Posted on 5/7/2013

Virgin vs. Zodiac – Patentees cannot now recover pending damages from subsequently invalid UK patents

In a recent decision handed down by the Supreme Court, the time-honoured UK tradition of a patentee being able to claim pending damages from an infringer despite their patent being subsequently revoked (and so deemed never granted in the first place), has been quashed.

Until the decision in Virgin vs. Zodiac the UK Courts used the so-called Unilin principle to enable a patentee to proceed with an inquiry to, and obtain the payment of damages, even if the patent were later held to be invalid.

The principle goes back more than 100 years to Poulton v. Adjustable Covers which was decided by the Court of Appeal in 1908, and followed by Coflexip v. Stolt decided in 2004 and Unilin v. Berry Floors, decided in 2007.

These Court of Appeal cases were all based on the premise that a final decision that a patent was valid and infringed created an “estoppel” and that no subsequent change of circumstances could overturn the order for damages.

Lord Sumption in Virgin vs. Zodiac considered this presumption and decided that the estoppel was not absolute and that a change in circumstances could remove the effect.

The decision of the Supreme Court was never in doubt after Lord Sumption stated at the beginning of the trial:

“In this case, Virgin Atlantic Airways Ltd wishes to recover damages exceeding £49,000,000 for the infringement of a European Patent which does not exist in the form said to have been infringed.”

This decision now means that even if a UK patent is deemed infringed, if the patent is subsequently revoked, then the alleged infringer will not have to pay pending damages, and may eventually be able to claim back damages already paid.

The UK Courts are now also more likely to stay proceedings if there is an opposition against a corresponding European Patent.

Wilson Gunn