NLO Fortify no. 8 2019
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no. 8 | volume 6 | summer 2019

Pepper plants lead to hot decisions and patentable subject matter

Authors: Stijn van Dongen and Bart Swinkels

On 5 December 2018 the Boards of Appeal decided that Rule 28(2) of the European Patent Convention (EPC) is in conflict with Article 53(b) of the EPC and that the article prevails over the rule (Article 164(2) EPC). As a result, Rule 28(2) is to be considered void and should be ignored. This means that plants (or animals) obtained via essentially biological processes are not excluded from patentability – despite Rule 28(2) explicitly saying so.

The proceedings in Case T1063/18 concerned the appeal of a patent applicant (Syngenta) against the decision of an examining division to refuse a European patent application (EP2753168) for the sole reason that the claimed subject matter falls within the exception to patentability according to Article 53(b) and Rule 28(2) EPC (plants exclusively obtained by means of an essentially biological process). Public oral proceedings were arranged, where the rule was determined to conflict with Article 53(b) and was ruled to not be enforceable. The Board of Appeal, enlarged to five members, considered that this matter had already been settled by the Enlarged Board of Appeal in 2015 and that no new referral was required.

When the seed of discord was sown

Rule 28(2) at the centre of the issue is rather new. On 29 June 2017 the EPO’s Administrative Council amended the regulations pertaining to the patentability of plants. In the new rule, plants and animals exclusively obtained by an essentially biological process were explicitly excluded from patentability. These rules originally came into being as an implementation into the EPC of the EU Directive on Biotechnological Inventions (98/44/EC). This directive was issued to harmonise European law in a field that was newly emerging at the time.

The decision by the Administrative Council to change the rules was taken after a proposal by the EPO, which in turn was made after a notice of the European Commission was issued in November 2016. In this notice, the European Commission clarified that, in its view, it was never the intention of the original directive to allow patents on biological processes or products obtained by such processes. Delving further back in time, this notice was triggered by the *Tomato II* and *Broccoli II* cases from the EPO’s Enlarged Board of Appeal.

In 2015 the *Tomato II* (G2/12) and *Broccoli II* (G2/13) cases reached decisions which held that “plants are patentable even if they are obtained through essentially biological breeding methods involving crossing and selection”. In other words, plants can be patented, even if they were the result of traditional breeding, as long as the usual criteria for patentability are met and the technical feasibility of the invention is not confined to a particular variety. These decisions caused commotion, leading to the short-lived implementation of Rule 28(2).

Legal perspective

The Boards of Appeal, which issued the *Broccoli* and *Tomato* decisions, are not bound by an amendment of the EPC Implementing Regulations if they perceive the rule to be in conflict with an article. This is because articles trump rules. Therefore, the boards can declare a rule invalid and non-enforceable under Article 164(2) (which the Enlarged Board of Appeal in G2/07 already did with Rule 26(5)). This prerogative of the boards also applies when there is a conflict of a rule with the interpretation of an article, wherein the interpretation is established by a ruling of the Enlarged Board of Appeal (T315/03, Point 5.7). In the present case, a board exercised this discretion by voiding Rule 28(2).

The Administrative Council, while competent to amend the EPC rules (Article 33(1)(c)), is not competent to amend the articles without meeting further requirements. In this light, the board in T1063/18, reasoned that the Administrative Council overstepped its competence by implementing this new rule. The fact that Rule 28(2) would indirectly amend the scope of Article 53 could be seen as an indirect amendment of an article – one that was already clarified by authoritative decisions in the *Broccoli* and *Tomato* cases.

Thus, even though the rule change looked clear-cut when it was implemented, it did not actually achieve its intended effect. The patentability of plants obtained by means of an essentially biological process is still a (theoretical) fact.

Culturing the future

If it is still the intention of the legislature that plants obtained by means of an essentially biological process are to be excluded from patentability, some possibilities remain.

One option is that Article 53(b) could be changed via a direct process. This would not be a short-term exercise because it requires the unanimity of all the contracting states at a diplomatic conference. Such a change in law would require transitional provisions to take account of existing rights of patentees and applicants. A further point that would need to be considered is that the exclusion of plants produced by essentially biological processes creates additional legal uncertainty because such plants are nowadays no longer clearly distinguishable from plants produced by new gene-editing technologies such as CRISPR-Cas.

Another possibility is that the European Court of Justice (ECJ) would have to deal with the patentability of plants obtained by means of an essentially biological process under the EU Biotech Directive. While the ECJ is not formally bound by decisions of the Enlarged Board of Appeal (and *vice versa*), the ECJ would be wise not to ignore such well-reasoned and authoritative decisions as the *Broccoli* and *Tomato* cases. After all, not only does the Enlarged Board of Appeal have final competence in interpretation of the EPC, its decisions are reached only after exhaustively applying established international provisions on the interpretation of treaties, and after considering facts from all available sources. In *Tomato II* and *Broccoli II* the Enlarged Board already considered the relevant provisions of the EU Biotech Directive and concluded that an exception of plants (and animals) is not supported by the directive. The more recent notice of the European Commission is not legally binding and could be seen as merely reflecting the current political climate. The notice itself mentions its own non-binding nature. It would not be unexpected if the ECJ were to come to a conclusion in line with that of the Enlarged Board of Appeal.

As a third option, the Enlarged Board of Appeal could come to a new point of view on Article 53. However, this is unlikely –*Tomato II* and *Broccoli II* are already a second consideration of the subject matter, confirming the earlier point of view. A third consideration would therefore be unlikely. In addition, to even bring a case before the Enlarged Board of Appeal, certain conditions must be met. For example, a board of appeal needs to make a referral. This is virtually impossible, as the only board which deals with this subject matter has just explicitly stated that referral to the Enlarged Board is not required. Referral can also be made by the president of the EPO, but this can be done only when conflicting decisions from the Board of Appeal exist; this is not the case, at least explicitly. The president might try and find a conflicting opinion to justify a new referral to the Enlarged Board of Appeal. For example, in T297/88 the board found that a board of appeal should refer a question that has already been decided by the Enlarged Board of Appeal to that enlarged board again if, weighing all circumstances, it considers that legal developments which have occurred since the earlier decision let it appear desirable in the public interest to have the issue re-assessed by the Enlarged Board. It remains to be seen whether this can be construed as actually conflicting with the present decision. Also, it is not a given that T297/88 also applies when a case has already been decided more than once with consistent outcome.

As a fourth option, the European Commission could amend the provisions of the biotech directive corresponding to the relevant EPC Articles. Article 33(1)(b) allows the Administrative Council to amend the EPC articles if the amendment brings the articles in line with an international treaty relating to patents, or with European Community legislation relating to patents. Faced with changed international law, the competency of the Administrative Council would then expand to a direct amendment of Article 53. If the article itself were to be amended, the Boards of Appeal would be unable to rely on the present argument that the rule conflicts with an article. Moreover, the Tomato and Broccoli decisions would no longer apply to the latest wording of Article 53, meriting new consideration from the Enlarged Board as well. So far, it appears as if the commission has been reluctant to open up the biotech directive, as it may well open a can of worms that could also affect the patentability of biotechnological inventions outside the realm of plant breeding. Nonetheless, if the commission does go forward with amending the biotech directive, good governance, as well as the European Convention on Human Rights, would require the commission to legislate proper transitional provisions to take account of existing rights of patentees and applicants.

Which plans might bear fruit?

In a 20 February 2019 meeting of the Committee on Patent Law, the EPO and representatives of the contracting states discussed T1063/18. This discussion was also attended by representatives from the European Commission. The committee addressed different potential options for the way forward, and were particularly interested in options for obtaining a new opinion from the Enlarged Board of Appeal. However, this would require an unconventional approach, because the EPC does not allow for a referral to the Enlarged Board in the present circumstances. Moreover, whether the Enlarged Board has at present any reason to deviate from its well-reasoned earlier decisions in G 2/12 and G 2/13 is under serious doubt. All parties present at the committee meeting expressed the intention to find a solution in the short term, but a diplomatic conference between 38 states is not generally seen as a short-term undertaking.

islature that plants obtained by means of an essentially biological process are to be excluded from patentability, some possibilities remain.

One option is that Article 53(b) could be changed via a direct process. This would not be a short-term exercise because it requires the unanimity of all the contracting states at a diplomatic conference. Such a change in law would require transitional provisions to take account of existing rights of patentees and applicants. A further point that would need to be considered is that the exclusion of plants produced by essentially biological processes creates additional.

Judging by Point 43 of the decision, the board might expect consideration of the situation by the ECJ. This, or the amendment of the biotech directive, might be the only realistic ways forward for those wishing to reinstate Rule 28(2) (or its effect) to its short-lived glory.

The little plant that persisted

The patent application at issue related to “a cultivated blocky fruit type pepper plant” wherein genetic markers associated with an extreme dark green colour were to be present. The refusal by the Examining Division has been overturned in appeal. The appeal was not a solitary affair – there were various third-party observations and interested members of the public present at the oral proceedings. Given this interest, it is probably a safe bet that notices of opposition are already being drafted.

Latest developments

At the time of writing, a president’s referral of the case to the Enlarged Board of Appeal has been made. Whether this will lead to a decision is uncertain; the Enlarged Board considers presidential referrals inadmissible if they are not based on conflicting board decisions (see G4/98,reason 1.1), and has dismissed earlier presidential referrals even when prima facie conflicting decisions existed (see G3/08, headnote 6) because the conflict was seen as “a legitimate development of the case law”. In the meantime, related proceedings have been staid – which for some applications is their third stay already. As the Dutch say, developments in this case ‘grow as fast as cabbage’.

Suitcase Illustration

Protecting your rights - How not to go wrong

Authors: Barbara Durling and Stefanie Lewis

Intellectual property is quickly becoming one of the most valuable assets owned by companies, large and small. Whether organisations opt to protect their innovation and brand through registered or unregistered rights, it is important to ensure that ownership of valuable IP does not come into question. A well-curated IP portfolio can open doors to successful takeovers, facilitate mergers and acquisitions, and maintain a strong position in the market. However, the ability to harness these advantages rests with the holder.

Crafting an IP portfolio can be a long and expensive procedure. Whether the focus lies in in-house innovation, or acquisition of IP rights from outside via assignments and licensing, significant investment can be expected to ensure that IP rights end up in the right hands. Since full enjoyment of IP rights can rest upon correct details being listed in official registers, keeping these registers up to date should stay near the top of the to-do list.

Recording your rights in the register

IP organisations throughout the world maintain public registers that list bibliographic details of rights holders for the benefit of parties holding an interest in a registered right. Keeping a public record of rights holders protects not only the parties holding the rights, but also third parties who may have those rights enforced against them.

Keeping the public registers up to date is an often-overlooked step in ensuring that your IP can be fully exploited. Although not all IP transactions can be recorded in all public registers, failure to record the following changes can have far-reaching consequences:

  • changes of name of the rights holder(s) or a change in the entity status;
  • assignment of a registered right to a new party;
  • grant of a license; and
  • grant of a security interest.

Why record a change?

The first step in assigning or licensing IP rights is to draw up an agreement between the parties in accordance with the laws of the country in which the transfer or grant of rights is to take place. Once this agreement has been concluded and the rights have changed hands, many organisations consider the job done and return to business as usual.

Similarly, when an organisation changes its name, changes hands, or its entity status changes, the official paperwork is often concluded without a thought given to the name in which its IP is held.

However, unless action is taken to update to the register, the true holder of the rights will not be shown in the public record. Discrepancies between the record of ownership and license holders in the public register can have undesired consequences which can be costly to untangle.

“A stitch in time saves nine”

Due to the burden that would be placed on third parties to determine ownership without a public register, many countries require all transfers, assignments and exclusive licenses to be registered in a timely manner, and sanctions often apply for failure to do so. Sanctions can range from a fine for failure to promptly notify the national office of a change in ownership, to the transfer not being deemed to have taken place at all until the transfer is recorded in the register. Failure to swiftly record rights may result in limitation on the recovery of costs (during infringement proceedings).

For example, in the UK, assignments and licenses must be registered within 6 months of completion if the rights holder is to enjoy the maximum recovery of costs during infringement proceedings. If a transfer or license is registered later and an infringement action is brought against an infringer, then the assignee or licensee cannot recover costs or expenses for the time between when the agreement was made and when it was (eventually) registered.

L’Oréal case

This was recently confirmed in a decision by the UK High Court (L’Oréal Société Anonyme & L’Oréal (UK) Limited vs.RN Ventures Limited (HC-2016-003018)) in which the licensee’s final costs award was reduced by 35% due to a failure to swiftly record the exclusive license in the register.

In this case, L’Oréal (UK) Limited had acquired an exclusive license from L’Oréal SA in 2012. In the same year, RN Ventures Limited began activities that would later be held to be infringing the patent for which L’Oréal (UK) held an exclusive license. In 2016, L’Oréal (UK) recorded its exclusive licence in the register and issued a claim against RN Ventures. Although L’Oréal (UK) was successful in its claim, it was held that it could not recover the costs it had incurred in the case insofar as they related to infringement that had taken place before the licence was recorded in 2016.

Other countries do not require a change, transfer or license to be recorded in a particular time frame, but may insist that only the registered right holder can enforce the right, and may have strict requirements for recording a change, transfer or license.

Good housekeeping

Keeping the register up to date can, by virtue of good housekeeping, avoid significant costs and delays in updating the register later, especially if one or more parties to an agreement has been dissolved, changed hands, or no longer wishes to cooperate. In some cases, the strict requirements for registering a transfer or license can delay or even prevent the assignee or licensee from starting an infringement action, for example. This can lead to the loss of urgency in summary proceedings.

In many jurisdictions, including the Netherlands, an original signed document (or a certified copy thereof) may be required. Acquiring these documents several years after an agreement was concluded is often difficult, and sometimes impossible. Another quirk of Dutch law requires that a deed of transfer include a statement of acceptance from the assignee. If a statement of acceptance is missing, the Dutch intellectual property office can refuse to record the change in the register even if the parties are in possession of the original documents. In a worst case scenario this can result in a registered right being effectively ‘frozen’ because it cannot be enforced or transferred to a new party because consent is required from an entity that no longer exists.

It is a common tactic, when faced with an infringement claim, to explore the chain of title of an IP right, and if possible, argue that the claimant cannot enforce the right against the alleged infringer because he is not the registered holder. Even if a discrepancy can be resolved, doing so can be costly and is best avoided.

Moreover, recording a change provides protection against subsequent conflicting transactions by putting third parties on notice.

In the Netherlands and the UK, for example, a party acquiring rights in good faith will not be affected by an earlier assignment or license that was not recorded in the register. Failure to swiftly record your rights in the register can thus lead to a subsequent transaction taking precedent over your own agreement due to swifter administrative procedures on the part of another party.

It is particularly important for licensees that their license is recorded in the register. Most, if not all, countries ensure that registered licensees maintain their license agreements in the event of a transfer. If a license is not registered, a new owner of the right may be able to revoke the license or grant new licences running contrary to the terms of the original agreement.

However, following the CJEU rulings in Hassan v Breiding and Thomas Phillips v Grüne Welle, with regard to EU trademarks and designs, it has been established that an exclusive licensee may initiate proceedings without the licensor’s consent if the licensor does not act after having been urged to do so, even if the license has not been registered.

How to record a change

How to record changes in connection with your registered intellectual property rights depends on the type of right (e.g. trademarks, patents, designs, etc.), the territory in which the right exists, and the stage of prosecution. How and when the change is recorded can have significant cost implications.

For example, the International Bureau of the WIPO will record changes before the thirty month period for entry into the national phase expires. If the register is updated before this deadline, the costs and specificities of separately recording the change before each of the national and regional offices can largely be avoided.

Similarly, whilst a European patent application is pending, the EPO will record any changes in ownership or licensing status upon request. However, after grant, a European patent is merely a bundle of national patents and rights must be registered individually in each national office. Since many countries require sworn translations, original deeds, or locally notarised copies of official extracts, delaying a recordal until after grant of a European patent can be costly.

Many national or regional offices require that each step in the chain of title for a registered right be evidenced and recorded on the register. For example, if company A changes its name to company B, and then assigns its rights to company C, two steps must be recorded on the register: A –>B, and then B –>C. Waiting to update the register because further changes seem likely is therefore unlikely to reduce costs.


Proper registration of changes in ownership (including entity changes), exclusive licenses and the like, whilst lacking the meaty substance of prosecution, can see off threats to the validity of your right to enforce an IP right, or convince a large corporation that your start-up company is worthy of investment.

Although failure to record every change promptly in every register will rarely result in disaster, saving the job for a rainy day can have far-reaching consequences. In addition, it reduces the risk of losing protection and unnecessary reparation costs. After investing heavily in an IP portfolio, it pays to make sure that the public registers reflect and protect that investment.