Ipcom GmbH & Co Kg v HTC Europe Co Ltd & Ors

A stay of patent proceedings pending parallel European Patent Office proceedings is discretionary. The court must balance justice, commercial certainty, delay, duplication, the parties’ interests and the public interest. The possibility of inconsistent outcomes under the European patent system does not itself justify a stay. A non-party whose confidential information is affected by an order may apply under CPR rule 40.9, even if the party subject to the order has not objected. Such an application is not ordinarily a route to re-argue an issue already decided. The court may instead vary the order to impose a tightly confined confidentiality regime.

IPCom sued HTC for patent infringement. HTC counterclaimed invalidity and applied to stay the technical trial pending opposition proceedings concerning the corresponding European patent before the EPO. IPCom also sought enforcement of an earlier order requiring inspection of parts of source codes relevant to HTC’s alleged workarounds.

Qualcomm and Intel, whose source codes were involved, applied as non-parties to discharge or vary that order. The court therefore considered the proper approach to a stay, the jurisdiction of non-parties under CPR rule 40.9, and the appropriate protection for highly confidential source code.

1. Stay. The application to stay the technical trial was refused. The guidance in Glaxo Group Ltd v Genentech Inc [2008] EWCA Civ 23, [2008] FSR 18 applied. The discretion must be exercised by balancing justice in all the circumstances. The likely length of the EPO proceedings was the most significant factor. A further appeal, and potentially further remittal and appeal, could delay resolution for several years. A trial in the Patents Court would provide earlier commercial certainty. The risk of inconsistent outcomes was inherent in the European patent system and did not, without more, justify a stay.
2. The fact that IPCom was a non-practising entity did not remove the relevance of the commercial-certainty guidance. Its commercial circumstances remained a factor within the overall balancing exercise. The earlier stay had been justified by materially different circumstances, including HTC’s undertaking to use variants accepted not to infringe. That position had since changed, and IPCom alleged continuing infringement of the amended patent.
3. Non-party application. CPR rule 40.9 was broad enough to permit a non-party directly affected by an order to seek its variation where inspection would disclose its confidential business secrets. This applied even though the party against whom inspection was ordered had not raised an objection under CPR rule 31.19.
4. The non-party application could not properly be used to re-run an argument already advanced before Norris J, particularly where the party subject to the order had not appealed and the application was substantially out of time. The justification for inspection remained because the product and process descriptions were still relevant to the infringement issues.
5. The inspection order was therefore not discharged, but was varied. Access was confined to one or two nominated experts who gave written confidentiality undertakings and identified individuals within IPCom’s external English legal team. Any extension required an application supported by evidence. No patent prosecution bar was imposed.

The judgment records earlier orders in the same proceedings, including a stay pending the EPO Technical Board of Appeal and an inspection order made by Norris J. The present court refused a further stay and varied the inspection order. Following the Supreme Court’s later judgment in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46, permission to appeal was granted against the refusal of a stay.