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European IP Bulletin, Issue 16, October - Patents
Patents
5. Patent Litigation Makes Its Way Into Internet and Related Technologies
There has been a recent upsurge of intellectual property litigation in the technology sector, particularly in relation to internet and allied technologies. Patent lawsuits are increasingly seen as lucrative options by companies. The trend started with the payment of $225m to settle a suit over parallel instruction computing technology by Intel to Intergraph.
Recently BTG, an intellectual property commercialisation firm, started legal proceedings against amazon.com, Barnesandnoble.com and two other internet companies for infringing its patents related to the tracking of users on World Wide Web. BTG had purchased these patents from Infonautics after undertaking comprehensive research about the commercial and industrial utility of these patents. Since a number of internet trading companies like Amazon were using the patented technology, BTG saw the patents as a future source of revenue. However, having failed to convince the companies to either license or buy the technology, BTG filed suits against them for patent infringement, and claimed unspecified amount of damages. Earlier this year, BTG also initiated suits against Microsoft and Apple for a patent related to a web-enabled software update.
This trend provides new insight into the internet-related technology paradigm, its commercialisation and the corresponding role of intellectual property. It mirrors the overall status of innovation within the field. People have run out of new ideas and have started looking at old ideas and ways of exploiting them. Patent holders are becoming more aware of the hidden commercial value of their patents in internet technologies, and are ready to force big companies into litigation. This is a warning sign for major internet-based trading companies and other corporate users to be vigilant and respectful of patents on internet and related technologies owned by other firms or else they will be sued for the infringement of associated intellectual property rights.
6. Does Science Reduce the Risk of Inconsistent Findings?
Proceedings were brought by DSM Anti-Infectives BV (“DSM”) against subsidiaries of GlaxoSmithKline Beecham plc (“GSK”) http://www.bailii.org.uk/ew/cases/EWCA/Civ/2004/1199.html. The Court of Appeal’s decision on 10 September 2004 allowed the English proceedings to continue.
The case concerned the use of two strains of bacteria known as ‘AnnexVII’ and SC7. These strains are used in the manufacture of potassium clavulanate in order to supply manufacturers of co-amoxiclav with a more powerful antibiotic than amoxicillin. The bacteria are used by DSM (in Sweden) and GSK (in the UK) to produce the base product clavulanic acid. DSM settled previous proceedings with GSK permitting its own use of ‘AnnexVII’, whilst GSK retained confidentiality and patent rights in SC7. The settlement was governed by English law with exclusive jurisidiction of English courts and was without prejudice to GSK exercising rights in the US.
However, further proceedings were commenced in the US where GSK claimed to have found products from two US manufacturers produced from SC7 potassium clavulanate. GSK claimed improved tests for identifying product from SC7. DSM was joined to the US proceedings for supplying the companies with SC7 potassium clavulanate. After a short delay DSM commenced proceedings in the UK requesting a declaration from the English courts that it was using ‘AnnexVII’ not SC7. GSK applied for stay of the English proceedings submitting that the agreement did not relate to the exercise of its rights in the US. Having established the relevance of the contractual position, the court had to exercise its discretion.
The court decided that under the contract
- DSM’s claim was ‘in connection with the agreement’ (being construed widely) – it obliged GSK not to sue DSM for use of Annex VII, and
- DSM was not prevented from resolving such a claim before the English courts merely because of the jurisdiction issues in the US proceedings.
GSK argued that exclusive jurisdiction could be overridden because of the risk of inconsistent findings in the US court. The court considered this GSK’s best point however noted that GSK itself claimed certainty in the tests for identifying use of their strain. Given that the identification of the strain used was the prime issue in both cases the risk was reduced. The party to lose in the first case would be estopped from arguing the opposite in the other case. Therefore the contract should be resolved as envisaged.
The Court of Appeal expressed clear views on how the cases should be resolved. It agreed that the US action would effectively give worldwide relief to GSK if it went against DSM as DSM would be estopped from claiming otherwise elsewhere. It doubted whether GSK should get jurisdiction before the US court to decided which strain was used as the contract referred to US ‘rights’ not issues of ownership of strain allegedly used in Sweden. Further it called for a speedy trial in the English proceedings before a specialist patent judge. These views suggest that whilst on principle a scientific analysis forming the basis of two disputes should produce the same result, the court remains nervous that the best possible analysis should be had of scientific results to avoid inconsistent findings.
7. Novartis and Institute of Microbiology and Epidemiology V Comptroller General
On the 7th September 2004, the Advocate General gave his opinion before the European Court of Justice in Novartis AG University College London and Institute of Microbiology and Epidemiology v. Comptroller-General of Patents, Case C-207/03, and Ministre de l’économie v. Millenium Pharmaceuticals Inc, Case C-252/03.
This opinion related to the way the duration of a Supplementary Protection Certificate (SPC) is to be calculated within the European Economic Area (EEA). The main issue was whether an authorisation to market granted by a State authority which was not part of the EEA but was one that enjoyed a special custom agreement with one of the EEA Member States, was to be taken into consideration when assessing the duration of the SPC.
Two questions were referred to the ECJ by the High Court of England and Wales and by the Cour Administrative de Luxembourg:
- Is a marketing authorisation granted in Switzerland, which is automatically recognised in Liechtenstein, an EEA Member State, the first authorisation to place a medicinal product on the market when calculating the SPC?
- Is a competent authority within the EEA obliged to rectify an incorrectly assessed duration within a SPC?
On the first issue, the Advocate General held that the purpose of Regulation No 1768/92 was to obtain a harmonised extension of exclusivity, the duration of which was based on the first marketing authorisation obtained within the EEA. It was argued that an authorisation granted in Switzerland did not open the EEA market, and therefore could not be viewed as a first authorisation. However, because there is no relation between a marketing authorisation and the free movement of goods within the EEA market, the former being left to a Member State’s authorities, this argument was held irrelevant. Therefore, a marketing authorisation provided by the Swiss authorities can constitute the first authorisation in the EEA because it allows the product to be marketed in Liechtenstein, an EEA Member State, irrespective of its free movement within the EEA.
In relation to the second issue, it was held that the competent authorities of the EEA Member States should be obliged to rectify any incorrect assessment of duration in a SPC. However, there were uncertainties over the correct procedure, and, also, over the fact that the application of that procedure within national law might affect the principle of legal certainty.
Accordingly, it can be seen that Regulation No 1768/92 addresses the issue of first marketability in order to have a standard for the harmonisation of the duration of the SPC, but does not intend to harmonise authorisation of marketability within the EEA market. Therefore, any means which allow a product to be marketed within one of the EEA Member States is to be considered as a first authorisation of marketability with respect to the Regulation.
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