Unilever Plc v The Procter & Gamble Company

Factual and Procedural Background

This is an appeal from an order made by Judge Laddie in the Patents Court striking out an action brought by Company A (the appellant) against Company B (the respondent) as an abuse of process. The dispute arises from patent infringement threats related to European Patent (UK) number 0343069, which Company B owns and which covers a laundry washing process. Company A contended that its product, Persil Performance Tablets, did not infringe this patent. There were ongoing opposition proceedings at the European Patent Office and related litigation in France involving subsidiaries of the parties. A high-level meeting took place in Frankfurt on 20 May 1998 under 'without prejudice' terms, during which Company B allegedly made a claim of right and threatened proceedings against Company A in the UK. Following an arrangement between a third party and Company B, Company A promptly issued proceedings seeking a declaration of non-infringement, motivated by a desire to intervene in the European Patent Office appeal proceedings under Article 105 of the European Patent Convention. Company B subsequently commenced infringement proceedings against a subsidiary of Company A in the UK and sought to strike out Company A’s action for a declaration of non-infringement.

Legal Issues Presented

1. Whether the general rule of evidence on 'without prejudice' communications applies to an action for threats under section 70 of the Patents Act 1977.
2. Whether the action brought by Company A constituted an action under section 70 of the Patents Act 1977.
3. Whether declaratory relief could be granted under the court’s general jurisdiction apart from sections 70 or 71 of the Patents Act 1977.

Arguments of the Parties

Appellant's Arguments

• The appellant argued that the 'without prejudice' rule should not shield Company B’s alleged threat made during the negotiations, as section 70 imposes statutory consequences on such threats regardless of the label.
• They contended that the threat should be assumed true for strike-out purposes and that it constitutes a statutory tort deserving protection from litigation.
• The appellant also advanced a fall-back argument that their claim could succeed as a general declaratory relief claim not based on sections 70 or 71, and that a claim of right was not necessary for such relief.

Respondent's Arguments

• The respondent contended that the 'without prejudice' rule applies to the communications during the Frankfurt meeting, which were part of ongoing settlement negotiations, and thus the alleged threats could not be relied upon in court.
• They argued that the action was an abuse of process and that the claim did not meet the requirements of section 70, particularly regarding the nature of the alleged threat and the relief sought.
• Respondent also raised subsidiary points including the insufficiency of particulars of the threat and the standing of the appellant to seek declaratory relief.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by assuming the pleaded facts true for the purposes of the strike-out application. It examined the nature and purpose of the statutory regime governing threats under section 70 of the Patents Act 1977, noting its evolution from earlier legislation and its specific exceptions, including section 70(4) which limits actionable threats to certain acts of infringement. The court analyzed the 'without prejudice' rule, emphasizing its dual foundation in public policy and implied agreement, primarily protecting admissions made during settlement negotiations from being used as evidence.

The court reviewed modern authorities establishing that while 'without prejudice' communications generally are inadmissible, exceptions exist where the communications are relevant to issues such as whether a settlement was reached, estoppel, or abuse of privilege. It distinguished the present case from older authorities that suggested threats might be admissible despite the 'without prejudice' label, concluding that those cases are either outdated or inapplicable given modern legal developments.

The court found that the Frankfurt meeting was a genuine 'without prejudice' negotiation between experienced representatives of multinational companies, intended to be a candid settlement discussion. It concluded that admitting the alleged threat from that meeting would undermine the public policy objective of encouraging frank negotiations. There was no evidence that Company B acted oppressively or dishonestly, and no recognized exception to the 'without prejudice' rule applied to allow admission of the threat.

The court also considered subsidiary issues, including whether the appellant's action qualified as a threats action under section 70 and whether declaratory relief could be granted under the court's general jurisdiction. It held that a declaration of non-infringement under the general jurisdiction requires an asserted claim of right by the patent proprietor, which was absent here. The court found the appellant's failure to follow the statutory procedure under section 71 notable but not decisive.

Ultimately, the court agreed with the trial judge that the appellant’s action was an abuse of process and that the appeal should be dismissed.

Holding and Implications

The appeal is dismissed. The court upheld the strike-out order, determining that the appellant’s action constituted an abuse of process due to reliance on 'without prejudice' communications made during settlement negotiations. The decision reinforces the protection afforded by the 'without prejudice' rule in the context of patent threats actions and confirms the limited circumstances under which such communications may be admitted. The court also clarified that declaratory relief under the general jurisdiction requires an asserted claim of right, underscoring the importance of statutory compliance in patent infringement disputes. No new precedent was established beyond affirming existing principles and the application of the 'without prejudice' rule in this specialized context.