New Procedures for Patent Litigation

Various changes in the Civil Procedure Rules governing the procedure for claims for intellectual property rights, in particular patents, registered designs and registered trade marks are being introduced on 1 April 2003.

One change of particular note is the introduction of a new "streamlined procedure" for some patent litigation. Under the basic streamlined procedure:

• all factual and expert evidence is in writing;
• there is no requirement to give disclosure of documents;
• there are no experiments;
• cross-examination is only permitted on those topics where it is necessary (and is confined to those topics);
• the total duration of the trial is fixed - and will normally be no more than one day; and
• the trial will usually take place well within a year of the commencement of the proceedings.

Minor variations from the basic streamlined procedure will be possible - for example there could be disclosure of a limited category of documents.

The procedure will be available in both the High Court Patents Court and the Patents County Court by agreement between the parties, or when the Court otherwise orders (and when considering whether or not to order the streamlined procedure, particular emphasis will be placed on proportionality, the financial position of the parties, the degree of complexity and the importance of the case). Although it is thought likely that the most extensive use of the procedure will be in the Patents County Court, the overall likely effect will be to make the English courts a significantly more attractive place in which to conduct patent litigation than has been the case in the recent past.

Agreement has been reached on a broad outline for a Community Patent system. At a meeting of the Competitiveness Council of the European Union on 3 March 2003 the jurisdictional basis for a new Community Patents Court was agreed, thus removing what it is hoped will be the last major barrier to a Community Patent system.

A new central court will be established based in Luxembourg with appeals being heard by the European Court of First Instance. This new court will have exclusive jurisdiction in actions and claims for invalidity, infringement and declarations of non-infringement in relation to Community Patents and will be set up by 2010. In the meantime, national courts will hear these issues, although it is not clear when the Community Patent system will be up and running.

The aim of the new system is to reduce the cost of obtaining patent protection in Europe to a level comparable with the US and Japan. It is estimated that the Community Patent will reduce patenting costs in Europe from €50,000 to €25,000. This is however still twice the cost of obtaining patent protection in the US which has led some business groups to criticise the increased costs caused by delays in implementing the new court system and the decision to have three official languages (English, French and German) and not an English-only system.

For more information, see the summary of the revised proposal, dated 3/3/2003, at http://ue.eu.int/newsroom/newmain.asp?lang-1 (click on "Council" and then "Competiveness").

In our February 2003 bulletin we reported on the Smithkline Beecham v Apotex Europe case in which Smithkline and Glaxosmithkline were granted an interim injunction against Apotex Europe and others to prevent them from launching a new product pending the end of the full infringement trial. The injunction prevented the generics companies Apotex, Neolab and Waymade from selling a drug which could infringe GlaxoSmithkline’s patent on paroxetine, the active ingredient in the anti-depressant sold under the name Seroxat. Following our February 2003 bulletin, there was a hearing in the Court of Appeal at which Apotex appealed against the granting of the interim injunction.

The Court of Appeal affirmed Mr Justice Jacob’s decision and ruled that an interim injunction was necessary to protect the rights of a patent holder against violation of any right where damages would not be adequate. Jacob was right to conclude that damages would not be an adequate remedy and was entitled to take into account, when deciding to maintain the status quo, that Apotex walked into the situation in which they found themselves with their eyes open to the risk that they were taking. To avoid potential infringement, they should have cleared the way before launching into the market.

Interim injunctions are rarely granted in UK patent cases. However, this is the second decision to grant such an interim injunction in two years. Particularly since it was approved by the Court of Appeal, the present case indicates there may be a lowering of resistance to the granting of such injunctions. The full trial is due to start in June this year.

The Court of Appeal has upheld the High Court’s decision that a ferry which made regular crossings between Ireland and the UK and which would otherwise infringe a valid UK patent could take advantage of the defence in s60(5)(d) Patents Act 1977 for ships temporarily in the internal or territorial waters of the UK.

The case involved a ferry (the "Jonathan Swift") operated by Irish Ferries on its Dublin to Holyhead route. Proceedings were commenced by the patentee, Stena Rederi Aktiebolag, and its exclusive licensee, Stena Line Aktiebolag, for infringement of its patent relating to superstructures for multi-hull vessels. The relevant claims of this patent were held to be valid and infringed by the ferry but both the High Court and the Court of Appeal held that Irish Ferries had a good defence under s60(5)(d).

Stena argued that, as the ferry made routine and regular trips into UK territorial waters, its presence could not be said to be "temporary". It was also argued that the defence in s60(5)(d) only applied to a product or process in the body or operation of a ship and not to the whole ship.

Both these arguments were dismissed by the Court of Appeal. The Court ruled that the purpose of this defence was to prevent national patents impinging on the movement of foreign vessels into and out of territorial waters. The word "temporarily" should therefore be construed as meaning "transient" or "for a limited time" and consideration of how routine or regular these trips were was irrelevant.

The Court also rejected the second line of Stena’s argument saying that to exclude the whole vessel from the scope of the defence would be illogical. Such a construction would defeat the original purpose of the defence which was to protect international trade and would be contrary to the wording of the Paris Convention from which s60(5)(d) is drawn. It would also produce a completely arbitrary result depending on how the claims of the patent were drafted – the patent could for example claim just the inventive feature or equally it could include a claim to a vessel including the inventive feature. This was likely to be a matter of chance and s60(5)(d) should not provide a defence in the former but not the latter situation.

The decision should also apply equally to aircraft, hovercraft or other vehicles which have temporarily or accidentally entered into (or are crossing) the UK. The net effect of this ruling is that patents which relate to such vehicles can only be enforced in the country where the particular vehicle is registered. This may act as a disincentive to seeking patent protection and ultimately to innovation in this sector.

Two recent decisions in patent cases have provided useful guidance on the Courts’ approach in deciding (1) the costs to be awarded following judgment for a party in circumstances where that party had won on one determinative issue but had lost on other issues and (2) whether to award an interim payment on account of costs following the resolution of long and complicated

proceedings.

In the case of Stena v Irish Ferries (see above) the Defendant had succeeded on its defence under s.60(5)(d) Patents Act 1977 which provided it with a complete defence to Stena’s action for patent infringement. However it had lost on the issues of validity and infringement which were fully

argued at the trial. The Court of Appeal approved the issues based approach which the High Court had adopted in awarding costs and the Defendant, Irish Ferries, was ordered to pay 80% of Stena’s costs with Stena being ordered to pay 20% of Irish Ferries’ costs.

The second case involved an application for an interim payment on account of costs in the long running case of Dyson v Hoover. Dyson had prevailed at the liability stage and had accepted a payment into court to resolve the resulting damages enquiry. Its costs were £480,000 for the liability phase and in excess of £2.5 million on the damages enquiry. It sought a proportion of those costs as an interim payment.

In refusing the interim payment the Court accepted that, although it had a discretion to award an interim payment, there was no presumption that it should or should not do so. In this case where the judge had not heard the full trial and the subsequent damages enquiry had been resolved without a hearing, the judge did not have any detailed knowledge of the strength or nature of the arguments advanced by either side. He was therefore not in a position to make a reasonable assessment of what Dyson would inevitably recover from the costs judge. Accordingly, this was a case where the discretion to award an interim payment should be left to a costs judge (that is to say, to one of those judges who deal solely with costs issues) who would be able to exercise the discretion to award an interim payment after he had taken steps to put himself in a position where he was able to make a reasonable assessment of Dyson’s likely ultimate recovery.

In the latest of a line of cases the Patents Court has refused to stay English patent infringement proceedings where opposition proceedings in the EPO were already pending.

The Court had to weigh up the competing considerations of avoiding the expense of parallel proceedings in two jurisdictions and the risk of incompatible judgments in the EPO and the UK

Court if a stay was refused against the delay which would be incurred by staying the UK proceedings. The Court found the arguments to be finely balanced but eventually held that a stay was not appropriate in this case.

The case confirms that there is no hard and fast rule which says that English proceedings must be stayed where there are pending EPO opposition proceedings. Rather, the facts of each individual case must be carefully weighed before coming to a decision.

The Patent Office has announced that patent legislation is to be reformed by use of an order under the Regulatory Reform Act 2001. The proposed reforms are principally aimed at bringing UK legislation into line with the WIPO Patent Law Treaty, but will also streamline the way in which national security and public safety is dealt with. Any views should be sent to the Patent Office before the consultation period ends on 30 May 2003.