Two Important Bills for IP Rights Holders Adopted in France

by Dechert LLP
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This OnPoint covers the implications of two important recent developments for IP rights holders in France: (i) the ratification by the French parliament of the Agreement creating the Unified Patent Court (law no. 2014-199, dated 24 February 2014); and (ii) the adoption of the Bill aimed at strengthening the fight against IP rights infringement (law no. 2014-315, dated 11 March 2014).

Creation of the Unified Patent Court Ratified

The French Parliament ratified the Agreement creating the Unified Patent Court on 24 February 2014. France joins Austria as the first Member States of the European Union to ratify the Agreement. The Unified Patent System will enter into force upon ratification of at least 13 Member States, which must include France, Germany and the United Kingdom.

For 50 years, Member States have debated the creation of a unitary patent that would apply across the entire European Union. The Agreement establishing the Unified Patent Court was finally signed by 25 out of the 28 Member States on 19 February 2013.

While current European patents are centrally granted by the European Patent Office (EPO), they result in a bundle of national patents that must be enforced separately in each country where the patent is in force. As a result, enforcing a European patent can result in increased litigation costs, delayed proceedings and irreconcilable decisions.

Under the new system, the patentee will have the choice at the end of prosecution before the EPO to have either a European patent governed by the current system or a unitary patent effective within the 25 Member States. The new system also creates a new judicial court: the Unified Patent Court having jurisdiction over European patent and Unified patent matters.

During a transitional period of seven years (which is renewable), the owners of European patents will be entitled to opt out the system. In such a case, national courts will remain competent and the current system will still apply.

The Unified Patent Court will comprise a Court of First Instance and an Appeals Court, with the Court of First Instance being organized into local and regional divisions, as well as a central division. The central division will be located in Paris, with branches in London and Munich. The Appeals Court will be based in Luxembourg.

The central division will have exclusive jurisdiction over main claims for patent revocation, while the local divisions will have jurisdiction over patent infringement and counterclaims for patent revocation. The territorial jurisdiction of the local courts is determined by the draft rules of procedure (in summary: (i) location of infringement giving a choice to the claimant in case of multiple locations of infringement; and (ii) domicile of the defendant with rules in case of multiple defendants). Moreover, a system of possible transfer of the case to the central division, when a counterclaim for patent revocation is filed before a local court, is also provided by the draft rules of procedure. The draft rules of procedure are still being discussed among members of the Preparatory Committee.

Germany is expected to ratify the Agreement in the coming months, as are other Member States. Let us hope the Unified Patent Court will soon become a reality.

Strengthening the Fight Against IP Rights Infringement

On 26 February 2014, the Bill aimed at strengthening the fight against intellectual property rights infringement was adopted by the French Parliament (publication in the Official Journal on 12 March 2014). This law amends in several aspects the law of 29 October 2007, which implemented into French law the European Directive 48/2004/CE of 29 April 2004.

As a reminder, the main provisions introduced by the law of 29 October 2007 further to the implementation of the Directive were:

  • Availability of ex parte interim injunctions: an interlocutory injunction can be obtained ex parte depending on the circumstances of the case and notably if the applicant would suffer irreparable harm.
  • Softer requirements to be met for interim injunctions:
    • The applicant for injunctive relief need to show a likelihood of infringement (previously, the applicant had to show the seriousness of the action on the merits which had to be filed prior to application for interim injunction and so within six months as from awareness of infringement).
    • Since the implementation of the Directive, French courts have shown themselves to be more willing to grant interim injunctions, especially in patent cases. Provided that the likelihood of infringement is established, French courts now consider that injunctive relief ought not to be granted only if the patent appears to be obviously invalid.
  • Right of information: possibility for rights holders to obtain, upon court order, information and documents held by the defendant to an infringement action or any person holding infringing goods, for the purpose of determining the origin and distribution networks of the infringing goods (clarified by the new law dated 26 February 2014).
  • Assessment of damages: courts should take into account (i) the negative economic consequences (including loss of profits) incurred by the aggrieved party; (ii) the moral prejudice to the aggrieved party; and (iii) the profits made by the infringer (while only the loss suffered by the rights holder, including loss of profits, was taken into account for the assessment of damages prior to the implementation of the Directive).

It should be noted that the typically French saisie-contrefaçon (inspection order) was part of the Directive. The saisie-contrefaçon is a very effective method of collecting evidence upon an ex parte order. While this procedure should exist in every Member State of the European Union, it remains difficult to be obtained in countries where it was not available before the Directive. Therefore, France remains an attractive venue for IP rights holders who can, prior to any action, collect evidence of the infringement.

Strengthened Means for Customs

The new law extends customs detention to patents, plant varieties and geographical indications.

Transshipment is included in the list of acts that are prohibited, absent the consent of the rights holder, with respect to all types of intellectual property rights. This means that transshipped goods, i.e. goods that are on transit within the European Union, are now subject to customs control. The purpose of this was to circumvent the ruling of the Phillips and Nokia cases (joined cases C-446/09 and C-495/09 of 1 December 2011) in which the ECJ held that goods in transit within the European Union could not be seized by customs. This ruling was highly criticized, since a rights holder could not prevent infringing goods from proceeding to their final destination.

A data file relating to infringing goods will also be created. It is worth noting that postal services and express freight providers are required to feed data into this file, which raises both data protection and secrecy of correspondence issues.

Clarification of the Right of Information

The wording and implementation of the law of 29 October 2007 has given rise to hesitations and judicial reversals, thereby creating legal uncertainty. When is it possible for the rights holder to exert this right of information? Upon a decision on the merits regarding infringement (since the law refers to “infringing goods”), or in the course of the proceedings? Which Court has jurisdiction? Is the rights holder entitled to exert his/her right of information when a saisie-contrefaçon was not carried out beforehand?

The new law provides that the right of information:

  • can be exerted in the course of the proceedings since reference is now made in the law to “alleged infringing goods”;
  • can be ordered by the judge ruling on the merits or by the judge ruling in interim proceedings; and
  • can be exerted even though no saisie-contrefaçon was carried out beforehand.

Better Compensation for Rights Holders

In accordance with the approach taken by the law of 29 October 2007, the new law reaffirms that when assessing damages, courts should take into account: (i) the negative economic consequences (including loss of profits and losses incurred by the aggrieved party); (ii) the moral prejudice to the aggrieved party; and (iii) the profits made by the infringer.

However, the new law goes a step further than the law of 29 October 2007 by providing that each head of damages should be taken into account “distinctively” by the court, which can also take into consideration “the savings on promotional, tangible and intellectual investments” that the infringer has benefited from the infringement. Undoubtedly, these new provisions will lead to an increase in the amount of damages awarded to rights holders, provided however that they make sure to provide the courts with sufficient financial and accounting data.

Harmonized Statute of Limitations

The statute of limitations for civil infringement actions, which was formally three years for most intellectual property rights, is now aligned with the five-year common statute of limitations. The five-year period shall apply to limitation periods that have not yet expired when the new law comes into force. Time that has already elapsed will obviously be taken into account in the calculation of the new period. This longer statute of limitations will contribute to increase the amount of damages awarded to rights holders.

The ratification of the Agreement on a Unified Patent Court, and the new law strengthening the fight against infringement, prove the true commitment of France to intellectual property matters.

Footnotes:

Italy and Spain have decided not to join the system and have even challenged the validity of the legislative procedure before the ECJ. However, their action was dismissed in April 2013. Spain brought a new action against the Unitary Patent Regulation and new Court before the ECJ; the case is still pending. As it stands, Italy will not be party to the Unitary Patent System, but will participate in the New European Patent Court. Poland has decided to observe the system before deciding whether to join.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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