliminary measures should lead to a suspension only in exceptional cases.191

2. Exhaustion of Rights 71

72

191

The principle of exhaustion allows, for example, the buyer of a patented product to resell it and to use it commercially without the consent of the patent owner. The first placement of a patented product on the market leads to the vanishing of the patent rights over the marketed goods; they are ‘exhausted’.192 In practice, most problems related to exhaustion concern the territorial scope. There has been a long political debate on whether Swiss IP rights shall be exhausted by the sale of the protected product abroad (international exhaustion) or by the sale of the protected product in Switzerland only (national exhaustion). The third alternative is the so-called regional exhaustion as it applies within the European Union and the European Economic Area (‘EEA’). In landmark cases stemming from actions against parallel imports of protected goods, the Federal Supreme Court decided in 1996 and 1998 that under trade mark and copyright law, international exhaustion shall apply.193 For patent law, the Court took a different approach and decided in favour of national exhaustion in the ‘Kodak’ decision of 1999.194 However, in the context of returning debates on the relevance of parallel imports for the overall price level in Switzerland, a legislative solution was pursued. Since 1 July 2009, the principle of regional exhaustion has applied to patent rights in Switzerland. Under the new provisions in Article 9(a) of the Patent Act, goods may be imported and used or resold commercially in Switzerland if the patent proprietor has placed them on the market in Switzerland or within the EEA, or consented to their placing on the market in Switzerland or within the EEA.195 As Switzerland is not part of the EEA, the introduction of regional exhaustion with respect to the EEA territory was a unilateral act, not leading to any reciprocal effect in the EEA. National exhaustion still applies to goods for which the price in Switzerland or in the country in which they are placed on the market is fixed by the State.196 This exception was made because there is no functioning international competition for price-controlled goods such as, for example, pharmaceutical products.197 An exception to the other side (international exhaustion) was made for goods for which ‘the patent protection for the functional characteristics of the goods is only of subordinate importance’.198

See Heinrich (n 5) art 128 N 5 et seq, 11. See Pedrazzini/Hilti (n 45) 308 et seq. 193 Federal Supreme Court of 23 October 1996—Chanel, BGE 122 III 469 (trade marks); Federal Supreme Court of 20 July 1998—BGE 124 III 321 (copyright). 194 Federal Supreme Court of 7 December 1999—Kodak, BGE 125 III 129. 195 Patent Act, art 9(a)(1), as introduced per 1 July 2009. 196 ibid, art 9(a)(5), as introduced per 1 July 2009. 197 See Heinrich (n 5) art 9a N 28 et seq. 198 Patent Act, art 9(a)(4); for the background of this provision and for further exceptions, see Blumer, Schweizer IP-Handbuch (n 45) § 15 N 13.5. 192

Patent Enforcement in Switzerland 279

3. Statute of Limitation, Laches 73

74

Like any claims arising out of tort, claims based on patent infringements are subject to the statute of limitations under Article 60 of the Swiss Code of Obligations. Under this provision, claims are barred one year after the injured party learns of the infringing acts, at the latest 10 years after such acts. If tort claims are based on criminal acts, the longer limitation period which may apply under criminal law also applies to the civil law claim.199 As the Patent Act provides for criminal sanctions for patent infringement, the applicable statute of limitations under criminal law applies to claims based on patent infringements, extending the one-year delay under Article 60 of the Code of Obligations to at least seven years.200 Claims for the restitution of the infringer’s profits follow the same rules as claims for damages.201 In any case, the statute of limitation may not apply to claims directed at removing persisting illegal situations, such as claims for injunctions or the destruction of goods.202 Any claims arising from patent infringements may be subject to the defence of preclusion or laches if the plaintiff unduly delays his enforcement actions. The defence may be invoked if (1) the injured person was inactive for a long time despite that he or she knew or should have known of the infringement; (2) the infringer could rely on the future inactivity of the injured person; and (3) the infringer acquired valuable possessory title in connection with the infringing actions.203 However, the chances of success of any preclusion defence are difficult to assess as there are no statutory rules and hardly any case law. In one case, the Federal Supreme Court accepted the defence where the patent proprietor filed an action for damages after expiry of the patent and more than 10 years after he knew of the infringing actions.204

4. General Exceptions to the Effects of the Patent 75

199 200 201 202 203 204 205 206 207

The list of exceptions to the rights derivable from a patent in Article 9 of the Patent Act was introduced only in 2008 even though most of the exceptions were recognised before this amendment of the statute.205 Under Article 9(1)(a) of the Patent Act, the effects of the patent do not extend to ‘acts undertaken within the private sphere for non-commercial purposes’. An exception for private use could also be read into Article 8 of the Patent Act which limits the effects of the patent to commercial uses of the patented invention.206 The limitation to ‘non-commercial purposes’ should make sure that even uses in the private sphere could be covered by the patent if such uses serve for commercial purposes.207 The exception for research and experimental purposes in Article 9(1)(b) of the Patent Act is limited to acts undertaken ‘in order to obtain knowledge about the subject matter of the invention including its uses’. It is not limited

Swiss Code of Obligations, art 60(2). Patent Act, art 81; Swiss Criminal Code, art 97(1)(b) and (d), as revised per 1 January 2014. Federal Supreme Court of 17 July 2000, BGE 126 III 382. See Pedrazzini/Hilti (n 45) 471 et seq. See Schweizer, ‘Verwirkung patentrechtlicher Ansprüche’(2009) 325. Federal Supreme Court of 10 June 2008—Radiatoren 2008, 820. See Heinrich (n 5) art 9(a) N 28 et seq. See section B.VI.1. Botschaft zur Änderung des Patentgesetzes vom 23 November 2005 (n 43) 69 et seq.

280

76

77

78

208

Fritz Blumer to non-commercial activities, and it is aimed, in particular, at the use in connection with the further improvement and the exploration of novel uses of the invention.208 The exception also covers uses undertaken to find out whether the patented process or products may be used for specific purposes, for example, in view of taking a licence under the patent.209 An educational use exception was introduced in Article 9(1)(d) of the Patent Act; it covers the ‘use of the invention for teaching purposes at educational institutions’.210 In connection with the necessity for manufacturers of generic drugs to use the patented drug before the expiry of the patent term in order to obtain regulatory approval in time to start marketing generic drugs immediately after the expiry of the patent term, the so-called ‘Bolar exemption’ was introduced into the US Patent Act in 1984.211 The case law in Switzerland with respect to the necessary use of patented products and processes in connection with regulatory proceedings was not entirely consistent.212 The exception introduced as Article 9(1)(c) of the Patent Act in 2008 covers ‘acts necessary for obtaining marketing authorisation for a medicinal product in Switzerland or in countries with equivalent medicinal product control’. The provision is not limited to uses in connection with the market approval of generic drugs, and it should cover also clinical trials.213 As a further exception, a breeders’ privilege was introduced which covers ‘the use of biological material for the purpose of the production or the discovery and development of a plant variety’.214 At last, farmers are protected by an exception for ‘biological material that is obtained in the field of agriculture due to chance or is technically unavoidable’.215 The defendant may be in a position to derive rights from a prior use of the patented invention. Under Article 35 of the Patent Act, a patent has no effect against a person who, prior to the date of filing of the patent application, was in good faith professionally using the invention in Switzerland or had made special preparations for that purpose. Similar rights to use a patented invention may be based on intermediate use, eg good faith use between the loss of rights of the applicant or patent holder and the reinstitution in these rights.216 In the same section as Article 35 related to prior use (titled ‘Legal restrictions on rights conferred by the patent’), a farmers’ privilege was introduced as per 1 September 2008 in Article 35(a) of the Patent Act. It allows farmers to use part of their products as seeds in the following years and to use animals for further breeding.217

ibid 72. See Pedrazzini/Hilti (n 45) 322. See also the last part of the wording of the Patent Act, art 9(1)(b): ‘any scientific research concerning the subject-matter of the invention is permitted’. 210 See Heinrich (n 5) art 9 N 13 et seq. 211 See Blumer, Schweizer IP-Handbuch (n 45), § 15 N 11.3. 212 See Pedrazzini/Hilti (n 45) 323 et seq, esp fn 788. 213 See Heinrich (n 5) art 9 N 6, 8. 214 Patent Act, art 9(1)(e). 215 ibid, art 9(1)(f). 216 Patent Act, art 48. 217 Patent Act, art 35(a)(1) and (2); see Heinrich (n 5) art 35a N 1. 209

Patent Enforcement in Switzerland 281

IX. Wrongful Enforcement 79

80

In the Swiss patent litigation system where the validity of the patent and its infringement are usually assessed in the same proceedings and by the same court, wrongful enforcement (ie the enforcement of a patent which subsequently is declared null and void) is less likely to occur than in systems where the validity of a patent is judged in separate proceedings and/or by another court than its infringement. Irreconcilable judgments on validity and infringement may still occur (at least theoretically) in a situation where a party is found to have infringed a European patent before the patent is revoked in opposition proceedings before the EPO. Enforcement actions which subsequently are found to be wrongful mostly occur in the form of preliminary measures. Preliminary injunctions may be granted on the basis of prima facie evidence and later be recalled because the patent is found to be invalid or not infringed. Under general rules of civil procedure, the applicant is liable for any loss or damage caused by unjustified interim measures. If the applicant proves, however, that he or she applied for the measures in good faith, the Court may reduce the damages or entirely release the applicant from liability.218 If the destruction of goods ordered in accordance with the Patent Act’s provisions on border measures proves to be unjustified, the applicant is liable for the resultant loss.219 In order to secure the alleged infringer’s damage claims arising from unjustified interim measures, the Court may make the interim measure conditional on the payment of security by the applicant.220 Similar rules apply for border measures.221

X. Costs 1. Court Fees 81

The court fees for proceedings before the Federal Patent Court depend on the value in dispute. Where an action does not specify a sum of money (as, for example, in invalidity actions or where injunctive relief is sought), the Court shall determine the value in dispute if the parties are unable to reach an agreement or if the information they provide is manifestly incorrect.222 The Federal Patent Court takes into account the entire economic circumstances of the proceedings when assessing whether the information provided by the parties on the value in dispute is correct.223 For a value in dispute below 50,000 francs, the court fees are in the range of 1000 to 12,000 francs, for a value in dispute over 5 million francs, the fees are between 100,000 and 150,000 francs. The Federal Patent Court has wide discretion when determining the court fees;

218 Civil Procedure Code, art 264(2). A similar provision in Patent Act, art 80 was abolished when the Civil Procedure Code entered into force on 1 January 2011. 219 Patent Act, art 86(i). 220 Civil Procedure Code, art 264(1). See also Patent Act, art 79(1) (valid before 1 January 2011). 221 Patent Act, art 86(k). 222 Civil Procedure Code, art 91(1). 223 See Order of the President of the Federal Patent Court of 28 October 2013, O2013_004. The value in dispute, which according to both parties was 1 million francs, was determined by the court to be 4 million francs.

282

82

83

Fritz Blumer it shall take into account the extent and difficulty of the matter in dispute, the form of the proceedings and the financial circumstances of the parties.224 Under Article 98 Civil Procedure Code, the Court may demand that the plaintiff make an advance payment up to the amount of the expected court costs. The Federal Patent Court, as a general rule, requests such payment of an advance within a time limit of two weeks when an action is being filed.225 The parties also may be required to make an advance payment for the costs of taking evidence.226 Such payment may be required from the party who requests the taking of evidence.227 As a general principle, the court costs are allocated to the unsuccessful party. If no party is entirely successful, the costs are allocated in accordance with the outcome of the case.228 The court fees are set off against the advances paid by the parties, ie mostly by the plaintiff. The balance is collected from the party liable to pay. The party liable to pay shall reimburse the other party his or her advances.229 Under these rules, the plaintiff who paid the advance risks to bear the full court costs even if he is successful.230

2. Costs for Attorneys (Party Costs) 84

85

224 225 226 227 228 229 230 231 232 233 234 235 236 237

The costs for representation are initially borne by the parties who may negotiate the fees with their attorneys. In its final decision, the Court decides on the allocation of the procedural costs, which include both the court costs and the party costs.231 The award of compensation for representation costs by the Federal Patent Court is made in accordance with a schedule to be established by the Federal Patent Court.232 The respective tariff foresees compensations for professional legal representation which depend on the value in dispute. For a value in dispute below 50,000 francs, the compensation is in the range of 2000 to 16,000 francs, for a value in dispute over 5 million francs, the compensation is between 100,000 and 300,000 francs. In summary proceedings, the compensation is generally reduced by 30–50 per cent.233 Costs for patent attorneys acting in an advisory capacity may be awarded as necessary expenses.234 Where a patent attorney acts as representative in invalidity proceedings under Article 29(1) of the Patent Court Act,235 the rules for professional legal representation apply.236 Under certain conditions, the defendant may request that the plaintiff must provide security for the defendant’s party costs. In particular, such security may be requested if the plaintiff has no residence or registered office in Switzerland.237 If a security

CostR-PatC (n 33) art 1. FPC Guidelines on Proceedings (n 31) art 7. See D Rüetschi in ‘Commentary Patent Court Act’ (n 6) art 27 N 66; Civil Procedure Code, art 95(2). Civil Procedure Code, art 102. ibid, art 106. ibid, art 11(1) and (2). See Rüetschi in ‘Commentary Patent Court Act’ (n 6) art 27 N 66. Civil Procedure Code, arts 95(1) and 104(1). Patent Court Act, arts 32 and 33. CostR-PatC (n 33) arts 5 and 6. ibid, arts 3(a) and 9(2). See section A.III. CostR-PatC (n 33) art 9(2); see also Bremi in ‘Commentary Patent Court Act’ (n 6) art 29 N 29. Civil Procedure Code, art 99(1).

Patent Enforcement in Switzerland 283 payment is ordered, failure of timely payment by the plaintiff results in the dismissal of the action.238

3. Legal Aid 86

Under Article 117 of the Civil Procedure Code, a person is entitled to legal aid if ‘he or she does not have sufficient financial resources’ and ‘if his or her case does not seem devoid of any chances of success’. Legal aid comprises an exemption from court costs and from the obligation to pay advances and provide security, but not from paying party costs to the (winning) opposing party. Under certain circumstances, the party seeking legal aid may request the appointment by the court of a legal agent.239 In one case, a defendant in proceedings before the Federal Patent Court filed a request for legal aid, which was denied because the defendant could not prove that he lacked sufficient financial resources.240

238 See Order of the President of the Federal Patent Court of 10 April 2014, O2013_013, where a security of 60,000 francs was ordered (25,000 francs for professional legal representation and 35,000 francs for patent attorneys’ fees) in view of a value in dispute of 250,000 francs. 239 Civil Procedure Code, art 118. 240 Order of the President of the Federal Patent Court of 22 April 2013, O2013_001.

10 Patent Enforcement in Turkey TÜRKAY ALICA

A. Introduction and Civil Law Enforcement in Turkey I. History Sensational findings at the most recent excavations1 of Göbekli Tepe2 enable us to trace the idea of invention in Anatolia back to the eleventh century BC. The protection of inventions3 by the granting of monopolies, however, has its origins in the institution of the ‘Ahi guild’,4 the roots of which date back to the thirteenth century AD. The first legal regulation concerning the protection of an invention through the granting of a patent is the Patent Act (‘Ihtira Beratı Kanunu’), dated 1879. This legal regulation was an adaptation of the French Patent Act of 5 July 1844, and was put into force with the aim of encouraging foreign investment and technology transfer in the Ottoman Empire.5 This law remained effective with a few amendments6 even after the establishment of the Republic of Turkey in 1923, right up until the year 1995, in which a new patent law was enacted. 2 The Patent Decree Act (‘PDA’)7 No 551 of 1995 is the current legislation in relation to the granting and protection of patents and utility models in Turkey. The standards envisaged by the PDA are mostly compliant with provisions of TRIPS, EPC 1973 and the EU Acquis. The PDA contains key provisions in relation to the prosecution of patents

1

1 K Schmidt, ‘Göbekli Tepe—the Stone Age Sanctuaries. New Results of Ongoing Excavations with a Special Focus on Sculptures and High Reliefs’ (2010) XXXVII Documenta Praehistorica 239–56. 2 An archaeological site in the Southeastern Anatolia Region of Turkey, approximately 12 km north east of the town of Şanlıurfa. 3 The invention of automatic machines in Anatolia is attributed to Al Jazari, who lived in the 13th century, and is known as the founder of cybernetics. See T Akman, Sibernetik, Dünü Bugünü Yarını (‘Cybernetics as of Yesterday, Today and Tomorrow’) 1st edn (İstanbul, 2003) 91–105. 4 A Kala, Türk Sınai Mülkiyet Hakları Tarihi (‘History of the Turkish Intellectual Property Rights’), Turkish Patent Institute Editions No 1 (Ankara, 2008) 19, 33. The Ahi system featured the idea of protecting the inventions made within the body of the community by envisaging the standard to which a new product should be developed or an innovation should be created, in order to establish a union of merchants. 5 Y Bülbül, Ö Yaşar and D Rahmi, ‘Sanayi Devrimi’nin Tartışmalı Bir Kurumu Olarak Patent ve Osmanlı’da İhtira Berati Kanunu’ (‘Patent as a Contentious Institution of the Industrial Revolution, and the Patent Right Act in the Ottoman Era’) Marmara University (2010) XXVIII (1) İİBF Review 51. 6 Kala, Türk Sınai Mülkiyet Hakları Tarihi (n 4) 107–08. 7 The PDA was published in the Official Gazette No 22326, dated 27 June 1995.

286

Türkay Alıca and utility models, as well as the rights conferred by them. The PDA also contains provisions which are principally the subject matter of the law of civil procedure, such as determination by the competent courts, enforcement of patent and utility model rights and the presumption of infringement in process patents, and submission of the defendant’s evidence relating to the infringement. Other than the above-mentioned procedural rules which consist of special provisions, the Code of Civil Procedure (‘CCP’) also applies where a lawsuit concerns patent right. The current CCP No 6100 entered into force on 1 October 2011.8 This CCP actually has its roots in European law; it is important to note that with the establishment of the Republic of Turkey, a significant number of revolutions were brought about in all political and social areas. One of these, known as the ‘Law Reform’, consists of reforms made to the legal system so as to render it compatible with Continental European law. The Code of Civil Procedure of 4 October 1927 adopted in this context was a translation of the Civil Procedure Act 1925 of the Canton Neuchâtel, Switzerland. The currently effective CCP was enacted by compiling the principal philosophy underlying the abolished Code of Civil Procedure, as well as the precedents and experience accumulated from past practices of a period of over 80 years after this Law Reform. In summary, the fundamental characteristics of both Turkish patent law and civil procedural law are included in the Continental European tradition. However, we should also note some aspects in which inspiration is taken from Anglo-American law; such as the criteria used in analysis of equivalent infringement and the fact that expert opinions obtained by the parties are accepted in the proceedings.

3

II. The Basic Features of Civil Procedure 4

The rights to raise a complaint and litigate are of particular importance in the Turkish judicial understanding. From a historical perspective, these rights constitute the components of ‘justice’ as a concept, which is a principal philosophy in the Middle East and in Turkish-Ottoman States. This specific justice concept9 meant that the people could submit their complaints and wishes directly to the Sultan, and be compensated by virtue of the Sultan’s order for any torts they had suffered.10 Moreover, this recovery was encouraged so much that the sovereign used to hand-pick the petitions of the people in every event, and the more he repeated this, the more just he was deemed.11 5 Therefore in the Turkish judicial tradition, the right to petition and litigate is part of the esteemed sense of justice. This tradition continues today, as a characteristic feature of the modern Turkish State12 and its legal proceedings. In a cultural sense, the person 8

The Law was published in the Official Gazette No 27836, dated 4 February 2011. In Middle-Eastern, Turkish-Ottoman state theory, justice is presented as a ‘sine qua non’ condition, and held in higher esteem than all other aspects. See Nizamu’l Mulk: Siyasetname (‘Political Writings’) translated from the Persian original by Mehmet Taha Ayar, Türkiye İş Bankası Kültür Yayınları 6th edn (İstanbul, 2014) 15. 10 ibid 17. 11 H İnalcık, ‘Şikayet Hakkı: Arz-i Hâl ve Arz-i Mahzar’lar’, Osmanlı’da Devlet, Hukuk, Adalet’ (‘Right to Complaint: Petition and Submissions to the Supreme Authority’) in E Yayıncılık, State, Law, Justice in Ottoman 2nd edn (İstanbul, 2005) 49. 12 The modern Turkish Republic is defined, in particular, as a democratic, secular and social-law state based on this ‘sense of justice’. See Constitution, Preamble, para 4, art 2. 9

Patent Enforcement in Turkey

6

7

287

sued is generally the one condemned, as opposed to the person initiating the legal action. Moreover, it is possible that a misperception can occur regarding the rightfulness of the party who exercises the right to complain or bring a lawsuit first in a dispute. Such historical and cultural understanding of the concept of justice undoubtedly has a negative effect on alternative dispute resolution systems such as arbitration or mediations, although it affects the number of lawsuits positively. Yet another factor increasing the number of lawsuits is that the fees and costs imposed upon the losing party are generally very low, as further explained below. There is no doubt that it is easier to contemplate bringing a lawsuit when the costs involved in a possible loss are known to be low. As a result, some patent cases are even initiated at the discretion of the lawyers involved without any serious preparation, or without discussing issues of cost, strategy and consequences with the claimant and technical expert or the patent attorney. On the other hand, the number of judges in the judiciary is far below what would be necessary to meet the demand for litigation, and there is no working standard for the number of cases assigned per judge. These factors negatively affect the quality of judicial practice. Even the frequency with which expert witnesses are consulted is one of the consequences of these factors. Having said that, it should be noted that patent cases are heard before specialised IP courts, and this partially mitigates these general problems.

III. Principles of Civil Procedure 8

9

10

11

The fundamental principles of civil procedure are set forth in sections 24 to 33 of the CCP. These principles are taken into consideration if there are no contrary provisions in the CCP or PDA. Yet again, these provisions establish a framework while constructing the other provisions of procedural law. The first principle in a civil proceeding is that of disposition. According to this principle, a judge cannot hear or conclude an action ex officio, without the request of the parties. The parties continue to hold power of disposition even after the action is initiated where the action relates to matters in which the parties can freely dispose, such as actions for patent infringement, declaration of non-infringement and alleged breach of licences. Another principle is that of submission by the parties. This principle requires that a judge cannot ex officio take into consideration any statement or facts not submitted by either one of the parties, or act in any way so as to suggest the foregoing. It also includes the condition that a judge cannot ex officio collect evidence, except as stated by law. The exception to this principle is where a judge decides that the dispute has a technical aspect and takes an expert report from one of the court-appointed experts. The principle of being ‘bound by the claim’ means that a judge is bound by the consequences of the claims of the parties and cannot confer upon any decision that is beyond or different from the one claimed. However, a judge can occasionally make a decision less than the claim. For example, in an infringement action, a judge can find that the damages are less than those claimed, or, in an invalidity action, it is possible that only part of the patent is ruled invalid.

288 12

13

14

15

Türkay Alıca The right to be legally heard is another principle consisting of four elements: the right to obtain information concerning the proceeding; the right to clarification and proof; the requirement that a court make an evaluation by taking into consideration the explanations of parties; and, finally, the requirement that decisions shall be clearly provided with justifications on a concrete basis. This principle is the basis for the CCP provisions on the right to a fair trial. The obligation to act honestly and to tell the truth indicates the boundary of the area of the parties’ disposition and dominance. The principle of acting honestly is actually a reflection of the principle of honesty set forth in section 2 of the Civil Code, on civil proceedings. The obligation to tell the truth requires that the arguments and statements that are put forward, whether in writing or orally by the parties in the course of trial, be real and true. However, the said obligation cannot be construed in such a way that the parties would also be required to put forward arguments against themselves. Yet another principle is the judge’s duty to clarify the case. According to this principle, a judge may request necessary clarifications from the parties, ask questions, and even require submission of evidence about the matters he deems materially or legally complicated or contradictory, where such clarification is necessitated for enlightening the dispute. This principle ensures that the judge undertakes an active role in resolving the dispute, and negotiates with the parties by clearly indicating deficiencies in the argued facts or evidence. Other principles governing the law of civil procedure are that the judge is in charge of the execution and management of the trial; that a case should be concluded in a reasonable time and at a reasonable cost (procedural economy); that the trials and final statement of decisions should be open to the public, and, finally, that the Turkish law is enforced ex officio by the judge.

IV. Industrial Property Rights in General 16

Turkey’s establishment of a Customs Union with the European Union in 1995 marks a milestone for the founding of a modern patent and IP system in general. Indeed, the Association Council Decision No 1/95 establishing a Customs Union between the EC and Turkey has dedicated Section I, Part IV, entitled ‘Approximation of Laws’, to the protection of IP rights. Accordingly, the parties agree that the Customs Union will function properly if an equal protection for the IP rights is provided by each party establishing the Union. Therefore, Turkey has undertaken to enter into a number of international agreements for the protection of patents as provided for in annex 8, amongst which are, in particular, The Agreement on Trade Related Aspects of Intellectual Property Rights (‘TRIPs’) and the Patent Cooperation Treaty (‘PCT’), and, in addition, to align its domestic law with the EU Acquis Communautaire. In this context, a number of regulations have been put in place in order to ensure that the patent system complies with the international conventions and the EU Acquis Communautaire.13

13 Legislation relating to patents in Turkey is largely compatible with EU Acquis Communautaire and Enforcement Directive of 2004/48: H Çetin, ‘Patent Haklarının Korunması Bağlamında 2004/48/ EC Sayılı Avrupa Parlamentosu ve Konsey Directifi ve Mukabil Türk Mevzuatı’ (‘Directive 2004/48 EC of the European Parliament and

Patent Enforcement in Turkey 17

289

The statistics covering the past 20 years since 1995 show that the number of registrations made in Turkey in relation to industrial rights has increased with respect to all types of rights. However, trade mark applications and registrations have always taken a pioneering role.14 Thereafter, designs come second, and the application of patents15 and utility models16 third.

V. Patent Rights in Particular 18

The advancement made by the reorganisation of 1995 in relation to patents is the PDA. The PDA is essentially drawn up by taking into consideration the provisions of

of the Council and Corresponding Turkish Legislation Within the Context of Protection of Patent Rights’) (2009) 1 Intellectual Property Yearbook 165–226. A Supplementary Patent Certificate (SPC) provided for pharmaceutical patents is an important difference from the EU acquis yet to be adopted. This issue was deferred until full membership of Turkey to the EU. 14 The statistics covering the period since 1995 show that the number of trade mark applications has increased from 16,194 to 117,723 in 2010, yet decreased to 108,608 in 2013: www.tpe.gov.tr/TurkPatentEnstitusu/statistics/. 15 The patent statistics covering the period since 1995 are presented below: www.tpe.gov.tr/TurkPatentEnstitusu/ statistics/

Domestic Year

TPE

1995

170

0

0

1996

189

0

0

1997

202

1

1998

201

6

1999

265

2000

Foreign Rate of Increase

TPE

170

–

1520

189

11.18%

687

0

203

7.41%

598

0

207

1.97%

596

11

0

276

33.33%

524

258

19

0

277

0.36%

2001

298

39

0

337

2002

387

27

0

414

2003

454

35

1

2004

633

49

3

2005

895

33

2006

979

93

2007

1747

60

2008

2159

2009 2010

PCT

Rate of Increase

Grand

Grand

Total

Rate of Increase

EPC

Total

0

0

1520

–

1690

–

26

0

713

–53.09%

902

–46.63%

730

0

1328

86.26%

1531

69.73%

1680

0

2276

71.39%

2483

62.18%

2220

0

2744

20.56%

3020

21.63%

442

2714

0

3156

15.01%

3433

13.68%

21.66%

119

2756

2

2877

–8.84%

3214

–6.38%

22.85%

88

1335

37

1460

–49.25%

1874

–41.69%

490

18.36%

43

305

314

662

–54.66%

1152

–38.53%

685

39.80%

68

167

1342

1577

138.22%

2262

96.35%

7

935

36.50%

75

143

2308

2526

60.18%

3461

53.01%

18

1090

16.58%

71

89

3915

4075

61.32%

5165

49.23%

31

1838

68.62%

71

139

4141

4351

6.77%

6189

19.83%

69

40

2268

23.39%

68

107

4694

4869

11.91%

7137

15.32%

2473

74

41

2588

14.11%

69

105

4479

4653

–4.44%

7241

1.46%

3120

60

70

3250

25.58%

77

100

4916

5093

9.46%

8343

15.22%

2011

3962

43

82

4087

25.75%

120

100

5934

6154

20.83%

10241

22.75%

2012

4360

74

109

4543

11.16%

78

154

6824

7056

14.66%

11599

13.26%

2013

4345

54

129

4528

–0.33%

95

175

7255

7525

6.65%

12053

3.91%

16

PCT EPC Total

The statistics covering the period since 1995 show that the number of utility model applications has increased from 41 to 3541 in 2013, and these cases are mainly domestic: www.tpe.gov.tr/TurkPatentEnstitusu/statistics/.

290

19

20

21

Türkay Alıca the EU Acquis Communautaire and the EPC of 1973. In line with the said process, Turkey became a party to the EPC on 1 November 2000. The PDA also includes the utility model system for the registration and protection of inventions, in addition to patents. Patents are regulated under two different categories: patents with examination, and patents without examination. Patents with examination are undoubtedly the strongest ones granted according to the conventional patentability criteria in the EPC system.17 The process relating to patents without examination begins automatically unless the applicant gives notice to the Turkish Patent Institute (‘TPI’) within three months of notification of the search report, stating that he or she prefers the system of patent with examination. The period of protection granted by a patent without examination is seven years. However, the patent owner or a third party may request examination prior to the expiry of the seven-year period. In such cases, the provisions of the system of patents with examination become valid. If, in the course of revocation proceedings initiated against a patent without examination, the parties to the proceeding, or a third party, request an examination by TPI, then ‘no order for revocation can be conferred upon without waiting for the result of the examination as it has now transformed into an application for patent with examination’.18 For this reason, the court cannot issue any decision regarding the validity of the arguments before the declaration has been published in the Patent Bulletin that the patent with investigation is granted (PDA, s 136). Yet another protection granted to inventions under the PDA may be provided by a certificate of utility model. In order for an invention to be protected by the issuing of a certificate of utility model, it is sufficient that the invention is new and can be applied to industry. In other words, an inventive step is not necessarily involved. On the other hand, no utility model certificate is issued for unpatentable subject matter or inventions, or for the process and the products of chemical substances obtained as a result of such process. Utility models are in practice the second most preferred protection system besides patents with examination.

VI. Representation in Patent Enforcement 22

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The main agents of patent enforcement are patent attorneys, attorneys and judges (the latter are dealt with below). Patent applications are filed by the applicants in person, or by patent attorneys appointed by them. However, any natural or legal person residing abroad must be represented via a patent attorney. In this sense, patent attorneys are professionals having the monopoly right to represent their client before the TPI. Any person who passes the patent attorney examination held by the TPI and is registered at the log kept by the Institute can carry out this profession.19 This means that an attorney with a law degree can act as a patent attorney only if he or she satisfies both of the above-mentioned conditions.

Unless otherwise stated in this study, the term ‘Patent’ means an examined patent. Decision No 2012/3290, 2013/3951, of 11th Chamber of SC of 4 March 2013. 19 The total number of patent and trade mark attorneys currently registered with TPI is 1005: www.tpe.gov.tr/ TurkPatentEnstitusu/attorneysearchAll/. However, the said data covers all patent and/or trade mark attorneys. On the other hand, there is no public organisation for patent attorneys. Yet, the Association of Patent and Trade mark Attorneys (‘PEM’), founded in 1998, is currently a non-governmental organisation operating with 110 members 18

Patent Enforcement in Turkey 23

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On the other hand, the power of representing parties before the courts in the proceedings of patent disputes rests with the attorneys. Patent attorneys have no power to represent the parties before the courts.20 The profession of law is an occupation that can be carried out by persons who are registered with the bar and licensed to practice as lawyers. Such authorisation covers all first instance courts and execution bodies, as well as the Supreme Court (‘SC’). According to data by the Union of Bar Associations of Turkey, there are 86,981 active lawyers in Turkey as of 31 December 2014.21 There is no need for a separate criterion or certification to act as an attorney in patent suits. Therefore, we do not have reliable data on the number of attorneys specialised in patent cases, or their qualifications.22 Regardless of the value or type of lawsuit, the proceedings can be initiated and followed up by natural persons in person and by legal persons via their representatives or one or more attorneys. The attorney must submit to the file his or her notary public certified power of attorney, or one copy of the same. During proceedings before the courts, the attorneys have a determining role in deciding on the type of lawsuit and its strategy, in collecting evidence and in requesting preliminary relief. The defendant’s attorney is expected to set the best possible defensive strategy. In this context, the defence would choose between proving that the defendant’s use is beyond the scope of the patent or remains within the exceptions, counterclaiming revocation of the plaintiff ’s patent, resolving the dispute via a licence by peaceful means, or obtaining the most advantageous decision on behalf of the defendant. However, lawyers in Turkey often lack the necessary technical knowledge and experience. For this reason, it would be prudent that an attorney avail him or herself of the assistance of a patent attorney or a technical expert in order to adequately prepare a suitable strategy. However, in practice, it is not unusual to come across lawsuits that lack proper preparation.

B. Problems related to the Enforcement of Patent Rights I. Types of Actions 1. In General 26

The first type of patent suit is the infringement suit. Among the patent lawsuits set forth under the PDA are also lawsuits against TPI resolutions, declarations of non-infringement and revocation proceedings, all of which have an important place in practice. Other types of cases worthy of mention concern usurpation of patents or

(http://www.pem.org.tr/). According to information obtained from the directors of the aforementioned association, the number of actively working patent attorneys is 519 as of 31 December 2014: U Yalçıner, ‘Patent and Trademark Attorneys, Numeric Data’ (unpublished annotation). 20 However, in practice, patent attorneys may be allowed to attend trials in patent proceedings to provide the parties and their attorneys with technical support. 21 www.barobirlik.org.tr/Detay39218.tbb. 22 According to the data at the date of 1 January 2013, AIPPI (International Association for the Protection of Intellectual Property) has about 150 members including a very limited number of legal persons (31 December 2014).

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Türkay Alıca patent applications, request for recognition as the inventor, employee invention disputes, licences and compulsory licence cases. As for the number of patent cases, statistics on this subject are inadequate. However, data23 covering the period since 2005 indicate that the number of all IP cases filed before the Civil Courts of Intellectual and Industrial Rights (‘IIRCs’) has increased from 2117 in 2010 to 2976 in 2013. And the number of decisions rendered by the courts has increased from 1408 to 3544 in the same period. The same data show that only 10 per cent of these cases are related to patents and utility models. In fact, in 2013, the number of patent cases was 203, and the number of utility model cases 159. And 871 decisions rendered in 2013 were procedural decisions on jurisdiction, and (rarely) settlements. On the other hand, 1052 decisions on the merits of the dispute resulted in a dismissal and 1620 in an acceptance in the same year. And the data show that only 46 per cent of the lawsuits decided in 2013 were successful.

2. Infringement Action 28

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Lawsuits that are based on an allegation of breaching of the rights under a patent are referred to as ‘breach of patent’ cases, and sometimes ‘infringement’ cases in the legislation. However, what is meant by the two terms is essentially the same type of lawsuit. The protection granted to the patent owner also applies to the utility model owner on the same basis. The prerequisite for initiating a patent infringement case is that the plaintiff should rely on a patent or at least a patent application published under the PDA. In other words, no action can be initiated, as a rule, prior to the publication of a patent application. This rule has two exceptions. First, if the infringing party is informed of the application or its scope, it is not necessary that the application has been published. It is beyond any doubt that the burden of proving this to be the case lies with the plaintiff. Second, if the court concludes that the infringing party acted in bad faith, the existence of an infringement is also accepted prior to the publication. However, the court cannot make any decision on the merits of the validity of the claims or the contention prior to the publication of the patent application.

3. Customs Action 30

As customs procedures are always interim proceedings, they are dealt with in greater detail under section IV, below.

4. Actions against Decisions of TPI 31

The procedures concerning the review of objections raised by applicants or third persons against the resolutions made by the Institute relating to the registration of industrial property rights and patents are, in general, carried out by the Review

23 Data were compiled from the report submitted to the EU Commission, prepared by Hülya Çetin, reporting judge in the Ministry of Justice, and the statistics published by the General Directorate of Criminal Records and Statistics.

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and Reassessment Board (‘RRB’). The RRB’s resolutions are the final decisions of the Institute. No action against its decisions for revocation can be initiated without obtaining a final RRB decision.24 The competence and jurisdiction of hearing suits initiated against such said decisions rest with the Ankara IIRCs. The deadline for filing a lawsuit against an RRB decision in relation to a patent is not set forth in the PDA. Therefore, the ordinary term of 60 days set forth as the deadline for filing a lawsuit in the Administrative Proceedings Law also applies to such said lawsuit. Such procedure has been accepted by the case law of the SC.25

5. Actions for Declaration of Non-Infringement 32

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Under section of the 149 PDA, any interested person may institute proceedings against the proprietor of a patent to obtain a decision of non-infringement. Prior to the institution of proceedings, the plaintiff shall serve a notice through the notary public to the proprietor of the patent. The matter of whether a warning letter to the patent owner is compulsory is disputed. The text of the provision contains the phrase ‘a notice may be served’, which is generally construed as not compulsory or not a condition of litigation. Yet the SC in one of its decisions of 200726 held that the notice as set out in the relevant provision is a ‘condition of litigation’. However, the SC in the same decision further held that the conditions of litigation were met in this dispute, as the defendant patent owner had previously given notice that the use of the plaintiff ’s patent by the defendant formed a breach of the rights under the patent. The patent owner may express his observations on whether the activity by the requesting party constitutes an infringement. Should the patent owner fail to answer within one month or his or her answer be found to be unsatisfactory, the plaintiff can initiate the lawsuit in order to obtain a decision of non-infringement. The action shall be notified to all right holders entered in the Patent Register. However, parties against which an action of infringement has been instituted in respect of the patent right, cannot institute this action. On the other hand, the actions of non-infringement may also be instituted jointly with an attack on invalidity.

II. Competent Parties 1. The Plaintiff 35

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The right to bring an action for patent infringement rests with the owner(s) of the patent or the patent application in dispute. However, a patent may be co-owned by more than one person. Yet again, the licensee may also have the right to initiate a lawsuit in case of breach of a patent, subject to certain conditions.

Decision No 2007/9468, 2008/12645, of 11th Chamber of SC of 11 November 2008. Decision No 2008/2506, 2009/6654, of 11th Chamber of SC of 1 June 2009. Decision No 2006/3973; 2007/12431, of 11th Chamber of SC of 4 October 2007.

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a. Patent Owner 36

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The right to initiate a lawsuit with the claim of patent infringement is vested in the owner of the patent in dispute, as of the date of act or litigation. If the patent is transferred after the termination of the act of infringement, then the previous patent owner can merely request declaration of the judgment only if he or she still has a legal interest, for example in obtaining damages for past infringement. If infringement of a patent also continues after the transfer or there is a risk of infringement, a lawsuit for removal of the ongoing infringement or prevention of the risk of infringement can be initiated only by the new patent owner. With regard to the ability of exercising the right to sue, no discrimination is made concerning the location of the invention, its technological field, or whether the products of the infringement are imported or manufactured on a domestic level. It is sufficient that the infringement or its consequences are manifest in Turkey.

b. Co-Ownership of Patents 38

A patent application or patent itself may be owned by more than one person without being divided by the claims. In such cases of co-ownership each stakeholder may take, on his or her own, the measures necessary for protecting the patent application or patent. In this context, if the rights conferred by a patent are infringed, each beneficiary can initiate by him or herself a lawsuit against the infringer. In order for the other beneficiaries to participate in the lawsuit, they should be informed within one month.

c. Licensees 39

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The PDA has made a distinction between exclusive and non-exclusive licensees with respect to their right of litigation of a patent infringement. Parties holding an exclusive licence may initiate those lawsuits which the patent owner can initiate, unless otherwise decided. The right of litigation of non-exclusive licensees depends on certain procedural conditions. Such parties may request via a notary public that the patent owner initiate a lawsuit. Should the patent owner not accept the said request or fail to initiate a lawsuit within three months of the receipt of notice, then the licensee can initiate the lawsuit in his or her name by adding the document of notice to the petition. However, if there exists a risk of serious damage, the licensee can also request that the court issue an interim injunction order prior to the lapse of the said period. The licensee is required to inform the patent owner of any lawsuit he or she initiates.

2. The Defendant 41

The defendant is the party who has allegedly infringed the plaintiff ’s right conferred by a patent. Those who infringe upon such said rights can be divided into two groups: direct and indirect infringers. However, determining the person against whom the lawsuit should be directed is a matter to be decided by the plaintiff. No lawsuit can be initiated in a discrete manner, ie by merely mentioning the persons who have committed infringement without stating their personal identity details or addresses. However, the plaintiff may also seek to determine the identity of the infringer. The possibility of

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obtaining evidence about the potential defendant, their capacity to pay damages, etc, will have an influence on the decision determining against whom the case should be directed.

III. Courts and Jurisdiction 1. The Court System 42

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The court system as provided by the legislation effective in Turkey since 2005 includes a three-phase organisation,27 consisting of the Courts of First Instance, the Regional Courts of Justice and the SC. However, the Regional Courts of Justice that are envisaged to be organised as the courts of second instance have not yet become operational. The main reason for this fact is an insufficiency of judges.28 Thus, the currently operational courts have a two-phase organisation. The courts of first instance are the civil courts and criminal courts. The civil courts of first instance consist of the civil courts of peace and basic civil courts of first instance, and the other civil courts established by special laws. The civil courts are established by the Ministry of Justice at the provincial and district centres and at such districts as determined in view of the geographical conditions and workload in such regions, with the positive opinion of SBJP. The civil courts of peace and civil courts of first instance consist of one judge. Among the other civil courts established by special laws are the Basic Commercial Courts, Family Courts, Enforcement Courts, Labour Courts, Maritime Courts, Consumer Courts and also the IIRCs. Patent (and other IP) disputes are handled by the IIRC wherever they exist, and by the Basic Civil Courts of First Instance that are designated and granted by SBJP with the competence and capacity to act as IIRCs. Patent disputes are handled by the IIRCs in Turkey. IIR Civil and Criminal Courts are first instance courts. The first IIRC was established in 2000 in İstanbul. This pilot court was followed by the Project of the ‘Effective Enforcement of IPR in Turkey’. New IP courts have been established in Ankara, İstanbul and İzmir within the scope of the said project. Presently there are 25 IIR Courts in total in the above-mentioned three major cities, 13 of them Civil and 12 Criminal. IIR Courts have jurisdiction within the territorial borders of the respective provinces, namely Ankara, İzmir and İstanbul.29 In cities in which there is no IIR Court, the first or, if there are more than two, the third Civil or Criminal Basic Courts act in the capacity of IIR Courts. This is the so-called ‘semispecialised IIR Court’ model. Ankara Civil IPR Courts have exclusive jurisdiction over appeals against decisions of the TPI, in addition to other types of IP dispute.

27 The Law No 5235 dated 26 September 2004 on the Establishment, Duties and Powers of the Courts of Regional Jurisdiction entered into force on 1 June 2005. (It was published in the Official Gazette No 25606 dated 7 October 2004.) 28 The Supreme Board of Judges and Prosecutors (‘HSYK’) resolved to establish Regional Courts of Justice in 9 cities on 18 May 2007, but their launch has been postponed to a future date. 29 And of the sub-province(s) İstanbul Centre, Bakırköy and Anatolia Regions, the case of Istanbul.

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Türkay Alıca In fact, acts infringing a patent are considered a tort; therefore, they require legal responsibility. However, such said acts are not a crime in terms of current positive criminal law.30 IIRCs deal not only with patent disputes, but also with those concerning trade marks, designs, geographical indications, new plant varieties and semiconductor topographies as well as copyrights. Unfair competition cases, in principle, are not within the competence of IIRC. However, in issues of unfair competition in connection with an IP litigation, both cases are handled together by the same competent IIRC. In contrast to the German judicial system, both infringement and revocation/invalidity cases can be heard before the same IIPC. In other words, Turkey has no split (or bifurcation) system regarding invalidity and infringement actions. The SC is the second and final instance in the court system. It was established in 1868 before the establishment of Republic of Turkey in the context of Ottoman reformation. There are 23 civil and 23 criminal chambers. The quorum for meeting of a chamber is five persons, of which four are members and one is the president of the chamber. Judgments are made by majority vote. General boards of civil and criminal law conclude an appellate review of the first instance court’s judgment, in case the decision of the lower court does not comply with that of the chamber, persisting in its own decision. General boards of every two divisions, both civil and criminal, have undertaken the functioning of unification of judgments, which bind all other courts and chambers of the SC. In the SC, there are in total about 515 high judges consisting of the first president of the entire court, 46 heads of chamber and other high judges, and approximately 812 judge rapporteurs whose duty is to carry out preliminary preparation and to explain cases to the members of this chamber.31 The SC does not have a specialised chamber dealing with patent and other IP-related cases. However, the 11th Civil Chamber examines patents and IP cases in addition to other commercial disputes. This chamber consists of one chairman and 10 members, as well as about 35 judge rapporteurs. Statistics covering the last five years indicate that this Board decided on 13,250 files in 2009, 13,250 files in 2010, 17,872 files in 2011, 21,756 files in 2012 and 23,808 files in 2013.32 These figures also include the examination of individual first instance court decisions twice by the same chamber within appeal and review phases.

2. Jurisdiction 51

The PDA, section 137 contains special jurisdiction provisions in order to determine the competent courts. Accordingly, the patent owner may initiate an infringement case against the infringer with the court located at the place of the patent owner’s residence, or where the infringement is committed, or its effects are seen. If the plaintiff does not reside in Turkey, and the entry in which his or her patent attorney’s work place was

30 Cases of wilful trade mark counterfeiting and copyright piracy on a commercial scale, as well as wrongful banderol implementations are the main crimes in terms of IP rights in Turkey. 31 www.yargitay.gov.tr/eng/index2.php?pgid=2. 32 www.yargitay.gov.tr/belgeler/site/istatistikler/2013.pdf. According to the estimates obtained from personal interviews, only one in four of these cases is related to IP rights, including patent litigations.

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registered to the registrar and the record of attorney are deleted, then he or she can bring the lawsuit with the court where the head office of the Institute (in Ankara) is located. Should there be more than one competent court, the competent court is the venue at which the first lawsuit is initiated.

3. Judges and Decisions 52

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According to the CCP, judges have the dominant role in the proceedings before the court. This role has become more active following the CCP which entered into force on 1 October 2011. The judge is the most important agent in the execution of procedural provisions, exercising discretionary rights and determining the management strategy during all phases of the lawsuit. Indeed, during the preliminary hearing the judge first determines the underlying points of the dispute and encourages the parties to agree on an amicable solution or arbitration, and takes the necessary actions to allow the parties to submit their respective evidence and rectify possible deficiencies. Therefore, he or she is not merely an observer, but rather an adjudicator acting for the purpose of resolving the dispute in a faster, fairer and more efficient manner. In this context, a judge orders the parties to make clarifications on matters, asks questions, gives time for completion of missing statements or evidence, reviews the dispute and evidence and negotiates them with the parties. However, due to the insufficient number of judges and the high number of cases, it is becoming very difficult for judges to carry out active court management in practice as defined by law. Indeed, while the total number of the judges and Republican prosecutors is 12,201 for the whole country with a population of 76 million, the number of the judges serving within the civil courts is only 5687 as of 2 September 2013.33 These data indicate that the number of judges per 100,000 persons in Turkey is about eight or nine, which is far below the international average.34 Thus, the fact is that the number of judges who are in charge within the justice system remains far below what is needed. These factors directly affect the duration and quality of proceedings, as well as undoubtedly the actual proceedings and their methodology. Even the frequency with which the courts request an expert opinion during a civil case is one of the aforementioned factors. However, the fact that patent disputes are handled in specialised or semi-specialised IIRCs mitigates such drawbacks to some degree. On the other hand, all of the judges who take office at the civil court, including the specialised courts, are professional judges educated in law only. This is also the case for the judges in charge at the IIRC. If the training programme35 carried out during the foundation phase of such said courts is left aside, no special education programme is available for the judges who are appointed there for the first time. However, the judges can attend on-the-job training programmes. In light of the reasons outlined thus far, the courts may request expert reports in civil procedures not only for clarification of

www.hsyk.gov.tr/istatistikler.html. SBJP 2012–16 Strategy Plan, p 46: www.hsyk.gov.tr/stratejik-plan.htm. 35 Within the framework of the ‘Project for Effective Enforcement of Intellectual Property Rights in Turkey’ implemented between 2001–03, 8 judges were appointed to the said courts upon completion of their one-year education at home and abroad, prior to the establishment of the specialised courts. 34

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Türkay Alıca the technical matters, but also in order to outline the facts and evidence. However, this is not always applicable to specialised courts. As far as the decisions are concerned, the CCP sets forth the aspects which should be contained in the judgments in terms of formal and basic requirements. Accordingly, the justification of a decision with respect to the essence of the matter should contain a summary overview of the parties’ claims and defences, the matters in dispute, the evidence relating to the contentious events and their evaluation, as well as the legal conclusions drawn from the facts as held by the court, and its reasons. The concluding section of a verdict clearly shows the (summary) decisions made for each claim, the obligations imposed upon the parties and the rights granted to them. In practice, a decision of a first instance court does not exceed three to five pages, and decisions of the SC are limited to two to three pages and decisions may not contain sufficient substance. However, decisions issued by the specialised IP courts are often more sufficiently reasoned in relation to the facts and evidence and their evaluations usually comprise four to sixpages and even longer especially in patent disputes. The SC decisions consist of a summary of the first instance court and a very short justification. In particular, the justifications contained in the decisions rendered by the Civil General Assembly of the SC could be more detailed.

IV. Preparation for Trial 1. In General 57

Prior to filing a lawsuit with the claim of patent infringement, it is not mandatory to send a notice to the defendant. However, the plaintiff may request from the defendant the matters which he or she can litigate in a lawsuit, by giving notice. It is very rare in practice to resort to this and thereby resolve a dispute by notice. There is no doubt that a negative answer or failure to answer the notice affects the expenses and costs to be imposed on the defendant.

2. Interim Protection Measures a. Obtaining and Preserving Evidence 58

Obtaining evidence, as an interim protective measure, has an important place in practice. Obtaining evidence is an exception to the principle that the lawsuit should be prepared by the parties. Indeed, the parties may, as pursuant to section 400 of the CCP, request that an investigation be conducted without delay, an expert examination be made, or statements of the witnesses be obtained, in order to establish an event prior to or after the initiation of a lawsuit. However, in order for the above-mentioned procedure to be implemented, there should be a risk that the evidence could get lost or that it could become considerably difficult to put forward the evidence if it is not obtained immediately. Yet it is observed that in practice the claims for obtaining evidence are prioritised over the principle that the lawsuit should be prepared by the parties. This is because of the common misconception that obtaining safe evidence

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should be made under the supervision of the judge. However, in practice, the specialised courts in particular act with due diligence in this respect. The need for obtaining and preserving the evidence relating to a patent infringement for investigation purposes or via an expert often emerges in the event that the plaintiff cannot reach the allegedly infringing product or process. Sometimes, where the evidence is not obtained immediately, the risk arises that it could end up lost. In such cases, the plaintiff is required to file an application with the court by submitting a petition which lists the patent documents held by the plaintiff, the purposes for which the evidence should be obtained for each individual item and the urgency of the issue. Procurement and preservation of evidence is requested from the competent court authorised to hear the main lawsuit or the civil court of peace at the place in which the subject matter of such procurement procedure is located. Proof in patent actions rather takes place by way of the expert viewing and taking photos or samples of the product which the defendant manufactures or makes available, or of the process used by the defendant. The expert to take part in this fact-finding is selected by the judge from among the patent specialists or attorneys or the academics who have studied in the relevant field. Where there is a danger that evidence may be destroyed or changed, the fact-finding procedure can be performed without giving notice to the counterparty. The protocol, petition of fact-finding and report are notified to the defendant. The defendant may raise an objection to such decision and procedures within one week. The filing of evidence procurement will be an annex to the main case to be initiated. Who shall bear the expenses of the fact-finding procedure is an issue determined in the main decision.

b. Preliminary Injunctions 61

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Preliminary injunctions are interim protection measures which are provided for losses that may arise out of the legal statutes of the parties, and start prior to the initiation of a lawsuit in relation to the merits of the case, possibly continuing up until the final judgment. No matter how fast a lawsuit is heard, it requires completion of certain phases, and therefore a long time. For this reason, the court may be requested, prior to initiation or making the judgment, to issue an order of preliminary injunction in order to ensure the effectiveness of any judgment to be made in future, or to protect against loss. The provision of section 151(I) of the PDA stipulates the issuance of an order of preliminary injunction in relation to a patent infringement under certain conditions. Accordingly, in order for a preliminary injunction to be granted, it is stipulated that, first of all, the patent the subject of the lawsuit is being used in Turkey or serious and efficient attempts have been made to this end. In addition to this, the issuing of a preliminary injunction order is subject to the following three principal conditions: the request for injunction; a declaration of the reasons for the injunction; and that, at least, the main claims are considered to be valid and infringement is highly likely. What should be considered here is the appropriate standard of proof. Section 390/III of the CCP expresses this as follows: ‘should appropriately prove he/she is in the right with respect to the merits of the case’. There is no doubt that the appropriate proof includes first of all the prerequisite of use, the validity of the patent and that the act of the respondent forms an infringement.

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Türkay Alıca The court may decide on an injunction to eliminate harm or to prevent loss to the plaintiff. As pursuant to section 152 of the PDA, injunctions should be such that they can completely ensure the effectiveness of the verdict to be conferred upon. Such injunction should cover, in particular, suppression of the infringement, ie the seizure and preserving in place of the goods and means which form the infringement, and a guarantee fund or letter. An objection may be raised at the same court against the preliminary injunction order.

c. Customs Measures 65

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The PDA has no special regulation with respect to interim seizure at customs, which is among the ambit of protective injunctions. However, section 152 in relation to the preliminary injunction sets forth that a court may order the seizure and preservation of any products or means which form an infringement, at any place they are located, including the customs offices and free ports and zones. Therefore, section 57 of the Customs Act No 4458, which regulates the said matter, applies to the interim seizure procedures at the customs offices. Pursuant to section 57 of the Customs Act, the procedure of seizing commodities which may infringe a patent right or suspending customs procedures may be implemented by customs upon request by the beneficiary or his or her representative. And, where no request has been made to the administration, the customs authorities can ex officio seize the goods or suspend the customs procedures to allow the application. However, for this to occur there should be clear evidence showing that the said goods form an infringement to the patent. Ex officio seizure is limited to three working days. A preliminary injunction order issued by a court should be submitted by the beneficiary within three working days for perishable goods, and 10 working days for other commodities, from the date on which the order of suspension or seizure issued by the relevant customs office is notified to the beneficiary. Otherwise, the decision of seizure or suspension made by the customs office is automatically revoked. However, should there exist just cause, upon the request of the beneficiary, the customs office may grant extra time of up to 10 working days. Where the court issues a preliminary injunction, the customs office takes action within such framework in relation to the goods. Depending on the content of the decision, the goods are destroyed or essentialy altered. If the conditions set out in the Custom Regulation36 exist, the customs office may decide on a facilitated destruction. In addition, it may also hold that the goods seized on a provisional basis are returned in consideration of a security to be determined by the beneficiary.

d. Other Interim Measures 68

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The types of decisions regarding interim measures are not limited. Section 406 of the CCP states that a decision may be made, where necessary, for book keeping or sealing in relation to the goods or titles. In addition, other provisions provide for provisional lien, preservation, provisional regulation etc. It was published in the Official Gazette No 27369 (Repeated) dated 7 October 2009.

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V. The Main Action 1. In General 69

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The CCP, which came into effect on 1 October 2011, governs the applicable procedure in resolving patent disputes. However, it is not yet possible to say that the transition period is complete, since accumulation of precedents has not yet occurred. On the other hand, this new Code adopted the fundamental philosophy of the previous Code, maintaining previously created academic doctrine and precedents. Hence, unless there is a contradiction with the new CCP, it is possible to take previous SC decisions into consideration, which were decided during the term of the previous CCP. The CCP adopts two different methods of proceedings for resolving legal disputes. These are ‘written proceedings’ and ‘simplified proceedings’. The written proceedings are the basic applicable method starting from submission of petitions and ending with the final decision to be made on the merits of the dispute. Simplified proceedings are a method to be used where there is a need for concluding the case or issue in a shorter, simpler and faster manner. With respect to patent disputes, simplified proceedings are used in particular for taking preliminary protection measures, such as interim injunctions, liens and collections of the evidence as such. While there may be differences depending on the specific circumstances of the case, patent infringement cases are decided within about one to two years in the first instance courts, and generally within a year in the SC. Where the defendant files a request for invalidity of the patent as a defence tool, the time required by the first instance courts might be longer. Where the invalidity case is filed before another court, the court hearing the infringement case will probably wait for the outcome of the invalidity case. If an infringement case is based on a patent application which is still under examination, then the infringement case is stayed until the decision to grant is issued. There is no opposition procedure before the TPI; hence, with regard to national patents, there would be no pending invalidity requests after granting. However, with regard to European patents validated by the TPI, if there are opposition or appeal proceedings pending before the EPO simultaneously with the infringement proceedings before the Turkish courts, the result of the opposition or appeal is likely to be awaited by the courts. These are undoubtedly important reasons that may delay the proceedings.

2. Procedures in the Main Action 72

For a patent infringement case which is subject to the written procedure, the first phase consists of the exchange of the petitions, which is completed on the basis of the file, without summoning the parties. The petition and the documents of the plaintiff should be submitted all together. The lawsuit may also be initiated over an electronic system called the National Judiciary Network Project (‘Ulusal Yargı Ağı Projesi’, ‘UYAP’). The matters to be included in the petition are set forth by law by way of enumeration. Among them, the names and addresses of the plaintiff and defendant, their respective Republic of Turkey National Identification numbers, and the conclusion of the request must be contained in the petitions. If one of the compulsory items is found to be missing, such deficiency must be rectified within the peremptory term

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Türkay Alıca of one week, which is to be granted by the court. Otherwise, the court will consider that no lawsuit has been initiated. The defendant’s reply should be submitted to the court within two weeks from the date on which the petition is notified to the defendant. However, if more time is necessary for the reply, such period may be extended by the court by as much as one month upon request. The said conditions for the lawsuit and the reply also apply to further replications and rejoinders. The phase of examination commences after the two petitions that may be submitted by each party are mutually notified. In this phase, the court may resolve the admissibility and preliminary objections without holding a trial, or by summoning the parties to the trial and examining the preliminary objections. During the trial held for preliminary examination, first the parties are heard with respect to the admissibility and preliminary objections. Where there is no admissibility or one of the preliminary objections put forward is accepted, the hearing is concluded with a decision to be made on the above-mentioned matter without proceeding to the next phases. Otherwise, the preliminary trial is continued by determining the matters of dispute. During the preliminary trial, the court encourages the parties to settle amicably, where they can freely act at their discretion. However, such encouragement in practice mostly consists of a formal recommendation. After all, losing a lawsuit that has been initiated at low cost does not pose a big economic loss or a deterrent for the parties. In case the attempt to settle is unsuccessful, then the matters in dispute are recorded in the form of a report, and signed by the relevant parties. Upon completion of the preliminary examination hearing, the parties are allowed a peremptory term of two weeks to submit all the evidence they indicate or make the necessary explanations in order for the evidence to be collected from other places. Acceptance of evidence that has not been submitted within the said period or which is subsequently collected from other places depends on the discretion of the judge, and will be admitted on condition that it is not aimed at delaying the proceeding, and does not result from failure or negligence of the relevant party. The preliminary examination hearing is also important in respect of the prohibition of the changing or expanding of the claim and defence. In principle, the parties may freely change their respective claims or defences with their replies or rejoinders prior to the preliminary examination. However, during the preliminary examination hearing, the parties may expand or change their respective claims or defences only in cases in which the counterparty is not yet ready, or subject to the explicit permission of the counterparty if the counterparty is ready. Upon completion of the preliminary examination phase, as a rule the parties can no longer change their claims or defences. However, subject to the counterparty’s explicit permission or by means of an amendment which can be made only once, the claims or defences can be changed up until completion of the inquiry phase. The third phase of the written proceeding is referred to as ‘inquiry’. The parties are informed that the proceedings have passed to the inquiry phase upon completion of the preliminary examination hearing. A court-appointed expert is also called upon frequently at the request of the parties or by the court at the end of the preliminary examination hearing. A separate day of trial is designated for discussing the expert evidence. If deemed necessary, the parties are also heard on the facts of the case during this phase.

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All claims and defences that are put forward by the parties in the course of investigation are reviewed together with the evidence submitted to prove them. However, the judge may decide to examine certain matters before others in order to simplify or shorten the proceedings. The duty of managing and arrangement of a hearing rests with the judge. The judge has a determining role in hearing the witnesses, referring to the oral statement of the court-appointed expert or the expert whose written statement is submitted by either one of the parties. However, the legal representatives of the parties attending the hearing may directly question the witnesses, experts, specialists and other persons attending the hearing, and the parties themselves may do so via the judge. After the evidence is reviewed and the dispute is sufficiently elucidated, the judge informs the parties that the inquiry is finished. Upon such notification, the court passes to the phase of oral proceedings and judgment. As a rule, a separate day is set aside for oral proceedings and judgment. However, if the parties are present and have not requested an extended hearing, the inquiry and the last oral session can be held together and the court can pass judgment on the same day. As evident from the above, the phase of exchanging the petition for a lawsuit, including patent cases, may last at least six weeks, and 18 weeks at the most in case of time extension. After the exchange of petitions, the passing of a judgment is expected, often at the end of three hearings. However, if there are delaying procedures which prolong the period of inquiry, such as the hearing of witnesses or obtaining of the expert’s report in particular, the number of hearings could be four or more. The procedure in such hearings may sometimes merely serve to establish whether a document or report has indeed been received.

3. Obtaining and Introducing Evidence 80

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The general rules apply to patent infringement cases with respect to the burden of proof and the introduction of evidence. That is, unless otherwise provided, everyone is obliged to prove the facts on which he or she bases his or her claims, and to submit evidence in relation thereto. Essentially, the plaintiff is obliged to add to his or her petition the facts which prove his or her claims and requests, and are in his or her possession at the time of initiating the action. Also, any information necessary for summoning the evidence located in other places or in the possession of other persons should be explained in the petition. If the documents and the evidence are held by a governmental authority or a third person, the court orders their submission. Where a document is not submitted and the reason for this is not explained with the evidence, persons can be heard as witnesses and the provisions which apply to witnesses are enforced upon them. There is no doubt that submission of the defendant’s documents and commercial books is crucial in proving the act of infringement and its damages. For this reason, the PDA has set forth a special provision to this effect. Pursuant to section 139, entitled ‘documents proving infringement’, the plaintiff can request that the other side provide all documents relating to the use of the invention, in order to allow determination of the loss he or she has suffered. However, the said provision makes no mention of the sanctions to be implemented in case of failure to submit the aforementioned

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Türkay Alıca documents. For the foregoing, the CCP provisions relating to the submission of commercial books and records by the litigant parties shall apply. In case there exists any document requested from either one of the parties to be submitted, then such party is obliged to submit such said document within the prescribed period if he or she has already acknowledged having such document or if this is understood on the basis of an official record. If he or she fails to submit, he or she should inform of the reason along with supporting evidence. Otherwise, he or she has to take an oath on the same. In default thereof, the court may accept the counterparty’s statement on the content of the said document. The court may decide on the submission of the commercial books and records, whether upon request of the parties or by acting ex officio. In order for commercial books to become evidence on behalf of the owner, it is necessary that these are kept complete and in accordance with the applicable procedure, and do not contradict the counterparty’s books, to which the same conditions apply. Even if one of the parties is not a merchant, should he or she avoid submitting while the counterparty, being the merchant, has informed that he or she would agree their content in case the books should be submitted, then the claim of the party requesting the submission is deemed to have been proved. Other than the above, there is no provision made for the party who does not submit his or her documents or books in the course of a lawsuit. Therefore, it is important for a plaintiff to put forward his or her claim by submitting the books and documents which prove the damage he or she has suffered due to the infringement, and to inform that he or she would accept the contents of the books submitted by the counterparty if these are duly kept.

4. Experts 84

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CCP, section 293 allows the submission of a party’s expert opinion (a practice with its origins in Anglo-Saxon law) besides the obtaining of the opinion of experts to be appointed by the court. The court decides, either upon the request of either one of the parties or acting ex officio, whether to obtain an expert opinion on matters which require special or technical knowledge. Section 266 of the CCP, which entered into force on 1 October 2011, states that the court cannot resort to an expert on those matters which can be resolved with general and legal knowledge. In practice, however, an expert report often covers even the legal matters. As previously noted above, the problem originates from the fact that the burden of work is beyond reasonable limits. Therefore, an expert is considered, in practice, not only as a specialist whose opinion is obtained for technical matters, but also as an assistant who reports on the file. When the matter is one of patent infringement and/or a case of revocation, the SC agrees that this is a technical matter that justifies the court’s request for an expert opinion. The experts are selected by the judge, from among the persons nominated in the lists to be issued on an annual basis by the local provincial justice commission. In case there is no expert having a specialism in the relevant field in the said list, one can be appointed on the basis of lists determined by the other provincial justice commissions. If the appropriate experts are not available in all the lists, lastly one can be appointed from outside the lists. With respect to patent cases, it should be stressed that

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the experts in the said lists are often insufficient in number. Hence the courts mostly appoint an expert from outside the list.

VI. Types of Infringement 1. Direct Infringement 86

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Those who commit the acts set forth in section 136 of the PDA are direct infringers. Accordingly, the following acts form an infringement of patent right: imitating, by the producing of a product, the subject of the invention, without the consent of the patent holder; the selling, distributing or commercialising in any other way, or importing for such purposes of products, or the keeping of them in possession for commercial purposes; or use by applying such products, manufactured as a result of an infringement, where the person concerned knows or should know that such products are imitations. As far as the process patents are concerned, any use of the process of the invention, including selling, distribution, offering for sale or import, or making available or implementing for the foregoing purposes of products that are manufactured by means of the said process, without the permission of the patent owner, form an infringement. Therefore, not only the process itself, but also the product manufactured by implementing such method is under protection. Also, extending or transferring the scope of a licence or compulsory licence for a product or process patent without permission is an infringement of the rights conferred by a patent.

2. Indirect and Contributory Infringement 88

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Indirect infringement is defined in section 74 of the PDA. According to this provision, granting the elements or means to unauthorised persons which allow an invention to be implemented and which constitute its essential part, knowing that such elements or means will be used for such said purpose, is an indirect infringement of a patent right. However, in order to affirm infringement, it is required that the said elements or means are not always available on the market, or even if they are available on the market, that such said use be instigated by the supplier. The acts of participating in, helping, encouraging or facilitating a direct infringement to a patent right are considered an indirect and secondary infringement. On the other hand, according to section 137(1)-f, to avoid releasing information regarding the origin of a product that is infringing and in the possession of a party or parties unauthorised constitutes assistance by protecting the principal agent, and is, as such, another secondary act of violation. But this action is rare.

3. Infringement and Presumptions for Process Patents 90

We have addressed above the acts that form an infringement of a patent right. Here we focus on proving the acts of infringement, and the presumption of infringement for process claims. The burden of proof for an infringement case is subject to the general rule, and the plaintiff is obliged to prove the alleged infringement committed by the

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Türkay Alıca defendant. For this reason, in the case of a product patent, it is sufficient that at least one of the infringing acts in relation to the product be proven to have been committed by the defendant. However, in the case of a process patent, the law maker has allowed for the presumption of infringement in two separate provisions. Such presumption is accepted both for the product by process, and for patents that only protect the process. Therefore, the presumption is also valid for patents where the product by process is not new. Accordingly, if a patent is obtained for a process which relates to the making of a product, each product having the same qualities is deemed to have been made according to the patented process. For this reason, it is sufficient to prove that the product has been manufactured by the defendant. The defendant is obliged to prove that he or she manufactures the said product without infringing the patented process.

4. Claim Interpretation 93

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Interpretation of the claims is set forth in section 83 of the PDA. The said provision complies with Article 69 of the EPC and the relevant Protocol. Accordingly, the scope of protection under the patent is determined by the claims. The claims are interpreted on the basis of the description and drawings. However, the scope of the protection conferred by a patent cannot be expanded to include features attained through interpreting the description and drawings which have been considered by the inventor but are not reflected in the claims. In case the description includes examples, then they cannot be interpreted to be limited to such examples. As demonstrated, interpretation of the claims is set forth in the PDA on an extensive basis. Also in the Turkish jurisdiction, interpretation of the claims is considered a legal issue. However, the expert report referred to in infringement cases also often includes a determination of the items of the claims, and its comparison with the accused product or process.

5. Literal and Equivalent Infringement 95

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There is no decision by the SC concerning which way is to be followed in evaluating equivalent infringement. However, the PDA sets forth in detail the criterion of the evaluation of equivalence. Accordingly, in evaluating the scope of protection of a patent, the items that are specified in the claims on the date of violation are also taken into consideration. If an item contained in the accused product or process essentially carries out the same function as that of one of the features described in the claims, even if not identical to it, or it does so in the same way and results in the same outcome, then these embodiments are considered to be equivalent. As is clear, evaluation of equivalent infringement has been adopted from the test formulated as function-way-result, as accepted in the US precedents.37 On the other hand, in evaluating the scope of a claim under the PDA, the statements made by the applicant or owner during the period of granting of the patent or its validity would be taken into consideration. There is no doubt that this rule differs Graver Tank & Mfg Co v Linde Air Prods Co, 339 U.S. 605 (1950).

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from the practice in jurisdictions in which the statements made in respect of the process of registration are never considered to evaluate the equivalent infringement,38 or are considered only under certain conditions,39 or only between the parties,40 or for the purpose of overcoming the impediment of registration. We believe that in this way the law maker has qualified the patent as a contract entered into not only between the patent owner and the Patent Office, but also by and between the public. And, with respect to the defence41 that the equivalent element is free state of the art, there is no clear provision made in PDA to this end, or in any decision made by the SC. However, taking into consideration the conditions of the concrete case, it should be accepted that no equivalent element for the state of the art would constitute an infringement.

VII. Remedies 1. In General 97

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A plaintiff whose right under a patent has been infringed may request that the court declare the act to be infringing, suspend and eliminate the effects of such acts, and seek damages for the patentee. In the context of eliminating the consequences of an infringement, the plaintiff may also request seizure of the products that are manufactured in violation of the patent, as well as the equipment that is used to produce the foregoing and the patented process, or transfer of such products or equipment to the plaintiff upon payment of adequate compensation. In addition to the above, the court may also, in order to prevent continuation of the violation, order correcting measures, in particular the changing of the forms of the seized products and equipment or, if inevitable, their destruction. Notifying the relevant parties of the issued court decisions, and publication, provided that the successful party has a legitimate ground or interest, are also important means of removing the consequences of infringement.

2. Damages 99

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The plaintiff whose right under a patent is infringed may claim compensation for the damage he or she has suffered due to such violation. The said damages may be tangible and intangible. The SC agrees that in case of a patent infringement, intangible damage could also occur, and thus an intangible compensation should be awarded in the interest of the plaintiff. Determining the intangible damage is solely a legal issue, and carried out by the court. The intangible damages differ from the damages for reputation. Note that reputational damage is a type of tangible compensation which can be claimed if the reputation of the invention is damaged as a result of the infringer’s bad production of the invention under the patent, or if that invention is unsuitably offered on the market.

In the UK, see Kirin-Amgen Inc & Ors v Hoechst Marion Roussel Ltd & Ors [2004]. In the US, see Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co, 535 U.S. 722 (2002). 40 In Germany, see German Federal Supreme Court, decision of 12.3.2002—X ZR 43/01—Kunststoffrohrteil. 41 In Germany, see German Federal Supreme Court—‘Formstein’, 1991 R.P.D.T.M.C. at 602, similar to the UK’s Gillette defence and the US Wilson case. 39

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In order for a court to award tangible or intangible damages, the defendant should have directly or indirectly committed at least one of the acts of infringement, even negligently, and there should be a causal connection with the act causing damage to the plaintiff, and the damage itself. If persons not committing the act of infringement in person use in any way an invention protected under a patent, and continue to do so in spite of their having been informed of the patent and the infringement, and are in default, they are obliged to make good the damages suffered by the plaintiff in connection therewith. However, the patent owner cannot initiate any action, including any claim for damage, against any third party who uses the products released to the market, and has paid to the patent owner compensation for the infringement. A plaintiff may claim for three types of damages within the scope of the material damages, ie the actual damages, loss of revenue and reputation damages. We have already addressed the reputation damages above. The actual damages are a loss in the plaintiff ’s assets due to the infringement. Loss of revenue concerns the hypothetical increase which could reasonably have been expected in the plaintiff ’s assets under normal conditions if no infringement had occurred. The loss of revenue is calculated according to one of three methods set forth in the PDA, depending on the choice of the plaintiff, ie the potential income to be obtained by the patent owner had there been no competition by the infringer, the revenue obtained by the infringer by using the invention, and the licence analogy methods. No matter which method is selected by the plaintiff, in calculating the loss of revenue the economic importance of the invention, validity of the patent and the number and type of the licences relating to the patent are taken into consideration. However, if the patent owner failed to fulfil the obligation of using the invention, damages can only be based on the licensing method. On the other hand, if the first two methods are selected and the invention represents a significant economic contribution through the manufacturing of the product or the use of the process involved, the court may make a reasonable addition to the compensation. If the invention has a determining role in creating demand for the product at issue, it is accepted that its economic contribution is important.

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VIII. Defences 1. In General 103

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The most likely defence to be raised is that the act is not within the scope of the plaintiff ’s patent. Such defence may be based on the justification that some elements in the claims do not exist in the accused product or process, or that the act is included within the scope of the exceptions granted to the patent right. In the first option, the defendant is expected to state which features are not contained in the accused product or process, contrary to the allegation of the plaintiff. The limitations of the rights under a patent set forth by the PDA concern private use, acts for trial purposes, medicines prepared according to a recipe, or arbitrary use in constructing or operating transportation means. Expiry of a patent right or acts remaining within the scope of the right of prior use do not form an infringement,

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either. However, it is no defence that the use of a dependent patent requires the use of the basic patent (PDA, section 78).

2. Request for Revocation as a Counterclaim 105

One of the most important defences in an infringement case is that the plaintiff ’s patent does not meet the requirements of protection and that it should be nullified. However, according to the established SC decisions, in order to be heard on such a defence, it is compulsory that a lawsuit be initiated with a request for revocation of the plaintiff ’s patent. Where the nullity action is initiated as a counter action with a reply to an infringement case, this claim is heard and concluded together with the foregoing. If the action for revocation is accepted, there is no longer a need for an evaluation of the infringement. This is because of the retroactive effect introduced if the court decides to revoke the patent. Therefore, the protection granted for the patent is deemed never to have existed. However, if the action for nullity is initiated not as a counter action but as an independent action, then the court may merge the files. But, if no merger is made, the infringement case should wait until the conclusion of the action for revocation. A national patent holder may surrender his rights, in whole or in part for one or more claim(s), provided that such surrender does not result in extending the scope of the patent. This surrender request can only be done before the TPI, but not before the court hearing the revocation case. If in such case the patent owner withdraws the infringement case, the defendant is deemed to have a legal interest in continuing the revocation proceedings on the basis of the previous claims. The court may be satisfied to render a decision of declaration that there are conditions to invalidate the previous claims, but it does not decide on cancellation. The same rule applies for a European patent registered in Turkey, where the patent owner made a limitation or revocation in accordance with Article 105(b)(3) of the EPC.

IX. Wrongful Enforcement 106

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PDA, section 80 sets forth that the manner of a patent owner’s use of its rights under a patent must not be detrimental to the general ethics, public order and general health. Such provision, which determines the general and public limitations of use of patent rights, also includes the existing or prospective legal prohibitions. Other than the above-mentioned limitations arising from public law, the patentee must also act in accordance with the principle of honesty in using his or her rights under the patent, as in all types of rights. This is a fundamental principle arising out of private law, which is set forth in the provision of section 2 of the Civil Code. This principle is undoubtedly valid for the use of patent rights as well. As a matter of fact, section 131 of the PDA has a separate provision for this matter where it is stated that the consequences of any decision revoking a patent will have a retrospective effect. Accordingly, a patent owner who causes damage to third parties on the basis of a patent due to his or her mala fide acts, must compensate such damage. That a patent or utility model owner obtains an injunction, suspension or preventive order against third parties, and has these remedies enforced relying on a patent which

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Türkay Alıca fails to meet the conditions of registration, may be an indication of bad faith. In such cases, the patent owner must reimburse the compensation he or she obtains by virtue of the lawsuit initiated with reliance on the invalid patent, as well as meet all damages suffered by the counterparty due to such wrongful enforcement.42 But, if the patent owner is bona fide, such retrospective effect is limited to two cases according to section 131(2) of the PDA, which reads: The retroactive effects of invalidity, without prejudice to claims for compensation for damage caused by acts of bad faith on the part of the holder of the patent, shall not extend to/ affect the following situations: a) Any final decision for infringement of the patent reached and enforced prior to the decision of invalidity; b) Contracts concluded and executed prior to the decision of invalidity. However, reimbursement, in whole or in part, of sums paid under the contract may be claimed on grounds of legitimate reasons and of equity to an extent justifiable by the circumstances.

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In other words, a final damage award that has been executed cannot be re-opened, while an injunction automatically becomes obsolete once the patent has lapsed or been revoked. The second case is a claim for damages due to the execution of a preliminary injunction (CCP, s 399). Such special provision applies to a claim for damages that is based on the allegation that a preliminary injunction was unfairly enforced. Accordingly, the obligation lies with the person on whose behalf an interim injunction is issued on the basis of a patent, to compensate any damage caused by him or her to others due to such injunction, if it is understood that he or she has acted unfairly, such as in bad faith based on a patent later revoked or not infringed at the time of requesting the injunction. A claim for damages on the grounds of an unfair injunction is subject to a peremptory term of one year from the date on which the judgment becomes final or the interim injunction is set aside. Such action is initiated at the court at which the lawsuit as to the accusations has been concluded.

X. Court Costs and Attorney Fees 111

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Three groups are set forth in CCP under the heading ‘court costs’. These cover the expenses for trial, attorneys’ fees, and litigation fees (judicial tax) incurred by the parties during the proceedings. As a rule, the claimant pays in advance at the time of initiating the lawsuit the prepaid fee determined by law, and the minimum costs required to collect the evidence on which his claims are based.43 Such fees and expenses are collected in advance, and the attorney fee established by the Minimum Attorneys Fee Tariff (ie ‘MAFT’), if the claimant is represented by an attorney, is collected from the respondent and given to the claimant depending on the conclusion and success of the lawsuit. Further, any additional fee other than that received in advance is received from the respondent if the lawsuit is accepted, even partially, and from the claimant

Civil General Assembly of SC, Decision No 2013/11-209, 2013/399 dated 27 March 2013 related to design. Any person unable to pay the court costs can avail himself/herself of legal aid subject to the condition that he/she form an opinion at the court that he/she is right in his/her claims or defences. Foreigners may also benefit from legal aid within the framework of the reciprocity principle. 43

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if it is fully rejected, and is recorded as revenue for the treasury. The court decides ex officio on the court costs even if the parties have made no request to that effect. Currently, the costs to be incurred by the losing party of a patent dispute upon final judgment of the court depends, in particular, on whether the subject matter of the lawsuit is related to money or can be evaluated in monetary terms. As explained above, this is because the court costs and attorneys’ fees consist of a fixed amount for lawsuits in which the subject matter cannot be evaluated in monetary terms. As of 2015, such sum is TL 55,40 (€18) with respect to fixed fees, and TL 2200 (€733) not to exceed the value of the judgment, with respect to the attorney fees. It must be emphasised that this attorney fee is decided by the court. Usually, a separate fee agreement between the parties and attorneys is made. However, these costs are not taken into account in the decision. Finally, the cost in the judgment to be incurred by the parties in the course of a proceeding is usually around TL 2000–4000 (€666– 1333), including the expert’s fee. On the other hand, among the types of lawsuit in the Turkish jurisdiction of which the subject matter cannot be evaluated in monetary terms, are in particular the lawsuits relating to the revocation of a patent, determination of whether or not there is an infringement of patent, elimination and prevention of an infringement, etc. In other words, the lawsuit types of which the subject matter can be evaluated in monetary terms are in practice limited to the claims for pecuniary and non-pecuniary damages based on infringement of a patent. This procedure means that a great number of lawsuits which should be subject to proportional fee assessment based on the value of the patent in dispute are concluded with a very low fixed cost and attorney fee. There is no doubt that precisely this consequence leads to the trivialisation of the cost of losing a lawsuit, and in turn gives rise to a large number of lawsuits being brought to the courts without proper consideration or the making of the necessary preparations. This is the case not only for patent disputes, but also for other IP lawsuits. Therefore, this low level of court costs results in a very high number of lawsuits before the local courts and SC, and in a decreasing quality of proceedings in general.

11 Patent Enforcement in China THOMAS PATTLOCH

A. Chinese Courts and Civil Procedure I. Civil Litigation System 1

The Chinese enforcement system for private right holders in principle allows the enforcement of rights either in civil courts or through the administrative authorities.1 Only in the case of so-called patent counterfeiting, may criminal measures also be initiated.2 In practice, the overwhelming number of infringement cases are heard and settled by Chinese civil courts.3 2 It is widely known that in its first phase, the Chinese patent system was a system largely based on the German model, which is demonstrated by the adoption of the bifurcated approach on judging infringement and validity in separate proceedings. While the guiding role of the German patent practice for the Chinese patent system has been true for many years since its introduction in 1984, the legislative amendments in the past decade together with a strong and increasingly sophisticated body of case law show that also many elements of US law have been continuously introduced into Chinese patent law.4 Such foreign influences have not been merely copied, but further adapted and fitted into the concept of a patent law with Chinese characteristics. The objective of this approach is to ensure that Chinese interests as a developing country are safeguarded. Safeguarding Chinese interests also includes better protection and enforcement of patent rights in China.

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Patent Act, s 60. Criminal Code, s 216. 3 In 2013, 88,286 civil cases, 2901 administrative cases and 9212 criminal cases, a 5.29% increase, a 0.07% increase and a 28% decrease respectively were reported by the ‘SPC’s Chinese IPR judicial protection status (2013)’ available at: www.court.gov.cn/zscq/bhcg/. In 2014, reportedly more than 110,000 new civil IP lawsuits were filed (the total number of lawsuits was 15.6 million, 63% of which were commercial disputes including IP, 10% criminal cases), see the report of SPC President Zhou Qiang on 12 March 2015 to the National People’s Congress available at: http://en.people.cn/90785/8561041.html. 4 The file history estoppel or prior art defence may be two examples of US law recently adopted by the Chinese patent system. 2

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Thomas Pattloch Following China’s accession to the WTO in 2001, two revisions of the patent law and the implementing rules have already taken place, and the growth of patent applications in China continues to be staggering, as is the growth of domestic patent litigation.5 China has made significant advances in this respect and no longer should be regarded as a ‘developing country’ in terms of patent protection. Indeed, Chinese jurisprudence may soon start to shape certain aspects of patent law in a global context, such as for example the relationship of standards and patents.6

II. Patent Law Policy and Interpretation 4

The most recent amendments in patent law were driven by a domestic agenda of becoming an innovation-driven nation under a National IP Strategy (NIPS), which was revealed for the first time in June 2008.7 The NIPS mandates a wide range of changes to the IP system, to legislation and to enforcement. The State Intellectual Property Office (‘SIPO’) is currently tasked with the leading role among all Chinese ministries to implement this strategy.8 To this end, annual plans are issued which contain significant measures to reach the objectives of the NIPS.9 5 Important examples of the effect of the NIPS regarding legislative changes are stronger patent infringement exemption rules such as an explicit Bolar exemption, but also higher amounts of damage compensation under statutory compensation rules for patent infringement. The result of the legislative changes is a very modern Patent Act and related Implementing Rules. 6 On the enforcement side, the law is complemented by Interpretations and Opinions issued by Chinese courts, in particular the Chinese Supreme People’s Court (SPC) situated in Beijing, and other leading courts such as the Beijing High People’s Court. Such Interpretations and, at a lower ‘legislative’ level, Opinions, are not law in the formal sense, but bind the lower courts. De facto, they provide very important and substantial guidance on the current practice and interpretation of patent enforcement. 7 The most important Interpretations and Opinions in relation to patent enforcement in China are: — Several Provisions of the Supreme People’s Court on Issues concerning the Application of Law in the Trial of Patent Dispute Cases, Fashi 2015 No 4, in force since

5 WIPO Report IP Facts and Figures 2014, 12 et seq, available at: www.wipo.int/edocs/pubdocs/en/wipo_ pub_943_2014.pdf; in 2013 alone, 9150 patent cases were newly filed. 6 See the Announcement of the State Administration for Industry and Commerce on Seeking Public Comments on the Provisions of the Industry and Commerce Administration Organs on the Prohibition of Abuse of Intellectual Property Rights to Exclude or Restrain Competition (Draft for Comments), issued on 11 June 2014. 7 Notice of the State Council on The Promulgation of the National Intellectual Property Strategy Outlines Guofa 2008 No 18, effective as of 5 June 2008, available at: www.wipo.int/edocs/lexdocs/laws/en/cn/cn021en.pdf. 8 Circular of the General Office of the State Council on Forwarding the Action Plan on the Further Implementation of the National Intellectual Property Strategy (2014–20) to Intellectual Property Offices and Other Departments, Guobanfa 64/2014, issued on 10 December 2014 with 27 commissions, ministries and agencies at the level of ministries involved. 9 See eg the Promotion Plan for the Implementation of the National Intellectual Property Strategy in 2014, available at: http://english.sipo.gov.cn/laws/developing/201405/t20140505_944778.html.

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1 February 2015, revising the formerly adopted SPC Several Provisions of the Supreme People’s Court on Issues Concerning Applicable Laws to the Trial of Patent Disputes Fashi 2001 No 21 (‘SPC Interpretation Patent Trials’); Opinions of the Supreme People’s Court on Giving Full Play to the Functional Role of Intellectual Property Trials in Advancing the Great Development and Prosperity of Socialist Culture and Promoting Independent and Coordinated Economic Development, Fafa No 18/2011, effective as of 16 December 2011 (‘SPC Functional Role Opinion’); Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Patent Infringement Dispute Cases, adopted on 21 December 2009, in force as of 1 January 2010 (‘SPC Interpretation Patent Infringement’); Supreme People’s Court Opinion On Certain Issues With Respect To Intellectual Property Judicial Adjudication Under The Current Economic Situation, Fafa No 23/2009, effective as of 21 April 2009 (‘SPC Economic Situation Opinion’); Regulations Of The Supreme People’s Court Concerning The Laws Applicable To The Temporary Restraining Order On Patent Infringement, Fashi No 20/2001 (‘SPC Temporary Order Regulations’), to be soon revised/complemented by an outstanding draft of the SPC issued on 26 February 2015 entitled SPC Judicial Interpretation on Concrete Issues in Application of Law in Determination of Action Preservation Measures in Intellectual Property and Competition Controversies; Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures Fashi No 33/2001, effective as of 1 April 2004 (‘SPC Evidence Rules’); Provisions of the Supreme People’s Court on the Jurisdiction of the Intellectual Property Courts of Beijing Municipality, Shanghai Municipality and Guangzhou City over Cases, Fashi No 12/2014, effective as of 3 November 2014 (‘SPC IP Court Provisions’); and Guidelines for Determining Patent Infringement by the Beijing High People’s Court, issued and effective as of 4 September 2013 (‘Beijing High Court Guidelines’).

Since the economic crisis of 2009, the SPC has started to intervene more strongly in the work of the patent-related trials at lower level Chinese courts to support the domestic economy and provide stronger guidance to the development of patent enforcement.10 It should be borne in mind that Chinese courts under the Chinese system do not have the same level of independence from the Chinese political system compared to Western democracies and are subject to control by the Chinese communist party. Opinions and statements on political guidance thus have a substantially stronger impact on enforcement reality than in other jurisdictions.

10 See No 3 of the said Opinion: ‘Patents as the core scientific and technological innovations form the core of enterprises and national competitiveness and play the most direct and important role in strengthening patent protection for scientific and technological progress and independent innovation. Every relevant court, based on a sense of responsibility and mission to improve innovation capability and build an innovative country, needs to attach great importance to the trial of patent cases and to raise the level of patent adjudication as a priority’.

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III. Institutions 9

China features a so-called dual enforcement mechanism, which is hailed as one of the most important Chinese characteristics of the patent system. Right holders are free to apply to administrative authorities to investigate, mediate and decide patent infringements. Alternatively, right holders can turn to any competent People’s Court for civil enforcement.

1. SIPO and its Local Branches, the IP Bureaux 10

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Foreign and domestic right holders can revert to administrative authorities for patent enforcement,11 usually the so-called IP Bureaux which administratively are either part of the provincial branch of SIPO, or in some provinces are handled by the local branch of the Ministry of Commerce (Mofcom) or other branches of a Chinese ministry. Country-wide, there are also about 80 IP Enforcement Assistance Centres with a public hotline ‘12330’.12 Administrative patent enforcement actions are filed with the competent local branch of SIPO where infringement is occurring. Cross-border infringements can greatly hamper efficiency owing to problems of jurisdiction.13 SIPO is the patent-granting authority. Inside the Chinese hierarchy of the government system, this independent agency reports to the State Council, but is at a lower level than a ministry like Mofcom or a commission such as the National Development and Reform Commission (‘NDRC’). SIPO is a very pragmatic and highly experienced organisation which employs excellent experts in the various technical fields and also coordinates cooperation with other patent offices around the world.14 SIPO strongly advocates strengthening administrative enforcement15 and is currently attempting to increase its role as patent enforcement agency.16 One reason for pursuing this objective by SIPO can be attributed to its current lead in the implementation of the NIPS. Other reasons are suspected to be the continuous power struggle with the Mofcom, which is trying to absorb SIPO. In practice, the majority of conflicts will still end up in Chinese courts rather than before the administration. The reasons are manifold: lack of human resources or capability at local level, the general inability of administrative authorities to grant damage compensation awards, or simply the complexity of the matter which, particularly in the past, often led to the rejection of a request directed to the administrative authorities. Recent statistics, however, show a strong increase in administrative enforcement that resulted in 4684 patent infringement administrative cases handled in 2013, in

11 See the SIPO Decree No 60, Patent Administrative Enforcement Rules, as revised and in force since 1 February 2011. 12 SIPO, Annual Report 2013, 32. 13 Cao Jingjing in Luginbuehl/Ganea (eds), Patent Law in Greater China § 12.54 and 12.55. 14 See SIPO Annual Reports with reference to the IP5 and many other bilateral cooperation activities. 15 See eg Decision on Enhancing the Administrative Enforcement of Patent Rights, issued on 26 June 2011, www.sipo.gov.cn/tz/gz/201106/t20110628_608983.html, and Circular of the State Intellectual Property Office on Seeking Comments on the Measures for Patent Administrative Law Enforcement (Draft), 27 January 2015. 16 The Draft Measures for example cut down response time for defendants (10 days) and overall length of procedure (3 months instead of 4 for invention patents, 2 months for designs and utility models), increase possibilities to shut down and intervene against infringement on the internet and focus on e-commerce.

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comparison to 9195 new patent cases before Chinese courts.17 In 2014, a total of 8220 patent infringement disputes were handled, with an even larger number of patent counterfeiting cases pursued in addition.18 With a new emphasis by central government to support administrative enforcement further, right owners may soon have further options to choose from in China, especially in clear-cut cases where stopping the infringement rather than obtaining financial compensation is a priority.

2. Special Case: Enforcement of Patents at Trade Fairs 13

Special rules for the protection of IP at trade fairs in China have been issued by Mofcom together with SIPO, the State Administration of Industry and Commerce (‘SAIC’) and the National Copyright Administration of China (‘NCAC’).19 These administrative regulations address also patent protection at bigger trade fairs which run for at least three days or longer. At these trade fairs, a temporary enforcement team consisting of local representatives of various agencies responsible for patent, trade mark and copyright enforcement is established. The enforcement procedure follows specific requirements during the trade fair further outlined in these regulations.

3. Customs 14

Upon registration of rights with the General Administration of China Customs (‘GACC’) or following a specific application, right holders according to the revised rules on IP protection20 by GACC can also take action to stop imports or exports and seize products that infringe their patent. In practice, until recently it was rather difficult using GACC for invention patent or utility patent infringement cases. Earlier statistics show that on the average only around 5 per cent of all customs cases concerned patents.21 Patent registrations with GACC, however, have strongly increased in the past years and according to statistics of GACC have even overtaken copyright registrations.22 It may therefore be expected that patent enforcement via this route may also increase in the near future.

4. Courts—Bifurcated Procedure 15

The Chinese court system features four different levels of People’s Courts for patent infringement procedures. At the lowest level, the Basic People’s Court will usually be authorised to hear trade mark and copyright and sometimes patent matters, but only in bigger cities such as Beijing and Shanghai. On the second level, the Intermediate

17 SIPO, Annual Report 2013 (English version) 31/32; SPC White Paper, ‘Intellectual Property Protection by Chinese Courts 2013’, I.(i), available at: www.court.gov.cn/zscq/bhcg/201404/t20140425_195314.html. 18 See www.chinaipr.gov.cn/casesarticle/cases/caseothers/201501/1852880_1.html. 19 Measures for the Protection of Intellectual Property Rights during Exhibitions, effective as of 1 March 2006. 20 Sections 2 and 3 of the Regulation of the People’s Republic of China on the Customs Protection of Intellectual Property Rights, as revised as of 24 March 2010, but see also s 24(3). 21 China Intellectual Property Statistical Yearbook 2011, 167, citing 5.4%. More recent public statistics on IP protection can be purchased from GACC. 22 GACC publishes Annual Reports and on its website www.customs.gov.cn offers statistics and reports, recently apparently however only against payment.

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Thomas Pattloch People’s Court will hear patent infringement cases in first instance, especially those involving foreigners.23 The High People’s Court will then hear cases on appeal. In closely described circumstances, parties may appeal to the Supreme People’s Court for admission of a ‘retrial’ (Civil Procedure Code (‘CPC’) s 198 et seq). In terms of numbers, there are currently about 80 Intermediate People’s Courts hearing patent infringement cases in first instance and about 10 or so Basic People’s Courts competent for first instance trials involving patents, mainly in Beijing and Shanghai, but also in other provinces such as Zhejiang. Invalidity must be claimed in separate administrative proceedings before the Patent Re-examination Board (‘PRB’) which is based in Beijing and is part of SIPO. An appeal to court previously was brought before the administrative court divisions of the Beijing No 1 Intermediate People’s Court, and in second instance before the administrative division of the Beijing Higher People’s Court. With the introduction of the new IP Court in Beijing, Shanghai and Guangzhou, the first instance of appeal against a decision by the PRB on patent validity is now heard exclusively by the IP Court in Beijing (SPC IP Court Provisions, s 5). The High People’s Court will still hear the appeal,24 and the SPC remains competent for a possible retrial. The court of appeal against a PRB decision will in particular examine whether the PRB has correctly affirmed the facts, that these are supported by evidence, whether laws and regulations were correctly applied and whether the first instance complied with the relevant procedural rules. The decision by the appeal court may uphold the judgment of the PRB, or may cancel the decision in whole or in part. The court can order the PRB to re-hear the case, or at its discretion may itself decide. The judges in invalidity proceedings at the PRB are technically trained patent specialists coming from SIPO. The procedure in front of the PRB is tried by three judges. While appeals are common, in practice it should be noted that a decision of the PRB is very difficult to overturn. Parties are well advised to spend considerable efforts already at this stage. The applicable law in proceedings before the PRB is the Patent Act and the Patent Examination Guidelines, with the rules of the CPC filling the gaps for procedural issues, for example in relation to evidence.25

IV. The Profession 20

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Lawyers in China can represent in patent matters without a special qualification for patent lawsuits. In practice, a smaller group of patent litigators has emerged. Attorneys-at-law need to pass the bar exam and need to be of Chinese nationality in order to be allowed to represent a client before a Chinese court. Lawyers in general have a relatively weak and much more passive role in the Chinese judicial system than compared to the US or other jurisdictions, and are dependent on

23 SPC Circular on Revising the Jurisdiction Thresholds for First Instance Civil Intellectual Property Cases at All Levels of Local People’s Court issued on 28 January 2010, in force since 1 February 2010. 24 SPC IP Court Provisions, s 7. 25 2010 Patent Examination Guidelines, pt IV, ch 8, s 1.

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a judge allowing them, for example, to conduct cross-examination of witnesses. Usually, judges will keep a tight leash on attorneys in the hearing, while at the same time following quite a rigid formal process of questions and answers put forward in order to guarantee impartiality and the possibility of each party being able to present its case. In infringement procedures, a maximum of two attorneys may represent a client. A power of attorney by foreign entities needs to be notarised and legalised. A change of attorney is possible, but can be very complicated and in principle will also require leave by the court. Of the total of about 200,000 lawyers or so registered in China today,26 only a small percentage is actually involved in patent litigation, making access and time for proper preparation of an action a difficult issue at times. Patent attorneys on the other hand are generally authorised to represent a client in front of the PRB and SIPO. Official representation in front of the PRB will usually be limited to two patent attorneys (which will not exclude active participation by further counsel in an oral hearing). On appeal, a Chinese attorney-at-law would have to be retained for representation; however, patent attorneys in practice can rely on section 58(3) of the revised CPC to represent a client in administrative proceedings if they are recommended by the All China Patent Attorneys Association. Where complex litigation takes place involving not only validity, but also infringement, prior art defences etc, an early involvement of legal advisors even at the stage of the PRB is still advisable. Different to attorneys-at-law, patent attorneys are required to pass an exam by SIPO which in the past has been very difficult. As a result, quality in patent matters is very high in China especially when compared to many other Asian countries.

B. Problems Related to the Enforcement of Patent Rights I. Types of Action 1. Civil Enforcement in Chinese Courts a. Jurisdiction 25

Disputes heard by Chinese courts are not limited to ‘normal’ infringement cases. According to section 1 of the SPC Interpretation Patent Trials, the competent court will hear a very broad range of patent-related disputes, including disputes over the right to apply for a patent, the ownership of a patent right, assignment or licence contract issues, service inventions, appeals against invalidity decisions of the PRB and requests for pre-trial measures, among others. The competence of the civil court for almost any type of dispute involving patents has been previously clarified by the Provisions on Causes of Civil Actions, issued by the SPC on 18 February 2011, which added further disputes over technical contracts, declaratory actions for non-infringement,

26 See State Council Information Office, ‘Judicial Reform in China October 2012’ Report, available at: http:// english.qstheory.cn/news/201210/t20121010_185361.htm.

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Thomas Pattloch damage compensation claims based on preliminary injunctions or customs enforcement measures, disputes caused by lawsuits filed in bad faith and return of licence fees after the patent has been invalidated, as well as disputes over patent pledge contracts, commissioned or cooperative development contracts, and agent contracts.

b. No Pre-Determination by Administrative Decision 26. Section 25 of the SPC Interpretation Patent Trials clearly states the independence of the court’s decision-making from any administrative decision: where the department responsible for the administration of patents has made a determination on whether or not a case concerning a dispute over a patent right accepted by the People’s Court amounts to an infringement, the People’s Court shall nevertheless carry out a full examination of the claims of the party concerned. c. Non-Infringement Declaratory Action 27

The Patent Act is silent on the admissibility of non-infringement declaratory actions. No 13 of the SPC Economic Situation Opinion and section 18 of the SPC Interpretation on Patent Infringement, however, explicitly provide for the possibility of initiating such action. Previous case law had already confirmed the possibility of such actions.27 As such, sending warning letters must be considered in advance with a view to the danger of allowing a declaratory action in the home jurisdiction of the alleged infringer.

2. Administrative Patent Litigation 28

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There are currently two main actions relevant for administrative patent litigation, namely litigation concerning re-examination decisions or invalidity decisions by the PRB and litigation concerning the administrative handling of patent infringement cases. According to section 41 of the Patent Act, a patent applicant who is dissatisfied with a rejection decision made by the Patent Office or the PRB within three months of the date of receipt of the respective notification of the rejection may file a request for reexamination/take legal action before the People’s court. According to section 46(2) of the Patent Act, a party who is dissatisfied with the PRB’s invalidation decision regarding the validity of the patent within three months of receipt of notification may take legal action before the People’s Court. The People’s Court must notify the other party to the invalidation procedure of its right to participate in the litigation as third party.

3. Customs 31

Section 44 of the Customs Act prescribes that IP rights including patents are also protected under the Customs Act. Section 91 of the Customs Act gives the power to

27 SPC, Notice Concerning Suzhou Longbao Bioengineering Industry Co v Suzhou Langli Healthcare Co Ltd; SPC, Honda Technology Industry Co Ltd v Shijiazhuan Shuanhuang Automobile Co Ltd (2012) Minsan Zhongzi No 1.

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customs authorities to confiscate infringing goods, impose a fine and press criminal charges where applicable. In the past, specifically the transfer of cases from customs to police has been very problematic, often due to very practical reasons such as payment of warehouse costs and the question of internal crediting of a specific case for each authority involved. Strong efforts are being made to address these deficiencies. GACC acts under the Regulations of the PRC for the Customs Protection of Intellectual Property Rights, in force since 1 April 2010. While in theory it is possible that Chinese customs authorities act and detain goods ex officio without prior registration of a particular IP right, in practice almost all cases will require a prior registration of the patent (including design patents) under a special register maintained by GACC. Registration can be effected in a relatively simple and straightforward procedure available online. Upon registration, right holders will be able to notify GACC and on the strength of their registration have infringing goods detained and seized nationwide at all ports of China for a period of 10 years. After expiry of such period, registration can be renewed. Different from many other countries, China extends IP enforcement also to the export of infringing goods. Chinese customs therefore provides stronger IP protection than the minimum requirements under the TRIPS Agreement. In practice, Chinese customs authorities primarily used to deal with simple patent infringement disputes mostly related to design patents. It should further be noted that different from clear-cut trade mark counterfeiting cases, customs authorities in patent cases usually will not make any administrative decision on infringement, but will ask the right holder to obtain a court judgment within 20 or 50 working days, depending on whether customs found the goods on their own and temporarily seized them with notification of the right holder (s 16), or seizure was initiated upon specific request by the right holder (Regulations of the PRC for the Customs Protection of Intellectual Property Rights, s 15). Seizure of goods will require posting a bond in local currency to cover any damages to the consignor or consignee as well as customs expenses. In patent cases, the shipper can post a counter bond in the amount of the value of the goods to have them released.28

4. Administrative Patent Enforcement 35

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Local patent bureaux can accept complaints of patent infringement by right holders and interested parties and issue an injunction upon determining an infringement, but unlike customs cannot act ex officio. Sections 79 and 81 of the Patent Act Implementing Rules allow larger IP Bureaux only (usually those authorised by the city level or higher) to take on cases, provided a case falls within their jurisdiction. This is the case if the alleged infringer has its domicile or seat within the region administered by the IP Bureau, or the act of infringement takes place there. The administrative department has the power to investigate and collect evidence, interrogate parties and witnesses, collect samples and take photos and videos.

Regulations of the PRC for the Customs Protection of Intellectual Property Rights, s 24(3).

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Thomas Pattloch Theoretically, also mediation can be requested, subject to agreement by the other party involved. As non-implementation of the mediation agreement would require another legal action in court,29 its scope of applicability is in practice limited. The current law does not allow administrative authorities to grant any damage compensation for an infringement. Administrative authorities such as the IP Bureaux also cannot judge the validity of the patent at issue and therefore will usually stay the procedure if a patent invalidity action is brought before the PRB. Regarding procedure for administrative enforcement, SIPO on 29 December 2010 issued the Measures for Administrative Enforcement of Patents, in force since 1 February 2011.30 The procedure under said measures follows the phases of submission of the complaint including evidence, inspection of the defendant’s premises and recording of facts in parallel to collecting a written defence statement and evidence by the defendant, oral hearing at the discretion of the administrative authority and finally decision on infringement. The procedure is very quick and according to the Measures must be finalised within four to five months. It should be noted that any action before the administrative authorities requires a clearly designated respondent; fishing expeditions are therefore not possible. An applicant cannot concurrently bring parallel proceedings to a People’s Court with regard to the same dispute. In a subsequent court action, the People’s Court shall carry out a thorough examination of the claims of the party concerned and is not bound by any previous administrative findings. A right holder has to submit evidence in relation to the relevant patent in force and owned by or licensed to him, as well as concerning the alleged infringement. Usually, also a sample of the genuine item should be provided to enable comparison with the alleged infringing item. In general, documentary evidence submitted will have to be notarised and legalised. Owners of utility models and design patents would also have to provide a full patent evaluation report.31 SIPO has issued new draft rules to strengthen administrative patent enforcement and bring it to the same level as trade mark enforcement. However, a lack of human resources at the local IP bureaux and the complexity of judging patent infringement matters make it somewhat more difficult for administrative enforcement to quickly reach the same level of efficiency as for trade mark enforcement. Statistics show on the other hand that, especially in the case of ‘patent counterfeiting’ as stipulated in section 63 of the Patent Act, recent efforts appear to be highly successful, with 2014 seeing more than 16,000 patent counterfeiting cases investigated.

Luo Dongchuan, Selected Chinese Patent Cases 2014, § 1.04 [2]. Currently under revision. 31 SIPO Measures for Administrative Enforcement of Patents, s 9; see the parallel regulation in SPC Interpretation Patent Trials, s 8. 30

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II. Competent Parties 43

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Patentees are always competent to initiate either administrative, civil or criminal actions,32 provided ownership is proven by submitting the original patent certificate, copy of the current patent register and the last original invoice for payment of annual fees. Patentees may act as defendant in cases concerning service inventions, licences etc. Concerning licensees, section 1 of the SPC Temporary Order Regulations states that the interested parties filing the request include the licensees of a licence contract for patent implementation and the legitimate heirs of patent property rights etc. Among the licensees, the licensee of an exclusive licensing agreement can file a separate request to the People’s Court; in case the patentee does not file a request, the exclusive licensee can file a request.

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In addition, case law has confirmed that a non-exclusive licensee may file suit with the explicit authorisation of the patentee.33 Indirect infringement under Chinese law basically means to provide the infringer with necessary means of infringement such as an apparatus, material or preliminary products. Indirect infringement was strongly debated during the revision of the Chinese Patent Act in 2009. At the end of the day, no provisions were introduced, as the problem of indirect patent infringement was seen as falling into the highly sensitive ‘grey’ area of interests between the patentee and the general public.34 Currently, the general civil provisions on joint liability in the General Principles of Civil Law and sections 8 and 9 of the Chinese Tort Act apply. According to sections 8 and 9 of the Tort Act, where two or more persons jointly commit a tort causing harm to another person, they shall be jointly and severally liable, and anyone who abets or assists another person in committing a tort shall be liable jointly and severally together with the tortfeasor. A number of judges and experts assume that only intentional acts of abetting or assisting lead to liability for joint infringements.35 More or less innocent suppliers of apparatus who had no clear intent to infringe—even though they had reason to know that the products may be used for infringing purposes—should therefore be exempted from liability.36 Different courts at different levels have decided in favour of indirect or joint infringement even where intention on the part of the defendants was not clearly proven, including a case where the assignor of an infringing utility model was held liable pursuant to previous interpretations by the Supreme People’s Court.37 The Beijing High People’s Court in the Beijing High Court Guidelines under No 105 to 110 has dedicated a full section to joint infringement. While these Beijing High Court

32 Criminal enforcement according to the Criminal Code, s 216 is limited to patent counterfeiting as defined in the Patent Act, s 63, further defined in the Patent Act Implementing Rules, s 84. For further details, see Luo Dongchuan, Selected Patent Cases in China 2014 (n 30)§ 1.04 [a]. 33 See also SIPO Measures for Administrative Enforcement of Patents, s 8. 34 See Li Jian in Luginbuehl/Ganea (eds), Patent Law in Greater China, citing SIPO under 16.27. 35 See IP Chamber of the Beijing No 1 Intermediate People’s Court (ed), ‘Qinfan Zhuanli Kangbian Liyou’ (‘Reasons for Defence Against Patent Infringement’) (2011) 215 et seq with reference to Patent Act, s 70. 36 See Li Jian in Luginbuehl/Ganea (eds), Patent Law in Greater China § 16.30. 37 Song Zhi’an v Wuxi Furnace Factory, cited by Li Jian, Patent Law in Greater China § 16.32.

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Thomas Pattloch Guidelines are only binding for the courts in Beijing (excluding the Supreme People’s Court), they show the state of discussion inside the judiciary. Further case law should be expected to clarify this issue. An application for an invalidation action at the PRB can be filed by any entity or person and is always subject to judicial review in two instances. In the administrative litigation at court level, the PRB is the defendant and the opposing party becomes a third party. This has caused much dispute among scholars and practitioners, as in essence an invalidity action will be raised owing to private party interests of the applicant.

III. The Competent Court 1. Jurisdiction 49

Section 5 of the SPC Interpretation Patent Trials states that an action must be filed before the competent court at the place where the infringement was committed or at the domicile of the defendant. The place where an infringement is committed includes the place where any of the following acts occur: the acts of manufacturing, using, offering for sale, selling or importing any product which is alleged to have infringed a patent right for an invention or utility model; the act of using a patented process, and the acts of using, offering for sale, selling or importing any product obtained as a direct result of using that process; the acts of manufacturing, offering for sale, selling, or importing any product containing a patented design; and the act of counterfeiting the patent of another person. The place where the result of any of the infringing acts described above occurs shall also be considered to be a place where an infringement is committed.

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The place of the result of tort is included in above definition. The SPC has clarified that it will not be sufficient to simply sue at the place where any damage to the patentee has occurred.38 In essence, patentees will usually have to sue the infringer at his domicile, or in case that evidence can be obtained, before the court with jurisdiction over the place of actual sale or demonstrated offer for sale. One important exception to section 5 is section 6 of the SPC Interpretation Patent Trials: where a plaintiff files a lawsuit only against the manufacturer of the infringing products and not against the seller, and the place where the infringing products are manufactured is not the same as the place where they are sold, the People’s Court at the place where the products are manufactured shall have jurisdiction over the lawsuit; where the manufacturer and the seller are sued as joint defendants, the People’s Court at the place where the products are sold shall have jurisdiction over the lawsuit. Where the seller is a branch of the manufacturer and the plaintiff files a lawsuit at the place where the infringing products are sold and sues the manufacturer for both manufacturing and selling the infringing products, the People’s Court at the place where the products are sold shall have jurisdiction over the lawsuit. In practice, this provision allows securing a different forum than the seat of the defendant by executing a notarised trap purchase.

SPC, Zhengzhou Runda, Chen Tingrong v Hubei Jieda et al (2013) Mintizi No 16.

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2. Competent Level and Court Division 53

Section 2 of the SPC Interpretation Patent Trials stipulates jurisdiction of the Intermediate People’s Court for patent disputes, including patent infringement. Some Basic People’s Courts can however be designated by the SPC to assume first instance jurisdiction. Already in 2009, the SPC decided that all administrative litigation against PRB decisions should be assigned to the IP division inside the Beijing court. With the issuance of the SPC IP Court Provisions, in force since 3 November 2014, specialised IP courts were established in Beijing, Shanghai and Guangzhou (the latter with full jurisdiction for the whole Guangdong province, while the first two only cover a smaller region) which have taken over first instance jurisdiction for patent disputes, including patent infringement cases and administrative litigation which was previously handled by the Beijing No 1 Intermediate People’s Court.

3. 3 in 1 System 54

Prior to the establishment of the IP courts in Beijing, Shanghai and Guangzhou, the Chinese judicial system introduced an instrument to consolidate all IP-related cases from multiple divisions of the civil, criminal and administrative division. Following the NIPS in 2008, it was recommended that all IP-related cases, including civil, criminal and administrative IP cases, should be heard before the IP division of the court only. By the end of 2013, the number of participating courts to this system dubbed ‘3 in 1’ included seven High People’s Courts, 79 Intermediate People’s Courts and 71 Basic People’s Courts.39 Outside the jurisdiction of the three IP Courts, this system still applies.

4. Expertise of Judges 55

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There are no jury trials or laymen judges used in China for IP-related cases. IP judges in the Chinese system today, especially those in IP chambers of the various courts or in the newly established IP Court, have a high level of proficiency and often also have a technical background. In addition, SIPO sometimes dispatches its experts to assist in tackling technical questions at the court. The Chinese system has assistant judges and fully qualified judges hearing a case. In the procedure and the hearing, three judges will usually be involved; however, even at the level of the SPC, owing to the high caseload there is a tendency to handle and try cases, including even retrial hearings by one single judge (which as of now is not the rule). The role of the judges is divided into the chairman guiding the procedure and giving directions during the trial, a reporting judge (usually the key judge preparing the case and decision) and a co-chairing judge. During the preparation of the trial, the court clerk will further be an important counterpart, handling issues such as communication and preparation of the hearing.

SPC, White Paper, ‘Intellectual Property Protection by Chinese Courts in 2013’ (n 17).

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Thomas Pattloch Judges in practice are not fully independent.40 The court has the authority to remove a specific judge from a case or to hear the case by a larger group of judges inside the court, namely the judicial committee of the respective court.41

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Mediation may be requested both in front of administrative authorities and in court. Section 60 of the Patent Act provides that where a patent dispute arises, a party may request mediation for the question of the amount of damages. If the mediation fails, the parties may institute legal proceedings in the People’s Court. Mediation is often actively encouraged by courts and administrative authorities. A mediation settlement will usually include payments or other remedies agreed on between the parties. It should be noted that especially in disputes regarding the reward and remuneration for service inventions or in disputes concerning patent application rights/granted patent rights, the expertise of SIPO staff may be extremely useful to settle a case. However, a mediation agreement made through the administrative department is not directly enforceable. The party which breaches such agreement needs then to be sued by the other party in another lawsuit. Court-brokered mediation agreements usually will be pushed by the judge acting as a strong moderator and sometimes even driver of a mediation agreement. A mediation agreement can be agreed on at any stage of the procedure. Such agreement will be witnessed and stamped by the court42 and can thus be enforced like a judgment, while a mediation agreement concluded outside court will only be a contract between the parties.

6. Arbitration of Patent Matters 62

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Under the Chinese Arbitration Act, it is possible to agree on arbitration in patent matters. This is certainly true for any disputes concerning patent ownership or licensing contracts. Once agreed, recourse to Chinese courts is no longer possible if the other party objects. However, it is currently unclear whether a decision by an arbitration tribunal can be made in regard of the validity of a patent in China (even if only inter partes). In practice, the relevance of this question may be somewhat limited. Usually only contractual parties who are ready to have an ongoing relationship such as under a patent licence agreement will look at his option, meaning that in most cases an interest in keeping the patent alive will prevent the tribunal from looking at this question; however, as discussions about standards and patents continue, further developments may still require Chinese authorities to answer this question.

But see Chinese Constitution, art 26. See the People’s Court Organisation Act, s 11 which provides the legal basis for the so-called adjudication committees ‘to bring together adjudication experience, discuss serious or difficult cases as well as other problems that arise in adjudication work’. 42 CPC, s 98. 41

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IV. Preparation for Trial 64

China does not provide any discovery system; the parties must provide all relevant proof by themselves. Only in limited circumstances will courts support and investigate facts of their own.

1. Evidence Preservation Orders 65

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Based on section 67 of the Patent Act and section 101 of the CPC, when evidence is likely to be destroyed and hard to be obtained, a pre-trial preservation order for evidence can be requested before a competent court. According to the SPC Evidence Rules, the deadline to apply for an order is the seventh day before the evidence submission deadline set by the judge.43 Once an application has been successfully accepted and lodged (which requires that all necessary documents and evidence as required have been provided to the court), the court must decide within 48 hours and immediately implement its decision. Within 15 days after the measure has been executed, the applicant himself must initiate a lawsuit to prevent that the order is lifted (Patent Act, s 67). The procedure is further regulated in sections 23 and 24 of the SPC Evidence Rules. Applicants are required to post a bond which can be ordered by the judge to be (sometimes substantially) increased upon application by the defendant. Orders will usually only be granted if the applicant can make it credible that evidence will be lost or will be difficult to obtain in the future and that the petitioner is not able to collect such evidence. Obtaining such order after a lawsuit has been filed is easier and the likelihood of success much higher than an attempt to file prior to submitting the main suit. Section 105 of the CPC stipulates that where an application is wrongfully filed, the applicant must compensate for any loss incurred from the preservation. Section 81 of the CPC further stipulates that under the circumstances in which evidence is lost or will be difficult to collect in the future, the party concerned may apply to a competent People’s Court for preservation of such evidence in the juridical proceedings, and the People’s Court may also take the initiative to take preservative measures. With regard to other procedures for the preservation of evidence, the relevant provisions outlined above apply. In terms of statistics, very few evidence preservation orders have been successful in the past.44 However, courts are encouraged to use this measure more often in the future.45

43 SPC Evidence Rules, s 23; such deadline is set by the judge after the writ has been served on the defendant which will usually be some weeks, sometimes months after filing. 44 SPC, White Paper, ‘Intellectual Property Protection by Chinese Courts in 2013’ (n 17): ‘[in 2013] The courts have accepted 11 cases involving application for preliminary injunction relating to intellectual property disputes; 77.78% were granted approvals. 173 applications for pre-trial preservation of evidence were accepted, and 97.63% were granted approval, which have reduced the burden of proof on the parties concerned. 47 applications for pretrial preservation of property were accepted, and 96.97% approved’. 45 See SPC, Functional Role Opinion, Nos 15 and 17.

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2. Evidence Collection by the Court 69

70

Following an application, section 64(2) of the CPC, and sections 3(2) and 17 of the SPC Evidence Rules also allows the collection of evidence by a court.46 This is so where evidence that the party requests is stored in archive files maintained by a State organ and can only be accessed with and by the court, the material concerns State secrets, commercial secrets or private data, or any other materials that on objective grounds cannot be collected by the applying party. The deadline for such application is seven days before the deadline for evidence submission. In case of a successful application, a party refusing to submit evidence will be faced with a reversal of the burden of proof and the claim of the plaintiff will be regarded as established.

3. Evidence and Translation 71 72

Evidence coming from abroad requires notarisation and legalisation. In general, original evidence must be presented at the latest at the oral hearing. Chinese translations of any foreign document must be submitted within the same time limit as for filing evidence.47 It is not mandatory to translate the entire evidence, but only the decisive parts.

4. Pre-Trial/Interim Injunctions 73

74

Section 66 of the Patent Act specifically grants the possibility to a patentee of requesting measures to provisionally stop infringing acts.48 The court in China is able to grant an ex parte injunction, but usually will try to hear the other side before taking a decision. In practice, only a very low number of about 20–40 pre-trial interim injunctions are obtained per year. Section 14 of the SPC Economic Situation Opinion restricts the scope and availability of pre-trial injunctions and basically excludes them for any case which concerns equivalent infringement.

a. Procedure 75

76

46 47 48 49 50

Upon filing an application for a preliminary injunction, the court must make a ruling within 48 hours only if all necessary documents have been submitted and all criteria are satisfied.49 Courts tend to rely on formal issues in order to prolong such deadline and gain more time for a decision.50 If issued, an injunction will be immediately enforced and can be appealed by the defendant, but without suspensive effect. Section 4 of the SPC Temporary Order Regulations provides that patent owners must provide proof of the authenticity and validity of their right, which includes the patent certificate, patent claims, description, register copy and proof of annual payment, as SPC, Astellas Pharma Inc v List Pharmaceutical et al (2013) Minshenzi No 261. CPC, s 70(2); Patent Examination Guidelines, pt IV, ch 8, s 2.2.1 [1]. See also CPC, s 100 concerning the advance enforcement orders. See for details SPC Temporary Order Regulations, ss 3 and 4. ibid, s 9.

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well as a search report/patent evaluation report for utility models and design patents. Licensees must provide proof of standing. Proof that the alleged infringer is infringing or about to infringe the patent right, together with a sample of the accused infringing product and material to compare the technical characteristics of the accused infringing product with the patented product is also required. Security (in cash in Chinese Yuan, Chinese bank guarantee letter, mortgage etc) must be provided in advance and may be increased.51 b. Legal Requirements 77

The court according to section 11 of the SPC Temporary Order Regulations will consider whether the patent infringement is indeed occurring or about to occur, whether the patent owner will suffer irreparable harm that monetary compensation would be difficult to remedy, whether an appropriate security has been provided for by the applicant and finally whether the public interest would be harmed if an injunction was issued.52 It is interesting to note that urgency or undue delay of taking action is not a specific requirement under this set of rules. If an interim injunction is granted, the successful party must file suit in the court within 15 days to avoid withdrawal of the injunction by the court (Patent Act, s 66(4); SPC Temporary Order Regulations, s 12).

c. No Suspension 78

A preliminary injunction remains in force until a final decision is rendered, or until the date specified by the court in the injunction; an appeal can be lodged with the issuing court who will hear the matter within days, but in the interim will not suspend execution. A granted injunction can be lifted during trial in case the court no longer sees the requirements as fulfilled. If the preliminary injunction was wrongly granted, the patentee will have to pay damages.

5. Asset Freezing/Property Preservation Order 79

Section 100 et seq of the CPC also allows a party to request the freezing of assets of the defendant (usually bank accounts) before the competent court. A key requirement is whether the legitimate rights and interests of the petitioner would otherwise be seriously compromised (CPC, s 101(1)). Such order will also be available if a party obstructs the enforcement of a judgment. Section 16 of the SPC Temporary Order Rules applies.

6. Warning Letters 80

51 52

Parties should carefully consider whether to send a warning letter in patent infringement matters. According to section 18 of the SPC Interpretation Patent Infringement, where a right holder sends a warning of patent infringement to another person, the person warned may demand that the patentee raises an action. If thereupon the

ibid, ss 6 and 7. ibid, s 11.

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Thomas Pattloch right holder neither withdraws the warning nor files a lawsuit within one month, the addressee of the letter may raise a suit to ascertain non-infringement. In practice, it may be possible not to allege a patent infringement outright, but rather to send a general inquiry; however, the wording and circumstances of each case need to be carefully considered.

V. The Trial 1. Principles 81

82

83

84

85

The trial in front of Chinese courts follows a rather rigid and formal set of steps where the actors such as the attorneys on both sides find themselves in a much more limited role than in the US procedure or even some jurisdictions under Continental law. Good preparation in advance is the key to success. Chinese procedures in spite of the high caseload are very fast,53 and deadlines for notifications of hearings are short.54 This can put severe pressure on the parties in case additional or new evidence and arguments are introduced. Judges in the Chinese procedure take a very strong role in guiding the parties and defining the points of discussion during trial. Trials rarely last longer than three to five hours or in extreme cases one or two days. Since there is no system such as a jury trial or discovery of evidence, preparation of the hearing is very crucial in order to be able to answer questions quickly and in a concise manner and to take part in discussions put forward by the judge. Judges in China tend to have a very high workload and usually do not have much time to prepare for the trial. In civil litigation, judges rarely invite technical experts on their own motion. SIPO reportedly has dispatched technical experts to certain courts in China to support the work of patent judges in determining technical questions in infringement cases. Lawyers have to follow the rigid procedure and will usually try to deliver short and not extensively argued written statements. In addition to the statement of claim, a rejoinder can be delivered to the court at the end of the trial or after the trial. Owing to usually rather short pleading time during trial, it is crucial for the representative to properly explain the technical points of the case. It is often underestimated that judges in China ask very precise questions and may refuse to hear arguments that are not regarded as relevant.

2. Procedure 86

The case starts with the plaintiff filing a writ (foreigners having to use a registered attorney) with the competent court and paying a fee which usually is very low compared to other countries and rarely exceeds a couple of thousand Euros even in big

53 CPC, s 149 with a deadline of 6 months for domestic cases; foreign-related cases are not subject to this deadline. 54 3 days; see CPC, s 136.

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cases. Within five days, the court will serve the complaint on the defendant who then, depending on whether it is a domestic or foreign defendant has 15 or 30 days to reply and file a defence which is then served on the other party within another five days.55 The judge in charge of the case will then determine one or more deadlines by which time all evidence relevant for the case will have to be presented.56 It is becoming increasingly common that a plaintiff in its initial writ gives only a rough outline of its evidence and waits until the time limit set by the court to present details in order to leave the defendant in the dark as to what evidence will be presented. In some rare instances, the court does not set a specific deadline for providing evidence which has the effect that evidence submitted at a later stage may not be precluded as late-filed. Evidence exchange may then be followed by a pre-trial hearing followed by the trial itself. At the trial, the parties will be able to put forward their claims orally and statements under the guidance of usually three judges. All three judges at the panel may put questions to the parties. Attorneys may also be allowed to direct questions at expert witnesses, if allowed by the court.

a. Evidence 89

90

China follows the principle that whoever asserts a fact favourable to its case must prove it (CPC, s 64). The Chinese judiciary focuses heavily on documentary evidence and witnesses are very rarely regarded as convincing, which is also stated in the SPC Evidence Rules.57 Party witnesses rarely have a positive impact on a case. Evidence needs to be original.58 If original evidence is not available, copies can be submitted, albeit with a much lower evidentiary value.59 Evidence submitted beyond the deadline may still be admitted if reasons for the delay can be given (see CPC, s 65). All evidence at the hearing will be examined as to relevance, truthfulness and authenticity. Chinese judges tend to have very high standards and are quite demanding in terms of conclusive evidence and an unbroken chain of evidence. In addition, evidence which is not notarised (in case it originates from inside China) or notarised and legalised (in case it originates from outside China) will rarely be accepted as a basis for the decision. This makes it necessary to prepare intensively for trial and conduct intensive and costly investigations with the help of notaries in order to secure admissible evidence.

b. New Evidence 91

55 56 57 58 59

In first instance, new evidence beyond the time limit for producing evidence is admitted when owing to objective reasons it could not be presented earlier. Section 139 of the CPC stipulates that the parties may present new evidence during the court hearing. With the permission of the court, the parties may cross-examine witnesses,

ibid, ch 3, s 136 et seq. See SPC Evidence Rules, s 33. ibid, s 77. CPC, s 70 CPC; SPC Evidence Rules, ss 10, 20–22, 49, 65. SPC Evidence Rules, s 65.

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Thomas Pattloch expert witnesses and inspectors. The SPC has further clarified that evidence shall not be precluded where the focal point of the discussion has shifted and further evidence becomes necessary.60

c. Expert Witnesses 92

Expert witnesses are only used in about 10–20 per cent of the cases. There is a tendency amongst Chinese judges both at court and the PRB to decide cases based on their own expertise. Party expert testimony (also by foreign nationals) can be useful if a specific technical question is explained objectively and in detail.

d. Expert Opinion 93

94

In accordance with section 76 of the CPC, a court-appointed expert will be selected by a judicial appraisal centre which usually has a list of selected institutes inside China. Experts will issue a written report; the scope and contents of the questions to be answered by the expert are determined by the court with the parties having little control thereof. Cross-examination of the expert in court is sometimes possible, but is always very limited with a focus on specific questions admitted by the judge. After the hearing, the attorneys will be provided with transcripts of the procedure which need to be supplemented or signed. After the trial is concluded, it will usually take a couple of weeks (and sometimes months) until a written decision is issued. Written decisions always follow the same style and will mention the cause of action, the claims and the facts and reasons on which the judgment is based. At the end of the judgment, the decision is summarised with the order and the distribution of costs. Usually, the order is quite short and not very detailed. It is possible that judges amongst themselves may disagree about the outcome of the case, but there are no dissenting opinions.

3. Appeal/Retrial 95

96 97

60

Following receipt of the written decision by the first instance court, an appeal can be filed within 15 days of receipt of the first judgment. An appeal must be filed at the first instance court which will submit the appeal brief to the next higher level court (CPC, ss 165–167). The Higher People’s Court will hear the case again in full (CPC, s 168). The procedure is identical to the first instance and the judgment of appeal is final. However, it should be noted that under the Chinese system, an application for retrial may be filed within six months from the second instance judgment to the Supreme People’s Court. The retrial reasons are outlined in section 200 of the CPC. Important reasons are, among others, new evidence which may be sufficient to overrule the original judgment or which may show that the facts were forged; failure to take into account main evidence; an error in the application of law; or a violation of legal procedures.

SPC, Astellas Pharma Inc v List Pharmaceutical et al (n 47).

Patent Enforcement in China 98

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While retrials were very rare in the past with only about 40 cases or so accepted each year, the Supreme People’s Court has made strong efforts to improve its control over lower level courts and provide guidance to the judicial system. The number of retrials has meanwhile increased quite significantly to several hundred a year and SPC decisions are rendered more frequently than in the past.61 Against any decision of the SPC, in theory it is possible to further appeal to the Supreme People’s Procuratorate which is the ultimate authority in the judicial system to address serious concerns (CPC, s 208). It should be clearly noted that intervention by the Supreme People’s Procuratorate is extremely rare.

4. Procedure before the PRB 100

101

102

103

104

105

The Chinese patent system provides no opposition comparable to the European Patent Convention. Prior to grant, it is only possible to provide third-party opinions to examiners. However, SIPO is not obliged to take these opinions into account or provide an answer after an opinion has been submitted. The main tool to attack the validity of a patent therefore is the patent invalidation procedure (Patent Act, s 45). The procedure before the PRB is governed by the Patent Examination Guidelines and CPC. Upon filing a request with the PRB, which in the case of foreigners has to be effected through a registered Chinese patent attorney, the reasons for invalidation cited form the basis of the subsequent procedure. Applicants have to deal with relatively short time limits. Supplementary evidence, for example, has to be filed within one month from the initial request. The patentee can, but does not have to reply to such request. During the review of the request for invalidation, the patentee may make claim amendments that do not extend the scope of protection of the granted patent. Usually, the PRB will determine validity only based on the grounds and evidence raised in the request, while the applicant is entitled to abandon grounds and evidence raised. Under certain circumstances, the PRB can ex officio conduct a review, eg if the patent has an obvious defect that makes it unpatentable, and such defect has not been raised by the petitioner. As in court, all evidence will be examined as to its relevance, truthfulness and authenticity, a test which especially requires compliance with the formal requirements such as notarisation and legalisation. During the oral hearing, the parties can make final submissions and the patentee may renounce or narrow some claims of the patent. After closure of the debate, the parties will sign a protocol, and a decision will follow some weeks later. Procedures before the PRB are usually fast-paced and are concluded within a year. Owing to the burden of having to provide original notarised and legalised evidence, timely preparation is quintessential.

61 SPC, White Paper, ‘Intellectual Property Enforcement by Chinese Courts 2013’ (n 17) mentions 365 accepted retrials in 2013, I.(i).

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5. Stay of Infringement Proceedings 106

107

108

109

Stay of an infringement procedure may be granted depending on the type of patent involved. For actions based on designs or utility models, a defendant must within 15 days (domestic defendants) or 30 days (foreign defendants) from the request to stay infringement proceedings file a request with the PRB that the plaintiff ’s patent right shall be declared invalid. The lawsuit may be continued where there are no reasons that lead to the invalidity of a utility model or design patent right according to the search report or the patent evaluation report submitted by the plaintiff; or where the evidence provided by the defendant is sufficient to prove that the allegedly infringing technology is already in the public domain; or where the evidence provided or the grounds relied on by the defendant to support invalidity are obviously insufficient; or where there are any other circumstances which allow the People’s Court a finding that the lawsuit shall be continued. Late filing usually will lead to a continuance of the infringement action, with possible exceptions. If the patent right has been upheld following an examination carried out by the PRB, and the invalidity defence is raised in time, the People’s Court may nevertheless continue with the case. Section 12 of the SPC Interpretation Patent Trials further stipulates that where the People’s Court decides to stay the infringement action, and the patentee or any interested party requests that the defendant be ordered to cease the relevant conduct or to take other measures that prevent the loss caused by the infringement from increasing, and provides a sufficient guarantee conforming to the relevant legal provisions, the People’s Court may order such measures in addition to an order to stay proceedings.

VI. Types of Infringement 110

Under Chinese patent law, full protection for an invention, utility model or design patent is only available as of its grant (Patent Act, s 11). However, for invention patents as of the date of publication, damage compensation can be obtained from infringers (Patent Act, s 13).

1. Determination of Infringement—Important Principles 111

Courts in China will rely on a structured comparison of the claims of the patent with the technical features of the allegedly infringing device.

a. All-element Doctrine 112

The scope of protection of a patent is determined by the claims, supported by the specification and abstract;62 the protection for a patent right shall be subject to the scope based on all the technical characteristics featuring in the claims (all-element doctrine

62 Patent Act, s 56(1); SPC Interpretation Patent Trials, s 17; for its interpretation in practice, see Andrew Inc v PRB and Wu Huiyin, Beijing High Court Xingzhongzi (2008) No 682.

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applies),63 and shall also include equivalents to such technical characteristics.64 Section 7(1) of the SPC Interpretation Patent Infringement expressly stipulates that all technical features described in the claims must be examined irrespective of whether they are necessary to achieve the inventive aim. Where the right holder alters the claims before the end of court debate in first instance, the People’s Court shall permit such alteration.65 For a technical assessment, it is irrelevant whether technical features appear in the preamble or the characterising portion of the claim. b. Doctrine of Equivalents 113

The term ‘equivalent characteristics’ refers to the characteristics that, through methods basically identical to the technical characteristics as recorded in the claims, realise basically identical functions and achieve basically identical effects, and that at the time the infringement claim is raised can be conceived by an ordinary technician in the same domain without any creative effort.66 The scope of protection of the patent right is neither constrained by the literal meaning of the claims, nor expanded to contents that require creative efforts for those of ordinary skill in the art after reading the description and drawings before the patent application date.67 The relevant point in time for judging equivalence is the time when infringement occurs.68

c. Public Domain 114

Claim interpretation is strict and requires attention when drafting an application in order to avoid a negative impact for the scope of protection. For instance, examples of embodiments which are cited in the specification but are not specifically claimed are regarded as abandoned.69 In revocation procedures, it is not possible to include in the claims an embodiment mentioned in the specification but not previously claimed.

d. File History Estoppel 115

63

Limiting statements made during examination will allow the defendant to raise the estoppel of file history, meaning that what the patentee has abandoned during the grant or invalidation procedure cannot be claimed as an equivalent in infringement proceedings. It is irrelevant whether any amendment or statement has been made at the right owner’s own initiative or at the request of the patent examiner, provided

Beijing High Court Guidelines No 8. SPC Interpretation Patent Trials, s 17. 65 ibid, s 1; in invalidity proceedings at the PRB, claims can also be altered to the extent they are challenged, subject to the quite rigid rules under Chinese patent law regarding the claim structure and dependent claims; see also SPC, Seiko Epson v PRB (2010) ZhixingZi No 53-1. 66 SPC Interpretation Patent Trials, s 17(2); Shanghai High Court, Schütz Werke GmbH & Co KG v Shanghai Packaging Container Co Ltd (2004) Minsan Zhi Zhongzi No 90. 67 Beijing High Court Guidelines No 7; a good example of finding for equivalent infringement in Beijing High Court, Beijng Yingtelai Morgan Thermal Ceramics Textile Co Ltd v Beijing Deyuan Kuaijie Windows and Doors Factory (2009) Minzhongzi No 4721. 68 Beijing High Court Guidelines No 52. 69 SPC Interpretation Patent Infringement, s 5; Beijing High Court Guidelines No 56 regarding claims for equivalent infringement. 64

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Thomas Pattloch there is causality between the amendment and the scope of protection as granted. If, however, the PRB invalidates an independent claim and upholds the validity of a subordinate claim, such amendment is no longer regarded as made voluntarily by the patent owner and therefore not subject to the file history estoppel.70 The court may under certain circumstances even verify by itself the file history and is thereupon reject an infringement claim.71 However, while methods of interpreting claims during grant and infringement procedures are essentially identical, they may in special circumstances differ, and arguments of the patent applicant in the file can only serve as a reference for understanding the description and claims, but are not authoritative.72

2. Claim Interpretation a. Patent Acting as its Own Dictionary 116

As in other jurisdictions, the patent is its own dictionary when it comes to the terminology of technical features used.73 Where technical terms in the description are different from their common meaning, interpretation in the description shall prevail, and in case of inconsistency between claims and description, the claims shall prevail.74

b. POSA 117

Claims are interpreted from the perspective of the person of ordinary skill in the art, a hypothetical ‘person’ who is aware of all common technical knowledge75 of the art prior to the application date, can learn all existing technologies of the art and is capable of using common laboratory means prior to the application date.76

c. Functional Features 118

The meaning of functional technical features in the claims is determined with reference to the preferred embodiments in the description and drawings, as well as equivalent embodiments.77

d. Embodiments 119

70

The scope of protection of the patent right is only limited by the description of the preferred embodiments disclosed in the description where substantially the claims are the technical solutions recorded in the embodiments, and where the claims include any functional technical features.78

SPC, Zhongyu Co v Jiuying Co Ltd (2012) Min Ti No 306. Beijing High Court Guidelines No 60. SPC, Seiko Epson v PRB (n 66). 73 SPC Interpretation Patent Infringement, s 3. 74 Beijing High Court Guidelines No 24, 25. 75 Chinese courts will usually construe common knowledge as covering only general knowledge that is documented in textbooks, technical dictionaries or technical manuals. By contrast, a broader understanding would extend the scope of common knowledge also to content disclosed by patent documentation, technical journals and in academic theses. 76 Beijing High Court Guidelines No 10. 77 ibid No 16. 78 ibid No 27. 71 72

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e. Comparison of Technical Features 120

If the technical features of the allegedly infringing technical solution lack one or more technical features mentioned in the claims, or have one or more technical features not identical or equivalent to those in the claims, the technical solution is deemed not to fall within the scope of protection of the patent right.79

f. Additional Technical Features 121

Additional technical features of an allegedly infringing solution will usually not be considered as a bar to infringement80 unless in the case of composition patents characterised by claims with a determined number of features (closed claims). If the allegedly infringing solution also contains elements which are not contained in the patent claim, and such additional features are not without substantial effect on the invention, infringement may be denied.81 Improvement patents with additional technical features are dependent patents and fall into the scope of protection of the earlier base patent.82

g. Process Patents 122

In the famous OBE v Zhejiang Kanghua case,83 the SPC decided that in infringement cases concerning method patents, the limiting effect of a specific sequence of steps should be considered in totality from the perspective of a POSA to determine whether the various steps should follow a specific sequence in order to reach the purpose of the step in accordance with the patent specification of the patented method;84 this is further specified in No 18 of the Beijing High Court Guidelines.85

h. Reverse Burden of Proof 123

79

Protection will extend to products directly obtained from a patented process (Patent Act, s 11). For globally ‘new’ products, the burden of proof may shift to the defendant.86 The SPC has further decided that if identical products are produced and the right holder in spite of reasonable efforts is unable to furnish proof on the process used by the defendant, the burden of proof may shift to the defendant particularly where the defendant rejects disclosure of the process he actually uses.

ibid No 31. ibid No 37. SPC, Xinyu v Monkey King Co Ltd (2013) Minshen Zi No 1201; Beijing High Court Guidelines No 38. 82 Beijing High Court Guidelines No 40. 83 SPC, OBE-Werk Ohnmacht und Baumgärtner GmbH & Co KG v Zhejiang Kanghua Glasses Co Ltd (2008) Min Shen No 980. 84 See also the more recent decision SPC, Lesheros v Chen Shundi et al Mintizi No 225. 85 ‘Where claims of a process patent clearly define the order of steps, the order of steps themselves and the order between steps shall define the scope of protection of the patent right. The absence of clearly definition of the order of steps in the claims of a process patent shall not become the ground not to consider the definitive effect of the order of step of the claims’. 86 Patent Act, s 61; Beijing High Court Guidelines No 102. 80 81

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3. Infringement 124

125

The manufacture of products is deemed an infringing activity, as is entrusting others to manufacture the products, or to indicate or claim ‘supervision’ over the products/ production or their assembly.87 Use of the patented product as component or intermediate products is regarded as an infringement:88 the original product acquired by using a patented method is regarded as infringing use under section 11 of the Patent Act. The act of acquiring a product from an original product that has been further processed or treated will also be determined as a use of a product acquired directly by the patented method as provided in section 11 of the Patent Act.89

VII. Remedies 126

127

Remedies under Chinese law follow sections 11890 and 13491 of the General Principles of Civil Law. In practice, however, these claims are restricted to a typical set of remedies which mainly include cessation of infringement, damage compensation, and in rare cases destruction of moulds etc which are exclusively or predominantly used for the manufacture of infringing items. It is usually not possible to obtain a public apology. Claims against the defendant for information on the scope and extent of infringement do not exist in China. To some limited extent, information may be provided by a trader who is accused of a patent infringement and invokes section 70 of the Patent Act to escape liability for damage compensation.

1. Injunction 128

87

Injunctive relief is generally granted in patent infringement cases. Following an intense and ongoing debate on the abuse of patents and the limitation of injunctive relief, the SPC Opinion Economic Role issued in 2009 raised in its No 15 the concept of acquiescence in case the right holder has waited for too long to pursue the infringement, and where an injunction would result in a significant imbalance

Beijing High Court Guidelines No 89. Jiangsu High People’s Court Shenzhen, Jieshun Science and Technology Industrial Co Ltd v Zhejiang Dongyang City Guangke Construction Intelligent Engineering Co Ltd (2010) Zhiming Zhongzi No 0125; Beijing High Court Guidelines No 92. 89 SPC Interpretation Patent Infringement, s 13. 90 ‘For infringement of a patent … there is right to demand that the infringement be stopped, its ill effects be eliminated and the damages be compensated for’. 91 ‘The main methods of bearing civil liability shall be: (1) cessation of infringements; (2) removal of obstacles; (3) elimination of dangers; (4) return of property; (5) restoration of original condition; (6) repair, reworking or replacement; (7) compensation for losses; (8) payment of breach of contract damages; (9) elimination of ill effects and rehabilitation of reputation; and (10) extension of apology. The above methods of bearing civil liability may be applied exclusively or concurrently. When hearing civil cases, a People’s Court, in addition to applying the above stipulations, may serve admonitions, order the offender to sign a pledge of repentance, and confiscate the property used in carrying out illegal activities and the illegal income obtained therefrom. It may also impose fines or detentions as stipulated by law’. 88

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between the interests of the parties. In addition, case law such as the famous SPC decision China Environmental Project Technology Corporation v Fujikasui Engineering Co Ltd, Huayang Electric Power Co Ltd92 denied injunctive relief on the basis of a significant social impact in the area of energy supply. The court instead ordered payment of an annual licensing fee. It remains to be seen whether further restrictions of an automatic injunction may be introduced, for example, such as in the case of patent enforcement and standards subject to FRAND declarations.

2. Compensation a. Damages 129

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132

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Section 65 of the Patent Act provides for a fixed order on how to calculate damage compensation. First, a patentee’s lost profits due to the infringement, second, the infringer’s gains from an infringement, third, a reasonable royalty, and only in case all of these three methods are difficult to implement, statutory damages. However, in practice, the plaintiff will be free to choose from the start one of the methods and try to prove damages in court. Even claims for statutory damages raise a discussion about the extent of infringement and the damages caused thereby. The courts do not allow the patentee to switch freely between different methods of damage calculation, though a court will usually grant leave to switch from one of the first three methods to a claim for statutory damages. The court can finally take recourse to a previous agreement between the right holder and infringer.93 The SPC Interpretation Patent Trials provides guidance on how damages are to be assessed. Plaintiffs have to prove the true amount of damages suffered or the infringer’s gains. The actual loss may be calculated by using the total number of the patentee’s patented products of which the sales volume is reduced due to the infringement, multiplied by a reasonable amount of profit for each patented product. Where the total number of the patentee’s unsold patented products is difficult to determine, the product of the total number of infringing products sold on the market multiplied by a reasonable amount of profit for each patented product may be deemed as the actual loss suffered by the patentee as a result of the infringement. The profit obtained by the infringer may be calculated by using the total number of infringing products sold on the market multiplied by a reasonable amount of profit for each infringing product. Generally, the profit obtained by the infringer as a result of the infringement shall be calculated based on the operating profits of the infringer. For an infringer who totally depends on patent infringements for a living, profits may be calculated based on the sales profits.94 Benefits are limited to those acquired by an infringer from the patent infringement and benefits arising from other rights or sales shall be reasonably deducted. Where a product which infringes an invention or utility model patent is a part or component

92 SPC, China Environmental Project Technology Corporation v Fujikasui Engineering Co Ltd Huayang Electric Power Co Ltd rendered on 21 December 2009 (2008) Minsan Zhongzi No 8. 93 SPC, Lerado v Tongba (2013) Mintizi No 116. 94 SPC Interpretation Patent Trials, s 20.

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134 135

136

137

138

Thomas Pattloch of another product, the court will reasonably determine the amount of compensation according to the value of the part or component, its role in the realisation of profits from the finished product, and other factors.95 Usually only a court inspection order of the defendant’s books will lead to a successful determination of damages based on this method. Where the loss suffered by a patentee or the profit obtained by an infringer is difficult to be determined, and a royalty can be used as a reference, the People’s Court may reasonably determine the amount of compensation as times the value of the royalty according to the type of the patent right concerned, the nature and circumstances of the infringing act, the nature, scope and period of validity of the patent licence, and other factors; where no royalty exists as a reference, or the royalty is clearly unreasonable, the People’s Court may determine the amount of compensation according to the type of the patent right concerned, the nature and circumstances of the infringing act, and other factors (Patent Act, s 65(2)).96 Proving the applicable and reasonable royalty rate usually requires that the plaintiff has already licensed its patents in China and can prove such royalty rate by producing a licence agreement and by arguing that this licence fee would also apply to the defendant. It is also possible to rely on evidence of industry standards, where available. The major obstacle is that for this method to apply, reference must be made to comparable licensing fees, which includes a consideration of normal licensing rates and the way in which infringement actually occurred, differences between timing and scale, but also the idea that infringement damages should be higher than normal licensee fees; see SPC Opinion Economic Role No 16. Recent case law in China indicates that a reasonable royalty amount in cases of a patent infringement which relates to a standard must be significantly lower than the normal one-off licence. Discussions on the abuse of standards by patentees, patent stacking and patent filing in relation to standards strongly impact the willingness of Chinese authorities and courts to grant royalty rates which are payable under a given standard.97

b. Statutory Damages 139

95

If it is difficult to determine the losses of the patentee, the profits of the infringer or an appropriate royalty rate, damages may be awarded as statutory damages between 10,000 and 1 million Chinese Yuan, depending on the type of patent right, the nature and seriousness of the infringing act and other circumstances the court may deem relevant (Patent Act, s 65(2)).

SPC Interpretation Patent Infringement, s 16. SPC Interpretation Patent Trials, s 21. 97 Supreme People’s Court Letter to Liaoning Higher People’s Court on whether it constitutes patent infringement that Chaoyang Xingnuo Corporation exploits a patent in a standard in using design and construction according to ‘Ram-Compaction Piles with Composite Bearing Base’, an industrial standard issued by Ministry of Construction (8 July 2008), Min San No 3 Ta Zi No 4. 96

Patent Enforcement in China 140

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So far, in an estimated 95 per cent of all patent infringement cases only statutory damages were claimed. Courts are usually cautious and will typically grant between 30 per cent and 50 per cent of the statutory damages claimed, unless there is evidence that the loss is significantly more than the maximum statutory damage, which according to section 16 of the SPC Opinion Economic Role Opinions would allow the court to award higher damages.

c. Reimbursement of Reasonable Expenses 141

Reimbursement of expenses can include costs for investigation to the extent proven by invoices, and deemed reasonable by the court to pursue the infringement. Further, costs such as reasonable attorney fees, warehouse fees, notarisation costs etc can be included. The court will make a separate decision about cost reimbursement in the order of the decision.98 In practice, only about 30 per cent to 40 per cent of the actual costs incurred will be awarded.

d. Compensation for Use prior to Grant 142

Only in case of invention patents can the patentee claim compensation for the use of the invention between publication and grant, a claim that can be made only once the patent has been granted.

3. Destruction of Moulds and Equipment 143

This claim only applies to equipment which is exclusively or mainly used for the production of infringing items and in practice is very hard to obtain from Chinese courts. Judges are highly cautious and often unwilling to destroy assets which may have an economic value for other purposes than infringement. While in principle there is a claim by the patentee for an order to eliminate all negative effects of the infringement, the SPC has basically restricted this claim to items that can solely be used to make infringing products (see SPC Opinion Economic Role, s 15).

4. Apologies/Publication of Decision 144

98

While in the past, a public apology for an infringement was available, nowadays this is rarely the case. Different from copyright law, patent infringement does not affect the reputation of the inventor.99 In some cases, however, a publication of a decision is granted by the court.

SPC Interpretation Patent Trials, s 22. Exemplary case Beijing No 1 Intermediate People’s Court, Motorola (USA) Inc v Fu Lianhua, Beijing Zhongtian Shenzhou Communication Market Ltd (2007) Minchuzi No 417. 99

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VIII. Defences 1. Exhaustion of Rights 145

While there is no explicit mention of exhaustion in the Patent Act, the international exhaustion doctrine100 appears to follow from section 69(1) of the Patent Act. The Beijing High Court Guidelines further stipulate this principle for judicial practice.101

2. Prior Use 146

147

148

149 150

Section 69(2) of the Patent Act states that having made an identical product or having used an identical process or having made necessary preparations for making such a product or using such a process prior to the date of application, gives a right to continue using the product or process within the original scope. The prior use defence is only available to the manufacturer, not the seller. Section 15 of the SPC Interpretation Patent Infringement clarifies that necessary preparations can be assumed if the defendant has completed the main technical drawings or process documents necessary for implementing an invention creation; or has manufactured and purchased the main equipment or raw materials necessary for implementing an invention. The term ‘original scope’ means the existing scale of manufacture or the manufacture and scale which could be reached based on the existing preparations for manufacture before the date of application. The restriction relates only to the manufacturer and does not impose any restriction on the way that the defendant sells the product.102 Passing on the prior user right requires that the technology or design is assigned or transferred together with the original enterprise.103 The prior user defence does not apply where the defendant has violated a nondisclosure agreement or did not obtain the prior use in good faith. It is further required to show effective implementation, such as evidence of drawings or credible preparations to buy equipment or preparations for approval of a drug. Courts usually will put high hurdles and restrict the prior use to the original scope as deemed credible by the court.

3. Goods in Transit 151

Goods in transit are exempt from infringement by section 69(3) of the Patent Act. Temporary transit does not include the transport of the patented products.104

4. Scientific Research 152

100 101 102 103 104

Section 69(4) of the Patent Act stipulates an exemption from infringement by use of a patent exclusively for scientific research and experiment. The research and For design patents: Ju Aijun v Gubeichun Co, reported by P Ganea in Patent Law in Greater China § 16.08. See Beijing High Court Guidelines No 119. Qiu v Shenzhen City Investment Co Ltd [2010] No 158. Beijing High Court Guidelines No 121 D. ibid No 122.

Patent Enforcement in China

153 154

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experimentation exemption distinguishes between research on a patented invention (exempted) and research with it (infringement). If the use of a patented technology is not for the purpose of improving the patented technology (‘to generate new technological achievements based on the existing patented technology’) and the result is not related to the patented technology, the exemption does not apply. Using patented technical solutions in the scientific research and experimentation as a research tool related to a different technology constitutes a patent infringement. Exempted use of the patent includes manufacture, use, import of patented products by the researcher himself, as well as manufacture and import of the patented products by others on behalf of the researcher.105

5. Bolar Provisions 155

156

Section 69(5) of the Patent Act provides that it is not an infringement if any person makes, uses or imports a patented drug or a patented medical apparatus for the purpose of providing information needed for administrative approval.106 The information required for administrative examination and approval refers to the relevant materials such as experimental data, research reports and scientific literature stipulated in provisions of the Drug Administration Act of the People’s Republic of China, Implementing Regulations of the Drug Administration Act of the People’s Republic of China, Administrative Measures for Drug Registration and related laws, regulations and departmental regulations for drug administration.107

6. Prior Art Defence 157

158 159

160

105

Section 62 of the Patent Act provides for the so-called prior art defence which can be raised in an infringement procedure.108 SPC Opinion Functional Role No 14 states that the prior art defence is applicable in the determination of both equivalent and literal infringement. This is different from the German ‘Formstein’ defence that is only available against the allegation of equivalent infringement (for details, see chapter four). Defendants must show that the allegedly infringing device can be found in one piece of prior art alone, or combined with common technical knowledge.109 The prior art defence imposes no burden of proof on the defendant to show how and when the defendant used the technology at issue, nor does it impose any restriction on the use of that technology. The prior art defence is often raised in infringement procedures in China, mostly without success. If confirmed by the court, it will not have the legal effect of confirming invalidity of the plaintiff ’s patent, but rather confirm that the allegedly infringing solution is part of the prior art.

ibid No 123. Beijing Intermediate People’s Court, Sankyo (Japan) Co Ltd and Shanghai Sankyo Pharmaceutical Co Ltd v Beijing Wansheng Pharmaceutical Co Ltd (2006) Minchuzi No 4134. 107 Beijing High Court Guidelines No 124. 108 Beijing High Court, Kohler Co v Shanghai Bravat Sanitary Equipment Co Ltd (2009) Minzhonzi No 1553. 109 Beijing High Court Guidelines No 125. 106

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7. Seller as Innocent Infringer 161

Section 70 of the Patent Act provides that whoever uses or sells a patented product without knowing that the product was produced and sold without the permission of the patentee, or a product directly obtained from a patented process for the purpose of production and business operation is not liable for compensation provided that he can prove that the product has been obtained from a legal source.

8. Limitation 162

Claims for patent infringement are subject to a two-year limitation period (Patent Act, s 68), counted from the date on which the right holder knew or should have known about the infringement. The defence of limitation must be raised by the defendant. If the infringement is ongoing, the limitation will apply to compensation claims going back beyond the two-year period, with compensation to be paid only for the last two years following the filing of the suit.

IX. ‘Wrongful Enforcement’ 1. Abuse of Patent Right 163

164

165

110

The concept of abuse of IP rights is currently very popular in Chinese academic circles and parts of the general public. However, Chinese courts have been reluctant to affirm abuse, with the burden of proof on the party who alleges it; even if a patent is declared invalid, ‘abuse of patent shall not be found for easily’.110 Still, in one case involving the deliberate filing for a utility model by an expert in the field of a standard technology, the enforcement of this right was held to be a misuse of a patent right and resulted in liability of the patentee.111 The basis of such defence is that the allegation that the patentee has obtained the patent through malicious behaviour and abuses the patent to institute an infringement action. The term ‘obtain a patent though malicious behaviour’ refers to the behaviour of obtaining a patent through circumventing the law or improper means, when knowing the invention should not receive patent protection, for the purpose of getting improper benefits or obstruction of another’s legitimate business. The following circumstances can be determined as malicious: (1) applying for and obtaining a patent for national standards, industry standards and other technical standards that already exist prior to the date of application; (2) applying for and obtaining a patent for a product which he or she knows is widely manufactured or used in a region.112

ibid No 113. Nanjing Intermediate People’s Court, Yuan Lizhong v Yangzhong City Tongfa Pneumatic Valve Actuators Factory, Yangzhong City Tongfa Industrial Co Ltd (2003) Minsan Chuzi No 188. 112 Beijing High Court Guidelines No 114. 111

Patent Enforcement in China

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2. Invalid Patent 166

167

Patents which are declared invalid are deemed never to have existed (ex tunc).113 Previous decisions on infringement that have been complied with or have been executed are, however, not retroactively affected, including licensing contracts. In such instances, only damages caused by the patentee who acted in bad faith are subject to a compensation claim under section 47 of the Patent Act. Where the restitution of patent infringement compensation or royalties for the exploitation of the patent is obviously contrary to the principle of fairness, a total or partial refund can be ordered (Patent Act, s 47(3)).

X. Costs 168

169

113

Costs for court fees, attorneys and enforcement of right are reimbursable by the opponent under sections 118 and 134 of the General Principles of Civil Law to the extent they are deemed reasonable by the court. In practice, only about one-third of the real costs will be awarded by the court. Costs of legal procedure in China are still relatively low compared to common law jurisdictions, but should not be underestimated and may reach the level of jurisdictions such as Germany. Preparation of evidence and statements of claim, in particular, usually require considerable time and resources.

Patent Act, s 47(1).

12 Patent Enforcement in Taiwan MING-YAN SHIEH AND SU-HUA LEE

A. Brief Outline of the System of Civil Procedure I. Introduction 1

In recent years, intellectual property (IP) protection has become increasingly important for economic development and become a yardstick of a country’s competitiveness. IP rights (IPRs) not only bring business opportunities and economic prosperity, but also endless disputes that have caused a surge in litigation costs and trade barriers. Taiwan is no exception to this global trend. This chapter presents not only the legal system of patent laws, but also an empirical study on some critical issues of patent enforcement in Taiwan’s judicial practice. The most important issue that can be identified for the enforcement of patent rights in Taiwan is the estoppel of invalidity, which since 2007 has given the IP Court the power to hold a patent invalid inter partes. This had led to a significantly lower rate of successful infringement suits, an issue that is also addressed and criticised in this contribution.

II. Development of the Patent Act 2

Taiwan’s Patent Act1 was enacted in 1944 and came into effect on 1 January 1949. With the goal of promoting industrial development, the Patent Act ‘encourage[s], protect[s] and utilise[s] the creation of inventions, utility models and designs’.2 Under the Patent Act, the protection period for invention patents is 20 years while that of utility model patents is 10 years, and the design patent’s protection period is 12 years.3 It should be noted that from July 2004 onwards, utility model patents are subject only to a formality

1 The English version of Taiwan’s Patent Act and its regulations can be downloaded from the website of the Intellectual Property Office at: www.tipo.gov.tw/lp.asp?CtNode=6817&CtUnit=3316&BaseDSD=7&mp=2. 2 Patent Act, s 1 provides: ‘This Patent Act is enacted to encourage, protect and utilise the creations of invention, utility model and design in order to promote industrial development’. 3 Under the Patent Act (amended 2013), ss 21 to 103 are provisions governing the protection and utilisation of invention patents. Provisions for utility model patents are ss 104 to 120, and those for design patents are ss 121 to 142.

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examination (Patent Act, s 111(1)).4 By contrast, patentability conditions and requirements for protection of invention patents and design patents come under close scrutiny by the Taiwanese Intellectual Property Office (‘TIPO’) through substantive examination. 3 Over the past seven decades, the Patent Act has been amended 13 times, with an average life cycle of 5.4 years for each amendment. The Patent Act was frequently amended not only because of the rapid development in technology, global economic growth and social changes, but also owing to the judiciary’s failure to further the development of IP law by clarifying the existing provisions and pointing out the direction of IP laws in Taiwan.5 The activism of the TIPO also contributes to the frequent amendments to the Patent Act. 4 A major revision of the Patent Act was the amendment of 3 January 2003, when Taiwan acceded to the WTO and aligned its patent system with the TRIPS requirements. The 2003 Amendment removed criminal sanctions for patent infringement. As a result, from 1 July 2004 onwards, patent infringement has been an issue of civil dispute where patent holders are entitled to civil remedies only. 5 Claiming priority in foreign jurisdictions used to be challenging for patent applicants from Taiwan because Taiwan was not a member to any international IP organisation, such as the World Intellectual Property Organization (‘WIPO’), or a party to any international IP agreement, such the Paris Convention, the Patent Cooperation Treaty (the ‘PCT’), or the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure. However, this changed after Taiwan became a member of the WTO in 2001 and acceded to the TRIPS Agreement in 2003. Nowadays, Taiwan’s inventors and creators may claim priority in WTO member countries.

III. Patent Prosecution Procedure 6

Requirements for patent applications under the Patent Act of Taiwan are no different from those of other countries, including patentable subject matter (inventions) (s 21) and subject matter excluded from patent protection (s 24). Also, patentable subject matter should meet the requirements of industrial application, novelty (s 22(1)) and inventive step (s 22(2)). Furthermore, the description of inventions should sufficiently disclose contents of the invention so as to enable persons skilled in the art to practice such invention (s 26(2)).6

4 Patent Act, s 111(1) provides: ‘Upon completion of the formality examination of a patent application for a utility model, a written decision shall be rendered and served on the applicant’. 5 In Taiwan, there is a so-called ‘precedent’ system, which allows the Supreme Courts (including the Supreme Administrative Court) to select from among their previous decisions and make those selected decisions ‘precedents’ that are legally binding on all courts until the Supreme Courts opines otherwise. To date, there is no precedent under the Patent Act, which to some extent means that the Supreme Courts have failed to solve legal disputes authoritatively and conclusively. 6 Ming-Yan Shieh and Su-Hua Lee, ‘Patent Enforcement in Taiwan’ in Kung-Chung Liu and Reto Hilty (eds), The Enforcement of Patents (Berlin, Springer Verlag, 2012) 180–82.

Patent Enforcement in Taiwan 351 7

The TIPO’s decisions to grant or reject patent applications are administrative acts (Administrative Procedure Act, s 92(2)), and those dissatisfied with such decisions could resort to administrative remedy proceedings. In other words, patent applicants can file for a re-examination of the TIPO’s decision (Patent Act, s 48). If applicants are still dissatisfied with the reviewed decision and believe that their rights or interests are not adequately protected, they can then appeal to the Board of Appeal of the Ministry of Economic Affairs (‘MOEA’) (Administrative Appeal Act, s 1(1)). Moreover, if appellants (that is, patent applicants) are still dissatisfied with the appeal decision, under section 4(1) of the Administrative Litigation Act they may appeal to the IP Court which has jurisdiction over administrative matters (IP Court Organisation Act, s 3(3)). Those dissatisfied with decisions made by the IP Court may appeal to the Supreme Administrative Court (Administrative Litigation Act, s 238(1)).

IV. The Profession 8

In addition to a good knowledge of patents and the relevant laws, patent litigation procedure and adjudication involves the understanding and interpretation of technical information. However, like the Federal Republic of Germany (‘Germany’), in which traditional legal education consists of a university law degree program, Taiwan has not fully adopted a US-style law school system, where law students possess different backgrounds by way of an undergraduate degree before receiving legal education. Thus, the majority of lawyers, judges and prosecutors in Taiwan have no science background and neither have they received adequate technical or other professional training. Therefore, full support provided by technical experts is indispensable for issues over validity and enforcement of patent rights.

V. Lawyers and Patent Attorneys 9

10

Professional representation of parties in proceedings before the courts, no matter if the civil courts or administrative courts, is limited to lawyers admitted to the Taiwan bars. In practice, only a small number of lawyers regularly deal with patent cases. Apart from lawyers, patent attorneys also play an import role in the field of patent law. The promulgation of the Patent Attorneys Act in 2007 established the profession of patent attorneys in Taiwan.7 Prior to the enactment of the Patent Attorneys Act, patent agents played a significant role in handling most patent applications. When the Patent Act was undergoing a revision in 1994, it was decided that there should be specific legislation on the role of patent attorneys. In November 1998, the Executive Yuan8

7 Patent Attorney Act, s 1 provides: ‘This Act is enacted for protecting the rights and interests of patent applicants, strengthening the management of patent professional services, and establishing the system of patent attorneys’. 8 The Executive Yuan is the executive branch of the Taiwanese Government, and its legal status is similar to the Cabinet.

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Ming-Yan Shieh and Su-Hua Lee submitted a draft bill of the Patent Attorney Act to the Legislative Yuan9 for legislative review. Only on 14 June 2007, did the Legislative Yuan finally pass the Patent Attorneys Act, which specifies that patent agents must successfully pass the Patent Attorney Examination10 and obtain a Patent Attorney Certificate to practise as a patent attorney (Patent Attorney Act, s 3).11 This Act and related regulations also provide provisions regarding patent attorney disciplinary penalties, professional training for patent attorneys and patent attorney certification fees. The promulgation of the Patent Attorneys Act raises the standard of professionals handling patent applications and safeguards the rights of the parties involved in patent matters filed before administrative agencies. The practice of patent attorneys in Taiwan is different from that of patent attorneys in Germany and the United States. Section 9 of the Patent Attorneys Act specifies that the practice of patent attorneys in Taiwan includes the following: (1) patent filing; (2) patent opposition and invalidation; (3) register of assignment, trust, pledge, licence and compulsory licensing of a patent right; and (4) other patent professional services as prescribed in accordance with the relevant laws and regulations. Accordingly, the practice of patent attorneys in Taiwan is apparently limited to handling patent matters filed before administrative agencies. Litigating patent disputes in the courts, such as the IP Court or the Supreme Administrative Court, is not within the scope of a patent attorney’s licence. However, a patent attorney in Taiwan may represent his client in patent litigation if the court permits such representation.12 Thus, the practice of Taiwan’s patent attorneys differs from that of German and US patent attorneys in the degree of participation in patent-related court proceedings. The legislature should consider amending the Patent Attorneys Act to encourage cooperation and teamwork between lawyers and patent attorneys in patent lawsuits. Resolving patent validity disputes requires technical expertise. Similarly, the determination of whether an allegedly infringing product or method falls within the scope of a patent claim demands specialist knowledge. Lawyers representing clients in patent litigation generally face challenges in thoroughly presenting all technical issues and/ or precisely answering all questions concerning technical issues. Thus, it is important that lawyers and patent attorneys work together to represent clients in patent litigation in order to thoroughly present and argue both legal disputes and technical issues. Right now, the number of patent attorneys stands at about 250.

11

12

9

The Legislative Yuan is the parliament of Taiwan. Patent Attorney Act, s 35(1) specifies that before the implementation of the Act, those with certain qualifications and certification may apply for an exemption from all subjects of patent attorney examination. According to this provision, patent agents who have their certification before the Patent Attorney Act is implemented may exchange the certification for patent attorney qualification. 11 Patent Attorney Act, s 3 states: ‘A citizen of the Republic of China, who has successfully passed the Patent Attorney Examination and obtained a Patent Attorneys licence in accordance with this Act, may practice as a patent attorney. A non-citizen may take the Patent Attorney Examination in accordance with the laws of the Republic of China; a non-citizen who successfully passes the Patent Attorney Examination and obtains a Patent Attorneys licence in accordance with this Act may practice as a patent attorney’. 12 Generally speaking, the law does not require mandatory representation by a lawyer during trial except in limited circumstances (eg appeal to the Supreme Court, death penalty cases, etc). Apart from that, a person who is not a lawyer may be retained to represent a party during trial with permission of the presiding judge. Therefore, it is possible that a patent attorney may represent his client in a patent lawsuit if the presiding judge at trial agrees. In practice, the IP Court generally allows patent attorneys to represent their clients at trials. 10

Patent Enforcement in Taiwan 353

B. Problems Related to the Enforcement of Patent Rights I. Types of Action 1. By the Patentee a. Ordinary Infringement Action 13

14

Taiwan’s legal framework was modelled after German law, in particular the bifurcation (or double-track, ‘Trennungsprinzip’) system of administrative (validity) and civil (infringement) proceedings. Accordingly, disputes of patent prosecution and validity are administrative matters governed by administrative proceedings. On the other hand, disputes involving patent infringement are adjudicated in the ordinary courts in accordance with tort law principles. Similar to the legal system of many countries, the judicial hierarchy in Taiwan, in principle, adopts a three-level and three-instance system, under which a case generally will be reviewed by the district court, the high court and finally the Supreme Court. Various district courts have first instance jurisdiction over patent infringements. However, since the Intellectual Property Court (‘IP Court’) began operating on 1 July 2008, most infringement actions with regard to patent rights are now adjudicated by the IP Court. Following the bifurcation system, a patent infringement is regarded as a tort pursuant to section 184 of the Civil Code and handled by the ordinary courts. General laws, including the Code of Civil Procedure (‘CCP’), Enforcement Act of the Code of Civil Procedure and Civil Execution Act, are also relevant to a patent infringement action unless provided otherwise in the Patent Act.

b. Border Protection Measures for Patents 15

The 2014 Amendment to the Patent Act extends current border protection measures to cover patent infringing goods. According to Article 51 of TRIPS, WTO members may take necessary border measures against infringing products. Unlike the European Union and the US, which have implemented comprehensive border control measures combating IPR infringement for years (for details, see chapter twenty of this book), Taiwan had no border measures against the importation of products infringing IP rights until 2004. However, border measures adopted in 2004 were limited to products infringing trade mark, copyright and plate rights.13 To strengthen patent protection, the Legislative Yuan amended the Patent Act in 2014 and introduced four provisions (ss 97(1) to 97(4)) to the Patent Act governing border measures against patent infringing products.14

13 eg a plate maker who arranges and prints a literary or artistic work that has no economic rights or for which the economic rights have extinguished, or who photocopies, prints or uses a similar method of reproduction and first publishes such reproduction based on such original artistic work, and duly records it in accordance with the Copyright Act, shall have the exclusive right to photocopy, print or use similar methods of reproduction based on the plate 10 years from the time the plate is completed (see Copyright Act, s 79). 14 TIPO, ‘Legislative Yuan Passes Patent Act Amendment Concerning Border Protection Measures for Patents’ (available at: www.tipo.gov.tw/ct.asp?xItem=504561&ctNode=6687&mp=2).

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Ming-Yan Shieh and Su-Hua Lee The 2014 Amendment introduced a so-called ‘request to detain’ mechanism allowing a patent holder to request customs upon furnishing a security deposit, to detain importing goods suspected of infringing patent rights. The owner of the detained articles, on the other hand, may furnish a security deposit or an equivalent assurance, to request release (s 97(1)). Once a suspected article is detained, customs shall order its release in case of any of the following: (1) if within 12 days following the date of customs’ acceptance of the request, customs has not been notified by the applicant (patent holder) that a civil infringement litigation regarding the detained articles has been initiated in accordance with section 96 of the Patent Act; (2) a litigation initiated by the applicant (patent holder) has been dismissed by a final and binding court decision; (3) a court has finally and bindingly held that the detained articles do not infringe the patent right; (4) the applicant (patent holder) has requested the release; or (5) the owner of the detained articles requests release upon furnishing a security deposit. As a result of a release, the patent holder shall be liable for relevant costs, including detention, warehousing, loading and unloading (s 97(2)). If a court rules finally and bindingly that the detained articles do not infringe the patent right, the applicant (patent holder) shall be liable for the loss incurred from such detention by the owner of the detained article, or from providing the security deposit or an equivalent assurance (s 97(3)).15

2. By the Defendant a. Opposition against a Granted Patent 17

Prior to 2003, there was an opposition procedure against a granted patent. The opposition procedure was abolished by the Patent Act Amendment in 2003.

b. Invalidation Procedure 18

After the patent grant, any third party who believes that an invention should not have been patented, may request revocation of the patent with the TIPO (Patent Act, s 71(1)). Neither the ordinary courts, nor the IP Court can invalidate a patent by way of a declaratory judgment in patent infringement cases.16 The administrative proceedings regarding issues over patent validity are adversarial in nature and the TIPO is always a party to the proceedings. If the TIPO decides that the patent should be revoked, while the patentee is dissatisfied with the TIPO’s decision, the patentee may appeal to the Board of Appeal of the MOEA, the IP Court and the Supreme Administrative Court. On the other hand, if the TIPO believes a revocation is unnecessary and the patent right is valid, the party requesting the revocation may equally have recourse to the aforementioned administrative proceedings.17

15 For details about the request of detention, repeal of detention, examination of detained articles, procedures involving payment, provision, and return of security or assurance, provision of required documents and other requirements, see Regulations Governing Customs Detaining Goods Suspected of Patent Infringement. 16 In Germany, any third party, believing that a patent should not be granted, is entitled to file a request for a declaration of invalidity before the German Federal Patent Court (‘Bundespatentgericht’). The invalidation proceedings before the Federal Patent Court differ from the opposition proceedings before the German Patent and Trade Mark Office (‘Deutsches Patent- und Markenamt’). 17 Ming-Yan Shieh and Su-Hua Lee, ‘Patent Enforcement in Taiwan’ (n 6) 182–83.

Patent Enforcement in Taiwan 355 19

20

21

22

The proceedings are adversarial in nature. However, the TIPO is always a party, even in revocation proceedings. For those who wish to invalidate a patent granted by the TIPO, only the above-mentioned revocation process can be used.18 However, as will be further explained below, the defendant in an infringement action is entitled to raise the estoppel of invalidity as a defence to patent infringement. Thereby, the IP Court cannot outright invalidate a granted patent, but can consider it as invalid between the parties. In this respect, statistics show that in patent infringement litigation, the IP Court tends to invalidate patents on the ground of lack of inventive step. In order to ascertain whether the civil courts and the administrative authorities apply different standards of review (and, if so, which), the authors conducted a case study on this issue. Court decisions that we have reviewed in our empirical study as well as the patent revocation statistics published by the TIPO reveal that the IP Court undertakes a strict scrutiny in determining the validity of a patent (see below for the statistics of the IP Court). According to the statistics periodically published by the TIPO, from 2003 to 2013 the revocation rate of patents varied between 32 per cent and 55 per cent. From 2009 to 2013, a period closely identical to our study period, the TIPO upheld the validity of more than 50 per cent of patents facing a revocation challenge (see Table 1).19 As a result, the foregoing statistics suggest that, in determining whether a patent claim meets the requirement of novelty, inventive step, or other requirements, the scrutiny standard held by the IP Court is more stringent than that held by the TIPO, a dedicated authority enjoying administrative discretion in determining the validity of patent.

c. Determination of Scope/Action for Ascertaining Non-Infringement? 23

Following the bifurcation system, only the civil court is entitled to determine the scope of a patent right in an infringement action. However, any third party who ascertains

Table 1: Revocation/Affirmation Rates of Patent Validity of the TIPO Year

Revocation Rates

Affirmation Rates

2007

45%

55%

2008

45%

55%

2009

54%

46%

2010

54%

46%

2011

50%

50%

2012

52%

48%

2013

55%

45%

18 Although the IP Adjudication Act, s 16(2) allows the accused infringer in some circumstances to raise the invalidity defence and a civil court to render its opinion on validity, its opinion binds only the parties in suit, while the administrative patent revocation process can invalidate a patent altogether. The system is thereby similar to those in Japan and Korea; see chs 13 and 14. 19 IPO, ‘Statistic in 2013’ (in Chinese), available at: www.tipo.gov.tw/public/Attachment/44101155799.pdf.

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Ming-Yan Shieh and Su-Hua Lee non-infringement may seek a declaratory judgment action for non-infringement. According to section 247(1) of the CCP,20 a party seeking declaratory relief must prove that the facts alleged, under all the circumstances, show that there is a substantial controversy between the parties that is of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. A defendant or any person potentially facing the assertion of patent infringement could fulfil these statutory requirements.21 It is worth noting that it is impossible to seek the declaratory relief of patent invalidity before the ordinary courts due to the bifurcation system.

II. Competent Parties 1. Plaintiff 25

26

According to section 96(1), (2) and (3) of the Patent Act, a patentee is entitled to request further prevention of infringement and destruction of the infringing articles, apart from damages. In the case that a patent is co-owned by more than one party, the Patent Act does not stipulate whether any one of the co-owners is able to individually resort to civil remedies against a third party. However, an affirmative answer could be inferred from section 821 of the Civil Code,22 which specifies that co-ownership will allow any one of the patent co-owners to file civil remedies against a third party for the common interest of all the co-owners. Apart from the patentee, an exclusive licensee may, within the licensed scope, assert civil remedies against the infringer according to section 96(4) of the Patent Act. However, it is interesting to note that section 62(1) stipulates that the licensee shall have no locus standi against any third party unless the licensing agreement is registered by the TIPO. There have been rare court cases involving this provision. Scholars have not commented much on this topic, either. A recent case from the Supreme Court23 brought the attention of scholars and legal practitioners to this provision. This is, whether without the registration of the licensing agreement the exclusive licensee can claim damages against the infringer. This issue has also been raised in Question No 9 of Civil Litigation in an IP Law seminar of the Judicial Yuan held on 22 June 2009. Pursuant to the conclusion of this discussion as well as the authors’ opinion, the exclusive licensee shall be allowed to sue the patent infringer for damages although the licence has not been registered with the TIPO.

20 According to CCP, s 247(1) ‘an action for a declaratory judgment confirming a legal relation may not be initiated unless the plaintiff has an immediate legal interest in demanding such judgment. The same rule shall apply to an action for a declaratory judgment confirming the authenticity of a certificate or the existence or nonexistence of the facts from which a legal relation arises’. 21 See IP Court Civil Decision 2008 Ming-Zhuan-Su-Tze No 15 (4 November 2008); IP Court Civil Decision 2008 Ming-Zhuan-Su-Tze No 55 (24 February 2009); and IP Court Civil Decision 2010 Ming-Zhuan-Su-Tze No 166 (24 May 2011). 22 Civil Code, s 821: Each co-owner may exercise the right of ownership against the third party for the whole property held in division. However, a claim for restoration of the said property may only be made for the common interests of all the co-owners. 23 Supreme Court, decision of 26 July 2007, 2007 Tai-Shan-Tze No 1658.

Patent Enforcement in Taiwan 357

2. Defendant 27

As will be explained below, Taiwanese patent law does not recognise indirect infringement as a type of infringing act. For this reason, the patentee is limited to actions against direct infringers.

III. Courts and Jurisdiction 1. Domestic Jurisdiction 28

29

In 1992, the Judicial Yuan24 issued an order urging all courts in Taiwan to establish a special division within each court to handle IP lawsuits with regard to patent infringement matters. In July 1998, the Taipei District Court assigned one of its divisions to exclusively deal with IP cases. However, the running of the designated IP division within the Taipei District Court failed the expectations of the IP professionals because its operation was undermined by the ineffective procedural rules generally applicable to ordinary courts. There was a strong call for establishing effective adjudication proceedings and a special court designated to deal with IP lawsuits, particularly patent lawsuits. In 2007, the Legislative Yuan passed the Intellectual Property Court Organisation Act and the Intellectual Property Case Adjudication Act (‘IP Adjudication Act’), which are leges speciales on criminal, civil and administrative litigation. The IP Court began its operation on 1 July 2008 after the Judicial Yuan promulgated the Intellectual Property Case Adjudication Rules earlier that year.25 Figure 1 presents the organisational structure of the IP Court.26 Unlike the IP High Court in Japan, which is a special branch within the Tokyo High Court, the IP Court in Taiwan is a special court separate from other courts and has characteristics similar to that of the US Court of Appeals for the Federal Circuit (‘CAFC’), the German Federal Patent Court, and the Central IP & International Trade Court (‘IP & IT Court’) of Thailand. The IP Court in Taiwan has broad jurisdiction over patent, trade mark, copyright, trade secret, integrated circuit, plant variety right cases and cases governed by competition law. Different from the IP High Court in Japan, which serves exclusively as court of second instance to hear appeals,27 the IP Court in Taiwan has jurisdiction over civil trials (first instance), civil appeals (second instance), criminal appeals, and administrative trials of IP lawsuits. Due to this broad jurisdiction, the 15 judges sitting on the bench of the IP Court have a heavy workload. The following Figure 2 presents an overview of the jurisdiction of the IP Court in Taiwan.

24 The Judicial Yuan is the highest supervisory authority in charge of the judiciary, and exercises the power to interpret the Constitution and the judicial administration power. 25 For the initial observation on the decisions made by the IP Court since its operation, see Ming-Yan Shieh and Su-Hua Lee (n 6). 26 Ming-Yan Shieh and Su-Hua Lee (n 6) 191–94. 27 In contrast, the Tokyo District Court (29th, 40th, 46th and 47th Divisions) and the Osaka District Court (21st and 26th Divisions) have since 2004 had IP-specialised divisions that have exclusive jurisdiction over cases on patents matters in the first instance. Judgments made by the Tokyo District Court and the Osaka District Court may be appealed to the IP High Court. For more details on the specialised courts in Japan, see M Suzuki and Y Tamura, ‘Patent Enforcement in Japan’ in Kung-Chung Liu and Hilty (eds), The Enforcement of Patents (n 6) 138, and ch 13 of this book.

358

Ming-Yan Shieh and Su-Hua Lee First Division Court Trial Dept

Second Division Court

Law Clerk Recording Section

Third Division Court

Technical Examination Officer

Fourth Division Court

Judicial Associate Officer

Chief Clerk Office

Documentation Section

President

Personnel Office Administrative Dept

Civil Service Ethics Joint Office Accounting Office Statistics Office

Operational oversight Administrative oversight

Information Management Office

Research and Evaluation Section General Affairs Section Litigation Counseling Section Court Police

Figure 1: Organisational Structure of the IP Court28

Supreme Court (third instance)

Supreme Administrative Court (second instance)

High Courts (second instance)

IP Court (second instance)

IP Court (second instance)

IP Court (first instance)

District Courts (first instance)

IP Court (first instance)

District Courts (first instance)

Board of Appeal of the Administrative Authorities Administrative appeal TIPO and other Administrative Authorities

Civil Action

Criminal Action

Administrative Action

Figure 2: IP Litigation Procedure in Taiwan

28 http://ipc.judicial.gov.tw/ipr_english/index.php?option=com_content&view=article&id=16&Ite mid=200003.

Patent Enforcement in Taiwan 359 30

31

In Taiwan, patent validity and infringement cases used to follow the German legal system and underwent administrative and civil proceedings, respectively. However, the IP Adjudication Act has altered the dual adjudication system, allowing the IP Court to assume jurisdiction over administrative cases and civil cases involving IP disputes in order to avoid contradictory decisions, and accumulate experience in handling IP cases. Administrative proceedings of patent prosecution and validity are still handled by the TIPO and the Board of Appeal of the MOEA during the stage of administrative proceedings. The IP Court has replaced the administrative courts in adjudicating IP administrative litigation. The IP Court’s decision in administrative IP cases may be appealed to the Supreme Administrative Court. The foregoing means that the IP Court in Taiwan does not serve as the court of last resort for all IP disputes, though it has jurisdiction over different types of IP cases. Depending on the nature of the subject matter in each IP lawsuit, the court of last resort for each case could be either the Supreme Court or the Supreme Administrative Court.29 Many scholars and professionals have criticised the foregoing structure of judicial hierarchy and considered it a lacuna in the law because it may result in the Supreme Administrative Court and the Supreme Court arriving at different decisions on similar cases.

2. International Jurisdiction 32

33

Section 25 of Taiwan’s Act on the Conflict of Laws (‘Conflict Act’) states: ‘The laws at the place of tort shall apply to liabilities for tort, but other laws shall prevail which have the closest relation to the tort’. Therefore, as long as the patent is granted by the TIPO, Taiwanese courts have jurisdiction over the infringement of the patent, regardless of whether the infringement occurs in Taiwan or in other countries.30 In addition, according to the principle of territoriality, a patent granted by a foreign patent authority does not enjoy patent rights in Taiwan. However, when the patentee and the infringer of a foreign patent are both resident in Taiwan, it will be a question of whether the patentee is allowed to file a suit in Taiwan. According to the amendments to Taiwan’s Conflict Act on 26 May 2010, Taiwanese courts seem to have jurisdiction and shall adjudicate the case by applying foreign patent laws.31

3. Judges and Technical Examination Officers 34

Since the IP Court has only a few judges who have specialised knowledge on technical matters, the IP Court has technical examination officers (‘TEO’) to assist with adjudication (IP Court Organisation Act, s 15(1)). Under the judge’s instructions, the TEOs provide evaluation, gather technical information, analyse and give advice on technical

29 This is different from the role of the German Federal Court of Justice (‘Bundesgerichtshof ’, BGH), which is the court of last resort for both civil patent infringement and patent validity cases. 30 Kung-Chung Liu and Su-Hua Lee, ‘Introduction to the Patent System in Chinese Taipei (Taiwan)’ in S Luginbuehl and P Ganea (eds), Patent Law in Greater China (Cheltenham, Edward Elgar 2014) 413–14. 31 Conflict Act, s 42 provides: For the right which has intellectual property as its subject matter, the laws at the place where protection is claimed shall apply (para 1). For the ownership of the intellectual property made by an employee in the performance of his/her duties, the laws applicable to the employment agreement apply (para 2).

360

35

36

Ming-Yan Shieh and Su-Hua Lee issues, and are present in litigation proceedings (IP Court Organisation Act, s 15(4)).32 Scholars and lawyers have continually criticised the function and role of the TEOs, although the TEOs do play an important role in the IP Court proceedings. However, there is one issue of dispute concerning the role of the TEOs, namely whether the TEOs are able to provide unbiased and objective technical expertise to the judge. To explain further, in order to maintain the neutrality and objectivity of the TEOs, it is critical that the TEOs shall remain independent. However, the TEOs working at the IP Court are on secondment from the TIPO. The TEOs receive their salary from the IP Court, but their service is evaluated and recorded by the TIPO. This situation raises the question of whether the TEOs would be able to maintain neutral and provide unbiased assistance to the IP Court when the TIPO is the defendant in a case. In general, a party who is not satisfied with the decision made by the TIPO may file a revocation suit before the IP Court against the TIPO. Since the TIPO always acts as a defendant before the IP Court, using personnel from the TIPO to assist the judge on technical issues arguably casts doubt on the neutrality and objectivity of the TEOs as well as the fairness of procedure. In order to solve this problem, it is necessary to overhaul the current administrative validity proceedings into true invalidation suits, and to remove the TIPO from the role of a defendant. Prior to any such change, it is necessary to avoid having the TEOs on secondment from the TIPO or to let the IP Court have authority over the service evaluation of the TEOs in order to maintain their neutrality and objectivity.33

4. Technical Experts 37

38

Apart from the assistance provided by patent attorneys and TEOs, patent infringement generally needs to seek help from technical experts in order to have an in-depth understanding of technical knowledge. Thus, section 103(2) of the Patent Act provides: ‘The Judicial Yuan may designate specialised institution(s) to conduct an assessment of patent infringement’. Section 103(3) of the same Act provides: ‘A court of law in processing a litigation pertaining to an invention patent may request the specialised institution(s) designated according to the preceding paragraph to conduct an assessment of patent infringement’. Judges have full discretion whether to adopt the opinion of technical experts presented in their evaluation report (assessment). Notably, the Supreme Court in Taiwan has held that a technical assessment conducted during trial is considered evidence, though the core of patent dispute litigations lies in the determination of infringement. It is worth noting that prior to the establishment of the IP Court, it was customary practice for civil litigation plaintiffs/defendants to send their case to external thirdparty technical experts for an opinion on patent infringement. In light of the abovementioned TEO system, the IP Court now rarely seeks help from external technical

32 IP Court Organisation Act, s 15(4) provides: ‘Pursuant to the judge’s instruction, Technical Examination Officers shall collect technical information as well as provide evaluation, advice and analyse technologies. In accordance with the applicable laws, a Technical Examination Officer may participate in trial proceedings’. 33 It should be mentioned that also other countries where the Patent Office is a defendant to an invalidation action have serious procedural problems. See in this respect ch 17 on Brazil.

Patent Enforcement in Taiwan 361

39

assessment. Whether the TEOs are able to provide accurate technical information to the judge is of paramount importance to the outcome of the case. The TEOs, to a certain extent, possess expertise similar to that of external technical experts. However, given that the IP Court has only nine TEOs, and a high number of IP infringement cases in a wide variety of technical fields, it is doubtful whether the TEOs at the IP Court possess enough expertise to cover different technical fields so as to adequately provide assistance to judges in hearing cases before the bench. Given the limited number of the TEOs, it is also debatable whether the TEOs have enough capacity for producing quality evaluation reports as required in different cases, and thus replacing all external technical experts in each and every case filed in the IP Court.

5. Appeals 40

41

42

43

The IP Court not only exercises first instance jurisdiction over IP civil disputes, but also hears appeals of first instance decisions. There will be a judge presiding over the case when a plaintiff brings a civil lawsuit on IP matters to the IP Court for trial (ie the IP Court acts as a court of first instance). On the other hand, an appeal against the first instance decision rendered by the IP Court can only be filed before the IP Court. A panel of three judges will hear the appeal and decide the case. The organisational structure of the IP Court is likely to affect the Court’s supervisory function. The appellate structure in judicial hierarchies provides appellate supervision over lower courts, which requires appellate courts to timely correct errors in the output of lower courts.34 At present, there are 15 judges (including the president of the IP Court) on the bench of the IP Court. Under the organisational structure of the IP Court, appellate judges hearing civil appeals are different from those presiding over civil trials. Nevertheless, all judges of the IP Court work in the same courthouse. In addition, sometimes they work on the same administrative trial case or sit together on the bench to hear criminal appeals. Moreover, unlike judges of the IP High Court in Japan, who are subject to a rotation system, judges of the IP Court are not required to rotate among different courts in Taiwan, resulting in high levels of professional expertise. However, the organisational structure of the IP Court is problematic because (1) the IP Court not only serves as a court of first instance for IP disputes, but also has jurisdiction over hearing appeals from first instance decisions; (2) judges of both instances work in the same building; and (3) there is a limited number of trial judges who are not subject to the rotation system. Given the foregoing, the impact of the aforementioned organisational structure of the IP Court on IP litigation practice in Taiwan needs to be observed in the future and requires further studies. Some legal professionals express concern about whether the second instance of the IP Court is more likely to affirm the first instance decisions rendered by the same court, and whether the interests of the parties will be affected by judges of the first and second instances working in the same court. Although judges will rule according to

34 Kun-Ling Shen, ‘The Principle of Protection of Procedural Interests in the Process of Intellectual Property Lawsuit’ in Collection of Essays on Intellectual Property Litigation: vol II (Judicial Yuan ed, 2013) 156–57.

362

44

Ming-Yan Shieh and Su-Hua Lee the law, judges in the same court tend to arrive at the same decision, or, alternatively, disincline to dissent from the reasoning of other judges sitting in the same court. This pattern is also likely to put pressure on judges who attempt to reverse the decisions rendered by other judges in the same court. According to the statistics conducted and published by the Judicial Yuan, the second instance of the IP Court shows a strong tendency to affirm the first instance decisions of the same court. For instance, the affirmation rate of appeals against the first instance decisions of the IP Court in 2013 was 94.20 per cent, regardless of the type of subject matter (see Table 2). On the other hand, in the same year the affirmation rate of civil appeals against decisions of first instance courts in general was 85.97 per cent (see Table 3).

Table 2: Affirmation Rate of Appeals against First Instance Decisions and Second Instance Decisions of the IP Court35 Year

Affirmation Rate of Appeals against First Instance Decisions of the IP Court (%)

Affirmation Rate of Appeals against Second Instance Decisions of the IP Court (%)

2009

100.00

86.08

2010

95.77

80.99

2011

98.78

86.11

2012

94.67

93.56

2013

94.20

89.92

Table 3: Affirmation Rate of Civil Appeals against Decisions of Courts of First Instance and that of Courts of Second Instance36 Year

Affirmation Rate of Civil Appeals against Decisions of Courts of First Instance (%)

Affirmation Rate of Civil Appeals against Decisions of Courts of Second Instance (%)

2009

83.51

84.24

2010

85.16

87.08

2011

85.21

85.90

2012

85.22

89.79

2013

85.97

89.07

45

35 36

The above statistics reveal that the affirmation rate of appeals against second instance decisions of the IP Court is similar to that of civil appeals against decisions of courts of second instance. Nonetheless, the affirmation rate of appeals against first instance decisions of the IP Court is 10 per cent higher than that of civil appeals against decisions of first instance courts in general. One may argue that the IP Court’s high Judicial Statistics (in Chinese), available at: www.judicial.gov.tw/juds/index1.htm. ibid.

Patent Enforcement in Taiwan 363

46

47

affirmation rate on appeals is because all judges of the IP Court are legal professionals who possess not only a wide range of legal expertise in various IP fields, but also high proficiency in adjudication. However, some scholars and legal practitioners are afraid that, given the IP Court’s high affirmation rate on appeal, the appellant’s interests in pursuing appellate remedies are likely undermined.37 To a certain extent, the current situation is giving cause for concern. Since the rate of patent revocation in civil litigation is high, the patent holder’s win rate is low at trial, and the affirmation rate on appeals is extremely high, it is difficult for patent holders to win patent infringement litigation before the IP Court in Taiwan. If a patentee is unsuccessful in first instance, the chance to obtain a different verdict on appeal will be relatively small. From the viewpoint of protecting the interests of the parties involved, apparently this is not the best approach. A desirable alternative is allowing different courts (other than the IP Court) to hear IP cases in first instance, while assigning appellate jurisdiction over IP cases to the IP Court, which is similar to the US CAFC’s jurisdiction over patent appeals.

IV. Preparation for Trial 1. Preservation of Evidence 48

49

Since evidence is an element of paramount importance for establishing infringement, measures to preserve evidence are crucial for the plaintiff. Section 368(1) of the CCP entitles a plaintiff to request the preservation of evidence, if it is likely that evidence may be destroyed or its use in court may be difficult, or with the consent of the opposing party. However, the IP Court tends to deny the motion for evidence preservation (see Table 4). As reference points for comparison, 58 per cent of motions to preserve evidence by patent holders were denied by the Taipei District Court between January 2004 and September 2011, and 29 per cent of motions to preserve evidence by patent holders were denied by the New Taipei District Court between January 2002 and June 2011.38

Table 4: Motion for Order to Preserve Evidence Granted/Denied by the IP Court between July 2008 and December 2012 07/2008–12/2012 Denied

Invention Patent

Utility Model patent

Design Patent

45 (77.58%)

79 (91.86%)

14 (100%)

Granted

9 (15.52%)

3 (3.49%)

0 (0%)

Partially Granted

4 (6.90%)

4 (4.65%)

0 (0%)

Total Cases

58

86

14

37 According to some scholars, it is rare to see a specialised court (eg the IP Court) exercising first instance jurisdiction while simultaneously hearing appeals of first instances decisions. 38 Kung-Chung Liu, Ming-yan Shieh, Jerry G Fong and Ming-Jye Huang, E mpirical Study of Preserving Evidence in Taiwan (Taipei, Taiwan, 2013).

364 50

Ming-Yan Shieh and Su-Hua Lee Does the fact that the IP Court tends to deny the plaintiff ’s motion to preserve evidence help explain why patent holders rarely win in patent infringement lawsuits? Among those 24 cases reviewed by the IP Court between 2008 and October of 2013, only in five cases did the IP Court grant the motion to preserve evidence, while there was a 20.8 per cent patent holder win rate for patent infringement lawsuits. Given the foregoing, some scholars opined that the fact that the IP Court tends to deny the plaintiff ’s motion to preserve evidence is uncorrelated to the patent holder win rate in patent infringement litigation.39 We respectfully disagree. The aforementioned opinion is based on very few cases. However, such opinion ignores the facts that in those cases where the IP Court denied the plaintiff ’s motion to preserve evidence, the patent holders lost their case and were unable to effectively enforce their patent rights owing to a lack of evidence or the difficulty to retrieve evidence.

2. Interim Relief 51

52

Since the Patent Act is part of the civil law system, the mechanism of interim injunction under section 528 of the CCP40 is applied to patent infringement actions, too. Apart from that, section 22 of the IP Adjudication Act41 provides a further regulation. According to this provision, interim relief always requires inter partes proceedings. The applicant is required to demonstrate the grounds for the injunction, including the necessity for prevention of material harm or imminent danger or other similar circumstances. If the grounds are not sufficiently elaborate, the court shall dismiss the motion for interim injunction. In practice, the court will deny the motion, when the validity of patent rights will become an issue, or where the infringement is unlikely to be established. The court usually needs six to eight months to decide whether a motion shall be allowed or not. It is worth noting that the IP Court tends to deny the motion for interim injunction. Statistics from July 2008 to October 2013 show that among 27 motions with regard to

39 Hsin-Rong Lin, ‘Constant Improvement on the Operation of the IP Court: Empirical Study of the Patent Litigation in Taiwan’ (2014) 18(10) Taiwan Bar Journal 9. 40 CCP, s 528: Where necessary for the purposes of preventing material harm or imminent danger or other similar circumstances, an application may be made for an injunction maintaining a temporary status quo with regard to the legal relation in dispute (para 1). The ruling provided in the preceding paragraph may be issued only where the legal relation in dispute may be ascertained in an action on the merits (para 2). The injunction provided in the first paragraph may order a certain act to be performed in advance (para 3). The court shall accord the parties an opportunity to be heard before issuing the ruling provided in the first paragraph and the preceding paragraph, except where the court considers it inappropriate to do so (para 4). 41 IP Adjudication Act, s 22: Where no action has been initiated, an application for provisional attachment, preliminary injunction, or injunction maintaining the temporary status quo shall be filed with the court where the action is to be brought; where the action has been initiated, such application shall be filed with the court where the action is pending (para 1). An applicant seeking an injunction maintaining the temporary status quo shall provide a preliminary showing proving it is necessary to prevent material harm or imminent danger or other similar circumstances with regard to the legal relation in dispute. The court shall dismiss the application if the preliminary showing is insufficient (para 2). When the grounds for an application for an injunction maintaining the temporary status quo are demonstrated in the preliminary showing, the court may still order the applicant to provide a bond for granting the injunction (para 3). Before an injunction maintaining the temporary status quo

Patent Enforcement in Taiwan 365 patent actions, only one was allowed.42 The IP Court is of the opinion43 that products involving IP-related disputes are characterised by their short life cycle in the market. An injunction which is granted to prohibit the manufacture or sale may cause serious consequences. The product subject to the injunction may be phased out and the company may be expelled from the marketplace before a final decision on the case is rendered. For this reason, the IP Court believes that it should proceed with caution when dealing with the motion for an injunction.

V. The Trial 1. Course of Proceedings 53

In practice, before a lawsuit against the infringer is filed, the patentee usually issues a warning letter to ask for a ‘cease and desist’ of the infringement. Apart from the prevention of future infringements, compensation for damages is a remedy for past infringement and is awarded by the ordinary courts (IP Court) on the basis that the infringers have acted wilfully or negligently. The general scenario of the ordinary infringement action before the courts is as follows:44 1. 2. 3. 4. 5.

54

First instance of a civil action. Both parties are nationals of this country. Plaintiff has never submitted any request for amending the issued patent claims. Defendant asserts patent invalidity as one of the defences. Court case management system during the proceedings.

Figure 3 shows the trial scheme of patent infringement cases and an approximate time spent in each step of the procedure for the purpose of reference.

is granted, the court shall accord the parties an opportunity to be heard. However, where the applicant asserts and is able to provide evidence to substantiate his assertion that there are special circumstances that shall restrict the opposing party from being notified before the injunction is issued, and the court deems such assertion appropriate, the above shall not apply (para 4). The court may, upon motion or on its own initiative, revoke an injunction maintaining the temporary status quo where an action is not initiated within 30 days after the order is served on the applicant (para 5). A public notice shall be given of the revocation described in the preceding paragraph, and the revocation shall become effective when the notice is published (para 6). When the court revokes an injunction maintaining the temporary status quo because such order is not justified ab initio, or upon motion by a creditor, or due to the situation prescribed in paragraph 5, the applicant of the injunction shall indemnify the opposing party against the losses suffered (para 7). 42 G Shaou, ‘Rethinking the Proceedings of Interim Injunctions regarding IP Litigation’ (Symposium on Patent Application and Enforcement in Taiwan, Taipei, Taiwan, 27–28 December 2013). 43 http://ipc.judicial.gov.tw/ipr_internet/index.php?option=com_content&view=article&id=114&catid=51&I temid=100031. 44 IP Court, ‘The Procedure of Civil Cases Concerning Intellectual Property for Patent Infringement Cases’ http://ipc.judicial.gov.tw/ipr_english/index.php?option=com_content&view=article&id=97&Itemid=100006.

366

Ming-Yan Shieh and Su-Hua Lee The complaint is received and reviewed by the reviewing board.

30 Days

The correction is not submitted.

The formality of the complaint is being checked; if the formality does not meet the requirements, plaintiff will be ordered to correct the complaint.

A first court order will be served to the defendant to order him to submit a response.

The correction is submitted.

Defendant raises a procedural issue.

Defendant raises a substantive issue. 60 Days

30 Days

The complaint is dismissed without prejudice.

Both parties will be ordered to file a brief regarding procedural issues and to exchange the brief with the other party; or the Court will proceed with the preparation procedure.

If necessary, the Court will assign the case to one technical examiner. The Court will issue an interlocutory decision.

A second court order will be served to the plaintiff to order him to submit a brief for summarising the issues at dispute.

The procedural defects no long exist or have been corrected.

The case is dismissed because of procedural issues; or the case will be transferred to another court.

30 Days

A third court order will be delivered to the defendant to order him to submit a brief for summarizing the issues at dispute. 30 Days

The procedural examination is done; the case is then distributed to one tribunal.

The preparation procedure is managed by the Court.

1. Before the date of the first oral argument, both parties shall comply with the requirements imposed by s 266 of the Civil Code to propose all factual or legal issues, reasons for asserting those issues, and evidence for supporting them. Both parties are also required to file a motion to investigate evidence, or a motion to order third parties to hand in(submit) documents or specified objects. With that, it is easy for the Court to conduct the preparation procedure so as to plan the trial. 2. If one party thinks that the documents submitted by the other party are concerning with his trade secret, he may file a motion to seek for an order to keep the documents under trade secret protection under ss 11 and 12 of the Intellectual Property Case Adjudication Act. The Court will summarise the issues and plan how to conduct the trial. (See below.)

Figure 3: Trial Scheme of Patent Infringement Cases45

45

ibid.

Patent Enforcement in Taiwan 367

The preparation procedure is managed by the Court.

60 Days

For a first oral argument, both parties are required to submit to the Court a brief that explains all arguments for the issues and evidence used for each of the arguments; a copy of such brief shall be delivered to the other party.

The Court will summarise the issues and plan how to conduct the trial: 1. Under s 268(1) of the Civil Code, the Court will summarise and simplify the issues (eg claim construction, patent validity, infringement or noninfringement and damages calculation). 2. Regarding the simplification of the issues, the Court will decide ways to investigate evidence and steps thereof (for instance, necessities of examination, direct investigation, document-collection and mandatory response upon a court’s formal request). The Court will also decide the date of trial. 3. The Court will order the parties of the case, or third parties, to submit documents or objects within a period of time. 4. When one party asserts or states that the reasons for invalidating the patent at dispute do exist (that is, there is an issue of patent validity), if necessary, the Court will order the IP agency to join the suit. 5. The order of adjudicating the issues of patent validity and infringement will depend on the situation of a case. 6. The judge will notify the parties if they do not follow the trial plan to present assertions, arguments or evidence, they will lose a right to do so.

The first oral argument is being held.

60 Days

For a second oral argument, both parties are required to submit to the Court a brief that explains all arguments for the issues and evidence used for the arguments; a copy of such brief shall be delivered to the other party.

If it is necessary, a second oral argument will be held.

60 Days

For a third oral argument, both parties are required to submit to the Court a brief that explains all arguments for the issues and evidence used for the arguments; a copy of such brief shall be delivered to the other party.

Any following oral argument will be held, if it is necessary.

A judgment is made; the case is over.

Figure 3: (Continued)

The validity issue regarding the disputed patent is adjudicated while the Court will also look at the issue of claim construction.

The patent is held valid.

The patent is held invalid.

The infringement issue is being adjudicated.

Infringement is concluded.

The damages issue is being adjudicated.

Non-infringement is concluded.

368 55

Ming-Yan Shieh and Su-Hua Lee The timeframe for patent infringement cases adjudicated by the IP Court in first instance was around 233 days in 2013 and 2014.46 The adjudication time span of second instance was around 216 days in 2013 and 2014.47

2. Statistics 56

From 1 July 2008 to 31 August 2014, the IP Court rendered a total of 9225 decisions covering civil, administrative and criminal cases on patents, trade marks, copyrights, trade secret and competition law. Statistics show that, among all identified decisions during such period, a bit more than half were decisions in civil cases (4796 cases).

Table 5: Volume of the IP Court’s Decisions between July 2008 and August 201451 Years 07/2008–08/2014

07–12/ 2008

2009

2010

2011

2012

2013

01–08/ 2014

Total

Civil Cases (1st instance)

183

482

746

461

574

492

361

3299

Civil Cases (2nd instance)

92

267

311

236

215

238

138

1497

Criminal Cases (2nd instance)

175

367

349

353

333

303

206

2086

Administrative Cases

244

432

460

339

346

325

197

2343

Total

694

1548

1866

1389

1468

1358

902

9225

57

58

In order to evaluate the operation of the IP Court, the following section analyses its civil decisions on patent rights in first instance from 1 November 2010 to 30 April 2014 (three years and six months)48 by carrying out various searches on ‘Lawbank’, one of the primary online legal research services in Taiwan.49 Among the 381 decisions that we retrieved were 34250 decisions involving patent infringement. As for the rest, the main issues of these 38 cases were settlements and confirmation of patent ownership or co-ownership, and patent licensing agreements. The following discussion focuses on the 342 patent infringement cases. Among the 342 patent infringement cases we retrieved, there were 126 cases involving invention patents, 185 cases concerning utility model patents, and 36 cases related to

46 http://ipc.judicial.gov.tw/ipr_english/ index .php?option=com_content&view=category&id=53&Ite mid=105. 47 ibid. 48 For an analysis of civil decisions on patent rights from 1 July 2008 to 31 October 2010, see Shieh and Lee (n 6) 199–210. 49 http://fyjud.lawbank.com.tw/index.aspx?login=0. 50 Apart from these 342 decisions involving patent infringement, there is one civil litigation decision related to infringement. However, details about this case are not available. Thus, this case is excluded from the statistics and analysis presented in the following paragraphs. 51 Judicial Statistics (in Chinese) (n 35).

Patent Enforcement in Taiwan 369

59

design patents.52 Apparently, more than half of these patent infringement cases concerned utility model patents. In respect of the nationality of the parties involved in patent infringement litigation, Table 6 shows that most patent infringement complaints were filed by or against Taiwanese, including natural and legal persons.

3. Technical Assessment of Infringement 60

61

The construction of the scope of IP rights and the determination of infringement of a highly technical nature often require an evaluation opinion (assessment) from a technical expert. As mentioned above, after the establishment of the TEO system, the IP Court mainly relies on the technical assessment and support provided by TEOs. However, in practice it is critical whether the parties involved are offered the opportunity to cross-examine the TEOs and present their arguments. To explain further, under section 16 of the IP Case Adjudication Rules, reports produced by the TEOs will not be disclosed to the parties. This has not only caused a stir among practitioners, but it also contradicts section 8(1) of the IP Adjudication Act, which provides: ‘Before any special professional knowledge already known to the court is adopted as a ground for judgment, parties shall be accorded an opportunity to present their arguments regarding such knowledge’. Thus, we suggest amending section 16 of the IP Case Adjudication Rules in order to offer the parties the opportunity to cross-examine the TEOs during trial in order to be consistent with section 8(1) of the IP Adjudication Act.

4. Success Rate 62

63

Statistics reveal that from November 2010 to April 2013, the plaintiffs in most patent infringement actions lost their cases. The IP Court either found the patent at issue invalid, or not infringed. Among the 126 civil cases involving invention patents, only in 15 cases did the IP Court find for the plaintiffs, whereas in 111 cases, the IP Court held against the plaintiffs. In other words, the loss rate of the plaintiffs was 88.10 per cent. Even if we exclude those 25 cases involving the ‘729 patent’ (for details on this patent, see below section VIII ) from our statistical result, the plaintiff ’s loss rate remains 85.29 per cent (see Figure 4).

Table 6: Statistics of Patent Infringement Litigation Involving Foreign Parties

Plaintiff Defendant

Invention patent

Utility model patent

Design patent

Taiwanese

96

184

31

Foreigners

30

1

5

Taiwanese

108

181

34

Foreigners

18

4

2

52 It is possible that there may be more than one patent or more than one type of patent involved in each case. Therefore, the number of patents involved is more than the number of individual cases.

370

Ming-Yan Shieh and Su-Hua Lee 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

cases won by plaintiffs cases lost by plaintiffs

Invention patent

Utility model patent

Design patent

15% 85%

23% 77%

39% 61%

Figure 4: Cases Won/Lost by Plaintiffs

64

65

66

Statistics on the 185 utility model patent cases present a result similar to the statistics seen in the foregoing paragraph. Only in 42 cases did the IP Court find for the plaintiffs. Among these 42 cases, the plaintiffs partially succeeded in seven civil cases. On the other hand, the plaintiffs lost in 143 civil cases, resulting in a plaintiff loss rate of as high as 77.30 per cent (see Figure 4). Statistics on the civil cases of design patent present a result slightly different from the statistics above (see Figure 4). Among the 36 design patent cases, the plaintiffs won 14 cases (plaintiff win rate: 38.89 per cent) and lost 22 (plaintiff loss rate: 61.11 per cent). However, it is difficult to provide an in-depth analysis, as there are only a limited number of design patent cases. Future development in this field will require further observation. In general, the overall win rate of patent holders in patent infringement litigation in Taiwan was about 25.67 per cent. Unlike what we have observed in other jurisdictions in which the overall win rate of patent holders is much higher, it seems unrealistic to expect a 50 per cent overall win rate in infringement litigation in Taiwan. In Japan, prior to and after the establishment of the specialised IP High Court, the overall win rate of invention patent holders and utility model patent holders in civil litigation between 2000 to 2006 was between 12.5 per cent and 21.57 per cent. Since 2007, a period after the establishment of the IP High Court, the overall patent holder win rate has kept climbing from 24.32 per cent to a peak of 40 per cent in 2011.53 On the other hand, in the US, the overall win rate in patent infringement litigation in federal district courts is 33 per cent, though the rate varies across various industries.

53 Suzuki and Tamura (n 28) 135. Part of this can be explained by the Court’s approach towards novelty and inventive step. Immediately following the ‘Kilby’ decision (Japanese Supreme Court, 11 April 2000, 35 IIC 91 (2004)—‘Kilby’) that gave the ordinary courts jurisdiction to entertain the estoppel of patent invalidity, most patents were held invalid, an approach that gradually changed over the following 10 years. See ch 13 for further details.

Patent Enforcement in Taiwan 371 67

68

The overall patent holder win rate in the US and Japan may not be high, but is certainly higher than in Taiwan. Given that the overall patent holder win rate in the IP Court is as low as 25.67 per cent, a patent holder bringing patent infringement litigation in Taiwan is more than likely to lose his case as a result. In Taiwan, ‘why patent infringement cases are so hard to win for patent holders?’ is an issue that deserves further discussion and analysis. However, we believe that the IP Court has a notable tendency to hold a patent claim invalid, which is certainly one of the contributing factors. Another roadblock is the IP Court’s reluctance to issue orders for the preservation of evidence. As noted in the Preamble of Directive 2004/48/EC of the European Parliament and the Council of 29 April 2004 on the enforcement of intellectual property rights, ‘evidence is an element of paramount importance for establishing the infringement of intellectual property rights’.54 The intangible nature of patents not only prevents patent holders from becoming aware of infringement, but also makes it challenging for patent holders to prove infringement of intangible assets, which is way more difficult than proving infringement of physical assets. Thus, the IP Court’s discretion in ordering evidence plays a critical role in patent infringement litigation.

VI. Types of Infringing Acts 1. Direct and Indirect Infringement 69

Section 99 of the Patent Act, following Article 34 of TRIPS, provides a presumption of infringement of a method patent. It should be pointed out that, unlike the patent laws of the US and Germany, which prohibit both direct and indirect patent infringement, Taiwan’s Patent Act provides no provision on indirect infringement. Aiding, abetting or inducing patent infringement is covered by section 185(2) of the Civil Code. In practice, it is hard for patent holders to prove that one is a joint tortfeasor simply because he provides assistance to or induces infringement of a patent. Patent holders often face difficulty in proving direct causation between such behaviour and patent infringement. It is also challenging for patent holders to prove that an abettor acted intentionally or negligently.55

2. Literal and Equivalent Infringement 70

The core of patent enforcement lies in the determination of the connection between the scope of a patent claim and the allegedly infringing product or method. In other words, the determination of patent infringement requires a determination as to

54 Preamble 20 of Directive 2004/48/EC of the European Parliament and the Council of 29 April 2004 on the enforcement of intellectual property rights. 55 Taking an example of the decision adjudicated by the IP Court (IP Court Civil decision No 2008-MinZhuan-Su-5, 28 October 2008), the defendant was accused of indirect patent infringement by instigation and accomplice. But the patent holder failed to prove intention, negligence and causation, and thus lost the case. For an interpretation of the decision and limitations of the Civil Code’s regulations on indirect patent infringement, see Su-Hua Lee, ‘Pharmaceutical Composite Patent and Joint Infringement: An Interpretation of the IP Court Civil Decision 2008-Mingh-Zhuan-Su-Tze No 5’ (2009) 19 Taiwan Law Journal 175 et seq.

372

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Ming-Yan Shieh and Su-Hua Lee whether the alleged infringing product or method falls within the scope of the plaintiff ’s patent claim (Patent Act, s 58(4)). Interests of the patent holder and third parties should be taken into account in undertaking such claim construction.56 In determining the scope of a patent claim in patent infringement cases, courts generally will consider two important factors: (1) adequate protection for the patent holder; and (2) sufficient degree of legal certainty for third parties. After determining the scope of a patent claim, principles such as the all elements rule, literal interpretation, the doctrine of equivalents and the reverse doctrine of equivalents come into play to determine whether the alleged infringing product or method falls within the scope of a patent claim asserted by the patent holder.

VII. Remedies 1. In General 72

73

When there is patent infringement, the patent holder and the exclusive licensee may bring a suit against the infringer. In addition to claiming injunctive relief and damages, the patent holder or the exclusive licensee may request destruction of the infringing products or the raw materials or implements used in infringing the patent, or request other necessary forms of disposal (Patent Act, s 96(3)). When an inventor’s right to indicate his name is infringed, he may request a ruling to indicate the inventor’s name or otherwise to recover his reputation (Patent Act, s 96(5)). The right to claim the above remedies shall be time-barred if not exercised within two years from the time the patent holder has become aware of the infringement, or within 10 years from the time of the infringement (Patent Act, s 96(6)).

2. Injunctions 74

As mentioned above, section 96(1) of the Patent Act allows patentees to demand infringers to stop or prevent such infringement through an injunction. Patentees are entitled to apply for an injunction and request for disposal of infringing products as well as the removal of facilities used to manufacture the infringing products (Patent Act, s 96(3)). In general, courts always grant injunctive relief as long as the ascertained patent infringement is established.

3. Compensatory Damages 75

Section 97 of the Patent Act provides three methods for calculating damages. Namely, a patent holder may use any of the following methods to calculate his damages: 1. the method as set forth in section 216 of the Civil Code.57 Namely, a patent holder may claim damages based on the amount derived by subtracting the profit

56

Ming-Yan Shieh and Su-Hua Lee (n 6) 184–85. Civil Code, s 216 provides: ‘(1) Unless otherwise provided by law or by contract, the compensation shall be limited to the injury actually suffered and the interests which have been lost. (2) Interests which could have been normally expected are deemed to be the interests which have been lost in the ordinary course of events, envisaged projects, equipment, or other particular circumstances’. 57

Patent Enforcement in Taiwan 373 earned through exploiting the patent after infringement from the profit normally expected through exploiting the same patent, if no method of proof can be produced to prove the actual damage suffered; 2. the profits earned by the infringer as a result of the infringement; and 3. the amount calculated on the basis of a reasonable royalty, namely the equivalent amount of royalty that may be collected from exploiting the invention patent by way of licensing. 76

It has come to our attention that the second method above, in which damages are calculated on the basis of the profit earned by the infringer, has been used in most cases in the past, since the courts did not strictly hold the patent holder accountable for meeting the burden to prove the cause-and-effect relationship between the infringement and the damages (the profit earned by the infringer). However, nowadays, the IP Court tends to hold that the plaintiff must meet the burden to prove the cause-and-effect relationship. We take the view that the royalty-based method should be encouraged where damages are calculated on the basis of a reasonable royalty, as this method will likely reduce the patent holder’s burden of proof in practice.

4. Punitive Damages 77

78

‘Punitive damages’ is a concept foreign to classical civil law, as the doctrine of damages of traditional civil law is principally governed by the concepts of compensation and restitution. The concept of punitive damages was introduced into the Patent Act in 1994 with a provision specifying that, in the event where infringement was the result of wilful misconduct, the court could award damages in an amount higher than the estimated amount of loss, but not more than three times the estimated loss. Nevertheless, the Amendment to the Patent Act in January 2013 removed the above punitive damage provision in order to adhere to the compensatory theory of tort law. The TIPO was of the opinion that monetary damages should be awarded to compensate the patent holder for the loss he suffered as a result of the infringement, regardless of whether the infringement was committed intentionally. The removal of the punitive damages provision in the Patent Act encountered strong public opposition. Some scholars58 argued that the award of monetary damages under the Patent Act not only serves the purpose of compensating the patent holder for the loss he suffered from the infringement, but also of preventing future infringement. Some even contended that the TIPO should not set a cap strictly limiting the amount of punitive damages.59 The concept of punitive damages was re-introduced in the Patent Act with the Act’s amendment on 31 May 2013 in order to strengthen the protection of patents. According to the current law, in the event that the infringement is found to be intentionally committed, the court may, upon request and on the basis of the severity of the infringement, award damages greater than the loss suffered, but not exceeding three times the proven loss (Patent Act, s 97(2)).

58 Ming-Yan Shieh, Intellectual Property Law 3rd edn ( Taipei, Angle Publishers, 2012) 354; Tsung-Fu Chen, Wrongfulness of Torts and Damages (Taipei, Angle Publishers, 2008) 365–66. 59 Chen, Wrongfulness of Torts and Damages (n 58) 365–66.

374 79

Ming-Yan Shieh and Su-Hua Lee In addition to the Patent Act’s re-introduction of punitive damages, the question of whether the amount of damages awarded by the courts is way too low remains disputable and attracts wide public attention. Moreover, legal scholars, professionals and practitioners have constantly raised their concerns about the operation of the IP Court and debated on issues such as whether patent laws provide enough protection for patent holders, whether patent holders could enforce their rights properly, and whether there is room for improvement in the operation of the IP Court.60 To ensure that patent holders will be compensated with at least a minimal amount of damages, some legal professionals61 assert that the Patent Act should set a minimal statutory damage as provided in section 88(3) of the Copyright Act.62 Whether the growing trend towards strengthening patent protection and increased damage awards will continue requires further study and closer attention in the future.

5. Statistics on Patent Damages 80

Since the plaintiffs lost in most civil cases, it is no surprise to see that only in a few cases did the IP Court actually award monetary damages to the plaintiffs (see Table 7).

Table 7: Amount of Damages Awarded by the IP Court NT Dollars (NTD)63

Invention Patent

Utility Model Patent

Design Patent

Below 10,000

0

5

1

10,001–100,000

0

10

2

100,001–500,000

6

11

3

500,001–1,000,000

4

3

2

1,000,001–5,000,000

5

10

5

5,000,001–10,000,000

1

1

0

Over 10,000,000 Total (cases)

81

2

2

1

18

42

14

Moreover, only in 16 cases did the IP Court award punitive damages (see Table 8). It is difficult to provide further analysis, as there are only a limited number of cases.

60 eg since the IP Court was established, lots of symposia, workshops and conferences organised by scholars in the IP fields, Asian Patent Attorneys Association (‘APAA’), Taiwan Patent Attorneys Association (‘TWPAA’) and Taipei Bar Association have been held. 61 Judge Sung-Mei Hsiung, ‘Whether the IP Court in Taiwan can become an Asian IP Dispute Settlement Center?’ (Symposium on the Legal Framework of Patent Related Industries and Dispute Settlement in Taiwan, Taipei, Taiwan, 27–28 December 2013). 62 Copyright Act, s 88(3) provides: ‘If it is difficult for the injured party to prove actual damages in accordance with the provisions of the preceding paragraph, it may request that the court, based on the seriousness of the matter, set compensation at an amount of not less than ten thousand and not more than one million New Taiwan Dollars. If the damaging activity was intentional and the matter serious, the compensation may be increased to five million New Taiwan Dollars’. 63 1 Euro is almost equal to 40 NTD.

Patent Enforcement in Taiwan 375 Table 8: Punitive Damages awarded by the IP Court Punitive Damages (multiplication)

Invention Patent

Utility Model Patent

Design Patent

Below 0.5 time

0

1

0

Over 0.5–1 time

0

0

0

Over 1–1.5 times

1

4

0

Over 1.5–2 times

1

4

3

Over 2–2.5 times

0

0

0

Over 2.5–3 times

1

1

0

Total (cases)

3

10

3

6. Further Considerations 82

83

84

During the period of our empirical study, the volume of court decisions in the category of damage awards between NTD 1 million and NTD 5 million was higher than in other categories. Nonetheless, we would like to point out that damage awards falling below NTD 1 million represent the largest percentage (above 50 per cent) of identified court decisions that held in favour of patent holders. Such damage awards are relatively low compared to damage awards for other intangible rights like personal rights, which generally go beyond millions of dollars. According to a recent study on patent litigation in the US federal district courts, the annual median damage award between 2010 and 2013 was $4.3 million US dollars. If we leave out damage awards in lawsuits filed by non-practising entities, the median damage award for patent holders is $2.5 million US dollars (see Figure 5).64 The tradition of Civil Law, also known as Romano-Germanic Law or Continental Law, has had a strong and lasting influence on the legal system of many Asian countries, including Japan, Korea and Taiwan. Under the principles set forth in the civil law system, monetary damages are awarded to compensate for actual loss suffered by the infringement. In other words, unless otherwise provided by the law or by contract, the compensation shall be limited to the injury actually suffered and the interest which has been lost (Civil Code, s 216(1)). Some scholars65 assert that compensatory remedies are only intended to compensate for the loss incurred by the infringement. Prevention of further infringement is not the purpose of compensatory remedies, even in the field of IP and economic laws. The different nature and function between tort law and criminal law should not be ignored. The former emphasises compensation of the right holder for damages suffered from the infringement. Penalties for infringement and prevention of further infringement are not the purposes of civil remedies. They are the domain of criminal law.

64 PwC, 2014 Patent Litigation Study (2014) 6, available at: www.pwc.com/en_US/us/forensic-services/publications/assets/2014-patent-litigation-study.pdf. 65 eg Chia-Yuan Yang, Compensatory Damages of Torts 2nd edn ( Taipei, Angle Publishers, 2009) 10.

376

Ming-Yan Shieh and Su-Hua Lee $12

$8 $7

$10 $5.5 $4.9

$5

$4.3 $4 $3 $2

Median damages awarded (in $MM)

$6

$11.3

$7.5

$8.5 $8

$6

$7.3

$5.6 $5.5

$5.7 $4.3

$4 $2.5 $2

$1

01 –2 10

$0

1995–1999 2000–2004 2005–2009 2010–2013

Nonpracticing entities

20

–2

00

3

114

9

153

05

–2

00 20

00 20

19

95

–1

99

9

100 4

61

$0

Practicing entities

Figure 5: Median Damages Award66

85

66

However, the traditional attitude towards the nature and function of compensatory remedies has been greatly challenged by some scholars owing to the inherent drawbacks in dealing with cases involving intangible rights, such as personal rights and IP rights. In recent years, the viewpoint that compensatory remedies serve the purpose of not only compensating for the delay in obtaining payment for past infringement, but also preventing future infringement is prevalent in academic fields of civil law67 and IP law.68 It is remarkable that even in Germany, both academics69 and the courts70 tend to emphasise the importance of sanctions against infringers and the prevention of further infringement where intangible rights are involved.

Ibid. See Chen (n 58) 233; Tsung-Fu Chen, The Principle of Responsibility for Torts and Damages (Taipei, Angle Publishers, 2008) 317–18, 365–66. 68 See Ming-Jye Huang, ‘The Role, Function and Application of Compensatory Damages Regarding Recovery of the Profits Incurred by Infringer: Comments on the Supreme Court 97 Tai-Shang-No 227 Judgment’ (2009) Taiwan Law Review 167, 172–74; Shieh, Intellectual Property Law (n 58) 354; Chun-Hsin Hsu, ‘Examining the Compensation Liability for Patent Infringement in Taiwan from the Perspective of German Law’ (2007) National Taipei University Law Review 61, 96; Su-Hua Lee, ‘Patent Infringement and Damage Calculation in Taiwan Legal Practice: Recovery of the Infringer’s Profits’ (2013) 42(4) National Taiwan University Law Journal 1407–10. 69 M Lehmann, ‘Präventive Schadensersatzansprüche bei Verletzungen des geistigen und gewerblichen Eigentums’ (2004) GRUR Int 762, 763; M Loschelder, ‘Rechtsfortbildung der Schadensberechnungsmethode “Herausgabe des Verletzergewinns”’ (2007) NJW 1503. 70 BGHZ 128, 1 ff. = NJW 1995, 861—Caroline von Monaco; BGH GRUR 2001, 329—Gemeinkostenanteil; BGH GRUR 2012, 1226 (No 7)—Flaschenträger. 67

Patent Enforcement in Taiwan 377

VIII. Defences 1. In General 86

87

88

Similar to other countries, Taiwan’s Patent Act prescribes that patent rights do not extend to certain acts like research and development on patented subject matter (Patent Act, ss 59(1)(ii) and 60). The exhaustion principle (Patent Act, s 59(1)(vi)) is a further inherent limitation. When the legal conditions of such provisions are met, such acts performed by a third party will not constitute an infringement. In addition, it has become common in recent years that the invalidity defence is raised by the defendant in a civil infringement suit. That is to say, before the implementation of the IP Adjudication Act, it was rare to see a defendant raise the invalidity defence in patent infringement litigation. Under the bifurcation system of Taiwan, patent validity is an administrative issue governed by administrative proceedings. On the other hand, patent infringement is a civil matter subject to the jurisdiction of ordinary courts. However, after the implementation of the IP Adjudication Act, it has become more and more common to see the parties raise the invalidity defence in patent infringement litigation based on section 16 of the IP Adjudication Act.71 Namely, under section 16(1) when a party claims or asserts that an IPR shall be cancelled or revoked, the court shall decide based on the merits of the case, and the Code of Civil Procedure, Code of Administrative Litigation Procedure, Trade mark Act, Patent Act, Species of Plants and Seedling Act, or other applicable laws concerning the stay of an action shall not apply.

89

Therefore, the civil court handling a patent infringement case is entitled to decide whether the patent right at issue is valid without having to wait for the decision of the administrative authorities. This is due to section 16(2) of the IP Adjudication Act which states that ‘under the circumstances in the preceding paragraph, the holder of the IPR shall not claim any rights during a civil action against the opposing party where the court has recognised a ground for cancellation or revocation of the IPR’. In practice where the invalidity defence was raised, ‘obviousness’ and ‘anticipation’ accounted for the two most common grounds for invalidity of patent rights. Details about the statistics and analysis are presented in the following paragraphs.

2. The Invalidity Defence 90

Among 126 cases involving invention patents where the validity of the patent was attacked, there were only 25 cases in which the IP Court did not look into the validity issue.72 Only in 13 cases did the IP Court fully affirm the validity of the invention patent in dispute. On the other hand, in 62 per cent of the cases the IP Court cancelled

71 By contrast, if the invalidity of the patent right is not contested by either party, a civil court is strictly prohibited from adjudicating on whether such a right is valid or not. 72 The IP Court did not look into the validity issue because the plaintiffs failed to establish their case on infringement.

378

91

92

Ming-Yan Shieh and Su-Hua Lee or revoked the invention patent at issue. It should be noted that from 2010 to 2012, there was one plaintiff who filed several lawsuits against different defendants based on the same invention patent, the Patent No I309729 (hereinafter the ‘729 patent’). Although the IP Court denied the validity of this patent in the first civil lawsuit, the patent holder continued to sue based on the 729 patent, since the finding of patent validity by the IP Court is not binding for other lawsuits. From November 2010 to April 2014, the IP Court heard and adjudicated 25 cases involving the 729 patent. Even if we exclude those 25 cases involving the 729 patent from our statistics result, there were 64 out of 102 cases (62.75 per cent) in which the IP Court held the invention patent in dispute invalid (see Figures 6 and 7). Regarding utility model patents, among the 184 cases there were 43 civil actions in which the IP Court did not look into the validity issue. On the other hand, only in 34 cases did the IP Court fully affirm the patent validity. Statistics show that the IP Court denied the validity of utility model patent in 107 out of 184 cases (see Figures 6 and 7). The proportion of cases where the validity of a utility model patent has been recognised by the IP Court is even higher than that of invention patents, even though invention patents are substantively examined, while utility model patents are only subject to a formality examination, as mentioned above.

IX. Wrongful Enforcement 1. In General 93

The Taiwan Patent Act had provisions for criminal penalties before 2003, which were often used by patentees in patent infringement cases as a threat to competitors or an urge to an infringing party to reach a settlement or take a licence. Since the removal of criminal penalties from the Patent Act, civil remedies have become the major resort in patent infringement cases. One current form of wrongful enforcement is via false Invention patent

No judgement (25) 24%

Utility model patent Validity affirmed (13) No judgement 13% (43) 23%

Validity denied (64) 63%

Figure 6: IP Court’s Determination of Validity (1)

Validity affirmed (34) 19%

Validity denied (107) 58%

Patent Enforcement in Taiwan 379 Invention patent

Utility model patent

Others (2)

Others (0)

Inadequate specification (3)

Inadequate specification (4)

Anticipation (7)

Anticipation (28)

Obviousness (51)

Obviousness (34) 0

20

40

60

0

10

20

30

40

Figure 7: IP Court’s Determination of Validity (2)

94

95

patent marking (such as wrongfully indicating that a certain product is patented, even though it is not, or the patent has expired, or protection has only been conferred by a utility model), to which sections 21 or 24 of the Taiwan Fair Trade Act (‘TFTA’) may apply.73 The TFTA also applies to warning letters issued by the patentee. Therefore, if the patentee issues the warning letter in an improper way and does not comply with the TFTA, the victim can seek remedies under competition law.74 One recent case is noteworthy:75 The patentee filed several infringement suits based on the 729 patents granted by the TIPO. In one infringement suit, the defendant raised the patent invalidity defence which the civil court affirmed, leaving however the patent intact. Subsequently, the patentee filed a new complaint against other parties based on that patent. The Court opined that this was an abuse of right and dismissed the new complaint out of hand. Regarding spurious litigation such as wrongful seizure or interim relief that is subsequently overturned, tort provisions stipulated by section 184 of the Civil Code and section 531(1)76 of the CCP may apply. However, there has been no case where the aggrieved person claimed damages against the actor, since it is often difficult to prove that such behaviour was the direct cause of damage and that the patentee had intended to cause the damage. It should be noted that in a recent case, the victim of a wrongful enforcement was granted damages for losses resulting from a baseless preliminary injunction where subsequently no infringement was found.77

73 In addition, the Commodity Labelling Law may apply to false patent marking, and the authorities can impose administrative penalties on the guilty party. 74 Ming-Yan Shieh and Su-Hua Lee (n 6) 190–91. 75 IP Court Civil Decision 2010 Ming-Zhuan-Su-Tze No 90, 30 November 2010. 76 CCP, s 531(1): where a provisional attachment ruling is revoked either by reason of being improper ab initio or by reason of the provisions of the fourth paragraph of s 529 or the third paragraph of s 530, the creditor shall compensate the debtor for any losses incurred from the provisional attachment or the provision of a countersecurity. 77 IP Court, Civil Decision, 2 December 2010, 2010 Ming-Gunn-Shan-Tze No 3.

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Ming-Yan Shieh and Su-Hua Lee

2. Dysfunctional Use of the Patent System 96

97

98

99

In general, there is no specific provision in Taiwan dealing with remedies against the abuse of patent rights. The remedies provided under competition law and the Civil Code are applicable in this regard.78 The TFTA sanctions the abuse of a monopolistic market position which can derive from an ‘essential patent’. Under such circumstances, the patentee’s refusal to license may constitute a violation of competition law.79 The disputes arising from the enforcement of a patent right or a licence could also be resolved through other provisions of the TFTA. The Taiwan Fair Trade Commission (‘TFTC’) promulgated the Guidelines on Technology Licensing Agreements (Taiwanese Guidelines) on 20 January 2001 to explain how it would treat patents and/or know-how licensing agreements according to the TFTA. As discussed above, before the patentee files a lawsuit against the infringer, the patentee usually issues a warning letter to ask for a ‘cease and desist’ of the infringement. Competition laws may also apply to such warning letters. The TFTC promulgated Guidelines on the Reviewing of Cases Involving Enterprises Issuing Warning Letters for Infringement of Copyright, Trade mark, and Patent Rights on 7 May 1997. Parties whose rights or interests have been adversely affected by the patentee owing to a contravention against the TFTA can seek civil remedies including the removal of the infringement and a claim for damages (TFTA, ss 30–31). Section 32 of the TFTA specifies that if an infringement is intentional, punitive damages may be higher than the amount of estimated damages, but not more than triple the amount of damages.80

X. Costs 100

78

Since disputes involving patent infringement matters are adjudicated in the ordinary courts, the CCP applies. With regard to court costs and litigation expenses, section 77(13) of the CCP stipulates that

Ming-Yan Shieh and Su-Hua Lee (n 6) 189–90. The most well-known and important cases in Taiwan are the ‘Philips’ CD-R Cases. For more details of the cases and some critique, see KC Liu, ‘Analysis of and Comments on CD-R-Related Cases: Focusing on Competition Law and Patent Compulsory Licensing Issues’ (2009) 17(1) Fair Trade Quarterly 1 et seq; KC Liu, ‘The Taiwanese “Philips” CD-R Cases: Abuses of a Monopolistic Position, Cartel and Compulsory Patent Licensing’ in C Heath and A Sanders (eds), Landmark Intellectual Property Cases and Their Legacy (The Netherlands, Kluwer Law International, 2011) 83 et seq. 80 TFTA, s 32: in response to the request of the person being injured as referred to in the preceding section, a court may, taking into consideration of the nature of the infringement, award damages more than actual damages if the violation is intentional; provided that no award shall exceed three times the amount of damages that is proven (para 1). Where the infringing person gains from its act of infringement, the injured may request an assessment the damages exclusively based on the monetary gain to such infringing person (para 2). 79

Patent Enforcement in Taiwan 381 in matters arising from proprietary rights, the court costs shall be 1,000 New Taiwan Dollars (NTD) on the first NTD100,000 of the price or claim’s value, and an additional amount shall be taxed for each NTD10,000 thereafter in accordance with the following rates: NTD100 on the portion between NTD100,001 and NTD1,000,000 inclusive; NTD90 on the portion between NTD1,000,001 and NTD10,000,000 inclusive; NTD80 on the portion between NTD10,000,001 and NTD100,000,000 inclusive; NTD70 on the portion between NTD100,000,001 and NTD1,000,000,000 inclusive; and NTD60 on the portion over NTD1,000,000,000. A fraction of NTD10,000 shall be rounded up to NTD10,000 for purposes of taxing court costs.

101

The Code of Civil Procedure also stipulates that the losing party shall bear the litigation expenses (s 78). It shall be noted that the litigation expenses borne by the losing party do not include attorney’s fees of the winning party.

XI. Conclusion and Outlook 102

103

In 1949, Taiwan put into effect the Patent Act to encourage and protect technical innovation. Since then, the Patent Act has been amended several times owing to industrial developments and the rapid growth of technology. With professional personnel and streamlined adjudication procedures of the IP Court, a new era of patent enforcement in Taiwan began on 1 July 2008. Legal professionals had high expectations for the IP Court to enhance the trial quality and provide high-level IPR protection under a new litigation system which will foster market competitiveness in the knowledge-based and technology industries. However, our empirical study on the IP Court’s decisions concerning patent disputes shows a disturbingly low patent holder win rate. Therefore, it does not come as a surprise that the current operation of the IP Court attracts criticisms from the industries and legal professionals. It is worth noting that the criticisms have caught attention and recently the IP Court has initiated some adjustment of the judicial practice, in a pro-patentee approach. The operation of the IP Court and the patent enforcement in Taiwan remain to be further observed.

13 Patent Enforcement in Japan CHRISTOPHER HEATH*

A. Civil Law Enforcement in Japan in General I. Civil Procedure, Law Enforcement and Legal Consciousness 1

There are few fields in law that are as dominated by mutually misconceived perceptions as the field of enforcement. The Japanese are huge admirers and often avid readers of Jhering’s Kampf ums Recht,1 while Germans are often told by Japanese that litigation is simply out of the Japanese character, a thesis that was lent academic credence by an eminent Japanese law professor who wrote in 1948: I do not think that the costs and long delays of law suits are a sufficient explanation for the low number of law suits in Japan. Rather, the discrepancy between the Japanese legal consciousness and the current legal system is of far greater importance. Traditional legal consciousness in Japan does not regard rights and obligations as clear and defined facts. Yet the current legal system that was adopted from the West aims at clarifying and defining legal rights and obligations of both parties on the basis of established facts. Such a black and white decision destroys the basis of an amicable and cooperative relationship that developed especially because the framework of rights and duties were not clearly defined. In the traditional sense, raising a claim must therefore be regarded as a public challenge or declaration of war.2

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But neither are most commercial litigants in Germany as pig-headed as Michael Kohlhaas, nor are the Japanese shy and withering wallflowers, and John Haley in his ground-breaking article ‘The Myth of the Reluctant Litigant’3 and Guntram Rahn in his profound work on ‘Legal Thinking and Legal Perception in Japan’4 did a lot to debunk the myth of the litigation-averse Japanese. While cultural traits should certainly not be discounted, shortcomings in the Japanese enforcement system certainly played their

* I am much indebted to Mr Atsushi Furuta (Japanese Patent Office, former researcher, Max Planck Institute, Munich) for his assistance in preparing this text, and for locating source material. 1 Rudolf v Jehring was one of the most important law academics in the second half of the 19th century. In his work Der Kampf ums Recht, he approvingly cites Heinrich von Kleist’s novel Michael Kohlhaas, the story of a peasant who, wronged and humiliated by a landowner and nobleman, starts a crusade of revenge in order to get justice for the injustice done. 2 H Kawashima, Nihonjin no hô ishiki (‘The Legal Consciousness of the Japanese’) ( Tokyo, 1967) 139. 3 JO Haley, ‘The Myth of the Reluctant Litigant’ (1978) Journal of Japanese Studies 359. 4 G Rahn, Rechtsdenken und Rechtsauffassung in Japan (Munich, 1992).

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part in the low number of lawsuits. When compared to the practice today as is described in the following chapter, it shows how far things have changed. 3 Until the mid-1990s, a ‘typical’ court action was held in about 10 hearings with intervals of two months each, and such hearings would often last only three minutes each in order to exchange pleadings and arguments.5 The old Code of Civil Procedure 1926 gave the parties significant leeway regarding the timing of hearings and the presentation of evidence and legal arguments (satirically termed ‘samidare’, as hesitantly as Japanese spring rain). The new Code of Civil Procedure 1998 (‘CPC’) that in this respect draws heavily upon the German experience with the ‘Bender’ reforms of civil procedure in the 1970s, requires more clarity for the writ as such and introduces a preliminary hearing to clarify the issues in dispute. In IP matters, section 104bis introduced an obligation by the defendant to do more than just make a bare denial. Rather, the ‘other party shall clarify his relevant act in a precise manner’. This has significantly helped to speed up procedures. In addition, section 157 of the CPC allows the court to reject facts or arguments filed unduly late. While this provision was hardly applied prior to 1998,6 the courts are now more assertive in exercising their discretion.7 4 Moreover, a significant number of problems related to civil procedure centred around evidence and proof. For one, parties in a civil suit in the past had only limited recourse towards obtaining written (documents) or oral (affidavit) evidence from the other party. Systems of pre-trial discovery (the US), the saisie-contrefaçon (France), or the Anton Piller Order (UK) were unavailable, a situation not unlike the one in Germany where the Besichtigungsanspruch in a 1985 decision was essentially emasculated by a most literal interpretation of ‘inspection’.8 While things in Germany have changed under the impression of the European Enforcement Directive 2004/48/EC, the Japanese courts can now order ‘the other party to produce documents necessary for the proof of alleged infringement or the assessment of damages caused by the infringement’ ( Japanese Patent Act, s 105(1)). In the past, submission of documents was often opposed for the reason that trade secrets were involved. After the Tokyo High Court found that ‘the intention of protection trade secrets is not a legitimate reason for withholding relevant documents that may be of importance to the other side’,9 section 105(2) was introduced allowing the court to inspect documents requested by one party in order to determine if there is good reason for withholding such documents. The assessment of the court is not open to review, as the other party does not see the documents.10

5 H Nishiguchi and others, ‘Teamwork ni okeru funyoteki soshō undō wo mitoshite’ (A joint look at the the workings of civil procedure) (1994) 846 Hanrei Times 10. It was reported that in patent cases, judges would rather wait for their next transfer (routine rotation every three years) than deal with a patent case. 6 N Yoshino, ‘Die neue Diskussion um die Prozeßbeschleunigung in Japan’ (1991) 8 Recht in Japan 65, 67. 7 Tokyo High Court, 31 October 2002, 2003 AIPPI Japan (English edn) 359—Anti-Allergic Agent. Here, in a patent infringement suit, the defendant was slow and reluctant to produce relevant documents, which caused a tremendous delay in proceedings. In addition, the defendant frequently changed the basis of its argumentation. As this continued on appeal, the appeal court ruled in favour of the plaintiff, as the defendant had failed to overcome the statutory presumption of infringement (the case concerned a manufacturing process) as its arguments in this respect were filed too late. 8 German Federal Supreme Court, 8 January 1985, 18 IIC 108 (1987)—‘Pressure Beam’. 9 Tokyo High Court, 20 May 1997, 30 IIC 452 (1999)—Sale of Pharmaceuticals. 10 See eg Osaka District Court, 4 December 2001, 34 IIC 203 (2003)—Cogwheel. Here the Court inspected the documents and allegedly infringing device and ultimately decided that the latter was not deemed infringing. It is,

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Procedures for protecting the secrecy of documents are also in place (Japanese Patent Act, s 105quater).11

II. Patent System and Industrial Policy 5

While the concept of industrial property laws was imported from abroad, it blended with Japan’s policy of rapid technological development that became the driving ambition of the Meiji Government after 1867: ‘Knowledge shall be sought throughout the world so as to strengthen the foundations of imperial rule’.12 Industrial property rights were thus regarded as tools for industrial development under the jurisdiction of the Ministry of Agriculture and Trade, later the wily Ministry for Trade and Industry (‘MITI’), now METI. The Japanese Patent Act, which was initially enacted in 1871, repealed one year later, and which finally came into force in 1885,13 was significantly amended in 1888, 1899, 1909, 1921 and 1959. The current Patent Act of 1959 (‘PA’) has undergone no fewer than 50(!) revisions, almost 30 of which occurred between 1998 and today. While often minor, they include such important changes as allowing the patenting of pharmaceutical substances, multiple claims, and the patenting of microorganisms, paving the way for broadening the scope of patent,14 abolishing and re-introducing the opposition system, statutory provisions for damage awards in cases of infringement etc. Already in 1905, Japan had taken the bold step of introducing the German-based system of protecting minor inventions by utility models, a system particularly suitable to Japan’s small and medium-sized enterprises. Unlike other statutory instruments, no clear preferences for a certain foreign legal system can be detected. While the initial patent statute was based on US law, the revisions of 1921 and 1959 marked a major shift towards the German patent system. And the current Examination Guidelines are often the result of trilateral consultations between the European, US and Japanese patent offices. 6 Both the significant amendments to the Code of Civil Procedure in 1998 and the changes of the Japanese Patent Act in the last 15 years were due to attempts to overcome economic recession by a ‘Cycle of Economic Recreation’ (‘chiteki sōzō cycle’) proposed

of course, difficult for the plaintiff to argue infringement without ever having seen the device. s 105(3) allows for a court inspection of objects and thus complements the provision on an inspection of documents. 11 These secrecy orders by the court are applied rather pragmatically (Osaka District Court, 18 April 2008, 2010 GRUR Int 79 for third parties; Osaka District Court, 25 December 2008, 2010 GRUR Int 80 for a subsequent revocation of the order), and also apply to interim proceedings: Supreme Court, 27 January 2009, 41 IIC 858(2010)—‘Secrecy Order’. 12 For an account of the industrial property policies of the Meiji Government in Japan, see G Rahn, ‘The Role of Industrial Property in Economic Development: The Japanese Experience’ (1983) 14 IIC 449. 13 The first Patent Act was almost single-handedly written by Korekiyo Takahashi, an enlightened politician who went on to became Prime Minister in the 1930s and was murdered by a right-wing Japanese military squad in 1936. 14 For details, see T Takenaka, ‘Interpreting Patent Claims: The US, Germany and Japan Compared’ IIC Studies vol 17, (Weinheim, 1995) 193 et seq. A doctrine of equivalents comparable to the one developed by US and European case law was only recognised by the Supreme Court decision of 24 February 1998, 30 IIC 443 (1999)—Ball Spline Bearing III. For subsequent decisions in this respect, see the articles by S Hattori, Shimei kintōron (My Own Doctrine of Equivalents), T Itō Saikōsai kintōron igai no kintō no hanrei (Cases on the Doctrine of Equivalents) and Y Aoki, Kintō jōken (Selected Elements for the Theory of Equivalents) in (1999) 6 Patent 65–92 (in Japanese).

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Christopher Heath in a 1997 report by the Japanese Patent Office (‘JPO’). Not much later, in 2002, then Prime Minister Koizumi proclaimed the ‘Chiteki rikkoku’, a nation based on IP rights. This national goal eventually led to the promulgation of the ‘chiteki zaisan kihonhō’, the Basic Intellectual Property Act of 2003.15 The Intellectual Property Strategy Headquarters (‘chiteki zaisan senryaku honbu’) set up under this Act answers directly to the Prime Minister, and annually publishes a plan with projects for a pro-patent policy. Finally, it should be mentioned that different from 10 or 20 years ago, there are now a number of publications on the Japanese patent litigation system in Western languages, adding to the transparency of the system.16

III. Enforcement Procedures 1. In General 8

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In the following, this chapter will mostly deal with the civil enforcement of patents. While wilful patent and utility model infringement is a criminal offence, there are no known cases where these provisions have actually been applied. Also mediation or arbitration do not seem to be alternatives pursued in Japan, presumably due to the fact that the courts are quite efficient in their handling of cases and have also become a highly experienced forum owing to the limitation of first instance jurisdiction to the district courts of Tokyo and Osaka. Administrative proceedings before the Patent Office relate to oppositions, invalidation actions and requests for limiting the scope of a patent (ex parte only). The Patent Office is not involved in any issues for determining infringement. Of a certain (but in patent matters limited) interest are administrative customs procedures.

2. Civil Courts 10

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Since 1 April 2004, the district courts of Osaka and Tokyo under section 6 of the Code of Civil Procedure (‘CCP’) have had exclusive first instance jurisdiction over disputes concerning technical IP rights (patents and utility models), while the IP High Court in Tokyo hears all appeals against first instance decisions of these two district courts, and of the Patent Office. The composition of the courts, and its procedure, are further elaborated under section B below. Japan follows a system of career judges who are often recruited directly after the bar exam. The judiciary is administrated by the Supreme Court that tends to transfer judges every three years to a different location and often a different field of law. This makes it rather difficult for judges to specialise in the IP field despite the existence of specialised courts. All IP-related decisions are published on the website of the IP High Court: www.ip.courts.go.jp. For some decisions, an English translation is also provided.

Basic Intellectual Property Act, Law No 122/2002, effective as of 1 March 2003. See section B.XII for a list of publications.

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3. Professional Representatives 12

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Representation is not mandatory in civil proceedings. Authorised representatives before the courts in infringement proceedings are attorneys (bengoshi, about 35,000 as of 2014), while patent attorneys (benrishi, about 10,000 as of 2014) may represent a case before the Patent Office, the IP High Court in appeals against decisions of the Patent Office, and as co-counsel after having qualified as one of now 2500 fuki-benrishi.17 Attorneys may represent clients before the Patent Office, yet rarely do so. About 100 are listed as patent experts with the Patent Office. Most attorneys have a legal background, although due to the introduction of the ‘Law School’ system some attorneys may now come with an undergraduate degree different from law. In such case, they have to study three years at law school, while those with a law degree only need two years. After passing the bar exam (currently about 30 per cent pass), they will get legal training with the courts for 12 months, and then take the second bar exam that allows them to register as an attorney, or to compete for the post of judge or prosecutor. On the other hand, most patent attorneys have a technical background, although it is possible to pass the patent attorneys exam also with a legal background for a future practice in trade mark matters. In addition thereto, JPO employees who have worked for at least seven years as examiners may also register as patent attorneys, a fact that may explain the relatively high early retirement rates of patent examiners.

B. Problems Related to the Enforcement of Patent Rights I. Types of Action 1. By the Patentee a. Infringement Action 14

This is further elaborated below.

b. Customs Action 15

Seizure and destruction can be requested under the Customs Tariff Act (‘Kanzei hō’), last amended in 2014. While the number of registered industrial property rights amounts to about 3.9 million in Japan, customs annually apprehends about one million goods, of which only very few concern possible patent infringements, in fact less than 500.18 The procedures are regulated in detail in sections 69(11) to 69(20). Different from procedures in Europe, the importer has to be heard whenever a request

17 Y Tani, ‘The Role of Benri-shi (Patent Attorneys) in Japanese Dispute Resolution’ in G Rahn (ed), ‘Patent Litigation in Japan and Germany’ (2011) Journal of Japanese Law Special Edition, 113. 18 www.jpo.go.jp/shiryou/toushin/nenji/nenpou2014/toukei/2-19-1.pdf. www.customs.go.jp/mizugiwa/chiteki/pages/h26dai4shihanki.files.pdf.

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Christopher Heath for seizure is filed. Under current procedures for stopping goods allegedly infringing patents, utility models or designs, customs can request a body of experts (namely attorneys and patent attorneys) for a determination of infringement and validity. Further details are provided in chapter twenty of this book.

c. Correction Trial 16

Faced with a case of possible infringement, the patentee can raise an infringement action before the courts, a customs action before the competent administrative body, or launch a criminal complaint. At any time after the grant of the patent, the patentee may request a limitation of the patent right (‘correction’) before the Patent Office (PA, s 126). This can be done if the infringement court deems that the patent is invalid in the form as granted, but could be saved by a limitation of the claims. A correction cannot be requested once an opposition or invalidation is pending.

2. By Third Parties a. Opposition/Revocation Action 17

Third parties, competitors and/or potential infringers may attack the validity of the patent either by way of (newly introduced) opposition proceedings (up to six months from the date of grant).19 These are proceedings exclusively in writing and can be raised by anyone, with or without a legal interest. The opposition system, abolished in 2004, has thereby been re-introduced in 2015.20 Revocation proceedings (PA, s 123) before the Patent Office require a legal interest of the applicant and are thus normally initiated in connection with an infringement action, or a warning letter from the patentee. A pending revocation action prevents the patentee from requesting a correction of the patent, although a limitation of the patent can also be requested in the revocation action.21 In a correction action, the whole patent is the subject of the proceedings, while in a revocation action, only those claims that have been specifically attacked.22

b. Declaration of Non-Infringement 18

A third party may also pre-emptively raise a suit with the request for a declaration of non-infringement in cases where a legal interest can be proven (eg an allegation of infringement by the patentee).

19 Prior to 1994, oppositions could be filed prior to grant. Then, Japan switched to a post-grant opposition system. 20 In the years prior to its abolition, about 4000 opposition trials were requested each year, while the number of revocation actions (both prior and after the abolition of the opposition system) was about 300 requests per year, roughly corresponding to the number of patent infringement actions. In the last year of operation, 39% of the oppositions were rejected, 37% led to a revocation of the patent, and in 22%, the patent was upheld in amended form. 21 Both in opposition and revocation proceedings, the patentee has two possibilities of amending the patent: after the request has been filed, and after a preliminary opinion from the opposition division/appeal board has been published. Patents may be upheld in part where only certain claims have been attacked or found unpatentable. This mitigates the fact that no auxiliary requests can be filed in these proceedings. 22 Supreme Court, decision of 10 July 2008, German translation in (2009) GRUR Int 623.

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c. Determination of Scope 19

Anyone can request a trial before the Patent Office with the purpose of determining the scope of a patent (PA, s 71). This system is practically never used.

d. Misappropriation of an Invention 20

For a long time, the Japanese patent system provided no adequate remedies against the misappropriation of inventions, namely the filing of a patent application by someone who was not the inventor, or by one of the co-inventors who claimed more than his share. Incorrect statements about the inventor in the patent were regarded as a ground of nullity (PA, s 123(1)(ii) and (iv))and could not be remedied by a transfer to the true (co-)inventor. This was highly unsatisfactory.23 As of 1 April 2012, the true (co-)inventor now has a right that the patent be transferred in whole or in part, or alternatively request revocation. A request for revocation based on this ground can only be raised by the true inventor rather than any third party.

e. Suit for Proper Remuneration for an Employee’s Invention 21

The right of an employee to request proper remuneration for the transfer of the invention to his employer is a highly complicated issue in Japan and cannot be dealt with in the context of this contribution.24

II. Competent Parties 1. The Plaintiff 22

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As the patentee enjoys all the exclusive rights his patent confers to him under the Patent Act, he would certainly be competent to file a suit for any act deemed infringing under section 100 of the Patent Act. Even where an exclusive licence has been granted, the patentee may sue for injunctive relief,25 and for damages in the amount of an ordinary licensing fee.26 The patentee is entitled to launch an infringement action regardless of his (substantive) entitlement to the patent as such. This is of particular importance for employees’ inventions which under section 35 of the Patent Act belong to the employee, while the employer has a right to a non-exclusive licence. However, the employer can contractually negotiate a transfer of such invention upon payment of a reasonable remuneration.27 Only the true inventor could claim estoppel of patent misappropriation when

eg M Hattori, comment on Supreme Court, 25 March 2002, (2004) 35 IIC 686. Background reading is provided by A Petersen-Padberg, case note on employees inventions in: Bälz/ Dernauer/Heath/Petersen-Padberg, Business Law in Japan, Cases and Comments (Alphen aan den Rijn, 2012) 449; C Heath/M Mōri, ‘Employees’ Inventions in Japan’ (2005) IIC 679. 25 Supreme Court, 17 June 2005, 37 IIC 221(2006)—‘FlexX’. 26 N Nakayama, Chukai tokkyohō (‘Commentary on the Patent Act’) 3rd edn ( Tokyo, 2000) 1103. The patentee cannot claim lost profits or the infringer’s profits owing to the lack of entitlement to use the patent. 27 Reasonableness would depend on the commercial potential of the invention. There are numerous cases on this matter, eg Tokyo District Court, 23 December 1983, 15-3 Mutaishû 844; Osaka District Court, 26 April 1984, 16-1 Mutaishû 282; and Tokyo District Court, 28 September 1983, 15-3 Mutaishû. 24

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Christopher Heath sued by the patentee.28 A legislative change that as of July 2015 had passed both Houses of Parliament now stipulates that an employee’s invention belongs to the employer where this has been contractually so agreed and where the employer has an appropriate remuneration scheme in place.29

2. Co-owners of Patents 24

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As a patent in its true construction does not give a right to use, but a right to exclude third parties not entitled to the invention, co-owners should be able to assess their rights independently of each other.30 While it is settled case law that Japanese co-owners, at least before grant, have to act jointly to get the patent processed, or to appeal against decisions from the Patent Office,31 each co-owner is entitled to individually defend a granted right against a decision of the JPO along with acts of infringement.32 According to section 73 of the Patent Act, joint owners may work the patented invention without each other’s consent,33 yet not grant any licence or transfer their rights without the other’s permission.

3. Licensees 26

Patent law distinguishes between exclusive and non-exclusive licences. According to the Patent Act (s 100 et seq.) the registered, exclusive licensee is the only one entitled to sue for injunctive relief and damages, while non-exclusive licensees cannot do so even if authorised by the patentee. An unregistered licensee can invoke the license as an estoppel against any subsequent owner of the patent (PA, s 99), and may sue out of his own right for damages.34 A non-exclusive licensee may also sue alongside the patentee.35 The previous distinction between registered and unregistered non-exclusive licences has been abolished as of 1 April 2012,36 and now non-exclusive licences can no

28 Supreme Court, 20 November 1992, 1050 Jurist 180, AIPPI Journal of the Japanese Group International edn, 3/1993, 98. This has now been clarified by PA, s 123 for the estoppel of invalidity; see above. 29 www.meti.go.jp/press/2014/03/20150313001/20150313001.html. 30 This has been set out for the United Kingdom by the House of Lords in Steers v Rogers [1893] AC 232:

The truth is that letters patent do not give the patentee any right to use the invention—they do not confer upon him a right to manufacture according to his invention … . What the letters patent confer is the right to exclude others from manufacturing in a particular way, and using a particular invention. When that is borne in mind, it appears to me to be very clear that it would be impossible to hold, under these circumstances, that where there are several patentees, either of them, if he uses the patent, can be called upon by the others to pay to them a portion of the profits which he takes by that manufacture, because they are all of them entitled, or perhaps any of them is entitled, to prevent the rest of the world from using it. There seem to be no decisions in Japan, yet the above position is also taken by Matsumoto in N Nakayama (ed), Chûkai tokkyo hō (‘Patent Law Annotated’) 2nd edn (Tokyo, 1989) 834. According to Matsumoto, damages by one patentee can only be claimed up to the share he holds in the patent. 31 Supreme Court, 7 March 1995, 1527 Hanrei Jihō 146 (1995)—Magnetic Treatment Device. Also Tokyo High Court, 14 March 1993, Patent 12/1993, 117. The question was decided differently by the Tokyo High Court, 27 January 1994, Patent, 12/1994, 119. 32 Supreme Court, 25 March 2002, 35 IIC 686 (2004)—‘Pachinko Device’ with comment by M Hattori. 33 Despite the mistaken decision of Nagoya District Court, 16 July 1994, 225 Hanketsu Sokuhô, No 6520. 34 Osaka High Court, 20 June 1986, 18-2 Mutaishû 15—‘Permabrush’. 35 Osaka District Court, 26 December 1964, 15-12 GeMin 3121—‘Polypropylene’. An agent who is empowered to grant licences on behalf of the right owner has no independent standing to sue for injunctive relief: Tokyo District Court, 31 January 2002, 35 IIC 1110 (2004)—‘Tonttu’. 36 Amendment of the Patent Act by Law No 63/2011 (8 June 2011), in force since April 2012.

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longer be registered at all. There are further some indications that also exclusive, but unregistered licensees are entitled to sue for injunctive relief.37

4. The Defendant 27

Infringing acts are those that interfere with the exclusive right of the patentee to work the patent under section 68 of the Patent Act. ‘Working’ is defined in section 2 as acts of manufacture, use, assignment, lease or import. Producing (non-infringing) parts that can be assembled to create an infringing product are infringing acts in themselves under two circumstances. Either as the manufacture of ‘substantial’ spare parts,38 or of articles to be used ‘exclusively’ for the manufacture of the patented product under section 101(1) of the Patent Act. It is sufficient for an infringement that there is no reasonable commercial use for such article other than for the manufacture of infringing products.39 A claim for patent infringement can be directed against the importer and/or the distributor of infringing goods, yet not against a foreign parent company or foreign developer of infringing goods where the foreign companies lack any connections to the Japanese jurisdiction.40 Exporting parts of a protected device for assembly abroad does not infringe, while an assembly for the purposes of testing, and subsequent exportation does.41 Where a patent is infringed by the joint working of several persons, a claim for injunction and damages can be made against the person actually managing and controlling the final product.42

III. Jurisdiction, Applicable Law and Courts 1. National Jurisdiction 28

National jurisdiction in patent matters first of all follows the rules of general jurisdiction, that is, a suit can be brought at the residence of the defendant (CCP, s 3bis)43 or where the tort has occurred, in other words, in any place infringing articles have been found (CCP, s 3ter (1) no 8). Alternatively, the plaintiff can also sue at his place of business or residence, as the courts would regard this as the place where compensation for the infringement of property rights would have to be paid. Section 6 of the

37 Obiter dictum in the above ‘Tonttu’ decision (n 35), and Osaka District Court, 26 July 2004, 37 IIC 480—‘NuBra’. 38 Osaka District Court, 24 April 1989, 21-1 Mutaishû 271—Crushing Device. The case concerned a device consisting of a hammer and a board for crushing stones. While the hammer as such lasted 3 years, the crushing board had to be replaced at least once a week. The defendant manufactured and sold crushing boards that could qualify as essential parts of the whole device, the manufacture of which could thus qualify as infringing. See also K Matsuo, Kansetsu shingai no seiritsu to sono kōka (‘Structure and Effect of Indirect Infringements’) (1990) 957 Jurist 248. 39 Tokyo District Court, 29 July 1994, 1513 Hanrei Jihō 155 (1995); Tokyo High Court, 23 May 1996, 1570 Hanrei Jihô 103 (1996). See also N Nakayama, Tokkyohō (‘Patent Law’) (Tokyo, 2010) 322–29. 40 Tokyo District Court, 14 May 2001, 34 IIC 554 (2003)—Medicine for Reducing Eye Pressure. 41 Osaka District Court, 22 March 2012, German translation in (2014) GRUR Int 567—‘Heating Furnace’. 42 Tokyo District Court, 14 December 2007, German translation in (2010) GRUR Int 249—‘Eyeglasses’. 43 In the case of a commercial enterprise, this would normally be the place of registration, yet may also be the place where business is actually conducted: Tokyo High Court, 9 September 1993, 1485 Hanrei Jihō 116 (1994), 27 IIC 108 (1996)—Cylindrical Cutter.

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Christopher Heath CCP established an exclusive jurisdiction of the Tokyo and Osaka District Courts for ‘suits under rights of a patent or utility model, a right of use of a design layout of an integrated circuit, or rights of an author over a program’. Patent infringement suits can thus only be brought before the District Court of Tokyo (jurisdiction over the districts of Tokyo, Nagoya, Sendai and Sapporo) or Osaka (jurisdiction of the districts of Osaka, Hiroshima, Fukuoka and Takamatsu). For all other IP-related subject matter, section 6bis of the CCP has introduced a concurrent jurisdiction of the district courts of Osaka and Tokyo. This would apply to trade mark, design, copyright (without program), plant variety and unfair competition cases. In total, the district courts of Tokyo and Osaka hear more than 80 per cent of all IP-related cases. Claims under a patent right under section 6 of the CCP also include the interpretation of licensing agreements, the object of which are patents.44 International experience shows the advantages of limiting jurisdiction for patent matters to a small number of courts owing to the technical and highly specialised nature of this field. In Japan, the idea of judicial specialisation has been implemented only to a certain extent. While there is a limited number of first instance courts in patent matters (Tokyo and Osaka), and only one appeal court (IP High Court Tokyo), judges are still rotated on a regular basis every three years regardless of special expertise. Judges with an IP masters degree from a US or European university may find themselves working in the Yamagata small claims court or Niigata family court after their return. Judges in patent matters are assisted by technical experts.45 First, by senior patent examiners dispatched to the courts by the Patent Office for a period of three years. These experts (chōsakan) assist the judges in understanding the technical issues of a given case, yet do not report to the parties. There are six of these at the Tokyo District Court, three at the Osaka District Court, and 10 at the IP High Court. And, second, by (external) experts (senmon iin) commissioned by the court and chosen from a list of university professors and senior patent counsel. At the request of one party, the court can also commission an expert opinion on the quantum of damages (PA, s 105bis). See also below section V for the stage of litigation when technical issues are examined. For appeal cases, the IP High Court since 1 April 2005 has exclusive jurisdiction. In addition to appeals in patent matters, the IP High Court also hears appeals for cases brought before the Tokyo District Court under the rules of concurrent jurisdiction, while the other high courts outside Tokyo still have jurisdiction to hear appeals for cases before the district courts under their jurisdiction. The IP High Court also has exclusive jurisdiction over appeals against decisions rendered by the Patent Office. Appeal procedures basically mean a re-hearing of the whole case, including evidence. A final appeal on questions of law can be brought before the Supreme Court, a body of 15 judges that has wide discretion to allow appeals. Section 317(2) of the CPC,

44 Osaka District Court, 21 September 2001, 1785 Hanrei Jihō 78 (2002) = 35 IIC 324 (2004)—Jurisdiction in Patent Matters. According to the Court, ‘matters related to patents’ were not limited to questions of infringement and validity, but could also comprise questions of whether a certain patented technology had been worked or not, which was at issue in this case. 45 Y Nagasawa, ‘The Examination of Technical Issues in Patent Litigation’ in Patent Practice in Japan and Europe Liber Amicorum Guntram Rahn, (Alphen aan den Rijn, 2011) 545.

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introduced in 2000, allows an a limine rejection of the petition to appeal. As of yet, no IP expert has ever been appointed to the ranks of the Supreme Court, although there are regularly IP experts amongst the assistants of the judges. Some attempts have been made to move IP infringement litigation away from the courts to arbitration centres. There is one arbitration centre for industrial property cases that was set up in 2000 and which handled a mere four cases in its first year.46 As to (court) mediation, in April 1998, a new division meant to mediate IP disputes was set up at the Tokyo District Court. While according to an IP High Court decision, licensing agreements can be made subject to arbitration clauses that even survive the termination of the agreement, patent invalidation procedures are not considered ‘civil disputes’ that can be made subject to arbitration.47 This case thus takes the view that while issues of infringement, damages and injunctive relief may be brought within the ambit of an arbitration clause, this is not so for patent invalidation actions, as these are considered administrative in nature. It is notable in this respect that different countries continue to adopt different approaches to the question of arbitrability of claims about the validity of IP rights.48

2. International Jurisdiction 36

Two issues have come before the courts regarding international jurisdiction. First, to what extent the infringement of a foreign patent can be regarded as an actionable tort or a contributory infringement in Japan. The relevant case concerned acts that were actionable under the extraterritorial provision of § 271(b) and (c) 35 USC, in other words, provisions that allowed the US patentee to bring an action against infringing acts committed abroad (active inducement and contributory infringement). The Japanese courts in three instances denied that such conduct was actionable under Japanese law, basically because the principle of territoriality limited the effects of the US patent to the United States.49 After the reform of the Japanese International law (‘Hōrei’) in 2006, detailed conflicts rules on tort were adopted (Act on the Application

46 T Takii, ‘Nihon chiteki zaisan chûkai center gutaiteki toriatsukai jirei no kentō’ (‘Appraisal of Cases Handled by the IP Arbitration Centre)’ (2004) 54 Chizai Kanri 723 introduces 5 cases, but does not give statistics. The Japanese Arbitration Centre (Chûsai Sentâ) is now publishing statistics at: www.ip-adr.gr.jp/case-ctatistics/. There seem to be about 5–10 cases per year. 47 Tokyo District Court, 21 October 2005, 38 IIC 841 (2007). 48 See eg L Boo, ‘Arbitrability of Intellectual Property Disputes’ (Proceedings of 4th AIPPI Forum in Singapore, 4–6 October 2007) available at: www.aippi.org/?sel=meetings&cf=4forumsingapore (with further references comparing in particular the situation in Singapore, Switzerland and the United States). 49 Tokyo District Court, 22 April 1999, 1691 Hanrei Jihô 131 (2000); Tokyo High Court, 27 January 2000, 1711 Hanrei Jihô 131 (2000) = 2001 GRUR Int 83 with comment by Petersen; Supreme Court, 26 September 2002, (2003) 19 Law & Technology 81 = Bälz and others, Business Law in Japan (n 24) 679 with comment by Y Nishitani—Card Reader. This is consistent with a previous decision by the Tokyo District Court, 12 June 1953, 4–6 Kakyu Minshû 847, which denied that the infringement of a patent in Manchuria could be qualified as a tort in Japan. See also S Chaen, ‘Gaikoku tokkyo shingai jiken no kokusai saiban kankatsu’ (‘International Jurisdiction over the Infringement of a Foreign Patent’) (1997) 21 Kôgyô shoyûken hôgakukai nempô 59; M Takabe, ‘Tokkyoken shingai sosho to kokusai saiban kankatsu’ (‘International Jurisdiction and Patent Infringement’) in Chiteki zaisanhô to gendai shakai 125 (Tokyo, 1999); M Dogauchi, Jurisdiction over Foreign Patent Infringement from a Japanese Perspective (2001) 44 JAIL 56; Y Nishitani, ‘Cross-Border Patent Infringement in Japan—Comment on the Supreme Court’s Decision of September 26, 2002’ [‘Card Reader’ case] (2004) 16 ZJapanR/J.Jap.L 251.

394

37

38 39

40

Christopher Heath of Laws, ss 17–22). It left out, however, the envisaged special rule on the infringement of IP rights (that would have pointed to the country of protection) for lack of unanimous support.50 Second, to what the extent the infringement of a foreign patent can be determined by the Japanese courts. The latter was affirmed most prominently in a case involving the alleged infringement of a US patent by a Japanese company. The alleged infringer sued the patentee, a Japanese competitor, for denigration, actionable under the Japanese Unfair Competition Prevention Act. In the course of determining denigration, the Tokyo District Court used the principles of claim interpretation as applied in the United States in order to determine if there was indeed a patent infringement under US law. The Court ultimately denied this, granted the claim under unfair competition prevention law, and awarded the plaintiff (alleged infringer) damages in the amount of almost 2 million Yen plus 1 million Yen in attorneys’ fees.51 In the case of licensing agreements over a Japanese patent right, jurisdiction can of course be agreed upon between the parties.52 Issues of double jurisdiction in patent matters hardly arise in Japan. On a more general level, the courts do not regard court proceedings abroad on the same subject matter as an obstacle to assessing jurisdiction themselves, thereby frustrating attempts at a later execution of the foreign decision in Japan.53 As to the applicable law, Japanese law would of course be applicable in cases of infringement of a Japanese patent. In the case of licensing agreements, the applicable law might be agreed upon, yet one should be aware of section 3quinquies (3) of the CCP according to which ‘Japanese courts have exclusive jurisdiction for suits related to existence or effect of intellectual properties which are established upon registration and registered in Japan’. Japanese courts further seem to presume the application of Japanese law over a licensing agreement of a non-registered right (eg a trade secret), unless otherwise agreed upon.54

50 See Hōmushō Minjikyoku Sanjikan-shitsu, ‘Kokusaishihō no Gendaika ni kansuru yōkō chūkan shian hosoku setsumei’ (Explanations on the current draft of an International Private Law) in Bessatsu NBL Henshū-bu (ed), Hō no Tekiyō ni kansuru Tsūsoku-hō Kankei Shiryō to Kaisetsu (Tokyo, 2006) 201; Y Nishitani, ‘Die Reform des internationalen Privatrechts in Japan’ (‘The Reform of the Private International Law in Japan’) (2007) IPRax 556 (note 46). 51 Tokyo District Court, 16 October 2003—Sango Fossile Powder, 1874 Hanrei Jihô 23 = 1151 Hanrei Times 109. In a previous case, the Supreme Court had affirmed that the Japanese courts would be competent to determine an alleged copyright infringement in Thailand under similar circumstances: Supreme Court, 8 June 1999, 16 Law & Technology 72—‘Ultraman’. 52 Tokyo High Court, 16 September 1991, 24 IIC 391 (1993)—‘Liquid Fuel Component’. Also reprinted in Hanrei license hô (Tokyo, 2000) 521, with comment by Nakano. 53 Tokyo District Court, 24 September 1991, 35 Japanese Annual of International Law 175 (1992)— ‘Manufacture of Coated Copper’. This ignominious decision would perhaps no longer be followed today and must be seen as an attempt to shield Japanese companies from foreign companies asserting their rights. In addition, back in 1990, Japan had no specific provisions on the protection of trade secrets. In a more recent decision, Supreme Court, 24 April 2014—‘Eyebrow Treatment’, the courts had to determine whether a US decision could be executed that had affirmed the misappropriation of a trade secret in Japan and the US by 2 Japanese-based persons. While the first two instances denied the possibility of execution owing to the fact that no damage had been proven in the US, and for this reason a US court had no jurisdiction over the matter. According to the Supreme Court, it was sufficient to demonstrate that the plaintiff ’s interests were likely to be compromised in the US in order to affirm jurisdiction of the US courts. 54 ‘Liquid Fuel Component’ (n 52).

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The above principles developed by the courts have now been statutorily regulated by sections 3bis to 3duodecies of the CCP under Act no 36/2011, in force since 1 April 2012.

IV. Preparation for Trial 1. General Matters 42

43

44

45

Starting a patent infringement suit requires careful preparation. In cases where the patent has been translated from another language, a re-translation of the patent may be useful in order to determine the exact wording of the claims. After all, translation errors or limitations during application may have occurred. Prior art cited in the Japanese as well as in other application procedures should be carefully evaluated, as the estoppel of invalidity is regularly raised in infringement procedures (see below section VIII), and the courts find a high number of patents invalid (see below).55 Requesting an ex parte limitation of the patent prior to commencing infringement proceedings gives the patentee a freer hand than having to request a limitation in (inter partes) invalidation procedures. For matters of infringement, a patentee should be aware that the courts are still relatively reluctant to affirm equivalent infringement (see below section VI), that research exceptions are interpreted broadly and that the parallel importation of patented goods can normally not be objected to (see below section VIII). While finding a specialised patent lawyer is no longer that difficult and can often be arranged via an attorney in the home country, it is often very hard to get a clear answer and estimate about the costs of an action. Necessary expenses would often involve more than one attorney, a patent attorney and sometimes an expert. In difficult legal issues (eg in the field of repair/reconstruction, damages), it is customary to solicit (costly) expert opinions from Japanese (or foreign) law professors. Most Japanese patent experts feel comfortable communicating in English, but this is not true for other foreign languages, although a small number speak and read German, and knowledge of Chinese is rising. A personal meeting with legal counsel is highly recommended prior to commencing any legal action. Here, strategic options, costs and risks should be discussed. Cultural differences as a source of possible misunderstandings are never far from the surface. Success in an infringement action is far from certain, and even in successful cases, the patentee will rarely be reimbursed for his legal costs (see below section X).

55 Between 2005 and 2008, the rate of patents held invalid by the infringement courts was about 50%. It has now dropped to about 30%: www.jpo.go.jp/torikumi/ibento/text/pdf/h26_jitsumusya_txt/09.pdf.

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Table 1: Number of Judgements and Settlements (Patent Infringement) between 2003 and 201356 Year Judgements

Settlements

46

47

03

04

05

06

07

08

09

10

11

12

13

Total number

65

70

63

40

50

37

37

36

38

40

56

Claims are admitted totally or partially

10

12

11

5

15

9

9

7

9

6

14

Claims are denied

55

58

52

35

35

28

28

29

29

34

42

61

60

76

67

45

44

32

24

29

34

40

126

130

139

107

95

81

69

60

67

74

96

Assuming that cases which were settled with a settlement were favourable for patent holders, the chances of a patent holder winning in infringement cases are approximately 40 to 50 per cent.57 In light of the above statistics, it is advisable (though not mandatory) to commence proceedings with a warning letter to the alleged infringer that specifies a time limit within which to respond. Even a lengthy exchange of letters or opinions does not lead to negative consequences for a subsequent preliminary or ordinary action. As ex parte actions for interim relief or gathering information are not available under Japanese law, there is not much point in filing a surprise action.

2. Preliminary and Provisional Measures 48

49

56

Preliminary measures for obtaining evidence are not available outside an already pending action, although there is an action for the preservation of evidence and documents (CPC, ss 220–242). This of course requires that the petitioner knows what to look for. Also the action for preliminary injunction is not what most Europeans would expect. Raising such action does not require urgency, and is dealt with in a similar manner and pace as the main action, for which reasons preliminary and ordinary procedures often run in parallel. Thus, there are no ex parte injunctions. The huge advantage of a preliminary injunction is that it can be immediately enforced, while in an ordinary action, enforcement is normally deferred until the decision becomes final. Where doubts as to the validity or infringement of the patent persist, the court would recommend the plaintiff to drop the preliminary action (which can be done without the consent of the defendant), and simply proceed with the ordinary infringement suit. Secrecy orders can also be requested and issued in preliminary proceedings.58

J Pitz, Patent Litigation in Germany, Japan and the United States (Munich, 2015) 9. ibid 9 mentions 50%; Chief Justice Shitara 40%: www.nikkei.com/article/DGKKZO84405270U5A 310C1TCJ000/. 58 Japanese Supreme Court, 27 January 2009, 41 IIC 858 (2010). 57

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397

One should however be aware that the enforcement of a preliminary injunction, if subsequently revoked, may lead to damage claims.59

V. The Trial 51

52

53

Prior to the 1998 amendment of the CPC, procedures in patent infringement cases would take anywhere between two to five years in first instance. The Tokyo and Osaka District Courts now handle such cases within 12 months.60 The significant improvements made are partly due to the new measures introduced by the CPC and the Patent Act, to the limitation of jurisdiction and partly to the greater expertise of judges handling such cases. After having received the initial claim by the plaintiff and the respondent’s answer thereto, the judge can convene a pre-trial conference in order to structure the future proceedings regarding the points at issue and the evidence to be presented. Procedures are not conducted ‘in one go’, but in a number of hearings in intervals of about six weeks. Delaying tactics are less successful than they were in the past, as the court in such case can either preclude evidence filed too late or use presumptions against the party from which performance is due. Preliminary assessments on the merits of a case (leaving the questions of remedies to the final decision) are now the rule in IP disputes in order to proceed with an assessment of damages where the judges indicate that infringement has been proven.61 The model structure of an infringement action was published in 2012 by the Tokyo District Court and is summarised below. Some additional remarks should be made: 1. ‘Preparatory proceedings’ are not public and allow for an open exchange between the court and the parties. Only the first and the last hearing are called as such, and are public. Preparatory meetings are held in intervals of six weeks to two months. 2. As mentioned above, section 104bis introduced an obligation by the defendant to ‘clarify his relevant act in a precise manner’, otherwise the plaintiff ’s allegations would be deemed admitted. The same holds true if the alleged infringer refuses to submit documents under section 105 of the Patent Act. 3. A correction of the patent claims that is filed as a defence to the allegation of invalidity can be considered by the court only where this correction has been actually filed with the Patent Office (which may not possible in an ongoing nullity suit, or on appeal). 4. The court may order the secrecy of proceedings, limited access to proceedings or obligation of the other party not to use or disclose a trade secret relied upon in court (PA, s 105quater). In 2012, eight requests for such order were made in patent

59 Osaka High Court, 15 October 2004 and 29 March 2005, 1912 Hanrei Jihō 107; Supreme Court, 24 December 1968, 230 Hanrei Times 173. 60 M Hattori, ‘The “Procedural Timetable for Patent Infringement Litigation” by the Tokyo District Court’ (2012) 37 AIPPI Journal Japanese Group (English edn) 155. 61 An account of the pre-1998 litigation practice is given by S Ono, ‘Chiteki zaisanken songai ni okeru songai baishō kyaku no kettei’ (‘On Decisions Regarding the Amount of Damages in Infringement Actions’) (1993) 111 Kōgyō shoyûken kenkyû 1. Dr Ono’s article summarised just about everything that was wrong with infringement proceedings at the time.

398

Christopher Heath cases before the Tokyo District Court, of which five were granted.62 Examples are data submitted to the Ministry of Health,63 or a detailed structure of an LED chip.64 5. The parties may settle the case in court (CPC, s 267), or out of court by way of withdrawal (CPC, s 261).

54

The following is a summary of the model procedural sequence for patent infringement litigation:65 1. Prior to the first oral hearing, the plaintiff has to make a brief statement of complaint including basic documentary evidence, and the defendant has to submit a brief reply, and also submit evidence intended to be filed. 2. During the first oral hearing, both parties will state their respective cases, especially to what extent they agree or disagree with the other party’s allegations. In particular, the defendant must state whether he wishes to contest the validity of the patent. 3. The following hearings are not public and are labelled ‘preparatory meetings’ (jumbi tetsuzuki). For the first of these hearings, the defendant is asked to explain the allegedly infringing product or process, to argue the case of (non-)infringement in a comprehensive manner, and, if applicable, the case of invalidity by submitting the prior art documents on which the argument is based. A date is then set for the second preparatory hearing. Here, the plaintiff should counter the defendant’s arguments on infringement and validity. The court would then give an opinion as to which points should be argued further, and which evidence might be necessary where issues of proof are of relevance. This should allow both parties to prepare for the third hearing. 4. The third hearing is again an exchange of arguments regarding infringement and validity. Both parties will give a technical presentation (Powerpoint, experts) to the court. In cases where the validity of the patent is called into question, the fourth hearing will be dedicated to this point and involve the court’s technical assistants (chōsakan) who will give their opinion. The plaintiff may thereupon choose to request a limitation of the patent (which the court, however, can only take into account when a request is actually filed with the patent office). At the end of the fourth hearing, the court will give a provisional opinion as to validity and infringement. 5. If the court takes the provisional opinion that the patent is valid and infringed, the fifth preparatory hearing will be dedicated to the question of damages, and the question which evidence will have to be submitted by the parties.66

62 T Abe and L Hwang, ‘Protective Order in Japan’ in Liber Amicorum Guntram Rahn (Alphen aan den Rijn, 2011) 233. 63 Tokyo District Court, 15 September 2006, 1973 Hanrei Jihō 131. 64 Osaka District Court, 18 April 2008, 1287 Hanrei Times 220. The order was subsequently revoked: Osaka District Court, 25 December 2008, 1287 Hanrei Times 227. 65 Reprinted as an annex to M Hattori, ‘The “Procedural Timetable for Patent Infringement Litigation” by the Tokyo District Court’ (n 60) 168–70. 66 For damage proceedings, see www.courts.go.jp/tokyo/saiban/sinri/0807_songaibaishou/index.html.

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6. The final (public hearing) will only take place where no settlement has been reached meanwhile, and will only consist of the parties stating their final requests, or, where necessary, by hearing witnesses.

55

It should be noted that in all preparatory hearings, the court takes an active role by issuing provisional opinions, pointing out unclear issues or points where further proof is necessary. The court would also at various stages propose a settlement. Appeal proceedings mirror those in first instance, and the parties argue their case de novo.

VI. Types of Infringement 1. Direct and Indirect Infringement 56

57

Acts defined as ‘working’ the invention are listed in section 2(3)(i)–(iii) of the Patent Act and include producing, using, exporting, importing or offering for sale. This definition corresponds to the acts defined as infringing in section 101 of the PA. As to the act of producing, the distinction between repair and reconstruction has become particularly problematic.67 Indirect infringement is defined as the supply of parts that are used exclusively for the production of the patented product (PA, s 101(i)). There are hardly any cases, because it is very difficult to prove such exclusive use.68 As of 2002, a new act of indirect infringement according to section 101(ii) of the Patent Act was introduced, namely the supply of parts combined with the positive knowledge that these would be used for infringing purposes. Still, there are hardly any cases.69

2. Literal and Equivalent Infringement 58

The technical scope of a patented invention is determined based on the statements in the scope of claims70 (PA, s 70(1)). Therefore, the general principle is that patent infringement is recognised only if an allegedly infringing product meets all of the structural elements stated in the claims.71 This is known as literal infringement. Literal infringement may even be affirmed in cases where the accused embodiment uses

67 C Heath and M Mōri, ‘Ending is Better than Mending’ (2006) 37 IIC 856; M Dernauer, ‘Case Comment on Supreme Court, 8 November 2007’ in Bälz and others (n 24) 399. 68 Shimanami/Ueno/Yokoyama, Tokkyohō nyumon (‘Introduction to Patent Law’) (2014) 284–88; S Chaen, ‘Software no seizō hambei to tokkyohō § 101(2)(iv)’ (Production and Sale of Software and Patent Act section 102(2)(iv)), Jurist 1316, 21; IP High Court, 30 September 2005, 1904 Hanrei Jihō 47—‘Ichitaro’. 69 Osaka District Court, 27 December 2012, AIPPI Japan Journal (English Edition) 2013, 160 and Tokyo Court, 28 February 2013 ‘Diabetis Treatment’ required a connection between the supplied goods and the inventive concept and denied indirect infringement. 70 A recurring issue in Japan has been the question on how to interpret product-by-process claims. According to the IP High Court, decision of 27 January 2012, 2144 Hanrei Jihō 51, a claim for a product that can only be defined by the process is not limited to a specific production method, but a claim that describes a product and a process for its manufacture is limited to this production process. 71 It being understood that for the interpretation of the claim language, the description and drawings may be taken into account: IP High Court, 28 September 2006—‘Device for Displaying Figures’.

400

59

Christopher Heath additional, yet disclaimed elements of the invention.72 Literal infringement cannot be affirmed where not all elements of the claim are embodied in the accused device. The doctrine of equivalents73 finds no statutory recognition in Japan, yet was affirmed for the first time in a Supreme Court decision of 199874 that held as follows: Whether the contested device infringes a patented invention or not must be determined according to the interpretation of a patent claim under Sec. 70 Patent Act. However, even if the allegedly infringing device partially differs from the wording of the claims, an equivalence can be affirmed if: i. ii. iii. iv. v.

60

the above differences concern an essential part of the claimed invention, the allegedly infringing device despite the replacement still attains the same purpose and result, a person skilled in the art could have easily anticipated the replacement at the time of production, at the time of the patent application the allegedly infringing device did not belong to the state of the art or could have been easily anticipated therefrom, and in the course of patent application proceedings, the scope of the patent claims was not meant to exclude the allegedly infringing device.

Still, even after this decision, judicial opposition against the doctrine of equivalents has been rather strong, and according to a study published in 2007,75 the percentage of judicial precedents affirming equivalent infringement was less than 10 per cent, the reasons of rejection being — for not meeting the first requirement: more than 70 per cent — for not meeting the second requirement: less than 20 per cent — for not meeting the third requirement: about 15 per cent — for not meeting the fourth requirement: about 3 per cent — for not meeting the fifth requirement: more than 30 per cent

61

In a rather unusual public statement from a judge, Tomokatsu Tsukahara, the former chief justice of the IP High Court, has criticised his fellow judges’ attitude towards applying the doctrine of equivalents. He writes: Judges in Japan feel that, basically, they do not want to admit infringement under the doctrine of equivalents. Judges in Japan emphasise consistency with the statement of the claims without showing any substantive, rational grounds. They should not, however, depend solely on grammatical considerations when interpreting the [Ball Spline Bearing] judgment of the Supreme Court with regard to the first requirement [essential element] … Judges in Japan

72 IP High Court of 7 September 2011—‘Rice Cakes’ affirmed literal infringement even in a case in which the infringing embodiment had used all elements of the claim, plus one additional element that had been explicitly disclaimed—in this case, a cross-wise cut on top of pre-fabricated rice cakes that had to be baked for a couple of minutes prior to consumption. The result is problematic because disclaiming an element of the claim that is subsequently embodied in an accused device normally gives rise to a file wrapper estoppel under the doctrine of equivalents: IP High Court, decision of 26 June 2012—‘Telephone Transmitter’. 73 For details of how the doctrine of equivalents is applied in Japan, see A Okada, ‘Case Comment the Supreme Court decision of 24 February 1998’ in Bälz and others (n 24) 433; IP High Court, decision of 29 June 2009, 43 IIC 476 (2012) ‘Hollow Golf Club Head’ and D Koo, ‘Comparison of the First Requirement of the Doctrine of Equivalents between Korea and Japan’ (2013) 44 IIC 178, 182. 74 Supreme Court, 24 February 1998, 30 IIC 443 (1999)—‘Ball Spline Bearing’ with comment by C Heath. 75 K Iida, ‘Kintōron ni kansuru saikin no saibanrei no keikō ni tsuite’ (‘Trends in Judicial Precedents on the Doctrine of Equivalents’) in The Theory and Practice of Intellectual Property Law (Tokyo, 2007). At 177, the author provides research performed on more than 150 lower court precedents between 1997 and June 2006.

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should start understanding the doctrine of equivalents from the original point; they should not start from the wording of the Supreme Court precedent. If judges examine and determine infringement under the doctrine of equivalents based on that idea, they will notice easily that it was wrong that they were relieved in their hearts by denying infringement under the doctrine of equivalents based on the first requirement. With regard to the first requirement, judges in Japan should cease to examine initially and determine the first requirement through comparison with the distinctive matters of the claimed invention as they did in the past. Instead, they should examine and determine infringement under the doctrine of equivalents mainly based on the second and third requirement in almost the same manner as in the United States and Germany….In order to increase the number of patent lawsuits in Japan,… the content of the first requirement of the doctrine of equivalents, which has been a source of confusion since the Supreme Court’s decision, must be reviewed.76

VII. Remedies 1. Injunctive Relief 62

63

Injunctive relief under section 100(1) of the Patent Act is the remedy most commonly sought in cases of patent infringement. This remedy is only available during the lifespan of a patent and cannot be requested beyond the patent’s term, even though the action for injunctive relief may have been filed before that date. Injunctive relief can also be requested if an infringement is imminent, but has not yet been committed.77 Injunctive relief is a remedy of right and has to be granted once the requirements are met. For exceptions, see below section VIII (FRAND patents). A request for injunctive relief must precisely describe the allegedly infringing goods rather than generally refer to an order ‘not to infringe the patent’. Thus, an injunctive order will list certain products or processes the defendant is no longer entitled to use. The order is therefore relatively narrow. It is not limited in time, but automatically loses effect once the patent expires. Injunctive relief is not available in cases where a process is infringed, yet the process patent covers only part of the manufacturing process for the products ultimately obtained. In the case at issue, the defendant had manufactured a pharmaceutical and under the Pharmaceutical Act was obliged to test the quality of the substance, which he did using the plaintiff ’s process patent. Under these circumstances, the Supreme Court denied injunctive relief, holding that neither manufacture nor sale of the (unpatented) pharmaceutical infringed the plaintiff ’s patent.78

2. Damages 64

Damages under the Japanese Civil Code (s 417) take the form of monetary relief rather than other forms that perhaps more adequately would restore the status quo ante. Further, damages are strictly compensatory and not punitive, as the Supreme Court has clarified.79

76 T Tsukahara, ‘Current Situation and Activation of Patent Infringement in Japan’ (2011) 36 AIPPI Journal of the Japanese Group (English edn) 3. 77 Supreme Court, 8 June 1995, 30 IIC 223 (1999)—‘Wall Street Journal II/III’ (a copyright case). 78 Supreme Court, 16 July 1999, 1686 Hanrei Jihō 104. In effect, the Supreme Court made a distinction between process patents for the manufacture of a product and other process patents. 79 Supreme Court, 11 July 1997, 30 IIC 485 (1999)—Punitive Damages.

402 65

Christopher Heath Viewed as compensatory, proof of damages is a necessary part of procedure, which, however, is difficult in the absence of court orders on an inspection of documents. This finally prompted the legislature in 1998 to enact provisions that should give the judge a certain discretion in damage calculation. Where the other side does not produce evidence, or where evidence is difficult to come by for other reasons, sections 248 of the CPC and 105ter of the Patent Act entitle the judge to a discretionary calculation of damages.80 In addition, court experts can be appointed for issues of damage calculation. Here, section 105bis of the Patent Act provides a special provision whereby the court upon the request of one party may ask for an expert opinion ‘with respect to the matters necessary for the proof of the damages caused by the infringement’. In such case, ‘the other party shall explain to the expert the matters necessary for the expert opinion to be given’. In other words, the infringing party has to cooperate with the expert for the assessment of damages, failure of which may trigger an award of estimated reasonable damages under section 105ter of the Patent Act.81 There is no comparable provision for an expert opinion on infringement, as the Tokyo and Osaka courts are assisted by technical experts dispatched from the Patent Office. The parties are of course free to appoint their own experts either on matters of infringement or damage calculation. Their opinions are treated as arguments from the parties, however, and do not enjoy the specific position of a court expert under sections 212–218 of the CPC.82

a. Calculation of Damages 66

This field has become one of the most difficult areas of patent enforcement,83 and there is consistent case law for none of the three calculation methods described below. The usual form of damage calculation as mentioned in section 102 of the Patent Act is the patentee’s loss due to the infringement: in other words, the patentee’s (hypothetical) assets but for the infringement, minus the patentee’s actual assets after the infringement. While the latter is easy to calculate, the former is certainly not, in particular in the absence of any meaningful discovery as to how the defendant’s infringing acts have influenced the patentee’s market share, turnover, etc. In the 1990s, the courts were unwilling to make difficult equations as to market share, etc, and outright proof of loss due to the infringing act would only be possible in a market with only

80 The Code of Civil Procedure, s 248 was applied in the Tokyo District Court, 12 October 1998, 30 IIC 457 (1999)—‘Cimetidine’. The provision was used in order to determine the amount of the infringer’s expenses to be deducted from its turnover in order to arrive at a figure for the infringer’s profits. 81 Even prior to the introduction of s 105bis in 1999, there have been court decisions where experts on the calculation of damages were appointed: Tokyo District Court, 9 February 1990, 1347 Hanrei Jihō 111. Here, 2 financial experts and 1 tax advisor were appointed to calculate damages incurred over a period of 8 years and took 25 days for their expertise. 82 See eg the case Tokyo District Court, 24 March 1995, 1995 AIPPI Japan English edition 238—Air Filter. Here, several expert opinions were presented to the court in order to determine if the defendant’s product really consisted of unpolar polymer material, a term that was contained in the patent application. The Court affirmed infringement. 83 N Nakamura, ‘Recent Trends in Court Judgements concerning Damages in Japanese Patent Infringement Cases’ (2014) AIPPI Journal Japanese Group (English edn) 389.

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two competitors: the patentee and the infringer.84 This reluctant stance has changed.85 By the amendment of the Patent Act in 1999 (s 102(1)),86 personal losses can be calculated on a discretionary basis, according to the number of infringing goods sold by the defendant, taking into account the right owner’s market share and marketing efforts.87 For this method of calculation, it does not matter if the defendant did not make a profit from such sales or even distributed items for free.88 This would basically mean a calculation based on the infringer’s amount of sales, multiplied by the right owner’s usual profits per item, but limited to the right owner’s marketing capacity (PA, s 102(1)), thereby putting small-scale inventors and universities at a disadvantage.89 Section 102(1) also appears applicable where the lost sales are attributable to a different (but unexploited) patent of the patentee.90 While the right owner claims lost profits, he has to deduct the expenses saved. Vice versa, the infringer can deduct from his profits the expenses incurred.91 If the infringer’s figures for pure profits seem unrealistically low, the court would simply multiply the infringer’s turnover with the IP owner’s normal profit, as patent law already provides on a statutory basis.92

84 eg Tokyo District Court, 10 March 1987, 1265 Hanrei Jihō 103 (1988)—ICS: no lost profits, as the orders lost by the plaintiff due to the infringement could also have been lost to one of the plaintiff ’s competitors. Different, the situation in ‘Cimetidine’ (n 80): ‘The amount of the infringing products sold by the defendant can be said to equal the amount … the plaintiff would have sold but for the infringement’ Criticism against this ‘all or nothing’ method is voiced by S Chaen, Tokkyoken shingai ni yoru songai baishō (‘Damages for Patent Infringement’) (1999) 1162 Jurist 50. 85 Tokyo High Court, 15 June 1999, 1697 Hanrei Jihô 96 (2000)—Heatbank System. The Court calculated the losses in accordance with the plaintiff ’s market share of 60% even in a case where the patentee did not use the patented technology to manufacture his products that were in competition with the infringing products of the defendant. 86 Law No 41/1999. 87 The infringer’s advertising efforts and the existence of competing products on the market can significantly reduce the amount to be claimed: Osaka District Court, 28 February 2013—80% reduction; IP High Court, 24 January 2012—98% reduction. This essentially overturns an early decision where none of these factors was considered: Tokyo District Court, 19 March 2002, 34 IIC 965 (2003)—Pachinko Slot Machine. The decision became moot, however, as the patent in question was revoked only days after the decision was rendered. But the split in opinion amongst the judges remains. 88 The infringer can deduct his own direct production costs, but not costs of research and transportation: Tokyo District Court, 25 September 2013 (IP High Court homepage); Osaka District Court, 28 February 2013 (IP High Court homepage); IP High Court, 22 December 2011 (IP High Court homepage). 89 The potential capability to produce seems to be enough, though: Tokyo High Court, 29 October 2003 (IP High Court homepage). 90 Heatbank System (n 85): here the patentee held patents A and B, made its turnover by exploiting patent A, while the infringer used the technology of patent B, which then led to a drop in sales of the patentee’s products using technology A. The case resembles a similar US case (Rite-Hite Corp v Kelley Corp, 56 F3d 1538 (Fed Cir 1995) and is open to question: first, the result would doubtlessly be different if patents A and B were held by different owners. Second, if the Patent Act aims at patents being exploited, why should strategic non-exploitation be rewarded? 91 Osaka District Court, 17 September 1998, 282 Hanketsu Sokuhō 17—Toaster. 92 eg Osaka District Court, 25 February 1993, 25-1 Chizaishû 56—Jimmy’z; in Tokyo District Court, 31 October 2001, 15 Law & Technology 92 [2002], this principle is affirmed, yet the Court stresses that it would apply particularly to trade marks, as no damage to the trade mark owner’s goodwill could be detected in such case. The principle is also applied to other IP rights, however: Osaka District Court, 27 March 1981 for a patent. That the courts in trade mark cases require use by the trade mark owner rather than the (registered) licensee is incomprehensible, however: Tokyo District Court, 24 March 1993, 26 IIC 566 (1995)—Type Chanel No 5. This decision has, or so it seems, now been overturned (or disapplied for patents) by IP High Court, 1 February 2013, GRUR Int 2015, 237 ‘Diaper Disposal’ where use by the licensee was equated to use by the patentee.

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Christopher Heath An underlying difficulty of the Japanese provision of section 102(1) of the Patent Act is the ambiguity as to whether this provision is a legal fiction that no longer requires the proof of a causal link between damages and the infringement, or not. The latter view was explicitly taken in the ‘Massage Chair’ decision, where the patentee had a rather limited capacity to produce the patented goods, and according to the court, could thus not have sold the patented products even if the defendant had not infringed: Thus, the infringement of the plaintiff ’s patent no. 5 cannot be the reason for the plaintiff to sell fewer patented products. In other words, due to the limited production and marketing capacity of the plaintiff, the proviso of Sec. 102(1) ‘reason for not being able to sell’ must apply … The patentee argues that even if the proviso of Sec. 102(1) Patent Act should apply in the presence of competing products on the market, for the remainder of the goods sold by the defendant (thus, 99%) [in other words, those goods that the patentee could not have produced], Sec. 102(3) should apply and the ordinary licensing fee be calculated as 5% of the sales price. However, Sec. 102(1) Patent Act compensates for patent damages calculated as if the infringing event had not occurred, while Sec. 102(3) Patent Act compensates the patentee to an adequate amount for the use of the invention. These are thus two completely different ways of calculating damages. In addition, a request for an ordinary licensing fee for those items the patentee could not have sold, goes beyond a request the patentee makes for compensatory damages for an act of infringement meant to make good damages that have been incurred. It is therefore difficult to see a reason why the patentee should be compensated beyond the damages he has actually incurred, and the plaintiff ’s request in this regard must fail.93

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The latter decision therefore requires there to be a causal link between damages and infringing act, and furthermore does not allow the patentee to combine the patentee’s damages (within the ambit of the latter’s production capacity) with an ordinary licensing fee for those infringing goods the patentee could not have produced.94

b. Infringer’s Profits 69

93

Section 102(2) of the Patent Act statutorily regards the infringer’s profits as one form of calculating the patentee’s damages. How ‘profits’ should be calculated is somewhat in dispute, in particular what the defendant should be permitted to deduct as expenses in this respect in order to arrive at the ‘pure profit’ the courts would allocate.95 First of all, it is up to the defendant to prove that turnover does not equal profit. In other words, once the defendant’s turnover has been established, this figure is presumed to be the amount of profit unless otherwise shown by the defendant.96 Under section 248 of the CCP, the courts would be entitled to a discretionary calculation in cases of ‘substantial difficulties’ in establishing exact proof. One decision on patent infringement allowed for the following deductions:

IP High Court, 25 September 2006, 42 IIC 858 (2011)—‘Massage Chair’. However, Tokyo District Court, 19 September 2007 allowed for such combination. 95 Many decisions deduct a ‘contribution rate’ of the infringer: IP High Court, 22 March 2012, while other decisions considered such possibility, but rejected it: IP High Court, 24 January 2012. 96 Tokyo District Court, 7 October 1998, 1657 Hanrei Jihō 122 (1999)—‘Recharging System’. Details by Chaen, ‘Damages for Patent Infringement’ (n 84). 94

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In order to calculate this amount of profit, one should start from the amount of Tagamet tablets and calculate first of all the direct expenses of marketing and producing these (costs of the basic substance, manufacture, packaging, licensing fee, shipping and selling) which have to be deducted. These direct costs over time amount to an average of 45.2% of the sales price, in other words, it would be reasonable to deduct 45% of the tablets’ sales price for costs the plaintiff saved due to loss in sales. Further, the plaintiff had other expenses, such as the costs of sales promotion and advertising, wages, research and communication, expenses for entertainment, health and welfare, plus other expenses. Among these expenses are those that are in no way related to the actual sales of Tagamet tablets and the amount that is sold, and should thus not count as deductible expenses.97

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Things become more complicated if either the infringer makes extremely low profits on his turnover, or if the infringing goods are composite articles of which the patented invention only represents a small part. As to the first question, the courts increasingly tend to dismiss the infringer’s figures for pure profits when deemed unrealistically low. In these cases, the court would multiply the infringer’s turnover with the patentee’s normal profit on his own devices: Yet, the profit made by the defendant is extremely small … due to the fact that the defendant used the products to promote others of his own. For this reason, the defendant’s calculations on prices and profits cannot be taken into account here. Rather, the calculation of profits should be based on what the plaintiff would have made as a profit for the comparable goods he sold.98

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Under the new section 105bis of the Patent Act, the court may appoint an expert witness for the calculation of damages (see above). As to the second problem, there is little case law to draw on. In one case of patent infringement where the defendant had only infringed a patent for a composite part of a complex machine, the court awarded damages calculated on the sale of the machine multiplied by a factor corresponding to the relevance of the patented part.99 While some decisions have held that the infringer’s profits cannot be claimed where the IP right in question was not used,100 one decision has questioned this in a case where the patentee did not use its patent, but would have obtained the profits but for the defendant’s infringing behaviour (due to the sale of a different pharmaceutical in

Cimetidine (n 80). ‘Toaster’ (n 91). 99 Tokyo District Court, 26 December 2003, 1851 Hanrei Jihō 138—‘Filling Machine’. On the other hand, in a case of copyright infringement, the Court awarded the copyright owner the complete profits on the sale of a CD with about 20 different computer games, only one of which was infringing. Tokyo District Court, 31 January 1994, 26-1 Chizaishû 1—‘Pacman’. 100 Tokyo District Court, 31 October 2001, 15 Law & Technology 92 [2002]. There is a certain discussion as to what should happen if the patentee could not have sold its (competing) products by law, eg because this would infringe a third party’s patent—an estoppel of unclean hands, so to speak. In IP High Court, decision of 27 August 2014, English summary in (2015) AIPPI Japan (English edn) 102, the Court held that the caveat of s 102(1) (‘would have been unable to sell the quantity’) did not apply to s 102(2) telle quelle, but that this could lead to a reversal of the presumption. As to the infringement argument, the Court found that the third party apparently had never asserted its patent against the plaintiff who thus did not seem to be legally impeded from selling its patented goods. 98

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Christopher Heath competition with the infringing one manufactured by the defendant).101 Use by the licensee is (correctly) regarded as use by the patentee.102

c. Ordinary Licensing Fee 75

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Awarding an ordinary licensing fee is the fallback method of calculation if higher damages under other calculation methods fail. Traditionally, in patent matters the courts awarded extremely low licensing fees based on two studies of the Inventors’ Association on licensing fees for certain types of inventions in domestic licensing contracts.103 In most cases, however, those patents infringed were particularly valuable ones, and often were inventions made abroad. It would thus have been more appropriate to take fees in international licensing agreements as a reference,104 and award top-end fees rather than across-the-board averages. In some cases the courts took existing licensing agreements into consideration.105 Yet the patentee might not be particularly interested in publishing the rates of other licensing agreements on the infringed technology, particularly since there is no reason why an infringer should profit from what an honest user had negotiated. Owing to the 1998 amendment of section 102(2) of the Patent Act,106 the courts no longer feel obligated to award only an ‘ordinary’ licensing fee, and subsequent case law seems to indicate that the courts have become more assertive in arriving at higher figures,107 while a 3 per cent seems to be a popular figure after taking into account all the circumstances of the case.108 In cases where the above-mentioned damages cannot be claimed, for example, due to time bar, the right owner can base his claim for a licensing fee on the provisions of unjust enrichment (time bar of 10 rather than three years).109

3. Seizure/Destruction 78

Seizure of infringing goods by order of a civil court is a provisional measure and may go further than what could ultimately be ordered for destruction.110

101 Tokyo District Court, 8 October 2009, 42 IIC 860 (2011)—‘Kyucal’. It is not clear if the Court held this only for the rather specific facts of this case, or if it generally found that the Patent Act, s 102 should not be limited by the patentee’s own inertia. 102 ‘Diaper Disposal’ (n 92). 103 Hatsumei Kyokai (ed), Jisshi ryōritsu (‘Use and Compensation’) ( Tokyo, 1980); Hatsumei Kyokai (ed), Gijutsu torihiki to royalty (‘Technology Transfer and Royalties’) (Tokyo, 1992). 104 Which was in fact done in Tokyo District Court, 30 March 1996, 1585 Hanrei Jihō 106 (1996). 105 Tokyo District Court, 18 October 1996, 1585 Hanrei Jihō 106—‘Concrete Steel Rod’. 106 Law No 51/1998. 107 Tokyo District Court, 30 March 1998, 1646 Hanrei Jihō 143 (1998) awarded an unheard of 7% royalty rate in a patent infringement case. 108 eg IP High Court, 27 May 2010. 109 Tokyo High Court, 13 July 1999, 1696 Hanrei Jihō 137—‘Karaoke’. The Court found the damage claim time barred, yet ordered the defendant to pay what a lawful user would have had to pay. 110 Tokyo District Court, 6 April 1984, 525 Hanrei Times 314 (1985)—‘Crystal’. Upon the plaintiff ’s request the Court had ordered the seizure of a high-speed copying machine that commercially copied copyright material without proper permission.

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Destruction of goods is relatively easy in cases of finished goods,111 yet may be more difficult in the case of unassembled or semi-finished products which would only be infringing upon assembly.112 Where a process patent has been infringed, the products obtained therefrom are not subject to the right of destruction, however.113

VIII. Defences 1. Non-Infringement 80

Section 68 gives the patentee the exclusive right to commercially work the patented invention. Even where the defendant’s product or process falls inside the scope of the patent claims, there are a number of defences available, namely statutory or contractual licences, experimental research or exhaustion.

a. Statutory Licences 81

Statutory licences are provided for the employer in case of an employee’s invention, and for the prior user (s 79). Prior use requires a third party commercially working the invention or having made preparations to this end at the time of filing.

b. Experimental Research 82

111

Exceptions to the right of exclusive use are always necessary for two purposes. First, for a competitor or any third party to verify that the patented invention is working and can indeed by repeated based on the patent specification (experiment). And, second, in order to develop further and ultimately better products or processes (research). One of the most contentious issues has been experiments by manufacturers of generic drugs aimed at obtaining marketing approval. As even generic manufacturers of drugs have to obtain marketing approval, they normally prove in a simplified procedure that their own product possesses the same characteristics as the one already proved (the so-called bio-equivalency test). These tests are necessary under the Pharmaceutical Act, yet are not or not primarily aimed at improving already existing technology. For that reason, such tests were initially deemed infringing.114 Subsequent decisions, however, held these tests as not infringing, since section 69(1) of the Patent Act ‘is not limited to tests conducted with the aim of proving efficacy or technical limits’.115

eg Osaka High Court, 30 November 1993, 25-3 Chizaishû 476 (1993)—‘Aluminium Wheels’. While the request for the destruction of semi-finished goods was initially denied by Tokyo District Court, 28 December 1989, 21-3 Mutaishû 1073 (1989)—‘Cable Cover I’, the request was granted in part in appeal: Tokyo High Court, 25 February 1993, 25-1 Chizaishû 33 (1993)—‘Cable Cover II’. 113 Supreme Court, 16 July 1999, 1686 Hanrei Jihō 104—‘Product-by-process’. 114 Tokyo District Court, 10 July 1987, 20 IIC 91 (1989)—‘Monsanto’; Nagoya High Court, 16 March 1996, 28 IIC 398 (1997)—‘Clinical Trials’. 115 Tokyo High Court, 31 March 1998, 30 IIC 454—‘Procaterole’, and ultimately, Supreme Court, 16 April 1999, 30 IIC 448 (1999)—‘Clinical Trials III’: exception of clinical trials limited to what would be required under the Pharmaceuticals Act: ‘Extending such protection to cover also clinical trials conducted by generic drug makers carried out for the purpose of obtaining governmental approval would effectively prolong the life span of a patent, a benefit that cannot be said to be intended by the Patent Act’. 112

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c. Exhaustion 83

Rights for any given product or process covered by a patent are limited to the first act of commercial exploitation (so-called ‘exhaustion’). This has been so held in the Supreme Court’s ‘BBS’ decision,116 and has been reiterated in the subsequent Ink Cartridge117 case. Where patented goods have been marketed abroad with the patentee’s consent, the importation is only infringing if the goods carry an explicit prohibition of importation. Less clear is the distinction between exhaustion and repair, which is determined according to the circumstances of the case (the wording of the patent, difficulty of replacement or refill, specifics of the product, etc).

2. The Defence of Invalidity 84

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The relationship between patent infringement procedures and the estoppel of invalidity has been of considerable practical importance and comparative interest. After all, the main defences against patent infringement are, first, that the act performed by the defendant does not infringe in the first place, and, second, that the patent is invalid or unenforceable. There is a certain divide in this matter. Anglo-American systems tend to give the courts the power to invalidate patents if so requested as a counterclaim to an infringement action, or even in isolation, while the Patent Office does not enter the fray. France and Italy have given the courts the same powers, but for a different reason: the Patent Office does not examine patents as to the requirements of patentability, and therefore there is no perceived conflict between the administrative decision of grant, and a possibly contradictory one of invalidating such grant. This is (or was) different for countries such as Germany118 and China,119 and until recently Korea,120 where the courts in an infringement action do not allow the defendant to raise the issue of validity. The underlying rationale for such bifurcation is that an administrative decision such as the grant of a patent should be reviewed by an administrative body. In China, this is the Review Board of the Patent Office (‘RPB’), in Germany, the Federal Patent Court (‘Bundespatentgericht’). In Japan, it had always been clear that only the JPO has jurisdiction over invalidating a registered IP right, either by request of an interested party (patent law) or the

Supreme Court, 1 July 1997, 29 IIC 331—‘BBS Car Wheels’. Supreme Court, 8 November 2007, 39 IIC 982 (2008)—‘Canon Ink Cartridge’. The difference between these two decisions lies in the fact that the latter one leaves it open whether only the first sale (rather than the first marketing) actually triggers exhaustion. The Japanese word ‘jōto’ is somewhat ambiguous in this respect. This ambiguity becomes of relevance in cases where the product is not sold, but leased on certain conditions. A recent decision (Osaka District Court, 16 January 2014, English summary in (2014) AIPPI Journal Japanese Group 377) denied exhaustion under these circumstances. Applying the reasoning of the BBS decision, this is incorrect, though, as the exhaustion principle is based on a balancing of interests that cannot be unilaterally shifted in favour of the patentee. Exactly the opposite (retention of title invalid) was decided by Osaka High Court, 1 December 2000, 1072 Hanrei Times 234, also for hospital tissue dispensers. 118 The German Federal Patent Court has exclusive jurisdiction in regard of the invalidation of German patents and extended European patents that are no longer subject to opposition/appeal procedures. 119 Ganea/Pattloch, Intellectual Property Law in China (London, 2005) 305. 120 Until the decision of the Korean Supreme Court, 28 December 2004, German translation in (2006) GRUR Int 617. 117

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public at large (trade marks). In the case of trade marks, the courts have long refused enforcement in cases where the trade mark should not have been registered in the first place121 or was prone to cancellation.122 Things were far more complicated for patents. Here, decisions of the Imperial Supreme Court of 1904 and 1917 had held that the estoppel of patent invalidity would give the court discretion to stay procedures, yet not to regard the patent as invalid.123 Invalidation procedures before the Patent Office were not only slow, but both parties could even supply the Tokyo High Court with completely new facts on appeal.124 In circumstances where the patent was presumably invalid, the courts sometimes tried to narrow the patent’s scope,125 or grant the defendant a prior user right.126 This somewhat unsatisfactory state of affairs was changed only in the Supreme Court’s Kilby (or TI—the inventor was Mr Kilby, and the patent owned by Texas Instruments) decision of 11 April 2000,127 which in a rather unprecedented dictum held that: 1. The court that examines a case of patent infringement may judge whether or not the patent is invalid, even before a patent annulment decision of Japan Patent Office becomes final. 2. If it is found that there are obvious reasons for holding the patent invalid as a result of the court hearing, a claim for injunction, damages, etc, based on the patent is deemed an abuse of rights unless there are special circumstances.

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Before this decision and based on the precedents cited by the Court, it had been assumed that the courts could not judge the validity of a patent, as this was a matter for the JPO to decide. According to this decision, a patent right, registered with the JPO, is a civil right, and the scope of a patent can be judged by a court in an infringement case. Second, the decision held that if there are obvious reasons for holding the patent invalid as a result of the court hearing, a claim based on the patent is deemed an abuse of right. Here, the Court only holds the exercise of the patent an abuse of right,

121 eg Kobe District Court, 21 December 1982, 14-3 Mutaishû 813—‘Dorothee Bis’. Here, a former distributor of the French fashion designer ‘Dorothee Bis’ had registered the mark while still distributing Dorothee Bis goods. The Court held that the goodwill rested only in the French fashion undertaking, not the registered trade mark owner, and thus refused enforcement of the mark. 122 Supreme Court, 20 June 1990, 25 IIC 118 (1994)—‘Popeye Scarves III’. Here, the Supreme Court held that the registered mark even at the time of registration conflicted with an existing copyright and should thus be cancelled. Cancellation procedures at the Patent Office seemed to take forever as the Patent Office apparently was unable to make up its mind about the cancellation request already filed years earlier. 123 Imperial Supreme Court, 23 April 1917, 23 Minroku 654: ‘If a new commercial model has been registered as a utility model … it is not permissible to deny the validity unless the right has been declared null and void in nullity procedure’. 124 Supreme Court, 4 April 1968, 22-4 Minshû 816. The invalidation procedure has two further disadvantages. First, the Patent Office and the courts would only examine the reason of invalidation as argued by the petitioner, rather than make a general assessment of patentability (Supreme Court, 10 March 1976, 30-2 Minshû 79— ‘Knitting Machine’). Second, the patentee can almost endlessly prolong the invalidation procedure by requesting an amendment of the patent before the end of the invalidation trial, as this trial would then have to be repeated in light of the amended patent (Supreme Court, 9 March 1999, 53-3 Minshû 303—‘Rectangular Steel Pipe’, and Supreme Court, 22 April 1999, 1675 Hanrei Jihō 115—‘Calendar’). Should the amendment not be accepted, the patentee can of course appeal against this decision, too. 125 eg Osaka District Court, 25 March 1993, Patent 11/1994, 121. 126 eg Nagoya District Court, 31 July 1991, 15 Tokkyo Kenkyû 3. 127 Japanese Supreme Court, 11 April 2000, 35 IIC 91 (2004) with comment by C Heath and M Mōri = GRUR Int 2004, 154 with comment by Petersen.

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Christopher Heath but does not declare the patent invalid. The Court finds the precedent of the Imperial Supreme Court is contrary to the spirit of equity and against the economy of legal procedure. A similar reasoning was already adopted previously where the Court found the patent lacked novelty and was thus invalid.128 Unlike previous decisions, however, the Kilby decision no longer requires the courts to demonstrate specific circumstances of the case for holding a patent invalid, but lets obviousness be a sufficient reason. The Kilby decision is now reflected in section 104ter of the Patent Act, which does not allow the patent right to be exercised where ‘the patent is recognised as one that should be invalidated by an invalidation trial’. Decisions after Kilby affirmed that the grounds for holding a patent invalid could relate to a lack of novelty129 or inventive step,130 insufficient disclosure131 or misappropriation.132 The new approach towards invalidity may have speeded up procedures, but is not necessarily beneficial to the patentee. According to information supplied to the author by (former) Judge Mimura, invalidity was affirmed by the courts in about half of the infringement cases in the first years after Kilby. While invalidity is raised in 70 to 80 per cent of all infringement cases by way of estoppel, the courts affirm such defence in about half of the cases.133 This also had repercussions on the Patent Office’s handling of nullity procedures. While between 1997 and 1999 nullity actions had a success rate of 10 to 15 per cent, this escalated in 2006 to over 70 per cent and has meanwhile dropped to about 20 per cent.134 Current practice before the courts has shown that the estoppel of invalidity is successful even in cases that are not ‘obvious’. This in effect has given the courts a parallel jurisdiction over patent invalidation matters, albeit limited to an inter partes effect. It is thus conceivable that the courts find a patent invalid, yet that the Patent Office in subsequent invalidation procedures upholds the patent. What should happen in these cases is unclear. As the law stands at the moment, there is no remedy for the patentee should the court decision already have become final. Invalidation and infringement proceedings may be conducted concurrently, subsequent to each other or in isolation, creating all sorts of legal problems. As if this was

Nagoya District Court, 26 November 1976, 852 Hanrei Jihō 95. Tokyo District Court, 14 July 2000, 1734 Hanrei Jihō 121; Osaka District Court, 5 September 2000 (unreported). 130 Tokyo District Court, 27 September 2000, 1735 Hanrei Jihō 122. 131 Tokyo District Court, 25 April 2001 (unreported). 132 Tokyo District Court, 30 January 2001 (unreported). 133 JPO and IIP (Chiteki Zaisan Kenkyujo), Shingai Soshō tō ni okeru tokkyo no anteisei ni shisuru tokkyoseido/ Unyō ni kansuru chōsa kenkyû hōkokusho (2014): www.jpo.go.jp/shiryou/toushin/chousa/pdf/zaisanken/2013_12.pdf; JPO, Shinpan no Gaiyō (2014): www.jpo.go.jp/torikumi/ibento/text/pdf/h26_jitsumusya_txt/09.pdf. 134 1997: 184 invalidation requests, upheld in 22 cases; 1998: 252 invalidation requests, upheld in 46 cases; 1999: 293 requests for invalidation, upheld in 27 cases; 2000: 296 requests for invalidation, upheld in 77 cases; 2001: 283 requests for invalidation, upheld in 138 cases; 2002: 260 requests for invalidation, upheld in 156 cases; 2003: 254 requests for invalidation, upheld in 128 cases; 2004: 358 requests for invalidation, upheld in 133 cases; 2005: 343 requests for invalidation, upheld in 211 cases; 2006: 273 requests for invalidation, upheld in 194 cases; 2007: 284 requests for invalidation, upheld in 142 cases; 2008: 292 requests for invalidation, upheld in 182 cases; 2009: 257 requests for invalidation, upheld in 123 cases; 2010: 237 requests for invalidation, upheld in 102 cases; 2011: 269 requests for invalidation, upheld in 91 cases; 2012: 217 requests for invalidation, upheld in 73 cases; 2013: 247 requests for invalidation, upheld in 43 cases. Source: Tokkyo Chō, Tokkyo gyōsei nenji hōkokusho (Annual Report on Patent Administration) (Tokyo, 2002–14). 128 129

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not enough, the patentee can request ex parte limitation proceedings before the Patent Office, often in response to the court holding the patent invalid inter partes. Different from most common law countries, the courts in Japan still cannot declare the patent invalid, and they cannot limit the scope of the patent by request of the patentee. In limitation proceedings, the patentee has the advantage of dealing with the Patent Office in the absence of any third party, but is significantly inconvenienced by the fact that the Patent Office in such proceedings does not accept auxiliary requests. In one of the subsequent cases that went up to the Supreme Court, the patentee in response to a finding of invalidity by the infringement court, tried to limit his patent in order to distinguish the patent from the prior art the infringement court found prejudicial to the maintenance of the patent. Yet it took the patentee five attempts to successfully limit the patent, and the infringement case had meanwhile arrived at the Supreme Court135 that held: A patentee whose patent has been regarded as invalid by the courts can only be heard with the argument that such patent was successfully upheld in amended form in a correction trial before the Patent Office where such trial was conducted without unreasonable delay.

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In the case at issue, the Supreme Court found that it was too late to consider the limitation. Patentees have therefore tried to request amendments to the patent in a timely manner, but the courts are not entirely clear what this should encompass. This is now reflected in section 104ter(2) according to which the infringement courts can disregard the estoppel of invalidity if this would cause unreasonable delay. In order to overcome the estoppel of invalidity, the patentee may suggest an amendment of the patent to the court that would overcome the prior art objections while still making the defendant’s device fall within the scope of the patent claims. This, however, requires that the patentee has already requested a correction trial before the Patent Office and submitted a new wording of his request.136 Where this is not possible, because an invalidation or correction trial for this patent is already pending, the patentee cannot rely on such amended version.137 For the reverse situation that the court had found the patent valid and infringed, yet the Patent Office had ultimately revoked the patent, see below. A final issue that deserves mention is that in the aftermath of a Supreme Court decision,138 the issue of 2012 amendment of the Patent Act has now aligned the effects of invalidation and correction trials in that in both cases, decisions are made on a claim-by-claim basis rather than on the patent as a whole. Claims that have not been attacked or revoked thus remain valid.

Japanese Supreme Court, 24 April 2008, 40 IIC 721 (2009)—‘Knife-Processing Device’. Intellectual Property High Court, 27 April 2010, ‘K.K. Kotobuki v Japan Post’. 137 In order to avoid a sort of hide-and-seek between the various instances, the Patent Act amendment of 2012 no longer allows the patentee to request a correction trial as long as another invalidation or correction trial for the same patent is still pending. This may then become a trap if an amended request is presented before the court at a time when no correction trial can be requested. 138 Japanese Supreme Court, 10 July 2008, German translation in (2009) GRUR Int 623. 136

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3. Standard Patents 97

Two decisions by the IP High Court of May 2014 have clarified the situations where standard patents are relied upon in infringement suits.139 The parties to both lawsuits were Apple and Samsung. Samsung, as the patentee, had agreed that certain of its patents became part of the UMTS standard, and that licences could be taken out on FRAND terms. Despite best efforts by both parties, no agreement on these terms could be reached. The Court denied injunctive relief on the following conditions:140 The owners of essential patents declare that their patents can be used on condition that a license under FRAND terms has been obtained. On this, potential licensees of standard patents should be able to rely. As long as the owners of essential patents can obtain a remuneration based on FRAND terms, there is no comparable necessity to protect the patent monopoly by way of injunctive relief. Under these circumstances, a claim for injunctive relief against third parties that are willing to obtain a license under FRAND terms would lead to an unduly broad protection for the owners of substantial patents and hinder the development of industry as a purpose of the Patent Act (sec. 1) due to delays in the development of parallel technologies.

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The Court further limited the damage claim to a licensing fee under FRAND terms ‘against third parties willing to obtain a license under FRAND terms’.141 In other words, the estoppel of standard patents is available only for ‘willing licensees’.

IX. ‘Wrongful Enforcement’ 1. Post-Infringement Invalidity 100

Until 2012, section 338(1) No 8 of the Code of Civil Procedure 1996 allowed for a retrial ‘where a civil or criminal decision, any other decision or an administrative act on which the decision [at issue] is based, has been modified by a subsequent decision or a subsequent administrative act’. Both the grant and the revocation of a patent being administrative acts, the Tokyo142 and Osaka Courts143 had no difficulty in allowing a retrial once the revocation of the patent had become final and conclusive. However, this rather far-reaching possibility of a retrial was considered inequitable given the fact that invalidity could very well be argued in infringement proceedings following the Kilby decision (as above), the more so since section 104ter(2) had introduced a rule whereby the defence of invalidity could be ignored if filed too late. Thus, a 2012 amendment to the Patent Act144 introduced section 104quater of the Patent Act,

139 I Nakayama and Y Tamura, ‘Denial of Injunctive Relief on the Grounds of Equity : Situation in the US and Japan’ in Hilty/Liu, Compulsory Licensing (Heidelberg, 2015) 267. 140 IP High Court, 16 May 2014, 46 IIC 124 (2015)—‘Apple v Samsung/Standard Patent and Abuse of Rights’. 141 ibid—‘Apple v Samsung—Standard Patents and Damage Claim’. 142 Tokyo High Court, 31 January 2005, 135 Chizai Kenkyû 15–20. 143 Osaka High Court, decisions of 15 October 2004 and 29 March 2005, 1912 Hanrei Jihô 106–18. 144 Law No 63/2011 of 8 June 2011.

Patent Enforcement in Japan

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which no longer allows the retrial of a final decision finding infringement once the patent has been subsequently invalidated, at least as far the claim for damages is concerned. Since an order for injunctive relief does not automatically become ineffective once the patent has been revoked, a retrial to discharge the injunctive order is still possible.

2. Warning Letters to Suppliers or Customers 101

Judging by the surprisingly high number of decisions in this field,145 the sending out of (often groundless) warning letters seems to be rather common.146 To the extent that the warning letter or allegation of infringement is targeted at the manufacturer or importer, there is normally no remedy. The courts have refused to acknowledge a ‘right of business’,147 and have explicitly held that (unfounded) requests for border detention148 or unwarranted lawsuits149 are not unlawful acts unless they are ‘inequitable’. There are no known cases where the sending of a warning letter to the manufacturer or importer was regarded as unlawful. On the other hand, sending out warning letters to customers seems a convenient way to avoid a lawsuit, yet achieve the result of blocking the manufacturer’s sales channels for good.150 Perhaps due to the latter reason, the courts prior to 2002 regarded such warning letters as unlawful per se if it turned out later that there was no infringement,151 an approach criticised by some academics.152 The basis of an action against the patentee is section 2(1)(xiv) of the Unfair Competition Prevention Act (‘UCA’), which prohibits ‘acts of making or circulating false allegations injurious to another’s business reputation in a competitive relationship’. The above standard of practically no-fault liability changed with the Tokyo High Court decision of 29 August 2002153 where the Court made unlawfulness dependent upon on ‘the contents and timing of the warning letter, the search efforts of the right owner, the addressee, and the latter’s possibilities of dealing with such allegation’: When a patentee is so bold as to warn in spite of knowing that there are no factual grounds or no legal basis for the allegation, or when a patentee could have easily concluded that the

145

Takabe in her article (n 146) lists 20 decisions, Heath (n 146) 21 between 1972 and 1995. Recent literature: M Takabe, ‘Chiteki zaisanken wo shingai suru shi no kôkoku to fusei kyôsô kôi no seihi’ (2005) 1290 Jurist 88; T Hirose, ‘Chiteki zaisanken shingai ni kan suru kōkoku’ (2007) 57 Chizai Kanri 929. Literature in English: C Heath, Unfair Competition Prevention in Japan (London, 2001) 179–80; C Heath, ‘Wrongful Patent Enforcement’ (2008) 39 IIC 307; S Murata, ‘Sending out Warning Letters for Patent Infringement’ (2015) 40 AIPPI Japan (English edn) 20. 147 Osaka District Court, 27 February 1970, 2 IIC 325 [1971] with comment by H Kuwata—‘Parker’. 148 ibid. 149 Tokyo High Court, 19 October 2004, 39 IIC 121 (2008)—‘Kojima/Yamada’ with comment by C Heath. 150 Typical examples: Tokyo District Court, 1 July 1995, 27 IIC 570 [1996]—‘Beauty and the Beast’, where instead of the importer of films, cinemas were informed of the infringing copies (in the end, this allegation was true); Tokyo District Court, 15 March 2004, 39 IIC 247 (2008)—‘Water Pellets’, where allegations of infringement were circulated to public water boards that used the allegedly infringing technology. 151 eg Osaka District Court, 29 June 1979, Tokkyo Kanri Bessatsu 554 [1979]: ‘Unless there are specific facts, the defendant in stating that there is an infringement is assumed to have acted negligently’. 152 K Dohi, ‘Eigyō hibō kōi toshite no kenri songai keikoku’ (‘Infringement Claims as Slander’) (1982) 5 Kōgyō Shoyûken Hōgakukai Nempō 56. 153 Tokyo High Court, 29 August 2002, 37 IIC 758 [2006]—‘Warning Letter/Metallic Powder’. 146

414

Christopher Heath warning was groundless, had examined the facts and done legal research necessary for commencing a patent infringement suit, the warning should be regarded as unlawful and the spreading of untrue facts injuring the competitor’s business reputation. When the above precautions are taken, the warning should be regarded as a legitimate conduct, because it is a part of the legal exercise of the patentee’s patent rights. When the notice to customers of a competitor at first sight looks like the lawful exercise of a patent right, but in contents or style goes beyond what can be considered normal, in other words, when the right is exercised substantially for the purpose of injuring a competitor’s business reputation vis-a-vis its customers, thus threatening the competitor’s relationship with customers or competition in the market as such, it is obvious that such notice cannot be regarded as a legitimate conduct and constitutes an act of unfair competition. The patentee in such case is liable for the competitor’s damage. It must thus be determined whether the warning letter directed at customers of the competitor was part of the exercise of the patent right or rather beyond what was necessary according to common sense. Whether such letter was part of the exercise of the patent right or only formally complied with such exercise should also be determined by looking at the synthesis of the negotiation process with the competitor until the warning, the timing and the distribution of the warning letter, the number and range of customers the letter was distributed to, the size and type of business concerned, the relationship and the style of dealing with the competitor, the allegedly infringing products, the way a patent infringement can be dealt with at the level of customers supplied with the allegedly infringing goods, the reaction to the distribution of the warning letter, the conduct of the patentee and the customers after the distribution, and other circumstances.

102

This standard has been followed by subsequent decisions154 that absolved the patentee from liability even where no detailed enquiries about the patent’s invalidity were made, but determining validity was rather unclear.155 These decisions are clearly based on an ex ante analysis rather than the previous ex post standard. Things have become even less clear on the basis of a 2013 decision that generally denied the application of the UCA for warning letters directed at the manufacturer of allegedly infringing goods, as this would not be ‘injurious’ to the business reputation of the supplier of the allegedly infringing parts.156

154 Tokyo District Court, 15 March 2004, 39 IIC 247 (2008)—‘Water Pellets’; Tokyo District Court, 31 March 2004—‘School Bags’; Tokyo District Court, 6 July 2006, 39 IIC 374 (2008)—‘Fish Food’. 155 Tokyo District Court, 8 August 2006—‘Coat Hanger Clip’. The Court found the preparations of the patent attorney when drafting the application to be sufficient. ‘Fish Food’ (n 154) concerned a warning letter sent while the patent had already been revoked in first instance and an appeal was pending. Negligence was affirmed because there were no rational reasons why the first instance decision was wrong and the appeal should succeed. 156 IP High Court, 25 March 2013, English translation in (2015) 40 AIPPI Japan (English edn). Here, allegedly infringing parts were supplied to a manufacturer who was the addressee of the warning letters in question, while the plaintiff whose business reputation had suffered was the supplier of allegedly infringing parts that were used in the manufacture of a device. The Court reasoned that warning letters against primary infringers were not acts of denigration under the UCA. That seems to be correct also given the fact that both supplier (plaintiff) and manufacturer coordinated their activities for having the defendant’s patent revoked. The case rather seems to indicate that the plaintiff was a subcontractor of the manufacturer.

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X. Costs 103

104 105

106

In principle, the losing party must bear the court costs (Code of Civil Procedure, s 61) which amount to 8–10 million Yen (0.1–0.3 per cent of the value of the case) for each instance that the plaintiff or appellant has to advance.157 Yet even a successful plaintiff or appellant would normally not try to recover the court costs from the opponent, the more so since it appears standard practice in Japan for plaintiffs to claim damages far in excess of what the courts would actually award. This will then lead to an apportionment of costs in accordance with the successful part of the claim. The costs of the legal representatives are currently not included in the court costs,158 and only in exceptional circumstances are (partly) awarded as damages in cases where particularly difficult legal questions are involved.159 There are no fixed fees for legal representation, yet as a rough guideline, the costs of attorneys in Japan are as follows: Attorneys’ fees are freely negotiable. In general, two methods of calculation are used. According to the traditional way, the payment is calculated as a combination of advanced payment and success fee. This method is mainly selected for civil lawsuits and the amount to be paid is estimated by the economic gains of winning the lawsuit. The other method of calculation is time-charge based. The legal fee is thus calculated by the amount of time spent on the case. The latter way is more common when dealing with foreign clients or large companies. The Japanese Attorney’s Act, the ‘Bengoshi hō’, was amended in 2003. According to the amendment, the Japanese bar associations were to abolish the old tables of recommended attorneys’ fees by 1 April 2004. Thus, the bar associations no longer recommend certain fees members should charge to their clients. According to the new rules, every attorney is supposed to submit an estimate of fees to be charged for a certain case in advance, and enter into an agreement with the client for the attorney fees to be charged. Still, many attorneys will keep applying the old table of attorney fees for another couple of years. According to the abolished table, a client should expect to pay about 10 per cent of the economic value of a case—more for small claims, less for large ones.

157 This is a rough estimate. Court costs are based on the value of the claim, in the case of injunctive relief ‘decrease in the plaintiff ’s annual sales x plaintiff ’s profit rate x remaining patent term x 1/8’, according to the website of the Japanese courts: www.courts.go.jp/tokyo/saiban/sinri/ip. 158 The Japanese Government submitted a bill to the Diet in 2004 that would have required a losing party to bear the opponent’s cost of legal representation. However, because of the opposition of the Japan Federation of Bar Associations, the Bill was rejected. 159 eg Supreme Court, 29 May 1984, 530 Hanrei Times 97—‘American Football Symbol Mark’. Amounts tend to be low, eg 1 million Yen.

416

Christopher Heath

107

For complicated or international cases, the time charge system is preferable because it is often necessary to involve a team of specialists in such cases, even for litigation cases. Although the going hourly rates depend on the specialty and experience of each attorney, IP specialists would charge between 20,000 Yen (€190) and 50,000 Yen (€480). For lawsuits, much time is required especially at the preparatory stages. While the losing party in a lawsuit has to bear the court costs (although the successful plaintiff would rarely claim these against the defendant), attorneys’ fees would have to be borne by each side.

108

XI. Statistics Table 2: Applications and Grants for Patents and Utility Models Year

Patents

Utility Models

Applications

Grants

Applications

Grants

1930

15,430 2862

4,976 1610

38,487 382

12,236 119

1940

19,827 1902

6,716 1453

31,833 410

15,703 357

1950

16,896 2360

4,272 137

24,324 46

8,021 (–)

1960

43,484 11,587

11,252 3576

63,077 1069

22,102 708

1970

130,831 30,309

30,879 9488

142,066 2369

27,718 741

1980

191,020 25,290

46,106 8074

197,785 1397

50,001 533

1990

367,590

59,401

138,294

43,300

2000

436,865 49,501

125,880 13,611

9,587 1690

5,372 122

2010

344,598

238,323

8697

8571

109

Numbers in italics indicate applications by or grants to foreigners, where available. The statistics in Table 2 allow patent litigation to be put into perspective: Due to the backlog in applications, the number of granted patents is still increasing, yet the application numbers levelled off in 2000 and have been decreasing ever since (328,000 in 2013).

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Table 3: Number of Intellectual Property Lawsuits between 1993 and 2013 (1st Instance at the District Court Level) Year

Total

1993 1994

Copyrights160

Patents

UM

Designs

Trade Mark

470

91

130

37

55

70

81

6

497

106

98

26

53

72

134

8

1995

528

111

61

31

53

87

172

13

1996

590

157

77

28

80

85

132

31

1997

563

167

70

25

63

94

132

12

1998

559

156

58

22

78

112

130

3

1999

642

191

72

32

65

117

155

10

2000

610

176

59

38

89

97

143

8

2001

554

153

34

29

67

127

136

8

2002

607

165

38

27

99

113

141

24

2003

635

189

27

106

113

113

166

7

2004

654

217

35

25

80

100+7

178

12

2005

579

196

13

28

90

81+15

133

23

2006

589

139

16

18

93

138+18

146

21

2007

496

156

12

20

78

115+14

92

9

2008

497

147

3

29

88

105+14

92

19

2009

527

174

1

14

96

102+18

111

11

2010

631

122

9

15

96

251+2

127

9

2011

518

207

7

16

76

90+12

98

12

2012

567

155

3

29

92

109+19

136

24

2013

552

164

8

12

81

121+15

119

32

110

UCA

Others

The annual number of patent infringement suits has been relatively stable over the years and does not exceed 200, which is a rather low number when compared to the number of patents actually in force. This lends credence to the theory that patent rights in Japan have been regarded less in terms of their court-based enforceability against third parties, than in a multitude of other aspects such as innovative image, potential for cross-licensing and the like.161 Actual statistics on requests for preliminary injunctions in patent matters are no longer available, yet even these have never exceeded 75 requests per year. As has been explained above, preliminary protection is not of such importance in the patent field.

160 After 2004, the statistics show two figures for copyright cases, eg 100+7. The first figure refers to the ordinary cases, the second for the number of cases involving computer programs that fall within the exclusive jurisdiction of the Tokyo/Osaka District Courts and the IP High Court. 161 G Rahn, ‘Patentstrategien in Japan’ (‘Patent Strategies in Japan’) (1994) GRUR Int 377.

418

Christopher Heath

Table 4: IP Cases on Appeal Year

Total

Patents

UM

Designs

Trade Mark

Copyrights

UCA

Others/ Appeals

1993

102

38

14

10

5

6

25

4

1994

91

28

12

7

10

11

21

2

1995

97

18

17

4

11

11

32

4

1996

84

23

14

3

9

15

19

1

1997

120

40

16

11

7

10

31

5

1998

143

50

23

10

8

23

24

5

1999

194

62

22

7

25

41

36

1

2000

216

69

30

2

17

43

55

0

2001

180

58

23

9

18

32

38

2

2002

181

77

13

7

15

34

33

2

2003

183 (114)

66

14

6

30

31

36

0—534

2004

178 (113)

68

6

4

21

29+5

41

4—527

2005

141 (87)

51

3

6

15

31+3

31

1—589

2006

135 (96)

41

5

4

22

25+4

30

4—566

2007

138 (105)

58

4

8

19

29+1

14

5—437

2008

140 (95)

57

2

3

19

30+2

22

5—496

2009

134 (88)

55

2

2

9

30+6

27

3—443

2010

130 (104)

57

5

4

11

29+4

18

2—413

2011

155 (90)

47

4

2

16

53+5

24

4—453

2012

146 (101)

58

1

7

14

29+5

28

4—457

2013

148 (114)

61

4

5

19

25+4

26

4—353

111

112

162

Numbers in brackets are cases pending before the IP High Court in Tokyo. Though since 2004, the IP High Court in Tokyo has become the only court of appeal for patent infringement matters, this is not so for trade mark, copyright and unfair competition cases. In terms of workload, most IP cases that come before the IP High Court concern appeals against decisions by the Patent Office. First instance patent infringement proceedings are relatively speedy also in international comparison (The Hague 15 months, London 25 months, Paris 27 months, Düsseldorf 22 months).162 Interestingly enough, the fact that Japanese courts since 2001 regularly evaluate the validity of a patent also in infringement actions has not slowed down proceedings.

M Köllner/H Weber, ‘Rumour has it’ (2014) Mitteilungen 429, 436.

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Table 5: Average Duration of IP Infringement Cases in Months (1st Instance at District Courts) 1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

31.1

29.6

31.9

23.1

23.7

22.7

25.0

25.7

23.1

21.6

18.3

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2013

16.8

15.6

13.8

13.5

12.5

14.4

13.7

13.4

14.8

13.4

15.7

XII. Academic Writings in English and German Abe/Ikubo/Katayama, Patent Litigation in Japan 2nd edn (West Publishing, 2012). H Baum/M Bälz, Handbuch Japanisches Handels- und Wirtschaftsrecht (Heymanns, 2012). B Hansen (ed), Patent Practice in Japan and Europe, Liber Amicorum Guntram Rahn (Kluwer Law, 2011). K Hinkelmann, Gewerblicher Rechtsschutz in Japan 2nd edn (Heymanns, 2011). J Pitz, Patent Litigation in Germany, Japan and the United States (CH Beck, 2015). G Rahn (ed), Patent Litigation in Japan and Germany, Zeitschrift für Japanisches Recht Special Issue 3 (Heymanns, 2011).

14 Patent Enforcement in Korea BYUNGIL KIM

A. General Issues 1

Creative effort or commercial goodwill in Korea is currently protected by a number of legal instruments enacted by the National Assembly (Acts), government (Enforcement Order), or internal regulations promulgated by the Korean Intellectual Property Office (‘KIPO’) and the Ministry of Culture, Sports and Tourism. The most important of these are the Patent Act (‘Teugheobeob’: ‘PA’),1 the Utility Model Act (‘Silyongsinanbeob’),2 the Design Act (‘Designbohobeob’),3 the Trade Mark Act (‘Sangpyobeob’),4 the Unfair Competition Prevention Act (‘Bujeong Gyeongjaeng Bangjibeob’),5 the Copyright Act (‘Cheojakkweonbeob’: CA)6 and the Plant Variety Protection Act (‘PVPA’).7 2 A patent right shall come into effect upon registration of its establishment (PA, s 87(1)). Under section 88(1) of the PA, the term of protection of a patent is 20 years from the filing date of the application. This can be extended in cases where, prior to the working of a patented invention, an inordinate amount of time was required to obtain marketing approval (PA, ss 89–90). 3 Under Korea’s dual patent litigation system, only attorneys-at-law may handle infringement litigation in the district courts (and appeals therefrom), while both attorneysat-law and patent attorneys8 may handle invalidation, confirmation-of-scope, and correction trials before the KIPO and the Intellectual Property Tribunal (‘IPT’) of the

1

Act No 950, 31 December 1961, wholly amended by Act No 4207 on 13 January 1990. Act No 952, 31 December 1961, wholly amended by Act No 7872 on 3 March 2006. 3 Act No 951, 31 December 1961, wholly amended by Act No 11848 on 28 May 2013. 4 Act No 71, 28 November 1949, wholly amended by Act No 4210 on 13 January 1990. 5 Act No 911, 30 December 1961, wholly amended by Act No 3897 on 31 December 1986. The title of the Act was changed from ‘Unfair Competition Prevention Act’ to ‘Unfair Competition Prevention and Trade Secret Protection Act’ in 1998 by Act No 5621. 6 Act No 432, 28 January 1957, wholly amended by Act No 8101 on 28 December 2006. 7 Formerly part of the Seed Industry Act (Law No 5024 of 6 December 1995, last amended by Law No 11704 of 23 March 2013), the PVPA (Law No 11457 of 1 June 2012) was promulgated on 1 June 2012 and entered into force on 2 June 2013, last amended by Act No 12062 of 13 August 2013. The PVPA focuses on substantive and procedural aspects for the protection of breeders’ rights, while the SIA focuses on developing the seed industry in Korea. 8 In order to register as a patent attorney, a person must either (1) pass the Korean Patent Attorney Examination, complete the practical training and pass the screening, or (2) be a qualified attorney-at-law. 2

422

Byungil Kim KIPO (and appeals of these actions to the Patent Court and the Supreme Court). Therefore, patent attorneys may represent clients in trial proceedings at the KIPO, and in appeals against KIPO decisions at the Patent Court and the Supreme Court, but may not act as trial counsel at the district courts or in appeals therefrom.9

B. Enforcement of Patent Rights in Particular I. Types of Action 4

5

The patentee or exclusive licensee has title to sue for infringement of a patent (PA, s 126). The patentee or exclusive licensee can also apply to the IPT for an ‘offensive claim scope confirmation’ (PA, s 135). Furthermore, customs actions at the Korean Customs Service can be used to quickly obtain a de facto ‘injunction’ against such imported/ exported goods pending resolution of a court infringement action to enforce the relevant patent right. A person sued for an alleged infringement of a patent might challenge the validity of the patent, claiming that it should be revoked because it has been anticipated or that it is obvious or not highly advanced. He can apply to the court for a declaration that his activities are non-infringing, and apply to the IPT for a ‘defensive claim scope confirmation’ (PA, s 135). In many infringement actions, the defendant might also seek to challenge the validity of the patent (PA, s 133). It should be noted that an IPT determination of scope is not binding on the courts.

II. Parties to an Infringement Action 6

7

In general, the plaintiff to the action is the rights owner, and/or the entity suffering damage, such as the exclusive licensee.10 The defendant is the entity directly or indirectly infringing the IP right. A patent right may be assigned (PA, s 99(1)). Joint owners may, except in cases where the joint owners have agreed otherwise, work the patented invention without the consent of the other joint owners (PA, s 99(3)). However, no co-owner may assign his share or establish a pledge over it without the other’s permission(s 99(2)). Where the patent right is owned jointly, a co-owner of the patent right may not grant an exclusive or a non-exclusive licence of the patent right without the consent of all the other joint owners (s 99(4)). Each co-owner is entitled to individually defend the granted right and sue potential infringers.

9 As of December 2014, there were 18,708 attorneys registered with the bar associations and 7745 patent attorneys registered with the KIPO in Korea. 10 An exclusive licence is established by contract and registration thereof (PA, ss 100–101). An exclusive licensee shall have the exclusive right to work the patented invention commercially or industrially to the extent provided by the terms of the agreement (PA, s 100(2)).

Patent Enforcement in Korea 8

9

423

Domestic or foreign individuals and corporations may become party to a lawsuit in their ownnames. Associations or foundations which are not corporations must appoint a representative or administrator in order to become party to a lawsuit; an appointed party representing a group of persons having common interests may also become party to a lawsuit. If the rights or liabilities which are the subject of a suit are common to two or more persons, or have the same factual and legal basis, such persons may join in the suit as co-litigants (Civil Procedure Act, ‘CPA,’11 s 65). In the case of infringement of a plaintiff ’s intellectual property by multiple parties, the district court can enjoin all the defendants if within the court’s jurisdiction. Also, a claim for damages is often heard in the same procedure as a claim for a permanent injunction in a main action.12

III. Jurisdiction 10

11

12

11

Jurisdiction over cases involving intellectual property in Korea is divided between the district courts,13 which have jurisdiction over infringement actions (but not over the invalidation of patents), and the IPT and the Patent Court, which are competent to hear cases for invalidation, cancellation and confirmation-of-scope trials. Neither the KIPO nor the Patent Court has jurisdiction over patent infringement cases, but rather the district courts and the high courts, and ultimately the Supreme Court. Still, the KIPO can issue decisions on the scope of a patent in confirmation-of scope trials. Such decisions are, however, not binding on the ordinary courts. Appeals from decisions of the district courts are generally taken to the high courts.14 The high court undertakes a de novo review of the district court’s decisions on matters of both law and facts. In other words, the high court will accept new evidence and arguments in addition to reviewing the record of the district court trial. Appeals from the high courts go to the Supreme Court, which has discretion as to whether to accept an appeal. Cases at the Supreme Court are normally reviewed by panels typically consisting of four judges (though cases of special importance may be heard en banc). Supreme Court judges are supported by judicial assistants who specialise in IP matters and who have a rank equivalent to high court judges. A Supreme Court decision is not necessarily a binding precedent in subsequent cases of a similar nature, but constitutes persuasive authority only. However, the Supreme Court’s interpretation of a law in a particular case is binding on the lower courts in the same case if the case is remanded. The Patent Court, created under section 3(1) of the Court Organisation Act of 27 July 1994 (Act No 4765), in force since 1 March 1995, hears appeals from decisions made

Act No 547, 4 April 1960, wholly amended by Act No 6626 on 26 January 2002. J (Y-J) Yang, ‘The Enforcement of Patent Rights in Korea’ in C Heath and L Petit (eds), Patent Enforcement Worldwide IIC Studies, vol 23 (Hart Publishing, 2005) 361–62. 13 The district courts are the courts of first instance for both civil and criminal matters. Most infringement actions are heard by a panel of three judges, although for cases with smaller damages claims, a panel may comprise a single judge. District court judges are typically transferred to other positions or jurisdictions every two years, pursuant to the regular reshuffling of judges within the Korean court system. 14 A high court panel consists of three judges, and some high courts have panels of judges with expertise in IP matters. 12

424

13

14

15

Byungil Kim by the IPT belonging to the KIPO. The Patent Court operates as an appellate court, and, like the high courts, decisions of the Patent Court with respect to matters of law are appealable to the Supreme Court.15 The Patent Court is comprised of three panels, each panel consisting of three judges. These judges have experience in patent cases or have an academic background in science and/or engineering. The Court Organisation Act also provides for the appointment of up to 15 technical examiners, to act as judicial assistants.16 These examiners play an important advisory role, explaining to the judges the technical issues and arguments presented by the parties, and answering any questions that the judges may have regarding the invention. After the oral arguments have been concluded, the technical examiner submits his opinion to the panel. However, technical examiners do not have the authority to make decisions in the case. The Patent Court has exclusive jurisdiction in reviewing decisions rendered by the IPT regarding industrial property applications and the validity of industrial property rights.17 Any appeals before the Patent Court should be brought within 30 days from the date of receiving a certified copy of the decision from the IPT. The dual patent litigation system (as above) has raised significant issues regarding the non-uniform and inefficient application of the PA. In particular, problems and delays have arisen due to the fact that patent invalidation or confirmation-of-scope actions are often used as defences to infringement actions.18 Recently, the Supreme Court has been considering an amendment to the Court Organisation Act. This amendment is expected to give the Patent Court exclusive appellate jurisdiction over industrial property infringement cases in addition to its existing jurisdiction over IPT decisions. Even if there is no provision on international jurisdiction which specifically deals with IP rights, section 2(1) of the Private International Act19 prescribes that [i]n case a party or a case in dispute is substantially connected to the Republic of Korea, the court shall have international jurisdiction. In this case, the court shall apply reasonable principles, compatible to the spirit of the allocation of international jurisdiction, in judging the existence of a substantial connection.

There has hardly been any case law about acts committed abroad as part of domestic infringement. The court will determine whether a court in Korea has international jurisdiction by virtue of the fundamental principles of fairness between the parties, appropriateness, expediency of adjudication and judicial economy.

15

Unlike the other high courts, however, the Patent Court has national jurisdiction. According to r 2(2) of the Supreme Court’s Rules Concerning Technical Examiners, these technical examiners must have at least one of the following prerequisites: 16

1. 2. 3. 4.

a Masters Degree in science and technology, and 10 years’ subsequent experience in the field; a PhD in science and technology; 5 years’ experience with the KIPO; or 7 years’ experience as an official in a technology related field.

17 The Patent Court has jurisdiction over cases set forth in the PA, s 186(1), the Design Act, s 166(1) and the Trade Mark Act, s 85-3(1), and other first instance proceedings of cases coming under the jurisdiction of the Patent Court pursuant to legislation such as the Plant Variety Protection Act, s 103(1). 18 Yang, ‘The Enforcement of Patent Rights in Korea’ (n 12) 362. 19 Act No 966, 15 January 1962, wholly amended by Act No 6465 on 7 April 2001.

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IV. Preliminary Measures 16

17

Unlike many other jurisdictions, the Korean CPA does not provide for pre-trial discovery. This lack of pre-trial discovery sometimes frustrates the complainant or plaintiff in connection with collecting evidence because it is practically impossible to collect evidence unless a lawsuit is actually filed and proceeds to trial. However, the fact that there is no official pre-trial discovery process does not preclude the plaintiff from collecting evidence on his own. As a result, the party who wishes to initiate a lawsuit may have to exert more efforts to collect evidence through private investigation than parties in other countries.20 While the Korean PA contains a provision whereby the court may order the other party to submit documents necessary for the assessment of damages caused by the infringement (PA, s 132), the order can only be made where the document can be identified with certainty. Sections 375–384 of the CPA provide for the ‘preservation of evidence’, which allows a party to file a motion requesting the court to accept evidence prior to the filing of the initial complaint. According to section 377(1) of the CPA, the following matters shall be made clear in a motion for the preservation of evidence: 1. 2. 3. 4.

18

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20 21 22

indication of the other party; matter requiring proof; the evidence; and the reason for requiring preservation of the evidence itself.

The reasons for the preservation of evidence shall be demonstrated by evidence (CPA, s 377(2)). If the court grants the motion for preservation of evidence, and the party against whom the motion was filed fails to cooperate, the matters sought to be proved by the requesting party may be presumed against the party failing to cooperate therewith (CPA, s 380). This procedure may be sought in either ex parte or inter partes proceedings (CPA, s 379). An action for preliminary injunction may be brought only when there is a ‘necessity for injunction’, which means that an immediate or present danger of causing an irreparable harm to a right exists. The preliminary injunction is usually regarded as the most effective and immediate method of relief, partly because the hearings proceed more rapidly than in a main action, and partly because the court’s order of preliminary injunction may be executed even if the respondent files an appeal. Injunctive relief may be denied when the court has reasonable doubt as to the validity of the alleged patent. In the case of Raychem v Taerim Chemical Co Ltd,21 the Supreme Court held that the necessity for an injunction may be denied (1) where the petitioner’s failure in the main action is clearly expected, owing to the termination of the subject patent right in the near future; (2) where there is a high probability that the KIPO will decide to invalidate the subject patent in the pending invalidation trial; or (3) where the KIPO has rendered its invalidation decision on the subject patent already. However, in F Hoffman La—Roche Age v Cheil Sugar Co Ltd,22 the Supreme Court held that Yang (n 12) 363. Supreme Court, 92 Da 40563 (12 February 1993). Supreme Court, 91 Ma 540 (2 June 1992).

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Byungil Kim the court may deny the necessity for injunction where the court found a likely lack of novelty for the patent, although the court is not allowed to deny an injunction where inventive step of the patent is doubtful.23 A preliminary injunction action may be brought either alone or together with a main action. However, it is not generally recommended to file both actions simultaneously, as the court tends to combine both actions, rendering the preliminary injunctive action practically meaningless. Although the law states that a preliminary injunction may be issued with or without a hearing, courts will usually review a petition for a preliminary injunction in inter partes proceedings. A preliminary injunction is available upon a prima facie showing of infringement and of the necessity for provisional relief. In deciding the necessity for provisional relief, courts weigh the irreparable harm caused to the plaintiff by the defendant’s continuing infringement against the economic harm to the defendant that would be caused by the grant of injunction. Courts also consider the adequacy of damages to redress the injury to the plaintiff from infringement and the likelihood of invalidation of the relevant IP right, although the validity of the IP right is presumed until it is declared invalid in a final decision of an invalidation action. The respondent is given the opportunity to present arguments and evidence in rebuttal. Although the court may issue a preliminary injunctive order with or without requesting a security deposit, it generally requires the patent owner to post a security bond before issuing an injunction for the purpose of indemnifying the other party for possible damages. This can be returned either on the basis of the defendant’s consent or after a final judgment in the permanent injunction action in favour of the plaintiff.24 However, where the defendant wins the main action notwithstanding the execution of the preliminary injunction, he may file an action for damages caused by such an execution. In the case of F Hoffman La-Roche v Dong Hwa Pharmaceutical Co Ltd,25 the Supreme Court held that if the defendant prevailed in the main action, the plaintiff is responsible for defendant’s damages suffered by the execution of the preliminary injunction practically with a no-fault liability.26 When a preliminary injunction order is issued, the court may: 1. prohibit the respondent from continuing the manufacturing or sale of the articles which infringe the petitioner’s right; 2. direct that the infringing articles or other articles used for the infringement be transferred to the custody of a court bailiff; and 3. instruct the court bailiff to post an appropriate public notice of the order on the premises of the respondent.

23 In these proceedings, a party may engage its own expert to prepare an expert opinion, which the party then submits as evidence in support of its case. A party may submit further evidence rebutting an expert opinion submitted by the opposing side. In addition, the court may appoint its own expert upon the request of either party, or on the court’s own initiative. 24 Yang (n 12) 366. 25 Supreme Court 79 Da 2138, 2139 (26 February 1980). 26 The Supreme Court held that the plaintiff is regarded as negligent with regard to the preliminary injunction if he failed in the main action, 80 Da 730 (25 November 1980).

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If the petition for a preliminary injunction is denied by the trial (district) court, the petitioner may appeal the decision to an appellate court. Alternatively, the petitioner may proceed with the filing of an action for a permanent injunction and/or seek other remedies.27

V. The Main Action 1. Warning Letters 27

Where an infringement is discovered in Korea, it is customary to send a warning letter to the infringer, which may result in an amicable settlement instead of an expensive and time-consuming court trial. Although a warning letter is not required in an infringement action, it is sometimes important since it will inform the alleged infringer of the existence of the right and will establish intentional infringement of the right from the day of receipt.28 Although negligence of the infringer is presumed by the existence of a registered IP right, warning letters are still advisable, especially if the infringing activities occur while the concerned IP right has not been registered yet.29 Warning letters must be carefully formulated and based on supportable allegations. Otherwise, a civil action may be commenced against the sender for tortious interference with business.

2. Procedures in the Main Action 28

29

30

27

The virtual absence of pre-trial discovery and the lack of a jury trial under the Korean CPA generally results in lawsuits being handled relatively quickly. A trial consists of a series of hearings held by the court every three or four weeks (two to three weeks for preliminary injunction actions), and the first hearing will generally be scheduled only a few weeks after the filing of the complaint. At each hearing, the parties typically submit briefs and evidence in support of their case and thus the hearings tend to take less than 30 minutes unless an examination of a witness or an expert witness is conducted. In principle, an IP right holder bears the burden of showing the existence and the likelihood of an infringement by the alleged infringer. As a general rule in Korean civil litigation, all parties must produce their own evidence. Court-ordered production of evidence is restricted, and the parties are not obligated to disclose the existence of documents in their possession relating to the case.30 Under the CPA, however, a litigant may petition the court to order the other party or a third party to submit a known document which relates to the case. Sections 344–355 of the CPA provide that the ‘submission of documentary evidence shall be made by presenting the document, or by applying for an order of production addressed to the person holding the document’. Evidence is usually presented at trial in the form of documents or affidavits from witnesses or expert witnesses.31 Samples or photographs can also be submitted. Oral

Yang (n 12) 366. Seoul Criminal District Court, 91 No 3825 (12 September 1991). 29 Yang (n 12) 367. 30 ibid 367. 31 The court may generally call any person as a witness to appear and testify (CPA, s 303). In practice, witnesses are called by the court upon petition by a party (CPA, s 308). 28

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Byungil Kim statements by witnesses can be presented as evidence during in-court witness examinations conducted with the permission of the court. Given the focus on documentary evidence and the limited nature and scope of witness examination in Korean trials, the trials tend to be more inquisitorial than adversarial.32 In Korea, an in-court presentation can be made with the permission of the court. In formal proceedings, both parties attend and have the opportunity to rebut the opposing party’s presentation. Especially in patent litigation, presentations have been used increasingly in court and judges favour that both parties attend and present their explanations of complex technical issues.33

VI. Types of Infringement 32

33

34

32

Once a patent right is granted, the patentee has the exclusive right to commercially exploit the invention and to exclude others from doing so (s 94). However, this provision shall not apply to the extent that the exclusive licensee has the exclusive right to work the patented invention under sections 100(2) and 94 of the PA. A patent infringement is defined as a commercial activity ‘of producing, using, transferring, leasing, importing, or offering, for the sale or lease, an article covered by a patent’ (PA, ss 2(iii) and 94).34 Section 127 of the PA also provides that any commercial activity of production, transfer, lease, import, or offer, for sale or lease of articles used exclusively for the production of an infringing article or for the practice of the patented process constitutes a patent infringement. This type of infringement is generally referred to as ‘indirect infringement’, but the infringer does not need to know that a particular component was especially made or adapted for the use in the infringement of a patent, which is different from the concept of contributory infringement under US patent law.35 The scope of protection conferred by a patented invention shall be determined by the content of the claims (PA, s 97). Infringement is determined by comparing the infringing article or process to the patent claims. If a competing article or process falls within a patent claim, it is called a literal infringement. To constitute a literal infringement, all of the constituents of a claimed invention must be used in the competing article or process. A slight change made in the competing article or process affecting neither the constitution nor the function or effect of the patented invention also constitutes a literal infringement.

Yang (n 12) 367. Yang (n 12) 370. 34 In the case of a process patent, any activity which involves using a patented process, or of using, transferring, leasing, importing, or offering, for the sale or lease, an article manufactured by the patented process also constitutes an infringement. 35 In the case of Samsung Electronics v Sung-Kyu Cho (Supreme Court, 7 November 1996, 96 Ma 365), the Supreme Court found a toner cartridge of a laser printer an article used exclusively for the production of the patented laser printer even though such toner cartridges are expendable supplies, and held that (1) the cartridge is an important part of the subject matter of the patent; (2) it is not generally used for any other purpose; (3) future replacement of the cartridge is inevitably expected; and (4) the cartridges have been separately manufactured and sold only by the patentee. Sang Jo Jong, ‘Contributory Patent Infringement in Korea’ (2000) 2 Washington University Journal of Law and Policy 287, available at: http://openscholarship.wustl.edu/law_journal_law_policy/ vol2/iss1/10. 33

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Recent decisions rendered by the Supreme Court indicate an attitude towards broadening the scope of patent protection beyond the realm of working examples given in the specification. Particularly in the case of Aktiebolaget Haessle v Boryung Pharmaceutical Co Ltd,36 the Supreme Court rejected the infringer’s argument to confine the scope of patent protection to the invention as disclosed in working examples. The Court held in particular that: (1) as a matter of principle, the scope of patent protection should be determined by the subject matter described in the claim; (2) when the claim itself does not render it possible to determine the technical constitution or scope, other disclosures contained in the specification may be used to solve the ambiguity; however, in such case, such other disclosures cannot be used to expand the scope of protection beyond the claim itself; and (3) when it is possible to determine the technical scope based on the claim alone, the scope of patent protection cannot be restricted or reduced by using other disclosures contained in the specification. A patent infringement may be found in Korea under the doctrine of equivalents (‘DoE’).37 According to a Patent Court decision in the Bayer AG v Union Quimico Pharmaceutica SA case, the following conditions should be met:38 1. a replaced constituent element must carry out substantially the same function in substantially the same manner to obtain substantially the same effect as the relevant constituent element of a patented invention; 2. such a replacement must have been easily conceivable to one of ordinary skill in the relevant art at the time of the preparation of the competing article; 3. the competing article was not prior art technology or could not be easily conceived from prior art at the time of filing the application for the patented invention; and 4. the replaced constituent element must not have been intentionally excluded from the patent claims during the prosecution history of the patented invention.

37

36

Although the DoE was found to be applicable in a relatively small number of cases,39 the Korean Supreme Court’s recent decision of expressly adopting the DoE is anticipated to have a profound effect in broadening the applicability of this doctrine in future cases. According to the Supreme Court, equivalency may be found only if there is (1) no difference in an ‘essential part’ of the patented invention;40 (2) practical interchangeability; (3) the same mechanism or function of the patented invention; and (4) obviousness of interchangeability by an ordinary person skilled in the relevant art.41 It should be further noted that any of the differences between the two inventions does not entail any material difference in the outcome; and the equivalency was disclosed in the references published prior to the filing date of the patent application.

Supreme Court, 91 Hu 1908 (12 October 1993). Patent Court 98 Heo 2160 (17 September 1998); Patent Court 98 Heo 4395 (27 August 1998); Supreme Court 97 Hu 2163 (12 March 1999); 97 Hu 2200 (28 July 2000); 2007 Hu 3806 (25 June 2009), etc. 38 Patent Court, 98 Heo 2160 (17 September 1998). 39 Among 60 Supreme Court cases from 2000 to 2011 whose decision is based on DoE, in 13 cases (21.7%) infringement was affirmed and in 47 cases (78.3%) infringement was denied. D Kim, Patent Equivalents Infringement (Bubmunsa, 2013) 292. 40 An interchanged part is a ‘non-essential part’ of the patented invention and therefore an allegedly infringing device or process has the same characterising structure as the patented invention. Supreme Court 2007 Hu 3806 (25 June 2009); 2010 Hu 296 (27 May 2010); 2007 Da 66422 (24 December 2009); 2009 Da 46712 (15 October 2009). 41 Supreme Court, 97 Hu 2200 (28 July 2000). D Koo, ‘Comparison of the First Requirement of the Doctrine of Equivalents between Korea and Japan’ (2013) 44 IIC 178, 182. 37

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Byungil Kim Furthermore, as is the case in a number of other countries, the doctrine of ‘file wrapper estoppel’ is generally recognised in Korea.42 Therefore, restrictions imposed by the examiner, and amendments or admissions made by the applicant during the prosecution of the patent application concerned, may be used at a later time against the patentee in the interpretation of patent claims. A patent applicant enjoys a provisional right to recovery of an ordinary royalty after the application has been laid open and the alleged infringer has obtained knowledge of the application (PA, s 65). Such compensation cannot be sought until the patent has been granted, after which the patentee has the right to seek full damages and preliminary or permanent injunctive relief.

VII. Remedies 40

41

The Civil Code, the Civil Procedure Act (including the Civil Execution Act)43 and the Criminal Procedure Act44 apply to the enforcement of IP rights. Each IP law also specifies remedies available for civil and criminal infringement. Claiming damages is a typical remedy for tort actions in Korea and is governed by the basic principles enumerated in the Civil Code. Moreover, injunctions may be made in the normal course of litigation, and in the form of provisional dispositions (or preliminary injunctions) under the Korean Civil Execution Act. Among these remedies, interestingly enough, the most frequently used relief is the provisional injunction remedy. In a patent infringement action, the plaintiff must prove that: (1) he is the lawful patent right holder; (2) the defendant is engaged in or making preparations for the business of practising (manufacturing, using or the like) of a certain product or process; and (3) the product or process of the defendant infringes on the plaintiff ’s patent.

1. Civil Remedies 42 43

42

Civil remedies include injunctions, damages and measures that would restore the victim’s business reputation.45 A claim for damages is often made at the same time as a claim for a permanent injunction. Since IP rights such as patents and utility models are presumed valid until declared otherwise by the KIPO, civil courts may at their discretion decide to stay the infringement proceedings pending a decision by the KIPO on the issue of validity. However, the trend appears to be for courts to proceed with litigation parallel to any KIPO actions.

Supreme Court, 2000 Hu 2712 (14 June 2002); 2002 Hu 2181 (12 December 2003). Act No 6627, 26 January 2002, entered into force on 1 July 2002. Act No 341, 30 May 1954, last amended and entered into force on 30 December 2014 (Act No 12899). 45 Typically, an advertisement of apology in a newspaper was ordered to restore reputation. Since an advertisement of apology is embarrassing to an infringer and damaging to his business reputation, the contents of an advertisement of apology need only contain the essentials. Supreme Court 87 Daka 1450 (14 June 1988). However, the Constitutional Court held that an advertisement of apology in a newspaper contravenes the Korean Constitution (Art 19 of the Constitution, the freedom of conscience), Constitutional Court, 89 Hunma 160 (1 April 1991). 43 44

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Other orders, such as orders for disclosure of suppliers or manufacturers, are not generally a part of the judgment. It is possible that such information could be obtained through a request during the trial proceedings, but courts are usually highly restrictive in seeking information from a defendant.

a. Injunctive Relief 45

46

Injunctive relief, preliminary or permanent, can be granted not only against infringing acts which have already occurred but also against those that are imminent. In many cases, proceedings for provisional injunctions are special proceedings used for the prompt processing of an injunction claim according to section 300 of the Civil Execution Act.46 Courts generally ask that security be furnished before issuing a preliminary injunction.47 The procedure for obtaining a permanent injunction is similar to that for a preliminary injunction. The effect of a permanent injunction is permanent and thus the court is more thorough in reviewing such petitions. Consequently, it usually takes about one to two years to obtain a permanent injunction, which is longer than required for a preliminary injunction action.48 A preliminary injunction is usually issued within about six to 12 months. Emergency relief, such as temporary restraining orders, is generally not available in civil proceedings in Korea.

b. Damage Claims 47

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46 47 48

The provisions of IP law are leges speciales to general tort law under section 750 of the Civil Code. In general, there are four requirements for damage claims: intention or negligence, existence of an act of infringement, damage, and causality between damage and acts of infringement. The patentee or exclusive licensee may seek compensation of damages against a person who has knowingly or negligently infringed a patent or an exclusive licence. In the case of infringing acts, negligence shall be presumed according to section 130 of the PA, so that the burden of proof is shifted to the defendant. The amount of damages is determined by the general principles of tort law. According to section 128(1) of the PA, damages are based on multiplying the quantity of the products sold or transferred by the accused infringer by the reasonable unit profits which may have been realised by the patentee himself. The calculated quantity, however, cannot exceed the amount producible by the patentee or the exclusive licensee. Unlike some other countries such as the US, there is no provision allowing treble damages for wilful infringement of a patent in Korea, since Korea imposes criminal punishment in this respect. It is also recognised that the profits gained through the infringement shall be presumed to be the amount of damages suffered by the owner of the patent right or the exclusive licensee (PA, s 129). As a minimum amount of damages, section 128(5) of the PA recognises the right to a reasonable amount of royalty which the patentee would normally receive in a freely-negotiated transaction, although there is no standard rate of reasonable amount of royalty set for this and the Supreme Court, 87 Daka 90 (12 April 1988)—Aero Chemie. Seoul District Court, 94 Kahab 12987 (27 March 1995). Yang (n 12) 363.

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Byungil Kim court decides ex officio. In the case of Dukhee Lee v Kwangjin Yun,49 the Seoul High Court affirmed the judgment of Inchon District Court which set damages at 5 per cent of royalties on the patent relating to a method and an apparatus for the manufacture of label sewing needles. If the amount of damages exceeds the prescribed amount, the claim for damages may be made even to such excess. In this case, the court shall consider the intent or gross negligence on the side of the infringer when determining the amount of the damages. In addition, the infringed parties may request the court to order the defendant to produce documents which prove the value of goods sold.

2. Criminal Sanctions 50

51

More often than not, criminal sanctions may be more important in strengthening the protection and enforcement of IP rights than civil remedies. There are two kinds of criminal penalties: imprisonment and fines (PA, s 225).50 A person who has infringed a patent right or an exclusive licence may be criminally prosecuted notwithstanding the filing of a civil action. However, unlike trade mark infringement, the criminal prosecution of a patent infringer may not be initiated ex officio, but only if the patentee or his exclusive licensee files a criminal complaint. The complaint can be withdrawn up until the time a decision is rendered. Depending on the severity of the infringement, the infringer can be arrested and incarcerated once the indictment decision is made, even before the sentencing. Where a representative director of a juridical person or a representative, an employee or any other servant of a juridical person or natural person violates sections 225(1), 228 or 229 of the PA with regard to the business of the juridical person or natural person, the juridical person is liable to a fine and the natural person is liable to a fine prescribed in the relevant section, in addition to the offender (PA, s 230). In the case of patent, a criminal investigation and indictment may be brought only upon the complaint of the right holder.

VIII. Defences 52

The most common defences raised in response to an infringement action are a denial of the infringement, abuse of patent rights, a claim of invalidity and a request for a negative confirmation of scope.

1. Non-Infringement 53

49 50

As a defence in a patent infringement action, the defendant may argue that his product or process does not fall within the scope of the patent. Such argument may be supported by a written opinion by an expert witness who is often a patent attorney or a university professor having expertise in the relevant technology. In this connection, the alleged infringer may, before or after the initiation of an infringement action, seek a decision before the IPT of the KIPO confirming that his product or process does not fall Seoul High Court, 88Na 23020 (27 June 1990). Imprisonment (up to 7 years) or fine (up to 100 million Won) is imposed for infringement of a patent right.

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within the scope of the patent. However, recent Supreme Court decisions have affirmed that if it is shown in an infringement trial that the asserted patent lacks novelty or inventive step and would likely be invalidated by the IPT, the district court may refuse to enforce the patent and dismiss the infringement action as an abuse of patent rights.51 In the case of Shindo Mulsan Co Ltd v Hanmi Silup Co Ltd52 the Supreme Court held that if every single inventive element constituting a patented invention had been in the public domain prior to the filing date of the patent application, then such a patent is inherently defective owing to lack of novelty, and therefore the court, without declaring the patent invalid, can refuse to enforce the patent and dismiss the infringement action. This unanimous judgment reversed the Court’s previous decisions. The impact of the above decision was somewhat mitigated by the later case of F Hoffmann La-Roche v Cheil Sugar.53 Here, the alleged infringer tried to extend the scope of the above ruling to the case where a patented invention allegedly lacked inventive step rather than novelty. The Supreme Court rejected this argument, holding that the said exception should be strictly applied to cases of lack of novelty; in all other cases, the court should hear the infringement action with the presumption that the patent is valid even if the patented invention could have been easily conceived over the prior art. The effects of the patent right for inventions of medicines (products used for diagnosis, therapy, alleviation, medical treatment or prevention of human disease) manufactured by mixing two or more medicines, or for inventions of processes for manufacturing medicines by mixing two or more medicines, shall not extend to the acts of dispensing medicines in accordance with the Pharmaceutical Affairs Law or to medicines manufactured by such acts (PA, s 96(2)). Besides, the patent rights may be limited by certain statutory licences in the case of an employee’s invention (Invention Promotion Act, s 10(1) and for the prior use, PA, s 103). A competitor can request the Commissioner of the KIPO to grant an award of a compulsory nonexclusive licence, provided that no agreement is reached despite having a consultation under reasonable conditions with the patentee or exclusive licensee on the grant of a non-exclusive licence for the patented invention or a consultation is impossible to arrange (PA, s 107). The consultation shall be made in writing, state the reasons therefor and specify the following matters: (1) the scope and duration of the nonexclusive license; and (2) the remuneration for the licences and the method and time of payment (PA, s 110).54

2. Abuse of Patent Right 57

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The abuse of a patent right may, in theory, be an affirmative defence in a patent infringement action under section 2 of the Civil Code.55 However, the Korean Supreme Court has been very cautious when denying a private right, even though section 2 of the Civil Code is a general rule applicable to all private legal relations.56 The Korean Supreme

Supreme Court (en Banc) 19 January 2012, 2010 Da 95390. Supreme Court, 81 Hu 56 (26 July 1983). 53 Supreme Court, 91 Ma 540 (2 June 1992). 54 It is reported, however, that a compulsory licence has never been granted so far. 55 Section 2 (Trust and Good Faith) of the Civil Code stipulates (1) The exercise of rights and the performance of duties shall be in accordance with the principle of trust and good faith. (2) No abuse of rights shall be permitted. 56 Seong-Soo Park, ‘Controlling Patent Abuse in Korea’ (2007) 11(1) Journal of Korea Information Law 13. 52

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In an IP case, the Supreme Court ruled that the plaintiff ’s filing of a lawsuit in 1995, which was six years after the infringement started in 1989, was not barred by the defence of laches.58 This decision added that the right holder should not be regarded as causing or assisting the infringement. Another approach to solving patent abuse problems in Korea is the ‘defence of bad patent’ that deals with certain types of defences available to the patent infringer. Commentators argue that filing lawsuits on a ‘bad patent’ is a misuse of the patent.59 Though the Seoul High Court recognised this type of defence in a recent decision, the Supreme Court of Korea has taken a vague position on this matter,60 which makes this issue far from settled. The third approach on resolving patent abuse is by depending upon the Monopoly Regulation and Fair Trade Act (‘MRFTA’).61 In determining whether or not various clauses found in IP licensing agreements constitute unfair business practices, section 59 of the MRFTA plays an important role. According to section 59 of the MRFTA, the Fair Trade Commission (‘KFTC’) does not raise anti-competitive issues with normal exercise of the IP rights in order to encourage creative inventions. However, it may constitute a breach of the MRFTA if patentees abuse their intangible property rights or take advantage of such rights to engage in other unfair trade practices.

3. Invalidation Action 60

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Invalidation actions are one of the most common defences in a patent infringement suit. As mentioned earlier, invalidation actions are handled by the IPT and the Patent Court, while infringement actions are handled by the district courts. A decision of invalidity by the IPT or the Patent Court will not have a binding effect on a court until it becomes final and can no longer be appealed. Once a patent is registered, interested parties may bring an invalidation action before the IPT. The petitioning party is required to prove that he has an ‘interest’ in bringing the action; otherwise the action shall be dismissed. The petitioner may submit evidence for invalidating the patent before the finalhearing. The invalidation action can be brought at any time during the patent term and even after its expiration. The patentee as a respondent may request correction of the patent and may submit a response against the petition as well. Normally, an oral hearing will be held before the panel

Supreme Court, 2001 Da 72081 (26 March 2004). Supreme Court, 2000 Da 48272 (11 March 2003). 59 See Choi Sungjoon, ‘Is Voidness of Patent Defense Available under the Principle of Prohibition of Abuse of Right?’ Informedia Law Decision 100 (Pakyoungsa, 2006) 129–36. 60 Supreme Court, 2000 Da 69194 (28 October 2004). 61 Act No 3320 (‘Dogjeom gyuje mich gongjeong georaee gwanhan beobryul’), 31 December 1980 was wholly amended by Act No 4108 on 13 January 1990, last amended by Act No 12708 of 28 May 2014. 58

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of the board renders a decision. The losing party may appeal to the Patent Court to reverse the decision. The case can be further appealed to the Supreme Court when legal issues are involved therein.

4. Confirmation of Scope 62

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As explained above, the scope of protection conferred on a patented invention shall be determined by the subject matter described in the claim (PA, s 97). A patentee or an interested party may request a trial to confirm the scope of a patent right against possible infringement (PA, s 135), but not for an assumed infringement which might occur in the future.62 Further, requesting a trial to determine whether a subsequent patent utilising a prior patent falls under the scope of the senior patent is not possible, since it would result in negating the right of the registered patent.63 However, a request for a trial to establish whether a subsequent patent utilising a prior patent does not fall under the scope of the prior patent is possible, since it will not result in negating the right of the registered patent.64 The trial to confirm the scope of a patent right is an administrative ruling by the IPT with respect to technical issues, and therefore the court reviewing a civil action or a criminal action relating to the infringement of the patent is not obliged to accept the decision of the IPT, though the court may refer to the decision. The losing party in the trial may bring an action to annul the decision to the Patent Court, and the case can be further appealed to the Supreme Court when legal issues are involved.

IX. ‘Wrongful Enforcement’ 64

If the preliminary injunction decree is subsequently nullified for the reason of noninfringement and/or patent invalidity, the patentee will likely be held responsible for the losses suffered by the accused party due to the execution of the preliminary injunction. Special statutory provisions exist in the case of copyright to protect parties against unjustified threats to sue (CA, s 123(4)).65 However, there are no statutory provisions that protect against unjustified threats to sue in relation to patents, trade marks and design right. In these cases, an aggrieved party may able to bring an action for the tort of abuse of process.

X. Costs 65

62 63 64 65

The cost generally consists of stamp taxes (filing fees), processing fees, other out-ofpocket costs such as per diem fees for witnesses and photocopies, and lawyers’ fees. The total costs for patent infringement suits at each court level are between 8 and 10 million won (currently €70,000 to €90,000). Attorneys’ fees are freely negotiable and Supreme Court, 96 Hu 665 (20 September 1996). Supreme Court, 84 Hu 6 (25 March 1986). Supreme Court, 96 Hu 375 (30 July 1996). Those who wrongfully allege copyright infringement are liable for damages (CA, s 123(4)).

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Byungil Kim are normally calculated per hour. The attorney’s fees are divided into an advanced payment and a success fee. Most of the court costs and fees listed above are recoverable by the prevailing party from the losing party in a proceeding. In most cases, the attorney’s fees have to be borne by each party, while the losing party may have to reimburse a nominal fee to the winning side.66 However, attorneys’ fees are not fully recoverable pursuant to Supreme Court regulations and are calculated based on a tariff schedule, which is based on the amount of the claim.

XI. Conclusion 66

There is strong pressure from the international community that Korea raises the level of IP protection in order to match the global standard even after the conclusion of the negotiation process of the Korea-USA FTA and Korea-EU FTA.67 Since the FTAs’ implementation, there has been significant progress in the field of IP protection. It remains, however, to be seen how Korea’s efforts will impact or improve the civil enforcement of IP protection in Korea.

66 The attorney’s fees shall be calculated in accordance with the Regulation of the Supreme Court (CPA, s 109(1). CPA, s 109(1) applies mutatis mutandis to the fee for patent attorneys who provide representation in litigation (PA, s 191bis). 67 In addition, the Korean Government signed the Anti-Counterfeiting Trade Agreement (‘ACTA’) for the purpose of establishing international standards on IP rights enforcement on 1 October 2011.

15 Patent Enforcement in India HEMANT SINGH

A. Outline of the Indian Legal System I. Indian Constitution and the Patents Act 1970 1

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India is a federal union of 29 States and seven Union Territories inhabited by over 1.2 billion people. It is the world’s most populous democracy. The Constitution of India is the fountainhead of the Indian legal system. It demonstrates the Anglo-Saxon character of the judiciary which is basically drawn from the British legal system because of the long period of British colonial influence during the British Raj in India. During the drafting of the Indian Constitution, laws from Ireland, the United States, Britain and France were all synthesised to get a refined set of Indian laws as it currently stands. Indian laws also adhere to the United Nations guidelines on human rights law and environmental law. Certain international treaties concerning intellectual property such as TRIPS are also enforced in India. India is a member of Paris Convention, Patent Cooperation Treaty (‘PCT’), Madrid Agreement, Berne Convention etc. Laws by the central government and their interpretation by Supreme Court of India via judicial precedent or general policy directives are binding on all courts and citizens of India. Product patents as well as process patents are granted and enforced in India under the Patents Act 1970 (the ‘Act’), as last amended by the Patents (Amendment) Act 2005 and the Patents Rules 2003, as last amended by the Patents (Amendment) Rules 2014.

II. Judicial System 4

The judicial system is a unique feature of the Indian Constitution. It is an integrated system of courts that administer both State and Union laws. The Supreme Court of India is the apex court whose decisions are binding on all courts all over India. Each State and Union Territory has federal High Courts. There are several subordinate courts in each district and sub-divisions of a State under supervisory and appellate jurisdiction of its High Court.

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III. Indian Legal System 5

There are mainly two categories under which the Indian legal system operates. These are: — civil procedure; and — criminal procedure;

1. Civil Procedure 6

A civil suit is the most commonly resorted litigation, covering a wide range of legal remedies including remedies arising from patent infringement. All courts dealing with civil matters follow the common Civil Procedure Code 1908 while administrative and statutory tribunals, being quasi-judicial forums, adhere to their own rules of procedure based on the principles of natural justice. The Code of Civil Procedure 1908 deals with the procedures to be followed by the civil courts in adjudicating upon a civil suit, broadly involving the following steps and stages of proceedings:

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a. Institution of Suit and Pre-Trial Stage — filing of the plaint to institute the suit; — issue of notice/process to the opposite party;1 — filing of the written statement by the opposite party, ie the defendant within 30 to 90 days;2 — replication by the plaintiff (rebuttal to the defendant’s written statement); — admission/denial of documents; — discovery of documents and facts; and — framing of issues. b. Trial Stage — submission of list of witnesses;3 — affidavit in evidence of plaintiff; — cross-examination by the defendant; — affidavit in evidence by the defendant; — cross-examination by the plaintiff; and — final arguments. c. Judgment — —

1 2 3

final order and judgment; and final decree.

Sarkar, Commentary on Code of Civil Procedure, 10th edn (Nagpur, Wadhwa and Company, 2004) 2. ibid 2. ibid 2.

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d. Post-Suit — reviewer revision; — first appeal against order/decree; and — second appeal.

2. Courts and Style of Adjudication 8

Patent infringement cases are heard by civil courts. Infringement of a patent is not a criminal offence. The jurisdiction to decide a patent infringement case vests with the district court which is the principal civil court of original jurisdiction within any district. This includes such High Courts which exercise ‘original civil jurisdiction’. These High Courts are located at Delhi, Mumbai (Bombay), Kolkata (Calcutta) and Chennai (Madras). Owing to their high level of awareness of IP laws, these High Courts are the preferred choice by patentees for institution of patent infringement cases.

3. Intellectual Property Appellate Board (‘IPAB’) 9

IPAB is a statutory tribunal created by the Government of India under the provisions of the Indian Trade Marks Act 1999 and the Patents Act 1970 referred to as ‘the Appellate Board’. It has been conferred jurisdiction to decide petitions for revocation of patents and appeals arising from orders passed by the Controller of Patents in cases of patent applications or pre-grant or post-grant oppositions. The Appellate Board constitutes the Chairman and a Technical member authorised to hear such cases. The Chairman is required to be a retired High Court Judge. The Technical member is required to be a person having a science degree and having worked as Controller of Patents or who has discharged the functions of the Controller for at least five years or practised as a patent agent for 10 years.

4. Jurisdiction to Decide the Issue of Invalidity 10

Though the district court has jurisdiction to decide the issue of infringement of a patent4 it has no jurisdiction to decide the issue of invalidity if raised by a defendant as a counterclaim in such suit. If, as and when, such plea of invalidity is raised, it is obligatory for the district court to transfer the entire suit to the High Court exercising supervisory and appellate power over it.

5. Style of Decisions 11

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The courts in India adjudicating upon patent infringement suits operate as a court of law but grant or refuse injunction, based on principles of equity. A patentee, therefore, Patents Act 1970, s 104(1): Jurisdiction: No suit for a declaration under section 105 or for any relief under section 106 or for infringement of a patent shall be instituted in any court inferior to a district court having jurisdiction to try the suit: Provided that where a counter-claim for revocation of the patent is made by the defendant, the suit, along with the counter-claim, shall be transferred to the High Court for decision.

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Hemant Singh in order to succeed in a suit for infringement, must not only make out a case of being a patentee, holding a valid patent and acts of infringement committed by the defendant, but also establish that it is not disentitled to the relief of an injunction in equity. Hence, inequitable conduct such as material concealment, misleading pleadings, misrepresentation, inconsistent pleas etc would be relevant factors which will weigh in a court’s decision to grant or reject a relief.

IV. IP Profession 12

The IP bar is well developed in India and there are large numbers of IP practitioners primarily located in the four metropolitan cities of Delhi, Mumbai, Chennai and Kolkata with a few also located in Ahmedabad.

B. Enforcement of Patent IP Rights I. Types of Action 1. Infringement of Patent 13

Although the Patents Act 1970 does not define what constitutes infringement nor confers any exclusive positive right to commercialise the patent, it confers negative statutory right on the patentee to prevent third parties from making, using, offering for sale, selling or importing the patented product or the product obtained directly by the patented process in India. This implies that any infraction of such statutory right would amount to infringement of patent. Section 48—Rights of patentees: Subject to the other provisions contained in this Act and the conditions specified in section 47, a patent granted under this Act shall confer upon the patentee— (a) where the subject matter of the patent is a product, the exclusive right to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling or importing for those purposes that product in India; (b) where the subject matter of the patent is a process, the exclusive right to prevent third parties, who do not have his consent, from the act of using that process, and from the act of using, offering for sale, selling or importing for those purposes the product obtained directly by that process in India.

2. Importation of Patented Products: Customs 14

The importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product will not be considered as an infringement of patent rights under section 107A(b) of the Act.

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3. Intellectual Property Rights (Imported Goods) Enforcement Rules 2007 15

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The central government, Vide Notification No 47/2007 dated 8 May 2007, introduced the ‘Intellectual Property Rights (Imported Goods) Enforcement Rules 2007’ to protect the IP rights against infringing import. It empowered customs to seize such imports which amount to infringement of patent as well as trade marks, copyright, designs and geographical indications. Vide Circular No 41/2007 dated 29 October 2007, the Government of India clarified that the said rules mandate that in respect of a patent and the complaint of its infringement, the customs officials should be extremely cautious in determining the issue of infringement unless the offence has already been established by judicial pronouncement in India and customs is merely called upon to implement such order. Clause 4 is reproduced below: It is pertinent to mention that while the mandatory obligations under Articles 51 to 60 of the TRIPS dealing with border measures are restricted to Copyright and Trade Marks infringement only, the said Rules deal with Patents, Designs and Geographical Indications violations as well, in conformity with the practice prevailing in some other countries, notably EU countries. While it is not difficult for Customs officers to determine Copyright and Trade Marks infringements at the border based on available data/inputs, it may not be so in the case of the other three violations, unless the offences have already been established by a judicial pronouncement in India and the Customs is called upon or required to merely implement such order. In other words, extreme caution needs to be exercised at the time of determination of infringement of these three intellectual property rights.

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In LG Electronics India Pvt Ltd v Bharat Bhogilal Patel & Ors,5 the Delhi High Court held that customs officials are only an implementing authority, when there is complaint relating to patent infringement and it should act only on orders passed by a court in suit for patent infringement. This position has been challenged by customs itself in an appeal before the Appellate Bench of High Court of Delhi and is pending adjudication. In Telefonaktiebolaget LM Ericsson v Union of India & Ors,6 the Appellate Bench of the Delhi High Court observed that the customs officials can seize the goods in a simple case of patent infringement. However, in a complex case, the customs authority should relegate the parties to civil proceedings. The judgment does not contain any guidance as to which kind of patent infringement cases would fall within the scope of ‘simple’ as compared to ‘complex’ cases.

4. By a Third Party 19

5 6

The Indian Patent Act prescribes two types of opposition proceedings: ie, pre-grant opposition and post-grant opposition. Pre-grant opposition could be filed by any person whereas post-grant opposition can be filed only by an ‘interested’ person.

2012 (51) PTC 513 (Del). 194 (2012) DLT 248.

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5. Pre-Grant Opposition 20

‘Any person’ may file a pre-grant opposition by way of representation along with a statement and evidence in support thereof. He may further request a hearing if so desired to the Controller of Patents at any time after publication of the patent application under section 11(A) of the Act. It is not before the expiry of six months7 available from the date of publication under section 11(A) that a patent is granted. Therefore, a person has an assured period of six months from the date of publication to file the pre-grant opposition. Such a representation will only be considered after a request for examination for the application has been filed. The grounds for filing pre-grant opposition are prescribed under section 25(1) of the Act, which are same as those prescribed for revocation of patents dealt with later in this chapter (below section B.I.7). The decision on examination is kept pending till the time the pre-grant opposition is disposed of. If the pre-grant opposition has merit, a notice is sent to the applicant, along with a copy of the representation. If the applicant so desires, he may reply to the representation along with a reply statement and evidence in support, within three months from the date of the notice.8 The Controller usually calls for an inter partes hearing wherein both parties are granted the opportunity to advance submissions in support of their pleas and contentions. The Controller considers the reply statement and evidence filed by the applicant, along with the arguments made during the hearing, and may either grant the patent or refuse the grant or ask for amendment of the complete specification to his satisfaction before the grant of the patent. In a case before the Kolkata High Court, Hindustan Lever Ltd v Godrej Soaps,9 a patent filed by Hindustan Lever Ltd on 14 October 1992 in India was opposed by Godrej Soaps Ltd. The patent had two priorities of UK dated 14 October 1991 and 14 July 1992 and was granted on 18 May 1996 in India. The grounds of opposition were:

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prior publication; prior public use and prior public knowledge; obviousness and lack of inventive step; non-patentability; and insufficiency and clarity of description.

After the hearing, it was held by the Court that the teachings of the cited exhibits were insufficient to prove the above-mentioned grounds of opposition. The applicant amended the claims and specifications to make its point clear and to overcome the opponent’s allegations. After considering notice of opposition, statements and evidence from both of the parties, the opposition was dismissed.

6. Post-Grant Opposition Only a ‘person interested’10 can file a notice of opposition along with a written statement challenging the grant of a patent under grounds mentioned in section 25(2)(b)

25 7

The Patents Rules 2003, r 55(1A). ibid, r 55(4). 9 Hindustan Lever Limited v Godrej Soaps Limited & Ors AIR 1996 Cal 367. 10 Patents Act, 1970, s 2(1)(t): ‘person interested includes a person engaged in, or in promoting, research in the same field as that to which the invention relates’. 8

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in a prescribed Form 7 within 12 months from the date of publication of grant of patent (rr 55A, 57).11 The grounds of opposition are almost same as they are in case of pre-grant opposition. Once the Controller is convinced that the opponent is indeed an interested person, the notice of opposition is taken on record. After receipt of notice of opposition, the Controller notifies the patentee about the fact of receipt of notice, without any delay and constitutes an Opposition Board (s 25(3)(b), r 56).12 If the patentee desires to contest the opposition, he shall file a reply statement setting out fully the grounds upon which the opposition is contested along with evidence, if any, in support of his case, within a period of two months from the date of receipt of the copy of opponent’s written statement and evidence.13 If the patentee does not desire to contest or does not file his reply and evidence within two months, the patent shall be deemed to have been revoked.14 After the receipt of reply from the patentee, the opponent may file reply evidence within one month from the date of delivery to him of a copy of patentee’s reply statement and evidence.

7. Revocation 29

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11

The validity of a patent can be questioned any time throughout the term of the patent. The provisions set out in the Act provide an opportunity to any ‘interested person’ to challenge the validity of a granted patent after expiry of the one-year period for filing post-grant opposition. The grounds of revocation are provided under section 64 of the Act, which are almost the same with minor variations, as prescribed for filing pregrant or post-grant opposition. Revocation of patents is possible by five different ways, which are briefly discussed below.

Patents Rules 2003, r 57: Filing of written statement of opposition and evidence: The opponent shall send a written statement in duplicate setting out the nature of the opponent’s interest, the facts upon which he bases his case and relief which he seeks and evidence, if any, along with notice of opposition and shall deliver to the patentee a copy of the statement and the evidence, if any.

12

Patents Rules 2003, r 56: Constitution of Opposition Board and its proceeding: (1) On receipt of notice of opposition under rule 55A, the Controller shall, by order, constitute an Opposition Board consisting of three members and nominate one of the members as the Chairman of the Board. (2) An examiner appointed under sub-section (2) of section 73 shall be eligible to be a member of the opposition Board. (3) The examiner, who has dealt with the application for patent during the proceeding for grant of patent thereon shall not be eligible as member of Opposition Board as specified in sub-rule (2) for that application. (4) The Opposition Board shall conduct the examination of the notice of opposition along with documents filed under rules 57 to 60 referred to under sub-section (3) of section 25, submit a report with reasons on each ground taken in the notice of opposition with its joint recommendation within three months from the date on which the documents were forwarded to them.

13 14

ibid, r 58. ibid.

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Hemant Singh revocation in the public interest by the central government;15 revocation relating to atomic energy by the Controller;16 revocation by the Controller for non-working of patents;17 revocation by the High Court on petition for failure to comply with the request of the central government;18 and — revocation by the IPAB on a petition by a person interested or the central government or by the High Court in a counterclaim in a suit for infringement.

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8. Choice of Forum for Revocation 31

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On 2 June 2014, the Supreme Court of India pronounced a decision19 with farreaching limitations on choice of forum that a person raising a plea of invalidity of a patent can make. In the case, Dr Wobben, the patentee, sued the defendant company and its directors who were licensed to use the patented invention. The defendants continued using the patented invention even after termination of the licence. In a suit for infringement filed before the High Court of Delhi, the defendants assailed the validity of the patent by way of a counterclaim in the suit. The first suit was followed by several other suits for infringement of several other patents of the same plaintiff against the same defendants. The defendants also filed revocation petitions against such patents before the IPAB which invalidated some of the patents while the suit for infringement and the counterclaims were pending before the court. Dr Wobben sought stay of the revocation petitions pursued by the defendants before the IPAB on the ground that, having filed counterclaims in the infringement suits before the civil court, the defendants should not be permitted to simultaneously

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Patents Act 1970, s 66: Revocation of patent in public interest: Where the Central Government is of opinion that a patent or the mode in which it is exercised is mischievous to the State or generally prejudicial to the public, it may, after giving the patentee an opportunity to be heard, make a declaration to that effect in the Official Gazette and thereupon the patent shall be deemed to be revoked.

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Patents Act 1970, s 65: Revocation of patent or amendment of complete specification on directions from Government in cases relating to atomic energy: (1) Where at any time after grant of a patent, the Central Government is satisfied that a patent is for an invention relating to atomic energy for which no patent can be granted under sub-section (1) of section 20 of the Atomic Energy Act, 1962 (33 of 1962), it may direct the Controller to revoke the patent, and thereupon the Controller, after giving notice, to the patentee and every other person whose name has been entered in the register as having an interest in the patent, and after giving them an opportunity of being heard, may revoke the patent. (2) In any proceedings under sub-section (1), the Controller may allow the patentee to amend the complete specification in such manner as he considers necessary instead of revoking the patent.

17 18 19

ibid, s 85. ibid, s 64(4) and (5). Dr Aloys Wobben v Yogesh Mehra AIR 2014 SC 2210.

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pursue the revocation petitions before the Appellate Board. The High Court of Delhi ruled in favour of the defendants holding that the Act does not contemplate a ‘Doctrine of Election’ and therefore the two proceedings should continue concurrently until the satisfaction of either of them was arrived at. The issue was taken up on appeal before the Supreme Court of India. The Supreme Court held that if ‘any person interested’ has filed post-grant opposition under section 25(2) of the Act, the same would eclipse all similar rights available to the very same person to again seek revocation under section 64(1) of the Act. This bar would include the right to seek revocation of a patent in the capacity of a defendant through a ‘counterclaim’ (also under section 64(1) of the Act) arising in a suit for infringement before the court. If a ‘revocation petition’ is filed by ‘any person interested’ before the Appellate Board to the institution of any ‘infringement suit’ against him, he would be disentitled in law from seeking the revocation of the patent in the suit through a ‘counterclaim’. The issue of invalidity can only be decided in a revocation petition filed first before the Appellate Board. Where in response to an ‘infringement suit’, the defendant has already sought the revocation of a patent through a ‘counterclaim’ in the suit, the defendant cannot be permitted to seek invalidation by way of a ‘revocation petition’ before the Appellate Board and the issue of invalidity can only be decided by the civil court. The Supreme Court further assigned to the term ‘the interested person’ the meaning of any person who has a direct, tangible and present interest in the patent in question which adversely affects its such right.

9. Declaration of Non-Infringement 39

Any person may request a court to make declaration that the use by him of any process, or making, use or sale of any article by him does not, or would not constitute an infringement, provided the following conditions are fulfilled:20 1. if such person has applied in writing to the patentee or the exclusive licensee for a written acknowledgement to the effect that there is no infringement and has furnished him with full particulars in writing of the process or article in question used by him; and 2. that the patentee or licensee has refused or neglected to give such an acknowledgement.

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The validity of a claim of the specification of a patent shall not be called into question in a suit for a declaration and accordingly the making or refusal of such a declaration in the case of a patent shall not be deemed to imply that the patent is valid or invalid. A suit for a declaration may be brought at any time after the publication of grant of a patent.

Patents Act 1970, s 105.

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II. Competent Parties 1. Who may Sue? 42

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A patent can be enforced by the patentee or by a co-patentee or an exclusive licensee or assignee who has like right as the patentee itself. In the case of infringement committed after the date of grant of the exclusive licence, the exclusive licensee will have the right to seek damages suffered by it or to claim profits earned by the infringer from the acts that may constitute infringement of the rights of the exclusive licensee.21 However, a suit for infringement by the exclusive licensee will be maintainable only if the patentee is either impleaded as co-plaintiff or as co-defendant.22 On the other hand, a mere licensee of the patent is not entitled to institute a suit for infringement. However, in the case of infringement of a patent, a licensee is entitled to call upon the patentee to take proceedings to prevent infringement and if the patentee refuses or neglects to do so within two months, the licensee may institute a suit for infringement in his own name as if he was the patentee making the patentee as co-defendant.23 An assignee of a patent or exclusive licensee or a non-exclusive licensee can sue for patent infringement only if an application for recordal of the assignment or the licence has been filed before the Controller of Patents.24 A co-patentee, subject to agreement to the contrary, is entitled to an equal undivided share in the patent and each of such persons is entitled to claim a statutory right in patent by himself or his agents including the right to sue for infringement.25

2. Who may be Sued? 46

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Any person who infringes the patent without the consent of a patentee can be sued for infringement. According to the Code of Civil Procedure 1908, all persons may be sued for committing a violation who are jointly or severally or in the alternative liable and involved in activities giving rise to cause of action of infringement of patent.26 All persons who have deliberately and knowingly acted in furtherance of the common design to infringe the patent, as distinguished from a mere onlooker, can be sued for contributory infringement. All persons who facilitate infringement can be sued for infringement. Hence, where there are two or more individuals who have worked together to build an infringing product, both would be liable for the act of infringement. The agents, licensees or franchisees involved in the manufacture or sale or offer for sale or import or use of infringing product will be liable and can be sued. As far as directors of the company are concerned, they will not be liable unless it is shown that they have been directly involved in commission of the infringing activity.

ibid, s 109. ibid. ibid, s 110. ibid, s 69. ibid, s 50. Code of Civil Procedure 1908, Order I, r 3.

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III. The Competent Court 47

The competence of a court to decide an issue of infringement of patent depends upon the following three factors: 1. whether it has territorial jurisdiction;27 2. whether it has pecuniary jurisdiction;28 and 3. whether it has subject jurisdiction.29

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All suits for infringement of a patent can be instituted only before district courts. However, where both the district court and the High Court have concurrent civil original jurisdiction, their jurisdiction would be determined by the value of monetary relief claimed. Once the pecuniary jurisdiction is determined, a patentee has to examine as to which court has territorial jurisdiction to decide the suit. The territorial jurisdiction would depend upon the area of location of the infringer or the area of sale or offer for sale of the infringing products or where the threat of sale or infringement is felt. Recently, a large number of ‘quia timet’ patent infringement cases have been filed in India where the jurisdiction of the court was questioned considering that there was no infringing product in the market and the alleged infringer was not carrying any business within the territorial limits of the court. Against such background, the High Court of Delhi has held that if there is a threat of sale of an infringing product within its territorial limits as the infringer is selling other products in the said area, then such threat would constitute part of a cause of action which would be deemed to have arisen within territorial jurisdiction of the court.30 There are no established IP courts in India to hear patent infringement cases. Some of the district courts in India have designated IP benches but the judges therein keep changing. Hence, there are no designated courts having expertise to decide patent infringement cases. Where a suit is filed only on the basis of one of several defendants carrying on business within the territorial jurisdiction of the court concerned and no part of the cause of action has arisen therein, a suit can be prosecuted by taking leave of the court.31

IV. Preparation for Trial 1. Pleadings 53

27 28 29 30 31

The pleadings in the suit form the foundation of the claim and the defence. No evidence which is beyond the pleadings can be looked into by courts. The pleadings are supposed to be statements of facts alone that a party needs to prove to establish its case for the reliefs claimed. The pleadings are not supposed to contain evidence or ibid, s 20. ibid, s 6. Patents Act 1970, s 104. Bristol Myers Squib Company v VC Bhutada 2013 (56) PTC 268 (Del). Code of Civil Procedure 1908, s 20(b).

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Hemant Singh arguments. A plaintiff is required to file a plaint which should be duly verified and supported by an affidavit sworn by the person verifying it. The plaint should contain necessary averments as to what is the invention protected by the patent and how it is being infringed by the defendant. The defendant is granted the opportunity to comment upon such averments and raise its defence to establish that there is no infringement or that the patent is invalid or that the patentee is not entitled to the reliefs claimed on any other ground in law. The pleadings must contain complete disclosure of all material facts relevant to the issue under adjudication. In Merck v Glenmark32 the grant of a temporary injunction was denied and the Court observed the following: The plaintiff in a suit restraining infringement of patent ought to have known the defence which the defendant has put forth and ought to have met the same in the plaint, as has been done in the arguments in rejoinder by arguing on ‘basic’ and ‘improvement’ patents. There is not an iota of pleading on the said aspect. The plaintiff, to show that the defendants product, in spite of combining Phosphate with patented SITAGLIPTIN, medically remained equivalent to SITAGLIPTIN, was expected to plead in detail on the aspects of efficacy of SITAGLIPTIN, reason for itself combining the same with Phosphate and the role of Phosphate being inconsequential in the disease which SITAGLIPTIN cures. It was for the plaintiffs to have made a case of Sitagliptin Phosphate being merely a new form of SITAGLIPTIN which does not result in the enhancement of the efficacy of SITAGLIPTIN or being a mere combination of other derivatives of SITAGLIPTIN. I am unable to find any pleading of the plaintiffs to the said effect. Rather, the plaint proceeds on the premise that Sitagliptin Phosphate is the same as SITAGLIPTIN but which is not found to be the case of the plaintiffs in its own application for grant of Sitagliptin Phosphate and which was abandoned.

2. Documentary Evidence 55

The parties are required to produce all documentary evidence that they wish to rely upon at the time of submission of their pleadings. Any additional documents subsequently filed are only permissible by leave of the court and on establishing sufficient ground for their non-production earlier. It is therefore advisable to place such expert evidence that a patentee wishes to rely upon to establish infringement along with institution of the suit or immediately thereafter. It is equally important for a defendant also to place on record along with its pleadings, all such prior art and expert evidence that it wishes to rely upon to establish non-infringement or plea of invalidity of the patent.

3. Preliminary Injunction 56

It is usual along with institution of the suit for a patentee to press for an ad interim injunction order and Anton Piller order, to preserve the infringing material so as not to allow the same to be disposed of by the infringer. In case of quia timet actions of patent infringement, the courts do grant ad interim injunction orders to preserve the ‘status quo’. The Supreme Court of India observed in the case of Wander v Antox:33 The interlocutory remedy is intended to preserve in status quo, the rights of parties which may appear on a prima facie. The court also, in restraining a defendant from exercising what he

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Merck v Glenmark 2013 (54) PTC 452 (Del). 1990 Supp (1) SCC 727.

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considers his legal right but what the plaintiff would like to be prevented, puts into the scales, as a relevant consideration whether the defendant has yet to commence his enterprise or whether he has already been doing so in which latter case considerations somewhat different from those that apply to a case where the defendant is yet to commence his enterprise, are attracted.

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The hearing of the application for preliminary injunction is like a ‘mini trial’ without cross-examination where lengthy arguments are heard by the court on all aspects including the validity of the patent, the issue of infringement and the likely damage to the parties. It is therefore essential that a preparation should be made for the hearing of the application for preliminary injunction comparable with preparation for a trial. All documents and evidence that the parties wish to rely upon should be placed on record for examination by the court. There are several factors which are considered extremely relevant by the court before issuing or refusing a preliminary injunction. These can be summarised by way of following factors: 1. whether the patentee has established a ‘prima facie’ case establishing infringement of the patent; 2. whether a defendant has prima facie established that there is a serious challenge to the validity of the patent in question; 3. what is the strength of the respective contentions of the parties on the issue of infringement and invalidity; 4. where the balance of convenience tilts, if a preliminary injunction is granted or refused; 5. who, between the parties, would suffer irreparable injury, if the preliminary injunction is granted or refused.

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Each of the above factors requires necessary pleadings and evidence to assist the court in arriving at a prima facie determination. Along with an application for an ad interim injunction, it is usual for the parties to apply for the appointment of local commissioners to visit the premises of the defendants and to take into custody all such evidence which may be necessary for the purpose of adjudication in the suit in line with the Anton Piller orders34 of the United Kingdom. The power of the court to appoint such local commissioners is statutorily recognised35 and usually, where an ad interim injunction is granted, local commissioners are also appointed to visit the premises of the defendants and take custody of all necessary evidence. Such evidence is usually returned to the defendants on Superdari, ie the defendant is put under an obligation to safeguard such evidence until the disposal of the suit.36 The conditions for granting an Anton Piller order in India are:37 1. the plaintiff must have a strong prima facie case; 2. the actual or potential damage to the plaintiff must be very serious;

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See Anton Piller KG v Manufacturing Process Ltd & Ors. 1976 RPC 719. Code of Civil Procedure 1908, Order XXVI, r 9, read with Order XXXIX, r 7. ibid, Order XXVI, r 10. Bacyrus Europe Ltd v Vulcan Industries Engineering 2005 (30) PTC 279 (Cal).

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Hemant Singh 3. it must be clear that the defendant possesses clear and vital evidence; and 4. there must be a real possibility that the defendant might destroy or dispose of such material so as to defeat the ends of justice. Therefore, the principles governing the appointment of local commissioners in India are the same as those that govern the grant of Anton Piller orders (now ‘inspection orders’) in the United Kingdom.

4. Prima Facie Validity and Credible Challenge 62

The courts have held in India that during the hearing of preliminary injunction, a ‘mere credible challenge’ to the validity of a recent patent is sufficient for the court to deny a preliminary injunction. Hence, the threshold of invalidity which the defendant has to overcome to deflect a preliminary injunction is quite low. In the judgment reported as Roche v Cipla38 in 2008, the Court observed that ‘credible challenge’ means whether a defendant has put forth a ‘substantial question of validity’ to show that the claims in issue are vulnerable. The same case was later heard by the Appellate Bench which further observed that the challenge to the validity of a patent must raise a ‘serious substantial question’ and a ‘triable issue’.39 A patent which survives the pre-grant challenge can still be challenged, but on grounds different from those raised at the opposition stage. The fact that the challenge is on grounds not urged at the pre-grant stage would lend credibility to the challenge but if it is on the same grounds which have been considered and rejected, the burden on the defendant to demonstrate the credibility of the challenge would be considerably higher. In the case of Strix Ltd v Maharaja Appliances Ltd,40 the Delhi High Court rejected a claim to ‘credible challenge’ as the defendant failed to place on record any acceptable scientific material, supported or explained by expert evidence which substantiated its grounds of revocation.

5. Obviousness 63

It has been held by the Supreme Court of India in the case of Biswanath Prasad Radhey Shyam v Hindustan Metal Industries41 that the grant of a patent does not amount to prima facie validity thereof. The observation of the Supreme Court in this regard is instructive: It is noteworthy that the grant and sealing of the patent, or the decision rendered by the Controller in the case of opposition, does not guarantee the validity of the patent, which can be challenged before the High Court on various grounds in revocation or infringement proceedings. It is pertinent to note that this position, viz. the validity of a patent is not guaranteed by the grant, is now expressly provided in Section 13(4) of the Patents Act, 1970. In the light of this principle, Mr. Mehta’s argument that there is a presumption in favour of the validity of the patent, cannot be accepted.

38 39 40 41

F Hoffman La-Roche & Anr v Cipla Ltd 2008 (37) PTC 71 (Del). F Hoffman La-Roche & Anr v Cipla Ltd 2009 (40) PTC 125 (Del). MIPR 2010 (1) 181. Biswanath Prasad Radhey Shyam v Hindustan Metal Industries 1979 (2) SCC 511.

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6. Discoveries 64

The parties are entitled to seek discoveries and interrogatories if the pleadings are completed.42 The courts have also permitted the constitution of a ‘Confidentiality Club’ comprising authorised representatives of the respective parties and their lawyers to share among themselves such confidential documents which are otherwise filed and maintained by the parties under sealed cover.43

V. The Trial 1. Presenting Testimony 65

The expression ‘trial’ has not been defined under the Code of Civil Procedure 1908 or, for that matter, under any other law in India and the task of defining its meaning has been left to the courts which, in the context of civil trials, have interpreted it to mean the stage where evidence is adduced by parties to the suit—this includes the examination of each witness produced by a party followed by cross-examination by the other party and, if required and not very frequently, re-examination by the party producing the witness.44

2. Presentation of Evidence 66

42 43 44

The substantive law of evidence in India is covered by the Indian Evidence Act 1872 whereas the procedural aspects, particular to civil cases, are covered by the Code of Civil Procedure. Under the civil procedure of India, the examination-in-chief of each party was conducted by way of oral deposition until 2002, when the Code was amended to allow the examination-in-chief to be conducted by way of affidavits.45 However, the courts have held that the examination-in-chief cannot be considered to be concluded until the relevant witness steps into the witness box and confirms the contents of his affidavit.46 This step is generally known to lawyers and judges as ‘the tendering of evidence’.

Code of Civil Procedure 1908, Order XI. Sivaswamy v Vestergaard 2010 (42) PTC 273 (Del). Indian Evidence Act, 1872, s 138: Order of Examinations: Witnesses shall be first examined-in-chief, then (if the adverse party so desires) cross-examined, then (if the party calling him so desires) re-examined. The examination and cross-examination must relate to relevant facts but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief. Direction of re-examination: The re-examination shall be directed to the explanation of matters referred to in cross-examination; and, if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter’.

45

Code of Civil Procedure 1908, Order XVIII, r 4: Recording of evidence: (1) In every case, the examination-in-chief of a witness shall be on affidavit and copies thereof shall be supplied to the opposite party by the party who calls him for evidence.

46 FDC Limited v FMRAI AIR 2003 Bom 371. For a detailed discussion of this aspect of civil procedure, see Salem Advocate Bar Association v Union of India AIR 2003 SC 189.

452 67

Hemant Singh The affidavit in evidence of a witness is expected to cover all the evidence pertinent to that witness which helps in discharging the burden of proving any issue required to be proven by the party producing such witness. This entails that the documentary evidence relied upon by a party be covered in the affidavit of a witness if such witness is otherwise competent to prove the contents of that document.

3. The Role of Experts 68

By their very nature, patent infringement suits oblige parties to present before the court expert witnesses who are competent to depose on facts and issues relevant to such suits and, in practice, affidavits in evidence of such experts are filed and relied upon by both sides in such suits. This is because patent infringement suits involve scientific and highly technical questions on which a judge, in spite of the high standards of judgment and knowledge that he or she possesses, may require understanding of technicalities. Such situations are jointly met by the Indian Evidence Act 1872,47 which permits the court to rely upon the opinions of experts in their field, and the Patents Act, which permits the court to appoint an independent scientific advisor to assist it upon any question of fact or of opinion not involving a question of interpretation of law.48

4. Who Qualifies as an Expert 69

70

47

A party seeking to adduce evidence of a person under section 45 of the Evidence Act should, in the first instance, prove to the court that such witness is especially skilled in the particular science and therefore fit to be accepted as an expert.49 On the question as to what qualifications a person needs to have in order to qualify as an expert within the meaning of section 45 of the Evidence Act for the purpose of a patent infringement suit, the Delhi High Court in Vringo Infrastructure Inc & Anr v Indiamart Intermesh Ltd & Ors50 has concluded that the requisite qualities are the same as those that would enable a person to have his name entered in the roll of scientific advisors maintained by the Controller of Patents under Rule 103 of the Patent

Indian Evidence Act 1872, s 45: When the Court has to form an opinion upon a point of foreign law, or of science, or art, or as to identity of handwriting or finger impressions, the opinions upon that point of persons specially skilled in such foreign law, science or art, or in questions as to identity of handwriting or finger impressions are relevant facts. Such persons are called experts.

48

Patents Act 1970, s 115: Scientific Advisers. (1). In any suit for infringement or in any proceeding before a Court under this Act, the Court may at any time, or whether or not any application has been made by any party for that purpose, appoint an independent scientific advisor, to assist the Court or to inquire and report upon any such question of fact or of opinion (not involving a question of interpretation of law) as it may formulate for that purpose. (2) xxx.

49 50

Central Excise Dept v Somasundaram 1980 CrLJ 553 (Kar). See also State of HP v Jai Lal AIR 1999 SC 3318. 2014 (60) PTC 437 (Del).

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Rules 2003.51 Thus, the requisite qualifications for a person to qualify as an expert under section 45 of the Evidence Act would be that: 1. he holds a degree in science, engineering or technology or equivalent; 2. he has at least 15 years of practical or research experience; and 3. he holds or has held a responsible post in a scientific or technical department of the central or State government or in any organisation. 71

72

73

51

In the instant case, the patent alleged to be infringed was a telecommunications patent for ‘a method and a device for making handover decision in a mobile communication system’. To support their patent, the plaintiffs had filed an affidavit of a person with a degree and other qualifications in business management from various universities in the United States of America and who was subsequently employed with various telecommunications and computer companies as a management consultant. Thereafter, he went on to lead a full-service consulting and training firm specialising in communications and computer convergence and, all in all, he claimed to have over 40 years of experience in the field of telecommunications technology and also to have written a number of research papers on the subject. Refusing to attach any importance to the expert’s affidavit, the Court noted that the said expert did not, in the first place, have any basic degree in science or technology or engineering dealing in telecommunications nor did he have any practical or research experience in the field. The Court also noted that the said expert had merely stated that he had written a number of research papers on telecommunications technology without citing any such paper in support thereof and such unsubstantiated claims would not suffice for the purpose of section 45 of the Evidence Act. Noting that the said expert did not meet any of the three requirements stipulated in Rule 103 of the Patent Rules, the trial judge held that, prima facie, the said expert could not be considered an expert under section 45 of the Evidence Act. The plaintiffs challenged the order on appeal before the Appellate Bench. The Appellate Bench clarified that the single judge’s observations were only relevant for the purpose of prima facie determination of the dispute and could not be treated as final for the purpose of trial.52 For this reason, the Appellate Bench refused to set aside the trial judge’s observations, while, clarifying that a person could be an expert in an area of specialised knowledge by experience and he or she need not hold a degree in the field of specialised knowledge. Hence, a person can also become an expert by virtue of his avocation or occupation.53 Patent Rules 2003, r 103: Roll of scientific advisers.—(1) The Controller shall maintain a roll of scientific advisers for the purpose of section 115. The roll shall be updated annually. The roll shall contain the names and addresses of scientific advisers, their designations, information regarding their educational qualifications, the disciplines of their specialization and their technical, practical and research experience. (2)

A person shall be qualified to have his name entered in the roll of scientific advisers, if he – (i) (ii) (iii)

52 53

holds a degree in science, engineering, technology or equivalent; has at least fifteen years’ practical or research experience; and he holds or has held a responsible post in a scientific or technical department of the Central or State government or in any organization.

Unreported decision dated 13 August 2014 passed in FAO (OS) No 369/2014. ibid.

454 74

Hemant Singh The Appellate Bench concurred with Phipson’s view which is though the expert must be ‘skilled’, by special study or experience, the fact that he has not acquired his knowledge professionally goes merely to weight and not to admissibility…. Equally, one can acquire experts knowledge in a particular sphere through repeated contact with it in the course of one’s work, notwithstanding that the expertise is derived from experience and not from formal training.54

75

The above case however serves as a warning call to patentees to choose their experts carefully when filing suits for patent infringement in India. Since each party to a patent suit can be expected to challenge the expertise of the witness produced by the other side, it would be useful to set out the qualifications a witness should ideally have for rebutting such challenge: 1. a scientific or technical degree, ideally Masters or Doctoral or Post Doctoral degree but, at any rate, a Bachelors degree, in the field of the relevant patent; 2. specialised knowledge of the technology used by the patent in order to be able to explain and distinguish or attack the said patent; 3. a working experience in a technical role which entails working with the technology relied upon or improved upon by the patent; 4. authorship of articles/papers dealing with the said technology; and 5. absence of any conflict of interest on account of any association with any of the parties.

76

A combination of all of these qualities would raise a witness far above Powell’s benchmark for an expert as being one who has devoted time and study to a special branch of learning and who is thus specially skilled on those points on which he is asked to state his opinion.55

5. Extent of Relevance of Expert’s Evidence 77

78

It is recognised law that the opinion of a witness can only assist the court in coming to a conclusive judgment and cannot replace the judgment of the court itself. As Lindsay, J has written, ‘the nature of the invention has to be determined by the judge and not by a jury, nor by an expert or any other witness. This is familiar law though often disregarded when witnesses are examined’.56 Lord Tomlin in British Celanese Ltd v Courtaulds Ltd observed: He is entitled to give evidence as to the state of the art at any given time. He is entitled to explain the meaning of any technical terms used in the art. He is entitled to say whether in his opinion that which is described in the specification on a given hypothesis as to its meaning is capable of being carried into effect by a skilled worker. He is entitled to say what at a given time to him as any given hypothesis as to its meaning would have taught or suggested to him. He is entitled to say whether in his opinion a particular operation in connection with the art could be carried out and generally to give any explanation required as to facts of a scientific kind … He is not entitled to say nor is Counsel entitled to ask him what the specification

54 55 56

Phipson on Evidence 15th edn (London, Sweet & Maxwell, 2000) 37-09, p 962. Powell, Principles and Practice of the Law of Evidence 10th edn (London, Butterworth, 1921) 39. Brooks v Steele and Currie (14) RPC 46.

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means, nor does the question become any more admissible if it takes the form of asking him what it means to him as an engineer or as a chemist. Nor is he entitled to say whether any given step or alteration is obvious, that being a question for the Court.57

79

Although the role and relevance of expert witnesses in guiding the court to come to sound conclusions is not disputed in India, the Supreme Court has clarified that a court is not bound by such evidence.58

6. Documentary Evidence 80

81

The Evidence Act 1872 stipulates that the contents of documents may be proved either by primary or secondary evidence.59 Primary evidence is the document itself produced for the inspection of the court.60 Secondary evidence means and generally includes reliable copies of the original document or oral accounts thereof by someone who has seen the original when the original is lost.61 The law requires that documents must be proved by primary evidence62 except under certain circumstances where secondary evidence would be permitted of the existence, condition or contents of a document.63 Electronic records can be produced as evidence if the requirements under section 65B of the Indian Evidence Act are complied with.64 The reason behind the rule that documents must ordinarily be proved by themselves, and not by secondary means, was explained by Lord Tenterden thus:65 I have always acted most strictly on the rule that what is in writing shall only be proved by the writing itself. My experience has taught me the extreme danger of relying on the recollection of witnesses, however honest, as to the contents of a written instrument; they may be so easily mistaken that I think the purposes of justice require the strict enforcement of this rule.

7. Discovery and Production of Documents 82

57 58 59 60 61

The parties to a suit are entitled to seek discovery of documents in the power or possession of the other party.66 The reasoning behind this rule has been aptly summarised by the Supreme Court thus:67

(52) RPC 171. Malay Kumar Ganguly v Dr Sukumar Mukherjee AIR 2000 SC 1162. Indian Evidence Act 1872, s 61. ibid, s 62. ibid, s 63: Secondary Evidence: Secondary evidence means and includes: (1) Certified copies under the provisions hereinafter contained; (2) Copies made from the original by mechanical processes which in themselves insure the accuracy of the copy and copies compared with such copies; (3) Copies made from or compared with the original; (4) Counterparts of documents as against the parties who did not execute them; (5) Oral accounts of the contents of a document given by some person who has himself seen it’.

62 63 64 65 66 67

ibid, s 64. ibid, s 65. Anvar PV v PK Basheer 2014 (10) SCC 473. Vincent v Cole 1828 M&M 258 as cited in Sarkar on Evidence 15th edn (Nagpur, Wadhwa & Co, 1999) 1056. Code of Civil Procedure 1908, Order XI, r 12. ML Sethi v R P Kapur AIR 1972 (SC) 2379.

456

Hemant Singh Generally speaking, a party is entitled to inspection of all documents which do not themselves constitute exclusively the other party’s evidence of his case or title. If a party wants inspection of documents in the possession of the opposite party, he cannot inspect them unless the other party produces them. The party wanting inspection must, therefore, call upon the opposite party to produce the document. And how can a party do this unless he knows what documents are in the possession or power of the opposite party? In other words, unless the party seeking discovery knows what are the documents in the possession or custody of the opposite party which would throw light upon the question in controversy, how is it possible for him to ask for discovery of specific documents?

83

The factors which a court must consider before ordering discovery under this rule are relevance, justness and expediency to produce such documents.68 Once a court makes an order for discovery against a party under this rule, such party is bound to disclose, by way of affidavit, such documents that it has in its power or possession.

VI. Types of Infringement 1. Direct and Indirect Infringement 84

85

86

Every type of infringement constitutes an independent cause of action and should be pleaded. Any omission may not be permitted to be incorporated by way of amendment as it may amount to setting a new cause of action. An infringement could be direct or indirect. Direct infringement occurs when a person makes a product or sells it or offers to sell or uses it or imports an infringing product. There is no requirement that such activity must be of commercial nature. Where the subject matter of the patent is a process, a product obtained directly from that process in India or the use or offer for sale or sale or import of such product would constitute infringement. The parties who supply materials and implements, knowing that the predominant use thereof would be for creation of infringing goods, are liable for indirect infringement.69

2. Test for Infringement 87

88

The test for infringement is whether the ‘pith and marrow’ of the invention claimed has been used by the unauthorised party.70 If the infringing goods are made with the same object which is attained by the patented article, then infringement is made out, notwithstanding minor variations. Applying the ‘doctrine of equivalence’, a person is guilty of infringement if he makes what in substance is the equivalent of the patented article. The Delhi High Court in Raj Prakash71 held: 12. We have, therefore, to read the specifications and the claims from the point of view of the persons in the trade manufacturing film strip viewers. It is the pith and marrow of the

68 69 70 71

Sasanagouda v Dr S B Amarkhed AIR 1992 SC 1163. Patents Act 1970, 108(2). Raj Prakash v Mangat Ram AIR 1978 Del 1. ibid.

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invention claimed that has to be looked into and not get bogged down or involved in the detailed specifications and claims made by the parties who claim to be patentee or alleged violators. (See Birmingham Sound Reproducers Ld. v. Collaro Ld. and Collaro Ld. v. Birmingham Sound Reproducers Ld. 1956 R.P.C. 232). It is not necessary that the invention should be anything complicated. The essential thing is that the inventor was the first one to adopt it. The principle, therefore, is that every simple invention that is claimed, so long as it is something which is novel or new, it would be an invention and the claims and specifications have to be read in that light, as was observed in the famous hair-pin case, reported as Hinde v. Osberne, 1885 R.P.C. 65. To quote from another well-known decision of the Court of Appeal in R.C.A. Photophone Ld. v. Gaumont-British Picture Corporation Ld. and British Acoustic Films Ltd., 1936 R.P.C. 167, the specification must be construed in the first instance as a written instrument and without regard to the alleged infringement. 25. The patented article or where there is a process then the process has to be compared with the infringing article or process to find out whether the patent has been infringed. This is the simplest way and indeed the only sure way to find out whether there is piracy. This is what was done in the hair-pin case above-referred to, and is indeed, always done. Unessential features in an infringing article or process are of no account. If the infringing goods are made with the same object in view which is attained by the patented article, then a minor variation does not mean that there is no piracy. A person is guilty of infringement if he makes what is in substance the equivalent of the patented article. Some trifling or unessential variation has to be ignored. There is a catena of authority in support of this view. We need not cite all those cases which were brought to our notice at the Bar. Suffice it to quote the words of Lord Denning, M. R. in Beecham Group Limited v. Bristol Laboratories Ltd. and another, 1967 (16) R.P.C. 406:‘The evidence here shows that in making hetacillin in the United States the defendants use a principal part of the processes which are protected here by the English patents. The importation and sale here is prima facie an infringement. There is a further point. A person is guilty of infringement if he makes what is in substance the equivalent of the patented article. He cannot get out of it by some trifling or unessential variation. … On the evidence as it stands, there is ground for saying that hetacillin is medically equivalent to ampicillin. As soon as it is put into the human body, it does after an interval, by delayed action, have the same effect as ampicillin. In these circumstances, I think there is a prima facie case for saying there was an infringement. The process is so similar and the product so equivalent that it is in substance the same as ampicillin.’

89

The main function of the court is to construe the claims which are alleged to have been infringed with reference to the body of the specifications. The Supreme Court of India held in Biswanath Prasad72 that it is always advisable to read the specification first in order to prepare one’s own mind to the invention claimed: 42. As pointed out in Arnold v. Bradbury (1871) 6 Ch. A. 706 the proper way to construe a specification is not to read the claims first and then see what the full description of the invention is, but first to read the description of the invention, in order that the mind may be prepared for what it is, that the invention is to be claimed, for the patentee cannot claim more than he desires to patent. In Parkinson v. Simon (1894) 11 R.P.C. 483 Lord Esher M.R. enunciated that as far as possible the claims must be so construed as to give an effective meaning to each of them, but the specification and the claims must be looked at and construed together.

72

Biswanath Prasad v Hindustan Metal AIR 1982 SC 1444.

458 90

Hemant Singh Where one person has a patent for a basic invention and the other person later obtains a patent for improvement to this invention, the later patentee is not free to use the invention without permission of the former patentee.73

3. Claim Construction 91

92

Where the claims are clear and unambiguous, the scope of patent should be interpreted by literal meaning assigned to the claims in accordance with the rule of literal construction. Where there is ambiguity in the interpretation of the claim, the claim should be interpreted applying the rule of purposive construction to give effect to what was intended to be the scope of the invention by the inventor. Where the impugned product contains variants/constituents, their nature needs to be examined as to whether they affect the working of the invention.74 If the infringing product is made with the same object as the patented article and the role of the variant is minor, not affecting the working of the patented article, then it would be an infringement, provided the patentee pleads and establishes this fact. In the absence of such pleading, the finding of infringement cannot be arrived at.75

VII. Remedies 1. Injunction 93

94

A patentee is entitled to an order of injunction restraining the manufacture, sale, offer of sale, use or import of an infringing product. In addition, the patentee is also entitled to claim rendition of accounts of profits which the infringer has misappropriated by making use of the patented process or product. In the alternative, the patentee can claim damages, subject to the same being established by way of evidence. The patentee can also seek relief for delivery of infringing products and materials and implements used for creating infringing products, for destruction. So far, there have not been instances in India where damages have been calculated in a patent infringement case by a court. However, it is understood that the same standards of calculating damages would be followed by the courts in India as are applied internationally by courts in other jurisdictions.

VIII. Defences 1. Non-Infringement 95

73 74 75

It is open to a defendant to challenge the plea of infringement of the patent raised by the patentee by distinguishing the product or the process used by the defendant

Hindustan Lever Ltd (n 9). F Hoffman La-Roche Ltd & Anr v Cipla Ltd 2012 (52) PTC 1 (Del). Merck (n 32).

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from the patented product or process. A defendant can highlight that the essential part of the plaintiff ’s invention has not been used or proven to be used by the defendant. There is no infringement if the defendant has produced the same result by a different combination of different elements where the patent is for a combination of elements.76 The defendant can also plead non-infringement on the ground that its product contains variants/constituents in addition to what is claimed in the invention and these variants are material in the working of the defendant’s product.77

2. Gillette Defence 97

The defendant can also plead ‘Gillette defence’78 to the effect that what is being produced by the defendant is covered by prior art. Such defence is very effective since, if it is established, it will either lead to invalidation of the patent or the finding of noninfringement. The courts in India have applied the Gillette defence in the past.79

3. Statutory Exceptions 98

It is open for a defendant to plead a statutory defence to a plea of infringement as accorded under section 47, section 107 and 107A. Hence, use of a patented product or process for the purposes of experiment or research or education is not an infringement. Similarly, making, selling or using or importing any patented product or a product manufactured by a patented process for a use reasonably related to the development and submission of information required under any law in India or any other country that regulates the manufacture and construction of such product is not an infringement. There is no judicial precedent interpreting section 107A(b) on ‘exhaustion of right’ or ‘international exhaustion’ but it could be argued that importing patented products in India from any person duly authorised under the law to produce and sell or distribute such product is not an infringement.80 This principle is in accordance with the law in the United Kingdom as laid down in Betts v Wilmott.81

4. Activities not Amounting to Infringement 99

76 77 78 79 80 81

Section 48 is subject to other provisions of the Act which carve out exceptions to prohibited acts which do not amount to infringement. These exceptions are discussed below.

TVS Motor Co Ltd v Bajaj Auto Ltd 2009 (40) PTC 689 (Mad). F Hoffman La-Roche (n 38). See Gillette Safety Razor v Anglo American Trading Co 1913 (30) RPC 465. 3M Innovative Properties Co v Venus Safety & Health Pvt Ltd 2014 (59) PTC 370. Patents Act 1970, s 107A(b). (1870–71) LR 6 Ch App 239.

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5. By the Government 100

As stated in section 47(1) and (2) of the Act,82 the central government and any person authorised in writing by it, may use the invention for government purposes. Accordingly, any machine, apparatus or article in respect of which the patent is granted or any article made by using a process in respect of which the patent is granted, may be imported or made by or on behalf of the government for the purpose merely of its own use.

6. Research and Analysis 101

Section 47(3), read in conjunction with section 107(2)83 of the Act, permits any person to make use of the patented invention without having to gain prior permission from the patentee as long as it intends to use the patented product or process for research purposes or to impart education.

7. Bolar Exemption 102

Section 107A(a)84 permits any act of making, constructing, using, selling or importing a patent invented solely for use reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of such product.

8. Use on Foreign Vessels 103

Pursuant to section 49 of the Act, if a foreign vessel/aircraft/land vehicle owned by a foreign resident ventures into Indian seas accidentally or temporarily, and is making use of the patented article for purposes of its own use in the vehicle, such use is not considered as infringement, provided a corresponding exemption is also available to vehicles of Indian residents in the country of origin of such vehicle.

82 Unless otherwise specified, any reference to Act is by way of reference to the provisions of the Patents Act 1970, as amended by the Patents (Amendment) Act 2005. 83 Patents Act 1970, s 107:

Defences, etc., in suits for infringement: (1) In any suit for infringement of a patent every ground on which it may be revoked under section 64 shall be available as a ground for defence. (2) In any suit for infringement of a patent by the making, using or importation of any machine, apparatus of other article or by the using of any process or by the importation, use or distribution or any medicine or drug, it shall be a ground for defence that such making, using, importation or distribution is in accordance with any one or more of the conditions specified in section 47. 84

Patents Act 1970, s 107A: Certain acts not to be considered as infringement: For the purposes of this Act,— (a) any act of making, constructing, using, selling or importing a patented invention solely for uses reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product; (b) importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product, shall not be considered as an infringement of patent rights.

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9. Onus of Proof 104

The onus to prove the invalidity of a patent is always on the party raising it. In the case of a plea of infringement of a process patent for obtaining a new product or the product identical to the product obtained by a patented process, the court can direct a defendant to disclose and prove that the process used by it to obtain the patented product is different.85

10. Invalidity 105

All grounds on which a patent can be revoked under section 64 are available to a defendant as a ground for defence.86 These grounds are: (a) that the invention, so far as claimed in any claim of the complete specification, was claimed in a valid claim of earlier priority date contained in the complete specification of another patent granted in India; (b) that the patent was granted on the application of a person not entitled under the provisions of this Act to apply therefor: (c) that the patent was obtained wrongfully in contravention of the rights of the petitioner or any person under or through whom he claims; (d) that the subject of any claim of the complete specification is not an invention within the meaning of this Act; (e) that the invention so far as claimed in any claim of the complete specification is not new, having regard to what was publicly known or publicly used in India before the priority date of the claim or to what was published in India or elsewhere in any of the, documents referred to in section 13; (f) that the invention so far as claimed in any claim of the complete specification is obvious or does not involve any inventive step, having regard to what was publicly known or publicly used in India or what was published in India or elsewhere before the priority date of the claim: (g) that the invention, so far as claimed in any claim of the complete specification, is not useful; (h) that the complete specification does not sufficiently and fairly describe the invention and the method by which it is to be performed, that is to say, that the description of the method or the instructions for the working of the invention as contained in the complete specification are not by themselves sufficient to enable a person in India possessing average skill in, and average knowledge of, the art to which the invention relates, to work the invention, or that it does not disclose the best method of performing it which was known to the applicant for the patent and for which he was entitled to claim protection; (i) that the scope of any claim of the complete specification is not sufficiently and clearly defined or that any claim of the complete specification is not fairly based on the matter disclosed in the specification;

85 86

ibid, s 104A. ibid, s 64 and s 107.

462

Hemant Singh (j) that the patent was obtained on a false suggestion or representation; (k) that the subject of any claim of the complete specification is not patentable under this Act; (l) that the invention so far as claimed in any claim of the complete specification was secretly used in India, otherwise than as mentioned in sub-section (3), before the priority date of the claim; (m) that the applicant for the patent has failed to disclose to the Controller the information required by section 8 or has furnished information which in any material particular was false to his knowledge; (n) that the applicant contravened any direction for secrecy passed under section 35 or made or caused to be made an application for the grant of a patent outside India in contravention of section 39; (o) that leave to amend the complete specification under section 57 or section 58 was obtained by fraud; (p) that the complete specification does not disclose or wrongly mentions the source or geographical origin of biological material used for the invention; and (q) that the invention so far as claimed in any claim of the complete specification was anticipated having regard to the knowledge, oral or otherwise, available within any local or indigenous community in India or elsewhere.

11. Anticipation 106

In order to be patentable, the product must be new, involve an inventive step and be capable of industrial application under section 2(1)(j) of the Act. Inventive step means a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art. Hence, a product or process which was publicly known or publicly used in India or elsewhere before the priority date cannot be considered novel. Mosaicing of different publications which existed before the priority date of complete specification does not constitute anticipations.87 In order to constitute anticipation, the earlier specification must convey the same knowledge as is disclosed by the specification of the invention under challenge. It must be established that the prior publication contains all facts to instruct the public on how to put the invention in practice.88

12. Prior Publication 107

87 88 89

The Supreme Court, in Novartis v Union of India,89 explained the meaning of the expression ‘publicly known’, the term used in section 64(1)(e) of the Act. It does not mean that it should be widely known or used publicly. It is sufficient if it is known to the persons engaged in the pursuit of the knowledge of the product or process either

Billcare Ltd v Amartara Private Ltd 2007 (34) PTC 419 (Del). Pope Alliance v Spanish River AIR 1929 PC 38. Novartis AG v Union of India AIR 2013 SC 1311.

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as man of science or man of commerce or consumers. It is sufficient to constitute ‘publicly known’ if the information was publicly available.

13. Section 3(d): New Form of Known Substance 108

Section 64(1)(d) of the Act is a ground to invalidate a patent, if the subject is not an invention within the meaning of this Act. Section 3 of the Act mandates as to what subjects are not considered patentable ‘inventions’. Section 3(d) prohibits the grant of a patent for a new form of a known substance which does not lead to enhancement of the known efficacy of such substance. The said provision came for interpretation before the Supreme Court in Novartis AG v Union of India90 wherein a patent was claimed for a beta crystalline form of Imatinib Mesylate, which was used as an active ingredient for a cancer drug marketed under the trade mark GLIVEC. The Supreme Court declined the grant of a patent on the ground that, although a beta crystalline form of Imatinib Mesylate is a new form, the evidence to establish enhanced efficacy was not produced. It held that in the case of drugs, ‘efficacy’ must mean ‘enhanced therapeutic efficacy’. The Supreme Court further observed that enhanced physiochemical properties, which may be otherwise beneficial, but do not enhance therapeutic efficacy, cannot be taken into consideration to overcome a section 3(d) objection. However, the Supreme Court clarified that, merely because a beta crystalline form of Imatinib Mesylate does not clear the test of section 3(d) of the Act, it should not be understood that section 3(d) bars patent protection for all incremental inventions of chemical and pharmaceutical substances.

14. Obviousness 109

The courts in India have followed the ‘Windsurfing’91 test of obviousness to examine the non-obviousness of the patent under section 64(1)(f) of the Act. Obviousness does not involve any inventive step, having regard to what was publicly known or publicly used in India or elsewhere before the priority date of the claim. The four step test of obviousness comprises: 1. to identify the inventive step of the invention claimed in the complete specification; 2. to assume the mantle of a skilled but unimaginative addressee in the state of art that existed at the priority date having common general knowledge of the relevant art in question; 3. to identify the differences between what was known in the state of prior art and the inventive step disclosed of the invention; and 4. to evaluate as to whether such differences constitute steps which would not have been obvious to the skilled but unimaginative addressee having no knowledge of the invention.92 Hindsight analysis of the invention to establish obviousness

90 91 92

ibid. 1985 RPC 59. F Hoffman La-Roche (n 74).

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Hemant Singh is non-permissible.93 The Supreme Court has interpreted obviousness in Biswanath Prasad94 to mean as ‘naturally to suggest itself to a person thinking on the subject’. The Supreme Court laid down the test as follows: Had the document been placed in the hands of a competent craftsman (or engineer as distinguished from a mere artisan), endowed with the common general knowledge at the ‘priority date’, who was faced with the problem solved by the patentee but without knowledge of the patented invention, would he have said, ‘this gives me what I want ?’ (Encyclopaedia Britannica; ibid). To put it in another form: ‘Was it for practical purposes obvious to a skilled worker, in the field concerned, in the state of knowledge existing at the date of the patent to be found in the literature then available to him, that he would or should make the invention the subject of the claim concerned?’ Halsbury, 3rd Edn, Vol. 29, p. 42 referred to by Vimadalal J. of Bombay High Court in Farbwrke Hoechst & B. Corporation v. Untchan Laboratories AIR 1969 Bom 255.

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An issue of obviousness is always a mixed question of law and fact and would depend on the evidence produced by a defendant challenging the validity of the patent.

15. Non-Disclosure of Corresponding Application—Breach of Section 8 111

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93 94 95 96 97

Section 8 of the Act requires applicants to file a statement setting out the detailed particulars of the application filed in any country outside India with regards to a same or substantially similar invention. The importance of compliance with section 8 was emphasised by the Delhi High Court in Chemtura Corp v Union of India,95 where it was strictly enforced leading to vacation of a preliminary injunction operating in favour of the patentee/plaintiff who had failed to inform the Controller about a corresponding US application where narrower claims were granted on account of cited prior art documents. Recently, the Delhi High Court in Koninklijke Philips Electronics v Sukesh Behl96 held that information concerning the pending foreign applications was inadvertently missed out by Philips. In order to invalidate a patent under Section 8, the court must ascertain whether there was deliberate or wilful suppression of information, which was indispensable and material to the grant of the patent by the Indian Patent office. If the court prima facie finds that the non-disclosure may have material bearing on the decision of the Controller to grant or refuse the patent application, it would amount to a breach of applicant’s obligation under Section 8. On the other hand, if such non-disclosure or omission has no material bearing on the issue of patentability or the scope of claims which are granted, such omission may not be considered as a ground to invalidate a patent or decline an order of injunction arising from the infringement of the patent. Even if a breach of section 8 is found, the court has discretion not to invalidate the patent where bona fide of non-disclosure is not suspect.97

F Hoffman La-Roche (n 38). Biswanath Prasad Radhey Shyam (n 72). 2009 (41) PTC 260 (Del). 2013 (56) PTC 570 (Del). F Hoffman La-Roche Ltd (n 38).

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16. Non-Working of Patent 113

Where a defendant can establish that there is no commercial working of the patented product, the court will decline to grant any preliminary or final injunction.98 However, what constitutes commercial working of a patent would depend upon the facts of every case. The plea raised by the defendant that the sale of a patented product by way of import and not of local manufacture would not constitute commercial working was rejected by the Delhi High Court in the case of Telemecanique v Schneider Electric.99 The observation of the Court in this judgment is instructive: 31. We would also like to note that while making submissions in rejoinder Mr. Arun Kathpalia, learned counsel for the appellant, sought to make submissions that in view of Section 83 read with Section 90(d) of the Patents Act, 1970 the patent has to be worked out in India by manufacture and not by import. Mr. Kathpalia sought to rely on the commentary of Terrell on the Law of Patent, 13th edition chapter X, para 10.07, 10.09, 10.10, 10.13, 10.14 and 10.17. Mr. Kathpalia submitted that same principles would apply in respect of the Indian law and thus in the absence of definition of commercial scale, natural and ordinary meaning should be given to the expression. He submitted that in terms of the said treaties the general principles set out are that a patentee must manufacture the product in that country and it should not also be mere improvements. We have, however, considered this aspect aforesaid and have come to the conclusion that there is no force in the submission of the appellant.

17. Standard Essential Patent 114

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IP rights are monopolistic in nature and their legitimacy is recognised as such even by the Competition Act 2003. Violation of IP rights therefore may lead to an injunction and compensation without raising any issue under the Competition Act. However, the same yardstick may not be applicable to ‘Standard Essential Patents’ known as SEPs. Licensing of SEPs on reasonable and non-discriminatory (‘RAND’) terms is the foundation of the standards development process. The rationale behind RAND is that it allows for inclusion of patented technology in technical standards, while also ensuring that the holder of a SEP cannot abuse the dominant market position it gains from widespread adoption of voluntary technical standards.100 RAND, also known as fair, reasonable, and non-discriminatory (‘FRAND’) are licensing obligations that are set by standards-setting organisations to be followed by the members that participate in the standard-setting process. Standard-setting organisations are the industry groups that set common standards for a particular industry in order to ensure compatibility and interoperability of devices manufactured by different companies.

Frank Xavier Huemer v New Yash Engineers AIR 1997 Del 79. 94 (2001) DLT 861. 100 A Dore, ‘Limiting the Abuse of Market Dominance by Standards-Essential Patents’ 6 February 2013, available at: https://itu4u.wordpress.com/2013/02/06/limiting-the-abuse-of-market-dominance-conferred-bystandards-essential-patents/. 99

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A standard can be defined as ‘a set of technical specifications that seeks to provide a common design for a product or process’.101 In other words, standards are norms that apply to a category of technology. SEPs do not stand on the same footing as other patent rights as SEPs are subjected to terms like RAND and FRAND. Thus, the owner of SEP is under obligation to grant a licence for use of patented technology to fulfil the standards set for the industry. The patentee is allowed to charge a nominal fee but that should be reasonable and fair, failing which the Competition Law may intervene. In a case in the United States between Microsoft and Motorola,102 the Court held that ‘a given patent is ‘essential’ to a standard if use of the standard requires infringement of the patent, even if acceptable alternatives of that patent could have been written into the standard’.

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18. SEP vis-à-vis Competition Laws 119

In India, the Competition Act does not refer to unfair patent licensing and resulting competition law issues. However, it provides for prevention of abuse of a dominant position in section 4(2)(c) in the broadest form to include any case of abuse of dominant position by any patentee by holding-up, royalty stacking or imposing unfair patent licensing terms. Even the Indian Patents Act recognises certain restrictive conditions as unlawful.103

19. The Competition Act 120

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Pursuant to section 4(2)(c) of the Competition Act, it would be an abuse of a dominant position if an enterprise or a group indulges in practice or practices resulting in denial of market access in any manner. Also, pursuant to section 19(4)(h) of the Competition Act, the Competition Commission of India (‘CCI’) may have regard to high capital costs of entry, technical entry barriers and marketing entry barriers while inquiring whether an enterprise enjoys a dominant position or not under section 4. The CCI has so far intervened in two cases pertaining to SEPs against a telecom company giving its prima facie view that the telecom company was in dominant position and a demand of royalty linking the same with the cost of the product to the user was contrary to the FRAND obligation. Forcing a party to execute a nondisclosure agreement (‘NDA’) is also anti-competitive. In Micromax Informatics Limited v Telefonaktiebolaget LM Ericsson,104 it was observed: For the use of GSM chip in a phone costing Rs. 100, royalty would be Rs. 1.25 but if this GSM chip is used in a phone of Rs. 1000, royalty would be Rs. 12.5. Charging of two different licence fees per unit phone for use of the same technology prima facie is discriminatory and also reflects excessive pricing vis-à-vis high cost phones.105

101 MA Lemley, ‘Intellectual Property Rights and Standard Setting Organizations’ (2002) 90 California Law Review 1889, 1896 102 Microsoft Corp v Motorola Inc et al, Case No C10-1823JLR. 103 Patents Act 1940, s 140. 104 Case No 50/2013 available at: www.cci.gov.in/May2011/OrderOfCommission/261/502013.pdf. 105 ibid [17].

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In Intex Technologies (India) Limited v Telefonaktiebolaget LM Ericsson,106 the Commission took the view that, [f]orcing a party to execute an NDA and ‘imposing excessive and unfair royalty rates’ constitutes ‘prima facie’ abuse of dominance and violation of section 4 of the Indian Competition Act.107 Imposing a jurisdiction clause debarring complaints from getting disputes adjudicated in the country where both parties were in business and vesting jurisdiction in a foreign land prima facie was also an abuse of dominance.108

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The Competition Commission’s intervention was sought by Micromax and Intex after Ericsson had filed two separate suits before the Delhi High Court seeking an injunction against infringement of eight SEPs belonging to Ericsson.109 The Competition Commission’s intervention has been challenged by Ericsson, which has filed a writ petition.110

20. The Patents Act 124

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As regards licensing, the Indian Patents Act is silent on compulsory licensing on FRAND/RAND terms.111 Section 82 only provides for compulsory licensing on three grounds without reference to the nature of the patent, ie whether SEPs or not or what may be the terms and conditions of the licensing, ie whether it should be fair, reasonable and non-discriminatory. However, section 90(1)(i) of the Patents Act in its broad terms provides that in settling the terms and conditions of a compulsory licence under section 84, the Controller shall endeavour to secure: that the royalty and other remuneration, if any, reserved to the patentee or other person beneficially entitled to the patent, is reasonable, having regard to the nature of the invention, the expenditure incurred by the patentee in making the invention or in developing it and obtaining a patent and keeping it in force and other relevant factors.

21. Compulsory Licence 126

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A compulsory licence is granted when a government allows someone else to produce the patented product or process without the consent of the patent owner. Section 83 lays down the general principles for the working of a patented invention while section 84(1) lays down the cornerstone for grant of compulsory licences:

Case No 76/ 2013 available at: www.cci.gov.in/May2011/OrderOfCommission/261/762013.pdf. ibid [17]. ibid [17]. 109 See Telefonaktiebolaget LM Ericsson v Mercury Electronics and Anr CS (OS) No 442 of 2013 and Telefonaktiebolaget LM Ericsson v Intex Technologies India Ltd, CS (OS) No 1045 of 2014, both pending before the Delhi High Court. 110 Telefonaktiebolaget LM Ericsson v Competition Commission of India WP (C) No 464 of 2014. 111 Patents Act 1970, s 82. 107 108

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Once an application has been made, the Controller takes into consideration the following factors, as mandated by section 87, in considering the grant or refusal of a compulsory licence: a. nature of the invention; b. time lapsed from date of grant of the patent and complexity involved in working the same; c. ability and competency of the applicant to work the patented invention in the public interest; d. whether the applicant has made full efforts to obtain a licence from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period construed as a period not ordinarily exceeding a period of six months.

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India’s first compulsory licence was granted by the Patent Office to Natco Pharma Ltd for producing a generic version of Bayer Corporation’s patented medicine Nexavar, used in the treatment of liver and kidney cancer. The Controller decided against Bayer112 on all three grounds enlisted in the Patents Act for the grant of compulsory licence being: 1. reasonable requirements of the public not being satisfied; 2. non-availability to the public at a reasonable affordable price; 3. patented invention not being worked in the territory of India.

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The decision of the Controller was appealed against by Bayer before the IPAB113 which upheld the decision of the Controller on the grounds of ‘public interest’ and held that the right of access to affordable medicine was a matter of right to dignity of the patients. The Appellate Board, however, disagreed with the Controller that local manufacture is essential to constitute working of the patent. It held that import may constitute working of the patent if the patentee has sufficient reasons to justify as to why local manufacture was not undertaken and produces evidence to substantiate it. In another case, BDR Pharmaceuticals, a generic medicine manufacturer, requested Bristol Myers Squibb, a multinational pharma company, for the grant of a voluntary licence to make a generic version of anti-cancer drug Dasatinib, sold under the

112 Controller’s decision dated 9 March, 2012 in Natco v Bayer (CLA No 1 of 2011) before the Controller of Patents, Mumbai. 113 IPAB Order No 223 of 2012 dated 14 September, 2012 in M.P. Nos 74 to 76 of 2012 & 108 of 2012 in OA/35/2012/PT/MUM.

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brand name Sprycel. The Patent Office however rejected the compulsory licence application on the ground that the prima facie case for grant was not made out. The Controller114 further held that BDR had not really made any credible attempt to procure a voluntary licence and therefore could not be said to have satisfied the statutory requirement.

IX. Wrongful Enforcement—Groundless Threats 131

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Where any person threatens any other person by circulars or advertisements or by communications, oral or in writing, with proceeding of infringement for a patent, any person aggrieved thereby may bring a suit against him for groundless threats with a prayer of declaration that such threats be declared unjustifiable and an injunction be issued against continuance of such threats and damages may be awarded as are established to have been sustained on account of such threat. However, in such case, it would be open to a patentee to establish that the threatened act, if done, would constitute infringement.115 In the case of LG Electronics v Bharat Bhogilal116 the High Court of Delhi issued an interim injunction against the patentee who had filed a complaint before customs against LG Electronics on the ground that its import of mobile parts amounts to infringement of the patent. The complaint before customs was contested by LG Electronics on the ground that the patent itself was invalid and the petition for its revocation has already been initiated by LG Electronics before the IPAB. Despite the same, the customs authorities interdicted the mobile phone consignment of LG Electronics shipped from South Korea. Accordingly, LG Electronics filed a suit for groundless threat pleading that it was essential for a patentee to sue for infringement of patent if it believed that it was entitled to an order of an injunction and it was for the Civil Court to decide the disputed issue of infringement and validity. The Court issued a preliminary injunction treating the complaint filed by the patentee before customs, in the absence of a suit for infringement, as a groundless threat. The judgment is under appeal before the Appellate Bench of the Delhi High Court.

X. Costs 133

Very few patent infringement suits in India have reached the stage of final determination. There has yet not been any instance where a successful patentee has been awarded costs of the litigation which are usually very high. However, in an instructive judgment of Ten XC Wireless v Mobi Antenna,117 the High Court of Delhi applied the Supreme Court judgment in case of Salem Advocate Bar Association v Union of India:118

114 Controller’s decision dated 30 October 2013 in BDR Pharmaceuticals International Pvt Ltd v Bristol Myers Squibb Company (CLA No 1 of 2013) before the Controller of Patents, Mumbai. 115 Patents Act 1970, s 106. 116 See n 5. 117 2011 (48) PTC 426 (Del). 118 AIR 2005 SC 3533.

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Hemant Singh 10.2 In Salem Advocate Bar Association v. Union of India (AIR 2005 SC 3353), the Supreme Court held that actual reasonable costs should be awarded to the successful party. The findings of the Apex Court are reproduced hereunder:39. Judicial notice can be taken of the fact that many unscrupulous parties take advantage of the fact that either the costs are not awarded or nominal costs are awarded on the unsuccessful party. Unfortunately, it has become a practice to direct parties to bear their own costs. In large number of cases, such an order is passed despite Section 35(2) of the Code. Such a practice also encourages filing of frivolous suits. It also leads to taking up of frivolous defences. Further wherever costs are awarded, ordinarily the same are not realistic and are nominal. When Section 35(2) provides for cost to follow the event, it is implicit that the costs have to be those which are reasonably incurred by a successful party except in those cases where the Court in its discretion may direct otherwise by recording reasons thereof. The costs have to be actual reasonable costs including the cost of the time spent by the successful party, the transportation and lodging, if any, or any other incidental cost besides the payment of the court fee, lawyer’s fee, typing and other cost in relation to the litigation. It is for the High Courts to examine these aspects and wherever necessary make requisite rules, regulations or practice or direction so as to provide appropriate guideline for the subordinate courts to follow.

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The Delhi High Court in Ten XC has laid down certain guidelines for determining cost in patent infringement cases: — parties to submit their estimated future cost at the commencement of trial; — greater transparency about cost will promote access to justice; — the parties and court master shall maintain a record of the court time consumed; and — the unsuccessful party is liable to pay costs to the successful party.

16 Patent Enforcement in the United States TIMOTHY MALONEY

A. General Considerations I. The Nature of US Patent Rights 1

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Utility patents grant the patent holder a limited legal monopoly on the invention for 20 years after the initial filing date in the United States. During the term of the patent, the patent holder can prevent others from making, using, offering for sale, or selling the patented invention in the United States or importing the patented invention into the United States. The US Patent and Trademark Office (‘PTO’) is responsible for ensuring that the patents it awards are of proper scope and provide sufficient disclosure of the invention to benefit the public and with sufficient clarity so that the zone of exclusivity can be reasonably determined and understood. To enforce a patent, the patent holder normally brings suit against the alleged infringer in a federal district court. By commencing infringement litigation, the patent holder opens a comprehensive investigation into the accused activities, while inviting an equally probing inquiry into the rightful nature of the patent itself. The entire basis for the patent grant is subject to close scrutiny and frequent challenge during enforcement litigation. Given the numerous substantive and technical requirements imposed by the US patent laws, the inventor of meritorious technology may nevertheless face difficulties in attempting to enforce the related patent rights. Proper preparation and prosecution of the patent application in the first instance is crucially important. Carelessly drafted patent claims, incomplete disclosure of the invention, and inaccurate characterisations of the prior art are but a few of the types of transgressions during prosecution that may pose obstacles to successful patent enforcement.

II. The Duty of Candour 4

Because the proceedings in the PTO are ex parte in nature, the applicant has a ‘duty of candour’ to be forthcoming in dealing with the PTO throughout the prosecution of

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the patent application. This duty includes providing the PTO with all information that may be material to the examination of an applicant’s patent application. The duty of candour does not require the applicant to carry out a prior art search, but requires disclosure of all relevant prior art of which the applicant or the applicant’s representative is aware. The duty to disclose relevant prior art continues throughout the prosecution of the application. Therefore, if the applicant later becomes aware of relevant prior art, including prior art found by patent offices outside the United States during prosecution of the corresponding applications filed in other countries, that information must be provided to the PTO. Failure to comply can result in any patent issuing from the application being declared unenforceable by a trial court. 5 The duty to disclose is not limited to prior art, but extends to any information that may be material to patentability. This includes information on enablement, potential prior art, inventorship conflicts and the like. Patent holders should notify the PTO of any related litigation and any material information arising from the litigation.

III. The System of Civil Procedure 6

The US system of justice is an adversarial system that relies on the parties and their attorneys to collect evidence and present their dispute before a neutral fact-finder. The court presides over the presentation of evidence, but does not participate directly in obtaining evidence before or during trial. In theory, the clash of adversaries before the court is most likely to lead to the truth and a fair resolution of the controversy.

1. The Trial Courts 7

Generally speaking, the US civil justice system is comprised of the federal courts and the courts of each of the 50 individual sovereign States. Under section 1338(a) of Title 28 of the US Code, a claim of patent infringement is a federal cause of action. The district courts are the trial courts of the federal court system.1 There are 94 federal judicial districts, including at least one in each State, the District of Columbia and Puerto Rico.2 The district courts have jurisdiction over nearly all civil and criminal matters arising under federal law. The district courts may also hear controversies involving State law between parties having different State citizenship if the amount in controversy exceeds $75,000. Patent litigation may be initiated by one having rights to enforce a patent against an alleged infringer, or by a party seeking to have the patent declared invalid, unenforceable, or not infringed in response to having been threatened under the patent. 8 Disputes regarding title to patents or licences or other contracts regarding patents must be brought in the State court absent some other basis for invoking federal jurisdiction. This jurisdictional grant also generally does not extend to claims of infringement of a foreign patent.3

1 The United States Court of Federal Claims has exclusive jurisdiction over patent infringement claims made against the federal government. 2 The Virgin Islands, Guam and the Northern Mariana Islands, which are US territories, also have district courts that hear patent and other federal cases. 3 See Mars, Inc v Kabushiki-Kaisha Nippon Conlox, 24 F.3d 1368 (Fed Cir 1994). The patent owner in this case sought to enforce both a US and a related Japanese patent against the defendant in one proceeding.

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Pursuant to Article III, section I of the US Constitution, district court judges are appointed for life by the President with the advice and consent of the Senate. There are no specific qualifications to become a judge, and most were formerly State court judges, law professors, or accomplished private or government attorneys. Few have any formal training in the sciences or patent law. There are currently 663 authorised judgeships in the district court system, the largest number being in more populous States such as California, Florida, Illinois and Texas.4 In view of the broad scope of federal subject matter jurisdiction, these judges are required to handle a wide variety of matters, including contract disputes, personal injury actions, labour disputes, criminal matters and many others. Patent actions make up only a small percentage of cases at the district court level.5 The amount of experience handling the numerous complex issues involved can vary considerably among the districts and among individual judges.

2. The International Trade Commission 11

The United States International Trade Commission (‘ITC’) is a federal agency having authority to preclude importation of products covered by a US patent or made abroad by a process covered by a US patent. An administrative law judge (‘ALJ’) presides over the investigation. A commission Investigative Attorney also participates, representing the public interest in the investigation. If the ALJ finds a product infringing, he may issue an exclusion order to bar entry of the infringing products into the United States or a cease and desist order to bar importation and sales activities. ITC orders are enforced by the Department of Homeland Security’s Bureau of Customs and Border Protections. Monetary remedies are not available in proceedings before the ITC, but civil penalties may be assessed for violating a cease and desist or exclusion order.

3. The Patent Trial and Appeals Board 12

The Patent Trial and Appeals Board (‘PTAB’) was created in 2011 as part of the America Invents Act (‘AIA’) to help establish a more efficient and streamlined patent system, improve patent quality and limit unnecessary and counterproductive litigation costs. Trials before the PTAB are envisioned as a timely, cost-effective alternative to litigation. The PTAB replaces the Board of Patent Appeals and Interferences. It is charged with rendering decisions on appeals from adverse examiner decisions upon both applications for a patent and re-examinations, and with presiding over post-issuance challenges to patents. The PTAB is comprised of the Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks and Administrative Patent Judges.

Under 28 U.S.C. s 1338(b), a claim of unfair competition may be joined with a substantial and related claim of patent infringement. The Federal Circuit rejected the patent owner’s argument that infringement of the Japanese patent constituted unfair competition under this provision. It also rejected the argument that the Japanese and US patent infringement claims were so related as to permit jurisdiction under a more general supplemental jurisdiction statute, 28 U.S.C. s 1367(a). ibid 1375. 4

Federal Judgeships, www.uscourts.gov/judges-judgeships/authorized-judgeships; 28 U.S.C. 133. FTI Consulting, 2013 Intellectual Property Statistics, available at: www.fticonsulting.com/; pwc, 2014 Patent Litigation Study, available at: www.pwc.com/. 5

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4. The Courts of Appeal a. The US Court of Appeals for the Federal Circuit 13

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The Court of Appeals for the Federal Circuit has exclusive jurisdiction over patent cases. The Federal Circuit was created in 1982 to promote uniformity in the area of patent law and diminish the uncertainty created by inconsistent application of the law among the regional circuits. The availability of reasonably clear and consistent rules for evaluating disputes regarding patentability, infringement and remedies facilitates the predictability needed for effective innovation planning and investment in the marketplace. The Federal Circuit has worked vigorously towards this objective. The Federal Circuit currently comprises 17 judges, six of whom have senior status and may handle a lesser caseload. As with other federal judges, they are nominated by the President and must be confirmed by the Senate. They are tenured for life, subject to ‘good behaviour’. The jurisdictional statute, 28 U.S.C. section 1295(a), grants the Federal Circuit exclusive jurisdiction of appeals from final decisions of the district courts in actions where the district court’s jurisdiction ‘was based, in whole or in part, on section 1338 of this title’, that is, civil actions arising under the patent law. The Federal Circuit has inherent authority to determine whether its exercise of jurisdiction in a given case is within the mandate of section 1295(a). The variety of circumstances in which cases have been brought before the Court have raised difficult issues pertaining to its jurisdiction. The inquiry must be addressed on a case-by-case basis by considering whether the plaintiff has asserted ‘at least some right or privilege that would be defeated by one or sustained by an opposite construction of [the patent] laws’.6 If the Federal Circuit concludes that it lacks jurisdiction, it may either dismiss the case or transfer it to another court of appeals that has proper jurisdiction. Results in this area have been less than predictable.7 The Federal Circuit also hears appeals of patent matters from the PTO, the Court of Federal Claims and the International Trade Commission, as well as appeals of a variety of non-patent matters. In 2013, about 71 per cent of district court patent decisions were appealed to the Federal Circuit.8

b. The US Supreme Court 16 6

Decisions of the Federal Circuit are only superseded by decisions of the Supreme Court or by changes in the statutory law by act of Congress. A party may petition the

Dubost v United States PTO, 777 F.2d 1561, 1564 (Fed Cir 1985). Examples of Federal Circuit decisional law regarding the scope of its jurisdiction and the contexts in which such issues arise appear in Atari, Inc v JS&A Group, Inc, 747 F.2d 1422 (Fed Cir 1984) (jurisdiction exists over appeal from grant of preliminary injunction on copyright count where case also included patent count, even though district court separated patent count for trial); Schwartzkopf Dev Corp v Ti-Coating, Inc, 800 F.2d 240 (Fed Cir 1986) (no jurisdiction over remaining State law claim for royalties due under licence agreement after counterclaim for declaratory judgment of invalidity and non-infringement dismissed by the counterclaimant); and Yarway Corp v Eur-Control USA, Inc, 775 F.2d 268 (Fed Cir 1985) (Federal Circuit had jurisdiction over a patent licensee’s action against patent owner for infringement of licensed patent even though the patent infringement dispute arose between contracting parties). In 2013, the Supreme Court unanimously held that, contrary to the Federal Circuit’s precedent, cases asserting malpractice in the handling of a patent case do not ‘arise under’ federal patent laws, do not involve questions unique to patent law, and as such, are to be heard in State courts rather than federal district courts. Gunn v Minton, 133 S.Ct. 1059, 1065, 568 U.S. ___ (2013). 8 pwc, 2014 Patent Litigation Study (n 5). 7

Patent Enforcement in the United States 477 US Supreme Court to accept an appeal from an adverse decision of the Federal Circuit. The Supreme Court has discretionary control over its docket, and declines to hear the vast majority of cases it is asked to decide. With the authority of its decisions second only to those of the Supreme Court, the Federal Circuit is effectively the court of last resort for most patent litigants. In recent years, the Supreme Court has been reasonably active in the area of patent law, and has addressed several issues of significant importance to patent litigants.9

5. The Profession 17

The proceedings in the PTO are restricted to patent attorneys and agents licensed by the PTO. Patent infringement actions in the district courts, and appeals therefrom, may be brought by any attorney licensed by at least one State and admitted to practice in the applicable federal court. Many patent litigators have technical degrees and are also licensed to practise before the PTO. The profession had become more diverse as lawyers, technologists and business professionals alike have been drawn to the challenges and opportunities of this dynamic field. The number of attorneys and other professionals who specialise in or at least regularly practise patent litigation has increased commensurate with the steady growth of US patent litigation and the importance of such cases to the business interests of clients.10

B. Problems Related to the Enforcement of Patent Rights I. Types of Action 1. PTO Procedures 18

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Historically, the reissue and the re-examination procedures have been the two primary mechanisms for making substantive corrections to issued patents in the PTO. These procedures have enabled patent owners to fix potential problems before enforcing a patent, and have also provided alternative avenues for competitors to challenge the validity or restrict the claims of an issued patent. The America Invents Act brought a number of changes to post-issuance PTO proceedings, including introducing new procedures that allow further opportunities for

9 Recent issues addressed by the Supreme Court include: availability of injunctive relief, eBay Inc v MercExchange, LLC, 547 U.S. 388 (2006); the standard of obviousness, KSR Int’l Co v Teleflex, Inc, 550 U.S. 398 (2007); international enforceability of US software patents, Microsoft Corp v AT&T Corp, 550 U.S. 437 (2007); patent exhaustion as it relates to certain types of method patents, Quanta Computer, Inc v LG Elecs, Inc, 553 U.S. 617 (2008); subject matter eligibility of business method patents, Bilski v Kappos, 561 U.S. 593 (2010); subject matter eligibility of inventions covering laws of nature, Mayo Collaborative Servs v Prometheus Labs, Inc, 566 U.S. 10 (2012); liability for induced infringement based on direct infringement by more than one party, Limelight Networks, Inc v Akamai Techs, Inc, 134 S.Ct. 2111, 572 U.S. ___ (2014); and subject matter eligibility of patents based on abstract ideas, Alice Corp v CLS Bank Int’l, 134 S.Ct. 2347, 573 U.S. ___ (2014). 10 The number of new patent cases filed reached nearly 6000 in 2013. 2013 Annual Report of the Administrative Office of the United States Court, Table C-2.

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a. Reissue Proceedings 20

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The reissue procedure is available to correct a defective patent if the owner can establish that the specification is defective or that the patent claimed more or less than the inventor had a right to claim. The AIA made reissue more accessible by eliminating the requirement that the defect sought to be corrected resulted from an error made without deceptive intent. An application for a reissue patent that contains claims enlarging the scope of the original patent must be filed within two years of the date of grant of the original patent. The term of a reissue patent is the unexpired portion of the original patent; a reissue patent cannot extend the duration of the original patent. The patent owner may attempt to secure a reissue patent to expand the scope of the claims to cover a competitor’s activities, or to narrow the claims to avoid newly discovered prior art. The reissue file is open to the public. Once the patent owner initiates the reissue proceeding, competitors may participate by filing a written submission protesting the proposed reissue claims on any grounds of patentability. The patent owner must surrender the original patent upon filing the reissue application, and risks the possibility of newly proposed claims and/or the original claims being disallowed. An infringer may have a personal defence of intervening rights to continue an otherwise infringing activity if the activity or preparation for the activity took place before the grant of the reissue patent.11

b. Re-Examination Proceedings 22

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A patent owner or any interested party can seek PTO review of an issued patent on the basis of patents and/or printed publications that raise a substantial new question of patentability. This procedure allows the PTO to determine the correctness of the original patent grant in light of the newly presented prior art. Starting in 1999, the rules allowed a third party to request and participate in either an ex parte or inter partes re-examination proceeding. In an ex parte re-examination, the third-party requestor submits the initial challenge and is thereafter limited to responding to an applicant’s initial statement concerning patentability, if filed. Under inter partes re-examination, the third party could respond to arguments and amendments made by the patent owner throughout the re-examination. The third party was, however, barred from later asserting invalidity in litigation on any ground that was raised, or could have been raised, during the re-examination proceeding. The PTO can reaffirm the original grant, change the scope of protection by allowing new or amended claims, or withdraw the original grant. The legal presumption of validity of the patent is not strengthened by the successful completion of the reexamination proceeding. However, courts and juries will generally look with particular

35 U.S.C. s 252.

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favour on a patent that has twice been found patentable by the PTO. On the other hand, the re-examination proceeding provides a potential infringer with the possibility of invalidating a patent outside of the court system at a considerably reduced cost. Ex parte re-examination has remained substantially intact after passage of the AIA. The inter partes re-examination proceeding has been replaced by inter partes review. This is a trial proceeding conducted in the newly created PTAB.

c. Post-Grant and Inter Partes Review 26

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Any party may request the PTAB to initiate post-grant review proceedings to challenge the validity of an issued patent within nine months after the patent is granted.12 The basis for the challenge may include novelty, obviousness, inadequate written description, lack of enablement and indefiniteness. Documentary evidence may be supplemented with other factual evidence or expert opinions. The request for a post-grant review must show that it is ‘more likely than not’ that at least one challenged claim is not patentable. The proceeding may involve a trial before the PTAB, and is expected to be completed within one year of its commencement. The PTAB’s final decisions in the proceeding are immediately appealable to the US Court of Appeals for the Federal Circuit. If the challenge is unsuccessful, the challenger may be precluded from raising a broad range of invalidity defences in litigation. Inter partes review is another new trial proceeding to challenge the validity of claims. The challenger is limited to prior art consisting of patents or printed publications. A party other than the patent owner may petition to initiate this proceeding after the completion of any post-grant review or nine months after patent issuance, whichever is later. There are additional time limitations when the patent being reviewed is involved in pending litigation. A petitioner files a petition requesting a post-grant review or inter partes review. The patent holder may optionally file a preliminary response to argue why the PTAB should not institute a trial. The patent holder may not introduce any new evidence at this stage, such as expert testimony, unless authorised by the PTAB, and cannot amend any claims. If the PTAB institutes a trial in either type of proceeding, the panel of three judges overseeing the trial has wide latitude in administering the proceedings. In general, documentary evidence may be supplemented with other factual evidence or expert opinions. The panel need only find that the challenged patent is invalid by a preponderance of the evidence as opposed to the higher clear and convincing standard required to invalidate a patent in a US district court. An important aspect of these trials is the significant estoppel effects that they carry. Petitioners challenging claims in either type of review are barred from requesting or maintaining any other invalidity proceedings in the PTO, a district court, or the ITC on any grounds that were or reasonably could have been raised during the PTAB trial. Petitioners should also keep in mind that even if the parties settle their dispute, the PTAB is not required to terminate the proceedings, and an estoppel may still apply.

12 Patents with a priority date after 15 March 2013 are eligible for post-grant review, although post-grant review is available for all covered business method patents regardless of priority date.

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d. Supplemental Examination 31

Supplemental examination, also introduced by the AIA, permits the patent holder to request the PTO to ‘consider, reconsider, or correct information believed to be relevant to the patent’. If the information submitted raises a ‘substantial new question of patentability’, a supplemental examination will be conducted in view of the new information. This procedure allows the patent holder to mitigate the risk of the patent being challenged during infringement litigation on the basis of fraud (inequitable conduct) for withholding from the PTO information material to patentability.

2. Ordinary Infringement Proceedings 32

Most patents are enforced as lawsuits filed in the US district courts, which are the trial courts of the federal judicial system. Given the relative freedom afforded the parties to investigate and present their cases with little court intervention, the enforcement of patents in the US system is a highly strategic undertaking at all stages of the proceedings, details of which are provided below. The following discussion primarily addresses specific procedural and substantive aspects of the enforcement of US patent rights in the district courts, and attempts to highlight important tactical and strategic considerations where possible.

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Significant procedural and substantive differences exist between this forum and the district courts. For example, ITC investigations are conducted by ITC staff, whose determinations must consider factors such as the public welfare, competitive economic conditions and the interests of US consumers, which do not necessarily align with the parties’ interests. ITC decisions regarding patent issues have no preclusive effect in district court proceedings. ITC actions offer an attractive option to patent holders faced with potentially infringing imports, and are utilised with increasing regularity. The ITC offers the potential to obtain relief quicker than through a patent infringement suit in the district court. Many believe it is also easier to obtain injunctive relief through the ITC than in the district court.

II. Strategic Considerations 35

Suits to enforce or defeat patents are invariably a component of larger business objectives, and the tactics employed must derive from the underlying business strategy. Patent litigation in the United States can be expensive. Legal fees, expert witness fees, travel expense and other costs can mount quickly given the need for careful preparation and presentation of complex legal issues. The expense alone compels careful consideration of whether to file suit in the first place, and constant re-evaluation of discovery, pre-trial and trial strategies to maximise the chances of both legal and economic victory.

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Many other risk factors necessarily affect the patent owner’s and accused infringer’s respective strategies. The accused infringer faces the risk of being enjoined from continuing the commercial activities at issue, although legal developments in recent years have substantially reduced this risk. The accused infringer may also be required to pay compensatory damages, as well as enhanced damages and attorneys’ fees, if found to infringe. The financial consequences of an adverse decision of infringement are thus potentially catastrophic. On the other hand, a victory for the accused infringer can be a hollow one if it spends all of its profits from the accused activity defending its right to continue. Because patent invalidity is an absolute defence to an infringement charge, the patent holder risks investing substantial litigation expense and effort only to emerge from trial with a valueless, invalid patent and no means of preventing competitors from practising the once protected technology. The early statistics of the new postissuance review proceedings should give patent owners even greater pause. Based on data collected from September 2012 through March 2014, approximately 77 per cent of the final written decisions issued by the PTAB invalidated all claims instituted in an action.13 And beyond the question of patent validity, it seems clear that developments in patent law over the past decade have been decidedly negative for patents that are too broad, represent only minor advances in technology, were poorly drafted, or purport to command licence fees out of line with the true economic contribution of the invention. Still, patent holders succeed at trial two-thirds of the time. However, in recent years, the median damages award has continued to decline. The median award for 2010–13 was $4.3 million, down from $4.9 million for 2005–09 and $7.5 million of 2000–04.14 These risks are magnified by the high degree of uncertainty inherent in the jury trial system. The parties are therefore often motivated to compromise their dispute by entering into a mutually acceptable licence relationship. The majority of cases terminate as a result of settlement or by court action prior to trial, such as by summary judgment rulings by the trial judge. When one considers the number of patent disputes that are resolved before litigation is even initiated, the relative number of controversies left to be determined by trial is indeed very small.

III. Competent Court and Competent Parties—The Commencement of an Action 40

A patent infringement action is commenced by filing a complaint in a US district court, upon which the court issues a summons. The summons and complaint must be served on each adverse party within 120 days of filing in a manner sanctioned by the Federal Rules of Civil Procedure for providing proper notice of the suit to each of them.

13 BJ Love and others, Inter Partes Review: An Early Look at the Numbers (2014) 81 University of Chicago Law Review Dialogue 93, 102. 14 pwc, 2014 Patent Litigation Study (n 5).

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1. The Competent Court 41

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A suit to enforce or attack a patent may be filed against a given defendant in any district court in which requirements of venue and personal jurisdiction are met. The rules governing venue in patent cases seek to prevent the defendant from having to litigate in an inconvenient forum. Generally, the proper venue for a patent infringement case is any district where the defendant resides or has committed acts of infringement and has an established place of business.15 If the defendant is a non-US citizen, the case may be brought in any district court.16 The second requirement, that the court have power to exercise personal jurisdiction over the defendant, depends on whether the defendant has established some minimum contact with the State in which the district court sits and, if so, whether the assertion of jurisdiction over the defendant is fair and reasonable in light of all of the circumstances.17 All of the defendant’s contacts with the forum State, such as offices, employees, bank accounts, product sales, advertising, telephone listings etc, may be considered. A lesser showing of contacts is necessary if the contacts relate to the course of action (eg sales of accused product). Even a non-US company with no operations in the US may be subject to jurisdiction if it places an infringing product into distribution channels that it reasonably knows will lead to product sales in the US.18 In terms of volume of patent cases handled, the top districts include the Eastern District of Texas, the Northern District of Illinois, the District of Delaware and the Central District of California.19 The average time to resolve cases can vary widely within these popular patent forums.20 If a defendant is sued in a district court where venue or personal jurisdiction requirements are not met, or if there is otherwise a more convenient court to hear the case, the district court may transfer the case to the preferred court.21 While the transfer statute speaks to convenience of the parties and witnesses, forum selection disputes are often more about managing the chance of a favourable outcome on the merits. Patent infringement win rates and damages recoveries among the districts are of great interest to the parties. These statistics vary considerably among the districts. The district courts have wide discretion to affect such transfers, and often consider most important the location of key witnesses, the interests in the respective States in the underlying dispute, and the presence of other lawsuits involving the same patent in one of the district courts being considered. Rates of success on motions to transfer differ significantly among the federal district courts. This suggests that the judge’s interest in patent cases might sometimes influence the analysis.

28 U.S.C. ss 1391(c) and 1400(b). ibid, s 1391(c). Red Wing Shoe Co v Hockerson-Halberstadt, Inc, 148 F.3d 1355 (Fed Cir 1998). 18 Beverly Hills Fan Co v Royal Sovereign Corp, 21 F.3d 1558 (Fed Cir 1994) (holding district court in Virginia had personal jurisdiction over a Chinese corporation who manufactured the accused product in Taiwan and sold to a New Jersey importer because it placed the products in a ‘stream of commerce’ knowing the likely destination of some of the products in Virginia). 19 2013 Annual Report of the Administrative Office of the United States Courts, Table C-3. 20 Average time to resolve cases in these districts varies from just over 3.5 years in the Northern District of Illinois to just under 2 years in the District of Delaware. The median time to trial is about 2.5 years. pwc, 2014 Patent Litigation Study (n 5). 21 28 U.S.C. ss 1404 and 1406. 16 17

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2. The Competent Parties 45

Article III of the US Constitution limits the federal court jurisdiction to actual cases and controversies. This requirement mandates that the party bringing suit have standing to sue for the alleged injuries.

a. Plaintiffs in Suits to Enforce Patents 46

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The patent statute provides a ‘patentee’ with standing to sue for infringement, and defines ‘patentee’ as the original patentee or successors in title to the patent.22 Thus, an original patent owner clearly may bring suit, as may an assignee of all rights in a patent. An assignee must possess the assigned patent rights at the time that the suit is filed.23 According to one court, permitting non-owners the right to sue so long as they subsequently obtain patent ownership would enmesh the courts in abstract disputes, risk multiple litigations and provide incentives for litigants to expand the scope of pending litigation by acquiring rights in additional patents.24 The analysis of standing issues is closely related and often addressed with the rules for joining parties under the Federal Rules of Civil Procedure. Under Rule 19, a case may not go forward in the absence of a party that is both ‘necessary’ and ‘indispensable’. It is this potential for dismissal that usually motivates parties to bring Rule 19 issues to the court. A person is necessary if it satisfies the factors of Rule 19(a), which considers: (1) whether the existing parties can resolve their dispute in the person’s absence; and (2) how the absent person’s interests may be affected by the litigation or create inconsistent obligations on the parties. A necessary person should be joined if subject to the court’s jurisdiction. If a necessary party is outside the court’s jurisdictional reach or refuses to be made a party, the court must dismiss the case if, based on additional factors of Rule 19(b), the case cannot go forward ‘in equity and good conscience’ in the person’s absence. While it is clear that an assignor of all rights in a patent is not required to be joined under Rule 19,25 more difficult questions arise when less than all of the patent rights are conveyed. Where a patent is co-owned by multiple persons, all must jointly bring suit.26 Corporations should therefore make certain that each of joint inventors execute an assignment document to avoid subsequent difficulties in bringing an infringement action. A transfer of less than the entire patent, an undivided share of the patent, or all rights in the patent in a geographical region of the US, is ordinarily deemed a licence and conveys no right to sue. A licensee may sue in its own name for patent infringement only if it owns ‘all substantial rights’ under the patent, such that the licence operates as a ‘virtual’ assignment. In certain circumstances, a licensee with less than all substantial rights may have standing

ibid, ss 281 and 100(d). Mas-Hamilton Group v LaGard, Inc, 156 F.3d 1206, 1210 (Fed Cir 1998). The Federal Circuit clarified in Mas-Hamilton Group that a party having standing to sue for infringement when the suit was filed maintains standing even though the right to sue for past damages was separately assigned during the lawsuit. The plaintiff ’s right to seek injunctive relief and future damages at the time of filing suit was sufficient to confer standing. 24 Procter & Gamble Co v Paragon Trade Brands, Inc, 917 F. Supp. 305, 310 (D Del 1995). 25 OrthoPharm Corp v Genetics, Inst, Inc, 52 F.3d 1026 (Fed Cir 1995). 26 STC.UNM v Intel Corp, 767 F.3d 1351, 1353–54 (Fed Cir 2014). 23

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Timothy Maloney to sue as a co-plaintiff.27 The courts look to the substance of the agreement to decipher the intent of the parties. To qualify as an exclusive licence conveying standing to sue, an agreement must clearly manifest the patentee’s promise not to grant anyone else a license in the area of exclusivity.28 Licence provisions expressly granting the licensee a right to sublicense without the licensor’s approval, to exclude others from using the technology, to file suit for infringement and to defend the licensor’s interest in such a suit may qualify a licence as exclusive. However, a right to sue provision by itself cannot confer standing to an ordinary licensee.29 Despite rather clear guidance from the Federal Circuit regarding principles of standing in patent enforcement actions, disputes in this area arise quite frequently. The varied contexts of reported cases regarding standing to sue emphasise the importance of assignments, licences and other commercial documents that clearly delineate the parties’ rights and obligations with respect to litigation against infringers. For example, in Rite-Hite Corp v Kelly Co,30 independent sales organisations lacked standing to sue for patent infringement of a patented loading dock restraint device because their contracts with the patentee provided only the right to sell the patented restraints in their respective sales territories but no right to exclude others from making, using or selling the invention. As a result, the Federal Circuit vacated the district court’s award of damages to the ISOs and dismissed them from the lawsuit.31 In Ortho Pharmaceutical Corp v Genetics Institute, Inc,32 Ortho sought to intervene as a licensee in a patent suit brought by the patent owner, Amgen, against Genetics and Chagai. The licence agreement gave Ortho the right to bring suit only if Amgen failed to do so and allowed the party bearing the litigation expense to retain any amount recovered. Other provisions required that Amgen and Ortho consult and sue together if either ‘finds it necessary to join’, and required them to cooperate. Because the licence grant itself was non-exclusive, and permitted Amgen to license others, the right to sue provisions did not give Ortho standing to share in the damage award or file a second infringement suit against Genetics.33 A recent trend in litigation involves non-practising entities (‘NPEs’) asserting patents, often against multiple defendants. One recent study reported that in 2013, NPEs filed 67 per cent of all new patent cases.34 An NPE often buys patents from the original inventor or owner for the purpose of litigation-backed licensing efforts. The NPE does not commercialise the patent itself, and thus is not at risk for countersuit from its accused infringers for infringement of their own patents. The more pejorative term ‘patent troll’ is often used for entities that broadly assert patents against a large number of defendants as leverage to extract low settlements from many. The high cost of litigation ultimately fuels this model because it is usually cheaper to settle than to

27 Enzo APA & Sons, Inc v Geapag AG, 134 F.3d 1090, 1093 (Fed Cir 1998); Textile Prods, Inc v Mead Corp, 134 F.3d 1481, 1484 (Fed Cir 1998). 28 Textile Prods (n 27) 1485. 29 ibid. 30 Rite-Hite Corp v Kelley Co, 56 F.3d 1538 (Fed Cir 1995). 31 ibid 1553–54. 32 Ortho Pharm Corp v Genetics Inst, Inc (n 25). 33 ibid. 34 pwc, 2014 Patent Litigation Study (n 5) (citing RPX Corporation’s 2013 NPE Litigation Report).

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challenge patents that are of questionable validity, scope and/or value. Several legislative measures aimed at curbing the activities of patent trolls have been proposed in Congress, but to date, none have passed. Some States have taken actions against the so-called trolls under consumer protection and unfair competition laws. The debate regarding NPEs has focused more on the nature of the patent holder and less on the merits of the patent cases being pursued. But it is dangerous to presuppose that patents which have not been commercialised by their owner are necessarily of questionable merit. Commercialisation by the patent holder may impress the jury and expand available damages theories, but says nothing about the merits of the infringement theory. US law already provides strong penalties to deter frivolous litigation, and thus the need for extensive reform is widely debated. Most would probably agree, however, that the district courts could use more resources to assist in the difficult task of managing patent cases and addressing frivolous claims swiftly, effectively and fairly in the often complex circumstances of patent disputes.

b. Defendants in Suits to Enforce Patents 53

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One seeking to enforce US patent rights is afforded substantial flexibility in choosing one’s adversaries. Section 271(a) of the Patent Code provides a remedy against those who make, use, sell, offer for sale or import a patented invention. These are each acts of direct infringement. Under section 271(b), those who actively induce infringement by knowingly and actively aiding another’s direct infringement can also be held liable. Section 271(c) provides a remedy against one who contributes to infringement by selling a material part of the invention that he knew was specially adapted to infringe the patent and is not a staple item of commerce suitable for non-infringing use. In order to prove inducement or contributory infringement, a patentee must prove at least one direct infringement.35 It is not necessary that the direct infringer be named as a party, although doing so often simplifies the task of obtaining evidence sufficient to prove direct infringement. Section 271(f) creates a cause of action against those who supply components of a patented product in the US intending that the components be assembled into an infringing product abroad. Section 271(g) permits a patentee to sue one who imports, offers to sell or uses in the US a product made abroad by the patented method. The choice of who to sue among the various parties involved in infringing activities may be affected by several factors. Chief among them is whether the party has conducted one or more of the acts of infringement enumerated in the patent statute. Of those entities that could be sued, further consideration of their financial resources, their motivations to defend the suit, their access to sources of evidence, available damages theories and where suit may be brought may prove important. The manufacturer of an accused product often has the greatest commercial interest in the dispute, control over the most relevant evidence of infringement and the strongest financial resources to satisfy a settlement or damage award. Numerous courts have therefore recognised

Aro Manufacturing Co, Inc v Convertible Top Replacement Co, Inc, 365 U.S. 336 (1961).

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Timothy Maloney a strong public policy favouring patent suits between competing manufacturers.36 Notwithstanding the manufacturer’s strong interests, end users of patented technology also find themselves involved, either directly as parties or indirectly as sources of relevant evidence. Consider, for example, the situation of a relatively inexpensive patented technology that offers significant efficiencies and cost savings to large enterprises. The potential damages calculated as a percentage of the cost savings achieved by the end user enterprise may far exceed the available damages based on the sales of the vendor who supplied the technology. Also, the small technology vendor may have less ability to pay for a licence or awarded damages as compared to its much larger customers. The determination of who the proper defendants are in an infringement action always involves an analysis of the infringement claim. Consider a patent covering a system that is implemented as an assemblage of components supplied by multiple vendors. Prior to filing suit, the patent owner must carefully consider how each component of the infringing system relates to the patent claims, and which vendors are really responsible for the infringement. It may be necessary to sue multiple vendors and the company using the assembled system in such a circumstance. Similar complications arise in cases involving products that are customisable by the end user, or products capable of both infringing and non-infringing modes of operation. Consider, for example, a patent covering a method that is practised only if a machine is set to a particular mode of operation. The statutory cause of action against the machine manufacturer is for indirect infringement, which requires proof of direct infringement by customers.37 The maker of the machine may deny having knowledge of how each customer uses the machine, or may deny that the machine was intended to be used in the infringing mode. The question of whether the patentee or the vendor should be held accountable for this potential gap in the evidence involves competing practical and policy considerations. The patent owner bears the ultimate burden of proof on the issues of infringement and damages. But requiring the patentee to prove infringement on a customer by customer basis, and limiting its recovery to damages based on sales made to infringing customers, invites large-scale litigation involving potentially hundreds of defendants. On the other hand, permitting the patentee to make some lesser showing may work injustice if the infringing mode of operating the machine is seldom used. Recent decisions by the Federal Circuit have made inducement claims more difficult by requiring that a patent holder prove that the accused infringer possessed not just knowledge of the patent, but knowledge of the infringement, and culpable conduct aimed at encouraging such infringement.38 Evidence of a specific intent to induce not just the acts, but the infringement, can be very hard to come by. Indeed, the Federal

36 See eg Katz v Lear Siegler, Inc, 909 F.2d 1459, 1464 (Fed Cir 1990) (‘[T]he manufacturer is the true defendant in the customer suit … It is a simple fact of life that a manufacturer must protect its customers, either as a matter of contract, or good business, or in order to avoid the damaging impact of an adverse ruling against its products’.). 37 Limelight Networks v Akamai Techs, Inc(n 9). 38 Ericsson, Inc v D-Link Sys, Inc, Nos. 2013-1625, -1631, -1632, -1633 (Fed Cir 4 December 2014) (‘Inducement requires that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another’s infringement’).

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Circuit recently held that an infringer’s good faith belief that the patent was invalid or not infringed may negate a finding of specific intent to induce infringement.39 Hence, the patent owner may lack confidence in its ability to present the proof needed to establish inducement, leading it to pursue the end users on a direct infringement theory rather than risk an unsuccessful inducement claim against the vendor. When suspected patent infringement activities occur across an entire industry, the patentee may proceed simultaneously against all competitors, or in some logical sequence. Often the patent holder initially proceeds against one or a select number of competitors, hoping to test its legal theories and to obtain favourable rulings regarding claim scope, infringement validity and other issues that may persuade others to accept a licence. The patent holder may wish to name multiple competitors as defendants in the same action. This may reduce expense as well as the potential for inconsistent outcomes associated with piecemeal litigation. The competitor-defendants’ interest in avoiding common discovery and trial proceedings involving commercially sensitive technical and financial information is also compelling, particularly the risk that the jury may confuse the features of the different accused products or methods or attribute the actions of one defendant to other defendants. There is also a public interest in not directing the resources of multiple federal judges toward the same patent. Prior to passage of the AIA in 2011, disputes in this area were governed by Rule 20(a) of the Federal Rules of Civil Procedure, which permits claims against unrelated defendants to be joined only if they arise ‘out of the same transaction, occurrence, or series of transactions or occurrences’ and involve a common question of law or fact. Several district courts had previously allowed multi-defendant patent suits under this rule, reasoning that infringing the same patent satisfied the same transaction test or occurrence test. Under the AIA, however, joining multiple defendants based only upon infringement of the same patent is expressly prohibited.40 The plaintiff must now bring separate cases against each defendant. Pre-trial proceedings of these serial cases may be consolidated under Federal Rule of Civil Procedure 42 for addressing the issues common among them, such as issues of claim construction. The AIA only prohibits a combined trial for unrelated codefendants. Plaintiffs may also seek to have pre-trial procedures for multiple lawsuits consolidated by the Multidistrict Litigation (‘MDL’) panel.41 An MDL panel can transfer civil actions involving one or more common questions of fact that are pending in different districts to a single district for coordinated or consolidated pre-trial proceedings. The degree of coordination or consolidation of the involved actions is left to the discretion of the transferee court. Upon conclusion of the pre-trial proceedings, the cases are remanded to their originating courts.42

39 Commil USA LLC v Cisco Sys, Inc, 720 F.3d 1361, 1369 (Fed Cir 2013), cert granted, 190 L. Ed. 2d 474 (2014). In 2015, the Supreme Court will consider whether a good faith belief that a patent is invalid is a defence to induced infringement. 40 35 U.S.C. s 299(a)(2) (absent waiver, accused infringers may not be joined in the same suit ‘based solely on allegations that they each have infringed the same patent or patents in suit’). 41 28 U.S.C. s 1407; In re Bear Creek Techs, Inc, 858 F. Supp. 2d 1375 (MDL 2012). 42 ibid.

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c. Declaratory Judgment Plaintiffs 65

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One sufficiently threatened with an infringement suit may file an action in a district court seeking to have the patent declared invalid or not infringed. The court’s jurisdiction over such actions derives from the Federal Declaratory Judgments Act of 1934.43 A declaratory judgment action must be based on an ‘actual controversy’ between the parties. Under the standard originally promulgated by the Federal Circuit, the party filing suit was required to show (1) that it has or is prepared to produce the accused product or use the accused method, and (2) that the patentee’s conduct created an objectively reasonable apprehension that the accused infringer would eventually be sued if it continued its activity.44 In 2007, the Supreme Court held, in MedImmune v Genentech, that a patent licensee need not refuse to pay royalties and breach the licence agreement before suing to declare the patent invalid, unenforceable or not infringed.45 The Federal Circuit interpreted MedImmune broadly as applying to suits brought by parties other than licensees. Following MedImmune, the Federal Circuit held that where a patent holder asserts rights under a patent based on identified ongoing or planned activity of another party, the other party may seek a declaration of its rights to engage in the accused activity without first actually engaging in it.46 A supplier may also bring a declaratory judgment action where the supplier is obligated to indemnify a threatened customer from infringement liability.47 Although MedImmune has been viewed as relaxing the threshold for declaratory judgment jurisdiction by eliminating the requirement to show a reasonable apprehension of being sued, it did not go so far as to make the existence of a patent itself to be sufficient. The patent holder must have taken some action to create a threat to the right to engage in specific commercial activity. The party invoking jurisdiction must still demonstrate an injury-in-fact caused by the patent holder based on all of the circumstances.48 The availability of declaratory judgment relief is also limited by the district court’s discretion to decline such cases even when an actual controversy exists.49 A court must have a sound reason for declining jurisdiction. Often such reasoning lies in the existence of other litigation involving the patent. When the other litigation involves the same parties, as when the patentee files an infringement action against the declaratory judgment plaintiff in a different district court, the first filed suit normally takes precedence. The Federal Circuit has recognised an exception to the ‘first filed rule’ that favours a later-filed declaratory judgment suit filed by a manufacturer over an earlier

28 U.S.C. s 2201. Arrowhead Indus Water Inc v Ecolochem Inc, 846 F.2d 731 (Fed Cir 1988). 45 MedImmune Inc v Genentech Inc, 549 U.S. 118 (2007). 46 SanDisk Corp v STMicroelectronics Inc, 480 F.3d 1372 (Fed Cir 2007). The Court found declaratory judgment jurisdiction to exist despite a statement by the patent owner that it had ‘absolutely no plan whatsoever to sue’. 47 Arris Group, Inc v British Telecomm PLC, 639 F.3d 1368 (Fed Cir 2011). 48 Teva Pharms USA Inc v Novartis Pharms Corp, 482 F.3d 1330 (Fed Cir 2007). 49 28 U.S.C. s 2201 states that the court ‘may’ declare the parties’ rights in an actual controversy, which has been interpreted as meaning that the court may decline to do so. See also Genentech Inc v Eli Lilly & Co, 998 F.2d 931 (Fed Cir 1993). 44

Patent Enforcement in the United States 489 suit by the patentee against the manufacturer’s customer.50 However, in practice, neither the rule nor the exception has been applied rigidly.

3. The Pleadings 70

The parties to a patent action must conform to the procedural pleading requirements of the Federal Rules of Civil Procedure.51 The main purpose of these rules is to limit the number of pleadings, to encourage simple and concise allegations, to avoid raising technical barriers to resolving controversies, and to assure that counsel certifies that he or she has good grounds for the allegations made.52 The pleading rules are construed liberally, and courts freely grant litigants opportunities to correct their errors before dismissing a claim or defence on pleading grounds. A detailed discussion of these procedural requirements is therefore not presented here.

a. The Complaint 71

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The action is commenced by filing a complaint that must identify the parties, the basis of the court’s jurisdiction, and a ‘short and plain statement showing that the pleader is entitled to relief ’.53 In a patent infringement complaint, the statement will normally allege that the plaintiff owns or otherwise has rights to enforce the patent, that the defendant is infringing the patent by making, using, selling or offering for sale products embodying the patented invention, and that the infringement has damaged the plaintiff. The plaintiff may request preliminary and/or permanent injunctive relief and an accounting for damages. The plaintiff need not specify the amount of damages requested. In a declaratory judgment action, the short and plain statement should include allegations that the patent is invalid, unenforceable and/or not infringed, together with a fairly detailed recitation of the facts and circumstances which gave rise to the court’s jurisdiction. The complaint in either type of action should also include a demand for jury trial if a jury is desired. The Supreme Court recently raised the pleading standards for federal cases by requiring sufficient detail to prove that the claims pled were ‘plausible’.54 While these pleading standards technically apply to patent actions, the impact has been minimal. The Federal Rules of Civil Procedure still allow such a claim to be made using a form that includes only limited details. Despite this, some parties have found it useful to plead direct infringement with more with specificity. Ongoing efforts at patent reform may result in the current form being modified such that more particularity is required for pleading patent cases.

b. The Response to the Complaint 73 50 51 52 53 54 55

The defendant may respond to the complaint by filing an answer or by bringing motions challenging it on various procedural grounds.55 An answer must admit or Kahn v General Motors Corp, 889 F.2d 1078, 1081–83 (Fed Cir 1989). Fed.R.Civ.P. 7 through 16. ibid 8 and 11. ibid 8(a). Bell Atlantic Corp v Twombly, 550 U.S. 544 (2007); Ashcroft v Iqbal, 556 U.S. 662 (2009). Fed.R.Civ.P. 12.

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Timothy Maloney deny each of the plaintiff ’s allegations, and raise any ‘affirmative defences’. Affirmative defences are matters outside the plaintiff ’s main case that are in the nature of avoidance, such as invalidity of any patent claim in suit, unenforceability of the patent, laches, and implied licence.56 The defendant may also bring counterclaims for relief against the plaintiff.57 An accused infringer will normally bring a counterclaim seeking to have the patent declared invalid or not infringed. In a declaratory judgment action, the defendant-patentee is usually seeking a counterclaim for patent infringement. The defence of inequitable conduct is ultimately an accusation of fraud. To prove inequitable conduct, an accused infringer must establish by clear and convincing evidence that ‘the applicant misrepresented or omitted material information with the specific intent to deceive the PTO’.58 Rule 9(b) requires that all averments of fraud must be pled with particularity. The standard for pleading this defence is a high one, designed to deter unsubstantiated fraud claims.59 The most common motions filed in lieu of an answer in patent cases are those challenging the court’s jurisdiction over the defendant, requesting transfer to a more convenient district court, or alleging that an indispensable party with an interest in the dispute has not been joined.60 Such motions rarely resolve cases, but may result in tactical advantages such as adding a party with greater access to evidence of the prior art, or avoiding a ‘rocket docket’ court.

IV. Preparation for Trial 1. The Phase of Discovery 76

A central feature of the US system of civil justice is its reliance on the parties to prepare their own cases for trial. Each party may obtain information supporting its case informally, such as by interviewing its own employees or researching public information. Formal discovery is governed by the Federal Rules of Civil Procedure, Rules 26–37 and 45, which provide mechanisms for obtaining potential evidence from less accessible sources, converting informally acquired information into admissible evidence, exploring aspects of the opponent’s case and identifying uncontested facts and issues.

a. Matters Discoverable 77

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Extensive and invasive discovery is a hallmark of US patent litigation. The rules relating to discovery encourage full disclosure by the parties to avoid potentially unfair

ibid 8(c). ibid 13. 58 Therasense, Inc v Becton, Dickinson & Co, 649 F.3d 1276, 1287 (Fed Cir 2011) (en banc). 59 Exergen Corp v Wal-Mart Stores, Inc, 575 F.3d 1312, 1326-27 (Fed Cir 2009). The Federal Circuit cautioned against allowing inequitable conduct to ‘devolve into a magic incantation to be asserted against every patentee’. ibid 1331. It held that the pleading must identify the specific who, what, when, where and how of the material misrepresentation or omission committed before the PTO. Although knowledge and intent may be alleged generally, the pleading must include sufficient facts from which to reasonably infer that a specific individual knew of the withheld material information or of a material misrepresentation, and withheld or misrepresented this information with specific intent to deceive the PTO. 60 Fed.R.Civ.P. 12(b). 57

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surprises at trial. In practice, this rarely occurs without significant fights between the parties regarding their respective discovery obligations. The scope of permissible discovery is broad. Rule 26(b)(1) allows a party to seek from its opponent or a non-party any information that is not protected by a recognised privilege and is either relevant to an issue in the case or appears ‘reasonably calculated’ to lead to admissible relevant evidence.61 The court resolves disputes regarding requested discovery by considering the relevance of the information, whether any privilege is involved, the requesting party’s need and the burden on the objecting party. The categories of persons and information that may become subject to discovery procedures in a patent action will of course vary from case to case. However, certain discovery can almost be considered routine. The patentee will seek evidence regarding the accused product or process, the profitability of the infringing activities, the accused infringer’s awareness of and intent with regard to the patent and the accused infringer’s defences. Persons requested to provide such information may include management, engineering and accounting personnel of the accused company, customers and suppliers, former employees and even competitors. The accused infringer requires evidence regarding the development of the invention and prosecution of the patent application, details of the patented product or process, prior art to the asserted patent and the patentee’s awareness of uncited prior art, and the profitability of the patented product or process. Obtaining such information may involve the inventors, the patentee’s own engineering, marketing and financial personnel, the patent attorney involved in prosecution and other companies with prior related technology. Obtaining discovery from a non-party requires counsel to issue a subpoena, which the district court may revoke or modify if the subpoena is overbroad or otherwise unreasonable.62 Confidential information is commonly subject to a protective order of the court limiting access to such information. Protective orders often restrict the circulation of trade secrets and financial information to the parties’ outside counsel, while permitting less sensitive confidential information to be provided to employees of the parties who are assisting trial counsel. Voluntary compliance with the ordered procedures by the parties and their counsel is crucial to the integrity of the process because violations are difficult to prove yet can cause substantial competitive harm.

b. Privileges and Immunities 80

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Two important limitations on discovery of relevant information in patent actions are the attorney-client privilege and the work product immunity doctrine. The former protects confidential communications between lawyer and client for the purpose of securing legal advice. The latter protects documents prepared by or for counsel in connection with litigation, and counsel’s mental impressions. Disputes often arise regarding the discoverability of information communicated to or prepared by patent attorneys and information regarding opinions of counsel obtained by the accused infringer. Work product protection is ordinarily not extended

61 Thus, for example, a memorandum that is inadmissible at trial because of the hearsay rule against out-ofcourt statements may nonetheless be discoverable given its potential to identify witnesses who can testify directly regarding its contents. 62 Fed.R.Civ.P. 45.

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Timothy Maloney to documents prepared by a patent attorney in prosecuting the patent-in-suit. Thus, for example, technical drawings provided to the attorney, results of prior art searches and drafts of patent applications are not immune from discovery. However, communications between inventors and their patent attorneys regarding legal advice may be subject to the attorney-client privilege.63 A finding that an infringement was wilful can support a punitive award of multiplication of damages and attorneys’ fees. These sanctions for the wilful infringement of a patent are important deterrents to those willing to disregard a patent owner’s legal rights. When an accused infringer offers evidence that it relied in good faith on the advice of counsel that it could legally continue the accused activity, the advice becomes relevant. Under principles of fairness, the courts have held that relying on evidence of advice of counsel waives the attorney-client privilege as to the subject matter of the advice. Otherwise, a party would rely on favourable documents in its defence while shielding potentially damaging documents behind the privilege.64 This puts the alleged infringer in the dilemma of choosing between waiving the privilege or being precluded from using important evidence in its defence. The scope of waiver is unpredictable. As a result, clients may be reluctant to openly discuss legally sensitive concerns knowing that their opponents are effectively ‘listening in’ on their discussions with counsel. The Federal Circuit’s early decisions imposed an adverse inference that the defendant must not have received an opinion, or received a negative opinion, if it did not waive privilege by producing the opinion for use at trial.65 This adverse inference was criticised as discouraging open, frank and objective discussions between counsel and client, contrary to the public interest.66 The rule may also have unfairly shifted the focus away from other factors relevant to the defendant’s good faith, such as the existence of strong liability defences developed during litigation. In its 2007 In re Seagate decision, the Federal Circuit created a new two-prong test for proving wilful infringement. First, the patent owner must prove by clear and convincing evidence that the alleged infringer acted despite ‘an objectively high likelihood that its actions constituted infringement of a valid patent’. Second, the patent owner must then show that this objectively high risk was ‘either known or so obvious that it should have been known’ to the alleged infringer.67 This decision also did away with the adverse inference by confirming that there is no affirmative obligation to obtain an opinion of counsel.68 Wilful infringement is generally considered much more difficult

63 An earlier line of cases considered the patent attorney a mere conduit of technical information between the applicant and the PTO, and refused to recognise a privilege. More recent cases have rejected this rationale while recognising the legal nature of the dialogue that occurs in preparing a patent application. In re Spalding Sports Worldwide Inc, 203 F.3d 800 (Fed Cir 2000); see also Advanced Cardiovascular Systems Inc v CR Baird Inc, 25 U.S.P.Q.2d 1354 (ND Cal 1992). 64 Frazier Indus Co, Inc v Advance Storage Prods, 33 U.S.P.Q.2d 1702 (CD Cal 1994). 65 Underwater Devices Inc v Morrison-Knudsen Co, 717 F.2d 1380 (Fed Cir 1983); Fromson v Western Litho Plate & Supply Co, 853 F.2d 1568 (Fed Cir 1988). 66 Lucent Information Mgmt, Inc v Lucent Techs, Inc, 186 F.3d 311, 318 (3d Cir 1999); Parker v Prudential Ins Co of Am, 900 F.2d 772, 775 (4th Cir 1990) (both refusing to apply an adverse inference due to the assertion of privilege). 67 In re Seagate Tech, LLC, 497 F.3d 1360, 1371 (Fed Cir 2007) (en banc). 68 ibid 1371.

Patent Enforcement in the United States 493 to prove after Seagate, and has been alleged less frequently. This has brought some relief to the discovery challenges associated with defending against such charges. c. Discovery Methods 86

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The discovery procedures commonly invoked in patent actions include requests for production, interrogatories, requests to admit, depositions and facility inspections. Many district courts have augmented these basic tools with specialised procedures requiring early disclosure of essential facts, infringement contentions, invalidity theories and positions regarding the scope and meaning of the patent claims. The parties will typically present the opinion testimony of independent expert witnesses at trial in support of their positions on the disputed issues of infringement, validity and damages. The Federal Rules of Civil Procedure provide additional procedures for investigating the opinions of the opponent’s experts during discovery, both to expose any flaws in the expert’s work and to reduce the potential for unfair surprise at trial. Production requests are used to obtain tangible evidence such as documents, drawings, photographs, product samples and digitally stored data. A party may also request to inspect and test the accused or patented products or processes. It may be necessary, for example, for a technical expert to inspect a manufacturing process, machine or software code as part of the infringement investigation underlying opinions to be presented at trial. As in other types of litigation, the prevalence of digital media for storing information has posed challenges in patent litigation. The volume of electronically stored information (‘ESI’) maintained by businesses has increased exponentially, and with it, so has the cost of discovery of such information. Routine document requests seeking categories of relevant documents including ESI often results in mass productions, which may ultimately contain few relevant documents. Still, businesses are expected to retain any and all relevant records as soon as they are reasonably aware that litigation will ensue. Businesses that do not retain such records by circulating a litigation hold memorandum to employees and instituting proper controls, such as suspending auto-delete functions, may be subject to harsh sanctions, ranging from monetary penalties to adverse inferences to so-called ‘death penalty’ sanctions.69 To help curb the burgeoning scope of ESI discovery, many courts now issue ESI orders under their inherent authority to manage their dockets and further the interests of justice. These orders seek to help streamline e-discovery, including email production, by requiring the parties to exchange core documentation before making email production requests, and thereafter limiting the number of custodians and search terms for such requests.70 Interrogatories are written questions posed to the opposing party that must be answered in writing under oath. The written answers may be used as evidence at trial. The parties will typically use interrogatories to obtain core facts, the identity of potential witnesses, and to elicit the opponent’s contentions regarding the primary claims and defences in the case. The responding party may object to interrogatory questions

A leading e-discovery spoliation case is Zubulake v UBS Warburg, LLC, 382 F. Supp. 2d 536 (SDNY 2005). See eg the E-Discovery Model Order released by then Judge Radar of the Federal Circuit, available at: www. cafc.uscourts.gov/images/stories/announcements/Ediscovery_Model_Order.pdf. 70

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Timothy Maloney on various grounds. Typical objections may complain that the question as posed lacks sufficient clarity, seeks irrelevant information, imposes undue burden relative to the needs of the case or cannot be fully answered without disclosing protected privileged information. Disputes over these objections and the sufficiency of the responding party’s responses have become the norm in patent litigation. Requests to admit seek written admissions of uncontested matters. Although used somewhat sparingly in patent cases, requests to admit can be effective tools for resolving issues, such as the genuineness of important documents, before trial. The deposition process permits counsel to obtain sworn testimony from witnesses before trial. Depositions assist counsel in preparing the case by exploring an opponent’s case, identifying additional documents and witnesses, or obtaining admissions from an important witness. A deposition is also an important opportunity for each party to assess the strength of their opponent’s case, the credibility and demeanour of key witnesses, and to showcase the strengths of their own positions. Deposition testimony may be admissible at trial if the witness is unavailable to testify in person. It may also be used to contradict the testimony of a deponent who later testifies at trial. Often used in patent cases, Rule 30(b)(6) permits a corporation to be deposed through one or more designated representatives who speak on the corporation’s behalf. The deposition of a party may be used at trial for any purpose. Under Rule 26(a)(2), the parties must disclose a written report summarising the opinions of each expert witness that is expected to testify at trial. The report must contain a complete statement of all opinions the witness will express, the basis for those opinions, and all facts and evidence that will support them. The expert’s qualifications, previous testifying experience and compensation must also be disclosed. These disclosures are made towards the end of the discovery period, after which the experts are usually examined thoroughly at deposition regarding the subject matters of their reports. Opinions and supporting evidence not disclosed in the expert report are subject to being excluded at trial.71 The typical report is therefore quite thorough, and provides the clearest picture yet of how each party intends to prove their case at trial. District court judges have broad discretion to set their own procedures for handling the cases assigned to their docket. There can be wide variation in the procedures that individual judges use to manage patent cases and in the relative length of time a patent case would remain pending prior to disposition. The absence of a uniform set of rules for patent litigation has been viewed as a deficiency by litigants and lawyers seeking more certainty so that they can better manage litigation. Several federal district courts have addressed this by adopting local patent rules establishing uniform procedures and timelines within the district for certain aspects of patent cases.72 These local rules typically require preliminary disclosures of infringement, non-infringement and invalidity contentions for the purpose of focusing discovery on the central disputes. Many districts require updating these disclosures after completing some amount of fact discovery. Local patent rules also mandate an exchange of patent claim construction contentions to focus the disputes regarding claim meaning that the court will resolve as a

See eg Innogenetics, NV v Abbott Labs., 512 F.3d 1363, 1373 n.2 (Fed Cir 2008). Approximately 31 district courts now have some form of local patent rules. See Local Patent Rules, available at: www.localpatentrules.com. 72

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matter of law. In practice, local patent rules have been reasonably effective in reducing procedural disputes that commonly arise in patent cases while promoting fairness and reducing the time to prepare cases for trial. Despite the efforts of local rules, discovery disputes remain a problem in patent litigation. These disputes invariably multiply costs, delay progression of the case, hinder settlement efforts as a result of the refusal to provide information critical to evaluating the case and place an undue burden on the court. Local rules often require substantive meet and confer requirements between the parties before a discovery motion may be brought. This is to encourage the parties to resolve their differences without court intervention. When the parties cannot reach an accord on the dispute, a motion to compel the party to provide the desired discovery or a motion for protective order to prevent the party from obtaining the sought-after discovery can be brought. The courts seem more inclined than ever to assess sanctions under Rule 37 of the Federal Rules of Civil Procedure for discovery misconduct. That rule states that if a motion to compel is granted, or if the disclosure or requested discovery is provided after a motion is filed, the court must require the party whose conduct necessitated the motion to pay the movant’s reasonable expenses incurred in making the motion. Rule 37 also authorises stronger remedies, including the court directing that certain facts be taken as established for purposes of the case, prohibiting the disobedient party from supporting or opposing designated claims or defences and even dismissing an action.73 Reported decisions in this area often relate to the failure to properly preserve, collect and produce ESI.74

2. Preliminary Injunctions 97

A preliminary injunction, by which the alleged infringer is forbidden to do certain specified acts before a full trial on the merits of the case, serves to preserve the status quo in the market during the suit. The patent statute does not expressly reference preliminary injunctions but more generally authorises the grant of injunctive relief in accordance with principles of equity. The preliminary injunction is considered an extraordinary remedy, to be granted only when monetary damages cannot make a patent owner whole. To obtain a preliminary injunction, the patent owner must show: (1) a reasonable likelihood of success on the merits; (2) irreparable harm to the patent owner if the injunction is not granted; (3) hardships favouring the patent owner; and (4) that the public interest will be favoured by granting the injunction. These are rarely granted, as the case required to establish the appropriateness of injunctive relief is often difficult to make at an early stage of the proceeding before liability is established.

3. Claim Construction Proceedings 98

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The claims of a patent define the invention to which the patentee is entitled to the right to exclude. Any ambiguity in the scope or meaning of the claim language must be resolved to provide clear meaning to the claim. Patent claim construction disputes

Fed.R.Civ.P. 37(b)(2). See eg Zubulake v UBS Warburg, LLC, 382 F. Supp. 2d 536 (SDNY 2005); Alexsam, Inc v IDT Corp, 715 F.3d 1336, 1340–41 (Fed Cir 2013) (discussing sanctions imposed by district court). 74

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Timothy Maloney lie at the centre of almost every case; their resolution is often dispositive of key validity and infringement issues. The Federal Circuit’s Markman decision resolved inconsistencies in prior precedent and held that the court, and not the jury, has the power and obligation to construe the meaning and scope of patent claims as a matter of law.75

a. Rules for Interpreting Claims 99

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In construing a claim, the court’s role is not to broaden nor narrow the claims, but only to interpret them based on what patentee has chosen to recite as the invention. The court construes disputed claim terms to have the meaning that would be understood by one of ordinary skill at the time of the invention. In 2005, the Federal Circuit responded to calls for more clarity regarding the framework and hierarchy of evidence to be used in the claim construction process in its en banc decision in Phillips v AWH Corp.76 The Federal Circuit emphasised in Phillips that the claims themselves provide substantial guidance as to the meaning of claim terms, and the context in which a term appears in the claim can be highly instructive to its meaning. The person of ordinary skill, through whose eyes the claims are construed, is deemed to read the words used in the patent documents with an understanding of their meaning in the field, and to have knowledge of any special meaning and usage in the field. Dictionaries, encyclopedias and treatises may be useful sources in understanding a term’s ordinary meaning because they collect the accepted meanings of terms used in various technical fields. However, the Phillips court emphasised a crucial point that may have been lost in some earlier decisions: the person of ordinary skill in the art is deemed to read the claim term not only in the context of the particular claim in which the disputed term appears, but in the context of the entire patent, including the specification.77

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Thus, the specification may limit a claim term if it reveals a special definition given to the term that differs from the meaning it would otherwise possess. The specification may also be limiting if it reveals an intentional disclaimer, or disavowal, of claim scope by the inventor.78 This does not mean, however, that the claims are limited to details of the disclosed embodiments. There must be some reason demonstrating that persons of ordinary skill in the art would confine their definitions of terms to the exact representations depicted in the embodiments. Thus, the court is required to walk a fine line between construing the claims consistent with the disclosed invention, without improperly limiting them to that disclosure. The Phillips decision affirmed that the prosecution history helps to demonstrate how the inventor and the PTO understood the patent. However, because the file history represents an ongoing negotiation between the PTO and the applicant, it may lack the clarity of the specification and thus is deemed less useful in claim construction proceedings.79 Markman v Westview Instr, Inc, 52 F.3d 967, 967 (Fed Cir 1995). Phillips v AWH Corp, 415 F.3d 1303 (Fed Cir 2005) (en banc). ibid 1314–17. ibid 1316. ibid 1317.

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After Phillips, a court has more limited discretion to consider evidence external to the patent record, such as expert testimony to educate itself about the invention and the relevant technology, or to establish that a term in the patent has a particular meaning in the pertinent field. It may not use such extrinsic evidence to arrive at a claim construction that contradicts the intrinsic evidence.80 This guidance provided by Phillips has undoubtedly assisted litigants and district courts. One study reports that the rate of Federal Circuit reversal of district court claim construction decisions dropped from 37.6 per cent (pre-Phillips) to 23.8 per cent (post-Phillips) on a per claim term basis.81

b. Procedures for Interpreting Claims 104

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The Markman decision does not require the district courts to follow any particular procedure for construing the claims. Typically, the parties will submit detailed written briefs on the subject. The court will frequently conduct a separate evidentiary hearing, known as a ‘Markman hearing’, prior to trial. This may be particularly helpful to the judge when expert testimony is required to understand the relevant technology. The Markman hearing format invites a thorough and probing discussion of the invention, the claims, and the various sources of evidence of claim meaning presented in the parties’ briefs. The timing and format of the briefing and any hearing are within the judge’s discretion. The hearing may occur at the start of the case, in the middle of discovery, just before trial, or even during trial. When the case involves particularly complex technology, the court’s preference may be to defer issues of claim construction until the parties have completed sufficient discovery to present a full picture of the relevant technology and prior art. The claim construction proceedings are typically scheduled to occur after some amount of fact discovery has taken place, but before issuance of the parties’ expert reports. Construing the claims early in the litigation process allows the parties to better focus their discovery efforts and may lead to eventual resolution by summary judgment. An early ruling regarding claim construction may also facilitate settlement.

4. Summary Judgments 106

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Under Rule 56, a court may dispose of an action without conducting a trial where the evidence presents no genuine disputed issues of fact. A party may seek summary judgment at any time, but such requests are usually made after the completion of discovery. Courts are frequently requested to resolve patent cases based on summary judgment motions filed by one or both parties. When there is conflicting evidence regarding the central issues, or when the credibility of witnesses is at issue, a decision on summary judgment is unavailable. If complex factual issues exist, and expert testimony is required to explain the technology to the court, such motions should be

Vitronics Corp v Conceptronic, Inc, 90 F.3d 1576 (Fed Cir 1996). J Anderson and PS Menell, Informal Deference: A Historical, Empirical, and Normative Analysis of Patent Claim Construction (2014) 108 Northwestern University Law Review 1. 81

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Timothy Maloney denied.82 However, when the facts are not disputed, and an issue depends only on the legal construction of the patent claims, summary judgment becomes an effective way to resolve cases quickly and efficiently. Issues which may be appropriately resolved by summary judgment in a given case may include invalidity due to anticipation, and non-infringement when one or more claim limitations are clearly absent from the accused product, system or method. Patents ordinarily will not be declared unenforceable for fraud on the PTO during summary judgment, because such an issue of inequitable conduct involves fact issues regarding the applicant’s intent to deceive the PTO. By diminishing the evidentiary weight of extrinsic sources of claim meaning such as general dictionaries, and refocusing the claim construction analysis to the actual invention described in the patent specification and throughout the prosecution file history, the Federal Circuit’s Phillips decision has generally led to patent claims being interpreted more restrictively. A defendant who persuades the court to interpret even one claim requirement narrowly may then be well positioned to demonstrate to the court that a reasonable jury could not find the restricted claim to be infringed. The defence of invalidity for obviousness usually involves numerous disputed factual issues which preclude resolution by summary judgment. However, the Supreme Court’s clarification of the law of obviousness in KSR83 puts patents involving minor improvements to simple technologies at greater risk of being held invalid for obviousness by summary judgment. In KSR, the Supreme Court held that by applying common sense, ‘in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle’.84 The Court further held that a patent claim can be proven obvious merely by showing the combination of elements was ‘obvious to try’, explaining that [w]hen there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp.85

Many patents have since been challenged by summary judgment motions urging the court to find that any subject matter not taught in the prior art would have been arrived at by the mere use of common sense. However, the Federal Circuit has cautioned that experts and juries still play important role when an obviousness analysis involves disputed facts or technical concepts.86

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Palumbo v Don-Joy Co, 762 F.2d 969, 975 (Fed Cir 1985). KSR Int’l Co v Teleflex Inc, 550 U.S. 398 (2007). ibid 1742. 85 ibid. 86 eg in reversing summary judgment of obviousness of a patented tool bag design, the Federal Circuit explained: ‘The courts have recognized that, although advances in technology may in retrospect appear obvious to a judge, stimulated by advocacy, it is relevant that the advance eluded persons in the field. The distortions flowing from judicial hindsight have often been remarked’. Outside the Box Innovations v Travel Caddy, Inc, 695 F.3d 1285, 1297 (Fed Cir 2012). The Federal Circuit held the district court had improperly excluded expert testimony regarding whether the asserted prior art taught or suggested the patented design to persons skilled in the art. ibid. ‘Such evidence is relevant to the question of obviousness particularly in crowded fields, where small differences may produce a nonobvious advance and commensurate commercial success’. ibid 1298. 83 84

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In recent years, about one in three motions for summary judgment of invalidity have succeeded.87 Accused infringers have won about half of their summary judgment motions alleging non-infringement.88 Patent holders have won about one in three motions for summary judgment of infringement.89 These results vary widely by the district court presiding over the case.

V. Trial 111

Only the rare patent case is not settled or resolved by the court. In 2013, of approximately 5300 patent cases resolved after commencement of litigation, only about 2 per cent reached trial.90 Patent trials involve the presentation of evidence, submission of the case to the trier of fact for decision, followed by the entry of judgment. The purpose of the trial is to decide facts based on the testimony of witnesses and examination of evidence, and to apply the governing legal standards to the facts. In a jury trial, factual issues are determined by the jury and legal issues are decided by the judge.91 In a bench trial, the judge determines both fact and legal issues. The judge also serves the important role of presiding over the trial to assure that the process is fair to the litigants. In carrying out this obligation, the judge will resolve disputes regarding the conduct of the trial, rule on objections to the admissibility of evidence or improper questions asked of witnesses, instruct the jury regarding the findings it must make and control the conduct of the attorneys and witnesses.

1. The Use of Juries 112

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The US is unique in using juries to decide commercial civil trials, including patent disputes. The right to a trial by jury is enshrined in the Seventh Amendment to the US Constitution and has been exercised readily by patent litigants. A civil jury is typically comprised of 8 to 12 persons. The role of the jury is to listen to the evidence presented at trial, to determine the true facts and to determine disputed issues by applying the patent law to those facts. From 2000–13 about 60 per cent of patent trials have utilised a jury.92 Opponents of patent jury trials argue that people of only average education, and infrequent technical education, cannot rationally and fairly resolve complex technology

87 JR Allison et al, ‘Understanding the Realities of Modern Patent Litigation’, Hoover Institution Working Group on Intellectual Property, Innovation, and Prosperity, Stanford University, Working Paper Series No 14008 (April 2014). 88 ibid. 89 ibid. 90 2013 Annual Report of the Administrative Office of the United States Courts, Table C-4. 91 Examples of fact issues include disputes regarding the structure and operation of the accused device, the teachings of the prior art and level of skill in the art, whether the accused device is equivalent to the claims and the amount of damages sustained on account of the infringement. Typical legal issues include claim interpretation, whether inequitable conduct occurred during prosecution, and whether the prior art prevents infringement under the doctrine of equivalents. 92 pwc, 2014 Patent Litigation Study (n 5).

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Timothy Maloney disputes involving highly specialised legal doctrines.93 Proponents trust the ability of juries to reach predictably rational and reliable outcomes when properly aided by the court and trial counsel. The Federal Circuit has never recognised a ‘complexity exception’ to the Seventh Amendment right to trial by jury.94 Patent litigants and their lawyers are charged with the difficult task of presenting complex patent issues to non-technical and often patent-novice judges and jurors. Simplification and selection of the best claims and defences for trial is a must. The presentation may emphasise a few central themes and tie each specific issue to one of the themes. Counsel may appeal to the jury’s sense of fairness and the broader business context of the case in a narrative form that is easier for laypersons to understand. Visual and concrete examples are also often used extensively to teach key technical concepts. It may help to maintain a consistent presentation across infringement, invalidity and damages issues. In recent years, patent holders have prevailed in about 60 per cent of trials.95 These results vary widely by the district court in which the case is tried. Districts where the patent holder is more likely to prevail at trial include the Eastern District of Texas, the Southern District of New York, and the Western District of Wisconsin. Defendants have won a higher percentage of trials in courts such as the Northern District of Illinois, the District of New Jersey and the District of Delaware.

2. Trial Procedure 116

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Prior to trial, attorneys from both sides meet with the judge in a pre-trial conference to determine the approach for the trial and scheduling issues. At this time the parties submit their motions in limine. Such motions request that certain evidence be excluded from the trial for reasons of irrelevance, prejudice or because it is legally inadmissible. Jury selection is also conducted prior to a trial. The judge and the attorneys question potential jurors to determine if they are able to be fair and impartial; this process is called voir dire. The judge may excuse an individual from service in a particular case for various reasons. Each party may also use a limited number of ‘peremptory challenges’ to excuse a potential juror for any reason except race or gender. The process of questioning and excusing jurors continues until 8 to 12 persons are accepted as jurors for the trial. To the extent possible, the parties are also attempting during the jury selection process to learn the attitudes jurors have about patents, the parties involved in the dispute and other factors that may affect their view of the dispute. For example, an authoritative juror tends to defend the actions of the PTO, whereas a cynical juror is

93 One line of argument for a ‘complexity exception’ maintains that when it added the Seventh Amendment to the Constitution in 1791, Congress could not have intended juries to handle the complex patent cases that arise today. Others have attacked the use of juries in patent cases as denying the due process protection of the Fifth and Fourteenth Amendments. They argue that a jury ‘incapable’ of understanding the evidence and governing legal rules provides no safeguard against an erroneous result. See SRI Int’l v Matsushita Elec Corp of Am, 775 F.2d 1107, 1128 (Fed Cir 1985) (en banc) (Markey, CJ additional views). 94 ibid 1130 (‘We discern no authority and no compelling need to apply in patent infringement suits for damages a ‘complexity’ exception denying litigants their constitutional right under the Seventh Amendment’.). 95 Allison et al, ‘Understanding the Realities of Modern Patent Litigation’ (n 87).

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more likely to see the PTO as a bureaucratic institution of questionable competence. The proficient lawyer will shape the case towards jury attitudes throughout the trial. Jurors often favour inventors whom they believe invent for the good of society. However, they are less likely to protect an inventor whom they believe is not working to use their invention for the public good. Thus, if an accused infringer is making a product that is better, more efficient, cheaper or safer than the claimed invention, defence counsel will try to emphasise this to draw sympathy from the jury. After the jury is empanelled, the trial begins with opening statement by the parties’ attorneys. These statements provide a framework for the case, highlight the points of conflict and issues that the jury will be asked to decide, and attempt to persuade the jury regarding the key issues. After opening statements, the presentment of evidence begins. Each party may present witnesses, deposition testimony, documents and demonstrative evidence such as charts, photographs, videos and physical objects. Given the potential for jury confusion, trial counsel must carefully plan a sequence and manner of presenting the evidence which will aid the court and jury in understanding the complex technical and legal issues involved and sway them towards the desired result. Generally, counsel will attempt to present a simple, straightforward case. The patent owner has the burden of proving infringement by a preponderance of evidence, which requires showing that the defendant has more likely than not infringed. For example, the patent owner may support the infringement case by calling the inventor to testify regarding the technology and the merits of the invention, submitting drawings and testimony of the opponent’s engineers regarding the accused device, and then utilising an expert witness to give opinion testimony showing how each claim limitation is met by the device. The patent owner must also prove damages, and will normally do so through the testimony of economic and financial experts, who have conducted a detailed analysis of the economic impact of the patented technology and the alleged infringing activities. After cross-examining the patentee’s witnesses, the accused infringer will attempt to prove its defences. The most common defences are non-infringement and invalidity for obviousness or lack of novelty. Any challenge to patent validity must be proven by clear and convincing evidence, thus the accused infringer must prove the defence by presenting evidence that leaves no serious doubt in the mind of the fact-finder. The clear and convincing evidence standard is a greater burden than the patent owners’ preponderance of evidence standard. This is because a patent is presumed to be valid.96 Testimony of the defendant’s own witnesses may help demonstrate differences between the invention and the accused device, or show that the invention represents only a small advance over the prior art. Proving the content of the prior art may require introducing documents and testimony from non-party witnesses, often through

96 Patent Act, s 282 states that ‘[a] patent shall be presumed valid’. The Supreme Court has confirmed that the same ‘clear and convincing evidence’ standard of proof applies to validity challenges based on prior art not considered by the PTO. However, the Court suggested that juries may be instructed to take into account that the asserted prior art had not been considered previously. Microsoft Corp v i4i Limited Partnership, 131 S.Ct. 2238, 564 U.S. ___ (2011).

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Timothy Maloney deposition testimony. The defendant will also invariably introduce testimony from at least one technical expert to make a convincing showing of non-infringement and/or invalidity. The defendant will also offer its own fact and expert witnesses to counter the patentee’s damages evidence. The patent holder will also have an opportunity to rebut the defences offered, such as by challenging the disclosures of the prior art, showing the commercial success of the invention, or that the minor differences in the accused device do not affect the way it functions. Technical, economic and financial experts play a key role. Often, the party with the more credible and convincing experts wins. A trial judge has broad discretion to consider whether a person is qualified as an expert, and whether the expert’s knowledge will assist the jury. In response to concerns about the prevalence of ‘junk science’ in federal civil cases, the court must make a preliminary assessment of whether the expert’s reasoning and methodology is scientifically valid.97 Technical or financial expert analysis which cannot be tested or which does not satisfy accepted standards in the expert’s particular field is subject to exclusion. During the course of the trial, the judge provides instructions to the jury regarding the law that applies to the case, including the proper interpretation of the patent claims. The jury is obligated to apply the law conveyed in the jury instructions to the facts presented at trial to arrive at a verdict. After the presentation of evidence, the jury listens to closing arguments and then deliberates until a verdict is reached.

VI. Types of Infringement—Primary Claims 127

The patent owner in an infringement suit must prove infringement and damages, and may also seek to recover enhanced damages for wilful infringement. In addition to defending the infringement charge, the accused infringer may challenge the patent as invalid and/or unenforceable. Other defences such as laches or implied licence may also be asserted. The most commonly asserted claims and defences are discussed in more detail in the following sections.

1. Literal Infringement 128

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The process for determining patent infringement has two main steps. First, the claims of the patent are interpreted to determine their scope and meaning. Next, the properly interpreted claims are compared to the accused product or process.98 As mentioned, patent claim interpretation is performed by the judge based on the words of the claims themselves interpreted in light of the written description and drawings and the record of proceedings in the PTO. In the United States, patent infringement can occur either by literal infringement or under the doctrine of equivalents. Literal infringement of a patent requires that each and every limitation or element of at least one claim be found in the accused product or process. If a single limitation is not present, there is no literal infringement. Daubert v Merrell Dow Pharmaceuticals, Inc, 509 U.S. 579 (1993). Markman v Westview Instruments, Inc (n 75) 967.

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2. Infringement under the Doctrine of Equivalents 130

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In the absence of literal identity, infringement may still be found under the doctrine of equivalents where the differences between the claimed invention and the accused product or process are ‘insubstantial’. Evidence that the accused product or process performs ‘substantially the same function, in substantially the same way, to achieve the same result’ as the claimed invention may support a finding of equivalency. But this test is more suitable for analysing mechanical devices than chemical compositions or processes. The doctrine of equivalents effectively expands the scope of a patent claim beyond the literal language of the claim. Otherwise, a party who copies a patent’s inventive concept, but makes some trivial or obvious change, would avoid legal infringement. However, the doctrine of equivalents creates uncertainty as to the scope of patent rights and may thereby discourage legitimate efforts to design around existing patents. Important technical advancements are often the result of such design-around activities. The courts have struggled to formulate and apply the doctrine in a manner that strikes a proper balance between these competing considerations. In 1995, the Federal Circuit addressed basic issues concerning the doctrine of equivalents and held that (1) the determination of equivalents is a fact issue to be resolved by the jury; (2) the test focuses on the substantiality of differences between the claimed and accused products or processes; and (3) equivalency is determined objectively from the perspective of a hypothetical person of ordinary skill in the relevant art.99 Two years later, the Supreme Court confirmed equivalents infringement as a viable doctrine, but expressed concern that the doctrine had become ‘unbounded by the patent claims’.100 The Supreme Court did little to clarify the proper test of equivalency, but required a ‘special vigilance against allowing the concept of equivalence to eliminate completely any [claim] elements’.101 Nevertheless, there are important limitations on the doctrine of equivalents intended to prevent patent rights from being extended too broadly. First, the doctrine is applied on an element-by-element basis. Thus, for each claim limitation there must be a corresponding element in the accused product or process that is identical or equivalent to that limitation. Stated differently, if a theory of equivalence would effectively read a claim limitation out of the claim altogether, then there is no infringement. Further, there is no infringement where the scope of equivalents necessary to cover the accused device or process would also cover prior art.102 A third important limitation on the doctrine of equivalents is ‘prosecution history estoppel’. This limitation prevents a patent owner from covering subject matter that was relinquished during prosecution of the patent application. The purpose of prosecution history estoppel is to protect the notice function of the claims. Courts traditionally adopted a ‘flexible bar’ approach under which the subject matter surrendered

Hilton Davis Chemical Co v Warner-Jenkinson Co, Inc, 62 F.2d 1512 (Fed Cir 1995). Warner-Jenkinson Co, Inc v Hilton Davis Chemical Co, 520 U.S. 17, 28–29 (1997). ibid 40. Wilson Sporting Goods Co v David Geoffrey & Assoc, 904 F.2d 677, 684 (Fed Cir 1990).

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Timothy Maloney was determined by what a reasonable competitor would likely conclude from reviewing the prosecution file. However, in its 1999 Festo decision (Festo I), the Court of Appeals for the Federal Circuit ruled that when a claim limitation is narrowed during prosecution, application of the doctrine of equivalents to that claim element is completely barred.103 This complete bar approach would eliminate the public’s need to speculate as to the subject matter surrendered by a claim amendment. The Festo I decision also held that prosecution history estoppel applies to all narrowing amendments made for any reason related to patentability, even those made for purposes of clarification and not in response to a prior art rejection.104 Although the Festo I decision would lend certainty to the determination of patent scope, there was concern that it represented an overly rigid approach that would, in effect, severely restrict patent rights. The Supreme Court overturned the complete bar approach of Festo I and returned the case to the Federal Circuit for further consideration.105 The claim scope actually surrendered by amendment will remain an important consideration in applying the doctrine of equivalents and prosecution history estoppel. However, according to the Supreme Court, the patent owner should bear the burden of overcoming presumptions that: (1) amendments which narrow a patent claim, for any reason, create prosecution history estoppel; and (2) all coverage between the originally proposed claim and the issued claim was surrendered by the patent owner. In 2003, the Federal Circuit issued its Festo II opinion, clarifying its interpretation of the Supreme Court’s ruling and the current procedure for analysing the doctrine of equivalents when prosecution history estoppel is at issue.106 The Court confirmed that any narrowing amendment made for a reason related to patentability may invoke prosecution history estoppel, even amendments not made to distinguish prior art. If the prosecution record does not reveal the reason for an amendment, then it is treated as an amendment that was made for a substantial reason related to patentability, which creates a second presumption that all equivalents for the amended claim limitation were surrendered. The patent holder may rebut the presumption by showing that the particular equivalent in question was not surrendered. The criteria for determining the scope of surrender may include whether a particular equivalent was foreseeable, whether the amendment was directly relevant to the alleged equivalent, and whether failure to expressly claim the equivalent was due to shortcomings of language.

3. Direct Infringement 137

Under section 271(a) of the Patent Code, direct infringement occurs when a party makes, uses, sells, offer for sale or imports a patented invention. The importation, use,

103 Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co, Ltd, 234 F.3d 558 (Fed Cir 1999), remanded and vacated, 535 U.S. 722 (2002). 104 ibid 566. 105 Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co, Ltd, 535 U.S. 722 (2002). 106 Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co, Ltd, 344 F.3d 1359 (Fed Cir 2003).

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sale or offer for sale of a non-patented product in the US is also an act of infringement, if the non-patented product was made outside the US by a process patented in the United States. The theory of direct infringement becomes more complicated when the accused system or method is the result of components supplied by or steps performed by multiple entities. The law of ‘divided infringement’, also called ‘joint infringement’, is at issue when multiple parties are involved in infringement. Divided infringement is an active area of legal development.107, 108 The law of divided infringement, as it has evolved in recent years, has substantially weakened patents whose claims describe components or steps provided by multiple unrelated parties. Patents directed to internet-enabled systems and business methods are especially vulnerable, as these often involve a centralised server computer interacting with the client computers of multiple end users. The Federal Circuit has shown little sympathy, instead emphasising the importance of proper claim drafting in the first instance.109

4. Indirect Infringement 140

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Through indirect infringement claims, a defendant may be held liable for infringement even though it did not directly engage in infringing activities itself. The two types of indirect infringement are induced infringement and contributory infringement. To be liable for inducement under section 271(b), the defendant must actively and knowingly aid and abet another’s direct infringement. The conduct being induced by the defendant must constitute direct infringement. In 2014, the Supreme Court made clear that a defendant is not liable for inducing infringement under section 271(b) unless someone has directly infringed under section 271(a) or another statutory provision.110 To be liable for inducement, the defendant’s conduct must also meet a high standard of specific intent. This is difficult to prove in most cases. It is not enough that the defendant intended to induce the acts leading to the direct infringement; the defendant must intend to induce another’s actual infringement.111 To meet the intent requirement the accused inducer must also have knowledge that the induced acts constitute patent infringement. This knowledge requirement can be met by showing

107 ‘A party cannot avoid infringement … simply by contracting out steps of a patented process to another entity’. BMC Res, Inc v Paymentech, LP, 498 F.3d 1373, 1378 (Fed Cir 2007). Where multiple parties act together to perform the steps of a claimed method, the claim is directly infringed ‘if one party exercises “control or direction” over the entire process such that every step is attributable to the controlling party, i.e., the “mastermind”’. Muniauction, Inc v Thomson Corp, 532 F.3d 1318, 1329 (Fed Cir 2008). It is not necessary to prove that all the steps were committed by a single entity. Akamai Techs, Inc v Limelight Networks, 692 F.3d 1301, 1306 (Fed Cir 2012) (en banc). It is sufficient that one or more steps are performed by an agent of the accused infringer or a party acting pursuant to the accused infringer’s direction or control. ibid 1307. 108 A system claim is infringed by causing the system or apparatus as a whole to perform its intended operation and obtaining benefit from the result. A party is considered to have used the system if it controls the ‘ability to place the system as a whole into service’. Centillion Data Sys, LLC v Qwest Commc’ns Int’l, Inc, 631 F.3d 1279, 1283–85 (Fed Cir 2011). 109 Akamai Techs, Inc v Limelight Networks, Inc (n 107) 1321–22. 110 Limelight Networks, Inc v Akamai Technologies, Inc (n 37). 111 DSU Medical Corp v JMS Co, Ltd, 471 F.3d 1293 (Fed Cir 2006).

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Timothy Maloney wilful blindness by the defendant, ie, that the defendant (1) subjectively believes that there is a high probability that a patent exists and that the defendant’s acts infringe that patent; and (2) takes deliberate actions to avoid learning about those facts.112 Evidence of good faith, such as an attorney’s non-infringement opinion, can negate liability for inducement. Section 271(c) creates liability for those who have contributed to the infringement of a patent by supplying a key component of a patented device. Like induced infringement, a claim of contributory infringement requires the existence of direct infringement. The alleged contributory infringer must also have known of the patent and that his or her actions would lead another party to directly infringe the patent. The supplied component must have been unsuited for any commercial non-infringing use. The sale of an article capable of both an infringing use and other lawful uses is not sufficient for a finding of contributory infringement.

5. Wilful Infringement 144

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If a patent holder proves that a defendant wilfully infringed the patent, the patent holder is entitled to enhanced damages. Claims for wilful infringement result from the statutory provision that ‘the court may increase the damages up to three times the amount found or assessed’.113 In general, the idea of wilful infringement is that once an infringer receives actual notice of another’s patent rights, the infringer has a duty of due care to avoid patent infringement. Typically, a potential infringer will obtain a freedom-to-operate opinion letter from counsel and present it as a defence to wilful infringement. As mentioned above, wilful infringement is now analysed using a two-part test. First, there must be clear and convincing evidence that the alleged infringer acted despite ‘an objectively high likelihood that its actions constituted infringement of a valid patent’. Second, this objectively high risk must have been ‘either known or so obvious that it should have been known’ to the alleged infringer.114 This standard is generally not met where the alleged infringer develops and asserts reasonable litigation defences.115 The threshold determination of objective recklessness under the Seagate standard for wilful infringement is a question of law to be decided by the judge.116 After Seagate and the cases that followed, wilfulness is more difficult to show. Typically, when a defendant has presented a reasonable argument of non-infringement and/or invalidity during the litigation, there is no objectively high likelihood that its actions constituted infringement of a valid patent. The trend is for the court to reject wilfulness if either infringement or validity is closely contested. The circumstances where wilfulness is still available generally involve cases that are extremely strong on the merits for the patent holder, particularly after the claims have been construed, and more often cases where there is evidence of bad conduct by the defendant such as direct copying and/or litigation misconduct. Global-Tech Appliances, Inc v SEB S, 131 S.Ct. 2060, 563 U.S. ___ (2011). 35 U.S.C. s 284. In re Seagate Tech, LLC (n 67). Spine Solutions, Inc v Medtronic Sofamor Danek USA, Inc, 620 F.3d 1305, 1319 (Fed Cir 2010). Bard Peripheral Vascular, Inc v WL Gore & Assocs, Inc, 682 F.3d 1003, 1006-07 (Fed Cir 2012).

Patent Enforcement in the United States 507

VII. Remedies 1. Injunctive Relief 147

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When a patent is found valid and infringed at trial, the court may, pursuant to section 283 of the Patent Code, grant injunctive relief against future infringing activities. The district court is given broad discretion to shape injunctions, but must ensure that the injunction is tailored to fit the violation at hand. Often, the injunction is drafted rather broadly to prohibit ‘further infringement’ of the patent. Under such an injunction, further sale of the product adjudged to infringe or a product only insignificantly different would expose the infringer to severe penalties for contempt. Until 2006, when the patent holder made a clear showing of validity and infringement, the appropriateness of granting injunctive relief was presumed.117 In essence, an injunction issued automatically based on a finding of patent infringement. In eBay Inc v MercExchange, LLC, the Supreme Court held that district courts should not automatically grant injunctive relief to the prevailing patent holder.118 After eBay, to obtain an injunction, the patent holder must demonstrate that all four of the traditional factors apply, namely: (1) that it has suffered irreparable injury; (2) that damages alone are an inadequate remedy; (3) that the balance of hardships weighs in its favour; and (4) that the public interest would not be harmed by issuing the injunction. Since eBay, it is more difficult for successful patent holders to obtain injunctions. Important factors that support the requisite irreparable injury include practice of the invention by the patent holder, direct competition by the infringer causing loss of market share, and the business importance of the patented technology. When a post-trial injunction is not granted, the district court may conduct additional proceedings to determine the amount of future royalty payments for continuing infringement if the parties are not able to negotiate an acceptable licence. The royalty rate awarded by the jury is typically used as a starting point. The court may then determine whether, and by how much, this should be increased to account for the changed business circumstances and the wilful nature of post-verdict infringement. Other factors, including the public interest in deterring infringing activity, may also be considered. The resulting royalty may substantially reduce, or even eliminate, the defendant’s profit from the infringing activity.

2. Damages 151

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Under section 284, a patentee may recover damages adequate to compensate for the infringement, but in no event less than a reasonable royalty.119 It is proper to award the patentee’s lost profits if they exceed a reasonable royalty. However, the patentee is not entitled to the infringer’s profits. To prove lost profits, the patentee will generally try to show: (1) demand for the patented product; (2) ability to meet the demand;

Richardson v Suzuki Motor Co, 868 F.2d 1226 (Fed Cir 1989). eBay Inc v MercExchange, LLC (n 9). 35 U.S.C. s 284.

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Timothy Maloney (3) absence of non-infringing substitutes; and (4) the amount of profit that would have been earned.120 However, this is not an exclusive test, and the patentee may find other ways to prove with reasonable probability that it would have made all or some of the infringing sales.121 If lost profits cannot be shown, the patentee is entitled to a reasonable royalty. This is calculated as the amount a person would have been willing to pay as a royalty in a hypothetical negotiation at the time infringement began. The hypothetical negotiation is said to occur with both parties assuming that the patent is valid and infringed. Some of the factors normally considered in determining the reasonable royalty include the commercial benefits of the invention and the extent of its use by the infringer; whether acceptable non-infringing alternatives were available; the infringer’s expected profit; whether the licence would have been exclusive; and actual established royalties under the patent or in the particular field. Patent damages need not be proven with exacting precision. A contrary rule could unfairly penalise the patent holder when the economic harm caused by infringing activities is difficult to quantify. Yet the requested damages must be reasonably supported by the evidence and sound economic theory, and not entirely speculative or disproportionate to the real value of the technology involved. The Federal Circuit has shown particular interest in reasonable royalty damages in recent years, striking out speculative and overreaching theories in favour of more rigorous economic analysis closely tied to the claimed technology and its use by the defendant. For example, a conventional practice among damages experts of assuming the infringer’s willingness to pay roughly 25 per cent of its infringing profits as a royalty was struck down as arbitrary and speculative.122 Another series of decisions addresses the proper royalty base that can be presented to a jury. The royalty base is the monetary value that is multiplied by a percentage royalty rate to arrive at the royalty damages. The base usually relates to the revenues from the sale of the accused product. Where the asserted patent claims relate to only one feature of a multi-component product, however, it may be improper to use the entire product revenue as the royalty base.123 The market value of the entire product should be used as the royalty base only if the patented feature drives the demand for an entire multi-component product.124 In other words, the patented feature must be what motivates consumers to buy the product. Merely being a ‘valuable’ or ‘important’ feature is insufficient. If the patented feature does not drive the demand, then the portion of the economic value of the product attributable to the patented feature must be reasonably estimated, and this apportioned value used as the royalty base. This heightened scrutiny over the determination of the royalty base serves to protect defendants from exaggerated damages claims presented as a small royalty percentage applied to an exaggerated base. The concern is that the jury will focus on the low rate (for example, less than 5 per cent) as being reasonable, without carefully scrutinising

Gyromat Corp v Champion Spark Plug Co, 735 F.2d 549 (Fed Cir 1984). Carella v Starlight Archery & ProLine Co, 804 F.2d 135 (Fed Cir 1986). Uniloc USA, Inc v Microsoft Corp, 632 F.3d 1292, 1318 (Fed Cir 2011). See eg LaserDynamics, Inc v Quanta Computer, Inc, 694 F.3d 51, 56 (Fed Cir 2012); Uniloc (n 122) 1318. LaserDynamics (n 123) 68.

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whether the base is also reasonable given the contributions of other features unrelated to the patent. By demanding that patentees and their damages experts do more to isolate the value of the patented technology as used by the defendant and relative to other available alternatives, these standards also invite challenge to the admissibility of expert opinions under Federal Rule of Evidence 702 and the Supreme Court’s Daubert decision. The Federal Circuit will not hesitate to vacate the jury’s damages award if it detects a serious flaw in the patent holder’s underlying damages model.125 Prior to enactment of the Federal Circuit, patent infringement damage awards in patent cases were often relatively small compared to the effort and expense of litigation. The need to fully compensate patent owners was a prevailing theme of early Federal Circuit jurisprudence and damages awards rose accordingly. With the courts’ more recent emphasis on ensuring that the result does not overcompensate the patentee, the pendulum appears to be swinging back towards a reduction in the size of damages awards.

VIII. Primary Defences to Infringement 158

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The alleged infringer will almost always assert that the accused product or process does not infringe the patent claims either literally or under the doctrine of equivalence. The burden is on the patent owner to show that the claims cover the alleged infringing device or process. The alleged infringer may also attempt to show that the patent owner is estopped from expanding the claims under the doctrine of equivalents sufficiently to cover the alleged infringing device or process either because of admissions or arguments presented during the prosecution of the patent before the PTO, or because the broader reading of the claims would encompass and cover prior art devices or processes. The validity of the patent can also be raised as a defence, and must be proven by a more difficult clear and convincing standard of proof. The primary validity challenges focus on novelty and non-obviousness. Anticipation, or lack of novelty, requires proof that a single prior art reference identically discloses every element of the patent claim. Even a novel invention is not valid, however, if the differences between the claimed subject matter as a whole and the prior art would have been obvious at the time of the invention to a person of ordinary skill in the art. If the prior art offered by the challenger is not materially different from that considered by the PTO during examination of the patent, the challenger will have a difficult time showing that the patent is not valid. In effect, the challenger must convince the judge or jury that the PTO failed to do its job properly in granting the patent. If the challenger can present prior art that was not known to the PTO examiner, and especially if the new prior art is more relevant than the prior art before the examiner, the challenger will have a better chance. In important cases, the challenger may go to great lengths to find additional prior art, including conducting extensive literature

125 VirnetX, Inc v Cisco Systems, Inc, No 2013-1489, slip op (Fed Cir Sept. 16, 2014); Lucent Techs, Inc v Gateway, Inc, 580 F.3d 1301 (Fed Cir 2009).

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Timothy Maloney searches, hiring technical experts, interviewing other researchers in the field, and even posting rewards for helpful information. A challenger may also attempt to invalidate a patent by showing sales, offers of sale, or public use of the invention more than one year prior to the effective filing date of the patent application. Evidence of such activity by the patentee or some other party is often not known to the PTO and, thus, if available, may pose a serious challenge to patent validity. A challenger may also attempt to invalidate a patent by showing that the specification does not enable one of skill in the art to make and use the invention without undue experimentation. The patent may also be scrutinised under the ‘written description’ requirement if the claims extend too far beyond the inventor’s actual technical contribution as described in the patent specification. These defences are considered less likely to persuade jurors, who are typically reluctant to question the PTO’s expertise in such matters. The challenger may also assert that the patent owner acted improperly and violated its duty of candour to the PTO in obtaining the patent. In contrast to invalidity based on the other criteria discussed, a finding of unenforceability based on inequitable conduct affects the entire patent, not just the claims to which the inequitable conduct may specifically relate. It may also render related patents unenforceable. Given the severe consequences for the patent holder, this inequitable conduct or fraud defence had been routinely raised in patent infringement suits, frequently without sufficient justification. The Federal Circuit criticised this practice and set a higher standard for proving inequitable conduct in its en banc Therasense decision.126 To prevail on this defence, an accused infringer must present clear and convincing evidence that material information was omitted or misrepresented with the specific intent to deceive the PTO. To establish materiality of undisclosed prior art, it must be shown that the PTO would not have allowed a claim had it been aware of the undisclosed prior art.127 Thus, patents should no longer be held unenforceable if the withheld information at issue would not have made a difference to the PTO’s determination of patentability. The court left a narrow exception for egregious conduct involving the submission of false affidavits, which is considered material without further showing.128 Therasense also confirmed the separate intent requirement. It must be shown that the patentee acted with the specific intent to deceive the PTO. Proof that an applicant was negligent in that it knew of a reference, should have known of its materiality and chose not to submit it, is not sufficient. Rather, specific intent to deceive must be the single most reasonable inference supported by the evidence.129 Thus, the defence of inequitable conduct is now reserved to circumstances involving disturbing facts that are highly suggestive of active fraud. Patents directed to computer software, internet-implemented systems and business methods are now routinely challenged on the basis of claiming an ‘abstract idea’ ineligible for patent protection. In the last of its four decisions on patenteligible subject matter since 2010, the Supreme Court reiterated that the concern Therasense, Inc v Becton, Dickinson & Co (n 58). ibid 1291. ibid 1292. ibid 1290.

Patent Enforcement in the United States 511 that drives this exclusionary principle is one of pre-emption.130 Allowing abstract fundamental truths, mathematical relationships and conventional economic practices to be broadly patented by generic computer implementation risks pre-empting basic building blocks of human ingenuity and known methods of organising human behaviour. The Court acknowledged, however, that many inventions involve abstract ideas at some level, and that inventions that apply abstract concepts to improve the functioning of the computer itself, or to effect an improvement in a technical field, remain eligible.131 The lower courts are left with difficult issues in applying the Supreme Court’s jurisprudence, however.132

IX. Appeal 165

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As mentioned above, appeals involving patent issues are taken to the Court of Appeals for the Federal Circuit.133 An appeal is not an opportunity for the losing party to try the case again. The duty of the Federal Circuit to review the determination in the lower court is limited by the standard of review. The standard of review both determines the power of the Federal Circuit to address claims for error and defines the amount of deference it will give to the findings of fact and conclusions of law made in the district court. The standards of review, ranging from broadest to narrowest, include: de novo review, substantial evidence review, clear error review and abuse of discretion review. The ‘de novo’ standard of review provides the Federal Circuit the widest latitude in reviewing the lower court decision. Under this standard, the court exercises its own independent judgment on the evidence of record. Examples of issues that the Federal Circuit reviews de novo are claim construction, prosecution history estoppel and determinations of enablement, obviousness and claim indefiniteness.134 The Federal Circuit applies a more deferential ‘substantial evidence’ standard of review to the jury’s factual findings. Technically, fact-finding made by district court

Alice Corp v CLS Bank Int’l (n 9) 2354. ibid 2351. 132 Is the claim invalid if directed to an abstract concept implemented on a computer, or only if the concept itself is also shown to have been well-known or conventional in the particular field? Alice cites prior precedent equating abstract principles with ‘fundamental truths’. ibid 2354 (citing Le Roy v Tatham, 14 How. 156, 175 (1853)). Alice notes mathematical relationships as a category of abstract fundamental truths, as exemplified in Benson (algorithm for converting numbers into pure binary form) and Flook (formula for computing alarm limits unconventional catalytic conversion process). ibid 2350 (citing Gottschalk v Benson, 409 U.S. 63, 67 (1972) and Parker v Flook, 437 U.S. 584, 594–95 (1978)). Alice also addresses prior precedent in the realm of economic practices. The Alice Court abstracted the claims in Bilski to the concept of risk hedging, which it characterised as ‘a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class’. ibid 2356 (citing Bilski v Kappos (n 9) 611). The Alice Court characterised these cases as involving claims that did little more than instruct to apply the conventional mathematical formulas, economic practices or wellknown relationships in routine ways. In each prior case, as in Alice itself, the introduction of a computer failed to supply the ‘inventive concept’ required to make patent-eligible the fundamental concept, mathematical equation or conventional industry practice underlying the claims. ibid 2350. This would suggest, however, that an abstract idea that is itself non-conventional, should not lose patent eligibility under Alice merely because its implementation requires a computer. 133 28 U.S.C. s 1295(a). 134 Markman v Westview Instr, Inc, (n 75) 997 (claim construction); Paragon Podiatry Lab, Inc v KLM Labs, Inc, 984 F.2d 1182 (Fed Cir 1993) (validity issues). 131

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Timothy Maloney judges enjoy a less deferential ‘clear error’ standard of review; however, there is little practical difference between the two. Typically the ‘substantial evidence’ standard is satisfied unless the jury decision requires something a reasonable mind would not accept. Some of the issues that the Federal Circuit reviews under the substantial evidence or clear error standard are literal infringement, equivalency under the doctrine of equivalence and the factual underpinnings of a finding of inequitable conduct.135 Under the ‘abuse of discretion’ standard, the Federal Circuit does not reverse the decision below unless it is grossly unsound, unreasonable, or is a clear error of judgment. Examples of issues reviewed under this standard are decisions by a judge to grant enhanced damages and a judge’s decision on whether to hold a patent unenforceable due to inequitable conduct based on the jury’s fact-findings.136 Thus, the parties must shape their arguments on appeal to the proper standard or standards of review that apply. The nature of the error claimed, and the applicable standard of review, affects the likelihood of success on appeal. For example, when the legal question of obviousness arises on appeal, the court must apply a multistep analysis. First the Federal Circuit must review the claim construction, which is a question of law governed by the de novo standard of review. The ultimate question of obviousness is also freely reviewable de novo, but the court must apply the more deferential substantial evidence standard to the jury’s determination of what the prior art in fact teaches. The appealing party seeking to invalidate the patent has a better chance by focusing on an incorrect claim construction, rather than challenging the jury’s factual findings regarding the prior art. Procedure in the Federal Circuit is governed by the Federal Rules of Appellate Procedure and the Federal Circuit’s Rules of Practice. An appeal is commenced by filing a timely notice of appeal with the clerk of the district court from which the appeal is taken. The record on appeal includes all original papers filed and orders in the district court. The parties submit their arguments by written brief. Unless waived, the court will entertain a short oral argument before providing its decision. Most appeals result in a mixed decision where the court affirms some issues but reverses others. Approximately 75 per cent of recent patent decisions appealed to the Federal Circuit were modified in some manner.137

X. Litigation Expense 172

The median cost of a medium-size patent lawsuit is approximately $3.5 million through trial.138 Effective case management is thus essential to achieving an acceptable return on the litigation investment relative to other dispute resolution options. The parties and their lawyers should obtain a detailed understanding of the technology,

135 Miles Labs, Inc v Shandon Inc, 997 F.2d 870 (Fed Cir 1993) (literal infringement); Warner-Jenkinson (n 100) 17 (equivalency under the doctrine of equivalence); Gerber Garment Tech, Inc v Lectra Systems, Inc, 916 F.2d 683, 686 (Fed Cir 1990) (factual underpinnings of inequitable conduct). 136 Cybor Corp v FAS Tech. Inc, 138 F. 3d 1448 (Fed Cir 1998) (enhanced damages); Gerber Garment Tech (n 135) 683 (judge’s determination regarding inequitable conduct). 137 pwc, 2014 Patent Litigation Study (n 5) 4. 138 American Intellectual Property Law Association, Report of Economic Survey (2013).

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patent claims and accused products or systems as early as possible. The prior art also plays a significant role in shaping liability issues, and must be thoroughly assessed. Often it serves to limit how broadly the patent be applied, and provides a safe haven to a defendant willing to change its design to a prior art approach. Early evaluation of the economic aspects of the case is often beneficial, and may inform the appropriate litigation strategy. This may reveal, for example, that the accused sales are significantly less than what the patent holder may have assumed, motivating both parties to settle quickly. The high expense may also justify allocating resources towards designing around the asserted patent. A successful design-around not only caps the damages liability and reduces the plaintiff ’s incentive to continue litigating, but it may also prove superior to the previous version in the marketplace. Budget control may also include limiting claims and defences to the ones most likely to succeed. Fact and expert discovery can then be narrowly tailored to the specific needs of the case. An early claim construction by the court is often helpful to focus the issues, and may even facilitate settlement discussions. The accused infringer will also consider commencing a re-examination or inter partes review proceeding to have the validity of the asserted patent assessed anew by the PTO (discussed in Section B.I.1. above), which can be a much less expensive option. The general rule in the US is that each side pays its own costs and attorneys’ fees. Once there is a ‘prevailing party’, there is some nominal cost shifting, limited to items such as court reporter fees, travel expense for key trial witnesses and limited photocopying costs. A party or an attorney that violates certain standards of conduct may be subject to monetary penalties under Federal Rule of Civil Procedure 11. Improper conduct includes making arguments for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; presenting frivolous claims, defences and other legal contentions; and presenting factual contentions that have no evidentiary support. Rule 11 sanctions have traditionally been limited to extreme conduct. In addition, the court in ‘exceptional cases’ may award reasonable attorneys’ fees to the winning party.139 Historically, litigants have only rarely recovered under this provision because it required either misconduct in securing the patent or in conducting the litigation, or that the litigation was brought in bad faith and was objectively baseless. Typically an exceptional case was only found when wilful infringement was proven or when a party committed extreme misconduct during litigation. The Supreme Court’s Octane Fitness decision may make it easier to recover fees in meritless cases.140 The Supreme Court seems to have eased the standard, explaining that an exceptional case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position, considering both the governing law and the facts of the case. The unreasonable manner in which the case

35 U.S.C. s 285. Octane Fitness, LLC v ICON Health & Fitness, Inc, 134 S.Ct. 1749, 572 U.S. ___ (2014).

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Timothy Maloney was litigated can also make it exceptional. Another Supreme Court decision in 2014 returned more discretion to the district court judge to determine whether a case is exceptional.141 These decisions are viewed as addressing the need to curtail frivolous lawsuits. District courts are now seemingly more willing to find a case to be exceptional. For example, in Home Gambling Network Inc v Piche, the court granted attorneys’ fees to the defendant where plaintiff ’s theory of infringement conflicted with controlling Federal Circuit precedent.142 In Kilopass Technology Inc v Sidense Corp, the district court granted attorneys’ fees where the plaintiff ’s counsel had advised before the litigation that there was no literal infringement.143 In Chalumeau Power Sys LLC v Alcatel-Lucent, the court granted fees to a defendant where the plaintiff ’s claim construction position on one term was ‘one of the wors[t] proposed constructions’ that the court had ever seen.144 There is little doubt that the patent holder now faces a real risk of paying the other party’s fees if it brings a meritless case hoping for a quick settlement. It is expected that this lower standard will be applied with equal vigour against defendants who raise unsupportable defences.

XI. Wrongful Enforcement 182

141 142 143 144 145 146 147

Federal patent law authorises patent owners to give notice of their rights, either by marking the patent number on patented products or communicating specific notice to alleged infringers. Indeed, with the exception of patents containing only method claims, damages do not accrue until such constructive or actual notice is provided. However, marketplace infringement allegations to a competitor’s actual or potential customers or suppliers made in bad faith do not further the purpose of the patent laws to promote innovation, and are actionable under federal and State unfair competition laws.145 Bad faith requires proof that the threatened claims are objectively baseless and that the patent holder subjectively believed that the patent is not valid or not infringed.146 Statements that a competitor could not design around a patent may also give rise to bad faith because most patents are susceptible to being designed around.147

Highmark Inc v Allcare Health Management System Inc, 134 S.Ct. 1744, 572 U.S. ___ (2014). No 2:05-CV-610 (D Nev 22 May 2014). No C10-02066 (ND Cal 12 Aug 2014). No 11-1175 (D Del 12 Sept 2014). Zenith Electronics Corp v Exzec, Inc, 182 F.3d 1340 (Fed Cir 1999). Mikohn Gaming Corp v Acres Gaming, Inc, 165 F.3d 891 (Fed Cir 1998). Zenith Electronics (n 145) 1354.

17 Patent Enforcement in Brazil FILIPE FISCHMANN

A. Introduction and Outline of the System 1

Dieter Stauder has contributed to the understanding of patent law with several studies. One of his famous contributions is certainly the study of the relationship of infringement proceedings to revocation proceedings in selected European countries.1 In order to praise Dieter Stauder, this chapter will highlight the relationship between infringement proceedings and revocation proceedings in Brazil, while inviting other researchers to conduct an empirical analysis of this topic, as Dieter Stauder did years ago with other jurisdictions. 2 Although the relationship between infringement and revocation proceedings in Brazil is the central issue in the following pages, this chapter will also analyse other issues of the civil enforcement of patents in Brazilian courts. While other forms of patent enforcement will not be debated, it is important to state that patent infringement may also entail criminal sanctions. Although criminal actions related to copyright or patent infringement are not unusual, criminal proceedings due to patent violation are not a common practice in Brazil. Furthermore, this chapter will address some aspects of the administrative proceedings before the Brazilian Patent and Trademark Office (‘INPI’), but will not address any possible enforcement related to border measures, as it is questionable whether these measures are available for patent infringement.2 3 With regard to civil enforcement in general, it is important to state that Brazil has enacted the new Civil Procedural Code (Act 13105/2015; ‘CPC 2015’). The new rules are likely to have a major impact on civil litigation in general once the CPC 2015 enters into force in March 2016—unless a new Act changes this situation. In light of these probable effects on litigation in general, this chapter will refer to the new rules, while also explaining the current ones. The reader should, however, consider that the interpretation of the new rules will only be consolidated after a couple of years of practice with them.

1 See the results of this study in D Stauder, ‘Die tatsächliche Bedeutung von Verletzungs- und Nichtigkeitsverfahren in der Bundesrepublik Deutschland, Frankreich, Großbritannien und Italien: Ergebnisse einer statistischempirischen Untersuchung’ (1983) GRUR Int 234. 2 The Brazilian IP Code (Act 9279/1996) refers only to border measures as a measure to be employed against trade mark violation (see IP Code, art 198). Therefore, it is far from certain that these measures may be applied in patent cases.

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Superior Court of Appeal

State Court of Appeal

Regional Federal Court of Appeal

State Court of First Instance

Federal Court of First Instance

Figure 1: Schematic Depiction of Part of the Judiciary in Brazil

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After presenting these introductory remarks, the system of patent enforcement in Brazil can briefly be outlined. The civil enforcement of patents in Brazil takes place mostly in State courts and in federal courts.3 State courts normally deal with infringement issues, while federal courts judge revocation proceedings. Before these proceedings are explained in detail, it is important to understand the overall organisation of the respective part of the Brazilian judiciary. Figure 1 gives an outline of the structure of those courts and of the Superior Court of Appeal (‘Superior Tribunal de Justiça’) as well of the Supreme Court (‘Supremo Tribunal Federal’): Starting at the top, the Supreme Court and the Superior Court of Justice decide few cases on IP. They oversee the case law of lower courts and may receive appeals from the Courts of Appeals. The Supreme Court may also decide on appeals against decisions of the Superior Court of Appeal, if they are directly related to constitutional provisions. However, in patent cases, only in exceptional cases will they be directly related to constitutional provisions. Nevertheless, the Supreme Court plays a role in major issues of patent law, when it has to analyse the constitutionality of specific patent law issues.4 State courts and federal courts have both courts of first instance and appeal courts. Normally, a State Court of Appeal (‘Tribunal de Justiça’) will receive the appeals of cases decided by a State court of first instance located in the respective State,5 while

3 Employment courts judge issues related to the question of which rights an employee may have in a patented invention. Normally, the employer retains the right to the patented invention, if the employment was related to research or inventive activities and no other arrangement was reached in the employment agreement (see IP Code, arts 88–93). 4 eg the constitutionality of so-called ‘pipeline’ patents, ie patents covering pharmaceutical patents that could not be patented according to the revoked IP Code and that received protection by the new IP Code as a transitional period. See Case ADI 4234 (pending before the Supreme Court). 5 Each State has its own State Court of Appeal.

Patent Enforcement in Brazil 517 a Regional Federal Court of Appeal (‘Tribunal Regional Federal’) judges the appeals decided by a Regional Federal Court of Appeal of first instance located in the region of its jurisdiction.6 However, in districts (comarcas) where no federal court is present, a State court may exceptionally decide as a federal court.7 In this case, a Regional Federal Court of Appeal will decide the appeal against the decision of the State court of first instance. If a State court of first instance were to judge the validity and infringement of a patent, appeals against the infringement decision would be judged by the State Court of Appeal, while the appeal against the validity part would be decided by the Regional Federal Court of Appeal. 6 In decisions by the Court of Appeals, in which more than one judge decides a case, it is not unusual that many ‘concurring opinions’ are issued, particularly in major cases.8 This may, occasionally, make the interpretation of the case law difficult, as it may be hard to differentiate the ratio decidendi from dicta. Nevertheless, interpreters of Brazilian decisions can easily access the most recent case law, as decisions are freely available on the internet. It is important to note that decisions are only published in Portuguese, as proceedings in Brazil have to be conducted in the official language of the country— even documents in another language usually have to be translated. 7 Concerning the representation of the parties, Brazilian law allows some exceptions to compulsory representation by an attorney trained in law—eg small claims up to a specific disputed value—but patent cases are very unlikely to fall under one of those exceptions. Hence, parties will only be represented by lawyers before courts.9 In Brazil there are some IP boutiques and about a dozen law firms with several attorneys, in which an IP department can be found. Nevertheless, even attorneys not specialised in patent cases are allowed to appear before a court in patent cases. This indeed happens, particularly in infringement cases.

B. Selected Issues of the Civil Enforcement of Patents I. Types of Action 1. Enforcement Before the Courts: Infringement, Revocation and Preliminary Measures 8

Infringement actions may be brought by the patentee or (under certain conditions) by the licensee against an alleged infringer. Revocation proceedings may also be brought in Brazil. Preliminary measures are available in infringement and in revocation proceedings. For details, see below section IV (interim proceedings) and V (main proceedings).

6 Currently, there are 5 Regional Federal Courts of Appeal functioning in Brazil. The Constitutional Amendment 73 creates another 4 Regional Federal Courts of Appeal. However, the Supreme Court issued a preliminary injunction, rendering the Constitutional Amendment 73 without effect, until a final decision on the constitutionality of the Constitutional Amendment 73 is issued (see Supreme Court, 17 July 2013, case ADI 5017 MC/DF). 7 See art 109, §3rd of the Brazilian Federal Constitution. See also Supreme Court, 24 June 2008, case AgRg of the RE 232.472-9—SP. 8 In ordinary cases, the other judges normally follow the approach of the judge rapporteur. 9 Parties may, however, be represented by non-lawyers before INPI.

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2. Administrative Enforcement: Post-Grant Opposition 9

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The most important issue of the administrative enforcement of patents in Brazil is the post-grant opposition, as there is no pre-grant opposition and the availability of border measures in patent cases is questionable. The rules on post-grant opposition are set out in the IP Code, Articles 50 to 55. Although any person may start the opposition proceedings, their availability is limited in time: opposition procedures must be started within six months after the patent grant (IP Code, art 52). Parties frequently make use of opposition proceedings in Brazil. However, opposition proceedings normally are not faster than revocation proceedings. Moreover, the decisions taken by INPI in opposition proceedings may be appealed to the federal courts. Therefore, opposition proceedings may take several years until they are completely finished.

II. Parties to the Proceedings 1. Patentee and Licensee 11

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A patentee may be involved in all kinds of proceedings. For instance, she can be the claimant in infringement proceedings or the defendant in revocation proceedings. As licensor, the patentee can be either the claimant or the defendant in cases in which the clauses of a licence agreement are disputed. A licensee can also be the claimant or the defendant in those cases. Moreover, a licensee can also act for the patentee. Once a licence agreement is recorded with INPI, it may generate effects against third parties (IP Code, art 62). According to Article 61 of the IP Code, a patentee may grant a licensee all the powers to defend the licensed patent. Hence, a licensee may go to court to enforce the patent, provided that (1) the licence agreement grants her the respective powers; and (2) the licence agreement was recorded with INPI. Furthermore, the licensee may be a party in a dispute over the licence agreement.

2. Alleged Infringer and ‘Persons with Legitimate Interest’ 13

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An alleged infringer may be the defendant in infringement proceedings or the claimant in revocation proceedings. Although the alleged infringer and INPI are clearly allowed to commence revocation proceedings, it is still largely undecided who else may start these proceedings, as the legislation uses the expression ‘any person having a legitimate interest’ (IP Code, art 56). If courts want to limit the number of possible claimants in revocation proceedings, they could embrace something similar to the reasonable-apprehension-of-suit test, which the Federal Circuit used to require in the United States until the US Supreme Court issued its Medimmune decision.10 However, a better solution would be for courts to consider that the revocation of invalid patents lies in the public interest and not to limit the number of persons who may

Medimmune Inc v Genentech Inc, 549 U.S. 118, 132–33 (2007).

Patent Enforcement in Brazil 519 commence revocation proceedings—at least as long as the patent is still in force.11 A stricter approach should, however, be followed, when a party brings a declaratory action of non-infringement, as the party should prove that she has a concrete interest in the declaration of non-infringement.12

3. INPI 14

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INPI may start revocation proceedings on its own initiative as the claimant in revocation proceedings (IP Code, art 56). Furthermore, INPI will be involved in all revocation proceedings, even if they are commenced by third parties, as this is required by the legislation (IP Code, art 57). Nevertheless, the provision does not clarify to what extent and under which procedural capacity INPI (joint claimant, joint defendant, sui generis joint litigant or assistant) should be involved in proceedings.13 Although some controversy regarding the procedural position of INPI remains,14 appellate courts have decided that INPI has the full status of a party.15 This consideration of INPI as a regular party has a series of consequences. First, the claimant may decide to bring the revocation proceedings in the court with jurisdiction over the defendant’s seat or in the Federal Court of Rio de Janeiro (where INPI’s headquarters lie) or in the court with jurisdiction over the place where INPI has one office (eg the Federal Court of São Paulo).16 Second, INPI may oppose an agreement to dismiss the revocation proceedings and may appeal decisions.17 Third, INPI may be forced to reimburse part of the expenses of the winning party, if INPI does not prevail in the litigation.18

4. Public Prosecutor’s Office 16

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In Brazil, the Public Prosecutor’s Office (‘Ministério Público’) is not only responsible for criminal prosecutions, but also plays a role in certain cases of civil enforcement. One of the situations where intervention of the Public Prosecutor’s Office in civil proceedings may be necessary is in cases in which a public interest is clearly present (Brazilian Civil Procedural Code (‘CPC’), art 82, III). Hence, patent cases may represent one of these situations. For instance, it was decided in a case concerning the patent of a drug used to treat AIDS that the lack of an intervention by the Public Prosecutor’s

cf Regional Federal Court of Appeal for the First Region, 14 September 2007, case 2003.01.00.009323-9/DF. The proceedings of the declaration of non-infringement are to be brought before the State court. They will largely follow the structure of the infringement action (see section V.1), with the basic difference that the patentee is not the claimant, but the defendant, while the alleged infringer (ie interested party) will be the claimant. 13 AAM Souza, ‘O INPI como interveniente especial nas ações de nulidade—nova interpretação conforme a Lei da Propriedade Industrial’ (2005) 28 Revista CEJ 109, 110. 14 The Superior Court of Appeal expressly avoided making a decision on the exact procedural position of INPI. See Superior Court of Appeal, 18 August 2009, case REsp 721.614—RJ. 15 See eg Regional Federal Court of Appeal for the Second Region, 27 September 2011, case 2007.51.01.800454-8; Regional Federal Court of Appeal for the Third Region, 26 March 2013, case 2005.61.05.900003-9. 16 Regional Federal Court of Appeal for the Third Region, 11 June 2013, case 2013.03.00.002126-3/SP. 17 Regional Federal Court of Appeal for the Third Region, 25 September 2006, case 2006.03.00.049987-0. 18 Regional Federal Court of Appeal for the Third Region, 26 March 2013, case 2005.61.05.900003-9. For cost issues in general, see section X. 12

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Filipe Fischmann Office was a reason for reversing a decision and remanding it to the court of first instance.19 Although the Public Prosecutor’s Office plays a very important role in certain lawsuits, one may ask if this intervention is really needed in revocation proceedings. In these proceedings, INPI will necessarily intervene and therefore the public interest should already be represented and defended. Therefore, forcing the Public Prosecutor’s Office to intervene may unnecessarily spend public resources (capacity from the Public Prosecutor’s Office, judge’s time, etc) and lead to an unnecessary delay in the outcome of the proceedings. Nonetheless, the intervention of the Public Prosecutor’s Office may be reasonable in infringement proceedings, if they are a matter of public interest, as in this kind of proceedings there will be no intervention from INPI.

III. Competent Courts and Specialised Courts 18

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The competence of federal courts is partially determined by subject matter (eg litigation over indigenous rights)20 and partially by personal jurisdiction (eg the Federal Union, its institutions and companies).21 Patent law as such is not a subject matter to be exclusively treated by federal courts. However, as INPI, an institution of the Federal Union, necessarily has to intervene in revocation proceedings, patent revocation proceedings are subject to the jurisdiction of federal courts (see also the IP Code, art 57). Moreover, federal courts may have jurisdiction over patent infringement cases if the claimant or the defendant is a public company controlled by the Federal Union. If neither the claimant nor the defendant is a person over whom federal courts have jurisdiction, patent infringement lawsuits will be decided by State courts. Therefore, infringement cases are normally decided by State courts. Within State and federal courts there is frequently some degree of specialisation of the courts, which is normally related to the size of the district (ie larger districts normally have courts with a more specific specialisation). Even smaller districts frequently have a differentiation between civil courts and criminal courts. However, there may be even further specialisation among the civil courts. For instance, Article 241 of the IP Code authorises the creation of specialised courts for IP. Hitherto, a few courts of first instance (and some chambers of the Court of Appeals) have been created to specialise in IP issues.22 Hence, the vast majority of Brazilian districts do not have a court specialising in IP. Nevertheless, the majority of revocation proceedings are litigated in the courts of Rio de Janeiro, where INPI has its headquarters. Infringement proceedings, by their turn, are brought in State courts of different districts. This is a consequence of the fact that infringement proceedings should be brought before the court where one defendant has its seat or where the infringement

Regional Federal Court of Appeal for the Second Region, 11 December 2007, case 2004.51.01.506840-0. Brazilian Federal Constitution, art 109, XI. 21 ibid, art 109, I. 22 See eg arts 24 and 25 of the Resolution (Resolução) No 24 of 11 October 2010 of the Regional Federal Court of the Second Region, attributing IP cases in the district of Rio de Janeiro to 4 federal courts of first instance. 20

Patent Enforcement in Brazil 521 took place. Therefore, infringement actions may often be decided by judges who are not experts in IP. However, the claimant is normally able to influence the determination of the district to have competence over the infringement proceedings, either by adding another defendant (eg a reseller of a product) or by trying to show that the infringement happened elsewhere. If a counterclaim of invalidity is allowed, the case could be transferred to a court with jurisdiction over a seat of the Patent Office (eg Rio de Janeiro) or the case could be heard before a federal court with local jurisdiction over the place where the case originated.

IV. Preliminary Measures 22

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The CPC sets out basically two different kinds of preliminary measures: a preliminary injunction (tutela antecipada) and precautionary proceedings (ação [or medida] cautelar). In this respect, precautionary proceedings aim to preserve or maintain a current situation in order to allow that the final decision may be rendered (eg safeguarding evidence), while preliminary injunctions provide the anticipation of a remedy sought.23 Both preliminary injunctions and precautionary proceedings may be requested and granted in infringement proceedings or in revocation proceedings. Preliminary injunctions in general—and in patent cases—are subject to three requirements: (1) high likelihood of the existence of the right as claimed; (2) reasons to fear the irreparability or difficult reparability of the harm; and (3) the possibility of reversing the decision at a later stage (CPC, art 273 and art 461, §3rd; IP Code, art 56, §2nd and art 209, §1st).24 When assessing these requirements, the judge has some flexibility, as the words used in the legislation grant a certain measure of leeway.25 In order to meet the first requirement, a patentee may present the evaluation of an expert, showing that the defendant is infringing her patent.26 However, Brazilian courts avoid granting a preliminary injunction in infringement cases before an expert appointed by the court comes to the conclusion that the patent is indeed infringed.27 As a preliminary injunction may be requested at any stage of the proceedings, the patentee will more likely succeed in such a request if it is made after the evaluation of an expert concluding that the defendant is infringing the patent.28 However, this will mean that the patentee will normally have to tolerate an infringement for some months. While preliminary injunctions in infringement proceedings may prohibit the commercialisation of an infringing product, they may suspend the effects of a patent in

D Bessone, ‘Acquisition of Evidence in Patent Litigation: A Brazilian Perspective’ (2008) 97 Revista ABPI 3, 8. Superior Court of Appeal, 7 December 2004, case REsp 685.560—RS. 25 Superior Court of Appeal, 22 November 2011, case REsp 1.263.187—SP. 26 JMD Machado, ‘Antecipação da Tutela na Propriedade Industrial’ in F de Bem da Rocha (ed), Capítulos de Processo Civil na Propriedade Intelectual (Lumen Juris, 2009) 281, 288. 27 Court of Appeal of the State of São Paulo, 7 July 2014, case AI 0036246-44.2013.8.26.0000; Court of Appeal of the State of Rio de Janeiro, 19 February 2014, case AI 0065666-89.2013.8.19.0000; Court of Appeal of the State of São Paulo, 30 October 2012, case AI 0151180-49.2012.8.26.0000; Court of Appeal of the State of São Paulo, 11 October 2011, case AI 0166333-59.2011.8.26.0000. 28 cf Court of Appeal of the State of São Paulo, 9 December 2014, case AI 2157932-32.2014.8.26.000. 24

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Filipe Fischmann case of revocation proceedings.29 As in infringement proceedings, courts also avoid granting preliminary injunctions in revocation proceedings, unless convincing proof of the patent’s invalidity is presented.30 Nevertheless, the evaluation of an expert may be not required for granting a preliminary injunction if the patent challenger presents documentation showing that the patent was wrongly granted (ie due to lack of novelty).31 However, if the patent challenger only starts the revocation proceedings long after the patent was granted (eg seven years), courts may be reluctant to grant a preliminary injunction.32 Regarding precautionary proceedings, different measures can be pursued. For instance, precautionary proceedings may be brought in order to safeguard evidence (CPC, arts 846–851) or to force one party to present a document (CPC, art 844). The procedural rules set out a series of precautionary measures that may be required and establish the framework of each measure.33 Moreover, the procedural rules ensure that courts have the flexibility to order further measures that may be needed, in order to avoid a serious harm, which may be difficult to rectify or which tends to be irreparable. Concerning preliminary measures, the new procedural rules bring some changes, differentiating between urgent remedies (tutela de urgência) and remedies of certainty (tutela de evidência).34 Both kinds of remedies will require a high likelihood of success, and the risk that granting the remedy at a later stage will cause harm to the winning party or may impair the effectiveness of the proceedings. Although these new procedural rules will likely enable changes in the case law of the courts regarding provisional measures, they are unlikely to affect the frequency of issuance of preliminary injunctions in patent cases. Regarding precautionary measures in order to safeguard evidence, they are still expressly set out in the new procedural rules (CPC 2015, arts 381–383), although they are now part of the main proceedings.35

V. The Trial 1. First Instance Infringement Proceedings 28

Infringement proceedings are started by the claimant’s initial brief (petição inicial),36 which will be superficially analysed by the court. The judge will determine if one of the parties obviously does not have standing, if the claim is barred by the limitation

29 It should be mentioned here that INPI can also request revocation of the patent of its own motion, and as a preliminary measure ask the court to temporarily suspend the patentee’s right to exclude third parties from using the patent. 30 cf Regional Federal Court of Appeal for the Third Region, 13 July 2009, case 2007.03.00.096440-6. 31 Regional Federal Court of Appeal for the Second Region, 31 May 2011, case 2011.02.01.002405-5; Regional Federal Court of Appeal for the Second Region, 25 May 2010, case 2009.02.01.013468-1. 32 Regional Federal Court of Appeal for the Second Region, 14 October 2008, case 2006.02.01.005336-9/RJ. 33 MJI de Soura, ‘Tutelas de Urgência na Propriedade Industrial: as Medidas Cautelares’ in de Bem da Rocha (ed), Capítulos de Processo Civil na Propriedade Intelectual (n 26) 363, 384. 34 See CPC 2015, arts 294–311. 35 Under current procedural rules, a party has to start the main proceedings within 30 days, after the precautionary measure was granted (see CPC, art 806). 36 The claimant does not need to contact the alleged infringer before starting the proceedings. Third parties (eg retailers) may be informed by letter that proceedings have been started against the defendant and that measures may be also taken against them, if they contribute to the infringement of the patent.

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periods, or if the remedy pursued is legal, etc (see CPC, art 295). If the initial brief passes this test, the judge will summon the defendant(s). Where a preliminary injunction is requested, the judge may grant or reject the request before hearing the defendant, or may order an urgent hearing, in order to hear the defendant before deciding on the preliminary injunction.37 The patentee normally bears the burden of proof. However, an alleged infringer has the burden of proof concerning process patents, ie she will have to prove that the product was obtained by a process not protected by the patent (IP Code, art 42, §2nd). Nevertheless, the holder of a process patent will still have to show the likelihood of infringement, in order to obtain a preliminary injunction.38 Under current CPC rules, the defendant is granted 15 days to prepare her defence (CPC, art 297). For instance, she may present an answer (contestação) and/or offer a counterclaim (reconvenção). However, under current rules, she is not allowed to plead the revocation of the patent as a counterclaim.39 If the defendant does not present an answer, all the facts described by the claimant will be held to be true (CPC, art 319), unless the lawsuit is also directed to a joint defendant and that defendant provides an answer (CPC, art 320, II). If the defendant presents in his answer another version of the facts described in the initial brief, the claimant will be granted the chance to present a reply (réplica) within 10 days (CPC, art 326), while the defendant may have the chance to present a response to the reply (tréplica). If there is no controversy about the facts and there is no need to produce further evidence, the judge may then issue its judgment (CPC, art 330). In patent infringement cases, this occurs only exceptionally. Normally, the proceedings will continue with a conference, at which the judge will try to obtain a settlement from the parties (CPC, art 331). If the parties do not settle the case, the judge will determine the evidence that needs to be produced. For example, the judge may determine that an expert should analyse the issue of infringement. In making this determination, the judge may name a certain person, who will be given the chance to decide whether she accepts the judicial request and, in such case, provide an estimate of the costs of her analysis. The parties, who may oppose the judge’s choice of expert, will have the chance to make observations about the statement of the expert (including the cost estimate) and may present questions to the expert. Parties may also appoint their own experts, who may follow the analysis performed by the appointed person. The expert will then produce a written statement, answering the questions asked by the judge and parties. Although the judge may deviate from the opinion of the expert, she will normally adopt the opinion of the latter in her judgment.40 Moreover, the expert may appear at an oral hearing, and, if needed, testimonies may be also heard (CPC, arts 450–457). During the oral hearing, the attorneys of each party are not allowed to directly question the experts and their testimonies, as cross-examination is controlled by the judge (CPC, art 416). Therefore, the judge may rule out questions

For an explanation of the preliminary measures, see section IV. D Bessone, ‘Acquisition of Evidence in Patent Litigation: A Brazilian Perspective’ (2008) 97 Revista ABPI 3, 4. 39 See section VIII.2. 40 PMN Barbosa, ‘Uma visão analítica acerca do contencioso judicial de patentes’ in de Bem da Rocha (n 26) 53, 63. 38

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Filipe Fischmann that are impertinent41 or may rephrase questions, in order to avoid the inducement of an answer.42 At the end of the oral hearing, the judge may orally issue a judgment or may publish a written judgment. In case of the latter, there is no need to schedule another hearing, as the judge may simply deliver a judgment, which will be published—and parties will be notified about it. In patent infringement cases, it is normal for the judge to deliver a written judgment. Although the legislation sets out a deadline of 10 days for the issuance of a judgment (CPC, art 456), there is no consequence for the judge failing to comply with this provision. As patent cases are complex and judges are often not steeped in patent law, it is normal that the issuance of the judgment may take much longer (even years).43 One of the core changes of the new procedural provisions targets exactly the situation of a judge not issuing a judgment, even if the proceedings are ready to be decided. According to the new civil procedural rules, judges will normally have to issue judgments in chronological order (CPC 2015, art 12), ie cases that have been awaiting judgment for a longer period will have to be decided before other cases. Another core difference of the new rules is the possibility for parties to agree on the procedural rules to be followed in cases related to disposable rights (CPC 2015, art 190). As patent infringement issues are related to disposable rights, parties may agree on amendments to the proscribed procedural rules. Further changes to the civil procedural rules were also made. For example, the defendant will be invited to attend a conference aimed at the settlement of the case before (and not after) submitting a defence (CPC 2015, art 334). Regarding the defence, the new procedural rules may allow a counterclaim of revocation to be brought by the alleged infringer, see below section VIII.2. Another innovation of the new procedural rules is the express authorisation of the use of videoconference in oral hearings in civil cases (CPC 2015, art 236, §3rd, art 385, §3rd, art 453, §1st and art 461, §2nd). An additional example of the changes introduced by the new procedural rules is the fact that procedural deadlines counted in days will only refer to working days (CPC 2015, art 219).

2. First Instance Revocation Proceedings 34

The general structure of revocation proceedings reflects that of infringement proceedings, as the CPC is also applicable to revocation proceedings. Besides the compulsory intervention of INPI in revocation proceedings, the other difference from the general civil procedural rules clearly stated in the IP Code is the fact that the patentee will have 60 days to file her defence (IP Code, art 57, §1st). Furthermore, one may assume that revocation proceedings deal with non-disposable rights (ie the validity of a patent

41 If a question is rejected by the judge, a party may ask that the rejected question be added to the transcript of the hearing (CPC, art 415, §2nd), and the party may present an appeal (agravo retido), which will be only analysed by the Court of Appeal, if so required by the affected party, in case the judgment is also appealed (CPC, art 523, §3rd). 42 Bessone, ‘Acquisition of Evidence in Patent Litigation’ (n 38) 6. 43 It is also important to note that the final oral hearing, which is the starting date for the issuance of the written judgment, is very unlikely to be ordered within the first year, counting from the date of commencement of the proceedings; rather, it is usual that it will be scheduled within the second or third year.

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claim),44 and therefore the initial conference, at which the judge will try to obtain a settlement from the parties, does not need to be ordered by the judge (CPC, art 331). Apart from those differences, revocation proceedings follow the same steps as infringement proceedings. The new procedural rules will also similarly affect revocation proceedings. Nevertheless, parties will not be free to decide on amendments to procedural rules of the revocation proceedings, given that such cases deal with non-disposable rights (CPC 2015, art 189). Moreover, the new procedural rules will increase the time for the defence of the patentee by about one month, as 60 working days (new rule) represents approximately three months, while 60 days (old rule) represents approximately two months.

3. Appeals 36

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Appeals play a very important role in Brazil, as the statutes on court practice allow appeals to be filed frequently during the development of the proceedings. This is true even though amendments made to the civil procedural rules at the beginning of the millennium limited the possibility of filing certain appeals. An example of such a limitation was the restriction of immediate appeals of interlocutory decisions to situations where an appealing party may suffer a serious harm which may be difficult to rectify. Although granting several appeals may promote the due process of law, it may also prolong the proceedings, which may harm parties and, under certain conditions, may render the granting of any remedies ineffective. This is particularly true in Brazil, because frequently a decision can be appealed, and the decision of the appeal can be re-appealed and so forth. Partially due to this fact, Courts of Appeal often have a significant backlog, which may mean that an appeal will be decided three or four years after the filing of the appeal (or five to eight years from the start of the proceedings). Although this situation is certainly getting better, there is still room for further improvement. One example of an appeal that may lead to delay in the proceedings is the ‘appeal of clarification’ (embargos de declaração). This appeal was conceived to amend decisions in order to clarify them or avoid blatant contradictions, but it plays a much larger role in practice. As courts admit that this appeal can, in exceptional circumstances, change the content of a judgment beyond those two limited situations, parties frequently try to make use of it instead of (or in addition to) other appeals—or clearly to delay the outcome of the proceedings. In spite of courts having the power—and also duty—to sanction abusive behaviour in filing these appeals (CPC, art 538, Single Paragraph), they are often reluctant to apply any fine for the filing of an ‘appeal of clarification’. One argument that judges make to justify this reluctance is the fact that the imposition of the fine may generate satellite litigation (and further appeals). As a general rule, decisions of first instance are not enforceable, as an appeal to the Courts of Appeal usually has suspensive effect. Nevertheless, judges are exceptionally entitled to allow an appeal to proceed without suspensive effect. An example of an appeal that does not have suspensive effect is an appeal of a first instance judgment granting a preliminary injunction. In addition, appeals to the Superior Court of cf Regional Federal Court of Appeal for the Third Region, 25 September 2006, case 2006.03.00.049987-0.

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Filipe Fischmann Appeal or to the Supreme Court do not have suspensive effect unless those courts—or the court which rendered the judgment under appeal—under exceptional circumstances, order that an appeal should have suspensive effect. The new civil procedural rules amend specific aspects of current appeals and even eliminate certain appeals. Nonetheless, the main principles governing appeals remain unchanged by the new provisions. However, it is possible that the new provisions may stimulate new practices to be adopted by courts.

VI. Types of Infringement 41

42

As the Brazilian Patent Law prohibits not only literal infringement, but also equivalent infringement, the defendant will have to prove that her acts do not amount to an equivalent infringement of the litigated patent. Although the provisions regarding civil enforcement of the IP Code do not address the issue of equivalent infringement, one provision regarding criminal enforcement (IP Code, art 186) clearly states that a crime will be committed, even if the patent violation ‘is restricted to the utilisation of means equivalent to the object of the patent’. If equivalent infringement amounts to a crime, it makes sense to also assume that it may be stopped by means of civil enforcement.45 This conclusion is shared by the courts, which also refer to Article 186 in the context of civil enforcement and allow that a patentee may make use of civil enforcement against equivalent infringement.46 Nevertheless, the case law does not provide clear guidance about the criteria to be used to find an equivalent infringement. The decisions on equivalent infringement only explain that the infringement of a patent is judged by the similarities47 (regarding shape, function and outcome) and not by the differences.48 In another case, it was decided that the reproduction of the essential features or of the main new features of the invention suffice to characterise the infringement, even if different features are also present in the infringing product.49 However, it is unclear how the threshold of similarity is set or how the ‘essential feature’ is defined, in order to characterise an equivalent infringement or to permit the finding of no infringement.

VII. Remedies 43

45

The civil enforcement of patents provides different remedies to the winning party, including the reimbursement of certain expenses (see below section X). In case of infringement, the judge will normally order injunctive relief if the patent is still in

cf IP Code, art 207. Court of Appeal of the State of São Paulo, 4 November 2014, case 9175306-15.2009.8.26.0000. See also Court of Appeal of the State of São Paulo, 29 May 2014, case 0001914-38.2001.8.26.0108; Court of Appeal of the State of São Paulo, 25 November 2014, case 0614245-61.2000.8.26.0100. 47 Even old decisions of the Supreme Court regarding legislation prior to the current IP Code came to the conclusion that a patent was violated by a similar product, even if it was not identical to the object of the patent. See Supreme Court, 18 May 1953, case RE 22017—SP. 48 Court of Appeal of the State of São Paulo, 4 November 2014, case 9175306-15.2009.8.26.0000. 49 Court of Appeal of the State of São Paulo, 14 August 2014, case AI 2078982-09.2014.8.26.0000. 46

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force and this has been requested by the patentee. Normally, there will be no analysis of the balance of interests or an analysis in equity of the necessity of the injunctive relief. However, it is still possible that in theory, a compulsory licence may bar the ordering of an injunction.50 It is important to observe that courts have not yet developed case law referring to standard essential patents. Nevertheless, the provisions of the IP Code on compulsory licensing, which refer also to a violation of competition law, could be used to avoid the issuance of an injunction and only allow damages to be ordered. However, compulsory licensing in Brazil is an extraordinary remedy and it cannot be safely assumed that courts would be willing to grant a compulsory licence in a case of violation of a standard essential patent. Regarding damages, the patentee may be entitled to receive compensation due to the violation of the patent. In case of damage claims, an infringer will be forced to transfer to the patentee any benefit she may have received due to the patent infringement (IP Code, art 208). Moreover, the patentee may claim damages due to lost profits, which will be calculated using the following three criteria and adopting the one which most favours the patentee: (1) the benefits that she would have accrued in the absence of the infringement; (2) the benefits the patent infringer obtained with the infringement; or (3) the fees that would have been due if the patent infringer had obtained a licence from the patentee, in order to exploit the patent (IP Code, art 210). Furthermore, moral damages (dano moral) may be ordered if, for example, the reputation of the patentee was affected owing to the patent infringement. Concerning the calculation of damages, the exact amount may already be known from the start, or may be easy to calculate. In those cases, the judgment will already state the exact amount that is due. Nevertheless, the calculation of damages may be more complex. In such cases, a calculation of damages will be made by means of further proceedings (liquidação de sentença), which will discuss not the liability (an debeatur), but only the amount (quantum debeatur). If the patentee prevails, further measures may be also ordered. For instance, destruction of seized goods or publication of a note reporting the main points of the decision in certain newspapers at the expense of the patent infringer, are examples of possible remedies. This publication may also be of interest to an alleged infringer if she prevails in the proceedings. Those remedies follow the general rule on remedies that establishes that a court can only grant a remedy if it was pleaded from the very start of the proceedings (for the patentee) or from the start of the counterclaim (for the defendant). Concerning remedies, the new civil procedural rules do not seem to affect the possible measures that a court may order in patent cases. Regarding the rules on reimbursement of expenses, the new provisions do not alter the main principles on the matter. Nevertheless, Article 84 of the CPC 2015 sets out how to arbitrate attorney fees in certain situations, in which courts have more discretion under current rules.

For compulsory licensing, see section VIII.3.a.

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VIII. Defences, Interaction of Infringement and Revocation Proceedings and Interplay of Competition Law and Patent Law 47

In an infringement action, the defendant may raise a series of arguments to avoid liability. First, the defendant may claim that she is not infringing the patent (for infringing acts, see above section VI). Further defences are certain privileged acts and limitation periods (see below section 1). Finally, invalidity of the litigated patent (or of certain patent claims) is certainly an argument against any liability for patent infringement. However, one may argue that invalidity is currently not a defence as such, as autonomous revocation proceedings have to be initiated according to recent case law. Therefore, invalidity is analysed together with the important issue of the interaction of infringement and revocation proceedings (see below section 2).

1. Privileged Acts, Exhaustion and Limitation Periods 48

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The IP Code in Article 43 lists a series of acts which are privileged, ie acts that do not amount to a patent infringement. Therefore, the defendant may claim that her conduct amounts to a privileged act and avoid any liability. The first privileged kind of act of general application is private use, without commercial purpose, provided that this does not harm the economic interest of the patentee (IP Code, art 43, I). This provision may provide protection for consumers of a patented product, as long as they use the patented product for private purposes.51 Another general privileged act is experimental use related to scientific or technologic research (IP Code, art 43, II) or related to the acquisition of market authorisation of one product (IP Code, art 43, VII). The latter is not only related to pharmaceuticals, as the provision does not place any restriction on the kinds of products that may be covered.52 Moreover, the IP Code privileges two other acts: the preparation of a prescribed individual drug (IP Code, art 43, III) and, in the case of patent related to living matter, the use of the patented product without economic purposes as the source for other products (IP Code, art 43, III). Hitherto, these provisions have not been frequently litigated, but their interpretation may represent a topic for debate in the future. Another defence is exhaustion of the patent rights. Exhaustion of the patent rights is addressed in three different provisions of the IP Code: Article 43, IV and VII as well as Article 68, §4th. The first provision refers to the situation where the product is placed on the domestic market by the patentee or with her consent. According to the usual interpretation, the expression ‘domestic market’ hints at national exhaustion, ie the patentee would have to agree to the marketing of the product in Brazil, in order to exhaust the patent rights.53 However, the limitation to the ‘domestic market’ is not found in the provision regarding the exhaustion related to a patented invention concerning living matter (IP Code, art 43, VI). Therefore, one may argue that those

51 Instituto Danemann Siemsen de Estudos de Propriedade Intelectual, Comentários à Lei da Propriedade Industrial (Renovar, 2005) 87–88. 52 Nevertheless, some interpretations try to reduce the scope of this exception. See ibid 106. 53 ibid 96.

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inventions are subject to international exhaustion. Although this issue still has to be analysed by the courts, the IP Code certainly provides for international exhaustion in patent cases when the patent is exploited in Brazil only by means of imports. In those cases, third parties may also import the product to Brazil without the need to obtain permission from the patentee (IP Code, art 68, §4th). Prior use may also protect a defendant from infringement claims. According to Article 45 of the IP Code, prior use is allowed if the person was, in good faith, making use of the protected object of the patent in Brazil before the date of the patent application or the priority date. This right may only be transferred to a third person if the company—or respective division of the company—is also being transferred. However, prior use will not be recognised as a defence, if the defendant started to make use of the invention after gaining knowledge of it by means of a publication covered by the grace period, which amounts to one year. Furthermore, a defendant may invoke limitation periods in order to avoid any liability. According to Article 225 of the IP Code, damage claims based on the infringement of a patent are barred by a limitation period of five years. As the general period for damages claims is three years (Brazilian Civil Code, art 206, §3rd, V), the period of five years for the protection of patent rights represents an increase in the level of protection of patent rights in comparison to other rights. As patent prosecution in Brazil may take several years, and considering that a patent may be invoked only after it is granted, but it confers protection for acts after the publication of the application (or exceptionally even earlier, according to IP Code, art 44, §1st), this extension of the limitation period seems to be justified.

2. Invalidity and Interaction Among Infringement and Revocation Proceedings 52

53

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A common defence against infringement claims is to claim that the patent is actually invalid. Nevertheless, bifurcated legal systems—ie systems that set up different proceedings for revocation actions and infringement actions—may not allow invalidity to be presented as a ‘defence’ in infringement proceedings. In those cases, the defendant is forced to bring an independent action if she would like to claim the invalidity of the litigated patent. For instance, this is the current situation concerning the interplay of revocation proceedings and infringement proceedings in Brazil. Unfortunately, the relationship between infringement and revocation proceedings is not clearly addressed by the Brazilian IP Code. As explained above, Brazil has a particular way of (normally) bifurcating infringement and invalidity, as the participation of INPI sends revocation proceedings to the federal courts, where infringement proceedings are only exceptionally litigated. As INPI does not take part in infringement proceedings, a counterclaim starting a revocation action is not allowed. INPI would necessarily be a party in the revocation proceedings and would have to join the proceedings, while the prevailing interpretation of the key provision on counterclaims (CPC, art 315) maintains that no litigants can be added by means of counterclaims.54

T Negrão and others, Código de Processo Civil e Legislação Processual em vigor 42nd edn (Saraiva, 2010) 426.

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Filipe Fischmann Moreover, joining revocation claims with damage claims in the federal courts is not allowed according to the case law of the Superior Court of Justice.55 Nonetheless, Article 56, §1st of the IP Code establishes that ‘the invalidity of the patent may be argued at any time as a matter of defence’. Therefore, it is reasonable to interpret this provision as allowing the defendant to claim the invalidity of the patent as an estoppel during infringement proceedings. Moreover, this interpretation complies with the provision on criminal enforcement, which permits the validity of the patent to be challenged in criminal proceedings (IP Code, art 205). Indeed, this interpretation was the prevailing one for more than a decade in Brazil. It was even endorsed by the Superior Court of Justice in several judgments.56 It was commonly understood that the invalidity of the litigated patent could be claimed before the State courts. In those cases, no counterclaim of patent revocation could be brought before the State court, but a defence of patent invalidity was allowed. If the court found the patent invalid, this declaration of invalidity would have only inter partes effects, ie even if a State court declared the invalidity of the litigated patent, it could still be enforced against other defendants.57 Although this ability to raise the invalidity of the patent as a defence was beneficial to defendants, it was also problematic with regard to the use of judicial resources, as State courts and federal courts would have to decide upon the difficult issue of patent validity. Moreover, this could also lead to divergent decisions concerning the validity of the same patent claim. Nevertheless, this situation changed with a decision issued by the Superior Court of Justice in 2012,58 in which it was stated that Article 56, §1st of the IP Code should be interpreted as allowing the possibility to start revocation proceedings before the federal courts at any time. In order to justify this position, the Superior Court of Justice stated that there should be a strong presumption of patent validity. According to the view expressed in this decision, if a person wanted to produce a product protected by a patent, this person should commence the relevant revocation proceedings. In such proceedings, a preliminary injunction (impeding the enforcement of the patent) could be granted in her favour (see above section IV). Although this decision avoids some shortcomings of the previous scenario, it reinforces the bifurcation principle in Brazil, the shortcomings of which have been discussed in recent publications.59

55 Superior Court of Appeal, 7 December 2004, case REsp 1.188.105—RJ. However, at least one new decision from a Regional Court of Appeal has attempted to interpret this decision as permitting infringement claims to be dealt together with revocation claims, if the remedy sought in the proceedings is an injunction regarding future commercialisation, and not damages for past acts (see Regional Federal Court of Appeal for the Second Region, 11 December 2014, case 2013.02.01.001581-6). 56 See eg the headnotes of Superior Court of Appeal, 9 November 2011, case AgRg of the CC 115.032- MT: ‘The invalidity of a patent, with erga omnes effects, can be declared only by an independent action, to be proposed before the federal courts by INPI, or with its intervention—when it is not the claimant (IP Code, art 57). However, the recognition of the invalidity of the patent as a pre-condition, which may lead to the suspension of the effects of the patent, may take place before State courts. Precedents’ (free translation). 57 This consequence is expressly determined by art 205 of the IP Code, which refers to the possibility of claiming the invalidity of the patent as a defence in criminal proceedings. 58 Superior Court of Appeal, 13 March 2012, case REsp 1.132.149—PR. 59 See eg R Jacob, ‘To Bifurcate or not to Bifurcate: That is the Question’ in A Bender, K Schülke and V Winterfeldt (eds), Festschrift zum 50-jährigen Bestehen des Bundpatentgerichts am 1. Juli 2011 (Heymanns, 2011) 819; K Cremers and others, ‘Invalid but Infringed? An Analysis of Germany’s Bifurcated Patent Litigation System’ (2014) ZEW Discussion Paper No 14-072, available at: http://ftp.zew.de/pub/zew-docs/dp/dp14072.pdf.

Patent Enforcement in Brazil 531 57

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The position defended in this decision has been confirmed by the Superior Court of Justice in later cases.60 Moreover, State courts are also following the approach suggested by the Superior Court of Justice.61 Nevertheless, some courts are trying to temper this position by accepting that the argument of patent invalidity be exceptionally considered by State courts in cases of flagrant invalidity.62 Although this is a positive development, for it may quickly protect a defendant from blatantly unfounded claims, it has to be noted that a preliminary injunction would probably be granted anyway by federal courts in those cases. Once a preliminary injunction is granted in revocation proceedings, the infringement proceedings will be normally stayed. Despite or perhaps due to these recent developments, the interaction of infringement and revocation proceedings is subject to controversy in Brazil. For instance, there is a debate as to when infringement proceedings should be stayed, as there is no specific provision concerning patent cases and the wording of the general provision on stay of proceedings may offer solutions that are not adequate for patent cases. According to Article 265, IV, (a) of the CPC, proceedings shall be stayed, ‘when the judgment (sentença) on the merits hinges on the decision of another proceedings, or from the declaration of the existence or of inexistence of the legal relation, which is the main object of a pending lawsuit’. The first problem of the wording of this provision when applied to patent cases is the possibility of staying any infringement proceedings only because revocation proceedings have been commenced. One could argue that the judgment in the infringement proceedings will always depend on the decision of the revocation proceedings, for there will be no infringement if the patent is declared invalid. This extreme interpretation, however, is not endorsed by the courts. The second issue concerning the wording of this provision refers to the word ‘judgment’ (sentença) in Portuguese, as it refers to the judgment of first instance. Therefore, one could be given the impression that infringement proceedings could only be stayed if no judgment of first instance had yet been issued, ie that an appeal could not be stayed. This interpretation is indeed supported by some commentators in Brazil.63 Others argue that infringement proceedings can only be suspended if the revocation proceedings were started before the infringement proceedings.64 Nevertheless, the Superior Court of Appeal did not follow those views. It decided that infringement proceedings may be stayed even after the decision of first instance has been rendered.65 This is a positive development, as it is possible that a defendant may only gather information demonstrating the invalidity of a patent at the appeal stage of the proceedings. In those cases, it is convenient to stay the infringement proceedings, in order to avoid a waste of court resources with proceedings that will likely be rendered moot and unduly constrain defendants.

60 See eg Superior Court of Appeal, 19 June 2012, case REsp 1.322.718—SP; Superior Court of Appeal, 11 December 2012, case REsp 1.251.646—RJ. 61 See Court of Appeal of the State of Rio de Janeiro, 19 August 2013, case 0045233-64.2013.8.19.0000; Court of Appeal of the State of São Paulo, 18 November 2014, case 0006701-29.2005.8.26.0510. 62 Court of Appeal of the State of São Paulo, 5 June 2013, case 0104698-55.2008.8.26.0009. 63 FdB da Rocha, ‘As ações de propriedade industrial e a suspensão do processo em razão de questão prejudicial externa’ (2007) 90 Revista ABPI 60, 67. 64 ibid 63. 65 Superior Court of Appeal, 19 September 2006, case REsp 742.428—DF.

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Filipe Fischmann Be this as it may, it would be better if a single court could decide the issues of infringement and validity of the patent, especially because both issues are decided in Brazil by legally qualified judges, and not by technical judges. Apparently, under the new procedural rules, bifurcation of the proceedings can be avoided. This is because the new rules allow a counterclaim to add new litigants to the proceedings, ie it may be brought against parties other than the claimant, or may be brought together with another party (CPC 2015, art 343, §3rd and 4th). Thus, this provision may permit a defendant in infringement proceedings to file a counterclaim of revocation, which will indeed bring INPI to the proceedings. The fact that the competence of the courts will change does not represent an obstacle, for Article 45 of the CPC 2015 determines that the proceedings will be transferred to a federal court in case of an intervention by a federal institution. If courts allow this practice, the enforcement of patents in Brazil may be optimised with the new civil procedural rules.

3. Patent Enforcement and Competition Law a. Compulsory Licensing and Competition Law 61

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The granting of compulsory licences is an issue expressly addressed by the IP Code in Articles 68–74, which stipulate the different circumstances under which compulsory licences may be granted. For example, compulsory licences may be—and already have been on one occasion66—granted in case of national emergency or public interest. Other examples of circumstances that may lead to a compulsory licence being granted are dependent patents (IP Code, art 70) and the non-use of the protected object of the patent by the patentee for a period of at least three years after the patent grant (IP Code, art 68, §1st). Moreover, the IP Code sets out that a compulsory licence may be granted in case of patent misuse or if the patent is used in a way that violates competition law (IP Code, art 68). These situations and the aforementioned dependent patents and non-use of the patent were hitherto barely applied in practice. Nevertheless, the Administrative Council for Economic Defence (‘CADE’, the Brazilian competition authority), discussed the grant of a compulsory licence for violations of competition law in a case where guidance was requested by the Federal Health Ministry.67 According to CADE, a compulsory licence due to a violation of competition law may be granted in a case, subject to the conditions that (1) the violation of competition law is related to the patent; and (2) that the violation is so grave that it demands the granting of a compulsory licence. CADE also decided that any kind of conduct related to a patent may give rise to the granting of a compulsory licence. This part of CADE’s decision should be welcomed, for it does not limit the granting of compulsory licences to very narrow circumstances, but still safeguards the interests of a patentee. In a case like the one decided, which was very abstract, this decision was probably the

66 In a case of patents covering a drug used in the treatment of AIDS (see Decree 6108 of 4 May 2007). The fee granted by the decree amounted to 1.5% of the price or production cost of the medicament (see art 2 of the Decree 6108 of 4 May 2007). 67 Administrative Council for Economic Defence, 31 March 1999, case Consulta 31/99.

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best that could be reached. Moreover, the majority of the members of CADE decided that a violation of competition law could occur even if the patentee does not hold a dominant position. This is also a correct decision, as the Brazilian Competition Law forbids not only the abuse of a dominant position, but also cases of monopolisation, which can occur even if the patentee does not have market dominance at the time of the conduct. Furthermore, CADE interpreted the law as not allowing itself to grant a compulsory licence, but only allowing it to recommend the grant of a compulsory licence, which would have to be granted by INPI, which, in turn, would be required to grant a compulsory licence in case of a recommendation by CADE. Although this interpretation of Article 24, IV, (a) of the Act 8884/1994 is probably the best literal reading of the provision, one could argue that CADE could not only recommend, but also directly grant a compulsory licence, as it is competent to order measures to stop conduct which violates competition law (the Act 8884/1994, art 7, V). Hence, if granting a compulsory licence were necessary to stop a breach of competition law, CADE should be able to order this measure. Forcing CADE only to make one recommendation, which would bind INPI, needlessly makes the entire proceedings more bureaucratic and time consuming. This situation was unfortunately not completely remedied by the new Competition Act, which only empowered CADE to grant compulsory licences in merger cases (the Act 12529/2011, art 61, §2nd, V), but not in cases of violations of competition law (the Act 12529/2011, art 38, IV, (a)). In those cases, CADE can still only recommend the granting of compulsory licences.

b. Fraud in the Procurement of a Patent and Sham Litigation 65

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68 69

Another possible point of interaction between competition law and patent law in Brazil is fraud in the procurement of a patent and sham litigation. Hitherto, CADE has not condemned any undertaking for such conduct in relation to a patent, but there is one pending case in which CADE’s Complaint Counsel (Superintendência-Geral) claims that Eli Lilly has committed both of these.68 In this case, it is claimed that Eli Lilly tried to obtain a patent for the active substance Gemcitabine knowing that this substance was in the public domain and that Eli Lilly started a series of proceedings against INPI, which impeded the final rejection of the patent application and harmed competition. As this case is still pending, it is important to analyse the two cases already decided. In one case decided in 2010, CADE concluded that an undertaking did not commit fraud in the procurement of design rights, as no fraud was proven in the case.69 Although the decision does not provide detailed guidance about the necessary elements to prove fraud, it contains an important statement regarding the relationship between CADE and INPI. In this decision, CADE recognises that it is not competent to analyse the validity of IP rights granted by INPI, as revocation proceedings are to be brought before and judged by the courts.

Case 08012.011508/2007-91 (pending before the Administrative Council for Economic Defence). Administrative Council for Economic Defence, 28 April 2010, case 08012.005727/2006-50.

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Filipe Fischmann Concerning sham litigation, CADE has already held an undertaking liable to pay R$ 1,774,312.6670 (about €600,000) for starting baseless claims of copyright violation.71 Although this case concerned copyright, it is fair to assume that sham litigation may also be present in the context of patent litigation. For instance, if a patentee brought infringement claims against an act which was clearly not violating a patent, this could give rise to a sham litigation claim, if, for example, the patentee held a dominant position and the infringement proceedings negatively impacted competition.

IX. Wrongful Patent Enforcement 68

An alleged infringer who prevails in the proceedings may also be entitled to recover damages from the patentee. Since the wording of Article 210 of the IP Code refers to the ‘harmed party’ and not to the IP holder, this provision may also be used to provide damages to an alleged infringer if she was the harmed party (eg if she was prevented from developing an economic activity owing to a wrongly granted injunction). This is, however, a topic which needs to be further developed in court practice.

X. Costs and Cost Orders 69

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Attorney fees vary widely in Brazil. Brazilian law does not set any cost caps (like in Germany) and different ways of charging are allowed (billing per hour, an invoice for the entire proceedings, etc). The hourly rate for one lawyer can vary from less than R$100 (about €30) to more than R$1000 (more than €330). Moreover, the fees will also take into account the importance of the case, the expertise of the attorneys, the value in dispute, etc. It is perhaps safe to state that attorney fees in patent cases in Brazil are generally not as high as in the United States or in England and Wales. Moreover, contingency fee agreements are popular in litigation in Brazil in general and patent cases do not represent an exception to this practice. Contingency fee agreements in Brazil may determine that the client will pay to the attorney a certain percentage of the economic benefit of a decision or a lump sum, if a certain result (preliminary injunction granted, final decision grants certain remedy, revocation of a patent, etc) is obtained. Contingency fee agreements represent an incentive for attorneys, who also obtain another incentive from the system of cost orders in Brazil. According to the cost orders scheme in Brazil, the prevailing party will not obtain reimbursement of her attorney fees. However, the losing party will normally have to pay an amount of attorney fees. These fees will, however, be retained by the attorneys of the prevailing party, thereby providing an additional incentive for winning the case. Normally, the attorneys of the prevailing party receive an amount corresponding to about 10 per cent of the value in

70 This value amounted to 5% of the turnover of the company in the year before the commencement of the investigation for infringement of competition law. 71 Administrative Council for Economic Defence, 15 December 2010, case 08012.004283/2000-40.

Patent Enforcement in Brazil 535 dispute. However, this amount may be set according to equity principles if the value in dispute is extremely high or too low.

C. Final Remarks 72

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This analysis has shown that Brazilian higher courts have begun to rethink the civil enforcement of patents within the last decade. Some of the new decisions were certainly welcome, although other decisions could have brought better solutions to patent enforcement. However, the entry into force of the new procedural rules will represent an opportunity for courts to reassess the solutions which have also begun to become consolidated in the case law of lower courts. Nonetheless, the past decisions should not be ignored once the new provisions come to be interpreted. On the contrary, the interpreters should build on the previous debate, as the consequences of previous decisions are at least partially known and can, hence, be critically evaluated. Performing this evaluation, thus, will hopefully enable more efficient, balanced and speedier practices related to patent enforcement to arise in Brazilian courts.

18 Patent Enforcement in Argentina MÓNICA WITTHAUS

A. Introduction: Brief Outline of the System of Civil Procedure In 1995, the Argentinean Patent Act1 underwent radical changes intended to bring it into line with the GATT/TRIPS Agreement. These changes have been reflected in many court rulings; in fact, during this last 20 years there have been more court decisions involving patent law than within the preceding century under the old Law 111. In a first period, these court decisions concerned matters of law such as the term of validity of patents granted before the entry into force of the new law, patents of importation, etc. Today we are in the second phase where we can find many court decisions on issues arising from matters of fact. Such issues are typical of patent compliance, where the decisions of the courts generally presuppose infringement. Argentina has no courts dedicated exclusively to industrial property. The subject is dealt with by the civil and commercial courts of justice and the criminal and correctional courts of justice, which are federal (rather than provincial) courts. Even if the Patent Act includes criminal rules, criminal litigation is not meaningful. There have been very few criminal cases because the parties and the lawyers consider that civil litigation is more effective. The system of civil and commercial federal courts includes first instance courts whose decisions are appealable to the Civil and Commercial Federal Chamber of Appeal. An extraordinary appeal against a judgment by the Court of Appeal may be lodged before the Civil and Commercial Federal Chamber of Appeal and, if admitted, will be decided by the Supreme Court. If an extraordinary appeal is not admitted by the Chamber of Appeal, such rejection may be appealed by filing a complaint for rejection of an appeal to the Supreme Court, which shall decide on its admissibility and—if appropriate— shall hand down the corresponding decision. Proceedings before the Civil and Commercial Federal Courts are governed by the National Code of Civil and Commercial Procedure.

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Patent Act 24 481 in force until 29 September 1995.

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Mónica Witthaus Industrial property agents representing the interested parties in any matter to be referred to the National Industrial Property Institute (‘INPI’) need the assistance of a lawyer if they wish to appear on behalf of the patent holder before the courts. There are not many lawyers specialised in patent litigation. As there are no official statistics to relay on, it is not possible to mention accurate figures, but the number of professionals should be around 30.2 In civil law actions, proceedings before the courts are written, except for hearings that are prescribed by the procedural rules on conciliation and on matters of evidence. The number of hearings depends on the evidence produced by the parties, particularly on the number of witnesses; the average might be up to three hearings in first instance; hearings in second instance are very unusual. The lawsuit may take about three or four years until the Second Instance Decision.3 In practice, lawyers generally enforce patents by means of civil procedure, which is seen as more effective for securing cessation of use of the patent and any compensation claimed. The Mediation Act requires a stage of prior mediation hearings to be held before the court case starts. This stage gives the parties a last chance to reach an out-of-court settlement in the presence of a registered mediator. The results of this process vary, depending on the conflict concerned. However, in practice, mediation hearings held after interim relief measures have been taken are usually effective, saving the holder of the infringed patent time and money. It also allows the alleged infringer a more facesaving and less expensive exit.

B. Problems Related to Patent Enforcement I. Types of Actions 1. Actions by the Patentee 9

The Patent Act provides for several civil actions, which are often brought together in the same lawsuit. They are briefly listed below, while in the following sections they will be discussed thoroughly as to the matter and purpose of each type of action, as well as the parties involved and the applicable procedure:

a. Cessation of Use of the Patent by the Alleged Infringer 10

This action seeks that whoever is infringing the patent ceases its unlawful conduct. The plaintiff must establish that the used, sold, offered or imported product or procedure is covered by the patent claims or that the products involved are directly obtained by the patented process.

2 The number of lawyers practising in trade mark cases is much larger. Some of the law firms specialised in commercial law or even corporate law would also represent their clients in trade mark law cases, but they would rely on a specialist when patents are involved. 3 This is only an estimate of the average which depends on the complexity of the case, the evidence, the number of hearings and incidental proceedings or motions.

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b. Claims for Damages According to the Provisions of the Patent Act and the Argentinean Civil Code 11

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Any person who has suffered an infringement of its patent is entitled to compensation for damages caused by such infringement. This is specifically dealt with in section VII below. In order to protect and ensure the rights of the plaintiff who could be harmed by any delay in the aforementioned procedures, the Patent Act and the Code of Civil and Commercial Procedure provide for interim relief orders, a ‘plea of exploitation’, and the possibility of requesting customs measures either judicially or administratively (see below section B.IV).

2. Defendant’s Actions 13

Each of the following patent nullity and expiry actions, as are further described in section VIII, may be filed as a separate action or defence:

a. Patent Nullity Claim 14

This is the most common answer to any of the above-mentioned actions. This is because the patentee’s claims will become non-admissible if the patent is proved invalid. Furthermore, if interim relief has already been granted on the basis of such invalid patent, the plaintiff will liable for damages (see below section IX).

b. Expired Patent Claim 15

As in the previous paragraph, in this case the action filed by the patentee lacked grounds, since all lapsed patents fall into the public domain.

3. Actions Available to Both Parties: a. Actions Seeking a Declaratory Judgment 16

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Section 322 of the Code of Civil and Commercial Procedure provides for an action seeking a declaratory judgment intended to avoid situations of uncertainty about the existence, scope or nature of a legal relationship, provided that such lack of certainty may result in actual damage or injury to the plaintiff and there are no other legal means of putting an end to such uncertainty. In patent enforcement cases, this action is used to determine the scope of a patent and whether it is null or expired. Therefore, it is of particular interest when someone is afraid of being sued for patent infringement and wishes to establish without doubt that a product or method does not fall under the scope of certain patent claims that could be invoked by an opposing party. The purpose and scope of the above-mentioned actions seeking a declaratory judgment, make them a useful tool also for patentees wishing to make sure that their patent is valid and has the desired scope.

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II. Competent Parties 1. Patent Holders and Licensees 19

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Argentinean patents are governed by Law 24 481 on Patents and Utility Models (the ‘Patent Act’), amended by Law 24 572 (vol 1996) and by Law 25 859 (vol 2004) with Implementing Decree 260/1996.4 The GATT/TRIPS Agreement (Law 24 425) also applies.5 Under this rule, the parties with standing to sue to secure compliance with a patent are the holders and licensees of granted patents. They may appear as plaintiffs in civil actions for cessation of use, compensation etc, and can petition for interim relief and advance proof. Title VI of the Patent Act, ‘Infringement of Rights Granted by the Patent and Utility Model’, sections 81 and 83, provide that in addition to criminal actions, the holder of the patent or the utility model and its licensee, may bring civil actions for prohibition of the continued unlawful exploitation and for compensation for the loss incurred. The injured party may also petition for interim relief after submitting title to the patent or utility model certificate, subject to such guarantees as the judge may deem necessary. The right of licensees to sue depends on the patent holder not exercising the right itself.6 As interpreted by Genovesi,7 the law limits the right to seek damages in criminal proceedings to holders of exclusive licences. Genovesi does not see a holder of a simple (non-exclusive) licence as suffering loss through someone else’s exploitation of the invention, since the simple licence does not guarantee the licensee exclusivity. Despite the clear distinction drawn between the two types of licensee, it should be pointed out that it is inaccurate to assert that a simple licensee suffers no loss from counterfeiting. While a simple licensee loses less than an exclusive licensee, obviously a simple licensee still suffers economic loss from the presence of an unfair competitor, who places identical products on the market without royalty costs for the licence. Therefore, as the letter of the law makes no distinction between the positions of exclusive and simple licensee, a simple licensee must also be accorded the right to bring the legal actions which the patent holder is entitled to bring, only if that holder does not exercise it for itself.8 The courts have recognised the right of the licensees to sue; the proof of the existence of a licensing agreement is not related to any formalities and may result from the parties’ behaviour.

4 Act concerning Patents and Utility Models, Law 24 481, amended under the same title by Law 24 572 (vol 1996) and by Law 25 859 published in Official Gazette No 30 317 of 14 January 2004, regulated by Implementing Decree 260/1996, published in Official Gazette No 28 360 of 22 March 1996. 5 Law 24 425, published in Official Gazette dated 5 January 1995. 6 Patent Act, s 40. 7 LM Genovesi, ‘Acciones civiles y penales’ in C Correa and others, Derecho de patentes (Ciudad Argentina, Buenos Aires, 1999) 334. 8 Patent Act, s 40.

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In Bayer Cropscience Ag y Otro v Cibeles Argentina SA, on the cessation of use of patents and damages,9 the Court ruled that: However, since license agreements are contracts requiring no legal formalities …. and Argentinean law does not require registration of licenses in the relevant patent records…., the question is whether in the case there are any acts by the parties evidencing the existence of a licensor-licensee relationship. Therefore, all these elements lead me to conclude that the patentee in question …….when giving its consent for Bayer Argentina to commercially exploit their invention in our country and to file all legal actions to safeguard the IP rights involved, it has acted as grantor of a license on the invention and Bayer Argentina may be considered the licensee. It is known that the licensor or patentee may authorize the licensee in advance, under a contractual provision, to file all kinds of actions. Furthermore, in this case the aforementioned authorization is explicit since the patentee decided to join Bayer Argentina—its licensee—as co-plaintiffs under the rightful assumption that the potential injury caused to the patentee could also affect those exploiting the invention under their license. Therefore, according to the instruments submitted by the plaintiff and the laws above mentioned, the standing of Bayer Argentina to file the complaint in the case at hand has been sufficiently established.

It is also worth citing the decision issued in Merial Limited v Pharmavet SA,10 where the Court recognised standing to sue of the party which held an exclusive licence for the use of the patent in question.

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2. Owners of Patent Applications and Unpatented Inventions a. Owner of a Patent Application 26

The law says nothing about the rights of an applicant for a patent. Thus there is no specific regulation of the inventor’s rights during the process of granting the patent. To understand how serious this gap in the law is, one need only think of the habitual delays of the formalities leading to a patent being granted, and the speed of technological progress in certain fields. This means the economic attraction of the invention often peaks before the patent is granted. In that case, a literal (ie narrow) interpretation of the law will deprive the applicant of protection when it most needs it. Obviously, this will be the time of greatest exposure to counterfeiters and infringers. Since these have no need to invest in research and development, they can afford the luxury of producing (ie imitating) only those inventions which are on the ‘crest of a wave’. Opinions in academic writings differ on this point, interpreting the law’s silence in various ways. Breuer Moreno wrote his classic treatise on the matter while Law 111 was in force. Chapter VI of that Law, entitled ‘On counterfeiting, its prosecution and penalties’, likewise only mentioned the rights of the ‘patent holder’ and not those of the ‘inventor’.

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Civil and Commercial Federal Court of Appeal, Division I, 25/10/12, Case No 4.567/07. Civil and Commercial Federal Court of Appeal, Division III, 21 December 2010, Case No 4252/08.

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Mónica Witthaus Breuer Moreno argued that an applicant who suffers loss is entitled to take civil and criminal action against the infringer when conditions exist to do so, provided he gave notice to the infringer of the pending patent application before the patent was granted. Such protection is based on Article 17 of the Argentine Constitution, which states: ‘any author or inventor is the sole owner of his work, invention or discovery for the term granted by Law’. This guarantee does not appear conditional upon first obtaining a patent. Instead, it stems from the very fact of the invention.11 Cabanellas notes the legislature’s silence on applicants’ rights before granting of the patent. He concludes that such rights do not exist in Argentinean law, because it is constructed on the principle that the patent holder’s rights only commence on issue of the patent concerned. There is no legal provision allowing a compensatory right to be granted to the holder of a patentable invention which has not yet been patented.

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While regretting the gap in protection, Cabanellas maintains that applicants only have the rights which apply to unpatented knowledge, and the rights deriving from the criminal law protection of unpatented inventions under section 77 of the Patent Act. This system of protection denies unauthorised access to such knowledge, provided the holder takes the necessary precautions to keep it confidential and publicises its intention of doing so. The knowledge must not be disclosed in a manner which enables a normally qualified technician to access it.12 Genovesi13 maintains that ‘the rights granted under a patent exist from the time of granting’ and ‘the criminal provisions of Law 111 referred to infringement of the patent holder’s rights’. Hence to extend those rights to infringement of an application for a patent or utility model would contravene the prohibition against enforcing criminal laws by analogy. It would also be contrary to Article 19 of the Constitution, which provides that ‘no inhabitant of the Nation shall be obliged to do what the law does not command, nor deprived of what it does not prohibit’. He also quotes a 1969 judgment of the Argentine National Supreme Court, whereby the privilege of exploitation of an invention is a concession made by means of the patent. For this reason, to make fraud punishable, Sec. 53 requires that the invention be patented14

While Genovesi contends that this judicial attitude remains valid, he recognises the possibility of a different interpretation, though he certainly does not advocate it. This concerns section 75 of the present Patent Act, which states that ‘defrauding the inventor of his rights shall be deemed an offence of counterfeiting and punished by imprisonment between six months and three years, and a fine’. This refers to ‘inventor’s rights’, unlike other provisions, which refer to the right of the holder of a patent or utility model.15

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P Breuer Moreno, Tratado de patentes de invención (Abeledo-Perrot, Buenos Aires, 1957). G Cabanellas, Derecho de las patentes de invención (Heliasta, Buenos Aires, 2001) 21–26. 13 Genovesi, ‘Acciones’ (n 7) 342 et seq. 14 CSJN (Supreme Court of Justice), 22 July 1969, Fallos, 7:290, ‘Chinchilla v Bosini’. 15 Thus eg s 76, punishes the production of objects and the importation, sale, offering for sale, marketing or introduction to Argentina of one or more objects infringing the rights of the holder of the patent or utility model. 12

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In Novartis AG v Laboratorios LKM SA,16 it was decided that: It is noteworthy that the protection obtained by patenting a product, starts on the granting date and there is no provision regarding the rights of the patentee against non authorized exploitation of their invention during the period from publication of the application and granting of the patent. In many countries, this problem has been solved through the so-called ‘temporary protection’. Thus, laws in several countries, establish that the inventor is entitled—provided the patent is finally granted- to claim damages for infringements committed after publication of the application, or even earlier, if the inventor reliably notifies the existence of the application to the alleged infringer. On the contrary, in Argentina there is no rule on this issue. However, several authors have already stated that such protection should be recognized.17 The truth is that—as has been said—Argentina’s patent system does not grant any rights to the inventor during the patent prosecution, since protection is effective as from the granting date of the patent.

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Section 77 relates to the penalties for ‘disclosure and infringement of inventions not yet protected’ and sets penalties for the following.

b. ‘Whoever Breaches the Secrecy Obligation Imposed by this Law’ 34

This indent undoubtedly tends to protect the rights of an applicant for a patent. It makes clear reference to the staff of the National Patent Authority, who are bound by section 70 of the Patent Act to keep the content of patent application files confidential. The one-third increase in the penalty of section 75, to between nine months and four years’ imprisonment and a fine, reflects the status of the offenders as civil servants.

c. Owner of an Unprotected Invention 35

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Further to what has been said above concerning patent applications, it has to be asked what happens in the case of an inventor who has not initiated any procedure to protect his invention. What has already been said in connection with section 75 (which refers to the ‘inventor’s rights’ and not to the ‘patent holder’s rights’) would also be applicable in this case; but the above-mentioned court decision regarding protection of patent applications, shows a tendency towards a literal interpretation of the patent law, which does not favour the owners of unprotected inventions. Indents (a) and (b) of section 77 concern inventions not yet protected. They punish the behaviour of whoever is a partner, attorney, advisor, employee or worker of the inventor or his assignees and who infringes or discloses the invention as yet unprotected;

Civil and Commercial Federal Court of Appeal Division III 3 July 2012, Case No 11.565/07. IA Poli, ‘Comentario al Proyecto de Ley de Patentes de Invención’ author’s edn (Buenos Aires, 1992) 44; CM Gallo, ‘Las patentes y el artículo 17 de la Constitución Nacional. Ensayo sobre la protección de las patentes antes de su concesión’ in ElDial.com, DCF7D, published on 30 October 2008; C Mitelman, ‘Invenciones de hecho’ in La Ley, 2009-C, 1148. 17

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Mónica Witthaus and whoever obtains disclosure of the invention by corrupting the inventor’s partner, attorney, advisor, employee worker or his assignees. Here the legislature basically envisages the case of someone who has not submitted an application and is thus particularly vulnerable to such conduct, which would deprive his invention of novelty and thus jeopardise his chances of obtaining the patent. Such conduct is punished with the penalty of section 75 plus one-third, owing to such an offender’s relationship with the inventor.

3. Direct Infringers 38

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Anyone producing, using, offering for sale, selling or importing a product covered by a patent without the consent of the patentee infringes the patentee’s rights. These acts constitute an infringement regardless of the method used to obtain the product (Patent Act, s 8(a)). In case of process patents, anyone using the process or anyone using, offering for sale, selling or importing for such purposes a product obtained directly by the patented process without the consent of the patentee infringes such patent (Patent Act, s 8(b)). The following constitute specific, aggravated, cases of infringement: (1) partners, agents, consultants, employees or workers of the inventor or his successors appropriating or disclosing an invention which is not yet protected; or (2) corruption of partners, agents, consultants, employees or workers of the inventor or his successors to obtain the disclosure of the invention or (3) breach of the duty of confidentiality provided for in section 77 of the Patent Act). The latter case refers to civil servants, in particular, officials and employees of the local Patent Office.

4. Contributory Infringers 41

While the Patent Act does not contain provisions addressing indirect infringement, it is unlawful under the general principles of law: those who have participated as perpetrators, advisors or accomplices in any act causing damage by intent or negligence are jointly and severally liable, which is applicable to the case of infringement of patent rights.

III. Competent Courts 42 43

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Section 89 of the Patent Act empowers the judges of the Civil and Commercial Federal Court to hear civil cases. This competence according to subject matter is supplemented by the provisions of the Codes of Civil Procedure, depending on location (seat of the defendant; place where tort occurred). Thus, the national federal courts of the Federal Capital (Civil and Commercial) or their provincial counterparts are competent, as the case may be. These courts are not dedicated exclusively to industrial property. Nevertheless, in civil cases, at least, industrial property can be said to account for a very large proportion of the matters resolved by the courts. It is therefore a major area of specialisation for them.

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Civil and Commercial Federal Courts have one-judge courts in the first instance and collegiate courts in the appellate instance. In the City of Buenos Aires, where the largest number of trials are filed, such Chamber of Appeals is divided into three divisions, each with three judges. The decisions of each of these three divisions are delivered by the majority vote of the three judges, each casting one vote. All decisions contain, in the first place, the leading opinion and then the opinion of judges that support the majority decision or—in case of partial or total dissent—the votes of the other two judges, so that minority opinions are also published. In most cases, this decision will be final. In case of admission of an extraordinary appeal alleging that constitutional rights are in jeopardy, it will be decided by the Supreme Court, which has five members and is not divided into divisions. Decisions are made by an absolute majority of its members. Also in this case minority votes are published.

IV. Preparation for Trial: Interim Relief and Advance Proof 1. Importance 46

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This point is tremendously important to the subject of concern to us here. When there are no adequate provisions for interim relief or for correct interpretation and application of such relief by the courts, the best decisions on the merits of the case will prove totally abstract and merely theoretical, lacking teeth to prevent or compensate for the loss caused by infringers. The dictum ‘justice delayed is justice denied’ is true in this field as in no other. Applicable provisions are those of the Patent Act, the formal codes and GATT/TRIPS. Under the Constitution, the last prevail over the first and second.

2. Relief Provided Under the Patent Act 48

The injured party may petition for the following interim relief, subject to such guarantees as the judge may deem fit: — seizure of one or more examples of the infringing objects, or description of the process complained against; — an inventory or attachment of the forged objects and of the machinery especially designed to manufacture the products or to carry out the process that allegedly infringe.18

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In this case, the law clearly requires production of title. Hence, in principle, only the holder of the patent can obtain this kind of protection. The title to the patent serves to prove the ‘plausibility of the right’, which is always required in such cases. An inventor whose invention was not protected by a patent would be denied this kind of protection (eg an applicant who has not yet obtained the patent).

18 Patent Act, s 83.1. As for the list of measures provided for in this provision, Aracama Zorraquín, who analysed the draft, states that the law ‘should say inventory “and/or” attachment—one and the other, not one or the other, as the draft says’. This comment is still accurate as the text of the draft has not been modified on this point. (E Aracama Zorraquín, El proyecto de ley del Poder Ejecutivo sobre régimen de patentes de invención y modelos de utilidad vol 147 (DE, Buenos Aires, 1992) 811.

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Mónica Witthaus It is worth asking whether a licensee could apply for such relief if the patent holder did not take the action to which it was entitled. In this case, we think a broad interpretation of section 40 must lead to a positive answer. Otherwise, the right granted to the licensee would lack any genuine effectiveness. Case law has recognised the rights of licensees to obtain interim relief. Thus, in the case Bayer AG v Agtrol International Argentina SA19 it was decided that With regard to the standing of the plaintiff, it is noted that Law 24 481 provides that ‘The licensee under a patent license agreement shall have the right to exercise the legal actions available to the patentee’ when such patentee has failed to do it (Sec. 40); likewise, the same rule also provides that ‘… the holder or licensee of a patent or utility model may bring civil actions intended to stop unlawful exploitation and seeking compensation for the loss suffered’(s 81). Therefore, in view of the instruments submitted by plaintiff and the above-mentioned laws, the standing of plaintiff to request the interim relief measures analyzed herein is in principle sufficiently established. To all this we must only add that the above legal citation is fully applicable to this case, in accordance with the provisions of s. 97.

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Until the enactment of Law 25 859, such relief was granted ex parte according to the general principles. The judge thus had to ask the holder of the patent or utility model for whatever guarantee was regarded as necessary, either in the form of a promise or a real guarantee. Given its function of ensuring possible compensation for unjustified losses, the amount would depend on the seriousness of the consequences of the requested relief, the plausibility of the applicant’s right, etc. The new section 83(2)20 stipulates that judges are allowed to order interim relief regarding a patent in order to: — prevent patent infringement, and in particular to prevent the entry of goods into the channels of commerce, including imported goods immediately after customs clearance; and — preserve relevant evidence with regard to the alleged infringement: provided the following conditions are met: a) there is a reasonable probability that a plea of nullity of the patent by the defendant will be rejected; b) the delay in granting relief causes irreparable damage to the holder; c) the loss caused to the holder exceeds damages to the alleged infringer if the relief is wrongly granted; and d) there is a reasonable probability that the patent is being infringed.

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If these conditions are met, in exceptional cases, such as a demonstrable risk of destruction of evidence, the judges may order these measures inaudita altera parte. In all cases the judge will require an officially appointed expert to give an opinion on points (a) and (d) above within 15 days. If interim relief is granted, the applicant must provide a sufficient guarantee or bond in order to protect the defendant and to avoid abuses. According to the new provisions, interim relief will only be ordered when the stipulated conditions—some of them not present in the text of Article 50 of TRIPS21—are met. Civil and Commercial Federal Court of Appeals, Division II, 12 February 2002, Case No 7809/01. Introduced by Law 25 859. This refers particularly to points (a) and (c).

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Previously, interim relief was ordered by the judges ex parte according to the principles of the Civil and Commercial Code of Procedure governing this sort of measures, and the injunctive relief was ordered on the basis of Article 50 of TRIPS and section 232 of the Code of Civil and Commercial Procedure. The conditions listed in points (a) and (c) of section 83(2)—which require the appointment of an expert, who has 15 days to give an opinion—hardly seem compatible with the speed which is essential to interim relief. The existence of those conditions can only be established in a fact-finding process that allows the judge to acquire a detailed knowledge of the facts through a wide range of proof not subject to the constraints of urgency. The required determination as to whether ‘there is a reasonable probability that a plea of nullity of the patent by the defendant will be rejected’ according to section 83(2) is a sort of judicial revision of the examination made by the Patent Office before granting the patent, ignoring the presumption of validity of administrative acts which is clearly applicable to the title of the patent holder. As a plea of nullity is one of the most timeconsuming processes in IP law, it is difficult to see how the patent holder would be able to demonstrate this point in time to prevent the damage caused by infringers. Validity of a patent is not an issue that can be decided upon by summario cognitio. This has been recognised by case law, and efforts have been made to adapt this requirement to those of an interim relief measure, as it is apparent from the judgments summarised below. On the other hand, one of the main prerequisites to be fulfilled by a party that applies for interim relief is the bond (guarantee) required to assure the compensation of the damage caused by a measure grounded on an invalid patent or otherwise unjustified or wrongly granted. The conditions provided in point (c) ‘the loss which the holder may suffer exceeds the loss of the alleged infringer if the relief is wrongly granted’, are also questions that can only be established, and not easily, by proof. Even in long fact-finding processes where payment of damages is sought, the issue of proof of damages caused by the infringer is always a difficult one. It is difficult to make this requirement compatible with the urgency inherent to interim relief. Furthermore, the comparison of damages as proposed in this point may lead to inequitable decisions when the patent holder seeking interim relief is a small company or a natural person.22 As has been said before, the guarantee that the party seeking interim relief has to bring, is meant to compensate the counterparty in case of wrongly granted relief. Pursuant to the amendment, measures can be only granted ex parte in exceptional cases, such as the existence of a demonstrable risk of destruction of evidence.

22 According to point (c), when the illegal commercial activity is on a large scale and therefore the losses caused to an infringer by an injunction would be great, he would have many opportunities to avoid the application of the measures contained in s 83; even if the wording of point (c) refers to ‘wrongly granted’ relief at this point, it is always difficult to be absolutely sure whether the measures granted are justified (this is why the patent holder is asked for the above-mentioned guarantee), and this point may represent an obstacle for a small patent holder seeking interim relief. Last but not least, it is also important to point out that in many cases the ‘losses’ suffered by the infringer as a consequence of an order to cease exploitation will equal the patent holder’s lost earnings.

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Mónica Witthaus In the framework of the Argentinean legal system this means to ignore the principles of interim relief:23 in most cases this sort of legal measure would be deprived of teeth to prevent the damage caused by the infringers if they were not granted inaudita altera parte: surprise is one of the main requisites for their effectiveness. Although the Official Explanations to Law 25 859 show that the referral of this bill is the result of the agreement reached between Argentina and the US during nine rounds of consultations held at the US’s request, with a view to resolving differences in the framework of the WTO, and its aim is said to bring Argentina’s legislation into line with Article 50 of TRIPS, the amendments introduced in sections 83 and 87 Patent Act do not provide a stronger protection of the rights of the patent holder, but, on the contrary, make it more difficult to obtain the measures authorised by Article 50 of TRIPS. Section 83 of the Implementing Decree provides that: the interim relief and the guarantees for its appropriateness, as provided by Sec. 83 of the Act, shall not preclude the granting of other interim relief in the terms provided by the substantive or procedural law applicable in each case.

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This provision is hugely important, and has played a prominent role in the discussion in academic literature on the direct application of certain GATT/TRIPS measures and their harmonisation with the provisions of the specific law. In general, after this amendment the courts have applied the provisions of section 83(2) and rejected claims for the direct application of Article 50 of GATT/TRIPS. However, it has been recognised that the requirements of (a) and (d) tend to distort the nature of interim relief measures. Therefore, the tendency has been to adapt such measures so they do not lose their flexibility and efficiency and the door to the application of Article 50 has not been closed. In this sense, the analysis made by the Court is particularly interesting in the case of Bristol Myers Squibb Company,24 where it states its opinion on the new section 83(2), its compatibility with the TRIPS Agreement and case law before the amendment of section 83. The Court held: 5. The discussion about the timeliness or suitability of this amendment to the Patent Act are unrelated to this legal dispute. Prior to the entry into force of such amendment, the courts had ruled in the sense that the standards of protection under Article 50 of TRIPS—directly operational—allow the judge to issue effective temporary measures, even without hearing the other party and in the general terms of the national procedural law, when there is something more than a ‘fumus bonis iuris’ [likelihood of success on the merit of the case], and given the likelihood that any delay would cause irreparable harm to its holder.25 7. The new system of Sec. 83 (II) of the Patent Act (as amended by Law 25 859) provides that, prior to issuing the order, the judge will require an officially appointed expert to give an opinion on two points, namely, the reasonable probability that, if the validity of the patent were to

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According to the Code of Civil and Commercial Proceedings, these kinds of measures are granted ex parte. Civil and Commercial Federal Court of Appeal, Division I, 22 May 2007, Case No 1412/07. 25 Civil and Commercial Federal Court of Appeals Division I, cases 1440/97 dated 29 May 1997; 3925/05 dated 30 June 2005; Division II, cases 7809/01 dated 12 February 2002 and 7067/02 dated 1 August 2003; Division appointed to hear urgent matters while courts are in recess, case 188/03 dated 24 January 2003). 24

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be challenged by the defendant, it would be found valid,—paragraph a)—and the reasonable probability that the patent may be infringed—paragraph d). The first requirement seems odd for a patentability system as that of Argentina, where the granting of a patent is determined by a highly qualified administrative body, which examines the conditions of patentability and issues a formal act which enjoys a presumption of validity. Perhaps the historical background of this law, i.e., the ‘mutually agreed solution’ between Argentina and the United States under the WTO Dispute Settlement Understanding, explains the inclusion in our system of this requirement. In any case, it is necessary to give this rule a sense consistent with the context in which it appears, that is, within the framework of a national legislation that should provide the protection level established by an international treaty. This means that it is not conceivable to file a counterclaim for title invalidity during the interim relief proceedings. To ensure that implementation of the order does not lose agility and efficiency, the judge, with prior technical assistance, shall assess the admissibility of the measure according to rigorous criteria to a ‘satisfactory certainty’ that there is a reasonable probability of title validity, of the scope of the patent, and of the reasonable existence of an infringement. Certainly, the new legal system differs from the practice developed and wisely used by the judges of the forum before the amendment. However, it is not incompatible with the letter and spirit of the commitments assumed by Argentina under the TRIPS Agreement. This does not mean that in an exceptional case, judges cannot apply the powers they receive from the whole body of laws—including Article 50.2 of the TRIPS Agreement—to grant emergency relief when there is certainty of a patent infringement and it would be unreasonable for the judge to remain inactive against an imminent irreparable harm.

70 71

In the case of Bristol Myers Squibb Company26 the same considerations are repeated. In the case of Eli Lilly and Company,27 in which the plaintiff sought the application of Article 51 of the TRIPS Agreement as well as of Law 25 986 (which authorises customs to start, even ex officio, the detection and retention of goods that may be infringing patent rights), while opposing the application of section 83(II), under the arguments of superiority of the provisions of the TRIPS Agreement over domestic laws, the Court decided that such internal rule should anyway be applied: 4. … it is important to clarify, in the first place, that the purpose of the injunction clearly falls within Sec. 83 (II) of the Patent Act, beyond the laws invoked by the petitioner. In fact, said section, in the part relevant to this case, says ‘… (II). Judges may order interim relief regarding a patent granted according to sections 30, 31, and 32 of the law in order to: l) prevent patent infringement and, in particular, to prevent the entry of goods into the channels of commerce, including imported goods immediately after customs clearance; 2) Preserve relevant evidence with regard to an alleged infringement…’. It is then that, while the law maker has specifically provided for situations such as the one dealt with in this case, it is not possible to overlook the application of the law, since—as has been ruled by the Supreme Court-, judges cannot replace the law maker but rather apply the law as it has been conceived (see decisions 300:700, 316:2695, 321:1614 and 324:1740).

26 27

Civil and Commercial Federal Court of Appeals, Division I, 18 June 2013, Case No 1412/2007. Civil and Commercial Federal Court of Appeals, Division I, 20 September 2005, Case No 4432/2005.

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Mónica Witthaus 5. On this point, it must also be said that the argument concerning the supremacy of international treaties recognised in section 75 (2) of the Constitution in relation to the TRIPS Agreement—as argued by the appellant—and to the alleged inconsistency of the amendment to the Patent Act by Law 25 859 with the provisions of Article 1.1 of TRIPS involve issues beyond the cognitive framework of an interim relief measure, especially if it is to be granted ‘ex parte’.

3. Expiry of Interim Relief and Prior Mediation 72

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The relief conferred by section 83 remains ineffective if the applicant does not bring corresponding legal action within 15 days.28 It is necessary to view this provision in the light of the Mediation Act.29 This Act subjects all disputes not expressly excluded to its provision of pre-trial mediation. This covers disputes over infringements of the Patent Act. Section 5.f of the Mediation Act mentions interim relief as a possible prior procedure excluded from the mediation process. Under the Act, the sequence is as follows: interim relief is granted; a request for mediation is lodged and implemented; if agreement is not reached, the legal action starts. Pre-trial mediation will only start once the ordinary channels of recourse for interim relief have been exhausted. The start of mediation suspends the 15-day term of expiry.30 Under the previous Mediation Act, which was not clear on this point, various judicial rulings had already established this solution—and not only with regard to patents.31 20 days after mediation is complete, the term starts to run again.

a. Cessation of Exploitation 74

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Section 87, ‘plea of exploitation’, amended by Law 25 859 states that, ‘In cases in which interim relief has not been granted as per Sec. 83 Patent Act, the petitioner may request a guarantee from the defendant for the continued exploitation of the invention’.32 This provision is intended to strike some kind of balance between the rights of the opposing parties—the patent holder and the alleged infringer—in the course of the proceedings to establish whether the alleged infringement has taken place. Accordingly, should this section become applicable, the law will allow two possible alternatives—continuation of the exploitation presumed infringing, with a guarantee by the alleged infringer, or cessation of exploitation with a guarantee by the patent holder. If the alleged infringer decides to continue exploiting the invention for the time needed to obtain a ruling on the merits of the case (certainly a matter of years), the patent holder has no way of stopping it.

Patent Act, s 86. Mediation Act, Law 26 589. 30 ibid, s 18. 31 Civil and Commercial Federal Court of Appeals, Mayo Marcos, Daniel v Pelikan SA, Case No 2024/2001 of 5 April 2001; Civil and Commercial Federal Court, Order de Jaijel, Fanny et al v Tesis Grupo Editorial Norma; Case No 22 524 of 10 February 1998; Civil and Commercial Federal Court of Appeals, Bodega Navarro Correas SA, Case No 11 018 of 11 July 2001; National Civil Court, 26 December 1997, Neyra, José Alberto v Botello, Miguel, of 8 July 1998, 6. 32 Under the former s 87, the criteria for setting the amount of this guarantee were based on various norms, such as the plausibility of the right and the extent of the alleged loss, taking into account the commercial value of the product in question, the quantity manufactured, etc. The aim is to establish an amount which guarantees that the summonsed person will behave reliably. National Civil and Commercial Federal Court of Appeals, Division II, 6 July 1999, ‘American Cyanamid Company et al v IPESA SA on plea of exploitation’, Case No 172/99. 29

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b. Border Measures 75

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According to section 8(2) of the Implementing Decree, a patentee that has become aware by any means of the importation of goods infringing the IP rights granted by the law will be entitled to bring the appropriate administrative or legal actions. This Decree, as well as the provisions of Articles 44(1), 50 and 51–59 of the TRIPS Agreement provides grounds for requesting the court to issue interim relief measures intended to prevent imports of infringing products, by delivering the said order to the customs authorities. It should be noted in this regard, however, that the provisions of the TRIPS Agreement expressly refer to trade marks, and they are not binding in the case of patents. The text of section 8 of the Implementing Decree, which refers to the standing to file administrative proceedings, allows the patentee to request such measures directly to the customs authorities.33

4. Provisional Measures Provided Under TRIPS 77

The interim relief specifically provided by the Patent Act must be supplemented by the provisional measures included in TRIPS. For brevity’s sake, we will not list them here, but they are applicable because of the status which international treaties hold in the Argentinean legal order. Despite the discussion generated about the application of Article 50 to patent disputes, this general principle is unquestioned.

5. Other Provisional Measures a. The National Code of Civil and Commercial Procedure 78

Measures of interim relief provided by the National Code of Civil and Commercial Procedure may also be requested. In addition to the attachment and seizure specifically provided under the Patent Act, the Code provides for the following measures: — judicial intervention, consisting of the appointment of an inspector to collect the seized assets, if these relate to income or proceeds (eg income from payment of a licence fee). Alternatively, the inspector may provide information about assets, transactions or activities related to the proceedings; — a general freeze of assets, preventing the debtor from selling or encumbering his assets, by entering the measure on the relevant registers. This may take place in cases where there is reason for attachment, but cannot take effect if the debtor’s assets are unknown or do not meet the amount of the debt claimed; — the registration of the lawsuit, by entry in the appropriate register of the existence of litigation which may result in amendment of existing entries; — the prohibition of development where there is a danger, if a given situation of fact or of law changes, that this change may affect the judgment or render its enforcement ineffective or impossible;

33

M Bensadón, Derecho de Patentes (Abeledo Perrot, Buenos Aires, 2012) 537 and 539.

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Mónica Witthaus — the prohibition of contracting: when a prohibition of contracting concerning certain assets is necessary by law or by contract, or to ensure forced execution of the assets subject to the order, the judge will order this to be entered on the appropriate registers and notified to the parties concerned; and — general interim relief: under the Code of Civil and Commercial Procedure, section 232, if a party has good reason to fear that he may suffer imminent or irreparable harm before judicial recognition of his right, he may apply for emergency relief. Depending on the circumstances, these measures will be the most apt to ensure provisional compliance with the judgment. The latter measure is particularly important, as it eliminates the rigid and taxative nature of the enumeration.

6. Measures of Advance Proof 79

The Argentinean procedural order also allows for measures of advance proof. This means a given proof may be produced before commencement of the proceedings, if the passage of time may jeopardise such production. Under section 326 of the Civil and Commercial Procedure Code the measures which may be requested in advance are the following: a statement by a witness who is very old, seriously disabled or about to leave the country; judicial recognition or expert opinion to record the existence of documents or the state, quality or condition of objects or premises; and a request for information.34

V. The Judicial Proceedings 1. Civil Proceedings 80 81

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As provided by the Patent Act, civil proceedings will follow those of ordinary cases. The National Code of Civil and Commercial Procedure governs the procedures of an ordinary case. This is the widest of the fact-finding processes, and therefore the one in which the parties have greatest scope for obtaining a ruling based on a detailed knowledge of the facts. This is because it is not subject to the constraints of other, more urgent processes. Therefore it is also the most time consuming, basically due to the wider scope of the proof and the allowance of longer periods of time. The Code of Procedure makes the representation by a lawyer compulsory. Any document not signed by a lawyer is deemed not submitted. This is common to all civil proceedings. It means that industrial property agents who can represent patent applicants before the INPI by power of attorney or, less often, by authority, cannot do so without the support of a lawyer in court.

34 Finally, mention should be made of the possibility of applying for preliminary measures tending to facilitate the start of proceedings. Of these measures, the following should be noted: that the person against whom it is proposed to assert the claim must make a sworn declaration of any fact relating to its personality. Without corroboration of this, legal action cannot commence. If the eventual defendant has to leave the country, he has to elect domicile. Identification of goods must be carried out, and notice is served for acknowledgement of the obligation to render account, etc (s 323).

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Before the trial, the mediation required by Law 26 589 must be carried out.35 The stages of ordinary proceedings are set out below:

a. First Instance: Petition, Submission of Demurrers, Defence Pleadings and Counterclaim, Proof, Judgment and Execution of Judgment 85

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Once the terms for defence pleadings or counterclaim have elapsed and the demurrers have been resolved, the judge opens the case to evidence. Before starting the stage of production of evidence tendered, he invites the parties to a hearing at which he attempts conciliation or another form of conflict resolution. He receives evidence of confessions, if offered by the parties. Then he clarifies the evidence offered, admitting that which deals with disputed or indicative facts. He rules on opposition to opening the case to evidence, and declares the case to be judged on the pleadings (without receiving evidence) if applicable. He decides on the admissibility of the evidence offered, and resolves the parties’ objections in this regard. The judge and the parties may propose conciliatory formulae. If the parties reach agreement, a document is drafted to this effect and approved. If, on the other hand, this conciliatory attempt is unsuccessful, the stage of production of evidence commences. The Code of Civil and Commercial Procedure, section 377, places the onus of proof on whoever asserts a disputed fact. Each party must prove that it meets the factual precondition of the provision it is invoking as the basis of its claim, defence or plea. This is different for process patents (Patent Act, s 88). Here, the defendant has to prove that the process used by him is different from the patented process; however, the judges are allowed to require the plaintiff to introduce evidence to show that the process used by the defendant infringes the patent and that he is the legal holder thereof in case the product obtained by the protected process is not new. When obtaining evidence under this section, the legitimate rights of the defendants regarding the protection of their industrial and commercial secrets will be taken into account. Even if the obligation introduced by the amendment seems intended to make the protection stronger, the obligation to prove that the product obtained by the patented process is new given the assumptions of lack of novelty included, is a burden imposed on the patent holder which is stricter than the conditions included in Article 34(2) of TRIPS. These provisions are criticised by Poli, who points out that the novelty of the invention has to be established at the moment the application is filed and not at the moment of the infringement and that the requirements introduced may result in the reversal not being applied in the case of parallel imports.36 The Code of Civil and Commercial Procedure provides for the following types of evidence, although this listing is not exhaustive:37 documentary evidence, evidence

35 As regards prior mediation in industrial property disputes, including patents, this is analysed in more detail in M Witthaus, ‘Mediación y propiedad industrial: Críticas e interrogantes a un año de iniciado el camino’ in Temas de derecho industrial y de la competencia (Buenos Aires, 1999) 241 et seq. 36 Poli, ‘Del Dicho al Hecho: Las Medidas Cautelares en el Proyecto de Reformas a la Ley de Patentes’. 37 Under s 378, evidence must be produced by the means expressly provided by law, and by such means as the judge may dispose, at the request of a party or by official order, provided the moral well-being and personal freedom of the litigants or third parties are not affected, and no specific ban applies to the case.

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Mónica Witthaus of records and requested files, evidence of confession (commonly called confessional evidence or close of pleadings), witness evidence, expert evidence and judicially examined evidence. Most questions arising in patent proceedings are technical. As the parties are assisted by lawyers, whose training is solely legal, like that of the judge, expert evidence is extremely important here. The procedural order allows each party the right to appoint a technical consultant. This allows parties to present alternative interpretations to the content of the report of the court-appointed expert, or to challenge that report on technical grounds. As civil proceedings are written this means the filing of a writ by the party challenging the report or asking the expert to clear a point, which will be answered by new a writ of the expert.38 The result of the expert’s report is vastly important because, lacking technical education, the judge will rely on it in most cases to issue his decision even if he is not legally bound to do so. Once the evidence tendered by the parties has been produced, they are entitled to submit their ‘alegato’, ie a written pleading on the merits of the evidence. For this purpose, the file is lent to the lawyers in due order. Having submitted these pleadings, or after the period allowed for this purpose, the judge calls the proceedings for judgment and issues the final judgment.

b. Second Instance 92

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An appeal may be lodged against the judgment of first instance. This opens the proceedings before the second instance, in this case the National Civil and Commercial Federal Chamber of Appeals. Having referred the case to the Chamber, the appellant must submit a written statement of objections justifying the appeal. This will be passed to the opposing party, who will have the opportunity to submit the corresponding defence statement. Resolution of the case proceeds once the statement of objections and the defence statement have been received, or after the period allowed for the latter and (exceptionally),39 on production of the appropriate evidence. The judgment of second instance will be given by majority: each judge casts his vote in the order in which he was chosen, providing justification or conforming to the vote of another. The procedural order allows appeal against refusal of leave to appeal. This allows the party to petition directly before the Chamber that the appeal, denied in the first instance, be allowed. Although the judgment of the court of second instance is normally final, in the cases allowed by section 14 of Law 48,40 an extraordinary appeal may be made before the Supreme Court.

38 The judge may set a special hearing in order to listen to the experts but this would be exceptional and usually does not occur. 39 The production of evidence at the second instance is exceptional, and only occurs when probative measures were denied at first instance, when negligence has been declared in relation to the measures, or when new facts arise. 40 Under s 14 of Law 48, pleading before the Supreme Court is authorised in the following cases: when the action has questioned the validity of a treaty, an act of Congress or an act of an authority executed in the name of the nation, and a ruling has been given against its validity; when the validity of a law, decree or decision of a

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The court, at its own discretion may reject the extraordinary appeal when the matter at issue proves to be groundless or is of no transcendental importance (Code of Civil and Commercial Procedure, s 280). It is also possible to file a complaint for rejection of an appeal, which shall be directly submitted to the Supreme Court.

VI. Types of Infringement 97

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99 100

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A patent gives its owner the exclusive right to manufacture, use, offer for sale, sell or import the product covered by the patent, in the case of a product patent, regardless of the process used to obtain it. In case of a process patent the owner has the exclusive right to use the process and to use, offer for sale, sell or import for such purposes any products obtained directly by such process (Patent Act, s 8(b)). Therefore, performing these acts without the consent of the patentee or their successors or assignees constitutes an infringement of the rights of the patentee. In the case of manufacturing, this is seen as an infringement if it is carried out in the territory of Argentina, regardless of their subsequent destination: any person manufacturing a product, even if the whole production is intended for exportation, infringes the Patent Act. An infringement is also committed even if the manufactured product is not identical to the patented product, if it includes it, ie if in addition to any of the patent claims it includes additional elements. When applying the theory of equivalents a product infringes a patent when it has replaced one of the elements included in the claims in an obvious manner.41 Use is considered an infringement in case the product is used by the infringer itself or it has been acquired from the infringer and not from the patentee or its licensee, ie when the rights of the patentee have not expired before falling into the hands of a user. ‘Sale’ not only refers to a sales agreement, but to any placing of the patented product on the market. An offer for sale is independent from the possession of the protected product and is considered to exist when there is any public offering of the product; possession or storage of the product is an infringement in itself.42

provincial authority has been questioned on grounds of contravening the national Constitution, a treaty or an act of Congress and a ruling has been given in favour of the validity of the provincial law or authority; when the meaning of a clause of the Constitution, of a treaty, an act of Congress or a commission performed in the name of the government has been questioned, and a ruling has been given against the validity of the title, right, privilege or exemption on which the clause in question is based, and that ruling forms the subject of litigation. In addition to the above cases, there is the ‘praetorian creation’ of ‘arbitrary judgment’. This means pleading before the Supreme Court is allowed in cases which, while not concerning any of the legal conditions, nevertheless resulted in a plainly arbitrary ruling, which necessitates a review. 41 M Bensadón, Ley de Patentes Comentada y Concordada con el ADPIC y el Convenio de París (Lexis Nexis, Buenos Aires, 2007) 143. 42 ibid 144.

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Regarding importation of a patented product, it should be noted that parallel imports are legal in Argentina, given that patent law follows the principle of international exhaustion of rights.43 In the case of process patents, protection extends to products directly obtained by the patented process. This provision was introduced in order to prevent any person without the authorisation of the owner to use the process protected in another country and then introduce the product into Argentina, which otherwise would not be protected by the law, enabling the infringer to circumvent the rights of the patentee. As stated above in section B.II, there are provisions for aggravated infringements by partners, agents, consultants, employees or workers of the inventor or their successors or assignees involving the appropriation or disclosure of an invention still not protected. It is also an aggravated infringement to obtain disclosure of the invention by corrupting the partners, agents, consultants, employees and workers of the inventor or their successors or assignees; the breach of the duty of confidentiality is provided for by the law (Patent Act, s 77).

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VII. Damages 107

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Under section 81 of the Patent Act, the patent holder and his licensee may bring civil actions to obtain compensation for loss incurred. This provision is supplemented by the Civil and Commercial Code, sections 1716, 1737 to 1740 referring to damages, and 1749 on direct responsibility.44 As for the rules of compensation, mention should be made of the following: 1. Consequential loss, the damage suffered by the patent holder: a fall in sales and therefore of profits; a fall in the prices of the product on the market, reflecting the counterfeiter’s lower costs, enabling him to sell them more cheaply; and less possibility of reinvestment, etc. 2. Loss of profit, the earnings of which the injured party is deprived by the infringer’s unlawful action. It is caused, inter alia, by loss of custom due to the counterfeiter’s unfair competition, sometimes to the point of ruin. Some case law has made a distinction between this concept and that of the profits earned by the infringer, which it treats merely as an indication.45 In some trade mark

43 According to s 36(c) of the Patent Act. The Implementing Decree is not clear on this point. Regarding trade marks, case law considered that parallel imports are legal; the Trade Mark Act itself does not include any provision on this point. 44 The mentioned sections of the New Civil and Commercial Code (Law No 26 994), in force as of 1 August 2015, replace ss 1069, 1077 and 1109 of the former Civil Code. 45 In Ancase SA v Zugolan SA, it was stated that ‘what has to be established is the loss suffered by the plaintiff, not the gain procured by the opposing party. Such gain “can only serve as a guide to gauge the scale of the loss, especially since, as far as making gains is concerned, the use of the trade mark (patent in this case) is but one of many factors contributing to this end”’ (Civil and Commercial Federal Court of Appeal, 30 October 1992, Case No 8072). Likewise, concerning infringement of trade mark rights, ‘the loss cannot be demonstrated in terms of the sales which defendant may have made since, as this Court has stated, there is no necessary correlation between income on the one hand and loss of earnings on the other (Division III, 19 September 1985, case 2020). This applies especially when it is unproven that the plaintiff ’s trade mark was so well-known that it can be presumed

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cases, however, the infringer’s earnings have been used as a basis to quantify this heading.46 3. Pain and suffering as per section 1078 of the former Civil Code (replaced by ss 52 and 1738 of the New Civil and Commercial Code), applicable without the need for proof, provided an unlawful act has taken place and the claimant holds the right. In this case, pain and suffering take the form of discrediting the legitimate patent holder’s business, entailing loss due to the presence of forgeries on the market, possibly of far inferior quality to the legitimate products. In this regard, there has been discussion about the appropriateness of compensation on these grounds if the injured party is a legal person. Orgaz has argued positively on this, saying that legal persons may ‘experience other pain and suffering, compatible with their nature, and claim appropriate compensation. This applies in cases of usurping good name or damage to reputation’.47 Oscar Etcheverry quotes an old ruling of the National Civil and Commercial Federal Chamber of Appeal that ‘although the plaintiff suffered no material loss, his pain and suffering cannot but be compensated, since the action derives from an offence of brand imitation, found by firm judgment’.48 Regrettably, since then, judgments have been given which tend to disallow this item when the claimant is a legal person.49 Academic literature has criticised this. In addition to those already listed, this author cites the following items and grounds of compensation: restitution of profits or return of proceeds, as per section 20 of Decree-Law 6673/1963 (industrial patterns and models). Breuer Moreno also favours inclusion of this item. Another is unjust enrichment, which applies if the defendant gets richer at the claimant’s expense, a causal relation between the two and lack of good cause justifying the enrichment.50

that the defendant’s sales depended on the use of that name’ (National Civil and Commercial Federal Court of Appeal, Division III, 29 October 1985, Vallejo Jiménez, Félix v Traverso Rossi, Ulises Héctor, Case No 3544). Contrary to this, the Federal Appeals Court of Córdoba, Civil and Commercial Division, did use the infringer’s profits to calculate this figure in Brunello, Américo, of 22 August 1977, published in La Ley, 1980-A-page 274. 46 ‘While it is certain that the extent of the loss cannot precisely be established, and that part of the price received covers costs and materials, compensation must be estimated. On this subject, Callmann’s position, quoted by Otamendi, seems right when he affirms the existence of a definite relation between the defendant’s income and the plaintiff ’s losses, both attributable to the diversion of sales, as evident from the defendant’s conviction. Moreover, the amount must be set in terms of the net extra profit which the plaintiff would probably have earned, had it benefited from the infringer’s sales’. (National Civil and Commercial Federal Court of Appeal, Division III, 3 March 1995, Case No 7695/91, Quimarco SAIC v Dimaca SRL et al on cessation of use of trade mark). The rulings quoted by Faerman, on compensation in cases of infringement of trade mark rights, are in line with this (S Faerman, ‘La condena al pago de indemnización por infracción a los derechos marcarios’, in Derechos intelectuales, vol IV (Astrea, Buenos Aires, 1989) 218. 47 A Orgaz, El daño resarcible 275, quoted by O Etcheverry, ‘La reparación de daños en las infracciones de marcas y nombres’ in Derechos intelectuales, vol III (Astrea, Buenos Aires, 1988) 17. 48 Federal Capital Court of Appeals, 22 December 1932, published in Jurisprudencia Argentina, 40-348, quoted by Etcheverry, ibid 17. 49 It has been ruled that ‘a petition for compensation of pain and suffering in favour of a commercial company cannot stand’ (National Civil and Commercial Federal Court Civil and Commercial Federal Court of Appeals, 28 December 2010, ditto, 2 July 1985, Relojes Rolex Argentina SA v Joyería Vía Florida, published in La Ley 1986-E703; Jurisprudencia Argentina, 1986-I-346 and that ‘compensation for pain and suffering does not apply when the claimant is a legal person’; Civil and Commercial Federal Court of Appeal, Antonio Delgado SA v Alvitos, José M et al, published in Jurisprudencia Argentina, 1981-IV-240. 50 Although Etcheverry provides his listing in relation to compensation for undue use of trade marks, the same appears to apply to patents. Etcheverry, ‘La reparación’ (n 47) 18; Case No 2373/2003 et seq.

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With regard to the quantum of damages recognised by the courts it should be remarked that in the case of Merial Ltd v Calvo, Ricardo H et al,51 the Court stated: VIII. Regarding the compensation for damages claimed by the plaintiff … such compensation for damages must be granted under the provisions of Section 1109 of the Civil Code I would like to recall that as regards trade mark infringement, upon evaluation, of course, of the particulars of each conflict, the Court has considered appropriate to fix the compensation for damages in an amount equivalent to 30% of the price of the goods sold … or 80% of the profit received by the defendant … And in a patent infringement lawsuit, Division I of this Chamber upheld the first instance judgment that had established compensation for copying a patented container in 30% of the value of the products sold, considering that such percentage meant a reasonable net profit.52

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This decision is consistent with the decision delivered in the case of Merial Ltd v Labyes SA et al.53 Regarding proof of damages, case law has agreed to dismiss special demurrers based on the lack of determination of the amount claimed in complaints for compensation for patent infringement, because it is considered that it is one of the cases in which the Code of Procedure54 exempts the plaintiff from the burden to numerically specify the quantum of the claim when fixing the amount is subject to the evidence to be produced in the proceedings. In López Orbea, César Raúl v Daimler Chrysler Argentina SA,55 it was stated that in relation to the quantitative determination of the claim for damages, the plaintiff shall only specify, if appropriate, the matter claimed, because the requirement of accuracy is no longer related to the amount of the claim, but to the matter claimed, which must be accurately detailed:56 And in this case it is not questionable to say, as explained above, that the plaintiff stated in its complaint that it also claimed—besides the cessation of use of the patent—a monetary valuation of damages—both property and pain and suffering damages—caused by the unlawful marketing of products infringing is exclusive rights, and which shall be evidenced in the appropriate procedural stage. The lack of determination of the amount claimed for damages incurred appears understandable considering that a quantification of the aforementioned items can only be established—seriously and not from a capricious estimation—with the relevant accounting and mechanical expert’s report and an evaluation of all the aspects involved, so it would not be appropriate to require the plaintiff to make an estimate, not even a provisional one, given that due to the close relationship between the claimed matter and the evidence to be produced, it could be considered arbitrary.57

51

Civil and Commercial Federal Court of Appeals, Division II, 28 December 2010, Case No 2373/2003. This decision quotes older cases on this topic (Civil and Commercial Federal Court of Appeal, 18 October 1985, Case No 3139; same Division, 9 April 1990, Case No 7491; same Division III October 1987, Case No 4970) as well as Division I of the Civil and Commercial Federal Court of Appeal, 22 March 1972, Case No 884. 53 Civil and Commercial Federal Court of Appeal, 12 November 2009, Case No 6631/2003. 54 s 330(6)(2). 55 Civil and Commercial Federal Court of Appeal, 23 October 2008, Case No 8.117/06. 56 Civil and Commercial Federal Court of Appeal, 5 August 1995, Case No 7695. 57 See also Civil and Commercial Federal Court of Appeal, 8 February 2013, Case No 11847/09, Sanofi Aventis v Sandoz SA and Civil and Commercial Federal Court of Appeal, 21 December 2010, Case No 4252/08 Merial Limited v Pharmavet SA. 52

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As for admission of the damage claim, it should also be mentioned that there is a judicial perception which, echoing the criticism in academic literature,58 maintains that a loss must be presumed to exist in cases where an infringement has been found. The judge must quantify it by applying section 165 of the Code of Civil Procedure if it cannot be calculated exactly from the evidence in the case. The basis of this perception is amply explained in the case Benítez, Héctor Pedro v Gaya et al.59 This case concerned the infringement of patent rights: In the context of industrial property, difficulties of proof of the loss caused by an infringement are well-known. Often, infringement of a legitimately obtained right originates— as in the records of the proceedings—in malicious conduct. The most modern literature therefore tends—not without firm foundations—to maintain that, as a rule, any usurping of a brand, company name or style, patent or pattern causes a loss. And, as this is generally hard (if not impossible) to prove, the authors favour working from a presumption of loss. To overcome the problems of proof and prevent them serving as a means of impunity, especially when the case has connotations of deliberate intent, the judges must use the precautionary ascertainment allowed by the last part of Sec. 165 of the applicable Code. This entails a careful appraisal of the circumstances of each case… Still, it is necessary to warn that, while the case law does not accept certain generalisations that can be found in academic literature, and allows for the different circumstances of reality, it has recently adopted a certain relaxation of the conventional criteria. In doing so, it approximates to the modern literature, which features a more relaxed stance for accepting the reality of the loss,60 and a severe attitude if practices contrary to good faith or to healthy commercial competition are found (cf. my vote in case 25 123/94, Iurcovich, Natán León v. Industrias Bravi SRL of 28/12/1995). This division ruled that if a competitor acts unlawfully by usurping, copying or imitating a brand, placing infringing items on the market with the illegitimate purpose of winning a third party’s customer by these reprehensible means, that competitor must not be allowed to use the difficulty of proof to evade its civil liabilities. An aura of impunity leads unscrupulous traders into conduct which is ethically and legally wrong. This is seriously detrimental to civilised life and undermines the fundamental pillars of the public good (order, justice and legal security). Therefore, as I said in the case referred to (25 123/1994), in the face of certain activities, it is usually reasonable to assume the existence of losses—in favour of the holder of the violated right—as causally linked to the unlawful act. Though proof is at times fiendishly difficult, the judge still reaches moral certainty that the infringer has caused definite, and not merely conjectured, damage. My vote in case 7491 of 4/9/1990 was in line with these principles, explicitly or implicitly. This was not an isolated expression, but a manifestation of the juridical realism mentioned above. Ultimately this serves to restrain the unfair advantage and stem the loss unlawfully caused. Thus the aim is to help, as far as possible, towards morality of customs in the complex world of business. Other examples of this laudable trend in the case law are the rulings in case 640 of (8/10/1971), in case 5221 of 9/10/1987 and in case 4465 of (6/3/1987).

58 Faerman, ‘La condena al pago de indemnización por infracción a los derechos marcarios’ Derechos intelectuales (vol IV) (Astrea, Buenos Aires, 1989) 218 et seq, applicable to the case, although it refers to trade mark law. 59 Civil and Commercial Federal Court of Appeals, 2 April 1996, Case No 50 903/95. 60 See J Otamendi, Derecho de marcas 2nd edn (Abeledo-Perrot, Buenos Aires, 1995) 325; Etcheverry (n 48) 13/20, etc, quoted in this decision.

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VIII. Defences 1. Pleas Based on the Patent Act and Case Law 116

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In this part, we will analyse the pleas which arise from the rules and case law in the specific field. Those based on the rest of the legal order will merely be mentioned in passing, since thorough analysis would exceed the scope of this chapter. First, it is worth mentioning that the allegedly infringing object or process and the patented object or process are not one and the same. The scope of the holder’s exclusive right, and hence his right to debar the infringer, rests in the patent claims.61 It is these which must form the basis of comparison between the objects or processes. As stated, this is where the expert’s evidence proves conclusive in nearly all cases. This is the main foundation of nearly all judgments, given the technical nature of the issue and the purely legal training of the judge and counsels of the parties. Section 65 of the Patent Act allows opposition of patent nullity or expiry actions by defence or plea. The patent holder’s rights lapse in case of nullity or expiry. Hence, in such cases, one of the conditions of infringement is lacking—the existence of a valid patent. Under section 59, a patent is wholly or partly invalid when granted contrary to the provisions of the Act. This includes absence of the requirements of section 4: novelty (which must be universal),62 industrial application or inventive activity; as well as the cases mentioned in section 6, which are not considered inventions and those contained in section 7, which are expressly excluded from patentability. Section 62 provides that patents and utility model certificates lapse on expiry of their validity, for waiver by the holder thereof (in cases of co-ownership, such waiver shall be made jointly); non-payment of the annual maintenance fees; in addition when use is granted to a third party, but the invention is not exploited63 for two years, for reasons attributable to the patent holder. According to TRIPS and the Paris Convention, a patent may only be declared expired when a new, compulsory licence is granted. Once this is granted, if the licensee cannot exploit the invention owing to the patent holder’s behaviour, the patent holder will be penalised by the lapse of the patent. Note that non-exploitation must be the fault of the patent holder, to whom the punishment applies, and not that of the licensee. The licensee may stand to gain, as his obligation to remunerate the patent holder will have lapsed. The former Patent Law 111 provided for the lapse to be declared (without prior granting of a compulsory licence) if exploitation had not taken place for two years from issue or after suspension of exploitation for a similar period. Both the present Act and Law 111

61 A Moncayo von Hase, ‘El nuevo régimen de patentes de invención: extensión y límites a los derechos’ in Correa and others, Derecho de patentes (n 7) 113. 62 Reference should be made here to the exception in s 5, whereby disclosure of an invention does not affect its novelty when the inventor or its assignees have revealed the invention by any medium of communication or have exhibited it at a national or international exhibition, within one year prior to the date of submission of the patent application or, as the case may be, of recognition of priority. On submission of the appropriate action, documentary evidence must be included on the terms provided by this law. 63 According to Argentine Patent Law the obligation of use could be fulfilled by manufacturing the product in the country but also by its importation. According to s 43 of Decree 260/96 the patent is used when the protected product is distributed and commercialised in a way which is sufficient to satisfy the needs of the national market on reasonable commercial conditions.

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release the patent holder from the consequences of non-exploitation in case of force majeure. The present law expressly defines force majeure as ‘objective difficulties of a technical and legal nature such as delay in obtaining registration, delay by public bodies concerned with authorisation or with placing on the market, beyond the patent holder’s control, which render exploitation of the invention impossible’. This solution had already been accepted in cases resolved during the validity of the old law.64 In practice, nullity and lapse are usually thrashed out by way of counterclaim, which challenges the plaintiff ’s valid title, as evidenced by the case law on this point.65 As both mechanisms are automatic, there is no need for them to be judicially declared to place the invention in the public domain. Thus, whoever has a legitimate interest can use these defences without awaiting a prior ruling in the matter. Section 36 states that the right conferred by a patent cannot stand against: 1. a third party who carries out scientific or technological investigation purely for experiment, trial or teaching purposes, and for this purpose makes or uses a product or follows a process equal to the one patented.

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This exception is common to most legal systems and is designed to avoid exclusive rights deriving from the Patent Act obstructing scientific and technological progress. It may be asked what the exact limit of the permission intended here is, as the growing cooperation between industrial sectors and universities sometimes makes it difficult totally to exclude a commercial purpose, albeit indirect. Examples which come to mind are pre-competitive investigations intended to perfect the product for commercial exploitation after the patent lapses, or applications for an additional patent. 2. Individual preparation of medicaments by authorised professionals, following a medical formulation, nor to acts relating to medicaments thus prepared. 3. In case of exhaustion of rights: Any person who acquires, uses, imports or in any way markets the patented product obtained by the patented process, once that product has been lawfully placed on the market in any country. It shall be understood that placing on the market is lawful when it conforms to the Agreement on Trade-Related Intellectual Property Rights, Part III, Section IV, TRIPS.66

64 Thus it has been said that ‘action for lapse is not viable when the non-use is due to causes of force majeure. The fact or principle here is one of the conventional conditions of force majeure. Hence “it is not strange, then, that the administrative permission previously requested for the dispensing of medicinal specialities has been mentioned by authors specialising in industrial law as a typical condition falling within the exemption contemplated in Section 26 of Law 22 362” (cf National Civil and Commercial Federal Court, Division II case no 8358 of 30 July 1991). Although, in the precedent described, this doctrine was applied to a case involving the lapse of a trade mark due to lack of use, its conclusions are wholly applicable to the analogous case governed by Section 47 of Law 111. That Section concerns another manifestation of industrial property: the right deriving from the granting of a patent. Under such conditions, the plaintiff ’s claim cannot be accepted even when—in the best case for the plaintiff—the matter at issue is judged solely in the light of the provisions of the former Law 111’ (National Civil and Commercial Federal Court, Case No 11 767 of 10 February 1998, IPESA SA v Nissan Chemical Industries Ltda). 65 ‘Hence the ensemble as such, claimed by the plaintiff, is not anticipated either by the patents, which relate solely to mate drinking tube improvements, nor by the patent combining tube and receptacle, but with no link to the suction control system. It follows that, by combining known means, the claimant invented an artefact of sufficient novelty to fall within the scope of Law 111. Thus the deliberate behaviour, noted by the defendants, is clearly unlawful. That fact leads to the judgment being upheld, since the counterclaim was dismissed, and the infringers ordered to refrain from their unfair action’ (Civil and Commercial Federal Court of Appeals of 2 April 1996, Case No 50 903/95, Benítez, Héctor Pedro v Gaya, Miguel et al). 66 The TRIPS Agreement leaves each State free to decide what system of exhaustion of rights it adopts.

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The Implementing Decree explains that a product is considered lawfully placed on the market when the licensee authorised to market it in the country can prove its authorisation from the patent holder in the country of acquisition, or from a third party authorised to place it on the market.67 The exhaustion of rights is one of the most complex issues in the field. The principle is that the holder’s right to the patent is ‘exhausted’ when the patented products are first launched on the market. At this time, subsequent transfers of the products are free. The Patent Act adopts the international exhaustion of rights. This means that exhaustion occurs regardless of the country where the first market launch took place. The existence of an export in breach of the territorial exclusivity provided in a distribution agreement or licence in no way affects the legitimacy of placement on the market. This is because, in this case, we are dealing with breach of contract. This cannot be held against the third party acquiring the products in question. It may give rise to contractual liability, but not to lawsuits based on patent law. Another controversial point is whether the effects of exhaustion of the right occur if there is a compulsory licence since, in that case, there would be legitimacy, but this would ignore the wishes of the patent holder. Finally, section 36(d) governs the use of inventions patented in Argentina on board foreign terrestrial vehicles or sea- or aircraft accidentally or temporarily in circulation in Argentina’s jurisdiction, if used solely for their own needs. The literature and case law have admitted the defence of ‘prior use’. This is applicable to the case of a first inventor, before the patent holder, who exploits the invention secretly. This activity does not render the patent invalid, since secret exploitation does not destroy novelty. However, it does allow the first inventor to continue that exploitation, since there is no question of an infringement.68 According to Ledesma, production of a patented invention is not an offence if it is non-industrial and does not constitute exploitation in economic terms.69 Breuer Moreno quotes the case, which he calls ‘provocation’, of a patent holder commissioning its competitors, through an intermediary, to make the patented products, and then taking action against them for counterfeiting. This might be deemed similar to a licence, so that the manufacturer is not breaking the law in any way.70 Genovesi cites the instance of manufacture not long before the lapse of the patent. For some authors this is legitimate, since the only way of freely exploiting the patented product following its entry into the public domain is to allow competitors to start production beforehand. Some take the opposite opinion, emphasising that manufacture is one of the patent holder’s exclusive rights. Hence, they maintain, any manufacture before expiry of the patent is unlawful, although the objects are only placed on the market after expiry.71 These arguments are also applicable to the question of the admission of the ‘Bolar exemption’.72

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67 The obscure wording of the Implementing Decree on this point leaves it open to various interpretations. One of these would involve ignoring the international exhaustion adopted by the legislature, banning parallel imports. This provision would be unconstitutional, because it contradicts the law (Moncayo Von Hase, ‘El nuevo régimen’ (n 61) 161 et seq). 68 Genovesi (n 8) 350. 69 JC Ledesma, Derecho penal industrial (Depalma, Buenos Aires, 1987) 172. 70 Breuer Moreno, Tratado de patentes de invención, vol II (n 11) 595. 71 Genovesi (n 8) 353. 72 In Argentina there is a Bolar-like exemption in s 8 of the Confidentiality Act 24 766.

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2. Formal Defences 131

The claim for damages is time-barred after three years.73

IX. Wrongful Enforcement 1. Interim Relief Measures 132

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Both the Patent Act and the Code of Civil and Commercial Procedure provide that one of the requirements for granting interim relief measures is to provide ‘sufficient bond (guarantee)’. This guarantee, whose amount will be directly proportional to the aggressiveness of the measure requested, aims to enable compensation for the person subject to the measure, in case it is determined that the alleged infringement which gave rise to such measure was not an infringement. In civil cases this bond can be implemented by the deposit of a sum of money or a bank guarantee, which is usually the preferred option for litigants. In the case of an exploitation event, the bond for costs to be incurred in case the alleged infringer suspends exploitation during the hearing of the case has the same purpose.

2. Civil Code Provisions 134

According to the provisions of sections 1737 to 1748 (recoverable damages) and 1749 (direct liability) Civil and Commercial Code74 anyone causing harm or damage by intentional misconduct, fault or negligence is required to compensate for it. These provisions include the acts of those who harm someone else claiming a non-existent infringement, invoking a patent that is finally declared invalid, etc. Section 1075 establishes that someone engages in an abuse of law when through invoking the law he or she acts contrarily to the purposes for which it has been created or surpasses the limits imposed by good faith, morality and decency. Section 1771 refers to false accusations and malicious prosecutions.

3. Act on Protection of Competition 135

Anyone obtaining protection measures against an alleged infringer based on a right that is eventually proved to be non-existent, or he who unfairly threatens someone who is not infringing a patent, shall be subject to the provisions of the Act on the Protection of Competition No 25 156.

73 Section 2561 Civil and Commerical Code. In Continental Plast v Terlizzi SAIC, it is further stated that time limitations run from the moment the corresponding action is originated, ie at the time the event that generated liability took place, unless the damage only become known about later by the injured party, in which case the action for damages may originate at a later date. In the reference case, the appellant had argued in vain that no action could be taken by the appellant until a final decision was passed on proceedings started for discontinuance of use, since it was held that the said party was fully able to bring an action for damages in due time (Civil and Commercial Federal Court of Appeals, Case No 1191/98 of 20 May 1999). Section 4023 of the Civil Code (Breuer Moreno (n 12) 637 et seq). 74 This sections replaced ss 1069, 1077 and 1109 of the Civil Code. 75 The said section replaced 1071 of the former Civil Code.

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136

It is worth mentioning that the Argentinean Act on Protection of Competition does not specifically provide for a list of forbidden acts per se, so in order for a conduct to be prohibited it should be intended for or result in a limitation, restriction, misrepresentation or distortion of competition or market access or constitute an abuse of a dominant position in the market, in a way that harms general economic interests. This rule does not protect the interest of a particular person, but the general interests of promoting competition without restrictions.

X. Costs 137

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In the case of lawsuits, the fees of attorneys and experts are established by the court based on the duration and complexity of the tasks performed, the result of the lawsuit and the amount claimed, as established by the Fees Act No 21 839 and the Code of Civil and Commercial Procedure. According to the latter, court costs will be awarded against the unsuccessful party and exceptionally against both parties; in this case, each party shall bear the expenses respectively incurred by each of them. The fees for the first instance, when they involve sums of money or valuable property, will be fixed within the range from 11 per cent to 20 per cent of the amount claimed in the lawsuit. The fees of the losing party’s attorney will be fixed within the range from 7 per cent to 17 per cent of the amount claimed in the lawsuit. For participating in the second or higher instances, in each instance the court will establish a fee ranging from 25 per cent to 35 per cent of the amount to be fixed for the fees of the first instance. As the number of patent cases is not large it is difficult to give accurate figures. Nevertheless, the fees established by courts in cases decided within the last years have been about €3500 for the lawyers of the successful party and €1500 for the losing party’s attorney for participating in the first and the second instance. The court filing fee to be paid in lawsuits will depend on the amount claimed, amounting to 3 per cent of the same. In the case of cessation of use actions in which there is no monetary claim there is a fixed amount to be paid related to the patent application fee. The Mediation Act provides for the payment of the fees of the mediator and the attorneys present in the relevant hearings. The mediator receives for its performance in the mediation a basic fee whose amount and payment terms are set in a government regulation. This is scale-related to the amount claimed in the lawsuit ranging from $300 to $12,000 (€27 and €1090). In addition to such basic fee there is an extra payment of $50 or $100 (€4.50 or €9) from the fourth hearing up to $1,400 (€127) maximum. In practice, attorneys’ fees are freely agreed with clients according to the principles of freedom of contract and differ from case to case. However, maximum percentages established by the Fees Act for lawyers and legal assistants are mandatory. Under the said Act, aggregate attorneys’ and legal assistants’ fees, for all aspects of the case, may not exceed 40 per cent of the monetary result obtained, without prejudice to the right of the professionals to collect any fees awarded against the opposing party. A scale of minimum amounts is also established.

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Attorney fees may be very different from one law office to another. Even if there is the possibility to charge on an hour basis many clients would not like this and prefer fixed fees—or at least maximum and minimum fees—for each procedural stage or even for the whole lawsuit, because this makes it easier for them to estimate the total cost of the lawsuit. Fees on an hourly basis are rather used for an expert’s report or counselling services. If damages are claimed there may also be a success fee often combined with a minimum. As this is a free agreement with the clients the range of different possibilities is great.

19 The Extraterritorial Enforcement of Patent Rights MARKETA TRIMBLE

A. Introduction 1

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The functioning of national patent systems is not compatible with the workings of modern business operations. Business operations often cross countries’ borders while patent protection remains territorial, requiring that parallel patents for the same invention be obtained in each country where a prospective patent owner wants the invention to be protected. Even in the nineteenth century, when modern patent law took shape, not all business operations were confined within country borders, and the dissonance of cross-border business dealings and national patent protections eventually led countries to enter into international treaties on industrial property. However, the treaties addressed only some of the issues of multiple-country patent protection, and now, in this century when international trade and cross-border exchange of goods, services and information are the norm, it is still relatively few prospective patent owners who can protect their inventions by patents in multiple countries, and even fewer who can protect their inventions globally. The limitations of patent territoriality concern not only the process of obtaining patents but also the process of enforcing them. When inventions are protected by patents in only one country—or by parallel patents in multiple countries—patent owners strive to enforce their patent rights in the most efficient and effective way possible while pursuing enforcement with the broadest territorial impact; sometimes this impact may extend even beyond the borders of the country or countries in which the patent owner holds the patent. This chapter discusses the means that patent owners employ to achieve their enforcement goals in terms of the enforcement’s territorial impact; the means include centralisation of litigation of multiple-country patents in a single court, litigating foreign patents in particular jurisdictions where the best prospects of actual enforcement exist, and stretching a protecting country’s patent law through the extraterritorial effects of the law and its application.1

1 This chapter does not discuss enforcement of European patents with unitary effect, which are discussed in ch 2 of this book.

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B. Foreign Patents in National Courts I. Infringements of Foreign Patents (With Adjudication of Validity) 3

Enforcement through civil litigation can be particularly effective if a plaintiff brings suit in a country where remedies can be readily enforced against the alleged infringer— provided that personal jurisdiction over the alleged infringer exists in the country. The country may be a country where the alleged infringer has all or most of its manufacturing operations, or where the major market for the allegedly infringing product is located, but it can also be another country where the alleged infringer’s assets are located. However, for enforcement of patent rights the choices tend to be limited: courts refrain from adjudicating the validity of foreign patents, and because patent invalidity is often counterclaimed or raised as a defence in a patent infringement suit, some courts also refuse to adjudicate any infringement suits involving a foreign patent because they are concerned that they would have to decide the issue of validity as well. Some courts even refuse to adjudicate cases in which patent validity will not be at issue (because the parties have stipulated to validity, or the suit is filed for a declaration of non-infringement without a patent invalidity claim) because the courts see some of the reasons preventing the adjudication of patent validity as also preventing the adjudication of patent infringement alone.2 4 Courts refuse to adjudicate the validity of foreign patents for several reasons. Deciding whether rights exist under foreign law is not an unknown function for courts; courts apply foreign law from time to time to determine the existence of rights when the rules of private international law (conflict of laws) so dictate. However, the existence of patent rights is based on the grant of a patent—a decision by a governmental agency—and some courts view a patent grant as an ‘act of state’ that warrants the application of the act of state doctrine or a similar doctrine that calls for respecting a foreign country’s sovereignty.3 In one US court decision, the majority of a panel of the US Court of Appeals for the Federal Circuit adopted the view that the rule of international IP law treaties that sets the principle of independence of national patents, when combined with the treaties’ silence on foreign patent adjudication, should be interpreted to mean that courts ‘should not determine the validity and infringement of foreign patents’.4 The majority of the panel also identified comity and the local action doctrine as reasons for not adjudicating cases involving foreign patents.5 Some courts will not adjudicate

2 Plastus Kreativ AB v Minnesota Mining and Manufacturing Co, English High Court, 1 January 1995, [1995] RPC 438, 447. But cf Satyam Computer Services Ltd v Upaid Systems Ltd, English Court of Appeal, 9 May 2008, [2008] EWHC 31 (Comm) [104]; Actavis Group HF v Eli Lilly and Co, English High Court (Patents Court), 27 November 2012, [2012] EWHC 3316 (Pat) [93] and [94] (on appeal [2013] EWCA Civ 517). 3 Potter v Broken Hill Pty Co Ltd, High Court of Australia, 20 March 1906, [1905] VLR 612, affd (1906) 3 CLR 479; Jenard Report on the Brussels Convention, OJ 1979, C 59, 1, at 36; Jan K. Voda v Cordis Corporation, 476 F.3d 887, 904 (Fed Cir 2007). For the general formulation of the doctrine by the US Supreme Court, see Underhill v Hernandez, 168 US 250, 252 (1897). 4 Jan K. Voda v Cordis Corporation (n 3) 899. 5 ibid 900–01.

The Extraterritorial Enforcement of Patent Rights 571 foreign patent validity for additional reasons that stem from concerns about effective enforcement and legal certainty; these courts recognise that a patent office is unlikely to change the status of a patent based on the decision of a foreign court.6 All of the above-listed reasons for refusing to adjudicate foreign patent validity have been met with opposition; most significantly, opponents argue that a grant of a patent is not the type of act for which the act of state doctrine was designed.7 5 The refusal to adjudicate cases involving foreign patents, even when parties seek only a decision on infringement and not on patent invalidity, has important implications for the prospect of centralising patent litigation; such centralisation would allow the filing of a single suit concerning parallel patents issued in different countries that protect the same invention. When courts refuse to decide cases involving foreign patents, plaintiffs cannot centralise litigation in one court even if the individual national patents originate in a single application (eg a PCT application), or stem from a single European patent, and the infringement was committed by a single entity through the same actions in multiple countries. 6 Courts appear to be united in their resistance to adjudicating foreign patent validity. The EU Brussels I Regulation (recast) gives exclusive jurisdiction in ‘proceedings concerned with the validity of … patents’ to the courts in the country where the patent was issued, regardless of ‘whether the issue [of validity] is raised by way of an action or as a defence’.8 The wording of the provision reflects the 2006 judgment by the Court of Justice of the European Union (‘ECJ’) in GAT v LuK, in which the Court held that any court proceedings concerned with the validity of a patent should be reserved for the courts of the country where the patent was issued, whether validity arises in a case ‘by way of an action or a plea in objection’.9 7 Similarly, in the United States, courts seem to be unreceptive to adjudicating foreign patent validity. The case of Voda v Cordis, which was decided by a panel of the US Court of Appeals for the Federal Circuit, concerned claims of infringement of several foreign patents that were raised in a single suit brought under one possible jurisdictional basis (supplemental jurisdiction),10 but the panel’s discussion of the reasons for not adjudicating infringements of foreign patents before US federal courts indicates that the court might rule against US federal court jurisdiction over any claims involving foreign patents—even if claims are brought under a different jurisdictional basis (eg as a diversity jurisdiction case),11 and certainly if the claims require the adjudication of the validity of foreign patents.

6 For other reasons that relate specifically to the possibility of extending jurisdiction over a foreign patent in US federal courts based on supplemental jurisdiction (28 U.S.C. §1367), see Jan K. Voda v Cordis Corporation (n 3) 894–905. 7 Mannington Mills, Inc v Congoleum Corp, 592 F.2d 1287, 1293–94 (3d Cir 1979); Jan K. Voda v Cordis Corporation (n 3) 914 (Fed Cir 2007) (Newman, J diss). 8 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), art 24(4). 9 ECJ, 13 July 2006, case C-4/03. 10 Jan K. Voda v Cordis Corporation (n 3). 11 Baker-Bauman v Walker, Not Reported in F.Supp.2d 2007 WL 1026436 (SD Ohio 2007); Infrastructure Defense Technologies, LLC v US, 81 Fed.Cl. 375, 400 (Fed Cl 2008).

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II. Infringements of Foreign Patents (Without Adjudication of Validity) 8

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Not all patent infringement cases involve questions of validity; in fact, an alleged infringer might purposefully choose not to raise invalidity in infringement proceedings. The straightforward case for a court should be the case in which the parties stipulate the validity of a patent, or the case in which an alleged infringer agrees not to raise patent invalidity. It would appear that in such cases courts have no reason (absent other reasons such as forum non conveniens or res judicata) to refuse to adjudicate infringement disputes; when the issue of validity is removed, the act of state doctrine does not apply, and other concerns about adjudicating foreign patent validity should also be moot. A more difficult question is whether a court should allow an infringement suit to proceed even if the parties do not stipulate the issue of validity. Without a stipulation a court could decline to adjudicate and could dismiss the case, basing its refusal and dismissal entirely on the possibility that the issue of foreign patent invalidity could arise.12 However, a court could also accept jurisdiction over infringement of a foreign patent and stay the proceedings if and when invalidity is raised; if invalidity is raised, the court would wait for a decision by a foreign body competent to decide the issue of validity of the foreign patent.13 The option of staying infringement proceedings in favour of patent validity proceedings conducted by a separate body resembles the procedure used for domestic patents in bifurcated systems—systems where patent infringement and patent validity are decided by different bodies. For example, in Germany it is trial courts that adjudicate infringements of German patents; unless a trial court determines that there is a likelihood that a claim of patent invalidity would be successful in a separate validity proceeding, the court adjudicates the infringement. If a trial court finds that a claim of patent invalidity is likely to succeed, it may stay its proceedings and wait for a decision by the Federal Patent Court on the issue of validity.14 Occasional stays of infringement proceedings in favour of decisions by different bodies on patent validity15 are in fact not limited to bifurcated systems, such as the systems in Germany and China; in non-bifurcated systems where both the courts and the patent office (and possibly the patent office’s appellate body) may decide on the validity of a patent, courts may also stay infringement proceedings to allow the patent office (and possibly its appellate body) to complete a concurrently conducted validity proceeding.16 In Japan, which

12 Coin Controls Ltd v Suzo International, English High Court of Justice, 26 March 1997, [1997] 3 All ER 45; Fort Dodge Animal Health Ltd v Akzo Nobel NV, English Court of Appeal, 20 October 2997, [1998] FSR 222; Röhm Enzyme GmbH v DSM NV, Brussels Court of First Instance, 21 May 2000, No 2000/857/A. 13 Landgericht Mannheim, 8 February 2002, 7 O 235/01. 14 Zivilprozessordnung, 5 December 2005, §148 (Ger). The issues of infringement and validity may eventually meet before the German Federal Supreme Court if both issues proceed to that point. 15 According to Peter Mes, ‘German infringement courts quite rarely stay the infringement case’, and ‘[a] stay of patent infringement proceedings is normally only granted if the invalidation action/opposition is very likely successful’. P Mes, ‘Reflections on the German Patent Litigation System’ in Wolrad Prinz zu Waldeck and Pyrmont and others (eds), Patents and Technological Progress in a Globalized World (Springer, 2009) 401, 406. 16 VirtualAgility Inc v Salesforce.com, 759 F.3d 1307 (Fed Cir 2014); CANVS Corporation v US, 2014 WL 4792943 (Fed Cl 2014).

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has a hybrid system that was originally modelled after the German bifurcated system but later influenced by the US and UK non-bifurcated systems, courts can decide that a patent should be invalidated; the ultimate invalidation decision, however, remains with the Patent Office.17 Concurrent proceedings also occur frequently before national infringement courts in the member states of the European Patent Convention and before the European Patent Office (‘EPO’); in such cases, it is in the discretionary power of the national infringement court to decide whether the court will stay the national proceedings and wait for the outcome of the proceedings before the EPO. The difference between bifurcated and non-bifurcated systems is that in non-bifurcated systems a trial court’s decision of patent invalidity is an adjudication of invalidity with erga omnes effects, the decision leads to a cancellation of the patent and the decision has preclusive effects in subsequent litigation. In bifurcated systems, by contrast, a trial court’s assessment of patent invalidity is only a decision on the likelihood of success in contesting the validity of the same patent before a different body. A decision in a bifurcated system has only procedural effects, and only in the instant litigation; the decision does not lead to cancellation of the patent at issue, it has no preclusive effects in other cases, and, at least formally, the decision has no erga omnes effects.18 If trial courts’ assessments of invalidity have no erga omnes effects in bifurcated systems, the question that arises is whether patent infringement proceedings in bifurcated systems should be considered ‘proceedings concerned with the validity of … patents’, and if not, whether foreign patent infringement cases should be allowed to proceed in courts in bifurcated systems under the same conditions as cases concerning domestic patent infringements. In the European Union, the ECJ answered the second question negatively in GAT v LuK.19 The ECJ recognised the different effects that patent validity decisions have in German infringement proceedings; however, it maintained that allowing German courts in infringement proceedings to assess foreign patent validity, even with the very limited effects described above, would create a risk that ‘contradictory decisions’ could eventually be rendered concerning patent validity.20 The ECJ’s concern in GAT v LuK regarding the possibility of contradictory decisions seems unwarranted. When a domestic patent is at issue in a bifurcated system and a court determines in infringement proceedings that it is likely that the patent will be held invalid, the court can stay the infringement proceedings to await a decision by the body competent to decide patent validity. The procedure would be no different if a foreign patent were at issue: as long as trial courts stay infringement proceedings

17 T Takenaka, ‘Merging Civil and Common Law Traditions in the Patent Validity Challenge System: Japanese Experiences’ in H-P Gotting and C Schluter (eds), Nourriture de l’esprit: Festschrift für Dieter Stauder Zum 70. Geburtstag (Nomos, 2011) 273–74; J Pitz, A Kawada and JA Schwab, Patent Litigation in Germany, Japan and the United States (CH Beck, 2015) 166–67. 18 In practice, even this type of assessment may strengthen or weaken, temporarily or otherwise, the patent in its economic valuations by competitors and investors. 19 Although GAT v LuK was originally filed as an action for declaration of non-infringement and invalidity, the German court phrased its question to the ECJ generally, and consequently the resulting ECJ judgment covered not only actions for declaration of invalidity but also infringement actions in which invalidity is raised. ECJ, 13 July 2006, case C-4/03, [12]. 20 ibid [30].

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Marketa Trimble concerning foreign patents when they find it likely that invalidity will be found, a competent body in the country where the patent was issued could render a decision on patent validity and no risk of contradictory decisions on the issue of validity would arise. If a trial court determines that a patent is likely valid, it would proceed to an adjudication of whether there is patent infringement. If the trial court holds that the patent has been infringed and later a body competent to decide on the validity of the patent invalidates the patent, the inconsistency can be mitigated because the law provides for ways to remedy the situations resulting from post-infringement findings of patent invalidity.21 It seems that, in bifurcated systems at least, foreign patents should be in no greater danger of ‘contradictory decisions’ stemming from infringement and validity proceedings than domestic patents, as long as foreign patents are treated in the same manner as, or in a manner similar to, domestic patents. Prior to GAT v LuK some courts in the EU assessed foreign patent validity in the same manner as they assessed domestic patent validity;22 however, GAT v LuK prevents this practice, and with its holding legislated into the EU through the Brussels I Regulation (recast), it will be difficult to change the course set by the ECJ for infringement cases in which invalidity is raised or counterclaimed. Nevertheless, the ECJ does allow for jurisdiction over foreign patents in proceedings on provisional measures. The ECJ has recognised the different nature of some decisions concerning patent validity that are made by courts in the context of proceedings on provisional measures. In Solvay v Honeywell, a Dutch court was asked to issue provisional relief against an alleged infringer who raised as a defence the issue of invalidity of several foreign patents at issue.23 The ECJ held that the fact that the issue of invalidity of foreign patents was raised did not preclude the issuance of the provisional relief. The ECJ recognised that the Dutch court’s decision in Solvay did not create a risk of conflicting decisions because the Dutch court only makes an assessment as to how the court having [exclusive] jurisdiction [to decide patent validity] would rule [on the issue of validity], and will refuse to adopt the provisional measure sought if it considers that there is a reasonable, non-negligible possibility that the patent invoked would be declared invalid by the competent court.24

Perhaps because the Dutch court’s decision concerning provisional relief was not a decision on the merits of the case, the ECJ was comfortable with having the Dutch court assess the validity of the foreign patent, even though provisional measures can conflict with later decisions on the merits. Nevertheless, the nature of the assessment of patent validity that the Dutch court made in the context of the proceeding on provisional relief appears to be no different from the assessments that German courts conduct in infringement proceedings. 21 Reconciliations of decisions of infringement with later determinations of patent invalidity are not unique to bifurcated systems; non-bifurcated systems can also have decisions of infringement followed by findings of invalidity that create a need for reconciliation of the decisions. See eg Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd, UK Supreme Court, 3 July 2013, [2013] UKSC 46; ePlus, Inc v Lawson Software, Inc, 760 F.3d 1350 (Fed Cir 2014). 22 Landgericht Düsseldorf, 1 February 1994, 4 O 193/87; Palmaz v Boston Scientific BV, Netherlands Gerechtshof, The Hague, 23 April 1998, [1999] FSR 352; Landgericht Düsseldorf, 31 May 2001, 4 O 128/00. 23 ECJ, 12 July 2012, case C-616/10. 24 ibid [49].

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Suits for declaration of non-infringement, if filed without an invalidity claim, offer a further possibility for litigating patent infringement in a foreign court. The ECJ decision in GAT v LuK stopped the practice in the European Union of filing actions for declarations of invalidity outside the country where the patent was issued but left open the possibility of filing suits for declarations of non-infringement outside the country in which the patent was issued—as long as no claim of invalidity accompanies the suit. Therefore, the decision did not foreclose all avenues for the use of the now infamous ‘torpedoes’—declaratory judgment suits that alleged infringers hurriedly file in slow-moving court systems to prevent patent owners from filing infringement suits in other, faster-moving court systems.25 Of course, not all suits for declaration of non-infringement are motivated by illegitimate goals; an alleged infringer may have reasons other than forum shopping for choosing not to attack the validity of a patent. If no party raises patent invalidity, a court seized with a suit for declaration of noninfringement might adjudicate the patent non-infringement issue even if the suit concerns a foreign patent. For example, in Actavis UK Limited v Eli Lilly & Co, the English High Court assumed jurisdiction over declarations of non-infringement with respect to the UK, French, German, Italian and Spanish designations of a European patent;26 in Fairchild Semiconductor Corp v Third Dimension (3D) Semiconductor, Inc, the US District Court for the District of Maine refused to dismiss a claim concerning a Chinese patent in an action for a declaration of non-infringement.27 In both cases no declaration of invalidity was sought. It is correct to state, therefore, that in some jurisdictions and under certain conditions a patent infringement suit may be filed outside the country in which the patent was issued. Although courts refuse to adjudicate foreign patent validity, they may adjudicate infringements of foreign patents unless the courts decide that the same reasons that prevent them from adjudicating foreign patent validity should also prevent them from adjudicating foreign patent infringement. Courts that do not adhere to a categorical prohibition against adjudication of foreign patent infringements may agree to adjudicate foreign patent infringements if the parties stipulate that they will not raise the issue of foreign patent invalidity. Courts may also adjudicate foreign patent infringements if an alleged infringer agrees not to raise the issue of foreign patent invalidity, for example when an alleged infringer files a suit for a declaration of noninfringement without, at the same time, seeking a declaration of patent invalidity. Some courts will adjudicate infringements of foreign patents even when the possibility exists that the parties will raise the issue of patent invalidity. When a party does raise the invalidity issue, courts may make an assessment of the likelihood of success of the validity claim and either proceed with adjudication of the infringement, or stay

25 For national court responses to torpedoes as acts of litigation misconduct and/or abuse of process, see The General Hospital/Bracco, Tribunal de grande instance de Paris, 28 April 2000, GR 99/4574; Landgericht Düsseldorf, 19 December 2002, 4a O 4/00. 26 Actavis UK Limited v Eli Lilly & Co, English High Court of Justice, 15 May 2014, [2014] EWHC 1511 (Pat). The UK non-infringement action was followed by a German action for infringement. The German court refused to dismiss the later-filed infringement action because it found that the parties to the dispute were not identical. Oberlandesgericht Düsseldorf, 4 March 2014, I-2 W 6/13. 27 Fairchild Semiconductor Corp v Third Dimension (3D) Semiconductor, Inc, D. Me., 2:08-cv-00158-DBH.

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Marketa Trimble the infringement proceedings and wait for a decision on patent validity by the competent body of the country in which the patent was issued. In the EU the option to proceed with adjudications of foreign patent infringement when invalidity is raised is foreclosed by the Brussels I Regulation (recast) and ECJ jurisprudence; however, provisional measures issued by courts in the EU may cover foreign patents if the proceedings on the measures involve only an assessment of foreign patent validity and not an adjudication of foreign patent validity.

C. Extraterritorial Application of National Patent Laws I. The Extraterritorial Reach of National Patent Laws 20

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With their patent protection limited to the countries in which they obtained patents, patent owners explore ways to stretch the territorial scope of the patent laws of the countries where they do hold patents, so that the patents result in the greatest possible territorial protection of the inventions. Although patent laws are typically regarded as extending only to a country’s borders, their territorial scope is in fact as large as a country’s prescriptive jurisdiction, which sometimes reaches beyond the country’s borders. In some instances legislators explicitly make their patent laws apply extraterritorially. An example is section 271(f) of the US Patent Act, which the US Congress adopted to legislatively overrule a 1971 decision of the US Supreme Court. The decision concerned a case in which all the components of a patented device (a shrimp deveiner) were manufactured in the United States but were supplied abroad and assembled into a complete patented device outside the United States.28 The US Supreme Court held that this activity was outside the reach of US patent law, a holding that prompted Congress to extend the US Patent Act extraterritorially in section 271(f) to capture such conduct by making it an infringement to supply or cause to supply a component in or from the United States.29 Extraterritorial reach can also result from judicial interpretation; when legislators remain silent on the territorial scope of a provision, courts must determine how far the provision will reach. Secondary infringement provisions are examples of provisions for which courts have found extraterritorial applications; for example, section 271(b) of the US Patent Act makes it an infringement to induce another to infringe a patent, and US courts have interpreted the provision as making an act of inducement infringing even when the inducer acted outside the United States, as long as the induced behaviour occurred inside the United States and infringed a US patent there.30 Acts of indirect infringement under section 10 of the German Patent Act may also occur

The Laitram Corp v Deepsouth Packing Co, 406 U.S. 518 (1972). 35 U.S.C. §271(f). The US Court of Appeals for the Federal Circuit held s 271(f) inapplicable to process patents. Cardiac Pacemakers, Inc v St. Jude Medical, Inc, 576 F.3d 1348, 1365 (Fed Cir 2009). 30 Crystal Semiconductor Corp v Tritech Microelectronics Int’l, Inc, 246 F.3d 1336 (Fed Cir 2001); Honeywell Int’l Inc v Acer America Corp, 655 F.Supp.2d 650, 660 (ED Tex 2009). See also Limelight Networks, Inc v Akamai Technologies, Inc, 134 S.Ct. 2111 (2014). 29

The Extraterritorial Enforcement of Patent Rights 577

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outside, as well as inside, Germany; an alleged infringer may be liable under section 10 when it supplies an essential element of an invention abroad if the element is to contribute to an act of direct infringement eventually committed in Germany.31 The general doctrines of participating, and aiding and abetting can also be utilised in German courts to reach those who acted abroad and contributed to an act of direct infringement in Germany.32 National patent law provisions regarding an infringing offer to sell are instructive examples of provisions that trigger disparate understandings of the patent law’s territorial reach. Three interpretations are possible: (1) both the offer and the sale must occur in the protecting country; (2) only the offer must be made in the protecting country; or (3) only the sale must be made (or intended to be made) in the protecting country. In some countries—Germany and Italy, for example—interpretation (2) is the rule and an offer made in these countries to sell anywhere in the world a product that is patented in these countries will be held infringing under their patent laws.33 In the United States, the US Court of Appeals for the Federal Circuit adopted interpretation (3) in Transocean Offshore Drilling v Maersk when it held that an offer made outside the United States (in Europe) infringed a US patent; the offer made in Europe concerned a sale of a product in the United States that was covered by a US patent.34 Although one could argue that interpretation (3) could easily be adjudicated as inducement under the US Patent Act, the particular facts in Transocean showed that inducement might not always be present when an offer to sell is at issue. A country’s patent law can successfully reach extraterritorial acts as long as the court of the same country whose law applies adjudicates the case and the defendant has a presence in the country that allows the court to adopt effective enforcement measures. A court in any other country may consider the extraterritorial reach of a foreign patent law as intrusive and therefore find ways not to apply the law, even when the law would otherwise be applicable under the court’s choice of law rules. A court may take a particularly critical view of the extraterritorial scope of a foreign patent law when the law’s scope extends to the activities in the court’s own country. Such an extension of a foreign patent law’s scope was at issue in Japan in the Card Reader case; in Card Reader, a plaintiff asked a Japanese court to apply section 271(b) of the US Patent Act (the inducement provision) to acts that the defendant committed in Japan. On appeal from lower courts the Supreme Court of Japan refused to apply US law; the Court found that the application of section 271(b) in this case would violate the principle of territoriality and be contrary to the public policy of Japan.35

Funkuhr II, Bundesgerichtshof, 30 January 2007, X ZR 53/04. Civil Code, §830; Funkuhr, Bundesgerichtshof, 26 February 2002, X ZR 36/01, 2002 GRUR 599. 33 Reichsgericht, 13 January 1934, I 137/33, RGZ 29, 173; Kreuzbodenventilsäcke, Bundesgerichtshof, 29 March 1960, I ZR 109/58, 1960 GRUR 423; Supreme Court of Italy, 3 April 2013, GRUR Int. 2003. 876; Messeangebot ins Ausland I, Landgericht München I, 23 June 2004, 21 O 6421/01 (appeal denied). 34 Transocean Offshore Deepwater Drilling, Inc v Maersk Contractors USA, Inc, 617 F.3d 1296 (Fed Cir 2010) (cert dismissed). See also Halo Electronics, Inc v Pulse Electronics, Inc 769 F.3d 1371 (Fed Cir 2014) (reiterating that it is the place of the sale that determines the territorial scope of liability under ‘offer to sell’). 35 Supreme Court, 26 September 2002, Case No 2000 juri 580, Fujimoto v Neuron Co Ltd (‘Card Reader’ case); trans Y Nishitani in Bälz and others, Business Law in Japan, Cases and Comments (Kluwer Law, 2012) 679. 32

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Marketa Trimble A national patent law provision will also be subject to scrutiny by a foreign court and potentially remain unenforced if a domestic court’s judgment based on the provision must be enforced against a defendant who has no presence in the country of the domestic (issuing) court. In this situation the domestic court’s judgment will need to be recognised and enforced in a foreign country where the defendant does have a presence. However, a foreign court may refuse to recognise and enforce the judgment if the foreign court considers the extraterritorial reach of the patent law that was the basis of the judgment, and/or the resulting remedy, to be contrary to the public policy of the foreign country.

II. Localisation as a Means of Extending the Reach of National Patent Laws 26

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Patent law can also apply beyond a country’s borders through a particular localisation of infringing acts. Localisation is a process that is used by decision-makers, typically courts, to determine where acts occurred. Localisation must be performed whenever the place where an event occurred is either dispositive of the outcome of some analysis relating to the decision or is one of the factors that must be considered in the analysis. In patent infringement cases localisation may affect personal jurisdiction and choice of law: it will be the courts of the country where the patent was issued and infringed that will have specific jurisdiction over the infringer (although courts in a different country may have general jurisdiction), and it will be the law of the country where the patent was issued and infringed that will be applied to adjudicate the infringement. An act of sale suitably demonstrates the possibilities of localisation. For example, in Litecubes v Northern Light Products the defendant advertised allegedly infringing products online from Canada. When US customers purchased the products online the defendant sold the products ‘free on board’ in Canada and a shipping company unrelated to the defendant delivered the products to the customers in the United States. The US Court of Appeals for the Federal Circuit localised the act of sale in the United States, which allowed it to find that it had personal jurisdiction over the defendant and to apply US patent law to the defendant’s activities.36 On the other hand, negotiation activities and economic harm suffered by a patent owner in the United States are not sufficient, by themselves, to cause a sale to be localised in the United States; in Halo Electronics v Pulse Electronics, a US court held that the negotiation activities by the defendant and the economic harm to the patent owner were insufficient to constitute an act of sale in the United States when the manufacturing, ordering, invoicing, shipping and delivering of the product all occurred outside the United States.37 Courts in some countries may localise the place of making an invention in a place where only some of the components of an invention are made. For example, making components in Germany and the Netherlands is sufficient to localise the infringing act of making the patented invention in those countries if the infringer knew of

36 Litecubes, LLC v Northern Light Products, Inc, 523 F.3d 1353, 1369 (Fed Cir 2008) (cert denied); see also MEMC Electronic Materials, Inc v Mitsubishi Materials Silicon Corp, 420 F.3d 1369 (Fed Cir 2005). 37 Halo Electronics, Inc v Pulse Electronics, Inc (n 34).

The Extraterritorial Enforcement of Patent Rights 579

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the subsequent assembly of the components into the patented invention in other countries38 and the patented invention could be made by combining the components with other commonly available components.39 In other countries, making an essential component of a patented invention in the country will not be enough to localise the infringing act of making the patented invention in the country; in fact, in these countries, even if all the components are made in the country, but not assembled there, the patent infringing act of making might not be localised in the country.40 While making the components in these countries is not infringing because only a completely assembled invention can infringe the patent, the acts of offering to sell and selling the components in the countries can be infringing; for example, in the United States, section 271(c) of the US Patent Act makes offering to sell or selling certain types of components in the United States infringing. Similarly, in the United Kingdom section 60(2) of the Patents Act 1977 makes infringing the supply of or an offer to supply in the United Kingdom the essential elements of a patented invention, but only if the elements are ‘suitable for putting, and are intended to put, the invention into effect in the United Kingdom’. In a country where the making of components, by itself, does not constitute an infringing act of the making of a patented invention, it may be impossible to stop the making of components that are supplied outside the country. This was the conclusion in the US Supreme Court’s 1971 decision, mentioned above, that led to the introduction of section 271(f) of the Patent Act.41 In the United Kingdom this issue was highlighted recently in Virgin Atlantic Airways v Delta; in that case Arnold, J construed the patent claims at issue to cover an entire passenger seating system and concluded that there was no infringing supply or offer to supply components of the system under section 60(2) of the Patents Act 1977 because only the components were made in the United Kingdom, the final assembly occurred abroad, and the assembled system was ‘put into effect’ outside the United Kingdom.42 On appeal, the Court of Appeal construed the patent claims differently and rendered a complete patented device what Arnold, J considered to be merely components.43

This knowledge may be evidenced by the unique, patent-specific features of the components. Reichsgericht, 5 May 1888, I 86/88, RGZ 22, 165; Dia-Rähmchen V, Bundesgerichtshof, 14 July 1970, X ZR 4/65, GRUR 1971, 78, 80; Kunststoffhohlprofil Bundesgerichtshof, 30 November 1976, X ZR 81/72, GRUR 1977, 250, 252; Flügelradzähler, Bundesgerichtshof, 4 May 2004, X ZR 48/03; Oberlandesgericht Düsseldorf, 24 February 2011, I-2 U 102/09, [101] et seq; Smulders v Tripod Transport Technology BV, Case 91/223 KG, BIE 1993, 56 (Neth) [5.1.4]. In Japan, the act of making requires that the complete patented product be assembled in Japan. Tokyo District Court, Case No H15(wa)16924, 27 February 2007. However, a court found direct infringement in one case where products were assembled in Japan to be tested before the products were disassembled after testing and shipped abroad in parts. Osaka District Court, Case No H21(wa)15096, 22 March 2012, German translation in (2015) GRUR Int. 40 Virgin Atlantic Airways Ltd v Delta Airways, Inc, English High Court of Justice, 30 November 2010, [2010] EWHC 3094 (Pat) [109]. In Rotocrop International Ltd v Genbourne Ltd [1982] FSR 241, a maker of components was found liable for infringement under the theory that the assembly was performed in the UK by the maker’s customers and therefore the maker was a joint tortfeasor. 41 See nn 28 and 29. 42 Virgin Atlantic Airways Ltd v Delta Airways Inc (n 40). 43 Virgin Atlantic Airways Ltd v Delta Air Lines Inc, English Court of Appeal, 23 February 2011, [2011] EWCA Civ 162. See also Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (n 21). 39

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Marketa Trimble The internet and other remote communication media offer myriad choices for flexible localisation; certainly, sales and offers to sell can easily be localised in multiple locations simultaneously on the internet and through the other media.44 For example, in NTP v Research in Motion, the US Court of Appeals for the Federal Circuit localised in the United States the use of a patented system ‘enabl[ing] a mobile user to receive email over a wireless network’, even when parts of the system were located outside the United States. The Court held that the use of the system occurred where ‘control of the system [was] exercised and beneficial use of the system obtained’.45 In Menashe Business Mercantile v William Hill, the placing of a part of a patented ‘gaming system for playing an interactive casino game’ outside the United Kingdom was not sufficient to prevent a finding of infringement of the system in the United Kingdom because it was in the United Kingdom where the invention was put into effect.46 In NTP v Research in Motion, the US court reached a different conclusion on the localisation in the United States of an infringing use of a patented process; it held that all steps of a patented process must be performed in the United States for the infringing use of the process to be localised there. If only some steps are taken in the United States, and other steps are performed abroad, not only will the acts in the United States not constitute an infringing use, but based on the decision in Cardiac Pacemakers v St. Jude Medical, the acts in the United States will also be insufficient to constitute an infringing supply under section 271(f).47 These facts might lead to a different result in other countries; for example, in Germany the infringing use of the patented process will be localised in Germany, regardless of whether the initial steps of a patented process are taken in Germany and the remaining steps abroad, or vice versa, provided that either the infringing process was completed in Germany, or the final steps abroad can be attributed to the infringer in Germany.48

III. Extraterritorial Remedies 33

Another way that patent holders can extend the reach of a country’s patent law is by obtaining remedies that have extraterritorial effects. Extraterritorial effects must be distinguished from multi-country effects, which were discussed earlier. If, as discussed earlier in section B.II, a court decides infringements of foreign patents, it may issue an injunction concerning the foreign patents—and the injunction will have multicountry effects. For example, in Solvay v Honeywell, discussed above, the Court was about to issue a preliminary injunction that would have covered multiple European countries. A preliminary injunction in this case would not extend the effects of Dutch

44 Landgericht Düsseldorf, 29 March 2012, 4a O 17/11, Tracto-Technik v ABC, 12–13 (discussing, for the purposes of personal jurisdiction, the localisation of an offer to sell made on the internet). 45 NTP, Inc v Research in Motion, Ltd, 418 F.3d 1282, 1317 (Fed Cir 2005). See also Decca Ltd v US, 210 Ct. Cl. 546 (Ct Cl 1976). 46 Menashe Business Mercantile Ltd v William Hill Organisation Ltd, English Court of Appeal, 28 November 2002, [2002] EWCA Civ 1702, [24]. 47 Cardiac Pacemakers, Inc v St. Jude Medical, Inc (n 29) 1365. 48 Rohrschweissverfahren, Bundesgerichtshof, 24 February 2007, X ZR 113/04; Prepaid-Karten II, Oberlandesgericht Düsseldorf, 10 December 2009, 2 U 51/08.

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patent law extraterritorially; although the injunction would cover activities in countries outside the Netherlands, it would do so only because the Court applied the laws of the individual countries to the allegations of patent infringements in those respective countries. Extraterritorial effects occur when courts issue remedies, such as injunctions, that are based on the application of a single patent law, but the remedies reach outside the protecting country. In one type of remedy a court issues a generally phrased injunction that tracks the language of the patent statute, and therefore the injunction extends to the same territorial limits as the statute itself, which, as explained above, may sometimes include an extraterritorial reach.49 The extraterritorial reach of a generally phrased injunction is clear and may be upheld later by an enforcing court when the injunction is issued in response to specific acts that the infringer committed outside the protecting country.50 In another type of remedy a court issues an injunction that is theoretically limited to the territory of the protecting country but the injunction causes global effects. The injunction may successfully stop all or a majority of an infringer’s global activities if it is issued, for example, in the country where the infringer has its entire manufacturing capacity, or in the place from which the infringer acted on the internet, or where the major market for the infringing goods is.51 Similar extraterritorial effects may be achieved through criminal penalties if those penalties are available and imposed in the place where the infringer is present. Finally, in isolated instances a court might issue an injunction with extraterritorial effects that are unsupported by the territorial scope of the patent law on which the injunction is based; this type of injunction might be possible and might be issued by a court if the law allows the court to issue injunctions with an extraterritorial reach to the extent that such reach is necessary to prevent further infringements.52 Monetary relief can also have extraterritorial effects if its deterrent function affects the infringer’s activities in countries outside the protecting country; any damages awarded that are based on one country’s law might dissuade an infringer from infringing not only in that country, but also in other countries. Damages based on one country’s law

49 Prima Tek II LLC v Leong, Case No 3:04-cv-00214-MJR-CJP, S. D. Ill, consent decree, 3 May 2004 (covering acts of inducement under s 271(b)); 3M Company v Asia Sun (Taiwan), Inc, Case No 2:04-cv-00417-TJW, ED Tex, final judgment, 20 June 2005 (covering products made abroad through a process patented in the United States under s 271(g)). 50 Litecubes, LLC v Northern Light Products, Case No 4:04-cv-00485-ERW, ED Mo; Merial Ltd v Cipla Ltd, 681 F.3d 1283, 1303 (Fed Cir 2012) (noting that ‘Cipla’s own extraterritorial conduct can violate the present injunction as indirectly infringing pursuant to § 271(b)’). cf Int’l Rectifier Corp v Samsung Electronics Co, Ltd, 361 F.3d 1355 (Fed Cir 2004) (refusing to extend the reach of a permanent injunction outside the United States). 51 ‘A hole, say in Germany, of a Europe-wide business in a particular product may make the whole of that business impractical’. Research in Motion UK Ltd v Visto Corp, English Court of Appeal, 6 March 2008, [2008] EWCA Civ 153, [15]. 52 Johns Hopkins University v CellPro, Inc, 152 F.3d 1342, 1366–67 (Fed Cir 1998) (explaining that an injunction ‘can reach extraterritorial activities …, even if these activities do not themselves constitute infringement [if it is designed to] prevent infringement of a United States patent’); O2 Micro Int’l Ltd v Beyond Innovation Technology Co, Ltd, Case No 2:04-cv-00032-TJW, ED Tex, final judgment and permanent injunction, 21 March 2007 (ordering the infringer to label his products made outside the United States as ‘Not for sale in, use in, or importation into the United States’). The judgment was vacated by O2 Micro Int’l Ltd v Beyond Innovation Technology Co, Ltd, 521 F.3d 1351 (Fed Cir 2008).

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Marketa Trimble will typically not redress the harm to a patent holder outside that country, but exemplary or punitive damages, if they are available and awarded, may in fact contribute to mitigating the harm suffered outside the protecting country. In some countries, a country’s border measures can maximise the territorial effects of its patent law. Typically border measures will concern only acts of importation into the country, and therefore will apply only to the territory of the country, which the infringing goods will not be permitted to enter. International treaties do not require a country’s border measures to apply to goods that infringe patent rights, and therefore not all countries that are parties to the international treaties adopt border measures to stop patent-infringing imports.53 International treaties also do not require border measures to apply to the exportation of infringing goods,54 but China, Japan and South Korea, for example, have border measures that are available to stop both the importation and the exportation of goods that infringe IP rights, including patent rights.55 Further, international treaties do not mandate that countries apply border measures in cases of goods in transit.56 Nevertheless, in some countries trans-shipped goods may be impounded by customs if the goods infringe the IP laws of the countries through which they are trans-shipped. Many countries reject this practice in cases of pure transit if no danger exists that the goods will leak into the countries’ own markets. The ECJ has held that under the EU Customs Regulation, goods that infringe the IP rights of the EU country of trans-shipment may be subject to customs measures under the Regulation only if the goods are ‘proven [to be] intended to be put on sale in the European Union’.57

IV. Extraterritorial Enforcement of Remedies 38

One hurdle that remedies must overcome is their extraterritorial enforcement, if they must be enforced outside the country in which they were awarded. A court in a foreign country can refuse to recognise and enforce a judgment if the foreign court considers the remedies awarded by the judgment contrary to the public policy of the foreign country, or for other reasons. The public policy exception to the recognition and enforcement of foreign judgments can be triggered by an overly expansive territorial reach of a remedy, or by the nature of the remedy. Courts in many countries will not enforce portions of monetary relief that exceed the amount of any compensatory damages if the non-compensatory relief is viewed by the courts as foreign-awarded

53 TRIPS Agreement, art 51. eg Australia, Brazil, Canada, Russia and Taiwan do not have customs measures available for patents. 54 ibid. 55 Regulations of the People’s Republic of China on Customs Protection of Intellectual Property Rights, art 3; Customs Act of Japan, Act No 61 of April 2, 1954, as revised, art 69-2(iii); Act on the Investigation of Unfair International Trade Practices and Remedy Against Injury to Industry and the Guidelines of the Korea Customs Service. 56 TRIPS Agreement, art 51, fn 13. 57 Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Company Ltd and Nokia Corp v Her Majesty’s Commissioners of Revenue and Customs, ECJ, 1 December 2011, Joined Cases C-446/09 and C-495/09; Council Regulation (EC) No 1383/2003 of 22 July 2003 concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights.

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punitive damages, which are not permitted to be enforced in many countries.58 Injunctions face enforcement difficulties in foreign countries as well; courts in common law countries have in the past refused, and some still refuse, to enforce foreign-awarded non-monetary relief. Even the enforcement of remedies that are on their face limited to the territory of the country of the issuing court may encounter difficulties if the remedies affect parties in other countries. In such situations anti-suit injunctions have been used to prevent the enforcement of remedies in foreign countries to the extent that court actions are necessary for the enforcement in the foreign countries. For example, when Motorola obtained an injunction in 2012 from a German court in a patent infringement proceeding against Microsoft, Microsoft asked the US District Court for the Western District of Washington to issue an anti-suit injunction to prevent Motorola from enforcing the German injunction in Germany.59 Although the German injunction was worded to apply only in Germany, Microsoft argued that it affected Motorola’s global contractual obligations to Microsoft, which were the subject of litigation in the United States. The US court agreed and issued an anti-suit injunction after considering, among other factors, the fact that Motorola filed its lawsuit in Germany after Microsoft had filed its lawsuit in the United States.

V. Res Judicata, Collateral Estoppel and Foreign Patents 40

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The doctrines of res judicata and collateral estoppel allow the effects of decisions made in one case to be extended to other cases. However, the utility of the doctrines in cross-border contexts is limited in patent cases because patent rights are territorially limited and arise from grants of national patents that are independent of each other.60 One court’s holding that an infringer has infringed a national patent by particular actions does not mean that the same actions committed by the same infringer in another country will infringe a parallel patent issued for the same invention in the other country. Although conclusions about patent validity, infringement and other questions of law or mixed questions of fact and law made by a foreign court in cases involving foreign patents have no preclusive effects in domestic patent litigation concerning domestic patents,61 factual findings made by a foreign court or agency in one proceeding may sometimes be utilised by a domestic court or agency in a different proceeding. In the United States, courts require as conditions for collateral estoppel that the issues in foreign and domestic litigation be identical, that the issues be litigated in foreign

58 On the recognition of the portion of the damages that represent compensatory relief, see eg Bundesgerichtshof, 4 June 1992, IX ZR 149/91, 118 BGHZ 312, 1993 (Ger.); Supreme Court of Japan, 11 July 1997, 1993 (O) no 1762, 51 MINSHŪ 2537 = 30 IIC 480 (1999) (Japan); Stuttgart Oberlandesgericht, 27 July 2009, 5 U 39/09; Cour de cassation 1e civ., 1 December 2010, No 1090 (Fr.) (09-13.303). 59 Microsoft Corp v Motorola, Inc, 696 F.3d 872 (9th Cir 2012). 60 Paris Convention for the Protection of Industrial Property, 1883, as revised, art 4bis. 61 Ditto Inc v Minnesota Min & Mfg Co, 336 F.2d 67 (8th Cir 1964); Timely Products Corp v Arron, 523 F.2d 288 (2d Cir 1975); Medtronic, Inc v Daig Corp, 789 F.2d 903 (Fed Cir 1986); Merck & Co, Inc v Teva Pharmaceuticals USA, Inc, 288 F.Supp.2d 601 (D Del 2003).

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Marketa Trimble proceedings, that factual findings be necessary for a foreign court’s final decision and that foreign proceedings be fundamentally fair.62 Because issues might not be identical, even when parallel patents for the same invention are litigated, not all findings made in foreign proceedings will be relevant in domestic proceedings. Similarly, given ‘the varying legal and procedural requirements for obtaining patent protection in foreign countries’,63 statements made during patent prosecution before a foreign patent office might not always be used for purposes of claim construction and for the application of the doctrine of equivalents in domestic proceedings.64 Some extraterritorial effects may also occur when judges give consideration to the decisions of their foreign counterparts informally.65 Patent adjudication is a highly specialised area comprising a relatively small legal community; judges are aware of each other’s decisions and occasionally exchange views on issues that arise in patent litigation. Sometimes judges will publicly express respect for the findings and judgments of their foreign counterparts, even if they cannot benefit from those findings and judgments because the findings and judgments are issued in foreign proceedings. For example, Judge Weinstein of the US District Court for the Eastern District of New York called the restriction a quiddity of [the] law that a well and thoroughly reasoned decision reached by a highly skilled and scientifically informed justice [in another country] must be ignored and essentially the same issues with the same evidence must now be retried.66

However, judges are also critical of each other’s decisions on occasion,67 and to what extent judges are informally influenced by decisions by their foreign counterparts is difficult to assess.

D. Conclusion 43

Enforcement of patents in multiple countries is costly; even the wealthiest of patent owners who hold parallel patents for the same invention in multiple countries must carefully decide how they will enforce their patents to maximise the benefits of

62 Northlake Marketing & Supply Inc v Glaverbel SA, 986 F.Supp. 471 (N.D.Ill.1997); Oneac Corp v Raychem Corp, 20 F.Supp.2d 1233, 1243 (N.D. Ill. 1998). See also, generally, A.B. Dick Co v Burroughs Corp, 713 F.2d 700, 702 (Fed Cir 1983), cert denied, 464 U.S. 1042 (1984). 63 Caterpillar Tractor Co v Berco, SPA, 714 F.2d 1110, 1116 (Fed Cir 1983). 64 eg TI Group Automotive Systems (North America), Inc v VDO North America, LLC, 375 F.3d 1126 (Fed Cir 2004); Pfizer, Inc v Ranbaxy Laboratories Ltd, 457 F.3d 1284 (Fed Cir 2006). cf Gillette Co v Energizer Holdings, Inc, 405 F.3d 1367, 1374 (Fed Cir 2005); Apple Inc v Motorola, Inc, 757 F.3d 1286 (Fed Cir 2014). 65 Grimme Maschinenfabrik GmbH & Co KG v Scott, English Court of Appeal, 15 October 2010, [2010] EWCA Civ 1110, [77] and [80] (mentioning consultations with judges in Germany and the Netherlands); HTC Europe Co Ltd v Apple, Inc, English High Court (Patents Court), 19 September 2011, [2011] EWHC 2396 (Pat) [15] (suggesting that when assessing the validity of the German designation of a European patent, a German court may take into account an English court’s findings concerning the validity of the English designations of the same European patent). 66 Cuno Inc v Pall Corp, 729 F.Supp. 234 (EDNY 1989). See also Motion UK Ltd v Inpro Licensing SARL, 16 June 2005, [2005] EWHC 1292 (Pat), [38]. 67 Actavis UK Limited v Eli Lilly & Co (n 26) [152].

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enforcement territorially. Extraterritorial enforcement—be it adjudicating a foreign patent infringement, extending the reach of a national patent law extraterritorially, or obtaining and enforcing remedies outside the protecting country—may help patent owners expand the territorial effects of their enforcement actions, but it suffers from numerous hurdles that may be difficult or impossible even for sophisticated patent owners to overcome. It seems to be generally accepted by commentators that the transnational enforcement of patents deserves to be improved; in fact, some improvements have already occurred. Some courts have extended their jurisdiction, whenever possible, over foreign patent infringements, and legislators in some countries have adopted choice-of-law provisions that allow parties to agree on the law applicable to patent infringements.68 In the European Union, the Unified Patent Court has been designed to facilitate multicountry patent enforcement. Academics in Europe, the United States and Asia have developed proposals for principles to facilitate easier transnational patent litigation,69 and the World Intellectual Property Organization and the Hague Conference on Private International Law have expressed interest in the proposals and in an ongoing academic project of the International Law Association that also addresses the intersection of IP law and private international law. When attempting to solve the inefficiencies of transnational patent litigation legislators should assess whether the inefficiencies might have some socially and economically valuable effects. For example, in reaction to the costs and complexities of multiple-country enforcement some parties have agreed to limit the number of litigation venues and the number of litigated patents and to take the result of the limited litigation into consideration when they settle their disputes world-wide. Parties may also opt to resolve their disputes in an arbitration that may allow the parties to litigate multiple-country infringements before a single panel. This behaviour by parties is among the effects of the inefficiencies that might be worth preserving.

68 Bundesgesetz über das Internationale Privatrecht (Switzerland), 18 December 1987 (as of 1 July 2013) art 110(2); Law of the Application of Law for Foreign-Related Civil Relations of the People’s Republic of China, art 50. 69 American Law Institute, Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (2008); European Max Planck Group on Conflict of Laws in Intellectual Property (CLIP), Conflict of Laws in Intellectual Property: The CLIP Principles and Commentary (2013); Transparency of Japanese Law Project, Transparency Proposal on Jurisdiction, Choice of Law, Recognition and Enforcement of Foreign Judgments in Intellectual Property (2009), available at: www.tomeika.jur.kyushu-u.ac.jp/ip/pdf/Transparency%20 RULES%20%202009%20Nov1.pdf; Korean Private International Law Association, Principles on International Intellectual Property Litigation (2010) (on file with author).

20 Border Measures in Europe, Japan and the US ANJA PETERSEN-PADBERG*

A. Introduction 1

Border measures may help to prevent the import of patent-infringing goods. Different from counterfeit and pirated goods concerning which infringement is easily understandable for customs authorities and which constitute the main target of border measures, customs authorities cannot easily assess whether goods infringe a patent. Even in cases where patent infringement is ‘visible’, the patent’s validity may be questionable. US, Japanese and European law handle border measures with regard to patents quite differently. Under the US Tariff Act, initiation of patent infringement proceedings at the US ITC (‘Section 337 Investigation’) will be necessary in order to obtain a limited or general ‘import exclusion order’ (and a cease and desist order with regard to sales in the US). Under Japanese law, the applicant has to submit an opinion on the infringement of specific imports and Japanese customs authorities will hear the importer and grant an ‘application to suspend import’ only if they can find prima facie infringement or after an expert group has submitted an opinion on the infringement and validity of the patent. Quite differently, in Europe, completion of a short application form with an emphasis on product features, but without any statement on the patent infringement is sufficient. Customs authorities do not have any expertise in IPR matters, but rely on the patentee’s statements. The patentee is fully liable for customs action, yet is not liable for any damages suffered by the importer during the 10 working days’ examination period. Also regarding costs, there are significant differences between the three proceedings. In the following, a closer look will be taken at the distinguishing features of border measure proceedings with regard to patents in Europe, Japan and the US. In the final part, suggestions will be made on how to improve European law on border measures with regard to patents.

* I would like to thank Timothy Maloney, author of the chapter ‘Patent Enforcement in the United States’ in this book, for providing me with valuable information on the US ITC s 337 investigation rules, and attorney-atlaw, Makoto Hattori of Abe, Ikubo & Katayama for sharing with me his valuable experiences on border measure proceedings with regard to patents, in particular his experiences as ‘expert’ for the Japanese customs authorities.

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B. Border Measures in the European Union I. Overview 1. Applicable Law 2

In Europe, an application for border measures with regard to patents must be directly filed at the central, national customs authorities (‘Competent Customs Department’). Border measures are governed by uniform European law, ie the European Border Measures Regulation (EU/608/2013)1 in force as of 1 January 2014 as a part of the European customs regime (hereafter also ‘the Regulation’).2 With regard to goods from third countries (and goods to be exported to third countries), the Border Measures Regulation is directly applicable and binding law in all 28 Member States of the European Union.3 The Regulation covers almost all IP rights available under European or national law, including patents, supplementary protection certificates (SPCs) and utility model rights, and supersedes national law on customs action. National law on border measures may only be applied to goods which are not covered by the Regulation, most relevantly parallel imports that infringe national IP law.4 Rules on border measures under national law also apply to Community goods, but do not play a significant role since, with the exception of random checks, basically no border controls exist between the EU Member States. 3 Members of the European Union have almost 30 years of experience with the use of European law on border measures. The second European Border Measures Regulation5 was originally drafted in parallel to the rules of Article 41 et seq of TRIPS on border measures with regard to counterfeit and pirated goods, ie goods infringing trade mark rights or design or copyrights. Patent rights (and SPCs) were included in the border measure regime for the first time in 1999.6 Utility models were included with the present Border Measures Regulation.

1 Regulation (EU) No 608/2013 of the European Parliament and of the Council of 12 June 2013, concerning customs enforcement of intellectual property rights and repealing Council Regulation (EC) No 1383/2003, OJ L 181, 15 et seq. This Regulation replaces Regulation EC/1383/2003. The new Regulation is more complex than its predecessors with a large number of minor administrative rules (see arts 3–16 which are concerned with the application proceedings). It is therefore difficult to find the rules of most practical importance at first glance; these are art 6(3) (application), however, superseded by the application form in the Implementing Regulation, arts 17 and 19 (custom action and inspection/samples) and art 23 (‘Basic Procedure’). The application form is published in Implementing Regulation (EU) 1352/2013 of 4 December 2013 establishing the forms provided for the Regulation (EU) 608/2013 of the European Parliament and of the Council concerning customs enforcement of intellectual property rights, OJ L 341, 10. 2 Regulation (EEC) No 2913/92 of the European Parliament and the Council of establishing the Community Customs Code, L 117 of 4 May 2005, 13 et seq. It is planned that the Community Customs Code will apply until 1 May 2016 and then the ‘Modernised Community Customs Code’ will replace it. 3 It is therefore not applicable to non-EU Member States, such as Switzerland, Norway, Iceland etc. 4 National law, if available, may only be applied with regard to an IP right not covered by the Regulation, notably achievements protected under unfair competition. 5 Council Regulation (EC) No 3295/94 of 22 December 1994 laying down measures to prohibit the release for free circulation, export, re-export or entry for a suspensive procedure of counterfeit and pirated goods, OJ L 341 P, 8–13. 6 With Council Regulation (EC) No 241/1999 of 25 January 1999, OJ L 27(amending, not replacing Regulation (EC) No 3295/94).

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Even though a few years ago border measure cases concerning MP2 and MP3 patents raised a discussion on the appropriateness of customs action for cases where infringement and validity are unclear, with the last revision of the Regulation no significant improvements were made and the Regulation’s rules are (still) focused on counterfeit and pirated goods.7 Therefore, also with the new Regulation, quite a number of legal issues relating to patent cases remained unresolved, for example the required level of information and evidence on the infringement and validity in the application for customs action; in case of an objection, whether goods may be destroyed after issuance of a provisional injunction as a non-final decision even without explicit agreement of the opponent; whether infringing goods may be released based on a licence settlement between the parties; how to protect trade secrets in inspection proceedings; and the principle of proportionality with regard to the destruction of the goods (destruction of the entire product or only of its patent-infringing part). 5 The present Regulation provides for the so-called ‘Basic Procedure’ (art 23) with regard to goods seized by customs authorities. The ‘Basic Procedure’ allows customs authorities to destroy IPR-infringing goods without a prior court decision upon consent of both parties. If the importer does not respond to customs authorities’ inquiry as to his consent to the destruction, such consent may be assumed. In the case of an objection, the patentee needs to file court proceedings to prevent the release of the goods. The entire liability for the enforcement of IP rights by border measures lies with the right holder, which will be explained in more detail below. 6 Under the present Regulation, customs will not be allowed to send samples for analysis to the patentee.8 However, the patentee has a broad right to inspection, including analysis and disassembly of the product.

2. Statistics 7

In 2013, almost 36 million items with a domestic retail value of around €760 million Euros were detained, which is less than half the total in some of the previous years.9 Concerning IP rights, the majority of items detained by customs in 2013 were suspected of infringing a Community or national trade mark (93 per cent). Some 2.89 per cent of items were detained owing to suspicions of infringements of design rights, 2.41 per cent related to patent rights, 0.94 per cent related to copyrights, 0.4 per cent of items were protected by plant variety rights, 0.02 per cent by geographical indications and 0.01 per cent by SPCs. In terms of the number of items detained in 2013, the category of products where the most items were detained was clothing (12 per cent), followed by pharmaceuticals (10 per cent). In 2013, 10 Member States accounted for 91 per cent of the total number of cases and 80 per cent of the total number of items. The majority of

7 The only ‘adjustment’ which was made in the present Regulation was to prohibit customs authorities to provide a patentee with a sample of detained, allegedly patent infringing, goods. In 1999 with regard to patent-related border measures cases the ‘Early Release Procedure’ (art 24) was introduced, see section VI below. 8 This also applies to goods infringing a SPC, utility model, plant variety right or topography of a semiconductor product. 9 European Commission, Report on EU customs enforcement of intellectual property rights, Results at the border 2013, http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/ counterfelt_piracy/statistics/2014_lpr_statistics_en.pdf. The number of items detained was about 68 million in 2000, 76 million in 2005, 79 million in 2007, 179 million in 2008, 118 million in 2009, 103 million in 2010 and 115 million in 2011.

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Anja Petersen-Padberg the cases occurred in the United Kingdom, Germany, Belgium, Italy, Ireland, Portugal Hungary, Spain, France and Austria, and the largest numbers of items were detained in Italy, Spain, the United Kingdom, Germany, France, Portugal, Hungary, Poland, the Netherlands and Belgium. It is remarkable that the Netherlands, having the busiest container port in Europe, and Germany, being the largest economy in Europe and having the second and fourth busiest container ports, found fewer items than Spain (5th and 6th busiest container ports) and Italy (10th, 16th and 18th busiest container ports in Europe). In the Netherlands, less than half of the number of items were detained compared to Italy. Germany detained 3 million items in over 20,719 detention cases, while Italy found almost 5 million items in only 5,492 cases. Also in Spain, the ratio between cases and items (4,032 cases, 3.5 million items) is better than in Germany and the United Kingdom. Germany and the United Kingdom, however, put more efforts into postal consignments which amounted to 72 per cent of all detentions in Europe. In 2013, China was the main source of items infringing intellectual property rights with 66 per cent of the total amount. With regard to the means of transportation, the number of cases in postal transport (64 per cent) and express transport (8.5 per cent) was very high, obviously due to customs interceptions in particular in Germany and the UK. 17 per cent of the cases related to air transport and 5.75 per cent of the cases related to road transport, with only 4.4 per cent of the cases relating to transport by sea. With regard to the items detained, the overwhelming majority were transported by sea (63 per cent), followed by road (12 per cent), express (11 per cent) and air (11 per cent). A small number of detentions were made in connection with rail transportation (0.17 per cent). Regarding the outcome of these cases, the goods were destroyed in 77 per cent of cases, while in 15 per cent of the cases a court case was initiated to determine infringement (the proportion of goods destroyed in these cases is unknown). In 8 per cent of the cases, the goods had to be released since (1) they appeared to be original goods (2.94 per cent) or (2) no action was initiated by the right holder (4.85 per cent). In 92 per cent of all cases, customs action was started whilst the goods concerned were undergoing import procedures. In 5 per cent of the cases, goods were discovered whilst in transit with an EU destination, and 1 per cent underwent re-export procedures with a destination outside the EU. Further, 1 per cent of the cases concerned goods in warehouse proceedings, 0.33 per cent concerned goods in transit with a destination outside the EU, 0.18 per cent of the goods were trans-shipped and 0.06 per cent were in export proceedings.

II. Scope 1. Intellectual Property Rights Subject to Border Measures in Europe 8

The Border Measures Regulation has a very broad scope and applies to goods infringing national or Community trade marks, national or Community design rights, goods protected by national or Community geographical indications or designations of origin, copyrights, patents, SPCs, utility models, plant variety rights and goods using a protected semiconductor layout.10 10

Regulation (EU) 608/2013, art 2(1)–(4).

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2. Customs Situations 9

10

11

11

Customs authorities may take action when goods are under customs surveillance, ie in one of the numerous customs situations under the Community Customs Code. Customs may therefore suspend the release of the goods when they are declared for release for free circulation (import), exported, re-exported, entering or leaving the customs territory or placed under a suspensive procedure, such as transit, temporary importation (eg exhibition of goods at a trade fair) or when the goods are placed in a free zone or free warehouse. The customs situations under the Community Customs Code go beyond what is considered infringing under European IP laws, for example the ‘placing of goods in transit proceedings’ is not an (explicit) infringement under European and national IP laws. This asynchronous situation has caused legal discussions and disputes.11 In this context, the law at least clarifies that the Regulation does not establish new criteria for patent infringement.12 Due to geography, goods in transit play a much more significant role in European customs proceedings than in the US or Japan. Whether goods in transit amount to an IP infringement has been the subject of a good number of national13 and ECJ decisions.14 A practical problem is that applicants can easily cheat by declaring goods as in transit, and later importing them into an EU Member State. With regard to customs action on goods in transit, the ECJ has more or less clarified the conditions of a trade mark (or design right) infringement. The ECJ decided in ‘Class International’, ‘Montex’ and ‘Nokia/Philips’ that transit goods basically do not infringe a trade mark or design right except in those cases where there is a substantial likelihood of diversion of the goods onto the market of the European Union.15 Concerning goods in transit possibly infringing a patent right, customs may only take action if there are indications that the goods will be placed onto the market of the relevant transit country.16 According to the Commission, the criteria established by the ECJ with regard to trade mark and design rights are also to apply to other intellectual property rights, in particular to patents.17 The German Federal Supreme Court also denied an infringement of patent rights with regard to goods in transit (irrespective of whether the goods were placed in so-called ‘internal’ or ‘external’ transit proceedings)

C Heath, ‘Customs Seizures, Transit and Trade’ (2008) 39 IIC 881. Regulation (EU) 608/2013, Preamble 10. 13 See the overview on national court decisions by Olivier Vrins, (2010) JIPLP 358 et seq. 14 See ECJ, 18 October 2005, C-405/03—Class International; ECJ, 9 November 2006, C-281/05—Montex Holdings; CJEU, 1 December 2011, joined cases C-446/09 and C-495/09—Nokia v HMRC/Philips v Lucheng. 15 The following criteria must be examined (1) the goods are sold to a customer of the European Union; or (2) the goods are being offered for sale or advertised to consumers in the European Union; or (3) where it is apparent from documents or correspondence concerning the goods that their diversion to European Union consumers is envisaged; and (4) the destination of the goods is not declared even if required or there is no precise or reliable information as to the identity or address of the manufacturer or consignor of the goods and no information as to whether there is a lack of cooperation with the customs (Nokia v HMRC/Philips v Lucheng (n 14) notes 71 and 78). 16 Not ‘Community market’. 17 European Commission, ‘Guidelines of the European Commission concerning the enforcement by EU customs authorities of intellectual property rights with regard to goods, in particular medicines, in transit through the EU’ of 01.02.2012. 12

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Anja Petersen-Padberg following the above ECJ rulings.18 With regard to generic medicines, the said approach of the ECJ was included within Preamble 11 of the Regulation.19

3. Parallel Imports and Personal Luggage 12

13

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18 19

The Regulation does not apply to goods manufactured with the consent of the right holder, ie it does not apply to parallel imports.20 Also goods which were manufactured behind the right holder’s back to save licence fees (overruns/grey market products) are not subject to border measures, even if they are of a lesser quality as agreed upon in the licensing agreement. Original goods shall not be subject to customs action since it is practically impossible for customs authorities to examine a breach of contract.21 If the importer alleges that goods are made under a licence agreement, it is the importer who must provide appropriate evidence.22 Customs action on parallel imports may be taken, if available. For instance, under German law, border measures under national law apply to parallel imported goods from third countries, provided that the IP right is not exhausted.23 However, goods must be ‘obviously infringing an IP right’ (section 142a Patent Act); the right holder must therefore clearly label the products as not to be marketed in the European Union (although no such notice is necessary to establish patent infringement under German patent law). Further, customs may not take action in regard to travellers’ personal luggage of a ‘non-commercial nature’ to avoid a serious disruption to the clearing of goods contained in travellers’ personal luggage.24 German Federal Supreme Court, 25 June 2014, docket X ZR 72/13, GRUR 2014, 1189—‘Electric Kettle’. Preamble 11 of Regulation (EU) 608/2013 reads: Under the ‘Declaration on the TRIPS Agreement and Public Health’ adopted by the Doha WTO Ministerial Conference on 14 November 2001, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all. Consequently, in line with the Union’s international commitments and its development cooperation policy, with regard to medicines, the passage of which across the customs territory of the Union, with or without transhipment, warehousing, breaking bulk, or changes in the mode or means of transport, is only a portion of a complete journey beginning and terminating beyond the territory of the Union, customs authorities should, when assessing a risk of infringement of intellectual property rights, take account of any substantial likelihood of diversion of such medicines onto the market of the Union.

20 With regard to parallel imported goods, the right holder needs to give his consent for the branding or manufacturing of goods. It is not necessary that the country where goods are branded or manufactured is an EU country. It is also of no relevance in which country goods were branded or manufactured with the consent of the right holder and were brought onto the market for the first time. ‘Bearing a trade mark or manufactured with the consent of the right holder’ includes products branded or manufactured by the right holder, or by a licensee or a sub-licensee. The consent of the licensee to its sub-licensee is to be considered as consent of the right holder. 21 See O Vrins/M Schneider, Enforcement of IPR through Border Measures (2012) note 1.28. 22 Under German law, in court proceedings, if the patentee has shown that there are indications of IPR infringement, ie that the goods are not authentic, the burden of proof that goods are authentic, ie manufactured under a licence agreement is on the importer, and, importantly, the patentee does not need to disclose his verification technology; German Federal Supreme Court, 15 March 2012, docket I ZR 52/10—‘Converse I’ (Community trade mark case); see also District Court Düsseldorf, 15 October 2014, docket 2a O 306/13. 23 Federal Finance Court, 7 October 1999—Jockey, GRUR Int 2000, 780. 24 The limits of the duty-free allowance will be of no relevance. Customs officers will take into consideration the nature and quantity of the goods and the frequency of importation. Member States are not precluded from prohibiting the import of such goods for non-commercial purposes; see also the Regulation on Relief from Customs Duty, (EC) 1186/2009 of 16 November 2009, OJ L 324 of 10 December 2009, p 23 et seq, art 45(2)(b).

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III. Application 1. Application Standard Form 15

Applications for customs action must be made by submission of a standard form and required documents to the Competent Customs Department (see below, section 2).25 The standard form provides for a box where the applicant has to choose between ‘Union rights’ and ‘national rights’.26 With regard to patents, including national parts of a European patent, SPC or utility model, ‘national rights’ must be chosen27 and the application will be called a ‘national application’. ‘Union application’ with a single centralised application procedure will become relevant for the envisaged unitary patent.

2. Competent Public Authority 16

Each Member State shall designate one customs department to receive and process applications (Competent Customs Department). A list of the Competent Customs Departments of the 28 European Member States is published by the European Commission, DG TAXUD, which is subject to regular updates.28

3. Entitlement 17

Only persons and entities with a right to sue are entitled to file an application and documentary evidence on entitlement must be presented. Non-exclusive licensees are therefore basically not entitled to apply for customs action. Furthermore, immediate notification of the customs authorities must be made should entitlement cease to exist, in case of non-compliance, customs may suspend the application.

4. Required Information 18 19

The information required in the application form is the only basis for customs action under the Regulation.29 The standard application form focuses on information of product features. It requires a minimum of ‘mandatory information’,30 ie the applicant has to provide information on the intellectual property right,31 its entitlement and information on authentic

25 Commission Regulation (EU) 1352/2013. The information can also be downloaded at the website of the European Commission: http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/ counterfeit_piracy/right_holders/application_en.pdf and usually also at the websites of national customs authorities. 26 The choice has to be made in box 2 of the standard application form according to Implementing Regulation (EU) No 1352/2013. 27 Regulation (EU) 608/2013, art 2(10); see also Manual, 15. National applications, which apply only in the Member State where they are submitted, may be submitted with respect to IP rights based on both EU law and national law. 28 http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_ piracy/right_holders/contactlist_intervention_en.pdf. 29 ie to assume ‘suspicion of infringement’ pursuant to art 17 of the Regulation. 30 Implementing Regulation (EU) 1352/2013 clearly indicates (with an asterisk (*)) which information shall be considered as mandatory. 31 The right holder must not forget to inform the customs authorities of a possible expiry of the right. Otherwise, he has to fear suspension of the application as a sanction under Regulation (EU) 608/2013, art 16(2)(a).

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Anja Petersen-Padberg goods. In addition to mandatory information, ‘optional’ information needs to be provided ‘if appropriate’;32 for instance, pursuant to boxes 20–27 of the application form, applicants may provide features of the allegedly infringing products. However, for successful border measures, of course product features need to be provided so that customs authorities are able to find infringing goods and to distinguish them from original goods.33 If possible, photographs should be provided. Furthermore, if available, information on the place of production, traders, channels of distribution, the kind of packages and its typical features and information on accompanying documents such as brochures or manuals should be submitted. Finally, a list of licensees should be presented to customs authorities to avoid the detention of original goods. In the case of patents, depending on the type of goods, the infringing goods might be detectable by specific serial numbers, packaging features etc by the help of information on technical features protected by the patented invention. Such features could, for instance, be described in an instruction manual or become visible when putting a device into operation. It will depend on the type of goods and the type of infringement whether mere product or packaging information will help to find the goods or whether information related to the protected technology, ie description of the infringing act will be of more help to detect the goods. Optional information, for example on features of the infringing goods or distribution channels, is crucial for successful border measures and an application with insufficient or missing information on the infringing product is useless. It is, however, unclear whether an application may be rejected owing to incomplete ‘optional’ information since the wording of Article 7(1) of the Regulation is imprecise in this respect. Different from the US Border Control Agency, European customs authorities need not take action on the basis of a court decision. Where a court decision related to the goods at issue has already been rendered, customs action constitutes an additional enforcement tool. The European practice also differs from border measures by Japanese customs authorities who, if it is not a clear-cut and undisputed case, take action on the basis of an opinion of an attorney-at-law or on an expert group opinion on infringement or validity, and the importer is given the opportunity to submit a statement. In Europe, importers will not be heard34 on the question of infringement (see below). This is so because customs authorities may not decide and cannot decide on the infringement and therefore they cannot decide on statements made by importers, since no experts are available, but the question is left to a (possible) ex post decision by the courts.35 Even if customs authorities doubt infringement or validity of the patent,

Implementing Regulation (EU) 1352/2013, ‘Notes of Completion’. Concerning the necessity to clearly state that such information will be mandatory, see section E, ‘Summary’. 34 In view of patent disputes, a right for the importer or the holder of the goods to be heard on the infringement was proposed in art 16(3) of the draft Regulation on Custom Action in 2011 (COM (2011) 285/3). This right was not implemented in the present Regulation. Instead, only notification procedures were modestly amended. Recital 19 states that in order ‘to take into account the conflicting interest of the parties’ and to ensure that the patentee is given the opportunity to react to a potential objection, the importer or holder of the goods and the patentee shall if possible be notified on the same day (Recital 19). 35 District Court Düsseldorf, 19 June 2008, InstGE 9, 130—Druckbogenstabilisierer, UK High Court, 27 February 2007, [2007]—SanDisk v Koninklijke Philips Electronics and others [2007] EWHC 332 (Ch) available at: www.bailii. org/ew/cases/EWHC/Ch/2007/332.html). 33

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or the infringement is not clearly explained, they do not have a right to reject or to stay the application.36 The reason for this is explained in Preamble 10 of the Border Measures Regulation: ‘This Regulation solely contains procedural rules for customs authorities. Accordingly, this Regulation does not set out any criteria for ascertaining the existence of an infringement of an intellectual property right’. Since this Regulation ‘does not set out any criteria for ascertaining infringement’, it is consistent that the application form does not require applicants to provide any information on the infringing act. Applicants therefore do not need to substantiate the infringing act by a feature analysis or an expert opinion on infringement and validity of the patent right.

5. Importers Have No Right to be Heard 26

27

28

As a rule, the application form is directed at an unknown number of possible infringers. The application can be directed at a specific competitor, in which case the name and addresses should be indicated in the box marked ‘manufacturer or distributor’ on the application form. However, different from a Limited Exclusion Order (‘LEO’) under US law, such an application may also be applied to products of other manufacturers or importers, ie name and address of a specific ‘manufacturer or distributor’ is only regarded as an example. Even if the application is directed at a specific competitor, owing to data protection laws, a patentee’s application for customs action will not be published, and possible infringers do not enjoy a right to be heard. It is also basically of no help for an importer or any other interested person to submit a so-called ‘protective letter’ (‘Schutzschrift’) to the customs authorities explaining why a certain product does not infringe a patent and why the patent is invalid—a common practice in German or Swiss law in order to avoid an adverse ex parte order. As long as no final court decision denying infringement or validity has been rendered, customs authorities must rely on the patentee’s explanations. If the infringement is in dispute, or if the importer has found out (on the basis of a file inspection right or an inspection right under the Administrative Information Act)37 that an application for border measures is pending, he could file a negative declaratory action combined with a request for a provisional measure to cease and desist any application for customs action. This would be costly and laborious. Cases in Germany are unknown.38

36 Only if allegedly patent-infringing goods are found, but the right holder asks customs to release the goods, may the customs authorities suspend the application for customs action; Regulation (EU) 608/2013, art 16(2). 37 Gesetz zur Regelung des Zugangs zu Informationen des Bundes, 05.09.2005, as in force of 1 June 2006 (BGBl. I S. 2722), last amended by art 2(6) of the Law of 7 August 2013 (BGBl. I S. 3154, 3160). 38 The UK High Court in SanDisk Corporation v Koninklijke Philips Electronics and others [2007] EWHC 332 (Ch), rejected the application for interim relief that Sisvel be restrained from instigating and/or commencing any action without 14 days’ written notice to SanDisk based on any patent before any court or administrative body (including without limitation any customs authority or police authority) in the EU, the effect of which may be to restrict the activities of SanDisk and/or dealing in its MP3-based products (including without limitation the seizure, detention, confiscation, removal or modification of any MP3 player) owing to a lack of jurisdiction. SanDisk had argued that Sisvel’s patents were obviously invalid and that enforcement measures contravened EU competition law and that Sisvel’s licensing strategy in Europe constituted an abuse of patent rights. With this request, SanDisk wanted to be able to submit to the customs authorities a statement on the validity and infringement of the patents (SanDisk v Koninklijke Philips Electronics and others (n 35)).

596 29

Anja Petersen-Padberg An importer may defend itself only when goods are found by customs authorities (see below).

6. Processing Time 30

An application must be processed within 30 working days. The rejection of an application must be justified and information must be provided on legal remedies.

7. Validity 31

The validity of an application for customs action is one year at most. Often, customs authorities only grant the application until the end of a renewal term of the IP right at issue. The extension of an application for customs action must be filed less than 30 working days prior to expiry. The applicant has to pay any debts owed the customs authorities, otherwise customs may refuse to extend the application.

8. Updates, Amendments, Special Alerts 32

Updates with regard to IP rights, product information, possible infringers or extension of an EU application to additional Member States can be filed at any time.

9. Costs 33

34

Customs authorities of the Member States may not charge a fee for the processing of the application, and an application does not necessarily need to be filed by an attorneyat-law or patent attorney (even though this is recommendable). Border measures in Europe therefore constitute a quite inexpensive enforcement tool. An applicant is also not required to post a bond, even though this would be a reasonable tool to protect importers from unfounded applications made by a patentee without financial means. The applicant should be aware that he has to bear all costs incurred by the customs authorities or other parties acting on behalf of the customs authorities (eg storage companies) from the moment of detention or suspension of release of the goods, but he has a right to seek compensation from the infringer or other persons under the applicable national laws.39 Costs are first of all storage and destruction costs, but possibly also translation costs.40 Costs for storing the allegedly infringing goods in a

39 Regulation (EU) 608/2013, art 29. German court decisions distinguish between the owner of the goods and persons currently in possession of the goods on behalf of the owner, eg transport companies. Forwarding companies may be liable under the principles of ‘Störerhaftung’. They are liable for the costs of destruction of the goods in any case, since these costs are related to the claim for destruction under IP laws, but in the event that the forwarding company has immediately given its consent to the destruction, but storage was nonetheless ordered by customs authorities, it will not be liable with regard to storage costs (prevailing court decisions, eg Appeal Court Cologne, 18 August 2005, GRUR-RR 2005, 342—Lagerkosten nach Grenzbeschlagnahme). 40 Some Member States, if they are designated in a ‘Union application’, require translations into their official language of the application and its exhibits, even though this is not foreseen in application proceedings (but only in Regulation (EU) 608/2013, art 29(3)).

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warehouse could amount to considerable sums of money in the case of lengthy patent infringement proceedings. The applicant will receive information on the estimated costs of storage only upon request. Also costs for the destruction could be substantial if the goods contain substances requiring special treatment. Should the reimbursement by the infringer be insecure, the applicant can avoid the payment of further storage costs by asking customs authorities to release the goods, even if infringement proceedings have not yet been terminated.41

IV. Customs Action 1. General 35 36

Customs may ‘suspend the release’ or ‘detain’ goods42 if these are under customs surveillance and if they are ‘suspected of infringing an intellectual property right’.43 Customs authorities in principle take action under the Regulation upon application. As an exception to this rule, the Regulation permits ex officio customs action, which in practice is not relevant with regard to goods infringing patent rights.

2. Suspicion of Infringement 37

Given that the Regulation solely contains procedural rules for customs authorities and does not set out any criteria for ascertaining the existence of an infringement of an IP right,44 customs authorities in the absence of their own expertise must rely on the information in the application. Thus, customs may take action if they find goods that fit the features described in the application form.45

41 This option is not clearly laid down in the Regulation, but seems to follow from the wording of art 28. Art 28 explicitly provides for the situation that ‘a procedure duly initiated pursuant to this Regulation will be discontinued owing to an act on the part of the patentee’. An ‘act’ would be the decision-holder’s statement that he revokes his confirmation under art 23(b) and requests the release of the goods. 42 The term ‘suspend the release or detain the goods’ is used depending on the customs situation in which the goods are found. Art 4 of the Community Customs Code generally defines ‘release of goods’ as ‘the act whereby the customs authorities make goods available for the purposes stipulated by the customs procedure under which they are placed’. Therefore, if the importer has placed goods in a customs procedure, and filed a customs declaration (Community Customs Code, art 73), and if those goods are suspected of infringing an IP right, the customs authorities ‘suspend the release of the goods’. If goods are found in another customs situation, ie if they have entered the Community customs territory and are therefore under customs supervision but have not yet been subject to a customs procedure, or if they were already placed in a customs procedure but have not yet received a ‘customs-approved treatment’ (in this period goods have the status of temporary storage pursuant to art 50 et seq of the Community Customs Code), or if goods are subject to a free zone or free warehousing procedure or notified/applied to be re-exported, in these cases, customs authorities ‘detain’ goods. ‘Detention’ is not a term used in the Community Customs Code. Goods which fall under the scope of the Regulation, cannot be seized at the same time under national border measure law. However, seizure under national criminal law rules is not excluded. 43 Regulation (EU) 608/2013, art 17. 44 ibid, Preamble No 10. 45 This was clearly laid down in the first Regulation on customs action: art 5(1) of Council Regulation (EEC) No 3842/86 of 1 December 1986 laying down measures to prohibit the release for free circulation of counterfeit goods.

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3. Consultation 38

Before any decision, customs authorities may, if necessary, consult the patentee or its representative to confirm their suspicion before suspending goods from release or detaining them.

4. Notification 39

40

Customs authorities shall notify the importer or holder of the amount and type of goods within one working day of the suspension of release or detention of the goods, and the patentee shall be informed on the same day. Further, customs authorities shall provide the patentee with photographs of the allegedly infringing goods. Upon request, the patentee may receive additional information, such as the name and address of the consignee, consignor, declarant or holder of the goods,46 and the origin, provenance47 and destination of the goods. Furthermore, the patentee will obtain information on the chosen customs procedure.

5. Right to Inspection 41

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No samples will be released for applications relating to a patent, an SPC, a utility model right, a plant variety right or the topography of a semiconductor product.48 Customs will provide samples only in relation to counterfeits and pirated goods. Under the previous Regulation, the patentee could obtain a sample; however, this option was abolished by the new Regulation as a ‘compromise’ in the discussion on how to handle patent matters. Customs authorities shall provide the patentee, the declarant or the holder of the goods and/or its representatives with an opportunity to inspect the goods. The inspection shall enable the patentee to substantiate his claims. The goods may be taken out of the packaging, disassembled, dismantled, decomposed, analysed and put into operation. If necessary, before the inspection is to take place, measures for the protection of trade secrets can become necessary (see TRIPS, art 57). However, so far, this issue has not been discussed and the Regulation does not provide for any procedural tools to customs authorities. The protection of trade secrets with regard to goods under customs

46 The patentee may only use this information, in particular the personal data of the possible infringer, for the purposes as prescribed in the Regulation, ie to initiate proceedings to determine whether an IP right has been infringed, to initiate criminal proceedings, to seek compensation, or for the agreement on the destruction of the goods or the amount of guarantee in the course of ‘Early Release Procedures’, but not for other purposes. It is unclear, however, whether the patentee may use the information to settle a case that involves a licence agreement and allow the licensee to make use of the goods, since art 21 of Regulation (EU) 608/2013 only allows a settlement for the destruction of the goods. With regard to counterfeit and pirated goods that constitute a danger for consumers, the release of the goods seems to be a problem. However, with regard to typical patent cases, the release to the licensee should be permitted. 47 The provenance of goods relates to countries to which the goods were passed, including the country of export of the goods. 48 Therefore, should both a patent right and a trade mark, copyright or design right be infringed, the patentee may obtain a sample.

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control will not, in the majority of cases, be an issue since the goods will normally enter the market and can then be bought and inspected. The issue may arise for instance with respect to intermediate products, or goods to be sent to an end-customer.49

V. ‘Basic Procedure’ 1. Notification 44

Customs authorities inform both the patentee and the holder or declarant of the goods on the suspension of the goods and that the ‘Basic Procedure’ will apply to the goods which they suspect of infringing an IP right.50

2. Confirmation of Patent Right Infringement by the Patentee 45

46

47

Within 10 working days of notification,51 the patentee must inform the customs authorities in writing (1) as to whether his intellectual property rights are being infringed; and (2) that he agrees to the destruction of the goods. This agreement shows the principle of the ‘Basic Procedure’ and the entire Regulation, ie that the patentee, and not the customs authorities, take responsibility for the destruction without a prior court decision. The patentee may reconsider his statement to the customs authorities and revoke his confirmation (before the goods are destroyed) since he takes the sole responsibility for proceedings. Should in this case the period of 10 workings days have already lapsed, he might be liable for damages (see below). Although no longer foreseen in the Regulation, German customs authorities allow the extension of the 10-working-day examination period, if ‘sufficiently justified’.52 This is in accordance with Article 55 of TRIPS.

3. Written Agreement of the Importer or Holder of the Goods 48

49

Upon request of the customs authorities, the importer or holder of the goods must provide a written agreement that the goods may be destroyed. The consent shall be submitted within 10 working days. It is sufficient that one of the persons involved gives his consent. The importer or holder of the goods may not obtain an extension to the 10-working-day response period. An important principle of the ‘Basic Procedure’

See also section E, ‘Summary’. As can be seen, the parties involved basically communicate with customs authorities on the destruction of the goods under the ‘Basic Procedure’. However, frequently, the patentee communicates directly with the importer or holder of the goods, to set a shorter time limit than 10 working days allowed by the Regulation. 51 With regard to the calculation of time periods, the Regulation on time periods, dates and time limits (Regulation No 1182/71) shall apply, which states that a ‘working day’ is considered to be every day other than a public holiday (in the respective Member State), or a Saturday or Sunday. The three or 10-working-day time limits to be taken into account commence on the day after receipt of the notification. A time period expressed in days starts at the beginning of the first hour of the first day and ends with the expiry of the last day of the time period (art 3(2)(b) of the Regulation on time periods, dates and time limits). 52 In the previous Regulation (EC) 1383/2013, patentees could easily extend the 10-working-day examination period by another 10 working days. However, the new Regulation only allows an extension in order to prepare a court action (Regulation (EU) 608/2013, art 23(4)). 50

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Anja Petersen-Padberg is that should the declarant or holder of the goods not respond within the prescribed period of 10 working days, his agreement to abandon the goods to destruction is to be presumed.

4. Objection to Destruction 49 50

For an objection or contestation, a brief statement to the customs authorities is sufficient. If the importer or holder of the goods has explicitly opposed the destruction of the goods, customs authorities shall immediately notify the patentee thereof.

5. Initiation of Proceedings to Determine Whether a Patent Right has been Infringed 51

52

If an objection to the destruction is made, the patentee needs to ‘initiate proceedings to determine whether an intellectual property right has been infringed’ in order to prevent the customs authorities from releasing the goods. ‘Proceedings to determine IP infringement’ can be main or provisional civil proceedings, but also criminal law proceedings.53 The patentee may also inform the customs authorities that proceedings concerning the same type of goods and between the same parties are pending and that the detained goods are identical to those of the court proceedings. If the patentee decides not to pursue the case, he will have to ask the customs authorities to release the goods. Customs authorities could, if they so wish, pursue the case on their own behalf provided that they have a right to sue under national law.54 ‘Proceedings to determine whether an IP right is infringed’ are not clearly defined in the Regulation. They can be understood as infringement proceedings with, for instance, a claim to cease and desist, information, damages, etc, where the court determines the infringement implicitly when deciding on the claims.55 A ‘final’ or ‘substantive’ decision is not explicitly required. Consequently, provisional proceedings can also be considered as ‘proceedings’ under the ‘Basic Procedure’, in particular since courts also determine in those proceedings whether an intellectual property right has been infringed.56

6. Release of Goods 53

If the patentee fails to inform customs authorities that goods are, in his conviction, infringing an IP right and/or fails to submit his agreement to the destruction within 10 working days, or if he fails to initiate proceedings to determine whether an IP right is infringed after an objection has been filed, or if the patentee asks for release, the customs authorities shall grant the release of the goods or put an end to their detention immediately after completion of all customs formalities under the Community Customs Code.

53 With regard to more details on ‘proceedings to determine IPR infringement’, see A Petersen-Padberg, ‘Regulation on Customs Action’, Art. 23 in: P Véron/T Cottier (eds), Concise Commentary on International European IP Law, 3rd edn (2014). 54 CJEU, 9 April 2014, case C-583/12—Sintax Trading OÜ/Maksu ja Tollia. 55 ie a separate declaratory claim for the ‘determination of infringement’ with proof of a ‘declaratory interest’ does not need to be filed; see also TRIPS, art 55; U Worm/A Gärtner, (2007) ‘Möglichkeiten zur Bekämpfung von Produktpiraterie’ Mitt 499, A Hermsen, ‘Das neue europäische Grenzbeschlagnahmeverfahren’ (2006) Mitt 264. 56 Appeal Court Munich, 19 March 1997, WRP 1997, 975—Grenzbeschlagnahme, Worm/Gärtner (n 55); C Cordes, ‘Die Grenzbeschlagnahme in Patentsachen’ (2007) GRUR 483, 486, Hermsen (n 55).

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7. Destruction of the Goods 54

55

56

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Destruction of the goods means ‘the physical destruction, recycling57 or disposal of goods outside commercial channels’,58 ‘in such a way as to preclude damage to the patentee’.59 Customs may destroy the goods (1) upon patentee’s confirmation of infringement and his consent to the destruction, and if the declarant or holder of the goods has agreed to the destruction or failed to respond; (2) after receipt of a final court decision in main proceedings with an order to destroy the goods; (3) after receipt of a provisional injunction (which will not provide an order to destroy the goods) accompanied by the holder of the goods’ or declarant’s consent to the destruction.60 With regard to the destruction of the goods, the principle of proportionality under European law or under national law is to apply. For instance, if only a small part of a device with a high value is patent-infringing, the part of the device and not the entire device is to be destroyed. With regard to indirect patent infringement, if the means can also be used for purposes which do not infringe the patent, depending on the evidence of the importer or holder of the goods, destruction can be prohibited under national law.61 If the destruction was not justified, the patentee will have to pay damages under the conditions of Article 28 of the Regulation.

VI. Early Release of the Goods by Posting a Bond 59

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The holder, owner or importer of the goods has a right to obtain the ‘Early Release’ of the goods against posting a bond during pending infringement proceedings (Article 24 of the Regulation). This right is, however, only available with regard to those IP rights which are often in dispute and proceedings to determine infringement take longer, such as EU or national designs, patent rights (including SPCs, even though not explicitly mentioned and which were probably omitted by mistake), utility model rights, EU or national plant variety rights or a topography of a semiconductor product.62 Customs authorities may grant the request for ‘Early Release’ when proceedings to determine patent infringement have been initiated, but not earlier.63

Recycling must be done in such a way that the goods cannot be put back on the market. The disposal of goods outside the channels of commerce means, for instance, use of the goods for educational purposes or for display in exhibitions, etc. 59 Regulation (EU) 608/2013, art 2(16); see also TRIPS, art 46. 60 Alternatively, following an objection, a provisional injunction and a request of the patentee to destroy the goods along with a statement by the patentee that the importer or holder of the goods was requested to provide consent to the destruction but did not respond within an appropriate period of time and a response is no longer to be expected. 61 See eg German Federal Supreme Court, 22 November 2005, GRUR 2006, 570—‘Extrakoronales Geschiebe’. 62 If goods are suspected of infringing a design, patent, SPC, utility model, topography of semiconductor product or plant variety under art 24 and are at the same time suspected of infringing a trade mark (art 2(2)(a)–(c)), a trade name (art 2(1)(l)), a geographical indication (art 2(4)(a)–(f)) or copyright pursuant to art 2(1)(c) of the Regulation, the request for early release shall be rejected. 63 Druckbogenstabilisierer (n 35) note 19. After proceedings to determine infringement have been initiated, Early Release Procedures may be filed without time limits. 58

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Anja Petersen-Padberg If a guarantee is deposited in ‘Early Release’ proceedings, customs authorities must release the goods. The parties may agree on the amount of the bond. If no agreement can be found, customs authorities have to calculate the amount of the guarantee under consideration, which must be ‘sufficient to protect the interests of the patentee’.64 German customs authorities often apply the ‘licence analogy method’ to calculate the amount of guarantee. In their view, ‘Early Release’ proceedings simplifies their handling of patent cases. Before releasing the goods, customs authorities must verify whether the goods are subject to precautionary measures, for example interim measures ordered by a public prosecutor or a provisional injunction to seize the goods obtained by the patentee.65 Customs authorities must verify whether all customs formalities under the Community Customs Code were completed before releasing the goods. The applicant or the patentee may not contest the customs authorities’ decision on the amount of the guarantee.66

Europe Basic procedure Patentee

Customs

Declarant or holder of the goods

10 working days

Customs take action: Suspicion of IPR infringement due to product features indicated in the application + customs situation Notice Information on ‘basic procedure’

Notice Information on ‘basic procedure’

Right to inspection No sample

Right to inspection No sample Consent to destruction/ no reaction

10 working days

1. Confirmation of patent infringement 2. Request for destruction

Objection

Notice of file a court action or extension request in order to fill a court action Destruction of goods No filing of a court action

No release of goods

Release of goods

Request for early release and posting of a bond

Figure 1: Basic Procedure

64

See TRIPS, art 53(2). The Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157 of 30 April 2004 (Enforcement Directive), art 9(1)(b)(b) includes a provisional measure to seize goods merely suspected of infringing an IP right. 66 Objections against an administrative act might be admissible under national administrative laws. Such a legal remedy will probably only be successful if customs authorities did not correctly exercise their discretion. The only defensive measure for the patentee is to file a provisional seizure measure to uphold the detention of the goods. 65

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If the importer or the owner of the goods opts not to initiate ‘Early Release Procedures’, but at a later point of time claims damages against the patentee since the border measures turned out to be unjustified, it can be questioned whether the importer caused (part) of the liability by refraining from ‘Early Release Procedures’.

VII. Liability 1. Liability of Customs Authorities 64

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The Regulation does not provide any liability rules with regard to customs authorities’ acts and omissions. Moreover, Article 27 clarifies that the grant of an application by customs authorities does not entitle the patentee to compensation under the Regulation in the event that the goods suspected of infringing an intellectual property right are not detected, or are released, or even if goods are detected, if no action is taken to detain them.67 The reason behind this is that customs authorities cannot physically examine all consignments, not only for practical reasons but also so as not to interfere with the free movement of goods. Customs authorities physically examine between 0.1 to 1 per cent of goods. Customs authorities are even not liable for the release of goods the patentee has confirmed to be infringing.68 As a result, it will be difficult, if not impossible to obtain damages due to a customs officer’s violation of his duties under the Regulation. Customs authorities are in particular not liable for the detention of goods which are ‘obviously non-infringing’, or where the IP right is ‘obviously’ invalid. As mentioned, customs authorities are executive organs, comparable to bailiffs. Customs authorities do not have decision-making authority to assess whether an application refers to non-infringing goods or whether the IP right is invalid.69 Customs only have to verify whether the IP right is validly registered and the applicant is entitled to the right.

2. Liability of the Patentee 66

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The patentee incurs a no-fault liability for goods suspended at his behest beyond the examination period of 10 days if it is subsequently determined that the goods are not infringing.70 Examples of possible damages suffered by the importer or the holder of the goods are: costs for legal representation; lost profit due to being unable to do business with the detained goods; expenses which were incurred in vain (eg the costs for a booth at a trade fair in the event that the machine to be presented was detained); purchase costs

67 Since customs authorities cannot be blamed for not detecting the goods, it must be presumed that there will be no rules under national law which would allow a claim for compensation. 68 This contradicts customs authorities’ obligations to detain goods suspected of infringing an IP right (Regulation EU/608/2013, art 17(1)). With regard to these cases, compensation can possibly be claimed under the rules of national law. 69 District Court Düsseldorf, 19 June 2008, BeckRS 2009, 10949—Eingriff in den eingerichteten und ausgeübten Gewerbebetrieb durch Grenzbeschlagnahme; Druckbogenstabilisierer (n 35); SanDisk v Philips et al (n 35). 70 The patentee is also liable due to ‘any act or omission’, eg if he maintains the application for customs action after an objection of the importer, but remains inactive; Regulation (EU) 608/2013, art 28.

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Anja Petersen-Padberg for substitutes, etc. However, the importer or holder of the goods will have to accept a reduction of damages due to contributory negligence, for instance should he have agreed on short and fixed delivery dates, without considering that customs proceedings could generally cause delay, or where no use of the ‘Early Release Procedures’ by payment of a security has been made, etc. It can be discussed whether the patentee should be liable under national tort law even if he has asked for release of the goods within the 10-day examination period, for: (1) an intentionally or fraudulently wrong or incomplete application that results in customs action on non-infringing goods which were released within the prescribed time limits; (2) the non-infringement or invalidity of the IP right is obvious and cannot be ignored by the patentee; or (3) if the patentee used the entire time limit of 10 working days to decide that the goods are non-infringing, even though the noninfringement was obvious and he knew that the goods were meant to be presented at a trade fair lasting for a few days only. The courts of the Member States will have to decide these issues on a case-by-case basis, taking into account the special circumstances of the case and the purpose of the Regulation. So far, for instance, the German courts have denied liability under tort law, in particular in trade fair cases. The courts decided that should the patentee, in a case of unjustified detention, not have acted in bad faith or unjustly informed the customs authorities within the prescribed time limits that the goods were non-infringing, no liability would occur.71 According to the UK High Court, if the patent is obviously not infringed or if the patent is obviously invalid and this is positively known to the patentee or believes that to be the case, abuse of right is to be assumed (which was denied in that case).72

C. Border Measures in Japan I. Overview 70

Under Japanese law, rules on border measures are called ‘import suspension proceedings’ (in the law) and also generally ‘border seizure proceedings’ (mizugiwa torishimari tetsuzuki), they cover imports, exports and goods in transit73 and they are laid down in the Customs Act and its Implementing Regulation.74 The rules on border measures in Japan apply to almost all IP rights available under Japanese law, including patent and utility model rights and goods protected under the unfair competition law, for

71 Druckbogenstabilisierer II (n 35) [26]; BeckRS (n 69); Eingriff in den eingerichteten und ausgeübten Gewerbebetrieb durch Grenzbeschlagnahme (n 69). 72 SanDisk v Philips et al (n 35) [46]. 73 Customs Act, art 75; AIPPI, Q 208 ‘Border measures and other Means of Customs Intervention against Infringers’, Response of the Japanese National Group, 16. 74 Customs Act, art 69-11 et seq (imports) and Customs Act, art 69-2 et seq (exports). An English translation of the relevant rules of the Customs Act is available at: www.kanzei.or.jp/cipic/sites/www.kanzei.or.jp.cipic/files/ pdfs/20131009eng_houV3.pdf, the Japanese version is available at: www.customs.go.jp/mizugiwa/chiteki/pages/ tsutatu2604.pdf.

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75

605

example goods that make use of an identical and/or famous trade mark or goods that copy a product configuration.75 Patents and utility model rights have been covered since 2004 by ‘import suspension proceedings’.76 As a reaction to the problem of counterfeit and pirated goods, in 1989 Japanese customs authorities established ‘CIPIC’ (Customs Intellectual Property Information Center) as a Special Unit of the Japan Tariff Association, under the authority of the Ministry of Finance.77 CIPIC reports and provides information on counterfeits and piracy issues, organises seminars and helps right holders with the inspection of goods. Border measure proceedings with regard to patents under the Japanese Customs Act are characterised by short time limits and a high burden of proof. In practice, basically only clear-cut patent infringement cases are eligible for import suspension proceedings under Japanese law.78 Where customs authorities have difficulties assessing prima facie patent infringement, they may mandate a group of three experts to provide an opinion on infringement (and, if disputed by the importer, also on validity). This expert system (senmon i’in seido) which is regularly used by Japanese customs authorities, helps them to decide on the grant or refusal of an application related to patents. An ‘Application for Import Suspension’ which is based on an expert opinion provides a solid basis for customs action and also helps to avoid any abuse of the border-measure system. If goods suspected of infringing an IP right are found, Japan’s customs authorities may decide not only on the suspension (or release) of the imported goods, but also on the merits of the case and they may execute their decision. However, patentees must make patent infringement credible and provide customs authorities with sufficient information on how to find the goods. Presently, 760 granted Applications for Import Suspension of IPR-infringing goods are pending before the Japanese customs offices.79 24 of these are based on patent rights.80 As a comparison: About 150 patent infringement cases are filed before the ordinary courts in Japan each year.81

75 The following types of IP rights are protected: trade marks, patents, utility model rights, copyrights and related rights, designs, plant variety rights and goods infringing art 2(1), No 1-3 of the Unfair Competition Act, ie goods making use of an identical registered trade mark or famous trade mark and goods copying a product configuration. Goods which fall under a patent extension (SPC) are not explicitly covered by the Customs Act; therefore, a respective application will probably be dismissed. 76 Previously, the right holder only had the option to submit to customs authorities ‘information for the suspension of import’ and customs authorities could decide at their discretion to stay import proceedings ex officio. 77 www.kanzei.or.jp/cipic/e_about.htm. CIPIC’s objective is to pursue effective and appropriate border measures by, inter alia, studies on border enforcement measures; collection, analysis and dissemination of IPR-related information; arranging educational programs for customs officers; and providing support services to right holders, eg inspecting goods. 78 M Hattori, ‘Customs Office Proceedings’ in Abe, Ikubo and Katayama, Japanese Patent Litigation 2nd edn (2012) 162, 164. 79 The lists of pending applications categorised to IP rights is available at: www.customs.go.jp/mizugiwa_ search/chiteki/index.htm. 80 The list of applications based on patents is available at: www.customs.go.jp/mizugiwa_search/chiteki/ index_3.htm 81 eg 155 patent infringement cases were filed at the District Courts in Tokyo and Osaka in 2012.

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Anja Petersen-Padberg

Table 1: Pending ‘Applications for Import Suspension’ (2014) Pending ‘Applications for Import Suspension’ (2014) Overall

760

Trade marks

298

Copyrights

98

Copyrights and related rights

253

Designs

80

Patents

24

Plant Variety Rights

1

Goods infringing Unfair Competition Act

6

Utility Model Rights

0

76

With regard to seizure cases due to IP infringements, statistics show a steady increase of cases: in 2014, Japanese customs authorities had 32,060 customs cases and suspended 896,000 articles (in 2010, they had 23,233 cases and 631,000 articles were suspended). 94.8 per cent of the suspension cases related to postal items, only 5.2 per cent to general cargo. 98 per cent of the cases are concerned with trade marks, 6.7 per cent with designs, 1.6 per cent with copyrights. The number of cases relating to unfair competition law has increased significantly in the last years (ie 1 case in 2010, 86 in 2014). Cases relating to patent rights have decreased in the last years, ie there were nine cases in 2010, but only one in 2014:82

Table 2: Customs Action (Suspension of Import) Customs Action (Suspension of Import) Year Patent Cases Articles

77

2010

2011

2012

2013

2014

9

8

3

2

1

4,258

16,276

2,562

33

60

In the following, the proceedings concerning the import of patent-infringing or utility-model-infringing goods will be explained.

82 Japan Customs, 2014 Seizure Statistics of IPR Border Enforcement, available (in English) at: www.customs. go.jp/mizugiwa/chiteki/pages/statistics/statistics2014.pdf; (in Japanese) at: www.customs.go.jp/mizugiwa/chiteki/ pages/h26dai4shihanki.files.pdf.

Border Measures in Europe, Japan and the US

607

II. Prerequisites 1. Customs Situations 78 79 80

Japanese Customs Authorities may take action when goods are imported or exported and when goods are in transit. Customs action is available for parallel imported goods only when considered infringing, which is normally not the case (see chapter thirteen on Japan in this book). Customs authorities may also take action on a traveller’s private luggage, provided that the luggage is exported or imported for commercial purposes.83 For the assessment of ‘commercial purposes’, circumstances such as purpose, quantity, occupation, content of transaction, etc must be taken into consideration. In practice, often private importers voluntarily abandon goods that infringe IP rights to prevent commencement of customs proceedings.

2. Entitlement 81

The right holder (also co-owner) and the (registered) exclusive licensee may file an ‘Application for Import Suspension’ (‘yun’yū sashitome mōshitate’). With regard to counterfeit and pirated goods, customs authorities may act on their own motion, which is rare.

3. Application a. Content of Application 82

The ‘Application for Import Suspension’ must provide the following information: — — — — — — —

the intellectual property right (registration data); name and address of the right holder; information on licensees; information on the original goods and on the infringing goods; prima facie evidence of infringement and the violation of business interests; desired timeframe for customs action; names and addresses of the importer, supplier, information on the country of origin, etc; — distinguishing features of the original goods and country of origin of the original goods; — value (prices) of original goods; — if possible, further useful information such as information on how to calculate a licence fee; regarding parallel imports, information on IP rights valid in foreign countries and information on the relevant content in licence agreements, indications on goods etc;

83 Patent Act, s 68; Utility Model Act, s 16; the Basic Circular Notice of the Customs Act, ss 69-2-6 (1) and 69-11-6 (1).

608

Anja Petersen-Padberg — if with regard to patent-infringing goods the infringement is not visible from the outside, information on how to detect the patent infringement, eg by putting a device into operation, etc, and also information on the packaging etc will have to be provided. The following attachments must be submitted with the application: — —

a certified copy of the registry of the relevant IPR; materials which allow detection of the infringing goods, such as samples, photographs, catalogues, drawings of the original goods and of the infringing goods etc; — decisions of a court or of the Patent Office which are relevant to the case; — a written advisory opinion by an attorney-at-law or another expert on the infringement or prove infringement by submitting a copy of a provisional injunction issued by a court or an opinion by the JPO; — other relevant documents, such as a warning letter to the infringer, documents which prove parallel import. b. Publication of Application/Notice to Importer 83

Upon receipt of the application for import suspension, Japanese customs authorities must publish the name and contact address of the applicant, the IP right concerned, the product name of the allegedly infringing goods and the contact address of the competent customs authority. Any persons interested in this application for import suspension may file a statement within 10 working days. The customs authorities will notify those importers who are indicated in the application on the pending application.

c. Grant or Rejection—Expert Group Opinion 84

85

If the applicant presents prima facie evidence of infringement, the customs authorities must grant the application for import suspension. If the customs authorities have difficulties assessing prima facie patent infringement, they may ask an expert group to decide on the infringement and, if disputed by the importer, also on the validity of the patent. The ex officio involvement of technical and or legal experts must count as a special feature of Japanese customs enforcement. Customs may ask the expert group if one of the following conditions is fulfilled: —

a person with a legal interest in the import suspension proceedings, usually an importer, has submitted a statement (denying infringement or validity); — a legal dispute concerning infringement of an IP right is pending with regard to the goods subject to the application; — if it is appropriate for other reasons.84

84

Customs Act, art 69-14; Implementing Regulation, art 62-19.

Border Measures in Europe, Japan and the US 86

87

88

609

As a rule, customs authorities will choose three experts from a list of attorneys-atlaw, patent attorneys and scholars. The experts will be paid on an hourly rate basis by the customs authorities. They have to observe guidelines when drawing up their opinion.85 Based on the documents and evidence, the experts will decide in an oral hearing whether the goods prima facie infringe an IP right. If disputed by the importer, the expert group will also examine the validity of the IP right. If court proceedings or proceedings before the Patent Office are pending, the expert group may advise a stay of the patentee’s application until the outcome of these court proceedings. An importer can therefore prevent the grant of an application for import suspension by filing a negative declaratory action or by submitting new evidence proving non-infringement or invalidity of the IP right. In practice, in patent and design right matters, customs authorities quite often request an expert opinion. If the expert group comes to the conclusion that the goods are non-infringing, applicants usually withdraw their application for import suspension. Should customs authorities reject the application, reasons have to be provided.86 The applicant may file an objection under the rules of the Customs Act within two months of notice or may contest the rejection under the Act on Disputes in Administrative Matters.

d. Processing Time 89

90

As a rule, customs authorities decide within one month whether to grant the application. If an expert group is asked for an opinion, a decision may take between three to four months. The time-period is not binding, and may be extended. The validity period of an import suspension is two years unless the relevant IP right does not lapse earlier. An application for extension must be filed three month in advance.

e. Costs 91

The application for import suspension is free of charge for patentees even if the evaluation requires an expert opinion.

4. Customs Action (Suspension of Import) 92 93

The procedure of customs action for the protection of intellectual property rights under the Japanese Customs Act is as follows: Customs authorities examine whether declared goods fall within the scope of an application for import suspension. If the customs authorities suspect that goods infringe a patent or a utility-model right, a public officer specialised in intellectual property rights (IP Supervisory Inspector) will also check the goods and the customs authorities must then decide whether to suspend import proceedings.

85 The customs authorities have published the guidelines, which are available at: www.customs.go.jp/kaisei/ zeikantsutatsu/kobetsu/TU-H19z0802.pdf. 86 Customs Act, art 69-13(2).

610 94

95

96

97

98

99

100

101

Anja Petersen-Padberg If the customs authorities suspend import proceedings, they will send the patentee and the importer a ‘notification on the initiation of a procedure to determine IPR infringement’. In this notification, the customs authorities provide information on the customs declaration number, the date of the customs declaration, the type and amount of detained goods, information on the possibly infringed IP right and information on the existence of an application for import suspension. The patentee will be informed of the name and address of the importer and, if known to the customs authorities, also of the manufacturer of the goods. The customs authorities will set a deadline for the response by the right holder and the importer of 10 working days (extendable to a maximum of 20 working days) within which to make the infringement credible or contest it. If the importer does not submit a written objection to the customs authorities in response to the notification within 10 working days, the customs authorities will determine the infringement solely based on the information provided in the application for import suspension. The right holder and the importer may inspect the goods upon request. The inspection serves to prepare a statement on the infringement and to obtain evidence. The patentee may disassemble or analyse a sample, for example, make a laboratory analysis. If the customs authorities provide a sample to the right holder, they must notify the importer thereof. The customs authorities must be present during the inspection and the importer may also attend. If the importer does not object to the suspension of import within 10 working days and if he has not reshipped the goods, the customs authorities may decide that the goods are prima facie patent-infringing and are to be destroyed. The importer can object to this decision under administrative law rules. If the importer objects to the suspension of import and claims non-infringement and/or invalidity of the patent, upon his request, the patentee, or the customs authorities upon their own motion may ask the Japanese Patent Office to provide an opinion on the infringement within 30 days, and inform the patentee and the importer thereof. The customs authorities may also ask the expert group for an advisory opinion with regard to other questions, for example, the validity of the patent. In practice, due to the application for import suspension concerning which importers have had a right to be heard and, since in many cases, the expert group has already provided an opinion, disputes on infringement or validity rarely occur after the customs authorities have taken action. Following the suspension of import, the customs authorities may ask the right holder to deposit a security (bank guarantee) amounting to the damages the importer may suffer should the stay of import proceedings turn out to be unjustified. If the customs authorities decide to suspend the import of the goods, or if the importer gives his consent or if the right to damages is limited by statute, they will return the security to the right holder. If the importer wishes to satisfy his claims using the bank guarantee, he will have to present to the customs authorities a final court decision or a settlement agreement which proves his claims. The customs authorities will then confirm the claim and grant the guarantee to the importer. The customs authorities decide on the basis of the party statements and possibly after consideration of the experts’ opinions or the JPO examiner’s infringement opinion

Border Measures in Europe, Japan and the US

102

611

whether a patent or utility-model right is infringed and whether to release, voluntarily dispose, seize, destroy or return the goods. The importer may present to customs authorities the right holder’s consent to import the goods (since he entered into a licence agreement), he may dismantle patent-infringing parts from the product or he may voluntarily abandon the goods. If proceedings take longer than 10 to 20 working days due to an expert opinion, the customs authorities will inform the parties. The importer may file an objection against the decision of the customs authorities under administrative law. If the patent is obviously invalid, customs shall release the goods.

5. Liability 103

If the goods are found to be non-infringing or the patent to be invalid, the right holder will be liable for the damages suffered by the importer.

D. Border Measures in the US I. Overview 104

105

106

Holders of registered trade marks and copyrights who are concerned about imports or exports of infringing goods may simply record their trade marks and copyrights with US Customs and Border Protection (US Customs Service).87 Patent rights, however, may not be registered, and patentees need to file a patent infringement action under section 337 of the Tariff Act88 before the US International Trade Commission (‘US ITC’), requesting the issuance of an import ‘exclusion order’ to be enforced by the US Customs Services (‘Section 337 Proceedings’).89 To obtain immediate action, a request for temporary relief may be filed. The US ITC was founded in 191690 and is an independent, quasi-judicial federal agency charged with administering a number of US trade laws. The US ITC is headed by six commissioners nominated by the President and confirmed by the US Senate. The agency determines the impact of imports on US industries and directs actions against unfair trade practices such as subsidies, dumping, but also patent, trade mark and copyright infringement. Section 337 of the Tariff Act is meant to prevent the importation of goods ‘made by unfair methods of competition’. Unfair acts cognisable under section 337 include patent, trade mark, and copyright infringement as well as other types of unfair competition, such as anti-trust violations and trade

87 19 Code of Federal Regulations (‘CFR’) s 133.0 to .53 (2008) More information can be accessed at the Customs and Border Protection (‘CBP’) website: www.cbp.gov/trade/priority-issues/ipr. 88 19 U.S.C. Tariff Act 1930, s 1337 as amended. The Procedure Rules are laid down in Title 19 of the CFR. 89 Also not subject to recordation are unregistered trade marks or trade secret claims; these matters are subject to s 337 proceedings. 90 The US ITC was established by the US Congress on 8 September 1916, as the US Tariff Commission. In 1974, the name was changed to the US International Trade Commission by the Trade Act of 1974, s 171.

612

107 108

109

110

111

112

Anja Petersen-Padberg secret misappropriation. The vast majority of section 337 investigations, ie about 90 per cent, are based on allegations of patent infringement,91 and section 337 investigations amount to 17 per cent of the US ITC activities, which is why the US ITC has gained significant expertise in patent infringement matters. The US ITC is not a court, but it is an administrative body, ie its administrative law judges conduct trial-type official administrative hearings. The US Tariff Act has often been considered protectionist in character. However, section 337 is rather aimed at fair trade, making illegal only those acts as patent, trade mark or copyright infringement, that customarily are or reasonably can be considered unfair competition. A patentee who wishes to ban imports of patent-infringing goods to the US has to file a complaint with the ITC, requesting that the ITC investigate the alleged infringement of a US patent which harms a domestic industry. A section 337 action then proceeds before an impartial Administrative Law Judge (‘ALJ’) having a similar role as a district court judge, who determines questions of infringement and validity, etc. These determinations are ultimately reviewed by the ITC Commissioners deciding by majority vote, by the review of the President of the United States, and are then appealable to the Court of Appeals of the Federal Circuit. A unique aspect of section 337 investigations is the participation of an Investigative Attorney (‘IA’) from the Commission’s Office of Unfair Import Investigations (‘OUII’). The IA enjoys full party status in the investigations and has to ensure that a complete record is developed, to provide ‘objective’ advocacy, and to safeguard the public interest in the investigation. Applicants may file a request to issue an exclusion order against products to be imported by one or more specific respondents, a so-called ‘Limited Exclusion Order’ (‘LEO’) similar to an injunction in district court. Alternatively or in addition to a ‘LEO’, they may apply for a general exclusion order (‘GEO’) with regard to patentinfringing goods of unknown source. Furthermore, a cease and desist order to prohibit sale on the US market may be requested. The US ITC has become an attractive venue, since it does not apply any additional conditions to a cease and desist order, as civil courts now do as a result of the case eBay Inc v MercExchange, LLC.92 An example of a combined request for an ‘LEO’, a ‘GEO’ and a cease and desist order against the respondents of the ‘LEO’ is the complaint by Epson Portland Inc, Epson America Inc and Seiko Epson Corp. Japan against the importation of certain ink cartridges on 23 December 2014.93 There are a number of advantages and differences between Sec. 337 actions and district court proceedings: —

Proceedings are subject to a tight time schedule and must be completed within 12 to 18 months. District court proceedings last roughly twice as long or even longer.94

91 Yang Yu/Lei Zhang, ‘Analysis of Enforcement Mechanism of Sec. 337 of the US Tariff Act through Perspectives in Law and Economics’ (2012) 17 Journal of Intellectual Property Rights 209. 92 In the Supreme Court’s 2006 holding in eBay v MercExchange, LLC, 547 U.S. 388, 391 (2006), a 4-factor test must be applied to receive a permanent injunction, see section D.VI, ‘Temporary Relief ’. 93 www.itcblog.com/seiko-epson-files-new-337-complaint-regarding-certain-ink-cartridges. 94 Yu/Zhang, ‘Analysis of Enforcement Mechanism’ (n 91) 210.

Border Measures in Europe, Japan and the US —

— — — —

— — — — 113

114

613

The ITC venue has a broad ‘in rem jurisdiction’, ie the US ITC jurisdiction is based upon its power over property (imported goods) and therefore does not require in personam jurisdiction. The in rem nature of the investigations is reflected in the titles and the titles typically show a listing of products, components of products or manufacturing processes. With a ‘GEO’, importation of infringing products can be barred irrespective of their source. US ITC proceedings have the image of being patentee-friendly, and some statistics confirm this assumption.95 ALJs rather than a jury deal exclusively with patent cases. Experienced and specialised judges are considered an advantage for patentees.96 A patent-related complaint must support the allegation that the accused imported item or foreign manufacturing process is covered by the asserted patent. Therefore preparation of a section 337 complaint is typically more expensive and requests a greater commitment of resources than the preparation of a district court complaint.97 A notice pleading is not sufficient. Approximately 45 per cent of the cases go to trial, but only 5 per cent of district court proceedings will be heard in trial. The ITC has a nationwide subpoena (witness summons) power which provides the complainant with an advantage in gathering evidence and testimony. With regard to evidence, the ITC allows and adopts all kinds of evidence that might be useful and relevant, including hearsay evidence.98 If the patent holder is not satisfied with the ITC decision, he may appeal to a federal district court (no res judicata effect).

The US ITC is not empowered to award damages. Patentees often file parallel proceedings at district courts, possibly in the hope of being able to claim damages.99 By legal amendment, the respondents were empowered to request stays of parallel district court proceedings until the Commission has completed its investigation100 (see below). Statistics show a steady increase of US-ITC section 337 proceedings. In 2013, there was a total of 124 section 337 investigations and related (ancillary) proceedings. Of these, 113 cases were solely patent-based. In 2013, five limited and five general exclusion and 34 cease and desist orders were issued.

95 Between 1975 and 1988, patentees won 65% of the cases, compared to 40–45% in district courts; CA Cotropia, ‘Strength of the International Trade Commission as a Patent Venue’ (2011) 20 Texas Intellectual Property Law Journal 1, 6. 96 ibid 6; Yu/Zhang (n 91) 211. Administrative Law Judges are much more experienced in patent matters than district court judges. 97 WP Atkins and JA Pan, ‘An Updated Primer on Procedures and Rules in 337 Investigations at the U.S. International Trade Commission’ (2010) 18 University of Baltimore Intellectual Property Law Journal 105, at IV.A; the article is available at: www.pillsburylaw.com/iteFiles/Publications/Section337Primer13111.pdf. 98 Yu/Zhang (n 91) 211. 99 Cotropia, ‘Strength of the International Trade Commission as a Patent Venue’ (n 95) 14; C Chien, ‘Patently Protectionist? An Empirical Analysis of Patent Cases at the International Trade Commission’ (2008) 50 William & Mary Law Review 63, 67 at 92–93. 100 28 U.S.C. s 1659(a) (2000). Even if the patent holder does not file a complaint at the district court, the respondents in the ITC action will typically file a declaratory judgment action in the district court; Chien, ‘Patently Protectionist’ (n 99) 94.

614

Anja Petersen-Padberg

II. Pre-Institution Investigation 115

Once a complaint is filed and an examination of sufficiency and compliance with the filing requirements has been conducted by the OUII,101 the Commission has 30 days to determine whether an investigation should be instituted on the basis of the complaint.102 The pre-institution investigation can take 15 days longer if the complaint is accompanied by a motion for temporary relief. The Commission will mandate the ALJ in charge and the IA. Formal proceedings before the ITC begin with the Commission’s issuance of a ‘Notice of Investigation’ in the Federal Register. If the Commission votes to institute or to terminate a section 337 investigation, it will publish an announcement in the Federal Register and also on its website.103 In its notice, the Commission identifies the entities that may participate in the investigation as parties, namely the complainants and respondents and the Commission Investigative Attorney. All documents filed in an investigation, and its orders and decisions, except for those containing confidential information, are published in the Commission’s electronic databank, EDIS.104

III. Intervention 116

Any party interested may request leave to intervene by filing a written motion. At the Commission’s discretion, such persons may be allowed to intervene as ‘interveners’ or ‘respondents’.

IV. Investigation Procedures 117

After issuance of the protective order to prevent the disclosure of any confidential business information (‘CBI’),105 the ALJ further issues a Scheduling Order. This will set the date by which proceedings must end, expert reports exchanged, motions to compel and motions for summary determination must be filed, etc. The defendant has to file a response within 20 days following the notice of investigation, but this can be amended or supplemented afterwards. Parties have to have their case ready for the hearing according to the Scheduling Order.

101 The complainant may submit a draft of its complaint to the Office of Unfair Import Investigations for a review prior to its official submission to the Secretary of Initiation of the ITC (19 CFR, s 210.73(a)). 102 If a complaint is accompanied by a motion for temporary relief, the Commission will normally make its determination regarding institution of an investigation and provisional acceptance of the motion for temporary relief within 35 calendar days after the filing of the complaint and motion. 103 Other notices published in the Federal Register are available at: www.usitc.gov/archive.htm. 104 EDIS can be accessed after registration at: http://edis.usitc.gov. Questions about the status of an investigation can be addressed to the Commission Investigative Attorney whose name and telephone number are listed in the notice of investigation. 105 The understanding of ‘Confidential Business Information’ includes trade secrets, processes, operations, style of works, or apparatus, or to the production, sales, shipments, purchases, transfers, identification of customers, inventories, or amount or source of any income, profits, losses or expenditures of any person, firm, partnership, corporation, or other organisation, or other information of commercial value, etc; C Charnesky, ‘The Role of the Office of the Administrative Law Judges Within the United States International Trade Commission’ (2009) John Marshall Review of Intellectual Property 221; 19 CFR, s 201.6(a)(1).

Border Measures in Europe, Japan and the US 118

119

120

121

615

Discovery is critically important in a section 337 investigation. Some of the more lively areas of discovery concern the claim construction and the hearing of expert witnesses as to the meaning of disputed terms of the asserted patents, as well as the expert’s analysis of the products and methods accused of infringing the patents. Discovery concerning importation matters and domestic industry issues are also prominent.106 The ALJ may schedule prehearing conferences. Because of the complexity of many of the patents at issue, an ALJ often finds it useful to hold a tutorial hearing during which counsel, with the aid of experts, present non-controversial technical information relating to the patent or patents at issue. Defences that may be raised in section 337 investigations include all defences that are available in district court litigation, such as invalidity, patent misuse, fraud and inequitable conduct, laches and equitable estoppel and waiver, and licence or settlement defences. Additionally, a respondent can use defences based on breach of duty or candour or abuse of process under ITC Rule 210.16(b)(2).107 The respondent may also file a counterclaim (and not a mere defence); however, this must be removed to the appropriate federal district court. The fact that counterclaims will not become subject to the investigation contributes to the speed of US ITC proceedings. The ALJ conducts a formal on-the-record evidentiary hearing108 according to the scope as laid down in the notice of investigation, which is very similar to a federal court bench trial, in conformity with the Administrative Procedure Act. The hearing will last about one to two weeks. The complaining party (‘the complainant’), the defending parties (‘the respondents’), and the Commission Investigative Attorney may all present evidence at the hearing. Confidential evidence can be handled in camera. Invalidity must be proven by ‘clear and convincing evidence’. Witness testimony is taken and exhibits are introduced into the record. Following the hearing and no later than four months before the target date, the ALJ will issue an ‘Initial Determination’ as to whether section 337 has been violated. The ALJ will address all aspects of the investigation whether or not needed to fully resolve the merits, including a decision on permanent and temporarily relief, bonding and public interest.

V. Remedies 122

106

On finding a violation of section 337, the ITC may issue an exclusion order prohibiting importation of the involved articles or cease and desist orders or both. An LEO is directed only at the accused products of those entities specifically named as respondents before the ITC. Remedial orders are directed at all products covered by the asserted claims as to which a violation has been found, rather than to limit the order to specific models.109 Since the decision Kyocera Wireless Crop v ITC, the US

Charnesky, ibid 222, 223. Atkins/Pan, ‘An Updated Primer’ (n 97) IV.G. 108 Parties have the right of adequate notice, cross-examination, presentation of evidence, objection, motion, argument, and other rights essential to a fair hearing, 19 CFR, s 210.36. 109 Charneski (n 105) 227. 107

616

123

124

125

126 127

128

Anja Petersen-Padberg ITC is no longer permitted to extend a LEO to importers not explicitly named as respondent in an ITC action.110 It is therefore no longer possible to include (unidentified) importers of ‘downstream products’ in an LEO. Under certain circumstances, a GEO may be issued against all infringing articles from any source, regardless of whether or not the source was included in the investigation. This is to avoid numerous complaints to different importers relating to the same type of infringing goods. To obtain a GEO, the complainant is required to prove ‘both a widespread pattern of unauthorised use of its patented inventions’ and certain business conditions from which one might reasonably infer that foreign manufacturer other than the respondents to the investigation may attempt to enter the US market with infringing articles.111 The Commission may also issue cease and desist orders against certain respondents, generally those that have commercially significant US inventories of the accused products. The Commission generally issues a cease and desist order directed at a domestic respondent when there is a ‘commercially significant’ amount of the infringing, imported product in the United States that could be sold so as to undercut the remedy provided by an exclusion order.112 The Commission may also order a temporary exclusion or cease and desist order that remains in effect during the pendency of the investigation and consent orders. The Commission’s exclusion orders are enforced by the US Customs and Border Protection and the cease and desist order by the Commission (see below). Appeals of Commission orders entered in section 337 investigations are heard by the US Court of Appeals for the Federal Circuit. The ITC, however, cannot award monetary damages. To obtain such damages, a complainant must file a separate action before the US District Court.

VI. Temporary Relief 129

Upon a motion accompanied by a memorandum supporting the request, the ITC may issue temporary relief in the form of temporary exclusion orders and/or temporary cease and desist orders. Temporary relief proceedings must be concluded in 90–150 days and the remedy remains in force during the pendency of the investigation. In order to qualify for temporary relief, the complainant must prove: — the likelihood of success on the merits of the case; — irreparable harm to the complainant in the absence of temporary relief; — harm, if any, to the respondents if temporary relief is granted; and — the effect, if any, that the issuance of temporary relief would have on the public interest.

110 Federal Circuit, 545 F. 3d 1340 (Fed Cir 2008). Previously, the ITC extended ‘LEOs’ to importers not explicitly named in an ITC, eg to cover ‘downstream’ products, ie products that include the infringing product. The ITC fixed the criteria for such extensions in ‘Certain Erasable Programmable Read-Only Memories, Components (…)’, U.S. ITC Pub 2196, Inv No 337-TA-276, at 125 (May 1989). The criteria became known as the ‘EPROM factors’. 111 19 U.S.C. s 1337 (d) (2), (A) and (B); In re Certain Airless Paint Spray Pumps and Components Thereof, U.S. ITC Pub 1199, Comm’n Op. 18, Inv No 337-TA-90 (Nov 1981), 1981 LEXIS 167 at *30. 112 Charneski (n 105) 228 with further references.

Border Measures in Europe, Japan and the US 130

131

617

The Initial Determination on temporary relief is subject to review by the Commission. By the 90th day after institution of an investigation (or the 150th day in more complex cases), the Commission will determine whether to accept the ALJ’s Initial Determination on the temporary relief and whether to grant temporary relief. The number of motions for temporary relief is relatively small.113 During temporary relief, the respondents may upon request deposit a bond to continue the import of goods, or alternatively the complainant can be required to post a bond to protect the respondent’s interests.

VII. Review by the Commission 132

Upon request or upon its own initiative, the Commission has four months in which to review the ALJ’s Initial Determination. This review period must take place within the time period prescribed by the target date. The Commission may decide by majority vote to adopt, modify or reverse the ALJ’s Initial Determination in full or in part or it may decide not to review it. Reasons for a review are that the Initial Determination contains a clearly erroneous finding of the material fact or an erroneous legal conclusion or it affects Commission policy. If the Commission declines to review an Initial Determination, the Initial Determination becomes the final determination of the Commission.

VIII. Presidential Review 133

Exclusion orders and cease and desist orders by the Commission do not take effect immediately. Instead, since Commission decisions have an effect on international relations, the President has 60 days during which he can disapprove, for policy reasons, any Commission order. Around five vetoes have been issued so far.114 In three of these, the breadth of the Final Determination was criticised and the Commission modified the decision, which was then accepted.115

IX. Settlement 134

113

Parties may also settle the case, including a settlement to present the matter for arbitration. If the ALJ and ultimately the Commission conclude that a licence (or other agreement) is not contrary to public interest, the investigation may be terminated in whole or in part, for example with regard to certain respondents only. The US ITC

Atkins/Pan (n 97) IV.F.2. As examples, on 4 January 1985, a US ITC decision in favor of Duracell was overturned by President Ronald Reagan. The case involved the import of alkaline batteries in competition with Duracell, the American manufacturer that developed them. On 3 August 2013, President Barack Obama overturned the Commission’s decision in investigation no 337-TA-794 that would have banned Apple Inc from importing several of its older products, since Samsung’s patent was a standard-essential patent. 115 Atkins/Pan (n 97) IV.H. 114

618

Anja Petersen-Padberg offers a mediation program to settle section 337 investigations. It is inexpensive, confidential and quick, but it may not be used to delay investigations.116

X. Appeal 135

A judge’s ‘Initial Determination’ may be appealed to the Commission, which seems to be the norm.117 The ITC’s decision in section 337 investigations may be appealed to the US Court of Appeals for the Federal Circuit within 60 days of the date that the Commission’s decision became final. The Federal Circuit uses Markman v Westview Instruments, Inc118 to interpret the claims in an ITC appeal de novo, which means they consider the patent’s claims as if no decision had been rendered by the ITC. The Federal Circuit can vacate the Commission’s rulings on the issue of infringement and remand the case for findings and re-determination with respect to literal infringement and infringement under the doctrine of equivalents. The Federal Circuit has also affirmed the Commission’s decision in a number of cases.119

Based on a 15 month target date (typical range is 15–18 months) Initial determination on violation— recommended remedy

Target date for final determination on violation & remedy Commission determination [Remedy in whether to full effect]* review ID

ITC institutes investigation Evidentiary hearing

Target date set File complaint

Pre-trial & discovery phase of investigation

45 days

30 days Month 0

1

2

[Presidential review and bonding period]*

Appeal to federal circuit

60 days 3

4

5

6

7

8

9

10 11

12

13

14

15 16

17

18

19

20

*Only applies if a violation is found

Figure 2: Timetable Section 337 Proceedings120

116 117 118 119 120

More information is available at: www.usitc.gov/intellectual_property/mediation.htm. Charneski (n 105) 229 with further references. 517 U.S. 370, 38 USPQ2nd 1461. Atkins/Pan (n 97) IV.A.1. Prepared by Cadwalader, Wickersham & Taft LLP.

Border Measures in Europe, Japan and the US

619

XI. Parallel Court Actions 136

A complainant may file a parallel action in US District Court. However, respondents in the section 337 investigation that are also defendants in the district court litigation are entitled to a stay of the district court action pending the outcome of the section 337 investigation. Once the investigation is completed, the ITC record may be transmitted to the district court.

XII. Processing Time of Investigation Proceedings 137

The ITC is required by statute to complete section 337 investigations at the earliest practicable time. To this end, at the outset of each section 337 investigation, the ALJ sets within 45 days after publication of the notice of investigation (see above) a target date for completion of the investigation. The initial target date is usually set for anywhere from 12 to 18 months (most often 16 months), depending on the complexity of the investigation and the judge’s caseload. The investigation ends with either the Commission’s decision not to review the Initial Determination—thus adopting the ALJ’s decision as its own—or its reviewing the ALJ’s Initial Determination and affirming or reversing.

XIII. Clearing-the-Way Requests 138

An entity that has not been a respondent in Commission proceedings can seek an advisory opinion as to whether a proposed course of conduct would violate a Commission order, for example a foreign manufacturer who is contemplating exporting products to the US might seek a prior determination that its products are not covered by a particular GEO.121 The same applies to a respondent who has redesigned its product.

XIV. US Customs and Border Protection Procedures 139

140

121

The Commission’s exclusion orders are enforced by the US Customs Service according to internal guidelines.122 Complainants usually meet with customs authorities and explain the scope of the exclusion order and how to identify the goods. If the competent customs director decides to exclude a particular shipment and informs the importer that it may ship the goods back or these will be destroyed, the importer, consignee or person seeking entry or delivery of the imported articles may file administrative ‘protest’ proceedings within 90 days of the decision by the customs

ibid IV. I. With regard to general statistics without data on patents, see www.cbp.gov/sites/default/files/ documents/2013%20IPR%20Stats.pdf. 122

620

141

Anja Petersen-Padberg director. Denial of a protest can be appealed through a civil action in the US Court of International Trade.123 Should importation be allowed, the complainant may file a provisional injunction against this order. If an importer attempts to ‘port shop’ by trying to bring infringing goods into different ports, etc, hoping to evade an exclusion order with the knowledge that an unsuccessful attempt would merely result in refusal to enter the goods and their return to the owner, the Commission may order a seizure and forfeiture on the goods subject to the exclusion order.124

E. Summary 142

143

123

Border measures for the enforcement of patent rights under US, Japanese and European law differ significantly. US customs authorities take action only upon a limited or general exclusion order rendered in quasi-court proceedings by the US ITC. In Japan, the customs authorities thoroughly examine the application for customs action and grant the importer a right to be heard. Only if the Japanese customs authorities can assume prima facie patent infringement will they immediately grant the application, and otherwise will ask an expert group of three attorneys-at-law or patent attorneys to prepare an opinion on the infringement and, if disputed by the importer, also on the validity of the patent. When deciding on the suspension of import of allegedly patent-infringing goods, and if the importer objects the suspension, the Japanese customs authorities may request an opinion of the JPO on the infringement and/or the expert group to decide on other legal issues. Under consideration of the opinion(s), the customs authorities will decide on the suspension of importation. In Europe, customs may not decide on the infringement and therefore the applicant basically does not have to submit detailed information on the infringement to the customs authorities. Under European law, the right holder is liable for unjustified customs action, but not within the 10-working-day examination period. In particular with regard to standard essential patents (MP2 and MP3 formats), concerning which validity and infringement was frequently unclear and also with regard to customs action prior to a trade fair, this 10-day period of unfettered freedom has given cause of concern. Also with regard to costs, proceedings differ significantly. It can be concluded that the US ITC proceedings generate the highest amount of (attorney-at-law) costs. Japanese customs proceedings are charge-free, while attorneys’ fees need to be paid. Proceedings in Europe are the least expensive, particularly since the application can be filed without an attorney-at-law or patent attorney even though it may be preferable to request professional assistance, however.

28 U.S.C. s 2636 (2006); Atkins/Pan (n 97) IV.I. 19 U.S.C. s 1337(i) (2004); see also GM Hnath, ‘General Exclusion Orders under Sec. 337’ (2005) 25(2) Northwestern Journal of International Law & Business 352. 124

Border Measures in Europe, Japan and the US 144

145

146

147

148

149

621

Under European law, issuance of a preliminary court injunction should become a prerequisite for border enforcement with regard to patents. In this respect, it should be considered that, as a rule, a provisional injunction should only be issued when the validity of the patent can be ‘sufficiently ascertained’. For instance, as a rule only if the EPO or a competent national administrative body has rendered a (non-final) validity decision favourable to the petitioner will the patent be eligible for provisional injunction proceedings.125 An exception can be made, if the patent is recognised by licensees. If the patent at issue was revoked in the first instance, as a rule, the validity of the patent must be considered as unclear and the issuance of a provisional injunction will be impossible. If the issuance of a provisional injunction will become a prerequisite for European border measures, border enforcement based on unclear infringement or validity of the patent can be prevented. Those importers who were not a party to the court proceedings will be sufficiently protected by the ‘Basic Procedure’. Furthermore, the problem of protection of trade secrets during inspection proceedings at customs authorities’ premises should be solved. In the future, customs authorities will need to have rules on how to if the patentee wishes to inspect goods and the importer claims that trade secrets will be disclosed. The examination of the goods by an expert and the disclosure of the opinion only in the case of a confirmed patent infringement may be a solution. It should also be clarified that with regard to the destruction of patent-infringing goods, the principle of proportionality is to apply and therefore it must be questioned on a case-by-case basis whether the entire product or only the patent-infringing part of the product is to be destroyed. With regard to indirect patent infringement, it must be clarified whether products can be used for another purpose and destruction must therefore be prohibited. Where appropriate, these issues could be clarified in provisional injunction proceedings. Finally, it should be clarified that if the patentee and importer settle the case, the goods may be released to the importer. As a result, there is still much work to do for the European legislature with respect to border enforcement on patents, supplementary protection certificates, utility model and plant variety rights and this should be commenced soon, since the present legal situation in Europe is unsatisfactory. In particular, the ‘GEO’ under US law can be a model for a legal revision of the EU Regulation on Border Measures.

125 See Düsseldorf Appeal Court, 29 April 2010, docket I 2 U 126/09, Mitt 20011, 193—Harnkatheterset; Higher District Court Karlsruhe, 8 July 2009, docket 6 U 61/09, GRUR-RR 2009, 442—Vorläufiger Rechtsschutz.

INDEX Please note that, in the index, paragraph numbers are the locators and are prefixed by the chapter number (eg 10.89). If necessary, we suggest using the Summary Contents to help find this number in the text. The index is structured according to geography, while international and cross-border issues feature under ‘extraterritorial enforcement’ or ‘TRIPS enforcement provisions’.

Argentina advance proof measures 18.79 aggravated infringement 18.40, 18.106 alleged infringer, cessation of use by 18.10 appeal 18.92–96 attorney fees 18.137–43 border measures 18.75–76 civil code/Patent Act claims for damages 18.11–12 compensation 18.108–9 competition, act on protection 18.135–36 conciliation 18.85 costs 18.137–43 court system/civil proceedings 18.2–8, 18.42–45, 18.80–96 damages 18.107–15 admission of claim 18.114–15 civil code/Patent Act claims for 18.11–12 compensation 18.108–9 quantum 18.110–13 time-bar 18.131 declaratory judgment, actions seeking 18.16–18 defences 18.116–31 defendant’s actions 18.13–15 direct infringers 18.38–40 equivalents theory 18.101 evidence 18.87–88, 18.90 exclusive licences 18.22, 18.25 exclusive rights 18.117 exhaustion of rights 18.125 experts 18.89 expired patent claim 18.15 fees 18.137–43 first instance proceedings 18.85–91 importation of product 18.104 industrial property agents 18.5 interim relief border measures 18.75–76 cessation of exploitation 18.74 conditions 18.53–55, 18.57–63 ex parte 18.52, 18.56, 18.62 expiry/prior mediation 18.72–76 guarantees 18.48–49 importance 18.46–47 licensees 18.50–51 wrongful enforcement 18.132 WTO/GATT/TRIPS measures 18.64–71, 18.77 see also provisional measures below

inventions on foreign vehicles etc 18.126 licensees actions 18.19–25 authorisation 18.124 manufacture prior to lapse 18.130 manufacturing process 18.100–101 non-industrial production 18.128 nullity claim 18.14, 18.118, 18.121 onus of proof 18.86 parties actions available to both 18.16–18 contributory infringers 18.41 direct infringers 18.38–40 patent application, owners 18.26–33 patent holders/licensees 18.19–25 unprotected invention, owner 18.35–37 Patent Act/court decisions 18.1, 18.12 patent application, owners 18.26–33 patent holders, actions 18.19–25 patentee actions 18.9–12 prior use 18.127 process patents 18.98, 18.105 proof 18.86 provisional measures advance proof measures 18.79 National Code of Civil and Commercial Procedure 18.78 TRIPS measures 18.64–71, 18.77 see also interim relief above provocation 18.129 sale as infringement 18.103 scientific/technological investigation 18.122–23 second instance proceedings 18.92–96 secrecy obligation, breaches of 18.34 trial preparation 18.46–47 TRIPS measures 18.64–71, 18.77 types of infringement 18.97–106 unprotected invention, owner 18.35–37 use as infringement 18.102 validity 18.119–20 wrongful enforcement 18.132–36 Auskunftsanspruch see under Germany, see under TRIPS enforcement provisions balance of probability see under TRIPS enforcement provisions

624 Index border measures basic issues/summary 20.1, 20.142–49 EU see under European Union (EU) Japan see under Japan TRIPS provisions 1.129–1.136 US see United States (US) Brazil administrative enforcement 17.9–10 appeals 17.5, 17.6 proceedings 17.36–40 basic issues/conclusions 17.1–2, 17.72–73 civil enforcement 17.3 competition law 17.61–67 compulsory licensing 17.61–64 costs/cost orders 17.69–71 courts competent/specialised 17.18–21 enforcement before 17.8 system 17.4–5 damages 17.44 defences 17.47–67 defendant preparations 17.29 destruction 17.45 exhaustion of patent rights 17.49 expert role 17.30–31 first instance proceedings infringement 17.28–33 revocation 17.34–35 fraud 17.65–66 infringers 17.13 INPI (Brazilian Patent and Trademark Office) 17.2, 17.10, 17.12–13, 17.14–15 invalidity proceedings 17.52–60 judgments 17.33 legal representation 17.7 licensees 17.11–12 limitation periods 17.51 parties 17.11–12 patent attorneys 17.7 patentees 17.11–12 post-grant opposition 17.9–10 precautionary proceedings 17.22, 17.26 preliminary measures/injunctions 17.22–27 prior use 17.50 privileged acts 17.48 Public Prosecutor’s Office 17.16–17 publication 17.45 remedies 17.43–46 revocation proceedings 17.34–35, 17.53, 17.58–59 sham litigation 17.67 specialised courts 17.18–21 types of action 17.8–10 of infringement 17.41–42 wrongful enforcement 17.68 China abuse of patent right 11.163–65 administrative decision, no pre-determination by 11.26 administrative enforcement 11.35–42

administrative litigation 11.28–30 all-element doctrine 11.112 apologies 11.144 appeals 11.95–99 arbitration 11.62–63 asset freezing 11.79 bifurcated procedure 11.15–19 Bolar provisions 11.5, 11.155–56 burden of proof, reverse 11.123 civil enforcement 11.25–27 civil litigation system 11.1–3 claim interpretation 11.116–23 compensation 11.129–42 competent court 11.49–63 competent parties 11.43–48 component/intermediate use 11.125 costs 11.168–69 court system/divisions 11.15–19, 11.53 customs 11.14, 11.31–34 damages 11.129–38 actual loss 11.131 benefits deduction 11.132–34 calculation 11.129–30 profits obtained by infringer 11.132 royalty use 11.135–38 statutory damages 11.139–40 declaratory action, non-infringement 11.27 defences 11.145–62 definitions of infringement 11.124–25 destruction of moulds and equipment 11.143 determination principles 11.111–15 discovery 11.64 dual enforcement mechanism 11.9 embodiments 11.119 equivalents doctrine 11.113 evidence at trial 11.89–91 collection by court 11.69–70 and translation 11.71–72 evidence preservation orders 11.65–68 exhaustion of rights 11.145 expert opinion/witnesses 11.92–94 file history estoppel 11.115 GACC (General Administration of China Customs) 11.14, 11.32 German/US models 11.2 goods in transit 11.151 importation of products 15.14 indirect infringement 11.45–47 information claims 11.127 injunctive relief 11.128 institutions 11.9–19 interim injunctions 11.73–78 Interpretations and Opinions (SPC) 11.6–8 invalid patent, retroactive affect 11.166–67 invalidation application 11.48 invalidity proceedings 11.16, 11.18 IP Bureaux 11.10 judges’ expertise 11.55–58 jurisdiction 11.25, 11.49–52 lawyers 11.20–24

Index 625 China (continued) limitation period 11.162 mediation/settlements 11.59–61 moulds and equipment, destruction 11.143 National IP Strategy (NIPS) 11.4–5 non-infringement declaratory action 11.27 patent attorneys 11.23–24 patent as own dictionary 11.116 patentees 11.43–44 policy development 11.4 POSA 11.117, 11.122 PRB (Patent Re-examination Board) procedures 11.100–105 pre-trial injunctions 11.73–74 prior art defence 11.157–60 prior use 11.146–50 procedure for injunctions 11.75–76 process patents 11.122 property preservation orders 11.79 public domain 11.114 publication of decision 11.144 reasonable expenses, reimbursement 11.141 remedies 11.126–44 retrials 11.95–99 reverse burden of proof 11.123 revisions of patent law 11.3 scientific research 11.152–54 seller as innocent infringer 11.161 settlements/mediation 11.59–61 SIPO (State Intellectual Property Office) 11.10–12 technical features additional 11.121 comparison 11.120 functional 11.118 3 in 1 system 11.54 trade fairs 11.13 translation of evidence 11.71–72 trial appeal/retrial 11.95–99 evidence 11.89–91 expert opinion/witnesses 11.92–94 PRB (Patent Re-examination Board) procedures 11.100–105 preparations 11.64–80 principles 11.81–85 procedure 11.86–94 stay of proceedings 11.106–9 types of action 11.25–42 types of infringement 11.110–25 use prior to grant, compensation for 11.142 warning letters 11.80 wrongful enforcement 11.163–67 comparative overview see TRIPS enforcement provisions customs proceedings, see border measures damages, TRIPS see under TRIPS enforcement provisions domicile-based jurisdiction see under European Union (EU)

European issues see under TRIPS enforcement provisions European Union (EU) border measures applicable law 20.2–6 applications for customs actions 20.16–34 basic procedure 20.44–58, 20.62 Fig., 20.145 competent public authority 20.16 confirmation of infringement by patentee 20.45–47 consultation 20.38 costs 20.33–34 Japan/US differences 20.143 customs actions 20.35–43 customs situations 20.9–11 destruction 20.54–58 objection to 20.49–50 proportionality 20.147 early release by posting bond 20.59–63 entitlement 20.17 GEO (US) model 20.149 importers’ right to be heard 20.26–29 information required 20.18–25 initiation of proceedings 20.51–52 inspection proceedings, trade secrets’ protection 20.146 right 20.41–43 intellectual property rights 20.8 liability customs authority 20.64–65 patentee 20.66–69 notification 20.39–40, 20.44 objection to destruction 20.49–50 parallel imports 20.12–13 personal luggage 20.14 preliminary injunction 20.144 processing time 20.30 proportionality 20.147 provisional injunction 20.145, 20.148 release of goods 20.53 revisions of the law, need for 20.149 situations 20.9–11 standard form 20.15 statistics 20.7 suspicion of infringement 20.37 trade secrets’ protection 20.146 transit of goods 1.135 updates/amendments/special alerts 20.32 US/Japanese differences 20.142 validity 20.31 written agreement of importer/holder of goods 20.48 connected claims/plurality of defendants jurisdiction 2.16–18 domicile-based jurisdiction 2.7–12 general rule 2.8 member states 2.9–11 Regulation basis 2.7 Enforcement Directive aim 2.30, 2.32 evidence preservation 2.37

626 Index European Union (EU) (continued) implementation 2.34–36 minimum standards 2.33, 2.38 TRIPS disparities 2.31 EPO (European Patents Office) 1.68–69, 1.74, 2.39 European Court of Justice (CJEU) 1.70 future role 2.82–83 evidence in cross-border scenarios 2.26–29 basic situation 2.26 in practice 2.28 Regulation requirements 2.27 US location 2.29 international jurisdiction questions 2.5–6 jurisdiction 2.5–25 key issues 2.1–4 national jurisdictions, and unified patent court system, comparison of advantages 2.84–90 non-domiciled jurisdiction 2.12 place of infringement jurisdiction 2.13–15 political map 2.3 seats outside, situations 2.1–2 territoriality 2.4 Torpedo actions 2.19–25 basic situation 2.19–20 blocking/delay function 2.24 national courts 2.21–22 in practice 2.25 same party actions 2.23 transit of goods 1.135 TRIPS enforcement see TRIPS enforcement provisions, European issues unified patent court system and national jurisdictions, comparison of advantages 2.84–90 regulations entering into force/ application 2.43–46 unitary patent 2.39–43 UPCA (Agreement on a Unified Patent Court) 2.43, 2.52 UPR (Regulation on the unitary patent) 2.43, 2.47–48 UPTR (Regulation on the language regime for the unitary patent) 2.43, 2.49–51 Unified Patent Court (UPC) appeal procedure 2.56, 2.79–80 bifurcation 2.75–77 competences 2.57–62 court fees 2.81 Court of First Instance’s divisions 2.53 European bundle patents 2.62 European Court of Justice, future role 2.82–83 evidence 2.78 exclusive jurisdiction 2.57 judges 2.63–68 language of proceedings 2.69 organisation 2.53–56 procedure 2.69–80 renewal fees 2.90–97 rules of procedure 2.70 seats of courts 2.54–56 stages of proceedings 2.71–74

UPCA (Agreement on a Unified Patent Court) 2.43, 2.52 UPR (Regulation on the unitary patent) 2.43, 2.47–48 UPTR (Regulation on the language regime for the unitary patent) 2.43, 2.49–51 extraterritorial enforcement basic issues/conclusion 19.1–2, 19.43–45 foreign patents in national courts bifurcated/non-bifurcated systems 19.11–14 declaration of non-infringement 19.16–17 provisional relief 19.15 refusals to adjudicate 19.4–7 staying proceedings 19.10 with validity adjudication 19.3–7 without validity adjudication 19.8–13, 19.18–19 national patent laws basic provisions 19.20–25 component manufacture 19.28–30 internet communications 19.31 localisation 19.26–32 remedies 19.33–37 enforcement 19.38–39 res judicata/collateral estoppel 19.40–42 territorial limitations 19.1–2 transit of goods 1.135 foreign patents in national courts see under extraterritorial enforcement France appeal proceedings 5.111–19 affirm/reverse power 5.114 cases de novo hearings 5.113 Cours de cassation 5.120–26 decision statistics 5.112 exclusive jurisdiction (cour d’appel de Paris) 5.111 judge’s role 5.117 nature of cases 5.195–96 timing/time limit 5.115–16, 5.118–19 winning rates 5.197–98 arbitrators’ court 5.54 attorneys-at-law 5.9 case law 5.3–4 competent parties see parties above confiscation/destruction of products 5.165 contributory infringement 5.137–41 costs 5.185–89 Cour de cassation 5.120–26 court arbitrators 5.54 competent 5.52–58 jurisdiction 5.52–54, 5.56, 5.58 private international law 5.55, 5.57 system 5.5–6 customs measures basic provisions 5.21–23 as detection tool 5.25 summary 5.24

Index 627 France (continued) use 5.20 damages 1.114–20, 5.155–64 attorneys’ fees 1.119 award statistics 1.120 calculation rules 5.157–62 as compensation 5.156 infringer’s profits 5.161 licensing fee assessment 1.119 loss assessment 1.114–18 lost profits 5.158 other claimants 5.163 proceedings 5.164 decisions, statistics 5.2, 5.190–91, 5.195–98 defences 173–77, 5.167–70 direct infringement 5.133–36 equivalents, infringement by (contrefaçon par equivalence) 5.147–50 evidence discovery 1.33 exceptions to exclusive use 5.171–72 exhaustion 5.173 experts 5.129–31 first instance proceedings 5.95–110 appeals 5.108, 5.110 decision statistics/timing 5.96, 5.97 exclusive jurisdiction (TGI Paris) 5.95 judgment 5.106–7 nature of cases 5.195–96 oral hearing 5.105 pleadings 5.99–101 procedural hearings 5.104 scheduling conference 5.103 service of summons 5.98, 5.102 winning rates 5.197–98 FRAND defence 5.175–77 hearings, oral hearing 5.127–31 indirect infringement 5.137–41 infringement actions availability 5.15 burden/means of proof 5.17–18 limitation period 5.19 statistics 5.14 injunctive relief 1.152–54 interim injunctions 1.55 invalidity 5.169, 5.170 invalidity declaration after payment of damages decision 5.182–83 after preliminary injunction 5.179–81 judges 5.10 legislative framework 5.1–4 licence agreement registration 5.51 licensees see under parties above limitation proceedings 5.59–6.62 literal infringement (contrefaçon à l’identique) 5.144 non-infringement declaration admissiblity requirement 5.41 frequency 5.45 non-domicile defendant 4.44 pre-litigation phase 5.42–43 third party action 5.40

opposition proceedings 5.37–39 oral hearing 5.127–31 parties exclusive licensee 5.49 licence agreement registration 5.51 non-exclusive licensee 5.50 owner of patent 5.48 patent law practitioners 5.7–8 patentee actions 5.13–25 preliminary injunctions 5.78–94 appeals 5.90–92 balance of interests 5.83 ‘clear the way’ doctrine 5.84 inter partes/ex parte proceedings 5.86 legal basis 5.78–80 procedural aspects 5.87–89 protective letters 5.93 reasons for 5.81–82 statistics 5.192–94 time limits 5.85, 5.94 prior personal possession 5.174 private international law 5.55, 5.57 protective letters 5.93 publication of judgment 5.166 recall/confiscation/destruction of products 5.165 remedies 5.151–66, 5.184 reproduction, infringement by (contrefaçon par reproduction des moyens essentiels) 5.145–46 revocation actions erga omnes effect 5.28 invalidity grounds 5.31 inventive step 5.33 patent eligibility 5.32 patent entitlement 5.35 statistics 5.27, 5.36 sufficiency 5.34 third party requests 5.29 time limitation 5.30 right of information request 5.77 saisie-contrefaçon 5.66–77 authorisation 5.68–69 bailiff actions 5.70–72 definition 5.66 descrizione (Italy), comparison 7.44–48 legal basis 5.67 plaintiff action 5.73–74 probative measure 5.66, 5.75–76 right of information request 5.77 statistics annex 5.190–98 third party actions 5.26–47 threats, actions against 5.46–47 trial preparation limitation proceedings 5.59–6.62 preliminary injunctions see preliminary injunctions saisie-contrefaçon see saisie-contrefaçon above warning letters 5.63–65 types of action 5.12–25, 5.12–47 types of infringement direct infringement 5.133–36

628 Index France (continued) equivalents, infringement by (contrefaçon par equivalence) 5.147–50 literal infringement (contrefaçon à l’identique) 5.144 reproduction, infringement by (contrefaçon par reproduction des moyens essentiels) 5.145–46 summary 5.16, 5.132, 5.142, 5.143 unfair competition 5.46–47 unjustified threats 5.184 warning letters 5.63–65 wrongful enforcement 5.178–84 GATT right of transit 1.135 Uruguay Round 1.15–1.17 Germany appeal courts 4.60–68 facts, questions on 4.61 judges 4.60, 4.65 nullity proceedings 4.62 points of law 4.63–64, 4.66–68 preliminary injunction (PI) 4.86 senates 4.60 attorneys-at-law 4.55–56 Auskunftsanspruch 1.44, 1.124, 4.139–144 basic characteristics 4.1 bifurcation nullity proceedings 4.5–9 principle 4.2–4 border seizures 4.29–32 claim interpretation 4.102–7 claimant exclusive licensee 4.40–41 non-exclusive licensee 4.42–43 patentee(s) 4.38–4.39 summary 4.37 co-ownership defence 4.154 competent courts 4.49–68 contributory infringement 4.113–17 damages 4.130 double domestic nexus 4.115 ‘means’ criterion 4.113–14, 4.117 subjective element 4.116 contributory infringer 4.47 costs statutory minimum fees/reimbursement of costs 4.173–75 and Tables value of court case 4.170–72 court decision publication, claim 4.145 courts 4.49–68 damages 1.96–103, 4.123–33 account of sales 4.123–24 attorneys’ fees 1.100, 1.101 calculation methods 1.96, 1.102, 4.126–29 contributory infringement 4.130 exclusive licence 4.131–32 fault requirement 4.125 infringer’s profits 1.101 interest rates 1.103 licence analogy 4.127

lost profits 1.99 proof of 1.97 reasonable royalty 1.98 unjust enrichment 4.133 decisions statistics 4.25 style 4.23–24 defences 4.146–63 defendant contributory infringer 4.47 direct infringers 4.44–46 interferer (Störer) 4.48 defendant actions declaration of non-infringement 4.33 nullity suits 4.35–36 Torpedo actions 4.34 destruction claim 4.135 direct infringers 4.44–46 double protection 4.150 Düsseldorf hearings 4.14–17, 4.60 equivalent infringement 4.109–12 evidence discovery 1.36, 1.40–44, 4.69–77 exclusive licensee 4.40–41 exhaustion principle 4.163 expert, appointment 4.93–94 Federal Court of Justice 4.64–68 Federal Patent Court 4.57–58, 4.68 Formstein defence 4.149, 4.153 hearings 4.13–22 information claim (Auskunftsanspruch) 1.44, 1.124, 4.139–43 injunctions, interim see interim injunctions injunctive relief basic provision 4.118 danger of first infringement 4.120 non-discretionary remedy 4.119 period of time 4.122 wording of 133 inspection rights/claims 1.41–43, 4.69–77 interferer (Störer) 4.48 interim injunctions 1.55 interpretation of claims 4.102–7 invalidity as no defence 4.147–49 judges appeal courts 4.60, 4.65 Federal Patent Court 4.58–59 ordinary courts 4.53–54 licensee exclusive 4.40–41 non-exclusive 4.42–43 literal infringement 4.108 Mannheim hearings 4.18–20 manufacture/repair or modification, distinction 4.97 Munich hearings 4.21–22, 4.57 non-infringement defence 4.151–53 nullity suits 4.35–36 appeals 4.62 offering a product 4.98 ordinary courts 4.49–56 attorneys-at-law/patent attorneys 4.55–56

Index 629 Germany (continued) basic provisions 4.49 expert, appointment 4.93–94 judges 4.53–54 regional courts 4.49–52, 4.92 trial in 4.92–94 parties 4.37–48 patent attorneys 4.55–56 patentee actions customs actions 4.29–32 infringement actions 4.26–28 patentee(s), as claimants 4.38–4.39 possession/import 4.100 preliminary enforcement 4.164–67 subsequent invalidity 4.168 preliminary injunction (PI) 4.78–88 appeals 4.86 ex parte/inter partes 4.83 at fairs 4.85 period of enforcement 4.87–88 protective letter (Schutzschrift) 4.84 rendering requirements 4.79–80 urgency requirement 4.81–82 prior user rights 4.155–59 published patent application, compensation claim for 4.134 recall claim costs 4.138 legal consequence 4.137 subject of claim 4.136 remedies 4.118–45 rendering of account, claim 4.144 request for evidence 1.40 Schutzschrift 4.84 standard patents exception 4.160–62 Störer (interferer) 4.48 third party activity 4.96, 4.99, 4.101 Torpedo actions 4.34 trial preparations 4.69–91 types of infringement claim interpretation 4.102–7 contributory infringement see contributory infringement above equivalent infringement 4.109–12 in general 4.95–101 literal infringement 4.108 unjust enrichment, damages 4.133 warning letters 4.89–91 unjustified 4.169 written procedure 4.10–12 wrongful enforcement 4.164–4.169 India adjudication 15.8 anticipation 15.106 Anton Piller orders 15.56, 15.60–61 Bolar exemption 15.102 civil procedure 15.6–7 claim construction 15.91–92 competent parties 15.42–46 competition laws 15.119, 15.120–23

compulsory licence 15.126–30 Constitution 15.1 corresponding application, non-disclosure defence 15.111–13 costs 133–34 courts 15.8 competence 15.47–52 credible challenge 15.62 customs 15.14 damages 15.94 decision styles 15.11 definition of infringement 15.13 direct infringement 15.84–86 discoveries 15.64 documentary evidence 15.55, 15.80–81 discovery/production 15.82–83 evidence presentation 15.66–67 experts qualifications 15.69–76 relevance of evidence 15.77–83 role 15.68 foreign vessels/aircraft/vehicles, use on 15.103 Gillette defence 15.97 government activities 15.100 groundless threats 15.131–32 indirect infringement 15.84–86 injunctions 15.93 Intellectual Property Rights (Imported Goods) Enforcement Rules 2007 15.15–18 international agreements 15.2 invalidity grounds 15.105 jurisdictions 15.10 IPAB (Intellectual Property Appellate Board) 15.9 judgment 15.7 judicial system 15.4 known substance, new form of 15.108 legal profession 15.12 legal system 15.5–11 non-infringement declaration 15.39–41 defence 15.95–96, 15.99 non-working of patent defence 15.113 obviousness 15.63 obviousness defence 15.109–10 onus of proof 15.104 parties 15.42–46 Patent Acts 15.3 patentees 15.42–45 pleadings 15.53–54 post-grant opposition 15.25–28 post-suit 15.7 pre-grant opposition 15.20–24 pre-trial stages 15.7 preliminary injunctions 15.56–61 hearings 15.57 relevant factors 15.58–59 prima facie validity 15.62 prior publication 15.107 quia timet cases 15.50 remedies 15.93–94

630 Index India (continued) research and analysis 15.101 revocation 15.29–30 choice of forum 15.31–38 standard essential patent (SEP) 15.114–18, 15.119 statutory exceptions 15.98 test for infringement 15.87–90 testimony presentation 15.65 third party actions 15.19 trial preparations 15.53–64 procedures 15.65–83 stages 15.7 types of action 15.13–41 types of infringement 15.84–92 wrongful enforcement 15.131–32 injunctive relief see under TRIPS enforcement provisions interim injunctions see under TRIPS enforcement provisions international law see under TRIPS enforcement provisions, see extraterritorial enforcement International Trade Commission (ITC), see border measures, see United States Italy appeal courts 7.10–13 background/conclusion 7.1–2, 7.105–6 civil justice structure 7.3–19 claimant 7.28–29 competent courts 7.38–42 competent parties 7.28–37 contributory infringement 7.69 costs 7.103–4 counterfeiting activity 7.70 courts 7.38–42 damages 7.73–95 actual damages 7.83 assessment/quantification 7.73–75 burden of proof 7.77 calculation methods 7.79–82 compensation 7.78, 7.81 disgorgement of profits 7.90–92 fair price of consent 7.89 limitation 7.76 lost profits 7.84–88 moral damage 7.93–94 presumption of validity 7.100 wrongful enforcement 7.100–101 defences 7.96–97 defendant 7.35–36 defensive actions 7.31–32, 7.37 descrizione (description) 7.44–48 document production 7.60 evidence discovery 1.34, 7.73–74 expert appointment 7.61–62 first instance courts 7.4–9 fundamental conditions, pre-trial 7.52–55 hearing types 7.58 inibitoria (cease/desist order) 7.50 initiation of enforcement 7.30 injunctive relief 7.71–72

interim measures 7.43–55 fundamental conditions 7.52–55 subsequently revoked 7.99 invalidity presumption 7.23–25 limitation procedure 7.63–66 parties 7.28–37 preliminary measures 7.43–55 fundamental conditions 7.52–55 presumption of invalidity 7.23–25 publication 7.51, 7.95 remedies 7.71–95 saisie-contrefaçon (France), comparison 7.44–48 sequestro (search/seize) 7.49 supra-national law 7.21 Supreme Court 7.14 technical issues 7.26 torpedo actions 210 trial preparations 7.43–55 fundamental conditions 7.52–55 trial procedures 7.56–66 type of action 7.27 types of infringement 7.67–70 urgent relief 7.22 warning letters 7.102 writ of summons 7.56–57 written pleadings 7.59 wrongful enforcement 7.98–102 Japan appeals 13.32–34, 13.55 arbitration 13.35 border measures action procedures 13.15, 20.92–102 application requirements 20.82–91 bank guarantees 20.100 burden of proof 20.72 content of application 20.82 costs 20.91 EU/US differences 20.143 deadlines 20.95, 20.98 decisions 20.74–76, 20.101 entitlement 20.81 expert group opinions 20.84–88, 20.99 experts 20.73 grant 20.84 inspection of goods 20.97 liability 20.103 notice to importers 20.83 overview 20.70–77 prima facie evidence 20.84 procedures for actions 20.92–102 publication of application 20.83 release of goods 20.102 rules on 20.70–71 scope of suspension 20.93 security/bank guarantees 20.100 situations 20.78–80 suspension, applications/actions 20.75, 20.76, 20.92–102 time limits 20.72 US/EU differences 20.142

Index 631 Japan (continued) written objections 20.96 civil procedures 13.1–4, 13.10–11 co-owner of patents 13.24–25 competent parties 13.22–27 correction trial 13.16 costs 13.103–8 customs actions, see border measures damages 1.91–95, 13.64–77 basic provisions 1.91, 13.64–65 calculation 13.66–68 infringer’s profits 13.69–74 loss of reputation/market confusion 1.95 ordinary licensing fee 13.75–77 recovery options 1.92–94 defences 13.80–99 defendant 13.27 destruction 13.79 determination of scope trial 13.19 direct infringement 13.56 double jurisdiction 13.39 equivalent infringements 13.43, 13.59–61 ex parte/inter partes limitations 13.42 exhaustion 13.83 experimental research 13.82 extraterritorial enforcement 13.36 foreign patent infringement 13.36–37 indirect infringement 13.57 industrial policy 13.6 information discovery 1.45–46 injunctive relief 13.62–63 interim injunctions 1.57 international jurisdiction 13.36–41 invalidity defence 13.84–96 invention misappropriation 13.20 judges 13.30 jurisdiction 13.28–41 licensees 13.26 licensing agreements 13.29, 13.38, 13.40 literal infringement 13.58 national jurisdiction 13.28–35 non-infringement declaration 13.18 non-infringement defence 13.80–83 opposition action 13.17 parties 13.22–27 patent lawyers/attorneys 13.44 patent system 13.5–7 patentee actions 13.14–16 personal meetings 13.45 plaintiff 13.22–23 post-infringement invalidity 13.100 preliminary/provisional measures 13.48–14.50 prior art 13.42 procedures 13.8–13 professional representatives 13.12–13 remedies 13.62–79 revocation action 13.17 scope of trial, determination 13.20 seizure 13.78 standard patents 13.97–99 statistics 13.46–47, 13.109–12

statutory licenses 13.81 technical experts 13.31 third party actions 13.17–21 translation issues 13.42 trial preparation 13.42–50 trial proceedings 13.51–55 duration 13.51 model structure 13.53–54 preliminary assessments 13.52 types of infringement 13.56–61 warning letters 13.101–2 wrongful enforcement 13.100–102 Korea abuse of patent right 14.57–59 appeals 14.11–12 basic provisions 14.1–3 civil remedies 14.42–49 conclusion 14.66 confirmation of scope trial 14.4, 14.53, 14.62–63 costs 14.65 criminal sanctions 14.50–51 damage claims 14.47–49 defences 14.52–63 definition of infringement 14.33 determination of scope tial 14.4, 14.53, 14.62–63 discovery, pre-trial 14.16–18, 14.28 doctrine of equivalents 14.36–37 dual litigation system 14.3, 14.13 equivalents doctrine 14.36–37 evidence 14.29–30 file wrapper estoppel 14.38 in-court presentation 14.31 injunctive relief 14.45–46 invalidation action 14.60–61 jurisdiction 14.10–15 non-infringement defence 14.53–56 ordinary royalty recovery 14.39 parties 14.6–9 Patent Court 14.12, 14.14 preliminary injunctions 14.19–26 procedures 14.28–31 remedies 14.40–51 scope of protection 14.34–35 confirmation 14.62–63 types of action 14.4–5 types of infringement 14.32–39 warning letters 14.27 wrongful enforcement 14.64 Liechtenstein Principality

9.3

national patent laws, extraterritorial enforcement see under extraterritorial enforcement Netherlands accelerated proceedings 6.17 appeals 6.19, 6.20 border enforcement 6.22 competent courts 6.25–37 competent parties 6.23–24 conclusion 6.86

632 Index Netherlands (continued) costs 6.85 damages 6.79–82 decisions, statistics 6.9 defences 6.60–71 direct/indirect infringement 6.21, 6.54–56 duration 6.20 English/Dutch language 6.20 equivalent/literal infringement 6.57–59 evidence, obtaining of 6.38–40 exhaustion 6.67 experts 6.53 final judgment 6.18 FRAND license 6.73 information 6.73–76 injunctive relief 6.72–78 interim injunctions 1.56 international jurisdiction, debate 6.26–37 invalidity 6.60–66 judges 6.3–9 exclusive jurisdiction/competence 6.5–8 semi-professionals 6.3 jurisdiction international, debate 6.26–37 national 6.25 kort geding 6.41–48, 6.86 advantages/disadvantages 6.46–48 characteristics 6.41 preservation of evidence 6.42 subsequent proceedings 6.42–45, 6.77 lawyers 7.16–19 legal advisers 8.31–32 literal/equivalent infringement 6.57–59 national jurisdiction 6.25 oral proceedings 6.12 parties 6.23–24 patent attorneys 6.10–11, 7.16–19 Patent Office advice 6.64, 6.65 payment of profits 6.79–82 procedure rules 6.13–14, 6.16 registration system 6.2 remedies 6.72–82 research as exception 6.68–71 revocation arguments 6.60–63 territorial effects 6.1 trial preparation 6.38–48 trial proceedings 6.49–53 types of action 6.21–22 types of infringement 6.54–59 wilful/intentional infringement 6.22 written proceedings 6.15 wrongful enforcement 6.83–84 Paris Convention Art 9 1.135 Poland administrative measures 8.38–39 advocates 8.30 appeals 8.82–85 border measures 8.38–39 cassation 8.87–89 civil infringement action 8.35–37

civil law 8.10–14 commercial matters, procedures 8.54–55 competent parties 8.49–51 conclusion 8.125 constitution 8.15–22, 8.15 Table contractual/compulsory licence 8.107 costs 8.114 current system 8.10–27 civil law 8.10–27 transitory provisions 8.24–27 damages 9.98 decision styles 8.56–57 defences 8.101–9 destruction of goods 9.99 doctrine of equivalents 8.91–93 double/trans-border litigation 8.63–67 equivalents doctrine 8.91–93 European patent applications 8.12–14 European unitary patent, debate 8.115–24 evidence preservation 8.68–74 exclusivity exemptions 8.106 exhaustion 8.108 expert opinions 8.81 foreign subjects 8.18, 8.63–67 historical development beginnings 8.1–5 conclusion 8.125 EU membership 8.9 outlook 8.115–24 post-Solidarity revolution 8.8 post-WWI 8.6–7, 8.10 injunctive relief 9.96–97 interim injunctions 8.76–78 international agreements 8.23, 8.109 invalidity defence 8.103 invalidity procedures, before Patent Office 8.40–48 infringement/invalidity, split jurisdiction 8.40–44 procedure 8.47–48 representation 8.46 judges’ caseload 8.79 jurisdiction 8.52–53, 8.58–62 language issues 8.19–22 legal profession 8.28–34 literal infringement 8.90 national jurisdiction 8.52–53, 8.58–62 non-infringement 8.101–2 parties 8.49–51 patent attorneys 8.33–34 procedures 8.54–55 process patents’ protection 8.94 profits’ claim 8.98 publication of decision 8.100 remedies 8.95–100 styles of decisions 8.56–57 time bar 8.104–5 time duration 8.80 trans-border litigation 8.63–67 transitory provisions 8.24–27 translation issues 8.19–22

Index 633 Poland (continued) trial preparation 8.68–78 trial procedures 8.79–89 types of action 8.35–51 types of infringement 8.90–94 warning letters 8.75 wrongful enforcement 8.110–13 procedures see under TRIPS enforcement provisions provisional measures see under TRIPS enforcement provisions Switzerland action for unquantified debt 9.65 attorney costs 9.84–85 breeders’ privilege 9.76 civil procedure system 9.1–3 civil proceedings 9.14 competent court 9.26–35 competent parties 9.20–25 costs 9.81–86 court fees 9.81–83 criminal proceedings 9.17–19 customs actions 9.15–16 damages 9.63–65 declaratory judgment, actions for 9.66–67 defences 9.68–78 defendant 9.23–25 educational use exception 9.75 effects of patent 9.53–54, 9.75–78 equivalent infringement 9.57–58 evidence, taking of 9.49–51 exhaustion of rights 9.71–72 farmers’ privilege 9.78 Federal Patent Court historical background 9.4–6 international jurisdiction 9.29 jurisdiction see jurisdiction organisation 9.7–10 good in transit 9.54 hearing instruction 9.46–48 main 9.52 injunctive relief 9.60–62 instruction hearing 9.46–48 interim measures 9.38–39 intermediate use 9.77 international jurisdiction 9.29–35 Brussels Convention 9.30–31 Federal Patent Court 9.29 Lugarno Convention 9.32–35 interpretation of claims 9.56 invalidity defence 9.19, 9.68–70 jurisdiction exclusive 9.26 foreign patents 9.28 non-exclusive 9.27 laches 9.74 language of proceedings 9.42–43 legal aid 9.86 limitation 9.73 literal infringement/imitation, distinction 9.55 main hearing 9.52

parties 9.20–25 party costs 9.84–85 patent effects of 9.53–54 scope of 9.55–59 patent attorneys 9.12–13 plaintiff 9.20–22 precise description 9.40 preclusion 9.74 preliminary measures ex parte 9.41 summary proceedings for 9.38–40 prior use 9.77 private use exception 9.75 professional representation 9.11–13 protective letters 9.37 remedies 9.60–67 research/experimental purposes exception restitution of infringer’s profits 9.64–65 statute of limitation 9.73 translation requirement 9.59 trial preparation 9.36–41 trial proceedings 9.42–52 types of action 9.14–19 types of infringement 9.53–59 unquantified debt, action for 9.65 warning letters 9.36 written submissions 9.44–45 wrongful enforcement 9.79–80 Taiwan appeals 12.40–47 background/conclusion 12.1, 12.102–3 bifurcation system 12.13–14, 12.23–24 border protection measures 12.15–16 civil dispute issue 12.4 compensatory damages 12.75–76 competent parties 12.25–27 costs 12.100–101 court structures 12.28 Table, 12.29 Table damages compensatory 12.75–76, 12.84–85 further considerations 12.82–83 punitive 12.77–79 statistics 12.80–81 defences 12.86–92 defendant 12.27 defendant actions 12.17–24 direct infringement 12.69 dysfunctional use of system 12.96–99 equivalent infringement 12.70–71 evidence preservation 12.48–50 exclusive licensee 12.26 indirect infringement 12.69 injunctions 12.74 interim relief 12.51–52 international conventions 12.4–5 invalidation procedure 12.18–22 invalidity defence 12.90–92 judges 12.34 jurisdiction

9.75

634 Index Taiwan (continued) domestic 12.28–31 international 12.32–33 legal profession 12.8 literal infringement 12.70–71 non-infringement determination 12.23–24 opposition against granted patent 12.17 ordinary infringement actions 12.13–14 parties 12.25–27 Patent Act, development 12.2–5 patent attorneys 12.9–12 patentee actions 12.13–16 plaintiff 12.25–26 procedures 12.6–7 punitive damages 12.77–79, 12.81 remedies 12.72–73, 12.82–85 request to detain mechanism 12.16 revocation/affirmation rates 12.22 Table technical assessment 12.60–61 technical examination officers 12.35–36 technical experts 12.37–39 trial preparations 12.48–52 proceedings 12.53–55 statistics 12.56–59, 12.62–71 technical assessment 12.60–61 types of action 12.13–14 types of infringement 12.69–71 wrongful enforcement 12.93–99 TRIPS enforcement provisions administrative enforcement 1.3, 1.19, 1.30, 1.127–28 balance of probability 1.49–50 basic provisions 1.1 bifurcation of proceedings 1.27, 1.62 border measures 1.129–36 definitions 1.129–30 importation acts 1.135–36 procedures 1.131–34 civil enforcement 1.3, 1.19, 1.30 evidence discovery 1.37 commercial strategies 1.6 criminal measures 1.3, 1.137–38 damages attorneys’ fees 1.122–23 by country 1.85–121 calculation 1.83–84 other countries 1.121 decisions requirements 1.28 definition of enforcement 1.2 effective action requirements 1.20 European issues, see also European Union EU law instruments 1.77–78 institutions 1.68–75 intra-European issues 1.66 legal framework 1.76–78 national courts 1.71–73, 1.75 personalities 1.67 see also European Union (EU) evidence Directive obligations 1.38

discovery issues 1.31 further interim measures 1.39–46 information right (Auskunftsanspruch) 1.44, 1.124 jurisdiction models 1.32–37 final measures 1.79–1.126 history of 1.15–18 importation, right of 1.135 information right (Auskunftsanspruch) 1.44, 1.124 injunctive relief 1.80–82 interim injunctions balance of probability 1.49–50 basic provisions 1.47 jurisdiction practices 1.51–58 provisional measures 1.48 international law conventions on effects of legal disputes 1.8 obtaining IP rights, comparison 1.9, 1.10 terminology/substance 1.7 uniform rules, advantages/disadvantages 1.11–14 see also TRIPS enforcement provisions judicial review 1.29 main action 1.59–65 invalidity estoppel/counterclaim 1.62–63 limitation proceedings 1.65 outcome statistics 1.61 manner of enforcement 1.4 means of action 1.3 parallel imports 1.132 principles 1.19–30 procedures 1.19, 1.24–27 jurisdiction differences 1.60 provisional measures 1.48 remedies 1.5, 1.125–26 revocation of patent 1.22 right to information (Auskunftsanspruch) 1.44, 1.124 special courts 1.26–27 transit of goods 1.135 uniform rules, advantages/disadvantages 1.11–14 unjust enrichment 1.84 wrongful enforcement 1.21, 1.23 Turkey attorney fees 10.111–13 case statistics 10.27 civil procedure basic features 10.4–7 current code 10.2, 10.3 principles of 10.8–15 competent parties 10.35–41 contributory infringement 10.88–89 court costs 10.111–13 court system 10.42–50 current legislation 10.2, 10.3 customs actions 10.30 customs measures 10.65–67 damages 10.99–102 decisions 10.55–56 defences 10.103–4 defendant 10.41

Index 635 Turkey (continued) direct infringement 10.86–87 equivalent/literal infringement 10.95–96 evidence obtaining/preserving 10.58–60 submission 10.80–83 experts 10.84–85 first instance courts 10.42–50 historical laws 10.1 IIRCs (Civil Courts of Intellectual and Industrial Rights) 10.27, 10.32, 10.44–48 indirect infringement 10.88–89 industrial property rights 10.16–17 infringement actions 10.28–29 interim protection measures 10.58–68 interpretation of claims 10.93–94 inventions, registration/protection 10.19, 10.21 judges 10.52–54 jurisdiction 10.51 legal representation 10.22–25 licensees 10.39–40 literal/equivalent infringement 10.95–96 non-infringement declarations, actions for 10.32–34 parties 10.35–41 patent attorneys 10.23, 10.24 Patent Decree Act (PDA) 1995 10.2, 10.18–21 patent rights 10.18–21 period of protection 10.20 plaintiff basic principles 10.35 co-ownership of patents 10.38 licensees 10.39–40 patent owner 10.36–37 preliminary injunctions 10.61–64 process patents, infringement/ presumptions 10.90–92 registration statistics 10.17n remedies 10.97–98 representation 10.22–25 revocation request as counterclaim 10.105 TPI (Turkish Patent Institute) decisions 10.19–20, 10.31 trial preparation 10.57 trial proceedings 10.69–83 basic provisions 10.69–71 duration 10.79 evidence see evidence above experts 10.84–85 inquiry phase 10.76–77 main action procedures 10.72–79 oral proceedings/judgment 10.78 petition exchanges 10.72–73 preliminary examination 10.74–75 types of action 10.26–34 types of infringement 10.86–96 wrongful enforcement 10.106–10 uniform rules, advantages/disadvantages see under TRIPS enforcement provisions United Kingdom (UK)

accusatorial/inquisitorial systems, movement between 3.5–7 actions parties 3.16–17 types 3.12–13 unwarranted/groundless threats 3.15, 3.92 admissions 3.55 Anton Piller orders 1.35, 1.124, 3.42 background/conclusion 3.1–3, 3.95 blocking injunctions 3.47 case management conference (CMC) 3.56–57 central limitation actions 3.13 certificate of contested validity 3.80 claim interpretation 3.70 costs 3.93–94 course of action 3.50–67 Court of Appeal 3.24–25 courts/jurisdictions 3.18–27 cross-undertakings 3.36–37 damages account of profits 1.111 cases’ rareness 1.113 infringer’s profits 1.107 punitive damages 1.112 reasonable royalty 1.110 reasonably forseeable loss 1.108–9 split trials 1.105–6 statute basis 1.104 defences 3.83–89 delivery to claimant 3.79 denial of infringement 3.83 direct/indirect infringements 3.68 directions, application for 3.56–57 disclosure of documents 3.58–60 discovery of names 3.38–39 English patent courts 3.19, 3.20–25 EPO proceedings, stays pending discretion 3.87 generality of assertions 3.89 key issues 3.85 other factors 3.88 principles to be employed 3.86 EU unified system 3.3 evidence discovery/preservation 1.35 other provisions 3.65–67 experiments 3.62 expert evidence 3.62–64 extent of infringement 3.70 history/tradition 3.4–7 injunctions discretionary remedy 3.73 modified injunction 3.74 permanence 3.72 inquisitorial/accusatorial systems, movement between 3.5–7 Intellectual Property Enterprise Court (IPEC) 3.21 Intellectual Property Office (UKIPO) 3.23 opinions 3.28–31 interim injunctions 1.53, 3.32–37

636 Index United Kingdom (UK) (continued) advantages 3.32 cross-undertakings 3.36–37 pre-action procedures 3.28–49 principles 3.33–35 invalidity of patent, defence claim 3.83 judges 3.9–10, 3.95 case management conference (CMC); directions 3.56–57 directions, application for 3.56–57 jurisdictions (three) 3.18–19 lawyers’ professional barriers, removal 3.8–9 licences, actual/implied, defence claim 3.84 limitation actions 3.13 location of effect 3.69 Mareva injunctions 1.39 monetary remedies basis of calculation 3.77–78 disclosure of infringing trade 3.76 inquiry as to damages/account of profit 3.75 Northern Ireland courts 3.18–19 parties 3.16–17 patent attorneys 3.8–10 Patents County Court (PCC) 3.21–22 Patents Court 3.20–22 pre-action procedures 3.28–49 see also interim injunctions above preliminary measures 1.39 preservation of assets 3.40–41 of evidence 1.35, 3.42–46 publicity order 3.81 remedies basic types 3.71 certificate of contested validity 3.80 delivery to claimant 3.79 injunctions see injunctions above monetary see monetary remedies above publicity order 3.81 summary judgment 3.82 revocation actions 3.12, 3.14 scientific advisors 3.11 Scots courts 3.18–19 search orders 3.42–46 statements/particulars of case, claimant/ defendant 3.51–54 summary judgment 3.82 Supreme Court 3.18, 3.25 three jurisdictions 3.18–19 transnational jurisdiction 3.26–27 types of infringement 3.68–70 unwarranted/groundless threats 3.15, 3.92 witnesses 3.61 wrongful enforcement 3.90–92 United States (US) abstract idea challenge 16.164 administrative law judge (ALJ) 20.109, 20.117, 20.120 appeals 16.13–15, 16.165–71 border measures administrative law judge (ALJ) 20.109, 20.117, 20.120, 20.130, 20.132

appeals 20.135 cease and desist orders 20.125–26 clearing-the-way requests 20.138 Commission review 20.130–31, 20.132 costs, EU/Japan differences 20.143 court proceedings 20.112 Customs Service (US), border protection procedures 20.139–41 damages 20.113 defences 20.119 discovery 20.118 EU/Japanese differences 20.142 evidentiary hearing 2.120 exclusion orders 20.122–24, 20.126 fair trade aims 20.108 filing infringement action 20.105 general exclusion order (GEO) 20.111, 20.123–24 initial determination 20.121 International Trade Commission (US ITC) 20.105, 20.106–7, 20.109, 20.110, 20.132 intervention 20.116 investigation procedures/proceedings 20.117–21, 20.137 investigative attorney (IA) 20.110 limited exclusion order (LEO) 20.111, 20.122 monetary damages 20.128 overview 20.104–14 parallel court actions 20.136 ‘port shop’ procedures 20.141 pre-institution investigation 20.115 Presidential review 20.133 protection procedures, Customs Service (US) 20.139–41 recording trade marks/copyrights 20.104 remedies 20.122–28 scheduling order 20.117 section 337 actions/proceedings 20.105, 20.106, 20.109, 20.112 timetable 20.135 Fig. settlement 20.134 statistics 2.114 temporary relief 20.129, 20.130–31, 20.132 timetable 20.135 Fig. civil procedure system 16.6–17 claim construction proceedings 16.98–105 procedures for 16.104–5 rules for 16.99–103 commencement of action 16.40 competent parties 16.45–75 complaints 16.71–72 responses 16.73–75 contributory infringement 16.54–55, 16.60 costs 16.172–81 courts competent courts 16.41–44 system 16.7–10 Courts of Appeals for the Federal Circuit 16.13–15, 16.165–71 damages 1.85–90, 16.151–57 basic provisions 1.85

Index 637 United States (US) (continued) limits to awards 1.90 lost profits 1.86, 16.152 lost sales of products 1.87 proper marking of product 1.89 reasonable royalty 1.88, 16.151, 16.154–55 declaratory judgment plaintiffs 16.65–69 defences 16.158–64 defendants in suits to enforce patents 16.53–64 factors in choice of 16.56–59 direct infringement 16.127–39 discovery phase 16.76–96 categories of persons/information 16.78 deposition process 16.91–92 digital media 16.88 expert witnesses 16.93 interrogatories 16.89–90 matters discoverable 16.77–79 methods of discovery 16.86–96 privileges/immunities 16.80–85 procedure variation 16.94–96 doctrine of equivalents 16.130–36 duty of candour 16.4–5 equivalents’ doctrine 16.130–36 evidence discovery 1.32 exceptional/meritless cases, costs 16.177–81 expenses 16.172–81 fraud defence 16.74, 16.163 immunities 16.80–85 indirect infringement 16.140–43 inequitable conduct defence 16.74, 16.163 injunctive relief 1.80–82, 16.147–50 inter partes review 16.26–30 interim injunctions 1.52 invalidity defence 16.159–61 risks 16.37–17.38 ITC (International Trade Commission) 16.11, 16.33–34 joining parties 16.47–48 jury use/selection 16.112–15, 16.117–19, 16.126 legal profession 16.17

licensees 16.49–50 literal infringement 16.128–29 litigation expenses 16.172–81 meritless cases, costs 16.177–81 multiple competitors 16.62–64 non-practising entities 16.51–52 obviousness invalidity 16.109 ordinary infringement proceedings 16.32 parties 16.45–75 patent rights 16.1–3 plaintiffs, declaratory judgment 16.65–69 plaintiffs in suits to enforce patents 16.46–52 pleadings 16.70–75 post grant/inter partes review 16.26–30 preliminary injunctions 16.97 primary defences 16.158–64 prior art defence 16.160 privileges/immunities 16.80–85 PTAB (Patent Trial and Appeals Board) 16.12 PTO (Patent and trademark Office) 16.2, 16.17 procedures 16.18–31 re-examination proceedings 16.22–25 reissue proceedings 16.20–21 remedies 16.147–57 strategic considerations 16.35–39 summary judgments 16.106–10 supplemental examination 16.31 Supreme Court 16.16 trials basic issues 16.111 expert witnesses 11.125, 16.123 jury use/selection 16.112–15, 16.117–19, 16.126 procedure 16.116–26 types of action 16.18–34 types of infringement 16.127–46 wilful infringement 16.144–46 wrongful enforcement 16.182 World Trade Organisation (WTO), see also TRIPS Dispute Resolution 1.1 Freedom of Transit 1.135 Panel Report on Border Measures 1.134