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URL: http://www.bailii.org/ew/cases/EWCA/Civ/2012/729.html
Cite as: [2012] Bus LR 1889, [2012] EWCA Civ 729, [2012] WLR(D) 166

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Neutral Citation Number: [2012] EWCA Civ 729
Case No: A3/2012/0866

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
MR JUSTICE MANN

[2012] EWHC 889 (Ch)

Royal Courts of Justice
Strand, London, WC2A 2LL
30/05/2012

B e f o r e :

LORD NEUBERGER, MASTER OF THE ROLLS
LORD JUSTICE LLOYD
and
LORD JUSTICE MOORE-BICK

____________________

Between:
SAMSUNG ELECTRONICS (UK) LTD

Claimant
Respondent
- and –


APPLE INC
Defendant
Appellant

____________________

Michael Silverleaf Q.C. and Richard Hacon (instructed by
Freshfields Bruckhaus Deringer LLP) for the Appellant
Henry Carr Q.C. and Anna Edwards-Stuart (instructed by
Simmons & Simmons LLP) for the Respondent
Hearing date: 21 May 2012

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Lord Justice Lloyd:

    Introduction

  1. This is the judgment of the court. The proceedings in which this appeal arises form part of a large body of litigation between Apple Inc, the appellant, on the one hand, and various companies in the Samsung group on the other, in which Apple alleges that Samsung's Galaxy tablet computer (in several versions) infringes Apple's rights in respect of its registered Community design No. 181,607-0001. There are or have been proceedings in the Netherlands, in Germany and in Spain as well as in England, and there have also been proceedings (not relating to a Community design) in other countries outside the EU. In addition, there are proceedings in the Office for Harmonisation in the Internal Market (OHIM) brought by a number of companies in the Samsung group claiming that Apple's registered design is invalid. The issue in this appeal is as to the relationship between the proceedings in this country and those proceedings in OHIM.
  2. The appeal is by Apple against an order of Mann J made on 4 April 2012. The relevant part of that order was the refusal of Apple's application for an order that Samsung's claim for a declaration that the Galaxy does not infringe Apple's registered design should be stayed. Having refused that application the judge went on to give case management directions in respect of Samsung's claim and Apple's counterclaim (which is for infringement), under which both claim and counterclaim are to come on for hearing on a highly expedited timetable, under which they are now due for trial on 18 June 2012 for two days. The need for urgency arises because of the intense competition between the rival parties and their products in the market, and because of Samsung's position that Apple's contention that the Galaxy infringes the registered design is putting Samsung wrongly and unfairly at a disadvantage in the market. The judge said at paragraph 54 of his judgment:
  3. "The dispute in this case needs resolution while the designs of the product are still current, and in the context of a Europe-wide dispute about these tablet computers it is necessary to start to get some (or some more) final decisions in place to produce certainty and remove public and litigation posturing."
  4. The legal issue on the appeal is posed by the terms of article 91(1) of the Council Regulation (EC) No 6/2002 on Community designs (CDR for short). Before we come to that, and to other relevant provisions of the CDR, we must describe briefly the course of the proceedings, limiting this as regards details to those directly relevant, that is the OHIM proceedings and those in England.
  5. Samsung announced two versions of the Galaxy to the public early in 2011, and launched its version Tab 10.1 in the EU (including in the UK) on 3 August 2011. Apple started proceedings in Germany to prevent Samsung selling Tab 10.1 in the EU and obtained an ex parte injunction on an EU-wide basis on 9 August, which, however, only lasted for a week before being limited to Germany. Also on 9 August 2011 a number of Samsung group companies applied to OHIM for a declaration of invalidity as regards Apple's registered design. (For the purposes of this judgment, we do not need to distinguish either between different versions of the Galaxy product or, in general, between different entities in the Samsung group.)
  6. On 9 September 2011 the present proceedings were commenced by two Samsung companies, claiming a declaration that the Galaxy does not infringe Apple's registered design. These proceedings do not put in issue the validity of the registered design. The Particulars of Claim include the phrase (in the particulars under paragraph 6) "If (which is not admitted) the Registered Design is valid". That is consistent with Samsung's position in the OHIM proceedings. It is also consistent with the CDR under which validity cannot be put in issue in a claim for a declaration of non-infringement.
  7. In December 2011 Apple served a Defence and Counterclaim alleging, in the counterclaim, that the Galaxy does infringe the registered design and seeking a declaration of infringement and injunctive and other relief appropriate to a case of infringement. In turn Samsung's Reply and Defence to Counterclaim served in January 2012 put infringement in issue, but did not, as it might have done, assert invalidity by a counterclaim to the counterclaim.
  8. Thus, validity or otherwise is in issue in the OHIM proceedings, and, on the assumption that the registered design is valid, infringement or not is in issue in these proceedings, by virtue of both Samsung's claim for a declaration of non-infringement and Apple's counterclaim for infringement. That is a situation in which, according to Apple, the English proceedings must be stayed, unless Samsung withdraws its OHIM proceedings and puts validity or otherwise in issue (assuming it wishes to do so) in the English proceedings. Apple's position on this has evolved and it is not put on the same basis by Mr Silverleaf Q.C. (leading Mr Hacon) on the appeal as it was by Mr Thorley Q.C. (leading Mr Delaney) before Mr Justice Mann. For Samsung Mr Carr Q.C. and Miss Edwards-Stuart appeared both before us and before the judge. The judge refused permission to appeal, but such permission was granted by Lord Justice Kitchin. We are grateful to Counsel for their clear and succinct presentation of the issues in the written and oral submissions.
  9. The Community Design Regulation

  10. This regulation is in many respects similar to the Community regulation concerning trade marks (CTMR). Although the latter is currently in a consolidated form dating from 2009, the CDR was no doubt largely derived from the form in which the CTMR stood in or before 2001, having been promulgated first in 1993 as regulation 40/94. As in the case of trade marks, designs may be registered at OHIM, and issues as to their validity (but not as to infringement) may be contested in OHIM. Unlike trade marks, Community rights exist in relation to unregistered as well as registered designs, but this case is concerned only with a registered design.
  11. The general motive of the CDR is identified in recital (1) as follows:
  12. "A unified system for obtaining a Community design to which uniform protection is given with uniform effect throughout the entire territory of the Community would further the objectives of the Community as laid down in the Treaty."
  13. Recital (6) records that the objective cannot be sufficiently achieved by action by Member States alone, so that Community action is justified. Recital (27) states that "A procedure for hearing actions concerning validity of a registered Community design in a single place would bring savings in costs and time compared with procedures involving different national courts" Recitals (29) and (30) are as follows:
  14. "(29) It is essential that the rights conferred by a Community design can be enforced in an efficient manner throughout the territory of the Community.
    (30) The litigation system should avoid as far as possible 'forum shopping'. It is therefore necessary to establish clear rules of international jurisdiction."
  15. The CDR does not include two recitals which are to be found in the CTMR, but the corresponding substantive text is the same and there is no good reason to suppose that the policy behind these two recitals does not also inform the CDR. They are recitals (16) and (17) of regulation 207/2009. Their gist is that, first, decisions as regards validity and infringement of Community trade marks must have effect and cover the entire area of the Community, so as to prevent inconsistent decisions on the part of the courts and of OHIM and to ensure the unitary character of Community trade marks, and secondly, contradictory judgments are to be avoided involving the same acts and the same parties if brought on the basis of a Community trade mark and parallel national trade marks.
  16. The substantive provisions of the CDR are set out in twelve titles, of which the present appeal is concerned with Title IX, headed "Jurisdiction and procedure in legal actions relating to community designs". Before turning to those provisions we must mention some of the earlier articles. Article 24, headed "Declaration of invalidity", provides that a registered Community design may be declared invalid either on application to OHIM or by a Community design court on the basis of a counterclaim in infringement proceedings. The reference to a counterclaim (and the contrast with article 24(3) concerning unregistered designs) points to the fact that an objector cannot initiate proceedings in court for a declaration of invalidity of a registered design. OHIM is the only recourse for a party who wishes to take the initiative by seeking a declaration of invalidity in respect of a registered design, whereas OHIM has no standing or function in relation to an unregistered Community design. Article 25 deals with grounds for invalidity, and article 26 with consequences of invalidity. The latter is as follows:
  17. "1. A Community design shall be deemed not to have had, as from the outset, the effects specified in this Regulation, to the extent that it has been declared invalid.
    2. Subject to the national provisions relating either to claims for compensation for damage caused by negligence or lack of good faith on the part of the holder of the Community design, or to unjust enrichment, the retroactive effect of invalidity of the Community design shall not affect:
    (a) any decision on infringement which has acquired the authority of a final decision and been enforced prior to the invalidity decision;
    (b) any contract concluded prior to the invalidity decision, in so far as it has been performed before the decision; however, repayment, to an extent justified by the circumstances, of sums paid under the relevant contract may be claimed on grounds of equity."
  18. Coming to Title IX, this begins at article 79 by dealing with the modified application of the Brussels Convention (now the corresponding Regulation) on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters. This is to apply, with stated modifications, to proceedings relating to Community designs as well as to proceedings relating to actions on the basis of Community designs and national designs enjoying simultaneous protection.
  19. Article 80 requires Member States to designate national courts and tribunals to perform the functions of Community design courts as provided for under the regulation.
  20. Article 81 deals with jurisdiction over infringement and validity. It is as follows:
  21. "The Community design courts shall have exclusive jurisdiction:
    (a) for infringement actions and — if they are permitted under national law — actions in respect of threatened infringement of Community designs;
    (b) for actions for declaration of non-infringement of Community designs, if they are permitted under national law;
    (c) for actions for a declaration of invalidity of an unregistered Community design;
    (d) for counterclaims for a declaration of invalidity of a Community design raised in connection with actions under (a)."
  22. Article 82 deals with the appropriate jurisdiction for "proceedings in respect of the actions and claims referred to in article 81", as between the courts of different Member States. The details do not matter for present purposes.
  23. Article 84 is headed "Action or counterclaim for a declaration of invalidity of a Community design". Paragraphs (1) and (2) deal with the relevant grounds of invalidity and with the persons who can bring such an action or counterclaim. An action for invalidity is possible, but only in relation to an unregistered Community design. For present purposes the important provision is paragraph (4):
  24. "The validity of a Community design may not be put in issue in an action for a declaration of non-infringement."
  25. By article 85, of which paragraph (1) deals with registered designs, a Community design court is to treat the Community design as valid in proceedings in respect of an infringement action. "Validity may be challenged only with a counterclaim for a declaration of invalidity." Mr Carr told us that, for this reason, someone who is at risk of being challenged as an infringer, but against whom proceedings have not yet been brought, may well wish to start proceedings for invalidity in OHIM in order to be able to show to the national court, if he is later sued for infringement, that validity is already in issue.
  26. Article 86 is headed "Judgments of invalidity". Paragraph (3) received some attention during submissions before us. It is as follows:
  27. "The Community design court hearing a counterclaim for a declaration of invalidity of a registered Community design may, on application by the right holder of the registered Community design and after hearing the other parties, stay the proceedings and request the defendant to submit an application for a declaration of invalidity to the Office within a time limit which the court shall determine. If the application is not made within the time limit, the proceedings shall continue; the counterclaim shall be deemed withdrawn. Article 91(3) shall apply."
  28. Article 87 provides that a judgment of a Community design court declaring a Community design invalid has effect in all Member States in accordance with article 26.
  29. At the centre of this appeal is article 91, headed "Specific rules on related actions". Paragraph (1) is follows:
  30. "A Community design court hearing an action referred to in Article 81, other than an action for a declaration of non-infringement, shall, unless there are special grounds for continuing the hearing, of its own motion after hearing the parties, or at the request of one of the parties and after hearing the other parties, stay the proceedings where the validity of the Community design is already in issue before another Community design court on account of a counterclaim or, in the case of a registered Community design, where an application for a declaration of invalidity has already been filed at the Office."
  31. Paragraph (3) of the same article allows the court, on staying the proceedings, to order provisional measures, including protective measures, for the duration of the stay. Paragraph (2) of the article provides for a stay if invalidity proceedings are brought in OHIM when there are already such proceedings by counterclaim in a national court; the details of this do not matter for present purposes.
  32. We do not need to refer to any other provision of the CDR. The provisions of Title IX of the CDR are closely parallel to those of Title X of the CTMR. However, there appears to be no authority on the meaning or effect of the relevant provisions of either regulation.
  33. Discussion

  34. Samsung's English proceedings were and are for a declaration of non-infringement. They are therefore within paragraph (b) of article 81. Necessarily, in accordance with article 84(4), they do not put in issue the validity of the registered design. That could only be done (in August or September 2011) by the application to OHIM which Samsung made.
  35. Apple's counterclaim in Samsung's English proceedings is within paragraph (a) of article 81, as an infringement action, even though it is brought by counterclaim to an existing action, rather than by an action as such. Samsung could have brought a counterclaim to that counterclaim under paragraph (d) of article 81 claiming the invalidity of the registered design, but has not done so.
  36. Apple's application was for a stay of Samsung's claim and of its own counterclaim, under article 91(1). This was on the basis that the Patents Court, within the Chancery Division, as a Community design court, would be hearing an action referred to in article 81, other than an action for a declaration of non-infringement, and that the validity of the design was in issue on an application to OHIM.
  37. Before Mann J the argument was presented principally on the basis that Samsung's claim touched on the validity of the registered design and was therefore not to be understood as being within the exception for an action for a declaration of non-infringement, that being properly construed on a narrow basis. The judge rejected that contention. We do not need to say any more about it than that he was right to do so for the reasons he gave.
  38. On the appeal Apple's argument was put rather differently. Although Samsung's claim is an action for a declaration of non-infringement, and therefore on its face within the exception in article 91(1), Apple's counterclaim is an infringement action, and therefore within the main provision of article 91(1), not the exception. Mr Silverleaf's submission was that, since the court would be hearing an action referred to in article 81 which is not taken out of the article by the exception, and since invalidity is in issue in Samsung's prior proceedings in OHIM, the court is required (absent special grounds) to stay "the proceedings" which, he argued, means both claim and counterclaim. That would leave both claim and counterclaim in abeyance pending the resolution of the OHIM proceedings. He pointed out, however, that this result could be avoided by Samsung if it were to withdraw its OHIM application and instead put invalidity in issue (assuming it still wants to do so) by a counterclaim to Apple's counterclaim in the English proceedings.
  39. Logically there could be three possible outcomes. The court could refuse a stay, as Mann J did, leaving both the claim for a declaration of non-infringement and the counterclaim for infringement to proceed to trial, or the court could grant a stay of the infringement claim while leaving the claim for a declaration of non-infringement to go to trial, or the court could stay both the claim and the counterclaim.
  40. For Apple Mr Silverleaf argued that the judge's order could not be right (absent special grounds, and his order was not put on that basis) because on any footing article 91(1) appears to require that the proceedings which are within article 81 and not excepted (i.e. the infringement counterclaim) should be stayed. He also submitted that to stay the counterclaim but not the claim would be unfair, as well as inappropriate. He argued that, if the issue of infringement was to go to trial on the claim, there should be no good reason why the counterclaim should not also go to trial. Otherwise, if Samsung were to lose on the issue of infringement, Apple would have won, but would not have before the court its counterclaim on which it could be granted the appropriate remedies. There was some debate before us about the position as it would be if Apple won on infringement, but the issue of invalidity remained open in OHIM so that at the end of the day Apple might prove not to be entitled to the rights it had asserted. Article 26 would mean that the declaration of invalidity would have retrospective effect, but by virtue of article 26(2)(a) it seems that this might not affect the court's intervening decision on infringement if it had become final and had been enforced, for example by the grant of an injunction. It is not necessary to decide what the position would be in those circumstances, and we do not do so.
  41. In support of his argument that both claim and counterclaim were required to be stayed, Mr Silverleaf prayed in aid both the text of the CDR and the underlying policy. He argued that the words of article 91(1) "shall … stay the proceedings", and the contrast with "the action" as used earlier in the article, point to the stay being of whatever proceedings are before the court, that is to say here both action and counterclaim. He relied on other uses of the words "proceedings" and "action" in title IX, above all the use of "proceedings" in article 86(3) in two places, the first of which, he argued, must mean both action and counterclaim.
  42. The language of this part of the CDR does draw a distinction between "actions" and "proceedings", the former generally referring to a claim and the latter having a wider ambit. However, we are reluctant to place too much weight on detailed linguistic points, especially where different inferences may be derived from different language versions which deal with the same subject somewhat differently. Thus, the French text does not have a different noun where the English uses "hearing"; there it uses "la procédure", though for "an action" it has "une action". It does not seem to identify the subject of the stay by a separate noun, saying instead "un tribunal … sursoit à statuer". The Italian has "il procedimento" where the English has "the hearing" and also "the proceedings", and "un'azione" where the English is "an action". The German has "das Verfahren" for the English "the proceedings", it has (in effect) "its" continuation (i.e. that of "das Verfahren" – the proceedings) in place of the English "the hearing", and "eine Klage" for an action. We have not examined any other version.
  43. Article 86(3) does provide Mr Silverleaf with some support, in terms of the English language version at least, for the proposition that, in a situation where there is both an action and a counterclaim, the phrase "the proceedings" is used to refer to both the action and the counterclaim. Its first use in that paragraph seems to be to a stay of both of them, pending the defendant's decision whether or not to apply to OHIM. Its second use refers to the action, since the counterclaim is deemed withdrawn, by virtue of the article itself.
  44. More important than detailed linguistic points, on any basis, is the policy behind these provisions of the CDR. As to this Mr Silverleaf and Mr Carr identified different features. Mr Carr pointed out that Samsung took the only courses open to them at the time. They could not commence an action asserting invalidity, so they challenged validity in OHIM. They could, and therefore did, commence an action claiming a declaration of non-infringement. He submitted that the latter is an important right for a person who has been, or may be, alleged to infringe a registered Community design, and who considers that the allegation is unjustified even if (which he may not wish to admit) the registered design is valid. Especially in a very active and competitive market such as that for tablet computers, to be able to bring such an action and get it to a hearing quickly is an important and valuable recourse for a person in his client's position. By contrast, he told us, proceedings in OHIM tend to be slow, and the present application may not be resolved for several years. According to his client's evidence, proceedings in the Invalidity Division of OHIM itself are unlikely to be determined until 2013, and appeals are possible as of right to the Third Board of Appeal and then to the General Court in Luxembourg. On that basis the evidence suggested that appeals are unlikely to be exhausted before 2018. Accordingly, he argued that, if Apple is right, the holder of a registered design could frustrate the ability of the alleged infringer to obtain a rapid clearance to market his own product by way of a declaration of non-infringement, leaving the competitor to await the outcome of the slow processes of OHIM. In that way, the proprietor of the registered design could stymie a legitimate claim for a declaration of non-infringement, and the natural commercial desire for speed on that claim, by taking the natural and predictable course of counterclaiming for infringement, leaving the whole matter in abeyance pending a decision by OHIM. Even if no interim measures were granted to protect the registered design rights, the continuing uncertainty would be very damaging for the alleged infringer. Mr Carr suggested that Apple was motivated by a desire for delay. Whether or not that is a fair comment in this case (as to which we say nothing) it would at least be a possible forensic tactic.
  45. On that basis Mr Carr argued that the policy required that article 91(1) be read so as to require (subject to special grounds) only the stay of the proceedings which are within article 81 and not excepted by article 91(1) itself. Specifically, Apple's counterclaim should be stayed (absent special grounds) but Samsung's claim for the declaration of non-infringement should not be stayed.
  46. As against that Mr Silverleaf pointed out that Apple had done that which it was entitled to do in response to Samsung's two initiatives and, moreover, that Apple's counterclaim for infringement opened up another option for Samsung, namely to challenge validity in the English proceedings instead of in OHIM. If Samsung were to take this opportunity and were able to establish, in the English proceedings, that the registered design was invalid, that would have effect throughout the Community, under article 87, just as an OHIM decision would do. Moreover, to put validity in issue in the English proceedings would not preclude the court from considering the non-infringement aspect first, without prejudice to the arguments about validity, so that, even if validity might take longer to decide, so that a hearing dealing with that could not be brought on so quickly, the court could direct separate hearings, with non-infringement to be taken first, and on an expedited basis if that was justified on the facts. On behalf of Apple he offered to agree that, if Samsung would withdraw the OHIM proceedings, so that article 91 was no longer relevant, (and would do so soon enough) the currently fixed hearing date could be held to for the non-infringement issues, leaving validity to be dealt with, if necessary, in due course once the issues had been properly formulated by further pleadings. The application to OHIM was made not only by the two Samsung companies which are parties to these proceedings but also by other Samsung companies relevant in other Member States. All of them would have to withdraw the OHIM application for article 91 to cease to be relevant.
  47. The possibility of an OHIM application on the part of someone who is not a party to the proceedings in the national court raises one of the points on which Mr Carr relied. It might be all very well, he said, if (as here) the OHIM application is by the same party as has brought the action for a declaration of non-infringement, or by related parties. They would have control over their own application to OHIM. But the application to OHIM might have been made by an unrelated third party, another competitor in the market (either Europe-wide or in one or more other Member States) of the registered design proprietor and perhaps also of the party seeking the declaration of non-infringement. It might even have been brought on a collusive basis by another undertaking, not part of the commercial group of the registered design holder, but willing to do it a favour for some reason. In such a case it would not be within the control of the claimant for the declaration of non-infringement to see that the OHIM application is withdrawn, in order to clear article 91 out of the way. Equally, the design right holder might sue a different competitor for infringement in another Member State, and that alleged infringer might counterclaim for invalidity in those proceedings. That situation would also bring article 91(1) into play in circumstances in which the party seeking the declaration of non-infringement would have no control over the invalidity proceedings.
  48. Mr Silverleaf met that argument with the proposition that, if the claimant really could not get the OHIM application withdrawn, or in the case of a counterclaim elsewhere involving a different and unrelated alleged infringer, there would be ample special grounds for not ordering a stay under article 91(1), so that the claimant would not be at a disadvantage by reason of the proceedings pending in OHIM or of the separate counterclaim proceeding elsewhere.
  49. The essence of Mr Carr's argument about article 91(1), building on his point about the importance to someone in his client's position of the ability to claim a declaration of non-infringement, and to bring that claim to a speedy trial, is that this is the whole point of excepting such a claim from article 91(1), and that the paragraph should not be read as requiring such a claim to be stayed under any circumstances. Thus, he submitted, it is only Apple's action (by counterclaim) for infringement that attracts the application of article 91(1) and it is only that that falls to be stayed, absent special grounds. He argued that it is not necessary or appropriate to construe "stay the proceedings" as requiring the stay of a proceeding which is expressly excepted from the effect of the article.
  50. The purpose of article 91(1) is plain. Consistently with recitals (29) and (30) of the CDR, it creates a rule which prevents the validity of a registered Community design being considered in simultaneous proceedings in different fora, subject to two exceptions, one real and the other more apparent than real. The first is where there are 'special grounds' for permitting two such proceedings to continue. That is, presumably, to ensure that the rule has a degree of flexibility and is not used to create injustice. The second is where the action is for a declaration of non-infringement. A potential infringer may well want, and be able to obtain, a quick determination that his product does not infringe (even if the registered design is valid), and he should not have to wait for validity proceedings to be determined before he can know whether it is safe to market his product. That would be to his benefit, and to that of the public. Given that Article 84(4) specifically excludes the validity of a Community design being put in issue in an action for a declaration of non-infringement, such an action would not give rise to the mischief which the rule is intended to avoid. For that reason, this case is not a true exception to the rule identified above.
  51. The issue on this appeal ultimately turns on the meaning of the words 'the proceedings' in article 91(1), in a case where the defendant proprietor of a registered Community design brings a counterclaim alleging infringement of the design against a claimant who has issued a claim, in a Community design court, seeking a declaration of non-infringement, in circumstances where the validity of the design is already in issue before OHIM or before another Community design court. In such circumstances, the question to be resolved is whether 'the proceedings' are both the claim and the counterclaim, as Apple contends (in which case, both are to be stayed unless 'there are special grounds for continuing the hearing'), or whether 'the proceedings' are simply the counterclaim, as Samsung contends (in which case the claim can continue, but the counterclaim is to be stayed in the absence of 'special grounds').
  52. Each side suggested anomalous results as arising from the other's preferred interpretation. For Apple, it is said to be quite wrong to contemplate that Samsung could litigate its claim for a declaration of non-infringement without facing a counterclaim for infringement, upon which, if Samsung were to lose, Apple could obtain the relief that would normally follow from a finding of infringement. For Samsung, reliance is placed on the fact that, absent a plea of special grounds, in circumstances which would not necessarily be at all unusual, the claimant for a declaration of non-infringement would, according to Apple, have its claim frustrated and substantially delayed by other proceedings, whether in OHIM or in the Community design courts of another Member State, over which it might have no control and which might remain pending for a long time. Given the ability (at least in this jurisdiction and evidently in some other, if not in all, Member States) to seek a declaration of non-infringement, and given the value of that ability, as explained to us by Mr Carr and well illustrated by the present case, that would be very substantially impaired by Apple's reading of article 91(1). Moreover it does not seem to us that it can by any means be assumed that the existence of other invalidity proceedings, whether in OHIM or by counterclaim in another Member State, brought by an unrelated third party, would qualify as special grounds so as to obviate the requirement of a stay under article 91(1).
  53. It is also to be noted that, if Mr Silverleaf is right about special grounds, article 91(1) would apply, in that event, in such a way that there would be two parallel invalidity proceedings, one in a Community design court by counterclaim and the other either in another such court in a different Member State or in OHIM, neither of them being stayed. Both parts of article 91 proceed on the basis that the first set of proceedings have priority, as appears from the use of the phrase "is already in issue", which presumably applies to the moment when the proceedings in question are commenced. That concurrence of active proceedings would be inconsistent with the manifest policy of the CDR.
  54. As for Mr Silverleaf's argument that this would involve an illegitimate reading of "the proceedings" in article 91(1), which he submitted had to be contrasted with, and understood differently from, "the action", we would refer, first, to our hesitation about attaching too much importance to particular wording as against the policy of the legislation as understood from the CDR as a whole, mentioned at paragraphs [32] and [34] above. Secondly, in the context of article 91(1), it seems to us that it would be natural to read "the proceedings" as referring back to the opening words of the paragraph, that is to say to "an action referred to in article 81, other than an action for a declaration of non-infringement". That is the part of the litigation before the court which involves, or could involve, an issue of validity or invalidity, whereas a claim for a declaration of non-infringement cannot do so, by virtue of article 84(4). Article 86(3) is Mr Silverleaf's best material in opposition to that reading, but there is no such phrase in that paragraph, back to which the expression "the proceedings" could be taken to refer.
  55. Accordingly, we conclude that the policy of article 91 in particular and of the CDR as a whole shows that the correct reading of that article is that, in the circumstances to which the article applies, if there is a claim for a declaration of non-infringement and a counterclaim for infringement, the stay which is required by the article, absent special grounds, is of the counterclaim, not of the claim. Nor is that reading inconsistent with the language of the article in its context.
  56. It was submitted by Mr Silverleaf that, depending on the view taken of the effect of article 91(1), there might be a question of interpretation of the article which would require to be referred to the CJEU for a preliminary reference. On the view that we take of the article, we do not consider that there is any doubt which calls for such a reference.
  57. Conclusion and disposal

  58. Thus, on our reading of article 91(1) it does not require that Samsung's claim should be stayed, despite Apple's counterclaim, but it does require Apple's counterclaim to be stayed, unless there are special grounds for "continuing the hearing", that is to say for allowing it to proceed without imposing a stay. Subject to the issue of special grounds, the intermediate outcome of the three identified in paragraph [29] above is correct. As regards the claim, at any rate, the appeal should be dismissed and it should proceed to trial in accordance with the judge's directions already given.
  59. That leaves the question of the fate of the counterclaim: should it be allowed to continue, on the basis of special grounds, or should it be stayed in accordance with article 91(1)? This was not an issue considered by the judge, because it did not arise on the arguments put to him. There was some limited debate before us on this possibility. Samsung did not oppose Apple's suggestion that there ought not to be a stay of the counterclaim. However, we do not think that the agreement of the parties, or absence of opposition on the part of the claimant, could be sufficient by itself to amount to special grounds for this purpose.
  60. It seems to us that, while it would be rash to attempt to define "special grounds", something can usefully be said in relation to the legislative policy. The nature and force of the special grounds which would justify not ordering a stay in a given case would need to be such as make it appropriate to allow proceedings to continue to which article 91(1) applies, thereby opening up the possibility of parallel and active proceedings on the same issue of validity or otherwise, and therefore possible inconsistent decisions on the same point in different courts or as between a Community design court and OHIM. The grounds would have to be of sufficient importance and substance, on the facts of the given case, to justify that risk. In relation to the present case, some features apparent to us might be eligible to be brought into account on this question. (There may well be others.) One is that the current proceedings in England do not in fact include any issue as to validity, because Samsung has not responded to Apple's counterclaim, as it could have done, by counterclaiming for a declaration of invalidity. Therefore the proceedings as currently constituted would not result in the English court coming to a decision as to validity which would be even potentially inconsistent with whatever determination was eventually reached (if any) by OHIM. Another relevant factor might be the objectively justifiable need, as found by the judge, for speed in the determination of the claim, though whether that itself justifies allowing the counterclaim to proceed, rather than only the claim, may require further consideration. Moreover, although we do not see that the parties' agreement could itself constitute special grounds, the fact that they do agree, or that Samsung does not object, and that the invalidity proceedings are brought by Samsung, may be a factor which can properly be taken into account.
  61. Samsung did not seek an order for a stay of the counterclaim by its Respondent's Notice, but the question clearly arises on the reading of article 91 which we have held to be correct. It does not seem to us that we can be confident that we have before us all the relevant material on which to decide that question. On the other hand, it is not a point which, as it seems, is likely to require the calling of witnesses. If time were not so short before the trial date fixed by the judge's order, it might be sensible for this issue either to be determined after further argument before this court, or to be remitted for decision at first instance before the trial. As it is, and given that claim and counterclaim are mirror images of each other, we propose to order that the issue whether the counterclaim should be stayed under article 91(1), that is to say the question whether there are special grounds for it not to be stayed, should be remitted to the Patents Court, to be determined upon argument at the time of the imminent trial. Since it will not affect the issues at the trial itself, which are the same on the claim as on the counterclaim, it does not seem to us that to require the judge to decide this additional issue should cause difficulties at the trial, other than by requiring what we hope will be a modest amount of time to be devoted to this aspect of the argument.
  62. On the main issue, that is to say whether the claim should be stayed, which would render the imminent trial abortive, unless the OHIM proceedings were withdrawn very promptly, we hold that Samsung's arguments are correct and we therefore dismiss the appeal.


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URL: http://www.bailii.org/ew/cases/EWCA/Civ/2012/729.html