Recent Belgian case law has brought interesting developments in two major fields of patent litigation. Important decisions were reported in matters of (i) assessment of the prima facie validity of patents in preliminary injunction (“PI”) proceedings and (ii) recovery of fees and costs of lawyers and technical experts assisting parties in legal proceedings.
Until recently the prima facie validity of patents was virtually held untouchable in PI proceedings. Indeed judges in PI proceedings traditionally were reluctant to participate in the technical debate regarding the prima facie validity of the patent invoked. It seems that the Belgian Supreme Court (“Cour de Cassation”/“Hof van Cassatie”) has now reached a turning point in this matter.
Also the rules laid down in Article 1022 of the Belgian Judicial Code on the recovery by the successful party of lawyers’ fees and costs, on the one hand, and the Belgian case law regarding the recovery of costs and fees of technical experts (such as patent attorneys) assisting parties in court proceedings, on the other hand, are at present questioned in view of their compatibility with Article 14 of the Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (“Enforcement Directive”). Currently lawyers’ fees and costs are only partially recoverable and the fees and costs of technical experts are only recoverable under certain circumstances. It is not surprising that, in framework of patent litigation, this (in)compatibility issue gave rise to a referral to the European Court of Justice of the European Union (CJEU).
It seems like Belgium is making significant efforts in order to align with its neighbouring countries in important areas of patent litigation.
Assessment of the prima facie validity of patents in PI proceedings
In patent litigation PI proceedings are often initiated by patentees in order to stop or prevent an alleged patent infringement. However, in most cases such proceedings will lead to a discussion between the parties on the validity and/or infringement of the patent invoked. Consequently, judges in PI proceedings have an important role to play in this matter. If there are sufficient grounds to reasonably doubt about the validity and/or infringement of a patent, the request for a PI (e.g. a provisional commercialisation prohibition) should be dismissed. If not, the request should in principle be granted, awaiting a decision on the merits.
When assessing a request to obtain a PI on the basis of a patent (such as a provisional commercialisation prohibition), the Belgian judge will need to take the following four consecutive steps:
- examining whether urgency is demonstrated;
- examining whether the patent is prima facie valid;
- examining whether there are serious and sufficient indications of a prima facie (imminent) patent infringement; and
- balancing the interests of the parties (i.e. the judge will have to decide whether the interests of the patentee to obtain the preliminary measures outweigh the interests of the alleged infringer in the event of dismissing the action).
Urgency is quite easily accepted. A (threat of) patent infringement is considered as a sufficient ground to initiate PI proceedings. Balancing the interests of the parties, generally turns in favour of the patentee, at least when the prima facie validity of the patent and the prima facie (imminent) patent infringement are demonstrated.
As a consequence, the granting or dismissal of a PI request will essentially depend upon the assessment of the prima facie validity of the patent. If there are reasonable doubts about the validity of the patent invoked, the PI request should be dismissed. Only if the prima facie validity of the patent invoked has been sufficiently established, it should be examined whether there is a prima facie infringement.
However, until recently, Belgian judges tended to avoid any assessment of the prima facie validity of a patent in PI proceedings. It was basically held that any appreciation of technical (in)validity arguments would touch the merits of the case, which exceeds the competence of a judge ruling in PI proceedings. It is not surprising that this case law resulted in a situation where the validity of a patent was virtually held untouchable in PI proceedings and, moreover, isolated Belgium from its neighbouring countries (such as the Netherlands, Germany and the UK), where the judges in PI proceedings traditionally interfere in the technical debate regarding the prima facie (in)validity of the patent invoked. This isolated position was reinforced by two judgments of the Belgian Supreme Court on this issue, i.e. the judgments of 5 January 2012 (Mylan vs. Novartis case) and 24 June 2013 (Eurogenerics vs. Lundbeck case).
In its judgment of 5 January 2012 the Belgian Supreme Court ruled that the judge in PI proceedings may decide that the revocation of a European patent by the Opposition Division of the European Patent Office (EPO), pending appeal against this revocation decision, has no legal implications on the prima facie validity of the patent, having regard to the suspensive effect of the appeal. Such patent retains, according to this decision of the Belgian Supreme Court, its full effect, which implies that the patentee may continue to rely on the exclusive rights conferred by the patent. In its judgment of 24 June 2013, the Belgian Supreme Court went even further and held that, as long as a decision of a Belgian court invalidating a supplementary protection certificate for medicinal products (SPC) is not final, the SPC can still be considered a legal basis for granting a PI.
However, in two recent judgments, the Belgian Supreme Court seems to have reached a turning point in this matter.
In a first judgment the Belgian Supreme Court decided on 26 June 2014 in the Sandoz vs. AstraZeneca case that only protective measures can be granted on the basis of an invalidated patent, pending appeal against the decision invalidating the patent, when the two following conditions are met:
- the patentee has to establish that his appeal against the invalidity decision will likely be successful; and
- the measures requested in the PI proceedings are necessary in view of the circumstances of the case (including the duration of the appeal procedure and the extent of possible damage).
In a second judgment the Belgian Supreme Court ruled on 12 September 2014 in the Syral vs. Roquette case that in the event protective measures are requested, the judge must, when assessing the prima facie validity of a patent, also take into account final judgments of foreign courts (in this case the UK Courts) invalidating the national part of a European patent.
After the Supreme Court ruling of 26 June 2014 the President of the Dutch-speaking Commercial Court of Brussels was asked to rule, again in a case between AstraZeneca and Sandoz, on the revocation of ex parte obtained seizure measures and other protective measures in the framework of a descriptive seizure (“saisie-description”/“beslag inzake namaak”). AstraZeneca invoked its European patent (EP 0 907 364 B1) on several formulations of quetiapine sustained release (EP ‘364) against Sandoz. In an earlier judgment of the Commercial Court of Antwerp, the Belgian part of EP ‘364 was however held invalid for lack of inventive step. AstraZeneca appealed this decision. Pending appeal before the Court of Appeal of Antwerp, the President of the Dutch-speaking Commercial Court of Brussels was asked to rule on the revocation of ex parte granted seizure measures and other protective measures in the framework of a descriptive seizure requested by AstraZeneca. By order of 21 November 2014 the President decided that the seizure and other protective measures should be revoked because there were serious doubts about the prima facie validity of EP ‘364. The fact that the judgment, in which the patent was held invalid, was appealed and that the appeal has suspensive effect could not be considered sufficient to rely upon the prima facie valid character of EP ‘364. Referring to the Belgian Supreme Court judgment of 26 June 2014, the President also ruled that protective measures may only be granted in the event the patentee sufficiently demonstrates that his appeal against the judgment invalidating the patent will be successful (i.e. that there are reasonable chances of success in appeal). The mere reference to statistics on patent case law of the Antwerp Court of Appeal reversing invalidity decisions could, according to the President, not be considered sufficient in order to demonstrate the reasonable probability of success of the appeal against the decision invalidating EP ‘364. Moreover, the President noted that in several other countries the national part of EP ‘364 had already been invalidated and that such decisions should be taken into account when assessing the prima facie validity of the Belgian part of EP ‘364. The President made explicit reference in this respect to the Supreme Court judgment of 12 September 2014.
It results from the above that:
- Belgian judges will have to make an effective assessment of the validity of a patent invoked in the framework of descriptive seizure or PI proceedings;
- the patentee, faced with a court decision invalidating his patent or, as the case may be, revoked by the competent patent authorities (such as the EPO) – unlike in the past – will have to demonstrate that, in case he appealed this decision and the appeal is still pending, his appeal will have reasonable chances of success;
- the patentee can no longer simply rely on the suspensive effect of the appeal filed against the invalidity decision given by the national court or the revocation by e.g. the Opposition Division of the EPO;
- reference to statistics on patent case law in appeal on reversing invalidity or revocation decisions are not sufficient to demonstrate that the appeal has serious chances of success; and
- foreign judgments in which the national part of a European patent or an equivalent national patent has been definitively declared invalid have to be taken into account when assessing the prima facie validity of the Belgian part of the European patent or Belgian patent.
Recovery of fees and costs of lawyers and technical experts in patent litigation cases
National rules on the recovery of lawyers’ fees and costs in patent litigation can influence the strategy and decision of a patentee to initiate an infringement action or a third party (e.g. a competitor of the patentee) to file an invalidity claim. Patent infringement and/or validity issues, whether raised in PI proceedings or in proceedings on the merits, are often complex and require assistance of specialised patent litigators and technical experts in the field. This makes patent litigation quite expensive and the question of fees and costs recovery important.
In Belgium, Article 1022 of the Judicial Code provides in a scheme for recovery of lawyers’ fees and costs by the successful party in civil and commercial litigation cases, including IP litigation cases. According to this mechanism, the successful party is entitled to a fixed amount that is deemed to recover the lawyers’ fees and costs of that party. The fixed amount will depend on the value of the case and might be increased or lowered under certain conditions (e.g. by taking into account the complexity and/or the manifestly unreasonable nature of the case).
Concerning the fees and costs of technical experts assisting parties in legal proceedings (e.g. patent attorneys), Belgian case law (including the case law of the Belgian Supreme Court), established that such fees and costs are only recoverable in the event the unsuccessful party has committed a (contractual or extra-contractual) fault (e.g. by filing or continuing an infringement action) and the fees and costs paid to the expert are the inevitable consequence thereof.
On several occasions, the question has been raised whether the Belgian mechanisms for recovery of fees and costs of lawyers and technical experts assisting a party in legal proceedings is compatible with Article 14 of the Enforcement Directive, which provides that “Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this”.
In a patent dispute opposing United Video Properties (the patentee) to Telenet (the alleged infringing party and one of the major players on the Belgian telecom market) this question has finally been referred to the CJEU.
Telenet contended that the provisions of Article 1022 of the Belgian Judicial Code on the recovery of lawyers’ fees and costs are not compatible with Article 14 of the Enforcement Directive. Telenet asserted that especially patent cases are extremely complex and require comprehensive written pleadings and assistance of specialists. In its judgement of 26 January 2015 the Court of Appeal of Antwerp decided that also other (i.e. non-IP) cases might be complex and require assistance of specialists. However, the Court of Appeal of Antwerp agreed to refer the issue to the CJEU for a preliminary ruling and raised the following questions (free translation in English):
- "Do the terms “reasonable and proportionate legal and other costs” in article 14 of the Enforcement Directive oppose against Belgian legislation which allows the court to take into consideration certain specific characteristics particular to the case and provided in a system of variable fixed rates for lawyers’ fees and costs?
- Do the terms “reasonable and proportionate legal and other costs” in article 14 of the Enforcement Directive oppose against case law according to which the fees and costs of a technical expert are only recoverable in the event of fault (contractual or extra-contractual)?”
It should be noted that the Court of Appeal of Antwerp rephrased the questions initially formulated by Telenet. The wording Telenet proposed was more balanced and summarized much better the core issue at stake in this matter (free translation in English):
- Does article 14 of Directive 2004/48/EG of the European Parliament and the Council of 29 April 2004 on the enforcement of intellectual property rights prevent a national legal rule providing that in court proceedings such as in the present case, the successful party, can recover only a fixed amount, as compensation for the lawyer fees and costs it paid, from the unsuccessful party, which is lower than the reasonable and proportionate fees and costs paid by the successful party, while there are no reasonable objection grounds against sentencing the unsuccessful party to the payment of these fees and costs?”
- Does article 14 of Directive 2004/48/EG of the European Parliament and the Council of 29 April 2004 on the enforcement of intellectual property rights prevent national case law according to which, in court proceedings such as in the present case, the successful party can only recover the fees and costs for assistance of technical experts from the unsuccessful party in the event the unsuccessful party has committed a fault by initiating or continuing court proceedings?”
As it is general practice of the CJEU, it is more than likely that it will, on its turn, rephrase the referred questions, hopefully putting in a right perspective the compatibility issue of the Belgian fees and costs recovery existing mechanisms with Article 14 of the Enforcement Directive. It will of course take some time before a judgment of the CJEU can be expected. In any event, with this referral to the CJEU, an important step has been made for IP litigation in Belgium. If CJEU rules that the Belgian fees and costs recovery mechanisms are incompatible with Article 14 of the Enforcement Directive, it would be interesting to see how this could impact on existing proceedings and if the Belgian State might eventually be held responsible for damages these mechanisms might have caused to successful parties.