Coflexip SA v Stolt Offshore MS Ltd (formerly Stolt Comex Seaway MS Ltd) (No 2)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Aldous,Lord Justice Kay,Lord Justice Jonathan Parker |
| Judgment Date | 13 March 2003 |
| Neutral Citation | [2003] EWCA Civ 296 |
| Docket Number | Case No: A3/2002/2278 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 March 2003 |
[2003] EWCA Civ 296
Lord Justice Aldous
Lord Justice Kay and
Lord Justice Jonathan Parker
Case No: A3/2002/2278
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MR JUSTICE JACOB
Richard Miller QC and Justin Turner (instructed by Clifford Chance) for the Claimants
Antony Watson QC, Colin Birss and Thomas Hinchliffe (instructed by Bird & Bird) for the Defendants
Coflexip SA are the proprietors of European Patent (UK) No. 0478742 and their associated company, Coflexip Stena Offshore Limited are exclusive licensees. I will refer to them as Coflexip.
Coflexip sued the defendants, which I will refer to as Stolt, for infringement and Laddie J held that the patent was valid and infringed. His judgment was upheld on appeal and a petition for permission to appeal to the House of Lords has been refused. At that stage Coflexip took appropriate steps to bring before the court the enquiry as to damages that had been ordered. Pursuant to a directions order, Coflexip filed Points of Claim which were amended and refiled on 20th September 2001. That Amended Points of Claim has been amplified in a response to a request for further information. Stolt have filed an Amended Points in Answer.
Coflexip's contentions are difficult to discern from the Amended Points of Claim, but it is apparent that they claim damages on the basis that Stolt's infringements caused them damage due to (a) loss of profits, (b) the need to reduce prices and (c) in the alternative, loss of a reasonable royalty.
By an application dated 3rd May 2002 Stolt applied to strike out the part of the Amended Points of Claim that claimed damages for loss of profits upon the ground that it disclosed no reasonable grounds for bringing the claim. In the alternative, they sought an order that Coflexip should provide a statement of case in relation to their claim for damages for lost profits and price reduction. That application came before Jacob J on 30th July 2002. He concluded that the submissions of Stolt were correct. It followed that the pleading was insufficient and therefore Coflexip should replead their case for loss of profits in the light of his judgment. He so ordered and against that decision Coflexip appeal. For reasons that appear later in this judgment, Coflexip are prepared to replead their case, but they contend that the judgment of the judge was based upon a wrong view of the law with the consequence that the requirement that their repleaded case should reflect the judge's conclusions was wrong.
A second application was made on 18th October 2002 to strike out the parts of the Amended Points of Claim which claimed damages because the acts of Stolt had caused Coflexip to reduce their prices. The judge came to a similar decision and made a similar order. Coflexip appeal that decision and order for the same reasons. As the parties accept that the issues that arise are the same, it is sufficient to concentrate upon Coflexip's claim for loss of profits.
The patent is for an invention entitled "Device and process for unrolling of flexible tubular conduits essentially vertically." The object of the invention is said to be the laying of flexible conduits at depths in the sea that are substantially greater than those which are feasible by using the known means. Claim 1 is to the process and claim 3 is to a device for operating the process of claim 1. As found by Laddie J, the invention overcame serious and longstanding problems and provided increased safety and speed of laying.
At trial the acts held to infringe involved the laying of flexible pipe from a ship called the "Seaway Falcon." As yet there has not been complete disclosure of the documents surrounding those contracts, but from what we were told, the documents would show that some of the contracts specified laying using the Seaway Falcon, others were silent as to what process was to be used and at least one referred to a different ship which used a non-infringing process.
The Amended Points of Claim is an obscure document which makes little attempt to follow the normal rules of pleading. That Mr Miller QC, who appeared for Coflexip, nearly admitted to be correct. I believe he realised that his clients' case needed to be repleaded and to assist he provided a draft containing an overview of Coflexip's case which contained a clearer statement of what was intended to be alleged in the Amended Points of Claim. In that draft it is alleged that Stolt used the Seaway Falcon in an infringing manner on 15 contracts. The draft continued as follows:
"2. The Claimants contend that but for the Defendants' wrongful acts the First Claimant's appropriate UK operating subsidiary would have performed all or a proportion of those Infringing Contracts. Further if the First Claimant's appropriate UK operating subsidiary had performed the Infringing Contracts the Claimants would have made, in respect of each Infringing Contract, those profits which are referred to as lost profits in section B, and those uplifts and other amounts referred to hereunder in paragraphs 3, 4 and 5. The Claimants claim those lost profits and said uplifts and other amounts in respect of each of the Infringing Contracts.
The wrongful acts relied upon hereunder are
(a) In the case of Infringing Contracts (i), (ii), (iii) and (vi) the use of and offer for use of an infringing process as claimed in the Patent with the Vertical Lay System,
(b) In the case of all the Infringing Contracts the use of the Vertical Lay System which is an infringing product.
2A. In determining the proportion of Infringing Contracts which but for the Defendants wrongful acts would have been performed by the First Claimant's appropriate UK operating subsidiary the Claimants will, in addition to relying upon evidence relating to each of the individual Infringing Contracts, rely upon the loss of chance of performing the Infringing Contracts. In particular the Claimants rely upon those facts and matters pleaded in section F and that during the period 1995 – 31st July 2000 the Second Claimant's share of the UK flexible pipe installation market (excluding Infringing Contracts) was 60.8% and that during the period 1997 – 31st July 2000 the Second Claimant's share of the relevant UK rigid pipe installation market was 45%. The Claimants will contend that based upon this loss of chance the proportion (by value) of the Infringing Contracts which but for the Defendants said wrongful acts would have been performed by the First Claimant's appropriate UK operating subsidiary would have been (a) in the case of infringing flexible pipe installation contracts (contracts (i) to (vii), (xii), (xiv), (xv) not less than 60.8% and (b) in the case of those pipe installation contracts which included the laying of both flexible conduit and rigid pipe (contracts (viii) – (x), (xiii)) not less than 45%.
3. Some of the prices set out in Section B were reduced due to the Defendants' infringing competition. Accordingly, where there has been such price reduction, the Claimants claim an uplift to the Section B losses as set out in Section C below.
…
Reasonable Royalty
In respect of that proportion of the Infringing Contracts for which the Claimants are not awarded damages for loss of profits, the Claimants will claim a royalty in respect thereof at a rate expressed against the particular contract value calculated by reference to 25% of the Defendants' anticipated incremental profit for the contract.
If, contrary to the First Claimant's contention set out in Section B below in respect of Magnus Swift, Magnus MP5/J2, Magnus J7, Foinaven and Dauntless/Durward, the First Claimant is not entitled to recover the loss of profit suffered by its operating subsidiary, then the Claimants will, in the alternative, claim a reasonable royalty in respect thereof.
Additional losses for Price Reduction (Non-Infringing Contracts)
9. The Claimants contend that but for the presence of the Defendants' Vertical Lay System in the market and the Claimants' belief that the Defendants were in direct competition with the First Claimant's appropriate UK operating subsidiary the said subsidiary would not have lowered its prices as particularised in tables 3 and 4 of the Confidential Schedule. The Claimants contend they are entitled to recover those losses arising from it lowering its prices as aforesaid together with an uplift to such losses in respect of variation in workscope as more particularly set out in Table 8 of the Confidential Schedule."
Stolt submitted to the judge that the Amended Points of Claim did not properly plead any causal link between the loss of profits claimed and the infringement of the patent. They submitted that the loss claimed arose at the time that the contracts were awarded to Stolt. For Coflexip to recover damages for that loss, they needed to plead and prove that a cause of the award of the contract to Stolt was the infringing method of pipe laying that was used or use of infringing apparatus. If the method by which the pipes were to be laid was not a requirement of the contract, then the loss of the contracts was not caused by the infringement. The pleading did not allege that a cause of the award of the contracts to Stolt was that they were going to use the infringing process or infringing apparatus. Coflexip contended that no...
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