I N Newmans Ltd. v Richard T Adlem [2004] EWHC 1563 (Ch)

Case No HC 03 C01066[2004] EWHC 1563 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Venue Royal Courts of Justice, Strand, London WC2A 2LLDate 28 July 2004
Before
MR DAYIDYOUNG QC
Between
SECRETARY OF STATE FOR EDUCATION AND SKILLSClaimant- v -
Between
FRONTLINE TECHNOLOGY LIMITEDDefendant
MR R ARNOLD QC and MR R DAVIS (instructed by The Treasury Solicitor) appeared for claimantMR M HOWE QC and MS F CLARK (instructed by Olswang) appeared for defendantHearing Hearing date: 13 July 2004
JUDGMENT
[1]Following my judgment of 17 June 2004 in which I held that claims 1 and 2 were invalid for lack of inventive step in view of certain prior art referred to as Kingshurst but that claim 7 was valid, on 13 July I heard argument as to the appropriate terms of order to be made. Neither party sought leave to appeal from the judgment but there was a substantial argument by counsel as to the appropriate order as to costs.[2]As Mr Arnold QC for the claimant submitted there are two broad areas of dispute namely first the precise principles to be applied and secondly the detail as to how they should be assessed once the correct approach has been determined.[3]I was helpfully referred to two cases regarding the approach I should adopt. In Apotex Europe Ltd v Smith Kline Beecham [2004] EWCH 964 (Ch) Mr Justice Pumfrey examines the provisions of CPR rule 44.3 in paragraphs 9 to 13 of his judgment which can be summarised as follows:(1) the starting point is the general rule that the unsuccessful party will be ordered to pay the costs of the successful party (rule 44.3(2)).(2) the court will have regard to all the circumstances and in particular the matters set out in rules 44.3(4) and (5) namely (in this case) the conduct of the parties and the extent that a party has succeeded if not wholly successful.(3) Where the court wishes to make an order for costs relating only to a distinct part of the proceedings under rule 44.3(6)(f) then it is encouraged to make an order that a party must pay a proportion of another party’s costs (rule 44.3(7)).(4) If it is decided to make an order for costs on an “issue based” assessment it is appropriate to formulate the assessment in terms of a percentage recovery.(5) A party successful on the issue of invalidity will not generally recover its costs of the objections to validity that failed unless they are so tied in with the successful objections that it would not be fair to treat them differently (Pumfrey J para 11).(6) A successful party may but not must have to pay the unsuccessful patentee’s costs of the issues upon which it fails if those issues were unreasonably raised and persisted (Pumfrey J para 11).[4]Mr Justice Pumfrey went on to point out that the issue based assessment in terms of a percentage recovery is necessarily more rough and ready than a detailed assessment. He also states (para 13) that in that case where Apotex had succeeded both on validity and infringement the successful party is assumed to recover all its reasonable costs of the action and that the percentage deduction is made from the overall costs.[5]Mr Howe QC for the defendant referred me to an earlier decision of the Court of Appeal, Summit Property Ltd v Pitmans [2001] EWCA Civ 2020. In that case, which preceded the present rule 44.3(6)(f) and 44.3(7), an unusual order was made by the trial judge in favour of the unsuccessful party. Longmore LJ referred to Lord Woolf's well known remarks in Phonographic Performance Ltd v AIE Rediffusion Ltd [1991] 1 WLR 1507 where he points out that the most significant change of emphasis of the new rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. Lord Woolf continued:
“It is now clear that a too robust application of the ‘follow the event principle’ encourages litigants to increase the costs of litigation since it discourages litigants from being selective as to the points they take.”
Longmore LJ states with reference to Lord Woolf’s observations:
“In my judgment it is also no longer necessary for a party to have acted unreasonably or improperly before he can be required to pay costs of the other party of a particular issue on which he (the first party) has failed. That is the substance of what the Master of the Rolls was there saying.”
Reference was also made by Longmore LJ to the case of Johnson Estates (1990) Ltd vSecretary of State for the Environment [2001] EWCA Civ 6535 where in setting out the principles applicable to that case Chadwick LJ stated that:
“the judge may make different orders for costs in relation to discrete issues — and in particular should consider doing so where a party has been successful on one issue but unsuccessful on another issue and in that event may make an order for costs against the party who has been generally successful in the litigation.”
Longmore LJ states the principle as follows:
“if it is appropriate to consider costs on an issue basis at all, it may be appropriate in a suitably exceptional cases to make an order which not only deprives a successful party of his costs of a particular issue but also an order which requires him to pay the otherwise unsuccessful party ‘s costs on that issue without it being necessary for the courts to decide the allegations have been made improperly or unreasonably.”
[6]It is common ground that I should adopt the approach of Mr Justice Pumfrey, namely to apportion costs on an issue by issue basis relating such issues to the percentage of time taken at the trial. It was not suggested that any different apportionment should be applied to the pre trial costs incurred by the parties. In approaching the question of where such costs lie, I shall adopt the statement of principle of Longmore LJ referred to above, namely in an exceptional case costs may be awarded in favour of an unsuccessful party without it being necessary to decide whether the allegations on which the successful party has lost have been made improperly or unreasonably.

Overall considerations

[7](1) Mr Arnold for the claimant contends that he is the successful party and in so far as he has succeeded in invalidating the broad (conceptual) claims 1 and 2, he is correct. Mr Howe for the defendant who as I have already indicated does not seek leave to appeal also considers he has succeeded in securing the validity of claim 7. Claim 7 which is appendant to claims 1 or 2, 3 or 4 and 5 or 6 is to a combination of features which relate at least in the earlier days to the commercial embodiment. There is no evidence before me as to the degree of success of the defendant or indeed the claimant in terms of the impact on the market. All that can be said is that the removal of claims 1 and 2 opens up the possibility of others devising radio attendance registration systems which do not embody the combined features required by claim(2) As I indicated in my judgment the claimant in its attack on the validity of claims 1, 2 and 7 raised a plethora of grounds and have only succeeded on one of those grounds namely lack of inventive step of claims 1 and 2 in view of Kingshurst.(3) The trial lasted some 2 weeks with 9 days of evidence. I consider that even by the standards of patent actions there was a serious overloading of the grounds of attack with little attempt to limit the issues. I have in mind in particular the duplication of the grounds of attack with regard to both Kingshurst and SIMS as explained hereafter and also the allegations of intervening use of the EARS system in respect of a number of schools, none of which were found by me to add to the originally pleaded use at Brentford School.(4) Mr Howe also contended that there was an unwarranted attack by the claimant on the truthfulness of Mr Tigin Guryel, Mr Bartlett and Mr Aker in connection with the development phases of the Bromcom EARs system. All matters which had to be resolved after full consideration of both parties submissions and were resolved by me in the defendant’s favour.(5) Mr Arnold made some criticism of the late admissions made by the defendant relating to the EARS prior uses which he contended were also advanced in a previous action to which the defendant was a party. What remained in issue were questions firstly as to what extent were the pleaded uses confidential and secondly whether the information imparted by such use was an enabling disclosure. Whilst I found largely in favour of the claimant on these issues, I do not consider the conduct of the defendant was such as would otherwise require some special costs order. Mr Arnold also referred to the defendant’s late concession regarding the independent validity of subsidiary claims 3 to 6 which it had previously asserted. However it was accepted by both counsel that this could be appropriately dealt with by a special order that the defendant should pay the claimant’s costs occasioned by such assertion.(6) As stated above, the claimant’s attack was only partially successful, namely having regard to claims 1 and 2 but not claim 7 The primary attack on claim 7 which it was accepted by the defendant was not entitled to the earlier priority date related to the “intervening” EARS use with particular reference to EARS Mark 2 It follows that quite apart from the unsuccessful grounds of attack against claims 1 and 2 there was the separate and entirely unsuccessful attack on claim 7.

Detailed consideration of issues

[8]The claimant has helpfully provided a table (Table 1) appended hereto which apportions the time taken and the percentage of the total time of the hearing in respect of each of the main issues. The defendant has produced a separate table which allocates the time into issues which include not only those identified by the claimant but also further categories. However, in the defendant’s table no allocation or apportionment by issues is given to either opening or closing speeches. Considering the issues in the order set out in Table 1.(1) General background and common general knowledge This issue relates to the general background to the relevant art, the construction of the patent, the relevant team of persons skilled in the art and the knowledge to be imputed to them (common general knowledge). The claimant contends that all of these matters are tied in with their successful attack based on Kingshurst and therefore the defendant should pay 17 per cent out of a total of 19 per cent allocated to this issue. 2 per cent is allocated to claim 7. The defendant contends that had the attack been limited to claim 7, it would have been necessary to have investigated all or most of these matters. In other words they are common to both claims 1 and 2 on the one hand and claim 7 on the other hand. These differences of approach are based on how one categorises who is the successful party. Whilst I accept Mr Arnold’s contention that he was successful vis-à-vis claims 1 and 2 and therefore in principle the defendant should pay the claimant’s costs with regard to this issue I consider the claimant’s allocation of only 2 per cent in respect of claim 7 does not do justice to the fact that the background matters and common general knowledge issues were also relevant to assessing the validity of claim 7 which included an investigation of the features of claims 3 to 6. There was also certain background matter, namely who were the relevant skilled persons or team which were resolved against the claimant. Applying a broad approach I consider that the 19 per cent should be discounted to a figure of 15 per cent rather than the 17 per cent suggested by the claimant.(2) Kingshurst There is no disagreement that as the claimant was successful on this issue the defendant should pay the claimant’s costs. The issue is whether the 15 per cent allocated is the correct figure. The defendant has estimated that the hours spent on Kingshurst were only 3½hours (compared with the claimant’s 8¾ hours). However importantly the server/workstation architecture of Kingshurst was accepted to be the same as that of the SIMS system and was dealt with by the experts in the context of SIMS. I consider that the claimant’s readjusted allocation of 15 per cent for both Kingshurst and SIMS to be a fair division of the time spent on these two issues.(3) SIMS As I observed in my judgment, given the acceptance of the prior use of Kingshurst, it was difficult to see why the SIMS use was pursued. It added nothing to Kingshurst and was far less relevant relating as it did to paper based systems read by an OMR device. I do not consider it was reasonable to pursue this attack which in so far as it was relevant, merely duplicated the server/workstation architecture of Kingshurst. In the circumstances I consider that claimant should pay the defendant the 15 per cent of its costs allocated to this issue. This, however, is subject to the question of costs incurred by the defendant in relation to the experiment they performed in seeking to establish the volume of network traffic in SIMS Attendance 3.1. As explained in paragraph 75 of my judgment the precise amount of traffic was not material and the experiment was irrelevant to the issues the court had to decide. Whilst it is true that little court time was spent on the experiment, I do not have details in percentage terms of time spent by the defendant on the experiment. I consider that the appropriate order should be that the defendant pay the claimant the costs it has incurred relating to the experiment, a matter considered hereafter in relation to the question of reserved costs.(4) SYMBOL This was a discrete issue relating to claims 1 and 2 which failed. It had no overlap with the Kingshurst based attack. The claimant contends that no order for costs should be made whilst the defendant contends that as it was successful the claimant should pay its costs in relation to this issue. I consider that it was reasonable to rely on SYMBOL relating as it did to a radio communications network system for capturing data. It was helpful in showing the differences between such specialised systems and the general wireless LAN systems. I consider that the fair order on this issue should be no order as to costs.(5) Documentary prior art Originally the claimant relied upon four publications which was reduced to two by the time of hearing, namely Gombrich and Nobles. Neither citation was successful; neither could be said to relate to any other ground. I do not consider it was reasonable to rely and persist in relying on either of these citations and that the claimant should pay the defendant’s costs relating to this issue which is estimated by both sides as 3 per cent of the time taken.(6) Obviousness in view of common general knowledge The claimant’s table does not allocate time taken over this issue. However, the defendant has allocated a period of 46 minutes (1 per cent of trial time). Given that it was necessary to investigate the extent of knowledge of the relevant skilled persons, although the claimant failed on this issue, I consider the proper order should be no order as to costs. (7). EARS intervening use This topic can be divided into three parts.a. Priority Date This related to claims 1 and 2 only. The claimant failed.b. EARS Mark 1 This related to Brentford and had the priority attack succeeded claims 1 and 2 would have been held to be invalid over Brentford. However any obviousness attack relating to claim 7 would have failed.c. EARS Mark 2 A number of other uses of EARS at various schools were relied upon unsuccessfully to seek to show that claim 7 was anticipated. The schools or colleges involved were St John Bosco, Spennymoor and Wilberforce. Whilst the priority date issue purely related to claims 1 and 2, other than Brentford the major thrust of the intervening use was directed to claim 7 on which the claimant failed. I have no doubt that the defendant should have the major share of the costs incurred relating to the EARS intervening use. The defendant has broken down the 17 ¼ hours spent on these three topics and I consider the appropriate split between claims 1 and 2 on the one hand and claim 7 should be 10:20. Given that the defendant was the overall winner on the priority/EARS issue I consider that the claimant should pay 20 per cent of the defendant’s costs. Summary[9]The overall position regarding recovery of costs is that there should be a net payment by the claimant in favour of the defendant of 8 per cent of the defendant’s reasonable costs (to be taxed if not agreed). This figure is however subject to the following orders I propose making in relation to the question of reserved costs.

Reserved costs

[10](1) On 4 February 2004 I gave judgment relating to two applications regarding the admissibility of evidence proposed to be adduced. (a) The first application dated 13/14 January was an application by the claimant to exclude parts of the defendant’s evidence. The hearing took some two days in court and was only partially successful. It failed in seeking to exclude evidence relating to the common general knowledge of certain witnesses (Stephenson, Christoffersen, Bryant, Williams and McDonnell) regarding wireless LAN systems. Indeed this evidence was relied upon by me in my judgment. However it largely succeeded with regard to the exclusion of evidence relating to commercial success, truancy and certain miscellaneous matters. The claimant also unsuccessfully objected to the evidence of Mr Ashley Wright, one of the two IT experts nominated by the defendants, on the ground that it duplicated evidence by Mr Copeland the defendant’s main expert. Whilst the court time taken for the hearing of these matters was overly long, to the extent that the defendant succeeded (about 50 per cent of evidence sought to be excluded was excluded) I consider that the defendant should pay 50 per cent of the claimant’s costs of this application. (b) The second application was an application by the defendant dated 28 January which sought inter alia to exclude certain evidence put forward by the claimant. This part of the application was unsuccessful. Indeed evidence relating to Kingshurst given by Mr Latham and Mr Lynch which was sought to be excluded as being duplicative was referred to in my judgment. However, the evidence of Mr Mason and Valerie Slaughter which was also sought to be excluded was not relied upon by me. In addition to the above as part of the defendant’s application, the defendant unsuccessfully sought leave to rely on a supplemental report of Mr Copeland in relation to certain experiments relating to the SIMS Attendance module. Leave was refused because the defendant had failed to comply with Practice Direction (Part 63) para 9.1. I consider that the defendant should pay 75 per cent of the claimant’s costs of the second application.(2) On 5 March 2004, the defendant applied successfully for leave to adduce evidence relating to an experiment relating to the measurement of the volume of network traffic on Attendance 3.41. As I have already indicated I did not find the experiment of any probative value. It did not require any experiment to decide that in running Attendance 3.41 there was a large amount of traffic not related to attendance gathering, the precise amount was not material. Given the lateness in which permission was sought to adduce this experimental evidence (following on from my refusal to allow it on 4 February 2004) and its lack of probative value I consider the proper order is that the defendant should pay the claimant’s costs of this application as well as the costs incurred in witnessing a repeat of the experiment and the costs of adducing evidence by Dr Jones in response. This order does not include costs relating to any rebuttal experiment the claimant may have performed which was not the subject of Dr Jones’s evidence. I understand that in the course of the hearing of the above application, the claimant sought unsuccessfully to exclude a further experiment relating to the Attendance module. I was informed that the matter was conceded by the defendant. I do not propose to make any special order regarding this matter.

Mr Wright

[11]Mr Arnold contends once again that the evidence of the defendant’s second expert was duplicative of Mr Copeland, the main expert and as such the defendant should not be entitled to any costs relating to his evidence. Mr Ashley Wright was in 1992 the technical director of Nord Education Ltd, suppliers of computer solutions to schools and colleges. His evidence as both an IT expert and one involved in the educational field differed from Mr Copeland in that Mr Copeland had no educational expertise. Mr Wright’s evidence dealt with the claimant’s ground of attack that claims 1, 2 and 7 were obvious in view of the common general knowledge. He also gave evidence relating to the teaching of the Priority Document. I found his evidence was of considerable assistance and refer to it in paragraphs 23, 26, 68, 70 and 85 of my judgment. Mr Arnold contends that because most of Mr Wright’s evidence supported the claimant’s case that somehow the costs relating to such evidence should be disallowed. Experts if they are providing appropriate impartial assistance to the court may assist one party or the other. I do not accept Mr Wright’s evidence was duplicative of Mr Copeland’s evidence and reject Mr Arnold’s request.

Conclusion on costs

[12]The claimant must pay the defendant 8 per cent of the defendant’s reasonable costs in respect of the action less the following:(a) 50 per cent of the claimant’s costs of its application dated 13/14th January 2004;(b) 75 per cent of the claimant’s costs of the defendant’s application dated 28 January 2004 (save in so far as it related to the amendment of the defence);(c) the claimant’s costs of the defendant’s application dated 1 March 2004;(d) the claimant’s costs of inspecting the defendant’s experiment the subject of (c) together with the cost of adducing the evidence of Dr Jones in response to such experiment;(e) the claimant’s costs in so far as they have been increased by the late concession that if claims 1 and 2 were invalid, claims 3 to 6 were not independently valid: All costs to be taxed if not agreed.[13]As regards the costs of this hearing regarding the terms of the order and the order as to costs I propose to make no order.