England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		The Rolls Building Fetter Lane London EC4A 1NL
		14 October 2014

(Please note that due to the poor quality of digital recording, it has not been possible to produce a high quality transcript in this case.)

MR JUSTICE SALES:

1. This is an application for determination for what was described as a preliminary issue, but is in substance an application by the Claimant to strike out parts of the Defendant's Defence which relate to defences in respect of the asserted invalidity of the Claimant's patent relied upon in these proceedings.
2. The proceedings relate to what is said to be infringement by the Defendant by selling goods infringing the Claimant's patent, UK Patent QB2309038B, relating to tubular fabric and a method for making such fabric, and to a claim for breach of a settlement agreement entered into between the parties on 3 October 2011 in respect of previous patent infringement proceedings brought by the Claimant against the Defendant ("the Settlement Agreement").
3. The patent relates to a method for manufacture of a tubular fabric for incorporation in brassieres. Put shortly, the patented method of production involves using a melted yarn fused into the fabric tubular surrounds of wire elements in a brassiere so as to form a penetration barrier to prevent the wires penetrating the surrounding fabric.
4. The patent dates from 1996.
5. In 2009 the Claimant came to suspect that the Defendant was selling brassieres manufactured for it by others which incorporated fabric which infringed the Claimant's patent. So, in July 2010 the Claimant commenced infringement proceedings against the Defendant. The pleadings in that case took a conventional form, with the Defendant including in its defence asserted grounds of invalidity of the patent and including a counterclaim for revocation of the patent on the same grounds of invalidity.
6. The parties in due course decided to settle those proceedings by way of the Settlement Agreement. The Settlement Agreement included the following by way of recital:

"A. Proceedings have been commenced by the Claimant against the Defendants by way of High Court Claim No. HC10C00278 filed on 30 July 2010 in the High Court of Justice (the 'UK Proceedings') arising out of the Claimant's claim for infringement of United Kingdon Patent Number GB 2,309,038 {the 'UK patent') by the UK Defendant (the 'UK Dispute') and US Civil Action no. 2:10-CV-371 (EDVA) filed on July 20 2010 in the United States District Court for the Eastern District of Virginia (the 'US Proceedings') again arising out of the Claimaint's claim for infringement of US Patent Number 6,071,578 (the 'US Patent') by the US Defendant (the 'US Dispute'). In both the UK and US dispute the Defendants have denied all claims and liability."

"B. Following mediation between the Parties on 31 May 2011, pursuant to a Mediation Agreement dated the same date, the Parties agree to compromise the UK and US Proceedings on the terms set out in this Settlement Agreement."

"C. The Parties intend that this Agreement bring finality to this dispute worldwide with respect to the claims asserted or those that could have been asserted with regard to the products at issue."

7. The settlement agreement included the following terms:

"1.1 "Claims" shall mean any claim made in either the UK Proceedings or the US Proceedings (including any claim for damages, interest and costs) and any other potential claims in relation to the subject matter of those proceedings elsewhere in the world.

1.2 "H&M Low Volume Fabric" shall mean any wire casing product with a volume of fusible yarn of approximately 0.3-0.7 of the total volume of yarn in any tubular fabric component, including but not limited to the samples provided by the Defendant to the Claimant under cover of a letter of 16 May 2011 from Shoosmiths Solicitors to the Claimant c/o Potter Clarkson.

1.3 "Accused Product" shall mean

1.3.1 Any product which falls within any of the claims of any of the Patents;

but does not include the H&M Low Volume Fabric.

1.5 "Party" shall mean a party to this Settlement Agreement.

1.6 "Prohibited Acts" shall mean:

Making, disposing of, offering to dispose of, using, importing or keeping (whether for disposal or otherwise) in any of the Prohibited Jurisdictions any Accused Product; during the duration of the terms of the Patents in their respective jurisdictions so long as each Patent remains enforceable in this jurisdiction;

1.13 "UK Proceedings" has the meaning set out in paragraph A of the Background to this Settlement Agreement.

1.14 "US Proceedings has the meaning set out in paragraph A of the Background to this Settlement Agreement.

…

3. The Defendants' and Claimant's Obligations

3.1 In consideration of the Claimant agreeing to compromise the claims against the UK Defendant and the US Defendant (together the "Defendants") the Defendants each agree:

3.1.1 Between them to pay, by way of costs, to the Claimant the sum of £235,000 (the "Settlement Sum") in full and final settlement worldwide of all claims present and future made by the Claimant and/or its subsidiaries/associate companies.

3.1.2 Not now, or at any time in the future to do, or procure or authorise the commission by any third party to do any of the Prohibited Acts, nor conclude with any company within the same group of companies in relation to the commission of any of the Prohibited Acts, whether by their directors, officers, servants or agents or any of them or otherwise how so ever.

3.1.3 To ensure that by the date of the expiry of the Sell-Through Period no H&M retail stores in the United Kingdom, the United States of America, Belgium, Germany, France and Italy will at that time or in the future dispose or, offer to dispose of, use, or keep (whether for disposal or otherwise) any Accused Product.

4. Release.

4.1 subject to clause 4.2 below, agreement to these terms and payment of the Settlement Sum is in full and final Settlement of the Claims or any other claim relating to the subject matter referred to in the litigation in the US and/or UK, and/or anywhere in the world, and the Parties are forever discharged from liability in relation to such Claims or any other claim whether the same have been intimated to the UK or the US Defendant or not.

5. Agreement not to sue.

5.1 Subject to receipt of the Settlement Sum in accordance with clause 3.2 of this Settlement Agreement, the Parties each agree, on behalf of themselves, their successors or assigns, not to commence or pursue, or voluntarily assist the pursuit of, any further proceedings relating to or arising from the claims against the other Parties, or their parents, subsidiaries, assigns, transferees, principles, agents, officers or directors, in this jurisdiction or elsewhere (otherwise than for the purpose of carrying into effect the terms of this Settlement Agreement).

6. Disposal of the proceedings.

6.1 Subject to receipt of the Settlement Sum in accordance with clause 3.2 of this Settlement Agreement, the Parties consent to the stay of the UK proceedings and shall take all necessary steps, via their legal representatives, to obtain a Consent Order staying the UK proceedings, in the form set out in Annex 1 to this Settlement Agreement. The Claimant's solicitors will file the Consent Order with the UK court within 7 days of the receipt of the Settlement Sum by the claimant's solicitors."

8. Clause 6.1 referred to a draft consent order appended to the Settlement Agreement. Paragraph 1 of that consent order provided:

"All further proceedings in this action shall be stayed except for the purpose of carrying such terms into effect. Liberty to apply as to carrying such terms into effect."

9. As part of the settlement arrangements the Defendant agreed to purchase quantities of materials from the Claimant. The Claimant assumed for some time that the Defendant was complying with the Settlement Agreement and was no longer obtaining supplies of products which infringed the Claimant's patent.
10. However, in about 2012 the Claimant received information which caused it to be suspicious that that might not be the case. The Claimant therefore conducted test purchases of products from the Defendant's stores.
11. The Claimant now contends that certain of the products being sold in those stores are such as to infringe the terms of the Settlement Agreement and also to infringe the Claimant's patent.
12. The Claimant commenced a new action against the Defendant by claim form dated 28 March 2013. In its Particulars of Claim in that action, the Claimant set out two inconsistent claims: one in relation to seeking to enforce the Settlement Agreement, the other in relation to payment for damages for infringement of the patent, including in respect of active infringement which had been pleaded in the first action (see paragraphs 13 and 14 of the Particulars of Claim). In the prayer for relief, at paragraph 2, the Claimant claims:

"An Order that the Defendant resume performing/continue to perform its obligations under the Settlement Agreement."

And at paragraph 5 it claims:

"An Order that the Defendant provide disclosure to the Claimant sufficient to allow it to know (and where appropriate make an informed election between an inquiry as to damages or an account of profits resulting from) all of the Defendant's (a) breaches of the Settlement Agreement; (b) acts of infringement of GB 2 309 038B including (i) acts pleaded and further identified in the First Action; and (ii) the acts subsequent to the date of the Settlement Agreement."

13. The Defendant by its Defence and Counterclaim averred that the patent had at all material times been invalid, but also denied that the Settlement Agreement had been breached and also sought to rely on the terms of the Settlement Agreement as a binding agreement. The Defence included particulars of the grounds of the invalidity of the patent.
14. The Claimant in its Reply denied that the patent was invalid as alleged, but also continued to assert the possibility of claims both for a breach of the patent, including in respect of the period before the Settlement Agreement, and claims based upon the Settlement Agreement itself. In paragraph 15 of the Reply the Claimant said:

"... it is admitted that the settlement sum as defined in the settlement agreement was received by the claimant. However pending disclosure on and/or definitive determination of the question as to whether or not the defendant ever carried out its obligations under the settlement agreement and/or whether or not it was always in, or when it came to be in breach thereof, paragraph 18 [of the Defence, being a plea by the Defendant that it was entitled to rely upon the Settlement Agreement and a denial that the Claimant is entitled to any damages for patent infringement arising from its earlier claim] is denied."

15. It thus appeared from the Claimant's pleadings that it was reserving its position as to whether ultimately it would seek to rely upon the Settlement Agreement or might treat that agreement as having been repudiated by the Defendant.
16. The Claimant sought disclosure of documents from the Defendant to enable it to inform itself as to what position to adopt in relation to the Settlement Agreement. There were interlocutory hearings before myself on 23 October 2014 and before Norris J on 22 January 2014 in relation to this. At both hearings it was made clear that the Claimant's position was that it had not yet decided whether to assert that the Settlement Agreement had been repudiated (and hence was no longer binding) or whether it would seek to reply upon the Settlement Agreement (in effect accepting the averment of Defendant that the Settlement Agreement was a valid and binding agreement).
17. Subsequently, disclosure was given by the Defendant in the light of which the Claimant made its election not to assert that the Settlement Agreement had been repudiated. Accordingly, the claims now being asserted by the Claimant in these proceedings are a claim based on the assertion that the Settlement Agreement is binding and valid and gives rise to a breach of contract claim for the benefit of the Claimant in relation to sale by the Defendant of brassieres in breach of the terms of the Settlement Agreement and also a claim in which the Claimant seeks to rely upon its patent and claims infringement of that patent in relation to sales by the Defendant of what the Claimant maintains are infringing products, in the period after the date of the Settlement Agreement. The Claimant does not now seek to maintain a claim for infringement of its patent for the period before the Settlement Agreement.
18. The application now made by the Claimant seeks to narrow the scope of the issues in dispute between the parties in advance of a trial, by applying in effect to strike out those parts of the Defendant's pleaded case which seek to raise the issue of the validity of the Claimant's patent in the present proceedings. The Claimant maintains that the issue of the validity of the Claimant's patent is a matter which was determined by way of an agreed compromise between the parties by the terms of the Settlement Agreement, such that the Defendant is now disabled by reason of the terms of that agreement from being entitled to raise an issue in relation to the validity of the patent in answer to the Claimant's current form of patent infringement claim against it.
19. The Defendant, on the other hand, on the basis of various arguments advanced today submits that the settlement agreement does not have the effect of precluding it from being entitled both to raise a defence based on section 74(1)(a) of the Patents Act 1977 to the effect that the patent is invalid by reason of obviousness and other matters and should not disable it from having a right to claim revocation of the patent. Mr Burkill QC for the Defendant focused most particularly upon the defence aspects of the arguments in relation to invalidity which the Defendant would wish to raise and argues forcefully that these are matters which were not covered by the Settlement Agreement.
20. In my judgment, however, the Settlement Agreement does cover the issue of the claim of invalidity of the Claimant's patent and has the effect of precluding the Defendant now from raising the issue of invalidity of that patent in the present proceedings.
21. The approach to be adopted in relation to interpretation of a settlement agreement such as the one in this case is that set out by the House of Lords in Bank of Commerce and Credit International SA v Ali [2001] UKHL8; [2002] 1 AC 251. As summarised in the headnote, there are no special rules of interpretation of a release in a settlement agreement, which falls to be construed in the same way as any other contract, the question being the intention of the parties ascertained objectively in the context of the circumstances in which the release was entered into. I refer in particular to paragraphs [8] and following in the speech of Lord Bingham and to paragraphs [23] to [29] in the speech of Lord Nicholls.
22. In my view, on a proper interpretation of the Settlement Agreement, all matters in dispute between the parties in the first action - including the issues raised by the Defendant in relation to the validity of the Claimant's patent - were settled definitively between them by the terms of that agreement. In that regard, I highlight the following aspects of the terms of the Settlement Agreement.
23. In Recital A, set out above, one has reference to the "UK proceedings" and the "US proceedings". The word "proceedings" is a word apt to cover all issues raised in legal proceedings and is a term with a meaning wider than simply the claims being brought by a claimant (or, indeed, the claims being brought by any party) in those proceedings. It is a term which includes defences raised in the proceedings as well. The width of the concept of "proceedings" in the context of the UK proceedings and the US proceedings is reinforced by the terms of clause 1.1, which make it clear that the UK proceedings and US proceedings may include a significant number of claims beyond simply the claims made by the Claimant against the Defendant. In my view, it is also reinforced by clause 6.1 relating to disposal of the proceedings and the terms of the consent order annexed to the Settlement Agreement, which in paragraph 1 refers to "all further proceedings in this action" being stayed, i.e. covering all aspects of the issues in dispute in the litigation between the parties.
24. In my opinion, Recital B is a clear indication that the parties agreed to compromise both the UK proceedings and the US proceedings in their entirety; that is to say, covering all the legal issues raised between the parties and put in dispute between them in those proceedings. Recital C reinforces the impression that the parties intended to achieve finality in relation to all matters in dispute between them, and to bring the entirety of the dispute to an end. The reference to "claims asserted or those that could have been asserted with regard to the products at issue" is a phrase which, in my view, in the context in which Settlement Agreement was entered into, is apt to cover all aspects of the litigation between the parties in respect of the claim of infringement brought by the Claimant, including the defence of invalidity which the Defendant claimed it had and its counterclaim for revocation of the patent.
25. The definition of "claim" in clause 1.1 further reinforces this interpretation of the Settlement Agreement. It makes it clear that the "claims" which were compromised cover any claim made in the two sets of proceedings, whether a claim made by the Claimant or a claim made by the Defendant. It is not a provision limited to claims brought by the Claimant. It is a provision expressed in terms which are plainly apt to include a counterclaim, such as that on the face of the pleadings at the time the Settlement Agreement was entered into by which the Defendant claimed revocation of the patent.
26. That is material when one comes to examine other provisions in the Settlement Agreement in the light of Mr Burkill's emphasis on the defences which the Defendant now pleads in the preset action in respect of the alleged invalidity of the patent, since the substantive grounds for the counterclaim in the first action for revocation of the patent were identical to the grounds put forward for raising a defence in that action of invalidity in respect of the same patent. It is very difficult indeed to see what sense there could be in the parties agreeing to bring their dispute finally to an end in relation to the question of revocation on grounds of invalidity as claimed by the Defendant without their agreement also covering the terms of the dispute which had arisen in relation to the validity of the patent raised as a matter of defence to the Claimant's claim of infringement.
27. Clause 3.1 is of significance because the parties introduce there an express qualification in relation to particular claims which were, in the contemplation of that provision, to be compromised, namely "the claims against the UK defendants and the US defendants" (emphasis added). The language stands in contrast with the terms of the release in clause 4.1, which refers to "claims" without any such qualification. As a matter of the ordinary interpretation of the words "the claims", as used in clause 4.1, they cover all claims raised by any party in the proceedings, whether Claimant or Defendant. They are not, on improper interpretation, limited just to the claims brought by the Claimant against the Defendant. Clause 4.1, particularly when read in light of the contrast with clause 3.1, makes it clear that it was expressly intended that the Settlement Agreement would operate as full and final settlement of all claims in issue between the parties, including the Defendant's counterclaim for revocation of the patent on grounds of invalidity. Moreover, within clause 4.1 the reference to "the parties" reinforces the interpretation of this provision as covering all claims, whether such claims might have been brought by the Claimant or brought by the Defendant and whether they had been intimated to the Claimant or not.
28. Then, at clause 5.1, one sees that "the parties each agree" (i.e. both Claimant and Defendant) "not to commence or pursue or voluntarily assist the pursuit of any further proceedings relating to or arising from the claims against the other parties". In my view, this language clearly has the effect of imposing obligations on both the Claimant and the Defendant. The words "not to … pursue or voluntarily assist the pursuit of any further proceedings relating to or arising from the claims the other parties" is language which, in my judgment, is apt to cover the raising of a claim or counterclaim for revocation of the patent on grounds of validity and the maintenance of any co-extensive answer by the Defendant that it has a defence to the infringement claim brought against it on the basis of a patent on grounds of the invalidity of the patent. To raise such a defence is a matter which I consider is plainly a matter "relating to or arising from" the claim brought in the first set of proceedings by the Defendant against the Claimant, namely the counterclaim for revocation on grounds of invalidity of the patent. As already noted, the word "proceedings" is apt to cover all issues in dispute between parties engaged in litigation, including defences. For the Defendant now to seek to pursue in the new action a contention that the patent is invalid would, in my view, fall within the scope of the prohibition in clause 5.1. It is not something which is properly available to it.
29. That interpretation of the Settlement Agreement is further reinforced, in my opinion, by clause 6.1 of that agreement, which, as I have pointed out, relates to a stay of the UK proceedings in their entirety; that is to say, a stay covering all issues which have been raised by the parties in those proceedings, including the issue raised by the Defendant of the validity of the Claimant's patent, both by way of defence and by way of counterclaim.
30. In my view, reading the Settlement Agreement as a whole, there is no sound basis on which any distinction can be drawn between the question of the invalidity of the patent raised by way of a defence and the same question of the invalidity of the patent on the same grounds raised by way of a counterclaim for revocation of the patent. The parties intended all issues to be settled between them by the terms of the Settlement Agreement, covering both those dimensions of the Defendant's case in the first set of proceedings.
31. The Defendant submits that the judgments in Bank of Credit and Commerce International support it in its interpretation of the Settlement Agreement in this case. I do not agree. In my view, the opposite is the case.
32. In Bank of Credit and Commerce International the House of Lords found, by a majority, that settlement agreements entered into in that case by employees of the bank were made in a context where neither party could realistically think that any claim for damages in respect of disadvantage on the labour market was a possible claim which could ever in principle be brought by the employees against the bank. It was in that context that the principles of interpretation to which I have already referred fell to be applied. Applying those principles, the House of Lords held that the parties could not be taken to have intended the releases to apply to such claims.
33. By contrast, in the present case the issue of validity of the Claimant's patent was raised clearly and distinctly on the face of the pleadings in the first action by the Defendant, both by way of defence and as grounds for seeking an order for revocation of the patent by way of a counterclaim. That issue was therefore four-square within the contemplation of the parties as a dimension of the dispute they wished to resolve by means of the Settlement Agreement. In my view, on application of the relevant principles of construction, the Settlement Agreement on its true interpretation covers all dimensions of the dispute between parties which had been raised between them on their pleaded cases in the first set of proceedings.
34. The Defendant says that it wishes to defend itself by raising the issue of alleged invalidity of the patent in the present proceedings and that in that regard there is an additional matter going to bolster its case in respect of obviousness, which had not been raised on the pleadings in the first action. However, in my judgment, the substance of the Defendant's case in relation to its argument on the invalidity of the patent is the same as it was in the previous action. The fact that there is now some additional element which it would wish to add to that argument in no way changes the nature of the claim which it seeks to make as to invalidity. In my view, the arguments now sought to be advanced by the Defendant in seeking to question the validity of the patent are covered by the terms of the Settlement Agreement, so that the Defendant is precluded from raising that issue in the present proceedings, whether by way of a defence or as a ground for claiming revocation of the patent.
35. This reasoning seems to me to cover the main points which have been raised in the argument before me. However, Mr Burkill made certain additional points which deserve mention. He submitted that even if, contrary to his primary submission, the Settlement Agreement did cover the Defendant's counterclaim (as I have held that it does), it could not be construed as covering the issue of invalidity as a defence to infringement. However, as I have already indicated, in my view the terms of the Settlement Agreement equally cover that issue.
36. Mr Burkill also sought to suggest that the Claimant has waived its right to rely upon the Settlement Agreement in this way by the doing of two things. First, it waived its right to rely on the terms of the Settlement Agreement by including as part of its present action a claim of infringement of the patent. He maintains that if clause 5.1, in particular, of the agreement is construed as the Claimant says it should be construed, then giving a wide definition to the meaning of the term "claim" as the Claimant suggests means that the only logical position for the Claimant to adopt would have been to accept that it could only bring a claim for breach of contract in respect of the Settlement Agreement and could not bring any claim for infringement of the patent. I am by no means persuaded that that is correct as a matter of interpretation of the agreement. However, the main point made in answer to it by Mr Caddick QC in his submissions, which I accept, is that one cannot spell out from the way in which the Claimant has brought the present action and pleaded its case any clear and unequivocal indication that it elected not to rely upon its rights under the Settlement Agreement: see Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The Kanchenjunga) [1990] 1 Lloyd's Rep 391, House of Lords, in particular at pages 398 to 399 per Lord Goff.
37. The Claimant's pleaded case in the present proceedings was always ambiguous as to whether the Claimant would seek to rely upon the Settlement Agreement or would seek to say that that the Settlement Agreement had been repudiated and was no longer binding, so that the Claimant was entitled to go back in time, including so as to bring a claim for infringement of the patent in the period before the Settlement Agreement was entered into. As set out above, the Claimant made its position clear as the proceedings went forward that it wished to reserve its position in relation to the question whether it would rely on the Settlement Agreement or would seek to say that it had been repudiated, until such time as it had had further disclosure from the Defendant. It has now had further disclosure and has made its position clear that it seeks to rely upon the Settlement Agreement. In my view, there is nothing in this background which could begin to found a good argument that the Claimant has waived its rights to be entitled to rely upon the terms of the Settlement Agreement as it now seeks to do. Arguments may be developed in due course at trial by the Defendant based on its interpretation of the Settlement Agreement, to the effect that the Claimant is now confined to a claim based on breach of contract, but that is a very different matter from saying that the Claimant's conduct thus far shows that the it clearly and unequivocally waived its ability to rely on the Settlement Agreement.
38. The second matter particularly relied upon by Mr Burkill in relation to waiver was the submission that the Claimant has waived its rights to rely upon the Settlement Agreement by advancing a positive case on the validity of the patent in its Reply, in answer to the contention of the Defendant in its pleading that the patent is invalid. Mr Burkill sought to contend that the Claimant by doing this had elected to accept that validity of the patent was indeed to be treated as an issue in the case.
39. However, again, in my view, there is nothing in the way the Claimant has pleaded its case or presented its case that involved any waiver of its rights to rely upon the Settlement Agreement in the clear and unequivocal terms that would be required, in line with the guidance given in The Kanchenjunga. The position the Claimant has maintained throughout has been to maintain a case which includes a claim that the Defendant should be held to the terms of the Settlement Agreement. It has done nothing which amounts to waiver of its rights in that regard.
40. A further point raised by Mr Burkill – really, as I understood its effect, as a case management issue - was that the court should not take the step of making an order at this stage, since aspects of the invalidity issue would arise in any event in the course of the action as currently framed (in particular, in relation to the question of tests that should be applied in relation to the degree of penetration possible in respect of the penetration barrier for goods allegedly made using the Claimant's patent method). In my view, however, it clearly is in the interests of justice and the overriding objective, with a view to minimising the issues in dispute between the parties and the extent of enquiry which would be required by the court at trial in order to determine the dispute, that the court should at this stage - having determined the true meaning and effect of the Settlement Agreement - make orders to give effect to the Settlement Agreement by limiting the issues on the pleadings and the matters to be gone into at trial.
41. At various points in his submissions, Mr Burkill suggested that it would be unfair for the court to construe the Settlement Agreement as contended for by the Claimant. He emphasised that, as he contends, there has been a change in the way in which the Claimant seeks to put its case on the proper interpretation and effect of the patent, in relation to the criteria of penetration and the tests applicable in respect thereof, as between the position maintained by the Claimant in the first action and the position which it is seeking to maintain in this action. As I understood him, he sought to suggest that this was a feature of the case which brings it within the sort of class of case contemplated by the House of Lords in the Bank of Credit and Commerce International decision, in which upon proper interpretation of the general release in that case the employees were found not to have lost the right to bring the particular claims which they sought to bring.
42. In my view, however, this feature of the case does not assist the Defendant; nor does it bring this case into that special category of case contemplated by the House of Lords in Bank of Credit and Commerce International. I consider it is clear that the parties knew perfectly well when they entered into the Settlement Agreement in 2011 that issues had arisen in relation to the validity of patent and that issues in relation to the true interpretation of the claims as set out in the patent would arise at the trial of the first action. It was all of those issues which the parties intended finally to settle and dispose of by their agreement. In my view, upon proper interpretation of the agreements in line with the approach identified in Bank of Credit and Commerce International, the matters which the parties agreed to resolve between themselves included all matters relating to the validity of the patent (as properly construed according to the objective standard that a court would bring to issues of interpretation of the patent). On proper interpretation of the terms that they used in the Settlement Agreement, the parties did not intend only to resolve between themselves issues relating to questions of construction and validity of the patent turning upon, and limited to, the precise way in which the parties at that juncture happened to be putting their cases. In my view, as I have already said, the issue of the validity of the claimant's patent was raised squarely on the pleadings in the first action by the terms of the Defendant's pleading, and the parties by their agreement intended finally to resolve that question of validity in favour of the Claimant.
43. As matters now stand, therefore, by reason of the Settlement Agreement as properly construed, I consider that the Defendant is foreclosed by that agreement from raising in the present proceedings the issue of the validity of the patent whether by way of defence or by counterclaim for revocation of the patent.