The April 24, 2024’s judgment of the French Cour de cassation in the Japanese Sony case[1]: the admissibility of patent infringement claims for infringing acts committed before the date of entry in the French Patent Register of the act of transfer of the patent.
- The facts of the case
Between 1997 and 2001, the Japanese company Sony Computer Entertainment filed three European patent applications designating France and relating to various functionalities of the game controllers of the famous Play Station console (hereinafter the « SONY Patents »).
In 2010, the branch of activity bringing together game consoles, as well as all of the intellectual property rights associated with it, were transferred from the company Sony Computer Entertainment to another company of the Sony Group (hereinafter “SONY”).
It is only on August 13, 2018 that the patent assignment agreements, signed between Sony Computer Entertainment and SONY and which relate to the transfer of the SONY Patents, entered in the French Patent Register.
However, well before this date, namely on December 19 and 20, 2016, SONY carried out “seizure operations” (opérations de saisie-contrefaçon) at the head office of the French company SUBSONIC, which was suspected of infringing the French part of the SONY Patents.
On January 19, 2017, SONY, as well as subsidiaries of the Sony Group which exploit the SONY Patents in France, sued SUBSONIC for patent infringement and unfair competition.
On first instance, before the “tribunal de grande instance” de Paris (now the “tribunal judiciaire” of Paris), the defendant SUBSONIC argued that SONY lacked standing on the grounds that (i) it did not provide proof of the universal transfer of assets by which it claimed to have been assigned the SONY Patents in 2010, and (ii) that in any event, having only entered in the French Patent Register the intra-group transfer of the SONY Patents well after the date of service of its writs of summons, SONY was not admissible to bring proceedings for patent infringement in relation with all the facts which occurred before the date of entry in the French Patent Register of the intra-group transfer of the SONY Patents.
This argument allowed SUBSONIC to “brush aside” all claims for infringement since in this case, all the alleged acts of infringement pre-dated the date of entry in the French Patent Register of the transfer of the SONY Patents.
At first instance, the “tribunal de grande instance” of Paris, in its judgment dated September 4, 2020, found SONY inadmissible since it did not provide proof that it was the (new) owner of the SONY Patents.
On appeal, SONY produced new documents in light of which the court of appeal of Paris held, contrary to the first instance’s judges, that the proof of the universal transfer of assets which occurred in 2010 was well reported. On the other hand, noting that the date of entry in the French Patent Register of the transfer of the SONY Patents occurred 18 months after the date of service of the summons, the court of appeal followed the defendant’s argument by holding that SONY was not, at the time of service of the summons, the holder of a right enforceable vis-à-vis third parties and was therefore not, on that date, admissible to bring proceedings for patent infringement.
The court of appeal of Paris, in its judgment dated September 9, 2022, further considered that “if, as provided for in Article 126 of the French Code of Civil Procedure, the inadmissibility is likely to be regularized during the proceedings, this regularization can only have effect for acts committed subsequent to the date of entry in the French Patent Register”.
SONY was therefore declared inadmissible to bring proceedings for patent infringement for all acts committed before this date of entry, that is to say, in the current case, for all the alleged acts of infringement.
2. The decision of the Cour de cassation of April 24, 2024
The Cour de cassation upheld only partially the judgment of the court of appeal of Paris.
Indeed, on the one hand, the Cour de cassation recalls the well-established principle according to which, as long as the patent’s transfer has not been entered in the French Patent Register, the successor in title (in this case the transferee) may not invoke the rights arising from the patent. The assignee is therefore not admissible to sue a third party for patent infringement.
Indeed, according to article L.613-9 of the French IP Code, “all acts transmitting or modifying the rights attached to a patent application or a patent must, to be enforceable against third parties, be registered in the French Patent register maintained by the National Institute of Industrial Property. Nevertheless, such an act, before it is so entered, shall have effect vis-à-vis third parties who have acquired rights in the registered patent after the date of that act but who knew of the act at the date on which the rights were acquired.”
On the other hand, the Cour de cassation overturned the reasoning of the court of appeal which considered that from the date of entry of the transfer in the French Patent Register, the assignee is only admissible to sue a third party for acts of infringement committed after the date of entry.
The Cour de cassation indeed affirms that from the date of entry in the French Patent Register, the transferee is eligible to bring proceedings for infringement for the purposes of obtaining compensation for (i) the damage caused to him by the acts committed since this date of entry, as well as, ( ii) if the patent’s transfer so specifies, the damage caused to him by the acts committed before this date of entry[2].
Consequently, until such time as the court has not rendered its judgment on the merits on the patent’s infringement claims, it is still possible for the patent assignee to enter its patent’s transfer in the French Patent Register. This late entry in the French Patent Register makes the infringement action admissible, which gives rise to a right to compensation for infringing acts occurring before the registration/recordal (if the patent transfer contains such an explicit clause), like for the infringement acts which occurred after this registration/recordal.
3. Comment of the decision of the Cour de cassation
This decision is in favor of the assignees who have delayed in entering the patent’s transfer in the French Patent Register.
Nevertheless, it is always better to record/register a patent’s transfer (like a patent’s license) as soon as possible after the signature of the patent’s transfer (or patent’s license).
Indeed, the entry in the register of IP transfers and licenses protect assignees and licensees from conflicting interests such as the grant of further licenses or a second transfer of the patent by the first owner.
Moreover, according to the current French case-law, the assignee of a patent who has not entered its patent’s transfer in the French Patent Register is not admissible to lodge, before the court, an application for preserving evidence (“requête aux fins de saisie-contrefaçon”).
Such type of application is very often used by the plaintiff who is willing to start a patent infringement action against a defendant before the French court.
The application for preserving evidence is generally lodged before proceedings on the merits have been started. If this application, which is an ex-parte proceedings (i.e. the applicant requests that measures to preserve evidence be ordered without hearing the defendant), is judged well founded, the court may order, in particular, the following: (a) preserving evidence by detailed description, with or without the taking of samples; (b) physical seizure of allegedly infringing goods; (c) physical seizure of the materials and implements used in the production and/or distribution of these goods and any related document.
Finally, by deciding that any third party, and in particular an infringer, could invoke the rule of article L. 613-9 of the French IP Code to raise a plea of inadmissibility against the assignee of the patent (i.e. the plaintiff who brings proceedings alleging infringement of his patent), the Cour de cassation adopts a position different from that taken by the Court of Justice of the EU in matters of trademarks and designs’ license.
Indeed, in cases C-163/15 (February 4, 2016) and C-419/15 (June 22, 2016), the Court of Justice of the EU judged the following:
“The first sentence of Article 33(2) of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs must be interpreted as meaning that the licensee may bring proceedings alleging infringement of a registered Community design which is the subject of the licence although that licence has not been entered in the register of Community designs.”
The content of article 33(2) of Council Regulation (EC) No 6/2002 is very similar to the content of article L. 613-9 of the French IP Code:
‘1. The effects vis-à-vis third parties of the legal acts referred to in Articles 28, 29, 30 and 32 shall be governed by the law of the Member State determined in accordance with Article 27.
2. However, as regards registered Community designs, legal acts referred to in Articles 28, 29 and 32 shall only have effect vis-à-vis third parties in all the Member States after entry in the register. Nevertheless, such an act, before it is so entered, shall have effect vis-à-vis third parties who have acquired rights in the registered Community design after the date of that act but who knew of the act at the date on which the rights were acquired.”
The reasoning of the Court of Justice of the EU to adopt such a favorable decision can be summed up as follows:
“As regards the context of which the first sentence of Article 33(2) of Regulation No 6/2002 is part, it should be observed, first of all, that the second sentence of that paragraph qualifies the rule set out in that first sentence as regards ‘third parties who have acquired rights’ in the registered Community design after the date of the legal act in question but who knew of the act at the date on which the rights were acquired. Article 33(3) establishes an exception to that rule in the case of a ‘person who acquires the registered Community design or a right concerning the registered Community design’ by way of transfer of the whole of the undertaking or by any other universal succession. Accordingly, an interpretation of Article 33(2) and (3) of Regulation No 6/2002 which is both literal and schematic gives support to the idea that it, as a whole, is intended to govern the enforceability of the legal acts referred to in Articles 28, 29 and 32 of the regulation in respect of third parties who have, or are likely to have, rights in the registered Community design (…).
It must also be stated that, according to Article 32(5) of Regulation No 6/2002, the licence is entered in the register on request of one of the parties. However, that article, like Article 29 of the regulation, does not contain any provision analogous to that of Article 28(b) of the regulation, under which ‘[a]s long as the transfer has not been entered in the register, the successor in title may not invoke the rights arising from the registration of the Community design (…)
With regard to the purpose of the rule laid down in the first sentence of Article 33(2) of Regulation No 6/2002, it must be held that, having regard to what has been established in paragraphs 19 and 20 of the present judgment, the lack of effects, vis-à-vis third parties, of the legal acts referred to in Articles 28, 29 and 32 of that regulation which have not been entered in the register is intended to protect a person who has, or may have, rights in a Community design as an object of property. It follows that the first sentence of article 33(2) does not apply to a situation such as that in the main proceedings, in which the licence holder complains that a third party, by infringing the design, infringes the rights conferred by the registered Community design.”
SONY relied on this case law of the Court of Justice of the EU to ask the Cour de cassation to “cancel” the decision of the Paris court of appeal which had deemed SONY inadmissible to bring proceedings for patent infringement.
The Cour de cassation was not convinced by this argument.
However, the solution reached by the Cour de cassation remains very favorable to patent assignees since the latter, if they have not thought of publishing their act of patent assignment in the French Patent Register before summoning a third party for infringement, will always be able to regularize the situation during the procedure, as long as the court has not rendered its judgment on the merits.
[1] To have access to this decision, please click on: https://www.legifrance.gouv.fr/juri/id/JURITEXT000049509789
[2] As such, it is common to provide, in patent transfer agreements, a clause stipulating that the transfer of the patent, for the benefit of the new owner, will take place at the same time as the transfer, for his benefit, of the action for infringement (or claim for reparations/damages) against possible infringing acts prior to said transfer of ownership, so that the new owner will be authorized, upon entry in the French Patent Register of the act carrying out the transfer, to sue and request for their compensation.