An extract from The Technology Disputes Law Review, 1st Edition

Year in review

The following outlines some of the key trends seen over the past year. As might be expected, a number of these – such as increased interest in force majeure provisions and the widespread use of remote hearings – relate to the covid-19 pandemic. In addition, data disputes remain a trend, new arbitration rules for digital disputes have been published and important developments in patent law are set to continue.

i Force majeure and frustration

The covid-19 pandemic and the resulting impact on businesses' ability to meet their contractual obligations have given rise to an increase in cases relying on the force majeure provisions of a contract, where one party claims to be excused from its breach of performance by reason of factors outside its control. In English law, the ability to make such a claim depends upon the precise wording of the contract and courts are generally strict in their interpretation of specific terms. Where parties are unable to rely on force majeure provisions, there has also been an increase in attempts to rely on the common law doctrine of frustration, which entirely discharges a contract if it becomes impossible to perform. Findings of frustration are rare and, while the pandemic has given rise to claims relying on frustration, it remains to be seen how the courts will decide those claims.

ii Insolvency

Another trend arising from the pandemic is the rise in insolvency proceedings within the technology sector as parties who have suffered, either directly or through difficulties in the supply chain, become unable to pay their debts as they fall due.

iii Remote hearings

During the covid-19 pandemic, the English courts have remained open for business, with many trials heard either as 'hybrid' hearings, with both remote attendees and attendees in court, or fully remotely by videoconferencing. The courts are starting to return to normal, but, given the efficiencies of using videoconferencing, it is likely that remote or hybrid hearings will continue to be used, such as for short hearings or cases where a party or witness cannot attend in person (e.g., an overseas expert who cannot travel).

iv Digital Dispute Resolution Rules

Away from the pandemic, reflecting the rise in the number and prominence of technology disputes, on 22 April 2021, the UK Jurisdiction Taskforce published new arbitration rules, the Digital Dispute Resolution Rules, which are intended to provide a specialised, quicker and cheaper dispute resolution process for disputes arising out of emerging digital technologies such as cryptoassets, cryptocurrencies and distributed ledger technology, and fintech disputes. It remains to be seen how these will be implemented and the impact they will have on technology disputes.

v Data

Claims relating to the use and misuse of data continue to be a trend across the sector. Judgment is currently awaited from the Supreme Court in the case of Lloyd v. Google LLC,2 the claim issued as a representative class action by Richard Lloyd alleging that Google breached its duties as a data controller under the Data Protection Act 1998 by secretly tracking the internet activity of Apple iPhone users for commercial purposes between 9 August 2011 and 15 February 2012. The judgment will become the leading authority on damages for breaches of data protection law in England and Wales and will clarify whether and how representative actions can be brought.

vi SEP and FRAND disputes

In August 2020, the UK Supreme Court held in joined appeals in Unwired Planet v. Huawei and Conversant v. Huawei and ZTE3 that the English courts have jurisdiction to determine the royalty rates and other terms of a licence on fair, reasonable and non-discriminatory (FRAND) terms if the owner of a standard essential patent (SEP) covering the UK demonstrates that it is valid and infringed, and to grant an injunction to restrain the infringement unless the implementer takes that FRAND licence. On the facts of that case, a global portfolio licence was found to be FRAND and the Court set rates for territories outside the UK.

The Supreme Court's judgment confirms the English courts' willingness to set global FRAND licence terms, regardless of how important the UK is as a market (in Huawei's case less than 1 per cent of sales were in the UK). It is an important decision, which has already seen the UK become the forum of choice for SEP holders. Parties are now racing to issue competing claims in jurisdictions they consider to be favourable and seeking anti-suit injunctions to preserve their preferred forum. There are also a number of pending cases in which the English courts are considering related issues such as: the point at which an implementer should commit to licence terms set by the English court4 and whether the damages payable for infringement of a UK SEP should be calculated by reference to a global licence.5 The European Commission is also consulting6 on a new framework to make the licensing of SEPs clearer and more transparent, and recognising the importance of SEPs to new technologies such as the internet of things.

vii Doctrine of equivalents

The courts have also continued to grapple with the implications of the UK's new approach to construing patent claims, following the Supreme Court's 2017 decision7 introducing separate consideration of infringement by equivalents.

Some guidance has been given in recent cases. It has been indicated that a patentee 'cannot have it both ways', by narrowing a claim to avoid issues with validity in prosecution only to rely on the doctrine of equivalents to broaden the claim in enforcement.8 It has also been suggested that a Formstein defence exists in English law, limiting claims to a normal interpretation to prevent them ensnaring equivalents that lack novelty or are obvious.9 However, this commentary was obiter, and other issues – such as whether an equivalent can invalidate a claim10 – remain to be tested. It is likely that further guidance on equivalents will be needed from the Court of Appeal and the Supreme Court over the next few years.