In IPCom GmbH & Co Ltd v HTC Europe Ltd and others [2013] EWCA Civ 1496, the Court of Appeal of England and Wales discussed the effect of the decision of the Supreme Court in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46 on the guidelines for granting a stay set out by the Court of Appeal in Glaxo Group Limited v Genentech  Inc. and Biogen Idec Inc. [2008] EWCA Civ 23 and hasrevised the guidelines.

BACKGROUND

IPCom’s patent EP (UK) 1 841 268 (the patent), held to be valid in previous litigation between IPCom and Nokia, protects an invention controlling access to the random access channel in a wireless telecommunication network. In light of its success against Nokia, IPCom initiated infringement  proceedings against HTC in the United Kingdom. After initiating  this litigation the European Patent Office (EPO) Opposition Division held that the patent was invalid for added matter.

IPCom appealed to the EPO appeal board, which determined that the added matter objection was overcome by amendments to the claims, and consequently referred the amended claims back for consideration of novelty and  inventive step. Following that decision, HTC applied to have the UK patent infringement and revocation action stayed pending the outcome of the EPO proceedings.

On 12 June 2013 Roth J, applying the guidance set out in Glaxo, refused to grant a stay with reasons to follow. Before those reasons were handed down, the Supreme Court passed judgment in Virgin Atlantic, which questioned the correctness of the Glaxo guidance. Consequently, Roth J granted HTC permission to appeal.

DISCUSSION

The Court of Appeal held that the Glaxo guidelines should be revised.

The principal amendment is that the default position has shifted so that a stay of national proceedings should be granted, with the burden placed on the party resisting the stay to establish that it is appropriate for a stay not to be granted in the circumstances.The guidelines set out in Glaxo indicated that the length of the delay in the EPO proceedings compared to national proceedings should be the primary factor considered by the court in exercising its discretion. The revised guidelines consider the duration of delay to be just one of a number of factors (albeit an important one) to be taken into account by the court.

The guidelines set out in Glaxo indicated that the length of the delay in the EPO proceedings compared to national proceedings should be the primary factor considered by the court in exercising its discretion. The revised guidelines consider the duration of delay to be just one of a number of factors (albeit an important one) to be taken into account by the court.

Other relevant factors include the provision of commercial certainty to the parties, the earlier crystallisation of the extent of patent rights to the general public, the promotion of settlement through national proceedings and the risk of wasted costs.

It is worth noting, however, that wasted costs arguments will likely carry less weight than those in respect of commercial factors. An important factor, according to the revised guidelines, is the extent to which a stay will “irrevocably deprive a party of any part of the benefit” derived from the  dual national-EPO system, in particular if the patentee could derive some monetary compensation that is not repayable even if the patent is later revoked. Provision of suitable undertakings to repay damages awarded if a patent is subsequently revoked may, however, overcome objections founded on this premise.

The court must consider all factors at a high level so that an application for a stay does not result in a “mini-trial of the relevant factors”.

COMMENT

The chief effect of the revision of the guidelines is to alter the default position in respect of granting stays and to tone down the court’s emphasis on delays in EPO proceedings in making its decision, with factors in favour of refusing a stay being largely commercial in nature.