Tuesday 23 June 2015

Splitting trials: yes, it can be done -- when there's a good reason

British Gas Services v VanClare SE LLC (2015) is an extempore 17 June judgment of Mr Justice Arnold, sitting in the Intellectual Property Enterprise Court (IPEC) for England and Wales. While that court is technically part of the High Court, it's really the successor to the junior Patents County Court -- though High Court judges do occasionally sit in it.

This was an application by VanClare, the defendant in patent revocation proceedings brought by British Gas Services (BGS) to be transferred to the Patents Court, together with an application by BGS for its revocation claim to be heard before Vanclere's infringement claim.

In essence, in 2014 VanClare acquired a 2002 patent relating to prepayment utilities metering. VanClare granted an exclusive licence in respect of the patent to another entity controlled by the same person as VanClare.  That licensee then wrote to BGS (part of the UK government's smart metering implementation programme, SMIP), drawing the patent to its attention and suggesting that BGS took a licence. A letter before action followed.

SMIP involved the installation of 16 million meters by 2020 at a cost of approximately £600 million. When infringement proceedings were threatened, BGS issued revocation proceedings in the IPEC, alleging that the patent was obvious in the light of common general knowledge and prior art, not to mention added matter. VanClare had not served a defence. Soon afterwards, the exclusive licensee commenced infringement proceedings in the Patents Court, serving particulars of claim and particulars of infringement. At this point, VanClare sought the transfer of the revocation action to the Patents Court. BGS objected and said that the infringement claim should be stayed pending the outcome of the claim for revocation which, it said, was simpler and could be tried ealier and more quickly.

Mr Justice Arnold ordered that the revocation claim be transferred to the Patents Court so that it could be heard along with the infringement claim in accordance with the usual practice. In his view:

* so long as it did not appear that the revocation claim could be heard any more quickly in the IPEC than in the Patents Court, BGS did not oppose its transfer, since BGS just wanted the revocation claim to be heard before the infringement claim.

* the normal practice in the Patents Court was for validity and infringement to be tried together. That avoided the risk of inconsistent decisions on the interpretation of the patent if there were two hearings, and the possibility of delay inherent in a possible appeal against the decision on revocation.

* the court could order the issues to be tried in whatever order was convenient, if there was a good reason for doing so, and the onus on a party seeking to do things in a different order was not a heavy one -- but it had to be shown that that was the better way to proceed.

* while it was said that this revocation claim was simple to try, the issues were not so straightforward that an application for summary judgment had been made or even suggested. The revocation case was not unanswerable and would need a trial for its proper resolution.

* conversely, the infringement claim was said to be complex, not properly particularised and nowhere near ready for trial. However, the infringement claim could be elaborated if necessary in the ordinary way, and any deficiencies in preparedness could be dealt with by routine case management directions.

* bearing this in mind, differences in the relative complexity and readiness of the cases on the pleadings were not sufficient to justify the suggested bifurcation of the proceedings and there was no reason why the infringement claim could not be ready for trial with the revocation claim, especially since any delay would be prejudicial to both parties and the patent only had five years to run.

There are two sorts of bifurcation of patent proceedings: those where infringement is heard first, followed by revocation, and those (as was sought in this application) that go the other way round. This decision confirms that, while neither is normal in England and Wales, either is possible if the argument in favour of it is sufficiently persuasive. One wonders whether, following this clarification, more applications to hear one issue ahead of the other might be expected.

This blogpost is prepared from a note on the subscription-only Lawtel service.

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