My Lords, I am afraid that this is a much more serious issue and I dare say that my noble friend is already aware of the strong concerns about elements of the clause that have been expressed not only by the patent agents but by the Law Society in a recent briefing paper.
In 2012, the Intellectual Property Office consulted on an amendment to the opinions service. That was responded to by a number of professional bodies. The CIPA agreed that the opinions service could be usefully expanded in some respects but was firmly opposed to the non-binding opinions service being turned into a binding service in relation to the existence of the patentee’s patent. Currently, the opinions service can give rise to four non-binding opinions: first, where the patent is valid; secondly, if the patent is invalid for lack of novelty or obviousness; thirdly, if the patent is infringed; and, fourthly, if the patent is not infringed. The Bill is proposing that one, and only one, of those four opinions should become something more than a non-binding opinion, while the other three retain their non-binding status.
The Bill proposes at subsection (4) to introduce into Section 73 of the Patents Act 1977 a power for the comptroller to revoke patents of his own motion when an opinion is given that the patent lacks novelty or is obvious. It is of concern that this proposal has not been fully thought through and I ask noble Lords to reconsider whether it should be kept in the Bill. The opinions service is very useful. It provides a low-cost forum for obtaining a first view as to the validity or infringement of a patent. The fact is that it is an opinions service, and a non-binding one, meaning that a certain approach is taken to such proceedings and costs are kept low. Moreover, the opinions are a useful commercial tool because the requester and the patentee can enter into negotiations regarding the patent. However, if the patentee knows that the opinion could lead to
revocation of the patent, it is unlikely that any negotiations will be carried out on the same basis and it is less likely that settlement will be reached.
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The proposal in the Bill will turn requests for limited requests for validity opinions into something quite different and deprive the opinion service of its present advantages. One of the advantages of the opinion service is that it takes place on paper, with opinions being given within 12 weeks. However, the patentee is given only a few weeks in which to file comments. Where the patentee is overseas or there are language barriers, then such a short period is difficult. This is manageable where there is no further impact from the opinion. However, where there could be a knock-on to the validity of the patent, this becomes more drastic and potentially significantly more expensive.
Opinions on validity are usually sought by third parties, so the patentee is not a party. If there is a hearing, the patentee has no opportunity to present oral argument, nor does the patentee have the right to challenge evidence by cross-examination. As we discussed earlier with regard to design rights, the opinion service is not a judicial proceeding and there is no right of appeal to the court. In fact, Section 74A makes it clear that the patentee has no right of appeal against the opinion given. Although the patentee has a right to seek a review under Section 74B, the grounds for review are limited to whether the opinion was wrongly concluded. This falls short of being a proper appeal, and any appeal under Section 97 is similarly limited. Paragraph 22 of the IPO response noted:
“Fortunately the number of reviews and appeals has been small”.
If the outcome of an opinion has the potential to impact the patent, this number is likely to rise. This will be difficult for SMEs who will now have to file Form 2 and pay the fee as well as seek expensive legal help on how to deal with the,
“high hurdle for overturning a patent opinion that was established in one of only two review proceedings to go on appeal”.
In the amendment to the opinion service proposed in the Bill, it appears that the patentee will be placed in the position of having to overturn the presumption that the patent is invalid. Thus, the normal burden in revocation proceedings will be reversed. Moreover, the person requesting the opinion will, in effect, have placed a large financial burden on the patentee to defend his patent even though the requester has to pay only the fee for an opinion, which is comparatively low.
It is also not clear that the patentee will have recourse to a proper judicial procedure. It is not clear from the Bill or from the notes accompanying the Bill that the patentee will have a right to a full hearing on the merits. It is of particular note that neither the IPO nor the patentee will be able to cross-examine the requester’s witnesses or experts during the opinion procedure and nor would such opportunity be available during any subsequent Section 73 proceedings. It is difficult to see how this latter would be possible in what will essentially be ex parte proceedings. I shall not deal with the clarity of the invalidity because that will be dealt with by the subsequent amendment.
I wonder whether the IPO has considered whether the proposal is TRIPS- compliant. Is the patentee afforded the necessary two levels of hearing? I further wonder whether the proposal in the Bill is future-proofed. It is likely that the unitary patent will come into effect in due course. Can the IPO give opinions on unitary patents? If it can, will it not be able to revoke a unitary patent? Surely exclusive jurisdiction for the unitary patent rests with the unified patent court. It seems odd to have a provision which will apply to some, but not all, patents effective in the UK.
I recognise that the IPO has a fundamental role as the regulator of the patent register. However, I do not see that the IPO has an obligation to clear the register of invalid patents. It is against its financial interest to do so. It does not do this for all the many patents on the register for which opinions are not requested. Why should it do it for patents on which opinions are requested? This is discriminatory and not a function assigned to the IPO by any legislation.
I recognise that the IPO also offers value-added services, such as assistance for private applicants, mediation services and opinion services. When offering such services, the IPO has to keep them entirely separate from its regulatory function. It must be careful about the advice it offers, and it has to be careful not to be both judge and jury. In offering value-added services, the IPO has to guard against the breakdown of the notional wall between, for example, a non-binding opinion service and the regulatory function. Notwithstanding the IPO’s comments in the response, this proposal breaches that wall.
If the patent is now to be put at risk by the opinion service, then all patentees must respond when invited to do so. The patentee will have to treat opinion service proceedings at the same level as patent revocation proceedings, thereby finding and submitting full evidence and opinions on why the requester is wrong. Although, as the IPO has noted, many already do this, that is not the case for all patentees—note especially my earlier comments on overseas patentees with language barriers. It then also becomes important that the patentee should have a greater right of redress when it does not agree with the opinion given. That would mean changing the procedure so that the patentee could appeal, but that is not part of the Bill’s proposals.
Allowing there to be legal consequences to the opinion, albeit after further proceedings, changes the nature of the opinion service and the costs for both parties, yet there is no provision for cost recovery. This also opens up possibilities for abuse. We have talked about the imbalance between parties in other contexts. Here, a rich party could target all the patents of an SME so as to remove both good and bad patents in an SME’s portfolio by requesting opinions on all of them. That would be at little cost to the requester but would require significant cost from the SME to defend all its patents. Even if the comptroller is to begin fresh proceedings under Section 73, there will be a perception, whatever the response to the consultation says on this topic, that the non-binding opinion would be a decision that the patentee had to overcome, as opposed to the IPO acting as an independent and impartial tribunal, as required by part 1 of Article 6 of the human rights convention.
A further point needs to be considered. Amendments made under Section 73 are not advertised prior to acceptance and there is no procedure for a third party to intervene. While that may not be an issue for the other situations under Section 73, in this case, there is clearly a third party with an interest, even if it has chosen not to file for revocation. Depending on the amendments accepted, the IPO may have invented a procedure that negates the value of the opinion already given and undermines the decisions and settlements formed on the basis of it. The third party may then find that its further opinion on non-infringement no longer held water and it had to start that process all over again.
I understand the IPO’s concern that, should its value-added services give an opinion, whether binding or not, that a patent is not valid, then it might seem strange that that patent remains on the register. However, there are many reasons for a non-binding opinion to be sought and many reasons why the patentee may not take part in those proceedings or only take part to a limited level. If it is important to the applicant for the validity opinion or to a third party that the patent be revoked, then IPO inter partes proceedings are available under Section 72. Where the applicant does not wish to pursue those, the IPO can step in and take them over. Section 72 proceedings are judicial proceedings where there is a full exchange of evidence, disclosure, cross-examination and oral hearing. The proposed subsection potentially turns the opinion service into a cheap form of revocation proceedings and this will debase the value of the opinion service. These are formidable arguments against that subsection and I beg to move.