Smith & Nephew plc v ConvaTec Technologies Inc., England and Wales Court of Appeal (Kitchin, Briggs, Christopher Clarke LJJ), London UK, 30 July 2015, Neutral Citation Number: [2015] EWCA Civ 803

The Court of Appeal has stayed both an injunction and an order for delivery up or destruction pending the outcome of two decisions in relation to European Patent (UK) 1,343,510 (the “Patent”), firstly Smith & Nephew’s application for permission to appeal to the Supreme Court and, secondly, an EPO opposition.

ConvaTec’s Patent covers a process for the silverisation of fibres in wound dressings.  The Patent has been the subject of a series of decisions, initially in relation to validity (as reported on this Blog here and here) and subsequently in relation to infringement, including an application for a declaration of non-infringement (as reported here and here). The Court of Appeal decision on infringement overturned Birss J’s judgment as to the scope of a numerical range in the relevant claim of the Patent and concluded that Smith & Nephew infringed the Patent.  The resulting form of order could not be agreed by the parties and an application was made to determine various issues, including permission to appeal and a stay of the injunctive relief.

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Permission to appeal

The Court of Appeal refused to grant permission and stated that the approach to the interpretation of patent claims, as set out by the House of Lords in Kirin Amgen [2004] UKHL 46, applies equally to numerical ranges as it does to words and phrases.  However, the Court of Appeal recognised that the Supreme Court may take a different view and stated that there is a real prospect of an appeal to the Supreme Court.

Stay of injunctive relief

Smith & Nephew made an application for a stay of injunctive relief until the outcome of the application to the Supreme Court for permission to appeal, and any such appeal, and pending the outcome of the EPO opposition proceedings.  Smith & Nephew filed evidence that failure to grant a stay would cause significant harm to their reputation, would seriously affect their market position and may ultimately result in job losses and an inability to re-launch their product if the Patent was subsequently revoked.

The status of the opposition at the EPO is that the TBA initially held the patent invalid for lack of inventive step but remitted the case to the Opposition Division for consideration of the admissibility and allowability of various auxiliary requests.  By decision of 16 December 2014, the Opposition Division declined to admit further evidence on which ConvaTec sought to rely and revoked the patent.  The parties could not agree on the likely date of the TBA hearing of ConvaTec’s appeal, but the Court ruled that in any event it was very likely to take place by April 2016. 

ConvaTec submitted that a stay should not be granted pending the TBA decision as the English Courts had already made a finding as to the validity of the patent.  Further, ConvaTec said that by granting a stay, Smith & Nephew would have the chance to design around.  In addition, ConvaTec argued that the principle established in Adaptive Spectrum v British Telecommunications [2014] EWCA Civ 1513, that there is no need to offer a cross-undertaking in damages to cater for the possibility that the EPO might subsequently revoke or materially amend a patent, is equally applicable in this situation.  

The Court of Appeal concluded that the balance of justice lay in favour of suspending the injunction at least until the Supreme Court decides whether to grant permission to appeal, at which point the Supreme Court can decide whether a further stay is required. 

The Court found the following points to be particularly material: (i) the relatively short period that the injunction would be stayed if stayed incorrectly, (ii) that ConvaTec’s associated damages would be easily quantifiable; (iii) the severe and irreparable consequences to Smith & Nephew if the stay was wrongly granted; and (iv) that Smith & Nephew (but not ConvaTec) had been pressing for accelerated opposition proceedings at the EPO.  The Court also stated that Smith & Nephew should not be criticised for their conduct in seeking to clear the way and then, when those proceedings failed, seeking a declaration of non-infringement.  The Court further noted that ConvaTec had not offered a cross-undertaking in damages, although stated that this was not determinative.

The Court then considered whether also to link the stay to the decision of the TBA in the EPO opposition.  The Court distinguished the reasoning in Adaptive Spectrum on the basis that the patent in suit had already been revoked by the Opposition Division and the decision of the TBA was likely at most only a few months after decision of the Supreme Court on permission to appeal.  The Court concluded that it would be wholly disproportionate not to grant the further stay and that such a suspension should be granted in the interest of fairness and equity.  In concluding this, the Court of Appeal noted that the matters referred to in considering the grant of a stay pending the decision of the Supreme Court in relation to the permission application were equally apposite to the further period between the decision of the Supreme Court on permission and the decision of the TBA. 

The stay was therefore granted, but on the condition that Smith & Nephew undertook to continue to press for expedition in the EPO proceedings and prosecute their application for permission to appeal to the Supreme Court with all due diligence.  The parties were given liberty to apply to a Patents Court judge for further guidance if the stay appeared likely to extend beyond April 2016.

Read the judgment here.

Headnote by Thomas Hendicott, Bristows LLP. 

Smith & Nephew is represented by Bristows LLP in the above dispute, but the author has had no involvement.