Smithkline Beecham Plc v Apotex Europe Ltd (Costs) (No.2)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jacob,Lady Justice Arden,Lord Justice Ward |
| Judgment Date | 16 December 2004 |
| Neutral Citation | [2004] EWCA Civ 1703 |
| Docket Number | Case No: A3/2003/2722 HC 02 C03101/HC 02 C02037 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 December 2004 |
[2004] EWCA Civ 1703
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL APPEALS DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (PATENTS COURT)
The Hon Mr Justice Pumfrey
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Ward
Lady Justice Arden and
Lord Justice Jacob
Case No: A3/2003/2722 HC 02 C03101/HC 02 C02037
Andrew Waugh QC, Justin Turner and Geoffrey Pritchard
(instructed by Simmons & Simmons) for the AppellantsAntony Watson QC, Colin Birss and Thomas Mitcheson
(instructed by Taylor Wessing) for the Respondents
By the main judgment in this case ([2004] EWCA Civ 1568) we upheld Pumfrey J's finding that the SKB patent was not infringed but reversed his findings that it was invalid by reason of anticipation or obviousness over '407 and obviousness over the erythromycin patent. Because we were not asked to do so, we did not rule on further questions of construction and attacks of invalidity though we expressed the view that some of these had "considerable force."
When the case came back before us for oral argument as to the form of order there was a considerable debate as to the appropriate order for costs. Other matters were disposed of readily and I need not recite them. An order was made dealing with these. We reserved judgment on the question of costs and matters consequential upon it. This judgment deals with the appropriate order as to costs.
The overall result of valid but not infringed was reached by decision of a host of issues and sub-issues. Both Pumfrey J and we had to consider a number of further issues which in the event it was not necessary to decide (see e.g. para. 115 of my judgment) . On top of that there were issues which Apotex had to prepare to deal with (claims 3 and 8) which SKB had to abandon at the commencement of trial because of the decision of the Court of Appeal in the BASF case. This required a concession that these claims were invalid and in due course the necessary consequence of amendment down to the original claims 10 and 11. Many of the issues overlapped, for instance the denial of claim coverage of the Apotex process being coupled with an assertion of invalidity if the position were otherwise.
The result of all this is that it is just not possible to disentangle the various issues and make a precise allocation of costs as to who was the winner of each. For that reason the parties both agreed that the thing to do in principle was to decide to reach an overall conclusion as to whether one side should be paying the other costs, and if so to set a proportion of those costs allowing for all appropriate factors by way of reduction. The parties were also agreed that the costs of first instance and appeal should be dealt with separately on such a basis.
We agree. To set a costs judge with the case the task of unravelling the costs of the issues would be to ask the impossible. We must do the best we can to decide now which side is a payer and the appropriate percentage if it is.
The disparity between the parties' positions is substantial. Apotex say they should have 65% of their costs below and 60% of the costs of the appeal. SKB say they should have 18% of their costs below and 46% of the costs of the appeal, each to be on an indemnity basis.
Points of principle
Before getting down to the apportionment exercise it is necessary to deal with a number of points of principle.
Section 65 of the Patents Act 1977
Following judgment in the BASF action, upheld on appeal, Pumfrey J certified that "the validity of claim 11 of the Patent was unsuccessfully contested." Claim 11 became claim 2 of the D version of the patent, the version before us. SKB say accordingly s.65 of the Act applies. It provides:
"65(1) If in any proceedings before the court or the comptroller the validity of a patent to any extent is contested and that patent is found by the court or the comptroller to be wholly or partially valid, the court or the comptroller may certify the finding and the fact that the validity of the patent was so contested.
(2) Where a certificate is granted under this section, then, if in any subsequent proceedings before the court or the comptroller for infringement of the patent concerned or for revocation of the patent a final order or judgment or interlocutor is made or given in favour of the party relying on the validity of the patent as found in the earlier proceedings, that party shall, unless the court or the comptroller otherwise directs, be entitled to his costs or expenses as between solicitor and own client (other than the costs or expenses of any appeal in the subsequent proceedings) ."
It is not in dispute that although the section speaks of "costs as between solicitor and own client" the reference should be taken to mean "costs on the indemnity basis" within the meaning of CPR 44.4(1) . We were told that this would in practice raise the level of recovery from about 70% to 90% of the actual fees paid by a client to his solicitor.
The fact there is this very old-fashioned reference in the section shows its age. According to Mr Blanco White's book Patents for Inventions, 4 th Edn. (1974) provisions of this sort go back to 1835 with various amendments. I doubt that they really serve any useful purpose these days – particularly in primary legislation which is inflexible and hard to change. The principles of the award of costs are now much more sophisticated and flexible than they once were. They are well able to cope with the vice at which the provision is aimed – vexing a patentee with essentially the same points on which he has previously won. Nonetheless, so far as the provision applies, it is relevant here.
Mr Watson disputes that it applies. First, so far as the appeal is concerned, he draws attention to the closing words of s.65(2) . He says they have the effect that where there is a certificate of validity from a previous action, in a subsequent action where the patentee is again victorious, he can have his costs of the victory on an indemnity basis, but only at first instance. The provision, he submits, does not apply to appeals.
The conclusion is completely irrational – why should a patentee vexed twice get a special costs order at first instance but not for an unsuccessful appeal? Mr Watson did not suggest any rational basis for his construction – he submitted that is simply the effect of the words used.
No one doubts the principle that one leans heavily against a construction which is irrational, the more irrational it is the harder one leans. But in the end if one is forced to the conclusion that Parliament intended that which seems irrational, then that is the law. Here I think Mr Watson is right: I can find no way of reading "subsequent proceedings" as meaning anything other than the second, vexing, proceedings.
I wondered whether the predecessor provisions to s.65 might help. Section 64 of the Patents Act 1949 read:
"64(1) If in any proceedings before the court of validity of any claim of a specification is contested, and that claim is found by the court to be valid, the court may certify that the validity of that claim was contested in those proceedings.
(2) Where any such certificate has been granted, then if in any subsequent proceedings before the court for infringement of the patent or for revocation of the patent, a final order or judgment is made or given in favour of the party relying on the validity of the patent, that party shall, unless the court otherwise directs, be entitled to his costs as between solicitor and client so far as concerns the claim in respect of which the certificate was granted:
Provided that this subsection shall not apply to the costs of any appeal in any such proceedings as aforesaid."
The proviso, as Mr Blanco White observed at para. 12–145, was ambiguous: did "any such proceedings" refer to the original proceedings only or did it refer to all appeals? It was possible to read the excluding proviso as making it clear that only an appeal in the original action was not subject to the special costs rule. But that possible way of reading that provision cannot apply here – the word subsequent, which appears for the first time in the 1977 Act, is explicit. It is the appeal in the subsequent action which is exempted from the special costs rule.
Nor is much help to be gained from even earlier legislation. I looked at s.35 of the Patents Act 1907 as amended in 1919. This read (the 1919 amendments being in bold):
"In an action for infringement of a patent, the court may certify that the validity of any claim in the specification of the patent came into question; and if the court so certifies, then in any subsequent action for infringement the plaintiff in that action on obtaining a final order or judgment in his favour shall, unless the court trying the action otherwise directs, have his full costs, charges and expenses as between solicitor and client so far as that claim is concerned."
Neither in 1907 nor in 1919 did Parliament explicitly deal with appeals at all. The focus on "the court trying the action" seems to be a reference to the first instance court only. If that were right, then in those days the special costs rule simply did not apply to appeals at all. I note in passing the remarkable fact that prior...
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