Unilever Plc v The Procter & Gamble Co

The without prejudice rule protects genuine settlement negotiations as a whole. Its protection extends beyond admissions against interest and rests on public policy and the parties’ agreement. An actionable patent threat made during protected negotiations does not, merely because it constitutes a statutory tort, become admissible. The exception for unambiguous impropriety applies only in the clearest cases of abuse of the privileged occasion.

In disputes concerning property rights, a person against whom no relevant claim has been asserted cannot obtain a declaration of non-liability under the general jurisdiction. Courts should be particularly cautious about granting declarations of patent non-infringement through that jurisdiction where a specific statutory procedure imposes detailed requirements.

Procter & Gamble owned a European patent concerning a laundry-washing process. Unilever wished to establish that manufacturing and marketing Persil Performance Tablets would not infringe it. Representatives of the two companies attended a meeting expressly conducted without prejudice as part of negotiations to settle several disputes. Unilever alleged that Procter & Gamble threatened United Kingdom infringement proceedings during that meeting.

Unilever sought a declaration of non-infringement. Its purpose was to obtain standing to intervene in opposition appeal proceedings before the European Patent Office under article 105 of the European Patent Convention. It had not followed the procedure for obtaining a declaration under section 71 of the Patents Act 1977. Procter & Gamble subsequently brought infringement proceedings against Lever Brothers, the subsidiary dealing with the product in the United Kingdom.

Laddie J struck out Unilever’s action as an abuse of process. Unilever appealed with his permission. The principal question was whether an alleged threat made during genuine without prejudice negotiations could support proceedings under section 70 of the Patents Act 1977. Alternatively, Unilever sought declaratory relief under the general jurisdiction without relying on an admissible assertion of adverse rights.

1. The appeal was dismissed unanimously. Robert Walker LJ gave the leading judgment. Wilson J agreed, and Simon Brown LJ expressly agreed with all of that judgment. The action remained struck out as an abuse of process.

2. Per Robert Walker LJ, the without prejudice rule rested partly on public policy and partly on the parties’ agreement. Protection of admissions against interest was its most important practical effect, but its scope extended to the remaining contents of genuine settlement negotiations. Separating admissions from assertions, proposals and statements of future intentions would create practical difficulties and obstruct free discussion. The modern principles in Cutts v Head, Rush & Tompkins v Greater London Council and Muller v Linsley governed the appeal.

3. Per Robert Walker LJ, the alleged patent threat had to be assumed true for the strike-out application. That assumption did not establish abuse of the privileged occasion. The meeting involved skilled representatives engaged in genuine settlement discussions, and the pleading disclosed no oppressive, dishonest or dishonourable conduct. Neither the threat nor a claim of right could therefore be pleaded. The public policy rule itself supplied sufficient protection; extending its scope through the parties’ agreement was unnecessary.

4. Per Robert Walker LJ, exceptions to protection remained available, particularly where exclusion would conceal perjury, blackmail or other unambiguous impropriety. That exception required the clearest abuse. The statutory consequences of an actionable threat under section 70 of the Patents Act 1977 supplied no additional exception. Kurtz v Spence (1888) 5 RPC 161 should no longer be regarded as good law. Skinner & Co v Shew & Co concerned a different privilege question, while Re Daintrey concerned a communication to which settlement protection had never attached.

5. Per Robert Walker LJ, the general declaratory jurisdiction did not enable Unilever to obtain a declaration of non-infringement without an admissible relevant claim of right against it. Re S had not altered that principle for property disputes. Patent cases called for particular caution because section 71 provided a special jurisdiction with detailed requirements.

6. Per Robert Walker LJ, neither the disputed description of the threatened infringement nor the subsidiary’s involvement supplied a proper additional basis for striking out. Whether the relief pleaded could constitute a section 70 claim was left unresolved because amendment might have been sought. Simon Brown LJ added that the assumed statutory tort did not unequivocally abuse settlement protection.

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

• Court of Appeal: On 28 October 1999, dismissed Unilever’s appeal unanimously and upheld the strike-out order. Permission to appeal to the House of Lords was refused, and Laddie J’s order was stayed pending a petition.
• High Court, Chancery Division, Patents Court: On 24 February 1999, Laddie J struck out Unilever’s action as an abuse of process and granted permission to appeal. No citation for that decision is supplied.