Coflexip SA & Anor v Stolt Comex Seaway MS Ltd & Ors

This is an application for specific disclosure. The claimants (who I will refer to as “Coflexip”) succeeded in patent infringement proceedings against the defendants (who I will refer to as “Stolt”). The dispute now between the parties relates to the disclosure of documents which are said to be relevant to the inquiry which the claimants are pursuing.

The claimants say that various submarine pipe-laying projects undertaken by the defendants would have gone to them had they not been infringements of the Coflexip patent. However there may be difficulties in proving contract-by-contract that that is so. For that reason, the claimants have decided to run their application for financial relief in alternative ways. First, they have looked at each contract as an individual stand-alone transaction and have put in evidence which the court can use to assess whether each individual contract was likely to have gone to the claimants. Second, they adopt an approach similar to that adopted in Gerber v. Lectra [1995] RPC 383 in accordance with which they will argue that there has been a loss of opportunity and that the size of that opportunity is to be assessed by looking at their market share in the relevant market in which the infringing pipe-laying contracts of the defendants were exploited. Thus, for example, if they had 50 per cent of the relevant markets they would invite the court to assume that about 50 per cent of the contracts, either by number or by value (it is not necessary to resolve which at the moment) would have gone to them and that they should be compensated accordingly.

To this end the Claimants have put in evidence directed to their market share from 1995 in respect of flexible pipes and from 1997 in the case of rigid pipes. They have given their market share and given disclosure relating thereto for the period up to 31 July 2001, the latter date being the date upon which the Court of Appeal upheld the first instant judgment in this action finding infringement.

The start date of 1995 arises as follows. The first of the defendants’ contracts of which complaint was made and in respect of which financial relief is sought is known as the “Magnus Swift” contract. The document which gave rise to a binding contract between the defendants and their client in relation to this project was signed, so I understand, in 1995. The claimants assert that that is the appropriate starting point for determining their market shares.

The order as originally sought by the defendants on this application is in the following terms:

“An order requiring the claimants to provide, pursuant to CPR 31.12, copies of the submissions made to the OFT relating to the acquisition by Coflexip SA of certain assets of Stena International BV and the documents underlying that report.”

Apparently in the mid-1990’s when Coflexip SA – that is the first claimant in this action – was minded to buy certain assets of Stena, including the assets which are now the second claimant in this action, there was an OFT investigation. Coflexip made submissions to the OFT to secure clearance for the acquisition. Those submissions were made by Coflexip in October or November of 1994 and, as their solicitors accept, included certain statements made on behalf of Coflexip as to their assessment of their own market share at that time, that is to say, their market share for the purpose of determining whether or not permission to acquire the Stena assets could go forward.

The purpose of this application, is to allow the defendants to see those submissions and, as the order sought indicates, the underlying documents. In the course of his submissions, Mr. Hinchliffe, who appears on behalf of the defendants, modified the scope of the documents sought to cover the submissions made by Coflexip “together with the documents referred to in it, which documents relate to market share”.

I have already indicated the alternative cases being advanced by the claimants. The defendants’ position is that the market share approach is wholly inappropriate and they will, on the hearing of the inquiry, argue that point. Nevertheless, they say that, because the claimants are advancing a claim based upon market share, they are entitled to the disclosure they seek.

It appears to me that the question before the court today is whether the material sought by the defendants is relevant to the issues between the parties. Among the points advanced by Mr. Hinchliffe is that the “Magnus Swift” contract was tendered for in July 1994 and awarded to the defendants in October 1994, and therefore the claimants are wrong in suggesting that market share as of 1995 onwards can be relevant to assessing whether or not they would have obtained that contract. That may be right and no doubt it will be one of the issues advanced on behalf of the defendants at the hearing of the inquiry.

However what is being sought on this application is documents relating to the claimants’ assessment of market share before 1995. As to that, the claimants have made their position absolutely clear not only in the pleadings they have served but in the evidence of their solicitor, Mr. Peter David Taylor, served on this application. In particular, he says in paragraph 21 of his witness statement: “The claimants do not rely upon market share prior to 1995, nor do they wish to do so.” For that reason, they say whatever the contents of Coflexip’s OFT submissions, they relate to a period prior to that which the claimants say is relevant for this inquiry.

If Mr. Hinchliffe is right as to the relevant period for assessing market share, assuming that market share is an appropriate yardstick at all in this case and that in relation to the “Magnus Swift” contract market share in 1994 is what counts, then the position adopted by the claimants is simple. They have chosen not to put before the court, and have chosen not to give disclosure of documents relating to, their market share for that period. Mr. Campbell, who appears on behalf of the claimants, has accepted that, if the relevant period for assessing market share is 1994, his clients will have chosen to exclude material for making that assessment from the court and the result will be that his client will not be able to secure damages on a market share basis in respect of any contracts where the relevant date for assessing market share was prior to 1995.

That being the claimants’ position, it seems to me that it must follow that the OFT submissions are irrelevant to the issues which the parties have chosen to litigate on the inquiry.

I should deal very briefly with a number of additional arguments raised by Mr. Hinchliffe. First, he argues that the way in which the claimants have defined the market on this inquiry is artificial and indeed wrong. Instead of looking at the market as a whole they have looked at the market defined narrowly so as to cover only those types of pipes which they, the claimants, were in a position to lay, and they have also excluded from their calculations the part of the market secured by the defendants whether by infringing or non infringing pipes. Mr. Hinchliffe says that the OFT submissions are likely to contain a rather different assessment of the market than that contained in the materials relied upon by the claimants in this inquiry.

That may well be true but, in my view, it is not relevant to the inquiry. No doubt for the purpose of securing permission to make the acquisitions which it desired in the mid-1990s, Coflexip had to address issues of market share relevant to competition legislation. Although the words “market share” are used in this inquiry, the market share being considered here is not the same as the market share being considered for competition issues. What is relevant on the inquiry is the market share relating to those types of pipe-laying contracts which the claimants say they could have undertaken. If, of course, Mr. Hinchliffe is right and that the way in which the claimants have defined the markets is inappropriate for the purpose of the inquiry, then the consequence is likely to be that that part of the claimants’ case for compensation for infringement on the market share basis will fail. But whether that is so or not, it seems to me that it is unlikely that seeing how Coflexip assessed market share in relation to competition issues for the purpose of its submission to the OFT will throw any significant light on the matters with which the court will have to concern itself on the inquiry.

The other point relied upon by Mr. Hinchliffe which I think I should refer to is his argument that the way in which Coflexip assessed its market share for the purpose of the OFT inquiry may throw light upon whether the claimants’ assessments for the purpose of this inquiry are reliable. In my view, even had the same “markets” been in issue for the OFT determination as on this inquiry, this would have been of minor assistance to the court in assessing the accuracy or otherwise of the claimants’ evidence. However, for reasons I have already given, the assessment in the OFT submissions were for a different market than that which is argued to be relevant, for the inquiry. Therefore, it seems to me that the assessments in the former are unlikely to be of any real assistance to the court on this inquiry.

In the end, because of the way in which the claimants have structured their case and the limits that they have put on the material which they wish to put before the court for the purpose of assessing market share, it appears to me that this application is in respect of material which does not relate to any issue live between the parties. For this reason I decline to make the order sought.