England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		The Royal Courts of Justice The Strand London
		4th April 2007

1. MR JUSTICE LEWISON: Visto counterclaims against RIM for having started proceedings in Italy seeking declarations of non-infringement of certain designations of one of Visto's European patents.
2. Visto alleges that the Italian court has no jurisdiction to entertain RIM's claim and that RIM knows that perfectly well. Accordingly, in this action Visto counterclaims damages under Article 96 of the Italian Civil Procedure Code; alternatively under the English law of tort, the relevant tort being abuse of process.
3. Which is the appropriate court to determine whether the Italian court has jurisdiction to entertain the claim and whether the processes of the Italian court have been abused? Put in that way, the answer is obvious: the Italian court. Hence RIM apply under Article 28 of Council Regulation 44/2001 (the judgments regulation) for dismissal or stay of the counterclaim.
4. Article 28 provides as follows:

"1. Where related actions are pending in the courts of different member states any court other than the court first seised may stay its proceedings.

"2. Where these actions are pending at first instance any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.

"3. For the purposes of this Article actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."

5. Thus the power can be exercised only where there are related actions and only by a court other than the court first seised.
6. The first step, as it seems to me, is to identify which actions are the related actions. The relevant procedural chronology is as follows:

(a) On 5th December 2006 RIM began an action in this court seeking a declaration of non-infringement of the UK designation of Visto's European patent. The claim was made under section 71 of the Patents Act 1977;

(b) On 21st December 2006 RIM amended its particulars of claim, claiming in the alternative, a declaration of non-infringement under the inherent jurisdiction of the court;

(c) On 27th December 2006 RIM began proceedings in Italy in the District Court in Milan. These proceedings claim revocation of the Italian designation of Visto's European patent and declarations of non-infringement in relation to Italy, Germany, France, Spain, and the Dutch and Belgian designations;

(d) On 2nd February 2007 Visto served the defence and counterclaim in the English action.

7. The relevant parts of the defence read as follows:

"2. This action was started without giving the defendant or its advisers any opportunity of considering the product and process description, nor any other description of the products and software in relation to which the claimant seeks declaratory relief.

"3. Further, this action has been started by the claimant relying upon statements made by representatives of the defendant which were made before or shortly after litigation was started in the United States and which clearly relate to the issues and patents in that action and which were made at a time before the patent ensued in this action was even granted. There is no reason to believe that the statements made were intended to relate to this particular patent of the defendant, and the claimant has used them solely as an excuse to start this action as part of the concerted effort referred to below.

"4. Yet further, the action has been started and is being pursued in relation to only some of the claimant's offering in the United Kingdom. The claimant has deliberately left out of the claim for a declaration of non-infringement software, namely BlackBerry Mail Connector, which when used with the claimant's hardware and other software does infringe the patent in suit.

"5. Moreover this action has been started and is being pursued as part of a concerted effort to seek any kind of relief from a court with a view to counteracting the commercial uncertainty and its publicity that arises by virtue of the litigation between the defendant and the claimant's parent company in the United States in respect of different patents owned by the defendant.

"6. On 27th December 2006 and shortly after this action was started and pursuant to the said concerted effort the claimants, together with related companies, started an action in the court of Milan, Italy. In that action, the claimants, including the claimant in this action, seek revocation of the Italian designation of the European patent, the subject of these proceedings. They also seek a declaration of non-infringement in respect of the Italian designation of the said European patent and designations of the said European patent in Belgium, France, Germany, Holland and Spain (that is every significant country designated other than the United Kingdom) and in particular all such jurisdictions where rapid relief is available to a patentee, whether by way of final relief in an infringement-only trial, or preliminary measures or remedies including procedures such as court gaining and saisie contraire faisant and similar relief now available in the courts of Spain.

"7. The claimant knows full well that the action in Italy, insofar as it seeks to claim a declaration of non-infringement in relation to the non-Italian designations, is spurious and contrary to European law on jurisdiction.

"8. However, the claimant has started the action in Italy purporting to seek relief in respect of designations other than the Italian designation deliberately with a view to preventing any infringement action being taken in respect of the same in those other jurisdictions by virtue of the existence of the Italian proceedings. The claimant knows and intends that the Italian proceedings will be slow moving and that it will take a considerable amount of time for the Italian court to even determine the question of jurisdiction over a non-infringement claim in respect of non-Italian designations.

"9. In support of the allegation that the Italian proceedings are a stifling device, the defendant relies upon the fact that if the claimant had believed that European law allowed non-infringement claims such as the one brought in Italy and if it had genuinely wanted such claims determined expeditiously it would have brought them in this action which was commenced first in time and which sought a declaration in respect of the UK designation. It did not do so because it was aware that this honourable court would rapidly decline jurisdiction and thereby not give any significant hindrance to the ability of the defendant to bring an infringement action in those other jurisdictions if so advised."

8. Paragraph 10 then summarises these contentions. Paragraph 11 alleges that:

"Accordingly the court ought not to exercise its inherent jurisdiction to make declarations."

9. Paragraph 12 makes the same plea in relation to the discretion to make a declaration under section 71 of the Patents Act 1977.
10. I should say for the record that RIM denies the truth of the allegations about its motivation and its state of knowledge about the alleged invalidity of the Italian proceedings, but for the purposes of this application I must proceed on the basis that the allegations at least may be true.
11. The counterclaim filed along with the defence sets out an allegation of infringement. It then continues as follows:

"31. Paragraphs 2 to 10 above are repeated.

"32. The commencement of the aforesaid proceedings in Italy are unlawful.

"33. If the proper law of the tort is Italian the defendant relies upon Article 96 of the Italian Civil Procedure Code which provides for damages to be payable for litigation commenced or resisted in bad faith or with gross negligence.

"34. Alternatively, if the proper law of the tort is English law the said proceedings will commence for a purpose, alternatively a predominant purpose, other than the proper purpose for obtaining the relief formerly sought. Accordingly, the commencing and pursuing of said proceedings amounts to the tort of abuse of process.

"35. By reason of the aforesaid, the defendant has suffered loss and damage."

12. Article 96 of the Italian Civil Procedure Code provides, so far as material and in translation, as follows:

"If it transpires that the losing party has acted or resisted in the proceedings with bad faith or gross negligence the judge orders upon request of the other party apart from the payment of the legal expenses the compensation of damages which he liquidates also on his own motion in the judgment."

13. There are two other matters I should mention at this stage. The first is that Visto have admitted that the matters described in the PPD do not amount to an infringement of the UK designation of the European patent. RIM have intimated in correspondence that in the light of that admission made by Visto it is not currently minded to pursue its claim.
14. In the course of his opening, Mr Dicker QC, appearing on behalf of RIM, said that the claim would not be pursued to trial. That position hardened in the course of his reply when, in response to a question from me, Mr Dicker, on the instructions of his client, gave an undertaking to discontinue the claim with whatever costs consequences that entails.
15. Mr Speck, appearing on behalf of Visto, submits that RIM have not actually discontinued, so the claim remains on foot and that I should determine the application as if no such undertaking had been given leaving it to RIM to reapply, if so minded, for a stay or dismissal once discontinuance had taken place. He pointed to the unfairness, in his submission, of the nature of the application having been changed fundamentally in the course of Mr Dicker's address in reply.
16. I do not accept Mr Speck's submission. If I were to accede to it, it would simply rack up further expense. Any unfairness to Visto can, in my judgment, be dealt with in costs.
17. Secondly, Mr Speck also submits, correctly, that RIM have not applied to strike out his defence. Mr Dicker says that in the light of the undertaking that is irrelevant. I agree. He also says that even in the absence of his undertaking his application relates to the counterclaim not the defence. So even without a formal strike-out he is still entitled to show, if he can, that the matters pleaded in the defence are no defence at all. I agree with that too.
18. There are some matters that I should clear out of the way:

(a) It is said that by comparison with English procedures Italian procedures are very slow. That, in my judgment, is neither here nor there. Both Italy and the United Kingdom are member states of the European Union. Each legal system must trust the other and each are equal in the eyes of European law;

(b) It is common ground that the Italian court will decide for itself whether it has jurisdiction to entertain the claim made in Italy. There is no question of an English court pre-empting a decision on its own jurisdiction by the Italian court. Mr Speck, however, says that even allowing for the alleged slowness of Italian procedures this question will be determined before the trial of the English action. As indicated in the quotation from the defence and counterclaim, that is not the way the matter is pleaded.

(c) It is common ground that the English court cannot award damages either under Article 96 of the Italian Civil Procedure Code or indeed in tort, unless and until the Italian action has been dismissed by the Italian court.

19. It is also common ground that the counterclaim is to be treated as an action in its own right for the purposes of the judgment regulation. It seems to me that once RIM's English non-infringement action is out of the way the only relevant proceedings are Visto's counterclaim and the Italian proceedings. Of those two, the Italian court is plainly the first seised. Indeed it cannot be otherwise since the very fact of the Italian claim is part of the foundation of the counterclaim.
20. Inherent in the counterclaim also is an allegation that the Italian court does not have jurisdiction to entertain the Italian proceedings. The assessment of the validity of the claim and also of a claim under Article 96 of the Italian Civil Procedure Code, are both matters peculiarly within the competence of the Italian court.
21. It seems to me also that even the claim based on the English law of tort would have as part of its essential foundation the allegation that the Italian proceedings had been begun without reasonable or probable cause. Thus it seems to me to be a necessary precondition of liability that the Italian court does not in fact have jurisdiction to entertain the claim. So that aspect of the counterclaim is also related to the Italian proceedings.
22. If, as I hold, the Italian court is first seised as between the Italian proceedings and the counterclaim, I consider that the Italian court is plainly the right forum in which the matters raised in the counterclaim ought to be determined. It follows, therefore, in my judgment, that since the conditions set out in Article 28.2 are satisfied the counterclaim so far as it relates to the allegations of abuse of the Italian process ought to be dismissed.
23. I now turn to consider briefly the position as it would have been if the undertaking had not been given. Mr Dicker says that the only related actions are Visto's counterclaim in the English action and RIM's Italian proceedings. If that is correct, then it is common ground that the Italian court is still the court first seised. On the assumption that the undertaking had not been given, Mr Speck says the related actions are RIM's English proceedings, including Visto's defence and counterclaim, and the Italian proceedings. If that is correct, then the English court is the first seised, and if the English court is the first seised then the power to dismiss or stay under Article 28 does not arise. There may be other case management powers available to the court to order a stay, but that is not the basis of this application.
24. Mr Dicker says that in determining which are the actions that are related actions I should look at the English action as originally constituted together with such defences as are latent in or pregnant with the claim. Mr Speck, on the other hand, says that I should consider both the claim and any defence to that claim of whatever kind. The approach that I should take to the judgment regulation is said by the House of Lords in Sarrio SA v Kuwait Investment Authority, [1999] 1 AC 32, to be a broad common sense approach.
25. The issue raised in the counterclaim is the allegation of the abusive nature of the Italian proceedings. Necessarily, that allegation could not have been raised until the Italian proceedings had been begun, but once the Italian proceedings had been begun the Italian court was first seised of those proceedings. Common sense tells me that the Italian court is the first seised on the question of its own process and of the question of whether that process has been abused. Since it is common ground that damages under Article 96 cannot be awarded unless it is decided that the Italian court has no jurisdiction, it follows that the question of the jurisdiction of the Italian court is an important issue common to both the counterclaim and the Italian proceedings. If both this court and the Italian court decide that question then there is a plain risk of inconsistent and conflicting decisions. It follows in my judgment that the counterclaim and the Italian proceedings are related proceedings.
26. I except Mr Dicker's submissions that Mr Speck's acceptance that the Italian court will decide the question of its own jurisdiction sits ill with the assumption in Article 28 that the court first seised will decide the whole action. If part of the action has to be hived off to the court second seised in order to avoid the risk of conflicting decisions then something is wrong in the approach to Article 28.
27. The reconciliation is in my judgment found in Mr Dicker's submission that the notion of the court first seised and the notion of related actions are concepts that are intertwined. The defence of abuse by reason of the action in Italy was not latent in RIM's non-infringement claim. I would therefore have held, even in the absence of the undertaking, that in relation to the issues of the Italian procedure the Italian court was the court first seised.
28. Mr Dicker also relies on the decision of the European Court of Justice in Turner v Grovit [2005] 1 AC 101 as indicating that this court should not purport to tell a court in another member state directly or indirectly how to exercise its own jurisdiction. To award damages against a party for having improperly invoked the process of a foreign court is an indirect interference with that foreign court. I accept his submission, which provides another reason why the Italian court should decide questions arising under Article 96.
29. Had it been necessary, I would also have held that the matters raised in paragraphs 2 to 10 of the defence would not have been a good defence to the claim for a non-infringement declaration. It is no part of the function of an English court to investigate whether the process of a foreign court has been abused. That is all the more so where, as here, the patent in suit has territorial application only and where the European Court of Justice has said that both infringement and validity actions must be brought on a member state by member state basis. Thus even on the assumption that the undertaking had not been given I would still have dismissed the counterclaim.