Wobben granted Norwich Pharmacal order against Siemens*

Published on 31st Oct 2014

Why is this interesting?

No company wants to be accused of infringing someone else’s intellectual property. But if the worst should happen, then as far as possible it would be preferable to keep the dispute, and its public relations impact, within bounds. This may not, however, always be as easy as the directors would like: particularly if the allegedly infringing product is a component of a larger system, which therefore may also be infringing once customers put it into use.

Background

Wobben brought infringement proceedings against Siemens and other defendants based on their European Patent (UK) 0 847 496 which relates to a method of operating a pitch-controlled wind turbine. Wobben claims that Siemens have infringed the patent by manufacturing, marketing and supplying wind turbines consisting of patented technology to its customers.

Siemens contends that the patent is invalid and a trial date to assess validity and infringement has been set for June 2015.

In the meantime, Wobben applied for a Norwich Pharmacal order that Siemens provide them information as to the identity of their customers who have been supplied with allegedly infringing technology. 

Nowich Pharmacal Order

A Norwich Pharmacal (2) order is an order requiring a respondent to disclose certain information to the applicant. The respondent must be either involved in a wrongdoing, innocently or not. Generally where such an order is granted, the purpose is to identify the proper defendant to an action or to be used to plead a claim. Such an order may be obtained at any stage during an action. They are not granted routinely and will only be granted where it is necessary in the interests of justice.

Wobben alleged that where Siemens’ customers have activated the accused technology, this is infringing use. Wobben argued that since the end users of the technology are very substantial parties, and the use of the technology is very profitable. Since their patent will expire in August 2016, any delay in bringing subsequent actions may result in Wobben not being able to obtain an injunction before their patent expires. Further, even if the judgment after the hearing in June 2015 is that the patent is valid and infringed, the end users may still challenge the patent’s validity anew. Then the matter will have to be tried for a second time and that would be waste of both the claimant’s and the court’s resources.

Wobben argued that this inefficiency can be avoided if they are given information as to the identity of Siemen’s customers where the technology has been activated or will be activated between now and trial, Wobben could then take steps whereby a customer who is party to those proceedings is bound by the decision of the June 2015 trial. Wobben also argued that if one of Siemens’ customers was successful in challenging the validity of its patent, any injunctions obtained in the initial proceedings would be overridden by the revocation of the patent (as in Virgin Atlantic Airways v Zodiac Seats UK Ltd) (3). J Morgan stated that “This would produce the result that the defendants in the first two sets of proceedings would have a second bite of the cherry of attempting to have the patent declared invalid.”

Siemens responded that the disclosure of its customers in this way to Wobben would result in very grave damage to its reputation. In Sega Enterprises Ltd v Alca Electronics (4) it was held that it would be wrong to inflict such damage at a time when it has not been established that the defendant has been involved in any wrongdoing. Siemens argued that the appropriate time for such an order would be following a finding of infringement and also pointed out that the claimant should have made this application much earlier.

Decision

For Norwich Pharmacal jurisdiction, the applicant must show the following: (i) a wrong has been arguably carried out by a third party (here, Siemens’ customers by using the activated technology); (ii) the defendant has facilitated that wrong; (iii) the defendant has the information requested; (iv) the claimant needs to have the information requested to enable it to bring proceedings against the third party; and (v) it is just to make the order sought.

Morgan J held the first four requirements had been made out by Wobben. As regard the justice of the order, though it would be possible for Wobben to sue all of Siemens’ customers and discontinue the action against those who show that they have not activated the technology, he held that it is far better for the customers, the claimant and Siemens if this did not take place. Morgan J held that it was not unfair to ask the customers to agree to be bound by the outcome of the June 2015 proceedings instead of being joined to those proceedings or be subjected to separate proceedings which he agreed would be a waste of the claimant’s and the court’s resources.

The judge held that it is very likely that the claimant would sue more of Siemens’ customers if the order was refused and that on this basis, the reputational damage to Siemens would be even greater. He noted that Wobben knew the identity of Siemens’ customers, that it would not be an abuse of process to issue proceedings for alleged patent infringement, that the claimant was serious about seeking relief for infringement of its patent and that the disadvantages to the claimant in issuing proceedings and subsequently abandoning them against customers who were not infringing, were very limited.

As to Siemens’ argument that they would suffer very grave reputational damage if the order is granted, Wobben suggested that those active in the industry will already know about the allegation of infringement. Morgan J noted that Siemens could take steps to mitigate any reputational damage by explaining the position and reassuring its customers that it will challenge the validity of Wobben’s patent. In Sega Enterprises Ltd v Alca the court balanced the harm to the defendant against the need of the claimant and refused the Norwich Pharmacal order. But Morgan J held that as the facts in Sega were different, that decision did not bind him to produce a result that is contrary to justice in the present case. He held that he had carried out a similar balancing exercise here to that carried out in Eli Lilly v Neolab (5) where a Deputy High Court Judge held that the claimant in that case would suffer irreparable damage he if refused to make the order.

Accordingly, Morgan J granted the order that Siemens provide the information sought by Wobben.

Comments

This is a relatively rare example of a Nowich Pharmacal order being granted in a patent action, where a claim against the supplier is often considered sufficient provided that the supplier is in a position to pay for all the damage to the patentee as a result of their supply. But the proximity of the expiry date of the patent, and the undertaking in principle of a series of separate challenges to its validity, clearly swayed the Court.

Justice Morgan’s comment that following a successful revocation action brought by a customer,” the result that the defendants of the first sets of proceedings would have a second bite of the cherry of attempting to have the patent declared invalid”, is somewhat perplexing. First, if the patent is revoked, unless and until that revocation is successfully appealed at a higher court, the rights in the patent are extinguished, so no second attempt is possible. Second, even if the defendants in the first set of proceedings considered bringing a second action, they would be estopped by the concept of res judicata unless they were relying upon different documents and arguments.

Two interesting points emerge from this decision. First, the Court perceives the availability of an injunction – even for a short period – as crucial. This contrasts with the on-going debate around whether injunctions should be available at all in the context of standards-essential patents, where the English court has taken the view that they should not IF a licence would be available provided the right terms are on offer. The question of availability of licences does not seem to have been considered here. Secondly, the question of redress for Siemens’ reputational damage was not addressed at all. Whilst It may be that Wobben is correct and the industry is already aware of the dispute, nevertheless it would seem appropriate for some mechanism to be provided – if only Wobben publicising the judgment – if Siemens do in fact succeed in revoking the patent and thus vindicating themselves.

*Wobben Properties GmbH v Siemens Public Company Ltd and others [2014] EWHC 3173 (Pat)
(2) Norwich Pharmacal v Commissioners of Customs & Excise [1974] UKHL6
(3)[2014] A.C. 160
(4)[1982] FSR 516
(5)[2008] FSR 615

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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