England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE PATENTS COUNTY COURT
(HIS HONOUR JUDGE FYSH)

		Royal Courts of Justice Strand London, WC2
		18 January 2005

1. LORD JUSTICE JACOB: This is a most unusual application. Proceedings for infringement of patent 0,687,238 were brought in the Patents County Court by the patentee (MDL) and its exclusive licensee (Pechiney). They succeeded. On 12th May 2004 the judge held that the patent was valid and infringed by a device called the M602, a large machine.
2. On 18th June an injunction and other relief were granted, along with permission to appeal on the issues of infringement and validity on a particular point.
3. The defendants then sought a declaration of non-infringement in respect of a modified machine. By a second judgment of 26th October 2004 the judge held that the modified machine would not infringe, and granted an appropriate declaration. It is, however, said to be technically inferior to the original machine. There is no challenge to that assertion.
4. The defendants appealed the first judgment and the patentees and their exclusive licensees the second. The appeals are fixed to be heard over a period of three days in mid-February, just a month away. The defendants have prepared the relevant paperwork. I was told that the patentees have not.
5. Meanwhile, on 16th December 2004, the opposition division of the EPO held the patent invalid on the ground of added subject matter (Article 100(c) of the EPC). This was not a ground argued in the English proceedings. In accordance with its standard procedure the opposition division (a) did not give its reasons at the time; and (b) declined to deal with any of the other objections raised against the patent. I have to say that in the circumstances of this case that procedure operates in a highly unsatisfactory and highly uncommercial way. I was told that the practice is to deal with objections point by point or groups of points together. If one of these succeeds all other attacks are put into abeyance. In some cases that may have some logic, for if the decision is right then the other objections will never need to be considered. But there is a considerable risk of very considerable delay if the opposition division is wrong. There will be an appeal on the point concerned. If that is successful the matter goes back for the remaining issues to be determined, with a consequential loss of time. In theory at least, if the practice is followed again, one could have something like a tennis match between the opposition division and the appeal boards, the case going forward in a series of halting steps. Much the wiser practice would be for the opposition division to consider the commercial position before considering whether to deal with the case on an issue by issue approach. Here, for instance, some of the very grounds raised before them were also in dispute in the English proceedings. It would at least have made sense to deal with those. They were live issues between the parties.
6. Currently the position is that the patentees have now appealed the opposition division decision. It is common ground that it will take at least 18 months for that to be determined. The opposition division has not yet given its reasons, even though the decision was given over two months ago.
7. The upshot of all this is that the future of the EPO proceedings, if the appeal in the EPO succeeds, looks long-drawn-out. The parties are agreed it may take at least four or five years. I am bound to say from my experience that people seem to be optimists rather than pessimists in relation to EPO proceedings.
8. Whether such long-drawn-out procedures -- and there are many worse cases than this -- are compliant with Article 6 of the Human Convention on Human Rights, remains to be tested. I say no more than that the EPO would be wise to consider the position now.
9. Also following the two judgments, the exclusive licensee, Pechiney, have ceased to fund the case, having lost commercial interest in selling this sort of machinery. I know not what the relationship between the patentee and the exclusive licensee was but it is quite clear that the patentee did not need to be a plaintiff (or claimant as we now call it in this country). The company could have become a defendant and let Pechiney make all the running at their own risk as to costs.
10. The patentees say they are in a small way a business, much smaller than the vast defendants and their associated companies. I do not have any actual figures as to the assets and income of the patentees. All I am told is that the world turnover is of the order of £15 million. The principal reason advanced for seeking a stay now is legal costs. The patentees are embroiled with the defendants in other jurisdictions, particularly Australia and New Zealand.
11. So what is now proposed is that, notwithstanding their success before HHJ Fysh, the appeals should be adjourned until the EPO opposition proceedings are over.
12. It is accepted that it will be necessary to protect the defendants in the meantime. It is now proposed that the existing injunctions be discharged. I have just been supplied with the following proposed order containing undertakings intended to provide protection:

"1. Subject to paragraph 2 below, appeals A3/204/1419 and A3/204/2379 be stayed until after final determination of the European Patent Office and Technical Board of Appeal in the opposition proceedings to European Patent Number 0,687,238 ('the Patent').

"2. The injunction set out in paragraph number 1 of the Order of the Patents County Court dated Friday 18 June 2004 be discharged forthwith but that any orders consequent upon such discharge be stayed pursuant to the Order in paragraph 1 above.

"3. The costs of this application be costs in the Appeal.

"The undertaking referred to above given by MDL is as follows:

"If, after the stay set out in paragraph 1 above is lifted, the Patent is still subsisting MDL will not seek injunctive relief or delivery up in respect of any act carried out by Sealed Air or any associated corporation which is a subsidiary of the ultimate parent company of Sealed Air Limited in respect of any act allegedly infringing the Patent in the United Kingdom in any case where the product alleged to be an infringement has been offered for sale or supply, delivered or installed in the United Kingdom by or to the order of Sealed Air or any subsidiary of the ultimate parent company of Sealed Air Limited prior to the date on which these Appeals and any consequent hearings on the merits of the action for liability is finally disposed of, and provided that thereafter nothing shall prevent MDL from seeking damages by way of a reasonable royalty for infringement or its rights (if any) under the Patent. MDL further undertakes that, in respect of any product which may be alleged to infringe the Patent offered for sale, sold, supplied, delivered or installed prior to the date on which the action on liability is finally disposed of, not to seek to prevent the repair and/or maintenance of such product in the normal course of operations and, in the case of a total loss, the replacement of such product, whenever occurring."

13. That undertaking would also, I was told, extend to other potential defendants. In short, during the period of the EPO opposition, and until this appeal was finally determined, no claim would be made against any customer or other manufacturer. In any event, the only financial relief that would be sought from anyone would be a reasonable royalty.
14. There is no material suggesting that the costs involved in hearing the appeal next month would in any way significantly affect the patentees. I do not have their accounts. I know nothing of their financial position other than a figure for turnover.
15. I have to say that waiting for an EPO opposition procedure to end seems often to be close to waiting for Godot. Cases where most (or all) of the life of a patent are taken up are not infrequent. Sometimes this may not matter, where for instance there is no real commercial product or commercial inhibition caused by the patent. Perhaps a point of principle is at issue, or the invention has no real commercial value. But there are plenty of cases where this sort of delay really matters. It must never be forgotten that uncertainty normally favours the patentee: others do not know what they can safely market, or work on by way of development and fresh invention, if they stand in the shadow of a possible patent. So whilst it is of course desirable that one should avoid the possibility of inconsistent judgments or the expense of parallel litigation, as Aldous LJ pointed out in Beloit Technologies v Paper Machinery [1997] RPC 489 at 503 and Kimberly-Clark v Proctor & Gamble [2000] FSR 235 at 245, unless resolution in the EPO is reasonably imminent it would often be unjust to stay proceedings here while the EPO procedure runs its leisurely course.
16. In the present case the relevant period is four to five years. That is a very long time in the commercial world. Much can change commercially and technically over such a time. Moreover, the patentee has currently got a decision on validity and infringement which is there for all the world to see. That I regard as a significant matter. Reasoned decisions of one European judge are increasingly given respect by other European judges. This patent, I was told, has corresponding patents in France and Germany, and a decision of the English court that the device infringes may affect the market in those countries. One cannot say one way or the other. That means that there is a real risk, if the decision stands, of some commercial prejudice outside this country, quite apart from the undertakings that are offered as far as this country is concerned.
17. If matters are delayed for all this time, then I think there is a real risk of prejudice to the defendants in a host of areas. Their technical developments remain under the shadow of the patent. If the appeal succeeds the patent will be declared invalid by a judgment of this court which may well reduce the degree of uncertainty hanging over the defendants' development.
18. As far as relations with customers are concerned, even with the undertaking a customer would not be certain that if he bought one machine during the period of the undertaking he could not buy another later if he found it satisfactory. He may want to develop a factory -- I know not what -- and he may not want to have two different machines.
19. I have come to the clear view that it is inappropriate to stay the appeal. The suggested prejudice to the patentees is merely a question of costs. As I have indicated, the detail is simply not made out. If the defendants succeed they will obviously not only recover their costs of the appeal but the costs they have incurred below, which otherwise would remain undetermined for five or six years. True it is that they are a large company, but even large companies care about money. Further, if the matter is stood out the costs involved in these proceedings, if they ever come back, will be much greater because it would involve starting from scratch. Mr Thorley put it this way in his skeleton argument:

"The Claimants' proposal is that once the stay is lifted (in 2009) the appeal should be relisted for hearing (say) in 2010. By this time all such accumulate knowledge will long since have been forgotten. Leading counsel for the Defendant will be then probably be retired but, from the writer's perspective, hopefully will not be dead."

That would undoubtedly be a result of an adjournment for this kind of time.

20. In the result, I refuse the application.

Order: application dismissed with costs to be assessed.