Kwikbolt v Airbus: transfer from IPEC to Patents Court
The English courts offer a two tier solution for the resolution of patent infringement disputes, the Intellectual Property Enterprise Court (IPEC) and the Patents Court. Broadly, the former is aimed at small to medium sized enterprises (SMEs) and/or non-complex claims, with the latter addressing all other claims.
The principal features of IPEC are its streamlined procedure (including limits on evidence), two day trial, and, if successful, cap on costs recovery (of £50,000) and damages (of £500,000). There are a number of strategic implications to this, depending on the circumstances. For patentees who are SMEs, it may mean some costs certainty. The cost of litigation may be lower and the potential exposure to an adverse costs award (if unsuccessful) will be limited to a maximum of £50,000. For larger companies, the limit on evidence and trial time can be a concern. Further, it may still incur significant costs successfully defending the litigation, but only be able to recover up to £50,000. The limit on damages is also of little solace as it is the injunction which will be of significant cost.
As a result, the SME patentee’s choice of the IPEC as the forum for the litigation is often contentious. This is particularly so where the larger company may be incentivised to transfer the litigation to the Patents Court, remove the costs certainty and price the SME out of the litigation. The issue recently arose in Kwikbolt v Airbus.
Under UK accounting guidelines, Kwikbolt was classified as a micro-entity, with five employees, a turnover of less than £632,000, and balance sheet total of less than £316,000. By contrast, Airbus was part of the Airbus Group, which had annual revenues of £55.4 billion.
Kwikbolt was the proprietor of GB 2,455,635, which claimed an invention entitled "removable blind fastener", namely a device for fastening one workpiece to another which can be inserted and fixed from just one side of one of the workpieces (rather than a nut and bolt type fastener which requires access to both sides). The single example of their use given in the patent was for applying a skin to an aircraft wing frame. Airbus used a blind fastener made by a US company called 'Centrix'.
Kwikbolt alleged that the keeping and use by Airbus of the Centrix fasteners infringed the patent. It commenced proceedings in the IPEC. Airbus applied for the claim to be moved to the Patents Court.
The judge hearing the application, His Honour Judge Hacon, summarised the principles which cover transfer from IPEC as follows:
"... 'When deciding whether to order a transfer of proceedings to or from the Intellectual Property Enterprise Court the court will consider whether –
(1) a party can only afford to bring or defend the claim in the Intellectual Property Enterprise Court; and
(2) the claim is appropriate to be determined by the Intellectual Property Enterprise Court having regard in particular to –
(a) the value of the claim (including the value of an injunction);
(b) the complexity of the issues; and
(c) the estimated length of the trial.”
The court summarised the facts as follows:
- The patent in suit was not complex, with only one independent claim which had twenty-one integers;
- The case for infringement had been pleaded in detail;
- Airbus admitted the relevant alleged infringing acts;
- Airbus admitted that fifteen of the twenty-one integers were present; and
- Airbus’ challenge of the validity was confined to lack of novelty and inventive step over three pieces of prior art and common general knowledge as well as a plea of insufficiency.
The court found that such a case could be dealt with within a two day trial, extended to a three day trial if necessary.
In response to Airbus’ argument that any judgment awarded would cause significant damage and the claim, therefore, should be transferred, His Honour Judge Hacon held:
“In any event, it seems to me if an injunction would be damaging, it does not follow that this case must be heard in the Patents Court. Exactly the same damage would be caused by an injunction granted in the patents court. As I have already indicated, the effect of an injunction would only be relevant to the issue of transfer if there was a realistic risk that Airbus' ability to argue its defence to the claim for patent infringement would be significantly limited if the case were heard in this court. I have no doubt that it would not.”
The court concluded, therefore that the application should be rejected and the claim should remain in the IPEC. In closing, his honour Judge Hacon made the following comment:
“There can be no doubt whatever that there is an overwhelming imbalance of resources as between Airbus and Kwikbolt. Experience also teaches that statements of costs in the Patents Court tend to branch out and blossom marvellously when compared to statements of costs for equivalent proceedings in IPEC. It is not unrealistic to suppose that the costs may increase by some hundreds of thousands of pounds. In fact, this is even part of Mr Ward's argument. He made a point of asserting that the Patents Court is seen as providing the Rolls Royce of English proceedings, to which Airbus is entitled. Rolls Royces are no doubt reassuringly expensive to run.
A very small enterprise like Kwikbolt is bound to be prejudiced if it has to face the higher costs of the Patents Court.”
The judgment demonstrates the viability of IPEC as a forum to resolve patent disputes and the judicial commitment to maintaining it as a forum for SMEs to litigate cost effectively.