Van Dongen on Proportionality and Injunctions in the UPC

Lisa Van Dongen has posted a paper on ssrn titled Proportionality and Flexibilities in Final Injunctive Relief, forthcoming in The Unified Patent Court: Problems, Possible Improvements and Alternatives (Alain Strowel et al. eds., Ledizioni, 2023).  Here is a link to the paper, and here is the abstract:

          In 2006, the patent world was shaken to the core by eBay v MercExchange, a case that questioned several basic principles in patent enforcement that were considered well established. The US Supreme Court sent a clear signal that patent rights were not to be considered absolute, and courts should thus not enforce them in automated fashion with injunctive relief. This case has received considerable attention globally, with many patent scholars analysing it in meticulous detail and questioning the European approach. Even though there is no agreement in the field on the optimal balance in patent enforcement (and likely never will be), even the most adamant proponents of strong patent enforcement agree that there may be other interests that merit the denial or tailoring of final injunctive relief. Yet, the automated tendencies in patent enforcement in Europe - the finding of an infringement automatically leading to the (blanket) grant of a permanent injunction - remain not only as prevalent as they have been for several decades, but also without any clear departures by courts (apart from English judges) from such tendencies indicative of course changes. What is more, is that the possibility for Europe to break with automated tendencies in enforcement will soon be further complicated by the addition of another layer to Europe’s existing patent systems, namely by the creation of the Unified Patent Court (UPC) and the unitary patent. If this system takes off, decisions of this new court will carry significant weight in European patent enforcement due to several organisational and territorial aspects. The UPC has even been described as a potential judicial counterbalance to pro-patent tendencies in patent offices, particularly the European Patent Office (EPO). However, considering the strange construct of its creation, it is questionable that the UPC will be that judicial counterbalance and lead the way for other courts in Europe. Some of these aspects might also create some tension with other systems it will have to co-exist and interact with. A closer look is thus imperative. This paper aims to do just that, testing the hypothesis: The UPC will not bring about a change in the current automated tendencies in granting final injunctions, but rather cement them. This paper explains why there will be no push from the EU to try and do so based on the current status of EU harmonisation in patent enforcement, questions the UPC’s capability and willingness to break with the existing automated tendencies based on the UPCA’s formulations and organisational features of the UPC, and explores some legislative solutions at the European level to move Europe away from automated tendencies in patent enforcement.

This is an insightful paper, and I suspect that the author is correct in predicting that the UPC will not depart from the status quo in favor of near-automatic granting of injunctive relief to the prevailing patent owner.  Her recommendation that the EU consider legislation providing more detail on when and how proportionality might result in limitations on (tailoring) injunctive relief, or in some instances denying such relief altogether, seems to have merit.

Unified Patent Court Agreement Enters into Force This Week

On Thursday, June 1, to be precise.  So far, 17 EU members have ratified the agreement. Seven others (Cyprus, the Czech Republic, Greece, Hungary, Ireland, Romania, and Slovakia) are signatories but haven't yet ratified it.  This day has been a long time coming, and I hopeful that the court will prove to be a great success. 

The remedies provisions of the UPCA, articles 59-69, include as one would expect provisions on injunctions (permanent and provisional), corrective measures, and damages.  They are similar, though not identical in every respect, to the provisions found in the Intellectual Property Rights Directive.  In this regard, I published a post in March titled Some Resources on Damages in the UPC, which included a JUVE Patent article titled UPC: How are damages dealt with; an OxFirst article titled Considering Patent Infringement Damages Calculations under the Unified Patent Court and a very good OxFirst webinar titled Legal underpinnings of patent damage calculations in Germany, featuring Dietrich Kamlah; and what I described as "a brief discussion of damages under the UPC in Paul England's book A Practitioner's Guide to European Patent Law:  For National Practice and the Unified Patent Court (2d ed. 2022), at pp. 235-36."  I also noted that Dr. England had recently published another book titled A Practitioner's Guide to the Unified Patent Court and Unitary Patent, which I did not yet have a copy of but now do; it has an extensive discussion of remedies available from the UPC at pp. 155-160, and in chapters 15, 16, and (especially) 18.  Also relevant is chapter 12, which discusses declarations of noninfringement.  (Of course, it may be a while before any of these provisions, other than perhaps the ones on orders to produce evidence and inspect premises, freezing orders, and provisional and protective orders get used.)  I should also note that Pierre Véron has a webpage titled Unified Patent Court Document Repository, which you might want to bookmark for its handy links to the Unitary Patent Regulations, the UPCA, and other relevant documents.

Bechtold, Frankenreiter & Klerman on Forum Selling Abroad

Stefan Bechtold, Jens Frankenreiter and Daniel Klerman have posted a paper on ssrn titled Forum Selling Abroad, 93 Southern California Law Review __ (forthcoming 2019).  Here is a link to the paper, and here is the abstract:

Judges decide cases. Do they also try to influence which cases they decide? Clearly plaintiffs “shop” for the most attractive forum, but do judges try to attract cases by “selling” their courts? Some American judges actively try to enlarge their influence by making their courts attractive to plaintiffs, a phenomenon known as “forum selling.” This article shows that forum selling occurs outside the U.S. as well, focusing on Germany, a country that is often held up as the paragon of the civil law approach to adjudication. As in the U.S., German courts attract cases primarily through the pro-plaintiff manipulation of procedure, including the routine issuance of ex parte injunctions in press cases and refusal to stay patent infringement proceedings when the patent’s validity is challenged in another forum. A critical difference between forum selling in Germany and the U.S. is that court administrators are more actively involved in Germany. As state officials, German court administrators have the incentive to consider the effect of caseloads on government revenue and the local economy, and they use their power to allocate judges to particular kinds of cases in order to make their courts attractive. They also use their power over promotion, case allocation, and resources to reward judges who succeed in attracting cases. Based on an extensive set of interviews with attorneys, judges and court officials, this article describes evidence of forum selling in German patent, press, and antitrust law. It also analyzes how German courts compete internationally with courts from other countries.

This is a very interesting paper.  The authors conclude that the prevalence of patent litigation filed in Düsseldorf, Mannheim, and Munich. is attributable not only to the quality and speed of decisions, but also to such matters as the courts' reluctance to issue stays of judgments pending invalidity proceedings (coupled with the perceived inadequacy of damages for wrongful enforcement in the event the patent is subsequently invalidated), and their reluctance to appoint expert witnesses (which, when it occurs, slows things down considerably).

Updates on Compulsory Licensing, Punitive Damages, Unwired Planet

1.  This past Monday I published a post titled German Court Affirms Preliminary Grant of Compulsory License for HIV Drug.  We still are awaiting the release of the BGH's judgment in this case (all we have for now is a press release), but the June 2017 issue of GRUR has a brief discussion of the August 2016 judgment of the Bundespatentgericht in an article by Ingrid Kopacek and Wolfgang Morawek titled Aus der Rechtsprechung des BPatG im Jahr 2016:  Teil II:  Patent Recht und Gebrauchsmusterrecht ("From the Case Law of the Bundespatentgericht in 2016, Part 2:  Patent and Utility Model Law").  See pp. 545-57, see in particular pp. 555-56.  Also of possible interest, although it doesn't discuss the recent German case, is an article by Hugh Dunlop titled Compulsory Licensing under a Unitary Patent, 39 EIPR 393 (2017).  Here is the abstract:

Expectations are high that the European Unitary Patent and the Unified Patent Court will get off the ground very soon. The new court will have jurisdiction over unitary patents (and "traditional" patents granted under the EPC that are not opted-out) for actions in relation to patent infringement and licences of right, but compulsory licences are supposed to be left to national courts. This article explores whether this assumption may be challenged and, even if it stands, whether national courts may take an EU-wide view of compulsory licences under unitary patents.

2.  Also this week, Norman Siebrasse published another post on Airbus v. Bell (see my previous post here, which links to Professor Siebrasse's other posts on this case), this one discussing in greater depth the issue of determining the quantum of punitive damages in patent cases.   As Professor Siebrasse notes, the rationales for awarding punitive damages under Canadian law are retribution, deterrence, and denunciation--a trio that dates back to an 18th century English case, Wilkes v. Wood, as cited in the 2002 Canadian Supreme Court decision in Whiten--but the only one of these that provides any real guidance with regard to quantification, if only in an imperfect sense, is deterrence:  

The difficulty with this principled scheme, as I see it, is that it actually provides very little guidance in assessing quantum. Quantum must in the end be expressed as a number. Deterrence, as discussed below, naturally lends itself to quantification, but the siblings of denunciation and deterrence communicate moral values and judgments, which are by the nature almost impossible to quantify.

Highly recommended, and not just for patent aficionados. 

3.  I should also note that Professor Peter Picht's paper Unwired Planet/Huawei: A Seminal SEP/FRAND Decision From the UK, which I previously mentioned on the blog here, has been published in the July 2017 issue of GRUR Int (pp. 569-79).  Here is a link, and here again is the abstract:

With its decision in Unwired Planet (UWP) v. Huawei, Birrs J has not only handed down the first major ruling on SEP/FRAND issues in England but also decided a case that poses a number of questions which are key for this area of the law. Well aware of this, he has drafted a thorough and extensive opinion that is likely to have considerable impact – not only – on the development of EC law. Inter alia, the decision discusses the legal nature of an ETSI FRAND declaration; the question whether “FRAND” is a range or a single set of licensing conditions; the procedural component of FRAND; the existence of a qualified “unFRANDliness”-threshold below which competition law is not triggered; the sequencing of negotiation and litigation over FRAND licences; hard-edged vs. soft-edged discrimination; the role of “Comparables” for calculating FRAND; and the anti-competitiveness of offering a mixed portfolio of SEPs and non-SEPs.

Léonard on Abuse of Right Under Belgian, French, and E.U. Law, Part 2

A couple of weeks ago I blogged about Amandine Léonard's article L’abus de droit dans le contentieux des brevets:  Entre divergences nationales et vœu d’harminisation de la jurisdiction unifiée du brevet—une piste à suivre? (“Abuse of right in patent litigation:  between national differences and the desire for harmonization in the unified patent jurisdiction—a path to follow?”), published in the January 2017 issue of Propriété Industrielle (pp. 10-14).  I thereafter learned that Ms. Léonard has published two other very interesting papers, in English, on the abuse of right doctrine.  (In case you're not familiar with abuse of right, it's a civil law doctrine--potentially applicable in all types of cases, not just patent cases--that in recent years courts in the Netherlands and Japan invoked to prevent Samsung from asserting claims for injunctive relief in litigation charging Apple with the infringement of certain FRAND-committed SEPs.  I've discussed the Japanese case several times on this blog (e.g., here), and the Dutch case in this article.)  

Anyway, the first of the two English-language articles by Ms. Léonard is ‘Abuse of Rights’ in Belgian and French Patent Law – A Case Law Analysis, 7 JIPITEC 30 (2016).  Here is a link to the article, and here is the abstract:

This paper examines what types of actions undertaken by patent holders have been considered as abusive in the framework of French and Belgian patent litigation. Particular attention is given to the principle of the prohibition of “abuse of rights” (AoR). In the jurisdictions under scrutiny, the principle of AoR is essentially a jurisprudential construction in cases where judges faced a particular set of circumstances for which no codified rules were available. To investigate how judges deal with the prohibition of AoR in patent litigation and taking into account the jurisprudential nature of the principle, an in-depth and comparative case law analysis has been conducted. Although the number of cases in which patent holders have been sanctioned for such abuses is not overabundant, they do provide sufficient leads on what is understood by Belgian and French courts to constitute an abuse of patent rights. From this comparative analysis, useful lessons can be learned for the interpretation of the ambiguous notion of ‘abuse’ from a broader perspective.

The other paper is coauthored with Richard Steppe and is titled Catching Patent Trolls in the Net of Abuse of Rights:  Applying the General Principle of Union Law in the Context of the Unitary Patent Package, 39 EIPR 163 (2017).  The paper is available in hard copy and on Westlaw.  Here is the abstract:

The phenomenon of "patent trolling" is recurrently alleged to obstruct the founding purposes of patent law. This contribution assesses to what extent the prohibition of abuse of rights, as a principle of Union law, may serve as a corrective mechanism. First, the article sets out the relationship between "patent trolls" and other (e.g. non-practicing) entities, establishing a behavioural definition of the former. Secondly, EU and national perspectives on abuse of rights are outlined and their applicability to patent rights tested. Lastly, the criteria of abuse are applied to trolls’ behavioural characteristics within the context of the Unitary Patent Package.

"Non omne quod licet honestum est. Summum jus, summa injuria; malitiis non est indulgendum."

I like the Latin maxims, which I believe come from Roman law and which might be translated as "Not everything that is permitted is honorable.  Extreme justice is extreme injustice.  The wicked are not to be indulged."  Perhaps I will use them myself if I ever get back to my contemplated project on the comparative law and economics of wrongful patent enforcement . . . .

Walz on Damages Under the Unitary Patent System

Axel Walz has published a paper in the June 2016 issue of GRUR Int (pp. 513-30) titled Schadensersatz und Einheitspatentsystem:  Rechtliche Grundlagen und Systematik des Schadensersatzanspruchs im künftigen Einheitspatentsystem ("Damages and Unitary Patent System:  Legal Principles and Schematic of Damages Claims in the Future Unitary Patent System").  Here is the abstract (my translation):

Up to now, discussions of the new European Unitary Patent System have focused in large part on questions concerning claims for injunctive relief.  While German courts up to now have assumed it self-evident that claims for injunctive relief are subject to the principle of reasonableness, in practice there was and is established an almost automatic coupling of patent infringement and claims for injunctions.  In contrast to the question whether and to what extent this practice must change under the future European Unitary Patent System, the discussion concerning possible damages claims leads but a shadow existence.  The present article therefore takes up the questions of which conditions must be satisfied for damages claims within the  framework of the future Unitary Patent system, and what legal principles are relevant in this context.  In addition, deviations from what has been German practice to date are specially highlighted. 

The article notes, among other things, that article 68(4) of the Agreement on a Unified Patent Court appears to permit a court to award the infringer's profits without evidence that the infringer knew or should have known of the patent (in contrast to German law).  Towards the end of the article, the author also questions whether the Agreement contemplates anything comparable to the German practice of permitting a court to award damages  in its free discretion (nach freier Überzeugung) under article 287 of the German Civil Procedure Code (see my recent article on Patent Damages Heuristics at p.20 & n.76 for brief discussion).  My one critique of the article is that it doesn't take account of the change made in the 17th and 18th drafts of the UPC Rules of Procedure, which in a departure from the 16th draft have eliminated the provision (article 118(2)) that would have allowed the court to award damages in lieu of injunctive relief (see discussion on this blog here).  Overall, though, a good read.

Claims for Residual Damages Under German Law

Last month I blogged about an article by Michael Nieder titled Europäische (Bündel)Patente--Restschadensersatzanspruch adé? ("European (Bundle) Patents--Farewell to Residual Damages Claims?") in the January 2016 issue of Mitteilungen der deutschen Patentanwälte (pp. 1-3), which discusses, among other things, whether article 72 of the Agreement on a Unified Patent Court, which mandates a five-year statute of limitations for infringement claims, eliminates the ten-year statute of limitations for underlying residual damages claims under German law.  As I wrote at the time (see here): 

The author explains that, under section 199(1) of the German Civil Code, a claim for damages for the infringement of a German patent or the German portion of a European Patent normally must be brought within three years ("Unless another commencement of limitation of is determined, the standard limitation period commences at the end of the year in which . . . 1.  the claim arose and 2.  the obligee obtains knowledge of the circumstances giving rise to the claim and of the identity of the obligor, or would have obtained such knowledge if he had not shown gross negligence").  However, the second sentence of section 141 of the German Patent Act states "Where the person obliged has obtained something as a consequence of the infringement at the expense of the entitled person, section 852 of the German Civil Code shall apply mutatis mutandis," and section 852 states "If by a tort the person liable to pay compensation obtains something at the cost of the injured person, then even after the claim to compensation for the damage arising from a tort is statute-barred he is obliged to make restitution under the provisions on the return of unjust enrichment. This claim is statute-barred ten years after it arises, or, notwithstanding the date on which it arises, thirty years after the date on which the act causing the injury was committed or after the other event that triggered the loss." 

Similarly, in a post I published in 2013 I noted that:

In Germany, the statute of limitations for filing an action for patent infringement is governed by article 141 of the Patent Act.  WIPO’s translation of this provision reads:

As regards the period of limitation for claims due to infringement of a patent right, the provisions of Part 5 of Book 1 of the Civil Code shall apply mutatis mutandis. If the infringer has gained something through the infringement at the expense of the entitled party, Section 852 of the Civil Code shall be applicable mutatis mutandis.

Focusing on sentence 1, the general statute of limitations for filing a patent infringement claim is three years.  See Thomas Kühnen, Patent Litigation Proceedings in Germany:  A Handbook for Practitioners ¶ 1554,at 389 (6^th ed. Frank Peterreins tr. 2013); Benkard, Patentgesetz § 141 ¶ 4, at 1504 (10^th ed. 2006).  But the second sentence provides a second opportunity to file a claim for damages, after the three-year period has lapsed.  Here is the text of the referenced section of the Civil Code (BGB § 852) (English translation can be found here, German original here):

If by a tort the person liable to pay compensation obtains something at the cost of the injured person, then even after the claim to compensation for the damage arising from a tort is statute-barred he is obliged to make restitution under the provisions on the return of unjust enrichment. This claim is statute-barred ten years after it arises, or, notwithstanding the date on which it arises, thirty years after the date on which the act causing the injury was committed or after the other event that triggered the loss.

So even after the three-year period, the patent owner may get to file a claim, but for what?  The term used for the damages the patent owner may recover under these circumstances is Restschadensersatz, or residual damages.  Prevailing opinion is that these damages consist of a reasonable royalty only.  See Benkard Patentgesetz, § 141 ¶ 6, at 1505-06.  The argument appears to be that the only benefit the infringer derived at the expense of the entitled party is the royalty it didn’t pay.  For a contrary opinion, however, see Matthias Hülsewig, Der Restschadensersatzanspruch im Patentrecht—beschränkt auf die angemessene Lizenzgebühr?, GRUR 2011, 673, arguing that the patentee should have the option of recovering the infringer’s profit or a reasonable royalty.

A few weeks back Dr.  Hülsewig kindly emailed me a copy of a 2015 opinion of the German Federal Supreme Court in a copyright matter, in which the court states that the question of whether BGB § 852 permits the recovery of the infringer's profit remains an open question.  See paragraph 34 of Judgment of Jan. 15, 2015, I ZR 148/13 (BGH)--Motorradteile, available here.  In addition, as Dr. Hülsewig pointed out, the new 11th edition of the Benkard treatise on German Patent Law now also takes the position that claims for residual damages are not limited to reasonable royalties but also may include the disgorgement of other pecuniary benefits the infringer has derived ("Daher kann der Rest-Schadensersatzanspruch nicht in jedem Fall auf die (stets geschuldete) angemessene Lizenz beschränkt werden; vielmehr können auch weitere Vermögensvorteile herausverlangt werden" (section 141, p. 1907).  So perhaps we are witnessing a change in the majority view of what claims for residual damages may include under German law--though if Nieder is correct about the effect of the Unified Patent Agreement, in cases involving European patents such claims eventually may be constrained by the five-year statute of limitations.

New Book on the Unitary Patent

My university's library recently received a copy of Transitions in European Patent Law:  Influences of the Unitary Patent Package (Rosa Maria Ballardini, Marcus Norrgård & Niklas Bruun eds., Kluwer Law International 2015).  Part IV is titled Enforcement and Procedural European Patent Law, and includes chapters by Kelli Larson titled Enforcement:  Legal Implications of the European and Unitary Patent Systems for Non-practicing Entity Patent Enforcement in Europe, and by Marcus Norrgård and Alicia Nylund titled The Requirements for Preliminary Injunctions in the Unified Patent Court.  Ms. Larson's chapter provides a interesting discussion of factors that cut both for and against the prediction that the new system will make Europe more NPE-friendly, while the chapter by Professor Norrgård and Ms. Nylund contrasts the UK approach to preliminary injunctions (involving something of a balancing inquiry) with the German approach (involving more of a prediction as to likelihood of harm). Norrgård and Nylund note that the relevant legal documents relating to the UPC do not clearly specify which approach the UPC should take toward preliminary injunctions, and they argue in favor of an approach (patterned after frameworks developed by Professor John Leubsdorf and Judge Richard Posner) that they refer to as "inverse sequential," which would begin "by weighing the interests of the parties, which in turn would define the standard of proof required.  In short, the graver the consequences for the plaintiff compared with the defendant's consequences, the lower the threshold for a preliminary injunction, and the other way around:  the greater the harm to the defendant (compared to the plaintiff's), the higher the threshold."  Interesting reading.

EPLaw Patent Congress in Brussels This Coming Friday

Information here and here, courtesy of IPKat (more about which, see below) and EPLaw.  I won't be at this one myself (though I will be in Amsterdam the following week, see here), but it looks like it will be a rewarding event, with sessions on the UPC, patent damages, the reimbursement or royalties following the invalidation of a licensed patent, and FRAND, among other matters.

Bennett on Torpedo Actions and the Unified Patent Court Agreement

A "torpedo action" is a declaratory judgment action filed by a potential patent infringement defendant in a European state that is believed to have a slow-moving docket, with the goal of preemptively staying proceedings in a faster forum in which the patent owner is likely to file an infringement action.  I've discussed torpedo actions in my book (pages 253-55) and on this blog (here, here, here and here).  Now Richard Bennett has published an article in the July 2015 issue of Mitteilungen der deutschen Patentanwälte (pp. 301-08) titled Das Übereinkommen über ein einheitliches Patentgericht—das Ende des Torpedos? ("The Unified Patent Court Agreement—The End of Torpedo Actions?").  Here is the abstract (my translation from the German):

The Unified Patent Agreement (UPA) has as its goal the faster and simpler enforcement of patents.  The continued alternative or supplemental jurisdiction of national courts for claims concerning both Unitary Patents and European Patents, however, offers the possibility to present to a national court a question of rights preliminary to an infringement action.  In particular, in view of the interplay of the UPA with the Brussels Regulation (Recast) 2015 the possibility of such preliminary questions is not averted.  In this regard, the UPA achieves its self-imposed goal at best only conditionally.

Mr. Bennett argues that, during the 7-year transitional period provided under article 83 of the Unified Patent Court Agreement, prospective defendants may be able to stay litigation before the European Patent Court by initiating torpedo actions in slow-moving national courts, and that even after that period prospective defendants may be able to stay actions before the EPC by initiating related actions such as actions for a competition law-based  compulsory license.

Microsoft, Google/Motorola, Settle Patent Disputes

Readers may have seen this news already, but if not here are stories in Bloomberg News, Reuters, and The Wall Street Journal. According to Reuters, "The companies said they have been cooperating on such issues as the development of a unified patent court for the European Union, and on royalty-free technology for speeding up video on the Internet," and Bloomberg News reports that "the two companies are lobbying to ensure" that PAE suits "don’t become as prevalent in Europe as they are in the U.S."

Update:  Florian Mueller's analysis on FOSS Patents is available here.

CJEU Rejects Spain's Challenges to the Unitary Patent

From time to time I have blogged about the Unitary Patent and Unified Patent Court--and how it might affect patent remedies within the E.U.--which 25 of the E.U. member states have approved but which is not yet up and running.  As reported today in IPKat, the Kluwer Patent Blog, and no doubt many other outlets, the Court of Justice for the European Union today rejects Spain's challenges to the Unitary Patent system, thus paving the way for implementation (though formal ratifications are still needed from several member states, see here).  According to another article on the Kluwer Blog from earlier this week, the first cases could be heard as early as October 2016.  Links to the English-language versions of the CJEU judgments are here and here.

Reetz et al. on Injunctions Under the UPC Agreement

I mentioned last week (here) that Alexander Reetz, Camille Pecnard, Riccardo Fruscalzo, Ruud van der Velden, and Mark Marfé,had just published a paper titled Die Befugnisse der nationalen Gerichte unter dem EPÜ und des Einheitlichen Patentgerichts (EPG) nach Art. 63 (1) EPGÜ zum Erlass von Unterlassungsverfügungen--eine rechtsvergleichende Untersuchung (which I translated as "The Authority of National Courts Under the Unified Patent Agreement and of the Unified Patent Court according to Article 63(1) of the Agreement on the Unified Patent Court with respect to Granting Injunctions--A Comparative Investigation") in the March 2015 issue of GRUR/Int.  I had started to read the article in the original German when I discovered that an English-language version of the article (titled The power of national courts and the Unified Patent Court to grant injunctions: a comparative study) had become available in the current edition of the Journal of Intellectual Property Law and Practice (link here).  Here is the abstract:

Continental Europe and the United Kingdom give diverging answers to the question of whether the granting of a cease and desist order (‘permanent injunction’) in favour of the proprietor of a European patent (EP) may in a specific case be refused due to considerations of proportionality.

The authors discuss the differences between Continental Europe and the United Kingdom and argue that the future Unified Patent Court (UPC), under the Agreement on a Unified Patent Court (UPCA) and the 17th version of the Rules of Procedure (RoP), can make use of a pan-European ‘lowest common denominator’ when deciding whether proportionality should play a role in deciding on an injunction claim. 

The authors begin with a brief discussion of, principally, EC Enforcement Directive articles 11 ("Member States shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement") and 12 ("Member States may provide that, in appropriate cases and at the request of the person liable to be subject to the measures provided for in this section, the competent judicial authorities may order pecuniary compensation to be paid to the injured party instead of applying the measures provided for in this section if that person acted unintentionally and without negligence, if execution of the measures in question would cause him/her disproportionate harm and if pecuniary compensation to the injured party appears reasonably satisfactory").  In the authors' view, apart from article 12 the Directive (in article 3(2)) expressly recognizes proportionality as a rationale for restricting a court's power to grant a permanent injunction only for (1) abuse of right and (2) violations of competition law.  

They then proceed with a discussion of the law on injunctions in Germany, France, Italy, the Netherlands, and the U.K., stating that none of these countries have "invoked the option conferred by Article 12 of the Enforcement Directive to implement a proportionality requirement into their national laws."  Thus in Germany, the authors conclude, "there is no scope for a restriction for reasons of proportionality of the power to grant injunctions" and  injunctions must be granted, absent an abuse of right or competition law violation.  Similarly, in France "only in extraordinary circumstances have . . . courts to date refused to grant an injunction despite patent infringement being established," and in Italy as well "no . . . court has refrained from granting an injunction on the grounds of it being disproportionate in the specific case," though a minority of decisions have refused injunctions where "the patent infringement was discontinued and the risk of repetition was removed . . . ."  Dutch law did not transpose article 12 either, though under some circumstances a Dutch court will apply the abuse of right principle to preclude injunctive relief for the alleged infringement of SEPs (see, e.g., my post here).  

By contrast, under the law of England and Wales injunctive relief traditionally is viewed as discretionary in nature, involving, as a "starting point," application of the four Shelfer factors (see my post here).  Although some recent English precedent has indicated that courts nevertheless should award injunctions for the infringement of IP rights unless the grant would be "grossly disproportionate," a 2014 (non-IP) case from the U.K. Supreme Court (Coventry and others v. Larence and another [2014] UKSC 13) suggests "a more flexible approach should be taken by a judge, when asked to award damages instead of an injunction, than that suggested in recent cases. In such a situation, the judge should not have an inclination either way, and the outcome should depend on all the evidence and arguments."  In a subsequent 2014 High Court case involving trademark infringement (Comic Enterprises v. Twentieth Century Fox [2014] EWHC 2286 (Ch.)), the court "concluded that the question of whether to allow damages in lieu of an injunction requires a multifactorial approach, balancing the right of intellectual property against the right to freedom of expression and the right of the arts to be free from constraint."  Nevertheless, the authors do not read either of these latter two cases as departing from earlier precedent, and note that the burden remains on the defendant (in contrast to the U.S. eBay approach).

As for the UPC, the authors note that article 63(1) of the Agreement  on a Unified Patent Court (UPCA) states that "Where a decision is taken finding an infringement of a patent, the Court may grant an injunction against the infringer aimed at prohibiting the continuation of the infringement."  Understood in its proper context, however, the authors argue, the word "may" in article 63(1)

is to be understood in the sense of ‘shall have the authority to’. It cannot be derived from these provisions, directed at the Member States, that the court shall have the power to exercise decisionmaking discretion. In actual fact, these provisions are—in line with their purpose—to be understood merely as a task for the Member States to provide their courts with the legal power to grant injunctions. What is more, these provisions allow the legal tradition of each Member State to retain its ancestral habitat. . . .

. . . However, assuming that article 63(1) would confer a procedural discretion to the UPC for refusing an injunction where there is a finding of infringement, the case law of the courts of England and Wales would require that such argument for withholding an injunction must be exceptionally strong. In other words, Article 63(1) cannot be regarded as a decent ‘port of entry’ for the importation of a standard analogous to the US Supreme Court judgment in eBay.

Finally, towards the end the paper discusses Rule 118.2 of the 16th Draft of the Rules of Procedure of the Unified Patent Court, which states 

Without prejudice to the general discretion provided for in Articles 63 and 64 of the Agreement, in appropriate cases and at the request of the party liable to the orders and measures provided for in paragraph 1 the Court may order damages or compensation to be paid to the injured party instead of applying the orders and measures if that person acted unintentionally and without negligence, if execution of the orders and measures in question would cause such party disproportionate harm and if damages or compensation to the injured party appear to the Court to be reasonably satisfactory.

The authors note that this language "was taken almost word for word" from article 12 of the Directive.  They then argue that 

It is Rule 118.2 of the RoP—and not the UPCA—that attempts to provide for damages or compensation (hereinafter ‘alternative compensation’) instead of the injunction, as a separate claim according to substantive law. The Rules of Procedure, however, cannot do so. Rule 118.2 RoP is not ‘compliant’ with the UPCA (Art 41(1) sentence 2 UPCA), since it does not merely stipulate a ‘condition’ for the ordering of an injunction within the meaning of Articles 63 and 56(1) UPCA, thus clarifying the norm.

The point may be moot, however.  Presumably the paper went to press before the 17th Draft of the Rules of Procedure were out, and as I discussed here this past December, the 17th Draft (unfortunately, in my view) deleted Rule 118.2 altogether.  C'est la vie.

Reetz et al. on Injunctions under the UPC System; Hoppe-Jänisch on Important German Patent Cases

1.  This article, from the March 2015 issue of GRUR/Int., just came to my attention.  The authors are Alexander Reetz, Camille Pecnard, Riccardo Fruscalzo, Ruud van der Velden, and Mark Marfé, and the paper is titled Die Befugnisse der nationalen Gerichte unter dem EPÜ und des Einheitlichen Patentgerichts (EPG) nach Art. 63 (1) EPGÜ zum Erlass von Unterlassungsverfügungen--eine rechtsvergleichende Untersuchung ("The Authority of National Courts Under the Unified Patent Agreement and of the Unified Patent Court according to Article 63(1) of the Agreement on the Unified Patent Court with respect to Granting Injunctions--A Comparative Investigation").  Here is the abstract (my translation from the German):  

Continental Europe and the United Kingdom provide different answers to the question whether, in a case in which patent infringement has been established, a court may specially refuse an injunction for the benefit of the owner of a European Patent on the ground of disproportionality.  The authors discuss the existing differences between continental Europe and the United Kingdom and will show that, in any event, the future Unified Patent Court can fall back upon a pan-European minimal consensus of the contracting states in answering the question whether proportionality should play a role under the Agreement on the Unified Patent Court and the 17th Draft of the Rules of Procedure for the Unified Patent Court.

I have not yet read the paper, but this certainly appears to be essential reading.  I hope to report back soon.  For previous discussion on this blog, see here, here, here, and here.

2.  In January and February I blogged about Daniel Hoppe-Jänisch's article Die Rechtsprechung der Instanzgerichte zum Patent- und Gebrauchsmusterrecht seit dem Jahr 2013 ("The Patent and Utility Model Case Law of the Lower Courts Since 2013"), which appeared in the December 2014 issue of GRUR RR.  An English-language version is now available here.

Some new papers and other materials on patent remedies

1.  Mark Lemley has published Taking the Regulatory Nature of IP Seriously:  Response to Ted Sichleman, Purging Patent Law of "Private Law" Remedies, in 92 Texas Law Review See Also 107 (2014), available here.  The abstract from the ssrn version of the paper reads:

Ted Sichelman’s paper in the Texas Law Review makes an important contribution by encouraging us to take the essentially regulatory character of IP seriously, arguing that public, not private, interest should determine remedies. In this comment, I both extend and critique his approach, suggesting that private law remedies may play an important role even in a patent system properly understood as public law rather than property law. Nonetheless, understanding the regulatory nature of patent remedies has some significant implications for setting those remedies, including the recognition that the optimal patent damages award will sometimes be $0.

Dan Burk and I each published a response to the same paper in Texas Law Review See Also a few weeks back, as I noted here.

Readers also may  be interested in reading Gene Quinn's recent interview of Mark Lemley on patent damages, on Gene's IP Watchdog blog.

2.  Samuel Chase Means has published a paper titled The Trouble with Treble Damages: Ditching Patent Law's Willful Infringement Doctrine and Enhanced Damages, 2013 U. Ill. L. Rev. 1999, available here.  Here is the abstract:

In a patent infringement lawsuit, a plaintiff often asserts a willful infringement claim and enhanced damages as a remedy. Under current U.S. patent laws, courts have the discretion to reject a claim for willful infringement and decline increasing damages, even if the jury returns a finding of willful infringement. This creates an unnecessary drain of resources on the court system and alleged infringers.
The enhanced damages provision in patent law is also often an unavailable remedy for plaintiffs even though plaintiffs almost always assert a willful infringement claim, often simply wasting courts’ and litigants’ financial resources. The enhanced damages provision also frustrates the purpose of the existence of patent laws, and patent owners actively avoid learning about new patents for fear that this knowledge will lead to allegations of willful infringement in the future. Finally, no other nation in the world has a remedy like the enhanced damages provision, and the existence of the remedy frustrates goals to harmonize global intellectual property laws.
This Note examines these issues presented by the enhanced damages provision. This Note analyzes alternatives for the enhanced damages remedy and considers whether abandoning the current law would appropriately deter patent infringement. Ultimately, this Note recommends that the entire enhanced damages provision and its associated willful infringement doctrine should be removed from the U.S. patent laws. 

3.  Matthew J. Silveira has published a short paper titled Getting to Zero--Proving a Patentee Is Entitled to No Infringement Damages After Apple v. Motorola in the July 1, 2014 issue of Bloomberg  BNA's Patent, Trademark & Copyright Law Daily (available here, behind a paywall).  From the introduction:

Much has been made of the U.S. Court of Appeals for the Federal Circuit's holdings in Apple Inc. v. Motorola, Inc., regarding the admissibility of expert damages testimony and the availability of injunctive relief for the infringement of standard essential patents. Another aspect of that decision has received less attention—the Federal Circuit's discussion of when, if ever, a patentee may be awarded no damages for patent infringement.

Although the Federal Circuit suggested that a finding of no damages will rarely be affirmed, particularly on summary judgment, it did not foreclose that result. Alleged infringers and patentees alike will need to address the court's reasoning when developing their damages theories to advocate for, or to avoid, an award of zero damages.

4. A few weeks back I listed some treatises that provide information on patent remedies in India (here).  One that I missed, and which Jorge Contreras has since called to my attention, is Kalyan Kankanala, Arun K. Narasani & Vinita Radhakrishnan, Indian Patent Law and Practice (Oxford Univ. Press 2010), chapter 10 (pp. 232-56).

5.  Recently the EPLaw Blog published a post with links to PowerPoint presentations from an April 2014 Young EPLaw Conference, including presentations on "Injunctions in the UPC" (Charles Tuffreau), and on damages in the U.K. (Laura Whiting), Belgium (Gunther Meyer), Germany (Stefan Richter), and Spain (Laura Cantero).   The slides provide a concise but useful resource on the subjects.