Nikon and ASML are locked in a worldwide battle over optical exposure machines for computer chips. It is the biggest patent dispute the Netherlands has ever seen – a case made for the Unified Patent Court. But should Brexit cause the new patent court to fail, Dutch courts and law firms will benefit. Its patent system is proving attractive enough for major international proceedings.
24 September 2018 by Mathieu Klos
“The ASML vs. Nikon case is one the biggest in my career,” says Willem Hoyng. And the veteran of Dutch patent law has certainly seen everything. Other Dutch patent lawyers also reach for superlatives: “The biggest case a Dutch patent court has ever seen.”
Usually, a major patent dispute that goes before the Patents Chamber at The Hague – the first instance in the Dutch patent court system – has three parallel suits. In the dispute surrounding the huge optical-exposure machines for computer chips, however, Nikon filed no less than eleven parallel lawsuits against its Dutch competitor last year. ASML responded by filing its own suit, accusing the Japanese company of infringing more than ten of its patents in the manufacture of semiconductors, flat screens and digital cameras. In addition, ASML filed nullity suits against the Nikon patents.
At the heart of the dispute is highly complex machinery used in the manufacture of semiconductors. Nikon’s patents protect its immersion lithography systems, in which laser beams are refracted through ultra-high-performance lenses to etch circuits onto the silicon substrate (known as the wafer) on chips. Nikon and ASML are the principal manufacturers of these machines, which are then supplied to only a few chip manufacturers around the world. ASML uses lenses from Carl Zeiss SMT for its machines.
The dispute thus spilled over into other countries around the world. Not only did Nikon file two infringement suits at the German regional courts against ASML’s supplier Carl Zeiss, but the two global market leaders are also battling it out in Japan, with smaller suits also pending in France and the United States.
Textbook example of a UPC case
“The proceedings have taken on such a complexity in scope that a single national law firm can no longer handle the case alone,” says one of the lawyers involved. In the Dutch and German proceedings therefore, Nikon is banking on two local teams from Hogan Lovells and Freshfields Bruckhaus Deringer, as well as a number of external patent attorney firms.
Meanwhile, Willem Hoyng has compiled an international team from his firm Hoyng ROKH Monegier (HRM) for ASML. Almost the entire Amsterdam office is involved in the Dutch proceedings, including the firm’s own patent attorneys, while the Düsseldorf office has taken on the German proceedings for Carl Zeiss. Various German patent attorney firms are taking care of the technical side.
Parties on both sides agree that this dispute would have played out before the UPC, had a constitutional complaint not put the court on hold. Germany is the last of 13 countries that need to ratify the UPC Agreement in order for the court to open, but until the German Constitutional Court has given its ruling, Europe will have to wait.
Holland’s best kept open secret
The Netherlands ratified the UPC Agreement two years ago and the location of the Dutch Local Division has already been decided. “Preparations for the Dutch UPC Local Division are complete. Even though the Dutch government has not yet officially announced it, everybody in the community knows that it will be located in an attractive business centre in the centre of The Hague,” says Wouter Pors, a partner at Bird & Bird.
In March, The Hague Hearing Centre was opened right by the central station, in the heart of the country’s political hub. It is currently being used by the Court of Arbitration and the United States-Iran Claims Tribunal. But it is an open secret that it is to be the home of the Dutch Local Division once the UPC is up and running.
But the former confidence that this will happen is dwindling among Dutch patent lawyers. “The UPC still has a lot of support in the Dutch patent market. But the German constitutional complaint has also led to considerable disillusionment,” says Richard Ebbink, a partner at Amsterdam IP boutique Brinkhof.
Bert Oosting, partner at Hogan Lovells, summarises what many in Amsterdam, Eindhoven and The Hague are thinking: “I still hope that the UPC will happen. But it’s all a bit unclear right now.”
“Also some judges have difficulty believing that the German Constitutional Court will decide in time,” says Richard Ebbink.
If the German judges decide soon and the complaint is dismissed, then German ratification can take place with enough time for the UPC to open its doors before 29th March 2019 when the UK leaves the EU. Otherwise, the UK’s withdrawal agreement will have to be amended by November to cover the UK’s long-term participation in the court. If this is not achieved, the dream of a UPC with the UK will go up in smoke. In fact, the whole project would be under threat. Another Dutch source says that one or two of the Dutch patent judges – almost all of them have applied for the UPC – will probably not pursue their applications and will retire instead.
Dutch patent lawyers and judges in particular had high hopes for the European patent court. During the preparation phase, some were involved in various committees. The court and its Rules of Procedure feature a slight Dutch influence, as well as the more obvious German and British input.
“The UPC is a good system for all patentees. It is important that it comes into force.” says Wim Maas, partner at Taylor Wessing. “Without a unique system Europe will hardly be able to compete with the US system.” Others, however, such as Anne Marie Verschuur, a patent partner at national full-service firm Nauta Dutilh, see disadvantages: “The Unified Patent Court offers clear advantages for international companies. But it may not be as attractive and accessible for small and midsized companies because of cost concerns.”
On their marks
Many UPC advocates are committed Europeans. Some are also fascinated by the personal challenge of being able to participate in such a court project from the outset. But the Dutch are commercially aware enough to hope that the UPC will benefit their business. Above all, they hope to lure cases away from their biggest neighbour and Europe’s number one patent nation: Germany. The Dutch made this clear from the start when they announced their intention to offer English language proceedings at their local division. So far, the German courts have not dared to take this step.
Ever since this announcement, the European patent community has known to keep a close eye on the Dutch local divisions, because the Dutch patent courts are known for their speed, quality and value for money, not to mention their internationally renowned judges such as Rian Kalden, Hans van Walderveen and Robert van Peursem (see below: Epicentre of Dutch patent litigation). A group of around 50 highly specialised lawyers ensures that the Netherlands is internationally renowned for patents. The Netherlands can certainly hold its own in comparison to Germany – even if German judges hear far more cases. Wouter Pors is convinced: “The Netherlands is an attractive location for patent litigation. We have experienced judges and lawyers, most of whom speak very good English.
As a trading nation we also have a tradition of treating things neutrally. This could also make the UPC local division in The Hague attractive to plaintiffs.”
A further advantage for Dutch and British judges at the UPC compared to their German counterparts is that they are used to trying infringement and nullity cases as one as opposed to the German system of bifurcation. The prevailing opinion among patent experts is that bifurcation will not play a role at the UPC and German judges will have to adapt.
That could also be an advantage for lawyers, claims Wim Maas: “Dutch litigators have a long track record with not only infringement but also validity issues in patent cases. I also believe that being a non-native English speaker within the UPC is not a disadvantage since this is also true for the majority of the UPC judges.”
The debate among Dutch patent lawyers is which Dutch patent firm is most likely to benefit from the UPC. “I am not sure that the Unified Patent Court only has advantages for the Dutch legal market,” says Verschuur. “The Dutch patent courts are certainly attractive because they offer quick decisions, good quality and cost efficiency. But a number of cases will not go to the Dutch local division but rather to one of the central divisions.”
Bas Berghuis van Woortman, partner at Simmons & Simmons, also sees some disadvantages for some Dutch firms: “Dutch lawyers are not the most obvious choice for the UPC. I believe it is a misconception that all Dutch law firms will benefit from the UPC. International clients will mainly turn to their go-to US or European counsel, and the need for clients to find lawyers in all jurisdictions will diminish.”
But there will also be cases where the know-how of Dutch patent litigators will be needed and here he is cautiously optimistic. “Of course clients will want to instruct Dutch litigators, for example when a Dutch judge is on the panel or when proceedings are started in the Netherlands,” says Berghuis. “Then international law firms with Dutch lawyers on board will have an advantage. I believe that local Dutch law firms will benefit the least.”
“The UPC will lead to a stronger
segmentation of the Dutch market”
Above all, patent litigators in international firms are convinced that they will be the main beneficiaries. “The UPC will lead to a stronger segmentation of the Dutch market for patent litigation. International law firms such as HRM, Hogan Lovells or ourselves, will dominate the UPC cases,” says Wouter Pors of Bird & Bird. “The remaining law firms will share some of the national cases.”
Some, however, believe the UPC will lead to more work for everyone. “I expect the UPC to lead to a higher amount and also more complex patent cases in Europe. So the pie for the lawyers is getting bigger,” says Wim Maas. But the Taylor Wessing partner also believes that the international teams will have an advantage over the boutiques, because Asian and US clients, in particular, will be looking for a single law firm to serve them in Europe.
All eyes on Brexit
Until there is a ruling on the German constitutional complaint, however, this all remains just a theory. Meanwhile, Brexit looms heavy over Europe. “How Dutch law firms will develop in the UPC also depends to a large extent on whether or not the UK will be able to participate,” says Otto Swens, partner at Amsterdam IP boutique Vondst. “At the moment, British law firms are often the first point of contact for US companies in Europe. If they need to stay outside the UPC, Dutch firms could become interesting for clients from the US.”
Many Dutch patent lawyers are speculating about whether, in the event that the UPC must launch without the UK, the Central Divisions planned for London will be relocated to Amsterdam. These courts are to rule on pharmaceuticals, biotech and chemistry patents.
“I do not think that The Hague or Amsterdam will be awarded the London Central Divisions. The Netherlands has already landed the European Medicines Agency as a result of Brexit,” says Otto Swens. The EU decided in November 2017 to move the EMA from London to Amsterdam following Brexit. This ought to give rise to more pharmaceuticals-related regulatory work for Dutch firms. Vondst is one of the IP boutiques that combine patent litigation and regulatory advice. When it comes to the UPC, however, the firm is more cautious. Other Dutch boutiques such as Brinkhof and HRM are taking a more proactive approach to competing with international firms for cross-border cases.
Observers of the Dutch patent market watched with interest as Brinkhof hired its first patent attorney last year. The firm has a clear focus on IP litigation. Koen Bijvank specialises in pharmaceutical and biotech patents, but he is considered to be highly experienced in litigation, which he will conduct in concert with Brinkhof’s lawyers.
“Dutch procedural patent law allows patent attorneys to plead in patent infringement disputes together with a lawyer. As far as we can tell, Koen is currently the one who does so most prominently,” says Brinkhof partner Ebbink. Ebbink sees a clear trend in the Netherlands towards joint law firms of patent attorneys and lawyers. “The fact that we strengthened our team with Koen, confirms that trend.”
The second market-leading Dutch IP boutique HRM boasts its own team of seven patent attorneys in Amsterdam – a considerably larger team than Brinkhof. “Admitting patent attorneys to our Dutch patent litigation practice was the best decision we could have made for our practice. However, a prerequisite for this business model is the ability to offer first-class quality,” says Willem Hoyng. His partner Bart van den Broek adds: “Such a business model can only succeed, however, if the litigation work results in a constant flow of patent cases. If not, there is an unhealthy imbalance between patent attorneys and lawyers.”
Trend toward mixed law firms
In other UPC countries, more and more patent practices are choosing a mixed approach. In Germany and the UK, for example, large patent attorney firms such as Hoffmann Eitle, Grünecker, Vossius & Partner, Marks & Clerk and Carpmaels are increasingly adding lawyers to their litigation departments. Large international lawyer teams such as those at Hogan Lovells in Munich and Düsseldorf or Simmons & Simmons in London have lately integrated patent attorneys into their litigation teams.
Willem Hoyng is a firm believer in IP boutiques pursuing an international approach in order to compete with large international practices for cross-border litigation. The merger of his firm with the top German IP boutique Reimann Osterrieth Köhler Haft in 2015 had already caused a stir, but then this year HRM went on to join forces with top Paris outfit Véron & Associés. Suddenly patent lawyers are realizing that three of the most renowned litigation firms in Europe have just united under the HRM banner – long before the UPC has even started. HRM is clearly making a move against the two leading European patent teams, Bird & Bird and Hogan Lovells. Unlike the latter two, however, HRM does not have an office in London.
With or without the UPC
For many competitors, the international merger of these three nationally leading firms does not make sense without a London office. “If you want to be a European IP firm, an office in London is desirable. If we have the chance, we have to take it,” says Willem Hoyng. “But”, adds van den Broek, “London is also a far too complicated market to go making any hasty decisions. We will only go if we find first-class people who share our vision.”
“If you want to be a European IP firm,
an office in London is desirable”
With the delays plaguing the UPC, the question of a London office has fallen further down HRM’s agenda in any case. Not only HRM but the entire Dutch patent system would survive without the UPC if it came to that. And if the UPC goes ahead without the UK, the European domestic market would need a new counterweight to the dominant German patent courts. In this respect, the Dutch courts – with all their advantages – could close the gap left by the British.
One thing is clear: the patent owners and their lawyers will not allow any one patent court to become too strong. They want the freedom to choose the court that can offer them the best advantages on a case-by-case basis. As it stands, the Dutch courts could certainly give the German patent courts a run for their money. Once Brexit is over, the Dutch courts will be the only courts in the EU able to offer Asian and US companies the chance to conduct English-language parallel infringement and nullity suits. Other big cases like Nikon vs. ASML are sure to follow.
Rechtbank Den Haag (Court of First Instance)
No permanent chambers. These are formed by the coordinator of the IP group once the pleas have been exchanged.
Judges: Hans van Walderveen (coordinator), Edgar Brinkman et al.
Gerechtshof Den Haag (Court of Appeal)
Judges: Rian Kalden (presiding judge), Peter Blok (presiding judge)
Hoge Raad (Dutch Supreme Court, no specialised chambers)
Judges: Robert Van Peursem (advocate general)