Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly known as Contour Aerospace Ltd)

JurisdictionEngland & Wales
CourtSupreme Court
JudgeLord Clarke,Lord Sumption,Lord Carnwath,Lady Hale,Lord Neuberger
Judgment Date03 July 2013
Neutral Citation[2013] UKSC 46

[2013] UKSC 46

THE SUPREME COURT

Trinity Term

On appeal from: [2009] EWCA Civ 1062

Before

Lord Neuberger, President

Lady Hale

Lord Clarke

Lord Sumption

Lord Carnwath

Virgin Atlantic Airways Limited
(Respondent)
and
Zodiac Seats UK Limited (formerly known as Contour Aerospace Limited)
(Appellant)

Appellant

Henry Carr QC

Iain Purvis QC

Brian Nicholson

(Instructed by Wragge & Co LLP)

Respondent

Jonathan Crow QC

Richard Meade QC

Henry Ward

(Instructed by DLA Piper UK LLP)

Heard on 29 and 30 April 2013

Lord Sumption (with whom Lady Hale, Lord Clarke and Lord Carnwath agree)

1

In this case, Virgin Atlantic Airways Ltd wishes to recover damages exceeding £49,000,000 for the infringement of a European Patent which does not exist in the form said to have been infringed. The Technical Board of Appeal ("TBA") of the European Patent Office ("EPO") has retrospectively amended it so as to remove with effect from the date of grant all the claims said to have been infringed.

2

The TBA found that in the form in which the patent was originally granted the relevant claims were invalid because they had been anticipated by prior art. Virgin says that it is nevertheless entitled to recover damages for infringement because before the TBA had issued its decision, the English courts had held the patent to be valid and specifically rejected the objection based on prior art. Their case is that this conclusion and the finding of validity on which it is based are res judicata notwithstanding the later but retrospective decision of the TBA. A similar argument had succeeded before the Court of Appeal in very similar circumstances in Coflexip SA v Stolt Offshore MS Ltd (No 2) [2004] FSR 708 and Unilin Beheer BV v Berry Floor NV [2007] FSR 635. The Court of Appeal, conceiving itself to be bound by these decisions and regarding them as correct in principle, arrived at the same conclusion.

The statutory framework
3

The appeal perfectly illustrates the problems arising from the system of parallel jurisdiction for determining the validity of European patents.

4

Part II of the Patents Act 1977 gives effect to the principal provisions of the European Patent Convention. Section 77(1) of the Act provides that a European Patent (UK), i.e. one which is granted for the United Kingdom or for states including the United Kingdom, is to be treated as if it were a patent granted under the Act, and that "the proprietor of a European Patent (UK) shall accordingly as respects the United Kingdom have the same rights and remedies, subject to the same conditions, as the proprietor of a patent under this Act." Section 77(2)-(4A) deal with the revocation or amendment of a European Patent by the EPO ("EPO"):

" 77 Effect of European Patent (UK)

(2) Subsection (1) above shall not affect the operation in relation to a European patent (UK) of any provisions of the European Patent Convention relating to the amendment or revocation of such a patent in proceedings before the EPO.

(3) Where in the case of a European patent (UK)—

(a) proceedings for infringement, or proceedings under section 58 above, have been commenced before the court or the comptroller and have not been finally disposed of, and

(b) it is established in proceedings before the EPO that the patent is only partially valid,

the provisions of section 63… apply as they apply to proceedings in which the validity of a patent is put in issue and in which it is found that the patent is only partially valid.

(4) Where a European patent (UK) is amended in accordance with the European Patent Convention, the amendment shall have effect for the purposes of Parts I and III of this Act as if the specification of the patent had been amended under this Act; but subject to subsection (6)(b) below.

(4A) Where a European patent (UK) is revoked in accordance with the European Patent Convention, the patent shall be treated for the purposes of Parts I and III of this Act as having been revoked under this Act."

The provisions of section 63 to which section 77(3) refers deal with the power of the Comptroller in a case where a patent is found to be only partially valid to grant relief in respect of that part which is found to be valid and infringed.

5

Section 77(2) of the Act refers to "the provisions of the European Patent Convention relating to the amendment or revocation". This is a reference to article 68 of the Convention, and indirectly to article 64. They provide:

"Article 64

Rights conferred by a European patent

"(1) A European patent shall, subject to the provisions of paragraph 2, confer on its proprietor from the date [of publication of the mention of its grant], in each Contracting State in respect of which it is granted, the same rights as would be conferred by a national patent granted in that State.

(2) If the subject-matter of the European patent is a process, the protection conferred by the patent shall extend to the products directly obtained by such process.

(3) Any infringement of a European patent shall be dealt with by national law.

Article 68

Effect of revocation or limitation of the European patent

The European patent application and the resulting European patent shall be deemed not to have had, from the outset, the effects specified in articles 64 and 67, to the extent that the patent has been revoked or limited in opposition, limitation or revocation proceedings."

6

Part V of the Convention provides for opposition procedure before the Opposition Division of the EPO and on appeal from them to the TBA. A European patent may be opposed on the ground (among others) that the invention is not patentable by reason of lack of novelty. The procedure is available to any one affected, provided that it is initiated within nine months of the grant. Under articles 101 and 111 of the Convention, the Opposition Division and the TBA are empowered to revoke a patent found to be invalid or to accept an amendment proposed by the patentee which will cause the patent to satisfy the requirements of the Convention.

7

The effect of these provisions is that the English courts have the same jurisdiction to determine questions of validity and infringement in the case of a European patent as they have for domestic patents, but that concurrent jurisdiction over questions of validity is exercisable by the EPO. There is, however, an important difference between the legal effect of a decision in the two jurisdictions. Both are decisions in rem. They determine the validity of the patent not only as between the parties to the proceedings, but generally. But the English court's jurisdiction over the question of validity is purely national. A decision of an English court declaring a patent invalid, or (which will normally follow) revoking it, will have effect in the United Kingdom only, whereas a corresponding decision of the EPO, which was the authority by which the patent was granted, will have effect in all the states for which the patent was granted. These considerations make it highly desirable to avoid inconsistent decisions if it can be done. National procedures for achieving this differ from one contracting state to another. In England, there are established procedures for staying English proceedings in which the validity of a European patent is in issue, if there are concurrent opposition procedures in the EPO. However the value of these procedures is somewhat diminished by the current practice of the High Court, which is based on dicta of Jacob LJ in Unilin Beheer BV v Berry Floor NV [2007] FSR 635, at para 25 and on the subsequent decision of the Court of Appeal in Glaxo Group Ltd v Genentech Inc (Practice Note) [2008] Bus LR 888. Their effect is that the primary consideration on an application for a stay is the probable duration of the proceedings before the two tribunals. If the question of validity would be likely to be resolved quicker in the English court than in the EPO, it would normally be appropriate not to stay the English proceedings. The consequences of this practice are particularly serious in a case where the English courts "win" the race to judgment if, as the Court of Appeal decided in Unilin, the effect is to bind the parties to a decision of the English court that the patent is valid notwithstanding that the EPO which granted it subsequently decides that it should be revoked or amended ab initio. In Glaxo Group Ltd v Genentech Inc, at para 83 Mummery LJ, delivering the judgment of the court thought that this consequence was inherent in the existence of concurrent systems of adjudication:

"… the possibility of the duplication of proceedings contesting the validity of a patent granted by the EPO is inherent in the system established by the Convention. In practice national courts exercise exclusive jurisdiction on infringement issues and they have concurrent jurisdiction with the EPO on validity issues. As Mr Daniel Alexander appearing for the claimant said, the contracting states and the UK Parliament contemplated that the national patents courts should be able to determine the same issues of patentability as the EPO. The resultant legislation allowed the determination by the national court and the EPO at the same time. Indeed, there is nothing in the Convention or the 1977 Act to prevent the commencement of revocation proceedings in the Patents Court on the very date of the grant of the patent by the EPO."

It is undoubtedly right that the draftsmen of both the Convention and the Patents Act 1977 envisaged concurrent jurisdiction over questions of validity, but it may be doubted whether they envisaged anything like the consequence which has come about in this case.

The facts
8

The patent in suit is a European patent for a "seating system and passenger accommodation unit for a vehicle", granted to Virgin and published on 30 May 2007. The seat, which was designed in about 2005, reclines to provide a flat bed....

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