1. 1 HOW TO PROTECT YOUR PATENTS IN EUROPE FROM THE LEGAL POINT OF VIEW Chongqing, September 2008 Bruno Cinquantini Notarbartolo & Gervasi

2. 2 HOW TO PROTECT YOUR PATENTS IN EUROPE FROM THE LEGAL POINT OF VIEW Shunde, September 2008 Bruno Cinquantini Notarbartolo & Gervasi

3. 3 Content 1.Patenting strategies you can use in Europe 2.How to license in or license out your innovation 3.How can a company organise its patent department 4. What are the remedies if your patent is infringed in Europe

4. 4 Patenting strategies To protect your innovation, you can use: Trade secret (keep information confidential) and/or file National patent National utility model European patent

5. 5 Trade secret Why? If your technology has no competitors No reverse engineering is possible on your product Your know how is important to make your product or process Your innovation has little chance to be patented

6. 6 Trade secret Advantages It is cheaper than patent No complex procedures necessary If you make your new product or use your new process far from competitors, more difficult to be given away In Europe all countries have adequate legislation to protect trade secrets

7. 7 Trade secret Disadvantages You must organise expensive procedures to keep trade secrets in your business If your secret is discovered, no remedy is available licensing is more difficult than if patented

8. 8 Patent External advantages for i) protection, ii) bargaining, iii) image i) protection protecting product technology protecting process technology building up retaliatory power against competitors

9. 9 Patent ii) bargaining: Better possibilities to license in or license out Better possibilities to access technology by cross-licensing Makes easier co-operation in R&D with others Improves bargaining position in standard setting iii) image Improves the company image

10. 10 Patent Internal advantages Improves employees’ motivation gives measure of a company R&D capacity

11. 11 Patent Disadvantages Costs of procedures maintainance counsel enforcement Discloses technical information to competitors

12. 12 Strategies for filing patents a) file a Chinese patent application (alternative: PCT first filing) and claim priority, within 12 months b) Choose a strategy for Europe: a) follow national route only b) follow PCT route and later National route c) follow PCT route, later EPC and National route d) follow EPC route and National route e) follow EPC route only

13. 13 a - Direct national route only Advantages: it is cheaper and faster if: Protection in few countries (<4countries) or Countries are not in EPC because less translations to make utility model available (cheaper, shorter validity, no examination) quicker granting procedure (no examination in several countries) usually no opposition Disadvantages: more languages during prosecution, more representatives

14. 14 b - PCT and National route Advantages: cheaper and faster because centralised search and International patentability report (IPER) one language during PCT less translations (after PCT route) you can choose utility model (cheaper, shorter validity, no national examination) quicker granting (no examination in several countries) or direct granting after IPER Advisable if: Protection in few countries <4 countries, if members to EPC, (NB: not allowed in some countries) or countries not in EPC

15. 15 b - PCT and National route Disadvantages: more languages during national procedure, more representatives Impossible for several countries members to EPC (you must follow the EPC route after PCT)

16. 16 c - PCT, EPC and National route (Routes can be followed in parallel or subsequently) Advantages: After PCT route, follow only centralised EPC route it is cheaper only one examination, one language and patent in only one version If some countries of interest are not in EPC, necessary to follow national route after PCT

17. 17 c - PCT, EPC and National route Disadvantages During PCT (and EPC) routes, difficult to enforce in case of infringement in many countries Lengthy examination at EPO and granted patent after several years advisable if you have no necessity to arrive quickly at granted patent

18. 18 d - EPC and National route Follow EPC route for all countries possible, and National route only for countries not in EPC Advantages: cheaper for several European countries Only one examination procedure One language One representative until grant (less afterwads)

19. 19 d - EPC and National route Disadvantages: Lengthy examination at EPO difficult to enforce in case of infringement before grant of patent advisable if you want to arrive cheaply to a patent for several countries, (preferably request accelerated examination at EPO !)

20. 20 e - EPC route only Cheaper, if for 4 or more countries advisable when all interesting countries belong to EPC Preferably request accelerated examination, if risk of infringement

21. 21 Content 1.Patenting strategies you can use in Europe 2.How to license in or license out your innovation 3.How can a company organise its patent department 4. What are the remedies if your patent is infringed in Europe

22. 22 Licensing A patent may be: bought sold transferred or inherited licensed

23. 23 Licensing Advantages of licensing You still own your patent and you transfer to someone else the right to use or sell your patented product or process in return for a royalty payment.

24. 24 Licensing Licenses can be limited in time and space. There are different types of licences: Exclusive Non-exclusive Sublicence

25. 25 Licensing strategies Licences must fit in product business strategy, help development of licensed product. Cross-license whenever possible. Balance of costs of licensing must be advantageous Non-exclusive licenses bring more advantages: less risks for licensor and licensee better control by licensor on the product lower royalties for licensee Exclusive licenses are advantageous when licensor is not present on the market

26. 26 Licensing strategies Lincensing in Advantages: Savings in acquiring new technology with respect to developing autonomously Reducing risk connected to R&D for developing the technology Possibility of modernising quickly a production line Possibility of entering in the market very quickly

27. 27 Licensing strategies Licensing out Advantages: Possibility to enter makets where the licensor is not present Additional revenue

28. 28 Licensing strategies Main aspects of licensing contract: object of contract guarantees for product or process guarantees for patents confidentiality of know how law of contract arbitration duration payments and royalties

29. 29 Content 1.Patenting strategies you can use in Europe 2.How to license in or license out your innovation 3.How can a company organise its patent department 4. What are the remedies if your patent is infringed in Europe

30. 30 What is Europe ? many independent countries different cultures different traditions different economic levels different legislations different judiciary many different languages and what does this mean in IP field? several levels of culture and various policies in respect of IP, different company dimensions Establishing an IP department in Europe

31. 31 IP culture - Levels of companies Ground Floor Second Floor Third Floor Penthouse Basement Total Integration Profit Generation Cost Savings Defensive Unprotected Penthouse Integration Third floor Profit Second floor Savings Ground floor Defensive Basement Unprotected

32. 32 0 - Unprotected level They use confidentiality and carry out non-trade secret intellectual property protection where appropriate Penthouse Integration Third Profit Second Savings Ground Defensive Basement Unprotected How businesses behave at the various levels ?

33. 33 1 - Defensive level Company activities: - Awareness of intellectual property - Obtaining intellectual property - Maintaining patents - Respecting intellectual property rights of others (freedom to operate) - Willingness to enforce patents when necessary Penthouse Integration Third Profit Second Savings Ground Defensive Basement Unprotected

34. 34 2 - Cost savings level Company activities: - Focuses on how to reduce costs of filing/maintaining intellectual property portfolio Penthouse Integration Third Profit Second Savings Ground Defensive Basement Unprotected

35. 35 3 - Profit generation level Company activities: - Makes intellectual property a profit center - Utilizes the intellectual property portfolio as a corporate asset - Extracts value directly from intellectual property portfolio - Focus on non-core, non-strategic intellectual property having tactical value Penthouse Integration Third Profit Second Savings Ground Defensive Basement Unprotected

36. 36 3 - IP for profit level Company activities: - Considers intellectual property at all levels of organization - Organises high profile campaign against infringers - Develops active patent/trademark licensing program - Makes more good sense oriented R&D efforts - begins/improves active screening/watches for patent infringement Penthouse Integration Third Profit Second Savings Ground Defensive Basement Unprotected

37. 37 3 - IP for profit level - Establishes an enforcement program, it ensures that no one infringes your patents - Requires constant policing and monitoring of the market in order to challenge infringing products - Enforcement function includes method of negotiation so company can suppress infringement without having to engage in litigation - In tough cases, is prepared to litigate against infringers Penthouse Integration Third Profit Second Savings Ground Defensive Basement Unprotected

38. 38 3 - IP for profit level Licensing - Starts/increases proactive licensing program - Finds opportunities to generate revenue without sacrificing competitive advantage - Begins by licensing non-core technologies or technologies outside current field of products - Finds appropriate licensees (potential infringers) Penthouse Integration Third Profit Second Savings Ground Defensive Basement Unprotected

39. 39 4 - IP Integration level Company activities: - Sets long term patent strategy - aligns IP strategy with itscorporate strategy - Makes competitive assessment - Focuses on strategic value extraction - Develops a performance measurement and reporting system - Ensures that patent strategy drives research Penthouse Integration Third Profit Second Savings Ground Defensive Basement Unprotected

40. 40 Organisation of IP department Other factors for decision Objectives set for department Importance of dept inside company Strategic placement inside organigramm Dimension of company Technology type Which market is addressed

41. 41 TOP MANAGEMENT CEO technical dpt marketing dpt commercial dpt legal dpt Intellectual property TOP MANAGEMENT CEO TOP MANAGEMENT CEO TOP MANAGEMENT CEO TOP MANAGEMENT CEO TOP MANAGEMENT CEO commercial dpt TOP MANAGEMENT CEO commercial dpt TOP MANAGEMENT CEO Organisation of IP department

42. 42 It is a company having a defensive stance IP department takes No autonomous decisions No autonomous strategy It receives guidelines from the department to which it is attached Organisation of IP department

43. 43 TOP MANAGEMENT CEO Technical dpt marketing dpt legal dpt TOP MANAGEMENT CEO TOP MANAGEMENT CEO TOP MANAGEMENT CEO TOP MANAGEMENT CEO TOP MANAGEMENT CEO commercial dpt technical dpt Intellectual property other departm. Organisation of IP department

44. 44 It is a company of the multinational type, leading on the market having large dimensions The IP department has autonomous decisional power and defines strategies There exists a Director for IP, sometimes at Vice- President level Organisation of IP department

45. 45 Organisation of IP department Directorate IP Secretariate strategies documentation patentstrade marks professional administrative professional administrative Licensing + litigation Internal structure of IP dept

46. 46 Use of patents Is it core Business? Obligation to licence? Licence at market conditions Licence at disadvantageous conditions Use of patents Is it core Business? Use of patents Obligation to licence? Use of patents Obligation to licence? Use of patents Offensive attitude yes no Coop. agreements compulsory licences at favorable conditions Organisation of IP department yes Decision process in large companies Obligation to licence? yes Obligation to licence? yes Obligation to licence? yes compulsory licences at favorable conditions Obligation to licence? yes compulsory licences at favorable conditions Obligation to licence? yes Coop. agreements compulsory licences at favorable conditions Obligation to licence? yes Coop. agreements compulsory licences at favorable conditions Obligation to licence? yes Coop. agreements compulsory licences at favorable conditions Obligation to licence? yes Coop. agreements compulsory licences at favorable conditions Obligation to licence? yes Coop. agreements compulsory licences at favorable conditions Obligation to licence? yes Licence at disadvantageous conditions yes Licence at conditions below market yes

47. 47 Organisation of IP department Use of patents Obligation to licence? yes compulsory licences at favorable conditions Coop. agreements Offensive attitude Licence at conditions below market Decision process in small companies

48. 48 Content 1.Patenting strategies you can use in Europe 2.How to license in or license out your innovation 3.How can a company organise its patent department 4. What are the remedies if your patent is infringed in Europe

49. 49 Few common rules and a harmonisation trend in the framework of the European Community Treaty (ECT) Relevant provisions of ECT  "the prohibition, as between Member States, of customs duties and quantitative restrictions"  “creation of an internal market characterised by the abolition, as between Member States, of obstacles to the free movement of goods, persons, services and capital" Enforcement of patent rights in Europe

50. 50 Enforcement of patent rights in Europe Enforcement of IP Rights are antithetical to these goals of ECT, therefore European Court of Justice set some limitation to IPR “the specific object of a patent is inter alia to ensure to the holder, so as to recompense the creative effort of the inventor, the exclusive right to utilise an invention with a view to the manufacture and first putting into circulation of industrial products either directly or through licensees, as well as the right to oppose any infringement.”

51. 51 Doctrine of “exhaustion” of IP rights in EU “IPRs cannot be exercised in relation to goods placed on the market in the Community by the IPR owner or with his consent” Parallel imports from EU countries Parallel imports from non-EU countries Marketing of products by patentee in country where no patent exists exhausts patentee's rights Enforcement of patent rights in Europe

52. 52 Enforcement of patent rights in Europe Compulsory licence and free movement of goods “National rules on patents may be different, but the legislative measure may not discriminate between national and imported products” Limitation to export in other country patented goods for which compulsory licence was obtained No compulsory licence is possible if patented goods are manufactured in other EU member State

53. 53 Infringement Differences throughout Europe Philosophical differences Civil code countries (DE, FR, NL, IT) Common law countries (GB) Procedural differences Proving infringement 'saisie' in France or Belgium, 'descrizione' in Italy (=on-site inspection), “Anton Piller order” in United Kingdom, no on- site inspection in Germany Conduct of proceedings written testimony only (FR, IT) written testimony and hearings in Court (DE) Hearings (GB)

54. 54 Procedural differences Invalidity as a defence can be raised in Court (IT, FR, NL, GB), while separate suit necessary in Germany obtaining interlocutory injunctions and/or summary judgment Final remedies Substantive differences still exist equivalency indirect (=contributory) infringement claim interpretation, translation differences infringing actions pre-use, producing for research and test purpose, non commercial production producing before the end of patent period Infringement

55. 55 Infringement Forum shopping in Europe is determined by costs (GB, DE, FR/IT) rapidity of proceedings (GB, DE) judicial reliability (DE, GB) legal differences

56. 56 Infringement strategy You have a patent that is allegedly infringed by a competitor: Collect evidence about the infringement, Have an analysis made of the patent situation of the alleged patent infringer (countries, possible patents on the same or similar subject) in view of settlement or of counter- attacks by the defendant (using counsels in every relevant country ), If possible, evaluate where to sue (“forum shopping”), Send a warning (not always necessary), Sue in the most promising country, taking account of laws, costs, speediness and effectiveness of procedures.

57. 57 Infringement strategy You are sued by a competitor having a patent that is allegedly infringed: Collect evidence about the validity of the patent(s) allegedly infringed, used against you, have an infringement evaluation made by experts in the relevant country and have a nullity analysis made of the patent allegedly infringed, Start a nullity suit against the patent allegedly infringed in the country(ies) where you are sued, start a retaliatory infringement suit using your patents and taking advantage of “forum shopping”, keep open the possibility of settlement with your competitor, at the appropriate moment.

58. 58 Infringement strategy REMEMBER The outcome of a trial in IP litigation is not always determined by the true merits of the case. Aside from whether infringement really exists or whether a patent is valid and enforceable, a case is sometimes decided by non-merit factors, such as perseverance and stamina of the parties, character and demeanor of crucial witnesses, ability of counsels, predispositions of a judge towards patents and monopolies, difficult to understand. Consequently, a decision to litigate has to take account of several factors and decided on a case by case approach.

59. 59 Infringement strategy First of all PREVENT PATENT LIABILITY ! It is especially important for a business to manage its patent liability by monitoring the patent activities of its closest and biggest competitors. and ENLARGE YOUR PATENT PORTFOLIO

60. 60 THANK YOU FOR YOUR ATTENTION! Bruno Cinquantini Corso di Porta Vittoria, 9 20122 Milan - Italy b.cinquantini@ngpatent.it www.ngpatent.com NOTARBARTOLO & GERVASI European Patent, Design and Trademark Attorneys Milan Munich Lugano Florence Rome Padua Turin Bolonia