(1) L'oréal Société Anonyme v RN Ventures Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henry Carr |
| Judgment Date | 19 February 2018 |
| Neutral Citation | [2018] EWHC 391 (Ch) |
| Date | 19 February 2018 |
| Docket Number | Case No. HC-2016-003018 |
| Court | Chancery Division |
[2018] EWHC 391 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
PATENTS COURT
SHORTER TRIAL SCHEME
Royal Courts of Justice
7 Rolls Building
Fetter Lane
London, EC4A 1NL
Mr Justice Henry Carr
Case No. HC-2016-003018
Mr Tom Moody-Stuart QC (instructed by Baker & McKenzie LLP) for the Claimants.
Mr Richard Davis (instructed by Irwin Mitchell LLP) for the Defendant.
Section 68 of the Patents Act 1977
The claims of infringement of patent and registered design have succeeded. I now have to consider whether the operation of s. 68 of the Patents Act 1977 precludes, at least in part, recovery of costs by the Claimants (“L'Oréal”).
S. 68 of the Patents Act provides:
“68. Where by virtue of a transaction, instrument or event to which section 33 above applies a person becomes the proprietor or one of the proprietors or an exclusive licence of a patent and the patent is subsequently infringed before the transaction, instrument or event is registered, in proceedings for such an infringement, the court or comptroller shall not award him costs or expenses unless—
(a) the transaction, instrument or event is registered within the period of six months beginning with its date; or
(b) the court or the comptroller is satisfied that it was not practicable to register the transaction, instrument or event before the end of that period and that it was registered as soon as practicable thereafter.”
An exclusive licence is a transaction to which s.33 applies and therefore is required to be registered.
The purpose of s.68 was considered by the Supreme Court in Schütz v Werit [2013] UKSC 16; [2013] RPC 16. At paragraph [85] Lord Neuberger approved the observation of Jacob LJ in LG Electronics v NCR Financial Solutions Group Ltd [2003] FSR 24 that “ People need to know who is on the register. This section is aimed at making the people who own the monopolies get on the register”. The section is intended to ensure the accuracy and completeness of the register by providing a costs sanction for failure to register within six months, unless the exception in s. 68(b) applies.
Paragraphs [97]–[100] of Lord Neuberger's judgment explain how the costs sanction of s.68 is intended to work. In summary:
(i) The conclusion of the Court of Appeal in Schütz that s.68 only disentitles a licensee from recovering costs incurred in connection with an infringement action during a period that the licence is unregistered was rejected inter alia because “ it leaves the section with very little bite, as an unregistered licensee could avoid its consequences simply by registering and then starting the proceedings.”
(ii) Werit's case, that if a claim for damages or an account by the licensee of a patent relates to an infringing act prior to registration of the licence, then the claimant licensee can recover no costs, was also rejected, as it would produce an arbitrary and penal result: “ It is arbitrary because the sanction would be the same whether the licensee was claiming for one week's infringement before registration and five years' after, or for five years' infringement beforethe registration and for one week's after. In the former case, it would also be penal.”
(iii) The correct interpretation is that a licensee cannot recover its costs in so far as they are attributable to the claim for damages or an account in respect of infringements pre-dating the registration of the licence, but it can recover costs attributable to such relief in respect of infringements post-dating the registration. The Supreme Court rejected the view of the Court of Appeal, expressed in argument, that this would be unworkable. Lord Neuberger said that: “ Obviously in a case where there was a claim for pre- and post-registration relief, there would have to be an apportionment, and the apportionment would normally involve an element of rough justice. But that is a familiar state of affairs when it comes to costs.”
The dispute in this case
The first Claimant (“L'Oréal SA”) is the proprietor of the patent in suit (“the Patent”) and has granted an exclusive licence to the second Claimant (“L'Oréal UK”). In particular, an exclusive licence was entered into on 1 July 2008 between L'Oréal SA L'Oréal UK. By an addendum dated 1 August 2012 the parties agreed to include the Clarisonic product the subject of this Claim as a Licensed Product. The exclusive licence was not registered until 9 th December 2016. In those circumstances it is common ground that s.68 prevents recovery of the costs of the patent infringement claim by L'Oréal UK, as proprietor of the exclusive license.
The section provides that “ the court or comptroller shall not award him costs or expenses” (emphasis added). It was common ground that, as a result of this wording, the section does not apply to L'Oréal SA as patentee. The dispute concerns the practical effect on costs of the section, where both patentee and exclusive licensee are claimants.
L'Oréal contend that the s.68 issue is, in the circumstances of this case, a moot point. The Claimants are jointly and severally liable for the costs of the action. Under the terms of L'Oréal's engagement with Baker & McKenzie, L'Oréal SA is liable for all of the costs of the infringement claim and has, in fact, been paying them. Mr Moody-Stuart submitted that although L'Oréal UK cannot recover its costs, L'Oréal SA is entitled to all of the costs of the action any event. Therefore, he argued that a deduction of a proportion of costs from L'Oréal UK, although required by section 68, will make no practical difference.
In answer to that submission, Mr Davis made two points. First, he said that L'Oréal SA, as patentee, has given away all of its rights to sue for infringement to L'Oréal UK, as exclusive licensee. Therefore, the patentee had no cause of action and was only included in the proceedings because it had to be joined, as claimant or defendant, pursuant to ...
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Philip Price v Flitcraft Ltd
...as between Mr Price's claim and Supawall's claim. In taking this approach, I note that in L'Oréal S.A. v RN Ventures Ltd (no. 2) [2018] EWHC 391 (Ch), where patent claims were made (successfully) by a proprietor and (unsuccessfully) by an exclusive licensee, Henry Carr J started by apporti......