One step forward, two steps back

The French statute of limitations for patent nullity actions. Yes: again. Seems like we can never get enough of this topic, can we?

Courtesy of Matthieu Dhenne (who, as regular readers of this blog may have noticed, is no fan of the time-bar on patent revocations), here is the latest installment of the saga.

In the previous episodes:

  • A trend slowly emerged at the Paris Tribunal de grande instance (TGI), per which actions for revocation are time-barred five years from the date at which the claimant became aware or should have become aware of the patent right at stake, as a potential impediment – said date being determined in concreto based on the specifics of the case.
  • Then, a ruling from the Paris Cour d’appel (Halgand v. RP Nicoll) issued on September 22, 2017 seemed to imply that the starting point is or should generally be the grant of the patent.

When I reported on this latest case, I wondered whether the TGI would apply the criterion set by the appeal judges. Well, we may have a beginning of an answer now – and it is a negative one.

Today’s decision was issued on October 5, 2017. The pleadings hearing took place on September 12, i.e. before Halgand v. RP Nicoll was issued. However, it is very likely that the court was aware of this appeal decision before drafting and issuing the judgment of October 5.

As this is not a common law country, there is no obligation for the TGI to defer to the legal analysis put forward by the Cour d’appel in another, unrelated case.

In summary: it seems that the TGI is sticking to its previous doctrine.

Going in circles around a tricky legal issue.

The case concerns French patent No. FR 2804186 (FR’186) owned by Valeo Embrayages (Valeo). The patent was filed on January 25, 2000 and granted on April 26, 2002.

On July 17, 2015, Valeo sent a warning letter to German company LuK GmbH & Co. Kg (LuK). Valeo claimed that several of its patents, including FR’186, were infringed by LuK, and requested that LuK should take a license.

On January 23, 2017, LuK filed an action for nullity of the FR’186 patent in front of the Paris TGI. Valeo raised the defense that the action was time-barred. The judge in charge of case management decided to hold a hearing in front of the whole court on this issue, in parallel to the exchange of submissions of the parties on the merits. Today’s decision thus solely relates to this legal issue.

First, LuK made the point that the defense based on the statute of limitations should not be examined separately from the merits of the case. Indeed, the determination of the starting point for the limitation period is related to the existence of an impediment to their business due to the patent, and therefore to the merits of the case.

The court rejected the argument as follows:

The fact that it is necessary to examine the scope of the patent and its potential points of contact with the technology of the nullity claimant to determine the starting point of the limitation period does not imply any analysis of the validity of the right subjected to the court. Even without the separation ordered by the judge in charge of case management to streamline the proceedings and reduce their cost in case of a success and otherwise remove a complex question, the court would anyway have decided on the issue of the statute of limitations first, and without considering the issue of validity of the patent or its infringement (if it were raised).

It is quite clear that the court has a discretionary power to deal with some issues first, especially a legal defense such as this one.

But LuK’s arguments do reveal one the drawbacks of the statute of limitations being applied to patent nullity suits, and of the in concreto appraisal of the starting point for the limitation period.

Even if determining when a party felt (or should have felt) impeded in its business by a patent is not synonymous with deciding whether there is or has been any patent infringement, it is still dangerously close. 

The court uses the enjoyable expression of “potential points of contact with the technology of the nullity claimant“. However, if would-be nullity claimants feel cornered into admitting or half-admitting infringement in order to be able to sue (and this is even more true if you take into account the issue of standing, which was not at stake here), this will act as a powerful deterrent.

The next point addressed by the judgment is the impact of a cross-license / settlement agreement dated 2014 between the parties.

LuK argued that Valeo was barred from invoking the statute of limitations due to the 2014 agreement. Indeed, one provision of the agreement recited that each party could challenge the validity of licensed patents within 12 months from a license request.

The court determined that the FR’186 patent did not belong to the technical field concerned by the 2014 agreement. Therefore, the agreement had no impact whatsoever on the present case. At any rate the above provision did not prevent the regular application of the statute of limitations as there was no clear intent to discard said statute; and as no license had been granted on this patent anyway.

And finally, the real meat of the judgment, that is the computation of the limitation period. As mentioned above, the TGI maintained its traditional approach: 

The starting point for the limitation period must be set to the date, determined in concreto, on which [LuK] knew or should have known, due to the progress in the development and industrial implementation of its TAC technology (which is the only one targeted by [Valeo]) that the FR’186 patent could impede it.  

Thus, the publication of grant of the patent is not a suitable starting point, as it would in fact demand an unrealistic watch from stakeholders and is unrelated to the performance of the project which gives standing to sue. Neither is the knowledge of the grounds of nullity of the patent, which may arise well before the knowledge of facts and economic considerations giving rise to standing to sue and actually is equivalent to the publication of grant. 

I discussed this point with Matthieu Dhenne, who agrees that this is an instance of what we call in this country “resistance of the lower courts“. Or rather, “coming to one’s senses” is I think the expression he used.

After this important point, the court reviewed the scope of the patent as well as LuK’s “TAC” technology in great detail. Valeo argued that the technology was developed from October 2007 at the latest and was disclosed in April 2010. As a result, the nullity action became time-barred in June 2013, they stated.

The judges disagreed and held that the technical features disclosed in the various LuK patents and publications relied on by Valeo were not sufficiently close to the subject-matter of the FR’186 patent to constitute the starting point for the limitation period:

Moreover, the article of April 14, 2010 and the patent applications filed do not reveal any relevant points of contact between the TAC technology and the FR’186 patent which could prompt [LuK] to worry about the patents of its competitor. 

Hum, those points of contact again!

[The fact that the FR’186 patent] was cited as prior art under category “A” in the search report of an international application of July 4, 2011 […] [is] irrelevant. Therefore, nothing shows that LuK intended, in the course of the development of its TAC technology, to define the nominal position of the gearing means owing to dedicated setting means as an element of its wear correction device. Consequently, the FR’186 patent represented a potential impediment only on the day it was expressly cited against them, i.e. on July 17, 2015. 

As a result, the case will now proceed to the discussion on the merits.

Readers will surely have noted that, since FR’186 was granted in 2002, LuK’s action would be time-barred if the Cour d’appel’s approach were applied instead of the TGI’s. 

This leads Matthieu to make the following remark:

The plaintiff did not submit that the statute of limitations is inapplicable. If there is an appeal, they should. This will provide them with an additional ground of cassation if the Cour d’appel confirms its case law of September 22, 2017 (as the action would be time-barred if the standard set in this case law stands). 

Well, I am sure it is only a matter of time before our supreme court gets to decide on this legal point. Whether people will like what they say is another kettle of fish.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 1ère section, October 5, 2017, LuK GmbH & Co KG v. SAS Valeo Embrayages, RG No. 17/01156.

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