LCII Half-Day Conference: Regulating Patent “Hold-Up”?

Readers who share this blogger's view that the CJEU decision in the matter Huawei ./. ZTE (see e.g. here)  still leaves room for discussion will be pleased to learn that the LCII wants to offer this room in the next event:

REGULATING PATENT “HOLD-UP”? AN ASSESSMENT IN LIGHT OF RECENT ACADEMIC, POLICY AND LEGAL EVOLUTIONS

Abstract: The patent hold-up theory has nurtured many policy developments in the past ten years. On the one hand, Standard Setting Organizations (SSOs) have been exploring changes to their licensing policies, in particular in relation to the commercial implications of FRAND pledges given by holder of Standard Essential Patents (“SEPs”). On the other hand, antitrust agencies and patent courts across the globe have been confronted with several waves of cases Those proceedings have generated a thick, diverse and somewhat inconsistent body of case-law on a wide array of topics, including the availability of injunctive relief, patent valuation, portfolio licensing, practicing and non-practicing entities, etc. This conference seeks to provide a 360° state of play on patent hold-up in contemporary antitrust and patent policy.

This Half-Day conference will take place in Brussels, on February 29th, 2016. The full Conference programme is available here, Registration here.

Speakers include the most prominent scholars, judges and advocate generals in the field such that the event will surely be beneficial to all those who attend.

Mock Trial in Munich - Chris Ryan reports

Solicitor Chris Ryan was so kind to report in the mock UPC trial which had been organized by EPLIT in Munich last Friday. 

The idea of the European Patent Litigators Association (EPLIT) to run a mock UPC trial based on the famous Improver v Remington litigation of the late eighties and early nineties struck me as a really interesting idea when I first heard the suggestion. It turned out to be a fascinating and highly educational experience when it was run last Friday (22 January) at the Sofitel Bayerpost Hotel conveniently close to Munich station. 

The Improver litigation did more than establish the “Improver questions” in English law for assessing equivalence ([1990] FSR 181). It led to a series of decisions around Europe, based on the same European patent and the same alleged infringement, in which judges reached very different conclusions on the question of whether a claim for a “helical spring comprising a plurality of adjacent windings” covered a solid rubber rod with slits cut into it, which was capable of performing the same task – pulling out hair when set up in an arcuate configuration and rotated at speed around its axis.

Will the arrival of the UPC repair the fault line in the European Patent system, which the Improver story so clearly identified? On the evidence of the mock trial it will do just that. The “mock” Local Division in Munich reached a decision on validity and infringement which took effect in every designated Member State albeit that it may take time to develop a body of interpreted law and procedure that is consistent across the territory of the EU and distinct from that of the individual Member States from which judges may be drawn.

The panel of judges consisted of Prof Haedicke (Oberlandesgericht in Düsseldorf), Mr Zigann (Landgericht in Munich) and Mr Van Walderveen (District Court in The Hague). They were joined by Mr Klein as Technical Judge (formerly of the Boards of Appeal of the European Patent Office). 

The patent proprietor was represented by Rainer Beetz (Sonn and Partner, Austria) and Leythem Wall (Finnegan Europe LLP, Great Britain). The defendant was represented by Marek Lazewski (Lazewski Depo and Partners, Poland) and Jan Stein (Ipracraft AB, Sweden). The case documents had been prepared by these representatives together with Markus Rieck (Fuchs Patent Attorneyes, Germany).

I found the main trial (in the afternoon) was slightly less interesting than the Case Management Conference which preceded it in the morning. The final conclusion was that the patent was valid and infringed. However, it was not the outcome that I found most interesting. It was the differences in approach adopted by advocates and judges and the manner in which the presiding judge ran the business of the trial.

On the first point, the debate on validity turned on inventiveness over two elements of prior art. It was not entirely clear (to me, at least) which of several available tests for determining inventiveness was being relied on at different stages of the debate between the judges and the advocates, or in the judges’ deliberation over their conclusion. Similarly, in respect of the infringement issue, all parties seemed to agree that two questions required to be asked by the judges but were unsure whether there was a third question and, if so, what it should be. I suspect that all the judges were deliberately staying within the comfort zone of the approach that would be adopted at each stage within their own domestic courts. Their approach certainly illustrated the challenge facing the UPC (at both first instance and appeal level) of establishing a body of jurisprudence over time which will be distinct from the law emanating from national courts. 

The second point that struck me was the power of the presiding judge in setting an agenda and then outlining each issue in some detail before inviting the parties’ advocates to address it. It may be, of course, that the stark contrast with the way in which a case would be conducted in London was accentuated by the artificiality and time constraints of a mock trial. And no doubt those familiar with EPO hearings will find the inquisitorial approach and management of the debate on each issue more familiar. It certainly led to a crisply efficient disposal of each element of the case and the dispute as a whole.
Firm management of the process and the emergence of national differences in approach were even more evident during the Case Management Conference.

The organisers of the event had tweaked some of the facts of the original case in order to create some interesting preliminary issues. Had the proprietor opted back into the exclusive competence of the UPC in time where the defendant had issued an application for a declaration of non-infringement in the English Court on the same day as that on which the application to opt back in was entered on the register (Rule 5.9 – opt out not permitted where “an action has been commenced before a court of a Contracting Member State …prior to the entry of the [opt back in] Application in the register…”). If it had, should the UPC proceedings nevertheless be stayed under the Brussels Regulation’ requirements to avoid multiplicity of proceedings. And if the proceedings were still on their feet after those two challenges did the Local Division have jurisdiction over the dispute, given that, first the only sales in Germany had been a couple made by a third party who had acquired the goods in Poland and on-sold them in Germany against the wishes of the defendant and, secondly, very substantial sales had been made in the UK. 

There was also an application at the Case Management Conference to strike out the claim of literal infringement because it was unarguable (application granted by the Rapporteur but reviewed at the main hearing, when the ruling was reversed) and the court required the claimant/plaintiff to amend the request for remedies (prayer for relief) by providing a great deal more detail as to the scope of the injunction sought. The amended version available at the main hearing tracked the language of the relevant patent claims in identifying which products would be covered and even included a photograph of the defendant’s product. The difference between the precision of drafting expected in, for example, the German courts was contrasted with the broad scope of injunction sought and granted in the English courts. In this case the German pattern prevailed, designed, it was said, so that a court bailiff called upon to enforce it would have no doubt as to whether a product he came across did or did not fall within the scope of the court order. 

Other issues touched upon included the language of the proceedings (English because it was one of the languages which the Local Division had designated), translation facilities at the main hearing, summoning of witnesses, the appointment of a technical judge and, in the light of his appointment, the need for any expert evidence (and in which field of technology), as well as security for costs.

Listening to the well-structured submissions on each of the issues raised, and then eavesdropping on the judges as they considered their decision, proved to be an extremely effective means of improving (gaining) familiarity with the relevant procedural rules. 

The judges helpfully paced both the debate with the advocates and their own deliberations to assist the audience in tracing each issue, and the decision made on it, back to the language of the current draft of the rules. 

Judges, advocates and organisers are to be congratulated on an extremely informative and interesting learning experience. Another success for the increasingly effective Association which brings patent attorneys together from around Europe in its continuing efforts to assist their preparations for the new court and to influence the way it will operate.

This blogger is very grateful for this report because he was unable to attend to the event himself.  The report confirms my impression form previous mock-trials that the degree of activity of the presiding judge in managing the discussion in the trial and asking questions is one of the aspects of procedureal law which is still entirely unharmonized.  Mock trials with international panels really give an impression on the clash of (legal) cultures we will be experiencing once the UPC is up and running.

UPC Ratificatons: Finland has ratified, UK makes step forward

The number of states having ratified the UPC agreement is steadily increasing and has now reached nine (nine and a half?). According to the European Council website, Finland is the proud 9th signatory state to have deposited its ratification instrument on January 19th, 2016.

According to the available information (see e.g. here), Finland does not participate in the Nordic-Baltic Regional Division. However, no plans for setting up a local division have been published, either.

Moreover, the UK Government has published a draft Statutory Instrument (SI) for the ratification of the UPC agreement. The instrument raises fairly interesting issues, some of which have already been pointed out in the comments on a recent IPKat post on this issue. The interplay between the EPC, UPC-Agreement and the respective national SIs including the question which one would prevail in cases of conflict will surely be a formidable playground for academics, critics, judges and attorneys handling the first infringement cases. 

Supreme Court Agrees To Decide Proper Claim Construction Standard in IPR Proceedings

On January 15, 2016, the U.S. Supreme Court granted certiorari in a case involving the appropriate claim construction standard for patent claims challenged in an inter partes review proceeding before USPTO’s Patent Trial and Appeal Board (PTAB). Cuozzo Speed Technologies, LLC v. Lee, Case No. 15-446 (cert. granted Jan. 15, 2016).

Cuozzo Speed Technologies, LLC owns U.S. Patent No. 6,778,074, which claims, among other things, a speed display connected to a global positioning system device that displays a vehicle’s current speed and indicates when the speed exceeds the legal speed limit for the vehicle’s exact location. Garmin International, Inc. filed a petition for inter partes review (IPR) of certain claims of the ‘074 patent on September 16, 2012 – the first day that IPR proceedings were available under the Leahy-Smith America Invents Act. The PTAB construed the claims by giving each claim the “broadest reasonable construction in light of the specification of the patent in which it appears,” also known as the “BRI” standard, applying the USPTO rules for AIA proceedings. 37 C.F.R. § 42.100(b). In its final decision, PTAB ruled that three challenged claims were invalid as obvious.

Cuozzo appealed the result to the Federal Circuit. In a Feburary 4, 2015 divided decision, the court held that the BRI standard was appropriate. In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268 (Fed. Cir. 2015). The panel also held that the USPTO’s decision to institute an IPR proceeding was not appealable, either prior to or after the PTAB’s final decision. See 35 U.S.C. § 314(d) ([t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”). Cuozzo then filed a request for rehearing en banc.

In another split decision, the Federal Circuit declined en banc review by a thin margin. In re Cuozzo Speed Technologies, LLC, 793 F.3d 1297 (Fed. Cir. 2015) (per curiam).Circuit Judge Timothy B. Dyk wrote an opinion concurring in the denial. Chief Judge Sharon Prost, joined by four other judges, wrote an opinion dissenting from the denial.

The principal point of disagreement on the court, and an issue to be considered by the Supreme Court on appeal, is the standard the PTAB should use to construe claims during AIA proceedings. The USPTO implemented the AIA’s post-grant provisions by promulgating rules requiring claims to be interpreted using the BRI standard. In federal court proceedings, on the other hand, claims are construed to have their “actual” meaning to a person skilled in the art based on the claim language, specification, prosecution history, and – occasionally – other extrinsic evidence.

In his concurring opinion, Circuit Judge Dyk argued that BRI was supported by the AIA’s legislative history, because Congress had been aware of the USPTO’s use of that standard for decades and the AIA legislative history is silent about requiring a different standard.

In her dissent, however, Chief Judge Prost argued that the AIA post-grant trial mechanism was a “new, court-like proceeding[,]” and thus it should use the same construction standard used in traditional litigation matters. She noted that the Federal Circuit has embraced the BRI standard only as a useful tool prior to patent issuance or during reexaminations or reissues, where the patentee has the ability to amend claims. Under the PTAB rules for IPRs, on the other hand, amendments are very limited.

The specific questions presented in the Supreme Court are:

1. Whether the court of appeals erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.

2. Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable.

Briefing will continue until late spring, with oral argument most likely in May.

The Non-Commutative Algebra of Inventive Step - T 1649/10

The decision T 1649/10 of the Technical Boards of Appeal raises the bar for the admissibility of an appeal under Articles 106 to 108 EPC and Rule 99 EPC. Rule 99 EPC relates to the "Content of the notice of appeal and the statement of grounds".

Rule 99(2) EPC stipulates: "In the statement of grounds of appeal the appellant shall indicate the reasons for setting aside the decision impugned, or the extent to which it is to be amended, and the facts and evidence on which the appeal is based".

In the case at issue, the patent had been maintained in amended form (with added features from the specification) by the opposition division. Claim 1 as granted had been judged to lack inventive step starting from a document D10 as the closest prior art in combination with a document D4. In the grounds of appeal, the appellant argued that claim 1 as granted was indeed non-obvious starting from D4 as the closest prior art in combination with D10.  No reason why D4 would be a more appropriate starting point than D10 was given.

D10 combined with D4 or D4 combined with D10 - does it make a difference?

According to the Board, it does. The appeal was rejected as inadmissible because the reasons of the impugned decision (obviousness starting from D10) were not properly addressed. The claim as maintained by the opposition division was considered to lack clarity and the patentee having lost its status as appellant did not find a way to overcome this problem without colliding with the prohibition of reformatio in peius. The patent was completely revoked.

This following the decision T 2077/11 , this decision highlights the importance to specifically address the reasons given in the impugned decision and to not only re-iterate one's own view of the case. While I personally think that this decision overstresses  the requirements of Rule 99(2) EPC, it should serve as a warning when drafting grounds of appeal.

12 years is excessive - T 0823/11

The appeal case T 0823/11 lies from the (not properly reasoned) decision of the Examining Division posted on 30 September 2010 to refuse a European patent application with the filing date of 15.05.1996, which has entered the European Phase on 15 December 1997.

The duration of 12 years is considered to be a substantial procedural violation justifying the reimbursement of the appeal fee. According to point 2 of the reasons:

In the opinion of the Board, the delays cannot be justified by the particular circumstances of the case. The duration of the first-instance proceedings of more than twelve years after entry into the European phase must be regarded as excessive. According to decision T 315/03, even a shorter delay of ten years in a much more complex opposition case amounted to a procedural violation (points 15.5 and 15.6 of decision T 315/03 which was published only in an abbreviated form in OJ EPO 2006, 15). The Board in that case found that such a delay was not "within a reasonable time" and therefore infringed Article 6(1) of the European Convention on Human Rights (ECHR).

This is reasoning is remarkable because it is one of the rare cases referring to the ECHR and the delay has some similarities with the purported delay of up to 15 years for labour cases against the EPO handled by the Administrative Tribunal of the International Labour Organisation (ILOAT).

The additional delay of 5 years for the 2nd instance is not mentioned or justified. Rather, the case is remitted to the examining division, not without noting that "...  the Examining Division should expedite its final examination of the remitted case." 

Given that the Patent - once Granted - will expire in May this year, the reimbursement of the appeal fee will be a poor consolation for the applicant.

Reform of Boards of Appeal - Advance to Go

Back from his the holiday break, this blogger was eager to learn about the fate of the proposal for the reform of the technical Boards of Appeal presented at the pre-Christmas meeting of the EPO's administrative council which had been held on 16 and 17 December 2015 in Munich. The proposal had been outlined in the document CA/16/15 and had been the subject of a user consultation, the results of which (as interpreted by president Batistelli) had been published here. Quite a few rumors had been spread in advance and the communiqué has now been published on the EPO website.

As for the Reform of the Boards of Appeal, the communiqué contains the following statement (emphasis added):

The Council then had an exchange of views on the envisaged structural reform of the EPO Boards of Appeal. It mandated its Board 28 to elaborate guidelines to serve as a basis to the President for the drafting of concrete proposals to be submitted for decision to the Council possibly at its March 2016 meeting.

In my understanding this means that the proposal CA/16/15 has been rejected entirely rather than being remitted for entering modifications. Further, it is remarkable that the AC considers it to be necessary to elaborate guidelines to serve as a basis to the President for the drafting of concrete proposals rather than relying in the president's capacity to draft proposals alone.