The Supreme Court in Virgin v Zodiac: whither the fat lady?

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1 110 ARTICLE Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 2 The Supreme Court in Virgin v Zodiac: whither the fat lady? Gary Moss* It ain t over till the fat lady sings! 1 So goes the old adage. However it would now appear that, in the field of patents, even when the fat lady has sung, it still ain t over! That seems to be the outcome of the Supreme Court s decision in Virgin Atlantic Airways Limited v Zodiac Seats UK Limited. 2 The issue that arose in Virgin is one which has long vexed the courts in the United Kingdom: what happens when, in a patent infringement action, a defendant challenges the validity of the patent in suit, that challenge is not successful, the defendant is held to infringe and is ordered to pay damages, only for the patent to be revoked subsequently in separate proceedings. Does the original order against the defendant stand or does the subsequent revocation enable the defendant to avoid having to pay damages even though it lost its own case? Background For over 100 years, the answer which the British courts have given to that question had always been that the original decision stands and the subsequent revocation is of no effect. The line of cases which adopted that position starts with Poulton v Adjustable Cover & Boiler Block Company, 3 a decision of the Court of Appeal in More recently, the Court of Appeal has virtually unanimously affirmed that principle in several cases, notably Coflexip SA v Stolt Offshore MS Ltd, 4 Unilin Beheer BV v Berry Floor NV 5 and Virgin Atlantic v Premium Aircraft Interiors. 6 The author uses the term virtually unanimously advisedly, because the one dissenting voice in all of this was Neuberger LJ (as he then was) in Coflexip. Indeed, in Coflexip, Neuberger LJ stated in very clear terms that he thought that there were grounds for saying that the decision in Poulton was wrong, though he declined to overturn that earlier decision on the grounds that, under its then existing jurisprudence, the Court of * gmoss@eip.com 1 The author, along with, he suspects, many readers, had believed that this saying had originated with the New York writer Damon Runyan. However, research by the author indicates that in fact this originated with the US sports commentator Dan Cook in Virgin Atlantic Airways Limited v Zodiac Seats UK Limited [2013] UKSC 46. The author Gary Moss is a Solicitor and the Head of EIP Legal, London. This article In its decision in Virgin Atlantic Airways Limited v Zodiac Seats (UK) Limited the Supreme Court overturned 100 years of jurisprudence and held that an unsuccessful defendant in a patent action could nevertheless raise a subsequent finding of invalidity ofthepatentinsuitasadefenceintheinquiryasto damages arising from the first decision. This article examines the possible consequences of this decision and how it might affect the conduct of patent actions going forward, in particular whether the courts will continue to hear patent infringement suits while an opposition is pending in the European Patent Office. The author argues that, while the decision has been welcomed in some quarters, potentially the decision raises just as many problems as it solves. Appeal could only depart from its earlier decisions in very limited circumstances and those circumstances did not arise in Coflexip. However, he left readers of his judgment in no doubt as to where he stood on the substantive issue. The significance of that will become apparent below. Poulton decided that as between the patentee and defendant a decision on validity was res judicata, meaning that the issue had been adjudged and, save in very limited circumstances, could not be re-opened. Thus whatever may happen subsequently, the defendant was 3 Poulton v Adjustable Cover & Boiler Block Company [1908] 2Ch Coflexip SA v Stolt Offshore MS Ltd [2004] EWCA Civ Unilin Beheer BV v Berry Floor NV [2007] EWCA Civ Virgin Atlantic v Premium Aircraft Interiors [2011] EWCA Civ 163. # The Author(s) (2014). Published by Oxford University Press. All rights reserved. doi: /jiplp/jpt218 Advance Access publication on 2 January 2014

2 Gary Moss. The Supreme Court in Virgin v Zodiac ARTICLE 111 caught by the judgment made against it and had to live with the consequences of it. That may seem to the uninitiated to be somewhat harsh and illogical. However, the reasoning underlying this line of cases was based on two long-standing and well-accepted jurisprudential principles which are common to most legal systems. The first is that there has to be finality to litigation actions cannot go on for ever with the same issues being fought over again and again. The second is the so-called Henderson v Henderson 7 principle, that parties who are involved in litigation have to bring forward all their arguments and evidence in one go, and that a litigant who fails to do so, whether through deliberately holding things back or by negligence, will be prevented from raising them subsequently. These are summed up in the maxim Nemo debet lis vexari pro una et eadem causa no-one should be vexed twice over for the same cause. These principles have been applied regularly in the patent sphere; see for example Chiron v Organon Teknika, 8 where Aldous J (as he then was) said: I believe that there can be no doubt as to what was the cause of action raised by the defendants in their counterclaims in the 1992 actions. There, the only allegation was that the patent was invalid for the reasons set out in the particulars of objections. Thus, the decision of the court that was sought was that the patent was invalid. That was decided in the plaintiffs favour...that is the matter which the defendants now wish to relitigate. I believe that they are precluded from so doing. The validity of the patent as decided is res judicata between the parties. Aldous J based his decision in part on the 19th century decision in Shoe Machinery Co Ltd v Cutlan (No 2), 9 where Romer J said: But a further point is now taken on behalf of the defendants. It is said that they are entitled, in this action, to re-try the question of validity of the patent because they say they have discovered fresh material for impeachment fresh alleged anticipations and are entitled to have the issue of validity re-tried as to this fresh material on the footing of such further material. In my opinion, they are not so entitled. If they were held to be so entitled, I do not see how there could be finality upon a question of this kind as between parties such as these. According to this contention a defendant might fight his case piecemeal. He might raise such objections to the validity of the patent as he thought convenient, and when he was defeated on those, might raise other points at his pleasure, and might, in that way, try the case of validity of a patent piecemeal; and, so far as I can see, 7 Henderson v Henderson (1843) 3 Hare Chiron v Organon Teknika (No 6) [1994] FSR 448 at para 455. extend it over as long a period as he chose. In my opinion, a defendant is not entitled to do that. When the question of the validity of a patent is brought to trial, by reason of the defendant challenging the question of validity, he is bound to put his whole case before the court, and if he does not do so it is his fault or misfortune. He cannot be allowed to put a part of his case, or to put his case in an incomplete manner. He is bound, then, when that question is raised, to search and to find out all that he intends to rely upon in support of his contentions that the patent is invalid. Those cases were decided in the context of litigants losing in a first action and then seeking to raise the same issue (validity of the patent) in a second action before, essentially, the same court. However, a new factor which has emerged during the past 10 years or so is the effect of opposition proceedings in the European Patent Office (EPO). The EPO enjoys concurrent jurisdiction with the national courts over the issue of validity. Indeed, to some extent, one can argue that the EPO enjoys a superior jurisdiction since, if it concludes, that a patent is invalid and decides to revoke it, that decision will trump any previous decisions of a national court ruling that the patent is valid. Nevertheless, in both Unilin and Virgin, the Court of Appeal did not have any difficulty in applying the Poulton principles in such situations. What is more, the Court of Appeal used the existence of the Poulton principles to justify the practice of UK courts going ahead with and determining the issues of infringement and validity in the UK, notwithstanding the fact that an opposition was pending before the EPO and notwithstanding the fact that a decision by the EPO that the patent in issue was invalid would lead to either amendment or revocation of the patent. Thus in Glaxo Group Limited v Genentech Inc, 10 Mummery LJ, on reviewing the Patents Court s refusal to stay a pending UK infringement action while an EPO opposition ran its course, pointed out that: 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 QC 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. 9 Shoe Machinery Co Ltd v Cutlan (No 2) (1896) 13 RPC 141 at p. 145, line Glaxo Group Limited v Genentech Inc [2008] EWCA Civ 23 at para 83.

3 112 ARTICLE Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 2 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. In Glaxo, the court quoted from an earlier decision of Jacob LJ in Unilin: 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. 11 The judicial justification for this position was summed up by Jacob LJ in Unilin itself: So I think the Judge was wrong to hold that there was no estoppel. I am not sorry to reach that conclusion. It means that businessmen in this country know that they can use the rather speedy court system here to get a conclusion one way or the other. If the patent is revoked, the way is cleared; if it is upheld and held infringed then compensation will be payable for past acts. And an injunction will run unless there is a later revocation by the EPO. Subject to that last point, the effect of all this is that one does not have to wait to find out who has won until the slowest horse in the race gets there. 12 The decision in Virgin v Zodiac However, all this precedent did not impress the Supreme Court in Virgin v Zodiac. Perhaps that was not surprising in view of the fact that, by the time the case reached that court, Lord Neuberger had become its President. Although he did not give the leading judgement (that was given by Lord Sumption) he did give a supporting judgment with which the other Judges concurred. In Virgin the facts were as follows: Virgin had sued Zodiac (formerly Contour) for infringement of a patent relating to flat-bed seats used on aeroplanes. At trial, Lewinson J had found that the claims were limited in a way that did not catch the Contour seats; Subsequently the Court of Appeal overturned that decision and found that the patent was both valid and infringed; However, in proceedings before the Board of Appeals of the EPO, Virgin was required to amend the patent 11 Unilin, above, n 5, para Ibid, para 88. in a manner which involved deleting the claim which the Court of Appeal had held was infringed; Zodiac subsequently applied to the Court of Appeal to vary the order made following its first decision on the ground that the claim which the court had decided was infringed was no longer part of the patent. The Court of Appeal refused on the basis that the finding of infringement was res judicata, citing the line of cases referred to above; and Zodiac appealed to the Supreme Court. Both judgments in the Supreme Court embark upon a detailed analysis of the general law relating to res judicata and its various subcategories, including cause of action estoppel, issue estoppel and the rule in Henderson v Henderson. And there was a detailed analysis as to whether these various estoppels were absolute (i.e. could not be departed from) or only applied unless there were other countervailing reasons why they should not be applied. For present purposes, a detailed exposition of those considerations is not necessary. Suffice to say that the Supreme Court drew a distinction between a defendant (i) wishing to rely on additional arguments in support of the invalidity or non-infringement of the patent and (ii) wishing to rely on the fact that the patent had been revoked or amended. According to the court, the deletion of the claim in question was a new fact which did not exist at the time of the first judgment, and therefore could not have been raised by Zodiac in the earlier litigation. Both of their Lordships also referred to the fact that the relevant legislation specifically provided that a patent which had been revoked was deemed never to have existed, while one which was amended was deemed to have always existed in the amended form. 13 Moreover, they pointed out that a decision to revoke a patent was a decision in rem, i.e. it revoked the very right upon which the claimant s actions were based. In Lord Neuberger s view: Fletcher Moulton LJ rightly said in Poulton...that [t]he order of revocation is in the nature of a judgment in rem which terminates the res, and he was also right when he added that [i]t has...no further effect so far as estoppel is concerned. Where he [i.e. Lord Fletcher-Moulton in Poulton] went wrong was to conclude that this meant that the fact and consequences of the revocation could not be relied on by a person who had previously been held to be an infringer, for instance when damages come to be assessed. He acknowledged that [a]s regards the world at large, everyone is bound by the fact that the patent ceased to exist, and, as a matter of legal principle and consistency, as well as a matter of common 13 EPC, Art 68 and Patents Act 1977, s 75(3). In fact, s 75(3) only refers to amendment and is silent as to revocation.

4 Gary Moss. The Supreme Court in Virgin v Zodiac ARTICLE 113 sense and fairness, I consider that everyone includes a party who has previously been held to infringe it. 14 In addition, Lord Sumption made reference to the guidelines on staying proceedings set out in Glaxo and had this to say: The effect of that guidance is to put more litigants in the impossible situation in which successive decisions of the Court of Appeal place the parties in this case. As it is the problem has not gone away, even on the footing that those decisions have been overruled....this is not a suitable occasion, nor is the Supreme Court the appropriate tribunal to review those guidelines, but I think that they should be examined by the Patents Court and the Court of Appeal. Analysis It remains to be seen how the lower courts will take up that last challenge. The Supreme Court s decision has been greeted in some quarters as one which is eminently sensible and a long overdue change to the existing law. 15 However, the author does not count himself among the enthusiasts. Indeed, it is the view of the author that the decision is likely to give rise to a number of practical issues regarding the conduct of patent litigation and, if taken to its logical outcome, the decision could well create more problems than it solves. Perhaps this is a case of having to be careful what you wish for! As stated, both leading judgements embark upon a detailed analysis of the law of res judicata and whether or not the rule is absolute. It makes for an extremely interesting study for academic lawyers but, the author ventures to suggest, one which does not have much relevance to the real world in occupied by practitioners. The fact is that all aspects of claim preclusion, be they res judicata, issue estoppel, the rule in Henderson v Henderson, abuse of process or whatever, are based on a simple notion, namely what is equitable and fair in all the circumstances of the particular case before the court. And as the old maxim goes, equity varies with the length of the Lord Chancellor s foot. Most of the leading cases in this area can be explained by the courts attempting to do justice on the particular facts of the cases before them. Attempting to lay down hard and fast rules in this area can be fraught with difficulties. So inevitably one s view of the outcome of the Virgin v Zodiac case depends primarily on how one views the fairness of the outcome! One of the problems in this area is that good cases frequently make bad law. In the Virgin case, the perceived unfairness of the outcome was exacerbated by the fact that the Appeal Board of the EPO had been due to consider the appeal in April of 2010, but the hearing was delayed due to the travel difficulties brought about by the eruption of the Icelandic volcano. Had that not happened, the EPO may have given this decision before the Court of Appeal gave its judgment. So in this case, it cannot be denied that there was an element of arbitrariness about the outcome which arose from the fact that the judgement of the Court of Appeal came first: this resulted in Zodiac having to pay substantial damages. As Lord Sumption said: The fate of 49 million must surely depend on more substantial and predictable considerations than these. But does the fact that, in this case, there was an element of arbitrariness mean that one should throw the baby out with the bathwater? Indeed, it is difficult to think of an area of law which is any more prone to decisions whose outcome is based on arbitrariness than patents; for example, whether something is prior art can turn on a single day, or whether or not certain words were included in a communication or whether something was or was not available to the public. As indicated above, both the Patents Court and the Court of Appeal, which have far greater experience than the Judges of the Supreme Court in the conduct of patent litigation, had maintained a consistent line on the issue. One can view it as a pragmatic line aimed at achieving an element of certainty. And the defendant could hardly complain, since it had had its day in court and lost. What is more, the existence of the Poulton rule had enabled the courts to deal with the practical issue of what to do with an infringement case brought while an opposition was pending (or could be pending). The result was to deal with each action on a case-by-case basis, but, where the action in question involved two large entities which were well able to afford the costs of the litigation and the claimant could put up a good case for having the issue determined without delay, the tendency was to allow the case to proceed. And, indeed, why should it not? After all, the effect of the legislation is that a European patent which is validated in the UK takes effect as if it were a patent granted by the UK Intellectual Property Office. And if a British court comes to the conclusion that, according to UK law, the patent is valid and infringed, why should not the defendant be 14 Virgin v Zodiac, above, n 2, para See eg No more nonsense on Stolts or damages for infringing an invalid patent IPKAT (3 July 2013). Available at /07/no-more-nonsense-on-stolts-or-damages.html (accessed 1 December 2013).

5 114 ARTICLE Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 2 bound by that decision? Although, as stated, it can be argued that decision of the EPO trumps that of a UK court that is not totally accurate; the effect of an EPO decision may be to revoke the patent but it does not overrule or render nugatory the decision made by a British court; nor can it do so. In any event, the Supreme Court did not in its decision provide an answer to the cogent point made by Mummery LJ in Glaxo that the possibility of parallel proceedings is inherent in the legislation and within the contemplation of the Contracting States at the time they entered into the EPC. The possible consequences It is of course notorious that the length of time which oppositions can take in the EPO can have the effect of rendering nugatory, or considerably weakening, the protection which should be provided by a granted patent. Assume that infringement is occurring at the date a European patent is granted or shortly thereafter. There is first a nine-month opposition period; even if an opposition is filed on the day immediately following grant, the EPO Opposition Division will not act upon it until the nine month opposition period has expired in case any additional parties decide to oppose and only file their oppositions at the end of the period; for reasons of efficiency, the EPO will want all oppositions to run together. It then takes at least two years for the opposition to work its way through the Opposition Division and a further two years for there to be an Appeal to the Board of Appeals. And if the Board of Appeals decides to remit the patent to the Opposition Division, there can be substantial further delay. What is a patentee to do in the meantime? It appears from comments made in the Supreme Court that their view is that any action in which validity is put in issue should be stayed until the proceedings in the EPO have run their course and an action for infringement almost inevitably stimulates a defence of invalidity. But if one assumes that it is going to be five years minimum for the opposition to run its course, and it then takes another 12 months to get to trial in the UK, one is looking at a delay of six years. Can that be an appropriate way to conduct patent infringement proceedings in this day and age? Suggestions have been made that the answer to this is that patentees can, in appropriate cases, seek interim injunctions restraining infringements during this period. The problem is that the price for securing an interim injunction is a cross undertaking in damages. So, one may ask, why should a claimant be at risk for several years to compensate the defendant if its claim is finally adjudged to be without merit when, according to current UK procedure, it could have had the merits finally determined one way or the other in a little over 12 months? Maybe those considerations are not so pressing in the case of large entities for which such liabilities are simply another cost of doing business, but what about SMEs? How could they risk being liable for such potentially large sums? Are we not at risk of having one law for the rich and powerful and another for the rest? The UK Patents County Court for England and Wales (now renamed the Intellectual Property Enterprise Court) can now, in suitable cases, provide a final judgment (subject to appeal) in a few months, with adverse costs being limited to Is it really appropriate to allow that procedure to be nullified by the defendant filing an opposition in the EPO and then claiming that the proceedings should be stayed for five years and forcing the patentee, if it wishes to have the infringement cease immediately, to give a cross-undertaking in damages with all the risks that that might carry? German courts are able to avoid this situation by reason of their bifurcated system. Thus for the duration of the opposition period, and while any opposition is pending, litigants are not able to file nullity suits in Germany. But the German District Courts will nevertheless determine the infringement issues in the meantime; they will only stay the proceedings if they are satisfied that it is highly likely that the patent will be found to be invalid when examined by the EPO or the Federal Patent Court as the case may be. British courts have consistently eschewed the concept of bifurcation, regarding it as something of a nonsense to split the determination of infringement and validity. Are they now going to have to consider their approach and, where an opposition is pending, possibly deal with the infringement issues first, leaving the validity issues on one side? One very much doubts it. And on the question of fairness, why should the defendant/opponent have everything all its own way? All defendants/opponents want two bites at the cherry namely the chance to revoke the patent in the EPO and then again before the national courts. Opponents rarely agree to being bound by the outcome in the EPO, and the British courts have decided that EPO decisions do not give rise to res judicata or issue estoppel. 16 So, it may be argued, why should the patentee also not be allowed its two bites on validity and enjoy the fruits of its victory? Where is the unfairness? There is a practical answer to this conundrum; that is to eschew the European Patent System altogether and 16 Buehler v Chronos Richardson Limited [1998] RPC 609.

6 Gary Moss. The Supreme Court in Virgin v Zodiac ARTICLE 115 instead file national patents, thereby removing the prospect of oppositions. Research has shown that most European patents are validated in up to three or four states only. While the costs of prosecuting a European patent and validating in that limited number of states may still be more expensive than filing and prosecuting nationally in the same number of countries, many larger entities are beginning to wonder whether the drawbacks of the European system mean that those extra costs may be justified. This latest decision may just be another factor to be weighed against the European system. But that only deals with the future; in the meantime there is a whole backlog of granted patents and pending applications which will be ripe for litigation over the next 20 years. So where does that leave the fat lady? However, even that solution would still leave the second issue alive, namely, that the aria by the fat lady does not signify the end of the operatic entertainment. Because under the decision in Virgin v Zodiac, even though a patentee may have litigated its patent and won, the patent is still open to attack by another party and if that attack succeeds the first victory is to naught. That applies whether the patent is UK designation of a European patent or a national UK patent. And one can see that this leaves the way open for strategic litigating by combinations of savvy defendants. Let us ponder a few scenarios. Assume that Company A has a patent and brings suit against Company B. Company C is manufacturing a similar product to B and is going to be next in the firing line. C now has a choice. Either it sits on the sidelines and waits to see what happens in the action against B. Or it applies to join the litigation so it can ensure that its arguments are heard. All things being equal, up to now one would possibly have favoured C joining in so as to make sure that the issues are properly and fully argued. But now there is a positive incentive for C not to join in, since it can have a second attempt at invalidating, possibly before a different judge. Moreover, it now becomes interesting for B and C to agree between them that B will only run some of the arguments and prior art so that, if those do not succeed, C will bring a separate action based on other arguments and prior art. Now let us vary the facts slightly and assume that B and C are not in cahoots. C watches B go down in flames and become subject to an injunction and a large award of damages. C now approaches A and points out that it is possession of prior art which will render A s patent invalid. But rather than applying to revoke the patent, how about A grants C a non-exclusive licence so that effectively they enjoy the market between them? Anti-competitive? Maybe but why should A and C be forced to litigate when there is a sensible settlement available? And what does B do when it finds out? It cannot raise the new prior art itself because it seems accepted by the Supreme Court that that would be putting in issue again the validity of the patent, an issue which is res judicata. So does B find a suitable straw man to bring a revocation action? But then, in all probability, the straw man would be a privy with B and would be subject to the same rules of issue estoppel/res judicata. So maybe B should sue A and C for anti-competitive behaviour? Here is another scenario. A sues B for patent infringement. Prior to the matter coming on for trial, B agrees to settle and pays a sum of money for past infringements. C now comes along and successfully revokes A s patent. Can B recover the monies paid? The classic answer would be no: B had a choice and elected to cease its challenge to the patent so it is stuck with its decision. But close analysis of the Supreme Court s reasoning in Virgin v Zodiac indicates that it may not be so straightforward. As the Supreme Court has pointed out, the effect of the relevant provisions of the EPC and Patents Act 1977 means that the patent is deemed never to have existed. So, effectively, B has paid under a mistake of fact the fact being that A had a patent when in fact it had nothing. And it is well established in UK law that where sums are paid under a common mistake, the contract is void and the payer can recover the monies paid. It is not within the scope of this paper to embark upon a detailed analysis as to the law relating to mistake, but it is generally accepted that a mistake as to the existence of the subject matter of the contract constitutes a common mistake. Thus where parties have entered into contracts for the purchase of a cargo which at the time has in fact perished, the contract has been held to be void. So, one may ask, what is the difference between a cargo which has ceased to exist at the time the agreement was entered into and one which has been deemed never to have existed in the first place? One can take this analogy further. What about sums paid under a patent licence where the patent the subject of the licence is later revoked? A well-drawn patent licence will specify that revocation of the patent will not justify the licensee avoiding payment of royalties arising prior to the date of revocation, but what happens if the agreement is silent? Can the licensee argue that the sums were paid under a common

7 116 ARTICLE Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 2 mistake, namely that the licensor owned a patent but in fact this never existed, and that it is entitled to return of the payments made? The author does not purport to be an expert in the law of restitution, but are we not at risk here of opening a veritable Pandora s box? Finally, Lord Sumption drew the distinction between situations where the inquiry as to damages was still pending and those where the inquiry had been concluded. He stated that, in the latter case, the different considerations would arise because there will have been a final judgment for a liquidated sum and at common law that judgment could only be challenged by way of an appeal if an appeal was still open. He also commented that he doubted that a right to reopen such a judgment could be implied from the scheme of the Patents Act 1977, although he specifically left the issue open to await a case in which it arises. But assuming Lord Sumption s view is the correct one, does that not potentially open up another set of potential illogicalities? In particular: Does it now behove a successful patentee to press on with the inquiry as quickly as possible so as to procure a final judgment? If, while the inquiry is pending, a third party challenges a patent, what should the court do? Should it stay the inquiry pending the outcome of the third party challenge? What if that challenge goes to trial and then subsequently goes on appeal for how long is the inquiry going to be stayed? And does that now provide an incentive for defendants who have not been successful to persuade non-connected parties to put forward another challenge so as to put off the evil day? What happens if there are two defendants, one of which settles the inquiry and agrees damages and the other does not? Does that mean a successful third party challenge means that the latter escapes liability whereas the former does not? The show s not over It is often said that good cases make bad law. Whether this is the case with Virgin v Zodiac is not yet known. As stated, many commentators have welcomed the decision as being the sensible reversal of an old illogicality. But, as argued above, the situation which arises where a patent is upheld by one tribunal and then rejected by another is replete with illogicalities and, in the view of the author, all one is potentially doing is substituting one set of illogicalities for another. How the courts deal with the new set of illogicalities will be fascinating to watch. In the meantime, the author would venture to suggest that those heading for the exit the minute the fat lady bursts into song risk missing the best part of the entertainment! Postscript After this manuscript was prepared but before publication the opportunity for the Court of Appeal to take up the Supreme Court s invitation and reconsider the Glaxo guidelines arose the in case of IPCom GmbH & Co KG v HTC Europe Co Limited and Others. Judgment was given by the Court of Appeal on 21 November The lead judgment was given by Lord Justice Floyd, who was, of course previously a Judge in the Patents Court and before that a practitioner at the Patent Bar. There is insufficient space to do justice to what is a masterly analysis of the issues arising in the situation where there are concurrent proceedings pending in the EPO and the English Court and a reading of that judgment is recommended. Among the points highlighted by the Court of Appeal are the following: It is inherent in the EPC and the UK Patents Act that twin routes to revocation may be pursued at the same time; The EPO system of oppositions under which it deals with grounds of invalidity serially means that it is not necessarily adapted to do justice quickly; Even the Agreement setting up the Unified Patents Court only provides for stays in favour of oppositions when rapid decision may be expected from the EPO, and that is only permissive, not mandatory; The fact that the UK Court and the EPO may come to different conclusions does not necessarily mean that ALL the costs of the UK trial will have been wasted ; in reality the UK trial may have resulted in a considerable narrowing of issues thereby limiting the scope of any future trials. The discretion to stay or not to stay is that of the Patents Court, not the Court of Appeal (nor sotto voce the Supreme Court!) While the Supreme Court emphasised the need to avoid inconsistent decisions, that was difficult in a system which envisaged concurrent jurisdictions. The Court of Appeal re-stated the Glaxo guidelines in the light of the comments made by the Supreme Court. 17 [2013] EWCA Civ 1496

8 Gary Moss. The Supreme Court in Virgin v Zodiac ARTICLE 117 Nevertheless it is difficult to see that there is that much difference in substance. The Court did emphasise that absent other factors the default position should be in favour of a stay and that the onus was on the party resisting the stay to justify why a stay was not appropriate, but that tended to be the position under the old Glaxo guidelines anyway. Although Lord Justice Floyd is far too proper to express himself using anything other than appropriate judicial language, one can possibly detect in his judgement an underlying theme addressed to the Supreme Court along the lines of Back off, we and the Patents Court know what we are doing For further insight into the way in which Supreme Courts act in patent matters please see Patent law decisions from Supreme Courts; how can nonspecialist judges decide this field of law by Darren Smyth JIPLP 2013 [ ]