Wednesday, 27 April 2011

Clarity is not at issue in Nullity after the EPO-limitation procedure

To the best of my knowledge, there has not been any case-law on the relation between the new EPO limitation procedure (Art. 105a and 105b EPC) and the nullity procedure.

The first decision in this regard has now been issued by the German Supreme Court (BGH, X ZR 72/08 "Kosmetisches Sonnenschutzmittel III).

There is a small catalogue of grounds for nullity of german patents, which is similar to the grounds for opposition in the EPC. Just as in the EPC, clarity does not count among these grounds.

However, if amendments are made during the nullity procedure in order to defend the patent in a limited form. the full examination including clarity is opened for theese amendments.

In the case at issue, the amendments were not made in the nullity procedure at the Federal German Patent Court (Bundespatentgericht) but in a co-pending limitation procedure before the EPO.

The BGH has now ruled that the claim as limited in the EPO-limitation procedure is to be considered as the valid patent claim and may not be examined for clarity because a pertinent ground for nullity is missing.

Tuesday, 26 April 2011

May selling a patent be discriminative?

In a recent post, we had seen that a patentee dominating the market may have to grant a compulsory license to a standard-relevant patent.

It is generally agreed upon that this license has to be granted unter "Fair, Reasonable and Non-Discriminative" (FRAND) conditions.

The Karlsrule Upper District Court (OLG Karlsruhe) had to decide on an action filed against a former patent owner requesing a refund of the damages incurred by the selling of the patent. The plaintiff is a defendant in various co-pending high-stake infringement procedures filed by a non-manufacturing legal entity having bought the patent portfolio including standard-relevant patents.

One of the arguments was that the act of sellig the patents was an abuse of the position dominating the market because the buyer was not bound to the FRAND conditions according to the ETSI standard. The patents were sold while negotiations on licenses were pending such that the legal position of the plaintiff was deteriorated due to the transfer of the patent.

However, the OLG decided clearly that even a position dominating the market may not prevent the party from selling the patent. As a consequence, the indication of plans to sell the patent during the license negotiations may not be considered an abusive menace of the market dominator.

Wednesday, 20 April 2011

The value of a Patent Law Firm BGH XII ZR 40/09

The Federal  Court of Justice has recently issued a ruling on the value of the practice of a dentist, which includes the value of the substance as well as the goodwill. The result may be transferred to patent law firms (and to all other professional practices).

Here is how it goes: The value of the goodwill at a certain point in time is to be calculated under the presumption/hypothesis that the practice is sold. Relevant is thus the price which can be realized on the market. Presume there is an investor considering buying the practice and letting do the work by an employed professional person. The the salary B of the employed person corresponds to the value of the work contributing to the earnings. The rest is thus the profit of the goodwill. Start with the net earnings A of the practice per year and presume that a fraction of 10% thereof depends on the person of the owner to such an extend that it would not be realizable after a sale. A rough estimate of the earnings after the sale would therefore be A*0,9. Then, subtract the value of the work B contributing to the annual profit to obtain C=A*0,9-B.

This value corresponds roughly to the profit resulting from the goodwill the invesor may expect in the year after the acquisition.

It has to be multiplied with a factor F corresponding to the number of years in which the goodwill will be sustained. For the dentist's practice, the BGH has presumed a time of three years, wherein the profits of the second and the third year have to be discounted based on the basic banking interest rates, the general enterperneurial risk yielding a factor F sligthly below 3, in this case F=2,7620. The overall formula for the value V of the practice is thus


In view of the typically long-term relations between patent attorneys and clients, the sustainability time for a patent practice could be set to a value higher than 3 years. However, for times beyond, say, 8 years, the discount factors (general enterpreneurial risk ... ) result in a very low weight in the overall sum such that factors F of more than 5 are unrealistic. For B, the salary of an employed patent attorney with some years of experience may be put in, i.e. something between 100kEUR and 120kEUR. However, I am not sure about this because I have never been employed.

Tuesday, 19 April 2011

Preconditions for Preliminary Injunctions Harnkatheterset

The Dusseldorf Upper District Court (OLG Düsseldorf, I-2 U 126/09 vom 29. April 2010 – Harnkatheterset) has compiled a catalogue of preconditions for granting preliminary junctions on patent infringements in a decision called "Harnkatheterset".

As a rule, a prelininary injunction can only be granted if both the infringement and the enforcibility of the patent are clear to such an extend that a revision of the ruling in a later main procedure can not be reasonably expected.

Doubts in the enforcibility do not lead to a rejection of the request for a preliminary injunction if the patent is actually not challenged or if an attack on the patent in suit can not be foreseen in a reliable way.

If the delay for filing an opposition has not yet expired or is not expiring in the near future, reasonable doubts may exist even if the defendant is not able to produce relevant citations challenging the patent provided that the possibility exists that such documents will be found in a search to be carried out before the expiry of the delay for filing oppositions.

If an action challenging the patent is pending, the burden of proof that the action will surely not be successful is shifted to the patentee.

The enforcibility may be assumed with a sufficient degree of certainty only if the patent has survived at least one opposition- or nullity procedure. A deviation from this rule is possible only under exceptional circumstances (see e.g. BGH "Olanzapin").

Tuesday, 12 April 2011

New Option to Challenge 2nd Instance Litigation Decisions in Germany

The German double-tracked system of litigation suits held at the lower and upper district courts on the one hand and a parallel nullity suit at the German Patent Court and the Federal Court of Justice (BGH) on the other hand is facing changes. The former practice of the district courts to stay the litigation procedure until the ruling in the nullity procedure has reached legal force is gradually superseded by an accelerated practice of deciding on the infringement without waiting for the ruling in the nullity suit in cases where the district court holds that the invalidation of the patent is improbable.

The 2nd instance decision in the litigation suit may be revised by the BGH only in exceptional cases where the Upper District Court has admitted such a revision, which should be done e.g. in cases interests of the general public beyond the individual case are affected. The decision not to admit a revision may be appealed within a term of one month and the grounds for the appeal have to be supplied within a term of two months from the date of notification of the decision.

The BGH has now decided in the case “Crimpwerkzeug III” (X ZR 193/03) that a ground for admitting the revision is given as soon as the BGH bases its decision in a nullity appeal procedure onto an interpretation of the claim deviating from the interpretation used by the upper district court in the judgement in a decisive point. Moreover, if this ground occurs after the expiry of the delay for filing the grounds for the appeal against the non-admission, it may be enforced by means of a request for restitutio in integrum.

In the case under dispute, the alleged infringer had been sentenced for infringing a patent against which a nullity suit was pending. The decision not to admit a revision was appealed at the BGH, who decided to stay this appeal procedure until the nullity suit, which was pending at the BGH likewise, was terminated. The Patent was upheld mainly by arguing that the point-like nature of “supporting points ... formed as thrust faces” was the clue to inventiveness, whereas the district court had held that the larger thrust faces of the allegedly infringing product could still be interpreted as “supporting points” despite of them clearly not being point-like.

According to the BGH, the impossibility to resolve such a discrepancy between the claim interpretations would lead to a loss of confidence into the jurisprudence as a whole and into the German double-tracked system in particular. This entails a sustainable effect of the decision on the interests of the general public beyond the individual case being sufficient for admitting the revision.

This new loop-hole may be opened by the underlying party in a 2nd instance litigation procedure with a co-pending nullity suit by filing an appeal against the decision not to admit the revision and to request the BGH to stay the appeal procedure until the termination of the nullity suit. Additional grounds focusing on discrepancies in the claim interpretation employed by the two courts may then be handed in later by requesting a restitutio in integrum.

A central revocation for European Patents at the EPO

In a panel discussion on the case-law of the EPO boards of appeal two weeks ago here in Munich, some poeple including Rudolf Teschemacher (former chairman of an EPO Board of Appeal) have noted that interestingly, experience has shown that the total number of appeals filed against granted patents decreases when the delay for filing oppositions is increased.

This somewhat counter-intuitive relation may be explained by the fact that the majority of oppositions is filed for precautionary reasons such that the longer the delay for filing the opposition, the bigger the fraction of cases where an appeal turns out to be unneccessary.

Looking at the German nullity procedure, there are practically no nullity suits filed as a "precautionary measure" but in almost every case there is a parallel infringement action pending. This may be due to the high costs of the nullity procedure on the one hand but also due to the lack of time pressure.

This means that a prolongation of the 9-months term for filing an opposition would reduce the total number of appeals and would concentrate the appeal procedure to cases of high economical importance.

Following this thought to the extreme would correspond to a prolongation of the delay for filing an opposition at the EPO up to 20 years from the filing date. The result would be a central revocation instance at the EPO realizing one of the two aims of the "European and EU Patent Court Agreement" project recently rejected by the European Court of Justice.

One of the interesting aspects of this idea is that the time limit for filing the opposition may be amended by the administrative council (Art. 33(1)a EPC) with a majority of three quarters (Art. 35(2) EPC) and thus in a very simple way.

Monday, 11 April 2011

Compulsory licenses and abusive behavior

The upper district court in Düsseldorf has published an interesting decision (I2 U 92/10) in preliminary injunction procedure. The defendant had argued that the patentee abused his position dominating the market such that a compulsory licence to the patent would have to be granted - with the consequence that the cease and desist claim of the patentee would not be enforcible by referring to the "Microsoft" judgement of the European Court.

However the Upper District Court holds that the "exceptional circumstances" required in EuGH, GRUR 2004, 524 Rdnr. 38 – IMS/Health.

The cummulative preconditions for a claim for compulsory license are
(1) the desired use of the patent is unavoidable in the sense that even major efforts do not lead to a real or realistic potential substitute for the invention,

(2) the party seeking for the license plans to offer new products or services not being offered by the owner of the protective right and which will potentially be requested by the customers,

(3) the refusal of the license is not justified by substantial reasons, and

(4) the refusal leads to an exclusion of any competition on a derived (neighboring) market.

As far as I know, nobody has ever been successful in turning the "Orange Book" caselaw into a succesful defense in a patent infringement procedure.

Friday, 8 April 2011

Are the EPO Boards of Appeal Independent Courts?

 Oliver Randl has found an interesting decision on K's law. It actually relates to the question whether or not the EPO's BoA are entitled to revoke a patent.

A petitioner requesting a review by the Enlargend BoA had argued that the Boards of appeal don not fulfill the requirements of an independent court. The same line of reasoning had led to the separation of the German Patent Court 20 years ago from the Patent Office (DPMA).

Although this argument appears to be very despearte at first sight, the argument is maybe not as absurd as it might seem given that the same argument was used in a discussion on the case law of the BoA by Robin Jacob LJ in Munich. However, Jacob questioned the EPO's procedural rules by referring to Article 32 TRIPS, saying "An opportunity for judicial review of any decision to revoke or forfeit a patent shall be available." This is not the case if the patent is revoked after an appeal against an unsuccessful opposition such that - surprisingly - the EPC is not consistent with TRIPS. This aspect was disregarded by both the ECJ and the EBoA in their decisions.
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Broad Claims BPatG "Buprenophinpflaster"

The claim at issue mentioned a chemical composition comprising, besides some active substances, a "solvent". In all the embodiments, the solvent was such that it contained at least one acidic group and the technical teaching indicated that the acidic group has a function while giving no inducation how other suitable solvents could be found.

The Bundespatentgericht ruled that the claim was too broad because the invention was generalized beyond the contribution of the invention to the prior art. The disclosure is not sufficient in terms of practicability if the skilled person has to apply the priciple of trial and error for finding suitable chemicals out of a unmanageable quanity of possible candidates. For the full text (in German), click here.
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