Businesses found to have infringed patent rights can face potentially substantial bills for compensation and a block on the manufacture, supply and sale of infringing products.
This guide is based on UK law.
The owner of a patent may bring civil proceedings in respect of any act of infringement of the patent and in those proceedings may make a claim for an injunction to restrain infringement, an order for delivery up or destruction, damages or an account of profits and/or a declaration that the patent is valid and has been infringed.
A claim for damages or an account of profits can be made in respect of infringements that take place at any time after publication of a patent application. An applicant is only entitled to bring proceedings after the patent has been granted.
Article 10 of the EU's Directive on enforcement of intellectual property rights provides that EU member states ensure that the competent judicial authorities may order, at the request of the applicant, that appropriate corrective measures be taken with regard to goods they have found to infringe an intellectual property right and, in appropriate cases, with regard to materials and implements used to manufacture such goods. These measures include destruction of infringing goods, recall and removal from commercial channels.
The proportionality between the seriousness of the infringement, the remedies ordered, and the interests of third parties will be considered by the court prior to the grant of relief.
Injunctive relief
An injunction to stop a defendant from infringing a patent is the most common form of relief sought and granted in patent infringement proceedings. An injunction is an equitable remedy and it is therefore at the discretion of the court to grant. Where the court considers that an injunction would be disproportionate it may refuse to grant one.
An interim injunction is temporary and stops the alleged infringement(s) until the dispute can be heard at trial. Generally injunctive relief is granted following a finding at first-instance that at least one valid claim of a patent has been infringed, such an injunction is final.
Not only is the grant of an injunction discretionary but the conditions to be imposed may vary according to the seriousness of the infringing act. In some circumstances the court may consider it appropriate to grant an injunction which extends beyond patent expiry in order to restrain the sale of products manufactured during the life of the patent or to prevent the defendant from obtaining a springboard onto the market after patent expiry.
The court may stay the injunction pending appeal if the court considers that the infringer has a real prospect of success on appeal and on the basis of the balance of convenience. Equally, the court may award injunctive relief pending appeal where it considers that an injunction is necessary for the Court of Appeal to be in a position to do justice between the parties. If this is the case the claimant will be required to give an undertaking to compensate the defendant if the injunction is lifted by the Court of Appeal.
Damages or an account of profits
The owner of a patent may either obtain damages in respect of losses caused by infringing activities or an account of profits obtained by the infringer – but they cannot seek both. When drafting particulars of claim, the claimant will generally request these remedies in the alternative.
Following a finding of infringement, the court will order an inquiry as to damages or an account of profits. At the start of this procedure the claimant will be given disclosure to allow it to make an election between the two. During the inquiry the burden of proof is on the claimant to establish the extent of damage..
An award of damages is intended to compensate the patent owner for the loss suffered and to put them in the same position they would have been in but for the infringing acts. They may be assessed in accordance with the loss of profits suffered by the patentee because of the infringing activities, by reference to a reasonable royalty rate (particularly where the patent has been licensed), or by a combination of the two methods.
If the claimant would not receive adequate compensation for the actual prejudice suffered, then, pursuant to the IP Enforcement Directive, it is possible to award an additional sum, such as for any moral prejudice caused to the right-holder, relating to the profit made by the defendant from knowing infringement.
In the IPEC an award for damages or account of profits is capped at £500,000 unless the parties agree otherwise.
Exemplary damages may be available in a patent infringement action if the case falls within:
- oppressive, arbitrary or unconstitutional actions by the servants of government;
- where the defendant's conduct has been calculated by them to make a profit for themselves which may well exceed the compensation payable to the plaintiff; or
- where the statute expressly authorises the same.
Since the Patents Act 1977 does not provide for exemplary damages, any claim would likely arise under 2.
Declaratory and other relief
The court may make a declaration that the patent is valid and has been infringed. Where validity is contested and the patent found to be wholly or partially valid, the court or Comptroller General of Patents, Designs and Trademarks, who leads the UK's Intellectual Property Office (IPO), may certify those findings by way of a certificate of contested validity. This has costs implications in any later proceedings challenging the validity of the same patent.
Rights of prevailing defendants
The general rule is that a successful party to litigation is awarded reimbursement of his or her costs, including solicitor and barrister fees, expert fees and court fees, payable by the unsuccessful party. Where a party has succeeded on some issues only, the court may order an assessment of costs on an issue by issue basis, so costs are only awarded for those issues upon which he or she was successful.
Whilst it is usual for a successful party to be awarded his or her costs, in practice they would generally recover only 60-80% of the sum actually paid on legal fees.
Following a finding of non-infringement, the court may make a declaration that an act committed does not constitute patent infringement.
Following a finding of invalidity, the court may order a declaration of invalidity and an order for revocation will be made. Any such order will usually be stayed pending any appeal.
Other declaratory relief may also be awarded. The court may order relief to the effect that a product or process was obvious at a relevant date.
In some cases, relief may be granted under a cross-undertaking in damages. If an interim injunction is granted, the claimant must give a cross-undertaking in order to compensate for any loss the defendant may suffer if it is held at the final trial that the injunction should not have been in place. If the injuncted party later succeeds on the merits of the underlying claim, the court will discharge the injunction and order an inquiry into damages on the cross-undertaking.
Contact an adviser
