Recent Developments

The English High Court recently considered whether to allow pre-application disclosure of patent licences under Civil Procedure Rule (CPR) 31.16 in the case of Big Bus Co v Ticketstogo [2015] EWHC 1094 (Pat). This application was granted on 28 April 2015 in a judgment which is likely to have significant implications for the future of patent licence negotiations.

The applicant, Big Bus, is an operator of open top sightseeing tours. The respondent, Ticketstogo, is the proprietor of a UK patent for a method of issuing a ticket containing a barcode over the Internet. Ticketstogo asserted that Big Bus required a licence for use of its ticketing system and supported this claim and the validity of its patent by stressing that many other travel companies had taken a licence. In response, Big Bus requested disclosure of all of the licences issued under the patent.

Big Bus did not accept the validity of Ticketstogo's patent or the alleged infringement, but stated in its request for pre-application disclosure that it was concerned about the considerable expense of patent litigation, even if successful. Therefore the application was made in order to establish the value of Ticketstogo's claim with a view to informing a settlement.

In order for pre-application disclosure to be granted, the jurisdictional tests of CPR 31.16(3)(a) to (d) must be satisfied. These require that the applicant and the respondent are both likely to be parties to subsequent proceedings, on the basis that such proceedings are brought; that the documents would fall within the respondent's duty of standard disclosure in proceedings; and that disclosure before proceedings is desirable, for example, to assist settlement or save costs. Provided that these conditions are met, the Court then has discretion to make an order for disclosure. 

The Court found that Big Bus and Ticketstogo were both likely to be parties to any subsequent proceedings. In respect of the dispute as to whether the standard of disclosure would include the patent licences, the Court held that it would, but only in relation to licences taken by companies in the transport industry. It was found to be irrelevant that there was likely to be a split trial, as disclosure nevertheless extended to documents relating to quantum. Finally, disclosure was held to be desirable as price information is a key requirements for proper market functioning and such disclosure would help the parties to reach a settlement and hence save costs. Ultimately, the Court considered it appropriate to exercise its discretion to order disclosure, as it would be unfair to require a party to accept a licensor's suggested price for use of a licence simply to avoid litigation.

Conclusions

As licensing is an integral part of pharmaceutical business, this decision is likely to have important ramifications for the way in which certain patent licences are negotiated in the sector. This sort of pre-action disclosure is a powerful assessment tool for licensees and raises a significant disclosure risk for licensors. This decision shifts the balance of power somewhat, as licensors will be less easily able to demand that infringers pay a stipulated amount to avoid facing an infringement action. Bad news for patent trolls. Other prospective licensees will no doubt file similar pre-disclosure actions in order to obtain market price information, and even current licensees may seek to position themselves to take advantage of this opportunity in the future.