Litigation in the Brave New World: a full set of links

For the convenience of readers -- particularly for new followers of this weblog, who missed the beginning -- here is a full list of blogposts in Don McCombie's 'Brave New World' series on what we can expect from the new EU patent litigation package:

Litigation in the Brave New World 1: overview of the EU reform package

Litigation in the Brave New World 2: Jurisdiction and the Unified Patent Court

Litigation in the Brave New World 3: Early Stages of a Claim and Choice of Forum

Litigation in the Brave New World 4: The Governing Law

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

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

PatLit once again thanks Don, a patent litigator in the London office of Latham & Watkins, for taking the trouble to put this series together.

Litigation in the Brave New World 4: The Governing Law

Impossible, or just improbable?

In this, the fourth in the series of blogposts on the European patent package reform, Don McCombie (Latham & Watkins) writes on the governing law for European patent disputes, taking in not only the increasingly complex provisions within the EU itself but the application of general principles of private international law.  This thoroughly-researched post reflects the thoughts of its author alone, and should not be taken to represent the opinion of any other person or entity.

Governing Law

Having now looked at jurisdiction and the questions of how and where to commence a claim, this post now considers the substantive law to be applied by the Unified Patent Court (UPC).  This is another long post, and it contains a fair amount of discussion which readers may regard as unnecessarily academic.  However, this is all focused on a single practical question: which laws will the UPC apply on day one?  The answer is not as straightforward as you might think.

Article 20 of the UPC Agreement states that the court shall apply EU law in its entirety and shall respect its primacy, and  Article 24 states that:

“(1) In full compliance with Article 20, when hearing a case brought before it under this Agreement, the Court shall base its decisions on:

(a) Union law, including Regulation (EU) No 1257/2012 and Regulation (EU)

No 1260/20121;

(b) this Agreement;

(c) the EPC [European Patent Convention 1973, as amended];

(d) other international agreements applicable to patents and binding on all the Contracting Member States; and

(e) national law.”

Each of these sources of law is dealt with in turn below.

(a) Union Law

As noted previously, the EU has only legislated in two specific, niche areas of substantive patent law and related rights; certain aspects of biotechnological inventions and supplementary protection certificates.  In addition, the directive on the enforcement of IP rights harmonises to a limited extent the “measures, procedures and remedies necessary to ensure the enforcement of intellectual property rights”, including injunctions and damages, but no patent-specific provisions are included.  Further, and as noted previously, several provisions of the recast Brussels Regulation are relevant to (and may conflict with) proceedings in the UPC, but these relate only to jurisdiction and the enforcement of judgments, rather than substantive patent law. 

Regulation 1257/2012, the Unitary Patent Regulation, states that the scope of the rights conferred by a Unitary Patent “shall be uniform in all participating Member States” (Art 5(2)), such rights being “those defined by the law applied to [Unitary Patents] in the participating Member State whose national law is applicable to the [Unitary Patent] as an object of property in accordance with Article 7” (Art 5(3)).  Article 7 states that a Unitary Patent will be treated as an object of property of the participating Member State in which that applicant had either his residence or principal place of business or, failing that, a place of business, at the filing date of the application. If the applicant had no place of business in a participating Member State at the filing date, German law will apply (Art 7(3)).  For example, the scope of protection of a Unitary Patent filed by a French-incorporated company will be defined by French law, regardless of which local, regional or central division of the UPC hears an action relating to that Unitary Patent.  A Unitary Patent filed by a Japanese-incorporated applicant having no place of business within any participating EU state would be governed by German law, again regardless of the UPC division which hears the case.

Following the removal of Articles 6-8 from the previous draft of the Unitary Patent Regulation, which had provided for substantive EU patent infringement laws, there is very little EU law applicable to questions of the infringement or validity of patents, even in the case of Unitary Patents created under an EU Regulation.  Many commentators have expressed doubts as to whether the CJEU will in any event take jurisdiction over questions of infringement, but these arguments will not be rehearsed again here.

(b) The UPC Agreement

Articles 25-27 of the UPC Agreement contain substantive direct and indirect infringement provisions and a list of ‘limitations to the effects of a patent’, i.e. the exceptions to infringement.  These provisions are almost identical to Articles 29-31 of the 1975 Community Patent Convention (CPC), subject to some additional exceptions to infringement which relate to certain niche Regulations and Directives.

The national laws of most EU Member States largely conform to the CPC, so the basic infringement laws should already be familiar to practitioners, and there is a substantial body of existing case law decided under these provisions.  The Court of Appeal for England and Wales explained its approach to the decisions of courts in other CPC countries in 2010 as follows:

“80. Broadly we think the principle in our courts – and indeed that in the courts of other member states - should be to try to follow the reasoning of an important decision in another country. Only if the court of one state is convinced that the reasoning of a court in another member state is erroneous should it depart from a point that has been authoritatively decided there. Increasingly that has become the practice in a number of countries, particularly in the important patent countries of France, Germany, Holland and England and Wales. Nowadays we refer to each other's decisions with a frequency which would have been hardly imaginable even twenty years ago. And we do try to be consistent where possible.”

The degree of uniformity currently enjoyed between EU Member States has its limits, however, and despite a common basis for countries’ infringement laws, some significant differences have arisen between national approaches to infringement.  Probably the most obvious of these is the approach to claim construction, which is not addressed by the UPC Agreement (see next section).  The existence of significant differences between national approaches shows, at the very least, that the express terms of the CPC do not provide a clear answer in every situation, and that additional input from national laws has been required.  In the event that a given infringement question cannot be answered only by reference to the express terms of the UPC Agreement, but where that question has been answered by, and forms part of, the relevant national law, it will be open to debate whether the UPC is bound by national law or if it will be free to decide the case using decisions of national courts as persuasive but non-binding authority.  Lawyers trained in the common law (including judges) will approach this question differently to lawyers trained in civil law systems, and the different legal status accorded to court decisions in common law and civil law jurisdiction may also complicate this analysis, i.e. in England, the rationes decidendi of judgments form part of national law and are binding on judges, and Article 24(1)(e) states that the UPC shall base its decisions on national law, which will include such judgments.

Finally, Article 65(2) of the UPC Agreement expressly incorporates the grounds of invalidity in Articles 138(1) and 139(2) of the European Patent Convention.

(c) The European Patent Convention

The European Patent Convention (EPC) relates to the examination, grant and validity of patents.  The EPC leaves the determination of the rights conferred by a European patent to national laws (Article 64 EPC), although the EPC does address the ‘extent of protection’ conferred by a European patent in Article 69, as further clarified in the Protocol on the interpretation of Article 69 EPC (see below).

There is a very substantial body of case law on the provisions of the EPC.  The foreword to the sixth edition of the Case Law of the Boards of Appeal (the EPO White Book) states that, as at June 2010, the Boards of Appeal have settled more than 28,000 cases since March 1979.  Members of the EPO boards of appeal are bound only by the EPC and not, strictly, by earlier decisions of the boards of appeal, although case law that results from the decisions of the boards plays a major role in the development of the EPO’s practice.  Similarly, only the EPC, and not EPO case law, is stated by Art 24(1) to be a source of law for the UPC.

The national laws of EPO contracting states are shaped by the decisions of the EPO Boards of Appeal. The UK Patents Act 1977, for example, notes at s.130(7) that the relevant provisions of the UK law are intended to have the same effects as in other convention countries, and the UK Supreme Court has summarised the UK approach to the application of EPO case law in Human Genome Sciences v Eli Lilly (see paras 83-95).

Whilst consistency is an oft-stated and laudable aim, there are some clear differences between the approached taken by the EPO boards of appeal and the national courts.  For example, the boards of appeal (and consequently the divisions of the EPO) in almost every case apply the “problem and solution” approach to assessing inventive step, which has been adopted by national courts in some EPC contracting states, but not in others.  For example, although the English courts have consistently emphasised the importance of ensuring consistency with the approach of the EPO boards of appeal, they have instead adopted the structured approach set out in Windsurfing/Pozzoli (at para 23).

The English courts have noted on several occasions that the Windsurfing/Pozzoli approach is not compulsory, but the various divisions of the EPO and the boards of appeal are more firmly wedded to the problem-solution approach.  Although it was stated in case T_465/92 that the problem-solution is approach is “no more than one possible route for the assessment of the inventiveness”, the EPO White Book calls this is a “one-off decision” (see p163).  English judges have voiced differing opinions on the merits of the problem-solution approach (see judgment here at paras 25-50), which has never been adopted. Although the differences may in many cases be formal rather than substantive, in some instances the alternative approaches may ultimately lead to differing outcomes.

Also, the common practice of the EPO boards of appeal, which is not adopted in every case, is to deal with each ground of invalidity separately.  By contrast, ‘squeezes’ are often deployed in some national courts between, for example, obviousness and insufficiency arguments, which require the two separate grounds of invalidity to be considered together.  There is no guidance under the UPC Agreement or the Rules of Procedure on this point.

Finally, and probably most significantly, approaches to claim construction vary significantly between EPC contracting states.  Article 69 EPC and the Protocol on the interpretation of Article 69 EPC establish the ‘extent of protection’ conferred by a patent.  Article 2 of the protocol states as follows:

“Equivalents

For the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims.”

Gratefully relying on this note from Vossius & Partner, I understand that Germany operates a ‘doctrine of equivalence’, under which protection is not limited only to those features falling within the scope of the claim, but also equivalent methods of solving the same technical problem but which fall outside the scope of the claim, with key the question being “whether the skilled person having knowledge of the claimed invention will be able to solve the technical problem underlying the patented invention with modified but equivalent means”.  The differs markedly from the UK approach to ‘purposive construction’, which aims to assess what the skilled person would have considered the patentee to intend to claim based on the language used.  The Court of Appeal for England and Wales recently summarised the English approach to construction, stating inter alia that: 

“(vii) It further follows that there is no general "doctrine of equivalents."

(viii) On the other hand purposive construction can lead to the conclusion that a technically trivial or minor difference between an element of a claim and the corresponding element of the alleged infringement nonetheless falls within the meaning of the element when read purposively. This is not because there is a doctrine of equivalents: it is because that is the fair way to read the claim in context.”  

A clear conflict therefore exists between the approaches adopted by different EPC contracting states, and it is not clear how the UPC will approach the issue of claim construction.  

(d) Other international agreements applicable to patents

International agreements and treaties such as TRIPS, the Patent Cooperation Treaty and the Paris Convention do not in general contain rules of substantive patent law having a greater degree of specificity than the EPC or the UPC Agreement, so they are of little help as sources of substantive patent law.

(e) National Law

Whilst I have noted the divergent approaches taken by national courts regarding issues of infringement and validity, both the EPC and the UPC Agreement do at least provide a legislative framework which can be applied by the court.  Readers, particularly those with civil law training, may regard the concerns I have raised above regarding the need to rely on national law as unimportant, with divisions of the UPC ultimately being bound only by the EPC and UPC Agreement for most issues, treating case law of the EPC and CPC contracting states as persuasive but not binding.  To lawyers trained in the common law tradition this would be a significant change, but we are an adaptable bunch.

However, important points such as accessory liability are not dealt with anywhere in the EPC or the UPC Agreement.  As noted by Mr Justice Arnold in 2009 (see p8), these issues will fall to be considered under national law, so certainty as to the applicable national law is important.  Similarly, the laws relating to offers for sale over the internet, in particular where such offers are deemed to take place, are not addressed by the UPC Agreement.  Where national law applies, Article 24(2) of the Agreement provides guidance on determining which national laws are to apply:

“(2) To the extent that the Court shall base its decisions on national law, including where relevant the law of non-contracting States, the applicable law shall be determined:

(a) by directly applicable provisions of Union law containing private international law

rules, or

(b) in the absence of directly applicable provisions of Union law or where the latter do not apply, by international instruments containing private international law rules; or

(c) in the absence of provisions referred to in points (a) and (b), by national provisions on private international law as determined by the Court.”

Private international law rules

The term ‘private international law’ may be understood as the set of procedural rules used to determine the substantive law and jurisdiction applicable to a legal dispute. The difference sources of private international law rules mentioned in Art 24(2) are considered below.

Union Law

Provisions of Union law containing private international law include Regulation 864/2007 on the law applicable to non-contractual obligations (“Rome II”), the Unitary Patent Regulation itself, and the IP enforcement directive.

Article 8 of Rome II governs the applicable law in respect of infringement of IP rights. Article 8(1) states that “[t]he law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which protection is claimed”.  Where the UPC has to adjudicate the infringement of a European patent, which is a bundle of separate national rights claiming protection in several member states, this provision will lead to difficult results.  If a European patent is designated in France, Germany and the UK, Article 8(1) of Rome II would require the UPC to apply French accessory liability laws to the infringing acts occurring in France, German accessory liability laws to the infringing acts occurring in Germany and English accessory liability laws to the acts committed in the UK.

Rome II does not extend to preliminary or incidental questions concerning the creation, registration, validity or transfer of IP rights, which are proprietary rather than tortious in character.  The choice of law relating to these issues, insofar as they are not covered by the EPC, will fall to national rules in the case of European patents. 

For unitary patents, Article 8(2) of Rome II states that, “[i]n the case of a non-contractual obligation arising from an infringement of a unitary Community intellectual property right, the law applicable shall, for any question that is not governed by the relevant Community instrument, be the law of the country in which the act of infringement was committed.”  The Unitary Patent Regulation contains specific provisions to deals with these points at Articles 5 and 7, as noted above. 

International instruments

The EPC is an ‘international instrument containing private international law rules’. The provisions which could be seen as relating to choice of law include Articles 2, 64 and 74.  As with Rome II, the EPC does not assist with identifying any single law which should apply to a bundle of separate national rights which are being considered simultaneously by a single court.  If there are any such instruments, I would be grateful if readers could name them, as time constraints have prevented me from researching this area.

National provisions on private international law

Article 24(2)(c) begs the question of which country’s national provisions of private international law are to apply. If the UPC is to be a supranational court, as opposed to a national court, it will not have lex fori (i.e. the domestic law of the forum).  Reading the relevant parts of Article 24(2) and sub-article (c) together, the problem becomes more apparent:

“To the extent that the Court shall base its decisions on national law the applicable [national] law shall be determined by national provisions on private international law.”

This appears to mean that the UPC must use national law provisions to determine which national law provisions apply to the question of which national law is to apply, which is circular and rather unhelpful where the UPC is not a national court.  I had always understood that the UPC was intended to be a single supranational court having divisions physically but not ‘legally’ located within individual member states.  However, this difficulty with Article 24(2)(c) led me to question whether the UPC was indeed intended to be a supranational court, as opposed to a conventional national court.

National or supranational court?

By way of background, the earlier Draft Agreement on the European and Community Patents Court from March 2009 had contemplated a supranational court open to all EPC countries, including non-EU Member States.  Opinion 1/09 of the CJEU declared this proposal to be incompatible with EU law.  In response, the proposals were recast and a draft UPC Agreement was issued on 14 June 2011, which is similar, but not identical, to the final approved UPC Agreement. Article 1 of the June 2011 draft stated that the UPC “is a court common to the Contracting Member States” and which is “to be part of the judicial system of the European Union and is subject to the same obligations as a national court with regards to the respect of Union law”. 

The wording of the final UPC Agreement contained a subtle change, stating that the UPC “shall be a court common to the Contracting Member States and thus subject to the same obligations under Union law as any national court of the Contracting Member States”, possibly suggesting that a division of the UPC is a national court ‘like any other’.  The waters are muddied further by Article 4, which states that “the Court shall have legal personality in each Contracting member State and shall enjoy the most extensive legal capacity accorded to legal persons under the national law of that State”.

However, a clue to the source of the final wording is found in paragraph 82 of Opinion 1/09, which cited the Benelux Court of Justice as a “court common to a number of Member States, situated, consequently within the judicial system of the European Union” that had been held to be compatible with Union law.  This wording has been adopted wholesale in the final UPC Agreement.  Council Paper 13984/11 of 9 September 2011 provided ‘reflections’ on the Benelux Court of Justice (BCJ), and whether it could “serve as an example showing the way towards a Unified Patent Court”.  The paper describes an arrangement under which national courts of the Benelux countries themselves apply Benelux law, referring questions on the interpretation of harmonised Benelux law to the BCJ as a procedural step in the course of proceedings before the national courts.  The arrangement appears very similar to that of the CJEU in relation to EU law, although I would appreciate comments from Benelux lawyers if this is incorrect.  Paper 13984/11 concludes by saying that “many of the common characteristics of the BCJ and of the UPC will contribute to address the legal requirements set out by the ECJ in Opinion 1/09”, before listing such ‘common factors’.  It therefore appears that the BCJ has been used as something of a model for the UPC, and that the UPC should indeed be viewed as a supranational rather than a national court.

However, I understand, based solely on Paper 13984/11, that the BCJ is not a fact finding tribunal, and does not issue decisions which are directly enforceable in the Benelux Treaty states.  Rather, it decides points of law abstracted from the facts, with the application of the law to the facts and the enforcement of decisions being left to the national courts.  A further key difference, and one which is highly relevant to the determination of the applicable law by the UPC, is that, according to Paper 13984/11, “the Treaty establishing the BCJ and the rules of procedure which are based on it constitute the court’s sole legal sources”.  As noted above, the UPC will draw on Union law, the UPC Agreement, the EPC and national law as legal sources, without there being a single judicial body with authority to issue definitive judgments on all of these sources. By contrast with the BCJ, the UPC will have to apply national law and have some clear mechanism of determining which national law is to apply.  The example of the BCJ is therefore of little help for determining how a division of a supranational court, which just happens to be physically located within the territory of a given member state, is to determine the applicable national law.

So which national law is to apply?

Without any division of the UPC being a national court, there is no default set of national ‘choice of rules’ to apply. A localising element or ‘connecting factor’ will need to be determined (see para 1-079 of Dicey, Morris & Collins).   Factors such as the lex situs of bundle rights encounter the same problem noted above in relation to Article 8(1) of Rome II. Ultimately the divisions of the UPC may have to apply the lex fori of their host countries in the same way that an arbitral tribunal may in some instances apply the law of the seat of arbitration when determining the law applicable to an arbitration clause (see para 2.1.2 of Chapter 4 of Cook & Garcia.  In such case, the UK local division would apply English ‘choice of law’ rules, the Paris Central Division French rules, and a regional division the rules of its host country.  Such divergence within a unified system is not ideal.

Precedent and statutory interpretation

Case law of the UPC is not one of the ‘sources of law’ listed in Article 24, and neither the UPC Agreement nor the Rules of Procedure appear to make any reference to any doctrine of precedent.  This is consistent with the view that the UPC will regard judgments of the UPC and those of national courts and decisions of the EPO boards of appeal as persuasive rather than binding.  There could be some debate as to whether, in the absence of specific rules on precedent, this issue will fall to national law, but as this post already extends to over 4,000 words, I’ll leave that debate to another day.

There are also no specified rules of statutory interpretation.  Neither the UPC Agreement nor the EPC are instruments of EU law, so there appears to be no reason for the UPC to apply established EU rules of statutory interpretation.  It would, again, be unsatisfactory in a unified system for statutory interpretation to be governed by individual national law rules.

CONCLUSIONS

Union law, the UPC Agreement and the EPC provide a framework to decide the majority of the legal issues that will need to be decided by the UPC.  Matters falling outside EU law, the EPC or the UPC Agreement are to be covered by national law (other international agreements are of little help in substantive patent law matters). 

When dealing with European ‘bundle’ patents, the above suggests that the UPC will have to apply several sets of national laws to issues of infringement under Rome II, with ‘proprietary’ matters being dealt with according to national choice of law rules.  Only a single set of national laws will apply to unitary patents, determined by reference to the applicant’s domicile or place of business at the time of making the application.

In summary, it’s complicated.  Whether this ends up being a lawyers’ dream or a lawyers’ nightmare remains to be seen.

Litigation in the Brave New World 3: Early Stages of a Claim and Choice of Forum

Early stages: what's hatching?

In the third in this series of blogposts on the European patent package reform package, Don McCombie (Latham & Watkins) examines some of the detail of the provisions with which Europe's patent litigators and their clients will be expected to engage when launching a patent infringement action under the new system. As with the previous posts, the opinions expressed here belong to Don and should not be imputed to any other person or entity.

EARLY STAGES OF A CLAIM AND CHOICE OF FORUM

As noted in my previous post, a claimant may have jurisdiction to bring a claim before one of a number of different divisions of the Unified Patent Court (UPC). Claims for revocation and declarations of non-infringement must be commenced in the Central Division. Depending on the subject matter of the patents in suit (see Annex II to the UPC Agreement), a standalone action for revocation or a declaration of non-infringement will therefore take place in Paris, Munich or London. For infringement actions, a claimant may have a greater degree of choice. Before considering the factors influencing the choice of forum, I will first look at the early stages of bringing and defending a claim by reference to the 14th draft of the Rules of the Procedure. The Rules of Procedure will be the subject of further amendment, but the general structure of the Rules is unlikely to change significantly.

Starting a Claim – Written Procedure

According to Rule 10, proceedings before the Court of First Instance will consist of the following stages:

a) a written procedure;

b) an interim procedure;

c) an oral procedure;

d) a procedure for the award of damages; and e) procedures for cost orders.

In general, proceedings before the UPC will place far greater emphasis on front-loaded, fully-argued written submissions than actions before the English or US courts. The preamble to the procedural rules states that “proceedings shall be conducted in a way which will normally allow the final oral hearing on the issues of infringement and validity at first instance to take place within one year”, with more complex cases taking longer and simpler cases taking less time. Rule 113(1) states that oral hearings trial hearings should last only a single day, which again will be a major change for English litigators, although Rule 113(2) anticipates that oral testimony may be given at a hearing separate from the trial. During the written and interim procedures, a so-called ‘judge-rapporteur’ will have responsibility for case management, after which the presiding judge will have responsibility in consultation with the judge-rapporteur (Rule 331). The ‘general principles of case management’ and ‘case management powers’ are set out in Chapter 8.

This post will concentrate on the written procedure at the beginning of an infringement claim, including a counterclaim for revocation.

Statement of Claim

A plaintiff starts a claim by lodging a Statement of Claim in the division of their choosing (Rule 13). The Statement of Claim must comply with a long list of formalities, including an indication of the division which is to hear the claim and an explanation of why that division has competence. Where a plaintiff is not the proprietor or the only proprietor, a copy of the Statement of Claim must be served on the proprietor.

Fees for bringing actions before the UPC have two components: a fixed fee, which must be paid when lodging the relevant pleading; and a value-based fee, which must be paid within 10 working days of the order determining the value of the dispute (see Part 6 of the Rules of Procedure).

The Statement of Claim must also contain the following substantive information about the claim:

• the nature of the claim, and the order or remedy sought;

• an indication of the facts relied upon, including one or more instances of infringement or threatened infringements and the identification of the patent claims alleged to be infringed;

• the evidence relied upon, where available, and an indication of any further evidence which will be offered in support;

• the reasons why the facts relied on constitute infringements of the patent claims, including arguments of law and where appropriate an explanation of the proposed claim interpretation; and

• an indication of the estimated value of the claim.

Pleadings in the UPC will therefore be more comprehensive than those customarily used in litigation before the US courts or the English High Court. To litigators used to English practice, the prospect of having to offer a claim construction before having sight of a defendant’s prior art references and invalidity arguments may focus the mind. This will be old hat to some European litigators, however. It remains to be seen how tolerant UPC panels will be of vague initial claim constructions and later ‘clarifications’ and restatements.

Rule 14 relates to the language of the Statement of Claim, which will in general be either one of the languages of the local or regional division or, where the claim is brought in the central division or where the parties agree, the language in which the patent was granted. A defendant has one month from the date of service of the claim to object to the jurisdiction and competence of the UPC or the specific division of the UCP (Rule 19).

Defence and Statement of Revocation

A Statement of Defence must be lodged within three months of service of the Statement of Claim (Rule 23). Given the requirement to provide evidence with the defence and any counterclaim, this deadline will be tight. Although the deadline may be extended on making a reasonable request to the judge-rapporteur, but it is anticipated that the application of procedural deadlines will be strict. The Statement of Defence must also contain in indication of the facts relied upon, including any challenge to the plaintiff’s assertions of fact (Rule 24). Similarly to the Statement of Claim, the Defence must contain the evidence relied upon, and an indication of any further evidence to come. The Statement of Defence must also state the reasons why the action should fail, including any statement that the asserted patent is invalid.

Where a Statement of Defence contains an assertion of invalidity, a counterclaim for revocation must be included, which will require the payment of a separate fee (Rule 25). The Statement of Revocation must contain evidence, a statement of the facts relied upon and “one or more grounds for revocation, which shall as far as possible be supported by arguments of law, and where appropriate an explanation of the defendant’s proposed claim construction”. The defendant must also indicate whether it wishes the court to: (a) hear the infringement claim and revocation counterclaim together; (b) refer the counterclaim to the central division and suspend or proceed with the infringement claim; or (c) refer both the claim and counterclaim to the central division under Article 33(3) of the UPC Agreement. Option (b), the hearing of infringement claims separately from revocation claims, is commonly known as ‘bifurcation’.

If the plaintiff is not the proprietor of the patent(s) in suit, the court Registry will serve a copy of the counterclaim on the proprietor. Article 47(5) of the UPC states that “the validity of a patent cannot be contested in an action for infringement brought by the holder of a licence where the patent proprietor does not take part in the proceedings. The party in an action for infringement wanting to contest the validity of a patent shall have to bring actions against the patent proprietor.” It is assumed that service by Registry under Rule 25 is sufficient for these purposes. If not, Rule 305 states that the court may order a person to be added as a party.

As soon as practicable after service of the Statement of Defence, the judge-rapporteur will set a date for the oral hearing (Rule 28).

Reply and Defence to Counterclaim

The plaintiff will have two months in which to lodge a Defence to the Counterclaim, and it may lodge a Reply to the Statement of Defence at the same time (Rule 29). If there is no revocation counterclaim, the time limit for the Reply is one month. The Defence to the Counterclaim may include an application to amend the claims of the patent(s) in suit (Rule 30). Any rejoinders from the defendant, including a defence to the application to amend must then be served within one month.

The formal and substantive requirements for the Defence to Counterclaim and the Reply are similar to those for the earlier pleadings. The plaintiff has to respond to the defendant’s choice of the Article 33(3) options (see above), and it has to indicate which claims of the patent(s) are said to be independently valid. No new matters can be raised in the Reply. The closure of written pleadings, and any requests for additional written pleadings, are dealt with in Rules 35 and 36.

Application of Article 33(3) of the UPC Agreement – Bifurcation

With the possible exception of the CJEU’s role, the possibility of bifurcating infringement and validity claims has been the most controversial aspect of the UPC proposals. Bifurcated systems are seen by many as being patentee-friendly. I will try to avoid rehearsing the arguments for and against bifurcation, and instead focus on how the system might work in practice.

Rule 37 states as follows:

“1. As soon as practicable after the closure of the written procedure the panel shall decide by way of order how to proceed, with respect to the application of Article 33(3) of the Agreement.

2. Where the panel decides to proceed in accordance with Article 33(3)(a) of the agreement [i.e. to hear both infringement and validity together], the judge-rapporteur shall request the President and the Court of First Instance to allocate to the panel a technically qualified judge if not already allocated pursuant to Rules 33 and 34.

3. Where the panel decides to proceed in accordance with Article 33(3)(b) of the Agreement [i.e. to bifurcate the infringement and revocation claims], the panel may stay the infringement proceedings pending a final decision in the revocation procedure and shall stay the infringement proceedings where there is a high likelihood that the relevant claims of the patent (or patents) will be held to be invalid on any ground by the final decision in the revocation procedure.”

Article 33(3) says that local or regional division concerned “shall have discretion” as to whether to bifurcate the claim or not. There is little guidance as the criteria to be used when exercising such discretion. The decision to stay infringement proceedings pending central revocation is subject to the ‘high likelihood of revocation’ test, but no such criterion is to be applied to the decision to bifurcate in the first place. Rule 332(h) states that one of the general principles of case management is that it should be considered “whether the likely benefits of taking a particular step justify the cost of taking it”. Parties should be wary about placing too much emphasis on this single provision, however.

It is unclear whether local divisions in countries which currently bifurcate proceedings will continue to do so under the UPC. For example, I understand that the German constitution (Grundgesetz) dictates that validity and infringement issues be heard by separate national courts. Assuming the UPC is compatible with the Grundgesetz, it remains to be seen whether the multinational judicial panels of German local divisions, who will likely be highly knowledgeable about all aspects of patent law, will actively choose to refer questions of validity to a court in a different member state to be heard in another language, particularly in circumstances where a technical judge will be allocated to the local division from the central pool.

Where a regional or local division has referred a revocation counterclaim to the central division, the judge-rapporteur is obliged to accelerate proceedings before the central division (Rule 40), so as to avoid any time lag between a finding of infringement and a subsequent decision that the infringed patent was actually invalid.

Ultimately, it may be for the parties’ representatives to persuade the relevant local or regional division whether a case is or is not suitable for bifurcation, and whether the benefits of bifurcation justify the costs. The decision will be taken by a panel having the benefit of the parties’ full arguments on validity/invalidity and much of the relevant evidence in support, together with the parties’ submissions on the suitability of bifurcation to the particular case. Where there is a clear validity/infringement ‘squeeze’ on clam construction that would be prejudicial to the defendant if the issues were considered separately, this should hopefully be a factor taken into account by the panel. Similarly, where parties have already been litigating before a local division for six months, the costs to both the court and the parties of attending an additional trial hearing in Munich, Paris or London before a newly-convened three-member judicial panel, and the possible requirement for the translation of all pleadings and evidence, may run counter to some of the current benefits of bifurcated proceedings, namely cost effectiveness and the prospect of rapid dispute resolution.

In summary, it is too early to tell which courts will have a tendency to bifurcate, and the criteria on which local and regional panels will make their decisions.

Choice of forum

For many litigants, the choice of forum will be limited by the jurisdictional factors considered in last week’s post. For generic pharmaceutical companies who are accustomed to ‘clearing the way’ ahead of launch to avoid interim injunctions, assuming the relevant patents have not been opted out of the UPC, the plaintiff will have no option but to commence a revocation claim in the central division. Such claims cannot be commenced in local or regional divisions. Generics companies may be less willing to launch at risk than under current court systems, although the English Patents Court, for example, does not currently place much emphasis on validity considerations when assessing the merits of an interim injunction application. Many patentees may choose to opt out of the UPC entirely, as they will not want to take the risk of pan-European revocation of valuable rights. Companies in many industries, particularly in the pharmaceutical sector, may therefore find their litigation strategies are largely unchanged, with revocation actions continuing to be brought and defended in national patents courts. Other industries may find their litigation strategies changing dramatically, as telecoms and electronics companies may find themselves being sued more often, by claimants for whom the prospect of country-by-country litigation across Europe did not previously make economic sense. Clearly, it is not possible for defendants to ‘opt-out’ of the UPC, and a mobile phone manufacturer cannot expect to ‘clear the way’ before bringing products to market, but creative mitigation strategies may be available.

For patentees, they will be free to bring an infringement claim against a defendant in any local or regional division which has jurisdiction (see last week’s post for further details). A patentee will have to state its preferred claim construction in its Statement of Claim at the commencement of proceedings, when it will be unclear what validity challenges will be faced or whether the proceedings will later be bifurcated. This prospect may chasten potential litigants, especially where they have conducted only limited validity analysis before commencing a claim.

It seems inevitable that differences will develop between different local and regional divisions, and that some courts will acquire a reputation for being more ‘pro-patentee’ than others, attracting more cases as a result. It seems premature to try and predict where these courts might be, given that the locations of all the local and regional divisions have yet to be established. A range of factors will influence the attractiveness of a particular forum to patentees, including the following matters which already differ significantly between European jurisdictions:

• the weight placed on expert testimony relating to obviousness, and the assessment of the ‘common general knowledge’ of the skilled person;

• a panel’s receptiveness to added matter arguments (note current differences between, e.g. the EPO approach and that of the English courts);

• expansive/restrictive national accessory liability laws (see last week’s post);

• willingness to order disclosure within the scope of the procedure rules;

• whether different heads of invalidity, such as obviousness, insufficiency and added matter, will be considered together, allowing ‘squeeze’ arguments to be run, or whether a more compartmentalised approach will be adopted; and

• yes, the willingness of panels to bifurcate.

The applicable substantive laws and Rules of Procedure permit many different approaches to these matters, and time will tell how they will be treated by different local and regional divisions, possibly influenced by traditional national approaches.

It is important not to forget the benefits of the proposed system, however. The UPC will allow rights owners to take a consistent approach to substantially the entire EU trading bloc. Patentees will be able to enforce their rights in markets where the benefits of litigation do not currently justify the costs, i.e. some of the smaller European countries. Where enforcement costs have been too high, this may have affected patenting strategies in respect of the some EU states in the past, and companies may now wish to seek protection in those countries, either through European patents or Unitary Patents. Similarly, companies that regularly face parallel infringement and revocation actions in several member states simultaneously may see significant in reductions in their litigation expenditure, although the new proposals will not benefit all industries equally.

Next week: having now looked at jurisdiction and the early stages of procedure, it's time to consider the substantive laws to be applied by the UPC.

Don's first two posts can be accessed here and here

Litigation in the Brave New World 2: Jurisdiction and the Unified Patent Court

Now that the dust has more or less settled on the European patent package reform package, Europe's patent litigators and their clients are looking at the new scenery to see what is still familiar and what has changed.  In this context, PatLit was pleased to welcome last week the first of a series of guest posts by Don McCombie (Latham & Watkins) on what he calls the Brave New World of EU patent litigation.  Now we post Don's second offering, on the controversial scheme for the Unified Patent Court. The opinions expressed below are definitely Don's, but not necessarily those of Latham & Watkins.  Anyway, this is what Don writes:

JURISDICTION AND THE UNIFIED PATENT COURT

Following last week’s general overview, this week’s post looks specifically at the jurisdiction of the Unified Patent Court and its component divisions.  Next week’s post will look at the early stages of a claim, including the choice of forum.  However, before choosing a forum, a claimant must first establish whether and where they have jurisdiction to bring a claim.

Rights over which the UPC has jurisdiction

The UPC will eventually have exclusive jurisdiction over existing and prospective European patents, Unitary Patents and supplementary protection certificates (Art 3 of the Agreement).  In the case of European patents, decisions of the UPC will cover only those contracting member states for which that patent is designated (Art 34).  During the seven-year transitional period following implementation of the UPC, national courts and the UPC will share jurisdiction over the infringement and revocation of European patents (Art 83).  Additionally, patentees may opt their European patents (but not Unitary Patents) out of the competence of the UPC entirely during the transitional period (Art 83(3)), meaning that only national courts would be competent to hear claims relating to that patent.

Once opted out, patentees may opt back into the jurisdiction of the UPC any time they wish, i.e. even after the transitional period has expired (Art 83(4)).  Neither the Agreement nor the current draft of procedural rules contain any disadvantage for a patentee where they opt out and later opt back in.  This arguably incentivises patentees to opt-out to avoid pan-European revocation in the UPC Central Division, only to opt back in when it is advantageous to enforce the patent across Europe.       

Relationship with the Brussels Regulation and contrast with the Community Trade Mark

Before looking at the specific jurisdiction provisions of the UPC Agreement, the background to certain provisions of the current draft should be explained.  The European Commission published a ‘non-paper’ in 2011, which expressed inter alia the Commission’s views on the combined application of the recast of the Brussels Regulation and a previous draft of the UPC Agreement.  The Commission stated at p3-4 on the ‘non-paper’ that the:

“jurisdiction rules of the Brussels I Regulation apply to the UPC.  In practice, this means that the UPC will have jurisdiction any time when a national court of a participating Member State would have jurisdiction based on the rules of the Brussels I Regulation.  The UPC would not have jurisdiction when no national court of a participating Member State has jurisdiction pursuant to the Brussels I Regulation (e.g. when jurisdiction pursuant to the Brussels I Regulation would lie with the courts of a non-participating Member State);

The rules of the Brussels I Regulation do not apply to the internal allocation of competences between the various divisions of the UPC, which will be regulated by the UPC Agreement itself

With respect to Art. 22(4) of the Brussels I Regulation [i.e. which confers exclusive jurisdiction over questions of validity on the courts of the Member State in which a part of an EP has been designated], insofar as European patents are concerned, the UPC would have exclusive jurisdiction only with respect to those parts of the patent which concern participating Member States. For the other parts, the UPC would need to recognise the exclusive jurisdiction of other Member States. […]

The lis pendens rule of the Brussels I Regulation does not apply between different divisions of the UPC.”

The Commission noted some specific points requiring ‘careful attention’ (see p.4), recommending clarificatory amendments to both the UPC Agreement and the recast Brussels Regulation.  The recast Brussels Regulation makes no reference to the UPC, although some limited amendments have been made to the UPC Agreement.

The Commission recommended that a new article be inserted, providing for the “applicability of the Brussels I Regulation and specify that the UPC will have jurisdiction any time a court of a participating Member State has jurisdiction on the basis of the Brussels I Regulation.”  Article 31 of the final version of the UPC Agreement has been added, which specifically refers to the application of the recast Brussels Regulation, although the manner in which its specific provisions will apply is unclear.

By illustrative contrast, the Community Trade Mark Regulation (CTMR) expressly recognises its relationship with the current Brussels Regulation. Recital 16 says that “[t]he provisions of [the Brussels Regulation] should apply to all actions at law relating to Community trade marks, save where this Regulation derogates from those rules”, and Article 94 of the CTMR expressly states which provisions of the Brussels Regulation either do not apply or are modified by the CTMR.   

With the above points in mind, and noting that the compatibility of the recast Brussels Regulation with the UPC Agreement is not crystal clear, particularly regarding the ‘exclusive jurisdiction’ provisions of the recast Brussels Regulation at Article 24(4), I will now turn to the specific jurisdiction provisions of the UPC. The following is based on the assumption that the Commission’s views as expressed in the ‘non-paper’ are correct.

Jurisdiction of local and regional divisions - infringement

International jurisdiction of the UPC is to be established in accordance with the recast Brussels Regulation and, where applicable, the Lugano Convention (Art 31).  The territorial jurisdiction of individual local and regional divisions in infringement and injunction proceedings is to be established by Art 33 in combination with the recast Brussels Regulation.  Jurisdiction can be determined by reference either to the location of the act of infringement or the residence or domicile of the defendant(s).  Art 33(1)(a) confers jurisdiction on

“the local division hosted by the Contracting Member State where the actual or threatened infringement has occurred or may occur, or the regional division in which that Contracting Member State participates”. 

In many cases, the defendant will have sold an accused product in several Contracting Member States, providing the claimant with a choice of venues in which to bring a claim.

Art 33(1)(b) confers jurisdiction on

“the local division hosted by the Contracting member State where the defendant or, in the case of multiple defendants, one of the defendants has its residence, or principal place of business, or in the absence of residence or principal place of business, its place of business, or the regional division in which that Contracting Member State participates.  An action may be brought against multiple defendants only where the defendants have a commercial relationship and where the action relates to the same alleged infringement.”

This latter provision could be seen as combining Articles 4(1) and 8(1) of the recast Brussels Regulation, although the wording of Article 8(1) is arguably broader in scope.  The practical effects of these provisions appear to be:

·         a patentee can clearly sue a defendant in the country in which it commits an infringing act.  However, on a literal reading neither Art 33(1)(a) nor the provisions of the Brussels Regulation allow a court to take jurisdiction over co-defendants which have not committed infringements in that given state.   

·         a patentee can clearly sue a defendant in the country of its domicile or place of business.  Jurisdiction can then be taken over co-defendants based in other countries based on the domicile of the ‘anchor’ defendant under Art 33(1)(b) or Article 8(1) of the recast Brussels Regulation (formerly Article 6(1)).  The extent of the jurisdiction over co-defendants is dependent on the interpretation of either the terms ‘commercial relationship’ and ‘same alleged infringement’ (Art 33(1)(b)) or whether the claims are “so closely connected that is expedient to hear and determine the them together to avoid the risk of irreconcilable judgments resulting from separate proceedings” (Article 8(1)). Member state and EU courts are familiar with the latter formulation, but the scope of the wording of the UPC Agreement remains untested.

Parties may also agree to the jurisdiction of any division of the Court of First Instance, including the central division (Art 33(7)).  Where a party has no residence or place of business in a contracting member state, the division of the contracting member state where the infringement takes place and the central division have jurisdiction (Art 33(1)).

Although the manner of application of these provisions is as yet uncertain, they may present a further solution to one of the concerns of stakeholders expressed during the drafting of the UPC Agreement, namely the prospect of having to defend an infringement action before a local division which is either inexperienced or which might adopt an unjustly pro-patentee stance.  Whilst the provisions relating to multinational judicial panels (Art 8) are already designed to mitigate such problems, in addition it could be possible to structure a company’s distribution network to ensure that no acts are undertaken by a person having a domicile or place of business within the territory of a ‘rogue’ local or regional division.  

In such circumstances, a patentee would still be able to sue the infringing distributor in the ‘rogue’ division in respect of acts taking place within that country/region, and in respect of acts performed by that same defendant in other contracting member states. However, in order to take jurisdiction over other defendants associated with that distributor, the claimant would have to commence proceedings in either the division of the distributor’s domicile or the domicile of one of its co-defendants. A company or corporate group could therefore potentially ring-fence its operations in the event that, say, a particular court became the go-to venue for non-practising entity litigation.  Such a strategy would not deprive a patentee of the possibility of fairly asserting its patents under the UPC – a defendant or an entity with which it had a ‘commercial relationship’ would be very likely to have a place of business in at least one contracting state, or proceedings could be commenced in the central division – but it may be possible to mitigate against unfair forum shopping to some extent.  The efficacy of such a strategy would be dependent on national laws relating to accessory liability, however (see below).

A defendant may lodge a preliminary objection within one month of service of a statement of claim to challenge the jurisdiction and competence of the UPC or the competence of a particular division (currently, Procedure Rule 19).

Accessory liability and jurisdiction

As noted in 2009 by Mr Justice Arnold (at p.8 of the linked document), the Agreement does not contain any provisions about accessory liability, meaning that questions of the ‘procurement’ of infringement and joint tortfeasorship may fall to be determined under national laws, which are not harmonised across the EU.  For example, if a patentee wished to sue the US parent of a UK-based infringer in the UK local division, it would have to make out a case under the applicable English law that the parent was either a joint tortfeasor or had procured the acts of infringement, i.e. assuming the US parent had not directly performed any infringing acts in the EU.  Such a determination is, under English law, dependent on the facts of the individual case.  Other countries will have their own approaches to these issues, and concepts of separate corporate personality versus ‘single economic entity’ approaches may differ between the national laws of the contracting states.  Such national rules would need to be taken into account when designing any ‘ring-fencing strategy’.

Competences of the divisions of the UPC

The UPC has ‘exclusive competence’ in respect of the specified types of actions listed in Art 32(1), including infringement, revocation, declarations for non-infringement and preliminary injunctions.  Entitlement proceedings are not included, which remain within the competence of national courts (Art 32(2)).  As lack of entitlement is itself a ground of revocation under the national laws of many contracting states, entitlement may potentially be raised as part of a revocation claim or counterclaim.  There is no express provision for the making of declarations as to matters such as the essentiality of a patent to a given standard, although such declarations might be sought either as a defence to an infringement action or as part of a declaration for non-infringement.

The most significant difference in competence between the different divisions of the First Instance is that actions for revocation and declarations of non-infringement may only be brought before the central division, and not before local or regional divisions (Art 33(4)). Local and regional divisions are, however, competent to hear revocation counterclaims (Art 33(3)).  A local or regional division may either:

·         hear both the infringement claim and revocation counterclaim together;

·         hear only the infringement claim and refer the revocation counterclaim to the central division, also known as ‘bifurcation’. The next post in this series will look at bifurcation under the UPC in more detail; or

·         refer both parts of the claim to the Central Division (Art 33(3)). 

Article 33 also details with situations where infringement and invalidity proceedings are already pending before other divisions of the UPC (Art 33(2), (4), (5) & (6)).

If there is no local or regional division for a given contracting member state, then actions shall be brought before the central division (Art 33(1)).

The CJEU

Article 21 relates to the role of the Court of Justice of the EU.  Except for the biotech directive and the supplementary protection certificate regulation, the substantive laws relating to the infringement and validity of patents are largely untouched by EU law.  There has been a deliberate and concerted attempt to avoid the jurisdiction of the CJEU in substantive patent law matters, and specific provisions relating to infringement laws were removed from the Regulation on creation of the Unitary Patent.  As the UPC Agreement is not technically an instrument of EU law, the substantive infringement provisions will also, at least in theory, fall outside the competence of the CJEU.  Time will tell if the CJEU will nevertheless take jurisdiction over these matters.

Litigation in the Brave New World 1: overview of the EU reform package

Now that the dust has more or less settled on the European patent package reform package, Europe's patent litigators and their clients are looking at the new scenery to see what is still familiar and what has changed.  In this context, PatLit is pleased to welcome the first of a series of guest posts by Don McCombie (Latham & Watkins) on what Don calls the Brave New World of EU patent litigation:

EU Patent Reform – Litigation in the Brave New World 

The Agreement on a Unified Patent Court has now been signed by every current European Union (EU) member state except Spain and Poland. The Agreement is still subject to ratification in accordance with the respective constitutional requirements of the individual member states; 13 countries, including at least Germany, France and the UK, must ratify the Agreement before it can be brought into force.  Some previous attempts at European patent reform have failed at the national ratification stage.  However, after nearly 40 years of trying, it appears that the EU may finally succeed in its goal of re-shaping the European patent system. 

The Unified Patent Court (UPC) is part of a package of reforms including a Regulation on the creation of an EU Unitary Patent and an associated Regulation on the translation arrangements applicable to Unitary Patents. The reforms have been the subject of much criticism and debate.  However, the intent of this series of posts is not to address the controversy, or to offer any value-judgements on the merits of the proposals. Rather, these posts will look at the likely practical effects of the reforms on the conduct of patent litigation in Europe, assuming the proposals are ultimately brought into force.   

This first post provides a high level overview of the reform package, and will be followed in the coming weeks by more detailed posts on certain aspects of the UPC, including:
·         jurisdiction, ‘opt-outs’ and the relationship with national courts and the EPO;
·         choice of forum and the early stages of a claim;
·         the substantive law to be applied by the UPC;
·         interim procedures and provisional measures;
·         case management and evidence; and
·         trials, damages and appeals. 

CURRENT SYSTEM 

For the benefit of non-European readers, the current system can be broadly summarised as follows. An applicant can make a single application to the European Patent Office (EPO) designating the individual European countries in which patent protection is required; protection may be sought in all 38 European Patent Organisation contracting states or in only a small sub-set, depending on the applicant’s needs. Substantive examination is undertaken centrally, but upon grant a so-called ‘European Patent’ becomes a collection of national patent rights, which must be renewed, enforced or revoked (subject to EPO Opposition proceedings) on a country-by-country basis.  There are only 27 EU member states, so not every EPO contracting state is a member of the EU.  

If a patentee wishes to enforce its rights in every EU member state, at present it needs to commence infringement actions separately in the courts of each member state.  For example, if a pharmaceutical company holding a European Patent wanted to prevent a competitor from selling products covered by its patent in France, Germany and the UK, it would have to bring three separate infringement actions before the courts in those countries.  Even if the British version of the European Patent was revoked before the parallel infringement actions reached the courts in France or Germany, the French and German versions of that European Patent would still be enforceable as against an alleged infringer in those jurisdictions, and the different national courts may in many cases arrive at opposing decisions. 

The current system therefore leads to duplication in litigation between European countries in some cases, leading to potentially inconsistent results and increased litigation costs. Further, it is often prohibitively expensive for parties to litigate in every EU member state, and current litigation strategies tend to focus on the larger national markets in Europe.  The reforms are intended to provide patentees and applicants for revocation with the ability to take a pan-European approach to patenting and freedom-to-operate strategies. 

THE UNIFIED PATENT COURT 

The Agreement on the Unified Patent Court establishes a single patent court with the power to issue decisions on the infringement and validity of existing European Patents and the proposed Unitary Patents (see below) which are binding across all contracting EU member states.  1 January 2014 is the earliest date on which the new system could be brought into force under the terms of the Agreement.  However, this is a very ambitious timeline, as judges still need to be appointed and trained, court premises still need to be found, and a great many administrative matters still need to be undertaken, so significant delays are to be expected.     

The structure of the UPC is fairly complex, but can be summarised as follows: the Court of First Instance of the UPC consists of three types of ‘Divisions’; Local, Regional and Central:
·         Each contracting state is entitled to at least one Local Division, and countries may request additional Local Divisions in certain defined circumstances. At least initially, Germany is likely to be the only country to request more than one Local Division.
·         Two or more contracting states may ‘club together’ to request the establishment of a Regional Division. The identity, location and composition of any Regional Divisions has yet to be publicly confirmed, although this has been the subject of speculation for a number of years.
·         The Central Division will have its seat in Paris, where it will hear cases relating to all subject matter except chemicals, human necessities (which includes pharmaceutical products) and metallurgy, which have been allocated to the London section, and mechanical engineering, lighting, heating, weapons and blasting, which have been allocated to the Munich section. 

At First Instance, judicial panels will generally consist of at least three judges, and the panels will have a multinational composition. Panels of Local and Regional Divisions will be composed of three legally qualified judges, and an additional technically qualified judge may be allocated to a Local or Regional Division on request, and must be allocated in the event of a revocation counterclaim.  Panels of the Central Division will be composed of two legally qualified judges from different contracting states and one technically qualified judge.  Notwithstanding the above, it is possible for parties to agree to have their case heard by a single legally qualified judge. 

Local and Regional Divisions may hear claims including infringement actions, applications for injunctions, licence defences and revocation counterclaims.  Standalone actions for revocation actions and/or declarations of non-infringement must be commenced in the Central Division, which can also hear all types of cases over which Local and Regional Division have competence.  No standing or ‘controversy’ will be required in order to commence a revocation action. 

Where a revocation counterclaim is made in response to an infringement claim in a Local or Regional Division, the court will have discretion as to whether to hear both the infringement claim and the revocation counterclaim together or to refer the revocation counterclaim to the Central Division and proceed only with the infringement claim.  The court structure therefore allows for ‘bifurcation’ of infringement and validity claims, which will be covered in more detail in a later post.  On the agreement of the parties, the entire case may also be referred to the Central Division. 

The Court of Appeal will have its seat in Luxembourg, where the Court of Justice of the European Union (CJEU) is located.  Appeal hearings will be presided over by panels consisting of three legally qualified judges and two technically qualified judges. 

The court will be obliged to refer questions relating to issues of EU law to the CJEU, although many stakeholders have sought to ensure that substantive validity and infringement laws are not the subject of EU law, so as to avoid having the CJEU decide substantive questions of patentability and infringement.  It remains to be seen whether, despite the efforts of the framers of the package of reforms, the CJEU will nevertheless assume competence over questions of patent infringement. 

THE UNITARY PATENT 

Regulation (EU) 1257/2012 on the creation of unitary patent protection will apply as from the later of 1 January 2014 or the entry into force of the UPC Agreement, which is likely to be delayed for the reasons noted above.  Unitary Patent protection may be requested from the EPO in respect of European Patents granted on or after the date of application of the Regulation.
Like existing ‘European Patents’ described above, Unitary Patents will be examined and granted by the EPO.  However, on grant a Unitary Patent will provide for uniform protection across all participating EU member states as a single EU legal right, rather than as a collection of individual national rights.  Administration and renewal fees will be dealt with centrally by the EPO, rather than by individual national patent offices.  

Unitary Patents will not be subject to the UPC transitional provisions, and there will be no possibility of Unitary Patent holders ‘opting-out’ of the new UPC system, but the enforcement of Unitary Patents under the UPC will otherwise be substantially identical to existing and future European Patents. 

It is expected that 25 of the current 27 EU member states will adopt the Unitary Patent. Spain and Italy have challenged the legislative basis of the Unitary patent proposals in the EU courts (although Italy has signed the UPC Agreement), and the Advocate General recommended on 11 December 2012 that the legal challenge should be rejected. The decision of the CJEU itself is still pending.