The Unified Patent Court: here's the AIPPI resolution

PatLit is grateful to Dr. József K. Tálas (Attorney-at-Law and Managing Partner, Sár and Partners Attorneys at Law, Budapest), for drawing its attention to the resolution passed last week at the AIPPI Congress Seoul.  This resolution reads as follows:

Resolution put forward by AIPPI Special Committee Q165 

Unified Patent Court 

1. AIPPI acknowledges that the process of creating a legal framework for a Unified Patent Court, and for the creation and exercise of European Patents having unitary effect, is well advanced. 

2. AIPPI believes that the proposed system will not provide an improved experience for patent users. This is particularly the case if individual patent cases are subject to a third or fourth level of appellate review, with the General Court or the European Court of Justice being asked to consider substantive questions of patent law. AIPPI accepts that the proposed system is within the legal framework of the European Union, and its existence and structure are subject to the review of the European Court of Justice.  It believes, however, that the draft Regulation should be amended so as to make it clear that under the new system the European Court of Justice will have no greater role concerning the grant or exercise of unitary patents than is presently the
case for EP patents.

3. To that end, AIPPI reiterates its support for the deletion of Articles 6-8 from the currently proposed draft Regulation on the Unitary Patent as agreed by the council of the EU on June 28/29, 2012. It is recalled that the content of those articles already appears within the Draft Agreement on the Unified Patent Court and it is proposed that these provisions should apply to unitary patents as well.

4.  AIPPI is of the opinion that it is essential for the acceptance and success of the Unified Patent Court that the original goals of the project which promised judges "with the highest standards of competence and proven experience in the field of patent litigation to ensure expeditious and high quality decisions and thus enhance legal certainty" should not be put at risk.  To that end, it should be ensured that appropriate programs for the selection, training and ongoing support of such judges are put in place as soon as the draft agreement is approved. 

5. AIPPI notes that the Committee for the Rules of Procedure of the proposed Court is presently working to provide a further draft set of procedural rules.  AIPPI resolves that a public consultation period of at least 3 months should be allowed following the publication of this draft before any further steps are taken to adopt any text.

This blogger welcomes the resolution which, he believes, reflects a sentiment which is held by very many practitioners to whom he has spoken, both within AIPPI and beyond it.

Infringers as interveners in EPO proceedings

"EPC Article 105(1) practice curtails interveners' rights" is an article which is now available online to subscribers to the Journal of Intellectual Property Law & Practice (JIPLP). The author, Dr Joseph Straus, is a multi-chaired academic and Emeritus Director at the Max Planck Institute for Intellectual Property and Competition Law, Munich. Article 105 states as follows:

"(1) Any third party may, in accordance with the Implementing Regulations, intervene in opposition proceedings after the opposition period has expired, if the third party proves that

(a) proceedings for infringement of the same patent have been instituted against him, or

(b) following a request of the proprietor of the patent to cease alleged infringement, the third party has instituted proceedings for a ruling that he is not infringing the patent.

(2) An admissible intervention shall be treated as an opposition".

According to the abstract:

"Under the rules of the European Patent Convention third parties may intervene in pending opposition proceedings.

In this article the author examines the requirements of intervention as applied by the case law of the European Patent Office in the light of the rationale and purpose of the adopted legal instrument.

The author makes several suggestions for a more balanced treatment of the rights of interveners".

This is not a subject on which there appears to be a large literature. PatLit would therefore like to hear of any experiences, good or bad, which readers may have had with regard to Article 105(1).

Explaining Patent Litigation 6: expedited trials

The sixth and final guest post in Liz Cohen's Explaining Patent Litigation series, on patent litigation in England and Wales, considers the opportunities available for seeking an expedited trial -- a particularly prized facility for patent owners when one considers how limited the duration of the patent monopoly is when compared with that of most other intellectual property monopolies. As Liz, an IP specialist partner in Bristow LLP, explains:

Expedited patent trials in England and Wales: is it worth applying?

Patent litigation in England and Wales conducted according to a tightly controlled court timetable. The Patents Court generally aim to issue a first instance decision on validity and infringement within 12 months from issue of the claim. But what if this is not fast enough? In cases of extreme urgency, a party may apply to court for expedited proceedings.

Examples of reasons for expedition include the hope of obtaining a favourable decision on validity (and infringement) before a German (or other) court hears a parallel infringement case; having an interim injunction lifted sooner so that an injuncted party may take advantage of a particular state of affairs (e.g. a generics company may be able to take advantage of a duopoly if it launches a generic product before the expiry of the relevant patent or SPC); and having two related cases tried together.

Expedited trials in the UK take six months on average to reach trial but can be heard as quickly as four months (so called “super-expedited” trials). Expedition may be ordered on the basis of certain conditions, for example, that the prior art is limited, or that disclosure of documents and/or experiments are limited or waived.

An application for expedition would normally be made at the outset of proceedings, as delay in making such an application can be fatal to the request.

In the absence of specific provisions in the CPR, requests for expedition are decided on principles drawn from case law. The general principles were summarised in WL Gore & Associates GmbH v Geox SpA [2008] EWCA Civ 622:

(a) the applicant must show good reason for expedition; (b) the court must consider whether expedition would interfere with the good administration of justice; (c) the court must consider whether expedition would cause prejudice to the other party; and (d) the court must consider whether there are any other special factors.

Often, when deciding whether to grant expedition, the trial judge will weigh (a) against (b) and (c). In HTC Europe Co Ltd v Apple Inc [2011] EWHC 2396 (Pat), HTC was seeking a UK decision on validity which it hoped would be of assistance in parallel German proceedings. The court granted some degree of expedition because of the considerable commercial importance of the claims to the parties and to third parties, such as mobile operators. In a later application for expedition (see HTC Europe Co Ltd v Apple Inc [2012] EWHC 2037 (Pat)) between the same parties in relation to different patents, the commercial certainty argument was advanced again. The court said that even though HTC had a good reason for expedition, the benefit of ordering expedition was not sufficient to outweigh the dual considerations of the proper administrations of justice and prejudice caused to Apple because the size and complexity of the case would cause significant disruption to the court timetable and Apple’s counsel were not available during the proposed trial period. In addition, the fact that further proceedings were pending against HTC from Apple and Nokia meant that HTC could not achieve sufficient commercial certainty from the expedition of the four patents in issue alone. Similar reasons for refusal were given in ZTE (UK) Ltd v Telefonaktiebolaget LM Ericsson [2011] EWHC 2709 (Pat), although delay and the unavailability of a decision in time for the German infringement hearing were also factors.

Despite the Patents Court’s obvious willingness to consider expedition cases, it seems that the bar for a “good reason for expedition” has been set very high. Only if an applicant can demonstrate a very strong sense of urgency, is a court likely to order any degree of expedition.

If expedition is obtained, the benefits to the party seeking expedition can be significant, particularly if it is involved in multi-jurisdictional litigation. English judges provide fully reasoned, respected decisions from a specialist Patents Court which can be persuasive to (but not binding on) other courts in Europe. In addition, an early decision on a patents matter can help to eliminate inconsistencies in a party’s case or evidence between jurisdictions and useful documents or evidence may come to light which can in certain circumstances affect the outcome in other jurisdictions.

Other posts in this series:
1: New Term, here
2: Small businesses and the Patents County Court, here
3: Smaller businesses and tax benefits, here
4: IPO Patent Opinions, here
5: Leave to appeal, here.

Contributory Infringement and Territoriality

Simple question: a Belgian shopkeeper B sells a product infringing a German patent to his client C in his shop in Belgium. Infringement or not? Most of us would say the answer is plainly no – territoriality principle.

The BGH has now wondered whether this might change if the shopkeeper knows that the client wants to sell the product in Germany. Then, the act of selling could amount to contributory infringement.

The question became relevant not for patent infringement but because a copyright and trademark owner had sued a Belgian defendant before the German Courts by arguing that the contributor to a main infringement may be sued – according to the German Civil Procedure law - before the courts having jurisdiction for the main infringement action. In the above case, these would be the German Courts.

The BGH has therefore referred the following  question on the interpretation of Art. 5 Nr. 3 EUGVVO (Council Regulation (EC) No 44/2001) to the ECJ:

Must Article 5 Nr. 3 of the Council Regulation (EC) No 44/2001 be interpreted such that the harmful event occurred in one member state (member state A), when the tort, delict or quasi-delict, being subject of the procedure or from which claims are derived has been committed in a different member state (member state B) and consists in the participation in the tort, delict or quasi-delict, having occurred in the first-mentioned member state (member state A)? (freely translated by the author of this note)

If the answer would be positive, this would clearly open new and interesting options for cross-border litigation on the basis of Article 5 Nr. 3 of the Council Regulation (EC) No 44/2001 not only for copyright and trademark cases but also in patent cases where the application of Art. 6 Nr. 1 of the Council Regulation (EC) No 44/2001 is foreclosed after the ECJ-decision Roche/Primus, as long as Art. 22 Nr. 4 of the regulation does not enter the game.

On the same day, the BGH referred the same question on the interpretation of Art. 93 par. 5 of the Commnity Trademark Regulation (Council Regulation (EG) 40/94) to the ECJ. PatLit will keep you updated.

Patent litigation in the UK: some real research results

During 2011-2012, Christian Helmers and Luke McDonagh (both of the London School of Economics & Political Science) have been working on interdisciplinary empirical research for the UK's Intellectual Property Office concerning patent litigation in the UK. This project is linked with SEEK, an ongoing wider European project.  As Luke explains:

"We have undertaken an empirical survey of cases filed at the Patents Court 2000-2008. The two papers that have come out of this project are being pre-published as LSE Working papers on SSRN.  The first of these is Patent Litigation in the UK, the second being Trolls at the High Court?".

The abstract for Patent Litigation in the UK reads:

"We construct a dataset that contains the complete set of patent cases filed at the courts in England and Wales during the period 2000-2008. The data cover all types of patent-related cases brought before the Patents County Court, the Patents Court at the High Court, the Court of Appeal, as well as the House of Lords/Supreme Court. We combine the detailed information on court cases with information on the patents in dispute as well as firm-level data for the litigating parties. We employ the dataset to analyze characteristics of the court cases, = litigating parties, as well as the contested patents. We also provide detailed discussion of the cases that were heard by the House of Lords/Supreme Court as well as of the costs involved in patent litigation before the courts in England and Wales.".

This study, which shows inter alia that the most frequent outcome of any patent litigation is revocation, is fascinating -- but not too much should be read into it as a predictor since there has been a substantial overhaul of patent litigation procedures with the revitalisation of the Patents County Court in October 2010.  This blogger hopes that there will be a follow-up, to measure the degree of change which, at present, is more anecdotal than carefully quantified.

According to the abstract for Trolls at the High Court?:

"This article investigates the phenomenon of litigation undertaken by Patent Assertion Entities (PAEs), often referred to as ‘patent trolls’, within the legal system of the Patents Court (PHC) of England and Wales during the period 2000-2008. Our analysis shows that patent suits involving PAEs at the PHC are rare – they account for less than 6% of all patent cases. We suggest two reasons why the PHC does not provide a welcome venue for PAE litigation. Firstly, the majority of patent cases which reach a judgment in the UK result in a ruling invalidating the patent. Secondly, the costs regime in the legal system of England and Wales requires that the losing party pay the costs of the other side. In other words, even if its own costs are kept low, a PAE which loses a case may have to spend a substantial amount of money in order to cover the costs of the other side. When taken together, it is likely that these two aspects discourage litigation by PAEs at the PHC, which accounts for the low volume of cases when compared with other jurisdictions such as the US. We also offer interesting insights to the wider debate concerning whether it is likely that in the near future there will be a similar increase in PAE litigation in Europe as has already occurred in the US over the last decade. This article also discusses potential implications for the design of the proposed European Unified Patent Court".

Presumably PAEs have to go to court from time to time, even if they can regularly expect their patents to be invalidated, otherwise the threat of infringement litigation which underpins their business model will be reduced.  If patent litigation is costly and inconvenient enough, even the certainty that an action for infringement brought by a PAE would fail and that its patent would be revoked wouldn't entirely negative the attraction of settling quickly and easily by paying a smallish royalty fee.

Study Confirms Impact of Non-Practicing Entities in US Patent Litigation

For several years, observers of patent litigation trends in the U.S. have noted the apparent increase in patent infringement cases filed by so-called "Non-Practicing Entities" (aka patent "trolls"). Criticism of NPE enforcement activity was a major force behind litigation provisions in the America Invents Act.

A group of researchers now have published a report, based on research requested by the U.S. Government Accounting Office, to gauge the  true impact of NPE activity. See Sara Jeruss, Robin Feldman, and Joshua Walker, "The America Invents Act 500: Effects of Patent Monetization Entities on US Litigation" (forthcoming in the Duke University Law School Law and Technology Review). A copy is available on SSRN.

The study documents the rise of "Patent Monetization Entities," a category that includes various plaintiffs whose core activity is creation of an income stream from the robust patent market, as opposed to exploiting their patents as an operating company.  The study concludes that for 2007-2011:

[L]awsuits filed by patent monetizers have increased significantly over the five ‐ year period. The sheer number of cases has increased, as well as the percentage of overall case filings represented by monetizers. In other words, lawsuits filed by patent monetizers are on the rise, while lawsuits filed by operating companies have fallen. Specifically, lawsuits filed by monetizers increased from 22% of the cases filed five years ago to almost 40% of the cases filed in the most recent year. In addition, monetizers were also heavily represented in the list of those who filed the greatest number of lawsuits. Of the 5 parties in the sample who filed the greatest number of lawsuits during the period studied, 4 were monetizers. Only one was an operating company. (at 5).

The Unitary Patent Package: 12 reasons for concern

German intellectual property scholar Matthias Lamping, a Senior Research Fellow at the Max Planck Institute for Intellectual Property and Competition Law, Munich, has been assiduously following the increasingly tense and acerbic debate over the future of Europe's patent grant and enforcement infrastructure.  He has reminded this blogger that the attention of PatLit readers may not have been directed to the Institute's recent objective and reasoned critique of the currently-proposed package of legal reforms.  As Matthias explains:

The Unitary Patent Package: 12 Reasons for Concern

The Max Planck Institute for Intellectual Property and Competition Law, which has functioned as a politically and economically unbiased centre of legal competence for European intellectual property legislation ever since its foundation in 1966, is a well-recognized scientific commentator and adviser on the evolution of European patent law.

The Institute considers a balanced, innovation-friendly and uniform patent system as being indispensable for Europe. However, the current patent package is deemed to be both dangerous and misguided. While a superficial glance may create the false impression of a patent law advancement through the proposal, it instead actually threatens to forestall the necessary legal progress and innovation capacities for the foreseeable future.

These concerns of the Max Planck Institute are shared by experts throughout Europe. Likewise, within a considerable sector of industry, doubts are harboured as to the proposed system's efficiency. Large undertakings might indeed benefit from a reinforcement of their patent portfolios through the proposed system. However, small and medium-sized enterprises are particularly likely to experience significant obstacles to their innovation activities.

Criticism of the package is underpinned by a series of legal arguments which can be found here. Many of these points remain quite unchallenged in the current debate. Yet remedies are only promised for the time after the entry into force of the package. Experience shows that, particularly in relation to legislation for intellectual property, promises of subsequent improvement are unlikely to be fulfilled. Consequently, it might prove disastrous to implement a patent system which is already known to be detrimental from both the legal as well as the innovation perspectives. Much rather, the correct course must be set now. Against this background, the Institute believes it is indispensable to reconsider the content of the Unitary Patent Package afresh.

This blogger feels that, given its impressive track record over the past decades for highly-focused and responsible, reasoned analysis of intellectual property issues, the Max Planck Institute has earned the right to be listened to and for its comments to be taken seriously. Arguably, the Institute has provided a greater contribution to the development of a harmonised, functional integrated intellectual property system in Europe than any other institution -- including the European Commission.

Explaining Patent Litigation 5: leave to appeal

The fifth guest post in Liz Cohen's Explaining Patent Litigation series, on patent litigation in England and Wales, deals with an important and sensitive topic:the mechanism for appeal in patent disputes. Liz, a partner in the IP specialist practice of Bristows LLP, explains why it is that an unsuccessful litigant can't just appeal at will but has to get leave to do so. This is what she writes:

Why is permission needed to appeal?

For those who do not practise Patent litigation in the Courts of England and Wales, the need for a party to seek permission to appeal a judgment is often considered quirky. Permission to appeal a County Court or High Court decision is now required in virtually all cases, compared to (for example) France and Germany, where permission to appeal to a higher court is an automatic right.

A few years ago, the requirement to seek permission to appeal was challenged (see Pozzoli SPA v BDMO SA and Moulage Industriel de Perseigne SA [2007] EWCA Civ 588.) Pozzoli argued that Article 32 the TRIPS Agreement (which reads "An opportunity for judicial review of any decision to revoke or forfeit a patent shall be available") imposes an obligation to grant permission to appeal where a patent has been revoked at first instance, even if there is no real prospect of success on appeal.

The Court of Appeal dismissed Pozzoli's argument that Article 32 requires a full judicial hearing on the merits and held that a decision by the Court of Appeal as to whether or not to grant permission to appeal from an order for revocation is a "judicial review" within the meaning of Article 32 of the TRIPS Agreement.

However, the Court of Appeal went on to observe that, in patent cases which are not very clear and which would not be understood sufficiently readily by the Court of Appeal in an hour or so, the better course was normally for the trial judge to grant permission to appeal. This was because the Court of Appeal, when faced with an incomplete understanding of the case and a plausible skeleton argument seeking permission to appeal, would be likely to grant permission in any event.

So it still remains the case that a party wishing to appeal a judgment from a lower court must first convince the judge who made the decision to be appealed that the appeal has a real prospect of success or that there is some compelling reason why the appeal should be heard. Examples are cases raising questions of great public interest or questions of general policy. Alternatively, following Pozzoli, permission may also be granted if a party can convince a judge that it would take the Court of Appeal more than an hour to sufficiently understand the case to make a meaningful decision on permission to appeal. In practice, this is often a more appealing submission than trying to convince a Judge that he got it wrong. Failing that a party can still apply directly to the appeal court in an appeal notice.

Any permission granted may be limited to particular issues to be heard on the appeal or may be subject to conditions, for example, deferring the hearing of the appeal to a later date.

In all cases the appellant (or intended appellant, if that party is seeking permission from the appeal court) must request permission to appeal in an appellant’s notice. The appellant’s notice must be filed at the appeal court within 21 days after the date of the decision of the lower court that the appellant wishes to appeal unless an alternative period is directed by the lower court (which may be longer or shorter than 21 days). An appellant who requires more than 21 days should apply to the lower court when the judgment is given.

Next week: Expedited patent trials

Preliminary relief: irreparable harm must be related to infringement

Last Thursday's decision of the U.S. Court of Appeals for the Federal Circuit, reversing the decision to grant Apple’s application for a preliminary injunction for infringement of its 8,086.604 patent against fierce rival Samsung, can be accessed here. If you are too lazy, busy or bamboozled by the rapid succession of Apple v Samsung decisions that leap up before your eyes and demand your attention, you can rely on the kindness of our correspondent Perry Saidman (SAIDMAN DesignLaw Group, LLC, Silver Spring, Md) who has read the decision on behalf of all this blog's readers and who tells us that the key excerpt from the opinion is as follows:

“It is well established that as the party seeking emergency relief, Apple must make a clear showing that it is at risk of irreparable harm, which entails showing a likelihood of substantial and immediate irreparable injury. Apple, Inc. v. Samsung Electronics Co., 678 F.3d 1314, 1325 (Fed. Cir. 2012) (hereinafter Apple I) (citing Winter, 555 U.S. at 22; Weinberger v. Romero–Barcelo, 456 U.S. 305, 311 (1982); O'Shea v. Littleton, 414 U.S. 488, 502 (1974)); see also Beacon Theatres, Inc. v. West-over, 359 U.S. 500, 506–507 (1959) (The basis of injunctive relief in the federal courts has always been irreparable harm and inadequacy of legal remedies). But in cases such as this—where the accused product includes many features of which only one (or a small minority) infringe — a finding that the patentee will be at risk of irreparable harm does not alone justify injunctive relief. Rather, the patentee must also establish that the harm is sufficiently related to the infringement. Apple I, 678 F.3d at 1324. Thus, to satisfy the irreparable harm factor in a patent infringement suit, a patentee must establish both of the following requirements: 1) that absent an injunction, it will suffer irreparable harm, and 2) that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement”.

All change for smaller businesses 4: IPO Patent Opinions Service

Sunday is the day for Liz Cohen's Explaining Patent Litigation series, and here's the fourth of her six reader-friendly posts on patent litigation in England and Wales. In this post Liz, who is a partner, Bristows LLP, writes about one of the best -- and most under-used -- features of the British dispute resolution infrastructure, the excellent patent opinions service offered by the Intellectual Property Office. Liz writes:

All change for smaller businesses: IPO Patent Opinions Service

It is well known that small and medium sized enterprises (SMEs) are important for innovation and job creation. It was acknowledged in the Review of Civil Litigation Costs by Lord Justice Jackson, published in January 2010, and more recently, in the Hargreaves Review of Intellectual Property and Growth, published in May 2011, that more needs to be done to assist SMEs with their intellectual property rights in the UK. A number of measures and reforms have since been introduced to achieve this purpose. These include reforming the Patents County Court (PCC) and introducing various tax reliefs. In addition, the IPO is currently consulting on proposals to expand the subject matter of its opinion service and to increase its ability to file revocation actions in relation to patents which it opines are invalid.

The final blog in this three part mini-series looks at the proposed IPO reforms.

The IPO has launched a consultation which outlines proposals to expand the IPO Patent Opinions Service by amendment to the primary legislation. Currently, the service provides non-binding opinions on questions relating to the infringement or validity (limited to novelty and inventive step) of granted UK patents. The IPO has issued over 150 opinions since the service was launched and over 90% of opinions on infringement have been requested by SMEs.

The IPO propose to enhance the Patent Opinions Service by expanding the questions relating to validity that can be the subject of an opinion to align them more closely with the grounds of revocation of a patent (i.e. whether the invention in question is capable of industrial application, relates to matter excluded by Section 1(1)(d) Patents Act 1977, is sufficient, adds matter, or has been extended by an amendment which should not have been allowed). Additionally, the IPO propose to offer opinions as to whether a SPC is valid and/or infringed.

Perhaps the most significant proposal is the expansion of the IPO’s rights to file for revocation of a patent on which it has issued a negative validity opinion. In such circumstances, this will remove the burden, and in particular the cost burden of filing a revocation action. This may be especially beneficial to SMEs. It could also benefit other businesses who have an interest in the patent (e.g. who are worried about infringement) but who were not involved in the opinion process.

The rationale behind the proposals is to enable companies to resolve more of their IP disputes through the Patents Opinions Service without having to resort to costly litigation. The proposals may cause concern for UK patent and SPC holders who may now have to get involved in a dispute at a much earlier stage. Previously, a patent holder would have little concern over a negative validity opinion issued on their patent. This is because the patent would not be revoked unless the opinion requestor commenced revocation proceedings in court or the IPO (which would often be prohibitively expensive for many SMEs). Now there will be a much greater incentive for patent holders to make submissions on validity to the IPO when a patent is challenged using the Opinions Service, as a finding of invalidity may well lead to initiation of costly revocation proceedings by the IPO.

Next week: Permission to Appeal

Portugal's new IP court: no sign yet of hoped-for improvements

"New Intellectual Property Court: first few months prove disappointing" is the sadly informative title of a brief piece by Manuel Lopes Rocha and Joana Trigueiros Reis (PLMJ - AM Pereira Sáragga Leal Oliveira Martins Júdice E Associados - Sociedade De Advogados - RL, Lisbon), recently posted on World Trademark Review but is presumably as relevant to patent litigation as it is to trade marks since the court's jurisdiction is said to cover 'industrial property'.

This piece notes the effect of the Portuguese Decree-Law 67/2012, which established a specialist intellectual property court in order to concentrate litigation within a single, focused tribunal and thus both expedite cases and improve their quality. The new Intellectual Property Court opened its doors to business at the end of March, and ran into trouble immediately: while the law provided for the appointment of two IP judges, only one was appointed -- and he has already been replaced.  In the first four months of its operation, some 244 judicial proceedings were commenced before it, but decisions have been slow to emerge and critics have been pining for the old system. In particular:

" ... the existence of only one court located in Lisbon implies pointless, long and costly journeys to the capital whenever a party is involved in a dispute regarding trade marks or copyright. This makes little sense since - as noted by the former president judge of the Lisbon Commercial Court, Mrs Maria José Costeira - the majority of companies that appeal to the Intellectual Property Court are generally located in the North of Portugal (ie, far away from Lisbon)".

The article concludes:

"Once again, the example of the Intellectual Property Court demonstrates that any reform of the court system should be prepared with care, and tested by lawyers and judges before entering into force".

This blogger notes both the criticism of the inconvenience of travel -- even within just one of the smaller countries within the European Union -- and the need for a proper preparation. Comment regarding the applicability of these points to the ongoing debate over the unified patent court would be superfluous.

Explaining patent litigation 3: All change for smaller businesses - tax benefits

In this, the third in a series of six reader-friendly posts on patent litigation in England and Wales, Liz Cohen (partner, Bristows LLP) moves from activity in the courts to the quest for financial betterment which enables businesses -- particularly the smaller ones -- to become more effective litigants.  She explains:

"All change for smaller businesses: tax benefits 

It is well known that small and medium sized enterprises (SMEs) are important for innovation and job creation. It was acknowledged in the Review of Civil Litigation Costs by Lord Justice Jackson, published in January 2010, and more recently, in the Hargreaves Review of Intellectual Property and Growth, published in May 2011, that more needs to be done to assist SMEs with their intellectual property rights in the UK. A number of measures and reforms have since been introduced to achieve this purpose. These include reforming the Patents County Court (PCC) and introducing various tax reliefs. In addition, the IPO is currently consulting on proposals to expand the subject matter of its opinion service and to increase its ability to file revocation actions in relation to patents which it opines are invalid.

This blog looks at the proposed tax benefits.

The Patent Box will be available to all businesses within the scope of UK corporation tax, including SMEs. It will be phased in over a period from 1 April 2013 to 1 April 2017, assuming that an election for the regime to apply is made. To be eligible, the SME needs to own, or hold an exclusive licence for a qualifying IP right, which they have contributed to the development of, or incorporated into a product, and receive income related to that right. The result is that SMEs could find themselves paying only 10% rather than 20% tax on income related to a product protected by an IP right, including royalties and compensation for infringement.

Additionally, some improvements have recently been made to R&D tax relief. The rate of additional deductions for SMEs will be increased from 100% to 125% (giving rise to a deduction of 225% in total) and the rule capping the amount of any repayable tax credit by reference to the company’s PAYE/NIC liability will be removed. To offset this, the repayable tax credit will be reduced to 11% of the surrenderable loss (from 12.5%, having already been reduced from 14% in April 2011). Additionally, the definition of an “externally provided worker” will be widened to allow more costs to qualify, the minimum expenditure threshold of £10,000 a year will be removed, and the existing definition of “going concern” will be clarified to ensure that companies in administration or liquidation cannot benefit.

R&D tax relief, which can be extremely valuable to SMEs, is often overlooked by them. This is mainly due to the complexity of the legislation and the difficulties in identifying qualifying activities, especially given the frequent changes made by the government to the regime since its introduction in 2000. It is thought that identifying qualifying revenue for the Patent Box will be more straightforward, although some SMEs have expressed concerns that it may be uneconomical for them to claim the tax break due to the advisory and administrative costs required to file a claim.

Following confirmation of the Patent Box in the 2012 Budget, GlaxoSmithKline announced it would invest more than £500m in the UK across its manufacturing sites. This includes £350m for a state-of-the-art biopharmaceutical manufacturing facility in Ulverston, Cumbria and more than £100m across its two manufacturing sites in Scotland, to manufacture key materials for its portfolio of respiratory medicines and vaccines, and to increase production capacity for antibiotics. Hopefully, many SMEs will follow suit and take full advantage of the available tax reliefs in the UK".

Next week: All change for smaller businesses -IPO Reform

Phoning the rapporteur? Think again ...

PatLit wonders what the
EPO's policy is with regard
to phone rage ...

In T 1251/08 Serial bus simulation/TERADYNE, 29 June 2012, a Board of Appeal of the European Patent Office (EPO) has given some handy, if largely negative, guidance with regard to interviews with a rapporteur.

In this decision -- an appeal against a decision of the Examining Division -- the appellant made requests for telephone interviews with the case's appointed rapporteur so that it could discuss with the rapporteur the allowability of certain amendments sought by the appellant and also for an explanation of the Appeals Board's provisional decision.

Said the Board, these requests had been turned down because one of the rapporteur's duties was to act on behalf of the Board in substantive matters and it was necessary for the rapporteur both to tell the other members of the Board and to put them in a position from which they could render an informed opinion on the action to be taken. Unless all of the Board's members were privy to all the evidence and arguments, there would be a breach of the principle of collective decision-making. The telephone interviews sought by the appellant could have led the rapporteur to take a position on an issue where a collective decision was required, or to commit the Board to a particular position without there first being any preliminary discussion.

There is however some good news for people who enjoy phoning the EPO: telephone interviews may be allowed if and to the extent that they assist a Board in conducting proceedings in an orderly manner. As the decision says at para.4:

"The board wishes to avoid giving the impression that it finds that it is never appropriate for parties in ex parte proceedings to telephone the rapporteur. Leaving aside the question of whether it is appropriate to file new requests on the day before an oral proceedings, the representative's telephone call on the day before the oral proceedings to advise the board that several late requests were being filed by fax assisted the board in conducting these proceedings in an orderly manner. The board was consequently at least in a position to ensure that the late submission was distributed to the whole board as soon as possible".

Has it ever happened ...?

Interim injunctive relief for infringement
of a standards-essential patent: have
you ever applied ...?

A curious reader has written in with the following question. Does anyone have an answer?

(a) Has anyone ever applied in the United Kingdom for an interim injunction in respect of a standards-essential patent;

(b) If the answer to (a) is yes, what happened?

This blogger thinks that the answer to (a) is "no" -- but he is equally aware that patent litigation in the UK is a dark and murky pond in which many a large fish may lurk undetected.  In fishing for an answer on behalf of his reader, he hopes that one such fish may bite ...

BGH on Using Cancerogenic Substances

Incentive to use?

In the decision “Glasfasern”, the German Bundesgerichtshof (BGH) had to rule in the novelty and inventivess of a “use” claim. The patent had been granted on the idea of using a particular kind of glass fibre material as glass fibre “not having cancerogenic potential”.

The glass fibre as such was (besides of some very minor differences not giving rise to an inventive step) known from at least one document in the prior art. In the same document, it was noted that the glass fibre would presumably have cancerogenic properties (in particular when  minute fragments accumulate in the lung of workers using the material for building insulation) and that two independent institutes had been entrusted to carry out an investigation on this issue.

According to the established case-law in Germany, the anticipation of “use” claims does not require evidence that the “use” has actually taken place. Rather, it is sufficient if the product or substance has been evidently prepared (“sinnfällig hergereichtet”) for such a use, e.g. by using a design adapted to that use or by supplementing the product or substance with a user manual or package leaflet disclosing the possible use.

In the case at issue, the presumption of cancerogenic properties was not considered sufficient to establish a lack of novelty.

Further, this presumption together with the information that studies in this regard had already been commissioned did not constitute an incentive for the skilled person to carry out these (expensive and complex) studies by himself.

An interesting point in this decision is that the “use” was not limited to a particular technical application of the glass fibre such as building insulation but rather covered all applications where cancerogenic potential was undesired (difficult to imaging where this is not the case). The discovery of a yet unknown property (here: lack of cancerogenic potential) of a known substance gives the discoverer the exclusive right to use the substance in applications where this property is relevant.