The burden of proof in IP negative declaratory proceedings: a ruling from the Bologna IP Court

In its recent decision no. 302 of 2016, the Bologna Court division dealing with IP matters addressed the much-debated subject of the burden of proof in negative declaratory proceedings, specifically in the context of patent litigations.

The proceedings had been brought by an Italian company, seeking negative declaratory relief from the Court with respect to a wheel aligner it manufactured; specifically, the plaintiff requested the Court to rule that the device did not infringe two European patents relating to wheel alignment technology owned by a foreign competitor.

It should be noted that the defendant did not file a contrary counter-claim, i.e., did not request the Court to positively rule that the patents had been infringed by the plaintiff, but limited its requests to the simple dismissal of the plaintiff’s claims. This had an impact on the reasoning of the Court, as will soon become apparent.

The Court, as is standard in Italian patent litigation, appointed an expert witness to examine the plaintiff’s device and give his opinion on the alleged non-infringement. The work of the court expert, however, did not go smoothly. After performing a series of tests on a test product made available at the plaintiff’s premises, he reported that he considered that the latter did not infringe the defendant’s patents, but subject to a (quite unusual) reservation: had he been able to analyse the software operating the machine – which the plaintiff did not make available – and thus gain a better understanding of how the machine functioned, he might have come to a different conclusion.

The defendant objected to how the tests had been performed and the results interpreted, and argued that, in any event, a conditional opinion such as the one submitted by the court-appointed expert called for further investigations. The proceeding judge agreed and ordered an analysis on the source code of the relevant software, appointing another expert witness to do the job.

The work of the second court-appointed expert, too, remained incomplete. As he analysed the program, he realised that substantial changes had been made to the original source code, even while the judgment was under way. He decided to stay his operations and refer the matter to the proceeding judge for further instructions. The proceeding judge, in turn, referred to the deciding panel.

Under Italian civil procedure rules, the 3-judge panel at this point could have taken one of two roads: send the case back to trial, or issue its ruling on the basis of the existing evidence. The panel went for the latter and ruled in favour of the defendant.

The Court noted that, on the one hand, the expert evidence phase had left many of the questions regarding the actual operation of the plaintiff’s device without an appropriate answer, not least the doubt that the examined device did not correspond to the device actually manufactured and marketed. This was due to the undisputed presence, in the source code made available by the plaintiff, of substantive changes to the original code; on the other hand, the plaintiff had admitted to being unable to produce a copy of the original source code, hence making any continuation of the expert evidence procedure likely a fruitless endeavour.

On those premises, the Court found, there was no doubt that the plaintiff should bear the adverse consequences of such a defective evidentiary situation; in light of the “proximity to evidence” principle, the latter had, in fact, the burden of providing positive proof that the functioning of their device actually differed from the process claimed in the defendant’s patents, and had failed to do so.

On those grounds, the Court rejected the plaintiff’s lawsuit and ordered the latter to pay legal expenses and court fees.

The proximity to evidence criterion, therefore, rather than the abstract position of the parties relative to their respective allegations, weighed, in the reasoning of the Court, in such a deficient evidentiary situation as the one described, in favour of the defendant and to the plaintiff’s disadvantage.

There is no doubt that IP negative declaratory judgments are the most appropriate place to solve burden of proof issues on the basis of this particular criterion: in them, the plaintiff typically alleges the non-interference of one of its products with a third party’s IP rights.