BASF sues Carpmaels for damages over missed appeal deadline

Multinational company BASF alleges that mixed UK patent firm Carpmaels & Ransford “committed professional malpractice when it failed to file on time an appeal of the EPO Opposition Division’s decision regarding BASF patent, EP 1 663 458.” The patent covers an emission treatment system and method using an SCR filter.

According to BASF, the so-called SCR on Filter (SCRoF) technology controls nitrogen oxides and particulate matter or soot emissions from diesel engines in cars. The chemicals company claims that Carpmaels & Ransford’s negligence caused “substantial injury” to its business in relation to the SCRoF technology.

High values are at stake. However, the claimant did not confirm media reports claiming that damages of more than one billion euros hang in the balance. Rukhsanah Singh, senior counsel litigation at BASF, told JUVE Patent, “The calculation of BASF’s damages is based on confidential and sensitive information that BASF cannot share at this time.”

But diesel emission standards compliance technology is an industry with huge economic potential. Thus, the two parties are playing hardball at the High Court in London. In several oral hearings over three weeks, the court heard a total of 23 witnesses. This includes current and former BASF employees, technical experts and independent patent litigation specialists from the UK, Germany and France (case ID: BL-2018-001464).

The patent’s history

BASF Catalyst is a US subsidiary of BASF that supplies catalysts for the auto industry, among other things. In 2004, the company registered its invention. In 2009, the EPO then granted EP 458. That same year, Johnson Matthey and Umicore filed an opposition. Then, in May 2012, the Opposition Division of the EPO revoked the patent.

BASF’s representative at the time, Carpmaels & Ransford, filed an appeal against this on 19 July 2012. However, the appeal did not meet the EPO deadline. In the appeal notice, the representatives acknowledged that they filed it out of time. The reason given, according to the BoA decision, was a “combination of isolated mistakes.”

Carpmaels & Ransford requested the re-establishment of rights under Article 122 EPC with regards to the time limit for filing the notice of appeal. However, in January 2013 the Board of Appeal 3.3.05 refused this request, deeming that Carpmaels did not file the appeal.

BASF and Carpmaels part ways

In October 2018, BASF sued Carpmaels & Ransford for substantial damages in the UK High Court, alleging failure to file the appeal caused BASF to lose significant commercial opportunities related to EP 458. Therefore, said BASF, the company has suffered damages.

Asked why such a long time had elapsed between the BoA decision and BASF filing the suit, Rukhsanah Singh told JUVE Patent, “BASF filed the claim against Carpmaels & Ransford when the dispute could not be resolved without litigation and when the extent of the damages to BASF became evident.”

Meanwhile, collaboration with Carpmaels & Ransford continued for a while after the initial blip. It was not until November 2015 – almost three years after the Boards of Appeal ruling – that BASF changed representatives to the German patent attorney firm Herzog Fiesser.

Singh says, “BASF decided to move its matters to the Herzog Fiesser in part because the company was engaging the firm in other legal matters at that time.”

Lost opportunity or otherwise

During the trial, BASF argued that Carpmaels’ negligence led to the loss of significant commercial opportunities related to EP 458. Singh says, “Because Carpmaels failed to file the appeal on time, BASF lost the opportunity to succeed on appeal to the Boards of Appeal. It could not benefit from the protections of the ‘458 patent, while on appeal or potentially thereafter.”

While Carpmaels & Ransford freely admits the mistake, the firm disputes that the breach led to a lost opportunity for BASF.

In their closing statement, Carpmaels argues, “Even though the EPO would not have revoked EP 458 pending appeal, it would have left BASF with no more than a ‘zombie 458 patent’ that had been held invalid and was unenforceable, but was still formally alive. The existence of the zombie 458 patent would therefore have made no difference to what happened commercially.”

Unsuccessful divisional patent

According to Carpmaels & Ransford, BASF could not have enforced this patent. Neither would the company have licensed it. “On the contrary,” says the defendant in their closing statement, “they repeatedly refused to licence the SCRoF portfolio in the material period and there is no evidence at all to suggest that they would have been more amenable to licensing the zombie 458 patent.”

Furthermore, Carpmaels & Ransford argued that BASF overstated the importance of the EP 458 family. The defendant referred to the fate of divisional patent EP 2 042 227, which covers the same technology as EP 458. The Opposition Division also revoked this patent.

In appeal proceedings, the BoA held an oral hearing in late 2020. However, during the hearing, BASF withdrew the appeal. According to Carpmaels & Ransford, Johnson Matthey – who filed the opposition to the patent in the first place – had “better and cheaper SCRoFs at the relevant times.”

“Pure speculation”

While, even after the public trial, BASF remains tight lipped over financial details, a report by Managing IP cited claimed damages of around one billion dollars. However, defendants Carpmaels dismissed this amount as excessive. This is, says Carpmaels, because the patent was not based on the value of the individual EP 458, but rather on the entire industry value.

Carpmaels’ closing submission states, “BASF were not in any event in a position to service the entire SCRoF market.”

Furthermore, Carpmaels’ closing statement claims that “the claim by BASF that Carpmaels & Ransford owed duties to the entire BASF Group is unsustainable”. The firm gives the reason that, “BASF Group is a vast collection of different companies around the globe, many of which have nothing whatsoever to do with catalysts, let alone the prosecution of BASF Corps’ European patents.”

According to Carpmaels, the witness’ evidence about pricing and the impact of licences was “pure speculation.”

180-degree turn

To defend itself, the mixed firm has done a 180-degree turn. While as BASF’s representative it defended the disputed patent family, its strategy now is to highlight the weaknesses of the property rights. In its statement, Carpmaels says, “The product claims of the 458 patent were so broad that they could not sensibly entitle BASF to protection.”

Ian Kirby, partner at Carpmaels & Ransford, told JUVE Patent, “Everybody knew that the patent was weak. But that doesn’t mean you don’t fight for it.”

When the court asked why the patent attorneys responsible did not point out the patent’s possible weaknesses to BASF during the prosecution process, Carpmaels & Ransford referred to the limited nature of their role. “It was not part of their job to advise on the merits of the patents, or to advise on the commercial attractiveness of seeking, let alone obtaining a grant. Carpmaels really was acting as technicians.”

Whatever the court decides, Carpmaels & Ransford does not expect to suffer any financial damage. At the time of the delayed filing in 2012, the firm was still operating under a different company form to the current LLP. Thus, partners from the time would shoulder any potential damages, with many retired and insured against such professional errors.

Litigators and patent experts

BASF is relying on Reed Smith partner Charles Hewetson in the dispute. He specialises in professional negligence claims and general commercial litigation. Hewetson also cooperated with the two barristers. Roger Stewart is experienced in commercial litigation and professional liability, while Miles Copeland is an intellectual property litigation expert. He was part of the team advising Beijing Genomics Group against Illumina and  also advised ZTE against Conversant.

Clyde & Co represents Carpmaels & Ransford. Insurance company Pamia retains the law firm, as well as the barristers. While Ralph Cox is experienced in patent litigation, James Preece frequently advises on professional negligence claims. This is especially for solicitors and barristers, in both civil claims and disciplinary actions.

John Wardell of Wilberforce Chambers is experienced in commercial disputes, especially in fraud claims – many of which involve company law issues. Henry Ward is an experienced IP barrister. Among other things, Ward was on the team advising Sisvel and Mitsubishi against Xiaomi and Oppo. Nick Zweck is also an IP specialist. Carpmaels called him in as a reinforcement team during the case, to help review the documents provided by BASF among other things.

For BASF
Reed Smith (London): Charles Hewetson (regulatory and litigation)
4 New Square (London): Roger Stewart (commercial litigation)
3 New Square (London): Miles Copeland (IP)
In-house (New Jersey): Rukhsanah Singh (Senior Counsel, Litigation)

For Carpmaels & Ransford
Clyde & Co (London): Ralph Cox (patent litigation), James Preece (regulatory and investigation, insurance law, Manchester)
Wilberforce Chambers (London): John Wardell (commercial litigation)
8 New Square (London): Henry Ward (IP)
Hogarth Chambers (London): Nick Zweck (IP)

UK High Court, London, Business and Property Courts (Chancery Division)
Adam Johnson (presiding judge)

Update 12 November 2021: Carpmaels & Ransford will probably not have to pay billions in damages to its former client BASF. In late October, the High Court of England and Wales ruled that BASF is only entitled to nominal damages.

Judge Adam Johnson stated, “The Claimants (BASF) are entitled only to nominal damages resulting from Carpmaels’ admitted breach.”

Under UK law, nominal damages mean only a very small amount, which according to London lawyers is likely to be between 1 and 50 British pounds. BASF had demanded an amount of one billion or more from Carpmaels, according to media reports.

How much money Carpmaels must now pay has yet to be determined by Judge Johnson. But the ruling may not be the end of the dispute. BASF can still appeal.

It is not known whether the chemical company will appeal. Neither BASF nor Carpmaels commented on the verdict to JUVE Patent.

The next important event is the form of order hearing at the end of November, at which all follow-up questions to Judge Johnson’s ruling will be decided. At that time, it could also be a question of whether the judge will grant a motion by BASF to allow the appeal. It is currently not known whether BASF will file such a motion. If Judge Johnson rejects it, the company can still ask the Court of Appeal for permission to appeal under UK law.

In any case, a lot of money is likely to be at stake in the form of order hearing with regard to the legal costs. These could amount to several million British pounds on both sides, according to trial observers. Many expect Carpmaels to seek a large sum from BASF as a result of the favourable ruling.

If Judge Johnson’s ruling stands, the patent firm could expect to receive between 60 and 80% of the sum demanded, according to experts. Judge Johnson will make a preliminary determination of costs at the end of November. A judge with jurisdiction over costs will then set the final amounts later. However, according to London lawyers, this rarely happens because the parties settle beforehand.

Experts believe it is unlikely that BASF will reach an out-of-court settlement with Carpmaels before the form of order hearing.