Obtaining and Preserving Evidence Before

Enforcement of IP Rights in the Enlarged EU

Budapest, Hungary, 8-10 September 2005

Patent Enforcement

Papers read by Richard Abnett, Reddie & Grose, London, United Kingdom.

***

OBTAINING AND PRESERVING EVIDENCE BEFORE AND DURING PATENT INFRINGEMENT CASES

In patent infringement actions the primary method for obtaining evidence is the trap order. But that may not be enough, or may not even be possible, and the English Court procedures provide excellent means for obtaining and preserving evidence; indeed it is very much a strength of the United Kingdom system.

Normal UK court procedures require each side to search for all documents that might be relevant to the case and to disclose them even if they are harmful to their case. This is an extensive operation that has to be taken seriously. There are exceptions for documents that are privileged, such as correspondence between a client and his lawyer, and documents that are confidential, where who may see the documents or have copies might be restricted. The Court will order that confidential material may not be used for any other purpose than the case question.

Beyond this, a party may apply to the Court for an order for the ‘detention, custody or preservation’ of relevant property. The order may be made before legal proceedings are started and without notice to the other party. The Court also has the power to order a party to reveal relevant information, such as details of suppliers and customers.

The Court can order inspection of the defendant’s premises. If you are dealing with a respectable defendant this will normally be agreed between the parties, but if necessary, for example, to keep confidential information secret, the inspection may be limited to lawyers and expert witnesses, and representatives of the inspecting party themselves may not be allowed.

But the most powerful Court order of all is the search order. This particularly comes into its own when the defendant is not respectable. A plaintiff, or intending plaintiff - the order may be applied for even before proceedings have been started - may apply to the Court for an order requiring the defendant or intended defendant to permit the plaintiff to enter premises under his control and to permit inspection and copying.

The order may be granted in secret without notice to the defendant. The plaintiff must establish that he has a prima facie case of patent infringement, but he does not have to fully establish infringement. He must also show that it is likely that:

·  the defendant has incriminating goods or documents at the premises – it must not just be a fishing expedition

·  the defendant is likely to destroy them if he is given notice - suitable evidence of that would be any evidence of deception by the defendant such as the use of false names or addresses, anything that shows he is a rogue, and

·  the damage to the plaintiff is serious, that is he is unlikely to get the evidence of wrongdoing in any other way.

The rules for such orders are strict. The plaintiff must seek the order without delay as soon as he is aware of the facts that justify it. He must make a full and frank disclosure of the facts including those which support the defendant. And he must undertake to compensate the defendant if it should prove that the search order should not have been made. The search order will fix a date for a hearing after the search at which the defendant can put his case.

This is a very powerful weapon where, for example, counterfeiters are concerned. The first the defendant knows is when someone arrives at his door at 9.00 a.m. - it may be his business or his residence - telling him that they and a search team are entitled to search every part of his premises, to take copies and photocopies, to take away evidence of wrongdoing, to take images of all computer discs, and even to go through his pockets. He is allowed just two hours to obtain legal advice but must touch nothing during that time.

The plaintiff does not have the power to force entry, but if entry is denied the defendant may be liable for contempt of court, and the Court is likely to drawn an adverse inference against him.

The search order is at the cost of the plaintiff, and preparing for one is not cheap. If he wins the case he will get an order against the defendant for payment of a proportion of his costs. In practice many cases settle immediately after the search order is executed, often on the same day. The plaintiff must also meet the costs of an independent supervising lawyer experienced in search orders who must be present to ensure fair play.

In appropriate cases Orders of the type I have described can be obtained against non-parties such as carriers and warehouses as well as against the parties themselves; this is similar to orders against ISPs and banks which we heard about this morning in relation to copyright infringement.

The mechanisms I have described preserve the evidence by getting it into the plaintiff’s own hands - they can be used in all types of IP cases including copyright and can have dramatic effects on the course of the whole action, often leading to an immediate collapse of the defendant’s case.

POSSIBILITIES OF OBTAINING PRELIMINARY MEASURES BEFORE AND DURING LITIGATION

The main form of preliminary measure that is of interest is the interim injunction to stop continued infringement. It is not the only preliminary measure that can be taken; for example a Court can make an order restraining a party from removing assets from the jurisdiction or from dealing with the assets. These orders are known as freezing orders and can be used to freeze money in a bank account for example.

To obtain a freezing order it is necessary to show a good arguable case of infringement of a valid claim, as well as a likelihood that the assets might disappear if the order is not made.

But applying for an interim injunction is different. The Court has the power to issue an interim injunction to stop infringement, pending the trial of the action, against any person against whom a cause of action exists, that is any infringer. What the plaintiff has to establish is not what you might expect. First he has to establish only that there is a serious issue to be tried. He does not have to establish a prima facie case, which he does for a search order, not even a good arguable case, as for a freezing order, just that there is a serious issue to be tried.

If that is established the Court will then seek to determine the commercial balance of convenience. The Court will try to work out who will suffer most if the Court’s decision on the application for the interim injunction is wrong. If an injunction should be granted and it is not, the plaintiff/patentee will suffer from the defendant’s illegal competition, with the consequent confusion and loss of reputation for the patentee - difficult to quantify. If an injunction is granted when it should not have been, the defendant will be unjustly kept out of the market and will lose an unknown number of sales. The Court will consider who would suffer most, and as part of that, who can more easily be compensated by a monetary payment. If an interim injunction is granted the plaintiff will also have to give an undertaking to pay the defendant’s damages; the Court will consider whether the plaintiff has the ability to pay such damages. Finally, if the plaintiff has delayed in making the application that will count against him.

Only if these issues are finely balanced will the Court go back and look at the strength of the case on infringement and validity. In general, however, the possible weakness of the patent is not a problem. Where an interim injunction is granted it can be obtained very quickly indeed. You go into Court and get an injunction - what takes the time is preparing the case. But it can be a matter of days or even hours.

There are fewer interim injunctions now than there were several years ago; quite often the Court will instead order a speedy trial of the main action so that the period of uncertainty is minimized. Interim injunctions are of real concern to generics pharmaceutical manufacturers in particular; (as I am an electronics specialist I thankfully have not been involved in any such actions).

I should mention that the Court presently does not have the power to order security for damages against an alleged infringer while permitting the infringement to continue, (except apparently, in Scotland) but may agree to an offer by the defendant to make a payment into a joint bank account. The Court will be given this power when directive 2004/48 is implemented in the UK next year.

All provisional measures including interim injunctions can initially be applied for without notice to the other party, but the defendant then has the opportunity to present his case shortly thereafter. They can indeed be applied for before proceedings have actually started, and the intending plaintiff must then undertake to commence proceedings forthwith (or the Court will start them by order).

As we have seen, the interim injunction is decided on different criteria from the main action and so in patents at least does not become a mini-trial of the main issues but without all the relevant evidence. It is fair to the commercial interest of the parties, quick, and effective, and especially so when it is remembered that the Court can even possibly grant a cross-border interim injunction.

THE ROLE OF EXPERTS IN PATENT LITIGATION

Trial judges in UK patent actions are specialist judges with Intellectual Property experience. You are not dealing with a judge who has not seen a patent before. So for the normal case there is no need for an expert on any aspects of the patent system.

There will be a need for technical expertise. The law provides for the possibility that the Court will appoint an expert, but that is very rarely used. Such a Court expert is called a scientific advisor, or assessor, and his duty is to advise the Court on the technology. I was involved in one case in the 1970s when our Court of Appeal appointed a scientific advisor on a case concerned with colour television. This appointment was at the suggestion of the parties given that the Court of Appeal at that time had very little scientific expertise, and it was indeed crucial to the case. But it is very rare indeed.

But it is the usual practice for each party to put forward their own expert in support of their case. Normally only one expert will be allowed in each side, though there have been more than one in special cases, such as where two technical fields are involved. The procedure is that the expert will first prepare a report giving his views on the case. This will be in the form of a witness statement, effectively equivalent to an affidavit. The witness statements from the experts for the two parties will be exchanged, and they may prepare supplementary witness statements in response to the other expert’s comment, and to clarify their previous comments.

At the main trial the expert may be cross-examined about his views. The purpose of cross-examination is to test the strength of the evidence. It is fundamental to the common law system. In cross-examination the expert may be asked leading questions, and attempts may be made to try to show he is unreliable by reference to other matters such as papers he has written. The cross-examiner will try to find inconsistencies or to lead the expert on to a ridiculous conclusion. This sounds as if it might be humiliating, but an expert witness will always be treated in a very respectful manner. It is not like cross-examination on the television.

The expert has to acknowledge in his report that his duty is to the Court and not to the party who is paying his fees. He has to outline the instructions he has been given by the party for whom he is acting.

As well as allowing the strength of the evidence to be tested, the system of having experts on each side avoids any danger of the expert, in fact, becoming the judge. This cannot happen.

It has to be said, however, that choosing the right expert can be very important. He is an expert witness and must stand up to cross-examination, so choosing someone who will make a good witness, and possibly establish a rapport with the judge, can be advantageous. Commonly senior people from the academic world or recently-retired consultants are used as expert witnesses.

I said that experts on patent or IP law are not usually required, but just occasionally they are. One example is when a UK patent is amended after grant. It has been necessary to show then that the patent was originally drafted with adequate skill and knowledge. I have acted as an expert in such cases, so I can truly say I have seen the procedure from both sides. Gratifyingly I have never found it too stressful an experience. Of course, unlike most expert witnesses, I did already know personally most of the patent lawyers who were cross-examining me, so perhaps that helped.

In summary the dual-expert system has the advantage that the expert evidence can be properly tested, and the expert cannot become the judge.

INTERRELATION BETWEEN VALIDITY QUESTIONS AND THE SPEED OF ENFORCING PATENT RIGHTS

As you will all know, in the UK the issues of infringement of a claim and its validity are tried in the same proceedings. The issue of infringement will be raised in the plaintiff’s pleadings at the commencement of the case, and in his defence the defendant will typically first deny that the claim is infringed and secondly argue that the claim is invalid and indeed he will counterclaim for the revocation of the patent on the basis of the invalidity. In practice, validity is an issue in the vast majority of infringement actions.

By bringing both issues before the same judge the judgement obtained will be more comprehensive and complete, and the legal process more efficient overall. It should also produce a more accurate result, since there is no possibility of a nullity court and an infringement court taking mutually inconsistent approaches.