HomeInsightsHigh Court considers s 62 of the Patents Act 1977 on restrictions on recovery of damages for infringement

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Facts

The patent in this case was a European Patent (UK) entitled “Interface Circuit”. It was described as relating to interface circuits for use within simulation techniques. The claimant alleged infringement of its patent, seeking damages only, as the patent expired in March 2020. The defendants denied infringement and contended that the patent was invalid for obviousness over two citations.

Mr Justice Meade found that the defendant’s circuit board devices were indeed infringements of the claimant’s patent. However, Meade J also found that, in fact, the patent was invalid for obviousness over one of the citations of prior art.

The defendants also raised three points under s 62(3) of the Patents Act 1977, which would have been relevant if the patent was found to be valid. Although Meade J did not have to consider these points, he did so anyway in case the judgment went on to be appealed.

The law

Section 62(3) used to state that where a patent was only partially valid, the court could not grant relief by way of damages, costs or expenses unless the claimant proved that: (i) the patent’s specification was framed in good faith and with reasonable skill and knowledge; and (ii) the proceedings had been brought in good faith.

In other words, the burden of proof was on the patentee to show that the specification was framed with good faith and reasonable skill and knowledge. Further, the court was prohibited from awarding any relief unless that requirement was satisfied, and there was no basis for reducing damages pro-rata in relation to the seriousness of the faulty draftsmanship or lack of good faith.

Article 13 of the IP Enforcement Directive (2004/48/EC) dated 29 April 2004 states that courts must be able to order the infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity, to pay the rights holder damages appropriate to the actual prejudice suffered as a result of the infringement. Article 13 goes on to list aspects that the court should take into account when assessing the level of damages.

In order to comply with Article 13, s 62(3) had to be amended to lift the absolute prohibition on damages being awarded where the good faith and reasonable skill and knowledge requirements were not satisfied. Accordingly, in April 2006, s 62(3) was amended to read:

“Where an amendment of the specification of a patent has been allowed under any of the provisions of this Act, the court or comptroller shall, when awarding damages or making an order for an account of profits in proceedings for an infringement of the patent committed before the decision to allow the amendment, take into account the following –

(a) whether at the date of infringement the defendant or defender knew, or had reasonable grounds to know, that he was infringing the patent;

(b) whether the specification of the patent as published was framed in good faith and with reasonable skill and knowledge;

(c) whether the proceedings are brought in good faith”.

In Nokia v IPCom [2011] EWHC 2719 (Pat), Mr Justice Floyd (as he was then) said that the amended s 62(3) was “not intended to act as a sanction against careless drafting or lack of good faith when these matters have no bearing on the damages or other remedy sought by the patentee”. The court was now only required to see what bearing the lack of good faith and reasonable skill and knowledge had on the relief being sought. Essentially, the amendment made the sanction, which was previously mandatory, discretionary.

Decision

The defendants said that they did not know or have reason to believe there was infringement. Meade J disagreed, finding that they knew all the facts. The whole point of the amendment to s 62(3) was to ensure that defendants who know or have reason to believe that there is an infringement do have to pay compensation, he said.

The defendants argued that they thought the patent might be invalid. This turned out to be correct, Meade J noted, but said that a mere belief that a patent might be invalid could not in itself engage s 62(3)(a), at least not in a normal case and not without more. In Meade J’s view, s 62(3) was primarily about what the defendant was doing and what they knew or believed about claim scope and was not about validity.

Meade J said that, in this case, there was nothing to suggest that the specification had not been drafted in good faith and with reasonable skill and knowledge.

As for whether proceedings had been brought in good faith, Meade J said that the claimant had only publicly available knowledge of the defendants’ products when it issued proceedings, but that it had a reasonable basis to assert infringement and had indeed succeeded. The defendants alleged “covetous claiming”, which is not a matter listed in s 62(3), but is a basis for opposing amendment when a more discretionary exercise is being undertaken. The defendants said that it was relevant to this question of good faith. Meade J accepted that that might be so in the right situation but found that it did not apply in this case. The allegation was based on the claimant’s knowledge from its prosecution of some prior art, coupled with the fact that it had applied to amend the patent. In Meade J’s view, this did not begin to make out a case of covetous claiming since there was no proof that the granted claims were invalid over that art, let alone that the claimant had thought so. Further, the claimant had proposed sensible amendments to the defendants before bringing proceedings. Therefore, Meade J said that the proceedings were brought in good faith.

Accordingly, Meade J rejected the defendants’ points on s 62(3), although they did not arise because of the invalidity. (Add2 Research and Development Ltd v dSPACE Digital Signal Processing & Control Engineering GmbH [2021] EWHC 1630 (Pat) (17 June 2021) — to read the judgment in full, click here).

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