Pharmaceutical Patent Litigation in Portugal

Court actions started by pharmaceutical companies usually delay or even stop appearance of generics in the market. This causes big harm not only to companies producing generics or consumers but also to those Governments that pay for the treatments of their population. This may be one of the reasons of the Portuguese Government attempt to establish the new dispute resolution reported by Baptista, Monteverde & Asociados in their last Newsletter (here) (pdf alert):

“It is clearly stated that a Marketing Authorization (MA) has the single purpose of assessing the quality, safety, and efficacy of the medicine and therefore a request for a MA should not be refused, changed, suspended or revoked due to the preexistence
of any IP rights.
…
By enacting this Law, the Government intends that it will be no longer possible for patentees to cancel or suspend MAs, retail prices or reimbursement decisions for generics medicines.
…
The Administrative Courts will no longer be competent for litigation related with IP rights. Any possible disputes related with medicines of reference and generics will become compulsorily subject to arbitration. Apparently, not even the civil Courts or the commercial Courts will be handling any patent enforcement matters related with medicines of reference and generics.
…
The Government seems to be aiming for getting the possible issues related with patent infringement solved before the MA is granted”.

Draft Agreement on Unified Court "unwise", concludes EPLAW

PatLit thanks Dr Jochen Pagenberg (President of the European Patent Lawyers' Association EPLAW and one of the most experienced patent scholars in Europe) for drawing the following highly pertinent criticisms of the proposed Unified Patent Court to its attention [this post will be cited later today on the IPKat weblog, following yesterday's post on the report of last week's Warsaw Conference here].

The Unified Patent Court: EPLAW Resolution on the Draft Agreement 13751/11 of September 2, 2011 

I. Introduction 

The European Patent Lawyers Association (EPLAW), comprising lawyers with many years of experience in European patent litigation, has been following closely the preparatory work for and the legal discussions regarding the creation of a European patent court system. With the EPO Academy EPLAW has since 2005 been organizing the Venice Judges Forum, and several of its board members have participated in shaping the texts of the relevant international documents. EPLAW members represent both large multinational corporations in all fields of technology as well as SMEs with very small patent portfolios. 

EPLAW welcomes the progress which has been made on the creation of a Unitary Patent, as evidenced by the Proposal for a Regulation in the area of the creation of a Unitary Patent (Council doc 11328/11, hereafter the ‘Proposed Regulation’). At the same time EPLAW stresses that the success of the Unitary Patent will be dependent on a litigation system which is satisfactory for the users. A draft agreement for such a system submitted to the CJEU for an advisory opinion, met with the Luxembourg Court’s disapproval in March of this year. 

The EU Presidency on 2 September 2011 presented a modified text of a Draft Agreement for a Unified Patent Court to fulfil this need for a satisfactory litigation system (Council doc 13751/11, hereafter the ‘Draft Agreement’). EPLAW is of the opinion that this Draft Agreement has serious shortcomings and that – without amendment – it will fail to meet the promises made by the Commission and the Council over the years and will have a negative, rather than a positive economic impact for the users, particularly for SMEs. 

II. Shortcomings and suggested modifications 

(a) Inexperienced local divisions reduce quality and efficiency 

Since the EU is no longer an economic stakeholder the incentive to create regional rather than local divisions has been given up. The result is likely to be the setting up of local divisions in most EU countries creating a complex, administratively burdensome, and rather diverse court structure with doubtlessly considerable differences in quality and experience of judges. The “expeditious and high quality decisions” required by the Draft Agreement (preamble par. 6) will fail to be reached if member states without sufficient patent litigation experience create local divisions instead of sharing a regional division. A satisfactory Draft Agreement must contain incentives for creating regional divisions.  

(b) Court fees must be clarified 

There is no proposal as to how court fees and other litigation costs will be assessed and imposed, and it is also open for debate what the financial implications will be for the participating member states. It seems that savings by the new system are anticipated based on an incorrect assumption of the number of parallel litigation cases. Cost is particularly relevant for SMEs who normally do not litigate in more than one country, and who are very cost sensitive. SMEs presently represent the large majority of plaintiffs and defendants and would therefore suffer most and save little or nothing in case of any increase of court fees or other litigation costs. 

Industry must be informed of the funding proposals and in particular the assessment of court fees before the Proposed Regulation is made available for enactment and the Draft Agreement for ratification. Users must be able to ascertain whether the new system will be sustainably financed at a level which guarantees speed, quality, and acceptable cost. It would be very unwise to decide such vital questions after execution of the relevant legal instruments. 

(c) Appointment of judges with proven experience 

It is difficult to understand how under the Draft Agreement procedure for the appointment of judges the Advisory Committee can make proposals for candidates with “proven experience in the field of patent litigation” (see Art. 10) in those countries where there has been little or no patent litigation so far. The final word on appointments will be with the Administrative Committee (with “common accord“) while the Draft provides no possibility for interested parties or the Commission to challenge an appointment. 

With respect to technical judges the question remains unresolved whether judges from the EPO Boards of Appeal who would have the required patent experience and legal knowledge will qualify for the Unified Court. Other technical judges except perhaps those of the German Federal Patent Court will be difficult to find. 

(d) There should be an option for parallel national litigation of EP patents 

Under the Draft Agreement the Unified Court would not only have exclusive jurisdiction over Unitary Patents but also over existing and future European (“bundle”) Patents (which are currently litigated in the national courts). The Unified Patent Court will replace all national courts (retrospectively for existing patents) after a relatively short transitional period of five years. After that, users will have no choice but to use the Unified Patent Court regardless of whether it is functioning properly and how expensive it will be; indeed, regardless of whether users can even afford going to (or having to de-fend in) this court. 

Upon introduction of the system it will also be possible for owners of existing European patents and pending applications for a period of five years to opt-out of the Unified Patent Court system as far as the relevant patents and applications are concerned.  

During the transitional period users will retain the right to enforce European Patents nationally.  For SMEs in particular this will be important as most will only be interested in enforcing such patents in one territory.  Consideration should be given for extending the transitional period in respect of this one–territory enforcement right until the Unified Court is established as a cost efficient alternative for such actions. This parallel right may be achieved in the short/medium term by a more flexible transitional period (see below). 

(e) There should be a longer transitional period and more opt-out/opt-in flexibility 

In view of these and other open questions EPLAW strongly believes that a transitional period should end only when the new court system has established an acceptable track record. This would require a sufficient number of decided cases in both instances covering a sufficient number of legal questions. Experience with the start of operation of the EPO in 1978 shows that it required ten years before the first cases reached the highest national instances. Given the increased risk of prejudicial questions being put to the EUCJ under the proposed system (see below) this means that the transitional period – as well as the opt-out period - must be extended to at least 15 years in order to give users a serious chance to evaluate whether the Unitary Patent and the Unified Court system are functioning to their satisfaction. 

Allowing those who opted out a permanent right to opt back-in (from national to Unified Court) would considerably enlarge the number of possible plaintiffs, since it would include all EP patents in force and filed over the past 20 years. 

(f) There should be no EU rules of patent infringement 

The most serious drafting error constitutes the inclusion of the Articles 6 to 8 into the Proposed Regulation. Rules with identical wording can be found as Articles 14f, 14g and 14h of the Draft Agreement. These articles (on ‘direct infringement’, on ‘indirect infringement’, and on ‘limitations’) set out the substantive law on patent infringement, based upon the corresponding provisions of the Community Patent Convention. The inclusion of these substantive rules into the Proposed Regulation will make them a matter of Union law with the result that an unpredictable number of referrals to the CJEU must be expected in an area which often is the core of a patent case [See on this topic the Opinion of Professor Krasser here].

How will the CJEU be able to deal with these questions which according to Art. 10 of the Draft Agreement not only require the “highest standards of competence and proven experience in the field of patent litigation“ but also an understanding of often highly technical facts? 

EPLAW strongly recommends the exclusion of rules of substantive patent law from Union law, i.e. to delete the Articles 6 to 8 from Chapter II of the Draft Regulation and to add “European patents with unitary effect” in the Articles 14f to 14h of the Draft Agreement. 

(g)          Rules of procedure 

The Draft Agreement currently proposes that the Rules of Procedure of the Unified Court will be adopted after the Draft Agreement comes into effect.  The Rules of Procedure will be critical to the achievement of the goals of the Unified Court and EPLAW believes that there must be sufficient clarity about the contents of these Rules before the Draft Agreement is made available for signature.  

(h)          Missing provisions 

The Draft Agreement will apply to SPCs, but contains no provisions relating to SPCs. There are no provisions on legal privilege either.  These are important omissions.  

(i)            Termination provisions required 

There is no termination provision to rely on in the event the system would fail for any reason. This is a problem as the powers of the national patent courts have been surrendered by granting exclusive jurisdiction to the Unified Patent Court also regarding EP bundle patents indefinitely. The Agreement will be a stand-alone international treaty and, as such, the status of a contracting party to the Agreement is distinct from member-ship of the EU.  Further, there is no right for a contracting Member State to withdraw from the Agreement if it believes the Unified Court is not functioning satisfactorily. 

III. Conclusions 

EPLAW believes that creating a Unitary Patent before having created and finally adopted a satisfactory litigation system is an unwise approach. 

Without revision the current Draft Agreement on a Unified Patent Court will fail to meet the promise of being accessible and affordable, and of creating laws and procedures which are easy to use. As it presently stands users will moreover face the situation that, because of the likely involvement of the CJEU and the likely creation of local divisions in all 25 member states, the promise of the “highest standards of competence and proven experience” with respect to patent litigation among the judges will be impossible to fulfil. 

EPLAW regards the revisions proposed above as the bare minimum required in order to reach the added value yardstick which industry has been requesting and has been promised as a condition for acceptance and use. Without these revisions it is very likely that the combination of the Unitary Patent Regulation and the Unified Patent Court Agreement will increase cost, increase legal uncertainty, and defeat its goal of ensuring expeditious and high quality decisions. 

EPLAW members have become concerned that speed is put above careful analysis and reflection and that an easy compromise has become the only goal. Inventors and patent-minded companies, however, - be they patentees or alleged infringers - deserve the best of all systems. They are the promoters of technical progress and economic growth. They must be convinced that everything is being done to eliminate mistakes and strive for a workable solution. We cannot afford another failure.

PatLit urges all responsible patent litigators throughout the European Union to consider these points and think about what they mean.  These are not the rantings of deranged subversives but the result of a substantial degree of careful weighing up by some of the continent's most dedicated patent litigators, highly trained legal representatives who take pride in their ability to achieve the satisfactory resolution of some of the most complex problems a judge is ever likely to see. Readers should then ask themselves whether they are, in all honesty, comfortable about the idea of representing clients in major litigation before the proposed court while these issues remain in need of a satisfactory treatment.

PCC Page 39: The Robot Octopus hides the paperwork

Fastidiously fashioned by the Chartered Institute of Patent Attorneys (CIPA), the PCC Pages seek 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 39th, former CIPA President Alasdair Poore continues his account of the effect of privilevge on the battle between the parties as to what documents the alleged infringer has to disclose.

Cautious’s patent attorney was rather surprised last week (well, a few weeks ago now) to learn that IPOff’s solicitors are claiming that the instructions IPOff sent to their “independent” design agency are privileged.  Apparently they contain legal advice.  As readers know, a key element of IPOff’s case that the Robot Octopus does not infringe unregistered design right is that they (or their design agency) designed the Robot Octopus independently and did not copy if from Cautious.
 IPOff should have mentioned privileged documents when giving disclosure.  Privilege is the right (of the client) to withhold the document from inspection, not to object to listing the document in the first place.  This is made clear in the Civil Procedure Rules, CPR31.10(4), which specifically provides for claims to withhold inspection, and Form N265, which allows the person listing documents to state:

“I have control of the documents numbered and listed here, but I object to you inspecting them ...”, and “I object to you inspecting these documents because ...”.

 (Form N265 is headed “Standard Disclosure”, but is clearly intended to be used for specific disclosure in the PCC, as provided in the Patents County Court Guide, Annex A (which is still on the Justice website under “Patents Court Guide”!))
 CPR31.10(4) (and N265) require the party to list the documents in a convenient order and manner and as concisely as possible. Practice Direction PD31 3.2 requires this to be normally in date order, numbered consecutively with a concise description.  Phipson on Evidence (Sweet & Maxwell) 17th edition, (pp 23-68) observes that this appears to require individual listing and identification of privileged documents and the basis for withholding them from inspection; but that there is no reported decision on the position, and the practice is still to list documents generically (for example  “Correspondence between the Defendant and their solicitors for the purpose of obtaining advice”).  Phipson argues that this may well be in accordance with the overriding objective (ie proportionate) but  

"in an exceptional case, where the claim for privilege has been shown to be unsatisfactory, [PD31] appears to give the court power to order privileged documents to be listed individually”.

So can Cautious challenge the claim to privilege? Is this case exceptional – Cautious's patent attorney would like to think so.  And there seem to be two grounds, one strong, the other less so.  The first is that IPOff appears not to have disclosed the relevant document anyway.  The instructions to the independent design agency, Fishy Designs at all, are clearly not “correspondence between the defendant and their solicitors for the purpose of obtaining advice”, and it seems most unlikely that they are “in contemplation of litigation”; so they have not made a claim to withhold the document from inspection at all at this stage.
 Secondly, it seems implausible ordinarily that instructions to a design agency would be privileged.
 Apparently there was copious authority historically to say that “a claim for privilege is conclusive” – so that the claim could not be challenged.  But, Phipson (pp 23-69) says that this was not the reality, and in West London Pipeline and Storage v Total UK [2008] EWHC 1729 the court was prepared to investigate a challenge on the basis that it was highly improbable that a particular report would have been prepared for the purpose of litigation rather than for investigatory reasons.
 Is it possible that instructions to Fishy Designs could be privileged?  Privilege is broadly a non-statutory creature, almost as difficult to get ones hands on as an octopus.  Section 190(2) of the Legal Services Act helpfully explains, in the quasi-algebraic way of that Act, that legal professional privilege applies to any communications, in relation to the provision of reserved legal services (in this context to provision of litigation and advocacy services) to non-solicitors (including, for example patent and trade mark attorneys) “in like manner as if P had at all material times been acting as P’s client's solicitor”.  The section does not help by saying when it applies in relation to a solicitor, and for this one has mostly to trek through dusty authorities from the last century, or at least one did until the collapse of BCCI.  That lead to the Three Rivers litigation, which bounced up and down to the Court of Appeal and House of Lords too many for an octopus to count.  More on the octopus’s encounter with fresh water, especially Three Rivers (No 5) [2003] EWCA Civ 474, next week.  Nor does section 190 help when it comes to looking at when non-solicitors may claim legal advice privilege.  More on that and the subsequent saga of Prudential [2010] EWCA Civ 1094 in the weeks to come.

Positive declaratory relief: can you help a Finn to finish?

Finnish Patent litigation enthusiast Teemu Puutio is currently working on his Masters degree in Turku. His LLM studies are now at their final stage, in which he is facing the ultimate challenge -- writing up his thesis on the law of patents.  Teemu's topic is "Positive declaratory actions in patent disputes - topicality and procedural prerequisites".  He adds:

"While my work springs forth from the frigid and snowy fields of Finland I am allocating a substantial portion of my work to the legal praxis of the UK, Germany, the USA and the Nordic countries.  However, due to the very limited use of specifically positive declaratory actions in patent disputes, it has been difficult for me to discover the most eminent cases from the legal systems of these jurisdictions. 

After many days and nights spent on various databases and case-aggregation-sites of varying quality, I am finally placing my hope on this message. Do you or your readers have any recollections of noteworthy patent dispute cases in which positive declaratory relief has been sought? I would be more than grateful for any assistance in this matter, be it tentative leads or concrete directions".

If you'd like to suggest any cases or appropriate further reading for Teemu, you can either email him here or post the information below.

Three conference themes to delight the patent litigator -- and a 10% discount

Three forthcoming conferences may be of interest to readers of this weblog, not least because the organisers are offering a 10% discount to any PatLit reader who registers via this link, citing the appropriate VIP ("Very Important Patent"?) Code.  The conferences in question are

International Patent Litigation, 8 December 2011 This is IBC's third annual event on this topic and it promises to be an exciting one if the international cast of judges, practitioners and litigants take advantage of the opportunity to engage in some plain speaking on subjects in which we share the same concern but often have sharply conflicting interests. The venue is the Bloomsbury Hotel, London. Full details of the programme and registration can be accessed by clicking here. The VIP Code is FKW82249PLE.

Standards and Patents, 16 and 17 November 2011 While this subject may appear to be of relevance principally to non-contentious patent lawyers who are involved in the seemingly endless round of negotiations and discussions that attend this topic, it is also one which is ripe for complex patent litigation in which not merely regular patent infringement but competition issues are apt to be raised, and patent litigation has its own slot in the programme. The venue is the Millennium Hotel London Knightsbridge. Full details of the programme and registration can be accessed by clicking here. The VIP Code is FKW82244PLL

US Patent Reform Congress 2011, 18 November 2011 If two days' intensive analysis and discussion of patents and standards leaves you craving more, IBC have kindly organised a further event for the day after conference described immediately above.  Good news for patent litigators is that, in addition to regular US patent disputes, which are as plentiful as strawberries at Wimbledon (and even more expensive), it will now be necessary to go to court in order to discover what the America Invents Act actually means. Full details of the programme and registration can be accessed by clicking here. The VIP Code is FKW82243PLL

PatLit is pleased that its readers (like those of its fellow weblog, the IPKat) are being given a 10% discount -- but we'd like something in return.  If one or more of those readers who are attending would like to write a short note on any particularly interesting, exciting or novel topic that arises from any of the papers or from the discussions thereafter, this blog will be pleased to host them.

For further discussion of these events, see the IPKat's comments here

The Costs of the Trolls

Boston University researcher James E. Bessen has published a study with the title “The Private and Social Costs of Patent Trolls” on SSRN which evaluates the alleged costs due to lawsuits filed by a particular group of non-practicing entities identified by the oganization “Patent Freedom” as trolls.

The method comprises evaluating the impact on filing a lawsuit onto the stock market value of the defendant companies in a time window a few days after the filing of the lawsuit. PatLit finds it not surprising that the news of being accused of patent infringement is considered bad news on the stock exchange and that the stock exchange rates tend to decrease as a result. A little more surprising is the finding that this effect is much less pronounced when the plaintiff is one of the alleged trolls (as compared to the effect of being accused by a “regular” plaintiff). Lawsuits filed by trolls generate a mean loss of 0.32%, whereas other studies have shown that the news of an ongoing patent litigation lead to losses of around 1.5% to 2% in the stock exchange rate.

Whilst the author’s definition of trolls as individuals “who opportunistically litigate over software patents with unpredictable boundaries” appears to divest a mind which is not completely unbiased, PatLit - as an impartial organ of the administration of justice - has to insist on the presumption of innocence and thinks that at least a fraction of the alleged damages might be due to patent infringements committed by the defendants, for which the poor trolls are not to blame.

Licence Analogy Back in the Game - with the worst Licensee you can Imagine

The calculation of damages using the licence analogy method has become somewhat unfashionable in Germany as the calculation of damages using the infringer’s profit is usually considered to give more favourable results for the patentee. This holds in particular since the possibilities of the infringer to deduce overhead costs have been limited strongly by the Federal Supreme Court (BGH) in the decision “Gemeinkostenanteil”.

The Munich District court has now issued a decision which might bring the licence analogy method back into the game.

The court finds that for the purpose of assessing the damages in a patent infringement procedure, the calculatory royalties should be noticeably higher than those on obtainable on the free licensing market.

The interesting point about this decision is that the court does not support this finding by arguing that a certain amount of punitive damages would be fair in order to achieve a discouraging effect as one might have expected. Rather, the court’s (and maybe the plaintiff’s) argument is entirely based on fairness arguments in line with Art. 13 lit. b of Directive 2004/48/EC.

Basically, the court accounts for the particular circumstances at the end of the procedure differing from those on the free licensing market. According to the court, the royalties paid on the free market are discounted for the following reasons:

• the general risk of the legal validity of the right,
  
• the risk due to the uncertainty of the infringement of the right
  
• the fact of asking for a license demonstrates a fair business conduct, which implies a certain credit worthiness.
  

The above factors are, however, not relevant at the end of the litigation where the validity is proven as well as the infringement and where the right owner risks to face further problems in enforcing his rights to timely payment of the royalties and to obtain documentary evidence for the sales. The delay of the payments to be expected increases the risk of insolvency of the infringer, which has to be accounted for.

In other words, the convicted infringer is considered to be comparable to a licensee with very low credit worthiness and the poorest payment record you can imagine in a case where the no uncertainty with regard to the validity of the right or with regard to the infringement exists. In the case at issue, the court found an increment of 66% over the usual royalties in the technical field to be reasonable.

Would you take a patent dispute to the ICC for an arbitration?

Revised ICC Rules make arbitration more attractive for IP disputes, say Katie McConnell and Nathan Searle (Hogan Lovells) in the following piece which has been specially commissioned for PatLit:

"International arbitration is the dispute resolution method of choice for international business. It has become increasingly prevalent as a means of resolving intellectual property disputes. Arbitration is particularly attractive for resolving multi-jurisdiction intellectual property disputes because it enables the parties to resolve their disputes in a single forum, avoiding the costs, delay and risk of inconsistent judgments that can arise from multiple proceedings in different countries. Another feature of arbitration that makes it attractive for resolution of intellectual property disputes is its confidential nature. This can be particularly important where a dispute involves trade secrets or technology and information that are commercially sensitive. Also, international arbitration awards are enforceable in 145 countries under the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. The Convention provides that local courts must enforce awards, subject only to limited grounds of challenge set out in the Convention.

One of the world's leading arbitration institutions, the International Chamber of Commerce, has recently released a new version of its arbitration rules. The rules will apply to all ICC arbitrations commenced after 1 January 2012. The new rules are designed to make the process more efficient, and to fully encompass modern forms of communication and technology (telex is out; email is in!).

The new ICC Rules of Arbitration include changes aimed at saving time and cost and improving the efficiency of complex multi-party arbitrations.

The key changes to the ICC Rules include the following:

• Emergency arbitrators: Provisions for the appointment of an emergency arbitrator to grant interim relief before the Tribunal is constituted. In some intellectual property disputes (such as to protect trade secrets) it can be of key importance to obtain an urgent injunctive relief. An emergency arbitrator appointed under the new ICC Rules can make an interim order granting such relief until the arbitral Tribunal has been appointed. This avoids the need of parties having to go to court to attempt to obtain such relief. Under the new rules the ICC will appoint an emergency arbitrator within as short a time as possible, which will normally be within two days. The emergency arbitrator provisions only apply to arbitration agreements entered into after 1 January 2012.

• Confidentiality: The ICC Rules now expressly provide that the Tribunal may make orders regarding the confidentiality of the proceedings and any other matters in connection with the arbitration, including taking measures to protect trade secrets and confidential information. As mentioned above, confidentiality of arbitration makes arbitration attractive for disputes dealing with commercially sensitive information, such as IP licensing rates. Accordingly, the strengthening of the confidentiality provisions in the ICC Rules is likely to be welcomed by arbitration users in the intellectual property sector.

• Arbitrator independence and availability: The new ICC Rules provide that Arbitrators must sign declarations of their independence and impartiality at the time of appointment and must keep the ICC secretariat informed of any matters that arise after their appointment that may impact their independence and impartiality. Arbitrators must now also sign a Statement of Availability before appointment by the ICC, disclosing their existing arbitral commitments and confirming that they will have adequate time to devote to the arbitration. These developments are also likely to be welcomed by arbitration users, as they are designed to ensure that arbitrators are and remain free of conflicts of interest and have adequate time available to resolve the arbitration in a speedy and cost-effective manner.

• Time and Costs: A number of provisions have been added aimed at reducing time and costs of arbitrations including:
• an express duty on the Tribunal and the parties to conduct the arbitration in an expeditious and cost-effective manner;
• a requirement for a mandatory case management conference at an early stage of the proceedings between the parties and Tribunal to discuss procedural matters;
• a requirement for the Tribunal to consider whether various case management techniques aimed at reducing time and costs are appropriate for the arbitration. Suggested case management techniques are contained in an appendix to the Rules and include techniques such as identifying preliminary issues or conducting part or all of the arbitration on documents only basis. In intellectual property cases there is often benefit to the parties in employing some of these techniques, such as having a hearing on issues of liability first and dealing with quantum issues at a later stage;
• The possibility for the arbitral tribunal, when deciding on the costs of the proceedings, to take into consideration the extent to which each party has conducted the arbitration in an expeditious and cost-effective manner; and
• The possibility of better monitoring the time taken to deliver an award to the parties by the Court.

• Multi-parties and multi-contracts arbitration: The Rules contain entirely new provisions which facilitate joinder (of a party to the arbitration agreement), multi-party arbitrations, cross-claims and consolidation. These provisions give recognition to the growing number of complex multi-party and multi-contract arbitrations. These provisions are particularly important in the context of intellectual property disputes which commonly include multiple claimants (such as licensees and licensors of intellectual property rights) and multiple respondents (such as manufacturers and distributors of allegedly infringing products).

Overall, the changes to the ICC Rules are likely to be welcomed by users of international arbitration in the context of intellectual property disputes, as they strengthen protection of confidential information and are likely to improve efficiency, speed and cost effectiveness of arbitration".

Electronic discovery: not just emails any more ...

Last week Symantec released the findings of its 2011 Information Retention and eDiscovery survey. This looked at how legal and IT personnel within enterprises are managing ever-growing volumes of electronically stored information and preparing for e-discovery requests. Through the survey is said to have been conducted among the legla and IT personnel of some 2,000 enterprises worldwide, it has a bit of an American flavour to it. According to the survey:

"• Email is no longer the primary source of information for e-discovery requests, and companies now must be prepared to produce information from more sources than ever before, with more than half indicating SharePoint files (51 percent), and nearly half citing instant messages and text messages (44 percent) and social media (41 percent) as most commonly part of an e-discovery request 

• Implementing best practices translates to a 64 percent faster response time with a 2.3 times higher success rate when responding to an eDiscovery request 

• Despite the risks, the survey found nearly half of respondents do not have an information retention plan in place, which leads to serious problems related to excess storage and improper legal hold practices".

There's plenty more information in the Symantec media release, as one might expect.

PatLit notes that regardless of the excellence of a company's best practices, not merely the discovery of electronic documents but the post-discovery processing of them is bound to be increase the cost of patent litigation in those countries which provide for discovery as against those that do not.

Do any readers have interesting experiences of electronic discovery issues which they'd like to share?

Unitary patent "would advantage the English, French and Germans"

"The EU Embraces Enhanced Cooperation in Patent Matters: Towards a Unitary Patent Protection System" is a recent article by Enrico Bonadio (City University London; The City Law School of City University, London). It has been published in issue 3/2011 of the European Journal of Risk Regulation and is now available in full on SSRN here. According to Enrico's abstract:

"On 13 April 2011 the Commission tabled a package of two legislative proposals implementing enhanced cooperation in the field of unitary patent protection and translation arrangements. Such proposals were subsequently agreed upon by the EU ministers in an Extraordinary Competitiveness Council on 27 June 2011. 

The objective of this regulatory move is to offer innovators in Europe a unique patent right which can only be transferred, licensed, revoked or may lapse in all the Member States which participate in the enhanced cooperation. 

However, Spain and Italy have chosen to remain outside the enhanced cooperation system and challenged before the Court of Justice of the European Union (CJEU) the Council Decision of 10 March 2011 authorizing such cooperation. They point out inter alia that the envisaged system would advantage applicants coming from EU English, French or German speaking countries".

Readers are invited to peruse Enrico's piece, which is a refreshingly brief five sides of pdf, and let PatLit (and Enrico) know what they think of it.

Patent Wars: a visual account

Via Scott Baxter comes this delightful infographic, the contents of which are self-explanatory. If you find it too small to read on-screen, it should grow if you click on it.




Via: Business Insurance Site

PatLit hopes that this diagram will be kept regularly updated.

IP litigators: can you stay the course?

PatLit has just learned the details of the next Intellectual Property Litigation and Advocacy courses, run from the depths of England's thickly-forested midlands by the  Nottingham Law School. According to the latest information:

"The courses now take place over a single year, comprising three modules for litigation and one module for advocacy. The dates are set out below.

Both courses (and passing the assessments) are required for patent attorneys who wish to qualify as Patent Attorney Litigators. Trade mark attorneys require the litigation part to qualify as Trade Mark Attorney Litigators and the advocacy part to qualify as Trade Mark Attorney Advocates. For both types of attorneys, there is still a requirement for 6 months supervised experience, but IPReg is consulting on abolishing this.

The courses are also useful to others who wish to know more about litigating intellectual property rights.

DATES:
Litigation
Unit 1: 6 – 8 October 2011
Unit 2: 17 – 19 November 2011
Unit 3: 26 -28 January 2012
Assessment date to be confirmed 

Advocacy
Unit 4: 25 - 27 April 2012
Assessment date: 28 April 2012".

For more information and to register, just click here.

Macedonia's civil procedure amendments: how will they affect patents?

PatLit guesses that most of its readers have not yet had much practical experience of litigating patents in the former Yugoslav Republic of Macedonia. However, this blog is sure that everyone will wish to learn about the amendments to the Macedonian Law on Civil Court Procedure which become effective this Friday, 9 September, since some of those amendments affect IP rights owners who are involved in civil litigation there.

Among other things. the amended law enables the parties to present their own expert evidence before the court. Until now, only the court was entitled to ask for expert evidence. The Ministry of Justice will publish an official list of expert witnesses in the near future [PatLit wonders whether the official list is likely to come any way near satisfying the needs of patent litigants and how easy it may be to augment the list where and when necessary].

Appeals to the Supreme Court in IP cases will only be possible in respect of monetary claims if they exceed approximately €16,000 ($23,000) [This at least shouldn't be a problem in most cases].

Source: article by Zivka Kostovska-Stojkovska, PETOŠEVIC, Skopje, for World Trademark Review, 6 September 2011

PCC Page 38: Has the Robot Octopus lost control?

Has IPOff's disclosure got Cautious
into a real stew ...?

Meticulously masterminded by the Chartered Institute of Patent Attorneys (CIPA), the PCC Pages seek 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 38th, former CIPA President Alasdair Poore considers how a poor and apparently inadequate attempt to comply with the requirement of disclosure can be dealt with.

"IPOff has asserted that the design of its allegedly infringing Robot Octopus was independently created – produced by an independent design agency, Fishy Designs.  In the Case Management Conference (CMC), the PCC ordered specific disclosure in relation to the allegation of independent design.  IPOff provided a list of documents, and copies of the disclosable documents on the list [Note: this list should include non-disclosable documents (such as privileged ones) although usually in a fairly cursory manner].  However, Cautious’s patent attorney thinks the list is deficient and wrote to IPOff’s solicitors, asking that his client make a better effort at disclosure.
 The response is blunt. Our client has done a proper job.  There is no further disclosure.  They add that the instructions to Fishy Designs are privileged, as containing legal advice [not sure about that!]. Cautious’s patent attorney’s assistant has prepared a note on current position: “You have asked me to comment on what steps we can take in relation to IPOff’s clearly inadequate disclosure.
 The first point to make is that, even where a party has given disclosure, you can make an application for further disclosure (CPR 31(12), PD31 5.1).  The application must set out specifically what documents are sought and provide evidence in support of the application (PD31 5.2, and see the White Book para 31.12.2).  The Court must take into account the overriding objective (PD31 5.4), and so it seems that the application or evidence should also explain why disclosure is proportionate.  However, where it appears that the failed to comply with the obligations in the CMC Order, it will usually make an order (PD31 5.4).
 In this case there are several aspects which we can rely on:  

·         There appear to be several deficiencies in relation to disclosure of emails.  First it is clear that “electronic documents”, such as emails, word documents and spreadsheets are disclosable (CPR 21.4 and PD31A 2A.1 and also see the Practice Direction on Disclosure of Electronic Documents PD31B at para 5 for examples).  The standard form of “Disclosure Statement” which is set out in PD31A, Annex (and N265) specifically requires a statement as to the extent of search carried out – including a statement of what electronic document resources have been searched (such as PCs, laptops and servers).  IPOff has simply left that statement untouched.  Clearly it should have searched some of these resources.  Indeed its reference to emails seems to show that it has.  Note that where “there is a failure to make a sufficient search, the court will "usually" make such order as is necessary to ensure that the obligations on the respondent are properly complied with”  (Digicel v Cable & Wireless [2008] EWHC 2522 at para 36 applying PD31 5.4) 

·         PD31A also makes specific comments about “deleted” documents: “In addition … the definition [CPR 21.4] covers those documents that are stored on servers and back-up systems and electronic documents that have been ‘deleted’.”  This makes it clear that IPOff should have considered searching for deleted documents on some of those resources.  In practice ‘deleted’ documents often still remain in place after deletion; they simply cannot be viewed using simple resources such as the application from which they have been deleted, or the file listing. 

·         There is also an obligation to search for copy documents where these might be materially different from those disclosed (CPR31.9) – these might for example be on a colleague’s computer, or smart phone.  This rule means that it is not necessary to list every copy – eg where they do not differ in a respect which a party intends to rely upon or which may assist either party.  However, clearly when the copy of the document which is disclosed has been deleted, any remaining copies which have not deleted should be disclosed. 

·         PD31B 20 to 23 make clear what the scope of a reasonable search for electronic documents is.  It should take into account the overriding objective, including dealing with a case in a manner which is proportionate (PD31B 20).  Where specific disclosure is sought of documents which are not “reasonably accessible” you must demonstrate that the relevance and materiality justify the cost and burden of retrieving and producing the document(s).  Thus ‘deleted’ documents, unless they are readily accessible from an archive copy, may require us to show that production is justified. 

·         Note that under the Practice Direction on Disclosure of Electronic Documents (PD31B 8), the parties are urged to discuss electronic disclosure before the Case Management Conference.  [There is an extensive discussion of electronic disclosure, emails and back-ups, and failure to agree the extent of search in Digicel v Cable & Wireless [2008] EWHC 2522 (see para 33 onwards].  This must be even more relevant in the PCC where the objective of the procedure is slim-line.  But it is not clear that discussion would have been realistic here, where IPOff was disputing giving any disclosure but it is pretty clear that they should have raised it as soon as they knew that disclosure was required.  PD31B 9 specifically says that where a party plunges in without discussion the court may require it to do it all again.It might be a chance to show you superior knowledge of the electronic disclosure rules!
 Secondly, IPOff has not listed any previous drafts of the drawings, although the minute refers to the 5^th draft being sent to it.  Clearly earlier drafts exist and it seems probable that IPOff was sent copies of them, and should have listed them whether or not it still has the copies. IPOff should also have considered documents in the possession of Fishy Designs. CPR 31.8 covers not just documents in a party’s possession, but also those which a party is entitled to, or of which it is entitled to obtain copies (see the White Book, para 31.8.2, 31.8.3 for a further explanation of possession and control, and for example Langbar International v Rybak [2007] EWHC 3255 para 47 (only need to establish prima facie case for control)).   It seems quite possible that Fishy Designs have some documents which belong to IPOff.  This should cover both the emails and, if IPOff deny having previous drafts of the drawings, those previous drafts.”
 [This is rather a bold statement.  Only some documents belonging to subcontractors will be ones which the principal is entitled to or to make copies of.  This will be subject to the terms of engagement with the contractor.  Secondly, the common position for a person providing services, is that material created for the principal, belong to the principal.  That means that original drawings may well belong to IPOff.  This is a good reason for making sure that the client is aware of looking for documents their subcontractors have generated.  However Fishy Designs’ copy of letters sent by IPOff belong to Fishy Designs, and Fishy Designs’ copies of letters sent by them to IPOff also belong to Fishy Designs.  The same would seem to apply to emails – so it is far from clear that Cautious could insist on disclosure of these.  However, Langbar v Rybak ([2007] EWHC 3255 para 47) notes the difficulty that the other party will have in knowing what is in the principal’s control, and provides that only a prima facie case for control need be established – go for it.] One further possibility that Cautious might consider is to approach Fishy Designs for its side of the story.  There is no property in witnesses and, unless they are employed by the other party, no ethical reason for not approaching them.  There may of course be some practical reasons, so tread with care".

Fine for grossly negligent (or worse) breach of cease-and-desist order

Here's a bit of delayed-action  news. According to a recent email from the PR folk at Nichia, an order was made last January by the District Court of Düsseldorf, Germany, that The Republic Group Handelsvertretung GmbH (“TRG”) stop offering for sale, placing on the market or using, or importing or possessing for any of those purposes in Germany the white LED products covered by Nichia’s YAG patent EP 936 682 (DE 697 02 929). It appears that, while more traditional forms of trading in those products ceased, TRG continued to offer an infringing product (Harvatek HT-U158TW) on its website even after the judgment. 


It seems that there was a happy ending, though -- for Nichia. On 25 July the District Court Düsseldorf made a further order that TRG to pay a fine of EUR 5,000. According to the decision, the court concluded that, even if it had not done so intentionally, TRG caused the breach of its earlier order at least by gross negligence.  This could not be regarded as a minor breach or a “less severe case”, and it could not be ruled out that there would be further breaches in the future. 


PatLit was wondering whether the infliction of a fine for a negligent breach of a cease and desist order might be expected in other countries than Germany, and what sort of scale of fine is inflicted.  It is unlikely that there will be any norm as between national courts, this blogger thinks.