Patents
Posted on 27/7/2021

AutoStore says ‘Let’s ‘Av Ocado’

We examine the ongoing patent battle between Ocado & AutoStore.

In October 2020, AutoStore, a Norwegian robotics company commenced legal action against the British online supermarket group Ocado for allegedly infringing AutoStore’s patents. Ocado promptly countersued AutoStore, accusing them of infringing Ocado patents.

Ocado uses robotically operated warehouses which have led the company to partnership deals with large overseas supermarket chains and has led to Ocado being valued on the UK stock market at over £20 billion.

As a part of this ongoing litigation, Ocado requested an interim injunction in the English High Court to prevent the disclosure of certain evidence in a US lawsuit with Autostore.

Interim injunctions (sometimes referred to as preliminary injunctions) are often sought in IP litigation. They are normally sought in the form of a prohibitory injunction, which prohibit a person from doing an act, which can be anything from a new product release or press release, to continuing sales of a product (only in specific circumstances), to destroying property which could be evidence in an action.

In order to understand their use in IP litigation, it is important to understand their advantages and disadvantages, as well as the basis upon which they can be obtained.

Interim injunctions are usually sought early in proceedings and as their name suggests, remain pending for a period, usually until there is a final decision by a court.

Interim injunctions are only granted at the discretion of a court, which means that the court must be persuaded to grant an interim injunction.  The decision in the UK will be based on a number of factors, with any delay by the party seeking the interim injunction usually seen as fatal to the grant of the injunction. So, make sure that you seek to prevent the act as soon as possible.

An interim injunction can also be issued without notice.  Under normal circumstances, a copy of the application for an interim injunction must be served on the other side as soon as practicable after it has been filed, and at least three days before the matter is due to be heard. However, this period can be varied if the matter is urgent.

An interim injunction will usually only be issued without notice if there are ‘good reasons’ for not giving notice. The best reason for not giving notice is a situation where the giving of notice would nullify the effect of the interim injunction.  The typical case that is seen of without notice interim injunction is that of a search order, where giving notice of an application for a search order gives notice to the party as to what is being sought, giving time to that party to prepare for a search.

Regardless of the specific type of interim injunction sought, a court will make the decision as to whether an interim injunction is issued according to a set of guidelines named after the legal case in which the guidelines were laid down, the case of American Cyanamid.

There are commonly three guidelines with an informal fourth guideline sometime used (the ‘any other factors’ guidelines). The three main guidelines are:

  1. Is there a serious issue to be tried?
  2. Would damages be an adequate remedy?
  3. Where does the balance of convenience lie?

Is there a serious issue to be tried?

It is enough at the interim injunction stage to establish that the claim has substance, it is not necessary to establish that the claim would be or is likely to be successful.  An application for an interim injunction will only fail this requirement is there is ‘no real prospect of success’.

Would damages be an adequate remedy?

This is considered from the side of each of the parties, but in business cases, it is often found that damages will not be an adequate decision.  Issues such whether as can the party pay the damages, the actual financial value of damages that will be suffered, and whether there will be irreparable damage suffered by either allowing the act to continue or by preventing it, are considered under this guideline.

If the interim injunction is sought to protect a business, then it is more likely that this guideline will be satisfied.

Where does the balance of convenience lie?

This guideline is best summarised in a famous statement by Staughton LJ in Lansing Linde Ltd v Kerr [1991] 1 WLR 251, CA:

the main question is then one of lesser evil: will it do less harm to grant an injunction which subsequently turns out to be unjustified, or to refuse one if it subsequently turns out that an injunction should have been granted…

Virtually any factor can be taken into account in this consideration, and it is important to remember that it is the balance that is important, because the granting of an interim injunction is completely discretionary.  In situations where there truly is a balance on both sides of the case, the court will act to maintain the status quo in most cases, although even this is a matter for argument; for example, the status quo from what date?

Although the above three guidelines are most often used and referred to in judgements on the granting and denial of interim injunctions, it is important to remember their discretionary basis and that a great deal of flexibility is accorded to judges making decisions on interim injunctions.

If an interim injunction is not complied with, the court will normally enforce the injunction by issuing an order for contempt of court which usually carries a penalty of prison time, although a court may also issue a fine or order confiscation of assets depending on the nature of the injunction and the seriousness of the non-compliance.

Finally, an injunction can be discharged at the court’s discretion when the matter next comes before the court, usually if it has served its purpose.

It is also vitally important to remember that while the above principles apply in the UK (and some other jurisdictions with similar legal basis), it is not necessarily the case in all countries.  For example, in January 2021, a German court challenged the long-standing practice requiring the claimant of a preliminary injunctions to demonstrate sufficient prospects of validity of a patent-in-suit.

The German court thought that the practice discriminates against patentees of newly granted patents (because they may not have had time to be successful in challenges or to become accepted in the relevant field), and asked the European Court of Justice (“CJEU”) to decide whether this is in line with European Law.

So, not only is the situation possibly different in different countries but it may continue to change over time.

What is clear is that the interim injunction is a valuable tool in the enforcement of intellectual property rights and will continue to be in the future, but like anything, if you want to play the game, you need to know the rules! Please contact one of our attorneys if you have any questions about this case or need advice on patent infringement.