UK: European Patent Strategy: A Helpful Framework

Last Updated: 14 December 2010
Article by Carl Rohsler

Selecting the right forum for patent litigation is often considered to be something of a 'black art'. In this article Carl Rohsler, Head of the Intellectual Property Group at Hammonds LLP, attempts to demystify this area. He clarifies the issues to be considered when selecting the right forum. His analysis framework will be helpful to both patentees and practitioners alike to highlight the most significant factors in developing what might be termed a "European patent strategy".

Two patent systems

We currently have two systems by which a patent can be granted in European states. The first is via a national filing in each country (so that, for example, one applies to the UK Intellectual Property Office for the granting of a UK patent). The second mechanism is through the operation of the European Patent Convention ("EPC") and the European Patent Office ("EPO") which is located in Munich, Germany. This system is designed to minimise the amount of bureaucracy necessary to achieve patents in the states that have signed up to the EPC. Essentially, a single application is made which designates those nation states where the applicant wishes to have protection. The application is examined centrally and, if no fundamental objections are found, it is published and thereafter is subject to an opposition period during which third parties can seek to persuade the EPO that the patent should not be granted.

If opposition proceedings succeed then the application will fail. However, if the application survives the opposition period intact, it will be granted and, at that point, separate applications arise in each national patent system which has been designated by the applicant. Some years ago, there were a number of further formalities which were required before the patent was actually granted in each of those states (for example the payment of certain fees and the filing of translations of the patent into local languages). However, these have been significantly reduced in recent years.

The important point is that we do not have a "European Community Patent" in the way that we have managed to achieve a Community trade mark system. All patents remain national in their geographical scope and so a European patent designating the UK (often referred to by the shorthand "EP (UK)") is precisely the same in terms of its scope of protection as a patent granted following a single national filing at the UK IP office. There are, in fact, some potential subtleties about the tests to be applied (Patents Act or Protocol under the EPC when determining validity and infringement), but they are too delicate to fall into consideration in a note of this scope.

Can one choose among the available courts?

European countries have, for a number of years, sought to regulate the potential conflict of different jurisdictions that might exist between states and to create a series of rules about where actions can and should be brought. This is an important part of any European policy designed to create harmonisation between states over matters such as trade. The rules were found in the Brussels and Lugano Conventions and, more recently, are set out in the Brussels Regulation. What follows is something of a gross oversimplification of the rules, but nonetheless hopefully a handy guide:

  • The general principle is that in civil cases, one should sue a defendant in the territory in which that defendant is domiciled. However, that basic principle (which is essentially "defendant friendly") is subject to a number of important exceptions.
  • First, in relation to torts (and of course patent infringement is a statutory tort), one is entitled to bring proceedings where the harmful activity occurred.
  • Second, in relation to emergency protective measures (such as interim injunctions) one is also entitled to seek remedies in the court for the jurisdiction in which the harm arose.
  • Third, disputes concerning the registration or validity of a patent should be determined in the jurisdiction where the patent is registered or where the patent application has been filed.

 

These exceptions are clearly very important in intellectual property cases and normally mean that the overall effect of the rules on "where one can sue" becomes claimant friendly. There is, in effect, the ability for the claimant to choose the forum in which it wishes the dispute to be heard.

The position is, in fact, slightly more subtle than described above. As noted, one can issue proceedings for patent infringement in either of those jurisdictions in which (i) the harmful event took place or (ii) the cause of the tortious activity was located. This might seem to be a fine distinction, but it can have an impact in relation to damages. For example, imagine a claimant owning one granted European patent which designates France, Germany and the United Kingdom as the three territories in which it provides protection. The defendant has one factory in the United Kingdom and then makes sales of the product in France, Germany and Spain. Clearly, no action could be brought in relation to sales in Spain (there being no patent protection). In relation to France and Germany, a patent action could be brought in the local courts but damages would only be able to be recovered in relation to those infringing acts taking place in each of those jurisdictions. By contrast, an action brought in the English courts would be able to deal with all of the damage being suffered. So there may be some benefit in examining where the financial impact of the infringement has its "root".

Types of remedy available from each of the courts

Taking the examples of France, Germany and the United Kingdom, the remedies available for patent infringement are all, essentially, the same: each court is able to grant financial compensation for the damage caused by the infringement (or the wrongful profit made by the defendant) and, more importantly, each of the courts will be able to grant an injunction preventing further infringement and other remedies such as delivery up of the infringing product and/or destruction under oath. Ultimately, some courts (although, notably, not the German courts) will have the power to invoke the criminal law against those who ignore a validly served injunction.

There is no possibility of a "pan-European injunction". The decision of a UK court that a patent has been infringed may well have a striking commercial effect in bringing the defendant to the negotiating table to seek a licence or stop its activity on a pan- European basis, but the English court will not be able to grant an injunction which will be effective in Germany.

That position is the same for each of the courts being considered in the above example. In other words, invalidating the patent in Germany will not have the effect of invalidation in the UK or France – although in practice it may make those patents of little economic or commercial value following an adverse finding in Germany. The only "remedy" in which there is a substantial difference in the treatment as between French, German and English courts is that of costs. That is dealt with separately below.

Comparison of the different systems

So far, we have dealt with what one might (mixing IP vocabulary) call "absolute grounds" for making a decision to pursue an action in one court or another – i.e. grounds which either entirely permit or entirely prohibit an action from being commenced. Thereafter, the issue of where to commence proceedings becomes much more one of judgement and nuance (and in most cases there are advantages and disadvantages to any particular course of action). The various factors that go into assessing the merits and the merits of acting in a particular jurisdiction may be summarised as follows:

(1) Legal system

The courts in England, Wales and Scotland operate on a common law system. By comparison, both France and Germany operate a codified civil law system in which case law has a lesser role to play. It is difficult to say how this factor plays out in a particular case except that some claimants (for example, a claimant based in the US) may find a common law system instinctively easier to understand.

(2) Language

Clearly, although many French and German lawyers have excellent linguistic skills, there is a measure of extra complexity in the process of obtaining and receiving instructions and giving tactical advice where the language of the proceedings will not be English. Conversely, of course, a German patentee might feel more at home with proceedings in the German Courts.

(3) "Philosophy"

Perhaps the most nebulous of the differences between the Continental courts and the UK courts is that the UK courts operate an adversarial system whilst the European courts tend to operate upon "inquisitorial" lines. It is very difficult to give concrete examples of exactly how these tendencies express themselves. An example might be the philosophy of the Continental courts that the court will collect and assess the evidence with a view to identifying the truth. In an adversarial system, the obligation (or right) to collect and analyse the evidence is placed much more firmly in the hands of the parties and the court will seek to determine which of the parties has put forward the best (most probably correct) case rather than concerning itself with its own investigation of the evidence.

(4) Quality of the judicial consideration

Approximately 90% of all patent actions in Europe are held either in the courts of Germany or in the United Kingdom. As between those two jurisdictions, Germany has by far the majority (in terms of absolute number of cases) than the UK. The "market" for patent law in France is considerably smaller which means that the available pool of skilled practitioners (and indeed the available pool of skilled judges) is smaller.

In Germany, a number of courts (particularly the Landgerichte (district courts) of Düsseldorf and Mannheim) have gained a reputation as being specialist in patent proceedings. This is the case even though judges in those courts will not necessarily have a technical background. In the United Kingdom, all of the judges in the Patents Court (and the Patents County Court) will be former barristers with technical specialism (usually at least a degree in a science subject and sometimes a previous career in science). Because they will hear only intellectual property cases, these judges will generally be much more familiar with the kind of arguments that are deployed. Again, it is difficult to know whether this is an advantage or disadvantage. For a marginal case, some may say that putting the matter before a non-specialist judge may give the claimant an advantage but there are also issues as to whether any resulting judgment is given as much credence in other courts. In any event, the technical ability of the judges is only one of the overall factors in assessing the quality of justice delivered.

A final point, of relevance to those with US experience: none of the systems under consideration use juries.

(5) Ability of a single court to deal with the proceedings

In the United Kingdom, patent cases are either dealt with in the Patents Court (part of the High Court) or the Patents County Court (which is a lower court designed to provide a swifter and simpler form of justice). Both these courts can deal with issues of infringement and any counterclaim of invalidity. By contrast, in Germany, the Landgericht (the court which deals with issues of infringement) does not have the power to deal with questions of validity. Validity issues are dealt with by the Federal Patent Court in Munich. This means that in cases where infringement is alleged and invalidity is counterclaimed, the proceedings of the infringement claim are subject to an application for a stay. In the stay application, the Landgericht judge will make an initial finding as to whether the validity claims are prima facie strong or not. This gives an initial (albeit imperfect) view on validity. If it appears that the case on validity is more than merely shadowy, the infringement proceedings will be stayed and the issue of validity will be dealt with in the federal court. Once a decision has been reached in relation to validity, the matter will be returned for consideration on the infringement issue by the Landgericht.

The French system would involve a case being brought before the Tribunal de Grande Instance (effectively a regional High Court)

(6) Appeals

For completeness, it is worth mentioning the appeals process.

  • The German system allows appeals on questions of infringement to the Oberlandesgericht (higher regional court) and then to the Federal Supreme Court (which is the final court). Invalidity issues would be appealed directly from the Federal Patent Court to the Federal Supreme Court. Liability and quantum are normally decided at separate hearings.
  • The French system would normally start in the Tribunale de Grande Instance or the Trade Court, with appeals to the Cour d'Appel and the Cour de Cassation. Liability and quantum are heard together.
  • The English system would start in the Patent Court (with appeal to the Court of Appeal and Supreme Court) or in the Patents County Court (for simpler and lower value matters) with appeal to the Court of Appeal and the Supreme Court).

Appeals in Germany to the higher regional court will be effectively re-hearings, whilst those to the Federal Supreme Court will essentially be restricted to matters of law. In France, the ability to introduce new evidence on appeal means that the appeal process can very often be close to being a re-hearing. In English Courts, appeals at all stages are limited to errors as to the treatment of the evidence or errors of law.

(7) Procedural differences

The most significant procedural differences between French, German and UK courts in patent actions are those relating to witnesses and disclosure. The UK has a sophisticated and wide ranging series of disclosure obligations and allows the production of expert reports, the operating of experiments and the cross-examination of both experts and witnesses of fact. The average trial length of a patent case brought in the High Court in the UK is probably 7 to 10 days.

In stark contrast, there are almost no obligations of disclosure in either French or German patent proceedings. The arguments, both legal and factual, will be put before the court in a trial which would not normally extend beyond one day and where the calling and cross-examination of witnesses is rare.

Again, this is a double-edged sword. Generally, however, patentees who feel that they have a strong case (or wish the issues to be explored to their fullest extent) would prefer UK proceedings over those in France or Germany.

(8) Costs

The disadvantage of thoroughness (or the advantage of limited disclosure and examination of the evidence) is that the cost of proceeding in Continental courts is significantly cheaper than that in the UK courts. One would normally expect a patent action on infringement issues alone to cost something in the region of €20,000 – €40,000 in the German courts. Even assuming an attack on validity and the potential for an appeal, litigation would probably cost less than €75,000. Trials being shorter and the issues being more heavily prescribed, decisions are often reached within 9 to 12 months.

By contrast, a significant patent action in the High Court in England with all of the costs of disclosure, experts, barristers and so on, will cost perhaps 10 times as much as a European equivalent. Cases in the High Court will probably take 12 to 14 months to come to trial.

However, there are a number of further important factors that need to be considered on the issue of costs when comparing the two jurisdictions:

  • First, a successful litigant in the English courts will be able to recover from his opponent approximately 3/4 of the costs of the action. So a losing party in a major patent action may be confronted not only with a bill for more than €750,000 from his own lawyers but also something similar in relation to his opponent's costs. There are a number of ways in which the courts have sought to deal with issues of costs and limit the ability of parties to use costs as a "weapon" in litigation but it must be said that there is still some truth in the comment of one judge who said that: "English justice is open to everybody, just like the Ritz hotel". Inevitably, however, the pressure created by the burden of costs and the casino like effect of "winner takes all" means that large and sophisticated organisations sometimes choose the English courts in order to put economic pressure on defendants.
    By contrast, recoverability of costs in French and German courts is very much more restricted (by reference to particular scales of recoverable costs based on the value of the action). In practice, therefore, although a party may only have a cost exposure of €40,000 - €75,000 in a German court, they will, even if victorious, only be able to recover a small fraction of that amount.
  • The relatively inexpensive nature of German proceedings has been one reason why the German courts have become generally regarded as "jurisdiction of choice" for patent litigants in Europe. However, in recent years, the UK government has introduced the Patents County Court as a deliberate attempt to provide a forum for more efficient and speedy resolution of matters. Very recently (in October 2010) further regulations in relation to the PCC have created a system which is not dissimilar to that operating in Germany (i.e. very restricted disclosure, the potential to restrict expert and witness evidence or exclude it altogether and a total cap on recoverable costs of £50,000). It will be interesting to see if these measures provoke an increase in the number of cases being brought before the English courts but at least now there is some form of equivalence between the UK and German systems if this forum is used.

(9) Construction of claims/for or against patentees

Finally, it is worth mentioning that there is some support for the notion that German courts are broadly more favourable to patentees than English courts. This arises because traditionally German courts have taken a more liberal approach to the construction of claims than the UK courts (and also perhaps because disclosure obligations and the chance to cross-examine witnesses give judges more time to develop criticisms of the patentee's case). However, one should not overemphasise this tendency, which is very much a question of impression and is not based on, for example, substantially different legal tests being applied.

Concluding comments

As stated at the outset, this article is intended to be a brief, rough and ready introduction to the issues which arise in selection forum in patent actions across Europe. In addition, further layers of complexity are imposed by the specific filing requirements and commercial considerations of the client, the state of opposition proceedings and so on in relation to the wider patent portfolio of the patentee and, very often, the practical use of the patent (patents for oil and gas technology are more normally litigated in the Norwegian and English courts, being the jurisdictions with a significant oil industry in the North Sea) compared with the French or German courts. This article does not, of course, represent specific legal advice on the strategy to be adopted in any particular case and offers no more than a general discussion of some of the issues that need to be considered. However, within these limitations, it is hoped that it provides a mental framework for approaching the analysis of patent strategy.

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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