Damages are still payable further to a final judgment of the Courts of England & Wales even when the underlying patent is subsequently found invalid at EPO.

To pay or delay?

Last week, the Court of Appeal answered the question:

Does a defendant still have to pay damages for infringement of a patent which although found valid and infringed in the UK was subsequently found invalid on opposition at the EPO?

in the affirmative.

Giving the lead judgment in Unilin Beheer v Berry, Jacob LJ held that:

  • the judgment was res judicata and the defendants were estopped from challenging the claimant's entitlement to an account of profits whatever the ultimate result in the EPO; and
  • even if there were no estoppel, past orders as to costs could not be challenged and so the liberty for the defendants to apply for an order for repayment of costs should be discharged.

The background to this particular judgment was that an appeal from HHJ Fysh's finding that the patent was valid and had been infringed had been dismissed by the Court of Appeal and leave to appeal to the House of Lords had been refused. The defendants applied for a stay of the inquiry as to damages pending the outcome of the opposition proceedings on the patent at the EPO. The Patents County Court held that the claimant's financial relief and costs were not res judicata, but Fysh J would not exercise his discretion to stay the inquiry. The issues were both appealed.

The Court of Appeal disagreed on the issue of estoppel. As stated by Jacob LJ: 

"I think the Judge was wrong to hold that there was no estoppel. I am not sorry to reach that conclusion. It means that businessmen in this country know that they can use the rather speedy court system here to get a conclusion one way or the other. If the patent is revoked, the way is cleared; if it is upheld and held infringed then compensation will be payable for past acts. And an injunction will run unless there is a later revocation by the EPO. Subject to that last point, the effect of all this is that one does not have to wait to find out who has won until the slowest horse in the race gets there."

Purists make bad business sense

"Purists", Jacob LJ said, might claim that it was unjust nonsense to maintain an obligation to pay damages in respect of an invalid patent (which is treated as revoked ab initio). However:

" ... I think there are good and pragmatic reasons why the purist approach makes bad business sense. You cannot unravel everything without creating uncertainty. And where a final decision has been made on a fair contest between the parties, that should stand as the final answer between them."

No such thing as "top court" in every situation

It did not help to try to conclude which court was universally "top dog". Jacob LJ said that neither the national courts nor the EPO should be seen exclusively as superior in terms of the effect of their judgments.

"Nor does it help to ask whether a national court or the EPO is "top". It all depends on the circumstances, as the two following scenarios illustrate:

  • The patent is still under opposition when a national court holds it valid and the EPO then revokes. So the EPO is "top";
  • The EPO holds the patent valid and a national court subsequently revokes it (there is no estoppel created by an EPO decision as to validity, see Buehler v Chronos [1998] RPC 703). So the national court is "top." In truth asking which tribunal is "top" is simply not helpful – there is just the untidy compromise inherent in the EPC and one which cannot be properly resolved unless and until a rational patent litigation system for Europe is created".

Conclusion

This decision, although at first glance counter-intuitive, does have the advantage of providing some certainty within today's multileveled European patent litigation system. Without such a finding there might be interminable stays on inquiries as to damages/accounts of profit and little incentive to settle them. Injunctions not to infringe the revoked patent, however, will not continue post-revocation given there is no longer a patent to infringe