English Court of Appeal tightened requirement for Crown use defence to apply, so when will it?

The Crown Use defence - less of
a crown, and more of a collar?

Back in February, the Court of Appeal in IPCom v Vodafone [2021] EWCA Civ 205 overturned the first instance decision of Mr Recorder Douglas Campbell QC who held that Vodafone could benefit from what seems to be the somewhat mythical defence of Crown use.  Although the decision is relatively dusty in the fast-paced age, the decision warrants further review.  Brussels-based trainee patent attorney, Henry Yang, provides a summary for readers below.  

Over to Henry:  

"This Court of Appeal decision was an appeal from the first instance judgment IPCom v Vodafone [2020] EWHC 132 (Pat) (reported by IPKat here). There were several issues under appeal; this note focuses on the Crown use defence, since this is the only issue where the English Court of Appeal differed from the conclusion of the lower court.

Issue

Section 55(1) of the UK’s Patents Act 1977 provides that:

"Notwithstanding anything in this Act, any government department and any person authorised in writing by a government department may, for the services of the Crown and in accordance with this section, do any of the following acts in the United Kingdom in relation to a patented invention without the consent of the proprietor of the patent […] and anything done by virtue of this subsection shall not amount to an infringement of the patent concerned."

The issue under appeal is the meaning of "authorised in writing by a government department" or more specifically what form of authorisation is required ([120]). Three possible interpretations were argued before the lower court ([147]):

1. this requires an express authorisation to work the patent in question;
2. it requires either an express authorisation to work the patent or an authorisation to do a particular act in circumstances where that act necessarily infringes the patent; and
3. it extends to an authorisation to do a particular act even if that does not necessarily involve infringing the patent.

The Judge held that the third interpretation was correct. On appeal, IPCom the patentee supported the second interpretation, while Vodafone the alleged infringer supported the third, wider interpretation. The Defence Secretary intervened in the proceeding, since the government instead of the infringer needs actually to compensate the patentee if the Crown use defence succeeds, and supported the first interpretation which is the narrowest, although he accepts that an express authorisation to work any patent is enough ([148]).

Decision of the English Court of Appeal

Arnold LJ preferred the second interpretation, and listed thirteen reasons to support his judgment ([149] – [172]). These reasons may be grouped into seven categories:

I. Statutory interpretation

- s.55(1) requires an authorisation to do acts related to a patented invention, which is more than an authorisation to do acts ([149]).

- s.55(6) provides the possibility of retrospective authorisation. This would be unnecessary if an authorisation to do any act (the third interpretation) suffices ([153]).

- s.55(7) requires the government to notify the patentee of the Crown use. The third interpretation would make it very hard to comply with this obligation ([155]).


II. Principle of the law of agency

The law of agency requires the authorisation to be either express or implied, whose basis is necessity. The third interpretation, extending the authorisation to an act which does not need to infringe a patent, goes against this principle ([151]).

III. Burden on the Crown

The correct interpretation of s.55(1) should not subject the Crown to a heavier burden than it would be under other interpretations. Two hypothetical examples in [158] and [160] showed that the third interpretation would impose a greater burden on the Crown than the first and the second interpretations.

In addition, the principle that in normal commercial transactions, the burden is on the supplier rather than the purchaser to ensure that the goods are non-infringing or licensed should apply here as well ([161]).

IV. Support from previous case law and Terrell

The reasoning of three cases Dixon, Pyrene, and Autogene, as well as Terrell on the Law of Patents support the second interpretation ([152], [153]).

V. Current Crown practice of contractual terms on the Crown use does not support either side

Although the Crown often contracts on terms either expressly excluding the grant of s.55 authorisation or asking the supplier for indemnity against s.55 liability, Arnold LJ did not consider this current practice to support the arguments of either side ([163]).

VI. Policy consideration

The policy underpinning s.55(1) is to respect private intellectual property rights, and a narrow interpretation of s.55(1) supports this ([164]).

VII. Consistency of the interpretation between the UK’s Patents Act and TRIPs

The UK’s Patents Act should be interpretated consistently with TRIPs. Arnold LJ considered that the broader the interpretation of s.55, the more inconsistent it is with Article 31 of TRIPs ([166] – [171]). Moreover, the second interpretation is at least as consistent with TRIPs as the first interpretation given the Defence Secretary’s ground that an express authorisation may be in respect of any patent ([172]).

For the reasons above, the Court held that Vodafone does not have a Crown use defence when Vodafone uses the patent EP 2 579 666 according to the Annex C mode of operation (in response to emergency requests in accordance with the Mobile Telecommunications Privileged Access Scheme).

Discussion

By preferring the second interpretation over the third, the Court of Appeal has given stronger protection of a patentee’s right compared with the first instance court. This is certainly a further improvement from the situation before 1883 where the British Crown can use a patent without the patentee’s consent and free of compensation (see [123] of the appellant judgment within the comprehensive overview of the historical evolution of Crown use in [123] – [141]).

The practical implication of this appellant judgment, however, may be limited. As explained in the point V. above, when contracting for services the practice of the Crown is to leave the burden of compensating the patentee to its agents. Nevertheless, this judgment clarified the exact form of authorisation required for the Crown use defence to apply and is a stimulating intellectual exercise."