UK: Centralized Litigation For European Patents New Proposals For Inclusion In The EPC Revision Package

Following an intergovernmental conference in Paris in 1999, proposals are being developed for revision of the EPC, which in its current form dates back to 1973. A working party has been set up to consider the establishment of an optional protocol to the EPC providing for an integrated judicial system for litigation of European patents. The working party was chaired jointly by Germany, Luxembourg and Switzerland, and its proposals have been discussed with patents judges from Denmark, France, Germany, Luxembourg, Netherlands, Sweden, Switzerland and the United Kingdom as well as representatives from the European Commission and the EPO. A "structure paper" produced by the working party can be down-loaded from the EPO website, and is being submitted to an intergovernmental conference on reform of the EPC which tales place in London in October 2000. Enabling legislation is to be found in Article 149a of the Basic Proposal for revision of the EPC, the latest (13th October 2000) version of which is to be found on the EPO website.

The Commission of the European Communities is proposing to introduce a Council Regulation on the Community Patent under which the EU will accede to the EPC and the EPO, though not a Community body, will be responsible for the grant of Community patents. These proposed regulation (COM(2000) 412 final; 01.08.2000) is proceeding in parallel but not in step with reform of the EPC: for the EU to accede to the EPC, amendment of Article 166 which provides for accession by European states will require amendment but no such amendment is contained within the present set of proposals for amendment of the EPC. The proposals of the Commission are generally similar to those for the EPC and are discussed below.

The working group has proposed all EPC contracting states should have the option of acceding to an optional European Patent Litigation Protocol (EPLP). The proposals have been published in outline rather than in detail, and provide as follows:

• A "European Patent Judiciary" (EPJ) will be created. The proposals envisage that each case will be heard before a panel of judges, three at first instance and five at the appeal stage. Panels will include both legally qualified and technically qualified judges. One of the judges of each panel will be appointed rapporteur and will be responsible for case management and control of the proceedings up to the oral hearing. The pool from whom judges for particular cases will be selected will include at least one legally qualified judge from each EPLP state, legally qualified members of the EPO Appeal Boards, and technically qualified members of the EPO Appeal Boards.

• The EPJ will in principle have exclusive jurisdiction over infringement and validity of European patents, though there may be scope for the involvement of national courts in matters of interlocutory relief and protective measures (e.g. saisie contrafaçon or search orders). The parties will also have the option to bring the case by agreement before one of the national courts, but if so the decision will only be effective in the country concerned. Proceedings concerning ownership of European patents, compulsory licenses and employee inventions will remain the responsibility of national courts.

• The EPJ will comprise a common court of first instance, a common appeal court and a registry. The inclusion of a common first-instance court was considered by a majority of the delegations to be necessary (a) to avoid forum-shopping and (b) to avoid problems of the individual outlook of the national courts of the contracting states derived from their various national traditions, which creates inconsistency in the decision-making process. It should be noted that several delegations favored maintaining a national jurisdiction at first instance with the common European jurisdiction being only at the appellate level.

• The common first-instance court will have a local presence. The court should be able to sit in courtrooms provided by the authorities of the contracting states with national judges who are also judges of the EPJ.

• The EPJ will have power to deal with both infringement and validity of European patents including sanctions and injunctive relief. The EPJ will decide on awards of an injunction and damages and on destruction of infringing goods, with subsequent enforcement of the order being a matter for the national courts.

• Its power will include revocation of European patents for all EPLP states both on application to the court and as a counter-claim to an infringement action. The patentee will have the right to amend the patent at least at the first instance stage.

• The substantive law will be that of the EPC with additional rules introduced via the EPLP.

• The main principles of procedural law will be set out in the EPLP, with the details laid down in court rules.

An explanatory memorandum outlines the procedure to be adopted, the main steps being as follows:

• Filing of a complaint accompanied by a statement of case and an indication of the evidence to be adduced (documents, expert evidence and names of witnesses).

• Filing of a defence accompanied by a reply and an indication of the evidence to be adduced.

• Case management conference under the aegis of the rapporteur, covering:

• Possibility of settlement

• Definition and clarification of the main issues

• Considering whether evidence needs to be taken, including in particular:

• Production of documents

• Hearing of witnesses of fact

• Provision of expert’s reports

• Filing of affidavit evidence

• Inspection [e.g. of an alleged infringing installation]

• Experiments.

• Fixing the timetable for further proceedings.

• Exchange of written statements covering points identified by the Rapporteur about which the parties have been requested to provide further information. "As a rule, one statement from each side should be sufficient."

• Hearing, including oral testimony of witnesses and experts notified in advance.

• Judgment.

The official languages of the court will be English, French and German, as is the case under the EPC, and unless otherwise agreed the language of the European patent will be the language of the proceedings. Legal representation will be compulsory, and parties may be represented by lawyers admitted to practice before the national courts and possibly also by European Patent Attorneys with a supplementary qualification in litigation (in the U.K., CIPA has recently been given the power to award such a qualification).

It will be noted that under amended Article 138(2) a partly valid European patent may be limited by corresponding amendment of the claims and may be revoked in part. Article 138(3) provides that in proceedings before a competent court or authority (which by definition will include the EPJ) the proprietor of the patent shall have the right to limit the patent by amending the claims. Since amendment is to be a right rather than a matter of discretion, issues of the patentee's conduct which have sometimes complicated UK infringement proceedings will not arise except perhaps where delay by the patentee during the infringement proceedings themselves amounts to an abuse of procedure, in which case the penalty may be an award of costs. Ordinarily, a patentee would be expected to submit amendments after the defense and most advantageously in advance of the case management conference.

The proposed revisions to the European Patent Convention include recognition in Article 149a that the contracting states may enter into an agreement providing for a European patent court. The EPO is to be empowered to provide support staff, premises and equipment to the EPJ. Furthermore, legal basis is to be provided for members of the EPO boards of appeal to serve additionally on the EPJ.

If the governments of the contracting states agree to go forward with the proposals of the working party, then the working party will be mandated before the end of 2001 to produce the detailed text of the proposed protocol. The drafting will be carried out by a sub-group comprising Denmark, Germany, France, Luxembourg, Monaco, Netherlands, Sweden, Switzerland and the United Kingdom.

A Community Intellectual Property Court (CIPC) is proposed which like the EPJ will comprise chambers of first instance and of appeal. In order to establish the court, the EU treaty will have to be amended, and discussions are under way in the Intergovernmental Conference on Institutional Reform. In its explanatory memorandum, the Commission explains that a centralized Community judicial system is necessary because:

• Inventors would not use the future Community patent without "Community-level" legal certainty.

• A non-centralized judicial system for Community patents would be costly for patent proprietors and would not give the legal certainty which is guaranteed by a centralized judicial system with consistent case law.

• It is undesirable for the validity or infringement of a Community patent to be decided by a national court without experience of intellectual property matters.

• It is impractical to give the EU Court of First Instance an appellate role from national courts because of the problem of excessive workload affecting that court and also affecting the EU Court of Justice.

The proposed CIPC will have exclusive jurisdiction concerning:

• infringement proceedings;

• revocation proceedings

• actions for a declaration of non-infringement;

• proceedings relating to pre-grant use of an invention;

• proceedings for establishment of rights based on prior use; and

• counterclaims for invalidity.

The CIPC will also have jurisdiction for amendment of a Community patent by way of limitation and for the assessment of damages. Where the language of the patent is other than that in which it was granted, or where a translation into the relevant language has not been published, then an infringer does not become liable for infringement damages until he is served with a translation at his residence or principal place of business. The Commission will have jurisdiction for compulsory license applications, appeal being to the Court of First Instance.

How cases progress through the CIPC will be governed by implementing regulations; as yet these have not been published.

The steady-state workload of the CIPC is estimated at about 600-1000 cases per year. The Commission proposed that the CIPC should have chambers composed of three judges assisted by two Grade A officials and two grade C secretaries, and if cases were to rise to 1000 per year then five chambers would be created. No proposal as to where the seat of the CIPC is to be located has been published and it is an issue that will need discussion between the representatives of the EU member states. Hopefully a brief discussion will be followed by a wise choice of site.

Patent attorneys and their clients are bound to welcome proposals aimed at increasing the effectiveness of the patent system and reducing the time, effort and costs involved in enforcement. A Europe-wide litigation procedure is therefore to be welcomed, although as previously noted views have been expressed that the principle of subsidiarity should apply and that all that is needed is a common appellate court like the CAFC of the USA.

It would be surprising and unfortunate if the European patent system which has had to manage since its inception without a centralized court at either first instance or appeal should now be faced with two such bodies each with distinct personnel and presumably with distinct implementing regulations. The existence of separate bodies is not conducive to the objective of legal certainty that the Commission has identified. If it is possible for all applications to be handled pre-grant by the EPO, then surely a way can be found to enable all the proposed post-grant matters also to be handled by a single body applying common rules wherever possible and drawing from a common pool of judges, subject to the proviso that non-EU judges should not sit in a dispute concerning a Community patent. Might it not be helpful, at least in an initial period to make available to that body the experience and support of the EPO?

It may be noted that:

• Only European and Community patents will be covered by the EPJ and CIPC. There will be no provision for litigating before the EPJ or CIPC a bundle of patents granted in different contracting states via the national route. The difference between the centralized EPC and Community systems and the de-centralized national patent systems will become still more pronounced.

• Under the present proposals the EPJ and CIPC will not have power to consider other matters e.g. breach of contract, misuse of trademarks, misuse of confidential information that are ancillary to the patent dispute. It is hoped that such flexibility will find its way into the draft legislation as it did into the litigator rights that are now available to members of CIPA.

• Members of the EPO Appeal Boards do not at present have to deal with issues of infringement. It would appear that they would need training in this area if they were to be fully effective members of the ECJ

• In its discussion of Evidence, the EPJ working party referred to Article 117(1) EPC, which governs European oppositions. It is logical to conclude that the course that a case will take before the EPJ will be closer to that adopted for a European opposition than that adopted by e.g. national courts in the UK where discovery, evidence (including cross-examination) and inspection of experiments can add appreciably to cost. This is consistent with the proposal for members of the EPO Appeal Boards to sit as members of the EPJ, and also with a possible intention that the level of costs should be closer to the reputedly low level in Germany than that in the UK. The corresponding rules of the CIPC, though unpublished, will probably be broadly similar. However, those who have practiced in the common law tradition will argue that cross-examination is an essential tool for finding out the truth in disputed situations, especially where there are no relevant third-party documents. Anybody who has been involved in an infringement trial in the UK knows that witnesses who start off with strong partisan views can completely reverse those views when confronted with the case of the opposing party during cross-examination. Although the decision to grant or maintain a patent and therefore permit the patentee to test his patent in court is highly responsible, the decision whether to enforce a patent is still more responsible since it may result in an order for the shutdown of expensive plant and equipment, making futile a heavy investment of resources and may cost people their employment. It is in the interests of both parties that the evidence should be thoroughly tested before a decision is reached and experience shows that for such a test to work those who give evidence have to be confronted with documents and questions and know in advance that the evidence that they give is likely to be tested in this way. The proposed courts will be the poorer if they are not influenced by the best features of the common law tradition.