Unilin Beheer BV v Berry Floor NV & Ors

If a patentee utterly prevails on infringement and validity and is held entitled to financial compensation in the Courts of England and Wales right up to the point where no further appeal lies, can all that be set at nought and utterly unravelled if the patent is later held invalid in the European Patent Office (“EPO”)? That is the main question we have to decide.

The essential facts (I try to leave out detail that does not matter) are these:

Unilin appeal the finding of no res judicata, the Defendants the refusal to stay the inquiry or account.

For the uninitiated reader I shall briefly describe the current European patent system. I do not provide detailed chapter and verse. It is unnecessary and would be burdensome to reader and writer alike.

Until 1977, when the EPO, set up pursuant to the EPC, opened its doors, patents were purely creatures of national law. Each nation state had its own patent laws, patent office and judicial arrangements for the litigation of patents. There was no harmonisation of any of these – what had been achieved at international level was only the system for according priority to a patent application made in one state if an earlier application had been made within a year in another (the Paris Convention of 1883 as amended).

The idea of a European Patent and a European Patent system came out of the Council of Europe in the early 1950s. By the early 1960s there was substantial agreement as to what the substantive law should be, the agreement being embodied in the Strasbourg Convention 1963. Also the idea of a common patent office for Europe had come into being. Work on these two matters continued into the 1970s. In 1972 a Diplomatic Conference was convened. It led to the EPC in 1973.

The EPC is an international treaty between sovereign states. It is not part of the legislation of the European Union. Indeed a number of parties to the EPC are not members of the EU, Switzerland for example. As an international treaty it required implementation by national legislation. So far as the UK is concerned, that was by the Patents Act 1977.

Broadly the EPC did two things. First it prescribed what Member States should have as their substantive patent law, essentially following the Strasbourg agreement. Second it set up the EPO. This is a common office to which a patent application may be made seeking patent protection in the states chosen (“designated”) by the applicant. The application is processed and examined there.

If it survives examination a “European Patent” is granted. The term is a misnomer. The legal effect of a grant by the EPO is a series of national parallel patents each treated in each national law of the “designated” states as if it had been granted by the patent office of the state concerned.

Thus the 1977 Act did two main things, first it made substantive patent law accord with that laid down by the EPC and second it deemed a patent granted by the EPO with a UK designation (called a “European Patent (UK)”) to have the same effect as if it had been granted by the UK Patent Office pursuant to an application made to it.

Up until grant, the processing of an application for a European patent is essentially a matter between the applicant and the EPO. If the examiner objects to the application or part of it, the applicant has a right of appeal to a Board of Appeal, the EPC having provided for such an appeal and set up a system of Boards of Appeal. They are staffed by independent individuals – whose status I once described as “judges in all but name,” Lenzing [1997] RPC 245 at p.277.

In addition to provision of the Boards of Appeal, the EPC created an “Enlarged Board of Appeal”. Normally a decision of a Board of Appeal is final, there being no third tier of appeal provided for decisions about patentability. If however a difficult question of law arises, or if different Boards of Appeal differ on a question of law (decisions of law of one Board are not binding on subsequent Boards) then the Enlarged Board can be called upon, by reference from a Board of Appeal or in some circumstances at the request of the President of the EPO, to decide the matter. The parties themselves cannot appeal to an Enlarged Board, save (by a 2000 amendment of the EPC) in respect of an allegation of fundamental procedural impropriety.

Third parties have no direct say in the examination procedure. There is no means by which a third party can formally oppose grant. Those who created the EPC thought, almost certainly rightly, that if true opposition (i.e. opposition to actual grant) proceedings were available, patentees would be likely to suffer too much delay before they could actually enforce their patents. That had indeed had been the case in this country, for instance, under the opposition procedure of the 1949 Patents Act. As an alternative it would have been possible to leave all post-grant revocation proceedings to national courts. This potentially would have required (at least in theory) proceedings attacking the patent in all the designated states to clear the way for the whole of Europe. That was felt to be wasteful. On the other hand the parties to the EPC were not prepared to leave all questions of validity to the EPO. So a compromise was reached.

This compromise is that within 9 months of grant, third parties can make a central attack on the patent (by now strictly a bundle of national patents) in the EPO. The proceedings are called an “opposition” although they are in reality proceedings for revocation. The use of the word “opposition” is an indication that in some respects the proceedings are regarded as a continuation of the examination process. Perhaps for that reason the original examiner normally sits as part of the opposition division panel – judging his or her prior decision to grant the patent. Proceedings at this level are called “administrative” rather than “judicial” though it is difficult to see why – after all the opposition division is deciding a dispute between rival parties. Appeal lies to a Board of Appeal whose members, as I have said, clearly operate in a judicial capacity.

Apart from procedure by way of opposition however, the EPC also allowed attacks on validity (only for the state concerned, of course) in the national courts. Such an attack can be made from the date of grant right down to expiry and even beyond – you are not required to wait until an EPO opposition is over before you can attack a patent in a national court. And likewise the patentee can sue from the moment of grant, as indeed happened in the present case.

At the time of making of the Treaty it was thought that opposition proceedings would be relatively quick. But that has not proved to be so. Partly this is due to the success (in terms of numbers) of the EPO. There may be other reasons – for instance I have long wondered whether if the 9-month period were abolished, people would not bother to oppose unless they had to whereas now they have to get their opposition in often before they know whether the patent matters commercially. In the UK when the time limit for attacking a patent in the patent office was abolished in 1977, the result, contrary to what was expected, was an almost complete collapse of proceedings for revocation in the patent office. It may well also be that matters could be improved by way of procedure, for instance by tightening up on adjournments and avoiding as far as possible remission of cases from a Board of Appeal back to the Opposition Division as frequently happens now. Whatever the reasons, it is currently the case that opposition proceedings can take many years.

No one pretends that the compromise is satisfactory – it was a fudge at the time and remains so. Unless and until sensible judicial arrangements are put in place, the litigation of European patents in various national courts and the EPO will remain a messy, expensive and prolix business. One would hope that the politicians would find a way to put various national interests on one side for the sake of European industry as a whole. But despite attempt after attempt that has not yet been possible.

The result of the EPC compromise is that a national court system can find a patent valid by a final and conclusive decision and yet later, in opposition proceedings it is determined that the patent is invalid or must be reduced in scope. That is what may happen here.

We had some debate about this. Mr Henry Carr QC for the Defendants submitted that the intention behind the EPC was to make the EPO the “top” tribunal for validity. He took us to a sentence of my judgment in Lenzing at p.263:

This country has agreed with the other States members of the EPC that the final arbiter of revocation under the new legal system is to be the Board of Appeal of the EPO.

He also relied on what was said by Laddie J in Unilever v Frisa [2000] FSR 708 at p.713:

For example, it is possible that the court here would come to the conclusion that the patent is valid and infringed. It grants relief which stops a manufacturing line or sales. However subsequently in Patent Office [i.e. EPO] opposition proceedings, which take longer than the proceedings here, the patent is held invalid. That finding of the EPO would be supreme and, I assume that the result would be that, notwithstanding the decision of the English Courts, the defendant would be released belatedly from the effect of injunctive relief which had been granted against him here.

Mr Carr fastened on the words “final arbiter” and “supreme” in the two quotations. But I do not think this is helpful.

Mr Carr also pointed to the fact that Laddie J seemed to have assumed that all costs incurred in fighting the action here might be wasted if there was a later revocation in the EPO. So he did. But that is no basis for thinking that he was in any way considering the estoppel point now before us.

Lenzing was about a challenge in our courts to an order of revocation made by an EPO Board of Appeal. I held that no such challenge could lie, even in the case of impropriety. Such an order is “final” in the sense that the patent is revoked and cannot be restored. (I would incidentally add that I am glad to see that by the EPC 2000 amendment impropriety of a Board of Appeal decision had been made the one class of case which can be taken to an Enlarged Board at the instance of the parties.)

As regards Unilever what Laddie J said was in the context of an application to stay UK proceedings. It was part of his discussion of whether the better course was to stay or not. He was not attempting to set out whether the national court or the EPO was supreme in some general sense. He was of course right to say that a subsequent ruling of invalidity in an EPO will take effect to revoke the patent even if a national court has previously held it valid. And he was right to assume that any injunction would go with the revocation – anticipating the Coflexip case discussed below. I note that he said nothing about what is to happen to financial relief granted by a final decision of the national court.

The other case cited by Mr Carr on this “who is top” point was Kimberly-Clark v P&G [2000] FSR 235. The main point of this case was a long way from the present problem. It was whether the previous UK rules about permission to amend a patent being a discretionary matter continued to apply to a EP (UK). The point arose because the patentee was applying in English proceedings to amend the patent and was simultaneously applying to amend the Patent in an EPO opposition. In the opposition proceedings as operated by the EPO there would be no discretion – so the patentee said there was no point in the English rules continuing to apply. This Court held that they did. But it also considered the problem of parallel proceedings in our courts and the EPO more generally. Aldous LJ said:

“I have already referred to the option to stay the proceedings in this country which, in my view, must be the preferred option when opposition proceedings are before the EPO. Unfortunately the judge did not consider whether in this case a stay would cause injustice. He referred to lengthy periods during which good and valuable patent rights would be unenforceable, but did not consider the possibility that interlocutory relief could be granted in the meantime. The judge looked at the matter as a point of principle so as to decide what was the ambit of the discretion given in section 75 in circumstances when opposition proceedings were in being. He went on to decide that he should confine consideration under section 75 to those matters which would be taken into account by the EPO under their jurisdiction. The fallacy of that approach is that the legislative jurisdiction of the EPO differs to that of the court under section 75 and more importantly the limitation of the court’s jurisdiction proposed by the judge does not meet the vice of having two tribunals considering the same question with the risk that they could come to different conclusions.”

I turn to the proceedings in the EPO. The essential facts here can be stated much more briefly. In March 2003 Berry Floor’s parent company (“Berry Finance”) started opposition proceedings against the Patent in the EPO. This was close to the end of the nine month period from grant. The opposition proceedings are still not over – and are unlikely to be so for a year or more. It is possible that they will ultimately result in the Patent being revoked or limited so as not to cover the Berry products.

That is all one needs to know for present purposes. But it is worth perhaps briefly describing the points in issue in the EPO and what is happening. There are two arguments about the validity of the Patent.

The first arises from the fact that it was granted on the basis of a “divisional application” made pursuant to Art. 76 of the EPC. Where a patent applicant has made an earlier application which is still pending he may make a further application for just some of the subject-matter of that earlier application. Such an application is called a “divisional application.” A divisional application can be made on the initiative of the applicant alone. Or he may find he needs to make one as a result of the Office saying that his earlier application has got too much in it (is for more than one invention). Where the latter happens the applicant will have to “divide” out the inventions or just drop some of the subject-matter originally disclosed in the earlier application.

A divisional application will be “deemed to have been filed on the date of filing of the earlier application and shall enjoy any right of priority” (see Art.76). It would obviously be outrageous if the patentee could get a divisional patent where he had put new information (subject-matter) for the first time in his divisional application. If he could, he would get a date earlier than his actual disclosure of that subject-matter.

So what should happen if a patentee makes a divisional application which the EPO considers contains additional subject-matter? Clearly the Office cannot and will not allow the application. But can the applicant amend the application so as to delete the offending added matter? In the past the Office, pragmatically and sensibly said “yes”. But that practice was called into question by a Technical Board of Appeal in a case called Astropower T 39/05. The Board pointed out that there are problems, particularly where there is a divisional itself divided out of a divisional. The Board decided to refer a number of questions about divisional applications to the Enlarged Board of Appeal. The case reference is G1/05. Since then two more references raising further questions about divisionals have been made in cases G1/06 and G3/06. G3/06 was made by the Technical Board of Appeal dealing with the opposition to Unilin’s Patent the EP (UK) part of which was found valid and infringed here.

It is said that the divisional application leading to the Patent contained additional subject matter, that the application cannot be amended to delete it (even though the matter is, according to Unilin an irrelevant stray sentence) and that is the end of the Patent. Whether there really is additional subject-matter or if so, it is relevant, I do not know.

I say this, however. It would be pity if the Enlarged Board is forced to conclude that the prior practice was wrong. Patent application procedure should not contain traps of this sort, traps which cannot cured by amendment and where the cure would harm no one. After all if the patentee is allowed to cut out the offending matter he will get claims properly entitled to the date of the earlier application, claims supported by the description.

In passing it is worthy of note that the same problem was identified in the UK early on in the life of the new law. In Hydroaccoustics [1981] FSR 538 the Patents Court held that a divisional application made in the UK Office pursuant to s.76 of the 1977 as it then stood could not be cured if it contained additional matter. That was thought to be so unfortunate that s.76 was amended by the Copyright Designs and Patents Act 1988 so as explicitly to allow amendment to cure the problem. Whether, if the Enlarged Board says the prior practice was wrong, the UK Act is non-Treaty compliant and, if so whether that matters, is of no concern in this case but would obviously matter more generally.

The second point touching validity relates to priority. It is said that claim 20 (now claim 1 by amendment) is not entitled to the date of the first priority document and that, if priority is lost, the claim lacks novelty by reason of a prior use. Any cure by amendment of the claim would exclude the Berry products held to infringe.

This Court, like HHJ Fysh, held that claim 20 was entitled to priority from the first priority document. It is suggested that the Technical Board of Appeal, if the patent survives the decision of the Enlarged Board and is remitted to the Technical Board, will hold otherwise. I think that would be unfortunate. Some might say I would say that! But the point goes deeper. Coherence of the European Patent system requires that as far as possible different courts (whether parallel national courts or the EPO and national courts) should try to follow each other, particularly where a matter has been seriously contested. They should only differ where convinced the earlier decision was erroneous. Where the point is one where reasonable minds can differ, considerable deference to the first decision should be given. Of course this is not so if the cases turn on different points (e.g. different prior art) or different evidence. Then different results may well be reached without any inconsistency between tribunals. I say no more.

First I observe that the divisional point in the EPO, could, in principle, have been taken in the English proceedings, though it was not. There is no question of the Defendants in the English proceedings being bound here by a point they could never have taken here.

Second it was agreed that it does not matter that none of the Defendants are actually opponents in the EPO. The parties’ respective arguments for and against the res judicata point do not turn on whether there is identity between the party who unsuccessfully sought revocation here and the opponent in the EPO.

There are two important decisions of this Court, Poulton v Adjustable Cover [1908] 2 Ch 430 and Coflexip v Stolt(No 2) [2004] FSR 34. In Poulton the patentees had successfully sued the defendants for patent infringement, the court holding the patent to be valid and infringed. An inquiry as to damages was pursued. Before that had been determined the defendant discovered a further prior use. In a different capacity (as was possible then) it successfully brought revocation proceedings. It then unsuccessfully sought to avoid the damages ordered to be assessed in the first action. Both Parker J (a distinguished intellectual property judge) and the Court of Appeal (including another distinguished intellectual property judge, Fletcher-Moulton LJ) held that for the purposes of the inquiry as to damages the defendants were estopped by the judgment in the first action from denying the validity of the patent.

Poulton was re-considered recently by this Court in Coflexip. The facts were very similar to those of Poulton. In a first action the patent had been held valid and infringed and an inquiry as to damages was proceeding. Then, at the instance of a third party, relying on different prior art, the patent was revoked. The unsuccessful defendants in the first action sought to have the inquiry aborted by reason of that revocation. By a majority of this court, it was held that the defendant was estopped from denying validity in the inquiry.

An argument that things were different under the new patents law brought in by the 1977 Act was rejected by all three members of the court. An argument that the decisions of the House of Lords in Arnold v National Westminster Bank [1991] 2 AC 93 and Johnson v Gore Wood [2002] 2 AC 1 had made it open for this court not to be bound by Poulton was rejected by the majority (Peter Gibson LJ and Sir Martin Nourse, though it was accepted by Neuberger LJ). The majority also agreed with my reasons (given at first instance) for holding that Poulton should be good law as a matter of policy.

It is perhaps worth articulating those policy reasons a little more. First and foremost, the estopped defendant has had a full and fair opportunity of attacking the validity of the patent in his own proceedings. Next there is a very very strong public interest in the finality of litigation. Finally a party who had lost would have a strong motive for finding further or better reasons for attacking a patent and getting some third party to do so, thereby undermining the first decision. It is much better that he 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.

It might be suggested that there should be a different policy depending on whether the compensation has been finally worked out and paid, or, as in this case is still in the course of being worked out and not yet paid. Neuberger LJ thought in his dissenting judgment in Coflexip that once damages had been paid “there would be very substantial, possibly insuperable, difficulties in the way of Stolt getting those damages back”. I am bound to say that I think it very difficult to think of a rational ground for differentiating between cases where the compensation has been worked out and paid, and those where it remains to be worked out. I say that for several reasons:

Mr Richard Arnold QC, sitting as a Deputy High Court Judge, in Hormel Foods v Antilles Landscape [2005] EWHC 13 (Ch), [2005] RPC 657 said he was “puzzled” by that conclusion. So am I, and not only for the reasons identified by Mr Arnold. Under the CPR a patentee must “give at least one example of each type of infringement alleged” (para. 11.1(1)(b) of the Practice Direction to Part 63). At trial the court will rule on whether each type pleaded is or is not an infringement. It will also rule on validity if there is a challenge to that. Under normal principles both rulings are res judicata and cannot be revised once all possibility of appeal is exhausted. And both rulings are not just on a sub-issue but on the causes of action decided upon at trial, namely whether or not the pleaded types of infringement do in fact and law infringe the Patent and whether or not that Patent is valid.

Now it is true that in an inquiry as to damages or account of profits the patentee is allowed to claim relief for types of alleged infringement not ruled on by the trial court. This saves the formal issuance of fresh proceedings in respect of these and is permitted as a matter of convenience, see General Tirev Firestone [1975] RPC 203 at p.207). And of course if, in the inquiry or account, the patentee alleges a type of infringement not considered by the trial court, the court conducting the inquiry or account will have to rule on whether it falls within the scope of the patent. But so far as the originally pleaded and proved type of infringement is concerned the matter is res judicata not merely as to an issue but as a cause of action in respect of that type of infringement.

Applying that to this case, it has not only been decided that the patent is valid, but also that the two types of infringement pleaded, “Snap-Fit” and “Berry” infringe. So, as Arden LJ pointed out in the course of argument, the cause of action for infringement has now merged with the judgment. At least for the infringements prior to the judgment (and there are none thereafter), Unilin simply no longer has any cause of action for infringement. It has a judgment instead.

It is common ground that both before and after the 1977 Act, an order for revocation of patent has retrospective effect. Going into Latin it is treated as revoked ab initio or ex tunc. Fletcher-Moulton LJ thought otherwise in Poulton but that is accepted to be wrong, see Coflexip at [137]. There is no provision in the Act expressly so stating, but since a successful attack on validity must be on the grounds that the conditions for grant were not satisfied, it follows inexorably that there can have been no power to grant the patent and hence it is a nullity.

Mr Carr accepts, as he must, that Coflexip and Poulton are binding on this Court. So, if Unilin’s patent had been granted by the UK Patent Office he would have to accept that the possibility of a subsequent revocation (it would have to be on the application of a third party) would not prevent the decision being res judicata as between Unilin and the Defendants. But, says Mr Carr, things are different because here we are concerned with a European Patent (UK).

The starting point for his argument – which involves an exception to the general rules of res judicata – must be the approach set out by Lord Diplock in Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273 at 289:

“The doctrine of res judicata rests on the twin principles which cannot be better expressed than in terms of the two Latin maxims “interest reipublicae ut sit finis litium” and “nemo debet bis vexari pro una et eadem causa”. These principles are of such fundamental importance that they cannot be confined in their application to litigation in the private law field. They certainly have their place in the criminal law. In principle they must apply equally to adjudications in the field of public law. In relation to adjudications subject to a comprehensive self-contained statutory code, the presumption, in my opinion, must be that where the statute has created a specific jurisdiction for the determination of any issue which establishes the existence of a legal right, the principle of res judicata applies to give finality to that determination unless an intention to exclude that principle can properly be inferred as a matter of construction or the statutory provisions.”

So what Mr Carr needs are provisions in the Act from which it “can properly be inferred” that the doctrine of res judicata is to be excluded if a European Patent is revoked in EPO proceedings after a EP (UK) is held valid in our courts. I therefore turn to consider the relevant provisions. Because of their prolixity I set them out in an Appendix, focussing only on the key wording here. It was common ground that we can work on the provisions of the Act as amended. This includes the amendments made to take into account the implementation of the amendments to the EPC made in 2000. This is because, if in the event, Unilin’s patent is revoked in the EPO, that will not happen until the amended provisions have come into effect.

Part I of the Act sets out the provisions of the “New Domestic Law”. It begins with the requirements as to patentability, the domestic procedures for obtaining a patent through the UK Patent Office and the rules as to infringement. Some of the provisions implement those called for by the EPC but the whole of Part 1 is drafted as though there is no such thing as the EPO and no such thing as a EP (UK). It is Part II of the Act (“Provisions about International Conventions) and specifically ss.77-83 (“European Patents and Applications”) which makes patents granted by the EPO have effect within the UK.

Referring to the specific provisions s.130(1) defines the EPC, “European Patent” and “European patent (UK)”. The key provision which makes a EP (UK) have effect as a patent is s.77(1). Such a patent is to be treated “as if it were a patent in the UK under this Act granted in pursuance of an application made under this Act etc.” This is an unhelpful starting point for the inference which Mr Carr seeks. Both UK and European patents are to be treated the same. It is far from self-evident that a rule of res judicata which applies to a patent obtained through one route will not also apply to one obtained through the other.

Mr Carr disputes that. He says that the Act allows two routes of attack on a EP (UK). One is via the courts (or Comptroller) here, the other via opposition in the EPO. Only when both are over can one say that the patent is valid.

He says that a patentee who applies for a patent via the EPO route necessarily accepts that he may have his patent for a particular designated state revoked by either one of two routes, the national court or the EPO. Having made that claim he must accept the consequences. He seeks to get all that from s.74A and Art. 68 of the EPC. But all s.74A says is that where a European patent (UK) is revoked in accordance with the EPC, the patent shall be treated as having been revoked under the Act. That does not suggest in any way that an estoppel preventing a party from relying on a subsequent revocation is in any way different for patents obtained via the EPO route as opposed to those obtained via the national route. On the contrary it indicates the effect is the same.

Art. 68 provides for retrospectivity of revocation or limitation of scope in opposition proceedings. What it says is that “the resulting patent shall be deemed not to have had, from the outset, the effects specified in Arts. 64 and 67.” It is only necessary for present purposes to consider Art. 64, Art. 67 adding nothing to the debate. Art. 64(1) says in effect that a European patent for a particular state shall confer the same rights as would be conferred by a national patent in that state. Art. 64(2) adds nothing relevant for present purposes. Importantly Art. 64(3) says “Any infringement of a European patent shall be dealt with by national law.”

It is to be observed that Art. 68 has no equivalent express provision in the 1977 Act. Why not? For the obvious reason that it was not necessary to provide in UK law that revocation operated ex tunc. As I have said that is and always has been UK law anyway. The position may well have been different in other countries. The purpose of Art. 68 is to prescribe that the new parallel but national patent laws (I use the plural deliberately) required by the EPC should be the same in this regard. All should provide that revocation operates ex tunc.

Mr Carr submits he can get more out of Art. 68 however. He says “the effect specified in Art. 64” includes Art. 64(3), the bit about “infringement being dealt with by national law.” So, he submits, any effect of the national law of infringement is deemed not to have had effect if there is a subsequent revocation in opposition proceedings. It follows that any decision of a national court about infringement must be undone, along with all its consequences. This includes orders for costs, damages and so on. All, he submitted, must be undone. He felt some difficulty about the case where damages have not only been assessed but paid, but so far as I can see the logic of his argument must even include that case.

I reject all these arguments for a series of reasons. First is simply that Art. 68 has no equivalent in the 1977 Act. It is just part of an international convention. No doubt our Act must be interpreted as far as possible to conform to that convention, but there is nothing in our Act which suggests that our rules as to estoppel (which form part of our procedural law) are displaced by a revocation in an opposition.

Second even if Art. 68 were explicitly made part of our law, it would not help Mr Carr. For Art. 64(3) is not an “effect” at all. There is nothing which can be made retrospective about a provision simply saying infringement shall be dealt with by national law. It is only Art. 64(1) which provides for “effects” and so it is only those effects which are to be made retrospective.

Thirdly I cannot see how one can spell out of the Act – “infer” to use Lord Diplock’s word - an intention that something which our law regards as of (using Lord Diplock’s words) “fundamental importance” shall be excluded. Something as important as that would require much more. Putting it another way it is impossible to find in the Act any intention that a final and binding decision of our courts is to be regarded as only provisional – which is what Mr Carr’s argument inescapably involves.

Fourthly I do not think the untidy compromise reached by the Convention is that any final decision of a national court rejecting an invalidity attack is to be regarded as merely provisional. On the contrary the compromise was to allow a patentee to sue for infringement and for third parties to attack a national patent in a national court from the moment of grant. If the contracting parties had wanted to say that the result, if favourable to the patentee, is merely provisional, it surely would have so said in express terms.

Moreover if the result goes the other way, so there is revocation by the national court, the result is certainly not provisional: any subsequent decision in an opposition upholding the patent would not reinstate the patent in the State where the patent has been revoked by the national court. So if a national court’s finding of invalidity is final in the state concerned, why not its finding (as between the parties) of validity?

Fifthly there is the fact that by the time the court is considering damages or taking an account following a final decision that a particular type of product infringes a valid patent, by English law one is no longer even considering a cause of action for infringement. The underlying patent right has gone, being replaced by the judgment. So even if Art. 68 somehow retrospectively removes the cause of action for infringement which led to the judgment, that does not matter, one is no longer concerned as to whether a cause of action for infringement exists.

Apply that here. The account ordered by the order of HHJ Fysh of 26^th September 2003 is of “the profits that the First to Third Defendants have made by reason of their infringements of the Patent.” “The infringements” is in context a shorthand form for saying “sales and other dealings” of the “Snap-fit” and “Berry” products. You do not go back to the law of infringement at the stage of the account.

Sixthly, I consider that the travaux préparatoires to the EPC give a firm indication that national procedural law (which clearly would include the law as estoppelper rem judicatem) is to apply to European Patents when litigated in a national court. At our instigation the parties researched the travaux. The Defendants started at a very early stage. In 1962 there was a draft Convention relating to a European Patent Law. That provided for something very different than that which ultimately emerged, a Europe-wide patent with a European patent court dealing solely with validity and national courts dealing with infringement. The proposal in that form was not adopted. There is nothing in it which assists either side.

A new draft was formulated in 1970, abandoning both the idea of a Europe-wide patent and the idea of a central court for validity. Instead the idea was basically that which came to be, a central granting authority, whose grant of a patent in practice meant a bundle of national patents. Questions of infringement (including attacks on validity) were to be decided by national courts, though there was to be a “belated opposition” procedure in the proposed EPO.

A further draft convention emerged in 1971. Arts 18 and 105a of this were clearly the forerunners of Arts 64 and 68 of the EPC. They read as follows:

Article 18

Rights Conferred by a European Patent

A European patent shall confer on its proprietor from the date of publication of its grant, in each Contracting State in respect of which it is granted, the same rights as would be conferred by a national patent in that State. Any infringement of a European patent shall be dealt with under the laws of that State.

Article 105a

Effect of the decision

Once the decision revoking the European patent wholly or in part has become final, the patent shall be deemed, to the extent that it has been revoked, not to have had, as from the outset, the effects specified in Article 18.

There was a report on the Conference. Each delegation provided a report on a different section of the draft convention. It was the British delegation which reported on Art. 105a. The report says:

“A new Article 105a defines the effect of a final decision wholly or partly revoking a European patent. The patent to the extent to which it is revoked, is to be regarded in each State covered by it, as never having had “the same rights as would be conferred by a national patent” granted in that State. It was not thought wise to define the retrospective effect of this provision any more closely, since this would tend to interfere too much with the civil procedures of Contracting States.”

This is valuable and to the point. The whole intention was not to interfere with the civil procedures of contacting states. To undo what we regard as of “fundamental importance” in our civil procedure would be a major interference with it – just what was not intended by the framers of the Convention. I do not agree with Mr Carr’s submission that this passage “lacks clarity” in any relevant respect.

The EPC was amended in 2000, the amendments taking effect at the end of this year. Mr Carr suggested that there was a change of intention by reason of the amendments to Art 68. But the amendment – to change the words “revoked in opposition proceedings” to “revoked or limited in opposition, limitation or revocation proceedings” – does not support the suggestion. The amendment is merely consequential upon the introduction of central limitation procedure in the EPO and by way of emphasis that a revocation by a national court is to have retrospective effect.

Mr Carr referred us to some cases which he suggested supported his arguments. I do not think any of them do, but I should explain why.

I have already explained why I think the cases about whether there is a “top” tribunal are of no assistance.

Next Mr Carr referred us to the Scottish case of ITP v Coflexip 19^th November 2004. There had been a trial in which the Lord Ordinary had held the patent valid and infringed. Whilst an appeal was pending a Board of Appeal of the EPO revoked the patent. The defenders withdrew all their grounds of appeal and instead were permitted to lodge an additional ground of appeal, namely that the patent was now revoked and to be regarded as void ab initio. Not surprisingly the Inner House allowed the appeal.

Mr Carr submitted that by implication the Inner House were here denying an estoppel created by a decision of validity. His technical argument ran thus: once the original grounds of appeal were abandoned, the decision at first instance became final. Yet the Inner House acted on the EPO revocation and allowed the appeal. So there was no estoppel created by the first instance decision.

The Lord President, giving the Judgment of the Court said:

[27] We should add that it appears to us that there was no logical or legal basis for the submission of pursuers’ counsel that the court could, on the one hand, accept the effect of revocation within the United Kingdom and other designated States, but on the other hand, preserve as between the pursuers and the defenders the liability which the Lord Ordinary had found to be established. A patent such as a European patent is a right of property, and in suing the defenders the pursuers were seeking remedies based on their right of property. That right of property was created by virtue of the European Patent Convention. The effect of revocation under that Convention was that from the outset the pursuers had no substantive right to the patent. The United Kingdom was bound to give effect to that in legislation. There is nothing in the Patents Act which could justify preserving, as between the patentee and another party, some residual effect of a revoked European patent.

Mr Carr particularly relied on the last sentence of this passage.

The flaw in the argument is that it is obviously wrong to regard the first instance decision as “final”. It was not. It was under appeal - the very negation of it being final. As Mummery LJ said in the course of argument: “an appeal is just a continuation of existing proceedings. Res judicata does not get a look in.” The fact that certain grounds originally relied upon were no longer relied upon is not enough to make the decision below final. I think the Inner House would be astonished to be told that its decision had a bearing on the point we have to decide.

Much the same goes for the decision of this court in Reed Executive v Reed Business Information [2004] EWCA Civ 159[2004] RPC 767. Certain parts of a first instance judgment were not appealed, other parts were. This court held that the unappealed portions could not create an estoppel in respect of any point raised on appeal. I put it a bit colourfully: “the appeal trumps the estoppel.” That is far from saying that a final, unappealable, decision can be trumped.

For those reasons I disagree with HHJ Fysh about these cases. He thought they supported Mr Carr. I do not.

Mr Carr also relied on the recent decision of this court in Special Effects v L’Oreal [2007] EWCA Civ 1. Special Effects sued L’Oreal on a registered trade mark. L’Oreal sought to contend that the registration was invalid. They had previously similarly contended in opposition proceedings in the Trade Marks Registry. It was argued that they were bound by that decision and could not subsequently defend the infringement proceedings by a challenge to validity. This court held that there was no estoppel arising by virtue of the decision in the opposition proceedings. Lloyd LJ said:

71.

A decision in court proceedings for invalidity will have the effect of binding the unsuccessful party to the extent of past matters, though not for continuing relief. The question is whether a decision of the Registry in opposition proceedings has that effect. Such a decision could at most (as the Chancellor held it did) preclude the unsuccessful opponent from relying on the same grounds in support of invalidity proceedings. If, however, invalidity proceedings were brought, successfully, by a third party, so that the trade mark registration was revoked, there would be no continuing effect of the estoppel against the unsuccessful opponent. That party, like any other, could then proceed with impunity, regardless of the previous registration of the trade mark. In that respect the position would differ from that of a party such as the Defendant in Coflexip v Stolt, because the previous proceedings would not have involved any order (other than as to costs) whose effect was not automatically cancelled by the subsequent revocation of the registration.

72.

It seems to us that the co-existence of the provisions for opposition and for a declaration of invalidity has the result that opposition proceedings are inherently not final. They exist at the first stage of the process, before registration. By itself that would not be conclusive, but it seems to us that the fact that, at least, any unconnected third party could challenge the validity of the registration despite an unsuccessful opposition by another, and that, if that challenge were successful, there would be nothing which would bind the unsuccessful opponent (in contrast with the position of a party which had unsuccessfully applied, at any rate to the court, for a declaration of invalidity), shows that the decision of the Registry on opposition proceedings, or more generally a decision to register despite opposition, is not a final decision so as to be capable of being the basis for an issue estoppel. This is true both as regards the grounds of invalidity and as regards the issue of prior use more generally, as relevant to a passing off claim. The same would be true of cause of action estoppel if, contrary to our view expressed above, there was a cause of action at that stage.

73.

In terms of what Lord Bridge said in Thrasyvoulou, in our judgment the terms of the legislation are such that, even though the statute has created a specific jurisdiction for the determination of the issue of registrability, which establishes the existence of a legal right, in the sense of leading to the registration of the trade mark which is itself an item of property, the principle of res judicata does not apply to give finality to that determination because the provisions as to a declaration of invalidity show an intention to exclude that principle.

So the position in relation to decisions concerning opposition to trade mark registration in this country and subsequent attacks on validity in the High Court is similar to that in patents. For, as already noted, failure in EPO revocation proceedings does not preclude revocation proceedings in a national court – see Buehler.