Patent Litigation 2017

The Patent Litigation guide provides expert legal commentary on the key issues for businesses involved in intellectual property matters. The guide covers the important developments in the most significant jurisdictions.

Last Updated March 01, 2017

Andreas von Falck focuses on litigation/counselling in patent law and all other areas of IP, specifically in the pharmaceutical, medical devices and high-tech industries. Andreas is recommended for patent litigation by numerous legal publishers. He regularly speaks at patent law conferences and has published extensively on, for example, preliminary injunctions in patent matters, transactional IP issues, the Unitary Patent system, second medical use claims, and ancillary competition law issues. Andreas is leader of the firm's IP group and member of its International Management Committee.

Hogan Lovells International LLP teams bring a broad range of legal capabilities to the table. The firm has major strengths in corporate law, dispute resolution and finance, alongside world-class capabilities in areas such as competition, government regulatory, intellectual property, tax and real estate. This means that the firm is able to advise its clients seamlessly on the full spectrum of legal issues, on a global scale. The firm’s key industry sectors include: aerospace, defence, and government services; automotive; consumer; education; energy and natural resources; infrastructure; financial institutions; industrials; life sciences and healthcare; real estate; sports and recreational facilities; telecommunications, media and technology; and transportation.

Patent law: Key global trends and developments

The number of patent applications has been increasing year by year over the past decade. This is, at the same time, evidence of continuing and increasing innovation worldwide and a reflection of an ever-increasing confidence in the enforcement systems worldwide. Just as the development of a strong and well-organised patent portfolio is at least as important as material assets for companies, patent litigation is now recognised as a business tool that has the same importance as innovation itself. Portfolio management, clever acquisition strategies, and the effective use of patent litigation command boardroom attention and have become key factors in successful business development strategies. With European courts still granting injunctions as a matter of law as opposed to applying a test as to whether or not an injunction is an appropriate remedy for the patentee, European courts, and German courts in particular, have been at the heart of many of the more recent patent battles, often accompanied by parallel litigation in the US International Trade Commission. More recently, China has been highlighted as another important jurisdiction for patent litigation, with more predictable results and fast courts, often, particularly in the telecoms sector, striking at the place of manufacture and thus making China a "trend" jurisdiction for patent litigation in the high-tech industries.

Increase in patent lawsuits

Over the last couple of years the number of patent lawsuits has increased dramatically. In addition to the big competitor lawsuits, non-practising patent-owning entities (NPEs) have been a major factor in driving these numbers. Whilst NPEs have traditionally been active in the high-tech industries, they are now also moving into the life sciences space. This is a trend that began with (predominantly US-based) universities that started licensing programmes in the pharmaceutical and medical device world but which has now firmly moved into the typical, venture or private equity-backed "patent troll" business.

Traditionally, the patent system did not have to deal with plaintiffs that were virtually "invulnerable" to counter-attacks. In the past, many of the biggest lawsuits in the patent world involved competitors with patent portfolios that read onto each others' products and thus any attack triggered the risk of a counter-attack in a different court or jurisdiction based on the defendant's own patents. More often than not, these lawsuits will ultimately be settled and the settlements will be a reflection of the the relative strength of the parties' patent portfolios.

The age of NPEs

However, in the age of NPEs the system must deal with different and more complex challenges. One particular challenge lies in the way in which courts deal with patent validity: whilst most jurisdictions allow the defendant at least to attack validity as part of the same proceedings, the issue in countries such as Germany, Austria, and China is that validity can only be raised in separate proceedings which are often (and in the case of Germany predictably) slower than the infringement actions. This leads to the problem often referred to as the "injunction gap" which allows the patentee to win and enforce injunctions in those countries without a previous thorough review of the validity of the patent(s) at issue.

The Huawei v ZTE defence

But defendants are not without defence: when standard essential patents (SEPs) are involved, the defendant is entitled to a licence under competition law as long as they can show that they are a willing licensee even before the parties have concluded an agreement. The requirements have been set out in some (but not all) detail in the Huawei v ZTE decision of the European Court of Justice (C-170/13). However, many questions are still open, including the exact timing of the steps to be performed by the parties, including, but not limited to,  exactly when a litigation can be filed, whether the principles also apply when no injunction is being sought, whether the rules apply in the same way when not just one but several patents are being licensed and which geographic coverage the respective offers should have. Another problem is that, whilst in theory the European Court of Justice has harmonised the requirements, the application in the lower courts still differs drastically. That uncertainty plays unilaterally against the defendants. Time will show whether the highest national courts can agree on a common set of principles for the enforcement of SEPs. In the meantime, an active role of the competition law enforcement bodies is required in monitoring enforcement practices by practising and non-practising entities.

Life sciences

In the life sciences area, more recently, compulsory licensing has become a more popular defence where patentees have been seeking injunctions in areas where patient supply with the accused product is critical. Often, these are broad patent claims and the patentee is either an NPE or, where it is a practising entity, it does not offer an alternative product. The German courts have recently been willing to issue compulsory licences in those cases, including by way of preliminary injunctions.

The effect of "Brexit" on the UPC?

The decision by the UK voters to leave the EU (which does, however, require a declaration by the UK government to withdraw from the EU under Article 50 of the Treaty on the Functioning of the European Union (TFEU)) is likely to have long-term consequences for the UPC (Unified Patent Court). Whilst there is no shortage of offering for solutions under which the UK could and should be able to "play" in the UPC, it is unlikely that the current government has the UPC as a priority item on its agenda. The required ratification would be likely to seem as contrary to the fundamental decision by the UK voters to "brexit", and submitting to the jurisdiction of the ECJ after "Brexit" is equally not going to be a popular decision in the UK.

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