Litigation / Foreign Patent Litigation / Europe

Patent Litigation in Europe

Whatever the merits of the European Union and the European Patent Convention in other matters, they have done little to help rationalize European patent litigation. At present all questions of infringement and, after the nine month patent opposition term provided for under the European Patent Convention has run, of validity are exclusively matters for the national courts. However, it should be noted that in general European countries have amended their definition of validity to agree with that of the European Patent Convention so that patents granted under national law and by the European Patent Office should be judged by the same standard. Additionally the European Patent Convention does contain, however, one provision which was intended to provide some uniformity in this area. The provision concerns a definition of how a claim in a European patent is to be interpreted. Prior to the coming into effect of the European Patent Convention, the British and Germans maintained opposing views on this. As originally agreed to, the European Patent Convention had a very simple definition of what interpretation the claim should be. Thus, Article 69 read:

The extent of protection conferred by a European patent or a European patent application shall be determined by the terms of the claims. Nevertheless, the description and drawings shall be used to interpret the claims.

At the diplomatic conference that gave rise to the final form of the European Convention, it was found that this simple wording was interpreted in entirely different ways by the British and the Germans. Rather than reword the article, which had been already incorporated into the draft text, a protocol for explaining what this article meant was agreed upon which reads as follows:

Article 69 should not be interpreted in the sense that the extent of the protection conferred by a European patent is to be understood as that defined by the strict, literal meaning of the wording used in the claims, the description and drawings being employed only for the purpose of resolving the ambiguity found in the claims. Neither should it be interpreted in the sense that the claims serve only as a guideline and that the actual protection conferred may extend to what, from a consideration of the description and drawings by a person skilled in the art, the patentee has contemplated. On the contrary, it is to be interpreted as defining a position between these extremes which combines a fair protection for the patentee with a reasonable degree of certainty for third parties.

As a practical matter, the protocol does not yet seem to have helped very much. The celebrated example of this is in respect of the European patent relating to alleged infringement by Remington of Epilady's patent for a hair remover for use on ladies' legs. The British and German courts still came to opposite conclusions as to whether or not a claim calling for a rotating helical spring (which plucked hairs from the legs at one point in its rotation and deposited them at another point when the coils of the spring separated) was infringed by a rotating rubber bar with slits in it, which performed the same function.

There are, however, some steps being taken toward harmonization between countries in the field of patent enforcement. For example, through the influence of the proposed Community Patent Convention, most countries now have more or less the same definition of what acts constitute infringement.[1]

In addition to the European Patent Convention and the possible Community Patent Convention, two other European treaties must be considered before we look at the specifics of patent litigation in the four major European countries. The first is the Treaty of Rome, the basic constitutional document of much of the European Union, itself. When considering the question of patent infringement in any EEC member country, one must always bear in mind what have come to be known, in England at least, as "Euro defenses". Article 2 of the Treaty of Rome that set up the EEC declares that a primary objective of the Treaty is the establishment of a true common market among member states. In July of 1987 the so-called "Single Act" came into effect to try to expedite the growth of the EEC's international market and to lower barriers to the free flow of goods between member states.

Free Flow of Goods Principle

The free flow of goods principle that has been adopted by the community derives primarily from Article 30 of the Treaty of Rome, which prohibits quantitative restrictions on imports and all measures having an equivalent effect thereto between member states of the EEC.[2] After some early ambivalence, the European Court of Justice in a copyright case,[3] in 1970, decided that exercise of an intellectual property right to prevent imports was a "measure having an equivalent effect" as referred to in Article 30. Thus, conflict between these provisions and national intellectual property rights became clear. The treaty in Article 36 provides that Article 30 shall not preclude the protection of industrial and commercial property. But this exclusion is predicated on the requirement that any prohibitions or restrictions on imports arising therefrom shall not... "constitute a means of arbitrary discrimination or disguised restriction on trade between member states".[4]

There are only two ways in which a case can come before the European Court of Justice. One is as an appeal from a decision of the Commission.[5] The other is as a result of a reference from a national court. In the latter case, the role of the European Court is confined to answering the questions on EEC law put to it to the national court and to apply that answer to the case before it.[6]

There are three key decisions of the European Court of Justice on the question of the conflict between the free movement of goods principle and national patent rights. All three relate to the import of drugs into Holland.

The first was Parke Daviswhich was decided in 1968. [7] In that case the court decided that a Dutch patent could be used to prevent the import to Holland of drugs put on the market in Italy (where no patent protection was possible). The questions put to the court were, however, in terms of Articles 85 (which has been discussed above) and 86 (which is an anti-monopolization provision roughly equivalent to section 2 of the Sherman Act) decision of the court was based on the reasoning that exercise of a patent right could not breach Article 85 in the absence of an improper agreement nor could it breach Article 86 in the absence of any use of the patent right that contributes to a dominant position, the improper exploitation of which will be liable to affect trade between the member states.

The Parke Davis decision held that the importation could be barred.

The second free flow of goods case involving patents to come before European Court was the Sterling Drug case decided in 1974, where it was held that the owner of the Dutch patent could not use this patent to prevent importation into Holland of drugs which had been put onto the market in the United Kingdom with his consent under the protection of his United Kingdom patent.[8]

The third case was the Merck case[9] decided September 1981 where the facts were essentially the same as in the Parke Davis case except that this time the question asked of the European court specifically drew attention to the fact that it was the Dutch patentee who had in fact put the drugs onto the market in Italy. It was held that it was not permissible to use a patent to prevent importation from Italy in this circumstance.[10]

The law as stated in the Sterling and Merck cases, re-emphasizes previous trademark and copyright cases that "the proprietor of an industrial or commercial property right protected by the law of a member state cannot rely on that law to prevent importation of a product which has been lawfully marketed in another member state by the proprietor himself with his consent".

These cases apparently made it clear that it is not possible for a patentee to use his patent in one EEC member state to prevent import of goods into that state from another EEC member state where they were first marketed by the party who seeks to assert the right or by his licensee.

The decisions of the European Court of Justice do not mean, however, that it is absolutely impermissible for the licensor to impose an obligation on a licensee not to sell licensed products outside the own territory as long as the terms of the license fall within the scope of the EU's recently revised group exemption on technology licensing. It seems, however, this it is probably impermissible for a licensor to impose an obligation on his licensee to prevent customers of that licensee from selling goods in other EU member states and that it would be foolish for a licensor to try to prevent imports from his own customers or another licensee in another EEC member state.

The free flow of goods principle of the Treaty of Rome does not apply to trade between the Common Market and a state outside even if that state has a treaty with the Common Market containing clauses in exactly the same terms as Articles 30 and 36. The court has taken the view that treaties between the Common Market and outside states should be interpreted in a different way from the Treaty of Rome itself.[11] The whole purpose of the Treaty of Rome was to create a common market. Treaties with outside countries were mere trade agreements and as such should not be construed to impose anything more than reciprocal obligations on the two parties.

Furthermore, a Hamburg appeals court has held (in a decision what was not referred to the European Court) that the free flow of goods principle does not prevent a patentee from using its German patent to prevent imports into Germany of goods first sold in the Netherlands by a totally independent third party in a case where there was no corresponding Dutch patent.[12] This decision was upheld by the German Supreme Court. The losing defendants took the issue to the German Constitutional Court on the question of whether the German Supreme Court should have referred the case to the European Court of Justice (as is required by the Treaty of Rome of any final court of appeal if there is an unresolved "question" of European law in the case before it). The German Constitutional Court noted that there were respectable arguments for saying that failure to secure protection in other countries, when this was the result of a voluntary act by the patentee, could be regarded as an implied consent. However, under German law the Constitutional Court was empowered to intervene only if the Supreme Court was clearly in error. The Constitutional did not conclude that the Supreme Court was clearly wrong, and the matter ended there.[13] Some indication of the European Court of Justice's views on the question of implied consent may, perhaps, be derived from a recent decision in a trademark case. In IHT Internationale Heiztechnik GmbH v. Ideal-Standard Gmbh,[14] the Court rejected an argument that sale of one's trademark in a given country implied that one consented to goods bearing that mark and originating from the country in which the mark had been sold freely entering a country where rights in the mark had been retained. Since it would seem that the implied consent argument should have been more powerful in such a case than when one merely failed to obtain a patent in a particular country, it may be that we have heard the last of the implied consent argument for a while.

In Pharmon v. Hoechst[15] the European Court of Justice held that first sale of goods in a member state as a result of the grant of a compulsory license was not sale "with the consent of the patentee" such that a patentee could not use a patent in another EEC member state to prevent importation of goods first sold elsewhere under the compulsory license. In the case of Generics v. Allen & Hanburys, [16] the British House of Lords requested a preliminary opinion from the European Court of Justice as to whether similar reasoning should apply in respect of goods first sold under a license of right.

All of this jurisprudence may, however, be about to be thrown back into the melting pot if the European Court of Justice follows the recommendation of its Advocate General in the case of Merck v. Primecrown.[17] Prior to joining the European Union, Spain did not provide product patent protection for new pharmaceutical products. As part of the Treaty of Accession, Spain was required to rectify this and it was provided that for a period of three years after Spain had provided for patent protection for pharmaceutical products, patents in other EU countries would be able to be used to prevent importation of pharmaceuticals produced in Spain without the benefit of patent protection, notwithstanding case law of the European Court of Justice discussed above holding that once a product had been put on the market somewhere within the EU by a patentee or with its consent, patents in other EU countries could not be used to prevent importation sale or use of such a product.

The three year term provided for in Spain's Accession Treaty to the EU expired in 1995. Attempts by Germany, Austria, Belgium, Denmark, France, Ireland and the United Kingdom to have the three year term extended or to provide some other form of safeguard in respect of products coming from Spain were rejected by the European Commission.

This left only one possibility for preventing imports into other countries of the EU of pharmaceuticals first marketed by the patentee or with its consent (where they were sold at a relatively low price as unpatented goods), namely a direct challenge to the European Court of Justice's case law on the question of patent exhaustion. This has now occurred in the case of Merck & Co v Primecrown Ltd. This case was brought before the English Patents Court and has been referred to the European Court of Justice for a preliminary opinion. Merck argued that it was wrong to apply what is in essence a theory of exhaustion to a situation where there were no rights to exhaust in the country of first sale (this argument being directly contrary to an earlier decision of the ECJ in Merck v. Stephar) and secondly that it had an ethical obligation to continue sales in Spain so that the sales to the Spanish market should not be regarded as being made with its consent for the purposes of the application of the prior case law. In his opinion to the court, the Advocate General in effect accepted the patentees arguments on exhaustion at least in cases where patent protection was not possible in the country in which the first sale occurred. It remains to be seen whether the court will follow his reasoning.

European Convention on Jurisdiction

A further factor to bear in mind in connection with proceedings in the EEC is the effect of the European Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters on patent litigation.[18] The basic rule is set out in Article 2. This provides that the courts of a defendant's home country have jurisdiction over the defendant for a wide variety of law suits even though the wrong complained of occurred in the territory of another signatory state.[19] Where there are a number of codefendants, Article 6 provides that the courts of any jurisdiction in which one of the codefendants is domiciled has jurisdiction over all of the codefendants, at least as long as the same issues are involved. As a result of this Convention, it may be possible to sue an infringer in his home country for infringements committed elsewhere, even though a provision in the Convention provides that each member country has exclusive jurisdiction over determination of the validity of its own patents.[20]

A more interesting provision which has been seized upon by the Duch Courts and posibly also in Germany, is that set out in Article 24 of the Convention which provides:

Application may be made to the courts of a contracting state for such provisional, incluiding protective measures as may be available under the law of that state, if under this Convention, the courts of another contracting state have jurisdiction as to the substance of the matter.

Thus even though the courts of one member state may provide the appropriate forum for the fiull trial of a matter, the courts of any member state may be requested to grant a preliminary remedy. This has happened a number of times in the Dutch courts where plaintiffs have used the Dutch procedural tool of Kort Geding (litterally"short proceeding") to obtain preliminary injunctions and other preliminary relief relating to patent infringement in other European countries.[21] In at least one case, the Paris Cour d'Appel has enforced such an injunction against a co-defendant that was domiciled in France.

Article 25 26 and 27 of the Convention provide for the recognition of judgments in one member state in all other states unless the judgment was awarded as a result default of appearance by the defendant because he was not given proper notice of the proceedings in which the judgment was awarded.

Misgivings have been raised by several commentators as to the propriety of granting Europe-wide injunctions on the basis of something less that a full trial, particularly in view of the fact that challenges to the validity of a patent cannot be fully developed in kort gedding proceedings. The issue has been referred to the European Court of Justice as a result of challenge to the status of kort gedding proceedings under Article 24 of the Judgment Convention. However, no decision on this can be expected for several more months.

Community Patent Convention; COPAC

Many of these problems will disappear if the Community Patent Convention ever comes into force and significant numbers of patents are granted under it. Under the litigation protocol that is attached to the convention, a number of existing courts throughout the European Union will be designated as Community Patent Courts and will have EU-wide jurisdiction to deal with infringement and validity issues arising from Community Patents. A single appeal court (Community Patent Appeal Court or COPAC for short) will be established having jurisdiction throughout the EU to which all appeals from national courts relating to matters of patent infringement or validity of community patents will be referred. Such rationalization of litigation seems likely to have to wait until a final decision on the Community Convention has been made, although there is some talk of bringing the litigation protoclol into effect independently of the full convention and applying the protocol to all patents granted by the European Patent Office, irrespective of whether they are demed to be Community patents.