Legal interest in a non-infringement ruling
On 9 February 2022, the Borgarting Court of Appeal ruled in an interesting case concerning Ewos AS' ("Ewos") right to bring a claim for a declaration that the sale, production, delivery and marketing of its products did not infringe the patent rights of Stim AS ("Stim"). Contrary to the Oslo District Court's decision, the Court of Appeal unanimously concluded that Ewos had legal interest in a declaratory judgment stating that the sale, production, delivery, and marketing of its products do not infringe on Stim's patents.
By Anna Eide and Thomas Hagen
A short introduction to the dispute
Ewos is one of the world's largest fish feed producers, producing the products Adapt Flex and Adapt Xellerator. In the years up to 2018/2019, Ewos had collaborated with Stim AS, which holds patent EP 3398449 ("EP '449") regarding a method for producing smoltification in Salmonidae and a license to patent NO 325534 ("NO' 534"). However, the contractual relationship between Ewos and Stim was terminated by Ewos in 2019.
Following the termination, Stim investigated Ewos' possible patent infringement. As a result, during the summer of 2020, Stim filed for a preliminary injunction against Ewos, demanding that Ewos cease the exploitation of Adapt Flex and Adapt Xellerator as it constituted patent infringement of EP '449 and NO' 534. However, the motion was not granted.
In the aftermath, Ewos filed a law suit claiming that Adapt Flex and Adapt Xellereator did not infringe on Stim's patent rights and that Stim's patent EP '449 is invalid. Stim disputed both claims and claimed that Ewos had no legal interest in obtaining a judgment for non-infringement, cf. the Norwegian Disputes Act section 1-3.
The main question in the case was whether Ewos had legal interests in claiming that the sale, production, delivery and marketing of Adapt Flex and Adapt Xellerator did not infringe on Stim's patents.
Pursuant to the Norwegian Disputes Act section 1-3, an action may only be brought before the courts for "legal claims". Additionally, the claimant must demonstrate "a genuine need to have the claim decided against the defendant" which shall be determined based on "an overall assessment of the relevance of the claim and the parties' connection to the claim". In other words, Ewos had to demonstrate that its claim that the sale, production, delivery and marketing of its products do not infringe on Stim patent rights constituted a legal claim which Ewos had a genuine need to have decided against Stim.
Ewos claim constitutes a legal characteristic (Nw: "rettslig karakteristikker"). According to Norwegian case law and the preparatory works for the Norwegian Disputes Act, disputes concerning legal characteristics such as whether something is "illegal" or "unlawful", can in some instances constitute "legal claims". In assessing if such claims are "legal claims", key factors are the need to settle the claim and whether a ruling on the claim would result in uncertainty regarding the legal effects of the judgment.
Through a preliminary injunction, Stim had demanded that Ewos cease its commercialization of Adapt Flex and Adapt Xellerator due to infringement of Stim's patents. Stim did not succeed in the preliminary injunction. However, the decision did not have a legal effect on the underlying material issue. Stim had not filed a claim against Ewos, and also had not waived the right to file such claim. Further, Stim had not recognized Ewos' right to commercialize the Adapt Flex and Adapt Xellerator products in case EP '449 was ruled valid.
In the case presented for the Court of Appeal, Ewos had filed two claims. First, that Stim's patent EP '449 was invalid, and second, that the sale, production, delivery and marketing of Adapt Flex and Adapt Xellerator did not infringe on Stim's patent rights. In order to infringe on a patent right, there must be a valid patent. Therefore, Ewos's claim for non-infringement would primarily be of independent significance if the courts would find Stim's patent EP '449 valid. Ewos had submitted that the company had not used Stim's patent EP '449 in breach of the Norwegian Patents Act section 3 and further, that the company had a prior use right. If the court found patent EP '449 valid, it would result in an unresolved dispute as to whether Ewos is still entitled to commercialize Adapt Flex and Adapt Xellerator, if Ewos' legal claims regarding non-infringement were dismissed.
The Court of Appeal concluded that Ewos had a legal interest in the disputed claim and that the District Court would assess it. The Court of Appeal stated Ewos' objective was clear, and if necessary, the courts may adjust the disputed claim. Further, the Court of Appeal did not find the individual case to bring up any significant issues relating to the uncertainty of the judgment's legal effects. A court decision on the disputed claim would be interpreted in light of its context and the case.
Key takeaways from the ruling
The ruling illustrates that parties in ongoing patent disputes may have a legal interest in rulings confirming their right to commercialize their products. As in this case, filing for a preliminary injunction might give the respondent a legal interest in a declaratory judgment on its right to continue the commercialization of a product.