Monday, May 27, 2013

Remedies for Wrongful Patent Litigation or Enforcement in Some Other Leading Patent Systems

I said I would follow up last week’s post on Remedies for Wrongful Patent Litigation or Enforcement Under U.S. Law with a post on the law as it exists in other jurisdictions.  A very good article on the topic is Christopher Heath’s Wrongful Patent Enforcement—Threats and Post-Infringement Invalidity in Comparative Perspective, 39 IIC 307 (2008), which I cite in my book at p.183 n.74 and at p.227 n.32.  Professor Heath summarizes the law on this topic in Germany, Japan, France, the U.K., and to some degree Italy.  I recommend the entire article to interested readers, but will mention a few salient points here.

First, Heath suggests that wrongful patent enforcement could occur when the patent is valid and infringed but “the actual enforcement is disproportionate either in view of the measures taken or the remedies sought.”  He notes, however, that so far “courts have taken little note of the issue of over-enforcement where an infringement could actually be proven,” with the one notable exception being the U.S. Supreme Court’s eBay decision.  (See also this recent post on the Kluwer Patent Blog reporting a recent German Federal Supreme Court decision holding that making an allegedly inflated damages claim for copyright infringement does not result in a forfeiture of the right to obtain an injunction.) 

Second, Heath discusses the possibility of liability attaching for the sending or publication of warning letters.  Here, the law in the relevant jurisdictions appears to diverge, though all of them appear to view with suspicion threats directed against so-called secondary infringers such as customers of the allegedly infringing manufacturer.  According to Heath, the German courts view such threats as being presumptively unlawful, subject to some exceptions (e.g., where “the primary infringer is domiciled abroad or otherwise unavailable”).  Liability under Japanese law appears to depend on a variety of circumstances, while under U.K. law the publication is lawful if the rights were infringed or “the patentee had no reason to suspect invalidity.” Again, I’d recommend reading his entire discussion, but the take-away point is that the U.S. appears to be something of an outlier in conditioning liability only upon proof by clear and convincing evidence that the false accusation of patent infringement was both objectively and subjectively unreasonable.  
Third, Heath discusses whether a defendant who has been found liable for infringement is entitled to a retrial and/or restitution of damages if the patent in suit is subsequently invalidated.  (I also, very briefly, mention this point and some of the relevant sources in my book at pp. 182-83 n.74.) To summarize, U.K. law (like U.S. law) would let the damages judgment stand, under principles of res judicata.  As a general matter, so would France, as the Cour de Cassation’s 2012 decision of February 17, 2012 holds.  (French text and an English translation both available here.)  On the other hand, Germany and Japan would both permit retrial and restitution.  (Indeed, in 2012 the German Federal Supreme Court held in Tintenpatrone III that restitution is available even where the patent is restricted in such a way that the infringement defendant’s conduct no longer falls within the scope of the claims.  For a translation of the decision into English, see 43 IIC 855 (2012).)   

Fourth, Professor Heath notes that article 9(7) of the E.C. Enforcement Directive requires that, where a court enters a preliminary injunction against a defendant but the defendant subsequently prevails at trial, the defendant is entitled to recover compensatory damages.  Specifically:
Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by those measures.
Professor Siebrasse has pointed me to discussions of recent French and Spanish cases applying this principle, and informs me that it is found in Canadian law as well.   

In the U.S., there is no such rule, though courts require the patentee to post a bond in order to obtain a preliminary injunction so that the defendant will be compensated up to the amount of the bond if the injunction turns out to have been granted in error.  (For a discussion of U.S. practice and an argument that courts should impose a restitutionary recovery in the event of a wrongly-issued preliminary injunction, see Ofer Grosskopf & Barak Medina, Remedies for Wrongfully-Issued Preliminary Injunctions:  The Case for Disgorgement of Profits, 32 Seattle U. L. Rev. 903 (2009).)  There would be no other claim arising from the good faith, though ultimately unsuccessful, assertion of rights under a patent, as discussed in my post last week.  

Finally, perhaps we will soon know the extent to which European competition law requires patent owners who enjoy a dominant market position to make their patents available on FRAND terms and not to obtain injunctive relief.  As suggested in an earlier post, this question may arise in the EC’s pending investigations of Samsung and Motorola and in the referral to the CJEU of questions relating to the German Orange-Book-Standard framework.


  1. Grosskopf & Medina state that one reason that the party obtaining a preliminary injunction is not usually liable for the full amount of the harm caused in US practice is that “the trial court has the power – and perhaps even the duty – to consider the equities of the case before imposing liability upon the bond and awarding damages by extracting from the bond that was created prior to the proceedings.” The same is true in UK and Canada, but consideration of the equities led to exactly the opposite conclusion. The courts considered that it would be very hard on the defendant to deny them what might turn out to be their legal rights, so without compensation for loss of those rights the equities normally favour refusing the injunction. The UK and Canadian courts clearly have the discretion to grant a preliminary injunction without requirement an undertaking from the plaintiff to compensate the defendant, but they are very reluctant to do so.

    An excellent analysis in a law and economics vein is provided by Hoffmann J in Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772 (Ch.): “The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the 'wrong' decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong' in the sense I have described.” By minimizing the risk of harm to the defendant if the injunction is wrongly granted, the undertaking by the plaintiff increases the likelihood that the injunction will be granted.

    1. Very interesting comment--thanks. The UK/Canadian approach makes sense to me.