My Lords, Amendments 25A and 25B relate to the patent opinions service. Amendment 25A, tabled by my noble friend Lord Clement-Jones, seeks to remove the power that will allow the Intellectual Property Office to initiate revocation proceedings where an opinion concludes that the patent is invalid. Amendment 25B, tabled by the noble Lords, Lord Stevenson and Lord Young of Norwood Green, seeks to insert the word “clearly” into the clause so that revocation will be initiated only when novelty or inventive step is clearly not satisfied.
Clause 15 allows a limited extension of the IPO’s existing powers to initiate revocation proceedings. It will help in particular SMEs and lone inventors who may simply be unable to afford to bring revocation action themselves. More broadly, it will be in the public interest to allow the IPO to seek the removal of certain invalid patents from the patents register. I reassure noble Lords that the IPO will only initiate such proceedings in clear-cut cases—where there is no reasonable argument to be made that the invention is new or not an obvious replacement of what has gone before. However, in those cases which are not clear cut there will be no revocation action.
I also wish to clarify that initiation of action will not always result in revocation. The patentee can submit observations that may demonstrate that his patent is valid. Alternatively, amendment may reduce the monopoly afforded by the granted claim. The patent holder will also be able to appeal any decision to revoke to the courts. The Explanatory Notes accompanying the Bill make it clear that the power to revoke will be exercised only in the most clear cut of cases. Therefore, I do not feel it is necessary to insert the word “clearly” into the legislation itself, as suggested by noble Lords in Amendment 25B.
Inserting the word “clearly” into the legislation may also lead to argument about what that word means, thus adding an unnecessary further strand to the dispute. For example, if the patent holder disagrees with the revocation and appeals to the courts, the court should not have to decide whether a patent is “clearly invalid” but should instead be free to decide the core question of whether the patent is or is not valid. The IPO is already able to seek revocation of a patent under certain circumstances. Experience shows that its officers would be well placed to assess whether revocation proceedings should be initiated following an opinion that concludes that a patent is clearly invalid.
Before answering a number of questions, I will finish by sharing with you the story of one SME which responded to the consultation in support of the government position. Shortly after it was set up, this SME became aware of a competitor’s patent for a similar product to that which it intended to sell. The SME requested an opinion on the patent, which concluded that the competitor’s patent was invalid. However, despite this alleged invalidity, the competitor continued to contact potential customers of the SME, warning them of possible infringement of their patent, and as a result customers stopped placing orders with the SME. The SME was therefore faced with the stark choice of either closing down or bringing revocation proceedings against the patent. It was apparently told it would cost £100,000 to bring such proceedings, and it simply could not afford to do so. In the end, the SME was fortunate in that it received backing from a much larger company, which enabled it to carry on trading and, indeed, to significantly grow the business. However, I am sure noble Lords can appreciate that such support cannot be guaranteed for all SMEs. As the example demonstrates, it is important that intellectual property does not become the preserve of only those with deep pockets. The clause as it stands, limited as it is and
with the necessary safeguards to protect legitimate patent holders, will, I believe, further help to ensure that does not happen.
In his usual perceptive way, my noble friend Lord Clement-Jones raised a goodly number of questions. I will attempt to answer them all. First, he asked whether the procedure was TRIPS-compliant. The proposed legislation mirrors legislation already in place for revocation under Section 73(1) of the Patents Act 1977. The process of revocation will also mirror the process of revocation under Section 73(1). This process means that the revocation will also be considered by a more senior official than the examiner who issued the opinion. He will look at the details afresh and will not be bound by the conclusions of the examiner’s opinion when deciding whether revocation proceedings should begin. The patentee will then have the opportunity to address the alleged invalidity by way of amendment of his patent or by argument. He will also be able to appeal any decision to revoke his patent to the High Court. Further appeals are still possible, and this ensures that the procedure is TRIPS-compliant.
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My noble friend Lord Clement-Jones asked whether opinions will be provided on unitary patents. Until the technical details of the unitary patent system and the unified patent court are finally in place, the IPO is not in a position to comment on whether it will issue an opinion on a unitary patent. However, once the system is established, the IPO will consider the requirements of stakeholders and the merits of providing an opinion on the validity of or infringement of a unitary patent. I hope that that goes some way to providing a reassurance for noble Lords.
My noble friend also asked whether this would change the non-binding nature of the opinion. Giving the IPO power to initiate revocation proceedings will not alter the non-binding nature of the patent opinions service. The decision to initiate revocation proceedings will be made by a senior officer independent of the opinions examiner, and that senior officer will reassess the facts of the case and will not be bound by the conclusions of the opinions examiner. In other words, the opinion may trigger a further separate investigation of validity, but in itself it will remain a non-binding opinion, which I think further emphasises the points I made earlier.
I was asked whether more input will be required from both parties in the process. It is always incumbent on the person requesting the opinion and the person filing observations to provide enough information to support their argument. Sampling observations submitted by patentees where validity has been challenged demonstrate that the majority of patentees are already providing a full and detailed response to the challenge. One respondent to the consultation indicated that the amount of work put into a patent opinion was similar to that put into proceedings before the patents county court, but without the added costs of evidence preparation. My noble friend asked whether this will lead to increased costs for the patent holder if he has to challenge the revocation before the courts. By limiting revocation action to those situations where there is clear-cut
invalidity, we consider that the patentee will appreciate that any appeal to the court would be unlikely to result in success. However, if an applicant were to appeal the decision to revoke and the courts were to find in his favour, under the UK court system, the losing party would usually be required to pay all the costs.
My noble friend also asked whether timescales are inappropriate with revocation, as are the procedures. The timescales for revocation and the procedures are set out with the existing procedures in Section 73 of the Copyright, Designs and Patents Act 1988 as it stands, so they are applicable to all. These work well and achieve the right safeguards for patentees; the proposal follows this existing model. My noble friend asked if users of the patent opinions service might not be interested in revoking patents, but any invalid patent that remains in force gives an unfair monopoly to the patentee in the commercialisation of his patent. This will usually have a wider impact than simply on the parties involved in any dispute as it can influence innovation and competition in the field—that is, the wider field beyond the particular patent. There is therefore a public interest in ensuring that clearly invalid patents do not remain in force.
My noble friend asked why we are not extending this further into other areas of invalidity, not focusing just on novelty or inventive step. The intention is to take action only against those patents that are clearly invalid. In practice, that means that the invention is clearly not novel or inventive. There are other grounds on which the validity of a patent can be challenged, such as whether disclosure of the patent is complete enough to allow a third party to work with the invention. Those grounds are almost invariably much less clear cut and would require a higher degree of input from parties than currently afforded and intended by the opinions service.
Earlier in his speech, my noble friend Lord Clement-Jones referred to the consultation. We argue that the response to the IPO’s consultation was mixed, although it did appear that some of the respondents against the proposal assumed that a patent would be automatically revoked, yet this is not the intention. In deciding whether to proceed with this proposal, the IPO took on board the concerns of representative bodies, such as CIPA, while also giving consideration to the comments of large corporations, such as Dyson, and the needs of SMEs and lone inventors, who supported the proposal.
The initial proposal was to initiate revocation proceedings following any conclusion of invalidity. However, the IPO acknowledges the burden that would be required upon a patentee to defend their patent in those areas of validity that are not clear-cut. For this reason the proposal has been significantly limited to initiate proceedings only where an opinion concludes that the patent clearly lacks novelty or inventive step.