Once in a while, a complex and long-lasting patent case gives rise to a simple and straightforward ruling.
Only longtime readers having an exceptional memory will remember that, a few years ago, I reported on a first cassation ruling in a Time Sport International v. Décathlon France et al. case. This ruling dealt with a priority issue.
It turns out that another cassation ruling has recently been issued in the same litigation. So this is one of these few never-ending cases in which the judiciary pingpong seems to go on eternally. Is it a bug or a feature of the French legal system? We may never know for sure.
Anyway, there is probably no need to go over the entire case in detail: as I said, the point made in this new ruling is quite simple and straightforward.
Suffice it to say that Time Sport International owns European patent No. EP 0682885 on a device for the adjustable occipital fixing of a helmet, and that Décathlon France and DHG Knauer were found to have infringed the French part of this patent. The only outstanding question is the computation of damages.
Damages were awarded to Time Sport by the Paris Cour d’appel in a judgment dated September 22, 2017 (corrected on May 4, 2018). Several amounts were awarded in consideration of different periods of time and defendants. The total amounted to more than 800,000 euros for Décathlon France, but (only) approximately 71,000 euros for Knauer.
The Cour de cassation, which only rules on points of law and does not reassess the facts, let the 2017 ruling stand for the most part, but took issue with one amount in particular, namely the one supposed to address Knauer’s infringement for the period running from November 1, 2007 to September 8, 2012.
Time Sport’s claim amounted to 1,754,483 euros. But the 2017 appeal ruling only granted them 28,620.90 euros. If the staff mathematicians are correct, this means that the court granted Time Sport 1.6% of what they asked for – obviously quite a disappointment for them.
The amount claimed by Time Sport was based on an expert’s report and was said to correspond to the profit made by Knauer. It seems that Knauer refused to communicate its sales figures relating to the infringing helmets to the expert, so that he made an estimate based on a minimum number of helmets sold by Knauer to Décathlon, on Décathlon’s average unit price and on Décathlon’s gross margin (not Knauer’s gross margin).
But the appeal judges noted that Knauer and Décathlon have different activities. Knauer is a manufacturer and wholesaler while Décathlon is a retailer. Therefore, the expert’s estimate based on Décathlon’s gross margin did not correctly reflect Knauer’s profits. As a result, the court decided that the damages should rather be computed by applying a 6% royalty rate to a certain turnover – how exactly this turnover figure was obtained is unfortunately not very clear to me when reading the judgment.
Time Sport argued in front of the Cour de cassation that this approach was incorrect.
The key provision here is article L. 615-7 Code de la propriété intellectuelle.
In the relevant version which was in force between October 30, 2007 and March 13, 2014, the article read:
To set the damages, the court takes into consideration the negative economic consequences suffered by the harmed party, including lost profits, the profits made by the infringer, and the moral prejudice caused to the right owner due to the infringement.
However, the court may, as an alternative and upon request of the harmed party, award a lump sum as damages, which cannot be lower than the amount of royalties or rights which would have been due if the infringer had asked for a permission to use the right which was infringed.
The amended version of the article currently in force is not much different from this one.
In summary there are at least three modes of computation laid out in the statute (leaving aside the moral prejudice aspect, which rarely gives rise to significant indemnification): the first one based on negative economic consequences for the IP right owner, the second one based on the infringer’s profits and the third one which is royalty-based.
The Cour d’appel applied the third one.
But these different modes of computation are not equally available to the court. In particular, the phrase underlined above shows that the third modality has to be requested by the plaintiff.
The Cour de cassation confirmed that there is no getting around the underlined phrase, and that the plaintiff indeed has the right to choose whether or not to be indemnified by way of a royalty:
The Cour d’appel, by ruling thusly, by refusing to take into account the indemnification claim based on one of the evaluation criteria set in article L. 615-7, first paragraph […] and by awarding the amount of royalties which would have been due to Time Sport if there had been a permission to work the patent, although a claim for enhanced royalties had not been filed, violated this provision by refusing to apply the first paragraph and by wrongly applying the second paragraph.
The case is therefore again remitted to the (regular) appeal level to have this portion of the damages award reassessed.
This cassation ruling can be viewed as a useful clarification – although, frankly, I would say the provision at stake in the Code de la propriété intellectuelle was in fact clear enough.
What remains fuzzy to me is how the court should “take into account” both the first and second modes of computation (negative economic consequences and infringer’s profits). I am not sure the case law is crystal-clear in this respect (see also this previous post on the same topic).
What is also somewhat fuzzy is what happens if the defendant refuses to open its account books, as seems to have been the case here. Wouldn’t it be logical in such a situation for the court to simply follow the plaintiff’s estimate?
I am not sure I have ever seen a bioinformatics patent lawsuit in France before the case reported on today: this may well be a first.
It is therefore particularly interesting to see how our judges grappled with such an exciting and complex topic. And the short answer is: pretty well it would seem!
The Codexis group is a leader in the field of biocatalysts. In particular, Codexis Mayflower Holdings LLC owns European patent No. EP 1761879, filed in June 2005 and claiming a priority of June 2004. The patent was granted in August 2013 and was not opposed.
Claim 1 of the patent is the following (the wording which will be important for the discussion below has been emphasized):
A computer-implemented method for identifying amino acid residues for variation in a protein variant library in order to affect a desired activity, said method comprising: (a) receiving data characterizing a training set of a protein variant library, wherein the data provides activity and sequence information for each protein variant in the training set; (b) from the data, developing a sequence-activity model that predicts activity as a function of amino acid residue type and corresponding position in a protein sequence, wherein the sequence-activity model includes one or more non-linear terms, each representing an interaction between two or more amino acid residues in the protein sequence, and wherein the sequence-activity model can distinguish amino acid residues that have a significant impact on the desired activity from those that do not; and (c) using the sequence-activity model to identify one or more amino acid residues at specific positions that are predicted to impact the desired activity for variation to impact the desired activity, (d) wherein at least one of the non-linear terms is a cross-product term comprising a product of one variable representing the presence of one interacting residue and another variable representing the presence of another interacting residue, and (e) wherein developing said sequence-activity model comprises selecting one or more cross-product terms from a group of potential cross-product terms, wherein the selected cross-product terms are those cross-product terms representing true structural interactions that have a significant impact on activity.
Unusually, the main defendant is an individual, and even more unusually, a university Professor, Mr. O.
Mr. O happens to teach biochemistry, molecular biology and bioinformatics in Nantes; he was blamed by Codexis for his personal website offering a tool for predicting protein sequences, called ProSAR. Furthermore, Mr. O is a vice-president of the company Peaccel, which provides services to biotech and pharma companies, and which uses the ProSAR software.
The issue, as you have probably guessed, is that Codexis deemed that the ProSAR software infringes its EP’879 patent.
In 2015, Codexis had an internet bailiff’s report, and then an infringement seizure at the professor’s home (!) carried out. The source code for ProSAR was seized and placed under seal. Codexis then formally initiated infringement proceedings against Mr. O and his company. The defendants filed a nullity counterclaim.
In 2016, an expert was appointed by the judge in charge of case management to analyze the source code and provide a comparison with the patent claims. The expertise was concluded in a matter of months.
In 2018, the Paris TGI issued its decision on the merits, rejecting both the nullity counterclaim and the infringement main claim.
Codexis appealed, Mr. O and Peaccel counter-appealed, which now leads us to the judgment rendered by the Paris Cour d’appel on January 15, 2021. This second judgment fully confirmed the first instance decision.
Starting with the validity discussion, one first item of contention was whether the priority claim was valid.
Indeed, Codexis’ inventors had originally filed a U.S. provisional application in 2002, followed by three successive continuation-in-part applications CIP1, CIP2 and CIP3 in 2003 and 2004. The EP’879 claims priority to the third one, CIP3.
Whenever patent attorneys see “continuation-in-part” and “European priority claim” in a same sentence, they smell blood in the water.
And indeed, the infringement defendants argued that CIP3 is not the first application for the claimed invention, as the first application is rather CIP2. As a result, they said, the priority is invalid, since only a “first application” can give rise to a priority right under article 87 EPC.
This argumentation must sound perfectly clear to EQE candidates, but it may not be an easy objection to deal with for a court of law. However, in this case, the court nicely set out the test to be applied:
It must therefore be first determined whether the subject-matter of the main claim 1 of the EP’879 patent and of dependent claims 2, 3, 7, 10 and 12 can be directly and unambiguously derived by the skilled person from the teaching of application CIP2, or from only the parts of application CIP3 not present in application CIP2.
Then, the court noted that the patentee did not dispute that features (a) to (d) were directly and unambiguously derivable from CIP2. On the other hand, they did not believe that feature (e) could be derived from the passages cited by the defendants. As a result, CIP3 was acknowledged as the first application for the invention, and the priority was found valid. Too bad for the defendants, as the application CIP2 itself was published between the priority date and filing date of the patent.
Mr. O and Peaccel further raised objections of lack of novelty based on two articles published in 2001.
The first article, “W et al.“, apparently disclosed a method similar to that of claim 1, but applied to peptides, and not proteins as required by the claim.
Let’s take a step back to molecular biology 101: peptides and proteins (also referred to as polypeptides) both designate polymers comprising amino acid residues. But the term “peptide” generally refers to a short polymer, whereas a “protein” is a long polymer. Paragraph  of the patent mentions a “typical” minimum number of amino acid residues of 30, 50 or 100 in a protein. In W et al., only three amino acids were present in the analyzed peptides.
The defendants insisted that the allegedly infringing software ProSAR works on both peptides and proteins, and that the internet bailiff’s report and expertise proceedings were actually conducted based on a test peptide of only ten amino acid residues, but this was considered irrelevant to the issue of novelty by the court.
As to the defendants’ argumentation based on the second article , “L. et al.“, it was found to be so lacking that the court did not even bother to address it in detail:
The object of this publication differs from that of the EP’879 patent since it does not disclose a computer-implemented method to identify amino acid residues for variation in a protein variant library in order to affect a desired activity, but a method for rationally designing a medicament, […] as not contradicted by the very partial translation of the L et al. article filed [by the defendants]. [They] unsuccessfully attempted to combine various excerpts from incomplete sentences […] [so that] it is not necessary to reply in detail to this technical argumentation.
Next, inventive step.
Starting from the first article W et al. as the closest prior art, Mr. O argued that the disclosed process was obvious to adapt from short peptides to actual proteins. The court was not convinced, as the proposed secondary reference related to a different process of protein engineering without features d) and e) of claim 1.
A second inventive step challenge also starting from a document directed to peptide engineering failed for similar reasons.
The patent was thus upheld. Let’s now turn to the issue of infringement.
Mr. O first argued that the analysis of the software relied upon by the plaintiff was based on a ten-amino acid test peptide – and thus not a protein. However, the court rejected the argument, since the software clearly works similarly with peptides and proteins. Squeeze-type arguments do not always work, and in this case the peptide/protein squeeze raised by the defendants left the judges unimpressed.
But another defense hit the mark, both in first instance and on appeal. Features d) and e) of claim 1 make reference to “a cross-product term comprising a product of one variable representing the presence of one interacting residue and another variable representing the presence of another interacting residue”. In the ProSAR tool, a different calculation is performed, based on quadratic, term-to-term products.
Codexis’ technical expert acknowledged that there is a well-accepted mathematical definition of “cross-product” (“produit vectoriel” in French) but then submitted that a broader interpretation of this expression should be adopted in view of the description of the patent, which would cover any non-linear term expressing the interaction of two residues in the polypeptide. The court did not agree that a definition of cross-product different from the conventional one could be found in the patent.
The identification of this difference between ProSAR and claim 1 of the patent was not offset by other contextual arguments, such as allegedly incriminating statements made by Mr. O that he had been inspired by articles published by Codexis. The identified difference was sufficient to conclude that there was no literal infringement.
Codexis had another shot, based on the doctrine of equivalents. They claimed that the quadratic terms in the ProSAR software are equivalent to the cross product of EP’879.
Again, the court was unsympathetic to this view:
[…] Therefore, the equation of step 6 of the expert report and the one of paragraph  of the description of the patent are neither identical, nor mathematically equivalent, and it can thus not be stated […] that the ProSAR tool is identical to the cross-product of the patent in terms of function and effect.
Thus, it is not demonstrated by Codexis that the selection of quadratic terms implemented in the ProSAR tool fulfils the same function as the selection of terms of the cross-product in the patented method, namely the identification of interactions between acid amino residues which have an impact on activity, in order to achieve a same result, namely predicting the activity of new variants. The expert report does not confirm […] that the sole purpose of the genetic algorithm implemented in the ProSAR tool is to allow an efficient selection of non linear terms.
It is slightly unfortunate that the judgment does not contain a more detailed discussion on this last aspect. Assessing infringement by equivalence in France requires determining what the function of the allegedly equivalent means is, but this determination is seldom straightforward. In the present case, based on the judgment itself, it is not easy to understand what the exact respective roles of the term-to-term product and the cross-product are in the process – and why.
Other than that, the quality of this ruling seems quite remarkable, given the high complexity of the technical field.
Pharma-savvy readers are probably well aware of the pan-European pemetrexed litigation.
Eli Lilly’s patent No.EP1313508 is probably one of the most litigated patents in Europe. A nice summary, which is a little bit more than one year old, can be found here but there have been more recent developments, in particular in the Netherlands and in Germany.
In this context, France was late in the game, but here we are, with a remarkable judgment by the Paris TJ (tribunal judiciaire) issued a few days ago. Many thanks to Loïc Lemercier at Clifford Chance for providing a copy!
The French decision seems to be overall aligned with the rulings issued in most other jurisdictions: in a nutshell, it is a (big) win for Eli Lilly.
The patent was upheld as valid and infringed. A permanent injunction was ordered against the defendant, Fresenius, and provisional damages amounting to 28 million euros were awarded – pending final determination.
There are certainly several noteworthy aspects in this decision, but the most interesting one is probably the interpretation of the claims and the infringement finding.
Claim 1 of EP’508 is a Swiss-type claim, which is drafted as follow:
Use of pemetrexed disodium in the manufacture of a medicament for use in combination therapy for inhibiting tumor growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof, said pharmaceutical derivative of vitamin B12 being hydroxocobalamin, cyano-10-chlorocobalamin, aquocobalamin perchlorate, aquo-10-chlorocobalamin perchlorate, azidocobalamin, chlorocobalamin or cobalamin.
The claimed invention thus relates to a cancer combination therapy based on the administration of pemetrexed disodium, the main active substance, in association with vitamin B12 (or the like).
As summarized by the court in the judgment, pemetrexed disodium is a known anticancer agent marketed by Eli Lilly under the trade name Alimta®. This agent is toxic and has significant side effects. According to the patent, these undesirable side effects may be reduced owing to the co-administration of vitamin B12, which lowers the level of methylmalonic acid (a predictor of toxic events in patients) without impairing the efficacy of pemetrexed. The two substances may be administered as a single composition or separately.
Fresenius obtained a marketing authorization for a generic of Alimta®, called Pemetrexed Fresenius Kabi®, in 2016, and has been marketing this generic in France.
According to the summary of product characteristics of Pemetrexed Fresenius Kabi® (NB: for some reason, you have to use another navigator than Google Chrome to open this link), there is a mandatory pre-medication regimen: “patients must also receive an intramuscular injection of vitamin B12 (1000 micrograms) in the week preceding the first dose of pemetrexed and once every three cycles thereafter“.
In other terms, Pemetrexed Fresenius Kabi® is intended for the combination therapy recited in EP’508.
But there is a hitch: the active substance in Pemetrexed Fresenius Kabi® is not in the same saline form as Amlita®. The generic drug contains pemetrexed diacid, whereas the originator’s contains pemetrexed disodium. And, most importantly, claim 1 of EP’508 refers to pemetrexed disodium. Fresenius’ non-infringement defense was based on this difference.
When analyzing the scope of the patent, the court made reference to article 69 EPC (the claims must be interpreted in the light of the description and drawings) and its protocol on interpretation. As a reminder, according to this protocol, claim interpretation must stay away from the extremes of an excessively literal interpretation and an excessively extensive interpretation. Besides, any element equivalent to an element specified in the claims must be taken into account.
Interestingly, the court cited the file history as an additional source of interpretation:
The scope of the claims is determined in the light of the description and drawings, and also if appropriate by taking into account elements from the file wrapper of examination proceedings, such as the amendments and arguments made by the patentee, which are factual elements, to be considered among others.
The court turned to the description of the patent and noted that it makes reference to the general class of antifolate drugs, of which pemetrexed disodium is an example. This seems to be because, in the application as filed, an antifolate was originally claimed, which was later restricted to pemetrexed disodium.
The court then noted that the crux of the invention is the combination of pemetrexed with vitamin B12, and that the disodium form of the active is inconsequential:
The skilled person knows that the active part of the pemetrexed active substance is the anion (which causes the therapeutic effects as well as the unwanted side effects) combined with vitamin B12 […] and understands, without focusing on the literal wording of the claims, that the invention resides in the combined administration of the active agent, whatever its form, with the other substances claimed in the patent.
The court added that the existence of other patents owned by the same company and claiming an active in more general terms (with the notion of “pharmaceutically acceptable salts“) is irrelevant.
The court also added that the file wrapper, in the present case, did not need to be taken into account. Anyway, it merely showed that the restriction to the disodium salt form was not necessary to distinguish the invention from the prior art. It was necessary because there was no support in the application as filed for pemetrexed in general, therefore omitting the disodium feature would have resulted in an extension of subject-matter by intermediate generalization:
[…] The examination procedure in front of the office [provides] a simple optional tool of interpretation, it has no effect on the scope of the patent, and is not binding on the court or the patent proprietor. The behavior of the patent proprietor, who accepted a modification requested by the examiner, cannot be interpreted as an admission which is binding on the court and it has no consequence on the scope of the claim. […] Especially so in the present case, as Lilly meant to designate a preferred embodiment, without intending to modify the scope of its right, even if they did not object to the examiner’s argumentation. In fact, this modification due to added matter under article 123(2) EPC was not meant to overcome a prior art prejudicing the validity of the patent, and was only made for purely formal reasons. The modification due to added matter may not prevent the patent proprietor from relying on infringement by equivalence, since it is a formal condition relating to the substance of the inventive contribution and the literal content of the specification, prohibiting the patentee from adding any element which cannot be directly and unambiguously derived from the patent [sic]. It does absolutely not alter the base on which the interpretation must be performed, and it has no bearing on the extent of protection which is conferred.
On the contrary, with respect to assessing the scope of the patent, article 69 EPC […] demands that equivalents be taken into account. Therefore, adding matter during examination proceedings is not a bar to relying on infringement by equivalence, provided that the specifically claimed means or combination of means (here, the combined used of vitamin B12 […] with the active substance) have a novel function (namely the reduction of toxic effects without impairing therapeutic efficacy) […].
The technical problem to be solved consists in reducing the toxicity of the pemetrexed antifolate, without impairing therapeutic efficacy. The solution recommended in the patent, despite the restrictive formulation of the claims, is the combined administration of the pemetrexed anion and the other substances mentioned in the patent, the form in which this antifolate is administered being irrelevant. The scope of the patent thus extends to all forms of pharmaceutically acceptable forms of pemetrexed (salt or others) employed in combination with the […] other substances.
There is a lot to digest here.
First, although the file history was generally presented as a source of interpretation, it is rated as a secondary, “optional” one.
My take is that file history is duly taken into account when it confirms the interpretation that the court wants to adopt, but it is disregarded when it does not fit the court’s reasoning.
Second, a primary reason for accepting that the patent covers more than pemetrexed disodium is the fact that the description of the patent generally refers to an antifolate drug.
What if the description had been more thoroughly adapted to the amended set of claims during prosecution, and if all generic mentions of the antifolate class had been removed? Would the court have reached a different conclusion, or would it have made it harder for the court to reach this conclusion? If so, this is a red flag for patent attorneys: do not underestimate the importance of this sometimes boring phase of examination proceedings at the EPO, namely the adaptation of the description.
Third, the court draws a clear distinction between two types of amendments made during prosecution: amendments introduced to distinguish the claimed invention from the art and amendments which are not necessary to distinguish the invention from the art.
Only the former type of amendment affects the actual scope of the patent.
Let’s now turn to the assessment of infringement:
Fresenius’ generic drug is composed of the same active substance pemetrexed, and its administration must be combined, as recommended in the EP’508 patent, with vitamin B12 […]. It is therefore irrelevant whether the [incriminated] compound uses a diacid solution so as to enable its administration, since this does not have any specific technical effect. It should be added that it has been admitted that a formulation specialist is able to offer a number of possible counter-ions other than sodium, to form a free acid or a number of well-known pharmaceutically acceptable salts. The selection of the salt form is thus irrelevant. Only the therapeutic effect of the pemetrexed anion combined with the other substances matters. The defendants claimed that it was not obvious to use this particular salt, which ranks 10th among frequently used salts. This is a criterion for the validity of an invention, not for the assessment of infringement. Fresenius obtained patents […] on this form of salt. But all of this is immaterial.
The variant directed to the use of a different salt is totally incidental. Pemetrexed Fresenius Kabi® is administered according to the use provided in the invention. It is meant to treat the same cancer conditions, with the same technical effect. It was authorized as a generic drug of the originator’s drug.
Infringement by reproduction is established.
Since infringement by reproduction is established, in view of the scope of the patent as determined above, infringement by equivalence does not need to be decided upon.
This latter part is a bit confusing. By “infringement by reproduction” is probably meant “literal infringement“. So the court seems to say that there is literal infringement when the claims are properly interpreted in the light of the description, so that “pemetrexed disodium” is understood to actually mean “pemetrexed“.
On the other hand, the court did cite the French equivalence test (different means, same function, function must be novel) when determining the scope of the patent (see the passages quoted above). This wavering is mostly inconsequential, though.
I personally think it would be much cleaner to consider that there is no literal infringement because the wording of the claims is crystal-clear, but that there may be infringement by equivalence when considering that the claims could have been drafted in a broader manner in view of the inventive concept. That said, literal infringement and infringement by equivalence both mean infringement, and it does not make any difference in terms of outcome or legal consequences.
To finish this post, I would like to go back to the rosuvastatin case commented on this blog a couple of years ago. In this case, the main claim was directed to the active compound rosuvastatin in the form of an acid or a non-toxic pharmaceutically acceptable salt thereof. The alleged infringement was a zinc salt of rosuvastatin. The court decided that there was no infringement because the claim, when properly interpreted in the light of the description, only covered salts in which the cation is an alkaline metal ion, an alkaline earth metal ion or an ammonium ion – and therefore excluded the zinc salt.
Rosuvastatin and pemetrexed are two sides of the same puzzling coin. On the one hand, an embodiment literally covered by the wording of the claims is found to be excluded from the patent’s scope. And on the other hand, an embodiment explicitly excluded from the claims during prosecution is found to still be covered.
I am not questioning that the outcome in both cases might be the right or “fair” one. But frankly, this is a nightmare for legal certainty.
One can also wonder whether the gap between patent prosecution and patent litigation has not become too deep. In front of the patent office, you have to argue based on the claims, the whole claims and nothing but the claims. In front of a French court, you might as well forget about the wording of the claims: it is all about what the description teaches.
One common trait of all standard essential patent (SEP) disputes is their procedural complexity. A lawyer’s dream come true.
A few weeks ago, I reported on the IPCom v. Lenovo litigation. The apparent conclusion was that, in the context of a multidimensional and multinational lawsuit, French courts were not ready to forgo their say. This seems to be confirmed in another high profile case, brought to my attention by Denis Schertenleib.
The case pitches the Dutch giant Philips against Hong Kong-based TCL.
Philips owns a portfolio of patents declared as essential for the 3G and 4G standards with the standard-setting organization ETSI (European Telecommunications Standards Institute). According to a classical plot, Philips and TCL negotiated a patent license for this portfolio and the negotiations failed. It seems that one of the bones of contention was the scope of the license, both in terms of patents and countries.
Philips sued TCL in the UK for infringement of two patents, in October 2018.
TCL started a legal backfire by suing Philips in front of the Paris Tribunal de grande instance (TGI). By the way, have I already mentioned on this blog that the TGI has been renamed TJ (tribunal judiciaire) since January 1, 2020?
What is much less conventional in this plot is that TCL sued not only Philips, but also the ETSI itself.
As a main request TCL asked the court:
to declare that Philips’ essentiality declaration to the ETSI amounts to a promise to grant a FRAND license to TCL on all patents declared as essential for the 3G and 4G standards;
to determine FRAND conditions for the license and to enjoin Philips to grant it;
to enjoin the ETSI to participate in the license granting process;
to declare that the conditions offered by Philips are not FRAND-compliant.
At the risk of disappointing readers, we do not have the court’s ruling yet. What we do have is an interim order by the judge in charge of case management dealing with a number of preliminary objections raised by Philips.
First, Philips argued that the Paris court lacked jurisdiction.
The discussion here revolves around article 8.1 of Regulation (EU) No. 1215/2012 (known as the Brussels I bis regulation) per which “a person domiciled in a Member State may also be sued where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings“.
Again, Philips is a Dutch company. The ETSI, on the other hand, is located in Sophia Antipolis, on the French riviera. Philips argued that the claim against the ETSI was artificial so that the institute was not a “real defendant“. Philips further challenged that the claims against it and against the ETSI were closely related.
The judge in charge of case management disagreed:
It must be noted in this case that the claims against the ETSI on the one hand and Philips on the other hand relate to a same factual situation resulting from the fact that, according to the plaintiffs, Philips does not comply with the IP rules established by the ETSI.
Although the legal grounds for the requests against the ETSI and Philips are different […], this is not an obstacle to the acknowledgment of an identity of legal situation, […] especially since in this case all requests are expressly subjected to French law, as provided in the rules of procedure established by the ETSI.
The identity of legal situation supporting these requests is thus characterized.
It must also be noted that the ETSI is endowed with legal means to ensure that IP obligations are complied with by its members, so that the claims against this institute cannot be held as artificial.
In addition, it must be noted that a decision enjoining the ETSI to participate in the grant of a license if needed by implementing the measures provided in its internal regulations, and one holding that Philips complied with its obligation to offer a license to TCL under FRAND conditions would be incompatible and not only diverging.
Second, Philips relied on a lis pendens objection (due to the preexisting British lawsuit).
The basis for this objection is article 29 of the Brussels I bis regulation, per which “where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established“.
Again, the judge disagreed:
[…] The claim in front of the High court of justice of England and Wales is based on infringement of the British part of European patents No. […]. It only concerns Philips and TCL.
The present lawsuit concerns Philips, TCL, and also the ETSI. It consists in determining whether Philips […] offered a worldwide license on a [patent portfolio] under fair, reasonable and non-discriminatory conditions.
As a result, the condition of triple identity of cause of action, subject-matter and parties is not met, and there is no reason to decline jurisdiction in favor of the English court.
Third, Philips relied on a related actions objection (still due to the preexisting British lawsuit).
This time, it is article 30 of the Brussels I bis regulation that comes into play:
1. Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.
2. Where the action in the court first seised is pending at first instance, any other court may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.
3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
This objection was no more successful than the previous ones:
As mentioned by TCL, the trial on the FRAND license issue will only proceed in the UK if TCL does not renounce requesting such a license […]. No risk of irreconcilable judgments under article 30 of the Regulation is established, so that the objection based on related actions cannot be sustained and the present court does not have to decline jurisdiction.
I must say that this part of the judgment is somewhat less clear to me than the rest. I assume that what the judge meant is that the objection is premature as there is no indication at this time that the same question will be asked to the British court and the French court.
As a result, the judge rejected all objections raised by Philips, so that the litigation can proceed further.
The ETSI also requested that the claims against it should be declared inadmissible. However, this other objection needs to be examined by the full court, so that the judge in charge of case management has not ruled on it.
This interim judgment is of particular interest because the jurisdiction of the Paris TJ was acknowledged with respect to TCL’s FRAND determination requests, independently of any infringement, non-infringement or validity claims regarding any French patent or French part of a European patent.
Suing France-based ETSI as a co-defendant was what made it possible to achieve this outcome.
If this strategy continues to prove successful (which remains to see), it will mean that it can be replicated in any other 3G or 4G standard-related dispute, in other words that any IP right owner can be sued in France with respect to FRAND determination claim. So this is kind of a big deal.
On the other hand, I have read comments on this judgment according to which the decision was the first one to qualify the promise by a patent owner to grant a FRAND license under the ETSI IPR Policy as a “stipulation pour autrui”, namely a third-party beneficiary clause that creates a direct contractual relationship between the ETSI member (patent owner) and a third party (would-be licensee).
It has indeed long been proposed that an essentiality declaration with the ETSI amounted to this contractual mechanism of “stipulation pour autrui“. But I personally fail to find in the judgment any clear confirmation that the judge agreed with this qualification.
What I do find in the judgment is a mention that the ETSI agrees with this qualification; and a discussion on the legal grounds of the claims against Philips and the ETSI, the latter one being the “stipulation pour autrui“. But I do not understand this discussion as an acknowledgment that the proposed legal qualification is correct. However, it is likely that future judgments in this litigation will provide more clarity.
Traditionally, patent litigation has a tendency to endlessly drag on.
Think about the pravastatin case in France for example (which I am not brave enough to keep reporting on).
But some cases are really fast movers. Such is IPCom v. Lenovo. In my previous post, published a couple of weeks ago, I reported on the anti-anti-suit injunction issued by the judge in charge of emergency interim proceedings (juge des référés) on November 8, 2019.
The ink on the post was barely dry, or its pixels were barely on, or whatever the right metaphor is, that the Paris Cour d’appel issued its ruling further to Lenovo’s appeal against the November 8 judgment (first brought to my attention by Jérôme Tassi on LinkedIn).
For a detailed summary of the facts of the case, please refer to the previous post.
For the most part, the appeal judges agreed with the juge des référés.
They confirmed that she had jurisdiction over the petition filed by the would-be licensee / infringement defendant Lenovo under article 46 Code de procédure civile, as IPCom would suffer a potential harm in France if the anti-suit injunction were issued in the U.S., affecting IPCom’s right to sue in France.
They also held that the anti-suit injunction, if issued by the Californian judge, would be a manifestly unlawful disturbance, in view of the French courts’ exclusive jurisdiction on matters of infringement of patent rights on the French territory, and in view of the property rights and the right to a fair trial enshrined in the European Convention on Human Rights and in the Charter of Fundamental Rights of the European Union. This was true even if the potential anti-suit injunction was only temporary. Therefore, the juge des référés was right when she ordered Lenovo to withdraw the motion for anti-suit injunction in the U.S.
However, the court canceled the second part of the référé order, which prohibited Lenovo from filing any other similar motion in front of any foreign court. This is because there is no longer any such motion currently pending, and no indication that a similar motion would be filed again. Therefore, the above manifestly unlawful disturbance has ceased and there is no imminent threat of the same.
In summary, there is formally no more anti-anti-suit injunction in place in France. But since the court agreed with the juge des référés‘ assessment, it would probably be unwise for Lenovo to give it another try.
But this is not the only development of the case that I would like to report on.
An even more interesting twist is that, in parallel to the ongoing FRAND determination lawsuit in the U.S., IPCom sued Lenovo (et al.) for patent infringement in France based on EP 1841628 (hence, of course, the anti-suit discussion in the first place). In addition to the action on the merits, IPCom also filed a motion for preliminary injunction (PI) in front of the juge des référés (not the same one as the one who issued the anti-anti-suit injunction, mind you).
On January 20, 2020, the judge issued his judgment, rejecting IPCom’s motion for PI.
I will skip the first part of the judgment, which deals with an alleged invalidity of the complaint – the argument did not work but is worth looking at if only to have the pleasure of reading a reference to the ordinance of Villers-Cotterêts of 1539, the oldest piece of legislation still in force in France, enacted more than 250 years before the monarchy started losing its head.
I will also skip the second part of the judgment, in which Lenovo disputed IPCom’s standing to sue, challenging the chain of transfer of the patent and the recordal of this chain of transfer with the French patent register. This objection was also rejected by the judge.
No, the real interesting part is the discussion on the merits of IPCom’s motion.
Remarkably, the judge heavily relied on the Enforcement Directive (2004/48/EC) and more specifically on the 22nd recital:
It is also essential to provide for provisional measures for the immediate termination of infringements, without awaiting a decision on the substance of the case, while observing the rights of the defence, ensuring the proportionality of the provisional measures as appropriate to the characteristics of the case in question and providing the guarantees needed to cover the costs and the injury caused to the defendant by an unjustified request. Such measures are particularly justified where any delay would cause irreparable harm to the holder of an intellectual property right.
Although the Code de la propriété intellectuelle does not explicitly mention this principle of proportionality of provisional measures, the judge considered that it does apply.
And in the present case, he considered that this proportionality principle would be breached if the preliminary injunction was ordered as requested by the patent proprietor.
Here are a couple of important facts to bear in mind in this case.
First, the EP’628 patent was declared as essential for the UMTS (3G) standard. Therefore, it is supposed to be implemented by all laptops, mobile phones and tablets of the defendants (marketed under the brands Lenovo, ThinkPad and Yoga). The motion for PI accordingly targeted all of these devices.
Second, the EP’628 patent was set to expire on February 15, 2020. Therefore, the PI, if issued, would just last for a few weeks.
The judge stated that the PI would be justified if IPCom could demonstrate that the infringement of the patent was likely, but also that the absence of a PI would cause harm which could not be repaired by damages.The judge further stated that the negative economic consequences for the defendants should also be taken into account, and more specifically whether they could be adequately repaired if the patent were ultimately found invalid or not infringed.
IPCom argued that it would suffer irreparable harm in the absence of a PI due to the annihilation of the value of its patent portfolio.
The judge was unpersuaded, as IPCom cannot lose any market share, because it does not market any devices. The sole harm suffered by IPCom is the lack of license revenues, which can be repaired by damages to be set by the court at a later stage.
The judge further noted that a PI would have long-lasting effects on the market even after the upcoming expiry of the patent on February 15, 2020, since the public would turn away from the Motorola, Lenovo, ThinkPad and Yoga devices. The loss of income would thus be very large. In addition, a recall of products from the market would tarnish the corporate image of the defendants in the long run and significantly disrupt distribution networks. In short, the PI and recall of products from the market would result in negative economic consequences which could not be adequately repaired by damages, if IPCom were to ultimately not prevail on the merits.
The judge’s conclusion was the following:
[…] The requested measures, set to last for a few weeks in view of the expiry date of the patent of February 15, 2020, are manifestly disproportionate and may result in an imbalance in the situation of the parties conferring an undue advantage to the patentee which may then be able to impose a license not meeting with FRAND requirements.
Frankly, I don’t really see how the judge could possibly have decided otherwise. The message is clear: SEP owners need to be more reasonable when they go to court.
In the meantime, the parties seem to be back to square one.