London Agreement – no preliminary injunction in lack of full Hungarian translation

Ten years after the Agreement on the Application of Article 65 of the Convention on the Grant of European Patents (the London Agreement) entered into force in Hungary, the long-awaited clarification about the enforcement of European patents was provided by the courts. According to the courts, the national scope of protection of a European patent is established by the filing of a full Hungarian translation of the patent description. Where the patentee does not file a full Hungarian translation along with the validation of the European patent, and if the translation is not made available to potential infringers through either publication by the Hungarian Intellectual Property Office (HIPO) or by directly serving it before initiating a legal dispute, a preliminary injunction may not be claimed. The recent Metropolitan Court of Appeals decision (8 July 2021, 8.Pkf.25.564/2021/3) confirmed the first-instance Metropolitan Court decision (3.Pk.20.925/2021/9), in which its precedent-setting previous decision (3.Pk.24.079/2018/10) was cited and confirmed. Based on these decisions, patentees should be aware of potential pitfalls regarding the enforcement of European patents and must take every possible step before they can start a preliminary injunction procedure.

London Agreement and translation requirements

The London Agreement was concluded at the inter-government conference held in London on 17 October 2000 (see OJ EPO 2001, 549) on the application of Article 65 of the European Patent Cooperation (EPC), an optional agreement aiming to reduce costs relating to the translation of European patents.

The EPC contracting states that have ratified or acceded to the agreement undertake to waive, entirely or largely, the requirement for translations of European patents. Under Article 1(1), (2) and (3) of the London Agreement:

• a state that has an official language in common with one of the official languages of the EPO will dispense entirely with the translation requirements; and
• a state that has no official language in common with one of the official languages of the EPO will dispense with the translation requirements if the European patent has been granted in the official language of the EPO prescribed by that state or has been translated into that language and supplied under the conditions provided for in Article 65(1) of the EPC (these states may, however, require that a translation of the claims be supplied in one of their official languages).

On 1 January 2011, Hungary was the 16th contracting state to enter the agreement under the conditions that a translation of claims is required, while in cases with English as an official language a Hungarian translation beyond the claims (ie, a translation of the description and drawings) is optional.

According to Section 84/H(1) of the Act on the Protection of Inventions by Patents (XXXIII, 1995, the Patent Act), a European patent will become effective in Hungary provided that the patentee supplies the HIPO with the Hungarian translation of the claims of the European patent. In addition, if the language of the EPO procedure is French or German, an English or Hungarian translation beyond the claims of the European patent must be provided. If the language of the procedure before the EPO is French or German, the European patent will become effective in Hungary when the mandatory Hungarian translation of the patent claims and the Hungarian or English translation beyond the claims are both filed.

According to Section 84/H(10a), apart from cases laid down in Section 84/H(1) and (1a), the patentee may at any time file the Hungarian translation of the text beyond the claims of the European patent with the HIPO. Where text beyond the claims was filed, According to Section 84/J(1) and (2), the scope of protection of a validated European patent will be determined according to the translation.

The patentee has every opportunity to file the translation of the patent description at the same time as the validation request or at any time before initiating a legal dispute.

The Patent Act provides that where the patentee fails to submit the full Hungarian translation of a European patent as required under Section 84/H:

• the patentee will be liable to make available the translation at their own expense at the request of the alleged infringer (Section 84/G(2)) in the event of any dispute relating to the European patent;
• it will be construed that the defendant failed to give cause for the lawsuit (Section 104(15)) and failed to make the translation available to the alleged infringer (Subsection (2) of Section 84/G) at the request of the alleged infringer; and
• should the infringer’s home address or registered office be located in Hungary, the infringement may not be considered to be committed under fault until the patentee satisfies the requirements set of Subsection (2) of Section 84/G or Section 84/H, unless the patentee can verify that the infringer should have understood the original text of the European patent in the absence of a translation (Section 35(3)).

Metropolitan Court’s first guidance (3.Pk.24.079/2018/10)

The first case where the absence of a Hungarian translation of the text beyond the claims of a European patent was taken into account was a preliminary injunction proceeding between a US patentee of a European patent for a hookah heat-management accessory and the Hungarian importer and distributor of a Turkish manufacturer’s product. The patentee filed its validation request within the prescribed three months by submitting only the English claims. The patentee sent no warning letter before filing its preliminary injunction request to the Metropolitan Court. The full Hungarian text of the invoked patent was filed before the court only after the preliminary injunction request had been filed and upon a deficiency order from the court.

In its decision, the Metropolitan Court noted that a Hungarian translation of a description can be filed in cases where the official language of the procedure before the EPO is English, and, in accordance with Section 84H(10a), apart from cases set out in Section 84H(1) and (1a), a patentee may file the Hungarian translation of the text beyond the claims of the European patent with the HIPO at any time. While the scope of protection is determined by the claims, the claims themselves must be interpreted based on the description and drawings, in accordance with Section 24(1) of the Patent Act. The foreign-language skill specificity of the Hungarian market is also considered by Section 35(3) of the act when determining the defendant’s liability.

The Metropolitan Court stated that although the Hungarian validation requirements can be fulfilled by filing the Hungarian translation of the claims only, patentees have a wide range of possibilities to file and publish the full Hungarian translation before, on or after validation of a European patent. According to Section 84/E of the Patent, the patentee already has the right to obtain provisional protection at an early stage by requesting the official publication of the Hungarian translation of the claims of the European patent application under examination by the EPO.

The court noted that in this way the patentee can clearly declare the scope of protection aimed at by its European patent application that is intended to be validated in Hungary after grant. According to the court, by not taking the pre-emptive translation-related steps, the risk of legal disputes may significantly increase and a patentee acting in this way does not deserve the right of special appreciation as one of the crucial requirements of ordering the preliminary injunction.

According to the court, where the understanding of the description of a patent available only in a foreign language cannot be expected from an enterprise due to the character of its normal economic activity, its size or for any other reason, the patentee is, in general, not entitled to special appreciation if they did not file the Hungarian translation of the description of the European patent. Failure to exert these rights by the patentee can be reasonably referred to by the enterprise as an act rebutting the presumption of Section 104(2) of the Patent Act relating to the patentee’s rights deserving special appreciation, and precluding the ruling of a preliminary injunction due to a reason deserving special appreciation on the basis of Section 103(1)(d) of the Civil Procedure Code, which will result in the rejection of a preliminary injunction request.

Metropolitan Court’s second guidance (3.Pk.20.925/2021/9)

The second case where Metropolitan Court had to deal with a preliminary injunction request, where only the translation of the description was filed before the court and was not provided to the alleged infringer beforehand, concerned a US patentee of a European patent for a prosthetic heart valve and a Hungarian importer and distributor of an Indian manufacturer’s product.

The court relied on its previous decision and explained that the patentee does not deserve the right for special appreciation (according Section 104(2) of the Patent Act or Section 103(1)(d) of the Civil Procedure Code) since it did not:

• apply for provisional protection before start date of the alleged infringement;
• exercise its right to file translations according to Section 84/H;
• send a warning letter to the alleged infringer to cease its activity; and
• provide a full translation of the patent, including the description, to the alleged infringer.

The court provided further guidance in relation to Section 103(1)(d) of the Civil Procedure Code, which was presented as an auxiliary claim by the patentee. The court explained that irreparable harm must be adjudged according to rules of civil law, meaning, therefore, that the patentee would need to provide prima facie evidence of damages, including lost profits. The court relied on Section 35(3) of the Patent, namely, that until the full translation of the European patent, including the description, is provided to the defendant, it may not be liable for damages, inter alia lost profits. The exemption of liability of the defendant must be presumed, and this therefore resulted in the rejection of the preliminary injunction claim based on irreparable harm.

In addition, according to the Metropolitan Court, the defendant (a small company with only one employee) was not obliged to understand the patent documentation without a Hungarian description, therefore the patentee does not deserve special appreciation, nor is the defendant liable for any irreparable harm. According to court, a large innovative legal entity with a legal IP department is likely to have sufficient skills to determine the scope of a European patent from an English translation of the text beyond the claims.

Metropolitan Court of Appeals’ clarification (8.Pkf.25.564/2021/3)

On appeal, the Metropolitan Court of Appeals confirmed the Metropolitan Court’s first-instance decision and explained that even though, for validation, Section 84/H requires a Hungarian translation of the claims only, it is, however, apparent from Section 84/J that the scope of the validated European patent is set only with the filing of the full text of the patent, including the text beyond the claims. Section 84/G(2) requires that, in case of legal dispute, a full translation of the European patent is provided to the alleged infringer. The latter requirement is also found in Section 104(15), according to which a defendant does not give cause to the lawsuit where no translation has been filed or provided on request by the alleged infringer. Accordingly, it is not a requirement, but is in the patentee’s best interest to take advantage of the opportunity to provide the description, since the actual scope of protection in relation to national jurisdiction of the European patent is set with such action, and is therefore indisputably and unambiguously defined.

The Metropolitan Court of Appeals did not consider fault or imputability as relevant in the proceeding. The size of the alleged infringer and its English or technical knowledge is irrelevant, since the scope of protection of the European patent as granted by the EPO and the translated claims before the HIPO may differ, which cannot be filtered out by consulting the English text of the European patent within the EPO or the HIPO databases. Accordingly, it is expected that a patentee must notify of the alleged infringement before turning to the court and provide a translation of the full patent document to bring the alleged infringer into a position where it can be judged as having committed patent infringement.

Accordingly, the Metropolitan Court of Appeals did not consider that a preliminary injunction was necessary based on the right to special appreciation. Although the second-instance court agreed with first-instance court that a preliminary injunction was also not necessarily based on irreparable harm, it did not elaborate on the translation requirements with respect to Section 35 of the Patent Act and liability under fault or imputability.

Comment

A decision by the patentee to validate a European patent by fulfilling only the minimum requirements (ie, by filing the Hungarian translation of the claims only) results in a situation where the patentee will be unable to enforce its rights emerging from the patent immediately, but only after a long-lasting legal procedure (eg, after a potential opposition procedure before the EPO or a nullity action before the HIPO). This might easily lead to – at least temporarily – loss of monopoly on the market, involving significant financial losses, especially when compared to the costs of filing a full Hungarian translation, offering a firm and secure legal background against all possible infringers. Further, if the language of the procedure before the EPO has been French or German, it is worth considering translating the description of the European patent into Hungarian instead of English so as not to lose the possibility to file a preliminary injunction request in Hungary in a possible infringement situation. The date of filing of this translation could be critical in relation to the possibility to file a future preliminary injunction request. The filing of the Hungarian translation of the description of the European patent where English was the language of the procedure should be done as early as possible and should be served to the alleged infringer immediately after filing the validation request to be able to file the preliminary injunction request effectively.

Further, to benefit from the presumption of special appreciation when requesting a preliminary injunction, the provisional protection of a European patent should be obtained by submitting the Hungarian translation of the claims after the publication of the European patent.

Finally, to rely on the right to claim a preliminary injunction based on irreparable harm, the patentee, its licensee or the distributor must use the patented invention in a product that is available on the Hungarian market. Without the sales of a product embodying the European patent, no damages or lost profits can be presumed by the court.