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10.Is there anything else?
Is there anything else?
Coverage
The need to prepare a memorandum of advice before a meeting with the client will be discussed.
After you have read this chapter you should be aware of:
2. What should be in the memorandum.
3.Options you may wish to bear in mind.
The final part of the paper is a memorandum of advice, and the syllabus says that in the memorandum you should:
a. Summarise your conclusions from your analysis. b. Based on your conclusions, recommend the most appropriate course(s) of action. c. Justify the recommended course(s) of action. d. Indicate where further information is needed. e. Indicate other practice points that may be raised by the situation.
However, there may be some merit in also looking at the marking scheme for the P6 paper sat in 2014 and the FD4 papers from 2015 onwards, where typically there are either few or no marks for summarising what your analysis has been in the infringement, novelty and inventive step sections – so keep any summary brief. There are usually marks for summarising your answer at the end of each respective section (i.e. your infringement conclusions at the end of the infringement section), but the examiners will award these in the Advice section if you haven’t concluded at the end of the respective sections earlier in your answer. The majority of the marks available are for dealing with a typical set of issues that arise in infringement situations and giving a recommended course of action once the facts of the situation have been considered alongside your analysis in respect of infringement and validity.
You should ‘plan’ your memorandum with both the syllabus, and the published marking scheme in mind, as a pretty standard set of issues will arise in each paper depending on the
exact situation and so you can almost have a checklist (in your head!) of what issues that you need to raise and discuss in your advice section.
Before you start the memorandum it you should look again at the client’s letter, and any instructions given by the examiner to see if you were asked to comment specifically on any particular point. The examiner may have asked you to consider the situation if the infringer starts importing a certain product, or the patentee may have said that he proposes to telephone the infringers ‘ to tell them to stop infringing or else’ ( and when you see phraseology like that the word ‘threats’ should be in your mind immediately). You need to ensure that in the memorandum you cover all of the points that the examiner or client have raised or hinted at in this way.
It will be best to follow the general ‘shape’ of the memorandum dictated by the syllabus. Start with a very brief summary of your conclusions regarding infringement, novelty and inventive step, just listing the claims that are infringed, the claims that are novel and the claims that are inventive. If you managed to devise a good saving amendment, just mention that fact. At this point also state if the patent is in force (it usually is) but consider whether any renewal fees should have been paid and state either (a) that these do not need to have been paid yet; or (b) that they are due and it needs to be verified that these have been paid; or (c) the letter may state that the renewal fees have been paid so this can be repeated at this point.
You might now list any relevant facts, such as the fact that the infringer is infringing, whether an interim injunction might be possible (briefly indicating your reasons), and the fact that the patent is valid, or can be made valid, or seems hopelessly invalid. There will be marks for setting out a reasonable amount of detail on whether an interim injunction might be possible or not, but do not go mad.
If you need more information, (especially if you suspect or know that the information is available but is just not in the papers provided as the question) now is the time to ask, but ensure that the data you request is relevant to the advice you will give. Preferably explain how the answer to each question you ask will change or confirm your assessment of the situation.
If there was one ‘balance’ point that was very difficult to decide, and which, had you decided the other way would have led to a very different result, mention it, and explain the consequence of a different conclusion.
If you have time you might now list courses of action that passed your mind but were rejected, giving your reasons. You might explain that ‘An interim injunction is not
recommended because, although the infringer is new in the market-place they are not selling in competition with you, because you make safes, and they are providing fireproof doors for ships, and so they are not damaging your business’.
Finally, you can set out your preferred actual course of action, giving your reasons why, not forgetting to indicate the possible responses or reactions that might be made by the other party.
As you do all of this, remember to mention any ‘practice points’ such as critical times, or things such as cross-undertakings in damages.
All of this seems quite straightforward, but there are a lot of factors to bear in mind. Remember that the proposed course of action should reflect the client’s needs and priorities (which may be expressed, or which may be an inevitable consequence of the information provided), and should take into account risks and costs. Do not be frightened to outline an
expensive course of action to a small client, such as applying for an interim injunction in appropriate circumstances but do explain the expense, and the risk of ‘costs’ if you lose in any litigation. Remember also that the course of action must be practical and achievable.
Dates are of importance and should not be overlooked. Always look to see how long the patent has to run, or how long since it was granted.Sometimes the patent only has a short period of time to run, which means that you can suggest to a client who is approaching you before marketing a product that the launch date should be deferred until the patent has lapsed. If the patent was granted three or more years ago, is there a possibility of a compulsory licence being granted? Clues for this situation are references such as ‘I have never seen anything like this before…’ Or ‘I was surprised to find that a patent existed…’
Are there any possible prior art items that are described but which do not have a date? Here the question may make it clear that there is no known date. For example the client might say
something like ‘I have no idea how long M… has been offering these items’ and the patent may be relatively new. Of course, if the item had been marketed by M… for a long time it would be available as an anticipation of the patent, but on the other hand, if it was only marketed at a later date, then it would be a potential infringement. This would be a real ‘balance’ question which could not be decided on the information provided, and it would really be essential for further investigations to be made to establish the truth of the situation.
Is it possible to design around the patent? This is something that is often overlooked, but which may prove to be a very simple solution to the problem.
While it is not really advisable to go into the examination with draft paragraphs for the letter firmly in your mind, nevertheless, you should have some idea of the sort of advice that you might be giving.
If you are advising the patentee, if an amendment is necessary or desirable, then it may be prudent to make the amendment first, in the hope that the alleged infringer does not become aware of the amendment being made and does not oppose the amendment.However, if for some reason speed is of the essence, then the amendment may have to be made during the relevant proceedings.
Also, if acting for the patentee, consider whether the infringer is really damaging the patentee in any way. Possibly the infringer is operating in a parallel art, and the activities of the infringer will not actually damage the profitability of the patentee in any way.
In such a situation a commercial arrangement would be much more lucrative than litigating. So, for example, a licence on even a modest royalty would probably bring in more overall than would be gained by going to court and getting an injunction, costs and an account of profits. There would, of course, be no mileage in going for damages if the patentee had suffered no actual damage, and even if costs were awarded at the end of the day they would not cover all of the trial costs. The amount to be gained in an account of profits would be uncertain to predict and may be desperately small. A licence could be put in place quite quickly, at a low cost, and would bring in some royalties.
Perhaps a more adventurous commercial solution would involve the client actually supplying components or sub-assemblies to the infringer.
It is very often the case, in real life as well as in FD4, that the best way forward does not actually involve litigation. So, always try and see if there can be any sort of negotiated
settlement. Litigation is not cheap. There have been reports of High Court infringement cases where the solicitors’ costs on just one side have been in excess of £3m. In 2006, The Gowers Report included a statement that a firm challenging a patent (in the High Court) could expect to pay £750,000 for a simple case – with a risk of paying the costs of the other side if they were not successful (see page 68 of The Gowers report, November 2006 – www.hmtreasury.gov.uk/d/pbr06_gowers_report_755.pdf). This general level of expenditure was confirmed in 2010 in the Review of Civil Litigation Costs by Lord Justice Jackson (www.judiciary.gov.uk/about_judiciary/cost-review/jan2010/final-report-140110.pdf –see especially page 50 and Appendix 3) which indicated that in 15 intellectual property cases the costs incurred by one party up to settlement or decision at first instance ranged from £196,000 to £1.54m, with the average being just under £700,000.There must be some commercial justification for incurring expense of this scale, especially as there is always a risk that the Court might not agree with your conclusions on the matter, and then the client faces the prospect of paying their own costs, and a proportion of the costs of the other party, with no benefit at all, if the case is lost.
Do not forget the Intellectual Property Enterprise Court. This Court has a multi-track and a small claims track. This means that there are two alternative procedures for making a claim in the IPEC. The IPEC multi-track has a limit on damages of up to £500,000. Costs orders will be made which are proportionate to the nature of the dispute and subject to a cap of no more than £50,000. The small claims track is for suitable claims in the IPEC with a value of up to £10,000. Costs orders on the small claims track are highly restricted.
Also do not forget that if both parties agree, infringement proceedings can be held before the Intellectual Property Office, but the available remedies are limited and do not include an injunction.
Typically, your initial thoughts would turn to trying to resolve matters by negotiation. Can your client do anything to help ‘the enemy’ that will not cost your client a lot? Could he supply or buy components? Promote the sale of the enemy’s product somehow? Give a cross-licence?
If there is no prospect of a negotiated settlement, then other avenues involving some sort of ‘pressure’ may have to be discussed, even if substantial costs may be incurred.
If you are beginning to move in this direction, then you may well need to consider whether the patentee is being damaged in an irreparable way, or whether damages and costs at the end of the day would be sufficient reparation. Here you will need to be able to understand the commercial situation facing the client.
Only if an ordinary trial will not be at all suitable should you suggest applying for an interim injunction.They seem to be granted only rarely now, as compared with the practice of former years, and you are most likely just to have a speedy trial appointed. Nevertheless, if the infringer is, for example, proposing a major marketing campaign, or if a lot of the patentees profits come from ‘consumables’ used with the patented invention, or if there are other circumstances that make an interim injunction desirable, then you should recommend it, briefly outlining the disadvantages, including the need for speed, and the cost consequences of that speed, and the need to provide a cross-undertaking in damages.
If, at the end of the day, an ordinary trial will prove to be sufficient, would there be any possibility of using the Intellectual Property Office opinion system? If both parties agree to this course of action, then a substantial cost saving can be made.
It may be worth advising the client not to communicate directly with the infringer to prevent the client from doing anything that could be considered to be a ‘threat’ actionable under section 70 of the Patents Act 1977.
If you are advising the infringer, if an amendment might be made that will put your client in a worse position, then, as a first step, you will need to watch the file, or file a caveat. You will then be told if an application to amend has been made, which would give you the option of opposing the amendment. This tactic will at least delay things, and may result in the amendment being refused.
You might briefly mention the possibilities of checking to see if there were any impermissible amendments, by conducting a file inspection or by comparing A and B publications. The validity of priority claims may also be checked if maintaining the claimed priority date is important to the validity of the claims. Of course, you may suggest carrying out additional prior art searches.
Again, you should initially explore any possibilities that do not involve litigation.You might have a mental check list of possibilities, including re-designing the product to avoid infringement, applying for a compulsory licence, deferring launching the product until the patent has expired, taking a licence from the patentee, offering to buy some of the major components of the infringing item from the patentee, or acting as importer or marketing agent for the patentee.
The memorandum of advice should be no more than a couple of pages long, and so you do not have time to ramble, and you do not have time to cover every possible course of action, so you need to select one or two possibilities, and explain to the client (and thus to the examiner) why you made that selection.
EXERCISE 8
Bearing in mind the papers of Exercises 4 to 7, consider this scenario:
Your client who was a sawblade designer in a bowsaw factory has been made redundant and is proposing to use his redundancy money to establish a business importing the sawblades of Figure 4. He thinks these blades are superior to any others on the market. His idea is to advertise on the internet, and when he has on-line orders for 50 blades he will order them at the wholesale price from the manufacturer (the proprietor of the European patent Application) in Iceland, who will send them directly to the customers. Your client is extremely surprised to get a letter from the proprietor of the patent only one day after he has launched his website saying that unless the website is taken down he can expect to be sued and there will be a claim for punitive damages.
What points would you mention in your memorandum of advice?
EXERCISE 8 – notes
Several ‘clues’ might have been seen and assessed before the client is given any advice.
The client seems to be short of cash, and has only just dipped a toe in the water, and so may wish to just abandon his business plan. If so, a letter explaining this to the patentee will suffice, especially if it is possible to point out why the patent is invalid or not infringed.
If the client wishes to continue with his business, what are the options? To show that the patent is invalid and/or not infringed it would be necessary to apply to the Court for a certificate of noninfringement. Costs? If the case is defended, the costs may well be measured in hundreds thousand pounds. One could apply for a declaration of non-infringement from the Intellectual Property Office, which would be less expensive, or apply for an Intellectual Property Office Opinion, at very much less cost, but that is not binding. Mediation might be a possibility, but only if the other side agrees to this procedure.
Is the ‘threat’ of the letter ‘groundless’? Can the patentee really apply for punitive damages?
But then again, how old is the patent? Does the fact that the client thinks that the blades of Figure 4 are superior to anything else on the market have any relevance? The client used to design blades, so must have an eye on what is on the market? Could it be that the blade of Figure 2 is not on the market? Have you realised yet that we are possibly in a compulsory licence scenario?
The fact that the infringer is an ex-employee does not seem relevant in this question. The employee does not seem to be using any confidential information, although it would be wise to check the contract of employment to see if there are any restrictive terms.
Although the ex-employee is not actually manufacturing, he is ‘offering to dispose of’ the product, and so is committing a potentially infringing act. It may well be that the Icelandic Company is also a direct infringer, as they are the ones who are ‘importing’, although the ex-employee and the Icelandic company may be joint tortfeasors.
EXERCISE 9
You are approached by your client who manufactures bowsaw blades. He filed his own application and obtained the British patent four years ago. He explains that in recent weeks a new blade (as shown in Figure 4) has appeared on the market, which is being imported from China at a rock bottom price. He believes that his ex-marketing manager, who left his company a month ago, took a copy of his client list, and has been contacting them to supply them with the Chinese blades. This has totally destroyed your client’s turnover, as his only product is the blade of Figure 2. He is concerned that if the sales of the Chinese product continue he will have to close his business.
What points should be covered in the advice to the client? Write some notes before you turn the page.
EXERCISE 9 – notes
Here we are advising the patentee, rather than the infringer, and although our comments concerning infringement, validity and amendment are the same, the advice will be different.
Ideally, one would wish to amend the patent before starting any action, so that the amendment can be completed before the infringer is aware of the situation, so that the infringer will not oppose the amendment. But the situation here is more complex, as there is no time. It takes several months to complete the formal procedures for post-grant amendment, and if we follow that route the business will be closed.
One could apply to the court for an interim injunction. If this is done, the application to amend should be filed at the court at the same time, and a full explanation should be given as to why the amendment is requested, how the amendment will overcome the problems, and why the amended claim is infringed. It will cost in the order of many thousands of pounds, and if the injunction is not issued swiftly, or if the injunction is contested and there is a full hearing, then some hundreds of thousands of pounds should be the budget figure.
But whom should we sue? Here we do not know the answer, as we do not have enough information. Are the blades being sent straight from China to the customers? If so, it may be that the only person to sue is the ex-sales manager, who seems to be ‘offering to dispose of’ within the jurisdiction. Any injunction would be personal to him, or to his company, and so might be side-stepped by the Chinese. The situation would be different if the Chinese import to England by the container-ful, and then have a distribution network here.
Is there anything we can do about the use of the client list? This is not immediately in the remit of a patent attorney, but you should be able to see that there might be something that could be done, especially if this is mis-use of confidential information, or breach of contract. The client should be alerted to the situation.
