Patent Infringement Proceedings in England and Wales
Since 1990 there have been two forums for patent infringement proceedings in England and Wales. The more important is the traditional High Court (Patents Court). The other is the Intellectual Property Enterprise Court (IPEC) (formerly the Patents County Court) intended to deal with cases more quickly and cheaply than the High Court. The practice in both courts is regulated by the Civil Procedure Rules (“CPR”). Part 63 of the Civil Procedure Rules contains specific rules for intellectual property, including patent, disputes. Both Courts offer the same range of remedies to Patentees. However, practice in the IPEC varies considerably from that in the Patents Court resulting in a reduction in the time it takes for cases to come to trial. Presently there is a cap on the monetary value of claims for patent and design infringement of £500,000 for cases at the IPEC. There is a section below on how to choose between the High Court and the IPEC.
It is also possible for the parties to a patent infringement action to agree that it should be heard in the Intellectual Property Office. However, because the Comptroller is unable to grant injunctions, this is rare and little discussion of it is provided in this document.
From 1 October 2005 it has also been possible for any person to request an opinion from the Comptroller as to whether (a) a particular act constitutes an infringement of a patent or (b) a patent is invalid for lacking novelty or inventive step. The opinion may be subject to a review, on the patent proprietor’s request, before the Comptroller. If a patent is determined to be clearly invalid in the opinion process, the Comptroller has the power to then revoke the patent. The request for an opinion is published. The Intellectual Property Office’s fee for an opinion is currently £200 and it aims to deliver the opinion within 3 months.
2 Preliminary Steps
Three steps are usually involved prior to the commencement of proceedings, namely (1) obtaining proof of infringement, (2) checking the vulnerability of the patent to a counterclaim for revocation and (3) selection of the legal team. In brief the considerations are as follows:
2.1 Obtaining Proof of Infringement
In order to succeed in an infringement action, it is in principle necessary to prove (a) that the alleged infringing article (or substance or process) falls within a claim of the patent in suit and (b) that the article (or substance or process) was the subject of an infringing act (e.g. making, importing, selling or performing) done by the Defendant in the United Kingdom before commencement of proceedings. In the case of a patent for an article, for instance, these points are normally proved (i) by obtaining one of the infringing articles, (ii) by demonstrating a connection between the article obtained and the Defendant, and (iii) at the trial, (if not by then admitted), by adducing evidence that the article meets all the features of the claims allegedly infringed.
A common procedure is for a sample of the article, desirably one so labelled as to connect it with the intended Defendant, to be obtained in a bona fide manner. It is then inspected by the Claimant's Patent Attorneys and other advisers so that they can satisfy themselves that it is or may well fall within the terms of a claim of the patent. The article, together with any material such as labels, invoices and packaging which connect it with the Defendant, is then kept in safe custody.
Normally a Claimant will at an early stage press for an admission by the Defendant that the article is in fact derived from him and that it does fall within the terms of a claim of the patent in suit. It is not, however, obligatory for the Defendant to make such admissions, even if true. In the absence of such an admission, the Claimant is put to the task of strictly proving the alleged infringement with the aid of such evidence as he can muster of the foregoing type supplemented by any further relevant evidence. If the proof he can adduce is inadequate, he will probably have to abandon the infringement action and, if still possible and if practical, start all over again. The Defendant is entitled to an award of costs in respect of any abandoned proceedings. So it is clearly advisable to collect adequate evidence of infringement before initiating proceedings.
A failure to give admissions where requested can, in appropriate circumstances, lead to adverse costs consequences for the Defendant e.g. if the Defendant's article was indeed found to have infringed, the Defendant may be liable to pay the costs of establishing infringement, even if the Defendant wins overall because it successfully invalidates the patent.
2.2 Checking the Vulnerability of the Patent
Where infringement of a patent is alleged, it is always open to the Defendant to claim in his defence that the patent is and always was invalid. Under those circumstances he would also counterclaim that the patent should be revoked. Both actions are then dealt with simultaneously by the Court. Therefore, we normally recommend that, before commencing infringement proceedings, consideration should be given to validity. If time permits and there is a real possibility that the proceedings will be seriously defended, we recommend that the prosecution file of the patent in suit is carefully examined, as well as the files of corresponding applications or patents in other countries. Any other prior publications or prior use of possible relevance to validity of which our client is aware should also be considered so that it can be confirmed that at the very least no unanswerable attack on validity is likely to be available to the Defendant. This investigation may reveal matters affecting validity which ought to be dealt with by amendment of the patent, either before any infringement proceedings are commenced, or at an early stage in the proceedings.
2.3 Choice of Legal Team
Before infringement proceedings can be commenced, it is necessary to select a legal team. This may include a solicitor or Patent Attorney and often also Counsel, and our litigation group includes specialist litigation solicitors, High Court patent litigation qualified patent attorneys and a barrister. Counsel need only be instructed simultaneously with, or shortly after, the start of the proceedings but his or her opinion may well be sought before commencement of proceedings.
The question of whether and when to brief Senior (Queen’s) Counsel in addition to Junior Counsel depends on the progress and complexity of the case, the importance the client attaches to the matter, and the budget which they set. We are, of course, pleased to recommend both Senior and Junior Counsel.
There is a general principle in the UK that parties should see whether matters can be settled before any proceedings are issued. There are no specific guidelines for patent and design disputes but a general pre-action conduct guideline is available here.
Whether or not pre-action protocol is followed affects the timetable, once proceedings are issued. However, giving advance warning to a defendant of the potential for proceedings can hand the initiative to the defendant (for example by way of starting proceedings in a different territory with the sole aim of delaying proceedings in the UK or by way of bringing a threats action (see Section 5.1 below)). Therefore, whether or not it is appropriate to write to a prospective defendant to see if matters can be settled before any proceedings are issued needs to be carefully considered on a case by case basis.
3 Choosing Between the High Court and the IPEC
The differences between the procedure at the High Court and the IPEC make the IPEC attractive in particular for small and medium size enterprises (SMEs), as a fast and cost effective IP litigation forum.
In the High Court, the Patents Court forms part of the Chancery Division. There are a number of specialist High Court Judges assigned to deal with patent matters, and these are supplemented with Deputy Judges, who are usually Queen’s Counsel specialising in Intellectual Property cases. The Court is very experienced at dealing with cases ranging from extremely complex matters worth millions of pounds to far smaller patent disputes. Court fees in the High Court are relatively high. Combined with different practice and representational requirements this tends to mean that litigation in the High Court is more expensive than in the IPEC.
The IPEC has one full time HH Judge Richard Hacon. Court fees in the IPEC are lower than in the High Court, and parties can be represented by Patent Attorneys, Solicitors or by Counsel instructed by Patent Attorneys or Solicitors. It is possible to keep costs in the IPEC considerably lower than in the High Court because a cost-benefit test (PD63, para 29.2(2)) will be applied by the Court to determine whether parties will be required to provide disclosure of documents or a product or process description, whether parties will be permitted to rely on experiments, witness statements, experts’ reports, cross-examination at trial and written submissions or skeleton arguments. Significantly, recovery of costs for the successful party in IPEC proceedings is limited to a maximum of £50,000, in almost all cases, often less. The procedure is more similar to the procedure at the European IP Courts, in particular the Board of Appeal at the EPO, with hearings being limited to a maximum of two days. Therefore, the procedural timetable is tighter and fewer evidential steps are available. It is expected to take less than 12 months from commencement to trial. The maximum claim for damages in the IPEC is £500,000.
A case started in the IPEC may be moved up to the High Court or vice versa. Guidelines to assist users in determining which of the two courts is suitable indicate that the size of the parties, the complexity of the claim, the nature of the evidence, whether there is conflicting factual evidence and the value of the claim are important. If both sides are small or medium sized enterprises then the case may well be suitable for the IPEC. Because of the streamlined procedure of the IPEC and the fact that trials last no more than two days, a complex case is likely to be more suitable for the High Court. Although experiments may be admitted in the IPEC, any case which involves substantial complex experimental evidence will be unsuitable for the IPEC. Because cross-examination of witnesses is strictly controlled in the IPEC, disputed factual matters such as allegations of prior use may best be handled by the High Court. As a general rule of thumb, disputes for which the value of sales, in the UK, of products protected by the intellectual property in issue exceeds £1 million a year are unlikely to be suitable for the IPEC.
The Court of Appeal has said that cases raising difficult and complex issues, where money is no object to the parties, should be heard by the High Court.
The procedure in the Patents Court and the IPEC is detailed in an Annex.
The cost of taking patent infringement proceedings through trial can be high. The cost depends very much on the particular facts of each case and whether the case is at the High Court or at the IPEC.
On 1 April 2013 new rules for the management and recovery of litigation costs for cases with a value of less than £10 million in the High Court came into force.
The rules act as a cap on recoverable costs and are in that respect a positive development. However, it does mean spending some time at the beginning of the process estimating the likely costs through to the end of trial. Factors will include the number and location of relevant documents to be disclosed, what evidence, expert and/or fact is required, and how large the legal team should be.
If the new rules apply, each phase of the litigation must be budgeted in a detailed form for the Court and the other side. It will not be possible to revise the budgets unless there are significant and unexpected developments in the claim.
Budgets should be agreed between the parties but if that is not possible the Court may approve the budget, having reviewed all elements of the estimate including hourly rates and the estimated number of hours for each phase.
4.1 Award of Costs
An award of costs will normally be made to the successful party. Such awards are almost always for less than the amount actually spent. The usual proportion of expenses recoverable from the losing party by the winning party is around two-thirds of the actual costs. If the cost budgeting rules are applied to the case then then the winner might expect to recover almost all of its budgeted costs. In addition, a successful Patentee will usually be able to recover damages, or be entitled to an account of profits.
An important difference between the High Court and the IPEC is that at the IPEC the recoverable costs from the losing party are limited to a maximum of £50,000 making this venue more attractive for an SME to bring proceedings against a larger defendant who might be able to spend freely on its defence.
5 Additional Considerations
In the UK, only a small proportion of infringement actions ever reach the stage of full Trial. The Defendant may seek, and the Claimant can offer, a settlement at any time before hearing. The most common occasions for settlement approaches are (i) at the stage of exchange of Statements of Case, before heavy legal and technical expenditure arises, and (ii) in the months prior to the hearing when, although a decreasing potential for saving is available, the consequences of winning or losing become more apparent, and the demands on the time and money of the parties are high.
The Civil Procedure Rules set out a formal procedure whereby offers of settlement can be made in accordance with specified timetables and with specified costs consequences for failure to accept an appropriate offer. Such offers are known as "Part 36 Offers" and can be an invaluable strategic tool in the run up to trial.
It is possible, provided the parties agree, and the Comptroller does not take the view that Court proceedings are the proper course, to bring infringement proceedings before the Comptroller of the Intellectual Property Office. A decision of the Comptroller can be appealed to the Patents Court. This course could prove to be less expensive than having direct recourse to the Court but, hitherto, it has rarely been used. In our view, it would be essential, before a decision to use it were made, carefully to consider with Counsel the chances of obtaining a favourable decision before this tribunal, which is not accustomed to receiving oral evidence nor to deciding issues of infringement.
The Courts are keen to encourage settlement and the Civil Procedure Rules emphasise the importance of methods of Alternative Dispute Resolution (ADR). It is becoming increasingly common for proceedings to be stayed for a specified period of time (usually one month) to allow the parties to mediate. Arbitration and Mediation of patent infringement disputes is available through a number of organisations, including WIPO (the World Intellectual Property Organisation).
6 Related Matters
For completeness, three other points, namely the question of warning infringers of the existence of the patent, the possibility of seeking interim relief, and interplay of patent infringement proceedings in England and Wales with European Patent Office (EPO) Opposition Proceedings require comment.
6.1 Warning Infringers
It is important to remember that, by section 70 of the Patents Act 1977 (as amended by the Patents Act 2004), the Court will restrain unjustifiable threats of infringement and grant damages in respect of such threats. The Courts have for many years taken an extremely broad view of what constitutes an actionable threat. However, the amended section 70 limits the types of approach that can constitute an actionable threat, and the IP Threats Bill currently before Parliament will further water down threats provisions.
There is an exception in respect of a manufacturer or an importer of a patented product or the user of a patented process: such persons can be safely threatened with proceedings both in respect of the acts of manufacture, importation and use and also in respect of other acts done in relation to the products manufacturer or imported and the process used.
It is not a threat merely to notify another person that there is a patent and to provide factual information about that patent. It is also not a threat to make enquiries of a person for the sole purpose of discovering whether, or by whom, the patent has been infringed by the acts of manufacture, importation or use of a patented process.
Notifying a person that there is a patent is normally interpreted by a recipient or his advisors as a warning that he is likely to be sued and, as a consequence, it does sometimes suffice to put an end to infringement, particularly in cases where the infringer was previously ignorant of the patent or is timid. However, there are cases where such a “mere notification” can do more harm than good. For example, it may cause the potential Defendant to make it more difficult to obtain proof of infringement; it can give the impression of weakness if not followed up promptly by initiation of suit; it can result in any preliminary application to amend the patent being opposed; or it can waste valuable time where the infringement is flagrant and interim relief is required.
Thus the question of whether or not to notify the infringer must be considered on a case by case basis. In all cases, however, it is of paramount importance that any approach, whether verbal or written, to the potential infringer be made under the strict control of the legal team. This is because if the warning goes beyond what is permitted by Section 70, this may result in the infringer gaining an advantage on the Patentee by initiating proceedings under Section 70.
6.2 Interim Relief
Interim relief, by way of an injunction stopping the defendant’s activities in the period up to full trial, is a very valuable expedient where it is available to the Patentee. Interim relief may enable the Patentee to stop the infringement at an early stage, and well before the hearing in the Patents Court. As it generally takes about a year to bring an infringement action to trial in the Patents Court interim relief can shorten the period of infringement substantially. Its grant, which is at the Court's discretion, is always conditional upon the Patentee giving a so called “cross undertaking” in damages. That is an agreement from the Patentee, in the event that the Defendant succeeds at the trial, to pay damages in respect of any loss the Defendant can prove he suffered as a result of wrongful imposition of the injunction.
To succeed in obtaining an interim injunction, a Patentee does not actually have to prove that the patent is infringed or that his patent is valid; he need only establish that he has an “arguable” case on both these points. The Patentee must, however, also establish that the “balance of convenience” is in favour of granting an interim injunction. More specifically, the Patentee must endeavour to establish that, unless he is granted interim relief, he will be damaged to an extent which is incalculable or in a way for which he cannot be compensated by the award of damages following success at the trial. The Defendant will normally seek to establish that he is in a rather similar position in relation to the cross undertaking in damages and do his best to cast doubt on the infringement and validity aspects of the Patentee’s case. The Court will also take into account any delay there may have been in seeking interim relief after infringement started or first came to the notice of the Patentee, and is likely, if the delay is too long and cannot be justified, to exercise its discretion against the Patentee.
The grant of interim relief is now relatively infrequent, the Court preferring to order a speedy trial of the issues. However, an application for interim relief remains a useful procedure for Patentees holding a monopoly for a well established patented product against those trying for the first time to break into his market, and also where the infringer has limited financial resources. Its effect is often to dissuade the infringer from contesting the infringement action further, but it should always be remembered that the Patentee must act very promptly and vigorously and has a difficult burden to discharge. Although evidence is normally given only by witness statements, costs can still be quite high. Decisions of the Patents Court on interim applications can be appealed in the same way as full trial decisions.
6.3 Interplay of patent infringement proceedings in England and Wales with EPO Opposition proceedings
The guidelines governing the possibility of a stay in infringement proceedings of a European patent in England and Wales pending outcome of parallel Opposition proceedings at the EPO have been updated in 2013. Previously, the key guidance given by the Court of Appeal in Glaxo Group Ltd v Genentech Inc  Bus LR 888 was that the Court should normally refuse a stay of its own proceedings if it would be likely to resolve the question of validity significantly earlier. Given the slow pace of EPO Opposition/Appeal proceedings, this meant in practice that a stay of infringement proceedings in the English Court for a European patent under Opposition was generally very unlikely.
The judgment of the Court of Appeal in IPCom GmbH & Co Kg v HTC Europe Co Ltd & Others  EWCA Civ 1496 changes the previous guidance in some respects. Notably, if there are no other factors, a stay of the national proceedings is the default option. Also, if a patentee opposing a stay wants to seek damages, they may need to undertake to repay those damages if the outcome of the EPO proceedings results in an earlier national decision being later undermined. However, the Court ultimately retains discretion as to whether to stay or progress a given case, taking into account for instance commercial factors. Whether or not a stay of infringement proceedings will be granted in the English Court in view of a parallel EPO Opposition will depend very much on the facts of a given case.
31 August 2016
1 IPEC Proceedings
The procedure at the IPEC is more similar to the procedure at other European IP Courts, in particular the Board of Appeal at the EPO. It is necessary for parties to set out their case fully but concisely early on in writing. Below is a summary of the procedure which is set out more fully in the Guide available here.
1.1 Statements of Case/Defence/Counter Claim
Proceedings are initiated by a written statement of case which sets out concisely all the facts and arguments upon which the party serving it relies. This is similar to Opposition proceedings before the EPO where a case must be made completely and all evidence submitted before the Opposition deadline.
A defence and, if appropriate, any counter claim must be filed within 42 days of the written statement of case if the Pre-Action Conduct practice direction (i.e. settlement has been sought) has been complied with or otherwise 70 days. A reply to the defence must be filed within 28 days and a defence to any counter claim must be filed within 14 days. The statement of case, defence and counter claim must each be verified by a statement of truth and these documents will form the basis of the proceedings. Time limits may only be extended with permission of the Court and with good reason.
1.2 Case Management Conference (CMC)
A Case Management Conference will be held with the Judge. The contentious issues will be identified at the Case Management Conference and a trial date and possibly the judgment date will be set. The Judge will consider whether to allow witnesses of fact or expert evidence at the Case Management Conference and such a request will only be granted if this is sensible based on a cost-benefit analysis. Most cases proceed without any or with only very few evidential steps.
1.3 Preparation for Trial and Trial
Any trial lasts for a maximum of 2 days. The procedure is similar to that in contentious proceedings at the EPO and the Judge will have considered all relevant issues beforehand. The opportunity for cross examination during the trial is limited and only at the Judge’s discretion, should he deem it necessary.
2 High Court Proceedings
Proceedings can conveniently be considered as consisting of three stages at first instance, together with perhaps one or two further stages by way of appeal. These stages are:-
2.1 Statements of Case/Pleadings
Proceedings are initiated by issue and service of the Claim Form, which sets out the relief that the Claimant seeks. Particulars of Claim, which set out the details of the Claimant's case, are either served with the Claim Form or shortly afterwards. Following receipt of the Claim Form and Particulars of Claim the Defendant then has a period of time within which to prepare and serve its Defence or Defence and Counterclaim. It is usual for the Defendant to counterclaim that the patent is invalid. Where the validity of the patent is put in issue, the Defendant must also serve a separate document, Grounds of Invalidity, along with the Defence and Counterclaim. The Grounds of Invalidity set out clearly which grounds the Defendant relies upon and provides details of each ground e.g. prior use, obviousness, insufficiency or added matter.
The Claimant may then file a Reply or Reply and Defence to Counterclaim. The Claimant must apply for a Case Management Conference within two weeks of receiving an Acknowledgement of Service or the Defence. Both parties must file a Disclosure Questionnaire 14 days before the Case Management Conference, and a costs budget unless the case is exempt. The Case Management Conference takes place before a Judge of the Patents Court soon afterwards.
2.2 Complying with the Directions
At the Case Management Conference, the Judge will give a “not before date” for trial and order directions in relation to procedure leading up to it. These may include directions for Disclosure, Amendments to Pleadings, Information and Clarification of either party’s case, Admissions by one party of the other’s allegations, Inspection of the Defendant’s premises, Experiments and Models and directions for the Written Evidence of experts and other witnesses. Compliance with the directions is very important, and the Court now operates strict timetables in order to manage its time efficiently and speed up the process to trial.
Standard rules for Disclosure of relevant documents in the possession of both parties now apply in both the High Court and the IPEC, but these have been simplified, and in some cases can be partially replaced with a Product or Process Description. The Judge has wide powers and can order points to be heard as Preliminary Issues before the full trial itself. He now has the power to order that expert witnesses meet in advance of the trial to discuss points and even to order that an independent expert be instructed to give evidence at trial.
2.3 Preparation for Trial and Trial
Once the Witness Statements, Expert’s Reports and evidence have been served on the other party, Court Bundles, Skeleton Arguments and a non-contentious Reading Guide are prepared and sent to the Judge. The Trial is attended by the witnesses, who are called by the parties and give evidence orally, and by the parties’ representatives and advocates and usually by the parties themselves. It should be noted at this point that it is possible to issue the claim using the Shorter Trial Scheme. If the case proceeds in the Shorter Trial Scheme there will be limited disclosure, limited evidence, and a trial of no more than four days. The Scheme is suitable for a simple claim which might have been suitable for the IPEC, but which is too high value.
When the Patents Court or IPEC has given its decision, it is open to either party, with permission, to appeal first to the Court of Appeal and then, with permission, to the Supreme Court.