Directive 2004/48/EC
On the Enforcement of Intellectual Property Rights
Contributions from industry and judiciary
Issues for Industry
David Rosenberg GlaxoSmithKline
David is the Vice
President
of
Corporate
Intellectual Property
Policy and he has
responsibility
for
managing the development of the company’s
position on IP policy issues. He represents
GSK’s position on various industry bodies.
He joined the company and has been with
them since 2000, after spending 15 years in
the IP group at Clifford Chance doing IP
litigation.
David Rosenberg: I think this has been
fascinating so far hearing experiences from
different countries around the EU as to how
the Directive has and has not been
implemented. Without wishing to criticise,
it is a bit of a shame there is nobody
speaking from Eastern Europe because, of
course, for many of the Eastern European
countries for whom IP is relatively new the
Enforcement Directive would be particularly
relevant. I think it would be really, really
interesting to hear the experiences from
Eastern European countries.
My remarks will be brief and I am
only going to address three topics. Firstly, I
am going to make some general remarks
about the context and political background
to the Enforcement Directive; secondly,
some comments on how important I think
the Directive is likely to be in practice; and
three, some remarks about the future. I
ought to stress, particularly as I gather
everything is being recorded, that I am
speaking in my personal capacity and not
necessarily expressing the views of
GlaxoSmithKline.
Let us look at the context in which
the Directive was drawn up. As we all
know, in the mid-1990s we saw the TRIPS
agreement, which I think for all sorts of
reasons may prove to be the high point in
international IP protection. The enthusiasm
was high, everybody thought IP was a great
thing, that we would see wonderful IP rights
and enforcement throughout the world. It is
not quite how it has worked out. At the end
of the 20th century and at the beginning, the
first few years of the 21st century I think it is
fair to say we have seen increasing pressure
on the intellectual property system both
internationally and in the EU.
We
had
various
developing
countries, including important developing
countries, missing TRIPS implementation
deadlines in important respects. We had, as
I know all too well, the debate around the
relevance of patents to access to medicines
in the developing world, claims that patents
were impeding access, killing people,
GlaxoSmithKline were referred to as GSK
meaning global serial killers. You may
think that is funny; it is not funny at all if
you are the company.
We had the case that the
pharmaceutical industry not very cleverly
brought against Nelson Mandela in South
Africa and for a change, and for the wrong
reasons, patents actually became front-page
news in the newspapers, at least in the
British newspapers. Whoever thought that
would happen? In the South African case
we had patents front-page news and to an
extent we are seeing it in the newspapers
even today. I do not know how many of you
have been reading the press reports about
compulsory licensing in Thailand, about the
case Novartis have brought against a
particular provision of the Indian Patents
Act. Again, the patent system is actually up
there in real newspapers.
We have seen news about
Developing countries missing deadlines, the
access to medicines crisis, we saw
increasing levels of counterfeiting and
piracy fuelled largely by digital technology,
we saw complete chaos in the EU over the
Computer
Implemented
Inventions
Directive, death threats to MEPs about
patent laws. Please, what is going on? Then
we saw the absolute inability of the Member
States in the Community to do anything
about Compat after 35 years for reasons
which again had nothing to do with the
patents
system whatsoever,
entirely
nationalistic reasons around languages, etc.,
understandable at one level but complete
chaos from an industrial policy perspective.
Against that background I think it
was very, very, very important that the
Enforcement Directive was passed in the
first place. It was important that the EU
send a message that it was important to have
proper enforcement of IP. That was a big
political message. It was also important, I
think, because it showed that the EU at least
sometimes can do something sensible on IP.
We have not seen very much good come out
of the EU on IP for about 10 or 15 years and
it was a very important political message.
Let us now look at some more of the
background and how the background to the
Directive has impacted on what it actually
says. If you look at the traveux preparatoire
and the recitals, you will see that there were
three real objectives: one, approximation of
remedies
around
the
EU;
two,
implementation of TRIPS; three, and most
importantly I think, the prevention of
counterfeiting and piracy.
All those, I think, have had some
input into what is actually in the Directive
and it is noticeable that the Directive has
certain elements which are TRIPS-plus, in
other words, elements that are not actually
required by TRIPS. The power to seize
documents relating to infringement as well
as infringing products is probably a TRIPSplus measure. The right to information
regarding distribution networks, outside
counterfeiting and piracy, remember, is also
a TRIPS-plus measure. The right to seize
bank accounts on certain occasions and the
very important thing, the only thing that is
taken from British law, obviously, is
payment of the other side’s legal costs if
you lose. All those are additional to what
TRIPS requires and I think industry as a
whole would regard these as best practice
additions and very, very welcome.
There are some slightly odd things
given that this was essentially an anticounterfeiting and piracy measure. The fact
that it was anti-counterfeiting and piracy
probably explains why in the initial drafts
there were proposals for criminal remedies.
That makes sense for counterfeiting and
piracy; it does not necessarily make sense
for other things but I will come back to that
briefly later. If it is anti-counterfeiting and
piracy, why does it include patents? I think
it is a jolly good idea that patents are
included in this but for an anticounterfeiting and piracy measure it is a bit
odd that it should include patents. Equally,
if it is about counterfeiting and piracy why
does it apply to parallel traded goods that
come in from outside the EU which infringe
IP? They may be IP infringements but they
are genuine goods, they are the originator’s
goods and it is slightly odd that an anticounterfeiting and piracy measure should
deal with parallel traded good. Again, I
think the reason for this is largely political.
At the time people were talking about this
Directive, talking about protecting IP
generally and particularly protecting patents,
was not a good thing, but talking about
combating counterfeiting and piracy gave
some legitimacy to some of the broader
aspects of what actually became the
Directive. I personally find that quite
interesting.
How important is it actually going
to be in practice? I think we have heard
today that it has clearly improved some
national laws although some countries
almost certainly still need to implement
parts of it. We do see remedies and
enforcement measures that are available in
law that did not used to be, and that has to
be a good thing. In theory, the aim of this,
and let us go back, is to “approximate
legislative systems” – and I quote from the
Directive, Article 10 – “to ensure a high
equivalent and homogenous level of
protection.” I think that is where it is going
to fail in its objective.
There are a number of difficulties.
For example, some of the remedies depend
on proof of intent. I am a common lawyer,
and I do not quite understand how you prove
intent in civil law systems where you do not
have disclosure and do not have crossexamination, and I particularly do not
understand how we are going to prove intent
in genuine commercial conflicts, not
counterfeiting and piracy, that is easy - you
copy something, you sell it as something
else, that is easy. In a genuine dispute about
whether something is patent infringing or
not what does “intent” mean and how are
you ever going to prove it, and to have
remedies depend on the existence of intent I
think is slightly odd and will probably have
the effect, actually, of lowering remedies
rather than increasing them. It is nothing
about aggravated damages or bad behaviour
but remedies may be reduced for innocent
behaviour.
Equally, on the injunction section
there is a provision that says, if damages are
inadequate
and
there
is
innocent
infringement
and
it
would
cause
disproportionate harm there may be no
injunction. I understand much of that, that
is the “what happens if there is a tiny patent
infringing bit in a major computer
mainframe”, that is the sort of thing the US
is looking at, at the moment. I understand
that that is an issue but I do not understand
why intent to infringe should come into that
at all. I think that is going to cause some
complexities.
In terms of approximation of laws,
Recital 7 specifically refers to major
disparities in calculating damages. Article 3
says, “remedies will be effective,
proportionate, and dissuasive”, so pretty
impressive stuff until you look at what the
damages provisions actually say.
The
damages provisions in Article 13 give no
practical guidance whatsoever as to how
damages shall be assessed in the Member
States and, as we have already seen, there
are significant differences between the
Member States. British law does it properly,
German law ignores the issue; it is too
difficult.
There is no guidance at all as to how
damages should be calculated and I think it
gets worse than that because it says, “in
appropriate cases” whatever that may be “a
lump sum can be awarded, for example,
royalties.” So what is “appropriate”? If you
look at Article 26 it says, “it may be
appropriate where it is difficult to determine
the amount of damages”. Well, frankly, in
IP cases determining damages is difficult
and if royalties or a small lump sum are
acceptable this will not be dissuasive or
effective.
I think there is a real possibility that
although it talks about effective and
dissuasive it is going to be meaningless and
that provision, in particular, I suspect is a
sop, as we British call it, a concession to the
Germans because the Germans do not like
difficult questions on damages. Frankly, we
would say: “too bad, that is what courts are
there for”. The courts are there to make
difficult decisions and if every time it is
difficult they say, “You can have a little
lump sum,” it is not going to be effective,
proportionate, and dissuasive.
The biggest difficulty I see with this
Directive is that, although it says these
remedies will be available, it is impossible
at this stage to say how they are going to be
applied on a day-to-day basis in different
Member States in practice. It says, “You,
the courts, will have the power to give
remedy A, remedy B, or remedy C,” but it
does not say at all when you should do so.
So, until practice develops we are going to
have no idea as practitioners what you can
get from which courts, different courts will
develop in different ways, some courts will
give interlocutory or interim injunctions in
certain cases, some courts will not. All the
forum shopping we see now is going to be
there despite the Directive.
I know, for example, of a particular
patent case, not one we are involved in but a
pharmaceutical patent case, where you have
the same infringing products and you have
the same patent in six different jurisdictions,
applications for preliminary relief were
made in Belgium, Italy, Sweden, Germany,
France, and the Netherlands.
The
injunction was granted in Belgium, Italy,
and Sweden; it was denied in Germany,
the Netherlands, and France.
Why?
There is no good reason if we are really
approximating. The answer is that we are
not really approximating, we are providing
for the availability of remedies rather than
any sort of approximation as to how they are
granted in practice. I do not think the
Enforcement Directive will make a blind bit
of difference to that. I do not see that there
is any real prospect of harmonisation on
availability of interim remedies, or indeed
on damages at the moment. I do not see
there is a real prospect of the ECJ helping at
all, or the courts applying remedies
consistently in the Member States. So,
going back to my question about how
important this is going to be, it was an
important political step, it should improve
availability of remedies but it is not even
fully implemented yet, and we just have to
wait and see how it actually applies in
practice.
Let me make a few remarks about
the future so it will be connected to what I
have already said. Let me start with a new
point which I will call, Enforcement
Directive Number 2, which the EU is now
calling a Criminal Sanctions Directive.
Please keep this in mind and look at what is
going on. Criminal sanctions were dropped
from the first Directive probably on the
basis there were doubts as to Community
competence to legislate in the criminal field.
In a recent ECJ case 176/03, the
Commission now takes the view that they
have competence to legislate in the criminal
field. I think that is actually very doubtful
and I gather it is incredibly controversial and
I am not sure they do. So, as you all
probably know, we now have a proposal for
a new directive on criminal penalties. That
has some real difficulties in it, too.
The first Directive is aimed at
counterfeiting and piracy, but the penalties
are actually quite small in comparison to the
money that can be made from counterfeiting
and piracy. They need to be bumped up.
Probably with my British hat on, I am
extremely concerned about the Community
saying to me that we have to have criminal
penalties for patent infringement. I think it
is an appalling piece of legislation that I
know is in place in most Member States. I
know it is not used in very many but I think
it is a very, very, very bad idea indeed to
have criminal penalties for patent
infringement because it has the real prospect
of stifling competition.
To close, I see big problems arising
from the fact that the Directive requires
remedies to be available but gives no
practical guidance as to how or when they
should be applied. That will lead to lack of
harmonisation. How is that going to be
dealt with in practice? The EPLA, if it
happens, might actually impact on patent
enforcement because we will have, if you
like, central litigation in patents but that is
not going to help on copyright, trade marks,
and designs, we are still going to have
different courts applying the remedies in
different ways.
I do not think we can expect very
much help from the ECJ. There may or may
not be references to the ECJ on the
meaning of the Directive. It is quite difficult
to work out what those references could
actually be given the very vague nature of
the Directive. Even if there are references to
the ECJ, if we look at what the ECJ has
done recently in the IP field on parallel
trade, re-boxing, re-packaging, trade mark
directive, I think it is fair to say that most of
the judgments serve to confuse people rather
more than they clarify the position.
Anything that comes from the ECJ may be
less than entirely helpful, as it turns out.
Because as I said we have no guidance we
may find courts in one member state
granting or refusing remedies in cases where
an entirely opposite result is achieved in
different Member States and I am not sure
what can be done about that. In theory, if a
particular court did not give remedies on a
regular basis I suppose enforcement
proceedings could be brought by the
Commission but it is awfully difficult again
on the basis of the Directive itself to see
how you would actually do that. The whole
point is you have to have it in the law but it
does not say anything about when you
should exercise it.
To conclude, I do think the
Directive is a very good idea but I think it
may prove to be of limited practical value. I
think we are going to have to wait and see.
In April 2009 the Commission is supposed
to start preparing a review of the
effectiveness of the implementation so
perhaps I could suggest to UNION that in
about another two years’ time we should
have another session, possibly with the
Commission here, to see how this is actually
going in practice.
Mike Nicholls: I am interested in what you
think about this good faith or bad faith
infringement. If you set out to make a
product which is as close as possible to a
competitor’s but which avoids the patent,
are you acting in bad faith or are you acting
in good faith in trying very hard not to
infringe? Is it a similar position or do you
think it will be similar to the position in the
States on wilful infringement where my
understanding is that if you have an opinion
from a patent attorney saying that you do
not infringe that is at least some defence?
David Rosenberg: Let me try and answer
your second question first, is it going to be
like the position in the United States, I hope
not, but it is possible. Answering your first
question, does getting as close as possible to
the infringement whilst trying to avoid
infringement, is that good faith or bad faith,
I do not know. If you go to a patent attorney
who says it is 50:50 or it is 75:25 is that
good faith or bad faith? In my view, as a
matter of policy if you are genuinely trying
to get as close as possible and trying to
avoid infringement that should be good
faith.
The IP system is supposed to
encourage people to use what is out there
and get as close as possible as you can. It
gives you a certain defined boundary, and it
is very difficult to define what that boundary
is, but I do not think that should be bad faith
infringement. I do not know how it is going
to work. I have a real problem with words
like “intentional infringement” particularly
when you are talking about the meaning of
the word “intentional” across 27 different
members states all of whom will have (a) a
slightly different word for it and (b) a
different meaning ascribed to that word.
Roy Marsh: I am a British patent attorney
based in Munich. I wonder whether for a
user of a patent system such as your
employer we are actually in Europe not far
short of a perfect system for you to use, if
we can deal with all the small details. What
I have in mind is with England common law
jurisdiction and the rest of Continental
Europe running on a completely different
civil law jurisdiction you can pick the legal
system that suits your purposes. You could
run an action in Germany on Monday, run a
different action in London on Tuesday, and
get the facts out in London on Tuesday with
experiments, discovery, cross-examination
of the experts, a lengthy written reasoned
decision in England quickly, and then use it
in all the other jurisdictions in Europe for
the rest of your programme of enforcement.
That seems likely in theory but maybe it
does not work out like that in practice for a
real corporate user of a system. What I have
in mind is that Germany and England,
completely poles apart on the enforcement
side, and may be for a sophisticated user
such as your employer it is actually an
advantage to have those two completely
different systems.
David Rosenberg: That is an extremely
interesting question to which I do not have a
good answer. I think there is a lot in it so let
me try a slightly flippant answer. I think
that would be the case if UK courts ever
enforced patents these days. The way it is
going at the moment, every time we sue in
the UK court we end up with a bad decision
so that is not the sort of influence we want
to have in the rest of Europe. That is a
slightly flippant answer to a much more
serious question and I think, yes, there is a
lot to it. I personally think there is a lot of
value for all sorts of reasons in the different
systems in different Member States. I have
huge issues both in principle and in practice
with things like EPLA, not because I am a
little Englander but because I do think there
are values to each of the cultural approaches
to these things. It would be inappropriate of
me for all sorts of reasons to comment on
what our strategies are or might be but
obviously there is a lot to that as a
proposition.