Jurisdictional tussling: the UK is open for business on FRAND

The recent Supreme Court decision in Unwired Planet v Huawei (see our reporting here and PLC Magazine article here) answered many important questions about the UK court’s approach to FRAND disputes. However, it also left areas of uncertainty, particularly on the issue of jurisdiction. The High Court decision in Philips v TCL ([2020] EWHC 2553 (Ch)), handed down around a month after the Supreme Court’s judgment, confirms that the UK will take an expansive approach to its jurisdiction to determine FRAND licence terms. Indeed, it is unclear under what circumstances (if any) the UK courts will cede jurisdiction to another national court.

Background

Philips commenced proceedings in the UK against TCL on 30 October 2018 for patents it claimed were (and are now accepted to be) essential to the 3G and 4G standards. Its particulars of claim confirmed that it was willing to license those patents on fair, reasonable and non-discriminatory (FRAND) terms.

On 19 February 2019 TCL commenced proceedings in France for the determination of FRAND licence terms under Philips’ undertaking to the European Telecommunications Standards Institute (ETSI). The ETSI undertaking is governed by French law.

On 5 July 2019 Philips served a FRAND statement of case in the UK, setting out what it considered to be FRAND terms. On 19 July 2019 it submitted a written challenge to the jurisdiction of the French court under, inter alia, Articles 29 and 30 of the Brussels I Regulation (EU) 1215/2012 (the “Brussels Regulation”) essentially on the basis that the French and English proceedings had the same cause of action between the same parties and the English court was first seised.

The French court delivered its judgment on 6 February 2020. It rejected Philips’ jurisdictional challenge, confirming that the French courts had jurisdiction to hear the dispute. Philips filed an appeal to that judgment which is due to be heard on 15 February 2021. Judgment in the main French proceedings (assuming the appeal fails) is expected in late 2022 or early 2023, which is after one of the patents in suit in the English proceedings expires.

The decision

On 9 April 2020 TCL issued an application for a stay of “all aspects of [the UK proceedings] concerning [Philips’] FRAND licensing obligations”. The judgment of Mr Justice Mann was issued in relation to that application. In its application TCL asked that the UK proceedings be stayed under Articles 29 and 30 of the Brussels Regulation.

Article 29

Article 29 states that “where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established”.

TCL argued that although the English proceedings had been commenced first, the issue of appropriate FRAND licence terms had not arisen until Philips served its FRAND pleadings, which it did after the French proceedings had been commenced. Accordingly, TCL argued that the French courts were first seised with the FRAND licensing issues. A key basis for TCL’s argument was that the French courts had already ruled in favour of French jurisdiction on the basis that the French courts were first seised and so the English court must give effect to that judgment.

Philips, on the other hand, argued that the French court had not decided that it was first seised but rather that the issues in dispute in the two proceedings were different and therefore Article 29 was not engaged. The basis for this interpretation being that the English proceedings concerned infringement of UK patent rights (and the FRAND determination merely arose as a consequence of TCL raising a FRAND defence), while the French proceedings were contractual in nature.

Mr Justice Mann preferred Philips’ interpretation of the French judgment. In particular, he noted that this was consistent with the UK Supreme Court’s characterisation of FRAND proceedings that the key issue in dispute is one of UK patent rights (the FRAND aspects of the proceedings apparently being ignored for the purposes of considering jurisdiction). Accordingly the Article 29 challenge failed at that stage.

Mann J nevertheless went on to consider when the issue of a FRAND licence determination first arose in the English proceedings. His view was that Philips’ original statements of case clearly brought the issue of a FRAND licence determination into play in the UK proceedings. The fact that it later served a specific FRAND statement of case was to further particularise its position on appropriate FRAND licence terms, but it did not raise a new issue in the proceedings. He therefore held that the English court would have been first seised with the FRAND issues if those issues had been the same as those in France.

Article 30

Article 30 states that “Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings” where there is a “risk of irreconcilable judgments”.

Given that Mann J had already found that the English court was first seised the Article 30 challenge failed immediately as there was therefore no jurisdiction for it to stay proceedings under Article 30 (because article 30 only applies to courts “other than the court first seised”). Mann J nevertheless went on to consider the position if he were wrong about the English court being first seised.

Following UK Court of Appeal authority, he found that even if the proceedings only became “related” within the meaning of Article 30 at the point when Philips served its FRAND statement of case, the fact that the UK proceedings were commenced first still meant that the English court was first seised and so there was still no discretion to order a stay.

Although not determinative given Mann J’s previous findings, he also considered evidence from Philips’ French law expert that there was serious doubt about whether the French court would in fact determine FRAND terms. Along with that point, he also considered relevant the fact that the English court would be in a position to decide on the issue imminently, while any French judgment would take another two years and, importantly, would be given after expiry of one of the patents in dispute.

Mann J therefore decided that, even if he did have discretion to order a stay under Article 30, he would exercise that discretion against ordering a stay. The only point he considered weighed in favour of the French court determining FRAND terms was the fact that the ETSI undertaking was governed by French law. However, Mann J noted that “English courts are well used to construing foreign contracts, with the aid of evidence from foreign lawyers, and this contract is no exception”.

Analysis

Given this judgment, it is hard to envisage a situation where the English courts would cede jurisdiction to another national court to determine FRAND licence terms where English infringement proceedings are afoot.

Although in this case Mann J found that the UK courts were first seised, he made clear that even if that were not the case then (1) the Article 29 challenge would fail because the issues in dispute in the English and French proceedings were different and (2) he would have exercised his discretion under Article 30 against a stay. Therefore, even where English proceedings are commenced after those in another national courts, it seems possible that the courts will still refuse to stay the English proceedings.

This decision is another example of the English court’s expansive approach to jurisdiction in FRAND cases. It remains to be seen whether there will be any circumstances in which the court will cede jurisdiction. Ultimately, it may then become a question of which national court can give judgment on appropriate FRAND licence terms first and the risk of conflicting judgments is clear.

 

Andrew Moir

Andrew Moir
Partner, Intellectual Property and Global Head of Cyber & Data Security
+44 20 7466 2773

David Webb

David Webb
Associate, London
+44 20 7466 2629

FRAND patent licensing: Supreme Court stays the course

Andrew Moir and David Webb have today published an article about the recent Supreme Court FRAND decision in Unwired Planet in PLC Magazine.

This article first appeared in the October 2020 issue of PLC Magazine.

The article analyses the Supreme Court’s judgment, which provides welcome guidance on the UK’s approach to FRAND licensing, much of which will be welcomed by standard essential patent owners. You can also find an in depth summary of the case in our separate blog post.

Please do not hesitate to contact the authors if you would like to discuss this decision and its implications in more detail.

Andrew Moir

Andrew Moir
Partner, Intellectual Property and Global Head of Cyber & Data Security
+44 20 7466 2773

David Webb

David Webb
Associate, London
+44 20 7466 2629

UK Supreme Court in Regeneron v Kymab: technical contribution critical to determining sufficiency

The Supreme Court has handed down today its judgment in Regeneron Pharmaceuticals Inc v Kymab Ltd [2020] UKSC 27, allowing Kymab’s appeal and holding Regeneron’s patents invalid for insufficiency by a majority of 4:1.

The judgment emphasises the fundamental principle of the patent bargain, which envisages that the patentee makes full disclosure of the invention in return for a time-limited monopoly. Sufficiency is, amongst other tools like novelty, inventive step and industrial application, one of the ways to ensure such patent bargain is struck in the right place, such that the protection afforded by the claim is commensurate with the technical contribution to the art made by the disclosure of the invention in the patent. Whilst the Lords and Lady of the Supreme Court were of the view that their judgment does not change the existing, fundamental legal principles of sufficiency contained in the well-established authorities in the UK and of the Technical Board of Appeal of the European Patent Office, this case illustrates the importance of, and difficulty in, identifying a patent’s technical contribution and the significant consequences which follow. Continue reading

Supreme Court hears Kymab’s appeal against the sufficiency findings of the Court of Appeal

On 11 and 12 February the UK Supreme Court heard the appeal brought by Kymab against the judgment of the Court of Appeal which  found Regeneron’s European Patents (UK) No 1 360 287 and its divisional EP (UK) No 2 264 163 valid and infringed, reversing the invalidity finding of the first instance court (see our analysis of the first instance judgment here). The Supreme Court hearing can be viewed here.

Continue reading

Patent and Pharma Update, February 2020

Key recent developments in the United Kingdom and Europe relating to patents and the pharmaceutical sector

In this issue we report on the Supreme Court decision of Shanks v Unilever on employee inventor compensation. We update on two CJEU decisions relation to public access to documents submitted to the EMA and a key competition decision on “pay-for-delay” agreements. We cover a string of patent-related UK Court of Appeal cases, including Ablynx v VHSquared on jurisdiction, Anan Kasei v Neo on insufficiency and joint tortfeasorship and L’Oreal v Liqwd on claim amendments and admission of late evidence. We provide brief updates from the EPO on the recent CRISPR priority decision, as well as its AI inventorship decision. We have bumper SPC and FRAND updates covering key Court of Appeal and CJEU decisions in respect of SPCs and a string of interesting interim decisions in the UK in the case of FRAND. We round off the issue with a link to our new IP podcast series and updates on Brexit and the UPC. Continue reading

Patent and Pharma Update – December 2018

Key recent developments in the United Kingdom and Europe relating to patents and the pharmaceutical sector

This issue reports on several ground-breaking decisions from the UK courts on second medical use patents and skinny labels, infringement by equivalents and the possibility of global FRAND licences for standard essential patents (SEPs).  We also look at some significant decisions from the CJEU on SPCs and reimbursements in relation to medicinal products and a few developments at the European Patent Office. Finally, we provide our usual round-up of the latest UPC developments (this time from Italy) and Brexit-related developments relevant to the pharma sector. Continue reading

UK SUPREME COURT RAISES SUFFICIENCY STANDARD FOR SWISS-FORM CLAIMS AND LIMITS THE ABILITY TO ASSERT THEM AGAINST “SKINNY LABEL” PRODUCTS

Commercial impact

Yesterday’s Supreme Court decision in Warner-Lambert v Mylan is disappointing news for patentees who may have made significant investment in R&D to develop new uses for known medicines. The full judgment and press release can be found here.

The Supreme Court recognised the value of such second (and further) medical uses and the importance of their patent protection so as to reward and incentivise the patentee. In spite of this, the Supreme Court:

  1. raised the standard of sufficiency of disclosure, with the result that existing Swiss-form claims may be more vulnerable to attack and future medical use claims may be more difficult to obtain; and
  2. limited the protective effect of Swiss-form claims.

Whilst its decision concerns Swiss-form claims, the Supreme Court recognised that although EPC 2000 claims (which have superseded Swiss-form claims) may be drafted differently, they give rise to similar difficulties as those discussed in the decision. As a consequence, yesterday’s decision will have long-felt ramifications for patentees both in terms of litigation and prosecution strategy, as well as being influential in the courts of other jurisdictions.

Comment

The Supreme Court has adopted a higher standard for the assessment of the plausibility of Swiss-form claims than previously used. In doing so, the Supreme Court appears to increase the amount of information required to be disclosed in a patent’s description as well as the specificity required in claims where there are sub-categories of related indications. This may narrow the window that innovative companies have to file patent applications in advance of clinical trials and may necessitate the need for additional dependent claims covering the separate, related indications rather than relying on a category claim. The decision was by a majority view (Lord Sumption, Lord Reed and Lord Briggs).

Although obiter, the Supreme Court prefers an approach to the infringement of Swiss-form claims (which are purpose-limited process claims) in which:

  1. the ability to assert indirect infringement ends at the manufacturer’s gate; and
  2. an objective approach is taken to direct infringement by the sale of the product of the infringing process (under section 60(1)(c) of the Patents Act 1977). Under this objective approach, “skinny labels” carving out the patented indication will often be effective in avoiding infringement.

This approach to direct infringement appears to have taken its lead from the approach in Germany. However, as highlighted by Lord Briggs, the Supreme Court was not provided with any information about the particular features of the German system for prescribing and dispensing medicines or about the market conditions within which a fair balance has to be struck, all of which could have a significant impact on this balance. This would particularly be the case if, for instance, it was not possible to obtain reimbursement in Germany for the off-label prescription, but reimbursement was possible in the UK.

On the facts of the case before it, the Supreme Court held that the claims of Warner-Lambert’s patent relating to neuropathic pain were invalid for insufficiency in their entirety, and that there would have been no infringement by Actavis had the claims been held to be valid.

Contacts

Jonathan Turnbull

Jonathan Turnbull
Partner
+44 20 7466 2174

Alex Freelove

Alex Freelove
Senior Associate
+44 20 7466 7452

Supreme Court considers the role of plausibility in UK patent law

This week the Supreme Court is hearing an appeal in Warner-Lambert v Generics (UK) Ltd (Mylan) and others (UKSC 2016/0197) which will consider the following questions relating to the role of plausibility in UK patent law:

  • “Whether (and what) role plausibility should play in the statutory test for sufficiency, and whether a patent should be held insufficient for lack of plausibility even though it is in fact enabled across the full scope of the claim.”
  • “If a plausibility test is appropriate, provided there is basis to support the claim across part of its scope, whether later evidence can be used to fill the gap.”

“Plausibility” has been an increasingly hot topic in patent litigation in recent years, particularly in cases relating to pharmaceuticals, and its rise has not been without controversy amongst patent lawyers.  It has most frequently been associated with inventive step and insufficiency, but it has also come up in relation to industrial applicability, priority and novelty and it is now a firmly established concept for any lawyer considering the validity of a patent.

What is required for something to be “made plausible” has been considered by the Supreme Court before (HGS v Lilly (2011), in which it was found to be a low, threshold test) but that was in the context of industrial applicability.  This appeal to the Supreme Court asks the fundamental question of whether (and what) role plausibility should play in the statutory test for sufficiency.  The Court of Appeal has accepted that plausibility plays a role in sufficiency (and inventive step), based on EPO Technical Board of Appeal case law relating to both inventive step and insufficiency, combining it with English law relating to principles of general application.  It will be particularly interesting to see how the Supreme Court approaches this question, given the firmly established case law in the EPO on this issue.

Fundamentally, this is a question about what is required of a patentee at the time they file a patent application – is it enough for them to speculate in the specification on a possible use for the claimed compounds, in the hope that that speculation will later turn out in fact to be true (if it is not, the claim will be insufficient anyway), or should public policy require that the patentee at least provides some real reason for believing that the proposed use is true at the time of filing, to prevent patentees from excluding others from large areas of research in the hope that active compounds turn up one day?  The answer to that question has potentially significant ramifications for patentees, both in terms of what they need to be including in future patent applications by way of reasoning and/or data (which may affect the stage of the R&D process at which they are able to file them) and in considering the validity of their existing patents.  It is interesting that the UK BioIndustry Association has intervened in the case – more details on their position can be found here.

It’s worth noting that as well as the plausibility questions being considered, the Supreme Court will also hear argument on questions regarding expert evidence on claim construction and abuse of process in relation to late claim amendments, the answers to which may have effects on routine practice in the Patents Court.

Authors

Andrew Wells

Andrew Wells
Senior Associate
+44 20 7466 2929

Trunki’s claim over Kiddee Case design fails to appeal to Supreme Court

The UK Supreme Court today handed down its first decision on design rights, in the Trunki case (PMS International (Respondent) v Magmatic (Appellant) [2016] UKSC 12). The Supreme Court upheld the decision of the Court of Appeal to the effect that there was no infringement of the Community registered design for Magamatic's Trunki suitcase by PMS's "Kiddee" suitcase, which copied the idea but not the design as registered.

Continue reading