With global hubs fighting to attract big-ticket IP disputes, the London courts are facing a tougher challenge than they are used to. Dominic Carman reports
IP litigation continued apace in 2019 with a multiplicity of disputes. ‘Unlike everything else in relation to Brexit, certainly in the life sciences space and in patent litigation, things carried on pretty much as normal and we had quite a lot of cases,’ says Charlotte Weekes (pictured), contentious IP partner at Pinsent Masons. ‘People talk about some jurisdictions being pro-patentee or pro-challenger: the UK courts seem fairly well balanced.’
Last October, the Supreme Court cases of Unwired Planet v Huawei and Huawei and ZTE v Conversant became the combined star turn in relation to FRAND (fair, reasonable and non-discriminatory) terms. Although different, the two cases are inextricably linked and were therefore heard simultaneously by the Supreme Court to determine whether the English Court considers itself willing and able to adjudicate on global FRAND terms.
‘Given the shortage of patent judges, they’re relying heavily on deputies. There’s a queue, so getting to the Supreme Court takes at least three years.’ Mark Ridgway, Allen & Overy
Huawei appealed two Court of Appeal judgments, which had upheld a landmark High Court judgment by Mr Justice Birss: that a global FRAND licence is a fair and reasonable measure, and that it could prevent hold-out. Meanwhile, joint appellants, Huawei and ZTE, claimed that a Chinese court should hear FRAND claims by Conversant and offered global FRAND determinations in China. The late Mr Justice Carr, who died last year, rejected these suggestions.
At Allen & Overy (A&O), which acted for Huawei, IP partner Mark Ridgway notes: ‘If the Supreme Court upholds the Court of Appeal, will it attract more work? Yes. Since the Unwired Planet case, there have been numerous FRAND actions with a couple of copycat cases, directly borrowing from the Birss judgment and trying to build on it in terms of justifying a FRAND rate.’
Irrespective of the Supreme Court’s decision, the impact on SEP (standard-essential patent) holders will also be significant, affecting the territoriality of patent rights and national courts contrasting with the international nature of standards, licensing arrangements and supply chains.
‘The Supreme Court decision has the potential to keep FRAND litigation alive,’ says Weekes. ‘We will probably see even more FRAND-type cases than we already have. If the Supreme Court supports the Court of Appeal approach, we are going to have more companies looking to come here to have their FRAND licences globalised. It’s possible to look at it cynically and say that it is a way of keeping the UK as an attractive forum in light of Brexit uncertainty.’
Mark Shillito, global head of IP at Herbert Smith Freehills (HSF), offers a qualified interpretation. ‘It tracks into a trend: more FRAND licence cases coming to the UK if the Court of Appeal is upheld in its expansive view of its jurisdiction, which will therefore attract more work to UK litigation plc,’ he says. ‘But if the Supreme Court says, “No, that’s wrong,” then that same incentive for people to come to the English courts won’t be there.’
Richard Vary, IP partner at Bird & Bird, suggests that the appeals demonstrate ‘a move to internationalisation of FRAND cases – every decision that comes out gets cited in every other court in different jurisdictions as if it were brand new authority.’
Shillito develops the point: ‘Internationally, especially at judicial level, the IP community is quite tight: they talk to each other, they have been involved in cases against each other, develop policy together and it’s not surprising that they pay due account to each others’ decisions, even where they are not strictly bound by them.’
Blockbuster battles
Other patent cases have also been keeping the Supreme Court busy, among them Actavis Group PTC EHF & Ors v ICOS Corp & Anor. Pinsents acted for Actavis PTC and Teva, Bird & Bird for Actavis UK, Taylor Wessing for Mylan, and A&O for ICOS and Eli Lilly. The appeal related to the test of obviousness in a dosage patent for Tadalafil, a drug used for the treatment of erectile dysfunction. The Supreme Court ruled in favour of Teva, Actavis and Mylan.
Another prominent IP dispute heard by the Supreme Court was Unilever v Shanks: an employed inventor who successfully brought a case against Unilever claiming his invention was of outstanding benefit to his employer and, therefore, he was entitled to compensation. HSF advised Unilever. ‘The case has been going on over many years, it shows how difficult it has been for employees to satisfy the test for compensation under the Patents Act,’ says Shillito. ‘It will stimulate interest in the area and may cause more employees to make claims.’
He also identifies another Supreme Court case as significant: Regeneron v Kymab, which was heard in February. ‘It’s a biotech case about antibody-producing mice, roughly seven years of litigation,’ says Shillito. ‘It centres on the law of insufficiency in the UK and is important for the biotech community: it has the potential significantly to affect how the court looks at insufficiency in patents.’ A&O acted for Regeneron and Powell Gilbert for Kymab.
A seven-year stretch for disputes is not uncommon. Ridgway notes that the courts have always tried to enable parties to get a patent case heard in around a year. ‘That’s a bit of a problem now – given the shortage of patent judges, they’re relying heavily on deputies,’ he says. ‘A Court of Appeal judgment can take another 18 months and even petitioning the Supreme Court for permission can take six months. There’s a queue, so getting to the Supreme Court takes at least three years, assuming that the legal issues in your case are novel and important enough.’
Timing is an issue, confirms Weekes. ‘The speed of reaching a decision is something clients look at when considering their global or European litigation strategies, and weigh up which to go for first and the overall benefit in having a decision from the UK,’ she says.
The problem is most acute in the most complex trials with a technical difficulty rating of four or five, as Weekes observes: ‘We’re conscious of having only one judge, Birss, for category four and five patent cases. Deputy judges are dealing with some of the FRAND cases.’ Ridgway agrees: ‘It’s a problem for Colin Birss, the deputies and the wider pool of patents judges who aren’t specialists.’
Vary suggests that a shortage of specialist IP judges has a detrimental impact. ‘It is relatively common that clients ask about litigation and we go through various European jurisdictions and put together speed, cost, and the decision is: “Let’s go to Germany,”’ he says. ‘It’s depressingly hard to sell the UK when the reality is it will cost more than Germany and it will take so much longer to go to trial. A real frustration – it could so easily be resolved and isn’t.’
Unlike everything else in relation to Brexit, in life sciences and patent litigation things carried on as normal. People talk about jurisdictions being pro-patentee or pro-challenger: the UK courts seem fairly well balanced. Charlotte Weekes, Pinsent Masons
His solution to reduce the caseload would be to train and appoint more IP judges. ‘If you look at the number of patent cases that are held in Germany and the number of German patent judges, they are hearing tens of times as many cases as we are,’ he says.
Others point to the excellent quality of deputy judges who are able to step in and ease the burden, such as Daniel Alexander QC and Richard Meade QC. But Ridgway counters: ‘Of course, the courts are really busy so the Bar is very busy as well. Because the court fills its judge slots on a lot shorter notice than barristers’ diaries fill up, unless someone has settled a case, and therefore has a slot open up, the courts may struggle to get them to sit.’
Hostile outlook
Moving forward, Weekes anticipates a considerable volume of litigation around medical use patents and infringement ‘because we haven’t seen anything yet that really applies the Supreme Court guidance on infringement of second medical use claims. It’s likely to be the same with FRAND.’ Shillito adds: ‘We had a good year last year although not one of our most outstanding, but the year to come is looking much busier again.’
The outlook is promising, agrees Vary. ‘It is good in that we have got the Unwired Planet jurisdiction, which makes it an attractive place: it’s good in terms of quality of judgment. But it would be so much better if the cases were getting through to trial in under a year. The UK has got so much potential and it’s being held back.’
Ridgway adds a note of caution: ‘We may well end up with lots of courts fighting aggressively for business and to be the global determinant of FRAND disputes. While it might seem like a great tool for attracting business to the UK right now, it won’t work that way in the long run because other courts will have to respond – and they will.’ LB