Smith & Nephew Plc v Convatec Technologies Inc & Ors

The approach to construing a patent claim applies equally to numerical ranges and descriptive language. The critical question is what the skilled person would understand the words or numerals to mean. Where a final injunction has been granted, the court may stay it pending a further appeal and related European Patent Office proceedings if the balance of justice, fairness and proportionality requires that course. It should weigh the likely harm to each party, the prospects and timing of the other proceedings, and any cross-undertaking in damages. Disclosure for choosing between damages and an account of profits need only be sufficient to enable an informed election. Costs may be reduced to reflect issues pursued at disproportionate length or later abandoned.

After its main judgment on the construction and infringement of the patent, reported at [2015] EWCA Civ 607, the Court of Appeal was asked to determine the form of order. Smith & Nephew sought permission to appeal to the Supreme Court and stays of the final injunction and delivery-up or destruction order pending the further appeal and European Patent Office opposition proceedings. ConvaTec sought disclosure enabling it to elect between an inquiry as to damages and an account of profits. The parties also disputed the costs of the first-instance and appeal proceedings.

At first instance, Birss J, in [2013] EWHC 3955 (Pat), found that the modified process did not infringe but that four experiments did, granted an inquiry in respect of those experiments, declined springboard relief and awarded Smith & Nephew 82.29% of its costs. The central issues were the appropriate interim relief, disclosure and costs following the appellate construction decision.

1. Permission and stays. Permission to appeal to the Supreme Court was refused. The court nevertheless stayed the final injunction and the order for delivery up or destruction until the Supreme Court determined whether to grant permission or, if later, until the Technical Board of Appeal determined the pending European Patent Office proceedings. Smith & Nephew had to pursue both matters with due diligence and press for expedition. The parties had liberty to apply if the stay appeared likely to extend beyond April 2016.
2. The stay was justified by the balance of justice, fairness and equity. There was a real prospect of a further appeal and a real prospect that the patent would be revoked. The European Patent Office hearing was likely to occur only a few months after the Supreme Court permission decision. Immediate enforcement risked severe and irreparable harm to Smith & Nephew, whereas ConvaTec’s interim loss was likely to be substantially quantifiable. The court also considered the parties’ conduct, the absence of a cross-undertaking in damages and the limited evidence that Smith & Nephew would use the stay to design around the patent.
3. The court distinguished the decision and reasoning in Adaptive Spectrum and Signal Alignment Inc v British Telecommunications plc [2014] EWCA Civ 1513. That decision recognised that later revocation or amendment would not show that an injunction was wrongly granted when made. The present circumstances were unusual because the patent had already been revoked by the Opposition Division and the further hearing was imminent. In those circumstances, refusing a stay would have been wholly disproportionate.
4. For disclosure, the sales and supply information offered by Smith & Nephew was sufficient to enable ConvaTec to make an informed election between damages and an account of profits. Requiring further analysis of non-infringing products said to have been bundled with infringing products would have been unduly burdensome at that stage.
5. Applying CPR 44.2, the court preserved the interim costs orders, treated ConvaTec as the real winner, but reduced its recoverable first-instance costs by 20% for the development-work experiments and by 20% for the springboard claim. ConvaTec therefore recovered 60% of its first-instance costs and 86% of its appeal costs. It also received payment on account of 60% of the relevant costs and repayment of £500,000 with interest.

• Court of Appeal (Civil Division) — In the main judgment, [2015] EWCA Civ 607, the court accepted ConvaTec’s construction of the patent claim. In this judgment it refused permission to appeal, stayed the injunction and delivery-up or destruction order, limited disclosure and made costs orders.
• High Court of Justice, Chancery Division (Patents Court) — Birss J’s decision at [2013] EWHC 3955 (Pat) found no infringement by the modified process but infringement by four experiments, granted an inquiry, declined springboard relief and awarded Smith & Nephew 82.29% of its costs. A further judgment on the form of order was reported at [2014] EWHC 86.