Patents: costs award where patent has certificate of contested validity

Background

Where a certificate of contested validity of a patent has been granted, if in any subsequent proceedings for infringement or revocation of the patent a final judgment is made in favour of the party relying on the validity of the patent as found in the earlier proceedings, that party is, unless the court or the comptroller otherwise directs, entitled to his solicitor and own client costs or expenses (section 65(2), Patents Act 1977) (section 65(2)).

Awards of costs under section 65(2) are governed by the Civil Procedure Rules (CPR). CPR 46.9(3) provides that the court will presume costs have been reasonably incurred and are reasonable in amount if the client has approved these (the so-called "solicitor and own client basis"). It will not make this presumption if the costs are of an unusual nature or amount and the solicitor did not tell the client that as a result the costs might not be recovered from the other party.

CPR 44.3(4) provides that, unless the court orders otherwise, costs will be assessed on the standard basis.

The High Court has held that a patent, which related to handover between GMS and UMTS systems, was valid and essential to both the 2006 and 2011 versions of the UMTS standard (Unwired Planet v Huawei [2015] EWHC 2097).

Facts

O sued A for infringement of a patent. This patent had previously been held to be valid in Unwired Planet and had been granted a certificate of contested validity under section 65.

The Patents Court held that O's patent was valid and infringed by A, and that O was entitled to its costs. O and A applied for a costs order.

Decision

The court ordered costs applying a "solicitor and own client" basis of assessment to the costs of, and relating to, all issues, apart from a deduction for one issue which O had continued to contest during trial then abandoned.

The application of section 65(2) here meant that, in general, the costs to be awarded in O's favour ought to be assessed on the solicitor and own client basis. Broadly, this is a more generous basis than either an indemnity or standard basis.

O was concerned about the effects of CPR 44.3(4), which could result in costs on a standard basis. To deal with this, the cost order would state that the costs were to be assessed as between solicitor and own client in accordance with section 65(2) and CPR 46.9(3), if not agreed. This order could not be overridden by CPR 44.3(4)(b).

The court's usual approach at the end of patent proceedings, of considering whether there were any discounts and dealing with them on a percentage basis, was still the right approach to take, even when dealing with costs assessed on the solicitor and own client basis. Here, O could and should have abandoned one issue earlier, before trial. If O had done so, then some costs would not have been incurred. O's conduct therefore had an effect on costs. Although that did not in itself lead to a decision to make a deduction, it was a relevant factor.

Normally, the court would make an order for assessment as provided for in section 65, but there was a discretion to make a different order. The onus was on the person asking the court to exercise its discretion. The discretion did not only have to be exercised by deciding that the entire costs of the matter ought to be assessed on a different basis. Instead, particular issues might be treated as being assessed on a different basis. Rather than ordering an assessment on two bases, such a conclusion would be better dealt with by making a deduction, taking a broad approach to working out what was fair in the circumstances.
When the certificate of contested validity was granted in the previous proceedings, the court had also given permission to appeal. This did not justify a deduction. The fact that the court recognised that there was a real prospect of success on appeal relating to the merits of the case was nothing to do with the certificate of contested validity.

A was defending and pursuing its own commercial interests rather than acting in the public interest in seeking to invalidate the patents. Although in practice telecoms standard essential patents had more of a public impact than some other patents, this was not a reason for making a different costs order here.
Part of A's case, although unsuccessful, relied on prior art which had not been considered on the previous occasion. The approach of the court in the only relevant case law was too old to provide guidance. The procedural rules had changed. Also, under the Patents Act 1949, certificates of contested validity were narrower than under the Patents Act 1977 since they used to refer to individual claims and they now apply to the patent as a whole.

The correct approach under the CPR was to apply the overriding objective. The fact that a new piece of prior art was relied on could be taken into account by the court in deciding whether to treat the whole of the costs, or the costs relating to that prior art, as being subject to assessment on a solicitor and own client basis or some other basis. However, the fact that different prior art was relied on did not justify disapplying the provisions of section 65 and ordering costs assessed on the more generous basis. Here there were no specific circumstances that meant that the court should not apply section 65.

Comment

The only case law relating to this issue is very old, probably because accused infringers are unlikely to dispute a case brought on a patent with a certificate of contested validity as the chance of success is likely to be very small. Therefore, this decision provides useful updated guidance on determining costs in such cases.

Case: Optis Cellular Technology and others v Apple Retail UK Ltd and others [2020] EWHC 3248 (Pat).

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