One risk of doing business, particularly for innovative technology companies, is the possible existence of conflicting third-party rights. At the very least, a patent infringement lawsuit can create uncertainty with respect to a company's ability to perform, while the worst case scenario includes injunctions, damages and possible bankruptcy. While companies are free to make their own choices with respect to their patent rights – in particular, whether to obtain them in the first place and whether to enforce them – they may not have much choice when it comes to third-party rights. Ignoring third-party rights will not make them disappear, and wishful thinking will not prevent a lawsuit. This update looks at some options for handling a threat of this kind in Norway and examines why going directly to the courts may be particularly advantageous.
The discovery of third-party rights may happen in a number of ways. They may be identified as a result of a freedom-to-operate search and analysis, perhaps performed in association with the introduction of a new product, or they may be brought to a party's attention by someone else – for example, the patent owner. For the purposes of this update, it will be assumed that the threat has been identified and that there is no easy way of designing around the patent. While parties may conclude that the risk is worth taking, wilful infringement is considered in Norway and if a party is found to have wilfully infringed a patent, damages may be increased (for further details please see "Damages for patent prosecution").
Consequently, remedial action may be required in order to reduce legal uncertainty or remove the threat entirely.
If the identified risk stems from a pending patent application, it is possible to file a so-called 'observation by a third party'. An observation can be filed with the Norwegian Patent Office (NIPO) and must include the grounds on which the observations are based. An observation may also be filed during prosecution of an opposition against a granted patent.
The party filing an observation does not become party to the proceedings. This may be a serious argument against using this instrument. If a patent is granted despite the observations, it will be difficult to prevail in a later attack on the patent based on the same grounds, even if it can be argued that the NIPO did not understand and apply the provided information properly.
Oppositions may be filed within nine months from grant. An opposition can be filed by any party and must include grounds. The party filing an opposition becomes party to the proceedings. The NIPO may uphold the patent with the same or amended claims or refuse the patent.
After expiry of the nine-month opposition period, and after any opposition that has been filed has been finally decided, it is possible to file a request for administrative review. However, a request for administrative review cannot be filed if court proceedings relating to the patent have been initiated. A decision may result in the invalidation of the patent or the amendment of the patent claims.
The NIPO has the authority to grant attorney's fees to the prevailing party.
Decisions in oppositions and administrative reviews may be appealed to the Board of Appeal for Industrial Property Rights (KFIR).
After a case has progressed through the administrative system described above, the parties may still bring a case before the courts. It is also possible to go directly to the courts, which may be a particularly attractive option in Norway.
If a particular patent is believed to represent a risk to a business, a number of options are available. It is possible to attack the patent's validity in a revocation action and seek to have the patent invalidated in whole or in part. Grounds for invalidity are limited to those explicitly listed in the Patents Act – namely:
- unpatentable subject matter;
- a lack of novelty or inventive step;
- a lack of enabling disclosure;
- the inclusion of subject matter after the application has been filed; or
- the expansion of the patent's scope after it has been granted.
However, it is also possible to bring an action for declaratory judgment of non-infringement before the courts. This does not attack the patent as such, but rather seeks to clarify whether the patent is applicable to a specific set of circumstances. This may be an attractive option if the patent represents legal uncertainty that should be resolved. Parties may, for example, be reluctant to invest in product development and production equipment unless they know that doing so will not bring the added bonus of a patent infringement lawsuit. This option may be particularly relevant if attacking the patent's validity seems unlikely to succeed.
Any party with a legal interest may bring one of these actions before the courts, subject to the requirements of the Civil Proceedings Act. No specific formal requirements are associated with declaratory judgment actions. For example, a declaratory judgment of non-infringement can be brought regardless of whether a cease-and-desist letter has been received from the patent owner. When planning the procedure, the judge will ask the parties whether they want to go to arbitration, but the court will not require that the parties make any effort to reach a settlement before the proceedings.
The Oslo District Court is the mandatory first-instance venue for patent cases in Norway. Decisions may be appealed to the Borgarting Court of Appeals and the Supreme Court.
The administrative systems are often thought of as cheaper and quicker alternatives to the courts, but this is not necessarily the case in Norway. Going directly to the courts is quick: by law, proceedings must start within six months from the filing of the suit. The proceedings themselves rarely take more than a few days and, by law, decisions must be rendered within two to four weeks after conclusion of the main proceedings. If the case is appealed, a slightly longer timeframe of approximately one year can be expected. In contrast, it is not uncommon for the prosecution of an opposition by the NIPO followed by an appeal to the KFIR to take approximately 10 years. At that time, if the parties are not exhausted, the case may still be brought before the courts.
Further, legal fees associated with court cases in Norway are relatively low. In principle, all types of evidence are admissible, but discovery proceedings are limited and cannot be used as a strategy to inflate the opponent's costs. The proceedings themselves are usually limited to between two to three and 10-12 days, depending on the complexity of the technology at issue and whether the case involves both infringement and invalidity (which are treated in the same proceedings). This ensures that costs are predictable and kept under control. The prevailing party will usually be awarded full legal costs.
The courts are experienced with all types of evidence, so if a patent prosecution case relies on witness testimony and other types of evidence that are not usually part of regular proceedings before the NIPO, the courts can be expected to handle this evidence more consistently and thoroughly than the NIPO or the KFIR. Normally first-instance patent cases will involve one legal judge and two expert judges, out of which at least one will be an experienced patent attorney.
Finally, a decision by the courts (potentially after appeal) is final and enforceable. Conversely, administrative proceedings may simply be a prelude to court proceedings, in which case they will have only added costs, time and uncertainty.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.