Useless drawings

If anyone still had a doubt that French courts have gotten really tough on extension of subject-matter, despite previous indications to this effect (here, here, here and there), the present post may come as a final confirmation.

The patent which was revoked this time is EP 1215336, in the name of Paper Machinery Technology Italia SpA (or PMT Italia) – as first reported on this French blog. As the name of the company suggests, the patent relates to a machine for manufacturing paper.

PMT Italia sued French Alps-based ABK Machinery for infringement of the patent in February 2012. The defendant lodged a nullity counterclaim which was successful, according to a judgment from the Paris Tribunal de grande instance dated May 7, 2014.

PMT Italia appealed. The appeal proceedings were suspended between January 2015 and June 2016, as ABK Machinery went bankrupt, before resuming in the presence of the court-appointed liquidator. On October 7, 2016, the Cour d’appel confirmed the first instance judgment.

Claim 1 of the patent as granted reads as follows:

A counterblade assembly (10) for a wet section (1) of a paper machine, comprising a fixed structure (13) fixed to a frame (5) of the machine; a counterblade (9) connected to said fixed structure (13) and movable, with respect to it, by actuating means (25) to exert pressure on two wires (2, 3) travelling between said counterblade (9) and a guide surface (8) along a substantially horizontal traveling path (P); and connecting means (22) interposed between said counterblade (9) and said fixed structure (13), characterized in that said connecting means (22) are articulated-parallelogram type connecting means and include a plurality of articulated rod elements (16) hinged to said fixed structure (13) and to said counterblade (9) about respective horizontal axes (A, B) perpendicular to said travelling path (P).

In the above paragraph, expressions in bold are those which were added relative to claim 1 as filed.

This modification was introduced by the applicant in response to the sole communication from the examining division during examination proceedings. Here is what the representative wrote in the letter to the EPO regarding compliance with Art. 123(2) EPC:

The added feature in the claim is at least implicitly disclosed in the description as originally filed (page 5, second paragraph) and clearly and unambiguously disclosed in the drawings (figs. 2 and 4). Therefore, the amendment does not contravene art. 123(2) EPC. However, an explicit support has been added in amended sheet 5 of the description.

[…]

Amended drawings 1 and 2 are also filed, with added reference signs for axes A, B and added reference signs P1, P2 in fig. 1.

Therefore, although an implicit support for claim 1 was supposed to be present in the application as filed, it appeared necessary to modify the description and drawings to make the support more explicit.

Clearly, the court was not very fond of this approach.

The judges started by looking at the modified paragraph of the description, which reads as follows:

More specifically, each connecting assembly 22 comprises two pairs of elements 16 located on opposite sides of post 15 and bar 21, and each defined by two parallel elements 16 extending in a substantially horizontal direction. Each element has one end 16a hinged to post 15, and one end 16b hinged to bar 21 about respective horizontal axes A, B that are perpendicular to the traveling path P of wires 2, 3.

Again, the underlined phrase corresponds to the addition relative to the application as filed.

Says the court:

The respondent rightly notes that, in the original application, nothing taught the skilled person […] about the orientation that the articulation axes should have, namely a position perpendicular to the direction of travel of the wires, for implementing the invention as recited in the claim as amended during examination proceedings. 

Indeed, the paragraph relied upon […] does not contain nor suggest any information on this orientation which was precisely set at 90° during examination proceedings, and the appellant wrongly claims that it is implicitly disclosed. 

Quite frankly, I have not fully studied the application, but the above assessment seems to make a lot of sense. The original paragraph at stake was simply silent on the orientation of the articulation axes.

The next step in the court’s reasoning is probably more controversial, though. Indeed, the court stated that Figures 2 and 4 of the original application as filed could not possibly be relied upon

insofar as the implicit disclosure from the above-mentioned second paragraph on page 5 cannot be acknowledged; the drawings are optional, they are meant to supplement the description which is the only one which is mandatory, since it is not possible to protect something which is claimed without being described (so as to interpret it), and not the other way around.

It seems that the court introduced a hierarchy between the description and drawings (because the presence of a description is mandatory whereas drawings can very well be omitted). According to this hierarchy, the drawings could not be used as the sole support for a claim amendment.

There can certainly be valuable arguments for this approach, but it is contrary to the case law of the Boards of appeal, per which drawings are “to be treated on an equal footing with the other parts of the application” (see Case Law of the Boards of Appeal of the European Patent Office, 8th edition, July 2016, section II.E.1.12.1, p.453).

It is in fact also contradictory with earlier case law from the Cour d’appel itself. Indeed, at least in a judgment Knauf Insulation v. Saint-Gobain Isover dated May 16, 2014, the court accepted that a certain claimed feature could be derived from the drawing figures of the application as filed.

In the present case, the stricter standard applied made all the difference, because it seems that the perpendicular orientation of the axes recited in claim 1 of the granted patent with respect to the traveling path P was indeed visible on the drawings.

This does not imply that the amendment was necessarily allowable by the Boards of Appeal’s standards, though. Indeed, according to the latter, “the EPC does not prohibit the amendment of claims to include features from drawings, provided the structure and the function of such features were clearly, unmistakably and fully derivable from the drawings by the skilled person and not at odds with the other parts of the disclosure. Nor could any element be dropped” (Ibid.). A thorough analysis would thus be necessary to come to a conclusion -which was not performed by the court.

Sometimes drawings are the crux of a patent
Sometimes drawings are the crux of a patent

There are two different ways of looking at this, a pessimistic one and an optimistic one.

The pessimistic view is that the court made an error of law by conflating support of the claims in the description and extension of subject-matter, or in other terms Art. 84 EPC and Art. 123(2) EPC. Indeed, Art. 84 EPC, which was explicitly cited in the decision, provides that the claims “shall be clear and concise and be supported by the description“. Note: “by the description“, the law says, and not “by the description and/or the drawings“.

But non-compliance with Art. 84 EPC is not a ground for revocation of a granted patent. Only non-compliance with Art. 123(2) EPC is (see Art. 138(1)(c) EPC). And the latter broadly makes reference to “the content of the application as filed“, without distinguishing between the original description, claims and drawings. In summary, according to this pessimistic view, the court had it all wrong.

But there is a more optimistic view, which is that the court in fact made a thorough assessment of the application as filed, and came to the conclusion that, in this particular case, the amendment could not possibly be justified by the drawings.

The reasoning is not sufficiently explicit to definitively exclude one of these two views, but the optimistic one can be supported by the following statements in the judgment.

First, the court noted that the description makes it clear that variations can be made relative to what is depicted in the drawings. If my understanding is correct, the added feature was therefore considered by the judges as a non-essential, or even unimportant one, in view of the original disclosure, so that the skilled person would not have isolated it from the disclosure to include it in the main claim.

Second, the court emphasized that the applicant heavily relied on the added feature during examination proceedings in support of inventive step. For the court, “the new claim brings a technical contribution to the invention, it does not merely correspond to a reformulation of the technical problem and of its solution which could be deduced from the overall content of the application as filed“.

Again, trying to translate what is meant there, the point is the added feature completely changes the problem at stake and its solution. As this change was not derivable from the original application, the addition is unallowable.

In summary, if the optimistic view is correct, the analysis made by the French judges may not be that different from the analysis that a Board could have made, after all.

Anyway, claim 1 was held invalid. The same applied to dependent claims 2-7, quite easily so as the patentee did not develop any specific argumentation to defend these claims.


CASE REFERENCE: Cour d’appel de Paris, pôle 5 chambre 2, October 7, 2016, Paper Machinery Technology Italia SpA v. SA ABK Machinery, RG No. 14/16544.

A solo invention

France is well known around the world for its baguette bread, strong cheese, good wines and frequent strikes. Turns out French IP also has clichés of its own, and one of them is probably the Soleau envelope. Although the general public does not necessarily know much about IP law, they have usually at least heard of this national institution.

The Soleau envelope is a way to self-preserve evidence by putting any document in a sealed envelope and having it date-stamped and kept in store by the INPI (the French patent and trademark office). It is popular probably mainly because it is a cheap and easy process. But this comes at a price of a number of misconceptions (just like some of the other French clichés), as many people tend to believe that it is a lesser alternative to a patent – which of course it is not.

The Soleau envelope had an inventor, Mr. Eugène Soleau, who quite interestingly filed and obtained… two patents for his invention. At least he knew better.

The Soleau envelope patent.
One of the Soleau envelope patents.

The case discussed today is relatively exceptional in that it is an example of a situation in which Soleau envelopes were actually useful in the end. There is yet another reason why the case is fairly exceptional: it relates to a claim for ownership of a patent, and the claim was successful – quite often the burden of proof on an ownership claimant is simply too heavy to be properly discharged.

Mr. Courau is a specialist of pine resin extraction, which is a traditional practice in the Southwestern part of France. Resin extraction is performed by making an injury on the trunk of the tree. Resin exudation can be stimulated by spraying sulfuric acid on the injury, but this has obvious drawbacks for the environment and workers.

According to the judgment, Mr. Courau has been experimenting the use of alternative resin exudation stimulating agents, comprising notably citric acid or sodium citrate, for a number of years.

He filed Soleau envelopes describing his work in 1994, 1995, 2003, 2009, then on July 7, 2010 and finally on August 18, 2011.

Between 2007 and 2012, he worked with the company Holiste Laboratoires et Développement, which specializes in aromatherapy. A confidentiality agreement was signed between them on July 7, 2010 (the same day as the fifth Soleau envelope was filed), and then apparently a collaboration agreement two weeks later.

On March 16, 2012, Holiste filed a French patent application. This application was eventually withdrawn but a divisional application was also filed which matured into a patent. Holiste also filed a PCT application claiming the priority of the French application. Mr. Courau found out about these filings and sued Holiste in June 2014, claiming ownership of the patents / applications because, he said, the invention was stolen from him and the filings violated the 2010 confidentiality agreement.

Holiste’s defense was that Mr. Courau was not the inventor of the patents / applications at stake. They said he had offered to replace the conventional acid stimulating agent by a neutral stimulating agent. The parties had therefore discussed a possible neutral composition based on sodium citrate, calcium carbonate and water. On the other hand, the invention at stake is rather about using citric acid as a stimulating agent. This concept was suggested by another technician (namely the person designated as the inventor in the French and PCT filings).

The court analyzed the claims and the description of the French patent. The main claims recite a solution containing citric acid or a derivative thereof for stimulating resin exudation. Various additives can be employed, including in particular a filler such as clay.

The court then turned to the contents of Mr. Courau’s successive Soleau envelopes. In those dated 1994 to 2009, stimulating compositions based on sodium citrate are mentioned. As a reminder, sodium citrate is a salt of citric acid; when put in a solution citrate sodium will decompose and yield citrate (a base) and/or citric acid (guess what: an acid) depending on the pH of the solution. Anyway, in the later Soleau envelopes of July 2010 and August 18, 2011, citric acid per se is mentioned.

Then the court reviewed the collaboration agreement of July 2010. The agreement defines confidential information exchanged in the framework of the agreement and provides that the recipient of confidential information from the other party has no right on (notably) related inventions. In a letter dated September 3, 2010 to Holiste’s designated inventor, the plaintiff had explicitly referred to “the neutral exudation paste which contains sodium citrate and the know-how necessary for its implementation” as confidential information under the agreement.

Finally, the court took into account of number of email exchanges. In August 2010, Holiste acknowledged that Mr. Courau was the sole inventor of a new resin exudation stimulation composition. The filing of a patent application by Mr. Courau was planned after some additional testing, with a license to be granted to the company. In December 2011, Holiste further confirmed in writing that Mr. Courau was the inventor of the exudation stimulation composition.

The court considered all the above evidence as convincingly showing that Holiste had indeed been disloyal and breached the agreement by filing a patent application on his invention. The invention was a solo invention made by the plaintiff.

The court disregarded Holiste’s defense based on the use of the term “neutral by Mr. Courau to characterize his invention (whereas the patent applications mention the use of citric acid):

Claude Courau invented the composition of an exudation paste that he termed as “neutral”, not in a chemical sense (i.e. at pH 7) but in a common sense, meaning that it is not harmful for man and the environment, unlike sulfuric acid which was previously used. It cannot be concluded from the awkward use of this term that the product did not contain any acid. On the contrary, all documents mentioned above, which are dated prior to the patent filing, recite the presence of either citric acid or its derivative sodium citrate (which is obtained by adding soda). 

As a result, the court ordered that Mr. Courau be retroactively considered as the sole applicant of the French patent, as well as of the PCT application, “including patent applications originating from national phase entries thereof“.

The plaintiff was also awarded 10,000 euros for moral prejudice as well as 8,000 euros for reimbursement of attorney’s fees.

It seems that the claimant in this case was a very careful person, who had extensively documented his work or ideas over the years. This is not so common and is certainly the reason for the positive outcome that he obtained.

I do wonder however whether the court sufficiently reviewed all the claims of the French patent. For examples, dependent claims 6, 7 and 10 recite the presence of clay as a filler, in particular bentonite or kaolin. Whether this embodiment was also communicated by the plaintiff to Holiste prior to the filing date is unclear as the judgment is silent on this aspect. Also, the PCT application contains a slightly different claim set, with some additional features.

It seems to me that, if Holiste’s designated inventor contributed to at least some of the claims, the court should have ordered co-ownership instead of a full retroactive transfer of ownership.

As a last remark on this case, the PCT application entered into European regional phase. This is not mentioned in the judgment, but of course the file wrapper is accessible online on the EPO website.

In December 2014, Mr. Courau’s representative requested that the examination proceedings be stayed due to the pending ownership litigation. This request was immediately accepted by the EPO.

Holiste’s representative countered by stating that the lawsuit was groundless and by directly attacking Mr. Courau. The legal division of course stayed miles away from taking position on the merits of the case but simply explained that the legal conditions for ordering a stay of proceedings were met.

In July 2016, Holiste’s representative nevertheless filed amended claims to (oddly) align the European claims onto the French granted claims. Of course, this amendment could not be processed by the EPO. As a result, Holiste’s representative sent another letter in August 2016 expressing bewilderment at the EPO’s refusal to deal with the amendment.

To be continued. The next steps in the examination proceedings will of course depend on whether an appeal was lodged by Holiste against this TGI ruling.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 3ème section, May 13, 2016, Courau c/ Holiste Laboratoires et Développement, RG No. 14/09297.

The sofosbuvir conundrum

Few patents get famous enough to make it to the headlines of the general press. Some Apple patents are among them, such as those nicknamed “slide-to-unlock” or “rubber-banding” – especially thanks to the world war waged against Samsung. Other patent celebs include those on blockbuster pharmaceutical drugs.

In this latter category, one patent family in particular has attracted some fuss over the past few years. It is the one which covers the drug sofosbuvir, marketed under the name Sovaldi.

Blockbuster drug patents can beat even patents on blockbusters.
Blockbuster drug patents can even beat patents on blockbusters.

Sofosbuvir has markedly improved the treatment of hepatitis C virus (HCV) infection. But in many countries, in the absence of any generic version of the drug, the price of HCV treatment has skyrocketed as a result. This has aroused vocal protests by a number of NGOs (see e.g. here).

In Europe, the sofosbuvir patent (or at least one sofosbuvir patent) is EP 2203462, owned by Gilead. It was opposed after grant by ten different parties, including the NGO Médecins du monde, a number of generic manufacturers, and a number of straw men. Oral proceedings took place on October 4-5 in Munich. The only public information available as of today on the online register is that the patent was maintained in amended form. The minutes of the oral proceedings and the written decision of the opposition division have not been issued yet.

Tufty the Cat has recently made assumptions on his blog regarding the claims which were uphed by the opposition division. I have now received a confirmation by someone who attended the oral proceedings that Tufty got the claim amendment right.

But there seems to be some confusion, to say the least, after these oral proceedings. Indeed, Gilead and its opponents seem to have different views as to whether the amended patent still covers sofosbuvir or not.

In order to understand how there can be such a controversy, it is necessary to go back to some basic notions of stereochemistry.

There are many examples of chemical compounds having different 3D atom configurations although they share the same 2D chemical formula. These different configurations are referred to as stereochemical forms, or diastereomers, of a given compound.

In the pharmaceutical field, identifying the different stereochemical forms of a compound is of prime importance, as diastereomers often have different pharmacological effects. By way of example, the so-called (S) stereochemical form of ibuprofen is a hundred times more active than the so-called (R) stereochemical form.

Besides, such chemical compounds are generally not synthesized as stereochemically pure compounds, but as a mixture of diastereomers. It is often necessary to further purify this mixture in order to isolate the most active diastereomer.

Gilead’s patent as granted contains six claims, including three independent claims 1 to 3. For once, let’s start with claim 2.

Claim 2 is directed to a compound of the following formula:

sofos-claim-2

This is sofosbuvir.

Then claim 3 is directed to another compound of the following formula:

sofos-claim-3

This other compound looks very much like sofosbuvir, since it is its diastereomer. The difference between the two compounds is highlighted in yellow. In the sofosbuvir formula, the P-O bond is shaded in black and the P-N bond is hatched, which means that, in 3D, the oxygen atom is in front of the phosphorus atom, while the nitrogen atom is behind. It is exactly the opposite in the diastereomer of claim 3.

Now, here is the formula of the compound of claim 1:

sofos-claim-1

In this formula, the relevant P-N and P-O bonds are depicted as simple lines, which means that the 3D configuration is not specified.

Claims 4-6 simply recite a composition comprising the compound of one of respective claims 1-3 and a pharmaceutically acceptable medium.

According to my source, claims 2, 3, 5 and 6 were found by the opposition division to extend beyond the contents of the application as filed. As a result, the patent proprietor filed an auxiliary request in which these claims were deleted, and only granted claims 1 and 4 remained. The opposition division came to the conclusion that this auxiliary request meets all the requirements of the EPC, and made the interlocutory decision of maintaining the patent in this amended form.

The decision should soon be issued in writing, and will be open to appeal by all parties.

And now, here comes the conundrum.

The patent as amended during first instance opposition proceedings no longer contains claims 2 and 5 which were specifically directed to the sofosbuvir compound and the sofosbuvir-containing medicament. The question is whether the remaining claims 1 and 4 still protect sofosbuvir and sofosbuvir-based drugs.

One possible interpretation is that claim 1 is a generic claim which protects both diastereomers. It is broader than claim 2, and therefore the scope of the patent remains completely intact. Quite frankly, I think this is the interpretation that most patent attorneys would consider as the most logical one.

However, another possible interpretation is that claim 1 is directed to a diastereomeric mixture, i.e. a mixture of the compounds of claims 2 and 3 as granted. Arguments in favor of this interpretation could be that: claim 1 does show a 3D configuration in other parts of the molecule; thus, the absence of 3D information around the phosphorous atom means that such information cannot be provided, because both forms are present in the compound; furthermore, granted claims 2 and 3 are independent claims and do not depend on claim 1 which confirms that they are not particular embodiments of claim 1.

According to this second interpretation, a generic sofosbuvir drug would arguably no longer infringe the patent – as the drug would not contain a diastereomeric mixture.

It seems that the description of the patent does not fully clearly support one interpretation over the other.

I could very well see a French court coming to the conclusion that since the claim specifically directed to sofosbuvir was deleted, the patent may not possibly protect this molecule any longer. Maybe the written decision of the opposition division will contain a position as to what claim 1 means. But then, maybe not. And anyway, any position that they may have taken is not binding on national courts.

With that in mind, I would certainly not bet my life on either interpretation. Would readers be keen on taking a vote?

I would like to thank my source for this hot information. I have also been told that a number of interesting topics were discussed during the opposition proceedings, in connection with extension of subject-matter, priority and inventive step. So we should watch for the written decision of the opposition division when it is issued.


CASE REFERENCE: ongoing opposition proceedings against EP 2203462 to Gilead Pharmasset LLC.

Happy birthday

Happy birthday, blog. On October 17, 2015, this blog’s first post was published. I am looking forward to another year of blogging and I do hope to be able to publish a second birthday post – although no promises are made.

Thank you very much Lionel Vial and Aujain Eghbali for your contributions up to now. You are welcome back on this blog any time. Other contributors are also welcome, even for a short message. Anonymous contributions may also be accepted.

A few stats for those who are interested. At this point the blog has a little bit more than 70 email subscribers. Thank you all. The link for subscribing is at the bottom of the left banner. The blog has had approximately 13,500 page views so far. The best score ever was 628 views in a single day when Laurent Teyssèdre kindly mentioned the blog in a post of his own famous blog. Thank you so much for this huge publicity.

The home page and some permanent pages are the most viewed ones. Other than that, the most popular post ever was the April fools’ joke on the UPC. Makes me think that I should quit reading case law decisions and start a career in hoaxes. Then, the next most popular ones are generally in the pharma field, this one being the winner.

Unfortunately, the vast majority of search queries which led visitors to this blog remain unknown to the blogmaster, but a tiny minority are known (this all depends on which search engine is used as far as I understand), and it makes you realize that sometimes the search results must have been quite disappointing for the searchers.

For instance, someone looking for a “patent for poison” was led to this post on poisonous divisionals; another person wanting to translate “the remedy may be worse than the disease” into French landed on a report by Lionel Vial on Merck v. Actavis; last but not least, a reader interested in “nice models” ended up on another (gorgeous) report by Lionel Vial, this time on disease models and their importance for the appraisal of sufficiency of disclosure.

This may also be a good time to ask readers about their thoughts on the blog and their opinion on how it could be improved:

  • Would you like to read more about EPO case law? Or to read only about French case law?
  • Should the posts be more succinct?
  • Should I switch to French because no foreign reader can possibly have any interest in what is discussed here?
  • Are there topics which have not been addressed yet and which should?
  • What about posting frequency?
  • Should my sentences be shorter and contain less passive voice as the blog editor keeps telling me?

Comments and private messages are welcome.

Enough celebrated. Let's extinguish the candles right now.
Enough celebrated. Let’s extinguish the candles right now.

Damage control

Sometimes, a case is not over even after it is lost. This is especially true when a defendant is found guilty of patent infringement but the amount of damages is not yet determined in the infringement ruling. It is then still time to continue fighting for damage control. And this can pay off, like in the present case, where the total damages award amounted to approximately 7% of what the plaintiffs requested. That is, if my math is correct because the ruling contains so many figures that it is quite easy to lose track.

An example of not-too-bad damage control.
An example of not-too-bad damage control.

The story started a while ago, more precisely in June 2005, when Hutchinson, owner of European patent No. EP 0691481 (on a connecting rod for vehicles), together with its subsidiary and licensee Paulstra, sued two companies, CF Gomma Barre Thomas and Paul Robert Industrie, for infringement of the patent. CF Gomma Barre Thomas entered insolvency proceedings later in the same year, so that the infringement proceedings continued against the court-appointed receiver. In 2007, after another infringement seizure, a third company was added as a defendant, namely Société des Polymères Barre Thomas (later renamed as Cooper-Standard France).

In June 2009, the Paris Tribunal de grande instance (TGI) declared the patent valid but rejected all infringement claims. Hutchinson and Paulstra appealed.

In October 2011, the Cour d’appel confirmed that the patent was valid but set aside the first instance judgment as far as infringement is concerned: claims 1, 2, 4 and 5 of the patent were held to be infringed. The appeal ruling appointed an expert for determining the amount of damages.

A cassation appeal was lodged, and the supreme court judges partly canceled the 2011 judgment, because the finding of infringement of dependent claims 2, 4 and 5 was not sufficiently reasoned. However, this partial cancellation left intact the main findings of the 2011 judgment – in terms of validity of the patent and infringement of the main claim.

This leads us to the second ruling by the Paris Cour d’appel in 2016, after the expertise, on the assessment of damages.

Not exactly a fun read – unless you are an accountant, that is. But an important one, as this is the point at which the lawsuit finally has an actual impact on the various companies’ finances.

The guidelines for the assessment of damages are set forth in article L. 615-7 of the Code de la propriété intellectuelle:

In order to assess damages, the court shall separately take into account: 

1. Negative economic consequences of infringement, including lost profits and actual losses incurred by the harmed party. 

2. Moral prejudice. 

3. Profits made by the infringer, including intellectual, material and marketing investment savings deriving from the infringement. 

However, the court can alternatively, upon request of the harmed party, award a lump sum as damages. This lump sum is greater than the amount of royalties which would have been due if the infringer had asked for the permission to use the right that it infringed. This lump sum can be in addition to the indemnification of the moral prejudice.

A first issue raised by the defendants was whether the above (current) provision was applicable or not, given that it was modified in 2014. In particular the notion of “intellectual, material and marketing investment savings deriving from the infringement” was not recited in the earlier version of the law.

The court replied that the current provision is indeed applicable since the 2014 modification in fact did not change anything and did not add a new damages count; it is simply more explicit than the previous one.

A second issue was the definition of the perimeter of the infringing goods. Four models of connecting rods were mentioned in the infringement seizure reports of 2005 and 2007. These models were clearly to be taken into account in the assessment of damages. But the plaintiffs contended that six further models were also infringing and should also be taken into account.

The court disagreed. Indeed, the 2011 appeal judgment held that the first four models were infringing. Whether the six other models are also infringing or not was not decided upon. The 2011 ruling also contained an order not to make, market, and the like, any connecting rods identical or similar to the ones found to be infringing. However, this could not be seen as a basis for including the additional six models in the assessment:

This injunction, which guarantees that the monopoly right is restored to its state before the infringement, concerns the future and makes it possible if necessary to start further legal proceedings against an infringer who is then aware of the infringement. 

I have of course no idea whether the six additional models of connecting rods were similar or identical to the first four ones. But I think it is really a pity that the court did not find a way to rule on the additional infringement claim in this ruling (be it to hold that the new models infringe, do not infringe, or that there is not enough evidence of infringement). Telling the plaintiffs that they can start a new action does not seem satisfactory on the standpoint of efficiency, especially in view of the overall duration of the present proceedings.

The rest of the decision is concerned with the actual computation of damages, plaintiff by plaintiff, defendant by defendant, and period of time by period of time.

For the most part, the expert’s report was approved by the court.

By way of example, the plaintiffs contended that some accessories, such as fixation means, should also be included in the calculation, in view of the well-known doctrine of the “tout commercial” (which could be translated as the doctrine of the commercial package). The court rejected the contention, because there was no evidence that the accessories were sold as a consequence of the sale of the infringing connecting rods.

Paulstra claimed that it has suffered lost profits because they would have been able to make and sell all the connecting rods according to the invention marketed by the defendants. This point was accepted by the expert and the court.

However, the margin to be applied to the lost sales in order to compute loss profits was hotly debated.

Paulstra successively announced three different margins: 3%, 5.6% and finally 9.7%. They said the first two figures were erroneous: the first one concerned another equipment, and the second one concerned all connecting rods in general and not specifically those protected by the patent.

The court was (understandably) irritated by this flip-flopping and was not convinced that the initial figure was erroneous:

[The defendants] rightly stigmatize the behavior of Hutchinson and Paulstra, by emphasizing the contradictions in their successive statements, their inconsistency, and their lack of credibility, stating that this is due to their decision to prevent any control over Paulstra’s claims […]. The error alleged by Paulstra when the first rate of 3% was mentioned is indeed not credible, in view of the time that they took before replying to the expert, and of the importance of its “connecting rods” business. They necessarily knew what it was worth […].

Furthermore, the final figure of 9.7% was only supported by a statement by the company’s accounting director; and by a late-filed communication from an external auditor. The former was criticized by the expert as being a non-certified statement. The latter was disregarded by the court as it was too vague and imprecise, and not explicit enough.

As a result, the court applied a margin rate of 3% to Paulstra’s lost sales, also noting in passing that it is “the rate generally used in this type of product in the automobile industry“.

The moral prejudice suffered by the licensee Paulstra was calculated by the expert to be 125,000 euros. But the judges reduced this amount to zero. They held that there was no evidence that the defendants’ actions had harmed Paulstra’s reputation, as was alleged.

Turning to the patentee, Hutchinson first claimed lost profits due to Paulstra’s lost sales, because the patent was licensed to the subsidiary. Here, again, the court refused to take such lost profits into account:

It cannot be denied that a patent proprietor that does not exploit the invention but grants a license for its exploitation has the right to be awarded the profits it did not make because of the infringement. But it has to show that the alleged lost profits are real. 

In this respect, even if it is demonstrated that Hutchinson and its subsidiary Paulstra were bound by a lease management agreement, Hutchinson does not provide any evidence as to the profits earned owing to the license. […]

[…] [Hutchinson] relied on trade secret as the reason why no information was provided in this respect. But, during the expertise proceedings, they stated: “[…] these damages should no be calculated based on the contractual royalty that Paulstra would pay to Hutchinson. Indeed, Paulstra is only a subsidiary of Hutchinson, and it is not conventional, at least in terms of patentee-licensee relationships, to have such contractual royalty be paid between companies of a same group” […]. 

Since the very existence of the royalty was not demonstrated, the corresponding claim cannot succeed. 

Again, the claimants’ ambiguous statements certainly played against them. Half-admitting that there was no license royalties between Hutchinson and Paulstra while relying on trade secret not to say more was not a successful strategy for convincing the court that there were indeed lost profits to be recovered. Would the outcome have been different if Hutchinson had claimed the lump sum provided for in the last paragraph of article L. 615-7, which cannot be less than the royalties the infringer would have paid? I tend to think so.

Hutchinson was nevertheless awarded 60,000 euros (as estimated by the expert) in terms of moral prejudice. It is indeed generally accepted that patent infringement necessarily causes moral prejudice to the patent proprietor because the invention is depreciated.

On the other hand, Hutchinson lost again when they claimed the profits due to the infringers’ investment savings. They estimated such profits to be equal to 5% of the defendants’ connecting rod turnover. But the court held that the profits made by the defendants had already been taken into account in Paulstra’s damages; and that the claimed percentage, allegedly based on Hutchinson’s own spending, was not credibly substantiated, since it seemed to include other activities than those related to the patented invention.

In summary the total damages award for Hutchinson and Paulstra is 652,003 euros. Was the so far 11-year long litigation worth it? Of course the damages award is only part of the answer, as the claimants did get a permanent injunction which after all is the actual weapon of mass destruction in a patent war.

Anyway, the case strikingly illustrates that damages assessment is an endeavor of its own, sometimes underestimated by litigants. Just like for the assessment of validity and infringement, the court wants to see convincing evidence of whatever is asserted by the parties and will not satisfy itself with unsupported statements, let alone ambiguous ones.


CASE REFERENCE: Cour d’appel de Paris, Pôle 5, chambre 2, February 12, 2016, Hutchinson & Paulstra v. CF Gomma Barre Thomas et al., RG No. 09/13793.