From IP to NP, Day One: Part 3

"From IP to NP (Net Profit)" continued after a tasty and ample lunch break with a further parallel session, with the first pair of topics offered a choice between enforcing rights and getting them in the first place:

1 (for IP Professionals) Enforcement of IP Rights in US, Europe, Asia and Israel   

2 (for entrepreneurs and IP managers) Seminar on IP Rights Registration in a Constantly Changing World, Part A: Claim Construction & Implications 

Again, this Kat opted for the first of these, convened and moderated by Rinat Shiran-Rasky (Vice President & General Patent Counsel, Teva Pharmaceutical Industries Ltd) and Einav Zilber (Director, Intellectual Property Legal Counsel, Applied Materials).

First to speak was Amiram Benyamini, a judge in the Tel Aviv District Court, asking "How to improve efficiency, economic sustainability and certainty of IP litigation?" If IP rights are not effectively enforced, there is little to commend them. This talk focused on the efficiency and functionality of the enforcement mechanism, the judge citing the dictum of Lord Esher MR (right) in Ungar v Sugg 

"“... that a man had better have his patent infringed, or have anything happen to him in this world, short of losing all his family by influenza, than have a dispute about a patent".

Judge Benyamini first considered the bifurcation of litigation not just in terms of splitting infringement from validity but also in the sense of first deciding liability and then considering the final form of relief. Bearing in mind that each stage may be subject to appeal, any litigation can be "jammed" for years and might lead to the suspending of the trial. Going for simple relief such as damages is less prone to this effect than seeking an account of profits, which have a discretionary element to them.  Jurisdictions which offer statutory, fixed damages -- particularly where they are punitive -- do not run this risk.

Is a split between validity and infringement really necessary? The court can hear both issues together in a single step, saving the need to hear expert witnesses twice.  A lot of time and effort is also wasted in the corridors, as it were, dealing with avoidable pre-trial arguments that prolong the resolution of a dispute and increase the cost of litigation. Demands for disclosure, for example, should be dealt with by getting the two parties' lawyers to sit together and discuss what's really needed before getting an order.

As for interim relief, this is important because it can give the parties a chance to conclude the dispute at an early stage.  The Israel Supreme Court has reiterated that a trial court in interim IP proceedings must presume that a registered right is valid and that it should not conduct any in-depth analysis.  Said Judge Benyamini, this is not right where the evidence is clear and the case is simple, one should be able to act upon it.  Also, where irreparable damage is likely to be caused to either side, the case should be heard in depth; it's still worth entertaining an application for interim relief -- even if it takes a week, or even two weeks -- since that will often clarify the issues between the parties or give them a better chance to settle it once they can assess their respective strengths.

Expert assessors can be appointed to assist the court in IP matters, but there are no rules to establish who pays for them Judge Benyamini didn't think a court could order the parties to pay for an assessor if they were reluctant to do so.  There is a constitutional aspect to this, since a decisive but shadowy figure is introduced into the judicial process and his influence on the court cannot be identified and therefore challenged.  The assessor's role should be limited to clarifying issues, but not to giving his opinion and acting as an expert.

As for settlement of disputes, ADR is important.  Arbitrators are rarely likely to confer an advantage over litigation: a good and competent mediator can draw the parties into a settlement that spans not merely the local dimension of a dispute but also its global aspects.

David Hashmall (Head of Litigation Team, Goodwin & Procter, New York) then spoke on "Recent trends and strategic considerations in the selection of jurisdiction and venue for the enforcement of IP rights in the US". David gave an update and survey of the emerging position following the coming into force of the America Invents Act (AIA).  At present patent cases are being concentrated within a relatively small number of districts. From 2005 to 2012 three districts have become Central District of California, the Eastern District of Texas and the District of Delaware. However, the rocket docket of the Eastern District of Virginia is still the swiftest place in which to litigate, as well as the District which has the highest proportion of settlements.  Delaware takes longest to get to judgment, probably because of its high density of pharma cases and litigation under the Hatch-Waxman Act, which does not go before a jury.  Defendants make big efforts to shift cases away from Texas, but this is not always easy to achieve -- even when there is no apparent connection between the area and the dispute.  In Delaware each of the four patent judges gets around 524 a year: it may be wondered how they cope with them.

Moving on to the International Trade Commission (ITC), this forum is available only to the patent owner.  Anyone bringing a suit has to show that the patent is being worked by a local industry.  Cases are tried before an administrative law judge. Justice is swift: it takes just 10 months to get to trial, 15 months to a result -- and an injunction is mandatory, not discretionary.  Trolls can't use this machinery, which is in rem so you only have to show a risk of importation of an infringing product, not who is actually responsible for it.  No monetary damages are however available and, since the ITC's jurisdiction is not exclusive, the same dispute might also be litigated in parallel before a District Court.

Finally, David looked at the brand-new Patent Trial and Appeal Board, created under the AIA.  The PTAB has jurisdiction to deal with inter partes and post-grant reviews, among other things, and can deal with both first-to-file and first-to-invent patents. A petition of not more than 60 pages must be filed in support of PTAB proceedings, and District Court proceedings may be stayed till the PTAB has given its ruling. David then treated us to a breath-taking survey of how the PTAB works, concluding that it is offering a faster and less expensive procedure before patent-experienced judges.  Before the PTAB there is no presumption of validity: it deals with evidence on its face.

Pravin Anand (Katfriend, Managing Partner of Anand and Anand, India), fresh from his empirical research on the effect of baklava on sleep, addressed "Recent trends in Indian patent law".  Indian courts, he observed, are quite omnivorous in their consumption of legal sources and judgments: they will read and notice them from any jurisdiction -- so long as they are in English.  He also cautioned that, when making submissions or disclosing information, it's always safest to overdo it: the failure to disclose even something quite small can ruin an otherwise perfect case.

Pravin explained the Novartis case [mentioned by the IPKat here and here], in which the Supreme Court defined "efficacy" as "therapeutic efficacy", though leaving safety and toxicity open -- so that decision may not apply to it.  This case was warmly welcomed in India, which regards itself as the "pharmacy of the world". Pravin then alluded to decisions involving patents owned by Pfizer and Merck, in which the outcome was rather better for the proprietary pharma sector. Going on, Pravin conceded that the 2012 Bayer compulsory licence case received a lot of publicity, but it has since been ruled that importing a patented product into the country can indeed constitute "working the patent" [on this issue see earlier Katposts here and here]. He concluded by emphasising that pricing of one's products for the Indian market and having a local trading partner were both important positive factors that might affect a court's appraisal of a party's merits when seeking injunctions or resisting compulsory licence applications.

Trevor Cook (another long-standing Katfriend, Past President of the UK Group of AIPPI, Chairman of the British Copyright Council, Partner at Bird & Bird) then took us to the coffee break with "The new addition to the European court system – the Unified Patent Court – and how it will affect patent litigation in Europe". This was a reality in just a few years, with two interlinked facets: (i) a European patent with unitary effect would be an option to the usual bundle of national patents (except to Italy, Spain and initially to other countries that have ratified the Agreement on the Unified Patent Court, the UPC), and (ii) litigation before the UPC, subject to a transitional period for opting out.

Trevor emphasised that we are not simplifying the system but adding another, simpler layer on top of the existing position. However, Spain is right out of things; Italy is a problem, having opted for the UPC but not the unitary patent.  Poland hasn't signed the UPC agreement: if it did, the unitary patent would also apply in Poland, where a government study has indicated that it would not be beneficial to the Polish economy.  Croatia acceded to the EU after the UPC Agreement was signed.

The rules for the UPC are still in the air: they're now in their 15th draft.  We still don't know what the level for renewal fees will be -- and that will be influential in determining whether to opt for the old system or the new.  Many businesses still cherry-pick the countries in which they want patents at present, sticking to key jurisdictions such as Germany, the UK and France: would they want to pay more for protection they wouldn't otherwise have sought?

Trevor then explained how the UPC wasn't going to housed in a single, smart new building: even the Central Division, which sounds pretty central, is spread across the jurisdictions, and there will be local and regional divisions too.  Patentees can in any event opt out of the UPC since they are always able to opt back in again at any time -- though opting out will involve payment of a fee and we don't yet know how much that fee will be. Opting an entire portfolio out of the UPC's jurisdiction might be prohibitively expensive.  There is likely to be a sunrise period, before the UPC comes into effect, on which patent owners can register their opt-outs.  It's likely that the first litigation under the new system will be all about the opt-outs.