Virgin Atlantic Airways Ltd v Jet Airways (India) Ltd and Others Zodiac Seats UK Ltd and another v Virgin Atlantic Airways Ltd Premium Aircraft Interiors UK Ltd v Comptroller General of Patents, Designs and Trade Marks and another (Costs)
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Floyd,Mr Justice Floyd |
| Judgment Date | 23 November 2012 |
| Neutral Citation | [2012] EWHC 3318 (Pat) |
| Court | Chancery Division (Patents Court) |
| Docket Number | Case No: HC 08 C01575 HC08 C01578 HC10 C00543 CH/2012/0082 |
| Date | 23 November 2012 |
[2012] EWHC 3318 (Pat)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Royal Courts of Justice
Rolls Building London EC4A1NL
The Hon Mr Justice Floyd
Case No: HC 08 C01575
HC08 C01577
HC08 C01578
HC10 C00543
CH/2012/0082
Richard Meade QC (instructed by DLA Piper UK LLP) for Virgin Atlantic Airways Limited
Adrian Speck QC (instructed by Taylor Wessing LLP) for Jet Airways (India) Limited
Pushpinder Saini QC and Christopher Hall instructed by Wragge & Co LLP for Delta Air Lines, Inc
Adrian Speck QC (instructed by Bird & Bird LLP) for Air Canada
Iain Purvis QC and Brian Nicholson (instructed by Wragge & Co. LLP) for Zodiac Seats UK Limited and Premium Aircraft Interiors Limited
Fiona Clark (instructed by The Treasury Solicitor) for The Comptroller-General of Patents
Hearing date: 8 th November 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
I gave judgment in this action on 27 th July 2012: [2012] EWHC 2153 (Pat) ("the main judgment"). On 8 th November 2012 I heard argument from a number of parties on the form of the order to be made, and in particular on the issues about costs. These arguments raised a question about an offer which Virgin had made to Contour (now called Zodiac Seats UK Limited, "Zodiac"), purportedly under CPR Part 36, and whether it was appropriate for the court to be shown the offer at this stage. I decided it was appropriate to be shown the offer, but that I would put my reasons in writing. That will be the first issue I deal with in this judgment. I also heard argument on whether the existence of the offer meant that I should not deal with costs as between Virgin and Zodiac at this stage, but should wait for the outcome of other proceedings. That is the second issue with which I deal in this judgment. Next, I heard argument about who was the overall winner as between Virgin and Zodiac for the purposes of CPR Part 44.3, or whether there was an overall winner. That is the third issue I must determine in this judgment, if it arises.
Finally I heard argument between Air Canada and Jet on the one hand and Virgin on the other as to the correct costs order as between those parties. Those are the final issues I deal with in this judgment.
It was not possible to hear argument on all the disputed issues in the time available on 8 th November. Accordingly I adjourned all other issues to be decided at a further hearing, if they cannot be agreed.
These proceedings were complex, even by the standards of patent proceedings. In the main judgment, I summarised the result at [255] as follows:
"(a) 908 is not infringed by the Solar Eclipse seating system either in its original form or with the variant form of headrest;
(b) 711 would not be infringed by Solar Eclipse seat units, either in their original form or with the variant form of headrest;
(c) 734 would be infringed by the Solar Eclipse seating system and Solar Eclipse seat units both in their original form and with the variant form of headrest;
(d) the modified Solar Eclipse does not infringe any of the patents;
(d) subject to deletion of the words "at least some" in claim 1 of 908 and 734, and on the construction of the claims of 908 which I have held to be correct, none of the patents is invalid for added matter;
(e) none of the three patents is invalid for obviousness;
(f) the Delta undertaking continues to apply;
(g) the non-designation point fails;
(h) the Rule 50 appeal will be dismissed."
Although Virgin succeeded overall against Zodiac in relation to one of the patents (734), and will be entitled to an injunction to restrain any future infringement, this finding does not provide an alternative route for Virgin to recover back damages from Zodiac. This alternative route to back damages could only arise under 908, as the other patents were only granted later. The alternative route to back damages was one of the purposes for which the action was commenced. It would have been an "alternative" route because Virgin had already obtained an enquiry as to damages in an earlier action against Zodiac for those damages ("the first action"). However, the patent has subsequently been amended in proceedings before the EPO. On the current state of the law ("the Unilin principle": see Unilin Beheer BV v Berry Floor NV [2007] EWCA Civ 364) Virgin would be entitled to continue with the enquiry as to damages notwithstanding the amendment of 908. Zodiac has, however, been given permission to appeal to the Supreme Court on the question of whether the Unilin principle is correct. That appeal would have been rendered moot if Virgin had succeeded in recovering damages by this alternative route. The hearing in the Supreme Court has been allowed to come on at a date after the present action is decided for that reason. In this action, on the issue of the alternative route to back damages, Zodiac has prevailed. However, as the amendment of the patent led to the original injunction being discharged, Virgin has succeeded in restoring its position on injunctive relief.
Virgin's Part 36 offer
CPR Part 36 .13 deals with the restrictions on disclosure of Part 36 offers:
"(1) A Part 36 offer will be treated as 'without prejudice except as to costs'.
(2) The fact that a Part 36 offer has been made must not be communicated to the trial judge or to the judge (if any) allocated in advance to conduct the trial until the case has been decided.
(3) Paragraph (2) does not apply –
(a) where the defence of tender before claim has been raised;
(b) where the proceedings have been stayed under rule 36.11 following acceptance of a Part 36 offer; or
(c) where the offeror and the offeree agree in writing that it should not apply."
Virgin's skeleton argument for the application on 8 th November said this at paragraph 10:
"[Zodiac] does not have to pay damages based on the amended form of 908, but as matters stand, subject to the Supreme Court, it does have to pay damages following its defeat in the first action. [Zodiac] is therefore not a winner in any sense; to say it has won anything would be premature in advance of the outcome of the Supreme Court appeal and a subsequent damages enquiry (there is a sub-issue in this respect arising from a part 36 offer made by Virgin)."
Virgin has therefore disclosed the fact that they had made a Part 36 offer. Moreover even this early reference went further by hinting that the offer might relate to the other proceedings as well. Virgin went on to make submissions at paragraphs 44 to 48 of their skeleton about the ability of the court to defer any determination about costs, and cited cases where this had been done within the context of a single action. At paragraph 47 they said:
"By analogy, the same approach should be taken in the present case where the outcome of the damages phase of the first action is unknown but Virgin has made a Part 36 offer covering that action and the present proceedings." (emphasis added)
At paragraph 48, Virgin said:
"As a practical matter, Virgin does not object to the Court knowing that there is a Part 36 offer in existence, however. However, that does not mean that the Court should consider its terms, let alone some of its terms selected by the offeree, [Zodiac]."
Thus Virgin were explicitly agreeing to the court being told of the fact that they had made a Part 36 offer. In addition they had disclosed that it related both to the present proceedings and the first action. Finally they relied on the well known principle that it is wrong for only part of an otherwise privileged document to be referred to.
In HSS Hire Services Group plc v BMB Builders Merchants Ltd [2005] 1 WLR 3158; [2005] EWCA Civ 626, the trial judge had given judgment on liability with damages to be assessed. The defendants had made a payment into court under CPR Part 36 prior to the order for a split trial. Pursuant to the former CPR 36.19(3), which expressly allowed disclosure to the court of the fact of an offer where there was a split trial and liability had been determined, the judge was informed of the payment but not of its amount. The judge ruled that the offer was not of any relevance and ordered the defendant to pay the costs of the liability trial. On appeal, Waller LJ quoted and subsequently approved the submission at [29] that:
"The proper approach … should … normally be to adjourn the question of costs pending the resolution of all the issues including damages, at which stage the quantum of the Part 36 offer can be revealed and the discretion in relation to costs exercised in the knowledge of it."
The main reason why the court should take this approach was to be found in CPR 44.3(4)(c) which places the court under an obligation to have regard to offers:
"(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –"
(c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply."
The obligation to have regard to offers must obviously apply at the time the discretion in relation to...
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Part 36 Offers And Costs Orders
...on substantive issues in July 2012, ([2012] EWHC 2153 (Pat)). Virgin v Jet Airways, Zodiac v Virgin, Premium v the Comptroller [2012] EWHC 3318 (Pat) deals with the costs Disclosure of Part 36 Offer Virgin had made an offer to Contour (now Zodiac) under CPR Part 36 and the court had to deci......