Groundless patent threat over wine tap leads to Smurfit payout

Out-Law News | 30 Jun 2008 | 6:04 pm | 2 min. read

Packaging firm Smurfit must pay a rival damages because it made groundless threats about a patent infringement lawsuit to one of its rival's customers.

The dispute centred on tap designs for bag-in-a-box wine packaging. Smurfit told a customer of rival DuPont that it had a patent which its competitor was infringing, which caused the customer to slow down in its introduction of DuPont's tap systems.

The High Court agreed with DuPont's claim that Smurfit's actions slowed the process down and awarded damages for lost earnings for that slowdown. The companies will attempt to agree what those damages are.

The tap in question was DuPont's first attempt at making a wine box tap. Smurfit had been for some years been making the Vitop tap for some years, which was seen as effective but expensive.

DuPont started to create the Liqui-sure tap and in 2003 agreed with wine distributor Constellation that it would use the new tap as long as tests produced acceptable results.

Those tests proceeded for two years and it was not until June 2005 that Smurfit told Constellation that it would take action over the tap, which it believed infringed a patent it held for the Vitop tap.

Monsieur Didier Pontchar of Smurfit told Constellation that it would take action if the taps were used commercially, confirming a conversation later in an email which said: "it is our lawyers' opinion that European patent infringement as well as unfair competition could be sufficient reasons for us [to] counter this threat in court," said the email. "According to him, we could immediately initiate seizure of stock of wine BIB  [Bag in Boxes] with counterfeit taps in supermarkets and bars. These distributors would, we assume, seek compensation relative to their wine supplier who is responsible for goods sold."

“Although the ensuing legal battle might take time, we would have the right to intervene to defend our product and to initiate further seizure of stock, while awaiting the final outcome through the courts," he claimed.

Smurfit's patent claim was eventually tested in court. The High Court found that the patent was valid, but that DuPont's invention did not violate it. DuPont then sued Smurfit for making a groundless threat that interfered with its business.

Smurfit at first contested that the threat had any effect, but went on to concede that it did, but that the effect was not as serious as DuPont claimed.

Roger Wyand QC, sitting as a Deputy High Court Judge, said that the threat of patent litigation did affect Constellation's adoption of DuPont's tap, and that it would have been used earlier but for the threat of litigation.

He also said that he had to consider the fact that the tap was developed more slowly and as a lower priority because of the threat of litigation, so the gap between when it might have been finished without litigation and when it was actually used had to be estimated.

"The question is whether, if the project had not been accorded low priority, that date would have been earlier. On the evidence, I believe that it would," he said.

He said that one of the wine ranges would have started using the tap four months earlier if the development had not been slowed, and that another Constellation range would have taken the taps five months earlier.

The judge laid out some of the factors affecting what Smurfit should pay DuPont and left the two companies to negotiate a settlement, saying that he will hear arguments on one if it cannot be reached.