9.7 Civil remedies
9.7.1 Injunctive relief
Often, the principal reason why a patentee will have commenced infringement proceedings will have been to seek an injunction against the defendant to prevent it from infringing the patent. The courts of England and Wales have the power to grant injunctions “in all cases in which it appears to the court to be just and convenient to do so.”142
The exact wording and scope of an injunction is usually considered by the trial judge at the consequentials hearing. The normal form of the injunction is one in “general form,” restraining the defendant(s) from infringing the patent, as opposed to one limited to restraining the defendant(s) from performing the specific acts found by the court at trial to infringe the patent.
The granting of a general form injunction is a matter of discretion. The important issue of whether and in what terms to grant an injunction was considered by Mr Justice Birss (as he then was) in Evalve Inc. v. Edwards Lifesciences Ltd,143 who identified the following general principles:
- i) A general injunction to restrain future infringements is the normal remedy for the patentee.
- ii) The burden is on the defendant to give reasons why such an injunction should not be granted.
- iii) All the circumstances should be considered. The public interest, such as the impact on third parties, is a relevant consideration. […]
- iv) In a proper case, the public interest may justify refusal of or carve out from injunction, and an award of damages in lieu. […]
- v) The starting point of any consideration of the public interest in relation to a remedy after a patent trial is that the patent system as a whole is already criss-crossed with provisions which strike balances between different public interests.
- vi) The availability of an exclusionary injunction is an important manifestation of the monopolistic nature of a patent right. While monopolies in general are against the public interest, once a patent has been found valid and infringed, the patent monopoly is something which it is in the public interest to protect by an injunction in order to further the purposes of the system as a whole, such as to promote investment in innovation.
- vii) Therefore when […] various public interests are engaged and pull in different directions, one should have in mind that the legislator is better equipped than the courts to examine these issues and draw the appropriate broad balance. The jurisdiction to refuse or qualify a patent injunction on public interest grounds is not there to redraw the broad balance of public interests set by Parliament in the patent system. The power should be used sparingly and in limited circumstances.144
The courts have, in an appropriate case, been prepared to grant an injunction that extends beyond the lifetime of the patent in order to deprive the defendant of the “springboard” from which it had benefited by infringement during the patent’s lifetime.145
The courts also have the ability to tailor injunctive relief to the nature of the case. For example, in cases where the patentee is under an obligation to grant licenses on FRAND terms, the injunction may be expressed to lapse if the defendant enters into a license on the terms that the court has held to be FRAND.146 Conversely, because the grant of an injunction is an exercise of the court’s discretion, the courts have, in appropriate cases, been prepared to refuse or limit a final injunction following a finding of infringement and substitute an award of damages in lieu of the injunction.
9.7.2 Financial relief – damages and account of profits
The quantum phase of patent litigation is the proceeding in which the amount (i.e., the quantum) of financial relief is determined. This may be damages or, at the claimant’s election, an account of profits. This phase is usually bifurcated from and occurs after the liability phase.
Thus, if a patent is held valid and infringed, separate proceedings will need to be commenced to determine the amount of compensation payable to the patentee. Having contested liability for several years and often in many other jurisdictions besides England and Wales, the parties frequently become financially and emotionally exhausted by the litigation and the patentee may, having secured injunctive relief as appropriate, be reasonably content with its position. It is for these reasons that parties often settle their differences before the quantum proceedings are commenced or at least in the early stages of such proceedings. Consequently, this is why judicial decisions and judgments on the quantum of damages payable following patent infringement are comparatively rare.
While damages are usually compensatory in nature, pursuant to Article 13 of the Intellectual Property Enforcement Directive147 as implemented into U.K. law by Article 3 of the Intellectual Property (Enforcement, etc.) Regulations 2006,148 it is possible that some form of enhanced level of damages could be ordered.
The patentee is entitled to elect whether it seeks financial compensation by way of damages or an account of profits but not both. Before election, a patentee is entitled to a limited amount of disclosure from the infringing party pursuant to the principles laid down in Island Records Ltd v. Tring International plc.149 It is more common for the patentee to opt for an assessment of damages, although commercial considerations may push the patentee toward an account of profits.
When calculating damages, the court will consider whether the patentee manufactures goods in accordance with the patent, grants licenses to exploit the invention or both. If the patentee grants licenses, then it will be entitled to receive damages as if the infringer had a license on the usual terms and conditions required by the patentee. If the patentee manufactures in accordance with the patent, then, although the principle remains the same – to put the patentee in the position it would have been in but for the infringement – the analysis is often more complicated. The court must assess numerous factors, such as the extent to which the patentee’s and the infringer’s goods compete with one another, the extent to which the presence of the infringer caused price depression in the market and the extent to which sales of the patented product would have resulted in sales of other goods by the patentee as well. If a patentee neither manufactures goods in accordance with its patent nor grants licenses, the court will usually assess the compensation payable to a patentee on the basis of a reasonable royalty.
The approach that the court will take to the assessment of compensation if the patentee opts for an account of profits is different. An account of profits is restitutionary in nature, designed to deprive the infringer of the unlawful profits it made by virtue of the infringement of the patent and to hand those profits over to the patentee. If the patented product or process forms only part of the product – as will almost inevitably be the case with a composite article such as a mobile phone or a car – then the court will be required to make an apportionment of the value attributable to the patented component.
9.7.3 Other remedies
9.7.3.1 Revocation and declarations of invalidity
If the court makes a finding that a patent is invalid, it will make an order for the revocation of the patent, which the UKIPO will execute. It will also make a declaration that the patent is invalid.
9.7.3.2 Certificates of contested validity
If the validity of the patent has been unsuccessfully challenged, the patentee may request a certificate of contested validity. This certificate will be entered on the register for the patent at the UKIPO, and, if a further unsuccessful challenge to the validity of the patent is subsequently made, the patentee is entitled to have its costs of defending the challenge made on an indemnity basis unless the court directs otherwise.
9.7.3.3 Publication and dissemination of the judgment
The court may order the dissemination and publication of its judgment at the losing party’s expense.150 This is a discretionary matter for the court, and whether it is appropriate to do so (and if so, where and for how long the judgment should be publicized) will depend on the circumstances. In the case of a successful rights owner, such an order should normally only be made to act as a deterrent to future infringers or to raise awareness among the public. In the case of a successful defendant, such an order should normally only be made where there is a real need to dispel commercial uncertainty.151 As such, such an order may be refused when the effect may be to cause embarrassment to the published party.152
9.7.3.4 Delivery up and destruction
As Section 61 of the Act (see Section 9.5.3 above) makes clear, the court has the power to order delivery up or destruction of infringing articles in the infringer’s control or, in some exceptional circumstances, that the defendant should recall infringing products from any parties to whom those products have been supplied. In general, such an order is regarded as ancillary to an injunction and made to render the injunction more effective. However, such an order may also be made in other circumstances, such as an order for delivery up made so as to prevent a defendant from selling after-expiry stock that had been obtained by acts of infringement.153
9.7.4 Costs award and assessment
At the consequentials hearing, the trial judge will usually be asked to determine how the costs of the proceedings are to be apportioned. The starting point for the judge will be to assess which party was the overall winner from a commercial perspective and to award that party its costs. However, an issue-by-issue approach is often applied, with the result that the overall winner may not be awarded its costs in relation to certain issues on which it fought but did not succeed and may even be required to pay the costs of the losing party in certain circumstances.154 Thus, for example, a party may challenge the validity of a patent on grounds of anticipation (novelty), obviousness and insufficiency but may prevail only on the issue of obviousness. In these circumstances, the challenging party will have succeeded in its goal of invalidating the patent but may well not be awarded its costs of the anticipation and insufficiency issues. Further, if the judge considers that the challenger was unreasonable to have run such challenges, it may be that the challenger will be ordered to pay the patentee’s costs of these challenges.
The trial judge will usually not determine the amount of costs payable from one side to the other. This will be held over to a detailed assessment (discussed further below in Section 9.7.5) if not agreed upon by the parties. However, the trial judge may order that the paying party should pay a set percentage of the receiving party’s costs, taking a broad approach based on the principles described above and setting off the costs of one issue against another. This guidance from the judge is often helpful in encouraging the settlement of costs issues. The exception to this rule is where the parties have been required to prepare costs budgets (see Section 9.6.5.3.1 above). Assuming that the winning party has adhered to its costs budget, the trial judge may direct for all or substantially all of the costs of the winning party to be paid by the losing party.
In general, the court may award costs on what is known as a standard basis or on an indemnity basis. The standard basis excludes the costs of the lawyers advising their client and helping the client to understand the proceedings. Therefore, costs on a standard basis normally amount to about 65 percent to 75 percent of the actual costs incurred. Costs on an indemnity basis amount to around 90 percent of the actual costs but are awarded very rarely and only in circumstances where the court is satisfied that some sort of penalty ought to be imposed for some reason on the paying party (e.g., if they have behaved in a particularly egregious manner in relation to an issue or issues in the case).
Having determined which should be the receiving party and which should be the paying party, the trial judge will usually order an interim payment on account of costs to be paid by the paying party to the receiving party. This sum will be more than an irreducible minimum amount that the paying party is likely to recover, and the trial judge, again using a broad approach, may typically award approximately 60 percent of the expenses that the party has incurred.155 Thus, if a party has, using an issue-by-issue approach, been awarded 70 percent of its costs, the trial judge may order that it should receive 60 percent of those costs by way of an interim payment. For example, if the receiving party had incurred costs of GBP 1 million, then the interim payment – 60 percent of 70 percent of 1 million – is GBP 420,000.
9.7.5 Detailed assessment of costs
As discussed above, at the consequentials hearing, the trial judge will typically give two directions as to costs: (i) a decision on which party should receive its costs and the percentage of its costs that it should receive, and (ii) an order for an interim payment.
In many cases, the parties will reflect on the comments from the trial judge and negotiate a sum to be paid from one to the other in respect of costs. Invariably, if there is to be an appeal, the money will be paid subject to an undertaking to repay in the event of a successful appeal or will be held in escrow.
In the event that costs cannot be negotiated, the rules provide a framework for the detailed assessment of costs by a specialist costs judge in a procedure governed by CPR 47.