Finland: the new IP court, interim injunctions and goodwill

There is no doubt that the Finnish and European IP regime is in a state of confusion and change. For us lawyers who yearn to learn more and defend the most valuable interests of our clients, this has been a fruitful opportunity to reflect on how the future patent litigation landscape in Europe will look, especially with the introduction of the Unified Patent Court (UPC).

In Finland, we are living through a global financial crisis and the Western debt crisis like the rest of Europe. The situation has become even more challenging because of recent political developments. Despite these, the number of investments and transactions so far has remained very high, and there have also been several IP and technology-driven deals in Finland.

What makes Finland an attractive target for strategic acquisitions is that valuations here are significantly lower than in other Nordic countries. The most interesting business fields are the game, cleantech (energy-efficient and environmentally benign) and telecom industries. The business environment for growth companies is also good, and has been enhanced, eg, by the funding programme established by the Finnish government with annual investments of more than €200 million ($264 million) in growth companies in the cleantech sector. Also, the ‘post-Microsoft Nokia’ start-up community has been active and is doing a marvellous job of developing new innovations.

In this context, we wish to raise three current issues in the Finnish IP world.

New IP court

The first of these is the centralisation of all IP matters at the Market Court as of September 2013. Today, the Market Court has exclusive jurisdiction to hear all civil IP cases as the first instance, while criminal proceedings continue to be handled by district courts. One of the main positive aspects of this is that unfair competition cases and other IP cases can now be joined in one action; previously they required separate actions.

"it seems in the light of recent case law that the requirements for goodwill protection continue to be relatively strict in Finland."

Also, earlier, a claim for damages based on unfair competition would be addressed to the Market Court but a party seeking compensation would need to file a separate claim with the competent district court. In addition, appeal procedures have been changed. Appeal is now mainly possible only upon leave to appeal by the Supreme Court, which is currently granted in only approximately 10% of cases. This means that the Market Court is often also the final instance.

Despite all these positive changes it is interesting that the number of IP cases heard at the Market Court has been lower than in the past, although this may only be a reflection of the times.

Last, it should be noted that the exclusive jurisdiction of the Market Court does not cover IP disputes regarding IP agreements (unless related to, eg, an infringement case). This means that the parties to such an agreement may not, eg by means of a prorogation agreement, agree that the place of jurisdiction be the Market Court. This might lead to uncertainty as to which matters are such IP matters that actually belong to the Market Court and which should be handled elsewhere, as it is not always simple to determine the main issue in a dispute.

Interim injunction decisions from cleantech and pharmaceuticals

Interim injunctions have been a hot topic in Finland after two recent court decisions. In the first, UPM-Kymmene received a temporary victory in the Finnish biodiesel patent war against Neste Oil and, in the second, Pfizer was ordered to pay €16.5 million ($21.8 million) as compensation to Ranbaxy, originally an Indian generic manufacturer today owned by Sun Pharma, which is discussed below.

As background, a unique feature of Finnish pharmaceutical patent litigation is that it was not possible to obtain a product patent for pharmaceutical products prior to 1995. Instead, analogy process patents, characterised by the novelty and inventiveness of the end-product and not the process in itself, were granted. As chemical compounds can usually be manufactured using different methods it is often possible to change the process in order to avoid literal infringement of an analogy process patent. This has been utilised in Finland to expedite market entry.

In this particular case, the court held that Pfizer unnecessarily sought an interim injunction to protect its Lipitor (atorvastatin calcium) product and caused, as estimated by the court, a loss of €35 million ($46 million) to Ranbaxy’s sales, delaying its market entry with its competing product. Of this amount, the court estimated that 47% was profit, which Pfizer had to compensate Ranbaxy for.

As the level of damages in Finnish cases has typically been relatively modest, the result of this unnecessary interim injunction ruling must have been a great and unwelcome surprise for Pfizer, and it seems that we have not yet seen the final word on this. However, as this case clearly indicates, there is a need for IP litigators, including ourselves, to carefully ensure that the merits of the case are secured prior to filing interim injunction applications.

Goodwill protection in focus

“If man has any ‘natural’ rights, not the least must be a right to imitate his fellows, and thus to reap where he has not sown,” said historian and professor Benjamin Kaplan. We do not say that this is true, but in order to maintain economic competition it is clear that one is forced, to some extent, to imitate others. How much imitation should be allowed is, however, a more difficult question.

"As the level of damages in Finnish cases has typically been relatively modest, the result of this unnecessary interim injunction ruling must have been a great and unwelcome surprise."

Our third point focuses on imitation from the goodwill protection perspective. As we know, case law of the courts of the EU has promoted the idea that, in addition to traditional functions, investments should also be protected in goodwill cases. A landmark case in this respect is the L’Oréal v Bellure case (C-487/07), which has been referred to in several subsequent decisions.

Following these decisions, it is not the least surprising that national cases regarding goodwill protection (eg, Decisions of the Market Court MAO:121/12 [Granströms Båtvarv], MAO 269/13 [ABB], MAO:381/12 [Fischer Sports] and MAO 398/14 [Valio]) have become more common, and protection of goodwill seems to have become its own line of argumentation.

However, there seems to be surprisingly little debate on what the effect of the European case law regarding trademarks is and whether it can be extended to, eg, cases under the Unfair Business Practices Act without legislative reform (such as the one in Sweden). Although this alternative cannot be excluded, it should be emphasised in this regard that despite the developments mentioned earlier it seems in the light of recent case law that the requirements for goodwill protection continue to be relatively strict in Finland.

Conclusions

There have been several interesting developments in Finland. One additional issue we did not discuss this time is the crowdsourcing initiative signed by Finnish citizens proposing a parliamentary vote, which would amend our current copyright laws. We will return to this another time.

Now, with our new IP court in operation, Finland has also made an important decision not to join the Nordic-Baltic regional division of the UPC. Instead, we will establish a local Finnish division. It is uncertain how the UPC will affect patent litigation in Finland, but what is certain is that interim injunctions and goodwill protection are, and will remain, contested and widely debated topics.

Jan Lindberg is a partner at Attorneys at Law Trust Ltd. He can be contacted at: Jan.Lindberg@thetrust.fi

Kiira Lehtonen is an associate at Attorneys at Law Trust Ltd. She can be contacted at: Kiira.Lehtonen@thetrust.fi