Litigation in the Brave New World 6: Case Management, Evidence and Trials

Case management: a term that means
different things to different people ...

This final post in Don McCombie's Brave New World series on the European Union's Unified Patent Court (UPC) looks at certain aspects of case management, evidence procedures and trials under the proposed UPC system.  More could be written about these topics, but the author, a patent litigator in the London office of Latham & Watkins, has concentrated on the aspects which, in his s opinion, are the most noteworthy.  This is what Don writes:

Case Management, Evidence and Trials
 Case Management and Evidence
 
The posts in the this series have been based on the 14^th draft of the Rules of Procedure.  A 15^th draft is now circulating online, but as no final version yet appears to be publicly available, all references in this note are to the 14^th edition.  Rule 10 sets out the five stages of proceedings before the UPC.  Stage 1, the written procedure is covered in my third post, and this post focuses on stages 2 and 3, the interim procedure and the oral procedure respectively.

As detailed in the third post, parties are required to provide all evidence in support of their claim/defence, or at least an indication of the evidence that the party intends to rely upon, together with the statements of case at the outset of the case.  This is likely to place a heavy burden on the parties, especially defendants who counterclaim for invalidity, although any party expert evidence may not be required until later in the proceedings (see Rules 181 and 104).

As noted previously, it is intended that a ‘judge-rapporteur’ will have wide-ranging management powers for the active management of UPC cases, which will mainly be exercised during the interim procedure.  The Rules are not very prescriptive, providing the judge-rapporteur with a great deal of discretion; the quality of decision-making will be key to the successful operation of the UPC system.

Once all written pleadings have been exchanged (see Rules 12, 35 and 36), the judge-rapporteur will arrange an ‘interim conference’ (see Rules 101-106), which will be very broad in scope – certainly broader than most ‘case management conferences’ in English proceedings.  Rule 104 lists the main purposes of interim conference, which include enabling the judge-rapporteur to 

·         identify the main issues and determine which facts are in dispute; 

·         explore the possibility of settlement; 

·         issue orders regarding further pleadings and evidence (including party and court expert evidence), experiments and the scope of oral evidence and the questions to be put to witnesses; 

·         hold preparatory discussions with witnesses; 

·         convene separate hearings to hear oral witness evidence, and make all preparations necessary for the oral trial hearing; and 

·         set the value-based element of the court fee.

It is not clear at what stage any decision as to the bifurcation of revocation counterclaims from infringement claims is to be made, although it is likely to be at or before the interim conference.

If many of the above matters are disputed between the parties, it is possible that the interim conference will be a lengthy hearing in itself, potentially little shorter than the one-day trial hearings envisaged under the Rules.

Specific Evidential Issues: Experts

Part 2 of the Rules of Procedure (currently Rules 170-202) relates specifically to evidence procedures under the UPC, although I will not be cover these in great detail here.  A key point to note, however, is the likely role of expert witnesses under the UPC.

Under the current English and US systems, party experts play an absolutely central role, particularly in support or defence of allegations of obviousness.  Court appointed experts are very rare in English patent cases, for example, although scientific assessors have been appointed in recent years in some of the most technically difficult cases.  From experience, a very significant proportion of the work (and costs) involved in preparing an English patent case relates to the identification and interviewing of expert witnesses, drafting expert reports in chief and in rebuttal of opposing party expert(s), and preparing for cross-examination of expert witnesses.  The majority of the trial hearing itself often consists of expert witness cross-examination, largely relating to the validity of the patent(s) in suit.

By contrast, in many continental European systems far less weight is often placed on the evidence of party experts than in common law systems, and oral expert evidence at trial on validity issues is rare in many countries.  Practitioners in England (admittedly, myself included) can get very animated when discussing the need for cross-examination of statements made in expert reports, but given that one of the stated aims of the Rules of Procedure is for trials to be completed within a single day (Rule 113), the scope for lengthy cross-examination is limited.  The Rules of Procedure do allow for the convening of a separate hearing for witness evidence in front of the judicial panel (i.e. unlike US-style depositions - see rules 104(g), 113 and 115), but it appears unlikely that UPC trials and evidence hearings will permit several days of cross-examination as standard, in contrast to the current practice of the English and US courts.

As someone accustomed to the central importance of party expert witnesses in patent proceedings, I see this as a very significant change.  I recognise, however, that practitioners accustomed to, say, German or EPO proceedings may take a different view.  The emphasis to be placed on expert evidence, and the willingness to convene extensive separate evidential hearings may vary between the different local, regional and central divisions, influenced by the legal backgrounds of the individual national judges composing the panels.  If such variations arise, this may be a further factor influencing the parties’ choice of forum.

Trials and Decisions

Oral trial hearings are covered in Rules 111-118.  As noted above, these are intended to be a maximum of one day in duration, although no specific provisions are made for multi-patent trials.

Unless a single judge has been requested by the parties, at least three judges will preside over every UPC first instance trial, comprised of:
·         two local legally-qualified judges and one legal judge from the central ‘pool’ in the case of local divisions averaging more than 100 cases per annum;
·         one local legal judge and two legal ‘pool’ judges in the case of local divisions averaging fewer than 100 cases;
·         two regional legal judges and one legal ‘pool’ judge in regional divisions; and
·         in the central division, two legal judges drawn from different Contracting Member States and one technically-qualified judge from the central ‘pool’ (see Article 8 of the UPC Agreement).

In the case of revocation counterclaims or where the parties so request, an additional technical judge will be allocated to the panel in the local or regional division.

Panels are supposed to deliver a decision on the merits within six weeks on the oral hearing, with issues of quantum of damages and compensation and legal costs being dealt with in separate proceedings (Rule 8).  The form, content and length of judicial decisions varies enormously between Contracting Member States at present, with modern English judgements being particularly encyclopaedic, at least in part as a result of the common law system.  Little guidance on the content of judgments is provided in any of the UPC documents, although Articles 35 and 36 of the Statute of the UPC  do contain some limited provisions, including the possibility of judges expressing dissenting opinions in exception circumstances (see also Article 78 of the UPC Agreement).  Again, the practice of judges may vary depending on the legal tradition in which the members of the judicial panel were trained, although the proposals provide for judicial training regimes and the rules on the composition of panels is intended to provide as much uniformity as possible.

End of the Line 

This is the final post in the series, ending with a ‘fade out’ rather than a bang.  I hope readers have found these posts interesting, or at least informative - I have certainly learned a lot through writing them.  If anyone reading has any comments or questions about the contents of this series, or about the UPC in general, I would be happy to hear from you.

Litigation in the Brave New World 5: Preliminary Procedures and Provisional Measures

EU patent litigation: will
this complex machine work?

In this, the fifth in the series of blogposts on the European patent package reform, Don McCombie (Latham & Watkins) examines some of the mechanics of the new regime for European patent litigation. He explains the proposed new rules governing preliminary procedures and interim relief, orders governing the inspection of premises and the preservation of evidence, and freezing orders that prevent the removal of a litigant's assets from the jurisdiction.

Preliminary Procedures and Provisional Measures 

Having now covered the more difficult, technical aspects of the proposed new Unified Patent Court (UPC) in a number of lengthy posts, the next few posts will deal with a few discrete aspects of the proposals.  This post deals with preliminary procedures and provisional measures. 

Interim/Preliminary Injunctions 

Article 62(1) of the UPC Agreement provides for the grant of injunctions against an alleged infringer “or against an intermediary whose services are used by the alleged infringer” on a provisional basis. The wording   largely tracks that of Article 9(1)(a) of the Enforcement Directive, although there are some differences.  Article 62(1) states that such injunction may be subject to a ‘recurring penalty payment’, which under the Enforcement Directive is only available if provided for under national law.  Part 4 of the 14th Draft of the Rules of Procedure deals with the procedure relating to provisional measures, but there is no provision relating to ‘recurring penalty payments’, or how these are to be implemented in practice. Article 62(1) also states that the court may order that the continuation of the alleged infringing activities be made subject to the “lodging of guarantees intended to ensure the compensation of the right holder”, and an applicant for provisional measures must state reasons why such measures are considered necessary (R206(2)(c)). 

Article 62(2) states that “the Court shall have the discretion to weigh up the interests of the parties and in particular to take into account the potential harm for either of the parties resulting from the granting or the refusal of the injunction”. This is repeated in R211(3), but the UPC Agreement and the Rules of Procedure are silent as to how the court is to weigh up the relative interests of the parties.  However, R211(2) does state that the Court “must be satisfied with a sufficient degree of certainty that the applicant is entitled to commence proceedings […], that the patent in question is valid and that his right is being infringed, or that such infringement is imminent”.  Individual national laws take different approaches to these issues – please see the previous post in this series for a discussion of the applicable law.  I won’t return to the issue of conflicting national law approaches in any detail here, but I note, for example, that the English courts have developed substantial case law following the American Cyanamid principles, which differs from the approach taken by the German courts. 

If an injunction is granted, the Court may order the patentee to provide security adequate to compensate the defendant in the event that the Court revokes the order for provisional measures (R211(4)), and payment of security is compulsory in ex parte actions. 

Part 3 of the Rules of Procedure provides detailed guidance on a number of points, including: the lodging of protective letters (“schutzschrifte”) (R207); the formal requirements of an application for provisional measures (R206); formal examination of the application (R208); the Court’s discretion whether to inform the defendant of any application (R209); any oral hearing (R210); ex parte decisions (R212); and the revocation of provisional measures and the requirement for compensation of the defendant (R213). 

Orders to Preserve Evidence and Inspect Premises 

Article 60 of the UPC Agreement sets out relatively comprehensive provisions for the preservation of evidence (also known as a Saisie) and the inspection of premises. Save for the inspection provisions, Article 60 is broadly similar to Article 7 of the Enforcement Directive. Part 2, Chapter 4 of the Rules of Procedure sets out how to apply for these measures.  Article 60(1) allows a claimant, even before the commencement of proceedings, to apply for measures to preserve relevant evidence, which may involve taking samples or seizing infringing goods, items used in the protection of allegedly infringing products or documents (Art 60(2)).  These measures may be ordered ex parte (Art 60(5) and 60(6)), may require the lodging of security by the applicant (60(7), and may be  revoked (60(8)). 

Whilst orders to preserve evidence are already covered in the Enforcement Directive, with Member States therefore already being obliged to provide equivalent measures under national law, the inspection provisions in Articles 60(3) and 60(4) may have no national equivalents in some Member States.  The order for inspection envisaged in Article 60 appears similar to a so-called 'Anton Piller' order under English law, requiring the conduct of the search of any premises to be supervised by an appointed person.  As the geographical location of the premises to be searched will clearly fall within territorial scope of only one national part of a European patent, the national law to apply to the search order, insofar as this is not covered by EU law or the UPC Agreement, should be easy to determine (see the previous post). 

Order to Freeze Assets 

Article 61 of the UPC Agreement provides for freezing orders, which are governed by largely the same procedure at that for Saisie applications (see R200).  The wording of Article 61 differs substantially from that of Article 9(2) of the Enforcement Directive, but procedures implemented in national laws under the Directive are likely to broadly provide for the measures described in Article 61.  The Court may “order a party not to remove from its jurisdiction any assets located therein, or not to deal in any assets, whether located within its jurisdiction or not”.  This is potentially a very broad power, which may be applied for before the commencement of proceedings where infringement has already taken place or is anticipated to occur. 

Next post 

The next instalment in this series will cover general case management issues and evidence procedures.