Parainen Pearl Shipping Ltd v Kristian Gerhard Jebsen Skipsrederi as
| Jurisdiction | England & Wales |
| Judge | Mr Justice Arnold |
| Judgment Date | 11 October 2018 |
| Neutral Citation | [2018] EWHC 2628 (Pat) |
| Court | Chancery Division (Patents Court) |
| Date | 11 October 2018 |
| Docket Number | Case No: HP-2017-000074 |
[2018] EWHC 2628 (Pat)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
INTELLECTUAL PROPERTY LIST (CHANCERY DIVISION)
PATENTS COURT
Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Arnold
Case No: HP-2017-000074
Tom Moody-Stuart QC and Lindsay Lane (instructed by Stephenson Harwood LLP) for the Claimants
James Abrahams QC and Kathryn Pickard (instructed by Bristows LLP) for the Defendants
Hearing dates: 17–21, 25 September 2018
Contents
Contents
| Topic | Paragraphs |
| Introduction | 1–4 |
| The witnesses | 5–22 |
| Factual evidence | 5–15 |
| Technical experts | 16–17 |
| Experts on Norwegian maritime insurance law | 20–22 |
| Technical background | 23–29 |
| Common features | 24–26 |
| Vertical system | 27 |
| Vacuum system | 28 |
| Screw pump system | 29 |
| The Patent | 30–45 |
| The invention | 46 |
| The claims | 47–49 |
| Construction of claim 1 | 50–51 |
| Mr Humlestøl's list of components | 52–58 |
| The facts concerning the Vessel | 59–127 |
| Purchase and conversion of the Vessel by the Defendants | 59–60 |
| The grounding | 61–63 |
| The insurance settlement | 64–75 |
| Purchase of the Vessel by Cemet | 76–84 |
| The condition of the Vessel and the System at the date of the MoA | 85–92 |
| Work carried out by Cemet on the Vessel and the System | 93–94 |
| Purchase of the Vessel by Esmenet | 95–98 |
| Work carried out by Esmenet on the Vessel and the System | 99–110 |
| The Defendants decide not to purchase the Vessel | 111–116 |
| Purchase of the Vessel by the Claimants | 117–126 |
| Work carried out on the System by the Claimants | 127 |
| The correct approach to the issues of exhaustion and manufacture or repair | 128–132 |
| Manufacture or repair? | 133–172 |
| The law | 133–148 |
| Assessment | 149–172 |
| Purchaser expectations | 154 |
| Life expectancy of components | 155–158 |
| Subsidiary or substantial components | 159 |
| Independent identity | 160 |
| The inventive concept | 161 |
| Other factors | 162–166 |
| Overall assessment | 167–173 |
| Exhaustion | 174–197 |
| The law | 174–177 |
| Assessment: the insurance settlement | 178–186 |
| Assessment: the MoA | 186–196 |
| Implied licence | 198–205 |
| The law | 199–203 |
| Assessment | 204–205 |
| Estoppel | 206–209 |
| The law | 207–208 |
| Assessment | 209 |
| Summary of principal conclusions | 210 |
Introduction
The First Claimant (“PPS”) owns a ship now known as the M/V Nordanvik (“the Vessel”), while the Second Claimant (“SMT”) and the Third Claimant (“Eureka”) are respectively the technical and commercial managers of the Vessel. The Claimants claim declarations to the effect that the use of the Vessel in the United Kingdom will not infringe European Patent (UK) No. 2 032 426 entitled “System and method for discharge of bulk material from a ship” (“the Patent”) owned by the First Defendant (“KGJS”). The Second Defendant (“KGJSC”) and the Third Defendant (“KGJC”) are companies in the same group.
The Vessel incorporates a pneumatic cement discharge system in accordance with the Patent (“the System”). The Claimants do not dispute that the System falls within all the product claims of the Patent or that the method of operation of the System falls within all the method claims of the Patent. Nor do the Claimants challenge the validity of the Patent. Instead, the Claimants rely upon the fact that the Vessel was previously owned by KGJSC. The Claimants contend that, by selling the Vessel and/or entering into an insurance settlement, the Defendants have exhausted their rights under the Patent in relation to the System or have impliedly licensed the use of the System or are estopped from asserting the Patent against the Claimants with respect to the use of the System.
Much of the dispute turns on the fact that the Vessel ran aground in November 2008 and was extensively flooded. KGJSC declared the Vessel a total constructive loss and claimed on its insurers. The insurers accepted the claim, but did not acquire title to the Vessel, which was sold successively to Cemet Shipping Company SA (“Cemet”), Esmenet Shipping Co SA (“Esmenet”) and PPS. The Defendants contend that the System which they installed on the Vessel was effectively destroyed by the flooding, and that it has subsequently been replaced i.e. a new System has been manufactured. The Claimants contend that the System was merely damaged as a result of the flooding, and that it has subsequently been repaired partly by the intervening owners and partly by the Claimants.
There are parallel proceedings in Norway in which the Defendants allege infringement by the Claimants of the corresponding Norwegian patent. By a judgment dated 18 April 2018 the Oslo District Court rejected the Claimants' challenge to the validity of the Norwegian patent and their substantive non-infringement argument, but held that the System had been repaired rather than replaced and that KGJS had exhausted its rights as a result of the insurance settlement. The Defendants have appealed against this decision.
The witnesses
Factual evidence
The Claimants relied upon the evidence of four factual witnesses. Kai Grøtterud is Chief Executive Officer and part owner of Eureka, and a director of PPS. Mr Grøtterud dealt with the background to PPS's purchase of the Vessel. Counsel for the Defendants submitted that Mr Grøtterud's evidence was not satisfactory and that, at points, it was influenced by what he thought best served the Claimants' interests. I do not accept this; but on the other hand, the documentary evidence shows that in certain respects Mr Grøtterud's recollection was inaccurate and he could have accepted that more fully than he did.
Håkon Nytun has been a consultant to Eureka since November 2011. Prior to that he was Vice President of Commercial at KGJC. Mr Nytun gave some evidence about what the Defendants knew about the Vessel and about PPS's decision to purchase it. Counsel for the Defendants relied on the fact that Mr Nytun conceded in cross-examination that a couple of points made in his written evidence were incorrect as casting doubt on the reliability of the remainder of his evidence, but I do not accept that this follows.
Sjur Steimler is the owner of Steimler Shipbrokers of Bergen in Norway, and was involved in the sale of the Vessel from KGJSC to Cemet in January 2009 and the sale from Esmenet to PPS in 2012. No criticism was made of his evidence.
Janusz Sienkiewicz has been Director of Fleet Operations at SMT since 1 January 2018. Prior to that he had been the General Manager Fleet Service of SMT for 10 years. He gave evidence about the work done on the Vessel following its purchase by PPS. Counsel for the Defendants pointed out that, as Mr Sienkiewicz accepted, his evidence was largely based on reports from others and documents he had seen, but nevertheless counsel accepted that he had given his evidence fairly.
The Defendants relied upon the factual evidence of two witnesses. Jan Pedersen has been the Chief Executive Officer and a director of KGJS since 1993. Mr Pedersen gave evidence about the commercial background to the dispute between the parties. No criticism was made of his evidence.
Oddleiv Humlestøl is the inventor of the invention claimed in the Patent. He was employed by KGJS from 4 January 1974 to 30 June 2012 in successive capacities, finishing as Project Manager. Throughout his time at KGJS he specialised in cargo handling and cement systems. Mr Humlestøl visited the Vessel in the Oslo Fjord on a number of occasions following its grounding and was asked to advise KGJS on the extent of the damage both at that time and later on. Since 2012 Mr Humlestøl has acted as a consultant to KGJS.
Counsel for the Claimants made no personal criticism of Mr Humlestøl, but submitted that, owing to the manner in which his evidence had been prepared, no weight could be placed upon it save where it was supported by reliable documentary evidence. In this regard counsel relied upon three points.
First, significant parts of his evidence were not entirely his own work, but the product of teamwork involving two other employees of the Defendants as well as the Defendants' solicitors.
Secondly, parts of Mr Humlestøl's first statement constituted opinion evidence. For example, in paragraph 26 he said, “Bristows have asked me to describe the damage to the components of the blow tank shown in [a photograph] and explain the work that would be required to make these components functional again based on my experience of the installation and maintenance of cement unloading system on KGJS' Vessels”. This evidence was plainly inadmissible. When the Claimants pointed this out, the Defendants attempted to make the evidence admissible by inserting the words “I understood at the time from my inspections” and changing the tense of what followed from present to past. As Mr Humlestøl accepted, however, he had made no attempt actually to remember what he had thought at the time in this regard.
Thirdly, Mr Humlestøl resiled from a couple of points in cross-examination.
Although I agree that the second point means that the attempt to transform the inadmissible evidence into admissible evidence failed, I do not accept that these points justify the conclusion that Mr Humlestøl's evidence should be given no weight. Mr Humlestøl's reliance upon information from other employees of the Defendants was less extensive than Mr Sienkiewicz's reliance upon information from others, and his concession of a couple of points does not undermine the rest of his evidence any more than Mr Nytun's.
Technical experts
The Claimants' technical expert was...
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Exhaustion In The UK: IP Law Under Review
...Anr v Withrop BV (Case 16/74), 31 October 1974; Parainen Pearl Shipping Limited & Ors v Kristian Gerhard Jebsen Skipsrederi AS & Ors [2018] EWHC 2628 (Pat) 4. Betts v Willmott (1870-71) LR 6 Ch App 239, Chancery Appeals Court, Lord Hatherley L.C.; Incandescent Gas Light Co Ltd v Cantelo (18......
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Exhaustion In The UK: IP Law Under Review
...Anr v Withrop BV (Case 16/74), 31 October 1974; Parainen Pearl Shipping Limited & Ors v Kristian Gerhard Jebsen Skipsrederi AS & Ors [2018] EWHC 2628 (Pat) 4. Betts v Willmott (1870-71) LR 6 Ch App 239, Chancery Appeals Court, Lord Hatherley L.C.; Incandescent Gas Light Co Ltd v Cantelo (18......
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Exhaustion Of Patent And Trademark Rights In The United Kingdom
...BV & Anr v Withrop BV (Case 16/74), 31 October 1974 6. Parainen Pearl Shipping & Ors v Kristian Gerhard Jebsen Skiprederi AS & Ors [2018] EWHC 2628 (Pat) 7. Silhouette International Schmied GmbH & Co. KG v Hartlauer Handelsgesellschaft mbH 8. Betts v Willmott (1870-71) LR 6 Ch App 239, Chan......
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Exhaustion Of Patent And Trademark Rights In The United Kingdom
...BV & Anr v Withrop BV (Case 16/74), 31 October 1974 6. Parainen Pearl Shipping & Ors v Kristian Gerhard Jebsen Skiprederi AS & Ors [2018] EWHC 2628 (Pat) 7. Silhouette International Schmied GmbH & Co. KG v Hartlauer Handelsgesellschaft mbH 8. Betts v Willmott (1870-71) LR 6 Ch App 239, Chan......