A race condition or race hazard is a flaw in a system or process whereby the output of the process is unexpectedly and critically dependent on the sequence or timing of other events, knows Wikipedia: The term originates with the idea of two signals racing each other to influence the output first. Race conditions can occur in poorly-designed electronics systems, especially logic circuits, but they can and often do also arise in computer software.
Unfortunately there are also race conditions in the patent system, in particular with regard to the relation between infringement proceedings, on the one hand, and post-grant validity (nullity or opposition) proceedings, on the other hand.
If infringement and validity are dealt with in the same proceedings before the same court, an important source of such a race condition in a system of patent law can safely be avoided. However, if infringement and validity are dealt with independently and before different courts without proper co-ordination, some sort of a race condition can occur if a patent is revoked after grant:
If the validity proceedings become final before the infringement proceedings do, then the infringement proceedings can be properly terminated in full knowledge that, from a legal point of view, there is no and has been no patent at all because of it has been nullified ex tunc before.
However, if the infringement proceedings become final before the validity proceedings do, then the infringement proceedings might be terminated on the assumption of validity of the patent without actual knowledge that at some later point in time there there will be some knowledge that there is no and was no patent at all because of it is nullified ex tunc.
With other words: The outcome of the infringement proceedings is critically dependent on the timing of the nullity proceedings.
German patent law is prone to race conditions in a fourfold sense:
Firstly, in Germany infringement and validity are dealt with by separate courts, namely a District Court ("Landgericht") for infringement proceedings and the Federal Patents Court ("Bundespatentgericht") for general post-grant validity issues (except opposition proceedings in the first instance).
Secondly, with regard to national German patents granted by the German Patent and Trade Mark Office, an infringement case may be pending before a competent District Court while an opposition case is pending or is made pending before the Opposition Division of the German Patent and Trade Mark Office or, in the second instance, before the Federal Patents Court.
Thirdly, with regard to European patents granted by the European Patent Office with effect on the German territory, an infringement case may be pending before a competent District Court while an opposition case is pending or is made pending before the Opposition Division of the European Patent Office or, in the second instance, before the Board of Appeal of the EPO.
Fourthly, with regard to German parts of European patents, post-grant challenging of validity theoretically is possible by launching simultaneous oppositions proceedings before the Opposition Division of the EPO, on the one hand, and nullity proceedings before the Federal Patent Court, on the other hand.
Hence, there are especially situations possible where after infringement proceedings have become final the respective patent is declared invalid ex tunc by the Federal Patents Court, by the German Patent and Trade Mark Office acting in opposition proceedings or by the EPO's Opposition Division.
For the sake of justice, a claimant (plaintiff) of infringement proceedings preferably should not be allowed to get away with gains based on an presumption of validity which was later on explicitly disproved. Otherwise there would be an incentive for would-be claimants to attempt something like fast-track litigation on the basis of freshly granted patents with unknown long-term validity prospects.
German Patent law is equipped with several built-in safeguards against the detrimental effects of such race conditions:
A District Court dealing with an infringement case has the option, upon request of the defendant challenging the validity of the patent, to suspend infringement proceedings until the result of the nullity proceedings has become final. The judges are not obliged to suspend the proceedings; they will exercise some latitude of judgement by granting a suspension only if the validity case prima facie looks promising. The best way to avoid race conditions would, of course, be to give the defendant in infringement proceedings an undeniable right to a suspension of the proceedings as soon as the validity of the patent is challenged. However, lawmakers were afraid that such broad right might turn out to be a gateway for illegitimate delay tactics of defendants in infringement proceedings, and a great scale of discretion was given to the judges. In consequence, there are certain District Courts in Germany (e.g. Düsseldorf) where general wisdom assumes that a suspension in patent litigation cases is much harder to get for the defendant than before other Courts.
If a race condition should really have occurred e.g. because of a District Court did not grant suspension of infringement proceedings but the patent in question nevertheless later on gets anulled in nullity of opposition proceedings, restitution proceedings are possible according to leading opinions for unwinding illegitimate gains of a claimant of infringement proceedings.
Any potential race conditions between opposition proceedings pending before the Opposition Division of the EPO, on the one hand, and nullity proceedings ("Nichtigkeitsverfahren") pending before the Federal Patents Court, on the other hand, are excluded by a provision in German patent law blocking initiating of nullity proceedings before the Federal Patents Court for the German part of a European patent granted by the EPO as long as the term for filing a Notice of Opposition has not lapsed or, if opposition proceedings are pending before the Opposition Division of the EPO, as long as these proceedings are not terminated by becoming final.
Now there appears to be an interesting case in the UK concerning a race condition in the patent system over there.
On April 25, 2007, in the Royal Courts of Justice Strand, London, Lord Justice Mummery, Lady Justice Arden and Lord Justice Jacob took a Decision in the Case [2007] EWCA Civ 364 where Unilin Beheer BV acting as claimant had sued Berry Floor NV and others (defefendants) on the ground of infringement of the UK part of a certain European patent granted by EPO:
Unilin's Patent involved was granted on 26th June 2002, and
Unilin sued Berry Floor, IMC and B&Q (the "Defendants") in the Patents County Court as soon as it was granted. Two types of product known as "Berry" and "Snap-fit" were alleged to infringe.
The claim included a claim for financial relief for infringements committed between the date of publication of the patent application (2nd August 2000) and its grant. Such relief is provided for by s.69 of the Patents Act 1977, implementing Art. 67 of the European Patent Convention ("EPC").
In addition to defending the infringement claim the Defendants counterclaimed for an order for revocation of the Patent.
In September 2003 HHJ Fysh gave judgment for Unilin, holding claim 20 of the Patent valid and infringed by both the Berry and Snap-fit products, [2004] FSR 14.
i)This Court dismissed the Defendants' appeal by a judgment and order of 30th July 2004, [2005] FSR 6. The Court differed somewhat in its construction of the claim from that of the Judge below, but that made no difference to the result.
The House of Lords dismissed the Defendants' Petition for leave to appeal in February 2005.
That left Judge Fysh's order, and the order of this Court, in place. Besides an injunction (which by then did not matter commercially because the Defendants had changed to a non-infringing product) the key features for present purposes of the order as varied and the order of this court were that:
It was declared that claim 20 of the Patent as granted and claims dependent thereon were valid;
It was declared that claims 20 and 21 had been infringed by all of the Defendants;
Permission was given to Unilin to amend the Patent so as to limit its scope to that of claim 20;
The Defendants were ordered to pay 80% of Unilin's costs before HHJ Judge Fysh and all of Unilin's costs in the Court of Appeal;
"There shall be" at Unilin's election an inquiry as to damages suffered by Unilin or an account of profits made by the defendants "by reason of [the Defendants'] infringements of the Patent."
The costs orders and the inquiry or account order were stayed pending the determination of the issue of whether the specification of the Patent had been framed in good faith and with reasonable skill and knowledge.
So far this appears to be normal patent litigation business. But:
In March 2003 Berry Floor's parent company ("Berry Finance") started opposition proceedings against the Patent in the EPO. This was close to the end of the nine month period from grant. At the time of the Decision, the opposition proceedings are still not over - and are unlikely to be so for a year or more. It is possible that they will ultimately result in the Patent being revoked or limited so as not to cover the Berry products.
Hence, we have a typical race condition here.
The UK Judges decided:
"That the Defendants are estopped from challenging Unilin's entitlement to an account of profits, whatever the ultimate result in the EPO;
Even if there were no estoppel, past orders as to costs could not be challenged and so the liberty to the Defendants to apply for an order for repayment of costs should be discharged;
The Defendants' appeal for a stay of proceedings relating to the account should be dismissed."
This might be seen as a very harsh decision, potentially undermining the acceptance of the patent system in society. Even if the Opposition Division of the EPO eventually revokes the entire patent, the claimant would finally get away with all the gains as they were awarded by UK Courts.
Seems to be quite strong meat, indeed. In particular if read against the language of Article 68 EPC stating that a European patent application and the resulting patent shall be deemed not to have had, as from the outset, the effects specified in Articles 64 and 67, to the extent that the patent has been revoked in opposition proceedings.
Lord Justice Jacob writes to justify this approach:
"[...] First and foremost, the estopped defendant has had a full and fair opportunity of attacking the validity of the patent in his own proceedings. Next there is a very very strong public interest in the finality of litigation. Finally a party who had lost would have a strong motive for finding further or better reasons for attacking a patent and getting some third party to do so, thereby undermining the first decision. It is much better that he knows that the first litigation about validity is the time and place for him to get his best case together - that he knows he will have no second chance.
[...]
Now a purist may say: it is a nonsense, and moreover an unjust nonsense, for a man to have to pay for doing what, with hindsight, we know to have been lawful. The purist might, I suppose, also say that a licensee who has paid royalties under a patent subsequently revoked ex tunc should get his money back. He might even say that a man who lost profits by refraining from some commercial activity by reason of a fear, now known to be groundless, of infringing the patent should have some remedy.
But I think there are good and pragmatic reasons why the purist approach makes bad business sense. You cannot unravel everything without creating uncertainty. And where a final decision has been made on a fair contest between the parties, that should stand as the final answer between them.
In a sense a patent is always potentially at risk - someone may come up with a bang on but obscure piece of prior art (my favourite pretend example is an anticipation written in Sanskrit wrongly placed in the childrens section of Alice Springs public library), or simply with better evidence on known prior art. That is no reason for undoing what has been done or regarding a final decision as merely provisional. After a final decision businessmen should be able to get on with their businesses, knowing what the position is. [...]"
Lady Justice Arden argues vis-a-vis this situation:
"[...] The strongest phrase in the European Patent Convention (EPC) that supports the contention of the defendants that revocation of the patent in opposition proceedings in the European Patent Office would affect the judgment already given in this action is the expression 'as from the outset' in article 68. At first sight, these words appear to envisage that, once the patent has been revoked in opposition proceedings, the patent will be treated as having never had any existence. On that basis, there would be no basis on which a judgment in infringement proceedings could be maintained and enforced. The fact that article 68 does not provide that the effects specified in article 64 and 67 should be disapplied only with effect from the date on which the patent is revoked provides some support for the defendants' argument [...].
In my judgment, however, there are a number of answers to this point. First, in so far as the EPC enables national courts to entertain proceedings relating to European patents, the national courts are given autonomy as regards procedure (see article 64(3)). The effect of the prior judgment for infringement is thus a matter for national law. Secondly, as Jacob LJ has recorded, once the cause of action for infringement is given, it is as a matter of English law merged into the judgment and the owner of the patent becomes entitled to a new piece of property, namely the judgment. As I see it there is nothing in the EPC to suggest that revocation is to take away this property right.
Thirdly, it is a general principle of the rule of law that legislation should not have retrospective effect without good reason. There may be said to be a presumption against retrospectivity. It is difficult to see any reason for treating article 68 as retrospective in the factual situation in this case, and accordingly this court should not give it that effect. [...]"
"[...] He is not a human rights lawyer and does not pretend to be, but he can't help speculating whether one's money is a protected possession, in the context of him being deprived of it for the sake of being made to pay damages to compensate a patent owner for infringing a right that should never have been granted in the first place. [...]"
Wikipedia: The term originates with the idea of two signals racing each other to influence the output first. Race conditions can occur in poorly-designed electronics systems, especially logic circuits, but they can and often do also arise in computer software.