Adaptive Spectrum and Signal Alignment Inc v British Telecommunications Plc

In settling the terms of a patent appeal order, the court may stay a final injunction for a short period where the patentee primarily seeks financial relief and the public would suffer service disruption, provided suitable financial protection is imposed. Payments during the stay may be ordered on account of damages and subject to repayment after the damages inquiry. A cross-undertaking is generally appropriate for an interim injunction or an injunction pending appeal, but not merely because the European Patent Office may later revoke or amend a patent after an injunction was rightly granted. Costs may be adjusted to reflect the relative weight and outcome of the issues. A potential good-faith or reasonable-skill issue under section 63(2) may be raised in the damages inquiry, without requiring a separate inquiry at the order stage.

The judgment concerned outstanding issues in the final orders following patent appeals between Adaptive Spectrum and Signal Alignment Inc and British Telecommunications Plc. The underlying proceedings were in the Patents Court before Mr Justice Birss, whose decision is cited as [2013] EWHC 3768 (Pat).

The Court of Appeal considered the form and operation of the orders concerning two patents, including a short stay of the injunction on the 495 patent, interim payments, repayment protection if the patent were later revoked or amended by the European Patent Office, the effect of section 63(2), costs, interest, amendment, disclosure and permission to appeal. The court determined the outstanding order issues on written submissions.

1. Disposition and stay. The court settled the outstanding final order issues. It refused BT permission to appeal to the Supreme Court. Although an injunction would normally be granted where there was no pending appeal, the court was narrowly persuaded to stay the injunction concerning the 495 patent until 8 December 2014. ASSIA’s primary interest was financial, so a short stay would cause no lasting harm, while BT’s large market share meant that an immediate injunction could disrupt or reduce the quality of public telecommunications services.
2. Financial terms. BT was required to pay £250,000 for each week of the stay as an interim payment on account of damages. The sum was repayable to the extent that it exceeded the amount ultimately awarded in the damages inquiry. The court considered the approach in Virgin Atlantic v Premium Aircraft [2009] EWCA Civ 1513 applicable: a substantial interim payment may be ordered where the damages inquiry covers the whole period of infringement and any overall overpayment is unlikely. BT was also required to explain the steps taken to render its products and systems non-infringing.
3. Cross-undertaking and EPO proceedings. The court rejected a cross-undertaking in damages for the final injunction merely because the European Patent Office might later revoke or materially amend the patent. Such an event would not show that the Court of Appeal’s judgment, or the injunction when granted, was wrong ab initio. The injunction would become ineffective or require discharge only from the date of revocation or amendment. However, following IPCom v Nokia [2014] RPC 12, fairness required ASSIA to undertake to repay sums found due if revocation or amendment occurred. The court therefore refused a stay of the damages inquiry subject to that undertaking.
4. Section 63(2) and costs. Section 63(2) did not justify depriving ASSIA of its costs of the successful appeal concerning claim 6. The court declined to direct a separate section 63(2) inquiry, but permitted BT to raise the issue in the damages inquiry. The trial costs award was increased from 40% to 60% of ASSIA’s costs, reflecting the outcome while allowing for the substantial validity issue on claim 1. The court ordered the agreed interim appeal payment of £200,000 and a further £215,000 below, bringing the total interim payment below to £645,000.
5. The court ordered amendment in the agreed form, made the CPR 31.22 order, refused permission to appeal to the Supreme Court, and directed counsel to lodge a perfected minute within three days.

• Court of Appeal (Civil Division): In [2014] EWCA Civ 1513, the court determined the outstanding issues concerning the final orders following the patent appeals. It imposed a short stay of the injunction on the 495 patent on financial and protective terms, adjusted costs, made repayment and non-infringement orders, refused a stay of the damages inquiry subject to an undertaking, and refused permission to appeal to the Supreme Court.
• High Court of Justice, Chancery Division, Patents Court: Mr Justice Birss gave the underlying judgment cited as [2013] EWHC 3768 (Pat).