Infringer must pay – despite patent invalidity, says UK court

The patent covered the laying of flexible "flowlines" on the ocean floor, which are used to carry oil. In 1996, patent holder Coflexip SA sued Stolt Offshore and other companies in its group, alleging infringement. Stolt argued that the patent was invalid, on the grounds of prior art.

In 1999 the High Court decided that the patent was valid and that Stolt was guilty of infringement. It granted an injunction prohibiting Stolt from infringing the patent and ordered an inquiry to calculate the appropriate sum of damages.

Stolt appealed and tried to put further evidence of prior art before the court, but in 2000 the Court of Appeal dismissed both the appeal and the request to show additional evidence. The inquiry into damages continued – and Coflexip currently claims around £80 million.

However, in 2002, another company, Rockwater Limited, took Coflexip to court, claiming that the patent was invalid. In 2003 the High Court agreed, finding that the patent was invalid because of the existence of prior art – where the feature being patented is in the public domain at the time of application.

Stolt then asked the court to stay the inquiry into damages while Coflexip appealed the Rockwater ruling, but this was refused last July when Justice Laddie ruled that the revocation would not help Stolt in the inquiry or result in the discharge of liability for damages.

Stolt appealed that ruling and on 27th February the Court of Appeal issued its majority verdict that Stolt was still liable, despite the revocation.

Lord Justice Peter Gibson and Sir Martin Nourse reasoned that if the appeal were allowed it would reverse the principle of finality in litigation. This provides that a case, once decided, cannot be reopened.

The two judges were of the opinion that the prior art, which had resulted in the revocation of the patent, had been there to be found at the time of Stolt's action. Stolt had not shown "that they could not with reasonable diligence have found" the appropriate evidence in time for the original trial. Accordingly Stolt could not now produce further evidence "directed to showing that the issue was wrongly determined".

The judges added, "We, of course, take note of the very substantial sum claimed by Coflexip in the inquiry, but against the private interest of Stolt must be set the public interest in finality of litigation." The appeal was refused, together with the request to stay the damages inquiry.

In his dissenting opinion Lord Justice Neuberger, considered that there was:

"a real argument to the effect that the finding of validity and infringement in the first judgment should not prevent Stolt from relying on the subsequent revocation of the Patent on grounds of res judicata [meaning 'the thing has been judged' – i.e. the issue before the court has already been decided by another court]. The revocation is a fact which only came into existence after the first judgment, so that it could not have been relied on before the first judgment, and it is retrospective in its effect, and so, it may be said, no damage can have been suffered by Coflexip at the dates of the acts of infringement."

The case is likely to be appealed to the House of Lords.