The Big Bus Company Ltd v Ticketogo Ltd

This is an application by The Big Bus Company Ltd (“Big Bus”) for pre-action disclosure against Ticketogo Ltd (“Ticketogo”) pursuant to section 33(2) of the Senior Courts Act 1981 and CPR rule 31.16. In a nutshell, Big Bus seeks disclosure of patent licences previously granted by Ticketogo in order to enable Big Bus to quantify the value of a claim for patent infringement which has been intimated against it by Ticketogo. The application is unprecedented, but that in itself is not a bar to it being granted. More importantly, it raises an important point of principle.

Ticketogo is the proprietor of United Kingdom Patent No. 2 391 101 entitled “Ticketing system” (“the Patent”). The Patent discloses and claims a method of issuing over the internet a ticket containing a bar code in an image file format. It was granted on 20 October 2004 and has a claimed priority date of 9 May 2001.

As at 13 April 2015, the Register of Patents records that licences under the Patent have been granted to 38 companies. It is evident that the Register is out of date, since Ticketogo has referred in correspondence to other licensees who have recently taken licences under the Patent. Furthermore, Ticketogo’s solicitor told me that Ticketogo had now granted over 60 licences.

So far as the evidence before me goes, Ticketogo does not conduct any business other than patent licensing.

Big Bus is an operator of open top bus sightseeing tours. It is a subsidiary of Big Bus Tours Ltd, which claims to be the largest operator of such tours in the world.

On 2 October 2012 solicitors instructed on behalf of Ticketogo wrote to Big Bus notifying it of the existence of the Patent. The letter stated:

“Our client has recently concluded a licence agreement for the Patent with a major coach travel operator in the UK. Our client is also prepared to license the Patent to you, provided that suitable commercial terms can be agreed.”

Big Bus replied to this letter that it did not require a licence under the Patent. Ticketogo’s solicitors responded that their client believed that Big Bus did require a licence for its ticketing system and asked Big Bus to elaborate on its statement that it did not require one. Accordingly, on 18 December 2012 Big Bus’ solicitors wrote to Ticketogo’s solicitors explaining Big Bus’s case that its system did not fall within the claims of the Patent.

On 13 January 2013 Ticketogo’s solicitors replied with an explanation as to why Ticketogo contended that the system did fall within the claims. This letter also stated:

“For your client’s information - and in the spirit of openness with which this correspondence is being conducted - the closest prior art document of which our client is aware was found by the UK Intellectual Property Office’s search during the prosecution of the Patent. It was the British Airways patent application, no. GB 2361570, a copy of which is enclosed with the hard copy of this letter. The UK IPO’s objection to the grant of the Patent based on this prior art citation was overcome.

Furthermore, you will no doubt have advised your client that a challenge to the validity of a patent is always a complicated and expensive exercise, by the time that technical experts and Counsel have got involved. You will also have seen that National Express Group PLC is a licensee of our client. We invite you to revisit the list of licensees of the Patent on the UK IPO’s website, where you will note that a further licence has recently been granted to The Ticketline Network Limited. Both of these companies are substantial organisations who presumably decided after due consideration not to attempt a challenge to the validity of the Patent, but to take a licence instead.”

Big Bus’ solicitors acknowledged receipt of this letter in a letter dated 21 January 2013. After that the record is silent for some time, possibly because the parties were engaged in without prejudice negotiations.

On 22 April 2014 Ticketogo’s Chief Legal Officer sent a representative of Big Bus an email saying:

“Since our last communication, Ticketogo has managed to secure various new clients/licensees, a list of the current licensees is attached to this email.

I would welcome the opportunity to meet with you to discuss your company also becoming a licensee of the Patent.”

It is not clear from the evidence what response Big Bus made to this email, if any. Again, it is possible that there were without prejudice negotiations.

On 24 February 2015 Ticketogo’s current solicitors wrote to Big Bus’ solicitors saying that they had been retained to act in place of Ticketogo’s previous solicitors. The letter stated:

“Our client … believes that your client requires a licence of the Patent. Many others have decided to take a licence, once they have considered the Patent and taken advice. Attached, for ease of reference, is a current list of licensees.

If your client says that it does not require a licence, please explain its position fully regarding infringement and validity. We remind you of your client’s obligations under paragraph 6 of the Practice Direction – Pre-Action Conduct in the Civil Procedure Rules, which requires parties to exchange information and to behave reasonably, so as to facilitate a full understanding of each party’s position, before legal proceedings are contemplated.

If you do not comply with the Practice Direction by failing to respond to our correspondence, your client may be penalised in costs when this matter comes before the court.”

Many of the licensees listed in the list enclosed with this letter are companies in the transport sector, but others are companies in the entertainment sector.

On 10 March 2015 Big Bus’ solicitors replied asking for pre-action disclosure of four categories of documents, including the licences granted under the Patent. On 13 March 2015 Ticketogo’s solicitors replied declining to give such disclosure. The letter also stated:

“If the Big Bus Company’s strategy is to bury its head in the sand in the hope that our client’s claim will disappear, it is mistaken. The Big Bus Company should be in no doubt that our client’s claim will not disappear, and the size of the claim grows with each day of unlicensed activity.”

Big Bus launched the present application on 30 March 2015. By its application Big Bus seeks an order for the disclosure and inspection of all licences granted by Ticketogo under the Patent, and in particular the licences granted to 44 named licensees, being those named in the list enclosed with the letter dated 24 February 2015. The proposed order contains provision for a confidentiality club to be agreed or determined by the court in the event that any of the documents contain confidential information.

The application is supported by a witness statement made by Ian Wood of Big Bus’ solicitors. As well as pointing out that Ticketogo has repeatedly relied on the fact that others have taken licences in its efforts to persuade Big Bus to take a licence under the Patent, Mr Wood explains that, while Big Bus considers that its system does not fall within the claims of the Patent and that there is a strongly arguable case that the Patent is invalid, Big Bus is concerned at the considerable expense of patent infringement proceedings and at the irrecoverable costs it may incur even if it is successful. Big Bus is therefore conscious of the desirability of resolving the dispute through a commercial agreement. Big Bus considers that disclosure of the existing licences is desirable since it would allow Big Bus to establish the value of Ticketogo’s claim and thus assist the resolution of the dispute by an informed settlement. Ticketogo did not serve any evidence in opposition to the application.

CPR rule 31.16 provides, so far as relevant, as follows:

“(3)

The court may make an order under this rule only where–

(a)

the respondent is likely to be a party to subsequent proceedings;

(b)

the applicant is also likely to be a party to those proceedings;

(c)

if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and

(d)

disclosure before proceedings have started is desirable in order to –

(i)

dispose fairly of the anticipated proceedings;

(ii)

assist the dispute to be resolved without proceedings; or

(iii)

save costs.

(4)

An order under this rule must –

(a)

specify the documents or the classes of documents which the respondent must disclose; and

(b)

require him, when making disclosure, to specify any of those documents –

(i)

which are no longer in his control; or

(ii)

in respect of which he claims a right or duty to withhold inspection.”

It is well established that CPR rule 31.16 requires a two-stage approach to an application for pre-action disclosure. The first stage is to consider whether the jurisdictional tests of sub-rule (3)(a) to (d) are satisfied. If they are, the second stage is to consider whether, as a matter of discretion, an order should be made: see Smith v Secretary of State for Energy and Climate Change [2013] EWCA Civ 1585, [2014] 1 WLR 2283 at [10]. The discretion must be exercised in accordance with the overriding objective.

The jurisdictional tests in sub-rule (3)(a) and (b), namely whether the applicant and the respondent are likely to be parties to subsequent proceedings, are to be considered on the basis that such proceedings are brought. There is no additional requirement to show that such proceedings are themselves likely: see Black v Sumitomo Corp [2001] EWCA Civ 1819, [2002] 1 WLR 1562 at [71]-[72].

So far as the test in sub-rule (3)(c) is concerned, namely whether the documents sought would fall within the respondent’s duty of standard disclosure in such proceedings, Rix LJ stated in Black v Sumitomo :

“76: In general, however, it should in my judgment be remembered that the extent of standard disclosure cannot easily be discerned without clarity as to the issues which would arise once pleadings in the prospective litigation had been formulated. This Court touched on the question in Bermuda International Securities v KPMG [2001] Lloyd's Rep. PN 392, 397, paragraph 26, when Waller LJ there said that:

‘The circumstances spelt out by the rules show that it will only be ordered where the Court could say that the documents asked for will be documents that will have to be produced at the standard disclosure stage. It follows from that that the Court must be clear what the issues in the litigation are likely to be, i.e. what case the claimant is likely to be making, and what defence is likely to be being run, so as to make sure the documents being asked for are ones which will adversely affect the case of one side or the other, or support the case of one side or the other.’

77: It also seems to me to follow that if there would be considerable doubt as to whether the disclosure stage would ever be reached, that is a matter which the Court can and should take into account as a matter of its discretion.”

David Steel J held in Hutchison 3G UK Ltd v O2 (UK) Ltd [2008] EWHC 55 (Comm) at [44] that:

“The applicants have to show that it is more probable than not that the documents are within the scope of standard disclosure in regard to the issues that are likely to arise.”

Counsel for Big Bus submitted that the duty of standard disclosure for this purpose related to the proceedings as a whole, and not just the liability stage in the event that a split trial was ordered. He did not cite any authority in support of this proposition. Ticketogo’s solicitor did not dispute that this might be the correct approach in some kinds of case, but he submitted that it was not applicable to intellectual property cases such as the present one. I shall return to this question below.

In considering whether disclosure before proceedings is “desirable” in accordance with sub-rule (3)(d), a relevant consideration is the extent to which information is known only to one of the parties. In XL London Market Ltd v Zenith Syndicate Management Ltd [2004] EWHC 1182 (Comm) Langley J made an order for pre-action disclosure in litigation between the managing agents of various Lloyd’s syndicates. In relation to the test of desirability, he stated at [31]:

“In general, where the relevant information is held by the respondent and not otherwise available to the applicant, I think it is likely that if the first two tests are passed so will be the test of fairness.To determine if they have a claim and to formulate it, XL London and Brockbank need access to the second category of documents. I also think that disclosure will save costs. It will enable further investigation of the reserves to be focused rather than random. If a claim is made it can be expected to be presented with particularity.”

Similarly, in Birse Construction Ltd v HLC Engenharia e Gestao de Projectos SA [2006] EWHC 1258 (TCC) Jackson J (as he then was) stated at [44]:

“Paragraph 31 of Langley J's judgment in XL London Market Ltd seems to me to be in point. This is a case in which important information is held by the respondent and not otherwise available to the applicant. The present case is at the opposite end of the spectrum from First Gulf Bank. In that case the applicant had already obtained important information as a result of observing the related proceedings….”

Of particular relevance in this regard is Briggs & Forrester v The Governors of Southfield School for Girls [2005] EWHC 1734 (TCC), [2005] BLR 468. In that case the applicant had been accused in a letter of claim of breach of contract, namely that it had carried out an asbestos removal exercise badly, resulting in extensive contamination. The applicant accepted that there had been a breach, but it complained of the difficulty it faced in making an offer of settlement. It sought pre-action disclosure of a range of documents going to the quantum of the claim. It advanced the following complaint in evidence:

“… without the requested documentation, it is impossible for the proposed Defendants to quantify the proposed Claimants’ claim. If the proposed Defendants are unable to quantify the claim, it is also impossible to put forward a sensible offer of settlement, if so inclined, with a view to attempting resolution of the dispute and saving the costs of proceedings, possibly to arbitration or to trial.”

HHJ Coulson QC (as he then was) dismissed the application to the extent that it related to documents going to causation and remedial works, but he granted it insofar as it related to documents relating to quantum. As he explained at [43]:

“The documents in Part 3, A, B, C, E, F, H, J, N and O are of a different kind. They are documents highly relevant to quantum, and I shall refer to them hereafter as ‘the quantum documents’. Their disclosure plainly would satisfy both the grounds at r31.16(3)(d)(ii) and r31.16(3)(d)(iii). The application is therefore made out on the ground 31.16(3)(d) in respect of those quantum documents.”

In other words, disclosure of the quantum documents was desirable both in order to assist the dispute to be resolved without proceedings and to save costs. He went on to exercise his discretion in favour of ordering disclosure.

Ticketogo’s solicitor relied in his submissions on two older authorities on discovery in intellectual property cases. It is convenient to consider these, and two other authorities which were not cited in argument, before turning to the application of the principles set out above to the present case.

In Hazeltine Corp v British Broadcasting Corp [1979] FSR 523 the plaintiff sued the defendant for infringement of two patents and claimed an inquiry as to damages. The defendant denied infringement and contended that the patents were invalid. The patents were concerned with equipment used in both television transmission and reception, but the alleged infringement related only to transmission. The patents had expired in September and October 1970 and the action had been commenced in July 1976. Accordingly, the claim for infringement was in respect of, at most, a 10 week period.

The defendant feared that the costs of successfully defending the action would greatly outweigh any damages it might be called upon to pay if it lost. Since the plaintiff exploited its patents through licensing and not manufacture, the defendant thought it would be able to estimate its liability in damages if it had an idea of what a reasonable royalty rate would be. Accordingly, at the hearing of the application for directions, it sought discovery of all the licence agreements which the plaintiff had granted under the patents in suit and corresponding patents worldwide, whether in respect of reception or transmission, and all compromise agreements in respect of litigation in relation to such patents.

The plaintiff had voluntarily disclosed two agreements, one a licence agreement covering a large number of patents and providing for the payment of a running royalty, and the other a settlement agreement providing for a lump sum payment. The plaintiff resisted the order for discovery sought by the defendants on two grounds. The first ground was that the defendants were not entitled to discovery because the documents were not relevant to any issue on the pleadings given that the plaintiff sought an inquiry as to damages and the issues on liability had not been determined. The second ground was that the discovery should be refused in the exercise of the court’s discretion.

Whitford J did not reach a final conclusion on the first ground, but said this at 527-528:

“Although I am impressed with the case that is put by the plaintiffs, I should be reluctant to think that, in an appropriate case, the court was not able in fact to give a direction relating to discovery, which does touch an issue that is ultimately going to arise out of the action—damages—if, as a result of the order made, it might become entirely unnecessary for the parties to spend enormous sums of money and spend a great deal of time, because the whole proceeding could be brought to a relatively speedy conclusion.”

He went on to refuse the application on the second ground, holding that the discovery would be “extraordinarily burdensome” to the plaintiff, that it would not put the defendant in a substantially better position than the documents which had already been disclosed and that it would delay the trial.

In Baldock v Addison [1995] 1 WLR 158 the plaintiff, who was legally aided, claimed that the defendants had infringed his copyright in a musical work. He claimed an inquiry as to damages or an account of profits in the usual way. It was common ground that, as a result, there would as usual be a split trial with liability being determined first and quantum being determined only if the plaintiff was successful on liability. On the summons for directions the plaintiff nevertheless sought discovery on the issue of quantum. He argued that he needed such discovery to make an informed assessment of the value of his claim for three reasons. First, so that he could assess the merits of prosecuting his claim. Secondly, so that the legal aid authorities could make an informed decision as to whether to continue to support his claim. Thirdly, so that he could make an informed response to any offer of settlement.

The master ordered discovery on the issue of quantum. The defendants appealed to the judge, and on the appeal adduced evidence which gave an outline indication of the damages which the plaintiff might recover from the second defendant and which showed that the discovery as ordered would be a substantial exercise producing a disruptive effect on the second defendant’s business. It appears that the second defendant was the key defendant for these purposes.

The defendants relied on two grounds of appeal. The first was that the court had no jurisdiction to order discovery on the issue of quantum unless and until the issue of liability had been determined in the plaintiff’s favour. The second was that the court should exercise its discretion to limit discovery in that way.

Lightman J rejected the first ground of appeal, holding at 162:

“It is clear that in the case of all writ actions after close of pleadings under Ord. 24, rr. 1 and 2(1), in the absence of any agreement or court order to the contrary, each party is obliged to make discovery of documents relevant to all issues in the action, whether or not there is to be a split trial. The ambit of discovery extends to ‘matters in question in the action,’ and is not limited to matters in question at the first or any other stage. The extent of this obligation is confirmed — if confirmation was required — by the language of Ord. 24, r. 2(5), which enables a party subject to such an obligation in case of a split trial to apply for its abridgment and accordingly assumes the existence of the obligation to be abridged.

…

The jurisdiction of the court to enforce the obligation under Ord. 24, rr. 1 and 2(1) is conferred by rule 3(1). Likewise, the court is given jurisdiction to order, in proceedings outside the ambit of rules 1 and 2(1), discovery of documents ‘relating to any matter in question in the cause or matter.’ There is no limitation to matters in question at stage 1 of a split trial.”

He nevertheless allowed the appeal on the second ground, holding at 163:

“The court has a discretion in the case of a split trial whether or not to limit discovery to the issue of liability, but in my view in all ordinary cases the discretion will be exercised in favour of imposing that limitation. If discovery relating to quantum is not necessary at the stage of the issue of liability, it should not ordinarily be ordered. The parties should not unnecessarily be put to the cost and obligation of disclosure in respect of an issue that may prove academic. …

The rules contemplate that circumstances may justify an order for discovery of documents relevant to quantum, but they must I think be very special. All litigants have a legitimate interest in learning — so far as there is an available source of information — the amount in issue in the litigation. Such information assists in decision-making whether or not to proceed with an action or defence. But I cannot think that in any ordinary case this interest alone will be sufficient in a case of a split trial to justify the order for discovery. Nor can it be sufficient that the party in question is legally aided and requires this information to make a meaningful report to the legal aid authorities or to ensure that legal aid is granted or continued: a legally aided litigant for this purpose cannot be in a different position from any other litigant …”

Kapur v J.W. Francis & Co (unreported save in The Times, Court of Appeal, 9 February 1998) was not an intellectual property case, but I mention it for completeness and because it was cited in the next authority to which I shall refer. The claim was brought by a shopkeeper against insurance broker for losses sustained by the shopkeeper as a result of a fire following the repudiation by the shopkeeper’s insurer of the insurance policy for non-disclosure. The judge ordered a split trial. The broker appealed, seeking an order for a full trial. In the alternative, the broker sought an order that the plaintiff give discovery and answer interrogatories relating to quantum even if there was a split trial, in order to enable the broker to make an informed payment into court or settlement offer. The Court of Appeal dismissed the appeal.

Millett LJ, with whom Sir Brian Neill agreed, observed:

“In my judgment the power to order a split trial is exercisable for the purpose of enabling the trial to take place as economically as possible. Its principal purpose is the saving of unnecessary expense. Where quantum is a complex issue, which will not arise unless the Plaintiff succeeds on liability, it is normally desirable that the trial of quantum should be deferred until liability has been established, since otherwise unnecessary costs in relation to the issue of quantum will be incurred. It would often defeat the whole purpose of ordering a split trial if full discovery were ordered before liability was determined. As counsel for the Plaintiff asked rhetorically: Where would it stop? A defendant cannot make a fully informed payment into court or a fully informed offer of settlement unless he has seen the plaintiff's expert's report and possibly his witness statements.

In my judgment the primary question is: How should the trial best be conducted; the right course is to order whatever will be the most expeditious and economical mode of trial. Whether discovery, (whether general or limited) should also be ordered must in every case be a matter for the discretion of the judge. However, prima facie no discovery should be ordered of matters which relate to an issue which may never require to be tried. Enabling the defendant to make an informed payment into court must be a secondary consideration.

It is of course in the interests of the plaintiff that the defendant should make a sensible offer to settle and it will usually be in the plaintiff's own interests to provide sufficient information to the defendant to enable him to do so. In a proper case the defendant should ask for specific information or documents in order to enable him to make an informed offer of settlement. If the defendant asks the court to impose this as a term of ordering a split trial then it is for the defendant to specify the information which he requires and to justify it by satisfying the court that it would not be an onerous condition for the plaintiff to satisfy, that it would not be unduly wasteful of costs, and that the provision of the information would be of real assistance to the defendant to make a realistic offer of settlement. But I find it difficult to conceive of a situation in which it would be appropriate for the court to order general discovery of the plaintiff's documents on quantum in order to enable the defendant merely to ascertain the strength of the plaintiff's case with a view to making as low a payment into court as is practicable.

In the present case no specific information or documents were asked for. Before us counsel for the First Defendants confined himself to asking for the provision of accounts for the last two years before the fire. It may be in the Plaintiff's interests to supply them. It may be that if the First Defendants had asked the judge for them he would have ordered them. It probably depends on whether they are readily available and can be supplied without incurring much expense. But they were not asked for and, in my judgment, it would be wrong for this court to impose any such condition.”

In Unilin Beheer BV v Berry Floor NV (unreported, Patents County Court, 17 January 2003) the claimant sued the defendants for patent infringement. At the case management conference, the claimant sought an order that the defendants provide the claimant with information as to the volume of sales of an allegedly infringing product, the sale of which had ceased, made by or on behalf of each of the defendants. The claimant’s purpose in seeking the provision of this information was to enable it to assess the value of the claim in respect of that product in order to decide whether it was worth pursing. The claimant intended to pursue a claim in respect of a different product in any event.

Having referred to Baldock v Addison and Kapur v Francis, His Honour Judge Fysh QC ordered the defendants to provide a “broad outline” of the amount of the product sold, holding that this was in accordance with the overriding objective and would not be burdensome for the defendants.

Sub-rule 3(a) and (b). These tests are plainly satisfied. Ticketogo is the proprietor of the Patent and Big Bus is an alleged infringer of the Patent. If there are proceedings for infringement of the Patent, then they will both be parties to those proceedings. I would add that, although it is not necessary for Big Bus to show that such proceedings are likely, in my judgment they are likely. The tenor of the recent correspondence from Ticketogo’s solicitors is that, unless Big Bus agrees to take a licence soon, Ticketogo will bring proceedings against it for infringement.

Sub-rule 3(c). As noted above, counsel for Big Bus submitted that the duty of standard disclosure related to the proceedings as a whole. He further submitted that, given that Ticketogo exploited the Patent by licensing, the correct approach to the quantification of damages for infringement of the Patent was that summarised in Terrell on the Law of Patents (17^th ed) at 19-43 (footnote omitted):

“Where the patentee grants licences

Patentees derive their remuneration in respect of their inventions either by utilising their monopoly rights to enable them to obtain increased profits as manufacturers, or by permitting others to use their inventions under licence in consideration of royalty payments. In the latter case, the determination of the damages accruing from infringements is usually a relatively simple matter, it being generally assumed that the damage is equal to the amount which the infringer would have had to pay had he had a licence upon the terms normally granted by the patentee.”

As is well established, this involves consideration of licences which are comparable, particularly in terms of the activity licensed, to the licence which the defendant ought to have had. If there are licences which are similar, but not exactly comparable, then it may be necessary for an adjustment to be made to reflect the respects in which they differ.

Ticketogo’s solicitor submitted that this test was not satisfied for three reasons. First, if Ticketogo brought proceedings for infringement of the Patent against Big Bus, it would claim an inquiry as to damages alternatively an account of profits and there would be a split trial. If Ticketogo was unsuccessful on liability, whether because it failed to establish that Big Bus’ system fell within the clams or because the Patent was held invalid, then there would be no proceedings to determine quantum and therefore there would be no question of disclosure of documents relating to quantum. In support of this submission, he relied on Hazeltine v BBC and Baldock v Addison. Secondly, even if Ticketogo was successful on liability, it might elect for an account of profits, and in that event the licence agreements would not be relevant. Thirdly, even if Ticketogo elected for an inquiry as to damages, it was not the case that all of the licence agreements would be disclosable: at most, only a sub-set would be disclosable.

In my judgment this test is satisfied, but only in relation to a sub-set of the documents sought by Big Bus. So far as Ticketogo’s first point is concerned, it is not inevitable that there would be a split trial. Although a split trial is usual, the court would have power to direct that liability and quantum be tried together. Even if there was a split trial, Lightman J’s analysis in Baldock v Addison shows that, under the RSC, the obligation to give discovery extended to documents relating to quantum even if there was a split trial, unless the court made an order to limit discovery (which he considered that it normally should do in the exercise of its discretion). Hazeltine v BBC and Kapur v Francis are consistent with this. In my view the position is the much the same under the CPR. Under CPR rule 31.6, standard disclosure extends to documents which adversely affect the disclosing party’s case or support another party’s case. That includes their case on quantum, which in the present case would include their case as to the damages payable on an inquiry as to damages. Of course, CPR rule 31.5(8)(f) empowers the court to order disclosure in stages, which includes ordering disclosure only in relation to liability in the first instance, but that depends on the exercise of the court’s discretion. The fact that the court will normally exercise its discretion in favour of staged disclosure does not undermine the proposition that, in principle, the duty of standard disclosure extends to documents relating to issues as to quantum. Unilin v Berry is consistent with this.

So far as Ticketogo’s second point is concerned, in my view it is irrelevant that, in theory, Ticketogo might elect for an account of profits. The court has to consider the issues that are likely to arise. I consider it more likely that Ticketogo will elect for an inquiry as to damages than an account of profits, since if it opts for the latter it will have to show that the use of the patented system was the cause of Big Bus’ profits rather than the occasion for them. When I asked Ticketogo’s solicitor whether Ticketogo would be prepared to undertake only to seek an account of profits in any claim against Big Bus, unsurprisingly his answer was no.

As for Ticketogo’s third point, counsel for Big Bus submitted that, prima facie, all licences granted under the Patent would be relevant on an inquiry as to damages and should be disclosed. He made it clear, however, that Big Bus was prepared to consider any proposals by Ticketogo for disclosure of a suitably representative sample of licences. For his part, Ticketogo’s solicitor submitted that, even if one assumed that Ticketogo was successful on liability and elected for an inquiry as to damages, the only licence agreements that would be disclosable would be those structured as a “fee per ticket”. In my view it cannot be concluded at this stage that all 60 or so licences granted by Ticketogo under the Patent are sufficiently comparable that they would fall within Ticketogo’s duty of standard disclosure on an inquiry as to damages. Equally, however, I do not accept that that duty would be limited to licences structured on a fee per ticket basis. Licences structured on other bases, such as the payment of a lump sum royalty or a royalty calculated as a percentage of turnover or profits, would also be sufficiently comparable, and hence sufficiently relevant, to be disclosable. At this stage, and in the absence of any evidence from Ticketogo regarding the licences it has granted, I consider that the duty of standard disclosure would extend to all licences in the transport sector. I bear in mind that many of these relate to rail transport as opposed to bus or coach transport, but nevertheless I consider that these are sufficiently comparable to be disclosable. By contrast, I am not satisfied at present that licences in the entertainment sector are sufficiently comparable.

Sub-rule 3(d). Counsel for Big Bus submitted that disclosure was desirable for all three reasons listed in the sub-rule, but in particular the second and third reasons. He observed that experience showed that, all too often, parties to intellectual property disputes spent large sums of money litigating issues on liability when the costs incurred were entirely disproportionate to what was at stake in terms of the quantum of the claim. I entirely agree with this observation. Two recent examples of this from my own case load are Force India Formula One Team Ltd v 1 Malaysia Racing Team Sdn Bhd [2012] EWHC 616 (Ch), [2012] RPC 29 and Primary Group (UK) Ltd v Royal Bank of Scotland plc [2014] EWHC 1082 (Ch), [2014] RPC 26. A number of recent decisions of His Honour Judge Hacon show that this phenomenon even extends to litigation in the Intellectual Property Enterprise Court. Accordingly, so counsel submitted, it was desirable for parties to be able to make a realistic assessment of the value of the claim at the earliest possible stage. In a case such as the present, where the key information concerning the value of the claim was held by one party, then it was desirable for that party to be required to disclose that information by way of pre-action disclosure. That would place the parties on an equal footing, would enable both parties to make an informed assessment of whether the claim was worth litigating at all and would promote settlement of the dispute without resort to proceedings. In support of this submission, he relied upon Briggs & Forrester. Even if proceedings were commenced, he submitted, knowledge of the value of the claim would be a key tool in enabling the proceedings to be case managed in a proportionate manner (which might include, for example, deciding whether any claim brought in the Patents Court should be transferred to the Intellectual Property Enterprise Court or vice versa). In this regard, he pointed out that both Hazeltine v BBC and Baldock v Addison were decided prior to the Woolf reforms, and perhaps more importantly, prior to the Jackson reforms, with their emphasis on proportionality, which was now incorporated as part of the overriding objective (see CPR rule 1.1).

Ticketogo’s solicitor disputed that this test was satisfied, essentially for the same three reasons that he contended that sub-rule 3(c) was not satisfied. He also relied on certain additional matters which in my view are more conveniently considered in the context of discretion.

In my judgment this test is satisfied for the reasons advanced by counsel for Big Bus. I would add that in both Hazeltine v BBC and Baldock v Addison some documents or information as to quantum had been volunteered by the party against whom discovery was sought, that in Kapur v Francis the Court of Appeal was sympathetic to the proposition that limited discovery should be given and that in Unilin v Berry limited disclosure was ordered. Thus the courts have recognised the desirability of some disclosure as to quantum being given at an early stage. What the courts have resisted is the expense of full disclosure of documents relating to quantum being given prior to liability being established in cases where a split trial has been or is likely to be ordered, which would defeat part of the object of a split trial.

Counsel for Big Bus submitted that the court should exercise its discretion to make the order for pre-action disclosure for the same reasons that he contended that sub-rule 3(d) was satisfied. Furthermore, he submitted that the class of documents of which disclosure was sought was a tightly circumscribed one which would not be burdensome or costly for Ticketogo to disclose. With regard to inspection of the disclosed documents, he acknowledged that both Ticketogo and the third party licensees might contend that information contained in the documents (particularly the commercial terms) was confidential, but he pointed out that the order proposed by Big Bus addressed this by providing for a confidentiality club to be established, which in the first instance would only include Big Bus’ legal representatives.

Ticketogo’s solicitor submitted that the court should exercise its discretion to refuse the application for the same reasons as he relied on in relation to sub-rules 3(c) and (d). As noted above, he also relied on certain additional matters.

Ticketogo’s solicitor did not submit that it would be burdensome or costly for Ticketogo to disclose the licences, but he did submit that it would be time-consuming and costly for Ticketogo to seek the third parties’ consent to inspection. I do not accept this. All it would require is a letter in standard form to be sent to all relevant licensees notifying them of their right to object to inspection and inviting them to communicate any objections to Big Bus’ solicitors. After that, the onus would be on Big Bus to address such objections, for example by agreeing an appropriate confidentiality club.

More importantly, Ticketogo’s solicitor asserted that Ticketogo’s existing licensees had entered into licences without the benefit of disclosure of the kind sought by Big Bus. This assertion has not been substantiated by evidence from Ticketogo, but nevertheless I will assume that it is correct. He then submitted that, as he put it in supplementary written submissions following the hearing, “the Applicant can form its own view of the commercial value [of the claim] … and pre-action disclosure … impinges heavily on the freedom of negotiation ordinarily enjoyed in commerce by parties and confidences they may have”. This submission needs unpicking a little. As I see it, there are two points being made.

The first point is that Big Bus can form its own assessment of the value of the claim, based on its own knowledge of its system, its use of that system and its commercial position and on any professional advice it may care to obtain. I am unimpressed by this point, because Big Bus does not presently have access to the key information which the court would take into account on an inquiry as to damages, namely the terms of comparable licences granted by Ticketogo to third parties. It is no answer to this to say that the third parties negotiated their licences without the benefit of such disclosure. With the exception of the first licensee to take a licence, they could have made similar applications to that now made by Big Bus. Why should Big Bus have to fight and lose on infringement and validity in order to find out what it would have to pay by way of damages?

The second point is that the order would unjustifiably infringe Ticketogo’s “freedom of negotiation”. What does this mean? As I understand it, the point being made by Ticketogo’s solicitor is that, for a party in the position of Ticketogo, it is desirable to be able to negotiate licences individually with licensees without each licensee knowing what other licensees have agreed to pay. This will enable such a party to maximise the licence income it obtains from each licensee. In my view this is the real point of principle raised by this application: is it an answer to an application for pre-action disclosure that is otherwise well founded that it would deprive a patentee (or other right owner) of the ability to conduct its business in that manner? In my judgment, it is not. On the contrary, I consider that, here as in other contexts, transparency is a virtue. Availability of price information is one of the key requirements for the proper functioning of any market, and I see no reason why the market for patent licences should be an exception to that rule. Why should Big Bus be obliged, if it does not wish to litigate, to accept whatever royalty rate Ticketogo now sees fit to offer it, if a court would award less by of damages? Accordingly, I consider that it is appropriate to exercise my discretion in favour of disclosure.

Finally, Ticketogo’s solicitor submitted that, if disclosure was ordered against Ticketogo, it should also be ordered against Big Bus. In this regard he pointed out that, by letter dated 10 April 2015, Ticketogo had sought disclosure by Big Bus of the quantity of Big Bus’ ticket sales online since the Patent was published and information regarding the profits earned per ticket sold online. Counsel for Big Bus pointed out that this request had only been made shortly before the hearing and that there was no cross-application by Ticketogo before the court, and he reserved his clients’ position regarding the ambit of the disclosure sought; but he accepted that, in principle, what was sauce for the goose was sauce for the gander. I would encourage the parties to try and reach an agreement in this respect.

For the reasons given above, I conclude that the jurisdictional tests in CPR rule 31.16(3) are satisfied in relation to licences under the Patent granted to licensees in the transport sector and that I should exercise my discretion to make an order for pre-action disclosure of such licences.