Patent attorneys have long advised their clients to focus on the issues at the heart of a dispute and not to throw in a "kitchen sink" of other complaints just because it is easy to do so. In the patent case discussed below, ConvaTec face costs assessed on the defendants spend of more than £6 million because they had included allegations of misuse of confidential information before they had established that they had cause to complain.
In a judgement which has now been upheld on appeal, see [2012] EWCA Civ 520, ConvaTec failed to establish that a Smith & Nephew wound dressing called Durafiber infringed their patent. However, Claim 3 of the patent was found to be valid. Before the case came to trial allegations in respect of other patents were withdrawn and ConvaTec discontinued a claim against all of the defendants, including an individual, Dr Stephen Law, for breach of confidence and misuse of confidential information.
As the defendants had been successful in all matters they sought an order that the claimants pay their costs. The costs incurred by the defendants together was, it was submitted, the largest costs bill which had been presented to the Patents Court in recent times and came to almost £6.6 million. The largest amount of costs related to the confidential information case itself which was discontinued before trial. The claimants contended that they should not have to pay all the defendants' costs.
In [2011] EWHC 3461 (Pat), Birss HHJ, sitting as a deputy judge of the High Court, noted that it is settled that, unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant has incurred on or before the date of discontinuance.
The discontinued confidential information case arose out of the alleged actions of Dr Law who had been an employee of ConvaTec. He left to join one of the other defendants, Speciality Fibre and Materials Limited (SFM), and on leaving had a CD-ROM in his possession on which ConvaTec documents were stored. There were therefore allegations that this amounted to misuse of confidential information. In the event, ConvaTec finally alleged that Dr Law, in developing the fibres used by Smith & Nephew, had had recourse to a Master Recipe Sheet which embodied ConvaTec's confidential information. In exchanging expert evidence in advance of the trial, SFM's expert gave the opinion that all of the information in the Master Recipe Sheet had been published in ConvaTec patents referred to as the Medicel patents. Six days after seeing this evidence, ConvaTec discontinued its entire breach of confidence and breach of contract case. It accepted that the pleaded confidential information was not confidential.
However, ConvaTec argued that there should be a departure from the normal position on costs because the notification about the Medicel patents was delayed, and because Dr Law had failed to provide a comprehensive account of how he had developed Durafiber.
Birss HHJ was not satisfied that the way in which the relevance of the Medicel patents arose was sufficient to justify departure from the usual position on costs, particularly as the Medicel patents were ConvaTec's own. Furthermore, he determined that Dr Law was not required to defend himself until and unless the claimants had pleaded their case properly. The court had to be careful to ensure that full and proper particulars of all confidential information were given so as to be sure that the breach of confidence action was not to oppress and harass ex-employees.
ConvaTec were therefore found liable for the defendants' costs. Furthermore an interim award of £2.3 million was to be made to SFM which was 50% of their total costs. 50% of Smith & Nephew's costs would have been £690,000 but, in their case, ConvaTec were ordered to pay £500,000 on account.
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