Patent litigation – Double track system vs. bifurcation system

trustinip-bifurcation-systeme-v-double-track-system

Double track system

If you are sued by a patentee for patent infringement, one of the options you often have would be to attempt to invalidate the patent on the ground that the patent lacks patentability. The issue here is whether you can assert invalidity of the patent at issue to an infringement court, or you need to initiate a separate proceeding at a national patent office or a specialized patent court in order to argue patent invalidity. As for Japan, in addition to an invalidation proceeding at the Japanese Patent Office (Track 1), Japanese patent law allows a defendant in an infringement court to assert patent invalidity within the same proceeding (invalidity defense), and the court can judge the validity on its own (Track 2). This legal system can be referred to as a “double track system”. Examples of jurisdictions with this system besides Japan are the U.S., the U.K., France and Korea.

In Japan, the legal effect of patent invalidation at an infringement court is inter partes; a patent registration as such remains in effect as it is, but a patentee can’t assert against a defendant that the patent is valid in an infringement proceeding. On the other hand, the legal effect of patent invalidation at the Japanese Patent Office is absolute, i.e. invalid erga omnes.

The advantage of a double track system is to accelerate a conflict resolution because a defendant no longer has to wait for the examination by a national patent office or a specialized patent court. However, there are several problems in a double track system. First, it is not allowed for a patentee to amend the patented claim in an infringement court although the amendment is considered to be an indispensable defense to maintain the patent. Second, a double track system helps the parties to bring the conflict on patent invalidity up again, which causes responsibilities to bear a double burden of proceedings and costs. Third, there is the possibility of contradictory decisions; it is possible that an infringement court holds patent is valid while a national patent office holds a patent invalid.

Bifurcation system

In other jurisdictions in the world, there is another system referred to as the bifurcation system where infringement and invalidity of the patent at issue are examined in separate proceedings respectively. Examples of countries that adopt bifurcation system are Germany and China. In Germany, invalidity defense is not allowed in an infringement court. Instead of an infringement court, a defendant has to bring an invalidity proceeding at the Federal Patent Court (Bundespatentgericht).

The advantage of a bifurcation system is that judges or appeal examiners are all experts of patent invalidation proceeding, causing the judgment thereof to be more reliable. However, there are problems with bifurcation system as well. First, in separate proceedings, a patentee can assert inconsistent claim interpretations, which is disadvantageous to an allegedly infringing party; a patentee can assert his patent claim as narrowly as possible to overcome prior art at issue in the invalidation proceeding, while requiring broad interpretation to include the allegedly infringing product in an infringement court. In Germany, this inconsistent claim interpretation by a patentee would be allowed, and procedural estoppel would not be applied because each proceeding is supposed to be independent. Second, since there is possibly a time lag between a judgment by an infringement court and that by the Federal Patent Court; i.e. a judgment by an infringement court often comes earlier than that by the Federal Patent Court, an injunction could be enforced by a patentee even if the Federal Patent Court holds patent is invalid later on.

Where does the Unified Patent Court (UPC) stand?

This procedural issue is going to be solved in a flexible way in the UPC . In general, an action for infringement basically has to be filed before the UPC local or regional division , and an action for revocation has to be filed before the UPC central division. If a defendant in an infringement court (i.e., the UPC local or regional division) files a counterclaim for revocation, the court would select one of the options below after having heard the parties: (1) the court proceeds with both the action for infringement and with the counterclaim for revocation, (2) the court refer the counterclaim for revocation to the central division and suspend or proceed with the action for infringement, (3) the court refer the case for decision to the central division. Therefore, invalidation proceeding in an infringement court in UPC is the mixture of double track system and bifurcation system. The court can basically choose whichever proceeding it recognizes as the best way to solve the case.

Finally

There are both advantages and problems in the two systems, and I can’t say which system is better in general. However, there are definitely different strategies for patent litigation depending on which system one operates in. In my next posting (here), I will discuss strategies for patent litigation under the double track system in Japan.

2016-10-25

Hirotaka Nonaka

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