Where is the finish line?

Did you think you would never hear again of the thrilling subject of the French statute of limitations, and of its very controversial application to patent nullity suits? Well, think again.

In a previous post on the loi PACTE, I mentioned that the new provision putting an end to the time bar on patent nullity suits would immediately enter into force but that it remained to be seen how this would be interpreted in practice.

And so it is that, after spending lots of ink and pixels on how the statute of limitations applies to patent nullity actions, we may now have to devote more ink and pixels to a discussion on how exactly the statute will no longer apply.

Without further ado, as they say, I will now leave the floor to Matthieu Dhenne who will provide his insight on this matter.

I would like to come back to an issue close to my heart, as readers of this blog already know: the limitation period of actions for the annulment of industrial property titles.

I will not recall here the entire debate, already mentioned many times on this blog. The issue can be summarized by recalling that French judges applied a 5-year limitation period of the French Civil Code to these actions and that a debate has arisen about this case law, in particular because of the disastrous solutions to which it led.

The legislator has since intervened to combat this case law by declaring that these actions shall not be time-barred.

But a new debate is starting to emerge. Indeed, French Act No. 2019-486 of May 22, 2019, on the growth and transformation of companies – known as the “PACTE Act” – specifies that actions for the annulment of industrial property titles are not subject to any limitation period, while providing that that this applies to the “titles in force on the day of its publication“.

How should we interpret this provision?

The statute of limitations – the finish line.

Let us immediately rule out the interpretation according to which the parliament, by aiming at the titles in force on the day of the publication of the act, has excluded, on the contrary, the titles that were not (yet) in force on this date. This interpretation is disqualified, because it makes no sense. Indeed, we cannot consider that a transitional provision may have another object than transitional law, which deals with the application of an Act to past facts (i.e. facts that happened prior to its entry into force).

Only one question seems interesting with regard to the transitional provision discussed here: could it induce a retroactive effect by applying to titles in force on the day of the publication of the act, even though this day is after the limitation period has expired?

For instance, could a Court of Appeal apply the new Act to a case in which the limitation period applied at first instance? We should recall that the prevailing principle in French Law is that of the non-retroactivity of new laws, which is deduced from Article 2 of the French Civil Code; and that its counterpart is the immediate effect of new laws. Article 2222 of the same Code specifies that the limitation period, once expired, cannot be called into question.

The legislator may, however, provide, by way of exception, for the retroactivity of a law, if this is clearly and sufficiently stated. In this case, Article 124 of the PACTE Act does not specifically state that it is “retroactive”, but this is not required by Article 2 of the Civil Code or by the interpretation of the French Supreme Court (Cour de Cassation). Moreover, the specific mention that the law is “retroactive” would, as such, be of little use because it would be too vague.

Except if one considered that a specific reference to retroactivity is indeed mandatory – which the Cour de Cassation has never held – there is no evidence to suggest that the transitional provision in question is not clear or sufficient. We are therefore in a situation where it will be up to the judges to interpret the provision as closely as possible to the spirit of the text.

It must be kept in mind that the legislator intended to put an end to a jurisprudence that was belied by its text. It was therefore appropriate to refrain from restricting its application either to ongoing trials or to proceedings for annulment introduced after its entry into force or to actions for annulment based on titles issued after its entry into force. On the contrary, the text had to be worded in such a way that it could apply to all titles in force, which included all the aforementioned cases, but also titles previously issued and which had not given rise to legal proceedings on the date of the publication of the law.

Thus, the wording “titles in force on the day of its publication” seems to cover all pending and future actions and seems therefore retroactive.

I will have the opportunity to come back in more detail to this subject next week on @DeBoufflers Blog and then in the journal Propriété Industrielle (December issue); the latter will include a detailed response to an article supporting the opposite thesis, which was published in the same journal this summer.

Thank you Matthieu.

Transitional provisions are often tricky and can give rise to divided case law.

We have been there before, when the number of courts having jurisdiction in patent matters was reduced from 10 to 7 and then down to 1. And so, I would not be surprised if we got surprised again.

Cutting the limitation period

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.

Cutting-edge cutting tools.

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 mbHRG No. 17/09311.

It-which-must-not-be-named

Some pharma cases are somewhat delicate to discuss in a blog post.

Case in point, if I provide the commercial name of the drug at stake in today’s litigation, I am afraid that this post may be classified as a spam and may thus never reach my email subscribers.

You see, it is the sort of drug which is prescribed for the treatment of erectile dysfunction, and which keeps coming up in these pestering unsolicited email messages that you may receive on a daily basis.

Just to be clear, today’s drug-which-must-not-be-named is not the famous one that starts with a V (containing sildenafil as an active compound), but the other famous one that starts with a C (containing tadalafil as an active compound).

He-who-must-not-be-named.

Icos Corporation (of the Eli Lilly group) is the owner of a number of European patents in connection with the C. drug.

First, there is EP 0740668, which was the basic patent for a French Supplementary Protection Certificate (SPC No. FR 03C0017), which expired in November 2017. Second, there are EP 1173181 and EP 1200092, designated as “secondary patents” by the Paris Tribunal de grande instance (TGI).

In November 2014, generic drug company Mylan obtained a marketing authorization (MA) related to the C. drug. In January 2016, Mylan initiated nullity proceedings with respect to the EP’181 and EP’092 patents in front of the Paris TGI. The parties later reached a settlement agreement with respect to EP’092, so that only the fate of EP’181 remained to be decided upon. Icos Corporation and the French distributor Lilly France counterclaimed for infringement of EP’181. The first instance judgment was issued in May 2018.

EP’181 or equivalents thereof were or are also litigated in other countries. According to the summary provided by the court, the patents were revoked in Germany, the United Kingdom, Canada and Japan. It may thus come as little surprising that the same outcome was achieved in this country. On the other hand, the ground for nullity that the TGI took into consideration is relatively unexpected, as will be apparent below.

But before getting there, let’s first look at the statute of limitations defense raised by Icos.

Mylan argued that the statute of limitations is not applicable to patent nullity suits. This argument was rejected by the court, in keeping with earlier decisions.

Turning to the determination of the starting point for the limitation period, the court recalled its now established principle of an in concreto determination.

The court thus explained that the grant of the EP’181 patent was not the starting point for the limitation period. The general principle is the following:

The starting point for the limitation period must thus be set at the date, determined in concreto, at which Mylan was or should have been aware of EP’181, due to its intent to market a generic of the drug [C.], which led to the MA obtained on November 21, 2014, since this patent is an impediment to its exploitation.  

In this case, a determining factor to be taken into account was the date at which Icos obtained its own MA:

In this case, the first MA for [C.] was granted in November 2002. By way of application of article R. 5121-28 of the Code de la santé publique, the generic company can only apply for an MA as from the eighth year after the grant of the originator’s MA, and cannot be granted one before the tenth year. Therefore, Mylan could not file an MA application before November 2010.

This reasoning is fully consistent with that applied in another recent case which already involved Mylan.

However, this is not the end of the story here. The court further held:

In this case, an additional fact should be taken into account in the in concreto analysis of standing and the starting point for the limitation period. […] [Namely, Icos corporation] filed a request for limitation of the EP’181 patent on February 14, 2014 with the European patent office, and the limitation of the patent was published on March 25, 2015. 

Thus the patent enforceable against Mylan could only be known on this date, so that the starting point for the limitation period is March 25, 2015. 

In another recent case, the starting point of the limitation period was postponed by a court to the date of the decision of the Board of appeal of the EPO in the opposition appeal regarding the patent at stake. The relevant paragraph of this decision may be worth quoting again here:

[…] It is only on [July, 7, 2014, i.e. the date of the Board of appeal’s decision] that the drafting of the patent which is sought to be revoked was stabilized and that Ethypharm was able to precisely know the content of the claims of said patent as well as all the facts making it possible for them to act, so that the action is not time-barred and is admissible. 

We now have a confirmation that limitation proceedings, just like opposition proceedings, may result in a postponement of the limitation period for nullity actions.

It remains to be seen how general this principle is and in particular whether it extends e.g. to the impact of other lawsuits involving third parties.

Turning now to the merits of the case, claim 1 of EP’181 as limited reads as follows:

A pharmaceutical unit dosage composition comprising 1 to 5 mg of [tadalafil], said unit dosage form suitable for oral administration up to a maximum total dose of 5 mg per day.

Independent claim 10 is a Swiss-type claim containing similar features.

Mylan raised all classical grounds for nullity, but the court focused on insufficiency of disclosure.

After reviewing the description of the patent, the court noted the following facts:

  • There are several molecules belonging to the class of type 5 phosphodiesterase (PDE5) inhibitors.
  • Among them, particular reference may be made to sildenafil, the active compound of V., marketed at the priority date of the patent in doses of 25, 50 and 100 mg.
  • However, sildenafil generates a number of side effects, such as facial red patches, or a lowering of blood pressure.
  • The invention thus relates to a low dosage of the known alternative drug tadalafil, in order to provide an effective treatment of erectile dysfunction without the side effects associated with sildenafil.
  • The patent also contains a number of examples showing the efficacy and the absence of side effects of low dosage forms of tadalafil.

The court was apparently quite puzzled by the patent as a whole:

The problem expressed in the description of the patent is to provide a principle which avoids the issues of red patches and side effects of sildenafil by a particular dosage of tadalafil. 

Indeed, and as rightly noted by Mylan, no side effect associated with tadalafil is mentioned in the patent, so that the dosage suggested for tadalafil curiously addresses a problem associated with another active compound. 

The court then referred to a standard mentioned in the so-called “finasteride” judgment of December 6, 2017 by the Cour de cassation, commented on this blog:

[…] When a claim relates to a [second] therapeutic application of a substance or composition, obtaining this therapeutic effect is a functional technical feature of the claim. Therefore, in order to meet the requirement of sufficiency of disclosure, it is not necessary to clinically demonstrate this technical effect; but the patent application must directly and unambiguously reflect the claimed therapeutic application, so that the skilled person can understand, based on commonly accepted models, that the results reflect this therapeutic application.

The court then came back to the technical problem presented in the patent:

Icos Corporation and Eli Lilly do not dispute that no prior art document describes any side effect related to the use of tadalafil.
And they cannot validly argue that the absence of documentation in this respect does not amount to the absence of a problem, because the onus is on them to show that there was a problem to be solved and that it is solved by the teaching of the patent.
It thus appears that the problem described in the patent relates to sildenafil and not tadalafil, and it cannot be extrapolated that both active compounds have the same side effects, unless one were to admit the resolution of artificial or speculative problems.
In fact, the examples cited in the patent demonstrate that the dosage mentioned in the patent does not address the listed “problems”. 

In summary, the problem to be solved cannot be considered as the reduction in the side effects of tadalafil, because such side effects were not known in the prior art – only side effects of sildenafil were known.

Most of the examples of the patent also do not demonstrate the existence of side effects of tadalafil associated with higher dosages, so that these were held not to “reflect” the alleged therapeutic application (using the wording of the Cour de cassation).

The conclusion reached by the three-judge panel will not doubt cause a stir, as the invention recited in claim 1 was found not to be sufficiently disclosed in the patent.

The finasteride case related to a second therapeutic application invention, for a known molecule. It is well accepted both at the EPO and in French national courts that the new therapeutic application has to be demonstrated in a plausible manner in the patent, otherwise the patent is insufficient.

Yet, in the present case, claim 1 is a classical product claim, with no functional feature. According to EPO case law, there should be no problem of insufficiency of disclosure, because the skilled person is able to manufacture the composition containing the active substance at stake in the claimed dosage range. The question of whether said claimed dosage range provides any technical benefit or not only pertains to the appraisal of inventive step.

Now, as regular readers of this blog are well aware, the French approach to validity is much more fluid than the EPO’s.

If a court is convinced that an invention does not properly solve the alleged technical problem, or that the technical problem is artificial, this can give rise to a number of invalidity objections, including insufficiency of disclosure. My understanding is that the technical problem tends to be viewed by French courts as an integral part of the claimed invention itself.

But there is yet another cause for controversy in the judgment.

I mentioned above that most of the examples of the patent do not demonstrate the existence of side effects of tadalafil associated with higher dosages. That said, there is one example, namely example 7, which does analyze in detail the occurrence of various side effects depending on the dosage of tadalafil. The table of results is in fact even reproduced in the judgment. The court first remarked that some side effects are not present at all at any dosage. So far so good. But, regarding those side effects which are indeed shown to be less frequent in the claimed dosage range than at a higher dosage, the court noted:

Regarding headache, back pain and myalgia […], the reasoning is the same because these effects were never previously observed.

This part of the judgment seems to imply that, at least in the context of drug dosage patents, the existence of the technical problem to be solved must be acknowledged in the prior art, and cannot be demonstrated for the first time in the patent itself.

The invention can thus not be a so-called “problem invention“.

Things should be put into perspective, though, and the present case may not necessarily be generalized. Maybe the court did not believe that example 7 was convincing at all. At the very least, the fact that the dosage originally claimed in the patent, namely from 1 to 20 mg, had to be later restricted to 1 to 5 mg, due to some relevant prior art, certainly contributed to the court’s perception of the patent being invalid.

In fact, the court reviewed all the following claims and concluded that they suffered from the same deficiencies as claim 1, mentioning a lack of inventive step in passing for some of them. Fluidity of the grounds for nullity indeed.

As a final note, this is probably one of the last judgments penned by Ms. Courboulay, who, given her seniority and her involvement in many conferences and events, was often considered as the leading judge in the 3rd (IP) chamber of the Paris TGI.

Ms. Courboulay has now officially retired; but given the large number of important rulings which she authored, there is little doubt that her influence will continue to be felt in the coming years.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 1ère section, April 5, 2018, Mylan v. Lilly France & Icos Corporation, RG No.16/05073.

Judgment in the box

The burden of proof. A concept with a well-deserved name.

It can indeed be a real burden for a patent proprietor to find clear and convincing evidence that a patent is infringed; or for a defendant to find clear and convincing evidence that the invention was disclosed by the proprietor before the filing date.

The case discussed today illustrates both situations.

In this case, all litigants are from the Toulouse area. Construction Machines Automatiques Spéciales (CMAS) owns French patent No. FR 2755655, filed in 1996, which expired during litigation. The patent relates to a carton making machine.

The main defendants are: LB Pack, a company created in 2012 a few kilometers away from CMAS; and two ex-employees of CMAS, who also happen to be the founders of LB Pack.

CMAS filed claims of patent infringement and unfair competition against these three defendants. The defendants counterclaimed inter alia for patent nullity.

The first notable question raised in this case is whether the nullity counterclaim was time-barred.

As reported last week, the statute of limitations will no longer be applicable to any patent nullity claim if and when the UPC Agreement enters into force. But in the meantime we have to continue dealing with it and the legal uncertainty that it entails.

Quite surprisingly, the court disposed of this issue in a short paragraph, briefly noting, as if it were self-evident, that the statute of limitations is not applicable to nullity claims when they are raised as counterclaims.

An interesting development indeed, as it was previously held in other cases that nullity counterclaims are to be treated in the same manner as direct nullity claims – with the caveat that, if a defendant is time-barred, nullity can always be raised as a defense (exception) to the effect that the patent should not be enforceable against them, even if the patent is not formally revoked.

Stay tuned to check whether this new approach will hold.

The wonderful things you can make out of cardboard.

The main invalidity argument raised by LB Pack et al. was that CMAS (formerly CMA) had disclosed the invention before filing by showing and selling so-called Minicompact machines.

By way of an interesting strategy, the defendants requested and obtained an ex parte order from a judge allowing them to perform an inspection by a bailiff with a third party, the company Stendhal, that had bought a Minicompact machine in 1995.

The bailiff’s report proved the acquisition of the machine before the filing date of the patent. But the court was not convinced that this machine anticipated the patent claims. The main reason for this was that the machine was subjected to several servicing operations since 1995, including an important compliance operation in 2004, performed by CMAS. In other terms, the court believed that the machine may have been altered, and that the copy inspected by the bailiff during litigation may not be representative of the machine bought in 1995. Thus, the benefit of the doubt was given to the patent proprietor – who was apparently not required to demonstrate that they had indeed modified the machine in a way which would be relevant to the patent in suit.

The patent was thus declared valid.

Turning now to infringement, the shoe was on the the other foot.

An infringement seizure report had been drawn up by a bailiff. This proved that LB Pack had sold one machine to a third party, Sicaf. But the issue was the description of the allegedly infringing machine.

In fact, the bailiff was only able to inspect an unfinished machine, not yet operational, and with some parts not yet assembled. But, said the court, analyzing whether the characterizing portion of the main claim of the patent was implemented by LB Pack could only be done based on a fully assembled machine.

The other documents and evidence found by CMAS did not make it possible to know whether the subject-matter of the patent claims was implemented or not.

As a result, the infringement claim was rejected.

That said, the defendants were not off the hook, as they were found guilty of unfair competition.

It turns out that the bailiff conducting the infringement seizure found evidence that the two ex-employees who founded LB Pack had extensively copied business and technical information belonging to CMAS before leaving. Also, at the time they left the company, they had accessed and taken advantage of one CAD license belonging to CMAS.

The assessment of the court as to the consequences of these illegal actions was then the following:

Even if it is not demonstrated that LB Pack makes and markets machines which infringe CMAS’ patent, it remains that all the saved technical data belonging to CMAS necessarily and unjustifiably made it easier to create new machines which could be very quickly put on the market by LB Pack as from 2013, on the same market, which conferred them an undue competitive advantage.

Finally, it can be derived from the invoices annexed to the infringement seizure report that, owing to the customer and prospect files copied on the laptop of Mr. […], it was easier for LB Pack to solicit customers and thus market its machine more easily notably with Schneider and Durlin which were already customers of CMAS. The misappropriation of customers is thus demonstrated and is an act of unfair competition and free-riding. In view of the invoices from LB Pack seized by the bailiff, the court knows that 3 machines were sold starting from July 2013 for an amount of 235,000 euros, notably to Sicaf, which was a prospect of CMAS, and that maintenance services were also sold to Schneider and Durlin, customers of CMAS. 

Therefore, the acts of unfair competition and free-riding are serious and repeated and the compensation for the harm caused should be set to 80,000 euros. 

One remark here is that an infringement seizure is a procedure specifically intended to gather evidence of patent infringement. However, even in the absence of patent infringement, the evidence found during the seizure can be used against the defendant with respect to other claims, notably in relation with unfair competition.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 4ème section, March 15, 2008, SARL Construction Machines Automatiques Spéciales v. SARL LB Pack et al., RG No. 14/16600.

Getting ready

Little by little, everything seems to finally come into place for the kick off of the UPC – pending the outcome of the constitutional complaint in Germany.

A major step has now been taken in France, with a modification of the Code de la propriété intellectuelle (CPI) to make national law ready for the UPC, by way of an executive order dated May 9.

And one of the most important amendments thus introduced… well in fact has little do with the UPC, and everything to do with this very French debate on the statute of limitations applicable to patent nullity actions.

Indeed, a new article L. 615-8-1 is introduced, per which the statute of imitations is simply not applicable to patent nullity actions. So, back to the situation that everyone took for granted ten years ago, and back into line with the practice of other European countries. Very good news indeed.

But, there is a but, or actually two.

First, this new provision will only come into force when the UPC agreement comes into force – since the overall purpose of the order is the application of the UPC agreement. Second, the new provision will not be applicable to nullity actions which are already time-barred at the time the provision comes into force.

So you can still expect a lot of discussion for a few more years on how the statute of limitations should be applied and how the limitation period should be computed, before this really becomes history.

Waiting for the entry into force.

Now, back to the other, truly UPC-related provisions. One important aspect is how double protection by a French patent and a European patent for the same invention is handled.

The current situation is that, when a French patent and a European patent granted to the same inventor or successor in title cover the same invention and have the same priority date, the French patent ceases to be in force at the expiry of the 9-month European opposition period (if no opposition is filed) or when the opposition proceedings are closed, the patent being “maintained” (either in amended form or as granted).

Under the new version of article L 614-13 CPI, this remains the case, but only for European patents that have been opted out from the exclusive competence of the UPC (under article 83 of the Agreement). For non-opted out European patents (including of course unitary patents) on the contrary, there will no longer be any such so-called substitution. Thus, applicants will be able to secure both a national patent, enforceable in front of our national courts, and a European patent enforceable in front of the UPC, for the same invention. This is of course primarily of interest for French applicants who do their first filings at the INPI and then file at the EPO. But of course foreign applicants could also use this tool, for super-important inventions, by filing at the EPO and then in France, or simultaneously at the EPO and in France.

Now, what happens if a European patent is opted out at a late stage, for instance after the 9-month opposition period? The answer provided in the new law is that double protection then ends at the time of the opt out, i.e. the French patent ceases to be in force on the date of the opt out.

By the way, any substitution is irreversible. If a European patent is invalidated or lapses or if the opt out is withdrawn after a substitution has taken place, the corresponding French patent does not come back to life.

Another amendment relates to the prohibition to transfer, or to grant rights on, a French patent or application independently from a European patent or application, for the same invention, having the same priority date, and filed by the same inventor or successor in title.

This prohibition remains in place for all non-opted out European patents (including unitary patents), as well as opted out European patents (before the substitution takes place). In addition, the recordal of a transfer at the French national patent register is only effective if a parallel recordal has taken place at the European national patent register.

Next topic, a particular procedural rule in connection with patent litigation.

Currently, if a French patent is asserted and there is a corresponding European patent or application, the court stays the proceedings as of right until the substitution takes place, or until the European patent or application disappears (by way of a withdrawal, refusal, revocation, etc.) before any substitution takes place. This rule will remain in place but solely for opted out European patents. When a non-opted out European patent / application is present, an action based on the French patent will be able to proceed independently of the fate of the European patent / application. It remains to be seen how this will play out in practice. The court will still have the possibility to order a stay anyway, under the general rules of civil procedure, if they deem that a stay is appropriate for a good administration of justice.

On a few other aspects, French law has been harmonized with the UPC Agreement.

This is especially the case regarding the wording used to define the acts of infringement and exhaustion of rights. Besides, non-exclusive licensees will now be allowed to assert a patent if this is expressly authorized by the license agreement, and provided that the patent proprietor is given prior notice. This is a new possibility under French law, which mirrors article 47(3) of the UPC Agreement.

The limitation period for infringement damages remains five years but the starting point will now be the date on which the applicant became aware, or had reasonable grounds to become aware, of the last fact justifying the action, in keeping with article 72 of the Agreement. In the current version of article L. 615-8 CPI, the starting point is “the facts” on which the action is based. The effect of this significant modification will be twofold: right holders will in some cases be able to claim more damages; and more complex debates regarding the determination of the starting point of the limitation period can be expected, as the new definition is more fuzzy than the traditional one.

Last but not least, new article L. 615-18 CPI clarifies that the UPC shall have exclusive jurisdiction over unitary patents and non-opted out traditional European patents.

So, now that the rules of the game are known, all readers can start looking for potential loopholes or ambiguities, and imagining unusual scenarios. Isn’t this what new laws are primarily for?