The Paris Tribunal de grande instance (TGI) has recently handed down an unusually long judgment. But I will refrain from commenting on all 64 pages that the decision comprises. Instead, I will focus on the initial portion.
No, not so much out of laziness – who said that?
But mainly because this initial portion addresses the very important issue of standing in a patent nullity suit, which was already discussed here not long ago.
As usual, a word of context first – which, as usual again, is not so straightforward.
Pellenc is a French agricultural company, which has been marketing an electrical pruner since 1988. From 1989 to 2014, they were involved in commercial and cooperation agreements with Switzerland-based group Felco, which is active in the same field. In particular, Pellenc supplied Felco with batteries for some of their electrical pruners. At some point, Felco drastically reduced the volume of its orders to Pellenc and then introduced a new tool that they had developed.
However, Pellenc had six patents in store: two French patents and four European ones.
Felco, in a bold preemptive strike, filed a nullity suit in France in July 2012 against all six patents.
One of the European patent was revoked in opposition proceedings at the EPO, and the revocation was confirmed by the Board of appeal.
The French part of another European patent was definitively forsaken at the French patent office (presumably to avoid substitution of the original French patent).
All of that left the court with two French patents and two European patents to deal with.
But, in order not to make things easier, Pellenc filed requests for limitation of these four patents. The requests for limitation of the two French patents were accepted by the Institut National de la Propriété Industrielle (INPI) in May 2015. The EPO, on the other hand, initially rejected the central requests for limitation of the two European patents, in June and November 2015.
In view of these lingering limitation proceedings, the case management judge separated the case into two: a first sub-case concerned with the nullity claim regarding the two limited French patents; and a second sub-case concerned with the nullity claim regarding the two European patents still in limbo. Obviously, the first sub-case progressed quicker than the second one, which leads us to the decision at stake.
Let’s not maintain the suspense for too long: the two French patents were revoked in full.
The court made a very thorough job of deciding on the interpretation of a number of contested claim terms, and then reviewed each claim (yes, including all dependent ones) in great detail, finding them all deprived of novelty or inventive step. Hence the lengthy judgment.
But most interesting is how the court handled the defense that the nullity complaint was inadmissible due to lack of standing.
In the decision, the court recalled the principles to be applied for assessing whether a nullity claimant has standing to sue:
Therefore, a competitor can file an action for nullity of a patent if they can demonstrate the existence of sufficient interest to free an upcoming exploitation of the patented technology or a similar one: nullity actions are open to an industrialist willing to free a market.
More specifically, it must be established that the claims which are sought to be nullified “are or may be an impediment to their economic activity, because they have or plan to have an activity in the field of the patented invention“.
The court also made it clear that the claimant does not need to establish the existence or imminence of an infringement of any particular claims of the patents at stake. But it should be explained “how the patent may get in the way of their activity“.
In my previous post on the topic, which was in the pharma field, we could see that the court examined the evidence as to whether the patent stood in the claimant’s way in a very thorough and severe manner. In fact, standing was acknowledged for some of the patent claims but not others.
Now, in the present case, it seems that the analysis was overall easier and more straightforward.
The court first noted that there it was undisputed that Felco and Pellenc were competitors in France, since both make and market electrical pruners. In fact, it was mentioned in Pellenc’s submissions themselves that the recent tool developed by Felco was in competition with their tools.
The interesting point is that the competing tool was put on the market in France in May 2013, i.e. ten months after the nullity complaint was filed. The court concluded that, even if there was no competition on the day the complaint was filed, there was competition at least thereafter, so that the inadmissibility defense could no longer be relied upon.
In other terms, the relevant date for the assessment of standing in a patent nullity suit is the day on which the court decides on the inadmissibility defense, and not the day on which the complaint is filed – in keeping with the general rules of civil procedure in this country.
The court further remarked that Pellenc sued the Felco companies in Switzerland for unfair competition. It seems that Pellenc claimed in the Swiss lawsuit that Felco had taken unfair advantage of Pellenc’s patented and non-patented know-how which was transmitted to them over the course of their longstanding relationship. This was seen as further confirmation of Felco’s proper standing.
Yet another factor taken into account by the court was that Pellenc opposed two European patents owned by Felco. Frankly, I think this is a very indirect factor. It is more a possible indication of Pellenc’s activity being impeded by Felco’s IP than the other way around.
Apparently, there was also a dispute as to the legal consequences of the agreement between Felco and Pellenc on Felco’s standing. It was probably an exciting one, at that, as both parties filed consultations by renowned legal experts, respectively Prof. Reboul and Prof. Galloux. But the decision does not say much as to which arguments were made. It is simply stated that:
Regarding the contractual relationships which existed between the parties, it should be noted that they have ceased; besides, the existence of contractual relationships does not deprive the contracting party of their right to seek the invalidation of the patents, and does not render standing illegitimate per se.
Indeed, if the patents were to be held invalid, the standing of [Felco] would be legitimized and Pellenc would have illegitimately asserted worthless patents against their co-contracting party.
Therefore, the existence of contractual relationships cannot make a contracting party’s standing to seek nullity of patents belonging to the other contracting party illegitimate.
It is unclear whether the agreement explicitly contained a provision prohibiting Felco from seeking revocation of the patents, or whether the argument was that the agreement indirectly or implicitly prevented Felco from pursuing this course of action. Probably the latter.
But at any rate, the principle seems to be clearly established in this judgment that an agreement cannot restrict a party’s right to seek invalidation of a patent, and in particular cannot annihilate said party’s standing to sue. This is in addition to the serious concerns that non-challenge clauses may raise under competition law.
Good to know!
At that point, the court rejected Pellenc’s defense and, as mentioned above, held all claims of both French patents invalid, after carefully reviewing them one by one.
With two of Pellenc’s patents down, there are two more to go – namely the two European ones, which were also sought to be limited.
I checked on the European patent register, and it turns out that both patents were finally limited at the EPO, in June 2016. So, unless the parties settle, these patents should soon also be subjected to the firing squad of the TGI’s third chamber. Stay tuned.
CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre, 1ère section, March 2, 2017, Felco SA et al. v. SA Pellenc, RG No. 12/15393.