Damages Payable on Invalid Patent... Or Not?
This article was taken from the Venner Shipley Newsletter edition 19.
In our previous newsletter we reported a decision in the case of Coflexip SA v. Stolt Offshore MS Ltd. (No. 2)* Coflexip had successfully sued Stolt for patent infringement and an inquiry into damages was ordered. Before the inquiry took place, however, a third party (Rockwater) was successful in a separate action for revocation of the same patent, relying on prior art that had not previously been considered during Stolt's counterclaim for revocation.
Coflexip appealed against the finding of invalidity of the patent, and Stolt, (perhaps understandably) aggrieved by the prospect of being faced with a claim for around Ł80 million in respect of infringement of a patent that might be invalid, requested a stay of the inquiry into damages pending resolution of Coflexip's appeal. Nevertheless, it was held by both the judge of first instance and the Court of Appeal that the inquiry should proceed, since Stolt were ‘estopped’ from relying upon the subsequent revocation.
This decision was controversial, but a public interest in the finality of litigation can be appreciated. In this particular instance, though, any perceived unfairness to Stolt has now been mitigated by the fact that the Court of Appeal has overturned the lower court's finding of invalidity in the Rockwater proceedings.
An opportunity for this issue to be considered by the House of Lords has now been lost, and for the time being the estoppel principle still stands, as does the potential for future controversy on this issue: Stolt would have been liable to face the claim to damages, regardless of the final outcome of the Rockwater proceedings.
A key point to bear in mind in this case is that Stolt failed to show that they could not, with reasonable diligence in conducting a more extensive search, have discovered and produced, in their own counterclaim for revocation, the relevant prior art relied upon by Rockwater. A majority of the judges thus considered that to reopen the issue of validity would be an abuse of process.
This case highlights the importance of conducting thorough searches for relevant prior art from the outset, when considering actions for opposition or revocation of a patent.
* [2004] FSR77