Stay of proceedings at UK courts - Coloplast A/S v Salts Healthcare Limited
24th February 2020
This case relates to parallel proceedings in relation to Coloplast’s EP (UK) 2,854,723 B1. The patent was opposed at the EPO on 16 April 2018 by a third party, Hollister, and the hearing was scheduled for 26 September 2019. It was accepted that any decision would likely be appealed, and that the appeal would not be concluded until between 2021 and 2024. Accounting for the possibility of ‘ping-pong’ between the Board of Appeal and Opposition Division extended the estimates to 2028.
Around April 2019, Coloplast commenced national proceedings against Salts. Salts denied infringement, counterclaimed for invalidity and applied to join the Hollister opposition. Estimates were that any first instance decision would be issued between October 2020 and March 2021, with a decision on appeal by mid-late 2022 or early 2023. Salts sought a stay of the national proceedings pending the outcome of the opposition.
Salts’ arguments were that the validity of the patent could be determined by the EPO by 2021 at the latest. If found invalid, then the national proceedings could be avoided. Damages would provide adequate compensation for Coloplast if the patent was held valid and subsequently infringed. A stay would also avoid the risk of Salts being injuncted and ordered to pay damages and delivery up in relation to an invalid patent if the opposition proceedings did run longer than the national proceedings.
Coloplast argued that the EPO would not determine the validity of the patent until at least 2022/2024, and that if found valid, national proceedings would then not conclude until 2025/2028.
If national proceedings were shorter than the opposition proceedings, then any injunction granted would fall away if the opposition subsequently found the patent invalid. Coloplast also undertook to repay any damages received but did not address the question of damages suffered by Salts as a result of any injunction incorrectly granted.
Guidance on when a stay of national proceedings is appropriate comes from thirteen guidelines as set out in IPCom v HTC. The fifth of these states that, in the absence of other factors, a stay of national proceedings is the default position. In the present case, the stay was refused, with the judge deciding that:
(a) The refusal of a stay will not irrevocably deprive Salts of a benefit of the concurrent jurisdiction of the EPO and this court – Coloplast has offered to undertake to repay any monetary compensation it receives if the Patent is subsequently revoked (guideline 7);
(b) There is, in my judgment, some commercial certainty that would be achieved at a considerably earlier date in the case of these proceedings (guideline 8). Whilst the parties may not have absolute certainty (or certainty outside the United Kingdom), until the EPO proceedings are finally resolved, it is preferable to obtain certainty at least in the United Kingdom, one of the largest markets for Coloplast and the largest market for Salts, sooner rather than later;
(c) I have taken into account that the resolution of these proceedings may, by deciding some important issues (including, for example, infringement), promote settlement (guideline 9);
(d) I have considered the length of time that it will take for each set of proceedings and have concluded that these proceedings are likely to be concluded first. Certainly, if these proceedings are stayed and the EPO does not revoke the Patent, there will be a considerable delay which, in my judgment, causes significant prejudice to Coloplast. Rather, as noted above, I consider that early determination of these proceedings will achieve some certainty for the parties (guideline 10): I do not accept that denying a stay will cause irrevocable harm to Salts;
(e) In this case, there is some public interest in dispelling the uncertainty (guideline 11); and
(f) Whilst there is a risk of wasted costs if no stay is granted and the EPO eventually revokes the Patent, in my judgment, this is outweighed by commercial factors associated with early resolution, as guideline 12 suggests will “normally” be the case.
Although a stay of national proceedings is the ‘default’ position in the UK, the stay was refused in this instance because of the combination of an absolute right of appeal, a minimum of two years to appeal and the potential of the ping pong effect before the EPO.
These considerations are likely to apply in most parallel proceedings, suggesting that it is unlikely that a stay will be granted in most cases. The risk is then that a defendant will have to bear legal costs, pay damages, deliver-up and be injuncted in relation to a patent which is deemed never to have existed. In this case, Coloplast undertook to repay any damages and the court intimated that some or all of the remaining issues could be addressed at the form of order hearing after the conclusion of the national proceedings.