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 - 1 March 2024 - is below:

UPC

Court of Appeal lifts preliminary injunction against Nanostring and refuses to stay the proceedings.

On 26 February 2024, the UPC Court of Appeal handed down two decisions relating to the preliminary injunction (PI) granted to 10x Genomics in relation to its patent for a method of detecting analytes (such as RNA or proteins) in cell or tissue samples. The Court of Appeal’s decision hinged heavily on the specific technical knowledge and practices within the field of analyte detection and offers a contrasting analysis to that given by the Munich Local Division at first instance. It also marks the first occasion on which the UPC Court of Appeal has issued a detailed judgment on a PI application, and therefore will be of wide interest.

At first instance, on 19 September and 10 October 2023, the Munich Local Division issued preliminary injunction judgments in relation to alleged infringement by NanoString of two of 10x Genomics’ patents: EP 4 108 782 (EP 782) and its parent EP 2 794 928 (EP 928). The same panel of the Local Division ordered an injunction to be granted preventing infringement of EP 782, but denied an injunction in relation to EP 928.

In the EP 782 case subject to the current appeal, the Local Division began by finding that it had jurisdiction and that the application was admissible. It then considered in some detail questions of validity and infringement, finding with sufficient certainty that EP 782 was valid and infringed.

Following this finding, the Division went onto consider the necessity of ordering provisional measures. In terms of urgency, it was ruled, noting that EP 782 is a unitary patent, that enforcement measures before national courts are not equivalent to those before the UPC. Therefore, whether there had been unreasonable delay in this case should be evaluated from 1 June 2023, the day on which claims before the UPC could first be filed (and on which date the injunction request was made). Regarding harm, it was ruled that NanoString’s market entry would cause 10x Genomics significant, long-lasting harm.

Finally, the Local Division balanced the parties’ interests and found that 10x Genomics’ interests were more pertinent. An important factor in this assessment was the fact that there was a high likelihood of the patent being found valid and infringed at trial. A preliminary injunction was therefore granted to 10x Genomics without provision for security.

On appeal to the Court of Appeal in Luxembourg, Nanostring raised a number of grounds of appeal. The main ones were that: (i) the Local Division had incorrectly assumed jurisdiction; (ii) the narrow interpretation of the claims had been erroneous; (iii) the Local Division had erred in assuming that EP 782 was valid; (iv) the Local Division had misapplied both the facts and US and EU antitrust/competition law, and in fact the patentee had an obligation to grant Nanostring a licence; (v) the facts on irreparable harm, proportionality and urgency counted against the grant of a PI; and (vi) Nanostring should have been allowed to continue the acts complained of on provision of security, but in any event the PI applicants should have to provide security (in the amount of €20 million) to secure the PI if maintained.

On jurisdiction, the Court of Appeal held that the Munich Local Division did have jurisdiction on the basis that the attacked embodiments had been offered in Germany. However the Court of Appeal did not expressly deal with the argument that the UPC should decline jurisdiction (at least in respect of the German territory) given that 10x Genomics had already sought a PI under a parent patent in Germany.

On claim construction, the Court of Appeal departed from the conclusions of the Local Division on a number of issues. However, it did not deal with the question of infringement given its decision on validity (see below).

The most interesting part of the judgment is the treatment of validity. The Court of Appeal agreed with the Local Division that as an order for provisional measures is by way of summary proceedings, in which the opportunities for the parties to present facts and evidence are limited, the standard of proof for a PI must not be set too high. This is particularly if delays associated with proceedings on the merits would cause irreparable harm to the patentee (referring in part to the CJEU decision in Phoenix Contact C-44/21). However, the standard of proof should not be set too low in order to prevent the defendant being harmed by an order that is subsequentially revoked at a later date. There should therefore be a sufficient degree of certainty that the applicant is entitled to institute proceedings, that the patent is valid and is being infringed (or that such infringement is imminent). According to the Court of Appeal, such a degree of certainty requires the UPC to consider it at least more likely than not that the applicant is entitled to initiate proceedings (which includes that it is more likely than not that the patent is valid) and that the patent is infringed.

As to which party bears the burden, the Court of Appeal held that this lies with the applicant in relation to entitlement to initiate proceedings and infringement, as well as other circumstances supporting the applicant’s requests, whereas the burden regarding (lack of) validity and other circumstances supporting the respondent’s request lay with the respondent. The Court of Appeal noted that this is aligned with the position in merits proceedings. No special presumptions or criteria, such as the presumption of prima facie validity, or that the patent must have first survived third party challenge, were cited by the Court of Appeal.

Of further interest is that the Court of Appeal disagreed with the Munich Local Division on validity, holding that on the balance of probability, it was more likely than not that the subject matter of the claim 1 (as amended as per the patentee’s main request) will prove not to be patentable for obviousness.

The Court of Appeal conducted a detailed analysis of its own, sitting with two Technically Qualified Judges on the panel. At first instance, the Munich Local Division appeared to adopt the approach of the EPO to assessing inventive step, identifying the closest prior art, usually being a prior art document that discloses a subject matter developed for the same purpose or with the same aim as the claimed invention and sharing the main technical features, hence requiring the fewest structural changes. Applying this approach, the Local Division had taken the view that one of the prior art citations advanced by the respondents (D6) was not a realistic starting point, let alone as the closest prior art. In contrast, the Court of Appeal held that D6 would have been of interest to a person skilled in the art seeking to develop certain methods, rather than apply a formalistic closest prior art analysis, and thus appeared to give it greater weight than the Local Division.

The Court of Appeal’s decision put emphasis on the idea that a skilled person, motivated by the need for in situ analysis, would find it obvious to adapt the method in D6. D6 itself hinted at in situ applications, and similar publications demonstrated the concept's feasibility, even if using different probes. Issues like molecular crowding and autofluorescence were hurdles a skilled person would expect and be equipped to tackle. These problems did not make an in situ adaptation an unpredictable leap. The patent itself offered no unique solutions to in situ problems, which the Court of Appeal found would strengthen the argument that the adaptation would be within the routine skill of someone in the field.

The amendments proposed to the patent in an auxiliary request would not remedy the position. By limiting the patent to immunohistochemistry and fluorescence in situ hybridization, this would not address the core problem - these were obvious and established techniques for a skilled person seeking to do in situ analysis.

On this basis, the Court found it more likely than not that the patent would be revoked in the future, making the injunction inappropriate. The Court of Appeal did therefore deal with all the other issues raised in the appeal.

The second decision relates to the fact that Nanostring filed for Chapter 11 bankruptcy protection in the US and requested a stay of the proceedings, after the oral hearing for the main PI appeal took place in December 2023. 10x Genomics agreed to the stay, however the Court of Appeal held that a stay would not be granted. The Court concluded that the Rules of Procedure on stays were designed for situations where insolvency was declared before crucial legal proceedings were completed. In this case, all major procedural steps (including the oral hearing) had been completed before the bankruptcy filing. By suspending the case now, this would cause unnecessary delay and expense without impacting the bankruptcy proceedings themselves and therefore in the interest of efficiency and fairness, the Court of Appeal should deliver its PI decision as planned. The Court also commented that several other countries' legal systems have similar provisions, allowing ongoing court cases to reach a conclusion even if a party declares bankruptcy near the end.

EPO

Determining if something is a “substance or composition” for second medical use claims.

A recent decision by the EPO’s Technical Board of Appeal (TBA), T 1252/20 Embolic System / 3-D, dated 6 February 2024, has highlighted the correct application of the the law around second medical use claims. The decision concerned whether something was a “substance or a composition” for the purposes of Art. 53(c) and Art. 54(4) or (5) of the European Patent Convention (EPC).

Art. 53(c) has a relatively broad definition of matter not covered by the exclusion to patentability (“products, in particular substances or compositions”), whereas Art. 54(4) and (5) are narrower and specify “any substance or composition”. It has been held consistently at the EPO that the provisions of Art. 54(4) and 54(5) do not apply to medical devices and are limited to substances or compositions. However, the issue of what is covered by the Art. 54 definition of a “substance or composition” frequently arises before the EPO. In the present case the TBA noted that not every object can read onto the definition or “substance or composition”, even if every object, including medical devices, is ultimately made up of substances and/or compositions.

The case concerned self-assembling peptides and their use in the treatment of diseases. The peptides are introduced into a blood vessel and form a hydrogel, blocking a blood vessel and killing the surrounding tissue. The Examining Division (ED) held that this was a medical device rather than a “substance or composition”, as the peptides were held to be acting in a device-type, rather than a chemical interaction-type way. As a result the patentee could not rely on the provisions of Art. 54(4) and 54(5) EPC whereby novelty may lie in the method of treatment with a known product so long as the claim is framed in EPC 2000 form.

The TBA analysed the earlier case law (in particular the Enlarged Board's decision in G5/83) concerning second medical indications. It ultimately decided that using the mode of action of a material as a decisive criterion was not appropriate when assessing whether something was a substance or a composition, and was not required by the legislation. Reasons include that the material acting inside the body may not be the same as the material the claim is directed to, in terms of composition or some other relevant property. Further, the hypothesised mode of action may not be understood in detail or could turn out to be wrong, or might depend on the mode of administration. Additionally, applying such a restriction would not achieve the legislative purpose of the provisions, i.e. that patent protection should be available for technical developments that were highly desirable and beneficial notwithstanding the excluded nature of the use itself.

The mode of action of the material was not therefore the decisive criterion that should be used for qualifying a material or object as a substance or composition under Art. 54(4) or 54(5). Additional criteria could be helpful in difficult cases regarding the definition of substance or composition, but this was not mandatory, especially where the material would clearly fit within the definition of “substance or composition”.

In the present case, the TBA was of the view that although it would appear at first sight that embolization of blood vessels is an entirely mechanical process, it was well possible that the surface structure of the hydrogel formed has some influence on the adherence of the hydrogel to the inside surface of the blood vessels. In this case, there was no reason to disqualify a solution of a peptide, i.e. a shapeless liquid defined without any device-like features, from the scope of Art. 54(5) EPC. On the facts, the claims were held to be novel as the uses claimed were not covered by the prior art and the case was remitted to the ED for further processing.

SOUTH KOREA

Revision to the Invention Promotion Act, including the introduction of an employee invention automatic succession system.

Recent updates have been made to the law concerning employee inventions by the Korean Invention Promotion Act Amendment Bill (the “Amendment Act”) and will come into force on 7 August 2024. The amendments include the introduction of an Employee Invention Automatic Succession System (the “Employee Succession System”) and new Material Production and Confidentiality Orders, applicable to litigation regarding compensation for inventions made by employees (the “New Orders”).

The Employee Succession System

Currently, in order for an employer to gain the rights from an employee’s invention the employee must first notify their employer that said invention has been completed. The employer then has up to four months to notify the employee as to whether the rights succeed to the employer. The transfer does not occur until notification, and this had allowed employees in some cases to transfer their rights in the meantime to a third party.

Art. 13(1) of the Amendment Act means that as of 7 August 2024, in cases where an employee’s contract or working regulation states that the rights to an invention are to be transferred to the employer, the transfer of rights will now occur automatically on completion of the invention. It also requires that where the employer decides not to assume the rights, then the employer shall notify the employee within four months of completion. The administrative burden on employers has therefore been reduced, as notification is now only required where the rights to an invention will not be transferred.

The New Orders

Under Korean intellectual property laws (e.g. the Patent Act), there are provisions for the Court to compel parties to produce materials in litigation, and for the maintenance of the confidentiality of said materials. At present however, there are no such provisions in the Invention Promotion Act. This has made it difficult to calculate the appropriate level of compensation in employee invention disputes. The following amendments will become effective on 7 August 2024 (these are the same as those previously introduced in the Patent Act and Unfair Competition Act):

Under new Art. 55(8) of the amended Invention Promotion Act, the court may order a party to produce materials in order to allow compensation for employee inventions to be calculated. This is notwithstanding that such materials may be trade secrets of the employer.

Accordingly, a new confidentiality order system has also been implemented, which makes it necessary to protect such trade secrets (Art. 55(9) – 55(11) of the amended Invention Promotion Act). Under Art. 58(1), any violation of such an order without a justifiable reason will result in imprisonment for up to 5 years or a fine.

The effect of the amendments means that it is more likely that an employer will be required to provide materials relating to trade secrets in any employee inventorship disputes. Additionally, the new provisions are stronger than the document production order in the Civil Procedure Act (currently used in litigation relating to employee inventions), with a wider scope and larger sanctions.