One of the most significant events in the patent litigation field last year was the long overdue publication in August of the EU's draft Regulation for a Community Patent which includes as part of the new Community Patent system a proposal for establishing a centralised patent court to deal with Community Patent litigation. This was followed closely by two developments regarding the European Patent system set up under the European Patent Convention (EPC): the first was the agreement to a "first basket" of amendments to the EPC and the second was the publication of a paper by the Working Party on Litigation setting out their proposals and ideas for establishing an optional centralised patent court to deal with European Patent litigation.
The Future of Centralised Patent Litigation in Europe
The National Courts and Pan-European Injunctions
To date, only the Dutch Courts have actually been bold enough to grant pan-European injunctions in European Patent litigation. Since the two Dutch Court of Appeal decisions in Expandable Grafts v Boston Scientific and Cordis v Boston Scientific both in 1998, the scope for obtaining pan-European relief from the Dutch courts has been severely curtailed not least because (a) pan-European relief will not be granted unless the "spider in the web" of the defendant group of companies was located in Holland and (b) there is a recognition by the Dutch Courts that it is not appropriate in all circumstances to separate the issues of infringement and validity.
Last year saw for the first time the validity of the so called Torpedo being successfully challenged in Belgium, France and Italy. These decisions would tend to suggest that the Torpedo can no longer be used as a device to frustrate the grant of a pan-European injunction. In practice, the stricter approach being taken by the Dutch Courts means that there is less need for them in the first place.
In view of the much stricter approach being taken by the national courts (and in particular the Dutch and Belgium Courts) over the past few years to the use of the Brussels Convention as a procedural tool (both to obtain and block pan-European injunctions respectively), the proposals for establishing centralised patent courts to deal with litigation on a pan-European basis have taken on an added significance.
The EU Proposal for a Community Patent
In August 2000, the EU Commission published its draft Regulation on the Community Patent. This was the culmination of a process started by the EU Commission back in June 1997 with its Green Paper on the Community Patent and the European Patent System and in February 1999 with its Follow Up to the Green Paper.
The EU Commission's proposal for the new Community Patent is intended to establish a more efficient (i.e., cheaper and quicker) patent granting and litigation system for the EU than the current national and European Patent systems. It seeks to acheive this aim by
- enabling the European Patent Office ('EPO') to grant a patent covering the entire Community in only 1 of the 3 official EPO languages but once granted requiring the translation of only the claims into only the 2 other official languages until enforcement is necessary (and subject to a limitation on the recovery of damages); and
- enabling litigation to take place on a pan-European basis before a newly created central (possibly peripatetic) "Community Intellectual Property Court" (CIPC).
As regards the link between the Community Patent and the EPO, this will be acheived by the EU acceding to the EPC.
As regards the centralised patent court, the main practical hurdle is the need to amend the EU Treaty in order to provide the EU Commission with the power to create a new court. It is currently envisaged that the necessary amendments to the EU Treaty could be made as part of the negotiations leading up to the accession of the next round of new EU member states.
The success of the new pan-European litigation system (and in turn the Community Patent project itself) will turn on the organisational structure of the new Court, the quality of the Judges chosen to sit in the new Court and the effectiveness of the procedures (e.g., written or oral pleading and testing of evidence) adopted by the new Court. The Commission itself recognises that issues of infringement and validity should be answered definitively within 2 years.
As regards organisational structure, whilst the EU Commission envisages a two tier court with jurisdiction to hear disputes relating to infringement and validity of the Community Patent, it is silent on such matters as how many Judges will sit on each case in each tier and whether the Court will sit in one or more locations. As regards the Judges, whilst the EU Commission envisages that the Judges will have the necessary qualifications to examine the highly technical questions involved in many patent cases, it is silent on the way in which such Judges will be chosen in practice. As regards procedure, the EU Commission envisages that the Court would adopt its own rules. On all 3 of these crucially important matters, the EU Commission has not yet published any details of how it intends to acheive its objectives.
In terms of the more substantive aspects of the new Community Patent litigation system, the draft Regulation deals sensibly with most the jurisdiction and enforcement issues. However, there still some important matters which have either not been addressed at all or not addressed fully. By way of example,
- non-infringement declarations - the Regulation states expressly that there is no right to raise validity in proceedings for a declaration of non-infringement. This provision appears to be inconsistent with the acceptance that in principle infringement and validity should be heard together at the same time in the same action. This provision also suggests that non-infringement declarations could not be heard as part of an infringement and invalidity action which again would undermine one of the main applications of such an action at least in the UK.
- the scope of the experimental use exemption - the Regulation does not state expressly whether the experimental use exemption applies to clinical trials or not. The Follow Up to the Green Paper indicated that the EU Commission planned to take steps to harmonise the EU member states national laws in this regard. As yet, the EU Commission has not published any details of how it intends to acheive this objective.
- amendments - the Regulation provides that the patentee can apply to amend the Community Patent at any time other than within the 9 month opposition period or during opposition or invalidity proceedings. In the UK, patentees normally apply to amend their patent (often as a precationary measure) shortly before or at least at the start of infringement proceedings having considered (often for the first time) the full impact of a particular piece of prior art on the validity of their patent. The Regulation appears to preclude this procedure with the result that patentees would have no option but to defend the validity of their patent in its unamended form.
- injunctions - the Regulation only provide for the grant of an injunction in the case of an actual finding of infringement. This appears to preclude the grant of an injunction in relation to a threat to infringe or the grant of a preliminary injunction in an appropriate case. This position appears to be contrary to the intentions of the EU Commission which certainly envisages that the Court would have the power to grant preliminary injunctions.
- damages - the Regulation provides only for the grant of damages in the event of a finding of infringement. There is no provision for the award of an account of the defendant's profits as an alternative to damages. The Regulation also provides that the behaviour and good and bad faith of the parties can be taken into account in determining the amount of any damages payable. From the defendant's point of view, this seems to be inconsistent with the fact that damages are stated not to be be punitive. It also raises the question of intention the size of the investigation of which is in many instances unwarranted by the end result.
- Supplementary Protection Certificates - the Regulation is silent on the matter of SPCs for Community Patents. It may be that the reason for this is that the EU Commission intends to deal with this matter separately i.e., by extending the existing SPC regime to include Community Patents. Nevertheless, it would seem sensible to provide that any litigation concerning SPCs for Community Patents is brought before the CIPC.
Whilst the broad outline of the EU Commission's proposal has been favourably received by both industry and most practioners, it will be difficult to assess the prospects of success of the new Community Patent litigation system until the 3 key matters of the Courts organisation, the Judiciary and the procedures have been resolved. At the moment, the Commission has stated its objectives but not how these objectives are to be achieved in practice.
The EPO Proposal for an Optional Centralised Patent Court
At the Intergovernmental Conference of the member states of the EPO held in June 1999, a Working Party on Litigation ("WPL") was set up to consider 3 issues, the third of which was to put forward a draft optional protocol to the EPC for the establishment of a centralised patent court to deal with European Patent litigation. In the middle of last year, the WPL produced a so ccalled Structure Paper in advance of the second Intergovernmental Conference held at the end of last year.
The publication of the paper in advance of the Conference was intended to enable and enhance public discussion. In fact, although the WPL was only mandated to consider a two tier court structure, it also put forward the possibility of having only a centralised appeal court. The main elements of the new two tier court were as follows:
- infringement and validity to be heard together;
- jurisdiction for infringement and validity actions to be exclusive save for preliminary or protective relief over which the national courts would also have jurisdiction;
- the substantive law applied by the Court would be drawn as far as possible from the EPC and the CPC but bearing in mind TRIPS;
- enforcement would take effect via the national courts in accordance with the Brussels and Lugano conventions;
- although the court would be located in one member state, it would have the ability to sit in any of the member states.
Since the publication of the structure paper, the WPL has begun to consider the structure of the Litigation Protocol but has not yet published any of the detailed provisions. Again, whilst, the broad outline of the EPO's proposal has been well received by industry and most practioners, it will be difficult to assess the prospects of success of the new European Patent litigation system until the outline has been fleshed out. It is understand that the WPL is intending to publish the text of the Litigation Protocol by the end of this year although whether they can keep to this timetable remains to be seen.
The Revision of the EPC
It remains to be seen whether the member states of the EU and the EPC will agree to adopt the Community Patent Regulation and the EPC Litigation Protocol. At the diplomatic Conference held in late November of last year, however, the EPC member states did agree to a number of important changes to the EPC. They also deferred agreement on several others.
The principle agreed changes to the substantive and procedural law of the EPC were as follows:
- inventions are now stated to be available for "all fields of technology" (although a decision on the specific exclusion of computer programs from the non-inclusive list of non-patentable inventions was deferred)
- second medical use claims are now permissible without the need to couch the claim in terms of a "Swiss style" claim (i.e., "... the manufacture of a medicament for use in the treatment of ...". An EPO proposal to limit first medical use claims to a specific use was rejected.
- a patentee can seek to limit the scope of a European Patnet centrally on an ex parte application (i.e., the limitation if allowed would be effective in respect of all of the designated states).
- a patentee can now seek limit the scope of a European Patent in national proceedings (e.g., in a revocation or nullity action or counterclaim in order to overcome a piece of cited prior art)
- the Enlarged Board of Appeal now has the right to review decisions of the Boards of Appeal in cases of "fundamental procedural defect" (namely, lack of competence of a Board member or a violation of Article 113 (right to comment, etc.
One of the important changes which was not agreed was the proposed revision to the Protocol to Article 69 so as to define more specifically how the issue of infringement by equivalents should be determined. The proposed revision included (1) a definition of equivalents as well as (2) stating the infringement should be determined at the date of the infringement rather than the date of the application for the patent and finally (3) introducing the concept of file wrapper estoppel. In the end, the only change that the Conference could agree upon in respect of the Protocol was an addition to the Protocol that "Due account shall be taken of any element which is equivalent to an element specific in the claims."
The final point with regard to the agreed revisions to the EPC is that first, the new Convention (EPC II) will replace the EPC or old Convention and second, EPC II will come into force within 2 years of the 15th member state ratifying the changes or the last member state to so ratify if earlier. Accordingly, in the event of an EPC member state failing to ratify the EPC II by the time the EPC II comes into force then that state will no longer be a member of EPC II. It is understood that in both Denmark and Sweden some of the revisions will be viewed as effecting their national sovereignty and will therefore need to endorsed by means of a special parliamentary majority or a plebiscite. For at least these 2 countries, therefore, membership of the EPC II is by no means a foregone conclusion.
First published in Managing Intellectual Property in February 2001.