Explaining Patent Litigation 6: expedited trials

The sixth and final guest post in Liz Cohen's Explaining Patent Litigation series, on patent litigation in England and Wales, considers the opportunities available for seeking an expedited trial -- a particularly prized facility for patent owners when one considers how limited the duration of the patent monopoly is when compared with that of most other intellectual property monopolies. As Liz, an IP specialist partner in Bristow LLP, explains:

Expedited patent trials in England and Wales: is it worth applying?

Patent litigation in England and Wales conducted according to a tightly controlled court timetable. The Patents Court generally aim to issue a first instance decision on validity and infringement within 12 months from issue of the claim. But what if this is not fast enough? In cases of extreme urgency, a party may apply to court for expedited proceedings.

Examples of reasons for expedition include the hope of obtaining a favourable decision on validity (and infringement) before a German (or other) court hears a parallel infringement case; having an interim injunction lifted sooner so that an injuncted party may take advantage of a particular state of affairs (e.g. a generics company may be able to take advantage of a duopoly if it launches a generic product before the expiry of the relevant patent or SPC); and having two related cases tried together.

Expedited trials in the UK take six months on average to reach trial but can be heard as quickly as four months (so called “super-expedited” trials). Expedition may be ordered on the basis of certain conditions, for example, that the prior art is limited, or that disclosure of documents and/or experiments are limited or waived.

An application for expedition would normally be made at the outset of proceedings, as delay in making such an application can be fatal to the request.

In the absence of specific provisions in the CPR, requests for expedition are decided on principles drawn from case law. The general principles were summarised in WL Gore & Associates GmbH v Geox SpA [2008] EWCA Civ 622:

(a) the applicant must show good reason for expedition; (b) the court must consider whether expedition would interfere with the good administration of justice; (c) the court must consider whether expedition would cause prejudice to the other party; and (d) the court must consider whether there are any other special factors.

Often, when deciding whether to grant expedition, the trial judge will weigh (a) against (b) and (c). In HTC Europe Co Ltd v Apple Inc [2011] EWHC 2396 (Pat), HTC was seeking a UK decision on validity which it hoped would be of assistance in parallel German proceedings. The court granted some degree of expedition because of the considerable commercial importance of the claims to the parties and to third parties, such as mobile operators. In a later application for expedition (see HTC Europe Co Ltd v Apple Inc [2012] EWHC 2037 (Pat)) between the same parties in relation to different patents, the commercial certainty argument was advanced again. The court said that even though HTC had a good reason for expedition, the benefit of ordering expedition was not sufficient to outweigh the dual considerations of the proper administrations of justice and prejudice caused to Apple because the size and complexity of the case would cause significant disruption to the court timetable and Apple’s counsel were not available during the proposed trial period. In addition, the fact that further proceedings were pending against HTC from Apple and Nokia meant that HTC could not achieve sufficient commercial certainty from the expedition of the four patents in issue alone. Similar reasons for refusal were given in ZTE (UK) Ltd v Telefonaktiebolaget LM Ericsson [2011] EWHC 2709 (Pat), although delay and the unavailability of a decision in time for the German infringement hearing were also factors.

Despite the Patents Court’s obvious willingness to consider expedition cases, it seems that the bar for a “good reason for expedition” has been set very high. Only if an applicant can demonstrate a very strong sense of urgency, is a court likely to order any degree of expedition.

If expedition is obtained, the benefits to the party seeking expedition can be significant, particularly if it is involved in multi-jurisdictional litigation. English judges provide fully reasoned, respected decisions from a specialist Patents Court which can be persuasive to (but not binding on) other courts in Europe. In addition, an early decision on a patents matter can help to eliminate inconsistencies in a party’s case or evidence between jurisdictions and useful documents or evidence may come to light which can in certain circumstances affect the outcome in other jurisdictions.

Other posts in this series:
1: New Term, here
2: Small businesses and the Patents County Court, here
3: Smaller businesses and tax benefits, here
4: IPO Patent Opinions, here
5: Leave to appeal, here.

Explaining Patent Litigation 5: leave to appeal

The fifth guest post in Liz Cohen's Explaining Patent Litigation series, on patent litigation in England and Wales, deals with an important and sensitive topic:the mechanism for appeal in patent disputes. Liz, a partner in the IP specialist practice of Bristows LLP, explains why it is that an unsuccessful litigant can't just appeal at will but has to get leave to do so. This is what she writes:

Why is permission needed to appeal?

For those who do not practise Patent litigation in the Courts of England and Wales, the need for a party to seek permission to appeal a judgment is often considered quirky. Permission to appeal a County Court or High Court decision is now required in virtually all cases, compared to (for example) France and Germany, where permission to appeal to a higher court is an automatic right.

A few years ago, the requirement to seek permission to appeal was challenged (see Pozzoli SPA v BDMO SA and Moulage Industriel de Perseigne SA [2007] EWCA Civ 588.) Pozzoli argued that Article 32 the TRIPS Agreement (which reads "An opportunity for judicial review of any decision to revoke or forfeit a patent shall be available") imposes an obligation to grant permission to appeal where a patent has been revoked at first instance, even if there is no real prospect of success on appeal.

The Court of Appeal dismissed Pozzoli's argument that Article 32 requires a full judicial hearing on the merits and held that a decision by the Court of Appeal as to whether or not to grant permission to appeal from an order for revocation is a "judicial review" within the meaning of Article 32 of the TRIPS Agreement.

However, the Court of Appeal went on to observe that, in patent cases which are not very clear and which would not be understood sufficiently readily by the Court of Appeal in an hour or so, the better course was normally for the trial judge to grant permission to appeal. This was because the Court of Appeal, when faced with an incomplete understanding of the case and a plausible skeleton argument seeking permission to appeal, would be likely to grant permission in any event.

So it still remains the case that a party wishing to appeal a judgment from a lower court must first convince the judge who made the decision to be appealed that the appeal has a real prospect of success or that there is some compelling reason why the appeal should be heard. Examples are cases raising questions of great public interest or questions of general policy. Alternatively, following Pozzoli, permission may also be granted if a party can convince a judge that it would take the Court of Appeal more than an hour to sufficiently understand the case to make a meaningful decision on permission to appeal. In practice, this is often a more appealing submission than trying to convince a Judge that he got it wrong. Failing that a party can still apply directly to the appeal court in an appeal notice.

Any permission granted may be limited to particular issues to be heard on the appeal or may be subject to conditions, for example, deferring the hearing of the appeal to a later date.

In all cases the appellant (or intended appellant, if that party is seeking permission from the appeal court) must request permission to appeal in an appellant’s notice. The appellant’s notice must be filed at the appeal court within 21 days after the date of the decision of the lower court that the appellant wishes to appeal unless an alternative period is directed by the lower court (which may be longer or shorter than 21 days). An appellant who requires more than 21 days should apply to the lower court when the judgment is given.

Next week: Expedited patent trials

All change for smaller businesses 4: IPO Patent Opinions Service

Sunday is the day for Liz Cohen's Explaining Patent Litigation series, and here's the fourth of her six reader-friendly posts on patent litigation in England and Wales. In this post Liz, who is a partner, Bristows LLP, writes about one of the best -- and most under-used -- features of the British dispute resolution infrastructure, the excellent patent opinions service offered by the Intellectual Property Office. Liz writes:

All change for smaller businesses: IPO Patent Opinions Service

It is well known that small and medium sized enterprises (SMEs) are important for innovation and job creation. It was acknowledged in the Review of Civil Litigation Costs by Lord Justice Jackson, published in January 2010, and more recently, in the Hargreaves Review of Intellectual Property and Growth, published in May 2011, that more needs to be done to assist SMEs with their intellectual property rights in the UK. A number of measures and reforms have since been introduced to achieve this purpose. These include reforming the Patents County Court (PCC) and introducing various tax reliefs. In addition, the IPO is currently consulting on proposals to expand the subject matter of its opinion service and to increase its ability to file revocation actions in relation to patents which it opines are invalid.

The final blog in this three part mini-series looks at the proposed IPO reforms.

The IPO has launched a consultation which outlines proposals to expand the IPO Patent Opinions Service by amendment to the primary legislation. Currently, the service provides non-binding opinions on questions relating to the infringement or validity (limited to novelty and inventive step) of granted UK patents. The IPO has issued over 150 opinions since the service was launched and over 90% of opinions on infringement have been requested by SMEs.

The IPO propose to enhance the Patent Opinions Service by expanding the questions relating to validity that can be the subject of an opinion to align them more closely with the grounds of revocation of a patent (i.e. whether the invention in question is capable of industrial application, relates to matter excluded by Section 1(1)(d) Patents Act 1977, is sufficient, adds matter, or has been extended by an amendment which should not have been allowed). Additionally, the IPO propose to offer opinions as to whether a SPC is valid and/or infringed.

Perhaps the most significant proposal is the expansion of the IPO’s rights to file for revocation of a patent on which it has issued a negative validity opinion. In such circumstances, this will remove the burden, and in particular the cost burden of filing a revocation action. This may be especially beneficial to SMEs. It could also benefit other businesses who have an interest in the patent (e.g. who are worried about infringement) but who were not involved in the opinion process.

The rationale behind the proposals is to enable companies to resolve more of their IP disputes through the Patents Opinions Service without having to resort to costly litigation. The proposals may cause concern for UK patent and SPC holders who may now have to get involved in a dispute at a much earlier stage. Previously, a patent holder would have little concern over a negative validity opinion issued on their patent. This is because the patent would not be revoked unless the opinion requestor commenced revocation proceedings in court or the IPO (which would often be prohibitively expensive for many SMEs). Now there will be a much greater incentive for patent holders to make submissions on validity to the IPO when a patent is challenged using the Opinions Service, as a finding of invalidity may well lead to initiation of costly revocation proceedings by the IPO.

Next week: Permission to Appeal

Explaining patent litigation 3: All change for smaller businesses - tax benefits

In this, the third in a series of six reader-friendly posts on patent litigation in England and Wales, Liz Cohen (partner, Bristows LLP) moves from activity in the courts to the quest for financial betterment which enables businesses -- particularly the smaller ones -- to become more effective litigants.  She explains:

"All change for smaller businesses: tax benefits 

It is well known that small and medium sized enterprises (SMEs) are important for innovation and job creation. It was acknowledged in the Review of Civil Litigation Costs by Lord Justice Jackson, published in January 2010, and more recently, in the Hargreaves Review of Intellectual Property and Growth, published in May 2011, that more needs to be done to assist SMEs with their intellectual property rights in the UK. A number of measures and reforms have since been introduced to achieve this purpose. These include reforming the Patents County Court (PCC) and introducing various tax reliefs. In addition, the IPO is currently consulting on proposals to expand the subject matter of its opinion service and to increase its ability to file revocation actions in relation to patents which it opines are invalid.

This blog looks at the proposed tax benefits.

The Patent Box will be available to all businesses within the scope of UK corporation tax, including SMEs. It will be phased in over a period from 1 April 2013 to 1 April 2017, assuming that an election for the regime to apply is made. To be eligible, the SME needs to own, or hold an exclusive licence for a qualifying IP right, which they have contributed to the development of, or incorporated into a product, and receive income related to that right. The result is that SMEs could find themselves paying only 10% rather than 20% tax on income related to a product protected by an IP right, including royalties and compensation for infringement.

Additionally, some improvements have recently been made to R&D tax relief. The rate of additional deductions for SMEs will be increased from 100% to 125% (giving rise to a deduction of 225% in total) and the rule capping the amount of any repayable tax credit by reference to the company’s PAYE/NIC liability will be removed. To offset this, the repayable tax credit will be reduced to 11% of the surrenderable loss (from 12.5%, having already been reduced from 14% in April 2011). Additionally, the definition of an “externally provided worker” will be widened to allow more costs to qualify, the minimum expenditure threshold of £10,000 a year will be removed, and the existing definition of “going concern” will be clarified to ensure that companies in administration or liquidation cannot benefit.

R&D tax relief, which can be extremely valuable to SMEs, is often overlooked by them. This is mainly due to the complexity of the legislation and the difficulties in identifying qualifying activities, especially given the frequent changes made by the government to the regime since its introduction in 2000. It is thought that identifying qualifying revenue for the Patent Box will be more straightforward, although some SMEs have expressed concerns that it may be uneconomical for them to claim the tax break due to the advisory and administrative costs required to file a claim.

Following confirmation of the Patent Box in the 2012 Budget, GlaxoSmithKline announced it would invest more than £500m in the UK across its manufacturing sites. This includes £350m for a state-of-the-art biopharmaceutical manufacturing facility in Ulverston, Cumbria and more than £100m across its two manufacturing sites in Scotland, to manufacture key materials for its portfolio of respiratory medicines and vaccines, and to increase production capacity for antibiotics. Hopefully, many SMEs will follow suit and take full advantage of the available tax reliefs in the UK".

Next week: All change for smaller businesses -IPO Reform

Explaining patent litigation 2: All change for smaller businesses - the PCC

Last week PatLit introduced the first in a series of six reader-friendly posts on patent litigation in England and Wales by Liz Cohen (partner, Bristows LLP). This week Liz talks about the aims and objectives of the Patents County Court:

All change for smaller businesses: The PCC

It is well known that small and medium sized enterprises (SMEs) are important for innovation and job creation. It was acknowledged in the Review of Civil Litigation Costs by Lord Justice Jackson, published in January 2010, and more recently, in the Hargreaves Review of Intellectual Property and Growth, published in May 2011, that more needs to be done to assist SMEs with their intellectual property rights in the UK. A number of measures and reforms have since been introduced to achieve this purpose. These include reforming the Patents County Court (PCC) and introducing various tax reliefs. In addition, the IPO is currently consulting on proposals to expand the subject matter of its opinion service and to increase its ability to file revocation actions in relation to patents which it opines are invalid.

In a series of blogs, these three reforming measures will be examined in more detail. The first blog in this series of three looks at the reforms for the PCC.

After widespread reform in late 2010, the PCC is increasingly becoming a court of choice in IP matters, particularly for SMEs. Previously, many SMEs and private individuals were priced out of enforcing or defending their IP rights. The PCC is now suited to handling smaller, less complex, lower value actions, and its procedural rules are targeted to cases of that kind. The result? Shorter, cheaper, quicker litigation better suited to SMEs and private individuals looking to protect and assert their IP rights.

Key features of the PCC are as follows: proactive and flexible case management; concise but complete statements of case (pleadings); early case management conferences; no standard disclosure; no exchange of evidence, experiments, surveys or skeleton arguments as standard; and trials that last a maximum of two days without cross-examination of experts. Of additional benefit to SMEs is the costs cap of up to a maximum of £50,000 and damages cap of £500,000. This limited liability for costs and damages is an important consideration in determining whether to take or defend any action in the PCC.

Despite the name, the PCC has jurisdiction to hear all IP matters. Currently, all IP claims are allocated to the multi-track and the remedies available to the parties are the same as in the High Court of England & Wales. These include preliminary and final injunctions (interdicts), search and seizure and asset freezing orders, capped damages, accounts of profits and delivery up.

From 1 October 2012, there will be a new small claims track for copyright, trade mark, unregistered design and database rights cases in the PCC (patents and registered design cases are excluded). The small claims track will generally apply where the value of the claim is not more than £5,000, the particulars of claim state that the claimant wishes the claim to be allocated to the small claims track and no objection is raised by the defendant in the defence. Interim remedies under CPR part 25 will not be available. This measure should hopefully provide yet further assistance to SMEs and private individuals looking to protect their rights quickly and in a low cost forum.

Next week: All change for smaller businesses - tax benefits.

Explaining patent litigation I: New Term

In this, the first in a series of six reader-friendly posts on patent litigation in England and Wales, Liz Cohen (partner, Bristows LLP and a previous PatLit guest blogger here) introduces the subject for the benefit of (i) those who have never experienced it before and (ii) those who, having experienced it, wonder what on earth it was all about ...

New Term 

As the holidays end, and everyone returns to work, thoughts inevitably turn to the new court term ahead. Michaelmas Term starts in the High Court of England and Wales on 1 October and with it come those court applications that have been contemplated and prepared over the summer vacation, but not considered suitable, or urgent enough, for vacation business.

For those who are less familiar with the Court system in England and Wales (and quite often for those who are...), making a court application can be a confusing and tricky business. There are always several stages. The first stage tends to be to determine the status of the person making the application (for example are they a party or a non party -- hopefully this is not too difficult to do) and to decide what the application is for. Without careful thought an applicant can be flummoxed by the court asking “What is it you want the court to do?”, to which a frustrated applicant is tempted to answer “Isn’t it obvious?!”. This can ideally be avoided by some initial thoughts as to whether a party is seeking a decision, a remedy or permission to do something.

Once that is decided, it is always a good idea to look at the Rules. Generally the Civil Procedure Rules (CPR) Part 23 is a good place to start, but the trick is to appreciate that other parts of the CPR and Practice Directions can also apply and vary CPR Part 23 for specific applications. The Chancery Court Guide, particularly Chapters 5 and 6 can be useful and, for Patents, CPR 63, the Practice Direction and the Patents Court Guide will need to be consulted. In working out which Rules and Guides to take note of, an applicant will need to first determine at least what type of application you are making. For example, will the application be determined on paper, by telephone or at a hearing, will it be made by consent or is it opposed, ex parte or inter parte, on notice, or without notice?

The next stages of completing the application notice, drafting the order sought, working out the fee and issuing and serving the application follow. Evidence in support of the application will need to be drafted, filed at court and served on all parties. If the application is to be determined at a hearing, bundles, a skeleton argument and statement of costs will need to be prepared ahead of the hearing. Once the hearing has taken place the order will be drawn up, sealed and served.

After all that, another holiday is probably in order.

Next week: "All change for smaller businesses"