October 12, 2020
In this article for The Patent Lawyer, partners Sean Leach and Andrew White lay out a general roadmap to help non-European practitioners navigate the landscape.
A patent or patent application in the hands of a third-party, which covers a product which you wish to exploit presents a difficult challenge, and even more so if it is in a foreign jurisdiction. Preliminary qualitative research indicates that, in the US at least, the options to monitor and mitigate risks from European patents are not widely known. All but the most internationally focused US and Chinese attorneys use the European procedures infrequently, and their clients even less so.
Whether defending patent infringement action, reducing the risk posed by such actions, applying for complete or partial revocation of a patent, or opposing grant of a problem patent in the first place European jurisdictions offer many effective options, which by comparison with similar measures in the US are low-cost, low-risk and procedurally simple. Much can be done anonymously, and there are very good tactical reasons to take advantage of the possibility to remain anonymous.
In addition to these helpful features of the European procedural and legal landscape there are other issues, such as bifurcation in Germany and the losing party’s liability for the other side’s legal costs, which can represent very significant risks in their own right.
The background – patents granted by the EPO
The EPO provides a centralised examination procedure, through which a single application granted by the EPO is turned into a bundle of independent national patents.
Each patent must be dealt with separately after grant in the courts of each relevant national jurisdiction. Complete revocation of a granted European patent may thus require court proceedings in multiple jurisdictions, each conducted in a different language, under different evidential and procedural standards.
To a third-party to whom a European patent presents a risk, it is thus far better to take action at the EPO when possible. This can be done by filing so called “observations”, or by filing an opposition within a nine month time window after grant to have the patent revoked centrally at the EPO. Both can be done anonymously, which conveys a very significant tactical benefit because arguments can be advanced without constraining the conduct of future proceedings and because a patent proprietor forced to amend by an anonymous opponent cannot know the infringement target which they are aiming to hit.
In EPO proceedings there is no discovery or disclosure obligation on the parties, and only a very limited liability for the other side’s costs. There is no estoppel, the quality of the decisions is high and the rules of evidence and the standards applied by the EPO mean that outcomes are, by comparison to national proceedings, straightforward, fast and predictable.
1. Before grant: the options to attack an EPO or national application prior to grant in Europe
So-called “third-party observations” can be filed anonymously at the EPO at any point until the patent grants (and can even be filed against PCT applications before they enter the European Regional Phase).
The best time to file third party observations is thus early in examination before minds have been made up, and so the Examiner will be obliged to take them into account (the EPO Guidelines state that if the observations call into question the patentability of the invention in whole or in part, they must be taken into account). Experience suggests that unless the issue of patentability is prima facie clear, the observations may be less effective than one might hope. On the other hand, if the observations are fully substantiated and filed prior to any communication of intended grant, the EPO will normally issue a new office action within three months of their receipt.
The objections likely to fare best are clear added matter objections and clear novelty objections. Importantly, in Europe there is generally no presumption of validity. This is significant because a document being cited during prosecution does not mean that a national court will presume that a patent is valid over that document.
A potential downside to third party observations is that the applicant may amend the patent application so as to strengthen it. Thus there may be attacks which could be made but which would be much better saved for an Opposition (see below). However, an applicant responding to anonymous observations does not have any infringement target in mind. It may thus be possible, by carefully calibrated attacks, to shepherd an applicant toward a desirable amendment to clear a product without them ever having been aware of it.
2. Post-grant: the EPO opposition procedure, and its German national equivalent
As noted above, once a European patent application grants, it is converted into national rights, and litigation must be done at a national level at national courts. This can rapidly become expensive. One tactic adopted by some is to litigate in a single territory first and use the outcome of that litigating to force mediation/an agreement elsewhere. However, even adopting such a tactic, costs will be higher. For example, the cost of patent litigation in the English courts (even via the relatively cheaper Intellectual Property Enterprise Court) is typically measured in multiples of hundreds of thousands of pounds with further costs if there is an appeal.
By comparison, the cost of most EPO oppositions is generally less than £100K in all but the most complex cases, and simple cases can be won for far less. At the time of writing this article, an opposition (including detailed professional searches for prior art) could be concluded for about £30K-70K, and takes around two to four years to complete. Normally, first instance proceedings culminate in an in-person hearing at the EPO. An opposition decision can be appealed, which can add another two to four years and further cost – although appeals can be accelerated.
The EPO issues on average around 2000 opposition decisions a year, and roughly 30% result in the patent being upheld as granted, about 30% result in the patent being revoked, with the remaining 40% resulting in the patent being maintained in amended form. Therefore, opposition proceedings represent a good prospect of having the scope of a granted patent changed in some form or other.
To take advantage of the Opposition procedure it is of course necessary to be aware of the patent within the nine month Opposition period. Only during this window of opportunity can the patent be challenged centrally at the EPO. It is therefore prudent to search for competitors’ patent applications at the EPO and to monitor their progress. If the Opposition window is missed it cannot be reopened.
3. Post-grant: the options to control risk from national patents after grant and EP patents outside the EPO opposition period
a. UKIPO infringement and validity opinions
If the opposition period has been missed, or if it simply isn’t relevant (e.g. the patent was filed directly in a selected number of European territories) there are still options available to challenge and cast doubt on the validity of granted patents in Europe without costly court proceedings.
In the UK it is possible to obtain an opinion from the UKIPO either relating to the validity of the patent and/or as regards infringement. Opinions are fast and low cost and can be used to influence the conduct of later proceedings, and may have implications for awards of costs. Opinions can be requested anonymously.
UKIPO validity opinions are limited to issues of novelty and inventive step. The official fee is around £200 and the request can be filed against any patent or SPC, even if it is no longer in force. A list of opinions issued last year can be found here. The patentee is given an opportunity to comment, and the UKIPO will normally issue a validity opinion within three months. The opinion is non-binding, but the UKIPO can revoke a patent in cases where the patent is clearly invalid. This is rare. The procedure for obtaining an opinion on validity is relatively new, and to date 90 opinions have been issued, with 43 finding the patent to be invalid. Only 36 final decisions have been issued, with about half resulting in the patent being amended. In six cases the patent has been revoked.
Infringement opinions follow similar procedure and are also non-binding, but may serve as a useful negotiation tool to avoid or resolve a potential dispute.
b. Revocation actions in the national courts & before the UKIPO
In the UK, a revocation action can be taken before the UKIPO or the courts (The Intellectual Property Enterprise Court (IPEC) or the High Court (Patents Court)). The action can be raised on essentially the same grounds as for an EPO opposition. If action is taken before the UKIPO, a typical timeframe may be between 6 months to a year. Notably, decisions from the UKIPO can be appealed to the Patents Court. While a revocation action cannot be filed anonymously, any individual or legal entity can apply for revocation and (unlike e.g. in the US), there is no requirement for any threatened or actual proceedings.
If action is taken before the IPEC or Patents Court, it would probably take around 12 months to go to trial. Notably an application for revocation can be stayed pending the outcome of any pending EPO opposition proceedings.
The costs of the proceedings will be determined by the complexity of the case but may typically be in the range of £10,000 to £30,000 before the UK IPO, £50,000 to £200,000 before IPEC and £250,000 to £1,000,000 or even higher before the Patents Court. In English litigation, the losing party generally has to pay the other side’s costs. While costs are limited before the UKIPO and IPEC (in the IPEC the costs are capped at £50,000), in the Patents Court there is no limit on the award of costs
Whilst the procedure before the courts of each jurisdiction is independent, and courts in different European countries do sometimes reach different conclusions on the same patents, a successful outcome from the court of a major jurisdiction is likely to at least influence proceedings in other territories.
c. Bifurcation and protective briefs in Germany
In Germany validity and infringement are dealt with separately (in so-called bifurcated proceedings). It is thus possible for a patentee to obtain a preliminary injunction very quickly and without any invalidity defence even being considered.
To defend against this risk a protective brief can be filed pre-emptively at a German court setting out arguments against infringement or validity of the patent concerned. It is only disclosed to the patentee if they apply for a preliminary injunction. The benefit of a protective brief is that it ensures an invalidity defence must be addressed by the patentee and considered by the court before a preliminary injunction can be issued.
We have had a series of conversations with non-European attorneys to understand their view of European patent risk. The conclusion we drew from those conversations is that the monitoring and watching that most European attorneys do for their clients is not adopted as widely outside Europe as it could be. When faced with a European patent or patent application which presents a risk, forewarned is most certainly forearmed. The EPO opposition procedure is predictable, fast, and low cost. More people should use it. Although such action before the EPO has much to recommend it, there are also a range of options available in national jurisdictions to control risk without launching revocation proceedings as a first resort.