Celem SA & Anor v Alcon Electronics Pvt Ltd.

MR JUSTICE WARREN: This is an application in effect to discharge the order of Deputy Master Lloyd dated 10 March 2006 when he ordered that the claimant should have permission to serve the claim form on the defendants in India.

The defendant, Alcon Electronics PVT Limited (which I shall call "Alcon") is a supplier of electrical components in India. Amongst its product range are a range of capacitors known as FP capacitors, within that range is an FP4 range as well as an FP8 and an FP9 range, and I shall refer to them all collectively as "the products". Complaint is made by the claimants about products falling within each of those ranges but even within the FP4 range, as I understand it, the only products complained of are those with SM terminals; products with SP terminals are not said to infringe.

One of the companies which purchases products in India from Alcon is a company called Power Products International Limited (PPI), an English company operating here. PPI has been selling Alcon products since 1998. It itself is a manufacturer of various power products and also distributes such products of other manufacturers, including Alcon. I should just add that Alcon's products include a wide range of products other than the FP capacitors.

The first claimant is a French company, the second claimant is an Israeli company. They describe themselves as manufacturers of high quality power capacitors for medium and high frequency induction heating generators. The first claimant is the proprietor of a European patent (which I will call "the patent") in relation to certain capacitors, although it became proprietor only on 22 February 2006 following an assignment from its founder, M Albert Jakoubovitch, only shortly before the launch of these proceedings.

The Particulars of Claim allege that Alcon has infringed and threatens to infringe the patent. The Particulars of Claim in paragraph 22 lists a number of infringements or threatened infringements, including importation of a sample or samples of the FP4 150SM product in June 2005, the disposal of and/or to offer to dispose of a sample or samples of that same product to Radyne Limited (which I will call "Radyne" and will feature later in this judgment) on or about 15 June 2005, the offer to dispose of four capacitor products to PPI in or around October 2005, the importation into the UK and keeping in the UK of those four capacitor products on or around 2 December 2005 and the importation into the UK and/or keeping in the UK, whether for disposal or otherwise, and/or offer to dispose in the UK to persons at present unknown of Alcon FP4 150SM capacitor products, in addition to those particularised at A to D above, at times at present unknown to the claimants.

In fact, for the purposes of this application the claimants do not rely on any direct offer to dispose made by Alcon since it appears likely that all such offers were made outside the UK. The Particulars of Claim also allege that Alcon has infringed and threatens to infringe the claimant's copyright in relation to what it describes as Alcon catalogues. In fact these documents are more properly to be regarded as technical specifications but, for reasons I will come to, it is reasonably clear that whatever their nature they form part of Alcon's marketing material and are not akin to manuals which are supplied together with equipment. The pleading is set out at paragraph 23 of the Particulars of Claim and they relate to importation in November 2004, the supply of Alcon catalogues to PPI in about November 2004 and the importation to the UK and distribution in the course of business to persons at present unknown of Alcon catalogues in addition to those particularised.

There is also an allegation of infringement of unregistered design rights of the first claimant.

The substance of the claim so far as concerns past infringements relates to four of the products and the provision of two free samples. The total value of the sales was some £352, which include the trap sales which I will come to, of the four products. None of these sales was made by Alcon but were made by PPI. It is Alcon's case that it has an entirely arm's length commercial relationship with PPI. The claimants do not agree and assert that the facts of the relationship between the two companies are such as to make Alcon liable as a joint tortfeasor with PPI in relation to the latter's infringement of the patent and other IP rights of the claimants. Alcon is, as I have said, an Indian manufacturer. It is accepted by the claimants for the purposes of this application (but no further) that title in the products sold to PPI passed to PPI in India and prior to shipment out of Mumbai. It is not accepted that title in the free samples passed in India.

The alleged infringing acts are of limited scope. To explain the claimant's allegations I will need to look at some of the documents, but before doing so I should say that the evidence indicates that PPI first knew of the products in the latter half of 2004 when they were being shown at a trade fair in Munich. Alcon says that it was keen that PPI introduced the products to the UK market. It says that PPI met with limited success and that, whilst they contacted some companies, only one, Radyne, expressed interest but in the event no sales took place even to that company. That is not quite the full picture, I think. Let me refer to what little documentary evidence which there is.

There is in the bundle a letter dated 3 March 2006 from PPI to Norton Rose, who are the solicitors acting for the claimant. This, one can assume, followed complaints by the claimant to PPI, who may have become fairly helpful in assisting the claimant. They write in response to the initial request:

In the bundle is a list of perhaps a dozen or so, slightly less, companies in the United Kingdom who were to be approached. Mr Unde, who gave evidence on behalf of Alcon, points out that the product referred to in that letter and in the request that was made related not just to the allegedly infringing products but to the other products in the range which I mentioned earlier, in relation to which there is no alleged infringement, that is to say, products with SP terminals. Indeed, as the response goes on: "We confirm that the product was the entire Alcon FP capacitor range." While I am on that letter, it says later on:

I think Radyne's involvement I can pick up starting with an e-mail dated 17 January 2005 from Mr Clarke of PPI to Alcon where he says:

One can infer with confidence, I think, that that inquiry came as a result of the request by Alcon to PPI to let customers in the UK know about the product. On 25 January Alcon's Mr Jagdab responded to Mr Clarke. The end of that e-mail says:

The response to that on 27 January is that Radyne had decided that they would like to receive one FOC sample first. "Please advise when you are able to dispatch." Then Mr Jagdab replies on 1 February: "Dear Mr Clarke, one sample will be dispatched to you in the next ten days." Things started to go wrong, I mean in the literal sense, because the capacitor did not work. There is an e-mail dated 22 February from Mr Hong Shen of Radyne to Mr Dennis Champion. He writes to Mr Champion saying: "I do not have good news for you this morning" and he explains that he put the capacitor in an inverter and ran a test run and it basically did not work for long. Mr Champion forwarded that e-mail to Mr Clarke at PPI saying:

That then goes on from Mr Clarke to Alcon: "For the attention of Mr Jagdab", so the news gets back to the manufacturer. On 7 June (there is something of a gap there and it is not clear what has happened in between) Mr Clarke sends an e-mail to Alcon saying:

It appears that Alcon were paying a visit generally to the United Kingdom in June and it is apparent from this e-mail that a meeting must have been fixed with Radyne to address the problem of the faulty sample. Although they were then going to talk about other business, it seems that that must have been something which came up later because the e-mail I have just read shows clearly that there was a meeting to discuss the sample and then it brings up the possibility of the new project.

At the meeting with Radyne on 16 June 2005, it appears from an attendance note on PPI paper, there is a fax to Mr Clarke headed "Re Visit to Radyne, 15 June", and records as present Mr Oxborough, Mr Davies and Mr Hong Shen and Mr Jagdab from Alcon. Alcon gave a presentation of the capacitor product range. So this is the entirety, as I understand it, of the product range, including the alleged infringing products:

Then Alcon suggest various things about the best design. In his witness statement Mr Unde, giving evidence for Alcon, says that following failure of the first sample Alcon redesigned it and returned it directly to Alcon. However, from the note of 16 June, which I have just read from, it seems that the second sample was actually made available at the meeting. It is clear therefore that the second sample was brought to England by Alcon. There can, I think, be nothing to be said against the proposition that Alcon imported the sample into the UK and supplied it to Radyne in the UK.

On the visit to Munich PPI, who went to the stand of Alcon, picked up a number of copies of the technical brochure which they brought back to England. They subsequently asked Alcon to provide some further copies, which was done, these being sent by Alcon from India to PPI in London. Although Alcon denies that the brochures could possibly give rise to a sustainable claim that they infringed copyright, that is not a matter which I can possibly decide on this application and I am not asked to do so. The claimants were informed in June 2005 that they were infringing the claimants' rights, although by this time the patent had not been assigned to the first claimant. The dispute did not progress until a company called Metal Fusion Tradex Europe sought to purchase from PPI four products. In fact Metal Fusion was the distributor on behalf of the claimant and connected with it and this was a trap purchase. These were duly supplied by PPI and, for the purposes of this application at least, it is accepted that PPI acquired title to those four units in India.

There is one further fact that I should draw attention to, which is the website of Alcon, which is relied on by the claimant because what that shows is that Alcon advertises itself as having an international network. The problem is one does not have the whole of what might happen on the website because the page exhibited, the first page, is headed "About Us" and at the bottom it says "Sales Network", which one imagines you click on to move to the sales network page, which shows a map of India and an international map listing China, Turkey, Finland, Australia, the United Kingdom and Germany. Whether you could then click on those places to see whether there was a list of distributors or a list of agents, which might be rather different things, I simply do not know. Considerable importance appears to be attached by the claimants in this application to those two pages, but I have to say I gain very little assistance from them at all.

In these circumstances the claimants say that there are four potentially infringing acts and they are listed in Mr Knight's helpful skeleton argument at paragraph 4, which is divided into four paragraphs, A to D, some of which are subdivided. He says in general terms that there are four categories of acts which are potentially infringing.

The first is that representatives of Alcon attended a meeting (this is the Radyne meeting) in the UK at which the sample of the allegedly infringing product was supplied to a potential customer. I accept the submission on that point for the reasons which will be obvious from the way in which I have described the evidence. If it is said by Mr Unde that the attendance note is wrong, all I can conclude is that at the moment there is an obviously triable issue on the facts in relation to which the claimant has a serious case, that being the test which I shall come to in a moment. Paragraph B relates to offers to dispose of the product and for the purposes of this application Mr Knight does not rely on any offer to dispose of directly, although it does come in obliquely in relation to his submissions on joint tortfeasorship.

Thirdly, it is said that Alcon is jointly liable for and/or procuring infringing activities by PPI in the UK. He submits that it is incorrect to say, as Mr Unde does, that the relationship between Alcon and PPI was a true arm's length relationship between seller and purchaser. Summarising what Mr Harris has said in his evidence, Mr Knight focuses on the fact that Alcon made a direct request to PPI to identify and contact UK companies involved in the application for induction heating. I have already dealt with the evidence in relation to that, which appears in the letter from PPI to Norton Rose and the list of companies, but one also has the explanation of Mr Unde that the whole range of FP4 capacitor products was the subject matter of that request.

The next point is that Alcon was fully aware of and involved in PPI's activities. Of course, that does not mean what it appears to mean. What it means is that there is an example of it, which is that Alcon redesigned at least one sample of the allegedly infringing product specifically for a potential customer. That is the Radyne point again and I have already mentioned what Mr Unde said in his first witness statement about that. Next, he relies on Alcon's reference to its international sales network on its website.

The fourth head is importation of the infringing products. Mr Knight will seek to run the importation infringement and he specifically has three subparagraphs, and of course these overlap the main alleged infringement. First of all, the items which PPI confirmed were brought to the UK by Alcon for the meeting with Radyne, whether they are products or not, it is certainly the second sample. He, secondly, relies on those sample products and catalogues which were not sold to PPI and thus were not subject to the conditions of sale referred to in Mr Unde's witness statement. The position is perhaps slightly unclear, what Mr Unde says in paragraphs 6 and 7 of his witness statement, and I will return to that aspect later.

Going to paragraph 2 again, he relies on the sample products and catalogues which were not sold to PPI and so not subject to the conditions of sale which Mr Unde refers to and which were sent to the United Kingdom by Alcon. This is the first sample and again the second sample. He says Alcon was the party which owned the items at the time of their importation and arranged for their carriage and therefore must be liable for their importation into the United Kingdom.

The test for me in relation to service is set out in the White Book at page 206. I am not going to read the passage there, which is common ground, or the authorities which support it, but in particular I note that the claimants must show a serious issue to be tried or, to put the same test in a different way, a reasonable prospect of success. I accept of course that the court has a general discretion in the context of which it has to consider any point about forum conveniens. In the present case if there is a reasonable prospect of success it is common ground that the case falls within one or more of the qualifying paragraphs of CPR 6.20.

Alcon submits that there is no serious issue to be tried or that if there is I should in my discretion refuse to allow the claim to proceed in England. As to serious issue, I consider that, assuming of course that the patent is valid in the first place, the claimants have a serious claim in relation to the second sample, both in terms of importing and disposing. In relation to the first sample, it was supplied to PPI and the question is: who imported it into the United Kingdom? It is not accepted, even for the purposes of this application, by the claimants that title passed in India. In any event the claimants submit that the question of passing of title is distinct from that of importation. I do not propose to decide that issue in the light of, firstly, my attitude to the second sample and, secondly, what I turn to next, namely, joint tortfeasorship.

I think I need refer only to one case but I need to refer to it at all levels, SABAF v MFI, starting with the decision of Laddie J.

[I am conscious that this judgment should not go on too long and I do not propose therefore to read out paragraphs 41 to 43 of the judgment, but I would like them to be treated as incorporated into this judgment.]

I draw attention to two points, even if it is not quoted at this stage of the afternoon, which are these:

Then at the end of paragraph 43 he says:

In the Court of Appeal, which is now the highest authority on this particular aspect in the context at least of a patent action, the court at paragraphs 57 to 59 dealt with joint tortfeasorship issue. I will read paragraphs 58 and 59:

There is one passage in the House of Lords that is relied on by Mr Knight which relates to importation. At paragraph 40 of his opinion Lord Hoffmann says that:

The principle seems to me to be reasonably clear as set out in the Court of Appeal; each person has to make the infringing act his own and become so involved as to make himself liable for the tort, a rule which may not be easy to apply in practice.

Mr Ward says that the present case is indistinguishable from that case and that although each case is fact dependent I could not say that Alcon was a joint tortfeasor consistently with the decision as it is set out on its own facts. Mr Knight says there are distinctions. He says, correctly, that we do not know what the selling agent did, but Laddie J tells us that it participated in discussions with MFI which led them to buying the hobs. So there was a real involvement and knowledge of what was intended to happen but still Meneghetti was not liable. He draws attention to the website to show the existence of the UK marketing, but it was clear that there was a sales agent in SABAF with the same function. However, what has impressed me considerably is again the second sample, which, according to Alcon's own evidence from Mr Unde, was redesigned specifically in the context of the failure of the original sample and the new model was provided to Radyne. I think that this is enough to give the claimants a good arguable case or to show that they have a serious case that Alcon is a joint tortfeasor. They may not succeed at trial on that allegation, but on the evidence before me their case is sufficiently strong to pass the relevant test and full examination of the facts after disclosure and witness statements will establish the case one way or the other.

In relation to discretion Mr Ward submits this case cannot possibly be about the past infringements which are known about and which have on any view a trivial value. He suggests that this case is really about something much wider and is designed to damage manufacturing prospects of Alcon in India where threats, he says, have been made resulting in proceedings in which at the end of the day the real issue is likely to be the extent of the claimant's IP rights in India. I have no way of knowing whether there is anything in that submission. The fact is that the claimants assert IP rights in this country in respect of which no undertakings have been given and there has been no submission to an account or inquiry to damages. Even if there had been, the claimants would not achieve the disclosure of information about sales to third parties or verification of the absence of such information which they might otherwise hope to achieve.

Moreover, if the English court does not deal with the patent infringement claim it is unlikely in the extreme that the Indian court would do so and, as I understand it, there is no Indian patent in relation to which similar but quite possibly not identical issues might arise. The reality is that if the patent infringement is not to be the subject of resolution here the claimants will have no redress at all and, more importantly, no protection against future infringement in respect of which they would need to bring separate proceedings, if and when they discover such infringement should it occur.

The evidence suggests that the Indian lawyers consider that even the copyright claim would not be entertained by the Indian court, but Mr Ward says that in contrast with a claim in relation to the infringement of a patent, the matter would be justifiable in India. I do not consider that I need to resolve that question since, if the patent infringement claim is to proceed here, so too should the copyright claim, in my judgment, and the same goes for the unregistered design right claim as well.

Accordingly, I will allow this claim to proceed. It is a strong thing and, as far as I am aware, the English courts have not done so, to restrain English proceedings in relation to breach of European or UK patents. Whether this matter should find its way to the Patents County Court is something the parties will have to consider as being, I would have thought, at the very, very small end of claims. That deals with that application.

There is also before me an application for the amendment of the Particulars of Claim, which is not opposed, and I will formally grant leave to amend as requested, but I understand there may be a costs issue about that.