Blogging break

 I will be taking a blogging break this coming week.  I expect to resume on or about May 5.

China’s Supreme People’s Court Revokes Preliminary Injunction

The case is the Supreme People’s Court Judgment of 3 July 2024—(2024) Zui Gao Zho Min Fu No. 1, reported in GRUR Int. 74(4), 2025, pp. 356-60, and translated by Xiao Wang.  The court of first instance had granted an act preservation measure (China’s analogue to a preliminary injunction) in favor of the plaintiff patent owner, ordering the defendant to cease manufacturing and selling two models of self-cleaning sweeping and mopping robot.  In revoking the decision, the SPC relies on article 104(1) of the Civil Procedure Law, and on certain articles from the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in Cases Involving the Examination of Act Preservation in Intellectual Property Right Disputes (Jan. 1, 2019) [hereinafter Provisions].  I don’t know of an official translation into English of the current version of the Civil Procedure Law, but you can use a machine translator or refer to the GRUR Int. article, which provides two translations of article 104(1).  All of these reference the need for “an emergency” or “urgent circumstances.”  The GRUR Int. article also provides translations of the relevant articles from the Provisions, or you can consult this unofficial translation that is available online.  In any event, the SPC says that a court should first consider urgency, and in this regard it references article 6 of the Provisions, which provides as examples of urgency the imminent disclosure of a trade secret; the imminent infringement of the applicant’s personal or privacy rights; the imminent illegal disposition of IP rights; the infringement or expected infringement of IP rights at a time-sensitive place such as a trade fair; “a time-sensitive popular program is being or will be infringed” (I’m not sure what that means, but I would guess it is referring to the infringement of rights in a broadcast or live event?); or other circumstances exist requiring immediate measures.  Here, the SPC says there was no urgency.  None of the specific examples cited above were present, and the patentee waited 10 months after becoming aware of the alleged infringement to file its application.  The court also considers articles 7, 8, and 10 of the Provisions, which set forth, respectively, the general factors to be considered in deciding whether to grant the application ((1) whether the applicant's request has a factual basis and a legal basis, including whether the claimed intellectual property right is stable; (2) whether not taking act preservation measures will cause irreparable damage to the applicant's lawful rights and interests or cause the judgment of the case to be difficult to enforce; (3) whether the damage caused to the applicant by not taking act preservation measures exceeds the damage caused to the respondent by taking the act preservation measures; (4) whether taking act preservation measures harms the public interest; (5) other factors that should be considered”); the factors to be used in determining whether the IP rights are “stable” (e.g., have they undergone substantive examination, are they involved in or likely to be invalidated, etc.); and  the factors to be used in assessing whether the owner faces “irreparable damage.”  Here, the court notes that the patent in suit is an invention patent (not a design patent or utility model), so it has undergone substantive examination, but that courts nevertheless should be cautious in cases requiring a “very complex technical comparison.”  Moreover, although the applicant submitted an infringement analysis, the court characterizes it as not “a specific and in-depth analysis of the disputed technical features in conjunction with the specification,” so that “its conclusion is difficult to judge”; and there is (or at least was, during the relevant time period) an invalidation proceeding pending.  In addition, the SPC believes that the relevant damage here could be compensated by money.  Thus, the evidence was insufficient to show that the harm to the patentee from not granting the measure would exceed the harm to the defendant of granting it.  Finally, there are alternative products on the market and the public interest is not really at issue.  Overall, however, it was error to grant the injunction.

Some Thoughts on Teva Copaxone (Anticompetitive Misuse of Divisionals)

         As I mentioned last week, the European Commission has now published a "provisional non-confidential version" of its 565-page decision in Case AT.40588—Teva Copaxone.  The decision finds that Teva abused its dominant position in the market for glatiramer acetate (GA) within several E.U. countries.  GA is the active ingredient in Copaxone, an immunomodulator drug used for treating relapsing remitting multiple sclerosis.  According to the E.C., the abuse consisted of the combination of two strategies:  the misuse of divisional applications and the disparagement of a rival generic drug.  The portion of the decision addressing the misuse of divisionals is particularly relevant to my forthcoming book, Wrongful Patent Assertion: A Comparative Law and Economics Analysis, and so I will provide a few (very preliminary) thoughts about it here.

         By way of background, under the European Patent Convention, a patent applicant can file a divisional application either “to remedy a lack of unity of invention disclosed in an earlier application,” para. 47, or (more commonly) on a voluntary basis to cover “different aspects of the same invention, such as distinct therapeutic uses, different production processes, or dosage regimes” (para. 48).  An applicant may file a divisional “if it relates to an earlier pending European patent application, be it the original parent patent application or an earlier divisional application,” and only “up to the date on which its (direct) parent patent is granted by the EPO.  However, it is possible to file multiple generations of divisionals on the basis of an original parent patent” (para.49).  In other words, while a parent application is pending, you can file a divisional, and regardless of what happens to the parent the divisional is entitled to its own independent examination; and while any given divisional is pending, you can file another divisional based on that application (regardless of whether the initial parent application remains pending), which will be entitled to its own independent examination, and so on.  If granted and not revoked, however, a divisional will expire the same day as its parent.  Thus, “by continuously filing divisional applications, it is possible to preserve the patent family pending throughout the initial exclusivity period of the original parent patent (even if the original parent patent has already been granted, revoked or withdrawn) and thereby extend the uncertainty as to the validity of relevant patents for potential or actual competitors” (para. 52).  Further, a divisional “may not claim any additional subject-matter to that disclosed in that parent application,” but “it is possible to file a divisional application, which has a scope that is very similar to the parent application (that is, with nearly identical claims),” as long as the subject matter claimed is not identical (paras. 53-55). 

In the present case, Teva obtained its “main patent protecting the composition of GA within specific molecular weight range” in 2002, and that patent expired in 2015 (para. 101).  The divisionals at issue, however, were derived from two subsequent families of secondary patents.   In 2005, Teva filed a parent patent claiming a production process for GA, from which it later split off two divisional patents; and in 2010, a parent “dosage” patent, relating to a 40 mg formulation of the drug, from which it split off four divisional patents (paras. 102-03; see also tables 13 and 14, pp. 250-52).   (The dosage patent applications also included one, the so-called “ghost divisional,” that was withdrawn before grant, see para. 1137.  An opposition to the last of the granted dosage divisionals was still pending as of the date of the decision, see p.252.)  Altogether, Teva filed the divisionals over a period of eight years, from 2010 to 2018, but “[t]he intervals between the filings were not driven by any ongoing research” (para. 1018).  So why did it file them when it did?  According to the Commission, Teva staggered the patent filings, sought preliminary injunctions on the basis of patents that the EPO granted, and then (sometimes) “strategically withdrew the challenged patents before the adoption of a reasoned decision of those challenged patents by the TBA [EPO Technical Board of Appeals],” because “a reasoned revocation would have had a strong precedent effect on the remaining divisional patents of the same patent family” (paras. 1019-20).  In other words:

Teva carefully timed the filing and withdrawal of these divisionals, using these patents to delay or prevent market entry of competing GA products and in particular [generic competitor] Synthon GA. Correspondingly, Synthon and its licensees had to challenge the validity of each of those patents successively, as Teva repeatedly and in sequence decided to file and withdraw one patent only to rely on the next patent. Thus, instead of being able to obtain a final decision resolving the legal uncertainty concerning patent claims relevant for the entire divisional patent family, Synthon had to repeatedly re-start litigation from the very beginning before it could finally remove the patent barrier. This way, Teva managed to obstruct effective legal review of its patents and to prolong legal uncertainty surrounding their validity, thereby hindering Synthon GA’s entry on the markets. None of the patents relied on by Teva was confirmed as valid and enforceable in a final decision by the EPO (para. 140).

         The EC concludes that this scheme constituted an abuse of dominant position in view of the following principles as applied to the facts.  First, the general legal framework with regard to exclusionary practices is that “a dominant undertaking’s conduct can only be characterised as abusive if two cumulative conditions are met: (i) the practice must be based on the use of means other than those which come within the scope of competition on the merits; and (ii) the practice must be capable of producing an exclusionary effect. Where those two conditions are fulfilled, the undertaking in a dominant position can nevertheless escape the prohibition laid down in Article 102 TFEU if it shows that the practice at issue was either objectively justified and proportionate to that justification, or counterbalanced or even outweighed by advantages in terms of efficiency that also benefit consumers” (para. 1035).  Second, on the basis of AstraZeneca AB v. European Commission, Case C-457/10 P (CJEU 2012), an abuse of dominant position may “consist of behaviour which is otherwise lawful under branches of law other than competition law” (para. 1061).  In my view, this is correct both as a matter of law and policy.  Much the same reasoning underlies the decisions in the E.U. and the U.S. holding that pay-for-delay settlements can violate competition law, even though the scope of the agreed-upon term of exclusion falls within the potential exclusionary scope of the patent.  (Later in the decision, the Commission also cites AstraZeneca for the proposition that “[t]he mere possession by an originator company of an exclusive right can deter generic competitors from entering the market” (para. 1346).  By way of contrast, in U.S. cases in which, as in AstraZeneca, the plaintiff alleges that the defendant’s submission of misleading information to the Patent Office caused the issuance of an undeserved right,  there must be proof of enforcement or threatened enforcement, not just possession, for there to be a potential competition law offense.  I take this issue up in chapter 3 of the forthcoming book.) 

Third, citing ITT Promedia NV v. Commission of the European Communities, Case T-111/96 (Ct. First Inst. 1998), which addressed sham litigation antitrust claims, the Commission states that it “does not in this case . . . take issue with Teva’s recourse to courts,” but it “does take issue with Teva’s filing of multiple, staggered divisional patents with overlapping content and strategic withdrawal of challenged patents before a reasoned decision on their validity could be issued” (para. 1062).  Further, “[a]lthough, in isolation, a patent holder may exercise its rights by filing and withdrawing its patents, such conduct falls outside the scope of competition on the merits in cases where the regulatory procedures are used in such a way as to prevent or to hinder the entry of competitors on the market and where the conduct serves no legitimate interests. The combination of staggered divisional filings and strategic withdrawals enabled Teva to game the system and shield its patents from damaging precedents for as long as possible” (para. 1316; see also para. 1323).  The stated rationale makes me think of the common-law tort of abuse of process, under which liability hinges on the use of judicial process “to achieve an objective that is outside the purpose for which the process is intended,” Restatement (Third) of Torts:  Liability for Economic Harm § 26 (Am. L. Inst. 2020), as well as some descriptions of the civil-law doctrine of abuse of right.

         Fourth, it’s not too difficult to obtain a preliminary injunction in some E.U. member states, because “courts do not make a substantial assessment of the validity of the patent invoked in the request for preliminary injunctions and grant these on a prima facie basis” (para. 1136; see also paras. 1371-72).  This is, in my view, something that individual nations should consider altering, to the extent permissible under Phoenix Contact GmbH & Co. KG v. HARTING Deutschland GmbH & Co. KG, Case C-44/21 (CJEU 2022).

Fifth, the Commission repeatedly notes that the patents at issue were weak; that they were likely to be invalidated despite having been initially granted and, in some instances, having survived an initial opposition; and that Teva personnel were aware of these infirmities (see, e.g., paras. 1136, 1141, 1160, 1178, 1181, 1182-1213, 1255, 1258, 1290, 1294, 1296, 1315, 1357).  What I’m still trying to figure out is whether the Commission views such evidence as necessary for the staggered filing and subsequent withdrawal of divisional applications to constitute an abuse of dominant position.  Maybe it’s enough for a firm simply to employ the strategy of strategic filing and withdrawal, just to avoid the possibility of a reasoned decision on invalidity that could, potentially, topple all the dominoes (although the perceived weakness of the patents surely makes it more likely that the firm’s conduct is abusive).  But then, if you thought the patent probably would survive a decision by the TBA, and thus remain in force for several years to come, why would you withdraw it at the last minute?  (In a similar vein, see also para. 1247, noting that Teva’s conduct of staggering the filing of the divisionals “shortened and thereby reduced the value of each of its divisional patents”.)  On the other hand, as noted above, there was one divisional patent that was still pending before the TBA as of the date of the E.C.’s decision—though it wasn’t filed until 2018, and so it may be that absent the divisionals “game” Teva wouldn’t have been able to file or  maintain that application for as long as it did; and in any event, the decision states that that particular patent “was only maintained in Turkey after being granted” and is apparently not all that relevant here other than for context (para. 1121).  Moreover, in response to Teva’s argument that the Commission failed to prove anticompetitive effects—because its “theory is grounded on the premise that absent the withdrawals, the patents in question would have been invalidated,” when in fact according to Teva other factors need to be considered as well (para. 1326)—the Commission states, among other things, that “[c]ontrary to Teva’s claims . . . the Commission does not, and does not need to, independently conclude on the validity of Teva’s patents. . . .  It does however take into account Teva’s contemporaneous documents, including those in which Teva assesses the strength and validity of its patents as well as the documents originating from the EPO (including ODs and TBAs decisions on Teva’s patents) to show that, from an ex ante perspective, Teva’s comprehensive patenting conduct was capable of having exclusionary effects” (para. 1331).  The Commission’s principal rejoinder, though, is that needs to consider the defendant’s conduct as a whole, not just matters viewed in isolation.  

Sixth, based on the Commission’s findings, I got the sense that perhaps there would have been a basis for alleging abuse by means of product hopping or sham litigation. But the Commission states early on that its decision focuses on the divisionals game and on the disparagement campaign (not addressed in this blog post), and that the Commission was taking no “position on the legality of Teva’s other practices, which are part of Teva’s overall strategy to hinder the entry and uptake of competing GA” (para. 180).

Seventh and last, it seems to me that a potentially more effective way of preventing firms from gaming the system is to change the rules that enable the gaming.  As the decision notes, the EPO changed the rules in 2014 to permit the voluntary filing of divisional applications as long as the parent remained pending, rather than as before limiting them to 24 months after the receipt of the examination report.  Proposals to tighten the rules on divisionals, however, might meet the same fate as analogous proposals in the U.S. in recent years regarding matters such as continuations and double patenting.  Entrenched interests typically do their utmost to retain their ability to engage in rent-seeking, which then leaves it to courts and agencies to clear up some of the mess ex post.  Not an ideal situation, to be sure, but perhaps the best that can be hoped for in the near term.  

Upcoming Speaking Engagement at AIPLA Spring Meeting

The American Intellectual Property Law Association (AIPLA) is holding its Spring Meeting in Minneapolis on May 13-15.  Tuesday, May 13 will feature a concurrent session on remedies in IP cases.  The first session (from 10:15—11:00 a.m.) is titled “Crafting Monetary Remedies in Trademark, Copyright and Unfair Competition Cases (Part 1),” and will feature Professor Mark McKenna (moderating) and (Krista Holt, Charlie Eblen, and Jeffrey M. Gould).  The second session (from 11:15-noon) is titled “Attorney Fees Awards in IP Cases & Crafting Remedies in Patent Cases (Part 2),” and will be moderated by Ashe Puri.  Sue Stuckwisch and I will be presenting.  My focus will be on attorneys’ fee awards in IP cases and extraterritorial damages in patent infringement actions.  Maybe I will see some of you there!

EC Decision in Teva Now Publicly Available

Last fall, the European Commission fined Teva €462.6 million for allegedly artificially extending the latter’s exclusivity in the market for glatiramer acetate medicines by, inter alia, obtaining a series of divisional patents covering methods of manufacture, threatening to enforce these patents by means of preliminary injunctions, and then timely withdrawing its requests for preliminary injunctions to avoid judgments of invalidity.  See European Commission, Press Release:  Commission fines Teva €462.6 million over misuse of the patent system and disparagement to delay rival multiple sclerosis medicine (Oct. 30, 2024), https://ec.europa.eu/commission/presscorner/detail/en/ip_24_5581 (noting, in addition, that the case also involved an alleged campaign of disparagement of a rival’s generic product, and stating that these “abuses were complementary and together amounted to a single and continuous infringement of Article 102”); Summary of Commission Decision of Oct. 31, 2024 relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union (Case AT.40588—Teva Copaxone), https://ec.europa.eu/competition/antitrust/cases1/202504/AT_40588_10456072_6275_5.pdf.  Last week, the Commission made available to the public a "provisional non-confidential version" of its 565-page decision.  Here it is.  I am not very far along in reading it yet, but I will be discussing it in my forthcoming book Wrongful Patent Assertion: A Comparative Law and Economics Analysis.  The part about about the misuse of divisional patents runs from pages 226-339.

From Around the Blogs

1. On IPKat, Anastaslia Kyrylenko published a post titled CJEU to address compatibility of Italian anticipatory measures with Enforcement Directive.  The post discusses a recent referral from the Italian Supreme Court to the Court of Justice for the European Union, M.M. Ristorazione, C-132/25 (docketed Feb. 10, 2025).  The referral is said to pose the question whether, contrary to the courts of first and second instance, an injunction granted under article 700 of Italy’s Civil Procedure Code as an “emergency measure” (provvedimenti d’urgenza) in regard to possible trademark infringement qualifies as a “provisional measure” and therefore requires the movant to file suit within 21 business days or 30 calendar days, whichever expires later, under both TRIPS and the Intellectual Property Rights Directive.

Also on IPKat, Jocelyn Bosse published a post, titled Apple variety infringement ruling sees record-breaking amount of damages in China, about a recent decision of China's Supreme People's Court awarding RMB 3.3 million (which included a punitive component) for the infringement of a protected variety of apple.  Here is a press release about the case from the SPC itself.  Neither of these sources links to the text of the actual decision, however.

2.  The difficulty of obtaining the text of some Chinese decisions is itself something of a sore point for many, including the European Union, which has complained about it in two pending WTO matters.  The first, filed in 2022,  argues that Chinese courts’ issuance of ASIs violates articles 1, 41, and 63 of the TRIPS Agreement.  See WT/DS611—China—Enforcement of Intellectual Property Rights, https://policy.trade.ec.europa.eu/enforcement-and-protection/dispute-settlement/wto-dispute-settlement/wto-disputes-cases-involving-eu/wtds611-china-enforcement-intellectual-property-rights_en.  As noted in a recent post on ip fray opining that the EU has lost the initial case, the panel released its report to the parties in February, but it has not yet been made publicly available, and the parties have agreed to arbitrate the appeal (there being no functioning WTO appellate body for at least the last five years).  Meanwhile, in January the EU commenced a request for consultation with China regarding China’s practices with regard to establishing the terms of global FRAND licenses, as in the 2023 Nokia v. OPPO dispute.  The EU contends that China’s practice violates Paris Convention article 4bis, as incorporated under TRIPS article 2.1, as well as TRIPS articles 1, 28, and 63. See WT/DS632-1—China—Measures Concerning Patent Licensing Terms:  Request for Consultations by the European Union, Jan. 22, 2025, https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/DS/632-1.pdf&Open=True.  Enrico Bonadio has a post on the Kluwer Patent Blog, titled The WTOdispute between China and EU over Chinese SEPs global rate-setting.

3.  On SpicyIP, Yogesh Byadwal published Injunction against Natco refused:  Public Interest Triumphs—Maybe.  The post discusses a March 24 decision of the Delhi High Court in F. Hoffman-LaRoche Ag v. Natco Pharma Ltd., in which the court invoked the public interest in denying a preliminary injunction against Natco’s production of a generic version of the drug Risdiplam.