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Getting a licensing agreement against the backdrop of a patent opposition requires a deft touch, explains Terry Instone of Appleyard Lees.
A patent is only enforceable against an infringer if it is valid, and it is usual for an alleged infringer to counter-claim for invalidity when sued for infringement. By this stage, the parties are involved in an expensive court action and the alleged infringer will gather evidence to try to convince a court that the patent is invalid.
To avoid the costs of court action, an opposition against a European patent is typically filed by someone with an interest in having the patent revoked so that they can sell their own product. However, as the opposition procedure, including appeal, can take several years before reaching a final decision, there is still the risk that an infringement action could be filed by the patent owner before the opposition proceedings are completed.
Consider a licensing agreement before filing an opposition
Once a potential opponent has decided to prepare an opposition, then there are good reasons for the potential opponent to also consider approaching the patent owner directly to try to negotiate a licence under the patent. Ideally, this can be done weeks or months before the opposition deadline (which is nine months after the patent grant is published). This is to allow plenty of time for negotiation before the opposition must be filed and the opposition fee paid.
The potential opponent contacts the patent owner to ask for a licence in return for a promise to withhold filing the opposition against the patent.
The potential opponent first prepares a draft opposition which it believes will result in revocation of the patent or will at least increase the likelihood that the patent may be revoked.
The patent owner is then provided with a copy of the draft opposition, and an offer to refrain from filing the opposition if the patent owner agrees to grant a royalty-free licence under the patent in return. The requested licence could also include royalty-free terms under other members of the patent family, such as equivalent US or Chinese patents.
If the patent owner is contacted in good time before the opposition is filed, they may decide that rather than have the validity of the patent brought into doubt by the publication of the proposed opposition on the public register of the European Patent Office (EPO), it would be wiser to permit one competitor to have a cheap licence.
This would ensure that other competitors do not decide that, based on the published opposition, the patent may be invalid and unenforceable. In particular, in situations where an opposition is based on evidence of prior public use that is known to the potential opponent, but otherwise unknown to other competitors, avoiding the publication of the details of the opposition could be a pragmatic option for the patent owner.
Is it too late to consider an agreement after an opposition has already been filed?
There are still possibilities for obtaining a licence from an opposed patent owner in return for withdrawal of an opposition that has already been filed and published on the EPO register.
Only in exceptional cases will the EPO exercise its power to carry on the opposition proceedings in the public interest after an opposition has been withdrawn. This usually only occurs if the EPO considers that the issues raised in the published, but withdrawn, opposition mean that it is very clear that it is not in the public interest for the patent to remain in force as granted.
Provided that the withdrawal of an opposition leaves no other oppositions remaining pending against a patent, the EPO will usually terminate the opposition proceedings, leaving the patent in force, maintained in its original granted form.
This means that there is there is still potential for negotiation of a licence. The patent owner can essentially dispose of the opposition in return for the grant of a licence to the opponent.
Issues to consider
Patent owners should avoid threatening a potential infringer until the nine-month opposition period has expired. If the potential infringer was unaware of the patent, the threat may alert them to consider filing an opposition and opening negotiations for a licence.
Granting a licence in return for withdrawal of an opposition, or an agreement to withhold the filing of an opposition, is not usually considered anti-competitive behaviour. However, care must be taken to ensure that competition laws are complied with when drawing up the licensing agreement.
Terry Instone is a principal associate at Appleyard Lees. He can be contacted at: firstname.lastname@example.org
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