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When it's unreasonable to run all your reasonable runners

06/06/2012

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When it's unreasonable to run all your reasonable runners

snIPpets – June 2012

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MMI Research Ltd v CellXion Ltd and Others [2012] EWCA Civ 139

This case highlights the need to determine which of your arguments are reasonable, and then to select only the best of these. In MMI Research, no order was made as to costs to penalise the successful claimant for running too many points.

Facts

The claimant was an exclusive licensee under a European patent relating to IMSI catchers. These are devices used by police forces to obtain unique identification numbers (IMSIs) of mobile phones operated by suspects. The device works by tricking the mobile phone into transmitting its IMSI. A fake base station transmits a signal of the type received by phones when they are physically moved from one geographical zone to another.  Such virtual base stations were already known at the priority date of the patent, but the novelty claimed in the patent related to the manner in which the virtual base station transmitted a signal of such strength that the suspect's mobile phone would release its IMSI.

Decision

At first instance, the judge upheld the validity of the patent and found for the claimant. The defendants appealed to the Court of Appeal (CA) on the basis of new evidence; they produced written manuals and a floppy disc that they claimed were supplied to the Italian Carabinieri and German police force before the priority date. They argued that these constituted an enabling disclosure of the invention or in the alternative that they rendered the invention obvious. The judge disagreed and held that the manuals and disc did not constitute an enabling disclosure, did not render the invention obvious and were disclosed under a duty of confidence in any case.

A second appeal was allowed and the CA held that the claimant's expert had conceded at the first instance that an article on phone location technology rendered the invention obvious.   The Judge at first instance, Mr Justice Floyd, had overlooked this critical concession. The CA suggested that this was probably caused by the fact that so many other points had been raised. Had the defendants concentrated on their best points, the judge may not have erred. This was, no doubt, embarrassing for the judge at first instance, but better that the appellate Court reverses the decision than creates a new point of principle to fit the facts. 

In the costs judgment, Sir Robin Jacob held that the defendants were profligate in the number of defences they ran. A defendant in a patent trial cannot take as many "reasonable" points as it likes and not have to pay for any of them if they are unsuccessful. It should make a judgment as to which are the better points by applying the following test:

(a) "Is this point a reasonable runner?"; and then

(b) "which of my reasonable runners are the best few?"

Sir Robin went on to say that "a reasonably strict costs regime should make a defendant concentrate on his best [points] – which may indeed also give him a better chance of winning." In the end, no order was made as to costs, which deprived the defendants of their costs on the issue on which they won. This was held to be an appropriate price to be paid for the aforementioned profligacy. Given the defendants were the overall winners at trial however, they were not ordered to pay the other side's costs.

Comments

It is often not obvious which points will be the best runners at the beginning of a case. By the time evidence is exchanged, the parties should have a much clearer understanding of the relative strength and weaknesses of the case, but by then a large proportion of the costs dealing with each point will have been incurred by the other side. If any "bad points" are dropped at this stage, it is likely to result in negative costs repercussions in any event. However, the decision not to award costs in MMI Research went beyond merely not awarding costs for the "bad points"; the claimants were denied their costs on the successful points too.

Clients with deep pockets may be happy to take the risk of an adverse costs order for the peace of mind that no stone is being left unturned. However, it is not just a question of adverse costs orders; the legal team will need to dedicate time and effort to each claim and there is value in assessing at an early stage where the strengths in the case lie so as to focus resources appropriately.

Beatriz San Martin, Senior Associate and Adam Gamsa, TraineeIP Protection and IP Enforcement and Litigation at Fieldfisher.

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