Swiss watchmaker litigating about silicon hairspring?

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The NZZaS reported yesterday that Richemont is fighting with a consortium of Rolex, Patek Philippe and the Swatch Group over a silicon hairspring technology that Richemont’s brand Baume & Mercier is just about to introduce in the Swiss market.

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:

Details of B&M’s Baumatic™ movement with Twinspir™ technology (website)
B&M logo

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.

Reported by Martin WILMING

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Friendship on Facebook is no ground for recusal of a judge per se

Supreme Court
Case No. 5A_701/2017 | Decision of 14 May 2018 | ‘Friends on Facebook’

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.

Thumbs up?

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.

Who’s out there?

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.

In short:
A ‘Facebook friend’ is not necessarily a friend.

Reported by Martin WILMING

P.S.:
The FPC’s Guidelines on Independence can be found here. Grounds for recusal of judges are governed by Art. 3-5.

DECISION IN FULL

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PRESS RELEASE

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Patent protection is not price protection

This decision has been handed down by the Federal Administrative Court, not the Federal Patent Court. Still, it will surely be of interest for patent practitioners in the pharmaceutical field.

Case No. C-7765/2015 ¦ Decision of 07 March 2018 ¦ ‘KVG, Spezialitätenliste’

Lyrica® capsule

The decision has been published on 11 May 2018; it is anonymized but pretty obviously pertains to Pfizer‘s blockbuster drug Lyrica® with the active ingredient pregabalin; see the specialist information and the specialty list for further information (German only). Pfizer heavily litigated with generic companies about infringement issues, most prominently in the U.K. where the final judgment of the Supreme Court is still awaited.

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:

  1. Neuropathic pain
  2. Epilepsy
  3. Anxiety disorders

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.

Pfizer logo

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.

Reported by Martin WILMING

BIBLIOGRAPHY

Case No. C-7765/2015 ¦ Decision of 07 March 2018 ¦ “KVG, Spezialitätenliste”

Pfizer PFE Switzerland GmbH ./. Federal Office of Public Health

Panel of Judges:

  • Beat WEBER
  • Christoph ROHRER
  • Vito VALENTI
  • Michael PETERLI
  • Viktoria HELFENSTEIN

Court Clerk:

  • Tobias GRASDORF

Representative(s) of Plaintiff:

Representative(s) of Defendant:

  • n/a

DECISION IN FULL

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Be prepared for some proposed changes to the Civil Procedure Code

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:

  1. Costs

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.

Collection risk

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.

  1. Private expert opinions
A smart party expert

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.

  1. 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.

Reported by Martin WILMING

DRAFT OF CHANGES

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The draft changes are also available in French language here; I did not grab the Italian version.

EXPLANATORY NOTES

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The explanatory notes are also available in French language here; I did not grab the Italian version.

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Amendments of the Patent Court Act approved by both chambers of the parliament

I have reported earlier about the forthcoming organisational changes at the FPC on this Blog here.

After the National Council, the Council of States has also approved the amendments to the Patent Court Act on February 28, 2018, without any votes to the contrary.

Accordingly, the debate was not controversial:

  1. Robert Cramer (member of the Council of States)

A verbatim transcript is also availabe here (FR only).

  1. Simonetta Sommaruga (Federal Councillor):

A verbatim transcript is also availabe here (DE only).

Now, what is next?

Once officially published, the amendment to the Patent Court Act might be challenged with an optional referendum (Art. 141 FC) within 100 days, but this is highly unlikely. Thus, one may expect the changes to be enacted in mid 2018.

UPDATE 15 March 2018:

The final parliamentary vote on this matter will be on 16 March 2018. The drafting committee has published the final version of the draft bill earlier today; see here.

UPDATE 03 April 2018:

The official publication was made on 27 March 2018, so the optional referendum is possible until 05 July 2018. Without a referendum, the amendments will enter into force on 01 August 2018.

Reported by Martin WILMING

Header image courtesy of Parlamentsdienste, 3003 Bern

AMENDMENTS TO THE PATENT COURT ACT

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The Patent Court that tweets

Be my Valentine

The Swiss Federal Patent Court now has an official Twitter account and published its first tweet on Feb 14, i.e. Valentine’s day. This surely is an account to follow. Much appreciated!

The tweet was about the forthcoming hearing in the matter Guenat SA Watches Valgine ./.  Swiss Finest SA that will take place on March 13, 2018 at the Hôtel de Ville de Neuchâtel. Please find some further information about this litigation on this Blog here.

Reported by Martin WILMING

Shutters down in Liechtenstein

Princely Courts in Vaduz (Asurnipal under a CC BY-SA 3.0 license)

I have reported about the decision 4A_18/2017 of the Swiss Supreme Court (Utz ./. Hilti) on this Blog here.  It is an interesting decision for various reasons, but the factual setup is just not fully clear from the Supreme Court decision itself. I thus tried to obtain the underlying decision of the Princely High Court of the Principality of Liechtenstein, to gain further insight. I felt this should not be an issue nowadays.

Oh, how mistaken I was! The Princely High Court just put the shutters down.

Coats of Arms (LI)
Coats of Arms (LI)

I was informed that a formal request of file inspection would be required to obtain a copy of the decision. Practically, this will just not work: The parties involved need to consent (how would you ever get consent from six parties which are anonymised in the Supreme Court decision?), or one would have to have a legal interest (which obviously does not apply).

I could not even obtain an anonymised version of the decision (I did not expect more than that anyway):

Sending the anonymised decision to a foreign country is out of the question.

Eh? The ‘foreign country’ is the seat of the competent second instance court in this matter.

As a last resort, I suggested that the decision be published ex officio in the database gerichtsentscheide.li. However, only ‘selected’ decisions are included in this database. For some reason this decision is apparently not worth being selected.

Frankly, I have difficulties to accept that this is still happening nowadays. Just for the sake of comparison, note what the Swiss Supreme Court has decided in a recent case in relation to the public access to judicial decisions.

Reported by Martin WILMING

(Header image by Asurnipal under a CC BY-SA 3.0 license)

A VIEW OF THE SWISS SUPREME COURT

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Administrative Board of Judges for the term of 2018-2023

As previously reported on this Blog here and here, the Federal Assembly had elected Mark Schweizer as new President and re-elected Tobias Bremi as second permanent judge.

Frank Schnyder has also been re-elected as Vice President at the November 15, 2017 plenary assembly of the FPC.

Thus, the Administrative Board of Judges for the term of office of 2018-2023 is:

President Mark Schweizer
Vice-President Frank Schnyder
Second permanent judge Tobias Bremi

Reported by Martin WILMING

OFFICIAL COMMUNICATION

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Three judges with a background in chemistry elected

As noted earlier on this Blog here, elections of the additional judges with a background in chemistry by the Federal Assembly took place earlier today. Unsurprisingly, all judges proposed by the Judicial Commission have been elected.

Congratulations to Michael Kaufmann, Frank Schager and Diego Vergani, and all the best of luck in handling of their cases!

Reported by Martin WILMING

THE SDA COMMUNICATION

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Three additional chemists proposed for election as judges

A report of the Judicial Commission on the preparatory work for the election of three additional non-permanent judges with a background in chemistry has been published yesterday.

The following candidates are proposed for election:

  1. KAUFMANN Michael
  2. SCHAGER Frank
  3. VERGANI Diego

Election by the Federal Assembly is scheduled for 13 December 2017.

Reported by Martin WILMING

THE JUDICIAL COMMISSION’S REPORT

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Time is of the essence

I have reported earlier on this Blog here about the time limits and possible  extensions that parties should expect in proceedings at the FPC, subject to exceptions as set forth in Art. 7 of the Guidelines on Proceedings.

This list has now been officially published on the FPC’s website (see link at the bottom of the page).

Reported by Martin WILMING

CHART OF TIME LIMITS

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Ethical Coffee Company ./. Nestlé et al.

ECC’s complaint against Nestlé et al. on the basis of CH 701 971 B1 had not been successful; see this Blog here for details on the first instance judgment of the FPC and the Supreme Court decision here.

The claim at stake inter alia required that

[…] said cage (5) is arranged in such a way as to deform, at least partially, any capsule (1), made of a material that can be deformed upon contact with hot water, which is placed in the cage (5) so that the capsule (1) is retained in the cage (5) following its contact with hot water.

An interesting aspect in this case was the meaning of the term ‘any capsule.’ The FPC held that the attacked embodiments evidently did not retain toute capsule’ / ‘any capsule’. The Supreme Court likewise held that there is apparently no specific meaning of the term ‘any capsule’ in the specific technology, and that the literal meaning was perfectly clear. Since it had been beyond dispute that at least some capsules were not retained, the feature was held to be not fulfilled.

The Regional Court Dusseldorf now came to a different conclusion in its assessment of the parallel EP 2 312 978 B1; see 4b O 9/16. Note that the Swiss judgments had been brought to the attention of the Dusseldorf court; see ¶75. The Dusseldorf court holds that such an interpretation would essentially make the claim meaningless. The skilled person would not understand the claim in this way, in particular since none of the embodiments shown in the patent would be covered by that definition.

Der Fachmann erkennt, dass der Begriff nicht in dem Sinne zu verstehen sein kann, dass damit 100 % aller Kapseln gemeint sind, mit denen in der betreffenden Vorrichtung ein Getränk zubereitet werden kann. […]  Ausreichend ist […], dass der Käfig in Bezug auf eine vorgegebene Kapselform und -größe so ausgestaltet ist, dass er diese Kapseln […] zumindest teilweise verformen und festhalten kann. Bei den Kapseln der vorgegebenen Größe und Form, auf die die Abmessungen des Käfigs patentgemäß abgestimmt werden, handelt es sich um ‘jede Kapsel’ […].

Bei einem anderslautenden Verständnis, wie es das Schweizer Bundesgericht offenbar seiner Auslegung zugrunde legt […] und wonach ‘jede Kapsel’ im Sinne von 100 % aller Kapseln, mit denen in der Vorrichtung ein Getränk zubereitet werden kann, zu verstehen ist, liefe der Patentanspruch zudem im Wesentlichen leer. […]  In seinem Bestreben, dem Patent einen sinnvollen Gehalt zu entnehmen, wird der Fachmann daher nicht auf die beschriebene Sichtweise zurückgreifen.  Überdies würde das dargestellte Verständnis dazu führen, dass keines der Ausführungsbeispiele mehr vom Gegenstand des Patents erfasst wäre. […] Eine Auslegung des Patentanspruchs, die zur Folge hätte, dass keines der in der Patentschrift geschilderten Ausführungsbeispiele vom Gegenstand des Patents erfasst würde, kommt allerdings nur dann in Betracht, wenn andere Auslegungsmöglichkeiten, die zumindest zur Einbeziehung eines Teils der Ausführungsbeispiele führen, zwingend ausscheiden oder wenn sich aus dem Patentanspruch hinreichend deutliche Anhaltspunkte dafür entnehmen lassen, dass tatsächlich etwas beansprucht wird, das so weitgehend von der Beschreibung abweicht […]. Angesichts des bereits dargestellten widerspruchsfreien und sinnvollen Verständnisses des Merkmals, das dem Fachmann vorliegend zur Verfügung steht, wird er auf eben jenes zurückgreifen.

It is always interesting to see how the various courts address the same question differently. In this case, the Swiss courts apparently took a rather strict approach with a strong focus on the wording of the claim, while the Regional Court Dusseldorf took a more liberal approach of claim construction.

The floor is yours for comments …

Reported by Martin WILMING

THE LG D’DORF DECISION 

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THE PATENT IN SUIT

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