IP Report 2011/II

Reported by Dr. Jochen Pagenberg, LL.M.

In first discussions with the interested circles and experts the EU Commission announced that it will continue its work for a patent jurisdiction system and is planning amendments of the Draft Agreement of March 23, 2009 (St07928) which shall comply with the opinion of the Court of Justice of the European Union (CJEU) in order to achieve compatibility with the EU Treaties. 

Membership limitation
At a meeting of the Expert Group in Brussels, the Commission agreed in its interpretation of the Court Opinion with publications of practitioners that it will not be possible as planned to let countries join as members of an inter-national court which are not members of the EU. Users see this as an undesired modification of the original concept. The Commission is considering whether one can remedy this problem by a kind of “Patent Lugano Convention” in order to connect EFTA countries with the EU court system if they wish so. Details have not yet been disclosed.

Legal basis for the jurisdiction system
The Commission regards Article 352 TFEU (Treaty on the Functioning of the European Union, the former Lisbon Treaty) as a basis for the intended Agreement which requires ratification by the Member States and unanimity in the Council. Suggestions from industry to establish the court system rather by way of a regulation would not be a way to move forward, according to the Commission, since Member States feel that they need the approval of the national parliaments. The Commission nevertheless would like to speed up the procedure. It intends to propose a quorum by specifying a number of countries which would be necessary for the establishment of the Court. Those who sign after the expiration of the deadline would have to join later.

Implementation of referral rules into the Agreement
The most important question which met with the greatest reservations in the Expert Group is the degree of involvement of the CJEU in the future patent procedure. The EU Commission intends to amend the Draft Agreement by including the rules from Article 267 et seq. TFEU with strict obligations for the judges and sanctions in case of violations of EU law. Such sanctions also include damage claims which can be raised by private parties against Member States and even against the Patent Court itself.

Members of the Expert Group warned against such amendments for several reasons. The most evident result is a considerable delay of the patent infringement proceeding. While the infringement procedure under the Draft Agreement provides for a first instance and a second (and last) instance before the Court of Appeals, a referral of a legal question to the CJEU would double the number of instances.

A referral, in accordance with the general practice, would first open a new – third – instance before the CJEU which would last two to three years. This includes a hearing before the CJEU and the preparation of the conclusions of the Advocate General. When the CJEU has issued its decision and the “case” comes back to the Court of Appeals, another – the fourth – instance before the Appeal Court will start. The parties will discuss with the Appeal Court what the effect of the CJEU’s answer will have for the outcome of the infringement case. With an exchange of one or two briefs by the parties and another hearing the minimum of this part of the proceeding will be six months; in trademark cases this often takes up to twelve months. This means that the expected duration of about three years in the two instances of the Patent Court as it had been calculated so far will more than double.

Limitation of the EU legal order for patent law
Even if the number of cases might in theory be very low, it must be expected that in view of the threat of damage claims looming above the heads of the patent court judges, the number of referrals would considerably increase compared with the situation of the national courts today. But the number of referrals will also largely depend on the definition of what part of patent law must be counted as “EU patent law” from which questions for a referral could arise.

After some discussion the experts suggested that by the creation of the unitary patent and the jurisdiction system the present scope of the EU legal order in the field of patent law should neither be restricted nor expanded. As a result, rules which deal with substantive patent law should only be included into the Agreement and the Regulations if this is absolutely necessary. For this reason the Commission agreed to delete Articles 6 and 7 of Draft Regulation 215/3 on direct and indirect use as well as Article 8 concerning the limitation of the effects of the unitary patent.

The experts also requested that in order to avoid any uncertainty there should be an exhaustive and binding enumeration of the patent law rules which belong to the EU legal order (such as the Biotech Directive, the Enforcement Directive and a few procedural rules). Similarly, non-exhaustive examples of patent fields which do not belong to the EU legal order, in particular of substantive patent law, should also be added, such as the patentability requirements, revocation grounds and rules on claim interpretation and scope of protection contained in the EPC, to name only a few examples; not to forget the harmonized rules of the Member States which have been implemented into the national patent laws from the Strasbourg Convention, or the text of the Community Patent Convention of 1975 which has never entered into force.

Outlook
Some members of the Expert Group, although they were in favour of a clear delimitation of the legal areas which would be subject to referrals, expressed concerns that, in spite of such legislative clarifications, parties interested in delaying proceedings could nevertheless do so. They could, for example, argue in a patent infringement case that the patent was granted in violation of the (EPC) patentability requirements and that the allegedly invalid patent would constitute an infringement of the competition rules of the EU Treaty, a matter for which the CJEU has jurisdiction. On such and similar grounds referrals could be obtained fraudulently, and it could be expected that the CJEU might never-theless deal with questions of patentability and other rules of EPC substantive law, which means that uncertainties will remain.

The Commission will now work on proposals for the above amendments and it remains to be seen what the views of the users are.

Reported by Dr. Thomas Friede

The German patent DE 1975864 C1 (“Brüstle Patent”) contains claims directed to neural precursor cells derived from embryonic stem (ES) cells and methods for producing such neural precursor cells. The claims do not mention the use of embryos for producing the ES cells. Greenpeace filed a nullity action before the German Federal Patent Court for partial revocation of the German patent insofar as the claims comprise neural precursor cells derived from human ES cells. The nullity action was exclusively based on the ground that the subject matter claimed would not comply with the morality requirement of Section 2 (2) No 1 in combination with Section 2 (2) No 3 German Patent Act. The latter provision stipulates that no patents are granted for the use of human embryos for industrial or commercial purposes.

Greenpeace alleged that the practice of the invention insofar as it related to neural precursor cells derived from human ES cells would inevitably require the destruction of human embryos which is being considered to be immoral.

The Federal Patent Court decided to uphold in amended form a patent containing claims directed to neural precursor cells derived from ES cells, subject to the limitation that cells are excluded which are derived from ES cells prepared from human embryos. The patentee filed an appeal against said decision with the GermanFederal Supreme Court. Since the wording of the relevant provision Section 2 (2) No 3 German Patent Act is identical to Article 6 (2) (c) of the EU Biotech Directive 98/44 and requires inter alia an interpretation of the term “human embryo”, the Federal Supreme Court decided to refer questions of law to the Court of Justice of the European Union. Submissions were filed by some of the Member States. On March 10, 2011 the Advocate General rendered his opinion on the referred questions.

The first referred question relates to the meaning of the term “human embryos” in Article 6 (2) (c) of Directive 98/44 and whether this term includes all stages of the development of human life, beginning with the fertilisation of the ovum, or whether further requirements, such as the attainment of a certain stage of development, are satisfied. According to the Advocate General, the concept of a human embryo applies from the fertilisation stage to the initial totipotent cells and to the entire ensuing process of the development and formation of the human body, including the blastocyst. The Advocate General provided this definition in the knowledge of controversy among the Member States with respect to said term.

The Federal Supreme Court further inquired whether, in particular, unfertilised human eggs into which a cell nucleus from a mature human cell has been transplanted, or unfertilised human eggs whose division and further development have been stimulated by parthenogenesis are encompassed by the term “human embryos”. This question relates to alternative sources for creating human embryonic stem cells, i.e. therapeutic cloning and parthenogenesis. According to the Advocate General, unfertilised eggs into which a cell nucleus from a mature human cell has been transplanted or whose division and further development have been stimulated by parthenogenesis are also included in the concept of a human embryo insofar as the use of such techniques would result in totipotent cells being obtained.

The referring Court in particular wanted to know whether pluripotent embryonic stem cells obtained from human embryos at the blastocyst stage were considered as human embryos. The Advocate General considered that isolated pluripotent embryonic stem cells are not included in that concept because they do not in themselves have the capacity to develop into a human being.

The further questions of the referral related to the expression “uses of human embryos for industrial or commercial purposes” and whether this would include any commercial exploitation within the meaning of Article 6 (1) of Directive 98/44, especially use for the purposes of scientific research. Finally, the referring Court inquired whether a technical teaching is considered to be non-patentable pursuant to Article 6 (2) (c) of the Directive even if the use of human embryos does not form part of the technical teaching claimed by the patent, but is a necessary precondition for the application of that teaching (a) because the patent concerns a product the production of which necessitates the prior destruction of human embryos, (b) or because the patent concerns a process for which such a product is needed as base material.

In his opinion the Advocate General suggests to the Court to decide that an invention should be excluded from patentability where the application of the technical process for which the patent is filed necessitates the prior destruction of human embryos or their use as base material, even if the description of that process does not contain any reference to the use of human embryos. The exception to the non-patentability of uses of human embryos for industrial or commercial purposes according to the Advocate General concerns only inventions for therapeutic or diagnostic purposes which are applied to the human embryo and are useful to this particular embryo.

Remarks
For the practitioner in the field of Life Sciences-related patent law it may be noted that the present opinion of the Advocate General is stricter than the decision of the German Federal Patent Court which gave rise to the appeal and the referral. If the Court of Justice of the European Union should adhere to the opinion of the Advocate General, this may result in a lack of patentability for all human embryonic stem cell-related inventions in the European Member States. According to the current practice of the EPO, human embryonic stem cell-related inventions are granted if they were filed after 1998 when human embryonic stem cell lines became available and the stem cell lines could be used instead of the previous approach to prepare human embryonic stem cells from the blastocyst stage of human embryos.

The Decision of the Court of Justice of the European Union may be expected in summer 2011.

Reported by Dr. Rudolf Teschemacher

In December 2009, the last attempt was made to realise the community patent when the EU Council adopted conclusions on an “Enhanced patent system for Europe”. The Commission adopted a proposal for a Council Regulation on the translation arrangements for the EU patent. However, no agreement could be reached and at the Competitive Council, in December 2010, the failure of the project was confirmed: the necessary unanimous agreement on the translation arrangements could not be reached. As a reaction, the Commission proposed to launch an “enhanced cooperation”, as foreseen in the Treaties as a last resort if objectives of the Union cannot be attained within a reasonable period by the Union as a whole. At the outset, twelve Member States were prepared to take this route, and in the meantime thirteen more followed, leaving Spain and Italy as the only states staying aside. On April 13, 2011, the Commission published its proposals.

Two regulations are proposed. The first one is concerned with the creation of unitary protection. It is limited to the post-grant stage of proceedings before the European Patent Office (EPO). The European patent with unitary effect is offered as an option, while applicants remain free to obtain a national patent or a European patent taking effect in one or more of the European Patent Convention (EPC) signatory states.

The proprietor of the patent may request within one month after publication of the grant of the European patent the registration of the unitary effect of the patent. Unitary effect of the patent is defined in Article 3 of the draft as providing uniform protection and having equal effect in all participating Member States. This has the consequence that the patent may only be limited, licensed, transferred, revoked or lapse in respect of all participating Member States.

The draft contains a chapter on the effects of the patent which corresponds to Articles 29 to 31 of the Community Patent Convention of 1975 which in turn were the model for harmonising national legislation on infringing acts in the member states to the EPC.

The EPO is entrusted in particular with
– administering the requests for unitary effect,
– making entries on patents with unitary effect within the European patent register, and
– collecting the respective renewal fees.

Within the Administrative Council a select committee within the meaning of Article 145 EPC is to be set up for ensuring governance and supervision of the EPO’s activities related to the tasks entrusted to it. Decisions of the EPO in carrying out the entrusted tasks are subject to legal review before a national court.

The level of renewal fees to be set by the Commission shall be progressive throughout the term of the patent and shall be sufficient to ensure a balanced budget of the European Patent Organisation together with the procedural fees to be paid during the pre-grant stage. 50 percent of the renewal fees minus the costs incurred by the EPO in administering the unitary patent protection shall be distributed among the participating Member States. Inter alia, the share of distribution to be set by the Commission should provide compensation for Member States having an official language other than one of the official languages of the EPO.

The second draft regulation is concerned with the translation arrangements for the European patent with unitary effect. Article 14 (6) EPC provides that the European patent specification is published in the language of proceedings before the EPO, i.e. English, French or German, and that the specification includes a translation of the claims into the other two official languages. Article 65 EPC empowers the contracting states to prescribe a full translation of the patent to be supplied for validating the European patent. However, Article 3 of the draft regulation provides, without prejudice to the exceptions in Articles 4 and 6 of the draft, that no further translation is required. In accordance with Article 4, the alleged infringer or the competent national court may request a full translation.

Article 6 provides for a transitional scheme which may last up to 12 years from the entry into force of both regulations and will end before as soon as an expert committee concludes that high quality machine translations into all official languages of the Union are available. During the transitional period a full translation of the specification into English has to be filed with the request for unitary effect if the language of the proceedings before the EPO was not English.
If the language of the proceedings was English, a full translation of the specification into any official language of the participating member states that is an official language of the Union is to be filed. According to the Commission, this costs less than EUR 2,500. The translations are to be published by the EPO for information purposes only. 

Article 5 provides for a compensation scheme of reimbursing all translation costs up to a ceiling for applicants from EPO Member States filing in one of the languages of the Union that is not an official language of the EPO. The costs are covered by the renewal fees paid for patents with unitary effect.

Both drafts are transmitted to the EU Council and the European Parliament for adoption. The regulation on the European patent with unitary effect requires a qualified majority of the participating 25 Member States in the Council and a favourable vote in the Parliament; for the regulation on the translation arrangements the participating Member States must act unanimously in the Council after having consulted the Parliament.

Remarks
The proposals try to break the deadlock arising from the fact that Spain and Italy have blocked any attempt to implement a language regime for the community patent resulting in an attractive solution for applicants. However, reducing translation costs would also have been possible by making further progress with the London Agreement, if it is assumed that there is the political will to achieve such progress and to put aside the interests of lobbying groups representing those whose business is the existing big translation machinery.

Compared to the London Agreement, the simplified form of the community patent as proposed now has the further advantage of common administration of the granted patent, in particular the central collection of renewal fees by the EPO.

But simplification also has its price. One element is lacking which has been essential in previous proposals: a common litigation system. This may be the result of the opinion of the Court of Justice of the European Union (CJEU) 1/09, dated March 8, 2011 concluding that the draft agreement for creating a unified patent litigation system (named “European and Community Patents Court”) was not compatible with the provisions of the EU Treaties. The Commission is still analysing this opinion. So far it has not become clear how to overcome the concerns of the CJEU. Without a clear framework about which court can decide on the validity of a unitary European patent under which circumstances and with effect to whom, a single European title may appear dangerous.

In addition to the two draft regulations, the Commission has published four additional documents, to be viewed at:

http://ec.europa.eu/internal_market/indprop/patent/index_en.htm

Reported by Dr. Tilman Müller-Stoy and Dr. Niels Malkomes

Administrative acts such as examination reports formerly issued for a first application do not have any continued legal effect for a corresponding additional application for a “patent of addition” and thus do not affect the additional application. In this respect, additional applications for “patents of addition” have to be treated as independent applications.

The German Patent Act provides the concept of a so-called “patent of addition” (cf. Section 16 German Patent Act) allowing the applicant of a first application to file another application based on an improvement of the first application. This, for instance, serves to save annual fees.

In the present case, the applicant had filed a first application. Later on, the applicant also filed an “additional application” without requesting an examination. Both applications shared the same independent claim 1. After receiving a negative examination report for the first application, the applicant converted the additional application into an independent application. This independent application was rejected by the German Patent and Trademark Office without issuing an examination report, since the objections raised in the examination report of the first application also applied to the additional application. In response, the applicant lodged an appeal against this rejection and defended the application with amended claims.

The Federal Patent Court set aside the decision, ordered to refund the appeal fee and remitted the case to the Patent Office.

According to the Federal Patent Court, the principle of a fair trial was violated which justified the refund of the appeal fee. The Patent Office had been obliged to state the objections against patentability of the additional application and to give the applicant the opportunity to reply. This obligation which was violated by the Patent Office results from several aspects: i) Upon conversion of the additional application into an independent application, there was no longer any procedural connection to the first application. ii) Even in case the rejected application was still an additional application, the formal material difference between the first application and the additional application would have prevented that earlier administrative acts such as examination reports concerning the first application also applied to the additional application.

The Court stated that this was an important difference compared to a divisional application which is treated according to the same status the parent application had at the time of filing of the divisional application.

The present decision strengthens the legal certainty in case of applications for a patent of addition.

Reported by Stefan Bianchin

In the present case, the plaintiff, an employee, sued his two former employers, two companies headed by the same managing directors and having the same share holders, for the provision of information on the extent of their use of inventions made by the employee. In addition the plaintiff requested a declaratory judgment that both defendants are obliged to pay him damages for this use. Initially, the plaintiff was an employee of defendant 1) where he had made several employee inventions. Subsequently, the plaintiff was employed by defendant 2). Notably, in most of the cases, not defendant 1), where the plaintiff made the employee inventions, filed respective protective rights, but defendant 2). Accordingly, defendant 2) was recorded as the owner of these protective rights in the register with the German Patent and Trademark Office (GPTO).    

In first instance the Dusseldorf District Court found that the plaintiff’s employee inventions were not validly claimed by defendant 1) (under the old version of the German Employee Invention Act). According to that, the rights in the inventions rested with the plaintiff and both defendants were not authorized to use plaintiff’s inventions. Therefore, the Dusseldorf District Court came to the result that both defendants were liable for unauthorized use of plaintiff’s inventions and decided – in this respect – in the plaintiff’s favor.

The Dusseldorf Appeal Court confirmed that the plaintiff’s employee inventions were not validly claimed by defendant 1). However, the Appeal Court found that the plaintiff was formally not entitled to assert claims against defendant 1) with respect to these protective rights for which defendant 2) was registered as owner with the GPTO. The Appeal Court explained that the asserted claims were – in view of their content – infringement claims based on an infringement of protective rights and that, pursuant to Section 30 PatG (German Patent Act), respectively Section 13 (3) GebMG (German Utility Model Act), only the registered owner is principally entitled to assert such infringement claims. However, the Appeal Court pointed out that in the case law, it is established that a non-registered substantive owner was exceptionally entitled to assert infringement claims, however, only against the wrongly registered owner of the patent. Thus, even if the plaintiff was not registered as the owner, he was entitled to assert infringement claims against defendant 2), but not against defendant 1). As a result, the Appeal Court revoked the first instance decision insofar as defendant 1) was respectively burdened. According to the Appeal Court, this result was not unfair vis-à-vis the substantive owner, since the substantive owner was able to take action against the wrongly registered owner (i.e. to sue the wrongly registered owner to declare consent to the transfer of ownership).

In its decision, the Dusseldorf Appeal Court explicitly explained that it did not agree with the viewpoint of the Dusseldorf District Court as stated in several other decisions, that also a non-registered but substantive owner can be entitled to assert damage claims. The Appeal Court explained that this point was not consistent with the intention of Section 30 PatG, respectively Section 13 (3) GebMG which shall provide legal certainty for third parties. Moreover, the Appeal Court stated that also the fact that damage claims may be assigned and therefore may also be asserted by someone who is not the registered owner cannot exempt the owner from the requirement to register his ownership in order to be entitled to assert damage claims.

Remarks
As a result, the substantive owner is only entitled to assert infringement claims against the wrongly registered owner, but not against other infringing third parties. Interestingly, the Dusseldorf Appeal Court noted that this question may be answered differently, i.e. the substantive owner may be entitled to assert infringement claims against infringing third parties if the wrongly registered owner is simultaneously sued to declare consent to the transfer of ownership. However, the Appeal Court only raised this question, leaving the answer open.

Thus, if the worst comes to the worst, the substantive owner may have to file a first lawsuit, suing the wrongly registered owner to declare consent to the transfer of ownership. Only when this lawsuit has been successfully concluded, infringing third parties can be attacked – an in total burdensome and eventually long-lasting process. However, filing a request for a preliminary injunction against the infringing third parties may help to achieve a quicker result.

Reported by Thomas Schachl, LL.M.

The plaintiff is the owner of a German patent. On an international trade fair in Stuttgart, the defendant had exhibited a product covered by the claims of the plaintiff’s patent and had also displayed this product in a catalogue with an order number. The plaintiff had ordered the product in Germany by use of this order number, but only received a non-infringing version. The plaintiff then filed a request for preliminary injunction for patent infringement based on the exhibition of the patent infringing product at the German trade fair.

The court held that the mere exhibition of products at a leading international trade fair in Germany is not to be regarded as an infringing act of offering in the sense of the German Patent Act.

Due to the significant consequences for the defendants, preliminary injunctions may only be granted if patent infringement can easily be determined and if there are no doubts on the validity of the patent. Regarding the determination of patent infringement, there must be no doubts about the realization of the patented features as well as the specific type of the infringing acts.

In view of the specific type of infringing act, the court had remaining doubts whether the product was offered in Germany. There was no (further) evidence that the defendant had offered this product to specific customers. In view of the international character of this trade fair, the court found that it was also possible that the product had just been part of an (albeit non-infringing) exhibition without any intention for distribution in Germany. Although even the court considered a different legal evaluation may also be justifiable, the court held that merely the remaining doubts are causing the requirements for granting a preliminary injunction not to be fulfilled.

Remarks
This decision is continuing the recent case law of the German Federal Supreme Court in trademark cases (cf. Federal Supreme Court, April 22, 2010, I ZR 17/05 – Pralinenform II/praline shape II) and is also applying these legal principles to patent cases. However, it remains to be seen whether other German patent infringement courts will adopt them accordingly. As a consequence of this new case law, it is, at least for the time being, all the more advisable for patent owners to carefully record any infringing acts and – especially in case of a trade fair – to obtain or even provoke evidence for offers explicitly directed to the accused product.