Virgin v Contour - the £49,000,000 question

July 2013

The problem of the concurrent jurisdiction of the European Patent Office and national courts on the validity of European patents, and the affect on damages claims has been considered by the UK Supreme Court. 

The long awaited decision in Virgin v Contour (now Zodiac) was handed down on 3rd July 2013 and may also result in a change to the current practice of the English courts in relation to stays of proceedings pending EPO oppositions. 

The Supreme Court has decided that where judgment is given in an English court that a patent is valid and infringed, and that patent is subsequently revoked or amended at the EPO, the defendant is entitled to rely on the revocation or amendment on the inquiry as to damages. This changes English law and overturns the principle established in Unilin v Berry. 

The validity of a European patent can be tested either at the EPO (during the 9 month post grant opposition period) or at the relevant national court. The EPO is notoriously slow at deciding opposition proceedings and so it is not unusual for parallel proceedings to be taking place at the EPO and the national courts. In fact, it is not unheard of for the two different tribunals to reach different views on the same patent and each jurisdiction has developed its own approach to dealing with the problems that this creates. Judges in England are aware of this and HGF has recent experience of a High Court Judge pleading with the EPO to speed up proceeding to avoid overlapping court proceedings. 

In the Virgin v Contour case, after the Court of Appeal had ruled that Virgin’s patent was valid and infringed and an injunction and inquiry as to damages ordered, the EPO limited the scope of the patent as a result of opposition proceedings. The result was that the Contour product no longer infringed the amended patent. The issue to be decided by the Supreme Court was therefore whether it was appropriate for Contour to pay the claimed £49 million damages claimed by Virgin or whether the subsequent amending of the patent should displace the damages claim. There was no dispute that the injunction would no longer bite. 

The established principles in Unilin v Berry would have dictated that the damages should still be paid on the basis that the court had already found infringement and that the subsequent revocation or amendment of the patent should not affect this. However the Supreme Court departed from this decision and in a judgement which is likely to be seen as sensible and just, held that as a patent is deemed to be revoked or amended from the date of its existence. Contour should not therefore be prevented from relying on the amendment to avoid the damages claim. 

It should be noted that in this case the amendment to the patent happened after judgement but before damages had been assessed and paid. The court left open the question what the effect would be of a subsequent revocation or amendment after damages have been paid. Lord Neuberger suggested that the alleged infringer would then have to bring a restitutionary claim, but that this would be dependent on the facts of the case. 

This case puts the tension between the courts a nd the EPO into sharp focus. Responding to this the Supreme Court also proposed that the current procedural guidelines laid down by the Court of Appeal, which propose that the English court should normally refuse to stay its own proceedings if it would be likely to resolve the question of validity significantly earlier than the EPO, should be re-examined. This may well be the lasting legacy of this decision. 

This decision will have significant implications for patentees in respect of their filing strategies. The implications as to patent strategy will be discussed further in a Briefing Note from our patent experts at HGF.