Tuesday, 9 February 2010

Of conflict and cooperation: when national courts and the EPO differ

In Eli Lilly and Company v Human Genome Sciences Inc [2010] EWCA Civ 33 the Court of Appeal for England and Wales (Lord JusticeJacob, Lady Justice Hallett, Mr Justice Lewison) dismissed HGS's appeal against the decision of Kitchin J in 2008 that its patent was void as not being susceptible of industrial applicability under Art.57 of the European Patent Convention (for a note on the technical background to the appeal and a summary of the trial judge's decision click here).

Of particular interest in this case is the fact that the claims which the appellate court considered were not the same as those before Kitchin J, which the Opposition Division of the European Patent Office had also held invalid, but the somewhat restricted claims which the Technical Board of the EPO had subsequently accepted following an accelerated proceeding following cooperation with the Court of Appeal itself.

On the subtle if sometimes complex relationship of the EPO to the national courts, Jacob LJ, giving the judgment of the Court, said the following at paras 6 to 41:
"Co-operation between the EPO and National Courts

6. Co-operation between national courts and the EPO of the sort which happened between this court and the TBA in this case is mightily to be welcomed. It should, as far as possible, extend to all the stages of procedure in both national courts and in the OD and Boards of Appeal of the EPO.
7. I should enlarge upon that. Far from all oppositions (and appeals) in the EPO are of immediate commercial concern to the parties. Many, perhaps most (it would be valuable to find out), oppositions are started on a precautionary basis only: a potential competitor of the patentee takes the view that although the patent is of no immediate concern to him, it might have an impact on his business at some time in the future. If that is so, unless he is to lose all possibility of a central attack, he must start an opposition before the nine month period from grant expires. So he does.
8. Of course there are cases where the patent may have an immediate and obvious important commercial impact. It is in that class of case, and perhaps only that class, that parallel litigation in the EPO and one or more national courts occurs. Such cases are actually rare considering the total number of patents under opposition in the EPO at any one time. And it is in those cases that the sort of co-operation there has been in this case can be most valuable.
9. Actually it would have been better if the co-operation had started earlier. That probably would have happened if either of the parties has asked for it: neither the OD nor the TBA nor a national court can know that a case needs speeding up unless someone tells them and asks for it.
10. The more the overall opposition procedure can be expedited in the relatively small class of cases of immediate commercial concern, the more significant uncertainty (which is inherently damaging) is likely to be reduced for European industry and business. That needs co-operation from the outset not only between the TBA and the national court (as happened here) but co-operation between the national court(s) on the one hand and the EPO (both the OD and the TBA) on the other. And the parties should actively co-operate too. Commercially urgent and important cases need a fast track.
The Issues on the Appeal [...]

The nature of a first instance decision in England and Wales

14. Because we are differing from the TBA I should point out some basic matters of procedure and approach which help explain why.
15. A key rule of civil procedure in England and Wales (and indeed in most if not all common law countries as well as some civil law countries) is that each side must marshal all its evidence (expert and factual) and arguments for the trial court – the court of first instance.
16. The process at a trial in England involves an intensive investigation and testing of the evidence. Each party's witness statements and expert reports must be provided in advance of the hearing. The expert witnesses are generally people who have been closely engaged with the very technical subject matter of the case. Each party's internal documents relevant to the issues in the case (and most particularly the documents adverse to its case) have to be disclosed in advance by the process called by most common lawyers "discovery" but now in England "disclosure".
17. At the hearing the evidence, both factual and expert, is severely tested by the process of cross-examination – the asking of questions by a lawyer from the other side who will have been educated deeply in the art by his own party's expert. An expert's opinion, as such, is treated by the court as of little value. His reasons for that opinion are what matter. Those reasons are apt to be probed without remorse before a tribunal which itself will have developed a good understanding of the technical subject-matter. Because that is likely to happen, expert witnesses in English are less apt to "stretch" things in favour of the party relying on them. They know their reputation is "on the line."
18. Moreover the Judge himself will generally not only have an expertise in patent law but also some considerable general technical expertise. Many (but not all) English patent judges have a science degree and many years experience of the practice of patent law. ...
19. Finally in cases of particularly complex subject-matter it is possible for a scientific advisor to be appointed to the court. Sometimes that is done both at first instance and on appeal, sometimes only on appeal. The function of such an advisor is merely to assist the court in its technical understanding. He or she is not there to provide an opinion on the merits. Experience shows that such advisors are well capable of keeping within their proper function. ...
22. The English trial procedure has the very considerable advantage that all parties know that they have to make their best efforts for the first instance decision. Each side has to put its cards on the table. That in itself causes quite a few cases to settle: if the other side has aces and kings and you have only low value cards and you each know broadly what the other has, you had better settle on as best terms as you can get.
23. The system has its problems – particularly in relation to its expense. But in a case of great commercial importance and significance the expense is relatively insignificant to what is at stake. This is such a case.
The Nature of an Appeal in England and Wales

24. In England and Wales appeals lie from first instance decisions to this Court provided they are adjudged (either by the trial Judge or this Court) to have a real prospect of success.
25. But appeals are conducted on the evidence and materials before the court of first instance. There are no new witnesses, expert opinions, or other new evidential matter save in very exceptional circumstances. The most important of these are where the fresh evidence could not, using due diligence, have been found for use at the trial and even then only when it is likely to have a material effect on the appeal.
26. Further the Court of Appeal gives very considerable deference to the findings of fact of the first instance court. So also to its value-judgments – overall assessments of a question which itself involves a number of factors, such as, for instance, obviousness. ...
27. The upshot is that an English first instance case is "for real". It is not shadow boxing for a real contest later on an "appeal." Not only must a party put its cards on the table prior to the trial, it must find and play all its best cards at the trial. It is noteworthy that the currently proposed rules of procedure about appeals in a future European Patents Court of Appeal are based on essentially the same principle. And that the recent changes of procedural law in hearing about appeals from the Bundespatentsgericht have moved in the same direction.
The Nature of proceedings in the EPO

28. Inherently the procedure is very different and much less intensive. The very name "opposition", given to what is really and in law an application for revocation, indicates something about it: that it is in some sense regarded as part of the grant process rather than a contest before the ultimate arbiter of validity (though it will be that if the patent is revoked). For the same reason the first instance proceedings in the OD are regarded as "administrative" thus making it legitimate to have on the panel the very examiner who allowed the grant of the patent. The link to the grant process also explains the nine-month rule for entering opposition.
29. The opposition procedure represents a compromise. In theory a true pre-grant opposition would be ideal – any patent which emerged would have finished its patent office processing. But true pre-grant opposition can potentially lead to unacceptable delays in enforceability of the patent in national courts (it certainly did in the UK under the old law). So this form of belated opposition was provided as the compromise.
30. In practice, both before the OD and the Boards of Appeal there is much less room for the testing of evidence (both factual and expert) than there is in the English (and indeed some) other national courts. There is no cross-examination (even of a short and controlled nature) and no compulsory disclosure of documents (particularly those adverse to a party's case).
31. Moreover before the TBAs there is much more latitude for the admission of fresh material on appeal, though wholly fresh grounds of objection may not be considered without the patentee's consent .... Some say this latitude is justified by reason of Art. 114 of the EPC which provides that the EPO is not confined to the arguments and evidence of the parties, implying a general duty not to let any "bad" patent pass or to refuse any "good" one. I am not sure that is so, particularly given the original expectation that the opposition procedure would be one which was so speedy that in general pending national revocation actions would be stayed pending an EPO opposition ...
32. Anecdotal evidence from the professions suggests that some Boards are more liberal in their approach to fresh evidence than others. I cannot say whether that is so or not, though it would obviously be unfortunate if it were significantly so. What I can say is that in this case, the TBA permitted further evidence from HGS, amounting to 700 pages, just three weeks before the oral hearing. The material consisted of new technical papers and a declaration of a Dr Kelsoe which the TBA expressly relied upon in two parts of its decision. One is unable to discern whether other parts of the decision were influenced by the new material (though there was express reference to a new paper by Fu), though it is entirely possible - the process of forming a judgment inevitably includes taking into account matters of detail and impression which do not find their way into express reasoning.
33. It follows from the nature of the procedure that inevitably in some respects – particularly those involving the facts and the testing of expert evidence, the EPO, including its judicial organ, the TBAs, is something of a "coarse filter". It cannot, need not and does not investigate matters affecting validity as profoundly as a national court can. And there will inevitably, even if there is no express acknowledgment to that effect, be something of a benefit of the doubt accorded to the patentee who is in some sense seen still as an applicant for the patent.
34. I wish to make it plain that, by saying this, I in no way intend to disparage the most excellent work done by the TBAs, working as they do under the pressure of an enormous caseload. Far from it. Given what they have to cope with they do as well, perhaps rather better, than could be imagined.
35. It remains the position however, that once a patent has been granted by the EPO and survived any opposition, the ultimate arbiter of its validity in any designated Contracting State is the national court system of that Contracting State deciding the case using its own fact finding procedures. Under the EPC system the national courts are the final judges of validity of a patent which has survived in the EPO.
36. That the national court can differ on the facts from the TBA is illustrated by several English cases. ...
The status of EPO and especially TBA decisions on questions of law in National (and especially UK) proceedings.

38. When it comes to legal principles the position of the TBAs (and even more so of course, the Enlarged Board) stands quite differently from its determination of facts or questions of degree. Decisions of the TBAs on questions of law are of immense importance. We do not yet have a European Patent Court to lay down principles through case law. The TBAs (subject to occasional references to the Enlarged Board), albeit that technical members are in the majority, at present are the only body which can perform that function. They will continue to do so unless and until such a Court, staffed principally by lawyer judges, comes into being. Few would say they have done a bad job. Indeed it would not be exaggerating to say that but for the TBAs, European patent law – especially that concerning validity – would not have the coherence, integrity and predictability which it now has. The users of the system have a lot for which to thank the TBAs.
39. In the UK the key importance of the TBAs' case law is well settled. We follow any principle of law clearly laid down by them, only reserving the right to differ if we are sure that the commodore is steering the fleet on to the rocks .... Other significant national courts follow the same principle, as I understand it. For instance the Bundesgerichtshof has just recently applied TBA jurisprudence in its decision corresponding to (and agreeing with) that of the House of Lords in Generics v Lundbeck [2009] UKHL 9 (see the BGH decision of 10th September 2009, Case Xa ZR 130/07 at [33]).
40. Mr Carr suggested that our courts should go further: if the TBA has not only laid down a "pure" principle of law but has also set a standard by which it was to be applied in a series of cases, we should follow that standard too. In particular he took us to some other TBA cases which he submitted showed the application of a standard which we should follow.
41. I am not persuaded by this. Once one departs from a principle of law and starts trying to consider how a particular TBA applied the legal principles to various sets of facts in different cases, one is inevitably involved in assessing the facts of those cases or what are said to be those facts. The suggested exercise involves comparing the EPO's evaluation of the facts in one or more cases with the facts in the case at hand. I do not see why the English court's intense fact finding and evaluation process should give deference to the findings or evaluations of fact by the TBA in other cases – cases which, as we shall see, the TBA itself regards as fact-sensitive. The English Courts have never, for instance, given deference to the TBAs in the case of the objection of obviousness. I do not see why the position should be different in the case of other fact-evaluation objections such as sufficiency or, here, susceptibility of industrial application".

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