Court of Appeal backs parallel UK and EPO patent proceedings but alters guidelines for future cases

The Court of Appeal ruled that UK court proceedings between IPCom and HTC revisited existing guidelines on whether to 'stay' cases in the UK whilst parallel proceedings before the EPO are finalised. It rejected HTC's attempt to hold up UK proceedings whilst the EPO rules definitively on the validity of IPCom's patent.

The review of the 'Glaxo' guidelines, which stem from a 2008 case involving pharmaceuticals giant GlaxoSmithKline, was prompted by a decision of the Supreme Court earlier this year in a separate case.

Lord Justice Floyd, supported in his judgment by Lord Justice Patten and Lady Justice Rafferty, said that the Patents Court has "very wide" discretion about whether to suspend UK proceedings in a patent dispute whilst parallel proceedings are ongoing before the EPO. However, the judges laid out a range of revised criteria to those established in the Glaxo case that UK courts should consider when determining whether to stay or proceed with cases.

The most significant change is that, where parallel proceedings exist, the "default option" should be to stay proceedings where no other factors exist. The Glaxo guidelines previously stated that the duplication of proceedings was not itself sufficient to warrant the grant of a stay. The judges said that the onus is specifically on parties seeking for UK proceedings to continue to explain why UK proceedings should not be halted.

However, the judges agreed that the ultimate decision about whether to proceed with cases will depend on "where the balance of justice lies" and said that providing commercial certainty, and increasing the chances of settlement – even where decisions they take could be rendered void by future rulings by the EPO – were relevant factors to be considered.

Providing speedier commercial certainty will usually be a weightier factor encouraging UK proceedings to continue than the possibility of the disputing parties running up "wasted costs" if rulings issued by the UK courts are voided by EPO judgments, they said.

Whilst the guidelines now acknowledge that there are circumstances in which a party's interests can be badly prejudiced by the refusal of a stay, such as where it has to pay damages for the infringement of a patent that the EPO subsequently finds to be invalid, they also state that these risks can often be addressed through suitable undertakings. An example would be where a patent owner agrees to repay any damages they are awarded where the EPO subsequently rules the patent to be invalid.

Facts such as increase in the likelihood of delay, live issues of infringement and the relative commercial certainty that would be achieved by a trial at the end of the year were relevant to the Court of Appeal's decision to reject HTC's bid to hold up UK proceedings.

"It will be rare, for example in pharmaceutical cases, that no other factors will exist. Therefore, the judgment essentially reaffirms the status quo placing emphasis on the ability of the national courts to achieve some commercial certainty prior to a final decision being reached at the EPO," life sciences and patent law specialist Samantha Carter of Pinsent Masons, the law firm behind Out-Law.com, said.

"In practice, this means that it is likely to remain difficult to secure a stay of national proceedings pending a ruling in the EPO, where time frames are often uncertain and delayed," she added.

IPCom has accused HTC of infringing its patent but the Taiwanese smartphone manufacturer has disputed the claims and also challenged the validity of IPCom's patent.

The companies have been in dispute over the validity of the patent both in the UK and before the European Patent Office (EPO) in recent years. A related dispute regarding the licensing terms for the patent is also unresolved in the UK. The technical appeal board at the EPO ruled earlier this year that IPCom could rely on amended claims for its patent to defeat certain challenges to its validity. However, further issues in the opposition proceedings before the EPO have yet to be ruled on which regard other aspects challenging the validity of IPCom's patents.

HTC therefore asked the High Court earlier this year to postpone the UK trial addressing the alleged infringement of IPCom's patent, which is scheduled for next month, until the EPO had conclusively determined the validity and scope of claims that the patent can rely on.

In September High Court judge Mr Justice Roth rejected HTC's application to stay proceedings. One of the factors swaying his decision was that there would be "significant commercial benefit" in giving "relative certainty" by ruling on the issue of infringement on the basis of the status of the patent as determined by the EPO's technical appeals board. The judge also said it was relevant that the UK courts had already assessed some of the outstanding arguments around the validity of IPCom's patent that the EPO has still to rule on in a previous case involving Nokia.

However, Mr Justice Roth agreed to HTC's application to appeal his decision. This was because the Glaxo guidelines at the time governing how UK courts should handle patent disputes where there are parallel proceedings ongoing before the EPO were criticised by the Supreme Court. That Court called on the guidelines to be re-examined by the High Court and Court of Appeal when it was handing down a judgment in a case involving Virgin Atlantic Airways and Zodiac Seats.

Patents granted by the EPO can be simultaneously challenged both in the UK courts and through opposition proceedings before the EPO. A decision on the validity of a European patent by the UK courts only has national effect, whilst a decision by the EPO has effect across all the nations in which the patent is in force. Parallel proceedings are often launched because it can often take five or six years to settle a case brought before the EPO, whilst UK court rulings can generally be obtained in under half the time. It is relatively unusual for UK proceedings to be halted to wait for an EPO ruling.

"The Court of Appeal's judgment recognised the complexity of the range of outcomes that may arise from an EPO decision, including the possible revocation of a European patent across Europe, rather than merely in one country, as well as possible changes in the scope of claims patents can justifiably assert," life sciences and patent law specialist Camilla Balleny of Pinsent Masons said.

"It also recognised that national courts have exclusive jurisdiction to settle infringement issues and that they can revoke a European patent's applicability within their own jurisdiction. The judges also assessed the different ways that other EU countries, including Germany, address court procedures when parallel proceedings are ongoing in patent disputes," she said.