England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION PATENTS COURT
The Hon Mr Justice Floyd
HC 06 CO 3919/HC 08 CO1551/HC 07 CO 2890

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/02/2009

Lord Neuberger of Abbotsbury:

Introductory

1. This is an appeal from a decision of Floyd J given in two judgments on 25^th June and 1^st September 2008, [2008] EWHC 1379 (Pat) and [2008] EWHC 2078 (Pat). In his impressively full and carefully reasoned first judgment, Floyd J held, inter alia, that certain patents registered in the name of Zipher Ltd ("Zipher"), and alleged to have been infringed by Markem Systems Ltd and Markem Technologies Ltd (which can be treated as single entity, "Markem"), were invalid on various grounds and accordingly fell to be revoked. That aspect of the decision, to which much the greater part of the hearing and of the judgment was devoted, is not the subject of this appeal. The issue to be resolved on this appeal is whether the Judge was right in his acceptance of a separate argument raised by Markem.
2. By that argument, Markem contended that Zipher had given an undertaking in earlier proceedings between Markem and Zipher before His Honour Judge Michael Fysh QC (sitting as a Judge of the High Court) in 2003. The effect of that undertaking was said to be that Zipher was precluded from alleging that any claim wider than claim 5 of a UK Patent application, No. 2,369,602 ("the UK Patent"), and of its international equivalents, ("the PCT Patents"), were valid or infringed. In his first judgment, Floyd J held that Zipher was so precluded at least in the United Kingdom; accordingly, this argument succeeded, although it was largely academic in practice as the patents were held to be invalid. In his second judgment, Floyd J held that the undertaking extended to the PCT Patents; this was not academic, as it meant that Zipher was precluded from seeking to enforce any claim wider than claim 5 in any of the many jurisdictions outside the United Kingdom, where Zipher had applied for patents pursuant to the PCT, and where his declaration of invalidity did not apply.
3. The basic issue in this appeal is fairly simple and, in terms of practice, not unimportant. It is whether a binding undertaking was given or offered to the High Court, in circumstances where it was never committed to writing, and, if so, whether it binds the party who offered it, given that the case then went to the Court of Appeal. While the basic issue is relatively simple, the relevant history is more complex, in terms of duration, events and technicality. Accordingly, the ensuing paragraphs of this judgment set out only the centrally relevant facts, and do so in a somewhat simplified way where that is appropriate and possible.
4. In 2001, Zipher applied for the UK Patent and for the PCT Patents in respect of an alleged invention. The nature of the alleged invention is of no significance for present purposes. As is common, the patents ("the two Patents") contained a number of claims, with the later ones being (a) narrower in scope than the earlier ones, and (b) couched in terms which incorporated features of the earlier ones. In particular claims 1 to 4 were significantly wider in scope than claim 5, and claim 5 was couched in terms which incorporated by reference features of claims 1 to 4.

The entitlement proceedings at first instance

5. In 2002, Markem brought proceedings contending that they, rather than Zipher, were entitled to the proprietorship of the two Patents (still then only applications), on the ground that the individuals responsible for the invention had been employed by Markem at the time the relevant inventive idea was conceived. Those proceedings came on before Judge Fysh, and were heard during March and April 2003.
6. During the course of his closing submissions on the seventh day of the hearing, Mr Speck, counsel for Zipher, said that he had "made it absolutely plain" that "claim 5 is the crucial, the clever, bit" and that Zipher "would be more than happy to drop down to claim 5 if [Judge Fysh thought] the claim is too wide". Judge Fysh then said "There is an undertaking coming", and Mr Speck replied that he had "already made that plain". Towards the end of the day, he said again that Judge Fysh might well think that the claims went too wide, and that, if so, Zipher "would be perfectly happy to give an undertaking" and "would come back either to claim 4 or 5". Judge Fysh then suggested that he "do it anyway, out of an abundance of caution".
7. On the following day, the eighth day of the hearing, Mr Speck announced that he was "in a position to accept [Judge Fysh's] invitation out of an abundance of caution". He then said that "out of an abundance of caution, [Zipher] would undertake to [Judge Fysh] not to prosecute a claim over and above claim 5". He added that, as Mr Watson QC (then counsel for Markem) had "wanted it written down", that had been done; he then handed Judge Fysh a piece of paper, on which claim 5 had been rewritten so that it no longer referred to claims 1 to 4. Mr Speck then repeated that Zipher "will, out of an abundance of caution, give my Lord an undertaking". When asked by Judge Fysh about his position, Mr Watson indicated that Markem were very likely to refuse to accept any undertaking. Judge Fysh then said that "we will go ahead and I will adjudicate on this claim", and that he would "record in his judgment, of course, that an undertaking in those terms has been given, as a result of the discussion yesterday". At Judge Fysh's invitation issued immediately thereafter, Mr Watson confirmed that Markem were "rejecting that as a possibility", subject to changing their minds during the hearing (which they did not do).
8. Later the same day, Mr Speck referred Judge Fysh to "the unconditional offer made to you" and emphasised that "it is not subject to my friend [Mr Watson] accepting it". He then stated that "we will do it if we successfully maintain the patent in our name", and repeated that "it is not an offer to my friend [Mr Watson] to accept or reject in that way; it is an offer that we make to the court." After a brief further exchange with Mr Speck about the topic, Judge Fysh said "do not let us waste time on it. I have your undertaking".
9. Judge Fysh gave judgment on 4 July 2003, in which he found that Markem was entitled to claims 1 to 4, and Zipher to claim 5, of the two Patents. As Mr Speck had indicated, the most valuable claim was claim 5, but the invention which it embodied could not be implemented without infringing claims 1 to 4. Accordingly, the result could be said to have been something of a draw. In [134] of his judgment, Judge Fysh said that "during closing speeches, Mr Speck unconditionally offered" effectively to abandon claims 1 to 4, and that "this development did not attract Mr Watson, but for reasons which will become apparent, it was, I believe, a realistic response to the evidence". Those "reasons" are to be found later in the judgment at [184] where Judge Fysh concluded that, on his assessment of the evidence, Markem had a good claim to entitlement in relation to claims 1 to 4 of the two Patents. Judge Fysh concluded this paragraph by saying "It will be recalled that during the hearing, Mr Speck proposed an amendment to the principal claims of '602 which at the time was unacceptable to Markem. I believe that this proposal deserves reconsideration in the light of my findings".
10. Following that judgment, there were a number of further hearings before Judge Fysh, culminating in further judgments, and a final order was entered on 21 May 2004. In a judgment given on 1 August 2003, Judge Fysh recorded that "Mr Speck's principal argument was that recorded in the first interim judgment [at [134] of] the judgment" of 4 July 2003, and that "Mr Watson again objected to this proposal". He then went on to decide that the appropriate course was, as Mr Watson had suggested, to direct that Zipher's application for each of the two Patents proceed as separate divisional applications, one for claims 1 to 4, which was Markem's, the other for claim 5, which was Zipher's. The order recorded this, and it also recorded a number of other matters, including undertakings by both parties relating to the drafting of the divisional applications, and to the assignment of any rights obtained in the meantime, "if the judgment of this court is reversed or varied on appeal".

The entitlement proceedings in the Court of Appeal

11. Zipher appealed the decision of Judge Fysh to the Court of Appeal (Kennedy, Mummery and Jacob LJJ), and this led to a five day appeal hearing. The outcome of the hearing was a judgment given on 22^nd March 2005, in which Zipher was wholly successful, so that it regained the applications for the two Patents in full – see [2005] EWCA Civ 267, [2005] RPC 761. During the course of his submissions, Mr Thorley QC (who had been brought in to lead Mr Speck for Zipher) said that Zipher had "made an offer down below that claims 1 to 4 should be deleted" and that that "was our submission, and that is not something I resile from". He also said that "that undertaking was given below and it remains". At one point during the hearing, Mr Watson said that one of the points for consideration was: "Should Zipher's offer to abandon [claims 1 to 4] be accepted by the court?"
12. After the Court of Appeal had handed down judgment, there was a further hearing on 22^nd April 2005 to work out the terms of the order. In their written submissions for that hearing, counsel for Markem had a passage headed "Should Zipher be allowed to resile from the unconditional undertakings it offered?" This passage included the statement that "the appeal had been fought on the basis that Zipher's unconditional offer given below would stand". Zipher made no reference to any undertaking in its skeleton argument.
13. The transcript of the hearing of 22^nd April 2005 records Mr Watson as saying that "If he [sc. Mr Thorley] is going to abide by the undertaking he gave, and unless he is going to ask to be relieved from it, … then the undertaking should be recorded". The discussion between Mr Watson and the Bench then immediately turned to validity, which suggests that the court did not understand that Mr Watson was referring to Zipher's alleged commitment not to enforce claims 1 to 4. In reply, Mr Thorley said that Zipher did not want to give an undertaking, and that any undertaking that had been offered was "offered on the basis of the construction of claim 4 that was held by Judge Fysh". He went on to accept, however, that claims 1 to 3 were not valid as a result of an item of prior art called Datamax, which had been unearthed after Judge Fysh had given judgment.
14. Mr Watson then returned to the question of the undertaking, saying that "during the hearing, he [sc. Mr Thorley] was asking to delete [claims] 1 to 4". He then stated that Mr Thorley had "said quite clearly claims 1 to 4 are hopelessly invalid in the light of Datamax". Jacob LJ replied that, as the Court of Appeal had held that the applications were entirely Zipher's property, "it is no business of yours, and that is the end of it". At that point, Mr Watson gave up on the point or points he had been making.

These proceedings

15. Thereafter, Zipher pursued the applications. The Patents and at least some of the PCT equivalents were duly granted. Zipher then began the instant proceedings against Markem, contending that they infringed the two Patents. Markem defended on the basis that they did not infringe, that the two Patents were invalid, and, crucially for present purposes, that, in any event, Zipher was not entitled to rely on, or to allege infringement of any claim wider than claim 5 of the original application as it was bound by its undertaking to Judge Fysh given on the eighth day of the hearing of the entitlement proceedings not to do so. As I have said, in his first judgment, Floyd J found the two Patents invalid, and, again crucially for present purposes, he found that Zipher was bound by the undertaking which Markem relied on; in his second judgment, he concluded that the undertaking extended to the PCT Patents as well as to the UK Patent.

A summary of my conclusions

16. Zipher now appeals against the decision that it is bound by an undertaking given to Judge Fysh. As the argument developed, it seemed to me that Zipher's case had two main strands, which are to some extent connected. First, that no undertaking was given to Judge Fysh: an undertaking was offered to the court, but not taken up. Secondly, in so far as an undertaking was given or offered, that it effectively lapsed when Judge Fysh awarded claims 1 to 4 to Markem, and there was no question of the undertaking or offer having somehow revived in the Court of Appeal.
17. In my judgment the correct analysis is as follows. First, there was an offer by Zipher to Judge Fysh of an undertaking, as opposed to the giving and acceptance of a binding undertaking, not to pursue or enforce claims 1 to 4 in the two Patents. Secondly, that offer was contingent on Judge Fysh deciding that Zipher was entitled to claims 1 to 4, and, once he decided that Markem, rather than Zipher, were entitled to claims 1 to 4, the offer of the undertaking lapsed. Thirdly, even if there was a binding undertaking given to Judge Fysh, it lapsed when he decided that Markem were entitled to claims 1 to 4. Fourthly, the fact that Zipher appealed and obtained claims 1 to 4 from the Court of Appeal did not serve to resurrect the offer. Fifthly, even if there had been a binding undertaking given to Judge Fysh, it was not resurrected by the decision of the Court of Appeal. Sixthly, even if the decision of the Court of Appeal did serve to resurrect the offer of an undertaking, it was not accepted by the Court of Appeal.
18. The sixth point is more difficult and controversial than the other five points, and my conclusion on it is tentative rather than firm, as it is not essential to my conclusion that this appeal succeeds. In order to explain my conclusion, it is convenient to start with some general remarks about undertakings and then to turn to the six points.

General remarks about undertakings

19. An undertaking is a very serious matter with potentially very serious consequences. It is a solemn promise to the court, breach of which can lead to imprisonment or a heavy fine. Accordingly, there should never be room for argument as to whether or not an undertaking has been given. Further, while there is inevitably sometimes room for argument as to the interpretation of an undertaking, the circumstances in which such arguments can be raised should be kept to a minimum. Accordingly, any undertaking should be expressed in full and clear terms and should also be recorded in writing.
20. None of this is either controversial or original. Unsurprisingly, it is well established. In Hussain v Hussain [1986] Fam 134, Sir John Donaldson MR said at 139H that "an undertaking to the court is as solemn, binding and effective as an order of the court in like terms". He went on to observe at 140E that "it is in all cases highly desirable that any undertaking to the court shall be recorded and served on the giver personally". As he immediately went on to say, the "most obvious and convenient way … is to record the undertaking in an order of the court …". Neill LJ took the same view, stating at 142A-B that "the general practice to be adopted" was that the "undertaking should be included in a recital or preamble in the order of the court", which should be issued and served on the person who gave the undertaking with a penal notice. He went on to emphasise the importance of clarity and certainty in relation to what was required by any undertaking, and the consequences of it being breached. Ralph Gibson LJ agreed with both judgments.
21. It seems to me that it must follow from this that, in a case where there is a bona fide dispute as to whether an undertaking has been given, the fact that neither the existence nor the terms of the undertaking has been recorded in writing militates against an undertaking having been given. All the more so where the court has made an order in which the undertaking, if given, could and should have been recorded. As Neill LJ said in Hussain [1986] Fam 134, 142B, in a case where an undertaking has been given, even where the court makes no order, that ought itself be recorded in a formal order which should recite in full any undertaking that has been given.
22. I consider that it must also follow from the above analysis that, where the terms of an undertaking could equally well be interpreted as having a narrow scope or a wide scope, it is the narrower scope which must prevail. An accusation that there has been a breach of an undertaking has similarities with an allegation of criminal behaviour, and it therefore must be right that, where two interpretations of an undertaking are equally convincing, the less stringent one should prevail. (Of course, in some circumstances, the terms of an undertaking may be ambiguous in such a way as to render the undertaking simply unenforceable.).
23. In this case, the undertaking is said to have been given orally, and was never committed to writing (save that the variation to the patent which would have resulted from the alleged undertaking was written down and handed to the court). The argument as to whether an undertaking was given, and what its terms were, has therefore centred on the transcript of what was said at the hearing. Quite apart from the self-evident undesirability of courts having to trawl through transcripts of earlier hearings to consider whether any binding commitments were made on behalf of any party, and, if so, the meaning and extent of any commitment, there are, I think, four points of principle to bear in mind when considering transcripts in such circumstances.
24. First, all the relevant passages must be read together and, of course, in their overall context. Secondly, one should be wary of indulging in what Lord Diplock characterised as "detailed semantic analysis" of the words revealed by the transcript: if such analysis can be inappropriate in relation to formal written contracts, it must be a fortiori when it comes to oral exchanges in court. Thirdly, if there is real doubt as to the meaning or effect of what was said, it should, as mentioned, be resolved in favour of the person who would be bound. Fourthly, it is permissible to have regard to what was said and done after the undertaking is said to have been given, in order to assist in resolving whether it was, and, if so, what its terms were – see per Lord Hoffmann in Carmichael v National Power Plc [1999] 1 WLR 2042, 2048E -2051C.
25. Before turning to the specific points in this case, I add this. The fact that undertakings should be recorded formally in writing in clear terms does not mean that the court is bound to conclude that, where that has not happened, no undertaking has been given. There is no rule that an undertaking given to the court must be recorded in writing before it can be effective. In other words, whether an undertaking has been given is ultimately a question of fact in each case. Equally, the fact that, in cases of doubt, an undertaking should be construed beneficially to the person who gave it, does not mean that the court should search for uncertainties or ambiguities in undertakings. Ultimately, an undertaking is to be interpreted in the same way as any other document (assuming that it is in documentary form, as it ought to be).

The six issues to be resolved

26. Was an undertaking given to Judge Fysh, or was there merely the offer of an undertaking? Zipher's initial purpose in offering an undertaking on the eighth day of the entitlement proceedings was, at least in part, to induce Markem to agree that neither party would have claims 1 to 4. That offer was rejected by Markem, so that purpose fell away. As a result, everyone must have appreciated, as Judge Fysh said, that he would have to decide whether claims 1 to 4 belonged to Zipher or to Markem (or, it is said by Mr Thorley, to neither). Zipher nonetheless made it clear that the offer stood.
27. It seems inherently improbable that that offer amounted to a positive binding undertaking with immediate effect, as opposed to an offer which, in due course, was open to being accepted or rejected by the court. First, it makes better sense that it was an offer because, unless and until Judge Fysh decided that Zipher should have claims 1 to 4, any undertaking would have been provisional or inchoate. While a provisional undertaking is not an impossible concept, it seems inherently less likely that such an obligation was created, as opposed to the more simple and usual offer of an undertaking. Secondly, until judgment had been given, the precise terms of any undertaking could not be sensibly finalised: there could conceivably have been findings which required to be taken into account in the finalised form of the undertaking. Thirdly, there might have been argument about the extent, if any, to which Zipher's undertaking should extend to not seeking to widen the scope of claim 5, or the extent to which Zipher should ensure that any successors in title were bound. That again suggests that no undertaking, as opposed to a mere offer of an undertaking, was given. Fourthly, the absence of any written form of undertaking (in sharp contrast to the written reformulation of claim 5 which was provided) militates against an undertaking having been given. Fifthly, again apart from the reformulated claim 5, there was absolutely no discussion as to the precise terms or extent of the undertaking.
28. In the course of his excellently structured and well judged submissions on behalf of Markem, Mr Meade QC relied heavily on the language used by Mr Speck on the eighth day of the hearing before Judge Fysh. In my view, however, if one looks at what was said during the currency of the entitlement proceedings, it provides another reason for concluding that there was never anything more than the offer of an undertaking by Zipher. I accept that there are passages which, if read on their own, support Markem's case to the contrary, but, taken as a whole, the relevant passages in the transcript, and indeed the contents of one or two written documents, appear to me to be more consistent with the notion that an undertaking was offered, in the sense of being left with the court, rather than given, in the sense of bindingly entered into.
29. In the first set of exchanges on the eighth day of the entitlement proceedings, Mr Speck said that Zipher "would give an undertaking" and "will give … an undertaking". Being expressed in the future, neither expression naturally means that an undertaking "is hereby given", and they probably did not even mean that an undertaking would be given come what may, as no undertaking would have been appropriate if, as happened, Zipher was not awarded claims 1 to 4. If it was not such an absolute commitment, it is therefore consistent with having been an offer to give an undertaking, which the court could take up if it thought it appropriate. Such an interpretation is also consistent with two other events. The first is Markem's rejection of such an undertaking: this not only excluded Markem from any right to be involved in the undertaking, but it also meant that there was no point in Zipher giving, as opposed to offering, an undertaking. Secondly, the genesis of any undertaking was the point (raised on the seventh day) that Judge Fysh might consider that claims 1 to 4 were too wide: such conditionality appears more consistent with an offer, which would fall for acceptance, if in due course Judge Fysh did think those claims were too wide. In the later exchange on the eighth day of the hearing, Mr Speck's reference to "an offer that we make to the court" is also more consistent with there having been no more than an offer.
30. Judge Fysh's characterisation of the alleged undertaking in [134] and his further reference to it at [184] of his first interim judgment again appears rather more consistent with Zipher having made an offer of an undertaking which the court could take up, than with Zipher having given an immediately binding undertaking. Although much was made by Zipher of the absence of any reference to an undertaking in the discussions before Judge Fysh after that judgment, I consider that those discussions are irrelevant, as Mr Meade submitted. Any undertaking or offer of an undertaking was irrelevant at that time, as claims 1 to 4 had been held to be Markem's not Zipher's.
31. What happened in the Court of Appeal is of limited assistance, as it was so much later, and the question of an undertaking was so little discussed. In the main, the oral submissions appear to me to have been more consistent with the notion that there was no more than an offer of an undertaking which Judge Fysh would have been free to take up. There are two exceptions. The first is Mr Thorley's statement that the "undertaking was given below". As he engagingly said, that statement could have been simply an example of loose language by an advocate; that that is so is supported by Mr Thorley's earlier statement to the Court of Appeal that Zipher had "made an offer down below" and "it is not something I resile from". If there had been a binding undertaking, it would not merely have been an offer, and there could have been no question of resiling. Although Mr Watson referred at the main hearing to Zipher having made an "offer to abandon" claims 1 to 4 (consistent with the view that there was no more than an offer), he does seem to have submitted at the post-judgment hearing that there was an actual undertaking in place. However, although his written argument suggests that the undertaking was given below by Mr Speck, his oral submissions seem to have been based on the contention that it was Mr Thorley who had given the undertaking in the Court of Appeal. That is not an argument which is advanced by Mr Meade.
32. In these circumstances, I conclude that there was no more than an offer of an undertaking to Judge Fysh on the eighth day of the entitlement proceedings. The words used on the eighth day of the hearing were, at best from Markem's point of view, ambiguous; indeed, in my view, they were more consistent with the notion that there was no undertaking, but an offer of an undertaking (which was not taken up). As to what happened thereafter, it does not take Markem's case to the contrary any further, to put it at its lowest.
33. The second point concerns the extent to which Zipher's offer to give an undertaking was contingent on the court deciding that it was entitled to claims 1 to 4. As already explained, if, as happened, Judge Fysh decided that Zipher was not entitled to claims 1 to 4, any offer by Zipher in relation to abandoning or not enforcing those claims became meaningless. It might, I suppose, be said that it would still have been appropriate for Zipher to be obliged to amend claim 5 along the lines indicated in writing to Judge Fysh. However, that was not really the essence of the alleged undertaking as offered: it was the consequence. That conclusion is supported by the absence of any suggestion from anyone, after Judge Fysh gave judgment, that the court should accept, formulate, and record the undertaking. It is also supported by the formulation of the alleged undertaking by Markem in their skeleton argument on this appeal: it is said to be "to delete claims 1-4 of the then patent applications". The offer to give such an undertaking became meaningless and redundant as a result of Judge Fysh's decision. Accordingly, subject to the fourth point, namely whether the offer revived once the Court of Appeal reversed the decision, it follows that the offer of an undertaking lapsed when Judge Fysh held that Markem were entitled to claims 1 to 4.
34. The third point is very similar to the second, and does not strictly arise. It is that, even if an undertaking was formally given and accepted, rather than offered and left open, it effectively lapsed when Judge Fysh awarded claims 1 to 4 to Markem. My reasons are really the same as those given in the preceding paragraph in relation to the second point. However, in one respect, Zipher's case is even stronger on the third point. If there was an effective undertaking in force once Judge Fysh had given his judgment of 4 July 2003, one would certainly have expected it to have been incorporated in the order entered on 21 May 2004, or at least that possibility would have been raised by Markem before Judge Fysh in one of the hearings after he had given that judgment.
35. The fourth point concerns the question of whether, if (as I have concluded) there was an offer of an undertaking to Judge Fysh, which lapsed as a result of his decision in relation to claims 1 to 4, the offer revived once the Court of Appeal reversed that decision. There is no reason why a party cannot offer an undertaking to a first instance judge, which will be available to be taken up not merely when the judge gives his decision, but also (or even only) when an appellate court gives its decision. However, if, in the course of a trial, a party offers an undertaking which will only apply if he wins, then, once he has lost, it seems to me that the offer lapses completely, unless, on a fair interpretation, it is apparent that the offer is also intended to apply if an appellate court reverses the decision. In other words, the offer will be interpreted as applying only at first instance, unless it is tolerably clear from its terms that, notwithstanding its rejection or lapsing at first instance, it is to remain open for acceptance in the Court of Appeal. On the face of it, the offer is made to the judge hearing the case, so it is for him to accept or reject it, and, if the offer is rejected and the case goes to appeal, it would be a fresh issue as to whether an offer (and, if so, what offer) should be made to the appellate court, and it would be a matter for that court whether to accept or reject any such new offer.
36. That view seems to me to accord with the principle that, in cases where an undertaking can fairly have more than one meaning, it should be accorded the meaning which is less onerous. Quite apart from this, an offer of an undertaking during a hearing is normally a tactical decision, particularly when it is on the eighth day of a hard fought trial. It therefore seems rather unrealistic to suggest that the party who makes the offer intends it remain open in an appellate court, when much time may have passed and when things might appear very different, unless he says so in relatively clear terms. Further, by not holding that claims 1 to 4 were Zipher's, Judge Fysh effectively rejected the offer of an undertaking, and, as in contract, it seems to me that the normal rule should be that, once an offer of an undertaking is rejected, it lapses permanently, so that, unless it is renewed, it is not open to be taken up.
37. For these reasons, it appears to me that, unless it is reasonably apparent from what was said before Judge Fysh, or recorded in the order of 4 July 2003, that the offer of the undertaking was intended to survive its effective rejection by Judge Fysh, it lapsed to the extent of not being revivable in the Court of Appeal (although there was, of course, no reason why it could not have been expressly renewed in the Court of Appeal). In my view, there is nothing in what was said to or by Judge Fysh to suggest that the offer of an undertaking would survive his rejection of Zipher's case on claims 1 to 4. Indeed, if the offer of the undertaking survived Judge Fysh's decision, it should have been recorded in the order entered on 21 May 2004. In this connection, it is telling that that order did contain other undertakings which, in terms, were stated to apply only if the Court of Appeal reversed Judge Fysh's decision.
38. It was suggested that, if this was right, it would lead to an absurd result if Judge Fysh had found for Zipher and had been upheld by the Court of Appeal, because, although Judge Fysh could have accepted the undertaking, the Court of Appeal could not have done so. That suggestion is wrong for two reasons. First, once Judge Fysh had accepted the offer, the undertaking would have been in place, and there would be no question of the offer having been rejected or having to be renewed in the Court of Appeal. Secondly, and this is relevant to the fifth point, once Judge Fysh had found claims 1 to 4 were Zipher's and accepted the undertaking, the Court of Appeal could either have upheld or reversed him. If the former, Judge Fysh's order, including the undertaking would have stood; if the latter, Zipher would no longer have owned claims 1 to 4 and the undertaking would have been irrelevant, and would then have lapsed.
39. The fifth point is very similar to the fourth: it assumes that (contrary to my view) Zipher gave an undertaking to Judge Fysh, which was accepted, but that it lapsed when he ruled that Markem owned claims 1 to 4. On those assumptions, did the undertaking revive when the Court of Appeal reversed him? Essentially for the same reasons as those identified in the preceding four paragraphs, the answer in my view is in the negative. In some respects, many of those reasons could be said to be a little weaker if an actual undertaking was given, but once one has concluded that it lapsed, I find it hard to see how, in the absence of a clear statement to the contrary, an undertaking could have revived in the Court of Appeal. Further, if there was an undertaking (as opposed to the offer of an undertaking) which was intended to revive if the Court of Appeal reversed Judge Fysh, it is particularly striking that it is not recorded in the order entered on 21 May 2004, especially as it contains other undertakings contingent on Judge Fysh's order being reversed.
40. Finally, even if there had been an offer of an undertaking still available for acceptance by the Court of Appeal (if, as it did, it found for Zipher on claims 1 to 4), it seems to me that the offer was not accepted by the Court of Appeal, and therefore lapsed. The reasoning behind this conclusion should be self-evident. Both Mr Thorley and Mr Watson had emphasised in the argument before judgment that there was an offer by Zipher in relation to claims 1 to 4, and although Mr Watson mentioned the undertaking in his written and oral submissions after judgment, it is clear that the Court did not ask for the undertaking. Further, no undertaking was incorporated into the order drawn up following the decision of the Court of Appeal.
41. I feel some unease about this point, as there seemed to me to be considerable force in Mr Meade's point that there may have been a misunderstanding in the Court of Appeal as to the nature and purpose of the proposed undertaking. However, throughout the hearing in the Court of Appeal, Markem were represented by leading counsel who appears to have had the point well in mind, so it may be wrong to be concerned about any misunderstanding. It would not be sensible to go into that aspect further: in the light of my conclusions so far, it is clear that this appeal must succeed, whatever the right answer on this sixth point.

Conclusion

42. It follows that, in my view, there was no more than an offer by Zipher of an undertaking on the eighth day of the hearing of the entitlement proceedings, Judge Fysh did not take up that offer when he decided that Markem were entitled to claims 1 to 4, the offer thereupon lapsed, and it did not revive when the Court of Appeal decided that it was Zipher who was entitled to claims 1 to 4. It follows that this appeal must be allowed.
43. It is only right to record that we heard far fuller argument than Floyd J on the point in dispute, no doubt in part because the point represented only a small proportion of the many issues which he had to determine, and that it is the only aspect of his decision which has been appealed.

Sir Peter Gibson:

44. I agree.

Lord Justice Jacob:

45. I also agree.