CAFC bows to the inevitable

PatLit has already featured the cruel and unusual "patent marking" provisions of US patent law here and here (see also this post on patent marking policy in Taiwan). Well, earlier today the United States Court of Appeals for the Federal Circuit gave its ruling in Raymond E. Stauffer v Brooks Brothers Inc.; Retail Brand Alliance v United States here.

The decision is bad news for unsuspecting and harmless patent-markers. Brooks Brothers and its parent Retail Brand Alliance made and sold men’s bow ties. Some of the Brooks Brothers bow ties contained an “Adjustolox” mechanism made by a third party, J.M.C. Bow Company, and marked with, inter alia, U.S. Patent Nos. 2,083,106 and 2,123,620. These patents are not exactly hot stuff, having expired in 1954 and 1955 respectively. Stauffer, a patent attorney, bought some of the marked bow ties, then brought a qui tam action under 35 U.S.C. § 292 alleging that Brooks Brothers had falsely marked its bow ties as being patented. This would entitle him to half the fine in respect of each offending sale. The District Court dismissed Stauffer's action on grounds of lack of standing and an insufficiently argued claim that he was a person damaged by the bow tie sale.

Reversing this decision -- which to this English lawyer, unversed in US law, looked clearly wrong in the first place -- the Federal Circuit remanded the action for trial of the merits. On the issue of standing the appellate court had this to say:

"We also need not address whether Stauffer’s alleged injuries to himself or his asserted injuries to competition give him standing, either individually or as a member of the public. Stauffer’s standing arises from his status as “any person,” and he need not allege more for jurisdictional purposes. The district court conflated its jurisdic-tion with the merits of the case when it stated that Stauffer had failed to sufficiently allege a “purpose of deceiving the public.” ... Brooks Brothers similarly conflates jurisdiction and merits in asserting that Stauffer must show that the marking is fairly traceable to Brooks Brothers, rather than to J.M.C. Bow, the third party Adjustolox manufacturer. Neither of those points is jurisdictional in nature, nor do they fall under the standing inquiry. The standing doctrine is intended to require that the plaintiff is a proper person to bring the suit; it does not require that the plaintiff properly allege all of the elements of his claim. Thus, “standing does not depend on the merits of the plaintiff’s contention that particular conduct is illegal”; it instead requires a claim to an injury of a legally cognizable right. .... By allowing any person to sue, Congress granted individuals a legally cognizable right to half of the penalty defined in section 292(a). Thus, Stauffer has sufficiently alleged (1) an injury in fact to the United States that (2) is caused by Brooks Brothers’ alleged conduct, attaching the markings to its bow ties, and (3) is likely to be redressed, with a statutory fine, by a favorable decision ...".

Thanks, Gerry Gavigan, for the link.

New Procedure for the Patents County Court

This guest post, authored by Paul Cole*, brings welcome news of some long-awaited reforms in the operation of the Patents County Court for England and Wales (on which see earlier PatLit posts here, here and here). Paul places the new developments within their historical context and explains their significance:

NEW PROCEDURE FOR THE PATENTS COUNTY COURT: THIRD TIME LUCKY?

The Patents County Court (PCC), which aims to provide an inexpensive forum for resolution if IP disputes involving SMEs, has had a chequered history.

In its first incarnation under the guidance of Judge Peter Ford its rules aimed to provide a more compact and effective procedure than the High Court, but in high profile cases such as Pavel v Sony control over costs was not achieved, and a number of its decisions were reversed by the Court of Appeal. In a second incarnation under the guidance of Michael Fysh Q.C. and under the rules laid down under the PCC it has lead a quieter and less controversial life, but the number of decisions significant enough to appear on the BAILII website has been small. With the retirement of Judge Fysh, a new attempt is now being been made to reinvigorate the court and to provide it with distinctive rules that differentiate and simplify its procedure compared to that of the High Court.

A final report of a working group on proposals for reform of the Patents County Court was published on 31 July 2010. Unusually for such reports, many of its recommendations were implemented immediately, in the 53rd update to the Civil Procedure Rules (CPR), available here. Links to SI 2010/1953 which amends the CPR Part 63 and to a so-called “making document” which amends Practice Direction 63 can be found at the same link under the heading “preview”. The update comes into force on 1 October. Major changes introduced are that:

· The pleadings are intended to provide the primary basis on which the case will go to trial. A statement of case must set out concisely all the facts and arguments upon which the party serving it relies and must be verified by a statement of truth signed by a person or persons having personal knowledge of the facts alleged so that it can stand in evidence in itself. Where possible the court will determine the claim solely on the basis of the parties’ statements of case and oral submissions.

· The provisions providing for automatic standard disclosure in the Patents Court do not apply in the PCC.

· At the case management conference the court may order any of the following—

(1) specific disclosure;

(2) a product or process description (or a supplementary product or process description where one has already been provided);

(3) experiments;

(4) witness statements;

(5) experts’ reports;

(6) cross examination at trial;

(7) written submissions or skeleton arguments.

However, an order will only be made in respect of specific and identified issues and if the court is satisfied that the benefit of the further material in terms of its value in resolving those issues justifies the cost of producing and dealing with that material .

· The court will strictly control cross-examination.

· The court will endeavour to ensure that trial lasts no longer than two days.

· Costs in the PCC have been capped at £50,000 for liability and at £25,000 for an enquiry as to damages. As in the IP Office, there is now to be a scale of costs for the procedural stages, that for liability being set out below:

Table A
St Stage of Stage of a claim	Maximum amount of costs
Particulars of claim	£6,125
Defence and counterclaim	£6,125
Reply and defence to counterclaim	£6,125
Reply to defence to counterclaim	£3,000
Attendance at a case management conference	£2,500
Making or responding to an application	£2,500
Providing or inspecting disclosure or product/process description	£5,000
Performing or inspecting experiments	£2,500
Preparing witness statements	£5,000
Preparing experts’ report	£7,500
Preparing for and attending trial and judgment	£15,000
Preparing for determination on the papers	£5,000

• Save for exceptional circumstances an application to transfer the claim to the High Court or to stay proceedings must be made before or at the case management conference. In other respects, s.289 of the Copyright, Designs and Patents Act 1988 remain applicable to transfer of proceedings.

• A recommendation for a £500,000 cap on damages cannot be implemented because an Order in Council is required, and it is not clear whether it is intended to lay any such order before Parliament and if so when. Until that happens, the jurisdiction of the PCC as to damages remains unlimited.

• A new Guide is to be published for the PCC. No such Guide is yet available.

The Committee acknowledged concern that, even with a system of scale fees and an overall costs cap, larger litigants might try to gain an advantage over smaller litigants by outspending them. It accepted that this was a valid concern, but believed that the procedures that had been proposed and have now been introduced should minimise it. It commented that when exercising his case management powers, the Judge would have the responsibility of ensuring equality of arms between the parties so far as that is possible.

It remains to be seen to what extent such hopes survive the pressures of litigation: arguments concerning what issues it is appropriate to identify and the costs and benefits of the various possible orders could result in considerable expenditure of effort and considerable cost at the case management stage. Recent developments in the Court of Appeal could prove profoundly unhelpful to the objective of simplicity and straightforward procedure. In its decisions in Molnlycke v Procter & Gamble [1994] R.P.C. 49 and Glaverbel v British Coal [1995] R.P.C. 255, a distinction was made between primary evidence from expert witnesses and secondary evidence e.g. the reactions of particular individuals and commercial success, which it was held should be kept “firmly in its place.” That approach has recently been questioned in Schlumberger v Electromagnetic Geoservices [2010] EWCA Civ 819 (noted on PatLit here) where it was held that it would be wrong to read these decisions as saying that secondary evidence is always of minor importance, that to do so would be to throw away a vast mass of jurisprudence including many House of Lords cases, and that in approaching the secondary evidence with skepticism the judge was making an error of principle. In Schlumberger the decisive factor in favour of patentability was the contemporary reactions of other scientists that the claimed subject matter was “an exciting development.” Against this background it will be very difficult, where inventiveness is in dispute, for the judge at the case management stage to rule out investigation of secondary evidence, with the complexity and cost to the parties that this inevitably involves, without the risk that his decision may be overturned through an error of principle.

* Paul Cole is a Chartered Patent Attorney, Lucas & Co, Professor of IP Law, Bournemouth University and an editor of the CIPA Guide to the Patents Acts.

Impact of weblog on number of opponents: a form of abuse?

A practitioner acting for one of a number of opponents challenging a business method-type patent before the EPO has drawn the attention of PatLit to the fact that the proprietor's response contains an observation that opposition to its patent has been encouraged by a weblog, Schemaworks. According to the proprietor's response, this constitutes an abuse which also entitles to the proprietor to an award of costs based upon it. According to the response,

19 notices of oppositions have been filed naming 29 parties. It is believed that the large number of oppositions is due to a blog created by one Mikkel Hippe Brun which can be seen at http://blog.schemaworks.com/

For example, the blog has EPO Form 2300 available as a download to enable opponents to launch oppositions.

Whilst it is accepted that any person may give notice of opposition under Art. 99 EPC, it is submitted that setting up a blog to inundate the proprietor with oppositions is an abusive process which puts the proprietor as a relatively small company at a significant disadvantage. The proprietor requests that the Opposition Division bear this in mind during the opposition procedure, particularly with regard to requests for extension of time and an award of costs, if deemed appropriate.

While the large number of oppositions (19) and opponents (29) may well have been swollen by virtue of the blog, it is difficult to see how the use of a blog to support an opposition, whether by the opponent himself or by an interested third party, should make any difference to the outcome. The criteria of patentability, and of invalidity, remain unchanged and any patent that is granted without fulfilling them is vulnerable to an action for revocation at any time throughout its life. One might expect the use of blogs therefore to enhance the grant of quality patents.

Bulls and horns, carts and horses -- but still no stay.

On what may be the first occasion on which both bulls and horses have been harnessed by any British judge for the purpose of deciding a patent appeal, the Court of Appeal for England and Wales gave a short and somewhat bucolic-sounding decision in Molnlycke Health Care v BSN Medical Ltd [2010] EWCA Civ 988. Lord Justice Jacob (with whom Lord Justice Patten presumably agreed) explained that this was an appeal against Mr Justice Floyd's refusal to stay an English patent action on the ground that proceedings were already underway in Sweden and that, accordingly, the case fell within Article 27 of the Brussels Regulation which runs like this:

"1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.".

Dismissing the appeal, Jacob LJ said that, when the matter first came before the Court of Appeal it was not entirely clear from the papers whether the Swedish court was seised with the same issue as that in the English proceedings: did the samples of BSN's products fall within the claims of Molnlycke's patent? Rather than ploughing through the various Swedish judgments [which, PatLit guesses, were delivered in Swedish] the Court would take the bull by the horns and contact the Swedish judge. The latter responded immediately and helpfully in that spirit of cooperation between European judges which could not have existed even 20 years ago [which, PatLit guesses, means that she replied in English]. She confirmed that, as the case stands right now, that question was not in issue. Ergo, no stay.

If, as Jacob LJ pointed out, the question does subsequently arise in Sweden, since it will do so only after the Court of England and Wales was seised with that issue, it is that court and not the Swedish one which will be first seised.

It was argued, relying on Article 28 of the same Regulation, that the Court of Appeal should adjourn this current appeal to await a decision from the Swedish court as to whether it wants to take jurisdiction over this question. That, said Jacob LJ, was putting the cart before the horse: "This court is seised with the issue. There is an infringement, according to Molnlycke, of the British patent. Molnlycke are entitled to proceed to bring that claim before the English court". The learned judge then observed:

"Whether it is sensible for the parties to proceed in two different jurisdictions is a quite different matter. That is a matter for them. If they wish to choose just one of them and have it decided there, they can of course do that. But it is not a matter for the courts to get involved in".

Says PatLit, this judgment is also characterised by a mysterious line which reads:

"There were other points too, none of which matter for present purposes. PRIVATE ".

If the points do not matter for present purposes, one wonders whether it wise to mention them.

Prepaid Telephone Card: Germany reaches out to foreign infringing acts

An excellent note, "The “Prepaid Telephone Card” Decision of the Higher Regional Court Düsseldorf", by Felix T. Rödiger and Nina Malzhacker, was published earlier this month by leading patent practice Bird & Bird here. The note summarises and explains the recently-published decision the Higher Regional Court, Düsseldorf, which extended the scope of national method patents to cross-border situations. Prepaid Telephone Card complements an earlier decision of the Bundesgerichtshof, Rohrschweissverfahren, which considered that a national patent was infringed by an action which started abroad but ended in Germany. Until Prepaid Telephone Card, however, it was unclear whether the same principle applied in reverse.

In this case the patent was for a method for processing prepaid telephone calls which comprised various procedural steps, involving a server, which could be toll-free, accessed via a code number imprinted on a vendible telephone card. Since the defendant's server was located outside Germany and, apart from the sale of the telephone card, most of the steps described in the patent were performed abroad, the defendant argued that the principle of territoriality excluded an infringement of the German patent.

The Court disagreed: while actions which take place exclusively abroad cannot constitute a German patent infringement, cross-border actions are different. Said the court, there are two scenarios. In the first, the infringing act commences abroad but is completed in Germany; in the second, the infringing act starts in Germany but is completed abroad. In both cases, actions performed abroad must be treated like domestic actions when the infringer exploits them in order to infringe a national patent.

The effect of this decision is that it has become more difficult for companies to circumvent an infringement of a method patent in Germany and that the outsourcing individual steps to various countries will no longer give “a freedom to operate”. This decision is currently under appeal to the Bundesgerichtshof.

Says PatLit, readers might want to compare this case with the approach taken by the Court of Appeal for England and Wales in Menashe Business Mercantile Ltd. & Anor v William Hill Organization Ltd [2002] EWCA Civ 1702, where similar issues arose.

The Advocate General's Opinion: thumbs down for the proposed Court

Here, courtesy of Kevin Mooney (Simmons & Simmons) is an English translation of Advocate General Juliane Kokott's Opinion, on behalf of all the Advocate General, in Case 1/09 on the legality of the proposed European and European Union Patents Court. Readers, please note: (i) this is an informal translation, not an official one; (ii) once it's smartened up it will be posted on the elexica website.

In summary Kristof Neefs (Altius) tells PatLit that

- as for administrative proceedings, the AGs consider that EPO proceedings should be subjected to judicial review (either by the CJEU or an independent court);
- primacy of EU law as a whole should be expressly provided for;
- the current proposal contains insufficient safeguards against violation of EU law by the Patent Courts;
- the proposed language regime is incompatible with the rights of defence in that it is possible that a defendant is brought before the central division where the case will be tried in German, French or English. If these languages are neither the language of the defendant’s seat of establishment nor that of a jurisdiction in which he has developed commercial activities, this would be incompatible with the rights of defence, except if a provision would be included permitting the central division to derogate from the language rule or allowing the defendant to obtain translations of the procedural file.

Before you litigate that patent in India, read this

From the ever-fertile keyboard of Spicy IP blogger Prashant Reddy comes "A Beginner's Guide to Patent Litigation Before Indian Courts and the Indian Patent Office" (here), an entertaining and thought-provoking piece in which the author dares to suggest that some of the complaints most frequently laid at the feet of the Indian patent system relate to problems that are not inherent in the system itself but reflect "the faulty strategies, tactics and law firms" used by foreign innovator companies which complain loudest against the Indian system. Adding that it is "[e]ven more perplexing is the fact that innovator companies keep repeating their mistakes time and again, especially in opposition proceedings before the Patent Office. It's almost like they're trying to commit hara-kiri", Prashant then lists some surprisingly elementary advice for those who come to India to litigate their (or other people''s) patents.

PatLit thinks that a lot of this advice is applicable not only in India but in many other lively and fast-maturing developing markets in which innovator companies are trading at a great cultural distance from their head offices. Oh, yes -- and the fact that the offending parties can do a great deal better does not mean that the system is not in need of improvement ...

Two bites at the cherry, but no enhanced costs

The recent decision of a hearing officer for the UK's Intellectual Property Office (IPO) in Wragg v Donnelly BL O/280/10, 9 August 2010 has already been picked up by the SOLO IP weblog (here) on account of its novelty value, since the case was -- unusually -- heard outside London. But it is interesting for another reason: costs.

The patent in this dispute was for a device for conducting fluid released from a pressure relief valve of a boiler, via a conduit, to the outside of a building and changing direction of the fluid using a cup-shaped portion at the end of the conduit. By the time the hearing officer had determine the issues of validity and infringement, those issues had already been the subject of two non-binding opinions under the Patents Act 1977, s.74A, in which it was considered (i) that Wragg had indirectly infringed the patent and (ii) that the patent was valid.

In proceedings under s.71 of the same Act, Wragg sought unsuccessfully to establish that the same patent was both invalid and non-infringed. Donnelly, feeling aggrieved that his adversary had taken two bites at the cherry, argued that he should be awarded costs greater than the ordinary scale costs since the same issues had already been the subject of the two opinions.

According to the hearing officer, the whole point of the IPO's non-binding opinions service was to provide an inexpensive way for parties to get an impartial view of a dispute between them. If the use of this service did not actually enable the parties to resolve their dispute, it would be wrong to punish either party for wanting to have the matter fully explored in a way which was simply not possible under the opinions service, since it lacked cross-examination and other procedural devices which were available to the courts. Bearing this in mind, enhanced costs would not be awarded.

Process patent infringement: reversing the burden of proof

In "Reversal of burden of proof: a tough nut to crack", Aaradhana Sadasivam (KhattarWong, Singapore) seeks to compare the mechanisms relating to proof of infringement in cases involving process patents in terms of the national laws of Malaysia, the UK, Singapore, India and USA, as well as under the World Trade Organization's TRIPS Agreement. The abstract of her article for the Journal of Intellectual Property Law & Practice (JIPLP), which is not yet published in paper format but which is already available online to subscribers, is as follows:

"Legal context: During process patent infringement proceedings, patentees intending to invoke reversal of burden of proof are required to satisfy a number of conditions before invoking the provision.

Key points and practical significance: Patentees can only invoke the provision once the prescribed conditions have been duly satisfied. Process patentees need to carefully consider the conditions before invoking the provision, as invoking the provision of reversal of burden of proof can prove to be a monumental task in view of the conditions and circumstances entailing their process patents".

If you're not a subscriber to JIPLP and can't sweet-talk the author into letting you have a copy, you can still click here and scroll down to purchase short-term access.

Taiwan moves closer to new law, including patent marking

"Legislative Yuan considers sweeping changes to Patent Act", by Daisy Wang (Lee and Li Attorneys at Law, Taiwan), notes that the island's Patent Act, previously amended in 2003, is under review again. Over the past four years the Taiwan Intellectual Property Office (TIPO) has been conducting public hearings in order to solicit comments and suggestions on how to boost Taiwan's economic and industrial competitiveness, promote the development of biotechnology, green technology, advanced agriculture and other important technology and -- and this is probably the most difficult bit -- improve the patent examination process.

A draft amendment was submitted to the Ministry of Economic Affairs almost exactly one year ago and, following the ministry's review, a draft Act (approved by the Executive Yuan in December) is now before the Legislative Yuan. The proposed reform contains matters of interest to PatLit's readers. According to Daisy Wang:

"Enforcement of patent rights

The draft act sets out subjective elements of patent infringement (ie, a patent owner may claim damages from another party that infringes on the patent with intent or out of negligence). Changes have also been made with respect to the calculation of damages (eg, a royalty rate is added as one of the methods) and methods for patent marking. The act stipulates that:

"where patent marking cannot be made on the patented product, patent marking can be made on the label of the packaging of the product, or can be made in another apparent manner which may cause others to recognise it."

It seems that the recent spate of US action on patent marking has generated a lot of interest outside the US, even though the well-publicised issues in that jurisdiction relate to a set of rules that are unique to the US.

Source: article in International Law Office here.

Now you can win without even going to court

The IPKat weblog is currently running a competition to mark this year's CIPA Congress, IP in the New Decade, which takes place in the Lancaster Hotel, London on 30 September and 1 October. The prize for this competition is complimentary registration to this premier event (the full registration fee for non-members of the Institute is £1,075 plus VAT, so this prize is quite worthwhile).

As one might imagine, patent litigation is a topic which features prominently on the programme. Margot Froehlinger (European Commission) and Professor Sir Robin Jacob (Royal Courts of Justice and now University College London) are the speakers on "Towards an Enhanced Patent System in Europe", chaired by CIPA President Alasdair Poore, while topics such as disclosure (a.k.a. discovery) and enforcement in China are also on offer.

Details of the IPKat's competition can be found here.
More information on the CIPA Congress can be found here; full programme details are here.

Should we consider EPO and foreign rulings? The German position

An article for International Law Office, "Patent court required to consider EPO decisions" by Nora Keßler (Klinkert Zindel Partner, Germany), published online last month, comments on a decision of the German Bundesgerichtshof (the civil Supreme Court) that the Bundespatentgericht (the Federal Patent Court, right) is required to consider European Patent Office (EPO) decisions, as well as those of courts of other European Patent Convention member countries if they pertain to similar issues, including whether an invention is novel and inventive.

After explaining this decision in some detail the author comments:

"This decision is remarkable. The Supreme Court could have limited itself to ruling that, in the case before it, the Federal Patent Court should have considered the EPO decision. Instead, the Supreme Court established as a rule that courts must consider EPO decisions. Furthermore, the court also held that the same would apply to decisions issued by the courts of other European Patent Convention member states.

Unfortunately, the effect of the decision is somewhat mitigated by the Supreme Court's holding that, although the courts are required to consider EPO decisions and those rendered in other European Patent Convention member states, the deviation of a national court from such decisions does not constitute grounds to appeal to the Supreme Court. From the perspective of harmonization, such a ruling might have been desirable".

It's interesting to see how the shall-we-or shan't-we debate about referring to decisions of other jurisdictions and of the EPO is conducted in the major European patent-litigating nations. If any reader fancies doing some comparative research on this topic, leading ideally to an article for the Journal of Intellectual Property Law & Practice (JIPLP), I'll be delighted to hear from him or her.

Caution chills interim damages pay-out

Once liability for infringement was established in Alan Nuttall Ltd v Fri-Jado UK Ltd and another (see here for details of earlier litigation), the Patents Court for England and Wales still had to sort out some damages issues. On 30 July 2010, at [2010] EWHC 1966 (Pat), Mr Justice Kitchin gave a ruling which might be said to reflect a degree of conservatism verging on caution.

Nuttall had a patent for a self-service display cabinet, Turboserve, in which food such as roasted chicken might be kept hot. This patent was held valid and infringed and Fri-Jado's appeal was dismissed. In an enquiry as to damages, it was found that Fri-Jado had made 1,104 sales of infringing cabinets, generating sales income of £3,123,738. Nuttall applied to court for interim payment of £1 million under the Civil Procedure Rules 1998, r 25.7(1)(b). Fri-Jado said this was excessive and offered instead to make an interim payment of just £70,000.

According to Kitchin J, on the proper construction of the Rules, an interim payment of more than a reasonable proportion of the likely amount of the final judgment should not be ordered. Usually, interim payment procedures were not suitable where the factual issues were complicated, or where difficult points of law arose -- but that did not prevent the court from making an award made even in respect of part of a complex claim, if that part could be identified as 'an irreducible minimum part' without venturing too far into the disputed area of fact or law.

In this case Nuttall was entitled to a payment on account of damages of £156,000, this being 5% of Fri-Jado's sales price and a sum which, it could safely be assumed, Nuttall would recover in any event.