Case No. O2020_08/15 | Main hearing of 1 April 2021
The main hearing in this matter earlier today was highly interesting.
In brief, Acme Corp. asserts infringement of a European patent by Globex Corp. The tricky thing is that the patent had already been cancelled from the register at the end of its 20y term more than two years(!) before the alleged infringement took place.
Globex Corp. essentially contends that the complaint is simply an impertinence. What no longer exists cannot be infringed. Hank Scorpio, the CEO of Globex Corp., shouted out:
Where would we be?
But it appears to be not that easy. Acme Corp. essentially argued that it has been cheated out of several years of patent term because the patent was granted only more than 15 years(!) after the filing date. In Acme’s view, this demands for a term adjustment to compensate for the delay during prosecution through no fault of their own. Such term adjustments are granted ex officio in the U.S., and Acme argued that this was only fair.
During a break, I had a quick chat with a person who prefers to not see his name on this Blog but who is knowledgeable of the current status of the draft of the forthcoming revision of the Swiss Patent Act; see this Blog here for further information on the draft bill. It appears that some wished for U.S.-style patent term adjustments (similar to 35 U.S.C. 154) during public consultation, which will indeed be included in the final draft of the revised Swiss Patent Act. Accordingly, I understand that we may see patents valid in Switzerland with terms reaching months, if not years beyond the 20y term. This is unprecedented in Europe, to the best of my knowledge!
Stay tuned for further details to be published soon. It may well be that the transitional provisions of the revised PatA turn out to be decisive for the case at hand. And others. Yours, maybe?
As reported by the IPKat, with reference to a note of Reddie & Grose on their website, a referral to the Enlarged Board of Appeal is currently in the making. The legality of oral proceedings conducted as video-conference will be looked at.
Note, however, that the referral has not yet been made as per today.
The docket to watch is EP 1 609 239. The parties had not consented to oral proceedings by video-conferencing, but they have nevertheless been summoned to a video-conference. The minutes of the oral proceedings of 8 February 2021 hold:
After deliberation by the Board, the Chairman informed the parties that the Board will refer a question to the Enlarged Board of Appeal. The decision will be given in writing.
The composition of the to-be-referring Board 3.5.02 of Chaiman Richard LORD has then been changed on 11 February 2021; Wilhelm UNGLER (legal member) has been appointed as an additional rapporteur besides Fabian GIESEN (technical member).
One of the parties had filed an auxiliary request by Email, apparently during the oral proceedings. Since the request was in German, I suspect that it was filed by the opponent / appellant. It losely translates as follows:
We hereby submit the auxiliary request to submit to the Enlarged Board of Appeal for decision the question whether oral proceedings pursuant to Art. 116 EPC may be replaced by a video-conference if the parties do not agree thereto.
(On the fun side: Does that mean that a video-conference had been okay if the main request had been granted?)
I don’t think that this will be the question finally being referred to the EBoA because it already assumes that a video-conference is something different than oral proceedings pursuant to Art. 116 EPC. This, in my perception, is already part of the problem to be finally resolved by the EPO.
Once the referral has actually been made, cases with parties being summoned to oral proceedings by video-conference without their consent will likely be stayed. This will concern quite a lot of cases. Accordingly, I would expect that the EBoA will pick it up as soon as possible, like G 2/19 (Haar vs Munich) which had been resolved in less than five months.
UPDATE 16 March 2021:
Decision T 1807/15 of 12 March 2021 (see below) refers the following question to the EBoA:
«Is the conduct of oral proceedings in the form of a videoconference compatible with the right to oral proceedings as enshrined in Article 116(1) EPC if not all of the parties to the proceedings have given their consent to the conduct of oral proceedings in the form of a videoconference?»
What is to be hoped for
I am a big fan of oral proceedings in person; see e.g. this Blog here.
Still, I feel it would be a disaster if the EBoA concluded that a whole lot of unsolicited oral proceedings by video-conference during the pandemic were illegal. What I do hope for though is that the EBoA paves the way back to oral proceedings in normal times / after the pandemic as we had been used to have them at the EPO: In person, at least for those who expressly do not consent with video-conferencing.
The best piece of research in this respect that I have seen by now is from Tilman PFRANG, available here.
Further, many submissions have been made during public consultation on the new Art. 15a of the Rules of Procedure of the Boards of Appeal that expressly provides for video-conferencing (at the discretion of the respective Board). Not even a summary of all the submissions is available to date, but quite some associations have made their submissions publicly available. This is a wealth of information on the issue:
I had the pleasure to attend the conference on Case Management Issues in IP Proceedings earlier this week in St. Gallen, jointly organized by INGRES and SVRH. Expectedly, the discussion between judges, legal practitioners and patent attorneys was vibrant and open-minded. I gained a lot of full and frank insight into how cases are handled before the various commercial courts in Switzerland; these aspects of the conference will surely be dealt with in a summary to be made available here.
My personal take-away messages concerning proceedings before the FPC are the following:
No split reply anymore …
In the normal course of infringement proceedings, the FPC had ordered a partial reply from the plaintiff that only dealt with the nullity arguments brought forward by the defendant in his answer to the complaint, as a plea in defense. The FPC’s intention was to have a single statement of both parties on the two key aspects of the case, i.e. infringement and validity, before the parties were summoned for the instruction hearing. In the informal part of the instruction hearing, the court delegation could thus indicate a preliminary opinion on both key aspects, in view of the first exchange of arguments. Things may well have changed in view of the second exchange of briefs. But still, the interim assessment of the matter in the instruction hearing had been based on a well-balanced exchange of arguments: The first round had been completed. The exchange of briefs had been as follows:
In view of the obiter dictum in the Supreme Court’s recent decision 4A_70/2019 (discussed on this Blog here), the FPC has meanwhile discontinued the practice to split the reply in infrigement proceedings. Thus, the regular exchange of briefs in infringement cases will be as follows:
The reply will not be split anymore. The plaintiff will be invited to file his reply only after the instruction hearing. That’s a pretty standard exchange of briefs now, as it is known in any kind of proceedings governed by the CPC.
… and how that might influence the procedural strategy of the parties
Clearly, the assessment of validity of the patent in suit by the court delegation during the instruction hearing will be even more preliminary than ever before. The plaintiff will likely not have anticipated and addressed all the nullity arguments in the complaint. Thus, there will likely be nullity arguments on file on which the plaintiff / patentee has not yet been heard, and the court delegation cannot easily give an opinion on such arguments (except, maybe, for some formal / purely legal issues). Time will tell whether the instruction hearing will henceforth be of that much value to foster a settlement as it had been in the past; see the settlement rates over the years on this Blog here.
Some food for further thought, based on what has been discussed at the conference:
Will we see more infringement complaints with a full and frank discussion of potential nullity arguments, based on what has been argued in proceedings elsewhere, or in prior communication between the parties? That is pretty likely, indeed. It became clear in the discussion that such extensive frontloading has already happened.
A defendant in an infringement case has any motiviation to get invalidity reasonably addressed by the court delegation in the instruction hearing. But that will not happen to large extent when the plaintiff had just been silent on validity in his complaint. Still, the defendant might cure this ‘defect’ himself: He could gather what had been argued elsewhere by the patentee / plaintiff in defense of his patent or during prosecution, and disprove those arguments. The plaintiff would be hard pressed to contradict his own arguments that had been made elsewhere — and the court delegation could well indicate an opinion on such arguments in the instruction hearing, in my opinion.
Will patents more often be asserted only to a limited extent in the future, i.e. limited enough to render the (expected) plea for nullity in defense moot, yet broad enough to cover the allegedly infringing embodiment? In my perception, that would not be a sign of weakness at all. It is just pragmatic to assert the patent only to the extent necessary.
Yet another strategy of patentees might be to frontload various limited versions of the patent for assertion inter partes (verbal limitations) as auxiliary requests already with the complaint, to get a broad(er) picture of potential allowability in the instruction hearing.
Finally, patentees might also consider to assert the patent as granted, but to set out in the reasons that a whole lot of further features of the patent, from dependent claims or even from the specification, are fulfilled in the allegedly infringing embodiment. That leaves much leeway for various verbal limitations at a later stage of the proceedings.
Now, what if the instruction hearing turns out to be not of much value under the new regime anymore? Dieter BRÄNDLE mentioned that the Commercial Court Zurich had invited the parties to submit a brief statement only for consideration in the instruction hearing. If no settlement was reached and the parties wanted to rely on anything from their statements, they had to refile those arguments with their outstanding briefs.
Could that maybe a worthwile approach to bring the patentee’s complete view on defendant’s plea for nullity to the court delegation’s attention before the instruction hearing? Initial reactions were split: Would such a statement maybe considered as a reply in disguise? That could have fatal consequences with respect to an early closure of the file. However, I have also heard prominent voices in favor of this approach. Mark SCHWEIZER indicated that nothing like this would now be introduced in a rush now. Let’s see how the new regime works in practice. If it doesn’t, one might well consider this in more detail.
On a sidenote, I have recently been involved in a settlement conference in U.S. proceedings. The judge did a great job, even though no settlement could be reached in the end. The judge issued a very specific order beforehand about a confidential memorandum to be filed by both parties; see the Order for Settlement Conference. Along with a strict word count limit, I feel this is indeed very helpful for a judge to better understand where both parties are coming from. I am not overly enthusiastic about litigation in the U.S. at all, but this could be sth worth to consider.
Settlement talks in general
Should court-mediated settlement talks be held only with the two parties together? What about shuttle diplomacy, i.e. the judge(s) also talking with each party individually, e.g. to overcome certain personal tensions or hostile feelings between the parties and/or their representatives. Shuttle diplomacy (referred to as ‘Einzelabreibung’ or ‘Einzelabschlachtung’ by some participants) is practised at least by some Swiss courts; see Mark SCHWEIZER’s recent comparative study.
One potential downside is, of course, that a party may easily feel uncomfortable with the fact that some unilateral conversation is going on behind the scene between the judge(s) and the counterparty.
Mark SCHWEIZER had been asked whether shuttle diplomacy is done at the FPC. The answer was a clear ‘No’, and it became pretty clear that this was not an option for him at all.
Further news from the FPC
The FPC has recently issued ex parte interim measures without any written statement of the grounds, in accordance with Art 239(1) lit. a CPC. A written statement of the grounds must be provided if one of the parties so requests within 10 days of the notice being given of the decision; else, the parties are deemed to have waived their right to challenge the decision (Art 239(2) CPC). Since ex parte interim measures cannot be appealed in any event (see e.g. decision 134 III 417 of the Supreme Court), ex parte interim measures need arguably not come along with a written statement of the grounds in any event. It would have been interesting to learn more about the particular urgency of this matter that urged the FPC to explore this possibility. However, nothing will be published: The parties have settled. Darn!
As mentioned on this Blog here,a timeline for the further course of the proceedings is established during the instruction hearing if no settlement is reached. It became clear that not everybody at the FPC believes that this is feasible, but Mark SCHWEIZER said that he is a die-hard optimist.
Claim construction is key in almost every case — and it might perhaps play an even more important role in the instruction hearing than ever before. However, Mark SCHWEIZER indicated that claim construction is still frequently treated like a red-headed stepchild in the briefs, and that it is hard for the court to only catch a glimpse of a party’s understanding of a certain feature from e.g. the discussion of the cited prior art.
Mark SCHWEIZER mentioned on a sidenote that he would tend to always allow joint procedural requests of both parties, as long as they do not contravene the law. Let’s see how parties make use of this flexibility.
The unconditional right to be heard sometimes leads to an essentially meaningless exchange of party submissions after formal closure of the file. Both sides feel prompted to reply just in order to formally contest the other party’s allegations. The question came up whether a court could forward such statements with the comment that the submission is deemed to be contested in any event. Mark SCHWEIZER indicated that the FPC would look into this, in particular whether this would be compliant with the CPC.
Based on what had been mentioned at the conference I have to believe that the recent dissenting opinion had been supported by two judges; the actual split of the panel was thus 3:2. That’s a close call, indeed! See this Blog here for further information.
Sanipat’s CH’691 has already been partially surrendered twice, see below.
EP’067 is currently being challenged in EPO opposition proceedings, see EPO Register. Hafner joined the pending opposition proceedings by intervention; Art. 105(1) lit. a EPC. Oral proceedings are scheduled for 28 November 2019.
The patent at stake is about an apparatus for cooking food products. More information about the patentee’s product ‘Feuerring’ can be found on the patentee’s homepage.
The only independent claim 1 of EP’003 as granted read as follows:
An apparatus for cooking food products, said apparatus comprising a firebox (4) with an axially symmetrical form, the firebox (4) having a box wall (6) and a box edge (8), which defines the box wall, and being intended to accommodate a combustion material which, during combustion, outputs the thermal energy required for cooking, and having a continuous heating surface (10) which runs substantially at a right angle to the axis (A) of the firebox (4), surrounds an opening (12) arranged about the axis and is intended for the direct cooking of the food products, wherein between the box wall (6) and the heating surface (10) there is arranged a false floor (14) which is intended to support the combustion material, characterised in that the false floor (14) and the box wall (6) have an outlet opening (24 or 22) each for removing the residue of the combustion material from the apparatus.
This can be best understood with the figures of EP’003 at hand:
Opponent Nouvel AG lodged an appeal, and the FPC now requested to accelerate these appeal proceedings. Interestingly, two separate briefs with reasons of appeal have been filed: One by Felber & Partner, the other one by Manitz Finsterwald. Patentee / respondent has filed an answer.
Update 05 October 2018:
Opponent/appellant Nouvel filed a reply on 01 October 2018.
Not much is known about the actual subject of the proceedings pending at the FPC, except for the party representatives: Simon Holzer (MLL) and Andri Hess (Homburger). In view of MLL‘s involvement in the matter, Mark Schweizer apparently stepped back and Christian Hilti is chairing these proceedings.
Der Luxusgüterkonzern Richemont liegt wegen einer patentgeschützten Erfindung mit dem Konsortium aus Rolex, Patek Philippe and Swatch Group im Clinch.
A silicon hairspring technology had been developed by the consortium, together with CSEM, already about 15 years ago.
Vor über fünfzehn Jahren haben die Grossen der Branche […] ihre Kräfte gebündelt — und mit dem Forschungsinstitut CSEM in Neuenburg die Siliziumtechnik in der Unruhspirale 2005 zur Serienreife entwickelt.
Richemont’s silicon hairspring technology Twinspir™ in Baume & Mercier’s new movement Baumatic™ apparently is the bone of contention:
The NZZaS did not provide much details about the conflict, and no sources are revealed. It is only that Baume & Mercier’s CEO, Geoffroy Lefebvre, is cited with the confirmation that discussions with the consortium are ongoing, and that no patent has been illegitimately used. B&M is said to argue that their hairspring is designed differently. According to NZZaS, the consortium does not agree, and judges will have to decide.
‘Es gibt Diskussionen mit dem Konsortium’, antwortet Lefebvre knapp. Er betont, dass kein Patent ‘gesetzeswidrig genutzt’ worden sei. Das Konsortium sieht das offenbar anders, wie von Kennern des Sachverhalts zu hören ist. Baume & Mercier argumentiert, dass ihre Unruhspirale anders aufgebaut (aus zwei Strängen) sei — und darum kein Patent verletzte. Am Ende werden die Richter den Sachverhalt klären müssen.
UPDATE 27 Sep 2018:
I have been informed that NZZaS apparently already mentioned in an article of 2 Sep 2018 that the consortium alleges a patent infringement (see here):
Das Konsortium hat offenbar bei Richemont wegen einer möglichen Patentverletzung interveniert.
Again, no sources or further details are revealed; the basis of this information is obscure. It remains to be seen how this finally unfolds.
UPDATE 07 Oct 2018:
The NZZaS continued its serial on this topic today; see here. Frankly, without any significant news. It is only that Patek Philippe apparently also believes that Baume & Mercier infringes the patent:
Patek Philippe wie auch unsere Partner Swatch und Rolex sind effektiv der Ansicht, dass Baume & Mercier unser Patent (Silinvar) verletzt.
Contrary to what Baume & Mercier’s CEO Geoffroy Lefebvre had mentioned, Patek Philippe submits that the consortium is not currently engaged in discussions with Richemont / Baume & Mercier.
UPDATE 11 Nov 2018:
Yet another update by NZZaS today. But now, it’s apparently the other way around. NZZaS mentioned in an article about the Richemont group today that Richemont has challenged the patent:
Richemont hat kürzlich das Patent des Konsortiums angegriffen. Es ist unklar, wie der Streit beigelegt wird – […].
The article reveals no further details or sources.
This decision of the Supeme Court does not concern a patent case, but it clarifies what might constitute a ground for recusal of a judge in general.
Judges are not living in an ivory tower. They even use Facebook and have ‘friends’ there. Now, is it a ground for recusal if a party is a Facebook ‘friend’ of a judge?
Well, the answer is a clear not necessarily, but maybe.
The mere fact that a judge is a Facebook ‘friend’ of a party to the proceedings does not in itself constitute a ground for recusal. Without additional information, it cannot be concluded that there indeed is a friendly relationship that could give rise to the appearance of a judge being biased.
Every person is entitled to have his case decided by an impartial, unbiased and impartial judge. It is not decisive whether or not a judge is actually biased. Even the appearance of bias or the danger of bias is to be avoided. In the case of friendly connections, this requires a certain closeness that goes beyond a mere acquaintance or a ‘dozy relationship’.
Bei freundschaftlichen Verbindungen ist dazu eine gewisse Nähe erforderlich, die über eine blosse Bekanntschaft oder ein ‘Duzverhältnis’ hinausgeht. Eine ‘Freundschaft’ auf Facebook weist noch nicht auf freundschaftliche Beziehungen im traditionellen Sinn hin.
The decision holds that a ‘friendship’ on Facebook does not yet indicate friendly relationships in the traditional sense. Mutual affection or sympathy is not necessary to establish a ‘Facebook friendship’. ‘Facebook friends’ may well include people with whom one maintains regular contact in real life; but they can also include people one would only qualify as a simple acquaintance or as a person with whom one would only have a common interest in a social network on a particular subject.
Recent studies have also shown that a number of more than 150 ‘Facebook friends’ typically include people with whom one does not have any contact or one does not even know. Without additional information, one cannot conclude from a ‘Facebook friendship’ that a friendly relationship actually exists which could lead to the appearance of bias.
A ‘Facebook friend’ is not necessarily a friend.
Reported by Martin WILMING
The FPC’s Guidelines on Independence can be found here. Grounds for recusal of judges are governed by Art. 3-5.
The present matter is not about infringement, but rather all about pricing issues. It is important to understand that Lyrica® is approved for three indications:
Patent protection for (1) only expired in July 2017 (and allegedly accounted for about 2/3 of all uses of the drug), while protection for (2) and (3) already expired in May 2013. Overall sales of Lyrica® still accounted for about 5bn of Pfizer’s annual turnover in 2017.
Further, it is important to understand some basic principles of how prescription and use of generics is promoted in Switzerland. In general, the insured person’s share of costs consists of a fixed annual amount (franchise) and a deductible of 10% of the costs exceeding the franchise (up to a certain maximum). However, if the insured person demands a more expensive medicament and waives the cheaper option, he must pay 20% of the cost of the medication instead of 10%.
Until February 2017, this differentiated deductible of 20% applied to drugs whose price exceeded the average price of the cheapest third of all drugs consisting of the same active ingredients (and listed on the specialty list) by at least 20% (since March 2017: 10%).
Pfizer appealed an order of the Federal Office of Public Health (FOPH) of 29 October 2015, in which the FOPH issued a 20% deductible for Lyrica® with effect from 1 December 2015, not taking account of different indications at all. The overall calculation is anything but easy. In a nutshell, Pfizer argued that the price level of the generics had been wrongly determined by the FOPH, based on Art. 38a KLV. In simple terms, Pfizer argued that the not yet generic indication (1) has to be excluded from the maths and that a deductible of 10% shall apply in accordance with Art. 38a(4) KLV.
The FAC did not agree. Rather, the decision holds that the Health Insurance Act (KVG) and the Ordinance on Health Insurance (KVV) only differentiate on the level of preparations, not on the level of indications (¶8.2.7, emphasis in original):
[…]; vielmehr unterscheiden KVG und KVV auf der Stufe der Präparate zwischen Originalpräparat und generischen Arzneimitteln.
Further, the decision is very clear in that the patent law does not give the patent holder the right to a certain — or even just an economically worthwhile — price in the context of the commercial use of his invention. Contrary to what the plaintiff argued, patent protection does not mean price protection (¶8.3.3):
Das Patentrecht gibt dem Patentinhaber damit kein Recht auf einen bestimmten — oder auch nur auf einen für ihn wirtschaftlich lohnenden — Preis im Rahmen der kommerziellen Nutzung seiner Erfindung. […] Entgegen den Ausführungen der Beschwerdeführerin bedeutet Patentschutz nicht Preisschutz.
Finally, the decision holds that there would have been established ways for Pfizer to exclude the not yet generic indications from the maths — but it failed to take the appropriate actions. According to the Handbook for the Specialty List (p. 51, ¶C.5.2.2; corresponding to ¶C.4.4.3 of the former version of 1 September 2011), only the market volume of the original preparation with the same indication as the generic drug is taken into account when different original preparations with different indications exist for an active ingredient. However, Pfizer only had the further indications added to the list of indications of one and the same preparation of Lyrica® (¶8.4.4):
Zu Recht weist die Vorinstanz auf die […] Möglichkeit hin, eine neue Indikation eines bereits bestehenden Wirkstoffes als neues Medikament anzumelden und in die SL aufnehmen zu lassen. Dieses Vorgehen hätte der Beschwerdeführerin ermöglicht, für ein (hypothetisches) Medikament “[…] [für] […]” bis Ende des Patentschutzes dieser Anwendung von den höheren Preisen für Originalpräparate zu profitieren, ohne gleichzeitig einen höheren Selbstbehalt in Kauf nehmen zu müssen. […] Es steht damit dem Hersteller und Patentinhaber frei, welches Vorgehen er wählen möchte, im Wissen um die jeweiligen Konsequenzen.
In the end, it’s all about money. Due to the suspensive effect of the appeal, Pfizer benefited from an unlawful deductible of 10% instead of 20% from 1 December 2015 until 31 November 2017. Accordingly, the FOPH will have to examine whether and, if so, to which extent Pfizer will have to pay a refund.
The decision is not yet final; Pfizer’s appeal is pending at the Supreme Court.
The current Swiss Civil Procedure Code has been enacted in 2011, and the Federal Council had been asked to assess its practicality and to come up with suggestions for improvement, if appropriate (motion 14.4008).
The first draft of proposed changes has been published on March 2, together with exhaustive explanatory notes. The consultation process is open until June 11, 2018.
Proceedings at the Federal Patent Court are governed by the Civil Procedure Code, and the proposed changes would have quite some implications for FPC proceedings. In my perception, the most important aspects are the following:
First, it is proposed that only half of the expected court fee may be ordered as an initial advance payment; see Art. 98(1) of the draft. Notably, this is already the current practice at the FPC since December 2015; see this Blog here.
It is also proposed that a successful plaintiff shall get his advance payment(s) refunded; see Art. 111(1) of the draft.
Currently, the court keeps the plaintiff’s advance payment(s) irrespective of the outcome on the merits and orders that the defendant refunds the amount to the successful plaintiff. The proposed amendment actually shifts a collection risk from (successful) plaintiffs to the State.
Finally, legal aid is currently not available for the precautionary taking of evidence. It is now proposed to explicitly provide for this possibility in Art. 118(2) of the draft.
Private expert opinions
Private expert opinions are newly listed as a ‘physical record’ in Art. 177 of the draft. Note that private expert opinions are currently not considered as a means of evidence according to Art. 168 CPC, in particular not as a ‘physical record’ in the sense of Art. 177 CPC; see e.g. BGE 141 III 433. The dispatch of the Federal Council on the current CPC held that private expert opinions are admissible, but will only be considered as a statement of a party; see BBl 2006, p. 7325, 3rd paragraph. If the proposed change is adopted, party expert opinions would henceforth be subject to the court’s free assessment of evidence according to Art. 157 CPC.
Ex-parte interim measures
Ex-parte interim measures are a powerful tool – when granted. However, a request for ex-parte interim measures may backfire when the court dismisses the request. According to the current Art. 265 CPC, the court will summon the parties to a hearing and set the respondent a deadline to comment in writing. As a consequence, the respondent is informed about the ex-parte request, and there is a risk that a later enforcement of the measure might be frustrated.
It is held in Art. 265(4) of the draft that the court shall not inform the respondent of the decision and shall abstain from issuing the summons or setting the respondent a deadline to respond until it has been decided on an appeal against the decision to refuse ex-parte interim measures, if requested so by the applicant.