Coflexip S.A. & Anor v Stolt Offshore Ms Ltd. & Ors

The majority held that a later revocation of a patent did not permit an infringer to reopen a final determination of validity and infringement in an inquiry as to damages. For the pleaded infringement, Poulton remained binding. For other contracts, issue estoppel applied, and the defendant had not shown special circumstances because the decisive prior art could have been discovered with reasonable diligence. The broader merits-based approach in Johnson did not apply to an issue already decided in the same litigation. The majority also held that section 130(7) of the Patents Act 1977 did not import the consequences of article 33 of the Community Patent Convention. The appeal and the application for a stay were dismissed.

Coflexip brought patent infringement proceedings against Stolt. The patent was held valid and infringed, and an inquiry as to damages was ordered. After the first judgment and its appeal, a separate revocation action brought by Rockwater resulted in an order revoking the patent, stayed pending appeal.

Stolt applied to stay the damages inquiry and argued that the revocation would provide a complete defence or bar to enforcement of the damages award. Jacob J refused the stay on 31 July 2003. The central issues before the Court of Appeal were whether res judicata or estoppel prevented reliance on the later revocation, whether the Patents Act 1977 or the Community Patent Convention altered the position, and whether the inquiry should await the outcome of the revocation appeal.

Majority: Peter Gibson LJ and Sir Martin Nourse

1. The appeal was dismissed. In relation to the pleaded Magnus Swift contract, the final judgment that the patent was valid and infringed created cause-of-action estoppel. Poulton v Adjustable Cover and Boiler Block Co remained binding and was indistinguishable. The later revocation ended the injunction as to future infringements, but did not undermine the concluded findings or the damages inquiry.
2. The fourteen other contracts gave rise to distinct causes of action. The earlier finding that the patent was valid and subsisting nevertheless operated as issue estoppel. Under Arnold v National Westminster Bank plc, the limited exception for further material unavailable with reasonable diligence did not assist Stolt. The decisive prior art could have been found and adduced earlier. Reliance on the later revocation would therefore be an abuse of process and would undermine finality by encouraging indirect re-litigation through third parties.
3. The majority accepted the reasoning concerning the statutory provisions in the dissenting judgment. The amendment and revocation provisions of the Patents Act 1977 did not displace Poulton. Section 130(7) required the relevant provisions to be construed consistently with the corresponding provisions of the Community Patent Convention. It did not import every consequence of revocation under that Convention, including article 33, into domestic law.
4. A stay was refused. If the revocation appeal failed, it would not affect the inquiry. If it succeeded, the basis of Stolt’s argument would disappear. Any later application for a stay could be considered if necessary.

Dissent: Neuberger LJ

Neuberger LJ would have allowed the appeal. He considered that the later, retrospective and in rem revocation, the substantial sum claimed, the absence of serious misconduct by Stolt, the public interest against enforcing an invalid monopoly, and the fact that the damages inquiry had not begun justified overriding the non-strict estoppel while the matter remained under the court’s control.

• Court of Appeal (Civil Division): The appeal was dismissed. Neuberger LJ dissented on the estoppel issue. [2004] EWCA Civ 213
• High Court of Justice, Chancery Division, Patents Court: Jacob J refused Stolt’s application for a stay of the inquiry as to damages on 31 July 2003.