The European Patent: Current prospects and alternatives - some personal thoughts

1. The European Patent: Current prospects and alternatives- some personal thoughts David Rosenberg GlaxoSmithKline Fordham Conference, 27 April 2011

2. The importance of the reforms • “Enhancing the patent system in Europe is a necessary prerequisite for boosting growth through innovation and for helping European business, in particular SMEs, face the economic crisis and international competition” • Competitiveness Council, December 2009 • “The introduction of an EU patent and a unified patent litigation system is of the utmost importance to stimulate European competitiveness and boost research and innovation in Europe by reducing costs and complexity of obtaining and enforcing the relevant rights throughout Europe” • “Towards a Single Market Act” Commission Communication, 27 Oct 2010, COM (2010) 608 Final • To industry – creation of rights enforceable in a single action covering the (second?) biggest market in the world • Patent owners • Third parties

3. Objectives to be achieved • Reduce forum shopping • Speedy resolution • Cost efficiency for parties • Quality • How to achieve this balance especially in view of the increased commercial importance of decisions • Should not expect replication of processes and procedures which are appropriate for much smaller markets

4. Factors influencing quality of the system • Quality of substantive law • Good progress • Role of the ECJ • Quality of judges and panels • Quality of procedures and consistency of their application

5. The role of the CJEU in interpreting substantive patent law • Should be as limited as is consistent with EU requirements i.e. should interpret the Community acquis like the Biotech Directive but no more • International agreement setting up Court is a means of keeping substantive law outside the Community acquis • Draft Regulation creating unitary patent right has substantive provisions e.g. on infringement and defences (but not validity). These should be removed to the international agreement • Need preamble to the effect that Regulation neither expands nor restricts CJEU competence over patent issues

6. The patent court – structure and judicial qualifications • Central, regional and local divisions • Revocation and declaration of non-infringement cases in central division • Infringement cases in local or regional divisions • Split jurisdiction possible – revocation goes to central

7. Composition of panels for 6 years or approximately 2000 cases (Competitiveness Council, December 2009) • Central – 3 judges - 2 legal, one technical (potential for single judge if parties agree) – “multinational” • Regional divisions – 3 judges - 2 nationals from the region, one from pool • Local • Member States with at least 50 cases p.a. started for 3 years - divisions have 2 legally qualified judges from that country and 1legally qualified judge from another country appointed on a long term basis from the pool • Member States where at least 50 cases p.a. not started for 3 years - either join a regional division where at least 50 cases p.a. have been started or have panel with 1 national legal judge and 2 legal judges allocated from the pool on a case by case basis • In regional and local divisions if there is a revocation counterclaim (or request by one party) add a 4th technically qualified judge • Court of Appeal - 3 legal, 2 technical, multinational

8. Quality of procedures • Key to • quality of decisions • consistency in dealing with cases as between divisions • How to reconcile different traditions on key issues e.g. • Discovery • Pre-action discovery and preservation orders • Cross-examination at trial • Pre-trial injunctions • Current approach • Presumption of 1 day trial • Court has many powers but little guidance as to how they will be exercised • The likely consequence in light of the panel composition rules • Judges will exercise their powers in the way they are used to doing – no EU consistency • Forum shopping • The solution – rules must guide exercise of judicial discretion as to how powers should be exercised

9. A guide to likely costs - EPO assessment of first instance costs of EPLA (WPL/11/05, 1 December 2005)

10. A guide to likely costs - EPO assessment of appeal costs of EPLA (WPL/11/05, 1 December 2005)

11. What does this analysis show? • The 1st instance costs of a small/medium scale case before the EP Court will be lower than litigating in three national Courts (though not much lower than DE+ FR + NL) • The costs of a small/medium scale patent case will be higher than the costs before national Courts other than GB • Twice the cost of litigation in DE or FR • Substantially more than the cost of litigation in NL

12. Some comments • If significant numbers of cases are litigated in only 1 jurisdiction (other than the UK), to force EP owners to litigate in the EP Court will increase the costs for large numbers of patent owners • How many cases are litigated in more than 1 jurisdiction? • “Parallel litigation may account for no more than 5-10%” (WPL/4/03e) • So large numbers of cases will be more expensive than they are now • Under current proposals, patentee can opt out of new Court for patents and applications existing at time new system comes into force. All EP’s applied for thereafter must be litigated in new court • What is the justification for making the system mandatory when it will be more expensive for the vast majority of cases?

13. Questions which arise if the new court is cheaper for some cases • Panels of 3, 4 or 5 judges at first instance and on appeal (not all speaking the same language) • Judges shall have “highest standards of competence and proven experience in the field of patent law” Legally qualified judges must be qualified to be national judge. Technical judges must have degree and proven experience in a technical field plus knowledge of civil law and procedure • If costs are lower, will demand go up? • Where are judges with the required expertise to cope? • If they’re not there, speed of resolution and/or quality will be reduced

14. Thank you