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The UK’s flexible system for patent disputes




The UK courts provide quick, high quality and flexible solutions in patent cases – as recent judgments demonstrate. Tim Andrews, Esther Ford and Steven Gurney of Marks & Clerk explain

Patent and other IP disputes range from the small to the incredibly large and complex. When a dispute arises, litigants often have a choice as to the jurisdiction in which they conduct proceedings. The UK's common law jurisdiction offers a flexibility in patent disputes that is often missing from other jurisdictions, including innovative remedies, multiple venues to initiate proceedings and a fast and efficient procedure.

Declarations of non-infringement

A party can seek a binding declaration of non-infringement (DNI) from the UK courts as a way to give commercial certainty about an upcoming launch. There is a statutory procedure, which requires a party intending to seek a DNI to write to the patent proprietor to request an acknowledgement that the relevant product or process does not infringe the proprietor's patent. If the proprietor refuses or fails to provide an acknowledgement within a reasonable time, an application can be made to the court. Alternatively, and in particular if a party has already been threatened with infringement proceedings, the court can be asked to issue a DNI under its inherent jurisdiction.

When submitting a request, the third party must give full information in relation to the article or process which is alleged not to infringe the patent. The provision is satisfied by providing a sample of the alleged non-infringing article providing that its inspection by competent persons will make clear all aspects of the device relevant to the question of infringement. Alternatively or in addition, a description to be read in conjunction with a detailed drawing can be sufficient.

The ability to obtain a declaration of non-infringement is a powerful tool for a company that is concerned that a particular patent might form a road block in its path. It is also not limited to declarations of non-infringement regarding acts proposed to be committed in the UK. Provided patent validity is not in issue, the UK court will also consider DNIs in respect of other jurisdictions, as was demonstrated by the decision handed down by Mr Justice Arnold at the High Court in the case of Actavis Group v Eli Lilly and Company [2012] EWHC 3316 (Pat). In this case, Actavis requested a declaration of non-infringement in relation not only to the UK validation of Eli Lilly's European patent but also to the corresponding validations in France, Germany, Italy and Spain. Eli Lilly argued that the High Court only had jurisdiction in respect of the UK validation of the European patent. Eli Lilly accepted that the service was validly effected in the UK. Once it had done so, Actavis argued that the service was therefore validly effected for all jurisdictions. It contended that hearing all five declarations in the one forum would allow the case to be determined in a single court action (both in first instance and if necessary appeal): only one set of lawyers and witnesses would be required and it would eliminate the possibility of inconsistent decisions. Arnold held in favour of Actavis, concluding that no stay of the claims under the non-UK designations of the patent should be granted on forum non conveniens grounds. Although the Court of Appeal overturned the first instance court's decision on whether DNIs should be granted, it agreed with the High Court that pan-European declarations were allowable.

Declarations of essentiality/FRAND terms

The UK courts have again shown their flexibility on declarations, with regard to disputes on standard essential patents (SEPs) in the information and communications technologies (ICT) sectors. Some jurisdictions will only rule on infringement and validity but the UK courts are also willing to declare whether a patent is essential to a standard, and what is a fair, reasonable and non-discriminatory (FRAND) licence to such a patent.

In the telecommunications sector companies generally cooperate by notifying the industry body ETSI of patents they believe are essential to standards such as UMTS and LTE. In return for inclusion of a patent on ETSI's SEP database, the patentee agrees to license the patent on FRAND terms. However, ETSI does not examine the essentiality of the patents.

Consequently, the UK courts have been called on to rule on essentiality. In a relatively early case Nokia v InterDigital ([2005] EWCA (Civ) 614), Nokia applied for a declaration that four patents were not essential to the ETSI GSM standard. The England and Wales Court of Appeal held that, notwithstanding a licence between the parties, there was a real commercial issue in relation to essentiality, so the UK court had jurisdiction to grant such a declaration. Similarly, and when Nokia no longer had a licence from InterDigital, Nokia applied for declarations that 30 patents were not essential to the ETSI 3G standard ([2007] EWCA (Civ) 1618). In this case, the Court recognised that, absent a declaration on essentiality, Nokia would need to apply for a non-infringement declaration every time it launched a new 3G device. The Court therefore exercised its discretion to declare that three of the four patents that were still in issue, and the apparatus claims of the fourth patent, were inessential.

A very recent and important example of the UK court's approach relates to Unwired Planet, which owns patents acquired from Ericsson. In March 2014, Unwired Planet sued Huawei, Samsung and Google for infringement of five UK patents. Technical trials were held to consider validity, infringement and essentiality of the respective patents. A recently concluded non-technical trial ([2017] EWHC 711) was then held regarding, inter alia, FRAND issues. During the technical trials (now under appeal), two of the patents were found to have valid and essential claims, whereas the other two patents were held invalid. During the non-technical trial, the High Court indicated that it was willing to declare that a worldwide licence on terms settled by the judgment was FRAND, and similarly that each of the original offers from Unwired were not FRAND.

Notably, the Unwired Planet case is the first in the EU in which a judge has ruled on whether an offer to settle is FRAND. This is important, as neatly summarised in paragraph 806(5) of the decision (case reference [2017] EWHC 711): "an implementer who makes an unqualified commitment to take a licence on FRAND terms... cannot be the subject of a final injunction to restrain patent infringement. Whereas an implementer who refuses to take a licence on terms found by the court to be FRAND has chosen to have no licence, and so if they have been found to infringe a valid patent an injunction can be granted against them."

Declarations that a product or process is known or obvious

The UK courts are also prepared in some circumstances to issue a declaration that a product or process (as opposed to a patent) was obvious as of a certain date (so-called Arrow declarations). In the recent Fujifilm v Abbvie decision, the UK High Court issued such a declaration, notwithstanding the fact that the patentee had voluntarily revoked all UK rights and had given the court undertakings that it would not enforce any future divisional patent applications in the UK.

The matter involved a number of patent families including granted patents and pending applications patents owned by Abbvie and directed towards the highest selling prescription drug in the world, Humira. The claimant FKB intended to launch a biosimilar after expiry of the compound patent in October 2018.

Despite the way seemingly cleared for the claimant in the UK, meaning that a declaration now appeared to serve little or no purpose, the Court nevertheless issued a declaration that FKB's product was obvious. The Court made clear, however, that declarations of this nature will only be issued in limited circumstances. It cautioned against forum shopping and noted that cases brought in the UK purely to influence foreign courts would be unlikely to be accepted. The court was also at pains to confirm that it would not issue a declaration to directly or indirectly influence ongoing examination at the EPO, and that the mere fact of there being pending divisional patent applications was, in and of itself, not reason enough to issue a declaration of this sort.

It remains to be seen how frequently this form of declaration will be made, but claimants may wish to consider the possibility of such declarations in circumstances where they wish to clear the way but the presence of pending applications create legal uncertainty in the UK. Also, whilst the courts cautioned against forum shopping, this option should also be considered in the context of multi-jurisdictional litigation as it may have benefits in other jurisdictions and may promote settlement.

Speed and costs

The UK court system is fast and can issue decisions with speed. It is not uncommon to have an appeal level decision on both validity and infringement within around two years from lodging a claim. In particularly urgent cases both the first instance decision and the appeal can be expedited and heard in a matter of months. Another advantage in the UK is that infringement and validity proceedings can be held together unlike in Germany, for example, where there is bifurcation of proceedings. Through active trial management by the judges, and the requirement that all evidence in chief is in writing, the speed of both first instance decisions and any appeals is rapid compared to most other European jurisdictions. In Germany, for example, first instance decisions on validity typically take a little over a year but appeals take years, though the separate infringement proceedings are usually relatively fast. Preliminary injunctions are rare except in some pharmaceutical cases where failure to grant one would lead to irreparable damage to the patent proprietor, but in the vast majority of cases the granting of a fast trial is considered to be a preferable option.

High legal costs are often cited as one of the disadvantages of the UK jurisdiction. It is important to consider the whole picture. The UK also has a number of initiatives that can help to manage the costs of litigation. This helps potential litigants choose the right system to meet the budget and needs.

First, the UK High Court has relatively inexpensive capped court fees with the cost for initiating proceedings covering both validity and infringement capped at a maximum of £10,000 ($12,500). This is relatively inexpensive if compared to other European jurisdictions where court fees can be tens or hundreds of thousands of euros for an individual validity or infringement action. Many cases settle early on, by which time UK costs incurred will still be fairly low, especially as in the High Court it is not necessary in patent cases to prepare lengthy pleadings before initiating a claim.

Second, the UK High Court introduced the Shorter and Flexible Trial Schemes in October 2015, with the aim to offer faster and cheaper UK actions. The system is scheduled to run until September 2018 but appears likely to be adopted permanently. The Shorter Trial Scheme is aimed at relatively straightforward cases and sets various restrictions on the streamlined process, including restrictions on pre-action conduct, pleadings, discovery and the extent of expert evidence. The trial is limited to four days with judgment being handed down within six weeks of trial. The Flexible Trial Scheme does not lay down specific restrictions but instead allows the parties to agree on the streamlined approach to be followed.

Thirdly, an alternative option is to consider the Intellectual Property Enterprise Court (IPEC) which is aimed at small to medium enterprises and provides a fast and inexpensive way to enforce IP rights. The IPEC limits the hearing to one or two days and plays an active part in case management. The IPEC caps recoverable costs at £50,000 ensuring the costs exposure of the proceedings are minimised. With potential damages or an account of profit limited to £500,000, the IPEC is not suited to all litigants but it can (and does) issue injunctions and other final remedies so it can offer a cost effective and flexible way to secure an important commercial outcome.

Finally it is also possible to seek revocation of patents before the UKIPO with costs in the region of £50,000 to £100,000 being typical. The procedure is primarily written with hearings usually lasting no more than one day. Disclosure requests are possible, but they are unusual and will only be granted if very specific information is highlighted as likely to be available and required. The process is quick, with the hearing typically taking place within six to nine months after the initial claim is filed. For minor disputes, the IPO will also issue non-binding opinions on validity and infringement at very low cost, and these have been useful in promoting settlement.

Influence

Proceedings in the UK courts are before specialised patent judges and are consistently of high rigour and quality. Because of this, UK decisions are highly regarded throughout Europe and can be persuasive overseas. As such, commencing an action in the UK can lead to a decision that can be used to either support proceedings elsewhere or as a strong bargaining chip in settlement negotiations.

A very flexible system

Overall the UK court system is very flexible and offers litigants a variety of high quality forums to hear patent and other IP disputes. The standard of the decisions is highly regarded throughout Europe and they are persuasive with other courts. And, given the rapidity of the court system, a successful action in the UK can be leveraged across Europe. The UK courts have also shown themselves to be willing to provide innovative remedies, for example the recent decisions in Abbvie and Unwired Planet discussed above.

The UK remains a strong destination for parties looking to obtain from the courts strong, reliable and commercially useful decisions.

Tim Andrews
  Tim is a patent attorney and partner based in Marks & Clerk’s Cambridge (UK) office. He has extensive experience in the protection of chemical subject matter, especially pharmaceuticals, fine organic chemicals, polymers and petrochemicals. His practice involves the drafting, filing and prosecution of patent applications worldwide, the handling of opposition and appeal work at the EPO, the preparation of infringement and validity opinions, due diligence reports and IP audits.

Esther Ford
  Esther is a patent attorney based in Marks & Clerk’s Cambridge (UK) office, specialising in electronics and software, with a particular focus on internet service provision and the Internet of Things. Before joining the patent profession, she worked as a research engineer for a telecommunications multinational. In addition to drafting and prosecution, Esther provides advice on portfolio management, freedom to operate (FTO), due diligence and oppositions.

Steven Gurney
  Steven is a patent attorney based in Marks & Clerk’s Cambridge (UK) office, specialising in life sciences, and in particular pharmaceutical patents. He has experience both in-house and in private practice, in both Australia and the UK. Steven’s expertise covers drafting, prosecution, portfolio management, freedom to operate (FTO), due diligence, oppositions and litigation. His clients include multinationals, universities and start-ups in the fields of pharmaceuticals, chemistry and medical devices.


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