Long read

Italy’s patent market ripe for harvest

Italy, like its European counterparts, has traditional IP boutiques vying with international firms for a patent litigation market share. But the country’s opaque court system, unstable governance and fluctuating economy has left it playing catch up with Europe’s major markets. Now a new government and the possibility of a UPC central division mean its patent lawyers are cautiously optimistic about Italy playing a distinct role in Europe.

17 February 2021 by Amy Sandys

Italian patent market A new government and the promise of increased investment means the future looks bright for Italy's flourishing patent market ©Patryk Kosmider/ADOBE STOCK

The north of Italy has a long industrial heritage. Factories and skyscrapers jostle for space along the skyline, which sweeps from the western city of Turin across to the metropolis of Milan, and down into the canals of Venice. This region, and Italy’s northernmost cities, is also home to some of the country’s – and increasingly Europe’s – most important patent courts.

The prominence of the intellectual property sector in this region is not surprising. A nation of inventors, Italy has a proud tradition of protecting its goods, and preserving its scientific and artistic heritage. Years of patent litigation surround its famed espresso coffee machine, first patented in 1884 by Angelo Moriondo in Turin.

But Italy has faced several obstacles conspiring to constrain future innovation in the region. The patent court system is fragmented. Italy’s smaller enterprises regularly appear in one of 21 IP courts to defend their products; legislation dictates each region must have a specialist IP court. Lawyers lament poor English language skills among Italy’s old guard of patent lawyers and judges. The economy, which has long fluctuated, has never particularly favoured advancing its IP system. At first glance, Italy’s future in patent litigation seems in disarray.

History of pharma

Italy, however, is also home to several global pharmaceutical company headquarters, including leading names Menarini and Chiesi. Indeed, the country regularly ranks in the top ten global producers of pharmaceuticals. According to the Statista website, the country is the largest producer of pharmaceuticals in Europe, worth a production value of 32 billion euros in 2018.

As such, the country regularly plays host to pan-European battles between major global pharmaceutical players. Disputes between leading generics and originators, such as Gilead, Teva and Hexal over HIV blockbuster drug Truvada, are playing out in Milan.

High-profile cases concerning erectile dysfunction drug tadalafil, and chemotherapy drug pemetrexed, are seeing high-stakes litigation. In fact, Italian patent courts play a role in all major European pharmaceutical disputes. This is either due the importance of the Italian market for the manufacturer, or because it is the country which produces the disputed product.

Milano to Turin

However, in pan-European pharmaceutical and biosimilar disputes, parties choose the Italian patent courts for strategic reasons. Particularly the patent court in Milan, presided over by judge Claudio Marangoni, is considered highly competent in pharmaceutical disputes.

The possibility of obtaining a preliminary injunction relatively quickly is a strategic advantage. Another plus is that the Italian courts conduct PI proceedings as if they were main proceedings, also examining patent validity. Obtaining a favourable decision can be advantageous for proceedings in other countries.

This type of PI proceeding was conducted by Bayer against Ceva for infringement of a medical veterinary preparation to treat piglets. The case is now one of the most extensive patent battles in Europe.

Companies also approach Italian courts when the sales market is interesting, as is the case with emerging ‘heat not burn’ e-cigarette technology. British American Tobacco (BAT) and Philip Morris are now fighting in Italy, as well as in Germany and the UK. The same applies to heart valve manufacturers, with Edwards Lifesciences and Meril Life Sciences currently engaged in an intense dispute.

NPE Sisvel is also taking action in its home country against Chinese mobile phone manufacturers such as Xiaomi, Oppo and One Plus. “SEP disputes currently play a minor role in Italy,” confirm patent litigators from Italy’s patent practices. “Pharma disputes far outweigh SEP disputes, and Italy imports most of the cases,” says an IP partner at a full-service firm. “There are very few disputes between Italian manufacturers.”

Winds of change

Despite its importance, Italy’s IP courts have seen minimal governmental investment. Traditionally, say patent lawyers, the sector was side-lined. But now patent firms are hopeful that changing governance and a reshuffle of Europe’s patent system could push Italy in the right direction.

The Italian government is currently experiencing a transition of power. In January 2021, a withdrawal of support in the coalition ended prime minster Giuseppe Conte’s term of office. At the time of writing, former European Central Bank president Mario Draghi is on the cusp of being elected Italy’s next prime minister.

Many circles – including among the patent lawyers interviewed by JUVE Patent – welcome Draghi. He is well-respected among Italy’s economists and politicians alike, with the country’s stock market responding buoyantly to his potential election.

Italy’s lawyers hope the dawn of a Draghi government meaning more targeted investment. For example, the burgeoning government has promised to invest three billion euros, over several years, into the Italian judiciary. Lawyers have even cautiously suggested that, should the upward economic trajectory continue, the country could fill a vacuum in pan-European patent law left by the UK.

Draghi’s new approach

Gabriel Cuonzo

Gabriel Cuonzo

IP boutique Trevisan & Cuonzo is currently very visible at the Italian courts, representing numerous companies in a variety of patent cases. It is public that the boutique acts for Ceva in the Italian branch of litigation against Bayer, and represents Xiaomi, Oppo and OnePlus against Sisvel.

The firm is also active for BAT against Philip Morris over e-cigarettes. Bonelli Erede represents Philip Morris.

Now Gabriel Cuonzo, co-founder of Italian IP boutique Trevisan & Cuonzo, and Vittorio Cerulli Irelli, partner and head of its Rome office, are exercising what they describe as “cautious optimism” about the future of Italy’s patent market.

“Italy is planning to invest a lot of money in the coming years. The top priority for the new prime minister will be to increase the efficiency of the judiciary,” says Cuonzo.

“This could help Milan become a European hub. It is already the Düsseldorf of Italy, but we expect its relevance in international litigation to increase in the medium term.”

Giovanni Galimberti is one of two patent litigation partners at the Milan office of Bird & Bird, alongside two other partners dealing with patent issues. For him, Italy’s future in patent law is bright.

“When people think of Italy, they think of the scenery, the art, the culture and the history,” he says. “Patent law is not necessarily the thing at the forefront of their mind. But Italy has the second highest number of patent cases in Europe, after Germany.”

He says, “With so many cases, its booming life sciences sector and a potential UPC court, the country’s potential as a core patent litigation location is being realised.”

But with an increase in market potential comes a rapidly-changing market structure. At the top of the market, IP boutiques are beginning to make way for international law firms.

Giovanni Galimberti

Giovanni Galimberti

Burgeoning business

Up until the past decade, a handful of well-respected IP professors and their associated firms led litigation procedures in Italy. Then, ten years ago, the numbers of specialist professors began to dwindle.

A handful of IP boutiques led by well-respected professors, such as Mario Franzosi, Adriano Vanzetti, Giuseppe Sena and Cesare Galli, do remain.

But as boutiques began to lessen their grip, European firms began to expand their reach across Italy and the continent.

Milan’s latest arrival in 2018 was Herbert Smith Freehills, with the Italian offices of Bird & Bird and Hogan Lovells already present in the market and visible in major disputes, such as Bird & Bird appearing for Sisvel against various Chinese handset manufacturers.

Bird & Bird also represents Edwards Lifesciences in various European jurisdictions against Meril, including Italy. It is publicly known that Hogan Lovells is active for Meril. The patent team also has an intense relationship with pharma giant Eli Lilly in Italy, as well in the UK and Germany.

Over the past few years, the market has also welcomed DLA Piper and Simmons & Simmons.

As the system modernised, international and European firms seized an opportunity to establish themselves in patent hotspots of Milan, Turin and Rome. Patent lawyers in larger firms argue that a greater variety better positions Italy to export its patent expertise.

Stefania Bergia, IP partner at the Milan office of Simmons & Simmons, says, “Pan-European litigation gives us a chance to work with colleagues in another branch of our own firm. Both litigation and advisory services increasingly require across-the-board solutions, which it was becoming difficult to find in boutique firms. Instead, lawyers in international firms can combine their expertise. This is what clients are looking for.”

Laura Orlando, Italian patent market

Laura Orlando

New piece of the puzzle

Other international firms have recently worked on expanding their reach beyond Europe’s main patent jurisdictions. For firms domiciled in the UK, Brexit means looking for reinforcement in key court locations.

Laura Orlando is the managing partner of Herbert Smith Freehills’ patent practice in Milan, which she co-founded with partner Sebastian Moore in 2018. For Orlando, the move presented an opportunity to provide a well-established UK firm, which recently opened an IP practice in Germany, with an additional strong presence in Italy.

“We’re acting as a hub for global co-ordination work,” says Orlando. “Herbert Smith Freehills realised that, after Brexit, it couldn’t be a solo outfit, so the Milan office is part of a wider push across Europe.”

“The big cases are frequently litigated in Italy, and its lawyers are technically very talented. The Italian market has long been dominated by boutiques built around charismatic founders. However, now there is a real demand by multinationals experienced in global patent litigation for institutionalised representation.”

From the beginning of its launch in Milan, Herbert Smith Freehills’ most prominent client was Gilead in the Truvada case against various generics companies. Different Italian IP boutiques represented generics.

Sebastian Moore is also representing Gilead in the UK case, and co-ordinates the pan-European Truvada litigation.

Bright young things

Italy’s generational shift also plays a role in its patent firms offering fresh opportunities for law graduates.

Giulio Sironi, another patent partner at Simmons & Simmons, says, “Many young lawyers are interested in the international firm experience. Firms with pan-European offices and a more global structure can offer experience in other countries, as well as secondments with clients. This helps the new generation of practitioners to be more in-tune with client needs.”

Giulio Sironi, Italian patent market

Giulio Sironi

On the other hand, boutiques such as Trevisan & Cuonzo and Galli still flourish. The large numbers of IP conflicts running in Italy means there is more than enough work to go around.

A promise of increased investment in the patent sector means firms are beginning to showcase their European potential. Leading IP boutiques are no exception.

As investment in the Italian patent market increases, so too will interest in working for a well-connected patent firm. To continue attracting young talent, Italian boutiques must establish good links with other European independent practices. Such cross-border support could secure their future.

And the new generation of Italian lawyers reaches beyond just patent litigators.

Firms praise the “good young judges” emerging across Italy’s top patent courts, gradually replacing an old guard moving to pastures new.

Many patent lawyers note that Italy’s previous judicial bench found speaking English a stumbling block. Naturally, this had repercussions on the courts’ ability to truly integrate in the European system. Not just in terms of ability to conduct cases, but also the judiciary’s ability to market and showcase its patent judge expertise to the world.

Fresh-faced judiciary

Now, however, this is changing. Vittorio Cerulli Irelli says, “It’s refreshing to have a panel of young judges in Milan with a highly-practical attitude. We are seeing this approach in a number of high-stake FRAND cases we are handling, raising a lot of case management complexities.”

“Also, they are making excellent use of the new technologies which have become available as a consequence of the pandemic. It is now common practice to have online hearings with parties, foreign counsel and experts joining from abroad, with simultaneous translation,” says Cerulli Irelli.

Gualtiero Dragotti, Italian patent market

Gualtiero Dragotti

A recent effort to streamline proceedings is also addressing this problem. Laura Orlando says, “There has been a perception of the Italian courts being slow, whereas today the specialised IP sections are efficient and speedy forums in which to litigate patents. The efficiency of the specialised IP courts is helped greatly by the high quality of its judges.”

For Gualtiero Dragotti, partner at the Milan office of DLA Piper, the main draw of Italy’s courts is strategic. Dragotti represented Alpinestar in the Italian case against competitor Dainese. He argues that the country’s courts offer something different to Europe’s other leading jurisdictions.

He says, “You go to the Netherlands for a cross-border injunction, Germany for an injunction, and the UK for damages. You’d come to Italy if you want a validity and infringement decision from the same judge.”

Massimiliano Mostardini, partner at Bird & Bird’s Milan office, says, “Parties often choose Italy for strategic reasons. Whether it’s a torpedo, preliminary injunction, the saisie-contrefaçon (descrizione in Italian), or because the courts here are cheaper. It’s a big market, and we have a lot to offer.”

Veil of secrecy

Italian court continues to operate in a clandestine manner. Law firms are often unaware who is representing the opposing party; hearings take place before the judge in a closed room. Efficient proceedings on the merits are undoubtedly a boon for a sector still unknown to most of its European counterparts.

Massimiliano Mostardini

Massimiliano Mostardini

Some lawyers worry that, until this changes, Italy cannot be a viable option for clients. Here, other European courts such as the UK and the Netherlands clearly have a more transparent case management process. But Italy is working to throw off these shackles with other techniques.

As well as streamlining its procedures, patent lawyers say the coronavirus pandemic has led to a willingness by Italian courts to be open to new ideas.

Stefania Bergia says, “At the beginning of COVID-19, the courts physically shut down due to a lack of technological adoption. Over the past year, there has been an increasing adoption of IT tools. For example, court hearings can now be held over standard online platforms. This allows us to use the convenient functions of these platforms, including screen sharing during hearings.”

Bergia says, “This increasing technological innovation – in addition to creating a more efficient and rapid justice system – will serve to ensure that any urgent and emergency circumstances in the future will allow the justice system to move forward seamlessly.”

Stefania Bergia, Italian patent market

Stefania Bergia

Italy’s patent judges are also increasing their visibility in the European patent market. Leading IP courts such as Milan, Turin and Rome turnover most of Italy’s patent cases. Venice hosts the annual Intellectual Property Conference. Patent lawyers frequently mention the impressive work of judges such as Claudio Marangoni, Silvia Vitrò and Umberto Scotti.

Simple as UPC

An increase in judicial transparency has also opened the door for discussions around Italy’s hosting of a UPC division. The Italian government is keen for Milan to be a seat for UPC life sciences litigation.

“The choice of Milan as candidate for the third headquarters of the Unified Patent Court is a strategic decision,” it says, “in the direction of a further Italian contribution to the development and growth of the European Union.”

The argument picked up steam once the UK announced its withdrawal from the UPC project, leaving a gap for a pharmaceutical-specialist court. Milan is hosting a local division but is in the running, alongside Amsterdam, to host the now-vacant central division. In the interim period, courts in Paris and Munich are picking up the slack.

Many of Italy’s patent lawyers see the UPC as an opportunity for greater visibility of the Italian patent system in Europe. Its long-standing pharma tradition means sufficient technical expertise. Increased court openness, and more advanced English language skills, sees its judges better argue the case for Italy hosting a division – against, for example, Germany or the Netherlands.

Giovanni Ghirardi

Giovanni Ghirardi

Giovanni Ghirardi, partner at the Milan office of Hogan Lovells, says, “So far, Italy is underrepresented in the EU judicial landscape. But now we have specialised judges and we can ensure uniformity among judgments.”

Certainly, hosting a UPC would fit into the economic-centric vision of Italy’s new investment-ready government.

Gabriel Cuonzo says, “We had the impression that the former Italian government was very keen on Milan taking a more active role in the UPC. Let’s see how things unfold with the new government.”

“If these efforts were successful, the central pharma division in Milan might have beneficial spill-over effects on the Italian litigation system as a whole.”

Period of self-reflection

But, in some circles, the appetite for a UPC is waning. Giovanni Guglielmetti says, “German patent litigation is much better-positioned for a UPC than Italy. We are an ‘importer’ of litigation, with very few cases exported from Italy. Some lawyers are worried a UPC might lose them work.”

For other lawyers, streamlining of court procures means Italy is in the midst of a period of self-reflection. Now is a good time for the country’s patent system to take stock of what it can offer and prepare itself for further investment.

Gabriel Cuonzo says, “The use of technology in court proceedings is an important issue, and one which our courts historically fell behind. Now, Italy is keeping things in-line with international standards.”

Some lawyers say there should be a level of uniformity before the UPC. If the pan-European court is to start, it needs judges to be close to the business issue and make business-focused decisions. But some experts express doubts that Italy is not yet in a position to do this.

Vittorio Cerulli Irelli, Italian patent market

Vittorio Cerulli Irelli

Land where lemons grow

Undoubtedly, life sciences litigation continues to drive the Italian patent market. Mix in trade secrets expertise, its strong reputation for cases involving mechanical patents, and its future as a forum for standard essential patent cases, and Italy’s patent future looks bright.

The optimism of its patent lawyers buoys the market, who almost unanimously consider Italy – and especially Milan – the next major seat of European patent litigation.

Brexit means the UK has created a vacuum for the potential UPC pharmaceutical division, as well as for European firms looking to consolidate their offering. As the Italian patent market grows in strength, so too does its viability as a main player in European patent litigation. (Co-author: Mathieu Klos)