In an article published in the January 2004 edition of CIPA entitled Patent litigation – a costly business? Gordon Harris suggested that the reason why the English courts are losing business to their continental competitors (and in particular, the German and French courts) is not because of the cost of litigation here but rather because English Judges more readily find patents invalid for obviousness.
The article was written in immediate response to comments made by Mr Justice Laddie in his judgment of November 2003 in Merck v Generics regarding the cost of that action but also against the backdrop of Gordon Harris’ own experience in the SEB v De’Longhi litigation in which his clients’ appeal against the finding of obviousness made by Mr Justice Pumfrey was dismissed by the Court of Appeal in July 2003.
In the polemical spirit in which the article was written, I explain below why I call into question certain propositions put forward by Gordon Harris as the basis for his criticism of the English Judges.
The English courts are harder on validity than the German or French courts
In support of his proposition that the English Courts are harder on validity, Gordon Harris relies on 2 pieces of evidence.
The first is a passage in an article published in the November 2003 edition of EIPR featuring an interview with Mr Justice Laddie. The opening paragraph of the article states
“Close to 60% of (pharmaceutical) patents in suit are being revoked in the UK, according to some statistics. This score seems to be rather higher than on the Continent. How come?”
to which Gordon Harris adds the following further comment:
“Many patents involving mechanical and engineering concepts go the same way. And yet many of these are European patents, granted by the EPO in Munich, and consequently in the same words in each jurisdiction. Why is it that the English courts appear to adopt a much harder line on validity?
The second is the outcome of the SEB v De’Longhi litigation in England, France and Germany. In the UK, SEB’s appeal against the finding of obviousness was dismissed. Gordon Harris states:
“The same patent was litigated in France and Germany with opposite results.
So why did it go to De Longhi in this country? The answer in relation to this and many other cases appears to be a state of mind adopted by the judges that they are guardians of the public interest. Judges seem to think that the interests of the public are opposed to those of patentees on the grounds that patents create monopolies and suppress competition.”
I question whether Gordon Harris is in a position to draw the conclusions that he does from these two pieces of evidence. The first is hearsay - really nothing more than gossip. The second is an isolated example and without knowing more about the status of the French and German actions, the way in which they were conducted and in particular, the evidence that was before the French and German courts, it is impossible to know whether the difference in results in that particular litigation turned on the attitude of the Judges to obviousness (as Gordon Harris suggests) or for instance, differences in procedure or evidence.
The problem of course is that no one knows whether the English courts are harsher on validity than the German and French courts because the statistical data is simply not available. Whereas I am in a position to produce statistics in terms of the number of actions started and the results of trials or appeals for the English courts, I am not in a position to do so for the French and German courts. Nor as far as I am aware is anyone else because the results of trials and appeals for the German and French courts are not in the public domain. Incidentally, if I was a French or German patent litigator, this is not something I would necessarily be keen to remedy given the way in which the statistics for the English courts can be misinterpreted.
To prove the point on the availability of the trial and appeal statistics for the English courts, I have collated the results of the infringement/validity cases heard in the 2002/2003 judicial year in the Appendix to this article. The results of the infringement/validity cases heard in the 2001/2002 judicial year are collated in my firm’s Patent Update of Spring 2003 and the results of cases heard in earlier years are collated in Appendix 2 of A User’s Guide to Patents published by Butterworths.
One final point on statistics if they ever become available is that any comparative analysis needs to take account of settlement rate. For instance, it seems to me reasonable to assume that the vast majority of settlements result in the validity of the patent being maintained and either an undertaking not to infringe being given by the defendant or a royalty paying licence being granted to the defendant or in some cases a royalty free licence being granted to the defendant. The settlement rate before trial in Germany is I believe about 50% whereas in the UK it is nearer 85 - 90%. Factoring the consequences of this high settlement rate in the UK into the trial and appeal statistics would therefore imply that the English patent system is more pro-patentee than it is being given credit for by some commentators.
This is the reason why the English courts are the forum of choice for revocation actions
In the course of his article, Gordon Harris also refers to Mr Justice Laddie’s response in the EIPR article to a question put to him about the relatively high number of pharmaceutical patents found to be invalid in the UK compared with other jurisdictions. Mr Justice Laddie’s response was:
“The smooth answer is that 60% of the patents that are brought before our courts are invalid and maybe not 60% of the patents that are brought before the other courts are invalid.”
Gordon Harris criticises that response by stating:
“In any one year that may be true, but it is extremely unlikely to be the case over the number of years that this problem has been perceived in the English courts.”
He goes on to refer to Mr Justice Laddie’s response to the suggestion that English courts are becoming the forum of choice for those wishing to attack the validity of patents. Mr Justice Laddie’s response was:
“[t]he result may be that “we get a higher proportion of good validity attacks than other courts”.”
Gordon Harris also criticises that response by stating:
“The very reason that the English Patents Court has become the forum of choice for attacking patents is precisely because of the approach of he and his fellow judges in recent years, in particular in relation to the issue of obviousness.”
Again, in the absence of anything other than hearsay, I question whether Gordon Harris is in a position to make the statements here that he does.
Personally, I would find it neither surprising nor worrying if the English Courts were regarded as the forum of choice for revoking weak patents. The reason for choosing a forum for litigation turns on several factors including in the case of patent revocation actions speed of outcome and in particular, the likelihood of the action not being stayed pending the outcome of any EPO Opposition. The fact that the English courts hear revocation actions these days much more quickly than the German or the French courts (less than 1 year to first instance decision and less than 2 years to final decision as opposed to nearer 2 and 4 for both Germany and France) and have also historically been more reluctant to stay actions pending the outcome of EPO Oppositions strongly favour them as a forum of choice for revocation.
Indeed, for these reasons, I believe that Mr Justice Laddie’s answers to those questions put to him in the EIPR article seem perfectly sensible.
The English courts are losing business to the German and other European courts and the reason is the attitude of the English Judges to obviousness
Gordon Harris suggests that the mindset of the English Judges to validity and in particular, the fact that there is no presumption of validity in the English courts “has driven litigants to Germany and other jurisdictions”. He suggests that Germany is attractive not just because it is relatively inexpensive but more than that because its judges appear to adopt a more sensible, commercially realistic approach to patents and the requirement of inventiveness.
Yet, again, Gordon Harris has no statistical data nor does he refer to any other evidence (than hearsay) to support his underlying assumption that business is being driven away at all let alone his conclusion that it is the perceived anti-patentee mindset of the English Judges as compared to the more sensible, commercially realistic approach of the German Judges which is driving it away.
I also take issue with the general statement that German patent litigation is relatively inexpensive. It is important to bear in mind various aspects of German procedure when making any comparison between the costs of German and English actions. The first is that because of the split infringement and validity jurisdiction, most German patent litigation necessarily involves 2 sets of proceedings: infringement proceedings are normally run by (non-technically qualified) lawyers assisted by patent agents and revocation proceedings are normally run by patent agents liaising as necessary with lawyers. The second is that there is a right of appeal to the German Supreme Court from the German Patents Court in the revocation proceedings and a right of appeal from the district court to the regional court and then with leave on matters of law to the German Supreme Court. Appeals to the German Supreme Court in infringement actions are however much more common that appeals to the House of Lords in English patent actions. The third is that it is much easier in Germany than in England to introduce fresh evidence on appeal. Indeed, it is not uncommon for the appeal courts which are less technically competent than the first instance courts to appoint experts to assist them. Inevitably, the parties will need to comment on the report filed by the court appointed expert in advance of the oral hearing and may also wish to file further expert evidence of their own to support their arguments. The fourth is that whilst the fee scales in Germany govern what a winning party can recover from the losing party at the end of the litigation, they do not limit what German lawyers/patent agents can charge their clients.
That said, I accept that the split infringement/validity jurisdiction of the German courts does provide patentees in certain circumstances with a procedural and also therefore a potential cost advantage. If the patentee can persuade the infringement court not to stay the infringement action pending the outcome of the revocation action (e.g., because the attacks on the validity of the patents are not particularly strong ones) then he puts himself in a position to obtain a judgment on infringement without the validity of the patent having been examined by a Court. The infringement judgment is enforceable subject to the provision of security the amount of which is determined by the value of the litigation. In the absence of a non-infringing alternative, the only option for a defendant in these circumstances in order to stay on the market is to settle with the Plaintiff. If, on the other hand, the infringement court can be persuaded to stay its proceedings pending the outcome of the validity proceedings then it introduces an element of delay into the overall conduct of the litigation which is not possible in English proceedings where the action on both infringement and the counterclaim on invalidity proceed to trial at the same time. Whether such a system is fair and balanced is another matter. Certainly, Roy Marsh who has direct experience of the German system and whose response to Gordon Harris’ article was published in the February edition of CIPA did not seem to think so. It is also noteworthy that it is not a system which as far as I am aware even the German government was lobbied to promote as a model for the Community or European Patent litigation systems.
Overall, the English patent system has a lot to offer prospective litigants. It is faster than most if not all other European jurisdictions, it has evidence gathering and testing procedures which are not available to litigants elsewhere in Europe and it produces well reasoned decisions which have the potential to influence the outcome of other parallel actions. It is also procedurally fair in that validity and infringement are heard together.
That does not mean that the English Judges are beyond criticism particularly in terms of their approach to key patent litigation issues such as obviousness. Indeed, for every jurisdiction in which the validity of patents can be challenged, there will an issue as to how high the obviousness hurdle should be set and in particular, the difficulty of rewarding “investments in hard grind” as much as “eureka moments”. There have certainly been cases over the years before the English courts (e.g., Genentech  RPC 147 and Cairnstores v Hassle  FSR 564 and  FSR 413) and Pharmacia v Merck ([2000 RPC 709 and  FSR 775) where the hurdle has arguably been set too high for inventions arising out of “investments in hard grind”. See for instance the discussion of the approach taken by the English courts under the Patents Act 1977 in the judgment of the High Court of Australia decision in Hassle v Alphapharm ( ALR 485). Whether those decisions are representative of the general approach of the English courts and if so, how that approach compares with that of say the German revocation courts is certainly a subject which merits proper consideration although any comparative analysis would be dependent upon obtaining access to at least the judgments of the German Supreme Court on appeals in revocation actions.
Should English judges criticise parties for spending too much money
The starting point for Gordon Harris’ article are the alleged comments of Mr Justice Laddie in his judgment in the Merck v Generics action about the amount of money spent by the parties in the litigation and in particular, on the experiments. To be fair to Mr Justice Laddie, he seems to be directing his criticism at his own management of the case for allowing the money to be spent in the first place. In the judgment, Mr Justice Laddie states quite clearly that in future, a party who wished to adduce evidence from experiments directed at the issue of non-literal infringement would have to obtain the explicit permission of the Court before being permitted to carry them out and/or serve a Notice of Experiments.
To my mind, the question which is raised by Mr Justice Laddie’s comments in fact is whether English Judges should be able to prevent a party from carrying out and relying on experiments in support of any aspects of their infringement or validity case. It seems that in Gordon Harris’ view they should not. I disagree.
It seems to me that if the Judge is able to come to the considered view that the cost of experiments is not warranted by the relevance of their results to the issues in dispute in the action, then the Judge is justified in saying in advance that he will not take any account of them. Obviously, by refusing a party permission to rely on experiments, the Judge reduces the costs exposure of the other party in terms of the carrying out of the experiments themselves, any repetition, any experiments in reply and any repetition and finally the evidence relating to all of that at the trial.
On a more general note, I believe that the trial Judges should exercise their newly acquired case management powers under the CPR to control not only the issues which are brought before the court to be litigated but also the manner in which those issues are litigated and also the evidence which is to be adduced at trial in relation to those issues. The not-so-recently introduced streamlined procedure is a welcome addition to the case management powers which the trial Judges have at their disposal. Although I suspect that an order for a trial by means of the streamlined procedure will be made in relatively few cases, it does not matter. The importance of the streamlined procedure is that it provides a reference or starting point for the Judge and the parties. As the Patents Court Guide makes clear (and as Mr Justice Laddie emphasised in his judgment in Merck v Generics) it is incumbent on the parties' advisors to bring the availability of the streamlined procedure to the parties’ attention. The result will be less disclosure, fewer experiments and shorter trials in the majority of cases all of which will have the effect of limiting the costs actually spent by the parties in the action.
One potential problem is this regard is that the Judges do not necessarily have a free hand in the exercise of their case management powers. They have the Court of Appeal sitting above them. In the recent Intel v Via litigation, the trial Judge effectively struck out a plea raised by Via for breach of competition law on the basis that it had no real prospect of success ( FSR 175) Via appealed to the Court of Appeal and the appeal was allowed. Whether you agree or disagree with the Court of Appeal decision, the outcome illustrates the fact that the case management powers given to the trial Judges are overseen by the Court of Appeal and unless the Court of Appeal can be persuaded to refrain from interfering with some of the more robust case management decisions taken by the trial Judges then it may be difficult to achieve significant progress.
Results of Patent Infringement/Validity Cases in the PC/PCC in the Judicial Year 2002/2003
Patents Court and Patents County Court judgments on validity and infringement for judicial year October 2002 to September 2003
|02.10.02||Wesley v Coopervision ||Contact lenses||Fysh HH (PCC)||No||No - A&O|
Synthon v SKB
|N/A||No - A|
|20.12.02||Memcor v Norit|
Water filter Membrane
|Fysh HH (PCC)||Yes||No - A&O|
|21.01.03||Teva v Merck||Alendronate|
(1) No – A&O
(2) No – O&SMU
Vericore v Vetrepharm
|Treatment for sea lice||Laddie (on appeal from PO)||N/A||No - A&O|
NMI v Unwin
|Tracker device||Fysh HH (PCC)||Yes||Yes|
Kavanagh v Cameron
|Balloons||Fysh HH (PCC)||Yes||Yes (partial)|
|15.04.03||Rockwater v Coflexip||Pipe laying device||Laddie J||No||No - A&O|
|07.05.03||Daesang v Ajinomoto|
Process for purification of Aspartame
|07.07.03||Philips v Princo||CD boxes||Pumfrey J||N/A||Yes|
Niche & Wessex v Lundbeck
|Citalopram||Pumfrey J||No (uncontested save to terms)||N/A|
|26.09.03||Unilin v Berry||Laminated floors||Fysh HH (PCC)||Yes||Yes (partial)|
A = anticipation
O = obviousness
Appeals to Court of Appeal from Patents and Patents County Court on validity and infringement for judicial year October 2002 to September 2003
|22.10.02||Cairnstores v Hassle||Yes||N/A||No|
|28.11.02||Menashe v Hill||Yes (for different reasons)||Yes (preliminary point)||N/A|
|06.02.03||Stena v Irish Ferries||Yes||No||N/A|
|25.06.03||Synthon v SKB||No||N/A||Yes (reversing)|
BASF v SKB
SEB v De’Longhi
Storage Computers v Hitachi
12 cases were heard. 1 case was for a declaration of non-infringement which was granted. 5 cases were revocation actions. The remaining 6 cases involved both issues of infringement and validity.
In the 2 revocation actions not in the pharmaceutical field, both patents in suit were held valid. In the 3 revocation actions in the pharmaceutical field, 4 patents in suit were all held invalid. In Synthon v SKB, the Court of Appeal has overturned the first instance decision and upheld the validity of the patent. An appeal to the House of Lords however is due to be heard later this year. In Vericore v Vetrepharm there is no appeal pending and in Teva v Merck, the Court of Appeal has dismissed the patentee’s appeal against the first instance finding of invalidity on both patents in suit and the patentee’s further application for leave to appeal to the House of Lords has been dismissed.
In the 6 infringement and validity cases, 3 patents were held valid and infringed, 2 patents were held invalid and not infringed and 1 patent was held infringed (if valid) but not valid. In Rockwater v Coflexip, in which the patent was held invalid and not infringed, the appeal has recently been heard and allowed i.e., the first instance judgement has been overturned on appeal and the patent has been held valid and infringed.
Of particular interest, is the fact that of the 9 patents held invalid, only 1 was so held on the ground of obviousness alone. The other 8 patents held invalid were so held on the ground of anticipation alone or as well as on the ground of obviousness. In this latter regard, it is worth noting the comments of Lord Justice Jacob in his decision in the Rockwater v Coflexip appeal on the difficulty of a court making a determination of obviousness having already found a patent invalid for anticipation.
Court of Appeal
7 appeals were heard. The Judge was upheld in 6 of them. In Synthon v SKB mentioned above the appeal against the first instance finding of invalidity was successful although there is a pending appeal to the House of Lords.
First published in The CIPA Journal May 2004.