Tuesday 29 March 2011

Documents in need of translation: a word of wisdom

Gemstar- Tvguide International Inc & Others v Virgin Media Ltd & Another [2011] EWCA Civ 302 (29 March 2011) is a fairly unexceptionable decision of the Court of Appeal for England and Wales which will doubtless be picked up and analyses by other blogs.  The bit that caught PatLit's eye dealt with an issue that causes frustration and ezpense from time to time -- dealing with documents that have to be translated.  On this topic Lord Justice Jacob (sitting with Laws and Patten LJJ) had this to say:
"11. ... I must say a word about the disputes over translation. For there have been several translations. A lot of expense and time was wasted because of this. I do not go into the detail. In principle, whenever a party relies on a document in a foreign language, the translation should be sorted out at an early stage. Ideally the party relying on the translation should send it to the other(s) with an express request for agreement within a reasonable time. If the document is quite long the key passages relied on should be identified so that the other side can concentrate on these. If the translation is agreed, well and good. But if not, the Court at the case management stage should normally insist upon agreement or early resolution of the translation dispute, if necessary by a hearing for that purpose.

12. In the end, but only at trial, a translation was settled upon. It is that which must be construed – through of course the eyes of the skilled man. But, and this is an important but, the question of construction is one for the court, not for expert witnesses. Their job is to give the court the necessary understanding of the technology. Whilst it does not matter much if they opine in their witness statements on the meaning of the document, it is really their reasons which matter. It is worth bearing this particularly in mind when it comes to cross-examination – for otherwise the cross-examination can descend into pointless discussion about the meaning. In the present case, for instance, each side may have been somewhat guilty of that, and there has been reliance by both sides on the opinions as to meaning of the experts. I do not intend to go down that path, ... ".
Thus the processing of documents in need of translation is another item to stick on the increasingly long list of things which should be firmly dealt with at the stage of the case management conference -- quite rightly so.

PCC Page 22: IPOff tells Cautious: “Get knotted"

The PatLit PCC Series, cunningly craft d by the Chartered Institute of Patent Attorneys (CIPA), seeks to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 22nd, CIPA President Alasdair Poore reviews the strategic and other advantages of offering to settle the dispute before it goes too far ... 
"Cautious’s patent attorney has followed the advice on settling that was given last week, and considered carefully the question of making a Part 36 offer, a “Claimant’s offer", to IPOff. CPR 36 (“Part 36”) says that if the Claimant wins at trial at least as much as the offer it made, then it is entitled to enhanced interest on any damages and costs (CPR 36.14(1)(b) and (3)). 
Cautious’s patent attorney not unreasonably argues that this means that they can simply propose, in a Part 36 Offer, that the defendant meet all of Cautious's claim, and Cautious will be entitled to the costs and interest benefits of CPR 36.14. As a result he has sent the following, not very logical, proposal to IPOff’s solicitor by email:
“Dear X, we refer to the outstanding proceedings for patent and unregistered design right infringement against your client, IPOff. As you know, our client is seeking an enquiry into damages or (at its option) an account of profits arising from your client’s blatant infringement. 
We are now proposing, on behalf of our client, that your client concede that it has infringed our client’s patent and unregistered design and meet any damages or account of profits the court awards. This will save a lot of time and money, and we could make a deal on costs. Our client is willing to call it quits if yours agrees to this proposal. Please note that this offer is made under CPR 36, and our client will rely on the costs consequences set out in Part 36. The offer is open for 21 days only. After that we will pursue the claim with the utmost vigour.”
This letter illustrates all sorts of issues about how not to write when proposing “settlement”, including certainty as to what the offer really is – and it also illustrates some continuing problems for claimants in IP disputes who would like to rely on Part 36.

Part 36 was revised in 2006. It now expressly permits the Part 36 consequences (CPR 36.14(3)) to apply where the “judgment against the defendant is at least as advantageous” CPR36.14(1)(b) as the offer. This suggests that an offer on the same terms as if the claimant wins should have the CPR 36.14 consequences. However, I suggest that this is not an offer of settlement at all, and consequently does not qualify under CPR 36.2 for any of the benefits of CPR 36. This is a problem common to many IP claims – what offer can a claimant make (without knowing about all the infringements, which will often not be until an enquiry into damages)?

Can this be rectified by making a bigger claim (say for enhanced damages or aggravated damages – or publication of an apology) and then offering to settle for less? There would seem to be no reason why not – but more on that in a moment.

In order to qualify as a Part 36 Offer, the offer must comply with CPR 36.2 (including (a) being in writing, (b) stating on its face it is intended to have the consequences of Section I of Part 36, and (c) specifying a period of not less than 21 days within which the defendant will be liable for the claimant’s costs if the offer is accepted). It has been held that an offer only open for 21 days does not comply – the offer must be open until withdrawn by notice appropriately served. So Cautious’s offer would not in any event have been an offer under Part 36, because it expires after 21 days. Likewise, an offer which specifies the costs consequences would not be a Part 36 Offer, as that is inconsistent with Part 36, which sets out the costs consequences.

And the offer is made at the time it is SERVED (CPR 36.7). In this case, although email will qualify as writing, delivery by email does not qualify as service, unless service by email was acceptable – and most solicitors do not accept it – see CPR 6.20 and PD 6A, which set conditions before service by email is acceptable, even for documents other than Claim Form.

Note also that, if this had been effective as a Part 36 Offer, it is still open to the Court to refuse to give effect to the consequences, if “it considers it would be unjust to do so” CPR36.14(3), and in deciding on that, it must take into account the points in CPR 36.14(4). These include the terms of the offer, the stage of the proceedings, the information available to the parties, and the conduct of the parties in giving or refusing to give information to evaluate the offer. The effect of this seems to make it unlikely that, an offer which was made at a point (eg very early in the proceedings or when damages could not be assessed) would be given the full consequences – at least unless the other party provided much more information; and, where the only concession was very small, the Court might conclude that the other party could not reasonably have information to assess whether it was a meaningful concession.

Therefore one can get tied in knots over Part 36. It is very difficult to comment fully, not least because there are many decisions in areas totally remote from IP. For this reason I have not listed individual cases here – you need to look at the White Book, Black Book or a resource like PLC. This does not detract from considering it as a powerful weapon – encouraging parties to take offers seriously. The courts are not happy to see Part 36 being used to try to secure an unfair advantage but, where there is a meaningful proposal to be made, Part 36 should be considered. Even if it is not effective, a genuine (without prejudice save as to costs) offer must be taken into account in relation to costs under CPR 44.3.

A final warning. Part 36 offers do not behave like other offers in contract law: they cannot be withdrawn without leave during the first 21 days. Then they remain open until withdrawn by notice SERVED on the other party – which means that they are not revoked by a counter offer; or after a reasonable time; or even by rejection of the offer. So only make the offer if you know it can stay in place for 21 days, and keep it under review and withdraw it if it ceases to be appropriate (unless the CPR 36.14 benefits of keeping it in place still outweigh any change in circumstances)".
A consolidated list of the first 20 PCC Pages can be found here.

Monday 28 March 2011

Inventive step, obvious-to-try and hindsight

Gedeon Richter plc v Bayer Schering Pharma AG [2011] EWHC 583 (Pat), 17 March 2011, is a recent decisoin of Mr Justice Floyd in the Patents Court for England and Wales.  A keenly-fought contest which required six days of hearings, it resulted in a 186-paragraph judgment in which Richter, a Hungarian company, sought revocation of two Bayer contraceptive patents which are currently in the midst of opposition proceedings before the European Patent Office. In the result, Floyd J held some of Bayer's claims were invalid for obviousness but not for added subject matter.

PatLit picks up just one of the many points in this decision: the effect of something being obvious to try. In Conor v Angiotech (see the IPKat here) the House of Lords said that the notion of something being obvious to try was useful as a means of establishing obviousness only where there was a fair expectation of success resulting from trying it. However in this case both parties agreed that, while it would have been obvious to carry out in vitro pre-formulation testing, such tests would be performed in ignorance of the outcome and of whether any specific formulation strategy would have a fair expectation of success. There was no general rule: rather, it was necessary to look at each putative step which the skilled person was required to take and only then decide whether it was obvious.  One could then ask an overall question as to whether this step-by-step analysis, performed after the event, might not in fact be unrealistic or produce a result that was driven by hindsight.

Thursday 24 March 2011

PCC Pages: a consolidated list of pages 1 to 20

In the autumn of 2010 PatLit launched the PCC Pages, a series of short articles, prepared and supplied by Chartered Institute of Patent Attorneys (CIPA) President Alasdair Poore, on the recently re-invigorated Patents County Court for England and Wales, a means of bringing swifter and more affordable justice to litigants of limited means, such as Small and Medium-Sized Enterprises (SMEs).  Here's a complete list of the first 20 posts in the series:
PCC Page 1: Introducing the new judge and his revamped court

PCC Page 2: Does the Patents County Court match your needs?

PCC Page 3: avoiding problems at the pre-action stage

PCC Page 4: complementary Alternative Dispute Resolution (ADR) procedures

PCC Page 5: a road-map of costs

PCC Page 6: transfer of litigation from the Patents Court

PCC Page 7: First steps in launching proceedings

PCC Page 8: Limits on the recovery of damages

PCC Page 9: Issuing proceedings

PCC Page 10: Defending a claim

PCC Page 11: Getting your tentacles in a twist

PCC Page 12: Robot Octopus takes a break?

PCC Page 13: Snails and octopuses

PCC Page 14: Threats loom larger than the PCC

PCC Page 15: How secret is my technology?

PCC Page 16: How big are the patent attorney’s boots?

PCC Page 17: Victims of their own success?

PCC Page 18: a digression around the Central London County Court

PCC Page 19: Time for review

PCC Page 20: Back to being Cautious, and not letting the experts loose

Tuesday 22 March 2011

PCC Page 21: Offering to settle can be a strong tactic

The PatLit PCC Series, informatively drafted by the Chartered Institute of Patent Attorneys (CIPA), seeks to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 21st, CIPA President Alasdair Poore reviews the strategic and other advantages of offering to settle the dispute before it goes too far ... 
Cautious has reached the stage – an important stage in the proceedings against IPOff -- where his patent attorney is reviewing all the issues to make sure that the case is a robust one and that there are no gaps in it.  A natural occasion on which to do this is when preparing for the Case Management Conference (CMC), for which the date has now been fixed.  At the same time he is considering what form of order he would like at the CMC, and will shortly be attending a hearing – regrettably using a solicitor and barrister – in the High Court to have IPOff’s parallel claim for threats issued in the Patents Court struck out or at least moved to the PCC.
 One question which is on his patent attorney’s mind is whether there is a settlement option which should be considered, and in particular whether there may be any formal offer of settlement which could be put to IPOff.  Of course, one can always propose a settlement to the other party.  Typically an offer will be on a “without prejudice” basis.  This means that it cannot be shown to the court or relied on by the other party (except, obviously, if agreement is reached, in which case it can be shown to the court for the purpose of enforcement). What Cautious’ patent attorney wants, however, is something which creates some pressure on IPOff – a tactical settlement offer, which creates some risks for IPOff.  The Civil Procedure Rules (CPR) effectively provide two tools for doing this – CPR 36 (or Part 36 as it is often described) and CPR 44.3 (it need hardly be added that IPOff’s solicitor will be considering the very same questions). Part 36 (CPR 36) It is important that every litigator understands CPR 36 well, and knows how to use it tactically (and what to do when faced with a Part 36 offer).  Why?  Because it was specifically introduced to put pressure on a party not to fight unless it is confident that it will win.  Practical Law Company describes it as “one of the most important tactical steps that parties can take. … parties and their advisers should consider making Part 36 offers at all key stages.” 
 The rules in CPR 36 are not simple, and Cautious’ patent attorney should refer to them carefully. For example, if the offer is not made in the appropriate way it will not be a Part 36 offer, and the effects of the offer will not follow.   If done correctly, these effects can be dramatic: if Cautious makes an offer and IPOff goes all the way to trial and then does not get a better judgment (ie Cautious gets a judgment which is the same as or more advantageous than the offer it made), then Cautious will usually automatically be entitled to indemnity costs from usually 21 days after the offer was made, and interest on the judgment amount and those costs at up to 10% above bank base rate from the same date.
  The 'costs cap' in the PCC is going to undermine some of this.  Under CPR 45 and PD 43-48 25C, only 'scale costs' can be awarded unless a party has behaved in a manner which amounts to an abuse of process (CPR 45.41).  Nevertheless, as noted in earlier PCC Pages, the scale amount is a maximum (CPR 45.42).  The provision for indemnity costs means that it will be easier to show what level of costs is appropriate up to the maximum, because in the case of indemnity costs the court will resolve any doubt as to whether it was necessary to incur the costs in favour of the receiving party (CPR44.4(3)).  A little more potent is the interest award, which is in addition to any damages cap (The Patents County Court (Financial Limits Order) 2011, Article 2) or cap on costs (although, even in this case, if time to trial is quick, then the amount may be small).  A third incentive, is that it is clear that IPOff’s solicitor will have to discuss the offer and consequences with IPOff.
 Note that there is clearly an incentive in PCC proceedings, where there is a long delay in the stages up to the CMC, to make sure that a Part 36 offer is, so far as possible, considered at the very beginning of the case (or even before it).  More discussion on Part 36 will follow when Cautious formulates his offer. A Part 36 offer is “without prejudice as to costs” – ie it cannot (and must not) be shown to a judge who may be involved in trial other than after trial on a question of costs, or with the consent of all the parties. Beware too: CPR 36 was amended in the past few years so don’t rely on age-old memory (assuming it works).  Some of the changes are around payments into court (which are no longer required). CPR 44.3 Part 36 offers are not the only sort of offer which has costs consequences – but the costs consequences can be rather more dramatic, and the alternative (a Calderbank Offer) is often not very attractive to a claimant.
 A Calderbank Offer is an offer which is made “without prejudice save as to costs”.  The effect of this is that the offer can be shown to the judge on a determination as to costs (but not before), and in that case the provisions of CPR 44.3 come into play – allowing the Court a general discretion to adjust the costs payable between the parties (which would otherwise normally be on the basis that the winning party wins their costs) to reflect the sort of offer which has been made (see in particular CPR 44.3(4)(c)).  Typically such an offer is more likely to be one made by a defendant. Thus a defendant might make an offer for a lesser amount (or in respect of some issues), and then be entitled to ask the Court for its costs from a reasonable date after the offer, if the claimant then did not win more than that amount or those issues.  It is less attractive to a claimant to make such an offer as, if the claimant wins, it will usually be entitled to all its costs (on a standard basis (see CPR 44.4(2)) in any event – indeed this was one of the reasons for introducing Part 36 -- in order to provide a tool in the claimant’s armoury, which meant that there was a real penalty for a defendant not considering the offer). 

Wednesday 16 March 2011

Open justice and access to documents: can the Patents Court lead the way?

A tangential consequence of the discussion of expert evidence in most recent PCC Page is the sparking off of some interesting and highly constructive thoughts from a patent litigator who reads this blog, as to how access to court materials including expert evidence might be improved.  PatLit's correspondent writes:
"Writing in The Times in May 2007, Sir Hugh Laddie observed that "The Patents Court has been at the forefront of refining High Court litigation. Starting with Mr Justice Jacob (as he then was) for the past 15 years there has been an aggressive attempt to streamline procedure. Most things have been tried, including limiting (though not abolishing) documentary discovery."

With a deserved reputation for leading the way, the Patents Court is well placed to help the UK courts in areas where they are underperfoming -- as is the case in providing open justice.

Back in 2004, Mr Justice Park observed in Chan U Seek v Alvis [2004] EWHC 3092 that "Open justice has long been a fundamental principle of English law. There is a strong presumption that cases should be heard in public and that decisions should be given in public." He also noted that "A particular development in our system of civil trials, which has had to be considered in the context of open justice and of informed publicity for court proceedings, is the trend for a lot of material which the judge considers to be placed before him in written form, for him to read it all and take it all into account, but for much of it not to be read out aloud in court."

The importance of expert evidence was underlined in Cantor Fitzgerald [2000]RPC 95, where the court noted that it has "no points of reference other than those provided by the expert." The expert cross-examination is usually available from a transcript, which is a public document obtainable from the transcript writers. The evidence in chief -- including, therefore, all the points of evidence that were not challenged -- is only available in the form of his or her written report. As a result, a full understanding of the court's decision in a patent case is rarely possible unless one has access to the expert reports, skeleton arguments and so on - in fact, all the documents before the court.

Under the current system in England and Wales, it is open to anyone to make an application for a copy of the documents on the court file. But that is a costly step to take for a discretionary order and, facing a risk of costs orders, it is a step that would only be taken where there is a substantial commercial, rather than academic or forensic, reason for doing so.

It is not possible to obtain similar documents from, say, German courts, and if the UK system purported to maintain similar privacy in court proceedings, one could understand the reluctance to make papers available. But we do not. We aspire to offer the same open justice as is offered in the United States. However, we fall woefully short of the example set by the US court system.

The US courts have a well-established system for ensuring public access to court files: "Public Access to Court Electronic Records", known as PACER (www.pacer.gov). The self-financing system provides access to most filings in most courts in the US, and ensures that the courts there are not merely paying lip-service to the target of open justice but are actively promoting it.

PACER is not without critics. Quoted in the in February 2009, Carl Malamud, the leader of the effort and founder of a nonprofit group, Public.Resource.org commented: “"Pacer is just so awful. The system is 15 to 20 years out of date.” But we should not aim to high. As an initial target for the UK, catching up with the technology of the 1990s would at least be a start.

As every journey starts with a single step, perhaps the first stage should be to get Patents Court pleadings on the net, followed by skeleton arguments. This is a small volume of paper, usually submitted electronically, and they are (usually) masterful discussions of the law. This alone would make a superb resource on several fronts, including providing a shop window for counsel and the UK litigation system.

Does the Patents Court have power to authorise this? It seems the answer is: yes. The Civil Procedure Rules, CPR5.4C(2), provide that " A non-party may, if the court gives permission, obtain from the records of the court a copy of any other document filed by a party, or communication between the court and a party or another person." CPR3.3(1) adds: "Except where a rule or some other enactment provides otherwise, the court may exercise its powers on an application or of its own initiative." No application is needed for the Patents Court to give permission for a third party service provider to have access to documents which can then be placed on web, or to make them available itself in that way.

One can anticipate questions about copyright infringement. The exemption in section 45 of the Copyright, Designs and Patents Act 1988 seems entirely apt to answer those questions.

Obviously any new development requires some resourcing, even one as minimal as this. But cost is a poor excuse for doing nothing. It does not cost much to post a file to a blog -- as PatLit and the IPKat demonstrate. Charged appropriately, it could even cover its own costs. It is exactly the sort of project that an institute like IBIL might take on as a pilot scheme. With the arrival of an advocate for open justice like Sir Robin Jacob, fresh from the Patents Court and Court of Appeal, IBIL would in fact be the perfect vehicle for demonstrating a UK pilot scheme of open justice on the web.

Whether or not that happens, someone has to do it. It is ridiculous in 2011 still to be sending court clerks to flick through paper files and bespeak copies of documents. Ipad users don't even know what "bespeak" means".
PatLit invites and welcomes readers' comments on this topic.

Tuesday 15 March 2011

PCC Page 20: Back to being Cautious, and not letting the experts loose

Is the writing on the wall
for experts in IP trials?
The PatLit PCC Series, elegantly drafted by the Chartered Institute of Patent Attorneys (CIPA), seeks to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 20th, CIPA President Alasdair Poore considers whether expert evidence is really going to be necessary:
Cautious's patent attorney has written to Cautious about the defence and appropriate evidence in relation to IPOff’s claim that Cautious patent is invalid.  He is now writing about the need for expert evidence in response to relation to IPOff’s allegation that the UK and Community unregistered design rights are invalid because (a) the former is commonplace and (b) the latter does not create on the informed user a different overall impression from the prior art, especially wild octopuses.  However, before writing on this, he reflects on the wisdom of holding fire on his last letter: 
“Dear Cautious, A narrow escape – not writing that letter telling IPOff’s solicitor where to file his counterclaims.  He would have taken great pleasure in pointing out that with effect from April 1st (why do they choose these dates for important events?), claims in the Patents County Court will be issued in the Chancery District Registry (instead of the Central London County Court).  That is in the Thomas Moore Building in the Royal Courts of Justice – just where he was issuing his claim for threats!  [More news, including a map, on the details of issuing proceedings in the Thomas More Building closer to the time.] …” 
The above text contains a salutary reminder of two general principles in litigation.  The first is that it is rarely wise to send out the first letter that comes into your head.  For stress-relieving purposes it may be appropriate to have a pin board where you can pin up all those letters, as long as it is well out of sight of clients. 
The second is that every letter should be written with the thought, at the back of the mind, of what it would sound like if read out in open court (even if, in relation to proceedings in the PCC, this is actually a rather unlikely eventuality). 
There is some other organisational news from the PCC User’s Committee meeting last night:
·         PCC Guide: this is nearly in final form and is very likely to be available in the week.  The Guide will not include model pleadings, or even sample pleadings, but the intention is still to make available examples of pleadings as soon as possible.
·         Location of the PCC: The proposed move of the PCC to the Rolls Building is scheduled for around October (the same as before, although there has been some slippage in having the building ready).
·         The limit on damages of cases in the “special jurisdiction” (patents and designs), will come into effect on June 14  (Article 1), The Patents County Court (Financial Limits Order) 2011.  
There are transitional provisions (Article 3): the limit will not apply to cases where the proceedings were issued in the PCC before that date, or to cases which are transferred or the request for transfer for which, from the High Court, is before that date.  The limit is £500,000 (excluding interest, other than interest payable under an agreement, and costs: Article 2).  There is still no limit on damages in PCC claims other than in the special jurisdiction. 
“… As I mentioned earlier, we have to consider the allegations that the unregistered design right is invalid.  The UK right would be invalid if it were commonplace; the Community right if it is not really any different from the previous designs IPOff have referred to, namely live octopuses. 
In the discussions on the new rules for the PCC, there was some suggestion that if expert evidence was necessary then it might not be suitable for hearing in the PCC.  I am sure that is not the case generally however, as the rules specifically contemplate expert evidence on specific issues. 
Nevertheless, bearing in mind the nature of these designs, and especially that they are really ones intended to be seen by any Tom, Dick or Jennifer (and equally live octopuses are also seen by the same sort of people), our starting point should be not to have any expert evidence. …” 
It is worth noting that, in recent cases, at least in relation to registered designs, the High Court has become increasingly sceptical about the value of expert evidence.  So, some salutary reminders from shortly-to-be-retiring Lord Justice Jacob: 
“I do not think, generally speaking, that 'expert' evidence of this opinion sort (ie as to what an ordinary consumer would see) in cases involving registered designs for consumer products is ever likely to be useful. There is a feeling among lawyers that one must always have an expert, but this is not so. No-one should feel that their case might be disadvantaged by not having an expert in an area when expert evidence is unnecessary. Evidence of technical or factual matters, as opposed to consumer 'eye appeal' may, on the other hand, sometimes have a part to play-that would be to give the court information or understanding which it could not provide itself.”   
Isaac Oren v Red Box Toy Factory Ltd [1999] FSR 785 at 79 quoted again in Thermos Ltd v Aladdin Sales and Marketing Ltd [2000] IP & T 41 at 4243, [2000] FSR 402 at 404 
"It follows that a place for evidence is very limited indeed. By and large it should be possible to decide a registered design case in a few hours. The evidence of the designer, eg as to whether he/she was trying to make, or thought he/she had made, a breakthrough, is irrelevant. The evidence of experts, particularly about consumer products, is unlikely to be of much assistance: anyone can point out similarities and differences, though an educated eye can sometimes help a bit. Sometimes there may be a piece of technical evidence which is relevanteg that design freedom is limited by certain constraints. But even so, that is usually more or less self-evident and certainly unlikely to be controversial to the point of a need for cross-examination still less substantial cross-examination". 

Philips Electronics BV v Remington Consumer Products [1998] RPC 283 at 318 
Given that the questions in relation to unregistered designs are very similar here to these ones, it seems the court should (and Cautious patent attorney will) take a robust approach that one can do without the experts.

Friday 11 March 2011

Never ending patents?

Some interesting “pills”
Monday The New York Times published Drug Firms Face Billions in Losses in ’11 as Patents End.

"At the end of November, Pfizer stands to lose a $10-billion-a-year revenue stream when the patent on its blockbuster cholesterol drug Lipitor expires and cheaper generics begin to cut into the company’s huge sales".

"The loss poses a daunting challenge for Pfizer, one shared by nearly every major pharmaceutical company. This year alone, because of patent expirations, the drug industry will lose control over more than 10 megamedicines whose combined annual sales have neared $50 billion".

"... the industry faces intense pressure from generic competition and has tried every tactic to ward it off, including extended-release versions of the same medicine and new pills that combine two ingredients".
Reading the reference to expiration this year of Lipitor patent, the actions started against Dr Reddy (the last one at the beginning of the year) came to my mind. As announced for example in ibtimes on January 4, 2011, “Pfizer moves court against Dr Reddy's launch of Lipitor in US market”. As there reported, "The drug maker, which rakes in over $12 billion in global sales from Lipitor, has asked the court to withhold approval of the drug until one of its patents for Lipitor expires in January 2017".

On January 5, 2011, Claire Bowie wrote on Pharma Times:
"Though Pfizer’s central patent for the crystalline form of atorvastatin expires in July 2016, and it retains paediatric exclusivity through to January 2017, it came to an out of court agreement with Ranbaxy in 2008 that will see the Indian firm sell a low priced version of the enantiomer version of the drug from November this year.

The two firms have been fighting over the validity of patents covering Lipitor all over the world since 2003 and a number of analysts thought that Ranbaxy could possibly launch its generic version of the drug as soon as March 2010 in the USA, when Pfizer’s basic patent was set to expire. The enantiomer patent expires in the USA in 2011, while various process and crystalline form patents are valid until 2016 and 2017".
Bringing our attention back to the days when the agreement was signed, we find Release of Generic Lipitor Is Delayed, published on June 19, 2008, where we read:
"For people with high cholesterol, the wait for a cheaper version of Lipitor just got longer. Pfizer announced an agreement Wednesday to head off generic competition for its flagship drug until November 2011 — up to 20 months later than many analysts had been expecting.

By delaying Ranbaxy’s generic version of Lipitor, which might have been sold as early as March 2010, Pfizer has won extra time for exclusive sales of Lipitor, potentially totaling billions of additional dollars.

As part of the agreement, Pfizer granted licenses to Ranbaxy authorizing the company to sell generic Lipitor in seven other important pharmaceutical markets: Australia, Canada, Belgium, Germany, Italy, the Netherlands and Sweden.

The deal will let Ranbaxy sell its drug in those seven countries two to four months before patents expire, according to Chuck Caprariello, a spokesman for Ranbaxy".
Will the actions started against Dr Reddy end with an agreement? When will this company start selling its product? Which product will it finally sale? Will we get answers to these and many other questions before first patent expires?.

Tuesday 8 March 2011

Today I had a (EU Patent) dream

After decades blocked, the vast majority of EU Member States decided to solve all problems of the EU Community Patent system at once. Its ambitious purpose has just (apparently) suffered a death shot with the opinion of the Court of Justice of the EU issued today.

Maybe it was being too ambitious trying to solve at the same time economic problems (registration costs through all Member States) and practical ones (litigation in all the States), while trying to avoid the competence (control) of the Court of Justice, whose Judges have an alleged low expertise in Patent Law.

Looking back it may seem the dream of a group of patent passionate professionals. Now that we are awake, can we keep on dreaming?

Today during my siesta I had the following dream:

A single office for registration in a single language (in my dream it was Spanish but maybe it would be more realistic if it were English). That office was also dealing with cancellation actions and its decisions could be in first instance appealed at (a specialised section of) the EU General Court.

Unfortunately siesta doesn’t last as it used to and I woke up just when I was starting dreaming with infringement actions. I only had time to see specialised national Patent Courts. If my dream had continued I would have been able to see if a ruling of a national Paten Court (besides the District Court of The Hague) would have effects in all Member States. Maybe then I wasn’t dreaming with European Patents but with Community Trademarks.

UPLS dead and buried

In Avis 1/09 Creation of a Unified Patent Litigation System the Court of Justice of the European Union gave its negative ruling on the proposed system.

 The following comment was received from Paul England (Simmons & Simmons, London):
"In probably the most important decision the Court of Justice of the European Union has ever made for patent owners it has this morning dashed hopes of the proposed Unified Patent Litigation System in an Opinion that says this is not compatible with European Union law.

What this means in practice

For European patent holders this means there is currently no end in sight to the current unwieldy system which requires:
• a patent to be granted for every European state for which protection is sought;
• that infringement proceedings are fought in the courts of every state in which infringement occurs; and
• that invalidity proceedings are fought in each country for which revocation of the national patent is sought;
and therefore bringing high costs and inconsistency of decisions for those engaged in patent litigation at a European level.

The only way towards a single system may now be for the Court of Justice itself to decide on patent litigation cases – something which the profession does not want.

More detail on the background to this decision

The proposed Unified Patent Litigation System (UPLS)

In December 2009, the EU Council unanimously agreed on key elements of the proposed UPLS together with the proposal on translation arrangements for a Unitary Patent put forward in early July 2010. The UPLS is the latest initiative to establish a single system in Europe that combined a single, pan-European Unitary Patent with the existing European Patent Convention system that grants so-called European Patents. Despite their name, the latter patents are only effective nationally, and so any patent revocation or infringement related proceedings that occur in Europe must be fought in the courts of the national patent affected, whether they affect more than one European country or not.

The UPLS, as well as introducing a single Unitary Patent covering all EU states, also proposes a single system of European patent courts (the European and EU Patent Court (EEUPC)) in which all European patent disputes can be heard. In essence, the proposal provides that the EU accede to the European Patent Convention (EPC), allowing the European Patent Office to grant Unitary Patents and setting up an EU Patent Court to hear disputes relating both to Unitary Patents and existing European patents. However, before proceeding with this proposed system, the Agreement was referred to the Court of Justice to decide whether the proposed UPLS is compatible with the EU Treaties. This was done using the “Opinion” procedure, provided for by Article 300(6) of the EU Treaty. This special procedure exists to allow the EU’s institutions to seek advice from the Court of Justice about the compatibility of an international agreement with EU law before signing it. Most Member States, the Council, the Commission and the EU Parliament were represented at a hearing on 18 May 2010 before the Court of Justice.

The Opinion, which says that the UPLS is incompatible with the EU Treaty and the Treaty on the Functioning of the European Union means that this proposal is now consigned to history, the latest in a long line of setbacks to proposals for such a system that has been in the planning for nearly 40 years.

What now?

This decision is a tremendous blow for those who have worked on the UPLS proposals. These include members of the EU Commission, Senior Judges and leading patents practitioners, including our own Kevin Mooney. Many will view this decision as the Court of Justice seeking to be the judicial body overseeing any single patent litigation system that comes to fruition in Europe. This was the one single issue on which the Commission, industry and the lawyers agreed at an early stage in drafting the proposals to be undesirable. This is because, according to this view, the Court of Justice does not have the necessary expertise in this area of law. 
It might be thought that some attempt could be made to amend the proposed UPLS system or to go back to the drawing board completely. But, the essential reasoning for the decision is that the Member States cannot divest to an international body their powers as part of the European Union order over matters that will, inevitably, require the implementation of European Union law. So the reasons are fundamental and appear to rule out any revision of the UPLS or a return to the previously attempted European Patent Litigation Agreement (EPLA) proposal. It seems that alternatives to a system presided over by the Court of Justice have run out. The latter view is supported by a recent advance with the proposed single, pan-EU patent called the Unitary Patent in which, for only the second time in its history, the European Parliament voted for the “enhanced cooperation procedure” to be used to push this through, despite opposition from Italy and Spain on the language regime that is planned to be adopted. Decisions on such a patent would be made by the Court of Justice.

There is scant enthusiasm in industry and within the patent profession for a Court of Justice centred system and so support for this enterprise is likely to run out also".
Paul's disappointment will be shared by those who worked long and hard to achieve the UPLS, but not by those who have opposed it from the start for a variety of reasons. The constitutional roadblocks on which the proposal foundered were never going to be easy (some say, possible) to overcome, and it may be wondered how much appetite remains among the UPLS's supporters for seeking to navigate a path around them.

One point on which, it seems to this blogger, all are agreed -- whether pro- or anti-UPLS -- is that there is little or no enthusiasm for any system which places patent law in the hands of the Court of Justice.  But this is not the sort of consensus which can be easily converted into fresh proposals.

As ever, readers' opinions are welcomed.

PCC Page 19: Time for review

The PatLit PCC Series, lovingly crafted by the Chartered Institute of Patent Attorneys (CIPA), seeks to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 19th, CIPA President Alasdair Poore reviews the situation so far, with particular reference to evidential and procedural matters:
Cautious’s claim for patent and unregistered design right infringement before the PCC is progressing.  His patent attorney is now preparing a reply and defence to counterclaim, but has yet to finalise the reply in relation to unregistered design right infringement.  He is turning his mind to the next stages in the proceedings – particularly as a preparation for the case management conference.  This is an appropriate moment for a detailed review of the claim, in order to ensure that all the necessary elements are in place, all the appropriate evidence will be available, any other procedural steps which might be required at the case management conference are reviewed, and any tactical moves are kept in mind.

The first stage is to go rigorously through each element necessary to succeed in the claim. There is a patent, the registered proprietor is (and was at all relevant times) Cautious Co., the patent is in force – all these are admitted in this case.  A copy of the patent has been provided with the pleadings, with the relevant claims included. 

Then there is the allegation that IPOff have supplied a product in the UK (the Robot Octopus) – this is admitted. Cautious have a sample of the Robot Octopus and assert that it falls within the scope of the identified claims of the patent: this is not admitted.  Accordingly,evidence of what the Robot Octopus is or does will be required.  This evidence may be based on the product description, if that description is accepted, or it may be necessary to put in evidence a sample and any necessary analysis in order to determine what its features are. (nb this can be a bit of problem in the internet era.  The temptation is to launch proceedings on seeing a Web advert – and then there can be problems proving exactly what that advert advertises, unless a trap purchase has been made).  At present what the product is/does is unclear as IPOff have refused to provide a product description unless it is confidential and not disclosed to Cautious.  If the product description cannot be agreed, the parties will have to agree a sample/example of the product, or Cautious will have to prove an example of what IPOff have been selling.  Secondly, Cautious will have to provide sufficient evidence to justify the interpretation of the claim(s) on which they are seeking to rely.  That is a matter of construction, but can be assisted by possible expert evidence.

Then, on the patent claim, Cautious’ patent attorney turns to the defence and counterclaim: that the patent (or its relevant claims) is invalid on the grounds that the invention is obvious and not sufficiently described.  IPOff rely on two pieces of prior art – both of which have been included with the defence and the content of which are admitted.  However, they are likely to have to rely on some expert evidence as to how these would be understood by a person skilled in the art and the extent to which the step from each of those documents would be obvious – based on common general knowledge  Cautious will want to have evidence available to rebut these arguments, in terms of what the documents disclose, what is the step from the embodiments described in those documents to the invention, what is common general knowledge, whether the difference would be obvious – and a similar approach in relation to insufficiency.

Having reviewed this, and identified what evidence is required, he/she will need to check that the statement of case supports each of these (or whether any amendments are necessary), and identify what is already included as evidence as part of the statement of case, and therefore what gaps need to be filled.

At the same time, he will need to look at each of the specific areas on which the judge will wish to make an order during the case management conference (CMC): see PD63 29.1 (CPR63.23)).
At the Case Management Conference 
At the CMC referred to in rule 63.23 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.

and bear in mind PD63 29.2:

The court will make an order under paragraph 29.1 only –
(1) in relation to specific and identified issues; and
(2) if the court is satisfied that the benefit of the further material in terms of its value in resolving those issues appears likely to justify the cost of producing and dealing with it.

Consequently, part of the purpose of this review is not just to identify the general areas in which evidence is needed, but also to identify and set out the specific issues, and, if necessary, why the material is required and that producing it is proportionate to the issues in question.  In relation to expert evidence it will be important to identify specifically where the expert can assist the Court – the aim is to avoid long detailed expert reports and focus closely on the critical issues.

Other issues
In addition Cautious’ patent attorney will wish to review a number of other matters:

·         is there a possibility mediation might be appropriate (and advise Cautious on it, as the form of CMC order will likely recite that this has been done)?
·         review again what is the objective of bringing the proceedings?
·         should a settlement proposal be made, and can one be made which will put IPOff at risk in relation to costs under Part 36 or otherwise – discussed in a later page?
·         is the estimate of costs given to Cautious still accurate or should it be revised (incidentally something which should be kept under review all the time, not just in the run up to the CMC)?
·         whether the assessment of the merits of the claim has changed at all and any advice to Cautious on this?

An illustration of elements of the form of order which may be made is given in Dame Vivienne Westwood OBE V Anthony Edward Knight [2010] EWPCC 16 (incidentally due for hearing today, 8 March 2011)).

Monday 7 March 2011

China’s Future Knowledge Economy to lead to more litigation abroad by Chinese patentees

One of the aims of the State Intellectual Property Office’s recently issued National Patent Development Strategy (2011-2020) (Strategy) is to ensure that China has a robust knowledge economy by the year 2020, writes George Chan of Rouse China.

The development of a robust knowledge economy will require, among other things, an increase in Chinese companies’ foreign patent filings. The Strategy states that Chinese patentees will be expected to double the number of overseas patent applications by 2015, and quadruple them by 2020.

On the basis of figures for 2010, when approximately 13,000 PCT applications were filed by Chinese applicants, this would mean that by 2015 more than 26,000 PCT applications would be filed by Chinese applicants and by 2020, more than 52,000.

There are also indications in the Strategy that Chinese patent owners will be encouraged to enforce their patents abroad. Currently this occurs rarely. When Netac Technology, a Shenzhen-based flash drive manufacturer, sued Texas-based PNY Technologies for patent infringement in 2006, the case was noteworthy: cases that usually grab the headlines concern infringement by Chinese companies, rather than enforcement.

The Strategy aims to encourage Chinese patent owners to enforce their rights abroad. It proposes the establishment of an overseas IPR protection information network that would provide updated information relating to foreign patent protection and professional guidance in relation to dealing with overseas patent disputes.

Given that Chinese patentees have been very proactive in enforcing their patent rights in China (according to data provided by the Supreme People’s Court, China has been the most patent-litigious country in the world since 2005), litigation involving Chinese-owned foreign patents in other countries is likely to increase significantly.

China’s rise in the ranks of developed countries may, ultimately, prove to be a boon to patent professionals worldwide.

Friday 4 March 2011

LG v Sony again: the Institute speaks

Now that hi-tech seizures are with us, importers are advised
to consider importing more low-tech play stations such as the one above ...
So much has been written about the (mis)reported seizure of Sony PlyStations in the Netherlands that it was only a matter of time before the UK's very own Chartered Institute of Patent Attorneys (CIPA) added its tuppence-worth.  In a press release this afternoon (and Friday afternoon press releases are rare beast indeed, in the world of IP) the institute says:
Dutch move to seize PlayStations opens door to new tactics in patent disputes, say patent attorneys
The Guardian newspaper may have got a few facts wrong in its report of the latest move in the LG versus Sony patent dispute. But it does seem that this is the first time Border Protection procedures  - usually used to confiscate cheap imports of counterfeit goods like T-shirts - have been applied in a patent dispute involving high-value electronics.

‘This looks primarily like a ploy by LG to get Sony’s top management to take its patent dispute more seriously,’ says Ilya Kazi, a Chartered Patent Attorney and spokesman for the Chartered Institute of Patent Attorneys (CIPA). ‘There is little realistic prospect that the dispute over Blu-ray patents will be conclusively resolved in the courts in the near future.  But LG’s tactic of involving border agencies in Europe appears to have been effective in getting widespread publicity for a dispute that, until now, may only have been the concern of a few lawyers.  The commercial grief this must be causing may speed up resolution of the patents spat – for example, through a mutually acceptable technology licensing deal – although in the bigger picture it may turn out to be a mere sideshow.’

According to CIPA, LG’s action in getting the Dutch authorities to enforce a short-term ban on PlayStation 3 imports may encourage other companies to look at more creative approaches to resolving patent disputes.

‘LG’s tactic in this case is unusual,’ Ilya Kazi explains.  ‘primarily because patent cases are rarely open and shut, often involving complex considerations of validity as well as infringement.   If you are not confident that you have a valid patent that is clearly being infringed, such an action can be a two-edged sword as damages can become payable if goods are wrongly detained or destroyed.  However, it is certainly effective in getting publicity and causing your opponent to take notice, which may in itself push the parties into a quicker, less costly settlement. 
‘IP is becoming an increasingly important part of overall business strategy and we may well see more companies using tactics like this as a way of showing they mean business with their patents.’

Thursday 3 March 2011

LG vs Sony (PS3) - Preliminary injunction

I’ve read Mark Schweizer’s report in IPKat over the preliminary injunction obtained by LG against Sony PS3, at the district court of the Hague (once again acting as a de facto EU Community Patent Court?) and some questions came to my mind.

As Mark reports, “LG based its claim on patents (allegedly) covering the Blu-ray playback facility of the PS3”.

We don’t have much information but I belive the preliminary injunction affects a modification introduced by Sony in its product. Otherwise it would be difficult to understand how a preliminary injunction is granted against a product that has been sold for several years.

On 17 November 2006 the magazine PCWorld made especial reference to PS3’s “support for the Blue-Ray Disc format” (here). Furthermore, in the Instruction Manuals express mention is made to the Blue-Ray discs that it can read. The 2006 Instruction Manual can be found here.

Preliminary injunctions are traditionally granted when there is a threat of an irreparable damage or injury. I don’t think this would be the case of a product sold for more than three years. If LG failed to request a preliminary injunction in 2006, which irreparable damage or injury can now be claimed?

I’m definitely missing something. Does the injunction affect a modification introduced in the last model of the PS3? We will see.

Tuesday 1 March 2011

USA Ranking of damages awards

This week the ranking has been modified, Centocor Ortho Biotech (J&J) v Abbott $ 1,848 MM has disappeared from no. 1.

On February 23, the US Court of Appeals for the Federal Circuit in Washington concluded that four claims of plaintiff’s patent “are invalid for lack of written description” and reversed the judgment. Copy of the decision here.

Much was written about this case. Most of the times reference was made to the amount of damages (here, or here) but also to the lawyers “show” during the trial, as Jeremy reported here.

2007 Lucent v. Microsoft $ 1,538 MM returns to lead the ranking published by PWC in September 2010. Full report here.