Anan Kasei v. Neo: Important Patent Damages Decision from the Patents Court of England and Wales

The decision is by Mrs. Justice Bacon of the Patents Court of England and Wales, Anan Kasei Co. Ltd v. Neo Chemicals & Oxides (Europe) Ltd, [2022] EWHC 708 (Ch) (Mar. 29, 2022).  I need to read the decision more carefully, and I may have more to say about it in coming days, but for now I will note two important holdings.

First, the court holds that a patent owner can recover lost profits on sales it would have made in another country, but for a defendant’s predicate act of domestic infringement, subject to application of the doctrine of proximate cause (¶¶ 87-109).  In so holding, the court cited, inter alia, the U.S. Supreme Court’s decision in WesternGeco, the amicus brief submitted by Professor Stephen Yelderman in that case, and my recent article in the Cardozo Arts & Entertainment Law Journal (see ¶ 106).

Second, the court declines to depart from the rule established by the House of Lords in United Horse Shoe, which precludes a defendant from avoiding a judgment for lost profits by showing that it could have resorted to a noninfringing alternative (¶¶ 118-39).  The court recognizes some anomalies created by the rule; that courts in Canada and the U.S. have gone the other way on this issue (correctly, in my view, see, e.g., here at p.61); and that “[t]hese issues may well merit further consideration by a higher court.”  The court nevertheless concludes that “even if not technically binding upon me, the decision of the House of Lords in United Horse Shoe is strongly persuasive, particularly in circumstances where the principle adopted by the majority in that case has been consistently recognised and restated by courts in numerous subsequent cases, including judgments of the Court of Appeal. It reflects a policy decision that an infringer should not be able to escape liability by reliance on a non-infringing alternative product when, in the event, the relevant sales were made of the infringing product” (¶ 139).  The court also concludes that, even if it were to depart from United Horse Shoe, on the facts of the present case the defendant didn’t prove that it had an adequate noninfringing alternative (¶¶ 149-55).