Global Flood Defence Systems Ltd and Another v Johann Van Den Noort Beheer Bv and Others
| Jurisdiction | England & Wales |
| Judge | Judge Hacon |
| Judgment Date | 01 February 2016 |
| Neutral Citation | [2016] EWHC 99 (IPEC) |
| Docket Number | Case No: IP14M01776 |
| Court | Intellectual Property Enterprise Court |
| Date | 01 February 2016 |
[2016] EWHC 99 (IPEC)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
His Honour Judge Hacon
Case No: IP14M01776
Michael Hicks (instructed by Shakespeare Martineau) for the Claimants
Tom Alkin (instructed by DTM Legal LLP) for the Defendants
Hearing dates: 8–9 December 2015
Introduction
These proceedings concern devices used as a defence against flooding, in particular a product known as the 'self closing flood barrier' or 'SCFB'. It was developed by the first defendant ('BV') in around the early part of 2008. The second defendant ('Mr van den Noort') is a director and shareholder of BV and at least until recently has been its controlling force.
The second claimant ('UKFB') has been trading in flood defence products since 2008. Towards the end of that year it entered discussions with BV (then trading as Van den Noort Innovations BV) about acting as the exclusive worldwide distributor of the SCFB. About two years later BV agreed to grant a licence under patent rights and knowhow owned by BV. The first claimant ('Global Flood') was incorporated to act as licensee and the licence was concluded on 23 November 2010 between BV and Global Flood ('the Licence Agreement').
There arose a dispute about the patent rights owned by BV. Global Flood stopped paying royalties and the Licence Agreement was terminated by BV, coming to an end on a date no later than 18 February 2014. The claimants ceased sales of the SCFB and instead began to sell an alternative flood defence product, the 'self activating flood barrier' or 'SAFB'.
The defendants objected to the claimants' continued activity in the flood defence market, saying that the SAFB infringed patent rights owned by BV. Threats to bring proceedings for patent infringement were made. On 6 May 2014 the claimants started these proceedings, alleging that the defendants' threats were groundless and actionable. The defendants do not deny that the communications complained of were threats within the meaning of s.70(1) of the Patents Act 1977 ('the Act') or that the claimants are persons aggrieved by the threats within the meaning of s.70(2). The defendants say that all the threats are justifiable and that there is a defence to each of them pursuant to s.70(2A).
The claim against the third defendant was settled at an early stage and hereafter 'the defendants' should be taken to mean just the first and second defendants.
BV counterclaimed for royalties due from Global Flood under the Licence Agreement and also for a declaration that a Community registered trade mark owned by the Global Flood is invalidly registered.
The claimants then amended and expanded their claim, alleging that the defendants had made misrepresentations to the claimants which had induced BV to enter into the Licence Agreement. This is said to provide both a defence to the claim for outstanding royalties and to set up a claim for damages due to the misrepresentation.
On 21 January 2015 the claimants applied for summary judgment in relation to the alleged threats. In a judgment handed down on 29 January 2015 ('the January Judgment') I dismissed the claimants' application though I gave permission to appeal. There was no appeal in the event, so the allegation of threats remains live.
The counterclaim for a declaration that the first defendant's Community trade mark is invalid has not been pursued and the claim for outstanding royalties has been narrowed. The remaining issues are:
(1) the claimants' claim for unjustified threats of patent infringement proceedings;
(2) Global Flood's claim for misrepresentation;
(3) BV's counterclaim for €228,316.36, being the balance for minimum royalties due under clause 4.4 of the Licence Agreement for the calendar year 2013.
The claim in relation to threats
The issue is whether the admitted threats can be justified. The claimants say that there is now no possibility of justification, so the threats claim should be dismissed. Neither side is in a position to argue the claim at this stage, so the defendants say that it should be adjourned and heard at a later date.
The threats were made by reference to a patent application — in other words they were threats to sue for infringement of rights arising under s.69 of the Patents Act 1977 ('the Act'). In the January Judgment I explained this as follows:
"[12] … the first defendant has no granted patent with claims that cover the claimants' flood defence products in the UK. However, it owns European Patent Application 2315880, which designates the UK, and asserts that it has the contingent right to claim relief in relation to the sale of such products pursuant to s.69 of the Act:
69. (1) Where an application for a patent for an invention is published, then, subject to subsections (2) and (3) below, the applicant shall have, as from the publication and until the grant of the patent, the same right as he would have had, if the patent had been granted on the date of the publication of the application, to bring proceedings in the court or before the comptroller for damages in respect of any act which would have infringed the patent; and (subject to subsections (2) and (3) below) references in sections 60 to 62 and 66 to 68 above to a patent and the proprietor of a patent shall be respectively construed as including references to any such application and the applicant, and references to a patent being in force, being granted, being valid or existing shall be construed accordingly.
(2) The applicant shall be entitled to bring proceedings by virtue of this section in respect of any act only —
(a) after the patent has been granted; and
(b) if the act would, if the patent had been granted on the date of the publication of the application, have infringed not only the patent, but also the claims (as interpreted by the description and any drawings referred to in the description or claims) in the form in which they were contained in the application immediately before the preparations for its publication were completed by the Patent Office.
[13] The defendants say that once EPA 2315880 has matured to grant they will be entitled to bring proceedings against the claimants in relation to sales of their flood defence products between the publication of EPA 2315880 and the grant of the patent because if the patent had been granted on date of publication of the application, those sales would have infringed both the claims of the patent and the claims of EPA 2315880 (in the form they took immediately before the preparations for its publication).
[14] A claim raised under s.69, where there is no granted patent, is necessarily contingent: it depends among other things on (a) the patent being granted and (b) the granted claims being in a form which covers the product or process complained of.
[15] The defendants say this makes no difference — s.70(2A) of the Act still provides a potential defence sufficient to defeat a claim for summary judgment.
[16] Section 70(1) and (2) of the Act provide for the right to sue a party making threats of bringing proceedings for patent infringement and claim relief:
70. (1) Where a person (whether or not the proprietor of, or entitled to any right in, a patent) by circulars, advertisements or otherwise threatens another person with proceedings for any infringement of a patent, a person aggrieved by the threats (whether or not he is the person to whom the threats are made) may, subject to subsection (4) below, bring proceedings in the court against the person making the threats, claiming any relief mentioned in subsection (3) below.
(2) In any such proceedings the claimant or pursuer shall, subject to subsection (2A) below, be entitled to the relief claimed if he proves that the threats were so made and satisfies the court that he is a person aggrieved by them.
[17] Section 70(2A) provides for a defence to an allegation of threats:
(2A) If the defendant or defender proves that the acts in respect of which proceedings were threatened constitute or, if done, would constitute an infringement of a patent —
(a) the claimant or pursuer shall be entitled to the relief claimed only if he shows that the patent alleged to be infringed is invalid in a relevant respect;
(b) even if the claimant or pursuer does show that the patent is invalid in a relevant respect, he shall not be entitled to the relief claimed if the defendant or defender proves that at the time of making the threats he did not know, and had no reason to suspect, that the patent was invalid in that respect."
The effect of those sections in the context of a threat made in relation to a patent application has been considered by the Court of Appeal and Laddie J, in the same case. I went on to review those authorities:
"[19] If section 70(1) were to be interpreted literally it would provide no remedy for a threat to sue for infringement of s.69 rights — that is to say a threat to bring proceedings once a patent application is granted and to include in those proceedings a claim for relief in respect of acts done in the period between publication of the application and the grant of the patent. Section 70(1) refers only to threats of proceedings for infringement of a 'patent'.
[20] In Patrick John Brain v Ingledew Brown Bennison & Garrett [1996] FSR 341...
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Global Flood Defence Systems Ltd and another v Johan Van Den Noort Beheer B.v and Others
...The judge acceded to this application for the reasons he subsequently gave in a reserved judgment handed down on 1 February 2016 ( [2016] EWHC 99 (IPEC)). That judgment also dealt with the aspects of the trial that went ahead, which are not relevant for present purposes. 14 In the order he......