This judgment (Virgin Atlantic Airways Limited v Zodiac Seats UK Limited (formerly known as Contour Aerospace Limited)) was handed down on 3rd July by the Supreme Court.

Before this judgment, once a patentee had been awarded damages for patent infringement (whether or not the amount had actually been decided) in a final judgment, he got those damages, even if the patent was subsequently revoked or amended (e.g. in an EPO opposition) so it was no longer infringed. However, any injunction would have to be discharged.

The leading case on this point was ‘Unilin’ (Unilin Beheer BV v Berry Floor NV [2007] FSR 635). In essence it said that the rules of res judicata meant that the issue of patent infringement up to that date was finally decided once any appeal had been concluded on the matter. Res judicata is a catch-all term for a number of legal principles (mostly referred to as types of “estoppel”) that are intended to prevent the same issues being litigated over and over again.

The judgment discusses these principles in detail and explains that some kinds of estoppel are more absolute than others. The detailed reasons are beyond the scope of this note, but the outcome is straightforward: even where there has been a final decision on infringement and validity, the defendant is entitled to rely on the new fact that the patent has been revoked in a later enquiry into damages. In other words, the damages could be nil because the (unamended) patent is regarded as never having existed due to the retrospective effect of the amendment or revocation.

What is less clear from the judgment is what happens now if the patent is revoked/amended after the damages have actually been paid and there is no outstanding appeal where the issue could be re-opened. This issue obviously causes practical problems because the revocation/amendment might happen in quite unrelated proceedings many years later. One of the Supreme Court Justices, Lord Sumption, said this could not be done at common law and that “I doubt whether an implied statutory right to reopen [the issue] could be derived from the scheme of the Patents Act, but that is a question which will have to await a case in which it arises.” Lord Neuberger said that the alleged infringer “would have to try to raise a restitutionary claim if it wished to recover the damages…I express no view on the strength of such a claim…” The other justices said they agreed with both of them.  In other words, they left the question for another day, but there is certainly a strong hint that if damages have actually been paid when a patent is revoked/amended, it may be too late to get them back.

Lord Sumption also criticised the current practice of only staying UK proceedings whilst an EPO opposition is decided in exceptional cases and said that the court guidelines should be reviewed, presumably to make a stay much more likely.

One practical effect of all this is that EPO oppositions will become more important in relation to any UK proceedings. Up to now, their value was limited by their slowness – the expectation that they would take about four years to conclude meant that their outcome would be largely irrelevant for any infringement proceedings brought shortly after grant. Now, that same expectation, coupled with the likely shift towards more stays of UK proceedings, means that EPO revocation or amendment is much more likely to affect the outcome and that commencing an opposition may become an effective way for a defendant to slow down UK litigation that he thinks he may lose.