Bourns Inc. v Raychem Corporation and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ALDOUS,LORD JUSTICE SWINTON THOMAS,THE PRESIDENT |
| Judgment Date | 30 March 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0330-15 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | CHPCI 98/1445/3 CHCPI 98/1447/3 |
| Date | 30 March 1999 |
[1999] EWCA Civ J0330-15
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
(Mr Justice Laddie)
Royal Courts of Justice
The Strand
London WC2
The President of the Family Division
(Sir Stephen Brown)
Lord Justice Winton Thomas
Lord Justice Aldous
CHPCI 98/1445/3
CHPCI 98/1446/3
CHCPI 98/1447/3
MR M BLOCH QC (Instructed by Messrs Clifford Chance, London EC2A 4JJ) appeared on behalf of the Appellant
MR M SILVERLEAF QC ( MR R ARNOLD—30.3.99) (Instructed by Messrs Linklaters & Paines, London EC2V 7JA) appeared on behalf of the Respondent
These are appeals brought with leave of Laddie J against his orders of 19th November 1998 in which amongst other things he restrained the appellants from making use of certain documents, which I will refer to as "the documents", except in relation to proceedings for taxation of the respondents' costs. The appeals are part of litigation between the Raychem Corporation and Bourns Inc which has been conducted and is being conducted in this country and the USA.
Raychem are a substantial US corporation engaged in the manufacture and marketing of electronic devices, in particular devices made from positive temperature co-efficient materials. Bourns are also a substantial US company engaged in the manufacture and marketing of such devices. In December 1994, Raychem started an action against Bourns in the Californian Superior Court alleging misuse of trade secrets. Bourns responded in May 1995 by bringing a claim in the US District Court for the Central District of California alleging that Raychem had fraudulently procured certain US patents and in contravention of anti-trust laws monopolised the market for the devices covered by those patents in violation of US anti-trust legislation. Those two proceedings have been consolidated. In May 1996 Bourns petitioned the English High Court for revocation of a number of UK patents concerned with PTC materials which were registered in the name of Raychem. At least one of those patents was the UK equivalent of one of the patents that Bourns alleged in the anti-trust suit to have been procured by fraud on the US Patent Office. The High Court proceedings came before Laddie J in May 1997. He held that the patents in issue were invalid and ordered their revocation. Raychem appealed. This Court upheld the judge's conclusion and dismissed the appeal on 17th December 1998.
The trial of the US proceedings was due to take place in the summer of 1998 before a jury. To avoid the jury being overburdened, the judge decided to hear the anti-trust suit first, leaving the trade secrets part of the action to be heard at a later date. On 10th August 1996, the jury returned a verdict finding Raychem had been guilty of intentional fraud on the US Patent Office and that they were in breach of the US anti-trust legislation. They awarded Bourns $64,000,000 by way of damages which I believe will be trebled to £192,000,000. The trade secrets trial is likely to be heard later this year.
Raychem have filed a motion to set aside the verdict of the jury in the anti-trust suit. No doubt many issues are raised by that motion. The only potential issue relevant to this appeal is an allegation that the verdict was obtained by fraud.
These proceedings arise out of what happened on taxation. After the judgment of Laddie J in 1997, Bourns proceeded with taxation of their costs so as to enable them to recover their reasonable costs of the English proceedings pursuant to the order for costs made in their favour by the judge. By letter dated 4th March 1998 they served on Raychem's solicitors a copy of the bill of costs that had been lodged at the Taxing Office. On 11th March Raychem's solicitors wrote requesting an extension of 14 days to the period specified in the rules for their response as the bill of costs was voluminous and required detailed consideration. That request was refused on 16th March. The reply from Raychem's solicitors was prompt.
"In the circumstances, could you please let us have by return:-
1. Copies of all vouchers that should have been served with the bill of costs; and
2. a breakdown of all disbursements over £500."
On 20th March, Bourns' solicitors replied:
"We enclose by way of service copies of all vouchers for Counsel's fees, other professional fees and disbursements in excess of £500 which were filed with the Bill of Costs in the above actions."
The copies served included the documents. Raychem's solicitors referred the documents to Latham and Watkins, the US lawyers acting for Raychem, for advice as to whether the claimed costs were properly attributable to the English proceedings or were attributable in whole or in part to the US proceedings. Upon the basis of the documents and the advice given, Raychem objected to payment of certain of the costs claimed. That objection was ultimately upheld by the taxing master.
The US lawyers also concluded that the documents provided material support for Raychem's case to set aside the anti-trust verdict and therefore they should, if possible, be introduced into the motions to set aside the anti-trust proceedings. On 8th October 1998, Clifford Chance wrote to Bourns' solicitors saying that the US lawyers had seen the documents and they wished to rely upon them in the US proceedings. They sought confirmation that there was no reason why they should not do so. Bourns' solicitors objected contending that the documents were privileged'. They subsequently added the allegation that the documents were subject to an implied undertaking that they would only be used for the purposes of taxation. Raychem did not accept that view. The result was these proceedings started by Bourns seeking injunctions against Raychem and its legal advisers restraining them from using the documents and the information in them except for the purposes of the taxation.
Numerous issues, supported by affidavit evidence, were raised before the judge. He concluded that the best way to deal with them was first to consider the extent to which, if at all, the documents could be used for collateral purposes in England by an English litigant or English lawyers and then to consider the import, if any, of the fact that the documents had been seen by the US lawyers and were considered by them to be relevant to the US anti-trust proceedings and their reasons for that belief.
The judge decided that the documents produced upon taxation were the subject of an implied undertaking to the court that they would only be used for the purposes of the taxation. He went on to consider whether there was good reason for relieving Raychem from that undertaking so that they could be used before the Court of Appeal in this country and in the US proceedings. The judge concluded that there was no such reason. He went on to hold that the documents were privileged and that the privilege had only been waived to enable use in the taxation proceedings. In his view, the fact of the US proceedings and that some of the US lawyers involved in those proceedings had seen the documents did not mean that it was right to allow the documents to be used for any other purpose than in the taxation proceedings, despite the views expressed by Raychem's US lawyers. He went on to hold that the documents were not materially relevant to the issues between the parties in the Court of Appeal in this country or in the proceedings in the USA.
At this point in time, Raychem believe that it is important for their case to set aside the verdict of the jury to be able to introduce the documents into those proceedings. Thus the emphasis made by them in their evidence and in their submissions on what they perceive to be the law on discovery in the United States and the obligations upon United States lawyers. They sought to support their case in this Court with further affidavit evidence. The application to introduce that evidence was refused and I will give my reasons for that later in this judgment. I shall have to deal with the submissions on US law and the effect of the injunctions, but believe that the appeal is best decided by considering each issue from an English perspective and then deciding whether, having regard to US law, the obligations on US lawyers and the existence of the US proceedings, a different result should be reached.
(A) Privilege
The adversarial system of law applies to taxation of costs; but because of the nature of taxation proceedings, the taxing master has to consider claims for costs for privileged events. He therefore may have to and often does peruse privileged documents.
The procedure adopted on taxation is set out in O.62 of the Rules of the Supreme Court. O. 62 r.29 provides that a party seeking taxation must at the same time as he lodges his application lodge a statement giving particulars of the parties and, invariably, a bill of costs which sets out the charges and disbursements claimed. Unless the taxing master otherwise orders, a person who brings proceedings for taxation must lodge the papers referred to in O. 62 r.29(7). Rule 29(7)(d) contains a list of the following papers and vouchers:
"(i) a bundle comprising all civil legal aid certificates and amendments thereto, notices of discharge or revocation thereof and specific legal aid authorities;
(ii) unless the relevant information is included in the judgment or order or the parties have agreed the times of the hearings, a certificate of times or a copy of the associate's certificate;
(iii) a bundle comprising fee notes of counsel and accounts for...
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