The Court of Appeal has issued a further judgment in the litigation between Smith & Nephew and ConvaTec. Following on from its 24 June decision in ConvaTec's favour on the construction of its numerically defined patent claim, the court has now refused Smith & Nephew permission to appeal to the Supreme Court.
However, it also stayed the grant of injunctive relief (which would restrain further infringement by Smith & Nephew) pending the outcome of 1) Smith & Nephew's application to the Supreme Court for permission to appeal and 2) the (likely subsequent) decision of the Technical Board of Appeal (TBA) of the European Patent Office (EPO).
As we reported on 3 July, the Court of Appeal recently overturned (in part) Birss J.'s judgment regarding ConvaTec's patent EP (UK) 1,343,510 (the "Patent"). The Court of Appeal held that as a matter of construction the phrase "between 1% and 25%" extends to all values ≥ 0.5% and < 25.5% (Birss J. had held that it extended to all values ≥ 0.95% and < 25.5%).
Therefore, while Birss J. was correct that Smith & Nephew's Original Process (where the relevant value ranged from 0.93% to 0.97%) was infringed, he had incorrectly held that Smith & Nephew's Modified Process (where the relevant value was no more than 0.77%) did not infringe.
The present decision, handed down on 30 July 2015 ( EWCA Civ 803), relates to a request by Smith & Nephew for permission to appeal to the Supreme Court, and whether a stay of injunctive relief should be granted pending the appeal to the Supreme Court.
Having refused to grant permission to appeal to the Supreme Court, the Court of Appeal then had to consider whether Smith & Nephew is entitled to a stay of injunctive relief pending:
- Smith & Nephew's application for leave to appeal to the Supreme Court (which is expected to take seven months to resolve);
- the outcome of any subsequent appeal to the Supreme Court; and/or
- the outcome of an appeal by ConvaTec to the TBA to overturn the decision of the Opposition Division of the EPO to revoke the Patent for lack of inventive step (which is expected to be heard within nine months).
The decision of the Court of Appeal (given by Lord Justice Kitchin) therefore provides useful guidance in relation to stays of injunctions following the decision of the Supreme Court in Virgin Atlantic v Zodiac Seats and the decision of the Court of Appeal in Adaptive Spectrum and Signal Alignment, Inc. v British Telecommunications plc.
The application for leave to appeal to the Supreme Court
In relation to the application for leave to appeal to the Supreme Court, Smith & Nephew's submissions were that the Court of Appeal had got its judgment wrong, and that the point on construction raises a significant point of general public importance, which should be heard by the Supreme Court.
The Court of Appeal disagreed, stating that the decision and guidance of the House of Lords in Kirin Amgen was as applicable to a claim containing a numerical range as to a claim containing descriptive words or phrases. In both cases the critical question was what the skilled person would understand the author to have been using the words or numerals appearing in the claim to mean.
The Court of Appeal therefore refused Smith & Nephew's request for permission to appeal.
Stay of injunctive relief pending application to the Supreme Court for leave to appeal
However, Smith & Nephew "made it clear that they intend to apply to the Supreme Court for permission to appeal" (para 4).
This seems to have been an important submission, which distinguished the case on its facts from ASSIA. In ASSIA, while BT had sought permission to appeal to the Supreme Court from the Court of Appeal, it did not state that, if permission was refused, it would seek leave to appeal from the Supreme Court. This meant that Floyd LJ could state (para 9) that: "A cross-undertaking is appropriate to take account of the possibility that an earlier judgment is wrong (e.g. an interim injunction or an injunction pending appeal). In the present case, revocation by the EPO would not show our judgment to be wrong, or the injunction to have been wrongly granted..."
ConvaTec argued that: "this principle applied equally to Smith & Nephew's application for a stay of the injunction pending the decision of the TBA. This court has upheld the validity of the Patent and has now found it to have been infringed. If the Patent is subsequently revoked or materially amended, this will not show those judgments to be wrong or that the injunction was wrongly granted" (para 10).
If the only outstanding matter was the decision of the TBA, there would seem to be some force behind ConvaTec's argument - the UK proceedings were over, the Patent found valid and infringed, and the outcome of the EPO proceedings "would not show our judgment to be wrong, or the injunction to have been wrongly granted".
However, while the Court of Appeal had refused permission to appeal, because Smith & Nephew had made it clear that it intended to apply to the Supreme Court for leave to appeal, the Court of Appeal had to "recognise that the Supreme Court may take a different view [and that t]here is therefore a real prospect of a further appeal" (para 12).
The possibility of the Supreme Court showing either that the Court of Appeal's judgment was wrong, or that the injunction was wrongly granted, seems an important point of distinction between the two cases.
As well as relying on ASSIA, the parties had also put forth "extensive evidence and submissions" in support of their positions to show the "severe and irreparable" harm they would suffer if a stay was (or was not) granted. The Court of Appeal considered the following to be "particularly material" factors in its decision to grant a stay pending the outcome of the leave to appeal application (para 12):
- It was not appropriate to criticise Smith & Nephew for first seeking to revoke the Patent in the UK, and then seeking a declaration of non-infringement - they were simply seeking to clear the way.
- It was easier to compensate ConvaTec for a wrongly granted stay than to compensate Smith & Nephew for a wrongly granted injunction, particularly in light of Smith & Nephew's fact evidence, and notwithstanding the suggestion from ConvaTec that Smith & Nephew would take the opportunity to produce a design-around.
- Smith & Nephew (but not ConvaTec) had been pressing for the accelerated disposal of the opposition proceedings.
- ConvaTec had not offered a cross-undertaking in damages (although the offer of a cross-undertaking would not have reversed the decision of the Court of Appeal to grant a stay).
On this basis, the Court of Appeal was willing to grant a stay of the injunction until the determination of Smith & Nephew's leave to appeal application by the Supreme Court.
Stay of injunctive relief pending appeal to the TBA
The Court of Appeal was also willing to grant a stay of the injunction pending ConvaTec's appeal to the TBA against the Opposition Division's revocation of the Patent.
In so doing it said it had "well in mind the decision and reasoning of this court in" ASSIA, but that there were three factors which suggested a further stay was appropriate here (para 13):
- "the Patent has been revoked by the Opposition Division of the EPO" - so it would seem that the presumption of validity (and hence enforceability) no longer applies;
- "the decision of the TBA is likely to be at most only a few months after the decision of the Supreme Court in relation to the application for permission to appeal"; and
- "it would be wholly disproportionate not to grant to Smith & Nephew the further suspension they seek and that such suspension should be granted in the interests of fairness and equity in light of all of the matters to which we have referred in considering the grant of a stay pending the decision of the Supreme Court in relation to the permission application".
The Court of Appeal left the question of whether the injunction should be stayed pending the outcome of any appeal to the Supreme Court (i.e. assuming leave to appeal was given) up to the Supreme Court.
The judgment of the Court of Appeal suggests that there are several important factors which may persuade the Court to stay an injunction, including:
- Whether proceedings are ongoing in the UK - In ASSIA, BT was offered a limited stay of the injunction to allow it to implement a workaround, but only on undertaking to pay a substantial weekly sum to ASSIA. While it had asked the Court of Appeal for permission to appeal to the Supreme Court, it had not indicated that it intended to seek leave to appeal if permission were refused. Therefore, from the Court of Appeal's perspective, the question of infringement and validity of ASSIA's patents had been finally determined by it in that judgment, so BT was not entitled to a stay of the injunction (or indeed a cross-undertaking) against the possibility that the decision or injunction were wrong.
- Whether the infringer will suffer severe and irrevocable harm if the injunction is not stayed. In this respect, fact evidence (from both parties) seems essential.
- Whether a cross-undertaking in damages is offered by the patentee, although this factor will not necessarily persuade the court to not stay where it otherwise would.
- The length of time for which a stay is requested. The Court of Appeal was willing to grant a stay until determination of the leave to appeal application, but not to any subsequent determination by the Supreme Court. (That would be a matter for the Supreme Court). In applying for a stay, it therefore seems best to break down the periods for which a stay is requested to allow the court to pick an appropriate length of stay.
- The length of time for which any additional stay to deal with EPO proceedings would need to be granted. Here, the Court of Appeal was willing to grant an additional stay of "a few months" specifically to deal with the EPO appeal even if the Supreme Court refused to hear the appeal, although the parties were given liberty to apply if the stay looked likely to last more than 10 months. It is unclear, however, how much less indulgent the Court of Appeal would have been to Smith & Nephew had the EPO not already revoked the Patent (so that it was, in effect, on the front foot in the EPO).
This judgment provides yet further guidance regarding the interaction between UK and EPO proceedings.
The courts have previously stayed injunctions when they have granted permission to appeal (see ASSIA v BT), where they have granted permission for the bringing of an action seeking a declaration than an implemented workaround does not infringe (again, see ASSIA v BT), and where the infringing party needs more time to implement a non-infringed system (yet again, ASSIA v BT). The courts have also previously stayed proceedings in the UK pending the resolution of issues before the EPO (see for example HTC v IPCom, for stays pending determination by the TBA of an opposition, and Samsung v Apple, for stays pending determination of a central amendment application to the EPO).
However, one issue which remains unclear following this judgment is whether the courts will stay an injunction simply because a party is seeking leave to appeal from a higher court, or whether more (in particular, evidence of severe and irreparable harm) is required.