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Tuesday, 16 April 2013

Where the grass is greener: Irish professionals discuss the new EU patent regime

There's an old saying that the grass is always greener on the other side of the fence. Well, Ireland is the Emerald Isle, and green is the national colour -- but is the grass greener in the promised pasture of the new European patent landscape?

Ann Henry (Vice President, IP Law Committee, Law Society of Ireland) opened today's Intellectual Property Conference in Dublin with a general review of how we came to be where we are now, with the unitary patent court (UPC) and the unified patent system, following the implementation of the EU's hitherto little-used enhanced cooperation procedure: "This is something that is here for keeps. Constitutional issues will be ironed out in time", she said, noting that plenty of Member States will have a rule, with training of judges in Budapest, mediation in Ljubljana and Lisbon as well as the courts being located in Luxembourg, France, Germany and the UK). This "major priority of the Single Market" was achieved after a good deal of pushing from Poland, under the Irish presidency of the EU. Next up for unitary treatment is likely to be copyright, Ann told us, and it is important for Ireland to be at the centre of action as Europe pursues its drive to cultivate the knowledge economy. It was important not to be part of a regional court in combination with the UK, she observed, since Ireland would soon be subsumed within the gravitational pull of London -- and the case for opting for any regional court had not yet been made out.

At present, Ireland has a Commercial Court which could be established as a local division of the UPC's Court of First Instance: a wait-and-see approach was probably therefore best. Many of the EU Member States have considered their own interests in considering how to structure itself in terms of the UPC: there was no reason why Ireland should not do likewise. This issue is not confined to patents, Ann added, since the capacity to litigate IP applied also to trade marks, designs, copyrights and other IP rights.

Next to speak was Maura O'Connell (FRKelly, where she is a partner of fellow Kat David).  As a European patent attorney, primarily concerned with writing and prosecuting patents, she had a very different perspective.  Starting with language, Maura observed that the European Patent Convention already covered all 27 EU Member States and the European Patent Office (EPO) functioned with just three languages -- French, German and English. It was only once patents were granted and entered the national phase that local languages were involved. After the London Agreement came into play, it was possible for all 40 EPO members to require no translation at all, or translation of the claims only.  Only a minority of countries currently waive translation in whole or in part.

Several countries were unhappy with the slow progress towards a single EU patent, which is why the enhanced cooperation procedure was invoked. Article 142 of the European Patent Convention provides for subgroups of its members to provide for a single patent, which enables the proposed unified patent to fit within the existing grant mechanism.  The unified patent system will not however come into effect till the UPC is up and running. However, up to to last week, no country has yet ratified it. While Italy, which has accepted the UPC, is disgruntled about the issue of official languages and has "parked itself to one side", Spain has launched two fresh challenges -- and "basically has not gone away".

Prosecution stays exactly the same under the new system, as does grant, with the EPO handling validation of the unitary patent. You won't be able to opt for a unitary patent and a national patent covering the same territory: it has to be the one or the other. Following grant (one month is currently suggested), the patentee can request a unitary patent and provide the prescribed translation -- and there will be a "translation compensation scheme". Revocation and post-grant limitations are on an all-or-nothing basis, so far as the territories covered by the unitary patent is concerned.  The maintenance of a register of patents with unitary effect will be handy, for obvious reasons.

The fact that official fees have still not been published is "no small thing". Cost is something that drives patentees' filing policy. The plan is to share renewal fees with national offices, which will have seen a substantial fall in their own revenue.  But what is the average renewal fee across the EU? "Some of the assumptions the EU has been working on seem to be wrong", said Maura, who observed that among her clients were many who currently validated patents in only five or six countries. In some sectors, however, such as pharma patents, it was normal to validate for all available territories.

English language applications will still have to be translated into another official language, also adding to the cost -- particularly if an applicant wasn't already validating its patent in Italy or Spain, where a translation would be needed anyway.

In terms of strategic considerations, the new system is far less flexible: the main choice is "all or nothing", though the relative simplicity of the system and reduced translation commitments may compensate for this. The main strategic choice is whether to opt out of the UPC's jurisdiction while the transitional stage lasts, opting back in again if the court system seems to be working.

Following a most refreshing and amicable coffee-break, during which the elephant in the room finally materialised (Annsley has just posted on this particular elephant here), barrister Yvonne McNamara opened up with some provocative points concerning patent litigation. Issues such as place of infringement and the challenge faced by the new courts in dealing with both common law and civil law cultures were raised, as well as "patent exceptionalism" -- the concept that only a specialist patent court can handle patent matters. Lack of patent exceptionalism is not a big problem when only one small country's patent is at stake, but it's quite different where a court without specialised patent skills deals with a patent covering almost the entire EU.

Yvonne warned that the new courts are to be self-financing, with a combination of a set fee and a value-related fee, these fees being set with regard to the needs of SMEs, universities and so on.  However, the provision of legal aid for litigants is also hinted at.  The body setting fees, etc, is the Preparatory Committee, the existence of which is not apparent from the Unified Patent Court Agreement itself. She also reminded us that the involvement of the Court of Justice is far from having been completely written out of European patent litigation. There then followed a survey of which cases go to which courts for which purposes, which sounded every bit as complicated as it is.

"In the common law system, the trial is the focus", Said Yvonne of the new scheme, "It's the peerless process for finding the truth. Clearly this is not the case here, where the written procedures are key and the oral procedure is the poor relation", which may be dispensed with; likewise, the examination of witness will be strictly controlled by the court.  Regarding interim measures, it seems as though the applicable procedure may require technical expert input and not merely judicial discretion.  "This is a new court -- and it is divorced from all judicial procedures and processes that have gone before", she reminded us. While the judges are indeed judges, who are familiar with principles of proportionality, certainty and so forth, they will have no body of experience to fall back on, which will give new users no comfort.

So far as confidentiality is concerned, there is an option not to have a hearing in public and witnesses may refuse to answer questions if to do so would be to breach a confidence. This was something new to the Irish, Yvonne observed.

What about ex parte orders such as Anton Piller search-and-seize orders? It seems as though one might have to issue a plenary summons first, but the issue is still wide open as to how far it goes.  Such an order may be granted on the basis of the submission of "reasonably available" evidence of infringement -- a lower level to trigger an injunction than is currently available and much closer to the more liberally-granted saise procedures of continental law. Freezing orders are, it seems, available on much the same basis. Interlocutory injunctive relief on American Cyanamid principles, on a balance of convenience where damages would not be an adequate remedy, looks like it's on the way out: it seems that the need to show that damages would be an adequate remedy is no longer needed. With both permanent and interlocutory injunctions, relief is also available against third parties such as internet service providers -- even where they have done nothing specific to infringe the patent.  Regarding damages, that remedy is mandatory for deliberate or knowing ('reason to believe') infringement -- but no provision is made for an account of profits.

Costs should follow the event, and the successful litigant will be able to recoup them on the basis of full costs for experts' fees and legal costs proportional to the value of the case, not the value or amount of the work.

Yvonne concluded with some comments about opting out.  The opt-out provision for the transitional period can last till the end of the period of validity of the opted-out right, which can be a long time ahead -- and the option of opt-in remains.

A panel discussion then broke out, chaired by katfriend Patricia McGovern (DFMG solicitors).  Karl Flannery (CEO, Storm) reminded practitioner present that SMEs were more concerned with their markets for their products and IP rights, rather than with the legal structure within which they existed. Karl was also anxious as to whether trolls were more likely to flourish in the new, big-patent EU, as well as how to protect the IP of a knowledge economy if it had no local IP-specific patent litigation forum.  Ritchie Paul (Alkermes Pharma) voiced concerns about the lack of certainty and its impact upon the business sector.

From the floor, Shane Smuyth (FRKelly) said he regularly engaged in forum-shopping, to avoid the sheer cost of patent infringement litigation in Ireland.  He therefore questioned Karl's preference for litigating in an Irish court, while Karl felt that a court was a necessary part of the environment in which the IP investment and creation community would best thrive. Yvonne reiterated her regret that more effort was not made to model the litigation system on the Community trade mark, which has preserved national routes to pan-European enforcement.

2 comments:

johnjohnson said...

"This is a new court -- and it is divorced from all judicial procedures and processes that have gone before". What absolute poppycock. Advocates in front of the UPC are going to rely on case law of the previously competent courts. Thus the major patent jurisprudence of European superior courts will still be relevant - it is the same judges after all!!

Provisional measures are far from clear under the UPC. Articles 60 and 62 are almost identical copies of Articles 7 and 9 of the Enforcement Directive. The implementation of these measures into national law has been bit-part to say the least. Harmonisation has not occurred even as to the measures available, never mind the evidentiary burdens on applicants, the requirements for securitisation or the rights of defendants in ex parte hearings. In some states all search orders are granted ex parte, while in other states search orders are unavailable.

The UPC rules of procedure (205-220) provide little extra clarity on provisional measures. However they do point out that the American Cyanamid test is far from out the door. The UPC specifically provides for weighing the interests of the parties at art 62(4) and the rules of procedure repeat this. One can imagine that under such an examination the adequacy of damages and that friend "irreparable harm" will be analysed. Such a balancing of interests is unknown in many civil law systems and so I would suggest that UPC provisional measures represents a synthesis of the available implementations.

A worrying development must be identified in respect of freezing injunctions. Under the IPRED framework, freezing injunctions may be made available if judgment is likely to be frustrated. Under the UPC, there are two different articles alowing for freezing injunctoins - one in the normal frustration circumstance and a second where the applicant merely shows reasonably available evidence of infringement. The reason for this duplication is not clear to me.

The most pressing issue is simply whether the local divisions will be allowed to apply differing procedures and implementations, just as has happened under IPRED. It seems unlikely though and would be thoroughly counterproductive.

Anonymous said...

I was surprised to learn that BLUE is the national colour of Ireland (according to QI anyway)!

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