Halliburton Energy Services Inc. v Smith International (North Sea) Ltd (No.2)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE JONATHAN PARKER,Lord Justice Chadwick,Lord Justice Jacob,Lord Justice Rix |
| Judgment Date | 24 November 2006 |
| Neutral Citation | [2004] EWCA Civ 1631,[2006] EWCA Civ 1599 |
| Docket Number | Case No: A3/2005/2193,A3/04/2039 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 November 2006 |
[2004] EWCA Civ 1631
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
(MR JUSTICE LADDIE)
Royal Courts of Justice
Strand
London, WC2A 2LL
Lord Justice Jonathan Parker
A3/04/2039
MR ANTHONY WATSON QC AND MR THOMAS MITCHESON (instructed by Messrs Bristows, London, WC2A 3AA) appeared on behalf of the Applicant
The Respondent did not appear and was not represented.
This is renewed application for permission to appeal made by Halliburton Energy Services Inc ("Halliburton"), the claimant in two patent actions commenced in the Patents County Court in December 2003 and 14 January 2004 respectively, but subsequently transferred to the High Court and consolidated.
The defendants in the consolidated action are Smith International (North Sea) Limited, a UK company (Smith UK), Smith International Inc, Smith UK's US parent company, and Smith International Italia SPA, an Italian company in the same group. Initially Smith UK was the only defendant in the consolidated action, but the other two defendants were subsequently added. I will refer to them collectively as "Smith".
Halliburton and Smith are competitors in the field of technology relating to the design and function of drill bits used for oil drilling. In the consolidated action Halliburton claims infringement of two patents. There are parallel proceedings in the US and in Italy. The US proceedings have been brought to trial and Halliburton was awarded a substantial amount of damages, a sum exceeding US35 million. An appeal by Smith is pending in the US. The Italian proceedings are still at an interlocutory stage.
In the consolidated action in the UK Halliburton is represented by Messrs Bristows; in the US proceedings it is represented by US attorneys by Godwin Gruber LLP and in the Italian proceedings by Italian lawyers. It is also assisted in the Italian proceedings by two Italian technical experts. In both the English and the Italian proceedings Smith is represented by Messrs Bird & Bird and in the US proceedings by US attorneys. The trial of the UK proceedings is due to start on 17 January 2005 before Pumfrey J.
On 30 July 2004 Smith served a product and process description in the UK proceedings which was designated as confidential. Halliburton contends that, in fact, it contains no confidential material but for the purposes of the present application its confidentiality is conceded by Mr Anthony Watson QC, who appears with Mr Thomas Mitcheson for Halliburton on this renewed application.
By letter dated 18 August 2004, Bristows wrote to Bird & Bird putting forward nominations for membership of a confidentiality club in relation to the product and process description. It proposed four in-house members of the Halliburton legal team, plus Halliburton's expert Mr Hall, plus its US and Italian lawyers. In their letter Mr Bristows accepted that the US and Italian lawyers could not make use of the contents of the product and process description in their respective actions without Smith's consent or an order of the English court.
Bird & Bird replied on 20 August 2004 agreeing to the inclusion of the four in-house lawyers nominated by Bristows, together with Mr Hall. They also agreed to the inclusion of a Mr Landis of Godwin Gruber, the US attorneys, on the basis that he had participated in the US proceedings on behalf of Halliburton. However, they objected to the inclusion of any other US lawyers and also to the inclusion of any Italian lawyers.
That led to an application being made by Halliburton to Laddie J to expand the confidentiality club. Before the Judge, Halliburton modified its previous position in that it nominated two individuals only from each of the two foreign law firms: Godwin Gruber in the US and the Italian law firm. In the case of Godwin Gruber, the two individuals proposed were, in addition to Mr Landis, a Mr Patrick Farley and Mr Eric Beuther. Mr Beuther is the partner in Godwin Gruber with overall responsibility for the US proceedings. It is to him that Mr Landis and Mr Farley report. Mr Watson has told me that Mr Beuther participated in the US trial, cross-examining the relevant designer to some effect.
Halliburton's application to the judge was supported by a witness statement by Mr David Brown, the senior partner of Bristows. In paragraph 23 of his witness statement, Mr Brown said:
"There are three actions in different jurisdictions. Halliburton requests only that the information provided in one jurisdiction can be shared with the lawyers representing it in the other jurisdictions. There can be no prejudice to Smith if this should happen—it is merely putting the parties on an equal footing in each jurisdiction, Smith's lawyers in each jurisdiction have access to the confidential product and process description, Halliburton's do not. It will be important for this court (and eventually for the Italian court) to understand Smith's products and process fully. This position can be reached in cost effective way avoiding the repetition of work that has already been carried out in the United States, by permitting disclosure of what is in effect non-confidential information to Godwin Gruber and [the Italian lawyers."
In his judgment dismissing the application, Laddie J commented in paragraph 9 of his judgment that Mr Brown's witness statement was "virtually silent" as to the reasons why the confidentiality club should be expanded to include the individuals in question. As to the two US lawyers, the judge concluded that no good reason had been shown for their inclusion. After commenting that the evidence and support for Mr Farley's inclusion in the confidentiality club was "extremely thin", the judge had this to say, in paragraph 14 of his judgment, about the application to include Mr Beuther:
"As far as Mr Beuther was concerned, there is even less evidence relating to him than there is about Mr Farley. Late filed evidence by Mr Landis suggested that Mr Farley knew at least as much about the product and process description by virtue of his close contact with the American proceedings as he, Mr Landis, does. But he says no such thing in relation to Mr Beuther. Indeed, at one stage during his submissions Mr Watson said that the reason for wanting Mr Beuther to be in the club was to avoid, as I understood it, embarrassment. Mr Beuther is Mr Landis's senior, and he said it would be embarrassing if Mr Landis knew more about what was going on in the English proceedings than Mr Beuther, a senior partner in the American firm, knew. It may well be that Mr Watson is right that there would be an embarrassment, but I am concerned with whether or not there is a justification for admitting Mr Beuther to the confidentiality club. As far as I can see, no material has been put before the court which shows that Mr Beuther could made any contribution at all to the conduct of the proceedings in this country. It follows that I do not think that the claimant has made out even its restricted application in respect of Mr Beuther and Mr Farley."
The judge went on to conclude that the situation in relation to the two Italian lawyers was, if anything, worse so far as Halliburton's application was concerned. As to Mr Watson's submission that the inclusion of the additional individuals would reduce the risk in different jurisdictions, the judge said in paragraph 16 of his judgment:
"There is no evidence as to the contribution that the Italian lawyers (either as a firm or as two individuals) could made to the conduct of these proceedings. Mr Watson says that he required the presence of the Italian lawyers to guard against the possibility that inconsistent things were said in the Italian proceedings; ie things were said in the Italian proceedings which are inconsistent with what is said by Smith in the English proceedings. It seems to me that if this is a basis for ordering admission to a confidentiality club it would apply in every case where there is multinational litigation, because in any case one party can say it is fearful that the other party may say inconsistent things in different courts."
He concluded in paragraph 17:
"For present purposes I only need to say this. There is no material before me which gives rise to even a suspicion that the defendants intend to run inconsistent cases in England and in Italy. Indeed, even if there were such evidence I am by no means convinced that that would be a justification for adding Italian lawyers to the confidentiality club. What counts for the conduct of the English proceedings is what is put before the courts here, not whether lawyers in another country (for tactical or other reasons) run a different case there. It appears to me that there is no material to justify expansion of the confidentiality club to include the two named Italian lawyers either."
The judge accordingly dismissed Halliburton's application.
I refused permission to appeal on the papers on 14 October 2004 on the ground that the proposed appeal would have no real prospect of success. In the meantime, on 12 October 2004 Halliburton applied to Pumfrey J to lift certain of the protective orders made in the US proceedings so as to enable Halliburton and its team to have access to Smith's disclosure in those proceedings. By his order of that date, Pumfrey J granted limited relief in that respect.
Shortly thereafter, Smith consented to Mr Farley being included in...
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