Court hits the bull’s-eye

The case reported on today is a good opportunity to remind all readers that the new statutory provisions on heightened examination of patent applications in France will kick off on May 22 (with the entry into force of another part of the loi PACTE).

In other words, all national patent applications filed on or after May 22 will be subjected to full examination and may be rejected for basically the same grounds of refusal as at the EPO, including lack of inventive step.

Therefore, if you want your patent application to be prosecuted under the current regime (wherein the grounds for refusal are much more restricted), there is only one month left for you to file.

As a further reminder, if a refusal is issued in examination proceedings, the means for redress is an appeal in front of the Paris Cour d’appel – this will not change after May 22, so a surge in such appeals is to be expected in a few years’ time.

For the time being, appeal rulings further to refusals are rare. We should thus certainly review them to get a sense of what may lie ahead.

A few months ago, I reported on a judgment overturning a refusal of an application by Thales on an aircraft GUI invention. Today, I will address a case involving Bull, another French tech company.

Bull is the applicant of national patent application No. FR 16/00894, published as FR 3052274. Unfortunately the file wrapper on the INPI website appears to be incomplete, but I can gather the following:

  • The application was filed on June 2, 2016.
  • On November 9, 2016, the INPI examiner in charge of the application issued a communication stating that the claimed invention appeared to relate to a method for performing mental acts as such. The applicant replied, but this reply is missing from the online file wrapper.
  • On March 27, 2017, another communication was issued, stating that no meaningful search could be carried out.
  • On August 21, 2018, the INPI issued the decision of refusal (also not accessible on the INPI website!) based on ineligibility.

As a comment regarding these proceedings, we are looking at a French application which does not claim a foreign priority. Therefore, the application was sent to the EPO for the search, so that it is the EPO examiner who concluded that the search was not possible. The documents from the EPO are regrettably not present on the INPI website, but they can be accessed via the EP file wrapper of the corresponding Euro-PCT application (which was deemed to be withdrawn, in case you are wondering).

It turns out that the EPO examiner justified the absence of search by stating that the claimed technical features at stake were notoriously known from the state of the art. In the written opinion, the examiner argued that the claimed invention lacked inventive step.

As a first remark, the EPO examiner’s position is quite different from that of the INPI. Lacking inventive step is not the same as not being an invention. And, most importantly, lack of inventive step is not a ground for refusal in France – until May 22.

As a second remark, I do not quite understand the EPO’s practice of not carrying out a search in the case of allegedly notorious technical features. After all, if an invention relies on notorious features, the search should be very easy to complete. The absence of search on the other hand has serious procedural consequences for the applicant and does not make it possible for them to properly challenge the examiner’s reasoning.

Let’s now turn to claim 1 of the application, which reads as follows:

A terminal for establishing communications, the communications being broadcasts inside a group of users, a user of the terminal belonging to at least one group of users, the communication terminal including means for:

          • associating a list of user identifiers with a group identifier,
          • associating a plurality of properties with a user,
          • associating a property activation value with each property,
          • recording an identifier of a current group,
          • recording a value of a current state,
          • updating the value of the current state as a function of a user input,
          • adapting a display as a function of:
          • the identifier of the current group,
          • the value of the current state.

According to the refusal decision, the subject-matter at stake does not comprise any specific technical feature but merely sets out a method for carrying out mental acts implemented by generic computing means.

No applicant should get bull-ied by the patent office.

In the judgment, the court emphasized that the claims have to be interpreted in the light of the description and drawings.

The court then noted that the mention of a terminal comprising a microprocessor, storage means such a hard drive or a memory card, a communication interface and a screen, implies that the application does not relate to a purely abstract method.

The court then went on to analyze the problem set out in the application, and concluded that it is indeed a technical problem:

It is set out (on pages 1 and 2) that the invention is in the field of communication devices and in particular of the maximization of a ratio of information/surface comprising a plurality of users, more specifically for portable terminals such as those used on battlefields; and it provides a mode of global visualization of an aspect of a situation on a screen, so as to circumvent the problem of the state of the art per which fighters are endowed with information systems making it possible to display each fighter’s identifier, mission and operational capacities, but not giving any vision for a unit comprising several fighters, so that in a situation of combat stress, it is not possible to remember the corresponding information for each fighter. As a result, the technical problem is that of global visualization of a situation for a unit comprising several fighters, and not of memorization in a stressful situation, which is indeed a problem of a cognitive nature but which is not the one that the invention purports to solve. It thus cannot be considered at this stage that the invention does not provide a technical solution to a technical problem.

The INPI further reasoned that the various claimed means were defined in a purely functional manner and were generic, not clear, and merely related to basic and usual computer tools.

The court was not convinced, as these remarks are not relevant to the issue of whether the claimed subject-matter relates to an invention or not:

The use of technical means to implement a method within the framework of mental activities, thus totally or partly excluding human intervention, can confer to said method a technical character and therefore make it possible to consider it as an invention, just as the patentability of a combination of technical and non-technical features is admitted.

[…] The Director of the INPI can refuse a patent application on the ground of a manifest lack of novelty, and argues that the EPO examiner working on the search report stated that the computer technology relied upon is universally known and widespread, so that the notoriety of such prior art cannot be reasonably challenged. [But he] did not base the refusal decision on a manifest lack of novelty but on article L. 612-12, 5° which only excludes patentability when the subject-matter of the patent application can “manifestly not be considered as an invention under article L. 611-10 Code de la propriété intellectuelle”. The requirements of sufficiency of disclosure, novelty and inventive step cannot be taken into account in the application of this provision. 

Based on these findings, the court considers that the subject-matter of claim 1 relating to a terminal for establishing communications comprising various mutually interacting technical means does not concern a method of performing mental acts as such. It is thus not excluded from patentability for this reason.

All in all, applicants and patent attorneys alike will likely rejoice, as the court has drawn a clear and sound distinction between patent eligibility and the other patentability requirements, in keeping with the case law of the Boards of appeal of the EPO. Also, this approach is consistent with the earlier Thales ruling mentioned at the beginning of this post. This means more international uniformity and more legal certainty.

The issue remains that the main claim does have a broad and somewhat vague flavor to it (which is what the EPO examiner had to say in the first place). If the examination proceedings continue, will the INPI try to refuse the application a second time, this time for a manifest lack of novelty? Or will they conclude that, for a pre-PACTE application, they simply do not have the right legal tools to challenge such a claim?

At any rate, the fate of the first computer-implemented invention applications filed as from May 22 will have to be closely monitored, to see which way the new winds will be blowing.


CASE REFERENCE: Cour d’appel de Paris, pôle 5 chambre 2, November 22, 2019, SAS Bull v. Directeur Général de l’INPI, RG No. 18/21161.

Best FRAND forever

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.

A blogger working on his next SEP post during the lockdown.

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.


CASE REFERENCE: Tribunal judiciaire de Paris, 3ème chambre 1ère section, ordonnance du juge de la mise en état, February 6, 2020, SAS TCT Mobile Europe et al. v. Koninklijke Philips NV et al., RG No. 19/02085.

Back to the old normal?

Let me first start by wishing that all readers are safe and well, in these exceptional and difficult times.

As so many of us have to remain home all day in the foreseeable future, with the dreadful pandemic newsfeed as a main distraction, I said to myself, what better way to take my mind off it than to write about… a pharma case?

And so, here is an update on the Inegy® patent dispute (judgment kindly provided by Denis Schertenleib).

Difficult to think about anything else these days.

One year ago, Lionel Vial and I reported on a preliminary injunction ordered against Mylan due to the likely infringement of SPC FR05C0040 owned by Merck Sharp & Dohme Corp. (MSD).

In that post, we expressed some surprise at the decision since, back in April 2018, a judge in charge of emergency interim proceedings had refused to issue a preliminary injunction against another generic drug company, Biogaran, based on the same SPC, because the latter was considered likely invalid, which was confirmed on appeal on June 26, 2018 (see this post).

We wondered whether there was thus a new, more patentee-friendly trend in France with respect to preliminary injunctions in general and pharma patent litigation in particular, which is why the March 2019 post was entitled The new normal.

But now, we seem to be back to the old normal, as the Cour d’appel has overturned the preliminary injunction, and effectively re-raised the bar for pharma patent holders. 

As a reminder, Inegy® is a combination of ezetimibe and simvastatin, which is prescribed for reducing cholesterol levels.

Ezetimibe reduces intestinal absorption of cholesterol while simvastatin (belonging to the family of statins) is an HMG-CoA reductase inhibitor which inhibits cholesterol biosynthesis.

MSD’s SPC protecting Inegy® is based on European patent EP0720599 (EP’599) for the product “ezetimibe optionally in the form of its pharmaceutical acceptable salts in combination with simvastatin”.

EP’599 specifically claims:

  • a very broad family of compounds in claim 1 (in the form of a Markush formula);
  • ezetimibe as a specific compound in dependent claim 8; and
  • a pharmaceutical composition for the treatment or prevention of atherosclerosis, or for the reduction of plasma cholesterol levels, comprising an effective amount of the above compounds, alone or in combination with a cholesterol biosynthesis inhibitor selected from the group consisting of lovastatin, pravastatin, fluvastatin, simvastatin, CI-981, DMP-565, L-659,699, squalestatin 1 and NB598, in a pharmaceutical acceptable carrier (claim 17).

On October 17, 2017, Mylan initiated nullity proceedings, to which MSD responded by requesting, on November 30, 2018, that a preliminary injunction to stop selling Mylan’s ezetimibe/simvastatin combination and to pay provisional damages be issued against Mylan.

On March 7, 2019, the judge in charge of case management (JME) granted the preliminary injunction. Mylan appealed, and the JME’s judgment has now been overturned by the Paris Cour d’appel on February 14, 2020.

Like in first instance, Mylan argued that the SPC was invalid because:

  • It was granted for a combination which is not protected as such by the basic patent, in breach of Article 3(a) of the SPC regulation (No. 469/2009), since it does not form the core inventive advance of the patent, which is centered on ezetimibe, in particular in the absence of any research conducted on the ezetimibe/simvastatin combination.
  • The product protected by the basic patent was already the subject of a certificate (i.e. SPC FR03C0028 granted for ezetimibe) in breach of Article 3(c) of the SPC regulation.
  • As is usual in SPC-related cases, the court analyzed the relevant case law from the CJEU. But the court interpreted the Gilead decision (C-121/17, Teva UK Ltd. et al. vs. Gilead Sciences Inc.) differently from the JME at first instance.

According to Gilead:

Article 3(a) of [the SPC regulation] must be interpreted as meaning that a product composed of several active ingredients with a combined effect is ‘protected by a basic patent in force’ within the meaning of that provision where, even if the combination of active ingredients of which that product is composed is not expressly mentioned in the claims of the basic patent, those claims relate necessarily and specifically to that combination. For that purpose, from the point of view of a person skilled in the art and on the basis of the prior art at the filing date or priority date of the basic patent:

the combination of those active ingredients must necessarily, in the light of the description and drawings of that patent, fall under the invention covered by that patent, and

each of those active ingredients must be specifically identifiable, in the light of all the information disclosed by that patent.

The Cour d’appel held that the conditions of Gilead are not automatically met merely because the claims of the patent explicitly mention the active ingredients of the combination product. Something more is required.

The court insisted on the the link between the claimed combination and the technical problem at stake, based in particular on reason 48 of Gilead, which reads: “it is necessary to ascertain whether a person skilled in the art can understand without any doubt, on the basis of their general knowledge and in the light of the description and drawings of the invention in the basic patent, that the product to which the claims of the basic patent relate is a specification required for the solution of the technical problem disclosed by that patent“.

The court also turned to earlier decisions of the CJEU, namely Sanofi (C-443/12, Actavis Group PTC EHF & Actavis UK Ltd v. Sanofi) and Boehringer (C-577/13, Actavis Group PTC EHF & Actavis UK Ltd v. Boehringer Ingelheim Pharma GmbH & Co. KG) and found that the facts of the present case are similar to those of these earlier decisions.

Here is the court’s summary of Mylan’s key argumentation:

Mylan argues that the basic patent lists a large number of products, namely all known cholesterol-lowering products to be combined with the new active compound ezetimibe, that it does not contain any information on the specific effects of these combinations, and in particular the one associating ezetimibe with simvastatin, and that this combination is therefore not a product distinct from ezetimibe alone, for which the patentee has already obtained an SPC, which would make it possible for them to prohibit the sale of ezetimibe combined with any other product, so that the [SPC] is likely invalid.  

And here is the summary of MSD’s rebuttal:

MSD argues that [the expressly designated] composition of ezetimibe and simvastatin necessarily pertains to the invention for the skilled person, in keeping with Gilead. They add that this combination product is not a mere juxtaposition of two known active substances; it effectively makes it possible to solve the technical problem stated in the patent, namely the development of more effective drugs in the treatment and prevention of atherosclerosis, avoiding side effects, in view of the complementary modes of action of ezetimibe and simvastatin; and that this is a second invention of the EP’599 patent, covered by this patent under article 3(a) of the regulation, so that this case is different from Sanofi and Boehringer. They add that the combination product of ezetimibe and simvastatin has not given rise to an SPC under article 3(c) of the regulation yet, that several products can be protected as such by a basic patent, and that the condition of article 3(c) is also met so that the SPC is valid. 

In summary of the summaries: for MSD, there are two inventions in the basic patent, namely ezetimibe on its own, and the combination of ezetimibe with other complementary drugs such as simvastatin; for Mylan, the patent is only about ezetimibe itself.

In order to decide between these two propositions, the court looked at the structure of the basic patent, and at the nature of the combined effect of the two active substances.

Concerning the structure of the patent, the court noted that the summary of the invention primarily focuses on the class of compounds to which ezetimibe belongs. And then:

[…] The next paragraphs 15 to 17 which disclose product compositions and notably the association of a hydroxy substituted azetidinone and a cholesterol biosynthesis inhibitor are introduced by the following wording: “in still another aspect, the present invention relates to a pharmaceutical composition” or “the present invention also relates to”, so that the skilled person could consider the combination […] as being another “aspect” of the invention relating to hydroxy substituted azetidinones, and not a distinct invention. 

That sounds like a fair point, but on the other hand, it should scare the hell out of all patent drafters that an apparently innocuous choice of wording can have such dramatic consequences more than 25 years after the patent was drafted.

Concerning the “combined effect” of the active substances (an expression used at paragraph 53 of the reasons of Gilead), the court noted the following:

MSD states in its submissions that the “combined effect” under Gilead of the association of ezetimibe and simvastatin lies in the fact of not having to administer the maximum dose of statin and reducing the risk of side effects. This is not mentioned in the patent, which indifferently mentions that the effect of both hydroxy substituted azetidinones alone and their combination with a cholesterol biosynthesis inhibitor is the “treatment and prevention of atherosclerosis”. Therefore, the skilled person, who knew from the prior art that it was possible to combine two anti-cholesterol substances having different modes of action […] and who knew statins and especially simvastatin, in use since the end of the 80s for the treatment of hypercholesterolemia, would not consider that this combination is a distinct product of the patent (in the absence of any indication at the filing date as to the combined effect of ezetimibe and simvastatin, and the results from later research not having to be taken into account) […].

Consequently, the court seems to consider that, in order for a combo drug to be considered as distinct from a mono drug in a patent, this needs to be stated in the patent itself, and there must be a specific effect for the combination disclosed in the patent.

It remains an open question whether a mere mention of a specific combined effect would suffice or whether the combined effect would have to be plausible at the filing date (by analogy with the requirements of sufficiency of disclosure).

The above will probably be controversial enough, but an additional point made by the court, after concluding that the validity of the SPC was seriously challenged, may be even more controversial. To wit:

At any rate, the proportionality of the measures ordered at first instance is not justified in view of the respective interests relating to originator and generic drugs having obtained marketing authorizations. A financial harm cannot be seen as non-repairable or even poorly repairable, as long as it can later be cured by a damages award, unless under exceptional circumstances which are not justified in the present case, as the SPC at stake expired on April 2, 2019, i.e. less than two months after the preliminary injunction order.   

Just like in the latest post on this blog (in the context of telecom SEP litigation), the proportionality principle has thus been emphasized by the court, which seems to be a tendency on the rise. And just like in this other case, the fact that the expiry date of the IP at stake was nigh was a factor taken into account in the proportionality assessment.

This must be very worrying for originators, as preliminary injunctions have been a powerful deterrent for competitors, and as there are concerns that damages may never completely compensate for the competitive advantage gained by generic drug companies launching before expiry.

The case on the merits is probably going on in parallel, so we will probably get further updates on this case.

As a final note, a very similar decision was issued on the same day, with Sandoz instead of Mylan as the generic defendant.


CASE REFERENCE: Cour d’appel de Paris, pôle 5 chambre 2, February 14, 2020, SAS Mylan v. Merck Sharp & Dohme Corp. & SAS MSD France, RG No. 19/06114.

IPCom-tinuation

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.

Is there a proportionality issue here?

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.


CASE REFERENCES:

Cour d’appel de Paris, pôle 5 chambre 16, March 3, 2020, Lenovo Inc. et al. v. IPCom GmbH & Co. KG, RG No. 19/21426.

Tribunal judiciaire de Paris, ordonnance de référé, January 20, 2020, IPCom GmbH & Co. KG v. Lenovo SAS et al., RG No. 19/60318.

No U.S. torpedo

No breaking new today, as the case I am going to talk about has already been commented upon in many various places.

Looks like I may have some catching up to do.

And yet, this is a prominent international patent case with a French component, and it involves a quite unusual point of law. So, I would be remiss if I failed to mention it on this blog.

The German company IPCom owns a telecom patent portfolio acquired from Robert Bosch. These patents are presented by the owner as essential for the 2G, 3G and 4G standards.

IPCom has been negotiating a license for some time with the Chinese group Lenovo (which also owns Motorola Mobility) – without any luck so far. 

Lenovo was the first to shoot, litigation-wise, by filing a complaint with the District Court for the Northern District of California in March 2019, seeking the setting of the conditions of a worldwide FRAND license for the IPCom portfolio.

In July 2019, IPCom retaliated by initiating infringement proceedings based on one of their patents, EP 1841268, in the UK.

Probably wary of a likely escalation in other jurisdictions as well, Lenovo filed a motion for anti-suit injunction with the California court on September 18, 2019.

On October 16, 2019, IPCom performed infringement seizures against the French Lenovo subsidiaries and filed a motion for preliminary injunction.

On October 24, 2019, IPCom filed a petition with the juge des référés (the judge in charge of emergency interim proceedings) in Paris, seeking the withdrawal of the motion for anti-suit injunction filed by Lenovo in the U.S.

In other words, IPCom reacted to the motion for anti-suit injunction in the U.S. by a motion for anti-anti-suit injunction in France.

The hearing on the motion for anti-suit injunction in the U.S. was originally scheduled on November 14, 2019. Lenovo, in an attempt to beat the French proceedings, tried to bring this hearing forward by filing a motion to expedite with the U.S. court. IPCom was not intimidated and obtained an ex parte order from the French judge dated October 30, 2019, per which Lenovo was ordered to withdraw the motion to expedite, so that the hearing on the motion for anti-anti-suit injunction in France could take place on November 6, 2019, before the hearing on the motion for anti-suit injunction in the U.S.

Still on October 30, 2019, the motion to expedite was rejected by the U.S. court. The hearing in front of the juge des référés took place on November 6, 2019 as planned, and the judgment was issued on the same day, which is really remarkable.

At this point, you would probably venture that this post will mainly thrill civil procedure geeks, and not so much GSM, UMTS or LTE geeks – and you would be right.

Now that you have been warned, we can go through the judgment.

Before the judge was able to decide on the very procedural motion at stake… there were of course a few procedural preliminary objections to deal with.

First, Lenovo argued that the October 25, 2019 petition had not been properly served on the U.S. defendants before the deadline of October 29, 2019 which had been originally set by the judge for this service to take place.

However, the judge deemed that the formalities were properly performed by the due date. A French bailiff sent the petition on October 25, 2019 to the U.S. process server, and in parallel shipped it by express mail – which was received on October 28. Still in parallel, the petition was also sent to Lenovo’s usual French attorney. The petition was referred to by Lenovo on October 28 when they filed their motion to expedite with the California court. As a result, the juge des référés deemed that everything was in order, even if the U.S. process server did not provide the proof of service before the due date.

Second, Lenovo objected that the French judge lacked jurisdiction and that only the District Court for the Northern District of California had jurisdiction.

The judge dismissed this objection, mainly based on article 46 Code de procédure civile, per which, in a non-contractual dispute, a plaintiff may initiate proceedings in “the court of the place of the event causing liability or the one in whose district the damage was suffered”. 

The judge noted that, if the anti-suit motion was granted in the U.S., IPCom would suffer harm in France. Therefore, the French judge had jurisdiction over the petition for an anti-anti-suit injunction.

Third, Lenovo raised an objection due to lis pendens and related proceedings.

Since a lawsuit was already pending in California, the French judge should defer to the U.S. court, Lenovo argued. Once again, the juge des référés disagreed, noting that the present action related to a different matter from the one in front of the U.S. court; and that it would not be proper (in the original text: “pas d’une bonne administration de la justice“) to defer to the U.S. court when the very purpose of IPCom’s petition is to prevent the U.S. proceedings from interfering with the French proceedings.

Finally, the judge was able to address the petition on the merits, so to speak.

The judge stated that article 808 Code de procédure civile empowers her to order any measure which is not serious challenged or which is justified by the existence of a dispute, if there is an emergency.

In the present case, the existence of an emergency was easy to establish, in view of the pending motion in front of the U.S. court.

Then, the judge stated that anti-suit injunctions are not allowed among member states of the EU.

With regard to a non-EU country such as the U.S., the judge held that an anti-suit injunction would violate the French international public order – except if a jurisdiction clause or an arbitration clause was at stake, which was not the case here.

Wrote the judge:

Indeed, the anti-suit injunction (except in the cases mentioned above) is an interference with the jurisdiction of the courts and indirectly results in violating the exclusive jurisdiction which each state enjoys in order to freely define the international jurisdiction of its courts. 

Therefore, the judge granted IPCom’s petition.

Lenovo was ordered to immediately withdraw their motion for anti-suit injunction, insofar as it relates to legal proceedings which could be initiated by IPCom in France regarding EP 1841268. Lenovo was ordered not to file any other similar motion anywhere in the world. This order was issued under a penalty of 200,000 euros per violation and per day of non-compliance.

All in all, this ruling is a quite spectacular affirmation of sovereignty from the French court. The docket was fast-tracked at quasi-light speed, including with the interim issuance of the ex parte order mentioned above (which is rather exceptional), to make sure that the anti-anti-suit injunction was issued before the U.S. court could rule on the motion for anti-suit injunction.

My initial reaction is that this judgment fully makes sense. Patent infringement is a matter of national law, and it would thus be shocking if a patent proprietor could be prohibited by a foreign court to even attempt to assert its IP.

Accordingly, I understand that the high court in the UK also granted IPCom an anti-anti-suit injunction in the same case (see here). A few months earlier, in a different case and under different circumstances, an anti-anti-suit injunction was also issued in Germany (see here).

That said, without knowing of course who is acting in more or less good faith or bad faith, I do also have some sympathy with Lenovo’s position to some extent. The central issue in this dispute is that of setting the terms and conditions of the FRAND license for the IPCom portfolio. If the parties cannot agree, litigation must solve the issue.

But once the matter has already been brought in front of a court of law, what is the point in filing patent infringement suits here and there, beside exerting additional pressure on the would-be licensee?

To Lenovo’s point, centralized litigation makes more sense on a global standpoint.

But then again, on the other hand, there is something wrong in the notion that the first party to act can choose the forum that they please and then stop and freeze any possible initiative of the other party outside of that forum.

Why should the first one to pull the trigger always have the upper hand? After the Italian torpedoes which were in fashion some time ago, Lenovo tried to launch a U.S. torpedo, but it fizzled out.

Anyway, the case can easily make one think of a house of mirrors. It seems like an endless source of paradoxical questions.

In a procedural maze.

To wit:

  • Could Lenovo have filed a motion for anti-anti-anti-suit injunction in the U.S.? And so on? Is there any theoretical end to this game?
  • By issuing the anti-anti-suit injunction, didn’t the French judge achieve exactly what she wanted to avoid in the first place, i.e. interfere with another court’s business? In other terms, if an anti-suit injunction is per se illegitimate, isn’t there some illegitimacy in an anti-anti-suit injunction as well?
  •  What if the anti-suit injunction had been granted in the U.S.? What would the effect have been in France? The injunction would have targeted the patent proprietor, not the French court itself. So, could the French court have thwarted the effect of the injunction by e.g. granting damages to the patent proprietor for any loss suffered due to non-compliance with the U.S. injunction? Would the court have had jurisdiction to do so?

Anyway, now that a few months have passed since this ruling, I bet that multiple new developments have taken place in this multinational game of 3D procedural chess, and I would be delighted to be updated by any readers in the know.


CASE REFERENCE: Tribunal de grande instance de Paris, ofronnance de référé, November 8, 2019, IPCom GmbH & Co. KG v. Lenovo Inc. et al., RG No. 19/59311.