Slumming it? Multinationals take the cheap option

Unilever Plc v S C Johnson & Son Inc [2012] EWPCC 19 (25 May 2012) is an unusual example of a case in which two multinational corporations crossed swords in the Patents County Court (PCC), England and Wales -- this being the tribunal which, as readers of this weblog will probably know by now -- was set up as a cheap, user-friendly and relatively informal cost-capped alternative to the relatively expensive option of litigating in the Chancery Division's Patents Court. This fact prompted Judge Colin Birss QC to make the following comment at [4]:

"The action was commenced in the Patents County Court on 27th July 2011 [ie ten months ago, for revocation of two patents] and has been conducted under the PCC rules. One might ask whether a case between two multinational corporations is suitable for the PCC. Since neither side suggested the matter should be transferred, the question did not arise. I can say this much. In terms of the issues to be decided, the case is clearly suitable for the PCC. There has been no disclosure and the evidence consists only of reports from in-house experts on both sides.  ... As far as I can tell [, the one and a half day trial] has been run expeditiously and without major cost."

True, there wasn't much law to bandy around, but the point is made clearly enough: the PCC provides an attractive alternative to the more up-market Patents Court and, whether SMEs and individuals make much use of it or not, we may certainly expect big and well-resourced litigants to do so.  Incidentally, Judge Birss has been doing quite a bit of work as a High Court judge too over the past couple of years -- so parties opting for the PCC may find themselves before the same judge they might have been allocated had they taken the Patents Court route.

Silence Speaks a Thousand Words

PatLit is delighted to host this guest post from Liz Cohen, a partner in Bristows and an enthusiastic patent litigator. Liz writes on a topic which is of great evidential value and philosophical interest: the extent to which it is permissible to draw an inference as to the intention of a party which is based not on what it says but on what it declines to say:

"Silence Speaks a Thousand Words

The recent case of Merck Sharp Dohme Corp and Bristol -Myers Squibb v Teva [2012] EWHC 627(Pat) is the latest in a long line of cases in the pharmaceutical arena where a generic company, (in this case Teva), has faced an application for an interim injunction to prevent it launching a generic drug pending full trial. The case law before the English and Welsh Patents Courts is well established in relation to such applications, the deciding factors being those established almost 40 years ago by the then House of Lords in American Cyanamid v Ethicon Limited [1977] FSR 593 (archived on BAILII here). Although subject to some occasional fine-tuning, the factors that the Court must consider in deciding whether to make an order for an interim injunction remain by and large the same:

i. Is there a serious issue to be tried; 

ii. If so, would damages be an adequate remedy for either party? 

iii. If not, where does the balance of convenience lie?

It is this last criteria that is usually the subject of most evidence from both sides and where much time is spent in the development of arguments and submissions to convince the Court to make the order for an interim injunction or, alternatively, dismiss the application altogether.

However, this case serves as a sharp reminder that it can also be what, is at best, not said, and, at worst, deliberately omitted, that can be just as important to the Court as the wealth of written evidence and submissions served in deciding the application for an interim injunction, and was in fact critical in this case.

The case related to a patent (EP 0 582 455) owned by Merck and Bristol-Myers Squibb (‘BMS’) which provided compound protection for efavirenz, an anti-retroviral medicine used in the treatment of HIV and AIDS. An SPC obtained on the basis of the patent expires on 20 November 2013. Teva obtained a Marketing Authorisation (“MA”) for its efavirenz product via the Centralised Procedure, 22 months before the expiry of the SPC.

Just before Teva’s MA granted BMS’ lawyers wrote to Teva seeking an undertaking that Teva would not launch its efavirenz product in any country in which the patent remains in force. No undertaking was given by the requested deadline and BMS informed Teva that they therefore presumed Teva indeed intended to market the product imminently. In light of this, and taking into account that Teva launched its generic atorvastatin surreptitiously last summer, BMS applied for an interim injunction in the High Court of England and Wales.

In his judgment from the inter partes injunction hearing Judge Birss QC clarified that, in order to bring an action for interim relief on a quia timet basis (in other words, on the basis of a threat to infringe, rather than an actual act of infringement), as BMS had here, a defendant must have threatened and intended to infringe the patent in question. The intention to launch did not have to be immediate – if the intention was to launch before expiry of the patent, this would be enough even if expiry was someway in the future. How this was proved would depend upon the facts of each case.

On the facts before him, Judge Birss considered that it was reasonable to infer that Teva intended to launch before the expiry of the SPC. He considered the timing of the MA (as noted above, just less than 2 years before expiry) and the absence from Teva of a satisfactory explanation as to why an application so far in advance of patent expiry was necessary, to be important factors. He also noted that, while a failure to offer satisfactory undertakings or indeed any form of response does not in itself prove the existence of an intention to infringe, at the interim stage it may, depending on the circumstances, be fair to draw an inference from the silence.

In arguing that an injunction should not be imposed, Teva claimed that divulging its launch date would expose a valuable commercial secret. Judge Birss agreed that the date of any launch could be a valuable commercial secret. However, the fact that Teva, a generic company, intended to launch a product on patent/SPC expiry would “not be news to anyone.” Therefore if this was Teva’s plan, they could simply have said so.

Accordingly, an interim injunction was granted to BMS pending a full trial on the merits.

This decision is in line with the rationale of English civil litigation that potential parties to litigation should communicate with each other and try to resolve disputes without recourse to litigation. While the Judge stressed that each case turns on its particular facts, this action brings strongly into focus the need for a generic company to be clear about its commercial intentions if it wishes to resist a preliminary injunction ahead of patent expiry. If it is not, it is clear that the Courts will be prepared to draw a negative inference from its silence".

Innocent Questions and the Sound of Silence

The question "should I better file an auxiliary request now?" may put judges in real trouble. 

We as attorneys rarely have the opportunity to glimpse into the minds of judges when being faced with such questions. The decision 7(W) pat 66/09 published with a headnote gives us one such rare example.

 The Bundespatentgericht BPatG had to decide in an appeal against a decision of the Opposition Division (OD - actually, the OD is identical to the examining division at the DPMA) to revoke the patent. According to the protocol, the chairman asked whether anybody had new requests before closing the oral procedure.

The patentee filed a request for correction of the protocol, in which he argued to have told the OD that he had brought auxiliary requests and asked whether he should better file these auxiliary requests and that the chairman explicitly said that this would not be necessary.

In the decision rejecting the request for correcting the protocol, the OD declared not to have said anything about auxiliary requests, neither encouraging the patentee to file such request nor that the filing of auxiliary requests was not necessary. However, the OD did not dispute that the patentee has indicated to have auxiliary requests in his briefcase.

The Bundespatentgericht decided that this "saying nothing" constitutes a violation of the right to be heard.

Accordig to the 7th senate, this right includes the right not to be caught by surprise by the decision of the court, i.e. that the decision does not correspond to what the parties might have reasonably expected as a possible result. The latter expectations may only be based on the indications the OD-gives during the procedure. Furhter, these indications do not only include explicit answers to questions of the parties. Provided that the patentee had really offered the auxiliary requests in advance, the fact that a question whether or not he should file them by now was left unanswered could be interpreted by the patentee only in such a way that he could expect his main request to be granted.

What should the OD have answered? According to the 7th senate, the OD should have answered that it is not entitled to give indications on the chances of success and that it is in the discretion of parties to file auxiliary requests or not. Given that the result is open, the OD should have said that "in the case of doubt (im Zweifel), it is always advisable to file auxiliary requests".

Proposal for Patent Law Reform in Gemany

Leutheusser-Scharrenberger looking forward to a bright new
future for the German patent law

The German Federal Government Cabinet has agreed to a proposal of the Minister of Justice Sabine Leutheusser-Schnarrenberger to reform the German patent law.

Key points include:

• The prolongation of the opposition period from 3 months to 9 months.
• The search report will include a written opinion similar to the European Search Opinion.
•  Oral proceedings in the examination procedure will become mandatory if the applicant requests it (for the current situation, see here)
• The prolongation of the delay for filing German translations of applications originally filed in English of French language from 3 months to 12 months from the filing date but not later than 15 months from the priority date. The examiner may invite the applicant to file the translation earlier in exceptional cases of particular complexity.
• Applications for which the translation is not timely filed are no longer deemed to be not filed but deemed to be withdrawn. The consequence is that the priority may still be claimed.

According to the explanatory remarks of the proposal (page 27, 1st paragraph), the DPMA will carry out the search and issue the search opinion for applications filed in English or French even if the translations are not yet provided.

The new language regime and the new legal consequence of the missing translation opens the possibility for new and very interesting filing strategies. Applicants may file their first applications in English language and will obtain a preliminary opinion prior to the expiry of the due date for filing the translation into German and decide on the basis of this opinion on his further strategy. The (slightly increased) search fees of EUR 300 are a very competitive price for a reasoned opinion and if the applicant decides to file an EP application to be validated in Germany later on, the original German application may be dropped and no translation of the full specification into German will ever be necessary.

The proposal has yet to be ratified by the Bundestag and Bundesrat.

French survey invites responses

The attention of this blogger has been drawn to a survey which may be of both interest and future significance to readers of this weblog.

In short, a number of French bodies and associations whose logos appear on this website have come together to support the project of the European Union and its Member States to create a unitary patent and a specialized jurisdiction which can give judgment in litigation relating to this patent and the European patent. Those bodies and associations represent

-Companies using these instruments via the MEDEF, the AFEP, the CGPME and their intellectual property specialists (ASPI)
-Lawyers who specialize in intellectual property (AAPI)
-Patent attorneys in private practice (CNCPI et ACPI)
-Intellectual property associations : the French group of AIPPI, LES France, the APEB, the AACEPI, the AFPPI.

The rubric goes on to explain:

In agreement with the INPI (« Institut National de la Propriété Industrielle », the French Patent Office) and with the support of all the magistrates specialising in intellectual property in Paris (Tribunal de Première Instance, Cour d’Appel et Cour de Cassation), they support the choice of Paris for the seat of the Central Division.

Setting aside political considerations which may enter into this choice, we think it is important to allow those working in the profession to set out their wishes for the organization and working of this jurisdiction.

For this reason, the enclosed questionnaire has been drawn up by people working in the profession for others working in the profession and is intended to allow us to draw the attention of the competent European authorities to the needs which need to be met.

We should be grateful if you could reply to the questionnaire so that we can all prepare the future, without delay.

PatLit readers who are responsible members of the European patent litigation community are invited to participate in the survey, which you can access via the link above or click directly here.

Planning patent litigation in Europe? This may be for you

Bad news for supporters of bifurcation? German
invalidity proceedings take a lot longer than
infringement proceedings

I've recently learned from my friend Derek Tong (Managing Editor, Bloomberg BNA) that his title World Intellectual Property Report has now published the first of a six-part series by Jonathan Radcliffe (a partner in Mayer Brown's London office) which seeks to explore the strategic and planning considerations for patent litigation in Europe. Says Derek,

"Given the multinational nature of many patent disputes, Jonathan sets out to provide an understanding of the distinctive differences that operate within European jurisdictions and how these might be deployed to maximum advantage when managing an international patent litigation campaign".

You can access this series via Bloomberg BNA's IP and Communications Newsletter here (this page also offers links to other IP topics) or you can click directly on to it here

China Patent Forum: special offer

Readers of the IPKat weblog have been offered a substantial discount on the normal registration fee for a forthcoming Management Forum event, the China Patent Forum on Thursday 31 May.  There appears to be no reason why readers of PatLit who are not also readers of the IPKat should not be able to take advantage of the same offer. A substantial proportion of the programme is devoted to patent litigation and its alternatives.

Essentially, it's a day of good conferencing for £250 plus VAT, for which you can also pick up accreditation.  Click here for details.

UK Scrutiny Committee: unified patent proposal excoriated; Minister "oddly detached"

"Europe’s Unified Patent Court will hinder SMEs, not help them, say MPs" is the title of a press release issued by the British Parliament's European Scrutiny Committee -- a cross-party body of elected Members of Parliament which examines European legislative proposals and advises Parliament as how to respond to them. It reads as follows:

The draft agreement on the Unified Patent Court (UPC) is likely to hinder, rather than help, the enforcement of patents within the European Union, says the European Scrutiny Committee in its report, published today.

The Committee has held the draft agreement on the UPC under scrutiny since September last year. There has been vehement opposition to the draft agreement from national and European patent professions.

The Committee is particularly concerned about the effect the agreement would have on small and medium sized businesses (SMEs) who are supposedly the main intended beneficiaries. The patent profession was overwhelmingly of the opinion that the current draft of the UPC Agreement would actually increase litigation costs for SMEs and be far more burdensome than the existing system in the UK.

The overall aim of the UPC was to allow SMEs in particular to be able to obtain a single patent covering 25 countries at an affordable cost. However, the Committee heard that very few SMEs actually require protection in all 25 States and so cost savings would not be as great as was expected, and that litigation before the UPC was likely to be convoluted, expensive and protracted.

The Committee says that it is vital that the UK Government adopts a strong position reflecting the concerns of practitioners in the final negotiations of the agreement, as well as calling for the Central Division of the UPC to be in London in order to mitigate the most damaging effects of a unitary EU-wide patent.

Chairman of the European Scrutiny Committee, Bill Cash, says

“Although the theory of a single EU-wide patent - with a single court to administer it - has long been thought desirable, the practice has long been elusive. These latest proposals appear, regrettably, to be a further example of this. They would increase costs for SMEs and hinder the enforcement of patents within the EU, particularly by giving additional jurisdiction to the Court of Justice of the EU and not allowing the invalidity of a patent to be a defence to infringement proceedings. The negotiations have been rushed and effectively excluded the views of European patent professions.

“We found the responses of the Minister, Baroness Wilcox, oddly detached from the evidence we heard on these important points. This appears now to be a damage-limitation exercise but the UK Government must bring the practical concerns we heard to the table as negotiations conclude, and in particular ensure that the Central Division of the UPC sits in London.”

You can read the full report here.  It is 103 pages in length and consists of one of the most detailed and pertinent reviews of the unified patent court system that this blogger has yet seen.  Readers can expect further comment on the IPKat weblog from patent litigator Annsley Merelle Ward, whose detailed accounts of the various stages of the proposals and what passed for a debate on them have served as an effective briefing document for many of those whose submissions have helped persuade the Scrutiny Committee of its position.

Economics of litigating IP (or is that just patents?)

Both proactive and defensive  options  
can be expensive  and labour-intensive 
 for IP litigants ...

With apologies if you have already seen this on the IPKat weblog, here's a link to Nicola Searle's Katonomics post last night on the economics of intellectual property litigation. As is immediately apparent from Nicola's post, most of the data on which economists work is (i) drawn from patent litigation, since it is in numerical terms the most prevalent form of IP litigation and (ii) based on the data available in the United States.

Among the things that might particularly interest the patent-litigating reader of this weblog are the references to game theory as a means of assessing the basis on which to progress and/or settle a dispute and the question whether -- when so much information is available to both sides in a dispute -- one might expect more of them to settle without the need to go to court.

These and other matters are topics on which PatLit will be delighted to hear from readers. If anyone would like to write a critique of Nicola's post which this weblog can host, can such person please email me here and let me know.