England and Wales Patents County Court

IN THE PATENTS COUNTY COURT

		Rolls Building 7 Rolls Buildings Fetter Lane London EC4A 1NL
		27/02/2013

Judge Birss :

1. This is a patent action in relation to the claimant's patent EP 1107041 entitled "Mask to display an image taken with a camera". It began in February 2011 when the claimant issued a claim form against the first defendant alleging infringement. The first defendant denied infringement and counterclaimed for revocation.
2. The action has had a chequered history. There was a dispute about the period for service of the defence which was resolved on paper with an order on 1^st September 2011. The order directed the parties to liaise about a date for a case management conference (CMC) before the end of 2011. No CMC was arranged. It is not clear why not. It may have had something to do with proceedings in the EPO. On 15^th February 2012 the EPO dismissed the first defendant's opposition to the patent.
3. In any event in April 2012 the claimant applied to amend the Claim Form and Particulars of Claim to join the second defendant. The claimant believed that the second defendant was closely related to the first defendant but was now selling at least some of the products alleged to infringe. In the Amended Particulars of Claim it was alleged that (at least as at April 2012) some shareholders were common between the two companies. Moreover two directors of the second defendant (James Brooks and Victoria McLaren) are or were also shareholders of the first defendant. The claimant contends that the first defendant's business was transferred to the second defendant in summer 2010. The Amended Particulars of Claim also contends that the second defendant is jointly liable for the infringements alleged to have been committed by the first defendant.
4. On 1^st June 2012 the case came before Mr Recorder Campbell. This was for a CMC and to determine the application to join the second defendant. The second defendant was joined into the proceedings. Its defence was due on 31^st August 2012. The issues were identified and full directions were given to bring the matter to trial. The parties were to make an appointment with the Listing Office before 31^st July 2012 for trial date to be fixed and the case was to come on to trial on the first available date after 28^th September 2012. However no appointment was made and no trial date was arranged. In September 2012 the solicitors acting for both defendants ceased to act for them and came off the record but then later in September sought to come back onto the record again and then off again. At some stage, it does not matter when, the defendants' solicitors again ceased to act for the second defendant.
5. No defence from the second defendant had been filed and on 2^nd October 2012 James Brooks, a director of the second defendant wrote to the court. The letter stated that the second defendant did not believe it infringed and did not believe the patent was valid. The letter raised a host of issues and included numerous exhibits. It acknowledged that the second defendant was out of time in relation to various steps ordered at the CMC on 1^st June and apologised. The letter asked to court to review the case and consider whether the case could be determined on the papers. In an order made on paper on 4^th October I directed that another CMC should take place before 30^th November 2012.
6. The matter came before me on 26^th November 2012. The claimant and the first defendant were represented by counsel and solicitors. Mr Brooks appeared for the second defendant. It was clear at that hearing that the second defendant was responsible for a significant part of the difficulty although it was not solely responsible for everything. I made a series of case management directions to get this action back on track. The directions included a fixing the date for trial on 23/24^th July 2013 with a timetable for evidence including expert evidence on particular issues.
7. The 26^th November 2012 order included two "unless" orders. One was an unless order requiring the first defendant to clarify certain aspects of its case by 14^th January 2013, failing which its defence and counterclaim would be struck out. The first defendant subsequently complied with the terms of that unless order.
8. The second unless order required the second defendant to serves its Defence (together with any counterclaim) by 4.00pm on 10^th December 2012, in default of which the second defendant would be debarred from defending the claim and judgment would be entered for the claimant. When I made the order I took the trouble to explain it to Mr Brooks in person and make sure he understood its significance.
9. No defence was served by the second defendant within the period specified by the order but on 13^th December 2012 the second defendant sent a copy of a Defence to the claimant's solicitors and the court. The claimant's position is that the Defence was out of time and so the second defendant was in default and the unless order should take effect. There was correspondence between the parties in January to see if the matter could be compromised but no agreement was reached. No application for relief against sanction was made by the second defendant and on 31^st January 2013 the claimant applied on paper for judgment to be entered in the claimant's favour against the second defendant on the ground that the second defendant had failed to comply with the unless order. Amongst other things the judgment sought includes damages in the sum of £2,000 and costs (to be summarily assessed in the sum of £19,950). The application also contends that since the claim is expressed on a joint and several basis as between the defendants, if the second defendant pays the costs and damages as may be ordered by the court, the claimant's claim against the first defendant will be satisfied and as a result the claimant requests that the claim against the first defendant be stayed.
10. The application was served on 7^th February and the second defendant set out its case in a letter from Mr Brooks dated 13^th February. On the issue of the lateness of the defence, Mr Brooks states:

"I apologise to the court for the late delivery of Solo TI's defence. This was an error.

[While] I understand that the court's order in November 2012 was drafted so that the claimant could get judgment in default if Solo TI was late in serving its defence if there is anything I can do to persuade the court to accept the late defence please let me know."

11. The letter also addresses costs and damages and states that Mr Brooks is very concerned that the claimant thinks it can get an order that the second defendant pays costs incurred by the first defendant and damages for a product sold by the first defendant. He argues that the costs sought were not caused by the second defendant and most were incurred before the second defendant joined the proceedings. He argues that the damages are for sales by the first defendant. In relation to the injunction and delivery up, Mr Brooks refers to an offer he says was already made not to deal in the allegedly infringing products. He also says that he does not believe any article his company holds infringes the patent.
12. The first defendant has submitted that there should be no stay of the case against it, regardless of what happens to the second defendant.
13. The first issue is whether I should in effect grant the second defendant relief against sanction. I will consider the factors listed in CPR Part 3 r3.9. The important factors in this case are the following.
14. First, no application for relief against sanction has been made. This is not a mere technicality. If an application had been made, no doubt the second defendant would have articulated reasons why relief should be given. No reasons have been given. The most is Mr Brooks' statement in his letter of 13^th February apologising and asking the court to let him know if there is anything he can do to persuade the court to accept the late defence. The proper time for any such material to have been put forward was before now. It has not been.
15. Second, the Defence is only three days late. That is a very short time however it must be seen in the context of the second defendant's conduct in this dispute overall. The second defendant's Defence could and should have been served on 31^st August 2012. I am sure that a key reason why this case was derailed was the second defendant's failure to do that. No proper excuse was given at the time.
16. Third, I have looked at the Defence filed on 13^th December. Although the document does address each paragraph in the Amended Particulars of Claim, it does not do so with any specificity. Two key issues in the case as regards the second defendant are (i) whether something known as the S2 Integrated product falls within the claims of the patent (or is a means essential under s60(2) of the 1977 Act) and (ii) joint tortfeasance with the first defendant. On both of these points the Defence contains bare denials but articulates no reasons for the denials. This is contrary to CPR Part 16 r16.5(2)(a) which provides that where a defendant denies an allegation he must state his reasons for doing so. There is no attempt to provide reasons. This rule of the CPR applies in all civil cases and not just in the Patents County Court.
17. However in the Patents County Court Part 16 is modified so that a statement of case must set out concisely all facts and arguments on which a party relies (r63.20(1)). The second defendant has not even attempted to comply with this requirement. For example in patent cases before the Patents County Court it has become routine for the statements of case to engage with the issues using a breakdown of the claim into separate features. Infringement and validity are addressed by focussing on which features of the claim(s) are said to be present or absent or obvious (as the case may be). Although this involves a finer level of detail than one saw hitherto in the patent cases, it has not caused a disproportionate increase in cost and usually satisfies the requirement in r63.20(1) as to being concise. The second defendant's Defence here is not a concise statement of the facts and arguments to be relied on, it is simply a list of conclusions. This applies to its case on non-infringement and its denial of joint tortfeasance.
18. I am sure that part of the reason for the Defence being in this state is that the second defendant is acting without legal assistance. However I cannot help but note that in October, when the second defendant wrote to the court, it articulated arguments in much more detail than are set out in the Defence. The second defendant is capable of articulating arguments if it wishes to.
19. Fourth, I will consider the effect of granting relief against sanction and also the effect on the claimant of the failure to comply by the second defendant. Given the state of the Defence, further significant time would be required to manage these proceedings albeit the trial date will not be put in jeopardy. Problems with statements of case can often be sorted out at a CMC in the Patents County Court. On their own, the inadequacies in the second defendant's defence would not normally lead to the document being simply struck out. Normally case management orders would be made to ensure that the party's case was clarified and put properly. However the proper time for that to happen was long ago in these proceedings.
20. Refusing relief against sanction means that the second defendant will lose the action. Granting relief will put the claimant and probably the first defendant to yet more cost and trouble in sorting out exactly what the second defendant's case is.
21. Fifth, I will consider the administration of justice (r3.9(1)(a)). This case has already used up a larger share of the court's resources than other simple patent cases in the Patents County Court. There is nothing inherently wrong with that - not every case needs to be allocated the same share of the court's resources as every other case. CPR Part 1 r1.1(2)(e) explains that the overriding objective, dealing with a case justly, includes so far as practicable, allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases. However it is clear that the reason this case has involved two CMCs already instead of a single one is down to the second defendant's conduct. Moreover the inadequacy of this Defence is simply a recipe for yet more case management.
22. I am conscious that the Defence can be said to be only 3 days late however I do not think that is the right way of looking at this situation. There has been no attempt at a proper excuse for failing to comply with what was an entirely fair case management order. The order of 26^th November was made in circumstances where the action had been derailed by the second defendant's conduct and failure to comply with a previous order. The Defence which was filed is wholly inadequate and begs more questions. I refuse to grant relief against sanction in this case. The second defendant knew what it had to do and simply did not do it. Judgment will be entered for the claimant.

Consequences

23. I will make an order which includes an injunction and delivery up. I am not persuaded that the letters referred to by the second defendant provide any good grounds for refusing an injunction since they post-date the application to join the second defendant in the case.
24. There is no good reason to stay the claim against the first defendant and I will not do so.
25. As for damages, I am in no position to conduct an inquiry at this stage. It would increase the costs needlessly to conduct an inquiry separately from any inquiry ordered against the first defendant after the trial (if the claimant succeeds at trial). Moreover although the effect of this default judgment is that the second defendant cannot contest that it is liable jointly with the first defendant, I have not decided whether the first defendant is liable at all. That is a matter for trial. I will stay the inquiry with permission to apply for directions once the action against the first defendant is resolved.
26. On costs, I am sure that I should make an order that the second defendant pays some of the claimant's costs and I will do so. The question is: how much? The second defendant argues that it should not be liable for costs incurred before it was joined into the proceedings. In any case when a party joins the proceedings after they have started, one needs to take care about costs but in this case the costs of the Particulars of Claim, although partially incurred before the second defendant was joined, are attributable to the second defendant as much as to the first defendant. The same goes for the costs of the first CMC, at which the order was made, joining the second defendant. However I do not see why the costs of the Reply and Defence to Counterclaim are attributable to the second defendant since that statement of case was a response to the first defendant's Defence and Counterclaim and nothing to do with the second defendant's Defence which was not filed in time.
27. The order I propose to make is that the second defendant pays the claimant's costs of the action save for those costs not fairly attributable to the second defendant. That is a matter which will be sorted out on the summary assessment.

Summary assessment of costs

28. The claimant filed a brief schedule of costs claiming £19,950. This total consists of the PCC scale costs limits for Particulars of Claim (£6,125), Reply and Defence to Counterclaim (£6,125), two CMCs (2x £2,500), an application (£2,500) and a further £200 for inspecting a product. In terms of the PCC scales (Section 25C Costs Practice Direction Pt 45), for the reason I have already expressed, I doubt the second defendant should pay for the Reply and Defence to Counterclaim. I would think the claimant is entitled to the other stages however I will not make a final decision on the summary assessment because the information provided by the claimant does not appear to be adequate. For example the schedule states that the costs incurred for the stage Particulars of Claim are "estimated to be at least £7,100. The applicable cap is £6,125." As I explained in Westwood v Knight, [2011] EWPCC 11 the approach taken in the PCC to summary assessment involves two steps. For a given stage, one starts with the actual costs incurred at that stage and performs a normal summary assessment. That may lead to a figure more than the stage limit, in which case subject to other factors, the cap figure is likely to be awarded. However if the summary assessment produces a figure lower than the stage limit then a lower figure is awarded. So in this case the court will need to perform a summary assessment of the costs for the Particulars of Claim stage. If the actual costs are £7,100, the summary assessment might or might not produce a figure below £6,125. However no adequate detail is provided in the costs schedule to perform this task. Obviously the need to take a proportionate approach to costs means that one does not want to put the parties to significant further burdens in arguing about costs but this schedule is not sufficient. I will therefore conduct the summary assessment in writing. The claimant has 14 days to file at court and serve on the second defendant a fuller schedule (if so advised), the second defendant has 7 days to file at court and serve on the claimant any response and I will decide the matter after that.
29. There is no need for any parties to attend the handing down of this judgment. The claimant should submit a draft of the precise terms of the order to be made consequential on this judgment. It should be submitted in good time for the order to be made at the handing down.