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	England and Wales High Court (Patents Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Patents Court) Decisions >> Molnlycke Health Care Ab & Anor v BSN Medical Ltd & Anor [2009] EWHC 3370 (Pat) (17 December 2009) URL: http://www.bailii.org/ew/cases/EWHC/Patents/2009/3370.html Cite as: [2010] ILPr 9, [2009] EWHC 3370 (Pat)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		Royal Courts of Justice Strand, London. WC2A 2LL
		17/12/2009

Mr Justice Floyd :

1. Mölnlycke Health Care AB, a Swedish company which I will refer to as "MAB", and its sister company Mölnlycke Health Care Limited, a British company which I will refer to as "MUK" bring this action for infringement of European Patent (UK) No 0 855 921 against BSN medical Limited and BSN medical GmbH to whom I shall refer together as ''BSN". The proprietor of the Patent is MAB. MUK has been granted an exclusive licence under it for the United Kingdom.
2. There are two applications before me. The first is an application by BSN that these proceedings be stayed until the jurisdiction of the Stockholm District Court in co-pending declaratory proceedings relating to the patent is established. The second is an application by MAB and MUK for an interim injunction to restrain the further marketing by BSN of its allegedly infringing Cutimed Siltec products until judgment or further order.

The application for a stay

3. The application for a stay of proceedings is made on the basis of Article 27 of Regulation (EC) No. 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters ("the Judgments Regulation''). That Article provides:

"1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court."

Factual Background to the application for a stay

4. BSN contend that proceedings involving the same cause of action and between the same parties have been brought in the Stockholm District Court, as explained below. It is therefore the Stockholm District Court which is first seised, although there is an outstanding challenge by MAB to the jurisdiction of that Court which is currently being considered by the Swedish judge. They therefore maintain that, under Article 27(1) of the Judgments Regulation, the English Court must stay its proceedings until the jurisdiction of the Stockholm District Court is established.
5. MAB and MUK contend that the stay should be refused because:

i) The parties are not same: MUK is a party to these proceedings but not the Swedish proceedings;

ii) The causes of action are different - in Sweden the issue is whether or not the hypothetical products described in a Product and Process Description infringe the Patent, whereas here the issue is whether or not the Cutimed Siitec products that are on the market in the UK infringe the Patent.

6. The Swedish proceedings were filed in the Stockholm District Court on 27 March 2008 by both the BSN defendants as well as the BSN companies incorporated in Belgium, France, Italy and Spain. The defendant is MAB. The Swedish proceedings were brought in Sweden as the domicile of the patentee, MAB.
7. By its "Application for Summons", BSN sought declarations in the Swedish proceedings that the patent in suit did not prevent BSN from inter alia putting on the market BSN's Cutimed Siltec wound dressings in the UK. The Siltec Products were described by way of product descriptions, annexed to the Application which referred to the Cutimed Siltec products. The product descriptions made some fairly general statements about the products. For example the product descriptions alleged that the products contained an "elastomer", a point hotly disputed by Mölnlycke in fact, but one which they accept, if correct, would result in non-infringement. Subsequently, samples of the Siltec Products were provided to the Stockholm District Court and to MAB.
8. No challenge is made to the validity of the Patent in the Swedish proceedings or here. The case therefore does not raise issues of exclusive jurisdiction considered by the Court of Justice in GAT v. LuK C - 4/03; [2006] FSR 45.
9. In its first submission dated 21 May 2008 in the Swedish proceedings MAB sought to stay the proceedings on the basis, amongst other things, that no samples had been provided and the case therefore raised a hypothetical question. BSN subsequently provided samples of their products, whilst MAB still contended that the action was theoretical. BSN responded by pointing out that samples had now been provided and therefore the action could not be merely theoretical.
10. In its decision dated 19 January 2009, the Stockholm District Court rejected the request for dismissal. Having recited the arguments of the parties and noted the fact that samples had been provided, the Court said this:

"The descriptions of the product and the processes that the claims concern presented by BSN are, according to the District Court, sufficiently defined in order to try BSN's claims. Also the other prerequisites in order to try BSN's declaratory action are at hand".

11. Accordingly the District Court dismissed MAB's request for dismissal. There has been no appeal from that dismissal.
12. MAB subsequently submitted a Statement of Defence on 16 March 2009 asserting that the Siltec Products or any other products described in BSN's Product and Process Descriptions infringed the Patent and relying on the results of a laboratory analysis of the Siltec Products (the samples provided by BSN) as showing the presence of one of the integers of the claim.
13. On 15 July MAB lodged further procedural objections. One of the grounds raised was that, as the product and method as described in the product and process description did not infringe MAB's patent, BSN did not have a legitimate interest in a declaratory action. The point was put in this way to emphasise MAB's point that it accepted for example that if the product had an elastomeric layer, as the description said it did, it would not infringe. A second ground was a challenge, made for the first time, to the jurisdiction of the Swedish Court to grant a declaration of non-infringement in respect of the non-Swedish parts of the patent.
14. The Swedish Court has yet to rule on Mölnlycke's latest challenge, although a decision is expected before Christmas.

The law on Article 27

15. The Regulation envisages a two stage process. In the period before the jurisdiction of the first court seised is established, any court subsequently seised must stay its proceedings. Thereafter, when the court first seised has established jurisdiction, the court subsequently seised must decline jurisdiction. In view of the challenge to the Swedish court's jurisdiction, BSN accept that I can go no further than stage 1.
16. In Owners of Cargo Lately Laden on Board The Ship Tatry v Owners of The Ship Maciej Rataj ("The Tatry") Case C - 406/92 [1999] QB 515 it was made clear that for Article 27 to operate there must be identity of parties, and identity of cause of action.
17. Cause of action is to be understood as "the facts and the rule of law relied on as the basis of the action": see The Tatry.
18. In Kolden Holdings v Rodette Commerce [2008] EWCA Civ 10, the Court of Appeal reviewed the ECJ cases on the question of what was meant by identity of parties. Having considered what was said by the Court of Justice in The Tatry, and in Drouot Assurances SA v Consolidated Metallurgical industries Case C- 351/96; [1998] ECR I-3075, Lawrence Collins LJ (with whom the other members of the Court of Appeal agreed) said this at [85]:

"The starting point is that these general propositions can be derived from The Tatry and Drouot. First, the object of article 27 is to prevent parallel proceedings in different member states and to avoid conflicts between decisions and irreconcilable judgements: The Tatry, para 32; Drouot, para 17. Second, the term between "the same parties" has an independent or autonomous meaning: The Tatry, para 47. Third, in considering whether two entities are the "same party" for the purposes of applying the regulation, the court looks to the substance, and not the form: The Tatry. Fourth, although the parties must be "identical" (the The Tatry, para 33, Drouot, para 18) this identity is not destroyed by the mere fact of there being separate legal entities involved: in The Tatry in the English proceedings the party was the sister-ship, and in the Dutch proceedings was the shipowner: in Drouot the barge owner and the hull insurer were held to be capable of being the "same parties". Fifth, whether they are identical for this purpose may depend on whether there is such a degree of identity between the interests of the entities that a judgement given against one of them would have the force of res judicata as against the other (Drouot, para 19). Sixth, it will also depend on whether the interests of the entities are identical and indissociable, and it is for the national court to ascertain whether this is in fact the case; Drouot, para 23. In the context of a subrogated claim the court also emphasised that the insured would not be in a position to influence the proceedings: Drouot, para 19."

19. In Kolden Holdings itself the original claimants had assigned the contracts which were the subject matters of the action to Kolden. Collins LJ noted at [86] that the effect of the assignment was that the assignee could sue the other party without joining the assignor, and the assignor would have no further interest in the action. That, of course, is a point of distinction in comparison with the grant by a patentee of an exclusive licence: the exclusive licensee cannot sue unless the patentee is joined, and the patentee normally retains some interest in the action after grant of an exclusive licence.
20. In determining whether a decision against one party would be res judicata against the other, Collins LJ had regard to the English law of privity of interest as explained by Megarry LJ in Gleeson v Wippell [1977] 1 WLR 510: he held at [89] that the requisite degree of privity was present as between assignor and assignee. In determining whether the interests of the entities were identical and indissociable, Collins LJ held at [91] that in relation to each contract:

"there is only one right, and there are successive owners of that one right. It follows that the interests of the assignor and assignee are indissociable in the sense of indivisible. It does not matter that an assignment only passes the benefit and not the burden of a contract, nor that the assignor remains primarily liable to the obligor for the non-performance of its outstanding contractual obligations. The interest of the assignor and assignee in relation to the claim being advanced is identical".

21. In Berkeley Administration v McClelland [1995] ILPr 201 Berkeley claimed against a number of ex-employees and an English company, Maccorp GB set up by some of them. In the course of the action an order was made against the defendants relating to property in France ("the property order"). In French proceedings, Berkeley applied to restrain Maccorp France (a French incorporated wholly owned subsidiary of Maccorp GB) from acquiring any interest in the French property. Maccorp GB and Maccorp France responded by bringing proceedings in France for unfair competition. The French court dismissed all the claims.
22. Dillon LJ regarded the French and English cases as being between the same parties. He held that Maccorp France, though not incorporated until after the property order, was nevertheless bound by it. The issue was one under Article 27(3) about the ability not to recognise a judgment if it is irreconcilable. At paragraphs 29 and 30 he said this:

"[29] Because the property order bound Maccorp France as I have indicated, I would regard the French proceedings brought

by Maccorp GB and Maccorp France and this action as being for all materia] purposes between the same parties. On the one hand there are the plaintiffs; Auguste Thouard is concerned with an irrelevant issue and can be disregarded. On the other hand there are Maccorp GB and Maccorp France; the other defendants in the English proceedings can be disregarded, especially as the sixth and seventh defendants were not concerned with France at all.

[30] In the context of this case I would regard it as wholly unreal to separate Maccorp France, the wholly-owned subsidiary acquired by Maccorp GB, as being a wholly separate company with the result that the parties are different because Maccorp France has never been formally a party to this action."

23. Finally in Mecklermedia Corporation v DC Congress GmbH, [1998] Ch 40, Mecklermedia were attempting to sue DC Congress, a German company, in the English court for the tort of passing off by using the words "Internet World". DC Congress applied to set aside the writ on the grounds that the German court was first seised of an action in which the defendant claimed that an arm's length licensee of Mecklermedia was infringing its trade mark for Internet World. The case obviously faced more fundamental difficulties than the present. Jacob J (as he then was) rejected the contention that Mecklermedia and its German licensee were the "same parties". He said:

"I can understand that a wholly-owned subsidiary might be so regarded (cf Berkeley Administration v McClelland [1995] ILPr 201, 211, where Dillon LJ said, in the context of Article 21, that it was "wholly unreal" to separate a wholly owned subsidiary from its parent). But a mere licensee, a wholly different enterprise which happens to be working with the plaintiff, is simply not the same party."

The same parties?

24. So far as MAB and MUK's first point is concerned, it is correct that the Swedish proceedings do not involve MUK. MUK was granted an exclusive licence on the day that the present proceedings were commenced. There is no suggestion, however, that they are not properly a party to the action. Section 67 of the Patents Act 1977 provides that

"(1) Subject to the provisions of this section, the holder of an exclusive licence under a patent shall have the same right as the proprietor of the patent to bring proceedings in respect of any infringement committed after the date of the licence; and references to the proprietor of the patent in the provisions of this Act relating to infringement shall be construed accordingly.

(2) In awarding damages or granting any other relief in any such proceedings the court ... shall take into consideration any loss suffered or likely to be suffered by the exclusive licensee as such as a result of the infringement, or, as the case may be, the profits derived from the infringement, so far as it constitutes an infringement of the rights of the exclusive licensee as such.

(3) In any proceedings taken by an exclusive licensee by virtue of this section, the proprietor of the patent shall be made a party to the proceedings, but if made a defendant ... shall not be liable for any costs ... unless he enters an appearance."

25. It is not uncommon for an exclusive licensee to be joined as a party to an infringement action where the business in question is conducted by the exclusive licensee in this country, but the patentee is a foreign entity. The joinder of such a licensee may have an impact on the quantum of damages recoverable as compared with that recoverable if only the patentee was joined.
26. BSN submit that it is unreal to suggest that there is not identity of parties, relying on what Dillon LJ said in Berkeley Administration. They say that MUK has the same interest in alleging infringement as MAB. MAB and MUK are both subsidiaries of the same holding company, and the artificiality of the position is emphasised by the late creation of the exclusive licence. In these circumstances it is artificial to treat MUK as separate from MAB.
27. In my judgment, BSN is not correct in its assertion that the actions involve the same parties. I start by explaining my reasons by reference to some of the factors identified by Collins LJ in Kolden.
28. Firstly, I should approach the question with the purpose of Article 27 in mind, that is to prevent parallel proceedings in different member states and to avoid conflicts between decisions and irreconcilable judgements. That requires a flexible approach to the meaning of "same parties". In the present case, if I treat MUK as a separate company there will be separate infringement proceedings here and in Sweden over the same national designation of the same European patent. On the other hand the flexibility should not extend to preventing a party with a different, or indeed a non- identical, right and interest from asserting a claim.
29. Secondly, although it is right to acknowledge that MUK is a separate legal entity from MAB, that fact alone is not sufficient to make it a separate party for these purposes: Kolden at [85]. Similarly I should approach the question as one of substance and not of form.
30. Thirdly, a judgment against MAB in Sweden would, as it seems to me, probably bind MUK, at least on the issue of liability. There is a sufficient degree of privity between MAB and MUK for a finding in Sweden as between BSN and MAB that the Cutimed Siltec products do not infringe MAB's European patent UK to be regarded as binding on MUK. It seems to me to be wholly correct, to use Megarry VC's phrase in Gleeson v Wippell, to say that it would be "just to hold that the decision to which one was party should be binding in proceedings to which the other is party". The case, in my judgment, is probably on the Berkeley Administration side of the line (wholly owned subsidiary) rather than the Mecklermedia side (arm's length commercial licensee). But it is not necessary for me to reach a final conclusion on that issue.
31. The most difficult question is whether, in the context of the present case, the interests of the parties in the two actions are identical and indissociable. At one, rather high level the interests of MAB in Sweden and MAB and MUK together in the UK are identical: an interest in preventing the infringement of MAB's patent. But Mr Purvis QC submits that MUK have, by the acquisition of the exclusive licence, acquired the right to protect its UK business from damage. There is as yet no counterclaim for infringement in Sweden, and, he submits, it may not be possible under the Convention for an additional party to counterclaim there, particularly as Article 6(3) only allows for jurisdiction to be founded for a counterclaim "arising from the same contract or facts on which the original claim was based". So, if MUK is treated as the same party as MAB, MUK may be deprived of a right to damages which is distinct from any possessed by MAB.
32. I have come, somewhat reluctantly, to the conclusion that I must accept those submissions. I think it would be wrong to treat MUK as the same party when the effect may be to deprive it of the benefit of its exclusive licence in this way. This is not a case like Kolden where a party has acquired the whole of the benefit of a contract, leaving the assignor with nothing - MUK has been granted a specific right which is additional to the right which MAB continues to hold. Moreover it is not possible for MUK to assert its right independently of MAB, because of Section 67(3) of the Act. To put it another way, the interest of MUK which is in play in the English action is different to any interest of MAB which is in play in Sweden. Moreover, even if this were to be an answer to this point, there is no evidence before me which would justify the assumption that MUK would be able to launch a counterclaim in Sweden.
33. Mr Watson QC submitted that if I came to that conclusion I would nevertheless have to stay the case as against MAB. As the patentee is a necessary party under section 67(3) of the Act, the case could not proceed. I do not think that is a correct analysis. Firstly, if the parties are not identical, no question of a mandatory stay arises. Secondly, even if that were incorrect, the patentee is only required to be present as a passive party, to ensure that it is bound. A stay of the action would not in those circumstances affect the ability of MUK to proceed with the action.
34. Accordingly I would refuse the stay on the basis that the parties are not identical.

Same cause of action

35. It is not therefore necessary for me to consider whether the causes of action are identical. BSN submit that, in the light of the fact that the Swedish action is being conducted by reference to samples of the same products, and the decision of the Swedish Court to proceed on that basis, it cannot any longer be contended that the actions are different. MAB and MUK submit that it is clear neither from the application for summons, nor the judgment of the Swedish court that their objection to the action based on it being theoretical is unfounded.
36. It is of course true that an action for a declaration of non infringement, at least in this country can be conducted either by reference to a description of a product or by reference to the product itself. If a product is described in purely contentious terms ("a product which does not have this feature") then a declaration granted in relation to it will not preclude a subsequent action for infringement. The question in that action will be whether the product is in fact in accordance with the description, and accordingly whether it has the feature in question. The value of seeking declarations in such contentious terms has been questioned in the past.
37. I have come to the provisional view that, at least so far as this point relates to the basis on which the Swedish case is proceeding, the necessary identity of causes of action is present, essentially on the grounds advanced by BSN. For this purpose I ignore MUK, which it seems to me cannot be said to have the same cause of action as MAB, as it needs to rely in addition on its exclusive licence. But it seems to me that it would be wrong, while the Swedish court is still considering the basis on which the Swedish action goes forward, finally so to decide, particularly as I have been able to dispose of the application on other grounds.
38. It follows that I dismiss the application for a stay.

Interim injunction

39. It follows from the above that the application for an interim injunction needs to be considered on normal Cyanamid principles. Had I granted a stay of this action, it might still have been possible to grant an interim injunction by virtue of Section 25 of the Civil Jurisdiction and Judgments Act 1982, but that question does not now arise.

Serious question to be tried

40. BSN contend that there is no serious question to be tried concerning whether the Cutimed Siltec products infringe the patent.
41. Claim 1 can be broken down as follows

"A wound dressing characterised by

(i) a layer of absorbent foam which includes a pattern of holes

(ii) wherein the holes open out in that side of the foam material that lies proximal with the wearer's skin when the dressing is worn

(iii) and which is coated with a layer of skin-adhering hydrophobic gel

(iv) wherein the walls of the holes in said foam material are coated with gel at those end parts of the holes that lie proximal to the wearer's skin when the dressing is worn."

42. Although there are other features which are in dispute, I have italicised the phrase on which BSN found their attack for present purposes. BSN contend that there is no serious question to be tried over whether there is a layer of skin adhering hydrophobic gel present in the accused BSN wound dressings. For present purposes they concentrate on the feature "skin adhering", as whether the material is skin adhesive is one of the indications that there is a gel and not an elastomer present.
43. BSN submits that the evidence adduced by MAB and MUK does not adequately address these issues. Their case is that the relevant layer in their product is a silicone elastomer which provides only minimal skin adhesion.
44. BSN relies on the evidence of Professor Brook. BSN contends that its products fail both the skin adhesion test and the steel plate test described in the patent.
45. MAB and MUK rely on the evidence of Professor Clarson, who gives evidence that the products which he examined showed some measure of adhesion, and BSN's own product literature which says that the product adheres gently to the skin.
46. BSN's argument depends on the court taking a restrictive view of the proper construction of claim 1. At least on a literal reading of claim 1, any degree of skin adhesion will do. Numerical limitations on softness and other attributes of the gel appear only in dependent claims. However BSN contend that the gel must, on a proper construction, at least show sufficient adhesiveness to be held in position without additional assistance.
47. It is well settled that, on an application of this nature, the court should not attempt to resolve disputed questions of expert testimony by conducting a mini-trial. On the other hand if the patentee has in fact failed to adduce any evidence at all on a claim integer, or its evidence amounts to no more than unsupported assertion, the evidence will not show a seriously arguable case of infringement.
48. In my judgment MAB and MUK's case clearly crosses the relatively low threshold required on an application of this nature. Until the court is equipped with the relevant evidence, it would be dangerous to adopt BSN's narrow construction of claim 1. Moreover, even on BSN's narrow construction it is by no means clear that MAB and MUK will fail to establish infringement. BSN's instructions for use at least arguably suggest that in some circumstances no additional adhesion is necessary.

Balance of convenience

49. Neither side suggested that the other would not be able to meet an award of damages. I turn therefore to consider the factors relevant to the balance of convenience.

Harm to MAB and MUK if injunction refused

50. The Mepilex range of products which MUK sell under the protection afforded by the patent in suit are supplied to two sectors, the acute care sector (i.e. hospitals) and to the primary care sector (i.e. to Primary Care Trusts). In the acute care sector sales to hospitals are made to regional organisations such as NHS Supply Chain for England and Wales Health Supplies. These organisations let contracts for supplies every two or three years. In either sector it is necessary to obtain an NHS Drug Tariff listing. These products form a very important part of the business of MAB and MUK in the UK, which is their largest market outside the United States.
51. MAB and MUK say that there are already indications in both sectors that BSN will seek to undercut their prices. In the primary care sector the Drug Tariff for September 2009 shows that the Defendants are offering lower prices for two products: Cutimed Siltec and Cutimed Siltec L. However Cutimed Siltec B is more expensive in three

out of four size categories. As to the acute sector, MAB and MUK rely on what is happening in Germany and Italy, where, so they contend, BSN are competing aggressively on price.

52. MUK contend that this is a case where, if BSN continue to sell their wound dressing in competition with them, they will need to reduce prices in order to avoid loss of market share, and if they do so they will not easily be able to raise them again. This will irreparably damage the market. They also claim that they will have to cut their sales force.
53. BSN answer this point by saying that they will not use aggressive price cutting to gain market share. They contend that the products which they are marketing are technically superior to those of MAB. The prices at which they originally sought to negotiate with the Prescription Pricing Department of the NHS ("PPD") were generally equal to or higher than the prices of the equivalent MAB products. However BSN were forced to lower their prices by a small amount in order to persuade the PPD to accept the products onto the Drug Tariff Listing.
54. Moreover BSN contend that their pricing strategy is not out of line with that of MAB and MUK's other main competitors. These are Smith & Nephew and Brightwake/Advancis Medical, who are selling competing products, but against whom MAB and MUK have not sought interim relief. However, for the products in question it appears that Smith & Nephew pitch their prices higher than those of MUK, except where the products do not make use of soft silicone technology, where they are cheaper. Brightwake have been able to generate only very small sales (less than £500 worth since launch).
55. Mr Watson reminded me forcefully that this is not the case of a market for a patented prescription drug where experience shows that at least a second generic competitor can precipitate a sudden and dramatic price fall. The market there is dominated by price: all the competing products are otherwise exactly the same. The market in the present case is one where, although price may be a factor, products are sold on quality as well. He drew attention to the fact that MUK are already advertising increases in absorbency. He submits therefore that the court should not be predisposed to find that the introduction of the Cutimed Siltec products will cause the downward price spiral that MAB and MUK predict.
56. Mr Watson points to a number of factors as indicating that there will not be any such downward spiral in the present case. Firstly he points to the fact that BSN had wanted to have their product listed at a higher Drug Tariff price than MAB and MUK's. Whilst the refusal of the PPD to accept the higher prices is some indication that customers do not view the products as technically superior, I think this is some indication that BSN are not approaching this market as aggressive price cutters.
57. Secondly Mr Watson points to the fact that, despite several months of sales, there is no indication that MAB and MUK are in fact having to cut their prices in the UK. He says that this is an indication that they too do not consider the Cutimed Siltec products to be technically superior, and are preparing to meet the competition on technical rather than on price grounds.
58. Thirdly he points to the fact that companies do not readily let go of their Drug Tariff price listing. If other measures are available to meet the competition, these will be deployed first.
59. Fourthly, he points to the fact there is no evidence that Mölnlycke have had to cut prices in Germany. In fact the evidence in Germany, where the product has been on the market for some considerable time, is that the Lauer-Taxe, the German drug tariff, lists 10x10 Cutimed at 6.49 Euros for the non-hospital market against a 10x12 Mepilex product at 6.20 Euros. Independent IMS data says that BSN's average selling price for the hospital market in the second quarter of 2009 for the 10x10 Cutimed Siltec product was 2.90 Euros: the equivalent Mepilex price was 2.86 Euros. Mr McCraith's answer to this is that BSN offer larger discounts to wholesalers than Mölnlycke from the Lauer-Taxe price. He also says that the IMS data are based on only 10% of hospitals. They are, however, the only concrete data I have available and they do not show that BSN are aggressive price cutters, or indeed price cutters at all.
60. In the Italian hospital market the prices are 5.50 Euros for BSN and 5.08 Euros for Mölnlycke respectively. Mr McCraith also relays evidence about tendering in Italy, which shows significant undercutting by BSN. Mr Watson says that this may have been tendering for foam products generally. But I do not think that is a complete answer. Absent the competition from BSN, Mölnlycke might have been the only silicone foam product and secured the contract. But I agree that it is unwise to place much weight on these two individual instances in the absence of more detail.
61. On the whole I am not persuaded that this is a case where a significant downward price spiral is likely. In a market where quality plays an important role, the degree to which BSN have undercut MAB and MUK's prices is unlikely to place much pressure on them. The absence of any evidence of any actual price cutting on the Mölnlycke side in any country is telling.

Harm to BSN if injunction granted

62. As explained by Ms Helen Phillips in her two witness statements in the action, BSN's Siltec Products have been marketed in the UK since April 2009 with sales of the products commencing in September 2009. She contends that withdrawal of the Siltec Products at this stage would have the following direct consequences:-

Cost of withdrawing and amending existing marketing materials and communicating product withdrawal.

Damage to the reputation of BSN with BSN's target customers (tissue viability nurses, GP practice nurses and district nurses) leading to major difficulties in persuading them to accept the products after any injunction is lifted.

Loss of credibility for BSN as a full-range Advanced Wound Care supplier, leading to loss of sales of other products in BSN's Advanced Wound Care range.

Potential removal of the Siltec Products from the Drug Tariff, necessitating a re-listing at a later stage at a potentially lower price.

Loss of opportunity to tender for long-term NHS procurement contracts in the hospital market, leading to BSN being shut out from this market for a period of between 9 months and 2 years following trial, regardless of the result.

The waste of time, effort and money expended by BSN to date in promoting its Siltec Products, given the time delay before which marketing activities could be resumed.

Potential reassessment of the viability of BSN's Advanced Wound Care business in the UK.

63. BSN submit that it will be difficult, if not impossible, to assess which contracts (both for the Siltec Products and other wound care products) BSN would have won had they been allowed to remain on the market pending trial. Equally it will be impossible to assess how the inability to sell during the period of the injunction impacts on sales once an injunction is lifted.
64. MAB and MUK answer this case by suggesting that, to the extent it is not quantifiable, the damage to BSN is exaggerated given that BSN have only been selling the products in question for a short period. They also suggest that any loss caused to them by the grant of the injunction is their own fault. BSN knew about the patent in the UK but chose to launch here without obtaining clearance.
65. I think that this last point would be a harsh view to take of the position of BSN. BSN have been struggling in Sweden to obtain a decision of that court on the non-infringement of the product since March 2008. I have no doubt that the points taken by MAB in those proceedings are taken on reputable legal advice, but I equally have no doubt that if MAB had cooperated with BSN in those proceedings the position could have been made clear by now. So I approach the case on the basis that BSN will suffer some harm to their reputation if, having launched the product supported by a significant marketing effort, it has to withdraw it. It will be then be left with the problem of re-establishing its credibility when it has the right to do so after trial, possibly in different market conditions and at a different price.

Balance

66. Mr Purvis stresses that BSN is a recent entrant to the silicone market, as compared with MAB and MUK who enjoy an established position. He says that this is confirmed by the evidence, in which BSN say that one does not become a "credible" supplier unless one has a range which includes such a product. The points about loss of reputation have to be seen in this context.
67. Many of the points relied on by BSN are mere counter-weights to those relied on by MAB and MUK.
68. On the whole I think this is a case where the balance of convenience is fairly even. Both sides will suffer some loss which will not be capable of being restored by an award of damages. For both sides there will be some continuing loss after trial which will be difficult to quantify. Both sides have, I think, exaggerated the extent to which they will suffer that loss. I go on therefore to look at considerations of status quo and delay.

Status Quo and delay

69. It is common ground that the status quo to apply will be that which pertains immediately before BSN commenced their acts complained of, unless there has been unreasonable delay. BSN submits that the status quo strongly favours allowing BSN to remain on the market pending the trial on the merits. They contend that BSN's marketing activity in the UK commenced over 8 months ago, with significant sales having been made since September 2009, and that MAB and MUK's delay since then is unreasonable.
70. BSN has promoted the Siltec Products at a series of trade exhibitions attended by the Claimants from April 2009 and a promotional article featuring the Defendants' Siltec products appeared in the June 2009 issue of Wounds UK Journal, a publication subscribed to by the Claimants, which edition also featured an article on the Claimants' wound dressings.
71. Mr. McCraith's first statement on behalf of MAB and MUK says this

"The Claimants first became aware that the BSN products were being made available for purchase in the UK when they were listed in the NHS Drug Tariff for September 2009. "

72. Mr. McCraith does not deny that he was aware of BSN's activities in this country but says the fact they were exhibiting in the UK "does not mean that the products will necessarily be released onto the market". I think that MAB and MUK must have appreciated that there was a significant likelihood that BSN were going to expand their existing market from continental Europe to the UK.
73. Mr Purvis seeks to meet this significant period of delay by saying that MAB and MUK did not know until September 2009 at what price the BSN product would be launched, and at least between April and June BSN were contemplating higher prices. I do not think this is an answer to the point on delay. A party seeking an interim injunction needs to get on with the action: it cannot simply stand by during a period of 6 months during which the product might be launched any day. If he does, he cannot complain that the court is not prepared to help him by granting an injunction over the period until a trial which, because of his delay, is still many months away. There was clear evidence of infringement in April 2009, as there were samples of the product displayed on BSN's stand and a reasonable inference that they were planning to market here. Why else would BSN be applying for a declaration in Sweden? So far as prices are concerned: if it is correct that BSN were cutting prices elsewhere in Europe why could they not rely on that then as well? There was no reason why an injunction could not have been applied for then, at a time when any damage caused to BSN by its grant would be minimal.
74. Moreover it is highly significant that if the action had been started in April it could have been tried by now or at the latest early next year. Mr Purvis says that BSN cannot have it both ways: I should assume that BSN would have applied for a stay. But I should also assume that I would have refused the stay (as I have), and there is no reason why such an application could not have been disposed of quickly. If in June of this year I had refused the stay, there would still have been three months until BSN's launch. The balance of convenience might then have favoured a short injunction to enable a speedy trial to come on. It would all have looked very different.
75. MAB and MUK's approach in the Swedish proceedings is also not consistent with an urgent need for an interim injunction. Rather than taking advantage of the fact that BSN were submitting to the jurisdiction in Sweden, MAB and MUK elected to expend significant effort on procedural challenges that have delayed the progress of the Swedish action so that a judgment on the merits has not yet been issued. Their procedural approach in Sweden is not consistent with an urgent need for relief either there or here. Their failure even to commence an action in Germany is equally odd.
76. MAB and MUK say that by the date of their application BSN had sold only £24,000 worth of product. This is to be compared with the established position in Mepilex products which had a market share of some £20 million. But I think to look only at sales is to underestimate the effect of MAB and MUK's delay.
77. The considerations under this head lead me to the very clear conclusion that the injunction should be refused. MAB and MUK have simply not behaved like parties who need urgent protection against BSN's competition. The failure to raise any objection to BSN's continuing marketing activities from April 2009 onwards was unreasonable. The appropriate status quo to apply is that BSN are now on the market. I dismiss the application for an injunction.