Anan Kasei Co., Ltd & Anor v Neo Chemicals & Oxides (Europe) Ltd & Ors

Permission to withdraw an admission depends on all the circumstances, with the administration of justice and the overriding objective informing the court’s assessment of the prescribed factors. Permission may be granted on terms where a late withdrawal raises important legal issues and identifiable prejudice can be mitigated.

Summary judgment determines a claim, a severable part of it or a component necessary to liability. It is not available merely to obtain an abstract ruling that removes one issue from a future trial. Questions of patent infringement and causation should await trial where their proper resolution depends on disputed facts. In assessing lost profits for patent infringement, it remains realistically arguable that an infringer cannot reduce damages by asserting that it could have caused the same loss through a non-infringing alternative.

The defendants applied during an inquiry into damages for permission to withdraw longstanding admissions of patent infringement and for summary judgment on three legal issues. Liability had already been established following a trial, and the Court of Appeal had dismissed the defendants’ appeal.

The first two issues concerned whether patented products brought into the United Kingdom for overseas distribution, including goods allegedly held under an external transit customs procedure, had been “imported” or “kept” within section 60 of the Patents Act 1977. The third concerned whether damages could be reduced or eliminated because the defendants could have routed the same goods through a non-UK port.

The court had to decide whether the admissions could be withdrawn and whether any of the three legal issues were suitable for summary determination before the facts were tried.

1. Permission to withdraw the admissions was granted on terms. The admissions covered commercial quantities of products supplied both domestically and overseas, together with development and research samples. They prevented the defendants from advancing a materially inconsistent case unless withdrawn. The absence of new evidence, the lack of a proper explanation, the defendants’ conduct and the lateness of the application counted against withdrawal. Withdrawal would also prejudice the claimants by expanding the issues for trial. Conversely, refusal would prevent the defendants from advancing strongly arguable defences on important questions of law.

   The interests of justice favoured a full trial by a fine margin because the application was made nine months before trial, irretrievable reliance prejudice had not been proved, and much of the remaining prejudice could be mitigated. Permission was therefore conditional upon the first two legal issues being determined at trial rather than preliminarily. The defendants were also required to bear the costs of the withdrawal application and identifiable wasted costs.

2. Summary judgment on importation and keeping was dismissed. An “issue” under Part 24 of the Civil Procedure Rules 1998 means a claim, a severable part of a claim or a component necessary to determine liability. It does not encompass every factual or legal question arising within a claim. The declarations sought would not dispose of any part of the damages claim because disputed questions remained about the purposes for which the products were brought into and held in the United Kingdom, their customs status and what was done with them before export.

   The proper relationship between sections 60 and 130(7) of the Patents Act 1977, article 29 of the Community Patent Convention and the external transit customs procedure raised complex and realistically arguable questions. Those questions required findings on the actual consignments and fuller consideration of the relevant law. They were unsuitable for abstract determination shortly before trial.

3. Summary judgment on the non-infringing alternative was also dismissed. United Horse Shoe and later Court of Appeal authority made it realistically arguable that a patent infringer cannot reduce lost-profit damages by asserting that it could and would have caused the same loss through lawful means. Departure from that approach would involve a question of policy. In any event, causation could not properly be isolated from the extent of liability and the facts concerning the proposed counterfactual. The relevance of an established non-infringing business might differ from the possibility of creating a new alternative course of business.

• High Court (Chancery Division): Permission to withdraw the defendants’ admissions was granted on terms, but summary judgment on all three legal issues was dismissed.
• Court of Appeal: The defendants’ appeal against the earlier findings of validity and infringement was dismissed. The claimants’ appeal concerning joinder of the second defendant was allowed.
• Patents Court: By an order dated 6 June 2018, Mr Roger Wyand QC, sitting as a deputy High Court judge, held the patent valid and infringed.