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(1) OOO Abbott (2) Godfrey Victor Chasmer v (1) Econowall UK Limited (2) Project Consulting & Construction Limited (3) Smith Brewer Limited (4) Retail Display Connections Limited; High Court of England and Wales, Intellectual Property Enterprise Court (HHJ Hacon), neutral citation number [2016] EWHC 660 (IPEC).

In a dispute concerning a patent licence agreement, the Intellectual Property Enterprise Court (IPEC) in London had to consider applications from both sides mostly relating to the late service of the claim form. In England a claim form must usually be served on the defendant within 4 months of being issued. Here the deadline was extended by agreement but then missed. The claimants sought an order to make good the service of the claim form and the defendants sought to strike out the claim or stay the proceedings to allow the parties to arbitrate.

The judge, HHJ Hacon, found that there was a good reason to authorise service retrospectively. Relevant to this decision was the fact that a copy of the claim form had been served shortly after issuing and the fact that the defendants’ solicitors had not met the overriding objective of the civil procedure rules (“CPR”) in failing to clarify a misunderstanding that had arisen regarding the agreed extension of time for service of the claim form. HHJ Hacon found that where a litigant becomes aware of a real possibility that a genuine misunderstanding has arisen between the parties regarding a significant matter, the litigant should take reasonable steps to clear it up. Dispelling such misunderstandings is likely to ensure that the litigation will be conducted more efficiently.

The Facts
The patent that was the subject of the licence had previously been found to be valid and infringed by two other parties (the PCC Defendants). The defendants all traded in infringing products, some of which were supplied by the PCC Defendants.

The claim form was issued on 3 July 2015. An unsigned copy of the claim form was provided to the defendants’ solicitors on 6 July 2015, but no particulars of claim or infringement. In a course of subsequent correspondence, the parties agreed to extend the deadline for service of 3 November 2015 (pursuant to CPR 7.5(1)). However, there was a misunderstanding as to the new deadline for service: the claimants believing the new date to be the 3 December 2015 and defendants the 15 November 2015. Importantly, the defendants seemed to be aware of the confusion. In response to a letter highlighting the passing of the believed 15 November deadline, the (still unsigned) claim form and particulars of claim were served on 25 November 2015.

The decision re CPR 6.15
The submissions focussed on CPR 6.15(1) which allows the court to permit service by other means than otherwise permitted by CPR 6 where there is good reason.

HHJ Hacon referred to Abela v Baadarani [2013] UKSC 44 and applied four principles from that case to the application of CPR 6.15. First, the court should simply ask itself whether there is good reason to allow the order sought: precedent decisions are of little use since each will depend on its own facts. Second, bringing the attention of the claim form to the attention of the defendant (without formally serving it) cannot in itself be a good reason, but it is a critical factor. Third, the factors that led to the failure to serve will be relevant. Fourth, “good reason” is something less than the “exceptional circumstances” of CPR 6.16.

Considering the defendants’ submissions, HHJ Hacon did not agree with the defendants that the requirements of CPR 7.6(3) (which concerns applications to extend the deadline for service) are to be imported into CPR 6.15. In support of this, he pointed out that the Court of Appeal made no reference to CPR 7.6(3) in Bethell Construction Limited v Deloitte and Touche [2011] EWCA Civ 1321.

HHJ Hacon found that none of the reasons for disallowing 6.15 in Bethell applied to the present case. In particular, he found it important that the defendants had been aware of the mistake of the claimants’ solicitor. In HHJ Hacon’s view, where a litigant becomes aware of a real possibility that a genuine misunderstanding has arisen between the parties regarding a significant matter, the litigant should take reasonable steps to clear it up. Doing so will help to ensure that litigation will be conducted more efficiently and there is no real likelihood of any consequent unfairness to either side. In this instance, the defendants’ conduct in not making the claimants aware of the misunderstanding did not fully comply with the overriding objective of the CPR.

HHJ Hacon found that these features, along with the fact a copy of the claim form was provided on 6 July, collectively qualified as a good reason under CPR 6.15. Good service was therefore deemed to have been effective on 6 July.

In relation to CPR 3.9 (which allows the court to order relief from sanctions), HHJ Hacon was bound by Kaur v Ctp Coil Limited [2001] C.P. Rep. 34: CPR 3.9 can provide no relief from sanctions in circumstances where CPR 7.6(3) applies. As the claimants had, by their own admission, not satisfied CPR 7.6(3), CPR 3.9 could not apply. Had 6.15 not been satisfied, the claim would have been struck out.

The decision re stay of proceedings pending arbitration
In relation to the defendants’ application to stay proceedings in favour of arbitration, the patent licence in question contained two contradicting terms: one submitting the licence to the jurisdiction of the English courts and the other setting out the parties agreed to arbitration in the event of disagreement. HHJ Hacon referred to several cases but decided that, viewed objectively, the parties’ likely intention was that the English courts should have jurisdiction over disputes and that the arbitration clause was permissive: the parties may jointly elect to arbitrate only, at least once an English court had been seised. HHJ Hacon noted the advantage that this interpretation would keep all aspects before one tribunal. This would minimise costs given the claim would continue in any event against the fourth defendant who was not a party to the licence agreement.

A copy of the judgment can be found here.

William Jensen, Marks & Clerk Solicitors LLP