FRENCH SUPREME COURT, DECISION OF 17 FEBRUARY 2012, LPG SYSTEMS, NO. 10-24.282
The French Supreme Court decided that the retroactive nullification of a patent does not give rise to claims for a repayment of an award of damages in an earlier decision based on patent infringement.
Res Judicata v. Patent Revocation
In the earlier case (on the merits), the defendant was found liable for infringement of a French patent for a massage device and had been ordered to pay compensatory damages to the patentee. The decision became final and irrevocable. The infringer paid the damages awarded to the right holder.
In a later, different case regarding the same patent, the patent was held invalid and revoked for lack of inventive step. This nullity finding also became final and irrevocable.
The "senior" infringer wanted to benefit from the junior decision and initiated an action for reimbursement of an undue payment claiming a general retroactive effect of the revocation of the patent based on patent and civil law.
After his claim was rejected on the merits at first and second instance, the senior infringer applied for a review on points of law before the French Supreme Court.
The French Supreme Court decided the case, seating en banc – notably because it addressed the general question of the respective power of res judicata on the one hand and the general and absolute effect of the revocation of a patent on the other hand.
The court rejected the review, holding that the res judicata of the earlier decision, finding infringement, prevailed over the retroactive and general effect of the later revocation of the patent: "noting that [the senior infringer] had been held liable for infringement by a final and irrevocable decision, the Court of Appeal rightly found that the retroactive and general revocation of the patent (…) ordered in a subsequent [junior] decision could not justify the repayment of the sums paid in compliance with the infringement decision." The award for patent infringement was paid and the later nullification of the patent in a distinct case did not give ground for a repayment of the award.
The court said that there was res judicata with regard to the earlier infringement decision so that it appeared irrevocable. However, as statutorily stated in Article L. 613‑27 of the French Intellectual Property Code, the revocation of a patent has an effect not only for the parties in the revocation proceedings but also for third parties. As the revocation decision has a retroactive effect the revoked patent is considered as never having existed.
So, how can an infringement of a patent which never existed be res judicata? This question was even more acute as in earlier decisions the French Supreme Court indicated that a later revocation of a patent deprived an earlier infringement action of legal grounds.1
The key to the difference to the earlier cases and the harmonious combination of res judicata and retroactive general revocation of the patent seems to be one specific fact of the "senior" case: that the infringer had already paid the damages ordered in the judgment finding infringement. The fact that the patent was nullified subsequently did not leave the senior infringer room for legally reclaiming his money. To the contrary, in our view, had the infringer not yet paid the awarded damages, the later retroactive revocation of the patent would have deprived the senior infringement decision of its legal ground, and the senior infringer would have been in a position to claim that there was no longer a valid decision binding him to pay the awarded damages.
From a practical point of view, right holders should make sure final decisions on the merits in their favor are quickly enforced and awarded damages paid; parties liable for infringement but still unsure of the validity of the patent should find all acceptable ways for delaying the actual payment of awarded damages.