UK Supreme Court overturns law on patent infringement damages

05 Jul, 2013

The UK Supreme Court yesterday handed down its judgement in the Virgin Atlantic v Zodiac Seats patent case relating to business class airline seats. The decision overturned the century-old English legal principle of patent-holders having a right to damages for infringed patents notwithstanding later amendment to the patent.

 

Virgin Atlantic Airways had successfully sued Zodiac Seats in the UK High Court for infringement of a patent directed to business class airline seats, and the infringement was later confirmed by the Court of Appeal. However, following the Court of Appeal’s judgement, in separate opposition proceedings at the European Patent Office (EPO) the patent was amended to remove the infringed claims, meaning Zodiac no longer infringed Virgin Atlantic’s patent. In its claim before the UK Supreme Court, Virgin Atlantic relied upon a line of English cases which held that when the issues of infringement and validity had been found in a patentee’s favour, it was entitled to damages despite any subsequent amendment or revocation of the patent.

 

The Supreme Court disagreed with Virgin Atlantic’s argument and found that the amendment of the patent in the EPO proceedings to remove the infringed claims was a factor which Zodiac could rely upon when damages were assessed. The Court considered that the earlier cases on which Virgin Atlantic relied – starting with a decision of the Court of Appeal from 1908 in the Poulton case, and followed by two much more recent Court of Appeal cases – were decided in error.

 

The Supreme Court considered that where a patent had been held invalid by a competent tribunal, whether in the UK or at the EPO, that was a material fact which should be taken into account when determining damages. The Court was troubled by the concept inherent in the earlier cases that a patentee might recover damages based on an invalid patent by luck of the timing of various proceedings.

 

Mark Kenrick (pictured), Patent Attorney and Partner at Marks & Clerk, commented: “This case shows, again, the difficulties in getting the interactions between UK and European Patent Office proceedings to work in a sensible way. The UK Supreme Court noted that Parliament had expressly set up a system where patent validity could be heard in two completely separate tribunals, and felt it important that actions in the UK Court took full account of the EPO’s findings.

 

“This shows the need for technology-led businesses to consider carefully the interactions between parallel proceedings in the EPO and UK courts, when devising an overall strategy to address a particular patent dispute.

 

“The Court expressed dissatisfaction with the English courts’ guidelines for stays of UK proceedings where there are parallel proceedings in the EPO. While the Court did not think it was appropriate to modify the guidelines themselves, it seems likely that when an application for a stay because of concurrent EPO proceedings comes before the UK Courts, the guidelines will be revisited with this decision very much in mind.

 

“While the forthcoming Unified Patent Court will have pan-EU jurisdiction for patent validity, it will not, it seems, provide a solution to the recurring problem of how to deal with parallel proceedings in the EPO and the courts charged with patent enforcement. The draft Rules of Procedure for the proposed court do provide for stays of proceedings based upon proceedings in the EPO, but as with many aspects of the UPC, much will depend upon how the rules are actually applied in practice.”

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