Tuesday, 14 January 2014

Comforted by rhe seat of justice: a perspective on Virgin v Zodiac

Virgin Atlantic Airways v Zodiac is one of the most interesting and multifaceted patent appeals to reach the Court of Appeal for England and Wales in the past few years. Claire Bennett and Andrew Preston of DLA Piper -- who both worked on this case on behalf of the successful patentee -- have provided the following helpful analysis of it (thank you, Claire and Andrew!):
Comforted by the seat of justice: the European Convention of Human Rights ("ECHR") and the European Patent Office ("EPO")

In its recent judgment in the lie-flat aircraft seats case Virgin Atlantic Airways v Zodiac [2013] EWCA Civ 1713, the Court of Appeal considered an issue that had never been considered before in the UK: does the European Convention of Human Rights provide a back door through which a third party can challenge a decision of the EPO to grant a patent?

In this blogpost we highlight a few of the most interesting points for patent litigators in European Patent Convention ("EPC") states, not all of which will be evident from the judgment.


One of the greats of the patent world, Sir Robin Jacob, set this particular plane flying, when he observed in a 2009 hearing between the parties that it might be possible to argue that the patentee's alleged failure to designate the UK in its application for a European Patent rendered the EPO's decision to grant the UK designation a nullity (and hence rendered the UK's recognition of the patent also a nullity).

Domestic hub

At first instance, the arguments centred around whether there was a sufficient "domestic foothold" for the courts to intervene, as the acts of international bodies established by an international treaty such as the EPO are normally not justiciable. Floyd J (as then was) accepted the patentee's contentions that there was not, as:

  • The UK was not involved in the grant procedure itself;
  • The EPC did not contemplate private domestic actions relating to the grant procedure, indeed the EPC states had expressly delegated the grant procedure to the EPO; and
  • The provisions of the Patent Act 1977 (in particular ss 77(1), 130(1) & 60(1), which together require an EP patent to designate the UK and be in force in the UK in order to be enforceable) did not justify an enquiry into the validity of the designation.
  • This interpretation was supported by the limited grounds on which the validity of a patent can be challenged post grant (Articles 100 & 138 EPC, s 72 Patents Act).
This meant the court did not have to decide if the UK designation had in fact been withdrawn and, if it had, whether the EPO was entitled to proceed as it did, given that the patentee had relied on the EPO's representations that the patentee was entitled to a UK designation, and shaped its patent strategy accordingly.

Flying High

On appeal, the emphasis switched to the impact of the ECHR. The argument was that the UK courts were obliged to give effect to the defendants' Article 6 rights (right to a fair trial) by construing the Patents Act to allow a challenge on the grounds that the EPO's decision was a nullity.

However, the Court accepted the patentee's arguments that the matter was not justiciable, as the acts of the EPO were not within the UK's jurisdiction for the purposes of Article 1 ECHR (obligation to secure convention rights):

  • The actions of the EPO, which had its own separate legal personality, were independent of the UK;
  • The UK had not intervened directly or indirectly in the grant process; and,
  • The mere (legitimate) surrender of powers to grant patents to the EPO and automatic recognition of the EPO's decisions under s77 Patents Act was not enough to create a jurisdictional link.
The Court also accepted that Article 6 was satisfied in any event as:

  • Article 6 did not create substantive rights which the parties did not already enjoy under domestic law;
  • Under UK law third parties did not have a "right" to trade free of a patent unless it had been validly granted; and
  • There had been a fair hearing of the question of whether the matter was justiciable.
Safe landing

Patentees can now be confident that, once a patent is granted by the EPO, the English courts will not challenge the EPO's decision on the grounds of procedural error. This could potentially have had the draconian effect of a patentee losing a valuable patent when, if the error had been noticed at the time, the error might have been corrected (as it could have been in this case by filing another patent application to cover the UK).

As well as being a victory for legal certainty, in our view the decision makes good sense. Third parties are not misled by the procedural error as on the face of the EPO's records the patent has been granted, it is only through a more thorough trawl that a procedural error can be discovered. In any administrative procedure, a line has to be drawn between what decisions can be challenged and what cannot. There is no clear objective basis on which to distinguish between the severity of the error, so trivial errors could have a disproportionately large effect. Further, the courts and patent offices of every EPC state that was a signatory of the ECHR would potentially have had to determine whether the EPO's decisions were made on the correct legal basis. States could justifiably come to different views on this, undermining the EPC's purpose of establishing a common system for the grant of patents.

As far as we are aware, this is first time this specific issue has been considered in any EPC country, but we suspects other EPC/ECHR states would adopt the same approach. However, if we are wrong, we would be delighted to know.

1 comment:

Anonymous said...

Just a couple of minor thoughts on this otherwise accurate report.
(1) It is not quite right to describe Virgin as "successful" in this case. The non-designation issue was a sideshow to the general infringement issues relating to the '908 patent. It was a "safety net" point run by Zodiac and was not actually needed as Zodiac was held not to infringe the '908 patent, thus finally killing off Virgin's claim for damages. A divisional, the '734 patent, was upheld and the court held that it would be infringed if Zodiac made the seat again. However, this is not of much use to Virgin as Zodiac have not made the seat for four years, and the EPO Opposition Division found the '734 patent invalid a few days after the Court of Appeal decision.

On the non-designation point, the question of reliance is irrelevant. Once the countries designated have been identified, there can be no changes. Here Virgin clearly indicated that they did not want the UK designation and that should have been the end of it. The idea that years of litigation might follow based on a mistake by the EPO is ridiculous, and the idea that the EPO is imune from judicial review even in the event of fraud is simply unacceptable to any right thinking jurist.