Unilin Beheer BV v Berry Floor NV & Ors

A final, unappealable judgment that a patent is valid and infringed conclusively determines the parties’ rights to financial relief for the infringements adjudicated upon. A later revocation of the patent by the European Patent Office does not unravel that entitlement.

Although revocation operates retrospectively, the infringement cause of action has merged into the judgment. The judgment constitutes a distinct property right governed by national procedural law. Neither the Patents Act 1977 nor the European Patent Convention excludes the ordinary principles of res judicata.

Once infringement and validity have been finally determined, the successful patentee should ordinarily be permitted to enforce the judgment. Existing costs orders likewise remain effective.

Unilin obtained final judgments that its European patent (UK) was valid and that flooring products supplied by the defendants infringed it. The orders included costs and an inquiry as to damages or an account of profits. The defendants’ further appeal was refused.

Opposition proceedings concerning the patent remained pending before the European Patent Office. The defendants sought to stay the account and the assessment of costs because the opposition might result in retrospective revocation or a limitation excluding their products. His Honour Judge Fysh QC held that Unilin’s entitlement was not res judicata, but refused a stay.

Unilin appealed against the finding that there was no estoppel. The defendants appealed against the refusal of a stay. The central question was whether a later European Patent Office revocation could undo a final English judgment awarding financial relief for patent infringement.

1. Disposition. The defendants were estopped from challenging Unilin’s entitlement to an account of profits, irrespective of the eventual result of the European Patent Office proceedings. Unilin’s appeal on res judicata was therefore allowed in the court’s reasons, and the defendants’ appeal for a stay was dismissed. The parties subsequently settled, so the proposed order was not drawn up.

2. Per Jacob LJ, with whom Arden and Mummery LJJ agreed, the decisions in Poulton v Adjustable Cover [1908] 2 Ch 430 and Coflexip v Stolt (No 2) [2004] FSR 34 established that a defendant which had received a full and fair opportunity to challenge validity could not rely upon a subsequent revocation to defeat financial relief ordered in the first action. Finality was especially important because otherwise a losing defendant would have an incentive to procure a renewed attack through a third party.

3. The result did not differ because the patent was a European patent (UK). Section 77(1) of the Patents Act 1977 treated such a patent as if granted under domestic legislation. Neither that Act nor articles 64 and 68 of the European Patent Convention disclosed an intention to displace the fundamental rules of res judicata. Article 64(3) left infringement to national law, including national procedural law.

4. European Patent Office revocation operated retrospectively, but that did not destroy the judgment. Once validity and infringement had been finally adjudicated, the infringement cause of action merged into the judgment. The successful patentee possessed the judgment, rather than an unadjudicated infringement claim. The account quantified profits arising from the dealings already adjudged to infringe.

5. Arden LJ added that the judgment was itself a property right. Nothing in the Convention indicated that retrospective revocation removed that right. The presumption against retrospectivity also militated against construing article 68 as undoing an existing final judgment.

6. Even without estoppel, the past costs orders could not be unravelled. The defendants had contested and lost the issues for which those costs were awarded.

7. The judge had made no error of principle in refusing a stay. Unilin held an enforceable judgment and should not be kept from its compensation without good reason. Any unnecessary expense caused by the continuation of the account could be addressed through costs.

1. Court of Appeal (Civil Division): Held that the defendants were estopped from disputing entitlement to an account, that existing costs orders could not be challenged and that the appeal seeking a stay should be dismissed. The parties settled before delivery, and the proposed order was not drawn up.
2. Patents County Court: His Honour Judge Fysh QC held on 18 May 2006 that Unilin’s entitlement to financial relief and costs was not res judicata, but refused to stay the account and costs proceedings.
3. Earlier merits proceedings: The Patents County Court held the relevant patent claim valid and infringed. The Court of Appeal dismissed the defendants’ appeal, and the House of Lords refused permission to appeal. Subsequent proceedings also determined that the specification had been framed in good faith and with reasonable skill and knowledge.