Those new European patent litigation rules: a report on the Oral Hearing on the 17th draft

This Kat is grateful to Dr Stephan Dorn (a lawyer with Hogan Lovells Int. LLP, Düsseldorf, Germany, who works with Dr Andreas von Falck in that firm's Patent Litigation Department) . As he reminds us (as if we could forget), Europe is preparing for a major change in its patent litigation system, this being the European Patent with Unitary Effect and the Unified Patent Court. Last week, Stephan attended, as a representative of the DAV (Deutscher Anwaltverein, the German Lawyers Association), the Oral Hearing on the 17th Draft of the Rules of Procedure for the Unified Patent Court in Trier, Germany (right). He has kindly prepared the following report on the main issues discussed there for the special interest and attention of readers of this weblog:
Unified Patent Court: Oral Hearing on the Draft Rules of Procedure 
On 26 November the final Oral Hearing on the Draft Rules of Procedure for the Unified Patent Court took place at the ERA Congress Center in Trier, Germany. 
Dry subjects like patent rules
benefit from lubrication
Before we focus on the main issues that have been vividly discussed among the panel and the participants, here's just one short remark on the conference venue. We think that all the participants got their first clue as to the trouble arising from choosing nearby Luxembourg as the residence for the UPC Court of Appeal. Though both Luxemburg and nearby Trier are placed in the middle of Europe and could be reasonably called also the centre of the Agreement on the Unified Patent Court (UPCA) territory, many representatives attending the hearing could tell from their very time-consuming journeys to Trier that there might be problems ahead. We assume that, even in the starting phase of the new UPCA System, appealing the decisions of the Court will be more the rule than the exception. Thus, all users of the new Court system, in particular the lawyers planning to represent their clients before the UPC, should make themselves familiar with a new – we do not want to call it epic – dimension of Court travelling. However, at the end all representatives made it to the conference centre in time and could use the journey for sampling at least occasionally the pleasures of the Moselle valley, one of Europe's oldest wine-growing regions.
The panel consisted of nearly the whole legal group of the Preparatory Committee (chaired by Johannes Karcher, Federal Ministry of Justice (BMJV), Germany) accompanied by the so-called Expert Group (chaired by Kevin Mooney) responsible for the drafting of the Rules of Procedure from the very beginning of the work in 2011. The main topics of the hearing were four rules of the 17th draft of the UPC Rules of Procedure (see the explanatory note to the 17th draft here and the trilingual 16th draft here), namely Rule 5 (Opt-Out), Rule 14.2 c (additional languages in the proceedings before the UPC); Rule 118.1 (Injunctions), and Rule 220 (appeals, in particular procedural appeals). 
As regards the new draft of Rule 5, the contribution of the participants mainly concerned the complexity of the Opt-Out procedure. The new Rule 5 provides for an application of an Opt-Out before the agreement enters into force. The rationale behind this provision is that all patent proprietors should have the possibility to opt out without running the risk of being stopped from doing so just because a third party commences a proceeding before the Court beforehand and triggers the permanent bar for changing the jurisdiction as provided for in Art. 83(3) UPCA. Because neither the Court nor the registry exists before the UPCA enters into force, there is the factual problem that there is no authority that could receive any application for Opting-Out before that day. 
Considering the time required to deal with an application and Art. 83(3) Sentence 3 UPCA, according to which the Opt-Out takes effect with the day of the entry into the register, many patent proprietors worried about whether they will be able to effectively opt-out all their patents in time without being forced into the UPC System. Against this background the expert group had the wheeze of involving the EPO in the Opting-Out procedure. The EPO shall initially and before the UPCA enters into force collect all applications and then refer them (en bloc) to the registry of the UPC afterwards (sunrise period). All applications shall then be considered as effective with the date of the entry into force of the UPCA. 
There are times when sunrise makes
a person just want to opt out ...
The participants mainly welcomed the new Rule 5 even though many criticized it in that some details are not yet covered, i.e. the question of the payment process of the Opt-Out fee when the application is lodged with the EPO. Most participants argued that the EPO should be responsible for collecting the opt-out fee in the sunrise period. Many participants considered, in particular, legal certainty regarding the day of the effectiveness of the Opt-Out as desirable and suggested taking the day of the application instead of the day of the entry into the register. This idea was rejected by the panel, referring to the clear wording of Art. 83(3) UPCA. A second concern regarded whether the Court registry will be capable of dealing with the expected flood of Opt-Out applications and whether the processing of the Opt-Out application would not be in better keeping with the EPO instead of the Registry of the Court. Some participants objected that the Opt-Out was too complicated and nearly impossible to use for large patent portfolios due to high costs and shortcomings in practicability. 
The second main issue and certainly the most hotly discussed one was Rule 14 on the language regime before the Court, in particular Rule 14.2(c) providing for a possible partial use only of an additional language designated as additional language of the proceeding by the Contracting Member State (CMS) according to Art. 49(2) UPCA. Rule 14.2(c) reads: 
[(c). Where a designation of an additional language under Article 49(2) for a regional division or for one or more local division(s) hosted in a Member State so indicates, parties may use the additional language:
(i) for a Preliminary objection [Rule 19] and/or(ii) for written pleadings and other documents, including written evidence [Rule 7], and/or for oral hearings]. 
The angular brackets indicate that the expert group drafting the RoPs had not yet reached agreement whether this additional rule should be included into the RoP. The rationale behind this rule is flexibility in opening the somewhat rigid language regime of Art. 49 UPCA. Many of the participants commented negatively on the additional rule, in particular the participants from the Netherlands and UK. That was not surprising, because both the Netherlands and UK fancy their chances to get a more attractive jurisdiction for patent litigation if they could offer their English-only language regime without Germany being able to catch up with the needs of the international English-speaking users of the new UPC system. And thus, less surprising, they argued that including Rule 14.2(c) would complicate the whole proceedings, cause problems regarding legal certainty, increase costs as in particular cases more translations would be needed. 
However, a large group – definitely not a minority – of participants, mainly from Germany, supported the inclusion of Rule 14.2(c).They argued that it would be one-sided and unfair and against Art. 42(2) and 43(3) sentence 2 UPCA to give to the claimant --  and only to the claimant--  a right to determine a language which is not the official language of the CMS hosting the division (home language) to be the language of the proceedings binding all other participants including the Court. The interests of the defendant and the language skills of the division must be taken into consideration and must be respected. 
They saw it as a step further towards the use of English that Rule 14.2(c) allows the CMS concerned to admit English to a limited degree as an additional language: English thus may be used without forcing that language upon the other party and on the Court, because the home language remained the language of the proceedings. Rule 14.2(c) was seen as a compromise recommendable at least for the initial period of the UPC. The CMS concerned may withdraw its designation after some time. Then, under Rule 14.2(a), English may be determined by the claimant as the language of the proceedings with binding effect for all other participants and the Court. It was also argued that the administrative Committee may change Rule 14.2(c) at a later point of time under Art. 41(2) UPCA. Further, the German judges attending the hearing supported the inclusion of Rule 14.2(c). Facing the existing language skills of the very experienced German judges they strongly recommended to allow a mixed language regime according to Rule 14.2(c) in order to maintain the high quality of the judgments of the German divisions. Dr Grabinski, Member of the Legal Expert Group, emphasised that no CMS was obliged to implement Rule 14.2(c). Each CMS will remain free to find its best practice language regime. 
Before the break the hearing was about the new draft of Rule 118.1 and the deletion of Rule 118.2. The new version of Rule 118 reads now:

Rule 118 – Decision on the merits1. In addition to the orders and measures and without prejudice to the discretion of the Court referred to in Articles 63, 64, 67 and 80 of the Agreement the Court may, if requested, order the payment of damages or compensation according to Articles 68 and 32(1)(f) of the Agreement. The amount of the damages or the compensation may be stated in the order or determined in separate proceedings [Rules 125-143]. 
A former version of Rule 118.1 had worried in particular the IT industry because it was interpreted as providing for automatic injunctions if a patent infringement was found. The new version of Rule 118.1 emphasizes the discretion of the Court in granting injunctions and is thus closer to the wording of Art. 63 UPCA. The new version met with general agreement by the participants although many of the participants urged the panel to include a more or less restrictive guideline for exercising the discretion granted to the Court. The panel emphasized in particular with regard to the Opinion of the Advocate General in Case C-170/13 Huawei v ZTE [noted by the IPKat herethat stopping the patent infringement was the core element of the patent right and any restrictive construction of the Rule must be well founded. In general, the limitation of injunctive relief was an option only in very exceptional circumstances, according to the panel. Furthermore, the panel referred to the experience of the judges in exercising their discretion and that there was no need to develop a detailed scheme limiting or the discretion of the Court. Paul van Beukering, the chairman of the UPC Preparatory Committee, added, with regard to the comments given by the Legal and Drafting Groups allowing for not granting injunctions only in exceptional cases, that the RoPs were still in development and that the approval by all CMS that was still needed before the final version of the RoPs would finally be adopted.  
The last big issue on this day was the new version of Rule 220.2 providing for a discretionary review of procedural orders. The problem with procedural appeals is due to the unclear wording of Art. 73(2)(b)(ii) UPCA. Art. 73 UPCA makes a distinction between privileged orders admissible for appeal within 15 days, and unprivileged orders that are generally not admissible for appeal unless "the Court" grants leave to appeal. It is not clear, whether "the Court" means the Court of the first Instance, the Court of Appeal or both. The new Rule 220.2 provides for a compromise allowing for a so called "discretionary review" of unprivileged procedural orders if the first instance panel does not grant leave to appeal.. In a first stage of these review proceedings the standing judge decides whether to allow the request for discretionary review. In a second step, a panel of the Court of Appeal reviews the procedural order. Most participants agreed with the new draft. In particular the attending judges called the rule well drafted. 
After the coffee break the panel opened the hearing for an open discussion. There was debate on Rules 85 et. seq on the Action against decisions of the EPO. The participants saw a conflict with the time for validating the patent in some CMS (regularly within three months after granting of the EP by the EPO). The Court must decide very quickly those actions in order to maintain the possibility for validating the EP in the relevant CMS if the entry into the register for unitary protection was finally refused by the EPO and the Court. The participants urged the CMS to extend the time limit for validation in their national laws before the entry into force of the UPCA. 
All in all, the 17th draft of the Rules of Procedure seemed to find broad acceptance among the participants. Although a few issues remained open, the 17th draft is a major step towards the new Court system. The broad acceptance makes it very likely that all CMS will give their approval to a final version of the RoPs based on the 17th draft after few remaining drafting point have been sorted out.. 
Thanks so much, Stephan. Readers who were there, and those who weren't, may wish to add their comments to this helpful report.
Those new European patent litigation rules: a report on the Oral Hearing on the 17th draft Those new European patent litigation rules: a report on the Oral Hearing on the 17th draft Reviewed by Jeremy on Monday, December 01, 2014 Rating: 5


  1. Although I'm not sure who Johannes Karcher is, I'm pretty sure that the Federal Ministry of Justice (BMJV), Germany is Heiko Maas (you may easily check this via the link of the BMJV provided in the article).

  2. Thank you for your comment, anonymous.

    You are correct, that Heiko Maas is the German Federal Minister of Justice. I did not allege anything else. Johannes Karcher works for the German Federal Ministry of Justice and is the leader of the Legal Group of the UPC Preparatory Committee preparing the legal framework for the UPC.

    Kind regards

  3. As the article correctly states, Johannes Karcher is from the Federal Ministry of Justice. He is not the Minister though

  4. A number of questions have reached me via email on my Article about the Trier Hearing, especially on the response of the audience on Rule 14.2(c) (compromise regarding the additional languages of the proceedings under Art. 49(2) UPCA).

    Actually a clear majority of the participants which commented on this topic did support Rule 14.2(c). That compromise proposal was unanimously welcomed not only by German industry (BDI), practitioners (BRAK, DAV, VPP, Chamber of Patent Attorneys), by GRUR and by the three presiding judges participating) but also from CEIPI and from the Dutch Confederation of Netherlands Industry and Employers (known as VNO-NCW) which welcomed it as a step forward.

    Also on the bench, among the members of the Drafting Committee for the Rules a clear majority (4:2) spoke in favor of Rule 14.2(c): Judge Sir Colin Briss, Judge Dr Grabinski, Conseiller Honoraire à la Cour de Cassation Alice Pézard and Prof. Tilmann expressed themselves in support of that proposal.

  5. During the hearing I mentioned the lack of any rule on minutes of the hearings.
    According to Mr. Kaercher the audio recordings will take the place of the minutes.

    However, the recordings will not be available to the public (Rules 106 and 115), so I am wondering whether these rules could lead to a lack of transparency, considering e.g. that minutes of the EPO hearings are always drawn up and published on the EPO website.

    Curiously, the UPC hearing has been videorecorded and made available on the ERA website "for the sake of maximum transparency".


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