Hungary: Changes to EPO Oppositions and National Revocation Actions Amid Amended Patent Act
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Patent litigation is a vital aspect of Hungary’s legal landscape, safeguarding intellectual property rights and promoting innovation. Defendants often use invalidity actions to delay cases, but Hungary’s legislature aims to prevent such delays and protect innovators’ rights. Hungary hasn’t ratified the Agreement on a Unified Patent Court, so it lacks jurisdiction, but it’s still a favorable venue for patent disputes. Skilled examiners at HIPO and specialized tribunals can handle revocation and invalidity claims efficiently. Recent legislative updates and case law changes suggest faster patent infringement proceedings, promising long-term benefits for patentees.
- Forum shopping in Hungarian patent litigation
- Trial format and timing
- Invalidation of a patent
Referenced in this article
- Act XXXIII of 1995 on the protection of inventions by patents
- Act CXXX of 2016 on the Code of Civil Procedure
- Agreement on a Unified Patent Court
Patent litigation in Hungary makes up a significant part of the legal landscape, serving as the cornerstone for the preservation of intellectual property rights and the facilitation of innovative advancements. Invalidity actions against an enforced patent are a common tool for defendants to delay proceedings; however, the Hungarian legislature intends to prevent delays and provide an adequate tool for innovators to preserve their rights.
Forum shopping in Hungarian patent litigation
Forum shopping refers to a legal strategy wherein a party presenting legal issues seeks to choose a court forum that is likely to best serve its interests. This practice is particularly important in international disputes, where jurisdictions and regulations can differ between countries. This strategy is also applied in patent litigation cases, often referred to as ‘forum buying’. During forum shopping, parties take into consideration the expertise of the judicial body, the stability of legislation, the efficiency of the litigation process (speed) and potential legal remedies available.
Until recently, the Patent Act and case law did not allow forum shopping between the national revocation action of a validated European patent before the Hungarian Intellectual Property Office (HIPO) and the opposition of its European counterpart before the European Patent Office (EPO). Section 84/M(2) of the Patent Act – old legislation – advised HIPO to suspend its proceedings until the final decision of the EPO opposition. This meant, in practice, that when an opposition was filed, which was the case most of the time, HIPO quasi-automatically, based on a request, suspended the revocation. This action of HIPO was also confirmed by the courts (Metropolitan Court of Appeal 8.Pkf.26.264/2018/4).
Recent amendments to article 84/M(2) of the Patent Act allow the revocation action before HIPO to be suspended on a duly justified basis until the final conclusion of the EPO opposition. HIPO now has the discretion to suspend the proceeding, and this will only happen – according to HIPO – and give the EPO proceeding priority, if there are really duly justified cases. HIPO clarified that, in instances where an expedited revocation action measure was requested by either party (on the basis of pending litigation case), the Office must expedite its decision process; given that the EPO opposition procedure is anticipated to extend over an indefinite period, suspending the revocation action would only extend the existing legal ambiguity. It was clear to HIPO that the changes in the Patent Act gave it the freedom to decide on the suspension and the interest of the parties, including the effective enforcement of patent rights. The legislature intended to provide quick and high-level enforcement for patentees.
In the recent 3.Pk.22.731/2022/8-I Metropolitan Court and the 1.Pkf.25.375/2023/5 Court of Appeals decisions, the courts ruled that there is forum shopping and competition between the EPO and HIPO in the field of revocation actions and oppositions. There is no need to wait for the EPO’s decision; the procedure can only be suspended in duly justified cases and, in an accelerated procedure, this can be interpreted even more narrowly, like HIPO did.
The Court of Appeals stated that the legislative intention behind recent amendments was to allow the suspension of revocation proceedings within a narrower scope than before. Centralised opposition proceedings and national invalidation proceedings do not preliminarily question each other, even though they concern the same patent; more precisely, national validated patents will cover the same scope as the central counterparts. The reason for this is that the two forums both have jurisdiction over validity issues in their own areas. Therefore, the two proceedings do not complement each other, but there is a choice – an opportunity for forum shopping. Accordingly, HIPO has wide discretion to take into account various facts of a case that may prove duly justified cases, for example: the current state of the competing proceedings (even if not final), the expedited nature of the proceeding and the joint request of the parties or the unilateral request of one of the parties (in the latter case, by which party, on the basis of what legitimate interest, the suspension of the proceedings is sought).
HIPO in one case rejected the suspension request where the EPO Opposition Division (EPO OD) at first instance confirmed the validity of the patent in its original claim, while in another case suspension was granted based on the EPO OD first-instance partial revocation decision. It seems that if an EPO opposition proceeding hasn’t commenced, or the patent’s validity is confirmed at first instance, HIPO will not suspend the revocation action.
Based on the above, there is strategic consideration to be made by claimants and defendants. On the one hand, patentees are not tied to long revocation actions and may obtain a final decision on patent infringement within 1.5 to 2.5 years (including bifurcated revocation actions and infringement proceedings to the second instance). On the other hand, if the defendant can raise solid invalidity grounds, it may obtain a quicker resolution on the validity of the asserted patent against it. Looking at this from both angles, the new possibility for forum shopping and the fact that expedited revocation actions are possible, the parties may obtain a first-instance decision from HIPO on validity earlier than the EPO opposition proceeding may commence (after a nine-month opposition period) or advance into the oral hearing phase (about 12 months after commencement).
In the majority of patent disputes, defendants are well prepared to start national revocation actions; consequently, opting for swift revocation proceedings within HIPO appears advantageous for potential defendants as well. If a defendant fails to file a revocation action before HIPO, there remains the option to initiate a counterclaim for invalidity in the infringement proceeding, which by law is an expedited proceeding (see more details below).
Trial format and timing
Hungarian patent litigation has two stages: the first-instance adjudication and subsequent appellate recourse to the Court of Appeal. The invalidation phase, conducted within the first-instance court, engenders an incisive analysis of both substantive tenets and procedural difficulties. This encompasses the precise review of evidentiary grounds and legal contentions, underscored by written submissions and oral hearings. Upon the issuance of the first-instance judgment, the losing party is accorded the prerogative to invoke the appellate jurisdiction of the Court of Appeal, sending the case into a higher echelon of juridical scrutiny.
Act CXXX of 2016 on the Code of Civil Procedure is the cornerstone of patent litigation. It regulates civil court procedures, and the Patent Act includes some special rules. Section 170 lists parts that must be included in the statement of claims. According to subsection (1), section 179, if the statement of claims is acceptable, the court must notify the plaintiff and call upon the defendant to present a written defence statement within 45 days. Section 199 regulates the written defence statement. Section 201 allows the plaintiff to present a counter-memorial. After this, the defendant can provide a rejoinder. These latter two are not always asked to be presented by the court. If the facts or the legal questions are easy, or there is no counterclaim, these are rarely necessary. The court then summons the parties to a preparatory oral hearing (section 190). During this hearing, the aim is to clarify the claims and the evidence. The judge can adjourn the hearing, or can close the preparatory oral hearing and move onto hearing on the merits (section 196). The complete procedure takes about 10–12 months. After the first judgement is rendered, the parties can appeal to the Metropolitan Court of Appeals within 15 days. The oral hearings (if the parties initiate) are set within three to four months. During the second instance, only a written defence statement can be provided; the other statements can be performed at the trial. If there is a difference between the decisions of the first and second instance courts, a revision can be asked from the Supreme Court or in special cases, for example when first and second-instance decisions are aligned but are diverging from or have significant impact on precedent.
The Patent Act states that the defendant in a patent infringement action will be entitled to lodge a counterclaim for invalidity (subsection 1a, section 104). The court will hear a patent infringement action in a priority proceeding if the defendant makes a counterclaim for invalidity (subsection 1g). This means that the expert must provide the opinion within 30 days (subsection 1h). HIPO is entitled to provide this opinion, which means that the appointed patent examiners will have to provide a similar assessment on the validity as for a revocation action. While this short time frame may seem tempting, in practice it is a very short time to properly assess the validity.
For a national revocation action started before HIPO, before the infringement claim is filed at the court, the infringement proceeding must be suspended (subsection 1d). If the infringement proceeding already commenced, the court also may suspend the proceeding until the final decision in the revocation action, based on the general rules of the Code of Civil Procedure and prevailing case law, is rendered. Revocation actions may be examined in an expedited manner if the infringement proceeding already commenced; thus, HIPO should render its decision within one year. The parties may file a petition for alteration to the Metropolitan Court if they are dissatisfied the decision. The Metropolitan Court as the first-instance court will in this case only render a decision on the validity as the infringement action was already suspended and the cases are considered separate actions. In general, the Metropolitan Court renders its decisions within four to six months, which can be appealed within 15 days to the Metropolitan Court of Appeal. The Metropolitan Court of Appeal may only hear the parties on request, but it delivers its decisions in writing within four to six months. Again, this decision may only be questioned based on the infringement of law before the Supreme Court if the decisions are diverging or there is significant impact on precedent.
Invalidation of a patent
According to paragraph (c), subsection (2), section 44, the HIPO handles “invalidation of a patent, except if a claim for invalidation is made before the court hearing the patent infringement action, by way of a counterclaim in accordance with Subsection (1a) of Section 104”.
The procedural rules are regulated by the Patent Act. Subsection (2), section 47 regulates that HIPO will investigate the facts in revocation proceedings. Subsection (6), section 48 does not allow applications for continuation.
Section 80-81/A regulates revocation proceedings. Any person may file an application for revocation of a patent; thus, no special legitimacy must be proved. If the patent was granted not to the right person, only the person with a legal claim can apply. Documents and data must be attached. If the application for the declaration of invalidity fails to comply with the requirements prescribed in the Patent Act, the party requesting invalidation will be advised to remedy the deficiencies; if they have not paid the fee for the application, they will be advised to do so within the time limit prescribed in this Act. In the event of non-compliance, the application for the declaration of invalidity will be considered withdrawn. Where a counterclaim for a declaration of invalidity of a patent is submitted under subsection (1a), section 104, and an application for invalidation of the patent to which the counterclaim pertains is subsequently submitted before the HIPO under the same or different cause of action, the HIPO will suspend the procedure until the final conclusion of the court proceedings concerning the counterclaim. HIPO will dismiss the application for a declaration of invalidity if a counterclaim for a declaration of invalidity of a patent is submitted under subsection (1a), section 104 has already been resolved based on the same factual grounds, concerning the same patent, by a final court decision.
HIPO will request the patentee to provide an observation on the application, regarding which the applicant may also file a rejoinder, and sometimes the patentee may file a reply. HIPO then summons the parties for an oral hearing, where the parties may summarise their legal arguments, after which a decision is rendered and announced. If the patentee fails to introduce the facts and argument within the deadline, it cannot be added later. The decision is usually made in writing. The losing party will be compelled to bear the costs of the invalidation proceeding. The invalidation or restriction of the patent will be registered in the patent register (section 54), and will be published thereon in the official journal of the HIPO. The decision is usually written down and delivered within 30 days. The HIPO’s decision can be reviewed by filing a petition for alteration within 30 days to the Metropolitan Court (subsection (2), section 53/A). After the petition for alteration has been filed with HIPO and before HIPO refers it to the court, HIPO may also amend or withdraw its own decision (paragraph (c), subsection (3), section 53/A).
Hungary did not ratify the Agreement on a Unified Patent Court; therefore, the Unified Patent Court does not have jurisdiction. However, Hungary is a good choice for patent litigation, as Hungarian revocation and counterclaims for invalidity proceedings may be handled by experienced examiners at HIPO and specialised tribunals. After legislative changes and the latest case law, we expect swift patent infringement proceedings, from which patentees may benefit in the long term.