Germany: The European Litigation Protocol and the Future European Patent System

Last Updated: 25 September 2001
Article by Jochen Pagenberg

I. Introduction

Europe’s diversity in patent litigation has troubled patentees for many years. Not only that the level of experience of the courts is considerably different from country to country, also the lack of harmony even between experienced patent courts is visible if it comes to claim interpretation, but also with respect to procedural rules1.

Another complaint is the fact that patents, even if they have been granted by the EPO, are territorially limited rights which can only be enforced with respect to one single country and by the respective national courts so that – in spite of the possibility of extraterritorial effects under the Brussels Convention – parallel litigation and resulting forum shopping remains possible. In most European countries the validity of a patent can be challenged by way of a counterclaim or as a defense in an infringement action, in others, like Germany, a separate revocation action must be filed with a separate special court. Of course, a validity decision would be limited to the respective country. The project of a Community Patent failed 25 years ago, since the governments could not agree on a common litigation system which at that time was to be a Common Court of Appeals (COPAC).

Europe now has made a new move, and the Intergovernmental Conference of the Member States of the European Patent Organization, which was held from June 24-25, 1999, in Paris, mandated what has been called The Working Party on Litigation (WPL) to propose a "Structure of an optional protocol on the settlement of litigation concerning European Patents" (EPLP - European Patent Litigation Protocol) with an "integrated judicial system", including uniform rules of procedure and a common court of appeal. Since the European Patent Organization does not only comprise countries of the European Union, the Protocol, i.e. the intended international Convention, was planned as a voluntary union of states so that the solution proposed would not need the approval of all countries. Those who wish may join, those who do not agree with the proposal may stay outside. There was nevertheless a common understanding that it would not make sense to create a system which would only combine countries with a very low number of patent cases.

II. The present discussion

1. The proposal of the WPL

In spite of the limited mandate during the work for the basic concept of the Protocol, some delegations developed the idea not only to create a single court of second instance but also a common European court of first instance which was then discussed in more detail in the WPL Paper of 25.5.20002 and which, however, went again too far for many countries as well as for the specialized judges and litigating attorneys.

The first idea was to create a single court residing in one city which should decide infringement cases for all the territories in which EPC patents are in force and have been infringed. The languages which the EPJ (European Patent Judiciary) would allow would be the three working languages of the EPO, i.e. English, French and German3. Although this could in theory facilitate the communication in a single court, it would put an enormous burden on the litigating parties. It could result in situations where a Greek or Portuguese defendant would have to defend his case in German before a court sitting in Luxembourg, although there might have been an infringement only in the home country of the defendant - or no infringement at all.

These proposals, however, do not fit into a system which consists of a Union of States where 11 languages are spoken and more than a dozen entirely different court systems exist. A radical change which would abolish all existing national courts has too many consequences which have to be examined before they can be accepted.

A comparison with the US shows that today there are still more than 90 first instance courts which in theory have jurisdiction for patent cases, and nobody to my knowledge has ever even discussed the possibility, let alone necessity, of a central patent court of first instance. The US does have a central court of appeal for patent litigation, but in the US nobody disputes the right of the plaintiff to choose a forum which best serves the interests and needs in the defense of his rights. The US courts also differ in their practical approach as to how they handle patent cases. Some courts are known as particularly fast, and some are slower or less experienced.

Is it therefore really excessive if Europe maintains altogether 15 or 20 courts in view of the different language regions? And is the solution of all problems really a central court of first instance if, as we will see later, nobody knows where one would find the judges for it so that such a court would suffer for a long time from lack of experienced and competent judges? Who would entrust his cases to such a court? I think today it is simply premature to force judges into one single court, if these judges cannot even talk to each other, let alone understand and decide cases which are being heard in a different language than their own. In discussions with experienced patent judges in Germany, all of them affirmed that they would be unable to follow a technical discussion or the pleading in a hearing, even in the English language, which is the language best understood at least for general conversation.

A number of delegations, in particular those whose countries have a well functioning patent court system like Germany4, had objected to such a drastic change already because of its uncertainties as to quality and efficiency of the proposed court5, since the WPL Paper does not mention where and how one would recruit the judges for such a centralized court which would need to have patent litigation experience. Since it was expressly avoided by the authors of the proposal to include the existing national courts into the European system, obviously with an aim to immediately create a European system which has no national links any more, it soon became clear that one would need a considerable number of judges which are simply not available, except in the national courts6. The paper merely stated that "the number of judges needed will depend on the number of cases the court has to try each year" and "at least one highly legally qualified patent judge from every EPLP state should be appointed for each instance."7

Also non-German practitioners warn that one should not put at risk a well-functioning system like the German one which permits also smaller companies at reasonable cost to enforce their patents in a relatively short time8.

Upon wishes by industry circles9 and the patent bar for "local presence" of this court10, a modified version of the WPL Paper recognized the need of the litigating parties, especially small and medium-sized enterprises, to conduct their litigation "at home"11. The new idea was to create a "pool of judges" and a "peripatetic" court which would sit at different locations at different times. Also the possibility of regional chambers was added to the original proposal12. These chambers would have to be understood as ad hoc chambers for each individual case and without a permanent establishment and structure in the different member states13. It was not explained in the WPL Paper how the jurisdiction of these regional chambers would be defined, e.g. whether, in addition to the seat of the defendant, also the place of infringement would give jurisdiction.

Another proposal of this paper was that the judges should be appointed to the first and second instance of this common European Patent Court at the same time and form a "common pool" out of which the judges would be assigned to the cases. The judges should however not permanently and exclusively work with cases of one regional chamber14 but travel from court to court and case to case.

2. The proposed alternative: A decentralized system with centralized national courts

An alternative, supported primarily by the German delegation, but also by the large majority of the bar and patent judges as far as they participated in the discussion, was based on the fear that one single court of first instance would never be in a position to cope with the number of patent infringement cases which one must expect. Without the inclusion of existing courts, it would not have the required quality. Germany alone currently has approximately 600 patent cases in the first instance per year. Whether there will be 600, 800 or 1000 European cases from all 15 countries is difficult to predict15. A number of international organizations like AIPPI, FICPI and associations of lawyers in different European countries therefore also opposed the proposal for a single centralized court16.

In October 2000, at a Conference in London, it was decided that the Working Party should prepare two different proposals for the Litigation Protocol, one by the German delegation for a decentralized system in the first instance which would include the national courts, and the other by the Swiss delegation for a system of a central court. The Working Party appointed three experts, one from the EPO, Mr. Willems, who was to prepare the central proposal, and two upon suggestion of the German Justice Department, Dr. Schade, a judge of the Federal Patent Court who had already been a member of the German delegation, and as a litigator Dr. Pagenberg from Munich.

The two proposals were submitted at the beginning of 2001, and a conference of the Subgroup of the Working Party was held in The Hague between April 4 and 6, 2001. 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 favored the proposal of the German experts which basically contains the points contained in an article published already a year before17.

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. The judges for those courts must be carefully chosen and their education in patent law must be assured, also with respect to languages.
  • These courts, which in some countries already exist today, will be integrated under a common roof of a European Patent Judiciary (EPJ). Most of them have many years of patent litigation experience18.
  • 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. Since it is at the discretion of each country to designate the competent court or courts, the language will be the language of the respective country in which the court would sit. This does not exclude that mixed chambers of different nationalities and languages will gradually develop. Also, countries are free to designate common courts, e.g. a common Benelux Patent Court.
  • A common substantive law as well as a common code of procedure are to be established.
  • The (national) courts or chambers would have exclusive jurisdiction19 for infringement and validity inter partes for all European countries and eventually also for national patents which cover the same subject matter20. The latter may be optional for the respective country.
  • Jurisdiction will exist
    • in the country where the defendant is seated
    • eventually in the country where the plaintiff is seated (if the defendant is a resident of a country which is not a member of the EPO)
    • in the country where an infringement has been committed

An additional proposal which I had put forward on behalf of the German delegation is to prevent or at least considerably reduce multiple litigation. While the plaintiff may choose between several courts or regional chambers according to the above criteria when he starts litigation, once he has made his choice, he cannot file a second suit in another court, nor can the defendant by way of a declaratory judgement action. A further measure is directed against the so-called torpedo litigation. If the defendant has filed a declaratory judgement action at a regional chamber prior to the infringement action of the patentee, the patentee can, based on the place of infringement or the seat of the defendant, file an injunction action at another chamber and request at the same time that the declaratory judgement action be transferred to the chamber of his choice. This would end a blocking situation in a "slow court" jurisdiction.21

The above proposal would considerably improve the present situation by abolishing the multitude of national courts that have jurisdiction in patent infringement matters today and which are, in the majority, not specialized in patent law22. The new central national courts will be specialized, and other disadvantages of the present system which have been put forward as arguments in favor of a single court can be dealt with by other modifications as explained before.

3. Forum Shopping

Some critics might say that with the intended jurisdiction rule forum shopping will still be possible. But if a party has the choice between different courts and it chooses the one most appropriate and most convenient, is this always bad?

The creation of one single European Court, if it had exclusivity with respect to jurisdiction over European patents for all countries, would indeed mean that no forum shopping would be possible. However, since the Paper - now - speaks of regional chambers, this can only mean that these chambers have jurisdiction according to some regional criteria, e.g. on the basis of the domicile, seat or establishment of the defendant and the forum delicti commissi. But then the plaintiff would still have the choice between different regional chambers, so that forum shopping would be possible even under the "centralist" system.

In fact, the possible choice between different chambers is not bad, but the result of natural procedural justice. Forum shopping is only an evil when it can be or is misused, but it is not a harm which must be abolished at any cost. The reverse would be unfair, namely to imagine a situation in which a small or medium-size enterprise is "drawn" to a distant single European court of first instance, in a country where it does not have an establishment or any commercial activities, and therefore did not commit an infringement, and where it would be forced to speak a language which it does not understand.

4. Uniformity and predictability

Supporters of the WPL Paper will say that they want uniformity and predictability and therefore need a single court. But the examples of German courts show that there is no perfect uniformity between different courts, even if they have good quality and years of experience and their decisions are, within certain limits, quite predictable.

In a single central court one will need about 15 different chambers for the expected 1000 cases which might be filed each year. A look to the European Patent Office and the Community Trademark Office shows that it will certainly take some time and effort to develop a truly "European" approach, so that a single centralized court is no better guarantee for harmony than a number of central national courts.

The goal of uniformity of case law, namely quality and thereby predictability of decisions, in infringement and validity cases, can only be achieved by a European court system of first instance, if existing national infringement courts with experienced judges are integrated and become part of the European system, so that their local competence can be maintained, together with a clear set of procedural rules and uniformity of judicial practice and case management.

5. What further wishes for the EPJ do the users have?

a) Combination of the EPO and the Community Patent System

A separate court system for EPO patents on the one hand and Community patents on the other - perhaps even parallel to the national courts -, cannot seriously be contemplated23 because there are not enough judges for two or even three systems. If it is already questionable whether even the lowest of possible litigation figures could ever be handled by a single court with borrowed or half time judges, there would certainly never be enough for two parallel systems.

One must provide for certain special rules in view of the different members of the EPC and the Community. But this can easily be achieved with the central - for example, Swiss - court as the first instance and a common second instance which would hear appeals of both EPO and Community patents.

A functioning Community patent litigation system and at the same time a uniform application of substantive law is only realistic if the same courts and the same judges applying the same substantive and procedural law will be integrated into such a system. The idea of a separate or parallel system which the EU Commission seems to favor does not - once again - take into account that there are no more judges available than those which one finds today in the national courts.

b) Validity inter partes or erga omnes?

It had been proposed that decisions by the Central Court revoking the European patent shall have effect erga omnes, i.e. the European patent could be invalidated for all European countries. There was some hesitation whether the same power should be given to the central national court who would be sitting as a European national chamber. But in view of the fact that these regional chambers would consist of the best judges of the respective country24, they would certainly have at least the qualification as a mixed central chamber of which the judges would not even be known in advance.

On the other hand, a validity decision inter partes would also serve its purpose, since the final word on validity would rest with the single European Appeal Court anyway, so that there would be no risk that a different level of patentability would be applied to European patents by the different courts or regional chambers. It can be expected that the central European Appeal Court will develop a uniform case law which will be adopted by the regional chambers and in the long run even by all the national courts. This requires that the European Appeal Court gains authority through the quality of its judges. However, this can be achieved much more easily than with a first instance central court, since fewer judges will be needed for the Appeal Court in comparison to the first instance courts.

c) Minimum education standards for judges

Judges could be chosen by a judges’ council or even approved by the European Court of Justice. The risk that an unqualified judge could be refused would be an incentive for each country to provide the best candidates. Whether such a system can be adopted right from the beginning will depend on the willingness of the countries to give up this part of the administrative control of the judges’ selection system.

Visiting judges with sufficient language qualification could regularly participate in hearings and deliberations of other countries’ courts, an idea which has also been put forward in the Paper.25 Whether they can also take part in the vote still needs to be examined, but would certainly be a natural development in the future. Additional measures for the training of judges must of course be introduced in order to achieve a uniform level of qualification in the long run. These European judges will be able to learn from each other and attain a uniform training and qualification. Under the control of the single Court of Appeals they will be able, after a while, to apply uniform standards of validity and infringement with the same predictability as several chambers in a single court.

d) Uniform legal rules

As already mentioned before, there will be an urgent need for the harmonization of procedural rules, in particular with respect to rules of evidence. While European continental lawyers are not keen to adopt an expensive discovery system, there is a lot of enthusiasm among attorneys to introduce the French "saisie de contrefaçon", a simple and inexpensive seizure for obtaining evidence of patent infringement.

The possibility of torpedo litigation must be abolished as already discussed in the context of jurisdiction, although this will no longer be a serious threat if a central specialized court exists in each country, even if one offers an option to use either the European system or the existing national systems. One must therefore introduce the above rule that an injunction case always has precedence, as to jurisdiction, over a declaratory judgement case.

Also the practice of case management should be harmonized. Judges should be fully prepared for the main hearing so that they are able to discuss the case with the parties which is not common practice in all countries. This would also concern the question in which cases it is necessary to appoint a court expert for validity and/or infringement and how to formulate the questions to such an expert.

Finally, the central national courts also need identical standards for claim interpretation and inventive step, which can only be attained by a common statute.26 This also applies to other rules of substantive law as far as they have not yet been harmonized under neither the EPC nor the Strasbourg Convention. Among others, the rules on prior use and damages are the most important ones which need harmonization.

III. Latest developments.

On May 14 and 15, another meeting of the Subgroup of the WPL with additional specialists, representatives from the bench and the bar, i.e. judges and attorneys, has taken place in Munich in order to discuss in detail the most important procedural rules of the future European patent procedure.

The main topics were

  • Filing of complaint – with the central chamber or regional chamber?
  • Language in the appeal instance
  • Compulsory representation by attorneys?
  • Preliminary injunction – which criteria?
  • Discovery English or French style?
  • Organization and practice of Hearings
  • Decisions - Dissenting opinions?
  • Type of Appeal - Retrial or legal review

A report on the results of this discussion is expected as well as a revised text of the Protocol which reflects the views of the majority.

Concluding Observations

One may be of the opinion that it would cause no harm if, for a first period, only a limited number of countries can agree to join a Protocol for European Patent Litigation. But if one recognizes that the system adopted for the EPLP might later become the system for the Community Patent, the discussion has a broader impact. One should therefore avoid adopting a system which, if compared with today’s entirely national systems, would be the less preferable alternative so that plaintiffs will instead opt for purely national litigation. The aim should therefore be to find the best solution to which a large majority can agree, i.e. those who are expected to work there as judges, and those who mostly make the decisions which courts to use, namely the patentees and their attorneys.

A safe alternative might be a certain period of coexistence of the national and European systems which would provide a reasonable chance to test and eventually improve the system and let the users decide which one they prefer. This was the solution chosen for the European Patent Office with respect to the national offices. Why should it not work for two systems of enforcement?

FOOTNOTES

  1. Cf. for a very clear description of the problems in European patent law Brinkhof, Die Schlichtung von Patentstreitigkeiten in Europa, to be published in Festschrift 40 Jahre Bundespatentgericht
  2. The following citations refer to the English version of the WPL Paper prepared by the Luxembourg Conference of May 25, 2000 (WPL 9/99 rev.1).
  3. WPL 9/99 Annex I, No.1 page 24.
  4. Cf. the Report of the Working Group of the German Justice Department published in 2000 GRUR 221, 222.
  5. Cf.i.a. Pagenberg, 31 IIC 481 (2000), Schade, 2000 GRUR 101
  6. See Brinkhof, ibid. footnote 1, who confirms that this argument alone excludes the dream of a central court of first instance.
  7. See WPL Paper No. II.3, page 18.
  8. Brinkhof, ibid. coming himself from a very efficient patent system, calls Germany the „patent country par excellence"
  9. UNICE Paper of June 5, 2000.
  10. No.VII of the UNICE Paper of June 5, 2000.
  11. "at the defendant’s place," WPL 9/99No. II.6. 2) p. 17.
  12. Ibid. p. 17.
  13. Opposed in this form also e.g. by the Swedish delegation, Doc. WPL/12/00; the Swedish delegation with the WPL therefore made a counter proposal, cf. Memorandum 2000-06-05 Doc WPL/12/00 e
  14. This is a proposal already made in my article 31 IIC (2000) at p. 498.
  15. Estimates by epi during the first WPL meeting in Lucerne spoke of 1,000 European cases a year, for which one would need 50 judges. A conservative view could however be that all important European cases have been litigated in the past at least also in Germany so that one cannot add the cases in other countries to the total number of German cases.
  16. The resolution of AIPPI in Melbourne opted for a decentralized system of first instance courts in each country
  17. Pagenberg, ibid. footnote 4.
  18. This point is also correctly pointed out by the Swedish paper cited supra footnote 10.
  19. Cf. also the proposal of the Swedish delegation that a case where no cross border dimension is given can also be tried before a purely national court if the defendant agrees. This might however prevent harmony between European and national procedures.
  20. This possibility is rejected in the WPL Paper, see No. II.3.Ia), page 13
  21. The above procedural proposals would require an amendment of the Brussels Convention and eventually the Hague Convention on Jurisdiction.
  22. See this criticism in No. III of the UNICE Paper.
  23. Cf. Brinkhof, ibid. footnote 1.
  24. See No. II.3.I.a, page 13.
  25. See No. II.3 page 18.
  26. Cf. also Brinkhof, ibid.

 

© by Jochen Pagenberg 2001.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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