Sunday, 10 March 2013

Are Injunctions Obligatory in UK Patent Infringement Actions?

The title of this post was one of the many questions posed to those of us who spent our Saturday morning in a Cambridge basement a the CIPIL conference entitled 'What's new in IP Remedies' chaired by Mr Justice Richard Arnold. There were many papers but this is the point I wish to do my homework on. Despite belonging to TRIPS the US has lived happily for six years since the patent world was surprised by the eBay MercExchange decision which destroyed the presumption that a patent holder is entitled to an injunction as of right following a successful finding of infringement. Instead, as explained in the presentation by Prof Tomas Gomez-Arostegui of Lewis and Clark School of Law in Portland Oregon, there is no longer a presumption of irreparable harm and the inadequacy of legal (as opposed to equitable) remedies. The balance of hardships and public interest now have to be considered. The prospective pecuniary relief which is provided instead looks hazardously like a compulsory license as our Chairman noted.

Prof Posner and his cat
We also received a very thoughtful and enjoyable people from Prof Paul Heald of the University of Illinois in which he expounded a theory that an injunction was a form of punitive damages. He also offered us the interesting insight that the addition of a cat will send the right sort of message to make even the most austere professor palatable. He set out his thesis in understandable economic terms and made his own theory very palatable without any need for feline assistance. If you are a "patent assertion entity" (the new style for an NPE if you think troll is pejorative) it is easy to understand that the grant of an injunction allows a higher price to be coerced (he did use that word honest) from a defendant who is subject to high switching costs. The difficulty arises with the patentee who is not prepared to licence and would rather put his competitor out of business. Society may find this acceptable if he is a counterfeiter, but what if he is also an innovator.

The question of whether final injunctive relief is a guaranteed remedy was addressed but not answered in the presentation by Joel Smith and Christopher Sharp of Herbert Smith Freehills. Presumably they wish to continue arguing both ways depending on the client.

So what do we need to look at in the UK if we want to follow the US route. The consensus seems to be that you start with Lord Cairn's Act and the Shelfer exception, progress to a detailed study of Article 3 and 12 of the Enforcement Directive (2004/48/EC) which was implemented in the UK by a Statutory Instrument that doesn't think it changed the law but might have. Then  ensure your argument can be reconciled with TRIPS which says that  The judicial authorities shall have the authority to order a party to desist from an infringement.

The Enforcement Directive offers the best opportunities:  Article 3(2) is the general obligation that provides Those measures, procedures and remedies shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. Article 12 allows Member States to provide alternative measures if the defendant acted unintentionally and without negligence, [and/or?] if execution of the measures in question would cause him/her disproportionate harm and if pecuniary compensation to the injured party appears reasonably satisfactory.

If there is to be any following of EBay here, then you need a case where a final injunction is going to be DISPROPORTIONATE and an "innocent" infringer. Our existing compulsory licensing provision preclude a final injunction and must already fall within Article 12, but can other suitable cases that may not fit into those strait jackets? It seems to me that they can. In the discussion later on reference was made to property cases where damages had been awarded in lieu of an injunction notably the Wrotham Park Estate Company Limited v Parkside Homes Limited (1974) case.

2 comments:

Barbara Cookson said...

Discussed this issue with a Chinese patent attorney the other day and he told me about a case in which a Chinese court had decided against a permanent injunction in respect of an in infringement relating to a system installed in a power station. Replacement would have meant taking the station off-line the 7 months and since that was not in the public interest, an annual predetermined damages amount was ordered instead. My Chinese friend agreed that this did look something like a compulsory license.

Tim Roberts said...

The Supreme Court (I say) got it absolutely right in Ebay (if only the same were true of Prometheus!). In common law countries, there is a clear distinction between legal and equitable remedies. The former are entitlements, the latter are always discretionary. An injunction is an equitable remedy. A patentee will normally get one: but there may be circumstances in which it would be inconvenient or unjust (or 'disproportionate'). Then the Court may decide how to proceed. It does not help much (I think) to label this as 'compulsory licensing'. Many agree that compulsory licensing is generally highly undesirable, but it is not established as a fundamental evil in all cases. Even in USA (the country where IP is held in highest regard) it is allowed as a remedy for patent abuse, imposed case-by-case by individual judges. And see TRIPs. By analogy, there should be no problem with a judge exercising discretion in individual cases.