Coflexip SA v Stolt Offshore MS Ltd & Ors

A defendant who has finally lost a patent infringement action cannot avoid an inquiry as to damages by relying on the patent’s later revocation in separate proceedings. The earlier judgment creates a cause of action estoppel between the parties, including the basis on which damages are to be assessed. The later revocation does not reopen that decided issue. Gore Wood did not alter the distinct rules governing cause of action estoppel, and Poulton remained applicable. The statutory requirement that specified patent provisions have, so far as practicable, the same effect as corresponding Convention provisions does not import the Convention’s separate rule concerning the effect of revocation on final infringement decisions. A stay remains discretionary, but should be refused where it would cause substantial delay and unfairness and the legal objection has no merit.

In earlier proceedings, the claimants obtained final judgments that their patent was valid and infringed by the defendants. The Court of Appeal upheld those findings and ordered that an inquiry as to damages proceed. A separate action by Rockwater later resulted in an order revoking the patent, subject to appeal.

The defendants sought a stay of the damages inquiry. They argued that the subsequent revocation removed the legal basis for damages, relying on cause of action estoppel, Johnson v Gore Wood [2002] 2 AC 1, section 130(7) of the Patents Act 1977, and the Community Patent Convention. The central issues were whether the earlier judgment remained conclusive between these parties and whether a stay should nevertheless be granted pending the revocation appeal.

1. Application refused. The court declined to stay the inquiry as to damages.
2. The jurisdiction to stay derived from CPR Part 3.1 and the inherent jurisdiction recognised by section 49(3) of the Supreme Court Act 1981. It had to be exercised to permit justice and prevent injustice. The application was real and practical, although contingent on the outcome of the Rockwater appeal.
3. The earlier infringement judgment was final between these parties. Following Poulton v Adjustable Cover & Boiler Block Co. (1908) 25 RPC 529 and (1908) 25 RPC 661, the defendants were estopped from challenging on the damages inquiry the validity of the patent at the relevant dates. The inquiry was ordered on the footing that the patent was valid, and the subsequent revocation did not create an estoppel upon that estoppel.
4. Arnold v National Westminster Bank [1991] 2 AC 93 clearly stated the absolute nature of cause of action estoppel where the later proceedings concern the same cause of action. Johnson v Gore Wood [2002] 2 AC 1 concerned Henderson-type abuse of process, which was distinct from cause of action and issue estoppel. It did not impliedly overrule Poulton.
5. The argument based on section 130(7) of the Patents Act 1977 failed. That provision required only the specified domestic provisions to have, so far as practicable, the same effects as corresponding Convention provisions. It did not make the Convention’s rule on the retroactive effects of revocation part of domestic patent law. The statutory references to revocation concerned the grounds for revocation, not all legal consequences of revocation.
6. A stay was also refused in the general discretion. The inquiry would consume costs and court resources, while a stay would delay any substantial recovery for at least two years, deprive the claimants of interest, prolong litigation begun in 1996, and expose them to additional uncertainty. The balance of justice favoured proceeding with the inquiry.

The judgment records that the Court of Appeal had upheld the earlier infringement judgment and ordered that the inquiry as to damages proceed. Leave to appeal to the House of Lords was refused. The present application concerned a later revocation order made in separate proceedings and was refused.