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MIP International Patent Forum 2018

March 7-8, Waldorf Hilton, London

Key takeaways


Patent infringement by equivalents in the UK, France and Germany

Using analogies from Star Wars, Alex Brodie, partner of Gowling WLG, gave an overview of doctrine of equivalents in the UK, which has become a big issue since Actavis v Eli Lilly. “The seismic conceptual change has almost popped up out of nowhere,” Brodie said. “There wasn’t a push for it.”

Brodie gave an overview of rulings on doctrine of equivalents since then. “Everyone has had a go at it,” she said.

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Building on the Star Wars theme, Brodie drew attention to one case in particular. “The 2018 sequel is going to be Warner-Lambert, which was heard on Valentine’s Day,” said Brodie. “Who is going to be feeling the love? We’re not sure yet.” The Warner-Lambert v Generics & Actavis argument included the correct approach to (and the use of expert evidence in) the construction of patent claims. Brodie asked whether the awaited judgment will be “the last Jedi or the return of the Evil Empire”.

Cèline Bey, partner of Gowling WLG, discussed whether the French court, where doctrine of equivalents was introduced into case law in the 1960s, would have reached the same decision as the UK court. “Yes, it is likely the French court would have taken same approach on the first question [and found that Eli Lilly’s patent’s function was new],” Bey concluded. She said the second question regarding the prosecution history looked a little like the UPC in advance. “A French judge probably wouldn’t have agreed with it,” she said.

Carsten Schulte, partner of Gowling WLG, discussed the doctrine of equivalents in Germany. He said there was a “very interesting landmark decision” in June 2016 in the BGH case appeal. The BGH decision denied that the presence of a “selective invention” could be established merely on the information given in the specification, and clarified that the exact scientific definition used in the claims is not alone sufficient to deny an equivalent infringement. BGH’s conclusion annulled the judgement of the Higher District Court Düsseldorf and referred the case back to it. “It is still pending so there is no clear result yet,” said Schulte.

Latest rulings and policy developments: litigating & licensing SEP’s

Hugo Sakkers, head of legal at Philips International, discussed whether injunctions are still available in Europe in FRAND licensing cases. He described pursuing FRAND rates as “a cat and mouse game and a blood sport”. He said there is a low threshold for willingness on the part of the SEP user.

Sakkers discussed the prospects for injunctions going forward, noting the appeal in Unwired Planet v Huawei in May 2018 and BGH at some time this year. “I would hope going forward that courts will show muscle,” said Sakkers. “Sometimes the only thing to do is to bring injunctions.” He said courts should not condone delaying tactics.  “A further question is whether a manifestly unwilling user should be entitled to FRAND rates after getting away with murder.”

Clemens Heusch, head of European litigation at Nokia, discussed the European Commission’s recent communication on standard essential patents in November 2017, which was seen as a compromise between the two positions from the Fair Standards Alliance and IP Europe. “All the drafts were much harder than what came out,” he said. “The Commission ended up with a pretty soft outcome but there are some good points in there.” The EU approach includes: both sides should negotiate in good faith; there is no one size fits all; FRAND can differ from sector to sector and over time; and no clear statement on component licences.

Heusch said the most interesting point of European Commission communication is mentioning what is transparency. The report called for better databases – with no over-declaration and no dropped features – and essentiality checks. “Nobody knows how many patents there are around, so the question is: what is the real number?” said Heusch. “Here the Commission asked for transparency. Two reasons for declarations are that people think, ‘The more I declare, the more I get,’ and also the good ones declare early and so early patents remain in there.”

Russell Levine, partner of Kirkland & Ellis, discussed three recent developments in alternative dispute resolution for SEP disputes: WIPO’s FRAND ADR guidelines; proposed “damages first” approaches; and Japan’s proposal from 2017. “The second approach [damages first] is likely to have more traction around the world,” said Levine. “It determines first what the FRAND rate should be. It’s the approach judge Halderman used in the US [in the Innovatio IP Ventures ruling in 2013].”

The Japan proposal got deferred/abandoned in November 2017. Japan’s Patent Office had proposed mandatory ADR for SEPs. The potential licensee could request (binding) JPO arbitration. “It’s a development,” said Levine. “We’ll see if it starts to be used. But I would question whether it will gain traction.”

Tracking the advantages of judicial protection in Russia

The panellists – Natalia Gulyaeva, partner of Hogan Lovells, and Markus Gruber, senior patent attorney at Novartis – discussed recent trends in pharma litigation in Russia. This included the Novartis v Nativa case. The first instance court ruled in favor of Novartis, and the appeal court sustained the ruling of the first instance court.

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Gulyaeva discussed the Novartis v Nativa case’s impact on the industry. The case has inspired other innovative companies to file with Russian courts claims against generic companies that obtain marketing approval (MA) and register maximum manufacturer’s price for their generic drugs too early. “As of today, Russian courts are considering at least eight cases of this type,” she said.

Gruber gave a rundown of a generic producer’s defence strategy. This included: reference to the position of the Higher Arbitrazh (State Commercial) Court that obtaining MA is not a patent infringement; generic companies insisting that it is not a threat of patent infringement and applying for MA as early as possible is necessary, since the process of obtaining MA may be long; and statements that an innovative patent is not used and exclusively a patent of a generic company is used in its generic drug.

Gruber added that a generic company would argue that it uses exclusively its own patent (often just slightly different from innovative patent) and this excludes use of an innovative patent. He said this argument contradicts Russian law and is based on misinterpretation of court practice. In Novartis v Nativa case the courts dismissed Nativa’s argument that it uses only its own patent in generic drug.

He concluded with some recommendations. In case a generic producer obtains MA more than five years before the patent expiry date, consider filing a claim based on threat of patent infringement. Simultaneously seek out-of-court expert opinions on patent use in the generic drug. Secure court expert candidates. And be ready to respond to generic companies’ defense strategy.

High tech patents in the automotive industry – new technologies, IP protection & litigation

Moderator Matt Hervey, director at Gowling WLG, began by referencing the EPO’s recent study on “Patents and the Fourth industrial Revolution”. He said the automotive industry would be filing more patents in enabling technologies.

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Hervey of Gowling WLG noted the appearance of Toyota at 25th in the EPO’s ranking of Fourth Industrial Revolution applicants at the EPO. “These new entrants are going to change the industry,” he said.

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Adrian Howes, senior legal counsel at Nokia, noted there is going to be lots more involvement of industries to come up with the solutions of tomorrow. “The automotive space is very much like the telecoms industry 20 years ago – we had patents and we didn’t care much,” he said. “We will see Toyota moving up these rankings.”

Howes said in the automotive sector suppliers have traditionally already sorted out the patent licensing.
“Still, there is going to be the question of which level is the appropriate licensing level. We are looking forward to solutions in this area as a SEP licence holder,” he said.

Hervey pointed out the low EPO filings for AI, and asked whether this area is hard to patent. Roberto Vacca, director at the EPO, responded: “Apparently it is difficult to file! There is little in the way of decisions, so it is probably premature to answer the question.”
(Managing IP, in association with Gowling WLG, is launching a major project looking at the role of IP in the developing field of autonomous vehicles. We would like to know what readers think about this subject, and have created a short questionnaire, which you can take here.)

The importance of IP and innovation in India

Pravin Anand, managing partner of Anand & Anand, gave an update on intellectual property in India, which has undergone big changes. “For the first time in 50-60 years, we now have an IPR policy,” he said.

Under the National IPR Policy of 2016, the Copyright Department was removed from HRD and merged with DIPP (Commerce and Industry), the Copyright Board was merged with Intellectual Property Appellate Board, and a start-up policy was enacted. Changes in Patent Rules included a reduced filing fee, expedited examination, tax rebate, and assistance in filing by facilitators (there are 475 for trade marks and 283 for patents).

The IPAB was revived after two years in “deep freeze”, said Anand, with Justice Manmohan Singh appointed chairperson.  “Since January, it has already taken up over 500 cases, with 120 disposed of and 20 having fairly long and reasoned judgements,” said Anand.

The Indian Patent Office’s website has also been modernised, and the office has drastically sped up its examination. Trade marks are now examined within 15 days of filing and registrations are coming through in less than six months. For patents, the process from request for examination to grant is now three to four years – down greatly from eight to 10 years previously.

Anand closed with some tips and strategies, as below:

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Global landscape for IP owners: comprehensive analysis

Heli Pihlajamaa, director of patent law at the EPO, gave an overview of proceedings at the Office. She highlighted the new end-to-end patent granting process. One examiner is responsible for each application, while three examiners take the final decision to grant or refuse, ensuring the EPO’s high quality standards at all stages.

Pihlajamaa also gave some statistics on oppositions in 2017. She noted the opposition fee remains Eu785 but there has been an increase in the appeal fee to Eu2,255 (as of 1 April 2018).

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Pihlajamaa also reported that, as part of the measures to improve the efficiency and predictability of appeal proceedings, a revision of the Boards' Rules of Procedure (RPBA) is foreseen. Users are invited to take part in the online consultation on the proposed revised Rules which will remain open until April 30 2018.

Yannis Skulikaris, director operations, sector ICT, EPO, analysed the EPO approach to computer implemented inventions (CII). They must fulfill the legal requirements of the EPC and be “fit for purpose” (i.e. supports industry and fosters economic growth), be workable (examiners apply the EPO approach in a harmonized way in all technical areas in an efficient and targeted manner), can be readily understood by users and result in predictable outcomes for users.”

Skulikaris gave some conclusions for how the EPO approaches CII. They included: inventions having a technical character that are or may be implemented by a computer program are not excluded from patentability; the applicant cannot rely on non-technical features in the claim to support inventive step; the EPO approach is highly interactive, with the EPO examiner receptive to applicant’s argumentation, giving applicant the benefit of the doubt; and EPO Guidelines are adapted to provide for technology developments and to better reflect relevant case law.

Pete Wilson, senior patent attorney at BT, compared the test for patent eligibility in Europe and the US. “The EPO test is easy to understand,” he said. In contrast, he noted test outlined by the US Supreme Court in Alice v CLS Bank is less clear. However, Wilson added: “I wouldn’t worry too much about the Alice test – if you can pass the test for the EPO, the USPTO will allow it.”


DAY 2

Patent litigation strategies in Europe

Dirk Bühler, European patent attorney at Maiwald, gave an overview of where we stand with the UPC. Ratification is basically completed in Germany and UK. But Brexit will take place in March 2019 and a German constitutional court has announced it will hear a UPC case (and EPO-related complaints) in 2018. “The timing of the complaint is also unclear. So the UPC could start very quickly and then Brexit could take place,” said Bühler.

Huw Edwards, senior IPR litigation counsel at Nokia, noted that you need a lot of patents to win a case. He said, if each patent has only a 30% chance of winning, you need at least three to get a win. If the product lifecycle is shorter than the court process, you have to guess which features will be in the next product. “Assume you have a 50% chance of guessing right, you need six patents to get a win on something relevant,” Edwards said. However, if 50% of features can be designed around, you need 12 patents to get a win on a relevant feature which cannot be designed around.  If you want to persuade someone to take a licence globally, you need three or four countries – “So 48 patents,” said Edwards.

Edwards also referenced a recent Darts IP report that estimated the rate of NPE activity in Europe has gone up by an average of 19% between 2007 and 2017. “If you read the Darts IP report, patent monetisers are looking at handset vendors a lot more,” said Edwards. “The UPC will provide another thing into our tool kit [to fight that].”

However, Edwards also noted that NPEs will see the UPC as an opportunity as well. “I strongly think the first people at the UPC door will be either a patent monetiser or a generic that has found something they can knock out at a wider level,” he said.

Elise Cardin, patents director at Saint-Gobain, said in her market of the “old school manufacturing, I have much more basic needs.” She continued: “Do we feel an appetite for these new tools and the UPC and Unitary Patent when in most cases we deal with one country? To be honest, I feel I will be very happy with the local system. So I will sit back and see how you Huw does and how it works.” She added that she does see some opportunities with the UPC such as the potential for forum shopping.


Safeguarding a global market for easily copied innovative products

Andrew Hammond, senior partner at Valea, set the stage by outlining why Unilin worked to protect its easily-coped glueless integrated click flooring system. “The idea revolutionised the market. If you were a glue manufacturer for laminate flooring in 1996 you were on to a good thing. A few years later your industry had literally dried up.”

Bart Van der Stockt, managing director at Unilin, said that patents alone wouldn’t stop competitors from using easily replicated ideas. “Do not underestimate the drive of other companies and entrepreneurs. They will try to design around and invalidate your patent. And do not overestimate the legal system. You can file cases but by the time you have filed your injunction they will have changed the design a little bit and you will have to start again.”

He added that licensing was one solution to the problem and that it is important to consider the final licensing objective when drafting a patent or determining a litigation or business strategy. “You need to realise that licensing will be important ¬and you need to realise that from the start when you’re drafting your patent. If you know licensing is your objective maybe you will realise it doesn’t make sense to start a battle against your biggest competitor.”

Van der Stockt also delved into the strategic challenges of Chinese IP infringement. “In the rest of the world, you may have 10 to 15 competitors who you know. In China there are hundreds, in our case thousands, of competitors. How do you control the compensation mechanism in that landscape? How do you make sure they pay the correct amounts and how do you manage all of these companies?”

Unilin differentiated between domestic players and exporting firms to help manage the scale of Chinese companies faced. “In the domestic industry, our conclusion was to not waste time with the small players. We focused on big domestic players who were stock listed and we have been successful in getting those companies to license to us,” said Van der Stockt.

The firm also established its own market research expertise, invested in its ITC general exclusion, and created a holographic label to police its compensation mechanism. “We created a holographic label, which is difficult to copy, financed it ourselves and provided them to our licensees to put on every box. We also launched a legal campaign to all importers and retailers informing them that if they retailed, imported or bought products without a label on the box, it was not a licensed product,” said Van der Stockt.


How to successfully manage and protect your trade secrets

Bruce Elder, legal director at Integrated Device Technology, set out the importance of managing HR issues effectively to ensure trade secrets aren’t leaked through staff and how that can be achieved. “In my industry, the protections are all around contractual and employment obligations, non-disclosure agreements and confidentiality in contracts, and policing those rigorously. They’re also around new hire obligations when someone comes in. If they’re a high-level employee from another company I always get notified. “

Elder: “By far the hardest trade secrets to police in this business are those valuable learnings of what doesn’t work. We hire employees who say: ‘I know this way won’t work so I’ll do it this way’. They know that because they tried that at their old company and failed, and that’s a trade secret.”

Tilman Breitenstein, director of intellectual property at DSM, said businesses may want to simplify their protection strategies by prioritising their most valuable trade secrets. “What are the trade secrets that will bring you to your knees if they leak out? You need to find those and protect them and not care for the little ones. Make that a project that involves the entire company at all different levels.”

Arthur Lallement, IP manager at hVIVO Services, said companies must find a way to make a correlation between patent portfolios and trade secrets. “One strategy we chose was to file a priority patent early with the goal to reinforce the patent at the BCT stage. That means we have one year to find a partner, and if this fails we can still abandon the BCT application. During that year of development it is a trade secret because the patent is very weak.”

Ilya Goryachev, senior lawyer at Gorodissky & Partners, talked about the considerations of trade secret protection in a globalised environment. “There’s an absence of mutual recognition of trade secrets. We may face some notes to reflect on when structuring joint licensing deals of joint scientific and research activities. That invites the issue of due diligence and how to conduct it.”

Elder added that a key consideration for companies may be the threat of states stealing trade secrets. “There’s the obvious cyber corporate espionage and outright tapping your line, but there are also many more subtle things going on. We see a lot of discriminatory IP or tech transfer terms going up in contracts, such as: ‘You must put your data centre in this Chinese-run and state-owned data centre in Shanghai in order to do business there’.”

Understanding the different attitudes and law into account across the global landscape may also help businesses decide where to operate from a financial perspective, according to Breitenstein. “Once you’ve had this discussion you can make decisions, such as not to go to a particular country. It might be cheaper in the short run because personnel costs are lower but if the risk is higher in the long run because you could lose your trade secrets then this might not pay off.”


Preliminary injunctions in Turkey

Özge Atilgan Karakulak, partner at Gün + Partners, set out an overview of ACLASTA litigation, including the impact on invalidation actions. “The court in one case revoked the parent patent on the basis that the claim was a method of treatment which is not patentable under Turkish law. The reason the patent should be considered null and void was that it was granted before EPC 2000 provisions came into force,” she said.

Susanna Leon, senior patent attorney at Novartis, gave her in-house perspective on the advantages and disadvantages of the enforcement in Turkey. “There were a few things that stood out from this litigation. Turkey is an EPC contracting state and has been for quite a long time. And yet it seemed that there was an inconsistency of approach that the EPC was not really followed by the judge.” She added that her firm has never seen an invalidation based on inherent non-patentable subject matter and that it was extremely surprising that that should happen in Turkey.

Selin Sinema Erciyas, partner at Gün + Partners, added: “Before 2011 I only remember one case of enforcement of a second medical use claim and that was settled. This case we’re speaking of today was the first one that went through to trial. The main problem here was probably the workload of the IP courts.”

Leon added that the timing of preliminary injunctions are often unpredictable in Turkey. “Cases seemed to be very dependent on the judge. In one case we got a PI in a month or so, other cases were significantly longer with a whole series of hearings. The warranty you needed to pay didn’t seem to be based on any real analysis of the case. In one we had a very high cash bond and in another bank guarantee letter.”


Strategic measures when protecting your IP in China

Andy Bartlett, divisional director, patents at the UK Intellectual Property Office, kicked the session off by demonstrating the significant of the Chinese IP landscape. “In 2017 there were 1.4m patent applications filed at SIPO. The percentage rise at 14% dwarfs the rises that have happened in any other jurisdiction, though it’s a little lower than the recent percentage rise we’ve seen in China. That’s 43% of the global total. To put that into context, the number of filings being received by SIPO exceeded the number received by USPTO, the Japanese and Korean patent offices and the European Patent Office put together.” He added that the underlying message for businesses thinking of operating in China, the patent space is already densely populated.

Bartlett also said that China is able to turn around patent applications quickly since it has at least 10,000 examiners. “Sometimes we hear concerns over the quality of the CIPO examination. Our experience is that the quality is already very high.”

Qinghong Xu, partner at Lung Tin, delved into China’s One Belt One Road initiative (OBOR), which proposes to establish a modern Silk Road by creating a network of railways, roads, pipelines and utility grids between China and parts of Asia. “This initiative will create a lot of opportunities for foreign companies as well as state-owned ones in China; particularly in industries such as infrastructure, financial and professional services, including IP services, manufacturers, transport and logistics. Those sectors will be the focus in the next few years”

Jeffrey McLean, partner at Deacons, touched on evidence collections challenges for patent infringements in China. “Let’s say we had a manufacturing process for treatment of a surface coating on an alloy and we had multiple patents, one of which was expiring soon. It’s a process technology and there’s a chemical change in the process. How do you go about collecting evidence to demonstrate this process? There’s no discovery system in China and it’s difficult to obtain evidence in the defendant’s possession.

“The burden of proof is on the claimant but you really need to go the extra mile to gather the evidence, make it water tight and show an unbroken chain of proof.”


5G technology: standards versus open-source

Simon Kahn, partner at Boult Wade Tennant, noted there could be over 100,000 SEP families in digital communications. Open-source implementations of 2G, 3G and 4G technologies have been available in the past 5-10 years, but there have been few cases on the interaction between patents and open-source.

The panellists generally agreed the focus should be on standards and open source, not standards versus open source. Robert Pocknell, CEO of N&M Consultancy and chair of Fair Standards Alliance, commented: “What I think you’ll see in new world of IoT is whether or not 5G is another standard or whether it is something just building on 2G, 3G, 4G.”

The panellists debated whether there will be masses of litigation over 5G. Jimmy Ahlberg, defensive IPR strategist at Ericsson, commented: “Are we building up to a patent war? No. Are we building up to an open source war? Maybe.”



 

Lead sponsor

Valea




Sponsors



Dechert



Gowling WLG

Gun + Partners

Kirkland & Ellis

Lung Tin Maiwald Metroconsult


Supporting Organisation

aippi









Exhibitors


CPA GLOBAL patsnap

Zacco













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