Certificates of Contested Validity - Optis Cellular Technology LLC and others v Apple Retail UK Ltd and others

Author Subhrajyoti Saha, Licence CC BY-SA 4.0 Source Wikipedia


Jane Lambert 

Patents Court (Mr Justice Birss) Optis Cellular Technology LLC and others v Apple Retail UK Ltd and others [2020] EWHC 3248 (Pat) (23 Nov 2020)

On 23 Nov 2020 Mr Justice Birss held a hearing to decide the consequences of his judgment in  Optis Cellular Technology LLC and others v Apple Retail UK Ltd and others [2020] EWHC 2746 (Pat) (16 Oct 2020)  which I discussed in Patents - Optis Cellular Technology LLC and others v Apple Retail UK Ltd and others 14 Nov 2020.  It will be recalled that the patent in suit was found to be valid and essential to the relevant standard, that the counterclaim for revocation failed and the claim for infringement on the basis of compliance with the standard succeeded.  The claimants were the clear winners and they were entitled to their costs.

The first question for the judge was upon what basis those costs should be assessed.  The validity of the patent in suit had been challenged in Unwired Planet International Ltd v Huawei Technologies Co, Ltd and others [2016] EWHC 576 (Pat) (22 March 2016).  Mr Justice Birss had found that patent to be valid and had granted a certificate of contested validity under S.65 (1) of the Patents Act 1977.  That subsection provides:

"If in any proceedings before the court or the comptroller the validity of a patent to any extent is contested and that patent is found by the court or the comptroller to be wholly or partially valid, the court or the comptroller may certify the finding and the fact that the validity of the patent was so contested."

The consequences of such an order are that if the validity of the patent is challenged in subsequent proceedings, the challenger does so at his or her peril as to costs.  S.65 (2) adds:

"Where a certificate is granted under this section, then, if in any subsequent proceedings before the court or the comptroller for infringement of the patent concerned or for revocation of the patent a final order or judgment or interlocutor is made or given in favour of the party relying on the validity of the patent as found in the earlier proceedings, that party shall, unless the court or the comptroller otherwise directs, be entitled to his costs or expenses as between solicitor and own client (other than the costs or expenses of any appeal in the subsequent proceedings)."

As the claimants had succeeded in subsequent proceedings in which the validity of that patent had been in issue, they sought costs on the solicitor and own client basis.

The expression "solicitor and own client" basis is a throwback to the days before the Civil Procedure Rules came into force. Then costs were awarded on a "party to party" or "solicitor and own client basis". Those terms have been replaced by "indemnity costs" and costs on the standard basis.  However, as his lordship noted at paragraph [5] of his judgment, "solicitor and own client" was not quite the same as the indemnity basis under CPR 49.3.

The judge made a deduction for an issue that had been contested at trial but subsequently abandoned.  The costs on contested validity were estimated to be 25% of the claimants' costs.  The defendants argued that the claimants should be deprived of half of those costs as they should have dropped the issue before trial.  The claimants contended that the costs amounted to only 2.5% of the total.  Mr Justice Birss held at paragraph [18] that a 12% deduction, bearing in mind the overall circumstances of this case was too big, while 2.5%was too small. He decided to deduct, overall, 8% from the claimants' costs. That included, of course, the 2.5% which was an estimate of the costs of the issue itself and a further 5.5%, to take account of his lordship's view that the issue should have been dropped sooner.

The defendants submitted that the words "unless the court or the comptroller otherwise directs" gave the judge a discretion not to award costs on a solicitor and own client basis and that he should not do so in this case because the court had given the defendants permission to appeal and that it had been in the public interest to challenge the monopoly, particularly as it related to compliance with a standard.  Further, relying on  Otto v Steel (1886) 3 RPC 109 and  Flour Oxidising v Hutchison (1909) 26 RPC 597, where solicitor and client costs were refused on the ground that the validity of the patent was attacked on new grounds, the defendants contended that the court should not order solicitor and own casts assessment in this case because they had relied on international patent application WO 98/50909 ("Losh) which had not been cited in the previous proceedings.

The judge rejected the first submission at [21].

"In my judgment, the fact that when the Certificate of Contested Validity was granted the first time, the court also recognised that there was at least a real, rather than fanciful, prospect of success on appeal relating to the merits of the case itself, is nothing to do with the Certificate of Contested Validity. It does not in any way undermine its force or give a reason why, at a later occasion, the court might make a different order, so I will not take that into account at all."

He acknowledged some force in the second submission but did not see any reason for depriving the claimants of their entitlement under s.65 (2) at [25]:

"One reason is that just as invalid patents are contrary to the public interest, it bears pointing out that valid monopolies as found by the court are also in the public interest, precisely because the patent system is there to incentivise innovation. Innovators who have valid intellectual property rights are entitled to have their rights vindicated. The vindication of those rights itself furthers the purposes of the patent system. Those factors demonstrate that it is not correct simply to focus on the fact that invalid patents are contrary to the public interest and thereby to take a decision based on that, without taking into account the converse. So I do not believe in this case the considerations of the balance of the public interests takes one anywhere in deciding what to do about the costs."

As for the third submission, the judge noted at [28] that the patent legislation and procedural rules had changed since Otto and Flour Oxidising.  Consequently, whatever he proposed to do was not going to be based on a consideration of what judges did over 100 years ago.  In his view, the right approach was to apply the overriding objective. A new piece of prior art was not irrelevant and might be taken into account when deciding whether or not to make an order under s.65 (2) or a deduction, but the citation of a different piece of prior art was not of itself a basis for depriving a successful party of the benefit of a certificate of contested validity in the absence of specific circumstances.  There were no such circumstances in this case.

In accordance with Lord Justice Christopher Clarke's decision in  Excalibur Ventures LLC v Texas Keystone Inc and others [2015] EWHC 566 (Comm) (3 Feb 2015), the claimants requested a payment of costs on account.  It was common ground that the claimants' costs were about US2.1 million and that any award should be made in that currency.  The claimants sought an order for 95% of their costs while the defendants argued that it should be closer to 65%.  The judge split the difference and ordered 85% of the costs to be paid on account.

Finally, Mr Justice Birss made a 1% deduction from the claimants' overall costs on the basis that the claimants had abandoned an application for a publicity order after seeing the defendants' evidence on the issue.

Anyone wishing to discuss this article, certificates of contested validity or patents in general may call me on 020 7404 5252 during office hours or send me a message through my contact form.


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