This section explains briefly the main characteristics of the four enforcement systems and highlights some of the substantive and procedural differences that exist between the jurisdictions of Germany, the UK, France and The Netherlands.
The German patent system is illustrated in Fig. 1.
In Germany twelve regional courts, Landgerichte (LGs), are competent to hear patent and utility model infringement cases.Footnote 9 Appeals against the decisions of the LGs are heard by the higher regional courts (Oberlandesgericht—OLG). Against the decisions of the higher regional courts, a second appeal can be brought before the Federal Court of Justice (Bundesgerichtshof—BGH).
The LGs have no jurisdiction to decide on the validity of a patent—neither in form of a defense against a patentee’s claims for patent infringement nor in form of a (counter-) claim for declaratory judgment of invalidity. This is referred to as bifurcation of infringement and validity proceedings.Footnote 10 In both patent and utility model infringement proceedings the infringement court has the discretion to stay the proceedings until parallel revocation proceedings before EPO, DPMA (Deutsches Patent- und Markenamt) and BPatG (Bundespatentgericht) have come to a conclusion.Footnote 11
As in all contracting states of the EPC, the validity of an EP can be challenged by filing an opposition before the EPO. The validity of a DE patent may be challenged by filing an opposition before the DPMA.Footnote 12 The decisions of the DPMA can then be appealed before the Federal Patent Court.Footnote 13 Only after the deadline for filing an opposition against a DE patent or EP have lapsed and all pending opposition and appeal proceedings against the patent have been terminated, can a revocation action against an EP and DE patent be filed before the BPatG.Footnote 14 The decisions of the BPatG can be appealed before the BGH. Therefore, the BGH is the only court in Germany which has jurisdiction to decide on both infringement and validity.
UK (England and Wales)
In the context of our data collection period—2000–2008—the patent litigation system in the UK is illustrated in Fig. 2. With respect to cases filed 2000–2008 there are two UK courts of relevance to our analysis, both of which are located in England and Wales: (i) the Patents County Court (PCC)—since 2013 reconstituted as the Intellectual Property Enterprise Court (IPEC)—which deals with low-value claims, and (ii) the Patents Court (PHC), which is a specialist court of the Chancery Division of the High Court of Justice of England and Wales.Footnote 15 In principle, the PCC (now the IPEC) hears patent cases of lower value and complexity. In practice, the overwhelming majority of patent cases during the period 2000–2008 were heard by the PHC.Footnote 16
Appeals are made from the PHC to the Court of Appeal (CA). Leave to appeal must be granted by the PHC or by the CA itself. The decision of the CA can be challenged at the Supreme Court (formerly the House of Lords). Once again, leave must be given for appeal to the Supreme Court (SC), either by the CA or the SC itself.Footnote 17
As noted above, the validity of an EP can be challenged by filing an opposition before the EPO. In addition, the UK Intellectual Property Office (UK IPO) has a procedure to revoke UK national patents (GBs), e.g., via its patent opinion service.Footnote 18
In the UK there is a combined system of filing infringement and revocation claims at the same court. This means that the PCC (now, the IPEC) and the PHC have jurisdiction to determine both infringement and the validity of a UK national patent (GB) or the UK-validated part of a European patent (EP).
The jurisdiction of the PCC and PHC to determine patent validity is independent of the question of whether the deadlines for opposition against an EP have or have not lapsed and/or whether opposition proceedings are pending. However, the courts can stay the proceedings until the EPO has decided about an opposition. In the past, the PHC only rarely granted a stay pending EPO proceedings, but a recent decision of the UK Supreme Court has led to a partial revision of this policy.Footnote 19
The patent litigation system in France is illustrated in Fig. 3. Until June 2008, there were 10 specialised courts (Tribunaux de Grande Instance—TGI) that dealt with actions involving patent infringement and the related issue of unfair competition. Out of the 10 courts that heard patent cases until mid-2008, only two (Paris and Lyon) had specialist patent judges. These two courts, together with the court in Lille, heard the vast majority of patent actions.Footnote 20 The decisions of the TGIs could be appealed before the Court of Appeal (Cour d’Appel—CdA) which had the territorial jurisdiction for the relevant TGI.Footnote 21 Since 2009 the TGI in Paris has the exclusive jurisdiction for all patent cases.Footnote 22 Therefore, the only competent CdA is now the CdA in Paris. The decisions of a CdA can be appealed to the Supreme Court (Cour de Cassation—CdC).Footnote 23
There is no opposition procedure to challenge French national patents at the Institut National de la Propriété Industrielle (INPI).Footnote 24 The validity of French national patents and French-validated EPs can be examined by the TGI. Like in the UK, there is no German-style specialized, separate court for revocation actions. If infringement proceedings are already pending, invalidity can be raised as a counterclaim or defense.Footnote 25 However, the validity of FR patents and the French part of an EP can also be challenged in an isolated revocation action.Footnote 26 However, standalone actions for revocation are very rare in France (Véron 2010). In most cases (>90 %) the validity issues are raised as a counterclaim for revocation.Footnote 27 The courts have wide discretion to stay proceedings during a pending opposition at the EPO, but do so only if they find that the likelihood of success of the opposition is high and if the balance of the party’s interests does not contradict a stay.Footnote 28
Figure 4 shows the Dutch patent litigation system schematically. Since 1987 The Netherlands has had a highly centralized system of patent enforcement.Footnote 29 All patent matters must be brought before the courts in The Hague (s’Gravenhage), which have exclusive jurisdiction.Footnote 30 First instance actions must be filed at the patent chamber of the district court (Rechtbank) and an appeal may be taken to the patent chamber of the court of appeal (Gerechtshof). Appeal decisions may be subject to final judgment at the Supreme Court (Hoge Raad).
There is no opposition procedure for Dutch national patents comparable with that of the EPO for EPs. In Dutch legal actions, infringement and validity of Dutch national patents and Dutch-validated EPs are dealt with by the same court, either in the same proceedings (when invalidity is raised as a means of defense), in separate but simultaneous proceedings (a revocation action by way of a counterclaim), or in separate revocation proceedings.Footnote 31
The validity of a Dutch national patent can always be challenged in court.Footnote 32 By contrast, if the validity of the Dutch part of a European patent is challenged in the Dutch courts while opposition proceedings are pending, the revocation proceedings are usually stayed. However, Dutch infringement proceedings are normally not stayed while an EPO opposition proceeding is pending.Footnote 33
Differences across jurisdictions
Having described the characteristics of the different enforcement systems, we highlight in this section a number of differences across the four systems which have important effects on litigation behavior and hence the data described in the next section. Table 1 summarizes the main differences across the jurisdictions, which are explained in more detail below.
A major difference between the four legal systems is that Germany uses a bifurcated system. This is not the case in any of the other three legal systems covered by our analysis.
Due to the existence of bifurcation it is possible for a regional court in Germany to grant an injunction against a potential infringer of a patent which is later found to be invalid by the EPO, DPMA or the Federal Patent Court.Footnote 34 Another potential issue is that regional courts, which decide on infringement, and the Federal Patent Court that decides on validity construct claims independently of each other. This might lead to inconsistent claim constructions in the infringement and revocation procedures. This is often referred to as the Angora cat problem where the patentee applies the broadest possible interpretation of the patent claims in infringement procedures (a fluffy, blow-dried cat) and the narrowest possible interpretation in revocation proceedings (a wet, rolled-up cat). This creates the problem that an infringement court might issue an injunction against a defendant on the basis of a broad claim construction which would inevitably lead to the invalidation in view of a certain piece of prior art. At the Federal Patent court, in contrast, the patentee uses the narrow interpretation, which leads to the patent being upheld. Furthermore, there could be fewer counterclaims for revocation in the bifurcated system as costs involved in engaging in an additional, separate court action may be prohibitive, especially for smaller, resource-constrained companies. There is also the possibility that an alleged infringer drops the validity challenge as soon as the LG confirms that no infringement has taken place. Since a successful invalidity challenge produces positive externalities for other companies, in particular the challenger’s competitors that might also infringe the patent, the challenger has strong incentives to drop the challenge once its own situation has been clarified by the infringement court.
On the other hand, exclusive jurisdiction on patent validity offers the advantage of specialization. The Federal Patent Court charged with validity cases can train and deploy technical judges and accumulate experience specifically in the assessment of patent validity, facilitating coherent and well-founded claim construction and therefore increase legal certainty regarding the validity of patents. Since separate patent revocation proceedings increase the costs and risks for the alleged infringer, the separation of infringement and revocation procedures may lead alleged infringers to refrain from filing a revocation action if they have relatively low chances of success. Moreover, the strong presumption of validity, which puts considerable faith in the examination of the patent offices, could allow for a fast assessment of infringement claims, because validity does not need to be assessed simultaneously.
Number of competent courts
Another major difference between the legal systems is that in Germany several regional courts are competent to hear patent infringement cases; by contrast the UK, France (since 2009) and The Netherlands all make use of centralized systems for patent litigation.
This means that claimants in Germany can usually choose among several regional courts where to file an infringement claim. In the UK, depending on the size and value of the claim, the filing will typically be either at the PCC (IPEC) or the PHC (both are located in London); while in France patent cases must be taken to the TGI in Paris; and in The Netherlands first instance actions must be filed at the patent chamber of the district court in The Hague. In practice, this difference is mitigated somewhat by the strong concentration of cases in Germany in three out of the twelve competent courts—Düsseldorf, Munich and Mannheim.
Duration of the proceedings
In Germany, proceedings before the LG tend to be relatively speedy with the (first) oral hearing scheduled after 6–12 months, and judgment 1–3 months after the (second) oral hearing. Revocation decisions by the BPatG take usually at least 18 months after the filing of the revocation suit before the BPatG. In this respect it is important to recall that revocation actions are usually reactive actions and therefore filed after the infringement action has been initiated. Similarly, in The Netherlands proceedings are comparatively speedy—both Germany and The Netherlands follow a paper-based litigation procedure, with short oral hearings.
Regarding time limits, in the UK first instance cases filed before the PHC often take 12 months to reach full trial, but urgent cases can sometimes be heard within 6 months. Trial hearings are lengthy due to the presence of oral arguments and cross-examination, and trials can last from several days to a number of weeks. The first instance PHC judgment will usually be handed down within 2–12 weeks of the trial. Therefore, there is a typical overall length of around 12–14 months from filing to judgment, though complex cases can take longer. In France, first instance actions take on average about 18–24 months from claim to judgment.
In Germany preliminary proceedings are rare in patent cases due to the speed of the normal infringement proceedings and the strict requirements for granting preliminary relief. Instead, permanent injunctions can be granted by the LG based exclusively on an assessment of the infringement claims. As noted above with regard to bifurcation, if the LG does not stay the infringement proceedings, the claim for injunctive relief is granted about a year before the question of validity is even considered by the Federal Patent Court.
In France, preliminary proceedings—the saisie-contrefaçon—are commonly used to initiate infringement actions. As noted above, the court in France may order the seizure of the defendant’s goods within a few weeks of the action. Nevertheless, preliminary injunctions tend to be rare in France. This is also the case in the litigation system of the UK (England and Wales), where preliminary injunctions are relatively uncommon in patent cases. This might be partly explained by the practice of “clearing the way”—in the UK it is expected that a potential infringer should attempt to “clear the way” before bringing products to market that could potentially infringe a competitor’s patent(s) by proactively seeking revocation of the competitor’s patent(s), or alternatively, to seek a declaration of non-infringement. If they do so, they can avoid the possibility of an interim injunction being granted against them if the competitor decides to take patent infringement proceedings.Footnote 35 If a potential infringer does not do this, it is more likely that the PHC will grant a preliminary injunction preventing the sale of the potentially infringing product upon the commencement of infringement proceedings. In The Netherlands, the Kort Geding, a system of preliminary relief proceedings, comes into play. A preliminary injunction to halt infringing activities may be obtained within two weeks after filing a case. It also used to be commonplace in The Netherlands for a cross-border injunction to be granted with respect to infringement actions.
Costs and fee shifting
Since German infringement proceedings do not foresee extensive pre-trial disclosure of information and only short hearings usually without experts, proceedings are usually considerably less expensive than in other jurisdictions even if the same hourly rates for attorneys apply. Practitioners estimate the average costs to range between EUR 40,000 and EUR 100,000 per party.Footnote 36 The attorney fees are calculated according to a formula based on the estimated value of the dispute.Footnote 37 These fees are the basis for the reimbursement of costs which the winner of a case can demand from the loser. However, the attorney fees do not represent the true legal costs, but only a lower bound to which the attorney is entitled. Clients and their attorneys often agree to payment schemes based on an hourly rate which leads to attorney costs well above the legal fees. As a result, the costs are often not fully shifted to the loser.
In the UK, practitioners estimate the costs of a case which reaches trial to be at GBP 1.5 million for each side.Footnote 38 These estimates are supported by the research undertaken by Helmers and McDonagh (2013b) which show costs often ranging between GBP 1 million and GBP 6 million (encompassing the costs from both sides) for cases initiated during 2000–2008.Footnote 39 The main reasons for the relatively high costs are the disclosure requirement, the length of trial, the requirements for the carrying out of experiments and the cross-examination of expert witnesses. The loser pays costs system applies in this context—the losing litigant must pay not only his own costs, but also the costs of the other side. However, it is also important to note that such costs are allocated via an issue-based approach; depending on who lost which issue in the case, and taking into account how much court time the issue took to resolve, the court allocates the costs to each side on a proportionate basis also taking into consideration whether costs incurred were reasonable under the circumstances of the case.Footnote 40
In French proceedings, the involvement of the court is entirely free.Footnote 41 Most of the time, the attorney fees are calculated according to an hourly rate agreed with the client. The usual costs of the proceedings are estimated to range between EUR 50,000 and EUR 200,000.Footnote 42 In principle, the French system shifts the costs to the loser.Footnote 43 However, in practice the fees are shifted only to a very limited extent. For example, practitioners estimate that the sum of the granted litigation costs are on average between EUR 200 and EUR 300 and the granted lawyer’s fees are on average around EUR 3000.Footnote 44
Patent litigation in The Netherlands is estimated to cost on average between EUR 60,000 and EUR 200,000.Footnote 45 In principle, also The Netherlands shift the costs to the loser. Before the enforcement directive was implemented in 2007, the courts had usually shifted only a small amount of the fees.Footnote 46 However, since then full costs may be shifted.Footnote 47
There is an important theoretical literature that explores the importance of the allocation of costs among litigants (Reinganum and Wilde 1986; Spier 1992). The theoretical literature distinguishes between the American (no fee shifting) and British (full fee shifting) rule to find that in the presence of asymmetric information about the likelihood that the claimant prevails at trial, fee shifting encourages out-of court settlements (Spier 1992). The German and French systems could be considered as intermediate systems, shifting part of the costs from the winning to the losing party. In reality, however, in the UK costs are allocated on a per-item basis, which means that in practice often costs are not fully shifted from the winning to the losing party (Helmers and McDonagh 2013b).
In contrast to the other three jurisdictions, the German Patent and Trademark Office also grants utility models (Gebrauchsmuster). The legal remedies available to owners of utility models are the same as those available to patentees. Utility models differ from patents above all in that they are not subject to substantive examination by the patent office. As a result, they are registered within only a few months of filing. At the same time, in case the validity of a utility model is challenged in court, the burden of proof is on the owner of the utility model to show that the claims are valid. Utility models are restricted to product claims and their statutory life time is only 10 years. The existence of utility models in Germany makes a comparison of case counts across jurisdictions more complicated. Often utility models are used as a substitute for invention patents in Germany and they can be part of an international patent family. Inventions may also be protected by a combination of utility and invention patents. Such a strategy is particularly attractive to applicants if they want to seek an injunction relatively early.