The 17th version of the draft Rules of Procedure of the Unified Patent Court were published last week (see our previous bulletin here, and here for a copy of the draft Rules) following their examination by the Legal Group of the Preparatory Committee. The revised draft addresses concerns raised about some of ambiguities of the opt-out process, makes a number of minor amendments to issues relating to case management and interim orders, and also addresses what has been known as the "injunction gap" caused by bifurcation.

A full review of the changes to the draft rules are set out below (click on read more). In accordance with the "roadmap" of the Preparatory Committee (see here), the next stage is that an oral hearing will be held on the 17th draft of the Rules of Procedure to allow interested parties to discuss the amendments made by the Legal Group in this 17th draft, and also the changes made by the Expert Group in the 16th draft. The oral hearing has been scheduled to take place from 09.00 to 18.00 CET on 26 November 2014 at the European Law Academy in Trier, Germany. Although this is an invitation only event, we understand that there will be a live webcast of the hearing on the website of the European Law Academy at http://www.era.int/.

In other news, the Preparatory Committee (made up of representatives of all members of the Unified Patent Court) met in Brussels last week to discuss the progress towards implementation of the new court. The Preparatory Committee has commented that many member states reported that "they hope to be able to ratify the Unified Patent Court Agreement during the course of 2015." Only five states have ratified to date, with at least 8 more required for the court to come into effect, two of which must be Germany and the UK (France having ratified in March this year).

The Preparatory Committee also reported that the first tranche of training for judges will commence in early 2015, focussing on those that applied for legally qualified judicial appointments.

Analysis of the 17th draft Rules of Procedure    

The 16th draft Rules of Procedure were published by the Preparatory Committee in March 2014 following a public consultation and review by the Expert Group (the Expert Group is made of a number of practitioners and judges from the member states). In light of those changes, a number of concerns were raised by potential users of the new court in relation to ambiguities and uncertainties in the rules.

The Legal Group of the Preparatory Committee has now reviewed the draft Rules of Procedure and released a revised version – the 17th draft. This version is a mark-up of the 16th version, which was itself a mark-up. The changes made by the Legal Group are in blue, and the previous changes by the Expert Group are in red.

The key amendments to the rules proposed by the Legal Group are as follows:

  1. Opt-out
  2. Birfurcation and stays
  3. Deletion of defence of innocent infringement and guidance that a final injunction will be ordered save in very exceptional circumstances
  4. Security for protective and provisional measures (i.e. cross-undertakings)
  5. Procedural Appeals
  6. Access by the public to register  

1.  Opt-out  

The Unified Patent Court will have jurisdiction over both Unitary Patents and European Patents from Day 1. However, in relation to European Patents, that jurisdiction will not be exclusive, with the national courts retaining jurisdiction for a transitional period of 7 years (which can be extended). Patentees will, therefore, have a choice of jurisdictions in which to enforce European Patents during the transitional period.

However, third parties will also have a choice as to the whether to bring revocation proceedings against European Patents in either the Unified Patent Court or the national courts. In order to provide patentees with a choice, the Rules of Procedure include a system which provides that a patent holder can opt-out a European Patent from the Unified Patent Court regime. This opt-out procedure has been one of the major sources of concern for users of the new regime, with criticisms levelled against the process and the lack of transparency as to the fees that will be required in order to opt-out.

Opting-out

The opt-out mechanism is set out in Rule 5. Rule 5.7 states that an application for an opt-out in relation to a European Patent will be ineffective if an action has been commenced in the Unified Patent Court. The rationale for this is to prevent inconsistent decisions in relation to the same patent between the Unified Patent Court and later in the national courts. One of the areas of ambiguity had been whether the bar on opting-out in such circumstances only related to actions that were currently pending before the Unified Patent Court.

This has now been clarified by the latest draft of the Rules, such that if a European Patent has ever been before the Unified Patent Court, no opt-out can be made.

Withdrawing an opt-out

An opt-out in relation to a European Patent can be withdrawn by the patent holder during the transitional period. In a similar way to the opt-out, Rule 5.9 states that withdrawal of an opt-out is ineffective if an action has been commenced before a national court in relation to the European Patent. Again, there was a perceived ambiguity in the Rules as to whether the bar on withdrawing an opt-out related only to pending proceedings before national courts.

This has also been clarified by the latest draft. In essence, if a European Patent has been opted-out of the Unified Patent Court system, and an action is brought in relation to that European Patent in a national court, then it will not be possible to subsequently withdraw that opt-out and re-enter the Unified Patent Court regime

2. Birfurcation and stays  

Article 33 of the Unified Patent Court Agreement provides that actions for infringement of a patent are brought in the local/regional divisions of the Unified Patent Court. Counterclaims for revocation in an infringement action may be brought in the same local/regional division as the infringement action. However, that local/regional division will have discretion to either (a) proceed with the action for infringement and counterclaim for revocation at the same time, (b) refer the counterclaim for revocation for decision to the central division and stay or proceed with the action for infringement, or (c) with the agreement of the parties, refer the entire case for decision to the central division.

So, option (b) envisages a bifurcation of the issues of infringement and invalidity. The Legal Group have proposed two changes in relation to such bifurcation:

  • Rule 40(b) – Acceleration of revocation proceedings. Where a local/regional division has referred a counterclaim for revocation to the central division and where the infringement action has not been stayed, the central division shall accelerate proceedings. The panel is obliged by the rules to endeavour to set a date for the hearing of the revocation counterclaim prior to the hearing set down for the infringement action.
  • Rule 37(5) – Provision of information. Presumably in order to assist with the first amendment above, where a local/regional division decides to refer a counterclaim for revocation to the central division and still proceed with the infringement action, the panel must communicate to the central division the date set for the interim conference and for the oral hearing in the infringement proceedings.

The upshot of these changes is that the perceived problem of bifurcation – that an injunction is ordered in an infringement action, and then the patent is later revoked (the "injunction gap") – is dramatically decreased, as in most cases the revocation issues should be tried first.

3. Deletion of defence of innocent infringement and guidance that a final injunction will be ordered save in very exceptional circumstances  

Rule 118(2) of the previous draft of the Rules of Procedure included a provision such that, in appropriate cases, the court may order damages and/or compensation to be paid in lieu of injunctive relief or corrective measures where the infringing party acted unintentionally and without negligence, if execution of the orders would cause the party disproportionate harm, and if damages and/or compensation appear to the court to be reasonably satisfactory. This wording stems from Article 12 of the Enforcement Directive 2004/48/EC.

This defence has been deleted from the 17th draft. The Legal Group's guidance explains that the deletion was made as it was felt that such a scenario would be difficult to imagine where an infringer acted not only unintentionally but also without negligence. The guidance also explains that preventing a third party from using an invention without consent is the "core right of the patentee" and that only in very exceptional circumstances will the court use its discretion not to order injunctive relief.

4. Security for protective and provisional measures (i.e. cross-undertakings)

Rule 196 includes provisions relating to the grant of protective measures such as the preservation of evidence, physical seizure of allegedly infringing goods, physical seizure of materials and implements used in the production and/or distribution of infringing goods, and preservation and disclosure of digital media and data. Rule 211 includes similar provisions as to preliminary injunctive relief and freezing injunctions.

As with such orders in many member states, the applicant may be ordered to provide security for legal costs and compensation for any injury incurred by the defendant (for instance, in England, an applicant must give a cross-undertaking to compensate the other party for any losses incurred if it later turns out that the order should not have been made). Rules 196(6) and 211(5) reflect this position, and originally stated that the court must order security where the defendant was not heard (i.e. on an ex parte basis). The 17th edition waters this down slightly, providing that the court can dispense with the need for security in "special circumstances". The Legal Group's guidance provides a examples of such special circumstances – where no damage can occur, or if only a sample of an inexpensive mass-product is sought.

5. Procedural Appeals

A party may bring an appeal as of right at the Court of Appeal of only certain types of decisions (in particular, only final decisions on the merits). The previous draft of the Rules stated that procedural decisions could only be brought with the leave of the "Court". The drafting committee of the 16th edition noted that the construction of the word "Court" was unclear – which court did it mean? The first instance court or the Court of Appeal?

The 17th edition has now clarified the position. Procedural decisions can only be appealed with the leave of the court of first instance, and if such permission is refused then the appellant can request a discretionary review by the Court of Appeal. However, the judge considering the request in the Court of Appeal can deny the request for permission to appeal without giving any reasons.

6. Access by the public to register  

The Rules of Procedure provide the public with access to written pleadings, written evidence, decisions and other orders. In the previous draft, such documents were only made available once a 14 day period had passed following filing. This period was set to enable a party to apply to court for an order that certain information could be excluded from the register.

The 17th edition has amended the rules to make it easier for a party to exclude confidential material from the public. Rule 262 now provides that documents are available for public inspection unless a party has requested to the Registrar that certain information is kept confidential and provided specific reasons for such confidentiality (i.e. the party no longer needs to make an application to the court for an order). Where a party makes a request for documents to be confidential, it must also provide redacted copies.

Rule 262 also includes a provision allowing a member of the public to apply to the court for an order that any information excluded from the register is made available to the applicant. However, it is for the member of the public to demonstrate that the information is not confidential. The new version of the rules also state that the court shall allow the application "unless legitimate reasons given by the party concerned for the confidentiality of the information clearly outweigh the interest of the applicant to access such information."