Eugen Seitz AG v KHS Corpoplast GmbH & Co KG & Anor

This is an application for specific disclosure in these patent proceedings. The application is unusual in two respects. First, it arises post trial. The trial of the claimant’s claim for revocation of the defendants’ patent was heard in late November and early December of last year. For reasons which it is not necessary now to go into, judgment had not been given by late February, at which point the court was informed that it was being alleged that the defendants had not given proper disclosure. In the light of that, it was clearly inappropriate to produce a judgment until that question has been resolved.

It is common ground that the parties’ obligation to give disclosure does not cease with trial, and if relevant documents which should have been disclosed come to light after trial then such disclosure should still take place.

The second aspect in which this application is unusual is the way in which the existence of these documents for which this application is brought came to light. Both the claimant, Seitz, and the second defendant, Norgren, are Swiss companies. One of the claimant’s witnesses of fact is a Mr Bauer. He has been a senior design engineer at Seitz since late 2010. Prior to that he worked for Norgren, starting there in about 2003.

The basis for the application is that Mr Bauer has told Seitz about the existence of these documents but he did not do so when Seitz and its lawyers prepared their case for trial, including taking witnesses statements from Mr Bauer. The explanation that he gives in his witness statement made in support of this application was that when he left Norgren he signed full confidentiality obligations and that those obligations are very strictly enforced under Swiss law, so he felt that he could not tell his new employers about these documents. Mr Bauer continues to be subject to those obligations but, none the less, after the trial was over, in further discussions with Seitz’s Swiss patent attorney, he has revealed the existence of these documents. His witness statement for this application says that he did so because he was concerned “that there may be an injustice if I was aware of anything that was relevant to the case that had not come to light and I remained silent.”

The application notice served on the 22nd March seeks disclosure of classes of documents identified in Seitz’s solicitor’s letter, dated 22nd February 2013. That letter expressly refers to two categories of documents identified by Mr Bauer. The first category includes documents regarding the use of a hard plastic, known as PET, as an engineering plastic for valve components subject to high pressure, and the manufacture of such components by Norgren. Those documents are part of a dossier assembled by Mr Bauer in connection with an earlier and distinct dispute regarding the validity of this patent in 2007.

The second category comprises documents that make clear that Norgren considered itself free to offer PET pistons to other rotary SBM manufacturers and, specifically, a proposal to Sidel in 1998, and then a particular drawing is referred to. They have been described, for convenience, as the “Sidel Documents”.

To explain how this arises, it is necessary to say something, briefly, about the underlying dispute. The patent concerns a blowing station of a rotary stretch blow moulding, or SBM, machine, used for the manufacture of plastic bottles. More specifically, it concerns the valves in the blowing station and provides for a valve with plastic pistons instead of the more traditional metal pistons. I am summarising, for convenience, the much more detailed specific success of patent claims. A notable feature of these valves is that they have to withstand the high pressure of the blowing air and swift switching time because of the rapid throughput of the bottles being formed. The priority date of the patent is 29th June 2001. The patent is now held jointly by the two defendants, Norgren and KHS Corpoplast. Norgren is a valve manufacturer and KHS is a blow moulding machine manufacturer. Aside from KHS, there are a relatively small number of manufacturers of such machines. At the priority date, the largest share of the market was held by Sidel, with an estimated 70% market share.

The attack on the patent was on the grounds of novelty and obviousness. There were a number of pieces of prior art cited but by the conclusion of the trial, the only instance relied on as regards novelty was a fax sent in in 1992 from a Mr Rymann of Norgren to Mr Vogel at KHS at a time when they were collaborating on the design of valves for KHS machines. As to that, a major issue is whether that communication was subject to obligations of confidentiality or could amount to disclosure.

As regards to obviousness, one key issue is whether there was a strong technical prejudice not to use plastic in the high-pressure valves in SBM machines.

The overriding principle for disclosure is that of necessity: see note 31.0.3 in the White Book. Matters of proportionality must also be taken into account having regard to the overriding objective. That seems to me particularly the case when disclosure is being sought after the trial is over.

Although the defendants dispute the relevance of any of the documents now sought, very sensibly, most of the documents in the first category, described in the letter of 22nd February, have been disclosed. I say “most”, since Seitz pursues its application regarding a residual category. In the skeleton argument of Mr Acland QC, counsel for Seitz, the categories are broken down in this way, and I quote from paragraph 21:

“(1)

Examples of the use of PET by Norgren as an engineering plastic for valve components subject to high pressure before the priority date;

“(2)

Documents relating to the manufacture by Norgren of such components using tooling for machining PET in house before the priority date;

“(3)

The Sidel Documents.”

Documents in category (1), as they are described, have been disclosed, but category (2) has not. That is said to go to the issue of technical prejudice against using plastic, in particular, PET. However, in the first place, the categories as they are framed in the skeleton argument, it appears to me, may go beyond what is set out in category (1) in the letter of 22^nd February, which is what the application actually seeks. Secondly, as expressed, it is extremely broad. Thirdly, the fact that Norgren makes up components in-house rather than buying them in seems to me of little, if any, relevance. The question of prejudice concerns the use of such components for a high pressure valve, and that is covered by the first of Mr Acland’s three categories, of which, as I have said, disclosure has now been made. It seems to me that it is not necessary to have any further disclosure. Perhaps unsurprisingly, Mr Acland did not press hard at the hearing for the further disclosure of this category (2) as set out in his skeleton. In so far as it is sought, for all these reasons, it is refused.

The force of Mr Acland’s submissions was directed at the second category in the letter of 22nd February corresponding to category (3) in his skeleton, the Sidel Documents. As to those, it is notable that in the letter of 22nd February they were said to be relevant to the issue of confidentiality of the co-operation between Norgren and KHS and the consequent supply of PET pistons by Norgren to KHS in 1997. It was said to go to the question of whether Norgren regarded itself as free to supply PET pistons to other SBM manufacturers. However, that ground is not now relied on. Instead, the application is pursued on a quite different basis, that they are relevant – Mr Acland submitted that they are very relevant – to the issue of obviousness. In particular, it is said that they would provide relevant material on the question of whether any technical prejudice was, indeed, widespread in the industry, an aspect on which Mr Acland cross-examined the defendants’ expert, Mr. Brandau, at trial.

Mr Lykiardopoulos, for the defendants, made forensic play with the fact that Seitz had shifted its ground and submitted that this rather cast doubt on the relevance of the Sidel Documents to the obviousness issue. However, that question has to be considered on its own terms. I was referred to the case of Nichia Corporation v. Argos Ltd [2007] F.S.R. 38, where the majority of the Court of Appeal differed from Jacob LJ on the question of whether disclosure from the inventor could be relevant to the issue of obviousness. There, the majority refused to adopt a blanket rule against such disclosure. But that, effectively, is the extent of what that case appears to decide. The Court of Appeal did not hold that such disclosure is bound to be relevant or necessary. It would depend on the particular case. The majority judgments of Rix and Pill L.JJ expressly endorsed the observations of Sir Donald Nicholls, then Vice-Chancellor, in the Court of Appeal, in the Mölnlycke case, where he said, in an oft-quoted passage, which bears repetition:

“Secondary evidence of this type has its place and the importance or weight to be attached to it will vary from case to case. However, such evidence must be kept firmly in its place. It must not be permitted by reason of its volume or complexity to obscure the fact that it is no more than an aid in assessing primary evidence.”

Here, what Mr Bauer said about the Sidel documents in his recent witness statement is this, at paragraph 31:

“These documents relate to a proposal to supply blowing blocks with a PET plastic piston to Sidel for use in a SBM machine in 1998. I understand that in addition to dimension drawings, assembly drawings were also prepared. This indicates to me that it was an advanced proposal. I am aware that there is correspondence directly between Mr Rymann and Sidel as well correspondence between Norgren in Switzerland and Norgren France relating to this proposal, although I am not aware of the full extent of the proposal or the correspondence and other documents relating to it. I assume that any offer in relation to this proposal would have been sent by Norgren France to Sidel. I recall that there was some correspondence with Norgren France who were involved from a commercial view point. However, all the technical drawings would have been made at Norgren in Switzerland.”

I should add that Mr. Bauer himself does not know what happened in that regard in 1998 as he was not then working at Norgren.

Earlier in his witness statement, at paragraph 5, he said, and again I quote: “In around 2009….I identified some of the Sidel Documents. I emailed them to Mr Dell’Oca.” I interpose to say that Mr Dell’Oca was the then managing director of Norgren, Switzerland. “However, Mr Dell’Oca asked me not to investigate this further in the light of the agreement with KHS Corpoplast.” That is a reference to the patent dispute in 2007, which led Mr Bauer to assemble the documents that came into category (1) under this application.

I do not see how the fact that Norgren considered it sensible or feasible to propose PET pistons for an SBM machine in 1998 is of particular relevance, and certainly not of such relevance that it is necessary now to make this further disclosure. The fact that Norgren did not itself entertain prejudice against the use of plastic in such pistons is evident from the patent itself, for which the priority date is only some three years later.

Moreover, as Mr Lykiardopoulos emphasised, it was never suggested that, from the point of Norgren, this was a new idea. Mr. Rymann’s fax of 1992 shows that Norgren put forward such a proposal or something along those lines well before. Therefore, without more I do not regard this a case where, having regard to all the particular circumstances, such disclosure of secondary evidence from the inventor on the issue of obviousness is necessary.

However, the matter does not end there, since Mr Bauer says, as I indicated, that Sidel rejected the proposal, and it is common ground that Sidel continued to use metal pistons in its machines. The reaction of Sidel in 1998 to the proposal for all plastic pistons using PET does seem to me to be relevant. Sidel had the largest share of the market and it is axiomatic that technical prejudice must be one that is commonly shared and widespread in the relevant market. Thus, if in the documents to which Mr Bauer refers, Sidel expressed a reaction to the proposal to use plastic, that would, potentially, be relevant. It might even be very relevant. Of course, whether these document do disclose any such reaction is at present unknown. Sidel may have rejected the proposal for all sorts of reasons and, indeed, may not have revealed all of its thinking, or even its true thinking, to Norgren at the time. Subject to questions of proportionality, I think that these documents could, as I have said, be relevant to what was, undoubtedly, an important issue at the trial.

As regards proportionality, Mr Wilson, of the defendants’ solicitors, makes the point in his witness statement that an extensive search was conducted at the appropriate time in these proceedings and these documents were not then found. In so far as any document relating to the proposal to Sidel are with Norgren France, that is a separate company, and although related to the second defendant, in that they are part of the same group, its documents are not under the defendants’ custody or control. I do not think it is proportionate at this stage to seek whether documents with Norgren France might be obtained.

Further, in so far as there was correspondence with Mr. Rymann, to which Mr Bauer referred, Mr Wilson states that the defendants’ advisers did review Mr Rymann’s files, and it was confirmed through Mr Lykiardopoulos at the hearing that this included electronic files for the period from 1992 – 2003. No Sidel Documents were in Mr. Rymann’s files, or at least nothing relating to plastic pistons. But there is a way in which a limited search can rapidly be carried out and that is by way of disclosure of the documents which Mr Bauer says he sent by email to Mr Dell’Oca in 2009. They were not found on the earlier disclosure exercise since, although Mr Dell’Oca’s files were looked at, that examination did not extend as late as 2009. That is hardly surprising on what was then known. No one suggests that the defendants or their solicitors can be criticised for that, but now that this is known, to disclose those documents, in my view, fulfils precisely the criteria indicated by Rix LJ in Nichia of “documents known to exist or that can easily be revealed”: see at paragraph 72.

Beyond that, to launch a new disclosure exercise at this stage would be disproportionate. I bear in mind that the application is made after trial and on the basis of information which, it seems to me, could have been obtained by Seitz before trial as readily as it has been obtained now, and, further, an information which another Seitz employee, Mr Rymann, could also have revealed. Indeed, Mr Acland is unable to explain why he had not done so. Those seem to me factors to be taken into account when considering what is the appropriate scope of the order to make, although, of course, the obligation of disclosure is one that rests on the defendants.

In directing that such disclosure should be provided but limited to the material gathered by Mr Bauer in the exercise that he carried out around 2009, I make two caveats. First, the disclosure is for the purpose that I have mentioned. The defendants submitted that the real reason why these documents are now sought is to provide the foundation for a further challenge to the validity of the patent. Any such attempt would, of course, require amendment to the grounds of validity pleaded and, thus, a further application to this court on which the burden of persuasion would be high. Nothing in this judgment should be taken as remotely encouraging any such application.

Secondly, this is an order for disclosure. It would enable Seitz then to consider the documents and whether they have any, and if so what, significance. They are not in evidence, and if Seitz considers that they are of sufficient significance to justify reopening the trial, that will require a further application. Nothing I say in this judgment should be taken to foreshadow the view I might take if Seitz were to make such an application.

However, what is clear is that such disclosure can and should, in my view, be made quickly, and that it is appropriate to direct a period of time in which any consequent application to re-open the trial should be made so that this matter can now proceed to a resolution.