Mayne Pharma PTY Ltd & Anor v Pharmacia Italia SPA

J U D G M E N T

Judgment on Costs Thursday, 10th March 2005

1. LORD JUSTICE JACOB: Following our judgment to the effect that the patent was infringed, a number of issues have arisen in relation to the consequential order.

2. The first is an application by the patentees for an order for delivery up as well as the injunction. The injunction itself is agreed. The patentees say that some material which was imported and has been re-exported but is still within the control of the defendants, ought to be made the subject of a delivery up order because it was once within the jurisdiction. The material was removed when our judgment had been made public, but before the order was made. It has been removed to the Middle East. Mr Miller contends that this was sneaking the material out of the country, taking advantage of the fact that there was a gap between the giving of the judgment and the making of the order. He consequently wants the order for delivery up to apply from the date of the judgment.

3. I for my part would not make such an order. It is clear that no attempt was made to take advantage of the handing down of the judgment in draft before it was formally delivered. The patentees knew that it was the defendant's intention to start importing in November 2004 and there was no reason why they would not have carried forward their intention given that they had won at first instance. Mr Miller suggested that this was an exceptional case. I can see nothing exceptional about it.

4. Furthermore, it is important to remember what the jurisdiction to grant an order for delivery up is for. It is not anything more than a way of making sure that the injunction is obeyed. Einfeld J in Roussel Uclaf & Another v Pan Laboratories Limited [1994] 51 FCR 316, in the Federal Court of Australia, on 17th May 1994, dealing with a very similar case, said this:

"In this case the products cannot, while they remain outside the jurisdiction, infringe the Australian patents of the applicants. Nor is there any evidence that, unless ordered to do so by the Court, the respondents intend to re-import them. All that can be said in support of such an order is that while in Australia the products infringed the patents and that the respondents should not be allowed to "gain a benefit" by "sneaking" them out of the jurisdiction. But an order for delivery up is not for punishment of the infringer or compensation to the patentee. It is to protect the patentee's rights. As I see it, the presence of the products in Papua New Guinea does not place the rights of the applicant at risk and in need of protection. See further Blanco White, Patents for Inventions 1974 4th ed at para 12-128; Terrell on the Law of Patents 13th ed, para 14.178-14.180."

5. The order for delivery up therefore being ancillary to the injunction, one always has to ask whether it is necessary to be made. Sometimes the court refuses to make it simply on the basis that a particular machine which has been found to infringe can be modified. In that case the court makes the alternative order of modification upon oath. There is no case for delivery up of material which may have had a temporary presence in this country.

6. The second point before us was resolved by agreement. The patentees wish to reserve the right to apply for a post-expiry injunction along the lines approved by Judge Fysh in Dyson v Hoover [2001] RPC 27. It was agreed that pursuant to a liberty to apply they could apply for such an order. Whether there is jurisdiction in the court to grant the order is a matter that one day will have to be considered very considerably. Such orders are made in Holland, and may be in some other countries, may be not in other countries. There is quite a bit of English authority, both directly on the point and also rather indirectly, in, for example, the case of Chappell v Columbia Graphophone [1914] 2 Ch 745. I need say no more about that.

7. The third question is the question of costs. The patentees seek an interim payment. In order to come to a view about interim payment one must, of course, form a view as to what the total allowable costs will be.

8. The total costs of the patentees for the hearing, here and below, are said to be £560,000. The costs of patent actions in this country have always been high compared with some other countries, but in recent years it has been my experience that they have been becoming higher and higher. One must wonder why. I have a suspicion it is because too many people are put on to the case and too many peripheral issues are pursued.

9. In particular, what has been noticeable from the numbers of interim assessments which I have seen over the years, is the proportion of solicitors' fees to counsels' fees seems to be increasing. In this case, for example, looking at the appeal, the solicitor's fees are said to be higher than counsel's fees in the ratio 60/40. All the solicitor actually has to do to get a case to the Court of Appeal in the normal way is to put the papers into tidy files (preferably only those which are likely to be used) and re-brief counsel. There may be a change of counsel, but that is a matter for the party concerned. To find a bill of £120,000 for a case in the Court of Appeal involving merely a question of construction, is, frankly, very worrying.

10. Turning to this case, I have already commented on the question of the costs in the Court of Appeal. That will be taken into account in the sum ordered by way of an interim payment.

11. As to the costs below, Mr Birss for the defendants suggests there should be a considerable reduction. No less than 30 per cent, he says, are costs which the other side ought to be paying his clients for having raised an issue which, in the end, was abandoned, as the judge observed in paragraph 22 of his judgment. What he said was:

"Although initially it was suggested by Pharmacia that "reconstituted" was a term of art that was dropped and now there is no suggestion that any of the terms I must construe in the claim have a special technical meaning other than their ordinary meaning."

It was on the basis of the "ordinary meaning" that he came to his decision and it was on that basis that we came to our decision.

12. Mr Birss says that a lot of work had to be done to deal with the term of art point, particularly because there had been a very unhelpful answer in correspondence. I have to say, for my part, that I think he is right about the answer being unhelpful. Accordingly, I think it right to read out the particular correspondence. It begins with a letter from the defendant solicitors of 5th October:

"We write with a view to narrowing the issues prior to the trial of the UK proceedings.

Please state whether it is your case that the term "not reconstituted from a lyophilisate" as it appears in the claims of the 311 patent (or any part of that phrase):

(a) is a term of art; or

(b) is a term which should be construed solely in light of the disclosure in the rest of the specification."

13. The answer reads as follows:

"We refer to your fax of 5 October 2004 asking whether the phrase "not reconstituted from a lyophilisate" is a term of art, or ought to be construed solely by reference to the Patent. The question is asked with a view to "narrowing the issues". The only issue in the proceedings is the proper interpretation of this phrase as it is used in the claims of the Patent. Our client's position in relation to this issue is clearly set out in Professor Stella's reports."

14. Professor Stella's reports were to the effect that "reconstituted" was a technical term having a very special meaning, and one did not, therefore, apply the normal rule of patent construction which is to construe the word with the knowledge of the skilled man in context. The case that was being put forward by Professor Stella was a case that the skilled man would recognise that as having a defined meaning.

15. The defendant solicitors wrote back saying this:

"We refer to your second letter of today in which you refuse to state whether it is your position that the phrase "not reconstituted from a lyophilisate" is a term of art.

We do not believe your stance is in accordance with the spirit of the CPR.

We ask you to reconsider your response."

There was no such reconsideration.

16. I come to the conclusion that Mr Birss is right in principle that with an attitude like that taken in litigation there is bound to be an increase in costs. The party suffering that increase in costs ought, where it is possible, to get those costs awarded irrespective of the result. In principle, therefore, I think the defendants are entitled to those costs and would be entitled to those by way of a reduction as a cross claim on any assessment of costs.

17. As is usual the court does not normally order a separate assessment of costs of each side but comes to an overall percentage figure. The real question we have to decide is what sort of figure that should be. The suggested figure is based on the estimate that Mayne's costs of the issue are 30 per cent. Mr Miller points out that quite a lot of the work would have been done already, partly because there was corresponding litigation in Australia, and partly because a lot of the expert evidence was in already. There must be some substance in that. It is not possible to form a precise figure, but the figure which I think would be appropriate would be 15 per cent.

18. The consequences of that, logically, would be that Mr Birss gets 15 per cent of his costs of that issue, the term of art issue. Mr Miller does not get his costs of that term of art issue. The total effect is therefore to reduce the costs which Mr Miller can recover from the other side by a figure which brings it down to 70 per cent. So, so far as the costs below are concerned, the appropriate figure is 70 per cent.

19. I come, finally, to the question of the appropriate interim payment. One of the reasons for an interim payment is that it should form some sort of estimate by the court of a figure which will leave the parties with not too much to squabble about, with the consequence that they are likely to settle their dispute. That saves the costs of a costs assessment.

20. Mr Miller, under a little pressure from the court, has finally come to a figure of £200,000 for here and below. That seems to me to be the sort of figure which a patent action involving just the construction of a few words in a technical context should cost, both at first instance and in the Court of Appeal. I for my part would order an interim payment of £200,000. It may be that some more can be recovered if the full assessment process is gone through. The overall figure of £650,000 would have to be looked at, if it were to be pressed, by the costs judge with very considerable scrutiny.

21. In particular it is easy enough to count the hours, but it is much more difficult to find out what was being done in those hours and whether what was being done was any use whatsoever. Sometimes the costs judge may consider too many people were put on the case with the consequence that some of the costs consist of the people talking to each other.

22. I turn to the next issue which is permission to appeal. The House of Lords has recently considered all the principles in relation to the question of patent construction. Mr Birss did not suggest that any error of principle had been made by the court. He merely suggested that the court had got it wrong. That would be a matter for their Lordships to decide rather than for us.

23. LORD JUSTICE HOOPER: I agree.

24. THE PRESIDENT: I also agree. So as I understand the order which is under tab 1: the injunction is granted; we do not make an order for delivery up; we give liberty to apply; the respondent do pay the appellant's costs to 70 per cent of the costs below and the costs of appeal; we direct the costs judge to scrutinise the appellant's bill of costs with some care; that the costs paid below by the appellant to the respondents should be repaid; the payment by the respondents to the appellant on account of costs should be £200,000; we refuse permission to appeal to their Lordship's house.

ORDER: counsel to submit agreed minute of order.