Geofabrics Ltd v Fiberweb Geosynthetics Ltd
| Jurisdiction | England & Wales |
| Judge | Miss Charlotte May |
| Judgment Date | 27 September 2022 |
| Neutral Citation | [2022] EWHC 2363 (Pat) |
| Docket Number | Case No: HP-2018-000003 |
| Court | Chancery Division (Patents Court) |
| Year | 2022 |
[2022] EWHC 2363 (Pat)
Miss Charlotte May KC
(Sitting as a Deputy High Court Judge)
Case No: HP-2018-000003
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT
Rolls Building
Fetter Lane
London, EC4A 1NL
Mr Michael Hicks (instructed by Womble Bond Dickinson (UK) LLP) for the Claimant
Dr Geoffrey Pritchard, Mr Charles Brabin and Ms Alice Hart (instructed by Withers & Rogers LLP) for the Defendant
Hearing dates: 10–13 May 2022, 18–19 May 2022
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment was handed down by the judge remotely by circulation to the parties' representatives by e-mail and release to The National Archives. The date and time for hand-down is deemed to be 10.30am on 27 September 2022.
Miss Charlotte May KC (sitting as a Deputy High Court Judge): Introduction
This is the damages inquiry following the decision of David Stone (sitting as a Deputy High Court Judge) dated 5 th March 2020 ( Geofabrics Ltd v Fiberweb Geosynthetics Ltd [2020] EWHC 444 (Pat)) in which he found the Defendant liable for infringement of European Patent (UK) EP 2 430 238. The Defendant appealed that finding, but Mr Stone's decision was upheld by the Court of Appeal on 11 June 2021 ( Geofabrics Ltd v Fiberweb Geosynthetics Ltd [2021] EWCA Civ 854).
At the inquiry, the Claimant was represented by Mr Michael Hicks and the Defendant was represented by Dr Geoffrey Pritchard, Mr Charles Brabin and Ms Alice Hart. Dr Pritchard undertook the bulk of the oral advocacy for the Defendant, but each of Mr Brabin and Ms Hart addressed me on a discrete point of argument in closing. Parties are encouraged to look for opportunities to enable junior counsel to undertake oral advocacy in this way. I am grateful to counsel on both sides for their helpful submissions.
The technical background to the patent is conveniently summarised in Mr Stone's judgment at [5]–[11], to which the reader is referred. In summary, the patent concerns a geosynthetic trackbed liner (also sometimes called an anti-pumping geocomposite) that sits as a geotextile layer between the soil (or subgrade) and the ballast underneath railway tracks. It is used to ameliorate a problem known as “pumping erosion” that is seen with clay subgrades. This is a well-known problem caused by water, clay and silt leaching out of the subgrade by the weight of the train as it travels over the track. Over time, removal of clay and silt causes erosion to the trackbed and settling of the track, which requires remediation.
The problem of pumping erosion had previously been addressed by using a layer of sand (a “sand blanket”) between the subgrade and the ballast, but this was expensive and inconvenient to lay. In 2010 the Claimant launched its geocomposite product, Tracktex, as an alternative to a sand blanket (although sand remains approved for use as geocomposites are not suitable for all rail lines). A geocomposite has several advantages over a sand blanket which are said to make it commercially and environmentally attractive, including lower materials costs and lower costs of installation, and less track downtime required to install it.
The Defendant launched its rival product, Hydrotex 2, in July 2012. Hydrotex 2 was found to infringe the patent. It was on the market until June 2021, when the Court of Appeal dismissed the Defendant's appeal and the stay of the injunction ordered by Mr Stone pending appeal came to an end. In May 2021, the Defendant introduced a replacement for Hydrotex 2 called Hydrotex 4. All sales of Hydrotex 4 are deemed licensed and so are not relevant to this judgment. At all material times Tracktex and Hydrotex 2 were the only commercially available alternatives to a sand blanket.
Broadly, the Claimant's claim for damages can be broken down into four parts, as follows:
i) lost profits on lost sales of Tracktex;
ii) lost profits on historic sales of Tracktex as a result of price competition;
iii) lost profits on future sales of Tracktex as a result of ongoing price depression caused by historic price competition;
iv) interest.
There was also a claim for lost profits on lost sales of convoyed goods, but this was dropped at the start of trial, so I do not need to address it further. There was no claim based on a reasonable royalty in respect of any infringing sales that the Claimant would not have made itself.
By the end of trial, the parties had agreed a list of issues for me to decide. However, for that list to make sense, it is necessary first to provide a summary of the witnesses and the relevant factual background.
The Witnesses
Each party called one witness of fact and one forensic accounting expert.
For the Claimant, factual evidence was provided by Mr Gordon Donald. At all material times he was (and remains) the Claimant's Managing Director. He has been involved with Tracktex since he joined the Claimant in October 2009 and was responsible for Tracktex sales from when it was first approved. He provided six written statements and gave oral testimony. I found Mr Donald to be a careful witness. He gave clear and direct answers to questions and was able to speak firsthand about events that happened during the relevant period to the best of his recollection.
The Defendant did not criticise the way in which Mr Donald gave evidence but submitted that his views of what would have happened in the counterfactual should be scrutinised carefully for the reasons explained by Norris J in Servier v Apotex Inc [2008] EWHC 2347 at [11]. As Norris J said in Servier, even the most honest witness can innocently give self-serving evidence about what they would have intended or done in the counterfactual, with the result that this evidence must be assessed carefully by reference to whatever objective tools and evidence are to hand. However, in the same passage the judge warned that this assessment is not an opportunity for the court to construct its own hypothetical world out of the available materials in place of that argued by the parties. I have the whole of that passage well in mind in my assessment of all the evidence (not just that of Mr Donald).
For the Defendant, factual evidence was provided by Mr Stephen Hancock. He provided three written statements and also gave oral evidence. Mr Hancock has worked for the Defendant (or its predecessors) since 1988 but did not get involved with rail sales until around 2007. He was promoted to Sales Director in November 2012, responsible for managing the Network Rail account. His title changed to Key Account Manager in 2014, but he remained responsible for the Network Rail account until 2015 when his role changed. He then had little involvement with UK rail sales until 2018. His evidence was that he did not have hands on involvement during this period, although he continued to have some awareness of matters relating to sales of Hydrotex and the operation of the 2014 tender (of which more below).
The Claimant did not criticise Mr Hancock, who I find was also a good witness. However, the Claimant fairly observed that he did not know certain key facts and submitted that, as a result, some of his evidence should be treated with caution. This submission is best addressed in the context of the issues in which it arises (see below).
The Claimant's accounting expert was Mr Martin Chapman, a Fellow of the Institute of Chartered Accountants and a partner in the forensic accountancy team at Azets Holdings Ltd. He began his career in forensic accounting in 2005.
The Defendant's accounting expert was Mr Gervase MacGregor, also a Fellow of the Institute of Chartered Accountants and a partner in the forensic accountancy team at BDO LLP since 1992. He has been in charge of the forensic accounting department since 1994.
Each expert provided two written reports in a sequential fashion, with Mr Chapman going first. Both experts also gave careful oral testimony and were clearly doing their best to assist the court in respect of matters within their expertise.
The Defendant criticised Mr Chapman because there were some errors in the calculations in his first report and he did not provide a coherent reason for the changes in approach he made to the calculations in his second report. Whilst there is some basis for this criticism, I bear in mind that Mr Chapman corrected the errors in his second report. I also bear in mind that there is more than one way to approach the assessment of damages in this case. That is something that both experts accepted. The Defendant also submitted that Mr Chapman's approach to various issues was at best internally inconsistent and at worst selective in favour of his client.
As a result of these points, the Defendant argued that I should prefer the evidence of Mr MacGregor. I do not consider this to be a case where it is helpful or appropriate generally to “prefer” the evidence of one expert over another in the way that can sometimes be seen in respect of technical expert evidence in patent cases. Instead, I must approach each issue in turn, doing my best to determine what would have happened in the counterfactual by reference to the available evidence with respect to that issue. That includes the evidence of what actually happened, the evidence of Mr Donald about what the Claimant's intentions would have been (subject to the warnings given by Norris J in Servier v Apotex that I have referred to above), and the evidence of the experts (including, importantly, the reasons they give for their opinions).
It is convenient at this stage to note that both experts built detailed financial models which they used to...
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