England and Wales High Court (Patents Court) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		The Rolls Building, 7 Rolls Buildings, Fetter Lane, London, EC4A 1NL
		2nd October 2014

MR. JUSTICE MORGAN:

Introduction

1. These proceedings consist of claims against various defendants for alleged patent infringement in respect of a European patent EP (UK) 0 847 496, of which the claimant is the proprietor (by assignment). The patent relates to an alleged invention of a method of operating a pitch-controlled wind turbine. The first three defendants to the claim are Siemens plc, Siemens Wind Power AS and Siemens AG. I will refer to these defendants collectively as "Siemens". The claimant contends that Siemens have infringed the patent by manufacturing, marketing and supplying wind turbines to its customers, which wind turbines incorporate technology which is the subject of the patent.
2. This judgment concerns an application by the claimant for an order that Siemens do provide to the claimant information as to its customers within the jurisdiction of the court and, in particular, information as to the identity of customers to whom Siemens have supplied allegedly infringing wind turbines, the number of such wind turbines owned and operated by such customers, and the period of time during which the allegedly infringing technology has been both installed and activated for use in relation to those turbines. The information sought is not confined to those cases where the technology has been installed and activated in the past, but extends to cases where the technology is installed and activated after the date of the order.
3. The claimant says that the court has power to make the order it seeks either under CPR Part 18, dealing with further information, or under the jurisdiction identified in Norwich Pharmacal Co. v Customs and Excise [1974] AC 133 ('Norwich Pharmacal') and the cases which have followed that decision.

The Proceedings

4. The claim form in these proceedings was issued on 3^rd July 2013. There are altogether eight defendants. The claimant contends that all of the defendants have infringed the patent in suit. I have described the claim against the first three defendants ('Siemens'). The next three defendants have been referred to as Dong Energy and it is said that they have infringed the patent in the course of their development of various wind farms which use the wind turbines manufactured by Siemens. The last two defendants have been referred to as A2SEA. It is said that they have infringed the patent in the course of their installation of wind turbines for Siemens and Dong Energy.
5. All eight defendants have instructed the same solicitors and counsel and have served a single defence and counterclaim. The defendants contend that the patent in suit is invalid on various grounds. The proceedings have been the subject of two case management hearings before Mann J. The hearings took place on 28^th March 2014 and 8^th May 2014. Mann J gave directions for a trial which will focus on the issues arising as to the validity of, and the infringement of, the patent. That trial is scheduled to take place in June 2015 with a time estimate of seven days with one day pre-reading.

The London Array proceedings

6. The claimant has brought a further set of proceedings in which it alleges infringement of the same patent. The defendant in those proceedings is London Array Limited ('London Array'). This defendant owns, and is responsible for, the operation of the London Array Offshore Wind Farm in the Thames Estuary. London Array is a customer of Siemens. This wind farm uses a large number of Siemens wind turbines in which there has been installed the allegedly infringing technology.
7. London Array has defended the proceedings brought against it. It alleges that the patent is invalid on a number of grounds. Those grounds are much the same as the grounds put forward in the first set of proceedings against Siemens and others save that London Array has pleaded that it will rely upon an additional piece of prior art not (so far) relied upon by Siemens and the other defendants. Although London Array's solicitors are not the same as the solicitors instructed by Siemens and the other defendants, London Array has now instructed the same counsel as are instructed by Siemens and the other defendants and both sets of proceedings will be heard together in June 2015.

The Claimant's case

8. The claimant says that the allegedly infringing technology has been installed in the wind turbines which Siemens have supplied to its customers. In some cases, but certainly not all cases, that technology has been, or may have been, activated so that it has been used by Siemens' customers. Further, the technology could be activated and used between the present time and the date of the trial in June 2015.
9. The claimant is not at present minded to argue that the mere installation of the technology in wind turbines supplied to a customer is an infringement by the customer, but the claimant does wish to argue that the activation of that technology leading to its use by a customer is an infringement by the customer. It is said that the use of the technology is very profitable both for Siemens and for a customer who uses it.
10. The claimant says that in many cases of alleged patent infringement, a patentee is content to sue only the supplier of an infringing product or process, without also suing the end user. In such a case, a patentee can have a high degree of confidence that a decision of the court that a patent is valid and has been infringed by the supplier will not be challenged by the end user. Thus, if it becomes necessary for the patentee to claim relief as against the end user, the issue of the validity of the patent will not in practice have to be fought out a second or subsequent time.
11. It is said that this case is different principally because: (1) the end users of the technology are very substantial parties; (2) the use of the technology is very profitable; and (3) the patent expires in August 2016 so that the delay which might be involved in bringing a second or subsequent action against an end user may result in the claimant not obtaining injunctive relief before the expiry of the patent.
12. The claimant says that this combination of circumstances is at least likely to produce the result that a decision of the court following the trial in June 2015 upholding the validity of the patent will not be accepted by the end users of the infringing technology. The claimant can point to the fact, as I understand it, that when London Array was asked to agree to be bound by the decision in the proceedings against Siemens and others, it declined to do so.
13. The claimant says that if it succeeds in the two sets of proceedings which it has already brought and it then becomes necessary to sue one or more end users of the technology, those end users will not be bound (by res judicata) by the decision of the court in the first two sets of proceedings. A declaration that the patent is valid will not be a judgment in rem. The end users can allege that the patent is invalid and the matter will have to be tried a second or subsequent time. Such a result would be wasteful of the time and resources of the claimants. Such a result would be wasteful of the time and resources of the court.
14. If an end user succeeded in challenging the validity of the patent and in obtaining an order revoking the patent, the result would be that any injunction obtained in the first two sets of proceedings and any order for an inquiry as to damages or an account of profits would be overridden by the revocation of the patent, see Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160. This would produce the result that the defendants in the first two sets of proceedings would have a second bite of the cherry of attempting to have the patent declared invalid.
15. If the claimant is given information as to the identity of Siemens' customers within the jurisdiction where the technology has been activated, or is activated between the present time and the trial, the claimant can take steps to bring about the result that such a customer agrees to be bound by the decision in the first two sets of proceedings or, if necessary, is joined as a party to those proceedings, or similar further proceedings are brought. If such a customer realises that the claimant is in a position to proceed against it in that way, it is submitted that it is likely that a customer will agree to be so bound.
16. Such an agreement would make good sense from the customer's standpoint. The customer would know that the present proceedings are being defended by specialist solicitors and counsel so the customer need not incur expense of its own in defending proceedings to which it is a party. If, for whatever reason, such customer did not agree to be bound by the result of the present proceedings then the claimant will be able to take action to join that customer or bring separate proceedings against it and to obtain an order that the claim against such a customer will also be heard in June 2015. It is submitted that there is still time for such steps to be taken before June 2015.
17. In so far as Siemens say that the disclosure of the information requested would result in reputational damage to Siemens, the claimant points out that it is already in a position, acting lawfully, to inflict even greater reputational damage on Siemens. The claimant has ascertained through its own researches the identity of Siemens' customers within the jurisdiction. The allegedly infringing technology has been installed, whether or not it has been activated, on the wind turbines supplied by Siemens to those customers.
18. The claimant says that it would be entitled to bring quia timet proceedings against those customers to restrain them from bringing about activation and use of the technology. The claimant could avoid any difficulty which might be created by section 70 of the Patents Act 1977 (dealing with groundless threats) by issuing proceedings against the customers without having written a letter before action. Having issued such proceedings, the claimant could then invite the customers to agree to be bound by the result of the original proceedings.
19. It is submitted that Siemens' position, as regards alleged reputational damage, would be better if Siemens gave the information requested. That information would distinguish between customers where the technology had been activated and those where it had not. In that case, the claimant would only issue proceedings and communicate with customers where the technology had been activated. Those customers might only be few in number and, in any case, they would not be all of the customers whose identity is already known to the claimant.

The case for Siemens

20. Siemens say that in view of the directions given in the existing proceedings for a trial as to the validity of the patent and the question of infringement, before any question of damages or an account of profits needs to be addressed, the information sought cannot be said to be appropriate at the present time for the purposes of CPR Part 18. As to the relief claimed under Norwich Pharmacal, although it is accepted – indeed it is submitted – that the claimant needs that information to be able to bring proceedings against the end users of the technology, such relief should not be granted because of the grave reputational damage which would be caused to Siemens as a result of the claimant communicating with Siemens customers and asserting that Siemens, and its customers, were infringing the patent in suit. Siemens have served evidence which seeks to explain how that reputational damage would arise. As I have indicated, it is submitted that the reputational damage would be very grave.
21. Siemens rely on the decision of the Court of Appeal in Sega Enterprises Ltd v Alca Electronics [1982] FSR 516 as an authority which shows that it would be wrong to inflict such damage on Siemens at a time when it has not been established that Siemens have been guilty of any wrongful act. It is said that the time for this information to be provided, if ever, is following a finding that Siemens have infringed the patent. At that point, the information may be material for the purpose of an inquiry as to damages or an account of profits. Siemens also strongly criticise the claimant's delay in making this application which, it is said, could, and should, have been made much earlier.

Discussion and conclusions

22. Although the claimant initially relied upon CPR Part 18 as the source of the court's power to order Siemens to provide the information which is sought, the claimant came close to abandoning such reliance at the hearing before me. I consider that it is not appropriate to order Siemens to provide the information sought pursuant to CPR Part 18. Such information is not necessary at this stage for the purposes of the proceedings against Siemens and the other defendants. If the claim against Siemens fails then there will not be an order for an inquiry as to damages, nor an account of profits, and Siemens would not be required under Part 18 to provide the information sought. If the claim against Siemens succeeds and the court orders an inquiry as to damages or an account of profits then, unless the information request is provided in some other way, such as by disclosure, it would at that stage be material to consider the desirability of making an order under Part 18.
23. As to the Norwich Pharmacal jurisdiction, in this case, I consider that the claimant must show the following: (1) a wrong has been arguably carried out by Siemens' customers by using the activated technology; (2) Siemens have facilitated that wrong; (3) Siemens have the information requested; (4) the claimant needs to have the information requested to enable it to bring proceedings against Siemens' customers; and (5) it is just to make the order sought.
24. I consider that there is little difficulty in relation to the first four of these requirements. As to (1), if the technology has been activated resulting in its being used by a customer, then there is an arguable case that the patent is valid and, accordingly, that it has been infringed by the customer. The evidence suggests that at least in some cases, the technology has been activated at some point in the past.
25. As to (2), Siemens will have facilitated the alleged wrong. Although the Norwich Pharmacal jurisdiction is often invoked where the facilitator is itself innocent of any wrongdoing, the jurisdiction is also available where the facilitator is alleged to be a wrongdoer also.
26. As to (3), Siemens have the information requested. As to (4), on the claimant's case, it knows the identity of the customers, but it does not know which of them might have used the technology. The claimant does not wish, unless it is forced to do so, to sue all of the customers on a quia timet basis, but only those who have committed an alleged infringement by using the technology. The claimant is not able to know which customers have arguably committed patent infringement by using the technology unless it is told that the technology has been activated in the case of such a customer.
27. Although it would be possible for the claimant to sue all of Siemens' customers and then discontinue against those who show the claimant that they have not used the technology and have no intention of using it, it is far better for the claimant and the customers and, above all, it is far better for Siemens for that not to happen. It is better for all concerned if Siemens reduces the number of customers who will be sued by the claimant to those who have used the technology.
28. I also note that Siemens did not argue that the claimant did not need the information. In fact, Siemens positively submitted to me that it was necessary for the claimant to have the information and without it the claimant would not sue any customer. I will deal with this submission below.
29. The above conclusions mean that the case turns on whether it is just to make the order sought. I accept the claimant's submissions (which I have summarised in some detail above) as to the undesirability of there being further proceedings after the claimant obtains, if it does, a favourable outcome to the present proceedings in which further parties challenge afresh the validity of the patent.
30. Where the claimant wishes to assert an arguable claim of patent infringement by a customer of Siemens, it is not unfair to the customer to ask it to agree to be bound by the outcome of the present proceedings instead of being joined to those proceedings or even the subject of separate proceedings if need be.
31. Sequential proceedings, where the issue of validity is tried again, would be wasteful of the time and resources of the claimant. It would also be wasteful of the time and resources of the court. There is no procedural injustice to Siemens in having its customers agree to be bound by the outcome of the present proceedings or joined in those proceedings or the subject of similar proceedings. There is no procedural injustice to Siemens in denying a second bite of the cherry based on the decision in Virgin Atlantic.
32. The real point urged by Siemens related to reputational damage. Before I comment on the evidence as to reputational damage, I wish to consider whether Siemens will be better off in this respect if I refuse to make the order which is sought. In that regard, I consider that Siemens run a high risk of exposure to greater reputational damage involving more of their customers if they do not provide the information sought.
33. I have described how the claimant could lawfully proceed to make claims of patent infringement against Siemens' customers if the claimant is not given the information that it has requested. It is likely that such claims would involve more of Siemens customers as compared with the position where Siemens eliminates those customers who have not used the technology. Accordingly, if the claimant's allegations of patent infringement by customers would cause reputational damage to Siemens then the reputational damage will be greater if I decline to make the order sought.
34. Siemens' response to this suggestion was simply to brush it aside. Siemens said that this risk of greater harm would simply not come about because the claimant would not sue the customers on a quia timet basis. I do not regard Siemens' response as realistic given that: (1) the claimant knows the identity of Siemens' customers; (2) it would not be an abuse of process or otherwise unlawful for the claimant to issue proceedings for alleged patent infringement against those customers on a quia timet basis (whether or not it would succeed at trial on a quia timet basis only); (3) the claimant is obviously serious about seeking relief against a customer who might be committing an infringement of its patent; and (4) the downside to the claimant of starting, and then discontinuing, such proceedings against a customer who has no intention of using the technology is very limited.
35. I consider it is very likely that the claimant will sue more of Siemens' customers if I refuse the order sought as compared with the position if I grant the order sought. I assess the risk of greater reputational damage coming about in that way as being a high risk. These considerations appear to me to be an answer to Siemens' concerns as to reputational damage.
36. Apart from the above considerations, I find it difficult to assess the extent of the reputational damage to Siemens if it is required to disclose to the claimant the identity of its customers who have used the technology. Siemens have sought to describe very grave reputational damage which would flow from the claimant communicating with Siemens' customers. However, that evidence is general in relation to some highly relevant matters and the claimant has served evidence which calls into question some of Siemens' assertions. It is not appropriate to have a mini trial in relation to the assertions and counter-assertions. Instead, the court has to assess the likelihood of, or the risk of, serious harm coming about.
37. I can well see that Siemens does not want its customers dragged into this dispute. I do not know, however, how much the customers already know about this dispute. The claimant has already sued some other companies in the present proceedings, those companies being connected with the installation of Siemens' wind turbines. The claimant has also sued one large customer, London Array. The claimant suggests in its evidence that those who are active in the relevant industry will already know about the claimant's allegation.
38. It is also open to Siemens to take steps which could go some way to mitigate any reputational damage by explaining the position to its customers before they are approached by the claimant. It would be likely to help Siemens' position with respect to its customers if it reassured them of its intention to do everything appropriate to challenge the validity of the patent with the result that its customers need not themselves be put to any expense by agreeing to be bound by the result of present proceedings.
39. There is also the curious fact that the technology has been installed on a large number of turbines, but Siemens have stated at two points of time in the past that it was not at those points of time activated. Is that because of this dispute or for other reasons? If Siemens had to tell its customers that it may be safer not to use the technology until this litigation is resolved, how damaging in the end would that be to the customers? In relation to new orders from further customers, what is the likely scale of such orders and for what period prior to August 2016, when the patent expires, would a new customer really wish to use the technology?
40. Although Siemens are right to stress that the claimant's claim may ultimately fail, the claimant is entitled to stress that its claim may ultimately succeed. In the end, despite these many uncertainties, I am able to decide this case on the basis already described, namely, that there is a high risk that a refusal of the order sought is liable to inflict greater reputational damage on Siemens as compared with the position where I grant the order which is sought.
41. Siemens also took me through the history of the present proceedings and submitted that the claimant could have brought this present application much earlier and an order made earlier would have given everyone more time before a trial due to take place in June 2015. Siemens then submitted that I should refuse the relief sought on account of the claimant's delay.
42. I agree that the claimant could have made this application a good deal earlier. However, I do not regard it as a proportionate reaction to that delay to deny the claimant relief, which is otherwise appropriate and just as between the parties, and where there is probably still time for any necessary steps to be taken in relation to the relevant customers before June 2015. I do not go so far as to say that it will definitely happen that all and every action against a customer, where the customers contend that the patent is invalid, will be tried at a combined trial in June 2015. I consider that that is a desirable state of affairs and also one which is likely to be achieved in relation to a large number of the relevant customers. However, whether it does happen will depend on future events. None the less, the fact that I consider that it is likely to be achieved is sufficient for present purposes when assessing where the balance of justice lies.
43. Siemens rely on the decision of the Court of Appeal in Sega Enterprises Ltd. v. Alca Electronics [1982] FSR 516. It was suggested that the reasons which persuaded the Court of Appeal to refuse to make an order for disclosure in that case applied also in the present case. Sega was a case where the claimant alleged that the defendant had infringed the claimant's copyright by supplying machines using infringing technology to its customers. The claimant sought an order that the defendant do provide information as to its customers. The court accepted that it had jurisdiction, pursuant to Norwich Pharmacal, to make the order sought. In order to decide whether to do so, the court considered the harm which an order would cause to the defendant. It was stressed, at a very early stage in the action in that case, that the claimant had not established that the defendant had committed any infringement about copyright. It was held that an order would inflict considerable harm on the defendant. It was also held that an order was not necessary, certainly not at that stage of the proceedings, to protect the legitimate interests of the claimant. The court then balanced the harm to the defendant against the lack of need on the part of the claimant, and held that the balance came firmly down in favour of refusing the order sought.
44. Lawton LJ referred to a submission by the claimant as to the desirability of all the relevant parties – that is the original defendant and its customers – being before the court at a single trial: see page 522. But Lawton LJ did not subsequently refer to that matter in the balancing exercise that he carried out. He must have considered that, on the facts of that case, that submission did not carry much weight. All members of the court in that case considered the weight of the arguments for and against the order sought, and decided where the balance lay. The judgment certainly contained warnings about the court being too ready to grant relief which would inflict certain damage on a defendant before the court had established that the defendant has been guilty of wrongdoing.
45. Ultimately, Sega is authority for the court being required to take into account the effect of its decision on both parties before deciding where the justice of the case lies. That is the approach that I have adopted on the particular facts of this case. The decision on different facts in Sega does not bind me to produce a result contrary to what I consider the justice of the present case requires.
46. Sega was considered by a Deputy High Court Judge in Eli Lilly v. Neolab [2008] FSR 615. That was a case of alleged patent infringement where the claimant relied on Norwich Pharmacal and sought an order that the defendant disclose information as to the defendant's customers to enable the claimant to sue those customers for patent infringement. The Deputy Judge held that the claimant would suffer irreparable damage if he refused to make the order and the defendant would suffer irreparable damage, ie. reputational damage, if he made the order. He balanced the consequences of the options before him and held that the balance of justice was in favour of making an order for disclosure as to the defendant's customers to enable the claimants to sue for patent infringement. My approach in the present case has involved a similar balancing exercise as between the parties, having regard to the particular facts of the present case.
47. It follows that I will order Siemens to provide the information which is sought. At the hearing, Siemens did not make any submissions as to the draft order put forward by the claimant. Siemens contented itself with a submission that no such order should be made. I note that Siemens did not submit that I should only make the order if the claimant gave an undertaking in damages, which could be enforced if the claim for patent infringement failed and the order for information had caused loss to Siemens. I can see that in another case it might be relevant to consider such a possibility. However, in the present case, no such undertaking was sought. In any event, based on my reasoning that the risk of reputational damage to Siemens is greater if I refuse to make the order sought, it does not seem to me appropriate to require the claimant to give an undertaking in damages in relation to the lesser damage which might flow from making the order sought.