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Results for "Patent infringement"

Standing Ovation…Denied!

by Keval Amin | May 9, 2024 | Patents

The US Court of Appeals for the Federal Circuit reversed a district court’s decision in a patent dispute for a lack of subject matter jurisdiction because the plaintiff lacked constitutional and statutory standing. Intellectual Tech LLC v. Zebra Technologies Corporation, Case No. 22-2207 (Fed. Cir. May 1, 2024) (Prost, Taranto, Hughes, JJ.)

In 2011, OnAsset granted Main Street Capital a security interest in a patent owned by OnAsset. In 2013, Main Street notified OnAsset that it was in default and, in 2017, OnAsset and Main Street entered into a forbearance agreement. Around the same time, Intellectual Tech was formed as a subsidiary of OnAsset and was assigned the patent in which Main Street had security interest. Intellectual Tech entered into its own patent security interest agreement with Main Street. Later, like OnAssett, Intellectual Tech defaulted.

Intellectual Tech sued Zebra Technologies for patent infringement, asserting the patent that was the subject to the security interest. Zebra moved to dismiss for lack of standing since Intellectual Tech had defaulted with respect to the Main Street security interest agreement. The district court denied Zebra’s motion, affirming Intellectual Tech’s ownership over the patent and its right to enforce it against Zebra. Zebra argued that Main Street gained exclusive rights over the patent when OnAsset defaulted back in 2013. The district court disagreed but nevertheless granted Zebra’s motion regarding constitutional standing, concluding that Main Street still had a right to grant a license to the patent to Zebra. Despite Intellectual Tech’s efforts to cure the standing defect by joining Main Street to the lawsuit, the district court deemed it incurable and dismissed Intellectual Tech’s claims without prejudice. Intellectual Tech appealed.

The Federal Circuit reversed, determining that Intellectual Tech had an exclusionary right in the patent when it filed a complaint against Zebra. Zebra contended that Main Street’s authority to license the patent, as per the forbearance agreement, stripped Intellectual Tech of all exclusionary rights. Zebra presented two licensing-related arguments: Main Street’s exclusive licensing ability upon default nullified Intellectual Tech’s exclusionary rights, and even if both Main Street and Intellectual Tech could license upon default, Main Street’s nonexclusive capability still deprived Intellectual Tech of its rights.

The Federal Circuit disagreed, finding that the forbearance agreement did not suggest that, without further action from Main Street, the mere activation of Main Street’s options automatically divested Intellectual Tech of its rights. By rejecting this exclusive-rights contention, the Court did not evaluate whether Intellectual Tech would maintain constitutional standing under the interpretation.

The Federal Circuit distinguished exclusive and nonexclusive licensing contexts in explaining why the jurisprudence cited by Zebra (the Federal Circuit’s 2010 decision in WiAV Sols. LLC v. Motorola, Inc.) did not control. According to the Court, this differentiation underscored the importance of distinguishing between patent owners and licensees, as ownership typically entails baseline exclusionary rights, contrasting with a licensee’s limited freedom from suit.

Moreover, the Federal Circuit’s analysis also underscored the necessity to assess patent agreements thoroughly, particularly regarding assignment clauses. Zebra argued that Main Street’s option [...]

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Faulty Jury Instruction Tampered With Tamper-Proof Trial

by Keval Amin | Apr 4, 2024 | Patents

The US Court of Appeals for the Federal Circuit affirmed in part, vacated in part and remanded a district court decision after concluding that a jury instruction on the objective indicia of nonobviousness that failed to specify all indicia on which evidence had been received constituted prejudicial legal error. Inline Plastics Corp. v. Lacerta Group, LLC, Case Nos. 22-1954; -2295 (Fed. Cir. Mar. 27, 2024) (Taranto, Chen, Hughes, JJ.)

Inline Plastics owns a patent family pertaining to containers with specific tamper-proof features and methods of producing these containers using thermoformed plastic. The invention is intended to deter unauthorized tampering with products in the containers. These tamper-proof features serve to prevent theft and product loss and maintain consumer confidence in product integrity.

Inline sued Lacerta Group for patent infringement over its tamper-proof technology. The district court made several significant pretrial rulings, including a claim construction order, and granted Inline’s motion for partial summary judgment of infringement on some of the asserted claims. During trial, Inline voluntarily withdrew certain claims, and the jury returned a verdict declaring all remaining claims (even those on which summary judgment had been granted) invalid and not infringed. After trial, Inline sought partial final judgment, which was granted, but also motioned for judgment as a matter of law and a new trial on invalidity. The district court denied Inline’s motions. Both Inline and Lacerta appealed.

Inline argued that it was entitled to judgment as a matter of law of no invalidity and that an error in the jury instructions requires a new trial on invalidity. Lacerta cross-appealed, challenging the denial of attorneys’ fees and the “without prejudice” dismissal of certain patent claims that Inline voluntarily dropped from its asserted-claims list near the end of trial.

The Federal Circuit rejected Inline’s argument for judgment as a matter of law of no invalidity but agreed with Inline that the jury instruction on the objective indicia of nonobviousness constituted prejudicial legal error. The Court determined that the jury could have reasonably found obviousness and rejected Inline’s three arguments against it. First, Inline argued deficiencies in Lacerta’s prior art references and expert testimony, but the Court found these arguments unpersuasive. Second, Inline challenged Lacerta’s evidence of motivation to combine references, but the Court found enough support to prove a motivation to combine. Third, Inline argued that Lacerta’s challenge failed because there was no rebuttal or opinion on objective-indicia evidence. The Court dismissed this argument, explaining that the absence of such testimony did not necessarily discredit the patentee’s evidence on nonobviousness. According to the Court, Inline failed to explain why the jury could not reasonably assign little weight to its objective-indicia evidence, which led the Court to reject Inline’s categorical argument based on the absence of expert testimony from Lacerta’s side.

However, the Federal Circuit agreed with Inline’s argument for a new trial on invalidity. The Court explained that jury instructions must be legally correct and sufficiently comprehensive to address disputed evidence. The Federal Circuit concluded that the district court’s objective-indicia instruction [...]

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Sorry—No Finality, No Injunction, No Appellate Jurisdiction

by Kyle Sorenson, PhD | Nov 9, 2023 | Trade Secrets

The US Court of Appeals for the Third Circuit dismissed an appeal from the denial of a motion under the Defend Trade Secrets Act (DTSA) for an ex parte seizure order, explaining that such orders are not final, not effectively injunctive and that the DTSA does not independently provide appellate jurisdiction to review such orders. Janssen Prod., L.P. v. eVenus Pharms. Lab’ys Inc., Case No. 22-2426 (3d Cir. Oct. 17, 2023) (Porter, Freeman, Fisher, JJ.)

In 2015, the US Food & Drug Administration (FDA) approved Janssen’s drug Yondelis—a stable, injectable version of the cancer drug trabectedin—for use in certain cancer patients. Janssen asserts that its data, specifications and methods for manufacturing Yondelis are trade secrets. After Janssen received FDA approval for Yondelis, eVenus sought FDA approval for a generic version of Yondelis. Janssen filed a lawsuit against eVenus (under the Hatch-Waxman Act) for patent infringement. During discovery, Janssen obtained documents that allegedly demonstrated that eVenus misappropriated Janssen’s trade secrets. Janssen then filed the current lawsuit against eVenus seeking relief for eVenus’s alleged trade secret misappropriation under the DTSA.

During discovery, Janssen found that eVenus spoliated evidence. In response, Janssen filed a motion for an ex parte seizure under the DTSA, requesting that the district court order the seizure of eVenus’ network servers and stored data, and the laptops and cell phones of certain eVenus employees and ex-employees. The district court denied Janssen’s ex parte seizure motion. Janssen appealed.

The Third Circuit dismissed the appeal, concluding that it lacked jurisdiction over Janssen’s appeal for two reasons.

First, the Third Circuit found that it lacked appellate jurisdiction because the district court’s denial of Janssen’s ex parte seizure motion was not a final judgment and did not meet any of the limited exceptions to the final judgment rule.

One limited exception to appellate jurisdiction under the final judgment rule is review of a lower court’s refusal to order injunctive relief. However, as the Third Circuit explained, an ex parte seizure order under the DTSA is not effectively injunctive and therefore does not fall under the injunction exception. The Court explained that refusal to grant an ex parte seizure order does not satisfy the first two prongs of the Court’s three-part functional injunction test, which require that an order be “directed to a party” and may be enforced by contempt. Regarding the first prong, the Court noted that DTSA seizure orders are not “directed to a party” because the DTSA requires law enforcement officials—and not a party—to execute any ex parte seizure order. Regarding the second prong, no party can be held in contempt for failing to comply with an order that does not direct it to do anything. Therefore, the district court’s order did not effectively deny an injunction.

Second, the Third Circuit analogized DTSA seizure orders with seizure orders under the Lanham Act in terms of statutory construction. As the Court explained, in the Lanham Act, ex parte seizure provisions are part of its “injunctive relief” section. In contradistinction, Congress did not [...]

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Statements in Unrelated Application Don’t Narrow Claim Term

by Ashley T. Brzezinski | Nov 9, 2023 | Patents

The US Court of Appeals for the Federal Circuit vacated a stipulated judgment of noninfringement in a patent infringement dispute after construing a disputed claim term, taking a more literal approach than the district court based on the meanings of the individual words of the claim language. Malvern Panalytical Inc. v. TA Instruments-Waters LLC, Case No. 22-1439 (Fed. Cir. Nov. 1, 2023) (Prost, Hughes, Cunningham, JJ.)

The dispute involved a suit brought by Malvern against TA Instruments-Waters and Waters Technologies Corporation (collectively, Waters) alleging infringement of two patents. Both asserted patents disclose microcalorimeters for measuring the amount of energy absorbed or released during a chemical reaction between two compounds and include independent claims directed to “a micro titration calorimetry system” having several elements, including an automatic pipette assembly that is guided into at least two positions via another component—namely, the disputed “pipette guiding mechanism.”

The pre-grant publication of a commonly assigned but unrelated patent was cited during the prosecution of an unrelated Malvern patent because the examiner understood the disclosure of that patent to recite an automated pipette guiding mechanism. The applicant initially tried to rebut the rejections by arguing that the disclosure of that patent recited a “purely passive [pipette] guiding mechanism.” However, after the examiner found the arguments unpersuasive, the applicant simply changed course and argued that the cited reference was not prior art because the publication and unrelated patent had a common assignee.

Malvern then requested supplemental examination of the now asserted patent under 35 U.S.C. § 257. In connection with the supplemental examination, Malvern filed an information disclosure statement (IDS) that included 154 documents, seven of which were office actions from the prosecution of the unrelated patent. Malvern did not describe or characterize the office actions in any way.

Turning back to the litigation, during claim construction proceedings, Malvern argued that “pipette guiding mechanism” should mean a “mechanism that guides the pipette assembly” while Waters argued that it should mean a “mechanism that manually guides the pipette assembly.” The district court concluded that the term “pipette guiding mechanism” was a coined term because Malvern presented no evidence that a “pipette guiding mechanism” was known or readily understandable to a person of ordinary skill in the art. Based on that determination, the district court relied on intrinsic evidence to determine the objective boundaries of the term.

The district court found that the statement made during the prosecution of the unrelated patent was relevant to the claim construction because the asserted and unrelated patents were assigned to Malvern. The district court also considered these statements as having been incorporated into the intrinsic record of the asserted patent because it concluded that Malvern agreed to incorporate the statements when it cited the office actions filed during supplemental examination of the asserted patent. Malvern appealed.

The Federal Circuit explained that it was appropriate to construe the term “pipette guiding mechanism” by looking into the individual meanings of the words “pipette,” “guiding” and “mechanism.” The Court indicated that when the patentee [...]

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Noncompulsory Counterclaims Don’t Confer Appellate Jurisdiction

by Kathleen Lynch | Aug 17, 2023 | Antitrust, Patents, Trade Secrets

The US Court of Appeals for the Federal Circuit determined that it does not have appellate jurisdiction to review noncompulsory patent counterclaims in a case otherwise unrelated to the originally asserted patents. Teradata Corp. v. SAP SE, Case No. 22-1286 (Fed. Cir. Aug. 1, 2023) (nonprecedential) (Lourie, Taranto, Hughes, JJ.)

Teradata makes and sells data warehouse systems and services. SAP develops and sells software. The two companies began collaborating while SAP was simultaneously developing its own database (HANA) and component software. SAP eventually informed Teradata that it would stop selling certain Teradata products. Teradata sued SAP, alleging misappropriation of trade secrets on the theory that SAP used Teradata’s proprietary information to create HANA. Teradata also alleged various antitrust violations, arguing that SAP “illegally tied” HANA and HANA’s supporting software. In response, SAP filed counterclaims against Teradata for allegedly infringing SAP patents related to database organization and optimization. On Teradata’s motion, the district court agreed to sever one of the four patent infringement claims but allowed the others to proceed. The district court reasoned that Teradata’s claims and SAP’s counterclaims all arose from “the same transaction or occurrence,” namely SAP’s development of HANA.

The district court granted summary judgment to SAP on Teradata’s antitrust and technical trade secret claims and stayed proceedings on Teradata’s business trade secret claim and to Teradata on SAP’s patent counterclaims. Teradata appealed to the Federal Circuit.

SAP moved to transfer the appeal to the Ninth Circuit. The Federal Circuit denied the motion but instructed the parties to address the jurisdictional issue in the merits brief. 28 U.S.C. § 1295(a)(1) grants the Federal Circuit exclusive appellate jurisdiction over final decisions in which a party claims or asserts a compulsory counterclaim related to patents. As it relates to this case, the issue was whether SAP’s patent infringement counterclaims were “compulsory,” meaning SAP would be unable to later sue on these patent infringement allegations “if it did not press them in this action.”

The Federal Circuit began by looking at Federal Rules of Civil Procedure 13(a), which states that a counterclaim is “compulsory” if it arises from the same transaction or occurrence as a plaintiff’s claim. The Court explained that it uses three tests to determine whether the transaction or occurrence is sufficiently related between the claim and counterclaim:

Whether the legal and factual issues are substantially the same
Whether the evidence will be substantially the same
Whether there is “a logical relationship between the claim and the counterclaim.”

Taken together, these tests essentially ask if there is substantial overlap between what the plaintiff and the defendant must establish to succeed on the claim and counterclaim, respectively.

The Federal Circuit found that the first two tests clearly weighed against SAP’s counterclaim being compulsory. While an understanding of the accused products and alleged trade secrets would be necessary for both the claim and the counterclaim, “same-field overlap” is not enough to make the issues or necessary evidence “substantially the same.”

As to the third test, the Federal Circuit found [...]

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Invoking Generic Need for Claim Construction Won’t Avoid § 101 Dismissal

by Katherine Pappas | Jul 27, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed the dismissal of a patent infringement suit on § 101 grounds, rejecting the patentee’s argument that claim construction or discovery was required before assessing patent eligibility. Trinity Info Media, LLC v. Covalent, Inc., Case No. 22-1308 (Fed. Cir. July 14, 2023) (Stoll, Bryson, Cunningham, JJ.)

Trinity Info Media sued Covalent for infringement of patents related to poll-based networking systems that connect users in real time based on answers to polling questions. Covalent moved to dismiss, arguing that the patent claims were invalid under 35 U.S.C. § 101 because they were directed to patent-ineligible subject matter. In resolving the motion, the district court found that the claims were directed to the abstract idea of “matching users who gave corresponding answers to a question” and did not contain an inventive concept. The district court further found that the purported invention did not improve computer functionality but simply used “generic computer components as tools to perform the functions faster than a human would.” Accordingly, it found the asserted claims invalid under § 101 and granted the motion to dismiss. Trinity appealed.

Trinity argued that the district court erred by granting the motion without first allowing fact discovery and conducting claim construction. The Federal Circuit disagreed, finding that in order to overcome a motion to dismiss on § 101 grounds, “the patentee must propose a specific claim construction or identify specific facts that need development and explain why those circumstances must be resolved before the scope of the claims can be understood for § 101 purposes.” Trinity had identified claim terms to the district court, but never proffered any proposed constructions or explained how construction would affect the § 101 analysis. Because Trinity did not identify specific facts to be discovered or propose any particular claim construction that would alter the § 101 analysis, Trinity’s generic arguments were insufficient to avoid the motion to dismiss.

The Federal Circuit went on to analyze whether the asserted claims were invalid under the two-step framework established by Mayo and Alice. Under this framework, Step 1 evaluates whether the asserted claims are directed to a patent-ineligible concept, such as an abstract idea. Step 2 searches for an “inventive concept” by considering the claims to determine whether any elements “transform the nature of the claim” from ineligible subject matter into a patent-eligible application.

At Step 1, the Federal Circuit concluded that the claims were directed to the patent-ineligible abstract idea of “matching based on questioning.” The Court noted that a “telltale sign of abstraction is when the claimed functions are mental processes that can be performed in the human mind or using a pencil and paper” (citing Personal-Web), finding that the “human mind could review people’s answers to questions and identify matches based on those answers.” Further, the trivial variations appearing in some claims (e.g., using a handheld device, reviewing matches by swiping and matching based on gender) did not change the focus of the asserted claims. The Court explained that for software inventions, Step 1 [...]

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Blunt Rejection of Attorney Fees in Stipulated Dismissal

by Lillian Spetrino | May 18, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed the rejection of attorney fees, finding that neither inequitable conduct nor a conflict of interest rendered the case exceptional given the limited factual record following a stipulated dismissal in a patent case. United Cannabis Corp. v. Pure Hemp Collective Inc., Case No. 22-1363 (Fed. Cir. May 8, 2023) (Lourie, Cunningham, Stark, JJ.).

United Cannabis Corporation (UCANN) sued Pure Hemp for patent infringement. After the litigation was stayed pending bankruptcy proceedings, the parties stipulated to the dismissal. Pure Hemp then sought attorney fees based on alleged inequitable conduct by UCANN during prosecution of the asserted patent due to nondisclosure of a prior art reference used in the patent’s specification and based on a purported conflict of interest by UCANN’s litigation counsel. The district court denied Pure Hemp’s request, finding that the case was not exceptional. Pure Hemp appealed.

Pure Hemp argued that the district court erred by (1) failing to find Pure Hemp to be the prevailing party in the litigation, (2) not concluding that the undisputed facts established inequitable conduct and (3) not recognizing that UCANN’s attorneys had a conflict of interest.

The Federal Circuit found that although the district court erred in not finding Pure Hemp to be the prevailing party, this was a harmless error. The Court explained that by fending off UCANN’s lawsuit with a stipulation dismissing UCANN’s claims with prejudice, Pure Hemp is a prevailing party under § 285. However, the Court concluded that this error was harmless because the district court ultimately concluded that this case was unexceptional.

The Federal Circuit found Pure Hemp’s arguments on inequitable conduct without merit. The Court explained that it had no findings to review because Pure Hemp voluntarily dismissed its inequitable conduct counterclaim and did not seek any post-dismissal inequitable conduct proceedings. Although Pure Hemp argued that it could prevail based on the undisputed facts in the record, the Court disagreed. It explained that even the limited record demonstrated at least a genuine dispute as to both the materiality and intent prongs of inequitable conduct and, therefore, the district court properly determined that Pure Hemp did not demonstrate that this case was exceptional.

The Federal Circuit also rejected Pure Hemp’s argument that copying and pasting portions from the prior art in the patent’s specification (but not disclosing the same prior art references) was inequitable conduct. The Court explained that unlike the nonbinding cases Pure Hemp relied on, the district court here did not find that the copied prior art was material, and the record gave no reason to disbelieve the explanation provided by UCANN’s prosecution counsel. The Court was also unpersuaded by Pure Hemp’s arguments to support inequitable conduct, explaining that the Court was not free to make its own findings on intent to deceive and materiality and, further, the district court was not required to provide its reasoning for its decision in attorney fee cases.

As to Pure Hemp’s argument that the case was exceptional because UCANN’s attorneys [...]

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Allegations in Complaint Prevail over Statements in Exhibit

by Mike Baldwin | Apr 20, 2023 | Patents

The US Court of Appeals for the Federal Circuit, prioritizing specific allegations in the complaint over disclosures in exhibits to the complaint, reversed and remanded a district court decision dismissing an original complaint, denying leave to file an amended complaint. Healthier Choices Management Corp. v. Philip Morris USA, Inc.; Philip Morris Products S.A., Case Nos. 22-1268; -1563 (Fed. Cir. Apr. 12, 2023) (Taranto, Cunningham, Stoll, JJ.)

Healthier Choices Management (HCM) filed a complaint for patent infringement against two Philip Morris defendants in the Northern District of Georgia. The infringement allegation involved a patent for a nicotine delivery device. The relevant language from the claims focused on a heating element in the device “initiating . . . a combustion reaction . . . [with] the combustion reaction at least partially combusting the combustible material.” In its complaint, HCM alleged that the heating in the accused product resulted in at least partial combustion.

Philip Morris defended the claim by arguing that its accused product aerosolized the nicotine at a low temperature and, therefore, never combusted the tobacco. Philip Morris filed a motion under Fed. R. Civ. Pro. 12(b)(6) against HCM arguing that an exhibit to the complaint “conclusively demonstrated” that the accused product did not initiate a combustion reaction. The district court agreed and granted the motion to dismiss, prompting HCM to file a motion for leave to amend its complaint to more definitively allege infringement. The district court denied the motion and granted Philip Morris’s subsequent motion for attorneys’ fees under 35 U.S.C. § 285. HCM appealed.

Since the issues raised were not unique to patent law, the Federal Circuit addressed HCM’s appeal under the law of the relevant regional circuit, the Eleventh Circuit. The Court noted that in the Eleventh Circuit, exhibits attached to a complaint can be considered and the exhibit controls in the event of any conflict with allegations pertaining to the exhibit. However, when an exhibit is alleged to be factually false in some way and the allegations in a complaint are specific and well pleaded, then the allegations in the complaint control. The exhibit regarding the accused product in this case was alleged to be incorrect, as far as it stated that there was no combustion initiated by the “heat-not-burn” method described in the exhibit. HCM contended that combustion occurred despite the assertions in that document. Relying on several cases disavowing the truth of the exhibit, the Federal Circuit found Eleventh Circuit law to be both clear and in alignment with HCM. The Court concluded that in light of the detailed allegations as to the basis underlying HCM’s disagreement with the facts asserted in the exhibit, the complaint should not have been dismissed based on the exhibit.

The Federal Circuit next turned to HCM’s amended complaint. Noting that the amended complaint “superseded” the earlier complaint, the Court found that the amended complaint removed the offending exhibit and any references to the offending exhibit and included a declaration of a technical expert to further support HCM’s allegations. [...]

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Transfer Motions Take Priority Regardless of Target District

by Jodi Benassi | Mar 16, 2023 | Patents

The US Court of Appeals for the Federal Circuit granted a writ of mandamus and ordered the district court to decide a motion for intra-district transfer before proceeding to further substantive matters, explaining that both intra-district and inter-district transfer motions must be prioritized. In re: Apple Inc., Case No. 23-120 (Fed. Cir. Mar. 6, 2023) (per curiam) (nonprecedential).

SpaceTime3D sued Apple for patent infringement in February 2022 in the Western District of Texas, Waco Division. In July 2022, Apple moved to transfer the action within the Western District to Austin. The motion was fully briefed by the parties on November 7, 2022. The claim construction hearing was scheduled for November 17, 2022, based on an agreement between the parties. The day before the hearing, Apple moved to stay the hearing and all other proceedings until the district court ruled on Apple’s pending motion to transfer. The district court deferred claim construction, then denied Apple’s stay motion. The district court acknowledged that it was required to prioritize a motion for inter-district transfer but stated that “it does not have to stay the proceedings or decide whether to transfer the case intra-district until closer to trial.” Apple filed a writ of mandamus with the Federal Circuit.

The Federal Circuit noted that although the remedy of mandamus is drastic and should be invoked only in extraordinary situations, it has previously granted mandamus “to correct a clearly arbitrary refusal to act on a longstanding pending transfer motion.” The Federal Circuit stated that under Fifth Circuit law, precedent entitles parties to have their transfer motions prioritized. The Federal Circuit was not swayed by the trial court’s reliance on a statement in an unpublished, nonprecedential Fifth Circuit decision in Sundell v. Cisco Systems, Inc., because the Fifth Circuit did not suggest any discretion in the prioritization of transfer motions based on the type of transfer. The Federal Circuit explained that the Fifth Circuit does not require that inter-district transfer motions be prioritized to the exclusion of intra-district transfer motions. The Federal Circuit granted Apple’s petition for mandamus and ordered the district court to timely decide the transfer motion before proceeding with further substantive matters beyond the claim construction hearing.

Are You Ready for the UPC? Act Now to Prepare for its Opening on June 1

by Dr. Henrik Holzapfel, Charles Larsen and Diana Pisani | Mar 1, 2023 | EU Update, Patents

On February 17, 2023, Germany ratified the Agreement on the Unified Patent Court (UPC) and triggered the UPC’s entry into force on June 1, 2023. The UPC will revolutionize patent enforcement across Europe and impact companies around the world that hold European patents or conduct business in Europe.

Owners of existing European patents or pending applications can “opt out” of the UPC’s jurisdiction for an initial transitional period of at least seven years. Companies must act now if they want to opt out before the court officially opens.

Understanding the UPC

The UPC will have exclusive jurisdiction over patent infringement and invalidity actions in its member states for patents granted by the European Patent Office (EPO), including existing European patents and new European patents with unitary effect (unitary patents). There are currently 17 EU Member States participating in the UPC (Germany, France, Belgium, Bulgaria, Denmark, Estonia, Finland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Sweden and Slovenia). Additional EU Member States may join the UPC in the future.

The UPC will have local and regional divisions in its member states, with a central division in Paris and Munich and a Court of Appeal in Luxembourg.

As a streamlined patent enforcement venue, the UPC will provide several new benefits to patent owners, including faster decisions with limited discovery and lower cost, and the possibility of injunctive relief throughout the member states. At the same time, the UPC will allow revocation of a patent in a single action with effect for all member states, alongside the possibility to oppose a European patent before the EPO.

European Freedom to Operate

Because of the UPC’s structure and incentives, patent litigation will likely increase in Europe, which will heighten the intellectual property (IP) infringement risk for companies doing business in Europe. If a company has not already done so, it should promptly review its competitors’ European patent estates to assess the potential risks and develop a defense strategy to avoid a surprise attack from a competitor after June 1, 2023.

European Enforcement Actions

Although the UPC is new and untried, it has the incentive to provide strong relief for those who trust it. If a company needs to bring a patent infringement action against a competitor and would like to do so in a fast, cost-effective manner, with the possibility of significant remedies, the UPC should be considered as a potential venue. The company should review its portfolio and infringement evidence to assess its opportunities.

Deciding Whether to Opt Out

The right to opt out European patent filings from the UPC’s jurisdiction will be available for an initial transitional period of seven years, which may extend to 14 years. It will be possible to reverse an opt-out, but not if the patent has been enforced or attacked in national court.

McDermott’s UPC Resource Center explores the various advantages and disadvantages of both staying in and opting out of the UPC.