Friday Law Report: Claim based on without-prejudice discussion failed

A CLAIM for a declaration that the sale or manufacture of the claimant's product would not infringe the defendant's patent, made in response to a claim of right made by the defendant in the course of without-prejudice discussions, was an abuse of process.

The Court of Appeal dismissed the appeal of Unilever plc against the decision to strike out its action against the Proctor & Gamble Co as an abuse of process.

The defendant was the proprietor of European Patent (UK) 0343069. On 29 May 1998, the plaintiff issued a writ against the defendant seeking a declaration that its product known as Persil Performance Tablets would not constitute an infringement of any of the claims of the defendant's patent.

On 20 May 1998, a meeting had taken place between representatives of the plaintiff and the defendant. The discussions had been conducted on a without-prejudice basis. In the course of the meeting the defendant had made a claim of right and had threatened the plaintiff with proceedings for infringement of the patent in suit.

The plaintiff contended that the defendant's action seeking a declaration that its product did not infringe was an abuse of process, since it was a response to a claim of right made during the meeting on 20 May, and was therefore based on inadmissible statements made during without-prejudice negotiations. The judge struck out the plaintiff's claim as an abuse of process, and the plaintiff appealed.

Geoffrey Hobbs QC and Daniel Alexander (Bird & Bird) for the plaintiff; Simon Thorley QC and Colin Birss (Simmons & Simmons) for the defendant.

Lord Justice Robert Walker said that busy practitioners were doubtless acting prudently in making the general working assumption that the without- prejudice rule, if not sacred, had a wide and compelling effect. That was particularly true where the without-prejudice communications in question consisted not only of letters or other written documents, but of wide-ranging unscripted discussions during a meeting which might have lasted several hours.

At a meeting of that sort the discussions between the parties' representatives might contain a mixture of admissions and half-admissions against a party's interest, more or less confident assertions about a party's case, offers, counter- offers, and statements about future plans and possibilities. A threat of infringement proceedings might be deeply embedded in negotiations for a compromise solution.

The without-prejudice rule was based at least in part on public policy. Its other basis or foundation was in the express or implied agreement of the parties themselves that communications in the course of their negotiations should not be admissible in evidence if, despite the negotiations, a contested hearing ensued.

The protection of admissions against interest was the most important practical effect of the rule. However, to dissect out identifiable admissions and withhold protection from the rest of without-prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties to speak freely.

Since the appeal in the present case was against a strike-out, the facts pleaded in the plaintiff's statement of claim had to be be assumed to be true, and on that assumption the judge had been right to conclude that it would be an abuse of process for the plaintiff to be allowed to plead anything that had been said at the meeting either as a threat or as a claim of right.

The circumstances of the meeting were such that each side was entitled to expect to be able to speak freely. The meeting was undoubtedly an occasion covered by the normal rule based on public policy and the pleading of the threat (or claim of right) had not been shown to come within any recognised exception to the rule. The expansion of exceptions should not be encouraged when an important ingredient of Lord Woolf's reforms of civil justice was to encourage those who were in dispute to engage in frank discussions before they resorted to litigation.

Kate O'Hanlon,

Barrister