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Applying for a patent
What are the criteria for patentability in your jurisdiction?
The criteria for patentability in Hungarian law are in line with the European Patent Convention (EPC) 2000. According to Article 1 of the Patent Act (33/1995), 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”.
According to the Patent Act, the three key criteria for patentability are 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 to 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 Hungarian Intellectual Property 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. As Hungary is an EU member state which has signed the Unified Patent Court Agreement, European patents with unitary effect (known as ‘unitary patents’) will also be available in Hungary once the agreement takes effect.
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 EPC 2000.
The subject matter above is 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, and is 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 regulation. Therefore, 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 substantial medical benefit to humans or animals;
- animals resulting from processes referred to in Article 6(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 used in these methods – in particular, substances (compounds) and compositions.
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 Hungarian Intellectual Property Office as proof of ownership.
The Hungarian Intellectual Property Office and the 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, albeit 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 benefits from the evolving practice of the Hungarian Intellectual Property Office.
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. Nevertheless, they may be protected by know-how or brought before the Hungarian Intellectual Property Office, provided that the method is in writing.
However, when rules or methods are part of a system that consists of technical elements, the patentability of the entire system may be considered. In a similar way 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 is aligned with the EU Protection of Biotechnological Inventions Directive (98/44/EC). The limitations imposed on biotechnological inventions by the European Court of Justice (ECJ) also apply (eg, in Monsanto v Cefetra (C-428/08) and Oliver Brüstle v Greenpeace eV (C-34/10)).
For inventions relating to stem cells, Hungarian Intellectual Property Office practice is intentionally harmonised with that of the EPO 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?
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 EPC 2000), for the purposes of Article 2 of the Patent Act (novelty) any disclosure of an invention that occurs no earlier than six months before the priority date 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 Hungarian Intellectual Property 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 patent application’s filing date; and
- a certificate issued by the authority responsible for the exhibition attesting to the display and date of the exhibition within four months of the patent application’s filing date.
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, the six-month grace period applies (Article 3(a) of the Patent Act).
What types of patent opposition procedure are available in your jurisdiction?
During the patent-granting procedure, anyone can file an observation with the Hungarian Intellectual Property Office stating that the invention or application does not meet the patentability requirements. The observation will be considered when the requirement to which it relates 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 in a separate procedure. Patent decisions may not be challenged before the Hungarian Intellectual Property Office – 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 Hungarian Intellectual Property Office at first instance in 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 the Hungarian Intellectual Property Office’s first-instance decisions may be requested within 30 days of the decision being issued in writing. Under certain circumstances, the Hungarian Intellectual Property Office may overrule or annul its own decision. Otherwise, the Hungarian Intellectual Property Office forwards the files of the case to the Budapest Metropolitan Court, 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 court will uphold, amend or annul the Hungarian Intellectual Property Office’s decision, and its orders can be appealed before the Metropolitan Appeal Court. The appeal court may sustain or amend the lower court’s order or annul the order or the Hungarian Intellectual Property 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. In general, a patent will be granted within three to five years – although there have been instances where patent prosecution has taken more than 15 years.
Costs generally range between €2,000 and €3,500, excluding translation costs or the renewal fees payable from the first patent year.
Enforcement through the courts
What are the most effective ways for a patent owner to enforce its rights in your jurisdiction?
Due to the strict bifurcation of infringement and validity proceedings in Hungary, the most effective way for a patent owner to enforce its rights and protect its market exclusivity is by obtaining a preliminary injunction. A preliminary injunction request may be filed even before the main action. Preliminary injunctions can typically be obtained within six weeks to three months (with another two to four months for appeals), and are enforceable regardless of whether an appeal is filed. Outside the court system, there are no compulsory negotiations between the parties. A rights holder must prove that its infringement claim is likely to be upheld, rather than providing absolute proof; thus, the collection of evidence is somewhat less strict and time consuming.
However, a rights holder should act quickly as a request for a permanent injunction must be filed within six months of the infringement starting, and within 60 days of becoming aware of the infringement. While failure to meet these deadlines does not automatically prevent the rights holder from obtaining a preliminary injunction, it reduces the likelihood of an injunction being granted.
As a prerequisite for granting a preliminary injunction, the courts usually order a bond. Bonds must be paid directly into the bank account of the court via a transfer.
What scope is there for forum selection?
None – the Budapest Metropolitan Court has exclusive competence.
What are the stages in the litigation process leading up to a full trial?
On 1 January 2018 a new Code of Civil Procedure entered into effect, introducing new and rather strict formal and substantive requirements. These include:
- detailed information disclosure requirements, such as the parties’ tax number, company registration authority and due proof of entitlement to company representation; and
- a requirement that all foreign-language evidence (at least in the relevant parts) be translated into Hungarian.
Foreign parties must comply with these requirements or else the court claim will be rejected without meritorious examination by the court. A substantial number of petitions were rejected on formal grounds in the first half of 2018; in such cases, the court claim must be refiled following rectification of the formal errors or shortcomings. The procedure is fully electronic.
The new law also established a new litigation structure, where the procedure is divided into a preparatory and a meritorious phase. Evidence, information or statements of claims, defences or counterclaims must be provided during the preparatory period and no amendments to previous documents (facts) may be subsequently made (with a limited number of exemptions).
The formerly passive status of the defendant has also ceased. While previously the only requirement on the defendant was to appear at the first hearing and formally object to the court claim, under the new law a substantial factually and legally reasoned defence or counterclaim must be filed in the preparatory phase within a strict time limit (which can be extended only with the court’s written permission); otherwise, the court will approve the court claim, which can easily lead to a final judgment.
At the end of the preparatory phase, the court will clarify the main issues and request for any necessary further evidence. With particular regard to the preparatory phase, the new rules are intended to shorten the meritorious hearing and close the first-instance procedure within one-and-a-half years. However, as the Hungarian bifurcated system has not changed, this intention may be realised in patent litigation with limited effect, as the infringement lawsuit is always suspended until a final decision is made in the revocation proceeding. As the first lawsuits under the new code started only in 2018, there is as yet insufficient experience to draw conclusions as to its actual effects on patent litigation practice.
How easy is it for defendants to delay proceedings and how can plaintiffs prevent them from doing so?
Bifurcation provides means for defendants to delay the main infringement action. To delay the proceedings, defendants usually file a revocation or non-infringement action which – due to the bifurcated system and being dealt with by the Hungarian Intellectual Property Office at first instance – serves as a ground for the staying of the infringement lawsuit. Preliminary injunctions are not stayed, so plaintiffs should consider them in order to avoid delays and protect their market.
If a defendant believes that an infringement action is about to be launched against it, it may request a non-infringement ruling from the Hungarian Intellectual Property Office, whereby the Hungarian Intellectual Property Office decides whether the product or process used by the defendant falls within the scope of protection of the designated patent. While the non-infringement procedure is pending, the main infringement action will be suspended, although a preliminary injunction request can still be filed.
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?
The validity of a patent may be challenged by filing a revocation action before the Hungarian Intellectual Property Office. The revocation of a patent can be requested by any party (with narrow exceptions) and without time limits.
If a party expects infringement proceedings to be brought against it, it can file for a non-infringement ruling, in which case the suit is stayed until the non-infringement procedure is completed. However, a non-infringement ruling may not be requested after an infringement or preliminary infringement suit has been initiated.
What level of expertise can a patent owner expect from the courts?
The Budapest Metropolitan Court (which has exclusive competence) decides patent issues in a specialised panel comprising a legal judge as chair and two technical judges. This panel is well experienced, makes thorough decisions and is up to date on European patent law developments.
The Metropolitan Appeal Court also adjudicates patent issues in a three-judge panel, although these judges have no technical qualifications. Consequently, appeals focus more on legal details rather than technical details.
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 in Hungary.
What role can and do expert witnesses play in proceedings?
In main infringement proceedings, the party with the burden of proof may call a forensic expert. The new Code of Civil Procedure, effective from 1 January 2018, recognises three kinds of expert (as opposed to the previous code, which recognised only court-appointed forensic experts): private expert, expert appointed in another proceeding and court-appointed expert. The party offering evidence will choose which type to use; offering multiple parallel expert opinions is not allowed. Both the court-appointed experts and private experts must be chosen from a list of registered experts, the only difference being that in the case of court-appointed experts, the court formulates the task of the expert, while with private experts the party alone poses the questions. If the court appoints an expert, there can be only one expert for a single question; if private experts are used, both sides can propose their own private expert opinions. The new rules do not seem to exclude the possibility for any parties to file opinions of their own experts in the form of expert affidavits; however, these are supposed to carry less weight than the opinions of the experts recognised by the Code of Civil Procedure. In any case, as the technical questions are highly specific and there are only a few qualified experts, a party expert opinion may carry greater weight. This has special significance in preliminary injunction proceedings, where the timeframe does not allow the involvement of court-recognised experts and the submission of a clear, concise opinion of a real expert in the given field can be crucial to the case.
Does your jurisdiction apply a doctrine of equivalents and, if so, how?
The doctrine of equivalents is included in Article 24(4) of the Patent Act, in line with the European Patent Convention 2000, in order to determine whether 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. The Hungarian courts employs the so-called ‘triple identity’ test – namely, equivalence is established when, compared to the patent claim, the given feature serves an essentially identical function in an essentially identical way providing an essentially identical result.
Is it possible to obtain preliminary injunctions? If so, under what circumstances?
A preliminary injunction may be requested even before the main suit, and theoretically even ex parte (although this has not occurred in practice). The patentee or licensee must prove that infringement is highly probable and that the preliminary injunction is necessary to protect its rights. A presumption applies to these rights if the preliminary injunction is filed within 60 days from gaining knowledge of the infringement, provided that the latter has commenced less than six months previously.
Alternatively, the patentee may demonstrate that the preliminary injunction is needed to prevent immediate damage. In both cases the balance of advantages and disadvantages must be demonstrated. In many cases, the preliminary injunction is subject to the deposition of a security to be paid by the plaintiff. A pending revocation or non-infringement action does not prevent the court from ruling on a preliminary injunction request.
How are issues around infringement and validity treated in your jurisdiction?
The Hungarian courts follow a bifurcated system. If the validity of a patent is challenged via a revocation action (or an opposition, in case of European patents) during or before patent infringement proceedings, the infringement proceedings will be suspended until the revocation action has been finally adjudicated. This does not affect preliminary injunctions, as these can be requested and ruled on even if a revocation or opposition action is pending. As long as there is no first-instance invalidity decision against the patent, the courts generally consider the patent’s validity sufficiently proven for the purpose of an injunction.
Will courts consider decisions in cases involving similar issues from other jurisdictions?
The Hungarian courts are not obliged to follow or consider decisions adopted by other jurisdictions, and in many cases this is emphasised by the courts and the Hungarian Intellectual Property Office. A preliminary injunction proceeding for a European patent is the only case where the Patent Act specifies that the court may take into account whether the European patent at issue was revoked by the European Patent Office or nullified in another jurisdiction.
Damages and remedies
Can the successful party obtain costs from the losing party?
The losing party bears all of the court costs. If the winner-loser ratio is different, the same ratio is applied to the court costs. Often, if the winning ratio is indistinguishable, the parties are ordered to bear their own costs. The parties must certify their costs via invoices. However, if the court considers the costs to be disproportionate to the complexity or value of the case, it may mitigate them and establish a lower amount. In practice, the court often sets the costs at a lower level.
What are the typical remedies granted to a successful plaintiff?
According to Article 35 of the Patent Act, the patentee may seek the following civil remedies:
- a declaration of infringement;
- a cease and desist injunction (also available in a preliminary injunction);
- an order to obtain information on the identity of persons involved in the production and distribution of the infringing goods;
- satisfaction from the infringer by way of declaration or other appropriate means;
- surrender of the profits obtained through infringement of the patent;
- seizure, transfer, recall and removal or destruction of the infringing products, as well as the means and materials exclusively or principally used for infringement; and
Plaintiffs generally claim all of these remedies, if applicable. In preliminary injunction requests the courts are usually hesitant to grant claims other than injunctive relief due to their irreversible character (eg, the provision of information due to the protection of business secrets because this action is irreversible, even if the patent is ultimately found invalid).
How are damages awards calculated? Are punitive damages available?
The Patent Act differentiates two types of pecuniary compensation:
- Infringer’s profits gained through infringement – this is an objective penalty for the infringement and does not depend on whether the infringement was wilful. In patent cases the court typically considers the revenues and costs directly linked to the infringing product or process.
- A claim for compensation of the patentee’s damages in line with the Civil Code – this typically entails compensation for the patentee’s lost profits.
Importantly, the amount of the pecuniary claim must be proven by the plaintiff. Further, if the plaintiff is claiming damages, it must prove the link between the infringing activity and the damages (eg, a decrease of their profit).
There are no punitive damages under Hungarian law.
How common is it for courts to grant permanent injunctions to successful plaintiffs and under what circumstances will they do this?
Under Hungarian court practice a declaration of infringement is followed quasi-automatically by an injunction. To date, no cases have challenged this approach.
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 Court takes between 18 months and six years to issue a first-instance decision in a patent infringement suit. Many factors influence this broad timeframe – in particular, whether the defendant uses an invalidity defence, in which case the infringement suit will be 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, how many times the parties exchange submissions); and
- the availability of evidence (the courts often allow deadline extensions, particularly if one party is a private person).
The new procedural rules’ main aim is to shorten the procedure; however, we cannot yet see this effect in practice.
Court procedures for patent infringement may not be expedited. However, a preliminary injunction must be adjudicated in an expedited procedure and has a strict deadline. A first-instance decision usually takes between four to six weeks. Patent revocation actions last typically two-and-a-half to five years unless a pending infringement action justifies accelerated proceeding, which reduces proceedings by approximately one year.
How much should a litigant plan to pay to take a case through to a first-instance decision?
The actual costs vary greatly, depending on the circumstances of the case. Generally, rights holders should budget between €20,000 and €100,000 per patent, depending on:
- the complexity of the patent to be discussed;
- the available evidence;
- the number of hearings;
- the involvement of experts; and
- any translation requirements.
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 a first-instance infringement decision within 15 days of receipt of the decision. In appeal proceedings, new evidence is generally accepted only if the party could not file it during the first-instance proceeding or the new evidence proves an issue that was not previously raised (although exceptions apply). The appeal procedure generally lasts around one year. The Metropolitan Appeal Court hears appeals in a panel of three judges without technical qualifications. The court may appoint court experts to clarify technical issues, but rarely does so. The second-instance court also holds a hearing.
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 to reconcile their respective positions. This may be done before or during trial. Settlements can be concluded out of court or confirmed by a court order. In the latter case, the court order confirms that the settlement has the same effect as any judgment.
Arbitration is possible for the resolution of infringement, damages or licence fee disputes; however, in practice all patent disputes tend to go to state court in Hungary.