Where patent injunctions meet FRAND: Samsung v Apple in the Netherlands

The patent infringement litigation between Samsung and Apple in the Netherlands last month, leading to a judgment on 14 October, is worthy of note for the meshing-in of demands for traditional preliminary patent infringement relief with the analysis of the effects of contract law -- even when no contract has been concluded

This information comes from Ruprecht Hermans (Brinkhof), who reported as follows:

"In the worldwide conflict between Apple and Samsung the Dutch judge rendered a decision in preliminary injunction proceedings commenced by Samsung against Apple regarding infringement of a number of Samsung’s essential universal mobile telephone system (UMTS) patents. Samsung’s claims were rejected in a decision containing some interesting thoughts on the enforcement of essential patents.

Samsung based its infringement claim on the allegation that Apple’s phone products necessarily infringed Samsung’s patents as they complied with the applicable UMTS standards and therefore contained technology falling under the scope of Samsung’s patents. Samsung declared these patents to be essential under the applicable European Telecommunications Standards Institute (ETSI) policy.

Apple’s defence boiled down to the following: 

1. Samsung’s patent rights were exhausted because the chipsets used by Apple originated from third parties that were licensed by Samsung; 

2. Samsung’s Fair, Reasonable and Non-Discriminatory (FRAND) declaration was governed by French law; under French law this declaration was considered a licence as soon as it is accepted by a third party -- even if the royalties are still to be negotiated. It is sufficient that the royalties could be objectively determined, which is the case as they should be FRAND; 

3. As a result of the FRAND declaration Samsung forfeited its right to enforce its patents. Users may trust that they can apply the standard. If no agreement can be reached on FRAND royalties the patent owner can only claim damages for the past and FRAND royalties for the future; 

4. Samsung forfeited its right to enforce the patents because Samsung declared its patents to be essential only after the setting of the relevant standard.

However, as its first line of defence Apple relied on the lack of urgency required in preliminary injunction proceedings on the part of Samsung. Apple’s alleged infringing products had been on the market since 2008 and Samsung did not undertake any action. The judge’s view was remarkable. Instead of taking the usual position that, in matters of IP infringement, urgency is a given as long as the infringement continues, he considered that these proceedings were part of a conflict with proceedings in Japan, Korea, USA, Germany, UK, France, Italy and the Netherlands. Against this background it was likely that Samsung, although it at first didn’t do anything, has (again) an urgent interest in obtaining an injunction. This was already the case because such an injunction would strengthen Samsung’s position in its negotiations with Apple regarding a licence.

The judge rejected Apple’s exhaustion of rights defense because of lack of evi-dence in relation to the origin of the chipsets. He also rejected Apple’s defence that acceptance by Apple of Samsung’s FRAND declaration amounted to a licence. The expert opinions brought forward by both parties explaining the position under French law did not concur and the judge was not convinced that under French law a licence could exist absent an agreement on the licence fees. Moreover he had serious doubts whether the French requirement that a licence should be in the form of a written document was fulfilled.

But did Samsung forfeit its right to enforce? In a judgment on the merits of the District Court of The Hague of 17 March 2010 (Philips/SK Kassetten) it was held that, as long as a party does not have a licence, there is in principle no ground on which to allow it to use the patented technology. The court held: 

“Allowing the use of patented technology or preventing the enforcement of a patent right on the basis of a mere entitlement to a FRAND-licence would moreover lead to legal uncertainty. As long as the alleged entitlement is not converted into an actual licence, it is uncertain for both parties if the alleged entitlement is justified, let alone that it is clear what the licence terms will be. There will be frequent cases of such uncertainty, as parties regularly will have different opinions regarding the answer to the question which terms, and especially which royalty rates, are FRAND. Therefore, also in view of legal certainty a system is desirable where the right to enforce a patent only stands after a party actually has a licence.”

However, in Philips/SK, SK had only requested a licence under FRAND conditions after Philips had commenced infringement proceedings.

The judge in Samsung/Apple considered that the question was to be dealt with under Dutch law, under which there is forfeiture of rights if the right holder’s conduct is contrary to principles of reasonableness and fairness. This is the case if there are circumstances which cause the other party to trust that the right holder no longer wishes to enforce his rights or if the other party's position would be unreasonably harmed. Samsung’s obligation to license under FRAND terms under ETSI rules was not sufficient to come to such conclusion. Third parties may trust to get an offer for a licence on FRAND terms, but they may not trust that they can apply the standardized technology without a licence.

According to the judge the case wasalso different from the conflict between Philips and LG (The Hague District Court, 25 April 2007). In that case Philips neglected to disclose its essential patents although it participated in the standard setting. Samsung did make a general declaration that it would be prepared to license its essential patents under FRAND terms before the standard was established. That Samsung only disclosed the particulars of the essential patents later does not change this.

So for Samsung the case looked very good. Unfortunately for Samsung, though, the judge was not convinced that Samsung had complied with its obligation to negotiate a licence agreement on FRAND terms. The part of the proceedings actually dealing with the status of the negotiations between Apple and Samsung is -- for obvious reasons -- confidential,  and so, therefore, is part of the decision. However, the judge concluded that Samsung’s licence offer to Apple could not be considered FRAND and that the offer made even showed that Samsung was not really prepared to conclude a licence with Apple. According to the judge Samsung did not give the impression that substantially lower royalties than offered could be discussed. The judge considered that, under those circumstances, it would be likely that the court in proceedings on the merits would consider the enforcement of the patents by Samsung a misuse of patent rights. Therefore, other than in Philips/SK, Samsung had under these circumstances no right to obtain an injunction against Apple. Only if, after Samsung had made a FRAND offer but no agreement could be reached, could Samsung return to obtain an injunction against Apple".

A helpful analysis of this decision by Gertjan Kuipers, Douwe Groenevelt and Oscar Lamme (De Brauw Blackstone Westbroek) reached this blogger shortly after Ruprecht's account. You can access it here.

The America Invents Act 2011: US Marking Requirements and Pitfalls

In this, the third and final article in a series which PatLit commissioned from leading US intellectual property practice Faegre & Benson on the recently-enacted America Invents Act (AIA), Victor Jonas and Jason Kraus update readers on the changes made by the AIA to the controversial 'patent marking' provisions of US patent law:

"There are generally no legal requirements in European countries to mark a product with a patent number, though the US requires patent marking in certain circumstances, and both European countries and the US impose penalties for improperly indicating that unpatented products are so-protected. The America Invents Act 2011 (“AIA”) makes several changes to US marking requirements as well as the conditions under which penalties for “false marking” arise.

More flexible marking practices

With respect to marking requirements in the US, 35 U.S.C. §287 places limitations on the damages recoverable to a patentee in the absence of patent marking. In particular, a patentee claiming infringement of a claim to a “patented article” must mark that article with the patent number in order to receive damages for up to six years of past infringement – in the absence of such marking, the patentee can only expect to recover damages after actual notice of the infringement is given to the infringer. Prior to enactment of the AIA, US law required the patentee to mark the patent number on the product itself or, when impractical, to a package or label. While the patented article must still be marked, under the newly revised §287, patentees are allowed to mark patented articles with a website that lists one or more patents on the patented article. Specifically, the patentee must mark the patented article with the word “patent” or the abbreviation “pat.” together with an address of a posting on the Internet – accessible to the public without charge – that associates the patented article with the number of the patent. Thus, it is reasonable to assume that a patentee could mark all their products with the same marking and then break out which products are believed to be covered by which patents; although court decisions will still be needed to provide guidance on whether a specific marking practice is adequate. 

False marking claim curtailment 

Prior to enactment of the AIA, a rash of false marking law suits had been filed in the US, particularly for marking products with expired patents. These suits followed closely on the heels of the Federal Circuit's decision in Forest Group, Inc. v Bon Tool Co. (Fed. Cir. 2009) that a false marker could be fined $500 per article marked. While previously 35 U.S.C. §292 provided that any member of the public was able to bring such a claim of false marking, the AIA has amended the law to require that the US government bring suit for the civil penalty or that any other plaintiff must have suffered commercial harm and be limited to recovery of damages adequate to compensate for that harm. The AIA also eliminates a finding false marking based on marking with an expired patent that covered the marked product prior to expiration".

The two earlier articles in this series are

• America Invents: what do litigators need to know? here
• America Invents Act: New Opportunities for Challenging the Validity of US Patents here

Patent wars: New ammunition

During the last months we have seen several movements that suggest several companies are very active obtaining new ammunition.

As we have previously reported (here), at the end of June Nortel announced that the wining bidder of its patent portfolio was a consortium consisting in Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony. That Consortium bided US$4.5 billion, while Google bided US$ 900 million.

Google didn’t wait much to react and on July 28 Bill Slawsky informed that “on July 11th and 12th, Google recorded the assignment of 1,030 granted patents from IBM covering a range of topics, from the fabrication and architecture of memory and microprocessing chips, to other areas of computer architecture including servers and routers as well” (here). Only one day latter, Bill Slawsky published the list of 1,029 patents involved (here).

A couple weeks latter, on August 15, Google announced the acquisition of Motorola Mobility for $40.00 per share in cash, or total of about $12.5 billion (here). This was announced a few weeks after the largest individual Shareholder of Motorola Mobility, Billionair Carl C. Icahn (11%) suggested Motorola to monetize its patent portfolio (here). As Spencer Ante (WSJ) explained, Mr Icahn considered that the value of Motorola’s patents would be around US$ 4.5 billion (video here). Casually or not, the same figure that the mentioned Consortium paid for Notel’s patents.

What was Google buying in August? Of course Google was obtaining ammunition to attack (Motorola's patents), but not only. We should also bear in mind that on October 6, 2010 Motorola Inc. “announced that its subsidiary, Motorola Mobility, Inc., has filed a complaint with the U.S. International Trade Commission (ITC) alleging that Apple’s iPhone, iPad, iTouch and certain Mac computers infringe Motorola patents. Motorola Mobility also filed patent infringement complaints against Apple (NASDAQ: AAPL) in the Northern District of Illinois and the Southern District of Florida” (here).

With this ammunition gathering, we could expect Google to sue Apple. Before jumping to the battle field, it has helped one of its close friends, providing HTC with new ammunition to use in the battle it is facing with Apple (here).


Should Apple fear? Maybe not much, since yesterday it obtained a nuclear weapon: The USPTO granted patent no. 8,046,721 for “a method of unlocking a hand-held electronic device”. As James Kendrick reports, "every Android device now infringes Apple patent".

When will they face the final battle in this war? (if ever)

By the way, I first posted in PatLit on October 25, 2010 (one year already!). I want to celebrate with all of you. Feel free to take a slice from this pie and drink some Cava with me. Cheers!

PCC Page 42: Octopus-watching continues: giant squid v small fry .. and the prospect of settlement

Incipiently inspired 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 42nd, former CIPA President Alasdair Poore returns from his grand tour of the United States and regales us with some thoughts on the prospect of settlement:

Cautious and Co are still keeping a watching brief on the Patents County Court while their claim moves gradually on.  A couple of cases, one unreported, illustrate smart and not-so-smart ways of using the Patents County Court.

Liversidge v Abbott Laboratories (or maybe Abbott Laboratories v Liversidge,  unreported), illustrates a smart approach: Be selective about the relief sought, and make the PCC an attractive forum for both parties.  The case involved Abbott’s best selling drug, Humira, used in injectible form for the treatment of rheumatoid arthritis.  Liversidge alleged that an injector used for administration of the drug infringed a patent which he had recently been granted (EP 2067496).  Abbott dispute this and sought revocation of the patent.  The case could have answered one of the questions posed earlier in the PCC pages: what happens if parallel cases are launched in the PCC and the Patents Court almost simultaneously? 

In this case Abbott issued proceedings in the Patents Court for revocation and Liversidge issued proceedings in the PCC for infringement.  The cases could not have got closer: they were commenced on the same day and had received consecutive claim numbers on issue – the claim in the PCC having been issued in the Royal Courts of Justice (Chancery Registry) (section 2.2 PCC Guide).  Liversidge said that he would not be able to contemplate proceedings in the High Court because, if he lost, he would be bankrupt.  On the other hand Abbott contended that proceedings relating to infringement of one of the world’s leading drugs were hardly appropriate to the PCC.  Initially the parties could not agree even on which forum should hear a transfer application; Judge Birss QC therefore invited an application for transfer in the PCC.

Before the hearing, however, the parties reached a very pragmatic decision:  Liversidge agreed with Abbott that he would not seek an injunction in relation to the infringement claim, and that damages should be awarded as a reasonable royalty, this being based on the value of the syringe component, without including the value of the drug in the syringe.  On this basis Abbott was willing to have the case heard in the PCC.  This seems to be a victory for common sense.

It might be noted that the case was started before the damages limit was introduced in the PCC, and such a solution might be more difficult now.  But a bit of imagination might be engaged to ensure that the damages limit does not present a practical barrier – by agreeing to waive the limit or possibly to agree an alternative limit or approach to calculation, or by settling for some damages being better than none.

The second example, Martin Moore v Mark Plant Ltd [2011] EWPCC 25, was not such a happy case.  It involved alleged infringement of a Community registered design for a door knob (000908272-0001).  An incidental part of the decision is what is (or in this case, is not) behaving “unreasonably” such that the court should make an order for costs at the conclusion of the hearing.  Such an order would mean that those costs would be outside the scope of the cap on costs.  The case also illustrates the desirability of putting an explicit time limit on settlement offers or at least monitoring them to ensure that an offer is formally withdrawn when it should not longer be applicable – otherwise you could end up in a seemingly pointless hearing on whether a settlement has been reached.

The background was that the defendant made an offer of settlement on 3 May 2011.  Given that they had apparently dealt in only 88 knobs, and were happy to undertake not to deal in them in the future, this seemed rather sensible.  That offer was continually declined over a few weeks.  Then, on 19 May 2011, the defendants, having found some critical prior art, filed a defence and counterclaim, and telephoned the claimant’s solicitors to say (among other things): “If his client did not discontinue the proceedings forthwith, our client would be forced to incur significant costs, which our client would seek to recover from the Claimant on an indemnity basis.”

A week later, on 26 May 2011, the claimant’s solicitors purported to accept the offer.  A hearing was necessary on this.  Judge Birss rejected the argument that the settlement offer was still open to settlement, saying:

“it is absolutely plain that by 26th May circumstances had changed. … In my judgment the correct approach is to take an objective construction of what was going on.  To an objective party in the position of the Claimants, seeing what was emanating from the Defendants over the series of events from 16th, 17th and 19th, but in particular the 16th and 17th, it would have been clear that the Defendants had by then withdrawn the offer that they were making to settle these proceedings on the previous basis.”

In a final twist, the defendants applied for costs under CPR 63.26.  Readers will recollect that this provides that “Where a party has behaved unreasonably the court will make an order for costs at the conclusion of the hearing”; and that such costs are not counted in the capped costs for the proceedings as a whole (CPR 45.43).  To the frustration of the defendants Judge Birss QC decided that the fact that an objective (reasonable) party would have concluded that the offer had been withdrawn (and therefore that there was no settlement) did not mean that it was unreasonable to argue the point.  CPR 63.26(2)

“is concerned with the behaviour of the parties in terms of the behaviour of the process of the court, and that is different from making assessment in relation to the objective construction of the parties' intentions”. 

Presumably it would be necessary to show something like no reasonable party would have concluded that such an argument could succeed.

The decision, illustrating that the jurisdiction to award “off scale costs” will be exercised only when there is behaviour in the proceedings which is unreasonable, is welcome.  However, it is all too easy to see that this could be a recipe for cost wasting activities which are “just arguable”.  However, if such conduct happens repeatedly in a case, perhaps it is then possible to argue that such conduct is an abuse on the basis that it is contrary to the overriding objective (CPR 1.1(2)(b) and (c)): costs in such a case will clearly cease to be proportionate.

America Invents Act: New Opportunities for Challenging the Validity of US Patents

In this, the second in a series of three posts commissioned from leading US intellectual property practice Faegre & Benson on the recently-enacted America Invents Act (AIA), Jason Kraus and Walt Linder examine the impact of the AIA on challenges to a patent's validity.  This is what they say:

Granting office -- and battleground
for patent validity

"Unlike European patent practice, current US patent law does not provide for post-grant opposition. Instead, the ex parte and inter partes reexamination procedures are used to challenge the validity of granted patents in the US Patent Office. Although the strategic use of these procedures has become increasingly common in the course of US patent litigation, they have characteristics that can limit their effectiveness. One such limitation is that only patents and other printed publications can be used as the basis for validity challenges. Before granting reexamination, the Office first makes a threshold determination as to whether a “substantial new question of patentability” exists. These procedures are carried out before a centralized unit of skilled examiners, but the time frames for resolving granted reexaminations, and inter partes reexaminations in particular, have steadily increased. 

The AIA modifies US patent practice by providing for post-grant review. This new post-grant review expands the available bases for validity challenges and is structured to offer a more efficient and effective review mechanism prior to litigation. While this new post-grant review proceeding is currently receiving much attention, with the exception of certain business method patents for which post-grant review is available on September 16, 2012, post-grant review is available only for granted patents based on applications filed on or after March 16, 2013. 

In the meantime, procedures similar to current inter partes reexamination remain available under the new name “inter partes review.” One significant change to the new inter parte review, which is already applicable to newly-filed inter partes reexaminations, is the determination threshold for the grant of a petition has changed from a “substantial new question” to a “reasonable likelihood that the petitioner would prevail.” Ex parte¬ reexamination remains in place and is substantially unchanged. 

Bases for Post-Grant Review 

Any ground relating to invalidity, including novel or unsettled legal questions important to other patents, can be used as the basis of a petition for post-grant review. Challenges based on assertions that the patent is invalid because the invention was on sale or in public use by the inventor or third parties, can now be raised in and decided by the Patent Office. Prior art patents and printed publications can also be used as bases for post-grant review. 

Timing 

A petition for post-grant review must be filed within nine months after the grant of the patent. Post-grant review is the only available review procedure during this nine month time period. A petition for inter parte review cannot be filed until after the nine month time period available for filing a post-grant review petition, or until after the termination of any instituted post-grant review. Furthermore, a party is barred from filing for post-grant review if it previously filed a civil lawsuit challenging the validity of the patent. 

By law, the Office must make an initial determination of whether to grant post-grant review within three months of the petition filing. Final determination must be completed within one year, but can be extended by six months. 

Procedure 

Post-grant review proceedings will be conducted by a new Patent Trial and Appeal Board. After a challenger files a post-grant review petition, the patent owner has an opportunity to file a preliminary response before the Office acts on the petition. The board can grant the petition only if the petitioner demonstrates “that it is more likely than not” that one of the challenged claims is unpatentable. During the proceeding, the petitioner is afforded substantial opportunity to participate in the post-grant review process. And similar to a European opposition procedure, the patent owner has an opportunity to cancel claims and present new claims for the board’s consideration. 

Estoppel 

Following a final decision in a post-grant review proceeding, the petitioner cannot maintain before the Patent Office, or raise in any civil lawsuit, any invalidity ground “that the petitioner raised or reasonably could have raised during that post-grant review.”

The first blog-post in this series, "America Invents: what do litigators need to know?", can be read on PatLit here.

Who is defending the Spanish opposition to the drafted Unitary Patent?

In a comment posted yesterday in “Unitary Patent: the Spanish view”, Steve Peers was wondering “if the Spanish government's position might change if the opposition party wins the forthcoming elections - as seems highly likely”.

What we know is that up to date the Spanish opposition to the suggested Unitary Patent was jointly defended at the European Parliament by both PP (opposition party in Spain today) and PSOE (party still in the Spanish Government).

As we can read at the European Parliament web page (here), during the meeting of the extraordinary meeting of the Legal Affairs committee held on January 20, 2011, Mr Antonio López-Istúriz (PP) held:

“I know that Commissioner Barnier is making a lot of effort, this is a hope for us to take greater advantage of the Single market. It is a Single market for all when it comes to the language issue we have had a very balanced report by Ms Palacio, there was no problem with the language issue, but when it comes to the process of enhanced cooperation we are left with the impression that we are adopting a number of issues which are changing the rules of the game and that includes the language issue”

At that same meeting, Mr. Antonio Masip (PSOE) held:

"We must be cautious, serene and we must have a common sense and that is something that can be demanded as legal experts. In this regard a few years ago Ana Palacio proposed 5 languages, so and why are 3 put forward now? Why have 2 been cut out? That makes no sense!"

On February 16, Mr López-Istúriz made reference in his personal Blog to the position maintained at the EP (here) (in Spanish):

“The popular deputies are going to support [the Government] in this endeavor because it is in the collective interest of Spanish citizens and companies”.

In the Amendments dated January 21, 2011 (here), we see that Mr López-Istúriz and Mr Masip jointly appear in Amendments 1, 3, 5, 7, 9, 14, 15, 17, 19, 21, 25, 27 & 28.

Will their position change when/if PP wins the forthcoming elections?


Unfortunately my crystal ball needs to be repaired and Spanish political parties have not yet disclosed their Programs. They may do it in the next days and I will report if any reference to the Unitary Patent is included.

The cost of proving infringement: how do civil procedure rules and disclosure affect it?

A postgraduate student writes as follows:

I am writing to ask for a little assistance for my thesis in Business Law at Copenhagen Business School.

The subject of my thesis is "Protection of Process Innovation in the Pharmaceutical Industry". The thesis examines the strategies of patents and secrecy for process innovation and the costs that influence the strategy. One of the costs I examine is the cost of proving an infringement by comparing the civil procedure rules in Denmark and UK. Therefore I am examining UK Civil Procedure Rules and the rules of disclosure in regard to the protection of patents and business secrets. Unfortunately I am having a hard time finding literature to this subject at my university.

I therefore kindly ask if you can be of any assistance to recommending literature on this subject or if you could to post my request for this information on your weblog".

Offhand I can't think of any literature or useful guidance on the cost dimension to the Civil Procedure Rules and the operation of the rules of disclosure. Can any reader recommend anything? Alternatively, might there be anyone out there who would at least be prepared to talk to the student in question and give her the benefit of their insights and experience?

America Invents: what do litigators need to know?

All smiles as President Obama signs
the Act -- but who will be smiling
once the litigation commences?

PatLit asked leading US intellectual property practice Faegre & Benson for some comments for its largely non-US-based readership on what the recently-enacted America Invents Act means in terms of litigation.  The firm has kindly responded to this request for an 'insider's view' with the following piece by Calvin Litsey and Kevin Wagner, whom we thank for their effort.

"The America Invents Act (AIA) has received a lot of press but, given its staggered implementation, its impact on patent litigation in the U.S. in the short term is likely to be minor. For example, the fundamental shift from “first to invent” to “first to file” only applies to patents filed after March 16, 2013, so the first litigation under the new system is not likely to occur until some point in 2014. In the meantime, smaller changes relating to joinder of multiple defendants, the best mode defense, the prior commercial use defence, defences relating to inventorship, and use of opinions of counsel in litigation will change some current litigation practices. 

Multiple Defendants 

It has become common practice for plaintiffs (especially for non-practising entities) to sue multiple defendants in the same action. The AIA makes this tactic much more difficult. With immediate effect, multiple defendants cannot be sued in the same action “based solely on allegations that they have infringed the patent.” Instead, joinder is allowed only when defendants are alleged to be liable jointly, severally, or in the alternative, and when there are common questions of fact to all defendants. This provision is largely a win for defendants, because it raises litigation expenses for plaintiffs and may expose plaintiffs to inconsistent claim construction rulings and multiple invalidity determinations. Because courts will still have the opportunity to consolidate cases for discovery and claim construction, however, not all of these advantages for defendants may be fully realized. Defendants who wish to pool resources can opt out of this provision. 

Best Mode 

One infrequently-used defence to a patent infringement is that the patent failed to disclose the best mode of practising the claimed invention that was known to the inventors as of the filing. The AIA eliminates this defence in all newly-filed cases. 

Prior Commercial Use 

For all patents issued after September 16, 2011, the AIA expands the prior commercial use defense beyond its traditional use in business method cases. Under this defense, almost any claim of infringement can be defeated by showing the defendant commercially used the invention at least 1 year before the filing date of the patent. 

Inventorship 

Another rarely-used defence is that an asserted patent is invalid because it names the wrong inventors. In all cases filed after September 16, 2012, the AIA eliminates the need to show lack of “deceptive intent” before inventorship can be fixed, effectively eliminating this defence. 

Opinions of Counsel 

When intent becomes an issue, as for allegations of willfulness or induced infringement, plaintiffs frequently seek to introduce the lack of an opinion of counsel as evidence of the defendant’s bad intent. Case law already discouraged this practice for willfulness, but this approach was permitted for inducement claims. The AIA eliminates reliance on the lack of an opinion of counsel for both situations for patents issued after September 16, 2012. 

First to File 

The change to a “first to file” system was implemented largely by changing the definition of prior art. For patents filed after March 16, 2013, prior art includes anything patented, described in a printed publication, in public use, on sale, or otherwise available to the public before the filing date of the claimed invention. This change expands prior art to include third-party prior art dated less than 1 year before the patent filing, eliminates the ability of the patentee to “swear behind” certain prior art, and allows use of additional foreign prior art. The AIA does include exceptions that allow some public disclosure by the patentee before patent filing. Concurrent with these changes, obviousness will be determined as of the filing date, rather than the date of invention".

Unitary Patent: the Spanish view

In an interview published last week, Mr. Alberto Casado, Director of the Spanish Patent and Trademark Office, has insisted in the arguments for the Spanish opposition:

“The Spanish position is favorable to have a Community patent and a European unified jurisdiction for patents. Therefore, we do not obstacle moving towards a single legal instrument; what is basically making it difficult for us is the model that the Commission and most member states are adopting and, especially, the fact which discriminates the Spanish language, both at the Community patent and the jurisdiction”.

Mr. Casado criticizes that the Unified Patent Court, as actually designed, “contemplates the possibility of technical judges who are not legally trained”. Appointing technical judges has recently been questioned by the European Patent Lawyers' Association in its Resolution on the Draft Agreement 13751/11 of September 2, 2011, posted two weeks ago in PatLit (here).

Furthermore, Mr. Casado claims that “appointing an specific judge for an specific action would go against our judicial security Constitutional principle”.

Full text, in Spanish, can be read here

Industrial Designs – the Wonder Weapon for the German Blitzkrieg?

A preliminary injunction granted on the request of Apple for preventing the sales of Samsung’s Galaxy Pad in most of Germany has recently caused a fairly big swivet in the IP community. This 1st instance case, featuring an industrial design and a defendant citing somewhat flimsy evidence, has even found its way to the hall of fame of “patent wars” in minimum time.

What is surprising from a patent litigator’s point of view is how simple this is. How is it possible that a preliminary injunction is granted based on an unexamined right?

As everywhere, the decision to grant a preliminary injunction requires a careful balancing of the right owner’s interest in preventing damages of irreparable nature and the defendant’s interest in a fair procedure. For any kind of protective right, doubts in the validity and doubts in the question of infringement will lead to a refusing decision in order to safely avoid erroneous judgements due to precipitate action.

In patent matters, even a successfully completed examination procedure is not necessarily sufficient to prove the enforceability with a sufficient degree of certainty (at least in Germany). Rather, additional conditions have to be met. In the case of unexamined utility models, the burden of substantiating the enforceability is at the plaintiff’s side, which must produce at least the results of a professional search carried out on the subject-matter of the utility model or a positive decision of an invalidity procedure.

Nothing of this kind can be found in the judgement of the Düsseldorf court – the reason being fairly simple: the validity is legally presumed in Art. 85(1) of the Community Design Regulation (CDR) , i.e. the court has to treat the community design as valid. This legal presumption may be challenged by way of a counterclaim. However, this shifts the burden of proof/substantiation to the defendant’s side. The applicability of Art. 85(1) CDR to interim relief has been questioned , but is generally accepted as far as the author of this note knows.

In practice, the short time scale of procedures in interim relief, the lack of search possibilities comparable to those available for patents and utility models and an official search result to start with leaves the defendant defenceless. This has a further crucial effect on the question of infringement because the defendant has practically no possibility to substantiate the existing design corpus such that the judge has to presume a high degree of freedom of the designer and thus a large scope of protection (cf. Art 10(2) CDR).

Further, the Hagen District court holds that the damages caused by infringements of industrial desings are more likely to be of irreparable nature as compared to patents because the industrial value of the former lies primarily in its individual character, which would be "diluted" when admitting counterfeits during the procedure of the merits, whereas the value of the patent basically lies in its technical advantages which are, as such, not affected by conterfeits on the market.

In particular in the world of telecommunication patent wars there is one further feature of industrial designs which makes them frightening weapons: they are not essential for standards and, thus, not subject to FRAND agreements. As a matter of course, there is no way to obtain interim relief against a global competitor on the basis of a standard-relevant patent.

In other words, you need not bother with being fair, reasonable and non-discriminative when using industrial designs.

The result is that industrial designs are tools which are largely underestimated in the portfolio of most of the IP right holders. Design rights are not expensive, powerful, can be enforced rapidly, easy to understand even for less experienced judges or customs officers, not susceptible for translation errors even in China, and deserve a decent fraction of every company’s IP budget.

PCC Page 41: Liimiting damages and “family” disputes

Regally regaled 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 41st, former CIPA President Alasdair Poore detaches himself from his beloved topics of disclosure and privilege and faces up to the harsh realities of damage limitation exercises where both parties are in pretty bad shape.

Over the last few months Cautious’s octopus has spent too much time focusing on the tentacles in his own case, and has taken his eye off the ball -- not a good thing for a football results predictor.   Meanwhile, stories unfold in the PCC which deserve some mention. The case of Victor Ifejika v Charles Ifejika shows that stranger events can call on the skills of His Honour Judge Colin Birss QC.  More on that in a moment. First, one year has passed since the PCC was first swept by the new broom.  The Report Card indicates that substantial progress is being made in the PCC.  The Judge reported at the CIPA Congress that the number of cases issued in the PCC has been increasingly steadily, with over 100 new cases in the last year.  Users are gaining confidence in the forum.  The Judge’s track record is dealing with cases in a sensible, robust and proportionate way – as illustrated in Ifejika v Ifejika.  

 Secondly, readers will already be aware of the implementation of the damages limit in relation to the remaining all proceedings in the PCC.  This came into effect on 1 October 2011, under the provisions of the Patents County Court (Financial Limits) Order 2011 (reported on the PatLit Blog here). The list is still shown as part of the Patents Court Diary's Pending matters – see the section at the end under the heading Patents County Court (note that the information on the Patents County Court page is still wildly out of date; can the Ministry of Justice please sort this out?) shows that there has been at least one full trial on a patent case issued under the new regime in Mastermailer v Horler (judgment awaited).  It is time for the court to get its teeth into more patent cases, and for patent attorneys to show their clients (or perhaps more accurately, their clients’ competitors) that the PCC means business. The Judge (and this octopus) calls for more patent attorneys to get their tentacles into the PCC.  

Thirdly, the court has moved to The Rolls Building (Court 20 – is this the final destination) Meanwhile, what of Ifejika v Ifejika?  Reported on 6 October 2011 at [2011] EWPCC 38 from the The Rolls Building, one notices something is immediately amiss with the name of the case.  Claimants and defendants with the same name are usually confined to family disputes.  You will not be disappointed to discover that this is the case here too. 

 This case was started in 2008, in the High Court, before the new PCC regime was in place.  It originates in a dispute between two brothers about registered designs and unregistered design rights in the “Hot House” contact lens cleaning device.  The case has already been up to the Court of Appeal [2010] EWCA (Civ) 563 (while it was being heard in the High Court, ironically by Judge Fysh QC, the former PCC judge, but sitting as a Deputy Judge in the Chancery Division).  Following this it was transferred to the PCC in early 2011.  It has all the appearance of an unfolding tragedy (in the dramatic sense). 

 The case has now been before Judge Birss on three occasions.  On the first, he made some enquiries about how much was at stake.  The response was that, in relation to one of the designs the amount was only £35!  Estimates for the other design ranged from £25,000 to £500,000. (see para 2 of the most recent judgment, at [2011] EWPCC 38).  This illustrates a very practical approach to making parties think about how valuable a case is.  In IP cases, where typically the prayer is for an inquiry into damages, the defendant should use this to press for further information, so that one can be sure that the case is being addressed in a proportionate manner. At the second hearing, case management directions were made.  They are usefully appended to the end of the judgment at [2011] EWPCC 38, in the Annex. The third hearing was about a further development – and shows a practical application of the “proportionate approach” to be used in the PCC.  The trial was scheduled for 19 October.  At the case management conference the judge, it was ordered that three witnesses were to be heard.  One of these, the only independent witness in the case, had reportedly stated in emails in the past: "I cannot believe that Victor is still trying to lay claim to your invention just because he provided financial support to the project".  Despite his now saying that his recollection of events quarter of a century ago might not be too reliable, Charles Ifejika regarded him as a crucial witness.  Unfortunately, this witness had serious family issues, including dealing with the death of his father.  These issues meant that he would be out of the country and could not any longer be present at the hearing.  The application was to reschedule the hearing. 

 Victor Ifejika opposed the adjournment of the hearing.  He was in serious financial difficulties – caused partly by his previous solicitors claiming costs of the hearing before Judge Fysh QC.  This money claim would take place before any new PCC hearing date (on the substantive dispute).  The only lifeline was Victor’s application for costs in the Court of Appeal (in which he was successful), but this had been adjourned until after the PCC hearing! 

 Judge Birss QC looked at this difficult family tragedy in a practical way.  The case had been going on far too long already.  It was important to keep it proportionate.  Charles Ifejika’s witness had given a witness statement which could be relied upon.  It was right that, in normal circumstances the witness should be open to cross examination, and this inability to do this would affect the weight to be placed on the evidence. However, the risk was that, if the hearing was delayed there would be no hearing, because of Victor’s financial position – brought about at least in part by the long running dispute.  Balancing these risks and applying a sensible approach, Judge Birss QC decided (para 20) that the original hearing date should be retained. Score (an octopus view): Birss 1 Dickens 0".

Are you a Patents County Court user? If so, have your say!

Members of the PCC Users Committee prepare for action ...

Readers of this weblog will know, without needing any reminder, about the effort and care that are being pumped into the Patents County Court (PCC) for England and Wales in an attempt to make it efficient, swift, affordable, fair and altogether virtuous in every possible way.  This even extends to listening to what people who use the court have to say about it.

The Patents County Court User Committee has a forthcoming meeting on 24 October. The User Committee meets on a regular basis to discuss and progress issues concerning the operation of the PCC, ranging from the trivial to important issues. For example it has been involved in preparing the User Guide, discussing damages limits and considering PCC user Evaluation forms.

If you have views on the PCC and its operation, contact Vicki Salmon, Alan Johnson or Alasdaire Poore.

PCC Page 40: IPOff in privileged company

Providentially proffered 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 40th, former CIPA President Alasdair Poore continues his review of the seemingly endless issues caused by privilege ...

Last week Cautious was considering an application for disclosure of IPOff’s instructions to their “independent” design agency, Fishy Designs.  No punches were going to be pulled on the application.  However, before putting pen to paper, IPOff’s solicitor sent a revised list with a bunch of documents.  These include IPOff’s instructions to the design agency.  Frustratingly these have large parts redacted, with heavy black lines crossing through the relevant text.  The accompanying letter explains that the missing passages reflect legal advice provided to IPOff by its solicitor and have therefore been redacted as they are privileged.  The rest of the document says nothing of any interest at all. 

 Cautious’ patent attorney is considering his options. 

 As noted last week, the antiquated world of privilege was thrown into disarray by Three Rivers (No 5) [2003] EWCA Civ 474.  This case arose from the BCCI litigation in the following way.  As part of the process of preparing for the inquiry into the collapse of BCCI, the Bank of England had set up a special team to coordinate.  This team instructed and obtained advice from the Bank of England’s lawyers.  So far so good.  The instructions provided to the lawyers and advice from them to members of the team was privileged as legal advice (Legal Advice Privilege).  Note that the documents did not benefit from litigation privilege, which is potentially wider, as the enquiry did not qualify as “litigation”. 

 In order to instruct their lawyers, members of the special team in the Bank requested and collected information from other employees of the Bank.  It was argued that the information, documents recording it etc., that the other employees provided was for the purpose of the Bank obtaining legal advice and, being thus privileged, did not have to be disclosed.  The claimants did not agree, and made an application to the Court.  Somewhat to the surprise of many observers, the Court of Appeal held that legal advice privilege only applied to information provided by and advice given to the select team whose job it was to coordinate and take advice from the outside lawyers.  In particular a communication from an employee of the Bank who was not a member of the select team, to a member of the team, in order to enable a member of the team to send that information on to the outside lawyers, and so to enable the lawyers to give advice was not privileged.  Nor was a communication of legal advice from the outside lawyers to someone in the Bank who was not a member of the team (para 31). 

 Leave to appeal to the House of Lords was refused.  When a later opportunity arose for the Lords to express a view, all that some of them said was that it would have to be reviewed in the future -- not a very convenient outcome, and one which has lead to a flurry of concerned arrangements being put in place for ensuring that, when necessary, legal advice benefits from privilege, such as house rules on who should seek and receive advice.  Sticking to the rules,
 Cautious’ patent attorney rather naturally thought that that must mean that advice originating with IPOff’s solicitor and ending up in the hands of a third party – not even an employee of IPOff – must surely not be privileged.  After a bit of research he has found he is wrong, although wrong in the good company of Anthony Watson QC. 

This argument was tested in USP Strategies Plc v Unicorn Strategies LLC [2004] EWHC 373 (Ch), an interesting case shortly after Three Rivers (No 5), showing that copyright really can be used to commercial advantage to protect business schemes, in this case a warranty scheme.  The argument was over advice which had been provided by Isle of Man lawyers and which had been incorporated into documents passed on to the party to whom this warranty scheme was being offered.  Mr Justice Mann dismissed Watson QC’s argument (see paras 16– 26).  Three Rivers was not only consistent with, but supported the position that, since the original advice (from the Isle of Man lawyers to their client) was privileged as legal advice, so too was anything which evidenced it.  So a copy of the advice sent on to the third party, or a summary of it, or indeed oral testimony, would not be admissible or discoverable.  This would not apply if privilege was waived, or the document had ceased to be confidential as might be the case if it were just passed to any third party.  And if a subsequent document which was disclosed included the advice or evidence of it, it could be redacted in a manner which excluded the advice.  This was summarised in Style & Hollander on Documentary Evidence (now Hollander (Sweet & Maxwell)): 

"If A shows a privileged document to his six best friends, he will not be able to assert privilege if one of the friends sues him because the document is not confidential as between him and the friend. But the fact six other people have seen it does not prevent him claiming privilege as against the rest of the world." 

 So Cautious will be disappointed in its desire to see exactly what instructions IPOff gave to its design agency. 

 In passing, it is interesting to look at this in the context of patent attorney advice on patent filing and prosecution.  One might be concerned that an effect of Three Rivers (No 5) is that certain communications between a patent attorney and his client might not be privileged.  Is the inventor the person within a company who is seeking and receiving legal advice?  Where there is one, might this not be the in-house IP coordinator rather than the inventor, or at least the person who initially instructs the patent attorney?  Fortunately, at least where the issue is about filing and prosecuting UK, EPC and PCT applications this issue is not relevant.  The reason is that privilege for patent attorneys arises in two ways: under s.190 of the Legal Services Act (for advocacy and the conduct of litigation), and s.280 of the Copyright Designs and Patents Act (equating a patent attorney to a solicitor in relation to the provision of advice relating to the protection of inventions etc. (the equivalent provision for trade mark attorneys is s.87, Trade Marks Act 1994).  In the latter case, s.103 Patents Act 1977 equates “patent proceedings” to litigation and so the form of privilege which is given in relation to prosecuting patent applications is (also) litigation privilege.  It therefore covers communications with “third parties” for the purpose of collecting information for the litigation.  The same may not be true of materials prepared for prosecution, say, in the USA.

Damages cap now in place

A cap to limit damage ...?

Many of PatLit's readers who have been following the fortunes of the Patents County Court for England and Wales will probably now know that the Patents County Court (Financial Limits) Order (No.2) 2011 came into force on Saturday.  According to an Intellectual Property Office media reliease, which was embargoed till one minute past midnight on Saturday morning:

"A new law comes into force ... that will give small and medium sized businesses easier access to justice to protect their copyright and trade marks. The Patents County Court (Financial Limits) Order (No.2) 2011 creates a clearer definition of which disputes involving copyright and trade mark claims should be heard in the Patents County Court (PCC) and which ones should go to the High Court. 

The change will encourage more businesses to protect their intellectual property and enforce their rights. ... 

A new damages cap of £500,000 for all claims in the PCC means small companies claiming damages up to that amount are less likely to face a potentially more expensive trip to the High Court. ...

Previously, a business with a legal case worth less than £500,000 could face litigation in either court with unknown levels of financial risk. An earlier Order, which came into force on 14 June 2011, had set the same limit in relation to patents and design cases. 

The change in law will ensure that lower value, less complex cases, which would typically involve small businesses, will automatically fall within the jurisdiction of the PCC which has a less costly and more streamlined process. Therefore the risk of expensive disputes over where the case should be heard will be reduced. 

In the past some companies were put off protecting their rights due to the uncertainty of how much it would cost. Supporting evidence to the Hargreaves Review of Intellectual Property and Growth highlighted that around one in five (17 per cent) of small and medium sized businesses had given up attempting to enforce their rights. 

Support for a limit was expressed by small and medium sized businesses during a full public consultation on the reform of the PCC. The effectiveness of the damages cap will be monitored with a formal review in 2014".

PatLit will be watching closely to see whether the damages cap actually affects the behaviour of small and medium-sized litigants and, if so, how. This blogger can think of few recent IP reforms that will be more closely monitored and looks forward to the results of the formal review in 2014.

The PCC one year on: Judge Birss QC writes

This weekend the new procedural rules in the Patents County Court (PCC), England and Wales, celebrated their first birthday. To celebrate the event, PatLit is pleased to host this brief assessment of life in the PCC by Judge Birss QC, who has presided over what has been a very busy and, by all accounts, most encouraging year:

"The new procedural rules in the Patents County Court (PCC) came into force in October 2010, implementing the recommendations of the High Court’s Intellectual Property Court Users Committee which had been endorsed by the Jackson Review. Much has happened since then: 

• In April 2011 responsibility for issuing new claim forms in the PCC and receiving cases transferred into the PCC was transferred from Central London County Court (CLCC) to Chancery Chambers at the Royal Courts of Justice. 

• Also in April 2011 a new Guide to the PCC was published. 

• In June 2011 a cap on damages was brought in for cases within the special jurisdiction. This cap formed an integral part of the recommendations for all cases in the PCC. The corresponding cap on damages for other IP cases is due to come into force on 1 October 2011. 

• A list of the forthcoming trials in the PCC is now published (as part of the list of future trials in the Patents Court) and PCC judgments are available on the internet (where possible) on the Bailli website. 

• Since 1 October 2010, when the new procedures came into force, 130 cases have been commenced in or transferred into the PCC. So far, the period between the case management conference and trial date has ranged from 11 to 33 weeks with an average of 21 weeks. The first trial to be heard in the PCC after 1 October was at the end of February 2011. Since then the court has heard 9 full trials varying in length from a trial heard in one day with judgment given that day to three day hearings generally in cases started under the previous procedural scheme. One case under the new procedure required three days to be heard. Looking forward into the autumn, there are 13 trials due to be heard before the end of 2011.

The PCC is presently in the midst of moving into the Rolls Building along with the Chancery Division (including the Patents Court), the Commercial Court and Mercantile Court, and the Technology and Construction Court. This change will itself lead to changes in the way the court is administered. Up to now although listing in the PCC has been under the overall supervision of Chancery Listing, the PCC has been administered in largely autonomous manner. In the Rolls Building the administration of the court will become more integrated into the administrative structure of the Chancery Division itself. Listing will not change.

A meeting of the Users Committee of the PCC will take place in October. Feedback on the operation of the Court is welcome. The contact details for the secretary of the Committee are set out in the Guide to the PCC. A particular topic which still needs to be dealt with is precedents for pleadings in the PCC".