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Opening life sciences’ Unified Patent Court war chest
11 October 2016 • Author(s): Vanessa Rieu and Annsley Merelle Ward
The future role of the UK in the Unified Patent Court (UPC), if any, has been brought to the forefront as the battle on the fate of the UPC in a post-Brexit European landscape rages on. Political intrigue aside, it is the impact of the UK’s potential absence in the UPC that concerns many litigants, especially those in the life sciences industry.
Life science companies are used to patent litigation before European national courts. They have come to expect that cross-examination of experts in UK litigation will win or lose a case. The use of saisies and similar measures can help create the basis of a case in Italy and France. Preliminary injunctions in Netherlands will require a greater level of assessment on the merits than in the UK. They know how to deploy these procedural differences between national courts to their advantage.
The new UPC will shake this up, adopting aspects of legal traditions from across Europe’s civil and common law systems in a blended procedural regime before a multi-national panel of judges.
Irrespective of the UK’s future role in the UPC, Vanessa Rieu and Annsley Merelle Ward explain how life sciences companies can continue to leverage their knowledge of national laws when using the UPC’s new tools to maximize their success.
Preliminary injunctions: a powerful tool despite remaining uncertainties
Preliminary injunctions (PIs) are a very powerful tool in life sciences litigation. Significant and often irreparable damage can be caused by the “at risk” launch of infringing products. The UPC’s wide powers to grant PIs, both inter partes and ex parte, to prevent “imminent infringement” or “prohibit the continuation of infringement” across numerous European Union Member States in one shot is a crucial tool in a litigant’s war chest.
However, the strength of the remedy is mired by the uncertainty of the provisions which give the Court power to grant a PI. The UPC’s PI provisions are permissive with most criteria for the granting of a PI being discretionary.
Rules of Procedure
Article 62 of the UPCA and Rule 211 of the Rules of Procedure govern the granting of provisional measures including PIs. The Court “may” grant injunctions against an alleged infringer or an intermediary. In taking its decision, the court “may” also require the applicant to provide “reasonable evidence to satisfy the court with a sufficient degree of certainty” that (i) he/she is entitled to commence proceedings pursuant to Article 47 UPCA (mainly the patentee or the exclusive licensee under certain conditions), (ii) the patent at issue is valid and is being infringed or that the infringement is imminent. In this context, the “sufficient degree of certainty test” may be a lower standard than the words taken indicate.
Instead the standard may be construed as being enough evidence to provide comfort to the judges that that the patent is more likely than not valid and infringed. Prior revocation of the patent in a national court may be used as evidence that the patent is unlikely to be valid, but may not be enough by itself to create doubt in the Court’s mind to not grant a PI.
Priniciples of proportionality
The overarching principles of proportionality and fairness in the UPC gives the Court additional flexibility in deciding whether or not to grant a PI. One clear requirement, however, is that in doing so, the court must weigh up the interests of the parties and take into account the potential harm for either of the parties resulting from the granting or the refusal of the injunction. This balancing exercise is a crucial element of the test under English law for preliminary injunction.
Such high degree of flexibility in the Rules can be welcome as litigants can craft their evidence and arguments before the judges to fit the facts of the case and the judicial panel’s style. However, it also creates uncertainty. Given the lack of guidance within the UPC framework, patentees will have to carefully consider the different attitudes to PIs in different divisions and the importance of “couleur locale” of the panel composition in the likely outcome of an application. This will necessarily result in forum shopping by litigants, particularly in the early stages of the UPC.
For example, one important factor when assessing whether or not to initiate a PI is timing. Rule 211 (4) only provides that the court shall consider any “unreasonable delay” in seeking provisional measures. In the absence of any harmonised European case law as to what constitutes an “unreasonable delay”, divisions are likely to rely on national traditions. In most participating Member States (e.g. Germany), urgency is often required as a separate condition for preliminary injunctions.
This is not the case in France. PIs can be granted in case of an imminent threat of infringement or an actual act of infringement. The essential criteria for granting a PI under French law is the evidence of the intent of the generic company to actually launch its products on the market and the proportionality of the measures requested. In England & Wales, urgency is not a separate condition, but may be part of the overall assessment by the court when assessing the balance of convenience element of the test in American Cyanamid v Ethicon 
Ex parte PIs, although allowed, should be rare. Another important feature of the UPC will be the ability for the defendant to file a protective letter with the UPC, as is currently the case in Germany. This strategic tool is likely to be very useful for generic companies seeking to launch “at risk”, as filing a protective letter will reduce the risk of the UPC granting a pan-European interim relief on an ex parte basis.
Scope of liability
Another question left unanswered is the patentee’s scope of liability, if any. What happens in the UPC if a PI was wrongly granted? A cross-undertaking or security will only be required if “appropriate”. Rule 211(5) allows the court to order the applicant to provide “adequate security for appropriate compensation” and such measure shall only be mandatory in case of an ex parte application “unless there are special circumstances not do so”.
It is normal in many Member States for a patentee to have to provide security by way of a bond or guarantee (i.e., Denmark, Estonia, Germany, Hungary, Latvia, Romania, Spain and Sweden). For the patentee, providing a bond or a guarantee could be a significant hurdle when it has to cover all participating Member States.
Cross-undertakings are only compulsory in ex parte proceeding and are otherwise only granted in favour of the defendant, not third parties, in the discretion of the Court. Because the orders are subject to review, the duration and terms of the cross-undertaking may alter.
A final aspect to consider when it comes to PI is their enforcement. According to Article 82 UPCA and Rule 354, all decisions and orders of the UPC are directly enforceable from the date of service in each contracting Member State. However, those provisions also provide that enforcement procedures are governed “by the law of the Contracting Member State where the enforcement takes place”. Here again, national laws will play a significant role in the effective enforcement.
Gathering evidence of infringement
A significant concern of life sciences patentees is obtaining evidence of infringement, especially in the cases where the infringing products have not yet been launched on the market. The UPC positively answers such concern by offering a wide variety of tools to patentees.
Article 60 UPCA allows the court, in appropriate cases, to order prompt and effective provisional measures to preserve evidence and to inspect premises at the request of the applicant.
The applicant must first compile reasonable evidence to convince the court that the patent has been infringed or is about to be infringed. Such measures can be ordered before the start of or during the proceedings and, if necessary, on an ex parte basis where any delay is likely to cause irreparable harm to the patentee or where is a risk of evidence being destroyed. In such case, Rule 192 provides that the applicant will be under a duty to disclose any material fact known to him which might influence the court in deciding whether or not to grant an ex parte order.
The court may also request from the applicant the lodging of adequate security or “an equivalent assurance”. Once the order has been carried, the applicant must bring an action on the merits within either 31 calendar days or 20 working days (whichever is the longer). If the applicant does not, the measures will be revoked or cease to have effect. The applicant may also be ordered to provide an adequate compensation to the defendant.
Such measures are similar to the popular French saisie-contrefacon procedure. They may not only include the detailed description, with or without the taking of samples, or the seizure of the infringing products, but also the materials used in the production and or distribution of such products and the documents relating thereto. The ability to seize evidence pre-action is very attractive to life sciences patentees who will be able to request the seizure of specific documents such as parts of dossiers, documents relating to launch plans or inspection of their competitor’s premises. This tool is likely to be used extensively throughout the divisions, especially given the requirement provided under Rule 13 that patentees must fully particularize their infringement case in detail in the initial round of pleadings.
Other strategic tools in the UPC allow patentees to gather useful information on the infringing products. Article 67 UPCA allows the court to order the communication of information such as the origin and distribution channels of the infringing products or processes, the quantities at stake and the price obtained, the identity of any third person involved in the production or distribution chain of the infringing products.
More generally, the judge rapporteur’s wide case management powers include the power to order parties to disclose information, either by the court’s own motion or at the reasoned request of a party. These tools are similar to specific disclosure applications and requests for further information (RFIs) which are used extensively in patent litigation under English procedural law.
Confidentiality, Clearing the Path and Cross-Examination
Confidentiality concerns which may arise in such context are addressed both by the UPCA and the Rules of Procedure. A party can request that information is kept confidential and the court has the power to order that the collection and use of evidence is restricted or prohibited to specific persons, which means that in practice parties will have to agree to appropriate confidentiality undertakings.
Although not within the scope of this article, parties should also consider:
- use of cross-examination of witnesses;
- use of pre-emptive revocation actions and declarations of non-infringement to clear the path (including the potential of Arrow-type declarations, which are currently pending before the English courts);
- SPCs and scope of protection issues under Article 4, which is currently a matter of national law, will also be important.
With a variety of national legal traditions being blended by the Rules, it will take several years for a truly harmonized approach to emerge from the UPC. Although some consistency will be achieved through judicial training, much will depend on the number and frequency of rulings from the Courts of First Instance and, importantly, the Court of Appeal. It is here where litigants’ (and their advocates’) familiarity with the current pan-European patent litigation landscape will be crucial in helping guide the judges towards a unified application of the Rules of Procedure in the UPC.
-  Rule 211(2) of the Rules of Procedure builds upon Article 62(4) by requiring that the evidence also show that the patent in question is valid.
-  The words are reproduced from Article 9(3) of the Enforcement Directive.
-  See comments from the UPC panel of judges at AIPPI’s UPC Mock Trial held on 20 September 2016
-  Article 42 UPCA.
-  Rule 211 (3) of the Rules of Procedure.
-   UKHL 1
-  Rule 212(3), Rule 197(3), and (4) and Article 60(6) UPCA.
-  Article 60(2).
-  Articles 42 and 58, Rule 262.
-   EWHC 374
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