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Wednesday, 26 September 2012

Puzzled by comments in the UK, a German lawyer speaks out on the unitary patent

A very weary AmeriKat taking
a break on her unitary patent
update papers
The AmeriKat enjoys so many things about reporting on the unitary patent - the never-ending saga of not quite knowing what is going on, the always aggressively drafted comments posted on her reports and the weariness that comes with continually updating a series of updates (see such updates here).  But of all these little perks of the job, her favorite is entering into e-mail debates and communications with readers from across the globe on one of the hottest topics facing the European patent community.  

The AmeriKat has particularly enjoyed her e-mail correspondence with one of these readers, Dr. Ulrich Blumenröder.  Dr. Blumenröder, a lawyer in the Munich office of IP firm Grünecker, emailed her this evening with observations from a German IP lawyer's perspective.  Ulrich has this to say:
"Public comments in the UK on the Unitary Patent are puzzling. They dance around issues which are, at least to this author, of greater importance.  Maybe the ideas of a German lawyer may re-focus the discussion:
1. Bifurcation 
Long after the question on the location of seat of the Central Division settled, the never ending story about bifurcation nevertheless continues. UK lawyers seem to see the world of IP (at least England’s world) coming to an end if the currently planned system comes into existence as the current drafts (to the extent known) provide. They shout out to the IP community on this issue as if there were no tomorrow.  
It is moot to further discuss whether bifurcation is good or bad. It has been discussed over and over again. But for the fact that Germany and others live with bifurcation and have done so for quite some time without arriving at improper results (in the end), the implementation of the possibility of bifurcation will stay on the Draft Agreement. It is more noteworthy that it will not take place as often as feared by British lawyers, and likely only in clear cases where nullity of the patent is likely anyway. Contrary to unstated fears, the possibility of bifurcation will not take work away from British lawyers either (although of course one wouldn't mind that from a purely personal and business point of view). 
Why do I say this?  Plaintiffs can and will select the forum they consider best for their case. They will consider the speed of the respective forum, its qualification and experience, the costs, perhaps the language and the likelihood that the decision will be accepted by the defendant. As far as these issues are concerned plaintiffs will continue to make their choice mostly as they have done previously. Germans will swear that German judges (at least two of them will sit on the panel of a German local division) are the best, and the British will continue to imply that judges from the continent have no particular expertise and that only a British forum (with at least two British judges) can properly decide a case. If the patent is strong these criteria are all that will be of relevance for the selection of the forum. 
Dr. Blumenröder
The cases where the patent is shaky are those of more interest. British lawyers are concerned that plaintiffs will turn to fora where bifurcation will take place and the invalidity proceeding will be handled before the Central Division in Munich or Paris. Apparently, the fear is that not only Germans quarrelling among themselves will select such a local division (in Germany) but that British and non-European plaintiffs will make the same decision. However, what would be the benefit of such selection? The respective plaintiff knows that necessarily a nullity action will be filed and that an appeal of either action, nullity and infringement will be appealed. As a result one court, the Court of Appeals in Luxembourg will have jurisdiction over the joint proceedings within – hopefully – two years from filing. All that the plaintiff gains from inducing bifurcation is an infringement decision some 3 months earlier and one infringement decision which does not clarify either validity or infringement of the patent. Rather the plaintiff has to wait for a longer time to have the case properly decided. The consequence is easy to guess: plaintiffs will turn to a forum which in addition to speed, experience, price and language offer to decide both validity and infringement, i.e. the Central Division. Hence, plaintiffs will no longer rely on German panels as they do so far, if – yes if – German judges in local divisions do not adapt. They will, however, adapt. They are ambitious and proud and want to decide patent cases. And they want both the money and the prestige of being a European judge. With the technical judge at hand they will decide nullity actions. Even for those wishing to litigate in English they will provide options irrespective what might be said at this moment in time. And Germany will happily staff the panels.

Thus, plaintiffs will stay in Germany. The possibility of bifurcation will not be the reason. German plaintiffs and German judges will simply not apply it.

2. A Go for the Unitary Patent System? 
As contentious as the position on bifurcation may be between German and British lawyers, the main issue is that the European Parliament and EU Council will have to find a solution on how to deal with the (likewise endlessly discussed) question of the inclusion of Articles 6-8 of the Proposed Regulation. A solution is expected by 10-11 October, the next session of the Legal Affairs Committee of the EU Parliament.  
Notwithstanding the controversy of Articles 6 to 8, the hopes for implementation of the proposals in the near future might still be delayed. It is worthwhile to recount the events of the Summer:  
European Parliament President Martin Schulz
(i) The European Parliament must vote for the Draft Regulation. If not it will  not come into existence. Its Legal Service has issued an (unpublished in unredacted form) legal opinion arguing that removing Articles 6-8 from the Proposed Regulation will violate EU-law. Its Legal Affairs Committee has publicly said so and insisted on having Articles 6-8 in the Proposed Regulation. The EU Council (perhaps reluctantly) gave in. The EU Parliament has gained substantial self confidence which is publicly attributable to its new president Martin Schulz (who is (a) a German and (b) a member of Social Democratic Party, the opposition party to Merkel’s party). 
(ii) By mid-June everything was set.  The EU Council only needed to agree on the seat of the Central Division (an issue in which the European Parliament has no interest) on June 29 and the EU Parliament was to vote only five days later. Yet, the EU Council did not only decide on the seat but suggested to remove Articles 6 to 8 from the Proposed Regulation. UK Prime Minister David Cameron threatened to pull out of the entire system unless either the seat of the Central Division went to London or Articles 6 to 8 were removed. Hollande and Merkel (and apparently all others) gave in and “informed” the European Parliament how it was to vote. 
(iii) The European Parliament and its Legal Affairs Committee were fuming.

Now, where is the compromise? Shall the EU Parliament announce that it has been wrong with its legal opinion all along and that they of course will “obey” the EU Council? Or is it for UK Prime Minister Cameron to say that he was not quite serious when he threatened about the seat and/or Art. 6-8? The only promising sign is that all sources usually willing to comment on strategy in the European Parliament or in the German Ministry of Justice have all gone quiet. No comment at all or at least none with substance.
Ulrich and the Kat look forward to comments on the above observations and any thoughts on what a compromise might look like - readers can also e-mail Ulrich directly at Blumenroeder@grunecker.de.

In the meantime, Ulrich tells the AmeriKat that he is looking forward to seeing British lawyers in courts all over Europe.

3 comments:

Anonymous said...

Dr Blumenroeder is to be commended for addressing this matter head on.

However, I do disagree with his points, and for the following reasons. The core of his argument, which I take issue with, is as follows:
"However, what would be the benefit of such selection? The respective plaintiff knows that necessarily a nullity action will be filed and that an appeal of either action, nullity and infringement will be appealed. As a result one court, the Court of Appeals in Luxembourg will have jurisdiction over the joint proceedings within – hopefully – two years from filing. All that the plaintiff gains from inducing bifurcation is an infringement decision some 3 months earlier and one infringement decision which does not clarify either validity or infringement of the patent."

If you obtain an injunction based on a weak patent, shutting down ones business even for 3 months could be catastrophic. For products which are already on the market, this could cost a fortune in recalling products from shops and in lost sales, and it could easily lead to e.g. a telecoms company having to shut down its entire service.

Having to wait two years for an appeal while injuncted would be even worse - this could easily put a defendant out of business.

In such a situation, a defendant is far more likely to pay to settle the litigation, removing the ability to then seek the revocation of the patent. This situation would not occur where validity and infringement are heard together - if the validity is also contested up front, patentees will be more reluctant to assert weak rights in the first place, and no injunction will be granted based on an invalid patent.

Speed is not the only consideration - it has to be balanced against fairness, and bifurcation by default in almost every case lacks fairness.

Bifurcation would be more justifiable if the quality of patents being granted were higher. I understand the DPMA used to - and still does - do a more thorough job than the EPO, but the reality is that there are many thousands of weak patents out there, especially in the electronics field. Bifurcation is not suited to this actual reality.

Anonymous said...

It seems the core of Dr Blumenroeder's argument on bifurcation can be summarised as follows "Yes, it's bad, but not quite as bad as you might think". Not exactly a rousing endorsement for the policy.

Germans just need to accept it's a silly idea, and should be working to get rid of it, rather than impose it on the new unitary patent system.

Anonymous said...

The apparent British collective sense of horror at the possibility of bifurcated proceedings may relate to the general reluctance there to have a patent system which provides effective patent protection for innovative companies. Outside of the UK (and possible also inside) there is the feeling that before the courts of England and Wales, a patent will either be held to be invalid or not infringed. Elsewhere, there are systems which are more favourable to a patent proprietor, encouraging the investment in product developments.

So, if in your patent system, you expect the defendant to win and no injunction to be granted, a split jurisdiction system does not look good. If you have a more patent proprietor friendly point of view, split jurisdiction can be very attractive, requiring industry to innovate to survive.

There has been something of an attack of collective navel gazing following Apple's success against Samsung in the US, with the president of the EPO in his "Blog" wondering whether this showed the patent system to be in crisis. Clearly the iPad provoked a sea-change in computing devices - why were tablet devices only marketed effectively after Apple had shown the way? Faced with this situation, it would only be logical to provide the patentee with a strong weapon to preserve the monopoly situation until a final judgement issued of no infringement or invalidity. If your business model relies on stepping on the coat tails of others, the risk should be on you.

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