UK: 2004/2005: A Period of Significant Developments in UK Patent Litigation

Last Updated: 23 March 2005
Article by Zoe Butler and Liam Curren

With recent decisions from the UK’s highest court and both recent and pending legislative changes, the next year will be an interesting one for patent litigation in the UK. Zoë Butler and Liam Curren of Bristows explain some of the main developments, and also highlight why the UK is a fast and cost-effective forum for patent litigation.

2004 was a year heralding significant developments for UK patent law practitioners and their clients. It is extremely rare for any patent case to make it to England’s highest court, but 2004 saw two decisions from the House of Lords covering three of the main aspects of patent law – infringement, obviousness and sufficiency – as well as redefining one important aspect of the law of novelty. 2004 also saw the approval of the Patents Act 2004 bringing important changes to UK patent law, many of which come into force over the next year. In addition, there have been interesting and telling developments in patent litigation practice, making the UK a fast and cost-effective forum for patent litigation. In this article, we touch on each of these areas, highlighting what we believe to be some of the most interesting IP issues in the UK at the moment.

Current trends in patent litigation

The Streamlined Procedure: the fastest patent litigation in Europe?

At a time when the development of a unitary means of litigating patents across Europe has somewhat stalled, the need for a fast and efficient means of litigating patents has been recognised by the English Patents Courts with the introduction of a ‘streamlined procedure’. The reputation for thoroughness which the specialist UK Patents Courts have developed has been seen by some to be unduly thorough for certain types of cases. While it is often welcomed for dealing with complex disputes, particularly where technical evidence is critical, the plethora of procedural tools (disclosure, cross examination, witnessed experiments etc.) are not always appropriate, especially for lower value or simpler cases. In recognition of these needs the ‘streamlined procedure’ for patent actions has been available in the UK Patents Courts since 1 April 2003.

The streamlined procedure is designed to reduce the costs of less complex patent disputes by limiting the scope of some of the most expensive procedural stages such as disclosure, experiments and cross-examination of factual and expert witnesses, and accelerating the time to trial to within 6 to 8 months of commencing proceedings. The first streamlined procedure cases suggest these time limits have been achieved. For example, in Sandoz v Roche, English, Dutch and German proceedings were served on the defendants simultaneously on 17 October 2003. The streamlined procedure adopted in the UK Patents Court meant that the UK judgment was obtained in mid-2004 many months before the trials in the Dutch and German proceedings took place. In Mayne Pharma Pty Ltd v. Pharmacia Italia S.P.A., a streamlined procedure case in which there was essentially only one issue being the construction of a particular phrase in claim 1 of the patent, proceedings were issued on 17 May 2004 with the hearing taking place over 2 days in October 2004. The first instance decision was given on 1 November 2004 and the appeal decision on 17 February 2005, just 9 months after proceedings were commenced.

The court will order a streamlined procedure if both parties agree even where cases are complex. In the absence of agreement, a party can apply to the court for such an order. In making its decision whether or not to order this procedure, the court will consider in particular the financial position of the parties, the degree of complexity and the importance of the case. Importantly, the streamlined procedure is designed to be flexible so that the court can vary the procedural steps to fit the requirements of each particular case, either on its own initiative or following an application from one or both parties. For example, the question of whether or not to allow disclosure of documents will be influenced by cost, confidentiality issues, and the likelihood of documents existing that will significantly prejudice the other side’s case. In practice, the streamlined procedure seems to operate in a manner by which directions are largely agreed between the parties and the courts have demonstrated a willingness to be flexible thus far.

The streamlined procedure promises to bring the UK Patents Courts to a more paper based system more akin to those found in many continental European countries, at least for smaller value cases. However the possibility of the powerful common law procedural tools such as disclosure remain. The streamlined procedure will not always be appropriate for patent actions, for example those involving complex legal issues and/or complex technology, as by its very nature, it is not as thorough as the traditional approach of the UK Patents Courts. However, in more straightforward cases, it offers a quick and cost effective alternative for litigants.

The House of Lords considers key patent issues

Within a week in 2004, England’s highest court issued two decisions on patent issues, in both cases the leading judgments being given by Lord Hoffmann.

SABAF v. Meneghetti

The first case, SABAF v. Meneghetti, concerned the test for obviousness, and, in particular, whether the first instance judge, Laddie J, can been correct in applying the old "law of collocation". In essence, the law of collocation, as formulated by Lord Tomlin in a case reported in 1935, provides that "a mere placing side by side of old integers so that each performs its own proper function independently of any of the others is not a patentable combination, but that where the old integers when placed together have some working inter-relation producing a new or improved result then there is patentable subject-matter in the idea of a working interrelation brought about by the collocation of the integers." The Court of Appeal had criticized this approach, viewing it as a dangerous shortcut, and overturned the judge’s finding of obviousness.

The House of Lords, however, reaffirmed Laddie J’s decision and approved his approach. They confirmed that, in order to assess inventive step, the UK courts should apply the four-part Windsurfing test as originally formulated by the Court of Appeal in 1985 in Windsurfing International v. Tabur Marine, namely the court should:

1. identify the inventive concept embodied in the patent in suit;

2. assume the mantle of the normally skilled but unimaginative addressee in the art at the priority date and impute to him what was, at that date, common general knowledge in the art in question;

3. identify what, if any, differences exist between the matter cited as being ‘known or used’ and the alleged invention; and

4. ask itself whether, viewed without any knowledge of the alleged invention, those differences constitute steps which would have been obvious to the skilled man or whether they require any degree of invention.

However, the House of Lords also held that before you ask whether the alleged invention involves an inventive step, you first have to decide what the invention is and, in particular, whether you are dealing with one or more inventions. In the words of Lord Hoffmann, "if each integer "performs its own proper function independently of any of the others", then each is for the purposes of [the inventive step analysis] a separate invention and it has to be applied to each one separately". Their Lordships held that this is what Laddie J meant by the law of collocation and that, in approaching the question of obviousness on this basis, he had applied Windsurfing correctly.

In reaching its decision, the House of Lords considered the European Patent Office (EPO) guidelines and clearly viewed both the Windsurfing test and the law of collocation, as applied by Laddie J, as consistent with the European Patent Convention (EPC). This seems correct at least so far as it concerns the way in which the EPO applies the EPC. In cases where known products are combined, the EPO is customarily concerned to consider the interaction or synergy between the products; this is, of course, the flipside of a case of a mere collocation.

Amgen v. TKT

The second case, Amgen v. TKT, was perhaps more significant, with wide-ranging implications for patent holders, particularly those with patents in fast moving technologies such as biotechnology. Amgen’s patent concerned expression of the gene sequence for a naturally occurring protein hormone, erythropoetin (epo), which regulates red blood cells in the body. In essence, the central question before the court was whether TKT’s technique to produce recombinant epo, which was unknown at the date of Amgen’s patent, fell within the patent. The facts of the case were involved and so we simply highlight below some of the key legal issues addressed by the House of Lords.

Infringement

  • When determining whether patent claims are infringed, the principles currently applied by the English Courts for purposive construction are in accordance with the Protocol on the Interpretation of Article 69 EPC and largely in line with other European jurisdictions, and should be retained. The English Courts should not adopt a broader approach akin to the US doctrine of equivalents.
  • The House of Lords clarified the status of the structured approach of the English "Improver" or "Protocol" Questions, in which the court addresses (1) any material difference between the variant and the way the invention works, (2) whether such a difference would have been obvious to the skilled person, and (3) whether strict compliance with the literal meaning was nonetheless essential. They held that these questions are only guidelines for applying a purposive construction, and in rapidly developing, high technology fields these questions may not be appropriate, or indeed useful. The overriding question to be answered by the courts when seeking to interpret claims is what the person skilled in the art would have understood the patentee to mean by the language of the claims of the patent.
  • It is possible for patent claims to cover products or processes which were not known when the claims were drafted, so, potentially, inventive technologies not contemplated at the time of a patent can fall within its claims.

On the facts of the case, their Lordships declined to apply the Protocol Questions. They found that the skilled person would not have understood the claim in question as sufficiently general to include TKT’s method; thus, the claim for infringement failed. It will be interesting to see how much more flexible the UK courts will be in the post-Amgen era when construing claims, particularly in high-technology cases. The Mayne case referred to above, which concerned a pharmaceutical patent, was the first case to go to appeal on the question of construction post-Amgen. Both the first instance judge and Jacob LJ in the Court of Appeal decided that the Protocol Questions did not assist; as Jacob LJ put it: "What matters is the meaning of the claim read in context".

File Wrapper Estoppel

  • The speculation in recent years as to whether file wrapper estoppel had a place in English law appears to have been resolved in the negative.

Novelty

  • The English Courts should follow the EPO, and other European jurisdictions, and change its practice on patent claims covering products made by particular processes. Such product claims will no longer be held valid if the products themselves are not new, even where they are expressed to be limited to products made by new processes.

Sufficiency/ enablement

  • Determining whether a patent is sufficient first requires the identification of the invention because that is central to what must be enabled.
  • Disclosure of a "principle of general application" does not negate the need to enable an invention. This term applies to any element of a claim where the element is stated in general terms, and such an element is enabled where one can reasonably expect the invention to work with anything falling within the general term.

Significant Legislative Changes

Not only has there been significant caselaw recently, but there have also been changes to the UK patent legislation following the approval of the Patents Act 2004 in July 2004. The new Act makes a number of amendments to the Patents Act 1977 (the key UK statute governing patents). The objectives of the new Act are to: modernise and update the patents system; enable small businesses to enforce patent rights more readily and encourage out of court settlements of patent disputes; and implement the European Patent Convention 2000 (EPC 2000). Ron Marchant, Chief Executive of the UK Patent Office, said the 2004 Act would be "a boost for innovation and competition in the UK".

Some sections of the 2004 Act came into force on 22 September 2004 with certain more major provisions following on 1 January 2005. Further sections are due to come into force later in 2005, once necessary changes to the Patents Rules 1995 have been approved. The remaining provisions (in particular those aimed at implementing the EPC 2000) should come into force by late 2006 or early 2007, following ratification of EPC 2000 by the Contracting States.

Changes in force as from 1 January 2005

As a result of some provisions of the 2004 Act, and also various secondary legislation, some significant changes were made to UK patent legislation on 1 January 2005. We highlight below three of those changes:

  • Threats

The 1977 Act (pre-amendment) provided a remedy for certain persons aggrieved by groundless threats being made to bring infringement proceedings. This provision has been amended such that the scope for making non-actionable threats has widened. For example, the proprietor of a patent can now make enquiries of a person who manufactures or imports a product for disposal or uses a process; factual information about a patent can now be provided when making enquiries, rather than just stating that the patent exists; and enquiries to determine any primary infringement can be made. Where a patent is held at trial to be invalid, the patentee is not liable for making an unjustifiable threat if he can show that an infringement of the type alleged did take place, and that he did not know (and had no reason to suspect) at that time that the patent was invalid.

  • Costs

As a general rule, if a party is successful in litigation before a UK court, the court is likely to make an order for payment of their costs by the other side. The Patents Act now specifically provides that, when assessing costs in patent proceedings (commenced on or after 1 January 2005) in which infringement is in issue, the financial position of the parties must be taken into account. The new provisions do not stop other factors concerning costs also being taken into account.

  • Employee inventions

The basis for employees claiming compensation for exploitation of their patented inventions has been widened. It will no longer be necessary to show that the benefit enjoyed by the employer flows from the patent itself, as opposed to the invention. Benefits flowing from the patent itself will continue to be taken into account, but wider benefits will also be a factor. It remains the case, however, that there must be an "outstanding benefit", and the threshold for such outstanding benefit remains high.

Changes to come into force in 2005 or 2006/2007

Patents Act 2004

We highlight below four key changes that are expected to come into force over the course of the next couple of years:

  • Post-grant amendment

The UK courts have a discretion over whether to allow the amendment of a patent after grant. The general trend in the UK caselaw has been a downplaying of this discretion; however, its existence is at odds with the amendments to the EPC allowing a patentee to limit his claims in patent revocation proceedings before national courts in any event.

The 2004 Act does not explicitly remove the existing discretion of the UK courts, but requires the courts to have regard to EPC principles in exercising this discretion. Since the aim is to achieve consistency in approach as regards post-grant amendment in national proceedings and before the EPO, it would appear that, once the new EPC is in force, this discretion will effectively no longer be available. It will be interesting to see how the UK courts will approach amendment. The effect of this change is mitigated by the introduction of a further change under the new Act, which allows the court to refuse to award damages for infringements committed before the date of an amendment unless the patentee satisfies the court that the proceedings were brought in good faith.

  • Relief for partially valid patents

Under the existing legislation, where a patent is found partially invalid, the court may make it a condition that the patent is amended before granting relief for infringement of that part which is found valid and infringed. Under the new Act, in the case of a European patent (UK), the court may also make it a condition of granting relief that the claims are limited to its satisfaction by the EPO at the request of the proprietor.

  • Patent Office Opinions

The new Act introduces a new procedure for the UK Patent Office to give written, non-binding opinions on questions of validity relating to novelty or inventive step, and on infringement. The scope of these opinions is quite wide, and can include prospective acts, and/or expired patents. This procedure is intended relatively cheap and quick, and is aimed at parties who wish to settle disputes without launching full proceedings.

It remains to be seen whether this procedure will be widely used. Whilst the details of the procedure are yet to be set out, it is clear that the procedure is intended to be public, as the opinions will be placed on the patents register. This, together with the necessarily cursory nature of the opinions, means that patentees may not be keen to "show their hands" before having a chance properly to review their arguments. A negative opinion on validity may force a patentee to amend a patent before enforcing it or he runs the risk of losing pre-amendment damages under the new Act.

  • Methods of Treatment and Second Medical Use

New provisions will spell out that methods of treatment or diagnosis are excluded from patentability, rather than the current legislation which deems such methods to be incapable of ‘industrial application’. In practice, this change should not have a great impact, as the scope of patent protection is effectively unchanged. There will no longer be a need for so-called "Swiss-type" claims for second or subsequent use of a known substance in the treatment of disease. Currently, claims have to be in the form of "Use of X for the manufacture of a medicament to treat Y" (X being a known substance, and Y a medical condition); when the new provisions come into effect, claims worded "Substance X for use in the treatment of Y" will be allowed. If the specific use was unknown, it will be treated as novel.

"Bolar-Type" provision

2005 should also see the UK implement the "Bolar-type" provision of Directive 2004/27/EC. This Directive, part of the so-called 2001 Pharma Review, makes important changes to the European regulatory regime that applies to marketing authorisations laying down a broad range of rules relating to the manufacture, marketing and distribution of medicinal products, and includes provisions on the requirements for marketing authorisation.

The Bolar provision exists in US legislation as a compromise between the interests of the generic drug industry and the research-intensive pharmaceutical industry. It effectively allows a generic company to carry out acts, for example clinical trials, solely for the purpose of developing and submitting information in support of an application for a marketing authorisation to the Regulatory Authority, before the expiry of the patent protection of the reference product in question. The new European legislation introduces a "Bolar-type" provision, so named because the provision is not as broad as its US counterpart. It effectively allows generic companies to carry out, prior to patent expiry, any necessary studies and clinical trials required to be submitted with certain types of marketing authorisation applications (namely those made under the abridged procedure whereby the applicant relies on data in the file on the original medicinal product).

The deadline for implementation is 30 October 2005. There are some concerns as to the vague wording of the new provision as set out in the Directive, and only time will tell how the UK will interpret and implement the provision.

Conclusion

As we have highlighted in this article, there have been a number of recent important developments for UK patent litigation in terms of procedure, caselaw and legislation. The specialist UK patents courts have introduced a streamlined procedure which offers litigants a quick, relatively simple and less expensive option for litigating in the UK. The House of Lords, the highest appellate court, has clarified how some of the fundamental principles of UK patent law apply to emerging technologies. In addition, there are significant changes to the Patents Act 1977 aimed at modernising the patents system, encouraging out of court settlements and implementing the EPC 2000. This is an interesting time for patent litigation in the UK.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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