Late stage partial waiver of a patent: No appropriate ways to deal with them?!

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Case No. 4A_420/2019 (Supreme Court) | Decision of 13 May 2020 on appeal against O2016_001 | Decision of 27 June 2019

We had reported about the decision of the FPC on this Blog here.

In brief, Harcane had sued Comadur essentially to the effect that CH’572 be declared invalid (based on Art. 26(1) lit. a PatA, not lit. d); or, alternatively, if CH’572 was held valid, that it be transfered to Harcane. See Swissreg for further bibliographic information on CH’572; an automated translation can be found here.

Comadur partially waived CH’572 with the rejoinder; Art. 24(1) lit. c PatA. The FPC had dismissed Harcane’s requests and maintained CH’572 in partially waived form.

Harcane’s appeal has now been dismissed by the Supreme Court.

On a formal issue, I have learned from the Supreme Court decision that deletion of dependent claims 7-10 in the conclusions of the FPC decision (p. 41-42) happened by accident. A rectified decision has apparently been issued ex officio on 13 November 2019 (unpublished):

On appeal, Harcane challenged admissibility of the partial waiver, for various reasons: In first place, the amended claims were not directed to the same invention (contrary to Art. 24(1) lit. c PatA); alternatively, the claimed subject-matter was obvious (contrary to Art. 1(2) PatA) and not applicable in industry (contrary to Art. 1(1) PatA). The Supreme Court held that these objections have apparently not been raised before the FPC — but they could and should have been raised there:

L’argumentation ci-mentionnée est nouvelle et elle ne s’impose pas en raison des motifs du jugement attaqué. La demanderesse ne paraît pas avoir été empêchée de la soulever déjà devant le Tribunal fédéral des brevets, notamment au stade des débats principaux; elle a simplement omis de le faire.

The Supreme Court thus held that the appeal was inadmissible to the extent nullity / allowability of the partial waiver is concerned.

Still, there is an interesting sidenote on late stage partial waiver in general, and the procedural issues they cause. The Supreme Court did not mince matters (loose translation):

The partial waiver obviously introduced a very important change in the subject matter of the dispute. Neither the CPC nor the PatCA explicitly provides for a procedure appropriate to this situation. Usually, however, a partial surrender is suitable to allow a simplification of the proceedings ([…]). At first glance, it would have been appropriate to issue an interim decision in accordance with Art. 237 CPC on the partial waiver requested by the Respondent and then to invite the Claimant to refocus their arguments. This could have been done in the context of Art. 125 CPC, since this provision does not exhaustively list measures to simplify the proceedings ([…]).

Here is the original wording in French:

In my understanding, compliance of a partial waiver with Art. 24(1) lit. c PatA has to be examined ex officio. Accordingly, the Supreme Court notes that the court must examine (“[…] doit […] vérifier […]”) whether the newly formulated claims validly reduce the scope of the patent in suit; ¶3. By the way, the FPC did so (even though very briefly):

Frankly, I am not fully convinced that an interim decision would really simplify the proceedings. On the contrary, I feel it would rather lengthen the proceedings, except for clear cut cases of non-compliance with Art. 24(1) lit. c PatA — which I understand was not the case here, in the FPC’s view; and Harcane did apparently not argue that in first instance proceedings, either.

In my perception, the current practice of the FPC to instead invite the counterparty to comment on new factual allegations in the rejoinder within a time period fixed by the court is fit for purpose. The partial waiver clearly is a new factual allegation, and the counterparty actually is already provided with a possibility to refocus their arguments.

On the other hand, in a situation where the FPC considers that a partical waiver is non-compliant with Art. 24(1) lit. c PatA but both parties remained silent on this issue, the parties could be invited to complete their pleadings on this issue in any event, with or without a subsequent interim decision in this respect; Art. 56 CPC.

A further aspect of the decision relates to the value in dispute. The parties had proposed widely differing values, i.e. kCHF 80 and kCHF 660, respectively. The FPC had fixed the value in dispute to kCHF 500, in view of the hard fight of the parties before the various courts and the considerable economic value of the subject-matter of the patent. The Supreme Court held that the FPC has some discretion in fixing the value in dispute, and that there was no apparent abuse of this discretion. In particular the Supreme Court held (¶5, loose translation):

Contrary to the plaintiff’s opinion, the outcome of the litigation cannot influence the estimate of the value in dispute and it is therefore irrelevant whether the patent will eventually be deemed invalid.

With respect to the cost issue, the appeal was thus held admissible, but ill-founded.

Reported by Martin WILMING

BIBLIOGRAPHY

Case No. 4A_420/2019 (Supreme Court) | Decision of 13 May 2020 on appeal against O2016_001 | Decision of 27 June 2019

Harcane Sàrl (Appellant / Plaintiff)
./.
Comadur SA (Respondent / Defendant)

Panel of Judges:

    • Dr. Christina KISS
      • Dr. Martha NIQUILLE
      • Marie-Chantal MAY CANELLAS

Court Clerk:

    • Antoine THÉLIN

Representative(s) of Plaintiff:

    • Jean-Claude SCHWEIZER (SLB)

Representative(s) of Defendant:

DECISION OF THE SUPREME COURT (II)
→ appeal against FPC decision dismissed
Case no.: 4A_420/2019
Decision of: 13 May 2020

DECISION OF THE FPC
→ patent maintained / partially surrendered; plaintiff’s claims dismissed
Case no.: O2016_001
Decision of: 27 June 2019

DECISION OF THE SUPREME COURT (I)
in a related matter, referred to in ¶13 of the FPC decision and Section B of the later Supreme Court decision 4A_420/2019
Case nos.: 4A_584/2017
4A_590/2017
Decision of: 9 January 2019

PATENT IN SUIT

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Paying annuities may have unexpected consequences …

Case No. O2018_018 ¦ Order (excerpt) of 4 January 2019 ¦ ‘Klageüberfall’

Reading time: 5 minutes
HEADNOTE

Art. 106(1), 107(1) lit. e CPC:

Allocation of costs.

The patentee who deletes their patent from the patent register after the filing of a nullity action is liable to pay the procedural costs even if they have not been forewarned before the filing of the action.

The hn highlights in no uncertain terms the risk associated with maintaining patents of doubtful validity in Switzerland: Even in case of a nullity action out of the blue, and even if the patent is then withdrawn immediately, the patentee / defendant still has to bear the procedural costs.

Frankly, this does not come as a complete surprise. The tendency has already been clear since O2015_010, decision of 5 January 2016. The present order again confirms that Swiss law (unlike Germany, cf. § 93 DE-ZPO) does not provide for an obligation to issue a prior warning letter. With reference to the practice of the cantonal court of Zug (A3 2010 58, ‘Geburtsgel’), the order holds that clapping all costs on the defendant is justified if the defendant had

[…] given the impression by his pre-litigation conduct that he had not had the patent cancelled on mere warning.

Noteworthy, the present order holds that this conclusion can already be drawn from the mere existence of a formally valid patent. This is because the patent is cancelled if the renewal fees due are not paid on time (Art. 15(1) lit. b PatA). It would be unreasonable to assume that the patentee would pay the annuities on time but cancel the patent on first demand.

And, in fact, the patentee in the present matter did not respond immediately to the (informal) notification of the action by cancelling the patent, but rather offered the plaintiff a licence. This suggests that even in the case of a pre-litigation request, the patent would not have been cancelled immediately.

Feller logo

The order has been published in highly truncated form only. But still, I am reasonably sure about the patent at stake. Searches in Swissreg give only a single perfect fit, i.e. EP(CH) 1 204 164 B1 of Feller AG; see Swissreg. Annuities had been validly paid until 30 November 2018, but the patent had been withdrawn shortly before that date, with letter of 6 November 2018 (published in Swissreg on 8 November 2018).

The invention of EP’164 apparently is all about a screwless connecting terminal for electrical conductors, with more secure releasability of the conductors. Claim 1 reads as follows:

Device (1) with screwless terminals for connecting electrical conductors, with at least one spring comprising an elastic terminal arm (7) and a brace (2) which encloses it, where a contact tongue (8) of the terminal arm (7) cooperates with a retaining part (5) of the brace (2) so as to maintain a conductor introduced between the contact tongue (8) and the retaining part (5), where the brace (2) leaves the contact tongue (8) at least partially accessible on both sides of the retaining part (5), so that it can be acted upon from outside the brace (2) on both sides of the retaining part (5), characterized in that the brace (2) comprises a base (3) and a lateral wall (4) the upper part of which is bent so as to form the retaining part (5) in such a way that this retaining part (5) is only connected through its longer side with the lateral wall (4), and that the latter comprises at least one recess (11) in the vicinity of the extremity of the contact tongue (8).

All this is more readily understandable with Fig. 1 of EP’164 at hand:

EP 1 204 164 B1, Fig. 1

Unfortunately, I failed miserably to track the plaintiff of this case. If someone out there does know more, please let me know.

Reported by Martin WILMING

BIBLIOGRAPHY

Case No. O2018_018 ¦ Order (excerpt) of 4 January 2019 ¦ ‘Klageüberfall’

n/a
./.
Feller AG

ORDER (EXCERPT)

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EP 1 204 164 B1

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The clock is ticking (but not yet for the costs)

Case No. 4A_301/2017 (Supreme Court) ¦ Decision of 30 June 2017 ¦ “Patent, interim measures, costs”

This case relates to a folding buckle for watchbands featuring biometric recognition of individual vein patterns. For further background information on the assignment action, please see this Blog here (S2017_003, decision of 25 April 2017).

The plaintiff had lodged an appeal to the Supreme Court against the FPC’s interlocutory decision in summary proceedings, but only challenged the apportionment of costs. However, apportionment of costs in summary proceedings does not cause irreparable harm in the sense of Art.  93(1) lit. a SCA since apportionment can be challenged with an appeal against the final decision; Art.  93(3) SCA (see decisions 4A_24/2017, r 2.2; 135 III 329, r 1 and 138 III 94, r 2).

The appeal was thus held manifestly inadmissible.

Reported by Martin WILMING

BIBLIOGRAPHY

Case No. 4A_301/2017 (Supreme Court) ¦ Decision of 30 June 2017 ¦ “Patent, interim measures, costs”

Biowatch SA

./.

  1. Oréade Manufactue de Boîtes SA
  2. B. SA
  3. C. SA

The President:

  • Dr. Christina KISS

Court Clerk:

  • Raphaël CARRUZZO

Representative(s) of Appellant / Plaintiff:

  • Florian DUCOMMUN (HDC)

Representative(s) of Respondent (1):

Representative(s) of Respondents (2) and (3):

DECISION IN FULL

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Decision on costs: The winner takes it all?

Case No. O2014_002 ¦ Decision of 21 November 2016 ¦ “Urinalventil: Kosten- und Entschädigungsfolgen (Rückweisung)”

As reported earlier, the Supreme Court has reversed the FPC’s judgement in this matter. In brief, the FPC had decided that the first generation device infringed but the second generation device did not infringe EP 1 579 133 B1. The Supreme Court held that the second generation also infringed — and remitted the case to the FPC to accordingly adjust the ruling on costs. And here we are: The present decision only deals with the apportionment and fixing of costs.

The value in dispute had initially been set to CHF 300’000,–. Proceedings against the present defendant have later been separated since bankcruptcy proceedings had been initiated for the other defendant (Enswico AG; meanwhile liquidated). Now, how does this affect the value in dispute of the separated proceedings? In the event of the voluntary joinder of parties or joinder of actions, the values of the claims are added together insofar as they are not mutually exclusive; Art. 93 CPC. The FPC held that a contrario the value in dispute is to be allocated in case of a separation of proceedings. The present defendant was a contract manufacturer of the other defendant; it did not even own the molds. The value in dispute was thus fixed to only CHF 75’000,–, as requested by the defendant.

The court fee to be borne by the defendant was fixed at CHF 12’000,– in accordance with Art. 1 CostR-PatC. A compensation for legal representation of CHF 15’000,– was awarded to the plaintiff, ie well within the tarif (Art. 5 CostR-PatC). Expenses for the plaintiff’s patent attorney were awarded only with a sharp cap at CHF 15’000,–, ie corresponding to the compensation for legal representation. One may like it or not, but this approach is established case-law since O2012_043. A 50% share of the patent attorney’s overall costs incurred for both defendants would have resulted in more than twice as much.

Reported by Martin WILMING

BIBLIOGRAPHY

Case No. O2014_002 ¦ Decision of 21 November 2016 ¦ “Urinalventil: Kosten- und Entschädigungsfolgen (Rückweisung)”

Daspaco AG ./. Von Allmen AG

Composition of the Board of Judges:

  • Dr. Dieter BRÄNDLE
  • Dr. Tobias BREMI
  • Dr. Christoph GASSER
  • Werner ROSHARDT
  • Dr. Ralph SCHLOSSER

Court Clerk:

  • Susanne ANDERHALDEN

Representative(s) Patentee:

Representative(s) of Defendant:

DECISION IN FULL

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Late surrender of the patent only after nullity suit was lodged: Costs clapped on the defendant

Case No. O2015_010 ¦ Decision of 05 January 2016 ¦ “Verzicht auf das Patent gemäss Art. 15 Abs. 1 lit. a PatG nachdem Patentnichtigkeitsklage rechtshängig ist; Gegenstandslosigkeit; Kosten- und Entschädigungsfolgen”

The patent in suit in this nullity case is CH 696 260 A5 of AstraZeneca. This Swiss patent is a member of the patent family of WO 01/51056 A1 since it claims the same priorities, but it is not a nationalization of the PCT application. Via the PCT route, there are also two European patents currently in force in Switzerland within the same patent family, i.e. EP 1 250 138 B2 (see EP Register and Swissreg) and EP 2 266 573 B1 (see EP Register and Swissreg).

Fulvestrant
Fulvestrant

CH’260 pertains to certain fulvestrant formulations. The corresponding product on the market is AstraZeneca’s Faslodex® (active ingredient: fulvestrant). Fulvestrant is an estrogen receptor antagonist indicated for the treatment of hormone receptor positive metastatic breast cancer in postmenopausal women with disease progression following antiestrogen therapy. It has been approved by Swissmedic on 19 March 2004.

Sales figures (worldwide) are still on the rise (according to AZ’s Annual Report 2014; see p. 143):

2012 2013 2014 2015
USD 654m USD 681m USD 720m not yet published

This nullity suit against CH 696 260 A5 was filed on 18 August 2015. With his answer the patentee / defendant submitted that he had surrendered the patent by written declaration to the patent office according to Art. 15 PatA. Lapse of the patent has been published on 04 November 2015, with ex tunc effect; see Swissreg.

Well, no patent, no proceedings anymore; the case is to be dismissed as groundless (Art. 242 CPC). But somebody has to bear the costs. Note that it is at the discretion of the court to allocate the costs when the case has become groundless; Art. 107(1) lit. e CPC.

The defendant / patentee requested that costs should be borne by the plaintiff. It was argued that a mere letter requesting the surrender of the patent would have been sufficient and could have avoided the costly and unexpected proceedings. In view of the two aforementioned European patents in force in Switzerland it would have been readily apparent hat there was no actual interest anymore in the Swiss patent. The plaintiff argued that the proceedings were not at all unexpected. The plaintiff had already asked the defendant in March 2015 whether he would agree to conduct the proceedings in English. Consequently, the FPC held that the defendant / patentee knowingly took the risk of the nullity proceedings.

Court fees were charged on the defendant and fixed at CHF 12’000,–; a party compensation of CHF 35’700,– (as requested) was awarded to the plaintiff. The decision can still be appealed to the Supreme Court.

From the reasons of the decision, it is evident that also nullity proceedings are currently ongoing before the FPC against the two European patents, i.e. EP 1 250 138 B2 and EP 2 266 573 B1. Case numbers are O2015_011 and O2015_012, respectively. No further information is currently available on these cases.

For an overview of litigation elsewhere on this topic, please see AZ’s Q3 2015 report (excerpt below, marked-up):

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Reported by Martin WILMING

— BIBLIOGRAPHY —

Case No. O2015_010 ¦ Decision of 05 January 2016 ¦ “Verzicht auf das Patent gemäss Art. 15 Abs. 1 lit. a PatG nachdem Patentnichtigkeitsklage rechtshängig ist; Gegenstandslosigkeit; Kosten- und Entschädigungsfolgen”

Actavis Switzerland AG ./. AstraZeneca AB

Composition of the Board of the FPC:

  • Dr. Dieter BRÄNDLE

Court Clerk

  • Susanne ANDERHALDEN

Representative(s) of Plaintiff:

Representative(s) of Defendant:

  • Dr. Michael RITSCHER (MLL)
  • Dr. Mark SCHWEIZER (MLL)
  • Dr. Kilian SCHÄRLI (MLL)

— DECISION IN FULL —

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Upfront payment of court fees reduced by half

The FPC has just announced a change of court practice on the internet, as follows:

As from now in ordinary proceedings the plaintiff is invited to pay an advance on only half of the expected court costs for a decision, which corresponds to the expected court costs up to and including the instructional hearing (Art. 98 CPC).

This will relieve plaintiffs from a significant share of their upfront costs when bringing a suit, and it reflects the very high share of cases being settled at the occasion of the instructional hearing.

Guidelines for the court fees are given in Art. 1 CostR-PatC, recited below (in CHF). I have added a third column to reflect the new advance payment regime:

Value in dispute Court fees Advance payment
up to 50’000 1’000 – 12’000 500 – 6’000
50’000 – 100’000 8’000 – 16’000 4’000 – 8’000
100’000 – 200’000 12’000 – 24’000 6’000 – 12’000
200’000 – 1’000’000 20’000 – 66’000 10’000 – 33’000
1’000’000 – 3’000’000 60’000 – 120’000 30’000 – 60’000
3’000’000 – 5’000’000 80’000 – 150’000 40’000 – 75’000
over 5’000’000 100’000 – 150’000 50’000 – 75’000

Reported by Martin WILMING

Infringement of a patent in good faith?

Case No. O2014_012 ¦ Decision of 23 September 2014 ¦ “Beendigung des Verfahrens ohne Entscheid; Kostenfolgen; kein Klageüberfall”

This court order of 23 September 2014 has been published only recently.

The story is quickly told: The plaintiff had sued the defendant for patent infringement. In his answer, the defendant immediately submitted to the requests for injunctive relief. Thus, only the allocation of costs remained to be decided. As a general rule, procedural costs are charged to the unsuccessful party. If no party is entirely successful, costs are allocated in accordance with the outcome of the case; see Art. 106 CPC. In a nutshell, the defendant argued that he had not been aware of the plaintiff’s patents beforehand. The plaintiff should have sent a warning letter before going to court. If he had done so, costs could have been avoided. The defendant thus invoked Art. 107 lit. f CPC and argued that there are “other extraordinary circumstances that would result in an allocation according to the outcome of the case being inequitable.”

The FPC held that the defendant essentially argues to have acted in good faith. Every person must act in good faith in the performance of his obligations; see Art. 2  CC. There is no good faith anymore if one knew, should have known or could have known of the non-conforming legal position. No person may invoke the presumption of good faith if he has failed to exercise the diligence required by the circumstances; see Art. 3(2) CC. Now, what is in fact required by the circumstances? In O2013_007 (r. 4.3), the FPC has already expanded on this issue:

There is no general obligation to conduct investigations — but if one has reason to suspicion, one has to clarify the situation.

In the present case, the defendant is not an end-user but rather a retailer. The FPC held that a retailer must clarify the patent situation if there is a risk of infringement. Such a risk was held to be clearly given in the present case. The plaintiff is apparently a renowned manufacturer typically seeking patent protection. The allegedly infringing products were technically and functionally very similar. Thus, the risk of a patent infringement should have been obvious for the defendant. He could thus not invoke the presumption of good faith and costs were allocated in accordance with the outcome of the case, i.e. the defendant has to bear the costs inasmuch as the requests for injunctive relief are concerned. But the plaintiff had also requested a rather prominent publication of the decision in trade journals in Germany and Switzerland. Later on, this request was withdrawn. Thus, the plaintiff was unsuccessful with this request. At first sight, one might have expected that the requests for injunctive relief were to be weighed higher than the request for publication. But the defendant had only sold two devices (a third one was apparently ordered by the plaintiff), and there was no reason to assume that the business would have extended. On the other hand, the publication in trade-journals would have globally blemished the defendant as a patent infringer.

Concluding, the FPC allocated the costs by half, and no party compensations were awarded.

Reported by Martin WILMING

— BIBLIOGRAPHY —

Case No. O2014_012 ¦ Decision of 23 September 2014 ¦ “Beendigung des Verfahrens ohne Entscheid; Kostenfolgen; kein Klageüberfall”

(not identified) ./. (not identified)

Subject(s):

  • Kosten: Parteientschädigung

Composition of the Board of the FPC:

  • Dr. iur. Dieter BRÄNDLE (President)
  • Lic. iur. Susanne ANDERHALDEN (First Court Secretary)

Representative(s) of Plaintiff:

Representative(s) of Defendant:

  • Dr. Robert BRINER (CMS)
  • Peter STEINEGGER (SBMP), assisting in patent matters

— FULL TEXT OF THE DECISION —

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