In this article, originally published in Intellectual Asset Management Magazine, Graham Burnett-Hall and Sarah Routledge address some of the key questions businesses need to ask – from arbitration to expert witnesses – when considering patent litigation in the UK.
Q: What options are open to a patent owner seeking to enforce its rights in your jurisdiction?
The UK courts are divided into three jurisdictions: England and Wales, Scotland and Northern Ireland. The great majority of patent litigation takes place in the courts of England and Wales, which will be the focus of this Q&A.
In England and Wales, patents are enforced in civil proceedings brought by the patentee or the exclusive licensee, in the Patents Court (part of the High Court of Justice) or, for smaller matters, the Intellectual Property Enterprise Court (IPEC). Some disputes may also be resolved through the Patent Office, but this is much less common.
Q: Are parties obliged to undertake mediation/arbitration before bringing a case before the courts? Is this a realistic alternative to litigation?
It is not compulsory for parties to undertake alternative dispute resolution (ADR) methods such as mediation or arbitration, but it is encouraged and should be considered at various stages of litigation. An unreasonable failure to engage with ADR may have a negative impact on cost recovery at the end of the proceedings, but if ADR is not a realistic alternative to litigation, the parties are unlikely to be penalised.
Q: Are there specialist patent or IP courts in your jurisdiction? If not, what level of expertise can litigants expect from the courts?
There are two specialist IP courts in London which operate in parallel – the Patents Court and the IPEC.
The Patents Court has specialist judges hearing mainly patent and certain other IP cases. The quality of technical comprehension of the judges is high. There are no juries.
The IPEC is similar to the Patents Court, but is tailored to smaller IP claims and gives parties greater control over costs. There are differences in procedure and shorter trials. The judges are, again, technically competent and there are no juries.
Q: Are validity and infringement dealt with together, or does your country have a bifurcated system?
The system in England and Wales is not bifurcated: infringement and validity are dealt with in the same proceedings.
However, proceedings usually involve a split trial: liability is determined first and, if the claimant wins, there follows a damages inquiry or an account of profits, using a separate procedure.
Q: Who may represent parties engaged in a dispute?
Parties are usually represented in litigation by solicitors and barristers, and sometimes by patent attorneys.
Solicitors run the action and are the main point of contact for clients: they agree overall strategy with clients, communicate with the other side, work with experts and witnesses and assist with document preparation. Solicitors instruct and work closely with the barristers (counsel) to prepare for trial. Solicitors may undertake advocacy in the IPEC, but not in the Patents Court, unless they are qualified as solicitor-advocates.
A barrister is a specialist advocate used during the trial itself, whose main function is to present oral argument and cross-examine experts and witnesses at trial. Particularly in complex cases, barristers work with the solicitors to prepare the case for trial.
Patent attorneys may represent litigants in the IPEC and may be entitled to represent clients before the higher courts if they are suitably qualified. However, in most litigation clients usually instruct solicitors and barristers.
Q: To what extent is pre-trial discovery permitted?
Pre-action disclosure (discovery) is possible and may be ordered by the court in certain circumstances, but is not common.
Generally, disclosure is usually ordered after proceedings have commenced, but it is limited in scope to keep the disclosure exercise reasonable and proportionate. Disclosure is a potentially expensive and often fruitless exercise, so there is a general resistance to ordering wide-ranging disclosure. In patent cases, there is typically a time limitation applied to documents relating to validity issues: documents dating from outside a four-year window (ie, more than two years before or more than two years after the priority date) need not be disclosed.
An alleged infringer will not normally have to produce documents relating to the alleged infringement if it provides a written description of the product or process alleged to infringe the patent being asserted.
Q: Is cross-examination of witnesses allowed? If so, what form does this take?
A key element of the adversarial system in England and Wales is cross-examination of witnesses, especially experts. Witnesses are required to appear before the court and are subjected to a series of questions from the opposing side’s barrister on the written evidence that they have provided, or any other document or evidence that is in issue.
Q: What use of expert witnesses is permitted?
Expert evidence is the norm in patent actions and often plays a central role in the case. The main role of the expert is to educate the court as to the mind-set of the notional skilled person working in the industry, including the ‘common general knowledge’ of that person at the relevant date and his or her reaction to the cited prior art. The expert might also have to deal with matters such as infringement and experiments.
Written expert reports, which stand as the evidence that the expert will give to the court at trial, are disclosed to the other side usually around six to eight weeks before the trial.
Q: Is the doctrine of equivalents applied by courts in your jurisdiction? If so, what form does this take?
UK law changed very recently, following the July 2017 Supreme Court decision in Actavis v Lilly. The Supreme Court held that the United Kingdom should apply a doctrine of equivalents, the purpose of which is to cover immaterial variants, as well as the products or processes that would be covered by the patent claims when interpreted normally.
In brief, the questions to be asked by the court are as follows:
- Does the variant achieve substantially the same result in substantially the same way as the invention?
- Assuming the skilled person knows that the variant achieves substantially the same result, would it be obvious that the variant achieves it in substantially the same way as the invention?
- Did the patentee nevertheless intend strict compliance with the literal meaning of the patent claims?
Q: Are there problems in enforcing certain types of patent relating to, for example, biotechnology, business methods or software?
The UK courts have shown themselves highly competent to handle disputes in all areas of technology.
Certain types of invention are excluded from patentability, including business methods, computer programs (software) and inventions which would be contrary to public policy or morality.
In general, biotechnological inventions are patentable, subject to certain exceptions, which include:
- discoveries of a gene sequence without industrial application (ie, without a credible function);
- processes for cloning human beings or modifying genetic material in the germ line and genetic identity of human beings;
- commercial or industrial use of human embryos;
- the human body at various stages of its development;
- processes for modifying the genetic identity of animals that are likely to cause them suffering without substantial medical benefit, and animals resulting from such processes; and
- animal or plant varieties or any essentially biological process for their production.
Q: To what extent are courts obliged to consider previous cases that have covered issues similar to those pertaining to a dispute?
England and Wales is a common law jurisdiction. Judgments in prior cases may form binding precedents. The courts are bound by decisions of the higher English courts and, currently, by decisions of the European Court of Justice.
Q: To what extent are courts willing to consider the way in which the same or similar cases have been dealt with in other jurisdictions? Are decisions from some jurisdictions more persuasive than those from others?
The UK courts are not bound by, but do consider, decisions of foreign courts concerning similar concepts – in particular, the courts of major European and Commonwealth patent jurisdictions.
The English courts will consider European Patent Office (EPO) case law, especially that of the Enlarged Board of Appeal. While board decisions are not binding, the Supreme Court has indicated that where the board has adopted a consistent approach to a particular issue which can be tracked through a number of decisions, a national court should be slow to diverge from that approach.
Q: What realistic options are available to defendants seeking to delay a case? How might a plaintiff counter these?
A defendant can introduce some delay in the early stages of proceedings by applying for extensions of the time allowed for different steps in the action to be completed. However, this is more difficult once the court has set the timetable and, in particular, a trial date. If a trial is expedited, the chances of introducing delay are minimal. A party can also seek a stay of proceedings in order to allow settlement discussions to take place. Stays pending the outcome of parallel EPO opposition proceedings concerning the same patent are also possible, but rarely granted.
Q: Under what circumstances, if any, will a court consider granting a preliminary injunction? How often does this happen?
Preliminary injunctions are a matter for the court’s discretion. They are most common in pharmaceutical actions involving generics, particularly where an originator company can demonstrate an adverse effect on pricing and their monopoly.
In considering an application for a preliminary injunction, the court will consider whether there is a serious issue to be tried (but will not conduct a mini-trial with detailed technical arguments), whether damages will be an adequate remedy and where the balance of convenience lies. Other factors that the court will consider include whether the patentee has delayed in making the application and where the status quo lies.
Q: How much should a litigant budget for in order to take a case through to a decision at first instance?
The costs of taking an action to trial in the Patents Court will vary depending on the complexity of the matter, the number of disputed issues, expert costs and the overall strategies employed by the parties. If both infringement and validity are in issue, costs will likely exceed £500,000. In high-value, complex matters the costs (including court fees) can be £1 million to £2 million or more.
Costs in the IPEC are generally less, as the matters are smaller and less complex, and may range between £150,000 and £350,000.
In both courts, many cases settle before trial.
Q: How long should parties expect to wait for a decision to be handed down at first instance?
In the Patents Court, written judgments which give a full account of the judge’s reasoning are usually handed down within two to eight weeks of the trial, but can take longer, depending on the complexity of the case and the judge’s workload.
In the IPEC, a judgment is usually handed down within a few weeks of the trial.
Q: To what extent are the winning party’s costs recoverable from the losing party?
As a general rule, the loser will pay the winner’s reasonable legal costs – typically 65% to 80% of costs actually incurred. However, a party may be penalised in costs if it runs a point which fails, even if it is the overall winner. Costs are usually agreed between the parties, but if they fail to reach an agreement the court will assess the costs and decide on the amount that the losing party must pay.
Costs recovery in the IPEC is usually capped at £50,000.
Q: What remedies are available to a successful plaintiff?
The following remedies may typically be available to a successful claimant:
- a permanent (final) injunction;
- damages or an account of profits;
- delivery up or destruction of any infringing product;
- publication of the decision;
- a declaration of infringement or validity; and
Q: How are damages awards calculated? Are punitive damages available?
Damages are usually assessed in a separate set of proceedings after the main trial. The claimant must choose between an inquiry as to damages and an account of profits.
Damages are compensatory, not punitive. The general principle is that the patent owner must be put in the same position as if the infringement had not happened. This means that the patent owner must be compensated for all reasonably foreseeable losses suffered as a result of the infringement.
Damages in the IPEC are limited to £500,000.
Q: Under what circumstances might a court grant a permanent injunction? How often does this happen?
A permanent (final) injunction is a discretionary remedy, but a successful claimant will usually be granted a permanent injunction to restrain the defendant from continuing to infringe its patent.
Q: Does the losing party at first instance have an automatic right of appeal? If not, under what circumstances might leave to appeal be granted?
A party may appeal from either the Patents Court or the IPEC to the Court of Appeal. There is no automatic right of appeal and the losing party must seek permission to appeal from either the first instance court or the Court of Appeal. An appeal will typically be allowed on questions of law, rather than findings of fact or evidence-based issues.
Q: How long does it typically take for the appellate decision to be handed down?
Approximately nine to 15 months, but appeals can be expedited in particularly urgent cases.
Q: Is it possible to take cases beyond the second instance?
A party may appeal from the Court of Appeal to the Supreme Court. Permission is rarely granted and usually only on a point of law or for important public policy reasons. An appeal to the Supreme Court may typically take an additional one to two years.
Q: To what extent do the courts in your jurisdiction have a reputation for being pro-patentee?
The judgments of the Patents Court and IPEC over the last three to five years have shown a balanced approach to validity. Many patents have been held valid. However, the rigour of the UK procedure means that weak patents will often be exposed as such, leading to revocation.
Q: Have courts in your jurisdiction handled cases relating to standard-essential patents and fair, reasonable and non-discriminatory licensing since the ECJ’s Huawei v ZTE decision? If so, what have they decided?
Yes, frequently, in relation to validity, infringement and declarations of essentiality. The first UK judgment to consider the licensing of standard-essential patents and the meaning of ‘fair, reasonable and non-discriminatory’ (FRAND) was handed down in April 2017 by Justice Birss in the Patents Court in Unwired Planet v Huawei ( 711 (Pat)).
Unwired Planet sued Huawei, Google and Samsung for infringement of five standard essential patents and one non-essential patent. The defendants denied infringement and counterclaimed for revocation of the patents. After the commencement of proceedings, Unwired made a series of licence offers, which the defendants countered were not FRAND and constituted an abuse of dominant position in breach of competition law. Google and Samsung subsequently settled with Unwired.
The judge held that:
- the patentee’s FRAND undertaking can be determined and enforced in an English court and there is “only one set of licence terms which are FRAND in a given set of circumstances”;
- the court can use its equitable jurisdiction to refuse to grant an injunction to a patentee that refuses to accept FRAND terms;
- an appropriate way to determine a FRAND royalty is to determine a benchmark FRAND royalty rate based on the value of the patentee’s portfolio;
- the parties can agree a worldwide licence rather than a country-by-country licence, but different royalty rates may be agreed for different countries or regions; and
- a FRAND undertaking is not just a contractual commitment to grant licences on FRAND terms, but also to adopt a FRAND approach to the negotiation of such licences.
In this particular case:
- the court had previously held that two of Unwired’s standard-essential patents were valid and infringed;
- Unwired’s approach to the licence negotiations and seeking of an injunction were not an abuse of dominant position and therefore not anticompetitive;
- Huawei had not accepted a licence on FRAND terms;
- Unwired’s approach did not comply with the scheme set out in Huawei v ZTE; and
- a final injunction to restrain infringement of the two standard-essential patents by Huawei should be granted, to be stayed pending the parties agreeing a global FRAND licence.
Q: Has your jurisdiction signed the Agreement on the Unified Patent Court? If so, when do you expect it to be ratified?
The United Kingdom has signed the Unified Patent Court (UPC) Agreement. Ratification of the UPC Agreement and Protocol has been delayed by the 2017 General Election. The Conservative Party, which was in government before the election, lost seats in the election, but remains the largest party in Parliament and has formed a minority government and is continuing the ratification process. Ratification is most likely to take place in Autumn 2017.
Q: Will your country play host to one or more divisions of the Unified Patent Court?
The United Kingdom will host both a local division of the UPC and a branch of the central division, both of which will be located in London.
The London seat of the central division will, in particular, hear cases relating to pharmaceuticals, life sciences, chemicals, medical devices and agriculture/food.
Q: Are there any other issues relating to the enforcement system in your country that you would like to raise?
Key advantages of the UK courts, compared to other European jurisdictions, are the speed of proceedings and the high standing of the Patents Court judges. A second-instance judgment covering both infringement and validity can be obtained in two to two-and-a-half years following the commencement of proceedings and faster if the proceedings are expedited. This makes the UK courts very attractive to litigants looking to clear the way for their products by way of revocation actions and declarations of non-infringement.
This article first appeared in Intellectual Asset Management Magazine.