England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		25 November 2005

Mr Justice Kitchin :

1. This is the case management conference in an action for infringement of the claimant's UK patent No. 231898 entitled "Roof Tiles" and for infringement of the claimant's UK registered design No. 1047764.
2. In this action the claimant complains of the manufacture, keeping and disposal by the defendant of a tile called the "Duoplain" tile. The action is due to come on for trial not before May of next year.
3. The issue in contention between the parties is an application by the defendant to amend its defence to the claim for infringement of patent to introduce a defence under s.64 of the Patents Act 1977 ("the Act"). That application is resisted by the claimant on the basis that it has no real prospect of success.
4. The general principles which I must apply in considering an application to amend are well established. In Cobbold v. Greenwich LBC August 9, 1999, (unrep.) Peter Gibson LJ said (with Sedley LJ concurring):

"The overriding objective (of the CPR) is that the court should deal with cases justly. That includes, so far as practicable, ensuring that each case is dealt with not only expeditiously, but also fairly. Amendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party caused by the amendment can be compensated for in costs, and the public interest in the administration of justice is not significantly harmed."

5. An application to amend will not, however, be allowed where it is apparent that the proposed amendment has no prospect of success. The test to be applied is the same as that in Part 24 relating to summary judgment. Permission to amend will be granted where the proposed amendment is arguable, but it will be refused where the prospects of success are false, fanciful or imaginary. There must, in short, be a real prospect of success.
6. Section 64 of the Act reads as follows:

"(1) Where a patent is granted for an invention, a person who in the United Kingdom before the priority date of the invention

(a) does, in good faith, an act which would constitute an infringement of the patent if it were in force, or

(b) makes in good faith effective and serious preparations to do such an act, has the right to continue to do the act or, as the case may be, to do the act, notwithstanding the grant of the patent; but his right does not extend to granting a licence to another person to do the act."

7. In outline, the proposed defence is as follows. The priority date of the patent is 14 January 1988. Before that date the defendant designed and tested in the United Kingdom a tile called the "Theta" tile. Further, up until and indeed after the priority date, the defendant made effective and serious preparations to launch the Theta tile in the United Kingdom. It is agreed that the Theta tile has all the features of the tile the subject of claim 1 of the patent including, in particular, a substantially flat cross-section. In the circumstances the defendant says:

(i) the acts of making, keeping and using Theta tiles in the United Kingdom before the priority date were done in good faith and would have constituted an infringement of the patent had it been in force. Therefore the defendant has a right to continue those acts notwithstanding the grant of the patent;

(ii) those acts also provide an implied right to dispose of and offer to dispose of the Theta tiles;

(iii) alternatively to (ii), before the priority date the defendant made in good faith effective and serious preparations to make, keep, use and dispose of Theta tiles in the United Kingdom and has a right to do all of those acts notwithstanding the grant of the patent.

8. In 1989 the defendant took the decision not to market the Theta tile essentially, it says, for commercial reasons. The matter was not re-opened or reconsidered until 2002 when the Theta tile was used as the basis for the design of the Duoplain tile. In particular, the designer used a Theta tile pallet to assist him when he came to design the underside of the Duoplain tile.
9. The defendant's primary position is that the Duoplain tile does not fall within the scope of claim 1 of the patent because it has a cross-section which is cambered. If, however, it is wrong about that and the court concludes that the tile has a substantially flat cross-section, then the defendant seeks to contend that the Duoplain tile is essentially the same as the Theta tile and that consequently the acts of making, keeping, using and disposing of the Duoplain tile are, in substance, the same as the acts which it did, or which it made effective and serious preparations to do, before the priority date.
10. As counsel for the defendant put it in paragraph 16 of his skeleton argument, the defendant undertook infringing acts (or made effective and serious preparations to do such acts) in relation to tile products which were substantially flat when considered in cross-section and which satisfied all the other features of claim 1 of the patent in the suit. It is this act of commerce which the defendant says falls to be protected. In these circumstances a s.64 defence is proper to bring before the court for adjudication.
11. The claimant has essentially two objections to the introduction of this plea. First, the evidence relied upon in support of the application does not establish that effective and serious preparations were made to do anything in relation to the Theta tile before the priority date, let alone anything in relation to the Duoplain tile. Second, even if the evidence establishes an arguable case that effective and serious preparations were made to make and sell the Theta tile, it comes nowhere near establishing an arguable case in relation to the Duoplain tile, which is a different article of commerce.
12. Further, counsel for the claimant submitted that the court is in as good a position today to determine whether, assuming the facts put forward in the evidence relied upon by the defendant were correct, then that is enough in law to make out the defence. If it is not, then to allow the plea to go forward will only result in unnecessary expenditure of time and costs.
13. The scope of s.64 was considered by the Court of Appeal in Lubrizol v. Esso [1998] RPC 727. Aldous LJ said at 769, line 26:

"That section has been considered in two previous cases. In Helitune Ltd v. Stewart Hughes Ltd [1991] F.S.R. 171 at page 206 I said:


"Section 64 gives what can be called a statutory licence to a person who in good faith either does an infringing act or makes effective and serious preparations to do such an act. The infringing acts referred to are set out in section 60 of the Act and include, where the invention is a product, making, disposing of, offering to dispose of, using and importing the product. Where the invention is a process, infringing acts include using the process and disposing of, offering to dispose of, using or importing a product made by the process.


Section 64(2) confines the statutory licence to the right to continue to do or to do "that act," namely the act which the person had done or had made effective and serious preparations to do. Thus, the right is limited to the particular act of infringement done or for which effective and serious preparation had been made. That conclusion can be illustrated by considering a person who had in good faith imported an infringing product. The section enables him to continue to import the product but not to sell it unless the importation amounted to an effective and serious preparation to sell it.


Section 64 (1) relates to acts which constitute an infringement and not to any particular product or process. As I have stated the acts are those covered by a patent as set out in section 60. Thus, provided a person has carried out an infringing act before the priority date, he can continue to carry out that act even though the product or process may be different to some degree. This can be illustrated by considering a person who uses an infringing process.


The fact that he alters that process after the priority date does not matter. The section states that the doing of that act, namely using an infringing process, shall not amount to an infringement."

The other case was Lubrizol Corporation v. Esso Petroleum Co. Ltd (No. 1) (1992) R.P.C. 281. Mr Laddie Q.C., as he then was, considered my judgment in Helitune. He said (at page 295):


"However, I think it is only right to say that I have some doubts, with great respect to Aldous L.J., as to whether Helitune is correct. The act which the alleged infringer is entitled to continue to conduct by virtue of section 64 (2) is the act which he was committing before the priority date. It was not an infringement then. It was an act of commerce. It is that specific act of commerce which he is entitled to continue. I have difficulty in accepting that by, for example, manufacturing product A before the priority date, he was thereby given a right to manufacture any product after the priority date. In my view, section 64 is intended to safeguard the existing commercial activity of a person in the United Kingdom which is overtaken by the subsequent grant of a patent. It is not meant to be a charter allowing him to expand into other products and other processes."

It seems that the words used by me in Helitune have been read in a way not intended. Clearly the right given by section 64 cannot be a right to manufacture any product nor a right to expand into other products. However I do not believe that identicality is required. I believe that the judge was right in this case when he said [1997] RPC 195 at 216:


"If the protected act has to be exactly the same (whatever that may mean) as the prior art then the protection given by the section would be illusory. The section is intended to give practical protection to enable a man to continue doing what in substance he was doing before."

The judge in my view rightly held Exxon had not made "effective and serious preparations." The word 'effective' qualifies the word 'preparations'. It follows that there must be something more than preparations to do an infringing act. What more will depend upon the nature of the product and all the surrounding circumstances, but in all cases the preparations must be so advanced as to be about to result in the infringing act being done. That was not the position in this case. There had been manufacture in the United States of America and a program of technology transfer to the United Kingdom. Batch Zero had been shipped into the United Kingdom and samples had been supplied. Management had started to plan for manufacture, but interim site approval was delayed until March 1977. First production was in June 1977.

By the priority date manufacture was contemplated. But as the judge said:

"By the priority date nothing effective had been done at all."
"A very preliminary stage with no decision yet made is not sufficient to fall within the words.""


Brooke LJ agreed with the judgment of Aldous LJ, and explained further at 785, line 14:

"I have no doubt that Exxon was acting in good faith and that they were making serious preparations to do an act of the type described. To come within the words of the statue, however, the preparations in question must be both serious and effective. The primary meanings of the word "effective" are "having an effect" or "powerful in effect". It will of course be a matter for a court to determine in any given case whether the serious preparations in question properly warrant the additional epithet "effective". I reject Mr Burkill's submission that it is sufficient to show that the serious preparations, if pursued to finality, will have the requisite effect. Their effectiveness must be measured immediately before the priority date, and in my judgment it would be an abuse of language to say of a project that was then in its preliminary planning stages that preparations to manufacture which were both serious and effective had already been made.


For the reasons given in this judgment, in addition to the reasons given by Aldous L.J., with which I agree, I would also dismiss this appeal."

Roch LJ agreed with both judgments.

14. In the light of these principles I must now consider the rival contentions and, in particular, the objections which are raised to the proposed amendment. As to the first objection, namely that the evidence relied upon in support of the application does not establish effective and serious preparations to do anything in relation to the Theta tile, the defendant has, in substance, three responses. First, it was submitted that manufacture, keeping and using Theta tiles are all activities which the defendant undertook before the priority date and accordingly it has a right to continue to do those acts, notwithstanding the grant of the patent, pursuant to s.64(1)(a). This case seems to me to be at least arguable.
15. Secondly, it was submitted the right to continue the acts of manufacture and keeping must carry with it an implied right to dispose of the tiles so made and kept. I have some sympathy with this argument. However, it does face the difficulty that a similar argument was rejected by Aldous J, as he then was, in Helitune in the passage which he cited without qualification in his judgment in Lubrizol. There he explained that the right given by s.64 is limited to the particular act of infringement done, or for which effective and serious preparation has been made. He illustrated this conclusion by considering a person who has in good faith imported an infringing product. The section enables him to continue to import the product, but not to sell it unless the importation amounted to an effective and serious preparation to sell it.
16. Counsel for the defendant met this difficulty by submitting that the Court of Appeal in Lubrizol went on to make it clear that s.64 is intended to give practical protection to enable a defendant to continue doing what in substance he was doing before. In this case, he submitted, the defendant was clearly making and keeping tiles for the purpose of selling them. Accordingly, he argued, the defendant has at least an arguable case that practical protection requires that the defendant must not only be entitled to make the Theta tile after the priority date but also to sell it. It does seem to me that there is something in this submission and that at this stage of the proceedings it would be wrong to conclude that the argument has no real prospect of success. It is also tied closely to the third response, to which I now turn.
17. Thirdly, it was submitted that the defendant has shown on the evidence an arguable case that before the priority date it made effective and serious preparations to sell the Theta tile. In this regard my attention was drawn to the evidence relied upon in support of the application which is contained in a witness statement of Mr Angus McLean, a solicitor at Simmons & Simmons, and who has, under the supervision of his partner, the day-to-day conduct of this litigation. In his witness statement Mr McLean explains that the defendant engaged in a substantial project before the priority date to develop the Theta tile for commercial purposes. That project may be summarised as follows.
18. In July and August of 1985 the defendant commissioned Redland Technology Limited, a company affiliated to the defendant, to carry out an in-depth design study into the Theta tile. In May 1986 the defendant was in a position to instruct Redland Engineering Limited, another affiliated company, to design and modify an existing tile machine so that a mini-production run could be carried out at one of the defendant's factories, and that following this trial the defendant commissioned Redland Engineering Limited to begin designing and building the pallets and machinery that would be required to produce Theta tiles on a pilot plant scale. Thereafter, between October and November 1986 the defendant produced between approximately 200 and 400 hand made Theta tiles for use in a laying trial that was carried out at the defendant's trading centre in November of that year. Shortly after that trial the defendant conducted another trial to determine how the Theta tiles could be configured for packaging and presentation. Further, in November Redland Engineering Limited commissioned a company called Barton Aluminium Foundries Limited to produce approximately 50 sand-cast pallets so that machine made tiles could be used to investigate the performance of the Theta tile in wind tunnel tests, and that after the inspection instructions were given for the manufacture of a further 500 sand-cast pallets, all of which were delivered by March 1987. Wind tunnel tests began in February 1987 and strength tolerance tests were performed during the course of 1987 and into 1988. Overall, Mr McLean explains the design of the tile was settled by January 1988 and the defendant was making final preparations to go into full-scale production. At that time, he says, the projected launch date was between the end of 1988 and the end of March 1989.
19. In the light of this evidence I accept that the defendant has shown an arguable case that it made, before the priority date, effective and serious preparations to sell the Theta tile. Whether or not it would be able in due course to establish that it had done enough to satisfy the requirements of the section would depend upon a consideration of all the evidence at the trial. But it does seem to me that at this stage the defendant has done enough to show an arguable case that its preparations were so advanced as to be about to result in the commercial sale and marketing of that tile.
20. Accordingly, I consider that the defendant has overcome the first objection.
21. The second objection does, however, have more substance. In this case it was maintained on behalf of the claimant that the evidence simply does not begin to establish an arguable case in relation to the Duoplain tile and, in particular, does not begin to establish that the Duoplain tile is in substance the same as the Theta tile.
22. In this regard it was submitted on behalf of the claimant that it is important to have in mind that the Theta project died a death no later than July 1989 and yet the defendant did not start designing the Duoplain tile until 2002. This is at least some indication that these two tiles are not the same article of commerce. Further, however, and more importantly, the claimant argued that the evidence establishes only the vaguest of any relationship between the two products. The relevant evidence before me is contained in paragraph 16 of Mr McLean's witness statement. There he says:

"Stephen Rice, the person who was responsible for designing the DUOPLAIN tile, informs me and I believe, that he analysed the THETA tiles when he began designing the DUOPLAIN tile in 2002, and used the THETA design as the basis for the DUOPLAIN tile. In particular, Mr Rice used a THETA pallet to assist him when he came to design the underside of the DUOPLAIN tile."

23. It is significant that Mr McLean does not explain in this paragraph the extent to which the two tiles are the same or similar. He simply states that the Theta design was used as the basis of the design of the Duoplain tile. There is no attempt in this evidence to establish that the two tiles are manufactured in the same way, that the properties of the tiles are the same, to explain the precise differences and similarities between them or to explain the importance of the similarities or the immateriality of the differences.
24. Counsel for the defendant sought to meet this objection by casting the description of the Duoplain tile in very broad terms. Hence, as I have indicated, in paragraph 16 of his skeleton argument he submitted that the defendant carried out various activities before the priority date in relation to the Theta tile, which was substantially flat when considered in cross-section and which satisfied all the other integers of the claims of the patent in issue. It is this act of commerce which the defendant says falls to be protected.
25. That the tile product must be substantially flat when considered in cross-section is one of the integers of claim 1 of the patent in suit. Hence, in substance, the defendant submitted that having made one product falling within the scope of the patent it has a right to make any other product falling within the scope of the patent. This is precisely the argument which Mr Laddie Q.C. as he then was, rejected in Lubrizol Corporation v Esso Petroleum Co Ltd (No 1) in 1992 and which Aldous LJ also rejected six years later in the passage of his judgment in Lubrizol which I have set out above. I must reject it too.
26. My attention was also drawn by counsel for the defendant to the decision of Neuberger J, as he then was, in Hadleigh Industries Plc v. Metal Sections Ltd and Metsec (UK) Ltd dated 13 November 1998 (unrep.). In that decision Neuberger J rejected a s.64 defence on two grounds. First, he considered that the particular process which was alleged to infringe was not substantially the same as the process which the defendant had used before the priority date. Secondly, he held that for the defendant to succeed in a defence under s.64 it would have to show a clear link, or chain of causation, between the two processes before him, and that on his view of the evidence the defendant had failed to establish this.
27. It was submitted to me on behalf of the defendant that in this case such a link had been shown because the evidence established at least an arguable case that the designer of the Duoplain tile began with the design of the Theta tile. I accept that the defendant has shown an arguable case that the Duoplain tile was designed starting from the design of the Theta tile. However, I do not understand Neuberger J to have held in Hadleigh that a chain of causation is in itself enough to establish a defence under s.64. The overriding requirement is that the defendant establishes and of course, at this stage of the proceedings, establishes an arguable case, that the production and sale of the Duoplain tile are activities which are substantially the same as the activities which it carried on, or made effective and serious preparations to carry on, before the priority date.
28. For the reasons which I have given I have reached the conclusion that the evidence before me does not establish an arguable case that the Duoplain tile is the same article of commerce as the Theta tile or that the two tiles are in substance the same. The evidence does not show an arguable case that the defendant is simply seeking to safeguard the commercial activity which it undertook before the priority date or that the activities of which complaint is made are substantially the same as those which it carried on or made preparations to carry on before the priority date.
29. In the circumstances I must reject the application.