Vetco Gray UK Ltd & Anor v FMC Technologies Inc

The matters before me today are applications made by the defendant in the present proceedings (FMC Technologies Inc.) for a stay of these proceedings on forum non conveniens grounds. The applications arise in the context of a patent action. The jurisdiction in whose favour a stay is sought is that of Scotland.

I can most usefully start by setting out the patents in suit. The patents in suit are related to oil exploitation technology. They relate to christmas trees, that is to say a complex series of valves and pressure containment vessels and similar apparatus which are needed to sit on a well head for the proper exploitation of oil and gas under the sea.

The principal patent in suit is a European patent with the number EP 1 278 935, which I shall call the 935 Patent. It was granted on 21st June 2006 pursuant to an application filed on 22nd March 2001. Its nature, putting it shortly, is an alleged new method of providing for pressure containment within a horizontal Christmas tree. The patent has 49 claims.

The second of the patents in suit is a European patent, which I shall call the 721 Patent, EP 1 336 721 B 1. It is a divisional patent and all I need to say about it at the moment is that it is a matter related to the 935 Patent. I need not describe it further because in the circumstances to which I shall come it falls out of the picture.

The third matter before me is a European patent application number EP 1 707 737. I shall call that the 737 application. That is for another divisional patent. That becomes relevant in relation to what I will call the rump of the second of the actions before me.

The sets of proceedings involved in this matter are as follows. The first in time are Scottish proceedings commenced on 7th December 2006. If the Scots will forgive me, I will use English terminology rather than Scottish terminology for describing the parties. The claimant is FMC Technologies Inc. and the defendants are, firstly, Vetco Gray UK Limited (that is to say, the first of the claimants in these English proceedings), and, secondly, Vetco Gray Incorporated (the second of the claimants in the proceedings before me), described in the Scottish proceedings as incorporated under the laws of the United States.

That action is a patent action in which the claimant claims infringement of the 935 Patent, the infringement allegedly occurring as a result of the sale and exploitation of a very substantial piece of equipment made by the Vetco companies and called the HT-2. The Scottish claim claims infringement in respect of some 16 of the 49 claims of the 935 Patent. The other claims do not seem to be in issue in the Scottish proceedings.

The defence has two principal elements. The first is that some of the alleged infringements are themselves disputed. Second, the validity of all the claims relied on is disputed on the basis of want of novelty and obviousness. Eight pieces of prior art are relied on in those Scottish proceedings.

Those Scottish proceedings are currently going through Scottish procedures. I need not set out those procedures, nor need I describe where they have got to. The important thing for present purposes is the likely trial date of those Scottish proceedings, which is likely to be, on the best calculations at the moment, some time in March or April of next year, 2008.

There are two sets of English proceedings. The first bears the action number 4490 and is the main one of the two sets of relevant English proceedings. The parties to the English proceedings, which are those before me, are the same in Scotland except the other way round; that is to say, the Vetco companies are the claimants and FMC Technologies Inc. is the defendant. The claim form in these proceedings was issued on 21st December 2006. Particulars of claim were served on 17th January 2007, along with grounds of invalidity.

The claimants in these proceedings claim revocation of the 935 Patent and, in the alternative, seek declarations of non-infringement. The claims for revocation are effectively the counterpart of the claims for revocation so far as raised in the Scottish proceedings; that is to say, want of novelty and obviousness and there is also an added matter point. It will be noted that these English proceedings seek to revoke the patent. They therefore amount to an attack on all the claims in the 935 Patent. They are not confined to those which are in issue in the Scottish proceedings. Eleven items of prior art are relied on: all eight of those relied on in Scotland plus three more.

The second of the two actions before me is an action bearing the number 051. The claim form in this case was issued on 10th January 2007 and particulars of claim and certain grounds of invalidity were served on 25th January 2007. The parties are the same as in the 4490 action. Their claim is to revoke the 721 Patent and they seek certain relief in respect of the 737 application.

The 721 Patent falls out of the picture because, after a certain amount of skirmishing and conditional offers, FMC Technologies Inc. have now unequivocally indicated that they will consent to the revocation of the 721 Patent. That takes that patent, whose validity was in issue in the 051 action, out of the picture. What remains in the picture, however, is the claim in relation to the 737 application.

The principal claim in the proceedings relating to that application is set out in paragraph 3 of the prayer, which reads as follows:

The first of two paragraphs 4 in the prayer claims an injunction restraining the defendant from bringing any such proceedings. The basis on which that ostensibly rather odd relief is sought is set out in paragraphs 5 and 6 of the particulars of claim, and they read as follows:

As I have already indicated, the applications before me are brought by FMC (as I shall call the defendant in this these proceedings) for a stay of these English proceedings. The stay is sought on a forum non conveniens basis. FMC's central point is that the proper issues which arise between the parties have been properly raised in Scotland, those proceedings are the more appropriate vehicle for the resolution of those issues and the English proceedings should be stayed in order to allow the issues to be tried in Scotland. There is no claim to strike out the 051 action on the basis that it is bound to fail. The application in relation to that action is also a stay on forum non conveniens grounds.

I will concentrate for the moment on the main action, the 4490 action, because in this context the other action is something of a sideshow. It is common ground between the parties that the way of resolving which, if either, of the English and Scottish actions should go ahead is to determine the matter on a forum non conveniens or a forum conveniens basis.

It is accepted by both parties that each action is properly brought within its own lights, save for a point taken in Scotland about the propriety of joining Vetco Gray Incorporated as a defendant in Scotland. That is something which will be resolved in Scotland. There is a debate in the evidence that I have seen as to whether that is most appropriately done before the trial in Scotland or at the trial in Scotland. That will have to be resolved in Scotland. It has the potential, I suppose, for some delay of the Scottish proceedings, but, subject to that, it is in my view of no great relevance to the issue that I have to decide.

Before going on to consider the evidence, I should remind myself of the principles applicable to an application such as this. Mr. Piers Acland, for FMC Technologies Inc., and Mr. John Baldwin QC for the Vetco companies between them took me to the relevant authorities. I need only cite a summary deployed by Lewison J in Ivax Pharmaceuticals UK Limited v. Axa Nobel BV [2006] FSR 888, paragraph 7. In that paragraph Lewison J set out a summary of the relevant principles as they appeared from the cases and as they had, in turn, been summarised by Tugendhat J in Lennon (Neil) v. Scottish Daily Record & Sunday Mail Ltd. [2004] EWHC 359. Tugendhat J said:

Those are the principles that I shall apply.

The logical first question which arises is whether the two proceedings do effectively raise the same or substantially similar issues. If they do not, then it is hard to see how it could be helpful or useful or proper to stay one in favour of the others.

FMC Technologies Inc. says that the cases do indeed raise the same or substantially similar issues. While the claim is in the form of an action to restrain an infringement in Scotland, the defences raised are defences which go to the root of the patent; that is to say, the claims are challenged on the basis of want of novelty and obviousness. Those are the same claims which underlie the English proceedings, which are revocation proceedings.

Mr. Baldwin, for the Vetco companies, says no, the case in England goes beyond that. The Scottish proceedings do not contain a revocation claim; the English proceedings do. The Scottish proceedings, therefore, do not attack the whole of the patent; the English proceedings do. Accordingly, there is no large scale identity, or sufficiently large scale identity, of issues between England and Scotland. Technically, it seems to me, Mr. Baldwin is correct, but only technically.

I have not had an opportunity to identify completely the scope of those claims which are in issue in Scotland and to compare them with the claims which are also in issue in England, so I cannot form a complete judgment as to the full extent to which the English proceedings will be in substance wider ranging. However, having said that, the firm impression I have is one of substantial identity. It seems to me to be likely that the claims which are not in issue in Scotland do not necessarily add an enormous amount to the matter, or they are unlikely to do so, so that, having decided the validity of the claims which are in issue in Scotland, it seems to me to be highly likely that the other issues will fall into place. In any event, the issues could be made identical if a revocation counterclaim were brought in Scotland. Mr. Acland has given an undertaking that his clients would not oppose an amendment in order to achieve that, but Mr. Baldwin says, on instructions, his clients will not do so. The fact that the bulk of the prior art is common to both the English and Scottish proceedings is, again, a pointer to the substantial identity of the issues which are likely to arise in both.

Having therefore decided that the actions are sufficiently similar, the next question is whether or not some forum other than England is a more appropriate forum. Obviously, Mr. Acland says, in support of his submission, that Scotland is the appropriate forum, or certainly an appropriate forum. He relies on two principal factors. First, he says that the infringement has occurred there and the Scottish defendants (that is to say the Vetco companies, or at least Vetco Gray UK Limited) has its manufacturing base there, which is probably merely a different way of saying that the infringement occurred there. Second, he relies on the facts that FMC has its own manufacturing facilities there, in Dunfermline. Indeed, in so far as it has UK manufacturing facilities, they are situated exclusively in Scotland.

Both those matters, as matters of fact, are true but in my view the latter is of no real significance. This action is a patent action and the matters rendering Scotland the appropriate forum, if there are any, ought to be those germane to such an action and not general connections with Scotland. The manufacturing activities of FMC do not seem to me to fall into that category.

Mr. Acland's first point, however, seems to me to be a good one. The infringing activities which his clients complain of took place there. They seek relief there because they seek an injunction. It is appropriate to seek that relief in that jurisdiction, and indeed it might be thought it is the only jurisdiction in which that relief can be sought. In the circumstances, it seems to me that that infringement and the infringement claim, by themselves, make Scotland an appropriate, if not the more appropriate, jurisdiction, subject to any factors pointing in favour of England.

Other factors came and went in the course of the evidence and in argument. Each side sought to reinforce its own case in favour of its chosen jurisdiction by reference to those factors and to knock down the appropriateness of the suggested jurisdiction of the other. At the end of the day, most of them came out fairly neutrally. They can be summarised as follows.

The first is cost. The evidence was subject to a degree of equivocation as to the relative cost of proceeding in Scotland and in England. Mr. Baldwin's case is that he would be prepared to accept that the cost of the Scottish proceedings would be £300,000 to £400,000 per side. Mr. Baldwin accepted, or said his clients accepted, that an estimate put forward by Mr. Acland of £800,000 to a million pounds for the cost of English proceedings would be about right. That is on the footing that that figure described the costs of both sets of parties in England, indicating that in England the costs would be likely to be £400,000-£500,000 on each side - a significant but not enormous difference. However, Mr. Acland revealed during the hearing that the £800,000 to a million pounds figure was his side's estimate of the costs of one of the parties. That seems somewhat extreme. In my view, so far as I have evidence of cost, the evidence is that the costs are going to be broadly similar both in England and in Scotland. Certainly it cannot be said that England is going to be cheaper. If anything, Scotland will be cheaper.

Second is timing. Timing is said to be important. Timing is always said to be important in patent actions, but some particulars are given in relation to this one. Mr. Baldwin's clients put in some evidence indicating that FMC are indulging in a certain amount of "bad mouthing" in the industry and creating some difficulties for Vetco based on its infringement claim and its allegation that Vetco is infringing FMC's patent. The evidence indicates that Vetco is hoping to do some deals, first in the autumn of this year and second in the early part of next year, which, it is suggested, would be or might be impeded if the issue is not resolved by the time those deals come to be done. Certainly the difficulties being caused in the marketplace by Vetco require that the matter be dealt with as soon as possible, according to Mr. Baldwin's evidence.

The dates at which it seems a trial can be had in each jurisdiction are probably March/April in Scotland and probably February in this jurisdiction. I do not consider that that difference in estimates (which are, it has to be said, only in relation to estimates) is sufficient to make one or other of the jurisdictions a more appropriate one in the current circumstances. The latest point of time at which Mr. Baldwin claims to have a deal which is going to be affected by this litigation is February of next year. With the best will in the world, I do not see how Mr. Baldwin is likely to get a judgment by the end of February in this jurisdiction, even if he has a trial in this jurisdiction. So it seems to me that, if there is prejudice to the deals, that is going to happen because a judgment cannot be obtained in either jurisdiction before those deals need to be dealt with. Otherwise, the similarity between the present estimates of the dates at which trials can probably be obtained is such that I do not consider that either jurisdiction has a material timing advantage over the other.

Those, I think, were two of the three principal other issues which each side tried to throw into the scale on its particular side from time to time. As I have indicated, they come out pretty neutral.

The third matter requires a little more development. The evidence filed by the Vetco companies suggested that this application would involve a critique of the experience of Scottish courts and certain individual Scottish judges when it came to hearing a patent dispute of this nature and this substance, with the alleged complexity of the present proceedings. Some debate was anticipated, at least by me, about the experience of the designated Scottish IP judges. However, in submissions, Mr. Baldwin disavowed any challenge to the competence of the Scottish judges. He rightly said it would have been an impertinence to mount such a challenge. He put his case differently. He relied on what he said was the acknowledged high reputation of the London patent courts, a reputation which he said (with all due deference) was not shared by the Edinburgh courts; and he relied on the very large sums of money at stake in this case, said by him and his clients to be hundreds of millions of dollars, because the equipment affected by the patent in suit is a very large and expensive piece of kit. His clients, he said, have the right to bring a case for revocation in a court of competent jurisdiction and a court of their choice and they should not lightly be shut out from their chosen jurisdiction, particularly bearing in mind the reputation which his clients wish to have the benefit of in this jurisdiction and bearing in mind the sums involved. He even went so far as to invoke the maxim that justice has not merely to be done; it has to be seen to be done.

I say nothing about Mr. Baldwin's otherwise flattering submissions about the reputation of the English Patents Court, but he is probably right in his basic starting point that his clients have the right to choose a court of competent jurisdiction and that right becomes even more justifiable if and in so far as they are seeking to take the benefit of a court with a high reputation in a given field. However, it also has to be acknowledged that that starting point gives way to the principles of forum non conveniens where appropriate. His clients do not have an absolute right to bring proceedings wherever they choose to bring them and it is the very adjustment of those rights, when they run up against other principles, that is in issue in this application. Accordingly, while Mr. Baldwin's clients have explained their choice of the English jurisdiction, the fact of their choice and the flattery which apparently accompanies it, do not, in my view, take the debate any further.

In considering the scope and implementation of Mr. Baldwin's clients' rights, and in considering such discretion as I have in this matter, I bear in mind the result of what would be the case if I were to accede to Mr. Baldwin's submissions. There is no extant application by Mr. Baldwin's clients to stay the Scottish proceedings. He accepts that, if I do not stay these proceedings, then both sets of proceedings (English and Scottish) will continue. On instructions, he told me that he would not introduce his revocation claim as a counterclaim in Scotland, despite the undertaking given by FMC, and that would give rise to a very obvious and highly undesirable duplication of costs and effort. There would be a race to judgment in order to get the benefit of potential estoppels or, worse still, the risk of inconsistent decisions if no estoppels operate. There would be an enormous waste of cost and effort in one jurisdiction. Mr. Baldwin says that the costs involved are de minimis in the context of the amounts at stake, but I am afraid I do not consider that legal costs of the order of £400,000 per side can be regarded as de minimis in anybody's currency.

A modern court should not be encouraging or assisting that sort of parallel litigation. I accept, of course, that that is the sort of thing that will happen if forum non conveniens grounds are not made out in any given case and it is probably not sufficient to invoke the doctrine of forum non conveniens to point to the undesirability of having two parallel sets of proceedings; but it is not attractive and, as I have said, it is not to be encouraged. At the end of the day, the state of affairs proposed by the Vetco companies, so far as it has any weight in the calculation, points in favour of a stay rather than against it.

There are no particular juridical advantages or disadvantages which are to be brought into the calculation in this particular case. One potential candidate that was floated has little weight. It is apparently the case that in Scotland all evidence in chief is given orally, even expert evidence, and that will mean that the no doubt complex expert evidence in chief will have to be given orally by the experts, although Mr. Baldwin does tell me there is some system for the exchange of experts' reports. The same goes for any evidence of fact that has to be given. That no doubt will lengthen the proceedings and might have been capable, if the numbers had worked out differently, of increasing the costs in Scotland to a significant extent over the costs in England. However, the costs in England seem to have their own momentum and, even allowing for the extra time necessary for extensive evidence in chief to be given, it does not seem to have any costs consequences which tell against Scotland and in favour of England. In any event, in the circumstances, I do not regard that as any particular juridical advantage or disadvantage.

Weighing up all these matters, I have come to the conclusion that Scotland is indeed the more appropriate forum for determining this dispute. I leave out of account the fact that proceedings were started in Scotland, although they were. As Mr. Baldwin points out on the authorities, the principal significance of a party starting proceedings in one jurisdiction rather than another is that, in an appropriate case, those proceedings may be more advanced and it may therefore be more significant to go with those proceedings. In the present case that does not apply.

In the circumstances, I shall order that the current proceedings be stayed in favour of Scotland. If those proceedings do not absolutely determine every aspect of the disputes that arise between the parties, it will be because Vetco has chosen not to counterclaim. I do not see that Vetco should be rewarded for their declining to counterclaim by being given the forum of its choice.

The positive feature of the whereabouts of the infringement is a positive, and indeed the principal positive, feature making Scotland the more appropriate forum for an infringement dispute. I shall stay the 4490 proceedings accordingly.

There is not much left in these proceedings once the 721 Patent has been revoked. What is left is the somewhat odd claim which I have referred to earlier in this judgment. There may be much to be said for striking out that claim on the ground that it is unsustainable in the circumstances, and I had anticipated from Mr. Acland's skeleton argument that he was going to invite me to do something like that. However, there is no such claim. The claim made in respect of this action is for a stay.

It has to be said that the issues arising in this claim, so far as they are discernible, are not the same as those arising in the Scottish proceedings. Different points arise in this case, even in the rump of this case, if they arise at all. There is, in my view, no basis for staying the rump of this action on the basis alleged; that is to say, the basis of forum non conveniens. It remains to be seen whether pursuing these proceedings remains sensible or is legally possible, but I will not stay these proceedings on the grounds of forum non conveniens. If another look is to be had at these proceedings on some other basis, then it will have to be had in the context of some different application and not the current application. I will therefore not stay this action.

Mr. Baldwin, there is implicit in this an application in order that you should pay the costs. Do you want to say anything about that?

These figures are very large sums of money. What I shall do is to make a strictly logical order and you can take your chances with the costs judge. I shall make an order that Mr. Acland shall have his costs of the application on which he succeeded and Mr. Baldwin should have the costs of the application on which he succeeded. The costs judge can work out where the costs lie in relation to each of those and there will be netting at the end of the day. The costs judge can sort it out. These are very large sums.

My Lord, that is one reason where we submit there was an error in principle, in fairness, in not giving us an opportunity to deal with the point.

The second point is that you assumed that a reasonable likelihood of when the trial would come on in Scotland was in March. That, at best, is a "guesstimate" based upon what the Keeper might do in May or June and, although you have given us permission to apply, we lose time by the result of the stay.

My Lord, the third matter is that because you reached the conclusion that the infringing activity was taking place in Scotland, Scotland was more appropriate. My Lord, under the Spiliada test, merely being more appropriate is not good enough. I rehearsed the test for you and we say that, too, founds an error in principle.

My Lord, for those reasons, we submit it is appropriate, although it is a question of your Lordship's discretion, and I know as well as most that the Court of Appeal considers that the discretion is yours and not theirs. There are circumstances, in our submission, whereby it would be appropriate and fair to give us leave to appeal.

Is there anything else?