WL Gore & Associates GmbH v Geox SPA

This is an application for permission to appeal -- with appeal to follow immediately after, if permission is granted -- against an order of Lewison J, refusing to order a speedy trial of an action brought by W L Gore and Associates GmbH (“Gore”) against Geox SpA (“Geox”). The action relates to four patents which concern sole structures for footwear comprising waterproof breathable membranes. Gore seeks (i) a declaration of non-infringement in respect of two designs of shoe construction, and (ii) revocation of each of the patents on grounds of novelty obviousness and/or insufficiency.

There were two reasons why the judge refused expedition. First, the parties had agreed a timetable in a consent order and there was no valid ground for varying the timetable. Secondly, in any event, it would be inappropriate by all the circumstances to order expedition.

The relevant facts are as follows: Gore are members of a group of companies which make Gore-Tex weatherproof breathable membranes for use in clothing and footwear. Geox are shoe manufacturers, who, since 1992 have built up a substantial business specialising in shoes with weatherproof breathable membranes. At the end of April 2006 Gore wrote to Geox explaining they were proposing to introduce “a fully waterproof/breathable GORE-TEX ® shoe”, and seeking an assurance that Geox would not assert one of the four patents (“EP103”) against Gore and their licensees. This lead to discussions which proved inconclusive, and, eleven months later, on 29 March 2007, Geox wrote to Gore stating that the shoes would “interfere” with their “patent rights”.

Discussions ensued, but they did not resolve the dispute. On 26 September 2007, Gore issued the present proceedings, and on 11 January 2008, in accordance with an agreed extension of time, Geox served their Defence. Meanwhile the parties had been discussing directions. In December 2007, Gore made proposals which involved a trial date of July 2008, but Geox said that would be too soon. During discussions in January Gore said that their main concern was the hearing date. On 18 January the parties agreed directions which were sent to the court and, as a result of the directions being agreed, a directions hearing of 22 January was vacated.

The agreed order was eventually drawn up, approved by Floyd J, and sealed on 8 February 2008. It opened with the words: “IT IS ORDERED BY CONSENT THAT” and the directions which followed were in fairly familiar form for patent proceedings. In paragraph 4, there was an order that the parties give disclosure on or before 21 May 2008; in paragraph 6 it was provided that, twelve weeks before the date fixed for trial, the parties give notice of models, etc; by paragraph 7, each party was entitled to call up to two expert witnesses, with time limits as to the dates when their statements were to be provided. Importantly, the last three paragraphs of the order were in these terms:

“12.

The trial of these proceedings shall be before an assigned judge, alone in London, estimated length 5-6 days, to be fixed not before the first mutually convenient date in or after November 2008, with a pre-reading estimate for the judge of one day.

13.

The complexity of the technical issues in these proceedings should be level 2-3. [I interpose to explain that the level varies between 1 at the simplest and 5 at the most complex].

14.

The parties are at liberty to apply on two days notice for further directions and attendance.”

Meanwhile, Gore were starting to appreciate that the hearing date provided for in these directions (which has the effect that a trial will probably take place in January 2009) would present them with commercial problems. In particular, Gore concluded that the launch of their product, currently due for late spring or early summer 2009, meant that they would ideally want to know the outcome of these proceedings by 12 September 2008, when a big trade exhibition is due to take place in Germany, which prospective licensees would be attending. Such licensees would be expected to commit themselves to Gore on or around that date. It has become clear, say Gore, that such prospective licensees would not be prepared to commit themselves unless and until the court has decided the revocation or infringement issue in Gore’s favour. The spring 2009 launch may well be possible even if the decision came a little later, mid-September 2008.

Gore’s case is that, at the time that they agreed the consent order 18 January 2008, they were unaware that most or all prospective licensees would refuse to commit themselves in the absence of the court decision, and that the earliest they became aware of the problem was 5 February 2008.

In these circumstances, Gore issued the application for an expedited hearing in particular seeking a hearing during July 2008. The application came before Lewison J on 5 March 2008, and he refused the application on the two grounds I have mentioned. In paragraph 11 of his judgment, Lewison J said this:

“The principles upon which the court acts in exercising that power -- that is, the power under part 3.1 sub-rule 7 of the Civil Procedure Rules to reconsider an order -- are conveniently set out in a summary of the decision of Patten J in Lloyds Investments (Scandinavia) Ltd v Ager-Hanssen [2003] EWHC 1740, as approved by the Court of Appeal in Collier v Williams [2006] EWCA Civ 20. In the light of the decision of the Court of Appeal in Collier v Williams, the only circumstances in which the court should exercise the power to vary is where there has been some material change of circumstances or where the judge who made the earlier order was misled in some way, whether innocently or otherwise, as to the correct factual position before him. It is not suggested in the present case that Floyd J was misled, so the application is based on a material change of circumstances.”

The judge also made reference to the decision of this court in Chanel Ltd v FW Woolworth and Co Ltd  [1981] 1 WLR 485, and said that he considered that there had been no change of circumstances. He then said that:

“The factual circumstances surrounding the proposed entry of Gore into the market for licensing its technology for the manufacture of footwear have not, in my judgment, changed at all. What has changed is Gore’s appreciation of the effect of what it agreed on the attitude of its licensees towards committing themselves to take up the licenses. That, to my mind, is not a change of circumstances at all. It is simply a change of perception of the significance of those circumstances.”

The judge also considered that the evidence on behalf of Gore did not actually show precisely when they first became aware of the problem, and suggested that they may well have been aware of the problem before the order was drawn up on 8 February 2008.

The order was agreed on 18 January 2008, which was the date when it was sent to the court for sealing. To my mind, that is the primarily relevant date, as it was the date when the parties agreed the order. I accept that it could (at least arguably) have been recalled by Gore before it was drawn up and sealed on 8 February 2008, but it seems to me that it was not unreasonable for Gore to have assumed that it would be drawn up promptly. It would be unattractive if delays in the court administration could be crucial in determining parties’ rights and duties save in special circumstances where, for instance, the parties expected the delay. Accordingly, unless driven to a different conclusion by the facts, it seems to me that one should concentrate on 18 January 2008 as the relevant date, although the fact that there was a delay before the order was drawn up is not irrelevant.

In my judgment this was a case where it was open to the court to consider the application of the merits, although the order of 8 February 2008 was made by consent, and although the ground now advanced for departing from it could have come to Gore’s attention before the order was agreed.

First, although this was a consent order and stated to be such on its face, there are different sorts of consent orders. The point was discussed by Lord Denning, Master of the Rolls, in Siebe Gorman Limited v Pneupac Limited [1982] 1 WLR 185 at 189 E to G, where he said this:

“We have had discussions about ‘consent orders’. It should be clearly understood by the profession that when an order is expressly made ‘by consent’ it is ambiguous. There are two meanings to the words ‘by consent’…one meaning is this: the words ‘by consent’ may evidence a real contract between the parties. In such a case, the court will only interfere with such an order on the same grounds as it would with any other contract. The other meaning is this: the words ‘by consent’ may mean the parties hereto not objecting. In such a case, there is no real contract between the parties. The order can be altered or varied by the court in the same circumstances as any other order that is made by the court without the consent of the parties. In every case it is necessary to discover which meaning is used. Does the order evidence a real contract between the parties or does it only evidence an order made without objection?”

In this case, the parties were purely concerned with agreeing directions, and there was no real issue between them. They were simply trying to find a sensible procedure to which they could then adapt their internal procedures. In such a case, the order should not normally be treated as a binding contract between the parties. It is very different from Chanel, where there was a real issue as to whether a cross-undertaking in damages should be given until a trial or further order. It seems to me that this point is reinforced by the fact that the CPR (particularly the overriding objective) apply, which was not, of course, the position at the time of Siebe Gorman.

Secondly, there is the Collier case, which the judge rightly relied on. It is true that Patten J is quoted with approval of the Court of Appeal in paragraphs 39 and 40 as saying this:

“…it seems to me that, for the High Court to revisit

one of its earlier orders, the Applicant must either show some material change of circumstances or that the judge who made the earlier order was misled in some way, whether innocently or otherwise, as to the correct factual position before him. The latter type of case would include, for example, a case of material non-disclosure on an application for an injunction. If all that is sought is a reconsideration of the order on the basis of the same material, then that can only be done, in my judgment, in the context of an appeal. Similarly it is not, I think, open to a party to the earlier application to seek in effect to re-argue that application by relying on submissions and evidence which were available to him at the time of the earlier hearing, but which, for whatever reason, he or his legal representatives chose not to employ.”

(Geox understandably rely on that last sentence). However, the whole passage is introduced by the words:

“Although this is not intended to be an exhaustive definition of the circumstances in which the power under CPR 3.1(7) is exercised.”

Furthermore, later in the same judgment, at paragraph 120, the Court of Appeal said this:

“In short, therefore, the jurisdiction to vary or revoke an order under CPR 3.1(7) should not normally be exercised unless the applicant is able to place material before the court, whether in the form of evidence or argument, which was not placed before the court on the earlier occasion” (emphasis supplied).

In this connection, the evidence as to the position of the licensees and the prejudice to Gore, in terms of being able to market its product in spring/summer 2009, was not before the court at the time of the consent order being made.

Thirdly, as Lewison J said in paragraph 12 of his judgment:

“It is, of course, to be noticed that the order in the present case is an order made by consent in the ordinary way. That, in my judgment, would impose a higher hurdle on a party that seeks to have it varied; but as Lindsey J pointed out in Russell Cooke v Prentis [2002] EWCA 1435, where an order contains liberty to apply, it itself contemplates that a further application may have to be made.”

Fourthly, case management decisions, whilst subject to the overriding objective and subject to the court’s overall control, and whether by consent or not, should be observed. It is therefore right to emphasise that the overriding objective, or a party’s perception of change of circumstances, cannot be invoked to defeat or justify the variation of directions, just because the court before whom the application to vary comes thinks that it would not have made the particular direction. Nonetheless, it seems to me that it must be right, particularly under the CPR regime, that the court retains a degree of flexibility and control over its own procedures, especially on matters such as a speedy trial.

Fifthly, it is true that Gore’s evidence, as to precisely when and why and how they became aware of the problem that now is relied on, is not as clear or full as one would have hoped, or indeed as one might have expected. Having said that, on the basis of the evidence that has been provided, interpreting it in a fair way, and taking into account commercial common sense, it seems to me that Gore cannot have been aware of the substantial commercial importance of having a determination from the court of the issue in these proceedings by 12 September or thereabouts. If they had been aware, then it simply defies belief that they would have agreed to a timetable which involved a decision in November 2008 at the very earliest. Furthermore, if they had been aware of the position by 18 January 2008, some of the statements in the evidence now put forward on their behalf are simply misleading at best, and dishonest at worst.

It may well be said that Gore should and could have checked with their licensees before agreeing the directions on 18 January 2008, particularly in relation to the trial date. However, they may well have had good commercial reasons for not doing so, or they may have failed to do so due to an oversight; it may even be the case that the left hand, concerned with negotiating with licensees, and the right hand, concerned with consulting with solicitors as to the appropriate timetable, did not know what the other was doing. Nonetheless it seems to me clear that the representatives of Gore concerned with agreeing the order and, in particular, the trial date and the timetable leading up to the trial date, were unaware of, or at least failed to appreciate, the importance of a determination by September 2008.

Bearing in mind the applicable principles, and in particular the control which the court has over its own procedures and the aim of achieving justice, I am of the view that nothing in the history of this case prevents the court from entertaining this application and considering it on its merits. However the merits most certainly include, in favour of Geox, the fact that there was a direction which involved a hearing in November 2008 at the earliest, and that it was part of a set of directions agreed between the parties.

That brings me then to the second ground on which Lewison J refused the application. He said this in paragraph 16 of his judgment.

“I must, I think, also bear in mind the impact of the variation which I am asked to make. The impact of the variation is potentially to displace other litigants from their position in the queue of cases waiting to be heard. I of course appreciate that there are commercial consequences for the claimant in this case but every party who brings his claim before the court has serious commercial consequences at stake. Each are entitled to their place in the queue and there must be very cogent reasons indeed for giving preference to one litigant over all the others who are waiting for their cases to be heard. The fact that the parties have been offered a trial date in January 2009 shows what is the current state of the list in the ordinary court. Accelerating the trial of this action is likely to delay others’ trials which in the ordinary course would come on earlier. I am not satisfied that this would have been an appropriate case to displace other litigants waiting to have their cases being heard given the current state of the lists of this division.”

On the face of it, that is a clear and careful exercise of a discretion, but two attacks have been made on it. The first is that the judge failed to appreciate that this was an exceptional case, because, so long as the proceedings remain undetermined, they have a continuing commercially disadvantageous effect on Gore, who do not have the benefit of a cross-undertaking in damages from Geox. This is not a case where the claim is for damages or often relief reflecting the past, nor is it a case where the potential damage is compensated by a cross-undertaking in damages.

The second point that is taken is that the judge’s exercise of his discretion was coloured by his view that he had no jurisdiction anyway. I am not sure that the judge did so hold. Even if he did, while seeing the force of those arguments, and, accepting that other judges might have taken a different view, were it not for one point I would not have been prepared to interfere with the exercise of the judge’s discretion refuse a speedy trial. This court has to be particularly careful before interfering with the exercise of such a discretion. This is not only because it is a case management decision, but also because the first instance judge is much more likely to be aware of the state of the lists than this court (although of course we can make enquiries).

Accordingly if matters had stopped there, I would have dismissed this application. But matters do not stop there. The application for a speedy trial made to Lewison J was on the basis that what was sought was a hearing in July, and the judge’s remarks and decision were rightly based on that assumption. What we have been presented with is a different proposal, namely that the hearing should take place in September on the basis that two principal judges of the Patents Court, Kitchin J and Floyd J, are sitting as vacation judges in September and could hear this case during that month. As a result of the characteristically co-operative attitude of the Chancery Listing Officer, Mr Doug Bell, it is clear that this case could be heard in September. Ordering expedition in these circumstances would not involve the sort of queue-jumping problems which were rightly identified by Lewison J as a relevant factor. It might involve a degree of inconvenience, but, with his knowledge and experience, Mr Bell has said that the case can be heard in September. That seems to me to put an entirely different complexion on this application and entitles, indeed requires, us to reconsider the issue of whether the application for expedition should be granted.

To my mind, when considering such an application there are four factors to take into account. The first is whether the applicants (in this case, Gore) have shown good reason for expedition; the second is whether expedition would interfere with the good administration of justice; the third is whether expedition would cause prejudice to the other party; and the fourth is whether there are any other special factors.

First, has Gore shown good reason for expedition? Mr Arnold says that a hearing in September will not avail Gore because, even if the hearing takes place in early September, this is a case where it is almost certain that an ex tempore judgment will not be given, and therefore there will be no determination prior to the trade exhibition on 12 September, even if the hearing takes place in early September.

While the trade exhibition is very important, a determination after 12 September but well before January 2009 (which is realistically the earliest, on the basis of the present directions, that a judgment could be given) would undoubtedly be a significant improvement from the point of view of Gore. Indeed, despite the importance of the trade fair, a decision in October 2008, unlike in January 2009, could well enable Gore to achieve a spring/summer 2009 launch.

Further, as Mr James Mellor QC who appears for Gore points out, it is quite possible that, if the hearing takes place in September 2009, while the judge will almost certainly reserve he may be prepared to give his decision at the end of the hearing.

In fairness to the judge who hears it, and in fairness to Geox, I should say that, while it would be perfectly proper at the end of the hearing for Gore to ask the judge whether he would give an indication of his decision, even if the reasons are reserved, the judge should not feel under any pressure whatever to accede to the request. Any judge who thinks a case is worth reserving on will be well aware of the risk of a change of mind, even if his present view is fairly strongly one way.

I turn to the second factor, the good administration of justice. This includes having a sensible timetable leading up to the hearing, and it also includes the interests of parties to other cases, which weighed quite rightly with Lewison J. I have already indicated that a September hearing, unlike a July hearing would not involve any significant problem, so far as other litigants are concerned.

So far as the proper conduct in this case is concerned, subject to one point, it seems to me clear that a hearing around six months from today can easily be accommodated in this case. It is not a simple case, but it is not a particularly complicated case. It would be very unfortunate if a case of this sort could not be ready for hearing within eight months of directions being agreed, and within 11 months of the proceedings actually being issued. The Patents Court in London is a court which seeks, like the Commercial Court and the Chancery Division, seeks to assist commercial people in resolving their disputes, and, as far as is consistent with the interests of others and with justice and fairness, it should accommodate, and make it clear that it accommodates, concerns such as those of Gore in this case.

Thirdly, prejudice to the other party. The one point Mr Arnold made in this connection was that there may be difficulty in Geox in getting experts who will be available for a hearing in September or for discussions and preparing of proofs ahead of the hearing in September. Mr Arnold said that one of the two experts was in place but it was unclear whether he would be available for a September hearing. Geox cannot be criticised in any way for not having given further details of any possible prejudice in this connection, because they were only aware of the possibility of a September hearing date a couple of days ago.

I would suggest that, if we do grant expedition for a hearing in September, the parties reconsider the directions that they have agreed, and that the expedition order be on terms that Geox have the right to apply for refixing of the hearing date if they can satisfy the judge that a September hearing date has caused unfair prejudice. It is fair to say that, on the basis of what I have heard, I would be sceptical of the idea that a September hearing date should cause any prejudice to Geox, but it would be wrong not to give them the right to apply if it does so.

Finally, there are the “other factors”. The most important component often found in this case is the conduct of the applicants, Gore, a number of aspects of which have been subjected to attack. In particular, there is (a) the delay between spring 2006, when the parties were first in communication, and the issue of proceedings in September 2007, (b) the fact that the proceedings, after they were issued, did not proceed with great expedition; and (c) that Gore should have been aware of this problem and could have been aware of this problem when they agreed the consent order.

So far as the first alleged delay period is concerned it seems to me that it was plainly sensible for both parties to try and negotiate. No doubt, with the wisdom of hindsight, Gore could have brought these proceedings earlier but I am unpersuaded on the evidence I have seen and heard that there can be any significant criticism of them in that connection.

As for the second period of alleged delay, Gore were not conspicuously quick, but they were certainly not particularly slow, in their conduct after the issue of proceedings. In any event, that ties in with the third point, in that they were not aware of the critical nature of the timing of the hearing when Gore (on the Gore personnel considered in these proceedings) agreed the consent order. In that connection it seems to me that there is some real criticism which can be made of them. However, the relationship between Gore and their potential licensees is, I am prepared to accept, on the basis of what Mr Mellor said, such that what Gore said to them was a matter of fairly keen commercial judgment. While they can also be criticised for not saying much in the way of detail, one can understand why they do not wish to give too much detail of their discussions and talks with potential licensees to a potential competitor.

The fact that Gore should have appreciated the problem when they agreed the consent order it is a powerful factor in favour of rejecting the application for expedition. Nonetheless, it seems to me that it would be disproportionately penal to refuse Gore the limited order for expedition they now seek simply on the basis that they could have done better during the period between September 2007 and February 2008.

Although the outcome is quite finely balanced, it seems to me that circumstances have changed so that we can, indeed should, now reconsider the position, and that fairness dictates that, subject to there being no prejudice to Geox, it would be right to order this case to be heard in September 2008. For my part, I would so order, and I would further invite the parties to agree a form of order that gives effect to the application for expedition while giving appropriate protection to Geox. I would also, subject to any argument, order Gore to pay the costs both before Lewison J (as he ordered) and before us. The September hearing date is a new proposal, which was not before the Judge, and Geox are certainly not in any way to blame for the application having to be made or for this appeal having to be brought.

I agree fully with the judgment and the reasons of my Lord. So the application for permission to appeal will be granted and the appeal allowed on the terms indicated by my Lord.