Neutral Citation Number: [2011] EWPCC 33
Claim No. Pat. 09 050
IN THE PATENTS COUNTY COURT

7 The Rolls Building
Fetter Lane, London EC4A 1NL

Date: 24/10/2011

Before:

HIS HONOUR JUDGE BIRSS QC
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Between:

	MUSION SYSTEMS LIMITED	Claimant	
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	(1)	ACTIV8-3D LIMITED
(2)	C2R LIMITED
(3)	DAVID JOHN DUTTON
(4)	SIMON DAVID HUMPHREYS	

Defendants	

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Computer-aided transcript of the Stenograph Notes of Marten Walsh Cherer Ltd.,
1st Floor, Quality House, 6-9 Quality Court, Chancery Lane London WC2A 1HP
Tel No: 020 7067 2900 Fax No: 020 7831 6864 DX: 410 LDE 
Email: info@martenwaslshcherer.com 
Web: www.martenwalshcherer.com 
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Mr. Geoffrey Pritchard  (instructed by Messrs Browne Jacobson) appeared for the Claimant
Mr. Simon Humphreys appeared in Person 
Mr. Paul Andrews, a director, appeared for Activ8-3D Limited 
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JUDGMENT

HIS HONOUR JUDGE BIRSS QC: 

1.	I heard a preliminary issue in this action in the summer of 2011.  Today was to be the hearing of the trial.  Since the preliminary issue, the claimant has settled with the second and third defendants.  The defendants before me are the Activ8 defendants, that is to say the first and fourth defendants (Activ‑3D Limited and Mr. Simon Humphreys).  They represented themselves.  Mr. Paul Andrews is a director of Activ8 and spoke on behalf of Activ8.  Mr. Humphreys confirmed that he had nothing to add to what Mr. Andrews had said.  
2.	They have no lawyers representing them, although it is tolerably clear from the skeleton argument that was produced for the trial that they do have access to some legal assistance, at least in some respects.  The skeleton argument is, if may say so without any disrespect to Mr. Andrews and Mr. Humphreys, a relatively sophisticated document which cites authorities on certain points and takes an approach which would appear to be an approach taken with legal assistance.  Mr. Pritchard (instructed by Browne Jacobson) appears for Musion.  
3.	There is something about this litigation which produces a tendency to file late evidence.  This is another example of the same problem.  One of Activ8's defences is that the patent is invalid and they have a counterclaim for revocation.  One of the bases on which they contend the patent is invalid is, they allege, a prior use which took place at Phantasialand and is pleaded out.  I allowed the application to amend the pleadings to include this point in June 2011.  The allegation is that machinery which is relevant to the validity of the patent was installed by a company called Musion GmbH.  The moving spirit of that company is a man called Uwe Maass.  That is a company which, to some extent, is related to the claimant in this case; the precise relationship does not matter for the purpose of this decision.
4.	On 12th October this year, the defendants submitted a witness statement of Mr. Augusiak which exhibited a redacted version of the contract which relates to the Phantasialand installation.  Mr. Augusiak is the person who was involved at that time and would appear to have access to relevant documents related to it.  
5.	Last week Activ8 filed a skeleton argument, and annexed to their skeleton were some pictures which they contend show prior use of a particularly important feature in this case, which I will describe as "matched lighting".  The precise details of what "matched lighting" is do not matter.  On Thursday of last week, Active8 filed a third expert report from their expert Mr. Knight.  
6.	I received a housekeeping skeleton from Mr. Pritchard this morning addressing, as it says, "housekeeping matters".  At that stage the position was that as regards Mr. Knight's third report, the claimant reluctantly accepted that it needed to come in and did not object; or rather it objected but could see that realistically it needed to be part of the case.  As regards the pictures, the claimant submitted that they were far too late and should not be admitted.  As regards the redacted version of the contract, again the position, reluctantly, was that the claimant accepted it would inevitably be part of the proceedings.
7.	Paragraph 19 of the housekeeping skeleton says as follows:  
"Whilst this document was very, very late (at the latest it should have been provided in disclosure and then amended into the pleading) the claimant has endeavoured to deal with it."
8.	The claimant's position in the housekeeping skeleton was that a short adjournment of about half a day was needed to deal with the late material.  That is what it was asking for, and that is what one might have thought I needed to deal with first thing this morning.  
9.	However, overnight, between Sunday and today (Monday), a third witness statement of Mr. Augusiak has emerged with what appears to be an unredacted copy of the contract in question and more pictures relating to the matched lighting question.  The witness statement also deals with the position of Uwe Maass, but it does not seem to me that that is particularly material to the matter I have to decide now.
10.	Mr. Pritchard rose at 10.30, and his submission essentially was "enough was enough".  He sought to exclude this late evidence or alternatively seek an adjournment of the trial.  
11.	During the course of the discussions, both sides ultimately accepted that the better course was to adjourn the trial and I have done so; the trial will be adjourned into the New Year.  It is plainly right.  The Activ8 defendants wish to put the material into the case, and it is quite clear that there is no way Musion can deal with it with a trial commencing today, even commencing at two o'clock this afternoon.  The material needs to come in, but the case has to be adjourned in order to accommodate it.  
12.	The issue I have to decide is the question of costs.  There are two matters arising.  First of all, Mr. Pritchard submits that the Activ8 defendants should pay the costs thrown away by the adjournment.  The other matter is an order for an interim payment that I made in June of 2011 in which I ordered that the Activ8 defendants should pay £70,000 by way of a payment on account of the costs relating to the preliminary issue.  I ordered that £30,000 of that had to be paid within 28 days and the balance was adjourned to the trial.  At that stage, on the date I made the order, and at the same time as I was making that order, the trial was set for this date.  In other words the adjournment was to this trial on this day.  Mr. Pritchard submits that I should not adjourn that payment any further even though the trial has been adjourned.
13.	I will deal with costs thrown away first.  The position explained by Mr. Andrews is essentially this.  He tells me that although it is obviously unfortunate that things have come out the way they have, it is not Activ8's fault.  They have been trying and trying to get documents from Mr. Augusiak.  They only thought the contract itself was relevant when they saw Mr. Maass's evidence in September of this year, which referred to a contract.  The explanation for the redacted version was that Activ8 asked only for the terms relating to confidentiality, and that is why a redacted version of the contract was produced which essentially redacted everything else except the terms relating to confidentiality.  
14.	In response to the criticisms of the redacted document which were raised by Musion, they sought more from Mr. Augusiak; it was produced, and that was the third witness statement and the unredacted version of the contract.
15.	Mr. Pritchard says that this is not the whole picture.  First of all he points to material which in fact I had before the preliminary issue which showed that Mr. Humphreys had been considering prior use allegations of some kind since 2008.  He refers to an e‑mail which makes it clear that Mr.  Humphreys was confident of their position in relation to the prior use in relation to this patent.  It seems to me whether that in fact relates to this allegation or not is not clear, and I do not need to be concerned with that.  
16.	Mr. Pritchard then refers to an e‑mail in 2009.  This e‑mail is exhibited to the fourth witness statement of Simon Humphreys.  This witness statement was the witness statement which was before me (or one of the documents before me) to justify why I should allow, which I did, the late amendment to the grounds of invalidity to admit the allegation of prior use in relation to Phantasialand in the first place.  What Mr. Humphreys fourth witness statement is doing is seeking to explain why it is that the matter has arisen as late as it has.
17.	Mr. Pritchard drew to my attention to the fact that it includes an e‑mail exchange between Mr. Humphreys and Daniel Augusiak in August of 2009 which relates to preparing the evidence to substantiate these prior uses and makes the point that Mr. Augusiak replies to Mr. Humphreys.  Mr. Humphreys' question is as follows. 
 "Hello Daniel, I hope that you are well.  Our lawyer (Peter Taylor who is cc'd on this e‑mail) has just asked me for the prior art evidence so he can review it and determine if we can use this in our case.  At this 1st stage we just need a brief outline of the prior art available e.g. date, name of shows/events, drawings, photos, videos, etc).  The witness statements can be arranged later if this proceeds to court." 
18.	In reply, Mr. Augusiak says:  
"Hi Simon, as said before, it is not possible to just send over any prior art evidence.  For our case in Munich we need to be very careful with these information.  Therefore it is essential that our lawyers prepare this case as explained in my previous e‑mail."
19.	The point that Mr. Andrews makes is that this bears out his point that everything Mr. Augusiak produces is vetted by his lawyers, which I do not doubt is the case.  The point that Mr. Pritchard makes is that this shows that the preparation of the case on this issue has been going since August 2009.  
20.	I should also interpolate that Mr. Augusiak is involved in an opposition in the EPO along with the Activ8 Limited in which this prior use is also material; so Mr. Augusiak himself has an interest in pressing this point.
21.	I will refer next to the passage in Mr. Humphreys' fourth witness statement that Mr. Pritchard took me to.  It seems to me that there are two pertinent paragraphs.  One is paragraph 13.  There it is explained that there was a meeting on 7th September 2010 between Peter Taylor, who was the solicitor then acting for Activ8 and Mr. Humphreys, and Daniel Augusiak, and presumably others too, but at least those two.  At that stage, according to Mr. Humphreys, Mr. Augusiak explained that whether the systems were sold or hired out to a customer, Musion GmbH did not impose any obligation on the customer to keep the details of the system confidential.  This question of whether Musion GmbH had imposed an obligation of confidence on the customer is the question to which all this material relates.  The argument is about whether the contract does or does not impose an obligation of confidence, either expressly or if not expressly perhaps by implication.  That is what the documents are all related to.  Mr. Pritchard points out that there has been a discussion specifically with the solicitors for Activ8 at that time and Mr. Augusiak going back at least to September 2010.
22.	Mr. Pritchard also refers to paragraph 15, which indicates as follows:  
"Towards the end of September 2010, Daniel Augusiak told me that he had not so far been able to find any paperwork relating to the Phantasialand project but had arranged for someone to trawl through Musion GmbH's old archive records.  In early October 2010 he told us that he had managed to locate some documents and that these would be exhibited to the grounds of opposition which Blickfang would be filing at the European Patent Office by the 20th October 2010 deadline." 
I should note that Blickfang is Mr. Augusiak's company.  Mr. Pritchard submits that there was a trawl to find documents and documents were found.
23.	Then Mr. Pritchard refers me to the pleading itself, the amended grounds of invalidity, which I admitted into the proceedings in July 2011.  This is an allegation that the patent lacks novelty: 
 "The image projection apparatus supplied by Musion GmbH to the 'Feng Ju Palace' in the Phantasialand Amusement Park ('Phantasialand') at Berggeiststrasse 31‑41, 50321 Bruhl, Germany in June 2002.  Annexed hereto at Annexes A‑C respectively are copies of: contractual documents between Musion GmbH and Phantasialand; structural drawings of the image projection apparatus; and some recently taken photographs of the installation."
24.	Mr. Pritchard submits that it has been apparent since the absolute latest (June or July of 2011) that contractual documents were relevant.  Mr. Pritchard says it is plain and it has always been plain to this litigant, that these documents, the documents now sought to be put in at this incredibly late stage, have been vital for many months if not for years.  There is no proper excuse and the costs thrown away by the adjournment should be borne by the Activ8 defendants.
25.	Mr. Andrews repeats that he has been trying to get documents from Mr. Augusiak, and that is the explanation for why the matters are so late.
26.	It seems to me that what this trawl through the history shows is that it is not a sufficient excuse for Mr. Andrews to submit that it was only seeing Mr. Maass' evidence in September, which refers to a contract, which justifies the late production of this contractual material.  It is quite obvious that the terms on which the deal between Musion GmbH and Phantasialand was done have been material and known to be material since at least 2010, if not before, and contractual documents were referred to in the pleading itself.
27.	As regards the adjourned balance payment of £40,000 out of the £70,000, Mr. Andrews points out that it was adjourned because of Mr. Humphreys' evidence that he could not pay any larger sum than the £30,000 I ordered him to pay.  To that, Mr. Pritchard points out that the adjournment was to give Mr. Humphreys time to get the money together, and the adjournment was until the trial which was to have been, when it was adjourned, this date, which is 24th October 2011.
28.	Obviously I have a discretion what to do about the costs.  I bear in mind the overriding objective, which is to deal with cases justly.  What should I do about costs?  It seems to me that this adjournment has been caused by Activ8 failing to get their evidence together in the proper time, for the reasons Mr. Pritchard has advanced, and I will order that the costs thrown away by the adjournment are paid by Activ8 and Mr. Humphreys.
29.	As regards the £40,000, it seems to me that although when I made the order it cannot be denied that the contemplation of the court was that the adjournment was until October 2011, the order I actually made was to adjourn the payment until trial.  Since I am adjourning the trial, I will not interfere with the order I made before and that payment will be adjourned over to the trial which has been itself adjourned, which means that there will be no further requirement to pay the £40,000.  If I had made a different order at the time, things might have been different.  Since I made the order I made, it does not seem to me to be proper to revisit that order.  I will order that the Activ8 defendants, that is to say the first and fourth defendants, pay the costs thrown away by this adjournment.
(See separate transcript for proceedings after judgment)