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Applying for a patent

Patentability
What are the criteria for patentability in your jurisdiction?

The criteria for patentability in Hungarian law are in line with the European Patent Convention 2000. According to Article 1 of the Patent Act (Act XXXIII/1995), patents “shall be granted for any inventions in any field of technology that are new, involve an inventive step and are susceptible of industrial application”.

The three most important criteria for patentability are defined by the Patent Act as follows:

  • Novelty – an invention is considered new if it does not form part of the state of the art (Article 2 of the Patent Act).
  • Inventive step – an invention is considered to involve an inventive step if, in regard to the state of the art, it is not obvious to a person skilled in the art (Article 4 of the Patent Act).
  • Industrial application – an invention is considered susceptible of industrial application if it can be made or used in any sector of industry or agriculture (Article 5 of the Patent Act).

Hungarian national patents are prosecuted, granted and registered by the IP Office. However, patent protection in Hungary may also be obtained through the Hungarian national phase of an international patent application filed under the Patent Cooperation Treaty or by validating a European patent in Hungary.

What are the limits on patentability?

Article 1(2) of the Patent Act excludes the following from patentability:

  • discoveries, scientific theories and mathematical methods;
  • aesthetic creations;
  • schemes, rules and methods for performing mental acts, playing games or doing business;
  • computer programs; and
  • presentations of information.

This is a verbatim implementation of Article 52 (2) of the European Patent Convention (EPC) 2000.

The  subject matters above are excluded from patentability only to the extent to which a patent application or patent relates to the subject matter (Article 1(3) of the Patent Act).

Article 6 of the Patent Act identifies the exceptions from patentability. It is also in line with Article 53 of the EPC 2000.

No patent protection will be granted for an invention whose exploitation is contrary to public policy or morality. Exploitation may not be regarded as contrary to public policy merely because it is prohibited by law or regulations.

On the basis of the above, the following are not patentable:

  • processes for cloning humans;
  • processes for modifying the germ line or genetic identity of humans;
  • the use of human embryos for industrial or commercial purposes;
  • processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial medical benefit to humans or animals;
  • animals resulting from processes referred to in Subparagraph (d) of the Patent Act;
  • plant varieties and animal breeds (plant varieties may be granted plant variety protection according to special rules within the Patent Act); and
  • essentially biological processes for the production of plants or animals (a process for the production of plants or animals is essentially biological if it consists entirely of crossing, selection or other natural phenomena).

Inventions which concern plants or animals are patentable if the technical feasibility of the invention is not confined to a particular plant variety or animal breed.

Surgical, therapeutic or diagnostic methods of treatment for humans or animals are not patentable. This provision does not apply to products – in particular, substances (compounds) and compositions – used in these methods.

To what extent can inventions covering software be patented?

In Hungary, software may not be patented as such (Articles 1 (2) (c) and (d) of the Patent Act). However, software may be protected by other types of intellectual property (eg, copyrights, know-how and business secrets), and may be brought to the IP Office as proof of ownership.

The IP Office and European Patent Office (EPO) typically reject software due to a lack of technical character. The prevailing approach is to deny the possible technical character of any solution achieved by software; however, the EPO is slowly moving away from this rigid standpoint (as are IP offices in other EU member states, at a slower pace).

Some applications based on software (ie, so-called ‘computer implemented inventions’) may be patentable, provided that they do not cover only an organisational issue or abstract question. In other words, if the claims are formulated in a way that demonstrates that the software is used to solve a technical issue (eg, comparing the strength of two electric signals and storing the result in the memory), the invention will be considered a technical solution and may be patentable. However, patent attorneys must be skilled and able to formulate the claims in a way that can benefit from the evolving practice of IP offices.

To what extent can inventions covering business methods be patented?

In accordance with Article 1(2)(c) of the Patent Act, business schemes, rules and methods may not be patentable as such. They may be protected by know-how or brought before the IP Office. As a precondition, the method must be written down.

However, when rules or methods are part of a system that consists of technical elements, the patentability of the entire system may be considered. Again, similarly to software, patentability largely depends on the system or solution to be protected and the way in which the claims are formulated.

To what extent can inventions relating to stem cells be patented?

Biotechnological patents are governed by Article 5(A) of the Patent Act. Hungarian patent law aligns with EU Directive 98/44/EC of the European Parliament and the EU Council on the legal protection of biotechnological inventions (July 6 1998). The limitation provided by the European Court of Justice (ECJ) on biotechnological inventions (eg, Monsanto v Cefetra (C-428/08) and Oliver Brüstle v Greenpeace eV (C-34/10)) also applies.

For inventions relating to stem cells, the IP Office’s practice is intentionally harmonised with that of the European Patent Office and is based on EU Directive 98/44/EC and relevant ECJ rulings. Consequently, inventions relating to stem cells whose elaboration does not destroy human embryos are patentable.

Are there restrictions on any other kinds of invention?

No.

Grace period
Does your jurisdiction have a grace period? If so, how does it work?

There is a six-month grace period, with limited applicability.

According to Article 3(2) of the Patent Act (which is in line with Article 55 of the European Patent Convention 2000), for the purposes of Article 2 of the Patent Act (novelty), any disclosure of an invention that occurs no earlier than six months preceding the date of priority will not be considered as part of the state of the art if the applicant or its predecessors in title displayed the invention at an exhibition specified in an IP Office announcement in the Official Gazette.

Under Article 3(b) of the Patent Act, an applicant can request that the display of its invention at an exhibition not be considered when the state of the art is determined if it files:

  • a statement to this effect within two months of the date of filing the patent application; and
  • a certificate issued by an authority responsible for the exhibition attesting to the display and date of the exhibition within four months of the date of filing the patent application.

The certificate must be accompanied by a description and, if necessary, drawings bearing the authentication of the authority responsible for the exhibition.

Further, certificates may be issued only while the invention or its disclosure can be seen at the exhibition.

No further acts of disclosure by the applicant before the priority date – intentional or otherwise – may benefit from the grace period.

However, if a third party discloses a patent by abusing the rights of the applicant or its predecessors in title, then the six-month grace period applies (Article 3(a) of the Patent Act).

Oppositions
What types of patent opposition procedure are available in your jurisdiction?

During the patent granting procedure, anyone can file an observation with the IP Office stating that the invention or application does not meet the patentability requirements. The observation will be considered when the requirement objected to in the observation is examined. The person making the observation will not be party to the patent granting procedure. However, the person will be notified of the outcome of its observation. Observations are evaluated during the framework of the granting procedure and are not considered a separate procedure.

Patent decisions may not be challenged before the IP Office. That is, there is no post-grant opposition procedure in Hungary.  

Apart from oppositions, are there any other ways to challenge a patent outside the courts?

The validity of a granted patent may be challenged via revocation procedures, which are adjudicated by the IP Office at first instance within the framework of an administrative procedure. At second and third instances, revocation procedures are adjudicated by the courts.

How can patent office decisions be appealed in your jurisdiction?

Appeals of IP Office first-instance decisions may be requested within 30 days of the decision being issued in writing. Under certain circumstances, the IP Office may overrule or annul its own decision. Otherwise, the IP Office forwards the files of the case to the Budapest Metropolitan Tribunal, which has exclusive competence over appeals and will adjudicate the case within the framework of a non-contentious civil procedure, pursuant to the Code of Civil Procedure. The tribunal will uphold, amend or annul the IP Office’s decision. Tribunal orders can be appealed before the Metropolitan Appeal Court. The Metropolitan Appeal Court may sustain or amend the tribunal’s order or annul it or the IP Office’s decision. Metropolitan Appeal Court orders are final; only extraordinary legal remedies against the court’s decisions exist.

Timescale and costs
How long should an applicant expect to wait before being granted a patent and what level of cost should it budget for?

The timeframe and costs involved depend on the complexity and field of the patent. Generally, a patent will be granted within three to five years – although there have been instances where patent prosecution has taken in excess of 15 years.

Costs generally range between €2,000 and €3,500, not including translation costs or the renewal fees payable from the first patent year.

Enforcement through the courts

Strategy
What are the most effective ways for a patent owner to enforce its rights in your jurisdiction?

The most effective way for a patent owner to enforce its rights is by obtaining a preliminary injunction. Preliminary injunctions can be obtained in two to three months (with another two to four months for appeals) and are enforceable regardless of whether an appeal is filed. Outside court, there are no compulsory negotiations between the parties. The rights holder must prove that its infringement claim is likely to be upheld, rather than needing to provide absolute proof; thus, the collection of evidence is somewhat less strict and time consuming.

The downside is that the rights holder must act fast, as a request for a permanent injunction must be filed within six months of the infringement beginning and within 60 days of gaining knowledge of the infringement. While failure to meet these deadlines does not automatically prevent the rights holder from obtaining a preliminary injunction, it does decrease the chances.

As a prerequisite for granting a preliminary injunction, the courts usually order a security bond. Bonds must be paid directly into the bank account of the court via a transfer; no escrows of guarantee are accepted.

What scope is there for forum selection?

None – the Budapest Metropolitan Tribunal has exclusive jurisdiction.

Pre-trial
What are the stages in the litigation process leading up to a full trial?

According to the Code of Civil Procedure (Act 3/1952), parties with legal personality must try to settle their dispute via negotiation before filing any suits, including patent infringement suits. This does not apply for private persons; nor is it necessary before filing a request for a preliminary injunction. 

How easy is it for defendants to delay proceedings and how can plaintiffs prevent them from doing so?

Most delays during proceedings are caused by Hungary’s bifurcated system. If a patent’s validity is challenged by filing a request for revocation with the IP Office before or during an infringement procedure, then the infringement suit is stayed until a final decision is rendered concerning the patent’s validity. This does not affect preliminary injunctions, which can be instituted and enforced regardless of a revocation action. As such, they are an effective counter against any delay, albeit as injunctive relief.

In addition, any party anticipating an impending suit may request the establishment of non-infringement. In such proceedings, the IP Office may rule that the product or process exploited or to be exploited by the party does not infringe the particular patent specified in the claim. Where a final ruling declaring the lack of infringement has been issued, infringement proceedings may not be instituted on the basis of the specified patent in respect of the same product or process..

How might a party challenge the validity of a patent through the courts in anticipation of a potential suit for infringement being issued against it?

A patent’s validity may be challenged by filing a revocation action before the IP Office. The revocation of a patent may be requested before or after infringement proceedings have been initiated; however, the courts will consider the timing of the action when adjudicating a subsequent claim for damages, although there is no solid practice in this regard.

If a party anticipates that infringement proceedings will be brought against it, it can file for the establishment of non-infringement, in which case the suit is stayed until the non-infringement procedure is adjudicated. However, establishment of non-infringement may not be requested after an infringement suit has been initiated.

At trial
What level of expertise can a patent owner expect from the courts?

The Budapest Metropolitan Tribunal (which has exclusive competence) decides patent issues in a panel of three judges. Two of the judges must have technical university degrees or equivalent qualifications. They have a reasonably high level of expertise and generally consider and reason their decisions diligently.

The Metropolitan Appeal Court also adjudicates patent issues in a panel of three judges, although these judges have no technical qualifications. Consequently, appeals consider less technical details and more legal issues. Further, although the appeals court can appoint court experts to clarify technical issues, it rarely does so.

Are cases decided by one judge, a panel of judges or a jury?

A panel of three judges decide cases.

If jury trials do exist, what is the process for deciding whether a case should be put to a jury?

Jury trials do not exist for patent litigation. 

What role can and do expert witnesses play in proceedings?

Parties may present expert witnesses and the courts can appoint court experts who are registered in an official registry. Statements from the parties’ expert witnesses are formally considered to be the same as the statements of the interested party, although they are somewhat more influential for the court due to the reputation of experts. Court-appointed experts are considered non-partial, although their statements may be challenged by the parties. The cost of court experts is usually advanced by the interested party – typically the claimant – and borne by the losing party. If a party unnecessarily motions to appoint a court expert or collect further evidence, the court may order it to bear the costs of the unnecessary actions, regardless which party succeeds.

Does your jurisdiction apply a doctrine of equivalents and, if so, how?

Hungary applies a doctrine of equivalents. According to Article 24(4) of the Patent Act, to determine whether the patent protection extends to a product or process, due account must be taken of any characteristics of the product or process which are equivalent to those specified in the claims.

Is it possible to obtain preliminary injunctions? If so, under what circumstances?

Preliminary injunctions can be obtained. In patent litigation, provisional measures (until the contrary is rendered probable) are considered necessary to protect the plaintiff’s rights if the plaintiff proves that the invention is patented and it is the rights holder or an exploiter entitled to institute proceedings for infringement.

The provision relating to the necessity of protecting the plaintiff’s rights will not apply where:

  • six months have elapsed from the beginning of the infringement; and
  • 60 days have elapsed from the date on which the plaintiff became aware of the infringement and the identity of the infringer.

The court will use its discretion to evaluate the balance of interest of the parties when granting preliminary injunctions. Security deposits are usually requested. Further, the courts will also consider whether the measures obviously and considerably prejudice public interest or the legitimate interests of third parties.

The party requesting the preliminary injunction may request all remedies applicable to patent infringement. However, the courts always consider the provisional character of the remedies and will avoid granting claims where the injunction would cause irreversible detriment to the potential infringer (eg, provision of information).

How are issues around infringement and validity treated in your jurisdiction?

Hungarian courts generally follow a bifurcated system. If the validity of a patent is challenged via a revocation action during or before patent infringement proceedings, the infringement proceedings will be suspended until the revocation action is adjudicated with final effect. This does not affect preliminary injunctions.

Will courts consider decisions in cases involving similar issues from other jurisdictions?

The courts will consider foreign decisions, although they are not binding. According to Article 104 of the Patent Act, during preliminary injunction proceedings all circumstances of the case will be considered – in particular, if the patent was revoked by the IP Office or by the court of first instance and, in the case of a European patent validated in Hungary, if it was revoked by the European Patent Office or in another member state of the European Patent Organisation.

Damages and remedies
Can the successful party obtain costs from the losing party?

Court costs are generally borne by the losing party. These costs may be proven by filing the corresponding invoices or are established by the court ex officio. The court tends to mitigate the costs claimed by parties (even though they are certified by invoices) if it considers that they are exaggerated compared to the complexity or value of the case.

Where the winning and losing party cannot be established clearly (eg, where the rights holder voluntarily abandons a claim during a revocation procedure), the court may decide that the parties must bear their own costs.

What are the typical remedies granted to a successful plaintiff?

Court costs are generally borne by the losing party. These costs may be proven by filing the corresponding invoices or are established by the court ex officio. The court tends to mitigate the costs claimed by parties (even though they are certified by invoices) if it considers that they are exaggerated compared to the complexity or value of the case.

Where the winning and losing party cannot be established clearly (eg, where the rights holder voluntarily abandons a claim during a revocation procedure), the court may decide that the parties must bear their own costs.

What are the typical remedies granted to a successful plaintiff?

According to Article 35 of the Patent Act and the circumstances of the case, a rights holder may have recourse to the following civil remedies:

  • declaration of infringement by the court;
  • injunctions against the infringer to cease the infringement or any acts directly threatening the patent;
  • provision of information on the infringement;
  • satisfaction by way of a declaration from the infringer (possibly public);
  • surrender of the enrichment obtained by the infringement; and
  • seizure, transfer, recall and definitive removal or destruction of the infringing products, as well as the means and materials used for infringement.

Where a patent is infringed, the rights holder may also claim damages under the rules of civil liability.

Plaintiffs generally claim all of these remedies, if applicable.

In preliminary injunctions, the courts are usually hesitant to grant claims for the provision of information due to the protection of business secrets and because this action is irreversible, even if the patent is ultimately found invalid. 

How are damages awards calculated? Are punitive damages available?

It is important to differentiate between the reimbursement of enrichment and civil law damages.

Reimbursement of enrichment (Article 35(2)(e) of the Patents Act) may be claimed pursuant to the Patent Act. The plaintiff must prove that the defendant gained its enrichment due to the patent infringement. Claimable enrichment (profit) is calculated by deducting the costs from the total turnover obtained through the unlawful exploitation of the patent (eg, by selling the product embodying the patent). No further circumstances are considered.

Damages may be claimed pursuant to the Civil Code (Act V/2013). Any person that causes damage to another person will be liable for the damage. The damaging party will be relieved of liability if it can prove that its conduct is not actionable.

According to Article 6:522 of the Civil Code, the damaging party must compensate the aggrieved party for all of its losses in full. Under the principle of the right to full compensation, the damaging party must cover:

  • any depreciation in value of the property of the aggrieved party;
  • any pecuniary advantage lost; and
  • the costs necessary for the mitigation or elimination of the financial losses sustained by the aggrieved party.
     

In practice, this means that the defendant has more grounds to be exempted from paying damages, but that further amounts may be claimed beyond the profit already gained by the defendant (ie, prospective profits).

Punitive damages are not available. In exceptional cases, the court may award compensation in an amount that is lower than the amount of the total loss (Article 6:522 (4) of the Civil Code).

No solid legal practice regarding damages for patent infringement exists. This is because parties usually settle before a final decision is handed down.

How common is it for courts to grant permanent injunctions to successful plaintiffs and under what circumstances will they do this?

In practice, once patent infringement is established by the courts, an injunction is granted. However, theoretically, it should not be an automatic legal consequence, as there is no corresponding provision in the Patent Act.

Timescale and costs
How long does it take to obtain a decision at first instance and is it possible to expedite this process?

The Budapest Metropolitan Tribunal will issue first-instance patent infringement decisions in between one and a half and five years. Many factors influence this broad timeframe – in particular, whether the defendant uses an invalidity defence, in which case the infringement suit is stayed until final adjudication of the revocation action. Further factors may influence the length of procedure, including:

  • whether court experts are needed;
  • the parties’ activities (ie, whether they have filed many writs); and
  • availability of evidence (the courts often allow deadline extensions, particularly if one party is a private person).

Court procedures for patent infringement may not be expedited. However, by law, preliminary injunctions must be adjudicated in an expedited procedure and have strict deadlines. A first-instance decision usually takes between two and four months.

How much should a litigant plan to pay to take a case through to a first-instance decision?

Actual costs vary greatly, depending on the circumstances of the case. Generally, rights holders should budget between €20,000 and €80,000, depending on:

  • the complexity of the arguments;
  • translation requirements; and
  • the use of expert witnesses.

Appeal
Under what circumstances will the losing party in a first-instance case be granted the right to appeal? How long does an appeal typically take?

Either party can appeal first-instance infringement decisions within 15 days of receipt of the decision. The Metropolitan Appeal Court usually adjudicates appeals. It is possible to request that the appeal be decided by the Supreme Court instead, but only at the joint request of the parties. Thus far, this option has not been requested.

The appeal procedure generally lasts about one year. The Metropolitan Appeal Court adjudicates appeals in a panel of three judges, who have no technical qualifications. The court may appoint court experts to clarify technical issues, but rarely does so.

Options away from court
Are there other dispute resolution options open to parties that believe their patents to be infringed outside the courts?

If direct negotiations fail, the parties may involve mediators to help them reconcile their respective positions. This may be done before or during trial. During trial, the court may act as mediator. Further, settlements can be confirmed by court order. In that case, the court order confirms that the settlement has the same effect as any court order, except for the fact that even if it is appealed, it is still enforceable.