Global Flood Defence Systems Ltd & Anor v Johann Van Den Noort Beheer BV & Ors

In patent-threat proceedings based on a published application, the court may adjourn the threats claim where grant is imminent and the claims have become fixed, even though the patent has not yet formally been granted. A rigid rule that justification is unavailable unless grant occurred by trial would be artificial in such circumstances. The court must consider whether speculation about the eventual claims has fallen away and weigh any prejudice or other countervailing matters.

For negligent misrepresentation, the representation is assessed objectively through the eyes of a reasonable representee with relevant background knowledge and, where appropriate, informed specialist advice. A clear operative contractual provision may correct or replace an earlier representation. A party cannot rely on an untutored interpretation inconsistent with the operative terms.

The claimants marketed flood-defence products after a licence agreement with the first defendant had ended. They alleged that threats to sue for patent infringement were unjustified under Patents Act 1977, and claimed damages for alleged negligent misrepresentations which induced the licence agreement. The first defendant counterclaimed for unpaid minimum royalties.

The threats concerned rights arising from a published European patent application. By trial, the European Patent Office had issued a decision to grant, fixing the claims, but formal grant was due seven days later. The court also considered whether statements about European, United States and PCT patent protection had been actionable misrepresentations, and whether alleged misrepresentations defeated the royalty counterclaim.

1. Threats claim. The court rejected the claimants’ proposed bright-line rule that justification was impossible unless the patent had been granted by trial. Following Brain v Ingledew Brown Bennison & Garrett (No. 2) [1997] F.S.R. 271, the court recognised the concern about hypothetical claims, but held that limited circumstances could justify an adjournment. Once the EPO’s decision to grant had issued, the claims were fixed and the former difficulty of speculation had fallen away. Grant seven days after trial was materially indistinguishable from grant immediately before trial.
2. The court weighed the defendants’ diligence, the delay to the claimants, the interim injunction, and an alleged further threat. None justified refusing an adjournment. The alleged Spanish threat was not actionable under section 70 because, viewed through the eyes of a reasonable recipient, it was directed to acts in Spain; the court made no finding on the aspect of the letter closest to a UK threat because it had not been argued.
3. Misrepresentation. The statutory elements included a false statement of fact, communication, inducement, and loss. Silence alone was insufficient, but an unqualified representation could continue until contract. Inducement required the representation to be an operative cause and also satisfied the but-for test. A representation was assessed objectively, with relevant specialist advice included where the nature of the document reasonably indicated that advice was needed.
4. The licence agreement’s operative provisions licensed only the contingent rights based on the PCT application. They did not grant rights under a subsisting European or United States patent. The operative provisions therefore corrected, replaced, or overrode any inconsistent earlier representation. The misrepresentation claims failed. The court left open the separate question whether the representor’s intention was an essential ingredient of actionable misrepresentation.
5. The claimants were not permitted to raise a new unpleaded construction argument in closing. The royalty counterclaim succeeded. The threats claim was adjourned for later determination.