Monday, March 17, 2014

New draft rules for future European patent court slightly more balanced with respect to sales bans

A week ago, I expressed, in a post on infringement lawsuits filed that day by a non-practicing entity over former Ericsson wireless patents, doubts about the European Commission's Internal Market officials' commitment to a balanced patent litigation system. I have meanwhile looked at the 16th revised draft Rules of Procedure for Europe's future Unified Patent Court. Compared to the previous version, that draft is a step in the right direction with respect to injunctive relief, though at the current pace it would take Europe about 20 years to catch up with the U.S. eBay v. MercExchange standard (which is almost eight years old).

At least European policy makers don't entirely ignore a growing industry coalition's call for a balanced framework lest Europe become the patent trolls' paradise.

If further adjustments follow later this year, however, then there is still hope for a reasonably good outcome. In my opinion, something must be done about bifurcation: there must not be a window of opportunity to enforce injunctive (or even monetary) relief over patents before a validity decision has been made. Too many patents are simply invalid as granted. In all of the patent disputes I watch, not a single one of the challenged patents has been affirmed in its granted form.

At this point I'll just compare the current state of the European draft rules with the eBay factor.

Rule 211.3, which you can find on page 87 of the PDF document, relates to preliminary injunctions and now has the following wording:

In taking its decision, the Court shall in the exercise of its discretion weigh up the interests of the parties and, in particular, take into account the potential harm for either of the parties resulting from the granting or the refusal of the injunction.

(emphasis added)

The bold-face addition is similar to the balance-of-hardships eBay factor. And the words "in particular" mean that judges can give consideration to further factors, but it would be much better to spell those others factors out.

The other eBay factors -- irreparable harm, inadequacy of monetary compensation, public interest -- are not mentioned. Judges could, but won't necessarily, read them into the balance-of-hardships part. Without the rules of procedure being modified further, I doubt that the Unified Patent Court would focus on irreparable harm as opposed to just any harm. And if the focus should be on irreparable harm, then the inadequacy of monetary relief must also be a factor -- in my opinion, even an absolutely indispensable requirement. Of course, nothing would stop European judges from cosnidering the availability of other remedies in connection with the balance of hardships. But there should be a clear signal that monetary compensation is very often (though obviously not always) a perfectly adequate alternative to injunctive relief.

I'm also concerned that the public interest is not mentioned. I have repeatedly criticized attempts by litigants, intervenors and self-serving amici curiae in the U.S. to interpret the public interest exceedingly broadly. Nevertheless I believe that the public interest should be mentioned. In the current form, the European draft rules suggest that the granting or refusal of injunctive relief should be considered only againt the background of a dispute between two private parties. While a party could always make a public-interest argument in the balance-of-hardships context, the current rules don't ensure that such arguments, which can be very important and sometimes tip the scales, will be afforded significant weight.

If nothing else was done, the addition of a balance-of-hardships consideration might be "too little, too late". Much more of an effort is needed. I'm neither totally disappointed nor happy. I'm cautiously optimistic and will continue to follow the process.

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