BASF Corporation v Carpmaels and Ransford (A Firm)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Adam Johnson |
| Judgment Date | 29 October 2021 |
| Neutral Citation | [2021] EWHC 2899 (Ch) |
| Docket Number | Case No: BL-2018-001464 |
| Court | Chancery Division |
[2021] EWHC 2899 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
7 Rolls Buildings
Fetter lane, London
EC 4A 1NL
Mr Justice Adam Johnson
Case No: BL-2018-001464
Roger Stewart QC, Pippa Manby and Miles Copeland (instructed by Reed Smith LLP) for the Claimants
John Wardell QC, Henry Ward and Nick Zweck (instructed by Clyde & Co LLP) for the Defendant
Hearing dates: 14, 15, 16, 19, 20, 21, 22, 23, 26, 27, 28, 29, 30 April and 10, 13, 14 May 2020
Approved Judgment (Without Confidential Annex)
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
CONTENTS
| Paragraph | ||
| I | Introduction | 1 |
| II | The Witnesses | 16 |
| The Factual Witnesses | 17 | |
| The Claimants' Factual Witnesses | 17 | |
| The Defendants' Factual Witnesses | 27 | |
| The Expert Witnesses | 31 | |
| The Claimants' Experts | 31 | |
| The Defendants' Experts | 35 | |
| III | Some Preliminary Points | 41 |
| Selective Catalytic Reduction | 42 | |
| The Euro 6 Legislation | 44 | |
| The Catalyst Suppliers and the OEMs | 45 | |
| Copper Chabazite | 48 | |
| Selective Catalytic Reduction on Filter | 51 | |
| IV | The 458 Patent | 53 |
| V | Chronological Background | 74 |
| The Claimants and their Relationship with Carpmaels | 75 | |
| The CuCHA Patents and Daimler | 80 | |
| VW/Audi a Main Target | 83 | |
| Awareness of the 458 Patent | 88 | |
| Use of the SCRoF Patent Estate | 93 | |
| Meeting with JMI: Cross-Licensing proposal – October 2011 | 96 | |
| Agreement with JMI for CuCHA Licence | 99 | |
| JMI Request Licence of the SCRoF Patents | 103 | |
| The Opposition Division hearing in relation to the 458 Patent | 105 | |
| The Breach and Its Immediate Aftermath | 119 | |
| JMI's Reaction to Carpmaels' breach | 129 | |
| CuCHA Licence with JMI Endorsed by the BASF IP Committee | 130 | |
| The Opposition Division's Preliminary Opinion and Decision on Reinstatement | 131 | |
| The JMI CuCHA Licence is Documented | 135 | |
| The SCRoF market: the First RFQs | 136 | |
| The Divisional Application | 140 | |
| Daimler Award | 142 | |
| PSA and Umicore | 146 | |
| VW Award | 150 | |
| BASF Patent Strategy | 153 | |
| Further Negotiations with Umicore | 156 | |
| Dr Howard's Advice on Res Judicata and Double-Patenting | 161 | |
| Ford RFQ for Panther Phase I | 165 | |
| PSA Award to Umicore | 166 | |
| Mr LoCascio's Strategy Document | 172 | |
| Negotiations with Umicore Conclude | 175 | |
| Ford Awards | 176 | |
| Progress on the Divisional | 179 | |
| Other RFQs | 183 | |
| US Litigation: JMI Requests a SCRoF Licence | 184 | |
| Mr Kumar Engages with Audi | 187 | |
| JMI Further SCRoF Licence Request | 195 | |
| The Divisional Patent: JMI Again Request a Licence for SCRoF | 196 | |
| The two-step licence strategy for SCRoFs | 199 | |
| Negotiations with VW fail to progress: discussions open up with Umicore and JMI | 210 | |
| JMI is Awarded SCRoF Business After the Grant of the Divisional Patent | 213 | |
| BASF Continuing Concerns over Market Share | 214 | |
| SCRoF Licence with Umicore | 215 | |
| SCRoF Licence with JMI | 216 | |
| BASF Continues to face challenges with its SCRoF products | 218 | |
| JMI's Challenge to the Divisional Patent | 219 | |
| VI | The Claimants' Case at Trial | 221 |
| VII | Patent Validity | 227 |
| VIII | BASF's Technology | 248 |
| IX | To Whom Were Duties Owed by Carpmaels? | 262 |
| The Background and the Issues | 262 | |
| Improved Licence Fee | 264 | |
| Lost Profits on Sales | 265 | |
| Some Key Facts | 277 | |
| BASF Corp | 285 | |
| The Second to Fourth Claimants | 294 | |
| Express or Implied Retainer | 296 | |
| Duty of care | 311 | |
| X | The Claimants' Case on Loss – The Legal Approach | 322 |
| XI | The Claimants' Case on Loss – the 2012–2015 period | 347 |
| Overview and General Points | 347 | |
| Freedom to Operate: IP Rights and market share | 358 | |
| JMI would still have bid for business in the counterfactual | 379 | |
| No evidence that the existence of a patent was regarded as business critical | 403 | |
| The 2012–2015 period – Lost profits on Sales | 413 | |
| Daimler: March 2013 RFQ | 416 | |
| VW: March 2013 RFQ | 420 | |
| Ford | 425 | |
| The 2012–2015 period – Lost Licence Income | 428 | |
| No Sufficient proof of Loss | 428 | |
| Quantum | 441 | |
| XII | The post-2015 period – the Lost Appeal | 451 |
| XIII | Overall Conclusion | 464 |
I Introduction
This is a professional negligence claim. The Claimants are all companies in the BASF Group. The BASF Group (where convenient I will refer to it as “ BASF”) specialises in the research, development, manufacture and supply of chemical products.
The Defendant, Carpmaels and Ransford (“ Carpmaels”), is a partnership and a well-known firm of patent attorneys.
Carpmaels were instructed to prosecute a patent. This was European patent EP 1 663 458, referred to in these proceedings as “ Patent 458” or the “ 458 Patent.” Patent 458 concerned an emissions treatment system and method for use in the automotive industry. In summary it related to the idea of combining a catalyst and filter together, by putting a coat of catalyst material onto a filter unit. This gives rise to an acronym which has achieved much prominence in these proceedings, namely “ SCRoF”, referring to “ Selective Catalytic Reduction on Filter.”
In July 2012, in proceedings in the European Patent Office (“ EPO”), Carpmaels negligently failed to lodge an appeal to the Technical Board of Appeal (“ TBA”) from an earlier decision of the EPO's Opposition Division (“ OD”) of March 2012, revoking Patent 458 for lack of inventive step.
Because liability is admitted, this case is about what losses arise as a result of Carpmaels' breach. Broadly, two questions arise. The first is, to whom did Carpmaels owe either contractual or common law duties of care? In particular, was it only to the First Claimant, or was it also the Second to Fourth Claimants? Carpmaels accept that they were retained by the First Claimant (“ BASF Corp”), but deny that they were retained by, or owed any duties to, any of the Second Claimant (“ BASF Germany”), the Third Claimant (“ BASF Polska”), or the Fourth Claimant (“ BASF South Africa”).
The second broad issue is about what losses in fact flow from Carpmaels' admitted breach. That involves looking at what would have happened had the appeal to the TBA been filed on time, and how that counterfactual scenario would have differed from what in fact happened. The parties are agreed that, if the appeal to the TBA had been lodged, then in law the revocation of Patent 458 would have been suspended, at least until early 2015, which the parties are agreed is when the appeal would have been heard and resolved. Suspension of revocation is an automatic effect of an appeal being lodged on time: see Article 106 of the European Patent Convention. In such cases, the relevant patent remains valid in the form in which it is granted, pending final determination of the appeal.
Beyond that, however, there is a substantial measure of disagreement as to what the effect would have been of Patent 458 remaining unrevoked in the counterfactual scenario during the period 2012–2015.
The Claimants' case, in short, is that the period between July 2012 and early 2015 was a critical time for the commercial exploitation of the technology reflected in the 458 Patent, and they say that the revocation of the Patent thus deprived them of something of real value. They say the 458 Patent had potential for huge practical application, because it covered a form of technology which motor vehicle manufacturers (referred to as “ Original Equipment Manufacturers” or “ OEMs”) needed at the time in order to comply with new diesel emissions standards.
Three important OEMs were Daimler, VW and Ford. What in fact happened was that the BASF Group was awarded some limited business by VW during the relevant period, but lost out on other valuable business with these and other OEMs, who instead favoured SCRoF technology from a rival company, Johnson Matthey International (“ JMI”). The Claimants say that, with the benefit of an unrevoked patent, they would have had a better chance to obtain (1) a larger share of business from the OEMs, and (2) licence income from JMI, since JMI would have needed a licence of BASF's technology in order to compete at all.
Carpmaels, on the other hand, say that in reality the Claimants were deprived of nothing of value, because (1) in practice in the relevant marketplace patent monopolies were rarely if ever exploited; (2) the BASF SCRoF technology was inferior in terms of performance to the corresponding JMI technology which the OEMs preferred; and (3) in any event Patent 458, which had already been the subject of an adverse decision by the OD, would have been regarded even in the counterfactual as nothing more than a “ zombie patent”, and therefore of no real value in negotiating or other terms.
The above points all depend on an analysis of what is likely to have happened in the counterfactual scenario (i.e. assuming no negligence by Carpmaels) in the period 2012 to early 2015. That analysis does not involve having to assess the lost chance of success on the appeal before the TBA, because it is concerned...
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