Nokia makes little progress in its European Qualcomm patent fight

In our October 1 blog “Is Patent Exhaustion The Big New Thing?” we referred to the “exhaustion” argument as a pretty powerful tool for Nokia against Qualcomm in their negotiations on a continuation of the CDMA/WCDMA license.

Nokia has not come very far in Europe with this argument. This week in the UK the trial between the two started before Mr. Justice Floyd, likely to last 3 weeks. On October 23 , the Landgericht Mannheim in Germany dismissed Nokia’s claim that Qualcomm’s patent rights were “exhausted”. Nokia’s further request to the court to refer the issue of exhaustion of rights to the European Court of Justice, was also denied.

Nokia faced the same fate in The Netherlands, where the District Court denied Nokia’s claim that Qualcomm’s patents were “exhausted” because the chipsets that are used in the Nokia mobile handsets are being obtained from a third party (Texas Instruments) that has a license from Qualcomm under the alleged infringed patents. (for the English translation of the The Hague judgement, see here).

The argument ran parallel to a case in the US between LG Electronics and Quanta Computer Inc. currently before the US Supreme Court. In the Dutch case, the court found against Nokia, e.g. by deciding that Nokia had failed to specify both the products and the patents that were exhausted and which specifics of the products that would be covered under the TI license.

Our take from this is that last word has not been said on this complicated issue, but that clearly Qualcomm has the upper hand now in the negotiations. One wonders whether the Nokia strategy was smart enough to not (try to) agree before the German and Netherlands court would rule (see our October 1 blog).

The case in the UK, from what we could derive from pubic sources, is slightly different than in Netherlands and Germany in that Qualcomm is suing Nokia in the UK under 2 patents (EP 0,629,324 and EP 0,695,482) both related to power control. Qualcomm’s claim under '324 is limited to contributory infringement as the product claims require both a handset and a base station. They also seek a declaration of essentiality in respect of '324 re the 3G standard.

The infringement claims relate to specific handsets purchased by Qualcomm, but these are cited merely as 'examples' i.e. they claim the same arguments apply to all Nokia handsets. However, CDMA handsets are excluded as Nokia is licensed for these.

Nokia has counterclaimed for revocation. It also has other arguments to the effect that Qualcomm must grant FRAND licenses, and as to what the terms of those should be. Other Nokia arguments include waiver, estoppel, competition law and non-availability of injunctive relief. However, all these issues have been put off to a 2nd trial in the event that Qualcomm succeeds in the current UK trial.

click here for US ITC decision of December 13, 2007 in favor of Nokia agaisnt Qualcomm.

EU commission’s lethargy on EPLA criticized

EPLA proponent Jochen Pagenberg delivers fierce criticism on lack of progress on EPLA. Will the European Patent Litigation Agreement have a chance in 2008? Read his critical review in "International Review of Intellectual Property and Competition Law (IIC) 2007, 7).

He seems not particularly optimistic:

"Industry is certainly not willing to waste another year in fruitless discussions. If nothing happens, it will be better to drop EPLA and the Community patent for good - sooner rather than later. The Community patent will be even more difficult to adopt politically because the involvement of all Member States is indeed necessary. But the Community patent should be easier to discuss, when Member States have experience of how EPLA operates. Therefore, if EPLA is not achievable, it would be preferable to maintain the status quo and not even to start on an overhaul of the Community Patent Regulation. None of the Member States and nobody in the Commission will be willing and able to prepare any paper that could even come close to the detailed content of the EPLA draft. Therefore it must be feared that participants will grow tired of continuing discussions on one small item after another - and no end in sight."

German Federal Patent Court Invalidates Pfizer’s Lipitor Patent

On Wednesday, 31 October 2007, the Federal Patent Court (FPC) in Germany invalidated Pfizer’s Lipitor Patent in a first instance decision. This crucial decision for pharmaceutical companies contains some importantaspects regarding the patentability of secondary patents in Germany.

Background
The parties of the invalidity proceedings have not been published by the FPC, but it is known in the market that the generic drug makers Ranbaxy Laboratories Ltd. and Basics GmbH filed the revocation action against Pfizer’s Lipitor Patent (EP 0 409 281/DE 690 33 840). Lipitor is a popular cholesterol drug, which belongs to the most successful drugs in Pfizer’s drug portfolio. According to secondary sources, Pfizer achieved a turnover of nearly 11 billion USD in 2004 with its drug Lipitor (in Germany known under the trade mark “Sortis”).

Subject of the patent is the hemicalcium salt of R(R*R*) acid for the preparation of pharmaceutical compositions useful for treating mammals, including humans, suffering from hypercholesterolemia or hyperlipidemia. The plaintiffs argued in their revocation action that the invention of the patent is not new due to novelty destroying prior art documents. In particular, a prior art document disclosing the basic chemical compound was seen as novelty destroying by the plaintiffs. Pfizer, however, argued that the preparation of the hemicalcium salt R(R*R*) out of the basic chemical compound is new and patentable. In particular, Pfizer brought forward the argument that a prior art document, that allows an expert to make a selection on how to achieve a specific salt from the basic compound is not novelty destroying. Additionally, Pfizer argued that the European Patent Office confirmed the validity of the patent within prior opposition proceedings.

The decision
The FPC revoked the patent in first instance mainly on the bases of two novelty destroying prior art documents. The FPC is of the opinion that the prior art document comprising the basic chemical compound is novelty destroying in this case. The FPC reasons its decision by stating that novelty destroying state of the art has to be determined not only by considering the wording of the prior art document, but also by any connotation what is a matter of course even if it is not explicitly mentioned in the publication. Additionally, anything which have to be necessarily supplemented or what a person skilled in the art would contemplate by reading the publication needs to be seen as novelty destroying as well. The FPC says that these principles apply for chemical compounds as well, provided that the prior publication contains at least an allusion to the salt from the perspective of a person skilled in the art. In other words, it is novelty destroying if a person skilled in the art understands by reading the prior publications that it would be possible to obtain the salt to which the patent in suit extends. It is not required that the salt itself has already been manufactured. It is sufficient that the option of manufacturing the salt can easily be contemplated by a person skilled in the art by reading the prior publication. In the case in question, the FPC is of the opinion that according to the first prior art destroying document the hemicalcium salt automatically accrues in a composite of stereo isomers with a certain percentage of single isomers. Hence, single stereo isomers are necessarily a product of the chemical reaction within the composite itself. in consequence, the novelty of stereo isomers has to be denied, if an expert contemplates the stereo isomers by applying the teaching of the prior art document. An explicit reference to single stereo isomers as a product of the composite itself is not necessary in the view of the FPC. According to the FPC, there is also a second novelty destroying publication. In this regard, the court made some interesting statements regarding selection inventions. Pfizer argued in its defence that it is not novelty destroying if a person skilled in the art needs to make selections between several options in order to achieve the patented hemicalciumsalt, as this is the case in the second prior art document. The FPC denied this argument, because in its view the selection to be made in this case is anticipated in the relevant prior art document. The court argued that the selection of several carboxamide and their acid forms with pharmaceutical salts are already mentioned in the prior art document. Additionally, the FPC is of the opinion that the selection of calcium as a salt composing cation among only a few metal salts makes the hemicalcium salt of R(R*R*)-enantiomeres not new.

Regarding Pfizer’s argument that the European Patent office confirmed the patent within opposition proceedings, the FPC argued that the criteria for novelty set by the European Patent Office are too narrow and can not be applied under German case law. The FPC underlines that in the light of the decisions of the German Federal Court of Justice, there is no standardized European interpretation guide lines for novelty and inventiveness. Hence, the FPC is of the opinion that the question of novelty and inventiveness has to be interpreted under national standards.

Pfizer is said to appeal the ruling, so that it can take up to another 3 years to get a final
decision in this case. Pfizer does currently not see an immediate commercial impact of the decision. According to Pfizer, neither Ranbaxy nor Basics have received a regulatory approval by German authorities to sell a generic copy of Lipitor yet. Additionally, the patent is going to be expired in July 2010, so likely before a final judgement of the German Federal Court of Justice.

Effects of the decision
Although it is only a first instance decision, it shows that it might be difficult to maintain the validity of secondary European patents in Germany, comparable to the legal situation in UK. Should the decision of the FPC be confirmed by the German Federal Court of Justice, pharmaceutical companies must reconsider their patent strategy in this regard.

Dr. Peter Meyer, Dr. Kaya Köklü
Simmons & Simmons, Düsseldorf