Unilever Plc v The Procter & Gamble Co

Genuine without prejudice negotiations are protected so that parties may speak freely when seeking settlement. That protection is not displaced merely because a statement made in the negotiations might otherwise constitute a statutory patent threat. The recognised exceptions remain narrow, and an alleged threat made at a bona fide settlement meeting is inadmissible unless an established exception applies, including unequivocal abuse of the privileged occasion.

A claimant also cannot ordinarily obtain a declaration of non-liability under the general declaratory jurisdiction unless the defendant has asserted a relevant adverse claim of right. In patent cases, the specific statutory route for declarations of non-infringement reinforces the need for caution.

Unilever appealed against Laddie J’s order striking out, as an abuse of process, its claim against Procter & Gamble. The claim relied on an alleged statement at a Frankfurt meeting, held on an agreed without prejudice basis during wider settlement discussions. Unilever alleged that the statement threatened United Kingdom infringement proceedings concerning Persil Performance Tablets.

Unilever sought a declaration of non-infringement. Its immediate objective was to establish standing to intervene in related European Patent Office proceedings. It contended that the alleged statement was actionable under Patents Act 1977, section 70, or could support declaratory relief under the court’s general jurisdiction.

The central issue was whether the alleged threat could be pleaded despite the without prejudice rule, and whether a general declaration could be granted without a relevant assertion of right by the patentee.

1. Appeal dismissed unanimously. Robert Walker LJ gave the leading judgment. Wilson J agreed. Simon Brown LJ agreed and added observations on the policy of patent-threat legislation.

2. The Frankfurt meeting was a genuine settlement occasion. Its agreed without prejudice character entitled both parties to speak freely. The alleged threat could not be extracted from the negotiations and pleaded as a statutory threat or claim of right. The court applied the modern analysis in Cutts v Head [1984] Ch 290, Rush & Tompkins v Greater London Council [1989] AC 1280 and Muller v Linsley (30 November 1994, 139 SJ LB 43).

3. The rule rests both on public policy encouraging settlement and on the parties’ agreement. It ordinarily protects the whole course of genuine negotiations, not merely severable admissions. The recognised exceptions did not apply. There was no concluded compromise, estoppel, need to explain delay, or unequivocal abuse such as perjury, blackmail or other unambiguous impropriety. The alleged statement was made in a high-level meeting convened to settle disputes and was not oppressive, dishonest or dishonourable.

4. Kurtz v Spence (1888) 5 RPC 161, insofar as it suggested that an actionable patent threat could be proved from a without prejudice communication, should no longer be regarded as good law. The older threats authorities did not determine the modern evidential issue.

5. Unilever’s alternative claim for a general declaration also failed. A party against whom no relevant claim has been formulated cannot ordinarily seek a declaration of non-liability. The court distinguished the exceptional welfare context of Re S [1995] 3 AER 290. Where property rights, and especially patents, are concerned, the special procedure under section 71 of the Patents Act 1977 makes general declaratory relief without an asserted adverse right particularly inappropriate.

The appeal was dismissed with costs. Permission to appeal to the House of Lords was refused, with a stay of Laddie J’s order pending any petition.

• Court of Appeal (Civil Division): Dismissed Unilever’s appeal, upheld the strike-out, and ordered Unilever to pay costs.
• High Court, Chancery Division, Patents Court (Laddie J): On 24 February 1999, struck out Unilever’s action as an abuse of process.