Stretchline Intellectual Properties Ltd v H&M Hennes & Mauritz UK Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Kitchin,Lord Justice Briggs,Lord Justice Aikens |
| Judgment Date | 22 May 2015 |
| Neutral Citation | [2015] EWCA Civ 516 |
| Date | 22 May 2015 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2014/3559 |
[2015] EWCA Civ 516
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (PATENTS COURT)
THE HON MR JUSTICE SALES
[2014] EWHC 3605 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Aikens
Lord Justice Kitchin
and
Lord Justice Briggs
Case No: A3/2014/3559
Nicholas Caddick QC and Andrew Norris (instructed by Nelsons Solicitors Ltd) for the Claimant/Respondent
Guy Burkill QC and Geoffrey Pritchard (instructed by Shoosmiths LLP) for the Defendant/Appellant
Hearing date: 30 April 2015
Introduction
In these proceedings the claimant ("Stretchline") complains that the defendant ("H&M") has infringed its patent number GB 2,309,038 ("the Patent") and acted in breach of the terms of an agreement entered into between the parties by way of compromise of earlier proceedings for infringement of the same patent ("the settlement agreement"). The central question to which this appeal gives rise is whether H&M is precluded by the settlement agreement from challenging the validity of the Patent in these proceedings. The judge held that it was and struck out those parts of the defence and counterclaim which raised that issue. H&M now appeals against that decision.
Background
The Patent describes an invention for making the fabric tubes which are used to encase the under-wires used in garments such as brassieres and swimming costumes. A particular problem with such under-wires is that their ends sometimes penetrate the tubes which encase them and so cause considerable discomfort to the wearers of the garments into which they are incorporated. The Patent claims to solve this problem by providing a penetration barrier which is created by weaving into the fabric a fusible yarn, that is to say a yarn that melts in the fabric drying process, bonds to the other fibres in the fabric and solidifies when cooled.
In July 2009 Stretchline made various test purchases of brassieres which H&M was selling through its stores. Analysis of those garments led Stretchline to believe that H&M was infringing the Patent and accordingly it began proceedings for infringement. H&M defended the claim in a conventional way, disputing that its garments fell within the scope of the Patent, maintaining that the invalidity of the Patent gave it a defence to the claim and counterclaiming for the Patent's revocation. At about the same time, Stretchline also began proceedings against another H&M group company based in the US alleging infringement of its equivalent US patent.
A mediation took place in late May 2011 and this led in due course to the settlement agreement between the parties to both the UK and the US proceedings. The agreement included the following recitals:
"A. Proceedings have been commenced by the Claimant against the Defendants by way of High Court Claim No. HC10C00278 filed on 30 July 2010 in the High Court of Justice (the "UK Proceedings") arising out of the Claimant's claim for infringement of United Kingdom Patent Number GB 2,309,038 (the "UK patent") by the UK Defendant (the "UK Dispute") and US Civil Action no. 2:10-CV-371 (EDVA) filed on July 20 2010 in The United States District Court for the Eastern District of Virginia (the "US Proceedings") again arising out of the Claimant's claim for infringement of U.S. Patent Number 6,071,578 (the "US Patent") by the US Defendant (the "US Dispute"). In both the UK and US dispute the Defendants have denied all claims and liability.
B. Following mediation between the Parties on 31 May 2011, pursuant to a Mediation Agreement dated the same date, the Parties agree to compromise the UK and US Proceedings on the terms set out in this Settlement Agreement.
C. The Parties intend that this Agreement bring finality to this dispute worldwide with respect to the claims asserted or those that could have been asserted with regard to the products at issue."
Clause 1 included the following important definitions:
"1.1 "Claims" shall mean any claim made in either the UK Proceedings or the US Proceedings (including any claim for damages, interest and cost) and any other potential claims in relation to the subject matter of those proceedings elsewhere in the World.
1.2 "H&M Low Volume Fabric" shall mean any wire casing product with a volume of fusible yarn of approximately 0.3–0.7% of the total volume of yarn in any tubular fabric component, including but not limited to the samples provided the Defendant to the Claimant under cover of a letter of 16 May 2011 from Shoosmiths Solicitors to the Claimant c/o Potter Clarkson.
1.3 "Accused Product" shall mean:
1.3.1 any product which falls within any of the claims of any of the Patents;
but does not include the H&M Low Volume Fabric.
"Patents" shall mean:
1.4.1 United Kingdom Patent Number GB 2,309,038;
1.4.2 United States Patent Number 6,071,578;
1.4.3 European Patent Number 0,802,269;
1.4.4 German Patent Number DE 69700104;
1.4.5 United Kingdom Patent Number 2,336,574.
1.5 "Party" shall mean a party to this Settlement Agreement.
1.6 "Prohibited Acts" shall mean:
Making, disposing of, offering to dispose of, using, importing or keeping (whether for disposal or otherwise) in any of the Prohibited Jurisdictions any Accused Product; during the duration of the terms of the Patents in their respective jurisdictions so long as each Patent remains enforceable in that jurisdiction;
1.7 "Prohibited Jurisdictions" shall mean the United Kingdom, the United States of America, Germany, France, Belgium, and/or Italy.
…
1.13 "UK Proceedings" has the meaning set out in paragraph A of the Background to this Settlement Agreement.
1.14 "US Proceedings" has the meaning set out in paragraph A of the Background to this Settlement Agreement.
1.15 "Supply Agreement" shall mean an agreement of even date hereof between Stretchline (UK) Limited and H&M Hennes & Mauritz AB."
The parties' obligations were set out in clause 3 which provided, so far as material:
"3.1 In consideration of the Claimant agreeing to compromise the Claims against the UK Defendant and the US Defendant (together the "Defendants") the Defendants each agree:
3.1.1 between them to pay, by way of costs, to the Claimant the sum of £235,000 (the "Settlement Sum") in full and final settlement worldwide of all Claims present and future made by the Claimant and/or its subsidiaries/associate companies;
3.1.2 not now, or at any time in the future to do, or procure or authorise the commission by any third party to do any of the Prohibited Acts, nor collude with any company within the same group of companies in relation to the commission of any of the Prohibited Acts, whether by their directors, officers, servants or agents or any of them or otherwise whatsoever.
3.1.3 to ensure that by the date of the expiry of the Sell-Through Period no H&M retail stores in the United Kingdom, the United States of America, Belgium, Germany, France and Italy will at that time or in the future dispose or, offer to dispose of, use, or keep (whether for disposal or otherwise) any Accused Product.
…
3.3 If after the sell-through period has expired, the Claimant does discover a product in an H&M Store within the territory referred to in 3.1.3 above which it believes to be a violation of this Agreement, the Claimant will promptly bring such product to the attention of the UK and US Defendants who shall promptly investigate matters and thereafter the Parties hereto shall, without prejudice to the Claimant's rights as set out in this Agreement or generally, work together to resolve the situation to each other's satisfaction."
Clause 4.1 contained a release in these terms:
"4.1 Subject to clause 4.2 below, agreement to these terms and payment of the Settlement Sum is in full and final settlement of the Claims or any other claim relating to the subject matter referred to in the litigation in the US and/or UK, and/or anywhere in the world, and the Parties are forever discharged from liability in relation to such Claims or any other claim whether the same have been intimated to the UK or the US Defendant or not."
Clause 5.1 contained an agreement not to sue:
"5.1 Subject to receipt of the Settlement Sum in accordance with clause 3.2 of this Settlement Agreement, the Parties each agree, on behalf of themselves, their successors or assigns, not to commence or pursue, or voluntarily assist the pursuit of, any further proceedings relating to or arising from the Claims against the other Parties, or their parents, subsidiaries, assigns, transferees, principals, agents, officers or directors, in this jurisdiction or elsewhere (otherwise for the purpose of carrying into effect the terms of this Settlement Agreement)."
Finally, clause 6.1 contained an agreement to dispose of the proceedings by way of a stay:
"Subject to receipt of the Settlement Sum in accordance with clause 3.2 of this Settlement Agreement, the parties consent to the stay of the UK Proceedings and shall take all necessary steps, via their legal representatives, to obtain a Consent Order staying the UK Proceedings, in the form set out in Annex 1 to this Settlement Agreement. The Claimant's solicitors will file the Consent Order with the UK court within 7 days of the receipt of the Settlement Sum by the Claimant's solicitors."
I must return to the provisions of the settlement agreement later in this judgment in addressing the submissions made by the parties in this appeal but at this stage would make the following general points. First, it...
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...of the kind in issue is not enough to escape from the terms of a general release": see per Kitchin LJ in Stretchline Intellectual Properties Ltd v H & M Hennes & Mauritz UK Ltd [2015] EWCA Civ 516; [2016] R.P.C. 13 at [49]. As Kitchin LJ went on to say at [50]: "The aim is always to determ......
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