Patent forums: shop at the EPO

This article was included in our Winter 2009/10 edition of Inside IP.

It is often said that attack is the best form of defence.  For companies facing the risk of being sued for patent infringement, this can often be a good strategy.  But when the patent in question is a European one, where should one strike – in national courts, or at the European Patent Office (EPO)?  This article puts forward the proposition that now is a better time than ever for attacking a patent before the EPO.

Background

Nearly 60,000 European patents were granted last year.  This reflects the great attractiveness of the European patent system to the business community.  The European Patent Convention (EPC) provides a route to legal protection for an invention in a total of 39 countries as of 1st July 2009.  (Note that the EPC signatory states are not limited to the EU states, but also include, for instance, Switzerland, Norway, and Turkey.)  By comparison, only around 5000 UK patents were granted in the same period.

The European grant procedure involves the filing of a European patent application, which is treated as a single application that is examined centrally before the EPO, an inter-governmental organisation located in Munich and the Hague.  During the examination period, third parties may file observations under Article 115 EPC concerning the patentability of the invention.  This is rarely attractive, however, since this does not afford the ability to become a party to the proceedings.  In consequence, few take advantage of this option.

Once the EPO deems the application to be in a form that meets all the requirements for patentability, it is granted and the patent is, for the most part, treated as a collection of national patents, one for each of the designated states.  Infringement and/or revocation proceedings can be brought against each national patent individually.

Nevertheless, Article 99 EPC allows the filing of an opposition after grant of the patent.  A third party can thereby raise objections to the patent centrally before the EPO.

Opposition vs. revocation

Opposition proceedings have always presented certain advantages over national revocation actions.  A main advantage is that of legal certainty.  If a European patent is revoked in one country, there is no automatic revocation of the corresponding patents in the other countries.  Whilst in some cases the decision of one national court may be considered of persuasive authority by some other national courts, this has not in practice proved reliable.

Often, infringers seeking to invalidate a patent in several countries have found that such revocation decisions have not been recognised or taken into account at all by other national courts.  In contrast, decisions of the EPO under Articles 101 and 111 EPC in opposition proceedings automatically apply to all designated countries, which may be commercially very attractive for an opponent.

Another key advantage of the opposition system is reduced cost.  Costs for an opposition can range from £15,000 for a very simple case to a maximum of £100,000 for a very complex case including an appeal, which starkly differs from the cost of actions before national courts.  As an example, a patent revocation action at the UK High Court could cost £500,000 at the very minimum and could easily exceed £1 million, without even taking into consideration any subsequent appeal.  Multiplied by the expense of several actions in other countries, the attraction of opposition proceedings is obvious.

A further benefit is that the highest instance at the EPO, the Enlarged Board of Appeal, has held in its decision G 3/97 that “An opposition is not inadmissible purely because the person named as opponent… is acting on behalf of a third party.”  The ability to file oppositions anonymously, in the name of a so-called “straw man”, can be commercially desirable because it avoids alerting the patent proprietor’s attention to the infringer’s activities.

It should be noted that, even when an opponent does not achieve his desired outcome before the EPO, there is no principle of res judicata with regard to national actions, and so he is not precluded from subsequently applying for revocation before the national courts.  Oppositions can therefore provide a relatively low-cost first means of attack on a patent, without renouncing the right to present a more detailed case at a later stage, should that prove necessary.

Opponents must, however, be aware that Article 99 EPC stipulates that an opposition can only be initiated during the first nine months after grant of the patent.  This is not normally a problem for prudent companies, which keep a close eye on their competitors’ patenting activities and are able to respond within this timeframe.  Despite this, occasions may arise when a company becomes aware that they may be infringing a patent at too late a stage to initiate an opposition themselves.  Unless opposition proceedings are already pending in the name of another party (in which case Article 105 EPC permits them to intervene in these proceedings in the event that infringement proceedings are launched against them), revocation will be their only recourse.

In the past, a more serious concern for infringers has been the relatively longer time taken by the EPO to reach a final conclusion on validity of the patent.  The initial opposition proceedings could last approximately 3 to 4 years, and an appeal could extend this by another 4 years.  For high value products such as pharmaceuticals and consumer electronics, a delay of this extent could prove unacceptable.

In addition, infringement actions launched by a patent proprietor in the UK courts, at least, would often fail to be stayed pending the outcome of opposition proceedings that were expected to be lengthy.  Although a provision was introduced some time ago allowing the EPO to accelerate opposition proceedings in the event of pending infringement proceedings in a national court (see the Notice of the President of the EPO dated 19th May 1998), there was still much room for improvement on this front.

The turning tide

The EPO has faced much criticism over the past few years, particularly with regard to delays in handling various technical proceedings.  Such concerns have been taken very seriously and the EPO is making strenuous efforts to respond.  For instance, the Annual Reports of the EPO reveal that the average length of opposition appeal proceedings has declined from 34 months in 2002 to 26 months in 2007, and this trend is expected to continue with further improvements in procedural efficiency.  The good news is two-fold; a decrease in the length of opposition proceedings will also increasingly work in favour of infringers seeking to achieve a stay of UK court proceedings in respect of the same patent.

There has been a wave of new appointments to the patents bench in the UK recently, and the early impression of a number of practitioners is that these new judges have somewhat more of a “patent proprietor-friendly” stance than their previous counterparts.  Of course, it is difficult to make valid comparisons based on statistics alone since each case is decided on its merits, but this is something for potential opponents to bear in mind.

At the EPO, under Article 19(2) EPC, one of the three-member division examining an opposition is generally the primary examiner who was involved in granting the patent (although he may not chair the division), leading the casual observer to suspect that opposition divisions have an inherent reluctance to overturn the EPO’s own decisions.  This is not borne out by the facts, however: in 2008, over 70 % of opposed patents were either revoked or upheld only in limited form by the opposition divisions.

Figure 1 illustrates the increasing success that opponents have been having before the opposition divisions in recent years (information from the Annual Reports).  The authors believe that the growing emphasis on patent quality at the EPO, driven in part by political pressure, is likely to lead opposition divisions to look increasingly more critically at granted European patents, when presented with new evidence or arguments by an opponent.

Strategic weapons

The end of 2007 saw the introduction of a new facility for patent proprietors to limit the scope of their own European patents.  Previously, limitations (e.g. to strengthen the patent over prior art, putting the proprietor in a more robust position in advance of infringement proceedings) could only be sought during existing opposition proceedings or for the national patents separately, the provisions being non-uniform across all the European states.

A proprietor can now make an application under Article 105a EPC, centrally at the EPO and at any time during the life of the patent, for a limitation of its scope that takes effect in all countries, via a procedure that is simple, lasts only a matter of months and is not challengeable by third parties.  The proviso is that no opposition is pending or is filed before the limitation proceedings are concluded.

Interestingly, however, there is no corresponding proviso with regard to national revocation actions.  Accordingly, the filing of an opposition rather than a national revocation action can be an important strategic weapon, curtailing the proprietor’s options and ensuring that the opponent has the opportunity to contest any amendments to the patent that are sought at the EPO.

Ensuring fair hearings

A final, lesser, consideration for potential infringers in the past was the fact that a decision of a Board of Appeal, the second instance of the EPO during opposition proceedings, could not be overturned under any circumstances.  The lack of provisions for judicial review when procedural irregularities occurred during opposition appeal proceedings contrasted with the situation in most national states.  Whilst such irregularities occur only rarely, it has been an important point of principle for those working in this field.

In 1999, the Enlarged Board of Appeal, the highest instance at the EPO, reviewed this state of affairs and declared in its decision G 1/97: “…a flagrant violation of a fundamental procedural principle is inimical… to the very idea of justice … The legislator is therefore invited to provide for a possibility of reviewing final decisions of the boards of appeal in specific, clearly defined cases where a serious violation of a fundamental procedural principle has occurred…”

The EPO took up this challenge and, at the end of 2007, a new judicial review system was implemented in the form of Article 112a EPC.  This allows a decision of a Board of Appeal to be reviewed by the Enlarged Board of Appeal, if it is asserted that the decision was influenced by a fundamental procedural defect or a criminal act.  Fundamental procedural defects include violations of a party’s right to be heard under Article 113 EPC, and partiality of a member of the Board.

At the time of writing, eight petitions for review are pending, two have been rejected as formally inadmissible, and eight have been found unallowable.  It is unsurprising that no petitions have yet been successful; as previously mentioned, true procedural violations do not occur frequently, and parties are inevitably seeking to test the limits of this new law at the present time.  However, the existence of this new system is to be welcomed in the interests of fairness, and can only have a positive influence on the conduct of EPO members during opposition proceedings.

Conclusion

The factors outlined above make a convincing case for filing an opposition at the EPO as an infringer’s first line of attack.

30 Jun 2009

Return to news list