"Put up in time, or shut up": Court of Appeal rejects IPCom's arguments in UK leg of international patent battle with Nokia

This morning the Court of Appeal (Jacob and Sedley LJJ and Norris J) handed down its judgment in Nokia v IPCom [2011] EWCA Civ 6.

By way of back story: IPCom (described in the judgment as a “non practising entity”, i.e. a patentee with no business of its own in products covered by the patents), owned a number of patents (which it had bought from Bosch) in the field of mobile communications technology. It approached Nokia offering to licence the patents, but Nokia refused to pay what IPCom asked. IPCom therefore commenced infringement proceedings in Germany. Nokia retaliated, seeking revocation of a number of the patents in Germany and the UK, and the dispute escalated into what the Court of Appeal describes as "an international patent battle".

Floyd J dealt with the matters in three judgments (of the 20th November 2009, [2009] EWHC 3034 (Pat) (“the first amendment judgment”); 18th January 2010, [2009] EWHC 3482 (Pat) (“the main judgment”); and 31st March 2010, [2010] EWHC 789 (Pat) (“the second amendment judgment”)). The "main judgment is noted by the IPKat here.

By the time the matter reached the Court of Appeal, the patents under scrutiny had been reduced to two in number: the “Synch Patent”, and the “Access Rights Patent”. The former had been held to lack inventive step by the judge in the main judgment at first instance and, to cut a long story short, the Court of Appeal agreed. On the judge’s construction of the claims in issue (with which the Court agreed), and given the evidence, “[t]he claimed feature amounts to no more than the Boy Scout’s motto ‘Be Prepared’.”

The second patent under scrutiny was stated to be “[p]otentially … very important”, as it had been found to be essential for compliance with the 3G standard. Floyd J had found that the patent as it stood was invalid. IPCom did not seek to challenge this before the Court of Appeal, but rather sought to amend it proposing two variants – one having been proposed just before the trial with Floyd J and the other after he found it invalid as it stood. The Court noted that it was “not necessary … to distinguish between the variants”, noting that each involved “extensive additions to what was formerly claimed.” Nokia argued that the amendments were not allowable as they added matter and were unclear and, even if allowable in principle, the claims were nevertheless still invalid. However, the substance of IPCom’s arguments to amend was not the focus of the judgment by the Court – indeed it was not asked to rule on the rival contentions at all. The point under consideration was rather how the Court of Appeal’s judgment in Nikken v Pioneer Trading [2005] EWCA Civ 906, summarised at [91] of the judgment in hand as holding that “that a post-trial application to amend a patent should ordinarily be refused if it would involve a second trial on validity”, should be read.

IPCom argued for a less strict reading, insisting that it should have been allowed to amend the patent. The Court considered that:

[108] “the true test is one of abuse of process – procedural fairness - and that the burden lies on the party objecting to the second action to show this. However where a party fails to advance a case he could have advanced much earlier and does so without any real justification, he is abusing the process and the other party is therefore entitled to object. It is not normally procedurally fair to subject the other side to successive cases when you could readily have put them all in one go.

[109] … IPCom had every opportunity of proposing the amendments in time so that there could be a trial about them, it did not do so (whether deliberately or not we do not know), it only proposed amendments too late for them to be dealt with fairly at the trial, it elected to go to trial on the patent as it stood, and only when it lost did it seek to prolong matters thereby to vex Nokia again with the same patent. The Judge was fully entitled to regard that as procedurally unfair and to refuse to allow that to happen.”

Moreover:

[111] “The fact that there is a wider context (involving other patents here and parallel Access Rights and other patents in other countries) over which the parties are in dispute provides no basis for saying that what is an abuse of process concerning the proceedings about this patent in this country is somehow no longer so to be regarded. The question is whether there is an abuse of process in the litigation about this patent, not some wider woollier question.”

IPCom had also argued that Art 138 EPC 2000 drew “no distinction between amendments which were of the claim re-writing type … or new wording type”. Arguing that the Article was liberalising: “In effect it created a right to amend of any type, subject to cases where the patentee’s conduct was really culpable or amendment would cause unjust oppression.”

The Court of Appeal did not agree, explaining that:

[127] “…The main purpose of Art. 138 as compared with the unamended Art. 138 was to provide that national authorities should have an amendment procedure at all. For prior to the amendment of the Treaty the laws of some countries did not allow patent amendment post-grant at all. Now they must. Art. 138 was not intended to govern national rules of procedure concerning patent amendment, still less to require national courts to conduct them in a manner which national law regarded as an abuse of process.

[128] On its face, moreover, the Article does not apply to a case where the grounds of revocation affect the European patent as a whole, as the Judge held here. The provision is only about a case where the grounds of revocation affect the patent in part.”

As a final line of argument, IPCom submitted that Article 3 of the Enforcement Directive (Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights) covered the proposed amendment and the procedure concerning it. Their argument being: “I am seeking to enforce the relevant patent and amendment is part of and parcel of enforcement of that patent”.

The Court’s reply was sharp:

[133] “I do not accept that. Amendment of a patent is quite distinct from its enforcement: amendment is a procedure concerned with narrowing the scope of protection, not a procedure concerned with enforcement of what is protected. If allowed it applies in rem or as it is sometimes put in an alternative Latin tag, erga omnes. There is simply nothing in the Directive suggesting it applies to amendment of a patent.”

Concluding:

[139] “In short procedural tightening by way of making parties put up their cases in time for them to be dealt with fairly with at a pre-arranged hearing without adjournment is the trend in Europe. The message is: “put up in time, or shut up”. That can only be good for European industry.

[140] What IPCom seeks to do here is quite contrary to that trend as well as being an abuse of process. I would dismiss its appeal concerning the Access Rights Patent.”

Given the alleged €12b at stake for Nokia, which the Court of Appeal indicated it had been told IPCom was asking for in the German proceedings, it must be sighing in relief...

Things to do with €12b here, here, and here