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Samsung Electronics Co Ltd v Apple Retail UK Ltd and another [2014] EWCA Civ 250

Introduction

The Court of Appeal has allowed an adjournment of Samsung’s appeal from a decision revoking its patents pending the outcome of a post-judgment application made by Samsung to amend the claims in the European Patent Office (“EPO”).  If the EPO allows the amendments, then the claims in issue on the appeal will be different from those in issue at first instance.

Background

This case forms part of the on-going global dispute between technology giants Samsung and Apple. In these proceedings, Samsung alleged that various Apple products, including the iPhone 4, iPhone 4S and the iPad 2 3G infringed two of its patents.

At first instance in the High Court (Patents Court), both of Samsung’s patents were found: (i) not to be entitled to their claimed dates of priority; (ii) to be invalid due to lack of novelty over the intervening prior art, and (iii) even if they had been entitled to their claimed dates of priority, to be invalid for obviousness. Samsung had made applications in the proceedings for conditional amendment of the patents, but these were found not to cure the findings of invalidity and were accordingly dismissed. On 8 May 2013, an order was made for the patents to be revoked. However, that order was suspended pending the outcome of an appeal, provided that Samsung proceeded with the appeal with “due diligence”. Samsung filed a Notice of Appeal three weeks later and the hearing of the appeal was scheduled for early March 2014.

On 5 November 2013, Samsung filed applications to amend the claims of the patents using the central limitation procedure in the EPO and requested that these applications proceed on an expedited basis. The amendments sought by Samsung in the EPO did not reflect the amendments sought in the first instance proceedings in the UK.

The central limitation procedure allows the proprietor of a European patent to make a single application to amend its claims which, if allowed, takes effect in all countries where national designations are in force (subject to an earlier, final decision of a national court having limited the claims in that country to a greater extent). The amendments, if allowed, would therefore have effect in the UK (as a result of the fact that the revocation order made at first instance had been suspended pending the appeal). Furthermore, the amendments are considered to take effect ab initio and therefore apply retrospectively.

Shortly before the hearing of the UK appeal was due to come on, Samsung applied for an adjournment of the appeal pending the resolution of its applications for central amendment. Samsung’s position was that the EPO would decide on the amendment applications before there was final decision in the UK on the validity of the patents and therefore it would be sensible to adjourn the appeal to avoid it being conducted on a false basis (i.e. the wrong set of claims).  Apple made an application in response which, in essence, sought to make Samsung choose between pursuing its applications for central amendment in the EPO and its appeal in the UK.

Decision

The Court of Appeal, with Kitchin LJ giving the judgment of the Court, accepted Apple’s proposition that the fact that applications for central amendment are on foot does not prevent a national court from considering, or indeed revoking, a patent even if the central amendment applied for would save the patent. However, the Court pointed out that in this case the order for revocation had been suspended pending the outcome of the appeal and held that whilst the order is suspended, the patents remain in force and can be amended.

Apple argued that Samsung’s application constituted an abuse of process on the basis that: (i) Samsung was merely seeking to avoid the inevitable rejection of any application it may have wished to make for post-judgment amendment in the UK; (ii) when the order for revocation was suspended and permission to appeal given it was not contemplated that Samsung would apply for a central amendment; and (iii) Samsung had failed to comply with procedural rules requiring it to serve all parties to the proceedings with a copy of the intended application 28 days prior to filing it with the EPO and therefore had deprived Apple of the opportunity to seek directions from the Court on it.

The Court accepted that Samsung would be unlikely to be successful in obtaining a post-trial amendment in the UK but did not accept that Samsung’s actions amount to an abuse of process for any of the reasons argued by Apple on the basis thatthe legislative scheme in the UK specifically contemplated that applications for central amendment before the EPO might be made while UK proceedings are still pending. This includes the filing of an application for central amendment between a first instance judgment and any appeal hearing in such proceedings.

The Court acknowledged that it was conceivable that in certain circumstances an application for central amendment could amount to an abuse of process but this was not such a case. The Court declined to give guidance on what these circumstances might be, instead preferring to allow the jurisprudence in this area to develop on a case by case basis.

Importantly, the Court held that there was a real possibility, notwithstanding the fact that Samsung had been a little optimistic in its original estimate of the timing of the EPO’s determination of its applications for central amendment, that those applications would be determined prior to a final decision on validity being issued in the UK.  If this was the case, the appeal hearing would have proceeded on a false basis and the costs of the proceedings would have been wasted.

The Court therefore held that Samsung’s application should be allowed and Apple’s should be dismissed. The proceedings were adjourned until the outcome of Samsung’s applications for central amendment was known. The Court did however expressly reserve Apple’s rights to be heard further about the conduct of the action at that stage.

Comment

The concern underlying Apple’s application in this case and its characterisation of Samsung’s behaviour as an abuse of process was that it did not want to face a new set of claims at the appeal stage in circumstances where it had been open to Samsung to make those amendments at trial. However, given the concurrent jurisdiction of the EPO and national courts to determine validity and amendments, the tide was always running against Apple.

The decision confirms that a patent granted by the EPO may be amended after trial using the central limitation procedure in the EPO and that any such amendments will have direct and retrospective effect in the UK so long as the decision revoking (or limiting) the patent in the UK has not become final. Bearing in mind that the central limitation procedure can be completed fairly quickly (in a matter of a few months on an expedited basis) and that the current workload of the English Court of Appeal is such that appeals are typically taking 12 months or more to be determined in the UK, there is a real risk that the claims in issue on the appeal could well be different from those in issue at first instance. This risk is further exacerbated by the Court’s apparent willingness to delay appeal proceedings in the UK to allow the EPO procedure to run its course.

The Court’s approach in this regard is to be contrasted to some extent with the approach taken with respect to stays of UK proceedings in favour of opposition proceedings in the EPO.  The rationale for this divergence probably has much to do with the fact that the central limitation procedure, being ex parte in nature and limited to a consideration of whether the amendments are clear, limit (rather than broaden) scope and do not add matter, proceeds much faster than opposition proceedings.

Now that the legitimacy of this course of action has been endorsed by the Court, it is likely that it will become more prevalent in the UK.  However, the fact that the central limitation procedure is not available while opposition proceedings before the EPO are ongoing and the fact that the amendments have effect in all designated countries, will limit the extent to which the procedure is used.  If Samsung’s amendments are allowed by the EPO, it will be interesting to see how the appeal is handled and what orders (if any) are made to further discourage the seeking of post-trial amendment using the central limitation procedure, for example, cost sanctions.

Finally, like the recent Supreme Court decision in Virgin v Zodiac [2013] UKSC 46, this decision highlights the uncertainty that is created when the EPO reaches a decision which is inconsistent with an earlier UK decision and is then applied with retrospective effect.

Published with minor alterations in Intellectual Property Forum, Issue 97, May 2014