AIPPI UK Event Report: Roundup of 2023's Patent Cases

December, January, February  -
 wake the IPKat up in March

Back in December - when it was colder and darker - London's patent practitioners attended AIPPI UK’s annual patent round-up event hosted by Hogan Lovells. Andrew Lykiardopoulos KC and Henry Edwards of 8 New Square presented the highlights of the 2023 patent cases in the form of a Christmas menu, including culinary delicacies such as Turkey with Apixaban Sauce and Caviar by Ocado. Ada Nourell (Hogan Lovells) was on hand and delivered an excellent, prompt report on the evening's events (but you know Kats, they do things in their own time....).  

Over to Ada:

"Before the starters, the chefs served hors d'oeuvres consisting of some outcomes from 2023. In total 19 patents were litigated, with eight being held valid, and seven valid and infringed. There were three successful appeals, two on construction and one on validity. This is an increase from the single successful appeal in 2022.

The Starters

In 2023, the English Court made two FRAND rate determinations:

 
1. Apple Surprise

Optis v Apple (FRAND) [2023] EWHC 1095 concerned how much Apple was to pay for the global licence to Optis. Marcus Smith J set the terms of an annual global licence of $25.65 million plus $30 million for a 6-year past release - many orders of magnitude lower than Optis' sought.

Prior to this judgment, Apple had been ordered by Meade J to commit to licence terms ‘unseen’ if it wished to avoid an injunction in the UK. Apple had made the commitment and appealed to the Court of Appeal, who in 2022 upheld the First Instance approach. The Supreme Court was due to consider whether this is the right approach for infringers of offset patents in the UK, however Apple withdrew this appeal.

 
2. Prawns À la Lenovo

In January, the judgment in IDG v Lenovo [2023] EWHC 1583 what appeared to be a good decision for implementers. The rate of $0.175 ordered by Mellor J was close to Lenovo’s case of $0.016. Interdigital had sought $337 million, while Lenovo offered $80 million. The court ordered a lump sum of $139 million.

Mellor J ordered payment on past sales and held that limitation periods do not play a part in FRAND litigation. In doing so, the judge noted that a willing licensee in FRAND negotiations would not rely on a statute of limitation to determine the period for royalty-bearing past sales. While the industry normally applies a six or, for China, a three year limitation period based on what could be obtained in damages, Mellor J held that the court was not obliged to follow this practice when considering willing licensors or licensees.

Following the judgment, Mellor J ordered interest to run on past sales of just over $46 million.

It was interesting to note that Mellor J was critical of the ‘top-down’ analysis used by many in FRAND litigation, whereby an assessment is made of the relative amount of value that the patentee has of the relevant ‘stack’ of patents.

The Court of Appeal will be considering the issues of the past sales limitation periods and interest in 2024.

Another interesting FRAND development in 2023 arose in the Nokia v OPPO litigation:

 
3. Oppo Daily Special

In Nokia v Oppo [2023] EWHC 23, the Court considered whether implementers found to infringe a UK patent must commit to take an English Court set (as opposed to some other jurisdiction) FRAND licence. Meade J considered clause 6.1 of ETSI and the requirements that it imposes.

In this case, Oppo had committed to take a global licence settled by the Chinese court, whereas Nokia sought a global licence settled in the UK. The court considered the position where rival courts contemplated in parallel global terms for the same portfolio. Meade J held that, per Unwired Planet International Ltd & Anor v Huawei Technologies Co Ltd & Anor [2018] EWCA Civ 2344, where there may be more than one set of FRAND terms set, a SEP owner can choose which terms to offer between those determined by rival courts, provided that the terms are FRAND.

In construing clause 6.1, Meade J decided that this provision creates an obligation to make FRAND offers rather than grant FRAND licences. A SEP owner satisfies this obligation by making an offer, and in the UK this requirement is met by inviting the court to determine the licence terms and committing to abide by that determination (regardless of whether other FRAND terms are being set in parallel).
4. Reflections on FRAND

2023 marked a slight shift from the SEP-owner favourable position in the UK which followed Unwired Planet. Previously, SEP owners were keen to litigate in the UK. Now, SEP owners may be more persuaded by the attractions of other jurisdictions, such as the UPC and Germany. Meanwhile, based on recent outcomes, implementers may now be more inclined to seek a rate-determination in the UK.

 
5. PMI Sorbet

PMI v BAT [2023] EWHC 2616 related to ‘heat not burn’ tobacco devices. The patent in question was held to be invalid due to two pieces of prior art. Hacon HHJ declined to make an Arrow declaration, and in doing so provided guidance as to its function.

An Arrow declaration is a mechanism by which the Court will state whether a product or process is obvious or old as at a certain date, and thereby give implementers a degree of certainty pending grant of patents which may later be alleged to cover the product.

In declining to exercise his discretion to make an Arrow declaration, Hacon HHJ stated that the jurisdiction is broad and flexible. The declaration must provide a useful purpose rather than serving as a punishment for perceived ‘sharp practice’ by a patentee. The declaration can be sought in respect of one or a selection or features, however a declaration sought which is too general in scope may dilute its utility.

A declaration is useful to mitigate the undesirable practice of a patentee relying on its ungranted portfolio to prevent final resolution of a dispute. In such cases, where a patentee’s behaviour serves to prolong uncertainty for an implementer, the court will more readily infer a useful purpose and grant the relief.

Main Course

 
6. Turkey with Apixaban sauce

Sandoz & Teva v BMS [2023] EWCA Civ 472 concerned a patent relating to Apixaban, an anticoagulant drug used to treat thromboembolic disorders. At first instance, Meade J held that the Patent was invalid due to lack of plausibility and lack of technical contribution. Meade J held that it was not plausible from the Patent application that Apixaban would have useful factor Xa inhibitory activity.

BMS appealed on a number of grounds which essentially related to the following three questions:

a) What is the correct approach to plausibility?

b) Does the approach to a claim to a single chemical compound differ from a class?

c) Must a claim to a single chemical compound make it plausible that the compound is useful for a particular purpose?

The Court of Appeal considered the correct approach to plausibility and in doing so interpreted the Enlarged Board of Appeal’s decision in G2/21. Lord Justice Arnold found that Warner-Lambert continues to apply in the UK and applies to both second medical use and single compounds claims. The judge emphasised that there is no invention in merely identifying a new chemical compound, and that the invention must lie in identifying the utility.

Lord Justice Arnold gave observations on the EBA’s decision in G2/21. The judge suggested that the majority approach in Warner-Lambert equates to the “ab initio plausibility” test in G2/21 i.e. an effect is plausible from the application, whilst the minority approach equates to the “ab initio implausibility” test i.e. there is no reason to consider an effect to be implausible from the application. The EBA’s decision states that the two approaches give the same result and referred to various national cases. However, the judge explained that the Warner-Lambert decision is an example of how the two approaches do not always end up with the same result. Mr Lykiardopoulos drew attention to the different burden of proof for the two approaches, stating that if he were to suggest that it is not implausible that he would become a Supreme Court judge one day, someone might respond by saying that he has not yet made that suggestion plausible. The suggestion was that proving plausibility is a higher standard than proving something is not implausible.

 
7. Gilead side vegetables

In Gilead v Nucana [2023] EWHC 611 Meade J held that the primary evidence on undue burden will be from the experts. Evidence about the approaches of real workers who succeeded or failed is admissible, but may be of lower assistance and value to the Court. Its relevance depends significantly on how complete and testable it is. Meade J compared this with the way that secondary evidence is dealt with in obviousness whereby it is often discounted on grounds of being incomplete or not testable. The court found that the same applies in the exercise of assessing evidence on undue burden.

 
8. Emotional perception Goose

In Emotional Perception v Comptroller [2023] EWHC 2948 the court considered whether an AI invention fell under the computer program excluded subject matter for patentability (and whether the claim had a technical contribution outside of a computer program). Sir Anthony Mann heard this case on appeal from the patent office, who originally refused to grant the patent. The invention included a music recommendation system, based on an artificial neural network (“ANN”).

The law on the computer program exclusion is a difficult one to apply. While the case law is clear that technical contributions can relate to improving a system, there is less clarity about how to apply the law where there is a qualifying technical effect outside a computer.

Sir Anthony Mann disagreed with the UKIPO’s original decision not to grant the patent. He held that an ANN is not a computer program. Firstly, he noted that an AI model like a trained artificial neural network is agnostic as to whether it is produced by hardware or software. The AI model itself was found to not be a computer program, although it may subsequently be implemented in one. Additionally, the Judge found that the patent has a technical effect, in that it produces a file upon application of technical criteria which the system has worked out for itself, which goes on to have an effect on the user.

The effect of this decision appears to widen the scope of patentable inventions in the AI space.

 
9. Caviar by Ocado

Autostore v Ocado [2023] EWHC 716 was a prior user case about warehouse robots. Ocado discovered that Autostore, the patentee, had disclosed designs for patented products to a potential customer before the priority date. As the potential customer was a Russian entity, the question of whether this was an anticipatory disclosure, or whether the disclosure was made in confidence, had to be resolved under Russian law.

Under English law, the commercially sensitive disclosure to the Russian entity would be subject to an equitable duty of confidence. In contrast, Russian law stipulates that an obligation of confidence arises only if there is an express contract. Hacon HHJ held that, on applying Russian law, Autostore’s disclosure had put the designs into the public domain.

Desserts

 
10. A mess of Experts and some case management mints

In 2023, the courts made several comments on the instructions of experts:

· Nokia v Oppo [2023] EWHC 23 – Meade J commented that there needs to be a transparency in instructions where an expert has been involved in multiple jurisdictions for the same matter. In this case, the expert had been a part of English and Dutch proceedings and the court was unclear how the expert’s views had been formed in the multiple proceedings.

· Nokia v Oppo [2023] EWHC 23 (Pat) – Meade J also noted that while important matters should be challenged, litigators should refrain from challenging an expert’s every word on cross-examination.

· Gilead v Nucana [2023] EWHC 611 – An expert had given evidence in respect of undue burden in EPO and English proceedings. The ‘nudging’ instructions of the EPO advisers had reduced the extent to which the judge could rely on the expert’s evidence. While this did not disqualify the evidence, it was a factor to be taken into account.

· Teva v Grünenthal [2023] EWHC 1836 – Meade J agreed with Mellor J’s position in Alcom v AMO that parties should seek to reflect real world discussions between experts on the same side. One way to do this would be for experts, or teams of experts (on the same side), to hold in-person meetings. An expert should be able to consider their colleague’s draft reports, raise comments and modify their own report if required.

· Sycurio v PCI-PAL [2023] EWHC 2361 – Bacon J re-emphasised that an expert must have relevant expertise, which does not arise by virtue of having acquired the knowledge in the course of the case itself.

The courts also offered case management mints:

· AIM Sport Vision v Supponor [2023] EWHC 164 – Meade J flagged the utility of parties preparing an agreed list of issues ahead of the PTR.

· Nokia v Oppo [2023] EWHC 23 – Meade J commented that foreign judgments by the EPC and EPO may be of limited value for an English judge due to different evidence being offered in different jurisdictions. The court would be more open to consider foreign judgments on anticipation or matters of law, however.

· Gilead v Nucana [2023] EWHC 611 and PMI v Nicoventures [2023] EWHC 2616 – An issue arose of how much the judge should take into account a judgment in another case. Meade J decided that although he knew of the other judgment and could not avoid it entirely, he would need to base his decision on the material before him. Likewise, in PMI, Michael Tappin JC sitting as judge emphasised that having regard to earlier findings would be undesirable."