With the coming into force of Law 24/2015 on Patents (the new Patents Act) on 1 April 2017, a new era began in the field of patents in Spain.
As regards litigation, with approximately 50 patent cases per year, Spain still lags far behind other European jurisdictions such as Germany, where courts deal with hundreds of patent cases every year. Notwithstanding this, over the past decade the quality of judgments has increased dramatically, due to the specialisation of a small number of commercial courts that deal with patent matters.
II TYPES OF PATENTS
In Spain, three types of patents are available: European patents, Spanish patents and utility models.
European patents are granted by the European Patent Office (EPO) in Munich. The main advantage of this route is that one single application filed before the EPO results in a patent with effects in all countries that are party to the European Patent Convention (EPC) designated by the applicant. Once granted, this patent is decomposed into as many national patents as the applicant may have chosen. According to Articles 2.2 and 64 of the EPC, European patents, once granted, provide the same rights and obligations as a Spanish national patent.
Spanish patents are granted by the Spanish Patent and Trademark Office (SPTO). After 1 April 2017, when, as mentioned, the new Patents Act came into force, all Spanish patents will be examined. This has been a dramatic change, as under the old law substantive examination was optional. In practice, less than 10 per cent of Spanish patents were examined. As a result, the quality of the vast majority of Spanish patents was questionable. One of the main purposes of the new Patents Act is to increase the quality of Spanish patents, which may become an attractive and cost-effective alternative to the planned European patent with unitary effect.
Utility models are also granted by the SPTO. The new Patents Act modernised utility models to make them the natural alternative to the former non-examined Spanish patents. Unlike Spanish patents, utility models will not be examined. Under the new Patents Act, the main difference with respect to Spanish patents is that the thresholder of inventive activity is lower ('very obvious' instead of 'obvious'). Another salient feature of the new Patents Act is that, since 1 April 2017, utility models have been available for inventions in all fields of technology. The only exceptions are process inventions and those that deal with biological matter and pharmaceutical substances and compositions. The wording of these exceptions, which is very unclear, is an invitation to litigate. It is hoped that, like in Germany, courts will make a restrictive interpretation of these exceptions. Also, it is doubtful whether the discrimination of inventions in some fields of technology (in particular, pharmaceutical inventions) is compatible with the obligations of protection derived from the international treaties to which Spain is a party.
Finally, for the time being, Spain is not taking part in the initiative to create a 'European patent with unitary effect' and a Unified Patent Court. However, Spanish companies will of course be able to obtain this type of patent, in the same way that nationals of countries that are not parties to the EPC are able to obtain European patents.
III PROCEDURE IN PATENT ENFORCEMENT AND INVALIDITY ACTIONS
i Procedural aspects
Which courts deal with patent cases?
One of the main developments of the past few years has been the dramatic reduction of the number of courts with jurisdiction to deal with patent cases. This trend began in 1993, when the Barcelona Court of Appeal decided that all intellectual property matters would be decided by its Section 15. This resulted in the specialisation of the judges who handled cases assigned to this Section and, as a result, the quality of the judgments increased. The success of Section 15 inspired the creation of commercial courts in 2004. These are first-instance courts with jurisdiction on commercial matters (intellectual property, insurance law, transport law, company law, bankruptcy law, etc). Some years later, the commercial courts in Barcelona decided to dedicate three courts to specialise in patent matters. As a result, only commercial courts numbers 1, 4 and 5 have jurisdiction to deal with patent cases.
Following the example of the Barcelona commercial courts, a small number of commercial courts with jurisdiction to deal with patent cases were established in Madrid and Valencia. Also, the Madrid Court of Appeal established a specific section (Section 28) to decide intellectual property cases, which has also gained great prestige in recent years. As a result of all these developments, at present, the only cities with courts with jurisdiction to decide patent cases are Barcelona, Madrid and Valencia. The vast majority of cases are filed in Barcelona, where the courts are quicker and more experienced. 'Forum shopping' (choosing the venue) is possible, as the law allows the patent owner to file the action before the courts of any region where the acts of infringement may have caused effects.
Unfortunately, courts in Madrid are very slow, and the commercial court with jurisdiction to decide patent cases in Valencia has little experience so far. Unless the Spanish government provides all Commercial Courts with the necessary resources required to decide the number of cases opened every year, it will be very challenging for them to make decisions within the time frames that today's society demands. However, the experience of the Barcelona Commercial Courts has been very encouraging.
Under Spanish law, patent infringement is a criminal offence. However, criminal cases are very rare. This is because Criminal Courts do not have any experience in patent matters; they are extremely slow and the threshold of evidence required is higher than before commercial courts. As a result, the criminal route is only used in exceptionally clear-cut cases or when the facts as set out entail additional criminal offences such as crimes against public health or against consumers. The typical case would be an action filed against a defendant that has marketed a substance to prevent diseases in plants that is patented by a third party, without obtaining the necessary authorisation from the health authorities.
Threat of patent infringement
Under Spanish law, a threat of patent infringement action does not normally expose the patent owner to any liability, provided that the content of the warning letter is accurate. In fact, sending a warning letter is mandatory for the purpose of retaining the ability to claim damages against third parties acting in good faith who are neither manufacturers nor importers.
By contrast, in situations where a patent owner has included false statements in the warning letter, the third party affected could have a course of action under the 1991 Act on Unfair Competition.
Spain follows a front-loaded system, which means that the initial complaint must contain all the facts and points of law that the patent owner plans to rely on. Unlike in other jurisdictions, these arguments cannot be supplemented at a later stage. Therefore, a patent owner should not file an infringement action until all preparatory work has been done.
General discovery (i.e., United States-type 'fishing expeditions') is not available in Spain. However, limited disclosure (i.e., the disclosure of specific documents in possession of the other party or a third party) may be ordered by a court, if the applicant identifies the documents to be disclosed and the court considers that the applicant needs the disclosure of such documents for the purpose of proving a relevant fact.
Also, prior to filing a patent infringement action, the patent owner may file an application for Proceedings for the Verification of Facts, an inspection procedure that is very similar to the French saisie-contrafaçon. The main difference is that Spanish courts require a higher threshold of prima facie evidence of infringement before ordering this type of ex parte inspection.
One salient feature of Spanish patent litigation is that experts are key. They are examined and cross-examined at the main hearing. However, in contrast to England, for example, where the interrogatory of an expert may last several days, in Spain it is very unusual for an expert to be questioned for more than two hours (one hour per party). A case normally requires the involvement of one or two experts per party.
Moving on to the procedure of patent infringement proceedings, these consist of two distinct stages. In the first, the 'declaratory' stage, which ends with the judgment, any infringement and validity issues will be determined. As regards damages, according to the new Patents Act, damages will be calculated during the second 'execution' stage. The main milestones of the declaratory stage are set out below, in order of occurrence:
- defence and counterclaim;
- reply to the counterclaim;
- preliminary hearing; and
The commencement of an action: complaint
Court proceedings for patent infringement and for patent revocation are begun by the filing of a complaint. As mentioned, all the facts and points of law must be set out in the initial complaint. This must also include all documents and expert opinions that the plaintiff plans to use to support its claims. If the plaintiff considers that, for the purpose of deciding the case, it would be advisable for the court to appoint an independent expert, this must also be requested in the initial complaint.
It can thus be seen that the preparation of a complaint is an extensive exercise. Discussions with in-house business staff, together with technical experts and, often, independent experts are usually required.
The statement of defence and counterclaim
Within two months of the service upon the defendant of the complaint, the defendant must submit its statement of defence and, if appropriate, its counterclaim. The statement of defence should respond to the detailed allegations made in the complaint. In patent infringement actions, the statement of defence will often include either:
- an allegation of the invalidity of the patent in suit, but without the judge having to declare the revocation of the patent (in which case the patent holder will have eight days, counting from the date on which the statement of defence is served, to request the judge to address these allegations as a counterclaim); or
- a counterclaim seeking the revocation of the patent in suit. The format of the counterclaim will be similar to that of the complaint.
Expert opinions must, in principle, be filed along with the statement of defence (and, where applicable, the counterclaim).
The reply to the counterclaim
If the statement of defence includes a counterclaim, then, within two months of its service upon the plaintiff, the plaintiff must issue a reply to the counterclaim, setting out all the arguments upon which it intends to rely in respect of the validity of the patent in suit.
Expert opinions must, in principle, be filed along with the reply to the counterclaim.
After the defendant has submitted its statement of defence to the complaint, or the plaintiff its reply to the defendant's counterclaim, as the case may be, the judge will call the parties to attend what is termed the 'preliminary hearing' (i.e., directions hearing).
At the preliminary hearing, the judge first encourages the parties to reach an amicable settlement, which is very rarely reached in practice.
If no settlement is reached, the judge then examines any formal defects that might prevent him or her from handing down a judgment on the merits of the case at a later stage, such as the lack of capacity or representation of the parties, res iudicata or lis pendens or other defects regarding the procedure used or the way in which the complaint has been drafted.
After this, the parties are entitled to complement the allegations made in their initial writs and make new allegations in relation to any relevant facts that occurred after the complaint or the statement of defence was filed. If the parties disagree on the facts of the case, which is normally the case, they will be invited to submit evidence.
If that is the case, the parties will then be invited to propose all evidence they wish to use to support their claims and the judge will decide, for each piece of evidence, whether to admit it or not. The admissibility of the evidence proposed by each party is one of the key aspects to be decided at the preliminary hearing.
At the end of the preliminary hearing, the judge sets a date for the trial.
The purpose of the trial will be to examine the evidence submitted by the parties, including the cross-examination of the parties, witnesses and experts.
Once the evidence has been examined, the parties give their concluding remarks verbally on the disputed facts, as well as their closing arguments on the points of law on which their claims, which cannot be altered at this point, are based.
Judgment is normally handed down within two to six months after the trial, depending on the workload of the court.
Provisional enforcement of the judgment
Under Spanish law, it is possible to apply for the provisional enforcement of the judgment, which should be granted automatically by the court unless one of the limited exceptions set out in the Spanish Civil Procedure Act applies. One of these exceptions is a judgment declaring the invalidity of a patent, which cannot be provisionally enforced.
The basic rule is that the 'loser pays' the legal costs of the winner, unless the judge considers that exceptional circumstances exist and decides otherwise. In its judgment of 28 February 2018, the Barcelona Court of Appeal (Section 15) highlighted that if the judge deviates from the general rule, he or she must explain and justify the reasons.
Duration of main proceedings
First-instance proceedings before the commercial courts usually last between approximately one and one-and-a-half years.
Court of appeal proceedings may last one to two years.
Supreme Court proceedings may last three to six years. However, many cases come to an end at the second-instance level, because the Supreme Court is reluctant to hear appeals in patent cases.
Court of first instance
Court of appeal
ii Preliminary relief
According to Spanish law, the patent holder whose rights are being infringed, or might be infringed imminently, can apply for the interim injunctions necessary to secure the future enforcement of the favourable judgment to be obtained in the main proceedings.
According to the Spanish Civil Procedure Act, interim injunctions must be applied for, in normal circumstances, when the main claim is filed. Applications filed before the main action will only be accepted if the applicant proves reasons of urgency or necessity. On the other hand, applications filed after the main claim will only be accepted when such application is based on facts or circumstances that justify the request at such time.
The interim injunctions proceedings progress independently of the main proceedings, with their own self-contained procedure. The application for an interim injunction is normally made inter partes, namely, with notice to the other party. However, when the applicant proves special reasons of urgency or that hearing the other party might frustrate the purpose of the interim injunction, the court is entitled to order such interim injunctions within the following five days, without hearing the defendant, who is then entitled to file an opposition against the interim injunctions ordered.
The court order containing the interim injunction, if granted, may order the defendant to do the following, inter alia:
- to cease any act that infringes the applicant's patent rights, or prohibit it, where there are reasonable signs that it is about to begin immediately;
- to seize infringing items;
- to deposit a bond, guaranteeing payment of the damage already caused to the patent holder; and
- to record appropriate notices at the Patent Office to alert third parties of the existence of legal proceedings.
Requirements for obtaining interim injunctions
The requirements for obtaining an interim injunction, the fulfilment of which must be demonstrated by the applicant, are as follows.
- Fumus boni iuris (prima facie evidence of infringement): the applicant must have strong prima facie evidence supporting its application. Normally, this is proved by obtaining expert opinions that set out the reasons that lead an expert in the field to conclude that the defendant's product falls within the scope of the allegedly infringed patent.
- Periculum in mora (danger in the delay): the applicant must show that circumstances could occur during the main action that, unless an interim injunction is ordered, could prevent a favourable judgment or at least jeopardise the enforcement thereof. Abundant case law and legal doctrine have declared that in specific cases of patent infringement, a danger in the delay derives from the mere continuity of the infringing acts that are hoped to be avoided. In other words, this requirement is normally met where there is a well-founded risk that the conduct will be repeated and will persist while the main proceedings are being heard.
- The posting of a bond in order to compensate the defendant for any damages that the interim injunction might cause, and specifying the amount of such bond. This amount will vary depending on the circumstances of the case. To date, in patent cases, an amount of €500,000 per defendant is normally considered sufficient by the Spanish courts, although higher amounts are requested in some cases.
Amendment of the patent
The patent owner is entitled to amend or limit its patent during court proceedings (as a main or auxiliary request), filing the set or sets of claims and their justification along with its statement of defence, reply to the revocation counterclaim or reply to the revocation plea. In cases where the patent holder has brought an infringement action, it must justify (and, where applicable, prove) how the amendments affect such action.
The court will give the other party leave to make allegations about the requested amendment or limitation, so that it can maintain or modify its requests in light of the same. The two-month period allowed for this will begin as from the date of receipt of the request.
Notwithstanding the above, when the patent is amended outside of the court proceedings while such proceedings are under way, the holder can request that the patent thus amended be considered as the basis for the proceedings. In such cases, the court will grant the other parties the possibility to make allegations.
Once the request for an amendment or limitation has been filed, the court will inform the Spanish Patent and Trademark Office so that the request is recorded in the form of a caveat or preventive registration. Once there is a final decision about the patent amendment, the Office will be notified ex officio so that it is reflected in the registry and, where applicable, the patent is modified.
An alternative route for amending a patent after it has been granted is filing an application before the SPTO. One of the highlights of the past year is that the SPTO has accepted this type of administrative amendments not only in the case of Spanish patents but also in the case of European patents.
IV SUBSTANTIVE LAW
i Locus standi
The patent holder and the exclusive licensee whose licence has been registered with the SPTO have locus standi to initiate infringement actions. Where the patent is jointly owned by several persons, any of them will have locus standi, although the party filing the complaint is obliged to inform the other co-owners so that they may take part in the proceedings. Exclusive licensees also have locus standi when they litigate together with the patent holder.
ii Acts of infringement
According to Article 59 of the new Patents Act:
1. The patent grants its holder the right to prevent any third party, acting without its consent, from:
a) manufacturing, offering for sale, introducing into trade or using a product protected by the patent or the importation or possession of the same for the above purposes.
b) using a process protected by the patent or offering such use, when the third party is aware, or circumstances make it obvious, that the use of the process is prohibited without the consent of the patent holder.
c) offering for sale, introducing into trade or using the product directly obtained by the process protected by the patent or the importation or possession of such product for any of the above purposes.
2. When the subject of the patent is biological matter that, due to the invention, has certain properties, the rights granted by the patent will extend to any biological matter obtained from the patented biological matter by reproduction or multiplication, in an identical or differentiated manner, that has the same properties.
3. When the subject of the patent is a process that facilitates the production of biological matter that, due to the invention, possesses certain properties, the rights granted by the patent will cover the biological matter directly obtained from the patented process and any other biological matter obtained from the same via reproduction or multiplication, in an identical or differentiated manner, and that possesses the same properties.
4. When the subject of the patent is a product containing genetic information or consisting of genetic information, the rights granted by the patent will, notwithstanding section 4 of article 5, cover all subject matter in which the product is included and in which it is contained and the genetic information exercises its function.
These are the typical acts that constitute 'direct' patent infringement.
In addition, Article 69 addresses the acts that constitute 'indirect' patent infringement:
1. When a product is introduced into Spain in relation to which there is a process patent for the manufacture of the same, the holder of the patent will have the same rights in relation to the introduced product that the law grants in relation to products manufactured in Spain.
2. If the subject of a patent is a process for the manufacture of new products or substances, it is assumed, in the absence of evidence to the contrary, that any product or substance with the same characteristics has been obtained using the patented process.
3. When performing the evidentiary measures envisaged in the foregoing section, account will be taken of the legitimate interests of the defendant with regard to the protection of its manufacturing and business secrets.
iii Preparatory acts
Preparatory acts may be prohibited if it is shown that, otherwise, an act of infringement may take place 'imminently'. This 'imminence' requirement was introduced by the law that implemented the Enforcement Directive (i.e., EU Directive 2004/48) into Spanish law. Spanish courts have interpreted the meaning of 'imminence' on a case-by-case basis. According to the Ruling of 10 June 2013 (No. 81/2013) from the Barcelona Court of Appeal (Section 15), there is 'imminence' if the launch of an allegedly infringing product is likely to take place within a few months. For example, in the case of pharmaceutical products, if a third party has obtained marketing authorisation and price, these are normally sufficient indicia for the purpose of showing that there is an imminent threat of infringement.
iv Limitation period
Civil actions in respect of patent infringement may be brought up to five years from the date on which the action could have first been brought (i.e., the date on which the patent holder discovered the infringement). If the patentee waits longer than this five-year period, it will lose its cause of action against the infringer, who will be entitled to use the invention with impunity.
However, the prevailing view of the Spanish courts is that in the case of continuing acts of infringement (e.g., sales of the product over a continuous period of time), the five-year period must be calculated from the date when the last infringing act took place.
v Liability for patent infringement
The persons liable for patent infringement are normally the ones who carry out any of the direct or indirect acts of patent infringement set out in Articles 59 and 60 of Spain's new Patents Act, as explained above. Unlike in other jurisdictions, Spanish courts have not yet had the opportunity to address the situation of a person located outside Spain who induces a third party to infringe the patent in Spain, or who supplies a product knowing that it will be used for the purpose of infringing a patent in Spain.
As regards directors, they are not normally liable for patent infringement by their companies. However, there may be cases where they could be held liable, particularly in the context of criminal proceedings.
vi Interpretation of claims
Spanish Courts follow very closely the case law from the board of appeal of the EPO. They consider that claims must be interpreted in the same way in the context of infringement as in the context of validity. As Spain is party to the EPC, Spanish courts follow the Protocol of Interpretation of Article 69 of the EPC.
As regards the 'doctrine of equivalents', some years ago the Barcelona Court of Appeal (Section 15) imported the three-question test that the English courts crafted in Catnic. This landmark case concluded with the judgment of 10 May 2011 (Olanzapine) of the Supreme Court (en banc), where this test was endorsed. However, the recent judgment of 12 July 2017 (Pemetrexed) of the UK Supreme Court, which has substantially updated the old three-question test (in particular, by changing the second question), has sparked the debate as to which test will be applied by Spanish courts in future cases: the 'old' English test or the 'new' English test.
Common sense would suggest that they should follow a path along the lines of the 'new' English test, as one of the objectives pursued by the UK Supreme Court when updating the rather rusty 'old' test has been to try to align the doctrine of equivalents throughout Europe. It would be odd for Spanish courts to continue to follow a test that the English courts have just been required to abandon. In this regard, it will be interesting to see if Spanish courts will continue to follow the 'file wrapper estoppel doctrine', of which the UK Supreme Court does not appear to be too fond, as illustrated by this judgment.
On a different note, in its judgment of 19 April 2018, the Barcelona Court of Appeal (Section 15) declared that unless the reasons for alleging infringement under the doctrine of equivalents have been spelled out in the initial complaint, they cannot be introduced at a later stage.
vii Defences that a defendant may raise
Substantive law aspects
Where a party seeks revocation of a patent on the grounds that it is not valid (i.e., a petitioner for revocation or a counterclaiming defendant in an infringement action), that party's invalidity complaint or statement of defence, as appropriate, must again detail the factual and legal arguments used to support their claim. A patent may be considered invalid if:
- any of the patentability requirements are not met (i.e., lack of novelty, obviousness and lack of industrial applicability);
- the description is not clear and comprehensive enough for the patent to be executed by a person skilled in the art (i.e., lack of enablement);
- the patent discloses matter that was not disclosed in the application as it was initially filed (i.e., added matter);
- the protection conferred by the patent after its granting has been extended; or
- the patent holder is not entitled to the patent, in other words, it is not the inventor or its legal successor. However, only the party actually entitled to the patent can rely on this ground.
In practice, the invalidity ground most frequently adduced is lack of inventive activity.
The most frequent defence is challenging the validity of the patent. In 26 years in this profession, this author has been involved in only two cases where the validity of the patent was not challenged. The statistics would probably be different if losing an invalidity action entailed significant costs, as in Germany, for example.
In Spain, any person has locus standi to challenge the validity of a patent before Spanish courts. At the suggestion of the Spanish competition (i.e., antitrust) authorities, when the new Patents Act was debated, the classical 'legitimate interest' requirement was abandoned.
As a result, any person may file a revocation action as a 'stand-alone' action. Also, a person sued for patent infringement may file a revocation counterclaim in the statement of defence. Alternatively, it may adduce the invalidity of the patent as a 'defence'. The main difference is that in the latter case, if the defence succeeds, the infringement action is dismissed but the patent is not revoked (i.e., the invalidity finding has inter partes effects only). In contrast, if a revocation action succeeds, not only is the infringement action dismissed, but the patent is also cancelled in the registry (i.e., the invalidity finding has erga omnes effects).
Unlike in other countries such as Germany, where infringement and invalidity actions are 'bifurcated', in Spain they are all decided by the same court.
If an infringement action is based on a patent, the validity of which has been challenged before another court, either party in the infringement proceedings may request the joinder of the two cases so that they are decided by the same court in the same judgment. In cases where the requirements for joining two cases are not fulfilled (for example, because the two cases are in different instances), either party may request the stay (i.e., suspension) of the infringement proceedings until the validity proceedings have been resolved. The court will make a decision after hearing the other party. Whether or not the infringement proceedings are stayed depends on the particular circumstances of the case. In contrast, Spanish courts have traditionally taken the view that infringement proceedings cannot be stayed when the validity of the patent has been challenged before the EPO.
As regards the availability of other possible defences, this will of course depend on the specific facts of the case. For example, experimental use and Bolar-type defences are certainly available, although there have been very few cases where they have been alleged. Other defences may include the exhaustion of rights although, again, this type of defence is very rare.
There have been a few cases where defendants raised arguments based on competition law, particularly in the field of telecoms patents. However, these cases were settled.
V FINAL REMEDIES FOR INFRINGEMENT
Spain's new Patents Act contains an 'open' list of remedies, where the following are mentioned by way of example:
- an order for the cessation of the infringing acts (i.e., an injunction);
- an award of damages;
- an order for the seizure of infringing items and the means exclusively used for their production or for carrying out the patented process;
- an order for the assignment of the ownership of infringing items seized to the patent holder whenever possible;
- the adoption of any other measures necessary to prevent the patent infringement from continuing and, in particular, the alteration or destruction of infringing items when this is essential to prevent infringement of the patent; and
- the publication of the judgment against the patent infringer, at the infringer's expense, by means of advertisements and notification to other interested parties.
However, since, as mentioned, this is an 'open' list, other remedies may be appropriate, depending on the circumstances of the case. For example, on 13 December 2004, the Barcelona Court of Appeal (Section 15) ordered a 'springboard' preliminary injunction preventing the defendants from marketing their product during X months after the patent expired. The rationale was that they had used these X months as a 'springboard' before the patent had expired. This ruling was inspired by a similar springboard injunction ordered by the English Courts in the Dyson case (2001, EWCA Civ 1440: Dyson Appliances Limited and Hoover Limited). More recently, in a judgment of 28 February 2018, in a different case the same court ordered the defendant to alter a machine so that it would not longer make use of the invention.
If a final injunction is ordered, as already mentioned above, the patent owner is able to obtain the provisional enforcement of the judgment. This means that any appeal lodged will not have suspensive effect.
When infringement is found, the plaintiff is entitled to be awarded damages. Damages can only be claimed, however, for events occurring during the five years immediately preceding the date on which the appropriate action is brought. Under Spanish law, the general rule for awarding damages deriving from patent infringement is that damages will comprise not only the value of the loss that the patent holder has suffered (damnum emergens), but also the profits not obtained as a result of the infringement of its rights (lucrum cessans).
The lucrum cessans consists of the profit not obtained as a result of infringing the patent. For the assessment of the amount of profit not obtained, the claimant of damages is entitled to choose one of the following criteria:
- a lump sum that includes, at least, the amount the infringing party would have had to pay to the patent holder for a licence, in order to legally use the patent (the 'notional royalty criterion'). In establishing this amount, special consideration will be given to certain factors, for example: the economic importance of the patented invention, the remaining term of the patent at the time the infringement commenced and the number and type of licences granted at that time; or
- the loss of profits suffered by the injured party (the patent holder's 'loss of profit criterion'); or
- the profits obtained by the infringing party from exploiting the patent (the 'infringer's profit criterion').
Punitive damages are not normally available in Spain. Choosing the loss of profit criterion will require the patent holder to prove the cause-effect nexus between the patent infringement and loss of sales, and will also require the margin of the patent in relation to the product embodying the patent to be disclosed. This is the criterion normally chosen when it is thought that the margin of the patent holder is substantially greater than that of the defendant (as is usually the case in pharmaceutical patent litigation against generics companies). Where the patent holder, for commercial reasons, does not wish to disclose its actual profit margin, a usual course of action is to restrict the margin to a fictional figure below the actual figure, thus sacrificing part of the damages to be awarded in exchange for confidentiality.
It should also be noted that if the patent holder has not used the patent within the territory of a World Trade Organization state, under lucrum cessans it will only be able to claim damages according to the notional royalty criterion. However, it will still be able to claim compensation for the value of the loss that it has suffered under damnum emergens.
The new Patent Act also sets out that when a judgment orders the defendant to cease its acts of patent infringement, the court will set coercive damages for every day until the infringement effectively ceases. The final amount of these damages, and the date as from when there will be an obligation to compensate, will be determined when the judgment is enforced, following the general rules set out in the Spanish Civil Procedure Act. Such damages will be added to the general compensation for damages described above.
Until the new Patents Act came into force on 1 April 2017, damages were calculated during the main 'declaratory' stage of proceedings. This has now changed, and the calculation of damages has been postponed to the second, 'execution' stage.
VI OTHER TYPES OF PATENT PROCEEDINGS
Other than infringement and invalidity proceedings, the most frequent proceedings, although not very usual, are declaratory non-infringement actions.
Any interested party may bring court proceedings requesting a declaration that a specific act does not constitute infringement of a particular patent. However, the action cannot be brought if the interested party has been sued for infringement of the relevant patent. The declaratory non-infringement action can be filed along with a patent revocation action.
Before filing the complaint, the potential claimant must notify the patent holder by verifiable means so that it can make allegations about the patent and about the industrial exploitation carried out in Spanish territory by the potential claimant (or the effective and serious preparations to carry out such exploitation). If the patent holder does not reply within one month as from the date of the request, or if the potential claimant does not agree with the reply, it will be entitled to bring the declaratory non-infringement action.
The action must be directed against the patent holder. Furthermore, all persons holding rights over the patent in question who have been duly registered at the SPTO must be notified of the complaint, so that they have the option to appear and intervene in the proceedings. Nevertheless, licensees will not be entitled to appear in the proceedings when their licence agreement prevents this.
The judgment of 19 April 2018 handed down by the Barcelona Court of Appeal (Section 15), which rejected a declaratory non-infringement action, illustrates the risks involved with this type of action.
There have also been a handful of cases where the ownership of a patent has been disputed, although these types of cases are not frequent in Spain.
i Appeal before the court of appeal (second instance)
The judgments of commercial courts may be appealed before the court of appeal. No permission to appeal is required. In other words, the losing party has an automatic right of appeal.
The court of appeal consists of three appeal judges. In normal circumstances, it would take 12–18 months for an appeal to be heard following a judgment from the commercial court.
The court of appeal can decide the case afresh, on the basis of the evidence submitted to the commercial court. Alternatively, if there has been a defect in the procedure adopted by the lower court, the court of appeal can refer the case to the lower court and instruct it to resume proceedings from the date when the defect occurred.
Although it is possible to submit and examine evidence in court of appeal proceedings in certain particular cases (for example, when new evidence emerges), the court of appeal adopts a restrictive position and, in practice, it is rare for it to admit evidence to be examined in this second instance.
Appeals are decided after considering the written submission filed by each party. The court of appeal only calls the parties to a hearing in the unlikely event that new evidence has been admitted or when both parties have requested a hearing and the court considers that a hearing would be appropriate, considering the circumstances of the case.
ii Appeal before the Spanish Supreme Court
Further appeals to the Spanish Supreme Court are permitted only in exceptional circumstances. Two different appeals are possible:
- appeal in cassation: an appeal denouncing a breach of substantive law or case law. However, this appeal is only possible when:
• constitutional rights (other than the right to due process) are at stake;
• the plaintiff has justified in the complaint that the relief sought is an amount exceeding €600,000 (this is usually not the case in patent cases, as the damages awarded are only specified at a later stage in the proceedings); or
• the judgment in the second instance has applied rules with no unified consolidated precedents from the Supreme Court; or
- extraordinary appeal owing to breach of procedure, which is only possible in a series of situations involving a breach of certain procedural rules or an encroachment of the constitutional right to due process. This type of appeal requires the appellant to have previously exhausted all appeals and remedies at the lower instances in order to remedy the breach or encroachment suffered.
The Supreme Court will not review the findings of fact made by the lower courts. On the contrary, the role of the Supreme Court will typically be limited to verifying the application of the law by the lower courts.
VIII THE YEAR IN REVIEW
One of the most interesting developments over the past year has been the relatively high number of small to medium-size cases dealing with mechanical patents. This trend shows that patent litigation is not the exclusive realm of big pharma and the telecoms industry.
This year has been a year of transition for the new Patents Act after its coming into force on 1 April 2017. The experience to date is that the new Act has resulted in a more rational way of prosecuting and litigating patents.
Another noteworthy development is that, as mentioned, Spain has decided for the time being not to take part in the project aimed at creating a European patent with unitary effect and a Unified Patent Court.
1 Miquel Montañá Mora is a partner at Clifford Chance.