Recent Developments In International IP: Europe

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1 Recent Developments In International IP: Europe IPO Conference Boston 2013 Dr. Aloys Hüttermann M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

2 Recent Developments in European IP I. Unitary Patent and Unified Patent Court II. Antitrust Developments III. Further issues M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

3 Unitary Patent and Unified Patent Court The greatest change in European Patent Law since the establishment of the EPO in the 1970s. The system is not yet fully decided, many important details are still unknown. Only a short overview can be given. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

4 Current member states of EPC

5 Unitary Patent One single patent for 25 member States of the EU (except IT + ES). Will be available once the Court system has started. Will be granted by EPO, no new Patent Office is founded. Will not replace existing "validation" system, but provide an alternative. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

6 Unitary Patent Countries

7 Unified Patent Court Will be a newly introduced Court System with its own rules and jurisdiction. Competent for all Unitary Patents and existing European patents and applications which are pending on or are filed after the day the Court starts. Both for litigation and invalidation M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

8 Unified Patent Court Importance therefore much higher than the Patent because this is no alternative but a replacement of the current System. Based on treaty requiring ratification of 13 states (including DE, FR, UK) expected to be available from 2015 or M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

9 Unified Patent Court Courts of 1st instance: A plurality of courts from which patentees de facto can choose from ("forum shopping"). These are divided into Local Chambers ( 1 / country), Regional Chambers (e.g. Baltic States), one Central Chamber (with places in Paris London Munich). DE: 4, FR, IT: 2 local chambers (based on 2011 numbers). M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

10 Unified Patent Court A possible defendant cannot forum shop since invalidation actions as well as actions for declarations of noninfringement must be started at the Central Chamber. Moreover, in case that a declarations of non-infringement is started, the patentee can "overrule" this by filing a litigation within 3 months (and draw the case to a chamber of his choice). M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

11 Unified Patent Court 2nd instance (i.e. Appeal) Court in Luxemburg. Unclear if European Court of Justice will have any patent role in the Future (as in Biotech right now). Rules of procedure as well as cost issues still subject of Discussion. A draft for procedural rules is pulished and open for input from practicioners and the public until 1 October M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

12 Antitrust issues There is a referral to the ECJ concerning "FRAND". The EU commission has increased scrutiny on IP matters, pharmaceutical and mobile phone industry were accused of "abusing IP rights". Companies were fined for what the EU considers "pay for delay". No change when Unitary Patent System comes but next year there will be new Technology Transfer Guidelines. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

13 Further issues Employee IP Law is important especially in Germany. Law changes have made it significantly easier for companies to handle and obtain the rights for employers inventions. The trend goes to standardized compensation. NPEs are considered not a big threat due to the special circumstances in litigation, especially in Germany (e.g. low damages, loser-pays-system) M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

14 Further issues Grace period in Europe only in exceptional areas (e.g. German Utility models). Pressure exists to introduce a grace period, however, with the EPO this would require a change of the EPC treaty, which is unrealistic in the foreseeable future No change in all three areas due to the Unitary Patent System expected. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

15 Thank you very much for your kind attention Michalski Hüttermann & Partner Düsseldorf München Phone Fax mail: info@mhpatent.de Internet: M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

16 Back Up Slides

17 Present Situation Today the EPO grants patents for the countries which are member of the European Patent Organisation (some of which are non-eu). However, after grant, countries need to be "designated" (validated) which requires in some countries translations and national representatives. Furthermore annuities have to be paid country-by-country. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

18 Unitary Patent Annual fees still unknown, only "benchmarks" exist. For a transitional period a translation into DE or FR will be required. May be interesting only for certain technical fields, e.g. pharmaceuticals or biotech, where validation in many countries is the rule. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

19 Unified Patent Court For a transition of seven years after the Court exists there will be an "opt-out" for standard European patents. The applicant can declare that he wishes them to be treated under the current country-by-country litigation system "Opt-out" can be declared also for applications right at the time of filing at the EPO. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

20 Unified Patent Court E.g. when the court starts in 2015, "opt-out" can be declared for all then pending European patents and applications as well as all applications filed until 2022 (if no Unitary Patent is chosen for them). No "opt-out" if filed in According to the rules draft, "Opt-out" will be subject to a fee. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

21 Unified Patent Court From what is in the draft, the system will be close to Dutch/ German practice "front-loaded", mostly in writing, with a loser-pays compensation scheme, i.e. paying reasonable attorneys fees and court costs. However, in the rules draft many important issues, mainly the height of fees are not yet fixed. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

22 Unified Patent Court Altogether the Court will have estimated judges. 1st instance: Panel of three judges For local/regional chambers either two "local" judges and one "foreign" judge or vice versa, depending on caseload before UPC came into existence. Two "locals" for DE / FR / IT / NL (?) / UK (?) M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

23 Unified Patent Court 2nd instance: Panel of five Judges In litigation counterclaims for invalidation are possible. Court may then bifurcate by giving the invalidation to the Central chamber (and may stay or not) or decide both claims. Probably end of German bifurcation system. M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

24 Antitrust: Orange Book BGH-decision (referring to CD-R(W)s) Compulsory licences may be possible, however: - The infringer must make an offer to the patentee for a FRAND license or - when he already uses the technology without license, he must make a definite offer and either pay the patentee upfront or deposit the money safely (e.g. at a court) M I C H A L S K I P A T E N T A T T O R N E Y S H Ü T T E R M A N N

25 M i c h a l s k i H ü t t e r m a n n P A T E N T A T T O R N E Y S EU Unitary Patent and Unified patent court IPO Conference 2013 Dr. Aloys Hüttermann Michalski Hüttermann & Partner Düsseldorf, Germany

26 1. General Outline / Historical Overview This report 1 gives a short overview about the coming European Unitary Patent and Unified patent court at the time of 1 August It includes also personal observations and considerations, to a great deal arising out of statements that were made on the IPO s European Conference on May 27, 2013 in Brussels, where I was co-organizer. The installation of a Unified Patent and Unified Patent Court is the greatest change in European IP since the foundation of the OHIM 2 in the 1990s, In the field of patents it is surely the greatest revolution since the foundation of the European Patent Office by the European Patent Convention in This new Unified Patent System can be regarded as the (preliminary) end of a historical process which started in 1945 with the installation of the International Patent Institute 3 in The Hague, Netherlands - the buildings of this institute now are part of the EPO s branch Office there. In the Seventies of the last century, two initiatives were started to further harmonize and bundle European Patents and European Patent Law. The one initiative resulted in the already mentioned European Patent Convention, which was signed in 1973 in Munich. It is the basis for the EPO system as we know it now. The second initiative was the so-called Community Patent Convention (CPC) 4 and was signed in 1975 in Luxemburg. With this Convention it was planned to install a EU-wide 5 patent for 1 This report bases on a similar report as well as a series of lectures which I will hold in October 2013 at the Chung-Ang University, Seoul, Korea. Therefore please excuse the slightly over-academic tone. 2 The so-called Office for Harmonization in the Internal Market, the Office which registers European trademarks and designs. 3 This Patent Institute conducted searches for the Benelux Countries and France cf. the excellent book about patent history by Dr. Peter Kurz, Weltgeschichte des Erfindungsschutzes, Heymanns 2000, p. 548 ff. 4 For a text cf (Appendix to the Agreement on Unitary Patents, see below). 5 Note: At that time it was the European Community (EC) - 2 -

27 the first time. However, since the Convention was not ratified by all (then) member states of the European Community, this Convention never came into force. However, the agreement text contained a full-scale agreement about material as well as formal patent law and a planned court system which would have handled European Patent Litigation. The important difference between the European Patent Convention and the Community Patent Convention is that the first is based on an international treaty, whereas the second would have been valid only within the European Community. This explains why e.g. Switzerland and Turkey are part of the European Patent Convention, two countries which at the forseeable future will not join the European Union. The initiative for a single European Patent was refueled in the late eighties by the signing of the Agreement on Unitary Patents 6 in 1989, where an agreement to have a unitary patent in the future based on the 1975 CPC was signed; however this was fruitless as well and was finally buried in 2004, mainly for language issues. The third - and so far last - initiative to install a single European Patent started in the late Tens of this century just after the failure of the 1989 Agreement. In the meantime the Lisbon Treaty, the EU-Reform Treaty 7 had came into force in This Treaty allows the cooperation of EU-member states within the EU under certain circumstances, so-called enhanced cooperation, so that the ability of single EU-member states to block initiatives is circumvented. Before the Lisbon Treaty, just one single opposing member state had been able to halt any regulation, even when all other stated had agreed. Since no final agreement about the Unitary Patent and Unified patent court could be reached among all 27 member states of the EU, it was agreed to use this enhanced cooperation amongst those 25 member states who could agree on the initiative and leave the two objecting countries, Italy and Spain, out. This was the key stone for setting up the whole system, otherwise also this initiative would have shared the bitter fate of the initial CPC. 6 for a text cf.: 7 for a text cf

28 The Unitary Patent and Unified patent court system was then finalized in 2012 and awaits ratification, where needed. However, it should be noteworthy that only the Unitary Patent is handled via an enhanced cooperation within the EU, whereas the Unified patent court is ratified in an international treaty, similar as with the EPC. Some of the reasons for that will be explained later on. Furthermore the situation of 2012 is naturally different as in 1975 when the CPC was agreed upon and takes into account that in Europe now since 35 years the European Patent Office prosecutes patents. Therefore the new agreement differs heavily from the originally intended Community Patent System

29 2. Unitary Patent The Unitary Patent was started by the regulation 2011/167/EU which formally allows 25 of the 27 member states to start an enhanced cooperation in the field of patent law to form an Unitary Patent. Italy and Spain immediately filed a suit against this regulation before the European Court of Justice, arguing that the other states would not have been allowed to start such a cooperation, however, this suit was finally rejected 8 by the ECJ on 16 April Nonwithstanding the litigation at the ECJ, the remaining member states, together with the European Parliament, had agreed on two further directives, 1257/ 2012 and 1260/ which handle the Unitary Patent as such as well as translation issues. Italy has - quite to the surprise of most observers - decided to join the cooperation, whereas Poland has decided (at least at the moment) not to cooperate. To briefly summarize: Contrary as it has been done with the European Trademark and Design system, where a new Office, the OHIM in Alicante had been founded, there will be no new Patent Office run by the European Union. Rather, the European Union 10 will allow the EPO to grant (single) patents which then have effect within the EU. If the patentee desires to have a Unitary Patent he must file a request within one month after the publication of grant of the European Patent. 8 for a text of the verdict cf. st&dir=&occ=first&part=1&cid= There is a second lawsuit pending, this time only filed by Spain 9 for a text cf 10 In this context: The European Union insofar as the Enhanced Cooperation goes, i.e. not for Italy and Spain - 5 -

30 However, this will only be a further option, i.e. applicants will still have the possibility of obtaining the usual European Patent which then has to be separately validated; only a double protection, i.e. requesting a Unitary Patent together with validation will not be possible. The patentee must choose which path he wants to follow. The Unitary Patent will be available once the Unified patent court System has been ratified. Concerning languages, there will be a transitional period of at least six years and maximum 12 years in which after grant of the Unitary Patent, the applicant will have to provide a translation of the application either into English, or - if the application text is in English - either French or German. The length of the translational period depends on the quality in which machine translations are available. Any defendant which is litigated out of a Unitary Patent who has its place of residence within the EU in a country, where the language of said Unitary Patent is not an Official language may require a translation, same goes for a litigation in a member state who does not have English as Official language. The non-availabilty of said translation may in certain cases also affect the amount of damages which the defendant may have to pay. Surprisingly - taking into account the heavy disputes in the past concerning this issue - there are no further translation requirements, thus eventually the Unitary Patent will surely decrease translation costs for applicants to more or less zero. Only when litigations are filed then a translation will probably be demanded on a standard basis. The most important - and still undecided - question is of course the height of the annual fees that have to be paid; the directive has left that to a special commission 11 which is at the time of writing still in the process of deciding. Initially it was the goal that the applicants may save costs whereas it was also the goal that the national Patent Offices - which receive 50% of the annual fees of any validated European 11 cf. Art 14 of directive

31 patent in their Country - in total may receive the same revenues as before. This may sound like an impossible task; however these goals were formulated before the so-called London Agreement 12 came into force in Before the London Agreement, applicants were forced to file a translation of the full application in any country in which they wanted to validate a patent. A Unitary patent would have made most of these translation costs obsolete. After the London Agreement, in many 13 important European Countries, this translation is waived, so that the applicant already enjoy cost-saving effects at present. which makes the task of setting the annuities not easier. In the regulation, these mentioned two goals are insofar reflected as in Art 12 of the Directive /EU the renewal fees shall be set inter alia - sufficient to ensure a balanced budget of the European Patent Organisation - but at the same time should facilitate innovation and foster the competitiveness of European business, - also taking into account the size of the market. According to Art 12, (3), the fees should be (a) equivalent to the level of the renewal fee to be paid for the average geographical coverage of current European patents. (b) reflects the renewal rate of current European patents (c) and the number of request for unitary effect 12 For a good and quick overview of the London Agreement cf 13 For an up-to-date list cf

32 There are no drafts concerning the annual fees available and first drafts are expected only by the midst of 2014, however, it has been speculated that the annual fees would be set as for a European Patent with seven validation countries. Since many important applicants of European Patents at present only validate in three to five countries - most of them usually either London Agreement Countries or including Italy and Spain, where the Unitary Patent will not come into force in the forseeable future - this would make the Unitary Patent uninteresting for them, leaving the Unitary Patent a reasonable alternative only in those technical fields where validation in many countries is the rule, such as Pharma and certain areas within Biotech. This even more taking into account that many European Patents are now thinned out during the years, i.e. that after some years the Patent is prolonged for lesser and lesser member states, thus avoiding higher costs. Van Pottelsberghe 14 reports that for many European Patents after a few years only a few are still kept; according to his research, Germany 15 is the only country in the EU where about 20% of all validated patents reach the final twenty years of protection. The IPOs European Practice Committee has sent a letter inter alia to the special commission in this behalf, written by Jean-Jacques Canonici, head of the European Practice Committee. Since a Unitary Patent may be invalidated in one procedure - different from the present system where (at least de jure) one had to nullify country by country once the Opposition term is over - observers have already spoken of the Unitary Patent as a Danaan gift 16 for the pharmaceutical industry. 14 van Pottelsberghe, Lost Property: The European patent system and why it doesn't work, Bruegel Blueprint, 2009, Danguy J. and B. van Pottelsberghe de la Potterie, 2011, Cost-Benefit Analysis of the Community Patent, Journal of Benefit-Cost Analysis, 2(2), Art. 3, 41p 15 Remark: Therefore in van Pottelsberghe s view, Germany (or the GPTO, to be precise) would lose money in any of the feasible scenarios. 16 in German: Danaergeschenk, from Timeo Danaos et dona ferentes out of Virgils Aeneis (II, 49) - 8 -

33 3. Unified patent court Whereas the Unitary Patent may in the long run end up being a tool used only by a fraction of the applicants, mainly from selected technical areas, the Unified patent court will surely have wide impact on European and International Business as well as the European Patent System as a whole. The Unified patent court is not ruled by a directive of the European Union. Rather an Agreement on a Unified Patent Court was agreed upon the 25 member states which is, however, an international treaty, to which, however, only member states of the European Union can access. For this reason, the European Parliament in December 2012 has only issued a recommendation to ratify said Agreement. It is noteworthy that Italy has announced to ratify the agreement whereas Poland announced that it will not, which will mean that Poland will be part of the Unitary Patent but not of the Court and vice versa. The reason for the solution as chosen, i.e. avoiding an European Directive, lie at least partly in an Opinion 17 of the European Court of Justice that a previous draft of the Agreement (which was to be intended to be under the roof of the Union) would not be compatible with European Law. It cannot be ruled out that also the experience 18 which has been made in the field of Biotechnology, where via the Biotech Directive 98/44/EC the ECJ has the last say, did also not enhance the desire to embed the ECJ in the intended Unified Patent Litigation System. However, observers of the system have already remarked 19 that it may be unaviodable to have the ECJ involved since the architecture of the Unified Patent Court System might 17 Opinion 1/09, cf 18 cf Hüttermann A., Storz U. Monsanto Soy Bean Patent Cases A Paradigm Shift Gathering In Case The ECJ Takes Over Patent Jurisdiction, les Nouvelles Sept 2010, ; Aloys Hüttermann The Monsanto Case - A first landmark ruling of the ECJ The IPO Intl Committee Newsletter, December 2010, p. 6-10; A. Hübel, Patentability of pluripotent stem cells unlikely although they are not considered as embryomitt. dt. Patentanw. 2011, 11, S. 494, Hüttermann A., Storz U., Die möglichen Auswirkungen des Monsanto-Urteils des EuGH auf das Konzept des Stoffschutzes bei chemischen Verbindungen Mitt. dt. Patentanw. 2011, 1, S

34 automatically demand at least the possibility of referral to the ECJ. It is to be expected that in one of the first important cases involving the Unified Patent Court the losing party will try to bring its case before the ECJ and see if it is accepted. Since the Agreement is a multilateral treaty, it needs to be ratified first. As usual, ratification agreements exists; the agreement will then enter into force four months after thirteen member states, amongst them mandatorily all three of France, Germany and the UK 20 have ratified the Agreement. At the same time, also the Unified Patent will come into force. It is to be expected that this will be around 2016 at the earliest. Since especially in the UK heavy discontentment with the Agreement text in particular and the EU in general exists, it may still be that the Agreement (and thus the Unified Patent) will never see the light of the day and share its fate with the two previous agreements presented before. So far, only the Agreement text and the statute of the Unified Patent Court 21 is known in its definite form. The Rules of the Unified Patent Court are still in the making by a Drafting Committee which consists of seven members, two each from France, Germany and the United Kingdom and one member from the Netherlands. On June 25, 2013 a draft version of the Rules of the Unified Patent Court was published online 22 by the Drafting Committee and the interested public was asked for input until October 1, 2013; this report is based on this draft rules. It is noteworthy that in the draft rules the amount of all fees is still left open Competence of the Unified Patent Court 19 cf. eg. Tillmann, VPP-Rundbrief 2013, (2), 56-60, whereas Haedicke, GRUR Int 2013, 609 takes a different position 20 Remark: These countries are not directly mentioned in the Agreement (Art. 89) but Art 89 speaks of the three countries in which the highest number of European patents had effect in the year preceding the year in which the signature of this Agreement takes place and these are exactly France, UK and Germany (in ascending order). 21 For a text in all three binding languages cf the EPO Official Journal 5/2013,

35 According to the Agreement 23 the Unified Patent Court is competent inter alia for litigation and invalidity procedures for all Unitary Patents all Supplementary Patent Certificates (SPCs) but also (and this makes the Unified Patent Court so important) for all European Patents pending at the day the Unified patent court enters into force as well as all European Patent applications either pending at or being filed after the day the Unified patent court enters into force nonwithstanding that these European Patents are no Unitary Patents and nonwithstanding if any European Patent arising out of any pending patent application will turn into a Unitary Patent or be validated as before.therefore the Unified patent court will at the day of installment be the competent venue for more than a million patent and patent applications. However, concerning the usual European Patents there is a provision in the Agreement 24 that applicant will have the possibility to opt out, i.e. declare that an action for infringement or for revocation can/must be brought before the national courts. The applicant - if no court action has started so far - may still opt-in at any time, but a second opt-out is then not possible anymore. This opt out -possibility is, however, only availabe within a period of seven years after the entry into force of the Unified patent court with the possibility of the Administrative Committe to prolong this seven-year period for another seven years. To give an example: If 23 Art. 3 of the Agreement 24 Art 83 of the Agreement

36 the Unified patent court starts in 2015, then applicant will have the possibility to opt-out for any pending European patent application and patent and for any newly filed European patent application until Patent applications filed in 2023 or later will not fall under the optout regime, i.e. they will be automatically under the Unified patent courts jurisdiction if the seven-year period is not prolonged. After this maximum of 14 years there will be no opt-out anymore which means that once an applicant files at the EPO he cannot avoid the Unified patent court with his European Patent, may it be an Unitary Patent or a conventional validated European Patent. Nevertheless, since it will be possible to opt out also for pending applications, the transition period might be as long as 27 or 34 years (depending if the Administrative Committee prolongs the opt-out period or not). It should be noted that once a court action within the Unified patent court System has been validly filed - most likely an invalidation action by a competitor - the patentee may not opt out anymore. Since it is very likely that for many important patents i.e. in the pharmaceutical area generic companies may want to start invalidation actions at the very first day the system begins, there will be a possibility for patentees to forward opt out, i.e. file such declarations in advance, according to the rules at the EPO. It had been expected that the opt-out would be the general choice of the patentees since an opt-in is available at any time and has no real disadvantage for them since they might optin at anytime. This view might change, since according to the draft rules the opt-out will be subject to a fee (which height is still left out). Therefore patentees with a large portfolio of granted patents, like Siemens, Bosch or Panasonic (to mention the three companies with the largest number of grants in 2011) 25 might choose to opt out only in case of an arising litigation dispute. 25 Remark: No data for 2012 was available in the EPO statistics publication

37 3.2. Courts of 1 st instance According to the agreement, there will be a plurality of Courts of 1 st instance, which are named Local Chamber, Regional Chamber and Central Chamber. Patentees will de facto have a choice amongst them, i.e. they may forum shop. A Local Chamber has its seat in one of the member states if requested so by said member state. For any hundred cases p/a which have started during three years prior (or subsequent!) to the date that the agreement enters into force, a member stated can request a further Local Chamber up to the maximum of four. According to 2011 statistics, in said year the number of new cases 26 was as follows: Germany 1250 France 280 Italy 260 Great Britain 53 Netherlands 50 with every other member state having 10 cases/a or less. That would mean that Germany will have four local chambers (probably in Düsseldorf, Hamburg, Mannheim and Munich), France and Italy two and all other countries one. In alternative to a Local Chamber, several member states can also agree that the found one Regional Chamber which will be competent for them. It is expected that the Baltic states may found one Regional Chamber, some observers expect that also the Scandinavian countries will do so. The Regional Chamber has the advantage that cases before said Chamber will be always held with two local judges (c.f below). 26 Kühnen/Claessen, GRUR, 2013, 592 ff

38 The Central Chamber has its seat in Paris with branch Offices in London and Munich. The competence is shared along IPC classes, with London being competent for IPC main classes A and C; Munich for F and Paris for the remaining five main classes. The competence of the Chambers depends on the nature of the case that is filed. For patent litigation, the patentee may either file - at the local / regional chamber where the infringement took place or may occur; or - at the local / regional chamber where the defendant has its seat; or - at the central chamber For a nullity suit, the plaintiff may only sue at the central chamber. The same goes for a action for declaration of non-infringement. However, in case such an action is filed, the patentee may shift the case to a local chamber if he files an according patent infringement suit within three months. Therefore patentees have the possibility of forum shopping whereas for potential defendants the possibility of forum shopping is more or less ruled out. As a compromise between the German bifurcation system and the rest of Europe, where counterclaims for invalidity can be filed in the same proceedings, the following solution was found: In case of a patent infringement suit, the defendant may file a counterclaim for revocation. The court may then decide either a) to proceed both with the infringement as well as the revocation; b) to bifurcate by referring the counterclaim to the Central Division and either stay the proceedings or continue or

39 c) refer the whole case to the Central division with the agreement of the parties. According to some German Judges 27, however, their disposition to continue with the existing bifurcation practice, which is demanded by German law and leaves the judge of the infringement court no choice, may not be as high as expected so that in the future option a) - both cases are decided by the same court - may be rather the rule than the exception Court of 2 nd instance Whereas the seat of the central chamber (which might not be as important due to lack of cases for the reasons explained above) was highly controversial, the seat of the Court of 2 nd instance was never an issue. The Court of 2 nd instance will have its seat in Luxemburg. Appeal against a decision of the Court of First Instance is possible within two months of the notification of the decision. The appeal is not suspensive unless the Court of Appeal decides so. According to the Agreement, decisions of the Court of 2 nd instance cannot be appealed - however, it is yet unclear if that is really true and if the ECJ (as then revision instance) plays no role Judges / Seating of the Courts Selection of the judges The judges of the Unified Patent Court will be chosen by the - still to be installed - Advisory Committee of the Unified Patent Court, which will consist out of Patent judges and practicioners of the highest recognised competence and the Administrative Committe of the Unified Patent Court, which is composed of one representative of each member state. 27 e.g. the statement of Judge Tilman Büttner at the IPO European Conference in Brussels, 27 May

40 The judges themselves are divided into legally qualified judges and technically qualified judges, as it is commonpractive in Germany right now. Whereas legally qualified judges must have a law degree, this does not need to be the case for technically qualified judges, which on the other hand must have a technical or scientific degree. According to the statute of the Unified Patent Court, the judges shwll have a good command of at least one official language of the European Patent Office. From the list of applying judges, the Advisory Committee will then establish a list of the most suitable candidates; on the basis of that list the Administrative Committee shall appoint the judges. All judges will then form a so-called Pool of judges. Since the number of competent judges differs heavily from country to country, with Germany estimated having more - maybe even twice as more - specialized patent judges than all other member countries combined, observers have announced their expectation that even if a case is filed outside Germany quite probably on every panel there will be a German judge. This goes especially for the technical judges, since more or less the only place where technically qualified judges are available in abundance is the German Patent Court (Bundespatentgericht). It is very likely that the significance of the Bundespatentgericht will decrease dramatically once said court will not decide any invalidity cases anymore, which would in the Unified Patent Court system be decided by the Central Chamber or in Litigation itself. Therefore it generally expected that all judges of the Bundespatentgericht which are not close to retirement will apply to become technical qualified judge at the Unified Patent Court. Being asked at the IPO Conference in May in Brussels how it can be achieved that there will be also technically qualified judges i.e. from Eastern European Countries, Ms Margot Fröhlinger (who is one of the architects of the Unified Patent System) pointed to the possibility that also patent attorneys might qualify as technical judges. With that in mind it is likely to be expected that some of the technical judges will be laterals which have not worked as judges before. Some observers have also pointed to the possibility that EPO staff

41 might become technical judges. This will probably depend on the to-be-expected salaries and benefits (which may be quite a task to match coming from EPO conditions) Selection of the panels / Background of the Judges for the Courts In 1 st instance, the number of judges deciding a case and the background of these judges depends on the following: a) Litigation without Counterclaims at a Local Chamber or Regional Chamber In patent litigation without a counterclaim filed which are held at a Local Chamber or Regional Chamber there will be three legally qualified judges. A further technical judge can be appointed if one of the parties requests or if the panel requests it on its own initiative. If the proceedings are held at a local chamber where, during a period of three successive years prior or subsequent to the entry into force of this Agreement, fifty or more patent cases per calender year on average have been commenced 28 then there will be two judges which have the nationality of the country where the Local Chamber is and one judge who is not a national. Said one judge will be appointed from the Pool of Judges by the President of the Court of 1 st Instance which means that this can (although it does not mean that it will) be done on a caseby-case basis, whereas the other two judges will quite probably be permanent judges. If the proceedings are held at a local chamber where fewer cases have been filed then it will be the other way round, i.e. there will be one judge who is a national and two judges who are not. Based on the above statistics, the situation 29 is as follows: 28 Art. 8 of the Agreement 29 Remark: Unless the case load differs heavily from year to year which is as far as I know not the case

42 In Germany, France and Italy it will be sure that in cases before their Local Chambers there will be two national judges and one foreign judge. The United Kingdom and the Netherlands are somewhat on the border, since the number of new cases is 50 or just slightly above. In all further countries it will be sure that in cases before their Local Chambers there will be only one national judge and two foreign judges. At Regional Chambers, two national judges and one foreign judge will form the panel. National means of course that the judges may have any nationality of one of the countries who form the Regional Chamber. This provision is clearly an incentive for countries with few cases to form a Regional Chamber because in the alternative their Local Chambers will have panels with two foreign judges and only one local judge. b) Litigation with Counterclaim at a Local Chamber or Regional Chamber In case the defendant files a counterclaim for revocation then the Local Chamber can choose to decide on both the infringement as well as the validity. In these cases a technical judge will join the panel which comes from the Pool of Judges. If already a technical judge has been appointed then no further judge will join. c) Litigation at the Central Chamber At the Central Chamber there will be a panel of three judges, two legally qualified judges which have different nationalities and one technically qualified judge from the Pool of Judges. Only in very rare occasions (litigation and invalidity excluded) there will be three legally qualified judges

43 At the court of 2 nd instance there will be a multinational panel of three legally qualified judges and two technically qualified judges, the latter being appointed from the Pool of Judges Competence of the Courts The question which court is competent for a case depends on the nature of the case, as already explained above. For patent litigation the plaintiff may choose to - bring his case before the Central Chamber or - a Local / Regional Chamber where the actual or threatened infringement has occured or may occur; or - the Local / Regional Chamber, where the defendant (or one of the defendants) has its residence or principal place of business This means in practice that the plaintiff may forum shop more or less as he likes. For invalidation and declarations of non-infringements, the plaintiff may only bring his case to the Central Chamber. In Case of an action for declaration of non-infringement, the plaintiff may even bring the case to a Local Chamber of his choice if he files a corresponding patent infringement suit within three months of the date on which the action has started. Therefore the possibilities of potential infringers have been drastically reduced; they may not forum shop. Actually they must fear that in case they file an action of non-infringement that the patent owner will try to shift the case to a Local Chamber which he thinks may be best for his cause. As a result the system is somewhat innovator-friendly to the extent that patent owners have more choices as to choose to which court they want to go

44 3.5. Language issues The language of the proceedings depends on the case. In cases before a Local Chamber, the language is one language which is one of the official languages of the country where the Local Chamber is located; for Regional Chambers one of the official languages of the countries for which the Regional Chamber has competence. However, any member state may designate one or more of the three languages of the EPO as a language of proceedings of their Local or Regional Chamber. Furthermore the parties may agree on a language (and may request transfer to the Central Chamber if the court does not agree); the court and the parties may also agree that the language of the patent is the language of the proceedings. Given the fact that about 70% of all European patent applications are in English, about 25% in German and 5% in French, whereas about 70% of all newly filed litigation cases per year are in German, it is commonly expected that Germany will allow English to be used at their Local Chambers; this impression was also confirmed by Judge Büttner at the IPO Conference in May. Whether this is done on a case-by-case basis or by using the provision in the Agreement, which would then make English a permanent language, is however yet unclear. (Only) language at the Central Chamber is the language in which the patent was granted. Since invalidation actions may only be started at the Central Chamber this is self-evidently a strong incentive for German and French speaking applicants to file European applications only in their languages (instead of using English to save translation costs). Language of proceedings at the 2 nd instance is the language of the 1 st instance; however, here too, the parties may switch to the language in which the patent was granted

45 3.6. Course of the proceedings The regulations concerning the course of the proceedings were drafted with the objective to provide a fast, reliable, efficient and (if possible) also cost-efficient system. Keeping in mind the several hugely different and sometimes contradictory juridical traditions within the EU it is obviously impossible to find a system which fits everyone s needs; especially the two big influencing countries Germany and the UK have tried to put in the system as much of their tradition as possible. The Unified Patent Court system has achieved much attention outside the Patent World since it is the first truly pan-european litigation system which is constructed de novo. In the end the system may be regarded as somewhat of a compromise between the German and UK system - which as been described by Willem Hoyng, member of the Drafting Committee and Dutch patent attorney, on the IPO conference on 27 May as Dutch... The course of the proceedings can be generally described as - front loaded insofar as written statements will probably play a big role - streamlined insofar as there is no discovery (there may be gathering of evidence, cf. section 3.8) - concise insofar as Oral procedures are planned to be limited to a maximum of one day for usual cases; Furthermore appeal proceedings are intended to be merely a review of the proceedings of 1 st instance with limited possibility to bring in new evidence and facts Course of the proceedings, 1 st instance The proceedings have three stages which according to Art 52 of the Agreement are named Written procedure, Interim procedure and Oral procedure

46 This three-stage setting is intended to occur nonwithstanding of the nature of the case, i.e. that litigation as well as invalidation will pass through all three procedures. All stages have a rather strict time frame; it is intended to have a decision within 1 year after filing of the suit. As it is now common practice e.g. in Germany and cases before the ECJ, for each case the presiding judge of the panel to which the action has been assigned will designate one legal judge as the judge-rapporteur, which can also be the presiding judge himself. As will be apparent from the more detailled description of the three procedural stages, this judgerapporteur will play a central role, which goes far beyond the role that this judge has e.g. in German or European proceedings. From the Court side, the judge-rapporteur is the key deciding person until the case goes to the Oral Proceedings. 1) Written procedure The written procedure itself consist of four steps: Court action is started in that the plaintiff files a Statement of claim. The defendant may then file a Statement of defence. In a secound round the plaintiff may file a Reply to the Statement of defence, the defendant then a Rejoinder of the Reply. Further written pleadings will only be allowed with the consent of the judge-rapporteur. The proceedings become a more complex in case that in an litigation case the defendant files a Counterclaim for revocation - which will be subject to a fee - and the court decides to decide on both Claims. In this case, the patent Owner may file a Defence to the Counterclaim (including an Application to amend the patent), then there will be a second round with a Reply to the Defence (by the initial defendant who is now plaintiff) and a Rejoinder (by the Patent Owner)

47 The Statement of the Claim is intended to be highly formal and to (more or less) already include all facts and evidence that the plaintiff bases its claim on. It should be noted that in infringement litigation there will be no discovery. However, in a separate Court Action a patent owner may request the Gathering of Evidence (cf. Section 3.8.). Together with the Statement of the claim the plaintiff must partly pay the Court fee (cf. Section 3.7.) Within three months (!) after the Statement of the Claim, the defendant should file its Statement of defence. This period and also the other deadlines in the Written Procedure can be extended by the judge-rapporteur, however, only based on a reasoned request. Yet, this three-month term is intended to be kept unless the case is not complicated, which means that the defendant has only three months to prepare a Counterclaim for Revocation. If the Court practice will confirm the three-months practice, this is surely an advantage for the plaintiff. It should be noted that the fixation of time limits in the rules is something quite uncommon in European law. This further undermines the importance that the Drafting Committee has put on the time frame, something that may remind the observer of the set of Rules that the USPTO has published on Post-Grant Review procedures. Instead or additionaly of filing a Statement of the Claim, the defendant may also file a preliminary statement within one month term; however in this preliminary statement he may only rise formal issues, e.g. question the jurisdiction and competence of the Court or the language in which the Statement was filed. In case such a preliminary statement is not filed, it is regarded as submission to the jurisdiction and competence of the Court. In case the defendant files a Counterclaim for Revocation, then the plaintiff/patent owner has two months for his Statement of Defence. Otherwise the Plaintiff has one month for his Reply to the Statement of Defence. Finally the defendant has one month for his Rejoinder. At any time during the written prodecure the judge-rapporteur may decide to allocate a technically qualified judge to the panel. Such a request for allocation may also be raised by one of the parties; however, this is supposed to be done as early as possible in the written

48 procedure. After the written procedure is closed, the request will only be granted if justified grounds such as new circumstances appear. After the mentioned statements have been submitted to the court, the judge-rapporteur will inform the parties either that they have further possibilities to file statements and requests or his intention to close the written procedure. The parties may then request to file further statements; however only at the discretion of the judge-rapporteur. 2) Interim procedure The Interim procedure is intended to allow the judge-rapporteur to prepare the case for the Oral hearing so that the Oral hearing can concentrate only on points which - in view of the Court - need special discussion. Such an interim procedure is uncommon in German infringment practice, yet, in German court practice there is a procedure called früher erster Termin 30 which shows some striking similarities to the interim procedure, so that probably this procedure was the inspirational source. The aim of the interim conference is to enable the judge-rapporteur inter alia to - identify main issues and determine which relevant facts are in dispute - where needed, clarify the position of the parties - establish a schedule for the further progress of the proceedings - and make any other decision which he thinks is necessary for the preparation of the Oral hearing. Last but not least, the interim procedure is intended to help the judge-rapporteur deciding on the value of dispute, which then will determine the costs of the proceedings (cf. Section 3.7.) and which must then be paid. 30 cf 275 ZPO (German civil procedural law)

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