We are developing a series of events to help you navigate your way across the changing landscape of patent litigation in Europe.
13 Dec 2106 – Webinar: Unitary patents – Brexit update
Is your business ready?
On 28 November, the UK government revealed that it is proceeding with preparations to ratify the Unified Patent Court Agreement. This is great news and should mean that the unitary patent package will launch in 2017. However, it is not yet clear whether the UK will be able to participate in the longer term.
Pinsent Masons hosted a webinar discuss recent developments, the views of industry organisations and strategic issues to think about to ensure that your business is ready.
Our experts were joined by Tim Frain, Director, IP regulatory at Nokia who provided a tech and telecom industry insight on the UPC project, and gave an update on the position of key UK industry organisations like techUK. Chris Sharp provided an update on the position of the UK Life Sciences industry, Emmanuel Gouge spoke about the French perspective and Marc Holtorf covered the views of the German clients and industry associations.
You can watch a recording of the session here
29 Jul 2016 – Webinar: Brexit: the new EU IP Landscape
Pinsent Masons hosted a webinar about the impact of the UK’s vote to leave the European Union (‘Brexit’) on intellectual property – particularly the unitary patent system.
Our experts were joined by Douglas Alexander, former shadow Foreign Secretary and a senior fellow at Harvard University, who shared vital political insights on the viability of the unitary patent system project.
Adrian Murray spoke about IP portfolio reviews and new filing strategies. Emmanuel Gouge and Marc Holtorf discussed French and German perspectives respectively. Deborah Bould elaborated on what Brexit means for the unitary patent system and provided an update on the position of various industry organisations, the EPO and the UPC Preparatory Committee.
You can watch a recording of the session here
23 Feb 2016 – European Patent Law: Unitary Patent and Unified Patent Court
London: Pinsent Masons, 30 Crown Place, Earl Street, London EC2A 4ES, 17:30
Pinsent Masons hosted a mock preliminary injunction application under the new Unified Patent Court (UPC) rules in order to challenge current decision-making and provide unparalleled insight on how to engage with and prepare for the changing patent landscape ahead. Our mock UPC hearing was staged before a stellar panel of judges from the United Kingdom and France, two of the countries hosting the Central Division of the UPC. Our advocates were from the UK, France and Germany.
Introduction and scenario back story (video footage)
00:00 to 06:40
06:41 to 07:07
Opening remarks and case overview from the Presiding Judge (Mme Pezard)
07:08 to 10:17
Applicant’s submissions (BioTech City Ltd.)
– Merits (infringement and validity) – Tom Hinchliffe QC
10:18 to 18:45
– Balance of harm – Tom Hinchliffe QC
18:46 to 23:19
– Delay – Emmanuel Gougé
23:20 to 28:40
– Adequacy and form of security – Emmanuel Gougé
28:41 to 32:35
Defendant’s submissions (GreatGadget Ltd.)
– Merits (infringement and validity) – James Abrahams QC
32:36 to 40:44
– Balance of harm – James Abrahams QC
40:45 to 45:14
– Delay – Marc L. Holtorf
45:15 to 51:19
– Adequacy and form of security – Marc L. Holtorf
51:20 to 56:14
Applicant’s response: merits and balance of harm (Tom Hinchliffe QC)
56:15 to 59:55
Applicant’s response: delay and security (Emmanuel Gougé)
59:56 to 1:03:51
Defendant’s response (James Abrahams QC)
1:03:52 to 1:04:10
Judges adjourn to deliberate
1:04:11 to 1:04:24
Lead judgment (Mr Justice Arnold)
1:04:25 to 1:14:27
Dissenting judgment (Mme Pezard)
1:14:28 to 1:19:21
Deborah: Okay now we have prepared a video back story so that you can get into the scenario.
Two wearable digital health devices
Two dynamic competitors
One race to the market
Charlotte: Look I am sorry to start the meeting with bad news but our sales team have heard some rumours that there might be a new Vitamin D monitoring watch coming on to the market soon. It is called the [Vit D mon] by Great Gadget.
Clare: What the competitor of D Lite that is our most important product, our biggest seller. It has taken us years to develop at huge costs.
Charlotte: I know it looks like it.
Deborah: Wait a minute do we not have patent protection for that product?
Adrian: We absolutely do. The issue is we just need to make sure that we have got patents covering the functionality in the [Vit D mon] product. I will look into that and come back shortly.
Clare: Thanks Adrian. Charlotte can we find out some more about this [Vit D mon] product in particular when they are looking to launch it?
Charlotte: Yes, of course.
Clare: Is there any news from the lawyers on this D Lite patent?
Adrian: Yes, good news we have assessed the patent portfolio and we do have patent protection which covers the functionality we think of the [Vit D mon] device.
Clare: Good, so what are the next steps?
Adrian: Well we have been advised by our lawyers that what we need to do is write a letter to Great Gadget to put them on notice of the existence of our patent. However before we do that a second decision that we need to take is whether we opt the patent out of the UPC system.
Deborah: So, are there any costs involved with opting out our patent?
Adrian: Yes, there are but it is a meagre fee, it is only €80.
Deborah: We need to act quickly to try to prevent Great Gadget from launching its product across Europe which will obviously impact on D Lite sales and it make sense to keep our options open in relation to the UPC.
Clare: Absolutely we have to do all we can to protect our investments in D Lite and our market position.
: Two months later at GreatGadget HQ
Female: Next thing on the agenda is IP rights, Constance, can you please fill us in?
Constance: So I’m afraid that I do not have very good news; amongst the usual letters that we have received we have received one letter from Biotech City suggesting that they have a patent which might be relevant to the launch of [Vit D mon].
Female: Oh this is very bad and a complete news to me. [Vit D mon] is our most important product and we are just about to launch in March 2016 and I think in these moments are taking advance orders. What are our next steps?
Constance: Well that is right. When we were developing our product we reached out to a patent attorney and asked them to do a search of the existing patents which might be relevant to our product. Anna you have been liaising with the technical expert and the patent attorney. What did they say?
Anna: Well the technical team said that the [Vit D mon] nationality does not extend to actually quantifying the amount of Vitamin D in the users sweat it just measures whether it is below normal levels. So the patent is not relevant.
Constance: That is right but I also remember that the lawyers said at this point might be debatable depending on expert evidence.
Anna: True and I also spoke to our patent attorneys who said that we have challenged this patent at the EPO, the European Patent Office, on the basis that it should not been granted.
Female: So this is all in hand. What are the risks if Biotech City is right?
Anna: From what I understand Biotech City can ask the court to prevent us from launching the [Vit D mon] and/or claim damages for any losses they have suffered due to the competition.
Constance: I understand this means they can stop us from launching all across the Europe not just in the UK.
Female: This is very bad and it makes me very concerned. It is essential that the first and most important launch by the metic division is a success. What are we going to do about the letter?
Anna: The options the legal team suggested were first of all do nothing and see if they write to us again with more specifics as to why they think we infringe. Two we could file a protective letter at the court which I understand helps prevent Biotech City from stopping us noting before we have got a chance to be heard at the court. Or three start court proceedings now to validate the patent.
Female: Okay could you give me a little bit of your analysis what are the risks and benefits of each option? What are the costs?
My conclusion from what I have heard is that filing a protective letter is the best option then let us wait and see if Biotech City does anything or if they come back.
Constance: Yes I agree this seems to be the most cost effective option.
Anna: Great I will let the legal department know.
Meanwhile back at BioTech City
Charlotte: Sorry I am late everyone. It has been confirmed in the trade show that Great Gadget are planning to launch their product in quarter one next year and they are even taking advanced orders.
Clare: I thought they could not do that. What about our patent rights?
Adrian: Well we do have patent rights. We sent out a letter to Great Gadget to notify them about these but they have not responded yet. Charlotte can you get the sales team to send me details of the products and when they are planning to launch it so that we can forward it on to our lawyers.
Clare: Okay, but when can we expect an answer?
: Charlotte we need to keep the sales of D Lite up until these new products come on line it is our major product. Great Gadget should not be able to do this [we have got] patents. What price are they coming to market at? Do we know?
Charlotte: It is not certain yet, but the indication of the sales team it is going to be about 15% less than the D Lite.
Two days later
Clare: Right, where are we with the [Vit D mon] issue?
Adrian: The lawyers have now come back to us and suggested that if we want to stop the [Vit D mon] product coming into market in March we should initiate interim injunction proceedings against Great Gadget.
Deborah: Yes, I saw your e-mail on this and the lawyers and I really think we need to start proceedings.
Charlotte: I agree. We cannot afford to lose the D Lite market especially not at the moment. If we have to drop our prices to compete with Great Gadget we are going to really suffer in our margins.
Clare: Okay let us do it then. There is no point having a patent if we are not going to use it.
Back at Great Gadget HQ
Female : The court has sent us BioTech City’s application notice.
Constance: So, the protective letter worked then?
Anna: Yes, the court has given us an opportunity to put in submissions and has called us to a hearing.
Female : I still cannot believe that Biotech City sued us out of the blue. What are the next steps?
Anna: The hearing has been set for 23 February and I think we have got a tribunal of three judges; one from the UK, one from France and one from Germany.
Female : Okay thanks very much. Please let me know when you speak to our external legal advisor and please keep me very very closely involved. I want to be in the loop. I want to be on calls. This is a super important product for the company and it is going to be a disaster if we do not get to launch it.
To be continued live
: In the matter of Biotech City Limited and Great Gadget Limited.
Mme Pezard : Today is the hearing before the new European Patent Board. It is the first litigation before the London Section of this division. As many preliminary relief requests the matter is a pharmaceutical one. The Applicant, the UK company Biotech City Limited is the manufacturer of the D Lite the watch which boasts measuring of Vitamin D and the measure in each sweats and it is alleged the amount of UV radiation received by the wearer outside. The Defendant UK company Great Gadget Limited have developed a competitor product under the brand of [Vit D mon]. The Applicant of the litigated European patent through the EPO in Munich which covers Vitamin D measuring device commercialised since 2009. The patent will not expire until 6 September 2030. Pending resolution of an action for infringement under Article 62 of the Agreement on Unified Patent Court and Rules 209 and 211 of the Rules of Procedure. The Applicant requests that the court grant today an interim injunction prohibiting the Defendant from making or placing in the member states in the UPC any wearable device or quantifying the level of Vitamin D. The Court will grant or not will grant also another requiring the Defendant to deliver up to an address with any or all the wearable devices. The Defendant argues non‑infringement and invalidity of the European patent. At the end of the current hearing the court will appreciate according to the Rule of Proceeding 2011 the balance of the interest of the parties and will decide whether or not provisional measures. The court gives the floor to the Applicant. Please no more than 20 minutes. You have the floor now. Thank you.
Tom Hinchliffe QC: My Ladies and my Lord, I appear for the Applicant, Biotech City with Monsieur Gouge, Mr Abrahams Queens Counsel appears for Great Gadgets with his junior, Mr Holtorf. In the light of the concise summary of the facts you have just given my Lady, I will move straight onto the issues. We propose to deal with these under four headings. These are first the merits in terms of infringement and validity. Second the balance of harm. Third, delay and the relevance of the status quo and fourth the adequacy and the form of any security to be provided. I shall be addressing you on the first two of these topics and Mr Boujee will address you on the last two. So attending to the first, the merits, as you will be aware Article 62(4) and Rule 211(12) give you a discretion to consider various matters in coming to your conclusion as to whether to grant an injunction. Article 62(4) provides that the court may in respect of the measures referred to in paragraphs 1 and 3 – 1 being an injunction and 3 being the order for delivery up – require the Applicant to provide any reasonable evidence in order to satisfy itself with a sufficient degree of certainty that the Applicant is the right holder, that the Applicant’s rights are being infringed or that such infringement is imminent. Rule 211(2) which I shall take you to largely repeats the substance of Article 62(4) save for the adds in validity of the patent. Now in the light of that, that gives rise to two issues. Firstly what level of proof on the merits should a patentee in the position of Biotech City be required to satisfy you of at this stage and secondly is the requirement as far as validity concerned the same as the other issues given that it mentions only in the rules and not in the article of the UPC agreement itself. Now as for the first, we say that it is enough at this stage we show that there is a case, that our case of infringement has reasonable prospects of success. And by that I mean that our case on infringement is arguable and is not fanciful. Doubtless Mr Abrahams will try to persuade you that at this stage you should consider the merits on the balance of probabilities as you would at a full trial, but we say to do that now will turn applications for injunctions into mini trials that will be time consuming, wasteful and with the greatest respect, be prone for the court to come to the wrong answer. The reason why I make that last submission is because at trial you will be receiving evidence from experts who may well be subject to limited cross examination and you will be able to reach your conclusions on the basis of the evidence of those experts. You do not have that evidence before you today and you surely do not have the time to consider that evidence in as much detail as you would at trial, and therefore if you were to come to a conclusion on validity today, you inevitably would be doing so on the basis of only a partial picture. As for the second point, we say it is wrong for a patentee to have to prove the validity of his own patent. Patents are prima facie valid as patents have been granted by the UPO and they considered objections to it and you should consider it to be valid at this stage. However, if you are to consider the validity and take it into account in coming to a conclusion on the injunction, you should only do so if you can conclude that there is a high likelihood that the patent is invalid. We say that by analogy to the rules on stays of infringement actions for example Rule 37(4) which makes a stay of an infringement action mandatory only in circumstances where the court concludes there is a high likelihood that the patent is valid. We say that if you are going to take it into account at this stage that is the test to apply. Now turning to the facts and the various criteria that I have gone through, on ownership of course there is no dispute that my client is the owner of the patent. On infringement, infringement has not commenced yet, but it is imminent. It is not in dispute that the Defendant, Great Gadgets, is planning to launch in March this year. What the defendant takes is the point on infringements and for this purpose perhaps we can take the patents up that should be at tab 2 of your bundle and if you can turn to page 4 to the claims, and for present purpose we can consider just claim 1 which is to a wearable device for quantifying the level of Vitamin D in the user wherein the device comprises an electro-mechanical sensor. What Mr Abrahams says is that his device does not quantify the level of Vitamin D because it only says whether the level of Vitamin D in the user is above a particular threshold. That threshold is the recommended level based on the user’s gender, weight and height. He says because he does not report about the actual level, there is no quantification. In our submission this is a thoroughly bad point. In order to know whether the user’s sweat has a Vitamin D level that exceeds the recommended level for the wearer, the watch has to be able to work out how much Vitamin D there is in the user’s sweat. That is quantifying and that is all that is required from the claim. The fact that the watch does not report back the exact level to the user is neither here nor there, that is not a requirement of the claim. You can tell that the watch must be quantifying the level of Vitamin D because the same watch is able to deal with different thresholds for different users and we submit that the only way that it can do that is by quantifying the actual amount of Vitamin D in the sweat and comparing that to the threshold for that particular user. That infringement pertaining to validity, as we say we repeat our primary point that it is not appropriate that you hold a mini trial on validity at this stage, but let us look at their objection. Their objection is one of anticipation by publication of a prior poster which you can find in tab 3 of your bundle. Our point on this is simple, the poster discloses that there is a Vitamin D sensor in the watch, but there is no disclosure that the sensor is an electro chemical one as claim 1 requires. So there is simply a case of anticipation does not get off the ground. That then brings one to obviousness. Our submission on that is that obviousness will be a question for trial. Obviousness is a multi-factorial question that will require the court to consider all the relevant factors including how many people were trying to solve the problem that the patent addresses, how long it has been a problem for, the number of the possible ways that that problem could be solved, the effort in pursuing those avenues and an expectation of producing a successful product by pursuing any one of those avenues. As I have submitted earlier, the court will need to take into account the evidence of experts to come to that view and at this stage you are simply not in a position to do that. So on the merits we submit that your conclusion at the stage should be the infringement case is strong and that the patent is arguably valid and you cannot say that there is a high likelihood that it is invalid.
The Honourable Mr Justice Arnold: In relation to the advertisement you disclosed a sensor; do you accept that Great Gadget claims it discloses an electro chemical sensor?
Tom Hinchliffe QC: No we do not my Lord.
The Honourable Mr Justice Arnold: Can you clarify why not?
Tom Hinchliffe QC: Because the only disclosure is of a sensor. There is no written disclosure there my Lord of the nature of the sensor.
The Honourable Mr Justice Arnold: Alright.
Tom Hinchliffe QC: So turning now to the balance of harm as you will be very familiar, the court is required at this stage to consider the interest of the parties and in particular the balance of harm to both of them. For the court has to consider the harm to the Applicant if the injunction is wrongly refused and balance that with the harm to the Defendant if it is wrongly granted. The Defendant wants to write into the rules that the court can only take into account irreparable harm and to ignore any harm that can be compensated by money. In response to that submission, we say that that is simply not supported by the wording of the rules or the articles, both of which refer simply to harm and you can be sure that that was deliberate drafting by the draftsman of the rules and the agreement because irreparable harm is referred to, but only in the context of applications where the Defendant is not present. So it is harm in this case that you need to take into account. Looking at the harm…
The Honourable Mr Justice Arnold: Why are we concerned with harm that could be compensated for by an award of damages? You do not say that Great Gadget is not able to pay damages so surely it is the irreparable harm which matters.
Tom Hinchliffe QC: Well my Lord I am about to come on to say it does not really matter because I can show ample irreparable harm anyway but merely by looking at the wording of the rules and the articles the court is required to look at the harm and to balance the harm and even if the harm is substantial harm that might be able to be compensated for in damages that is still something you have to take into account. So looking at the harm for the Applicant first the Applicant is the only company with a wearable Vitamin D monitor on the market D Lite therefore they are by definition the market leader. It was launched in 2009 and in 2014 had sales of £20m. If it is flagship products and the Defendant sales will compete head‑on with it and inevitably will take sales away from us. We will have to compete with those sales and we will have to lower our price to compete. That in turn will inevitably prompt the Defendant to lower their prices leading to a downward price spiral and causing substantial loss to the Applicant. I doubt that Mr Abrahams will say that this is all perfectly quantifiable so there is no need for an injunction but I will give four responses to that: first the one I have made of harm and not just unquantifiable harm but in any event secondly even if the Applicant is successful at trial and the product is taken off the market we will not be able to raise our prices again because our customers will not tolerate that. Now the Defendant says that only undercuts us by 15% and it probably will not take much market share but in our submission that is unrealistic. 80% of our customers are in the healthcare profession and are keenly cost conscious. That 15% undercut is going to be very attractive to them. Thirdly the patent will not expire until 2030 and working out how the market would have developed and grown over the next 15 years will be almost impossible to do if you are trying to compare what happened as to what might have happened and finally the loss of revenue will also adversely affect Biotech City’s ability to develop new products and quantifying what might have happened if other products had come to the market would be impossible. In contrast the Defendant is in a very different position; their product is not on the market yet and has other products that they can sell. Mr Abrahams makes three points in his written objections and rather than dealing with those in turn now I will wait and see whether he persists with those and I will deal with them in a reply if he does. Finally from me clearing the way, further points is that the Defendant brought this harm insofar as they are going to suffer any on itself. They failed to take any steps to revoke the patent in advance of their launch, and worse still in September last year they were notified of the patent but chose to do nothing; no revocation, no declaration of non‑infringements, no attempt for work around, no engagement with [Vit D]. They just filed a protective letter and pressed on regardless. Now the Defendants, their experienced litigants, they are advised by experienced and sophisticated lawyers and they know that taking this approach they will be running the risk of an injunction. They have gone into this with their eyes wide open and that is something you should take into account when you come your decision on an injunction. So at this stage I am going to hand over to Mr Boujee to deal with the remaining issues.
Mr Gouge: My Lady my Lord further to my colleagues, one point on status quo, important issue since the product of the Defendant is not yet on the market so when we come to the assessment of the balance of harm this have to be taken into account because clearly here the harm to the Defendant is less when the product is not on the market than when the product is already on the market. This will certainly be a key point to be taken into account. Now on one aspect that is being raised by the Defendant which is likely delay or unreasonable delay and the way the Claimant is launching its claim. First element, the factual element, the chronology, you would probably remember from the documentation that in September 2015 there were only mere rumours about the infringement or about the product I should say. Mere rumours are not sufficient to be able for the Claimant to start a case. Nevertheless already in September 2015 the Claimant sends a warning letter to the Defendant and you probably heard from my colleague that there were no response from the Defendant, no response to this letter. In October 2015 the trade fair in Paris, what happened during the trade fair, for the first time the product was disclosed or showcased during the trade fair and the Claimant for the first time could have access to the product which means that it is only from that time that Biotech City could have a look at the product. It is only then that the company could analyse whether the product would fall within the scope of their patent. One will look at the chronology actually only as from November that the Claimant has an actual knowledge as to the possible scope of the infringement. So straight ahead the decision was taken to stop proceedings against the Defendant and that is where we came with the claim issued in January. So if there are any unreasonable delay the answer should be found also in the text because when you look at the agreements there is no such reference to unreasonable delay. It is only when you look at the rules and if you look closely at Rule 211 sub-paragraph 4 it reads indeed that the court shall have regard to any unreasonably delay in seeking provisional measures, fine, but what is unreasonable delay. We probably should have a look at also Union law since you that Union law should apply or at least that the agreement should be interpreted in light of Union law and here I refer to the enforcement directive, remedies shall be proportionate. Do we have here when we look at two months between the time the Claimant was informed and the time it issued proceedings is it proportionate and is it reasonable. Here I should say that application was filed before the launch of the product and the fact that the Defendant accepted orders is its own problem and it should not be the burden of the Claimant. Secondly application was filed some few weeks after the Claimant as I said was informed or certainty of the upcoming launch of the product and third again I repeat what was said clearly the Defendant decided to ignore the warning letter which obviously made it more complicated for the Claimant to find a solution and to investigate on the product. So here clearly there is no such thing as an unreasonable delay.
The Honourable Mr Justice Arnold: I understand your submission with regard to the application from interim injunction but what about your client’s failure to start proceedings on the merits. Of course under the rules it is not obligatory to start proceedings on the merits but if you want to get on with the case why have you not done so.
Mr Gouge: Well we will do so but as you have seen the time schedule in which we have issued proceedings have been very tight so this is something we as you know according to the rules and to the agreement we are able to do and we will do with certainty but there is no requirement for the validity of our claim to file at the same time or prior to the interim measures claim on the merit. So clearly this is indeed something we are working on.
Professor Gillian Davies: Excuse me can I ask you, you mentioned the enforcement directive, could you give me the exact reference.
Mr Gouge: Yes, the enforcement directive from 2004 which I will give to you.
The Honourable Mr Justice Arnold: It is Article 3.
Mr Gouge: Now on security, I have heard that the Defendant says that should a protective measure be granted it should be granted under the condition of security ordered by the court. First remark on this point is that security is a discretionary remedy where the Defendant is being heard and here we are in a situation where the Defendant is being heard as opposed to a situation where the Defendant would not be heard in which case indeed security would be compulsory. But we are not in this situation, we are in the situation here where the Court might grant such a measure but it is not compulsory. Article 16 of the agreement sub-paragraph 7 reads that measures may be subject to the lodging by the Applicant of adequate security or equivalent reference to ensure compensation for any prejudice suffered by the Defendant. If we combine that with the Rule 211 sub-paragraph 5 it is for the court to decide whether it should be by way of deposit or a bank warranty. Do we have here a natural or likely injury to be costed to the Defendant if a protective measure would be granted and would the Claimant be able to pay damages if damages were to be awarded to the Defendant. I think these are the two questions one has to answer and there is no such demonstration no such element put forward by the Defendant. First there is no evidence of actual or likely damage on the side of the Defendant.
The Honourable Mr Justice Arnold: Why not if they have been stopped from selling their product. Why on earth would they not suffer damage?
Mr Gouge: Because they are not on the market and you probably remember from the first element that were presented that their main business is not with this product their main business remains with other products. They say that they would be willing to enter that business but they are not yet on the market, the products are allegedly manufactured elsewhere in China, I have heard, and they are suppose to launch the products in the future but they are not yet on the market, they have not launched them. What we say here is that there is indeed no likely damage to be incurred by the Defendant.
Mme Pezard: Do you have research for this product in your opinion.
Mr Gouge: Research in the sense of?
Mme Pezard: Preparation and the market.
Mr Gouge: These are elements we have not seen on their side in their submissions and it is for them to bring elements in order to support their claim. It is not for us and I presume it is also not for the courts to bring these elements. It is for the Defendant to give this evidence. The second aspect is that the Applicant of sufficient funds in the event damages were to be awarded to the Defendant. What we say clearly is that there is no risk at all that the Claimant could not pay any damages that could likely be awarded by the court. You can just look at the cash amounts from 2014 2 million the same for 2015 and most likely an increase in the benefit for the year 2016. As a result there is no risk at all of any default in payment of any damages.
Mme Pezard: Thank you so much. No more than 20 minutes please.
James Abrahams QC: My Lady my Lord we are going to follow the same four headings that my learned friends adopted. I am going to address you on the merits both the correct approach and the issues of infringement and validity and secondly on the balance of harm under Article 62(2) and my friend Mr [Hausehoff] will address you on delay and on the question of security. On the question of merits the relevant rule is Rule 211(2) which is worth looking up. That refers to providing the court with a sufficient degree of certainty that the patent is valid and the right is being infringed and the question is what is sufficient for this purpose. Mr Hinchcliff submits that it is enough if his case on both these issues is arguable that means it is enough for him if he might just might win at trial and we say that is plainly not sufficient for the purpose of Rule 211. We say the Applicant must establish a case that is likely to succeed at trial on the balance of probabilities. The reason we say that is this; this court is an expert tribunal and well capable of coming to a view on the merits on this material. We contrast this with lets say the UK courts where traditionally decisions are based on oral evidence and on disclosure which has not been given here and that is why an interim stage the English courts are reticent about coming to a view on the merits for the purpose of an interim injunction.
The Honourable Mr Justice Arnold: Is this without the assistance of a technical judge? So how are we able to take a view on matters pertaining to technical questions?
James Abrahams QC: You do not have a technical judge but as I submit this court is an expert tribunal expert in dealing with technical matters of this sort an expert in patent law and well able to come to a decision on the merits of both validity and infringement on the material that you have been presented both by my learned friend and by myself. I was going to draw a contrast with Germany with a German infringement court it is not specialist patent tribunal and therefore it is understandable why prior to trial a general tribunal of that sort would not wish to come to a firm view on the merits. But in my submission none of the restraints that exist in Germany or the UK apply to your Ladyship and your Lordship and you should form a view on the available material.
Professor Gillian Davies: Why do you think that they especially included provisional measures in the new unitary patent system.
James Abrahams QC: Certain provisional measures are available.
Professor Gillian Davies: I mean according to what you say we can forget about provisional measures and you just go straight to trial.
James Abrahams QC: Well I do accept that unlike this application a normal provisional measures application will be brought on urgently and it should be open to the parties with a bit more time to produce additional material at trial. I am not asking this court to make a final decision that will be binding for all time but what I am saying is that you have enough material and enough expertise to come to a view to say is it likely that the Applicant is going to succeed at trial and if it is not likely that he is going to succeed at trial then in my submission that is not sufficient within Article 211. In any case I do say that it is clear what the result at trial is going to be and let’s move onto that now. Starting with infringement you will be shown in claim 1 which requires a device for the quantifying of a level of Vitamin D. That is described in the patent which is in tab 2 at the end of paragraph 11 and what that refers to at the end of paragraph 11 when describing the invention is that the subject’s actual and specific Vitamin D level could be measured and relayed to the subject. Now that is the ordinary meaning of the word quantifying and by describing the device of the invention in those terms the patent makes it clear that when it talks about quantifying its talking about both measuring and relaying to the user that quantity.
The Honourable Mr Justice Arnold: Is that not against you because one can understand the word quantifying is equivalent to the word measuring but there is nothing corresponding to and relayed in the claim.
James Abrahams QC: Measuring means simply measuring ie taking a measure, if you measuring a distance you put a ruler down. Quantifying means telling somebody the quantity and measuring plus relaying equals quantification and quantification is not merely the measuring it is the measuring plus the relaying to the user because then you quantify for a user. That is on claim 1, on claim 4 which is also asserted against us that is dependent on claim 1 and so there is no question of infringement of that claim either. Now for the purpose of validity I will focus on the narrowest claim asserted against my client which is claim 4 and for this we need to start with the patent which you have got, and what that says at paragraph 6 is it talks about historical methods of measuring Vitamin D and says that the current practices continue to use certain levels as a level of efficiency and it says the test is in a ELISA blood test carried out by a trained technician. ELISA stands for enzyme linked amino immunosorbent assay so what paragraph 6 is acknowledging is that enzyme based measuring of Vitamin D is not just known but it is common general knowledge it is the standard way of doing it. Now paragraph 11 which we have looked at presents the invention as being wearability. There is no suggestion here that the use of an enzyme is in any way clever or inventive it is the fact that you have got a wearable device and this is expressly confirmed in paragraph 15 which says that the electrochemical sensor employed in the device may take any form provided it is capable of quantifying the Vitamin D levels and implicitly what matters is wearability. So with that in mind if you turn to tab 3 of your bundle and look at the prior art document; this is clearly an advertisement for a wearable device there is no doubt about that and it clearly says that it has senses for Vitamin D as well as UVA and UVB. Now we know this court knows from paragraph 6 that the standard known way of detecting Vitamin D at the priority date was to use an enzyme sensor so that follows that it would be completely obvious for somebody who saw this document who wanted to reproduce what it show in this document to make a wearable device as shown for measuring Vitamin D and for using an enzyme sensor which would be the completely standard method and so for those reasons it is quite clear that claim 4 is obvious you have all the evidence.
The Honourable Mr Justice Arnold: You have skipped an element, which is the electrochemical sensor because Claim 4 is an electrochemical sensor with an enzyme.
James Abrahams QC: Indeed. But a sensor has to have…there has been no suggestion that there is any other type of sensor that could possibly work with or without enzymes for that matter other than an electrochemical sensor. So this is not a case where there are any other possibilities that might be more obvious or even obvious at all. The only possibility that we have any evidence of the skilled person knowing about is an electrochemical sensor involving an enzyme. So we say for those reasons or the merits the patentee is likely to fail on both validity and infringement and that is why we say there is not sufficient evidence for the purpose of Rule 211/2. I was now going to move onto the question of the balance of harm and for this we are looking at Rule 211/3 and I want to make three points on the correct approach to Rule 211/3. Firstly and I think Mr Holtorf and I agree on this, the aim is to consider which course of action granting an injunction or withholding an injunction carries the lowest risk of injustice. Second point is when balancing the harms we say you obviously take into account the possibility of compensation either to the patentee by way of damages or to the Defendant under Article 60 sub 9. Those provisions are an integral part of the UPC system and you do not just simply ignore them when applying Rule 211(3). Third point is this, the easiest way for this Court to avoid injustice is to get the decision right in the first place by which I mean not granting an injunction that later turns out should have been granted or not withholding an injunction in the case that the patent is valid and infringed. As I have already submitted this Court has no reason to be reticent about coming to a view on the merits. So we say that regardless of the first question I have addressed to you on sufficient evidence, the merit should be the first factor and a very important factor in weighing up the balance on harm and because on both validity and infringement the patentee’s case is weak the best chance of avoiding injustice in this case is to withhold an injunction. Harm to the patentee. There is no good evidence that there will be any long-term affect on the patentee’s business if it wins a trial and gets an injunction then. At that stage it will have the monopoly on wearable Vitamin D detectors and it can put its price back up and it will have the market power to be able to do so. Any sales that had been lost in the interim can be easily calculated and patent courts all over Europe are very well accustomed to calculating lost profits caused by patent infringement and also by price depression if that can be proved and it can be easily done here. Harm to the Defendant my clients. In our objection documents paragraph 16 to 18 we were around three points. First if we injuncted we will lose the first move for advantage of being the first company on the market with a product of this sort. Second there will be serious damage to my client’s reputation by being injuncted and therefore unable to fulfil orders that have already been placed and that point has been exacerbated by the patentee’s delay. Third there will be the loss of an income stream which will have serious financial impact on my client and on its employees who face the catastrophe of redundancy. None of these matters can possibly be compensated by money they go to the very heart of my client’s business and threaten his long-term future in a way that a cheque written long after the event cannot make up for.
The Honourable Mr Justice Arnold: What do you say about the point that this is a new product for your clients and your clients’ major businesses elsewhere.
James Abrahams QC: Well we have given evidence in paragraph 8. We refer to the evidence in paragraph 18 of the objection which gives you the figures. The lack of redundancy is likely to result in redundancies in that particular division and further development of products in that division. The fact that my client has other employees in other divisions that will not be affected does not mean that these affects will not be real on real human beings. Finally, clearing the way. Now clearing the way is practicable in a pharmaceutical case where there is only ever one or a handful of patents to consider. It is not at all practical in electronics cases where it is widely recognised that high tech businesses such as my client’s face a thicket of patent that they have to negotiate through and it is just totally unrealistic to expect us to clear all these out of the way. My clients received a large number of letters about various patents and had no way of telling that it would be this particular patent which would actually be asserted. This Court is meant to be a Court for European business but the rule or principle that require businesses to clear patents out of the way in a field like electronics would bring many EU industries such as telecoms to an absolute standstill and should not be applied in a case such as this. That is what I wanted to say about the balance of harm. I am going to ask Mr Holtorf to deal with delay and security.
Mr Holtorf: Your honours indeed I want to address two points. The question of the lack of urgency and the question of the security. Let us start with the lack of urgency. The Applicant very cleverly always refers to unreasonable delay but we are in an interim injunction proceeding, in a fast track proceeding for this is not whether the Applicant acted unreasonably slow. The question is whether they acted sufficiently fast. You will find this concept also later on in Article 209 paragraph 2 letter B of the Rules and Procedure. Now let us have a look how to address the urgency requirement. Is this a separate requirement that needs to be fulfilled independently of other requirements or is this just one ingredient in a soup and if you do not like the soup because it is too salty you might put some sugar inside to make it more sweet. I could also ask the question can the lack of urgency be outweighed by other factors. Now let us be fair here. Neither the agreement nor the rules really answer that question. So we have to look at other concepts and other indications. I ask the question what is the urgency requirement. In essence it is a procedural requirement.
Procedural requirements generally cannot be outweighed by other factors. I just give one example. If a court says it is locally not competent then it cannot render an injunction even though it might think the case as such is fine. This is exactly the same concept that applies to the lack of urgency also. Now there is one other idea that I want to introduce. Where does this concept of urgency come from. Basically this is a continental European concept and even more precise it is more or less being developed in Germany. The German courts also say if there is a lack of urgency we cannot render an injunction. From both considerations one has to say this is not one ingredient in a soup, this is a separate independent requirement.
The Honourable Mr Justice Arnold: It might be suggested that that is simply illogical because urgency must depend upon the factual context and in particular the relative harms that the parties are suffering. Suppose you have a case where the Defendant has announced a year in advance that they are going to be launching and there is a delay of one month. In those circumstances the delay simply has no affect at all. So why should the Claimant be out of court.
Mr Holtorf: I will come to this exactly now my lord because the question is what does urgency then actually mean. An urgency obviously first of all has a timing element. Now let us go back to the facts. The Applicant obviously became aware of a potential infringement already prior to sending the letter in September. Then they sent a letter in September. This letter has been addressed now as a warning letter but it was not a warning letter, it was just simply a letter saying, hello we have a patent. But if nothing had been requested and more important in connection with urgency, no deadline for response has been set.
The Honourable Mr Justice Arnold: That is actually no excuse for not responding at all.
Mr Holtorf: Because the letter only requires a response. The letter only said we have a patent. Okay, it did not claim anything. Then they definitely became aware that according to the Applicant’s view there is an infringement in October. So we are now talking about a good deal of October, we are talking about November, we are talking about December and we are talking about a good deal of January. So we are not talking about two months but we are talking about four months or three and a half. A long period as such and one might even have the conclusion that even the timing element is sufficient to say there is a lack of urgency but there is more as I just said what happened in this time and the answer to that is basically nothing. The time just passed the time just passed and they kept going on to do nothing. This is not the concept of a fast track proceeding. Actually I would even go further and this is to my view the whole story of this case. The Applicant is in essence a one product company and they will do anything to defend their one product whether it is legitimate or illegitimate and what they did here is they waited exactly until they can do the maximum harm to the market introduction of the Defendant’s product to the reputation of the Defendant and to the Defendant’s business. This is not only not urgent this is an abuse of this proceeding. Now let me go to the second aspect I wanted to address, the security question. Obviously only if the court has the view despite everything that has been said now that it considers granting the injunction we need to address this question. Article 60 paragraph 7 of the agreement and Rule 211 paragraph 5 in essence say that the Court has a lot of discretion in deciding whether it want to grant a security and also regarding the amount of the security. Now let us have a look at the hypothetical scenario in the future. If the injunction would be granted and later not upheld what would be the business situation then of the Applicant. Well the Applicant would face a lot of competition from actually then at that point the Defendant but also as we know from the facts of the case from other competitors who are ready to launch their product in about six months time. Now if we look at the current financial situation of the Applicant we see that it has a very small profit margin and it does not have a lot of cash or money actually even in a situation where there is absolutely no competition. So if we then go back to our hypothetical scenario where we have a lot of competition all of a sudden the question is how could they even pay damages that they would have to pay in this scenario and I think the question is pretty obvious they cannot do that. They cannot do that even now it would be quite difficult but with competition it would be practically impossible for them and this is exactly why in the scenario we discussed a security the injunction can only be rendered if at all then with a security on it and also we request that the security should be a cash payment rather than a bank guarantee as there are a lot of insecurities concerned with bank guarantees as we all know. Looking finally at the question of the amount of the security we leave the amount to the discretion of the court but nevertheless I want to address a few points with regards to the determination of the amount. The first thing is that the law and I quoted the provision already says that the security is only about the damages of the Defendant. So it is not whether the Applicant has big pockets or small pockets we are only talking about the damages that the Defendant suffered in that scenario. Secondly you heard already from my colleague and this is a very important point. That we will lose if the injunction is granted the benefit of being the first competitor. We know and this is well known from other industry for example the generic industry that loosing that advantage cannot be compensated. Whatever we will do we will most likely not be in a position to regain this first mover advantage. So this means in essence we will suffer from this injunction forever and this certainly needs to be taken into consideration when the amount of the security is stipulated. And finally I want to have a look at the market we are in. This is basically a market that is exploding currently and we are specifically addressing the wellbeing part of that where no prescription or anything like that is needed and consumers day by day take more of these products. What does this mean? This means that we are not only suffering damages based on a hypothetical sale that we would gain on the current market but the market is even getting bigger which even makes our damages bigger and this aspect also needs to be addressed when a security would be stipulated. Thank you very much.
Mme Pezard: Thank you. Would you like five minutes?
Tom Hinchliffe QC: My Lady, yes we all have other places to go. Briefly on the merits and the relevant tests to be applied Mr Abrahams flatters you. He says you are all scientific you do not need evidence you can just decide this but as my Lord as Justice Arnold noticed there is no technical judge here today. You have no proper evidence or expert evidence to decide the issues and if this court is going to go down the routes of having a mini trail for preliminary relief as well as a trial at the end of the day. The system is going to get bogged down. Every case is going to have to have two trials it is going to take up valuable court time, the system will slow down and that is not good for business in Europe. Now turning to infringements two points on that. Firstly as my Lord said Mr Abraham’s has pointed out relaying the information back to the user is not something that could be found in the claim but in any event we do make the point that even a watch such as his which says to the user whether they are above a certain level or not it is still quantifying the amount of Vitamin D in the user’s sweat saying there is more than 20 nano mills per litre is still quantifying the amounts of Vitamin D. There is no limitation in the claim that they have to be precisely quantified down to a certain level. As far as validity is concerned I note that Mr Abrahams has now abandoned his case on the dissipation and we are down to obviousness and on that after you have my submissions as to the difficulty in deciding that at this stage. On a balance of harm, firstly dealing with his points. Firstly he says he will lose his first mover advantage and as for that we will note that there is very little evidence as to what is going on but even if it is correct this court is experienced in working out damages and the court can look at comparative situations where previous pull up launches has occurred where the new products is the sole competitor with the established one as compared to when it is one of many entering the market and that is all perfectly doable. As far as his point about prejudice for his reputation has his products have been taken off the market. Of course it will be clear that the product had been taken off the market by reason of an order discord and not by anything that he has done. So it is difficult to see why they will suffer any prejudice or any reputational damage to themselves caused by that. His point about employees being laid off, of course as my Lord noted he… this is one of many products they have and his objections are quite closely drafted and then when you are looking at those in detail he is looking at the issue within each the division of his client’s company. What there is no evidence of is money will not be able to be moved between departments to keep the whole business running and finally on clearing the way he says well this is one of those industries where there is a thicket of patents. They get a lot of letters and how were they to know that this is a patent that was relevant? Well he is hoping to sell a wearable Vitamin D monitor this patent covers a wearable Vitamin D monitor. Any search would have found this and when you see this and it is obviously relevant to his product. So we just do not understand how he can say that that was the… failure to reply and failure to take action is somehow excusable. Unless I can help you further I will hand over to Mr Gouge.
Mr Gouge: Briefly on the aspect of urgency and very briefly security. I think what I heard on delay versus urgency I was a bit puzzled because the lack of urgency is not really the issue here. Indeed when you look at the rules and at Rule 2009 2B. The court shall in particular take into account the urgency of the action, that is one thing. But at the same time it is very clear that the issue, if you look at 211, which is the order on the application for reasonable measures, 211 refers to regard to any unreasonable delay. However we should look at, I think we have to be again refer to Article 42 of the Agreement, proportionality and fairness, what do we have here. We have a factual situation which is very clear. We have a responsible company which has indication as to rumours then investigates, then send letters straight ahead whereby the Defendant does not dare take into account that letter. Does not respond. Does refer to continue to put the product into display during a trade fair. Takes orders, despite the letter before action or whatever you call it. It is not a letter for fun. It was a clear letter sent to them. When we listen to the Defendant we have the impression that it is not important. So what does it mean. Does it mean that there is a patent, they know about the patent, they receive a letter and despite of this they would be able to continue without being responsible, without being liable for these actions. They the Defendant should be liable for what they have done. They knew about the situation, they took a decision, it is a business decision, they should be liable for this. In relation to delay, again, I think we have yet to be very practical. When you look at the element you realise that it is not so much in September or October. It was only in November that the Claimant could understand precisely what the situation was, straight ahead took a decision, prepared the submissions and filed the submissions in January. That is for the issue on delay and timing. The second one on security, I will not come back to all the factual and figures which you found in our submissions. I think that the important element is the fact the here again Article 42 as to proportionality and fairness, it would not be fair if you decided to order a security. It would not be fair to order deposits.
The Honourable Mr Justice Arnold: You say it is not fair, but why not. I see that if we grant an injunction you will be seeking an order that we impose a requirement for periodical payments in the event of breach. Why is not sauce for the goose sauce for the gander, to use an English colloquialism?
Mr Gouge: That is because whether you have got an order for a deposit or whether you come with a bank warranty, the benefit, because we are talking here about giving an assurance to the Defendant, the effects will be the same or the benefit would be the same for the Defendant. Whereas on the other side for the Claimant, the cost would certainly not be the same and the cash as such would not be available in you put it in a deposit whereas if you order a bank warranty where obviously the mechanisms is different. In that respect proportionality should be taken into account by solving this issue.
James Abrahams QC: We can see you are not buying what they say so we will not take up anymore of your valuable time with anymore submissions.
The Honourable Mr Justice Arnold: Don’t pre judge the tribunal.
: The judges return
The Honourable Mr Justice Arnold: So, under Rule 2010 of the Rules and Procedures of the Court deems it appropriate to give its decision or at least prior to providing its decision in writing. The Court is split and I will deliver the majority verdict myself and Profession Davides.
So far as the four headings are concerned we are dealing first of all with the question of merits. What the Rules require, specifically Rule 211, is a sufficient degree of certainty, that the Applicant is entitled to commence proceedings, the patentee question is valid and that his right is being infringed or such infringement is imminent. What amounts to sufficient degree of certainty would depends on the facts of the case. Certainly it seems to us that this is his well argument that it requires something more than a series issued and tried. Whether it necessarily requires a likelihood of success based on present evidence, is more debatable. But in the present case it seems to us that the question is very largely academic for the following reasons: On the issue of infringement the majority takes the view that the patentee has much the better of the argument as to the construction of the claim. The claim requires quantification but it seems to us to be clear that the Defendant’s device does quantify the amount of Vitamin D. It does not display the actual amount of vitamin D, it merely displays a result in terms of whether a threshold is being crossed. But it seems to us that that falls within quantification on the true construction within the claim, at least as matters presently stand with the [benefit] of the evidence margins thus far. So as I say on infringement we consider that the patentee has much the better of the argument. Turning to validity it seems to us that the position is as follows: firstly the patent is presumed to be valid until shown otherwise. The burden is upon the Defendant to show that the patent is invalid. Now at this stage we are sitting without the benefit of a technical judge and without the benefit of expert evidence. We are not therefore in a position to take concluding view particularly given that the Defendant’s argument is one of obviousness. Even if, which wasn’t pressed, there was an argument of lack of novelty of claim 1, clearly so far as claim 4 is concerned, the only argument available to the Defendant is one of obviousness and in order to knock down claim 4 the Defendant has to cross two steps from the prior art which is showing that the skilled person would think it obvious, firstly to implement the device shown in tab 3 by means of an electrochemical sensor. Then to do so by means of an electrical sensor with an enzyme. Now it may be that at trial the Defendant would succeed in showing that is obvious, but at present that is not being shown. Therefore, we are sufficiently certain for present purposes the patent is valid to proceed onto to consider the balance of harms. So far as the balance of harms is concerned it seems to us that the harm to the patentee if an injunction is refused at this stage is considerable the harm to the patentee arises firstly out of the fact that it is very largely a one product company. Secondly because 80% of its market goes to healthcare professionals and under no circumstances we think that it is entirely credible that if the patentee is forced to cut its prices by the entry of the competing product from the Defendant that it will be difficult for the patentee to raise its prices. Moreover it is very difficult to predict at this stage to what extent there is going to be a price spiral and to what extent the first mover as the Defendant itself proclaims itself to be is going to be followed by the time we get to trial by other competitors in this market place and of course if that happens then the price spiral will be all the greater. In those circumstances it seems to us that the patentee is going to suffer harm if there is no injunction which is going to be difficult to compensate by an award of damages. Turning to the Defendant’s position, the Defendant has a product which is not yet on the market. Therefore, the Defendant has no track record of sales and that we accept makes quantification of its losses difficult as well, but when one ways up the balance of those harms, we agree with Counsel the question ultimately to be addressed is what is going to cause the lowest risk of injustice. And it seems to us that the balance of harms on the contrasting hypothesis, favours the patentee because of it being a one product company which is established in the market. Whereas the defendant is a multi-product company which is only just coming into this marketplace and has not yet actually got its products into the market although that is imminent. A further factor to be taken into account, clearly is the question of delay and that factors into the correct assessment of the status quo. So far as delay is concerned, the majority takes the view that the patentee has been guilty of some degree of delay. It would be have been preferable if the patentee had moved more quickly to issue its application for an interim injunction. And also more quickly to start its proceedings on the merits, but we do not take the view that the delay is unreasonable. In the first place, one has to take into account the fact that the patentee did send a letter of notification in September and the Defendant quite simply ignored that. And in those circumstances it seems to us that to some extent the Defendant has itself to blame. Also and perhaps more importantly, from the perspective of whether the delay is unreasonable, it has not really had any significant impact because we agree with the patentee that it could not really do anything prior to getting solid evidence of infringement of the trade fair in late October. By that point, the Defendant was already taking orders for the launch in March, but the patentee has been able to get this application on before the court prior to those products being delivered. Therefore, although there has been a degree of delay, it has not really prejudiced the Defendant’s position and therefore we do not consider the delay to be unreasonable. Another way of looking at it, is to say that it has not really altered the status quo. The status quo remains that as yet, the Defendant is not on the market. And we take the view that in considering whether to grant an interim injunction, preservation of the status quo is clearly a factor that it is important to take into account. So, we consider that the factors of delay and status quo, reinforce the conclusion that we arrive at with regard to the assessment of the balance of harm, that then leaves the question of security. So, far as the question of security is concerned, it seems to us that both sides ought to have the comfort of ensuring that their respective positions are protected. In the case of the patentee, we are going to be protecting its position by granting an interim inunction with a sanction of payment of a recurring sum in the event of breach by the Defendant. And to protect the Defendant, we think it is right that the patentee should provide some security. We consider that it would be sufficient for it to do so by way of bank guarantee. Finally, that leaves just one matter which was not touched on in argument, but was dealt with in the written submissions, which is the question delivery up as to that we think the Defendant is plainly correct that there can be no question of delivery up given that it does not have products within the territory of the UPC at present and therefore the order will simply be for interim injunction until judgement following trial.
Mme Pezard: Thank you very much. It is more difficult for me because in English it is not so easy, but I am sorry, I apologise for my wrong English. Under French law, we discuss also about French law, even if the UPC it will of course it will be proceedings which are a mix of German, English and French law, but every judge has some sensibility to judge. And in this exercise we have two way of thinking. And just until now in French law for preliminary injunction, it is very rare that is true that the case law is a little in favour of preliminary injunction, but it takes since two or three years especially about medicine that is true, but is still a few rulings. It is the reason why in this case, I think if we were under French law, the order will not be counted, that I am sure. Not in UPC because in UPC we will be three judges and as you know I am member of the UPC committee and the responsibility of this committee is in favour of injunction. And the reason why I joined my colleagues, but now just dissenting opinion for explaining the French responsibility until now. And why, two grounds in this case. The applicant has not enough provide reasonable evidence that his right has been infringed. And it is slightly that function is different. Maybe under merits, it will be not demonstrated that the functions are different, but in preliminary injunction, there is lackness of two functions, the measure and the quantification. If the Applicant demonstrates that it is exactly the same thing, we consider that there is an infringement, but demonstration is insufficient in preliminary litigation, that is the first point. The second point concerns the validity of the patent and also in preliminary injunction, the validity of the patent in this litigation is seriously challenged. Of course, there is the presumption of validity of the patent. The IPO patent is respected, but it is a presumption of validity and there is also a litigation before the opposition chamber. And the reason why, there is a challenge against this patent, that from IPO point of view and we regard that of course in our French courts, but also it specifically French, we are very attentive to the prior art. And in this case, I think, but there is very very different case law in different countries and also countries in member states which are not present here. It seems to me that to skill man could have find invention from the prior art when I read the description of the patent, it seems to me that very skilled man maybe, but the invention could be deduced from this prior art. It is the reason why there are two reasons to have for this dissenting opinion. Thank you.
The judges presiding over our court were:
The Honourable Mr Justice Arnold, Judge in Charge of the Patents Court of England and Wales
Mme Pezard, member of the UPC Rules of Procedure drafting committee and former Judge of the French Supreme Court of Judicature
Professor Gillian Davies, former chairman of a Technical Board of Appeal and permanent member of the Enlarged Board of Appeal at the European Patent Office (EPO)
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Questions & Answers from the Event
The following questions were raised by audience members during the UPC mock hearing. We did not have time at the event to put all of your questions to the panel of judges. We have provided our answers to your questions below. Please note that the answers are from Pinsent Masons, unless indicated otherwise.
In the context of the European landscape, the doctrine of “clearing the way” is unique to English pharmaceutical patent litigation. The concept was first introduced over 10 years ago and it places an onus on a company intending to launch, for example a potentially infringing generic or biosimilar product, to inform a patentee of its commercial intentions and, if necessary, take steps to “clear the way” of any relevant patents by seeking a declaration of non-infringement and/or revocation of the patent. It is not a legal principle but one factor to be considered, among other relevant factors, when the court is assessing whether to grant a preliminary injunction. It is generally not a factor considered by the national courts of the other European Union member states when deciding whether to grant a preliminary injunction.
In terms of the UPC, the doctrine of “clearing the way” does not feature within the Agreement on a Unified Patent Court, or the 18th draft of the UPC Rules of Procedure (now adopted by the UPC Preparatory Committee, subject to “legal scrubbing” in relation to the rules on court fees and recoverable costs). Applying the UPC legislation, when hearing applications for preliminary injunctions the court need only (i) weigh up the interests of the parties (including considering the potential for harm); (ii) satisfy itself with a sufficient degree of certainty that the patent is valid and infringed; and (iii) consider whether there has been any unreasonable delay by the applicant.
That being said, although there is no requirement for the UPC to consider whether the defendant has taken steps to “clear the way”, the UPC judges will have broad discretion when deciding whether to grant a preliminary injunction. Consideration of whether the defendant has “cleared the way” could be taken into account in assessing the balance of interests. Where judges from the UK constitute the majority on the UPC panel – for example, when an application for a preliminary injunction is heard in the UK Local Division of the UPC – the extent to which the defendant has cleared the way may be one factor considered by the court in assessing the balance.
As is the case in the UK court system (which is governed by the Civil Procedure Rules 1998 (as amended)), the UPC will have wide case management powers under the UPC Rules of Procedure, including the ability to make a wide range of orders of its own volition. These case management powers stem from Article 43 of the UPC Agreement, which states that the court shall “actively manage cases before it in accordance with the Rules of Procedure”, and such powers can be expected to be used by the court to deal with, amongst other things, an abuse of process.
Chapter 8 of Part 5 of the Rules of Procedure sets out the case management responsibilities of the UPC, together with a list of the court’s case management powers (listed in Rule 334). These powers include, for example, the ability of the court to “dismiss or decide on a claim after a decision on a preliminary issue makes a decision on further issues irrelevant to the outcome of the action”, and the ability to exclude an issue from consideration.
These specific case management powers are bolstered by Rule 9, which sets out the overriding powers of the court, including that it may order a party to “take any step, answer any question or provide any clarification or evidence”. It may also disregard any step, fact, evidence or argument which a party has not submitted in accordance with a relevant time limit.
Additionally, Rule 19 sets out the procedure for a defendant to raise a preliminary objection concerning the jurisdiction and competence of the court, the competence of the division in which the claim is issued and/or the language of the claim, within one month of service of a claim. After the claimant has been given the opportunity to respond, the court shall decide the preliminary objection and determine the next steps in the proceedings.
In our mock hearing, the court granted the applicant a preliminary injunction even though the applicant had not issued proceedings on the merits in advance of its application.
In the UPC there will be no requirement for a claimant to issue proceedings on the merits ahead of (or immediately after) issuing its application for a preliminary injunction. However, Rule 213 of the Rules of Procedure provides that the court shall revoke provisional measures – at the defendant’s request – if the applicant does not start proceedings on the merits before the UPC within a period not exceeding 31 calendar days or 20 working days (whichever is the longer) from the date specified in the court’s order granting provisional measures. Therefore, an applicant can choose to wait up to a month before issuing its substantive claim.
Although there is no obligation on the claimant to issue its claim on the merits, as was seen from the mock UPC hearing, when determining an application for a preliminary injunction the court has a discretion to consider the merits of the case (issues of validity and infringement of the patent). If it does so, this will take place in the context of a wider deliberation, including consideration of the balance of interest and any unreasonable delay. Therefore, there may be strategic advantages, where a claimant’s or defendant’s case is strong, in having issued proceedings in advance of the application (see also answers to questions 6 and 9 below discussing the need for a technical judge). The opportunity to review the pleadings before making a decision on an application for an injunction may assist the court in determining the case for infringement and/or validity of the patent. Proceedings in the UPC are “front loaded” meaning that, in infringement actions (for example), statements of claim must set out the allegations of infringement in detail, including an indication of one or more instances of infringement and the patent claims alleged to be infringed. Such material may be useful for the UPC panel in the context of a preliminary injunction application. Beyond that, some judges, depending on existing procedures under their national court rules, may consider the fact that the claimant has got on with issuing a claim on the merits in weighing up the interests of the parties.
The UPC is underpinned by a comprehensive body of legislation (the UPC Agreement and the Rules of Procedure) which all judges must apply, and judges will no doubt strive to achieve a consistent approach in doing so. However, there is a possibility of inconsistent judgments or application of the legislation, at least in the early days of the UPC. However objective in their approach to the rules, each judge will bring their years of experience gained from working within their own national systems, which learning cannot be “undone”. The possibility for inconsistent application of the rules may be higher in areas where the UPC judges are given some discretion including, for example, in applications for preliminary injunctions.
Of course it is difficult to predict how the judges from each national jurisdiction will approach cases in the UPC; there certainly will not be a “one size fits all” approach, at least in the first months, even years, of the new court. However, as the UPC develops it own case law (particularly following referrals to the Court of Appeal), the risk of inconsistencies throughout different UPC Divisions should abate.
Under the legal system in England and Wales, when considering an application for a preliminary injunction, the court will apply the principles established in the case of American Cyanamid ( R.P.C. 513). Applying such principles, it is not necessary for the claimant to fully establish its case on infringement and validity of the patent; the court need only consider whether there is a serious issue to be tried. Providing that there is a serious issue to be tried, the UK court would then consider the adequacy of damages to either party, if the injunction was or was not granted. If the UK court considered that damages may not provide an adequate remedy for the claimant, it would consider whether, if the defendant were to succeed at trial, it would be adequately compensated under the ‘cross-undertaking as to damages’ which the claimant would have to give. If there was doubt as to the adequacy of the respective remedies in damages, the court would assess where the ‘balance of convenience’ lies. An important factor here is that if there has been ‘unjustifiable delay’ in bringing a claim for a preliminary injunction, the UK court would be very unlikely to grant the injunction, particularly where the delay results in a change to the status quo.
These principles are, to a certain extent, mirrored in the UPC Agreement and Rules of Procedure, although there are some differences (see our article here for more information). In our view it is unlikely that the court’s decisions at the mock hearing would have differed in the Patents Court in England and Wales.
In his leading judgment Mr Justice Arnold indicated that, although there is no obligation on the UPC to consider the merits of the substantive case in the context of an preliminary injunction application, the panel’s ability to do so was limited in any event by the fact that it was sitting without the benefit of a technical judge (and without the benefit of expert evidence). This was particularly the case where the defendant had raised arguments of obviousness, as in the mock hearing.
From this, we can surmise that if a technical judge were present this may have resulted in the mock UPC panel considering issues of validity and infringement in more detail or placing more weight on those issues in its assessment. In the mock case, that could have benefited the defendant, who raised credible arguments on these issues. That being said, it is very unlikely that the UPC panel will allow a preliminary injunction application to become a “mini trial”, and therefore these issues are still likely to be considered succinctly, even with the presence of a technical judge.
It is open to either party to request that the panel hearing the preliminary injunction application submit a request to the President of the Court of First Instance to allocate a technical judge (under Article 8(5) of the UPC Agreement). The President of the Court of First Instance may not accede to such a request, and the exercise of the discretion is likely to turn on the technical difficulty of the subject matter of the patent. It is worth a defendant, in particular, considering this request. The panel may also submit such a request for a technical judge on its own initiative, but only after having heard the parties.
This question was posed to the panel of judges following the mock hearing. Mr Justice Arnold gave his view that it is unlikely that national case law will be wholly irrelevant in the UPC. He opined that, although it will not be directly relevant because the legislation will be different, in certain circumstances national case law may be useful to enable the court to determine an issue. For example, when deciding whether to order a preliminary injunction, the UK court may refer to the principles provided in the American Cyanamid case (although it is expected that the approach by the UPC will be less formulaic than the approach set out in this case).
However, Mr Justice Arnold emphasised that, for the main part, judges will have to rely on the UPC Agreement and the Rules of Procedure.
This question was posed to Mme Pezard. We ran out of time to put the question to her at the mock hearing, but have asked her the question after the event.
First, it is highly unlikely that a case would be heard in front of a panel made up entirely of French judges. Article 8 of the UPC Agreement deals with the allocation of judges for cases in the Central, Regional and Local Divisions of the UPC, and at all times it is anticipated that at least one of the judges sitting on a panel in any of these Divisions will be a non-national of the contracting member state hosting such Division. It is very possible that a majority (ie. two out of three) of the judges sitting on a UPC panel will be of the same nationality (eg. French).
Despite this, Mme Pezard is of the view that even if two of the UPC panel judges are French (and consequently bring with them to the UPC their experience of the French patent court and case law in France), they belong to an international court and will be familiar with UPC case law as this builds over time. Furthermore, the presence of a third legally qualified judge from another contracting member state is a “strong guarantee” for a more rounded deliberation, far from the national interests and narrow spirit of the judges.
Although not answered directly by Mr Justice Arnold, his judgment following the mock UPC hearing implies that potentially it would make a difference had a technical judge sat on the panel for the mock hearing. Mr Justice Arnold confirmed that, for the purposes of the preliminary injunction application, the panel was entitled to presume that the patent was valid unless it was demonstrated otherwise. Without the benefit of a technical judge, the panel could not consider issues surrounding validity raised by the defendant in any more detail than is necessary to determine, with a sufficient degree of certainty, that the patent was valid.
Had there been a technical judge sitting on the panel who could have provided an insight into the technology behind the patent and the common general knowledge, the court may have been in a position to consider the validity arguments raised by the defendant in more detail.
Whilst this may not have affected the outcome of the application (considerations of validity and infringement are discretionary under the UPC Rules of Procedure, whereas a determination of the balance of interest and delay are mandatory), it is possible that this may have tipped the balance in the defendant’s favour.
The judging panel were not able to predict the answer to this. Indeed, Mr Justice Arnold stated that he had “no idea” whether this would be the case.
Our view is that this is unlikely, at least in the first few years. The UPC will have jurisdiction over both unitary patents and traditional European patents which have not been opted out of the unitary patent system. We expect that both types of patent, as well as national patents, will play a role within the new patent landscape in Europe. Importantly, the decision to designate a European patent as a unitary patent is not made until after grant of the patent by the EPO. The decision to elect for a traditional European or unitary patent should be considered as part of a holistic patent strategy.
Mr Justice Arnold acknowledged that the question of the legal effect of a Brexit has received very little coverage in the Brexit debate. Very simply, in the case of a Brexit, the UK will not be a part of the UPC system. Following a Brexit, the UK has to consider how it will deal with the transition out of the EU.
Mr Justice Arnold further confirmed that the UK does not need to ratify the UPC Agreement for the unitary patent system to come into effect. The UPC Agreement clearly states that it will come into force when thirteen EU member states ratify, including the three EU member states with the highest number of European patents in force in the year preceding the year in which the UPC Agreement was signed (2013). Therefore, if the UK is no longer an EU member state, it will fall to the next member state with the highest amount of European patents (which was initially thought to be the Netherlands, but is now considered to be Italy) to ratify alongside Germany and France. The UPC would therefore continue with or without the UK.
That being said, Mme Pezard gave her view as a member of the UPC Drafting Committee that, in the planning of the UPC, it was very much the idea that the UK would be a participant. If the UK is no longer an EU member state, this may raise questions of interpretation of the UPC Agreement to be determined by the remaining contracting member states.
You can read about our views on the likely consequences of a Brexit in our Insight “A UK exit from the EU”, which can be found here.