Tuesday, 14 October 2014

Patents County Court survey: the results

Readers of this weblog may recall the publication of a request for assistance with regard to research undertaken by Kingsley Egbuonu into the Patents County Court for England and Wales. The fruits of Kingsley's research are summarised below, together with a link to his survey results. As Kingsley explains:
In 2010 Lord Justice Jackson published his final report (“The Jackson Review”) which made recommendations for, among other things, the reform of the Patents County Court for England and Wales (“PCC”). One of the recommendations relevant to the PCC was the implementation of the proposals in the Intellectual Property Court Users’ Committee (“IPCUC”) Working Group’s final report. Overall, the main objective of the reform package was to widen access to justice for small and medium-sized enterprises (“SMEs”) and private individuals in intellectual property (“IP”) disputes.

Following various changes to its rules of procedure, the PCC began operating under a new regime on 1 October 2010. The PCC witnessed further changes until 1 October 2013 when it was replaced by the Intellectual Property Enterprise Court (“IPEC”). However, in the year of its abolition, it was possible to find reasonable information which can be used to explain how the PCC’s new regime works in practice (on which see Angela Fox’s book on the IPEC) and/or to assess the extent to which the policy objectives of the reform have been achieved. My research, which was conducted between April 2013 and September 2013, attempted to do both.

The research primarily relied on a body of case law developed under His Honour Judge Birss QC (as he then was) and published by BAILII, legislation, statistics from the Ministry of Justice, existing literature, and empirical evidence from IP practitioners. The empirical evidence was obtained through an online survey which recorded 30 responses. The survey questions were framed based on the Jackson Review recommendations and issues raised in various Consultations relating to it (e.g. see the concerns raised IPCUC Working Group’s final report).

The survey results can be viewed or downloaded here.

The summary of my findings, as of 30 September 2013, are as follows:

  1. Differentiation: Since 1 October 2010, there has been a clear distinction, in practice and procedures, between the PCC (continued by the IPEC) and the Patents Court or Chancery Division of the High Court. This helps the parties, typically claimants, make an informed decision about forum.
  1. Costs capping and financial remedies limit:
    • Generally, both measures were applied consistently, even in peculiar circumstances, in order to reassure prospective litigants. Sample of cases analysed found that average costs award was under £34,000 for liability trial and under £250,000 for damages.
    • The costs capping regime has not deterred parties from incurring own costs above the relevant caps (e.g. see Lumos Skincare Ltd. v Sweet Squared Ltd & Others [2012] EWPCC 28 and Henderson v All Around the World Recordings Ltd & Another [2013] EWPCC 19).
  1. PCC caseload:
    • The statistics on the number of cases issued in the PCC are inconsistent. Nonetheless, it is generally clear that more cases have been issued post-October 2010 than ever before. This view may be supported with the rise in the number of PCC judgments published on BAILII.
    • Further, the uptake of the small claims track was also encouraging: 16 cases were issued in 2012 and 28 as of July 2013. Lastly, the PCC entertained a variety of claims. Overall, the popularity of the PCC post-October 2010 is a clear evidence of success.
  1. Profile of parties:
    • A considerable number of cases involved SMEs and private individuals. Around 63 judgments published by BAILII (between November 2010 and 11 September 2013) involved an SME or private individual as a party. Arguably, this may well be the evidence to support the rationale behind the PCC reform.
    • On the other hand, my research did not find substantial evidence to demonstrate that larger enterprises were abusing or disproportionately using the PCC; equally, there was no evidence to suggest that there was a flurry of litigation against large enterprises by SMEs as a result of the reforms.
    • The PCC served private individuals and SMEs (represented or otherwise) and large enterprises equally.
  1. Length of trial: Cases were generally listed and tried within two days; only a handful lasted longer. There was also an improvement in the length of time cases take to come to trial.
  1. Transfers:
    • My research did not find any evidence to demonstrate that there was a disproportionate number of litigation on transfers between the PCC and the High Court.
    • Statistics revealed that just one case was transferred from the PCC to the High Court, whereas well over 10 were transferred to the PCC from other courts. The overwhelming majority of the PCC’s case load originated and remained there.
Verdict
Despite the little literature on the subject and difficulty in obtaining reliable statistics -- particularly on the number of cases and the profile of the parties involved -- my research concluded that the reforms generally succeeded. Active judicial case management and consistent application of the rules and case law were crucial to the success of the PCC.

The UK Intellectual Property Office, which should have better access to reliable data, is expected to publish its evaluation report on the PCC reforms this year. 

Monday, 13 October 2014

The UPC Agreement: is it compatible with the German constitution?

PatLit has received news of a new article by Ingve Stjerna (Rechtsanwalt and Certified Specialist for Intellectual Property Law, Düsseldorf), which has very recently gone “live”. This piece, “Unitary patent“ and court system – Compatible with Constitutional Law?", can be read in English here and in German here. Explains Ingve:
"The paper mainly addresses the question of whether a ratification of the UPC Agreement would be compatible with the German constitution and describes the special procedural redress in place under German law in relation to the ratification of an international Agreement (in principle, each [natural or legal] person affected can take recourse to the Federal Constitutional Court and request an assessment of its compatibility with fundamental rights).

I am also offering a theory what may be the reason for the recent delay of the Advocate General’s Statement of Position in CJEU proceedings C-146/13 and C-147/13".
PatLit thanks Ingve for his continuing contributions to the discussion of the UPC and for his willingness to investigate issues that many people seem comfortable to ignore.

Friday, 10 October 2014

686 Requests are Enough - T 0280/11

The following headnote (in a free translation from German) of the decision T 0280/11 reminds us that we should not mess with the Technical Board of Appeal after 16.45h:
The patentee, who had presented a very high number of requests (one main request and 681 auxiliary requests, of which 454 had been filed only three days prior to the oral proceedings), and further requests (four) in the course of the oral proceedings, has to be prepared that a substantial part of the available time on the day of the oral proceedings is required for managing the (total of 686) requests. After having discussed these requests in the oral proceedings and after having rejected them or after not having admitted them into the procedure (new requests 682 to 685), the patentee cannot reasonably expect that the oral proceedings be interrupted again on the late afternoon of the day of the oral proceedings to allow for the elaboration and presentation of further requests (cf. Nr. 5.5 of the reasons).

Thursday, 9 October 2014

Test the Prototype Case Management System of the UPC!

The UPC preparatory committee has now made the prototype e-filing / case management system available to test here. Curious readers are invited to test how it will feel to file an infringement claim.

The committee explains:
The prototype e-filing / case management system is now available to test. If you would like to test it and provide feedback please visit http://prototype.unified-patent-court.org/

Testers can supply feedback using the 'BugHerd' feedback application using the button at the bottom right-hand of the screen (this allows you to click on and highlight certain parts of the prototype, such as fields in forms, and write notes about them).

Purpose of the prototype

The prototype is being configured using an off-the-shelf product, based on UPC draft Rules of Procedure 13-28, allowing testers to file an infringement claim. Feedback from testers is being used over October and November 2014 to help us continue configuration in an iterative way and to then evaluate lessons to inform the procurement process.

The purpose of the prototype is to test the viability of a cloud-based, off-the-shelf, configured system for the UPC, where data is stored by a supplier and can be accessed securely from any location.

We are also learning lessons about user-friendliness, and how to ensure the system might support the UPC Rules of Procedure.

Further information on the prototype and what we hope it will achieve can be found on the prototype site.

Next steps

We will use lessons from the prototype to inform the tender for the UPC e-Filing and case management solution. We plan a full, open procurement process, with publication of the procurement notice in the Official Journal of the European Union in November 2014 and contract award in summer 2015.

Wednesday, 8 October 2014

Biogen v Medeva: down the tube ...

PatLit has just received the following news flash from his friends at Rouse about a very special event, scheduled for Thursday 16 October:
"As you may have heard, the RMT union has called a tube strike for 48 hours next week. Unfortunately this coincides with the Biogen v Medeva seminar [on which see the earlier PatLit post here] which was due to take place next Thursday. We’re concerned that this will cause significant difficulties for some getting to and from the venue and have reluctantly taken the decision to postpone the event, to avoid any further uncertainty. We’ll be in touch with a new date shortly".
This blogger is greatly saddened by public sector industrial action of this nature, since the people who suffer are not the employers but, rather, the public at large who are inconvenienced by it.  Having suffered the inconveniences of disruption to travel on the London Underground system for most of his life, he takes comfort in the fact that, from time to time, union officers need the services of a lawyer ...

Monday, 6 October 2014

"Invalid but Infringed?" A paper

"Invalid but Infringed? An Analysis of Germany’s Bifurcated Patent Litigation System", by Katrin Cremers, Fabian Gaessler, Dietmar Harhoff and Christian Helmers (a.k.a. Discussion Paper No. 14-072) is a must-read for anyone who wants to see the results of careful, painstaking research into the effects of handling infringement and validity in different courts within the same jurisdiction.  The authors' conclusions are as follows:
Overall, our results suggest that the German bifurcated patent system favors strongly the patent holder in litigation [It's good to know that the patent holder's investment and efforts are being protected ...]. We show that the bifurcated system creates a substantial number of cases where an invalid patent is held infringed [... but not if it's at the expense of innocent parties whose sole vice is to trespass on non-existent property]. We also provide evidence that fewer patents are challenged than what we would expect based on the consideration of litigation systems where infringement and validity are dealt with jointly. This means that the number of ‘invalid but infringed’ cases is presumably biased downwards due to self-selection [Indeed, a challenge to validity isn't made simply because a patent happens to be invalid but because it stands in the way of the would-be defendant's business plans. If the patent is enforced and invalidity is still some way off, a prudent business decision may involve changing one's business plan]. Our results also indicate that the possibility of facing an injunction for infringing an invalid patent creates legal uncertainty [This is true even in non-bifurcated systems with regard to interim injunctive relief]. We find evidence for such legal uncertainty by looking at changes in firms’ opposition behavior following directly a divergent decision. We find that alleged infringers that were subject to a divergent decision file more oppositions immediately following the court case.

Our results provide empirical support for the criticism that has been directed at bifurcation (Hilty and Lamping, 2011; Münster-Horstkotte, 2012) [This shows that the pro- and anti- debate takes place even in Germany, a significant point for those non-Germans who assume that all Germans are monolithically pro-bifurcation]. Given the probabilistic nature of patents, the strong presumption of validity that is at the core of Germany’s bifurcated enforcement system favors the patentee and creates uncertainty for potential infringers. That said, the problems revealed by our analysis should be compared to possible benefits of bifurcation – in particular, the impact of technically trained judges at the BPatG on validity decisions and the lower costs of litigation due to less need for technical expert witnesses [Though it should be possible to design a non-bifurcated system that makes more use of technically qualified judges and less use of technical expert witnesses, as is mentioned below]. Indeed, the costs of litigation in Germany are remarkably low compared to for example the UK [where this blogger likes to believe that costs have dropped substantially in the wake of better case management and the growth of litigation in the Patents County Court/Intellectual Property Enterprise Court], but technically trained judges could also be incorporated in a court system in which validity and infringement are decided jointly, as is the case in Switzerland (Ann, 2011). It is also possible that reforms that increased case loads at the BPatG and its appeal court, BGH, aggravated the problems during our period of analysis. Regardless, our results suggest that the current system is in danger of overly favoring patent holders. 
One way of addressing the problems highlighted by our analysis could be an acceleration of proceedings at the BPatG, thereby either avoiding the injunction gap altogether or trimming its length. This could allow attaining the benefits of bifurcation while avoiding the uncertainty created by ‘invalid but infringed’ decisions [this would be good]. Alternatively bifurcation could be abandoned altogether. While such a drastic step may look appealing to some observers, its impact would be uncertain. It might for example encourage forum shopping. If courts depend on the number of cases they hear for fee income, prestige, etc. patent holders might find themselves again at an advantage [This blogger feels that judges should be reminded that they should have no interest in fee income and prestige. They are only public servants and in doing their job properly tbey should put all extraneous matters like this aside]. In any case, we do not present a counterfactual analysis that would allow us to evaluate such a drastic step. Our analysis still suggests that bifurcation has considerable drawbacks, at least the way it is currently implemented in the German enforcement system.

Friday, 3 October 2014

Federal Circuit Gets Tougher on Patent Damages:
VirnetX v. Cisco Systems

The topic of damages in patent infringment actions reemerged recently, as the U.S. Court of Appeals for the Federal Circuit continued to restrict acceptable reasonable royalty analyses. This time, in VirnetX, Inc. v. Cisco Systems, Inc., No. 2013-1489 (Fed. Cir. Sept. 16, 2014) [Opinion], the court held that apportionment is required in virtually every case in which the patentee cannot establish that the patented invention is the basis for demand of the accused product. Apportionment, which has its root is 19th century patent caselaw, requires the patentee to apportion value between patented and unpatented features in an accused product. This may well be one of the most important patent cases of the last few years, and will have an immediate impact on how litigants prove damages, particularly in cases involving technologies embodied in components used in complex products. I have just co-authored a more detailed look at the case and its likely impact, "The Federal Circuit’s VirnetX Ruling Continues Its Focus On Requirements For Proving Patent Damages," which you can download HERE