The Legal 500

This article discusses the issues raised by the recent BlackBerry patent infringement litigation in the US, the UK and Germany, including: the emergence of patent trolls; the nature of litigation proceedings in the UK; the Gowers Review of IP rights; and, finally, the question of expert witnesses.

Background

The litigation concerning the BlackBerry technology in Germany and the UK demonstrates how parties can play the different European jurisdictions to their advantage.

The main parties in the litigation were Research in Motion (RIM) and InPro Licensing Sarl (InPro). RIM is the Canadian manufacturer of the well-known BlackBerry handheld device. It supplies the devices directly to end-users, entering into agreements with mobile communication network providers through whose networks the BlackBerry's features can be accessed. InPro is a Luxembourg patent and licensing company with a European patent for a

'... proxy-server system for enhancing functionality of computers accessing servers on the internet'.

Litigation in Germany

In early 2005 InPro commenced infringement proceedings in the Düsseldorf District Court against RIM's customer, T-Mobile, alleging that T-Mobile was infringing InPro's patent by offering and implementing the BlackBerry system in Germany. RIM later intervened in the proceedings to support T-Mobile, and a trial date was set for January 2006.

In Germany, unlike in most other European jurisdictions, there is a dual system for patent disputes: the district courts decide infringement issues, whereas the Federal Patent Court rules on validity issues. As a general rule, the district courts tend to deal with infringement proceedings more quickly than revocation actions in the Federal Court. The effect of this is that a finding of infringement may be made, and an injunction granted in Germany, even though an invalidity action is still pending. The district courts can grant a stay of the infringement action if there is strong evidence that the validity action will succeed, but this will normally be refused if the only attack on the patent is based on prior art already considered by the Patent Office.

RIM's response in the UK

Although T-Mobile and RIM commenced revocation proceedings in the Federal Patent Court, they were concerned that these might not be heard until the Düsseldorf District Court had made a ruling on infringement. Even though an injunction granted by the District Court would only apply in Germany, this could have negative repercussions on RIM's entire business, since a BlackBerry can be used anywhere in the world provided it is in range of a mobile network.

RIM therefore commenced proceedings in the Patents Court in London, seeking revocation of the UK element of InPro's European patent. The rationale behind this decision was that, although German courts are not bound by a decision of a UK judge, such foreign judgments can be persuasive. For the decision of the UK court to have this effect, the UK action had to be heard before the Düsseldorf Court reached its decision on infringement and an injunction. RIM applied for and was given permission to use the streamlined procedure (see box, p67).

The UK trial was heard at the end of 2005, by which time Laddie J, who heard the application for the streamlined procedure, had retired from the bench. Pumfrey J handed down his judgment on 2 February 2006, holding that InPro's patent was invalid and thus finding in RIM's favour.

Meanwhile, in Germany, just days before Pumfrey J's judgment was handed down, the validity issue was heard on 25 January 2006. This hearing took place sooner than expected, since the technical judges specialising in telecoms in the Federal Patent Court were available. In view of this, the Düsseldorf District Court decided to delay its judgment on infringement. Although Pumfrey J's judgment was not available to the German judges, the Federal Patent Court came to the same conclusion, ruling that InPro's patent was invalid and revoking it.

Unusually, in the RIM litigation the Federal Court issued its validity decision before the District Court reached its infringement decision; had it not done so there could have been a real injustice if an injunction had been ordered on a patent that was invalid. From the patentee's perspective, the prospect of an injunction without an investigation into validity can make commencing infringement proceedings in Germany a very attractive proposition, especially if it appears that the primary defence will be one of invalidity. The prospect of an injunction can put enormous pressure on the alleged infringer to settle. Conversely, it exposes the patentee to the risk that, if the Federal Court later finds the patent invalid, the patentee has to recompense the injuncted party for the losses suffered as a result of the injunction. In the RIM litigation, such costs could have been substantial.

US Patent infringement case

RIM has also been on the receiving end of patent infringement litigation in the US; in this case the patentee was NTP Inc. After the initial trial and appeal went against RIM it was likely that the Court would order an injunction, despite RIM seeking a

re-examination of the patent at the US Patent Office. This mirrors the position that RIM faced in Germany, with the possibility of an injunction prior to a final determination of validity. Unlike the position in Germany, however, in the US RIM had already challenged validity in the courts. The judge said of RIM's application to stay the infringement proceedings:

'Valid patents would be rendered meaningless if an infringing party were allowed to circumvent the patent's enforcement by incessantly delaying and prolonging court proceedings, which have already resulted in a finding of infringement.'

Facing the possibility of an injunction in the US, RIM settled the proceedings for $612.5m.

Patent Trolls

NTP is one of a new breed of patent holders often called patent trolls. A patent troll is a company that merely owns patents and obtains revenue through the licensing of those patents. The company does not make revenue from its own products, and as a consequence does not face the risk of retaliatory patent infringement actions. The best patent trolls build up a portfolio of patents in a particular area, making it difficult for infringers to avoid the panoply of rights, especially if those patents cover agreed standards. To avoid patent trolls, companies need to reduce the patent trolls' ability to acquire patent portfolios by either filing their own patent applications or by putting the technology into the public domain.

Expert Witnesses

An unusual facet of the judgment in the UK BlackBerry action was the very strong criticism made of Professor Eisenstein, the expert witness for InPro. Eisenstein was held to be a very distinguished person: at one stage he was president of the Institute of Electrical and Electronics Engineers (IEEE), one of the largest and most well-respected engineering institutions in the world. Eisenstein had acted as an expert witness on about 50 previous occasions, covering subject matters as diverse as remote controlled garage doors and the siting of mobile phone masts. It became apparent, however, that he did not have direct relevant experience of the subject matter of the patent under dispute. As the judge said, however, this is not of itself a problem, as:

'... a witness who lacks expertise in the particular area with which the patent is concerned can read himself in to the state of the art at the priority date and can be of great assistance even if he lacks contemporary experience, his general knowledge providing a framework for his analysis.'

The judge went on to conclude, however, that Eisenstein had not read into the position properly.

The judge was also highly critical of Eisenstein's behaviour during cross-examination, concluding that he was prone to exaggeration, was obstructive and repeatedly quibbled. Ultimately, the judge concluded that 'Professor Eisenstein was simply an unsatisfactory expert'. The judge therefore disregarded InPro's expert evidence and, in so doing, was deprived of any expert evidence contrary to that being advanced by RIM. One can only speculate as to the impact this had on the case and whether the validity of InPro's patent may have been upheld had InPro engaged a different expert witness.

Engaging the correct expert witness can be critical to success or failure in a patent infringement action. The reality is that the further the expert witness's experience is from the relevant technical area, the more they stand to be criticised for lacking the relevant expertise.

Finding an expert witness with appropriate technical expertise and an appropriate demeanour can be difficult. The problem is compounded by the fact that, frequently, those with the right technical expertise still work in the sector and are likely to have allegiances to one of the parties, or competitors and customers and therefore do not wish to be involved. To avoid accusations of bias, it would be best to find someone who has left the industry, for example, through retirement. It is the case, however, that many of those working in young industries (such as internet-based technologies) are themselves young, and many years from retirement.

Given the difficulties and time involved in finding a suitable candidate, it is prudent to locate and engage an expert witness before commencing patent proceedings. This also has another important benefit - in the absence of an independent expert witness, parties will tend to provide their own opinions on issues such as infringement and validity. Often such opinions can be somewhat over-enthusiastic, which can induce a party to commence proceedings only to find that their opinions were misguided. By then it can be very difficult to back out of the proceedings without losing costs, and possibly without losing the patent.

Conclusion

The various BlackBerry cases have together illustrated many of the current issues facing IP rights holders: how to use the different jurisdictions to best advantage; the emergence of patent trolls; the importance of choosing the right expert witness; and in the UK, the continual efforts being made to reduce litigation costs while maintaining flexibility.

By David Knight, partner, and Louisa Albertini, solicitor, in the IT/IP Dispute Resolution group at Field Fisher Waterhouse. The firm is part of Isosceles, a collaboration between patent attorneys, Mathys & Squire and Field Fisher Waterhouse, which provides a single resource for patent services.

 

Case refs

Research in Motion v InPro Licensing SARL (German Patent Court, 27 January 2006 (oral judgment))

Research in Motion UK Ltd v InPro Licensing SARL [2006] EWHC 70 (Pat)

Mayne Pharma Party Ltd and another v Pharmacia Italia SpA

[2005] EWCA Civ 137

Jerome Canady v Erbe Electromedizin GmbH and others

[2006] EWHC 2946 (Pat)