Patent Litigation 2024

Patent Litigation Around the World

Every year brings new challenges and opportunities in the field of patents, and 2023 was no exception. The biggest news in 2023 was the opening of the Unified Patent Court (UPC) on 1 June 2023, following a “sunrise period” between 1 March 2023 and 30 May 2023 which allowed patentees to “opt out” their European patents from the jurisdiction of the UPC. This option was used frequently, and by the end of 2023 more than half a million European patents had been opted out of the jurisdiction of the UPC by their owners.

Yet, 2023 saw rising numbers of filings in the UPC across all industry sectors, with the telecommunications and life sciences industries accounting for more than two thirds of disputes. Not unexpectedly, the new court has attracted a fair amount of SEP litigation; and the life sciences side (although large pharma disputes are the exception) has attracted litigation in the medical devices and diagnostics space. The German local divisions have by far attracted the most cases, led by the Munich divisions with roughly half of all German cases; followed by Paris and the Nordic Baltic division in Stockholm. 2024 promises further increased filings and, of course, the first substantive decisions by the UPC.

2023 also saw further attempts by governments to reign in on patentee’s rights, including through:

• the proposed EU SEP Directive (COM(2023)232), which aims at forcing parties to undergo compulsory rate determination by a “Competence Centre”, to be established at the European Intellectual Property Office in telecommunications disputes;
• the proposal for EU-wide compulsory licensing rules for EU-wide crises; or
• in the USA, the “march-in” rights proposed by the Biden administration to lower drug prices in the country.

The following report looks around the world, and analyses events and decisions since the last update that will impact on users of the various patent systems in 2024 and beyond.

Europe

UK

The courts continue to grapple with SEP disputes and, within those, FRAND determinations. Two decisions setting terms (Apple v Optis [2023] EWHC 1095 (Ch) and Lenovo v InterDigital [2023] EWHC 1583 (Pat)) suggest that implementers may not be as afraid of such determinations going forwards, as in both cases the rates set were much nearer to the terms suggested by the implementers. Indeed, recent filed cases suggest that more implementer-led FRAND determinations will be seen in 2024. All is not yet lost for patentees in the UK – in Nokia v OPPO, [2023] EWHC 1912 (Pat), the court decided that the patentee always gets to pick where it has terms set.

The other vogue topic for the courts remains an assessment of plausibility in all aspects of patentability. In contrast to the European Patent Office (EPO), which has moved away from such an analysis in relation to inventive step (post G 0002/21), the Court of Appeal has doubled down on the full-fat version (ab initio plausibility) for all claim types and inventive step, as well as sufficiency (Sandoz v BMS [2023] EWCA Civ 472). How long the UK will remain at odds with the EPO (and other EPC jurisdictions) remains to be seen.

The UK Supreme Court dismissed Dr Thaler’s appeal in December 2023, confirming that the UK Patents Act does not allow a machine to be the inventor (Thaler v Comptroller-General of Patents, Designs and Trade Marks, 2023 UKSC 49).

The Netherlands

In 2023 the Dutch courts continued to deal with a substantial number of patent cases, including cases involving cross-border injunction claims for European countries and beyond.

Decisions from the Dutch courts made clear that the courts will carefully consider decisions from foreign courts as well as the EPO, but will ultimately make their own decisions. For example, the Court of Appeal in The Hague was one of the first courts in Europe to deal with a case involving arguments on “plausibility” in the context of inventive step after the G2/21 decision of the EPO. It followed the decision in G2/21, thereby deviating from earlier Dutch case law and a UK decision in the same case, which required the technical effect relied upon to be made plausible in the application as filed. What is needed according to the Court of Appeal is that the skilled person, having the common general knowledge in mind, and based on the application as originally filed, would derive said effect as being encompassed by the technical teaching and embodied by the same originally disclosed invention.

The Dutch courts also dealt with the question of liability of patentees towards third parties for enforcement of rights later held to be invalid. The Dutch Supreme Court confirmed a decision by the Court of Appeal of The Hague in which a life sciences company was considered to not be liable towards a healthcare insurer for the enforcement of a preliminary injunction against a generic company, where the patent was later held to be invalid. It was held that the life sciences company did not know nor should have known that there was a serious chance that the patent would be revoked in opposition or national court proceedings.

2023 also saw an updated set of rules come into force for the Expedited Regime in Patent Cases. This update intends to make sure that cases can continue to be handled effectively, and the regime retains its attractiveness with a preset final oral hearing about a year from the start of proceedings.

On the standard essential patent (SEP) front, the Dutch courts confirmed that injunctive relief in preliminary injunction proceedings for such cases is practically unavailable, in line with the situation elsewhere in Europe. Normal proceedings on the merits, however, remain available in SEP cases, with the District Court of The Hague using its discretionary powers to order confidential disclosure of licence and settlement agreements by both the SEP-holder and the implementer.

Finally, with the launch of the UPC, judges from the specialised intellectual property (IP) courts in The Hague became among the most active UPC judges, sitting on many of the panels dealing with the first cases. The launch also meant that changes to the Dutch Patent Act came into effect, in order to bring the Dutch Patent Act (more) in line with the provisions under the UPCA.

Spain

On the judicial front, 2023 saw the setting up of a new (32nd) section in the Court of Appeals of Madrid. This new section substituted the 28th section, specialised (inter alia) in IP matters, along with the 15th section of the Court of Appeals of Barcelona. It will hear, on an exclusive basis (and in addition to other related matters), all appeals against the decisions of the Madrid first-instance courts issued in the fields of:

• copyright and related rights;
• industrial property (patents, trade marks and designs);
• unfair competition; and
• advertising and antitrust.

On the case law front, one of the most eminent developments in the field of patents in 2023 was rendered, in fact, by the aforementioned new section – ie, on 23 June 2023 in the judgment issued between, on the one hand, Eli Lilly and Company (“Lilly”) as the patentee/SPC-holder and Daiichi Sankyo Europe GmbH (“Daiichi”) as the exclusive licensee and, on the other hand, Laboratorios Cinfa, SA (“Cinfa”) and Teva Pharma, SLU (“Teva”).

The dispute related to the launch of generic raloxifene by the defendants. This is a landmark judgment which provides a rather clear set of guidelines regarding the scope and evidentiary requirements for damages claims following patent infringement. This decision will be particularly useful in the pharmaceuticals sector, as it confirms that the first generic moving onto the market and causing the creation of the “homogeneous group” for all authorised drugs (giving rise to the application of the “lowest price” dispensation rule – ie, that the pharmacist dispenses the drug with the lowest price in the group) and, subsequently, the reduction of up to 40% in the innovators’ product price, is directly responsible for the lost profit of the patentee. The judgment also settles some previously disputed topics, acknowledging the standing to sue of unregistered exclusive licensees (when they take action with the patentee), and opens up new ones such as the scope of the res judicata principle in invalidity proceedings.

Regarding the Mobile World Congress, annually held in Barcelona in February/March, and according to the Joint Statement by the Barcelona and Alicante courts, court activity increased substantially, in particular with respect to the number of protective briefs filed in 2023. In contrast, activity around ex parte preliminary injunctions and/or pretrial investigation proceedings remained calm last year. On the FRAND/SEP patent front, a number of new cases were lodged before different commercial courts in Spain over the last few years; however, some were settled and others remain pending without any decision on the merits having yet been rendered. 

Finally, a recent ruling of 13 December 2023 by the Spanish Supreme Court rejected the defendant’s appeal on the merits, thereby confirming the Court of Barcelona’s prior ruling of 2021 allowing the patentee to enforce a patent as amended by the EPO Board of Appeals in national infringement proceedings pending in appeal (thus changing the previous law).

France

In 2023, French courts issued several important rulings in the pharmaceuticals sector. The French Supreme Court rendered a series of decisions that clarified French case law regarding the validity of supplementary protection certificates (SPCs). Several of these decisions reversed Court of Appeal rulings which had considered as invalid an SPC covering a monoclonal antibody that was not specifically characterised in the basic patent (and that was covered by a subsequent patent). Notably, the Supreme Court seems to suggest that the discovery of the antibodies at stake did not involve an independent inventive step with respect to the basic patent (Cass Com, 1 February 2023, Case 21-13.663). This appears to confirm a recent trend in French case law towards a less stringent approach to SPC validity assessment.

With respect to the assessment of patent validity, the Paris Judiciary Court elaborated on the potential relevance of the so-called plausibility criteria. After distinguishing between the conditions applicable to second medical use claims and to claims covering a new product irrespective of its therapeutical application, the Paris Judiciary Court held a patent of the latter category valid from an inventive step point of view, on the grounds that the technical effect of the claimed compound was credible at the priority date for the skilled person (Paris Judiciary Court, 8 June 2023, Docket 21/12727). Notably, it considered that for this type of claim, it is not required that the patent discloses data supporting the plausibility of the technical effect, and that documents dated after the priority date may be taken into consideration.

As regards evidence-gathering mechanisms, the French Supreme Court clarified that the French evidentiary seizure (saisie-contrefaçon) can be used to obtain financial and accounting documents establishing the extent of the infringement, even during the course of proceedings on the merits, and irrespective of whether other mechanisms were available to obtain such documents (Cass Com, 22 March 2023, Case 21-21.467). This confirms the broad range of purposes for which this strategic tool can be leveraged.

Finally, with the launch of the UPC, some amendments to French statutory patent law entered into force, notably in order to align such law with the UPC provisions. Pursuant to this reform, France is also one of the countries that allows for the coexistence of a national patent and a unitary patent (or a non-opted-out European patent) on the same invention.

Germany

Germany saw a decline in patent litigation during 2023. Clearly, some of the perceived “advantages” of the German patent system (specifically, the “injunction gap”) were reduced, if not removed, by the 2021 German patent reform; as a result of which the German Federal Patent Court has started to produce preliminary opinions on patent validity within six months from service of a nullity action. While these preliminary opinions have, more recently, been delayed beyond the original six-month period, the Court is still trying hard to produce opinions on validity of patents in time for oral hearings in German infringement proceedings. These preliminary opinions help courts to more accurately assess patent validity, thus leading to more stays and fewer “quick” injunctions.

As a result of the reduction in patent filings, the Mannheim court, which used to be a particularly attractive venue for German litigants, closed one of its three patent divisions at the end of 2023. One reason for the reduced numbers of new patent infringement lawsuits in Germany may lie in the opening of the UPC, where many of the judges who were previously at the German District Courts are now in charge of running the UPC’s German local divisions.

Another tool that was introduced with the patent reform, the proportionality test for injunctions, has remained a “toothless tiger”. German courts have uniformly resisted the “temptation” to refuse injunctions following a finding of patent infringement in cases where an injunction may not be a proportionate remedy.

In an important and, arguably, groundbreaking decision (X ZR 123/20 – CQI-Bericht) the highest German patent court, the Federal Court of Justice, confirmed that not just a licence but also a contractually granted covenant to not use will usually lead to exhaustion of patent rights in Germany, and that the reservation of rights by the licensor against third-party users of the subject matter of the agreement has no effect. This decision is particularly important in the field of telecommunications, where often a distinction is made in licence agreements between licences (which lead to exhaustion) and covenants to not sue, to be sued last, etc, which the parties to the agreement had expected to be exempt from exhaustion.

The Federal Court of Justice also elaborated on its generous and patentee-friendly approach in assessing original disclosure in an earlier patent application from which priority is claimed. According to the decision, any disclosure must be read from the perspective of the skilled person, and can be amended, in the case of open technical “questions”, with common general knowledge (X ZR 53/20 – Datensendeleistung).

Italy

The most significant patent litigation update of the year for Italy was that, on 26 June 2023, the UPC Administrative Committee finally decided to establish the third section of the UPC central division in Milan. The Milan section will be competent for human necessities’ patents (Class A of the International Patent Classification), with the exclusion of SPCs. Class A includes patents in the fields of:

• pharmaceuticals;
• food;
• agriculture;
• tobacco;
• clothing;
• furniture;
• sports; and
• games.

The Italian government declared that they are aiming to make the Milan section fully operational by June 2024.

In the meantime, the UPC Milan local division has been called upon to decide on at least three different requests for orders to preserve evidence. While orders to preserve evidence have been popular in Italy for many years (known as descrizione), the Milan local division’s decisions are noteworthy since the judges had to adapt local practice to UPC rules for the first time.

With twin decisions issued on June 13th and 14th, Judge Alima Zana granted two ex parte orders to preserve evidence, within a day from the filing of their respective requests (LD Milan ORD_500663/2023, 13 June 2023; LD Milan ORD_500982/2023, 14 June 2023). Judge Zana found that because the allegedly infringing products would have been exhibited at a trade fair only for a couple of days, the extreme urgency of the matter did not allow for the defendant to be heard in advance. Interestingly, Judge Zana also authorised the applicant’s attorneys to access the evidence immediately after the enforcement of the order; whereas in Italian practice the gathered documents are generally sealed, at least until a discussion hearing.

On 25 September, Judge Pierluigi Perrotti issued another order to preserve evidence in Italy, broadly in line with Judge Zana’s earlier decision (LD Milan ORD_565446/2023, 25 September 2023). However, Judge Perrotti imposed on the applicant a EUR50,000 security for enforcing the order (corresponding to 2.5% of the declared EUR2 million value of the case), which is quite atypical for such proceedings in Italy.

On a different note, several major amendments to the Italian Industrial Property Code (IPC) came into force in August 2023. These new rules might have a relevant impact on Italian patent litigation in the coming years.

First, the reform abolished the so-called professor’s privilege. Until recently, Article 65 IPC provided that the right to obtain a patent on an invention developed by a university researcher belonged, as a rule, to the latter – not to the university. The newly minted Article 65 IPC adopts the opposite solution. The right to patent an invention developed by a university researcher now belongs, first and foremost, to the university. In turn, the researcher has a specific duty to disclose the invention to the research institution, and the right to be recognised as the inventor (a “moral right”). The abolition of the “professor’s privilege” aims to strengthen the IP portfolios of Italian research institutions, and to enable more efficient and centralised technology-transfer policies.

Second, the Italian legislature also reversed course on double-patenting. Article 59 IPC previously established that whenever, for the same invention, an Italian patent and a European patent having effect in Italy (or a European patent with unitary effect) had been granted to the same inventor (or their successor in title), having the same application or priority dates, the European patent pre-empted the Italian patent. By contrast, Article 59 IPC now provides that the Italian patent will maintain its effect and coexist with the European patent. Remarkably, Article 59 IPC does not include any safeguarding mechanisms that would limit the enforcement of the Italian patent – for instance, in the case of parallel UPC proceedings. Hence, Article 59 IPC may enable complex litigation strategies that are specific to Italy, potentially involving multiple proceedings on patents covering the same inventions.

Eurasian Economic Union (EAEU)

The EAEU’s single pharmaceuticals market provides for a simplified generic marketing authorisation approval for EAEU member states. For innovators, this means the need to more closely monitor the Unified EAEU Register of Drugs and the national registers of the EAEU member states (Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia), as well as information on bioequivalence studies in those territories. To date, the search through the Unified EAEU Register of Drugs does not provide full information on activities of generic producers. Hence, only careful checking of national registers (often combined with enquiries with local healthcare authorities) may help identify in which member state the generic producer has taken steps aimed at obtaining a marketing authorisation for the whole of EAEU territory.

Pharma patent disputes in the EAEU member states are largely decided by the courts in a balanced manner, despite the sense that the courts would not grant claims of patent right-holders originating from countries introducing sanctions against Russia and Belarus. In a nutshell, international businesses have continued to enforce patent rights in the EAEU states. More than before, there have been attempts to challenge validity as well as patent term extensions (PTEs). Simultaneously, generic producers demonstrated more willingness to negotiate amicable settlements with originators. Obtaining PIs in the EAEU remains a challenge. It seems, however, that a need for change regarding the availability of PIs in the region is understood by the region’s state authorities, and there is hope that 2024 will bring some positive developments.

The Eurasian Patent Office’s pharma patents register, introduced in 2022, has been popular among right-holders applying for recording of their Eurasian patents with the register in 2023. While this register currently serves as an optional tool for assessing the patentability of new patent applications by national patent offices, there is hope that this register may be used for patent linkage purposes going forward.

Compulsory licences remain a matter that also requires monitoring in EAEU countries. Compulsory licences have been sought before the courts owing to patent non-use or insufficient patent use, or based on rights to dependent patents. In Belarus and Russia, compulsory licences are also available via governmental authorities. While compulsory licences granted by governments remain an exception, on 27 December 2023 two generic producers obtained compulsory licences for seven patents protecting semaglutide in Russia. Constant monitoring of Eurasian and national patent applications in EAEU countries remains a must, as such a precaution may substantially help in shielding originators from potential compulsory licence grants (eg, by proceeding with a patent invalidity claim against “dependent” patents filed by generics as soon as the relevant patent application is granted). Equally important are proactive reactions to generics’ requests for licences, since originators’ silence only enhances the generic producers’ chance of obtaining compulsory licences.

Asia

Japan

In Japan, the courts have continued the trend of becoming increasingly pro-patentee: according to the IP High Court’s statistics released in June 2023, there was a 30% success rate for patentees in patent infringement cases decided between 2014 and 2022, and 35 cases in the same period in which the patentee received over JPY100 million (around USD700,000) in damages. 

In 2023, the Special Division of the IP High Court continued to explore the principle of territoriality (Case No 2022 (ne) 10046) and handed down a decision that the act of creating a general client/server system can amount to “production” in Japan (ie, as used in Article 2(3)(i) of the Japan Patent Act) – even where the server and the operator are outside Japan – provided that certain conditions are met and pursuant to a “comprehensive consideration theory”. This decision is consistent with the IP High Court’s decision in July 2022 which held, for the first time, that a Japanese patent can be enforced against acts of infringement that are partially committed outside the territory of Japan (Case No 2018 (ne) 10077; the parties are identical to those in Case No 2022 (ne) 10046). The issue in that case related to an online computer program hosted on servers in the USA but provided to Japan-based users. Having set out a four-part test to assess the circumstances and co-defendants’ activities, the IP High Court held that the co-defendants’ acts could be regarded as having been “substantially and wholly” conducted in Japan.

Other developments in 2023 include Japanese companies arguably continuing to become more assertive and initiating patent litigation, particularly in the technology field and including between domestic companies. More disputes may arise in this sector in the coming year or so, potentially in respect of 5G and other standards, the internet of things and connected devices (especially regarding connectivity in the automotive sector).

In the life sciences field, originator versus generics cases continue. Recently, a number of generic companies appear to have benefited from Japan’s non-statutory “patent linkage” system and the regulator’s apparent readiness to grant generic marketing authorisation in certain cases (for instance, where a patent has been held invalid by the JPO but not all avenues of appeal have yet been exhausted or the decision finalised). This potentially conflicts with the regulator’s long-held position of ensuring a stable supply of pharmaceutical products to the Japanese market.

In particular, in 2023 it seems that the regulator approved generic versions of two or more drugs, the active ingredients of which may still have been protected by relevant patents or patent term extensions. If the granting of such generic marketing authorisations are found to have been premature (in the sense of a first-instance patent invalidation decision being overturned on appeal, for example), there may be important changes to the regulator’s practice in the future in favour of originators and patentees.

Finally, a number of biologics and biosimilar patent cases continue to be the subject of dispute resolution in Japan, somewhat mirroring cases in the USA and Europe. It is still unclear whether the Japanese courts will take similar positions in respect of issues already litigated elsewhere. For instance, regarding antibody patenting in Japan, the current approach appears to be more similar to that of Europe than that of the USA, in that the Japan Patent Office tends to focus on the new functions or properties of the claimed antibody in finding inventive step or non-obviousness. Notably, expert evidence seems to have made a significant contribution in certain disputes, in some cases even leading to a court decision of non-patentability that reversed findings of validity in prior instances. In any event, it is expected that the number of such biologics patent cases will increase, and it will be important to monitor Japan-specific developments in due course.

China

In 2024, China is expected to continue to implement the policy document “Outline for Building a Strong Country in Intellectual Property Rights (2021–2035)”, which was issued by the Central Committee of the Communist Party of China and the State Council in September 2021. The Outline specifies the general requirements, key tasks and measures for building a robust Chinese IP system by 2035, including in the field of patents, by:

• improving the quality and efficiency of patent examination, and reducing the average examination period for invention patents to 14 months by 2025;
• strengthening the protection of patent rights, with a view towards increasing the amount of compensation for patent infringement, and implementing punitive damages for serious bad-faith infringement;
• promoting the transfer and transformation of patent achievements, and establishing a national patent operation platform; and
• enhancing the international influence of China’s patent system, actively participating in the formulation and revision of international patent rules, and expanding the scope and depth of patent co-operation with other countries and regions.

In light of the above goals, China completed its amendment of the Implementing Rules under the 2020 Patent Law (the “2023 Implementing Rules”), and of the 2010 Patent Examination Guidelines, in December 2023. These amendments, in combination with the amendment of the Patent Law in 2020, continue to mark a major reform of China’s patent system. They will have profound implications for both domestic and foreign patentees. 

The following overview explores the key areas for readers to focus on in the years to come, regarding the developments of China’s patent system.

Extension of patent term

Patent term extensions are proposed by the amendment of the 2020 Patent Law to compensate for the time taken for review and approval of new drugs. However, the amendment lacks details on the implementation of such extensions, such as the eligibility criteria, the calculation method and the application procedure. The 2023 Implementing Rules, which will take effect on 20 January 2024, have filled that gap.

For unreasonable delays in the examination process, the 2023 Implementing Rules specify the timeframe for application and the method for calculating compensation. Patent-holders must apply within three months after the patent grant announcement, and the calculation method for compensation is detailed in the 2023 Implementing Rules.

Regarding compensation for time that patentees lose during a new drug’s marketing approval procedure, the 2020 Patent Law stipulates that patents related to new drugs approved for sale in China may be extended for up to five years, ensuring that the total effective term of the patent does not exceed 14 years after drug approval. The 2023 Implementing Rules clarify the calculation method, which is similar to the European approach. However, they leave open key questions about the scope of “new drugs” eligible for the term extension, which future administrative regulations are expected to address.

The introduction of patent term extensions in China is a significant change that aims to encourage innovation and investment in the pharmaceuticals industry, especially for new drugs that require long and costly development and approval processes. However, the implementation of patent term extensions also poses some challenges and uncertainties for both patent-holders and generic manufacturers, such as:

• the definition of “new drugs”;
• the co-ordination between patent and regulatory authorities; and
• the potential impact on drug prices and accessibility.

The year 2024 will see approvals as well as rejections from the China National Intellectual Property Administration concerning patent term extensions. These administrative decisions, and further review or appeal of these decisions, are expected to additionally clarify the practical application of the 2023 Implementing Rules.

Principle of honesty and good faith, and no abuse of patent rights

The principle of honesty and good faith is a general principle that applies to various aspects of transactions or legal acts in China. This principle already exists under the Civil Code and the Anti-Unfair Competition Law. In 2020, it was newly added to the Patent Law, mandating that patent applications and enforcement actions must not abuse rights to harm public interests or others’ legitimate rights.

The 2023 Implementing Rules provide more detailed provisions, particularly targeting fraudulent practices aimed at exploiting government subsidies or tax incentives. Applicants found engaging in such practices may face fines of up to CNY100,000 (around USD15,000).

With the principle of honesty and good faith added to the Patent Law, the accused infringer in a patent infringement lawsuit may use a claim of malicious litigation or abuse of rights by the patentee as a defence. Previously, to determine that the patentee’s behaviour constituted an abuse of rights, or to request compensation for the losses caused by the patentee’s abusive litigation, the accused infringer often had to file a separate lawsuit under the Anti-Unfair Competition Law.

Patent linkage system

The patent linkage system in China is relatively new, as it was established in 2020 and came into effect in 2021. Since then, more than 100 patent linkage cases have been filed and dozens of decisions have been issued by the CNIPA and courts.

The patent linkage system in China bears some similarities with the US Hatch-Waxman Act. For example, both systems require generic applicants to submit certifications regarding the patents of the originator drugs, and both systems provide a waiting period for the approval of the generic drugs during litigation. However, there are also some notable differences, such as the length of the waiting period (nine months in China, which is much shorter than the 30 months in the USA), and the availability of the administrative adjudication route in China as well as the civil action route.

The patent linkage system in China is still evolving and developing. It is important for originator drug companies, generic drug companies and legal practitioners to keep abreast of the latest developments and trends regarding China’s patent linkage system, and to adopt appropriate strategies and measures to protect their interests and rights in patent linkage litigation.

Design patents should not be overlooked

In 2022, China joined the Hague Agreement Concerning the International Registration of Industrial Designs, commonly known as the “Hague Agreement”. The 2023 Implementing Rules harmonise the integration of the international application process for industrial designs under the Hague Agreement with China’s domestic procedures, and provide detailed rules on how to handle priority rights, the grace period for assessing novelty and other technical issues. These updates will likely increase the volume and variety of design patents registered in China. This development could lead to an uptick in design patent litigation. As more designs gain protection, the likelihood of infringement cases may rise, particularly given the visual and often more subjective nature of design patent infringement assessments.

Delayed examination

The 2023 Implementing Rules introduce the option for applicants to request a delayed examination, a feature not explicitly provided for under the 2020 Patent Law. This grants applicants greater control over the timing of their patent examination process.

The connection to patent litigation lies in the strategic management of patent portfolios. By delaying the examination of a patent application, applicants can better align their patent strategy with market trends, technological advancements and changes in patent examination policies. This strategic alignment might involve waiting for a more favourable legal environment or technological landscape to maximise the potential of a patent.

In the context of patent litigation, a well-timed patent grant can be a significant advantage. If a patent is granted at a time when the market for the technology is mature, or if there are clear infringers in the market, the patent-holder can leverage this in litigation for injunctions or damages. Conversely, rushing to obtain a patent in a less-developed market or technology area might lead to weaker enforcement options or challenges in litigation.

Delayed examination, therefore, offers a tactical tool for patent-holders, potentially leading to stronger positions in future patent disputes. This approach can be particularly advantageous in fast-evolving industries where timing can significantly affect the relevance and enforceability of a patent.

Standard essential patents (SEPs)

Three main areas of development of SEPs have been seen in China over the past few years.

First, there have been more SEP disputes before the Chinese courts, and Chinese courts are participating in international rule-making through significant case rulings. These disputes include domestic cases and cases involving domestic and foreign entities (eg, Huawei v Samsung, or Xi'an Xidian Jietong Wireless Network v Apple). In the recent OPPO v Nokia litigation in China, a Chinese court issued a ruling setting a global FRAND (fair, reasonable, and non-discriminatory) licensing rate. 

Second, on the administrative front, entities such as the State Intellectual Property Office and the State Administration for Market Regulation have made efforts in SEP governance, including issuing anti-monopoly guidelines related to SEPs.

Third, another area of development of SEPs in China is the international trade dispute that arose from the granting of anti-suit injunctions by Chinese courts against foreign SEP-holders. On 18 February 2022, the European Commission filed a request for consultation under the World Trade Organization’s (WTO) dispute settlement system against China, alleging that the practice of the Chinese courts contravened the TRIPS Agreement and violated the patent rights of European companies. The EU argued that such anti-suit injunctions interfered with the patentee’s right to seek judicial remedies in other jurisdictions, and created an unfair advantage for the Chinese implementers in FRAND licensing negotiations. The EU’s complaint against China is the first WTO dispute involving SEPs, and reflects the growing tensions and conflicts among the major players in the global telecommunications market over the protection and enforcement of SEPs and the resulting royalty payments for global licences.

Conclusion

For businesses and legal practitioners, these changes underline a need for a strategic approach to IP management, considering the evolving landscape of patent rights in China. It is essential to stay informed and to adapt to these developments, as they will shape the future of patent litigation and IP protection strategies in China and beyond.

Hong Kong

A new patent system was introduced in Hong Kong at the end of 2019, providing a direct route for seeking 20-year patent protection by means of original grant patents (OGPs). As of 30 November 2023, around 810 applications for OGPs had been filed at Hong Kong’s Intellectual Property Department (IPD), and around 80 OGPs had been granted, some within less than 18 months of filing.

The alternative route in Hong Kong for obtaining 20-year invention patent protection requires a patentee to first obtain a UK, European (UK) or Chinese patent (“designated patents”), and to then re-register the designated patent at the IPD without the need for any local substantive examination. The re-registration route operates in parallel with the OGP system, so patent applicants can choose between the OGP system or re-registration. In the 11-month period ending in November 2023, over 16,400 applications were filed to re-register designated patents, and around 9,750 patents were granted using the re-registration route.

However, the IPD wants there to be potential advantages in using the OGP route. For example, if an applicant agrees to not request any amendments and requests early publication of the application, and if the application progresses smoothly, the entire process to granting may be completed in around 12 to 18 months. Further, under an IPD pilot scheme an OGP applicant can request the deferral of the formality examination for a period of up to 12 months from the filing or priority date. The effect of this scheme bears some similarities to a US provisional patent application, and allows an applicant to establish an early filing date without having to file claim(s), giving applicants more time to assess the patentability and commercial potential of their invention. Such requests are granted at the Registrar’s sole discretion and must satisfy certain requirements. If a request is granted, the processing of the OGP application will be suspended during the deferral period.

In its 2023 policy address, the Hong Kong government announced plans to introduce legislative amendments in the first half of 2024 to implement a “patent box” tax incentive, and one issue is whether this will apply only for OGPs. During 2024, the Hong Kong government will also continue to discuss with the patent agent sector and other stakeholders plans for establishing regulatory arrangements for local patent agent services, covering professional qualification requirements, registration, and the regulatory model and framework. 

The Hong Kong High Court IP specialist list was set up in 2019, with a small number of designated judges who can hear patent and other IP cases. The intention of the IP specialist list is to:

• enable more judge-led case management;
• improve the level of judicial expertise for dealing with IP cases; and
• increase efficiency in (and therefore speed up) IP litigation.

New procedural court rules for patent and other IP cases are expected to be introduced soon.

China’s 14th five-year plan (2021–2025) affirms the Chinese government’s support for the future development of Hong Kong in a wide spectrum of areas, including developing Hong Kong into a regional IP trading centre, an international innovation and technology hub and as a leading centre for international legal and dispute resolution services in the Asia-Pacific region. The Hong Kong government wants to leverage Hong Kong’s advantages in international financial, legal and dispute resolution services within China’s Greater Bay Area (GBA), which covers Hong Kong and Macao as well as nine major cities in Mainland China, including Guangzhou and Shenzhen, the home of many Chinese technology companies.

Over the last twelve months, a number of large IP-related international arbitrations have taken place in Hong Kong, in some cases involving Chinese electronics manufacturers. At the end of January 2024, a comprehensive new mechanism will come into force for the reciprocal recognition and enforcement of judgments in civil and commercial matters between Hong Kong and Mainland China. Although patent infringement and validity judgments are not covered by this arrangement, once the arrangement comes into force on 29 January 2024 judgments issued in disputes, such as those for breach of contract, will be covered (with some limited exceptions), allowing both monetary and non-monetary judgments from Hong Kong courts in many types of technology-related contractual disputes to be registered and enforced by Mainland Chinese courts.

USA

Notable decisions

Amgen v Sanofi – an enablement standard with teeth

On 18 May 2023, the Supreme Court issued a unanimous opinion regarding US patent law’s enablement standard. The case pertained to antibody drugs that reduce LDL cholesterol by binding to a protein (PCSK9) that impairs the body’s ability to remove LDL cholesterol from the bloodstream. Amgen and Sanofi both created antibodies that bind to a particular region of PCSK9 called the “sweet spot” – a sequence of 15 amino acids out of PCSK9’s 692 total amino acids. Amgen’s antibody was called Repatha, and Sanofi’s was called Praluent. In 2011, both companies received patents for their respective antibodies. Neither of these patents were at issue in the case. 

Instead, Amgen asserted two 2014 patents that related back to its 2011 patent. These patents purported to claim the entire genus of antibodies that:

• bind to specific amino acid residues on PCSK9; and
• block PCSK9 from binding to LDL receptors. 

The specification disclosed the amino acid sequence and three-dimensional structures of 26 antibodies which performed the bind and block functions. It was undisputed that these 26 antibodies were enabled. The parties disagreed, however, on whether all antibodies that performed the bind and block functions were enabled by Amgen’s disclosure of two methods (called “roadmap” and “conservative substitution”) for finding additional antibodies. Both the district court and the Federal Circuit held that Amgen’s claims were not enabled, and the Supreme Court unanimously agreed. 

The Supreme Court explained that if a patent claims an entire class, the specification must enable a person skilled in the art to make and use the entire class. In other words, the more one claims, the more one must enable. The Court explained that Amgen failed to meet that standard because antibodies are incredibly diverse, and the science was still unpredictable. The Court noted that changing even one amino acid in an antibody’s sequence can alter its structure and function, and translating an antibody’s sequence into a known three-dimensional structure was still not possible today. Amgen disclosed only 26 antibodies, when its claims potentially covered millions of additional candidates that could perform the bind and block functions. The Court called Amgen’s two methods for discovering additional antibodies “little more than two research assignments” which required an unreasonable amount of experimentation. Both methods, which relied on trial and error, required painstaking experimentation to see what worked. Here, the public did not receive its benefit of the bargain, because Amgen claimed a lot but enabled only a little. 

The Supreme Court’s decision in Amgen v Sanofi articulated an enablement standard that is closely intertwined with claim scope. Yet, uncertainty remains as to what exactly is a “reasonable amount of experimentation”, which, as the Court acknowledged, depends on the nature of the invention and the underlying art. What is clear is that claiming a substance based on its function (as opposed to its composition) could be an area fraught with danger.

Ironburg v Valve – patent owner’s burden of proof for IPR estoppel

In an April 2023 decision, Ironburg Inventions Ltd v Valve Corp, the Federal Circuit clarified the standard for whether inter partes review (IPR) estoppel applies to a ground not raised in an IPR petition. Specifically, 35 USC Section 315(e)(2) provides that a petitioner, or their real party in interest, in an IPR that results in a final written decision is estopped from asserting “any ground that petitioner… reasonably could have raised during that inter partes review” in a district court or at the ITC. First, the Federal Circuit held that the patent-owner seeking to benefit from an assertion of estoppel has the burden of proof, by a preponderance of the evidence, to establish that the petitioner “reasonably could have raised” the grounds during IPR. Second, the Federal Circuit adopted the “skilled searcher” standard, holding that IPR estoppel under this section only applies to invalidity grounds “a skilled and diligent searcher would reasonably have discovered… through reasonable diligence”. 

The district court had found that IPR estoppel applied to certain grounds based on evidence produced by Ironburg that a third party had located the prior art references asserted by Valve. However, because the record was silent as to the level of diligence by the third party, the Federal Circuit vacated and remanded, explaining that the district court’s conclusion relied on an unsupported assumption that the prior art search by the third party was only “reasonably” diligent and did not involve “extraordinary measures”, such as using “scorched earth” tactics to find the references.

VLSI Technology LLC v Intel Corporation – patent infringement damages, and the detailed intersection of technology and economics

In December 2023, the Court of Appeals for the Federal Circuit overturned a jury verdict awarding over USD2.1 billion in damages to plaintiff VLSI Technology LLC for infringement by defendant Intel Corporation of two VLSI semiconductor patents. The Federal Circuit reversed the jury’s finding of infringement on one patent (the ’759 Patent) and affirmed the jury’s finding of infringement on the second (the ’373 Patent). With respect to the ’373 Patent, however, the Federal Circuit remanded for a new trial on the issue of damages – a reassessment of USD1.5 billion of the total initial damages award.

At trial, VLSI’s experts presented a multi-step analysis to identify technical advantages of the ’373 Patent practised by Intel’s semiconductor chips, and to quantify the incremental value of such use over non-infringing alternatives. VLSI’s analysis appeared to be detailed, both technically and economically. For example, the analysis was derived from technical calculations quantifying power savings and speed improvements, which were plugged into further revenue calculations to determine incremental revenue realised by Intel for using the patented functionalities in its products. In sum, VLSI’s overall “regression analysis” proposed a lump sum royalty of about USD1.6 billion for Intel’s infringement of the ’373 Patent. The jury awarded USD1.5 billion.

On appeal, the Federal Circuit identified errors in the technical inputs that were crucial to VLSI’s damages calculation. Specifically, the court stated that “in determining the power savings attributable to use of the ’373 Patent, [VLSI’s expert] made a readily identifiable error”. The court pointed out that VLSI’s expert “used inputs that he chose by trying to match (only or in part) data not from use of infringing functionality” (emphasis added). That certain data inputs in VLSI’s damages analysis were untethered to infringing functionalities in Intel’s accused products “undermines the reliability of the results”, the Federal Circuit said.

While the Federal Circuit ruled that VLSI’s experts’ testimony on damages was flawed, it found “no sound basis, given the nature of the error found or of the other errors alleged, for denying VLSI an opportunity to provide a corrected damages case”. The Federal Circuit noted deficiencies with Intel’s challenges as well. According to the court, Intel “had not persuasively shown that the regression analysis [VLSI] used… is an improper or unreasonable one”. Given the noted errors and shortcomings on both sides, remand for a new damages trial was deemed appropriate to give the parties “the opportunity to provide better explanations”.

The Federal Circuit focused on how precisely (or imprecisely) VLSI’s damages analysis was connected and limited to technical data inputs associated only with infringing functionalities (and the trial court on remand will likely do so as well). A key takeaway from this case is that damages proofs, particularly in hi-tech areas involving numerous functionalities, involve a precise intersection of technical and economic analyses, where selecting the wrong data inputs may compromise significant damages awards.