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05 April 2021
In its first patent decision of 2021 (IPCom v Vodafone  EWCA Civ 205), the Court of Appeal narrowed the scope of the rarely invoked Crown use defence to patent infringement.
So far, the decision has avoided much comment. This article reports the court's findings and considers the decision's implications, which may extend beyond the telecoms industry to other areas, such as the life sciences sector, which is particularly significant in the context of the COVID-19 pandemic.
IPCom was a non-practising entity which acquired a portfolio of telecoms patents from Robert Bosch in 2007. Over the course of the decade prior to the case, it actively enforced some of these patents against several mobile phone manufacturers (eg, Nokia and HTC) across Europe and the United Kingdom. This case against Vodafone concerned a patented method for granting authorisation to a mobile device to access a given telecoms channel at a particular time.
This technology is used in the United Kingdom during emergency situations under the Mobile Telecommunications Privileged Access Scheme (MTPAS). The MTPAS gives the network at a base station priority access to emergency services' mobile phones through an identifying class which is assigned to such phones by their SIM card. Under the MTPAS, a request that emergency responders be given priority access to the network is sent by a senior police officer to mobile network providers.
In January 2020 (IPCom v Vodafone  EWHC 132 (Pat), the High Court held that the patent (as conditionally amended) was valid and essential to the 3G (Universal Mobile Telecommunications Service) telecoms standard. It determined that some of Vodafone's activities infringed the patent but others did not, based on the judge's construction of the claims and the Crown use defence. Both parties appealed.
The Court of Appeal heard various arguments, including those regarding the High Court's findings on:
However, this article focuses on the Court of Appeal's consideration of the Crown use defence.
Sections 55 to 59 of the Patents Act 1977 relate to the use of patented inventions for services to the Crown (ie, the government). Section 55(1) of the Patents Act provides the Crown use defence to patent infringement, which may apply where a government department, or any party authorised in writing by a government department, infringes a patent without the patent holder's consent for services of the Crown. Section 55(4) of the Patents Act provides for compensation payable to the patentee under terms agreed with the government. Notably, authorisation can be given retrospectively.
Section 56(2) of the Patents Act provides that the Crown use defence can be used for:
Section 59 of the Patents Act supplements these provisions during times of emergency, which include circumstances relating to the effective prosecution of war and the maintenance of supplies and services which are essential to the life of the community.
At first instance, Mr Recorder Douglas Campbell QC (sitting as a judge of the High Court) held that Vodafone's use of the relevant access control mechanism when responding to an MTPAS request was covered by the Crown use defence.
The parties agreed that Vodafone had had written authorisation from the Crown to provide priority access to its network to the emergency services under the MTPAS scheme, but disagreed on two key issues.
What constitutes Crown use?
The first issue concerned whether Vodafone's use of the invention in response to an MTPAS request fell within the scope of services of the Crown. IPCom argued that it did not because Vodafone's activities were not covered by the list of activities which constitute services of the Crown provided by Section 56(2) of the Patents Act.
However, the judge agreed with Vodafone and the comptroller, whose views had been sought because the case concerned the public interest, and found that the word 'includes' in Section 56(2) of the Patents Act indicated that the list was non-exhaustive and not limited to the provisions of Section 59 of the act.
Further, the judge held that Crown use need not be directly for the benefit of the Crown. He held that 'Crown use' may comprise use by or for the protection of Crown services. Therefore, the operation of the system to fulfil an MTPAS request was use for the services of the Crown because it had been triggered by a request from a senior police officer who had been operating under governmental authority for the purposes of:
Authorisation to infringe?
The second area of dispute concerned whether an authorisation to perform a certain act implied an authorisation to infringe a patent that was not expressly mentioned within such authorisation.
In this case, the issue was whether the authorisation under MTPAS to provide priority access to the network for the emergency services amounted to an authorisation for Vodafone to infringe IPCom's patent, even though the authorisation did not mention the patent and, as Vodafone acknowledged, it had not been strictly necessary for Vodafone to infringe it in order to comply with the scheme.
Three alternatives as to the meaning of the phrase "authorised in writing by a government department" were put before the court:
While IPCom and the comptroller argued for the second option, Vodafone argued that the identification of every patent – particularly in the telecoms field, where many patents were potentially in issue – would place a significant burden on the Crown and that, therefore, the third option was correct. The judge agreed with Vodafone, holding that that the third alternative was the most natural reading of the provision and that which triggered the fewest questions.
He also noted that the burden should fall on the party which authorises the acts, not the party which conducts them. The judge opined that as long as there is written authorisation from the government to perform a relevant act, the legislation requires no further reference to an authorisation to infringe. Therefore, in his view, Vodafone did not have to show that it had been necessary to infringe the patent in order to comply with the government direction.
The High Court's decision caused concern about the extent to which the state could find itself liable for the actions of those who tendered services to it, particularly because the parties had agreed that methods of fulfilling the MTPAS request which did not infringe IPCom's patent were available to Vodafone. The judge's decision seemed to give complete freedom to infringers at the expense of the government.
Given the government's potential liability following the trial decision, the secretary of state for defence intervened in the appeal and agreed with IPCom's position that the judge had misconstrued the Crown use legislative provisions. Therefore, the issue centred again on the meaning of the phrase "authorised in writing by a government department" – specifically, what form of authorisation is required for this purpose.
The Court of Appeal upheld the trial judge's findings on all points apart from the Crown use defence. Giving the leading judgment, Lord Justice Arnold considered the legislative history and legal authority on Crown use and observed that a contractor "was acting for the Crown if the contract by necessary implication authorised the use of the patented invention". He concluded that the third interpretation was incorrect and provided 13 reasons for his decision that the second alternative was preferred. He noted that "[t]he authorisation must be an authorisation to do acts in relation to a patented invention, not merely an authorisation to do acts".
Vodafone's arguments emphasised the difficulty of conducting freedom-to-operate analyses, particularly regarding standard essential patent (SEP) cases. Arnold LJ acknowledged this, noting that it could be difficult to determine whether SEPs were essential to a particular standard. More broadly, he noted that the introduction of the doctrine of equivalents in UK infringement disputes had further complicated the determination of the relevance of any patent. Despite this, he disagreed with the trial judge and held that the onus remains on suppliers, which are better placed to conduct such analyses than purchasers, including the Crown, and that the Crown should not be unduly exposed to unforeseen liabilities.
It was the potential liability of the Crown, and other important public policy considerations, that evidently guided Arnold LJ's reasoning. The mechanism established in Section 55(1) of the Patents Act supports the overriding policy consideration of respect for private rights unless exploitation of those rights is in the public interest and only when appropriate notification and compensation is provided to the rights holder. Further, the Crown should not be unduly exposed to unforeseen liabilities by virtue of authorising agents to perform certain acts. This supports the narrow interpretation of the Crown use defence.
The more broadly that Section 55(1) of the Patents Act is construed, the more inconsistent it would be with the United Kingdom's obligations under Article 31 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, which limits the circumstances under which national law can permit the use of a private person's IP rights without their consent.
Crown use: rare and now narrow defence
The Court of Appeal has therefore clarified the law around Crown use such that only a narrow interpretation of the defence is permissible. This decision draws a clearer boundary around the circumstances in which the Crown use defence may apply. The Court of Appeal's preference for the second interpretation of the phrase "authorised in writing by a government department", which requires express authorisation to work the patent or to perform a particular act in circumstances where such act necessarily infringes the patent, is viewed more favourably among patent experts.
Governmental departments will welcome this decision. If the possibility of a broader defence remained, the government may have been open to a high number of compensation payments under the legislative regime.
This decision may put the onus on the technology's supplier (in this case, Vodafone) to be more proactive in identifying the correct rights and obtaining the appropriate authorisation to provide their services. In this case, both parties agreed that Vodafone could have complied with the MTPAS notice without infringing IPCom's patent. However, arguments concerning whether an authorised act necessarily infringes a patent remain possible and may surface in future cases where this defence is deployed.
COVID-19 pandemic: Crown jewel?
Although this case concerned the telecoms industry, the decision could have a broader impact on different sectors – significantly, regarding the COVID-19 pandemic. However, the court confirmed that Crown use should apply only to the narrowest set of circumstances and that it has no intention of increasing unforeseen liabilities for the government.
Moreover, the court understood that the Crown often contracts on terms that either expressly provide that no authorisation is granted under Section 55 of the Patents Act or that require the supplier to indemnify the Crown against any liability under such section. Based on such established practice, this case is unlikely to enable potential infringers to successfully deploy the Crown use defence, even for COVID-19-related patent infringement.
At the beginning of the first UK lockdown, many commentators believed that the rarely used Crown use defence may be invoked during the COVID-19 pandemic. Even if the circumstances of the Vodafone case did not fall within Section 56 of the Patents Act, Section 59 of the act provides for an even wider power where the government makes a declaration of emergency and the Crown use defence can be used more widely for the greater good. However, the government made no such declaration. This may have been because the pandemic was unprecedented and many organisations and patent holders pledged to avoid enforcing their IP rights to help bring it to an end.
This, along with the narrower interpretation approved by the Court of Appeal, means that the Crown use defence is unlikely to be invoked during the COVID-19 pandemic. However, this decision highlights policy concerns as to how it may be used in the future to avoid exploitation and protect the state from broad authorisations which lead to compensation claims, while also protecting IP rights. At the time of writing, the parties had not sought leave to appeal to the Supreme Court. However, given the public policy issues that it addresses, further consideration of this case would be unsurprising.
For further information on this topic please contact Mark Marfé, Sarah Taylor or Krishna Kakkaiyadi at Pinsent Masons by telephone (+44 20 7418 8250) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Pinsent Masons website can be accessed at www.pinsentmasons.com.
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