The new patent frontier

Out of sheer laziness, I am usually reluctant to report on bills that are still in the legislative process.

After all, you never know whether your report will still be consistent with what comes out of the process in the end. You may call that the UPC syndrome.

But the reform of the French patent granting procedure currently in gestation represents such an upheaval of the world as we French patent attorneys know it that it is getting more and more difficult to ignore it on this blog.

So, today, I will update readers on the “Projet de loi relatif à la croissance et la transformation des entreprises“, also known as the PACTE bill. Don’t ask me what the A in the acronym stands for. It is probably just easier to pronounce than “PLRCTE“, that’s all.

This is a very complex and long (some would say catch-all) bill that spans labor law, tax law, commercial law, etc. And there are a few provisions on patent law, which are rather far-reaching.

The bill, updated as of today, can be found here. All provisions have now been approved by the Assemblée nationale (the lower chamber of our parliament), which prompted today’s post. Please bear in mind that these provisions can still be modified during the rest of the legislative process though, but by now it is more likely than not that they will indeed become law.

The first relevant part of the bill is article 40, which deals with utility certificates. That’s the local name for utility models. These are seldom used in this country and probably not very well known. The three current main features of the utility certificate are the following:

  • no search report is established for a utility certificate;
  • the maximum duration of the utility certificate is 6 years from the filing date; and
  • a patent application can be converted into a utility certificate application but not the other way around.

In order to make the utility certificate a more attractive option for innovators, the maximum duration of the certificate will be brought to 10 years instead of 6. Its duration will thus be on a par with that of utility models in foreign countries, notably Germany.

A second change is that it will now be possible to convert a utility certificate application into a patent application. The conditions for this conversion will be further specified by way of an executive order.

If we assume that flexibility is always appreciated by applicants, these changes will indeed make the utility certificate more palatable to them. While we are at looking at what the Germans do, we might as well have imported the “Abzweigung“, i.e. the possibility to file a utility model application as a split-off from a patent (including European) application. This can be quite a powerful tool for applicants. Maybe next time – together with a (much awaited) re-opening of the French national phase PCT route?

The second topic addressed in the bill is a much bigger prize, though.

Article 42 authorizes the government to create national opposition proceedings, so as to allow third parties to request the revocation or modification of a French patent, by way of an “ordonnance”. 

An “ordonnance” is a special kind of executive order which has the same effect as a law passed by the parliament, provided that it is later ratified by the parliament.

There are absolutely no details as to this future opposition in the bill, as the parliament has precisely surrendered its prerogative to set rules on this matter to the government, by way of this article 42. So we will have to wait until we see the “ordonnance”. 

For what it is worth, a survey was conducted by the French patent and trademark office (INPI) on this topic a few months ago. Among the questions which were addressed in the survey, were the following:

  • Should any person be allowed to file an opposition, like at the EPO, or should an opposition be reserved to persons and entities having standing? (And, boy, we know that the appraisal of standing in nullity suits can be tricky.)
  • Should the opposition period be set to 6, 9, or 12 months?
  • What should the grounds for opposition be?
  • Should it be possible to file an opposition against a granted utility certificate?
  • Should the decision on the opposition be open to appeal in front of the Paris Tribunal de grande instance (first instance court) or in front of the Paris Cour d’appel (appeal court)?
  • What should the effect of an opposition be on parallel litigation, in particular concerning a possible stay of proceedings?
  • Should oral proceedings be summoned?
  • Should an accused infringer be able to intervene in opposition proceedings?
  • Should the examiner who granted the patent be part of the panel of three examiners who will decide on the opposition?
  • Etc.

As you can see, things were (still are?) very open. Rumor has it that the INPI is contemplating a rather extensive alignment of the future French opposition proceedings on the EPO model.

As a side note, article 42 of the bill specifies that the future “ordonnance” should make sure to prevent abusive oppositions. I have no idea what they mean by this, but I do hope that there will be no standing required to oppose a patent. This would certainly lead to useless complexity and legal uncertainty.

PACTE, the final frontier?

Now, the third topic of interest in the bill is as big as the second one – if not bigger.

At present, the INPI has limited power to refuse a patent application. Basically, a French examiner can raise objections (such as lack of clarity or unity) before the issuance of the search report. Then the search report and a complete written opinion are drafted, either by the EPO or directly by the French examiner. Then the applicant files observations as a response – which can very well be very brief. And a refusal can only take place in exceptional circumstances, e.g. if it is “blatant” that the application relates to subject-matter which is not an invention (such as discoveries, aesthetic creations, etc.); or if there is a “blatant” lack of novelty.

There are further (more minor) grounds for refusal, such as lack of unity. But the major fact is that lack of inventive step is not a ground for refusal – although of course it is a ground for nullity of the issued patent in front of a court. And lack of novelty or lack of patentability are grounds for refusal only insofar as the objection is crystal clear and there is no possible defense.

Well, it seems like this fundamental peculiarity of French patent law is about to become a thing of the past.

Article 42bis of the bill will make it possible for the INPI to refuse an application for lack of novelty or non-patentability, period (i.e. the objection will no longer need to be blatant); and also for lack of inventive step.

A huge change indeed. Hailed by some, as it is believed to increase the value of French patents. Lambasted by others, as applicants (especially local ones) may be less incentivized to file national applications if the local granting procedure becomes similar to the European one.

To me, the success or failure of the above reforms will mostly depend on their implementation by the INPI.

Tremendous efforts will have to be undertaken to hire and properly train new examiners to perform these tasks. Let’s hope that this aspect has not been underestimated by the government and that sufficient funding will be available to support these efforts.

One good point is that the new, beefed up, granting procedure will only come into force two years from the entry into force of the PACTE law. This transition period will certainly be necessary in order for everyone to get ready for this new enterprise, in other words “to explore strange new worlds, […] to boldly go where no man has gone before“.

And by the way, who said the unitary patent and the UPC would be the kiss of death for national patent rights?

PS: for those eager to know everything about the debates that took place in the Assemblée in connection with the above provisions, here is the link to the full transcript. Don’t hold your breath though, it is fairly high level and there was no discussion on the nuts and bolts of the new system.

Suspect suspicions

What are the top three traits of the French system that foreign companies like best? 

Good transportation infrastructure? Maybe. L’art de vivre? Very probably. But first and foremost: the saisie-contrefaçon. OK, there may be some patent attorney bias here.

As readers of this blog are surely aware, the saisie-contrefaçon (infringement seizure) is a special tool in the hands of patent right holders, in the form of an ex parte order for an unannounced inspection at a third party’s premises in order to gather evidence of possible infringement.

Traditionally, the order for seizure has been viewed as straightforward to obtain.

Basically, you show up in front of a judge; you show your patent, the status of the renewal fees, an excerpt from the patent register; then you explain what kind of evidence you want to get and where. And you’re pretty much good to go.

But from time to time, a court decision takes a different approach and makes this traditional view entirely derail.

Such is the judgment recently issued by the Paris Cour d’appel in Arconic v. Constellium Issoire.

Arconic owns European patent No. EP 1392878 on a process to produce sheets of aluminum.

It may be useful to copy here claim 1 of the patent, as a reference:

A process for producing a sheet or plate product comprising:
(a) providing an aluminium alloy consisting of 0.5 to 1.8% Si, 0.5 to 1.5% Mg, up to 1.2% Cu; up to 1% Mn, up to 1% Zn, up to 0.4% Cr, up to 0.5% Ag, up to 0.3% Sc, up to 0.2% V, up to 0.2% Hf, up to 0.2% Zr, the balance being aluminium and incidental impurities;
(b) heating the alloy;
(c) hot rolling the alloy to reduce its thickness by at least 30%;
(d) thermally treating the alloy hot rolled in (c) at 543°C (1010°F) or more;
(e) further hot rolling the alloy to further reduce its thickness;
(f) solution heat treating the alloy at 543°C (1010°F) or higher;
(g) quenching the alloy.

On October 4, 2017, Arconic requested and obtained an order for performing a seizure in the premises of Constellium Issoire, which belongs to the Constellium group. Arconic and Constellium are direct competitors as they both manufacture aluminum plate products, notably for Airbus’ A380 aircraft.

The seizure took place on October 10, 2017. On October 26, Constellium filed a motion to obtain the cancellation of the order for seizure. The judge in charge of urgency proceedings granted Constellium’s motion and issued an order on December 22, 2017 canceling the order for seizure.

Arconic appealed, but its appeal has now been dismissed by the Paris Cour d’appel.

So what was the problem with the initial order for seizure, and why did it deserve to be canceled, according to the appeal judges?

The focus of the discussion was Arconic’s statement in its initial request that they had reasons to suspect that Constellium infringed the patent at stake.

Arconic provided evidence for this suspicion, and the court performed a thorough review of said evidence.

The evidence comprised in particular a scientific article from three Constellium employees, a specification from Airbus, a standard and a publication on aluminum alloys, and an excerpt from Constellium’s website.

Based on this evidence, the court concluded that:

  • Arconic’s aluminum alloy is designated as 6013 while Constellium’s is designated as 6156.
  • Both alloys, based on Airbus’ specification, are made by lamination and a so-called T4 thermal treatment.

But the court then stated that this was insufficient to infer that most features of claim 1 of the patent at stake were implemented by Constellium.

In particular, the fact that the 6156 alloy is made by lamination and thermal treatment is perfectly conventional. Claim 1 of EP’878, on the other hand, requires a precise sequence of process steps, including the application of a certain temperature, a defined reduction of thickness of the alloy, etc. Thus, the court said, Arconic in fact did not know which process is used by Constellium.

Admittedly, the composition of the alloy itself, which is also recited in the form of elemental weight ranges in claim 1 of the patent, does cover the 6156 alloy. But the claimed ranges are sufficiently general to also cover further competitors’ products of the same category (the 6061 and 6082 alloys). Besides, it is clear when reading the patent that the invention is about a manufacturing process, not about a new alloy, added the court.

The tin man – which alloy is he made of?

Another reason for Arconic’s infringement suspicion was that, according to them, the mechanical properties of the plates made by Constellium could only be obtained with the patented manufacturing process.

The court accepted that Constellium’s 6156 plates seem to have very similar properties to Arconic’s 6013 plates, since both products are used by Airbus for the A380 aircraft.

But, the court continued, this does not imply that Constellium’s plates are necessarily made with the patented process, since different processes can of course lead to the same product.

As a further remark, the court noted that Constellium itself owns a later patent (EP 1809779) for a process of making 6056 or 6156 aluminum alloy products, and asserts that their industrial process is based on this patent.

As a conclusion, the court held:

Thus, the reasons set out in support of the request [for seizure] turn out to be wrong. More particularly, it cannot be derived therefrom any “suspicion” of infringement, nor “good reasons to assume” that the alloy plates supplied by Constellium would infringe Arconic’s patent. 

The final part of the judgment contains a more legal discussion. Arconic argued that its right to a seizure

only depends on the demonstration that the right at stake exists, without any further requirement of evidence concerning infringement itself.

As I said in the beginning, at the risk of oversimplifying, this is indeed probably the general opinion among the French patent profession.

Arconic in particular pointed to the so-called “enforcement directive” No. 2004/48/EC. Article 7 of the directive begins like this:

Member States shall ensure that, even before the commencement of proceedings on the merits of the case, the competent judicial authorities may, on application by a party who has presented reasonably available evidence to support his claims that his intellectual property right has been infringed or is about to be infringed, order prompt and effective provisional measures to preserve relevant evidence in respect of the alleged infringement, subject to the protection of confidential information.

The directive thus refers to the presentation of “reasonably available evidence” as a prerequisite for obtaining e.g. an order for seizure. But, Arconic remarked, this notion was not transposed in the relevant provision of the Code de la propriété intellectuelle, namely article L. 615-5. Since article 2 of the directive makes it possible for Member States to provide means which are more favorable to right holders, this must be interpreted to the effect that French law does specifically not require “reasonably available evidence” as a precondition for an order for seizure.

The court did not frontally disagree, but replied as follows.

[…] The property right conferred by a patent is neither absolute nor discretionary, and is still subject, in the case of a request for seizure, to the appraisal of its merits by the judge […], notably when, as is the case here, the reasons set forth in its support turn out to be wrong. 

Besides, article 3 of the [enforcement directive] requires that proceedings which are necessary to ensure that IP rights are respected must be fair and proportionate. In the present case, as there is no tangible suspicion of infringement, the court can only remark that the requested seizure measure would, as a main consequence, allow Arconic to know about Constellium’s aluminum alloy product manufacturing process. As these two companies are direct competitors regarding this products in front of companies in the aeronautic business, such as Airbus, Constellium can rightly fear that manufacturing secrets could detrimentally be disclosed, or even that its credibility with common customers could be harmed. Lastly, the court is surprised that it is only on October 4, 2017 that Arconic decided to initiate infringement seizure proceedings, although this direct competition with respect to Airbus dates back to 2004. 

Matthieu Dhenne, whose firm represented the patent proprietor in this case, wrote to me that there are a number of reasons why he believes the decision was wrongly decided.

First, he says the proportionality principle does not apply to an infringement seizure which remains an exceptional measure and is disproportionate by nature. He states that the travaux préparatoires concerning the transposition of the directive show that the proportionality principle was voluntarily not introduced into our statute. As a result, the court’s line of reasoning compromises legal certainty and jeopardizes the entire balance of the system. He also insists that a seizure is intended for gathering evidence, not appraising infringement. Matthieu adds that the court’s suspicion of the patentee was unwarranted and that it cannot be possibly demanded from the patentee that they should search for patents owned by the defendant. Whether any other, especially later, patent is indeed implemented or not by the defendant is irrelevant to the possible infringement of the main patent at stake, he argues.

I agree that there are a number of statements in the two above paragraphs quoted from the judgment which are controversial.

It is true that a seizure can result in business secrets being disclosed to a competitor. But the usual way to prevent this is for the seized party to request that the seized information and documents be sealed, and that an expert be appointed by the court to sort out the evidence, so that only information directly relevant to the demonstration of infringement be communicated to the right holder.

As for the fear that the defendant’s reputation be harmed, it seems irrelevant here, as the seizure was performed in Constellium’s premises, not at a third party’s.

The fact that Arconic waited a lot before initiating legal proceedings should probably not come into play either. Indeed, a patentee’s right to sue for infringement is never time-barred.

That said, I am not sure I am fully comfortable with the notion that a patentee’s right to a seizure should be automatic.

It does make sense for the court to carefully look at the specifics of each case before deciding whether this right can be exerted in the circumstances at hand or not.

In this particular case, it seems to me that what the court really did not like was that the “suspicions” of infringement mentioned in the original request for seizure, were not actual or legitimate suspicions, based on the evidence offered.

Would the outcome have been favorable if the plaintiff had played it differently, for example by (1) not mentioning suspicions of infringement but explaining that a seizure is the only possible way for them to determine whether there is any infringement; and (2) immediately offering that the seized evidence be sealed by default so as to be later remitted to a court-appointed expert?

I guess we will never know and can only have suspicions in this respect.


CASE REFERENCE: Cour d’appel de Paris, pôle 5 chambre 1, September 11, 2018, Arconic Inc. v. SAS Constellium Issoire, RG 18/01099.

For the sake of the argument

As I have already mentioned here, one reason why I do not often comment on decisions from the Boards of appeal of the EPO on this blog is that any interesting decision that comes out is instantly shot at by all good bloggers around the place before I even get a chance to draw my metaphorical gun.

So, sorry folks, no breaking news from me today, as Laurent Teyssèdre has already been here, as well as others.

But I could not let this one decision T 1914/12 go without a comment or two.

First, because it is highly interesting. Second, because it is in French (so, maybe some non-French speaking colleagues would benefit from further highlights). Third, because I was involved in the case at hand in the first instance proceedings, so this one brings back a number of memories.

The catchword of the decision can be translated as follows:

Boards of appeal do not have any appraisal power with respect to the admissibility of late arguments which are based on facts that are already part of the proceedings (decision diverging from T 1621/09).

A brief presentation of the facts of the case will probably suffice, before summarizing the very thorough legal discussion in the decision.

The patent at stake is entitled “Method of adhesively bonding a strip of flexible fabric to a substrate“. It was opposed after grant and revoked by the opposition division, for lack of inventive step (as well as extension of subject-matter as far as some of the auxiliary requests are concerned).

In the course of the appeal proceedings, the opposition was withdrawn, and the patent was transferred to the previous opponent. Not that this circumstance is really critical.

The key issue is that, for the first time on appeal, the new patent proprietor identified a further distinguishing feature relative to one of the main cited prior art references.

In a written communication, the Board expressed the preliminary opinion that this was a late argument and that its intention was not to admit it into the proceedings. But the Board, for once presided by the legal member, later changed its mind and came to the opposite conclusion. As a result, the first instance decision was set aside, and the case remitted to the first instance for further prosecution.

But before reaching this conclusion, the Board performed a very thorough analysis of the law pertaining to late facts and arguments.

A fancy EPO appeal clock.

The starting point for the discussion is article 13(1) of the Rules of procedure of the Boards of appeal (RPBA), per which:

Any amendment to a party’s case after it has filed its grounds of appeal or reply may be admitted and considered at the Board’s discretion. The discretion shall be exercised in view of inter alia the complexity of the new subject matter submitted, the current state of the proceedings and the need for procedural economy. 

So the question is: does the discretionary power of the Board apply to a situation such as the one at hand, where a new distinguishing feature is identified by the proprietor at a late stage?

As a first step (section 7.1 of the reasons), the Board reviewed in great detail the notions of “facts” and “arguments” and their respective definitions, based on the common understanding of the terms, of the legal understanding of the terms, and on the specific use of the terms in the EPC and case law.

Clearly distinguishing between facts and arguments is not just a matter of hair-splitting. Depending on whether a late submission is viewed as a fact or an argument, the fate of the submission may differ – even in first instance.

As a side note, in one opposition I have handled, a new inventive step attack based on a timely filed document only later identified as a possible closest prior art document was considered by the opposition division as pertaining to a “new fact” and not merely a “new argument” and it was thus not admitted into the proceedings. The Board set aside the first instance decision – but I don’t know yet if this point will be discussed in the reasons or not.

Anyway, the definition offered by the present Board (reasons, 7.1.4) is the following (in my own translation as always):

A “fact” can be understood as a factual (or allegedly factual) element or a circumstance on which a party bases its case, whereas an “argument” designates a proposition that a party bases on one or more facts and which supports the case that it puts forward. 

The Board then gave the example of a lack of novelty attack:

  • The party’s case (“moyen” in French) is that the claimed subject-matter is comprised in the state of the art.
  • One argument is e.g. that the subject-matter is disclosed in paragraph [0017] of D1.
  • Another argument is e.g. that the skilled person understands the paragraph in a certain manner, in view of common general knowledge, and thus views a certain feature as implicitly disclosed.
  • The textual content of the paragraph is a fact.
  • The copy of the document or of its translation is a piece of evidence.

As a next step, the Board addressed the central issue of whether late arguments can be disregarded or not.

Here, the first interesting remark is that the text of the EPC is not the same in the three official languages.

The English version of article 114(1) reads:

In proceedings before it, the European Patent Office shall examine the facts of its own motion; it shall not be restricted in this examination to the facts, evidence and arguments provided by the parties and the relief sought. 

Note the term “arguments” here. But the French version is in fact quite different, as it solely refers to “moyens invoqués” and “demandes présentées“. I would tend to translate the general term “moyens invoqués” by “the party’s case“. The German version does not specifically mention arguments either.

The Board noted that the English version seems to more accurately express the intentions of the drafters of the EPC (is that generally the case? the Frenchman asks), and therefore adhered to this English version in the rest of the reasoning.

Now the key part of the reasoning is that the English version of the second paragraph of article 114, on which the discretionary power of the EPO to disregard late submissions is based, does not refer to arguments:

The European Patent Office may disregard facts or evidence which are not submitted in due time by the parties concerned. 

This is in contrast to the first paragraph mentioned above, which deals with examination of the EPO’s own motion.

Based on the difference between the two paragraphs, the Board concluded that the discretionary power of the EPO is strictly limited to facts and evidence and does not extend to arguments.

Now going back to article 13(1) RBPA, there is a reference here to an “amendment to a party’s case“, which is not very explicit. But the notion of a party’s case is further defined in article 12(2):

The statement of grounds of appeal and the reply shall contain a party’s complete case. They shall set out clearly and concisely the reasons why it is requested that the decision under appeal be reversed, amended or upheld, and should specify expressly all the facts, arguments and evidence relied on. […]

So, on the face of it, it can be surmised that article 13(1) RPBA, via its implicit reference to article 12(2), empowers the Board with the right not to admit a late modification of the arguments of a party on appeal.

But, reviewing the Travaux préparatoires for the current version of the RPBA, the Board found that a proposed article 13(1) containing an explicit reference to arguments was rejected in the drafting process.

Thus, the Board held, the intent seems to have been in fact not to encompass arguments within the purview of article 13(1). See section 7.2.1 of the reasons.

Then, the Board reviewed the relevant case law in detail (section 7.2.2 of the reasons), and found a number of decisions pursuant to which arguments are not subjected to the Boards’ discretionary power.

But then there are T 1069/08 and above all T 1621/09, which decided otherwise. Especially in T 1621/09, an analysis of the travaux préparatoires was performed but the deletion of the word “arguments” in the drafting process of new article 13(1) was not noted.

In the wake of these two decisions, the Board counted 17 later decisions which relied on the principles set out in T 1069/08 and T 1621/09 without questioning them. A couple of recent decisions have however decided the other way around.

As a conclusion, the Board expressed its disagreement with the approach of T 1069/08 and T 1621/09 (section 7.2.3 of the reasons).

The final reason put forward by the Board for such disagreement is that the RPBA should not “lead to a situation which would be incompatible with the spirit and purpose of the Convention” (article 23), which would precisely be the case if article 13(1) RPBA were to be interpreted as encompassing arguments, although article 114(2) EPC, which prevails, does explicitly not refer to arguments, among the late submissions which may be disregarded.

One first question immediately comes to mind: is this question ripe for a referral to the Enlarged board of appeal?

After all, there are a number of diverging decisions, it seems. I guess the answer may depend on whether the Boards which issued T 1069/08 and T 1621/09 will stand their ground or change course.

The second question that I have is: what about the upcoming revised version of the RPBA?

A few months ago, there was a public consultation at the EPO on a draft. I do not know where this project stands right now. But, for what it is worth, there was a new paragraph 2 in article 12 in this proposal, which reads:

In view of the primary object of the appeal proceedings to judicially review the decision under appeal, a party’s appeal case shall be directed to the requests, facts, objections, arguments and evidence on which the decision under appeal was based.

Beside the fact that there is a new concept here (namely “objections“), this provision seems to introduce a limitation to what kind of arguments a party is allowed to file on appeal – namely, those on which the decision under appeal was based.

If one follows the reasoning of T 1914/12, wouldn’t this proposed provision breach article 114 EPC?


CASE REFERENCE: T 1914/12, Board 3.2.05, June 13, 2018, Gaztransport et Technigaz.

Standard or not standard?

Traditionally, non-practicing entity patent infringement suits have been  relatively few and far between in France.

Without the huge financial stakes of U.S. litigation, and without the lure of German bifurcation, the French legal system has, to some extent, resisted the trend so far. There are a few counter-examples, though.

Like the case discussed today, between famous Intellectual Ventures (IV) and SFR, one of the major French telecommunications companies.

Among the many patents owned by IV is EP 1304002, entitled “Arranging Data Ciphering In a Wireless Telecommuncation System” and originally filed as a PCT application by Nokia Mobile Phones Ltd, in Finland.

As you have probably already guessed, IV initiated legal proceedings in front of the Paris Tribunal de grande instance (TGI), alleging infringement of the EP’002 patent. The alleged infringement mainly relates to the WiFi technology.

You will not know who won at the end of the post, because no one did – the lawsuit is not over yet. In fact, the pleadings hearing is presently scheduled to take place on November 23, 2018. So there is still plenty of time left for you to take your morning off at the new courthouse.

The decision discussed today is only an interim order issued by the judge in charge of case management (JME in the local jargon).

Can you believe there are actually patent applications on methods for identifying patent troll activity? Do some of them get acquired by NPEs, just for the irony of it?

Among the various defenses raised by SFR, there is a rather interesting one, which is that the EP’002 patent is a standard essential patent (SEP).

Two standards were mentioned by SFR: 3GPP TS 33.234 (a 3G standard issued by ETSI – short for European Telecommunications Standards Institute), and 802.11.2012 (a WiFi standard issued by IEEE – short for Institute of Electrical and Electronics Engineers). According to SFR, the EP’002 patent was not declared as essential by its then owner Nokia – a member of both ETSI and IEEE – although it should have been. Due to this omission, they argued, the infringement action should be deemed inadmissible.

Now, apparently SFR did not have all the necessary evidence at hand.

They thus wrote both to ETSI and IEEE and requested the “travaux préparatoires” (one of the most well-known French expressions among lawyers, ranking third after “bonjour” and “merci”) for the relevant standards, as well as relevant correspondence between Nokia and both organizations.

France-based ETSI replied that they would provide the requested documentation, but IEEE turned down SFR’s request.

Thus, SFR filed a motion with the JME, requesting a stay and further requesting that IEEE be ordered to hand down the relevant documents. 

IV fought this motion.

First, IV claimed that SFR’s motion was inadmissible.

Indeed, IEEE is based in the U.S., and the French judge has no jurisdiction to directly order a third party to the litigation to hand down evidence, they argued. The only possible procedure would be the letter rogatory, i.e. the French judge should ask U.S. authorities to issue the order.

The judge closely looked at the written response made by IEEE further to SFR’s request. The first part of this response was the following:

Please be advised that it is IEEE’s policy not to provide information that may be used in litigation without a subpoena. This is to protect IEEE’s neutrality in any dispute. If that is necessary, please feel free to let me know and we can arrange the details of service. 

The JME deduced from this response that IEEE was willing to hand down the evidence at stake, and that they just required a formal judicial order for doing so. The judge was happy to oblige, and the formal and cumbersome process of the letter rogatory could thus be avoided.

I note that IEEE’s response does not specify whether the requested subpoena should be specifically issued by a U.S. court, or whether any subpoena would do. It was probably the judge’s understanding that, in the absence of any specific mention, they were open to any form of subpoenaing.

As a second defense against the motion, IV argued that SFR’s request was useless and unjustified.

SFR raised the SEP argument late in the case management procedure, IV said, and only they should have the burden of providing their own evidence. Besides, the second part of IEEE’s written response to SFR reads as follows:

However, a subpoena may not be necessary in this instance as IEEE 802.11 does host a public website that contains a wide variety of working group materials. The IEEE 802.11 website is located http://www.ieee802.org/11/.

But the judge held that SFR was free to raise a new defense at any point within the case schedule (which, in case you are wondering, is nothing like the extremely tight schedule envisioned for the future UPC). Besides, SFR stated that they could not find the relevant documents on the IEEE website, and that in particular the correspondence with Nokia is not supposed to be available on this site. Finally, the supply of evidence by the standard organizations should not take long.

As a result, the judge granted SFR’s request and issued an order for IEEE to send SFR all documents and reports of the working group relating to the relevant part of IEEE 802.11, as well as the relevant correspondence with Nokia, within one month.

On the other hand, the request for stay of proceedings was dismissed – probably because this timeline is supposed to be still compatible with the planned date for the main hearing.

Access to evidence can be challenging in this country especially in the absence of discovery / disclosure. French judges are often reluctant to order a taking of evidence, such as the provision of documents. But in a case such as this one, it does seem rather fair that a defendant should be allowed to explore a particular line of defense by requesting third party-held documents.

We will thus stay tuned, and I am sure the decision on the merits will be most interesting to read – if the lawsuit goes all the way of course.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 4ème section, ordonnance du juge de la mise en état, June 7, 2018, Intellectual Ventures LLC v. Société française du radiotéléphone, RG No. 16/16346.

Money money money

It is always about the money, isn’t it?

No, not life. But patent litigation? Maybe so.

Today’s lawsuit pits an optician businessman – and inventor – against the major French-based ophthalmic optics group, Essilor.

This inventor filed a French patent application concerning a nose pad invention in April 2013. On January 1, 2014, he assigned his invention to Essilor International. I should add that he was independent from Essilor, so we are not talking about an employee’s invention here.

The litigation between them later arose because the inventor was dissatisfied with the money he made from the assignment.

We thus need to look at the consideration provided in the assignment for the transfer of rights.

Based on the excerpts mentioned in the judgment, a lump sum of 400,000 euros was provided. In addition, a variable price was set, over a period of time of 19 years, according to a sophisticated formula taking into account the number of countries in which patent applications would be filed and patents would be granted, as well as the number of devices incorporating the invention which would be sold.

As far as I understand, only the lump sum was paid. In 2016, the assignor claimed additional money corresponding to the variable part of the deal. Essilor replied that there were difficulties in working the invention, and that prosecution of the patent applications on the invention was still ongoing.

In January 2017, settlement discussions were initiated, in which Essilor offered 85,700 euros as a complementary payment – to no avail. In May 2018, the inventor filed a complaint with the Paris Tribunal de grande instance (TGI), alleged a breach of contract and claimed damages.

The inventor provided several estimates for these damages. His first estimate amounted to more than 3 million euros for the period of 2015-2017, and then more than 2.7 million euros per year from 2018 to 2034. His second, auxiliary estimate was 4 million euros in total. The third, less preferred estimate was 600,000 euros in total.

Essilor fought back and requested that the action be dismissed. They also provided their own calculation for the minimal amounts to be due, as an auxiliary argument, namely 16,666 euros from year 2 to year 10 and 3,333 euros from year 11 to year 20. This corresponds to the amounts due in consideration of the current state of the patent portfolio, and does not take into account any sale.

After the nose pads… muzzle pads.

Turning now to the judges’ decision, the first interesting point relates to the issue of whether the negotiations between the parties were loyal or not.

The inventor claimed that he was not properly assisted during the negotiations, which were uneven and led him to agree to a clause on the variable part of the consideration which was unfavorable to him.

The court looked at various email exchanges between the inventor and Essilor before the agreement was executed and could not find any evidence of unfair or disloyal negotiations. The court made the following comments:

It is thus the content of an oral exchange in a time frame very close to the execution of the agreement which led to the adoption of the proportion of granted and non-refused patents as the adjusting parameter for the “provisional amount” or minimal amount, in the drafting of the agreement. But it cannot be deduced that this criterion was never previously discussed […]. Contrary to the defendant, [the inventor] provides little information on the exchanges prior to the execution of the agreement, which, based on their contents, do not reflect the alleged weakness of the plaintiff but at best his desire to rapidly achieve the execution of the assignment agreement. 

[…] Even if it is surprising that the provision relating to the variable part of the price, which is so important […], was significantly modified without any written proposal before the final version, this circumstance is not sufficient to qualify the discussions leading to the execution of the assignment as dishonest. The correspondence filed as evidence […] actually proves the very active part taken by the claimant in the different steps of the negotiation, the stakes of which he always clearly understood. 

Next, the inventor blamed Essilor for filing a PCT application based on his first French application.

Indeed, using the PCT route instead of direct national filings results in a delay in the grant proceedings. I would add that this is actually one of the main reasons why applicants file via the PCT in the first place. But in this case, any delay in the grant proceedings leads to less money payable to the inventor – in view of the definition of the variable part of the price.

The court noted that the agreement does not explicitly mention that the patent filings abroad should be done through the PCT route. Nor does it exclude the PCT route. Therefore, the court had to determine the common will of the parties. The court first noted that, according to another clause of the agreement, the assignor explicitly represented that he had not filed any direct or PCT application. The fact that a distinction between PCT and non-PCT was made in this clause (unrelated to future filings), was interpreted by the judges as a pointer to the fact that a future PCT filing should have been explicitly mentioned, in order for it to be allowed.

As a main reason and as a conclusion, the court then held that:

In view of the importance of the patent grant timeline for the general object of the contract, clause 5.2 must be interpreted, despite its lack of precision in this respect, as not allowing Essilor to file an international application. This choice was thus made in violation of the provisions of the [agreement]. 

So that’s a first rebuke for the assignee.

Then came a second one, relating to the absence of exploitation of the invention.

The court first held that, when the assignment price comprises a royalty which depends on the exploitation of the invention by the assignee, this implies a duty for the assignee to exploit the invention; otherwise the clause would be wholly one-sided.

This obligation concerns the means implemented by the assignee, and not the outcome. In other words the assignee does not have to succeed in implementing the invention, but they have to try. And the assignee has the burden of showing that they have used all appropriate means for exploiting the invention.

In this respect, Essilor referred to two messages evidencing some difficulties in the development of the nose pads of the invention.

The court commented as follows:

These two sole exhibits relating to a time span of almost two years cannot possibly show that there is a technical impossibility of exploiting the invention. They merely reveal that each version at stake turned out to raise different development issues, and that in 2016 only the “tube” version was deemed as being able to be made and marketed. 

So, that was held as another fault.

Finally, what is generally the stodgiest part of a judgment (this case being no exception): the assessment of damages.

The court started by holding that the damages should compensate for the loss of opportunity for the inventor to get royalties. Then, they took note of the objections raised by the various patent offices and the amendments made in response which, they implied, lowered the prospects of exploitation of the invention.

The court also took into account:

  • the initial estimate of the annual royalty of 100,000 euros which had been made by Essilor during the negotiation phase;
  • the defects of one of the versions of the device which led to dropping production launch;
  • the fact that the inventor subsequently filed another patent application on a nose pad.

All in all, the court discarded both the claimant’s and the defendant’s estimates, and came up with a global figure of 300,000 euros of damages compensating for the inventor’s loss of opportunity.

There is a very French expression for this approach: “à la louche“, literally “with a ladle“. It means a very rough estimate, close to guesswork. And, à la louche it is in this case, I think.

On the other hand, we cannot really blame the court for this. First, the parties came up with hugely discrepant figures, as is not unusual. Second, loss of opportunity is all about what could have been in an alternate universe, which leaves a lot of room for imagination. Third, the court was not assisted by an expert and had only the partial evidence provided by the parties at hand.

I can’t help but wondering: the parties will continue to be bound by the agreement for many years to come. So, would a settlement not be still the best option for all of those involved?


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 3ème section, May 25, 2018, Jean-Luc B. v. SA Essilor International, RG No. 17/06753.