Monday, 2 April 2012

Complex requests for leave to amend: blue, greeen and white machines -- and a red herring

Earlier this year, in Schenck RoTec GmbH v Universal Balancing Ltd, a Chancery Division for England and Wales decision of Mr Justice Vos (29 February 2012), a defendant in patent infringement proceedings sought to amend the grounds asserted in support of its argument of invalidity. This application was allowed in part, on the basis that the evidence on which it sought to rely as evidence of prior art raised different questions to other evidence that had already been pleaded.

Schenck RoTec's patent was for a machine for balancing prop shafts which spun a shaft, allowing measurements to be taken which in turn enabled an operator to use a welding gun in order to weld correction weights. The machine's design allowed for an increased cycle time and automation by allowing those balancing weights to be added in a single motion. Defending Schenck RoTec's infringement action, Universal Balancing asked to amend its grounds of invalidity in order to rely on two further machines as constituting evidence of prior art (the '1999 machine' and the 'white machine'), in addition to the 'blue' and 'green' machines, had already been pleaded. Universal Balancing also sought (i) disclosure if those amendments were allowed; (ii) further disclosure in relation to its visit to inspect the green machine in 2002 and associated drawings and materials, and (iii) disclosure in relation to discussions held between Schenck RoTec and a third-party company about a "costs-down" project -- all of which, Universal Balancing argued, were material relevant to a separate allegation of prior art.

With a hearing set to be heard in 10 weeks' time, the court had to decide the following questions:
(i) were the amendments to the grounds of invalidity allowable under the terms of orders made earlier by Mr Justice Arnold?
(ii) should permission to amend be granted in relation to the 1999 machine and the white machine ?
(iii) if permission to amend were granted in respect of either or both of the machines, should full relevant disclosure, with disclosure in relation to the costs-down project and any further disclosure be granted?
(iv) might a witness be allowed to give evidence by video-link?

Vos J ordered as follows:
* Universal Balancing had already been permitted to serve an amended defence and cross-claim which were to be consequential on amendments to the particulars of claim. They had argued that the 1999 machine and the white machine had only come to light as a result of the amended claims. Although the court could not confirm that no evidence as to those machines had been available to Universal Balancing before those amendments were made, or that any evidence in relation to prior art in the white machine or the 1999 machine would have been irrelevant to claims in the original claims, it was clear that claims to prior art in the two machines would have been equally relevant to claims in the unamended patent. Since the amendment was not truly consequential, the application for permission to amend had therefore to be decided on the usual principles.

* Amendments should in principle be allowed so that the real dispute between the parties could be adjudicated upon -- so long at any prejudice to the other party or parties caused by the amendment could be compensated for in costs, and the public interest in the efficient administration of justice was not significantly harmed.

* Under the Civil Procedure Rules (CPR PD 63 para.4.4), where material had allegedly been made available to the public by use, details of that alleged use must be contained in the pleadings in the grounds of invalidity. There were good reasons here for permitting Universal Balancing to make the amendment sought in relation to the 1999 machine; that machine was different from the blue and green machines which were the subject of the current pleadings, and the prior art in the 1999 machine had likely passed into the public domain before the priority date. The 1999 machine therefore raised different questions to those raised by the blue and green machines.

* Although it was possible that the machines were the same or similar, that question could not be answered without a product description for the 1999 machine. To allow the amendment in that respect would not cause undue prejudice to the future trial date and since any possible prejudice was outweighed by the demands of justice, the amendment be allowed.

* Where it was clear that a party had a large number of potential points, that party ought to only be allowed to rely on the better points.

* The problem with allowing an amendment to Universal Balancing's grounds of invalidity in relation to the white machine was that Schenck RoTec would be left not knowing what case it had to meet since, on the evidence of Universal Balancing, there was no difference between that machine and the 1999 machine. In that sense, the pleading could have been a red herring, and was no better case in support of Universal Balancing than the one it had with the 1999 machine. The sought amendment, if allowed, could also raise complex issues, including whether particular documents had actually been made public at all, the resolution of which depended on matters not before the court.

* Adjournment of the issue was not appropriate, since valuable time would be lost in preparing for trial, which would lead to an adjournment of the trial to a year ahead. The introduction of such complexities would be disproportionate and it would be unfair to Schenk RoTec if the amendment were allowed where there had been a failure to explain how the white machine would enhance Universal Balancing's case. Universal Balancing could however make a future application, showing why an amendment would be both necessary and just.

* Disclosure of the product description in relation to the 1999 machine was ordered. However, the application for further disclosure would not have been made, if it not were not for the application to amend. Standard disclosure had already occurred on both sides and, as Schenck RoTec had already disclosed relevant documents, an order for further disclosure was not necessary. Moreover, as the costs-down project was a separate allegation of prior art that had not been specifically pleaded, there were no grounds whatsoever on which disclosure on that issue could be ordered.

* The relevant witness could give evidence via video link, in light of the witness's personal circumstances and the fact that this wasn't seriously contested.
This note is based on a Lawtel note on an extempore judgment.

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