Recent Developments with respect to the Litigation Protocol. by Jochen Pagenberg Chairman of Special Committee Q165

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1 REPORTS Recent Developments with respect to the Litigation Protocol by Jochen Pagenberg Chairman of Special Committee Q165 After the Resolution of AIPPI on Q 165 in Melbourne which recommended a concentration of jurisdiction to one or few specialized chambers of first instance in each member state as first instance European Patent Courts a conference of the Subgroup of the Working Party was held in The Hague between April 4 and 6, 2001 in which Dr. Jochen Pagenberg took part as one of two experts appointed by the German Government. Although a number of delegations had so far favored a central court, after having recognized that the Willems proposal with traveling judges was much too complicated and would bring about severe legal deficiencies of due process, all the countries present at the conference rejected the Willems proposal and voted for the proposal of the German experts which is conformity with the AIPPI Resolution. This alternative proposal has the following features: The courts competent for patent litigation in all countries must be reduced to one, maximum three courts, depending on the case load in the respective country. These courts, which in some countries already exist today, will be integrated under a common roof of a European Patent Judiciary (EPJ). The EPJ would be, by its structure and organization, supranational with a central administrative seat. There will be no limitation of languages in the first instance. A common substantive law as well as a common code of procedure are to be established. The (national) courts or chambers would have exclusive jurisdiction for infringement and validity inter partes for all European countries and eventually also for national patents which cover the same subject matter. Jurisdiction will exist in the country where the defendant is seated or in the country where an infringement has been committed. A technical judge and a legal judge from another country with sufficient language qualification would participate in hearings and deliberations of other countries courts as visiting judges, so that there will be a 5 judges panel. On May 14 and 15, 2001 another meeting of the Subgroup of the WPL with additional specialists, judges and attorneys, took place in Munich in order to discuss in detail the most important procedural rules of the future European patent procedure. The main topics were Competent courts and filing of complaint Language in the appeal instance

2 Professional representation Criteria for preliminary injunction Rules of evidence (seizure procedure (saisie contrefaçon) and the role of experts) Organization and practice of hearings Type of Appeal (retrial or legal review) The result of this and a last meeting of the Subgroup in The Hague between July 11 and 13, 2001, was put by Mr. Williams into a Third Proposal for a Protocol, which is attached as documents Ewls 0120 and The text is very detailed in many areas of procedural law, but it contains still a number of inconsistencies which do either not reflect the opinion of the majority or are own ideas of Mr. Willems which are impracticable. Critical Observations have therefore been filed by one of the experts to the Working Party, Dr. Jochen Pagenberg, these are attached as document Ewls The critical remarks concern in particular the following points. 1. The Panels in the First Instance Courts Mr. Willems assumes that the judges for the national panels would have to be appointed in each case. In realty the panels of local judges exist already in each regional division, and a rule is only needed how the additional two judges, the foreign judge and the technical judge. That there are permanent chambers or panels is one of the basic requirements for a consistent and predictable case law which, if complemented by the education effect of the visiting judges would in the long run bring about a consistent decisional practice 2. Languages The delegations had taken a clear decision that the language in the first instance should be the language of the local court. Instead the new proposals in the present text of the Protocol cover a full page and are much too complicated to work in practice. Some of the rules proposed would have the effect that the plaintiff files the action in one language, and that he has to switch to another language afterwards. In fact the text provides for such a switch even during proceedings. Since the major problem with switching of languages is be the limited language capacity of judges, the language rule could be phrased in very simple terms: -The language of the proceeding is the language of the seat of the regional division. - Upon request of both parties and with permission of he court, proceedings can be held in one of the three official languages of the EPO. The second rule could make sense, e.g. if two American companies are litigating in a non-english speaking country in Europe, where the court is able to conduct the litigation in English. 3. Filing of Cases and challenge of jurisdiction

3 The Proposal suggests that the question of jurisdiction has to be examined at the very beginning of the lawsuit only based an the statement of claims and that the decision of the court which may consist of a referral of the case to another regional division cannot be challenged by an appeal. This proposal, if implemented, would constitute a violation of the Brussels Convention, since the parties can commonly agree to any court, or the defendant may just waive his right to challenge the jurisdiction of the court. Therefore: (1) There can be no decision on jurisdiction without hearing the defendant. If the parties agree on the choice of the court even after the action has been filed, or if the defendant does not challenge the jurisdiction of the court, this court has jurisdiction. (2) A mandatory assignment before the defendant has answered the complaint and against the will of the parties would be a violation of the Brussels Convention and the new EU Regulation 44/2001, see Art. 23 and 24. The court cannot anticipate what the wish of the parties is. Therefore a decision on jurisdiction can only be taken after an oral hearing. Meeting of the EPLP Sub-group Munich, Germany December 3-5, 2001 Twelve national delegations were present and in addition representatives of the EU Commission, epi, UNICE and the two experts, Mr. Willems and Dr. Pagenberg. The purpose of the meeting was the finalization of the text of a Protocol on the basis of the Third Proposal of Mr. Willems and the Observations of Dr. Pagenberg. The most important points of the discussion are the following. 1. Commission Information The representative of the EU Commission presented the view of the legal service of the Commission that after the entry into force of Regulation 44/2001 which will replace the Brussels Convention for EU member states, the member states are no longer competent to negotiate an international agreement which also concerns jurisdiction questions. You will remember that the member states had been informed by the Commission before the enactment of this regulation that it would not interfere with the negotiations on the Protocol. Afterwards the Commission changed its mind. The delegations did not comment on this announcement, the view among government delegations seems to be that the Protocol will be negotiated up to a diplomatic conference, and the Commission would only have the choice to go to the European Court of Justice to clarify this question. 2. Text and further work on the Protocol a. Although the mandate of the Sub-Group ends in 2001, the chairman announced that this deadline will not be respected which means that the work will continue also in After much progress has been made on

4 the text, but quite some drafting work needs to be done, a steering committee will be established consisting of some of the delegations which is expected to have a revised text by end of April so that this text can then be presented to the Sub-Group for a final meeting in May or June. The full Working Party which will comprise also those countries which have not participated in the work of the Sub-Group will then convene in the second half of 2002 in order to adopt a text which should then be ready for submission to a diplomatic conference. 3. Jurisdiction All delegations have finally agreed that the original idea of a Central Court in one city of the community cannot work, so that the proposal for a decentralized system will be the solution of the Protocol. However, the ex-centralists still adhere to ideas which would allow what I would call manipulation of cases by administrative means". Manipulation of the competent judge is however regarded in a number of countries as a severe violation of the constitutional rights. It seems that the discussion is not yet over on this topic. After the nearly unanimous decision of the Sub-Group for a decentralized system a proposal of Mr. Willems was that all cases should be filed at the Central Division and after checking which court would be competent, the files should then be sent to the respective regional division. I had vigorously opposed to this idea, already because of the risk of loss of files and a certain loss of time, but also since this would constitute a violation of the Brussels Convention and/or EU Regulation 44/2001 according to which parties can agree on the jurisdiction of any court. Furthermore, if an action has been filed at a court which would not be competent, the court would become competent, if the defendant does not object to its jurisdiction. Therefore, deciding on local jurisdiction before the defendant has filed his response would not make sense. Of course, the court must check its jurisdiction in case of a request by the plaintiff for default judgment, if the defendant is not represented. The other idea, that cases should be shifted from one regional division to another if one division has not enough work and the other is too busy, would again be an interference with due process rules. Although a clear majority was against the Willems proposal, these ideas are still being discussed. 4. Panels of the Regional Divisions This is also an old topic The original decision, also backed by the AIPPI Resolution in Melbourne, was "concentration of jurisdiction to few specialized chambers of first instance in each member state as. first instance of the European Patent Court [where]... litigation should be conducted in the language of the seat of the respective national chamber". The reason was that one wanted to make use of the existing qualified courts and their experience for the EPJ system. In order to improve the quality of judges in

5 some countries and to harmonize the practice of the different regional divisions it was later discussed to add to the existing national mostly three judge - panels one foreign legal judge and one technical judge, so that one would have a 5judge panel. Some countries in the Sub-Group in later discussions came to the conclusion that for cost reasons 3 judges are enough, but insisted that one should maintain the system of the sending in of two outside judges. This however would result in a situation where it would no longer be the existing national court which would decide the case. Also, since the judges sent in from outside would change for every case, the existing national court would become a rotating court which had originally been rejected because of its lack of predictability and consistency. So although rotating judges have been one of the objected features at the beginning, they come now back into the discussion by the backdoor under the disguise of cost. All practitioners are of the opinion that it will be the only safeguard of the quality of the European system that panels are not changed all the time, but that the panel can develop its own case law which does not only concern substantive law, but also case management, evidence questions etc.. If these rules change all the time a proper preparation of a case by the parties is not possible, and in addition the long established experience of existing court is lost. In addition to cost another reasons against three local judges with two visiting judges was that the local judges will always be in a majority and therefore impose local or national rules upon the visiting judges who will be in a weaker position (fear of one dominating legal cultrure). However, as the German delegation pointed out, in view of the fact that there will be a new substantive law, common procedural rules, a basic common understandings about case management etc., such a national culture will very soon turn into a European culture. On the other hand, the alternative of only one local judge who would be the reporting judge and a presiding judge and a technical judges flying in from abroad, one or two days before the hearing, cannot work. One can imagine the situation: the reporting judge will be the only one who thoroughly knows the file, the technical judge will pretend that he is the only one who understands the patent (although he has studied it only for one or two days), and the chairman will come in and say that he is the boss, but he does neither know the file nor the patent in detail. These three judges will never have the possibility to discuss in depth technical and legal details before the hearing, they are also unable to agree on procedural measures for case management early enough so that the chances that they will be well prepared for the hearing are nil. On the other hand, the goal with international panels and visiting judges, namely that a better qualification will be achieved through such rotation between the courts, will not be better achieved with three judge panels than with five judge panels. In fact, the number of rotating judges who are able to spread their experience in other regional division is exactly the same with three judge panels

6 and five judge panels, namely two. The cost question is also not convincing. I have given in the Meeting an example of the calculation of court fees under the present German system which is known to be self-supporting in patent cases. If one assumes a litigation value of one million - which in my opinion will be at the lower end of cases litigated before the European courts -, under the present German statute of fees, the following calculation applies advance on court fees in the first instance assuming 100 cases/year for a full time working court x 100 = 1.35 million divided by five judges = per judge Euro is probably 4 times the amount he would be paid according to present German standards, so that quite an amount is left for other expenditures like infrastructure and other expenses. If a court has less than 100 cases, then probably not all judges of the court are fully employed and they will probably in addition work in the local courts. On the other hand higher litigation values will also bring in higher fees. Thus one can predict that in a system of litigation values the payment of the judges cannot be taken as an excuse for a rotation system, since this can never reach the quality of the present German or English system. 5. Languages One must add to this observation the language question, since one cannot assume that all rotating judges coming from abroad will be able to follow the oral arguments in the hearing, let alone will be able to read, for the preparation of the hearing, hundreds of pages in a foreign language, so that already for this reason the majority of judges should speak the language of the proceedings. Also the idea that simultaneous translation should be provided during the hearing for the judges would in my mind not solve the basic problem. I have explained that in the future, e.g. fifteen years from now, international panels with judges who speak at least two languages fluently will become normal. But to start with an inefficient system which has no change to improve would certainly be an intolerable risk. It was surprising to hear, that contrary to the views of practitioners, also of those on the Committee 165, the government delegations of the smaller countries which do not speak one of the three EPO languages (like DK, SE, NL, BE) seem to be satisfied with a language of proceedings which would not be the local language. Some were willing to accept the language of the patent rather than the procedural language of the local court. The German delegation has made an express reservation with respect to the question of panels and of the language. One can expect that Germany and also France will not join the Protocol if the decision in the first two meetings, namely that the Regional Divisions will consist of existing local courts (or can be staffed by the respective member country with local judges) is not maintained.

7 6. Type of appeal So far the majority was in favor of a de novo trial in the second instance of the EPJ. Art. 156 of the Third Proposal (Willems) seems to limit the second instance with respect to facts which can be reviewed. In view of the complex nature of patent proceedings which will deal with patentability and infringement issues of a highly technical nature, the majority of delegations was against a restriction as to the presentation of facts. If e.g. in no expert opinion can be ordered by the court in the second instance - in particular if the first instance did not ask for it -, this might be detrimental to fair justice. 7. First and second instance judges Mr. Willems came back to the proposal to appoint judges to the first and second instance. Although two delegations were not entirely opposed to it, others declared that they would not be able to join the Protocol if this possibility existed. The majority was against this proposal. [ Home ][ Top ][ Terms of Reference Q165 ]