Conference report: 'Injunctions and flexibility in patent law'

A few days ago, LMU Munich hosted the conference "Injunctions and Flexibility in Patent Law". The programme featured several high-profile speakers. Katfriend Léon Dijkman (European University Institute) was also there, and has now prepared a report for The IPKat.

Here's what Léon writes:

Conference report: Injunctions and flexibility in patent law 

The conference faculty

"Once a joint domain of inertia and arcana, questions of patent remedies now generate heated public debate", wrote John Golden in a 2010 article. It seems the trend has now reached Europe. Two weeks ago, patent injunctions were the subject of a conference in Erlangen; the relevance of the debate is well summarized in the IPKat's conference report here. And just last week, a second conference was held on the subject in Munich. The two-day conference offered a thorough and exciting look at the thorny issue of court discretion in granting patent injunctions. It is hard to do each of the more than twenty speakers justice in a short summary, but here are the key points of discussion for each panel. Interested readers can find the speakers' presentations here.

The first panel (Thomas Cotter, Henning Grosse Ruse-Khan, Lionel Bently and Franz Hofmann) addressed the economic foundations and legal framework of patent injunctions. Prof. Cotter addressed property and liability rules and argued that effective differentiation between them will result in a compensation for the patentee that is in line with the added value of the patented technology. Substituting property rules for liability rules in appropriate cases ensures that just the technology's value, and not the threat position offered by the patent right, guide the patentee's remuneration. The discussion then shifted to the compatibility of more flexibility of courts in awarding injunctions with the national and international legal framework. Particularly revealing was Prof. Bently's argument that the focus in eBay v. MercExchange on final, rather than interim, injunctions was significant. According to Bently, this marks a changed perception of final injunctions in the common law system, which might be explained by considerable procedural changes in the past forty years and modern thinking about property rights.

The second panel (Richard Arnold, Klaus Grabinski, Willem Hoyng, Sapna Kumar) addressed proportionality in contemporary practice and offered perhaps the most lively debate of the conference. Mr Justice Arnold stated unequivocally his belief that any European court that does not perform a proportionality assessment when issuing a patent injunction disregards its obligations arising out of the Enforcement Directive and its interpretation as provided by the CJEU. Judge Grabinski took a different view and asserted that in Germany, the principle of proportionality is reflected in various limitations to patent exclusivity, such as compulsory licenses (the clash was reported separately on FOSS patents). Prof. Kumar's American point of view enriched the debate by explaining that eBay remains a controversial decision in the United States and arguing that its application by lower courts is sometimes sketchy. The different positions invited many comments from the audience which made clear that while many participants agreed that a proportionality test should be part of patent law, significant issues remain unresolved.

The third panel (Rafal Sikorski, Martin Stierle, Arthur von Martels) closed off the first day with presentations of recent work relevant to the topic. Prof. Sikorski argued that across jurisdictions there is a convergence toward greater flexibility when issuing injunctions, even if the legal tools to achieve it differ. In response to a question from the audience, he suggested that the list of circumstances in Article 11(2) Trade Secrets Directive is a codification of what European legal orders consider the core element of the proportionality inquiry, which can inspire patent law. Dr. Stierle addressed the difference between awarding damages in lieu of an injunction in a patent case and the grant of a compulsory license. His presentation invited critical questions from the audience, particularly from Judge Grabinski, who questioned whether a court could deny an injunction in cases where the defendant had not applied for a compulsory license. The issue, on which participants seemed divided, is important inter alia because of implications it may have for TRIPs compliance of courts.

The next morning, the fourth panel (Matthias Zigann, Jaani Riordan, Penny Gilbert) discussed ways to implement proportionality through 'tailored' injunctions, for instance by allowing a grace period to enable an infringing party to design around the patent. The key insight was that it is not as easy as it might appear to formulate an injunction to strike the right balance between the relevant interests. As Mr Justice Arnold remarked from the audience, it is often a matter of who bears the onus to bring new proceedings: a narrow injunction will place it on the patentee, whereas a broad injunction will place it on the infringer. Territoriality was another interesting topic of debate, the question mainly being whether it is appropriate to issue recall orders with cross border effect. This was defended by Willem Hoyng from the audience (in line with Dutch practice in this respect, see e.g. here) whereas Penny Gilbert would be more reluctant to allow such broad orders.

The fifth panel (Maximilian Haedicke, Justin Turner) concerned second medical use claims. These have recently been the subject of much attention and the discussion focused on how injunctions can strike a balance between defending the interests of the patent holder and allowing the supply of the drug for unpatented use. The question remains open, with Prof. Haedicke suggesting that the problem might be caused by social law, i.e. the rules governing physicians' prescription practices. Resolving it would therefore require legal reforms outside the field of (just) patent law. From the audience, Ansgar Ohly made the interesting suggestion to borrow from copyright and devise a compulsory compensation scheme that would recompense patentees for infringing sales that cannot be easily prevented. Another interesting idea came from Matthias Leistner, who pondered whether generic manufacturers might rely on the CJEU's refusal to deal cases in competition law (e.g. C-241/91 Magill). In sum, the panel provided ample food for thought.

The sixth and final panel (David Kitchin, James Robart, Peter Picht) closed off by looking at injunctions in cases involving Standard Essential Patents (SEPs). Territoriality was again a topic of considerable debate where the panel identified a clash: Lord Kitchin defended the UK approach in Unwired Planet to set global royalty rates in SEP disputes, whereas Judge Robart explained why U.S. courts are hesitant in this regard. Are global royalty rates a pragmatic solution to a SEP-dispute, or does it invite inappropriate forum shopping? The issue of whether injunctions are appropriate is at the heart of SEP disputes and it is interesting that we already have some decisions in this area from different jurisdictions. These can be discussed and built on so as to come to a balanced and established approach through judicial cooperation.

All in all, the conference offered a broad but thorough discussion of the many different aspects of patent injunctions. In their closing remarks, professors Leistner and Ohly summarized the debate and identified four archetypical situations in which the traditional approach may cause problems: cases involving (i) non-practicing entities or non-practiced patents, (ii) SEPs, (iii) small components in complex products and (iv) significant public interests in the technology, such as pharmaceuticals. It is expected that the number of these cases will only grow and it is right, as professor Golden wrote, that they should generate public debate: after all, patents are powerful rights the enforcement of which can have repercussions beyond the parties to the dispute. It seems that patent courts have their work cut out for them.