Schlumberger Holdings Ltd v Electromagnetic Geoservices AS

Documents held by companies within a corporate group may be within a litigating party’s control where the evidence establishes an existing and continuing consent to search, inspect and copy them. The result depends on the practical legal right available, not merely on the corporate structure.

Disclosure of secondary evidence relevant to obviousness may be ordered, but the search must be reasonable and proportionate. The court should tailor the categories, custodians and time period to the issues genuinely arising at trial. A broad request may therefore be narrowed or refused where it would yield material of little or no relevance.

The claimant sought revocation of patents concerning controlled source electromagnetic surveying for identifying the nature of subsea reservoirs. The defendant applied for disclosure of documents held by companies within the claimant’s wider corporate group, including material concerning electromagnetic research, reactions to publications announcing the inventions, and proposed acquisitions.

The central issues were whether documents held by group companies were within the claimant’s control for the purposes of disclosure, and whether the proposed searches were relevant and proportionate to the pleaded obviousness issues.

1. The disclosure application was allowed in part. The court ordered a schedule identifying relevant group companies and methods used, developed or evaluated in the specified period, limited to 14 August 2002. It also ordered a proportionate search concerning reactions to the inventions, limited to relevant senior technical and managerial staff of AGO and WesternGeco, with a June 2003 cut-off, and ordered the narrow search sought in category 3.

2. Under CPR Part 31.8, control includes a present or past right to inspect or take copies of documents. The mere possibility that a third party might consent is insufficient, since the documents are not then within the party’s present control. Here, however, the evidence established that the claimant had already enjoyed, and continued to enjoy, general consent from relevant group companies to search for and copy documents properly disclosable in the litigation. That consent placed the relevant documents within the claimant’s control. The conclusion did not depend on common corporate ownership and remained subject to the stated caveats concerning acquisition documents and unreasonably onerous requests.

3. The approach in Nichia v Argos [2007] EWCA Civ 741; [2007] FSR 38 required the search to be proportionate to what was at stake and what the search might produce. A blanket refusal was inappropriate, but the scope had to be fitted to the individual case.

4. Documents recording contemporaneous reactions to an alleged invention may be relevant to obviousness because they can bear on the difference between assessing obviousness without hindsight and assessing it with knowledge of the invention. The defendant’s request was nevertheless hopelessly wide and required substantial narrowing.

5. The court distinguished the situation discussed in Lonrho v Shell [1980] 1 WLR 627, where consent had not previously been given and would have had to be obtained in the future. The present evidence showed existing and continuing consent. No order was made for the proposed acquisition documents because the decisions were likely to be commercial and the companies concerned were likely to withhold consent. Costs were costs in the case.