Patent practitioners around the world have had another busy year, with patent trolls in the US and the proposed Unified Patent Court in Europe two of the biggest topics over the past 12 months. With the aforementioned court expected to begin in 2017, practitioners across Europe are preparing themselves and clients for the new system, although uncertainty as to how the courts will work remains. Patent trolls continue to be big news politically in the US, where Congress is introducing new legislation to help curb their grip on the market and try to ensure only valid cases are brought before courts. Telecoms and technology cases continue to be a hugely active field, while the continuing trend of mergers within the pharmaceutical sector has meant that levels of competition, and therefore patent disputes, have dropped.
A large percentage of the patents cases lawyers report seeing are still stemming from the pharmaceutical sector, with biosimilars and medical devices also proving to be significant sources of work. Within the life sciences sector, many practitioners noted that a spate of mergers between companies has begun to mean that there is less competition for patents. As there are now fewer separate entities, and therefore less work for practitioners stemming from patent disputes and enforcement, the work that lawyers are doing for pharmaceutical firms is shifting. Instead of helping to protect and enforce patents, lawyers are now advising on the handling of mergers and on how best to combine and maintain portfolios.
Emerging areas within life science have also provided an interesting challenge for lawyers, as they attempt to patent and protect technology and developments that push the boundaries of exactly what is patentable. One practitioner spoke of work involving mice cells for cancer treatments, and the issues faced in attempting to obtain a patent on a cell, something that was unimaginable when the existing patent laws were first drafted. As technology and innovation allow for developments into previously unpatentable areas, it is anticipated the laws will have to be adapted to cover these new fields.
Telecoms and technology cases are also playing a significant role in many lawyers’ practices as the wars between competing companies, especially in the mobile phone and tablet arenas, rage on. However, although there is plenty of work in these areas and cases being brought against rivals, there has still “yet to be a definitive ruling” on technology patent infringement. One lawyer noted: “We need a proper judgment in a telecoms case to know what will happen if cases go to trial; at the moment they all just settle.” If no clear-cut judgments are passed down, there is little to no context for litigation, meaning it is difficult to judge which way a case will go and can lead to huge disparities in the judgments being given. Practitioners have noted an increasing link to competition law in telecoms cases, as the use of patented material potentially leads to unfair market advantage. This has meant that lawyers need to keep an eye on competition cases taking place while they work on a patents one, as a judgment in one area could affect the case in another.
Trade secrets cases and related arbitration has been another notable trend in the past year, as patent holders attempt to keep ideas out of public knowledge and away from competitors. Practitioners expect to see more and more of these cases arising as the year goes on, and are most likely to be seen in the UK as English law is used in the majority of the contracts affected. Some lawyers have even stated that they are seeing more trade secret work now than they have since the early 1980s, as confidentiality clauses rather than patents are being used more and more in the US. Some practitioners drew a parallel between the growing entwinement between IP and privacy law and technology cases, suggesting the rise in trade secrets work is linked to the growth in this field. As one lawyer stated: “In tech cases these days, clients are more interested in keeping the ideas themselves secret, rather than just patenting ideas for others to build on.”
The Unified Patent Court (UPC) due in 2017 will standardise patent rulings across Europe. This will mean that patent owners will not have to individually enforce patents in each jurisdiction, saving money on obtaining legal counsel in each country, but also hugely upping the stakes on any disputes or court cases which do take place. It is a big shake-up to the patents market across Europe, as law makers are “essentially ripping up the rule book and starting again” according to one lawyer. Across the market there are very mixed views on how the UPC will affect patents cases and work, and whether or not it is a change for the better. Many have said that it will be a while before judgments start coming from the new courts, and until then it is difficult to judge how cases will be tried and viewed by judges. Before that clients face a bigger risk of taking a case to court without any precedent to give an indication of how the case will go. Before the UPC comes into force, patent owners must decide whether or not they want to opt out their portfolios from the new system. Patent agents are reviewing portfolios and deciding whether to opt out of the new system as well as spring-cleaning existing patents.
One of the major issues reported by practitioners across Europe is that of competition between offices of the same firm in different jurisdictions. As practitioners can represent clients in any of the patent courts, some see that there is less need for offices in each major European jurisdiction as work could be handled out of one central office. However others we spoke to believed that there would not be competition between offices of the same firm, and rather that each office would specialise in cases that would be tried in the court based in their country. Fee structuring is another issue which practitioners have highlighted. As lawyers from different jurisdictions will be competing against each other for work, they will need to be able to offer competitive fees. Current costs vary greatly between the UK and Germany, with cases brought in England sometimes costing close to double that of the same case in Germany. English practitioners we spoke to cited this as one of the main issues they foresaw with the new system, and most said it was a key consideration of their firm going forward.
The introduction of the UPC will have a particularly big impact on the English legal system. In the new courts solicitors will be given right of audience, potentially negating the need for barristers who are currently the only legal practitioners able to appear and speak in court. As one London-based lawyer put it, “This is a real game-changer for the English legal system and could be a sign for things to come in the future.” Patent agents can also apply to appear in the new courts, although they will have to complete a preparatory course before they are qualified to do so.
Aside from preparations for the introduction of the UPC, practitioners in England have also been commenting on the increase in waiting times at the patent courts. The time to go to trial is continuing to get longer as case numbers increase and workloads begin to get backed up. What was initially a one-year wait has now increased to almost two years. As many cases filed in the court are eventually settled before ever being heard, the courts are now quadruple-booking court slots to try to keep waiting times down, where they were previously only triple-booked. Most practitioners felt that these extended waiting periods were not competitive, and although there has been talk of appointing a new judge in the court, this has yet to come to fruition.
Patent trolls have been a major issue in the US over the past year, with practitioners consistently citing them as a big source of work. They have been a hot topic politically, with Congress taking a keen interest in the trolls and the effect they are having on the patent market as a whole. New legislations are now being proposed as a way to curb their reach and effect, although some practitioners we spoke to believe that the “mass hysteria” over patent trolls has been over played. Indeed many claim that in fact the issue is not as bad, or as new, as people are making out as non-practising entities have been buying up and enforcing patents for many years. As one lawyer put it, “Large companies in the computer technology industry have spent a lot of time convincing people trolls are a problem when actually bad patents are.” There is also some concern in the market that, following patent reforms and the introduction of the new UPC in Europe, clients may prefer to sue there rather than in the US.
Following the June 2014 Alice Corporation v CLS Bank International ruling on patent subject matter eligibility, the US Patent and Trademark Office has updated its section 101 guidance regarding pending patent applications. This has meant that patents are now much more closely scrutinised to make sure that they meet the requirements to receive a patent before it is granted. It also means that district courts are now filing motions to render patents invalid under the amendments to section 101, something which lawyers have seen dramatically increase in recent months. These amendments have “changed the landscape, creating a whole new battle grown to fight cases on” and have given defendants “more tools to fight off cases with”.
Patent trolls have been a significantly smaller issue in Europe than the US, mainly due to the “English rule” under which the party which loses a case is liable for both sets of attorney’s fees. However, following two Supreme Court rulings in April of last year it is now easier for defendants to recover legal costs if the judge deems a case to be frivolous. Lawyers believe that as a result trolls are already becoming more wary of beginning litigation proceedings. Many practitioners have reported seeing a downturn in patent troll cases in the past few months, suggesting that these proposed changes in the legislature and increased scrutiny have made the area far less appealing than before. Even so, many still feel that more needs to be done to curb the pressure on defendants to settle or run the risk of hefty litigation fees. Several lawyers we spoke to were also adamant that new legislation should not go too far to fight trolls as numbers already seem to be dropping off and they could have other damaging effects on the market.
Inter partes reviews (IPR) and post-grant reviews have both been very prominent in US lawyers’ work in the past 12 months, with practitioners reporting the number of IPRs increasing significantly. Since the introduction of these new review proceedings in September 2012 “the strategic landscape of cases has changed significantly,” with IPR reportedly the most popular way to deal with issues. Lawyers commented that IPR and post grant reviews are “becoming a real part of patent litigation strategy now” with the patent office receiving “twice as many as expected”. This has seen a drop in litigation as cases are decided through these reviews rather than in formal courts, generally “saving clients and significant amount of money”. Most IPR cases are producing the results lawyers expected, although “some judgments are a little strange.” As IPR cases are beginning to come to the court of appeal, the judgments handed down will give lawyers and clients more guidance as to how rulings will go and where things are heading.
Growing pressure to lower fees has been noted in the US market, a trend that has been increasing over the past few years. Reports are that clients are less willing to invest in litigation, which can be costly in terms of both time and money, and instead want faster solutions at a lower cost. Some practitioners also noted a slight decrease in demand for work at the top of the market, as “large corporate clients are reining in their usage of the most expensive legal talent”. Instead, a lot of work is going to smaller boutique firms which are able to offer much lower rates and alternative billing schemes, meaning there is huge competition for the high worth cases. Some firms are responding by offering alternative fee arrangements for clients, and practitioners predict that this fierce competition over pricing will continue in the coming year. Although things in general are looking up for US firms, some suggested that if they aren’t able to win back clients there may be more mergers in the market due to over-confidence.
Outside the traditional patent markets of North America and Europe, Asia is continuing to be a growing force in the field, with innovation in China, Japan and Korea especially feeding workloads. In China, practitioners noted that an increasing number of patent owners are starting to protect their patents and build up their portfolios. Having previously been the targets of attacks from patent trolls, Chinese companies are “now becoming wise to the importance of patenting work properly” to avoid future attacks. As with the Japanese and Korean markets before it, lawyers expect to see huge increases in Chinese patent owners starting to enforce their patents and make sure that they are properly covered. The patent regime has changed in Singapore, with legislation amended to allow positive grant rather than self-assessed patent granting. This has led to far more post-grant prosecution, and in the coming year more patent prosecution is expected as patents are granted for shorter times. With the patent office committed to making Singapore a patent hub, both in Asia and more widely, practitioners believe that it will take several years to see how successful these changes have been, and whether they will have the desired effect on the patent market.
In Australia there continues to be a strong focus on patent litigation, especially in the life sciences, technology and mechanical fields. New legislation is scheduled allowing for a single patent application and examination process across Australia and New Zealand, which is hoped to make the market more competitive with others which are unifying. This was passed by the Australian parliament in February and due to come into force in August of this year, practitioners are waiting to see how big an impact this will have on the market in the region as a whole.