IP and IT Law Bytes: Patents - Stay pending European Patent Office opposition

10 February 2014

Background

In Unilin Beheer BV v Berry Floor NV, the Court of Appeal held that a patentee whose patent has been held to be valid is entitled to claim damages for its infringement even if there is a later revocation of the patent ([2007] EWCA Civ 364).

However, the Supreme Court in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd held that Unilin, and the line of cases on which it was based, were incorrectly decided as they had ignored the statutory position that a revoked or amended patent was treated as revoked or amended ab initio (see News brief “Patent infringement: reclining in the seat of justice”, www.practicallaw.com/1-535-1285). As a result, the Supreme Court suggested that the guidance given in Glaxo Group Ltd v Genentech Inc on staying UK actions while EPO opposition proceedings are pending should be reconsidered ([2008] EWCA Civ 23).

Facts

I’s patent had been held to be valid in English proceedings between I and N, but was also the subject of opposition proceedings in the EPO. H applied to have the English action brought against it by I for infringement, and H’s counterclaim for revocation, stayed pending the outcome of the EPO proceedings.

The High Court refused a stay, relying on the Glaxo guidance but, before it had given its reasons, the judgment in Virgin Atlantic was handed down. H appealed.

Decision

The court dismissed the appeal. However, it said that the Glaxo guidance should be recast in a number of ways. These include:

  • If there are no other factors, a stay of the national proceedings should be the default option. Under the previous Glaxo guidelines, the length of the delay in the EPO proceedings compared to national proceedings was a primary factor in the exercise of discretion to grant a stay, and the likelihood of such delay would, in most cases, tip the balance in favour of the refusal of a stay.
  • The onus is now on the party resisting the grant of the stay to show why it should not be granted.
  • While the length of time that it will take for the respective proceedings in the national court and in the EPO to reach a conclusion remains an important factor affecting the discretion, the court now emphasises that this is not an independent factor, but needs to be considered in conjunction with the prejudice that any party will suffer from the delay, and lack of certainty, and what the national proceedings can achieve in terms of certainty.
  • The following two new factors should be taken into account in the exercise of the discretion to grant a stay of national proceedings:
  • the extent to which refusal of a stay will irrevocably deprive a party of any part of the benefit that the concurrent jurisdiction of the EPO and the national court is intended to confer. If allowing the national court to proceed might allow the patentee to obtain monetary compensation that is not repayable if the patent is later revoked, this would be a weighty factor in favour of the grant of a stay; and
  • the fact that resolution of the national proceedings may promote settlement.
  • The public interest in dispelling the uncertainty surrounding the validity of monopoly rights conferred by the grant of a patent remains a factor to be considered. In weighing the balance, the risk of wasted costs is material, but will normally be outweighed by commercial factors concerned with early resolution.

Applying these principles to this case, there was nothing to indicate that the High Court has wrongly exercised its discretion in deciding to refuse a stay.

Comment

The recasting of the Glaxo guidelines means that a stay is now the default position if there are no other factors. Commercial factors in favour of refusing a stay (for example, the need to get a ruling that a product is non-infringing before it is launched) will inevitably remain relevant, although the onus will now be on the party resisting the stay to justify its position with supporting evidence.

These changes also mean that the time delay inherent in EPO proceedings is to be given less weight than previously. An important factor will be whether refusing a stay will irrevocably deprive a party of some benefit derived from the dual system; in particular, if the patentee could derive some monetary compensation that is not repayable even if the patent is finally revoked. Patent owners resisting a stay should be prepared to give a suitable undertaking to repay in this event (such as that offered by I in this case) if it later transpired that the patent was invalid.

Case: IPCom GmbH & Co Ltd v HTC Europe Ltd and others [2013] EWCA Civ 1496.

First published in the January/February 2014 issue of PLC Magazine and reproduced with the kind permission of the publishers.  Subscription enquiries 020 7202 1200.