27 September 2013

Corporate Giants Unite to Express Concerns about UPC

Following the publication of the draft Rules of Procedure for the Unitary Patents Court (UPC) there is a consultation period ending on 1 October 2013.

A remarkable list of corporate giants from around the world – including Samsung, Google, Apple, Cisco, Hewlett-Packard, Intel, Microsoft, and Yahoo – have jointly put their name to a letter (see here) expressing concerns about the proposed system.  These concerns appear to stem primarily from the significant discretion afforded the courts of the UPC in the draft Rules.

The first concern is that the current draft Rules give the courts discretion to allow bifurcation.  This is where the issues of infringement of the patent and validity of the patent are considered separately and it can lead to a finding of infringement, and the granting of a pan-European injunction, before the validity of the patent has even been considered. Delays in considering validity following a finding of infringement can be hugely damaging for the Defendant once the injunction is in place.

The second concern is the lack of clear guidance on the amount of evidence that is required for the Court to grant an injunction, leading to the fear that injunctions could be granted by some courts with little or no supporting evidence.

In particular, the corporate giants fear that easily-obtained injunctions will encourage the activities of so-called Patent Trolls (also known as Non-Practicing Entities (NPEs)).  Particularly patentee-friendly regional courts of the UPC could, it is feared, allow such courts to become the equivalent of the Eastern District of Texas.  The Texan federal court has become a US capital of patent litigation known for sympathetic juries and fast decisions, and it is a favourite of the so-called Patent Trolls.

In response to the letter, members of the committee responsible for the draft Rules of Procedure have suggested that the concerns are unfounded.  They appear to be placing their faith in the judges who will be highly influential given the amount of discretion they are being afforded.  However, the enthusiasm for the new system expressed by some NPEs may start alarm bells ringing.