Norwich Pharmacal Company v Commissioners of Customs and Excise

JurisdictionEngland & Wales
Judgment Date25 July 1972
Judgment citation (vLex)[1972] EWCA Civ J0725-1
CourtCourt of Appeal (Civil Division)
Date25 July 1972
Defendents Appellants

[1972] EWCA Civ J0725-1


In The Supreme Court of Judicature

Court of Appeal

Appeal by defendents from order of Mr. Justic Graham on 18th February, 1972


THE MASTER OF THE ROLLS: The Norwich Pharmacal Company is an American Corporation which own a patent. Smith Kline and French Laboratories Ltd. are an English subsidiary and licensee of the patent. I will call them "the plaintiffs". They have letters patent for a chemical compound. In the specification it is designated by a very long name. I will not write it or repeat it. It is claim 2. It has 36 letters and 5 figures. The plaintiffs have given it a shortened name which I can both write and repeat. It is "furazolidone". This substance is useful for putting into poultry food because it gives the birds some protection against infection by microbes. Very little of it goes a very long way. The plaintiffs mix it with chalk in the proportion of about one-quarter of furazolidone to three-quarters of chalk. This I will call the furazolidone mixture. This goes even further. Only ½ 1b of the mixture goes into ton of feeding stuff. Some large poultry farms buy pure furazolidone themselvess or the mixture of chalk and furazolidone, and put it themselves into the feeding stuff. But smaller farms buy the final feeding stuff from merchants who have previously injected the furazolidone mixture into it.


The plaintiffs make the furazolidone in this country, and mix it with chalk here, and sell the mixture here. They have a strong belief, however that a lot of "pirate" furazolidone is being imported into this country from abroad. Sometimes it is brought in by big farmers. At other times it is brought in by merchants who put it into poultry food which they sell. The plaintiffs want to put a stop to these "pirate" importations. But they do not know who are the people who are importing it. They have no means, they say, of finding outs because the final foodstuff contains only a small amount of furazolidone. "It is"says the manager of their legal department, "for practical purposes impossible to show that this furazolidone is not lawful material originating with my company or its associates.


In these circumstances the plaintiffs seek to discover from the Customs authorities the names of the importers. It appears that in the United States there is a law which enables patentees to get such names from the Customs authorities. The plaintiffs seek to do the same hare by moans of this action. It appears that the Customs authorities here publish statistics shoeing the total amount of goods imported under the name of furazolidone, but none of the details. The plaintiffs seek to get the Customs to disclose the names of the puople the import so these quantities of furazolidone. If they can get the names, they intend to sue thorn for infringement of their patent. This will, they say, enable them to stop the "pirate" importations to a large extent. But it will not be fool-proof. The goods are sometimes imported as "medicament" without a name so it will not appear in the statistics as furazolidone.


The Customs authorities have in their possessions the names of the importers because, whenever goods are imported, the importer has to fill in the form of entry giving the name of the importers, the description of the goods, and so forth - sec section 28 of the Customs and Excise Act, 1952. The Customs authorities regard this information as confidential. They do not publish it at all. They only publish the statistics shoriny total quantities imported in the year, but no names or addresses.


This confidence is strongly confirmed in the Finance Act, 1967. Section 3 authorises the Commissioners to disclose some of the information to others if it is in the national interest, or rather, if the Secretary of State is satisfied that it is inthe national interest. But very significantly the section says that the Commissioners are not to disclose "the price of the goods or the name of the importer of the goods." Those matters are so sacrosanct that not even the Secretary of State can require them to be disclosed - not even when it is in the national interest.


Yet the Judge has held that the Customs' authorities must disclose the names of the importers to the plaintiffs. The, Customs appeal to this Court. Let me get one point out of the way at the very first: It was suggested that the Customs authorities were themselves guilty of infringing the plaintiffs' patents - not whilst they were ignorant, but as soon as they were told that the Goods infringed the plaintiffs" patent. I cannot accept this suggestion. The Customs authorities do not have possession of the goods. All they do is to ask the importers to pay the customs duty. They have power, of course} to prevent importation until the duty has been paid. The goods must stay in an approved warehouse till the duty is paid. None of this makes the Customs authorities guilty of infringement of patents, see Nobel's Explosives Co. v. Jones. Scott & Co. (1880) 17th 721 8 A.C. 1. They do not infringe the monopoly. All that the Royal grant gives to the patentee and his licensees is the right to "make use exercise and vend the said invention within the United Kingdom". The Customs authorities do none of those things. They do not make, use, exercise or vend it. They only collect duty on it.


But the plaintiffs suggest that the Customs authorities infringe in another way. The plaintiffs rely on the provision in the Royal grant which gives them "the whole profit and advantage" accruing by reason of the said inventions and, theysay that, by taking the duty, the Customs authorities take some of that profit and advantage. That is quite untenable. The profit is taken by the importer, not by the Customs. The Customs charge duty on it, just as the Revenue authorities charge tax on profits. But it does not wake them participators in it.


Finally, on this part of the case the plaintiffs suggest that, when goods are imported, which infringe their patent, they are prohibited goods and are liable to forfeiture under section (b) of the Customs Act, 1952: and, therefore, the Customs are in a position to make use of them. But that prohibition of imports is only available when the prohibition is imposed "under or by virtue of an enactment as, for instance, when injurious drugs are prohibited. It does not apply to goods which infringe a parent. By no stretch of the imagination could the Customs be expected to police imports so as to see that patents are not infringed. Not even if the monopolist asks them, car. The Customs be expected to do it.


I find myself, therefore, in entire agreement with the Judge on this part of the case. There is no conceivable cause of action against the Customs authorities for infringement of patent.


I turn to the question whether there can be discovery against the Customs authorities so as to compel them to give information as to the names of the importers. The cases warrant two propositions. First, discovery can be granted in did of any reasonable action which the plaintiff has brought or is intending to bring, or is capable of bringing, against the defendant. Thus, where the defendant has been found guilty of infringing a patent, he can be ordered to give the names and addresses of persons to whom be has sold the goods, both in aid of damages - Murray v. Clayton (1872) L.R. 15 Eng. 115: or of an account of profits - see Saccharin Corporation Ltd. v. Chemicals and Drugs Co. (1900) 2 Ch. 557. But that is only in aid of an existing or future action against the defendant.


Second. In general, "no independent action for discovery lies against a party against whom no reasonable cause of action can be alleged, or who is in the position of a mere witness." It was so held by the Judge, who gives many cases to support this proposition - see 1972 2 W.L.R. at pages 878/9. This proposition is founded on good reason. It would be intolerable if an innocent person without any interest in a case - were to be subjected to an action in Chancery simply to get papers or information out of him. The only permissible course is to issue a subpoena for him to come as a witness or to produce the documents to the Court.


But Mir. Walton urges - and the Judge has so held - that there is an exception to this second proposition - an exception, it is said, in aid of the administration of justice. Mr. Walton says that, when it is clear that there has been wrongdoing, and the plaintiff is unable to find out the wrongdoers, but a third party knows the names, then the Court can order discovery from the third party to find out the names, even though there is no reasonable cause of action against him. In support of this proposition Mr. Walton quotes cases of trade marks or passing off, and in particular Eunt v. Maniere (1864) 34 Beavan 157: Upmann v. Elkan (1871) L.R. 12 Eq. L40; Orr v. Diaper (1876) 4 Ch. D. 92, but much more fully and better reported in 25 W.R. 23. Those were cases of wharfingers, forwarding agents or shippers who were importing or exporting spurious goods. They handled champagne, cigars and sewing cotton which were dressed up so as to deceive purchasers. They did not know ofthe fraud at first, but, later on, were given notice of it. The Courts held that, on getting to know of the fraud, the wharfingers, forwarding agents or shippers ought not to part with the spurious champagne, cigars or sewing cotton. They ought to give to the aggrieved party such information as he might reasonably require so as to track down the fraud and sue the culprits. They ought to give the names of the consignors who shipped the goods with the counterfeit marks upon them; or the consignees who were importing them.


In each of those cases the wharfinger, forwarding agent or shipper had possession or control of the goods. As soon as the injured party complained, it was pretty...

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