22 February 2021 | Katharine Stephens Partner

Katharine Stephens considers the Court of Appeal's decision in IPCom GmbH & Co KG v Vodafone Group plc & others (19 February 2021). The court overturned the decision at first instance and held that Vodafone did not have a defence of Crown use in relation to acts done when responding to an emergency request as part of a scheme known as the Mobile Telecommunications Privileged Access Scheme ("MTPAS") or during testing for this purpose.  

Background

Cases in relation to Crown use are rare and this is the first such case in relation to mobile phone network infrastructure equipment.  More commonly, the issue arises in relation defence contracting and therefore it was no surprise that the Secretary of State of Defence ("SSD") intervened in the appeal.  

Crown use provides a defence where a person is authorised in writing by a government department to do any act for the services of the Crown which would otherwise be an infringement of a patent[1]. The patent owner is still compensated for such use, but the government department concerned is responsible for doing so.  Similar provisions apply in relation to designs.
 
In this case, IPCom's patent related to controlling mobile phones’ access to a random access radio channel between the mobile and the base station.  It combined two different access regimes: a bypass mechanism available to a group of privileged users only; and access based on random assignment for the remainder. This allowed the group of privileged users to gain access in preference to the non-privileged users. 

Vodafone were authorised by the Cabinet Office to operate MTPAS, a mechanism for the government to gain privileged access to mobile phone networks for organisations involved in responding to an "emergency" as defined in the Civil Contingencies Act 1994.  IPCom claimed that this mechanism infringed their patent.  In defence, Vodafone claimed that they had immunity under the Crown use provisions to operate MTPAS because they were "authorised in writing by a government department".  

The rival interpretations

Under section 55 of the Patents Act 1977, a defendant to a patent infringement action can only take advantage of the Crown use defence if the written "authorisation" has been given "in relation to a patented invention".  There were three possible interpretations canvassed before the judge as to what this phrase meant:

  1. It required an express authorisation to work the patent in question;
  2. It required either an express authorisation to work the patent or an authorisation to do a particular act in circumstances where that act necessarily infringed the patent;  
  3. It extended to an authorisation to do a particular act even if that act did not necessarily involve infringing the patent.

On the facts, it was technically possible to comply with MTPAS requests without infringing IPCom's patent.  Therefore, Vodafone could only succeed if the third interpretation was correct and, at first instance, the judge held that this was indeed the correct interpretation.

Decision of the Court of Appeal

Lord Justice Arnold, giving judgment for the court, held that the third interpretation was wrong and, although it was not strictly necessary for him to decide, he thought the second interpretation was to be preferred.

He gave 13 reasons for coming to this conclusion.  His first reason was that the language of section 55 of the Patents Act 1977 required that the authorisation must be an authorisation to do acts in relation to a patented invention, not merely an authorisation to do certain acts.  Secondly, he noted that the concept of authorisation was familiar from the law of agency.  In that context, the basis for implied authority was necessity.  It was therefore difficult to see why section 55 should extend to an authorisation to do an act which would not necessarily infringe a patent (the third interpretation).  Further, there was support for the second interpretation in the old authorities (Crown use has a long history) and in the successive editions of Terrell [2].

Arnold LJ agreed with the SSD's submission that if the third interpretation was correct, then it was difficult to see why section 55 provided for retrospective authorisation to be given.  However, he did not accept that express authorisation (the first interpretation) was required for the Crown to make an informed decision between contractors bidding for a government contract.    

The last of Arnold LJ's 13 reasons was that, if possible, section 55 should be interpreted consistently with TRIPS; the more broadly section 55 was construed, the more inconsistent it was. He was of the view that section 55 extended beyond Article 31 of TRIPS, but that the first and second interpretations were, at least, more consistent than the third.

Other points decided on appeal

The Court of Appeal upheld the judge on all the other points which were appealed.  In the result, the patent in its conditionally amended form survived Vodafone's obviousness attack and was held to be essential to the implementation of the relevant part of the 3GPP TS 36.331 standard.  Furthermore, Vodafone could not rely on an argument that three of its modes of operation did not infringe because the extent of the use was de minimis.  

Why is this decision important?

This narrower interpretation of the Crown use defence clarifies the position for the Crown but places the burden of checking for patents on suppliers.

If the Crown knows of a patent, then an informed decision can be made when a contract is put out to tender whether it necessitates working that patent or not.  If it does, under the terms of section 55, the Crown has to compensate the patentee.  

The difficulty comes for the Crown if it does not know of a patent.  Under the Court of Appeal's interpretation, if performing the contract necessitates working the patent, the successful bidder will have the benefit of the Crown use defence.  Although the Crown ends up with higher costs due to compensating the patentee, that would be the same whichever supplier won the contract.  The third interpretation would lead to uncertainty; the Crown might or might not have to compensate the patentee depending on whether the successful supplier infringed the patent or not and whether retrospective authorisation was given.

Arnold LJ was fully aware that the Court of Appeal's decision places the burden on suppliers to check that they have the freedom to operate.  In his view, and in contrast to the judge, this was fairer than placing the burden of unforeseen liabilities on the Crown.  The supplier is best placed to know what technology it is using, to conduct patent searches and take legal advice, to negotiate for a licence if required and to re-design if necessary.  

[1] The provisions on Crown use are found in sections 55 – 59 of the Patents Act 1977

[2] Terrell on the Law of Patents, now in its 19th edition and published by Sweet & Maxwell

About the Author

katharine stephens module

Katharine Stephens
Partner
I am co-head of the IP department in London and a member of the International IP Steering Group. I am fascinated by IP and the challenge of helping my clients protect, exploit and defend their IP rights to further their business objectives.

Direct: +44 (0)20 7415 6000

[email protected]

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