26 February 2016

Were we to go - what would Brexit mean for IP?

Just before the Scottish referendum I wrote a couple of articles on the SNP's proposals for intellectual property in a separate Scotland (What would an independent Scottish government do about Intellectual Property? 10 Sept 2014 and More on Scotland and Intellectual Property 13 Sept 2014). Today I shall attempt a similar exercise in respect of Brexit.

What would not change

Were we to withdraw from the European Union we would probably remain a member of the World Trade Organization and bound by TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights). Art 2 (1) of TRIPS requires WTO members to comply with Articles 1 through 12, and Article 19, of the Paris Convention. There is no reason why we should not remain party to the Berne, Rome and other multilateral agreements to which we are party including the European Patent Convention.

But what would

However, we would miss out on the unitary patent and the Unified Patent Court because art 84 (1) of the Agreement on a Unified Patent Court makes clear that it is open for signature only to EU member states. That would be a crying shame for no country in Europe would benefit from the Unified Patent Court than the United Kingdom. One of the reasons why the UK lags consistently behind not only Germany and France but also Switzerland and the Netherlands in the number of European patent applications is that it costs much more to enforce a patent in England and Wales than anywhere else in Europe (see Preparing for the Unified Patent Court 23 Jan 2016). The UPC would place us on a level playing field with our continental competitors. That is why governments of all parties have strived to persuade out partners to ratify first the Community Patent Convention, then adopt an EU patent regulation and finally the unitary patent for over 40 years.

Of course there would be nothing to stop a British company from applying for a unitary patent but there would no longer be a section of the Central Division of the Court of First Instance or a local division in London. If a British patentee wanted to enforce his or her unitary patent he or she would have to cross the channel to do so. If he or she wanted to enforce his or her European patent (UK) in the UK he or she would have to go to IPEC or the Patents Court (or possibly the Court of Session or Chancery Division of the High Court of Northern Ireland) without the option of the UPC.

For the same reason the Community trade mark and Community design regulations would cease to apply to the UK once we withdrew from the EU. No doubt UK businesses could continue to hold Community trade marks and registered Community designs for the rest of the EU but the Chancery Division, IPEC and County Court would cease to be Community trade mark and design courts, It is also possible that English would cease to be a working language at OHIM after the withdrawal of the biggest English speaking state.

What is less clear

Nearly half a century of legislation to implement directives would remain in force for the time being but we would not update our legislation with the rest of Europe. The decisions of the Court of Justice of the European Union would cease to bind us though its decisions would no doubt have persuasive authority for a time. Much would depend on the sort of relationship with the rest of the EU that we could negotiate in the two years allowed by art 50 (2) of the Treaty on European Unity. If we were to access the single market on the same terms as Norway of Switzerland we would almost certainly have to accept the single market legislation such as the Trade Mark Directive since that is a text with EEA relevance.

Other Factors

There are of other possible consequences were we to leave the EU. Our departure might prompt other states to leave which might mean the end to the EU or at least the single market. That would not be good for British business. We would lose European research funding, development grants, scholar exchanges and a whole load more. With the possible exception of the enforcement directive I can think if almost no advantage from being outside the EU which is why the overwhelming majority or creative and innovative people will vote to stay in.

23 February 2016

Damages for Patent Infringement - AP Racing Ltd v Alcon Components Ltd

Jane Lambert

In AP Racing Ltd v Alcon Components Ltd [2013] EWPCC 3 (5 Feb 2013) A P Racing Ltd. sued Alcon Components Ltd. for patent infringement in the Patents County Court. The patent in suit was UK patent GB 2 451 690 for " disc brake caliper body and a disc brake caliper comprising such a body". His Honour Judge Birss QC (as he then was) found the patent to be invalid for insufficiency at paragraph [123] of his judgment. However, he also found that had the patent been valid 4 of the 5 shapes of Alcon's callipers would have infringed claim 1 of A P Racing's patent.

A P Racing appealed successfully to the Court of Appeal in AP Racing Ltd v Alcon Components Ltd [2014] RPC 27, [2014] EWCA Civ 40.  The Court restored the patent and ordered an inquiry as to damages or an account of profits.  The claimant elected an inquiry which came on before His Honour Judge Halcon in AP Racing Ltd v Alcon Components Ltd [2016] EWHC 116 (IPEC) (28 Jan 2016).

The learned judge had summarized the principles for inquiries at paragraph [31] of SDL Hair Ltd v Next Row Ltd and Others [2014] EWHC 2084 (IPEC) (3 July 2014):
"(1) A successful claimant is entitled, by way of compensation, to that sum of money which will put him in the same position he would have been in if he had not sustained the wrong, see Livingstone v Rawyards Coal Co. (1880) 5 App.Cas., 25 per Lord Blackburn at 39.
(2) The claimant has the burden of proving the loss, see General Tire and Rubber Company v Firestone Tyre and Rubber Company Limited [1976] RPC 197, at 212.
(3) The defendant being a wrongdoer, damages should be liberally assessed but the object is to compensate the claimant, not punish the defendant, see General Tire at p.212.
(4) The claimant is entitled to recover loss that was (i) foreseeable, (ii) caused by the wrong and (iii) not excluded from recovery by public or social policy, see Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443, at 452.
(5) In relation to causation, it is not enough for the claimant to show that the loss would not have occurred but for the tort. The tort must be, as a matter of common sense, a cause of the loss. It is not necessary for the tort to be the sole or dominant cause of the loss, see Gerber at p.452.
(6) An inquiry will generally require the court to make an assessment of what would have happened had the tort not been committed and to compare that with what actually happened. It may also require the court to make a comparison between, on the one hand, future events that would have been expected to occur had the tort not been committed and, on the other hand, events that are expected to occur, the tort having been committed. Not much in the way of accuracy is to be expected bearing in mind all the uncertainties of quantification. See Gerber at first instance [1995] RPC 383, per Jacob J, at 395-396.
(7) Where the claimant has to prove a causal link between an act done by the defendant and the loss sustained by the claimant, the court must determine such causation on the balance of probabilities. If on balance the act caused the loss, the claimant is entitled to be compensated in full for the loss. It is irrelevant whether the court thinks that the balance only just tips in favour of the claimant or that the causation claimed is overwhelmingly likely, see Allied Maples Group v Simmons & Simmons [1995] WLR 1602, at 1609-1610.
(8) Where quantification of the claimant's loss depends on future uncertain events, such questions are decided not on the balance of probability but on the court's assessment, often expressed in percentage terms, of the loss eventuating. This may depend in part on the hypothetical acts of a third party, see Allied Maples at 1610.
(9) Where the claim for past loss depends on the hypothetical act of a third party, i.e. the claimant's case is that if the tort had not been committed the third party would have acted to the benefit of the claimant (or would have prevented a loss) in some way, the claimant need only show that he had a substantial chance, rather than a speculative one, of enjoying the benefit conferred by the third party. Once past this hurdle, the likelihood that the benefit or opportunity would have occurred is relevant only to the quantification of damages. See Allied Maples at 1611-1614."
In Henderson v All Around The World Recordings Limited [2014] EWHC 3087 (IPEC) (3 Oct 2014) he discussed the so-called "user principle" that is to say damages based on
"royalties that would have been paid had there been a licence which would have made the infringing acts lawful, negotiated between willing licensor and willing licensee."
I commented on that point in Inquiries as to Damages in the Intellectual Property Enterprise Court: Henderson v All Around the World Recordings Ltd. 5 Nov 2014.

AP Racing claimed damages for
"(1) Lost profits from sales of callipers that AP Racing would have made had Alcon not infringed.
(2) Lost profits from lost 'convoyed sales', i.e. other goods that would have been sold by AP Racing had the infringing sales of callipers not been made.
(3) To the extent that Alcon made sales of callipers which did not result in AP Racing losing any sales, damages equivalent to the royalty that Alcon would have paid under the Patent according to the user principle."
AP Racing also claimed interest.

In calculating lost profits from reduced calliper sales, the judge took into account:
(1) the number of infringing callipers sold by Alcon which are relevant to AP Racing's claim for damages;
(2) the number of extra callipers that AP Racing would have sold had there been no infringement by reason of Alcon's sales under (1); and
(3) the average sales price for AP Racing's callipers.
His Honour found that Alcon had supplied 1,179 callipers but deducted 242 that had been supplied before the patent application was published, 70 that Alcon had undertaken to destroy and 132 that had been supplied free of charge as replacements for defective callipers leaving a total of 735. Alcon argued that there should be further deductions based on s.69 (3) of the Patents Act 1977 and other points but those arguments were rejected by the judge. The price of each calliper was £1,186  so the total loss of sales revenue was £871,710. Of that 25% was profit, so the loss under that head was £217,928.

As for loss of profits on lost convoyed sales Judge Hacon found that AP Racing sold £410 worth of goods exclusively associated with the sale of callipers and a further £1,565 worth of goods associated with sales of callipers and/or other products 70% of the time. The parties agreed that the profit margin for those sales was 25%. Using the formulae 735 x (£410 x 0.25) for the goods exclusively associated with the sale of callipers and 735 x (£1,565 x 0.7 x 0.25) the judge found losses of £75,338 and £201,298 respectively.

The judge found no damages were due under the user principle. As he put it at para [43] of his judgment:
"AP Racing is already compensated in relation to the 735 calipers discussed above. Of the remaining 444, no damages are due on those which were sold before the date of publication of the application for the Patent. Nothing is due on the 70 which have been, or will be destroyed. I have no reason to think that the parties would have hypothetically a royalty charge on the 132 calipers supplied by Alcon free of charge to replace defective calipers."
The total damages were therefore £494,564 (£217,928 + £75,338 + £201,298).

Referring to Mr Justice Ramsay's decision in Persimmon Homes (South Coast) Limited v Hall Aggregates (South Coast) Limited [2012] EWHC 2429 (TCC) the judge awarded interest before judgment at the rate of 2% above base rate.

Should anyone wish to discuss this case, damages for patent infringement or patent law generally, he or she should call me on +44 (0)20 7404 5252 during normal office hours or use my contact form.

22 February 2016

Implementing the Unitary Patent in the UK

Photo T. B. Murray
Source Wikipedia
Creative Commons Licence

Whatever happens on 23 June 2016 HMG will have to make rules to implement the Agreement on a Unified Patent Court in the United Kingdom. The reason I say that is that the Agreement comes into force after 13 countries, including France, Germany and the UK, ratify the Agreement. Nine countries including France have already done so (see the European Council's website).  Parliament has enacted primary legislation to enable the Secretary of State to give effect to the Agreement in the UK by order in council (see S,17 of the Intellectual Property Act 2014 inserting a new s.88A and s.88B into the Patents Act 1977). As it would take time to negotiate an exit agreement under art 50 (2) of the Treaty on European Union the Agreement will almost certainly come into force while the UK is still an EU member. There would have to be some sort of secondary legislation at least for the time in which the UK remains a party to the UPC Agreement.

Consultation on such legislation began shortly after the Intellectual Property Act 2014 received royal assent. The Intellectual Property Office published a draft statutory instrument at Annex C to a Technical Review and Call for Evidence on Secondary Legislation Implementing the Agreement on a Unified Patent Court and EU Regulations Establishing the Unitary Patent (see my article entitled Unified Patent Court Consultation 25 June 2014) together with a series of questions and invited responses by 2 Sept 2014 (see my article entitled Unified Patent Court Consultation 25 June 2014). HMG received 20 responses to that invitation which it summarized in its Technical Review and Call for Evidence Summary of Responses on 12 March 2015. On 14 Jan 2016 HMG published its reply to those responses in its Government Response to the Technical Review and Call for Evidence on Secondary Legislation  Implementing the Agreement on a Unified Patent Court and EU Regulations Establishing the Unitary Patent. In the executive summary of that document HMG indicated that the 20 responses have helped to inform the further development of the secondary legislation and also assisted with updating impact assessments that go with that legislation.

HMG has indicated that it will make changes to the provisions of the draft statutory instrument that confer jurisdiction on the UPC (paras 10 and 20), make transitional arrangements (para 18), provide for enforcement of the UPC's orders (para 24), the computer software exception (para 55) and the definition of infringement (para 56). Other provisions of the draft order upon which the IPO consulted remain the same.

Over the next few weeks I shall be writing about the draft regulations in so far as they relate to our law on infringement, groundless threats and examiners' opinions. Should anyone wish to discuss those topics, unitary patents or patent law in general he or she should call me during office hours on +44 (0)20 7404 5252 or use my contact form.

05 February 2016

Unitary Patent: UPC's Power to Amend

Venetian Patent Act 1474
Source Wikipedia

Yesterday I presented a talk on the unitary patent and the Unified Patent Court. I had a good audience which included some familiar faces as well as several new ones. At the end of the talk I took questions and one of them was on the Court's power to amend.  I was able to answer the question from memory but I could not give chapter and verse and promised to do so in this blog.

As I said yesterday, the starting point is the European Patent Convention art 138 (3) of which provides:
"In proceedings before the competent court or authority relating to the validity of the European patent, the proprietor of the patent shall have the right to limit the patent by amending the claims. The patent as thus limited shall form the basis for the proceedings."
The competent court in actions or counterclaims for revocation of unitary or other European patents will be the Unified Patent Court (see art 65 (1) of the UPC Agreement).  Art 65 (3) of the agreement provides:
"Without prejudice to Article 138(3) of the EPC, if the grounds for revocation affect the patent only in part, the patent shall be limited by a corresponding amendment of the claims and revoked in part."
The draft Rules of Procedure that have been prepared by the Preparatory Committee to which I referred yesterday provide for an application to amend to be pleaded in a reply and defence to counterclaim for revocation (rule 12 (3) (a) or in a defence to an action for revocation (rule 43 (2) (a)).

Rule 29 (a) requires a claimant to lodge an application to amend his or her patent within 2 months of service of a defence that includes a counterclaim for revocation together with the defence to that counterclaim.

An application to amend the patent must contain the following particulars (see rule 30):
"(a) the proposed amendments of the claims of the patent concerned and/or specification, including where applicable and appropriate one or more alternative sets of claims (auxiliary requests), in the language in which the patent was granted; where the language of the proceedings [Rule 14.3] is not the language in which the patent was granted, the proprietor shall lodge a translation of the proposed amendments in the language of the proceedings, and where the patent is a European patent with unitary effect in the language of the defendant’s domicile in a Member State of the EU or of the place of the alleged infringement or threatened infringement in a Contracting Member State if so requested by the defendant;
(b) an explanation as to why the amendments satisfy the requirements of Articles 84 and 123(2), (3) EPC and why the proposed amended claims are valid and, if applicable, why they are infringed; and
(c) an indication whether the proposals are conditional or unconditional;  the proposed amendments, if conditional, must be reasonable in number in the circumstances of the case."
Rule 50 (2) makes a similar provision where the application to amend is made in a defence to a a claim for revocation.

If an application to amend the patent is lodged, rule 12 (4) requires the defendant to lodge a defence the application to amend the patent in his or her reply to the defence to the counterclaim. The proprietor  may lodge a reply to the defence to the application to amend and the defendant may lodge a rejoinder to such reply. The defence to an application to amend the patent must be served within 2 months (rule 32 (1)).  There are similar requirements in rule 43 (3) where the application to amend is made in a defence to a claim for revocation.   

In his or her defence to an application to amend the defendant must state whether he or she opposes the application and, if so, why.  He or she may do so on the grounds that:
(a) the proposed amendments are not allowable; and
(b) the patent cannot be maintained as requested.
The proprietor may lodge a reply to the defence to the application to amend the patent within 1 month of service of the defence and the defendant may within one month of the service of the reply lodge a rejoinder. The rejoinder shall be limited to the matters raised in the reply (see rule 32 (3)).

The application to amend will follow the procedure set out in art 52 of the UPC Agreement.  An interim and possibly oral procedure will follow the written procedure mentioned above. Evidence will be taken in accordance with art 53.

The language of art 65 (3) of the UPC Agreement is very different from s.75 (1) of the Patents Act 1977 which confers a discretion  on the Court or Comptroller when dealing with a patent application albeit one that has been modified by s,75 (5) (see Zipher Ltd v Markem Systems Ltd and Another  [2008] EWHC 1379 (Pat), [2009] FSR 1). There does not seem to be any scope under the Agreement for an objection  based on covetousness as used to be the case in England.

I hope I have answered that question comprehensively.   If anyone wants to discuss this article or indeed the UPC or unitary patent in general he or she should call me on 020 7404 5252 during office hours or message me through my contact form.

Further Reading


Preparatory Committee
UPC website
23 Jan 2016
Jane Lambert
23 Jan 2016
Jane Lambert
NIPC Inventors
26 Jan 2016
Jane Lambert
IP North West