Hogan Lovells

The Unified Patents Court - Potential Issues on the Agreement and Rules

There has been a great deal of debate surrounding all aspects of the proposed Unitary Patent system.  In this article, I will explore  three potential effects of the current drafts of the Agreement on the European and Community Patents Court and Draft Statute (the "Agreement") and the Draft Rules of Procedure (the "Rules"), and the impact this may have on litigants dealing with Unitary Patents. 

This article is based on the most recent drafts of the Agreement dated 23 March 2009 and the Rules dated 24 May 2012.

1. BIFURCATION AND THE "REVERSE TORPEDO"

Under Article 15 of the Agreement, issues of infringement and validity may be tried separately (by different judges, at separate trials, in separate courts).  There are a number of ways in which this so-called "bifurcated" system may operate.

Essentially, the Central Division will hear validity-only cases, as well as requests for declarations of non-infringement.  The Central Division may also determine certain infringement actions.  The Local or Regional Divisions will determine infringement actions, depending on the location of the alleged infringement or the Defendant (Article 15a(1)).

However, where a patentee has brought infringement proceedings in the Local or Regional Court under Article 15a(1), the alleged infringer may counterclaim for revocation of the patent concerned.  Under Article 15a(2), the Local or Regional Division has the discretion to choose from a number of ways to proceed with the infringement claim and revocation counterclaim.

One of the options available to the Local or Regional Division is to "refer the counterclaim for decision to the central division and suspend or proceed with the infringement proceedings" (Article 15a(2)(b)).
 
Draft Rule 35(3) states that:

"Where the panel decides to proceed in accordance with Article 15a(2)(b) of the Agreement, the panel may stay the infringement proceedings pending a final decision in the revocation procedure and shall stay the infringement proceedings where 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." 

In this way, it is possible for an alleged infringer to file a "reverse torpedo"  revocation action, which will have the effect of staying any infringement proceedings pending determination of validity.

No guidance is given in the Rules as to when the panel should exercise its discretion to stay the infringement proceedings, except that the panel is obliged to do so where there is a "high likelihood" that the patent will be found to be invalid.  Again, no guidance is given as to the evidence required.

2. DECLARATIONS OF NON-INFRINGEMENT

Article 15(1)(a1) gives the European and Community Patents Court jurisdiction over actions for declarations of non-infringement ("DNIs").  Pursuant to Article 15a(5), if the infringement action is brought within three months of the action for the DNI, then the DNI proceedings in the Central Division are stayed.

Draft Rule 70 sets out the procedure to be followed when a Plaintiff files an action for a DNI in the Central Division, and the patentee (or exclusive licensee) subsequently initiates an action for infringement in a Local or Regional Division against the Plaintiff in respect of the same patent(s) and the same alleged infringements.
 
Both Article 15a and Rule 70 are silent as to whether a patentee may bring infringement proceedings after the three month period.

If, as some commentators believe, these provisions introduce an estoppel against a patentee bringing infringement proceedings more than three months after filing of an action for a DNI on the same patents and same alleged infringing acts, this may present problems.
 
Manufacturers often request DNIs prior to launch, in order to confirm that their product or process does not infringe a given patent.  If the manufacturer does this more than three months prior to launch, then from the point of view of the patentee, no infringement has occurred, and the patentee may therefore have no basis on which to launch an infringement action within the required three month period.  Rule 11(1)(j)(i) requires the patentee to include in the statement of claim "one or more instances of alleged infringements or threatened infringements specifying the date and place of each".  Although it would appear that patentees can sue for threatened infringements, it may be that the patentee is unable to make out the threatened infringement in sufficient detail to satisfy the Rules.

Alternatively, if a very small manufacturer requests a DNI, the patentee may take the view that the relatively minor loss caused by the manufacturer's infringement is not worth the costs of a full scale infringement action.  If that manufacturer subsequently grows in size, causing the patentee substantial losses through its infringing activities, the patentee will then have lost its right to sue for infringement and to recover damages.  Thus, patentees may feel it best practice to launch infringement actions against companies seeking DNIs as standard practice.  However, as stated above, this may not be possible if the manufacturer has not launched its product or the patentee cannot make out an actionable threat of infringement.

3. PARALLEL REVOCATION PROCEEDINGS

The draft Rules allow for the possibility of parallel revocation proceedings.  For example, Company A might apply to revoke Patent X in the Central Division.  Pending that decision, the patentee might sue Company B for infringement of Patent X in a Regional or Local Division.  If Company B then counterclaims for revocation, then there are parallel revocation proceedings running at the same time.

Draft Rule 390 allows the Court to order that "proceedings commenced by a plurality of plaintiffs or in respect of a plurality of patents be heard in separate proceedings".  The Court "may" order that these proceedings should be heard together "where it is in the interests of justice to do so", but there is no compulsion that this should occur.  Thus, the draft Rules would appear to allow the existence of parallel revocation proceedings on the same patent.  This would appear to allow scope for validity of the same patent to be considered by different panels, which might lead to conflicting decisions.

For more information, please speak to your usual Hogan Lovells contact or get in touch with a member of our Unified Patent Court Taskforce.

By Hogan Lovells associate Sarah Johnson

Connect and Share:


© Hogan Lovells. ALL RIGHTS RESERVED. "HOGAN LOVELLS" OR THE "FIRM" REFERS TO THE INTERNATIONAL LEGAL PRACTICE THAT COMPRISES HOGAN LOVELLS INTERNATIONAL LLP, HOGAN LOVELLS US LLP AND THEIR AFFILIATED BUSINESSES, EACH OF WHICH IS A SEPARATE LEGAL ENTITY. ATTORNEY ADVERTISING. PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME.