England and Wales High Court (Patents Court) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		21st December 2007

Lord Justice Pumfrey :

1. The question which now arises is the correct order for costs to make in the light of the judgment that I have delivered. In major respects (including the Syngenta experiments question) the issues have largely been resolved in Monsanto's favour. Monsanto failed, however, on the comparatively short issue of construction, the meaning of the word 'isolated'. Monsanto failed also on the validity of claim 6.
2. The practice in patent actions relating to the making of orders for costs has not been uniform, but has always shown a much higher willingness on the part of the judges to make issue-based orders than has been apparent in other types of litigation. Until the CPR came into effect, the court exercised a general control on costs by the process of certification, which prevented costs from being allowed in respect of any issues raised in the particulars of infringements or particulars of objections unless the court had certified that such issues or particulars had been proven or were reasonable and proper. The requirement for certification was abolished by the CPR, and costs are allowed or disallowed in patent actions on the same basis as in any other litigation. There have now been a number of cases in which the application of the general principles of CPR 44 have been discussed in the context of patent actions, in particular the decision of the Court of Appeal in Smithkline Beecham Plc v. Apotex Europe Limited [2004] EWCA Civ 1703. Warren J and Kitchin J have considered the application of the principles so stated in Actavis Ltd v. Merck & Co Inc [2007] EWHC 1625 (Pat) and Generics (UK) Ltd v. H Lundbeck A/S [2007] EWHC 1606 (Pat) respectively.
3. In summary, Monsanto's total costs appear to have been about £2.2m, and Cargill's were £1.9m. The sums under consideration are accordingly very large.
4. Notwithstanding the substantial sums at stake, the parties have both argued for an order for costs expressed as a percentage or in absolute terms, rather than submit themselves to a detailed assessment. It necessarily follows that the order which I make will lack any degree of mathematical precision. It is not possible to decide as a matter of principle how (if at all) the costs expended are to be recouped with any hope of complete accuracy. As Jacob LJ said in SKB v. Apotex, 'to set a costs judge the task of unravelling the costs of the issues would be to ask the impossible'. While the precision of the costs judge's assessment would no doubt be greater than mine, the parties were anxious to avoid the further complexities. At the same time, it must be realised that when the court sets out to fix percentages upon this basis, highly detailed considerations are not appropriate. This is not a detailed assessment carried out by other means, but a judge's assessment based largely on the perspective which comes from concentration on one part of the action, the trial. This consideration is important in the present case, since much happened that was water under the bridge by the time the trial took place. By way of example, there were originally three patents in the action. The first, called 571, was removed from the proceedings by agreement, it being agreed that there should be no order as to costs. On the evidence before me, those costs were £70,000 on Monsanto's side, and £167,000 on Cargill's side. The next patent to drop out was called 749. That was revoked by the EPO on 3^rd May 2007, shortly before the trial. It is accepted that Monsanto should pay Cargill's costs relating solely to 749. The evidence is that these costs are £355,000.
5. This brings me to the next problem confronting the judge who has to make an order for costs of the kind the parties want in this case. That problem is the doubts which their respective solicitors entertain as to the accuracy of the other's estimate of the costs expended on the client's behalf upon the various issues. The sum of £355,000, which Mr Cohen says were Cargill's costs relating to 749, amounts to 18.7% of the costs of the action. Of this sum, Mr Powell says in paragraph 3 of his Seventh Witness Statement, 'this appears very high to me. . . . Monsanto's costs attributable to the 749 patent were only approximately 8% of its total costs'. Similarly, Mr Powell is criticised for producing a costs schedule where all the costs of the proceedings have been allocated to one issue or another, so that there are no unallocated, 'general', costs of the proceedings at all, something which is no doubt unusual. I wish it to be clearly understood that parties cannot have it both ways. Either the case goes to detailed assessment, in which case issues of this description will fall by the wayside, or it is dealt with by the trial judge, who cannot resolve them. If the parties wish to take advantage of the benefits flowing from a comparatively rough-and-ready assessment by the judge, they cannot expect a detailed assessment of the correctness of each of the sums which they specify. This is a matter for the parties and not for the court. If neither seeks a detailed assessment, then the court will do its best with the material which is made available, and can only adjust figures deposed to by the solicitors concerned if there is a really good reason for doing so.
6. Warren J records a submission made to him by Mr Thorley QC in Actavis v. Merck:

'Mr Thorley asked three questions, "Have you won, have you lost a suitably circumscribed issue, so should you be deprived of your costs, and is this an exceptional case such as to lead to an adverse costs order on an issue in favour of the overall loser?"'

7. In my judgment, this is the right approach. The court is obliged to identify the overall winner of the proceedings. Among other things, the overall winner is likely (save in the most exceptional circumstances) to be entitled to payment of all his costs which are not or cannot be allocated to a particular issue. I shall refer to these as the general costs of the action. In relation to costs that can properly be allocated to issues upon which the party who is successful overall has nevertheless lost, there are two questions: should that party recover his costs of that issue, and should he pay the otherwise unsuccessful party's costs incurred in respect of that issue?
8. The first question, 'should he recover?', is the question which was traditionally answered by the process of certification. The second question, 'and should he pay the other side?', is to be answered, it seems to me, having regard not merely to the reasonableness or lack of it in raising the issue at all, but upon it being established that there was something more than conduct justifying his being deprived of the costs of the issue in all the circumstances. I take the view that, as one moves away from the general rule that the unsuccessful party will be ordered to pay the costs of the successful party, an increasingly strong justification is required.
9. If there is justification for ordering the otherwise successful party to pay the costs of a particular issue to the other, it is often convenient to treat both parties' costs of an issue as being equal and to double the deduction. So, if a party fails to recover costs of an issue amounting to 15% of his total costs, he will be deducted 30% of his costs if the court concludes that he should also pay the costs of that issue to the other. This is a rule of thumb, but is convenient when one comes to working out the resulting order.
10. With that introduction, I can turn to the particular points that arise in this action.

Infringement

11. Schedules of costs prepared by the parties and summarised in two schedules supplied to me in final form after the hearing show that the proportion of the final bills devoted to the issues of infringement and validity were different. This would not have been altogether surprising had the principal differences been attributable to experiments, all of which were performed by Monsanto and all of which related to infringement. The costs, 749 and 571 apart, divide up as follows. On infringement, Cargill's bill is £769,500, and Monsanto's £929,664. These include (for Cargill) £391,400 and (for Monsanto) £531,800 spent on the experiments. Cargill attribute £370,500 to all issues of validity, whereas Monsanto attribute £843,262 to the issues of validity.
12. Cargill won on the issue of infringement. At the same time, the only point upon which they won was the issue of construction of the claim (to which they attribute £214,700 as opposed to Monsanto's £91,100). They adduced no independent evidence of experiments, and Monsanto established the facts which it sought to establish, as I have described in the judgment. They failed also on the defence of acquiescence, but the sting of that defence was drawn when Monsanto abandoned its claim for damages prior to 2005.
13. A powerful case was mounted for saying that Cargill should have faced up to the fact that their material shipped on the Podhale contained double-stranded DNA encoding the RuR EPSPS gene. There is force in this observation, and I think that Cargill should not receive the costs they incurred in respect of the experiments. Whether they should pay Monsanto's costs of the experimental work is more difficult, but I have in mind particularly the need to discourage unnecessary experimentation. In all the circumstances, I think it is right that Cargill should pay one half of Monsanto's costs of experiments.
14. The issue of acquiescence is more difficult. Cargill lost, and I had no real opportunity to assess the strength of this contention in the pre-2005 period, because Monsanto abandoned the claim for damages prior to that growing season. So Cargill secured a useful concession, but failed upon the rest. On the whole I think they should not recover their costs and should pay one-half of Monsanto's costs of this issue.
15. Moving now to the questions of validity, firstly Monsanto was successful upon this issue, with the exception of claim 6. In my view, Monsanto should have the costs of the issue of validity, subject to the question of claim 6, for which a deduction must be made. In the schedules with which I have been supplied, the expenditure on the various issues is expressed as a percentage of the final bill. Monsanto say that 0.6% of their final bill was spent on claim 6, as do Cargill. The percentage of their final bill spent on validity is 37.2%. I will accordingly reduce the recovery by Monsanto by 1.2% to 36% of Monsanto's final bill.
16. In my view, if an opposition to an amendment fails, the unsuccessful opponent should pay. Cargill's opposition was unsuccessful and Cargill must pay accordingly.
17. The question of the Syngenta experiments is straightforward. Cargill must pay Monsanto its costs of these experiments, which I refused to admit.
18. The result is conveniently to be set out in a table adapted from the table supplied to me as follows.

Issue	Cargill recover as % of their final bill	Monsanto recover as % of their final bill
General costs, to include common general knowledge of the skilled person and general costs of the issue of infringement and the costs of 571 and 749	4.8% + 4.6% + 4.6% + 18.7% = 32.7%
Experiments		One-half of 23.4% = 11.7%
Acquiescence		One-half of 12.8% = 6.4%
Validity		37.2% less 1.2% = 36%
Syngenta		8.3%
Amendment		2.3%
Total	32.7% = £621 300	64.7% = £1 467 639.27

19. I calculate this as a balance in favour of Monsanto of £846 339.27.
20. The figure must be rounded to reflect its precision, and the rounding should be in favour of Cargill, who won the action. I round the sum to be paid to Monsanto to £800 000. That is the order for costs that I shall make.