Indian Supreme Court aligns with international arbitration law in enforcing foreign award
Out-Law Analysis | 22 Feb 2016 | 3:50 pm | 6 min. read
The UPC will have jurisdiction over a market as big as that in the US and it will have the power to grant interim injunctive relief extending over this whole market.
Assessing the way the UPC might consider applications for interim injunctions will help businesses evaluate whether the benefits of embracing the new unitary patent and UPC outweigh the risks.
There are clues to how the UPC might review applications for interim injunctions in the underlying legal framework for the Court. Practices could differ from what companies are used to in proceedings before the national courts inEurope.
There is currently real variation in the national approaches to the grant of interim injunctions in Europe and there is scope for differing interpretations of the rules. One concern is that there may well be early variations in practice and scope for patentees to forum shop within the UPC to maximise the prospects of an injunction.
Why interim injunctions matter
Interim injunctions are a powerful weapon against would-be infringers of patents.
Interim injunctions are court orders that patent holders often seek to prevent rival companies infringing their patents when bringing goods or services to market.
An interim injunction, where granted by a court, will typically involve a court placing a temporary ban on the sale of goods that are suspected of infringing rights holders' patents whilst legal proceedings proceed to a full trial, often months later
The Unified Patent Court framework and what it says about interim injunctions
The UPC is a new court system being set up to underpin the creation of new unitary patents, and will offer companies almost pan-European protection for inventions through a streamlined enforcement process.
Businesses taking out unitary patents, as well as those that do not opt out existing European patents, will be locked-in to the UPC's jurisdiction for disputes concerning those patents. Decisions of the UPC will have universal effect in each country the patents apply.
The basis of the UPC is founded in the Agreement on a Unified Patent Court. Article 62 of that agreement specifically addresses the interim relief that the UPC can grant to patent holders, while further detail is provided in the Rules of Procedure for the Court. The lack of guidance on injunctions in the framework is deliberate so as not to fetter the Court's discretion and .appears to offer the opportunity for the UPC judges to exercise their discretion over whether to grant interim injunctions in a non-formulaic way.
For example, it seems open to the UPC to put little weight on potentially weak arguments of infringement and validity if there is strong evidence of potential harm to the patent holder.
The Agreement makes it clear that any award of interim relief by the UPC is entirely discretionary. The Court must weigh up the interests of the parties and the likely harm to either party that would be caused if an interim injunction was granted or refused.. The Agreement also allows the UPC to issue interim injunctions without notice if "any delay is likely to cause irreparable harm to the proprietor of the patent".
Although it is thought that most applications for interim relief will be on notice, the UPC will adopt a German-style system of protective letters. A potential defendant, concerned about the prospect of an injunction without notice being ordered against them, can file a protective letter requesting to be heard.
The party applying for an injunction may be required to demonstrate that it owns the patent and that with a sufficient degree of certainty that their right is valid and is being infringed, or that such infringement is imminent. According to the rules, the UPC must also consider whether there has been any unreasonable delay in bringing an application for interim relief when determining whether to issue an interim injunction.
The Agreement states that the UPC will be subject to EU law. This means that the UPC will need to operate in accordance with the Enforcement Directive. The Directive requires that measures imposed to enforce intellectual property rights are "effective, proportionate and dissuasive and … [are] applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse".
Current practices in the UK, France and Germany and the contrast with the UPC regime
The national courts of the EU member states each currently take very different approaches when considering whether to issue interim injunctions over alleged patent infringement. We focus here on how the approach of the courts in the UK, France and Germany differ.
UK courts adopt a formulaic approach. They take a broad view of whether the case for infringement and validity is at least arguable and worth hearing at full trial before looking at issues of harm and the interests of both parties when deciding if an interim injunction is justified.
In France and Germany courts, in practice, take a more detailed look at the validity of patents and whether they have been infringed before deciding whether to issue an interim injunction.
Under the UPC system, it appears that issues of a patent's validity could be given lesser weight than issues relevant to infringement when the Court considers interim injunction applications. However, validity issues might be given greater weight by the UPC if other jurisdictions in Europe have already found the patents at issue, or closely related divisional patents, invalid. It could be argued such an approach would be in line with the terms of the Enforcement Directive.
The UPC Agreement permits interim injunctions to be issued where there is an imminent threat of infringement. However, it is unclear how 'imminent threat' might be interpreted by the UPC. The UK, French and German courts have adopted varying approaches when assessing if an 'imminent threat' arises.
In the UK, it can be enough that a business has the ability to launch a product and refuses to confirm that it will not be launched during the term of the patent. In Germany, the promotion of a potentially infringing product in a way that creates demand in the country is seen as an imminent threat of infringement. Evidence that a business intends to market a product at a trade fair, launch the product or deliver it to a customer can be enough to constitute an imminent threat of infringement in France.
Both the UK and French courts give close consideration to whether irreparable harm has or could be suffered when deciding if interim injunctions should be granted. Irreparable harm is harm that cannot be adequately remedied through an award of damages.
In Germany the courts will consider whether either party would be substantially disadvantaged if an interim injunction was or was not issued. Rapid price decreases spurred by illegitimate competition can justify injunctions being granted. Similarly, if an alleged infringer is wholly or mainly reliant on an allegedly infringing product then the courts in Germany could dismiss requests for an interim injunction.
The UPC will also have to consider whether companies have delayed too long before making an application for an interim injunction.
It is not clear yet what the UPC would consider an unreasonable delay. For example, will it be considered an unreasonable delay for a patent holder to not to have taken action upon becoming aware of a small number of infringing goods being placed on the market in an EU country where it does not sell its product when it goes to seek interim relief against a larger scale launch in a country where it does trade? In Germany reasonable periods of delay are considered to last only a matter of weeks and valid reasons must be given by the applicant for any delay in seeking interim relief. In the UK and France,although the absence of delay is not a legal requirement, unreasonable delay is given discretionary weighting.
The UPC will have the discretion to order "appropriate compensation" for any injury caused or damages suffered by an interim injunction award. This could serve as a powerful disincentive to seeking interim relief in some cases.
In the UK interim relief is often only granted if the patent holder agrees to compensate the alleged infringer for any loss caused by an injunction being in place if it later transpires that the patent was not valid or was not infringed. Patent holders in Germany are legally bound to pay damages if an interim injunction originally issued is not upheld. French courts will also order compensatory damages to be paid if the interim relief awarded is later revoked
The UPC will also have the discretion to order patent holders to provide "appropriate security", such as a deposit or bank guarantee, to an alleged infringer for any injury likely to be caused to them by an interim injunction as a condition of that injunction being granted.
Security is rarely ordered in the UK and in France. In Germany an order of security is entirely discretionary.
Provisions within the Enforcement Directive suggest that the UPC might only require security to be provided when there is some concern that an undertaking to compensate would not be sufficient.
Interim injunctions could be considered unattractive by businesses if the provision of security is set too high, because both a deposit and bank guarantee involve upfront liability.
Indian Supreme Court aligns with international arbitration law in enforcing foreign award