UK Court backs payouts after patent failure

Patent failure should not trigger the recall of damages won in infringement suits, according to the UK Court of Appeal. Details published since 10 May on Unilin Beheer BV v Berry Floor NV show that an award granted in litigation must still be paid if the European Patent Office (EPO) cancels the relevant patent. The ruling was passed in late April by Lord Justice Jacob, following a lengthy dispute between the two firms.

Unilin’s European patent for a range of flooring panels was granted by the EPO in 2002. This entitled the firm to a UK patent, enabling it to sue Berry for infringement. Unilin won the case – a verdict the Court of Appeal later upheld. Meanwhile, Berry had lodged an Opposition at the EPO in 2003, contesting the validity of Unilin’s patent. With the Opposition pending, Berry had asked for a halt to proceedings, allowing the Court to decide whether the firm would still be liable if the patent were deleted.

In his ruling, Justice Jacob considered that the defendant in any such case would have ample opportunity to attack a patent in the course of his own evidence. He argued that the public interest was best served by the finality of litigation, and raised concerns that firms would conspire with third parties to undermine patents, in order to dodge payouts.

He said: ‘It is much better that [the defendant] knows that the first litigation about validity is the time and place for him to get his best case together – that he knows he will have no second chance. Now a purist may say: it is a nonsense, and moreover an unjust nonsense, for a man to have to pay for doing what, with hindsight, we know to have been lawful.

‘But I think there are good and pragmatic reasons why the purist approach makes bad business sense. You cannot unravel everything without creating uncertainty. And where a final decision has been made on a fair contest between the parties, that should stand as the final answer between them.

‘In a sense a patent is always potentially at risk – someone may come up with a bang on but obscure piece of prior art … or simply with better evidence on known prior art. That is no reason for undoing what has been done or regarding a final decision as merely provisional. After a final decision businessmen should be able to get on with their businesses, knowing what the position is.’