Fabio Perini S.P.A v (1) LPC Group Plc (2) Paper Converting Papeine Company Italia and Others (No 2)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Norris |
| Judgment Date | 04 April 2012 |
| Neutral Citation | [2012] EWHC 911 (Ch) |
| Docket Number | Case No: HC08C00958 |
| Court | Chancery Division |
| Date | 04 April 2012 |
[2012] EWHC 911 (Ch)
Mr Justice Norris
Case No: HC08C00958
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
The Rolls Building
Fetter Lane
EC4A 1NL
Justin Turner QC and Miles Copeland (instructed by Collyer Bristow LLP) for the Claimant
Antony Watson QC and Thomas Hinchliffe (instructed by Taylor Wessing LLP) for the 2 nd Defendant
Antony Watson QC and Thomas Hinchcliffe (Instructed by Harvey Ingram LLP) for the 4 th Defendant
Hearing dates: 6 7 10–13 17–19 October 2011 (written submissions 11 and 28 November)
Essential background
This is my judgment upon the inquiry as to damages consequent upon the Order of Floyd J dated 6 October 2009 following his decision in the infringement proceedings ( [2009] EWHC 1929 (Pat)) and the dismissal by the Court of Appeal of an appeal against that Order ( [2010] EWCA Civ 525). I have been asked by the parties to settle the principles upon which the assessment is to be undertaken.
The machinery which changes an industrial roll of paper into the rolls of kitchen and toilet tissue sold in shops is called "a converting line". It involves several operations which are conducted by separate machines linked together.
The paper is first unwound from large industrial rolls with dimensions of about 3 metres by 3 metres: this function is performed by an "unwinder". (The speed with which these rolls can be changed can affect the performance of the line). The paper web is then rewound onto a length of the cardboard tube that one finds at the heart of the tissue sold in the shops. (This cardboard tube is itself produced by a machine called a "corewinder": and the speed with which these tubes can be replaced in the rewinder can affect the performance of the line). The machine which performs this function of winding the tissue is called "the rewinder". It determines the size of each sheet on the roll and the quality, regularity and firmness of the wound tissue roll. It has to regulate the speed at which it winds the tissue in order to maintain a constant paper tension as the size of the wound roll increases. If the end product is to be single ply the rewinder is fed by a single unwinder: but if the end product is multi-ply tissue then there will be two or three unwinders feeding the rewinder: and another machine called a ply-bonder will be inserted in the line between the unwinder and the rewinder. If the end product is to be embossed or printed or laminated then the appropriate machinery can also be inserted between the unwinder and the rewinder. When the rewinder has finished its job it will have produced a "log" of the finished product. The log will be wound with the requisite length of tissue perforated into correctly sized sheets; it will have the same diameter as the product to be sold; but it will have an axial length of 3 metres.
This case concerns the next stage. The tissue on the log has a loose end or "tail". It is passed to a "tail sealer" which glues the tail to the remainder of the log so that the tissue cannot unravel, but stays rolled up. The sealed log is then passed (via an accumulator) to a "log saw" which chops the log into the individual rolls of bathroom tissue ("BRT") or kitchen roll (household tissue or "HHT") that are to be sold. These then pass to the packaging and dispatch conveyers.
There had been particular advances in the unwinder and in the rewinder technology (relating to the way in which the drive was applied to the roll of paper to make it unwind or rewind) which enabled the parent rolls and the cardboard cores to be rapidly changed. The potential bottle neck in the process became the tail sealer. The ideal in terms of efficiency of process and minimum wear and tear on machinery is for a process to be continuous and to operate at a steady speed. But the "log" had to come to a stop for the glue to be applied to the tail and the log sealed. The process broke down into three stages. Firstly, the tail was separated from the log and unwound to a sufficient extent that glue could be applied in the correct position on the log. Secondly, the glue was applied by sprayers or brushes. Thirdly, the tail was wound back onto the log in order to make the seal.
Fabio Perini SpA ("Perini") found a solution to this problem. It obtained Patent No. 0481929 ("929") which related to an apparatus and method for gluing the tail to the log. The invention was that the log was rolled across a guide surface and in doing so it passed over a slit from which glue was supplied from underneath; as the log continued to roll the tail was automatically rewound over the log and pressed against the log where the glue had been applied simply by the effect of gravity. Supplying glue from a reservoir through a slit avoided the need to have something like a pump and a nozzle or rotating brushes to dispense the glue. Claim 16 was for a method of gluing the tail by rolling the log over a slit with the tail unwound. Claim 17 was for a method of so gluing the tail by rolling over a surface to allow the application of the glue and the rewinding of the tail. The invention increased the speed and improved the reliability of the converting line.
The main proceedings
The 929 Patent was the subject of challenge in infringement proceedings commenced by Perini against its great rival manufacturer Paper Converting Machine Company Italia ("PCMC") and Paper Converting Machine Company Limited ("PCMC (UK)"). In those proceedings ("the main proceedings") Floyd J found ( [2009] EWHC 1929 (Pat) at paragraph 21) that paper converting in general, and tail sealing in particular, were fields in which the patent specifications of the leading players were carefully scrutinised by competitors as soon as they were published. PCMC had produced a machine called "the Rotoseal". In the Rotoseal the log rolled over an inclined table with a gap in it, and as it passed over the gap a rotating adhesive cable transferred glue from an adhesive pan up through the gap and on to the log; as the log continued to roll down the inclined table the body of the log rolled over the tail and effected the seal. Floyd J held that this Original Rotoseal infringed Patent 929, because the glue was applied by rolling over the slit. The Court of Appeal held that he was right.
PCMC also produced a revised version of the machine ("the Modified Rotoseal"). In this the log was stationary whilst the adhesive cable brought glue to the body of the log, the glue being applied entirely by the positive action of the adhesive cable. Floyd J held that this did not infringe the 929 Patent.
The Re-amended Particulars of Claim in the main proceedings sought relief against PCMC and PCMC (UK) as makers and sellers of the Rotoseal, and against two manufacturers and suppliers of paper products who used the Rotoseal—LPC Group Plc ("LPC Group") and LPC (UK) Ltd ("LPC"). The case was that two Original Rotoseal machines had been installed in the premises of and used as part of the manufacturing capability of LPC Group and/or LPC, having been made at PCMC's factory in Italy and then shipped to the UK and installed and commissioned by engineers of PCMC and/or engineers of PCMC (UK) Ltd as part of a converting line.
It was said that the Defendants had infringed the 929 Patent because:-
i) The Defendants had all used a process claimed in claims 16 and 17 of the 929 Patent ("the user case");
ii) PCMC and PCMC (UK) had also supplied or offered to supply in the UK the means (specified in claims 16 and 17 of the 929 Patent) for putting the invention into effect in the UK ("the supply case");
iii) In any event PCMC and PCMC (UK) had acted pursuant to a common design with LPC Group and LPC and were therefore jointly and severally liable as joint tortfeasors for the latter's wrong doing.
Floyd J held :-
i) The Rotoseal machines were purchased from PCMC (the sale contract being ex-works Italy).
ii) The importation of the Rotoseal machines was by LPC.
iii) LPC operated the machines and used the method in claims 16 and 17 thereby infringing the 929 Patent.
iv) Although Perini alleged that PCMC (UK) was involved in the offer for sale or supply of the Rotoseal machines in the UK, the material was "inadequate to establish an offer for sale or supply by PCMC (UK)". The Judge held:
"Such an offer would have to be by PCMC (UK) made in the UK to supply in the UK…there is really nothing to suggest that such an offer was made. At most there is evidence that PCMC (UK) assisted PCMC Italia to conclude the contract to supply the machine in Italy. That is not enough".
v) PCMC were jointly liable with LPC for infringing Patent 929. That was because there was a common design by the supply of the Rotoseal machines, by their installation at LPC's premises by PCMC and by PCMC's engineers causing them to work (all pursuant to a contract between PCMC and LPC).
vi) LPC Group was not liable.
Floyd J therefore ordered that there be an inquiry into the damages suffered by Perini (or, at Perini's option, an account of the profits accrued to PCMC and LPC by their acts of infringement): see paragraph 9 of the Order dated 6 October 2009.
The claims in the Inquiry
Perini elected for damages. In its Amended Points of Claim in the Inquiry Perini claimed against PCMC and against LPC:-
i) Lost profits on the supply of converting lines (not simply the tail sealers) which (but for PCMC and LPC's infringements) Perini would have made;
ii)...
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