For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

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Thursday, 19 July 2007

Jacob LJ gets his wrists slapped, or, how a wise man hides a leaf

The IPKat has noticed a judgment out today (and already available here on the ever-reliable and amazingly useful BAILII) from the Court of Appeal for England and Wales. This departs from the usual (for IP cases at least) recent practice of having a lead judgment being taken by Jacob LJ followed by the other two Lords Justice simply agreeing. Instead, after acknowledging a 'masterly review', and an admittance of Jacob LJ's 'vast experience' in the field of IP, Lords Justice Rix and Pill then proceed to flatly disagree with, and consequently overrule, his conclusion.

The case concerned a dispute between Nichia, a Japanese manufacturer of white light emitting LEDs, and Argos, the well-known UK retailer (and not the city in Greece named after the mythological figure who apparently suffered an unfortunate cranial-challenging incident: see above right). Argos had been offering for sale Christmas lights containing LEDs which, Nichia alleged, infringed their patents. Argos counterclaimed that the patents were invalid for being obvious.

A dispute then arose over whether certain documents in Nichia's possession which might relate to obviousness should be ordered to be disclosed. Mr Justice Pumfrey, in the Patents Court earlier this year, refused to order such a disclosure. Argos then appealed against this decision.

Jacob LJ first reviewed the rules on disclosure, which do not provide for an automatic duty of disclosure, but only for disclosure where the court directs. According to CPR 31.5-6 and the relevant practice directions, 'standard disclosure' of documents that adversely affect a party's case should not be required in patent cases where the documents relate to the issue of commercial success or where they relate to validity of the patent, except (confusingly) for documents two years either side of the priority date of the patent.

Following an extensive review of the case law on both obviousness and of disclosure in general, including a reminder of his new and improved version of the Windsurfing test in Pozzoli v BDMO (IPKat commentary here), Jacob LJ stated:

"Patent actions range in their commercial importance from the very great, with many millions and even billions of pounds at stake, to modest disputes between smallish companies about a widget or some such. Proportionality requires that the procedure to be adopted be tailored to the size of the dispute. The real question in this case is whether disclosure from the patentee (or objector) should be required when the objection is straightforward obviousness, that is one where there is no attempt to rebut the attack based on commercial success or a long-felt want.

I think the time has now come to hold that proportionality requires that normally such disclosure should not be ordered. Only in the largest kind of case, where the legal costs, although very substantial, form a small proportion of what is at stake, does what is involved by disclosure of this sort of material become proportionate. It is no good having the overriding objective, the specific requirement of dealing with a case in ways which are proportionate and a specific power to dispense with standard disclosure otherwise. You need millions at stake before costs of hundreds of thousands on an issue which is only "secondary" and which must be "firmly kept in its place" are warranted.
" (paragraphs 53-54)

Jacob LJ then agreed with Pumfrey J's view that it was right to refuse disclosure, particularly since it did not seem to be proportionate in the case in question.

Lord Justice Rix, although agreeing with Jacob LJ's concerns about the cost and proportionality of disclosure, disagreed with his conclusions, stating:

"Above all, it would be against the interests of justice if documents known to exist, or easily revealed, which would harm a party's own case or assist another party's case need not be disclosed because of a blanket prima facie rule against any standard disclosure. Once such a principle of disclosure were known to hold sway, dishonest or cavalier litigants would reap an unmerited advantage, contrary to the interests of justice.

In my judgment, rather than move directly, and in principle, to a blanket, albeit prima facie, rule of no disclosure, it would be preferable to explore, in a way which these parties have not done at all so far, how the concerns which Lord Justice Jacob has expressed in this context, and which I emphasise I share, might be met by a rigorous application of the rationale of standard disclosure.
"(paragraphs 72-73)

Lord Justice Pill also agreed with Jacob LJ's sentiments, but agreed with Rix LJ's conclusion that the appeal should be allowed, adding:

"Patent infringement disputes undoubtedly have features of their own but they are but one species of a very wide range of commercial disputes which come before the courts. It would not inspire confidence if businesses and their advisers were met with different standard of disclosures depending on the type of dispute involved. Of course, the amount of disclosure required in particular cases will vary widely but this should be achieved by case management and not by applying different standards in different types of case." (paragraph 83)

The appeal was therefore allowed. The IPKat thinks that this was clearly a very difficult one to judge, and in the end the 'brethren' (to use Jacob LJ's wording) of Lords Justices were all effectively trying to second-guess whether the cost of disclosure would be worth it, given the possible sums involved in the dispute. However, the majority leading judgment came down to not wanting to sacrifice any general principles (Peruvian Guano being much-quoted) for the sake of the special case of patent disputes.

How to hide a leaf here, and more Peruvian Guano here.

1 comment:

Jeremy said...

I've just had a sudden thought. Article 6 of the IP Enforcement Directive (2004/48) looks as though it means to provides that claimants who allege infringement are entitled to appropriate discovery - but it doesn't look to me as though it offers the same facility for the defendant to obtain disclosure of information in order to seek to invalidate the allegedly infringed right. Have I missed something?

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