Book Review: China Court Cases on Intellectual Property Rights

Like it or not - the rapidly developing field of intellectual property law in China including its national procedural particularities will inevitably move into the focus of everybody working in international IP prosecution and litigation. However, the non-chinese language references are still rare, such that the new book edited by Professor Zhou Lin is highly welcome to anybody doing business in china.

According to the publisher’s blurb:

This book presents, in extraordinary detail, sixteen landmark cases that profoundly affect the protection of intellectual property rights in China. Written by six prominent Chinese legal scholars and jurists – including judges who themselves participated in these decisions – each case is fully described and analysed: the parties and their representatives, the basic facts, the facts ascertained by the court, the evidence presented by plaintiffs and defendants, the judges’ opinions with their arguments and reasoning, the unanimous conclusions, and the judgment, along with a wealth of deeply informed comment.

The book includes cases covering the entire field from unfair competition over trade secrets, copyright, trademarks to patents, wherein only one of the cases is a purely patent law case. The cases are explained in detail in a language that is not always easy to read. However, it gives a good impression on the course of litigation procedures in China and on the decisive legal questions in the 16 cases in a way that is understandable for readers acquainted with the basic concepts of Intellectual Property Law.

A little bit disappointing for a book edited in September 2011 is the fact that the decisions date from 1996 – 2001. It is called an "Update and Commentary Version" of an earlier version published in 2002 in the context of the EU-China IPR Cooperation Programme. However, the updates are difficult to identify.  Given the rapid development of its subject-matter, e.g. copyright law in the internet, some more recent cases would surely be interesting. Further, the task of sorting out the special features of the Chinese case-law as compared to what is commonplace in the rest in the world is left to the reader.

Bibliographic Data:

Edited by: Zhou Lin
September 2011,  ISBN 9041134190
XV+316 pages, Hardcover
USD price: $174.00

Web page here

Australia fine-tunes non-infringement declarations

All the way from Australia comes some news from Baker & McKenzie of the Intellectual Property Laws Amendment (Raising the Bar) Act 2011, which covers a range of IP areas. This Act, which came into force on 16 April, makes provision for a number of legislative reforms that don't take effect until 15 April 2013. One such reform will interest PatLit readers since it deals with how declarations of non-infringement are pleaded. According to our source:

"The statutory reference to a person who wishes to "exploit the invention" will be replaced with a person who "has done, is doing, or is intending to do an act". This means that a person seeking a declaration will need not have sought or been granted a patent themselves in order to make use of the provision, and clarifies that a declaration can apply to a present, current or future act. An applicant for a non-infringement declaration will also be able to challenge the validity of a patent in the same proceedings".

It's Not Over When It's Over

Many jurisdictions know the legal remedy of re-establishment of rights or, as the humanists among us would call it, restitutio in integrum. A further common point is that the deadline for requesting the re-establishment of rights starts with the the removal of the cause of non‑compliance with the period, but ends at the latest within one year of expiry of the unobserved time limit.

The latter one-year term is usually considered an absolute one esuring legal certainty for third parties and expires irrespective of  the reasons for the failure observe a time limit.

Starting with the decision "Überwachungsvorrichtung" in 2009, the 10th senate of the German Bundespatentgericht and the BGH have develpoed a theory allowing for a re-establishment of rights even after expiry of the one-year term. The most spectacular decision "Crimpwerkzeug III" ( ZR 193/03) reported here and available (in German) here, the BGH granted re-instatement into the delay for filing new grounds of an appeal against the decision of an upper distruct court not to admit revision to the BGH because the new grounds related to contradictory claim interpretations in judgements, wherein the (binding) interpretation of the BGH was available only after the expiry of the delay.

In a very interesting new decision availabe here, the 10th senate of the Bundespatentgericht granted re-establishment of the right to pay the filing fees almost 2 years after the expiry of the time limit. The applicant had filed an application containing only claims and the office had informed him that the minimum requirements for the filing date were not met because a description was lacking. The office furhter noted that any fees would be refunded and that a new filing date could be obtained by filing complete documents.

The applicant responded by arguing that the claims would sufficiently describe the invention to qualify as a description. The argument was found convincing by the examiner who decided to keep the application pending. However, the office did not inform the applicant on this decision. The applicant got aware of this decision only after almost two years, when the GPTO notified the applicant that his right was lost due to non-payment of the filing fee.

Following the "Crimpwerkzeug" theory, the senate judges that re-establishment may be requested even after expiry of the one-year-term

"in specific exceptional cases for reasons of ensuring an effectice legal protection and the right to be heard, in particular when the reasons for the failure to comply with the time-limit do not lie in the sphere of the party but are rather to be assigned to the court/office".

Intent and indirect infringement: a comparative article

"What intent, whose intent, and to what extent? The knowledge requirement in indirect patent infringement" is the title of an article by David Nilsson (Bird & Bird, Stockholm) and Timo Minssen (assistant professor, Centre for Information & Innovation Law (CIIR), University of Copenhagen). According to the abstract:

"Recent UK and US case law has shed light on the requirements for a successful indirect patent infringement claim, in particular the knowledge requirement. In light of these cases, the knowledge requirement in indirect patent infringement will be analysed in the US, the UK, Germany and Scandinavia.

Courts in Community Patent Convention (CPC) jurisdictions will probably look to each other for precedent. While knowledge of the patent appears to be required in the US, it does not seem to be required in CPC countries. The requisite degree of knowledge required in the US appears to be the specific intent of the indirect infringer, whilst in Germany and the UK it is the supplier's knowledge of the intention of the buyer that matters. In the CPC countries, it suffices that the knowledge exists at the time of offer. Presumption of intent if means provided are particularly suited for use according to patent or supplier has highlighted such use in marketing or other informational materials in the CPC countries.

Recent US and UK case law in respect of indirect patent infringement, in particular the knowledge requirement, useful for both patentees and suppliers".

This article, which appears in the Journal of Intellectual Property Law & Practice, was first published online on 2 April 2012, doi:10.1093/jiplp/jps023. The printed version will be published in due course. The article can be accessed for a charge on a limited time basis from the JIPLP website here.

Transferring actions between courts: a clarificatory ruling

If an IP action, whether a patent infringement claim or indeed anything else, is started in one court, what is the proper avenue through which it might be transferred to another?  This issue was examined in some detail in DKH Retail Ltd v Republic (Retail) Ltd [2012] EWHC 877 (Ch). In this case Judge Colin Birss QC (Patents County Court, England and Wales) gave a very useful judgment on an application to transfer an unregistered design infringement action from the (expensive) High Court to the (cheaper, less formal) Patents County Court.  The application came initially before a High Court Master -- a type of judge who is concerned primarily with procedural matters such as applications, motions and case management. The Master declined to hear the application on the ground that he did not have jurisdiction and that the application should be heard in the Patents County Court.

The application was then made to Judge Birss QC, who confirms that what, up to now, has been considered to be the correct practice, which is that it is the Master or Judge in the transferring court who must hear and decides the application, is correct. The judge also summarised the basis on which an intellectual property dispute may be referred from a non-specialist County Court to the Patents County Court.

Fortunately there was no need to reapply to the transferring court, since the parties agreed to the transfer to the Patents County Court.

PatLit thanks Brian Whitehead (Kempner & Partners LLP) for prompting this blogger into action.

Complex requests for leave to amend: blue, greeen and white machines -- and a red herring

Earlier this year, in Schenck RoTec GmbH v Universal Balancing Ltd, a Chancery Division for England and Wales decision of Mr Justice Vos (29 February 2012), a defendant in patent infringement proceedings sought to amend the grounds asserted in support of its argument of invalidity. This application was allowed in part, on the basis that the evidence on which it sought to rely as evidence of prior art raised different questions to other evidence that had already been pleaded.

Schenck RoTec's patent was for a machine for balancing prop shafts which spun a shaft, allowing measurements to be taken which in turn enabled an operator to use a welding gun in order to weld correction weights. The machine's design allowed for an increased cycle time and automation by allowing those balancing weights to be added in a single motion. Defending Schenck RoTec's infringement action, Universal Balancing asked to amend its grounds of invalidity in order to rely on two further machines as constituting evidence of prior art (the '1999 machine' and the 'white machine'), in addition to the 'blue' and 'green' machines, had already been pleaded. Universal Balancing also sought (i) disclosure if those amendments were allowed; (ii) further disclosure in relation to its visit to inspect the green machine in 2002 and associated drawings and materials, and (iii) disclosure in relation to discussions held between Schenck RoTec and a third-party company about a "costs-down" project -- all of which, Universal Balancing argued, were material relevant to a separate allegation of prior art.

With a hearing set to be heard in 10 weeks' time, the court had to decide the following questions:
(i) were the amendments to the grounds of invalidity allowable under the terms of orders made earlier by Mr Justice Arnold?
(ii) should permission to amend be granted in relation to the 1999 machine and the white machine ?
(iii) if permission to amend were granted in respect of either or both of the machines, should full relevant disclosure, with disclosure in relation to the costs-down project and any further disclosure be granted?
(iv) might a witness be allowed to give evidence by video-link?

Vos J ordered as follows:

* Universal Balancing had already been permitted to serve an amended defence and cross-claim which were to be consequential on amendments to the particulars of claim. They had argued that the 1999 machine and the white machine had only come to light as a result of the amended claims. Although the court could not confirm that no evidence as to those machines had been available to Universal Balancing before those amendments were made, or that any evidence in relation to prior art in the white machine or the 1999 machine would have been irrelevant to claims in the original claims, it was clear that claims to prior art in the two machines would have been equally relevant to claims in the unamended patent. Since the amendment was not truly consequential, the application for permission to amend had therefore to be decided on the usual principles.

* Amendments should in principle be allowed so that the real dispute between the parties could be adjudicated upon -- so long at any prejudice to the other party or parties caused by the amendment could be compensated for in costs, and the public interest in the efficient administration of justice was not significantly harmed.

* Under the Civil Procedure Rules (CPR PD 63 para.4.4), where material had allegedly been made available to the public by use, details of that alleged use must be contained in the pleadings in the grounds of invalidity. There were good reasons here for permitting Universal Balancing to make the amendment sought in relation to the 1999 machine; that machine was different from the blue and green machines which were the subject of the current pleadings, and the prior art in the 1999 machine had likely passed into the public domain before the priority date. The 1999 machine therefore raised different questions to those raised by the blue and green machines.

* Although it was possible that the machines were the same or similar, that question could not be answered without a product description for the 1999 machine. To allow the amendment in that respect would not cause undue prejudice to the future trial date and since any possible prejudice was outweighed by the demands of justice, the amendment be allowed.

* Where it was clear that a party had a large number of potential points, that party ought to only be allowed to rely on the better points.

* The problem with allowing an amendment to Universal Balancing's grounds of invalidity in relation to the white machine was that Schenck RoTec would be left not knowing what case it had to meet since, on the evidence of Universal Balancing, there was no difference between that machine and the 1999 machine. In that sense, the pleading could have been a red herring, and was no better case in support of Universal Balancing than the one it had with the 1999 machine. The sought amendment, if allowed, could also raise complex issues, including whether particular documents had actually been made public at all, the resolution of which depended on matters not before the court.

* Adjournment of the issue was not appropriate, since valuable time would be lost in preparing for trial, which would lead to an adjournment of the trial to a year ahead. The introduction of such complexities would be disproportionate and it would be unfair to Schenk RoTec if the amendment were allowed where there had been a failure to explain how the white machine would enhance Universal Balancing's case. Universal Balancing could however make a future application, showing why an amendment would be both necessary and just.

* Disclosure of the product description in relation to the 1999 machine was ordered. However, the application for further disclosure would not have been made, if it not were not for the application to amend. Standard disclosure had already occurred on both sides and, as Schenck RoTec had already disclosed relevant documents, an order for further disclosure was not necessary. Moreover, as the costs-down project was a separate allegation of prior art that had not been specifically pleaded, there were no grounds whatsoever on which disclosure on that issue could be ordered.

* The relevant witness could give evidence via video link, in light of the witness's personal circumstances and the fact that this wasn't seriously contested.

This note is based on a Lawtel note on an extempore judgment.

Non-controversial amendments to patents post-settlement

Industrial Self Adhesives Ltd v Teknek Ltd and others [2012] EWPCC 10, 8 March 2012,  took a look at a variation on a theme that is becoming increasingly common these days -- the question whether the settlement of a case actually finishes it off or whether there is scope for further fiddling around with it.  The Chancery Division, England and Wales, recently visited this question in a different context, involving a post-settlement consent order in a trade mark infringement action which was subsequently challenged for, among other things, breach of EU competition law (see IPKat post here).  In that case, the strong public interest in the finality of a dispute settlement was emphasised.  Industrial Self Adhesives Ltd v Teknek was however exploring a different post-settlement issue: might the Patents County Court for England and Wales amend a patent post-settlement.

In this action, which originated in a claim for unwarranted threats, Judge Birss QC held that the Patents County Court enjoyed the same jurisdiction to deal with post-settlement amendments to a patent as did the Technology and Construction Court itself in Lars Norling v Eez-Away [1997] EWCC 369 (TCC). This did not mean, though, that the court should go ahead and deal with the amendments in every circumstance: there might be circumstances in which the proper course was for the patent owner to apply to the Comptroller instead.

On the facts of the case before Judge Birss, it appeared that the Comptroller had no comments to make; no opponent had come forward following the advertisement of the amendments sought by the patent owner; nor had the claimant in these proceedings objected. There wasn't any apparent controversy and no matter of public interest arose.  Accordingly, even though the amendments were more than simply an exercise in amending down to an existing dependent claim, it was appropriate for them to be dealt with immediately in the Patents County Court.

Mayo v. Prometheus: US Supreme Court struggles to distinguish “laws of nature” from patentable inventions

The U.S. Supreme Court’s new decision in Mayo Collaborative Services (dba Mayo Medical Laboratories) v. Prometheus Laboratories, Inc., Case No. 10-1150 (U.S. Mar. 20, 2012), adds another piece to the puzzle of evaluating patent eligibility under 35 U.S.C. § 101. The 2010 decision in Bilski v. Kappos, ___ U.S. ___, 130 S.Ct. 3218 (2010) laid out a framework for identifying unpatentable “abstract ideas.” In Mayo, the Court examines “laws of nature.”

In a 9-0 ruling, the Court held that Prometheus Laboratories, Inc.’s patents covering methods for adjusting doses of thiopurine drugs in patients with autoimmune disease were not patent-eligible. The Court ruled that the physiological relationship cited in the claims – that thiopurine metabolite concentrations below 230 pmol per 8x10⁸ red blood cells are ineffective, but concentrations in excess of 400 pmol per 8x10⁸ red blood cells are toxic – is a “law of nature.” As a result, the court ruled, a claim directed to a method utilizing that relationship must be restricted to an application of the relationship, not the law of nature itself.

Although the Prometheus patents recited steps of “administering” thiopurine drugs and “determining” the metabolite concentrations in a patient’s blood, thereby indicating whether the patient dosage was too high or too law, the Court ruled that the claims merely covered the law of nature itself. The Court discussed two factors in determining eligibility: (1) whether the claim recited features, such as unconventional or non-routine steps or structures, that provide “practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself[;]” and (2) whether the claim would “risk disproportionately tying up the use of the underlying natural laws[.]” Mayo, at 4, 8-9. The Court ruled that the steps of administering thiopurine to patents and then determining metabolite blood concentrations were well-known, routine, and obvious. Thus, they did not restrict the claim to an application of the underlying laws of nature. In addition, the Court ruled that the claim would disproportionally preempt innovation and research in the field, because the only way to exploit the law of nature (at least in the Court’s eyes) was to practice the steps recited in the claim.

Although the effect of this decision will depend on how it is applied by the lower courts, including the U.S. Court of Appeals for the Federal Circuit, the decision raises some grave issues concerning the eligibility of process claims, especially in medical diagnostic process inventions.

First, Court’s assumption that the precise relationship between metabolite concentration and effectiveness/toxicity is a law of nature seems suspect. Every scientific or technical invention will necessarily depend of some physical law. One would think that laws of nature were broader scientific relationships, such as the law of gravity, the mechanisms of DNA replication, or laws of physics and thermodynamics. The specific relationship recited in the Prometheus claims – including specified thresholds for drug effectiveness and toxicity – would appear to be an application some laws of physiology, not a law of nature in and of itself. If the fact that thiopurine metabolite concentrations in excess of 400 pmol per 8x10⁸ red blood cells is toxic is a law of a nature, what scientific fact would not be a law of nature? In effect, most – if not all- process claims could be subjected to this standard.

Second, the apparent requirement that a claim must recite unconventional, non-routine and unobvious steps or structures in order to be restricted to an “application” of a natural law seems unsupportable. The Court justified its rule in part on its milestone decision in Diamond v. Diehr, 450 U.S. 175 (1981). The process invention in Diehr employed the well-known Arrhenius equation, governing the curing or rubber, and recited steps of installing uncured rubber into a press, closing the mold, constantly determining the temperature, constantly recalculating the cure time using the equation, and opening the press. The Court concluded that those steps, unlike the steps recited in the Prometheus patents, were not conventional or routine. But it would appear that the steps would have been common in the rubber curing art.

Third, the decision calls into question the Court’s statement in Bilski that the “Machine or Transformation” test is “a useful and important clue, an investigative tool, for determining whether some claimed inventions are [eligible] processes under § 101[.]” Bilski, 130 S.Ct. at 3227. The Federal Circuit had held that since the thiopurine metabolites resulted from chemical transformations in the patient’s blood, the test was satisfied. The Court ruled, however, that the test was not dispositive: “Regardless, in stating that the ‘machine-or-transformation’ test is an ‘important and useful clue’ to patentability, we have neither said nor implied that the test trumps the ‘law of nature’ exclusion. That being so, the test fails here.” Mayo, at 19.

In light of these and other difficulties, it is likely that the Mayo decision will signal a general bias toward avoiding patents that claim natural laws as such, rather than establishing specific legal standards. Indeed, the Court expressly avoided stating exactly how much unconventional and non-routine activity was required to avoid claiming a law of nature itself. Mayo, at 18. That omission leaves the Federal Circuit a great deal of leeway in fashioning a more workable rule in later cases.

EU Commission shares its views on the FRAND defence

In the decision relating to the merger between Google and Motorola Mobility, the EU commissioner for competition Jaquin ALMUNIA expresses some interesting thoughts on the role of standard relevant patents (SRP) in the context of the EU antitrust regulations (Art. 102 TFEU).

Google had committed itself to Motorola's FRAND declarations and to the German "Orange-Book" standard  as follows (see item 9 d of the decision):

Finally, Google contends that in relation to Motorola Mobility's SEPs, a potential
licensee will have the opportunity to prevent an injunction from being sought, even
after good faith negotiations have failed, provided that a potential licensee (a) makes
an offer to license Motorola Mobility's SEPs, subject to certain conditions, and (b)
provides securities with regard to the royalty payments.

 And in item 106:

In the event licensing discussions fail, the SEP holder may ultimately take its counterparty to court and seek an injunction.

Florian Müller on FOSS argues that this might bee seen as a further requirement that licensing discussions must have taken place and have failed before an injunction is granted.

Similar thoughts are expressed in item 126:

it may be legitimate for the holder of SEPs to seek an injunction against a potential licensee which is not willing to negotiate in good faith on FRAND terms.

In a footnote, the commpssion points to the Case T-111/96 ITT Promedia v Commission [1998] ECR II-2937) and argues that in that case,

 the ECJ acknowledged that the fundamental right to property, which includes the rights linked to intellectual property, is not absolutely protected but must be balanced against the protection of other fundamental rights such as the freedom to conduct business. (See Case C-70/10 Scarlet Extended, judgment of 24 November 2011, paragraphs 41 to 46).

However, the commision emphasizes that the commitment to the Orange Book-Conditions is by no means a guarantee that Art. 102 TFEU is respected and reminds that the sword of Damocles of a commission investigation is always hanging over the holder of a SEP trying to enforce his right (item 132):

Given this context, the Commission considers that Google's incentives to use the threat of injunctions to forcibly extract cross-licences from good faith licensees are most likely be constrained by the prospect of an investigation based on Article 102 TFEU.

Must U.S. Courts Enter “Swamp” Of Patent Eligibility Standards As A Threshold Issue In All Patent Cases?

In a recent decision, two judges on the U.S. Court of Appeals for the Federal Circuit voiced sharp disagreement about the role of the question of patent eligibility, 35 U.S.C. § 101, in lawsuits presenting challenges to the validity of issued patents.

In MySpace, Inc. v. GraphOn Corp., Case No. 2011-1149 (Fed. Cir. Mar. 2, 2012), the court affirmed a district court summary judgment that the four patents in suit, including U.S. Patent No. 6,324,538 (entitled “Automated on-line information service and directory, particularly for the World Wide Web”), were invalid as lacking novelty and obvious. In a dissenting opinion, Circuit Judge Haldane Robert Mayer argued that the claimed invention was invalid as an ineligible “abstract idea.” See Bilski v. Kappos, ___ U.S. ___, 130 S.Ct. 3218, 3231 (2010)(invention based on hedging strategy for commodity market investments an unpatentable abstract idea). Noting that the Bilski Court termed eligibility a “threshold test,”, 130 S.Ct. at 3225, Judge Mayer argued that the appeals court “must first resolve the issue of whether the GraphOn patents are directed to an unpatentable ‘abstract idea’ before proceeding to consider subordinate issues related to obviousness and anticipation.” Thus, Mayer essentially proposed that patent eligibility forms a quasi-jurisdictional issue to be addressed prior to other grounds for determining patentability.

In an opinion written by Senior Circuit Judge S. Jay Plager, the majority rejected Mayer’s position. Plager noted that the dissent’s approach would require courts to consider eligibility in practically all cases. Although standards for eligibility are “manageable” for some technologies, he noted, attempts to define what constitutes an abstract idea “have been less successful.” He observed:

Our opinions spend page after page revisiting our cases and those of the Supreme Court, and still we continue to disagree vigorously over what is or is not patentable subject matter. This effort to descriptively cabin § 101 jurisprudence is reminiscent of the oenologists trying to describe a new wine. They have an abundance of adjectives — earthy, fruity, grassy, nutty, tart, woody, to name just a few — but picking and choosing in a given circumstance which ones apply and in what combination depends less on the assumed content of the words than on the taste of the tongue pronouncing them.

MySpace, at 15 (citations omitted). Plager concluded that courts could resolve patent challenges more efficiently and avoid the complications arising from wrestling with unclear eligibility standards by considering other invalidity grounds first:

Rather than taking the path the dissent urges, courts could avoid the swamp of verbiage that is § 101 by exercising their inherent power to control the processes of litigation, and insist that litigants initially address patent invalidity issues in terms of the conditions of patentability defenses as the statute provides, specifically §§ 102, 103, and 112. If that were done in the typical patent case, litigation over the question of validity of the patent would be concluded under these provisions, and it would be unnecessary to enter the murky morass that is § 101 jurisprudence. This would make patent litigation more efficient, conserve judicial resources, and bring a degree of certainty to the interests of both patentees and their competitors in the marketplace.

Id., at 17. The opinions are available here.

Non-Spanish language prior art in Spain

Spain says "hello" to non-
Spanish language online prior art

PatLit's thanks go to Ignacio Marqués Jarque (Abogado, IP/IT Department Baker & McKenzie Barcelona, S.L.P.) for news that a still-recent and now final decision of the Court of Appeals of Madrid redefines the concept of "national divulgation" in Spanish utility model cancellation actions in accordance with the current availability of online patent databases, regardless of the language in which the prior art is divulged. He explains:

According to section 143 of the Spanish Patent Act of 11/1986, of 20 March, a registered Spanish utility model protects inventions of "less inventive status" than those protected by patents. When granted, it protects a product's specific set-up or structure from which some use or practical/technical advantage can be obtained (its aim is to protect "utility" and "practicality" in a product's manufacture or use). A Spanish utility model is protected for a period of ten years from filing, and according to Spanish law, requires "Spanish novelty" as the relevant state of the art is "everything divulged in Spain before the application date" (section 145 of the Spanish Patent Act). 

In recent years, there has been a lot of contention and debate on the concept of "national divulgation" involving Spanish utility models litigation, and how this "national state of the art" is to be construed. In its judgment, no. 330/2011, the Audiencia Provincial de Madrid - Sección 28ª (the Court of Appeals of Madrid, 28th Section) has established that online patent databases can be used as evidence of prior art for the purpose of cancelling Spanish utility models ("modelos de utilidad"), even when such prior art is divulged in languages other than Spanish. 

In the reported case, the claimants relied basically on foreign patents to show and declare that the challenged Spanish utility models were not novel and did not meet the required level of inventive step. The Court understood that the prior art brought to the case was "divulged in Spain" (as the law requires) as it was available in online free-of-charge patent databases such as the European Patent Office's Espacenet before the challenged Spanish utility models were filed. The Court found that the prior art resulting of those online databases was relevant to determine the invalidity of the later Spanish registrations. 

This case is of relevance as the reported jJudgment redefines (and updates) the concept of "divulgation" in Spanish utility models cancellation actions with regard to (i) the legal relevance of foreign registrations and (ii) the availability of new sources of patent information (i.e. online databases)".

When ownership of a patent is beyond challenge

KCI Licensing Inc and others v Smith & Nephew and others was decided last Thursday by Judge Colin Birss QC, sitting as a judge in the Patents Court, England and Wales). Following earlier litigation in which KCI had pursued Smith & Nephew (S&N) for infringing two of its European patents and established that infringement had occurred, the company applied for summary judgment in relation to an enquiry into damages. In its particulars of claim in the infringement proceedings, KCI had asserted that it was the registered patent holder. S&N admitted that assertion at the time but now, in its response to KCI's statement of intent in the enquiry into damages, S&N claimed that KCI was not the true patent owner after all. KCI was not impressed and argued that it was surely not open to S&N to raise the issue of true ownership on the enquiry into damages -- not just because of the earlier admission but also because it in any event was estopped from doing so. No, said S&N: it had actually raised the point in its skeleton argument at the trial and the admission was only that KCI was on the register as its registered proprietor, not that KCI was its true patent owner.

In an extempore judgment which was noted briefly on the Lawtel subscription-only service, Judge Birss QC allowed KCI's application. In his view, the pleading that KCI was the registered proprietor was a plea that it was (i) the proprietor and (ii) on the register. This was quite normal, but it would not be usual to see a plea that the claimant was the "true proprietor". In any event, the burden of proof lay with S&N to disprove that KCI was the true proprietor. Having already admitted in its defence that KCI was the proprietor, an amendment to the defence was needed before the issue of true ownership to be raised. Since this issue was raised in S&N's skeleton argument at trial, it would not be right to look at the matter simply as a pleading point. However, S&N should have raised the issue when the trial judge was ordering relief following his judgment; if indeed KCI was not the true owner, it had no right to orders for relief -- and this could and should have been a ground for S&N's subsequent appeal. Once the court was considering damages or an account on an enquiry into damages, there was no longer any cause of action for patent infringement; it had been replaced by a judgment premised on KCI having title to sue. By this time it was too late for S&N to challenge KCI's right to sue.

Pile on the pleas, pay for the privilege

It's okay to have lots of bullets to fire
at the other side's patent -- but it may
cost you dearly if you use them all ...

An eye-catching decision on costs was delivered last month by the Court of Appeal, England and Wales (Lords Justices Elias and Kitchin, plus Sir Robin Jacob) in MMI Research Ltd v Cellxion Ltd and others [2012] EWCA Civ 139, 23 February 2012.

In the wake of its own earlier decision this January (here, discussed by Norman Siebrasse on the IPKat here) that a patent for a method of breaking through the security system of the Global System for Mobile Communications was invalid for obviousness, the Court of Appeal had to determine the level of costs: for (i) the main trial, (ii) the trial of remitted issues, (iii) the application leading to the second trial and (iv) the appeal itself.

Giving judgment for the court, Sir Robin Jacob ruled that no order for costs should be made for the first three of those categories. Notwithstanding the fact that Cellxion was the overall winner at trial, it had only won on one issue but had raised what the court regarded as an unnecessarily large number of points in the issues on which it did not win. Not just this, but it gave evidence which the court described as "wasteful and unsatisfactory". On the excessive raising of points Sir Robin had this to say, at [9]:

" ... We think the defendants were indeed profligate in the number of points they took. A defendant cannot take as many "reasonable" points as it likes and not have to pay for any of them if they are unsuccessful. If he has a large number of potential such points he should make a judgment as to which are the better ones. A good test to apply is not merely "is this point a reasonable runner?" but also "which of my reasonable runners are the best few?" If only a few such points are run and all but one fails, the court may deprive the party of its costs of the unsuccessful points. But there comes a point when more sanction is called for. This is particularly important in a patent action where very often a host of possible defences could be run. A reasonably strict costs regime should make a defendant concentrate on his best – which may indeed also give him a better chance of winning".

While it was appropriate to deprive Cellxion of its own costs on the issue on which it won, this action was nonetheless still not so exceptional that the company should be ordered to pay any of the other side's costs. Since Cellxion's appeal on the remitted issues was close to hopeless, while it won on obviousness it should only have 70% of the costs of the appeal.

Full of Eastern Promise: a new book on patent enforcement

The Enforcement of Patents is a title of natural interest to readers of the PatLit blog, though it becomes immediately apparent to anyone picking up this volume that its contents are aimed at understanding the legal, strategic and economic aspects of patent enforcement in Asia (the work actually belongs to the Max Plank Institute's Series on Asian Intellectual Property Law).  While PatLit has a healthy readership (last year the blog welcomed 49,986 visitors; this year it has already received 9,515, showing a year-on-year increase of 14.96%), only 7.27% of its visitors come via websites with Asian top-level domains.

The editors of this book are Reto Hilty (Director of the Max Planck Institute for IP and Competition Law, as well as editor of the Series) and Taiwan-based scholar Kung-Chung Liu. In this work they are assisted by a strong team of contributors drawn from East and West.  But what is this book about?  According to publishers Wolters Kluwer:

""Obstructions to patent enforcement exist all over the world. Increasingly, unauthorized players use protected inventions to conduct their own commercial businesses. The question must be asked whether available law provides for sufficient disincentives against the infringement of granted rights. If a patent right cannot be properly enforced, it is of little value to its owner; moreover, under-enforcement ultimately leads to tension within the entire system of protection, generating harmful repercussions and sooner or later producing dysfunctional effects. Yet protection that is too wide risks hindering further innovation. Carefully balancing the scope of legal protection with the impact of enforcement measures is essential. The more the legal focus has moved to questions of enforcement, the more the imbalance within the system of legal protection has been revealed. 

In 2010 an international conference was organized around these issues in Taipei by the Max Planck Institute for Intellectual Property and Competition Law and the Academia Sinica, Taipei, with the support of the IP Academy Singapore, the Institute of Law for Science and Technology of National Tsing Hua University, and the Graduate Institute of Intellectual Property, National Chengchi University. The aims were to provide doctrinal clarification of some common misconceptions and myths surrounding patent enforcement [Good idea -- but are any of these myths and misconceptions to be found in the generalisations contained in the previous paragraph? That's a good subject for a good argument in the bar, if not for a conference of its own], and to discuss the “more economic approach,” which is gaining growing acceptance across many countries.

This publication, derived from that conference, carries through those objectives, and also serves as a handbook for patent enforcement in major Asian jurisdictions, where there is huge potential for economic growth and patent cooperation [the word 'handbook' rather suggests a practical manual; this is a handy book, and a richly informative, but not a 'handbook']. In addition it looks into the experiences of the centralized system of patent enforcement in the United States, and into the European Union’s efforts to establish a truly international patent right governed by a unitary European patent court [I'm not convinced that these comparisons help, given the vast legal and cultural gulf that separates the US and EU from the way disputes are resolved in oriental societies]. Scholars, judges and practitioners were also invited to comment on the conference reports, greatly enriching the book [this feature works well: it is something that could equally well benefit other collections of conference-based papers]. 

Among the many matters treated in depth are the following: dysfunctional use of the patent system, such as misappropriation prior to grant, abuse of granted right; the interaction between patent enforcement and competition law; safeguarding the investor’s possibilities to obtain a return on his investments during a limited period of time; the need to challenge the industries’ contentions and the assertions of lobbying groups; widespread uncertainty about the impact of patent infringements; and absence of recognized standards on how to measure the losses of the industries concerned. The authors emphasize that issues of enforcement cannot be addressed in an isolated manner. The patent system, they show, can be improved by first understanding the unique features of certain jurisdictions that can spur reflections and mutual learning. Patent lawyers, regulators, and policymakers everywhere stand to benefit immeasurably from this richly significant book".

Bibliographic data: publication date December 2011 (though the copyright notice says 2012). ISBN 9041135278; ISBN 13: 9789041135278. xxvi + 466 pages. Hardback. Price £128.  Book's web page here.

Res Judicata, French style: Wehrkamp-Richter v Louis Paul Guitay

Patent litigators all round
Europe have been flagging up
this decision for discussion

Several readers have forwarded to me the helpful note from Pierre Véron (Véron & Associés) on the recent French Cour de Cassation en banc ruling in Reginald Wehrkamp-Richter v Louis Paul Guitay, which I would have posted earlier but for the fact that I was ploughing through a backlog of work when I received my own copy of it.  This decision, handed down on 17 February, concerns the situation in which a patentee prevails on infringement and validity and obtain damages as a result of a final judgment against a first infringer. Subsequently, in proceedings against a second alleged infringer, the patent is revoked.

The Court ruled that a first infringer cannot claim the restitution of the damages he has paid because the binding and final decision on liability is res iudicata and is not affected by the subsequent revocation of the patent. Pierre has made the judgment available in English here and in French here. He has also summarised the decision briefly:

"The answer given in the 17 February 2012 judgment, handed down en banc by the full court (Assemblée plénière) is loud and clear: 

"Because the first infringer had been held liable for infringement by an irrevocable decision, the Cour d'Appel rightly came to the conclusion that the retroactive and absolute revocation of the patent… in a subsequent decision could not justify the restitution of the sums paid in pursuance of the decision on the infringement."

It is quite exceptional that the French Cour de cassation deal with a patent case en banc (it does so only when conflicting decisions from various panels have been reported or to prevent such conflict). According to its standard practice, the Court does not explain its decision in the judgment itself, which is very short (2 pages). However, detailed explanations (in French) can be found in the 24-page report prepared by the rapporteur, which is available on the Court’s website here and in the 15-page advocate general’s opinion, available on the Court’s website here. 

This question was discussed during the 14th European Patent Judges' Symposium held in Bordeaux, 16-20 September 2008, published in the EPO’s Official Journal, Special Edition 1, 2009, page 56, "A patent held in a binding ruling to have been infringed is subsequently revoked: what happens next?" (here), with national reports from Germany, the United Kingdom and France".

Thank you, Pierre, for this useful information.

Pierre's firm runs the French Patent Case Law website, here.

Some Need a Slight Nudge, Some Need a Kick in the Trousers

One of the more problematic issues when discussing the inventive step is the “incentive” or “prompting” needed by the skilled person to combine particular pieces of prior art. Both EPO examiners and opponents sometimes have a really hard job to find such an incentive and often end up with citing the unlucky EPO decision T 1126/09 out of its context, according to which this prompting “need not be found in the cited documents but may result from the inventor’s fundamental endeavour to simplify the existing method/device“.

The German supreme court BGH has now found in the decision X ZB 6/10 “Installiereinrichtung II” that it depends on the circumstances how intense this prompting has to be. According to the judgement of the BGH, the prompting need not be explicit but may also be found in these factual circumstances:

The headnote (in a rough translation) reads:

 “The extend and the degree of concreteness of promptings in the prior art needed by the skilled person in order to further develop a known solution in a particular direction is a question which must be answered on a case-by-case basis requiring an overall consideration of all relevant elements of the factual circumstances. However, not only explicit textual indications to the skilled person are relevant. Rather, the characteristics of the technical field under consideration, in particular concerning the education of the skilled persons, the standard approach for developing technological innovations in the field, technical requirements resulting from the construction or from the application of the subject-matter concerned as well as non-technical requirements may play a role.”

Patent litigation in Canada: standards of review

"What is the standard of review for patent litigation in Canada?" is the title of an article by Professor Emir Aly Crowne (Associate Professor in the Faculty of Law at the University of Windsor; a barrister and solicitor) which has already been published online in the March 2012 issue of Oxford University's Journal of Intellectual Property Law and Practice (JIPLP). According to the abstract:

"In Canada patents are administratively granted by the Commissioner of Patents. Yet administrative law principles have never been applied when determining the validity of a patent during litigation.

Courts have always proceeded on the basis of a trial de novo to determine whether (on a balance of probabilities) the patent was valid and properly granted.

This paper examines the apparent tension between the Patent Act, patent jurisprudence and administrative law principles in litigating the validity of a patent".

This is a topic which appears to have received little attention in most jurisdictions; readers' reflections, both from inside Canada and elsewhere, are welcomed.

Non-subscribers to the online version of JIPLP can purchase short-term access to online articles. To do so for Professor Crowne's article, click here and follow instructions under ' Purchase Short-Term Access'.  The print version will be published at the end of the month.

Italy: Pfizer fined 10.6 M (abuse of dominant position)

We finally have a decision in the Xalatan case, started in October 2010 (reported here and here).

In a 33 page decision (here), the Italian Competition Authority concludes that Pfizer artificially extended patent protection of the active ingredient latanoprost (used to treat eye glaucoma) to prevent or delay generics entering the market.

I find of particular interest the following paragraphs of the decision (fast translation):

"74. The documentation inspection revealed the existence of a complex strategy - developed by a working group of Pfizer (the so-called "LOE group") - for the defense of the drugs after the expiry of patent protection, primarily designed to protect their share market entrance of equivalent drugs. The latter, in fact, are retained by Pfizer a particularly serious threat.

75. Among the strategies designed, beside those purely commercial or promotional, special emphasis is given to the use of "legal strategies" to change the date of expiration of patent protection.

76. … Pfizer appears to have full knowledge of the peculiarities of the Italian situation and the risk of a possible entry in the market of equivalents to Xalatan in advance of the rest of Europe.

84. Additional documentation shows Pfizer’s knowledge about the violation of antitrust law in the case concerning the release of the new SPC in Italy and the extension of patent protection in September 2009 to July 2011, in view of the doubts of the company regarding the validity of the SPC obtained.

89. Fears about possible actions by Pfizer to prevent access to the market for generic drugs were confirmed in the letter, sent in July 2009 by an attorney of Pfizer to Ratiopharm, requesting not to introduce its drug in commerce…

90. The documents included in the file show that similar communications were sent to other producers of Xalatan equivalents. The purpose of these letters was to prevent latanoprost generics entering the market before the patent expiration in July 2011.

91. However, comments from employees of the company suggest that sending warning letters to generic companies before placing their drugs in the market has been practiced successfully by Pfizer in other circumstances… (should we expect new investigations?)

The effectiveness of this strategy appears to support Pfizer’s choice to use the same even with regard to drugs whose patents where to expire. In particular, with reference to four blockbuster products, the company aimed to further prolong the patent rights from two to three years.

113. … Following the listing of Ratiopharm and Sifi (May 2010) the sales of Xalatan have suffered a drastic reduction in volume of approximately 70%. This share has been gradually acquired a 50% to Sifi and the remaining 20% from Ratiopharm.

138. The evidence acquired during the procedure, described in detail above, fully confirm Pfizer's abusive behaviour.

139. This documentation proves the existence of Pfizer's strategy to artificially extend the patent protection of Xalatan in Italy from September 2009 to July 2011, in order to align it with other European countries, by requests - solely to this end - both the EP168 divisional patent in 2002 and the following SPC, requested in Italy in 2009.

144. Pfizer's exclusionary conduct aimed not only to defend the sales of Xalatan in the Italian market, but also to those made in the entire European market as a price reduction to the public in Italy (to effectively combat the entrance of genericis) would inevitably risk a drastic decrease in revenues from sales of Xalatan in other Member States due to import from Italy, via parallel trade.

198. Again demonstrating the exclusionary nature of Pfizer's request (reference is made to the SPC), is relevant to make reference to the absence of a new drug, which normally follows the divisional application. This shows that the company had no intention to launch a new drug, but only to exclude prostaglandin generics from the Italian market - regardless of the absence of a statutory obligation in this regard, a fact underlined by Pfizer –.

212. The exclusionary nature of Pfizer’s overall strategy can be also seen in the request made in January 2011, to obtain a further term of protection extension based on pediatric trials of Xalatan (up to January 2012).

With the release of the extension of patent protection, Pfizer appears to have obtained a new extension of patent rights on their drug, this time not only in Italy but in all EU countries (should the European Commission start an investigation?)

214. … testing for pediatric use of a drug, like Xalatan, used to treat a disease that typically affects old people, appears only as seeking further extension of patent coverage of the drug.

As evidence, the documents in the case shows that the pediatric trial is held by Pfizer a tool to use for all drugs for which patent is near expiration, not just those intended primarily for the treatment of diseases that may also cover the children.

217 It should be emphasized that the request to extend patent protection for pediatric use has been made by Pfizer in January 2011, after the revocation of the divisional application by the EPO in October 2010 - which led to the annulment of the SPC - and, then, after disappearing in Italy the legal basis on which that request was based.

225. … Finally it appears Pfizer’s intention to use the same strategy to defend next drugs to “expire” … (will the Italian Authority start new investigations regarding those drugs?)

231. Finally, it should be noted that despite the huge estimated losses from the decrease in sales of Xalatan on the Italian market, Pfizer believes that it can not lower the price in Italy. Such a choice, in fact, is considered extremely dangerous because, as a result of parallel trade, a price cut in Italy would inevitably be forced to adjust the price of Pfizer's Xalatan on other European markets with "high price", where the patent protection was guaranteed by the SPC until July 2011 (and subsequently extended to January 2012).

233 Pfizer's strategy has produced significant effects on the market.
First to mention is the delay with which generics have entered the market ... (will now companies affected file damages actions? And the Italian Government, taking in to account the excess paid through the national health system?)

245 Direct result of the Pfizer’s strategy is the damage suffered by the NHS in terms of lost savings on drug reimbursement prices as a result of delaying the entry of generics in the market. The data reported by Pfizer itself confirms that the amount of Xalatan sold in the period following the expiration of the patent in September 2009, was approximately 1.4 million units.
In view of the price difference of the reimbursement price by the NHS of drugs based on latanoprost before and after the entry of generics in the market, the lack of savings for the NHS can be estimated around Euro 14 million.

251. According to the Commission Communication 2004 / C 101/07 - Guidelines on the effect on trade between Member States concept contained in Articles 81 and 82 of the Treaty on OJ C 101/81 of 27 April 2004, the concept of effect on trade between Member States must be interpreted taking into account the influence, direct or indirect, actual or potential, on the pattern of trade between Member States.

252. In light of that legal framework the case falls under Article 102 TFEU - and integrates many cases of violation - given the fact that the conduct engaged in by Pfizer were eligible to restrict trade between Member States. In particular, the conduct in question has produced its effects on the entire Italian territory, which is significant part of the Community market and on which there are many multinational companies and international operators.

255… the conduct in question - delaying, for about seven months, the entry of generics on the market - has enabled Pfizer to continue enjoying a monopoly rent quantifiable up to about Euro 17 million - in view of the market share gained by generics in the first seven months of their entry on the market -".

E-Justice at the Bundespatentgericht

In every trial in patent matters at the Bundespatengericht (BPatG) this blogger has been attending to, there was sooner or later a situation where somebody tried to explain something by pointing at features of a figure in one of the documents. What happens then is that everybody leaves his bench or desk to bow over the document such that all of a sudden, the orderly procedure collapses and turns into a gesticulating crowd of at least six or seven technically qualified poeple trying to explain something.

This was one of the annoyances - besides of old cars and potholes on the German Autobahn - the Government attacked when trying to find possibilities to spend money on for its stimulus package in the begining of the still ongoing financial crisis in 2009. See infromation on the BPatG website and press release.

As of November last year, the Bundespatentgericht (BPatG) in Munich has provided two of its courtrooms with electronic equipment enabling the sharing of electronic documents between the parties and the judges. Furhter, there is a video camera mounted on a stand over one of the tables such that both a document and the finger of a person pointing on it can be filmed and displayed on the monitors provided at the judges bench, the attorney's desks and (a big one) on the wall.

After a report on GermanIP, pointing to the regretful situation that it is difficult for the parties to predict whether or not a particular trial will be held in a traditional courtroom or in the "electronic courtruoom", Presiding Judge Dr. Norbert Mayer (20th Senate and responsible for the BPatG's e-justice programme) has informed us that the 19th, 20th and 23th senates (Technical Appeals) use the electronic coutrooms (Rooms No. 6 and 4) on a regular basis. The 5th Senate (Nullity) uses one of the rooms if it is sitting with technical members of the 20th senate. Furhter information may be found in Dr. Mayer's article in "Mitteilungen der Deutschen Patentanwälte" issue 7/8, 2011.

The big courtroom ("Kapelle") in the 5th floor will be electronically equipped within this year and may be used (just as the Rooms 6 and 4) by other senates if necessary and if the room is available.

The Bar Organization of the German Paten Attorneys, the "Patentanwaltskammer" is about to organize an introduction to the new technical possibilities together with Dr. Mayer.

When the excuses have to stop

In Musion Systems Ltd v Activ8-ed Ltd and others [2012] EWPCC 5, a patent infringement action, Judge Colin Birss QC had to deal with an application to strike out a defence and counterclaim on the basis that the defendants had failed to pay a wasted costs order to the tune of over £45,000 following the previous adjournment of the trial.  In short, this was one of those uncomfortable situations in which you can more or less read the court's thought bubbles along the lines of "there's a dodgy and unreliable defendant here who is messing around but we can only operate within the rules -- the more's the pity".

The judge gave the defendants a further seven days in which to pay the wasted costs order, plus a further £9,000 costs in the claimant's application to date. From his judgment one can pick out some useful advice for defendants who want to string the court along and put off the dread day when they are sunk without trace.  Thus

• Don't tell the court that you are not available due to “other commitments” without telling the court what those commitments are;
  
• If you say you can't appear in court because you are ill, it might be worth giving some clue as to what your ailment is;
  
• Where you decline to appear by telephone "on advice", the court might just be curious as to (i) what the advice is and (ii) whose advice it is -- a doctor's, a lawyer's, a friend's or a telephone engineer's;
  
• It also helps to let the court know the grounds on which you propose to resist the patent owner's claims, other than saying that you haven't got any money -- and if you don't have money, it's a good idea to give the court some sort of evidence to that effect.

The Older the Better? Not in Bavaria!

In one of the less discussed cases (LG Muenchen 21 O 26022/11) in the never-ending series of litigations between Apple and Samsung, the Munich District Court has now rejected Apple's request for preliminary injunctive relief banning the sales of Samsung's Galaxy 10.1N and Galaxy Nexus mobile phone, as reported by Bloomberg.

The opposition period of the patent in suit had not yet expired. It is the established jurisdiction of the courts in Düsseldorf and Mannheim (as outlined e.g. here) that, with certain exceptions, only patents having been challenged and havig survied an opposition procedure or a nullity suit may serve as a suficciently certain basis for a preliminary injunction.

While the reasons of the decision are not yet published, Bloomberg reports at least an interesting Statement of the Munich Judge Müller:

"We don’t share the idea that young patents are less valuable than those who have survived for a longer period of time. We don’t think that would be in line with European rules of enforcing IP rights".

The injunction was not granted nonetheless because Samsung's attorneys were apparently successful in casting doubts on the validity of the patent. I guess that this decision will strongly increase the attractivity of the Munich court for patentees seeking preliminary injunctive relief based on "young" patents.

FRAND - Commission opens proceedings against Samsung

The European Commussion has announced to have opened a formal investigation against Samsung in the question whether Samsung's strategy seeking injunctive relief based on standard-relevant patents amounts to an abuse of a dominant position which may affect trade and prevent or restrict competition given that Samsung had given its irrevocable commitment  to license any standard essential patents relating to European mobile telephony standards on fair, reasonable and non-discriminatory (FRAND) terms.

PatLit had reported on a selection of the litigations in question e.g. here and here.

Meanwhile, Florian Müller reports on FOSS that Judge VOSS at the Mannheim District court has announced his decision reject Samsung's requests for injunctive relief in both pending cases despite of the suspicious attitude towards the FRAND defence used by Apple discussed in a previous post. However, the reasons for the decision are not yet available.