IPCOM GMBH & CO KG v HTC EUROPE CO LTD

Transcription

1 [2014] R.P.C IPCOM GMBH & CO KG v HTC EUROPE CO LTD H1 H2 H3 H4 COURT OF APPEAL Patten, Rafferty and Floyd L.JJ.: 29 October and 21 November 2013 [2013] EWCA Civ 1496, [2014] R.P.C. 12 Patents Concurrent proceedings Stay of proceedings Principles applicable The Glaxo guidance Refusal of stay pending remitted EPO opposition Appeal to Court of Appeal Revised general guidance Patents Act 1977, s.77(3) Senior Courts Act 1981, s.49(3) European Patent Convention, art.138 European Convention on Human Rights, art.6 Agreement for the Unified Patent Court, art.33(10) This was an appeal from an order of Roth J. whereby he refused an application by the appellants ( HTC ) for an order staying patent proceedings against them pending the outcome of opposition proceedings before the European Patent Office ( EPO ). In arriving at his decision, Roth J. 1 had relied upon the general guidance set out by the Court of Appeal in Glaxo v Genentech. 2 However, since the handing down of Roth J. s judgment on the application, the Supreme Court had questioned that guidance in Virgin Atlantic v Zodiac 3 and invited review by the Patents Court or the Court of Appeal. The procedural history of the case was complicated. However, in essence, the position was this. The patent had been revoked by the Opposition Division of the EPO on grounds of added matter in April 2012 and an appeal had been launched against that decision. The technical patent issues in the English proceedings were stayed by Roth J. in May 2012 pending the handing down of the decision on that appeal. However, although following an amendment put forward by the respondent ( IPCom ), the Board of Appeal had set aside the decision of the Opposition Division on 7 March 2013 (and so the stay granted by Roth J. in May 2012 came to an end). It remitted the matter back to the Opposition Division for the consideration of other grounds of objection, namely lack of novelty and lack of inventive step. On 20 May 2013 HTC applied to the Patents Court for a stay of all technical issues in the action pending a final decision of the EPO on the remitted opposition proceedings (including any appeal) and it is the refusal of this application which was the subject of the appeal reported here. It was accepted that this was not a case in which an injunction would be granted at trial: IPCom had contended that the patent in suit was essential to the 3G ( UMTS ) mobile telephony standard and had undertaken to grant licences on fair, reasonable and non-discriminatory ( FRAND ) terms. However, there was a live and substantial dispute between the parties as to whether particular HTC devices (the A and B1 1 [2013] EWHC 2880 (Ch), 26 September 2013 (unreported). 2 Glaxo Group Ltd v Genentech Inc [2008] EWCA Civ 23, [2008] F.S.R 18, CA. 3 Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46, [2013] R.P.C. 29, [2013] 3 WLR 299, SC. [2014] R.P.C., Issue 5 ß Crown Copyright

2 398 IPCOM GMBH &CO KG V HTC EUROPE CO LTD H5 H6 H7 H8 H9 H10 H11 H12 variants) infringed and there was no common grounds as to whether sales of the then current HTC device (the D device) infringed. Roth J. had held that the position had changed since his previous decision in May In particular, the potential total delay resulting from the stay sought was much longer than had previously been envisaged and there were now live issues as to infringement in relation to HTC devices which would remain on the market in the meanwhile. This meant that IPCom faced not only delay in recovering damages for past infringement but also faced a continuing infringement which it was powerless to prevent by injunction. Weighing up the various factors including any risk of wasted costs and the impact potential further amendments to the patent may have on the technical trial, the judge had concluded that these were outweighed by the risk of prolonged delay and the relative commercial certainty which would be achieved by a technical trial at the end of the year. The trial was fixed to commenced in an 8 day window commencing on 9 December 2013 and so the appeal was heard as a matter of urgency. On appeal to the Court of Appeal, there were two main areas for consideration: (i) a review of the Glaxo guidance and (ii) whether the judge s exercise of discretion had been flawed. As to (i), HTC argued, inter alia, that the Glaxo guidance should be abandoned altogether. Its effect was that a stay would very rarely be granted except by consent. There should instead be a return to the position pre-glaxo, namely that there was a presumption in favour of a stay. Alternatively, the operation of the Glaxo guidance should be confined to cases where a party was seeking to clear a patent out of the way to launch a product. IPCom did not accept HTC s interpretation of the Glaxo guidance and argued, inter alia, that there was no basis for limiting their applicability as HTC contended. As to (ii), HTC argued, in essence, that the judge had based his decision upon the Glaxo guidelines which had since been criticised by the Supreme Court. HTC also placed particular reliance on alleged inconsistency between the approach taken by Roth J. on the application the subject of the present appeal and that which he had taken in May The factors which favoured a stay in 2012 still applied in 2013 and HTC s application should have been granted. IPCom contended that, even in the light of any necessary revision to the guidelines, the judge s exercise of discretion had been correct and that a stay was inappropriate. Held, dismissing the appeal, (1) Whilst the delays in the opposition procedure of the EPO could not be described as part of the architecture of the system, they formed an important part of the background to any application for a stay of national proceedings pending the outcome of EPO proceedings. ([25]) (2) It was inherent in the scheme provided by the European Patent Convention ( EPC ) and the Patents Act 1977 that the twin routes to revocation of a patent could be pursued at the same time. ([26]) (3) It was important to keep in mind the range of possible consequences of national proceedings and EPO opposition proceedings and their impact on one another. It was these features of the system created by the EPC which made the considerations affecting the grant of stays in patent cases different from those in other types of case. ([28]) Published by Oxford University Press for the Intellectual Property Office

3 [2014] R.P.C H13 (4) Amendment by the EPO after an English judgment did not amount to throwing away the cost and expenditure of the English trial. There may be some additional expenditure caused by the amendment in the concurrent proceedings, but that was a consequence of the litigation system created by the EPC, and was inherent in it. ([29]) H14 H15 H16 H17 H18 H19 H20 The Glaxo guidance (5) A principal concern in the Virgin Atlantic case had been that the Glaxo guidance should take account of the fact that the refusal of a stay should not be allowed irrevocably to deprive a party of any part of the potential benefit of pursuing proceedings in the EPO in addition to the national proceedings. To some extent however, the decision of the Supreme Court in that case not only identified the illness but provided the cure. What was left was the possibility that the patentee might obtain a judgment for a liquidated sum which could not be undone except by way of appeal, and any sums actually paid over would be unlikely to be recoverable if the patent were revoked. That possibility would need to be weighed in the balance, along with any undertakings designed to eliminate its effect. If any such irrevocable benefit remained, then, depending on its nature, it could be a powerful factor in favour of some form of stay. ([49]) (6) The observation of Lord Sumption in the Virgin Atlantic case that the Glaxo guidance should be designed to avoid inconsistent decisions if that could be done did not require the elimination of any risk of inconsistent decisions. If that risk could be eliminated, so much the better, but failing that, matters should be arranged so that the impact of inconsistent decisions did not cause injustice. ([50] [51]) (7) Likely duration of the proceedings before the two tribunals should not be seen as the only or even the principal reason for granting or refusing a stay. Delay had to be considered in combination with other factors. A delay which caused neither side any real prejudice might justify a stay. ([53], [65]) (8) The fact that a decision of the EPO revoking a patent was directly effective in every country for which the patent was granted was a factor to bear in mind, but a large number of oppositions failed. In the long period before the EPO decided the issue of validity, one could not predict that it would resolve the dispute between the parties: that remained no more than a possibility. Further, national proceedings had the potential to deliver some degree of certainty and a rapid decision of a respected national court could promote early settlement of the dispute as a whole, bringing to an end proceedings everywhere. ([55], [56]) (9) A system allowing for concurrent proceedings was more likely than others to involve some wasted costs in some cases. The court should seek to arrange matters to avoid wasted costs. However in some cases the risk of wasted costs would be outweighed by other factors. Costs were, for example, not necessarily wasted if the steps in the national proceedings could produce some commercial certainty for the parties or advance the case towards settlement. ([57]) (10) The Glaxo guidance required some revision but should not be swept away altogether. Its effect was not to prevent a stay save where the parties consented. The test remained one directed to where the balance of justice lay. However, for the future, the use of the expression duplication of proceedings was to be avoided. Concurrent proceedings did not duplicate each other: they could achieve different things. ([59] [61]) (11) The argument that the Glaxo guidance did away with the presumption in favour of a stay was also rejected. A stay was the default position and it was for the party [2014] R.P.C., Issue 5 ß Crown Copyright

4 400 IPCOM GMBH &CO KG V HTC EUROPE CO LTD H21 H22 H23 opposing a stay to demonstrate why it should not be granted. The guidance should more clearly reflect that position. ([59], [62]) (12) The Glaxo guidance should not be confined to cases where a party was seeking to clear the path for the launch of a product. It was intended as general guidance and should remain so. ([63]) (13) The guidelines did not invite the court to accept uncritically unlikely assertions of the need for commercial certainty. However, the hearing of a stay application was not to become a mini-trial of the minutiae of the reasons advanced by either side for adopting one course or the other. ([65] [67]) (14) In the light of both the Virgin case and the arguments of the parties on this appeal, the Glaxo guidance was recast as follows: (i) The discretion, which is very wide indeed, should be exercised to achieve the balance of justice between the parties having regard to all the relevant circumstances of the particular case. (ii) The discretion is of the Patents Court, not of the Court of Appeal. The Court of Appeal would not be justified in interfering with a first instance decision that accords with legal principle and has been reached by taking into account all the relevant, and only the relevant, circumstances. (iii) Although neither the EPC nor the 1977 Act contains express provisions relating to automatic or discretionary stay of proceedings in national courts, they provide the context and condition the exercise of the discretion. (iv) It should thus be remembered that the possibility of concurrent proceedings contesting the validity of a patent granted by the EPO is inherent in the system established by the EPC. It should also be remembered that national courts exercise exclusive jurisdiction on infringement issues. (v) If there are no other factors, a stay of the national proceedings is the default option. There is no purpose in pursuing two sets of proceedings simply because the Convention allows for it. (vi) It is for the party resisting the grant of the stay to show why it should not be granted. Ultimately it is a question of where the balance of justice lies. (vii) One important factor affecting the exercise of the discretion is the extent to which refusal of a stay will irrevocably deprive a party of any part of the benefit which the concurrent jurisdiction of the EPO and the national court is intended to confer. Thus, if allowing the national court to proceed might allow the patentee to obtain monetary compensation which is not repayable if the patent is subsequently revoked, this would be a weighty factor in favour of the grant of a stay. It may, however, be possible to mitigate the effect of this factor by the offer of suitable undertakings to repay. (viii) The Patents Court judge is entitled to refuse a stay of the national proceedings where the evidence is that some commercial certainty would be achieved at a considerably earlier date in the case of the UK proceedings than in the EPO. It is true that it will not be possible to attain certainty everywhere until the EPO proceedings are finally resolved, but some certainty, sooner rather than later, and somewhere, such as in the UK, rather than nowhere, is, in general, preferable to continuing uncertainty everywhere. Published by Oxford University Press for the Intellectual Property Office

5 H24 H25 H26 (ix) It is permissible to take account of the fact that resolution of the national proceedings, whilst not finally resolving everything, may, by deciding some important issues, promote settlement. (x) An important factor affecting the discretion will be the length of time that it will take for the respective proceedings in the national court and in the EPO to reach a conclusion. This is not an independent factor, but needs to be considered in conjunction with the prejudice which any party will suffer from the delay, and lack of certainty, and what the national proceedings can achieve in terms of certainty. (xi) The public interest in dispelling the uncertainty surrounding the validity of monopoly rights conferred by the grant of a patent is also a factor to be considered. (xii) In weighing the balance it is material to take into account the risk of wasted costs, but this factor will normally be outweighed by commercial factors concerned with early resolution. (xiii) The hearing of an application for a stay is not to become a mini-trial of the various factors affecting its grant or refusal. The parties assertions need to be examined critically, but at a relatively high level of generality. ([68]) Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46, [2013] R.P.C. 29, [2013] 3 WLR 299; Glaxo Group Ltd v Genentech Inc [2007] EWHC 1416 (Pat), [2007] F.S.R. 35; Glaxo Group Ltd v Genentech Inc [2008] EWCA Civ 23, [2008] F.S.R 18; and Unilin Beheer BV v Berry Floor NV [2007] EWCA Civ 364, [2007] F.S.R. 25, considered. Buehler AG v Chronos Richardson Ltd [1998] R.P.C. 609, [1998] 2 All ER 960; Poulton v Adjustable Cover and Boiler Block Co [1908] 2 Ch. 430; Coflexip SA v Stolt Offshore MS Ltd (No. 2) [2004] EWCA Civ 213, [2004] F.S.R. 34, referred to. Factors in the present case [2014] R.P.C (15) The Court of Appeal should not interfere with the exercise of the patent judge s discretion unless it failed to accord with legal principle or had not been reached by taking into account all the relevant circumstances and only the relevant circumstances. The fact that the decision of the Supreme Court in Virgin had necessitated a change in the Glaxo guidance did not necessarily mean that the judge s exercise of the discretion had been flawed. ([84]) (16) The current estimate was that the Opposition Division hearing would take place in January 2014 and any appeal (if expedited) in February or March If the trial date was not fixed in the interim, an 8 day trial would then be at least a year away. In theory one could fix the trial date in the interim, but this would lock up court time for other users. If that was not done, the effect of a stay would be to postpone the technical trial to If there was a further round of EPO hearings, the delay could be significantly longer. ([87]) (17) The judge had not expressly considered whether the refusal of a stay could irrevocably deprive HTC of any part of the benefit of the concurrent jurisdiction. However, there was no question of IPCom acquiring any irrevocable benefit in the present case. Even at the May 2012 hearing, IPCom had recognised the unattractiveness of the notion of attempting to obtain Unilin damages by [2014] R.P.C., Issue 5 ß Crown Copyright

6 402 IPCOM GMBH &CO KG V HTC EUROPE CO LTD H27 H28 H29 H30 H31 H32 undertaking to repay any damages if it subsequently transpired that the patent was invalid and an undertaking of that kind was still offered. ([88]) (18) There was nothing in the remaining revisions to the guidelines which was of any real materiality to the judge s evaluation and interfering with the judge s exercise of discretion was not justified. There could be no general rule that a patentee which had precluded itself from obtaining an injunction was also precluded from obtaining any other form of relief or determination until the opposition processes of the EPO were complete. Everything was acutely dependent on the circumstances of the individual case, which were for the patents judge to assess. ([91]) (19) The judge would also have been entitled to take into account the fact that the technical trial provided the potential for HTC to achieve certainty that their devices did not infringe valid claims in the UK. ([92]) (20) HTC s alternative arguments based on a comparison of the factors facing the judge in May 2012 and June 2013 were not accepted. The judgment under appeal related to different circumstances than those which applied in May 2012 and there was nothing in that judgment which would justify interference on appeal. In May 2012 Roth J. had been weighing the prejudice to IPCom in the context of a delay pending one further instance in the EPO with the reassurance of a pending FRAND determination, and no infringement in the meantime. He had expressly rejected an argument that he should consider a longer delay because of the practice of the EPO of serial decision making, thus opening up the possibility of further hearings before the OD and TBA on the basis that he had only been asked to consider a stay until the decision of the TBA on the pending appeal, and his decision was without prejudice to the arguments on a further application for a stay. The judge had accordingly been right to say that he was exercising an entirely fresh discretion. ([93], [94]) Observed (per Floyd L.J.): A procedure which allows disputes over patent rights to take in excess of a decade cannot meet the needs of industry, particularly in rapidly moving areas of technology. ([23]) Avoiding inconsistent decisions is...not easily achieved in a system which expressly allows for concurrent jurisdiction...as it is not suggested that the national court could stay the EPO, the elimination of any risk of inconsistent decisions would require a mandatory stay of all national patent proceedings, something which I am sure Lord Sumption would have said if he had meant. A mandatory stay of all national validity proceedings pending the resolution of validity in the EPO would mark the end of the ability of the national court to give judgments clearing the way for those who have products to launch and businesses to conduct in this jurisdiction, provided only that the EPO proceedings had not reached their conclusion. It would also make a significant hole in the ability of a party to enforce a patent for a very large proportion of its life. ([50]) Cases referred to: Buehler AG v Chronos Richardson Ltd [1998] R.P.C. 609, [1998] 2 All ER 960, CA Coflexip SA v Stolt Offshore MS Ltd (No. 2) [2004] EWCA Civ 213, [2004] F.S.R. 34, CA T 0612/09, CUBIST PHARMACEUTICALS, INC/Daptomycin, 11 April 2013 (unreported), EPO Tech. BoA Glaxo Group Ltd v Genentech Inc [2007] EWHC 1416 (Pat), [2007] F.S.R. 35, Pat. Ct Published by Oxford University Press for the Intellectual Property Office

7 [2014] R.P.C Glaxo Group Ltd v Genentech Inc [2008] EWCA Civ 23, [2008] F.S.R 18, CA Poulton v Adjustable Cover and Boiler Block Co [1908] 2 Ch. 430, CA Research in Motion (UK) Limited v Visto Corp [2008] EWCA Civ 153, [2008] F.S.R. 20, CA Unilin Beheer BV v Berry Floor NV [2007] EWCA Civ 364, [2007] F.S.R. 25, CA Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46, [2013] R.P.C. 29, [2013] 3 WLR 299, SC H33 Adrian Speck Q.C. and James Abrahams, instructed by Hogan Lovells International LLP, appeared on behalf of the defendants/appellants. Henry Carr Q.C., Brian Nicholson and Kathryn Pickard, instructed by Bristows LLP, appeared on behalf of the claimants/respondents. JUDGMENT FLOYD L.J.: 1 This appeal concerns the circumstances in which it is appropriate for a court in this jurisdiction considering combined patent infringement and revocation proceedings to grant a stay of its proceedings pending the outcome of co-pending opposition proceedings in the European Patent Office ( EPO ). By his order of 13 June 2013 Roth J., sitting in the Patents Court, declined to order such a stay on the application of the defendants in the action (collectively HTC ). The stay was resisted by the claimant patentee, IPCom. HTC appeal, with the permission of the judge. We heard the appeal as a matter of urgency because the trial of the action is fixed to commence in the Patents Court in an eight day window commencing on 9 December We were assisted by the able written and oral submissions of Mr Adrian Speck Q.C. and Mr James Abrahams for HTC and Mr Henry Carr Q.C., Mr Brian Nicholson and Ms Kathryn Pickard for IPCom. 3 In reaching his decision to refuse a stay, Roth J. was referred to and relied on the guidance given by this court in Glaxo Group Ltd v Genentech Inc [2008] EWCA Civ 23, [2008] F.S.R. 18 ( the Glaxo guidance ). After the judge had announced his decision, but before he had given his reasons, the Supreme Court handed down its judgment in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46, [2013] R.P.C. 29, [2013] 3 WLR 299 ( Virgin ). In the course of their judgments in that case, Lord Sumption J.S.C. and Lord Neuberger P.S.C. both questioned the correctness of the Glaxo guidance. Those observations were drawn to the judge s attention and formed the basis of his decision to give permission to appeal to this court. In the course of this appeal, therefore, we heard submissions on whether the Glaxo guidance needed revision in the light of the Supreme Court s observations. Permission to appeal to this court would not normally be given where the question at issue involves a discretionary case management power, such as the grant or refusal of a stay, when the judgment involves no error of principle or is not plainly wrong. 4 The appeal arises in a case where IPCom, a patentee which does not itself manufacture or market products in accordance with its patent, seeks to cause HTC to enter into a licence rather than, on IPCom s case, to continue infringing by selling its mobile telephones. It is accepted that this is a case where no injunction will be granted: the patent is said by IPCom to be essential to the UMTS mobile telephony standard, and IPCom have undertaken to grant licences on fair, [2014] R.P.C., Issue 5 ß Crown Copyright

8 404 IPCOM GMBH &CO KG V HTC EUROPE CO LTD reasonable and non-discriminatory ( FRAND ) terms. HTC characterises the case as just being about money, whereas IPCom maintains that its whole business depends on the exploitation of its patents, and a stay would prevent it moving towards a position where it can enforce them. The procedural history 5 There is a complicated procedural history to this case which involves not only the present action ( the HTC action ), but proceedings in relation to the same patent between Nokia and IPCom ( the Nokia action ). The two actions have, to an extent, become entwined. The essentials are as follows. 6 EP (UK) 1,841,268 ( the patent ) was granted on 17 March It relates to a method of controlling access to the random access channel or RACH in a wireless telecommunications network. During the nine month period allowed for opposition in the EPO, four companies launched oppositions, including Nokia on 18 August 2010 and HTC on 17 December 2010, the last day of the period allowed. 7 In addition to its opposition in the EPO, on 9 April 2010 Nokia commenced the Nokia action in the Patents Court. The Nokia action was an action for revocation of the patent. IPCom denied that the patent was invalid and counterclaimed for infringement. The pleadings also raised non-technical issues concerned with IPCom s obligation to grant licences on FRAND terms arising out of the inclusion of the patented technology in the UMTS standard. By an order made on 7 July 2010 the technical patent issues of validity and infringement were ordered to be tried first, with a trial on non-technical issues to follow if necessary. I will refer to this deferred trial as the FRAND trial. 8 The technical patent issues in the Nokia action came to trial before me in April In my judgment dated 16 June 2011 I held the patent valid (subject to an amendment to the claims which I allowed). I also held that the patent was infringed by some Nokia devices. Certain other Nokia devices the subject of applications for declaratory relief were held not to infringe. I also held that the patent was essential to the UMTS standard. Although the parties have adopted a different nomenclature, I will refer to the claims held valid and infringed by Nokia as the June 2011 claims. My June 2011 judgment was upheld by this Court on 10 May The Supreme Court subsequently refused permission to appeal. In July 2011 I gave procedural directions for the FRAND trial in the Nokia action. As will be seen, HTC later joined in to the proceedings to determine the FRAND royalty. 9 In the light of their success against Nokia, IPCom wrote to HTC inviting them to take a licence under the patent. They enclosed proceedings for infringement and asked whether HTC s solicitors were instructed to accept service. They were not, and so steps were taken to serve the proceedings out of the jurisdiction on HTC Corporation, the third defendant. The dispute about service out of the jurisdiction was compromised in April In August 2011 HTC attempted the so-called Italian torpedo. This was a procedural step designed to obtain a stay of all proceedings in this country on the basis that the courts of Italy are first seised. The idea was to slow the litigation down to the pace of one of the slowest jurisdictions in Europe. For a full description of the Italian torpedo see Research in Motion (UK) Limited v Visto Corp [2008] EWCA Civ 153; [2008] F.S.R. 20 at [12] to [14]. The Italian torpedo was eventually withdrawn, and on 20 January 2012 directions were given for trial of the technical issues in the HTC action. HTC were of course not bound by the decision in the Nokia trial. Published by Oxford University Press for the Intellectual Property Office

9 [2014] R.P.C In the meantime the EPO opposition proceedings had been continuing. On 25 April 2012 the Opposition Division ( OD ) of the EPO decided that the patent was invalid for added matter. In accordance with EPO practice, none of the other objections to validity were considered. IPCom launched an appeal from that decision to the Technical Board of Appeal ( TBA ). 11 On 11 May 2012 HTC applied to stay all aspects of the HTC action until the TBA handed down its written decision in the appeal. 12 On 30 May 2012 Roth J. made an order in both the Nokia and HTC proceedings embodying agreed directions pursuant to which both HTC and Nokia were to participate in the FRAND trial. That order was made notwithstanding the fact that there had as yet been no finding either as to validity or infringement of the patent as between HTC and IPCom. HTC were understandably interested in participating in a trial which would enable them to know the cost of the licence to which they would be entitled under the patent if it was otherwise valid and infringed by them. 13 In addition to allowing the FRAND trial to go forward on this consensual basis, Roth J. dealt with HTC s stay application. He granted a stay of the technical issues in the HTC action pending the TBA s decision in the opposition proceedings. HTC undertook that it would take a FRAND licence, and in the meantime restrict its commercial activities to one of the variants declared not to infringe in the Nokia action ( approved variants ). 14 Despite the stay, matters did not stand still in relation to technical issues in the Patents Court. HTC was directed to produce product and process descriptions, and further disclosure was ordered of source codes. This was rendered necessary because of uncertainty over precisely what methods of controlling RACH access HTC was using. In order to prevent matters drifting, Norris J. fixed the trial of the technical issues for a window commencing in December 2013 as by that stage it was known that the TBA s hearing would take place in March It is the normal practice of the TBA to announce its decision at the conclusion of the hearing. 15 On 7 March 2013 the TBA heard IPCom s appeal against the OD s decision revoking the patent. The result of the appeal was that the decision of the OD was set aside. The added matter objection was held to be overcome by an amendment put forward by IPCom. The TBA remitted the matter to the OD for consideration of the remaining issues: lack of novelty and lack of inventive step, issues which neither the TBA nor the OD had thus far addressed. The amended claims (which I will call the March 2013 claims ) were not the same as the June 2011 claims. They contained an additional feature. On 21 May IPCom applied in the Patents Court to amend the claims of the patent to bring them into line with the March 2013 claims. 16 The stay of the HTC action granted by Roth J. came to an end with the handing down of the TBA decision. It had lasted about 9 months. 17 In the light of the TBA s decision, HTC next applied (on 23 April 2013) for an adjournment of the FRAND trial fixed for July Mann J. granted that adjournment on 2 May On 20 May 2013 HTC applied to adjourn the technical trial in the HTC action, now fixed for December 2013, and to stay all the technical issues until a final decision of the EPO on the remitted opposition proceedings, including any appeal. 19 Those applications (amongst others) came before Roth J. on 12 June He refused HTC s stay application. The effect of that order was that the technical trial in the HTC action would proceed in December. In the light of that order the parties have continued to prepare for the technical trial. HTC contend that the judge was wrong to refuse the stay, and appeal from the judge s order. [2014] R.P.C., Issue 5 ß Crown Copyright

10 406 IPCOM GMBH &CO KG V HTC EUROPE CO LTD The litigation system created by the EPC 20 The relevant background is the European Patent Convention ( the EPC ), an international treaty, and the Patents Act 1977 ( the 1977 Act ). The EPC contains provisions which enable any person to apply for revocation of a granted patent. Thus under art.138 of the EPC a European Patent may be revoked by a national court of a Contracting State (e.g. in proceedings by way of direct action for revocation or counterclaim to an infringement action). Revocation in such circumstances will apply only to the designation of the Patent in that Contracting State. 21 A party who contends that a granted European Patent is invalid, and should be revoked, can also do so by means of the opposition procedure in the EPO. An opposition in the EPO must be launched within 9 months of grant, but there is no provision for when such proceedings must end. Experience has shown that opposition proceedings before the EPO are likely to take many years. There are numerous reasons for this. One reason is the EPO s serial approach to decision making. Where an opponent raises a variety of grounds of opposition, the practice of the EPO is to decide the issues in a given order. If, on consideration, a ground succeeds, it is rare for the OD to go on and decide the other issues in the sequence, as a first instance court in this country might consider itself obliged to do. As a result, if the OD s decision is overturned on appeal, the TBA will normally have to remit the case to the OD for it to consider the next issue. And so on. Some of that has happened in this case. 22 The EPO has been a victim of its own success. In the normal run of things an appeal from the OD to the TBA may take four years. Mr Carr showed us T 0612/09, CUBIST PHARMACEUTICALS, INC/Daptomycin (unreported), a decision of the TBA on an appeal against a decision of the OD dated 19 January 2009 revoking a patent, some two years after the opposition proceedings had been commenced. The Board s decision remitting the case to the OD is dated 11 April 2013, more than four years later, and six years from the commencement of the proceedings. The OD s attempt to decide more issues than necessary were dismissed as obiter dicta by the TBA. The Board s discussion of whether it should remit the case in these circumstances is revealing: 25. As already mentioned, the present appeal was filed in January The oral proceedings were held on 10 April 2013 and the decision issued on 11 April The appeal proceedings thus lasted a little over four years. While it gives the board no pleasure to say so, four years is currently the average time taken to dispose of the appeals in its list of pending cases. 26. Against that background the board, in considering the respondents argument that better justice would be done by the board itself reconvening at a later point in time, has to ask when that point in time would, or should, be? Quite clearly it could not, at the very earliest, be before any of the board s currently scheduled oral proceedings in other cases, and thus not in If, on the one hand, it should be before oral proceedings have taken place in all, or some, of the other cases in the board s list of pending cases, then clearly there would be a possible argument that the board was giving unfair preference to this case, in which oral proceedings on the issue giving rise to the appeal have already taken place and that issue has been decided, over other cases which have also been pending for Published by Oxford University Press for the Intellectual Property Office

11 [2014] R.P.C four years and in which oral proceedings have not yet taken place. If, on the other hand, the board were now to treat this case as a newly-filed appeal for the purpose of the undecided issues, the parties might, indeed in the currently prevailing conditions probably would, have to wait another four years for a final decision. In the board s opinion, neither of those solutions would lead to better justice, and certainly not necessarily to an earlier final decision, as the respondents argued. 27. The board understands that currently the time taken to dispose of opposition proceedings is (as happened in the present case) about two years so assuming that, after a remittal, the opposition division gives this case no particular preference, the parties would have a decision in half the time they might have to wait for a decision from the board. Of course, if one or more parties were then to appeal, a further long wait for a final decision might then ensue - just how long would depend on the length of the board s list of pending cases at that future point in time. But, in the absence of a further appeal, the likelihood must be that the parties will achieve a final decision sooner if there is a remittal and that is significant. Thus the board considers, not without regret, that the question of delay and the possible injustice delay may cause points, on balance, in favour of remittal. 23 A procedure which allows disputes over patent rights to take in excess of a decade cannot meet the needs of industry, particularly in rapidly moving areas of technology. Although such a procedure may technically comply with art.6 of the European Convention on Human Rights, which guarantees a trial before an independent tribunal within a reasonable time, the opportunity for successive appeals and remittals means that there is in practice no final determination of the parties rights for many years. Given their procedures, the Boards have a difficult task in seeking to achieve justice and finality. 24 Although the ODs and TBAs have shown sensitivity to acceleration of their proceedings in cases of commercial urgency, the serial nature of their procedures is not well adapted to arriving at early decisions even in cases where expedition is granted. The present case is an illustration of that fact. Even with expedition, the OD and TBA in this case have resolved only one of the issues in the oppositions since the opposition period closed on 17 December When the OD sits again on the currently predicted date of 22 Jan 2014 to consider lack of novelty and inventive step, the proceedings will have passed their third anniversary. An expedited appeal might take another year. By contrast, all the issues of infringement and validity in the Nokia action were considered by two instances in this jurisdiction in just over two years from service of the claim form. 25 Whilst the delays which occur in the opposition procedure of the EPO cannot be described as part of the architecture of the system, they form an important part of the background to any application for a stay of national proceedings pending the outcome of proceedings in the EPO. 26 It is inherent in the scheme provided by the EPC and the Act that the twin routes to revocation of a patent may be pursued at the same time. This is visible in a number of places in the Act. Thus s.77(3) provides that: (3) Where in the case of a European patent (UK) [2014] R.P.C., Issue 5 ß Crown Copyright

12 408 IPCOM GMBH &CO KG V HTC EUROPE CO LTD (a) proceedings for infringement...have been commenced before the court or the comptroller and have not been finally disposed of, and (b) it is established in proceedings before the European Patent Office that the patent is only partially valid, the provisions of section 63 or, as the case may be, of subsections (7) to (9) of section 58 apply as they apply to proceedings in which the validity of a patent is put in issue and in which it is found that the patent is only partially valid. 27 That section recognises that a decision of the EPO may be made at a time when infringement proceedings are before the national court, and provides that the effect of any amendment to the patent made by the EPO is the same as if the amendment had been ordered by the court. 28 It is important to keep in mind the range of possible consequences of the two sets of proceedings, and their impact on one another. It is these features of the system created by the EPC which make the considerations affecting the grant of stays in patent cases different from those in other types of case: see in this connection the observations of Lewison J. in Glaxo Group Ltd v Genentech Inc [2007] EWHC 1416 (Pat), [2007] F.S.R. 35 at [37] to [38]. Thus, in the EPO the patent can be revoked, maintained in an amended form or maintained as granted. Whilst revocation operates in rem, a finding that the patent is valid as granted in opposition proceedings does not operate as an issue estoppel between the parties thereto: see Buehler AG v Chronos Richardson Ltd [1998] R.P.C. 609, [1998] 2 All ER 960. Moreover, the EPO has no jurisdiction over the issue of infringement, which is within the exclusive jurisdiction of the national court. The jurisdiction of the national court is, however, territorial both in relation to infringement and in relation to validity. A decision by the national court to revoke a patent with effect for its own jurisdiction cannot be affected by a later decision of the EPO. The same is true of a finding of non-infringement. 29 One way in which the two jurisdictions interact can be seen in the example of the Nokia action. The English courts decided that the patent was valid with the June 2011 claims, infringed by certain Nokia devices and not infringed by the approved variants. The subsequent narrowing of the claims by the EPO to the March 2013 claims will leave many of the findings of fact and conclusions of law reached in the English judgments untouched. For example, the approved variants will still be outside the March 2013 claims, which are narrower than the June 2011 claims. The obviousness attacks against the patent, which failed in England, are unlikely to fare better against narrower claims. There will of course be new issues raised by the March 2013 claims, but these should be limited to whether the new feature adds subject matter, and whether the amendment takes the Nokia infringing devices outside the claim. These are relatively narrow further issues compared to the plethora of issues decided in the Nokia action. They may not even arise. There was a tendency in the submissions of Mr Speck for HTC to regard the fact of amendment by the EPO after an English judgment as throwing away the cost and expenditure of the English trial. It does not. There may be some additional expenditure caused by the amendment in the concurrent proceedings, but that is a consequence of the system, and is inherent in it. Stays 30 Neither the EPC nor the Act contains any provision providing for a stay whilst the validity or final form of the patent is established in proceedings in the EPO. The Published by Oxford University Press for the Intellectual Property Office

13 [2014] R.P.C practice in relation to the grant of stays pending the outcome of EPO proceedings is not uniform amongst member states of the EPC. In Germany, where the practice is to bifurcate the issues of infringement and validity, we were told that the courts will not stay infringement proceedings merely because there is a co-pending opposition in the EPO. The infringement court would apply a merits-based test to the validity attack, deciding whether there was a high likelihood that the patent would be revoked. On the other hand the national validity court will always stay proceedings where there are co-pending opposition proceedings at the EPO. In the light of what I have said about the speed of opposition proceedings in the EPO, under the German practice it seems it could take a defendant many years to overturn a decision that he had infringed a patent by establishing that it is invalid. 31 We were also shown art.33(10) of the as yet un-ratified recent Agreement for the Unified Patent Court. Art.33(10) of the Agreement provides, in relation to infringement and validity proceedings, that: A party shall inform the Court of any pending revocation, limitation or opposition proceedings before the European Patent Office, and of any request for accelerated processing before the European Patent Office. The Court may stay its proceedings when a rapid decision may be expected from the European Patent Office. 32 In the light of what I have said thus far, one can understand why the contracting states thought that the discretion to stay proceedings should only arise if an EPO decision is expected rapidly. 33 It is common ground that the Patents Court enjoys a jurisdiction to stay its proceedings pending the outcome of co-pending EPO proceedings. The jurisdiction is recognised in s.49(3) of the Senior Courts Act 1981: Nothing in this Act shall affect the power of the Court of Appeal or the High Court to stay any proceedings before it, where it thinks fit to do so The jurisdiction is obviously a very wide and unfettered one, and must be exercised having regard to all relevant circumstances. Domestic case law 35 The cases prior to Glaxo Group Ltd v Genentech Inc are comprehensively explained in the decision of Lewison J. (as he then was) at first instance in that case: [2007] EWHC 1416 (Pat) at [23] to [36]. The principal observations in the cases were these: The judge, as I see it, had to exercise his discretion whether or not it is in the interests of justice that the English proceedings should be stayed until the decision of the European Patent Office by balancing the various procedural considerations which may result from either course. The fundamental one, as I see it, is the length of time the proceedings in the European Patent Office are likely to take. per Dillon L.J. in Pall Corp v Commercial Hydraulic (Bedford) Ltd [1989] R.P.C. 703 at the Patents Court will stay the English proceedings pending a final resolution of the European proceedings, if they can be resolved quickly and a stay will not inflict injustice on a party or be against the public interest. Unfortunately that is not always possible as a resolution of opposition [2014] R.P.C., Issue 5 ß Crown Copyright

14 410 IPCOM GMBH &CO KG V HTC EUROPE CO LTD proceedings in the EPO takes from 4 8 years per Aldous L.J. in Beloit Technologies Inc. v Valmet Paper Macinery Inc [1997] R.P.C. 489 at absent any other consideration, a stay is the appropriate course to adopt. But when there are other considerations, it is for the court to weigh up the pros and cons and see where the justice of the situation lies. per Laddie J. in Hunt Techology Ltd v Don & Low Ltd [2005] EWHC 376 at [7]. Of course in principle the preferred option is to stay UK proceedings if there are corresponding EPO proceedings. And it may in some circumstances be the case that an interim injunction could serve to hold the fort whilst these proceed. But all must depend on the circumstances and particularly the timing. Normally, although a stay is in principle the preferred course, it would be wrong to prevent the patentee from enforcing his patent here if the EPO opposition will not be concluded reasonably soon as all too often it sadly is not. Take this case: the action started here in May 2002 and was finally over by November The EPO proceedings are still running and could be still doing so at the end of next year. Business needs to know where it stands and a patentee is entitled to enforce his patent without undergoing the risks inherent on the crossundertaking in damages especially if the period involved could involve years. Per Jacob L.J. in Unilin Beheer BV v Berry Floor and others [2007] EWCA Civ 364; [2008] 1 All ER 156. ( Unilin ) at [25]. 36 To these I would add what Lewison J. himself said in Glaxo: Equally I do not accept Mr Alexander s submission that there is an independent condition to be satisfied, namely that the stay must be a short one (how short is short?). I have no doubt, however, that the length of any stay and any prejudice that would flow from it is a highly material (sometimes the most material) factor. In my judgment the correct approach for me to adopt is that there is a presumption, although not a strong one, in favour of a stay, and that it is for the party resisting the stay to overcome the presumption. In the end, I must decide where the balance of justice lies. 37 Glaxo v Genentech was a case in which there was no allegation of infringement. Glaxo, and its partner Genmab, had brought proceedings for revocation in both the EPO and the Patents Court. They had a commercial product and wished to clear the way for its introduction onto the market. Lewison J. refused a stay, and his decision was upheld on appeal. In this context, the Court of Appeal, (Ward, Mummery and Jacob L.JJ.) gave some general guidance on the Patents Court s discretion to grant stays on the grounds that there are parallel proceedings pending in the EPO contesting the validity of the patent. They made clear that the guidance: is not intended to fetter the discretion of the court nor should it be interpreted as having that effect. 38 I should now set out the guidance: First, the discretion, which is very wide indeed, should be exercised to achieve the balance of justice between the parties having regard to all the relevant circumstances of the particular case. Published by Oxford University Press for the Intellectual Property Office

15 [2014] R.P.C Secondly, it is the discretion of the Patents Court, not of the Court of Appeal. The Court of Appeal would not be justified in interfering with a first instance decision that accords with legal principle and has been reached by taking into account all the relevant, and only the relevant, circumstances. Thirdly, although neither the EPC nor the 1977 Act contains express provisions relating to automatic or discretionary stay of proceedings in national courts, they provide the context and condition the exercise of the discretion. Fourthly, the possibility of the duplication of proceedings contesting the validity of a patent granted by the EPO is inherent in the system established by the EPC. In practice national courts exercise exclusive jurisdiction on infringement issues and they have concurrent jurisdiction with the EPO on validity issues. As Mr Daniel Alexander Q.C. appearing for GSK said, the Contracting States and the UK Parliament contemplated that the national Patents Courts should be able to determine the same issues of patentability as the EPO. The resultant legislation allowed the determination by the national court and the EPO to proceed at the same time. Indeed, there is nothing in the EPC or the 1977 Act to prevent the commencement of revocation proceedings in the Patents Court on the very date of the grant of the patent by the EPO. Fifthly, this setting indicates that, in present conditions, one factor affecting the discretion will usually carry more weight than any other. That is the length of time that it will take for the respective proceedings in the national court and in the EPO to achieve some certainty on the issue of the validity of the patent in suit so that business knows where it stands. The length of the stay of proceedings, if granted, is, in general, the most significant factor in the discretion. Both the parties legitimate interests and the public interest are in dispelling the uncertainty surrounding the validity of the monopoly rights conferred by the grant of a patent and the existence or non-existence of exclusive proprietary rights on a public register. A decision in the revocation action in the Patents Court will dispel some of the uncertainty. If the likelihood is that proceedings in the Patents Court would achieve this resolution significantly sooner than the proceedings in the EPO, it would normally be a proper exercise of discretion to decline to stay the Patents Court proceedings. They should be allowed to proceed to a decision that would supply some certainty in the public interest and the parties legitimate interests. Sixthly, there are no grounds justifying the application by the Patents Court of a presumption that the duplication of legal proceedings in it and in the EPO is, without more, a ground for a stay of the proceedings in the Patents Court, as the EPC system allows for parallel proceedings contesting the validity of the patent in both the international court (which is what the EPO in substance is) and in the national court. Seventhly, the Patents Court judge is entitled to refuse a stay of the national proceedings where, as here, the evidence is that some commercial certainty would be achieved at a considerably earlier date in the case of the UK proceedings than in the EPO. It is true that it will not be possible to attain certainty everywhere until the EPO proceedings are finally resolved, but some certainty, sooner rather than later, and somewhere, such as in the UK, rather than [2014] R.P.C., Issue 5 ß Crown Copyright