Dusseldorf Eyes Major Role in Future EU Unified Patent Court

Dusseldorf is expanding its patent court to handle more cases, hoping to land an important role in the European Union’s planned Unified Patent Court system.

The court has recently heard cases pitting Apple against Motorola Mobility and Samsung Electronics, and is Europe’s busiest for patent litigation according to the Ministry of Justice for the German state North Rhine-Westphalia, which ordered the expansion. Eight judges in two patent chambers handle around 600 patent cases each year, almost as many as the other major German patent courts combined, and the ministry will add a third patent chamber with at least three judges.

The ministry’s ambitions go beyond hearing a larger proportion of German patent cases, though: It wants Dusseldorf to become one of the regional chambers of the Unified Patent Court, planned by 25 of the 27 E.U. member states to enforce the E.U.’s proposed system of unitary patent protection. Spain and Italy have rejected the plans, raising doubts about its legality.

The goal is to create a single patent system in which a company can file one patent valid in all E.U. member states, and enforce it through a single court system to obtain an E.U.-wide injunction instead ofA litigating separately for national injunctions in each member state.

The details of such a far-reaching system, and who defines and enforces them, could have significant effects on the value — or inconvenience — of patents to IT and consumer electronics companies selling in Europe.

Technology companies including Apple, Microsoft, Motorola Mobility and Samsung favor German patent courts such as Dusseldorf because they are relatively fast and cheap.

A typical patent case in Germany can cost around a!250,000 (US$320,000), compared to over APS1 million (US$1.6 million) in the U.K., said Axel Verhauwen, a Dusseldorf patent lawyer who litigated patent cases for Philips and KPN.

Companies weigh that cost against the experience of the courts, and the potential impact of a win.

Judges in Germany and the Netherlands hear more patent cases than their counterparts in France, Spain and Italy, making courts in places such as Dusseldorf or The Hague more attractive, Verhauwen said.

Germany’s 80 million consumers make its technology market a big target for injunctions on product sales — so much so that Microsoft relocated a distribution center from Germany to the Netherlands recently rather than risk an injunction sought by Motorola Mobility to halt sales of Windows 7 and the Xbox, which Motorola Mobility claimed infringe one of its video codec patents.

Cutting costs and building a bigger target for injunctions are two ways a unified European patent system could benefit technology companies who bring patent litigation to Europe.

Technology companies’ main complaint about the way patents are enforced in Europe today is the cost of simultaneously litigating in several countries, according to Peter Chrocziel, a Munich attorney defending Microsoft in the video codec case brought by Motorola. A European patent court should make patent litigation cheaper in Europe as a whole, he said.

According to Sabine AgA(c), a French patent lawyer and secretary of the European Patent Lawyers Association (EPLAW), “Proceedings in Europe are used for leverage.” A single court that can enforce its rulings in all European countries will be a more powerful legal threat, she said.

Not every industry likes the idea of a unified European patent system, though. Pharmaceutical companies in particular prefer today’s fragmented system in which an injunction in one country today does not necessarily lead to an injunction in another, she said. “They don’t like to have all their eggs in one basket.”

Before a unified patent system can be created, though, E.U. nations must first agree on where to site the court. Regional and local divisions will be established around the E.U., and the 25 interested member states are scheduled to choose the court’s headquarters in a meeting of the Council of the E.U.

Denmark is anxious to obtain agreement before its presidency of the Council ends on June 30, said Carmel Dunne, a spokeswoman for the E.U. commissioner for Internal Market and Services.

AgA(c) warned that, “If the draft agreement is not adopted and signed by the end of June it could be put on hold for another two, three or four years.”

Candidate sites for the court include London, Paris, Munich — and even Milan, despite Italy’s rejection of the unified patent system. “Milan is considered as a compensation, to get the Italians to join the system,” she said.

The decision would then have to be ratified. The earliest date the whole patent reform could come into operation is Jan. 1, 2014, according to the E.U.’s draft Regulation on the unitary patent protection.

“However, the entry into operation of the entire system is subject to the ratification of the UPC Agreement by at least 13 Member States, including three member states with the highest number of valid European patents,” said Dunne.

The European system might be modeled on the one in Germany, which often rules in favor patent holders, said Verhauwen. The European Parliament’s Committee on Legal Affairs, responsible for crafting the jurisdictional system for patent disputes, is headed by the German Member of the European Parliament Klaus-Heiner Lehne. “He will at least be inclined to honor the quality of the German court proceedings,” said Verhauwen.

The country in which the Unified Patent Court headquarters is established shouldn’t have an effect on the decisions made, said Chrocziel, “But it could happen.”

While the creation of a European Patent Court could benefit technology companies involved in patent litigation in Europe, the wave of change that the Dusseldorf court is hoping to surf will be a long, slow one, according to Verhauwen. Even if agreement is reached, “There will probably be a transition period of ten to fifteen years,” he said. “For the time being, all will stay the same.”