The High Court has given welcome guidance as to the circumstances in which the UK courts would deny the amendment of a patent. Floyd J considered that the Court's discretion to refuse amendments which comply with the Patents Act 1977 has been limited. Zipher Limited v (1) Markem Systems Limited and (2) Markem Technologies Limited (26 June 2008 and 1 September 2008).
For many years, courts in the UK have exercised a wide discretion over whether to allow a patentee to amend the specification and/or claims of a patent even where the patentee has shown that all requirements set out in the Patents Act 1977 (for example as to novelty, inventive step and added matter) were satisfied. This discretion meant that factors such as the conduct of the patentee and any delay in applying to amend could be taken into account. In contrast, the EPO has granted amendments where the criteria prescribed in the European Patent Convention ("EPC") were satisfied without any residual discretion to refuse amendment. In the light of this divergence, the question arose whether the discretion would remain in the UK after recent amendments to the Patents Act 1977, which aim to bring the UK and the EPO approaches closer into line. In Markem the High Court has now given guidance on the issue.
Zipher Limited v Markem Systems Limited and another (in which Herbert Smith LLP successfully acted for Markem) is the latest in a number of disputes between the parties involving patents for tape drive systems used in industrial thermal transfer printers. These printers are used by manufacturers to print unique information, such as "best before" dates or batch codes, rapidly onto packaging materials.
Markem originally sued Zipher in 2004, claiming entitlement to a number of patents (including an international PCT application) which had been filed by former employees of Markem who had left to set up Zipher. At first instance, HHJ Fysh QC held that Markem were entitled to some of the patents’ broader claims, but that some of the narrower claims belonged to Zipher. During the proceedings, HHJ Fysh QC expressed concern that if the Court were to allow Zipher to keep the claims in their wider form, Zipher would then seek to assert them against Markem. To alleviate the Judge's concern, Zipher's counsel gave an undertaking to the Court to narrow the wider claims by amendment if it were successful in establishing its claim to be entitled to them, which at first instance it was not.
However, the Court of Appeal allowed Zipher's appeal, holding that Zipher were entitled to the patents in their entirety. This was on the basis that it was necessary when claiming entitlement under s. 8 Patents Act 1977 to establish a breach of some other right (such as a breach of confidence), something which Markem had not pleaded (this requirement has since been overturned in the House of Lords: see Yeda v Rhone-Poulenc). During the course of proceedings in the Court of Appeal though, Zipher accepted that some of the claims of the patents were invalid in the light of a recently discovered piece of prior art called Datamax. While this was recorded in the Court of Appeal’s order, the Order did not make any express reference to the undertaking previously given by Zipher's counsel.
Having secured entitlement to the patents, Zipher went on to sue Markem for infringement in the High Court. Zipher also applied to amend one of the patents in order to deal with its previous acceptance that certain of the claims were invalid in the light of Datamax. However, the amendments sought to the claims were not consistent with those in Zipher’s undertaking to HHJ Fysh QC, which were narrower. Markem denied infringement and counterclaimed for revocation of the patents. Markem also sought injunctions enforcing the undertaking to amend which Zipher had given to HHJ Fysh QC.
The Decision of the High Court
One of the issues before the High Court in the infringement proceedings was whether Zipher should be allowed to amend one of the patents (the other patents had been filed later and already had similar amendments). Zipher had sued Markem on the patent as proposed to be amended, and it was therefore crucial to Zipher for the amendments to the claims to be allowed since Zipher had accepted that they were invalid in their unamended form. In the event, Floyd J refused amendment on the basis that the amendments that Zipher sought were inconsistent with those set out in the undertaking which Zipher had given in the previous proceedings, such that amendment would amount to abuse of process.
However, the Judge also considered whether amendment could have been denied on discretionary grounds had it not been denied on the basis of the undertaking. In 2007, the Patents Act 1977 was amended by the Patents Act 2004 with the aim of harmonising UK and EU patent law. New subsections were inserted into s. 27 ("General power to amend specification after grant") and s. 75 ("Amendment of patent in infringement or revocation proceedings") of the Patents Act 1977, which then required a Court to have regard to any relevant principles applicable under the EPC when considering whether or not to allow an amendment. However, the Patents Act 2004 did not amend "may" to "shall" in those sections – the relevant subsections still read "the comptroller may … allow the proprietor of the patent to amend the specification …".
After considering the various relevant provisions under the EPC, Floyd J summarised the principles under the EPC as follows:
- in opposition proceedings, appropriateness of the amendments to the proceedings, their necessity and procedural fairness are the main, perhaps only, factors considered relevant to allow amendment; and
- in central amendment proceedings compliance with the procedural requirements gives rise to a right to have the patent limited in accordance with the request.
Floyd J considered that since the Court is to have regard to these principles, the discretion which it has to refuse amendments which comply with the Patents Act has been limited. In particular, considerations such as those formerly considered relevant to the discretion, such as the conduct of the patentee, are no longer relevant. On that basis Floyd J ruled that amendment would have been allowed had Zipher's counsel not given the undertaking.
Having refused Zipher's application to amend, Floyd J then went on to find that the patents (both in their original form and as proposed to be amended) were invalid for insufficiency, that some claims were invalid for lack of inventive step and that some of the amendments would have added matter. He also granted injunctions (albeit stayed pending appeal) (i) requiring Zipher to take positive steps to amend their patent portfolio worldwide to bring them into line with the undertaking they had given, (ii) preventing Zipher from filing any new applications anywhere in the world which were not compliant with the undertaking and (iii) preventing Zipher from asserting any patent claim anywhere in the world which was not compliant with the undertaking. These injunctions are interesting because, while they only have force in the UK against Zipher as a UK entity, their net effect is also to require Zipher to do an act (or refrain from doing an act) in other countries.
While the Zipher v Markem case suggests that the Court's discretion in relation to amendment has been significantly narrowed, it is important to bear in mind that Mr Justice Floyd's comments are obiter. This is because Zipher were prevented from making the amendments they sought, not because the Court exercised its discretion against them, but because those amendments were contrary to Zipher's previous undertaking and so constituted an abuse of process.
It remains to be seen whether the Courts in subsequent cases will follow the guidance on amendment provided by the Zipher v Markem case, particularly since the unusual facts concerning the prior undertaking given by Zipher may allow it to be distinguished. It may be that for the immediate future (until there is a binding decision), parties will need to consider whether to continue to adduce evidence on amendment issues, just in case the amendment point is resolved the other way.