J 13/12 – It’s Time To Get Ahead

This decision deals with an appeal against the decision of the Legal Division (LD) to resume proceedings that had been stayed.

The patent application was about to be granted (communication pursuant to R 71(3) issued on February 20, 2009) when the LD stayed the proceedings as of April 16, 2009, because the Doosan Lentjes company had started entitlement proceedings against the applicant, the Hamon Enviroserv company before the Düsseldorf district court.

On June 21, 2011, this court dismissed the complaint. The plaintiff filed an appeal before the Düsseldorf appellate court.

The LD then announced that the proceedings would be resumed in view of the length of the proceedings and the fact that the application was about to be granted.

The Doosan Lentjes company filed an appeal against this decision.

The Board found the appeal to be admissible and then examined its allowability:

*** Translation of the German original ***

[3] The appellant essentially bases its appeal on the fact that in its decision on the resumption of the stayed proceedings the LD had not sufficiently considered and weighed all the relevant objective circumstances and the interests of the parties but had only followed the judgment of the Düsseldorf district court, which had dismissed the complaint.

Based on this the appeal would be allowable if the LD had wrongly exercised its discretion, and, therefore, committed a legal error, by fixing July 1, 2012, as the date on which the grant proceedings – which had been stayed since  April 16, 2009 – were to be resumed pursuant to R 14(3) […] or if the factual circumstances have changed with respect to those on which the impugned decision was based such that they now allowed for and required a different assessment of the question of whether the grant proceedings were to be resumed or further stayed pursuant to R 14(1) […].

Has the decision been based on a wrongful exercise of discretion?

[3.1.1] First of all it should be noted that the extent to which the Boards of appeal can review discretional decisions of the administrative instance is limited. Insofar as the appellant contests the way in which the LD has exercised its discretion when taking the impugned decision, the case law of the Boards of appeal, which has in principle been confirmed by the Enlarged Board of appeal (G 7/93), has established that it is not the function of a Board of appeal to review afresh the factual situation of the case as if it were in the place of the organ of the administrative instance which has taken the impugned decision, in order to decide whether or not it would have exercised such discretion in the same way. If an administrative organ is required under the EPC to exercise its discretion in certain circumstances it should have a certain degree of freedom when exercising that discretion, without interference from the Board of appeal. A Board of appeal should only overrule the way in which the administrative instance has exercised its discretion if it comes to the conclusion either that the latter has not exercised its discretion in accordance with the right principles or in an unreasonable way, and has thus exceeded the proper limits of its discretion.

[3.1.2] As can be seen from the impugned decision, the LD has taken account of both the provisions that are relevant for its decision – in particular A 61 and R 14 – and the relevant case law, in particular G 3/92 and J 33/03; it has realized that it has a discretional power and has weighed the interests of the parties.

Thus it is clear that [the LD] did not wrongly exercise its discretion by not making use of its discretional powers.

[3.1.3] As to an exercise of discretion in accordance with wrong principles, it is necessary to first define the legal framework:

[3.1.4] A 61(1) in connection with R 16 governs the procedural rights of a person other than the applicant (a so-called third party) to whom a final decision of a national court has allocated the right to the grant of a European patent in place of the applicant; it offers this person the possibility of carrying out certain required actions related to the application.

Insofar as the European patent has not yet been granted (R 16(1)(b)) this third party may, no later than three months after the decision recognising its entitlement has become final (R 16(1)(a)), in respect of Contacting States designated in the EP application in which the decision has been taken or recognised or must be recognised on the basis of the Protocol on Recognition:

(a) prosecute the EP application as its own application in place of the applicant (A 61(1)(a));

(b) file a new EP application in respect of the same invention (A 61(1)(b)); or

(c) request that the EP application be refused (A 61(1)(c)).

[3.1.5] R 14 provides for a stay of the proceedings during the period in which the third party seeks a judicial decision confirming that it is entitled to the grant of the European patent; its purpose is to safeguard the rights of the third party for the duration of the proceedings by which the third party asserts its claims. R 15, which provides that from the date on which a third party provides evidence that it has instituted national proceedings by which the third party asserts its claims and up to the date on which the proceedings for grant are resumed, neither the European patent application nor the designation of any Contracting State may be withdrawn, has the same purpose.

[3.1.6] Pursuant to R 14(1), first sentence, if a third party provides evidence that it has instituted proceedings against the applicant seeking a decision within the meaning of A 61(1) the proceedings for grant shall be stayed unless the third party communicates to the EPO in writing its consent to the continuation of such proceedings.

[3.1.7] In the present case the grant proceedings were stayed by a communication of the LD dated April 22, 2009, with retroactive effect as of April 16, 2009, as a consequence of the indication of the appellant dated March 24, 2009, and its further written submission dated April 16, 2009.

[3.1.8] The fact that the LD did not determine a date on which the examination proceedings were to be resumed when it decided to stay the proceedings does not as such allow to draw conclusions as to the further proceedings. This is because pursuant to R 14(3) the grant proceedings may be resumed even if the EPO had not fixed a date for the proceedings to be resumed in its decision to stay, and before a final decision has been issued in the national entitlement proceedings.

[3.1.9] R 14 has to be considered in the context of the EPC as a whole and in particular in connection with A 61, which it further implements, and R 15. As the Board had already explained in its decisions J 7/96 [2.2] and J 8/96 [2.2], these provisions form part of a system of legal process which is provided under the EPC for determining the right to a European patent application when this is in dispute, and for implementing this determination. It is clear from the travaux préparatoires of the EPC that it was considered important to provide such a system in which disputes as to entitlement could be settled by a final decision of a national court but then implemented centrally by the EPO with respect to all the designated States (see document IV/2498/1/61-D, page 17 et seq). The terms of these provisions must be interpreted in this context and in the light of the object and purpose of this system (cf. G 3/92 [1]).

[3.1.10] As the Board has decided in its decision J 33/03 [2.1], contrary to the decision to stay the proceedings according to Rule 14(1), it is in the discretion of the Office to decide whether the proceedings are to be continued under R 14(3). When exercising discretion within the framework of R 14(3) the EPO, i.e. the LD and, pursuant to A 111(1), second sentence, also the Board acting within the framework of the competence of the LD, has to weigh the interests of the applicant on the one hand and the third party who has instituted national entitlement proceedings against the applicant on the other hand. In this context the EPO has to consider in particular the purpose of A 61, which is directed at a “well-balanced and fair resolution of conflicting interests” (G 3/92 [8.4]). The Guidelines for Examination, which are internal Guidelines issued by the administration, may be used as a complement.

[3.1.11] According to the Guidelines developed for the application of R 14(3) in concrete cases, the Guidelines for Examination A IV-2.3:

“If a date is set for the resumption of the proceedings for grant, it should be chosen with due consideration for the interests of the third party who only becomes a party to the proceedings after a judgement has been given in his favour, on the basis of the probable duration of the court proceedings so as to enable them to be concluded within that period of time. If, by the date set, the court has not given a judgement, the proceedings for grant must at all events be further stayed if the judgement is expected in the near future. However, the proceedings for grant should be resumed if it is evident that delaying tactics are being employed by the third party or if the proceedings in the court of first instance have concluded with a judgement in favour of the applicant and the legal procedure is extended by the filing of an appeal.”

[3.1.12] These internal administrative provisions do not support the appellant’s allegations concerning the conditions for resuming the grant proceedings and in particular do not support the legal consequences it seeks to obtain. Rather, the LD has appreciated all relevant circumstances of the case in a way that does not allow to conclude that it has wrongly exercised its discretion.

[3.1.13] In particular, it is not wrong, but it rather follows from the internal administrative provisions of the EPO (Guidelines for Examination) that the LD has not issued a separate communication setting a date for the grant proceedings to be resumed before the order to resume the grant proceedings. The LD was entitled to do so for the first time in the impugned decision.

[3.1.14] Nor can it be derived from the Guidelines for Examination that the LD has to wait for a final decision in the entitlement proceedings, possibly after all possible remedies have been exhausted (first instance, appeal, and review proceedings) or at least for the end of the appeal proceedings, before it can fix a date for the resumption of the grant proceedings, and in any case before the proceedings are actually resumed.

[3.1.15] It is part of the circumstances that the LD has to take into account (and which it has indeed taken into account) that a third party may indeed only exercise its procedural rights pursuant to A 61(1) if there has been a decision to its favour in national proceedings according to which the applicant was not entitled to a patent application, but this does not necessarily mean that the grant proceedings relating to the patent application of the person that was not entitled has to be stayed or remain stayed until that date. Rather, the rights of the third party are not only protected by possibility for it to prosecute said European patent application as its own application in place of the applicant who lacked entitlement (A 61(1)(a)) but also by the possibility to file a new European patent application in respect of the same invention (A 61(1)(b)). The admission of this new application is not limited to the case where the former, irregular application is still pending before the EPO (cf. G 3/92 [headnote]) in case the application has been withdrawn or is deemed to have been withdrawn.

Moreover, even after the Examining Division has decided to grant a patent application filed by an applicant who was not entitled, the entitled third party can exercise its right pursuant to A 61(1)(a) until the formal end of the grant proceedings pursuant to A 97(3) and A 98 and prosecute the European patent application as its own application in place of the applicant who lacked entitlement (cf. J 7/96 [9], J 8/96 [9]).

Insofar as the pursuit of the grant proceedings curtails the procedural rights of the third party, it puts an end to the strong legal position of the third party. However, in the present case possible serious consequences for the appellant are due to the fact that it has instituted entitlement proceedings and filed the request for a stay of the proceedings only at a very late stage of the grant proceedings, i.e. after the communication pursuant to R 71(3) to the applicant, although it was aware of the [existence of the] application. As a matter of fact the third party that prosecutes the EP application as its own application pursuant to A 61(1)(a) takes on the application in the procedural stage in which it was at the time when the proceedings were stayed. This also applies to the impending loss of right to file divisional applications according to the presently applicable provisions for divisionals, which was mentioned in this context by the appellant. Thus the fact that this circumstance was not taken into account cannot constitute a wrongful exercise of discretion.

[3.1.16] Nor can such a wrongful exercise of discretion be constituted by the consideration of the LD that the entitlement proceedings were unsuccessful for the appellant, at least at first instance.

The Guidelines for Examination precisely refer to the case where the judgement is in favour of the applicant – and to the detriment of the third party – who then files an appeal as an example for a situation where the stayed proceedings are continued.

[3.1.17] Insofar as the appellant asserts that the decision of the Düsseldorf district court to dismiss its complaint was mistaken and that it was likely to succeed in the appeal which it had filed, these submissions cannot be taken into account in the grant proceedings in general and in particular in the present appeal proceedings (cf. J 33/03 [2.2]; Benkard-Melullis, EPÜ, 2^nd edition, 2012, A 61, marginal number 21).

Only the national courts have jurisdiction to decide claims, against the applicant, to the right to the grant of a European patent (Article 1(1) of the Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the Grant of a European Patent (Protocol on Recognition)). Moreover, neither the LD nor the Board can decide to which party the European patent application might belong or which outcome of the national entitlement proceedings is more likely.

Thus the only aspect that can be taken into account when weighing the interests (and which was indeed taken into account by the LD) is that the entitlement proceedings instituted by the appellant against the respondent has not led to a final decision yet but is still pending as an appeal, which – in view of the previous procedural behaviour of the parties – might be followed by review proceedings before the Federal Supreme Court (Bundesgerichtshof). At least a reasoned judgement of a competent German court that has been issued after inter partes proceedings (im streitigen Verfahren) militates against the claims (Klagebegehren) of the appellant. It is not foreseeable that the appellant will finally succeed in the entitlement proceedings, nor is it foreseeable when there will be a final decision on the entitlement proceedings (before the appellant court or possibly even in review proceedings). Thus a prolongation of the stay of the grant proceedings according to the main request (as well as the first auxiliary request) of the appellant would lead to an indefinite delay of the grant proceedings and thus to a disproportionate disadvantage for the appellant.

[3.1.18] Finally the LD was entitled to – and even had to – take into account that the grant proceedings had been stayed for more than three and a half years (cf. J 10/02 [4.1] where the importance of the duration of the stay was underlined). This fact alone affects the interests of the respondent in a speedy treatment of its application in a significant way; a further stay of the grant proceedings would correspond to a disproportionate burden for the respondent that cannot be justified by the interests of the appellant.

[3.1.19] Insofar as the appellant has asserted that the fact that the examination proceedings were quite advanced, as can be seen from the fact that there had already been a communication pursuant to R 71(3), and that, as a consequence, a grant of the patent could be expected very soon, would hinder it from asserting its rights, this aspect has also been explicitly considered by the LD (point 8 of the impugned decision).

[3.1.20] Thus the Board of appeal is unable to find any error committed by the LD in the exercise of its discretion when it issued the impugned decision.

[3.2] As to new circumstances which could now justify a different assessment of the question of whether the proceedings were to be stayed by the Board of appeal, the appellant essentially refers to a change of the provisions governing divisional applications as well as to the fact that once the patent was granted, it could only assert its claim to entitlement under more difficult circumstances in each state designated by the patent.

[3.2.1] However, the Board of appeal cannot see – although it has asked [the appellant] in its summons to oral proceedings – how the legal position of the appellant could have changed to its detriment since the impugned decision has been issued; as a matter of fact only if and to the extent that this was the case the Board of appeal could take a decision that was not limited to the review of discretional decisions. Rather these circumstances are circumstances that already existed at the time of the impugned decision which, therefore, were already addressed by the discretional decision, which, as mentioned above, was free from error.

[3.2.2] Nor can the Board of appeal discern any new circumstances which have arisen after the impugned decision was issued and which would justify or require a prolongation of the stay of the grant proceedings pursuant to R 14.

Both parties have confirmed that the appeal proceedings before the Düsseldorf appellate court were pending and that one could not expect a judgement, let alone a final decision, in the entitlement proceedings in the near future. The investigations of the Public Prosecutor (staatsanwaltschaftliche Ermittlungen) as such do not provide sufficient indications that would allow to draw the conclusion that the position of the respondent was unlawful, all the more as the EPO and the Boards of appeal have no jurisdiction for assessing the chances of success of the national lawsuit and the investigations of the Public Prosecutor.

Finally, the Board of appeal has no jurisdiction for assessing the pieces of circumstantial evidence cited by the appellant, which it believed were sufficient for establishing an unlawful behaviour of the respondent and its entitlement […]. Only the national authorities (court, public prosecutors) have jurisdiction in this regard.

[3.2.3] Moreover, the discretionary considerations mentioned by the LD and taken into account by it still apply; the Board of appeal, considering all relevant circumstances and the interests of the parties both from a factual and a legal point of view, comes to the conclusion that the stay of the grant proceedings should not be prolonged and that the proceedings should be resumed. […]

The appeal is dismissed. […]

The grant proceedings are to be resumed as soon as this decision is announced (June 17, 2013).

It is interesting to see how important the Guidelines become in this context, isn’t it?

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