The question of damages for malicious prosecution is often raised by our clients, whether they are plaintiffs or defendants in an infringement action.
If the infringement action is unsuccessful, if the title invoked is cancelled, does the plaintiff run the risk of being ordered to pay damages for abusive proceedings?
For once, we used to give a clear-cut answer on this point: the judges invariably point out that “The right to take action or to defend oneself in court only degenerates into abuse in the case of malice, bad faith or gross error, which is equivalent to fraud, so that an order for damages must be based on a demonstration of malicious intent and awareness of a procedural stubbornness that is doomed to failure, with no other aim than to delay or discourage the implementation by the opposing party of the contested project. The principle of the right to act implies that the judicial decision to retain the unfounded nature of the claims is not sufficient to characterise the abuse of the exercise of the right” [1].
For its part, the Court of Cassation censures decisions that pronounce sentences for abusive proceedings “on grounds that do not suffice to characterise a fault that degenerates into abuse of the right to take legal action” [2].
In infringement cases, when the plaintiff in an infringement action is unsuccessful, it is very rare that he is ordered to pay damages for abusive proceedings, on the invariable grounds that the owner of an intellectual property right “may have misunderstood the extent of his rights”.
And our clients often show a lack of understanding of the severity of this case law when they are sued for infringement and are convinced that the legal action they are facing has been brought only to undermine them, on the basis of a patent that seems to be uninventive.
When our clients want to bring an infringement action, we are more reassuring on this point: the mere fact that the patent is likely to be annulled does not make the action abusive. On the other hand, it is necessary to ensure that the entire procedure, from the drafting of the preliminary letter of formal notice to the seizure of the patent, which must have the sole purpose of obtaining proof of infringement, runs smoothly.
However, suddenly, like a paving stone in the pond, comes a decision rendered by the Court of Appeal of Rouen a few days before the confinement of France, on 12 March 2020, which seems to call into question our fine assurance on this subject.
The Court of Appeal sentenced the co-owners of a patent to pay more than €100,000 in damages to a company called NEXIRA, as compensation for a loss resulting from a “characterised fault”, a measure that strongly resembles a conviction for abusive proceedings, even if it is not explicitly written.
NEXIRA accused the co-owners of the patent, who had lost a previous infringement action brought against it before the Paris Court of First Instance, of having ‘been guilty of fraud and disloyalty when they knew perfectly well that the patent was invalid, which did not prevent them from initiating an infringement seizure’.
It should be noted here that by a judgment delivered on 28 May 2015, the Paris Court of First Instance had declared the French part of the patent in question invalid and ordered the companies that were co-owners of the patent to pay NEXIRA the sum of 20,000 euros under Article 700 of the French Code of Civil Procedure, following a series of procedural twists and turns which we will not go into here.
However, recalling that “the plaintiff may misunderstand the extent of his rights”, case law generally refuses to consider whether the plaintiff “knew perfectly well that his patent was invalid”, as the Rouen Court of Appeal put it, or even whether the patent was likely to be invalidated.
It is understandable: how can one statistically assess the chances of success of a patent invalidity application? How can a patent owner “know for sure” that his patent is invalid? These questions lead to very subjective answers, in a field where subjectivity is already very important…
There are cases where, of course, the applicant knows that his patent is weak: the search report is provided, he is aware of a prior disclosure, he fought hard to obtain the grant of his title. However, French case law has adopted the adage that “faith is due to the title”.
It is in this respect that the decision of the Court of Appeal of Rouen is surprising. In order to grant NEXIRA’s request for damages, the Rouen Court of Appeal, which does not have jurisdiction rationae materiae to rule on patent matters, examined the means used by the Paris Court of First Instance to annul the patent in question.
According to the Court, the Court, in its invalidity decision, took into account “the extension of the radius of gyration interval RMS appearing in claim 1 of the EP 159 patent whereas it did not appear in claim 1 of the international application”, and understood that “this addition … justified ‘the invalidity'”, even adding that the invalidity “could not have escaped the attention of companies acting in the sector concerned”.
The ground of invalidity retained by the Paris Court of First Instance was the extension of the subject matter of the patent beyond its initial application (Article 138.1.c EPC).
Examination of this plea requires a detailed analysis of the matter added by the patentee in the patent as granted, compared to the application as filed; in this case, the indication of the radius of gyration interval RMS was not included in claim 1 of the patent application. However, the description of the application as filed did contain examples in which the radius of gyration was within the range of claim 1. Thus, according to the patentees, it was possible to generalise a range of values from an example to claim 1 of the patent as granted.
The European Patent Office had granted the patent, but it was not clear whether it had considered the claim of extension.
In order to invalidate the patent, the Court of First Instance undertook a detailed technical analysis, finding that the generalisation of the radius of gyration range obtained from the examples to any gum arabic was an impermissible intermediate generalisation, insofar as it did not result from “the unambiguous information that a person skilled in the art would derive from a reading of the example and the contents of the application as filed”. It does not appear from this reasoning that the invalidity pronounced was so obvious…
It is therefore rather worrying that the Rouen Court of Appeal, for its part, reproached the patent holders for having invoked, in the letters of formal notice and in support of their seizures for infringement, a patent that they ‘knew … to be invalid’.
A reading of the Rouen Court of Appeal’s decision shows that the Court criticised the patent owners for having issued a writ of infringement (which was subsequently cancelled) when they had already been sued by NEXIRA for patent invalidity, which is a classic case. The Court also noted that the patent holders had not acted in good faith, on the incomprehensible grounds that they had indicated to the judge who had authorised the seizures that “the fact that Nexira had initiated an action for invalidity (…) reinforced their doubts as to whether Nexira was infringing its patent (…)”.
Did the Rouen Court of Appeal want to sanction the attitude of Japanese and English companies, clearly part of a large international group, which threatened a French company based in Rouen, leading it to incur significant expenses to defend itself?
It is true that some of our clients sometimes feel a little “David” against “Goliath”, particularly when they are young companies that can be sued for patent infringement by large international groups, even though the patent seems weak and the infringement far from obvious… These companies suffer from being weakened by these legal actions, and find it difficult to understand why judges refuse to award them damages for “abusive proceedings”, and this trend could increase when the new Unitary Patent Jurisdiction becomes effective.
In the meantime, it would be surprising if the Parisian courts follow the path opened by the Rouen Court of Appeal.
Sandrine BOUVIER-RAVON
Partner, COUSIN & ASSOCIES
[1] Voir par exemple CA Montpelier, 28 mai 2019, RG 16/05814.
[2] Voir par exemple C. Cass., Chambre civile 3e, 27 janvier 2015, 13-25.305.
The opinions expressed in this article are those of the authors and do not reflect the position of the Institute.