EPLAW PATENT BLOG

IT – Court of Appeal decision touches on filing new prior art documents / generic decision for damage compensation

Posted: February 3rd, 2023

Introduction
The Court of Appeal of Milan, through its decision published on 16 January 2023, addressed:

(a) the possibility of filing new prior art documents at first instance – after the court-appointed expert (“CAE”) completes his/her assignment – and on appeal; and

(b) the requirements for a court to issue a decision finding damages liability with deferred liquidation of damages, known as a generic decision for damage compensation. Generic decisions establish a given defendant’s damages liability and defer to separate proceedings the determination of the exact amount due (based on generic decisions, the damaged party may, for instance, raise a mortgage on the damaging party’s immovable property as collateral for the damages it will be awarded in separate proceedings).

Case summary

Piaggio & C. S.p.A. owns European patent no. 1561612 (“EP’612”), granted on 2 September 2009 and validated in Italy on 26 November 2009, which concerns an anti-rolling device for three-wheeled vehicles. Piaggio manufactures and commercialises a very popular three-wheeled vehicle known as ‘MP3’, which implements the teachings of EP’612.

In 2014, Piaggio initiated infringement proceedings against Peugeot Motocycles Italia S.p.A. (now Peugeot Motocycles Italia S.r.l. in liquidazione – “Peugeot Italy”) before the Court of Milan and claimed that Peugeot Italy’s vehicle Metropolis infringed certain Piaggio-owned patents, including EP’612.

Whilst the infringement proceedings were pending, Peugeot Motocycles s.a.s. (Peugeot Italy’s French parent company – “Peugeot France”) started an invalidity action against Piaggio concerning the Italian portion of EP’612.

The two proceedings were then joined, and the court held in its September 2021 decision that EP’612 is valid and Metropolis infringes claims 1, 2 and 5 of EP’612. The court granted injunctive relief and ordered Peugeot Italy to withdraw Metropolis from the Italian market but rejected the damages claim, arguing that Piaggio submitted the allegations in support of its damages claim, including the quantification of the damage allegedly suffered, only in its final brief, and thus too late.

Peugeot Italy and Peugeot France (jointly, “Peugeot”) appealed the first-instance decision, arguing that EP’612 is invalid and in any case not infringed.

Piaggio cross-appealed the first-instance decision, arguing that the court was wrong to refuse to award damages.

The appeal decision

The court of appeal confirmed that EP’612 is valid and infringed by Metropolis.

Peugeot complained in its grounds of appeal that the court of first instance had not considered prior art document DE 1063473 (“DE’473”) as part of its novelty assessment of EP’612. But the court of appeal ruled Peugeot’s complaint unfounded for the following reasons.

First, the court noted that at first instance Peugeot had introduced DE’473 for the first time in its final brief, after the CAE had completed his assignment, and thus too late.

The court also noted that, under Art. 121(5) of the Italian Intellectual Property Code, parties may supplement their arguments and evidence while the CAE carries out his/her assignment and may thus also file new prior art documents. Therefore, filing new prior art documents is time-barred once the CAE completes his/her assignment.

The court further noted that Art. 345 of the Italian Civil Procedure Code prohibits the filing of new documents on appeal, regardless of whether they appear to be essential, except if the filing party proves that they cannot be filed at first instance for reasons beyond its control. However, DE’473 cannot be considered to have been filed late for reasons beyond Peugeot’s control because it is a German patent application published in 1959. Moreover, DE’473 was available to Peugeot while the CAE was carrying out his assignment, as evidenced by the fact that Peugeot had already filed DE’473 in October 2018 in the parallel French proceedings between Piaggio and Peugeot France. Therefore, the court of appeal appears to have based its reasoning on the assumption that Peugeot deliberately decided not to file that prior art document at first instance.

The court of appeal thus refused to consider DE’473 in the novelty assessment of EP’612 and held that it could consider only prior art documents previously filed by the parties and considered by the CAE as part of the assessment carried out at first instance.

As to Piaggio’s cross-appeal, the court of appeal noted that at first instance Piaggio timely requested that damages be awarded and asked the court of first instance to: (a) order Peugeot Italy to exhibit its books and accounts and provide the information needed to identify the people involved in producing and distributing the infringing vehicles; and (b) appoint an accountant to examine Peugeot Italy’s books and accounts and thus to quantify the damage.

The court of appeal held that, because Metropolis infringed claims 1, 2 and 5 of EP’612, Peugeot Italy had to pay damages to Piaggio. However, the case lacked the evidence necessary to quantify the damage because the court of first instance had rejected Piaggio’s evidentiary requests. Therefore, the court of appeal issued a decision with a generic decision for damage compensation and ordered that the proceedings continue to gather the evidence necessary to quantify the damage suffered by Piaggio.

The court of appeal thus appears to agree with Piaggio’s argument that the commercialisation of infringing products is sufficient to prove damage, at least when the right holder operates in the same market served by the infringer – as is the case here – because the commercialisation of infringing products is likely to negatively affect the right holder’s likelihood of selling the products covered by the infringed patent. In this case, according to the prevailing Italian caselaw, if the right holder has timely filed evidence/evidentiary requests to quantify the damage but the amount due is controversial, the court issues:

(a) a generic decision for damage compensation – at the right holder’s request and if the defendant does not oppose it – and orders the quantification of the damage in separate proceedings that either party may initiate; or

(b) an ex officio generic decision for damage compensation – without the defendant’s consent being necessary – and orders that the proceedings continue for the quantification of the damage.

In both cases, for the court to issue a generic decision for damage compensation, the right holder must have timely filed evidence/evidentiary requests for the quantification of the damage.

Alternatively, according to the prevailing Italian caselaw, the right holder may request from the outset of the first-instance proceedings a generic decision for damage compensation. In that case, if the defendant does not oppose the right holder’s request for a generic decision and instead requests that the court also quantify the damage, the right holder has to prove (only) its right to damages, without being required to file evidence/evidentiary requests for the quantification of the damage. Notwithstanding the above, the right holder will then have to initiate separate proceedings for the quantification of the damage.

The judgment (in Italian) can be read here.

Summary: Giulia Pasqualetto, Bonelli Erede

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