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BE – Nouvag / Malak – a costly second try at invalidity

14 Apr 2017

On 3 April 2017, the Mons court of appeal issued a judgment in a patent revocation action between Nouvag and Dr. Jean Malak (Docket nr. 2016/RG/263). The judgment, the latest in a series of decisions in relation to Dr. Malak’s patent nr. EP 0971754 for a liposuction apparatus, includes interesting considerations on res judicata and legal costs in Belgian patent litigation.

Res judicata – The judgment provides guidance on the impact of res judicata on a patent revocation action based on new prior art documents and on validity arguments not relied upon in previous litigation between the same parties in relation to the same patent.

On 15 October 2009, the Brussels court of appeal imposed an injunction and awarded damages for infringement of the Belgian counterpart of the patent. The court dismissed Nouvag’s counterclaim for revocation. That counterclaim was based on lack of novelty, insufficiency and inventive step. After this judgment was confirmed by the Cour de Cassation on 3 February 2012, Dr. Malak sought and obtained penalties in the amount of 915.000 EUR for violations of the injunction because the infringing device was still offered for sale on Nouvag’s website.

Nouvag then launched a second revocation action before the Mons commercial court, alleging insufficiency, lack of novelty and obviousness on the basis of 10 prior art documents not relied upon in the first action, as well as an alleged public prior use. The ‘new’ prior art documents had been used by Nouvag in parallel invalidity proceedings in Germany after the judgment by the Brussels court of appeal was issued. Nouvag also argued invalidity for added subject matter for the first time in the second action.

The Mons court of appeal has now declared Nouvag’s action inadmissible to the extent that it was based on lack of novelty, insufficiency and inventive step. The court decided that the rule of res judicata (Article 23 of the Belgian Judicial Code: “gezag van gewijsde” or “autorité de la chose jugée”) prevents a subsequent invalidity action between the same parties that is based on the same legal basis, regardless of whether new evidence is submitted. The judgment explains that patent litigation does not differ from other procedures in this respect. To the extent that Nouvag relied on added subject matter, an new invalidity argument that was not run in the first proceedings, the action was declared admissible but unfounded.

Two comments can be made on this aspect of the decision. The first is that Article 23 of the Judicial Code, determining the scope of res judicata in Belgium, has since been amended. The provision that applied to the litigation prevented new actions having the same object and the same cause of action, litigated between the same parties, in the same capacity. The provision has been changed to include that res judicata extends to actions having the same object and cause of action, “regardless of the legal basis”. Under the new regime, Articles 23 and 25 of the Judicial Code may have also barred Nouvag from filing a second revocation action based on new grounds, i.e. added subject matter.

The second is that all is not necessarily lost when new prior art documents come to light after a final decision was rendered. The route is – in the author’s opinion – not a second action, but rather a request for a retrial of the first decision (“verzoek tot herroeping van het gewijsde”). Article 1133 of the Belgian Judicial Code allows for such a request inter alia in cases of deception or if, since the decision, “determining evidence came to light that was withheld by the prevailing party”. Admittedly, this route is limited because the Cour de Cassation’s case law on retrials is strict: a request will not be granted if it is based on reasons that the claimant knew or could have known at the time of the decision (Cour de Cassation, 26 May 1995). Arguing that a new prior art document was not public to the extent that you could have been aware of it, could be a tall order.

Legal costs – A second interesting aspect of the judgment is that of legal costs. In United Video Properties / Telenet (C-57/15), the EU Court of Justice held, firstly, that Article 14 of Directive 2004/48/EC precludes national rules providing that reimbursement of the costs of technical advisers are provided for only in the event of fault on the part of the unsuccessful party, given that those costs are directly and closely linked to a judicial action seeking to have an intellectual property right upheld. Referring to this decision, the court of appeal awarded compensation to Dr. Malak for the fees of patent attorneys having advised on the matter on the basis of invoices produced.

The CJEU also ruled on the Belgian statutory cap on the recovery of lawyers’ fees. Article 1022 of the Judicial Code provides that prevailing parties in any litigation cannot recover lawyers’ fees exceeding the maximum amounts stipulated in the Royal Decree of October 26 2007. This decree features a matrix which provides standard, minimum and maximum costs awards, depending on the amount in dispute. Courts can vary the costs awards between the maximum and minimum amounts on the basis of the circumstances of the case. The statutory amount is usually insufficient to cover the parties’ real costs of legal representation.

The CJEU held in that regard that Article 14 precludes national legislation providing flat-rates which, owing to the maximum amounts that it contains being too low, do not ensure that, at the very least, a significant and appropriate part of the reasonable costs incurred by the successful party are borne by the unsuccessful party. Against this backdrop, the court of appeal reserved judgment on this aspect of costs and it invited the parties to comment on whether the statutory maximum of 12.000 EUR would cover a significant and appropriate part of reasonable costs in this case.

A copy of the judgment (in French) can be read here.

Headnote: Kristof Neefs, Inteo