Commissioner, Italian Competition Authority; former judge, Court of Rome (IP Section)
Recent developments in European and national patent law and case law
Four Italian patent cases
I. Patents and standards
Specialised Division of Intellectual Property, now Specialised Court of Enterprises
Tribunal of Milan − Judge Marina Tavassi
Samsung Electronics Co. Ltd. and Samsung Electronics Italia S.p.A. v Apple Inc., Apple Italia Srl, Apple Retail Italia Srl, Apple Sales International
ORDERS (two different orders for different groups of European patents), 5 January 2012 and the following trial
In the autumn of 2011 Samsung filed a claim for provisional injunctive relief before the Specialised Division of Milan. It requested the judge (Marina Tavassi) to prohibit Apple from selling the latest model of the iPhone on the Italian market. The launch of the iPhone 4S on the Italian market was scheduled for before Christmas 2012. Samsung also requested an injunction regarding the new models of the iPad, which were ready to be sold.
Looking for a preliminary injunction in order to block the forthcoming launch of the new Apple mobile device, Samsung alleged the infringement of two patents: one is for the famous "Siri" (a kind of intelligent automated assistant) and the other is for "data tapping" (useful technology that allows the user to trigger an action by tapping a specific piece of data).
The Milan IP Court was involved in the dispute for both the patent action and the competition action, including a claim to establish the FRAND royalty.
In the course of the proceedings Apple submitted a counterclaim to obtain an order against Samsung to grant a licence to Apple with FRAND royalties, citing an infringement of Article 102 TFEU.
In her orders, Judge Tavassi analysed the relationship between the parties, the previous contact between them in order to achieve an agreement on the percentage of royalties requested by Samsung to grant the use of its patents to Apple, the supply by Qualcomm and Intel of the chips used to build the new Apple models, and the existing agreements between Samsung and Qualcomm and Intel granting them licences for the Samsung patents. Subsequently, she weighed up the interests of the parties and in particular considered the potential harm to either party that might result from granting or refusing the injunction.
Here we are specifically concerned with two orders of 5 January 2012, the first of which was issued in ante causam interim proceedings and the second of which, of substantially identical content for the purposes of this review, was issued in the interim proceedings initiated at the request of Samsung as part of substantive proceedings it brought against Apple.
In the case in question, Samsung complained that Apple had implemented its own telephony devices using the data transmission function, choosing, among the possible variants, a mode of implementation which exploited the technology of the Samsung inventions. That conduct was the basis for the defendant's application to obtain a series of precautionary measures (i.e. injunction, withdrawal from the market and seizure of the allegedly infringing Apple products).
In its defence, Apple argued that Samsung's conduct was unlawful, alleging abuse of a dominant position. Samsung had in fact refused to grant its patents to Apple on FRAND terms (having asked for very high royalties of 2.4%). In any case, the only reason for instituting interim proceedings was to harm the respondent ahead of the new smartphone's launch on the Italian market.
The anticompetitive aspects involved the question of whether the presence of patents included in a particular standard would hinder the technological development of the sector, with negative consequences for both competitors and consumers, thus constituting abuse of a dominant position, within the meaning of Article 102 TFEU.
The debate on the matter was also influenced by the decision of the Court of Justice in re Rambus Inc. (COMP/C-3/38, 636, of 9 December 2009) and relates, in more general terms, to the issue of the essential facilities doctrine, where undertakings or individuals who make widespread use of an asset that is not easily duplicated for economic or legal reasons are forced to make such property available to anyone who requests it, on fair terms, refusal to comply being considered an abuse of law.
Referring to the teachings of the European Commission on the perceived transfer of technology (Commission Notice, Guidelines on the applicability of Article 81 of the EC Treaty to technology transfer agreements, 2004/C 101/02, paragraph 6), the orders observed how the effects of the presence of an exclusive right involve a dual option for the holder: a sublicence to third parties to exploit the patent, or the defence of its exclusivity. The latter behaviour, in the case of standards-essential patents, is an obstacle to the activity of competitors and ultimately to technological progress.
Pointing out the usefulness of the rule of reason, the judge affirmed the need to consider the particular market conditions in which the parties to the case were called to work. It was a sector characterised by strong technological innovation and the chance of windfall gains, fit to open the market to competitive prospects.
Therefore the orders considered that the applicant could obtain adequate protection for its property rights, and for potential victims, only in the light of all the facts. Weighing up conflicting interests, the judge held that evaluation of the obligation to grant a patent licence on FRAND terms and of the effectiveness of such a measure could only be carried out during proceedings on the merits, especially as the issue of a fair price involved anticompetitive matters that had to be subjected to more thorough scrutiny.
Finally, the prejudice that Samsung would suffer if the preliminary measures were to be rejected during the preliminary phase would be determined above all by the amount of unreceived royalties, assuming the claimant's statement of infringement to be confirmed on the merits of the case. It is correct to assert that the alleged prejudice to Samsung can be considered to be a credit right that can be adequately satisfied at the end of the proceedings on the merits.
Following the proceedings for injunctive relief – where Samsung's claim for injunction to cease the alleged patent infringement was dismissed – Samsung served Apple with a summons to obtain a full assessment of the case.
Apple countered with a claim for revocation of Samsung's patents, and in any case denied having implemented these patents in its iPhone 4S. In the proceedings on the merits Apple also reintroduced the claim for abuse of a dominant position.
The judge in these proceedings appointed two experts in order to assess Samsung's patents for validity and revocation and to determine whether Apple's product implements these patents. Judge Tavassi decided to allow the consultation of experts to determine:
(i) whether, from a technical perspective, Apple products exclusively contain chips and components of companies which have already paid the necessary royalties to Samsung (such as Qualcomm and Intel);
(ii) if not, whether those products infringe Samsung patents;
(iii) and if those patents are in fact valid.
In addition, an economic expert has been appointed to establish the possible percentage of a FRAND licence to implement Samsung's patents.
Currently, the ordinary trial is in progress.
In this context, it is important to focus on the fact that in April 2014 (decision of 29 April 2014) the Commission decided on two cases of high relevance in the specific sector of standards-essential patents (SEPs): the Samsung and Motorola Mobil cases.
In the Samsung case the Commission has accepted commitments offered by Samsung as legally binding under EU antitrust rules (Article 9 of EU Antitrust Regulation 1/2003). Under these commitments, Samsung, for a period of five years, will not seek injunctions in the European Economic Area on the basis of its SEPs for smartphones and tablets, present and future, against licensees who sign up to a specified licensing framework. The licensing framework provides for a negotiation period of up to 12 months and, after that period, a third-party determination on FRAND terms. Within that framework, any dispute regarding FRAND terms for the SEPs in question will be determined by a court or, if both parties agree, by an arbitrator. Such commitments therefore provide a "safe haven" for all potential licensees of the relevant Samsung SEPs. Indeed, potential licensees that sign up to the licensing framework will be protected against SEP-based injunctions by Samsung.
In this context the trial before the Specialised Court of Milan is in progress and is dealing with determination of the FRAND royalty.
II. Patents and international procedure
Italian Supreme Court, joint civil divisions, Order No. 14508, 10 June 2013, General Hospital Corporation, Palomar Technologies Inc. v Asclepion Laser Technologies GmbH
The order issued by the Italian Supreme Court relates to a preliminary issue of jurisdiction pending before the Court of First Instance. This issue was filed by Palomar Technologies and the General Hospital Corporation (the claimants).
The defendant (Asclepion) issued an action for a negative declaration concerning the counterfeiting of industrial products covered by a European patent before the Rome Court of First Instance. The claimants challenged the jurisdiction of the Italian Court, as the action had been brought by a foreign company against two foreign companies and thus lacked any link with Italian jurisdiction on the grounds of EC Regulation 44/2001, Article 5(3), in accordance with Italian legislation.
On the grounds of the same Article 5(3), the defendant considered that Italian jurisdiction was valid for both the Italian and the German portions of the patent.
The Italian Supreme Court interpreted Article 5(3) as meaning that, in case of tort, jurisdiction also resided with the courts for the place where the harmful event occurred. Furthermore, the recent CJEU decision of 25 October 2012 (case C-133/11) had ruled that the cited article applied to such an action for a negative declaration. Consequently, the claimants' arguments were rejected.
The outcome of the proceedings was that the court confirmed the validity of Italian courts' jurisdiction, which also extends to the German portion of the patent.
III. Patents and contributory infringement
Decision of the Court of Rome, specialised division for IP litigation
President Tommaso Marvasi − spokeswoman Gabriella Muscolo 25 June 2013
DiaSorin S.p.A., a pharmaceutical company, manufacturer and distributor of the kit "Transglutaminase IgA Elisa" (hereinafter "Elisa") for the diagnosis of coeliac disease, is acting against Detlef Schuppan and Walburga Dietrich, owners of patent EP 0 912 898 B1, with priority from German application DE 19630557, for a declaration of nullity of the Italian portion of said patent, for lack of novelty and of inventive step, and against Eurospital, distributor and Italian licensee of the same, seeking compensation for damages deriving from acts of unfair competition. The defendants, appearing before the court, have contested the nullity of the patent and have counterclaimed for a declaration of infringement by the Elisa kit, for the award of compensation for damages, to be quantified in the course of the proceedings and to be liquidated possibly by equity, for an injunction against continued infringement and for the destruction of the diagnostic kits, as well as incidental measures of monetary sanctions and publication.
The patent in suit is European patent EP 0 912 898, with Italian validation 47693BE2002, the latter being entitled "Immunological method of identification of the antibodies directed against tissue transglutamination (tTG), use of tTG for the diagnosis and control of the therapy as well as pharmaceutical oral means containing tTG". The patent claims the priority of German patent DE 19630557 filed on 18 July 1996.
The Elisa kit manufactured by Diasorin and distributed by the same company in Italian hospitals is a kit for the diagnosis of coeliac disease (coeliac sprue), characterised by a genetically determined intolerance to a series of cereals containing gluten.
The court commissioned an expert report which concluded that the invention involved novelty and inventive step and that Elisa, by virtue of being a kit for the diagnosis of coeliac disease, constituted an essential element for implementing the diagnostic procedure and controlling the disease and was not otherwise usable by hospitals. The court therefore decided that Diasorin, which manufactures the kit, regardless of the proof of awareness documented by the warnings filed with the trial documents, could be accused of participation in infringement of the patented invention.
For the reasons outlined above, the court rejects the principal requests for declaration of nullity of the patent in suit and orders compensation for damages deriving from unfair competition. It acknowledges the counterclaims for a declaration of participation in infringement, orders payment of compensation for damages, the infringing unlawful act being liable to cause such damage, and orders an injunction against continued infringement and for destruction of the infringing kits, in accordance with Articles 124 and 125 IPC.
The court also believes that, to send a message of deterrence and information to the relevant market sector, it is appropriate to provide for the accessory measures of monetary sanctions, fixed at EUR 1 000 for every day of delay in execution of its verdict, starting from the date of its communication, and of publication, which it authorises for two consecutive days, under the responsibility of the defendants and at the expense of the plaintiff, in two national daily newspapers and in two specialised magazines to be chosen by the defendants.
In a separate order the court pronounces on the prosecution of the trial for the liquidation of the damages. Judgment on costs is reserved until the final judgment.
IV. Italian Competition Authority
Decision of 27 February 2014, Roche-Novartis
The decision was issued by the Italian Competition Authority (ICA). It concerns a horizontal agreement between Roche and Novartis, as the licensee of patents related to the drugs Avastin and Lucentis.
The agreement restricted competition by sharing the market for drugs used to combat sight problems such as age-related macular degeneration. In the cited market, there were two main drugs used in order to fight this kind of ophthalmic disease.
Avastin, produced by Roche, is a drug which is used on-label for some cancer treatments. However, it can be used in order to treat macular degeneration, and in that respect it is used off-label in Italy.
Lucentis, produced by Novartis, is a drug specifically addressed to the treatment of macular degeneration, and it is much more expensive than Avastin. [ 2 ]
Both drugs were invented and patented by Genentech, which is a subsidiary of Roche. As the owner of these patents (due to expire in 2018, with an SPC extension to 2022 for Lucentis and to 2019 for Novartis), [ 3 ] Genentech entered into a licensing agreement with Roche, under which Roche has the right to commercialise Avastin outside the United States. Genentech also has a licensing and collaboration agreement with Novartis, under which Novartis can commercialise Lucentis outside the United States in return for royalties and other forms of compensation.
Consequently, in the US both Avastin and Lucentis were marketed by Genentech, so their differentiation, though it was made for economic purposes, from an antitrust perspective may be regarded as unilateral conduct. In the rest of the world, Avastin and Lucentis were marketed on licence by two different companies, and their differentiation could easily lead to competition concerns.
Before Lucentis was marketed in Italy, Avastin was the only drug available for treating macular degeneration, so it was prescribed off-label by doctors. As Lucentis arrived on the market, it began to replace Avastin, with an increase of related costs for the Italian National Health Service (NHS). Under existing legislation, [ 4 ] the Italian Medicines Agency (AIFA) banned the off-label use of Avastin. Although the Italian government tried to keep Avastin accessible, it did not succeed.
In the meantime, as both Novartis and Roche shared a stake in Lucentis, they colluded in order to artificially differentiate the two products, saying that Avastin was not safe and strongly promoting the use of the much more expensive Lucentis. Furthermore, the two companies raised uncertainty and emphasised Avastin's danger when used off-label, in order to persuade doctors not to prescribe it. Moreover, Roche and Novartis acted in concert to undermine the results of independent comparative research on the usability of the two drugs, which had found Avastin and Lucentis to be equivalent from a safety viewpoint.
Another part of the companies' strategy was the attempt to modify the Summary of Product Characteristics inserted in the European Public Assessment Report for Avastin, aimed (unsuccessfully) at obtaining extra wording related to the drug's ophthalmic risks. The whole strategy was aimed at hindering the possible authorisation of off-label Avastin use, as many organisations and politicians were reconsidering the issue. Indeed, the increase in cost for the Italian NHS was having the consequence of restricting patients' ability to afford treatment for macular degeneration and other similar diseases.
It must also be noted that Roche, during the antitrust proceedings, maintained that it was bound to communicate to the medicine authorities the risks of ophthalmic off-label uses of Avastin detected by its own pharmacovigilance activities; the ICA considered this conduct to be part of the illicit collusion, based upon a distorted use of legitimate prerogatives and aimed at artificially differentiating Avastin from Lucentis on the basis of safety issues.
In the end, the ICA confirmed both the anticompetitive object of the agreement and its effects, which entailed a consequential increase in costs for the NHS, as indicated above. In view of the nature of the agreement, the importance of the firms concerned and the context (the pharmaceutical market) in which the anticompetitive behaviour took place, the ICA fined the two companies EUR 90 million each.
The Italian government (National Health Service) has also issued a follow-up action before the court, claiming more than EUR 1 billion.
[ 2 ] In the ICA’s decision it is reported that, at the time it was issued, one injection of Avastin cost EUR 81.64 under safety standards and EUR 15.29 without these standards. In contrast, one injection of Lucentis cost EUR 902 ex works and EUR 1 489 as the retail price.
[ 3 ] Lucentis: application number MI2007B021920, application date 3.4.1998,
issue number 0000973804,
issue date 27.12.2006.
Avastin: application number MI2005B024272, application date 3.4.1998,
issue number 0001325932, issue date 20.4.2005.
[ 4 ] The existing legislation states that the off-label use of a drug is possible only if there are no suitable on-label drugs available on the market. A doctor who prescribes an off-label drug instead of the existing on-label one bears liability in case of diseases deriving from off-label use.