The Court of Rome affirms its jurisdiction in a torpedo case

In a post of some months ago, after noting that none of the torpedoes launched in Italy after the Asclepion ruling [Italian Court of Cassation, 10 June 2013, no. 14508, in Giur. ann. dir. ind., 2013 (for a full English translation, see IIC, 2014, pp. 822 ff.)] had been successful, we envisaged a possible end to the Italian torpedo story. A recent decision of the Court of Rome shows, however, that the end is yet to come. In a non-infringement action brought against an Austrian patentee (and two other defendants, also from Austria) with regard to the Italian part and several foreign parts of a European patent, the Court of Rome firmly stated that

the Italian courts have jurisdiction … for the French, German, Austrian and UK parts of the patent, on the basis of art. 5.3, EU Council Regulation 44/2001 of 22 December 2000, whereby the courts for the place where the harmful event occurred or may occur have jurisdiction, and on the basis of art. 27 of the Regulation, concerning jurisdiction for related actions”.

The brief reasoning of the decision (full text, in Italian) exclusively stems from a quotation of the Asclepion ruling of the Court of Cassation mentioned above. With regard to this ruling and its impact on torpedo actions (as well as for a review of the most recent decisions issued in Italy on the topic), we refer to the considerations already made here.

Riccardo Perotti

Court of Rome, 5 February 2018, Anki v. Stadlbauer 

A requiem for torpedo actions? A catalogue of the most recent decisions on the issue

 

Actions

(i) relating to a European Patent

(ii) aimed at obtaining a declaration of non-infringement of different national portions of said European Patent

(iii) brought before Italian Courts

(iv) against a patentee who is not domiciled in Italy

are commonly known as Italian torpedoes (the expression is a fortunate coinage of Mario Franzosi).

These actions are often started to take advantage of the rules concerning lis pendens. Where a non-infringement action is pending before a Court (say an Italian Court) with regard to the national portion of a European Patent (say the German portion), any infringement action subsequently brought before the Court of another country (say a German Court) with regard to the same portion of the same European Patent may be stayed. This stay – and the consequent delay in ascertainment of infringement – is the goal of torpedo-launchers.

Of course, the slower the jurisdiction, the longer the stay. Thus, launching a torpedo is particularly effective in slow jurisdictions, like – at least in the past – that of Italy.

Traditionally Italian Courts have not looked with favor on such actions, seeing them as tools for misusing the (flaws of the Italian) legal system.

This traditional view was authoritatively expressed by a 2003 decision of the Joint Divisions of the Court of Cassation (the Windmöller decision), which deracinated torpedo actions on the grounds that Article 5.3 of the Brussels Convention of 1968 does not apply to non-infringement claims (Italian Court of Cassation, decision no. 19550/2003, in Giur. Ann. Dir. Ind., 2004, pp. 61 ff.). If it is the plaintiff itself which denies the existence of a harmful event, said the Court, then by definition there cannot be jurisdiction under Article 5.3 of the Brussels Convention.

A few years later, in the GAT case (here), the EU Court of Justice struck another blow against torpedoes by stating that the rule of exclusive jurisdiction laid down by Article 16.4 of the Brussels Convention of 1968 [corresponding to Article 22.4 of Regulation 44/2001] concerns all proceedings relating to the registration or validity of a patent

“irrespective of whether the issue is raised by way of an action or a plea in objection” (the principle was later incorporated in Article 24.4 of Regulation 1215/12).

As a result – and even regardless of the restrictive interpretation of Article 5.3 of the Brussels Convention given by the Windmöller ruling -, in order not to fall into the exclusive jurisdiction under Article 16.4 of the Brussels Convention and 22.4 of Regulation 44/2001, torpedo actions had to be based on pure non-infringement arguments.

In this scenario, most certainly not favorable to torpedoes, a decision of the Joint Divisions of the Court of Cassation reopened the discussion on the admissibility of this kind of action (Court of Cassation, 10 June 2013, in Giur. ann. dir. ind., 2013, pp. 60 ff.: the Asclepion case; a full English translation of the decision has been published in IIC, 2014, pp. 822 ff.). In the context of a non-infringement case brought before the Court of Rome by a German company with regard to the Italian and German portions of a European Patent owned by a US company, the Joint Divisions – quoting, word for word, the EUCJ Folien Fischer decision (here) – stated that

(aArticle 5.3 of Regulation 44/2001 … must be interpreted “as meaning that an action for a negative declaration seeking to establish the absence of liability in tort, delict, or quasi-delict falls within the scope of that provision”

and also that

 (btherefore [pertanto, in the original Italian text] with regard to the declaration of non-infringement sought … before the Court of Rome, the Italian Courts must be considered to have jurisdiction, on the grounds that they are the Courts of the place where the harmful event may occur, also with regard to the “German portion” of the European Patent” [my translation].

The 2013 Asclepion ruling certainly lent itself to interpretation as a general permit to launch torpedoes, at least when they do not rely on any arguments of invalidity. This is, indeed, what the Court said. But, looking more closely, a missing step can be seen in the reasoning of the Asclepion ruling, between statements (a) and (b). This significantly limits its practical impact.

If closing the jurisdictional door of Article 5.3 of Regulation 44/2001 to non-infringement actions, as the Windmöller 2003 decision did, fatally blocks any attempt to launch torpedoes, interpreting Article 5.3 as covering both infringement and non-infringement actions does not necessarily mean – in spite of the adverb “therefore” used by the Court of Cassation – that the Italian Courts have jurisdiction under this provision over actions concerning the foreign portions of a European Patent. To this end, something more must exist, and namely a link with Italy.

It is precisely because of the (non-) existence of this link that the torpedo actions brought before Italian Courts after the Asclepion ruling have been stopped.

In Schindler v. Otis, in line with Asclepion, the Court of Milan (Judge Dr. Marina Tavassi; decision of 27 January 2014, published in Giur. ann. dir. Ind., 2014, pp. 741 ff.) admitted that, in itself, a non-infringement action may be brought against a foreign defendant under Article 5.3. Nevertheless, it declined its jurisdiction on the non-infringement claims submitted against a US patentee, insofar as the Spanish portions of the European patent in suit were concerned. According to the Court,

Italy can be the place where the harmful event occurs or may occur only with regard to the Italian portion of a European patent, because there cannot be harm – actual or potential – caused in Italy by the alleged infringement of the Spanish portions of the patents in suit. Indeed, any national portion of a European patent is effective only in the relevant country and may be infringed only in that country” [my translation].

Therefore, in the opinion of the Court of Milan, when it comes to the infringement/non infringement of foreign portions of European patents owned by foreign patentees, there can never be a link with the country of Italy.

In the more recent Basf v. Bayer case, the Court of Milan (Judge Dr. Alessandra Dal Moro; the decision, dated 14 December 2016, published in Riv. dir. ind., 2017, I, pp. 309 ff. and also available here) fully confirmed the above approach and declared its lack of jurisdiction over the non-infringement of the foreign portion of a European patent (in particular, the German portion). In doing so, the Court explicitly dealt with the reasoning of Asclepion, clarifying why, in its view, the Court of Cassation’s decision could not be read as allowing torpedoes:

the fact that article 5.3 of Regulation 44/2001 (now replaced by Regulation 1215/2012) may be applied to non-infringement actions in no way changes the stance of the Supreme Court with regard to the existence of jurisdiction in the case of infringement (or non-infringement) of non-Italian portions of European Patents. A claim seeking a declaration whereby certain conduct does not constitute infringement of a patent means that the patent is effective, and this effectiveness is geographically limited to the perimeter of the legal system to which it refers. Outside that perimeter of effectiveness, it is not possible to discuss infringing or non-infringing conduct and it is therefore not even possible to allege an, actual or potential, ‘harmful event’” [my translation].

A further decision was issued on torpedoes in 2014, but on different grounds. In Agilent v. Oerlikon, the Court of Genova (Judge Dr. Rossella Silvestri; the decision, dated 23 April 2014, is available here) declined its jurisdiction because the torpedo-launcher had raised invalidity arguments in support of non-infringement claims concerning the German portion of a European patent and a German utility model. The claims thus fell into the exclusive jurisdiction of the Courts of the place of registration.

Hence, all the torpedoes launched in Italy after the Asclepion ruling have been dismissed on the grounds of lack of jurisdiction. Does this mean that the torpedo saga has finally come to an end?

Riccardo Perotti

The Court of Milan says that standard-essential patents may be only “optionally” implemented in compliant products.

This past September the Court of Milan issued an interesting – and so-far unpublished – decision in a patent infringement cahtc-legendse involving smartphones and standard-essential patents. The decision is noteworthy as it addressed (albeit briefly) the dynamics of standard-setting and the concept of essentiality, in partial reversal of previous decisions from the same Court and other Italian Courts.

The facts first. The case involved, on the one side, TLC giant HTC and, on the other, IPCom: a German non-practicing entity. Around 2010 IPCom pressed criminal charges against HTC, claiming that a number of HTC smartphones infringed three of its patents (EP 1 236 368, EP 0 913 979 and EP 1 226 692) that had been declared essential to a number of standards (e.g. WDCMA, SAP and UMTS). In response to this, in September 2010, HTC summoned IPCom before the Court of Milan, looking for a declaration of invalidity and non-infringement of said patents. IPCom counterclaimed for infringement, but only for EP 1 226 692 (hereinafter “EP ‘692“).

A (complex and very lengthy) technical investigation phase followed suit, with the appointment of an independent expert. In particular, it was questioned whether HTC smartphones would have directly or indirectly infringed EP ‘692, which was preliminarily deemed valid by the Court-appointed expert.

In assessing infringement, the experts and the Court had to first come at odds with the fact that EP ‘692 had been declared “essential” to ETSI, a prominent standard-setting organisation, for the UMTS standard. And that HTC smartphones were undisputedly compliant to said technical norm.

IPCom contended that since EP ‘692 was formally declared essential to the UMTS standard, every product that proved to be complaint with said standard would automatically infringe its patent.

The Court of Milan, however, viewed things differently.

In the first place, it held that a declaration of essentiality is a “necessarily unilateral” statement, particularly referring to paragraph 3.2 of the ETSI Guide on IPRs, wherein the Institute specifies that it “cannot confirm, or deny, that the patents/patent applications are, in fact, essential, or potentially essential” (for the latest version of the ESTI Guide on IPRs see here). Therefore, the Court affirmed that it had to assess the infringement on a factual and technical basis, implicitly affirming that it could not presumptively do so, on the basis of the patent’s declaration of essentiality alone.

In the second place, the Court of Milan further reviewed the UMTS technical specification at stake, noting that the execution of the activities covered by the patent (relating to the so-called PDCP layer), although regulated in the standard, were only optional for standard-compliant products. To ascertain this, the Court ordered for tests to be carried out on HTC smartphones, simulating both the network operations and the phones’ connection to the providers. As the test revealed that “the phones communicated to the base station that they cannot do” the particular operations mentioned in the patent and that, in any case, “Italian providers don’t ask them to do” said operations, the Court excluded the occurrence of both a direct and an indirect infringement of IPCom’s EP ‘692 patent.

This passage of the decision highlighted a circumstance that is often disregarded in the SEPs discourse: namely that technically-essential patents may be indeed essential, but in relation to portions of the standard that are only optionally implemented in compliant products.

In light of the above, the Court of Milan seems to have stepped away from a previous case law of 2008, where – in line with the technical report drafted by Court-appointed expert – it established infringement of a standard-essential patent by referring only to its essentiality and to the product’s necessary compliance to the standard: a sort of presumptive assessment of the infringement (see Court of Milan, 8 May 2008, Italtel s.p.a. et al. v. Sisvel s.p.a et al.; similar reasoning were put forward – although in preliminary injunction matters – also by Court of Genoa, 8 May 2004, Koniklijke Philips Electronics N.V. v. Computer Support Italcard s.r.l., in Giur. ann. dir. ind. 2006, 4949; Court of Trieste, 23 August 2011, Telefoaktiebolaget L.M. Ericsson v. ONDA Communication s.p.a. ,in Giur. ann. dir. ind. 2013, 5951).

The approach here suggested by the Court of Milan in determining the infringement of SEPs seems to better take into account the inherent technical and legal nuances of the standard setting dynamics, where the possibility of the so-called “over-disclosure” phenomenon — i.e. claiming essentiality for non-essential patents – is considered to be wide spread, and where specific technical features may often be only “optionally” implemented within standard-compliant products.

Giovanni Trabucco

Court of Milan, IP division, decision of 21 September 2016, No. 10288

Time limits for amending patent claims in pending litigations: the opinion of the Tribunal of Milan

The Tribunal of Milan (full text here) has recently ruled (for the first time) over a thorny issue concerning the Patent Limitation Procedure regulated by art 79.3 of the Italian Industrial Property Code (“CPI”). The norm states that “In a proceeding concerning nullity, the owner of the patent has the right to submit to the Court, at any stage or instance of the trial, modified claims that remain within the limits of the content of the patent application as initially filed and that does not extend the protection conferred by the patent granted” (emphasis added).

T1he facts of the dispute are simple. Thermorossi S.p.A. claimed that several competitors infringed its European patent’s Italian Portion No EP 2 083 221 on “heating apparatuses such as pellet-fired stoves and thermostoves”. As counterclaim, the defendants filed an action for the declaration of invalidity of EP ‘221.

Since an Opposition was filed against EP ‘221 and the EPO decision (through which the Patent was amended) was published only after the Italian final hearing, the owner presented to the Tribunal a set of amended claims only in the final statement.

Despite Thermorossi had known EPO’s decision only after its final hearing, Milan’s Tribunal stated that the new set of claims could not be considered in that procedure because the final hearing had already identified the object of the trial. According to the Tribunal, in light of the Constitutional principle of reasonable delay (Article 111.1 Italian Constitution), the right to file a new set of claims cannot be exercised after the final hearing.

Due to this reason, the Tribunal took into account the patent as originally approved by the EPO. Furthermore, it declared the Italian portion of EP ‘221 invalid and consequently rejected all the requests filed by Thermorossi.

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The Tribunal rightly points out that Article 79.3 CPI should be interpreted in light of the Constitutional principle of reasonable delay. This consideration is certainly well founded considering that the limitation procedure (which requires the modified claim to be within the content limits of the patent application as initially filed and does not allow to extend the protection conferred by the patent previously granted), often requires an in-depth technical analysis. However, while it is true that in applying Article 79.3 CPI the Judge has to respect the principle of reasonable delay, it is equally true that the Court must make a case by case assessment. The words “at any stage of the trial ” seem to admit the reformulation of the claims even after the final hearing if this is deemed necessary for the overall economy of the judicial procedure (the opposite solution would require the institution of a new trial).

Giovanna Sverzellati

Tribunal of Milan, IP section, decision of 20 October 2016, No. 11544

FRANDly negotiations: national Courts apply the Huawei v. ZTE framework

The Bucharest Court of Appeal and the Regional Court of Düsseldorf have recently issued two decisions concerning the enforcement of standard essential patents (SEPs) in the telecommunication industry. The decisions (which have been made available by Comparative Patent Remedies: see here and here, also for their English translation) are particularly interesting in that they apply the framework depicted by the CJEU in the Huawei v. ZTE case (C-170/13, full text here) with regard to the availability of injunctive relief for SEPs encumbered by FRAND (Fair, Reasonable and Non-Discriminatory) commitments. As is well known, according to the Huawei v. ZTE decision, a SEP holder, before asking an injunction against an alleged infringer, must present him a specific and detailed FRAND license offer (Huawei v. ZTE, par. 63). In the absence of such a FRAND license offer, seeking an injunction may amount to an abuse of dominant position under Art 102 TFEU (Huawei v. ZTE, par. 77). But what if the infringer does not respond to the SEP holder’s offer? Is the FRAND-compliance of the SEP holder’s offer still to be verified, in order for the injunction to be granted?

***.***.***

The Romanian case

In 2014, Vringo, Inc., an Israeli non-practicing entity (NPE), obtained from the Tribunal of Bucharest a preliminary injunction against ZTE Romania on the basis of a patent essential to the 4G/LTE standard. The decision was upheld by the Bucharest Court of Appeal. In particular, in the case at stake, Vringo had offered a license to ZTE Romania and ZTE Romania did not respond to the offer.

Later on, ZTE Romania filed a motion to have the above preliminary injunction lifted on the grounds of its alleged inconsistency with the Huawei v. ZTE framework. However, both the Tribunal and the Court of Appeal of Bucharest dismissed the petition. In particular, by decision of 28 October 2015, the Court of Appeal stated that, precisely in the light of Huawei v. ZTE, when the alleged infringer does not respond to the SEP holder’s offer (but the same applies to the case of a non-FRAND counter-offer), the SEP holder cannot be deemed to be abusing its dominant position. It seems from the line of reasoning of the decision that the Bucharest Court did not verify the FRAND-compliance of Vringo’s offer, and deemed it sufficient that ZTE Romania failed to present a FRAND counter-offer for an injunction to be granted.

The German case

The approach of German Courts is different. In an order of 13 January 2016, the Higher Regional Court of Düsseldorf held that the alleged infringer is not required to propose a FRAND counter-offer if the one it received is not FRAND-compliant. In other words, the Court has, first of all, to verify whether the patent owner’s offer is FRAND. Only if this condition is met, it will check if the counter-offer is FRAND-compliant too. Therefore, the alleged infringer who receives a non-FRAND offer and does not respond cannot be subject to an injunction under the Huawei framework and, if sued before a Court, he can simply object that its counterparty did not respect the FRAND “etiquette” provided by the CJEU. Obviously, the patent holder would still have the chance to prove before the Court that its offer was actually compliant to FRAND terms and conditions, and to obtain an injunction.

The same approach was recently adopted by the Regional Court of Düsseldorf too, in its decision of 31 March 2016 (English  translation  of  the  relevant  excerpts made available by Comparative Patent Remedies blog here). In this case, concerning a patent essential to the AMR-WB standard for 3G communications, the Court specifically assessed the FRAND nature of the patent holder’s offer, although it was undisputed that the alleged infringer had not proposed a counter-offer.

***.***.***

The German approach seems to be preferable. Since, under the Huawei v. ZTE framework, a FRAND-compliant offer by the patent holder is mandatory, Court should not issue injunctions without a prior assessment of the FRAND nature of the patent holders’ offers. Should this assessment be omitted, the burden of estimating a fair offer would shift from the patent holder – the only one who has the very instruments to calculate a fair royalty rate according to “comparable licensing agreements” – to the alleged infringer. So that, in order to avoid an injunction, the alleged infringer will most likely present a very high counter-offer. This seems to stifle the pro-competitive effects of the Huawei v. ZTE framework.

Stefano Vignati

(IPlens’ guest)

Competition law’s application to patent settlement agreements: the first UK decision

When a pharmaceutical patent expires, the patent owner will normally face the competition of ‘generic‘ versions of the patented drug, which often means a dramatic fall in the originator product’s prices as well as an impending revenue cliff.

GlaxoSmithKline (hereinafter “GSK”) faced such a situation with regard to its patented anti-depressant product, Seroxat®, one of its best selling medications during the 2001-2004 time period. In 2001, a number of generics producers were taking steps to enter the market with their own versions of the product. GSK responded to the threat by commencing proceedings against two generics producers, Alpharma Limited (Alpharma) and Generics (UK) Limited (GUK), for breaching its patents.

Rather than taking the matter to trial, the parties proceeded to settle the case. The settlement terms included GSK paying certain sums to the generics producers and appointing them as its distributors of Seroxat®. In return, the generics producers agreed not to launch their own products into the UK market.

On the 12th of February 2016, the Competition and Markets Authority (former Office of Fair Trading) ran out an investigation against GSK and the generic companies finding that they had entered into anti-competitive reverse-payment settlements agreements for breaches of Chapter I of the Competition Act 1998 and Article 101 of the Treaty on the Functioning of the European Union (TFEU) (ex-Article 81 of the Treaty Establishing the European Community, TEC) (see the CMA press release at https://www.gov.uk/government/news/cma-fines-pharma-companies-45-millionfull, text of the decision yet to be published). The CMA found that the agreements effectively prevented the generic competitors from entering the paroxetine market and deprived the National Health Service of price falls averaging 70 per cent. Therefore it characterised the arrangements as a cartel and as an abuse of dominance by GSK.

The decision culminates in total fines of just under £50 million including a fine of £37.6 million against GSK. The size of the fine is itself significant: it is the second largest to have been imposed on an individual company by the UK competition authorities.

This is the first UK decision to consider the application of competition law to patent settlement agreements. However, the pharmaceuticals sector is not new to the attention of the competition authorities.

In the U.S., the FTC’s efforts to combat harmful reverse-payment settlement agreements resulted in the Supreme Court’s landmark decision in FTC v. Actavis, Inc., 133 S. Ct. 2223 (June 17, 2013), which held that these settlements are subject to antitrust scrutiny.

At the EU level, patent settlement were thoroughly reviewed in the Pharmaceutical Sector Inquiry, a report of the European Commission published on 8 July 2009 and followed by yearly Monitoring Reports (full texts here http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/).

In 2013, the EU Commission fined Danish pharmaceutical company Lundbeck €93.8 million and its generic competitors €52.2 million following an investigation which found that Lundbeck had concluded deals with them to unlawfully prevent the market entry of competing generic versions of its branded citalopram, a blockbuster antidepressant, following the expiry of its patents (full text here http://ec.europa.eu/competition/antitrust/cases/dec_docs/39226/39226_8310_11.pdf).

Essentially, the Commission considered that Lundbeck had paid substantial sums to the generic competitors in return for a delay in launching generic products onto the market. Now Lundbeck is appealing against the Commission decision and a judgment is expected later this year.

In 2014, the European Commission fined the French pharmaceutical company Servier and five generics companies a total of 427.7 million (EUR). In that case, Servier implemented a strategy to exclude competitors and delay the entry of cheaper generic versions of its bestselling blood pressure medicine, perindopril. Since its patent protection came to an end generics companies started developing their own products, Servier challenged them and subsequently settled the cases, paying the generics companies to stay out of the market. Also Servier’s appeal against the Commission’s findings is currently before the European General Court.

Waiting for the outcomes of these rulings, the case at stake seems to fall squarely within the territory that the EU consistently considers as giving rise to an “object” or automatic infringement of EU and EU national competition law (cf. Guidelines on the application of article 101 TFEU (ex Article 81 TEC) to technology transfer agreements, 2014/C 89/03 of 28.3.2014). Indeed, the misuse of the patent settlements to restrict competition emerges clearly looking at the direction of the transfer of value. In genuine patent litigation settlement, any payment will tipically flow from the alleged infringer to the patentee. Here, on the contrary, it is the patentee which provides compensation to the infringer. This deal is a straight horizontal agreement in restraint of competition, which would be equally unlawful if it had been stipulated by two producers of generics. As Prof. Ghidini outlines in Profili evolutivi del diritto industriale, 2015, 426, the deal is unlawful not because it concerns a patent, but due to the payment for delaying the product’s entry in the market (cfr. Abbott A.F., Michel S.T., The right balance of competition policy and intellectual property: A perspective on settlement of pharmaceutical patent litigation, IDEA, 2006, 46).

It remains to be seen what further repercussions GSK may face from this case. It is possible that the Department of Health and any other customers of the product could consider to launch a claim for recovering loss they may have suffered because of the amount Seroxat® was overpriced as a result of GSK’s conduct.

Jacopo Ciani

 

UK Competition and Market Authority, 12 February 2016, CMA v. GlaxoSmithKline plc  and others, CE/9531-11

Max Mara gets patent protection for jeans’ pockets which fit better to wearers’ body shapes.

By judgment no. 472 of 14 January 2016, the IP Court of Milan (Judges Mr Marangoni, Mrs Dal Moro and Mrs Giani) ruled that jeans produced by Germani Group and distributed by Il Passatempo infringed Max Mara’s italian patent on “a pocket for clothing” that can “enhance and shape the forms of the wearers, with particular reference to the gluteus area”.

The Court dismissed the defendants’ exception of patent invalidity, based on the alleged lack of inventive step. A three-dimensional pocket that well adapts to the body constitutes an appropriate technical solution for a very clear technical problem: the reduction of the jeans unpleasant aesthetic effect of flattening and the increase in comfort. “This technical solution involves an inventive step, since for a person in the art it was not evident from the state of the art.

The Court recognized that the patent infringement amounted also to unfair competition for contrast with professional ethics principles under art. 2598 no. 3) Italian Civil Code.

With reference to the distributor, the Court excluded its exemption from liability because unaware of the infringing nature of the saled product. Since intellectual property rights are subject to a system of publicity, the Court argued that market operators are presumed to be aware of their existence. As a consequence, the sale of i
nfringing goods amounts to infringement unless the distributor gives evidence that he was unaware, without his fault, of the infringement. That was not the case, since the distributor continued in marketing the infringing product even after the date of notification of the summons.

As regards the assessment of damages, the Court ordered the defendants to return the profits derived from the sale of the infringing products pursuant to art. 125 Italian Code of Industrial Property. This remedy was granted notwithstanding that Max Mara had not provided any evidence of the alleged damages and loss of profits. Even if the infringement does not give rise to damages, in any case it cannot enrich its authors, which will have to return their profits.

The decision seems to set the inventive step’s threshold required to get patent protection at a particularly low level. The related risk is that the same owner could claim different protections in relation to the same products. Indeed, in connection with the same jeans, design or even trademark protection could be successfully invoked as well.

Court of Milan, 14 January 2016, n. 472, Max Mara v. Germani Group et al. 

 

Jacopo Ciani

The CJEU sheds light on the way to calculate the term of SPCs

Article 13 (1) of Regulation EC No. 469/2009 (concerning the supplementary protection certificate for medicinal products, “SPC”) provides that SPCs are calculated on the basis of “the date of first authorisation to place the product one the market in the Community”. Existing SPC regulation is however ambiguous on this point and EU member states have adopted divergent practices.

By decision of 2 October 2014 the Oberlandesgericht Wien has referred questions to CJEU on a preliminary ruling regarding the calculation of SPCs term under Article 13 (1) of Regulation EC No. 469/2009.

The referral concerned two queries: a) whether the date of an MA (Market Authorization) has to be determined according to Community law or that of the member state where the SPC application is filed; b) whether (under Community law) “the date of the first authorisation” – as per Article 13(1) of the Regulation – is the date the MA actually issued or the date the applicant is notified.

The CJEU issued its Decision on 6 October 2015 in the case C-471/14, Seattle Genetics Inc. v Österreichisches Patentamt (full text here).

Confirming both the conclusions and the arguments submitted by the Advocate General Niilo Jääskinen in his Opinion as of September 10, 2015, the Court clarified: a) that, since Article 13(1) of aforesaid Regulation contains no express reference to the laws of the member states, it is necessary to adopt an independent and uniform interpretation that will be valid throughout the EU; b) that the date of the first authorisation is a matter of Community law, not of the legislation of the member state where the marketing authorisation has effect. The Court declared that the EU legislator chose to use the Regulation as the legal instrument to create a standard SPCs system.

In evaluating the second question, the CJEU further pointed out that SPCs were created to ensure sufficient protection to encourage pharmaceutical research, in light of the fact the period of exclusivity granted by patents concerning pharmaceutical products is insufficient to cover the R&D investment necessary.

In this context, the right to market a new drug arises on the date the patent holder becomes aware that the MA has been issued.

The Court therefore answered the second question by confirming that it is the date of notification of the MA that is to be considered the “date of the first authorisation”, this is the date to be taken into account in calculating the term of SPC.

As a result of this ruling, SPCs holders will benefit from a longer term of protection – by up to some weeks. Furthermore, a number of SPCs will likely need to have their duration recalculated.

 Matteo Aiosa

Court of Justice, Eighth Chamber, 6 October 2015, C-471/14, Seattle Genetics Inc. v Österreichisches Patentamt.

Huawei v. ZTE: Enforcing standard-essential patents as abuse of dominance

Following the request for a preliminary ruling issued by the Landgericht of Düsseldorf (Germany), on July 16th 2015, the European Court of Justice addressed the question whether or not, and at what conditions, the firm holding a standard-essential patent (SEP: namely, a patent essential to produce manufactures in compliance with a particular standard), which has committed to grant a license to third parties on FRAND terms, abuses its dominant position by seeking injunctions against alleged infringers (decision available here).

The long-awaited judgment of the Court confirms the general approach adopted by the Commission in both Motorola and Samsung cases (available here and here). However, while the Commission had merely stated that enforcing a SEP in court can constitute an abuse of dominance under certain circumstances, the ECJ decision goes further, clarifying what those circumstances are. In particular, the Court held that seeking an injunction against an alleged infringer does not violate competition law when the following conditions are met:

  1. prior to bringing the action, the SEP holder has informed the alleged infringer of the violation of its intellectual property right, specifying the mode of infringement;
  2. the SEP holder has presented a written offer for a license on FRAND terms to the “infringer” (which has previously expressed its intention to conclude a license agreement). The offer must include all the relevant conditions of the agreement, in particular the royalty rate applied and the way it is calculated;
  3. the potential licensee has not “diligently responded to [patent owner’s] offer in accordance with recognized commercial practices in the field and in good faith”, and has continued to use the protected technology.

The decision of the Court of Justice seems to subordinate the finding of abuse to the “bad faith” of both SEP owners and producers of standard-based products. On the one hand, the formers have to concretely fulfill the obligation to the standardization bodies consisting in giving a license on FRAND conditions to third parties. Indeed, a patent cannot obtain the SEP status unless the legitimate holder undertakes to grant a FRAND license to anyone who may require it, in order to prevent the SEP holder from “reserv[ing] to itself the manufacture of the products in question”. Thus, it is not surprising that, according to the ECJ, the patent owner may incur in an abuse of dominance if it seeks an infringement injunction without even submitting a licensing agreement to the alleged infringer.

On the other hand, the ECJ imposes the obligation of good faith also to the potential licensee, which – having decided not to accept the offer submitted by the patent owner – “may rely on the abusive nature of an action for a prohibitory injunction or for the recall of products only if it has submitted to the proprietor of the SEP in question, promptly and in writing, a specific counter-offer that corresponds to FRAND terms”.

The ECJ judgment has definitely the merit of striking a reasonable balance between the interests at stake: those of the potential (and willing) licensees, which supposedly made specific investments relying on the FRAND license promised by the SEP holder; and those of the SEP holder itself, which should be granted the right to effectively protect its intellectual property rights from free-riders.

Nonetheless, the intervention of European judges leaves some issues unsolved. Firstly, the decision does not explain when a license can be considered FRAND. Secondly, it does not answer the question whether holding a SEP implies, per se, a dominant position on the market (actually, the referring court had not asked about the finding of dominance). At first glance, there seems to be the glimmer of an opening for such a conclusion. A passage of the sentence, in fact, reads as follows: “[…] the patent at issue is essential to a standard established by a standardization body, rendering its use indispensable to all competitors which envisage manufacturing products that comply with the standard to which it is linked. That features distinguishes SEPs from patents that are non essential to a standard and which normally allow third parties to manufacture competing products without recourse to the patent concerned and without compromising the essential functions of the product in question” (emphasis added). This appears quite close to an irrebuttable presumption of dominance. A debatable position: in my view, the presumption should be rebuttable (as suggested by the Advocate General Whatalet in his opinion, available here), hence the judges should continue assessing, case-by-case, a situation of actual, effective dominance.

Piera Francesca Piserà

CJEU, 16 July 2015, case C-170/2013, Huawei Technologies Co. Ltd. v. ZTE Deutschland GmbH.

Product-by-process patent = product patent??

Worthy of comment is a recent decision of EPO’s Enlarged Board of Appeal (March 25, 2015) in the cases Tomato II and Broccoli II (respectively, Case Number G2/12 here and Case Number G2/13 here). Both cases relate to the patentability of plants and plant matter under Article 53(b) EPC. The Tomato II case concerns a “method for breeding tomatoes having reduced water content and product of the method”, while the Broccoli II case concerns a “method for selective increase of the anticarcinogenic glucosinolates in brassica species”.

The EPO’s Enlarged Board of Appeal stated that even a product-by-process patent is a “product patent” autonomously protected from the process that describes the former and from which the implementation as product depends.

The EPO’s approach (see, in each decision: Reasons, Legal erosion of the exceptions to patentability,§ 6.(b), p.61) is open to criticism. On the one side it risks paralyzing the competitive dynamics of process innovation, in contrast an interpretation of articles 64(2) EPC and 34 TRIPs whereby third parties are allowed to make the same product with a totally different process—hence,   without any absolute block imposed by pre-existing product patents that are the fruit of a totally different intellectual process. On the other side, EPO’s opinion ‘forgets’ that in absence of that process, the product wouldn’t even exist, as the facts of the cases highlighted that no other processes were available to achieve the same result. The final outcome of said decisions is even more debatable as the process through which the product was described and claimed was essentially biological , thus as such non patentable: with the paradoxical ultimate result of allowing the patenting of a product that could be realized only through a process not patentable by definition!

Gustavo Ghidini

Gianluca De Cristofaro

EPO, Enlarged Board of Appeal, 25 March 2015, Case Number G2/12 and Case Number G 2/13, Tomato II and Broccoli II

updated on 12 November 2015