For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

Two of our regular Kats are currently on blogging sabbaticals. They are David Brophy and Catherine Lee.

Tuesday, 20 August 2013

To stay or not to stay, that is the question

Our blogmeister Jeremy has been reminding us how difficult it is to find news stories during the long summer month of August. This particular moggy has also not been blogging on IP matters for a little while, because he has been sunning himself appropriately in the Land of the Rising Sun. (If you are interested in his travels, then please see his personal blog The IPAlchemist, which is reserved for matters insufficiently important, or insufficiently IP-related, to trouble the IPKat readership with ).

It seems to this Kat that the solution to there being little new news is to write about old news. He has so far yet to put metaphorical pen to electronic paper to record any thoughts in response to the recent UK Supreme Court decision Virgin Atlantic Airway Ltd v Zodiac Seats UK Ltd [2013] UKSC 46 concerning res judicata (blogged by the IPKat here).

The main part of the decision is whether a final decision by a UK court that a patent is valid and infringed remains binding as between the parties even if the patent is subsequently revoked or amended so that the finding of infringement would no longer apply (the law used to be that the earlier decision was binding, but that has now been overruled by the Supreme Court).

However, this Kat has been pondering Lord Sumption's admonition to the Patents Court and the Court of Appeal to revise their policy concerning granting stays in the situation that a UK patent infringement action is brought whilst there is a pending opposition at the EPO. Currently, the guidance (given in Glaxo Group Ltd v Genentech Inc [2008] Bus LR 888) is that a stay should be granted, unless it appears that "the evidence is that some commercial certainty would be achieved at a considerably earlier date in the case of the UK proceedings than in the EPO". Since however it is very often the case that EPO proceedings will be expected to conclude much later than the UK proceedings, in practice stays are relatively rare. Lord Sumption has stated "I think that [the guidance] should be re-examined by the Patents Court and the Court of Appeal", so how might this practice vary if Lord Sumption's comments are acted upon, and how might a different policy on stays affect litigation in practice?

The IPKat can see four possible outcomes: a) no change to current practice; b) keeping a discretionary stay but with a heavier presumption than currently in favour of a stay; c) mandatory stay; or d) staying only the damages enquiry.

The first may be improbable, as Lord Sumption's comments, although obiter, seem likely to be given serious consideration by the junior courts.  So some change to the current policy seems probable.

The last option was heard by the IPKat and seems an interesting idea - that the trial could go ahead as often occurs now, but that then the damages enquiry could be stayed if there is an EPO opposition pending.  This is an imaginative solution and seems to given effect to the Supreme Court's decision without delaying justice more than is absolutely necessary (and the IPKat has heard that "Justice delayed is justice denied").  There is an issue however - is a final injunction to be in effect in the meantime?  If so, would the winning patentee be liable for damages for enforcement of a final injunction in the event that the patent was later held invalid?  The IPKat has heard that in Germany the enforcement of a final injunction involves a cross-undertaking in damages if validity is still in issue.  Might that have to be the system? If so, would a patentee risk it?  Also, would UK courts countenance conducting a full trial if the outcome could become completely nugatory (under the new law of the Supreme Court) if the patent were later revoked?

Lord Sumption seems to be suggesting something close to c) - that a stay be mandatory if an EPO opposition is in progress.  A policy as inflexible as this seems an unlikely outcome in a common law jurisdiction that generally likes to weigh differing considerations.  But close to mandatory, ie that the reasons for not staying the UK proceedings need to be highly compelling, seems a possible outcome.  So if the general practice were to be a stay of the UK proceedings, how would this work in reality?  The UK court could write to the EPO to request expedition of the opposition.  The total number of such requests would probably not be excessive and it is likely that the EPO could accommodate them.  However, even expedited, it is likely that the proceedings would be up to 18 months per instance, so around 3 years in total.  If each UK patent trial with concurrent EPO opposition could in principle be delayed by that long, the shape of patent litigation would be completely altered.  This fact could make the filing of defensive oppositions much more prevalent, as it already is, apparently for analogous reasons (perhaps amongst other reasons), in Germany.  (One may here wish to pause and consider whether the UPC may in any case cause an increase in defensive oppositions, either because of a perceived increase in likelihood of bifurcation, or perceived increase in the stakes at issue in any single litigation.)

In reality b) seems to be the most likely outcome - that a stay would in principle be discretionary, but that the criteria would be more heavily weighted towards a stay, even if the EPO proceedings were expected to last a great deal longer than the UK ones.  Now that the law has changed, the Genentech desideratum of "commercial certainty" is in any case not afforded by a UK final decision, which is now always contingent upon the EPO outcome, even if later.  Maybe this makes continuing the UK proceedings without a stay less attractive in any event, even for a confident patentee.  So perhaps we will see more commonly the situation where both parties agree on seeking a stay, rather than one desirous of a stay and one resisting it.

These are the IPKat's current mew-sings on the matter.  As always, what he really wants is the reaction of his dear readers, and so therefore, over to you.

4 comments:

Anonymous said...

Darren, you have omitted the most obvious solution: stay the subject matter over which there is shared jurisdiction, and do not abdicate responsibility for the subject matter over which the EPO has no jurisdiction. In other words - bifurcate. Germany does it and still seems to be in business. We could too. So if there is an opposition: (a) stay the invalidity action pending its resolution (with a direction that there will be an expedited trial on validity should the EPO uphold the patent and the challenge be maintained); and (b) proceed with infringement on the usual timetable. If the challenger and opponent are the same people (as is often the case), it lies in the challenger's hands to drop the opposition. As for the final injunction: this solution allows the judge to impose an interim injunction and that does seem to be an appropriate discretion to allow the court.

Darren Smyth said...

I think it vanishingly improbable that the courts of England and Wales will introduce bifurcation as a result of this judgment of the UK Supreme Court. Your solution is obvious only if it is not unthinkable and I rather think it precisely that.

Anonymous said...

As a non-UK lawyer, I am curious about the effect on interim injunctions. My impression is that UK courts seem to grant interim injunctions easily (at least in respect of generic pharmaceutical cases, based on the "clearing the way" decisions), but that the hardship caused is somewhat ameliorated by the relatively quick trial procedures. However, if all trials are stayed pending the outcome of European proceedings, interim injunctions become a far larger barrier to market entry.

Anonymous said...

A couple of humble thoughts:

- As to the options posited, is there a more subtle alternative, namely putting the respective party at risk as to costs if it proceeds while an opposition is pending? There is precedent for this: in certain circumstances a party may elect to proceed with a damages inquiry following a first instance decision which is subject to appeal on the basis that it is at risk as to costs if the decision is overturned on appeal.

- As to bifurcation of infringement and validity (per the post 20.08.13 at 17:42), this would seem undesirable. Neither the UK court or EPO considers itself bound by the construction adopted by the other. This means that there would be a chance of inconsistent decisions on infringement and validity, an unsatisfactory state of affairs.

- As to interim injunctions (per the post 21.08.13 at 08:36) pharmaceutical cases represent the exception rather than the rule. Although the point raised as it applies to them is a valid one. It would seem that this is all up for debate before the courts.

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