Lifecycle of a Smart Idea | The game begins: Strategies for the early stages of patent litigation: The defendant's view

Gordon:           Good day to all our guests today, wherever you may be in the world. My name is Gordon Harris from the Gowling WLG IP Leadership Team and I'm delighted to welcome you to the 7^th webinar in our series, "The Life Cycle of a Smart Idea". Up to now we've been looking at establishing the intellectual property rights space, whether it's patents, trade secrets, copyright, whatever. If you would like to catch up on any of the earlier webinars in the series they are available on demand at our website and at our dedicated IP platform, GoXL.gowlingwlg.com. The last time we looked at the strategies behind planning the commencement of global enforcement proceedings from the point of a view of a patent owner, the Claimant. This time we move to the other side of the fence to look at the strategy and tactics of the Defendant as the game begins. We're going to do all this against the backdrop of a scenario based on a globally patented invention, attracting envious interest and inevitable imitation. To illustrate the issues we'll be calling in at our office around the world to hear from experts within enormous experience in national and multi-national patent litigations. So let me introduce our panel to you briefly.

                        First of all, Selena Kim, in Canada. Selina has been practicing patent law for 18 years in Canada and has represented both Claimants and Defendants in cases involving a variety of technologies. She has extensive experience in managing and coordinating multi-jurisdictional litigation. She is also qualified as a patent agent before the Canadian IP Office, and the US Patent and Trademark Office, and due to the insights gained from her patent prosecution practice to inform her patent litigation strategies and recommendations.

                        Jon Ball, in London, is a highly experienced IP dispute resolution lawyer. He has over 20 years of experience in assisting clients to achieve their commercial goals across all forms of contentious IP matters, with a particular focus on patent litigation, acting for both Claimants and Defendants.

                        Across the channel in  Paris, Clemence Lapotre is waiting for us. She has specialized in intellectual property and information technology matters. Her expertise notably includes patent, trademarks and software. She's a built considerable experience in litigation including complex and multi-jurisdiction disputes as well as the enforcement, management and licencing of IP rights. Search and clearance, risk assessment, opposition proceedings and settlement and licencing agreements.

                        Up to Munich, where Jonathan Konietz is waiting. He advises on IP law with a strong focus on patent litigation. His wide range of experience includes patent disputes in various technical fields such as telecoms, mechanics and electrical and mechanical engineering. Through his work on numerous high profiles, standard essential patent and FRAND cases he's also developed an in depth expertise in patent related anti-trust law and cross-border licencing negotiations.

                        Over in China, Ivy Liang is one of the newest members of our team, having joined our Guangzhou office in April this year. Before joining us she was a Judge in the Guangdong Provincial Courts and she served as Deputy Director of the IP division. So she's fully up to date with all the recent developments in Chinese IP law.

                        Then finally, in Moscow, we have Alexander Dovgalyuk. He's a litigation and enforcement lawyer with over 10 years of experience in IP enforcement. Alexander assists domestic and foreign and clients with a full range of services related to IP enforcement and litigation in Russia, including unfair competition cases, and he regularly represents clients before the IP Court and State Commercial Courts.

                        So there is our expert panel for the day. Now let me set the scene. Today, I'm the client but unlike last week I am not the UK based aspirational patentee, Tycorp. This time I'm the managing director of its competitor, ACWA Power, a French Canadian company with a long established business in the productive management of water for energy. Majoring up to now on hydro electric schemes. Those of you who attended the last session will recall that Tycorp is a company involved in sustainable energy creation and storage, which has developed seemingly new method of storing electricity under water using tidal flow, buoyancy and predictable currents. The potential is global but the technology is relatively simple. So Tycorp opted for a global patenting program, majoring on coastal countries and big energy users. The countries covered include Canada, the USA, Russia, China, many European countries as well as Brazil and Australia. As a hedge against possible complications following Brexit, Tycorp did not designate the UK in the European patent application, but took out a separate UK patent. As we acknowledged last week that was unnecessary. Probably a mistake but that is what they did. So there is a UK patent as well as a European patent which designates key countries in Europe including France and Germany. The technology involves using resistance to water flow and the buoyancy of large air filled containers to first generate and then store electricity. Although there are similarities between the patented technology, and known title energy generation technology, the patent has been granted verbally. They're not without quite a struggle in some patent offices. It is still under opposition in the European Patent Office. It was amended after the first round of the process before the opposition division but survived and there is now a pending appeal to the Technical Board of Appeal. The opposition was done on a strong arm basis but in truth it is ACWA Power, my company, which is funding and supporting the opposition. The technology was an instant and highly profitable success and has seen substantial demand for investment. However, ACWA Power believes that it had in fact already developed but not yet fully marketed technology which, if not identical, certainly employed similar techniques. ACWA Power chose to keep that confidential rather than seek patents. Its granted licences around the world in preparation for market launch. Companies in Germany, Russia, UK and USA have all taken licences of the know-how. ACWA Power is well aware of other people trying to enter this market following the sudden success and publicity surrounding the growth of the Tycorp product. In particular, there is a company in China which is actually one of the suppliers to ACWA Power of the some of the key parts. That Chinese company has its own version of the product ready to launch. So knowing that Tycorp is a well funded company which has been very vocal in the market about the uniqueness of its technology, I, as MD of ACWA Power, am very concerned that it will come after us and our licencees. I'm also concerned it will attack our Chinese supplier which might seriously disrupt our supply chain and our ability to meet early orders. I'm particularly concerned about being injuncted which might damage our whole marketing strategy. I want to know what I can do to stop Tycorp in it's tracks. Now, knowing that Gowling WLG has strong global coverage across many of the countries in which I'm interested, I've asked them to give me a global view. I've gone to a lawyer there I know well, Selina Kim in Canada, and asked her to take the lead, both in respect of the Gowling offices and also firms in other countries where they do not have offices. My instructions to them are to tell me what to do to try to stop Tycorp from disrupting our market plans and to slow down any litigation they may bring. I want to know where is the best place to bring an action and what plans I need to be making now to prepare for potential actions I might bring myself.

So let me start with Selena then. Thanks very much, Selena. Can you give me some initial advice?

Selena:            Yes. Thanks, Gordon, for that introduction. I'll start us off by commenting on three areas that I think are particularly important at this stage. First, I'll talk about getting your international team in place. Since you have the luxury of time, as you haven't been sued yet, this is the time to get going on this. Second, I'll be talking about dealing with your licencees who may be getting increasingly nervous and needing reassurance. Then I'll talk about an offensive part of your strategy which is getting Tycorp to start defending itself in multiple venues within a cost effective and strategic way.

                        First, it's very good that ACWA Power is thinking ahead and not just waiting around to get sued. This gives you a significant advantage and head start. Once you are sued it can become quite a scramble to retain counsel and coordinate your response. It's always better to be as much in control as possible. So in this respect, the first thing you want to do is to get your team in place in your important markets. If you get your conflicts cleared, team members up to speed and speaking with each other. At our firm we're often asked to coordinate and implement strategies in multiple jurisdictions. Of the key jurisdictions you mentioned we have IP litigators in Canada, Europe, Russia and China. In the other countries, US, Brazil and Australia, our firm has extensive knowledge of excellent local firms who have proven technical and legal expertise. We're highly experienced in coordinating between litigators in our own offices, as well as partnering with firms in other jurisdictions, to serve you using a coordinated and nimble strategy.

                        The second matter I'll discuss is dealing with your licencees. You'll want to think about how you're going to reassure them as they may be getting increasingly nervous about getting sued or shutdown by Tycorp. A key question will be whether you have given your licencees an indemnity whereby you pay for costs of defending patent litigation against them. If you have not yet you can be sure that your licencees will be asking you to protect them. So you should start thinking about the terms. In particular, if you are still on boarding new licencees and they ask for an indemnity you'll want to structure your agreement, and your royalty fees, to ensure that you are covered for taking on the additional risks of having to make good on your indemnity.

                        Now, third, I'll discuss an offensive strategy to force Tycorp to defend itself in multiple venues. Now when we advise Defendants we can often be more creative and strategic with our plans compared to when we're advising a Claimant. There is simply a lot more that you can do to distract and annoy. Gordon, you'd asked where is the best place to bring a patent action? I think the first consideration is to step back and consider whether as a Defendant you want to file a formal action at all. You can request courts to declare invalidity of Tycorp's patents in every jurisdiction where the patents are filed and, while that may feel attractive to be the aggressor, we do not actually know that Tycorp is going to sue or when. Once you file an action in any country ACWA Power's identity is public and it forces Tycorp to engage. What might be better in this case is to do more along the lines of what your already doing before the European Patent Office. That is filing some more anonymous patent challenges. A key place to do this is in the United States which I'll discuss later on in our talk today. Filing such anonymous challenges will achieve your goal of distracting Tycorp, forcing it to spread its resources more thinly and making it feel less confident that its patent would survive a validity challenge in a court, if it were to sue. You achieve all this while keeping your identity secret. Of course they will suspect ACWA Power is behind all these challenges but they won't know for sure. Which is another vexing source of uncertainty for a Claimant. I hope these initial thoughts were helpful for you, Gordon.

Gordon:           Thanks very much indeed. It's quite clear now that there are a lot of possibilities. So what I need to do now is to look for some real detailed plans. So what I hear from all the offices, all the different countries, about how we might best protect ourselves from attack, I'm looking to create a global strategy here to ensure that I can continue to run my business and protect my licencees. So, I can start by hearing from Jon, in London.

Jon:                 Of course, Gordon. I'll talk a bit more detail about the position in the UK for a potential Defendant facing patent infringement here and some of the initial steps we should be looking at making a start on. I'll pick up on the key thing mentioned by Selena to begin with, which is setting up the relevant team here in the UK, and obviously early preparation that we're going to be looking to doing as part of the overall defense. Thirdly, I'd like to talk about the overall strategy and particularly some of the more creative options we have here in the UK, as a potential Defendant, you will somewhat take control of the timetable and take control of the initiative. Conscious of course of what she said that you'd rather think that you'd like pushed off as far as possible in time. As I say there are some creative things we can commonly talk to you about.

                        Coming up to the first point, getting the team together, as you may know we still have a split legal profession in the UK between solicitors and barristers. But the solicitors preparing the case and the evidence and the barristers being the court advocate, the expert advocates that we have to do the trial for us. Now, the very best barrister is a Senior Queen's Counsel. It's quite a small pool of patent barristers. So we probably do want to get in quite early and secure who we think the best barrister, lead barrister, is going to be for the case and of course you're welcome to be a part of that process. Probably most importantly in the UK, the expert evidence and the quality of the expert witness, is very often what wins and loses cases up here. It can take very considerable time to find the right expert. Actually our case law is quite prescriptive on this in the way that we deal with an expert, particularly when we're trying to invalidate the patent, for things like obvious things. We have to go through a careful process of dealing with the potential expert. To start getting some opinions on things like, obviously before they've even been shown the patent, so there's no accusation that there's been the use of hindsight. Now that exercise can take a significant amount of time to work through. So early identification and working with potential experts can put in a very good early position in the UK. By way of other preparation, if we do get sued, we will have about 6 weeks to serve the defense which, although sounds like a decent amount of time, will go quickly so we need to get lined up early. We'll need to talk to you in more detail about possible non-infringement defenses. Do we have a prior use of defense if we've used in the UK before the patent? Is there a defense of the nature that this is a kit apart and actually we're not committing an active infringement in this jurisdiction at all? Let's talk with you about that.

                        But obviously the invalidity of the patent will form the major part of our defense and we're in the happy position of being involved in unique ways. We know a lot of the arguments already but in the UK our attack on the patent has to be very focused and we really need to cut down the list of prior art relied upon to just a few very best prior art references. Of course we can't do things like mosaicing art together here. So there's quite a lot of thought that we need to put into that.

                        We should consider whether there's an interim injunction risk. In this jurisdiction like Canada and America, I believe, to get an interim injunction a Claimant would have to show that they're going to be irreparably harmed if we are not stopped from infringing pending trial. They've got to show that damages are not an adequate remedy for them. So we need to get into some of that financial evidence and market evidence early on to see whether there's going to be any meaningful interim injunction risk. Of course, if Tycorp had known about us for a while and haven't acted, then that will pretty much be favourable for their chances of interim relief here.

                        Then come along to that final point about thinking creatively here as a potential Defendant. We'd want to agree with your strategy pretty early on on that. We can deploy a range of delaying tactics here. We can take points on service out of the proceedings. For example, on the Canadian entity. We can seek to reach some agreements with the Claimant over a more relaxed timetable if we are compliant on service and that sort of thing. We can certainly look at challenging jurisdiction. That's the jurisdiction of the Canadian Institute ... all here.  A decision whether to challenge has to be taken very quickly within just 2 weeks of service of the proceeding. So we need to get into that very early. But a jurisdiction challenge, even if not successful, can easily add 3 to 6 months onto the timetable at the front end before the substantive case can proceed. It can be a very useful delaying tactic should that be what we need to do. Also, of course, we can speed things up if we want to get faster in the UK. If we think that we've got a good chance of knocking out the patent here we can try and expedite things to do that. The courts here are sympathetic to Defendants who want to invalidate patent that is threatening to stop their business. They are amenable to getting us early trial dates if we apply for it. Equally, if we think an early UK decision might be helpful in other courts, as it's quite a well respected judiciary that it can be quite effective. We can go for something early. There's also offensive measures that we can take by way of declaratory relief as a Defendant. As well as things like a typical declaration for non-infringement. If our case is that we're simply operating within the prior art or obvious developments for the prior art, we can seek declarations from the court to that effect, and of course we could pre-emptively seek to invalidate the patent even before they sue us. But those are obviously things that would expedite proceedings here. As I say, we can be quite creative as a potential Defendant here in the UK which we should talk in more detail about some of those in due course.

Gordon:           That's terrific ...  Great many options ... I seem to have a bit of a feedback going on but hopefully that will clear in a moment. Anyway, right, thanks very much. Now I know that one country with a strong track record for granting injunctions, which is obviously worrying for me, is Germany. So, Jonathan, perhaps you can help me here. What are the best steps for me to take in Germany to protect the business?

Jonathan:        Thanks, Gordon. Yes, so you're absolutely right to be worried about the risk, at least, of preliminary injunctions in Germany. Because as we have discussed last week in Germany preliminary injunctions do not only exist on paper or in theory in Germany, but are actually and regularly granted by courts in IP matters. So in the next couple of minutes I will focus on two main issues. The first one is the risk of a preliminary injunction in Germany and how we can deal with it. The second is just some strategies and general information about patent litigation in Germany from a Defendant's perspective.

                        As we go with the first issue, as explained last week there's an increased risk of a preliminary injunction in patent matters if firstly the concerned technology is relatively simple and infringement can be shown relatively easy. Secondly, if the patent and suit has already survived at least first instance now that you are position proceedings and, thirdly, if there's a matter of urgency which means that the patent owner must act quickly after becoming aware of the act of infringement. As a firm rule you should act within a month after becoming aware of the infringement. In the case at hand, we already know that the concerned technology is relatively simple and we know Tycorp's core patent has already survived at least first since opposition proceedings. So there might be a real risk here of a preliminary injunction. So what we can do about it? German Civil Procedure Law provides for the possibility of filing a so called protective brief. In this protective brief we can, and should, include all arguments as to why the application for preliminary injunction is unfounded. The protective brief can be filed via a central electronic register and all German courts will check whether a respective protective brief has been filed before granting a preliminary injunction. One essential purpose of these briefs has always been to avoid ex parte injunctions. In other words to avoid being surprised by an injunction without a chance to first respond to the allegations in writing or a hearing. Now that risk of such a surprise attack has decreased significantly in Germany in view of very recent case law by the German Federal Constitutional Court regarding the right to be heard. Nevertheless, a protective brief can be a good product of cautionary measure. Which will also give us just more time to develop strong arguments without the pressure of deadlines set by the court which can be very short in preliminary injunction proceedings. In any case it will let us sleep more calmly.

                        Regarding the second part of strategies and general information about patent litigation, in Germany, from a Defendant's perspective. The first point to note is that in Germany we have a bifurcated patent litigation system. This means that infringement and validity of the patent are dealt with in separate court proceedings. The Federal Patent Court deals with validity and specialized patent channels of the normal. Civil Courts deal with the infringement. So the infringement court can issue a judgment while the fate of the patent is still in question which is one of the reasons, obviously, why you can obtain quick infringement finding. Now, as a result when sued for patent infringement, you need to start working on a nullity action to protect the validity of the patent immediately. Now for this purpose in Germany we usually team up with patent attorneys. The attorneys at law, like me, take the lead in the infringement proceedings and the patent attorneys usually take the lead in the nullity proceedings and both sides just work closely together to ensure that all arguments and the strategy are coordinated perfectly.

                        Now some defense strategies. One point is that you can always request a stay of the infringement proceedings pending decision and the parallel nullity opposition proceedings. The infringement court may do that if it thinks there's a high likelihood that the patent suit is invalid. But if the patent has already survived first instance proceedings, which is the case here, it is extremely unlikely that infringement proceedings will be stayed. We should also consider sending third party notices to companies in the supply chain that potentially contributed to the alleged infringement, inviting them to join the proceedings on our side. This will only help in view of potential recourse claims. But they also significantly increase the cost for the Plaintiff because if Tycorp loses the case it will have to reimburse not only our statutory costs of the proceedings but also the costs of all intervening parties. Gordon, you mentioned that ACWA Power believes that it already developed the concerned technology, or at least a very similar one, so like Jon already mentioned, obviously we need to look closer whether there's a prior use fact here. A very common strategy is also, in Germany, to contest the Claimant's standing to sue. In particular there's been a change of ownership with respect to the patent and foreign law applies to the transfer. There's a chance for the Defendant to push for an expert opinion on the effectiveness of that transfer. I've seen cases which were delayed for almost 2 years just because of these kinds of issues. It's important to understand though that this strategy does only work with respect to damages claims, not the claim for injunctive relief, because for that claim it doesn't matter who owned the patent in the past. But since both claims are usually asserted in the same proceedings it is absolutely possible to put the injunction on the slow track as well. Those were just a few initial thoughts and there's much more to say, of course, so if you do have any further questions please just drop me a line or give me a call anytime. For now, back to you, Gordon.

Gordon:           Thanks very much, Jonathan. We're only two jurisdictions in but the thing that's already occurring to me is the range of different options which are available in different countries. That makes me look forward to what I'm going to hear more of from other countries now. I have very particular concerns about my supply chain and I'm genuinely worried that if my key parts flow from China is interrupted I will not be able to keep the business flow properly. So, Ivy Liang, can you help me in China? How can I best protect myself there?

Ivy:                  Yes, Gordon. When talking about strategies, I'm thinking about the strategic portfolio of PPP here. Which means that precaution, the proactivity and the procrastination. So first, the precaution. Best strategy before action. Taking precaution is key to prepare for any possible actions. We will firstly prepare for the invalidation proceeding in case Tycorp ... or our supplier in China, of course. We have the similar ... here in China with what Jonathan mentioned about in Germany. China also adopts the bifurcated which means that China will use to examine or invalidate a patent. It's separate from the channel used to determine patent infringements. As the course of action for Tycorp here is vested in patent rights we will of course try to invalidate the patent rights in the State Intellectual Property Office. As the first step in this regard. I think our clients, ACWA Power, must be keen to keep the invalidation plan secret and only give Tycorp a strike with the full preparation and the best timing. So the first thing for us to do here is to do the internal assessment on the merits of the invalidation. We have many talents in our firm in China and all around the world, of course. For example, under this circumstance there is the patent that involve electricity and electronics, we will then line up our colleagues who are patent attorneys, excel in this field, and set up our analysis and suggestions in the assessment report. I also understand that the core patent of Tycorp is under opposition in the European Patent Office. The arguments of invalidation are kind of similar in nature in many countries. Therefore being part of the international law firm we have the privilege to liaise with our colleagues all around the world. For example, I will ... to my colleagues, Clemence and Jonathan in France and Germany, who are working closely on the invalidation with the client and get first hand information from them to support our assessment report in China. With this assessment report in hand we can then file the invalidity declaration to the State Intellectual Property Office whenever our client thinks fit. So, that's the first step.

                        The second step is the proactivity. That's the strategy before potential litigation. We firstly think about ... declaration of known infringements. Given the cost concern and the uncertainty result of litigation I truly suspect that Tycorp may ... placement over to cease and desist letter to our China supplier first without initiating the civil proceeding. Our China supplier may then refrain from supplying products to our client because whether Tycorp's patent right has been infringed upon is still pending. So this will seriously obstruct our supplier from supplying the key parts to ACWA Power and cause much trouble to our market plans. In China, to eliminate this uncertainty it is possible for our side to take the proactive measure by initiating a civil proceeding to the Court and sue for declaration of known infringements. The purpose of this mechanism is to regulate the excessive issuance of warning by the alleged right holders and a way to prolong disturbance which will cause much damages to the other party. Therefore, we will actively support our China supplier to give a written notice to Tycorp and demand it to exercise it's rights. If Tycorp is just bluffing and never respond or take any substantive actions and then we already have our preliminary assessment report ready. When we think about initiating the civil proceeding of declaration of known infringement and then we can take a more proactive approach and change from being passive to being active.

The last step will be the procrastination. That's the strategy during the litigation. First we'll think about applying for stay of the case. As I mentioned above, I'm not a bi-product of filing the invalidity declaration to the State Intellectual Property Office, is to stay the case in court. In China, with regard to any case accepted by the people's court concerning the infringement of a dispute over utility model or decide patent right. If the Defendant ... the invalidity issue and files the application the court shall stay the case. They'll wait for the decision of the State Intellectual Property Office. As you may remember I mentioned earlier that this procedure may take a very long time, for around 1 to 3 years in total. When the State Intellectual Property Office comes out with a decision, either the applicant or the patentee could disagree with this decision. May bring up an administrative integration against the cycle of the first instance and, of course, can appear later which may significantly make the life difficult for the Claimant. We can also think about applying for jurisdiction challenge and join the possible third party in the case. It is almost the most common strategy which the Defendant takes to postpone the civil proceeding in China. Although judges, including the old me, are not quite pleased with this but the law is law. We have to decide and give a decision on this jurisdiction challenge. For filing the jurisdiction challenge and appear later it may possibly postpone the whole proceeding for around 2 to 3 months. In addition, we may even complicate the matter by applying for joining the related third party in the litigation. For example, possible suppliers or manufacturers in supply chain of our Chinese supplier, things will become really complicated if the suppliers or manufacturers are from overseas and they need to be served with the Hague Convention.

So those are some opinions from China. Let's just hear some ideas from our colleagues, Alexander in Russia. Alexander, what's your suggestion for Gordon?

Gordon:           Alexander, has frozen. No. He's back.

Alexander:       No. No. I'm here. Okay. Sorry. The good news for the Defendant, for ACWA Power, in Russia is that the Claimant, Tycorp, will never get a preliminary injunction in Russia. If such option exist in theory but in practice Russia just don't want to grant ... no matter how strong the position of the Claimant is. It just doesn't work for us, fortunately. There are no declaration type of proceedings which means the ... here is nullity action. Just like in Germany and China, Russia adopts a bifurcated system, which means that invalidity cannot be raised as a defense in the claim of the infringement proceedings. The Defendant would need to launch separate proceedings because Russian ... in order to nullify the ... proceedings but they do not exercise this right very often. Therefore, given that the patent litigation infringement litigation develop and moves faster than the other jurisdictions, the Tribunal can render its judgment on infringement faster than ... the Russian Patent Office hears the invalidation case. Therefore, as Ivy and Jonathan noted, it is crucial to have nullity action prepared well in advance. Its worthwhile collecting the evidence of ... from other jurisdictions as well and prepare the statement of claim as well and to be ready to shoot action immediately after ... ... Tycorp takes infringement patency. Probably, it may be effective to shoot this action even before Tycorp acts against Russian licencee if it's okay from the global protection perspective. For example, if we are already sure that the patent is weak and we could already succeeded in some other jurisdictions ... nullity action. As for defense ... in the frame of infringement proceedings I would say ... the defenses we can raise.          

                        The first one is just an evident one to claim known infringement. Russia, if there is no discovery in Russia the burden of proof is on patent ...

Gordon:           Yeah. We are having serious technical problems here with Alexander. We're only getting part of what he's saying. What I'm going to suggest we do is move on from Russia now and hopefully we may be able to come back and pick up some of those points a little bit later on. So, let me pick up then and move to my home market. Home market for my company is France. It would be very serious, indeed, if we suffered business disruption in France. Clemence, can you put my mind at rest and what should we be doing to prepare for litigation in France?

Clemence:       Yes, thank you, Gordon. So, as you mentioned ACWA Power is a Franco Canadian company whose technology has been licenced to companies in Germany, in Russia, in the UK and in the US. As a licencer based in France, ACWA Power should consider how to coordinate action, only action in France and Europe wide, for sure. To that end I will discuss potential steps that ACWA Power can undertake at three different stages. Before any infringement action from Tycorp, within the context of an action initiated by Tycorp, and in the event that ACWA Power decides to take the initiative of an action.

                        First, ACWA Power needs to prepare for civil action by Tycorp. In this context, ACWA Power shall consider to coordinate actions abroad but also to prepare itself in France. As Selena and Ivy indicated, it may be desirable to support ACWA Power licences and suppliers outside France. In this respect we note that as a precautionary licencer ACWA Power has already taken the initiative to oppose Tycorp's European patent through a strongman. This is crucial because in the position filed against a European patent before the European Patent office is deemed to be against all countries designated by the patent. So if successful the patent will be invalidated, Europe wide, with a retroactive effect. We know in this respect that the patent has survived in a limited form and yet the appeal is now pending. As a result consolation should not be taken for granted. That in any case ACWA Power should consider continuing the opposition proceedings since it can help delaying Tycorp's actions. It can also share the material gathered to support the opposition since it's licences may have complimentary information that could be useful or may needed to file protective brief in German, as Jonathan mentioned, or challenge anonymously the patent in the US, as suggested by Selena. Which seemed an interesting tactic as well. In the course ACWA Power cannot find protective letter against potential ex parte injunctions. So there is no potential anticipate on that front. That being said, ACWA Power should get ready in case of seizure ... in French. We mentioned it last week, seizure is a powerful tool that enable a patent owner, duly authorized by the Judge, in ex parte proceedings. So to get the surprise. To have a bailiff usually assist by a patent attorney and other experts and tell the premises of the infringer and search evidence of the infringement and its extent. Meaning technical but also financial information. All that legally and lawyerly gathered can be used in litigation by the Claimant. Even if abroad. So it is really crucial to get prepared for such measure.

                        There is protection to take extreme that can include giving instruction to the employee ... who has found through any bailiff questions made in a statement if valid for us to do so. There's precaution that we can take during the seizure. Those include informing your counsellor from Gowling and ask him to come and assist during the seizure. We can also raise the confidentiality of sensitive, technical and commercial information. What we have to note is that if a seizure has been conducted it automatically means that election under mandate will be brought against ACWA Power. Which leads to my second point.

                        In France there is no bifurcation and in case of infringement actions of validity and the infringement of the patent will be assessed simultaneously in the same proceeding. As we mentioned last week there are good chances that no stay of proceeding on pending the outcome of the opposition will be granted. Nevertheless, there are several ways that ACWA Power can try to implement to build a solid defense strategy in the framework of an action on the merits. Among the numerous possibility we name three. Challenging the validity of the seizure of the bailiff we bought. Challenging the validity of the writ summons or raising the incidental procedural deficits, as well as changing the validity of the patent as a counter-claim.

                        This is my third point and ACWA Power can also consider taking the initiative and the action and, in particular since he is the licencer, and he can do that on three different grounds. The validity of Tycorp's patents, the absence of infringement and the prior personal use. As for the first ground of validity, in France like the jurisdiction in Europe, there is a risk that cannot be entirely ruled out, but the courts seized of an invalidity action we'll stay the proceeding pending the European Patent Office as seizure. However, we know that Tycorp also holds an independent ... patent whose validity can be challenged. As a result, as a means of pressure with the help of Jon, ACWA Power could also opt for an ... invalidity action in the UK. Which is known as a feared, an expensive and a technical jurisdiction. As Jonathan from the Munich office, within the context of the top strategy, ACWA Power can also consider bringing a declaration of non-infringement in course. A declaration of non-infringement can be introduced by any operator providing evidence, at least of serious preparatory acts, or industrial expectation and asking the patent holder to state whether the patent could be infringed by such expectation. If Tycorp fails to answer within 3 months, which is quite short, or in case of disagreement between the parties, ACWA Power could bring an action before Paris court to rule that the expectation of how technology does not fall within the scope of Tycorp patents. As an alternative ACWA Power can also, and we've discussed it, consider and claim that it was a position and putting into use the invention prior to Tycorp. This is prior personal use that can be invoked provided that the features of the technology used are identical to the patent and that the use has started in good faith prior to the filing date of the patent. In this respect I think that we have noted that ACWA Power has protected its technology through trade secrets and may not be willing to disclose it. However, since the implementation of the trade secret directive in France, there is considerable tools and solutions to preserve secrecy despite an action and proceedings. Those are, for instance, confidentiality clause, ... restrictive audience rules and publication of judgment redacted of any technical information.

                        Despite that, I will add that in any case those strategy are not free of certain risk. In particular they expose ACWA Power to a risk of infringement counter-claims, and should the decision be in favour of ACWA Power, it could not prevent Tycorp from bringing an infringement action in the event that the expectation of Tycorp is not carried out and the specific condition mentioned in the declaration of non-infringement are in the prior use action. This was for France and that being said I will give the floor to Selena for those strategies that can be implemented in the US or Canada.

Gordon:           Thanks very much, indeed, and thank you particularly, Clemence, for raising that point that under the directive on trade secrets in Europe. It is possible that we could use our own material that we consider to be secret in an action without necessarily disclosing it more broadly. I think that's a really important point. Right. Well, thank you very much, Clemence. Our main business base is in Canada and the US is a potentially obvious market. So, Selena, we've save the biggest to the last. Over to you. What can we be doing in North America to protect ourselves.

Selena:            Thank you, Gordon. Just before I start on Canada and the US, I thought because of the sound difficulties and the connection difficulties we had during Alexander's part of the talk for Russia, I would just summarize a couple of key points from Alexander's section. Alexander explained it's a very, very Defendant friendly jurisdiction in Russia. I'm totally jealous. You've got lots of power as the Defendant. First of all, there's no preliminary injunction that's practically available to the Plaintiff and in terms of discovery, there is none. So Tycorp is on its own in terms of trying to collect evidence of infringement and it sounded like the courts are even reluctant to give access to Plaintiffs or to even independent experts in terms of access to premises in order to gather evidence. So it sounds like Plaintiffs have a real uphill battle in Russia. Its great for our case.

                        Now, returning to Canada and USA. There's two things you want to do. First, I mentioned filing anonymous patent challenges before patent offices. This is a very effective and well established Defendant strategy to use before the United States Patent and Trademark Office. There's really little downside in proceeding right away before that agency. In Canada it's also possible to file a similar challenge before the Canadian Intellectual Property Office but it's much less commonly done then in the United States. This is because traditionally CIPO has been more likely to reinforce the original decisions of their patent examiners and procedurally there's less opportunity in the Canadian Patent Office procedures to make oral argument before the decision makers. So it's generally preferred to challenge validity in a Court where you have much more capacity to engage persuasively with the Judge and make your case. This situation is evolving but at this time I recommend proceeding only with a challenge before the US PTO.

                        Second thing you want to do is you want to prepare, in the event that Tycorp applies to the US International Trade Commission for an exclusion order blocking your products from importation, or for a Court injunction in Canada or the US. To counter Tycorps prospects in all of these situations you should brainstorm with your counsel and think about evidence to support your position that Tycorp would not suffer irreparable harm if you're allowed to continue your activities pending a full determination of the dispute. If you have good evidence ready this will really go a long way in protecting you from exclusion orders and injunctions in Canada and the US. Back to you, Gordon.

Gordon:           Excellent. Thanks very much indeed, Selena. That's great. I have quite a lot to think about, don't I? It would be really helpful if I could get one of you to pull things together for me into a summary of that advice, overall, and I'm going to ask Jon, in London, if you can do that. So, Jon, can you give me a little pulled together of what we've just heard?

Jon:                 Yes, certainly, Gordon. There is obviously a lot of ground covered there but if I can just start drawing some of the key strands together into key strategy decisions that have started to emerge. One of the key risks identified is clearly the interim injunction risk in Germany that's still available in practice. To getting that protective brief out early. To give it a chance to proactively take matters into our own hands before something does get filed against us. It's obviously a key first step in that market.

                        Likewise in France, Clemence identified this risk of the seizure procedure which is a very, very powerful tool in the hands of the Claimant. I think we do need to get lined up as soon as possible with trying to do everything we can to mitigate against that, as far as it's possible to do so, that very much needs to be top of our mind given the importance of the French market.

                        I think it's interesting that of the three jurisdictions in play here, Germany, China and Russia, they have this bifurcated proceedings. The nullity or invalidity of the patent is held in a completely separate court. To mitigate the infringement court risk we really need to do get on quickly and file very strong nullity suit if we think we're going to be attacked in those jurisdictions. Staying on the nullity theme, Selena outlined some specific challenges that can be brought, particularly in the US PTO, which can be powerful defensive weapons. So again, I think going on the attack on the nullity side, we need to think about the US options as well. Maybe Canada less so given Selena's advice there. Russia is an interesting one. Alex broke up just when he was talking about this and Selena summarized the advice from Russia. But the Claimant is not an easy position there to bring an infringement case and we can certainly play that to our advantage.

I think with the common law jurisdictions, UK, Canada, US, there's a range of creative options to go on the offensive by way of declaratory relief. I think interim injunctive relief is something we need to look at although it may be less risky for us. But also given the fact that all three of those Courts have full cross-examination of experts and deposition of ..., we do need to really focus on our expert evidence in defending those jurisdictions. But again, France, China, I mean as you've heard there's a range of different offensive tactics that can be deployed and we'll need to bring those together in a meaningful way to help you through all of that.

Then finally, the contractual matrix and the client's position within the supply chain is going to be, unfortunately, a complicating and challenging issue to be managed throughout the matter. International coordination on that is going to be critical to the success on that, Gordon.

Gordon:           Thanks very much. That really, really pulled things together very nicely. Thank you to all of you for your advice. Now, before I make any final decisions about strategy, I'm keen to follow up with a few questions that we've picked up along the way. Now sadly, today's the day we're finally doomed to have technology trap us. We've done very well up to now and this is the seventh of these events and technology has supported us. But we lost Russia for a while and now we've lost China. Ivy is not around to answer the question that's come from the audience about SIPO. But I can answer it for you. The answer is that yes, you can bring an invalidity challenge in the State Intellectual Property Office in China on a strongman basis. So, to answer that question, the answer is yes, you can do it as you can in Europe on an anonymous basis, in China.

                        Just picking up on a few other issues in other areas. Jonathan, is there a counter-action seeking a declaration of non-infringement in Germany?

Jonathan:        Yes, there is. So you can file such action before you have been sued. The very same question of infringement is already pending before a German Court. But in order to do that what you need is a real legal dispute between the parties, about a legal relationship between them, and in patent litigation matters this is usually the case if you get a proper warning letter saying, "This is my patent. You're infringing it and I have claims against you." Now this warning letter is there for a risky strategy also because, as Clemence mentioned, there's a risk of torpedo complaints in Europe, based on a European patent. What's likely to happen in Germany if somebody intends to sue you in infringement proceedings is that you will either get a letter with very soft language, which will not constitute a legal dispute between the parties yet, or you will just get sued out of the blue.

Gordon:           Thank you very much, indeed. Well, that's a very strong warning. Thank you for that one. Selena, I've heard that there are particular issues in Canada concerning the availability of Defendant's profits. Can you just top me up on that? Because that makes me a little bit nervous

Selena:            Gordon, this is a key risk to Defendants in Canadian patent litigation that this law arise in the US where you're essentially limited to your damages. So in a Canadian patent case, the Claimant is generally entitled to demand if successful at trial, either the Defendant's profits or the Claimant's own damages. Now profits are usually chosen because they are typically higher than the damages. Further, under our law, the profits are calculated differently than in regular business practice. Because you're only entitled to deduct variable costs from your revenues. So in general you cannot deduct fixed costs such as head office expenses or other costs that do not tend to go up and down with the volume of infringing activity. So this can result in very high profit awards in Canada. So in some cases in the past the profit award in Canada has been larger than the damages awarded in the corresponding US patent litigation. Despite the much larger market size in the US. So this is definitely an aspect of Canadian patent litigation that's important for you to be aware of.

Gordon:           That is very different and it is very different to Europe. In the UK I would say that profits can be made to disappear by accountants acting as magicians. They seem to disappear. Here we are. Things are happening and exciting. Ivy, are you there?

Ivy:                  Yes. Sorry.

Gordon:           I did have one more question for you if you were able to deal with it. If your technology will hold up. We've ... a lot of questions about some of the very creative things that could happen. Is there anything other than patent law which we could do using in China? Is there anything that we might do that is extremely interesting and fun?

Ivy:                  Yes. Gordon, sorry, my computer is having a bad mood. I think that we need to appease our important customers because patent litigation will be, of course, of much concern to our customers. They may require an explanation of the infringement issue and indemnity, as mentioned by Selena. So sometimes they will place future orders on hold, exactly what ... wants. Some Plaintiffs send letters to the Defendant's customers, enforce the inform of the customers potential liability. In this case I think the Defendant should take the initiative to contact our important customers and obtain legal opinions on possible race and think about bringing a separate action of ... position against the Claimant with the course of action of commercial defamation, maybe. That's my suggestion.

Gordon:           Wow. Thank you very much, indeed. Well, many thanks to everyone who's attended today and, indeed, any of the webinars in our series so far. We really appreciate your interest and support and I hope we've been able to give you some insight into the early stages of patent litigation from a Defendant's perspective. Many thanks to my panel for all the preparation and thought they put it into this. They've certainly thrown up a lot of ideas. I suppose my big take away message from this is this; there are lots of different strands of options, lots of different possibilities arising in different countries around the world. Things that can be done very differently from one country to another in order to achieve the overall legal and commercial goal. The risk, always there, is that you end up saying something in one country which actually supports the submission that you're making there and damages the position somewhere else. So having a really strong team of lawyers acting in concert and with lots of planning and coordination is clearly the best way to proceed. This is exactly the same conclusion I reached last week from the Claimant's perspective. Global coordination is crucial to make sure that submissions made in one jurisdiction are not fatal to your legal position elsewhere. Striking hard and fast to attack the patent which is threatening you can be effective and maybe force the patentee to compromise or even clear the path completely.

                        We're going to take a summer break now and we will be back in September to continue with this series. Among the highlights to come there will be a branch line of webinars looking at designing, branding and advertising the physical idea or our smart idea. As well as more in the dispute resolution space looking at the use of international arbitration and mediation in patent cases. Artificial intelligence will come up and the many perplexities of evidence including experts, experiments and disclosure. We'll take a really good look at all of these issues.

                        In the meantime, a recording of today's session will be available on our website and at GoXL.gowlingwlg.com in the next few days. Please feel free to watch again or to recommend this to one of your colleagues. Indeed, the whole series of these webinars is now available as a package at those two venues. So please feel free to share or dip back in if there's anything that you may have missed along the way.

                        Thank you very much, indeed, for your kind attention today and for taking the time to join us. Have a great summer and we look forward to seeing you again in September as we continue to pursue the Life Cycle of a Smart Idea. This broadcast will terminate automatically in just a few moments. Thanks very much, indeed.