The statute of limitations for nullity suits is probably one of the worst aspects of French patent law.
But as a blogger, I have to confess that I am grateful for it. If it weren’t for this odd aspect of our statute, the supply of notable French judgments to comment on would be much sparser. Sometimes it is even all there is to talk about. Like in this recent decision E. Leclerc v. Bilz Werkzeugfabrik, where it is in fact the sole topic addressed by the court.
In this case, two German companies, which I will call Innovat and Bilz (but which in truth have much longer names) filed a European patent application in 2000, on a device for clamping tools. The patent was granted in January 2003. It was opposed, and the opposition was rejected by the EPO in February 2007.
In June 2017, the French company E. Leclerc initiated nullity proceedings in connection with this patent. In case French readers are wondering, this company is said to be specialized in making, purchasing and selling cutting tools: it thus appears that it has nothing to do with the famous eponymous supermarkets.
The patent proprietors raised a limitation defense, and this objection was addressed in a preliminary judgment after a first hearing.
E. Leclerc’s first line of argumentation against this defense was that the statute of limitations does not apply to patent nullity claims.
A long shot for sure, as many other litigants have made such contentions before, to no avail. But, interestingly, E. Leclerc came up with a number of reasons in support for this position, some of which I have not come across before.
For instance, the nullity plaintiff contended that applying a limitation period to a nullity action would run contrary to Regulation (EU) No. 316/2014 relating to technology transfer agreements.
This regulation defines a limited exemption for technology transfer agreements from the general prohibition of anti-competitive practice under article 101 of the Treaty on the Functioning of the European Union. Article 5 of the regulation specifies that the exemption does however not apply to “any direct or indirect obligation on a party not to challenge the validity of intellectual property rights which the other party holds in the Union, without prejudice to the possibility, in the case of an exclusive licence, of providing for termination of the technology transfer agreement in the event that the licensee challenges the validity of any of the licensed technology rights“.
Quite creative, but beside the point for the court, which noted that the regulation only applies to agreements in which a licensor allows a licensee to exploit a technology, which is not the case here.
E. Leclerc also relied on the UPC agreement, which, they said, excludes any statute of limitations for patent nullity actions. The argument was easily dismissed by the court since, as we all know, the agreement is not yet in force.
They also relied on the executive order of May 9, 2018 (presented here) which is bound to eliminate the limitation period for patent nullity suits. But unfortunately, this order is not currently in force either. It is scheduled to enter into force together with the UPC agreement, precisely.
E. Leclerc also stated that, since the claims of a patent are never stabilized as they can always be limited, the limitation period never starts running.
This notion of “stabilization” of the claims derives from a couple of judgments in which it was held that, when the claims are modified in opposition or limitation proceedings, this postpones the start of the limitation period, because the claims are not stabilized before the date of modification. See previous discussions here and there.
Some have thus taken this logic as far as suggesting that claims are in fact never stabilized because there is always the possibility that the patentee may amend them any time by way of limitation proceedings. Ergo, the limitation period may well exist but it can never start running, problem solved.
The court did not buy this theory:
Finally, even if the claims of a patent may change, this mere likelihood cannot prevent the implementation of a rule of limitations.
At the end of the day, the court thus once again confirmed that the statute of limitations does apply to nullity actions.
“Caramba, encore raté” as Hergé famously wrote in his classic Tintin comic books.
Then the next step, as always, is to determine the starting point for the limitation period. Here, the Paris Tribunal de grande instance (TGI) once again stuck to its in concreto appraisal – although appeal judges seem to be on a different page, as already discussed several times on this blog.
In particular, the court noted that the grant of a patent cannot trigger the time bar. Otherwise, an undue monitoring of published patents would be required from all stakeholders.
Interestingly, the court also added that the rejection of the opposition against the patent by the EPO in February 2007 could not be taken as a starting point either, “for the same reason“. In one of the other cases already recalled above, it was decided that the starting point was the decision of a Board of appeal to maintain the patent in amended form, in opposition proceedings. So, as most of us suspected, this earlier decision cannot be extrapolated to some sort of automatic rule.
For the court, the fact that E. Leclerc already marketed many types of spindles in 2010, or that they filed a patent application in 2011 for a cutter for composite materials, was not taken into account by the court either, as “it does not imply that they were aware at that time of all patents granted to competitors concerning devices for clamping and releasing tools“.
The decisive fact in the case was rather a cease and desist letter sent by Innovat and Bilz’s attorney to E. Leclerc in May 2014. E. Leclerc was also targeted by an infringement suit in the Landgericht of Mannheim, but based on a different, national German patent, which led to a judgment in March 2016.
The judges thus held that the starting point for the 5-year limitation period was this cease and desist letter of May 2014. E. Leclerc’s action was thus not time-barred. As a result, the lawsuit will now proceed on the merits.
I have mixed feelings about this ruling.
On the one hand, the outcome makes a lot of sense to me. If we have to live with this statute of limitations for patent nullity suits – which we do – then some formal correspondence between the parties regarding possible infringement of the patent at stake seems to be a very reasonable place to start from in order to apply the rule.
On the other hand, I wonder how this ruling can be reconciled with other similar recent judgments.
Take MEP v. Raccords & Plastiques Nicoll for instance, where the Cour d’appel reached the exact opposite conclusion, by taking the grant of the patent and not a cease and desist letter as the starting point. Is there a blatant contradiction here? Or was MEP v. Raccords & Plastiques Nicoll special because in this case the nullity plaintiff worked in a highly specialized area and had business relationships with the other party?
Then take LuK v. Valeo Embrayages, a judgment by the same section of the Paris TGI as today’s decision. In this case, like in others, the court performed a thorough analysis of the business projets of the nullity plaintiff and determined when so-called “points of contact” between their technology and the patent at stake occurred. There is no such detailed analysis in today’s decision.
As always, I don’t think we should read too much into a seemingly different approach from one judgment to the next. The way the parties do or do not argue in their submissions is certainly a major factor in the court’s reasoning.
Now, my two cents, for what it is worth – and it is quite a subjective one.
I have the impression that the courts (at least the first instance courts, from which we have a larger sample of judgments to digest) make a moderate and measured application of the statute of limitations; and that a relatively heavy burden is placed on the nullity defendant to convincingly show that, for some specific reasons, the plaintiff was or should have been aware of the patent more than 5 years before the complaint was filed.
In other terms, it could be worse!
CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 1ère section, SA E. Leclerc v. Bilz Werkzeugfabrik GmbH & Co. KG & Innovat Gesellschaft für Sondermaschinenbau, Mess-und Steuerungstechnik mbH, RG No. 17/09311.