1. Dr. Christian Osterrieth, Honorary Professor for patent law at the University of Constance, Partner, Reimann, Osterrieth, Köhler, Haft, Germany Enforcing IPR in Europe: Overview of IPR System and Enforcement Strategy in EU part 1 EU-China Training Course for Industry and Government Officials 23-24 November 2009 in Xian

2. Content A. Introduction B. Judicial Measures C. Measures under Criminal Law D. Customs Authorities E. Conclusion 2

3. A. Introduction I. European Law on Enforcement of IPR Patentee’s position was recently strengthened by European Law, i.e. by: The Directive 2004/48/EC of 29 April 2004 on the Enforcement of Intellectual Property Rights (the “Enforcement Directive”) 3

4. A. Introduction I. European Law on Enforcement of IPR The Enforcement Directive seeks to harmonize the national laws on amongst others points like –Gathering of evidence (Art. 7 Directive) –Interlocutory injunctions (Art. 9 Directive) 4

5. A. Introduction I. European Law on Enforcement of IPR Article 7 - Measures for preserving evidence “Member States shall ensure that (…), the competent judicial authorities may (…) order prompt and effective provisional measures to preserve relevant evidence in respect of the alleged infringement, subject to the protection of confidential information.” 5

6. A. Introduction I. European Law on Enforcement of IPR Article 9 - Provisional and precautionary measures “Member States shall ensure that the judicial authorities may (…) issue against the alleged infringer an interlocutory injunction intended to prevent any imminent infringement of an intellectual property right, or to forbid (…) the continuation of the alleged infringements of that right (…)” 6

7. A. Introduction I. European Law on Enforcement of IPR Implementation of the Enforcement Directive –Due: April 29 th, 2006 –Actual implementation dates UK: April 29 th, 2006 NL: May 1 st, 2007 FR: October 29 th, 2007 DE: September 1 st, 2008 7

8. B. Judicial Measures Judicial measures: I. Injunction:  Stop infringement 1. Interlocutory injunction or 2. Main proceedings II. Gather evidence - Inspection order 8

9. 9 B. Judicial Measures I. Injunction 1.Interlocutory injunction –What can be achieved  Injunction as such, i.e. stop the copycat  Seizure of infringing devices to secure their destruction (sequestration)  Seizure of the booth to secure payment of procedural costs (S. 917 para. 2 ZPO)

10. 10 B. Judicial Measures I. Injunction In interlocutory injunction proceedings it is not necessary to provide the same level of „evidence“ like in main proceedings, but only substantiation by prima facie evidence like  Affidavits  Documents  Samples  Photos  Brochures

11. 11 B. Judicial Measures I. Injunction Interlocutory injunctions are granted (1)If the technical facts are straightforward and the infringement is clear (“obvious infringement”) (2)If there are no reasonable doubts regarding the validity of the patent in suit (3) If there is “Urgency” / Balance of interests in favor of applicant

12. B. Judicial Measures I. Injunction (1)Obvious infringement  The patentee should explain all technical facts in a way enabling the Court to assess the question of infringement (especially regarding ex-parte injunctions)  Better chances if Technical facts are straightforward Literal infringement or at least obvious equivalence like “kinematic reversal” Generic pharmaceutical drugs 12

13. B. Judicial Measures I. Injunction (2)No reasonable doubts regarding the patent’ s validity  Patent upheld in opposition or nullity proceedings or otherwise confirmed in inter partes proceedings (e.g. granted despite of a third party observation)  Notable competitors have acknowledged the patent’s validity, e.g. by taking licenses or by not filing an opposition despite the fact that they closely watch patents in the field and oppose whenever possible 13

14. B. Judicial Measures I. Injunction (2)No reasonable doubts regarding the patent’ s validity (c’ted)  Weak arguments on side of the exhibitor (e.g. in a protective letter)  Burden of proof with applicant, i.e. circumstances have to be explained and translations of relevant prior art documents have to be submitted 14

15. B. Judicial Measures I. Injunction (3)Urgency / Balance of interests in favor of the patentee  Immediate reaction of patentee v. early notice and only late reaction during fair  Trade fair is short, but may be highly relevant for further market position  Severe damages likely for patentee which cannot be cured by means of main proceedings 15

16. 16 B. Judicial Measures I. Injunction Security for procedural cost –Claim supplementing the interlocutory injunction –S. 917 para. 2 Code of Civil Procedure (ZPO) allows to confiscate valuables as a means to secure procedural costs –The exhibitor must come from a country which would not enforce judgements by a German Court like Belarus, Indonesia, Thailand, Russia and many African countries

17. 17 B. Judicial Measures I. Injunction Security for procedural cost (c’ted) –Allows the confiscation of the entire booth, including not-infringing objects belonging to the exhibitor –Often causing negative publicity for the exhibitor –The exhibitor may usually avoid the confiscation when he is able to pay or lodge a sum covering the procedural costs

18. 18 B. Judicial Measures I. Injunction Seizing infringing devices to secure their destruction (sequestration) –Claim supplementing the interlocutory injunction –Aims to secure the patentee’s right to let infringing devices be destroyed (S. 140a Patent Act) –A bailiff is ordered to sequestrate (confiscate) all infringing devices at the booth and store them until a final decision on the infringement is made

19. B. Judicial Measures I. Injunction Preliminary injunctions can be granted ex parte within a few hours or days During important trade fairs in Hannover, the District Court of Braunschweig is even available on Saturdays The police sets up a special post during trade fairs which is available day and night 19

20. Appeal against interlocutory injunction Ex-parte interlocutory injunctions: Objection according to S. 936, 924 ZPO. Will be decided after oral proceedings by the same Court Other interlocutory injunctions: Appeal to the Higher Regional Court –In both cases the appeal may come too late to enable the exhibitor to exhibit the respective products on the trade fair.  Prior measures are preferable 20 B. Judicial Measures I. Injunction

21. Protective letters (Schutzschrift) –Statement of defense deposited in Court to avoid a possible interlocutory injunction (including injunctions to tolerate inspection) – Common practice (about 20,000 protective letters a year in Germany) –Can be lodged at all relevant Courts (and at the prosecution) 21 B. Judicial Measures I. Injunction

22. Protective letters (Schutzschrift) (c‘ted) –Judge(s) will read the protective letter when considering to grant an interlocutory injunction –Useful before a trade fair, when the exhibitor anticipates that an interlocutory injunction might be requested against him –However, a protective letter which has only weak arguments can backfire and facilitate the grant of an injunction 22 B. Judicial Measures I. Injunction

23. 2. Main proceedings –Patentee should simultaneously to the injunction initiate main proceedings If the patentee is not successful obtaining an injunction because he cannot convince the court of the patent‘s validity, he can still win in the main proceedings. This is because in main proceedings the burden of proof for the validity of the patent is with the defendant instead of the patentee 23

24. B. Judicial Measures I. Injunction Main proceedings (c’ted) Therefore the patentee should rather resume main proceedings than appeal against a court’s rejection to grant an injunction Serving a court order and / or beginning main proceedings can be difficult or even impossible if the exhibitor has no office in Germany (or Europe). Therefore a trade fair can be used to serve documents to the booth directly and thus start main proceedings and the like 24

25. II. Inspection Order –Aim: Gaining opinion by Court appointed expert on the question of infringement of devices shown at a trade fair –Allows such inspection during a trade fair, since orders are usually issued within short time 25 B. Judicial Measures II. Inspection Order

26. Sec. 140c of the German Patent Act (PatG) –Entitles the patent owner to inspect devices if there is sufficient likelihood of infringement –Enforceable by means of interlocutory injunctions –The Court has to take measures to protect the alleged infringer‘s confidential information –If there was no infringement, the alleged infringer is entitled to damages 26

27. Requirements: –General procedural requirements –Adequate likelihood of infringement based on facts (e.g. visible features or effects imply presence of invisible features; infringement abroad) –Limited requirements regarding validity of the patent in suit B. Judicial Measures II. Inspection Order 27

28. Requirements (c’ted): –Proportionality: Demonstrable risk of evidence being destroyed Infringing device not readily available on the market Intrusion into substance to be balanced against likelihood of actual infringement Impact on Defendant’s business to be balanced against likelihood of infringement –Protection of confidential information (secret know- how), particularly in case of ex-parte court order B. Judicial Measures II. Inspection Order 28

29. Motion / Court order: –proceedings for the preservation of evidence (S. 485 et seq. ZPO): To obtain expert opinion on the question whether the attacked embodiment makes use of certain features of the patent in suit Appointment of expert Confidentiality obligation for expert Expert shall inspect the embodiment without prior hearing of the Defendant if matter is urgent Upon Defendant’s request, inspection is delayed up to two hours, such that Defendant’s legal counsel can be consulted B. Judicial Measures II. Inspection Order 29

30. Motion / Court order (c‘ted.): –interlocutory court order (S. 935 et seq. ZPO) That Plaintiff‘s counsels may be present at the inspection, but must keep all information confidential also vis-a-vis Plaintiff That Defendant refrain from any alterations of the product; in case of non-compliance fine or imprisonment can be ordered That Defendant tolerates inspection and documentation of the infringing device That Defendant hands over certain documents which are identified or at least identifiable (no fishing expedition) That Defendant may comment on confidentiality issues after inspection; Court will then decide if expert opinion is made available to Plaintiff B. Judicial Measures II. Inspection Order 30

31. Surrender of expert opinion to applicant –No issue if no (legitimate) interest in confidentiality on Defendant’s side –In case of legitimate interest in confidentiality Surrender to applicant generally only in case of infringement proven by expert opinion Blackening of parts which are irrelevant for proof of infringement, but confidential B. Judicial Measures II. Inspection Order 31

32. Enforcement of inspection as such: –Applicant needs to appoint bailiff to serve court order to Defendant –To preserve surprise effect, Applicant’s attorneys and court appointed expert need to be coordinated with bailiff in order to arrive together at Defendant’s booth (in the following: “Inspection Group”) B. Judicial Measures II. Inspection Order 32

33. Analysis of device –Usually disassembly and measurement covered by the court order –If that may damage the device or take longer time the Court will allow that only if there is a relatively high likelihood of infringement –The Court may order that the plaintiff has to lodge adequate security to ensure compensation for any prejudice suffered by the defendant, S. 140c (4) PatG, S. 811 BGB B. Judicial Measures II. Inspection Order 33

34. Assistance and not just tolerance by Defendants –Explanations on properties of inspected device(s) may be helpful, but cannot be enforced –Assistance in disassembly may facilitate inspection, but difficult to reflect in an enforceable manner in advance motion / court order –Entering of passwords for control software can be included in motion / court order B. Judicial Measures II. Inspection Order 34

35. Appeal –Immediate appeal (S. 567 para. 1 No. 2 ZPO) against decision to surrender or not to surrender expert opinion –Appeal against interlocutory court order Takes in most cases place after inspection and is hence only relevant for reimbursement of costs Decision depends on whether expert opinion established infringement or not B. Judicial Measures II. Inspection Order 35

36. Alternatives –Inspection can also be requested in main proceedings, which, however, takes too long to conduct inspection during the trade fair and destroys surprise effect –Normal visitors of the trade fair can be used as witnesses; however, those are less helpful in main proceedings compared to court appointed expert 36 B. Judicial Measures II. Inspection Order 36

37. C. Measures under Criminal Law I. Legal Framework Enforcement Directive does not affect criminal law (Art. 2, No. 3 (c)) In Germany: Sec. 142 Patent Act –Covers the unlicensed manufacturing, offering, bringing into commerce and use of a patented product or process –Up to five years of imprisonment or fine 37

38. Sec. 142 Patent Act (c‘ted) –Suspicion is sufficient for measures by the prosecution; however, rarely convictions due to lack of intent resp. corresponding evidence –Prosecution and Criminal Courts would need expert’s assistance to assess infringement in depth –During important fairs, the Police sets up a special post at the trade fair which is staffed day and night. The police will directly inform the prosecution if they suspect or receive notice of infringement 38 C. Measures under Criminal Law I. Legal Framework

39. Prosecution takes action usually upon notice by the patentee If there is a suspicion for infringement according to Sec. 142 Patent Act the prosecution can gather evidence by means of –Searches –Confiscations –Other measures under the Code of Criminal Procedure In addition, typically a security for procedural costs is taken Prosecution can collaborate with customs authorities and police  Exhibitor can collaborate by voluntarily handing over samples and a security (not less than EUR 10,000) to avoid negative publicity during fair 39 C. Measures under Criminal Law I. Legal Framework

40. Appeal against measures of the prosecution –If the measure was not based on a court decision Application for judicial review according to Sec. 98 para. 2 of the Code of Criminal Procedure –If the measures was ordered by a Court Appeal against that decision according to Sec. 304 of the Code of Criminal Procedure 40 C. Measures under Criminal Law I. Legal Framework

41. Example: IFA 2008  The International Radio Exhibition (IFA) in Berlin is one of the world‘s largest Consumer Electronics trade fairs  Search by police, customs authorities and prosecution on the first day of IFA 2008  Over 200 officers searched 50+ booths  Large publicity (national television news etc.) 41 C. Measures under Criminal Law II. Example and new approach

42. Example: IFA 2008 (c‘ted) –District Court later decided the underlying order of the Local Court was void, since it was not sufficiently specific –However, the general public took little notice of that decision compared to the attention given to the search  Precautionary actions and collaboration by exhibitors are preferable, appeal less helpful 42 C. Measures under Criminal Law II. Example and new approach

43. Aftermath –Searches by prosecution and police at the IFA 2008 and other German trade fairs that year led to discontent on side of the exhibitors –Subsequently, a very discreet approach is taken by the prosecution 43 C. Measures under Criminal Law II. Example and new approach

44. Current approach –Prosecution will contact exhibitors with civil servants and very discreet as long as he cooperates –Usually no uniformed policemen, no search, no shutting down of the booth –Prosecution will gather evidence by collecting samples only; enabling the exhibitor usually to continue his presentation at the fair 44 C. Measures under Criminal Law II. Example and new approach

45. Current approach (c’ted) –To secure the payment of a possible fine and the procedural costs, a deposit is collected from the exhibitor (not less than 10,000 Euro) –The matter can be referred to mediation booth provided by IPR2 at the trade fair to reach an amicable solution between exhibitor and patentee 45 C. Measures under Criminal Law II. Example and new approach

46. Patentee – preparation –Actions by the prosecution during a trade fair require thorough preparation –Prosecution should be educated on the matter by patent owner beforehand –Better chances to convince the prosecution that there is an infringement if the technical facts are clear and the infringement is obvious 46 C. Measures under Criminal Law III. Preparation before the Trade Fair

47. Exhibitor – precautionary measures –Protective letters can also be lodged at the Prosecution –Appeal possible, but not very helpful since it can only be filed after the measure has been taken –Mediation can be employed beforehand 47 C. Measures under Criminal Law III. Preparation before the Trade Fair

48. Exhibitor – precautionary measures (c’ted) –It is possible to talk with the prosecution before the trade fair in order to avoid interferences during fair by presenting counterarguments offering samples offering security for procedural costs informing the prosecution about on-going patent litigation before a civil Court 48 C. Measures under Criminal Law III. Preparation before the Trade Fair

49. D. Customs Authorities The customs authorities can detain goods or suspend their release for up to 20 working days Since trade fairs last only limited time, the detention for a couple of days is sufficient to prevent the exhibition of infringing devices Effective, strong and cheap means for patentees 49

50. E. Conclusion Judicial measures –Dealt with by specialist Courts –Higher likelihood for infringement necessary for injunctive relief than for inspection order Measures by prosecution or customs authorities –Strong measures for the patentee –Lower requirement regarding likelihood of infringement –Easier to obtain, more difficult to defend 50

51. 51 Thank You!