Toy beads in court: attempt to get judge to examine merits in interim proceedings fails

Epoch Co. Ltd v Character Options is a decision of the England and Wales Intellectual Property Enterprise Court (IPEC) of 29 October, courtesy of Judge Hacon. Being extempore, the judgment has not been uploaded to BAILII but was potted by the subscription-only Lawtel service.

This dispute revolved around Epoch's patent for a fusible bead toy in which beads could be first arranged and then fused together to form a specific design. CO, a company that imported bead toys from Australia and sold them on the UK market, placed a new type of bead toy on the market which, Epoch said, infringed its patent. Epoch sued for infringement and sought an interim injunction against CO, who alleged that the patent was invalid.

CO, relying on Series 5 Software Ltd v Clarke [here], submitted as a preliminary point that the court should investigate the merits of the case as a whole on the evidence available at the interim hearing. No, said Epoch: there was a serious issue to be tried and it would suffer irreparable harm without the injunction. This was because

• the lifespan of individual product designs was short, so CO's products were likely to cut short any interest in Epoch's; 
• one of CO's products had been under scrutiny in 2007 for containing harmful chemicals; if its products remained on the market there would be a risk of them damaging the reputation of that type of product generally; 
• there was brand loyalty for Epoch's products, and if Epoch succeeded at trial and the CO's products came off the market, customers would buy Epoch's beads but could not match the colours to what they had left of CO's, thereby damaging the image of Epoch's products.

Judge Hacon refused the application for interim injunctive relief. In his view

* The approach adopted in Series 5 Software had not been endorsed by other courts. While the American Cyanamid principle [which requires the court to look at the balance of convenience, or relative inconvenience, of the parties ahead of the full trial] did not prevent some weight being given to the merits, there should not be a mini-trial, especially where interim relief could influence the commercial outcome. The court would therefore apply American Cyanamid in the usual way.

* There was a serious issue to be tried as to whether Epoch's patent was valid, either because it lacked an inventive step or was unpatentable as a merely an aesthetic creation under the Patents Act 1977 s.1. The court would not however take a view at the interim stage in the absence of full legal argument on the meaning of "aesthetic creation".

* The likelihood of irreparable harm being caused to Eppoch if no injunction was ordered was low, as

• there was no evidence of overlap in the designs, and it was somewhat speculative to suggest that the lifespan of a popular Epoch design would be cut short by CO's activities, although it was possible; 
• there was no evidence that CO's products were dangerous; CO's evidence was that the beads were now formulated with a bitter taste to prevent their being swallowed; the evidence showed that there was a lively interest in the products; any damage to Epoch's reputation had occurred in 2007 but had disappeared; 
• even if there were difficulties in matching the beads as suggested, customers would recognise that it was due to the difference in brands -- there would be no damage to the image of Epoch's products. If there was brand loyalty, on its face that was a reason for not granting an injunction, This was because, if an injunction was granted but CO succeeded at trial, it was liable to find it difficult to re-enter the market. 

* There were only two parties on the market in the UK, and there was a strong inference that, to the extent that CO sold its products, Epoch lost sales on a 1:1 basis. Therefore if no injunction were granted and Epoch succeeded at trial, it should be able to assess its lost sales and calculate appropriate damages with reasonable precision. The balance of irreparable harm favoured not granting the injunction.

No stay of liability issue, but prospect of some sort of stay of relief remains

Fontem Holdings 1BV and another v Ten Motives Ltd and another; Nicocigs Ltd v Fontem Holdings 1BV and another [2015] EWHC 2752 (Pat), is 2 October 2015 ruling by Mr Justice Norris, in the Patents Court, England and Wales.

In short, this was an application by the defendant -- the alleged infringer -- for summary judgment on infringement of a patent for an e-cigarette, or in the alternative an application to stay the action pending the outcome of European Patent Office (EPO) opposition proceedings. In a pretty short judgment for a patent case (just 46 paragraphs in length) Norris J summarised the law, considered the issue of infringement and briefly set out the particular circumstances of the new and rapidly-growing market for e-cigarettes.

Given the nature and speed of change in the marketplace, he said, there was a clear need for a much earlier determination of the validity and infringement issues in the national litigation than the earliest possible date for completion of the EPO's opposition proceedings. If however infringement were proven at trial, there remained the possibility of some sort of stay when it came to sorting out the appropriate relief.

Not so "obvious to try": British appellate court revisits inventive step in Teva v Leo

From Paul Inman and Andrew Maggs (Wragge Lawrence Graham & Co.) comes this helpful account of the recent appeal decision in an England and Wales patent validity dispute, Teva v Leo. Thanks, Paul and Andrew!

"Leo's patent not "obvious to try" because there was "no reasonable expectation of success" regarding the claimed invention

The Court of Appeal has overturned Birss J's decision in Teva v Leo and ruled that Leo's patents regarding its Dovobet ointment for psoriasis are valid. In doing so, Sir Robin Jacob has provided useful guidance on the "obvious to try" doctrine, the relationship between real persons skilled in the art and the hypothetical skilled addressee, and the importance of considering the wider context in which the invention was made.

Background

LEO's patents concerned a combination of two active ingredients (calcipotriol (a vitamin D analogue) and betamethasone (a corticosteroid)) in a non-aqueous solvent (Arlamol E). At first instance, Birss J adopted an unusual approach to the assessment of Teva's obviousness challenge, as discussed here. It involved:

• the skilled addressee starting from the common general knowledge (which included a need for a non-aqueous topical medicament containing calcipotriol and betamethasone);
• the skilled addressee being presented with a piece of prior art ("Turi") which disclosed Arlamol E's use as a solvent for a corticosteroid alone; and
• the skilled addressee deciding to include it in his list for further investigation.

Birss J found fact that Arlamol E was not a usual solvent which a formulator would try to use. (In fact he held that it was not common general knowlegde, and that Turi would not have been found in a literature search). Despite this, in view of Turi, "there was a sufficient prospect of a positive result in the tests with this compound to make it worth testing". Upon carrying out the "entirely routine" screening he would find that Arlamol E was in fact a good solvent to use in the combination. Consequently, ruled Birss J, the 'invention' was obvious to try and the patent was invalid.

Birss J had erred in principle

In its decision of 28 July 2015, [2015] EWCACiv 779, the Court of Appeal disagreed with Birss J's analysis.  Birss J's principal error was in failing to attribute the necessary standard of expectation when applying the "obvious to try" test. Contributing to this was Birss J.'s additional failure, in Sir Robin Jacob's view, to impute to the notional skilled addressee "the real prejudices and practices of persons skilled in the art" about using Arlamol E as the solvent, his failure to recognise the importance of certain findings of fact which did not support a conclusion of obviousness, and his failure to consider the wider circumstances of a long-felt and unmet want preceding the "significant advance" (and "advance in human knowledge") represented by the invention.

The "obvious to try" standard

As we noted in our report on the first instance judgment in this case regarding the "obvious to try" doctrine, Birss J. had stated:

"It is wrong to ask whether something might achieve a particular desired effect. It is correct to ask whether it was obvious that it would achieve that effect".

While this statement appears to be correct, Birss J had apparently proceeded to answer the first (i.e. the "wrong") question, not the second one.

Sir Robin Jacob pointed to other passages of Birss J's judgment as revealing the error, including extracts from the following:

• "[t]he skilled formulator would carry out compatibility tests on a number of possible solvents. The number would be about 10 to 20" (paragraph 72),
• "[t]he notional skilled formulator would test some familiar compounds but .… would not be put off from including unfamiliar compounds merely because of their unfamiliarity" (paragraph 79), and
• the disclosure of Turi "would be sufficient grounds to include [Arlamol E] in pre-formulation tests. Based on what the skilled formulator knew about it at the time there was a sufficient prospect of a positive result in the tests with [Arlamol E] to make it worth testing. It was obvious to do so" (paragraph 92).

However, Sir Robin Jacob said that the inclusion of a specific solvent in a list of solvents to be tried is not sufficient to render the claimed invention (which covered only that one solvent) obvious. Quoting from his own judgment in St-Gobain v Fusion Provida] he said:

"Mere possible inclusion of something within a research programme on the basis you will find out more and something might turn up is not enough. If it were otherwise there would be few inventions which were patentable. The only research which would be worthwhile (because of the prospect of protection) would be in areas totally devoid of prospect".

This was so even though the field in the present dispute was empirical, such testing "was entirely routine" and once tested, Arlamol E was found to work.

In order to render the invention invalid, Arlamol E itself had to be obvious to try – and the prospect of success had to raise it over and above above other candidates. A finding that it was obvious to include Arlamol E in his list of solvents to try, and that trying it would in fact have led to success, was not enough: the later finding did not alter the expectation of success regarding Arlamol E before conducting the test. As Sir Robin Jacob said: "well-worth investigating" is not the same as "a fair expectation of success".

The findings of fact did permit a finding of obviousness

Sir Robin Jacob explained further, that the judge had missed the real significance of the evidence and of his own findings of fact. The judge had accepted evidence that to the skilled person, identifying a non-aqueous solvent which would actually work to produce a stable ointment was not easy. Sir Robin Jacob said:

"The Judge said that Arlamol E had the desired characteristics and so there were "sufficient grounds to include the compound in pre-formulation tests". I do not see that follows. Many non-aqueous solvents may have had the desired characteristics – propylene glycol is a particularly good instance. But there was nothing disclosed about Arlamol E that made it anything like an outstanding candidate – any different from any other non-aqueous solvent.

The Judge said that "there was a sufficient prospect of a positive result in the tests with this compound to make it worth testing." But that is to say no more than that there was a sufficient prospect of success with any non-aqueous solvent. On this analysis all such solvents were worth testing. Yet the evidence had shown that the "apparent pH" problem was real and that one could not say that just because a solvent was non-aqueous it would work."

Sir Robin Jacob said that he was confirmed in his view that the patent was not obvious by a further consideration. He noted that Birss J. had "dated all his findings about common general knowledge as at the priority date, April 1999", but that in fact all those facts had been common general knowledge since at least 1995, and yet "no-one found a way to put the actives together in an ointment (with any non-aqueous solvent, not just Arlamol E) until Leo  did it with the invention in the patents". Despite the long-felt want and the advance represented by Leo's solution, there was "no explanation of why that solution was not done before when it could have been". As the final nail in the coffin for Teva, the Opposition Division of the European Patent Office (EPO) had, after Birss J's first instance judgment (with which it was provided), declined to follow the judge's reasoning and rejected Teva's opposition. Sir Robin Jacob was "not surprised".

The skilled addressee of the patent

Behind the judge's conclusion on obviousness lay also his assessment of the skilled addressee of the patent and his or her common general knowledge. Sir Robin Jacob observed as "rather odd" the judge's suggestion that the notional person skilled in the art would be different from the real skilled person. Birss J had said:

"The skilled formulator would decide what compounds to test based on the properties of the compounds. LEO emphasised Professor Brown's evidence that familiarity with such compounds would be a critical element in the skilled formulator's thinking. I accept that familiarity would always play a part in the choices made by real formulators working in real organisations since it maximises the chances of success by using tried and tested compounds which are often found to work. However I find that the notional skilled formulator would not be as conservative in his or her thinking as that evidence might suggest…"

Sir Robin Jacob did not like this. He said:

"But the law of obviousness attributes to the notional person the real prejudices and practices of persons skilled in the art. For instance the "bagridden" mindset of real vacuum cleaner designers was attributed to the person skilled in the art in Dyson v Hoover [2002] R.P.C. 22. "

This is a reminder worth heeding.

It may perhaps be queried whether Birss J's comment was merely an expression of disagreement with LEO's expert as to the mind-set of the real (and hence the notional) skilled addressee. However in view of Sir Robin Jacob's other conclusions (discussed above) the point is probably moot.

The Pozzoli approach

As we noted in our report on the first instance judgment, Birss J.'s approach to obviousness appeared start with the traditional UK Pozzoli approach, but then (at stage 3 which requires identification of the difference between the pleaded prior art and the invention) depart from that and morph into more of a "problem-solution" approach. Sir Robin Jacob did not criticise Birss J.'s choice not to adopt the whole Pozzoli approach (or the whole problem-solution approach). He did however note at the outset to his judgment that both were "often a helpful way of approaching the problem" of obviousness. Further, towards the end of his analysis, he did perhaps hint that a full application of either the Pozzoli or the problem-solution approach might have assisted in the present case. At paragraph 33 he said:

"Putting this point into a Pozzoli structured analysis, the difference between the prior art (Turi) and the invention was that Turi was a mono active product using Arlamol E. The invention is a double active product. Turi would be seen as using one of a large number of possible non-aqueous solvents. It might provide stability for the two actives, just as any of the others might. But there was no reasonably optimistic expectation that it would. Finding that it really did was an invention and an advance in human knowledge".

At paragraph 39 Sir Robin Jacob recorded the conclusions of the EPO Opposition Division's problem-solution analysis (which requires an assessment of the closest prior art) and in doing so, emphasised particularly the final point as follows:

"In [Turi] the problem was neither mentioned nor even suggested and considering [Turi] as the closest prior art is merely the result of an ex-post facto analysis." (emphasis added by Sir Robin Jacob)

In our report on the first instance judgment in this case, we raised the questions as to whether a proper application of either of these approaches in full would have resulted in Birss J. coming to a different decision on obviousness. Bearing in mind his conclusion on the facts and their relative import

Comment

We believe that this is a very important judgment of the Court of Appeal, particularly for the pharmaceutical industry and all industries where empirical research forms the heart of the industry and forms the basis for many important advances in the art – and indeed in human knowledge. The first instance judgment in this case conjured up strong echoes from a past era – in which having a UK patent upheld as inventive in an empirical art was the exception to the rule. With 15 uses of the word "real" - whether to describe real problems, real organisations, real prejudices, real formulators, real world and ultimately a "real advance" - this Court of Appeal Judgment is firmly based in and recognises the importance of "reality" when assessing the validity of an invention.

Overall, the Court of Appeal's decision is therefore a positive re-affirmation that the "obvious to try" doctrine does not mean "obvious to include in an empirical research project". Rather, a patent's claim will only lack inventive step if it was obvious to try what is claimed with a reasonable prospect of success. This builds upon the guidance from Kitchin J in Generics v Lundbeck [2007] RPC 32 at [72]:

"The question of obviousness must be considered on the facts of each case. The court must consider the weight to be attached to any particular factor in the light of all the relevant circumstances. These may include such matters as the motive to find a solution to the problem the patent addresses, the number and extent of the possible avenues of research, the effort involved in pursuing them and the expectation of success."

And also upon the guidance of Lord Hoffmann in Conor v Angiotech [2007] RPC 32 at [42]:

"the notion of something being obvious to try was useful only in a case in which there was a fair expectation of success. How much of an expectation would be needed depended upon the particular facts of the case".

Sir Robin Jacob's judgment confirms that in an empirical field, despite the conduct of a broad test perhaps being an obvious and routine step to take, a patent will only be obvious if at the priority date there was a reasonably optimistic expectation that the particular claimed invention would work.

Finally, it is useful to see another citation of Jacob LJ's statement on the requisite degree of expectation of success, from the Court of Appeal in St Gobain, to remind ourselves that invention can of course lie in areas other than those " totally devoid of prospect". The sentence that Sir Robin Jacob left off that quote in his re-statement this time was that: "The "obvious to try" test really only works where it is more-or-less self-evident that what is being tested ought to work." That (perhaps) extreme level of "expectation" was subsequently tempered slightly in Kitchin LJ's judgment in Novartis v Generics [2012] EWCA Civ 1623) in which he said:

"What is a reasonable or fair expectation of success will again depend upon all the circumstances and will vary from case to case. Sometimes, as in Saint Gobain, it may be appropriate to consider whether it is more or less self-evident that what is being tested ought to work. So, as this court explained in that case, simply including something in a research project in the hope that something might turn up is unlikely to be enough. But I reject the submission that the court can only make a finding of obviousness where it is manifest that a test ought to work. That would be to impose a straightjacket upon the assessment of obviousness which is not warranted by the statutory test and would, for example, preclude a finding of obviousness in a case where the results of an entirely routine test are unpredictable."

However, where (as in this case) there are numerous potential avenues empirically to pursue, the "more-or-less self-evident" level of expectation may well be justified - to raise the particular solution out of the morass of background noise - before one can say it was "obvious".

Let's "keep it real"".

IP litigation in the UK: on the increase, thanks to IPEC

[Note: a slightly longer version of this post appears on yesterday's IPKat weblog, here]. Back in March, PatLit posted "Patent litigation in England and Wales 2007-2013: is it a predictor for UPC behaviour?", here, having received from Luke McDonagh some fascinating information and thoughts relating to current IP litigation research in the UK.  This has now been followed by the publication of a 53-page UK Intellectual Property Office-commissioned report, Evaluation of the Reforms of the Intellectual Property Enterprise Court 2010-2013, published on Wednesday and accessible via this link. As Luke explains:

In this report, which I co-authored with two economists, Christian Helmers and Yassine Lefouili, our task was to examine the impact of the 2010­-2013 reforms undertaken at the former Patents County Court (PCC), now the Intellectual Property Enterprise Court (IPEC). The primary aims of the reforms were to streamline litigation procedures and reduce litigation costs, and thereby increase access to justice for IP litigants, particularly for individual claimants and SMEs who had previously found the PCC an expensive and unwieldy litigation venue. The reforms introduced a number of changes -- staggered over the period 2010-­2013 -- including a cap on recoverable costs and damages, a reduction of the length as well as complexity of court actions, and the reconstitution of the PCC -- a county court -- as the specialist IPEC within the Chancery Division of the High Court.

In our report we assess the reforms both quantitatively and qualitatively. In our quantitative case counts we find that there has been a large increase in the quantity of IP cases filed at the IPEC post-reforms, and via a comparative study of IP cases at the High Court (HC) and Patents Court (PHC) we show that with the exception of patent cases, there has not been a corresponding increase in cases at the higher level.

We find quantitative and qualitative evidence that the costs cap and active case management by the IPEC judge have been the most influential reforms with respect to the large increase in cases filed at the IPEC post-reforms. We also note that case filings by SMEs have increased substantially following the reforms, fulfilling one of the key aims of the reforms. Importantly, we find that this effect is driven by changes at the extensive (more claimants) and intensive (more cases per claimant) margins of litigation behaviour at the IPEC. Finally, we provide a theoretical model that allows us to gauge the effect of the reforms on those IP disputes that never reach a court. Our theoretical predictions suggest that in addition to encouraging more IPEC case filings, the reforms have had the effect of increasing the quantity of out-of-court settlements as well.

This all suggests that the experiments in reformatting, restructuring and rebranding have paid off. The period in question stops before the Small Claims track started gathering its current momentum, so there may be even better news to come when use of the IPEC is next reviewed.

Any old judge can handle a patent-related contract action, rules court

Medical Research Council v Celltech R&D Ltd, an extempore judgment of Mr Justice Nugee in the Chancery Division of the High Court, England and Wales, on 7 July, is noted on the subscription-only Lawtel service. It's another instructive case as to the court on which an action should be allowed to proceed. Usually the argument is as to whether an action should be heard before the more expensive and high-powered Patents Court or its cheaper, less formal and generally swifter Intellectual Property Enterprise Court. This time, however, the discussion focused on whether the action should be placed before the specialist Patents Court or left on the High Court's General List.  As a contract dispute it could be expected to be heard on the General List, but as a dispute involving patents it could be said to belong to the Patents Court.

The background goes like this: the MRC had licensed Celltech to use inventions covered by a number of patents and applications in various geographic regions, the inventions being in the field of recombinant antibodies and methods for their production, including altered antibody binding sites. Under the patents, Celltech was obliged to pay royalties on the sale of relevant products by itself or one of its affiliates; it was not in dispute that this arrangement included sales by sublicensees.

In 1997, this royalty-bearing patent licence was amended, adding a proviso to the scope of the obligation to pay royalties. Celltech then granted a sublicence to a US company, which in turn granted licences to two other pharma companies. Those two pharma companies then developed two antibody products which they sold in the US. Said the MRC, in addition to royalties already paid by Celltech, royalties at one per cent of the net proceeds of all of those sales during a particular time period were outstanding under the amended licence agreement. The amount outstanding was said to be US$44 million, exclusive of interest, at the issue of these proceedings.

Celltech argued that the proceedings potentially raised complex issues that should be determined in the Patents Court. In particular, a Patents Court judge would more securely and easily resolve questions concerning the construction of the patent licence agreement as well as questions of US patent law, if necessary; case management, including requests for further information, would be better dealt with in the Patents Court rather than the General List. The MRC disagreed:what the court had to look at initially was the construction of the agreement and an estoppel argument, since the agreement had been operative for several years: these were suitable for the General List. Celltech hadn't argued that the products did not fall within the patents and there was no substantial technical dispute. If one did arise, the matter could be looked at again, The MRC also invoked section 62(1) of the Senior Courts Act 1981, in respect of matters that did not arise under the Patents Act 1977.

Nugee J refused the application to list the action with the Patents Court.  In his view:

* In due course there could be a dispute about which products fell within the claims of the existing US patent, but the court did not yet have the material from which it could conclude that something was bound to, or likely to, be in issue;

* The case might be disposed of entirely in relation to questions of contractual construction, fact and the estoppel plea. None of those things gave rise to the need to decide the highly technical issue of which drugs fell within the subsisting patents and nothing before the court indicated that that was something likely, let alone bound, to be in dispute.

* This being so, it was prima facie inappropriate for this action to proceed in the Patents Court -- which would have the practical effect of having the action heard by one of two full-time specialist patent judges, or a deputy judge, which were scarce judicial resources.

* The fact that it might be easier, quicker and sounder for a patents judge to construe licences did not of itself justify the order sought, since construing a patent licence did not require the level of expertise required to decide a patent action.

* There was no reason for thinking that case management issues had to be decided by a Patents Court judge rather than experienced masters in the General List.

Nugee J added obiter that the list of matters that had to be heard in the Patents Court under s.62(1) of the 1981 Act was not exhaustive: it could be that the natural meaning of s.62(1) was that the only proceedings that could be commenced in the Patents Court were those specified, but the practical consequence would be so inconvenient that the word "only" should not be read in.

Inventive step: is 'long felt want' still worth arguing?

VPG Systems UK Ltd v Air-Weigh Europe Ltd [2015] EWHC 1862 (IPEC), is a tidy little decision of Judge Richard Hacon, sitting in the Intellectual Property Enterprise Court, England and Wales, on 1 July, where the court found that VPG's patent for a device for indicating to the driver of a commercial vehicle that load limits for that vehicle had been reached or exceeded was invalid as lacking an inventive step [this is the second blogpost on issues arising between these parties: here's the first].

Of particular interest to this blogger is the judge's comment at [66]:

"I would only add this. No argument of long felt want was run by VPG. Superficially one might have expected an argument of that kind in these proceedings. The evidence from the experts suggested that this was a field in which the performance of inclinometers and accelerometers was advancing at quite a rapid rate in the period leading up to the Patent's priority date. Had long felt want been run, it is possible that it was around 2006 when such advances made a system of the type claimed in the Patent commercially attractive. As it is, long felt want was not enrolled to assist VPG's case so the change in performance of inclinometers is neutral".

'Long felt want' is an argument that had its heyday in the previous century, when a patent's inventive step (a.k.a. lack of obviousness) was something that was more often than not established by the application of rules of thumb which established that an invention was not obvious if, e.g., there had long been felt to be a want of it but that want had not been hitherto satisfied, or that it was obvious if it consisted of the application of a known principle for a known purpose or was reasonable for the person skilled in the art to try it. However, after (i) the Court of Appeal in Windsurfing International Inc v Tabur Marine (Great Britain) Ltd [1985] RPC 59 created a formula that looked specifically at the difference between the alleged patentable invention and the prior art and (ii) advances in computer storage, retrieval and search made the prior art far more accessible than had previously been the case, reliance on rules of thumb -- including 'long felt want' -- appears to have declined.

This is very much a personal impression, but this blogger feels that the very fact that a party raises 'long felt want' as an argument that its patent is not obvious is a flag being waved in the direction of the court that the argument in favour of there being an inventive step is a really weak one. A search of patent cases on the BAILII database suggests that the words 'long felt want' have scarcely been uttered by any British judge over the past five years.

Precisely delineated claims and the Protocol to Article 69: two cases, two views

From our friends Brian Whitehead, Stuart Jackson and Richard Kempner of Kempner and Partners comes this handy note on some very dramatic patent litigation from England and Wales which comes under their stern scrutiny. This is what they write:

Following on from yesterday’s decision in Smith & Nephew Plc v ConvaTec Technologies Inc [noted briefly on the IPKat here], the Court of Appeal for England and Wales has today handed down another decision in relation to patents in the healthcare sector in Actavis UK Ltd v Eli Lilly & Company [2015] EWCA Civ 555.  Actavis applied for declarations of non-infringement (DNIs) in respect of the UK, French, Italian and Spanish designations of European Patent No. 1 313 508.  That patent is drafted in the Swiss form, and claim 1 is for “Use of pemetrexed disodium in the manufacture of a medicament ...”.  Actavis’ proposed product contained pemetrexed in one of three different forms: the free acid, or the ditromethamine or dipotassium salts (non-chemist readers are referred to paragraphs 76-79 of Arnold J’s decision, in which an explanation of the various terms is given).

In assessing whether there was direct infringement, unusually both Arnold J at first instance and Floyd LJ on appeal applied the Improver three-stage test – rarely applied since the seminal decision in Kirin-Amgen.  Both at first instance and on appeal, it was held that there was no direct infringement.  We can agree with that – clearly, for example, the potassium salt of an acid is a different chemical entity to the sodium salt, and it is difficult to see how “sodium” could be construed to cover “potassium”.  In any case, the sodium and potassium salts may have different properties and would require separate efficacy and safety tests.

The Court of Appeal disagreed with Arnold J, however, on the issue of indirect infringement.  The medical practitioner utilising Actavis’s proposed product is required to dissolve it in a saline solution.  That would provide an excess of sodium ions, with the result that the solution would contain, amongst other things, pemetrexed and sodium ions.  Arnold J took the view that the reference to “pemetrexed disodium” in the claim is to the solid form of that substance.  Floyd LJ disagreed, holding that

“the skilled team, particularly the chemist, would understand from the 508 patent that pemetrexed disodium is also used to refer to solutions which contain pemetrexed ions and sodium ions in solution”.   

Applying that construction, Floyd LJ held that pemetrexed dipotassium is a means relating to an essential element of the invention, and therefore the Actavis product infringes under s. 60(2) of the Patents Act 1977. 

Whereas we can follow the logic of Floyd LJ’s approach, we believe that it leads to a rather arbitrary outcome, and that Arnold J’s approach was to be preferred.  The saline solution is nothing more than an inert carrier, and if Actavis’s formulation was dissolved in another (non sodium-containing) carrier, infringement under s. 60(2) would presumably not have been made out.  In fact, according to the postscript to the judgment Actavis has now asked for a declaration of non-infringement in respect of its same formulation but using a dextrose solution instead of a saline solution.

The decision raises a number of other very interesting issues, particularly on whether (and if so under what rules) the English courts can grant declarations of non-infringement for other countries’ designations of European patents.  Doubtless these issues will be the subject of commentary, but for the time being we have focussed only on the patent construction point.

The authors, two of whom are former research chemists, also have a comment on the ConvaTec decision. We find the outcome of Kitchin LJ’s approach to be problematic, in that we cannot see how the skilled person could possibly consider a concentration of 0.5% as falling within a claimed range of "between 1 per cent and 25 per cent".  We respectfully disagree with the approaches of both Birss J and Kitchin LJ.  In our view, the skilled person would understand that reagent concentrations can never be absolutely precise, but are subject to a margin of error.  What is an acceptable margin of error will depend upon the particular purpose of the reagent.  Kitchin LJ considered that “it is clear from the teaching of the specification that the binding agent concentration is not critical in the method of this invention”.  In the circumstances, we consider that whereas the skilled person would not necessarily prepare and measure the concentration of the silver solution to the highest degree of precision (it was undisputed that the concentration can be measured to a precision of at least two decimal places), he would still prepare and measure it with a reasonable degree of accuracy.  A minimum accuracy of 10% would, we suggest, be appropriate, as that is easily achievable even without using microbalances and calibrated volumetric flasks.  That would imply that the range covered by "between 1 per cent and 25 per cent" is, at its widest, 0.9-27.5%.  The chemist (one of the members of the skilled addressee as determined by Birss J) would be unlikely even to consider the concept of significant figures, which seems to form the basis of the judge’s thinking, even if he recalled the concept from school mathematics studies.  He would, though, expect a reasonable degree of accuracy in preparation of stock solutions, even for applications not requiring a high level of precision.  A margin of error of 50%, as suggested by Kitchin LJ’s approach, would in our view be regarded as unacceptable by the chemist.  Indeed, we would challenge the competence of any lab technician who made up such a solution.

Whereas this and yesterday’s ConvaTec decision may appear to have little in common, when read together they raise an interesting issue relating to patent construction.  All readers will be familiar with the Protocol to Article 69 of the European Patent Convention (EPC), which states that claims are to be construed in such a way as to combine fair protection for the patentee with reasonable certainty for third parties.  The judges in both cases expressly referred to the Protocol, and satisfied themselves that their construction of the patents satisfied its requirements.  Given that, we consider it surprising that two patent claims, which appear on their face to be very precisely delineated, can have given rise to such a divergence of views by judges in the Courts of England and Wales.  Whereas the patentees will presumably be highly satisfied with the degree of protection they have been given, we are not sure that the results can be said to provide “reasonable certainty for third parties”.  We shall have to see whether the Supreme Court will agree to hear appeals from either, and if so whether they will disagree with one (or both!) of the courts in either case.

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.

H&M's underwired bras get no support from Court of Appeal

Stretchline Intellectual Properties Ltd v H&M Hennes & Mauritz UK Ltd [2015] EWCA Civ 516 is a 22 May 2015 ruling of the Court of Appeal, England and Wales (Lords Justices Aikens, Kitchin and Briggs).

In short, Stretchline had a patent for a fusible woven barrier in a tubular fabric which prevented the ends of underwires used in brassieres and swimming costumes from penetrating the fabric. After making some test purchases in H&M's stores, Stretchline sued H&M for patent infringement. H&M's defence was that the patent was invalid, so a counterclaim for revocation was launched.

The proceedings were settled after mediation by an agreement which was said to be a full and final settlement of the dispute on a worldwide basis. This was not however the end of the story, since Stretchline later found that H&M had started selling infringing products again. Stretchline brought further proceedings, alleging both breach of the settlement agreement and infringement. H&M issued a defence and counterclaim that it had not acted in breach of the agreement because its brassieres did not fall within the scope of the patent, and further alleging that the patent was invalid. Stretchline applied successfully to strike out the defence and counterclaim as being precluded by the earlier agreement.

On appeal, H&M  submitted that the trial judge -- Mr Justice Sales at [2014] EWHC 3605 (Ch) -- had been wrong to conclude that the settlement agreement prevented it from raising the issue of validity by counterclaim or defence, and that Stretchline had materially altered its position by interpreting the scope of its patent more broadly after the date of the settlement agreement and by using a different test (the 'pin penetration' test) to measure penetration than that mentioned in the patent.

The Court of Appeal, in a judgment delivered for the court by patent specialist Kitchin LJ, dismissed H&M's appeal.

* Looking first at the mediated settlement, its recitals and substantive obligations had been broadly drawn so that any reasonable person would have understood that the parties intended to compromise all the issues in dispute including the validity of the patent. By the same logic, Stretchline was prevented from pursuing an infringement claim in addition to that for breach of contract.

* The patent and the original proceedings had been founded upon the use of "the L+M sewability tester", whereas the new proceedings were based on a pin penetration test, the results of which were not readily comparable. However, there was nothing in the body of the patent to say the sewability test had to be used. The patent's claims were cast in general language and there were powerful grounds for saying that the skilled person would consider that the resistance of the tube could be measured using any conventional test.

* There was no evidence that H&M had entered the settlement agreement on the basis that the sewability test was the only test of penetration, and the parties could reasonably be taken to have intended that the release should apply to claims of the kind in issue,

This decision underlines the principle that, once something appearing to be a final and global settlement of a patent infringement claim is entered into, the courts are most reluctant to depart from the proposition that it is indeed the last word on the subject.

Adding more infringing products at the stage of assessing financial compensation: can it be done?

AP Racing Ltd v Alcon Components Ltd [2015] EWHC 1371 (IPEC) is a decision of Judge Hacon, sitting in the Intellectual Property Enterprise Court (IPEC), England and Wales, on 15 May, relating to infringement of a patent for calipers. This decision established something that, in theory, we may well have assumed anyway -- but it's good to spell it out to patent litigants. The message? That, as a general rule, in cheap-and-cheerful IPEC proceedings a patentee whose patent has been shown at trial to be infringed will not be entitled to litigate a broader range of infringements in an account of profits, or in an inquiry as to damages, than those included in his original infringement claim. However, as an exception to that general rule, where a patentee has no reason to know of those other infringements until after the case management conference, the most expeditious way forward is for the court to consider further allegations in the inquiry or account -- if this can be done without having to deal with additional evidence.

In making this statement of general principle, Judge Hacon stated that the patentee is under no general duty to exercise reasonable diligence to ascertain whether he has a potential further cause of action against the defendant. However, he added, a lack of diligence where the further claim would have been apparent to a reasonable claimant early in the proceedings, if he had only exercised reasonable diligence, could tip a claimant's attempt to deal with further infringements at the remedy stage into the category of abuse of process -- though it wasn't an abuse of process in this instance.

Springtime, but no summary judgment for Huawei and their co-defendants

 Unwired Planet International Ltd v Huawei Technologies Co Ltd & Others [2015] EWHC 1198 (Pat) is a Patents Court, England and Wales, decision of Mr Justice Birss, delivered on 12 May. This ruling gives some useful guidance on applications for strike-out and summary judgment -- and on when not to bother making them.

Irish company Unwired, which held a portfolio of telecommunications patents, many of them declared to be essential to various telecommunications standards, sued Huawei and some other fairly serious telecommunications equipment businesses, alleging patent infringement in respect of the sale of standard-compliant products. In total, the action involved five standard-essential patents (SEPs) and one non-essential patent.

Unwired sought injunctive remedies, except to the extent that the various defendants were required and entitled to take licences to the SEPs on FRAND terms. Unwired made two open licensing proposals to the defendants; (i) in April 2014 it proposed a worldwide licence of all its patents, and (ii) in July 2014 it proposed a worldwide licence of its SEPs only.

The defendants said that none of the patents was essential, valid or infringed, but they said they'd be willing to take licences under any patents found to be valid and infringed. Their defence also alleged that, in seeking an injunction, Unwired was in breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU) by committing an abuse of its dominant market position. Once the Article 102 issue was raised, further interested parties were joined to the proceedings. Unwired then applied to add to its claim a declaration that its offers of licence were FRANDly; the company also sought a declaration as to the terms or range of terms that would be FRAND for a licence to use the claimant's portfolio of SEPs and/or its portfolio of patents.

Huawei and the other defendants contended that the FRAND obligation points were capable of being dealt with summarily and that they should be: Unwired's proposals couldn't be FRANDly because Unwired failed to offer (i) single patent licences if requested; (ii) a licence under all SEPs essential to a particular standard; (iii) a licence under SEPs relating to a particular territory.

Birss J refused to deal with the FRAND issue summarily. In his view:

* It was at least arguable that a key part of the factual matrix against which the offer of FRAND terms had to be construed was competition law and policy. This being so, no matter how clear the meaning of the words themselves might seem, a final decision about their meaning and scope could not be made without putting them into their proper factual and competition law context.

* It could well be that competition law considerations and the wider context actually worked in the defendants' favour -- but that should be decided at trial. It would not be sensible to try and decide issues of the construction of the claimant's proposals summarily, since they were too closely connected with underlying facts which were themselves in dispute. Since Unwired had a real prospect of defending all the points arising on the summary judgment application, it must be refused.

* Unwired's assertion that its proposals were FRANDly had a real prospect of success, so its application to amend its claim by adding a declaration to that effect would be allowed on terms stipulated by the court.

Of all the areas of intellectual property litigation, patent law is probably that in which applications for summary judgment and/or strike-out of claims have the least chance of success since not only are the facts often complex and in dispute but the ease with which competition law issues under the TFEU can be raised will tend towards the conclusion that there is a need for a full trial.  In contrast, applications for speedy trials may be a bit more promising for patents than for other IP rights, given the relatively short life of a patent and the fact that a swift decision on the issue of validity in the light of allegedly killer prior art may avoid the need for a full-blooded court battle on issues of infringement.

Disclosure of commercial licences: a new strategy for dealing with non-practising entities?

From Ian Wood (Charles Russell Speechleys LLP) comes a hot-off-the-press judgment which, Ian suggests, may be a new weapon to use against patent trolls.  Ian explains:

In what the judge, Arnold J, himself characterises as unprecedented, a company accused of infringing a patent (Big Bus) applied to the High Court for the owner of the patent (Ticketogo) to disclose the commercial contracts it had with existing licensees under the patent before court proceedings were brought. It sought this information in order to assess whether it should defend the claim (which would be expensive) or to seek a commercial settlement in advance of legal action. The judge agreed that the owner of the patent (Ticketogo) should disclose the licence agreements.

The Big Bus Company operates open-top bus sightseeing tours. Ticketogo has a ticketing system patent which provides a method of issuing tickets over the internet using a barcode in an image file format. Ticketogo does not conduct any business except patent licensing. Who are we to say that Ticketogo might be a patent troll?

In October 2012, Ticketogo contacted Big Bus notifying it of the existence of the patent, saying that Big Bus’s ticketing system infringed its patent and offering to license the patent to Big Bus if commercial terms could be agreed. Big Bus denied that its ticketing system infringed the patent.

Ticketogo’s lawyers responded by referring to the high costs involved in challenging the validity of a patent and listing other licensees who, they (i.e. Ticketogo’s lawyers) said, “presumably decided after due consideration not to attempt a challenge to the validity of the patent.”

All went quiet for a while but, in February 2015, new solicitors instructed by Ticketogo (Taylor Wessing) wrote again saying that Ticketogo believed that Big Bus, “requires a licence of the patent. Many others have decided to take a licence,” and attached a current list of 43 licensees. To many, including the judge, this would appear that Ticketogo was threatening litigation -– and the licences were relevant to its claim.  Accordingly, Big Bus sought pre-action disclosure (under suitable confidentiality provisions) of the patent licences previously granted by Ticketogo in order to help it quantify the value of the claim for patent infringement that could be brought against it by Ticketogo. Big Bus said that, because of the potential irrecoverable costs it might incur even if it was successful in any patent infringement proceedings, it was willing to resolve the dispute through a commercial agreement. However, to do so it needed first to establish the value of Ticketogo’s claim.

Big Bus applied to the High Court of Justice (Patents Court) asking for Ticketogo to be required to disclose commercial details of the licences it had granted to others using its patent in advance of infringement proceedings that Ticketogo might pursue against Big Bus.   The judge decided that this pre-action disclosure should be made.

The case is The Big Bus Company v Ticketogo Ltd [2015] EWHC 1094 (Pat). It's not yet on BAILII but should be. Ian Wood acted together with David Fyfield on behalf of Big Bus; Taylor Wessing acted for Ticketogo. 

Late references to prior art: how to reach a sensible solution

VPG Systems UK Ltd v Air-Weigh Europe Ltd was an extempore ruling of Judge Hacon yesterday, sitting in the Intellectual Property Enterprise Court (IPEC), England and Wales. It will never hit the law reports, but at least it was noted on the Lawtel subscription-only service. It's one of those small but revealing cases that shows how a low-tier court goes about its unglamorous daily business of resolving disputes as efficiently and economically as possible, given the obstacles facing the judge (otherwise known as the parties).

In short, this was all about a pre-trial case management conference in a standard infringement claim where the defendant alleged invalidity. The lists of issues had been determined at a case management conference, following which the defendant sought to include reference to a new item of prior art. Although that item of prior art had not been referred to in the original list of issues, it was not one that surprised anyone since it had been mentioned both in the pleadings and in evidence.

The defendant submitted that its expert had not realised, before the case management conference, that certain documents relating to the new item of prior art were available. It also argued that, since the relevant item of prior art had been referred to in the pleadings and in the evidence, in that sense it was already part of the material before the court.

Judge Hacon granted the defendant's application.

First, the bad news for the applicant: the primary difficulty for the defendant was one of the provisions of the Civil Procedure Rules, CPR r.63.23(2), which deliberately made it difficult for parties to add material into the case after the first case management conference. What's more, the fact that the expert had not realised that documents relating to the relevant piece of art were available before the first case management conference did not constitute an exceptional reason that could justify the proposed amendment.

What about the good news? Given that the prior art had been referred to in the pleadings and in evidence, it could not be said that the defendant was seeking to submit new material into the case; rather, it was seeking to rely on the new material as a specific item of prior art.  This being so, r.63.23(2) did not of itself provide a barrier to allowing the amendment -- and there wasn't any other barrier to allowing the specific item of prior art to be added into the list of issues. Plainly it was an item of prior item with which the patentee was familiar, it having been referred to in the pleadings and in the evidence, and therefore it had to be something that was well within the patentee's contemplation, and there was no real prejudice to the patentee in allowing the defendant to rely on it.

Now for the qualification: since its application would be allowed, the defendant would not be permitted to put in any material relating to the item of prior art that was not already before the court in the form of disclosure or evidence.

This seems to be a neat solution, protecting the interests of both parties and enabling the court to have a better stab at either invalidating or affirming the status of a patent that might well be of interest to others in the same market.

Lyrica or generic pregabalin? An innovative court order

Warner-Lambert Company, LLC v Actavis Group PTC EHF and others [2015] EWHC 485 (Pat) is a Patents Court, England and Wales ruling of Mr Justice Arnold on 2 March which has already received substantial attention on the IPKat blog, thanks to Darren Smyth, here. 02 March 2015

In short, in January 2015, in an action for patent infringement the Patents Court dismissed Warner-Lambert's application for an interim injunction. The problem before the court was that doctors, when prescribing pregabalin as a painkiller for neuropathic pain (the sole use that remained within the scope of patent protection), weren't prescribing it by reference to its brand name LYRICA but rather by reference to its generic name, i.e. pregabalin. Said Arnold J, it did not lie within the power of Warner-Lambert, or indeed of Actavis (which was poised to launch its own generic version of pregabalin) to ensure that doctors prescribed the drug only as LYRICA when treating neuropathic pain, since this was an outcome that depended entirely on the behaviour of the doctors as prescribers.

Subsequently both Warner-Lambert and Actavis sought orders that prescribers be given clear guidance by the National Health Service (NHS England), to the effect that the brand name should be used for the patented indication while the generic name should be used for non-patented indications. The parties also wanted prescription software suppliers to alter their software in order to make it easier for doctors to prescribe pregabalin by brand name. Meanwhile. the parties agreed that Warner-Lambert should give a cross-undertaking in damages, but they could not agree as to its ambit: should it only be given to Actavis or should it also cover other generic manufacturers, in this case Teva and Dr Reddy.

Arnold J's conclusions, in brief, were as follows:

On the evidence, the issuing of guidance by NHS England was the most efficacious, dissuasive and cheapest solution to the problem, especially since the alternative from Warner-Lambert's point of view would be to pursue its applications for interim relief against all the generic suppliers.

The benefit of the cross-undertaking should be extended to the other generic companies for two reasons: (i) if Warner-Lambert's patent later turned out to be invalid, the companies ought not to be prevented from making sales of generic pregabalin, and (ii) even if the patent was valid, the effect of LYRICA being prescribed and dispensed at the expense of generic pregabalin in circumstances that did not amount to an infringement of the patent could not be discounted.

ZTE fails in bid to reopen patent trial post-judgment but before judge seals order

Vringo Infrastructure Inc v ZTE (UK) Ltd [2015] EWHC 214 (Pat) is a 30 January decision of Mr Justice Birss, sitting in the Patents Court, England and Wales.  It's far from being the first time that these two adversaries have clashed in the courts of England and Wales [see eg earlier PatLit post here with links to earlier litigation].

This time round, ZE applied to re-open a trial at which Birss J concluded that Vringo's patent was valid, having found that the relevant prior art documents did not disclose protocol transparency. ZTE then looked for other examples of protocol transparency, finding prior art documents on which it sought to rely. Having done so, it obtained an order suspending the court's sealing of the order arising from the trial pending this application to reopen the trial.

In short, Birss J refused the application to reopen the trial. In his view

* The power to reverse a decision before the order had been drawn up existed, and was not limited to exceptional circumstances: every case depended on its circumstances and the overriding objective was the starting point [ie the court should deal with cases justly and at a proportionate cost].

* Allowing an amendment before a trial began was different from allowing it at the end of the trial to give an apparently unsuccessful defendant a chance to run a new argument, particularly where the amendment was sought after judgment,

* A party could not just wait for a judge's findings and say that he could have called more evidence on that point. If an amendment to the statements of case would not have been permitted before trial, it was unlikely to be permitted afterwards -- and, even if it were permitted, that did not mean that it should be permitted after judgment,

* In the context of patent litigation, the selection of prior art by a party challenging a patent was a matter of his own free choice and it was not open to a challenger simply to re-open the matter on the basis that a judge had not dealt with it.

* The prior art relating to protocol transparency was plainly potentially relevant earlier and could have been found with reasonable diligence. It was a toss-up as to whether that prior art would have had an important influence on the trial's result, and this new evidence was entirely credible.

* Points in favour of granting ZTE's application were that neither party had acted to its detriment in reliance upon the judgment; the patent was to be effective; the case was really only about money rather than injunctive relief; and costs incurred in a retrial would be compensatable

* Points against granting the application included the facts that there was no excuse for ZTE not having used the documents before; it would lead to a trial of at least two days; and the legitimate expectation of finality following the original trial would be thwarted. The strength of ZTE's case was not so clear as to show that the patent was probably invalid, since it would merely involve an arguable piece of prior art. A party had to make careful selections of prior arts and it was incomprehensible that ZTE had overlooked this prior art earlier.

Getting the balance right: when not to transfer a patent suit to a cost-capped forum

In Canon Kabushiki Kaisha v Badger Office Supplies Ltd and others, a Patents Court, England and Wales, ruling of Mr Justice Arnold last Friday, the court had to consider an application by the three defendants to transfer
a patent infringement claim from the Patents Court to the Intellectual Property Enterprise Court (the IPEC -- technically, like the Patents Court, part of the High Court but which, for all functional purposes, is a lower court and the successor to the Patents County Court). This application failed since the infringement claim was of some complexity and would be difficult to try within the two-day framework allowed for the IPEC. To address the defendants' concerns as to costs if the costs regime of the High Court were to apply instead of the cost-capping regime of the IPEC, the Patents Court would however exercise firm costs management. On that basis, Arnold J directed that a hearing take place so as to enable the parties could prepare for trial in a proportionate manner, adding that to try an infringement claim of some complexity, and an attack on validity on the basis of three items of prior art, in a two-day trial would be difficult.

This decision, which was delivered extempore, was picked up by the Lawtel subscription-only service, which also gave a brief summary of the salient facts.  In financial terms the defendants argued that the cost of a High Court patent action, estimated at £500,000, was disproportionate to the claim's value, while Canon -- the patentee  -- argued that the patent protected sales of products worth approximately €70 million per annum, and had 12 years to run, so that the claim's value greatly exceeded the £1 million identified as a guideline threshold in the IPEC guide. Canon also objected that it was unfair to subject it to the cost-capping regime in the IPEC where the defendants had not asserted that they could not afford to litigate in the High Court.

Disclosure of customer names and reputational concerns: Wobben gets its way

Wobben Properties GmbH v Siemens Public Ltd Company and others [2014] EWHC 3173 (Pat) is a Patents Court, England and Wales, decision of Mr Justice Morgan that dates back to early December of last year. Sorry about the delay in blogging it, but we are all over-stretched and this blog desperately needs more blogging fire-power. This decision is one of the many which deal with the nuts and bolts of procedural issues in pursuit of enforcement at national level.

Wobben, which held a European patent -- which was soon to expire -- for a method of operating a pitch-controlled wind turbine, maintained that Siemens had infringed its patent by making, marketing and supplying wind turbines to its customers which incorporated that patent's technology. The seven other defendants were said to have infringed the patent in the course of developing various wind farms which used Siemens' wind turbines or by installing wind turbines for Siemens and other defendants. Inevitably the defendants challenged the validity of Wobben's patent.

Wobben was concerned, that even if it succeeded against Siemens and the other seven defendants in this action, it might still have to press ahead with legal action against the end users of the technology, because the use of the technology was so very profitable. While Wobben had identified Siemens' customers within the jurisdiction, it didn't want to sue them all -- just those which had used the technology. It therefore wanted Siemens to identify the instances in which the technology had been activated so that Wobben could invite them to be bound by the decision in this action or to be joined as parties to it, thereby saving time and costs. Wobben therefore applied for a Norwich Pharmacal order that Siemens disclose the names of the customers concerned.

Siemens resisted the application, arguing that the disclosure of the information would cause it reputational damage.

Morgan J granted the application. In his view:

* the jurisdictional requirements for making a Norwich Pharmacal order had been made out. If the technology had been activated, resulting in its use by a customer, there was an arguable case of infringement which Siemens would have facilitated; Siemens had the information that Wobben asked for, and Wobben was not able to know which customers had arguably committed patent infringement by using the technology unless Siemens told it that which customers the technology had been activated for

* in proceedings against the end-users, the time and resources of Wobben and of the court would be wasted if the issue of the patent's validity were to be raised again.

* As for reputational damage likely to be suffered by Siemens, it was actually the case that Siemens ran a higher risk of exposure to even greater reputational damage, involving more customers, if it didn't provide the information sought. This was because Wobben was likely to make claims against more customers if it didn't know which ones to sue than it would if Siemen eliminated the customers which had not used the technology.

* it was not appropriate to have a mini trial in relation to the assertions and counter-assertions about reputational damage. Rather, the court should simply assess the likelihood (or risk) of serious harm coming about. On this basis Siemens would be better off if the court made the order sought, leaving it to Siemens to put its own spin on it via its own customer communications.

* while Wobben could could have made its application sooner, it would be disproportionate to deny it a Norwich Pharmacal order on the ground of delay.

This decision seems to be a sensible and practical one, particularly when viewed from the perspective of the efficient use of the court's time and resources -- an issue that the House of Lords did not consider when it first contemplated the availability of such orders back in 1973.