Friday, 9 October 2015

No stay of liability issue, but prospect of some sort of stay of relief remains

Fontem Holdings 1BV and another v Ten Motives Ltd and another; Nicocigs Ltd v Fontem Holdings 1BV and another [2015] EWHC 2752 (Pat), is 2 October 2015 ruling by Mr Justice Norris, in the Patents Court, England and Wales.

In short, this was an application by the defendant -- the alleged infringer -- for summary judgment on infringement of a patent for an e-cigarette, or in the alternative an application to stay the action pending the outcome of European Patent Office (EPO) opposition proceedings. In a pretty short judgment for a patent case (just 46 paragraphs in length) Norris J summarised the law, considered the issue of infringement and briefly set out the particular circumstances of the new and rapidly-growing market for e-cigarettes.

Given the nature and speed of change in the marketplace, he said, there was a clear need for a much earlier determination of the validity and infringement issues in the national litigation than the earliest possible date for completion of the EPO's opposition proceedings. If however infringement were proven at trial, there remained the possibility of some sort of stay when it came to sorting out the appropriate relief.

Monday, 5 October 2015

T2201/10 Do not Destroy the Foundations of your Argument

The decision T 2201/10 deals with the proper application of the problem-and-solution approach.

Our readers will know that inventiveness can usually be disproven (some say that the "unless" in Art. 56 EPC means that there is a legal presumption of inventiveness) but not proven.  The defender of a patent or application has to rely on secondary indicia and is otherwise limited to criticise the arguments of his challenger.

This decision in very precious in that it establishes a positive test for inventive step and does this in a very clear and definitive way.

A rough translation of the an excerpt of item 5.1.3 if the decision from the French is as follows (emphasis added):

The problem-solution approach ... further leads to the rejection of any analysis according to which the person skilled in the art would have modified the closest prior art in a way which would be in conflict with its reason of existence unless its very quality as "closest prior art" originally accepted for that document would be negated.

In other words, the finding that the invention as claimed departs from the disclosure of a document of the prior art in what are - in view of the objectives at which that prior art aims - the foundations of the latter, is as such sufficient to conclude that an inventive step of the invention vis-à-vis this prior art exists.

In the case at issue, if D1 is kept as the closest prior art, the skilled person would have excluded every modification going against the aim of the assembly which is described therein, i.e. every modification which would result in a reductions of exchange within the refrigerating fluid.

Thursday, 1 October 2015

Breaking News: Protocol to the UPC Agreement In Force

The News of the day comes from the UPC preparatory committee:
Today, October 1st 2015, a protocol to the UPC Agreement has been signed by representatives of member states in the margins on the Competitiveness Council meeting. This protocol will allow some parts of the UPC Agreement to be applied early. This includes final decisions on the practical set up of the Court, for example, the recruitment of judges and testing of IT systems. The provisional application phase will also be used to allow for early registration of opt-out demands.

This is the latest step towards bringing the Unified Patent Court into operation. In practice there is no immediate impact on business, however, the Preparatory Committee aims to complete its work by June 2016 with a view to the UPC opening at the start of 2017.

A copy of the protocol is available.

Federal Circuit Holds That Laches is Defense To Equitable Relief and Pre-Filing Damages In Patent Infringement Actions

In a recent en banc decision, the U.S. Court of Appeals for the Federal Circuit ruled that laches resulting from a delay in filing suit for patent infringement is a statutory defense, and may bar a patentee from obtaining injunctive relief or an award of pre-suit damages. SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, Case No. 2013-1564 (Fed. Cir. Sept. 18, 2015). The court distinguished the Supreme Court’s 2014 Petrella decision, which held that laches is not available as a defense under the Copyright Act. See Petrella v. MetroGoldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014). In addition, the Federal Circuit ruled that although a laches defense may preclude injunctive relief or an award for pre-suit damages, it only will bar a patentee’s right to continuing royalties for post-trial infringement in “extraordinary circumstances.”  A copy of the decision is HERE.

Petrella Calls Into Question Federal Circuit’s Previous Laches Rulings

The Federal Circuit has long recognized laches as a defense when an unexcused delay occurs between the time a patentee/plaintiff knows (or should know) of an infringement and the filing of an infringement action. See A.C. Aukerman Co. v. R.L. Chaides Construction Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc). The Aukerman court established that:

Two elements underlie the defense of laches: (a) the patentee’s delay in bringing suit was unreasonable and inexcusable, and (b) the alleged infringer suffered material prejudice attributable to the delay. The district court should consider these factors and all of the evidence and other circumstances to determine whether equity should intercede to bar prefiling damages.

Slip op. at 10-11. In addition, the appeals court ruled that “[a] presumption of laches arises where a patentee delays bringing suit for more than six years after the date the patentee knew or should have known of the alleged infringer’s activity.” Id.

In Petrella, the Supreme Court ruled that laches is not available as an equitable defense to a statutory cause of action for copyright infringement when the federal statute itself provides a statute of limitations. Petrella was a copyright case involving the 1980 film Raging Bull, but the Court noted that its decision might affect the Federal Circuit’s application of laches in patent infringement cases, although it had no “occasion to review the Federal Circuit’s position” in its decision. 134 S. Ct. at 1974 n.15.

Federal Circuit Holds That Laches Is A Statutory Defense Under Patent Act

The Federal Circuit ordered rehearing en banc in SCA Hygiene to consider the impact of Petrella on the laches defense in patent cases. The Federal Circuit distinguished Petrella and held that the laches defense is available under the Patent Act even though 35 U.S.C. § 286 provides a temporal limitation on the availability of damages for patent infringement, concluding that “[i]n the 1952 Patent Act, Congress settled that laches and a time limitation on the recovery of damages can coexist in patent law.” Slip op. at 5.

Chief Judge Sharon Prost wrote the majority opinion, which the entire court joined on the question whether laches is a defense to patent infringement. The court noted that, unlike the Copyright Act, the current Patent Act incorporates laches as a statutory defense. Although 35 USC § 282 does not explicitly refer to laches, it states that defenses to patent infringement claims “include noninfringement, absence of liability for infringement or unenforceability.” 35 U.S.C. § 282(b)(1) The court observed that it long had recognized that laches was codified in this provision. Moreover, the court relied on a detailed commentary on the Patent Act written by Pasquale J. Federico, the USPTO’s unofficial “historian” and principal author of the legislation that became the 1952 Patent Act. P.J. Federico, Commentary on the New Patent Act, reprinted in 75 J. Pat. & Trademark Off. Soc'y 161 (1993). The court noted that it and other courts have cited Federico’s commentary as “an invaluable insight into the intentions of the drafters of the Act.” Symbol Techs., Inc. v. Lemelson Med., 277 F.3d 1361 (Fed. Cir. 2002). According to Federico’s commentary, Congress intended § 282(b)(1) to “include the defenses such as that the patented invention has not been made, used or sold by the defendant; license; and equitable defenses such as laches, estoppel and unclean hands.”

Because the Federal Circuit found that the Patent Act includes laches as a statutory defense, the Supreme Court’s rationale for excluding laches as a defense under the Copyright Act is not applicable to patent infringement actions. In fact, the Petrella Court recognized that Congress could provide a statutory basis for laches, as it did in the Lanham Act. See 134 S. Ct. at 1974 n.15. Furthermore, the Federal Circuit observed that § 286 is a “damages limitation,” not a statute of limitations, stating that, “By its terms, § 286 is a damages limitation. The statute does not preclude bringing a claim—instead, it limits a patentee’s damages recovery to compensation for only the last six years of infringement.” Slip op. at 17. It ruled, however, that the distinction is irrelevant to the question whether the laches defense is available.

Laches Affects Injunctions And Bars Pre-Filing Damages

The Federal Circuit next evaluated the effect of laches on the remedies available in an infringement action. First, the judges unanimously agreed that laches continues to be a factor in a court’s decision to award injunctive relief. The Federal Circuit  noted that the circumstances giving rise to laches are considerations that “[f]all under the balance of the hardships factor” that a court must consider in considering requests for injunctive relief under eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006).

In addition, the majority (six of eleven judges) observed that pre-1952 cases consistently applied laches to bar recovery for monetary damages. See, e.g., Banker v. Ford Motor Co., 69 F.2d 665 (3d Cir. 1934). The court presumed that in enacting the Patent Act, Congress was aware of pre-1952 cases applying laches as a defense to legal claims. Thus by enacting § 282 without commenting on the common law rule, the statute “codified whatever laches doctrine existed” at the time, including the bar to pre-filing damages. Slip op. at 32. Five circuit judges dissented from the court’s ruling that laches is available as a defense for damage claims under the Patent Act. They argued that the question should be governed by the Supreme Court’s general interpretation of laches as a defense, and that the Federal Circuit should not adopt “special rules” for patent cases.

Finally, although the Federal Circuit ruled that Petrella did not require the abrogation of laches as a defense, it did require an adjustment of the defense’s impact on continuing damages. Laches may be a bar to recovering damages arising during a period of unexcused delay, but it is not a forfeiture of rights to the patent itself. This result is one important difference between laches and estoppel. See Menendez v. Holt, 128 U.S. 514 (1888) (“Delay in bringing suit there was, and such delay as to preclude recovery of damages for prior infringement; but there was neither conduct nor negligence which could be held to destroy the right to prevention of further injury.”). As a result, the Federal Circuit held that a “patentee guilty of laches typically does not surrender its right to an ongoing royalty.” Slip op. at 40-41.

This may not be the last word on the issue. The Supreme Court may be asked to review SCA Hygiene and decide whether the Federal Circuit was correct to keep the laches defense as part of patent law.

Saturday, 26 September 2015

Training for UPC technical judges - Antitrust Law

On the last day of the first block of the CEIPI Training Program for Future Technical Judges of the UPC, Nicolas Petit (Univ. Liège) gave a very dynamic and lively talk about the interface between competition law and IP rights. He expects that the UPC will have to establish case-law on antitrust-based defences in patent litigation (FRAND, Standard essential patents ...) as explicitly laid down in Art. 32(1) UPCA.

Prof. Petit
The question whether or not, in case of dubious settlements between the parties, the court will have a duty to raise a motion on breach of competition, was answered by analogy to what is considered to be applicable to mediation procedures: Such a duty exists only where the breach is very glaring and manifest.

He further emphasizes that a source of misunderstanding between lawers and scholars on both fields lies in the different use of the word "monopoly" in IP and antitrust law. While patents are permanently qualified as "monopolies" by IP lawyers, this is not true based on the understanding of this expression in the world of antitrust law. Actually, the patent alone does not confer the sufficient market power to the patentee because there may be lots of competing technologies around. "The patent grants an exclusive right to use a technology but typically does not exclude third parties market" (roughly Quoted from Hovenkamp).

The case law of the FRAND defence is put in analogy to the "essential facilities" case law in the field of antitrust law because the CJEU qualifies intellectual property merely as yet another kind of "raw material" to be processed in secondary markets. Requirement of the admissibility of such a defence would be that the parties are competing in at least a secondary market, which is not the case for Non-Practicing Entities in dispute with potential licensees of their patents. In other words, the FRAND defence will never be applicable to "trolls".

CEUJ Judgement July 2015 (Huawei / CTE C‑170/13) develops a sort of "good faith" test for the behavoir of both the holder of the standard essential patent (SEP) and the implementer who have to respect "certain conditions" in the course of negotiations and when bringing an action to the court.  These new conditions will replace the BGH Orange Book Standard in the future case-law and will be discussed in a separate post.

Friday, 25 September 2015

CEIPI Training Program for Future Technical Judges of the UPC

CEIPI Training Program for Future Technical Judges of the UPC is currently taking place in Strasbourg with an completely incredible lineup of speakers including the Who-is-Who of the UPC experts.

This blogger is most impressed about the enthusiasm of the speakers and the audience.

The first session on thursday started with welcoming words of Yves Lapierre (INPI), Max Brunner (French Ministry of Justice) and Cristophe Geiger (Ceipi) to continue with a resume of the long history of the UPC by Margot Fröhlinger (EPI) sharing some tiny bits of her knowledge on what happened behind the scenes in the course of the negotiations. Patlit hopes that she will someday publish an autobiography with even more of that ...

Alain Giradet and Sir Robin Jacob then shared their thoughts on Judicial Ethics and Independence (and on a lot of other issues of course) and gave most interesting insights on what it means to be a judge.

A brief summary of the second and third session will follow.

Splitting trial between IPO and court "unsatisfactory and wasteful"

Angle Ring Ltd v ASD Westok Ltd is an extempore ruling of Judge Richard Hacon, sitting earlier this week in the Intellectual Property Enterprise Court (IPEC), England and Wales. The decision is briefly noted on the Lawtel subscriber-only service.

This was an dispute involving the ownership and validity of three patents in which the defendant Westok applied for summary judgment in respect of Angle's patent ownership claim.  Angle, the first claimant, asserted that Westok had never been the true inventors of the patents and had at all times known, or had reasonable grounds to know, that the second claimant was the true inventor. Although the IPEC would be able to deal with lack of inventive step or novelty at trial, the claimants failed to make a pro forma application to the UK Intellectual Property Office (the IPO, which has the initial jurisdiction to deal with claims relating to ownership of patents and patent applications) to have the matter transferred to the IPEC, leaving an issue as to whether the court had jurisdiction to deal with entitlement.

Westok submitted that there were no reasonable grounds for it to have known that the second claimant was the true inventor, and that the court should determine that there was no real prospect of concluding that it must have known that it was not entitled to the patents.

Richard Hacon refused the application. In his view:

* The allegation that Westok had had reasonable grounds for knowing that the second claimant was the true inventor was irrelevant. It was fair to infer from the pleading that the claimants had alleged that Westok had known that it was not entitled to the patents, and the court would have to determine whether Westok knew that it was not so entitled.

* It was not appropriate to go through the evidence in a mini-trial of whether the claimants' case was unarguable; it had been pleaded sufficiently and should go to trial.

* The claimants would find it difficult to adduce further evidence if it turned out that the existing evidence did not support its case that Westok had had the relevant knowledge, and Westok would therefore succeed at trial on that point.

* The court ought to exercise its inherent jurisdiction in order to deal with entitlement at trial. It was artificial to distinguish the matter of lack of inventive step or novelty and leave entitlement to the IPO. That would be unsatisfactory and wasteful.

Friday, 18 September 2015

Intellectual Property Prevails over Banking Secrecy

The ECJ decision C-580/13 (Coty Germany GmbH/Sparkasse Magdeburg) of July 16 relates to the interesting question to what extend banking secrecy can prevail over intellectual property rights.

As reported here, the Ist Senate of the BGH (responsible for trademark matters) has referred an interesting question to the ECJ:
Is Art. 8 par. 3 Lit. e of the directive 2004/48/EG to be interpreted such that this provision is in conflict with a national regulation enabling a banking institute in a case as the one as issue to deny access information on the name and address of the owner of an account according Art. 8 par. 1 lit. c of this directive with reference to the banking secrecy?
(referring decision: "Davidoff Hot Water" (I ZR 51/12),

In the case at issue, counterfeit products were sold via e-bay and the payments were received on an account kept by a bank which was sued by the trademark owner to provide information on the account holder, which the bank refused.

The ECJ asserts that (par. 33, emphasis added):

The present request for a preliminary ruling thus raises the question of the need to reconcile the requirements of the protection of different fundamental rights, namely the right to an effective remedy and the right to intellectual property, on the one hand, and the right to protection of personal data, on the other (see, to that effect, judgment in Promusicae, C‑275/06, EU:C:2008:54, paragraph 65).
And finds that (par. 39 and 40)

... unlimited and unconditional authorisation to invoke banking secrecy is such as to prevent the procedures laid down by Directive 2004/48 and the measures taken by the competent national authorities, in particular when they seek to order the disclosure of necessary information under Article 8(1) of that directive, from taking due account of the specific characteristics of each intellectual property right and, where appropriate, the intentional or unintentional character of the infringement. 

 It follows that an authorisation of that kind is capable of seriously impairing, in the context of Article 8 of Directive 2004/48, the effective exercise of the fundamental right to intellectual property — to the benefit of the right of persons covered by Article 8(1) of Directive 2004/48 to the protection of personal data concerning them — as a result of the obligation, for a banking institution, to respect banking secrecy. 

The task to find "any other means or remedies" (par. 42) or to establish criteria are to be applied for striking the right balance between the right to intellectual property, on the one hand, and the right to protection of personal data is left to the referring court. The repeated reference to recital 17 of the Directive 2004/48 implies that the intentional or unintentional character of the infringement should play a role.

Wednesday, 9 September 2015

European Patent Litigation Certificate: here are the draft rules

Further to Monday's PatLit post, the Unified Patent Court website has posted the following information today:

At its meeting on 3 September 2015 the Preparatory Committee agreed the draft proposal for the Rules on the European Patent Litigation Certificate and other appropriate qualifications. The Explanatory memorandum and a copy of the Draft Rules are available.
The Explanatory memorandum, which is nine pages long, opens with the following explanation:
According to Article 48(2) of the Agreement on a Unified Patent Court (UPC Agreement), European Patent Attorneys (EPAs) who are entitled to act as a professional representative before the European Patent Office (EPO) pursuant to Article 134 of the European Patent Convention (EPC) may represent parties before the Unified Patent Court (UPC), provided they have appropriate qualifications such as a European Patent Litigation Certificate (EPLC). The wording of this article suggests that EPAs can prove having appropriate qualifications by different means, the EPLC being one of them.

Article 48(3) of the UPC Agreement states that the Administrative Committee shall establish the requirements for such qualifications. Therefore, a draft decision determining the rules on the EPLC and other appropriate qualifications (Draft EPLC decision) must be prepared, in order to be formally adopted by the Administrative Committee after the entry into force of the UPC Agreement. different means, the EPLC being one of them.

This decision shall establish the rules for the grant of the EPLC and the rules governing the other appropriate qualifications EPAs can alternatively have in order to be entitled to represent parties before the UPC.
The draft Rules, all 22 of them, cover just eight pages.

Informed comments by current patent practitioners and prospective holders of European Patent Litigation Certificates are invited.