Problems, solutions, 'tis and 'tisn't: Schlumberger on appeal

The Case of the Appeal-Proof Metaphor has just been the subject of a successful appeal, as can be seen from a perusal of Schlumberger Holdings Ltd v Electromagnetic Geoservices AS [2010] EWCA Civ 819, a decision of the Court of Appeal for England and Wales this Wednesday.

This note does not propose to discuss the merits of the appeal (neatly summarised by the IPKat here), but merely focuses on two issues that emerge from the judgment of the court, delivered by Lord Justice Jacob: (i) the application of the problem-solution approach to the question of inventive step and (ii) the role of expert witnesses who hold divergent opinions. First, obviousness:

"... the correct approach in this case is to start with the real problem faced by exploration geophysicists. Did they appreciate they had a solvable problem? One then asks whether the notional exploration geophysicist who read the cited prior art would see that the answer was to use CSEM [Controlled Source Electromagnetic surveying], or if not that, at least that CSEM had a sufficient prospect of being useful that it was worth asking a CSEM expert.

The problem must also be approached the other way round, from the point of view of the CSEM expert. Would he or she know of the exploration geophysicists' problem and, if so, would he or she appreciate that CSEM had a real prospect of being useful to solve the problem?

In short: was the marriage obvious to either notional partner?

One further approach is not necessary: that is to ask whether the notional team including both types of expert would see that CSEM would solve or stood a very good chance, of solving the problem. ...

There is danger to be avoided. There are cases where, even though you can, in retrospect, clearly see that there was a problem and articulate what it was, workers at the time did not do that. They did not say: "this is our problem. If only we had a solution to it." Instead they simply put up with things as they were. Then the essence of the invention is the insight that there was a solvable problem at all. ..."

Secondly, dealing with experts with conflicting opinions:

"I should also say something about how the court should deal with the conflicting opinions of the experts on obviousness. It is not a matter to be decided by choosing between one expert who says 'tis and one who says 'tisn't. A mere assertion of opinion is of no real value. I put it in this way [in two earlier decisions]

"But just because the opinion is admissible: it by no means follows that the court must follow it. On its own (unless uncontested) it would be "a mere bit of empty rhetoric" ... What really matters in most cases are the reasons given for the opinion. As a practical matter a well-constructed expert's report containing opinion evidence sets out the opinion and the reasons for it. If the reasons stand up the opinion does, if not, not".

I have no hesitation in repeating this. It cannot be emphasised enough. Reasons for the opinion are what really matter. It follows that it is generally not enough for the court to conclude that it accepts the opinion of one expert or the other. It too must descend into the reasons for the opinions."

IP attorney litigators: will they fly or die?

Writing in the current issue of the Journal of Intellectual Property Law & Practice (2010) 5(8):602-607 (JIPLP), British patent attorney David Musker (a partner in Jenkins and blogmeister of the Class 99 weblog), asks some probing questions concerning the viability of patent attorney litigators in the United Kingdom. The abstract of his article reads as follows:

"Legal context: The Courts and Legal Services Act 1990 opened the way for bodies such as the Chartered Institute of Patent Attorneys (CIPA) and the Institute of Trade Mark Attorneys (ITMA) to certify litigators licensed to act in competition with solicitors in England and Wales. There are currently almost 100 such attorney litigators in the UK

Key points: The author makes use of comparative and demographic data to study the profiles of attorney litigators, including routes to certification, seniority by years post-qualification, gender. He explores comparisons with other UK hybrid legal professionals such as licensed conveyancers.

Practical significance: UK solicitors are at no risk from other professions within the UK. Even any competitive price pressure in UK IP litigation is far more likely to be intra-professional, from rival firms, rather than inter-professional. Regardless though of whether the CIPA and ITMA certification schemes ultimately live up to the competitive aims of the 1990 legislation, they are certainly capable of meeting more modest goals of "upskilling" the IP attorney".

If you're not a subscriber to the journal and can't sweet-talk David into giving you a copy, you can still buy online access to David's article by clicking here and scrolling down to "Purchase short-term access".

Interest on damages for infringement not a correctable error

Yesterday's decision of Mr Justice Floyd (Patents Court, England and Wales) in the latest round of Leo Pharma A/S and another v Sandoz Ltd [2010] EWHC 1911 (Pat) (see earlier post here) picks up following the trial of an action in which Leo Pharma's patent infringement claim against Sandoz was upheld. A draft order before the court included a provision that

'The Defendant shall pay to the Claimants any sums found due on the taking of said inquiry into damages or account of profits together with interest at the judgment rate (being 8%) from the date of this Order".

The court decided to stay the final injunction pending Sandoz's appeal, directing the parties to draw up a minute of order. Leo drafted and sent to counsel for Sandoz an order which included the provision as to interest which the court's draft order had contained. Sandoz suggested a different order -- which did not include the paragraph quoted above -- which Leo did not accept. A little later, counsel for Sandoz said that, to avoid unnecessary costs, his client was prepared to agree to Leo's proposed form of order. The minute of order, including the paragraph in question, was then signed by junior counsel for both sides.

Later Sandoz applied under Civil Procedure Rule 40.12 to correct what it said was an accidental slip or omission in the order, seeking deletion of all the words following "account of profits", or at least of the words defining the rate and period of interest, on the basis that they had never been discussed. According to Sandoz, the court intended to make no such order about the rate and period of interest and that there had been a genuine mistake by counsel in agreeing to the terms of the order, since he never intended to agree the rate or period of interest. Leo, none too happy about this, asserted that when the agreed minute of order was placed before the court, the court definitely intended to make the order in those terms, and that even if there had been a mistake it wasn't a correctable one.

Floyd J agreed with Leo and dismissed the application.

* the operation of the slip rule only covered accidental slips or omissions, a far cry from matters deliberately included by the parties in an order drawn up and sealed by the court.

* On the facts, the order as made was not inconsistent with the intention of the court at any stage of the proceedings.

* A court should be most careful before going behind an apparent agreement between counsel, since counsel's signature on a minute of order was relied on as being conclusive of a binding agreement.

The judge said at para.12:

"The rule is described in the White Book notes as "one of the most widely known but misunderstood rules". The notes point out that the rule is essentially there to correct typographical or other careless errors, but goes on to point out that it can be used by the court to make the intention of the court plain".

Abbott v Medinol: full text now available.

A little while back, PatLit noted Abbott Laboratories Ltd v Medinol Ltd, an ex tempore judgment of Mr Justice Kitchin in the Patents Court, England and Wales on relevance and proportionality in an application for disclosure (discovery). The note was prepared on the basis of a LexisNexis legal alert.

A copy of the full text of this decision is now available here.

Patent appeals that you can afford

Oxford University Press is having its Summer Sale of law books -- 134 titles are on offer, at very generous discounts. One of these books is of interest to patent litigators, US ones at any rate. It's Patent Appeals: the Elements of Effective Advocacy in the Federal Circuit by Mark Simon Davies, published a little over two years ago and noted here on PatLit. When launched, its UK price was £60 but you can by it from the publisher now for just £15.

Please note, this offer price only applies to individual customers when ordering direct from Oxford University Press, while stock lasts. No further discounts will apply.

PatLit: tell us what you think

PatLit has been running for a little over two years now. During this time it has focused fairly firmly on patent dispute resolution issues. At the time of writing this article, the weblog has 554 email subscribers, a Google PageRank of 5 and a bank of over 260 searchable articles. Over 35,000 site visits have been made, from readers in more than 90 countries.

Several readers have asked why the blog concentrates specifically on patents. This is historical: the blog was launched as a means of raising awareness of the need for patent litigation reform in the UK and Europe (long-term readers will recall the Burdon Plan), but it has gradually expanded its coverage and happily brings news and developments from anywhere that patent disputes arise.

At the top of the PatLit side bar you will find a poll, through which we seek to obtain readers' views as to what they'd like the blog to contain. Please click your preference: every vote counts!

Suspension of compulsory execution: a shift in German practice?

In a recent article, "Suspension of compulsory execution as relief from patent injunctions", German patent litigation lawyer Philipp Ess explains how, for defendants in most patent infringement proceedings, the threat of an injunction halting production is of greater concern than the patentee's as yet unasserted damages claims.

The position of the alleged defendant in applications for provisional relief is particularly delicate since, while plaintiffs can themselves be held liable for losses incurred by the defendant if thre was no infringement and must post security bonds against this eventuality, the loss of income resulting from the defendant being ordered to cease production pending the full trial can easily exceed the value of the security bond and the solvency of the plaintiff. What's more, being ordered to halt production can seriously damage the defendant's reputation.

It is possible for defendants to seek protection against compulsory execution before the trial court renders a judgment, if they can show that an injunction would lead to severe and irreparable damage. However, this protection comes at a cost: in order to seek it the defendant must disclose business secrets regarding its solvency, sales figures and profit margins to the opposing party -- who in the context of patent infringement proceedings may very well be a competitor. The consequence of this is that, once the trial court has ordered an injunction, a defendant may play safe by accepting an unfavourable licence agreement rather than risking an appeal.

This article then goes on to explain the working of Section 719(1) of the Germany Civil Procedure Code, which empowers an appeal court to suspend the compulsory execution of a trial court injunction until the appeal court has decided on the merits. Courts are reluctant to do this in the context of patent infringement proceedings, given the short life and market sensitivity of a patent -- which tends to encourage courts to prioritise the patentee's interest in the expeditious enforcement of a patent. However some recent decisions have bucked this trend by granting motions for suspension.

To read the full article by Philipp Ess (Klinkert Zindel Partner) in International Law Office click here.

Interview with White House "IP Czar," Victoria Espinel

Following up on our earlier post regarding the Obama administration's recently-announced IP enforcement plan, below is an interview that PatLit conducted via email with Victoria Espinel, the White House's new U.S. Intellectual Property Enforcement Coordinator.

The Joint Strategic Plan on Intellectual Property Enforcement outlines the administration's international, inter-agency initiative to combat IP infringement. After reading the Plan, however, we noted that its language mainly addresses copyright and trademark law. Wanting to know the Plan's implications for patent law, we submitted questions to Ms. Espinel, whose office graciously responded via email. Our questions, and Ms. Espinel's answers, follow:

Q: Ms. Espinel notes in her "Letter to the President of the United States and to Congress" that "the U.S. Copyright Office participated in the development of this Joint Strategic Plan." Did the U.S. Patent and Trademark Office have any similar input, particularly in regard to patent law? Was the USPTO approached in the process of the Plan's development?
A: WE WORKED VERY CLOSELY WITH THE USPTO ON ALL FACETS OF THE PLAN'S DEVELOPMENT. (THE USPTO IS PART OF THE DEPARTMENT OF COMMERCE.)

Q: Was patent law a consideration in the development of this plan? Or does the Administration envision patent enforcement issues as being the province of the courts and Congress?
A: WE HEARD A VARIETY OF CONCERNS ABOUT PATENT ENFORCEMENT FROM THE PUBLIC - MOSTLY WITH RESPECT TO ENFORCEMENT IN INTERNATIONAL MARKETS.

Q: Does the plan include any developments for law enforcement (penal or civil) involving patents, as it does for copyright and trademark?
A: THE ASSESSMENT OF LAWS WILL COVER ALL ASPECTS OF INTELLECTUAL PROPERTY.

Q: The Plan provides for support for victims of IP infringement. Will victims of patent infringement receive similar services?
A: YES, THE STRATEGY EXTENDS TO INFRINGEMENT OF PATENTS AS WELL.

Q: Will the enhanced International Trade Commission (ITC) exclusion order enforcement extend to patented products?
A: YES.

Q: Will the FBI, DOJ, DHS, Secret Service, and/or other relevant agencies play any role in patent enforcement?
A: THE STRATEGY LAYS OUT THE PRIORITIES FOR OUR LAW ENFORCEMENT. THESE APPLY TO ALL TYPES OF INTELLECTUAL PROPERTY.

Q: Will patent enforcement be included in the the training that the Government provides to state and local agencies and prosecutors regarding IP enforcement?
A: AS APPROPRIATE.

Q: Will patent law be considered by the Economic and Statistics Administration and IPEC, in their interagency meeting assessing existing IP laws and potential IP improvements? Will the USPTO be one of the agencies participating in this meeting?
A: THE ESA INTIATIVE IS ABOUT MEASURING THE ECONOMIC CONTRIBUTION OF IP INDUSTRIES, NOT ASSESSMENT OF LAWS. ECONOMIC CONTRIBUTION WILL APPLY TO ALL TYPES OF IP. USPTO WILL PARTICPATE.

Q: Does the Plan include any provisions for patent reform? Does your office have any comment on the patent reform bills currently before Congress, or on patent reform in general?
A: NO COMMENT.

Patent law changes as eminent domain?

For months, arguments have raged about a controversial article published in the February 26 issue of Science magazine. In "Fixing the Legal Framework for Pharmaceutical Research" (available by subscription only), Sherry Knowles contends that recent changes to U.S. patent law have resulted in loss of revenue for brand-name pharmaceutical companies, to the advantage of generic manufacturers. Knowles suggests that this transfer of profits amounts to a "taking" of property -- a form of eminent domain -- in violation of the Fifth Amendment to the U.S. Constitution.

Knowles, who until this year served as Chief Patent Counsel at GlaxoSmithKline, primarily objects to certain changes in statutory law (specifically, the Hatch-Waxman Act) and several Supreme Court decisions (in particular, KSR, Bilksi, and Ariad) that invalidated patents previously thought to be valid. These changes, Knowles claims, have facilitated challenges by generics to the patents of branded manufacturers. This may, in turn, "stop R&D investment decisions that have already been made and could prevent a product from reaching the market because of patentability issues." Suggesting that the branded manufacturers' subsequent loss of revenue constitutes eminent domain, Knowles argues that the branded companies should be "compensated" with appropriate changes to the judicial and statutory regimes.

The Constitution's Framers included the Fifth Amendment's "eminent domain" provision as a protection against government seizures of citizens' real property. Generally, the Amendment is understood to prohibit a taking (1) by the government (2) of privately-owned land (3) for public use (4) without "just compensation." Citing Consolidated Fruit Jar v. Wright and Patlex Corp. v. Mossinghoff, Knowles argues that patents and land carry comparable property rights. In fact, federal statute 28 U.S.C. § 1498 does consider patent infringement by the government to constitute a form of eminent domain requiring compensation to the patent holder:

"Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture."

This statute does not necessarily help Knowles's case. Sec. 1498 applies to situations in which the government has infringed a patent by manufacturing a covered invention. Knowles's argument that patent infringement has resulted from a change in statutory law is tenuous. Also, some have argued that the court rulings have clarified, rather than changed, patent laws; if so, then the patents Knowles characterizes as "invalidated" were never valid to begin with, and the government therefore has not "taken" anything. Moreover, the Takings Clause refers to seizures by the government for public use -- whereas it is private generic manufacturers who tend to benefit from recent changes. Although, as Knowles notes, Kelo v. City of New London (wherein eminent domain for the benefit of Pfizer was ruled legal) "blurred" the line between public and private use, it did not eliminate the distinction completely. Finally, Knowles's equating of loss of corporate profits with a government seizure is an idea that, if acted upon, would likely flood the courts with ridiculous lawsuits.

Perhaps the main difficulty is that Knowles attempts to use a constitutional argument in order to address a market problem. A market-based argument might be more credible and effective.

Discovery of documents: is there a real benefit?

Abbott Laboratories Ltd v Medinol Ltd, an ex tempore judgment of Mr Justice Kitchin in the Patents Court, England and Wales last Thursday, addressed an issue that regularly arises regarding disclosure (discovery): how relevant and worthwhile is the material that the applicant for disclosure seeks?

Medinol, which held a European patent for a flexible expandable stent, sued Abbott for infringement. Abbott sought specific disclosure of documents concerning two witnesses for Medinol in this case (S and R). S was one of Medinol's expert witnesses in this case, while R was the only witness of fact. The documents which Abbott sought included evidence given by both these witnesses in similar patent actions in the United States and elsewhere in Europe.

According to Abbott, all these actions related to patents from the same family as the patents in this case and disclosure was needed here because a number of points of construction arose in these proceedings and there was some inconsistency between the expert evidence in the US and that in the British proceedings. No, said Medinol, the disclosure sought was neither reasonable nor proportionate: according to Medinol, Abbott's lawyers had already said that the specific terms in Abbott's patent claims were agreed by both parties not to be terms of art and that R was only to give evidence of fact in these proceedings on the issue of commercial success. Medinol also maintained that the documents that Abbott wanted could amount to tens of thousands of pages -- some 15 to 20 lever-arch files --- and that the volume and time it would take to consider them would make it an extremely costly process.

Kitchin J refused the application for disclosure. The documents sought here did not satisfy the requirement of relevance, the proper interpretation of patent claims being ultimately a matter for the court and a question of law, and the terms which had to be construed here were not terms of art. The disclosure exercise would in any event be entirely disproportionate to any conceivable benefit that the documents in question might bring to the proceedings. Not only would the disclosure exercise be substantial and costly -- it would probably result in the introduction of considerable complexity which would not ultimately assist the court.

This decision was spotted on a LexisNexis legal alert. The names of the parties have been transposed since the original version of this item was posted.