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Managing Partner, IPStyle
The Year 2016 in Review: Patents
The Game of Numbers: Quantity is Not Always Quality
Looking back on the previous year with regard to patenting, 2016 may be characterized as the year of Ukraine’s so-called fabulous progress namely within the sphere of patent filing. According to the State Intellectual Property Service of Ukraine, 51,559 patent applications were filed in 2016 (compared with 47,819 applications filed in 2015)1. However, the increased figures can hardly indicate an improvement in quality.
In Ukraine, just as in certain other countries, including Germany, France, China, Belarus, Kazakhstan, patents may be granted for inventions and for utility models as well. Patents for utility models are declarative. That is, the Patent Office grants them at the applicant’s own risk, without examining whether this or that utility model meets the criteria of novelty and industrial applicability. Moreover, the rights to utility models are the number two most popular intellectual property rights abused by patent trolls. It was the number of patent applications for utility models that increased last year (8,620 applications in 2015, compared with 9,557 applications in 2016), while the number of patent applications for inventions decreased (4,495 applications in 2015, compared with 4,095 applications in 2016).
These trends highlight the following:
1) In Ukraine, patent trolls increasingly focus their attention on patenting and, in most cases, they manage to escape legal responsibility;
2) Inventors and companies create less inventions or, being disappointed in the system’s efficiency, stop filing applications, or file their applications abroad, in breach of the mandatory requirement to file the first application in Ukraine.
The data on non-resident applicants interested in filing patent applications in Ukraine are hardly optimistic either. Only 191 applications from non-residents were filed under the national procedure in 2016 (against 235 applications in 2015) and 1673 applications under PCT (against 1989 applications in 2015). Foreign applicants are apparently disappointed in the efficiency of patent protection, or do not rely on Ukraine being a country that is attractive for investing, business and product import.
Sure enough, by comparing 2015 and 2016 only, it is impossible to take into account all the ins and outs of the current trends. Yet, these trends are obviously not encouraging.
Why Grant Patents for Utility Models that are Not New?
As said before, in Ukraine, patents for utility models are granted at the applicant’s risk, they are declarative and are often used by patent abusers. Unlike utility models, inventions are examined by the Patent Office for novelty, inventive step and industrial applicability. Interestingly, in 2016, only 5 lawsuits were filed for nullification of patents for inventions, while there were 15 lawsuits for nullification of patents for utility models. Only 2 patents for inventions and 8 patents for utility models were nullified by courts.
The question is, how come there are so few lawsuits requiring nullification of patents for utility models? The analysis of regulations, judicial practice and market trends points to numerous reasons, including the following:
1) Patents can only be nullified by courts. According to Paragraph 1, Article 33 of the Law of Ukraine On the Protection of Rights to Inventions and Utility Models, patents may be nullified in full or in part in a court of law.
2) Forensic examination of patents. According to Paragraph 3, Article 33 of the Law of Ukraine On the Protection of Rights to Inventions and Utility Models, to nullify a declarative patent, any person may require a competent institution to carry out the expert examination of a patented invention (utility model) against the requirements of patentability. However, even if the expert report of the Patent Office indicates that the patented utility model has failed to meet the criteria of patentability, it does not mean that such patent will be immediately nullified, and does not set aside the necessity for forensic examination.
The described approach is used in judicial practice. In particular, the Ruling of the Supreme Economic Court of Ukraine No.21/546-20/214 of 10 February 2009, states that “…this statutory provision does not change the general procedure for nullification of disputed patents (which may only be nullified in a court of law), and it exists since no other qualification examination of declarative patents is provided; this examination has the status of scientific and technical examination; the databases of the competent Institution containing the records of inventions’ registrations (in particular, international) and special expertise of its employees may be used. The reports of this expert examination may be applied as follows: for out-of-court resolution of disputes between the parties; when deciding whether applying to court/reasons for applying to court for the declarative patent nullification are viable; as evidence in a legal dispute, etc. However, no current regulations set out that expert reports of the Ukrainian Institute of Industrial Property indicating that technical solutions in declarative patents fail to meet the requirements by patentability, may be interpreted as decisions of a competent authority to nullify such patents”.
3) The fight against patent trolling and patents for inventions that are not new is a reminders of Don Quixote’s tilting at windmills. While a patent nullification case is being heard, the patent owner, his/her representatives or any other person, may file another patent application for a utility model, and the Patent Office has no grounds to refuse the granting of a patent for a utility model.
Judicial Practice as a Key Efficiency Indicator
In spite of statistics, judicial practice is developing not only in regard to patent nullification, but also with regard to protection of patent rights. This indicates that businesses are paying more attention to patents and are aware that it is important not just to obtain patents, but to be able to protect their patent rights in courts. 2016 was a year of unusual legal battles. Here is the overview of the most significant cases:
— Seedera Seed Company vs. the State Intellectual Property Service of Ukraine, Syngenta Participations AG. The claimant filed a lawsuit requiring to terminate Patent of Ukraine No. 41255 as of 14 July 2013 and hold invalid the decision of the State Intellectual Property Department (currently — the State Intellectual Property Service) to extend the patent term. Syngenta Participations AG obtained proprietary rights in the aforementioned patent, which had been earlier granted to another company called Novartis AG. Yet another company by the name of Syngenta Crop Protection AG obtained the registration certificate from the Ministry of Environment for a product that contained thiamethoxam, which had been protected by the aforementioned patent. According to paragraph 4, Article 6 of the Law of Ukraine On the Protection of Rights to Inventions and Utility Models, the term of a patent for an invention, i.e. the medicinal product, animal protection product, plant protection product, etc., the use of which requires a permit from a competent authority, may be extended at the request of its owner for a term equal to a period between the date of filing the application and the date of receipt of this permit, but for no more than 5 years. Thus, based on this legal provision, the claimant filed the request for the patent extension and the State Department extended the term of this patent.
In fact, the court had to decide whether the aforementioned legal provision was applicable, provided that the permit had been obtained by the person other than the patent owner. The Economic Court of Ukraine dismissed the claim. Thus, the above-mentioned legal provision was applied regardless of who had obtained the permit (the patent owner or any other person). It should be noted that the Kyiv Economic Court of Appeal and the Supreme Economic Court of Ukraine upheld the decision of the primary court.
— Individual vs. Kharkiv Machine Building Plant SVITLO SHAKHTARIA, the PJSC. The claimant had been the respondent’s employee for 10 years. The respondent filed the patent application, but in breach of the law, failed to make an agreement with the inventor specifying the amount and conditions of the latter’s remuneration. The inventor filed the lawsuit with rather unusual claims, including the following: to nullify the patent application as one that was filed in breach of the inventor’s rights, to admit that the claimant is the patent owner, etc. According to the claimant, patent applications for employee inventions had certain features of written agreements. Consequently, the employer’s obligation to conclude a written remuneration agreement within the time specified by the law shall be interpreted as a fundamental term of an agreement. However, the court dismissed the claim.
Still, the above legal case demonstrates that many employers ignore the requirements to execute remuneration agreements with inventors, while inventors become aware of their rights and are ready to protect them.
In addition to the aforementioned cases, there are numerous other current and recent legal cases, including cases involving the protection of rights, the acknowledgment of the previous user’s right, application or non-application of the doctrine of equivalents. All these cases hold out hope and show that despite the dominance of utility models and the spread of patent trolling in Ukraine, the market of patenting, licensing and inventions is gradually developing, while patent attorneys and IP lawyers deal with rather unusual cases in courts.