Optis Cellular Technology LLC & Ors v Apple Retail UK Ltd & Ors (Rev 1)

Where a patent has previously been upheld and a certificate of contested validity has been granted, Patents Act 1977, section 65(2) generally requires subsequent inter partes costs to be assessed as between solicitor and own client. The court retains a discretion to direct otherwise, but the party seeking departure bears the burden of showing that the circumstances justify it. The discretion may be reflected by a broad percentage deduction rather than separate assessments on different bases. The mere reliance on new prior art, additional claims, or the public interest in challenging standard-essential patents does not, without more, justify departure from section 65(2). Costs may still be reduced to reflect a suitably circumscribed abandoned issue or relevant conduct. A payment on account should be a reasonable proportion of the recoverable costs, assessed in the circumstances of the case.

The judgment determined consequential costs issues following the court’s earlier judgment in the patent proceedings, reported at [2020] EWHC 2746 (Pat). Optis had succeeded against Apple on validity and infringement issues. The patent had previously been litigated in Unwired Planet v Huawei, where it had been found valid and a certificate of contested validity had been granted under section 65 of the Patents Act 1977.

The court had to decide the basis and amount of the costs order, including whether to depart from the statutory solicitor-and-own-client basis, whether deductions were appropriate for abandoned issues and conduct, and the appropriate payment on account. It also considered whether new prior art, additional claims, the public interest, or earlier costs orders justified a different approach.

1. Optis was the successful party. Under section 65(2) of the Patents Act 1977, its costs were generally to be assessed as between solicitor and own client, in accordance with CPR rule 46.9(3). That basis is distinct from both standard and indemnity assessment. CPR rule 44.3(4) did not alter the statutory position where the order expressly identified the solicitor-and-own-client basis (paras [2]-[10], [39]-[41]).

2. The court retained a discretion under section 65(2) to direct otherwise. The burden lay on the party seeking departure. The discretion could be exercised by making a broad percentage deduction to reflect particular issues, rather than ordering separate assessments on different bases (para [19]-[20]).

3. The abandoned Ec/Io and RSRQ issue was a suitably circumscribed issue. Costs had been incurred on it, and Optis had maintained it until after the oral evidence. The court therefore made an 8% deduction, comprising an estimate of the costs of the issue and a further deduction to reflect conduct (paras [12]-[18]).

4. The public-interest character of standard-essential patents did not justify a different costs order. The public interest in challenging invalid patents had to be considered alongside the public interest in vindicating valid patent rights and incentivising innovation (paras [22]-[25]).

5. The historical approach in Otto v Steel and Flour Oxidising v Hutchison, concerning new prior art in successive patent proceedings, was no guide to the application of the modern Civil Procedure Rules and section 65. New prior art was relevant but did not, without specific circumstances, justify departure from the statutory basis. The same reasoning applied to claims that had not been in issue previously (paras [26]-[32]).

6. For the payment on account, the court considered the previous litigation experience of Optis’s legal team and the reasonable level of costs overall. It applied 85% to the costs after the 8% deduction. A further 1% deduction was made to reflect Apple’s successful opposition to the abandoned publicity-order issue. The resulting order was for payment on account on the solicitor-and-own-client basis, subject to the stated deductions (paras [34]-[48]).

This was a first-instance consequential costs judgment following the court’s earlier patent judgment at [2020] EWHC 2746 (Pat). The judgment does not state any subsequent appeal.