Ladas & Parry Guide to European Patent Office Practice

8. Post-Grant Issues

8.1 Protection Afforded by a European Patent

Although, once granted, a European Patent is effectively transformed into a national patent in the countries in which it is completed, the European Patent Convention does impose certain requirements on the laws of the member states. Among the most important are the following:

• European patents must have a term of twenty years from the filing date, which is subject to possible extension in cases where marketing is delayed due to the need of obtaining governmental approval.[93]
  
  
• Process patents granted by the EPO must be regarded as conferring protection on the products directly obtained by the process. [94]
  
  
• Pending European applications shall be afforded the same prior art status as pending national applications with respect to any later filed national application. [95]
  

Questions of infringement of a European patent are still governed by the domestic law of the country in which enforcement is carried out. [96] 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. As noted in Chapter 1 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.

This is not the place for a detailed discussion of patent litigation in the member states of the EPC but it is worth remembering that the basic approach to patent law still differs between the member states. Thus, in France and England the theory that a patent represents a contract between society and the inventor is paramount, and any one charged with patent infringement can claim for himself the role of protector to society's right to do what it likes unhindered by patents which should never have been granted. The German view is more paternalistic. Patents are granted because the state has decided, in its wisdom, and as part of the exercise of its power as parens patriae, that good will flow from their grant. This role is not likely to be usurped by a member of the public, especially if he is actually infringing the right granted by the state. Thus, in Germany a patent's being invalid is not a defense of patent infringement. If one wishes to challenge the validity of a patent, one must file a nullity action before a special Patent Court in Munich. Infringement actions, on the other hand, can be brought before any one of a dozen or so District Courts throughout Germany which will normally regard the patent as valid until the Patent Court says otherwise. [97] If they have real doubts as to the validity of the patent, the most they can do is stay the action before them until the Patent Court reaches its conclusion. However, even this is rare.

Another significant difference between various legal systems employed to enforce patents is in their approach to discovery. In Germany there is none. In France and Italy the Court can order inspection of premises where infringement is believed to be being carried out by a bailiff accompanied by a patent agent or attorney. In England there is a more limited version of discovery procedures similar, at least conceptually, to those of the United States. Even here, however, there is no uniformity. If the proceedings are brought in the High Court, each side is required to produce more or less automatically all documents, etc that it has in its possession or under its control that are relevant to the proceedings. In the new County Court jurisdiction that was created to reduce the complexity and cost of patent litigation, [98] discovery is more limited, and much of it must be specifically requested by the opposing party

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. [99]

8.2 Cross Border Injunctions in Patent Matters

As noted above, the Europe-wide patent legislation currently in force does nothing to simplify the enforcement of patents in multiple jurisdictions since after grant, since each patent arising out of a single European Patent is governed by and enforceable under only national patent laws. This can make such enforcement expensive and is one of the reasons why there are still hopes by some that something can be retrieved out of the Community Patent Convention to ease this burden. In the meantime, however, the Dutch Courts have seized the initiative and have taken advantage of the European Convention on Jurisdiction and Enforcement [100] to start issuing EU-wide injunctions to restrain patent infringement.

The European Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters contains a number of provisions that are relevant to the enforcement of patents.

The Convention's basic rule is set out in Article 2. This provides that the courts of a defendant's home country (i.e. where it is domiciled) 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. [101] 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. [102] Article 24 provides that application may be made to the courts of a contracting state for such provisional, including 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. Article 16 of the Convention provides that only the courts of the country which issued a patent right can hold it invalid. Article 64 of the European Patent Convention provides that once granted the effect of a European Patent in any country in which it is in force is the same as that of a national patent.

The Hague District Court (the sole Dutch court having jurisdiction in patent matters) has taken advantage of these provisions to grant injunctions under European patents at least having effect throughout Europe. Its view has been that since a European patent has the same form in each country, its effects should be the same and that there is judicial efficiency if only one court has to determine issues of infringement. This practice has been the subject of some concern, especially in that the Dutch courts have used Article 24 in a procedure that gives the defendant only a limited opportunity to contest the validity of the patent in question. A number of cases have now arisen in the Netherlands and the United Kingdom which may clarify the situation.

In Coin Controls Ltd v. Suzo International (U.K.) Ltd , the English Patent Court was requested to enforce British, German and Spanish patents that had all originated from the same European Patent against defendants domiciled in England, Germany and Spain. The court struck out the pleadings insofar as they applied to the foreign patents. The judge agreed with the Dutch courts that initially if the conditions of Article 6 applied, the court had jurisdiction to deal with infringement of the German and Spanish patents but went on to hold that once the validity of the patents had been put into suit, the provisions of Article 16 came into play. The judge held that:

the court cannot decline jurisdiction on the basis of mere suspicions as to what defense may be run. But once the defendant raises validity the court must hand the proceedings over to the courts having exclusive jurisdiction over that issue  .  .  . infringement and validity of an intellectual property right .  .  . are so closely interrelated that they should be treated for jurisdictional purposes as one and the same issue.

The Hague District Court did not agree. In Palmaz v. Boston Scientific B.V. it took the view that there were two ways to deal with the Article 16 issue. One was the approach taken in England in Coin Controls. The other, and in its view better, way was for the court initially seized of the case to retain jurisdiction over the infringement issues but to stay the proceedings until the courts competent to deal with validity (i.e. those in the country where the patent was effective) had reached a conclusion on the validity of the patent in suit. The approach of the English court was unacceptable because it meant that the jurisdiction of a court could not be established until after a defense was pleaded.

Some reining in of the Hague District Court may, however, result from the decision of the Hague Court of Appeal in Expandable Crafts Partnership v. Boston Scientific B.V. In this case, the issue was under what circumstances Article 6 of the Convention can be used to bring defendants having little connection with the Netherlands before the Hague District Court. The District Court's view had been that since the national patents resulting from a single European patent are the same and the law on infringement is substantially the same in all EU-member states, parties in other countries could properly be named as additional defendants in a case against a Dutch infringer since the issues before the court would be substantially the same. The Court of Appeal, however, looked to another provision of the Convention which deals with the question of when courts in one country should decline jurisdiction because the same matter was already being dealt with before the courts of another EU member state. In such cases Article 22 of the Convention provides that such action shall only occur where the cases are "so closely related that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings". In view of this provision and a European Court of Justice decision in Tatry v. Maciej Rataj which had held that the term "irreconcilable judgments" included cases where the reasoning differed in different countries even if the outcome was the same, the Hague Court of Appeal held that in cases where there were multiple defendants there must be a greater degree of connection between the defendants than the district court had required before Article 6 could be invoked to give rise to jurisdiction. Such a situation could arise for example where the defendants in different countries were related so that the acts of infringement could be regarded as one common activity based on one common design. In such cases the action should be brought in the jurisdiction where policy for the group of defendants is determined. In cases where jurisdiction does exist, however, the court disagreed with the English decision in Coin Controls and took the view that the court initially seized of the case should retain it, staying the proceedings where necessary for a ruling on validity from other countries. In the case of actions brought seeking interim relief under Article 24 of the Convention, staying the action might not be appropriate and the Court hearing the infringement action should weigh the chances of the foreign nullity action being successful. Unless there is a real chance that the foreign nullity action will be successful, a cross-border injunction would be appropriate.

In subsequent cases of Baxter v. Pharmacia UpJohn and Augustine Medical Inc. v. Mallinckrodt Medical BV et al, the Hague District Court has held that the limitation in the Expandable Crafts decision that an action under Article 6 should be brought only in the jurisdiction where policy was made did not apply to infringements by members of groups of companies where the group structure was very complicated. In such cases one could not determine where policy was made. Nor should the Expandable Crafts holding be applied in cases where non-European defendants participate in coordinated action involving infringement, since in such cases determining the location of the policy-making body would not be relevant.

In the meantime, the English Court of Appeal, in Fort Dodge Animal Health Ltd. v. Akzo Nobel B.V., was faced with a request by British companies for an order to restrain a Dutch company from seeking an injunction in the Netherlands to enforce its British patent. The Court took the view that Coin Controls was correctly decided and that for Article 6 of the Convention to apply there had to be a necessary connection between defendants in the country in which the action was brought and those outside it. It did, however, note the different views of the Dutch courts and so referred the question of the applicability of Articles 6, 16 and 24 of the Convention to patent infringement disputes to the European Court of Justice for a ruling.

A more interesting provision which has been seized upon by the Dutch Courts and possibly 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, including 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 full 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 (literally "short proceeding") to obtain preliminary injunctions and other preliminary relief relating to patent infringement in other European countries. [103] 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.

The early Dutch cases were based on the domicile provisions of the Convention and, although it came as a shock to some that the Dutch Courts were issuing injunctions to prevent infringement of, say a French patent, are, in view of the wording of the Convention not particularly exceptionable. The Dutch Courts approach notes that the European Patent Convention has as part of its objectives the establishment of common rules on patent validity and that the basic approach to infringement is similar in all countries.

The more controversial step of the Dutch Courts has been the use of the Kort Gedding proceedings. As noted above, these may be used even in cases where the domicile requirement is not met. Widespread concern has been expressed that these proceedings are biased much too firmly in favor of the patentee. Under Dutch procedure questions of infringement and validity are dealt with in separate proceedings. However, before granting an injunction, the court is supposed to satisfy itself that the patent is not likely to be held invalid. Kort Gedding proceedings are dealt with by a single judge. Normal Dutch patent actions are heard by a three judge court. In early kortgeddin proceedings on patent matters, the whole issue was normally dealt with in not much more that 8 weeks, scarcely long enough for the defendant to investigate the validity of the patent in any depth, particularly where the onus was very firmly on him to show that the patent was likely to be held invalid. More recently the criticisms seem to have been having an effect. The typical duration of a kort gedding procedure in a patent case may now be as much as 4 to 5 months. There may even now be some preliminary hearings before the final hearing. One effect of this may be a reduction in the number of injunctions granted in such proceedings.

The Dutch approach has been followed in two cases by the Dusseldorf LG, with appeals pending in both cases. In both of the Dusseldorf cases, however, jurisdiction was firmly based on Article 2 and in both cases, since the alleged infringements occurred in England, the court applied English Law (in one case even applying some elements of English procedural law relating to discovery).

The English Patent Court in the form of Aldous J. rejected the Dutch approach entirely, at least in part on quasi-political grounds relating to issues of sovereignty. [104] However, he has now been promoted to the Court of Appeal and both of the two current patent judges seem more receptive to the concepts involved. Furthermore, the English common law required that a tort action could be brought in England in respect of wrongs committed abroad only if the act complained of was wrong both in England and in the place where the wrong was committed ( the double actionability rule) has now been abrogated for all actions except defamation actions by the Private International Law (Miscellaneous Provisions) Act 1995. The effect of this is that courts in the United Kingdom will now be able to exercise jurisdiction inter alia to the full extent permitted by the Brussels Convention. This recent change to British law now opens the door to the possibility of British courts following in the steps of the Dutch Courts.

At times, it has appeared that the Dutch courts have indicated that they have jurisdiction over American defendants as well as those brought under their jurisdiction by the Brussels Convention. It now seems, however, that this is the case only when the US corporation has been seriously involved in the infringement in the Netherlands. It may be recalled that there was some controversy some years age when the English courts seemed to extend the concepts of joint tortfeasorship to achieve a similar result, although the impetus for this in the English cases was to drag in the American party so that the plaintiff could obtain discovery of its documents, an issue that does not arise in Dutch proceedings.

8.3 Free Flow of Goods Principle

The free flow of goods principle that has been adopted by the community derives primarily from Article 28 (formerly Article30) of the Treaty of the European Communities, which prohibits quantitative restrictions on imports and all measures having an equivalent effect thereto between member states of the EEC. [105] After some early ambivalence, the European Court of Justice in a copyright case, [106] 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 28. Thus, conflict between these provisions and national intellectual property rights became clear. The treaty in Article 30 (Formerly Article 36) provides that Article 28 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". [107]

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. 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.

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 Davis which was decided in 1968. [108] 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 is the European equivalent of Section 1 of the Sherman Act) and 86 (which is an anti-monopolization provision roughly equivalent to section 2 of the Sherman Act) and the 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. [109]

The third was the Merck case [110] 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. [111]

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 importation 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 28 and 30. 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. [112] 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 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. [113] 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 Court did not conclude that the Supreme Court was clearly wrong, and the matter ended there. [114] 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, [115] 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 [116] 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, [117] 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.

This jurisprudence was reconsidered in late 1996 in the case of Merck v. Primecrown.[119] 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 was 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. The Court did not agree. The only concession that the Court itself made was to agree that the patentee might be able to use its patents in one country to prevent importation of goods it had marketed or consented to being marketed in another EU country if it was required by law to market the goods in the country of first sale, a mere ethical obligation (for example, where a pharmaceutical company might feel obliged to supply the best drugs available in a given market), was held to be insufficient to override the basic EU requirement for there being minimum restrictions on the free flow of goods throughout the Union.

8.4 Supplementary Protection Certificates

As noted earlier, the European Community has taken steps to provide the patentee an additional term of protection for inventions of medicinal products to compensate for delays in marketing medicines which result from the need to obtain governmental approval of the safety or efficacy of the medicine. The regulation came into effect on January 2, 1993 for all EC Countries except Greece, Portugal, and Spain, for which countries the effective date is January 2, 1998. Countries that are members of the European Economic Area but are not yet members of the EC are also adopting legislation for provision of similar Supplemental Protection Certificates.

Additionally there is provision in the Community for health authorities to grant what is effectively a period of non-patent exclusivity for new drugs. This is done by the health authority agreeing for a given period not to grant approval for any generic drug unless the generic manufacturer submits all of the same test data as the initial applicant. The relevant Directive provides that Member States shall provide such exclusivity for a minimum period of six years. As a practical matter, however, most have adopted a term of ten years.

Extension of protection for products whose marketing has been delayed will be effected by the grant of "supplementary protection certificates" for up to five years after the end of the normal patent term. The regulation retroactively covers some products that had already been approved to be put on the market when the regulation came into effect. Supplementary Protection certificates are available only for products "presented" for treating or preventing human or animal disease; for diagnosis; or for restoring, correcting or modifying physiological functions of humans or animals. The Certificate is granted only in respect of the product for which marketing approval has been granted, and not for the entire patent. Furthermore the relevant directive implies that a supplementary protection certificate can be granted only in respect of the "basic" patent covering the product in question, although the meaning of this term is not entirely clear.

On February 8, 1997, Council Regulation 1610/96 came into effect providing for the issue by national patent offices of analogous supplementary protection certificates for plant protection products such as insecticides, fungicides and herbicides that are also subject to regulatory approval before they can be marketed. The maximum possible additional protection will be for five years. Under transitional provisions, the regulation may also apply to products already on the market if they were first marketed in the EU after January 1, 1985 as long as a request for the issue of a supplementary certificate is filed before August 8, 1997.