Facts
Decision
Comment


In the decision discussed in this article, in which the Patent and Market Court of Appeal (PMCA) granted an order to produce information, it was held that the doctrine of hierarchy of the courts may play a less significant role when interim rulings are handed down.(1) Accordingly, the PMCA ruled on a request to produce information, even though all prerequisites relating to the request had not been tried before the first instance. The decision also confirms that the threshold to successfully argue that such an injunction is not proportionate remains high.

Facts

The claimant in a patent infringement case filed against a competitor a request for an injunction to produce information relating to the purchase prices of allegedly infringing products. Information on the sales price and the number of sold products was already available.

The Patent and Market Court (PMC) rejected the claimant's request. It found that an injunction would not be proportionate as the information sought constituted trade secrets. The reasons for producing the information would not outweigh the detriment it would cause the defendant to produce the information sought, which would reveal the defendant's profit margin. The PMC did not try the other prerequisites for an injunction to produce information, such as probable cause for infringement of a valid patent.

The decision was appealed to the PMCA.

Decision

The first question the PMCA had to try was whether it should refer the case back to the PMC as all prerequisites for granting an injunction to produce information had not been tried thereby. The PMCA could contravene the doctrine of hierarchy of courts – according to which higher courts shall not rule on issues which have not been tried in the lower court – were it to assess these prerequisites as the only court.

The PMCA held that it would indeed have been favourable if the PMC had also assessed the other prerequisites for granting an injunction to produce information. One such prerequisite not tried by the PMC was whether there was probable cause that the defendant had infringed the patent in suit. However, the PMCA noted that it had sufficient access to the relevant evidence and facts to try this itself.

The PMCA also noted that the doctrine of hierarchy of courts is not absolute. In particular, the principle carries a less significant role in relation to interim measures (eg, an injunction to produce information). The PMCA therefore found that it "without difficulty" could try whether there was probable cause for infringement if the case was not referred back to the PMC.

The PMCA proceeded to assess whether the prerequisites were met for granting an injunction to produce evidence. First, it found that there was probable cause that the patent was valid. Then, it was noted that the defendant had attested that its use, at least to some extent, fell within the scope of the invention.

Finally, the PMCA found that the claimant had a justified interest in obtaining the information sought and that the request was proportionate. For the question of proportionality, the PMCA simply noted that the claimant's interest in obtaining the information outweighed the corresponding interests of the defendant. This was despite the fact that the parties were competitors and that the requested information constituted trade secrets. The PMCA thus ordered the defendant to produce the information sought.

Comment

Two major takeaways can be discerned from this case. The PMCA disregarded the doctrine of hierarchy of courts as having a minor significance for interim rulings, notwithstanding that the doctrine is well established in Sweden. However, the question of probable cause for infringement can also be complex in such cases, particularly in relation to patents. Further, it may be questioned whether the PMCA's reasoning applies to other interim actions. For example, the prerequisite of probable cause for infringement also applies when assessing a request for a preliminary injunction. It would be quite far-reaching, although unlikely to happen, if the PMC denied an injunction based on probable cause of the patent being invalid but refrained from commenting on infringement.

As for the other takeaway, the decision fortifies the difficulties a defendant will have in arguing that an injunction is not proportionate when probable cause for infringement has been established. Historically, protection of trade secrets is strong in Sweden, often leading to failed and/or very time-consuming actions for access to confidential information in IP proceedings. The parties being competitors has been explicitly highlighted in the legislative history as a circumstance to consider when assessing proportionality. The PMC also emphasised that the parties in this case were competitors when it found that the injunction was not proportionate in its decision, which the PMCA ultimately overturned.

The fact that the information sought in this case related to purchase price, and thus indirectly profit margin, may have been decisive as profit margin is listed as a relevant factor in calculating damages and as the sales price and the number of products sold was already known. One should therefore be careful in drawing too far-reaching conclusions as to the effect on trade secret confidentiality in general.

For further information on this topic please contact Måns Ullman or Ludvig Holm at Westerberg & Partners Advokatbyrå Ab by telephone (+46 8 5784 03 00) or email ([email protected] or [email protected]). The Westerberg & Partners Advokatbyrå Ab website can be accessed at www.westerberg.com.

Endnotes

(1) PMÖ 10423-22.