Zipher Ltd v Markem Systems Ltd & Anor

On 25 June 2008 I handed down my judgment in this case. At the request of the parties I adjourned any argument on the form of order to come on at a later date. On 30 ^th July I decided the issues of costs, interest on costs, interim payment of costs, stay, extension of time for seeking permission to appeal and permission to appeal. This judgment deals with the issue of the scope of the injunction to which Markem should be entitled in support of the undertaking given to HHJ Fysh QC.

I dealt with the issues surrounding the undertaking to Judge Fysh at [143] - [177] of my judgment. The important passages from the transcript before the learned judge are set out at [146] - [148]. I recorded that Zipher unconditionally offered to amend 602A by combining claims 1, 4 and 5. The amendments proposed in the action were inconsistent with that undertaking. So I said at [174] - [176]:

Zipher does not resist the grant of an injunction in principle. The dispute is about the proper scope of the injunction. It is common ground that the injunction must be no wider than the undertaking: it is highly undesirable that Zipher should have to look to both the injunction and the undertaking to determine the legality of any act or proposed act.

The issues between the parties can be summarised as follows:

Paragraphs 2, 3 and 4 of the order as finally sought by Markem are as follows:

The injunctions can be described as (1) mandatory amendment (2) prohibitory filing (3) and prohibitory assertion respectively.

The injunction must be no wider and no narrower than the undertaking given on its proper construction: there is no proper legal basis for any such wider undertaking.

The injunction should not be any narrower than the undertaking either. If it were, Zipher would have to assess their actions against both the undertaking and the injunction. It is highly undesirable that Zipher should have to look to both the injunction and the undertaking to determine the legality of any act or proposed act.

I propose to determine the scope of the undertaking on its proper construction, and grant an injunction of that scope. In those circumstances the question of whether the undertaking should be discharged is moot: Zipher will not breach the undertaking if they obey the injunction.

It is clear to me that the undertaking was not merely a non-assertion undertaking. Although the concern being expressed by HHJ Fysh was as to the use which Zipher would make of the claims against Markem, Zipher's proposed way of dealing with the problem was by means of cutting down the scope of the monopoly, not merely by agreeing not to assert the patent against Markem. Moreover, if the undertaking is to have any effect it must prohibit filing of such claims as well.

Zipher contends that an injunction as sought which requires it to "take all steps within its power" to amend as required is unclear. I do not think there is a problem here. The order is clear that if amendment is available Zipher should effect the amendment. If amendment is not possible, amendment will not be within its power. However if amendment is not possible I do not think I should require Zipher to "disclaim or disavow". I am not sure what this would entail, particularly in foreign jurisdictions. The corollary is that there should be a prohibitory injunction preventing the assertion of such claims as cannot be amended.

Zipher also contended that the prohibitory injunction should be limited to asserting the relevant patent claims against Markem companies. I do not see why that should be so. For example what about Markem's customers? And given the undertaking to limit the claim, why should Zipher retain the ability to sue third parties?

The only patent application expressly mentioned by Zipher's counsel was 602A. So Zipher's submission is that the undertaking cannot refer to anything else. The question is not what undertaking Markem would like now, but what undertaking was actually given.

Markem submit that, in context, the undertaking must have been meant to cover the PCT application and hence patent applications and patents deriving therefrom. The relevant context, submit Markem, includes the following (i) entitlement to the PCT Application was also in dispute at trial, (ii) claims 1-5 and 58 of the PCT are the same as claims 1-5 and 42 of 602A and (iii) the parties were treating 602A and the PCT Application as one and the same for the purposes of the entitlement dispute.

I think that the context point made by Markem is overwhelming. The PCT Application could give rise to further applications of wide scope. Zipher accept that the undertaking must extend to other UK applications derived from the PCT. I can see no basis for saying that only UK patents should be caught. It must be all patents deriving from or based on the PCT.

Markem, as can be seen from the draft, identify a relevant patent claim as one to a

Zipher says that the claim should be identified as one which is

Both sides accept that the restriction must apply to printers containing such devices and corresponding method claims.

The difference in wording is important for the following reason. Zipher questions what it is to do in a case where a patent has claim 1 to an invention which has nothing to do with tape drives, but a subsidiary claim introduces the features of claim 1 or 4 (but not 5) of 602. Zipher argues that this may create a combination invention. Markem say that if claim 1 is old or obvious the subsidiary claim would give Zipher exactly what they said they would give up.

Except to the extent that I think the type of tape drive mechanism in question should be limited in Zipher's words rather than Markem's, I do not think Zipher's point is a good one. The undertaking was as to the width of claims to tape drives. Once a claim arising out of the PCT application introduces a push-pull tape transport mechanism, it should be limited down to include all the features of claims 1, 4 and 5 of the Application. That is so wherever it appears in the claims hierarchy. It cannot have been intended that Zipher could have claim 1 or 4 as long it was combined with some other feature. Indeed it was self evident at the time that Zipher was giving up the ability to combine claims 1 and 4 with other claims, whatever their inventive content might turn out to be.

Moreover I do not think that Zipher's amendment, by including the words "directed to" comes anywhere near achieving what it wants. What Zipher would need is a proviso allowing them claims like claims 1 and 4, provided that they were combined with some other feature, which it would be necessary to define so as to avoid non-inventive features or features which are inventive in combination. The undertaking was not qualified in that way, nor is it easy to see how any such undertaking could be drafted.

Subject to drafting corrections I would grant the injunction in the following form

The parties should now be in a position to submit a final order for approval and sealing.