European Unitary Patents and the Unified Patent Court Kevin Mooney July 2013
The Problem European Patent Convention Bundle Patents Single granting procedure but national enforcement No common appeal court Significant variations in procedure Bifurcation in Germany and Austria Effect of EPO Oppositions Extent of document production Saisie (infringer s documents only) vs Disclosure (bilateral) Use of witnesses and experts 2 / Doc ID: L_LIVE_EMEA1:17371562_1
The Problem Significant variations in speed UK and Holland: 6-12 months Germany Infringement: 6-12 months Validity: 15-24 months France: 2-3 years Significant variations in outcome e.g. Leo v Sandoz, Novartis v Johnson & Johnson Significant variations in cost 3 / Doc ID: L_LIVE_EMEA1:17371562_1
A Brief History December 1975 First Community Patent Convention Never ratified (Denmark and Ireland) March 2000 EU summit in Lisbon proposes new Community Patent and litigation system August 2002 Working document on the new Community Patent and litigation system August 2002 to April 2007 Failure to progress (language issues) April 2007 Easter Message A new start and questionnaire 4 / Doc ID: L_LIVE_EMEA1:17371562_1
A Brief History June 2007 Dr Froehlinger commences bottom up discussions in Munich and formation of lawyers/judges advisory group June 2008 Commission launches new draft proposal essentially current scheme Autumn 2009 Reference of draft Agreement to CJEU Compatible? March 2011 Not compatible! May 2011 Proposal for treaty excluding EU itself and non-eu states 5 / Doc ID: L_LIVE_EMEA1:17371562_1
A Brief History May 2011 June 2012 Political deadlock over location of Central Division and Articles 6-8 February 2012 Formation of drafting Committee for Rules of Procedure June 2012 Deadlock over Central Division broken by compromise December 2012 Regulations creating the Unitary Patent adopted 19 February 2013 Agreement signed June 2013 15 th Draft of the rules of Procedure presented for public consultation 6 / Doc ID: L_LIVE_EMEA1:17371562_1
The Solution: Objectives Unitary patent, effective throughout the EU Enforcement through a single court system Same procedure everywhere Experienced judges everywhere Common appeal court ensures harmonisation One set of proceedings, one set of costs No forum shopping Quality, cost-effectiveness, efficiency, legal certainty and reliability Contrast United States - one US patent, local Federal District Courts with CAFC as common appeal court But to be avoided Procedural overkill and huge expense Juries lead to uncertainty and large damages awards Local rules and attitudes lead to forum shopping 7 / Doc ID: L_LIVE_EMEA1:17371562_1
The Solution: Unitary Patent Two Regulations (passed in December 2012) Unitary Patent pursuant to Article 142 EPC Enhanced Cooperation 25 countries only no Italy or Spain EPO prosecution procedures unchanged On grant applicant can apply for unitary patent instead of bundle patent. Languages Short term: Unitary patent in English PLUS translation into one other language Language of prosecution (if not English) or any EU language Long term (when technology satisfactory): on-line machine translation Translation into infringer s language if infringement 8 / Doc ID: L_LIVE_EMEA1:17371562_1
The Solution: Unitary Patent Cost Incentive: Current cost to grant c. 25,000 (assuming application is not based on a foreign filing) Current cost of validation in UK/France/Germany & Switzerland (55% of EU market) nothing Current additional cost of Spain and Italy (78% of EU) = 8000 Current cost of renewals = 100 (year 3) to 1300 (year 20) per country Proposed additional cost of translation under the Regulation (1 language) = 4000 Proposed additional cost of Spain and Italy (outside Unitary Patent Scheme) = 8000 translation cost of UP + renewals Proposed cost of renewal of UP = unknown but assuming same as amount for France/Germany/UK then 22% of EU market will be free But no freedom to cut back in later years Litigation risk disincentive 9 / Doc ID: L_LIVE_EMEA1:17371562_1
The Solution: Unified Patent Court Unified Patent Court Agreement signed 19 February 2013 Central Division and national/regional divisions Pure validity actions, declarations of non-infringement and some infringement actions go to Central Division Exclusive jurisdiction over the Unitary Patent and (eventually) over all existing European Patents Standard procedure for all courts Emphasis on written submissions plus one day hearing But discretion in procedural matters Bifurcation, document production, use of witnesses/experts May lead to forum shopping Legal judges, plus technical judges where validity in issue Flexible language regime 10 / Doc ID: L_LIVE_EMEA1:17371562_1
Unified Patent Court: Structure Court of Appeal ECJ on EU law issues Appeal (facts and law) Local division Local division Central division Regional division Regional division 11 / Doc ID: L_LIVE_EMEA1:17371562_1
Unified Patent Court: Overview on Jurisdiction Infringement Proceedings: Local or Regional Division where infringement occurred; or Local or Regional Division where Defendant (or one of them) is resident; or Central Division if the defendant is domiciled outside the EU Proceedings for Revocation or Declaration of Non-infringement Central Division; or Division where existing infringement proceedings are pending Counterclaim for Revocation: bifurcation Local or Regional Division may refer counterclaim (or whole case if parties consent) to Central Division, or ask for a technical judge Parties may agree upon the Division, including the Central Division 12 / Doc ID: L_LIVE_EMEA1:17371562_1
Unified Patent Court: Overview on Composition of Court Composition of Judicial Panels Local Division with less than 50 cases per year in three successive years 1 national plus 2 non-nationals Local Division with more than 50 cases per year* 2 nationals plus 1 nonnational All Regional Divisions 2 nationals from regional states plus 1 non-national Additional Technical Judge if requested Central Division 2 legal judges and 1 technical judge Court of Appeal 3 legal judges and 2 technical judges * Germany, UK, France and Netherlands would qualify 13 / Doc ID: L_LIVE_EMEA1:17371562_1
Unified Patent Court: Overview on Language of Proceedings First Instance Official local or designated regional language(s); or May designate one EPC language; or If parties agree or the Court orders, the language of grant Central Division Language of grant Court of Appeal Language of Court of First Instance; or If parties agree, the language of grant; or Exceptionally, Court of Appeal may designate another language with the consent of parties 14 / Doc ID: L_LIVE_EMEA1:17371562_1
Unified Patent Court Overview on Structure of Proceedings Written Procedure Statement of claim Full facts, evidence (if available) and arguments, including construction Defence/Counterclaim 3 months after Statement of Claim Reply, Rejoinder, Amendment of patent Total six months Interim procedure Documents, directions re evidence (experts, experiments etc.) Typically three months Oral Procedure Possibility of separate witness hearing Trial one day Judgment within 6 weeks Representation 15 / Doc ID: L_LIVE_EMEA1:17371562_1
Patent Litigation in Europe and the New Unified Patent Court Infringement and Defence of Invalidity (Rules 12 to 42) Defence to application to amend, Reply to Defence & Rejoinder (Rule 32) P s facts relied on for infringement and available evidence (Rule 13) CLAIM FILED 3 months D s facts relied on for non-infringement and validity and available evidence (Rules 24 and 25) 2 months P s reply for infringement and defence to validity and available evidence (Rule 29). Plus any application to amend (Rule 30) INTERIM CONFERENCE (Rules 101 to 110) Production of documents, party experts prepare reports and orders for experiments and inspection CLOSURE INTERIM STAGE (3 months Rule 101) WITNESS HEARING (Rule 104(9)) ORAL HEARING (Rules 111 to 116) JUDGEMENT (Rule 118) 0 1 2 3 4 5 6 7 8 9 10 11 12 Issue Identification Stage Substantiation Stage 16 / Doc ID: L_LIVE_EMEA1:17371562_1
Patent Litigation in Europe and the New Unified Patent Court Revocation Action (Rules 43 to 56) D s reply to Defence to Counterclaim (Rule 56.3) P s Rejoinder to Reply (Rule 56.4) P s facts relied on for revocation and available evidence (Rule 45) D s facts relied on for validity (Rule 49) and possible Counterclaim for infringement P s reply (Rule 51) and Defence to Counterclaim (Rule 56) CLAIM FILED 3 months 1 month 1 month INTERIM CONFERENCE (Rules 101 to 110) CLOSURE INTERIM STAGE (3 months Rule 101) WITNESS HEARING (Rule 104(9)) ORAL HEARING (Rules 111 to 116) JUDGEMENT (Rule 118) 0 1 2 3 4 5 6 7 8 9 10 11 12 Issue Identification Stage Substantiation Stage 17 / Doc ID: L_LIVE_EMEA1:17371562_1
Patent Litigation in Europe and the New Unified Patent Court Declaration of Non-Infringement (Rules 60 to 71) D s Rejoinder to Reply (Rule 67) P s facts relied on for noninfringement and available evidence (Rule 62) D s facts relied on for noninfringement and available evidence (Rules 65 and possible Counterclaim for infringement P s reply (Rule 67) and Defence to Counterclaim Rule 60 application 2 months 1 month INTERIM CONFERENCE CLOSURE INTERIM STAGE WITNESS HEARING ORAL HEARING CLAIM FILED JUDGEMENT -1 0 1 2 3 4 5 6 7 8 9 10 Issue Identification Stage Substantiation Stage 18 / Doc ID: L_LIVE_EMEA1:17371562_1
Appeals Appeals as of right: final decisions of CFI decisions terminating proceedings against one party decisions re provisional measures Procedural appeals only with leave of the Court Not a re-hearing limited possibility for new evidence / submissions only if highly relevant and could not reasonably have been made before CFI 19 / Doc ID: L_LIVE_EMEA1:17371562_1
Patent Litigation in Europe and the New Unified Patent Court Future Timetable Rules of Procedure Public consultation June Sept 2013 Rules of Procedure finalised May 2014 Ratification of Agreement by at least 13 Member States 2015? Agreement enters into force 2015? Transitional arrangements 7 years initially Grant of first European Patent with unitary effect 2015? 20 / Doc ID: L_LIVE_EMEA1:17371562_1
Patent Litigation in Europe and the New Unified Patent Court The Preparatory Committee shall prepare the practical arrangements and set out a road map for early establishment of the Unified Patent Court (draft declaration dated 14 November 2012) Finalise Rules of Procedure Recruitment of Judges and admin staff Organise training of Judges Prepare budget for first year of operation Make proposals for facilities (computer system) Set up Administrative Committee and its Rules of Procedure Set up the Budget Committee 21 / Doc ID: L_LIVE_EMEA1:17371562_1
Patent Litigation in Europe and the New Unified Patent Court Specific Issue I - Bifurcation Bifurcation in context of counterclaim (Article 33(3)): Decision on bifurcation ASAP after closure of written procedure Where there is a counterclaim for revocation the Court shall have the discretion (after having heard the parties) either to: (a) proceed with infringement and validity (with technically qualified judge) (b) refer the counterclaim to the central division and suspend or proceed with the infringement proceedings, or (c) with agreement of parties, refer case to the central division Bifurcation in context of revocation claim (Article 33(5) and Rule 70) Revocation action stayed if subsequent infringement action Pending decision on bifurcation by local or regional division, which shall take account of progress in revocation action Stay lifted if no counterclaim 22 / Doc ID: L_LIVE_EMEA1:17371562_1
How common will bifurcation be? Continuation of national traditions? But now have option not to bifurcate Competition between Divisions to attract business? Decision on bifurcation is normally made only after written pleadings on infringement AND validity Courts may prefer to decide validity rather than simply consider how Central Division will decide it in context of whether to stay infringement proceedings Need for ground rules from Court of Appeal Guidance on approach to follow and when bifurcation may be advantageous Procedural appeals where the Court gives leave (Art 73) which court? 23 / Doc ID: L_LIVE_EMEA1:17371562_1
Concerns re bifurcation and safeguards Ability of patentee to argue different claim constructions But will already have pleaded validity and infringement Risk of decision on infringement before validity forcing unfair settlement Accelerated proceedings in validity case (Rule 40(b)) Greater scope for stay of infringement case (Rule 37.3) Where the panel decides to proceed in accordance with Article 33(3)(b) of the Agreement, may stay the infringement proceedings pending a final decision in the revocation procedure and shall stay the infringement proceedings where the defendant has demonstrated that there is a high likelihood that the relevant claims of the patent (or patents) will be held to be invalid on any ground by the final decision in the revocation procedure. May render decision on merits under condition subsequent that patent is not held invalid OR stay relief pending final decision in revocation procedure or EPO opposition on same basis as above (Rule 118(3)) 24 / Doc ID: L_LIVE_EMEA1:17371562_1
Specific Issue II: Provisional Measures Provisional measures available include preliminary injunctions, delivery up, blocking bank accounts, preserving evidence May be ex parte (Rule 212) and may be prior to issuing proceedings Decision on application for provisional measures Rule 211 2. In taking its decision the Court may require the appointment to provide reasonable evidence to satisfy the Court with a sufficient degree of certainty that the applicant is entitled to commence proceedings, that the patent in question is valid and that his right is being infringed, or that such infringement is imminent. (Article 62(4) Agreement). 3. In taking its decision on the Application for provisional measures, the Court shall have the discretion to weigh up the interests of the parties. (Article 62(2) Agreement) No specific E-Bay type provisions 25 / Doc ID: L_LIVE_EMEA1:17371562_1
Specific Issue II: Provisional Measures Provision for compensation of Defendant (and security) if provisional measures incorrectly granted No general requirement for urgency Unheralded launch with protective letter? Clearing the way less likely if have good case on merits 26 / Doc ID: L_LIVE_EMEA1:17371562_1
Specific Issue III: Opt-Out Unitary Patent or European bundle patents? Lower initial cost and renewal costs Versus inability to opt-out of exclusive jurisdiction Existing and Future European bundle patents Opt-out from (exclusive) jurisdiction of UPC? All or some, but which ones? Cost of opt-out? Withdrawal of opt-out 27 / Doc ID: L_LIVE_EMEA1:17371562_1
Specific Issue III: Opt-Out Opt-out Timing issue opt-out effective only when registered (Rule 5) What if UPC revocation filed before backlog is cleared? (Art 83(3)) Sunrise provision register to open early? Many pharma/biotech companies are expected to opt out Risk having rules of engagement set by other industries Needs careful consideration Fear of entrusting valuable assets to untried system But voice needs to be heard when courts lay down procedural ground rules in early cases 28 / Doc ID: L_LIVE_EMEA1:17371562_1
Specific Issue IV: Opposition/Revocation Post-UPC Target patent is a Unitary Patent No 9 month time limit Revocation in central division will be quicker (about 1 year) BUT More expensive Cost of representation (depending on procedure followed) Fixed fee Value of case fee Target patent is a bundle Immediate revocation or must oppose within 9 months to preserve position If no opt-out then revocation and/or opposition possible Two bites at the cherry? If opt-out then opposition continues 29 / Doc ID: L_LIVE_EMEA1:17371562_1
Specific Issue V: Cost of Proceedings Fixed fees at each major stage e.g. for infringement, for counterclaim, for damages determination, for appeal Value-based fees are payable in addition for infringement and counterclaim each party will assess value of case judge-rapporteur will decide at the interim conference Reasonable and proportionate costs recoverable by the successful party 30 / Doc ID: L_LIVE_EMEA1:17371562_1
Other Important Issues Lawyer see Rule 286 Privilege See Rules 287 and 288 Wide definition of Lawyer and patent attorney In-house and independent Wherever practising But limited to UPC proceedings Language and Statement of Claim See Rule 14 and Article 49 31 / Doc ID: L_LIVE_EMEA1:17371562_1
Kevin Mooney June 2013 32 / Doc ID: L_LIVE_EMEA1:17371562_1