UPLS: bright ideas, please!

This coming Tuesday afternoon I'm sharing an IBC Informa conference platform with Tim Frain (Director of IPR, Regulatory Affairs at Nokia) on the subject "Developments in Connection with a Unified Patent Litigation System for Europe". Tim is giving some background and explaining the meat of the current proposals, looking at them not merely from a patent-owner's point of view but in the context of the 'Standards & Patents' theme of the conference. My task is to put together a collection of perspectives that I can bounce off the proposals, leading into the discussion session.

I can produce my own list of 'favourite topics', but I feel that my contribution to the day's programme would be enhanced if I could reflect some of the informed and thought-out opinions of colleagues who are involved at the coalface of patent litigation rather than (as in my case) the standpoint of the enthusiastic spectator.

Above: will the unique characteristics of national patent dispute resolution system be lost or merged into a unified system once consensus is agreed?

If there are any issues you'd like me to mention, or points you'd like me to raise, please email me here and let me know. If you'd rather I didn't mention you as the source or inspiration of my comments, please just say so. In return, I hope to be able to report on anything of particular interest or note which is said during or after the session.

How easily can multi-issue disputes be slimmed down?

Fresh out today, and far too long to read in an instant, is the decision of Mr Justice Floyd (Patents Court, England and Wales) in Grimme Landmaschinenfabrik GmbH & co. KG v Derek Scott (trading as Scotts Potato Machinery) [2009] EWHC 2691 (Pat). It's an action for patent and design infringement in respect of a machine for separating potatoes from weeds, earth, clods, stones and haulm, met by a defence of non-infringement and a counterclaim for invalidity of Grimme's rights and ungrounded threats to sue for patent and design infringement.

Both sides seems to be the winners/losers in that, while Claim 1 of the Patent is invalid for obviousness, Claims 17 and 24 are valid; Claim 17 is infringed in some circumstances (both directly and indirectly) but Claim 24 is not; the design rights were not commonplace and were infringed in respect of the defendant's original product but not a subsequent version; the counterclaim for unjustified threats of patent infringement proceedings failed, while that for design right infringement succeeded.

Apart from wondering what the costs order is going to look like, PatLit finds itself wondering how much time might have been saved by any of the various procedural reforms that have been discussed in the past year. While the court needed five hearing days, the variety of issues under consideration and the need to examine witnesses suggests that there wouldn't be much scope for savings here. As ever, readers' comments are welcome.

Swiss patent litigation reform

"New Developments In Swiss Patent Law", an article by Andrea Mondini, and Philipp Groz (Schellenberg Wittmer, Zurich) last month in IP Frontline, reviews the structure and functionality of the Swiss court system as it affects patent litigation. The authors explain that, with around 30 patent proceedings a year, split between the 26 Swiss cantons, most cantonal courts of first instance have only little practical experience in patent litigation and are not presented with enough opportunities to develop the necessary technical and legal expertise (most of the 30 are split between just four of those cantonal courts anyway). This has led to the concentration of the jurisdiction for patent cases into a single specialized court, a move which is also expected to make Swiss patent litigation swifter and more attractive to those for whom the prospect of forum-shopping is available.

The new Patent Court Act (PatCA) creates a special federal trial court with exclusive jurisdiction over all Swiss disputes regarding validity and infringement, as well as applications for pre-trial relief. Related disputes, such as those involving royalty payments, may be brought either before the new court or, as before, to a cantonal court. The court will designate one of Switzerland's three official languages (German, French and Italian) as the language of the proceedings, though. another official language may be used for for submissions and oral arguments. With the consent of the court and the parties, English may also be used. The creation of the Federal Patent Court does not affect the parties' freedom to submit patent disputes to arbitration.

Court reform: nothing to avail those in the middle?

Writing in the November 2009 issue of Informa's ten-times-a-year Patent World, PatLit team member Michael Burdon pens the journal's 'In Closing' back page feature. The title, "Court reform is of critical importance", reviews patent litigation reform proposals both in Europe and within England and Wales over the past year, concluding:

"I do however fear that this system still caters only for those at the extremes -- those who are litigating patents which have considerable commercial importance, so-called 'big ticket' litigation, at the one end and those involved in more modest low-value disputes at the other. I believe that there is a significant number of companies who are caught in the middle and cannot avail themselves of either alternative".

You can read Michael's article here.

Foiled! A sad tale of boss and emboss

Boegli-Gravures SA v Darsail-ASP Ltd and Andrei Ivanovich Pyzhov [2009] EWHC 2690 (Pat), a decision handed down by Mr Justice Arnold in the Patents Court (England and Wales) today, took the regular form of an infringement claim met by a denial of infringement and a counterclaim for revocation. The technology in question involved the embossing of packaging foil for cigarettes.

Two interesting points arose from the judgment: one was that neither side's expert was entirely expert (one's experience was as a buyer of machines rather than as a designer of them, while the other lacked experience in the market in question). The other was as to whether the second defendant, Pyzhov, a director and shareholder of the first defendant company, was personally jointly liable with the company for any infringing acts.

The judge found the patent valid and infringed and held Pyzhov liable. After reciting the applicable principles as annunciated in the copyright infringement dispute of MCA Records Inc v Charly Records Ltd [2001] E5WCA Civ 1441, [2002] EMLR 1 he concluded that the case for the director's liability was established on the facts:

"136. The background facts include the facts that (i) Mr Pyzhov is one of three equal shareholders and directors of Darsail, (ii) Darsail is a small company which has had a total of 9-12 employees during the relevant period, (iii) Mr Pyzhov would know about anything important that happened within the company, (iv) Mr Pyzhov was the principal inventor of Darsail’s roller technology, (v) Mr Pyzhov personally registered the domain name darsail.com and controls the contents of the website and (vi) Mr Pyzhov was one of three named contacts on the website. In my judgment these facts are not enough in themselves to make Mr Pyzhov jointly liable [This must be right. They may reflect on the facility or the opportunity for Pyzhov to infringe, and on any benefit he might expect to derive from it, but none is part of a causal link to the infringements specifically alleged].

137. The facts relating to Mr Pyzhov’s involvement with the infringement are that (i) he personally dealt with Mr Green [the alias of a private investigator working for Boegli's client BAT] virtually throughout the negotiations, (ii) he together with his two co-directors made the decision to supply the Famous Flavor rollers to Mr Green and (iii) he made the decision to supply the Mayfair foil to Mr Green. In both cases he gave, or was involved in giving, the instructions to Darsail’s staff. In my judgment these facts are sufficient to make Mr Pyzhov jointly liable, since he was personally involved in committing the infringing act. He thus went beyond merely performing his constitutional role in the company".

A close call? Probably not, though claimants may have some tough calculations to make when determining whether it's worth pressing for joint liability -- particularly if the argument in favour is less strong and the likely benefits are unclear.

Should appeal courts have a didactic role?

In an article last Friday for Intellectual Property Watch, ("US Federal Circuit May Offer Patent, Tech Policy Guidance For High Court"), Winter Casey reports on a lecture by Rochelle Dreyfuss, a professor at New York University School of Law, in which she is reported as suggesting that the United States Federal Circuit Court of Appeals should act more like a teacher to the Supreme Court and do a better job explaining its policy reasoning when it makes decisions on innovation-related cases: if the Federal Circuit was clearer in how it reached its conclusions in patent disputes, the Supreme Court might opt to get involved in fewer patent cases. The article reviews responses to Professor Dreyfuss's suggestions and adds:

"... Dreyfuss’ remarks came at a time when the Supreme Court is weighing in on more patent cases - the upcoming case of Bilski v. Kappos has received significant attention by industry ... and patent legislation is still pending before Congress.

... former USPTO Solicitor of Patents and Trademarks Nancy Linck said that Dreyfuss’ recommendation that “the Federal Circuit provide more policy rationale for their decisions to assist district court judges in following its precedent … is an excellent one.”

Linck added that “I agree with her that, if the Federal Circuit explained the policy considerations underlying its decisions, the number of reversals of district court cases might be reduced, and the Supreme Court might grant certiorari less frequently.”

Another patent lawyer attending the event said the role of the Federal Circuit is “to take a position that is consistent with the statute and also consistent with sound policy. If there is tension between what the Federal Circuit is doing and what the Supreme Court has done in the distant past, the Federal Circuit should acknowledge that tension and explain the policy reasons underlying its choice. As [Dreyfuss] said, the goal should be to substitute dialogue for hierarchy.”

... The Federal Circuit was set up as an experiment in specialisation, and there were concerns about risks of court capture by special interests, neglect of non-patent incentives to innovation such as intellectual curiosity, prizes or competition, as well as possible jurisdictional isolation of cases.

Dreyfuss said the experiment has been a “raging success,” with jurisdiction beyond patents, no capture, and eliminating “forum-shopping” of cases while establishing uniformity and predictability (possibly at the expense of flexibility). She said the increase in the more generalist Supreme Court reviews of the more technical Federal Circuit decisions could be a coming of age for the experiment.

She also said that the Federal Circuit’s history “reveals a strong interest in strengthening patent value and stemming what was perceived as a flight to trade secrecy.” But now, she noted, there are issues of too many patents and of lower quality. This is where the Supreme Court has moved in (taking more patent cases while taking less cases overall), helping the patent system to evolve and fitting it into the economy as a whole".

Superficially the notion of the Court of Appeals for the Federal Circuit acting as a teacher to the Supreme Court is attractive, for the reasons outlined. However, the reason why cases come before that court is that one or more parties to a live dispute have appealed a decision of the trial judge to that court and the prime function of any appellate tribunal should be to resolve the issues that led to the litigation arising in the first place. Neither the Federal Ciruit's appeal judges nor the members of the US Supreme Court have been elected in order to determine patent policy and it would be unfortunate if the direction taken by the US patent system were taken by the fortuitous circumstance that some issues have been raised on appeal while others have not.

Committal proceedings not the best way of resolving infringement issues

It’s not often that PatLit turns to a copyright case for inspiration, but the resolution of patent infringement issues gets a mention in Grisbrook v MGN Ltd and others [2009] EWHC 2520 (Ch), a 16 October decision of Lord Justice Patten sitting as a Chancery Division judge. This was an application for committal for contempt, or alternatively for sequestration of the assets, of MGN following an alleged breach of a consent order in copyright infringement proceedings. Said Patten LJ:

"72. To be a contempt the defendant's conduct must be intentional and the act complained of must be done with knowledge of all the facts which make it a breach of the order. It is not, however, necessary to prove that the defendant knows it is a breach of the order. [One of the infringements was], at most, a technical breach of the order which was remedied once the problem … had been recognised. …

73. The position with respect to [the operation of a back issues website which, the defendant argued, was impliedly licensed] is more complicated. Although…, their operation does constitute an infringement …, this is an important and by no means straightforward point of law on which MGN, on advice, was entitled to take a different view. …. The fact that its motivation is in part commercial does not detract from the importance of what is in issue.

74. I take the view that disputes of this kind should not be resolved through the medium of committal proceedings. This is not a point which featured in the two actions that led to the consent order and it should have been resolved in ordinary proceedings to determine whether an infringement was involved in the operation of the websites.

75. The dangers inherent in generally worded injunctions or undertakings not to infringe a patent or copyright have long been recognised. They can often lead to a further round of litigation in order to determine whether an infringement has occurred. The resolution of this issue in the context of a committal application was described by Romer LJ in Multiform Displays v Whitmarley Displays [1956] RPC 143 at page 158 as highly inconvenient. In the House of Lords ([1957] RPC 260) Viscount Simonds (at page 262) said this:

"Thus it is, my Lords, that upon what was a motion for sequestration and committal your Lordships are asked to try an action for infringement of a patent, and, inconvenient though such a procedure may be, it cannot be denied that there is ample precedent for it, nor that in certain cases it may be an expeditious way in which patentees can enforce their established rights. It may, nevertheless, well be doubted whether in the present case it would not have been a better course if advantage had been taken of the facilities offered by Sec. 66 of the Patents Act, 1949, to have the issue of infringement tried in proceedings unattended by threats of committal and sequestration."

76. The corollary to this is that a respondent who on advice and in good faith maintains that the conduct complained of does not amount to an infringement should not ordinarily be penalised by a fine or sequestration in the event of failure merely because the applicant has chosen to use committal proceedings rather than to bring an ordinary claim in order to resolve the infringement issue".

Patent litigation in the US and Japan: what's the difference?

PatLit is pleased to announce that on Tuesday 8 December it is holding a seminar at which the speaker is Professor Toshiko Takenaka (Associate Director, Graduate Program in Intellectual Property Law and Policy Director, CASRIP). The subject of her talk is "Patent litigation in the US and Japan: what's the difference?". The venue is the London office of Olswang, just over the road from Holborn tube station.

Professor Takenaka has professional experience both in-house (with Texas Instruments Japan) and in private practice (with the Yamasaki Law & Patent Office). She is also the editor of Patent Law and Theory: a Handbook of Contemporary Research (Edward Elgar Publishing, 2009).

The event runs from 5.30pm to 7pm and will be accompanied by refreshments. There is no charge for admission. If you'd like to attend, please email Sandra Holloway here.