The growth and benefits of specialised jurisdictions for IP cases

It is said that IP rights are only as strong as the extent to which they can be enforced. Legal risk – including litigation risk – is thus an important factor in determining the value of an IP right.

The quality of a tribunal, as well as its processes and procedures, can play a crucial role in determining the outcome of litigation. As IP cases – especially those relating to patents – become increasingly complex, there is a pressing need to establish the conditions that can promote consistent, predictable and high-quality judicial decisions.

With the steady increase in the number of IP applications and registrations each year – statistics from the World Intellectual Property Organisation (WIPO) show that in 2014 patent applications worldwide grew by 4.5% to around 2.7 million, while trademark applications rose to around 7.44 million, an increase of 6% (compared to 2013) – IP-related disputes are also on the rise. In China alone, the number of new first-instance IP-related lawsuits in 2014 came to 116,528, marking a 15.6% rise over the previous year.

The increase in the number, importance and complexity of IP-related disputes has led some countries to establish – or to consider establishing – specialised IP jurisdictions (SIPJs) for resolving such disputes.

In a recent study of jurisdictions in Europe, Asia and North, Central and South America, the International Chamber of Commerce found that 19 of the 24 countries surveyed had some kind of SIPJ, broadly defined as a tribunal or court, or a permanent division or a chamber within a civil or commercial court or administrative body, with exclusive authority to hear IP disputes or a particular kind of IP dispute.

The study reviews structures and trial procedures of SIPJs in Belgium, Brazil, Chile, China, France, Germany, India, Japan, Mexico, Peru, Portugal, Russia, Spain, South Korea, Sweden, Switzerland, Thailand, the United Kingdom and the United States, based on feedback from litigation experts in those countries. It focuses on contentious proceedings relating to IP infringements and the invalidation of registered IP rights, and does not deal with proceedings relating to the registration of IP rights or tribunals focused on the valuation of remunerative IP rights.

Why SIPJs for IP cases?

The primary motivations cited for establishing SIPJs include the desire to develop IP expertise in specialised judges, unify court practice with respect to IP cases, improve the consistency of court judgments and the predictability and quality of litigation outcomes and ultimately enhance the effectiveness of IP rights enforcement.

The need for SIPJs is particularly evident with regard to patents, which require a high degree of expertise in science and engineering. This is reflected by the fact that SIPJs in several countries have exclusive jurisdiction only for patents and not for other IP rights. This is true, for instance, of the US Court of Appeals for the Federal Circuit, the Patent Court of the Chancery Division of the High Court of England and Wales and the Federal Patent Court in Switzerland.

Despite sharing similar motivations for setting up SIPJs, different jurisdictions have implemented them in various ways. This diversity is most striking when it comes to how SIPJs are structured, the mechanisms for appointing judges and experts, and the rules for representing parties.

Structuring SIPJs

Most of the surveyed countries – Brazil, Belgium, China, France, Germany, India, Japan, Mexico, Peru, Spain, South Korea, Sweden, Thailand and the United Kingdom – have specialised chambers or divisions within existing civil or commercial courts which hear IP cases exclusively or in addition to other disputes.

Others – such as Chile, China, Germany, Portugal, Russia, Switzerland, Thailand and the United States – have separate standalone courts which specialise in IP cases. While this approach is usually adopted for the resolution of patent disputes (mostly related to validity), because these require specialised technical expertise (eg, Germany and Switzerland), some countries refer all IP matters to the SIPJ (eg, China, Portugal, Russia and Thailand).

Many countries – such as India, Mexico and Sweden – also have administrative agencies which deal with IP cases through administrative procedures and have appellate boards to review invalidation actions.

Competence

SIPJs also vary from jurisdiction to jurisdiction with regard to the kind of IP rights or the types of case which fall within their exclusive competence.

For example, the Federal Patent Court in Switzerland hears patent cases only, while the IP Appellate Board in India has jurisdiction over all invalidation actions, as well as appeals against decisions of the patent controller and trademark office, but does not hear IP infringement cases. In Sweden, proceedings concerning the validity of a registered patent, trademark or design are brought before the general courts, or the Stockholm District Court with respect to patents.

In Mexico, the Mexican Institute of Industrial Property can hear most IP matters, though some other IP-related cases – such as breach of a licence agreement or recovery of damages after a definitive finding of infringement by the institute – can be heard by civil courts.

In the United Kingdom, all IP actions in England and Wales involving registered designs and patents are heard by the Patents Court, which is a sub-division of the Chancery Division, or by the IP Enterprise Court, which is a specialised list within the Chancery Division. Other types of IP dispute are mostly heard within the wider Chancery Division, where judges with experience of hearing such cases (including the judges of the Patents Court) sit.

In the United States, federal district courts have exclusive jurisdiction to conduct trials in copyright and patent infringement cases, while the US Court of Appeals for the Federal Circuit has exclusive jurisdiction over appeals in patent matters, subject to Supreme Court review. Although neither federal nor state courts have specialised divisions to handle IP matters exclusively, both the federal district courts and state courts of general jurisdiction have authority to hear trademark infringement and trade secret misappropriation claims. Generally, state courts also have the authority (along with the federal courts) to hear certain cases (frequently contractual in nature) involving copyrights and patents (eg, whether a copyright licensee has breached a licence agreement).

In South Korea, the five district courts have exclusive jurisdiction to hear infringement disputes involving patent, trademark, utility model, design and plant variety protections at first instance. The Seoul Central District Court may hear any infringement dispute at first instance, even if one of the other district courts has relevant jurisdiction over the dispute. Disputes involving copyright infringement or the misappropriation of trade secrets are heard by the district courts. On the other hand, validation cases must be filed with the Republic of Korea IP Tribunal, an administrative tribunal within the IP Office. Appeals from the tribunal and the district courts must be filed before the Patent Court.

In Japan the IP High Court – a special branch of the Tokyo High Court – has exclusive jurisdiction as the court of first instance over suits against the Japan Patent Office and as the court of second instance over civil cases relating to IP matters (ie, patent rights, utility model rights, rights to layout designs of integrated circuits and rights of the authors of a computer program). The Tokyo and Osaka District Courts have specialised civil IP divisions, which hear cases from the eastern and western parts of Japan respectively.

In some countries, such as Germany and China, a distinction is drawn between administrative (invalidation) and civil (infringement) IP matters. In Russia, the IP Court hears infringement cases as the court of third instance (second-level appeal), while acting as the court of first and second instance (first-level appeal) for administrative decisions of the patent and trademark office.

In many other countries, courts which hear infringement disputes also have competence to hear challenges to the validity of the right – for example, in the United Kingdom, Mexico and France. Competence can also be conditioned by a monetary value threshold (eg, the IP Enterprise Court in the United Kingdom caps the amount of damages and recoverable costs of cases it hears).

Appellate structure

SIPJs in different countries hear cases as courts of first instance, appeal or last resort, with ultimate authority often vested in a higher court or even the Supreme Court. In Russia, first-instance decisions of the IP Court are rendered by a panel of three judges, effective immediately, and may not be appealed (but may be reviewed by the presidium of the IP Court). In Germany, it is possible to appeal first-instance decisions issued by the Federal Patent Court in patent invalidation cases and, under certain circumstances, second-instance decisions of the same court in appeal cases to the Federal Court of Justice. Patent cases heard by the Swiss Federal Patent Court may be appealed to the Federal Supreme Court, while for other IP cases appeals may be heard by general appeal courts. Administrative proceedings relating to the registration of trademarks may be appealed to the Swiss Administrative Court and subsequently to the Swiss Federal Court.

In some countries, such as France, administrative decisions issued by the national patent and trademark office on registration can be directly challenged before the court of appeal. This is also the case in the United States, where appeals from rulings of the administrative tribunals of the US Patent and Trademark Office (which determine questions of registrability) proceed to the Court of Appeals for the Federal Circuit for patents or to the federal district courts, with further appeals to the regional court of appeals for trademarks. In India, appeals against first-instance decisions of the Patents and Trademarks Office are heard by the IP Appellate Board. Any appeals against decisions of this body are then heard by the appropriate high court. In Mexico, appeals against first-instance decisions of the Mexican Institute of Industrial Property are heard by the Specialised Chamber of IP Matters of the Federal Court for Tax and Administrative Affairs. The third and final instance is before a non-specialised court.

Judges, juries and experts

Adjudication and enforcement of IP rights – especially when patents are concerned – often require specific technical expertise. The creation of SIPJs gives judges the opportunity to deal exclusively or mainly with IP matters and, consequently, to develop expert knowledge.

The composition of the boards of SIPJs varies not only among the surveyed countries, but also among different instances within each country.

Competent tribunals in all surveyed countries with SIPJs must be formed, at least partially, by legally qualified judges (ie, judges with an appropriate legal qualification). Of these, China, Germany, India, Sweden, Switzerland and the United States require competent tribunals to include technically qualified judges (ie, judges with a technical qualification in addition to an appropriate legal qualification). Only in Belgium, China and Thailand can competent tribunals include lay judges (ie, citizens appointed to the tribunal through a specific appointment process without necessarily having a legal qualification) in first-instance cases.

The United States is alone among the surveyed countries in relying on juries in the decision-making process in its SIPJ.

In some countries with highly developed SIPJs, cases are tried by panels of judges – often comprising technical judges. In Germany, the composition of the panels differs according to the type of case. For instance:

• patent invalidation cases are tried by three technical judges and two legal judges;
• appeals against the rejection of a patent application are handled by three technical judges and a legal judge; and
• appeals against the rejection of a trademark are tried by three legal judges.

In Switzerland, the judges are assigned to the court cases to form chambers of three judges, at least one being a technical and one being a legal judge.

In countries with a common-law tradition, such as the United Kingdom and the United States, IP cases are usually heard at first instance by a single legally qualified judge, and in the appeal courts by a panel of judges.

Technical experts

Technical experts, like technically qualified judges, are generally involved in cases where technical aspects may play an important role in the decision; this is typically the case for patent-related disputes and at jurisdictional levels dealing with facts (ie, usually at first instance).

In most surveyed countries with SIPJs – in particular, those relying exclusively on legally qualified judges – the competent tribunal may be supported by technical experts. Unlike technical judges, these are not members of the decision-making panel, but are individuals (or in some countries, entities) of proven technical background and expertise in the specific technical field. They may require official recognition in some countries, such as China.

In India, especially in patent disputes, the legislation itself mandates the appointment of scientific advisers in any proceeding for infringement or other related proceedings before the court. In the United States, the federal courts are authorised to appoint a ‘special master’ to assist the court. However, courts are usually happy to rely on opinions and evidence submitted by technical experts retained by the parties to the case.

In certain countries – such as France, India and the United Kingdom – a technical expert is not appointed by the court, but parties may submit evidence from an appropriate technical expert of their choosing, particularly in patent cases.

In patent invalidation or infringement cases in Mexico, each party may appoint a technical expert. If opinions from these are inconsistent, the administrative body or court may appoint a third expert, whose opinion will be taken into account by the judge or authority when deciding the case. In South Korea, a technical expert must be appointed by the court in principle – although in practice the court usually appoints the expert designated in the parties’ application for the expert opinion. In Sweden, too, both the court and the parties may appoint experts in cases where expert knowledge is required.

Representation before SIPJs

With the increasing technical complexity of many IP cases, it is crucial for courts and representatives to attain the technical knowledge necessary to determine any given dispute. SIPJs in different countries attempt to achieve this in different ways, both by involving technical experts or judges and through their rules of representation.

Many of the jurisdictions surveyed lack sufficient professionals with both legal qualifications and the aptitude to understand the technology which is the subject of dispute. While some countries allow only attorneys at law to represent parties, others also allow representation by other representatives such as qualified IP practitioners or individuals who are neither attorneys nor IP practitioners. Some countries authorise patent attorneys to represent clients in trials of administrative cases or even civil infringement cases.

For instance, in Germany, Japan, South Korea and Switzerland, parties in all IP-related lawsuits may be represented by attorneys at law, and parties in administrative proceedings (eg, for the invalidation/revocation of IP rights) may be represented by attorneys at law or IP practitioners who are not qualified attorneys. China, Russia, Mexico, Peru and Sweden allow not only attorneys and qualified IP practitioners, but also any other individual or entity to act for clients before SIPJs.

Legal doctrines and rules of evidence

In contrast to the striking diversity in the structure of SIPJs, the composition of judicial tribunals and rules of representation, similar basic legal principles tend to be applied in the different jurisdictions studied.

Shared legal doctrines in IP-related court proceedings include:

• the doctrine of equivalents in patent infringement cases;
• likelihood of confusion in trademark cases; and
• the exhaustion of rights, forfeiture of rights, prior use rights and intermediate rights.

Some countries – such as Brazil, China, India, Japan, Mexico, Peru and, in exceptional cases, France – apply the doctrine of file wrapper estoppel.

The rules of evidence applied in non-criminal cases in SIPJs are also similar. For instance, the same types of evidence may be submitted (eg, documentary evidence, statements from parties, statements from witnesses, expert statements, court inspection), although in common law countries, oral testimony is the standard manner of adducing evidence. In many of the countries surveyed, the plaintiff in an IP-related case has a claim to information, discovery, inspection or seizure of evidence, which may depend on the claim meeting a minimum threshold of strength or the probability of infringement being sufficiently high. The defendant’s legitimate interest to secrecy may be protected in different ways, such as by having a neutral person or bailiff collect the evidence (France), by limiting access to disclosed confidential information in appropriate cases (Mexico and the United Kingdom), or by appointing a local commissioner to record evidence (India).

Preliminary measures

An important litigation tool in infringement cases is the preliminary injunction. All of the surveyed countries with SIPJs allow for preliminary injunctions as expedited proceedings in IP-related cases. The vast majority provide for ex parte preliminary injunctions, with the rationale that any notice to the defendant of such an impending injunction involves the risk of destruction of evidence by the defendant. However, Japan and South Korea exclusively provide for inter partes preliminary injunctions, on the basis that an ex parte preliminary injunction also carries the risk of irreparable harm to the defendant.

By and large, the survey shows that these expedited proceedings are governed by the following basic principles:

• Preliminary injunctions are granted in cases where delayed action would likely cause irreparable harm to the claimant.
• The issuance of ex parte preliminary injunctions follows strict rules and is an exception rather than the rule in most surveyed countries, in view of the risks on both sides.
• Where preliminary injunctions are granted, their enforcement is typically subject to the deposit of a security, usually set by the issuing court. The security is intended to cover any potential damage to the defendant in case the injunction is later found to be unjustified.
• Defendants can oppose preliminary injunctions. In the event of such an opposition, the preliminary injunction is typically conditioned on the initiation of inter partes court proceedings within certain short timeframes.

Additional protective measures for the defendant are provided in some countries. For example, so-called ‘protective letters’ may be submitted to one or more potentially competent courts to prevent the grant of an ex parte preliminary injunction in Belgium and Germany, while defendants can file counter-bonds to stop the effects of the preliminary injunction in Mexico.

A positive, welcome development

Overall, SIPJs are a positive step towards improving the quality and consistency of judicial decisions. They can contribute to developing IP expertise in the judiciary, unifying trial standards and practices, enhancing efficiency in trials and ensuring the predictability and accuracy of case outcomes.

Important factors in the success of SIPJs include the quality and expertise of the judges, and the design of their structure and procedures, which should enable the court to understand the technical issues in dispute, especially for patent cases – whether by involving judges with a technical background, technical experts or IP practitioners or other specialists.

The establishment of SIPJs in an increasing number of countries is a welcome development which should help businesses to manage their litigation strategies and risks.