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In the recent case of Vodafone v IPCom EWCA Civ 113 the Court of Appeal ruled that it would not re-visit a costs order of nearly £1 million following the European Patent Office (“EPO”) subsequently revoking the patent which underpinned the original action.
This case highlights the importance of parties to litigation (and their advisors) ensuring that they properly protect their position in respect of any foreseeable eventualities. This includes the IP rights in issue, the manner in which their case is pleaded and mechanics laid out in the in the Civil Procedure Rules (“CPR”).
IPCom brought infringement proceedings against Vodafone in respect of its European Patent (UK) No 2 579 666 (the “Patent”) which related to the allocation of access rights within telecommunications networks.
The Patent was found to be valid and infringed by Vodafone’s activities, both at first instance and on appeal with the Court of Appeal ordering:
a declaration of infringement;
an inquiry into damages; and
costs be paid by Vodafone.
As a result, Vodafone was liable to pay a substantial sum in respect of damages and IPCom’s legal costs.
The Court of Appeal refused Vodafone’s subsequent request for permission to appeal to the Supreme Court. Notwithstanding this, on 19 March 2021, Vodafone applied directly to the Supreme Court for permission to appeal.
In parallel to the litigation in the English courts, opposition proceedings were progressing before the EPO.
On 23 July 2021 (some months after the Court of Appeal’s first judgment), the EPO’s Technical Board of Appeal revoked the Patent on grounds of added matter (that is to say that the patent had been amended such that its subject matter extended beyond the scope of the application originally filed).
The effect of the revocation decision was that the Patent was retrospectively invalidated in all designated countries (including the UK). By that point Vodafone had paid IPCom’s legal costs (damages had not yet been paid and it was accepted that, per Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd  UKSC 463, Vodafone would have an argument that damages should not be paid). Vodafone, therefore, had paid IPCom’s costs of a legal action for being found to be an infringer of an invalid patent.
Following the EPO’s revocation of the Patent, Vodafone applied on 17 November 2022 to the Supreme Court for permission to amend its grounds for permission to appeal so as to include an order for its costs (but to drop the substantive appeal in relation to infringement of the Patent). It is understood that as at the date of this article both Vodafone’s application for permission to appeal and its application to amend the grounds of that appeal await a decision of the Supreme Court.
In the meantime, Vodafone applied to the Court of Appeal to have the Court’s previous order varied or set aside in light of the EPO decision, and sought both a repayment of IPCom’s costs and a costs order in its own favour. Vodafone made this application in accordance with certain procedures set out in the CPR (specifically CPR 3.1(7)).
Vodafone’s application to the Court of Appeal to vary its previous order was refused.
The Court of Appeal found that not only did it consider CPR 3.1(7) to be an incorrect route for such an application (discussed further below), but that Vodafone could have, and failed to, take a range of steps to protect its position pending the outcome of the EPO opposition. Lewison LJ stated in paragraph 33 of the judgment:
“Vodafone could have [originally] asked us to adjourn the question of costs and other relief pending the decision of the Board of Appeal; or asked for any order for costs to be made contingent on the final outcome of the opposition in the EPO; or it could have asked for liberty to apply to revoke our order in the event that the patent were revoked by the Board of Appeal.”
Both Asplin LJ and Arnold LJ shared Lewison LJ’s sentiments stating:
“…Vodafone could have taken steps to protect itself but failed to do so.” Asplin LJ
“…Vodafone is the author of its own misfortune through failing to take steps which were open to it to protect itself against the foreseeable events which have transpired.” Arnold LJ
There was also a suggestion that Vodafone should have sought a stay of proceedings pending the outcome of the EPO opposition and, in return for there being no stay, obtained undertakings from IPCom which could have included a promise to repay any costs (and damages) if the Patent was revoked by the EPO. It is believed that Vodafone did seek a stay at one point, but failed to pursue it or press it to its conclusion.
Wrong Part of the CPR
The Court of Appeal noted that CPR 3.1 falls under part of the rules entitled “Case management” and that the Court would therefore not expect case management rules to apply to final orders. Vodafone took the view that the Court of Appeal’s order was not final because of its pending application to the Supreme Court for permission to appeal.
Considering multiple authorities the Court found that its “power under CPR rule 3.1 (7) to vary or revoke orders either cannot or should not be used to discharge a sealed final order. The only limited exception thus far even contemplated in civil proceedings is the case of a continuing order (such as a final injunction).”
In the Court’s view, the more appropriate route for Vodafone to seek to vary its previous order would have been under CPR 52.30, which states:
“(1) The Court of Appeal or the High Court will not reopen a final determination of any appeal unless—
(a) it is necessary to do so in order to avoid real injustice;
(b) the circumstances are exceptional and make it appropriate to reopen the appeal; and
(c) there is no alternative effective remedy.”
Vodafone did not make any such application, submitting that, as its application to the Supreme Court was still pending, it was not possible to say that Vodafone had no alternative effective remedy. The Court of Appeal disagreed with this analysis, but – unfortunately – gave no indication as to whether it would have entertained Vodafone’s application under this rule.
In this case it was foreseeable that the Patent might be invalidated by the EPO and the Court of Appeal considered that steps could have been taken to protect against certain outcomes. It did not assist the analysis that Vodafone sought to revisit the Court of Appeal’s order by the wrong procedural route, but – from the comments made by the judges – there must be a good chance that the Court of Appeal would have refused to revisit its order in any event.
As an aside, the application for permission to appeal to the Supreme Court now seems a little odd. It no longer seeks to appeal the substantive proceedings for which it was originally made and instead seeks costs. It is not clear whether Vodafone is also seeking the repayment of costs already paid or if this is an attempt to recover its costs by way of offsetting those costs, but it appears to be a purely procedural point. We also do not yet know if Vodafone will appeal the Court of Appeal’s decision in respect of its order and whether such appeal (if permitted) should be consolidated with the appeal on foot. There is no doubt that many in the patent litigation space will be closely monitoring the next steps.
Whether a large corporation or sole inventor, protecting your ideas is vital. Our IP Litigators and Patent Attorneys can advise on how to obtain commercially appropriate protection for innovations around the world, either acting directly or through our network of trusted foreign agents. If you are concerned by any of the issues highlighted by this case, you can contact us using the online enquiry form, email firstname.lastname@example.org or call +44(0) 20 7405 4044 to arrange a free and confidential consultation.
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