Patent Litigation 2020 Comparisons

Last Updated February 10, 2020

Law and Practice

Authors



Danubia Patent & Law Office – Danubia Legal is a full-service Hungarian IP law firm providing services covering patents, trade marks and all fields of protecting, enforcing and defending intellectual property rights. The firm's professional staff consists of registered European patent and trade mark attorneys, as well as associated attorneys at law, operating under the brand Danubia Legal and specialising mainly in trade mark and patent enforcement. Danubia is involved in almost all significant pharma patent and SPC litigation cases in Hungary, representing the big pharma (originator) companies such as Bayer, Merck, Pfizer, Lilly, Roche, AstraZeneca, Servier, Boehringer Ingelheim, Abbvie, Biogen and Astellas; the firm also obtains European patents and community trade marks and designs before the EUIPO and EPO, and has notably represented clients before the Court of Justice of the European Union (CJEU) (Incyte in case No C-492/16; Bayer in case No C-688/17). Danubia is also an important player in the country's IT litigation field (representing ZTE, for example) and in the mechanical and electrical patent litigation fields, mostly representing domestic clients in these fields.

The intellectual property rights available to protect inventions in Hungary are patents, utility models and know-how. These forms of protection are all based on statutory law (Act XXXIII of 1995 (Patent Act), Act XXXVIII of 1991 (Utility Model Act) and Act LIV of 2018 (Act on Trade Secrets and Know-how)), but Hungarian and European case law is also duly considered by the authorities.

The grant procedure for patents and utility models requires an application to be filed with the Hungarian Intellectual Property Office (HIPO). A formal examination is carried out and, if all requirements are met, a substantive examination of the requirements of novelty, inventive step and industrial applicability follows for patent applications, but no examination of novelty and inventive step is carried out in the case of utility model applications.

After a period of not less than 18 months from the filing date of the application, the HIPO makes the application available for the public. The applicant may also request an earlier publication. Publication gives rise to provisional protection, on the basis of which the applicant may seek relief against alleged infringers, but in patent cases the infringement procedure is stayed until final protection is obtained.

There is no grant or registration procedure for know-how; protection arises automatically pursuant to the law.

The granting procedure for patents usually takes two to three years, and six to 12 months for utility models. Representation by a (patent) lawyer is mandatory for foreign but not domestic clients before the HIPO, although it is mandatory for everyone before the courts. The average cost to grant a patent is EUR1,000 (excluding lawyers’ fees and depending on the length of time taken); for utility models it is EUR110 (excluding lawyers’ fees).

Patents last 20 years from the filing date, while utility models last ten years from the filing date. The duration of know-hows is potentially unlimited, provided the legal requirements are met.

Patents (Article 19 of the Patent Act)

The holder of the patent has the exclusive right to exploit the invention, on the basis of which the patentee is entitled to prevent any person not having his consent from:

  • making, using, putting on the market or offering for sale a product that is the subject matter of the invention, or stocking or importing the product for such purposes;
  • using a process that is the subject matter of the invention or, where such other person knows, or it is obvious from the circumstances, that the process cannot be used without the consent of the patentee, from offering the process for use; or
  • making, using, putting on the market, offering for sale or stocking or importing for such purposes a product obtained directly by a process which is the subject matter of the invention.

Utility Models (Article 12 of the Utility Model Act)

Utility model protection affords the holder the exclusive right to exploit the utility model or to license another person to exploit it, as provided for by legislation. The exclusive right of exploitation shall include the manufacture, use or importation of the subject matter of the utility model, or putting it on the market within the framework of economic activity.

The owners of the above IP rights are entitled to seek remedies against alleged infringers and may allow their licensees to take such action. The costs relating to the above IP rights are to be borne by the owner(s).

Supplementary Protection Certificates (SPCs) are available for medicinal products on the basis of EU Regulation Nos 469/2009 and 1901/2006 (paediatric extensions) and for plant protection products on the basis of EU Regulation No 1610/96. Such additional protection is available for a maximum of five years for certain pharmaceutical and plant-protection products that have been approved for sale in Hungary and are covered by a national patent (an additional six months of production is available for medicinal products that are also used for paediatric applications).

During the patent granting procedure, any person may file an observation with the HIPO to the effect that the invention or the application does not comply with a requirement of patentability. Such observation shall be taken into consideration when the requirement objected to in the observation is examined. The person making the observation shall not be a party to the patent granting procedure but shall be notified of the outcome of his or her observation.

If a final decision of the HIPO fully or partially refuses the grant of a registered intellectual property right, such as patents or utility models, an appeal (ie, a request for reconsideration) may be filed with the Metropolitan Tribunal (MT) within 30 days of the date of the notification of the decision. The decision of the MT may be further appealed at the Metropolitan Appeal Court.

Patents, SPCs and utility models lapse in the case of failure to pay the annual fees. A possible remedy is to pay an extra 50% late payment fee within six months of the missed deadline. If patent or SPC protection has lapsed due to failing to pay the annual fees, protection shall be restored at the request of the applicant or the patentee. The restoration of patent protection may be requested within three months following the expiry of the six-month grace period, upon the payment of a fee.

If utility model protection has lapsed due to failure to pay annual fees, the HIPO shall, on request, restore the protection upon payment of a fee if the failure occurred for good reason.

The fee to be paid for restoring the protection of any above IP right is twice the amount of the annual fee, and is to be paid in the year of the lapse occurring.

In the event of infringement, the owner of a technical intellectual property right may consider civil or criminal routes of enforcement or customs measures. Civil law enforcement includes initiating either a preliminary injunction proceeding and/or a main lawsuit related to patent or utility model infringement. Willful infringement of intellectual property rights is also considered a criminal offence and may incur penalties. Customs measures are available in the framework of EU Regulation 608/2013.

Importantly, it is not possible to file a protective letter with a court in Hungary. Third parties who find themselves in potential conflict with a patent or other technical intellectual property rights (eg, a utility model) may have the following options:

  • a non-infringement action in front of the HIPO may be started against a patent by anyone who is concerned that there will be an infringement action initiated by the patentee against him or her. In the request, the product or method of the applicant has to be compared to the patent in question. A pending non-infringement action causes the stay of the corresponding infringement action, but does not stay the preliminary injunction proceeding. If non-infringement is declared with a binding effect, there can be no infringement action against the same product or method;
  • a revocation action in front of the HIPO against a patent can be commenced by anyone. If there are several revocation requests against the same patent, the proceedings are often joined. A pending revocation action causes the stay of the corresponding infringement action but does not stay a corresponding preliminary injunction proceeding. A first instance decision by the HIPO declaring the invalidity of the patent is a strong argument against ordering a preliminary injunction. It is possible for the parties to make a settlement in the revocation action; however, the HIPO still has the authority to continue the revocation ex officio, but this seems to be a rather theoretical possibility as there are no cases where the HIPO would have exercised this right, as far as is known; or
  • a compulsory licence may be obtained in the event of lack of genuine use of the patent, dependency of patents and for the treatment of public health problems under EC Regulation 816/2006.

Compulsory licences on the grounds of either dependency or lack of use are adjudicated exclusively by the Metropolitan Tribunal. A successful lawsuit for a compulsory licence ensures that the licensee can use the patent and the patentee has to receive remuneration. Compulsory licences shall be registered in the patent register. Please note that no known compulsory licences have been issued by the courts so far, with only one case having been initiated in the past 20 years, as far as is known.

For patent and utility model infringement lawsuits, as well as preliminary injunction proceedings, the Metropolitan Tribunal of Budapest has first instance jurisdiction. The Metropolitan Appeal Court acts as second instance, and the Curia (Supreme Court) provides judicial review for questions of law.

For revocation actions, the first instance authority is the HIPO, and the appeal against its decision is dealt with by the Metropolitan Tribunal acting as first judicial instance. The Metropolitan Appeal Court acts as second judicial instance and the Curia provides judicial review.

This ensures four instances (HIPO preceding three judicial instances) for revocation but only three for infringement. Also, it means that patent litigation is bifurcated in Hungary, and infringements and revocations are assessed independently in separate proceedings.

Lawsuits related to ownership, licensing or remuneration, including any dispute arising from contracts involving patents, belong to one of the tribunals (courts acting in the central town of each county) of Hungary, depending primarily on the address of the defendant.

The HIPO as a specialised authority acts in revocation and non-infringement actions. There is no specialised court for patent litigation (patent infringement, compulsory licensing, judicial level of revocation), although the Metropolitan Tribunal has exclusive competence for these cases and there are designated senates at each judicial level that handle all IPR cases, and can therefore be regarded as specialised senates.

There are no prerequisites to filing a lawsuit for patent infringement. However, according to the Patent Act, if a preliminary injunction is granted, the main lawsuit shall be initiated within 15 calendar days or the preliminary injunction will be lifted. In the case of a lawsuit for compulsory licence, the plaintiff (ie, the party seeking the licence) shall demonstrate that the patentee was not willing to grant a licence in reasonable time. This can be regarded as a prerequisite as it implies a mandatory communication between the parties prior to the lawsuit. In Hungary, licensees can also commence patent infringement lawsuits in their own name, provided that the licensee is registered as such in the patent register and can prove that it called the plaintiff to step up against infringement and the plaintiff remained passive for 30 days.

Appearing at the HIPO, foreign individuals and entities must be represented by either a lawyer or a patent lawyer or a team of such. In court proceedings, legal representation is required by law for both foreign and domestic parties.

In intellectual property cases, preliminary injunctions are available based on the general rules of the Code of Civil Procedure, but with special rules – eg, in the Patent Act.

The right holder seeking a preliminary injunction shall demonstrate the probability of infringement as well as the necessity and proportionality in the request. Regarding necessity, a special presumption exists in the Patent Act by which necessity shall be presumed if the invention is under patent protection, if the plaintiff is the patentee or registered licensee, and if fewer than 60 days have lapsed since the plaintiff gained knowledge of the infringement and fewer than six months have passed since the actual commencement of the infringement. However, this presumption can be overturned and, in the course of evaluating this, the court shall attribute special consideration to certain facts, particularly if the patent has been revoked at least at first instance and in the case of EP patents in any European Patent Convention (EPC) member state. The proportionality requirement means weighing up the balance of public interest according to the Patent Act, taking into account the interests of third parties.

Theoretically, a preliminary injunction may also be ordered in the event of a direct threat of infringement, before the infringing product is actually launched on the market. However, in these cases the court tends to require convincing and specific evidence that the start of distribution or manufacturing is imminent.

The preliminary injunction is typically aimed at a cease-and-desist order, as well as the seizure and withdrawal of the products from the channels of commerce. Hungarian law applies specific injunctions, meaning that the court specifically identifies the infringing product by name or other identifier.

Either party may appeal a preliminary injunction, although it is enforceable regardless of an appeal. Upon the request and arguments of the defendant, the court often effectively grants a preliminary injunction, subject to a bond to be deposited by the plaintiff.

If the circumstances that gave rise to the preliminary injunction change, the defendant may request the injunction to be lifted and the court will decide on the request, evaluating whether or not the change of circumstances justifies the lifting of the injunction. If the preliminary injunction is lifted, the injunction defendant may seek appropriate compensation from the plaintiff. One relevant Hungarian court case gave rise to judgment C-688/17 (Bayer), which interpreted Article 9 (7) of Directive 48/2004/EC on the Enforcement of Intellectual Property Rights.

It is not possible to file a protective letter with the court in Hungary, although potential opponents may commence proceedings for non-infringement. If sued in a preliminary injunction proceeding, the opponent may also request the court to make a bond the condition of the preliminary injunction entering into effect. The amount of the bond is subject to the arguments of the parties. Very often, when a revocation action is pending, the court determines the bond based on the expected profit loss of the defendant for the duration of the revocation proceedings.

There is no special limitation period for intellectual property matters; the general five-year limitation applies as regards all civil law claims. However, judicial practice confirms that the right to such remedies such as declaration of infringement and cease-and-desist orders are tied to the ownership character of registered intellectual property rights and thus such claims do not prescribe.

If the plaintiff is unable to start an action for a reason that is not their fault, the limitation period is stayed. Also, there are certain acts that interrupt the limitation period and cause it to recommence, such as the initiation of a lawsuit if it is concluded on the merits. Importantly, a mere warning letter does not interrupt the limitation period.

Possibilities for obtaining information in patent infringement lawsuits are mostly made available in the context of Directive 48/2004 on the Enforcement of Intellectual Property Rights, as well as the Hungarian Patent Act’s earlier harmonisation with the TRIPS Agreement. The right to information from the defendant is available as part of a preliminary or final injunction. In this context, the court may order the defendant to provide information on the quantities of the infringing products, sales information and information about commercial partners. The same order can be obtained against parties who possess infringing products or have obtained or provided services relating to the infringement on a commercial scale. Also, during a patent infringement lawsuit the plaintiff may ask the court to order the defendant to provide information or evidence on the infringing product/process, and also to provide financial information. Besides this, the plaintiff may seek an order on the preliminary obtaining of evidence, which would allow the plaintiff to have the court inspect the defendant’s premises to request information in due course. Notably, neither the preliminary obtaining of evidence nor the enforcing of the right of information against third parties is common in Hungary. Also, courts tends to deny a request for obliging the defendant to provide information in a preliminary injunction proceeding, since the court considers it irreversible, which is against the nature of a provisional measure.

The initial pleadings must be very detailed, according to the rules of the Code of Civil Procedure. The court claim and the preliminary injunction request shall contain detailed arguments and all available evidence relating to the infringement. Preliminary injunction requests shall also include detailed arguments regarding necessity and proportionality. Importantly, following the initial round of court claim and the statement of defense, there is no automatic right to file further motions; the plaintiff may only respond to the court claim if the court calls the plaintiff to do so. Parties are thus advised to submit their arguments and evidence in their first submission to the court. An important feature of the Hungarian proceedings is that all foreign language documents submitted as evidence shall be submitted in Hungarian as well.

In revocation actions, the rules are not so strict before the HIPO. There are several rounds of exchanging writs by the parties, and evidence can also be filed during the proceedings before the HIPO, subject to respecting the timing of the hearing – ie, that evidence and pleadings filed too close to the hearing may be ignored by the HIPO. However, following the first instance proceeding of the HIPO, the same rules apply as above when the proceeding reaches the judicial level.

Collective actions are not known for IP litigation in Hungary.

The Patent Act (and other relevant acts, such as the Utility Model Act) contains no provision relating to restrictions, except for the protection of confidential information. The question of patent misuse or abuse has arisen following CJEU judgment C-688/17 (Bayer) in the context of awarding compensation to the defendant when a preliminary injunction was subsequently lifted, but no final judgment has been made to date.

In patent infringement cases, the claimant is normally the owner of the patent. If there are co-owners, any of the owners has the right to enforce the patent. Furthermore, the registered licensee (both exclusive or non-exclusive) may submit an action on his own behalf, if the patent-owner was invited to take appropriate steps against the alleged infringer and failed to do so within 30 days. Licensees may furthermore act as co-plaintiffs of the patentee or intervene in infringement proceedings initiated by the patentee.

In the case of trade secrets, normally the owner of the right files an action against the infringer; the licensee may file such action only if it has such right on the basis of the licence agreement.

In instances of direct infringement of an exclusive right, under Article 19 of the Patent Act, the patentee shall be entitled to prevent any person from doing the following without consent:

  • making, using, putting on the market or offering for sale a product which is the subject matter of the invention, or stocking or importing the product for such purposes;
  • using a process which is the subject matter of the invention or, where such other person knows, or it is obvious from the circumstances, that the process cannot be used without the consent of the patentee, from offering the process for use; or
  • making, using, putting on the market, offering for sale or stocking or importing for such purposes a product obtained directly by a process which is the subject matter of the invention.

In practice, courts interpret the forms of exploitation listed in Article 19 of the Patent Act strictly, and no other activity is considered to be infringing.

In the case of indirect infringement, the patentee is entitled to prevent any person without consent from supplying or offering to supply a person – other than a person entitled to exploit the invention – with means (instruments, appliances) relating to an essential element of the invention, or carrying out the invention. This applies when the person knows, or it is obvious from the circumstances, that those means are suitable and intended for carrying out the invention.

For available remedies, see 6 Remedies.

Under Article 24 of the Patent Act (which is in line with Article 69 of the EPC 2000), the scope of protection of the patent shall be determined by the claims. Claims shall be interpreted on the basis of the description and the drawings. The scope of the patent covers any product or process in which each characteristic of the claim is realised.

The doctrine of equivalence is also implemented into the Patent Act – ie, to determine whether the patent protection extends to a product or process, account shall be taken of any characteristics of the product or process that are equivalent to those specified in the claims.

As Hungarian patent litigation is strictly bifurcated (ie, the main infringement action is suspended until the final decision in the revocation procedure), the natural defence against an infringement case is filing a revocation action. However, preliminary injunction procedures are never suspended.

According to Article 37 of the Patent Act, any person believing that proceedings for patent infringement may be instituted against him or her may file a non-infringement procedure, requesting a decision ruling that the product or process exploited or to be exploited by him or her does not infringe a particular patent. Such a procedure shall be filed with the HIPO before the submission of the infringement action. In this instance, courts usually also suspend the infringement proceeding until the final decision in the non-infringement procedure.

Other defences (or rather limitation of the exclusive rights of the patentee) also exist, such as the Bolar exemption, patent exhaustion, prior-use rights, farmers’ privileges, transport traffic and compulsory licences.

As regards the Bolar exemption, Article 19 (6)b) of the Patent Act contains the so-called experimental exemption in Hungary. In line with Article 30 of the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS), the exclusive right shall not extend to acts carried out for experimental purposes relating to the subject matter of the invention, including experiments and tests necessary for the marketing of a product constituting the subject matter.

Furthermore, according to Article 19(6), acts performed for the purpose of private use and/or being considered as non-economic activities are also exempt, as is the non-regular preparation of a medicine in a pharmacy, upon a doctor’s prescription.

The prior use of the invention is also treated as a limitation of the exclusive rights of the patent holder, if someone in good faith, before the date of priority, in the territory of the country and within the framework of his economic activities, had begun making or using the subject matter of the invention.

Article 20 of the Patent Act regulates patent exhaustion. According to this, the exclusive right of exploitation conferred by patent protection shall not extend to acts concerning a product put on the market in the territory of the European Economic Area by the patentee or with his or her express consent, except where the patentee has legitimate interests in opposing the further marketing of the product.

According to the farmers’ privilege, the sale or other form of commercialisation of plant propagating material to a farmer by the patentee or with his express consent implies authorisation for the farmer to use the product of his harvest for propagation or multiplication by him on his own farm. Similarly, the sale or other form of commercialisation of breeding stock or other animal reproductive material to a farmer by the patentee or with his or her express consent implies authorisation for the farmer to use the patented livestock for agricultural purposes.

According to Hungarian practice, the court shall appoint a court expert if it is necessary – ie, if the court does not possess the required professional knowledge on a particular fact. Either party may file a motion for the appointment of a court expert, and the court may appoint a court expert ex officio. Essentially, the court formulates the questions to the expert, who then provides his or her expertise in writing. The court may invite the court-appointed expert to the hearing if the written expertise is not clear enough and/or there is any contradiction. At court hearings, the expert is first questioned by the judges; the parties may question the expert only if the judges allow it.

According to new Hungarian procedural rules, two other kinds of experts are also recognised: a private expert and an expert appointed in another proceeding. Under the new rules, both court-appointed experts and private experts must be chosen from the official list of registered experts.

The main difference between the different types of experts is that if the court appoints an expert, there can be just one expert for the same question, whereas if private experts are used, both sides can propose their own private expert’s opinion.

The party shall choose among the experts, pursuant to the principle of efficiency in legal procedures, which does not allow for a party to offer multiple, parallel expert opinions as evidence regarding the same issue. However, in revocation proceedings at the court, only court-appointed experts can be used.

There are no separate procedures for construing the terms of the patent’s claims.

The revocation of a patent may be requested by anyone without time limit and without any legal or commercial interest, except where the patent is granted for someone who is not entitled to it, in which case only the real and true inventor or predecessor of the inventor may file such a request.

If a patent is invalid, it shall be revoked ex tunc, with retroactive effect, from which it follows that no patent infringement can be established on the basis of a revoked patent. However, importantly, the Hungarian patent litigation system is bifurcated. This means that in the infringement lawsuit or preliminary injunction proceedings, the court has no power to revoke a patent under any circumstances.

According to Article 42(1) of the Patent Act, the patent shall be revoked ex tunc if:

  • the subject matter of the patent does not satisfy the requirements laid down in the Patent Act (lack of novelty, inventive step, industrial applicability, exclusion from patent protection);
  • the description does not disclose the invention in a clear and complete manner (insufficiency);
  • the subject matter of the patent extends beyond the content of the application as filed at the date of filing or – in the case of division – beyond the content of the divisional application (added matter); or
  • it was granted to a person who was not entitled to it.

The revocation of patents – either national patents or the Hungarian part of EP patents – falls under the competence of the HIPO at first instance.

A registered patent may also be cancelled if the renewal fees have not been paid or due to withdrawal by the patent owner.

A patent can be revoked in whole or in part. According to Article 42(2), if the grounds for revocation affect the patent in part only, the scope of the patent shall be limited accordingly.

The patent owner may request an amendment of the claim in a revocation procedure, and may file the suggested wording of the amendment. The scope of protection conferred by the amended claim must be narrower than that of the original. In addition, the amended claims shall be disclosed in full in the original application, and shall fulfil all the patentability requirements. There is no cancellation proceeding for the patent owners in Hungary.

Revocation and infringement proceedings are never heard together, according to the strictly bifurcated Hungarian patent litigation system. As the main infringement procedures are always suspended until the final decision in the revocation procedure, the decision in the revocation procedure always prevails over the decision of the main infringement procedure. However, the decision in preliminary injunction procedures always prevails over the final decision in the revocation procedure, so the patent owner has a chance to stop the infringing activity until the end of the revocation procedure.

The general rules contained in the Code of Civil Procedure (Act CXXX of 2016 - CCP) contain special provisions relating to court proceedings concerning the meritorious decision of the HIPO in respect of intellectual property rights (patents, utility models). These special provisions relate primarily to the definition of the competent court, the composition of the court, exclusion, publicity and representation.

A provision specific to IP cases is that in proceedings for the judicial review of the decisions of the HIPO (eg, in revocation actions), the HIPO is entitled to submit its legal standpoint to the court about the case, even though the authority is not a party to the proceedings. The HIPO tends to exercise this right from time to time in more significant cases.

An IP-specific provision for court proceedings for infringement and revocation is that the exclusive jurisdiction of the Metropolitan Tribunal of Budapest shall apply. The court acts in a panel consisting of three professional judges, two of whom will have a technical background. At the request of either of the parties, the court may decide to hold the hearings in closed sessions, even in the absence of the conditions set forth in the CCP. Regarding the exclusion of a judge from the panel, in addition to the general cases of exclusion set forth in the CCP, the persons who participate in passing the decision of the HIPO, as well as their close relatives (according to the Civil Code), shall be prohibited from taking part in the case and from participating as a judge. In cases brought in connection with intellectual property rights, in addition to lawyers, patent attorneys may take action in the proceedings as representatives, including the cases of mandatory legal representation.

There are also some special rules relating to preliminary injunctions (see 2.7 Interim Injunctions).

In revocation and non-infringement proceedings before the HIPO, each proceeding is heard and decided by a panel of three members, two of whom are patent examiners and one of whom is a legal member.

The Metropolitan Tribunal of Budapest has exclusive jurisdiction for reviewing the decisions of the HIPO. In such cases, the court shall act in a panel of three judges (one legal and two technical).

The Metropolitan Tribunal of Budapest also has exclusive jurisdiction for IP rights infringement lawsuits, including preliminary injunction proceedings. It also has a specialised IP panel consisting of three judges, two of whom have a technical background.

In both the review of the HIPO’s decisions and infringement lawsuits, the court of second instance is the Metropolitan Tribunal of Appeals (or Metropolitan Appeal Court) in Budapest, which proceeds with three legal judges. Similarly, the Curia proceeds with a panel of only legal judges.

The types of patent lawsuits that do not fall under the exclusive jurisdiction of the Metropolitan Tribunal of Budapest (eg, entitlement lawsuits, employee remuneration, licence disputes) are adjudicated by one or three judges, depending on the proceedings.

In all the above examples, the parties have no influence on who is appointed as decision maker, since it is defined by law (exclusive jurisdiction) and judges are assigned in accordance with the respective rules applicable for the courts.

In cases of trade secret infringement, the competent court corresponds to the seat of the defendant and the first instance court proceeds with a single judge.

There is no statutory provision regarding the obligatory attempt of commercial entities to settle their dispute out of court prior to the court procedure. Also, the Hungarian litigation system does not involve any form of mandatory settlement conferences. It is often the case, however, that parties wish to settle the proceedings themselves. They can do so at any point, as long as a final and binding decision has not been made. There are essentially two ways to do this. First, the parties may settle out of court and mutually request the court to terminate the lawsuit. Here, the court only orders on costs if needed, and the case is terminated without res iudicata. In this instance, the obligations of the parties are contractual obligations towards each other, and can be enforced as such. The other form is that the parties may also ask the court in infringement lawsuits (but not in proceedings for the review of the decisions of the HIPO) to approve their agreement, in which case the order made by the court in this subject has the effect of a judgment and results in res iudicata. Quite often, parties mutually request the stay of the proceeding for the duration of their settlement negotiation.

Parties may also settle during the HIPO phase of a revocation action. However, the HIPO is entitled to continue the proceeding ex officio. As far as is known, the HIPO has never exercised this right, although logically the settlement of the parties should not determine the validity of the IP rights.

The Hungarian system is strictly bifurcated – ie, validity and infringement proceedings are decided in separate proceedings and in different forums. Namely, patent infringement proceedings fall within the exclusive competence of the Metropolitan Tribunal at first instance, while revocation actions are initiated before the HIPO, the decision of which can be appealed before the Metropolitan Tribunal. If parallel revocation proceedings are pending, according to the established court practice of the Metropolitan Tribunal, the infringement proceedings are always stayed until the final conclusion of the revocation proceedings. Importantly, the ongoing revocation action does not stay the preliminary injunction, and does not prevent the court from making a decision and – if justified – granting a preliminary injunction.

According to recent court practice, the revocation action against the Hungarian validated part of an EP patent shall be stayed until the resolution of the EPO opposition proceeding if the latter one is pending.

If the court finds the patent to be infringed, it shall order a final injunction (eg, declaration of infringement, cease-and-desist obligations). Importantly, the court may only order such remedies that were contained in the statement of claims of the patentee; even in that case, the court may not order it in a form that was not specifically requested by the plaintiff. Following the implementation of Directive (EU) 2016/943 (Trade Secret Directive), unlike in the case of registered technical IP rights, in trade secret litigation the court has a degree of discretion regarding the remedies ordered, subject to proportionality.

As to monetary remedies, the patentee may request the return of any enrichment (profit or an unpaid licence fee) gained through the infringement of the patent, or may demand compensation for damages in accordance with the provisions of civil liability.

The main difference between the return of enrichment and damage compensation is that the first one is objective and the second one depends on the infringer’s liability. The plaintiff shall, however, prove the amount of enrichment, and that it resulted directly from infringement. Damages, on the other hand, depend on the liability of the defendant. If the patentee failed to submit the Hungarian translation of a European patent as required by law, and the infringer’s home address or registered office is located in Hungary, the infringement may not be imputed to that person unless the patentee is able to verify that the infringer should have understood the original text of the European patent even in the absence of a translation.

There are no punitive monetary sanctions under Hungarian law.

In addition, the court may order the provision of information, the delivery and destruction of the infringing products, the publication of the decision in newspapers or magazines, or on the Internet at the expense of the infringer, and the recall of the infringing products from the channels of commerce.

If the fact of an infringement of an effective IP right is established, the court grants an injunction without considering the other facts of the case (eg, the revenue loss of the defendant or the interest of third parties or wilful infringement).

If the court rejects the infringement claim, the defendant shall be awarded the legal expenses that have arisen in connection with the lawsuit (lawyers’ fees, translation costs, duty fees, etc).

Due to the bifurcated system, it may happen that a preliminary injunction is granted against the defendant, and the patentee starts the infringement proceedings within the legal deadline, and as a usual defence the defendant files a revocation request against the patent-in-suit. If the patent has been revoked as a result of the revocation proceedings, and the preliminary injunction is lifted, the defendant may claim damages. Regarding the legal basis of such damages, CJEU’s judgment C-688/17 (Bayer), which was a referral initiated by the Metropolitan Court of Budapest, is to be taken into account.

Available remedies are determined uniformly by the Patent Act, regardless of different intellectual property rights.

An appeal will suspend the enforceability of the first-instance decision on the merits, unless the judgment of the court of first instance expressly states that the decision is enforceable, notwithstanding an appeal.

Preliminary injunctions are always enforceable, irrespective of an appeal.

Under Hungarian law, there are no special legal provisions for intellectual property rights appeal proceedings. This also applies to patent/utility model infringement and validity proceedings, which are equally governed by the general rules of civil procedures contained in the CCP. In these cases, which belong to the exclusive jurisdiction of the Metropolitan Tribunal of Budapest, the Metropolitan Tribunal of Appeals is competent to adjudicate the appeals with a panel of three legal judges. In infringement lawsuits, the Appeal Court shall hold a hearing, while in proceedings for the review of the HIPO’s decisions a hearing is only held upon the request of either party.

Judgments and meritorious orders are subject to appeal in all proceedings, either contentious (eg, infringement lawsuits) or non-contentious (eg, preliminary injunction proceedings and reviews of HIPO decisions). The deadline for appeal is 15 days from the receipt of the decision. In intellectual property cases, the Metropolitan Tribunal of Appeals adjudicates the appeals and conducts a full review of the facts and points of law within the limits determined by the appeal submitted. The appellant must accurately set out the grounds on which the appeal is based by indicating the specific provision or part of the decision challenged by the appeal. The appeal shall contain a definitive request for the changes to be made by the court of second instance in the specific provision or part of the judgment of first instance that is contested, or for abolishing such provision or part, and shall provide its reasons respectively.

In the appeal phase of the proceedings, the submission of new facts or evidence is limited. There is no appeal against the decision of the Metropolitan Tribunal of Appeals. A final and binding decision can be referred to the Supreme Court of Hungary (Curia) for judicial review, which is only possible regarding questions of law.

Costs arising for the plaintiff prior to a lawsuit typically relate to the following categories:

  • obtaining evidence – this typically includes the costs of test-purchasing a sample of the infringing product and the technical analysis of it, if required, or obtaining expert opinions;
  • the costs of pre-trial correspondence with the other party, although this is not mandatory; and
  • the preparation of the court claim and its legal arguments.

Revocation actions and non-infringement proceedings have a fixed procedural fee of approximately EUR440 for the HIPO stage. During the court phase, the duty fee is determined by a hypothetical value of the proceedings, which is set by law. This makes the duty fee rather minimal. The duty fee in revocation proceedings is not dependent on the value of the patent or the market concerned.

In infringement lawsuits, the duty fee is 6% of the value of the lawsuit. However, according to practice, the value of the lawsuit can only be determined when the claim contains a pecuniary claim – eg, a claim for damages. If there is no pecuniary claim, the value of the lawsuit is hypothetical, and the duty fee is very low (less than EUR50 per patent and per defendant). The same (somewhat increased) volume of duty fee is to be paid at higher court instances.

In principle, the losing party shall be responsible for paying court fees, expenses and the other party’s lawyers’ costs. All expenses as well as the fee of the legal representative must be validated by invoices. However, the HIPO and the court have the right to reduce the lawyer’s costs that are to be awarded to the winning party, and it often does so.

Also, the court may decide that each party is to bear its own costs, especially if the winning ratio is close to 50% (eg, by only partially granting what the plaintiff requested). Such a decision is quite common in technical intellectual property cases. Also, if a party causes extra costs (eg, if its delaying tactics make a further hearing necessary), the court may order the party to bear these costs regardless of the winning ratio.

The legal costs awarded by the court are to be paid once the decision becomes final and binding.

There is no specific regulation regarding arbitration on the actions of IP rights in Hungary. However, the Hungarian Courts have exclusive competence. According to Article 44 of the Hungarian Patent Act, the HIPO shall have authority in procedures for the revocation (invalidation) of patents (at first instance). Therefore, a decision on the validity of a Hungarian patent will not be recognised by the HIPO or Hungarian courts and, as a result, cannot have effect on a patent’s validity (either national or validated European patent) as registered by the HIPO.

No legal regulation prohibits the use of ADR in patent infringement situations, but there have been no such situations that would have been settled by arbitration, as far as is known.

An intellectual property right can be assigned in Hungary in a written agreement; otherwise, due to the general provisions of contract law in the Civil Code, the transaction is deemed null and void. The assignment must be registered with the HIPO, enclosing at least a short assignment form, and there is no need to submit the detailed agreement of the IP assignment transaction. Service inventions made under employment are automatically assigned to the employer on disclosure, on the condition that the employer accepts said inventions in writing within 90 days of the disclosure.

The assignment needs to be submitted to the HIPO, preferably using a simplified assignment form. However, there is no restriction on the content of the assignment agreement, provided that it clearly contains the identification data of the intellectual property, the assignor, the assignee, and the fact of assignment of the IP right. The assignment is then entered into the IP Registry maintained by the HIPO. The date of assignment shall correspond to the date according to the assignment document.

The licensing provisions are included in the Patent Act, and apply to all other kinds of industrial property rights. An intellectual property right may be licensed in Hungary in a written agreement; otherwise, due to the general provisions of the contract law in the Civil Code, the transaction is deemed null and void. All kinds of intellectual properties – ie, industrial properties – including their applications, copyrights and trade secrets (know-how), and their combination may be licensed. The licence may be non-exclusive or exclusive, with the opportunity to grant the right to sub-license. However, the general rule offered by IP law is for non-exclusive rights with no right to sub-license; therefore, exclusivity and sub-licensing must be concluded in writing by the parties. The licensor shall guarantee both the freedom to operate and the technical operability of the IP; this may be excluded by the parties in writing. If the intellectual property is the result of a research agreement according to the Civil Code, the parties cannot waive the obligation to represent the legal clearance by the researcher. The licence terminates upon the expiry of the protection of the IP, or earlier, on the date set by the parties in the agreement.

The licensing transaction may be registered with the HIPO, though such registration is not an obligation. However, the licensee may only claim the exclusivity of the licence in front of a third party who acted in good faith if the licence has been registered with the IP Registry. There is no restriction on the content of the licensing agreement, provided it clearly contains the identification data of the intellectual property, the licensor, the licensee and the fact of licensing of the IP right. The licence is then entered into the IP Registry maintained by the HIPO. The date of the licence shall correspond to the date of the licensing agreement. Hungarian IP law acknowledges the compulsory licence, but it is rarely used in practice.

Danubia Patent and Law Office LLC

HUNGARY - 1051
Budapest
Bajcsy-Zs. str. 16.

+3614118700

central@danubia.hu www.danubia.com
Author Business Card

Law and Practice in Hungary

Authors



Danubia Patent & Law Office – Danubia Legal is a full-service Hungarian IP law firm providing services covering patents, trade marks and all fields of protecting, enforcing and defending intellectual property rights. The firm's professional staff consists of registered European patent and trade mark attorneys, as well as associated attorneys at law, operating under the brand Danubia Legal and specialising mainly in trade mark and patent enforcement. Danubia is involved in almost all significant pharma patent and SPC litigation cases in Hungary, representing the big pharma (originator) companies such as Bayer, Merck, Pfizer, Lilly, Roche, AstraZeneca, Servier, Boehringer Ingelheim, Abbvie, Biogen and Astellas; the firm also obtains European patents and community trade marks and designs before the EUIPO and EPO, and has notably represented clients before the Court of Justice of the European Union (CJEU) (Incyte in case No C-492/16; Bayer in case No C-688/17). Danubia is also an important player in the country's IT litigation field (representing ZTE, for example) and in the mechanical and electrical patent litigation fields, mostly representing domestic clients in these fields.