Patents - Shenzhen Carku Technology Co Ltd v The Noco Company
Jane Lambert
Patents Court (Mr Recorder Campbell QC) Shenzhen Carku Technology Co Ltd v The Noco Company [2020] EWHC 2104 (Pat) (24 July 2020)
Last year, Prof Frederick Mostert and I were commissioned by the World Intellectual Property Organization ("WIPO") to report on IP enforcement measures especially anti-piracy measures in the digital environment. We presented our Study to the Advisory Committee on Enforcement on 3 Sept 2020 and you can see our presentation as well as the rest of the day's proceedings on the recordings of the morning and afternoon sessions.
One of our findings is that rights holders are moving away from the courts to the application of voluntary measures by intermediaries. There are many reasons for that. The cost of litigation is continuing to rise, particularly in common law countries. Wrongdoers can keep a low profile when dealing over the internet making it difficult to identify and serve them. It is no problem for them to move their trade to another platform if one of their marketing or distribution outlets is denied them. As we observe at paragraph 6 of our report:
" It makes no sense for a content owner to run to court – at great expense – to stop the single sale of a pirated content on a digital platform because the actual listing typically appears online for only a few hours. Moreover, such action does nothing to address the multitude of other illegal listings posted by other Bad Actors."
Among the voluntary measures to which IP holders have recourse are the notice and takedown schemes operated by online distributors such as Alibaba and Amazon. The Intellectual Property Office published Guidance on Protecting Intellectual Property Rights on e-commerce stores on 12 June 2019. One of those schemes was used by The Noco Company ("Noco") to persuade Amazon to delist the products of its rival, Shenzhen Carku Technology Co Ltd.("Carku"), on the ground that they infringed its UK patent GB 2,527,858B. The complaint was very effective for between 30 and 40% of Carku's sales to the UK were made through Amazon. Carku protested to Amazon which responded as follows through its lawyers:
"Amazon would therefore not be in a position to re-list Car-ku's products on www.amazon.co.uk for the time being for the above reasons. However, our client would be more than willing to revisit its position should Car-ku provide it with a judicial decision declaring that Car-ku's products do not infringe NOCO's patent, or that NOCO's products infringe Car-ku's patents, the latter in order to de-list NOCO's concerned products."
In our Study, Prof Mostert and I pointed to the risk of unnecessary blocking and delisting in distributors' notice and takedown schemes.
Carku issued proceedings for groundless threats under s.70 to s.70F, a declaration of non-infringement under s.71 and revocation under s.72. Not long after the Russian flu pandemic, Lord Esher MR said in Ungar v Sugg (1899) 9 RPC 117
It is only with the experience of the COVID-19 pandemic that I have fully understood the significance of those words. Even though the Patents Court is less busy than it was, there would have been no prospect of a trial on those issues for several months. As for costs, Noco's amounted to £268,737 for an application that had been launched on 9 June 2020 and heard in a single day. It is hardly surprising that Carku tried a short cut to "a judicial decision".
By its application of 9 June 2020, Carku sought summary judgment on its claim for a declaration that none of its products infringed Noco's patent. In the alternative, it sought an interim declaration that those products did not infringe. The application was heard by Mr Justice Campbell QC who delivered judgment in Shenzhen Carku Technology Co Ltd v The Noco Company [2020] EWHC 2104 (Pat) on 24 July 2020.
The summary judgment application did not really get off the ground. The judge reminded himself of paragraph [15] of Mr Justice Lewison's judgment in Easyair v Opal Telecom [2009] EWHC 339 (Ch):
"As Ms Anderson QC rightly reminded me, the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows:
i) The court must consider whether the claimant has a 'realistic' as opposed to a 'fanciful' prospect of success: Swain v Hillman [2001] 1 All ER 91;
ii) A 'realistic' claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]
iii) In reaching its conclusion the court must not conduct a 'mini-trial': Swain v Hillman
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: If the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725."
"As Ms Anderson QC rightly reminded me, the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows:
i) The court must consider whether the claimant has a 'realistic' as opposed to a 'fanciful' prospect of success: Swain v Hillman [2001] 1 All ER 91;
ii) A 'realistic' claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]
iii) In reaching its conclusion the court must not conduct a 'mini-trial': Swain v Hillman
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: If the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725."
Carku's first problem was that it had adduced no evidence as to how its products actually worked. Secondly, although it sought a declaration of non-infringement in respect of 29 products it only provided details on 3. Even the evidence that it did provide was unsatisfactory and unreliable. Thirdly, Noco adduced evidence from a professor of computing and electrical engineering which at the very least raised triable issues. Fourthly, Noco indicated that it had an argument of infringement that relied on the doctrine of equivalents which was an issue that could not be resolved summarily. Fifthly, the evidence on invalidity had been raised too late and did not appear to be conclusive. For all those reasons the learned recorder dismissed the application.
Although CPR 25.1 (b) enables interim declarations to be granted in any case, they are not commonly sought in intellectual property cases. Noco referred Mr Campbell to a line of cases establishing that interim declarations are not appropriate or, at the very least, difficult to get in respect of questions that only permit of a final answer. In reply, Carku relied heavily on what it called the inequity of Amazon's notice and takedown procedure and submitted that an interim declaration was necessary to right the wrong. The recorder was not persuaded. He said at paragraph [104]:
"I agree that the Amazon procedure is significantly different from the court's approach to an interim injunction in all the ways the claimant has mentioned, but I do not see that this of itself entitles me to depart from the clear and consistent line of case law I have mentioned. It is not as if the claimant is without a remedy. For instance, it currently has a pleaded threats claim. The claimant suggested that the damages it recovers if successful on the threats claim may not compensate it for the damage it says it is currently suffering by virtue of being de-listed. I accept this is possible, but it is not immediately obvious to me that this submission is correct. In any event, it still seems to me that the threats action, if successful, will go a long way towards compensating the claimant for the damage it claims to be suffering."
Mr Campbell directed himself t [97] that there were two issues. The first was whether this was a case in which it was appropriate to grant an interim declaration. The second was whether there was sufficient evidence to justify the remedy. As for the first issue, the recorder said at paragraph [100] "it seems to me that despite the claimant's attempts to persuade me to the contrary, infringement is indeed a yes/no question, and it only permits a final answer, not a temporary one. The products either infringe or they do not." He doubted that it was necessary to consider the second issue but observed that he did not have the "high degree of assurance" that he needed for an interim declaration. It was not clear to him that Carku would win on non-infringement even for the 3 products for which it had adduced evidence let alone the other 26 for which it had not. That was enough to dispose of the interim declaration application.
Mr Recorder Campbell QC awarded Noco its costs in any event but not on the indemnity basis as Noco had requested. The test was whether the case was out of the norm and in his view it was not. However, he was not prepared to grant Carku permission to appeal his judgment.
I shall mention this case in my talk on Intellectual Property Enforcement Measures, Especially Anti-piracy Measures in the Digital Environment at the Informa IP Law Summer School on 20 Aug. Should anyone wish to register for the course which starts on Monday there is still time (see the Booking page). I am also happy to discuss this article and notice and takedown generally by phone, Zoom or Skype during office hours or else by email.
I shall mention this case in my talk on Intellectual Property Enforcement Measures, Especially Anti-piracy Measures in the Digital Environment at the Informa IP Law Summer School on 20 Aug. Should anyone wish to register for the course which starts on Monday there is still time (see the Booking page). I am also happy to discuss this article and notice and takedown generally by phone, Zoom or Skype during office hours or else by email.
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