Carpmaels & Ransford sued for missed appeal deadline

One of the UK's leading patent attorney firms is facing a claim brought by their client, chemical company BASF.  BASF is suing Carpmaels for a reported €1.05 billion, because of a missed EPO appeal deadline. Whilst the court proceedings are ongoing, some interesting background to the case can be found in arguments made by Carpmaels in the request for re-establishment of the appeal deadline. The EPO was characteristically unsympathetic in its decision on the request for re-establishment.  The Board of Appeal decision cataloguing the actions leading up to the missed deadline makes for some tough reading for any patent attorney wishing to sleep soundly at night. 

Case Background

BASF is a German multinational chemical company, with a revenue of nearly 60 billion euros. The patent in question (EP1663458) related to a filter for diesel emissions. The granted patent was successfully opposed by rivals Johnson Matthey and Umicore, and revoked in its entirety at opposition in 2012. 

The deadline for filing the Notice of Appeal was 2 months after notification of the opposition decision (Article 108 EPC). Carpmaels submitted a Notice of Appeal on behalf of BASF after this deadline, together with a request for re-establishment of rights.  

The EPO has stringent criteria for allowing requests for re-establishment. Re-establishment requires a party to show that they used "all due care" to meet the relevant deadline (Article 122(1) EPC) (IPKat). The requirement for "all due care" to have been shown applies to the applicant/patentee, their representative, and even none European patent agents (IPKat). For the "all due care" requirement to be fulfilled, patent attorney firms must show that the failure to meet a deadline was as a result of an isolated mistake in an otherwise well-functioning system (Case Law of the Boards of Appeal, III-E-5.4).

A "whole series of failures and mistakes"

The request for re-establishment was submitted by the Carpmaels patent attorney responsible for the case. The patent attorney had been a partner at Carpmaels for over quarter of a century, during which it was submitted, he "had never missed a due date for filing a Notice of Appeal or any other critical deadline before the EPO". Shortly before the incident with the appeal deadline, the patent attorney had retired. To manage the hand-over of work, the attorney continued to take some responsibility for a certain number of cases as a consultant and only visited the office occasionally. 

Stapling
Carpmaels argued that the missing of the appeal deadline was an isolated error in an otherwise "extremely reliable system". The EPO sent the minutes of oral proceedings and the revocation decision relating to the case stapled together, with the minutes of oral proceedings in front. Importantly, it is the revocation decision that sets the appeal deadline, not the minutes of oral proceedings. The Carpmaels records department did not notice the revocation decision and thus no appeal deadline was docketed. The responsible attorneys did not notice the mistake, and it was BASF who themselves contacted Carpmaels about the appeal deadline after noticing the decision on the EP register. Carpmaels were then instructed by BASF to work on a statement of grounds of appeal. Still, however, the appeal deadline was not docketed. 

Importantly at the time Carpmaels was still reliant on paper files. The retired partner ultimately responsible for the case was predominantly working away from the office and relied on documents that had been emailed to him by BASF and not the physical file. The attorney therefore failed to spot that the documents received by Carpmaels from the EPO had not been processed correctly by the records department. The retired partner was also travelling at the time the appeal deadline came due and only noticed that it had been missed on his return. 

The Board of Appeal in the appeal case (T1663/12) considered only the appeal's admissibility and the request for re-establishment. The EPO was characteristically harsh in its assessment of Carpmaels' case for re-establishment. The Board was not convinced that the monitoring system Carpmaels had in place was satisfactory, noting that: 

The fact that the Revocation Decision passed through so many hands without being identified as such indicates that these persons were not sufficiently instructed that mail must be read completely and thoroughly, or that no effective cross-check was performed.

The Board noted the failure of the record department to cross-check the incoming mail, the failure of the attorney responsible for signing the delivery receipt to properly review the documents, and the failure of the responsible retired partner to double-check the appeal deadline whilst he was working on the statement of grounds. The Board concluded:

looking at the whole series of failures and mistakes which took place, the Board sees no basis to argue that the failure to meet the appeal time limit could be considered an isolated mistake in a well functioning time monitoring system.

The request for re-establishment was thus refused. 

High Court showdown

BASF have now filed a case against Carpmaels in the UK. BASF have reportedly alleged that because of the missed deadline for filing the appeal, they lost a patent worth €1.05 billion ($1.2 billion). BASF particularly argued that the patent, which would have expired in 2034, would have allowed them to become a market leader in filter products.

Carpmaels' admit to missing the appeal deadline. Their argument in defence to BASF's claims is that the patent was clearly invalid anyway, and that the decision of the opposition division to revoke the patent would have been upheld by the Board of Appeal. Carpmaels have therefore placed themselves in the rather unusual position of arguing against the validity of a patent they once defended. The merits of the argument will be difficult for the court to assess, given that the opponents in the appeal case did not file replies to the statement of grounds of appeal, and no preliminary view was given by the Board on the merits of the case. The Court may however take note of the divisional patent (EP2042227) in the same family, which was also revoked at opposition. BASF withdrew their appeal of this decision. There also appears to be a pending divisional application (EP2933009), however the register shows no activity since 2017. 

In assessing the merits of the case the court may therefore have to wade through a myriad of hypotheticals: what decision would the Board of Appeal have come to had the appeal proceeded and what would have happened in the market had BASF's patent been maintained? However the court decides to deal with these questions, the case is undoubtedly going to be a fascinating one to observe. 

The case continues. 

Carpmaels & Ransford sued for missed appeal deadline Carpmaels & Ransford sued for missed appeal deadline Reviewed by Rose Hughes on Sunday, June 27, 2021 Rating: 5

23 comments:

  1. Burned on my mind is the comment from the mouth of Robin Jacob that he made when addressing a patent law conference I attended, 20 years or more ago. He told us that much as a career as patent attorney in private practice was attractive, it would never do for him. Why? Because he did not want to be robbed of his sleep at night. Because, he said, with the value of key patents being what it is, just one missed deadline can bring the whole firm down.

    We patent attorneys can't say we weren't warned.

    Ironic, I think, given the malpractice jurisprudence in Germany, that it's a German corporation running the action here. Robin Jacob was surely imagining the missed due date worst case to be on an American-owned patent.

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  2. I'd be interested to know how BASF arrived at a figure of around 1 billion - seems unlikely. It should be noted that this stems from an issue that occurred almost ten years ago and I'd imagine that Carpmaels have changed their processes since then. Everyone makes a mistake at some point, no matter how well they are prepared or their systems are functioning. What is important is how people learn from those and move forward - pointing fingers and playing the blame game is seldom productive. I'd be surprised if BASF get much from this case and I'm even more surprised BASF weren't tracking the deadline themselves given that this case was supposedly one of their crown jewels...!

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    1. But it wasn't making headlines on patent blogs 10 years ago. I think it has the potential to break out of IP-centric circles into the wider legal and business consciousness, which is bound to lead to reputational damage for Carpmaels.

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    2. PAMIA has an upper limit for insurance claims. Won't say what it is, as that is confidential, but it is much less that GBP 1 billion!! Carpmaels, like other big firms, will have top up insurance cover above the PAMIA threshold, but it won't go near the amount at issue here. Not that an English court is at all likely to award BASF anything like GBP 1 billion, mind

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  3. My understanding is that most private patent attorney firms in the UK are insured through the same mutual - PAMIA. It would be interesting to see a follow-up article as to whether the size of the claim, if successful, would have repercussions for the wider industry due to the impact on the mutual.

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    1. An increase in premiums seems likely. Having said that PAMIA must have known that claims of this size were possible in a number of sectors. Firms handling patents for blockbuster pharmaceuticals face a similar risk if a key generics-blocking patent were lost, for example. But I suppose knowing it's possible and having it actually happen are two different things.

      I'd also like to see a follow up on this topic, but it seems doubtful that anyone would want to disclose the necessary information.

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  4. BUT FOR THE GRACE OF GOD GO I. I wish Carpmaels luck. And I think whoever currently represents BASF (you know who you are) should consider whether you want to represent this company and what it would take for them to try you and sue for ONE BILLION DOLLARS (how obscene). I would certainly turn them away as a client.

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    1. I totally agree. It must have been unbearably stressful for those involved in both the human error (docketing) and the negligence case. After 30 odd years in the job I question the sanity of any private practice attorney who says they are not burnt out. Those involved have all my sympathy and more. I hope the damages award is negligible.

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  5. The request under Art. 122 EPC was filed by the representative on 25 July 2012.

    DG3 issued T1663/12 14 January 2013. That was relatively swift. Its 36 pages are mostly a copy-and-paste recapitulation of the arguments put forward, with a shorter refutation.

    I've seen this type of action from disappointed private inventors going crazy^W er, sorry, ballistic. Much less so from conglomerates, who are supposedly more savvy about the possibilities and limitations of the patent system.

    Question is: why did BASF wait nearly nine years to file this lawsuit?

    Claims in civil cases are typically limited to much less than nine years in most jurisdictions, and what happened in the parent application has no direct incidence in the outcome of its EP "divisionals". The UK Limitation Act (1980) provides that for an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.

    Divisional EP2042227 recently bit the dust, with the proprietor throwing the towel mere moments before the board was finally going to decide the case.

    From the minutes of the OP held 17 December 2020 in T 56/18, page 3: "The proceedings were resumed and the Chairman announced the opinion of the Board on the main request and expressed the Board's preliminary opinions on the auxiliary requests. In addition he reminded the appellant of new Rule 103(4) EPC. After a short recess the appellant withdrew the appeal".

    Did the appellant want to avert an unfavourable final decision which might have had a bearing in some foreign jurisdictions, in particular the US which has specific demands, cf. 37 CFR 1.56, MPEP s. 2001?) One possibility is that the plaintiff is trying with this suit to signal something to the world (akin to a failed election candidate refusing to acknowledge certified ballot results, against all evidence), rather than actually seeking some monetary reparation.

    The reference to new Rule 103(4) is cute. The full current fee for appeal is 2705€. The appellant paid 1880€ back on 8 January 2018, of which 470€ were returned. Is the EPO seriously thinking that this could constitute a serious incitation for anyone but the most destitute of applicants?

    If I wanted to follow this case, as suggested, how could I go about it? There is no mention of the venue (an English court?), a case number, or a filing date (pre ~2009-ish?). Journalism has its "Five Ws". Blogs ought to heed them too.

    Is there an equivalent to PACER in Britain? BAILII only publishes decisions, not the parties' documents.

    BTW, when I begin to type "Carpmaels" in a too well-known search engine, it autocompletes with BASF...

    The patent family includes a large contigent of US members, with no less than 14 (!) issued patents. I can't tell how many of these are being opposed, as USPTO PAIR seems to be down at this moment, but BASF filed a copy of an USPTO IPR submission in the record for EP2042227, from which I learn that at at least US8899023, US9032709 and US9039982 are the object of IPR proceedings. The batting average immediately reveals something about the comparative value of examination from different patent offices...

    The pending EP applications and granted patents provide some provisional rights until they are finally decided by an EPO division, board of appeal, or national court. Who will reimburse the public the costs attributable to the uncertainty from the ongoing examination, opposition, and appeal procedures? EP2042227B1 stood about five years before being canned, and this case, EP1663458B1, about four. This family is in its 17th year of existence, and EP rights might still be granted.

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  6. Roufousse, here my 5 cents (worth no more than that, I would say).

    30 years ago, back at the chambers of our QC having that very morning lost the appeal at the Court of Appeal, the CEO explained to the QC that his duty to his shareholders was to mitigate their losses. In that vein, he enquired, would there be any possibility of bringing proceedings against the patent attorney firm, seeking compensation for the loss of the patent? He did do me the courtesy of looking at me and saying apologetically "You understand don't you: it's only business".

    Here, I suspect that BASF's conduct is driven by the exigencies of business, the market, and the legal environment in its biggest market, the USA.

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    1. Max,

      Your brazen CEO was obviously channeling The Godfather (1972) where the capitalistic order constitutes a Leitmotiv. There is this scene in the conclusion where caporegime Sal Tessio (Abe Vigoda) realises in an eyebat his imminent doom, and turns to consigliere Tom Hagen (esq.) (Robert Duvall) to justify his treason: "Tell Mike it was only business. I always liked him."

      Which makes me wonder the type of "business" your chambers and its customer was mixed up in. :-) :-)

      A sad part is that the components in question were the ones rendered useless by the fraudulent software in the emissions scandal. How many were mounted in German cars?

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  7. The EPO, including the Boards of Appeal, regularly make formality mistakes that would fail the ridiculously high bar they have set for "due care" by patent attorneys in far smaller and significantly less funded set-ups.

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  8. Roufousse, the case number is BL-2018-001464 and the claim form was issued on 29th June 2018. I'm not sure why this is only just news... The (rough) "equivalent" to PACER is ce-file and the papers are on there if you have the inclination to wade through them. https://efile.cefile-app.com/.

    MaxDrei referred to comments of Robin Jacob. I may be misremembering but I believe it was also he who said there should be more in the law of negligence to "distinguish the sort of mistakes we all make from time to time from the sort of mistakes we really should not be making". It would be interesting if the High Court were to decide that the attorney was not negligent in the face of the EPO's decision on "all due care". But I doubt that will happen. Anyway I don't even know whether BASF base their claim in tort, breach of contract, or both.

    As for PAMIA, their policies (like most insurance) as far as I know have a limit of liability which I suspect might be less than a billion quid. So in theory the damage to others through increased premiums ought to be limited by that.

    You would think the case would settle... it's just about money now after all and it will presumably be defended by insurers. But you never know...

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    1. Anon, Roufousse: the reason that it is "only just news" is that it's only just been in the courts - hearings took place throughout quite a big chunk of April/May.

      See:

      https://www.managingip.com/article/b1rmm4kf84wv50/basf-targets-carpmaels-in-1bn-row-over-missed-patent-deadline

      and

      https://www.juve-patent.com/news-and-stories/cases/basf-sues-carpmaels-for-damages-over-missed-appeal-deadline/

      A judgment will presumably be handed down in the coming months.

      As to why BASF waited so long to bring their claim, maybe that will be addressed in the judgment?

      Carpmaels' defence - being based on arguing that the patent was clearly invalid - makes me as an attorney very uncomfortable. Presumably it is Carpmaels themselves who advised BASF on the prosecution, opposition and appeal strategies, including the scope of claims to pursue. Unless their advice to BASF at the time was that the claims of the patent were weak, this defence seems to be tantamount to saying not only were they responsible for missing a deadline, but also that their advice was bad!

      Surely the advice given to BASF by Carpmaels must have formed a significant part of discovery in these proceedings. It will be very interesting indeed to see what makes it into the judgment.

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    2. Thanks for the details, I have now a better understanding, but the picture is still incomplete.

      Assuming that the 6 year limitation I was referring to is the correct norm, and taking the failure to file a notice of appeal by the expiry of the delay as the triggering event, which would be 12 July 2012 (2 May 2012 + R. 126(2) EPC + Art. 108(1) EPC, first sentence + R. 131(4) EPC), then the suit was filed just a couple of weeks before the time window closed.

      The system you link to seems to only allow the filing of documents with the courts, but unlike PACER doesn't give access to them to third parties. Thanks anyway.

      Poking around the registry, I see that BASF and C+R parted ways circa 2016, but the firm still acts in a number of cases where some member of the BASF nebula is merely a co-owner.

      C+R converted to a LLP on 1 July 2013, presumably from a previous General Partnership. The events occured before that point in time, when the partners would still have had unlimited exposure to liabilities. I find at Companies House five entities including C+R in their name, of which four are LLPs and one is a LTD. Only the LTD was in existence in July 2012. If the case isn't otherwise settled, I would be curious to see who is named as the defendant on the judgment, it doesn't seem logical to me that one could retroactively transfer away his responsibilities.

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    3. ce-file does allow copies of filed documents to be downloaded. Once logged in I press "create office copy request" then enter the case number, then it's just a case of choosing what you want. It is a bit more expensive than PACER.

      What I can't remember, since it is so long ago, is what I had to do to sign up to get this facility. However I don't believe the facility is limited to those qualified to practice before the relevant courts.

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  9. The decision by the EPO not to reinstate does seem a little harsh. Errare humanum est and the circumstances described do seem "one-off". Be that as it may, if I had been damaged to the tune of one billion dollars, I don't think I would have waited 9 years to file suit. BASF is lucky that there is no estoppel (is that being argued?). I worked for a large multinational company and we routinely double checked litigation action dates on the principle that errare humanum est. I am surprised that BASF did not do the same, especially for an asset worth 1 billion US.

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  10. Peter G makes a good point. I remember thirty years ago discussing with my employer, the sole proprietor of a London patent attorney firm, the drafting of the firm's "standard" cover letter to the patent grant certificate. Under "annuities" he changed the burden of the text from "We shall send you reminders" to "Our records provide for sending you reminders but this patent is your property, not ours, and so you will want to make your own diary entries to protect yourself against inadvertent loss of your own valuable property". I was duly impressed. What a useful resource to draw upon, in the event of a malpractice suit, years later.

    And just as much impressed, I suppose, would have been those clients who bothered to read the text of the "standard" cover letter.

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  11. This is clearly annother incident of a client trying to profiteer from mistakes of an agent. It gets worse that the client has deep pockets and feels entitled to world domination. As a rule of thumb, I never take on big clients with high volume, as it comes with demands of low fee and an ego.

    We have to provide some social justice in our response, as there is only so much the law and insurnace companies can do to protect agents. We should decline all instruction from applicants who had sued an agent before.

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  12. What clients, courts and agents must bear in mind, is that a patent is just one part of a bigger machinery for making a business successful. There is uncertainty of success the entire way, in the effectiveness of product marketing, product reliability, supply chain, everything.

    By suing for a certain mistake made by other people, BASF is trying to give certainty to an uncertain success. How convenient.

    BASf should just fault themselves for choosing Carpmaels & Ransford, own the consequence and move on.

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  13. The European Patent Office issued the minutes of oral Proceedings and stapled the written decision to the back, which sets the appeal deadline. It is totally understandable that it was missed by Carpmaels Records department and the EPO have to take some of the blame for the way the dispatched the communications. I therefore feel the the restoration decision was very harsh and wish Carpmaels luck.

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  14. Is there any indication of when the decision will be handed down?

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