Patents 2018: Trends & Conclusions

Without doubt, 2017 was a busy year for patent lawyers across the globe. The latest report from the World Intellectual Property Organization reported an 8.3 per cent growth in global patent filings in 2016; this increase has shown no sign of abating over the past year. Patent lawyers across the board reported record-high levels of activity spanning all innovative industry sectors. As patents become increasingly important for global business strategies, the international patents landscape continues to evolve. We spoke to some of the world’s most highly regarded practitioners in the space to get their thoughts on the some of the key developments in the sector.

Changing attitudes towards patentees in the US

Perhaps the most notable development of recent years is the radical change in attitudes towards patent holders in the US. Traditionally, the US has been viewed as distinctly pro-patentee rights; however, there has been a marked shift away from this approach in recent years, which has become increasingly evident over the past 12 months. The problem of patent trolls has been a hot topic for some time, and both the US Congress and the courts have actively been working to tackle the issue and help to drive innovation forward. Although some progress has been made in addressing the issue, inevitably many legitimate innovator companies have also been affected. Over the past decade, the Supreme Court has made a number of rulings that have imposed restrictions on patenting certain inventions in the software and biology fields. These constraints have the power to prevent new applications and invalidate existing patents, providing defendants with new tools through which they may have patent infringement actions rendered invalid from the outset.

The Supreme Court decision in TC Heartland in 2017 has also placed restrictions on where patent holders are able to file proceedings in the US. It was held that patent venues are restricted to the judicial district where the defendant resides, or where the defendant commits an act of infringement and has a regular and established place of business, as per the patent venue statute. The decision is “a major shake-up in the area”, sources told us, and the implications far-reaching. Previously, plaintiffs were able to file a patent infringement claim in practically any judicial district in which the defendant company sold the infringing product. This significant development in the law has now led to cases being filed away from East Texas, a purportedly patentee-friendly location, with a particularly notable increase in Delaware where many companies are incorporated. One practitioner noted that, with the exception of Delaware, “patent suit filings are now better aligned with the population”, increasing the workloads of practitioners across the country.

The challenges faced by patentees within the US do not only stem from judicial precedents, however. In 2012, the process of administrative post-grant review proceedings was profoundly altered through the introduction of inter partes review (IPR) and as procedure to challenge the validity of patent claims based on printed publication, in a bid to cut costs and tackle patent trolls. Since their introduction, almost 7,500 of these proceedings were filed, 60 per cent of which stemmed from the electrical and computer industries. Since the creation of IPRs, the PTO has been invalidating many patents at a much higher rate than could be obtained in the courts, reportedly saving plaintiffs and defendants at least $2.31 billion in legal fees. Despite the apparent success of this system, its constitutionality was recently argued before the Supreme Court, which was asked whether the process of IPR violates the US Constitution by extinguishing private property rights through a non-Article III forum without a jury. The decision, expected in June 2018, will have significant consequences for the landscape of patent law in the US and patent lawyers across the country will be watching the case closely.

The key question at the heart of the matter is whether the current climate within the US for patentees is in fact stifling innovation, rather than encouraging it. It is clear that for the moment “the pendulum has swung in the favour of defendants”, leading plaintiffs to look to Asia and Europe for their patent needs. With the marked decline in big-ticket litigations, larger firms are struggling, which is making for a fiercely competitive market. Many lawyers we spoke to showed concern over the “general devaluation of the patent system in the US”, and it remains to be seen if and when the industry will recover.

Recent developments in the European patents market

In contrast to the US, Europe appears to have become notably friendlier towards patentees. As patenting regimes across Europe become increasingly permissive and litigation progresses at a much faster pace, the international patent community is increasingly drawn to the region. One practitioner we spoke to noted, “In the US there has been a clear push-back against injunctive relief, whereas in Europe it is an almost automatic remedy”. The clamp-down on injunctions within the US, coupled with ill-feeling against non-practising entities, means that more and more multinational companies are coming to Europe for their patent needs. Practitioners based in the UK are particularly benefitting from this. The England and Wales courts are well known for their flexibility and willingness to grant injunctions in patent disputes, making the jurisdiction a popular litigation venue for international clients. England and Wales-based practitioners reported that they have never been busier, a trend that seems set to continue throughout 2018.

Despite further delays to the ratification of the Unified Patent Court (UPC), the subject is still widely discussed within the patents community. The implementation of this single system will revolutionise patent protection across Europe, allowing companies to enforce their patents across all participating member states. The introduction of the UPC will be the biggest change in the European patent market for more than 40 years, and will “present a very important market for patent holders and therefore patent litigators”. In general, patent lawyers consider the formation of the UPC to be a positive development, with one noting, “Despite the initial trepidation about new system, many clients are enthusiastic about new tools.” Even with strong support, however, the path to the UPC is by no means clear. In Germany, the ratification process is currently delayed by a legal challenge brought before the Federal Constitutional Court, temporarily suspending formal ratification of the UPC before a final decision has been reached. Assuming the German constitutional challenge is resolved, the issue of Brexit remains a contentious issue.

The courts of England and Wales are widely considered to be the European hub for patent disputes within the life sciences space; however, whether this will continue after Brexit is a hotly debated issue. The majority of lawyers we spoke to were confident that the UK would be a part of the UPC when, and indeed if, it comes into play. As such, firms continue to make preparations for the coming of the UPC. With the new system attracting attention across the globe, many international firms have created specialised departments in order to advise clients on the potential implications. Whether this response will bear fruit, however, remains to be seen.

Conclusions

While the patents sector may be thriving, it is also facing the implications of some of the biggest changes to the legal landscape in decades. The challenges posed by these recent developments have resulted in a high caseload for patent lawyers. While litigation has slowed in the US, the global nature of patent law means that practitioners are required to work on disputes in multiple forums. And while Europe faces its own challenges, patent law specialists across the continent are benefiting from the huge volume of work. In the coming year, the global patents community can expect significant changes to their practices as landmark decisions by the courts and legislative bodies roll in. Regardless of the outcome, though, patent lawyers all over the world can expect another busy year.

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