Craig Baillie and Others v Bromhead & Company (A Firm)and Others
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Birss,Mr Justice Birss |
| Judgment Date | 02 July 2014 |
| Neutral Citation | [2014] EWHC 2149 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC12 C 01722 |
| Date | 02 July 2014 |
[2014] EWHC 2149 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Birss
Case No: HC12 C 01722
Roger Stewart QC and Richard Davis (instructed by Field Fisher Waterhouse) for the Claimants
John Wardell QC and Jeremy Reed (instructed by Hewitsons) for the Defendants
Hearing dates: 27th, 28th, 31st March, 1st–4th, 7th, 8th, 10th and 11th April 2014
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.
Approved Judgment
| Contents | Paragraph |
| Introduction | 1 |
| The negligence relied on | 12 |
| The law | 14 |
| The witnesses | 31 |
| Patents and technology | 44 |
| The technical background | 45 |
| The patents and the prior art | 55 |
| Patent practice worldwide and its relevance | 68 |
| Chronology of events: | 79 |
| The beginning: 2000 to 2002 | 79 |
| 2003 | 99 |
| 2004 | 103 |
| First office action for the US DualGlo application and the meeting in November 2004 | 108 |
| Funding the purchase of the Hirotec patent | 113 |
| Amending the US application: high opacity and rare earths | 119 |
| Advice to an investment broker; limiting the US application to white | 121 |
| 2006 – The European application | 127 |
| Developments in 2006 and 2007 | 131 |
| The New Zealand application | 133 |
| Further developments in 2007 | 137 |
| Tritec's observations in the EPO | 143 |
| 2008 | 147 |
| The "To whom it may concern" letter | 162 |
| 2009 | 166 |
| 2010 | 190 |
| 2011 – 2014: the proceedings | 196 |
| Findings on negligence and other key matters | 201 |
| (1) The earlier 7 th June 2000 application filed by UDL | 201 |
| (2) The Hirotec patent | 205 |
| (a) What advice was given about Hirotec | 206 |
| (b) Is Hirotec worthless? | 221 |
| (3) The DualGlo application | 248 |
| (a) The November 2004 meeting | 250 |
| (b) Later advice about the DualGlo PCT | 266 |
| (c) The relevance of Hannacolor to the DualGlo PCT | 274 |
| (4) What would DualGlo have done differently? | 300 |
| (5) What was the position of Lacomp? | 306 |
| (6) Why did the DualGlo companies cease to trade? | 312 |
| The duties owed by Dr Spencer | 315 |
| (i) The scope Dr Spencer's duties to the DualGlo claimants | 315 |
| (2) Did the defendants owe Lacomp a duty of care? | 326 |
| Quantum | 330 |
| Counterclaim | 331 |
| Conclusion and summary | 332 |
Introduction
This is an action for professional negligence concerning a patent attorney. In 1999, the first and second claimants, Craig Baillie and Stephen Lambert, started developing plastics materials which glowed in the dark. Mr Baillie had recently graduated with a degree in economics and had a number of ideas for new products. Mr Lambert had 20 years experience in the plastics industry and had technical experience in plastics compounding and extrusion. They obtained a few days free use of a laboratory at Warwick University and worked together making up batches of materials. The problem they set out to solve was that normal glow in the dark materials have an unattractive daytime colour (usually dull green). They addressed this problem and were able to make materials with a long night time glow and but also with a bright attractive daytime colour. Initially the colour was yellow but others followed. To achieve this result two components were mixed into the plastics: a phosphorescent component based on rare earth doped strontium aluminate and a fluorescent colourant. The phosphorescent component glows in the dark and fluorescent colourant shines brightly during the day. Their first patent applications were filed in June 2000.
The fourth and seventh claimants, DualGlo Ltd and DualGlo Technology Plc, are companies set up to exploit their ideas. The third claimant is a partnership between Mr Baillie and Mr Lambert. I will refer to these five claimants as the DualGlo claimants.
The third defendant, Michael Spencer, is a patent attorney engaged by the DualGlo claimants to work on their behalf. The first defendant (Bromhead & Co.) is the firm of which Dr Spencer was a partner at the earlier phase of the relationship. In mid 2004 Dr Spencer and his then partner Mr Crouch came together with partners from another firm JY and GW Johnson to form a new firm, Bromhead Johnson. It is the second defendant.
The relationship between Messrs Baillie and Lambert and Dr Spencer started in late summer 2000 until it came to an end in late 2009. The claim form was issued in May 2010. Throughout the period of the relationship Dr Spencer prosecuted patent applications for the DualGlo claimants based on a PCT application (PCT/GB01/02532) made by Dr Spencer on their behalf in June 2001. Patents were granted in the USA, Eurasia, New Zealand, Australia and India, amongst others. At the point the relationship ended DualGlo decided to stop spending any further money on the applications. By that stage the European application which had been pending in the EPO was abandoned and so too were a number of other applications including a continuation application in the USA aimed at broader claims than had been granted hitherto. A key ground for complaint in this case is that Dr Spencer is alleged to have advised that broad patent protection would be obtained around the world based on the PCT application but that this advice was negligent and wrong.
Another key aspect of this case relates to a US patent called Hirotec (US 6 177 029). That patent was cited by in the International Search Report for the PCT application. The claimants contend that Dr Spencer advised them to buy the Hirotec patent and advised them that it was valid, infringed by DualGlo and its competitors and of major importance. DualGlo bought the Hirotec patent from its owners for $550,000. They contend that the Hirotec patent is in fact worthless and that Dr Spencer's advice about it was negligent and wrong.
The DualGlo companies are now effectively dormant. The remaining granted patents (including Hirotec) have been assigned to a new company, Visible 24/7 Ltd, in return for shares. The relevance of Visible 24 and its activities is disputed.
The claimants contend that Dr Spencer was negligent in a number of further respects but the main issues are those I have mentioned. There is no dispute that Dr Spencer owed a duty of care to the DualGlo claimants either in contract or in tort. No distinction in argument before me has been drawn between the positions of the various DualGlo claimants as claimants nor between the positions of all three defendants as defendants. There may be a difference between the DualGlo claimants as regards the quantification of any damages but no other distinction is relevant.
The losses claimed are put in various ways. First there is a claim for repayment of all the sums paid to the patent attorney over the years. This includes fees for work done by the defendants and disbursements paid on to other professionals. It comes to £222,700. Second there is a claim for all the losses incurred by DualGlo Ltd since October 2001 on the basis that acquiring and prosecuting the patent portfolio as well as developing and marketing the DualGlo products was all predicated on the advice that broad patent protection would be obtained. These losses are put in two ways. They are either the wasted operating costs and expenses of DualGlo Ltd (including the cost of buying the Hirotec patent) in the sum of £1,960,344 or else they are the total value of the shares in DualGlo Ltd held by DualGlo Technology Plc plus outstanding intercompany loans, coming to £2,231,554 on the basis that the shares are now worthless and the loans will never be repaid.
The defendants deny negligence and deny that any negligence which is proved caused the losses claimed or any losses. The defendants also counterclaim for £57,328.58 worth of unpaid fees which were outstanding at the end of the relationship.
All the figures are stated without the interest which is also claimed.
The fifth and sixth claimants are in a different position. They were investors either in DualGlo Plc or, for one early investment, in DualGlo Ltd. They contend that Dr Spencer also owed them a duty of care and is liable to them for negligence too. They claim the loss of the money which they invested which has now been lost. The claim is for £1,912,562. The same issues arise on the defendants' side in relation to this claim with the further point that the defendants deny that any duty of care was owed to the investor claimants. They can be referred to as Lacomp.
The negligence relied on
The Particulars of Claim sets out six particulars of negligence. They are:
i) failure properly to investigate the existing position when first instructed leading to failure to make any priority claim from the 7 June 2000 filing;
ii) negligent advice on the Hirotec purchase;
iii) negligent advice as to the effect of an item of prior art (US 5 989 135, "Welch") on the scope which could secured for the DualGlo PCT;
iv) negligent advice as to the effect of another item of prior art (WO 00/27908, "Hannacolor PCT") on the scope which could secured for the DualGlo PCT;
v) negligent advice as the scope which could be secured on the DualGlo PCT generally;
vi) negligent advice as to the validity of Hirotec in 2008 (specifically in view of Welch).
However by the trial points (iii) and (vi) had been dropped. Point...
To continue reading
Request your trial