The Rise of Chinese IP?

China has been growing economically by leaps and bounds in recent years, and is now second only to the US in terms of GDP (at least according to this data), followed by Japan, Germany and the UK. Given a normal expected path of growth, it would be expected that growth in generation of IP would follow. This does appear to be the case. A recent article even claims that China could beat the US and Japan within the next two years, based on the number of international patent applications filed, suggesting that the US may be losing the "innovation race" (whatever that means).

Two large Chinese companies, Huawei and ZTE, dominated in 2016 in terms of the number of PCT applications filed, according to a recent report from WIPO, with US company Qualcomm in third place. What is not said, though, is how this translates into applications being pursued beyond the international phase and resulting in granted patents. For this, we have to go beyond the headline figures and start looking into the slightly murky world of patent statistics.

Looking first at the number of international applications filed, it is true that those originating from China have been growing at a very high rate over the past few years. This can be seen from the chart below, which shows the number of PCT/CN and PCT/US applications by publication year (data sourced from here). At the current rate of increase, and assuming the US stays fairly constant, China will probably catch up to the US within the next few years.

This is, however, not the whole story. PCT applications, as with any other types of patent application, are not granted patents. Pretty much anything can be filed as a patent application and it would still count, regardless of its merits. What actually matters is whether these patent applications are proceeded with into the national or regional phase (which costs more money, and therefore has to be justifiable in light of the preliminary examination PCT applications are subject to), and then whether they end up being granted. The number of applications that proceed into the European regional phase is, unfortunately, not something that is easy to assess. The EPO seems to have data on this only for the past year, counting 7150 applications originating from China, but nothing from previous years, making a comparison over time impossible without a lot more digging.

A better indication is the number of applications granted. There is, of course, a time lag between a patent application being published and it being granted, which can be (and often is) several years. Bearing this in mind, a rough indication of how well Chinese applicants are currently doing can be got from counting the number of granted European applications based on their country of origin. This is shown in the chart below, which compares the number of granted EPs originating from China and the US (the data for this was obtained from the EPO's annual statistics pages). The obvious large increase in grant rate for 2016 has been noted by the EPO here, together with a (possibly dubious) claim that quality has not been compromised. What is fairly obvious from this is that China is a long way behind the US in terms of granted patents, at the EPO at least. It would clearly take quite a few more years before China reaches the levels that the US has been consistently seeing for more than ten years.

The USPTO also provide some statistics detailing the number of patents granted, breaking these down into country of origin. The data for the years 2004 to 2015 (2016 is not yet available) is shown below. The numbers are much larger than those for the EPO, but the story is roughly the same. China is still a long way behind in terms of the number of patents granted, and there are no signs yet of China approaching comparable levels for the foreseeable future.

In conclusion, claims about the Chinese becoming increasingly important in terms of patent applications do seem to be correct, and we may well see China becoming a dominant player in international applications in the near future. As far as granted patents are concerned, however, China seems to be far behind the established players and it is unclear at the moment whether this is likely to change in a big way any time soon. As for the causes of this discrepancy, my guess is that the incentives to file applications in China are probably having a big effect on the application figures, and many applications are being filed without much thought being given as to whether they might result in a granted patent. Some of these applications will inevitably be patentable, but I suspect the proportion, at least at the moment, is still quite low.

UNION-IP Round Table: Literal Infringement and Doctrine of Equivalents

A long time ago, while I was training to be a patent attorney I was briefly involved with an application that faced a difficult problem, which was how to ensure that the claims of the application covered a possible infringer. The application (or rather its parent application, as the one I was dealing with was a divisional) was originally drafted as a US patent application, and described a type of device known as a PFO occluder (specifically this one). A patent had already been granted, EP0808138B1, covering the basic form of the device, claim 1 of which read:

A collapsible medical device (60) comprising a metal fabric formed of braided strands, the device (60) having a collapsed configuration for delivery through a channel in a patient's [body], and has a generally dumbbell-shaped expanded configuration with two expanded diameter portions (64) separated by a reduced diameter portion (62) formed between opposed ends of the device, characterized in that clamps (15) are adapted to clamp the strands at the opposed ends of the device.

The Amplatzer PFO Occluder

The claim covered a type of device known as the Amplatzer PFO occluder, marketed by St. Jude Medical. A key feature of the device is that clamps are provided at each end, which serve to keep the strands of wire together.

The Occlutech alleged infringement.

The alleged infringing device, made by Occlutech GmbH, was in most ways similar to the Amplatzer device but a key difference was that this device (also shown here) did not have a clamp at its distal end. This is because the device was made using a different technique that, rather than making the device from a continuous tubular braid, formed it as a closed-end sock shape, with the wires at the distal end crossing over and turning back on themselves. No physical clamp was therefore necessary at the distal end.

The question, which was put before courts in the UK, Sweden, the Netherlands and Germany (see also here for a summary of the cases), was whether the claim above could be construed to cover the Occlutech device. On a straightforward literal interpretation it clearly couldn't, because the Occlutech device didn't have a clamp at both ends, but only at one end. Could it, however, be infringed based on a doctrine of equivalents? This is the subject of an upcoming "Round Table" session organised by UNION-IP, to be held in Munich on 24 February (regular readers will recall that I attended and presented on partial priority at the event last year, which I reported on here). Details of this year's session are provided below.

For more information and how to book, please see the UNION-IP website.

UNION-IP Round Table Program, February 24, 2017 
Literal infringement and the doctrine of equivalence from a European perspective - How should one draft patents that are infringed? 

The landmark decision "Occlusion device", rendered by the BGH, started intense discussion amongst practitioners as to how to draft patents that can be successfully enforced. UNION-IP picks up this discussion, and connects together the jurisprudence which has been developed since the Occlusion device decision regarding the questions of literal infringement and doctrine of equivalence when drafting patents with a European perspective.

What lessons need to be learned? What are the pitfalls to be avoided? In brief, how does one draft a patent that can be infringed? We will hear views from experienced judges, litigators and patent attorneys on these points.

08:15 - 08:45 Registration
08:45 - 09:00 Welcome words
Luigi Franzolin, President UNION-IP, Mr. Rothe GPTO 
09:00 - 09:45 Do's and Don'ts under Dutch Case Law Experiences from the judge's bench
Edger F. Brinkman, Senior Judge IP Court of The Hague, NL 
09:45 - 10:30 Do's and Don'ts under German Case Law Experiences from the judge's bench
Judge Dr. Hermann Deichfuß, Federal Court of Justice, DE 
10:30 - 10:50 Coffee Break
10:50 – 11:35 Pitfalls and lucky punch Practical insight from the perspective of the telecommunication industry
Thomas Burchardi, Senior Patent Attorney, Ericsson GmbH 
11:35 – 12:20 Pitfalls and lucky punch  - Practical insight from the perspective of the pharmaceutical industry
Marco Riensche, Principal Patent Attorney, Novartis AG and Marco Fachini, Senior Patent Attorney, Sandoz Inc. 
12:20 - 13:05 Pitfalls and lucky punch The attorney's view
Sabine Agé, Veron & Associés, Lawyer, FR 
13:05 - 13:30 Q&A and closing remarks
Jochen Kilchert, Meissner Bolte, President Patents Commission UNION-IP, DE 
13:30 - 15:00 Get Together

G 1/15 - The Wait is Over

Back in 2011 I wrote about a potential problem that had been identified to do with priority and EP divisional applications. This problem was confirmed a couple of years later, after which I had a think and came up with a solution. This turned out to be similar to a solution that was considered by the EPO Boards of Appeal in T 1222/11. This was not, however, the end of the story.

The problem, put simply, is that if a European application claims an invention more broadly than is disclosed in a priority application, can partial priority be allowed for what is disclosed in the priority application. If not, then the priority application, if it also publishes as a European application, becomes A54(3) prior art and knocks out the claimed invention. If partial priority is allowed, then the problem goes away (for reasons given here). The Enlarged Board in G 2/98 set out a proviso regarding when partial priority would be allowed under A88(2), which was only if it gave rise to a "limited number of clearly defined alternative subject-matters" (point 6.7). The meaning of this has been argued over for the past few years and a referral was made in August 2015 to the Enlarged Board in T 557/13, which asked the following question:

1. Where a claim of a European patent application or patent encompasses alternative subject-matters by virtue of one or more generic expressions or otherwise (generic "OR"-claim), may entitlement to partial priority be refused under the EPC for that claim in respect of alternative subject-matter disclosed (in an enabling manner) for the first time, directly, or at least implicitly, and unambiguously, in the priority document?

The referral, which was numbered G 1/15, generated a lot of interest, as evidenced by the number of amicus briefs filed, as well as the number of comments received on this blog. Most of the briefs recommended a 'no' answer to question 1, which would cause the problem to go away. Following a hearing in June last year, the Enlarged Board issued an order that gave the following answer to the question:

Under the EPC, entitlement to partial priority may not be refused for a claim encompassing alternative subject-matter by virtue of one or more generic expressions or otherwise (generic "OR"-claim) provided that said alternative subject-matter has been disclosed for the first time, directly, or at least implicitly, unambiguously and in an enabling manner in the priority document. No other substantive conditions or limitations apply in this respect.

As far as I could see, this made the problem go away. There would no longer be any issue over partial priority and possible collisions between a priority document and a European application. Simply answering the question, however, was not the full story. The Enlarged Board has now issued their full reasoned decision, which has just appeared on the EP register here.

The decision goes over all of the arguments put forward along the way, which regular readers will already be well aware of (see the links above to previous posts). What the key question concentrates on is what was meant in G 2/98 by "a limited number of clearly defined alternative subject-matters", and how this could be aligned with the EPC and with the famous FICPI Memorandum that apparently expressed the legislative intent behind A88(2). I have tried to make it clear on this blog that the examples in the Memorandum must be consistent with any interpretation of A88(2), and partial priority should be assessed accordingly. Others, including the respondent in G 1/15 have effectively argued that this does not need to be the case.

The reasoning in G 1/15, as you would expect, starts from basic principles of priority, and develops towards the principles of partial and multiple priorities, leading up to the Memorandum, which defined examples where multiple priorities should be allowed in a single claim. The Enlarged Board thankfully make it quite clear that the Memorandum is indeed consistent with A88 and the Paris Convention, and then lead up to the inevitable consequence that the proviso in G 2/98 "cannot be construed as implying a further limitation of the right of priority" (point 5.3). This is enough in itself to reach a 'no' answer to question 1, but the Enlarged Board go on to lay out in clear terms how partial priority should be assessed. This is laid out at the end of the reasons for the decision, at points 6.4 to 6.7, which state:

In assessing whether a subject-matter within a generic "OR" claim may enjoy partial priority, the first step is to determine the subject-matter disclosed in the priority document that is relevant, i.e. relevant in respect of prior art disclosed in the priority interval. This is to be done in accordance with the disclosure test laid down in the conclusion of G 2/98 and on the basis of explanations put forward by the applicant or patent proprietor to support his claim to priority, in order to show what the skilled person would have been able to derive from the priority document. The next step is to examine whether this subject-matter is encompassed by the claim of the application or patent claiming said priority. If the answer is yes, the claim is de facto conceptually divided into two parts, the first corresponding to the invention disclosed directly and unambiguously in the priority document, the second being the remaining part of the subsequent generic "OR"—claim not enjoying this priority but itself giving rise to a right to priority, as laid down in Article 88(3) EPC.

This also corresponds, logically and exactly, to the scheme described in the Memorandum (see point 5.2 above): "If a first priority document discloses a feature A, and a second priority document discloses a feature B for use as an alternative to feature A, then a claim of the application directed to A or B will in fact consist of two distinct parts A and B respectively, each complete in itself...", and further: "... it would be appropriate to claim a partial priority in situations corresponding to the "OR"-situation under "Multiple Priorities", the European patent application itself taking the place of the second priority document".

The task of determining what is the relevant disclosure of the priority document taken as a whole, and whether that subject—matter is encompassed by the claim in the subsequent application, is common practice in the EPO and among practitioners of the European patent system and as such should not pose any additional difficulty. Nor does it create uncertainty for third parties, as argued by the respondent and in some amicus curiae briefs. Although it can be a demanding intellectual exercise, the decisions reached in cases T 665/00, T 135/01, T 571/10 and T 1222/11 all show that it can be carried out without any need for additional tests or steps.

From this analysis it follows that the assessment of entitlement to partial priority right does not show that any additional requirements are needed.

Just to make it clear, here is a simple flowchart I have created that defines the process to follow when considering whether partial priority should be allowed.

It should go without saying, but I'll say it anyway, that this is what I have been arguing in favour of all along. It should also go without saying that this decision really does put the final nail in the coffin for poisonous divisionals and poisonous priority. Conventional best drafting practice is still acceptable, and we can carry on as before.

Why amend an expired patent?

The maximum term of a UK patent, according to section 25 of the UK Patents Act, is 20 years from the date of filing of the application. If renewal fees continue to be paid, the last day of a patent's life will be on the day before the 20th anniversary of the date of filing. In the case of EP0736030, which was filed on 20 December 1994 and granted in 2001, the patent expired on 19 December 2014. The patent, titled "Tetrahydrofuran Antifungals" claimed the compound shown here on the right (with some optional features for X and R1).

The compound was apparently worth protecting a bit more, so a Supplementary Protection Certificate was applied for, and granted. SPC/GB06/007, granted in 2007, extended the protection by the usual five years beyond the expiry date of the patent, i.e. until 19 December 2019.

In April last year, two requests for an opinion were filed in relation to the patent and the related SPC, the requester alleging that the patent was invalid due to lack of novelty or inventive step. The requests were dealt with together, since validity of the SPC depended on validity of the patent, and resulted in opinion 09/16 & 10/16, issued on 31 May 2016. The examiner found that claims 1 to 4 of the patent were lacking novelty, but that claims 6 to 19 were novel and inventive. As is now allowed under section 73(1A-C), the comptroller initiated revocation proceedings on the patent, giving the proprietor (Merck Sharp & Dohme Corp.) until 21 December 2016 to respond. The proprietor responded, stating that they were "somewhat surprised" that the comptroller might consider revoking their patent, since it had already expired and that third parties were "unaffected by the validity, or otherwise of an expired patent", and suggesting that the only reason for amending an expired patent would be bureaucratic. They also questioned whether "otiose actions of this kind were in the mind of Parliament when S.73(1A) of the Patents Act was enacted". They did, after all this protesting, nevertheless submit amendments that limited the patent to the claims that were found to be allowable, and which also still covered the product covered by the SPC.

What I find surprising about this case is not the fact that revocation was initiated on an expired patent, but that the proprietor was apparently surprised by this possibility. An expired patent can still be used against third parties, since it could be used to claim damages for past infringements that took place while it was still alive. It can also be used to support an ongoing SPC, as in this case, so initiating revocation proceedings would be very relevant, particularly if they resulted in the SPC being knocked out as a result of the patent being found invalid. The fact that in this case the patent could be amended so that it was found to be both valid and still capable of covering the product protected by the SPC is something of a lucky break for the patent proprietor, but I don't think that this means the action was otiose at all.