The Patent Litigation 2019 guide provides expert legal commentary on key issues for businesses. The guide covers the important developments in the most significant jurisdictions
Last Updated: March 08, 2019
Patent litigation seems to flourish irrespective of the economic environment. Despite the apparent downturn in a few key economic indicators towards the end of 2018, there seems to be little that can stop the rush to the patent courts globally. There are, however, a few areas which we believe will continue to keep the courts particularly busy and which are also most likely to produce litigation on a regional or global scale: life sciences and technology.
The increasing importance of patent litigation not just for litigants but also for consumers and patients is illustrated by various factors, but one of the most important is the willingness of the highest courts in the most important countries for patent litigation (perhaps the US, UK, Japan, and Germany) to review patent cases, and an emerging discussion around the appropriateness of injunctions. Industry is split between those sectors (like pharma) that have traditionally relied on automatic injunctions in competitor litigation, and the telecoms and automotive industry, where many of the plaintiffs are non-practising entities and where there is a sense that unmitigated injunctive relief is perhaps less appropriate.
With the further delay in the introduction of the Unified Patent Court and the UK currently scheduled to leave the EU in March 2019, it is more uncertain than ever whether there will be a single Unified Patent Court in Europe. The main hold-up does not, however, come from pre-Brexit UK (which has made all the necessary ratifications); it comes from Germany, where the Federal Constitutional Court has stopped the ratification of the necessary instruments and is currently undertaking a review of the constitutionality of the entire proposal under German constitutional law. It is unclear when that review, which was originally scheduled to take place in 2018, will be finished.
In the following we take a closer look at a few developments in Europe, Asia, and the US where the big themes seem to circle around second medical use claims, FRAND and patent linkage.
In the UK, the impact of two recent Supreme Court decisions on Swiss form claims are likely to be tested further. Those cases dealt with equivalence, plausibility and skinny label infringement situations. The Supreme Court is also likely to provide a judgment on the approach to inventive step early this year and has just given permission for an appeal on the law of sufficiency, so that case may be heard either later this year or next. Akin to the situation in the US where patent cases suddenly became common in the top court, the UK is seeing a similar spate.
The UK continues to be a place for patentees to litigate to force global licences on standard essential patent implementers. This year and next will see those disputes develop further to consider alternative valuation approaches, the extent to which design-arounds remove the licensing obligation and the appropriate level within the chain for licensing requests.
Germany continues to have perhaps the highest number of patent cases in Europe. A couple of cases regarding FRAND and the respective obligations the parties have to each other regarding, in particular, the demonstration of the non-discriminatory nature of terms offered are going to keep the courts busy. The fact that the English and the German courts seem to disagree on key questions of FRAND-ness spices up the discussion and is likely to inform the choice of courts. In the pharma space, infringement despite carve-outs of second medical-use patents, as well as their validity, will continue to attract interest. The Constitutional Court has the UPC on its to-do list, and whether a decision will be available before Brexit is still open.
In France, the legislator is expected to vote soon on a law regarding the creation of a new opposition procedure before the French patent office (INPI), constituting a simpler alternative to the only judicial remedy in place today for domestic patents: judicial nullity proceedings.
Likewise, in 2019 the French legislator is expected to remove a more recent French speciality, the time-bar on patent nullity actions. This is an awaited clarification following the judgment of the First Instance Court of Paris of 16 March 2017 holding that, in a pharmaceutical patent nullification suit, a five-year time-bar started running from the day a marketing authorisation was granted to the holder of the patent or his or her licensee. In practice this ruling meant that invalid patents could remain in force due to the alleged time-bar.
Finally, the Lilly Pemetrexed ruling with potential statements on claim construction and the impact of file history on the doctrine of equivalents is expected for 2019.
In the Netherlands, the courts have confirmed that there is a clear distinction between being entitled to an injunction in actions on the merits and the entitlement to an injunction in preliminary relief situations. In actions on the merits, the plaintiff has a right to the injunction and the Courts must grant the injunction if it finds the patent valid and infringed (judgment District Court of 18 July 2018 in Nikon v ASML). In contrast, in preliminary relief proceedings, the plaintiff does not have a right to the injunction and the Provisions Judge has discretion to grant an injunction based on a weighing of interests. The Provisions Judge recently held in his judgment of 28 December 2018 in Koninklijke Douwe Egberts v Belmoca that the threshold for the grant of a preliminary injunction in the weighing of interests in a preliminary injunction action is high in cases where the allegedly infringing product has been on the market for a while (two years in the case at hand) and is so important for the defendant that the dispute is a "bet the company" case.
Dutch Courts have always had discretion in granting or refusing preliminary injunctions but, in practice, Dutch Courts rarely made use of this discretion and instead assessed validity and infringement and then granted or refused the preliminary injunction on the basis of this assessment. Going forward, we are likely going to see more preliminary injunction cases where the preliminary injunction is refused on the basis of a weighing of interests.
In the area of claim construction, on 8 June 2018, the Netherlands Supreme Court confirmed the decision of the Court of Appeal of The Hague in Resolution v AstraZeneca with respect to a patent claiming the product rosuvastatin and non-toxic pharmaceutical acceptable forms thereof. The Court of Appeal held that the inventive concept behind the patent concerned the discovery of a new group of statins, particularly rosuvastatin, with good HMG-CoA reductase inhibiting activity and that this justified a broad construction rather than a narrow construction limited to the specific salt-forms mentioned in the patent specification. The Supreme Court decision confirms that the inventive concept and extent of innovation brought by a patent can justify a broad claim construction.
Until recently, there was no "pharmacy exemption" in Netherlands patent law. This changed on 1 February 2019, when Article 53(3), second sentence of the Dutch Patent Act 1995 came into force introducing a pharmacy exemption for the preparation of medicines in the pharmacy in Netherlands patent law. The "pharmacy exemption" is limited to pharmacy preparation for direct use for individual cases on prescription and not for production on a commercial scale. However, several pharmacists are actively communicating their intention to compound products and the Dutch Ministry of Health takes the position that compulsory licensing and pharmacy compounding are suitable tools in restricting the "excessive pricing" of medicinal products.
Finally, in the area of trade secrets, on 28 October 2018, the Netherlands implemented the EU Trade Secrets Directive. The new Trade Secrets Protection Act introduced changes to the rules of procedure. Among the most important changes is the introduction of the possibility of a confidentiality club, which allows for access to certain trade secret information under confidentiality to a limited number of individuals. Under certain circumstances, access can even be limited to lawyers only.
Netherlands law now also provides for the possibility for the winning party to recover its reasonable and equitable legal costs in trade secrets cases. Furthermore, the Dutch Supreme Court ruled on 28 September 2018 that trade secret holders can conduct ex parte evidentiary seizures and detailed descriptions at the premises of parties suspected of trade secret misappropriation (Organik v Dow). This all makes the Netherlands a favourable place to litigate trade secret cases.
Italy, like other European countries, sees continued interest in second medical-use patents. Italian case law on second medical use patents is still scarce and often not to the point. Italian courts (in particular, the court of Milan) are currently handling several cases concerning dosage patents. While a couple of decisions have already been issued in 2018, more are expected to come in 2019. One particular topic of interest will be infringement by 'skinny labels', ie, medicinal products where a patented indication has been removed from the label, and whether these products can still infringe that same indication patent.
In Russia, 2018 was an interesting year for patent litigation in that the Russian courts for the first time allowed patentees to bring actions for patent infringement based on a mere threat of patent infringement (rather than actual infringement). In practice, this means that patentees can now sue earlier than before and do not have to wait until the infringement is actually happening. This is particularly important for patentees in the pharmaceutical space, where the first generic market entry will often cause particularly large and irrecoverable damage. Russia has also seen a version of 'patent linkage', whereby a pricing authorisation may be revoked if the product is covered by a third-party patent. One reaction by generic manufacturers has been to refer to their own patents (eg, to a crystalline form of an otherwise protected compound) by way of an 'own patent-use defence' against originator patent infringement claims. Equally, generics have been trying to obtain compulsory licences based on 'dependency', stating that their own patents are dependent on the originator patent. However, only two compulsory licences have been granted by Russian courts to date in favour of one Russian generic producer. Some cases are still pending and the statutory criteria for compulsory licences ('significant economic advantage' and 'important technicalachievement') are vague and we expect that they will be further clarified by the Russian courts in 2019.
In Japan, the patent litigation system has been under review since the autumn of 2018, particularly in respect of potential new evidence-gathering mechanisms. Unlike the US and some European jurisdictions, Japan does not currently have an extensive discovery or disclosure system. In order to assist less well-resourced companies in obtaining potentially relevant evidence of patent infringement, there is now a proposal that courts may in future permit certain specialists to conduct inspections of facilities based in Japan, not dissimilar to the continental European systems for search and seizure (with some modifications to alleviate concerns about the disclosure of trade secrets). It will be both interesting and important to see whether the proposal in due course becomes law.
Another area of potential change is in respect of the 'patent linkage' in the field of life sciences. Historically, while a patent was valid and in force, the Japanese regulator would typically refrain from granting a marketing authorisation in respect of a generic product falling within the scope of relevant patents, including while a decision of invalidity by the Japan Patent Office (ie, first instance) was being appealed to the IP High Court (ie, second instance) and beyond; now, however, it is becoming much less clear to what extent the regulator will wait for a final and binding invalidation decision (ie, after all avenues of appeal are exhausted) in respect of relevant patents, especially given the Japanese government's emphasis on and promotion of generic drugs.
Finally, a number of biologics and biosimilar patent cases are currently underway in Japan, somewhat mirroring cases in the US and Europe. These are still in their early stages, or have settled, so it is not yet clear whether the Japanese courts will take similar positions in respect of issues already litigated elsewhere. We expect the number of such biologics patent cases to increase, and it will be important to monitor Japan-specific developments in due course.
In China, it is likely that the remarkable upward trend in Chinese patent filings and litigation statistics will continue in 2019. Companies with activities in China need to prepare for China's crowded register by filing applications early and strategically, and by conducting thorough freedom-to operate-assessments before launching new technologies. Developing an IP strategy from abroad, using only filings through the PCT, often does not cut it for China.
2019 will also see an amendment to the patent act and further judicial reforms to improve patent protection. The fourth draft amendment to the Chinese Patent Act was reviewed by the Standing Committee of the National People’s Congress (NPC) in December 2018, and comments on the changes proposed by this fourth draft were gathered from all stakeholders. The draft aims primarily at strengthening patent protection by a substantial increase in the range of statutory damages from the current RMB10,000-1 million (ca. USD1,500-150,000) to RMB100,000-RMB5 million (USD15,000-740,000), the introduction of punitive damages for 'serious wilful' infringement (up to five times the amount of the actual damages), provisions related to shifting the burden of proof in infringement proceedings, take-down actions for infringing products sold online, and consolidating cross-province administrative patent enforcement actions.
2019 also marks the start of the newly established Intellectual Property Tribunal of the Supreme People’s Court (SPC). This new court hears all second-instance civil infringement and administrative court actions (against decisions of the Patent Re-examination Board) country-wide, related to invention and utility model patents. This new division follows the creation of over 20 new intellectual property courts and tribunals since 2014 with centralised jurisdiction over first-instance patent cases in most of the economically more developed areas. One obvious concern is that the SPC’s IP Tribunal will be overwhelmed with cases, resulting in further delays of the appellate patent proceedings, but the court has already made a number of senior hires to avoid that.
After several years of lobbying by IP lawyers and industry groups, the Hong Kong judiciary has finally agreed to set up an intellectual property specialist list in the Hong Kong High Court, with a small number of designated judges who can hear patent and other IP cases. Mr Justice David Lok has been given responsibility for setting up the list and he will be the first judge in charge of the list. The intention is to speed up IP litigation, improve judicial expertise for dealing with IP cases and have greater and more efficient judge-led case management. The new court rules and practice directions are expected to be influenced by the rules currently used for intellectual property cases in England. It is also envisaged that a fast-track system will be implemented to deal with smaller IP cases, with simpler procedures, faster litigation times and, hopefully, reduced costs for litigants.
Hong Kong is also preparing for the introduction of Original Grant Patents (OGPs). The current system for obtaining a 20-year invention patent requires a patentee first to obtain a European (UK), United Kingdom or Chinese patent ('designated patents'), and then to re-register the designated patent at the Hong Kong Intellectual Property Department (IPD). This system is fairly straightforward (no local substantive examination is required) and involves a small extra cost for the holder of a designated patent who wants patent protection in Hong Kong. The amendments are expected to be implemented soon and the OGP system is expected to go into operation later in 2019. Patentees will then be able to choose between using the new OGP system or continuing to use the current re-registration system to obtain a Hong Kong invention patent. Another amendment will allow second medical-use claims, following the position in Europe after the changes in the EPC 2000, so that Swiss-style claims will no longer be required in Hong Kong to protect second medical use inventions.
In the United States, an attractive aspect of challenging patents through inter partes reviews (IPRs) and post-grant reviews (PGRs) is the lack of a standing requirement. For example, competitors who do not yet have a product on the market may turn to IPRs to clear FTO. The courts are now wrestling with whether such competitors have standing to appeal an unfavourable decision in IPRs/PGRs to the federal courts.
When considering whether a claimed invention would have been obvious, 'secondary considerations' such as commercial success, long-felt need and failure of others can sometimes weigh heavily in favour of non-obviousness. However, a recent Federal Circuit decision (Acorda Therapeutics, Inc. v. Roxane Labs., Inc., 903 F.3d 1310 (Fed. Cir. 2018) has discounted such considerations because of the existence of a so-called 'blocking' patent, ie, an earlier patent that prevents others from pursuing the claimed invention. Whether any such secondary considerations can ever outweigh a blocking patent remains to be determined by the courts.