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Exclusive interview: the ‘Crown use’ cliffhanger where the govt was the real winner

A longstanding and public patent dispute came to an end last week when the UK Court of Appeals ruled that Vodafone had infringed on a standard-essential patent held by IPCom while developing a telecoms solution for the government.

The final ruling went against Vodafone, but interestingly, the case tested the rules around a rarely seen defence of ‘Crown’s use’. In an exclusive interview with WIPR, a lead lawyer in the dispute says had Vodafone won, the government may have faced “unforeseen” costs over its pandemic response.

Emergency system

Vodafone had been selected by the government for the Mobile Telecommunications Privileged Access Scheme (MTPAS), which saw the government request Vodafone to develop a system that would give emergency services precedence on network channels during high-traffic periods. When trialling the system, Vodafone was found to have infringed on an IPCom standard-essential patent (SEP).

In court, Vodafone took a rare decision to argue ‘Crown use’—a move that tested the rules around the state’s use of privately owned rights.

A Crown use defence describes when a government, or most likely a private organisation authorised by the government, infringes a patent without the patent holders consent in service of the state. In essence, the government has free reign to infringe on IP in emergency situations, as long as it compensates the rights owner afterwards.

Vodafone claimed that it had infringed on a 4G-related patent held by IPCom purely in service of the Crown, a plea that was successful in the first High Court hearing in January 2020.

When this plea was heard, questions arose around the potential implications of this precedent going forward concerning how private companies could eschew legal action and fines over IP infringement if they were working in service of the government.

Risk of ‘unexpected licensing payments’

“The ruling could have separated the person choosing to use the patent from those who would ultimately pay the bill,” said Myles Jelf, partner at Bristows, who acted for IPCom in the case.

“People were speculating that in an emergency situation such as the pandemic, the government could be opening itself up to a lot of unexpected licensing payments if Vodafone’s defence carried through the appeals court.”

The three key points of discussion in the case came from whether the MTPAS request that Vodafone was working under fell within the scope of “services of the crown”, whether testing the equipment for an MTPAS request constituted infringement and whether an authorisation to do a specific act implied an authorisation to infringe a patent.

The first judge, Recorder Douglas Campbell QC, claimed that Vodafone had a defence of Crown use, but the Secretary of State for Defence (SSD), along with IPCom, challenged the conclusion.

The appeal case on Friday 19 February ruled that Vodafone’s Crown use appeal did not stick. The appellate court agreed with IPCom’s defence, claiming that Crown use did not apply “unless the contract expressly or by necessary implication provides that the contractor is to make use of the patented invention in the fulfilling contract.”

If the Crown use defence had been successful, then it could have had implications for any higher government order in situations such as the COVID-19 pandemic, where companies could have appealed a breach of IP and billed the state.

“It would make the UK government's life much more difficult in procuring equipment in an emergency because there would be an overhanging uncertainty that it would end up with a bill whenever it contracted a company to provide products and services,” explained Jelf.

“This ruling now clarifies what the UK government needs to do in similar cases of crown use going forward. The Crown use defence can be made available, but only when the government consciously chooses to allow companies to use other patents.”

Read this article on World IP review | February 2021


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