Schering Corporation v Cipla Ltd

JurisdictionEngland & Wales
JudgeMr. Justice Laddie
Judgment Date10 November 2004
Neutral Citation[2004] EWHC 2587 (Ch)
CourtChancery Division
Docket NumberCase No: HC 04 02573
Date10 November 2004

[2004] EWHC 2587 (Ch)




Royal Courts of Justice

Strand, London, WC2A 2LL


The Honourable Mr. Justice Laddie

Case No: HC 04 02573

Schering Corporation
(1)cipla Limited
(2)neolab Limited

MR. SIMON THORLEY QC (instructed by Messrs. Bird & Bird) for the Claimant

MR. COLIN BIRSS (instructed by Messrs. Taylor Wessing) for the Defendants

Approved Judgment

Mr. Justice Laddie

I have before me this morning an application brought by the defendants in this action, Cipla Limited and Neolab Limited, to strike out the current proceedings. The claimant is Schering Corporation. It is the registered proprietor of patent EP UK 0152897.


On 6 July 2004, Mr. Amar Lulla, the joint managing director of Cipla, wrote to the chief executive officer of the claimant, or another company within the claimant's group, in the following terms:

"Without prejudice.

Dear Sirs, you may be aware of Cipla Ltd, India and its strong international franchise in the development and marketing of Products of various therapeutic categories. Cipla Ltd has developed tablet and syrup of Desloratadine. We wish to launch these products in Europe, particularly in UK with our strategic partner Neolab Limited.

We are aware of your patent EP 0152897 and of the SPC's in respect thereof. As a result of extensive investigations including professional and expert advice, we have received strong opinions confirming our view that this patent is invalid, especially in the light of the prior use of Loratadine and its inevitable conversion to Desloratidine.

We and our partners have no wish, whatsoever, to launch the product without first bringing our plans to your attention. We do not wish to embark upon the confrontational path of revocation if there is an alternative commercial solution acceptable to both parties. However, we must make it clear that, if there is no such solution, we will not delay seeking revocation of your patent prior to launch of our product.

Since this matter is some urgency to us, we would be glad to receive your early response. We would of course be pleased to meet and discuss matters with you in greater confidence, without prejudice, with your nominated intellectual property colleagues. If we do not hear form you within four weeks from the date of this letter, we shall presume that you do not wish to initiate any discussions and that we are at liberty to proceed ahead in this matter, as deemed appropriate.

With kind regards, your sincerely."


Schering did not respond to that by entering into negotiations with Cipla. Rather, it applied to Master Moncaster on 6 August of this year to serve the current infringement proceedings out of the jurisdiction on the two defendants. That application was successful.


The only basis upon which the allegation of infringement is put is the content of the Cipla letter of 6 July 200The parties agree that if the contents of that letter are to be treated as privileged because they are without prejudice, then Schering has no material it can rely upon for the purpose of its infringement action and these proceedings must be struck out. On the other hand, if the contents of that letter are not privileged, as I understand it, at least for the present, the defendants admit that there is sufficient pleaded to defeat the current application to strike out.


Therefore the dispute before me is simply as to the question of whether or not this letter is privileged.


I have had the benefit of careful arguments, both from Mr. Colin Birss for the defendants and Mr. Simon Thorley QC for Schering. They took me to three authorities in the Court Of Appeal which throw light upon the way in which a court should approach this question.


I start with what is chronologically the last case, namely Standrin v Yenton Minster Holmes Limited, an unreported decision of the Court of Appeal of 28 June 1991. In that case Lloyd LJ, having referred to two earlier decisions of the Court Of Appeal, namely South Shropshire DC V Amos [1986] 1 WLR 1271 and Buckinghamshire County Council v Moran [1990] Ch 623, said:

"The principle to be derived from these authorities, if it can be called principle, is that the opening shot in negotiations may well be subject to privilege where, for example, a person puts forward a claim and in the same breath offers to take something less in settlement, or, to take Parker LJ's example in South Shropshire DC V Amos, where a person offers to accept a sum in settlement of an as yet unquantified claim. But where the opening shot is an assertion of a person's claim and nothing more than that, then prima facie it is not protected. Where the claim is by an insured against his insurers, the insurers will usually be entitled to a reasonable time to consider the claim before deciding whether to accept it or not.

How, then, do documents 1 to 8 measure up against that test? The answer is clear: there is nothing which could properly be called a negotiating document until the plaintiffs' solicitors' letter of 9th May 1985, document 11, which was, as it happens, the first letter marked 'without prejudice'."


Mr. Thorley places particular reliance upon the sentence reading: "But where the opening shot is an assertion of a person's claim and nothing more than that, then prima facie it is not protected." That, he says, accurately describes Cipla's letter of July, which I have set out above.


The next authority I should refer to is the South Shropshire case. There a document had been sent by one party to the other which contained nothing but assertions of that party's rights and entitlements. The question was whether, notwithstanding the fact that it was so expressed, it was nevertheless to be treated as a negotiating document, a privileged document, because it was to be treated as being without prejudice


In the Court Of Appeal, Parker LJ referred to Cutts v Head [1986] 1 WLR 1271 which sets out the policy considerations behind the without prejudice privilege. He went on to say as follows:

"That passage is important for two reasons. First, it shows that the rule depends...

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