Author: Kristof Neefs (Altius, Brussels)
Sandoz/Daiichi Sankyo, Cour de Cassation (France), No. 09-72946, 14 December 2010
Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr025, First published online, 11 March 2011
The French Cour de Cassation has ruled in Sandoz/Daiichi Sankyo that a so-called saisie-contrefaçon, a discovery procedure for intellectual property holders, cannot be awarded after the patent has expired, even when the petitioner seeks evidence of acts that allegedly occurred during the patent's term. This judgment is at odds with case law on saisie-contrefaçon in Belgium and it is discriminatory. Furthermore, it appears it cannot be reconciled with Directive 2004/48 on the enforcement of intellectual property rights.
Article 7 of Directive 2004/48/EC requires EU Member States to provide for ‘prompt and effective provisional measures to preserve relevant evidence in respect to the alleged infringement of intellectual property rights’. Such measures can be ordered, if necessary without the other party having been heard, on application by ‘a party who has presented reasonably available evidence to support his/her claims that his/her intellectual property right has been infringed or is about to be infringed’. Long before the deadline for implementation of Directive 2004/48, Belgium and France had a procedure in place, labelled saisie-contrefaçon in each jurisdiction, for discovery of intellectual property infringements. A saisie-contrefaçon can be obtained by means of an ex parte petition, which can be opposed by the targeted party after service and the execution of the discovery measures. The procedures in Belgium and in France are similar.
In Belgium, the saisie-contrefaçon is governed, for all eligible intellectual property rights, by Article 1369bis of the Judicial Code. To be awarded discovery, the petitioner must show that the intellectual property right invoked is prima facie valid and that there are indications that it has been infringed or is about to be infringed. Discovery will then be carried out by a bailiff and a court-appointed expert who may describe all objects, elements, documents or processes which can evidence the alleged infringement or its origins, destination or scope. Anyone ‘entitled to file an infringement action in accordance with the relevant intellectual property act’ can solicit such measures. In Belgium, a saisie can even be awarded on the basis of a foreign patent where are indications that evidence of infringement abroad can be found in Belgium (Belgian Cour de Cassation, 3 September 1999, Docket No. C.960097.N).
The French saisie-contrefaçon for patents is based on Article L615-5 of the French Intellectual Property Code, which holds that ‘any person having the capacity to file an infringement action’ may request the court to have a bailiff and an expert describe, in detail, allegedly infringing products and processes at the targeted party's premises.
The ex parte decision awarding discovery was successfully contested by Sandoz. The first instance Court revoked the decision on 15 April 2009. In its judgment of 18 November 2009, the Paris Court of Appeal annulled the withdrawal of the saisie by the first instance Court (M. Schaffner & R. Viret, Validity of a ‘saisie-contrefaçon’ carried out after the expiry of the patent, Journal of Intellectual Property Law & Practice (2010) 5 (11): 756-757). The Court held that it was irrelevant whether the SPC was still in force at the time of the petition, as long as any act committed at that time was not the subject of the request.
In turn, Sandoz sought and obtained the annulment of the appellate judges' decision from the French Cour de Cassation. The Court's reasoning is brief. It rules that Sandoz' first plea in law is well-founded and that only a party who can establish both the existence of their title and the fact that it is in force is entitled to a saisie-contrefaçon. The Cour de Cassation annulled the judgment and ordered Daiichi to pay the costs of the proceedings.
The decision in Sandoz/Daiichi is objectionable for several reasons. First, no legal provision appears to support the view that a patent has to be in force to obtain a saisie-contrefaçon. The French Intellectual Property Code and the Belgian Judicial Code only require that the petitioner has the capacity to file ‘an infringement action’. The latter includes claims for damages, which can be filed both before and after the expiry of the patent, as long as the claim is not barred by the applicable statute of limitations. There is a plain logic to these provisions: as long as the discovery request relates to infringements – ie acts which necessarily occurred during the patent's term – and the patentee can still act, the status of the patent at the time of the saisie request does not seem relevant.
Thirdly and finally, the judgment appears to be at odds with Article 7 of Directive 2004/48 which requires that measures for collecting evidence are made available to parties ‘who have presented reasonably available evidence to support his/her claims that his/her intellectual property right has been infringed or is about to be infringed’ (emphasis added). This provision does not require that infringement is current or continuing at the time of the request for discovery. As the Directive imposes harmonized minimum standards for intellectual property protection, it does not allow national provisions (or interpretations) which are less favourable to intellectual property holders. Admittedly, one could argue that Article 4 of Directive 2004/48 holds that the measures and remedies set out in the directive must be made available to ‘holders of intellectual property rights’ and to ‘all other persons authorized to use those rights’ and that an expired patent no longer qualifies as an intellectual property right. Most will agree, however, that such interpretation of the Directive is flawed because, among other reasons, it affects more than just the provisions on evidence.
This critique does not imply that the physical seizure of stocks or a freezing order, measures which can be requested as a measure accompanying discovery in Belgium when infringement cannot reasonably be contested (Article 1369bis/1, §4 of the Belgian Judicial Code – France has a similar provision in Article L615-3, 2nd indent of the Intellectual Property Code but it does not form part of the saisie-contrefaçon), should still be available after expiry. Such measures exceed the probatory nature of discovery and resemble a preliminary injunction. Injunctive relief is in principle no longer available post-expiry – save in exceptional circumstances, for instance where it can be proved that the goods were manufactured during the patent's term and that their manufacturing was thus an infringement. Accordingly it can, normally speaking, no longer be awarded as a measure accompanying a saisie-contrefaçon either. This would unduly limit the seized party's freedom to operate.
Nor do I mean to say that a request for post-expiry discovery should not be carefully examined by the court. Discovery should, in those cases, be strictly confined to elements of relevance for acts that occurred during the term of the patent. Use of the saisie-contrefaçon to facilitate mere fishing expeditions is unacceptable (see, for instance, the Belgian Cour de Cassation's judgment of 29 November 2009 in INEOS/Chevron, Docket No. C.08.0206.N.1, in which the Court held that the mere fact that a competitor had opposed the petitioner's process patent with the EPO did not justify discovery at the competitor's production site). However, these concerns are equally relevant to discovery during the term of protection and they do not justify a per se dismissal of the request because the patent has expired. As long as the patentee's claim for damages is not statute-barred, measures to collect evidence to support such claim should remain available.
Once a patent has expired, it seems a saisie-contrefaçon is now no longer available in France and, consequently, it will likely become more difficult to establish damages incurred by past infringements. Depriving patentees, or ex-patentees if you will, of the right to gather evidence after the expiry of their title may encourage competitors to begin manufacturing and stocking up before – but close to – the patent's expiry date. The risk that a patentee would find out may not suffice to deter such strategy in case an immediate and large-scale market entry upon expiry would lead to substantial financial rewards. This concern is particularly relevant for the pharmaceutical industry, where generic competitors often rush to the market upon patent expiry. The outcome of Sandoz/Daiichi Sankyo is unfortunate and it is hoped this wind does not catch the sails of other European courts. To date, post-expiry discovery remains available in Belgium. The French supreme judiciary has now chosen a different route. Perhaps on the next occasion, the Paris Court of Appeal could ask the European Court of Justice for a preliminary ruling on Article 7 of Directive 2004/48, so France can bid adieu to the teaching of this judgment.