We reported some months ago on the German case concerning the relationship between patents and standards for recordable CDs. In that case, the German Federal High Court decided that the so-called “FRAND defence” could apply to patents relevant to standards. In other words, it is possible for a company implementing a standard to obtain a licence as long as it sets aside a reasonable licence fee.
The Dutch Court in the Hague explicitly rejected this defence and noted that its decision was different to that drawn by the German Federal High Court. The Dutch Court noted that there was no concept of “compulsory licence under cartel law”. Dutch law (like German law) has a specific provision in its patent code for the granting of compulsory licences. Such licences only come into effect when they have been granted by a court. The Dutch Court states that this is reasonable as nobody would otherwise understand the conditions under which the licence had not been granted.
There’s an implicit criticism of the defendant in the case that it had apparently never attempted earlier to take a licence to the technology from Philips. The Court clearly stated the defendant should have attempted earlier (on starting sale of the goods or becoming aware of the need) to obtain a licence under FRAND conditions and, if this attempt had not been successfuly, the defendant could have asked for a compulsory licence to be granted. The Court points out that at least a preliminary licence could have been granted in summary proceedings.
The decision highlights two issues of European Patent Law.
Firstly the need for a uniform patent litigation system to harmonise the decisions of the different national courts. The different decisions in the German and Dutch courts are based on different legal traditions and codes of civil procedure (and contractual law). The Dutch have traditionally granted complusory licences more readily than the German courts and so it’s not surprising that the Court in the Hague suggested this route, whereas the German Federal High Court suggested an alternative option.
Secondly the need for clarity under which licenses to patents required to implement standards can be granted. Most Standards Setting Orgnisations have a clear policy on intellectual property – licences will be granted on Fair Reasonable and Non-Discriminatory (FRAND) conditions. There are, however, difference on how to interpret these conditions – there’s little or no case law to enable a market entrant to assess its risks and It’s clearly impractical in a single European market to have to go to multiple courts to obtain compulsory licences (as the Dutch want) or post multiple bonds (as suggested in Germany).
The case has also been discussed on the EPLawblog here
CD-R, Patent licence, Standards, Orange Book, Philips
One of our interests on Tangible IP is the never ending story of software patents. Just to recap: the European Patent Office is currently considering the degree to which computer-implemented inventions are patentable. On the other side of the Atlantic the US Supreme Court has head arguments in the re Bilski case and we’re waiting for a decision.
I’m indebted to Pierre Breese, the author of the French-language blog “Chronique de la propriété intellectuelles” for his entry mentioning a decision issued by the Parisian TGI patent court. It concerns the validity of the European Patent EP 1 182 581 filed by the French company Exalead. The patent is directed towards a search engine.
The EPO Examiner initially rejected the patent on the grounds that it was not possible to determine the technical problem which was to be solved by the invention. The Applicant’s attorneys responded that the technical problem has been clearly described in the description and that this problem was solved by the claims. The EPO granted the patent.
Exalead then proceeded to sue another French company Sinequa who were providing a search engine service to the French Ministry of Culture and also to the French Senate. Sinequa argued that the patent was invalid. As part of their defence, Sinequa filed an identical patent application with the French Patent Office INPI who proceeded to reject the patent application on the bases that the claims were directed to a series of theoretical and abstract steps which included no technical means thus rendering a technical nature to the claims. The INPI Examiner concluded that the addition of the search engine into the claims was insufficient to confer a technical nature to the claims and thus the claims concerned a series of mental steps. The French court revoked the patent in France on this basis.
There are several points of concern in the decision. The French court seems to have adopted INPI’s arguments which were in direct contradiction to the decision of the European Patent Office on granting this patent. We don’t have any knowledge about the detailed arguments submitted to the court or the detailed reasoning of INPI but to merely revoke a granted European Patent on grounds that seemed to have been raised and overcome in the European granting procedure is stepping into dangerous ground.
Even more intriguingly is that there was a second patent application pending in France which had been filed by Exalead. Patrice – the author of the original blog entry – noted that this second (identical) patent application was not objected to by INPI.
Business and investment decisions can sometimes rest on the validity of IP rights. It’s clearly correct to have a review process to ensure that incorrectly granted patents can be revoked. It’s disturbing that a granted patent can be revoked on issues that were (apparently) considered during the patent prosecution. Without knowing the history of the case in more detail, it’s not clear whether the initial examination at the European Patent Office was not carried out with the usual degree of care – or whether there are stronger arguments for revoking the case that only came out during the French proceedings but have not found their way into the court’s decision. It would certainly have been helpful to understand the reasons for the revocation in more detail in order to allow businesses to find the boundary between a patentable computer-implemented invention and an unpatentable software process.
Patent, Software Patent, Search Engine