England and Wales High Court (Patents Court) Decisions

Nutrinova Nutrition Specialities & Food Ingredients + Ors v. Scanchem UK Ltd [2000] EWHC Patents 124 (17th March, 2000)

CH 1998 N 4731

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

Mr Justice Pumfrey

BETWEEN

1. I direct that no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.

DATED 18 May 2000

1. On 17th of March 2000 I gave judgment in this action. I held that claim 1 of the patent was valid and has been infringed. I held that the claims to the intermediate, acetoacetamide-N-sulphonic acid and its salts were invalid as were the claims directed to their manufacture by reacting diketene with sulphamic acid salts.
2. The claimants wish to decide whether to recover damages, and also seek to recover their costs. Since I have found the patent to partially valid, it follows from sub-section 63(2) of the Patents Act 1977 that the claimants must show that the specification for the patent was framed in good faith and with reasonable skill and knowledge. They apply also to amend the patent by deletion of the claims which I have held to be invalid. On the 7th April, I directed that the claimants should make an application to amend, and I dispensed with advertisement of the amendment. I directed statements of case from the defendant on the question of good faith and reasonable skill and knowledge and in relation to the application to amend, the claimants to serve statement in answer to the defendant’s case. There has been no application for disclosure on the application to amend. This substantial issue aside, the other issues for decision were:

(a) the scope of any injunctive relief, and, in particular, whether the scope of the injunction should be limited in the manner describe by Laddie J. in Coflexip SA v. Stolt Comex Seaways MS Ltd. [1999] FSR 473;

(b) whether the defendant should at this stage disclose the names of purchasers from it of infringing material;

(c) the costs order which should be made, including whether they should be a change in the costs order which I made in respect of the letters of request to the New York court to which I refer in the judgment; and

(d) whether there should be interim payment of costs, and if so, how much. There was no dispute that there should be a certificate of contested validity in respect of the claims of the patent found to be valid; that the claimants be given an opportunity to elect for an account or an enquiry, following the practice established by Millett J. in Island Records v. Tring. [1995] FSR 560; and that there should be permission to appeal. It was finally agreed at the hearing that the information sought for the Island Records disclosure should take the form of the information specified by paragraphs 3(a) and 3(b) of the claimants’ draft schedule certified by Scanchem’s auditors. There will be a liberty to apply in the event that the information provided is insufficient to make an election.

Good Faith and Reasonable Skill and Knowledge: Amendment

3. By article 138(2) of the European Patent Convention, if the grounds for revocation only effect the European in part, revocation shall be pronounced in the form of a corresponding limitation of the patent. If the national law so allows, the limitation may be effected in the form of an amendment to the claims, the description or the drawings. So far as domestic law is concerned subsection 63(2) provides as follows:

"Where in any [proceedings for infringement of a patent] it is found that a patent is only partially valid, the court ... shall not grant relief by way of damages, costs or expenses, except where the plaintiff ... proves that the specification for the patent was framed in good faith and with reasonable skill and knowledge, and in that event the court ... may grant relief in respect of that part of the patent which is valid and infringed, subject to the discretion of the court ... as to costs or expenses and as to the date from which damage should be reckoned."

4. Sub-section (3) is as follows:

"As a condition of relief under this section the court ... may direct that the specification of the patent shall be amended to its ... satisfaction upon an application made for that purpose under section 75 below, and an application may be so made accordingly, whether or not all other issues in the proceedings have been determined."

5. The question of what is to be done if the court imposes a condition mentioned in sub-section (3) but refuses the amendment is perhaps of theoretical interest only. Section 63 relates to relief for infringement, validity being governed by the provisions of sub-section 72(4). At first sight, sub-section 72(4) is inconsistent with the provisions of Article 138 if it preserves a discretion in the court to revoke a patent which only partially valid. Article 138 is not an article of the EPC which effects a substantive provision of patent law but is rather an obligation placed upon the Contracting States. I should be reluctant to construe section 72(4) in such a way as to suggest that the United Kingdom has not complied with its convention obligations in this respect, but since I am satisfied for the reasons I shall give that this is not a case in which amendment should be refused the discussion would be theoretical.
6. It is well settled that to demonstrate good faith and reasonable skill and knowledge a patentee must prove two things:

(a) that the specification was framed honestly with a view to obtaining a monopoly to which on the material known to him he believed he was entitled;

(b) the specification was framed with reasonable skill and knowledge, a phrase which relates to the care exercised by the person who drafted the specification.

7. Often, a specification is a collaborative effort between (for example) a patent agent and the inventor. It must always be remembered that it is the task of the patent agent to exercise his skill to apply to obtain as wide a coverage for the invention which is disclosed to him by the inventor as the state of the art known to him at the time of the application would reasonably warrant. So too, if he detects a wider potential invention in what has been described by the inventor (since inventors often approach the patent agent with what will eventually be the preferred embodiment of the patent in suit) it is his duty to exercise his skill in generalising the features of the invention disclosed to him. It neither possible nor desirable to give a list of examples of want of good faith or reasonable skill and knowledge; but an example of the former might well be knowingly drawing a claim which covers the prior art, and of the latter failure to appreciate that a claim as drawn does cover prior art know to the draftsman.
8. In the present case, the patent was based on a German priority application number DE3410439 made on 22nd March 1984 to the German Patent Office. The European Patent with which I was concerned was applied for at the European Patent Office on 13th March 1985 claiming priority from DE3410439. The German application was drawn by a German Patentanwalt employed at the time by Hoechst AG, and included the intermediate process claims, but not the claims to the intermediate per se. Dr Meier was responsible for the initial phases of the European Patent Application, but it was prosecuted through the European Patent Office by Dr Rudolph Weissert, also a Patentanwalt employed by Hoechst. Both gentlemen were cross-examined before me, Dr Meier by video link and Dr Weissert in person. Dr Reuschling, the inventor, who had also given evidence at trial gave evidence in relation to the drafting of the patent application and was cross-examined further on this subject. All three were truthful witnesses.
9. The defendant’s pleaded case in relation to good faith and reasonable skill and knowledge may be summarised as follows. The intermediate was obvious, as were the methods for making it. Dr Reuschling knew that it was obvious. He failed to disclose a prior publication (Petersen) to Dr Meier, and failed to tell Dr Meier that he had carried out the retrosynthetic analysis to which I refer in the judgment. Dr Reuschling should have told Dr Meier that retrosynthetic analysis was a standard and common place technique; and that a substitution of organic solvent for the aqueous solvent used by Petersen was straightforward and obvious step. In conclusion therefore it is suggested that Dr Reuschling misled Dr Meier as to the inventiveness of the process.
10. Dr Meier said under cross-examination that he would normally form his own view as to the inventiveness of a particular step in the light of the prior art of which he had made aware. He regarded it as his duty to get as wide a claim as possible which did not catch the prior art. He said that whether or not he had been told by Dr Reuschling about retrosynthetic analysis and about Petersen, he would have still have formed his own view as to inventiveness, and his view was (and remains) that it was inventive having regard to Petersen. It seems to me to be plain that the question of obviousness was arguable; and that Dr Meier and Dr Weissert would have been failing in their duty to their client, or employer, had they failed to try to cover what was and is a novel intermediate. To file a specification knowing of an arguable case of obviousness in respect of an intermediate compound, this case of obviousness having little or no effect on the validity of the principal claim, does not amount to bad faith, and much more would be required before the patentee is to be deprived of his costs and of the opportunity to sue for damages. I am quite satisfied that the specification of the present case was drawn in good faith and with reasonable skill and knowledge.
11. So far as the amendment of the patent in suit is concerned, the defendant’s case is that the claims which are sought to be deleted (and which I have found to be framed in good faith and with reasonable skill and knowledge) were nonetheless covetous, in the sense that they deliberately cover matters known to obvious. I have rejected the contention that it was known that the intermediate was obvious, and this ground for refusing to exercise the judicial discretion in favour of amendment must equally be rejected. However, the defendant relies upon other matters as providing a reason for refusing the amendment. Before turning to them, I should briefly outline the law on the subject. In Kimberley-Clark v. Proctor & Gamble [2000] FSR 235 the Court of Appeal has re-emphasised that there is a discretion in amendment proceedings to refuse amendment even where the amendment is a pure deletion of claims and the patent is a European Patent. At the same time, it must be remembered that in cases where the only amendment is by way of deletion of invalid claims, exceptional circumstances must be shown before such an amendment will be refused in the exercise of the Court’s discretion. As Aldous LJ has said, a refusal to permit amendment having the consequence that the patent would be revoked is harsh and provides justice only if there are very exceptional circumstances - see Chiron Corporation v. Organon Teknika [1994] FSR 458 at 460. It is clear that the kind of serious misconduct sufficient to prevent an amendment by deletion is bad faith or fraud or dishonesty or insincerity - see Texas Instruments v. Hyundai [30th July 1999, unreported].
12. The matters relied on by the defendant in the present case are these: the claimants have sought to enforce the patent including the claim against a large number of alleged infringers, some of whose names are given; there has been failure to disclose whether claims equivalent to the invalid claims in the present case have been found to be invalid in other jurisdictions; and the claimants’ failure to make full and frank disclosure means that the amendment should anyway be refused. During the course of the hearing, three countries only were raised as potentially countries in which there might have been an adverse finding on validity of the claims sought to be deleted: - Mexico, Brazil and South Korea.
13. So far as the suggestion that there has been a failure to make full and frank disclosure is concerned, the authorities prior to Kimberley-Clark (above), give some support to the contention that any failure to make full frank disclosure in relation to all matters potentially effecting the exercise of the discretion is fatal to the allowability of the amendment. So in a very strong case, Smith Kline and French v. Evans Medical [1989] FSR 559 Aldous J. as he then was said in this in a passage which has subsequently been approved by the Court of Appeal:

"The discretion as to whether or not to allow amendment is a wide one and the cases illustrates some principles which are applicable to the present case. First, the onus to establish the amendment should be allowed is upon the patentee and full disclosure must be made of all relevant matters. If there is a failure to disclose all the relevant matters, amendment will be refused."

In an earlier case, Chevron Research Company’s Patent [1970] RPC 580 Graham J. said this at page 586:

" ...it is essential that those seeking amendment should realise that they heavy onus to discharge and can only expect to do so if they have full evidence to prove their case and put the whole story before the court."

14. The judgment in Kimberley-Clark makes it quite clear that such a disclosure need only be made in respect of matters on the face of it cogent which are raised fairly by the opponent to the amendment. In this case there is no pleading from the opponents that claims corresponding to the product and process claims which I have held to be invalid in present case have been held to be invalid in any other jurisdiction, and it must be accepted that their absence from patents otherwise corresponding to the patent in suit may well be explicable on grounds relating to the local law, such as allowability of such claims, or as to the requirements of different patent offices in respect of multiple inventions in one specification. By way of example, the claims to the intermediate were divided out in the United States, where there is a second patent covering the subject matter of the claims I have held to be invalid. The defendant raised no prima facie case that any foreign jurisdiction had found the claims to be invalid, and in my judgment there was no duty on the patentees in this case to prove a negative by making a wide ranging, expensive and open ended disclosure. Nor, in my judgment, was there any duty on the patentee to disclose any findings of invalidity in relation to those claims, at least where that information is freely available from other sources. In my judgment, there are no grounds for refusing these amendments to delete the invalid claims and the amendments should be allowed accordingly.

Form of the Injunction

15. In the Coflexip case, Laddie J. examined the principles affecting the form of injunctive relief in patent infringement actions. His judgment was considered in the context of copyright infringement by Court of Appeal in Microsoft Corporation v. Plato Technology Limited [1999] IP&T 1. From these cases I draw the following propositions:

(1) there is no rule that in any case of infringement of an intellectual property right the injunction granted will be a general injunction against infringing that right;

(2) the task of the court is to tailor the injunction to match the wrong that has been committed and the wrong that is threatened to be committed in the future;

(3) the discretion is a wide one: injunctive relief may in an appropriate case be refused altogether (see Procter v. Bailey (1889) 42 Ch D 390, 6 RPC 538) or may be in the wide form hitherto customary;

(4) There are dicta in the Microsoft v Plato case supporting both the contention that to depart from the usual form requires exceptional circumstances, and the contention that the relief must be tailored in every case to the harm which is threatened. Thus, in discussing the exercise of the judge’s discretion, Nourse LJ said "For all the reasons which he gave he was entitled to treat it as an exceptional case which did not merit the grant of an injunction in the usual wide form." On the other hand, he approved Laddie J’s statement that the judge has a discretion in each case to tailor the relief to match the wrong committed and sentenced. In my judgment, there is no ‘starting point’ for the form of the injunction. Rather, there should be a recognition that the in the usual run of cases a proper assessment of the relevant factors may well lead to the grant of an injunction in the wider form. Nonetheless, in each case the question is to be approached on all the material available.

(5) In the case of an injunction in a patent infringement action it is necessary to bear in mind that the scope of the claim, and so of the injunction, may be uncertain, or unclear. As Laddie J. says a defendant should not be set a puzzle.

(6) There is undoubtedly a class of cases in which wide relief may be appropriate not withstanding considerations of the sort which I have described above. These are identified in the judgment of Mr Steinfeld QC at first instance in Microsoft v. Plato as cases concerning dishonest traders. Where a trader is either knowingly infringing or reckless as to whether the goods in which he is trading are infringing items or copies then it may well be that the interests of justice require grant of an injunction in the wide form on the basis that the defendant cannot be relied on to exercise any care in ensuring that the good in which he is dealing are not infringing.

16. The relevant considerations so far as Scanchem are concerned are these. First, this is not a case where it can be suggested that there may be a puzzle on the edge of the claim. Either SO₃ is used to close the ring of the intermediate or it is not, but absent direct evidence of the process operated by the manufacturer, it may be difficult to show infringement. Second, Scanchem sought and did not obtain a licence to deal in acesulphame not made by Hoechst in 1997. It did obtain a licence of right under the transitional provisions of the Patents Act of 1977 in relation to the so called ‘mixture’ patent to which I refer in the judgment and paid the royalties. Third, until April 1999, it seems to me to be clear that the question of infringement was doubtful. Certainly, on the material available from the patentee, it was far from clear that the patentee would be able to show that the acesulphame imported from Beijing VitaSweet was infringing material. However, the OKL documents were obtained in April 1999 and established in my view a clear case of infringement.
17. Mr Waugh’s submission was that at this point, an honest trader would have stopped selling the allegedly infringing material. He says that the Scanchem’s conduct since the OKL documents were received makes it clear that it is not to be relied on and that an order in the ordinary form is appropriate. In order further to support this contention he relies upon an exchange of correspondence taking place between Scanchem, the claimants, and the claimants’ solicitors starting with a letter from Scanchem of 23rd February 2000. This letter is as follows:-

"We have been investigating potential sources of acesulphame K. This activity has been entirely independent of the litigation between us that is currently awaiting judgment, and is the policy that we are pursuing in any event irrespective of the result of that judgment as part of Scanchem’s policy of searching for new suppliers for products in its range. In the course of that investigation we have identified a number of potential suppliers of acesulphame K in China. Of these, we believe that Guandong Food Additive uses a process to manufacture acesulphame K that does not infringe [the patent in suit] ....

We intend to conduct a full inspect [sic] of the Guandong Factory in April 2000 which will include an examination by an independent expert to ensure that the process used is not that described in the patent. We should like to include on that visit an independent expert such as Professor Siegemund appointed by Nutrinova, and if you are willing to instruct such a person we should be pleased to make the necessary arrangement with Guandong, and to include him in our inspection party. By this means both Nutrinova and Scanchem can be completely satisfied whether or not the Guandong process infringes and litigation can be avoided. Whilst in China plan also to inspect the factory of Hope Chemicals and Dong Gang all of which should be achievable within one week. Please let me know as soon as possible [whether] you agree to this proposal, and supply the name of your independent expert ...

We shall continue to import acesulphame K and sell it in the United Kingdom, but certainly wish to avoid infringing any patent by so doing. We have previously made enquiries of you regarding the patent position of the product manufactured by Guandong, but have received no reply. ... Please now let us know by return if acesulphame K manufactured by Guandong does infringe the patent. By letting us know this now, an inspection of the Guandong factory would be unnecessary, and the expenditure of a good deal of time and money by both Nutrinova and Scanchem could be avoided."

18. Nutrinova’s solicitors, Taylor Joynson Garrett, replied to this letter seeking further information as the nature of the process which Guandong said it was claiming to operate, asking how long it said it had been operating the process and asking for the annual capacity of the Guandong factory. They did not reply directly to the question whether Nutrinova considered that the Guandong product infringed, but I think it is a reasonable inference from their letter that they did. It appears that Mr Currie replied to this letter by e-mail, but this reply was not received by the solicitor responsible at Taylor Joynson Garrett, who very fairly admitted that their e-mail system was experiencing difficulties at the time Mr Currie’s e-mail was sent. Mr Curry’s e-mail does not describe the claimed process claimed to by operated by Guandong but refers to a Chinese patent specification. He gives further information ‘generally’ on other manufacturers in China and the quantities which they produce. This correspondence certainly does not suggest that Scanchem are not to be relied on.
19. The major problem in the present case is that it is conceivable that a process other than the infringing process could be being used by another manufacturer in China. It is not contended that Nutrinova have an exhaustive patent coverage (in contrast to the position in the Saccharin line of cases) and it would appear that Scanchem are willing to be frank with Nutrinova about the source of their material, and, so far as it lies within their power, the process which is used for making it. Of course, it is very much in Scanchem’s commercial interest to find a manufacturer who does not use an infringing process, and very much within Nutrinova’s interest to protect its market for as long as possible.
20. It seems to me that if an order in the wide form is made there is a substantial possibility that a difficult question of infringement would have to be decided on a motion to commit. I agree with paragraphs 27 and 28 of Laddie J’s judgment in the Coflexip case in thinking that it no answer to this objection to say that it is always open to the defendant to approach the court for a decision that his new course of action does not fall within the scope of the wider form of injunction. To advocate such a course is to assume tacitly that it is more likely that the infringer who has been guilty once will be guilty again. If the facts do not otherwise justify this assumption, it should not be made. I do not think that Scanchem is a willing infringer, and I do not consider that it is guilty of taking a Nelsonian approach to the process operated by its supplier. Since I do not consider that Scanchem has conducted itself in bad faith, I have come to the conclusion that a narrower form of injunction is appropriate. The injunction will be against importing acesulphame K from Beijing Vitasweet. There will be an express liberty to apply to both parties.

Identities of Purchasers from the Defendants

21. The claimants seek an order for disclosure of substantial purchasers of the infringing material from Scanchem at the present stage of proceedings. The claimants have not yet elected whether to sue for damages or for an account of profits, and it is common ground there is to be an appeal by the defendant. Nonetheless, the claimants say that they should be placed in a position now to approach purchasers from Scanchem. It is well settled that there is a jurisdiction to make such an order, and is equally well settled that in deciding whether to make such an order one should balance the interests of the successful claimant, who is entitled to adequate relief in relation to all infringement, on the one hand against the interests of the defendant in not having his trade connections and goodwill damaged unless it is necessary in the interests of justice to do so on the other. It was not suggested that to approach the defendant’s customers at this stage would put the claimants in a better position to recover such financial relief as they cannot recover against the defendant from those customers. What was said was that it is likely that the defendant will not be good for the money and that the claimants should accordingly have an opportunity to proceed against its customers straightaway. There is no doubt that an approach from the claimants will have a deleterious effect upon the defendant’s good will, and in my view in a case where the defendant’s good faith is not an issue it would require strong circumstances to justify such an order where there is a bona fide appeal. For reasons which I have given, I am satisfied that Mr Currie, the guiding spirit of the defendant, is not acting in bad faith and I shall accordingly not make an order for disclosure of customers names at this stage. It is however open to the claimants to apply for such disclosure at any stage if there is a change of circumstances, and I shall give an express permission to apply for this purpose.

Costs

22. The claimants have been successful in the action, they are therefore in principle entitled to the general costs of the action. The question is first, what is the proper order to make in relation to the issue of validity, upon which the defendants were partially successful; and second, whether a special order should be made in the light of what the defendants say is the disproportionate expenditure of effort and resources by the claimants on the litigation. Before turning to the specifics, I should mention that it would appear the solicitor and own client bill for the claimants is approximately £1.1 million. The defendant’s solicitor and own client bill is about £300,000. Mr Silverleaf, who appeared on behalf of the defendants submits that a looser should not pay for expansive litigation by the victor, and I shall consider this submission after having considered the proportion of their costs which should be recoverable by the claimants.
23. Mr Waugh contended for a general order for 95% of the costs of the action to be paid by the defendant to the claimants. Mr Cohen, Mr Waugh’s instructing solicitor, gave evidence that the question of the invalid claims accounted for about 25% of the costs of validity, and the issue of validity accounted for about 20% of the costs of the action. Mr Jackson, Mr Silverleaf’s instructing solicitor, estimates the defendant’s costs of the issue of validity as being very slightly less than £100,000 but does not suggest what fraction of that sum represents the costs associated with the invalid claims. I shall assume that the fraction is the same, that is 25%.
24. Rather than have two assessments, I think it would normally be convenient to deal with this problem by making a percentage deduction from the costs which would otherwise be paid to the claimants. 25% of the claimants’ costs of the issue of validity should not be recoverable, and in my judgment 25% of the defendants costs of the issue of validity should be paid by the claimants to the defendant. Since the ratio of the estimated costs in relation to this issue is 2:1 claimants to defendant, it seems to me to be sensible to deduct 25% plus a further 12.5% from the costs to be paid by the defendant to the claimants in respect of the issues on which the claimants were successful concerning validity. Accordingly, my order would be that the defendants will pay to the claimants 62.5% of the claimants costs the issue of validity to be assessed if not agreed.
25. The next issue is the order to make in relation to the issue of infringement. As I have related in the judgment, the complexion of the action changed very substantially when the results of the letters of request which were sent to the New York Court were received. The claimants had down to that date relied upon a number of technical matters (principally analyses of impurities in the defendant’s products) which they said showed infringement. I had already directed a statement of case on infringement, and this was reamended very extensively in June 1999 so as to remove the whole of the case which relied upon analysis of impurities. Instead, the whole of the case was placed upon the documents obtained in the course of Kashruth Certification in China and certain other documents which I have discussed in my judgment. The parties could not agree the correct order for costs on this extensive amendment to the statement of case on infringement, and that has been left over to be dealt with now. The ordinary order would be that the defendant’s costs thrown away by this amendment should be paid to the defendant. I am aware that orders of this sort can tend to discourage claimants from voluntarily limiting their claims to the contentions which really matter, and it is therefore necessary to consider each case on its own facts. In this case, I think that the ordinary order is the right order for the following reasons. First, the case based on impurities was complementary to the case based on the documents, and not inconsistent with it. Second, it is inherently undesirable in patent proceedings to encourage claimants to put their case on infringement on many different bases confident that if they succeed on one they will recover the costs of every alternative argument advanced, or at least not have to pay the defendant’s costs. It follows that the claimants should not recover their costs, and the only question is whether the defendants should receive their costs. I am satisfied that they should, since all the work which they did on these issues has proved to be abortive. I can see no reason in those circumstances why the ordinary order should not be made. Accordingly, the claimants are to have the costs of the issue of infringement, except the costs thrown away by the amendment which are to be paid by the claimants to the defendant, and there is to be a set-off.
26. That is not the end of the question of the costs, since Mr Silverleaf launched a frontal attack on the contention that the claimants should recover costs on any more generous a basis than the costs paid by the defendant in resisting the claim. Accordingly he submitted that a particular and special order should be made to reduce overall the proportion of costs which the claimants should recover. He reminded me of the overriding objective to which I must give effect when exercising any power given to me by the rules including the power to order costs. He drew my attention in particular to paragraphs (2)(b) and (c) of CPR 1.1, and submitted that the claimants had done nothing either to save expense or to deal with the case in a manner which was proportionate to its importance to the parties and to the complexity of the issues. He said that to make an order for costs on the basis of the whole of the claimants’ costs would be disproportionate and would fail to reflect the parties’ relative financial position. He mentioned also that in point of fact his clients were being used as an example to the rest of industry, and that the benefit to the claimants of their expenditure on this action was considerably greater than merely the relief which they would obtain against his clients. The claimants’ contention was that although they were a subsidiary now of the well known Celanese Group, acesulphame was their only product and that preventing its importation on a large scale from China was of central importance to their commercial well-being. Accordingly nothing they had done was disproportionate. Indeed, Mr Waugh’s submission was that the money which the claimants had paid to their solicitors was money fairly expended having regard to the potential threat represented by the defendant alone, who had imported a substantial percentage of the annual national consumption of acesulphame in the United Kingdom.
27. I have no doubt that in a proper case the court will look with great care at the disproportionate employment of resources by a successful party, and in particular a successful claimant. At the same time, a substantial expenditure cannot be regarded per se as disproportionate. Some idea of the sums involved may be gauged from the evidence given at trial that Mr Seidel’s profit from 40 tonnes of acesulphame could amount to DM 4 million. In my judgment it would not be right to say that in relation to those matters where I have held them to entitled to their costs, the claimants expenditure has been so disproportionate that a special order is required over and above the normal scrutiny to which the reasonableness of the particular items of expenditure will be subjected by the costs judge. In any event, I have in effect deprived the claimants of their costs in relation to the principal matter upon which Mr Silverleaf relied in support of his contention that the claimants approach had been disproportionate, that is, the allegation of infringement based on impurity levels.
28. At an early stage in the action, the claimants were ordered to plead a statement of case in relation to the case based on impurity levels and to support that statement of case by evidence from an expert. Mr Silverleaf relied upon this evidence, which came from one Professor von Rymon Lipinski, as evidence produced by a non-expert which was known to be untrue, and that the order for costs should reflect the fact that the claimant was prepared to advance untrue evidence in order to meet a possible application to strike the action out. I should make it clear that I reject Mr Silverleaf’s contentions. It is not clear on the material before me whether Professor von Rymon Lipinski was an expert who could give relevant evidence of the sort contemplated by the order, and it is far from clear to me that his evidence was untrue. It may well be that the defendant is satisfied that had the case gone to trial on the evidence submitted Professor von Rymon Lipinski it would have won. That may well be right, but it is not a relevant consideration given the other orders for costs which I have made. I see no grounds for reducing the basis of the award of costs in favour of the claimants.

Modification of the order for costs of the Letters of Request

29. This can be dealt with briefly. The order on the application for the letters of request contained a liberty to apply ‘to the Plaintiffs to apply for cause to vary this order’. There has been no relevant change in circumstance which could amount to a cause for varying this order, and accordingly the order for costs stands.

Interim Payment of Costs

30. The question is whether I should order some and if so what sum by way of an interim payment of costs by the unsuccessful defendant to the claimants. I cannot know what the outcome of the ultimate assessment would be but it is urged upon me that there is a sum which, to use Jacob J’s. words in Mars v. Teknowledge [2000] FSR 138, is the likely full amount of the costs to be recovered.
31. In Mars v Teknowledge , Jacob J discusses the jurisdiction to award interim costs. He points out that the discretion is a wide one, and that it must, obviously, be exercised so as to afford the closest approach to justice on the facts of each case. Jacob J identified a number of considerations which are likely to be relevant once the sum likely to be recovered in a detailed assessment has been identified. These factors include the relative financial position of the parties and the consideration that if the paying party may wish to appeal an interim payment should not render a probable appeal impossible or unduly difficult. The investigation of the financial position of Scanchem (there is little evidence as to the position of Nutrinova) was protracted. Nutrinova adduced evidence from the well-known forensic accountant Mr Andrew Mainz, the thrust of which was that Scanchem had recently paid substantial sums to Mr Currie but that if it continued to trade on a similar basis as heretofore it could probably make at least £100,000 profit per year post tax, and should have a capital value in excess of £500,000. Mr Mainz points out that the balance sheet shows current assets of £2.563m, and an overdraft of £716,000, indicating that there would be asset coverage for additional borrowing of £250,000 or so from a reputable lender.
32. Mr Mainz’s figures were necessarily historical, and, to some extent, based on informed deduction from Scanchem’s most recently filed accounts. He suggested a payment of £50,000 plus £5000 per month. The up-to-date position appears to be as follows. The substantial payments to Mr Currie appear to have been instalments of a distribution to him, or alternatively a one-off director’s payment, decided in 1995. Thereafter, the balance of this sum appears as the director’s current account until it was fully paid in 1998. Some criticism of the evidence in relation to an investment in an internet company, which has been written off in the current year was made, but I am unable to attach much importance to this. Of considerably more importance is that Scanchem is now factoring its invoices, and thus increasing its apparent borrowing, the outstanding amounts being secured by a charge on the book debts of the company, as is normal. Cash in hand is very small in the balance sheet as at 31 December 1998. The most recent year’s unaudited accounts show a small trading loss, with again little cash in hand, the substance of the assets comprising trade debtors (charged to the factors) and stock and goods in transit. The evidence was that the overdraft limit has been reduced to £300,000. The conclusion which I draw is that the company is far from cash rich, and that any payment in advance of costs would have to be made in instalments if it were to be substantial to avoid putting the company under unreasonable pressure. It is, however, to be noted that the company managed to pay its own solicitors somewhat in excess of £250,000 in the course of 1999, and I understood at the hearing that all their professional fees for the action had been paid. The company appears, therefore, to be capable of budgeting for legal expenditure of about £20,000 per month. Its year to date figures for the first two months of 2000 suggest a rate of £10,000 per month. This sits well with Mr Mainz’s estimate of about £5,000 per month.
33. Against this background, Mr Waugh requested an interim payment of £486,000 within 21 days. On any view this is far too much. To order the company to make this payment would in my judgment create a substantial risk of insolvency. Mr Silverleaf contended that any payment would be inappropriate, but failing that any payment should be periodic. In my judgment, I should not order a payment at a higher rate than has been achieved in the past in favour of Scanchem’s solicitors, and I must remember that Scanchem cannot offer, or at least may have considerable difficulty in offering, acesulphame which is an important part of their range of products.
34. I am not satisfied as to the sum which will ultimately be recoverable in the assessment of the claimants’ costs. I feel safe in the view that the claimants will recover at least £250,000. I am satisfied that Scanchem cannot afford the immediate payment of £50,000 suggested by Mr Mainz, and that borrowing for the purpose of the interim payment is likely to be difficult for them.
35. The position of Nutrinova is, as I have indicated, far from clear. It is a member of the Celanese group. It has not put forward any evidence to indicate how its expenditure on the costs of this action has affected its financial position, although this must be a relevant factor in assessing whether Scanchem should make a payment on account of costs at this stage. I am not confronted, therefore, with any immediate necessity for the payment of costs on the part of Nutrinova.
36. Finally, Jacob J suggests that the prospects of an appeal are a relevant factor. So far as this is concerned, I bear in mind only that the defendant failed on the facts both on validity and infringement, and that it is not really possible to identify any outstanding legal issue.
37. I have come to the conclusion that the best guide to what Scanchem can afford is the sum which it paid to its own lawyers in 1999. I think also that this is a case in which I must be careful not to order a sum which would cause disproportionate difficulty, the more so since I have no evidence that the claimants are seriously embarrassed by the lack of an immediate payment of their costs. I shall order an interim payment of £15,000 within 21 days and £5,000 per month until the conclusion of the detailed assessment, the sum paid in this way not to exceed £150,000, which is three-fifths of the sum which I am satisfied is bound to be recovered on an assessment. I appreciate that this approach is to some degree arbitrary, but I am satisfied that the claimant’s best hope for the recovery of their costs is not to put excessive pressure on Scanchem, and this I have also borne in mind.