Convatec Ltd and Others v Smith and Nephew Ltd and Others

JurisdictionEngland & Wales
CourtChancery Division (Patents Court)
JudgeHIS HONOUR JUDGE BIRSS QC,His Honour Judge Birss QC
Judgment Date21 December 2011
Neutral Citation[2011] EWHC 3461 (Pat)
Date21 December 2011
Docket NumberCase No: HC 10 C 03618

[2011] EWHC 3461 (Pat)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

PATENTS COURT

Rolls Building

7 Rolls Buildings

London EC4A 1NL

Before:

His Honour Judge Birss QC

(Sitting as a judge of the High Court)

Case No: HC 10 C 03618

Between:
(1) Convatec Limited
(2) Convatec Technologies Inc.
(3) Convatec Inc
Claimants
and
(1) Smith & Nephew Healthcare Limited
(2) Smith & Nephew Plc
(3) Speciality Fibres And Materials Ltd
(4) Stephen Law
Defendants

Piers Acland QC and Brian Nicholson (instructed by Latham & Watkins) for the Claimants

James Mellor QC and Miles Copeland (instructed by Bristows) for the First and Second Defendants

Justin Turner QC and Mark Chacksfield (instructed by Slaughter and May) for the Third Defendant

Andrew Norris (instructed by Kingsley Napley) for the Fourth Defendant

Hearing dates: 8th November 2011

HIS HONOUR JUDGE BIRSS QC His Honour Judge Birss QC
1

This judgment concerns costs and some other matters. It deals with the costs of the case which was the subject of my judgment handed down on 27 th July 2011 [2011] EWHC 2039 (Pat). However, as explained in paragraphs 1 to 4 of that judgment, by the time the matter came on for trial, many of the allegations had fallen away. As a result the trial only concerned the issue of infringement and validity of one patent EP (UK) 0 927 013. That case is only one of the matters which now fall to be considered on the question of costs.

2

This also explains the most startling aspect of the matter before me, the very large sum by way of legal costs which are being sought. The defendants have been successful not only in relation to the case about the '013 patent but also on the other matters. Accordingly they seek an order that the claimants pay their costs. The claimants' calculations put the costs incurred by the defendants together in these proceedings at almost £6.6 million. That is comparable to the sum spent in the RIM v Visto litigation and addressed by Floyd J at paragraph 15 of his judgment [2008] EWHC 819 (Pat). For such a sum to be spent in intellectual property litigation calls for an explanation. The claimants submitted it was the largest costs bill which had been presented to the Patents Court in recent times.

3

The explanation has three aspects, as follows.

4

The first aspect is that the costs are spread between three independently represented parties. Again using the claimants' figures, the costs of the third defendant (SFM) are £4.7 million. The first and second defendants (Smith & Nephew) incurred £1.5 million in costs. The fourth defendant (Dr Law) incurred about £387,000. That SFM incurred the most costs is not surprising since they made most of the running in this litigation but one of the issues arising is an argument about duplication of costs as between SFM and Smith & Nephew.

5

The second aspect is that costs are spread between multiple causes of action. A very substantial quantity of costs was incurred in relation to the claimants' claim for misuse of confidential information (and breach of contract). This was discontinued shortly before trial. There were also two further patents in issue. One case ('650) was discontinued shortly before trial. For the other ('912) the claimants agreed to submit to judgment for its revocation shortly before trial.

6

One can see the breakdown by using the figures for SFM's costs. These are based on a total of £4.1 million (which is lower than the £4.7 million figure used above but the difference does not matter for the moment). SFM's total of £4.1 million can be broken down as follows:

i)

Breach of Confidence:

£2,137,457.64

ii)

Patents (generally)

£99,203.28

iii)

Patent '013

£440,090.73

iv)

Patent '912

£247,892.23

v)

Patent '650

118,745.26

vi)

Trade marks

£184.10

vii)

Disclosure

£589,425.41

viii)

Pleadings

£23,169.33

ix)

Hearings

£168,702.16

x)

General

£122,585.82

xi)

Silverisation

£4,432.08

xii)

Miscellaneous

£181,891.96

Total:

£4,133,177.00

7

Some of the costs could be attributed to particular parts of the case while others could not be. Disclosure (item (vii)) was largely but not exclusively related to the confidential information case. Some costs were generic to the patent cases but could not be broken down further (item (ii)). What this breakdown shows is that the costs attributable to the patents aspect of these proceedings are not out of line with the sorts of levels of costs one sees in High Court patent cases.

8

The third aspect of the matter is the confidential information case itself. Since the confidential information case was discontinued before trial, I did not hear it and I am not in the same position as a judge who heard the trial to comment on the costs. However I did hear a number of substantial interim applications in these proceedings over a period of months, mostly related to the confidential information case and I can say with some confidence that it was a heavy case. The case was concerned with ConvaTec's trade secrets relating to the manufacture of carboxymethyl cellulose fibres and wound dressings using those fibres. It also related to other research ConvaTec had carried out. I am not surprised that the costs associated with that case, which came almost to the court door, were very substantial. Also, in contrast to the position before Floyd J in RIM, in this case I do not have overall cost estimates from the unsuccessful party to use as a comparison. On some matters of detail, when the claimants' costs might have been relevant, the claimants' contended that their costs (on that point) were comparable to the defendants' costs. On other occasions they contended that the defendants' costs incurred were too high. I cannot assume that the claimants' overall costs were comparable to the defendants', but it does seem to me that that I can safely assume that whatever their costs were, the claimants' overall costs were not so radically different from the costs incurred by the defendants as to make a striking comparison. If the difference had been of the order which emerged in the RIM case, I believe the claimants would have put forward overall figures for their costs. Of course that does not mean the level of expenditure was necessarily justifiable but it seems to me it is another indication that this trade secrets confidential information case was costly.

9

Finally I should mention proportionality. This case was concerned with the question of whether the claimants had to face a competitor to their carboxymethyl cellulose based Aquacel product in the shape of the defendants' Durafiber product. The claimants' aim in these proceedings was to establish, if they could, that Durafiber could not be lawfully made and sold. They failed. Since the fibres for Durafiber are made in the UK, had they succeeded the result would have protected the worldwide position. Worldwide Aquacel has made sales of $2 billion since 1996 and is worth £100 million per year. Aquacel sales in the UK for the first 9 months of 2010 were £13.45 million. While the level of costs expenditure in this case has been very high indeed, the stakes were much higher.

The issues

10

The issues which fall to be decided are these:

i) Confidential information discontinuance

ii) Smith & Nephew's costs – duplication

iii) Smith & Nephew's costs – the trade mark point

iv) Payments on account of costs

v) Declaration of invalidity

11

In relation to items (i) to (iv) above, I gave my ruling at the hearing on the 8 th November so that the matters could be dealt with then and there, with reasons to follow. These are those reasons. In relation to item (v), which is not about costs, I directed that I would resolve the issue between the parties on paper if it could not be agreed. It was not agreed and I will deal with it.

12

At the hearing Piers Acland QC and Brian Nicholson instructed by Latham & Watkins appeared for the claimants, James Mellor QC and Miles Copeland instructed by Bristows appeared for Smith & Nephew (the first and second defendants), Justin Turner QC and Mark Chacksfield instructed by Slaughter and May appeared for SFM, Andrew Norris instructed by Kingsley Napley appeared for the fourth defendant.

(i) Confidential information discontinuance issue

13

Ordinarily when a claimant discontinues a claim, they pay the defendant's costs. In this case ConvaTec discontinued the breach of confidence claim and the defendants seek their costs. ConvaTec contend that the circumstances in this case are such that a different order should be made. In order to put that submission into context it is necessary to understand some of the background and progress of this claim.

14

The businesses of SFM and ConvaTec have a shared history. The details of the restructuring arrangements and how they led to the position today in which ConvaTec and SFM are competitors do not matter. As part of the restructuring arrangements there were agreements in place which included licences of confidential technical information for certain limited purposes. I have been told in general terms that the licences were limited to use of the know how for the purposes of what are called the Alginate and Micropake businesses but the scope of these licences is not in issue before me. There was a restrictive covenant which prevented SFM from competing in the cellulose field. It expired in April 2007.

15

Until June 2007 the fourth defendant, Dr Law, worked for ConvaTec. He left and joined SFM. At SFM he worked as a research scientist on the development of cellulose ethyl sulfonate gelling fibres (CES fibres). Durafiber uses these CES fibres. He...

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  • Patent Costs When The Claimant Discontinues
    • United Kingdom
    • Mondaq United Kingdom
    • 16 May 2012
    ...itself which was discontinued before trial. The claimants contended that they should not have to pay all the defendants' costs. In [2011] EWHC 3461 (Pat), Birss HHJ, sitting as a deputy judge of the High Court, noted that it is settled that, unless the court orders otherwise, a claimant who......

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