Anan Kasei Company Ltd v Neo Chemicals & Oxides (Europe) Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Bacon |
| Judgment Date | 29 March 2022 |
| Neutral Citation | [2022] EWHC 708 (Ch) |
| Docket Number | Claim No: HP-2016-000018 |
| Year | 2022 |
| Court | Chancery Division |
[2022] EWHC 708 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT
Rolls Building
Fetter Lane
London, EC4A 1NL
Mrs Justice Bacon
Claim No: HP-2016-000018
Tom Mitcheson QC, Miles Copeland and Jacob Turner (instructed by Hogan Lovells International LLP) for the Claimants
Hugo Cuddigan QC and Adam Gamsa (instructed by Bird & Bird LLP) for the Defendants
Hearing dates: 28, 31 January, 1–4, 7, 10–11 February 2022
Approved Judgment
PROVISIONAL NON-CONFIDENTIAL VERSION
Note: Excisions in this Judgment marked “[✂]” relate to commercially confidential information.
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is an inquiry into damages for the infringement of a patent for high surface area (“HSA”) cerium oxide, a product used in the manufacture of catalyst systems for vehicle exhausts. The first Claimant (now named Solvay Special Chem Japan, Ltd) is the proprietor of the relevant patent, EP (UK) 1 435 338, which was filed in September 2002, granted in February 2011 and expires in September 2022. The Second Claimant is the exclusive licensee for the patent. Both Claimants are part of the Solvay group of companies. I will refer to the Claimants collectively as “Rhodia”.
The Defendants, who I will refer to collectively as “Neo”, are companies within the Neo Group. Following a liability trial which took place in January 2018, Roger Wyand QC (sitting as a Deputy High Court Judge) held that the patent was valid, and found that the First Defendant's C100 and C100N cerium oxide products infringed the patent: Anan Kasei v Molycorp [2018] EWHC 843 (Pat). The Court of Appeal dismissed Neo's appeal against the finding of validity: Anan Kasei v Neo Chemicals [2019] EWCA Civ 1646.
Following those judgments, the issue for this damages inquiry is the extent to which Rhodia can recover damages for Neo's supply of its C100N product to a particular customer, Johnson Matthey (“JM”), displacing sales of Rhodia's patented cerium oxide product HSA20 which Rhodia says that it would otherwise have made to JM.
Rhodia's damages claim originally pleaded nine heads of loss. The first, Head 1, was a conventional damages claim for loss suffered by Rhodia in the UK as a result of the infringing supply of C100N in the UK between 2014–2017. That head of damages was settled in late 2020, for a sum of £85,000. Heads 2 and 5–8 are no longer pursued. The only distinct heads of claim that are now before me are therefore Heads 3 and 4, which claim losses said to have been suffered as a result of sales outside the UK, in countries where Rhodia's product did not have patent protection. Those include, in each case, claims for losses from sales post-patent expiry, the basis for which is set out under Head 9.
The claim is therefore for losses from sales outside the territorial scope of the patent, but which are said to have been caused by the supply of infringing development samples of both C100 and C100N to JM in the UK between 2011 – 2013, and subsequently by the infringing commercial supplies of C100N within the UK. Rhodia contends that the overseas sales were caused by Neo's infringing supplies within the UK. Those sales were vastly greater than the UK sales, and Rhodia claims damages amounting to over €24m on this basis.
Rhodia's primary case is that absent the infringements Rhodia would have made all the sales to JM that Neo made, such that the infringement caused it to lose profits. In the alternative, if it would not have made those sales (or some of those sales), it says that it has lost out on royalties under a licence that it would otherwise have negotiated with Neo.
Neo says that it should not have to pay any damages at all. It contends that the overseas sales fell outside the scope of duty altogether; alternatively that they were not caused, sufficiently proximately, by the infringing UK supplies; alternatively that Neo could have supplied a non-infringing alternative to JM in the UK. In any event, Neo contends that Rhodia has not established that it had sufficient capacity to supply Neo's volumes during the relevant period (or that it would have sufficient capacity to supply Neo's future volumes). As to any licence royalties, Neo contends that these are largely precluded by the settlement of Head 1, and that in any event Rhodia's claim for global royalties under a UK licence is unsustainable. On that basis Neo's position is that any licence fee should reflect only the supply of the initial development samples to JM in the UK.
Mr Mitcheson QC, Mr Copeland and Mr Turner represented Rhodia; Mr Cuddigan QC and Mr Gamsa represented Neo. The trial was conducted principally in person, with two exceptions: (i) the cross-examination of Dr Richards was conducted as a hybrid hearing, with Dr Richards giving evidence remotely by videolink from France but the remainder of the parties present in the courtroom; and (ii) Dr Rohe was recalled for a further short cross-examination on 7 February 2022, which was conducted entirely remotely. Following the trial I received further written submissions from the parties on the issue of the Enforcement Directive and TRIPS.
The confidential nature of much of the material addressed in the witness evidence meant, unfortunately, that large parts of the cross-examination and some of the submissions of counsel had to take place in private session. For the same reason, parts of this judgment are redacted in the non-confidential version for publication.
Witnesses
I heard oral evidence from both witnesses of fact and experts. Unsurprisingly, JM refused to assist either party by providing evidence for the purposes of this hearing. It did not, however, object to evidence being provided by two of its ex-employees, Dr O'Sullivan and Dr Winterborn.
Practice Direction 57AC
Before I comment on the evidence given by the individual witnesses, it is appropriate to make some general observations on the requirements of Practice Direction 57AC, in light of Mr Cuddigan's objections that I should dismiss the evidence of certain of Rhodia's witnesses for failure to comply with that Practice Direction.
Paragraph 3.2 of PD 57AC provides that:
“A trial witness statement must set out only matters of fact of which the witness has personal knowledge that are relevant to the case, and must identify by list what documents, if any, the witness has referred to or been referred to for the purpose of providing the evidence set out in their trial witness statement.”
The purpose of the first part of that rule is to ensure that the evidence given by a witness is confined to relevant factual matters that are within the knowledge of that witness, rather than extending improperly to commentary, argument or speculation. The requirement to list documents is to provide transparency in respect of documents used to refresh the memory of the witness, for the benefit of both the court and the other side: see the comments of O'Farrell J in Mansion Place v Fox Industrial Services [2021] EWHC 2747 (TCC), §59.
These are important requirements, reinforced by the stipulation in paragraph 4.1 that the witness must specifically confirm their understanding and compliance with these requirements, and the further requirement in paragraph 4.3 for a witness statement to be endorsed with a certificate of compliance signed by the relevant legal representative. Breach of these requirements may lead the court (among other sanctions) to strike out part or all of a witness statement, or order that a witness statement be redrafted. In other cases, however, the appropriate course will be for the court to place less (or no) weight on witness evidence or parts of that evidence which fails to comply with the requirements of the Practice Direction.
In the present case, Mr Cuddigan objected that Rhodia's witnesses Dr Rohe, Mr Mackay and Dr Richards had failed to comply with PD 57AC, in various respects. While not making any formal application for any of Rhodia's evidence to be struck out, Mr Cuddigan submitted in closing that the court should completely disregard the evidence of Dr Rohe and Mr Mackay.
For the reasons set out below, I do not accept that submission. Rather, I have considered the specific objections to the evidence and the extent to which that might render certain parts of the evidence unreliable or insufficiently probative.
Rhodia's witnesses of fact
Dr Rohe has been the market and development manager for the automotive catalyst activity of Solvay since 2011. The focus of his evidence was on the question of Rhodia's capacity during the period in which Neo has supplied C100N to JM, and specifically whether Rhodia had sufficient capacity to supply JM with its high surface area cerium oxide product, HSA20, in place of Neo's volumes during that time. By the start of the trial he had provided three witness statements for the purposes of this part of the proceedings, and he was cross-examined on that evidence.
Around lunchtime on 4 February 2022, just before the conclusion of the oral evidence, Rhodia sent to Neo a further (very short) witness statement from Dr Rohe. In that statement Dr Rohe said that Mr Cuddigan had put to Mr Bezant during cross-examination an inaccurate summary of the oral evidence given by Dr Rohe. Dr Rohe therefore sought to correct the point. I admitted the new witness statement de bene esse on the basis that Dr Rohe would be recalled for...
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