The Court of Appeal in England has recently set out important guidance to Judges in the Patent Court as to how they should determine whether an English action in which the validity of a patent is in issue should be stayed pending the outcome of an Opposition involving the same patent at the European Patent Office (EPO).

Historically, the English courts have been reluctant to stay national proceedings pending the outcome of an Opposition. One of the main reasons for this reluctance was the long time taken by the EPO to reach a final decision. In 2000, Neuberger J (as he then was) granted a stay in GHC v Bracco and in the years that followed there was a sense that the courts were becoming more willing to grant stays in some circumstances.

The recent Court of Appeal decision in Glaxo v Genentech has not only made it clear that timing and commercial certainty are of paramount importance in deciding whether to stay or not but also provided the first instance Judges with some practical guidelines as to how to decide such applications.

Factual background

In August 2006, Glaxo commenced an opposition against a European Patent granted by the EPO and owned by Genentech. Six months later, on 19 February 2007, Glaxo commenced a revocation action in England against the UK part of the European Patent on the same grounds as those relied upon before the EPO. Genentech made an application in the English action for an order staying the English proceedings pending the outcome of the EPO opposition. To encourage the court to grant the order for a stay, Genentech offered undertakings to the court that they would not commence an action for infringement of the European Patent (UK) against Glaxo nor its customers during the period of the stay nor claim any financial relief other than damages on a reasonable royalty basis nor seek an injunction or order for delivery up during the period of the stay and that they would prosecute the EPO proceedings using all reasonable endeavours.

First Instance decision

At first instance, the Judge refused to make an order for a stay. However, he noted that this decision was out of line with the way in which such applications would be decided in a commercial case and indicated that it would be useful for the Court of Appeal to examine the current practice of the Patents Court in relation to such applications.

Genentech appealed against the decision although at the hearing of the appeal they confirmed that they had decided to consent to revocation of the European Patent (UK). The Court of Appeal nevertheless decided that they would go ahead and deliver their Judgment as there was a wider public interest involved in the issues raised by the appeal. Glaxo supported the Court of Appeal as they recognised that the point arose frequently in patent litigation and wanted there to be a clearer understanding of the principles. Also, both parties had already incurred substantial costs in relation to the application and they welcomed the court’s recognition that the costs and efforts put into it should not be wasted.

Court of Appeal decision

The guidance the Court of Appeal laid down when the Patent Court should have the discretion to stay legal proceedings pending EPO decision was laid out in nine points as follows:

First, the discretion to order a stay, which is very wide indeed, should be exercised to achieve the balance of justice between the parties having regard to all the relevant circumstances of the particular case.

Secondly, it is the discretion of the Patents Court, not of the Court of Appeal. The Court of Appeal would not be justified in interfering with a first instance decision that accords with legal principle and has been reached by taking into account all the relevant, and only the relevant, circumstances.

Thirdly, although neither the EPC nor the 1977 Act contains express provisions relating to automatic or discretionary stay of proceedings in national courts, they provide the context and condition the exercise of the discretion.

Fourthly, the possibility of the duplication of proceedings contesting the validity of a patent granted by the EPO is inherent in the system established by the EPC. In practice, national courts exercise exclusive jurisdiction on infringement issues and they have concurrent jurisdiction with the EPO on validity issues. The Contracting States and the UK Parliament contemplated that the national Patents Courts should be able to determine the same issues of patentability as the EPO. The resultant legislation allowed the determination by the national court and the EPO to proceed at the same time. Indeed, there is nothing in the EPC or the 1977 Act to prevent the commencement of revocation proceedings in the Patents Court on the very date of the grant of the patent by the EPO.

Fifthly, this setting indicates that, in present conditions, one factor affecting the discretion will usually carry more weight than any other. That is the length of time that it will take for the respective proceedings in the national court and in the EPO to achieve some certainty on the issue of the validity of the patent in suit so that business knows where it stands. The length of the stay of proceedings, if granted, is, in general, the most significant factor in the discretion. Both the parties' legitimate interests and the public interest are in dispelling the uncertainty surrounding the validity of the monopoly rights conferred by the grant of a patent and the existence or non-existence of exclusive proprietary rights on a public register. A decision in the revocation action in the Patents Court will dispel some of the uncertainty. If the likelihood is that proceedings in the Patents Court would achieve this resolution significantly sooner than the proceedings in the EPO, it would normally be a proper exercise of discretion to decline to stay the Patents Court proceedings. They should be allowed to proceed to a decision that would supply some certainty in the public interest and the parties' legitimate interests.

Sixthly, there are no grounds justifying the application by the Patents Court of a presumption that the duplication of legal proceedings in it and in the EPO is, without more, a ground for a stay of the proceedings in the Patents Court, as the EPC system allows for parallel proceedings contesting the validity of the patent in both the international court (which is what the EPO in substance is) and in the national court.

Seventhly, the Patents Court judge is entitled to refuse a stay of the national proceedings where the evidence is that some commercial certainty would be achieved at a considerably earlier date in the case of the UK proceedings than in the EPO. It is true that it will not be possible to attain certainty everywhere until the EPO proceedings are finally resolved, but some certainty, sooner rather than later, and somewhere, such as in the UK, rather than nowhere, is, in general, preferable to continuing uncertainty everywhere.

Eighthly, much weight should be given to an assertion by a commercial party that it has a good reason for resisting a stay.

Normally a party is the best judge of its interests. Contentions of a competitor that there is no commercial need for early resolution of validity, should be viewed with suspicion. Detailed arguments of the sort advanced here are unlikely to carry weight and a judge would be justified in dealing with them shortly.

Lastly, other considerations in the particular case may affect the balance of justice, such as the additional costs in the duplication of proceedings, the order in which the proceedings were commenced and so on, but, in general, the other factors, through relevant, are of lesser importance than achieving some commercial certainty somewhere sooner. The judge will receive evidence and submissions on other relevant factors, but should be wary of over-elaboration of the issues by the parties in their evidence and legal submissions. Although due consideration must, of course, be given to the evidence and the arguments, the actual exercise of the discretion does not require the judge to deliver a judgment dealing in detail with all the points taken by the parties. A global assessment of the relevant material, supported by valid reasons, is normally sufficient to justify the decision to refuse or to grant a stay.

Finally, the Court of Appeal held that the Patent Court judge decision not to grant a stay could not be faulted and the appeal was dismissed.

As stated above, the Court of Appeal has firmly re-established that achieving commercial certainty is of paramount importance in determining whether a stay should be granted or not. Therefore, in England, in most cases a stay is unlikely to be granted because of the time taken by the EPO to reach a final decision.