The Unitary Patent and Unified Patent Court: new survey seeks responses

Nick Cunningham (Wragge Lawrence Graham & Co.) has written to tell us that his firm is running a survey to try to find out what patent owners and their advisers are planning to do about the Unified Patent Court, and whether they think it is a worthwhile development (something we've all been speculating about). Adds Nick:

"We would like to get as wide a response as possible, so I was hoping that you might be able to mention it in a posting".

PatLit is always pleased to oblige. Wragge Lawrence Graham & Co's Survey on the Unitary Patent and Unified Patent Court can be accessed at https://www.surveymonkey.com/s/unitarypatentsurvey and it should not take more than 10 minutes of your time. The questions are designed to be answered by respondents from outside as well as inside the UK and, while the organisers expect to be closing the survey in mid-June, there is no formal closing date.

Federal Circuit Again Addresses “Divided Infringement” Scenarios

On May 13, 2015, the U.S. Court of Appeals for the Federal Circuit again considered the circumstances in which a defendant may be liable for direct infringement under 35 U.S.C. § 271(a) when multiple actors carry out the required steps of a patented process. In a sharply divided panel decision, the court ruled that while principles of vicarious liability apply to direct infringement, liability is not available under joint tort concepts, such as “concert in action.” Akamai Technologies Inc. v. Limelight Networks, Inc., Case No. 2009-1372 (Fed. Cir. May 13, 2015). As a result, a defendant may be liable for direct infringement of a method claim only if: (a) the defendant performed every step of the patented method, or (b) if the defendant did not perform every step, the defendant was a “mastermind” that orchestrated the infringement and thus was responsible for the steps performed by others. In order to be a mastermind, a defendant must go beyond merely instructing or encouraging another actor to perform the steps that it did not perform -- a defendant is liable only if it is legally responsible for the missing steps due to a principal-agent relationship, a contractual arrangement, or a joint enterprise.

The latest Akamai decision essentially reaffirms the court’s earlier ruling in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (2008) that direct infringement liability requires a single entity to perform all the steps of a patented method. This interpretation could have far-reaching implications for patent claim drafting and infringement litigation.

In a 2 to 1 decision written by Circuit Judge Richard Linn, the court ruled that § 271(a) includes a “single entity rule:”

[D]irect infringement liability of a method claim under 35 U.S.C. § 271(a) exists when all of the steps of the claim are performed by or attributed to a single entity—as would be the case, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise. Because this case involves neither agency nor contract nor joint enterprise, we find that Limelight is not liable for direct infringement.

Slip op. at 6-7. The court ruled that while § 271(a) covers situations in which a defendant is legally responsible for the acts of closely-related third parties (i.e., vicarious liability), direct infringement does not extend to common law tort theories in which multiple persons acting together are jointly liable.

In a vigorous dissent, Circuit Judge Kimberly A. Moore argued that the single entity rule has no basis in the statute or case law, and that limiting the scope of § 271(a) to vicarious liability situations creates a “gaping hole” in liability under the Patent Act, effectively rendering thousands of process claims uninfringeable. She argued that liability under § 271(a) also applies in cases where defendants would be considered jointly liable under some common law tort principles. Due to the pointed dissent, however, it is likely that the Federal Circuit will again review the issue en banc.

The Akamai decision underscores the need for patent applicants to claim their process inventions in a way that can be infringed by a single actor, either through actions by a single competitor or actions attributable to it through contractual relationship or agency principles. This is especially important because liability for active inducement or contributory infringement will not be available in many cases due to the high intent standard required in § 271(b) and (c). See Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011) (active inducement requires actual intent to cause infringement or willful blindness). 

A copy of the decision is available HERE.

Adding more infringing products at the stage of assessing financial compensation: can it be done?

AP Racing Ltd v Alcon Components Ltd [2015] EWHC 1371 (IPEC) is a decision of Judge Hacon, sitting in the Intellectual Property Enterprise Court (IPEC), England and Wales, on 15 May, relating to infringement of a patent for calipers. This decision established something that, in theory, we may well have assumed anyway -- but it's good to spell it out to patent litigants. The message? That, as a general rule, in cheap-and-cheerful IPEC proceedings a patentee whose patent has been shown at trial to be infringed will not be entitled to litigate a broader range of infringements in an account of profits, or in an inquiry as to damages, than those included in his original infringement claim. However, as an exception to that general rule, where a patentee has no reason to know of those other infringements until after the case management conference, the most expeditious way forward is for the court to consider further allegations in the inquiry or account -- if this can be done without having to deal with additional evidence.

In making this statement of general principle, Judge Hacon stated that the patentee is under no general duty to exercise reasonable diligence to ascertain whether he has a potential further cause of action against the defendant. However, he added, a lack of diligence where the further claim would have been apparent to a reasonable claimant early in the proceedings, if he had only exercised reasonable diligence, could tip a claimant's attempt to deal with further infringements at the remedy stage into the category of abuse of process -- though it wasn't an abuse of process in this instance.

CIPA initiative to boost 2015 Congress

This blogger has often wondered about the pricing of major conferences. While the main cost to any IP professional is the loss of chargeable time while he attends them, the registration fees can be a significant factor too -- particularly for people who are not partners or owners of their own practices but who work in-house and have little or no control over their budgets.  Accordingly the following news, received via Chartered Institute of Patent Attorneys (CIPA) Chief Executive Lee Davies, is especially welcome. Writing to CIPA members he says:

CIPA’s annual Congress has been a recurring theme during the recent ‘meet-the-members’ tour. It is clear that you value CIPA staging Congress each year as it acts as a showcase for the UK profession and helps your Institute to influence policy formers on your behalf. Many of you have, however, said that you would be more likely to attend if it were not so expensive. I am going to put that to the test.

I have encouraged the Congress Steering Committee to reduce the cost of Congress by up to twenty-five percent for 2015 as an experiment [Bravo! Can this be the beginning of a new trend?]. This is a challenge for us in that we always aim for Congress to achieve a break-even budget and to do so we need more of you to attend, but you have told me that cost is the deciding factor and I hope that at £775 (+VAT) for a two day conference (£685 +VAT if you book early) you will see this to be real value for money.

We are taking a provocative look at the world of intellectual property in 2015, asking the question: The global IP system, is it fit for purpose? A programme full of influential speakers will address themes such as:

• Do patents block innovation?
• Harmonisation: holy grail or poisoned chalice?
• IP crime: a crime without victims?
• At last, a unified patent system for Europe, but what does this mean for business strategy?
• Disruptive technologies: the end of IP as we know it or a new beginning?
• How can business and industry make the best use of the global IP system?

The venue is still the Lancaster London Hotel, and the dates are Thursday 1 and Friday 2 October 2015. This blogger ventures to suggest that the new registration fee arrangements will have an impact, particularly on corporate patent departments, and he expects that the event will be all the better for them [ie the fee reduction should be fit for purpose ...].

This year's CIPA Congress has its own website here, from which all relevant details can be accessed.

Springtime, but no summary judgment for Huawei and their co-defendants

 Unwired Planet International Ltd v Huawei Technologies Co Ltd & Others [2015] EWHC 1198 (Pat) is a Patents Court, England and Wales, decision of Mr Justice Birss, delivered on 12 May. This ruling gives some useful guidance on applications for strike-out and summary judgment -- and on when not to bother making them.

Irish company Unwired, which held a portfolio of telecommunications patents, many of them declared to be essential to various telecommunications standards, sued Huawei and some other fairly serious telecommunications equipment businesses, alleging patent infringement in respect of the sale of standard-compliant products. In total, the action involved five standard-essential patents (SEPs) and one non-essential patent.

Unwired sought injunctive remedies, except to the extent that the various defendants were required and entitled to take licences to the SEPs on FRAND terms. Unwired made two open licensing proposals to the defendants; (i) in April 2014 it proposed a worldwide licence of all its patents, and (ii) in July 2014 it proposed a worldwide licence of its SEPs only.

The defendants said that none of the patents was essential, valid or infringed, but they said they'd be willing to take licences under any patents found to be valid and infringed. Their defence also alleged that, in seeking an injunction, Unwired was in breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU) by committing an abuse of its dominant market position. Once the Article 102 issue was raised, further interested parties were joined to the proceedings. Unwired then applied to add to its claim a declaration that its offers of licence were FRANDly; the company also sought a declaration as to the terms or range of terms that would be FRAND for a licence to use the claimant's portfolio of SEPs and/or its portfolio of patents.

Huawei and the other defendants contended that the FRAND obligation points were capable of being dealt with summarily and that they should be: Unwired's proposals couldn't be FRANDly because Unwired failed to offer (i) single patent licences if requested; (ii) a licence under all SEPs essential to a particular standard; (iii) a licence under SEPs relating to a particular territory.

Birss J refused to deal with the FRAND issue summarily. In his view:

* It was at least arguable that a key part of the factual matrix against which the offer of FRAND terms had to be construed was competition law and policy. This being so, no matter how clear the meaning of the words themselves might seem, a final decision about their meaning and scope could not be made without putting them into their proper factual and competition law context.

* It could well be that competition law considerations and the wider context actually worked in the defendants' favour -- but that should be decided at trial. It would not be sensible to try and decide issues of the construction of the claimant's proposals summarily, since they were too closely connected with underlying facts which were themselves in dispute. Since Unwired had a real prospect of defending all the points arising on the summary judgment application, it must be refused.

* Unwired's assertion that its proposals were FRANDly had a real prospect of success, so its application to amend its claim by adding a declaration to that effect would be allowed on terms stipulated by the court.

Of all the areas of intellectual property litigation, patent law is probably that in which applications for summary judgment and/or strike-out of claims have the least chance of success since not only are the facts often complex and in dispute but the ease with which competition law issues under the TFEU can be raised will tend towards the conclusion that there is a need for a full trial.  In contrast, applications for speedy trials may be a bit more promising for patents than for other IP rights, given the relatively short life of a patent and the fact that a swift decision on the issue of validity in the light of allegedly killer prior art may avoid the need for a full-blooded court battle on issues of infringement.

Prix de thèse Véron: the winners, and a new book

PatLit has learned from its friend Pierre Véron that the award for best French thesis on patent litigation, Prix de thèse Véron & Associés, Contentieux des brevets d’invention, 3rd edition, was presented last month in Paris.

A very distinguished jury, composed of Professors Jacques Azéma, Christian Le Stanc, Jérôme Passa, Frédéric Pollaud-Dulian, and Jacques Raynard, conferred the award upon Mr Dominique Perdreau for his thesis "Le contentieux des brevets d’invention" ("Patent litigation"), under the direction of Professor Jean-Pierre Clavier (Nantes).

Ms Linda Boudour received a special mention for her thesis "La saisie-contrefaçon à l'aune des droits fondamentaux" ("The saisie-contrefaçon with respect to fundamental rights") under the direction of Professor Michel Vivant (Montpellier).

During the ceremony, Véron & Associés announced the imminent publication of the trilingual version (German, English, French) of the firm's book Saisie-contrefaçon, published in French by Éditions Dalloz, collection Référence (3rd edition, 2013). The new edition is due out this June: you can get all the details from the book's web page here.

Viiv and Teva to fight SPC dispute without benefit of premature CJEU ruling

ViiV Healthcare UK Ltd v Teva UK Ltd [2015] EWHC 1074 (Ch), a Patents Court, England and Wales, decision of John Baldwin QC, sitting as a Deputy Judge of the High Court, is a bit of a curiosity -- a case on supplmentary protection certificates (SPCs) for pharmaceutical patents that did not result in a reference to the Court of Justice of the European Union for a preliminary ruling (it seems quite ironical that it's SPC cases that get referred to the CJEU so often when the mere fact of a reference can add a couple of years to the length of a trial while the SPC itself is for such a short period of time).

In short, Viiv had an SPC on the basis of its UK patent for a medicinal product containing abacavir and lamivudine for the treatment of HIV. Viiv issued proceedings for a declaration as to the proper interpretation of Article 3 of Regulation 469/2009 (the SPC Regulation) in the context of its 2009 SPC for "a combination comprising abacavir, optionally in the form of a physiologically functional derivative and lamivudine, optionally in the form of a physiologically functional derivative". In response, Teva applied to revoke the patent and the SPC.

Both parties agreed that the patent revocation proceedings should progress to trial regardless of whether a reference was made, and the trial was expected to take place in March 2016, with a Court of Appeal judgment following about a year later. The parties had cooperated in producing drafts of an agreed statement which set out their factual contentions.

In these proceedings Teva argued that there was no need to make a reference to the CJEU until essential facts had been found. No, said Viiv: the question of whether to make a reference was essentially one of case management, and the overriding objective of the Civil Procedure Rules was best served by making a reference now so that it would be better placed to decide whether to make any application to amend the patent.

John Baldwin QC refused the application, making the following observations:

* The CJEU's "Recommendations to national courts and tribunals in relation to the initiation of preliminary ruling proceedings" stated that

"A national court or tribunal may submit a request for a preliminary ruling to the Court as soon as it finds that a ruling on the interpretation or validity of European Union law is necessary to enable it to give judgment."

* Case law made it clear that, as a rule, the court could not tell whether it was necessary to decide a point until all the facts were ascertained, so in general it was best to decide the facts first; it followed that, in principle, a reference should only be made in the context of facts agreed or determined by the national court,

* On references to the CJEU, it was not unusual to include facts in "Agreed Statements of Facts" which were not actually facts but which were parties' factual contentions. There might be circumstances where that was appropriate -- but that should not be the norm as it was contrary to the concept that references were only made when a decision on the question was necessary to enable the court to give judgment.  The issue was not desirability from the parties' perspective but necessity from the court's perspective.

* It was wrong for the court to make a reference to the CJEU merely to enable a party to be better informed as to whether to go forward with an application to amend its patent.

* In this particular case it was far too early to make a reference. The proposed statement of facts was not sufficiently precise to give the CJEU a firm basis on which to make a decision and there were too many contingencies. In any event, if the patent was revoked at the validity trial, all questions relating to the SPC would become irrelevant.

This blogger thinks that the Deputy Judge got it right, even if this ruling does rather spoil the fun for those of us who enjoy watching the continuing evolution of CJEU jurisprudence and measuring it up against the twin criteria of commercial necessity and common sense.

Grounds for Revocation in Art. 138 EPC are Necessary but not Sufficient Conditions - BGH Wundbehandlungsvorrichtung

Art. 138 EPC sets the conditions under which national courts may revoke national parts of European Patents:

Article 138
Revocation of European patents

(1) Subject to Article 139, a European patent may be revoked with effect for a Contracting State only on the grounds that:

...

(c) the subject-matter of the European patent extends beyond the content of the application as filed or, if the patent was granted on a divisional application or on a new application filed under Article 61, beyond the content of the earlier application as filed;

Did any of our esteemed readers ever remark the word "may" in Art. 138 EPC?

It is the basis on a BGH decision "Wundbehandlungsvorrichtung" resolving a controversy on the so-called "inescapable trap" between Art. 123(2) and 123(3) EPC within the Bundespatentgericht. While the BGH had ruled for purely national German patents that non-disclosed features may be left in a granted claim under certain circumstances  (feature is purely limiting, no "Aliud" - i.e. the amendment relates to a non-disclosed technical aspect), the 4th senate of the Bundespatentgericht had found that this cannot apply for the German parts of European Patents where the inescapable trap according to G1/93 should fall shut.

The BGH did not agree and argued that the basis of the decision in the German courts is not Art. 123 EPC but the national implementation of Art. 138 EPC, which is known as Art. II § 6 IntPatÜG. It then argues that Art. 138 EPC sets necessary but not sufficient conditions for revoking a patent and that it opens the possibility for the national court to abstain from revoking the patent although a ground according to Art. 138 exists without conflicting with Art. 123 EPC as the latter is understood by the Enlarged Board of Appeal (cf. point 49 of  the reasons, rough translation by the author).

This result is even more fascinating as the word "may" (kann) is missing in Art. II § 6 IntPatÜG, which stipulates that the patent is revoked mandatorily if the subject-matter of the European patent extends beyond the content of the application as filed.

According to the BGH, the German approach strikes the right balance between the fundamental right to protection of (intellectual) property and the aim to avoid adverse effects for third parties.

Spain's challenge to the EU patent package: the Curia summary

As most readers of this weblog will now know, the Court of Justice of the European Union has given judgment this week in Cases C-146/13 Spain v Parliament and Council and C-147/13 Spain v Council. Readers who have a deep interest in the legal and constitutional dimensions of the European Union's new patent package will probably have read the rulings already, while those who are not so interested may have ignored them together. Curia's media release, reproduced here, does however offer a useful compromise:

The Court dismisses both of Spain’s actions against the regulations implementing enhanced cooperation in the area of the creation of unitary patent protection 

The current European patent protection system is governed by the European Patent Convention (EPC), an international agreement which is not subject to EU law. That convention provides that, in each of the Contracting States for which it is granted, the European patent is to have the effect of and be subject to the same conditions as a national patent granted by that State.

Through the ‘unitary patent package’ [Regulation 1257/2012 implementing enhanced cooperation in the area of the creation of unitary patent protection, Council Regulation 1260/2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements and the Agreement on a Unified Patent Court], the EU legislature sought to confer unitary protection on the European patent and establish a unified court in this area. Under the EPC system, European patents provide, in each of the States which are party to that convention, protection the extent of which is defined by the national law of each State. By contrast, under the European patent with unitary effect (EPUE) system, the national law designated on the basis of Regulation No 1257/2012 will be applied in the territory of all the participating Member States in which that patent has unitary effect, which will guarantee the uniformity of the protection conferred by the patent. The translation arrangements for the EPUE, which are based on the current procedure in the European Patent Office, are designed to achieve the necessary balance between the interests of economic operators and the public interest in terms of the cost of proceedings and the availability of technical information. The official languages of the Office are English, French and German. The EU legislature also considered that it was essential to establish a court having jurisdiction to hear cases concerning the EPUE in order to ensure the proper functioning of that patent, consistency of case-law and hence legal certainty, and cost-effectiveness for patent proprietors.

Spain seeks the annulment of the two regulations forming part of that package, namely the regulation on the creation of unitary patent protection (Case C-146/13) and the regulation governing the applicable translation arrangements (Case C-147/13).

... [T]he Court of Justice dismisses both of Spain’s actions.

Case C-146/13, Regulation 1257/2012

Spain contests (inter alia) the legality, in the light of EU law, of the administrative procedure preceding the grant of a European patent. It argues that that procedure is not subject to judicial review to ensure the correct and uniform application of EU law and the protection of fundamental rights, which undermines the principle of effective judicial protection.

The Court rejects Spain’s argument by pointing out that the regulation is in no way intended to delimit, even partially, the conditions for granting European patents – which are exclusively governed by the EPC – and that it does not incorporate the procedure for granting European patents laid down by the EPC into EU law. Instead, that regulation merely (i) establishes the conditions under which a European patent previously granted by the European Patent Office pursuant to the provisions of the EPC may, at the request of the patent proprietor, benefit from unitary effect and (ii) provides a definition of that unitary effect.

Spain also submits that the first paragraph of Article 118 TFEU (Treaty on the Functioning of the European Union) concerning the uniform protection of intellectual property rights throughout the European Union is not an adequate legal basis for the regulation.

In that regard, the Court points out that unitary patent protection is apt to prevent divergences in terms of patent protection in the participating Member States and, accordingly, provides uniform protection of intellectual property rights in the territory of those States.

Spain also contests the assignment to the participating Member States acting in a select committee of the Administrative Council of the European Patent Organisation of the power to set the level of renewal fees and to determine the share of distribution of those fees.

The Court observes in that regard that, according to the TFEU, it is for the Member States to adopt all measures of national law necessary to implement legally binding Union acts. Moreover, it inevitably falls to the participating Member States, and not to the Commission or the Council, to adopt all the measures necessary for the purposes of carrying out those tasks, given that the EU – unlike its Member States – is not a party to the EPC. The Court adds that the EU legislature did not delegate any implementing powers which are exclusively its own under EU law to the participating Member States or the European Patent Office.

Case C-147/13, Regulation 1260/2012

Concerning the applicable translation arrangements, Spain alleges (inter alia) infringement of the principle of non-discrimination on the ground of language since – in its opinion – the regulation establishes, with respect to the EPUE, a language arrangement which is prejudicial to individuals whose language is not one of the official languages of the European Patent Office. Spain submits that any exception to the principle that the official languages of the European Union have equal status ought to be justified by criteria which are other than purely economic.

The Court acknowledges that the regulation differentiates between the official languages of the EU. However, it emphasises that the regulation has a legitimate objective, namely the creation of a uniform and simple translation regime for the EPUE so as to facilitate access to patent protection, particularly for small and medium-sized enterprises. The complexity and particularly high costs of the current European patent protection system constitute an obstacle to patent protection within the EU and affect adversely the capacity to innovate and compete of European businesses, particularly small and medium-sized enterprises. The Court emphasises that the language arrangements established by the regulation make access to the EPUE and the patent system as a whole easier, less costly and legally more secure. The regulation is also proportionate, as it maintains the necessary balance between the interests of applicants for EPUEs and the interests of other economic operators in regard to access to translations of texts which confer rights, or proceedings involving more than one economic operator, by introducing a number of mechanisms (including a compensation scheme for the reimbursement of translation costs, a transitional period until a high quality machine translation system is available for all the official languages of the EU, and a full translation of the EPUE for operators suspected of infringement in the event of a dispute).

The Court also holds that the second paragraph of Article 118 TFEU constitutes the correct legal basis for the regulation, as that regulation establishes the language arrangements for a European intellectual property right (namely, the EPUE), defined by reference to the EPC.

Further reading on this topic can be found in places.  There are three IPKat posts, with accompanying discussion, here, here and here. Steve Peers' EUI Law Analysis blog offers an excellent piece entitled "Cheerleading or judging? The CJEU upholds the EU's unitary patent package", here, And don't miss Wouter Pors' post on the EPLAW Patent Blog here. or Miguel Montana's post on the Kluwer Patent Blog, here.

CLA organises IPEC event

The Competition Law Association (CLA) is holding a forthcoming event under the title "Intellectual Property Enterprise Court Practice". The speakers on this topic are IPEC's Judge Richard Hacon himself, District Judge Melissa Clarke and Angela Fox (RGC Jenkins & Co, author of this book on the subject). Despite its misleading name, the CLA is an organisation that brings together IP lawyers and competition lawyers on matters that ideally should be of mutual interest.

The date of this event is Monday 18 May, 2015, 6 pm. The venue: Courtroom 1, Competition Appeal Tribunal, Victoria House, Bloomsbury Place, London WC1A 2EB. 

This blogger remains highly impressed with this court, and thinks that it is substantially underused.  He also has the impression that some potential litigants assume that it has no jurisdiction to deal with patent matters -- something that is true only for the IPEC's Small Claims Track (see Guide to the Intellectual Property Enterprise Court Small Claims Track,  here, at p 4).

If you are planning to attend this event, click here for details.

Disclosure of commercial licences: a new strategy for dealing with non-practising entities?

From Ian Wood (Charles Russell Speechleys LLP) comes a hot-off-the-press judgment which, Ian suggests, may be a new weapon to use against patent trolls.  Ian explains:

In what the judge, Arnold J, himself characterises as unprecedented, a company accused of infringing a patent (Big Bus) applied to the High Court for the owner of the patent (Ticketogo) to disclose the commercial contracts it had with existing licensees under the patent before court proceedings were brought. It sought this information in order to assess whether it should defend the claim (which would be expensive) or to seek a commercial settlement in advance of legal action. The judge agreed that the owner of the patent (Ticketogo) should disclose the licence agreements.

The Big Bus Company operates open-top bus sightseeing tours. Ticketogo has a ticketing system patent which provides a method of issuing tickets over the internet using a barcode in an image file format. Ticketogo does not conduct any business except patent licensing. Who are we to say that Ticketogo might be a patent troll?

In October 2012, Ticketogo contacted Big Bus notifying it of the existence of the patent, saying that Big Bus’s ticketing system infringed its patent and offering to license the patent to Big Bus if commercial terms could be agreed. Big Bus denied that its ticketing system infringed the patent.

Ticketogo’s lawyers responded by referring to the high costs involved in challenging the validity of a patent and listing other licensees who, they (i.e. Ticketogo’s lawyers) said, “presumably decided after due consideration not to attempt a challenge to the validity of the patent.”

All went quiet for a while but, in February 2015, new solicitors instructed by Ticketogo (Taylor Wessing) wrote again saying that Ticketogo believed that Big Bus, “requires a licence of the patent. Many others have decided to take a licence,” and attached a current list of 43 licensees. To many, including the judge, this would appear that Ticketogo was threatening litigation -– and the licences were relevant to its claim.  Accordingly, Big Bus sought pre-action disclosure (under suitable confidentiality provisions) of the patent licences previously granted by Ticketogo in order to help it quantify the value of the claim for patent infringement that could be brought against it by Ticketogo. Big Bus said that, because of the potential irrecoverable costs it might incur even if it was successful in any patent infringement proceedings, it was willing to resolve the dispute through a commercial agreement. However, to do so it needed first to establish the value of Ticketogo’s claim.

Big Bus applied to the High Court of Justice (Patents Court) asking for Ticketogo to be required to disclose commercial details of the licences it had granted to others using its patent in advance of infringement proceedings that Ticketogo might pursue against Big Bus.   The judge decided that this pre-action disclosure should be made.

The case is The Big Bus Company v Ticketogo Ltd [2015] EWHC 1094 (Pat). It's not yet on BAILII but should be. Ian Wood acted together with David Fyfield on behalf of Big Bus; Taylor Wessing acted for Ticketogo. 

Federal Circuit’s Initial Reaction to Teva: “Clearly Erroneous” Review Standard Not Implicated In Most Cases

In the nearly three months since the U.S. Supreme Court ruled that subsidiary factual findings in claim construction proceedings must be reviewed for clear error, the U.S. Court of Appeals for the Federal Circuit has decided a handful of cases requiring it to review claim construction rulings by a district court or the U.S. Patent and Trademark Office. The Federal Circuit has declined to extend deference in any of those cases, and by all indications it is unlikely to do so in many future cases.

Prior to January 20, 2015, the Federal Circuit reviewed claim construction rulings – including subsidiary factual findings – de novo, without affording any deference to the findings or reasoning of the lower court. See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc). In Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., ___ U.S. ___ (Jan. 20, 2015), the Supreme Court held that district court factual findings based on extrinsic evidence are subject to “clearly erroneous” review under Fed. R. Civ. P. 52(a)(6). This more deferential standard applies even if the fact finding is “nearly dispositive” of the ultimate legal question of claim interpretation.

The Teva Court indicated that in reviewing claim construction rulings, the Federal Circuit should review the ultimate ruling on claim construction de novo. If the district court only considered intrinsic evidence (the claim language, specification, and prosecution history), then the entire question of claim construction is subject to de novo review. If, however, the district court ventured into extrinsic evidence (such as expert or inventor testimony), then those specific factual findings are entitled to deference and must be reviewed for clear error. Despite that deference, however, the Federal Circuit still reviews the ultimate claim construction ruling de novo.

In practice, Teva’s effect on Federal Circuit review of claim construction rulings may prove to be limited. The appeals court has held that extrinsic evidence – the only type of finding now afforded any deference – is much less significant in the claim construction analysis than intrinsic evidence. See Phillips v. AWH Corp., 415 F.3d 1303, 1318 (Fed. Cir. 2005) (“We have viewed extrinsic evidence in general as less reliable than the patent and its prosecution history in determining how to read claim terms”). In fact, the Federal Circuit has rarely, if ever, expressly relied on extrinsic evidence when interpreting a claim. It is not likely to start relying on extrinsic evidence following Teva. A review of Federal Circuit cases since Teva illustrates the decision’s limited impact to date.

PTAB Ex Parte Proceedings

The Federal Circuit has addressed Teva in two cases arising from ex parte appeal proceedings before the USPTO Patent Trial and Appeal Board. In In re Imes, 778 F.3d 1250 (Fed. Cir. Jan. 29, 2015), the Federal Circuit reversed a PTAB ruling cancelling claims in a reexamination. The court rejected the USPTO’s construction of the term “wireless” based on an express and unambiguous definition of the term provided in the specification. As a result, the court noted that, “Nothing in this case implicates the deference to fact findings contemplated by the recent decision in Teva[.]” 778 F.3d at 1252 n.1.

In a more recent case involving an ex parte appeal from a final rejection, the Federal Circuit also stated that its review of the USPTO’s claim interpretation did not implicate the Teva standard. In re Bookstaff, No. 2014–1463 (Mar 26, 2015). The court reversed the USPTO’s construction of the term “data that is indicative of a gratuity to be charged” based on the specification and disclosed embodiments, without considering any extrinsic evidence.

PTAB AIA Proceedings

The Federal Circuit addressed the standard for reviewing claim interpretation during an AIA post-grant proceeding in one case, In re Cuozzo Speed Technologies, LLC, 778 F.3d 1271 (Fed. Cir. 2015). After holding that the Teva decision is applicable to PTAB trial appeals, the Federal Circuit proceeded to exercise de novo review. The PTAB based its interpretation of the challenged claim on the patent specification and prosecution history. As a result, the Federal Circuit noted that, “Because there is no issue here as to extrinsic evidence, we review the claim construction de novo.”

District Court Actions

In two appeals from district court judgments, the Federal Circuit also declined to apply Teva’s clearly erroneous standard. In Fenner Investments, Ltd. v. Cellco Partnership, 778 F.3d 1320 (Fed. Cir. 2015), the court noted the Teva standard, but affirmed the district court’s construction of the term “personal identification number” based on the specification and statements made in the prosecution history.

In Enzo Biochem Inc. v. Applera Corp., ___ F.3d ___, (Fed. Cir. Mar 16, 2015), the court considered an appeal from a jury verdict of infringement. The district court ruled that the asserted claim covered both direct and indirect modes of detecting nucleotide probes, based in part on expert testimony that a figure in the patent specification disclosed an example of direct detection. On appeal, the Federal Circuit reversed in a 2-1 decision, relying on claim language and statements in the specification. The majority considered arguments based on the expert testimony to be waived on appeal, but noted that, “Nevertheless, even if we were to consider the district court’s finding, which would be subject to review for clear error under Teva, this sole factual finding does not override our analysis of the totality of the specification, which clearly indicates that the purpose of this invention was directed towards indirect detection, not direct detection.” In a dissent, Judge Newman argued that the district court’s construction was based on specific findings, including those based on expert testimony, and that, “These factual findings are entitled to deference, in accordance with the Court’s instruction in Teva[.]” She accused the majority of “ignoring the testimony and the district court’s findings and the jury verdict based on the evidence at trial.”

In Teva, the Court established that, when construing claims, appropriate deference must be given to the findings of the district court. The district court received some conflicting testimony, along with concessions on cross-examination, from which the court concluded that “at least one component” may include “the whole signaling moiety.” My colleagues show error of neither fact nor law in the court’s findings and conclusions.

Conclusion

 It is difficult to predict the long-term impart of Teva based on the limited number of Federal Circuit decisions applying it. The cases suggest, however, that the Federal Circuit likely will continue to apply de novo review when it resolves claim construction issues based on intrinsic evidence. In addition to situations where the USPTO or district court only considered intrinsic evidence, this approach may extend to situations in which courts considered extrinsic evidence, including expert testimony, but the Federal Circuit views the evidence to be insubstantial to the claim construction analysis.

Data Shows Spike In Patent Attorney Fee Motions And Awards After Octane

Prior to last year’s U.S. Supreme Court decisions in Octane Fitness LLC v. Icon Health & Fitness, Inc, 134 S. Ct. 1749 (2014) and Highmark, Inc. v. Allcare Health Mgmt. Sys., 134 S. Ct. 1744 (2014), district courts in the United States awarded attorney fees in patent cases only in extreme circumstances. In Octane, however, the Court lowered the bar for fee awards. Furthermore, in Highmark, the Court made it clear that district court judges have broad discretion in awarding fees for litigation misconduct.

The Octane Court focused on the plain meaning on 35 U.S.C. § 285, which simply states that, “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” The Court noted that, “This text is patently clear. It imposes one and only one constraint on district courts' discretion to award attorney's fees in patent litigation: The power is reserved for ‘exceptional’ cases.” 134 S. Ct. at 1755-56. In turn, the Court held that an “exceptional” case within the statute is “simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the circumstances.” Id. at 1756.

The combination of Octane and Highmark has had a significant effect on attorney fee awards in patent cases. According to a recent report by the Federal Circuit Bar Association submitted to Congress earlier this year, motions for fees filed by accused infringers were granted 36 percent of the time following Octane, compared to only 13 percent of the time in the one year prior to the decision. In addition, Octane apparently has resulted in a sharp increase in the number of fee motions. In the one year prior to Octane, accused infringers filed an average of approximately four fee motions per month. That rate increased to over seven motions per month in the months following the decision.

The new Octane standard’s effect on attorney fee awards is illustrated by a recent Federal Circuit decision, Olpus Technologies, Ltd. v. Vizio, Inc., Case No. 2014-1297 (Fed. Cir. Apr. 10, 2015). In Olpus, the district court granted summary judgment of noninfringement in favor of the defendant-alleged infringer. The defendant then moved for an award of attorney fees under § 285, 28 U.S.C. § 1927, and the district court’s inherent equitable powers, citing a long pattern of vexatious conduct by the patentee prior to and during the litigation. The district court reviewed the parties’ conduct and found that, among other things, the patentee had engaged in an “abusive discovery strategy,” had used “inappropriate, unprofessional, and vexatious” litigation tactics, and had manipulated its expert testimony and infringement contentions so that the defendant faced “a frustrating game of Whac-A-Mole throughout the litigation.” Nonetheless, under the pre-Octane standard, the district court declined to award fees, mainly because case had “been fraught with delays and avoidance tactics to some degree on both sides” and the court could not say that the patentee’s tactics resulted in increased legal costs.

On appeal, the Federal Circuit vacated the denial of fees. After cataloging the patentee’s misconduct and expressing skepticism that those antics did not escalate the defendant’s legal fees, the appeals court remanded with instructions to apply the Octane standard:

Although the award of fees is clearly within the discretion of the district court, when, as here, a court finds litigation misconduct and that a case is exceptional, the court must articulate the reasons for its fee decision. In light of the court’s fact findings regarding the extent of harassing, unprofessional, and vexatious litigation, the change in legal standard by the Supreme Court, and the lack of sufficient basis to deny fees under § 285, we vacate and remand for the district court to consider whether and the extent to which fees are warranted.

Slip op. at 8.

The Olpus case is a clear example of circumstances where a fee award now is likely, even though the district court’s denial of fees would not have been disturbed prior to Octane. Although attorney fee awards are not available in all cases, district courts and the Federal Circuit have greater power under Octane to award them in cases involving bad conduct by either party, including vexatious litigation tactics and unfounded claims.

Purposive use of Information Modelling may be Patentable

The decision T 0049/99 relates to a patent application relating to a method for modelling a physical system in a computer. Inputs are various data describing the physical system and the output is an object-oriented model thereof.

The question arose under which conditions such kind of information modelling may contribute to the technical character of the invention and consequently be accounted for when assessing the inventive step.

Here is the catchword of the decision:

Information modelling is an intellectual activity and should be treated like any other human activity in a non-technical field, which is, as such, not an invention for the purposes of Article 52(1) EPC. Only the purposive use of information modelling in the context of a solution to a technical problem may contribute to the technical character of an invention.

While the first sentence is not very surprising, the second sentence might be a pointer to what could have been patentable if properly claimed.

The applicants/appellants had apparently argued that the link to the tangible application of power systems lends some technical character to the features. The BoA responds as follows:

The claimed invention, however, is not restricted to power systems; as expressly indicated in the description the invention may be applied to various types of systems, "large, complex systems" including manufacturing plants and other physical systems (see description, page 30, lines 10 ff.). Claim 1 uses the generic expression "physical system", which is actually a term including any real world system, even business and administrative organisations. 

In the light of the broad meaning of the expression "physical system", information modelling in terms of the first part of claim 1 has to be construed as an abstract non-technical activity using abstract constructs like objects, types, attributes, and relationships.

Eventually, a more specific definition of the purposive use would have helped to classify the feature as a technical one.

Self-sealed mailer patent comes unstuck

Everseal Stationery Products Ltd v Document Management Solutions Ltd & Others [2015] EWHC 842 (IPEC) is a decision of Judge Hacon in the Intellectual Property Enterprise Court, England and Wales, dating back to the beginning of this month.

Everseal had a patent for a product which still has some currency, even in the age of the internet: this product was a "mailer", this being a business communication which was folded, sealed by an adhesive around its periphery and sent through the terrestrial post. Claim 1 of Everseal's patent disclosed a mailer including an adhesive which self-sealed irreversibly under "finger pressure" namely pressure of 500 kPa or less. Claim 7 disclosed a mailer in which the adhesive was a natural rubber latex adhesive stabilised with ammonia.

DMS developed mailers which were referred to in the judgment as Mailer 1, Mailer 2 and Mailer 3. Everseal sued DMS for infringement of its patent; DMS counterclaimed for invalidity. The court had to decide whether (i) DMS's mailers fell within claims 1 and 7, and in particular whether DMS's adhesives sealed "irreversibly" and (ii) whether the patent was invalid for lack of novelty or inventive step over three pieces of prior art (Viking mailer, Faltin, and Johnsen).

Judge Hacon held for DMS. In his view:

* an adhesive self-sealed "irreversibly" if the recipient, receiving the mailer, could tell from both the adhesive structure and the appearance of the base material that it had previously been opened. If the fact that it had previously been opened was not betrayed by each of those criteria taken separately, the adhesive did not self-seal irreversibly when the mailer was first closed.

 * it could be assumed that anyone who had previously opened the mailer without permission would have taken some limited effort to hide the fact that he had done so.

* the seals on Mailer 1 were irreversible within that meaning; mailer 1 infringed claim 1 of the patent.

* infringement of claim 7 would have required Everseal to show that the adhesive used for Mailer 1 was a natural rubber adhesive stabilised with ammonia, but there was no evidence to that effect.

* experiments carried out by DMS did not enable the court to reach any conclusion as to whether opening Mailers 2 or 3 resulted in the disruption in the mailer's base material so as to demonstrate that their adhesives sealed irreversibly, and Everseal had chosen not to conduct its own experiments.

* the burden rested on Everseal to prove infringement, but it had not done so regarding Mailers 2 and 3.

* turning now to the counterclaim, claim 1 of the patent lacked novelty over the Viking mailer which had an irreversible seal and had self-sealed under finger pressure. Claim 7 did not however lack novelty over the Viking mailer.

* where lack of novelty turned on whether an alleged prior use had particular features, it was sufficient to adduce evidence which proved, on the balance of probabilities, facts establishing that the prior use had those features. In contrast, where the court was invited to infer that prior use had one or more features on the basis of primary facts proved, the invention would lack novelty only if the inference was inevitable.  Here the evidence -- that it was likely that the adhesive in the Viking mailer was a natural rubber latex stabilised with ammonia -- was not enough to establish lack of novelty regarding claim 7.

* the patent did not lack novelty over Faltin or Johnsen, since neither of them explicitly disclosed an irreversible seal.

* Claim 1 did however lack inventive step over Faltin and Johnsen, and over the Viking mailer if it did not anticipate the invention. Everseal had suggested no technical prejudice which would have deterred a skilled team, working prior to the claimed invention, from using an adhesive which self-sealed under finger pressure to create an irreversible seal.

* Claim 7 also lacked inventive step, the evidence being that a skilled person would have been expected to find a suitable formulation without difficulty.

This is a curious case, in that the litigation over this patent was commenced in the Patents County Court (PCC) in February 2010, before that court's rules were radically overhauled with effect from 1 October. The PCC then gave separate rulings on two preliminary points; the ownership of the patent was disputed; there were also a Tomlin Order, allegations of unlawful threats and two separate applications to amend the patent before the infringement action was finally heard by the IPEC.   One might be tempted to wonder whether the sequential segmenting of issues is always more efficient than trying to hear as many things as possible all in one go.

Mere Disagreement with Reasons of a Decison is not a Sufficent Ground of Appeal

The appeal in the case T 0972/13 has been held inadmissible because the grounds were considered insufficiently substantiated.

The appellant had filed grounds of appeal merely stating "We disagree with the OD [Opposition Division] in that ..... " followed by a repetition of the reasons of the decision given by the Opposition Division. No whatsoever reasons for the disagreement were given. The board concluded that the statement of the grounds of appeal did not comply with Rule 99(2) EPC because no reasons (other than plain disagreement) why the decision should be set aside were given.

After the decision reported here, the decision T 0972/13 puts further emphasizes the importance of discussing the reasons given the decision impugned in detail and not to merely re-iterate one's own arguments from the first instance or  state one's dissatisfaction with the reasons.

A further interesting point in this decision is that an order on apportionment of costs was issued, which is a fairly rare event. The appellant had indicated that it would not be represented in the oral proceedings without withdrawing its request to hold oral proceedings. This left open whether the appellant would attend to the oral proceedings without being represented by a representative or whether the appellant would not attend at all such that the defendants had to prepare and attend to the oral proceedings as a matter of due diligence. The board found that this justified an order that the appellant had to bear the costs for the defendant's preparation and attendance to the oral proceedinsg for reasons of equity (Art. 104(1) EPC).

Plants or Plant Material are Neither Process nor Plant Variety

The Enlarged Board of Appeal has written a new chapter in the Tomato- Broccoli Saga and confirmed the narrow interpretation of Art. 53(b) EPC.

The following is a quote from the EPO-website:

In the referral cases G 2/12 and G 2/13, which were considered in consolidated proceedings, the Enlarged Board of Appeal has decided that the exclusion of essentially biological processes for the production of plants in Article 53(b) EPC does not have a negative effect on the allowability of a product claim directed to plants or plant material such as a fruit or plant parts. This applies even if the only method available at the filing date for generating the claimed plants or plant material is an essentially biological process for the production of plants, and also if the claimed product is defined in terms of such a process (product-by-process claim). In this context it is of no relevance that the protection conferred by the product claim encompasses the generation of the claimed product by means of an essentially biological process for the production of plants. Product claims or product-by-process claims directed to plants or plant material other than a plant variety thus are not excluded from patentability under Article 53(b) EPC and are allowable if they fulfil the formal and substantive requirements of the EPC (emphasis added).

The term 'plant variety' is defined in R. 26(4) EPC in the same way as in Directive 98/44/EC on the legal protection of biotechnological inventions, namely as "any plant grouping within a single botanical taxon of the lowest known rank, which grouping, irrespective of whether the conditions for the grant of a plant variety are fully met, can be:

• (a) defined by the expression of the characteristics that results from a given genotype or combination of genotypes,
• (b) distinguished from any other plant grouping by the expression of at least one of the said characteristics, and
• (c) considered as a unit with regard to its suitability for being propagated unchanged.

Importantly, this definition excludes hybrid seed or plants lacking stability in some trait or generation as well as plant cells which can be nowadays cultured like bacteria and yeasts.

The full text of the decisions can be found here and here.

Parallel proceedings in the UK courts and the EPO: a new article

"Parallel patent proceedings between the European Patent Office and UK courts" is the title of a recent article by Paul England (Taylor Wessing) in the Journal of Intellectual Property Law & Practice (2015). The print version is not yet out but you can access it online via the JIPLP website. Subscribers to the online edition can access it as part of their subscription, while non-subscribers can purchase limited-time access from the same site.

 According to the abstract

In the European patent system, proceedings concerning patent validity can run concurrently in both the European Patent Office (EPO) and a number of national courts. In the UK, a number of cases have addressed the details of how the relationship should be managed between the courts and the EPO when such parallel proceedings are on foot.

Until recently, this had appeared to be settled by rules and guidelines that were logical, if not ideal in all their implications. However, a series of recent cases concerning the revocation and amendment of patents in the EPO have now posed difficult questions for judges at first instance and on appeal.

The solutions have required a significant shift in the UK and EPO relationship and raise awkward questions of their own about the possibility of patents being re-litigated between the same parties. This matters at another level, because the UK experience may inform the relationship between the Unified Patent Court (UPC) and the EPO in similar circumstances.

Belgians challenge national ratification of UPCA

PatLit has learned from an informed source that in Belgium the ratification statute for the Unified Patent Court Agreement seems to have been challenged in that country's Constitutional Court. This information can be found on the weblog of ESOMA, the European Software Manufacturers' Association, here

There would appear to be three bases for this challenge:

• language discrimination against Dutch-speaking Belgian citizens, which is forbidden by the Belgian constitution, 

• the Rules of Procedure for the UPC and possible future amendments can pass into law without being confirmed by the Belgian legislator 

• the European Patent Office lacks judicial responsibility, in contradiction of the Rule of Law.

At least this third plea has a familiar ring to it ...

USPTO Responds To Public Comments on PTAB AIA Trial Procedures

Responding to feedback from petitioners and patent owners, the USPTO disclosed a plan to revise the procedural rules governing post grant proceedings under the Leahy-Smith America Invents Act (“AIA”). USPTO Director Michelle K. Lee announced that although most modifications are still under consideration and will be implemented only after formal publication of proposed revised rules and a public comment period, the USPTO Patent Trial and Appeal Board (“PTAB”) will increase the page limits for some filings effective immediately.

The AIA created three new post-grant review proceedings that allow members of the public to challenge the validity of issued patents in trial-like proceedings. One of the review procedures, Inter Partes Review (“IPR”), has proven to be unexpectedly popular with challengers, with over 2,600 petitions filed through March 19, 2015. In response to the USPTO’s June, 2014 request for public input, attorneys representing both petitioners and patent owners provided comments on ways to improve the proceedings.  Director Lee responded to those comments in a March 27, 2015 USPTO blog posting by announcing new “quick-fix” improvements to the PTAB rules. The full post is available HERE.

Page Limits Increased Effective Immediately. Effective immediately, the PTAB will increase the allowed page limits for two important submissions:

• The page limit for petitioner reply briefs will be increased to 25 pages. (The current rules limit petitioner reply briefs to 15 pages).
• Briefs in support a patent owner’s motion to amend claims will be expanded to 25 pages, plus a claims appendix, with a “commensurate amount of additional pages” for the petitioner’s opposition to the motion to amend and the patent owner’s reply. (The current rules limit motions and opposition to 15 pages and limit replies to five pages).

Although formal modification of the page limits will require administrative rulemaking, Director Lee announced that PTAB “judges will begin implementing them through scheduling orders effective immediately.”

Additional Possible Modifications. In addition to the revised page limits, Director Lee announced that the USPTO is considering numerous other changes to the PTAB AIA trial procedures. Although the final form of these modifications is still under discussion, potential changes include:

• A “single-judge pilot program” in which a single judge would determine whether to institute a trial. If a trial is initiated, two additional judges would be added to the panel hearing the case on the merits;
• A significant amendment to rules governing motions to amend claims, which could “emphasize that a motion for a substitutionary amendment will always be allowed to come before the Board for consideration (i.e., be ‘entered’), and for the amendment to result in the issuance (‘patenting’) of amended claims, a patent owner will not be required to make a prior art representation as to the patentability of the narrowed amended claims beyond the art of record before the Office”;
• Amended rules governing the evidence that a patent owner could offer in its preliminary response;
• Adjustments to the scope of permitted additional discovery;
• A revised rule clarifying the claim construction standard to be applied to proceedings involving on expired patents;
• Rules to clarify how the PTAB will process multiple proceedings involving the same patent;
• Rule amendments concerning the use of live testimony at trial. In addition, the PTAB Trial Practice Guide may be revised to promote the use of live testimony at oral hearings, when appropriate;
• A potential rule requiring a Fed. R. Civ. P. Rule 11-type certification for filings; and
• Revised Trial Practice Guide guidelines to ensure that sufficient discovery is available for parties challenging petitions based on the absence of the real party in interest.

The modified page limits and other potential rule changes are a reminder of the changing landscape in this area, which will be impacted not only by the U.S. Patent and Trademark Office’s updates, but also the Federal Circuit and possibly further Congressional reform. As the USPTO continues to fine-tune the procedures governing PTAB trials, it likely will attempt to balance relaxed restrictions with the goal of providing a streamlined, focused forum for validity challenges. As Director Lee observed in her blog post, the USPTO is “committed to fulfilling our Congressional mandate to provide a quick, inexpensive alternative to district court litigation and improve patent quality and to ensuring that the AIA trials are as effective and fair as possible.”