International trade; national law

International trade is nothing new. English, Dutch, Spanish and Portuguese trading companies were competing (often using military force) for business in products including silk, saltpetre and tea, around the coasts of the Indian Ocean from the beginning of the seventeenth century. For a period of some three hundred years before this, the Hanseatic League of trading cities, centred in the Free City of Lübeck, ran a trading network of fur, wax and timber along the North and Baltic Sea coasts, from London to Novgorod.

In the end, the closure of Novgorod in 1494, by Ivan III of Russia, and expulsion from London in 1597, by Queen Elizabeth I, marked a century of decline for the League. Meanwhile, the long success of the League in northern Europe was mirrored in the south by the Republic of Venice, which dominated trade with Africa and Asia in the Mediterranean. It goes without saying that the mercantile networks of Rome and the civilisations of the Ancient Near East long predate all of this.

Nearly 900 years after the beginnings of Lübeck and Venice, however, the World Trade Organisation (WTO), free trade areas, instant digital communication and fast and frequent international travel, make it trite to observe that business now operates in a global marketplace more efficiently and extensively than at any time in history. However, such global trade is far from seamless: the continuing success (and popularity) of the nation state means that invisible barriers persist.

For economists this typically means tariffs, but for lawyers it first and foremost means contending with differences of national law. In particular, where there is trade in new and innovative products there are patents and patent law. Indeed, it is no coincidence that the first recognisable patent rights are thought to have emerged from the trading powers of fifteenth century Venice and Elizabethan England. The connection between trade and innovation is recognised by the WTO1:

"The idea of trade, and what makes trade valuable for societies, has evolved beyond simply shipping goods across borders. Innovation, creativity and branding represent a large amount of the value that changes hands in international trade today. How to enhance this value and how to facilitate the flow of knowledge-rich goods and services across borders have become integral considerations in development and trade policy."

Patent rights are national in scope – their protection ends at the borders of the country in which they are registered. Even if patents are registered in every country necessary to cover the commercially important markets in which a product is sold or a process used, differences in national patent laws or their interpretation by national courts may be encountered.

These can prove significant: the difference between an infringement in one country and not in another; or, the invalidity of a patent in one country and not in another. Preparing to contend with the differences in national patent regimes, either as a patent owner or a competing third party, can require the services of patent attorneys and patent lawyers in every country of commercial significance; a large cost in time and money.

How then can these differences be mitigated so as to allow businesses to operate more smoothly and cost effectively across borders?

Harmonisation in Europe

International treaties

The first step is international harmonisation. Truly international rules on intellectual property date back to the 1880s2, but it was not until the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, negotiated during the 1986-94 Uruguay Round, that global minimum standards for obtaining and enforcing patents were set out for the first time.

Even before TRIPS was negotiated, the issue had been a decades-long concern for the European countries (including, but not limited to, the European Union member states). Although the European countries maintain their own national courts and legislatures, pan-European treaty instruments have provided a basis for the harmonisation of national patent validity and infringement law rules. These first took shape with the introduction of the European Patent Convention (EPC), which came into force on 7 October 19773.

The EPC provided, amongst other matters, for the central grant by the European Patent Office (EPO) of European patents protecting national territories. The latter rules were provided by the Convention for the European Patent for the Common Market4, often referred to as the Community Patent Convention 1973 (CPC 1973), which was signed on 15 December 1975 by the nine member states at that time.

The CPC 1973 was never fully ratified and it was not until fourteen years later that another attempt to revive it was made in the form of the Agreement relating to Community Patents5, more commonly referred to as the Community Patent Convention 1989 (CPC 1989). Much like its predecessor, although this Agreement was signed, it was never fully ratified and did not come into force6, but it remains the basis for the acts of infringement in many European countries.

European Union law and the CJEU

The EU itself has also provided harmonising and directly effective legislation of a narrower scope: supplementary protection certificates (SPCs), the regulatory review defence (usually referred to as the 'Bolar Exemption') and the Biotechnology Directive, amongst others. Questions on the interpretation of these matters are referable to the Court of Justice of the European Union (CJEU) for preliminary rulings.

The experience of national courts is that the instrument most likely to give rise to referrals is Regulation 469 / 2009 of 6 May 2009 concerning the supplementary protection certificate for medicinal products (the 'SPC Regulation').

However, other European Union instruments relevant to patent matters include: Article 10(6) Directive 2001/83 of 6 November 2001 on the Community code relating to medicinal products for human use (the 'Bolar exemption'); Regulation (EU) 1610/96 of 23 July 1996 concerning the creation of a supplementary protection certificate for plant protection products (the ʿPlant Products SPC Regulationʾ); and, Directive 98/44/EC of 6 July 1998 on the legal protection of biotechnological inventions (the ʿBiotechnology Directiveʾ).

EPO case law

European patents take effect as a bundle of national rights upon grant, but it is still possible for them to be revoked centrally at the EPO, using the opposition procedure. An opposition must be initiated within 9 months of grant of the patent or the right to oppose the patent in the EPO is permanently lost.

The opposition will typically end with an oral hearing, followed by a decision of the Opposition Division that the patent in issue is invalid, valid, or partially valid and must be amended. The Opposition Division decision may then be appealed to the Technical Boards of Appeal (TBA) or even the Enlarged Board of Appeal (EBA).

A final decision of the TBA that a patent is invalid or valid only in amended form will result in the patent being revoked or amended, respectively, in all the national offices in which it is registered. The EPO thus has a direct impact on the national registers.

Moreover, in the process of their decision making, the TBA and EBA have built up a significant body of case law, which has varying degrees of influence in the national courts. Take, for example, their impact on the courts of the United Kingdom7:

"These decisions are not strictly binding upon courts in the United Kingdom but they are of great persuasive authority; first, because they are decisions of expert courts (the Boards of Appeal and Enlarged Board of Appeal of the EPO) involved daily in the administration of the EPC and secondly, because it would be highly undesirable for the provisions of the EPC to be construed differently in the EPO from the way they are interpreted in the national courts of a Contracting State."

Differences in application remain

Have these instruments succeeded in harmonising patent law across the European countries? The answer, in practice, is that whilst the signatories of the EPC (and within that group, the EU Member States) share very similar substantive laws at the statutory level, it is still not unusual for different national courts to come to different decisions when presented with cases arising from the same or similar facts.

This is despite the fact that, although they are not obliged to do so8, European judges of the higher instance courts frequently take notice of each other's judgments, in not just parallel national proceedings concerning the same patent, but also more broadly. Where it is possible to do so, they will be consistent with the decisions of each other. Jacob LJ put it like this in the Court of Appeal in Grimme Maschinenfabrik GmbH & Co KG v Derek Scott (t/a Scotts Potato Machinery)9:

"Broadly we think the principle in our courts – and indeed that in the courts of other member states – should be to try to follow the reasoning of an important decision in another country. Only if the court of one state is convinced that the reasoning of a court in another member state is erroneous should it depart from a point that has been authoritatively decided there."

"Increasingly that has become the practice in a number of countries, particularly in the important patent countries of France, Germany, Holland and England and Wales. Nowadays we refer to each other's decisions with a frequency which would have been hardly imaginable even twenty years ago. And we do try to be consistent where possible."

A recent and notable case in which one court has acknowledged the approach taken by its foreign counterparts and adjusted its course to bring it into closer alignment with them, is the UK Supreme Court in Actavis UK Ltd v Eli Lilly & Co10.

Equally, there are cases in which the national courts have gone their own way. Prior to the preliminary ruling of the CJEU in the case, varying decisions in parallel proceedings concerning tenofovir/Truvada were an example.

The proposed solution – the UPC

The reason decisions continue to differ in the way exemplified by the Truvada cases are complex. There are, however, three particular difficulties faced when trying to achieve consistency of decision making between national courts.

Firstly, procedural differences in the national European systems can present foreign judges with different evidence by which to assess the facts. Secondly, there are differences in the implementation of international instruments in national law; and, thirdly, there are differences in the way the national courts interpret those laws.

The proposed answer to resolving these sources of inconsistency is the Unified Patent Court (UPC) system. The idea of a single, pan-European patent protecting all territories in what was then the European Economic Community, dates to the CPC 1973. However, the emergence of the European patent having unitary effect ('Unitary Patent') and the UPC, in its current state of preparation, has taken a further 45 years.

To date, however, the UPC has not come into force.

A Practitioner's Guide to European Patent law

It is in this context that Taylor Wessing has led the writing of A Practitioner's Guide to European Patent Law to examine areas of consistency and difference between the key European patent law jurisdictions of England & Wales, France, Germany and the Netherlands across all the areas of patent law over which the UPC will need to establish a common approach.

It is also often the case that the decisions and approaches of other courts are important for European patent lawyers of all jurisdictions when submitting arguments in national courts. Therefore, and with the spirit of cooperation in mind that is outlined in Grimme Maschinenfabrik (above), this book is also intended to provide a guide to patent lawyers acting in the national European courts now.

When looking outside their immediate jurisdiction to find out how other courts approach a particular issue, will they find that the approach to an issue by their national court is outside the mainstream, does another court provide a better solution to a particular problem, or do the other major courts supply a ready-made approach for circumstances that are new at home?

A Practitioner's Guide presents the key issues of patent law by theme, assessing the national approaches together, rather than in nation-by-nation chapters. By taking a pan-European view of patent law, the book provides a high-level summary of common ground between the national approaches and, where relevant, looks at what we already know about the approach the UPC will take to substantive law.

A Practitioner's Guide to European Patent Law is published in October and available for pre-order.