England and Wales Court of Appeal (Civil Division) Decisions

You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Lilly Icos Ltd v Pfizer Ltd (2) [2001] EWCA Civ 2 (23rd January, 2001)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/2.html
Cite as: [2001] EWCA Civ 2

[New search] [Printable RTF version] [Help]

Lilly Icos Ltd v Pfizer Ltd (2) [2001] EWCA Civ 2 (23rd January, 2001)

		Neutral Citation Number: [2002] EWCA Civ 2
		Case No: A3/2001/0136

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MR JUSTICE LADDIE

Royal Courts of Justice
Strand,
London, WC2A 2LL

23rd January 2001

B e f o r e :

LORD JUSTICE ALDOUS
LORD JUSTICE BUXTON
and
LORD JUSTICE LONGMORE
____________________

LILLY ICOS LIMITED

Petitioner/
Respondent

- and –

PFIZER LIMITED

Respondent/Appellant

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

David Young QC and Richard Meade (instructed by Bird & Bird for the Respondent/Appellant)
Simon Thorley QC, Andrew Waugh QC and Colin Birss (instructed by Taylor Joynson Garrett for the Petitioner/Respondent)
____________________

HTML VERSION OF JUDGMENT ON DISCLOSURE
AS APPROVED BY THE COURT
____________________

Lord Justice Buxton :

This is the judgment of the Court.

Introduction

The background to this appeal, and the issues in the substantive dispute out of which it arises, are fully set out in the judgment in Appeal A3/2000/3811, and need not be repeated here.

The present dispute concerns various material disclosed by the patentee during the revocation proceedings, which was treated as confidential in the hands of the opponent during those proceedings, and which the patentee wishes to remain confidential even after those proceedings have terminated. Originally there was a significant amount of material in respect of which the judge had declined to make such an order and in respect of which the patentee wished to seek the view of this court; and further material in respect of which such an order had been made, some part of which the opponent wished to challenge. However, after discussions between the parties the opponent has abandoned its cross-appeal, and the patentee wishes to maintain its appeal in respect of only one document. Before the judge the opponent had not sought the release of the then existing confidentiality order in respect of that document, but the judge himself, of his own motion, refused to make an order maintaining confidentiality. Understandably, therefore, the opponent indicated that it would not oppose the patentee’s appeal. We however considered that issues of some general importance might be involved in the appeal, and we indicated that we would appreciate assistance from both parties. The opponent was thereupon good enough to instruct Mr Birss to assist us, and he afforded us considerable help, as did Mr Meade on behalf of the patentee.

Legal framework

The issue arises under CPR 31.22, which reads:

“31.22 (1) A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where-

(a) the document has been read to or by the court, or referred to, at a hearing which has been held in public;

(b) the court gives permission; or

(c) the party who disclosed the document and the person to whom the document belongs agree

(2) The court may make an order restricting or prohibiting the use of a document which has been disclosed, even where the document has been read to or by the court, or referred to, at a hearing which has been held in public.”

As is well-known, provisions to this broad effect, though formulated in slightly different terms, were introduced into RSC Order 24 rule 14A as a result of the decision of the government of the United Kingdom not to contest the complaint declared admissible by the European Commission on Human Rights, (1984) 7 EHRR 146, in relation to the law declared by the House of Lords in Home Office v Harman [1983] AC 280.

It may be mentioned that we have described the issue as one of confidentiality, and we will for convenience continue to describe it as such. However, it will be seen from CPR 31.22 that the basic prohibition in relation to disclosed documents is in terms of their use. A breach of that prohibition, such as in a patent case the use by the opponent of processes disclosed by the patentee, might not involve anything that would usually be characterised as a breach of confidence.

The provisions of CPR 31.22 relate only to, and in this appeal we are directly concerned only with, documents produced to the other side on disclosure, and the subsequent obligations of the other side in relation to those documents. We are not directly concerned with issues of access to court documents on the part of non-parties, such as have recently been considered by this court in GIO Personal Investment Services v Liverpool and London [1999] 1 WLR 984 and Barings plc v Coopers & Lybrand [2000] 3 All ER 910. The issue before us does however appear to impact indirectly upon the position of non-parties in two ways, which it will be necessary to have in mind. First, if a party is at liberty to “use” a disclosed document, he may no doubt make it available to a non-party, in the absence of a special order preventing that. Second, if the court does make an order under CPR 31.22(2), but the document in question comes into the possession of a third party, for instance by accident or theft, then any use by the third party of the document with knowledge of the court’s order will arguably be a contempt. We heard no sustained argument on that point, but as at present advised the conclusion just stated would appear to follow by analogy with the view taken by the House of Lords in A-G v Times Newspapers Ltd [1992] 1 AC 191.

The special condition releasing the normal rule of confidentiality arises when a document “has been read to or by the court, or referred to, at a hearing which has been held in public”. It was conceded that that condition was fulfilled in respect of the document in issue before us. However, since the width of this provision may affect the proper approach to cases arising under it, we should say a little more about it.

Although the principle of the orality of the English trial remains untouched, practice has moved greatly in the direction of the presentation of evidence and arguments in writing; the use of documents by reference to them in those writings rather than by their being read out in open court; and the consideration by the judge of a large part of that material before the trial opens, so that it is not necessary to make specific reference to it during the trial itself. In Smithkline Beecham v Connaught [1999] 4 All ER 498 [Connaught] this court pointed out that the intent of (as it was then) RSC O24 r14A would be substantially frustrated if the rule were literally restricted to what had physically happened in open court. The rule was passed in the interests of the publicity properly attaching to the administration of justice, and of the interests of the recipient of the document under article 10 of the European Convention: [1999] 4 All ER at p 510g. To achieve those ends under modern practice it was necessary to take as falling under RSC 31.22(1)(a) any document pre-read by the judge, or referred to in for instance witness statements taken to stand as evidence, even if the document or the witness statement was not actually read out in court. Some further details of that regime may be mentioned, and then some comments offered.

First, there are taken to fall under the rule certain categories of document, in particular those coming within the pre-reading of the judge. It does not have to be established that the judge has actually read the documents: once the category is established, it is for a party alleging that they have not in fact been read to establish that fact, something that has to be achieved without enquiry of the judge (Barings v Coopers & Lybrands [2000] 3 All ER 910[53]). Second, it therefore follows that not everything that is disclosed or copied in court bundles falls under this rule: the Connaught approach is restricted to documents to which the judge has been specifically alerted, whether by reference in a skeleton argument or by mention in the “reading guide” with which judges are now provided at least in patent cases. Third, since the Connaught approach is based upon the assumed orality of a trial, documents, however much pre-read by the judge, remain confidential if no trial takes place, but the application is, for instance, dismissed by consent, albeit by a decision announced in open court: Connaught at p509j.

The central theme of these rules is the importance of the principle that justice is to be done in public, and within that principle the importance of those attending a public court understanding the case. They cannot do that if the contents of documents used in that process are concealed from them: hence the release of confidence once the document has been read or used in court. As this court recognised in Connaught, there may be some artificiality about that approach. That is because full access to documents deemed to have been read or used in court may give third parties at least the possibility of much more fully studying and understanding the case and the issues in it than if they merely heard the documents read aloud. Nevertheless, that paradox helps to underline this court’s concern that economical means of using and referring to the documents, understood amongst the lawyers, should not exclude the spectators from comprehension of the case.

One further preliminary issue needs to be mentioned. At the start of these proceedings the parties followed the normal practice in patent actions of entering into what is called, perhaps slightly unfortunately, a “confidentiality club”. That is an agreement that during the proceedings documents designated as confidential shall be seen only by a strictly limited number of people on each side, almost entirely professional advisers, who are bound by undertakings of confidence in relation to them. The agreement in the present case however further provides, we were told in accordance with normal practice, that the undertakings cease to apply in respect of any document that has been read to the court or referred to at a hearing in public, unless the Court orders otherwise: that is, the parties adopted the condition laid down by CPR 31.22 (1)(a) and (2).

This agreement was reinforced by an order made by consent, again we were told in accordance with normal practice, retaining confidentiality for the documents in the confidentiality club, effectively under CPR 31.22(2), until the end of the trial. That enables reference to be made to documents falling under the Connaught rubric without at that stage surrendering confidentiality, an arrangement that is seen as facilitating the smooth running of the trial. We shall have to revert to that aspect of the arrangements at a later stage. Such an order however only applies to the trial. Once the trial is completed the order, and the agreement, expire: hence the need for specific application in relation to documents that are still sought to be maintained as confidential, such as the application made in this case to Laddie J.

When making its decision under CPR 31.22(2) at the end of the proceedings the court will note, but will not be constrained by, any such confidentiality agreement: Connaught, at p511b, ff. There are two reasons for that approach. First, as this court pointed out in Connaught, patent litigation is of considerable public importance, involving as it does potential restrictions on competition in respect of goods of great public benefit. It should so far as possible take place in public, whatever the contrary wishes of the parties. Second, as pointed out in paragraph 5 above, a confidentiality obligation, whether undertaken by agreement or imposed by order, incidentally affects the access to information, and thus freedom of expression, of third parties. For the court to sanction such agreements in circumstances other than those of real need would therefore give rise to serious questions under article 10 of the Convention.

The document and its history

With that regrettably long introduction we come at last to the document in issue in this case.

As is frequently the case in proceedings for revocation on grounds of obviousness, the patentee argued that one indication that the invention was not obvious was the striking commercial success of the product when eventually marketed. If it was obvious that such rewards were available, why had no-one else got there first? A counter to that argument often advanced by opponents is that the commercial success was explicible not by the unique merits of the product but by the promotional efforts of the large organisation that had marketed it. Each of these claims potentially requires substantial and inconvenient disclosure. It has therefore become the practice, in order to save the expense of disclosing thousands of documents, for the patentee to be ordered, by consent, to produce a schedule showing (page 1) sales figures in value terms; and (page 2) advertising expenditure on a month-by-month basis since the launch of the product. Such an order was made, and such a schedule produced by the patentee, in this case.

The patentee persisted to trial in its argument in relation to commercial success. However, the opponent did not in the event seek to argue, either in its pleadings or at trial, that that success had been attributable to promotional efforts. The patentee, in support of the claim to commercial success, adduced evidence from one of its senior scientists, who set out examples of the interest expressed in the product by the press, and gave details of amounts prescribed, numbers of patients treated, and estimated market share. These details went beyond, and gave more disclosure than, the information on page 1 of the schedule. The only reference to advertising and promotion was in the last sentence of this section of the witness statement, which said:

“I understand that details of sales of sildenafil cirate, broken down into the USA and the rest of the world, together with advertising and promotional expenses, on a month by month basis to August 1999 have been provided to the Claimant’s solicitors in confidence.”

The patentee does not seek to retain confidentiality for page 1 of the schedule, inter alia because the information that it contains, or something approaching it, can be reconstructed from various publicly available sources. The patentee does, however, seek to retain confidentiality for page 2 of the schedule, contending that figures for advertising and promotion are not publicly available, and are regarded generally in the pharmaceuticals industry as highly commercially sensitive. It will be recalled that the opponent did not oppose a confidentiality order in respect of page 2 of the schedule, but the judge of his own motion declined to make the order.

The judge’s ruling

It should first be said that the matter of orders under CPR 31.22(2) came before the judge in a somewhat unsatisfactory manner. There was more than one hearing, and the judge does not seem to have been given any detailed exposition of why, as in the case of page 2, certain orders were not opposed. In view of the observations of this court in Connaught, referred to in paragraph 12 above, it should be clearly understood that the court will require to be persuaded, and will require detailed submissions as to why it should be persuaded, that the confidentiality agreement should subsist in respect of any particular documents.

The judge at the start of his judgment referred to Scott v Scott [1913] AC 417, concerning the central principle that trials must be held in public, and then cited some well-known words of Lord Haldane, [1913] AC at p437:

“While the broad principle is that the Courts of this country must, as between the parties, administer justice in public, this principle is subject to apparent exceptions….But the exceptions are themselves the outcome of a yet more fundamental principle that the chief object of Courts of justice must be to secure that justice is done….In the two cases of wards of Court and of lunatics the Court is really sitting primarily to guard the interests of the ward or the lunatic…It may often be necessary, in order to attain its primary object, that the Court should exclude the public…The other case referred to, that of litigation as to a secret process, where the effect of publicity would be to destroy the subject-matter, illustrates a class which stands on a different footing. There it may well be that justice could not be done at all if it had to be done in public. As the paramount object must always be to do justice, the general rule as to publicity, after all only the means to an end, must accordingly yield. But the burden lies on those seeking to displace the application in the particular case to make out that the ordinary rule must as of necessity be superseded by this paramount consideration. The question is by no means one which, consistently with the spirit of our jurisprudence, can be dealt with by the judge as resting in his mere discretion as to what is expedient. The latter must treat it as one of principle, and as turning, not on convenience, but on necessity.”

Basing himself upon this classic statement, the judge held, at p6 of his judgment, that

“Where the court is dealing with a matter of general public concern, then the party seeking to withold material from disclosure has to make out particularly clearly that there is a necessity for the order he seeks.”

In respect of the schedule, the judge pointed out that commercial success had not been a side issue, but crucial to the patentee’s case. He then said, at page 11:

“I can see very great difficulties in [the patentee’s] way in making out a case of necessity for secrecy in respect of the figures relating to advertising and promotional expenses in view of the central nature of this issue to the task facing the court in considering the validity of this patent and in view of the extensive disclosure in [the patentee’s witness’s] statement which seems to me to disclose the most important commercial information, that is to say, sale, numbers of customers, and so on.”

However, the patentee having indicated that it would wish to appeal any order adverse to it in relation to page 2 of the schedule, the judge agreed to maintain the confidentiality order that otherwise he would have made until this court could consider the matter, with the benefit of such evidence as the patentee saw fit to put before us.

The evidence now to hand really does no more than reiterate the belief held by the patentee and others in the industry that information of the order to be found on page 2 is highly commercially sensitive, and to state that it cannot be gleaned from anywhere other than the manufacturer’s confidential records. We have no doubt that if that evidence had been before the judge it would not have altered the view that he was minded to take. We are therefore effectively in the position of hearing an appeal from a refusal by the judge to make an order under CPR 31.22(2) in respect of page 2 of the schedule.

Criticisms of the judge’s analysis

Two matters may be mentioned. The first, to which we will have to return, concerns the judge’s analysis of the nature of the substantive case. While it is quite true that commercial success was an important issue, as we have seen there was not, in the event, introduced into the case any actual consideration of the effect of advertising. Page 2 had been drawn up, by order of the court, but as a matter of convenience, against the possibility of such an argument being raised. Therefore, although page 2 was indeed referred to at a public hearing, by reason of its having been mentioned in the witness statement referred to in paragraph 15 above, that reference was only as a matter of record or in passing, and not as part of any argumentative submissions. Anyone sitting in court and trying to understand the issues in the case and why it was decided as it was would not have needed, indeed would not have been helped by, access to page 2.

Further, we think that it goes too far, as at one stage was tentatively suggested by Mr Birss, to argue that the page 2 figures were important to the case because they may have persuaded the opponent that the “promotion” argument was unsustainable, and therefore explained to a spectator why a common argument had not been advanced on this occasion. The material might well be of interest for that purpose, but that in itself plainly does not bring the material within the ambit of CPR 31.22(1)(a).

The second point is of more general importance. The judge imposed a test of “necessity”, drawing that from Scott v Scott. The general emphasis in Scott v Scott on public hearings is all-pervasive, and of central importance. However, as the passage cited in paragraph 18 above demonstrates, the “necessity” there discussed is necessity in the context of enabling the action to be heard at all. It is not, therefore, a test that directly addresses the issue of limited confidentiality within an action, and cannot be directly transposed from the one case to the other.

We are fortified in our belief that these two problems, although stemming from a common principle, are different in their implications by the form of CPR 39.2, relating to the holding of hearings in private. That provides:

“39.2 (1) The general rule is that a hearing is to be in public.

(3) A hearing, or any part of it, may be in private if-

(a) publicity would defeat the object of the hearing;

...

(c) it involves confidential information (including information relating to personal financial matters) and publicity would damage that confidentiality;

(d) a private hearing is necessary to protect the interests of any child or patient.”

It may be noted in passing that the validity of CPR 39.2 and its conformity to articles 6 and 10 of the Convention was upheld by the Divisional Court in R v Bow County Court ex p Pelling [2001] UKHRR 165, a decision in respect of which permission to appeal was refused by this court. The rule makes a clear distinction between the types of case addressed in Scott v Scott, which are dealt with in sub-rules (a) and (d) above, and problems such as that in our case, which is addressed in sub-rule (c). A test of “necessity”, generally stated, only goes a limited way towards illuminating the court’s task in the latter case, which has to be approached more broadly: whether the question is whether to hold the hearing in private, or whether to make or refuse an order under CPR 31.22(2).

The court’s approach

It may be convenient to set out a number of considerations that have guided us.

i) The court should start from the principle that very good reasons are required for departing from the normal rule of publicity. That is the normal rule because, as Lord Diplock put it in Home Office v Harman [1983] AC 280 at p303C, citing both Jeremy Bentham and Lord Shaw of Dunfermline in Scott v Scott,

“Publicity is the very soul of justice. It is the keenest spur to exertion, and the surest of all guards against improbity. It keeps the judge himself, while trying, under trial.”

The already very strong English jurisprudence to this effect has only been reinforced by the addition to it of this country’s obligations under articles 6 and 10 of the European Convention.

ii) When considering an application in respect of a particular document, the court should take into account the role that the document has played or will play in the trial, and thus its relevance to the process of scrutiny referred to by Lord Diplock. The court should start from the assumption that all documents in the case are necessary and relevant for that purpose, and should not accede to general arguments that it would be possible, or substantially possible, to understand the trial and judge the judge without access to a particular document. However, in particular cases the centrality of the document to the trial is a factor to be placed in the balance.

iii) In dealing with issues of confidentiality between the parties, the court must have in mind any “chilling” effect of an order upon the interests of third parties: see paragraph 5 above.

iv) Simple assertions of confidentiality and of the damage that will be done by publication, even if supported by both parties, should not prevail. The court will require specific reasons why a party would be damaged by the publication of a document. Those reasons will in appropriate cases be weighed in the light of the considerations referred to in sub-paragraph (ii) above.

v) It is highly desirable, both in the general public interest and for simple convenience, to avoid the holding of trials in private, or partially in private. In the present case, the manner in which the documents were handled, together with the confidentiality agreement during trial, enabled the whole of the trial to be held in public, even though the judge regarded it as justified to retain confidentiality in respect of a significant number of those documents after the trial was over. The court should bear in mind that if too demanding a standard is imposed under CPR 31.22(2) in respect of documents that have been referred to inferentially or in short at the trial, it may be necessary, in order to protect genuine interests of the parties, for more trials or parts of trials to be held in private, or for instance for parts of witness statements or skeletons to be in closed form.

vi) Patent cases are subject to the same general rules as any other cases, but they do present some particular problems and are subject to some particular considerations. As this court pointed out in Connaught, patent litigation is of peculiar public importance, as the present case itself shows. That means that the public must be properly informed; but it means at the same time that the issues must be properly explored, in the sense that parties should not feel constrained to hold back from relevant or potentially relevant issues because of (legitimate) fears of the effect of publicity. We venture in that connexion to repeat some words of one of our number in Bonzel v Intervention Ltd [1991] RPC 231 at p234.27:

“the duty placed upon the patentee to make full disclosure of all relevant documents (which is required in amendment proceedings) is one which should not be fettered by any action of the courts. Reluctance of this court to go into camera to hear evidence in relation to documents which are privileged which could be used in other jurisdictions, would tend to make patentees reluctant to disclose the full position. That of course would not be in the interest of the public.”

In our view, the same considerations can legitimately be in the court’s mind when deciding whether to withdraw confidentiality from documents that are regarded by a party as damaging to his interests if used outside the confines of the litigation in which they were disclosed.

The principles applied to this case

In our view, the most important feature of this case, and one that we think with respect was not sufficiently addressed by the judge (see paragraph 21 above), is the very limited role that page 2 played in the trial. If it had been placed in a physically separate document from page 1 of the schedule, and had not been, unnecessarily, referred to in passing by the patentee’s deponent, it would not have fallen under the terms of CPR 31.22(1)(a) at all. To keep the trial judge, or ourselves in hearing the appeal, under trial, in the terms referred to in paragraph 25(ii) above, it is not necessary, and indeed it is not relevant, for the interested spectator to have access to page 2, however much it may fall under CPR 31.22(1)(a). That consideration enables the court to take a somewhat less demanding approach to the claim for confidentiality than would otherwise be appropriate.

We are of course familiar from our general experience with the very great reluctance of businessmen to disclose advertising figures, though we would not claim to understand the full reasons for that reluctance, and the evidence in this case does not enlighten us. Nonetheless, we are told, in strong terms, that information of the order contained in page 2 is regarded as axiomatically confidential, not only by the patentee, but also by everyone else engaged in this industry. Despite the warning that we gave in paragraph 25(iv) above, and maintain here, we consider that that is a fear that we can, in an appropriate case, legitimately act upon. This is in our view a legitimate such case for the reasons given in paragraph 26 above. We should not by any means be taken as thereby deciding that figures for advertising expenditure can be kept confidential in every case, without further reason.

We therefore allow the appeal to the extent of making an order under CPR 31.22(2) in respect of page 2, only, of the patentee’s Confidential Schedule of Commercial Success.

Order: The main Appeal is dismissed; the second appeal is allowed in part; permission to appeal to the House of Lords refused; the appellants to receive their costs of the appeal and the respondent’s notice; detailed assessment of the costs of the main appeal; in the second appeal the costs will be assessed at £14,078; the order to be stayed on revocation pending determination of the petition for permission to appeal to the House of Lords in the standard form; counsel to lodge a draft minute of order.

(order does not form part of the approved judgment)