by Paul A. Harris, Head of Litigation at Dehns
Although rare, a problem arises when an English court finds a EP(UK) valid and infringed only for the EPO to find it invalid, or the claim set amended taking the infringement outside the scope of protection. This was the situation faced by Vodafone (Vodafone Group PLC and ors v IPCom GmbH & Co KG  EWCA Civ 113).
The problem is particularly acute where the EPO’s decision occurs some considerable time later, and the English court may well have reached a decision on the enquiry as to damages. Costs at the liability stage will have been paid, often very large sums, and an order awarding millions of pounds in damages handed down. As a decision of the EPO has retrospective effect, the revocation of the patent ab initio leads to an apparent injustice having been perpetrated.
Yet there are already approaches that can be put in place by the parties and the court to avoid such injustice arising. This decision sets out why and how.
IPCom was the proprietor of EP(UK) 2579666 (‘666 – due to expire in February 2020) concerning telecoms. The dispute concerned essentiality and FRAND licensing. At the time English proceedings were instituted, opposition proceedings before the EPO had commenced. IPCom applied to expedite the English proceedings, which Vodafone resisted initially seeking a stay because of the EPO proceedings, but that was not pursued, and expedition was ordered.
In September 2019, the Opposition Division upheld an amended form of ‘666. Vodafone appealed to the Technical Board of Appeal. In November 2019, Vodafone modified its network, so that it did not infringe ‘666. Following trial in the English Court, a decision of valid, and infringed but for a Crown use defence, was handed down. At the consequences hearing, the judge ordered an enquiry as to damages, and that Vodafone pay 60% of IPCom’s costs. Permission to appeal was granted.
In September 2020, Vodafone requested the appeal be adjourned pending the outcome of the TBA’s decision. IPCom refused, but no application to adjourn was made. The appeal took place in January 2021, and judgement given in February 2021. Vodafone’s validity appeal was dismissed, as was ICom’s on claim interpretation, but the latter’s appeal against the Crown use defence succeeded. The Court of Appeal made an Order that Vodafone pay a further 12% of IPCom’s first instance costs and 80% for the appeal. In total, Vodafone paid almost £1M in costs. In March 2021, Vodafone appealed the dismissal of the Crown use defence.
In July 2021, the TBA revoked ‘666 on added matter. In November 2021, Vodafone sought permission to amend its grounds of appeal to the Supreme Court. Arising from the TBA’s decision, the original grounds were academic. At the hearing of the permission to appeal and amend applications, the applications were adjourned, and the parties directed to apply to the Court of Appeal to vary/discharge all or part of its Order.
The question was: what could be done in relation to the Order, even if the original, fundamental basis of the Order (infringement of a valid patent) was ‘falsified’?
Two possibilities were posed, although Vodafone only pursued the first:
(1) an application under CPR rule 3.1(7) [relating to case management] to revoke or vary existing orders; or
(2) apply to re-open the Court of Appeal’s order under CPR rule 52.30
The Court of Appeal looked first at the effect of revocation. It considered its own decision in Virgin Atlantic Airways Ltd v Premium Aircraft Interiors UK Ltd (No 3)  EWCA Civ 163, and the subsequent appeal to the Supreme Court. That dealt with the impact on an assessment of damages. It was considered that there was a different approach to be adopted depending on whether the damages had been paid. If they have not been paid, the revocation could be relied on either in the assessment or to re-open judgement. If after, some restitutionary claim to recover damages would be needed; the outcome of the success of which was not guaranteed.
Also considered was Neurim Pharmaceuticals (1991) Ltd v Generics UK Ltd  EWCA Civ 359, and the impact of a later revocation on costs. Here, the first instance judge reversed his original order, prior to it being sealed, stating the defendant was the winner and entitled to costs. On appeal, Arnold LJ reversed this decision, concluding the defendant should pay the costs on issues where they failed, and no order as to costs otherwise.
Following consideration of both CPR rule 3.1(7) and rule 52.30, the Court of Appeal concluded that CPR 3.1(7) would not have applied. Moreover, as the Supreme Court appeal had not yet been rejected, the Court had no jurisdiction under CPR rule 52.30. Withdraw the appeal and it would have. As Vodafone had not done so, the application under CPR 3.1(7) was refused.
The key part of this decision lies in the Court’s consideration of what Vodafone could (for which read ‘should’) have done. In this respect, the Court pointed out that various options were available, and already known and used by IP practitioners.
First, seeking the stay of the English proceedings, when the EPO proceedings were on foot should have been pursued, and not dropped. Had it been pursued, then a factor to consider would have been whether the party seeking expedition of the Court proceedings was prepared to undertake to repay any costs or damages in the event no stay was granted, and the patent was subsequently revoked at the EPO. No inclusion of liberty to apply was inserted into the first instance order in the event the patent was revoked. Vodafone also did not apply to the Court of Appeal for a stay of the appeal pending the TBA’s decision. Furthermore, Vodafone could also have sought adjournment of the issue of costs and other relief pending the TBA’s decision. As the Court pointed out, these are “…well-trodden paths for experienced patent litigators….Vodafone did none of these things.”
It would be too harsh to point the finger of blame solely at the patent solicitors in this case, as the Vodafone team included a senior Silk. Moreover, we will never know what passed between the legal team and its client, and what decisions were made by the client, with or without knowledge of the ‘well-trodden’ paths. Whatever the case, heed ye these warnings if you are ever faced with such a situation.