Following Lord Sumption's criticism in the recent Supreme Court judgement in Virgin Atlantic Airway v Zodiac Seats of the guidelines from Glaxo v Genentech on whether or not to stay national proceedings in favour of proceedings at the European Patent Office (EPO), the Court of Appeal in IPCom v HTC have taken up the baton and modified these guidelines, possibly making the UK a more attractive forum for enacting swift litigation, thus giving commercial certainty in the fast moving technology area of mobile phones.
It is a proviso of the European Patent Convention that national courts can decide on patent validity and infringement even when a final decision on the validity of the patent is still pending at the EPO, e.g. during EPO Opposition and Appeal proceedings. However in some instances these EPO proceedings can last for many years after the initial grant of a patent, leading to commercial uncertainty for the parties involved. In the UK the courts have the option of staying national proceedings to wait for a final decision at the EPO or, if they consider that they can answer questions of validity significantly earlier to give commercial certainty, the courts can proceed with the national proceedings, risking a later contrary decision from the EPO.
Lord Sumption's comments indicated that it does not give credit to the UK procedures if time and money is wasted on judging on a matter which is subsequently decided in a contradictory manner by the EPO, which takes effect across Europe. However Floyd LJ in the Court of Appeal in IPCom v HTC has modified the Glaxo/Genentech guidelines to favour UK courts refusing stays.
In the current IPCom v HTC case, HTC appealed a decision from the Patents Court to refuse a stay of proceedings. IPCom is a non-practising entity which sought to cause HTC to enter into a licence for its patent to the UMTS mobile telephone standard, rather than to continue infringing by selling its HTC mobile phones. As IPCom's business depends on the exploitation of its patents, a stay prevents it being able to enforce them. This matter is heightened by the fast moving nature of mobile phone technology: things may well have moved on by the time the EPO concludes its proceedings, particularly as HTC have indicated they are likely to appeal an adverse decision.
Floyd LJ dismissed the appeal and thus confirmed the refusal to stay the UK proceedings, deeming that he was attracted by the relative commercial certainty concluding the UK proceedings would give, particularly as IPCom had undertaken to repay any damages if the patent was subsequently found to be invalid by the EPO. In the process, he reformulated the Glaxo/Genentech guidelines, adding a number of new tests including that it should be determined whether a refusal of a stay will irrevocably deprive a party of a benefit from the concurrent proceedings, and consider whether conclusion of national proceedings may promote a settlement.
This case arguably makes the UK a more attractive forum for litigation as the reformulated guidelines appear to have shifted in favour of refusing stays in favour of EPO proceedings. It also highlights that sometimes the EPO struggles to meet demand for quick litigation which fast moving industry requires but which the UK courts can provide. The Court of Appeal refused to endorse mandatory stays (one of the options if Lord Sumption's comments were to be followed) and instead provides a set of pragmatic guidelines for deciding such matters.