Publications Articles

The EPO and National Courts – An Odd Relationship

Graham Burnett-Hall, Associate

The Patents County Court has recently handed down its judgment in the latest stage long running dispute between Unilin Beheer BV (“Unilin”) and Berry Floor NV (“Berry”). The dispute concerns the validity and infringement of Unilin’s European patent for hardwood floor coverings. In the UK the patent had been held valid and infringed. Having won, Unilin asked the UK court to order an enquiry as to damages. But the patent was still under opposition in the EPO. Berry argued that any enquiry as to damages should be stayed until the opposition was resolved. To complicate matters further, the opposition itself is currently stayed pending the outcome of a case before the Enlarged Board of Appeal (G1/05), concerning whether a patentee can legitimately amend a divisional application to exclude added matter and still retain the filing date of the parent application. It was therefore probable that the conclusion of the EPO proceedings regarding the Unilin patent would take up to two years.

Unilin opposed various applications for a stay of the UK damages enquiry on two grounds:

A patentee who wins an action becomes entitled to all the relief awarded by the trial judge at the time the judgment is handed down, even if the damages enquiry will in practice take time to complete. There was therefore no substantive reason for staying an enquiry once validity and infringement had been decided. In this case, Berry were seeking a stay on the basis that in two years time circumstances might arise which might give rise to a ground for resisting the payment of damages. This, Unilin argued, was insufficient to justify delaying the commencement of the enquiry as to damages.
Even if the EPO proceedings did result in the patent being revoked, this would not affect Berry’s liability to pay damages, because the validity and infringement of the patent had already been subject to a final determination by the UK courts. Berry was therefore estopped from asserting in any UK enquiry as to damages that the patent was in fact invalid and that no damages should therefore be payable.

Unilin succeeded on the first point but lost on the second. Regarding the first issue, the court observed that the granting of a stay was a matter for the court’s discretion. Delays in the EPO were a continuing problem. The judge was not prepared to allow the conclusion of UK litigation to be dependent on the workload of the EPO.

Both parties had substantial financial resources. The judge was prepared to assume that should any party be required to repay money as a result of an EPO decision, that party would be in a position to repay that money with interest. The implication of this is that, had Unilin’s finances been such that there would have been doubts over whether it could have repaid any sums that turned out to have been wrongly paid to it, the balance of discretion may have weighed in favour of staying the UK proceedings pending the outcome of the EPO opposition. Implicit in this finding is that where a patent is later found to be invalid by the EPO in opposition proceedings, any sums that have been paid as a result of earlier infringement proceedings will be refunded.

The courts ruling on the second issue is at first glance surprising. The earlier Coflexip case held that where a patent is found to be valid and infringed in a first set of UK proceedings but is subsequently revoked in later proceedings by a different defendant, the first infringer cannot rely on the later revocation as a ground on which to refuse to pay damages. Although this seems unfair to the first “infringer”, given that the patent is now known to have been (and always to have been) invalid, there is a public policy in favour of ensuring that legal proceedings can be finally determined as between two parties and not reopened at a later date.

Why then, if a finding of invalidity in later UK proceedings should have no effect on the outcome of earlier proceedings, should a later finding of the EPO be any different? Unilin argued that there was no difference and that the finding of the EPO would have no effect on the UK proceedings. However, the court agreed with Berry. Section 77(2) Patents Act 1977 expressly provides that the treatment of a European Patent (UK) under UK law is subject to the operation of any provisions of the European Patent Convention relating to the amendment or revocation of the patent in proceedings before the EPO. Article 68 of the European Patent Convention says that the revocation of a patent in opposition proceedings shall be deemed to take effect retrospectively.

The court held that this gave rise to two distinct routes by which a European Patent may be amended or revoked. One was the “national route”, i.e. UK legal proceedings, the other was the EPO opposition procedure. Both could be pursued simultaneously and could raise the same grounds. Failure to achieve revocation in domestic proceedings was thus irrelevant where the same patent was later revoked by the EPO. In effect, any decision by the EPO to revoke a patent would “trump” a finding of the UK courts that the patent was valid and infringed.

Given that a finding by a UK court that a patent is invalid is also retrospective in effect, it appears inconsistent that a question of whether an infringer should be required to pay damages should be dependent on whether a subsequent revocation of the patent is made by reason of UK proceedings or an EPO opposition. The possibility of this anomaly arising may well count in favour of a party arguing at an early stage for a stay of UK proceedings generally (rather than just a stay of an enquiry as to damages) where opposition proceedings are still pending before the EPO.

Graham Burnett-Hall

Associate, Marks & Clerk Solicitors

This article Copyright © Marks & Clerk 2005. All Rights Reserved. The information in this article is intended as a summary. Readers should not act or rely on information contained in this article without first obtaining specialist professional advice. Please read our terms and conditions regarding use of this article.