How to buy a patent-owner in mid-litigation

In Eli Lilly & Company v Human Genome Sciences, Inc [2012] EWCA Civ 1185 the Court of Appeal for England and Wales was retro-fitted with Sir Robin Jacob in order to return to tidy up some loose ends in the straggling litigation between Eli Lilly and HGS over the patentability of a invention where the patent correctly identified the polypeptide as a member of the TNF ligand superfamily, listing a long description of its activities and uses, but without any back-up scientific data to support a description which the trial judge (Kitchin J, as he then was) depicted as being not so much as a description as a prediction based on knowledge of other members of the TNF superfamily.

In short, Kitchin J held the patent invalid here in July 2008 for lack of industrial applicability, insufficiency and obviousness; the Court of Appeal unanimously upheld his decision in February 2010 here,on the industrial applicability point and did not rule on the other issues.  After the Supreme Court -- to the surprise of many and the dismay of quite a few -- reversed this decision, it remitted the case to the Court of Appeal, here, so that the question of insufficiency of three of the claims could be considered: two had been ruled insufficient at trial and HGS appealed, arguing that they weren't, while a third was ruled sufficient at trial and Eli Lilly appealed on the ground that it wasn't.

The Court of Appeal allowed HGS'a appeal and dismissed Eli Lilly's. The reasoning of the Court appears to be based on well-established principles of claim construction rather than on any ground-breaking principles of law.

The decision in this case have been music to the ears of GlaxoSmithKline, which purchased HGS only last month. The patent in this case, for Neutrokine-α, is said to have an important role to play in dealing with autoimmune diseases and B-cell cancers. While the purchase of a patent-based company while it is in the middle of protracted litigation is always a risk, the risk was minimised here by the fact that the case was, unusually, on its way down to the Court of Appeal following a ruling from a superior court rather than on the way up to it, which both limited the scope of the Court of Appeal's decision-making and made it easier for GlaxoSmithKline to refine its purchase plans.

Divided Federal Circuit Sidesteps “Divided Infringement” Issue: Induced Infringement Does Not Require Direct Infringement By Single Actor

One issue that has vexed courts and commentators for several years is whether a method claim may be infringed when all the required steps are performed, but by more than one entity. In an earlier case, BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), a panel of the U.S. Court of Appeals for the Federal Circuit held that a single defendant was liable for direct infringement, even if it did not itself perform all the required steps, when the acts were committed by the defendant’s agent or a party acting pursuant to defendant’s direction or control. See Mark Lemley, et al., “Divided Infringement Claims,” 33 AIPLAQJ 255 (2005). To consider conflicting views on the issue, the Federal Circuit recently granted en banc review in two consolidated cases.

On August 28, the court issued a sharply divided en banc decision in the cases. Akamai Techs, Inc. v. Limelight Networks, Inc., Case Nos. 2009-1372, -1380, -1416, and -1417 (Fed. Cir. Aug. 28, 2012). In a 6-5 decision, the court ruled that issues of divided infringement are better handled as induced infringement under 35 U.S.C. § 271(b), rather than direct infringement under § 271(a). In order to permit that approach to work, the court rejected its prior authority holding that induced infringement only exists when a single third party has committed direct infringement. Instead the court majority held that the induced conduct itself could constitute the required direct infringement, even if the required method steps were performed by two or more entities (or even in part by the defendant). Thus, even though a defendant did not direct or control others in performing the various steps, it could be liable as an infringer under §271(b) if (1) it knew of the patent, (2) it performed or induced third parties to perform the steps of the claimed method, and (4) the steps were all in fact performed. (Note that under the Supreme Court’s decision in Global–Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060 (2011), a patentee proving active inducement also must show that the defendant acted with actual intent to cause infringement (or, alternatively, with “willful blindness”).

Five judges dissented. Judge Newman accused the majority of ignoring the issue for which en banc review was granted (and the only issue briefed and argued), namely, the proper standard for direct infringement in divided infringement cases. Judge Linn, joined by three other judges, argued that the majority’s decision usurped the policy-making function of Congress by retooling § 271 in a manner inconsistent with a long line of prior authority. The opinions (all 100-plus pages worth) are available here.

Beware the US jury: two $1 billion dollar patent damage awards in August

PatLit is delighted to host a second guest piece by Marian T. Flattery (Finnegan), following the warm reception of her first post, on pay-to-delay, here.  Following the flood of comment on the Apple/Samsung damages award, Marian felt it only right and proper to let readers know that smartphone technology and design is not the only field of patent infringement in which billion-dollar awards are being made. She explains:

By now, everyone knows about the $1.05 billion patent infringement damage award Apple won against Samsung in the latest verdict in the smartphone wars (see IPKat here and here). Since transgenic crops are not as “cool” as the iPhone®, the $1 billion dollar damage award to Monsanto against DuPont/Pioneer earlier this month received less popular press coverage and analysis. But, the underlying facts and issues in Monsanto v DuPont and Pioneer raise some quite interesting questions. Particularly noteworthy is the fact that Pioneer did not sell even one infringing product.

Monsanto and Pioneer are fierce competitors in the crop seed business and Monsanto is known for relentlessly enforcing its transgenic crop patents, even against its own customers. Monsanto has also widely licensed its transgenic crop patents, including to competitors. Many of Monsanto’s transgenic crop patents relate to technology which makes the crops resistant to the herbicide glyphosate. In 2002, Monsanto and Pioneer entered into non-exclusive, royalty-bearing licenses which gave Pioneer the right to manufacture and sell soybean and corn seed with Monsanto’s patented glyphosate-resistance traits (RR). Pioneer subsequently developed its own glyphosate-resistant trait technology (OGAT), based on a different gene than Monsanto’s, and began to combine or “stack” Monsanto’s traits with OGAT in soybean and corn seed products. 

Monsanto filed suit, in its home forum - U.S. District Court for the Eastern District of Missouri, against Pioneer in 2009 for breach of contract, patent infringement, inducement to infringe and unjust enrichment based on Pioneer’s production of RR/OGAT stacked seeds. Pioneer counterclaimed for a declaratory judgment that the licenses allowed it to stack OGAT with RR and also asserted a number of antitrust counterclaims. In 2010, the judge ruled that the licenses did not permit stacking of a non-RR trait with Monsanto’s RR trait, although there was no explicit language prohibiting it, and the case proceeded to trial on the patent issues. 

On 1 August, after a three week trial, the jury took less than an hour to return a verdict that Pioneer had willfully infringed Monsanto’s US Patent No. RE 39,247, that the ‘247 patent was not invalid, and awarding reasonable royalty damages in the amount of $1 billion. Unlike the jury in Apple v Samsung, which awarded damages of $1,049,343,540 based on infringement of six patents by 28 Samsung devices, the jury in Monsanto v Pioneer did not have to calculate reasonable royalty damages based on sales because Pioneer never sold any OGAT/RR stacked seed. According to Monsanto, Pioneer expected to generate $3 billion revenue from the sale of OGAT/RR stacked seeds prior to expiry of the ‘274 patent in 2014. In fact, Pioneer made no such sales. In the absence of any infringing sales upon which to calculate royalties or lost profits, Monsanto argued that the unlicensed use of the OGAT/RR stacked products for research and field testing gave Pioneer an unfair head start in producing these seeds prior to patent expiration. There is only a de minimis research use exemption in the U.S. and this case shows that patent damages for research use can be significant.

DuPont/Pioneer immediately announced that it would appeal to the U.S. Court of Appeals for the Federal Circuit and this damage award will be closely scrutinized. Prior to August 2012, there had been only three patent damage awards of over $1 billion in the U.S. The two biggest awards, $1.67 billion against Abbott Laboratories in 2009 and $1.52 billion against Microsoft in 2007, were overturned by the Federal Circuit on appeal. The only other $1 billion+ award was $1.2 billion in 1993 against Honeywell in a case that ultimately settled for $440 million.

Monsanto v Du Pont and Pioneer: more information here

Here comes The Patent Lawyer Magazine

The Patent Lawyer Magazine is a new title from Legal Business Media. You can read about it here and click here to take a look at the pilot issue. Sadly, Angelina Jolie's contribution is largely limited to the front cover -- she hasn't written any articles for the new journal and isn't even on the editorial board (though she does briefly reappear on page 17). But that's no reason not to take any further interest in it.  As the publishers explain:

"The Patent Lawyer Magazine is a special focus international legal publication that focuses solely on the patent industry, patent lawyers and patent law firms.

The magazine is packed full of information, special features, interviews, case comments, special country focus, patent litigation roundup, service provider focus, patent people moves, company press releases, recruitment, inventor section and a dedicated patent directory of services.

The aim of The Patent Lawyer Magazine is to fill the gap in the market for a dedicated magazine that exclusivly focuses on patent law, patent lawyers, inventors and those specialist companies that provide patent related services.

The Patent Lawyer Magazine will be sent via hardcopy and online to over 10,000 recepients including in-house Patent Lawyers, Private Practice Patent Lawyers, C Suite Executives within large pharmaceutical and technology companies around the world.

The launch issue will be published in September 2012 ...".

Transferring a revocation action to a junior court: ERT

Environmental Recycling Technologies plc v Stillwell, Rodlsburger and Upcycle Holdings Ltd is a decision of Mr Justice Warren (Patents Court, England and Wales) of 13 July which has not really hit the headlines (the full text is not on BAILII, though this is hardly surprising since the judgment was extempore). Fortunately the decision was briefly noted on the Lawtel subscription-only service.  Despite its relative obscurity, this decision reflects on when it is appropriate to transfer an action for revocation of a patent from the [more formal and expensive] Patents Court to the [cheaper and more cheerful] Patents County Court (PCC) on account of (i) the parties' financial positions, (ii) the simplicity of the case and (iii) the low value of the dispute.

Essentially, Stillwell and Rodlsburger owned a patent for a process for moulding plastic articles. ERT issued proceedings in the Patents Court for revocation. Stillwell and Rodlsburger assigned the patent to a company, Upcycle, which ERT joined to the proceedings. After some delay, Stillwell and Rodlsburger applied to transfer proceedings to the PCC. ERT was not enthusiastic about this. But what did the court say? Granting both the applications sought, Warren J noted that, while the financial position of the parties was an important factor to take into account it didn't determine by itself whether to transfer the action to the PCC -- and the mere fact that a party could afford to pay any High Court costs that might arise didn't mean that the action had to heard in the High Court.

He also noted that there were often competing and irreconcilable matters in relation to costs. In court cases the winner got their costs -- and in tribunal hearings each party had to bear its own. Although cost-capping in the PCC was the middle ground between the two approaches, it was no more right or wrong than shifting the costs to one party or another.

In Warren J's view, access to justice did not mean that it was right to keep a case in the Patents Court because one party felt that it would be denied justice due to on account of costs-capping in the PCC. Regardless of whether Stillwell and Rodlsburger had transferred the patent to Upcycle for the purpose of tax avoidance was neither here nor there: their actions had not been unlawful and the case could not be retained in the Patents Court on that basis.

Ultimately, in the judge's opinion, neither Stillwell nor Rodlsburger could afford High Court costs -- despite the loans made and overseas properties which ERT demonstrated to exist -- and it should be appreciated that an application to transfer a patent revocation dispute from a more costly forum to a cheaper one was not intended to be a trial of the parties' assets.

In reality, held Warren J, this case was not a complex one; the only issue to be decided was revocation, and in light of the case management conference that had already taken place, the need for lengthy discussion was questionable and the PCC would likely deal with the case in two days. The value of the claim was low, being valued at £10,000, which also pointed to a PCC trial.

Significantly, the applicants had to accept that the costs to date would have to be on the higher High Court scale and that their application for transfer should have been made more promptly.

Finally, there was no reason for  Stillwell and Rodlsburger to remain party to the action. Since they had passed the patent on to its new owner, Upcycle, no relief was actually being sought against them -- though, in the event that ERT won the trial and became entitled to costs, it could apply to join Stillwell and Rodlsburger at that stage.

Pharmaceutical, Biotechnology, and Chemical Inventions: a book review

A while back, PatLit posted a notice to the effect that Pharmaceutical, Biotechnology, and Chemical Inventions, edited by Duncan Bucknell, had been published by Oxford University Press -- but it wasn't really a review. That omission has now been made good by Darren Smyth (EIP), who has kindly given this work a rather closer, practitioner-oriented inspection.  This is what Darren has to say:

"This is a most useful and welcome book that is crammed with the sort of comparative information that the internationally-minded patent practitioner (and client thereof) often seeks.

When presented with this – well – it can only be described as a magnum opus in both senses and with an emphasis on the magnum, my first thought was to paraphrase Dorothy Parker “four two volumes, neatly boxed bound, suitable for throwing purposes”. The rupture factor is huge – the pages of a novella at least (comprising the contents, and tables of cases and legislation) before we get to the page which mendaciously purports to be “1”. Then each of the two volumes has around 1,100 pages of real content before wearily giving way to the indices.

Yet the appearance is doubly deceptive. First, each chapter (of which there are 100) is of a perfectly accessible length, not off-putting at all. And secondly, the tomes turn out to be very little restricted to the fields of the title, and are actually a review of patent and related law in general. Much of it (bearing titles of such topics – hardly specialist - of “novelty”, “inventive step”, “technology transfer arrangements”) would be of interest to, and completely accessible to, practitioners in any field of technology.

Naturally, there are chapters which are more specifically focused on the stated field – chapters on drafting bioscience patents and pharmaceutical patents respectively; on patent term extensions and supplementary protection certificates; and extensive sections on regulatory approval and data exclusivity.

The approach taken in this work is that the 15 sections (including: obtaining patent rights, the period of monopoly, patent validity, amendment, invalidity proceedings and strategy, infringement, defences to infringement, patent litigation strategies, regulatory approval, data exclusivity, competition law, and other IP rights) are each divided into chapters. For example, the infringement section has chapters called Infringing Acts and “Literal Infringement”, Infringement by Equivalents/Non-Literal Infringement, Indirect Infringement, Infringement Proceedings, Remedies for Patent Infringement, and Restrictions on Remedies. Each chapter then consists of an essay on that topic for each jurisdiction of Australia, Canada, China, India, Japan, United States, Europe (overview), France, Germany, Italy, Netherlands and the United Kingdom. Each national essay is written by a contributor from that country, and the individual voices of the different authors are clearly maintained. The essays on the same topic in respect of different countries adopt a different internal structure (presumably originating from the contributor). While this is inevitable in view of the way the work was created, it does mean that a piece of information which is supplied in respect of one jurisdiction is not necessarily supplied in respect of another, and, even if supplied, is not always easy to locate. The list of contributors is lengthy and impressive, and the mere creation and assembly of this work is of itself a monumental exercise. Duncan Bucknell is therefore credited as “Editor” rather than “Author”.

Surprisingly given the OUP pedigree, the book is not completely free from typographical errors. However, this is a minor quibble. A more significant quibble is that the writing style of some of the authors can sometimes be difficult to follow, and the sections written by non-native English speakers could often have benefitted from greater editorial intervention.

Books of this type, compiling comparative expositions of the law from multiple jurisdictions, are familiar in loose-leaf format, and it is perhaps surprising that a non-updatable conventionally hardbound presentation has been chosen. It goes without saying that some of the content of the work is already out of date.

I do not expect that the editors or contributors expected that anyone would sit down (or for that matter adopt any posture) and read the whole work cover to cover. This is a work to dip in and out of, and to consult. For the purposes of consultation, however, the index is not as extensive as would be helpful – it is suspiciously short for a reference work of this length, and key terms (such as “diagnosis”) are missing. Some parts of the book have been a joy to read and were clearly set out. Some parts were rather clunky (for example the treatment of the exclusion from patentability under Art 53(c) EPC in Europe Overview on page 514 ff, which was also unduly influenced by the pre-EPC 2000 formulation of this exclusion as relating to industrial applicability. It was also surprising that this section did not reference the seminal decision G1/04 in the discussion of diagnostic methods, referring to it instead in the Netherlands section).

Overall, this is an impressive book with an expansive coverage which is jolly handy to have around, but could have done with more work on the detail".

Further details of this massive work can be found on its web page here.

Pay-to-delay: settlements can cause litigation too

PatLit is delighted to welcome Marian T. Flattery to its readers. Marian is a seasoned patent practitioner at the distinguished practice of Finnegan; she has also guest-blogged for the PharmExec weblog.  You can read all about her here.

Marian has been invited to do some guest blogging for PatLit. Her first piece is on a topic which brings together strands of patent law and the regulation of competition: pay-for delay.  Marian writes:

Pay-For-Delay Patent Settlements Back in the News 

The legality of “pay-for-delay” patent settlements between name brand drug companies and generic drug makers is making news on both sides of the Atlantic. A pay-for-delay settlement is a patent litigation settlement in which a name brand drug company pays a generic drug maker to delay market entry. The European Commission has brought two pay-for-delay cases in recent days. While in the U.S., one U.S. circuit court expressly declined to follow an earlier sister court decision on two such settlements, thereby creating a split among the circuits as to what test to apply to evaluate the legality of pay-for-delay settlements.

In In Re: K-Dur Antitrust Litigation (3rd Cir., July 16, 2012), the 3rd Circuit rejected the “scope of the patent test” for analyzing the legality of pay-for-delay patent settlements. Under a new test announced in In Re: K-Dur, any payment from a drug company patent holder to a generic patent challenger who agrees to delay market entry must be treated as prima facie evidence of an unreasonable restraint of trade, which could be rebutted by showing that the payment (1) was for a purpose other than delayed entry or (2) offers some pro-competitive benefit.

Over seven years ago, the same two patent settlement agreements at issue in In Re: K-Dur were held not to be an illegal restraint of trade in Schering-Plough Corp. v. FTC, 402 F. 3d 1056 (11th Cir. 2005), cert. denied, 548 U.S. 919 (2006) under the “scope of the patent” test adopted by the 2nd, 11th and Federal Circuits. The scope of the patent test permits reverse payments from a drug company patent holder to a generic patent challenger so long as (1) the exclusion does not exceed the patent’s scope, in time or subject matter; (2) the patent holder’s claim of infringement was not objectively baseless; and (3) the patent was not procured by fraud on the USPTO.

In Re: K-Dur is the first time the 3rd Circuit has weighed in on the legality of pay-for-delay patent settlements and represents a significant break from prior decisions of its sister courts. It also creates a new plaintiff-friendly forum for private parties and the FTC to challenge the legality of pay-for-delay patent settlements between name brand drug companies and generic challengers. This 3rd Circuit decision is a victory for the FTC, which has long advocated that reverse payment or pay-for-delay settlements are illegal agreements in restraint of trade, and likely sets the stage for the U.S. Supreme Court to address the legality of such settlements.

A little bit about PatLit -- and how you can help

This coming September, PatLit will be four years old. Led by a small team of regular bloggers and supplemented from time to time by guest posts, PatLit has always focused on dispute resolution issues within patent law -- mainly litigation (as the name PatLit implies) but not excluding alternative dispute resolution mechanisms where appropriate.

You too can write
for PatLit ...

PatLit is driven by enthusiastic writing, not by commercial advertising or law firm sponsorship, and always welcomes news and views on patent dispute resolution, regardless of the jurisdiction. We'd like to hear from more countries where information about patent litigation is quite a rare event, as well as from jurisdictions in which it's almost a way of life. If you have a little spare time this summer and would like to put it to good use in writing, serious weblogs -- of which PatLit is just one of a large number -- are a good place to be seen. Unlike conventional professional and academic journals, weblogs offer instant access to a readership and the chance to indulge in some interactive debate. They don't have to go through a lengthy production process which often renders them of largely historical interest by the time they're published, and they are easy for prospective readers to search and find online.

For the record, at the time this piece was prepared for posting, PatLit was read by 1,076 "opt-in" email subscribers -- that's people who request to receive it, not people who are mail-bombed against their will.  There are also over 360 RSS feeders.  So far this calendar year, PatLit's pages have also received over 30,900 visits. Visitors have come from 127 countries, the bulk being from Northern Europe, North America and India.  The blog currently hosts 563 searchable items which include case notes, reports on patent law amendment, book reviews and opinion pieces.  The side bar also contains occasional information about forthcoming conferences and events, and sometimes of special registration discounts for PatLit readers.

This summer PatLit looks forward to welcoming readers to a couple of fresh guest bloggers who, if well received, will have the chance to join the team on a permanent basis. If you'd like to try your hand at some blog writing too, please email me here, giving me some information about your patent dispute resolution background and the jurisdiction(s) with which you are familiar.

Will unified patent litigation affect the generic medicine market?

A short note in this week's PLC IT & Communications round-up drew my attention to the fact that the European Commission has published a report on its third monitoring exercise into patent settlements in the pharmaceutical sector, covering the period January to December 2011. According to this note

"... The Commission has found that the number of concluded settlements has increased over the last three years. ... [T]he vast majority (89%) are prima facie unproblematic in competition terms. However, there was an increase in potentially problematic settlements during 2011 (although the overall level remains low). The Commission considers that this shows that there is a continuing need for it to continue to examine such patent settlements ..."

The Europa press release adds this comment:

"The Commission had also recommended to introduce an EU patent and a unified specialised patent litigation system in order to improve the fragmented patent system which currently causes legal uncertainty in patent disputes all over the EU, particularly as regards medicines, thus possibly contributing to delays of generic market entry. The Commission welcomes the progress made on the creation of a unitary patent system as well as a corresponding patent court".

More information concerning the report can be found in or via the Europa press release here.

Strategic use of UK disclosure aids Danisco in EPO rulng

Via Jason Costa comes news of victory for Danisco before the European Patent Office (EPO) in its long-running dispute with Novozymes.  Both are Danish biotech businesses that are engaged in enzyme manufacture. In these proceedings Danisco revoked one of Novozymes’ European patents for coated animal feed enzymes, which had been asserted by Novozymes in Denmark, Germany, the Netherlands and the United Kingdom (with proceedings under related utility models in Finland). PatLit reported here on proceedings between the same companies in England and Wales in June of this year.


According to the information received:

"The EPO revocation was based in part on Novozymes’ own documents (obtained by disclosure in the United Kingdom and released for use in the EPO by the Patents Court for England and Wales), which undermined Novozymes’ submissions in the EPO. This revocation restores the ability of Danisco -- acquired by DuPont in May 2011 -- to engage in commercial activities in Europe and provide customers with innovative solutions in the animal feed business.

Disclosure!

This decision sheds light on the discussions concerning the impending unitary patent in Europe, because it emphasises the importance of UK-style disclosure in determining the validity of commercially important patents. Novozymes initially refused to allow the documents to be used in the EPO.  However, the decision of the Patents Court at [2012] EWHC 696 (Pat) [this is not yet available online on BAILII] made the crucial documents available. The Patents Court and Court of Appeal initially refused to make the documents available to the EPO, but this position changed after Novozymes was held to be at fault in requesting a late adjournment of the UK trial. The decision also indicates the speed with which the EPO can decide accelerated proceedings: the patent was granted on 11 November 2009, opposed on 30 March 2010, revoked by the Opposition Division on 7 July 2011 and finally revoked by the Technical Board of Appeal on 29 June 2012 (31.5 months from grant to final revocation)".

This does not mean that the matter is at an end:

"Danisco will also seek compensation for the damage caused by a preliminary injunction originally obtained by Novozymes in Denmark. On May 25, 2012, before the Technical Board of Appeal revoked the EP'592 patent, the Eastern High Court in Copenhagen had revoked that preliminary injunction and ordered Novozymes to pay Danisco 1.5 million DKK (Danish kroner) in legal costs".

Incomplete Knowlege and Prior Use Rights

The prior use defense in patent litigation requires possession of he invention. But how much do you have to know? German Federal Supreme Court (BGH) has issued a decision (BGH Desmopressin X ZR 131/09) addressing this question.

Germany has the reputation of having an easily satisfied possession standard. In Germany, activities that constitute prior use include “use of the invention” and making “substantial arrangements to do the same.” A party asserting the defense must show actual possession of the invention. Possession of the invention means that the asserting party must have recognized the problem and its complete solution according to the invention both objectively and subjectively as well as the possibility to intentionally exploit the invention.

The case at issue in X ZR 131/09 was a utility model relating to a pharmaceutical composition containing an oxidizing agent. Claim 1 required the content of the oxidizing fall short of a certain upper threshold. According to the specification, the low content of oxidizing agent leads to an extended use-by date.

The defendant was able to prove that he had used a recipe inevitably leading to a composition falling under claim 1 but could not prove his subjective knowledge of the relation between the content of the oxidizing agent and the use-by date.

The BGH considered this sufficient. The second headnote reads (in translation):

“The subjective knowledge required for the possession of the invention exists when the activity is methodically directed to the realization of a technical teaching realizing all the features of the subject-matter of the invention (here: a certain recipe of a pharmaceutical composition). It is irrelevant whether or not the acting person has knowledge of effects being related to the realization of the subject-matter of the invention according to the specification (here: that the consideration of an upper limit for the content of oxidizing agent leads to an extended use-by date).”

In the reasons (margin number 18), the court argues that the possession of the invention can not depend on preconditions which did not become part of the technical teaching as defined in the claim. Accordingly, the knowledge of effects mentioned in the specification but not incorporated in the claim may not be decisive for the possession of the invention.

Patent professionals as expert witnesses? Not a good idea in Malaysia

An interesting issue arose recently in the Kuala Lumpur High Court, Malaysia, in Ronic Corporation v Cadware Sdn Bhd (D5-22IP-74-2010), an infringement claim and invalidity counterclaim in respect of a patent for a 'device for sensing and alarming the absence of water in a home machine for manufacturing soybean milk, watery bean curd and bean curd", the patent disclosing a circuit used for sensing and sounding an alarm when the absence of water is sensed.

The issue of invalidity was heard first and the defendant invoked as its expert witness a practising patent agent.  The expert evidence on the other side was supplied by an engineer specialising in electronics engineering and a professor specialising in the field of electrical engineering, brought in from Korea.

Holding the patent to be valid, the court expressed the view that the expert called by the defendant was not a person skilled in the art, as such a person must have a practical interest in electronic circuits in his or her day-to-day work (ie an engineer specialising in electronics or similar). A patent agent cannot be considered to have practical interest in the matter, said the court, as he or she would not have considered the invention at all, had he or she not been called as a witness in this case.

Source: "High Court upholds validity of patent and dismisses defendant's challenge", Contributed to International Law Office by Michael Soo and Wendy Lee (Shook Lin & Bok, Kuala Lumpur).

Matching of expert evidence to a patent's hypothetical addressees

Yesterday's ruling of Mr Justice Arnold (Patents Court, England and Wales) in Generics [UK] Ltd (t/a Mylan) v Yeda Research and Development Co Ltd & Another [2012] EWHC 1848 (Pat) is a lengthy but well-structured decision with three pages of contents to help the reader navigate its contents. A short note on it can be found on the IPKat here.

This post just picks up one small point: the treatment of expert witnesses. In this trial, as in many, a great deal of attention was paid to the nature of the addressee of the patent of which the validity was in contention and to the expert evidence that was to establish their state of knowledge and understanding.  Arnold J handled these issues like this at [81] to [82]:

"... there is no fundamental dispute as to the identity of the skilled team to whom the Patent is addressed, but there are certain differences as to the level of expertise of some members. Broadly speaking, it is agreed that the skilled team would comprise the following:

i) Someone with an interest in the treatment of MS. This person is likely to be a clinician by training, although a clinical qualification may not be essential.  ...

ii) Someone with experience in assessing the adverse effects of drugs in both in vivo tests such as the mouse lethality assay and in vitro tests .... This person is likely to be a toxicologist by training, although a toxicological qualification may not be essential. ...

iii) A synthetic chemist with expertise in synthesising polydisperse polymers.

iv) An analytical chemist with expertise in amino acid analysis.

v) An analytical chemist with expertise in SEC".

Regarding the experts put forward by the parties the judge observed at [85] to [86]:

"The expert witnesses called by the parties do not precisely correspond to the five disciplines I have identified as comprising the skilled team [ahead of trial it might not be fully possible for the judge to identify with certainty the components of a skilled team but, in an ideal world, it would be great if the parties could go away and choose their experts in accordance with a list of disciplines identified before trial, at the case management stage]. Furthermore, there is not a precise correspondence between Mylan's witnesses and the Defendants' witnesses, in particular since one of the Defendants' witnesses did double duty as discussed below. Yet further, there is some overlap between some of Mylan's witnesses. Still further, both counsel submitted that a witness called by the other side possessed greater expertise on a topic than another witness called by that side. Nevertheless, for convenience I will put the experts into pairs based on the skilled team....

... a general point which is convenient to note here is that a number of the experts had previously given evidence in the US proceedings. Both counsel submitted that the other side's witnesses who had done so had become entrenched in their views as a result. I think that there is some truth in this, and I have borne this factor in mind in assessing the relevant witnesses' evidence [again, in an ideal world, it would be good if both parties had to share a single expert on each issue that required expert evidence, as happens in some other areas of civil litigation, but it is generally insisted by patent lawyers that this is both impossible and workable. It would be good to revisit this issue]".

Unitary patent: discussion to resume this autumn

No more Parliamentary discussion
till the leaves begin to fall ...

Micaela Modiano (Modiano & Partners) has kindly forwarded to PatLit this link to the press release relating to yesterday's meeting of the Legal Affairs Committee of the European Parliament regarding the proposal to delete certain articles of the draft regulation on the creation of the unitary patent so as to avoid certain referrals to the Court of Justice of the European Union.

 As Micaela observes, the outcome is that "The committee will discuss the issue with Parliament's legal service again after the summer recess, possibly in September" -- a further delay.

PatLit is of the opinion that each delay, postponement and rethink is most likely to result in more focused thinking on the problems which the proposed solutions appear to be causing.  It's just a pity that the early stages were, relatively speaking, so rushed and that they paid so little attention to the accumulated experience of a large number of practitioners.

Trials and timing: the need to be realistic

This week's ruling by Mr Justice Floyd (Patents Court, England and Wales) in HTC Europe Co Ltd v Apple Inc [2012] EWHC 1789 (Pat) has attracted a good deal of attention (there's an excellent analysis of it by David Brophy here on the IPKat). This post seeks to draw the attention of PatLit readers to just one issue: .  Said Floyd J, towards the end of his epic judgment:

"360. At one point the present trial was estimated at 6-8 days [it eventually required 14 days in court]. This was, or became, a seriously inaccurate estimate on any basis. There were four patents in issue, all of obvious commercial importance to both parties. HTC, for their part, were relying on several documentary prior art citations per patent, as well as attacks based on prior use and the common general knowledge alone. The technology involved was not all entirely straightforward. Apple, for their part, were relying on independent validity of multiple sub-claims. Both parties filed voluminous expert evidence, generally three reports from each of three pairs of independent experts. The parties wished to cross-examine the opposing experts on this extensive material. The parties also estimated that the court could get on top of this material in two days, later collapsed to a day and a half because of a need for an expert to return to the United States. This time estimate was also completely unrealistic. A longer time estimate for reading does not cost the parties anything [not in terms of the trial -- but the real cost is arguably in the marketplace, where the speedier conclusion of invalidity or infringement proceedings can have financial repercussions both for the litigants and for third parties]. In the result the trial had to be interrupted to allow me more time to read and understand this material. This is highly disruptive.

361. The court will always be sympathetic to attempts by parties to resolve patent disputes with strict limits as to the number of citations and claims, the evidence which may be adduced, and the time which is to be taken in court with cross examination and speeches. Very careful consideration needs to be given to match reading time estimates and trial estimates to the way in which the case is in fact being conducted.

362. Finally, this is a case where there should plainly have been a pre-trial review in accordance with the guidance in the Chancery Guide. The guidance in paragraph 3.20 is only mandatory in the case of cases lasting more than 10 days, but applies in other cases where the circumstances warrant it. The parties should have appreciated that the present case would last 10 days or more. Moreover, and in any event, the circumstances of the present case plainly warranted a pre-trial review [this blogger is a great believer in the virtues of rigorous pre-trial review, firm case management and anything which can make the current system more efficient and less expensive without the need for law reform]".

ACTA: Not yet born and already gone

As the European Parliament web pages informes (here):

The Anti-Counterfeiting Trade Agreement (ACTA) was rejected by the European Parliament on 4 July 2012, by 478 votes to 39, with 165 abstentions. Parliament could not amend the ACTA, but only approve or reject it. Its rejection means that neither the EU nor its individual member states can join the agreement.

Reasons for rejection mentioned:

"In so doing, it followed its International Trade Committee, which recommended on 21 June, by 19 votes to 12 with no abstentions, that Parliament should indeed reject it.

Four other committees had also delivered opinions suggesting that ACTA should be rejected : the Industry, Research and Energy Committee (rapporteur Amelia Andersdotter, Greens, SE), the Legal Affairs Committee (rapporteur Evelyn Regner S&D, AT), the Civil Liberties, Justice and Home Affairs Committee (rapporteur Dimitrios Droutsas S&D, EL) and the Development Committee (rapporteur Eva Joly, Greens, FR).

On 19 June the Petitions Committee debated 5 petitions from citizens calling on MEPs to reject ACTA, one signed by over 2.8 million people from all over the world. The 5 petitions were kept open, meaning that citizens will continue to have a clear means to appeal if they feel that ACTA does not comply with EU law.

On 25 April 2012 David Martin, the MEP responsible for steering ACTA dossier through Parliament, presented his recommendation for the European Parliament to reject ACTA. He referred to concerns of unintended consequences of the ACTA, text specifically on individual criminalisation, the definition of “commercial scale”, the role of internet service providers and possible interruptions in the supply of generic medicines.

"The intended benefits of this international agreement are far outweighed by the potential threats to civil liberties. Given the vagueness of certain aspects of the text and the uncertainty over its interpretation, the European Parliament cannot guarantee adequate protection for citizens' rights in the future under ACTA. Your rapporteur therefore recommends that the European Parliament declines to give consent to ACTA", he said".

As Jeremy pointed out a couple years ago (here) “ACTA is a good deal less radical, and much less sinister, than had at first been feared in result of the exclusionary and secret manner in which it was initiated and originally drafted”. Why has then been rejected? I would say that the secrecy in its creation has driven to this result. ACTA final version here European Parliament Press release here

More details on the "EU Patents Package"

Laurent Teyssèdre, editor of Le Blog du Droit Européen des Brevets was the first to report more details on the “EU Patents Package”. Here is the portion of the decision of the European Council which is the most interesting for us:

3. Heads of State or Government of the participating Member States agreed on the solution for the last outstanding issue of the patents package, namely the seat of the Central Division of the Court of First Instance of the Unified Patent Court (UPC). That seat, along with the office of the President of the Court of First Instance, will be located in Paris. The first President of the Court of First Instance should come from the Member State hosting the central division.

Given the highly specialised nature of patent litigation and the need to maintain high quality standards, thematic clusters will be created in two sections of the Central Division, one in London (chemistry, including pharmaceuticals, classification C, human necessities,classification A), the other in Munich (mechanical engineering, classification F).

Concerning actions to be brought to the central division, it was agreed that parties will have the choice to bring an infringement action before the central division if the defendant is domiciled outside the European Union. Furthermore if a revocation action is already pending before the central division the patent holder should have the possibility to bring an infringement action to the central division. There will be no possibility for the defendant to request a transfer of an infringement case from a local division to the central division if the defendant is domiciled within the European Union.

We suggest that Articles 6 to 8 of the Regulation implementing enhanced cooperation in the area of the creation of unitary patent protection to be adopted by the Council and the European Parliament be deleted.

I think that it is in particular the last paragraph that will cause a collective sigh of relief in the community. Finally, the constant criticism by the experts in the field (see e.g. Professor Krasser's opinion and Sir Robin Jacob's opinion) has been successful despite of the deplorable lack of transparency (see J. Pagenberg's letter here). While I think that the role of the blogosphere is still small, I think that the great efforts of the AmeriKat Annsley Merelle Ward to keep us infromed might have contributed to this late turn of events. Thanks a lot for this!

Laurent also gives details on the time schedule. The new system shall be up and running on April 1, 2014 ;-)

Disapplying the costs cap

An expensive cap ...

A recent Patents County Court for England and Wales (PCC) decision of Judge Birss QC which has not yet reached the BAILII case law database is the subject of a short but informative newsletter from Hogarth Chambers. The case is Polymer v D S Smith, in which Richard Davis of Hogarth Chambers appeared for the claimant. According to the newsletter

"... the claimant sued for patent infringement and the defendant counterclaimed for invalidity. The patent in issue had previously been granted a certificate of contested validity by the Comptroller, and the question arose as to what, if any, impact this had on the PCC cost cap.

Section 65 of the Patents Act 1977 (“the 1977 Act”) sets out that where a certificate of contested validity has been granted by “the court or the comptroller” following proceedings where the patent was held to be valid or partially valid, then if the validity of the patent is again challenged in subsequent proceedings, the party relying on the validity of the patent is entitled to his costs on an indemnity basis.

CPR 45.41(2) [note for first-timers and non-British readers: CPR stands for Civil Procedure Rules] disapplies the cost cap in the PCC where (a) the court considers that a party has behaved in a manner which amounts to an abuse of the court’s process; or (b) the claim concerns the infringement or revocation of a patent or registered design, the validity of which, has been certified by a court in earlier proceedings.

HHJ Birss QC held that the term “a court” is to be interpreted liberally, i.e. the exclusion in rule 45.41(2)(b) applies where the certificate of contested validity was granted after invalidity proceedings either before a court or the comptroller.

Furthermore ..., as regards the implication of costs, the exclusion in rule 45.41(2)(b) regarding the costs cap and scale fees applies to the costs of both the patentee and the defendant. The judge did not accept the claimant’s contention that the rule should be interpreted purposively for the benefit of the patentee who has already succeeded in a previous invalidity challenge to his patent.

The judge held that the rule is to be interpreted such that there is no costs cap on either party. This did not deprive the party having such a certificate of any benefit litigating in the PCC since it would still have the advantage of the PCC’s procedural approach. Moreover, as in the High Court, the patentee can recover indemnity costs pursuant to s.65 of the 1997 Act.

... HHJ Birss QC made clear that his court was not a small claims court and it was appropriate for medium sized business to litigate before it".

This is just one of a number of recent decisions focusing on curbing the cost of IP litigation in England and Wales. The same newsletter also brings news of rulings relating to copyright and trade mark infringement proceedings.

UK Blocks the Unified Patent Court

The Financial Times reports that the "patent deal" which was supposed to be agreed upon at the EU summit today was blocked by the UK.

The constant criticism of the experts in the field, which had found their way into the report of the UK Scrutiny Commitee, appear to finally have reached Mr. Cameron, who surprisingly made a gleam of reason shine in this discussion. As the FT reports:

Mr Cameron offered to withdraw his call for the court to be in London if the European Court of Justice – the EU’s highest court – were stripped of ultimate jurisdiction over Europe’s reformed patent system.

This offer was preceded by van Rompuy's proposal to split the court into three parts - the central division being located in Paris and two other divisions in London and Munich respectively and by a Franco-German deal to cut out London, which was allegedly agreed by Mr Hollande and Ms Merkel on Wednesday night (see the FT article).

Latest News: As reported on the IPKat and here (via the reliable german press ageny DPA), van Rompuy's compromise has now been adopted. Further, according to this source, the London branch will deal with the administrative matters and the substantive jurisdiction will be distributed based on the technical field over the 3 cities.

Oral Proceedings before the EPO: event for fledglings

"Oral Proceedings at the European Patent Office" is the title of Management Forum's forthcoming course on that very subject, to be held at the Rembrandt Hotel, London, on 9 and 10 July. As the organisers explain:

The course has been designed for people who are facing their first EPO Oral Proceedings and are rather apprehensive about it, and also for people who have done it before but would like to learn how to do it better. After some tuition and guidance all the delegates are given a patent and have to prepare and present their case (defence and attack) in a court setting, and also experience what it’s like to sit on the Board.

Not surprisingly, participants feel that it’s much better to try out their fledgling advocacy skills for the first time in a safe environment, and without clients’ money at stake! The seminar leaders are Dr George Woods, formerly of the EPO, and William Chandler, a current EPO Appeal Board Member.

Management Forum have kindly offered a 15% discount on the course fee to readers of the IPKat weblog, but the Kat thinks it is more likely to benefit readers of PatLit -- particularly those who are involved in the cut-and-thrust of oppositions and have to deal with real live protagonists as well as the Board itself.  If you want to know more about the programme you can find further details from Management Forum's website here.  To get the benefit of the IPKat readers' discount, please quote code JL30 and be prepared to go "miaow" if challenged.

Mediation, expansion of Opinion service, are open for consultation

Fiction: the disputants are angry,
the mediator is happy. Reality?
The mediator can get fairly
frazzled too ...

There's a new consultation on plans to expand the UK Intellectual Property Office's Patent Opinions service -- a reasonably priced, good quality and surprisingly little used means of getting an expert opinion on the validity of a patent or its scope of protection which can assist greatly in the decision to bring an action -- or to defend one.

There are two sets of proposals on the table: one is for the expansion of the Patent Opinion service to cover supplementary protection certificates (SPCs) for pharma and agrichemical patents. While it seems quite illogical to exclude them, I doubt that the availability of this service would  make much difference in practice to whether SPC-related litigation was launched or not.  The other set of proposals relates to an SME-directed Mediation Service.  According to the BIS web page:

"The Intellectual Property Office (IPO) ... set out proposals to expand its Patent Opinions Service and is seeking views from business on how to improve its Mediation Service.

The Government is committed to providing SMEs with the economic environment and framework they need to grow. The Hargreaves Review identified a number of barriers facing SMEs trying to making the most of their Intellectual Property. One of these was the cost of managing IP, in particular resolving disputes surrounding the enforcement of their own IP rights and defending themselves against allegations of infringement made by others.

...  The IPO’s Patent Opinions Service allows individuals or companies to request an opinion on the validity or infringement of a patent and is well used. A review of this service demonstrated a high desire from users for expansion of the service to aid resolution of further patent disputes. Government is now consulting on the following proposal:

• expanding the questions relating to patent validity that can be the subject of an opinion; 

• expanding the service to offer opinions as to whether a Supplementary Protection Certificate ('SPC') is valid or is infringed; 

• giving the IPO the power to consider revoking a patent following issue of an opinion which concludes it is invalid.

The IPO provides a Mediation Service to any parties involved in an IP dispute who wish to resolve matters without resorting to the Courts. However, uptake of this service is low and the IPO is therefore seeking comments and supporting evidence from key stakeholders and IP right holders on the reasons for this. This will be used to determine what service, if any, the IPO should be offering to support speedier and lower cost dispute resolution".

The Mediation consultation will run for six weeks, ending on 24 July 2012 and your response should ne emailed here.  The Patent Opinions Service consultation will run for 12 weeks and concludes on 4 September 2012. Please send your comments here.

Inspection of redacted documents in patent trials

Don't ask for a copy of this extempore judgment, since it's not on BAILII and you'd need to be a Lawtel subscriber to read the Marten Walsh Cherer computer-aided transcript, but Danisco A/S v Novozymes A/S [2012] EWHC 1641 (Pat) is an interesting little Patents Court, England and Wales, judgment from Mr Justice Arnold (yes, he can produce short judgments too: this one covers just four sides). The topic is a delicate one: disclosure of documents and the inspection of redacted [i.e. censored] parts of them.

In short, Daniusco applied for specific disclosure and/or inspection of certain documents in the possession of Novozymes, this being in the course of Danisco's application to revoke a Novozymes patent, there being parallel proceedings in respect of the same patent before the European Patent Office (EPO). One of the documents, a May 2009 report, had been redacted for disclosure but Novozymes' solicitors let Danisco's solicitors inspect it.  Inspection of further redacted monthly reports was also sought. In Danisco's view was that disclosure of the document  was necessary in order to help it understand documents already disclosed; that the redacted parts of the May 2009 report should not have been redacted in the first place and that they were in any event relevant to the dispute; and that the redacted parts of the further monthly reports were relevant to Novozymes' evidence of its production capacity in 2004/5.

Arnold J allowed the application in part. In his opinion:

• The document in question set out the statistical method which was referred to by a number of disclosed documents.  Danisco was not just speculatively fishing when seeking it, but it still had to be asked whether it was actually relevant to the dispute which was the subject of the litigation.
  
• The document was actually necessary in order to understand the figures in another document that had already been disclosed -- though ultimately it might not possess any evidential weight.
  
• Disclosure of that document would not place any substantial burden on Novozymes, nor was it unfair to ask Novozymes to disclose it with the EPO hearing being just two weeks away. In any event, Novozymes could have disclosed the document earlier and, regarding the EPO hearing, the EPO would not allow Novozymes to be prejudiced by this disclosure.
  
•  As to the redacted parts of the May 2009 report, inspection would be ordered.  The report was sufficiently relevant to be able to support Danisco's case or undermine Novozymes'.  If this wasn't a patent trial, disclosure would have been ordered, the problem here only being that Danisco's application for inspection was made outside the four-year window for disclosure in patent cases. Again, no burden would be placed on Novozymes in complying with the inspection request.
  
• Disclosure of the redacted parts of the further monthly reports would not be ordered: they post-dated the issues to which Danisco claimed they were relevant by one-and-a-half to two years.

Federal Circuit Rules That Standard For Pleading Patent Infringement Less Demanding Than Other Civil Actions

The U.S. Court of Appeals for the Federal Circuit recently considered the standard for pleading direct patent infringement in light of several recent Supreme Court cases that increased the amount of factual allegations necessary to state a claim in a civil action. R+L Carriers, Inc. v. DriverTech LLC (In re Bill of Lading Transmission and Processing System Patent Litigation), Case No. 2010-1493 et al., (Fed. Cir. June 7, 2012). Traditionally, civil claims in U.S. federal courts were scrutinized under a relatively generous "notice pleading" standard, which required only that the allegations fairly notify the defendant of the claim. In two cases, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court chipped away at the concept of notice pleading, requiring that a pleading allege sufficient facts so that the allegations, taken as true, stated a claim for relief that is plausible on its face.

In R+L Carriers, the district court dismissed a 100-page complaint alleging direct and indirect patent infringement for failure to plead a claim under Fed. R. Civ. P. 8(a)(2). The Federal Circuit reversed the dismissal of the direct infringement claim. The appeals court noted that the appendix to the Federal Rules includes Form 18, which is a form patent infringement complaint. That complaint only alleges: “(1) an allegation of jurisdiction; (2) a statement that the plaintiff owns the patent; (3) a statement that defendant has been infringing the patent ‘by making, selling, and using [the device] embodying the patent’; (4) a statement that the plaintiff has given the defendant notice of its infringement; and (5) a demand for an injunction and damages.” R+L at 14, quoting McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007). The court noted that under Fed. R. Civ. P. 84, the forms accompanying the Federal Rules “suffice under these rules and illustrate the simplicity and brevity that these rules contemplate.”

Thus, the Federal Circuit concluded that Rule 84 and Form 18 govern the sufficiency of a patent infringement allegation, and that standard can be changed only through the established procedure for promulgating and amending rules, not by court decision (although, somewhat ironically, Supreme Court approval is one step in the amendment process). The appeals court concluded that, “[T]o the extent the parties argue that Twombly and its progeny conflict with the Forms and create differing pleading requirements, the Forms control.” R+L at 15.

As a result, the Federal Circuit’s standard for pleading patent infringement is arguably more generous than the standard established by the Supreme Court in Twombly and Iqbal for other civil claims.  For example, the Federal Circuit held that R+L’s complaint was adequate even though it did not identify a single customer who purchased and used the accused product. In addition, the pleading did not require specific factual allegations concerning how the elements of the asserted claims were infringed, or even which claims the plaintiff was asserting.

Notably, the court held that Form 18 only applies to pleadings alleging direct infringement under 35 U.S.C. § 271(a). Allegations of indirect infringement, such as contributory infringement under 35 U.S.C. § 271(c) or active inducement under § 271(b) continue to be governed by Twombly.

Judge Posner Changes Mind, Orders Injunction Hearing

In his preliminary order dismissing the Apple v. Motorola patent case, Judge Richard A. Posner cautioned that he might change his mind before issuing a final decision.  Now he apparently has, although the change does not necessarily reverse his view that a right to damages or injunctive relief is an essential element of a patentee's infringement claim.  On June 13, Posner issued a one-paragraph order requiring the parties to appear on June 20 for an evidentiary "eBay" hearing where "[e]ach party may argue that it would be entitled to injunctive relief as to its patent or patents were the other party found to have infringed."  Stay tuned for more twists and turns in this case.

Judge Posner Suggests That Damages Required For Viable Infringement Claim

U.S. Circuit Court Judge Richard A. Posner, a very influential jurist who sits on the U.S. Court of Appeals for the Seventh Circuit, is sitting as the trial judge by designation in the contentious patent infringement litigation between Apple Inc. and Motorola Mobility, Inc. (subsequently acquired by Google, Inc.) pending in the Northern District of Illinois (Case No. 1:11 cv08540). In that lawsuit, Apple and Motorola each assert that the other company infringes multiple patents relating to smartphone technology, including operating systems and touchscreen technology. Recently, practically on the eve of trial, Posner issued a two-page preliminary order cancelling the trial and indicating that he intends to dismiss all pending claims with prejudice.

Although he stated that he would explain his rationale more fully in a forthcoming written decision, Posner suggested that dismissal was required because neither side could prove a right to damages or injunctive relief. In light of his prior evidentiary rulings rejecting the proposed expert damages testimony of both sides, including for failure to meet the standard of technical reliability established in Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993), Posner concluded that neither side was able to prove infringement damages. Thus, he noted cryptically, that failure of proof meant that each claimant failed to create a genuine issue of fact for trial, and all infringement claims would be dismissed on summary judgment.

In addition, Posner noted that although neither company could prove damages, they both contended that damages were adequate to remedy infringement of their patents, so no injunctive relief was available. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). Furthermore, he noted that an injunction was not available because “injunctive relief would impose costs disproportionate to the harm to the patentee and the benefit of the alleged infringement to the alleged infringer and would be contrary to the public interest[.]” He also declined to enter declaratory relief.

Thus, it appears that Posner views an entitlement to actual damages, or at least a right to injunctive relief, to be essential for a viable infringement claim, despite the language of 35 U.S.C. § 271(a) (“whoever without authority [practices] any patented invention during the term of the patent therefor, infringes the patent.”). Finally, although Posner noted that a full decision would be issued shortly, he cautioned that in the course of preparing that decision, “I may change my mind.”

TRIPS and trade winds:Spanish injunctions and chemical-pharmaceutical patents

From Fidel Porcuna de la Rosa (Senior Associate, Bird & Bird's Madrid office) comes this fascinating note about the efforts that have been made to delineate the scope of patent protection for chemical and pharmaceutical compounds under pre-TRIPS era Spanish patent law. Fidel writes as follows:

"New winds blow for chemical-pharmaceutical patents in Spain

For almost the past two years, the Supreme Court has been repeatedly reversing the Spanish PTO's dismissal decisions to admit and advertise new revised translations of old --but still in force-- EP pharmaceutical patents so as to include product claims. The decisions, regarding a number of active ingredients (voriconazole, sildenafil, tolterodine, ziprasidone, racemic atorvastatin, etc.), were based on the Supreme Court's interpretation by which the direct applicability of the TRIPS Agreement, in force in Spain as of January 1 1996, anticipated the derogation of the prohibition to protect chemical and pharmaceutical compounds under the old Spanish patent law. Although the prohibition was derogated by the time Spain joined the European Community and the European Patent Convention Treaty in 1986, its effects were extended to patents filed up till October 7 1992 following a temporal reservation introduced by the Spanish Kingdom. For the owners of such patents, this would mean in practice that they had no exclusive right over the chemical or pharmaceutical compound, but just to the method to obtain it.

These judicial decisions seemed to provide new enforceable patent rights over old EP patents for pharmaceutical companies which were then able to seek injunctions and damages derived from marketing of generic drugs that would fall under the restored scope of such rights. This has had a quite negative impact in the generic drug industry, as well as causing legal uncertainty. Indeed the Barcelona Commercial Court no. 7 granted preliminary injunctions against generic companies under the above legal grounds (Judgment 21 Feb 2012 31 Pfizer Inc. and Pfizer SLU v Kern Pharma, S.L. and others JUR2012/82689).

However, a recent decision of the Barcelona Commercial Court no. 4 (Judgment 7 May 2012, no. 130/2012) offers a fresh interpretation which, while in principle not incompatible with the Supreme Court decisions, could force innovative laboratories to step aside. The judgment dismissed an application for a preliminary injunction sought by H.Lundbeck A/S, Lundbeck España S.A. and Almirall S.A. against the use of Escitalopram by Sandoz Farmaceútica, S.A.. Bexal Faramcéutica, S.A., Cinfa, S.A., Laboratorios Stada, S.L., Actavis Spain, S.A. and many other generic drug laboratories.

The facts are essentially as follows: In 2 February 1995 Lundbeck obtained the EP 347066 on Escitalopram, which expired on 1 June 2009 but for which a SPC was granted until 1 June 2014. Lundbeck's EP 347066 consisted of three different set of claims corresponding to three different groups of the Contracting states designated in the application. While in the first group (AT, BE, CH, DE, FR, GB, IT, LI, LU, NL, SE) Lundbeck protected product claims, in the second (ES) and third group (GR) it obtained method claims. This was due to Spain and Greece's reservations to the European Patent Convention Treaty against patentability of chemical and pharmaceutical compounds. In 30 March 1995 Lundbeck validated the EP in Spain by filing along with the corresponding petition a translation into Spanish of the process claims just granted by the EPO. More than a decade later (24 August 2006), convinced that the derogation of the prohibition to protect chemical and pharmaceutical compounds under the old Spanish patent law was anticipated by the TRIPS Agreement, Lundbeck petitioned to the Spanish PTO to advertise a new translation into Spanish of the EP 347066. This time it was about the set of claims granted for the first group of Contracting states. After much to-ing and fro-ing with the Spanish PTO and the Administrative Courts, the Supreme Court approved the petition and the new product claims were advertised. Lundbeck then addressed the now unauthorized use of Escitalopram products and filed preliminary injunctions before the Barcelona Court against the above companies, some of which would have by then have been marketing Escitalopram products for some time.

The Barcelona Court considered that Lundbeck's manoeuvre failed. The Court noted that the Spanish set of claims was narrower than the set of claims of the first group of Contracting states because it only contained method claims, and not product claims, and so was the subject matter of the validation of the EP 347066 in Spain. It added that Lundbeck requested the Spanish PTO, after several years of the patent being granted, to admit and advertise a new translation of the EP 347066 including product claims which corresponded to the original set of claims for the first group of Contracting states. In the view of the Court, seeking protection for such product claims would extent the original scope of the Spanish portion of the EP. For such translation to be valid, Lundbeck should have first requested the EPO to extent the scope of the set of claims granted for Spain. But the Court reminded that neither the EPO nor national patent office can extend the scope of the EP claims. In particular they can't extend the scope of any of the original set of claims corresponding to each group of Contracting states. This being so, the translation was no more than a circumvention leading to to a dead-end. Additionally, whether the Supreme Court accepted such new translation to be admitted and advertised in the Spanish official gazette, that would not mean to be enforceable for the new translation could never be considered narrower than the original version of the Spanish set of claims, and hence these --composed only by method claims -- would always prevail as the authentic text (section 11 Implementing regulation no. 2424/1986 of the European Patent Convention Treaty in Spain)".