BREAKING: Puns at the ready, Mr Justice Birss delivers epic CIALIS judgment

It's how long? ! 

A judgment of Arnoldian proportions has just landed on the AmeriKat's desk, but it is not from its namesake.  It is instead from Mr Justice Birss.  At an eye watering 113 pages consisting of 491 paragraphs, his decision in Actavis v ICOS [2016] EWHC 1955 is recommended beach reading for those ready to jet off the south of France for their August holidays.  Two patents were in issue - '181 (dosing) and '092 (formulation) relating to tadalafil.  Tadalafil is the generic name for the product sold under the brand names CIALIS (for male erectile dysfunction) and ADCIRCA (for pulmonary arterial hypertension).  The judge held at least Claim 7 of the '181 patent is valid and infringed and the '092 patent is invalid.

Although the AmeriKat is only just digesting the judgment, there are treats in store for everyone including:

• What is the the role of Teva v Leo?  
• Can a generic's "clearing the way" revocation action really not be construed as a threat to infringe the patent (when coupled with a contingent intention to launch a product if the action succeeds)?
• The role of chemical names and priority documents.  
• The ability to exercise your pun-tastic skills in talking about this decision.

Assuming the AmeriKat can last until the end of the judgment, she will be back with a more fulsome summary later on.   

Gathering evidence in patent proceedings? EPLAW's Europe/Japan mock trials may be what you need

Somewhat, but not completely revealing,
Merpel impersonates a defendant's 
voluntary infringement evidence....

September seems to be the month of mock trials, with at least three in the works as far as the AmeriKat is aware.  An exciting mock dealing with the new world of biosimilars litigation will be entertaining the lucky attendees at this year's AIPPI's World Congress in Milan (more details to come).  Only a few days later on 23 September 2016 in Paris, not one but four Mock Trials will be heard before Judges Shitara, Girardet, Grabinski and Hacon, respectively.  Each hearing will address the topic close to any patent litigator's heart - gathering evidence in patent proceedings.  The four hearings promise to result in an insightful comparison between Japanese, French, German and English approaches to evidence in patent proceedings.

The announcement states that:

"​Proving infringement of patents in complex technologies is increasingly challenging. Often the key evidence is in hands of another party and may be highly confidential. The court procedures of the key jurisdictions of Japan, France, Germany and the UK have developed a variety of approaches to deal with these challenges, and continue to evolve. The UPC rules of procedure have adapted a number of these approaches. 

The Japanese court and legislature are also reforming evidence gathering. This event provides an insight from judges and patent litigation lawyers from these key jurisdictions involved at the forefront of the development of the law. The evidence gathering challenges which patentees and defendants face in the current systems and in the future will be brought to life by a mock trial format 

The event is supported by the European Patent Lawyers’ Association (EPLAW) which represents patent litigators across Europe. ​ Leading Japanese IP associations are co-sponsoring the event and have been involved in the reform of Japanese evidence gathering reform."

The event, which is also promoted by JETRO, Japan Intellectual Property Association, Japan Patent Attorneys Association, the Japan Federation of Bar Associations and the IP Lawyers Network Japan, kicks off  at 9:30AM with Kat friend Penny Gilbert (President of EPLAW) introducing the day.  The evening ends with drinks at 6PM.  Tickets are €150, but includes lunch and evening drinks reception.

So if you would like to see advocates like Alex Wilson (Powell Gilbert), Christof Augenstein (Kather Augenstein) and Koichi Tsujii (Nakamura) get a grilling from the judges click here to register.

UK IPO finally speaks about the "facts" of IP post-Brexit

The AmeriKat under yet another Brexit law
update

Unlike many of the UK law firms who quickly climbed on board the Brexit bandwagon, the UK's Intellectual Property Office has been understandably and notably silent.  For the past several weeks they have been in listening mode as they hear from stakeholders about their post-referendum concerns.  Today, they have published a short guide called "IP and Brexit:  The Facts" to dispel the speculation on the future of IP law following the referendum result.  The main message is "The UK is still part of the EU so your EU-derived protections continue and we are considering various post-Brexit options".  Unsurprisingly, the brief is short given that the fate of EU-made rights will be determined by the ultimate relationship between the UK and EU.

On patents, the UK IPO confirmed that it was business as usual for UK businesses applying for patents at the EPO and that the referendum result will not impact the European Patent Convention (EPC).  On the UPC it stated:

"The UK remains a Contracting Member State of the Unified Patent Court at present. We will continue to attend and participate in UPC meetings in that capacity. There will be no immediate changes." 

On trade marks and designs, the UK IPO stated that

"We recognise that for EU trade marks, users will want clarity over the long-term coverage of those rights. The government is exploring various options and we will be consulting users of the system about the best way forward. Even after the UK leaves the EU, UK businesses will still be able to register an EU trade mark, which will cover all remaining EU Member States.  

In addition, the UK is a member of the international trade mark system called the “Madrid System”, which allows users to file one application, in one language, and pay one set of fees to protect trade marks in up to 113 territories including the European Union." 

On rights of representation of UK trade mark lawyers before EUIPO, the UK government stated that they fully recognized those concerns and "welcome views on how to address these concerns and are involving stakeholders in consideration of these issues."

The IPO's Brexit briefing summarizes
what we expected - business as
usual, until something  happens

On designs, the UK IPO reiterated the government's intention to ratify the Hague Agreement:

"in a national capacity, which provides a practical business solution for registering up to 100 designs in over 65 territories through filing one single international application. We are currently working through the steps of joining and hope to introduce the service within the next year." 

On copyright, the UK IPO stated that the continued effect of the EU Directives and Regulations post-Brexit "will depend on our future relationship".

Finally on enforcement, the UK IPO conducted some justifiable self-promotion by declaring that

"The UK is widely seen as a world leader in enforcement of IP. By working in partnership with law enforcement and industry, the government can deliver an IP environment where legitimate businesses thrive and consumers are protected. For the time being the UK’s enforcement framework remains unchanged."

The UK IPO concluded by stating that it

"...will continue to play an active role in the review of the Enforcement Directive, and the Commission’s work on tackling commercial-scale infringement."

The AmeriKat will be back later this week with an update on the Enforcement Directive consultation following June's IPR Enforcement Conference 2016.

Baroness Neville-Rolfe will definitely
need energy when it comes to
Brexit negotiations

In the meantime, Baroness Neville-Rolfe will continue as the minister for IP, but her full title is now Minister of State for Energy and Intellectual Property.  So with energy to her dossier, her full list of responsibilities is as follows:

• energy (with the Minister for Industry and Energy) 
• nuclear 
• oil and gas, including shale gas 
• low carbon generation 
• security of supply 
• electricity and gas wholesale markets and networks 
• energy efficiency and heat, including fuel poverty 
• smart meters and smart systems 
• international energy energy security, including resilience and emergency planning i
• ntellectual property 
• EU single market
• Lords lead on all BEIS issues

"Well if anyone can tackle that job specification," Merpel muses "Baroness Neville-Rolfe surely can...."

BREAKING: Mr Justice Arnold refers questions on Article 3(b) SPC Regulation to CJEU

The AmeriKat after the end of this term....

With the swan song of this year's Trinity Term having ended today, the Patents Court has been a hive of activity.  Last minute applications, end of term hearings and judges clearing their desks of judgments are the usual features of the end of the English Court's term.  This term has been no different, but my, how they have ended in a dramatic fashion with....drum roll please...a reference to the CJEU from Mr Justice Arnold on the SPC Regulation in Merck Sharp & Dohme v Comptroller-General of Patents [2016] EWHC 1896.

The problem and the questions to be referred 

What do you do if your patent is about to expire, but despite notice that Member States have agreed to grant your marketing authorization (MA) under the decentralized procedure, a MS has not yet taken the step to actually grant it?  You still make your SPC application, of course.

What happens after that is now subject to the following referred questions to the CJEU (subject to further revision and refinement by the Court and the parties' counsel):

1.  Is an end of procedure notice issued by the reference member state under Article 28(4) of the Medicinal Products Directive equivalent to a granted marketing authorisation for the purposes of Article 3(b) of the SPC Regulation. 

2.  If the answer to question (1) is no, is the absence of a granted marketing authorisation at the date of the application for a certificate an irregularity which can be cured under Article 10(3) of the SPC Regulation once the marketing authorisation has been granted?

Eye roll all you want, the AmeriKat actually
really does like SPC law

The SPC Regulation

Nothing makes the AmeriKat happier than SPC law (as far as "legal happiness" goes).  For those who have better things to do with their time than to understand the wonderful world of SPCs or to follow the myriad of national and CJEU decisions in this area, the key points are as follows:

• By law, before a medicinal product can be placed on the market, it requires a MA.  Getting a medicinal product to this point cant take upwards to 15 years. 
• By the time a MA for a medicinal product is granted, much of the term of the patent that protects the product will have expired.  
• This means that the effective protection under the patent is insufficient to cover the investment in R&D (see Article 4 of the SPC Regulation). 
• For this reason, a new right  - the Supplementary Protection Certificate (SPC) - was introduced by the SPC Regulation in order to address that problem.  
• SPCs provide an additional period of protection - up to a maximum of 5 years - for a product (i) subject to a valid MA at the date of the application (Article 3(b)) and protected by a patent (basic patent) in force at the date of the application (Article 3(a)).    
• National courts and the CJEU have spent many years wrangling with the interpretation and application of the SPC Regulation.  

What's the product?

Atozet is the medicinal product which contains the active ingredients of ezetimibe and atorvastatin.  It is used to lower cholesterol. Claim 17 of EP(UK) 0 720 599 (the basic patent) protects a pharmaceutical composition comprising ezetimible and atorvastatin (this was not in dispute).  MSD applied for a SPC for the "product" on the basis of this patent for:

"ezetimibe and atorvastatin or pharmaceutically acceptable salts thereof, including atorvastatin as atorvastatin calcium trihydrate". 

The problem was that at the time of the SPC application, there was no granted MA in the UK.

Background

MSD's arguments

MSD obtained a MA and SPC for the mono product - ezetimibe - in 2003.  It then obtained a MA and SPC for a combination of ezetimibe and simvastin - in 2004 and 2006, respectively (Merpel was struck by the relevance of this in the decision given that Article 3(c) objections were not in dispute, save for in the Dutch court).

In September 2006, MSD began development of the fixed dose combo of ezetimibe and atorvastatin.  However, it encountered formulation difficulties.  Seven years later, in September 2013, MSD filed MAs for Atozet in a number of Member States using the decentralized procedure (DCP) of obtaining a MA.  MSD designated Germany as the reference Member State (RMS).  As the RMS, the German medicines regulatory authority - Bundesinstitut für Arzneimittel und Medizinprodukte - coordinated the approval process, preparing the draft documents and, most importantly, the draft summary of product characteristics (SmPC) on which the other Member States comment.  All Member States' respective regulatory bodies need to be happy with the documents before the procedure is closed.  Thereafter, once agreement is reached, each Member State has 30 days to grant the MA.   The German medicines authority did not accept that MSD had filed a valid application until 13 February 2014 (another interesting inclusion, muses Merpel....).

On 12 September that year - a single day before the patent expired (remember the basic patent has to be in force under Article 3(a)) - MSD applied for its UK SPC at the UK Intellectual Property Office (IPO).  However, MSD did not have a granted UK MA.  Instead, MSD submitted, with their SPC application, a copy of the end of procedure (EoP) notice from the German medicines agency stating that the DCP had ended with approval.  MSD explained that the effect of the EoP notice was that concerned Member States, including the UK, had agreed to grant a MA for Atozet.  MSD therefore asked the UK IPO for permission to supplement their application when their UK MA was granted.

Five days later, the UK IPO's examiner said MSD's application did not comply with Article 3(b) because at the time of filing their SPC application, they did not have a valid UK MA.  The EoP notice did not satisfy that requirement.  The IPO also objected to the application on Article 3(c) grounds.  Three weeks later, the UK MHRA granted the MA on 10 October 2014.  MSD submitted a copy of the UK MA, together with the first EU MA (from France) and asserted that these documents would rectify any irregularities in the application.  The examiner maintained her objections, leading to a hearing in which the hearing officer agreed that Article 3(c) was satisfied but the SPC application fell foul of Article 3(b) which could not be cured under Article 10(3).

The Issues 

The Court was tasked with deciding whether:

(1) The SPC application complied with Article 3(b)
(2) The absence of a MA was an irregularity that could be cured under Article 10(3)

Arnold J sided with the Comptroller's
reasoning

Did the SPC application comply with Article 3(b)?

No (in his opinion).  Mr Justice Arnold sided with the Comptroller's arguments on the basis that:

• The focus of the SPC Regulation and regulatory approval is MA grant.  
• The SPC Regulation only talks about MA grant  There is no mention of EoP Notices in the SPC Regulation.  
• MA grant is necessary to launch a product. 
• EoP Notices have no legal effect.  Only national MAs have legal effect under national law and it is still for Member States to grant a MA (despite the mandatory provision of Article 28(5) of the Medicinal Products Directive which provides that once the approval is recorded, each concerned Member State "shall adopt a decision in conformity with the approved assessment report, [SmPC]...within 30 days after acknowledgement of the agreement". 
• SPC applications are made to national IPOs who are not medicines authorities subject to the Medicinal Products Directive. 
• Therefore, at the date of the application, there was no valid MA granted in the UK to place Atozet on the market.  The EoP Notice was not equivalent to a MA for this purpose. 

The judge ignored, in his decision, all the usual "go to" arguments about the underlying purpose of the SPC Regulation in compensating the R&D, which were made by MSD.  The AmeriKat notes the comments about the difficulties encountered in formulating the actives.  Indeed, it took seven years to get to the point of applying for a MA.   Surely, that is where the SPC Regulation's purpose should really kick in - as the time and expense in which it took to successfully formulate and take the product through Phase III trials should be recognized. Adopting an overly formalistic approach undermines the entire purpose of the SPC Regulation as set out in the Recitals, especially where there was only a month between the date of the SPC application and the grant of the UK MA.  But the text of Article 3 itself provides a harder line....

Is the absence of a MA an irregularity that could be cured under Article 10(3)?

No (in his opinion).  Mr Justice Arnold sided again with the Comptroller on the basis that DuPont[2009] EWCA Civ 966 - which held that Article 10(3) could be successfully used to remedy a defect in a paediatric extension application caused by the lack of all updated MAs being provided - was to be distinguished from the position in this case.  This was because of the following:

• An applicant for an extension has to apply by a specific date irrespective of whether it has all the relevant materials or not (i.e. two years before SPC expiry).  If no application is made by this date, no extension can be obtained.  By contrast, an application for an SPC can only be made after the grant of the patent and the grant of the MA.  Once those two events occur, the applicant has 6 months to make an application.  

• Article 3  - and therefore Article 3(b) - does not apply to an application for an extension.  Article 3(b) - a valid granted MA - is a condition of grant.  Such a condition is absent in extension applications, as noted by Jacob LJ in DuPont.  

• Even if Article 10(3) was employed to assist MSD, it was a dead end on the basis that you can't cure the incurable.  That is to say, a condition of grant under Article 3(b) is that there is a valid MA at the time of applying for the SPC.  At the date of application there was no granted MA and there was not until after the application for the SPC had been made.  Had the applicant merely forgotten to supply a copy of the MA, then that could be occurred by Article 10(3), but in this case there was no MA to supply.   

Doing everyone a favor,
Mr Justice Arnold refers questions
to the CJEU

So, why the reference then?

Mr Justice Arnold referred the questions as set out above.because:

• matters were not acte clair; and

• due to the presence of divergent decisions in other Member States on the SPC.  

On the latter, he noted that in Portugal and Sweden, the SPC was refused on the same ground.  However, in Denmark, Greece, Italy and Luxembourg granted the SPC.  The Dutch Patent Office refused the SPC but on Article 3(c) grounds (there was no objection on Article 3(b) as it accepted the EoP Notice as being equivalent to a MA).

One might as well cut to the chase and ask the CJEU what it thinks.  Or, as Mr Justice Arnold, put it:

"In these circumstances, I consider that it is only by referring the matter to the Court of Justice of the European Union that an authoritative ruling can be obtained."

Unfortunately for MSD, muses Merpel, unlike patent amendments she does not know of any "retrospective" provision when it comes to MA grants...

Mr Justice Arnold rejects bid to hear infringement of German designation in Rhodia v Molycorp patent jurisdiction tussle

The AmeriKat on  a sleepless summer night
musing on the future of patent litigation

The late night witching hours have begun again for the AmeriKat.  It is during the quiet, warm summer nights without the ding of incoming emails or calls, that she can muse on the state of patent law.  One of the issues that has been preoccupying her time lately has been the future of harmonization for European patent and SPC law, especially in a post-Brexit landscape.  With the ultimate fate of the Unified Patent Court unlikely to be determined any time soon, her attention is returning back to a national court's ability to land grab an other EU Member State's designation for the purposes of patent infringement actions.   The extent of how long the English court's arm is in this respect was a question posed in various guises in last week's interim decision of Mr Justice Arnold in Anan Kasei Co., Ltd & Rhodia Operations S.A.S. v Molycorp Chemicals & Oxides (Europe) [2016] EWHC 1722 .  The IPKat's ever insightful friend, Eibhlin Vardy, picks up the tale:

"Background

Rhodia is the exclusive licensee of the UK and German designations of a European patent entitled "Ceric Oxide and method for production thereof, and catalyst for exhaust gas clarification". Rhodia commenced infringement proceedings in the English High Court alleging that the English domiciled Defendant, Molycorp, had infringed the UK and German designations of the patent.

Molycorp's solicitors filed an acknowledgment of service, indicating that the Defendant intended to defend the claim, but did not intend to challenge jurisdiction. However, on the same day, Molycorp's solicitors wrote to the Claimant giving notice of Molycorp's intention to challenge jurisdiction of the German designation of the patent in Germany, and asserting that in that situation, the English Courts would not have jurisdiction over infringement of the German designation of the patent.

 Rhodia then issued an application for an order for the provision by Molycorp of samples of its ceric oxide products for testing by an independent laboratory instructed on behalf of Rhodia for the purposes of infringement of both the UK and German designations of the patent. Shortly thereafter, Molycorp issued nullity proceedings in the Bundespatentgericht (Federal Patent Court) challenging the validity of the German designation of the patent on the usual grounds (lack of novelty/inventive step, and insufficiency). It was common ground between the parties that the German validity proceedings were due to take approximately two years.

Issues before the Court

There were two issues before the Court:

Ceric Oxide, not to be confused
with cornmeal....

(1) Does the English Patents Court have jurisdiction over the infringement claim in respect of the German designation of the patent?

Rhodia sought to amend its Particulars of Claim and Particulars of Infringement in order to try and bolster its case on jurisdiction in respect of infringement of the German designation of the patent.  The essence of its proposed Amended Particulars of Claim and Particulars of Infringement can be seen from the following excerpts:

"4. The Defendant has infringed the UK and German designations of the Patent as set out in the Particulars of Infringement served herewith. In respect of the German designation of the Patent, if German designation is not invalid (which is to be determined by the German courts) the Defendant's conduct has infringed, and/or would fall within the scope of the claims of, the German designation of the Patent. 

(1) A declaration that each of the UK and German designations of the Patent has been infringed by the Defendant. 

(1A) A declaration that, if German designation is not invalid (which is to be determined by the German courts) the Defendant's conduct has infringed the German designation of the Patent. Alternatively, a declaration that the Defendant's conduct falls within the scope of the claims of the German designation of the Patent (if not found invalid, which is to be determined by the German courts)."

As things stand, the UK remains a member state of the EU, and the issue of jurisdiction falls under Articles 24(4) and 27 of the Recast Brussels I Regulation, which provide as follows:

"Article 24 

The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties: 

… 

(4) in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place. 

Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that Member State; 

Article 27 

Where a court of a Member State is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 24, it shall declare of its own motion that it has no jurisdiction." (emphasis added)

It was common ground between the parties that the German Courts have exclusive jurisdiction over the validity of the German designation of the patent. The issue in dispute was whether the reformed allegations of infringement in the proposed Amended Particulars of Claim/Infringement were "concerned with" the validity of the German designation of the patent within Article 24(4), or "principally concerned with" the validity of the German designation within Article 27.

Rhodia contended that they were not, because the claim had been framed to exclude any question on the validity of the German designation. Molycorp contended that they did fall within these provisions of the Recast Brussels I Regulation, because the question of infringement is inseparable from that of validity.

As a vocal objector to tentacles ::shudder::, the AmeriKat is pleased
that the English court's long arm is cut short by
Recast Brussels I Regulation ...

Following a review of relevant case law (including GAT v LuK  and Solvay v Honeywell), Arnold J concluded that Rhodia's claim fell under article 24(4), or was at least "principally concerned with" the validity of the German designation of the patent under Article 27. The proposed amendments to Rhodia's Particulars of Claim did not assist - the matter in dispute was simply whether "Molycorp has infringed a valid claim" of the patent, and Rhodia could not separate the inseparable through some careful drafting. The reasoning of the CJEU in GAT v LuK was equally applicable here.  Mr Justice Arnold held that:

"First, Rhodia's amendments are a transparent attempt "simply by the way it formulates its claims, to circumvent the mandatory nature of the rule of jurisdiction laid down in that article". Secondly, to allow Rhodia's claim to proceed "would have the effect of multiplying the heads of jurisdiction and would be liable to undermine the predictability of the rules of jurisdiction laid down by the Convention". Thirdly, it would "multiply the risk of conflicting decisions which the Convention seeks specifically to avoid".

Arnold J elaborated on the third point, by reiterating that the same claim construction must be used for both infringement and validity. If Courts in different jurisdictions adjudicate these issues separately, this would allow litigants to overcome the pressure of an infringement/validity squeeze, and could result in conflicting decisions on claim construction (the judge noted that a similar potential issue raised by a bifurcated claim in Germany is avoided because only one claim construction will be adopted by the Court on appeal for both infringement and validity).

In response to an issue raised by counsel for Rhodia, Arnold J noted that the fact that Rhodia had not challenged jurisdiction in the usual way under Part 11 of the Civil Procedure Rules (CPR) was misconceived for at least three reasons: First, the CPR cannot override the mandatory effect of a Regulation, and the timing of the challenge to validity in the German Courts was irrelevant. Secondly, CPR Part 11 does not apply where it is triggered by the defence to the claim, and Molycorp's solicitor's letter giving notice of intention to challenge jurisdiction in Germany was sufficient to raise the issue. Thirdly, Article 27 requires the Patents Court to decline jurisdiction of its own motion, regardless of Molycorp's omission to issue a formal jurisdiction challenge under CPR Part 11.

In summary, this issue of jurisdiction was a matter of substance, not form, and the Patents Court had no jurisdiction over Rhodia's infringement claim in respect of the German designation of the patent.

(2) Should an order be made by the English Court for the provision of samples in aid of a claim by Rhodia in the German Courts?

Mr Justice Arnold  - "principally
concerned  with" being a Patents Judge
or just "concerned with"?

Rhodia undertook to bring an infringement claim in Germany in the event that jurisdiction was declined by the English Court. On this basis, Rhodia maintained its application for an order for the provision of Molycorp's samples for testing for the purposes of the German infringement claim. Molycorp opposed the application on the basis that the Court has no jurisdiction to make the order, and that it would be inexpedient to do so.

Section 25 of the Civil Jurisdiction and Judgments Act 1982 provides as follows:

"(1) The High Court in England and Wales or Northern Ireland shall have power to grant interim relief where –

(a) proceedings have been or are to be commenced in … a Regulation State other than the United Kingdom …; 

…

(2) On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject matter of the proceedings in question makes it inexpedient for the court to grant it. 

... 

(7) In this section 'interim relief', in relation to the High Court in England and Wales or Northern Ireland, means interim relief of any kind which that court has power to grant in proceedings relating to matters within its jurisdiction, other than— 

… 

(b) provision for obtaining evidence."

Arnold J sided with Molycorp. Rhodia's application was for the sole purpose of obtaining evidence to support its infringement claim in Germany, and therefore fell under the exclusion identified in s25 (7) (b) above. It was common ground that this exclusion was included because the proper means for obtaining evidence in aid of proceedings in the EU is now governed by Council Regulation No 1206/2001/EC. Rhodia also submitted that the Court alternatively had jurisdiction to make the order through its general power of injunctive relief under s37(1) of the Senior Courts Act 1981. The Court again disagreed - to rely upon this general provision for interim relief would circumvent the specific restriction which Parliament has placed upon s25 of the 1982 Act.

Comment

Let go and be free....a lesson of Rhodia v Molycorp

In previous cases, the English Court has not shied away from adjudicating on patent infringement actions involving designations of a patent from another EU Member State, where the validity of those designations has not been challenged (see for example the Actavis v Lilly saga, reported previously on the IPKat here -  with one chapter of the saga pending before the Supreme Court). In the present case, Rhodia attempted to further extend the reach of the English Patents Court, by slicing and dicing the issues of infringement and validity of the German designation of the patent in its pleadings. However, the issue of jurisdiction over such patent infringement actions is ultimately a matter of substance, not form. By analogy, an alleged infringer wishing to establish jurisdiction for a declaration of non-infringement of a European designation of a patent in the English Courts must relinquish a challenge to validity of that designation to maintain jurisdiction in the English Courts."

Conference Report: Should you arbitrate FRAND rates?

The AmeriKat in standard essential form

At the last day of June, the First Joint Seminar on SEP/FRAND Mediation and Arbitration co-organised by Queen Mary University of London’s School of International Arbitration (SIA) and the WIPO Arbitration and Mediation Center was hosted at the London offices of Allen & Overy LLP.   For those who were unable to make it to Bishop's Square, some Kat friends who had less distance to travel - in the form of  Elettra Bietti and Taly Dvorkis (both of A&O) - report on the event:

"In light of the recent UK referendum vote to leave the EU and the potential impact on the Unified Patent Court, there is perhaps a potential increase in alternative dispute resolution (ADR) in the standard essential patents context.  While it remains to be seen exactly what impact the Brexit vote will have on the UPC, these considerations were in no doubt at the back of everyone's minds when the first panel speaker of the day, Christian Loyau, Legal Director of ETSI, kicked off.  

Loyau provided the background on standard-setting bodies and noted that ETSI, one of the most important telecommunications standard bodies in Europe, has produced over 30 thousand standards so far, including some of the most significant standards for GSM, 3G, and 4G. ETSI is currently working on setting the standard for 5G.

ETSI requires that a patentee whose patent is made part of the standard (and is thus a “standard-essential patent”) issues a declaration that the patent will be licensed on FRAND terms. Mr Loyau noted the possibility for mediation and arbitration in the SEP context. The advantages of arbitration are numerous: it better serves the needs of those with large portfolios of worldwide patents making the resolution of multi-jurisdictional disputes more efficient; arbitration awards can be enforced almost anywhere; and the proceedings can be confidential. It is also possible to assess the validity and essentiality of a patent in arbitration proceedings by involving experts. Mr Loyau also noted that ETSI has been involved in a number of quasi-mediations, often to offer expertise on the standard in question.

Maria Ioannidou 

The next speaker was Maria Ioannidou, lecturer in Competition Law at Queen Mary. She mentioned the ETSI IPR Policy as one that seeks to strike a balance between rights-holders and the public. She also mentioned the European Commission’s Case 39939 Samsung and Case 39985 Motorola decisions, in which the Commission applied the “exceptional circumstances doctrine” stating that the requirement of a FRAND declaration gives SEPs a special status and that, consequently, there is no “objective justification” for SEP holders to seek an injunction based on their patent alone. Lastly in C‑170/13 Huawei v ZTE [as reported by IPKAT here] (hereafter “Huawei”), the CJEU adopted a more balanced approach determining a procedural test that parties should follow before seeking an injunction.

Joachim Feldges, partner in A&O's Munich offices, was the third speaker. He discussed the German courts’ perspective on SEP and FRAND disputes post-Huawei, but noted that some decisions issued post-Huawei are interim decisions and many of them concern pre-Huawei disputes (eg. Higher Regional Court of Karlsruhe - 6 U 55/16- judgement of 31st May 2016, and Regional Court of Düsseldorf - 4a O 73/14 - judgement of 31st March 2016). Consequently the application of Huawei in Germany has not been fully fleshed out.

Joachim discussed the obligations on SEP holders and SEP users in the pre-litigation phase. It is not sufficient for an SEP holder to merely provide a list of patents alleged to be infringed, but rather they must provide claim charts for the most significant patents explaining the purported infringement. If the SEP holder references a standard in the claim charts, that reference has to be specific.

Joachim Feldges 

For SEP-users, there is an obligation to show willingness to take a FRAND license. A number of questions remain as to the substantive requirements needed to illustrate that willingness. For instance, if the patentee has made an offer, but the potential licensee has not received the necessary information to assess whether that offer is fair and reasonable, does the potential licensee have an obligation to request additional information? Before such information is delivered there should be no obligation to submit a counter-offer. In parallel, can an implementer still challenge the patent’s validity while an agreement is pending? Unlike the previous situation under Orange Book, the SEP user is free to challenge the validity of the patents under Huawei, but it remains to be seen whether users will continue to do so at later stages in the negotiations. 

Determining whether a license offer is fair and reasonable requires much scrutiny. German courts examine the markets to see if there are anti-competitive effects or if the amount is comparable to other royalties. Expert evidence on the meaning of FRAND is often used. In FRAND litigation preserving the confidentiality of what is disclosed to the court may be at issue, especially where parties have to submit proposed licenses to show that the terms were fair and not discriminatory, which might lead to a waiver of confidentiality over those terms.  Joachim concluded by emphasizing that this is an evolving area of law, and that more decisions are expected to be handed down soon.

The next discussion was led by David Perkins, a mediator and arbitrator for WIPO. He explained some of the mechanisms adopted in mediations on FRAND disputes and argued that mediation is the preferred starting point before going to arbitration. The industry wants certainty and, in the FRAND context, there is much uncertainty as to the value of the licenses and the nature of the amount in dispute between the parties. Mediations will not necessarily be “friendly” but they serve to narrow down the issues before a costly arbitration is commenced.

Next up was Garreth Wong, partner at Bird & Bird, who gave a presentation on arbitrating FRAND disputes and calculating royalties. While there is not yet significant jurisprudence on assessing large SEP portfolios, there are a variety of approaches courts have considered in how to make FRAND valuations. 

How much is the royalty?!?!

Royalties can be considered from the standpoint of a hypothetical negotiation guided by the 15 factors listed in Georgia-Pacific Corp v US Plywood Corp, 318 F Supp 1116, 1120 (SDNY 1970). Under Georgia-Pacific, the royalty rate is the amount that would have been agreed upon in hypothetical negotiations between the patentee and licensee before the incorporation of the patent into the standard, ie the focus is on the value of the innovation, not of the value of the standard itself. A more recent decision on FRAND royalty calculation is Ericsson Inc v D-Link Sys., Inc 773 F. 3d 1201 (Fed. Cir. 2014), in which the Federal Circuit Court of Appeals cautioned lower courts away from relying on every one of the 15 Georgia Pacific factors and instead focusing only on those factors that are relevant in a FRAND context. In that case the court also upheld the notion that a royalties calculation should take into account the approximate value of the technological contribution by the SEPs, not the value of widespread adoption due to standardization.

Another possible approach for determining a royalty rate is the “pure” ex ante analysis, which starts with the cost to the licensee of obtaining a license for the function performed by the patent, just before the patented invention is declared essential to an industry standard. 

A third approach to assessing royalties is the incremental value approach, whereby royalties are set based on the incremental value of the patented technology over the next-best alternative. This approach would establish the maximum amount that a willing licensee would pay in a hypothetical negotiation; however, it is often difficult to assess what incremental value a patent provides.  

 The fourth approach was adopted by a district court in the In re Innovatio IP Ventures, LLC Patent Litigation, No.11-C-9308, 2013 WL 5593609 (ND Ill., 3 October 2013). This “top-down” evaluation requires calculating the profit of the appropriate unit, then multiplying by a fraction calculated as a number of the SEPs at issue, divided by the total number of SEPs in the standard.

Finally, the comparable licences approach consists of computing royalties based on a set of identified comparable licences. This approach entails a number of unknowns, including the definition of a comparable licence in any given context.

Garreth also discussed a number of procedural questions that arise in FRAND arbitrations, such as what law would apply and the complexities that arise from the need to calculate FRAND royalties for large patent portfolios. Oftentimes parties need to pick only a defined number of patents to be representative of the overall portfolio. However, in those situations, the patent holder will always select the best patents, and the implementer will always select the weakest patents. The essentiality and validity of patents in a portfolio will vary and this will need to be taken into account when assessing overall royalties. In relation to comparable licences, Garreth noted that it is easy in theory to adopt a comparable licences approach, but not easy to identify licences that are comparable in practice. For instance when cross-licences are involved their relative strength becomes important and it becomes difficult to compare them with other licences.

Mark Bezant

The final speaker was Mark Bezant from FTI consulting. He mentioned that he is amongst the FRAND experts in the pending UK case of Unwired Planet v Samsung and Huawei [last reported by IPKat here]. He noted the two key issues in FRAND disputes: (a) the obligations placed on the SEP holders, and (b) the appropriate level of royalty rates. After reminding the audience of some of the methods discussed by Garreth Wong, he mentioned particular issues that arise in practice, such as having to rely on outdated licences or inherently complicated agreements. With respect to the incremental method of calculating royalties, he noted the difficulty in understanding the exact value a single patent has added to a standard. The most common approach, he explained, is looking at established comparable rates and matching them to the situation at hand. Mr Bezant concluded that one must establish a number of factors before assessing whether a licence is FRAND, such as the validity of the patents, the number of declared essential patents, the number of essential patents confirmed by a court, and the qualitative assessment performed by experts on the patents.

Sir Robin Jacob gave the closing remarks to end the session. He noted that while many issues had been discussed at the seminar, overall, standardization in the FRAND context works. The disputes we hear about are the isolated incidents, while out there in the world there are many companies negotiating licenses for many different technologies – we hold the evidence in our hands each time we use a smart phone. Standard setting bodies are working to create the best standard for consumers to use – their goal is not to embed particular patents in a standard, but to develop the best standard possible."

And so the age old question remains. What is the best forum for resolving patent and FRAND/SEP disputes?  It depends on who you ask...

High Court summarily dismisses Seretide combination color mark

Face planting - the AmeriKat's new pastime after a summer
of political mayhem

For those readers who fancy a change from Brexit and UPC-fate related news, preferring instead a reminder of good, old fashioned IP cases, you are in luck.  A couple of weeks ago, His Honour Judge Hacon (sitting in theHigh Court) handed down his decision in Glaxo v Sandoz [2016] EWHC 1537 in which he was asked by Sandoz to determine, on a summary judgment application, whether Glaxo's EU Trade Mark No 3890126 was invalid.  The answer - yes.  Luke Maunder (Bristows LLP) reports on the decision which will be interest to anyone who loves color combination trade marks or trying to figure out how to precisely and clearly ring fence the scope of trade mark protection:

"The Facts 

Perhaps it is its common association with royalty and mystery/magic (and chocolate, unless you are the Court of Appeal), or perhaps it is its humble origins in Sea Snail mucous, but there is clearly something about the Colour Purple. 

Glaxo was granted an EU Trade Mark (the “Mark”) for inhalers - which is used for its Seretide® inhaler - that was represented as follows: 

Graphic Representation Description:

 

Description:    

“The trade mark consists of the colour dark purple (Pantone code 2587C) applied to a significant proportion of an inhaler, and the colour light purple (Pantone code 2567C) applied to the remainder of the inhaler.” 

The Mark was assigned an INID designation of 558, meaning it was registered as a mark consisting exclusively of one or several colours. Glaxo was pursuing Sandoz for infringement, but the judgment concerns Sandoz’s application for summary judgment in its counterclaim for a declaration that the Mark was invalid (and by extension summary judgment on Glaxo's infringement claim). 

Sandoz argued that the Mark was not a sign nor was it capable of being represented graphically within the meaning of Article 4 of the Trade Mark Regulation (TMR). At the heart of the argument was a submission that the Court should put the emphasis on the description to determine the scope of protection, which showed that what Glaxo had registered was a potentially limitless number of signs (based on the proportions of colour and potential patterns). 

The "abstraction"

Glaxo countered by suggesting that the Mark should be construed as an abstraction of the graphic representation (see right), with the description merely clarifying this, and that it therefore constituted a single sign. To the extent that the Mark did encompass narrow variants, Glaxo contended that such variants were permitted. 

Decision 

HHJ Hacon distilled his decision making process into two questions of general principle:

1.  How should a trade mark application or registration be construed where there is no strict congruence between the visual representation and the description, particularly in the context of a trade mark consisting exclusively of one or several colours?

2.  May a colour mark encompass more than one form, i.e. can there be variants without contravening Article 4 of the TMR. If so, how much freedom of variation is possible?

Having considered the submissions, he decided as follows:

1.  There is no automatic precedence as between the visual representation of a trade mark and its description. An application or registration for a trade mark should be interpreted by the court through its own eyes, doing its best to reconcile both despite any lack of congruence, although it must do so within the bounds of its INID designation, which was an “inflexible starting point”. As a side (but not minor) point, the HHJ Hacon did, however, reject Sandoz’s assertion that the words “consists of” in a trade mark application or registration should be taken as a term of art indicating the description was definitive.

2.  Despite some creative arguments by Daniel Alexander QC based in part on Apple’s recent registration for a 3D representation of its store layout being inevitably open to variants (as the CJEU had held there was no need to include specific dimensions), a colour mark could not be validly composed of variants around a single sign (see the CJEU's decision in that case here).

Visual representation of Apple's application for a 3D mark
for specified retail store services

Taking the above answers on board, the judge went on to determine that the way the Mark was defined served only to pose a puzzle for the reader—it could be solved by interpreting the Mark either strictly (as the exact graphic representation), as the abstraction proposed by Glaxo or the potentially infinite marks proposed by Sandoz.

While he accepted that the first solution to the puzzle was a single sign, in his view the registration for the Mark had not limited itself clearly and unambiguously to just one such sign (it likely didn’t help in the judge's mind that Glaxo had, before the EUIPO, demonstrated another rectangular form of the abstraction which it said was a form of the Mark). The Mark was not sufficiently precise, clear or unambiguous as it set the reader a puzzle, and some of its solutions do not leave the reader any more certain of the Mark’s form. Consequently, the Court held, it was invalid.

Analysis

One can see shades (sorry) of the Cadburys judgment in HHJ Hacon’s thinking and indeed the Judge set out Sir John Mummery’s excellent precis of the key principles that could be distilled from the various CJEU decisions on colour mark registrations as part of his judgment. In particular, in my view the Judge particularly had in mind the following two points raised by Sir John in the Société des Produits Nestlé SA v Cadbury UK Ltd judgment: 

“Graphic representation of colour  

(7) As for the second condition of graphical representation, in a mark consisting of two or more colours designated in the abstract and without contours, qualities of precision and uniformity are required. The colours must be arranged by associating them in a predetermined and uniform way.  

Colour without form/in a multitude of forms 

(8) Those requirements are not met by the mere juxtaposition of colours without shape or contours, or by reference to colours in every conceivable form, so that the consumer would not be able to recall or repeat with certainty the experience of a purchase. The scope of protection afforded by such a mark would be unknown both to the competent authorities responsible for maintaining the register and to economic competitors. Registration would confer unfair competitive advantages on the proprietor of the mark.” 

The round and rectangular abstractions argued to be forms
of the mark claimed

Further, it is worth noting that although HHJ Hacon declined to make a reference to the CJEU, he hesitated on the basis of Marques’ permitted intervention last year in Red Bull where the General Court said: 

“…it must be held that the case raises questions of principle regarding the graphic representation of a mark consisting of colours per se in the application for registration and in the registration, at least so far as concerns the interaction between the description of such a mark and that graphic representation in order to satisfy the requirements of Article 4 of Regulation No 207/2009.”

Although it is clear that the law envisages a combination colour mark is capable of being a sign, it remains to be seen just how one may successfully delineate the scope of protection for such a mark in a clear and precise manner within the bounds of the law (even when the new rules come into force next year). The guidance from HHJ Hacon is clearly a helpful further clarification of what will not be accepted, but no doubt practitioners will await any guidance on the threshold of precision that is acceptable with baited breath."