Irides: Weekly patent litigation update

The Irides Weekly Update is our round-up of patent litigation news highlights from around the world. Taking its name from the plural of “iris” - a nod to the ability of Irides to see what’s happening around the world. 

Our latest edition - 29 September 2023 - is below:

AUSTRALIA

Federal Court dismisses application for a stay of revocation proceedings based on estoppel

In a long-running dispute between Orikan Group Pty Ltd and Vehicle Monitoring Systems (“VMS”), Orikan’s interlocutory application for a stay of the revocation proceedings on the basis of ‘Anshun’ estoppel (or abuse of process in the alternative) was dismissed in a decision handed down on 29 August 2023.

Orikan contended that VMS could and should have raised its invalidity cross-claims in earlier proceedings, specifically the opposition by VMS to the grant of the patent, as the claims were so closely connected to the subject matter of that earlier proceeding it was unreasonable not to have raised them at that time (so called ‘Anshun’ estoppel, named after an earlier Australian High Court case, and similar to the well-known Henderson v Henderson rule in the UK). The Judge was of the view that the relevant question to decide was whether it was unreasonable to defer raising an issue previously rather than whether it would have been reasonable to rely on them in the earlier proceedings. Whether it was unreasonable to do so was to be assessed on practicalities rather than legalities. The application was dismissed; VMS did not act unreasonably.  There was a fundamental difference in nature between the opposition proceedings and the cross-claim proceedings as in the latter Orikan had compelled VMS to come to court and defend itself against an infringement action. Although it is desirable to avoid a multiplicity of proceedings, parties should not be encouraged to raise each and every possible claim or issue irrespective of the time and cost associated with doing so. In regard to the alternative ground, abuse of process, it was held that there was nothing oppressive about the circumstances and by bringing infringement proceedings, Orikan should reasonably have expected to face a cross-claim for invalidity. Further, the matters raised by the invalidity claim did not overlap with the issues in the previous proceedings, so there was no realistic prospect of inconsistent findings that would bring the administration of justice into disrepute. However, the Judge did note that the conclusion may have been different had VMS instituted the revocation proceedings.

UPC

Clarity on UPC opt-out reversal process

On 21 September 2023, the Helsinki local division rejected an injunction requested by AIM Sport against its competitor, Supponor, over targeted advertising technology for sports stadiums.  The decision was made on the basis that the patent in dispute had initially been opted out of the UPC.

Art. 83(4) of the UPC Agreement states that “an opt-out can be withdrawn anytime as long as no action has been brought before a national court in respect of the application, patent or SPC subject to the opt-out.” German infringement and nullity proceedings decided in 2022 found infringement of AIM Sport’s patent, which is now pending on appeal. The claims in Germany therefore predate 1 June 2023 when the UPC came into force. However, in rejecting the preliminary injunction, the judges considered that opt-out withdrawals would also be invalid for patents subject to national proceedings that were filed prior to the UPC.

EU/FINLAND

AG Opinion given on claim to damages where a preliminary injunction had been granted on an IP right that was later revoked

On 21 September 2023, the Court of Justice of the European Union (CJEU) published the Advocate General (AG) opinion on a request for a preliminary ruling that had been referred from the Finnish Courts. The Finnish court sought clarification on whether a strict liability regime aligns with EU law and, if not, what the appropriate liability framework should be in cases of unjustified provisional measures. The reference also sought to clarify how the existence of liability should be assessed, especially in situations where an IP right is later found to be invalid. (Case No. C 473/22).

By way of background, in early 2017 Viatris, previously known as Mylan, launched at risk its generic version of Gilead's Truvada (tenofovir disoproxil; emtricitabine). In December 2017, Gilead sought and were granted a preliminary injunction from the Market Court on the basis of Viatris’ alleged infringement of a Supplementary Protection Certificate (SPC) based on a tenofovir combination compound patent (EP 0 915 894).  Viatris withdrew its product from the market and sought revocation of the tenofovir SPC and in September 2019 the Market Court  revoked the SPC. Viatris initiated a claim for damages against Gilead, seeking compensation for the period during which it was unable to commercialise its generic product due to the preliminary injunction.  In July 2022, the Market Court referred the case to the CJEU for guidance on whether applying a strict liability standard for damages aligns with the Enforcement Directive. 

The specific questions raised in this case concern whether a strict liability regime, where the applicant for provisional measures is automatically held liable, is compatible with art. 9(7) of Directive 2004/48/EC. Art. 9(7) outlines the authority of judicial authorities to order the applicant of provisional measures to provide compensation for any injury caused by these measures if they are subsequently revoked or found to be unnecessary.  The questions referred to are as follows:

1. Is a compensation regime based on strict liability, such as that described above (paragraphs 16 to 18 of this request for a preliminary ruling) which is in force in Finland, to be regarded as compatible with art. 9(7) of the Enforcement Directive?
   
   
2. If the first question is answered in the negative, what then is the nature of the liability for compensation on which the liability under art. 9(7) of the Enforcement Directive is based? Is that liability to be regarded as a form of liability based on fault, an abuse of rights, or some other ground?
   
   
3. In relation to the second question, what circumstances must be taken into account in assessing the existence of liability?
   
   
4. In particular, as regards to the third question, must the assessment be made solely on the basis of the circumstances known at the time when the provisional measure was obtained, or is it permissible to take into account, for example, the fact that the intellectual property right on whose alleged infringement the provisional measure was based was subsequently, after that measure was obtained, found to be invalid ab initio and, if so, what significance is to be attached to that circumstance?

The AG interpreted art. 9(7) to allow for a more nuanced assessment of whether compensation should be granted, taking into account the circumstances of each case and that art. 9(7) should be understood in the context of the entire Directive. Automatically holding the applicant liable for the reversal of provisional measures may discourage IP rights holders from using these measures and the primary objective of art. 9 is to allow IP rights holders to prevent potential infringements.

Additionally, art. 9(5)-(7) aims to balance the interests of both parties involved. The AG therefore considered that interpreting and implementing these provisions in a way that excessively exposes the IP rights holder to the risk of a heavy compensation burden would undermine the Directive's objectives. The IP rights holder should not face undue risks when enforcing its right, especially when the rights result from a public authority decision like a patent or SPC. Provisional measures do not determine the final outcome of a case in most instances. It should be open to the national courts to consider the merits of each application and weigh the interests of both parties to maintain the Directive's objectives. The liability regime under art. 9(7) should not be a strict liability one, as it should consider all circumstances of the case, not just the premises outlined in the provision. 

In conclusion, the AG suggests that art. 9(7) does not support a strict liability regime for the loss caused by provisional measures. The liability regime should allow the court to consider all relevant circumstances when deciding on compensation. The second to fourth questions regarding the type of liability regime and the circumstances to consider should be addressed in a manner consistent with that interpretation. The Judgment of the CJEU is awaited with interest. 

UPC

Two decisions regarding the transparency of proceedings at the Unified Patent Court (UPC) were handed down last week by the Munich central division and were considered by the judge-rapporteur for the cases, András Kupecz

In a decision given on 20 September 2023 (case 464985/2023), the applicant requested copies of documents from the file in a revocation action, specifically the Statement of revocation and the Letter for service on the patent proprietor. The reason cited for the request was for educational and training purposes. A preliminary order was issued inviting the parties to submit their comments and/or observations to the request following objections having been raised by the claimant in the main action, arguing on essentially proprietary grounds against a third party using the pleadings for their own interests. The defendants did not object, and no request for confidentiality had been made under Rule 262.2. The applicant submitted further comments in response to the preliminary order. The Court rejected the applicant’s request, finding their reason for educational and training purposes insufficient and not a legitimate reason to access the requested documents. They also stated that the Letter for service on the patent proprietor did not have a legal basis for disclosure under Rule 262.1(b).

The following day, a further decision was given (case 459505/2023) in which the applicant initially requested access to the register’s content, including all documents again related to a patent revocation action. Objections were raised by the parties, and in response the applicant (a law firm), who brought the initial application on behalf of a third party wishing to remain anonymous, changed their request to be in their own name, expressing a desire to form an opinion on the patent’s validity. Again, the court determined that a legitimate reason must be provided for accessing written pleadings and evidence, not just any reason. They also considered the interests of third parties and the prevention of evidence abuse. The court held that access should not be automatic but should be justified by a concrete, verifiable, legitimate reason and in this instance, the applicant’s initial reason was deemed insufficient as it lacked specificity. The court found that the mere wish to form an opinion on the patent’s validity was not a sufficiently concrete, legitimate reason for access. The judge was of the view that the public could inform themselves using other sources, and access to pleadings and evidence was unnecessary.

In both instances, the court granted leave to appeal the order, recognising the need for a consistent interpretation of the “reasoned request” rule.  More details can be found here, including commentary on the divergence between the application of the Rule 262.2 in these two cases and statements made by the Rules Committee when the Rule was adopted, which suggested a much more generous transparency regime was intended.