Coloplast v Salts: Should UK infringement proceedings be stayed if the patent has been opposed?

IPKat has followed for many years the case law on stays of infringement proceedings in the UK. Guidance on when a stay may be granted was provided in Glaxo v Genentech [2008] EWCA Civ 23 (IPKat post here). The Glaxo guidance was subsequently reformulated by the Court of Appeal in IPCom v HTC [2013] EWCA Civ 1496 (IPKat post here). A UK High Court decision has recently applied the IPCom guidance in a case where stay of proceedings was requested in view of a pending EPO opposition: Coloplast v Salts [2019] EWHC 1979 (Pat).

Coloplast is a Peterborough (UK) based manufacturer and the current market leader in ostomy products. An ostomy or stoma is a surgically made hole in the intestinal wall. An ostomy may be required in patients with severe disorders of the gut (e.g. Crohn's disease, ulcerative colitis or bladder cancer) or following injury to the bowel. There are many specialist products associated with ostomies, designed to make patients' lives more comfortable. The ostomy product market is currently worth approximately £120 million per annum.

To stay...

Coloplast is facing increasing competition in the ostomy product market. The dispute in Coloplast v Salts related to Coloplast's patent EP(UK) 2854723, and the alleged infringement of the patent by Salts, another ostomy product company. The patent claims an ostomy collecting bag. The patent has been opposed by Hollistor. After expiry of the opposition period, Coloplast brought UK infringement proceedings against Salts. Salts subsequently intervened in the Hollistor opposition as an alleged infringer (Article 105 EPC) (for a recent Board of Appeal decision on circumstances under which a third party may intervene in an opposition, see IPKat post here). Oral proceedings for the opposition are scheduled for September 2019.

Salts requested a stay of the UK proceedings in view of the pending European opposition. Coloplast offered an undertaking that if the UK proceedings were not stayed, it would repay any damages awarded by the court if the EPO were to later revoke the patent.

Legal background on stays

Guidance on whether or not a stay should be granted was provided in Glaxo v Genentech [2008] EWCA Civ 23 (IPKat post here). This guidance was regarded as generally discouraging stays. The Glaxo guidance was subsequently questioned by the Supreme Court in Virgin v Zodiac [2013] UKSC 46 (IPKat posts here and here). Following Virgin, the Court of Appeal refreshed the Glaxo guidance in IPCom v HTC [2013] EWCA Civ 1496 (IPKat post here). IPCom set out 13 factors to consider when deciding whether to grant or refuse a stay. The IPCom guidance are provided for readers' convenience at the end of this post.

The IPCom factors have since been applied in Actavis v Pharmacia [2014] EWHC 2265 (stay was ordered), and Eli Lilly v Janssen Sciences [2016] EWHC 313 (stay was not ordered) (IPKat post here).

David Stone (sitting as a Deputy High Court Judge), applied the IPCom guidance to the fact of the case in Coloplast v Salts. The Judge bore in mind that a stay is the default position, should Coloplast fail to show why the stay should not be granted (para. 18).

...or to go?

Guideline 10: If a stay is ordered, how long will be the delay?

According to Guideline 10 of IPCom, it is important to consider the length of time it will take the EPO to reach a decision in an pending opposition proceedings. Both parties agreed that after the opposition division had given its decision, this would be appealed to the EPO Boards of Appeal. A European patent attorney for Salts estimated that the Boards of Appeal would reach a decision "in late 2021, but 'perhaps' earlier if accelerated proceedings are granted" (para. 21.). A solicitor for Coloplast provided a different estimate of between January 2022 and January 2024. The likelihood of a "ping-pong" effect between the Boards of Appeal and the opposition division was also considered. If this happened, Coloplast estimated that a final decision may take until 2028.

The Deputy Judge commented that there appeared "to be a tendency to stretch the estimates a little". The estimations were also likely to have been made difficult in view of the imminent introduction of the revised Rules of Procedure of the Boards of Appeal (RPBA) (IPKat post here). The revised rules aim to increase efficiency and reduce the likelihood of "ping-pong".

The witnesses both estimated that the UK trial would occur in 2020 (with an appeal in 2021 or 2022).

The Deputy Judge concluded that a final Board of Appeal decision could be expected around January 2022. "Ping-pong" was possible but unlikely. The UK Court of Appeal could be expected to rule on any appeal of the UK case in late 2021 (para. 29).

Guideline 11: Lack of Certainty

Following his decisions on timings, the Deputy Judge went on to consider Guidance 11, namely the public interest in dispelling the uncertainty surrounding the validity of the patent. Coloplast argued that the loyalty of patients to their ostomy product was a reason not to grant the stay. If an injunction was granted in infringement proceedings, it was argued, there would be fewer patients impacted than if the decision was delayed by several years. If the decision was delayed, more patients may be expected to be using the Salt product, and so more patients would be affected by an injunction. The Deputy Judge agreed with Coloplast that there was public interest in early certainty on infringement: "every month of delay potentially affects an additional 400 patient" (para. 37).

Will a refusal to order the stay cause irreparable harm?

Salts argued that if a stay was not granted, it would suffer irreparable harm. In particular, patients loyal to the Salts product may move to another product if an injunction was granted. If the injunction was subsequently lifted following revocation of the patent by the EPO, Salts argued that these patients would be unlikely to return. However, the Deputy Judge agreed with Coloplast that Salts was confusing a refusal to order the stay of proceedings with a subsequent granting of an injunction during infringement proceedings. An injunction is not an automatic remedy in infringement proceedings. The issue of irreparable harm with respect to an injunction, the Deputy Judge reasoned, could be considered by the trial Judge when the grant of the injunction was considered (para. 42.).

The Deputy Judge also rejected Salts' arguments that Salts would be likely to suffer harm from any adverse court action even if an injunction was not granted. Salts had argued that even in the absence of an injunction, patients would "lose confidence" in the Salts product. However, the Deputy Judge found that it was unlikely that patients would be aware of any adverse court decision, given that the ostomy products are provided to patient's by medical professionals (para. 46). The Deputy Judge thus did not find that Salts would suffer any form of irreparable harm, should the refuse to grant the stay.

Amendments

The Deputy Judge accepted Salts' argument that amendments during the EPO proceedings were likely. However, the Deputy Judge also found that, given the expected timing of proceedings, the UK court would have knowledge of any amendments filed at the EPO by Coloplast. The UK Court would also have the written decision of the Opposition Division of the EPO (para. 52). Although not mentioned by the Deputy Judge, the opportunity for Coloplast to file further amendments during appeal at the EPO will also be significantly restricted in view of the revised Rules of Procedure of the Boards of Appeal that come into force on 1 January 2020 (IPKat post here).

The Balance of Justice

The Deputy Judge then took a step back and reminded himself of Guideline 1: "The discretion to order a stay, should be exercised to achieve the balance of justice between the parties having regard to all the relevant circumstances of the particular case". For good measure, he also reminded himself of all the other guidelines (para. 55).

The Deputy Judge concluded that the stay should not be ordered, because:

1. Refusal of the stay would not cause Salts irrevocable harm. 
2. Allowing infringement proceedings to proceed would be in the interests of early commercial certainty in the UK (Coloplast's and Salts' largest market)
3. Resolution of proceedings might promote settlement.
4. If the EPO does not revoke the patent, and a stay had been ordered, there would be a considerable delay to infringement proceedings, and prolong uncertainty.
5. There was some public interest in dispelling uncertainty. 
6. Any wasted costs resulting from infringement proceedings for a patent that is later revoked by the EPO, was outweighed by the commercial factors associated with early resolution of the UK proceedings. 

Taking a further step back, the Deputy Judge found that the balance of justice would be best achieved by refusing a stay (para. 57). We can thus expect infringement proceedings forthwith. 

As ever in decisions on stays in the UK Courts, this case very much turned on the facts. Particularly influential in Coloplasts v Salts was the estimated timings of EPO proceedings and UK trial. It is clear that when a Judge finds earlier certainty on an infringement action to be in the public interest, the backlog of cases at the EPO Boards of Appeal puts parties seeking a stay at a significant disadvantage. 

***********************************************************

The IPCom Guidance

1. The discretion, which is very wide indeed, should be exercised to achieve the balance of justice between the parties having regard to all the relevant circumstances of the particular case.

2. The discretion is of the Patents Court, not of the Court of Appeal. The Court of Appeal would not be justified in interfering with a first instance decision that accords with legal principle and has been reached by taking into account all the relevant, and only the relevant, circumstances.

3. Although neither the EPC nor the 1977 Act contains express provisions relating to automatic or discretionary stay of proceedings in national courts, they provide the context and condition the exercise of the discretion.

4. It should thus be remembered that the possibility of concurrent proceedings contesting the validity of a patent granted by the EPO is inherent in the system established by the EPC. It should also be remembered that national courts exercise exclusive jurisdiction on infringement issues.

5. If there are no other factors, a stay of the national proceedings is the default option. There is no purpose in pursuing two sets of proceedings simply because the Convention allows for it.

6. It is for the party resisting the grant of the stay to show why it should not be granted. Ultimately it is a question of where the balance of justice lies.

7. One important factor affecting the exercise of the discretion is the extent to which refusal of a stay will irrevocably deprive a party of any part of the benefit which the concurrent jurisdiction of the EPO and the national court is intended to confer. Thus, if allowing the national court to proceed might allow the patentee to obtain monetary compensation which is not repayable if the patent is subsequently revoked, this would be a weighty factor in favour of the grant of a stay. It may, however, be possible to mitigate the effect of this factor by the offer of suitable undertakings to repay.

8. The Patents Court judge is entitled to refuse a stay of the national proceedings where 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. It is true that it will not be possible to attain certainty everywhere until the EPO proceedings are finally resolved, but some certainty, sooner rather than later, and somewhere, such as in the UK, rather than nowhere, is, in general, preferable to continuing uncertainty everywhere.

9. It is permissible to take account of the fact that resolution of the national proceedings, whilst not finally resolving everything, may, by deciding some important issues, promote settlement.

10. An important factor affecting the discretion will be the length of time that it will take for the respective proceedings in the national court and in the EPO to reach a conclusion. This is not an independent factor, but needs to be considered in conjunction with the prejudice which any party will suffer from the delay, and lack of certainty, and what the national proceedings can achieve in terms of certainty.

11. The public interest in dispelling the uncertainty surrounding the validity of monopoly rights conferred by the grant of a patent is also a factor to be considered.

12. In weighing the balance it is material to take into account the risk of wasted costs, but this factor will normally be outweighed by commercial factors concerned with early resolution.

13. The hearing of an application for a stay is not to become a mini-trial of the various factors affecting its grant or refusal. The parties' assertions need to be examined critically, but at a relatively high level of generality.