The salt of the judgment

When you are in private practice, you sometimes get to work with clients who come up with very creative legal arguments. Or you get to work with clients whose competitors are unfortunately very creative. Rating the chances of success of such creative arguments can be difficult, especially when there is not yet any case law to refer to.

Let us take one example. A patent protects a molecule M1. A competitor markets a drug containing a molecule M2. When this drug is taken up in the body of the patient, molecule M2 is converted to M1. Is this a situation of contributory infringement?

It is not so common for thought-provoking ideas such as this one to be actually tested in court. I was thus quite happy to hear about Shionigi & AstraZeneca v. Biogaran, thanks to Lionel Vial (the decision does not appear on the INPI database). So, if you would like to know the answer to the above question, you may directly go to the end of this post to find out about the guidance offered by the presiding judge of the Paris Tribunal de grande de instance, Marie-Christine Courboulay.

But not so fast, as other aspects of the case are very worth being reviewed.

The patent at stake is EP 0521471 owned by the Japanese pharmaceutical company Shionigi, and licensed to the Swedish group AstraZeneca. The patent covers a drug for the treatment of hypercholesterolemia, called rosuvastatin.

The patent is already relatively old, as it was filed in 1992 and claims a priority of 1991. It went unopposed and expired in 2012. But a Supplementary Protection Certificate (SPC) was granted in 2005 by the French Institut national de la propriété industrielle (INPI), extending the duration of protection until June 29, 2017. And then on top of that, a pediatric extension was granted in 2015, further extending the duration of protection till December 29, 2017.

The SPC was granted for the product simply identified as “rosuvastatin”, based on a Dutch Marketing Authorization (MA) for the drug Crestor, which contains a calcium salt of rosuvastatin.

Biogaran developed a generic version of rosuvastatin. In 2014, Biogaran warned AstraZeneca and Shionigi that they had applied for an MA for the zinc salt of rosuvastatin, and stated that this product did not infringe the SPC. AstraZeneca and Shionigi did not agree with the latter statement.

Two years later, Biogaran obtained its MA and announced that it intended to launch the generic drug in July 2016 – i.e. before the term of the extended SPC.

As a result, AstraZeneca and Shionigi filed a motion for preliminary injunction (PI) in front of the judge in charge of urgency proceedings (juge des référés) on April 26, 2016. The judge issued her order on July 4, 2016.

The criteria assessed by the juge des référés for deciding on the PI are whether infringement is likely, and whether there is any serious validity challenge.

In the present case, Ms. Courboulay deemed that there is no serious validity challenge; but that, on the other hand, infringement is not likely.

As a preliminary step in the reasoning, the claims of the patent were interpreted in view of the description. It is certainly a very good thing when a patent is construed as a first step, and thus in a consistent way for both validity and infringement.

In the present case, this preliminary interpretation step led to a result which may come as a shock to a number of foreign patent attorneys but which seems to be in keeping with the tradition of French patent law.

Claim 1 of the EP’471 patent reads as follows:

The compound (+)-7-[ 4-(4-fluorophenyl)-6-isopropyl-2-(N-methyl-N-methylsulfonylamino)pyrimidin-5-yl)-(3R,5S)dihydroxy-(E)-6-heptenoic acid or a non-toxic pharmaceutically acceptable salt thereof.

This is the full name of rosuvastatin, either in the form of an acid or of a salt – any possible salt, it would seem.

Dependent claims 2, 3 and 4 respectively and specifically relate to the acid form, to the calcium salt and to the sodium salt of rosuvastatin.

The judge referred to article 69 EPC and the interpretative protocol, and made the following comments as to which rosuvastatin salts are protected by the patent:

[The patent] is drafted as disclosing a new pharmaceutical active substance, rosuvastatin, and the pharmaceutically acceptable salts of this substance, and the cited examples are only indicative and do not limit the protection to the only cited examples. However, the description and notably paragraph 007 provides examples of pharmaceutically acceptable non-toxic salts of rosuvastatin and makes reference to two families of metallic ions which were commonly used in the formulation of tablets of statins already known at the priority date, and in particular alcaline metal ions and alcaline earth metal ions. […] Thus, the pharmaceutically acceptable non-toxic salts are in these two families […], as the patent does not give any indication to the skilled person to select a salt in another family. On the contrary, the description focuses on these salts because they were already commonly used for the formulation of statin tablets; it does not provide any other lead, so that the skilled person will select a salt in the families offered by the patent as being the only relevant families for statins. He/she will not try to select salts of other families as the patent does not teach anything in this respect. 

Therefore, only salts belonging to the cited families, namely alcaline metals like sodium or alcaline earth metals like calcium, or those which can be part of the most commonly used cations for the formulation of statin tablets are concerned by the patent. The other salt families are not mentioned and thus excluded from the scope of protection of the patent

In summary, claim 1, taken at face value, covers any pharmaceutically acceptable salts of rosuvastatin. But according to the judge, the actual scope of the patent is narrower, as only two families of salts are covered: alcaline metal salts (such as sodium) and alcaline earth metal salts (such as calcium).

So beware: the interpretation of the claims in view of the description can result not only in a broadening of the scope of protection relative to the literal wording of the claims, but also in a restriction of the scope.

Just to be clear, this finding does not seem to be related to the existence of an SPC. The (re)definition of the scope of the patent was made with respect to the patent, not the SPC. See in particular the following comment in the judgment:

Although the Crestor MA designates the calcium salt of rosuvastatin, the scope of the […] SPC extends to all forms of rosuvastatin as covered by the EP’471 patent.

A judgment to be taken with a grain of salt?

Again, the limitation of the patent devised by the judge may come as a surprise from a European perspective. But I think it is in keeping with traditional French practice. French judges have consistently had a large degree of discretion in defining the scope of protection based on the overall teaching of the patent – or spirit of the invention.

Maybe another way to look at this would be to consider that the invention was sufficiently disclosed in the patent only for the two salt families explicitly mentioned (and exemplified) in the patent, which, as far as I understand, were the two usual salt families for other similar drugs at the priority date. Using other salts would have required further research.

Anyway, the consequence of this interpretation of the claim is that there was no direct infringement of the patent. Indeed, the Biogaran product is a zinc form of rosuvastatin, and zinc does not belong to the alcaline or alcaline earth metal families.

And now comes the last part of the judgment, which deals with an auxiliary argument by the claimants, which was articulated as follows:

Biogaran commits acts of contributory infringement because it provides essential means for implementing the invention [….]. The salt form under which rosuvastatin is administered decomposes as follows, as soon as it reaches the gastro-intestinal system of the patient. The salt is dissolved, which leads to the separation of the cation (for example the calcium or zinc ion) and of the anion (namely rosuvastatin in anionic form). Since the pH of the stomach is low (less than the pKa of the acid group of rosuvastatin), the rosuvastatin anion surrounded by H+ protons attracts them so as to make the free acid form of rosuvastatin. […] Therefore the invention is implemented in vivo, in the patient’s stomach, after the administration of the Biogaran rosuvastatin, which thus infringes the EP’471 patent by contributory infringement. 

An interesting theory, but which did not hold water for the judge:

The act of infringement in suit can only be the supply or marketing of the drug, and not the decomposition of the drug in the patient’s body. […]

Contrary to what is argued by the plaintiffs, contributory infringement does not consist in providing means allowing the decomposition of the rosuvastatin salt in anionic rosuvastatin and salt in the human body. This is a consequence of the ingestion of the drug in the body, and of its mode of action but it is not an essential means of the invention, which only relates to the formulation of the rosuvastatin tablet. […]

[Contributory infringement] cannot be relied upon in the context of an artificial auxiliary argument […] whereas the Biogaran product is a generic of Crestor and thus clearly intended for the same therapeutic indication.

Biogaran does not supply any means but a product equivalent to the one protected by the EP’471 patent and the SPC so that contributory infringement is neither established nor likely.

The reasoning is very clear. Contributory infringement is a notion intended to target suppliers of only part of an invention. It is “artificial” and therefore wrong to try to extend this notion to the situation of a drug which undergoes a chemical transformation into a patented compound only in the patient’s body.

It is remarkable, though, that the judge noted in passing that the Biogaran product is equivalent to the claimed invention. It seems that the plaintiffs did not argue infringement under the doctrine of equivalence. Would the outcome have been different if they had? Maybe we will find out with the case on the merits (assuming it proceeds to trial).


CASE REFERENCE: Tribunal de grande instance de Paris, ordonnance de référé, July 4, 2016, Shionigi Seiyaku Kabushiki Kaisha & Astrazeneca UK Ltd v. Biogaran, RG No. 16/56067.

Protocol not recognized

Another week, another issue of international jurisdiction. Last week’s post was about a case of declaration of non-infringement. This week’s post is about a case of ownership claim. But I think this time the decision issued by a French judge has a greater potential for arousing controversy.

In short: the judge decided that the Protocol on Recognition should be discarded in the determination of jurisdiction in the case at hand. The “Protocol on Recognition” is short for “Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the Grant of a European Patent“. The object of the Protocol is to define which courts of the EPC contracting states shall have jurisdiction to decide claims, against the applicant, to the right to the grant of a European patent.

Pursuant to Article 164(1) EPC, the Protocol is considered as an “integral part” of the EPC, and therefore is part of an international agreement. So, I think the decision by the judge not to apply the Protocol is a pretty big deal.

Let’s turn to the specifics of the case. This is a dispute between a British company, NCAM Technologies Ltd. and a French company, Solidanim, both active in the field of motion picture technology. Both hold IP on similar technologies, respectively called NCAM Live and SolidTrack.

Solidanim filed a French patent application in December 2011, followed by a European patent application in December 2012, claiming the priority of the French application. The French patent was granted, and the European application is still pending.

NCAM Technologies Ltd. filed a British patent application in May 2012, followed by another British patent application and a PCT application in May 2013, claiming the priority of the initial 2012 filing. The PCT application entered regional phase at the EPO.

Filing date 1918 – the early days of cartoon technology.

Apparently, Solidanim told clients that NCAM had stolen its SolidTrack technology. NCAM did not like that and sued Solidanim in front of the Paris Tribunal de grande instance (TGI) in October 2015. NCAM requested that Solidanim’s French patent be held invalid, and that Solidanim be declared guilty of unfair competition due to disparagement.

In March 2016, Solidanim counterclaimed for infringement of its French patent and of its European patent application and for unfair competition.

Even more importantly for the present post, Solidanim claimed ownership of NCAM’s British patent, PCT application and resulting European application.

In June 2016, NCAM retaliated by presenting the case management judge with a number of procedural requests:

  • that the proceedings should be stayed with respect to Solidanim’s infringement claims;
  • that the proceedings should continue with respect to NCAM’s nullity claim; and
  • that the court should acknowledge its lack of jurisdiction with respect to Solidanim’s ownership claim.

This leads us to the order issued by the case management judge in November 2016. The first request was quite easily granted. Indeed, infringement proceedings based on a pending European patent application are stayed as of right (article L. 615-4 Code de la propriété intellectuelle). Furthermore, infringement proceedings based on a French patent are also stayed as of right if there is a parallel European patent application which is still pending (article L. 614-15 Code de la propriété intellectuelle). This is because the French patent is bound to totally or partially disappear after the grant of the European patent (more specifically, at the end of the opposition time limit or at the end of the opposition proceedings, if any).

Turning to the second request, there was no mandatory rule for the judge to follow. He had discretion whether to proceed further or to stay. He decided to stay, “for a good administration of justice“, according to the ritual phrase, due to the parallel European patent application still being examined at the EPO, and since the fate of the French patent is closely tied to that of the European application.

But the big prize was the third request. NCAM based its request on the Protocol on Recognition, and more specifically article 2:

Subject to Articles 4 and 5, if an applicant for a European patent has his residence or principal place of business within one of the Contracting States, proceedings shall be brought against him in the courts of that Contracting State.

Articles 4 and 5 are irrelevant here, as they relate to employees’ inventions and cases in which there is a preexisting agreement with a jurisdiction clause in place between the parties.

So, this is quite straightforward. According to article 2 of the Protocol, the British courts should have exclusive jurisdiction to rule on Solidanim’s claim for ownership of NCAM’s European application, since NCAM has its principal place of business in the UK.

However, Solidanim relied on the Brussels I regulation, namely regulation (EU) No. 1215/2012, already discussed last week. More specifically, Solidanim relied on article 8(3) of the regulation, per which:

A person domiciled in a Member State may also be sued: […] (3) on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending.

Claims were already pending in the Paris TGI due to NCAM’s original complaint. Solidanim’s case was that their ownership counterclaim arose from the same facts on which the original nullity and unfair competition claims were based. As a result, the French court also had jurisdiction under the Brussels I regulation.

The judge thus had to address two questions:

  • First, as a matter of fact, did Solidanim’s ownership counterclaim indeed arise from the same facts on which the original claims were based?
  • Second, as a matter of law, which provisions should prevail: those of the Protocol on Recognition or those of the Brussels I regulation?

As to the first point, the judge agreed with Solidanim that the conditions of article 8(3) of the regulation were met:

[…] The latter claims are closely related to the circumstances of fact and relations between the parties, which need to be assessed so as to determine whether the filings made by NCAM did or did not violate Solidanim’s rights on the FR’057 patent, the validity of which is challenged in front of the Parisian court. 

I am not sure I fully understand why a nullity claim concerning one patent is necessarily closely related to an ownership claim concerning other, later applications by another party – apart from the general background of the case. On the other hand, it seems quite clear that NCAM’s unfair competition / disparagement original claim was closely related to Solidanim’s ownership counterclaim. In both cases, the issue, to put it bluntly, was whether or not NCAM had “stolen” Solidanim’s technology.

But the legal issue is certainly the most interesting one. Both the Protocol and the regulation contain some general provisions on how they should be articulated with other legal instruments.

On the one hand, according to article 11(1) of the Protocol:

In relations between any Contracting States the provisions of this Protocol shall prevail over any conflicting provisions of other agreements on jurisdiction or the recognition of judgments.

So the Protocol proclaims itself to be superior to any other agreement. But the regulation is not an agreement. It is a piece of EU law.

On the other hand, the regulation contains an entire chapter (articles 67 to 73) on its relationship with other instruments. This chapter contains general guidance and some specific provisions, but no specific provisions regarding the Protocol on Recognition.

So the judge turned to a CJEU decision relevant for this issue, namely C-533/08 (TNT Express Nederland BV v. AXA Versicherung AG) of May 4, 2010. This decision deals with the articulation between regulation (EC) No. 44/2001, which was the previous version of the Brussels I regulation, and an international agreement, namely the Convention on the Contract for the International Carriage of Goods by Road, signed in Geneva in 1956.

The court interpreted article 71 of regulation 44/2001 as meaning that:

in a case such as the main proceedings, the rules governing jurisdiction, recognition and enforcement that are laid down by a convention on a particular matter […] apply provided that they are highly predictable, facilitate the sound administration of justice and enable the risk of concurrent proceedings to be minimised and that they ensure, under conditions at least as favourable as those provided for by the regulation, the free movement of judgments in civil and commercial matters and mutual trust in the administration of justice in the European Union (favor executionis).

Article 71 of regulation 1215/2012 is similar to article 71 of regulation 44/2001. Therefore, the judge applied the criteria set by the supreme court of the EU, based on the premise that the same criteria should apply whatever the international agreement at stake is.

The judge acknowledged that the Protocol on Recognition affords a high degree of predictability.

However, turning to the objectives of sound administration of justice and of minimizing the risk of concurrent proceedings, the judge noted that the claims and counterclaims at stake were so closely related that the sound administration of justice and the minimization of the risk of concurrent proceedings were better served if all claims and counterclaims were handled by the same court.

The judge noted that

On the one hand, the [NCAM] patents relate to a system similar to the one claimed by Solidanim in its FR’057 patent, in that they deal with real-time merging or composing of computer-generated 3D objects and a video stream from a video camera. And on the other hand, the ownership claims rely on the same factual circumstances relating to the relationships between the parties and their employees, which lead them both to claim a primacy on the inventions provided in these different patents or applications and to consider that the statements made by the parties against each other constitute acts of unfair competition. 

Consequently, said the judge, the Protocol for Recognition did not pass the test set in C-533/08 in the present circumstances, and it should thus simply be ignored, to the benefit of the Brussels I regulation.

Let’s see how this case further develops. It could even be a matter for further reference to the CJEU down the road, could it not?

As a side note, in a few years’ time, I assume that the Brussels I regulation will no longer apply to the UK, so that a similar situation will have to be handled completely differently.


CASE REFERENCE: Tribunal de grande instance, 3ème chambre 2ème section, ordonnance du juge de la mise en état, November 24, 2016, NCAM Technologies Ltd. v. Solidanim, RG No. 15/15648.

Borderline

Cross-border litigation is a relatively uncommon but quite fascinating area of European patent law. I naively view it as a fairytale land of Italian torpedoes and Dutch spiders.

So I found it very interesting when I read a recent French decision in which the judge crossed the borderline and trod this unbeaten path.

In this case, several companies, including UK-based Furnace Solutions Ltd. and other French related companies, as well as one individual, filed a declaratory action of non-infringement in front of the Paris Tribunal de grande instance (TGI) against the French company CTP Environnement, as the owner of European patent No. EP 1528318.

Remarkably, the plaintiffs asked the French court to declare that both the French part and the British part of the patent are not infringed. The patent proprietor claimed that the TGI lacks jurisdiction. Such a procedural defense was addressed not by the full panel of the court but by the case management judge, in an order dated November 18, 2016.

The pan-European litigation game.

In brief, the judge rejected the lack of jurisdiction defense, and thus decided that the case could proceed further and that the TGI could rule on the declaratory claims with respect to both France and the UK.

In order to reach this conclusion, the judge reviewed the atlas of cross-border litigation, namely the so-called Brussels I regulation, formerly regulation (EC) No. 44/2001, still formerly known as the 1968 Brussels Convention, and nowadays known as regulation (EU) No. 1215/2012.

The central issue at stake was the articulation between articles 4(1) and 24(4) of the regulation.

According to article 4(1):

Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

An action for declaration of non-infringement is a lawsuit against the patent proprietor. Therefore, this provision apparently makes it possible for a third party to file a declaratory action relating to any national part of a European patent in the courts of the country in which the patent proprietor has its seat.

In the present case, CTP Environnement is based in France, which is why the action was filed in front of the Paris TGI.

But in IP matters there is a limit to this general jurisdiction rule, which is set in article 24(4):

The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties: […]  in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place. Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that Member State.

So the courts of each country have exclusive jurisdiction with respect to any issues of “registration” (whatever that means) and validity (well, we know what that means) of the respective national parts of a European patent. In other terms, nullity of the UK part of a European patent cannot be requested in France, it has to be requested in the UK.

According to the CJEU case C-4/03 (GAT v. LuK), exclusive jurisdiction as defined above applies in “all proceedings where the validity of the patent is decisive, irrespective of whether this is raised by way of an action or a plea in objection“. In other terms, not only invalidity claims or counterclaims, but also invalidity defenses are forbidden territory for cross-border litigation. This has actually been made clearer in the above version of article 24 than it was in the original 1968 Brussels Convention based on which GAT v. LuK was issued.

CTP’s defense in the present case was that a declaratory action may very well give rise to an infringement counterclaim, and then a nullity counter-counterclaim. Therefore, should the French court accept to hear the UK part of the declaratory action, it could impinge on prohibited UK-only validity issues.

In addition, the complaint made reference to a possible objection of extension of subject-matter of the patent, which meant that the validity of the patent would be challenged.

The judge rejected these arguments with the following brief reasoning:

In the present case, and at the present stage, the lawsuit concerns a claim for declaration of non-infringement without for the time being any counterclaim for infringement by CTP nor any claim for nullity of the UK part of the allegedly infringed patent, which would then be a matter for jurisdiction of British courts. 

Therefore, at the present stage of the lawsuit, article 24(4) […] is not applicable. Since the defendant has its seat in France, the present court has jurisdiction based on article 4 […] so that the defense of lack of jurisdiction must be rejected. 

It is clear from the above statements that the situation may change and that there may be a lack of jurisdiction in the future, if further claims are filed. What is less clear is whether only an invalidity claim by Furnace Solutions et al. would trigger this lack of jurisdiction, or whether also an infringement counterclaim by CTP would lead to the same result.

At any rate, the approach taken by the French judge in Furnace Solutions seems to be consistent with the outcome of the Actavis v. Eli Lilly pemetrexed case in the UK, where the British courts ruled on a declaration of non-infringement of a European patent in the UK but also France, Italy and Spain. See for instance the second pemetrexed appeal judgment dated 2015 here. In this case as well, the validity of the patent was expressly not challenged.

Together with the C-616/10 Solvay v. Honeywell CJEU ruling of 2012, which reopened the door to cross-border injunctions in the form of interim relief, these cases could pave the way for a revival of cross-border litigation – pending the UPC big bang.

As a final remark to those eager to follow in the footsteps of Furnace Solutions Ltd., the admissibility of a declaration of non-infringement in France is subject to a mandatory stage of pre-litigation negotiation.

Article L. 615-9 Code de la propriété intellectuelle provides that:

Any person who proves exploiting industrially on the territory of a Member State of the European Economic Community, or serious and effective preparations to that effect, may invite the owner of a patent to take position on the opposability of his title against such industrial exploitation, the description of which shall be communicated to him.

If said person challenges the answer made, or if the patent proprietor does not take position within a deadline of three months, they can sue to have a court rule that the patent does not impede said exploitation, without prejudice to a patent nullity action and to a later infringement action if the exploitation is not conducted in the terms specified in the description mentioned in the previous paragraph. 

In summary, prior notice to the patent proprietor is mandatory. Furthermore, in view of the three-month deadline, it seems virtually impossible to validly launch a surprise declaratory action in this country.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 2ème section, ordonnance du juge de la mise en état, November 18, 2016, Furnace Solutions Ltd. et al. v. CTP Environnement, RG No. 15/06637.

Groundhog case

Okay, campers, rise and shine and don’t forget your booties ’cause it’s cold out there today!

I don’t know if this sentence will ring a bell to some readers, but it is my favorite quote from the classic comedy Groundhog Day, in which poor Bill Murray cannot get out of a day he keeps re-living.

The movie came to my mind when reading about the latest development in the Nergeco v. Maviflex case. I don’t know if this patent litigation has broken a record or not, but it sure looks like the judicial equivalent of a groundhog day that never ends.

Here is the extraordinary timeline of the case:

  • At the end of the nineties, Nergeco (patentee) and Nergeco France (licensee) sued two companies, Mavil (now Gewiss France) and Maviflex, for infringement of a European patent.
  • On December 21, 2000, the Lyon Tribunal de grande instance (TGI) held that the plaintiffs’ claims were admissible but ill-founded. The plaintiffs appealed.
  • On October 2, 2003, the Lyon Cour d’appel set aside the first instance judgment and concluded that the patent was infringed. The court ordered an expertise to assess damages.
  • On October 15, 2005, the Cour d’appel issued a second judgment further to the expertise. The amount of damages was set to 60,000 euros to the patentee (Nergeco) and 1,563,214 euros to the licensee (Nergeco France). The defendants then filed an appeal on points of law.
  • On July 10, 2007, the Cour de cassation partly set aside the 2005 judgment regarding the damages to be paid to the licensee. The reason for the reversal was that the Cour d’appel had not addressed the argument that the license agreement had been registered in the patent register only in 1998, so that it was not enforceable against third parties before that date. The case was thus remitted to a different Cour d’appel, in Paris this time.
  • On June 2, 2010, the Paris Cour d’appel held that all claims against Mavil (now Gewiss France) were in fact inadmissible as Mavil no longer existed when they were initially sued; and reduced the amount of damages to be paid by the second defendant Maviflex to the licensee Nergeco France by approximately half (taking into account the date at which the license agreement was registered and became enforceable against third parties). Both sides filed another appeal on points of law.
  • On September 20, 2011, the Cour de cassation set aside the 2010 judgment. First, because the Cour d’appel should have ruled on an argument of invalidity of the license agreement (there was no res judicata on this issue, as it was not addressed in the 2003 and 2005 judgments). Second, because the argument that the claims against Mavil were inadmissible should not have been given any consideration, as Mavil / Gewiss France acted in the proceedings as if their designation in the initial complaint was correct. In fact, this part of the decision became very famous since it is one of the few illustrations of an estoppel principle in this country.  The case was again remitted to the Paris Cour d’appel.
  • On June 21, 2013, in a new judgment by the Cour d’appel, the case was reexamined pursuant to the instructions of the Cour de cassation. But the actual outcome was pretty much the same as in the previous judgment. In particular, the damages award to Nergeco France was similar to the one ordered in 2010. The defendants filed a third appeal on points of law.
  • On December 16, 2014, the Cour de cassation set aside the 2013 judgment. Once again, the supreme court ruled that the appeal judges should have ruled on some arguments relating to the inadmissibility of Nergeco France’s claims.

And this finally leads us to the latest decision in the series, issued by the Paris Cour d’appel on October 28, 2016, and which addresses the inadmissibility arguments that the Cour de cassation held needed to be addressed.

What an incredible mess… This lawsuit has now been pending for almost two decades, and the Cour de cassation set aside appeal judgments three times. It may not even be over yet. For all I know, the losing parties may have referred a fourth appeal on points of law to the Cour de cassation.

Fortunately, this is a very exceptional situation due to the fact that (1) the Cour d’appel repeatedly failed to address arguments that the supreme court believes should have been addressed; and (2) the supreme court repeatedly remitted the case to the appeal stage instead of putting an end to the lawsuit.

Groundhog day and Goodbye Lenin: very different but both fun to watch.

While the context of the case is by itself fascinating, the content of the October 28, 2016 decision is also quite interesting, as it notably addresses the issue of the coexistence of French and European patents.

As a recap, the issue at stake was whether Nergeco France’s claims in the lawsuit were admissible. The court held that they were not, because the agreement containing the license provision was invalid.

Remarkably, the court found not one but two independent reasons why the agreement was invalid.

The first reason was one of contractual law. The agreement between Nergeco and Nergeco France was executed on December 6, 1990. At that time, Nergeco France was not yet registered in the commerce register. It is possible for a company to enter into an agreement before its incorporation, but special formalities need to be observed. This was not the case here. The agreement even mentioned that Nergeco France was registered in the commerce register of the good town of Le Puy, under a certain number – which was untrue, as the registration only took place on February 2, 1991.

The agreement was thus executed by a company with no legal capacity.

The second reason was more specific to patent law. Article 8 of the agreement recites that

if necessary, Nergeco will be in charge of obtaining and maintaining patents. Nergeco Fance will ipso facto be a licensee of the patents for France. 

An annex to the agreement, dated January 31, 1991, specifies that, by application of article 8, a license is granted by Nergeco to Nergeco France on a number of patents, among which the European patent in suit.

However, the agreement and its annex are silent as to the French patents to which the European patent in suit claims priority.

Because of this silence, the Nergeco companies fell into the trap of article L. 614-14 Code de la propriété intellectuelle:

A French patent application or a French patent and a European patent application or a European patent having the same filing date or the same priority date, protecting the same invention and belonging to the same inventor or successor in title cannot, for the parts in common, be independently subjected to a transfer, security, pledge or authorization of exploitation rights, subject to invalidity. 

This provision is one of the tools for preventing some forms of double patenting in this country.

In the present case, the European patent was licensed to Nergeco France, but not the French priority patents. As a result, the license was invalid.

The plaintiffs tried to escape the L. 614-14 trap by presenting several interesting arguments.

A first defense was that the general sentence “Nergeco Fance will ipso facto be a licensee of the patents for France” in article 8 of the agreement meant that the French patents were also concerned. The court replied that the licensed patents were necessarily expressly mentioned in the agreement – and the French patents were not.

A second defense was based on article L. 614-3 Code de la propriété intellectuelle, according to which a French patent covering the same invention as a European patent granted to the same inventor or successor in title ceases to be in force at the end of the European opposition period (or at the end of the opposition proceedings, if an opposition is filed).

The opposition period ended on July 13, 1994. Nergeco argued that the two French patents ceased to be in force on that date. Therefore, the ground for invalidity related to the absence of mention of the French patents in the agreement no longer existed from that date. The court rejected the argument, as this ground for invalidity must be appraised on the day the agreement was executed. It cannot be cured afterwards.

For the same reason, the court did not take into account subsequent actions (such as the renewal of the agreement, later amendments to the agreement, etc.).

And so, after all this time, the licensee was finally found not to be an actual licensee.

Nergeco France saw this coming, and therefore tried to convert its claims as a licensee into claims based on unfair competition. But these were new claims and were thus held inadmissible at this stage of the lawsuit.

As a final word (for now?) on this story, things seem to have gotten very nasty between the claimants and defendants. The judgment briefly mentions a number of parallel proceedings, including criminal ones.

It also seems that Gewiss France and Maviflex argued that the agreement between Nergeco and Nergeco France was forged. The court did not take sides on this. I wonder if the alleged forgery relates to the date of the agreement. From an outsider’s perspective, the fact that the agreement makes reference to a company having a registration number although the registration had not yet been performed at the time is indeed troubling. Could it be that the court was troubled as well, leading them to being quite strict on formal invalidity issues?

One can only speculate, not having access to the file wrapper.


CASE REFERENCE: Cour d’appel de Paris, pôle 5 chambre 1, October 28, 2016, Nergeco SA & Nergeco France SAS v. Gewiss France SAS & Maviflex SAS, RG No. 2015/01298.

Fight club

The first rule of fight club is you do not talk about fight club. In legalese, I guess you could call that a confidentiality clause. Among other clubs which have been relatively confidential, there is also, well… confidentiality clubs precisely.

A confidentiality club is an agreement between litigants, per which only specified persons (such as specified outside or in-house attorneys) are granted access to some documents. This can be a useful tool for protecting confidential information from being fully released to the other party, while at the same time making sure that the relevant evidence can be debated.

Although I understand that confidentiality clubs are common at least in the UK, the same cannot be said of France.

Courtesy of Denis Monégier du Sorbier, here is an interesting decision issued almost two years ago, which opens the door to such clubs in this country.

In this case, the Dutch company DSM IP Assets BV obtained ex parte orders for carrying out infringement seizures against three defendants (Univar, Novozymes Biologicals France and Novozymes France), in order to demonstrate infringement of one of their European patents. After the seizures were performed, the seized parties filed a motion in court in which they requested that the seized documents should be placed under seal, and that the orders authorizing the infringement seizures be modified.

Such a motion is handled in urgency proceedings by a single judge from the Paris Tribunal de grande instance (TGI), and it results in an order being issued.

It is well established that seized documents which are confidential in particular as they relate to technological or business secrets, and which are not relevant for the demonstration of infringement, should not be transmitted to the claimant. On the other hand, documents which are relevant for the demonstration of infringement are usually to be released to the claimant, even if they relate to technological or business secrets.

After a seizure, it is a common reaction by defendants to request that all documents be placed under seal. It is then usual for an expert to be appointed by the court to sort out the documents and issue an official recommendation as to which ones may be given to the claimant and may thus be part of the ensuing litigation.

This can be a long and cumbersome process, especially if the amount of documents to be handled is large (which can be the case if documents were seized in a digital form); and especially if the parties fight hard on every piece of information in front of the expert, or in front of the case management judge (whenever they claim that there are issues in the way the expertise is handled).

In the DSM v. Univar case, the judge started by rejecting Univar’s and Novozymes’ request to place all seized documents under seal. He noted the following:

[…] As rightly stated by DSM, it is clear that Univar simply made a list of seized documents and stated that they are all confidential, without explaining, document by document, what the nature or the reason of such confidentiality is. 

Besides, it can be seen on the seizure report written in Fontenay Sous Bois that Ms. Theron, CEO, stepped in so as to redact mentions relating to the enzymes on the list of ingredients / food additives, to the amounts on the sales log and the purchases log, to the names of customers and to the turnover on the statement of sales per client, as well as invoices and delivery slips. 

Similarly, it can be seen on the seizure report written in the secondary office in Lieusaint that Mr. Corby, head of the warehouse, stepped in so as to redact […] the names and addresses of recipients on delivery slips, and the products other than Lactozym Pure cited on the reception orders. 

Thus, it should be emphasized that important information such as customers’ names, amounts of sales and products at stake is actually not accessible. If Univar’s representatives relied on confidentiality so as to redact some information, it can be assumed that the information that they allowed to be seized is not of a confidential nature preventing any disclosure. 

Besides, a number of seized documents are public, as either they can be found on the internet, or they are enclosed with the marketed product, and nothing suggests that they may contain any secret information. 

In summary, it is not sufficient for the defendants to simply ask for a blanket seal on everything, without specifying exactly which information is confidential and why – which makes a lot of sense.

There may be another lesson here for seized parties. Sometimes, some sorting out of confidential information and some redacting already takes place during the seizure itself. On the one hand, this may be the best way to prevent really sensitive information from leaking to the plaintiff. But on the other hand, this needs to be carefully done, as it may then be slightly more difficult to prove that non-redacted information should later be redacted as well.

Then comes the second and most interesting part of the decision, dealing with the defendants’ request for a modification of the seizure orders.

Among the various actions and measures authorized by the orders, one paragraph was about setting up a confidentiality club to handle evidence post-seizure. This is the paragraph that Univar et al. wanted to remove from the orders.

 

Two lawyers actuated by the hands of their respective clients

The judge held as follows:

[The defendants] claim that DSM, by inserting this mention “in the middle of the other requests in a unilateral and totally incongruous manner”, attempted to order a club which has no legal existence and no legal basis, and to which they firmly object. 

They add that the notion of confidentiality club is unknown in our procedure, wherein an expert is appointed to select which documents should remain secret, that the practical terms of how it operates are inconsistent, and that such a club was recently refused in another similar case. 

However, they underestimate the judge’s vigilance by thinking that an entire paragraph could elude his wisdom […]. Actually, if setting up such a club is indeed not provided in the statute, on the other hand it does not contravene the basic principles of our law, since it makes it possible for both parties, in an adversarial manner, to agree on the evidence which can be used in the litigation. 

Moreover, it is of course not mandatory. It is clear that if the parties […] do not agree on setting up such a club, to which no attorney at law or patent attorney could possibly be forced, one of them can file a motion in front of the case management judge to request that an expert be appointed to sort out the exhibits and select those which should remain secret, and this is a solution which would then put the parties back on the usual track. 

So, confidentiality clubs are possible in French patent litigation – although mention is made of another decision in which this option may have been rejected.

This is good news as it is an opportunity for parties to cooperate to a limited extent in order to streamline the proceedings and eliminate the additional cost and pains of formal discussions in front of an expert.

On the other hand, according to the order it is always possible for an uncooperative party to balk at joining the club and to have its case heard in front of an expert and/or of the judge at every step of the way.

Case management may be one of the weak points of patent litigation in France. It works well when the parties do cooperate. But it can be relatively easy for a party wanting to delay the lawsuit (often the defendant, but sometimes also the plaintiff) to disrupt the schedule by filing a number of motions, not complying with the deadlines set by the judge, etc. Such a rogue strategy may work to some extent as (i) the right to be heard is regarded by judges as a paramount principle and (ii) the court’s docket is usually more than full anyway, so that there is little incentive for them to force the parties to move on quickly.

Hopefully, confidentiality clubs may contribute to an overall increase in the efficiency of the system, by arousing a form of cooperation on side issues so as to focus on the real disagreement between the parties.

The real question though is whether they will catch on. Eric Halphen, the judge who issued the order in the case at hand, has left the IP chamber of the Paris TGI since then. We are thus looking forward to his colleagues’ position on such clubs for a streamlined fight.


CASE REFERENCE: TGI Paris, 3ème chambre 2ème section, ordonnance de référé, February 13, 2015, Univar et al. v. DSM IP Assets BV, RG No. 15/00822.