Case Summary and Outcome

The U.K. House of Lords,  reversing a Court of Appeal decision, established that a party may request the court to order the disclosure of information where there has been or may have been wrongdoing by a third party and where the information is required in order to seek justice in respect of that wrongdoing. The appellant owners and licensees of a chemical compound patent brought an action against the Customs and Excise Commissioners to obtain the names and addresses of importers that they intended to sue for infringement. The House of Lords reasoned that justice requires a person who unwittingly facilitates the perpetration of a wrong to disclose relevant information unless there is some consideration of public policy that prevents that.

Facts

Norwich Pharmacal was an American corporation that owned the patent for a chemical compound called “furazolidone.” Its U.K. subsidiary and licensee, Smith Kline & French Laboratories, alleged that a large volume of the counterfeited compound was being imported to the U.K. by unknown individuals. Intending to hold those importers accountable for patent infringement, Norwich and its subsidiary made a formal request to the U.K. Customs and Excise to release the names and addresses of the importers. The customs officials refused to do so, explaining that with the exception of publishing statistics showing the total quantities of the imported product, the names and addresses of the importers were confidential.

Norwich and Smith Kline & French Laboratories then sued the Customs and Excise Commissioners for aiding and abetting the importers’ infringement by not exercising their power to seize the counterfeited products.  They also claimed a free standing right to discovery of the names and addresses of the importers, regardless of the commissioners’ culpability. The court of first instance dismissed the substantive claim of aiding and abetting, but held that the companies were entitled to disclosure of the information.

The U.K. Court of Appeal unanimously reversed the judgment, holding that the public interest required the commissioners to keep the names and addresses of the importers confidential. The justices also held that no action for the sole purpose of discovery could be brought against a party against whom no other relief was sought. The Appeal Committee of the House of Lords allowed a petition by the appellants for leave to appeal.

Decision Overview

The House of Lords unanimously reversed the judgement of the Court of Appeal.

Lord Reid first considered whether information can be obtained from a person against whom no other reasonable cause of action could be brought. In so doing he held that the Court of Appeal had misapplied the so called “mere witness rule” in the present case. Under this long-settled rule, “information cannot be obtained by discovery from a person who will in due course be compellable to give that information either by oral testimony as a witness or on a subpoena.” [p. 34] According to him, the underlying foundation of the rule is “the assumption that eventually the testimony will be available either in an action already in progress or in an action which will be brought later.” [p. 34] He reasoned that the rule could not be applied in this case because Norwich was unable to bring an infringement action at all without identifying the alleged wrongdoers.  However Lord Reid also rejected the appellants’ argument that discovery should be available against anyone who can give information as to the identity of a wrongdoer, saying that “no authority, principle nor public policy would justify that.” [p. 34]

In his view the commissioners were in an intermediate position: “their conduct was entirely innocent; it was in execution of their statutory duty. But without certain action on their part the infringements could never have been committed.” Having reviewed relevant case law, Lord Reid concluded that discovery must be available not only when the requesting party has a cause of action against a person from whom the discovery is sought, but also when “a person through no fault of his own gets mixed up in the tortious acts of others so as to facilitate their wrongdoing…….justice requires that he should co-operate in righting the wrong if he unwittingly facilitated its perpetration.” [p. 35] He said that the goods are under statutory control of Customs from the moment they enter the port until duty is paid and the consignee is authorized to removed them. The Customs authorities can specify where the goods are to be put or prevent their movement and have full powers to examine or test the  goods. The goods are therefore under the commissioners’ control although they never have possession.

Having found that the commissioners had a duty to disclose the information, Lord Reid said the court then had to weigh the requirements of justice to the appellants against the interests of confidentiality and statutory duty claimed by the commissioners as justifying non-disclosure. He said there was nothing secret or confidential in the information sought nor was there any real danger in this case that disclosure would hamper the work of the commissioners or that the imports were not counterfeit.

In all these circumstances, Lord Reid held that the appellants could obtain discovery from the commissioners and allowed the appeal accordingly.

Lord Morris agreed with Lord Reid and the Court of Appeal that “in general the cases support the view that no independent action for discovery lies against a party against whom no reasonable cause of action can be alleged or who is in the position of a mere witness in the strict sense.” [p. 40] However, relying on the earlier cases of Orr v. Diaper and Upmann v. Elkan, both of which granted the order of discovery against third parties who were involved in the commercial activities of unidentified wrongdoers, Lord Morris said that it would be a denial of justice if the Customs officials were not ordered to disclose the information.

In his opinion, Viscount Dilhorne said that the case required the analysis of three questions: “First, on the facts of this case, can the [commissioners], who [were] not themselves wrongdoers, be ordered to disclose the names of the importers who, the validity of the patent being admitted, [were] wrongdoers. Secondly, in the exercise of the discretion vested in the court, should they be ordered to do so; and thirdly, [were] the [commissioners] in any event prohibited from disclosing that information.” [p. 43]

With respect to the first question, Viscount Dilhorne agreed with Court that where there was involvement or participation in a wrongdoing, whether it was innocent or the person seeking information had no intention of suing the participant, discovery could be granted. According to him, the commissioners were in fact involved in the importation of the counterfeited products because they exercised a sufficient degree of control over the movement until their removal from the port of entry. As to the second question, he stated that it was clearly “in the public interest and right for the protection of patent holders, where the validity of the patent is accepted and the infringement of it not disputed, that they should be able to obtain by discovery the names.” [p. 48] Lastly, Lord Dilhorne noted that the commissioners were unable to point to any statutory provision prohibiting them from disclosing the names of the importers. He also expressed his doubt that even if the information were to be considered confidential, it was not so highly confidential as to override the interest of justice in disclosure.

Lord Cross, after a lengthy discussion of previous cases on the issue, held that the mere fact that the goods passed through the possession or control of the Customs placed the officials under a duty to disclose the names and addresses of the importers, absent any viable privilege not do so. He agreed that the information sought was not highly confidential because it was available to everyone who was party to the shipment of a product, such as the master of the ship and the employees of the owners of the transit. He further dismissed the concern expressed by the commissioners that the Court’s order for discovery would open a floodgate of requests by individuals who try to collect evidence from persons without any relevant connection to the wrongdoer. Lord Cross said that the present case was not about collecting evidence, rather it concerned asking for the name of a person whom the appellants sought to make a defendant.

Lord Kilbrandon was of the opinion that the “mere witness” rule could not be applied here because it that rule prohibits “discovery against someone who has no connection with the litigious matters other than that he might be called as a witness either to testify or to produce documents at the trial.” In contrast, in this case there could be no prospect of litigation without obtaining the names of the importers. He agreed with other justices that because the commissioners were “mixed up with the transaction,” justice demanded the order for discovery.