Tag: Supreme Court

Question of law, or fact, or what?!

When I first read about questions of law (‘Rechtsfragen‘) and questions of fact (‘Tatfragen‘) in my younger years, I memorized something like this:

• • Questions of fact can be proven, and – as a rule – evidence is required.
  • Questions of law can be answered by applying the law to the facts at hand.

And I felt like «okay, got it; what’s next?» My goodness, how naïve I was. Much smarter people than I have been racking their brains over this for a long time. Meanwhile I feel more like there just is no clear and workable solution for differentiating between the two terms. I have once been told with a smirk that anyone who says otherwise just hasn’t thought about it long enough. There is undoubtedly some truth in that.

Why does the disctinction between questions of law and questions of fact matter?

It matters because the Supreme Court (SC) bases its judgments on the facts established by the lower court (Art. 105(1) SCA). It may correct or supplement the lower court’s findings of fact only if they are obviously incorrect or based on a violation of law within the meaning of Art. 95 SCA (e.g. the PatA); moreover, the correction of the defect must be decisive for the outcome of the proceedings (Art. 97(1) and Art. 105(1) SCA). According to the established case law of the SC, «obviously incorrect» means «arbitrary». The bottom line at least in my experience in patent matters is that the hurdle to get facts corrected on appeal is … anything but a hurdle; it’s effectively a wall.

But there is still a glimmer of hope in any appeal: The legal issues!

The skilled person, a FREAKY species

The most controversial issues in patent litigation are to be decided from the viewpoint of the skilled person. Novelty, (non-)obviousness, sufficiency of disclosure, allowability of amendments, … it all hinges on how the skilled person understands and approaches the matter. To complicate things even further: The skilled person is a legal fiction (Bernard CORBOZ in OJ EPO 2009, Special ed. 1). And what a weird guy he is! With reference to Lord REID in 1972 R.P.C. 346, Sir Robin JACOB put it like this:

It is settled that this man, if real, would be very boring — a nerd.

Oh, and he is also very forgetful, as JACOB rightly pointed out:

So, in a nutshell, some of the most controversial – and interesting – issues in patent litigation are to be decided from the viewpoint of a fictionary person, a somewhat skilled but very forgetful nerd (oh, or maybe even an assembly of nerds).

There is good and bad about this. Thinking about appeals to the SC:

✅ Good is that whatever that legal fiction of a skilled person understands or does cannot be a question of fact; what a legal fiction thinks or does is a question of law. As the German Supreme Court put it in X ZR 255/01 — Bodenseitige Vereinzelungsvorrichtung:

Accordingly, the SC should have a look at it.

❌ There will hardly ever be a universal truth: The skilled nerd simply cannot be asked. Accordingly, it can hardly ever be said that a first instance assessment is objectively wrong. We need to live with what comes closest to what is right. What is more, most patent cases are technologically quite demanding, and the FPC has judges with a technical training on the bench. Unlike the Supreme Court. All this might well result in quite some hesitation to intervene. The first instance assessment may easily amount to an anchoring fact, resulting in an anchoring bias in one’s own re-assessment. That would be bad (very bad).

Now, what are the chances of an appeal?

When filing an appeal in patent matters in Switzerland, one should not be overly enthusiastic about it. Chances are close to zero. By way of example, let’s have a look at the last calendar year (snapshot from the FPC’s annual report for 2021):

Statistics with small numbers are always a struggle. But 2021 was not an exception. In 2020, the SC dealt with 11 cases in patent matters: Eight appeals were dismissed, one was shelved, yet another one remitted to the FPC for further consideration / to complete the facts (the case was about the recusal of a judge for the appearance of bias; the skilled nerd couldn’t care less) — and only a single appeal was allowed. The latter undoubtedly pertained to a question of law, i.e. (im)proper novae (not an issue for the skilled nerd either).

So, just looking at the last 2.5 years: Not a single appeal has been allowed on the FPC’s assessment of how a skilled nerd approached the matter. Looking further back in time does not change much in this respect. From the top of my head, I do not recall a single appeal where the SC overruled the FPC’s assessment of what the skilled nerd had (not) understood from a piece of prior art or had (not) been prompted by the prior art to do in the expectation of some advance.

As always, I stand to be proven wrong, but it appears that the SC never had any issues with the FPC’s assessment of what the skilled nerd would (not) have understood or done. Whenever the FPC ruled on such an issue, i.e. when it stepped into the shoes of the skilled nerd, the SC never intervened.

Now, what does that tell us?

I would love to think that the FPC hands down perfectly right judgments in each and every case, to the extent the actual assessment of a case on the merits from the viewpoint of the skilled nerd is concerned.

But, frankly: How realistic is that?

If you have ever attended a high stake hearing with attorneys seriously arguing a borderline case on obviousness, you will appreciate that there can hardly ever be a universally correct b/w decision. (And most cases at the FPC are borderline cases; that’s why reasonable parties need to involve the court.) Putting oneself in the shoes of the skilled nerd and to decide on what he would (not) have understood or done back in the days is anything but easy, and the outcome is almost never non-controversial. Accordingly, shouldn’t it raise an eyebrow when first instance decisions on the nerdish issues of novelty, obviousness, sufficiency of disclosure and allowability of amendments are practically never lifted?

Meanwhile, in Germany …

According to  the most recent Busse/Keukenschrijver (9^th ed. 2020; §110, no. 18), about 50% of all nullity decisions of the Federal Patent Court in Germany are lifted by the Supreme Court (BGH):

At closer scrutiny, the BGH mostly amends the FPC’s decision in the patentee’s favour (which fits well with the FPC’s reputation as the ‘graveyard of patents’). Still, some decisions are also amended in the plaintiff’s favour:

[pro pat., decision amended pro patentee; pro plt., decision amended pro plaintiff]

The FPC apparently errs in a substantial number of cases. At least the FPC in Germany does. And the BGH does not shy away from correcting the assessment on the merits of a case. Notably, in my understanding, the legal framework is essentially the same as in Switzerland (cf. §110 and §111 DE-PatA).

… and at the EPO

The ODs of the EPO have a huge experience in re-assessing novelty, obviousness, sufficiency of disclosure and allowability of amendments of granted patents. Thousands of European patents are opposed each and every year (e.g., 3’247 patents were newly opposed in 2020, and 1’912 opposition cases were decided in 2020 by the ODs in first instance).

With such a wealth of experience (over decades!), there should hardly be any wrong decisions anymore. One would think so. But far from it. The BoA constantly sort out about 60% of all first instance decisions, each and every year:

Don’t get me wrong, this is not because the ODs do a bad job. Actually, they do a fantastic job to very large extent, in my experience. It is simply because people make mistakes — despite their vast experience. We all do.

I conclude from all this that one might reasonably assume that a typical first instance decision assessing validity of a patent from the point of view of a skilled nerd in inter partes proceedings should be lifted with quite a high likelihood when a second instance really re-assesses the case. Not so in Switzerland. The FPC has a perfectly clean record.

I had been chewing on this issue for quite a while when I came across a recent comment in the NZZ that approached the matter from a different perspective.

But let’s first have a closer look at the SC.

Ever more federal judges?

The SC has been struggling with its heavy workload for years. In 2021, the number of pending cases increased even further (3’235 at the end of last year).

In parallel, the overall chances to succeed (in full or in part) with an appeal in civil matters fell to the lowest rate (ever?) over the last ten years in 2021, i.e. 9.8%.

I cannot know whether this trend is just coinciding with the ever increasing workload at the SC, or whether there is a causal link. But, in any event, it is a remarkable — and worrying — trend on its own.

To fight the backlog, the SC inter alia requested that two further judges were appointed, to increase the total number of judges from 38 to 40; see e.g. the latest annual report of the Supreme Court.

In a recent guest comment in the Neue Zürcher Zeitung (NZZ), Ulrich MEYER (the former President of the SC; meanwhile retired) came up with a totally different proposal: The SC should be given more leeway to accept appeals in the first place, or to dismiss them without giving reasons. By far the most appeals did not pertain to questions of law anyway. Rather, arbitrariness is asserted: As MEYER put it, mostly questions of fact in disguise are concerned; the «easiest trick of attorneys.» (That sounds a bit like cheating, doesn’t it?)

However, the Supreme Court has to assess assertions of arbitrariness — and to at least give summary reasons for dismissing such appeals. Too much of a burden!

MEYER suggests to dispense therewith, and to actually reduce the number of judges to only 20. That would be enough staff to get the really important(?) things done. Two follow-up comments have been published in the NZZ: Arnold MARTI dissented and Karl SPÜHLER largely consented with MEYER.

What kind of Supreme Court should we want?

MEYER’s proposal rang alarm bells with me; see my first thoughts on LinkedIn. I am convinced that it would be a disaster in patent cases. The FPC is the first instance in patent infringement and validity litigation, and appeals go directly to the SC:

If the SC would not even give its summary reasons anymore when it dismisses an appeal, the whole appeal stage will likely be perceived as a mere rubber-stamping exercise. I would not want it that way.

Btw, MEYER is right in this respect: We mostly do see only very brief summary reasons. It sometimes feels like a resounding slap in the face of the appellant: How could you even bring this argument?! It could go like this:

However, appellant is not able to show a violation of Art. … [123 / 54 / 56 EPC, you name it] by merely contrasting the understanding of the lower court, according to which … [citing a bit from the judgment under appeal], with its contrary view. The lower court is not to be accused of a violation of law when it … [yet another bit from the judgment under appeal]; rather, the lower court comprehensibly pointed out … [and yet another bit from the judgment under appeal]. The appellant merely criticizes this reasoning in a sweeping manner as arbitrary; appellant is also unable to substantiate in more detail to what extent … [citing a bit from the appeal brief].

I frequently fail to spot much of a critical re-assessment in such a line of citations. It comes along as summary reasons, but effectively it’s sometimes not even that. Still, both practitioners and the lower court have something to consider, to learn, or to just struggle with. Summary reasons is not much, but it is something.

But, sometimes, I have radical thoughts:

Wouldn’t it be fantastic if the SC would really (and eagerly!) dive into the nitty gritty details of the most demanding technical issues and openly re-assess them from the viewpoint of the skilled nerd?

What if the Supreme Court would not leave practitioners with the impression that it presumed just another factual critcism in disguise (as MEYER put it) but would rather jump on the subject-matter under appeal to get close(r) to what is right?

In any event, wouldn’t it be great to read more than just summary reasons, maybe even reasons that set precedents for other cases to come? It really is not that all is settled about what the skilled nerd would have understood or done in a given situation. Far from it. On the contrary, I truly feel there is even room for brave landmark judgments in this respect that would be cited elsewhere. Just like Supreme Court judgments from the U.K. or Germany. Judgments are not cited elsewhere because they are right (or wrong); they are cited because they are convincingly – if not even brilliantly – reasoned and thereby set a precedent. I sometimes read high stake UK judgments on a Sunday afternoon, just because they are outstanding reads, with a well elaborated reasoning that sheds light on all facet of the arguments so that the interested reader cannot but concur in the end: Amen, that’s right, indeed. BGH judgments from Germany are of a different kind: Rarely entertaining, but with a razor-sharp analysis of the key issues.

What if we even had a specialized IP chamber at the Supreme Court? This would be nothing out of the ordinary: The BGH meanwhile has two IP chambers (the X. civil chamber exclusively hears patent cases; the I. civil chamber deals with copyright and other IP). In view of the lower case numbers in Switzerland, a combined chamber might make sense for Switzerland.

It ain’t gonna happen, you think?

Well, maybe you’re right. But I see it differently: Switzerland has been named the most innovative country in the world in WIPO’s Global Innovation Index 2021 — the eleventh(!) time in a row. Intellectual property, and patents in particular, cannot be underestimated in this respect: The detailed scorecard shows that Switzerland leads the pack in terms of patents and knowledge creation. I truly feel a specialised IP chamber at the Supreme Court that positions itself as a trailblazer in IP matters would make perfectly sense to reflect this position.

/MW

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Ulrich MEYER, guest comment in NZZ of 20 July 2022:

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Arnold MARTI, guest comment in NZZ of 8 August 2022:

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Karl SPÜHLER, guest comment in NZZ of 11 August 2022:

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