MONSANTO CHEMICAL COMPANY (D'AMICO'S) PATENT

699 [No. 23] Monsanto Chemical Company (D'Amico's) Patent [1974] R.P.C. IN THE HIGH COURT OF JUSTICE-CHANCERY DIVISION Before: MR. JUSTICE WHITFORD 15th, 16th, 17th, 20th, 21st, 22nd, 23rd May and 15th, 16th, 17th, 18th June and 31st July, 1974 5 MONSANTO CHEMICAL COMPANY (D'AMICO'S) PATENT Three patents-Extension-Opposition-Inadequate remuneration-Wild oat herbicides; Avadex and Avadex BW-Difficulties encountered in establishing Avadex products in U.K.-Discounted cash flow (DCF) method used for accounts-Observations on use of DCF in extension proceedings-Petitioner adequately remunerated10 Petition dismissed. The patentee sought an extension of the terms of three patents of which one was a divisional patent and the other a patent of addition to the first. The divisional patent related specifically to a herbicide commonly called di-allate and to methods of its preparation. Another herbicide commonly called tri-allate, was claimed in the 15 patent of addition as were methods of its preparation. These herbicides were found to be efficacious in the pre-emergence control of wild oats and blackgrass infestations. Such infestations were shown to constitute a severe problem to farmers in the U.K. Field trials of these herbicides were carried out in the U.S.A. and Canada in 1958 and 1959 and further trials were successfully carried out in the U.K. 20 in 1960 on the petitioners' behalf by B. Ltd. Di-allate was marketed in the United Kingdom in 1961 but both in 1961 and 1962 severe setbacks were encountered which led to the withdrawal of di-allate from the market. In 1964 di-allate and tri-allate were re-introduced under the trade names A vadex and A vadex BW but sales were slow to pick up. Rival herbicides had also begun to appear by that time and 25 opponents to the opposition adduced evidence directed to their value and efficacy. In addition, the opponents argued that the Avadex products had been put on the market without adequate trial. The petitioners were the sole manufacturers of these products at all times. Separate accounts were not presented in respect of di-allate and tri-allate nor was any allocation of profits made between the two. Sales and 30 trading profit figures were presented in historical dollars and thereafter DCF techniques were applied thereto to arrive at discounted profits showing the "net present value" of the A vadex project to the patentees as such. No evidence was adduced by the petitioners as to the level of royalty which would be appropriate in the herbicide field. 35 Held, refusing the petition, (1) that in spite of the exceptional utility and benefit of the invention to the public, the petitioners had not satisfied the court that their remuneration had been inadequate. 700 Graham, J. Monsanto Chemical Company (D'Amico's) Patent [1974] R.P.C. (2) That when products are separately covered by separate patents, unless satisfied that it is proper to lump them together, a patentee must expect to have to try to make a fair allocation to enable the court to come to a proper conclusion on the individual patents concerned. (3) That the DCF approach to the presentation of accounts was not acceptable 5 in this case particularly in the absence of evidence supporting it or enabling a cross check by way of, for example, appropriate royalty rates to be made. Observed, "I wish to make it clear that I am not saying that the DCF approach can never be useful or appropriate in an extension case . . . For my part I think such an account would be of more value if, assuming it is possible, it is in such a 10 form that a fair comparison can be made with the historical result before taxation and if the residual value of the project can be brought into account. Furthermore, on my present iniormation I think it will be valuable, if not essential, that the petitioners should produce policy evidence, which would of course be liable to crossexamination, in support of whatever conclusion they wish the court to draw from the 15 DCF account. How far such an account is likely to be useful will depend on the circumstances of the case but I can certainly envisage circumstances in which the DCF approach might well be of assistance in enabling inflation to be taken into account both generally and in relation in particular to the sometimes long delays between outflows and inflows of cash." 20 Case referred to in judgment: I.C.I. Limited's Patent [1970] R.P.C. 575. This was a petition brought by Monsanto Chemical Company for the extension of letters patent Nos. 882,110, 882,111 and 1,010,741 on the ground of inadequate remuneration. The petition was opposed by Stokes Bomford Limited. The facts of 25 the case appear from the following judgment. Thomas Blanco White, Q.C. and Michael Fysh instructed by Bristows, Cooke and Carpmael appeared for the petitioners. D. Falconer, Q.C. and David Young instructed by McKenna and Co. appeared for the opponents. William Aldous, in30 structed by the Treasury Solicitor appeared for the Comptroller. Graham, J.-This is a petition by the Monsanto Chemical Company to extend three letters patent, Nos. 882,100, 882,111 and 1,010,741. The second letters patent was divided out of the first and the third was made a patent of addition to the first. The terms of all the said letters patent expired on the 27th of February this year. The patent relates in particular to herbicides known as di-allate and tri-allate which 35 are sold under the registered trade mark Avadex. The principles on which extensions are granted are now so well known that it is unnecessary to elaborate them here. To justify extension the petitioners must satisfy the court that their invention is of more than ordinary utility, that they have been inadequately remunerated, and that the absence of remuneration is not due to the 40 fault of the patentee. The opponents here contended inter alia that so far as the di-allate is concerned the petitioners ought to fail on all these heads. So far as the tri-allate is concerned they modified their contentions to the extent of agreeing that on the issue of merit the tri-allate was a borderline case. The Comptroller-General, 701 [No. 23] Chancery Division Graham, J. by his counsel, conceded the merit of the invention and agreed that both the diallate and tri-allate qualified on the ground of merit, though, if there was to be an extension, the latter had a claim to a longer extension than the former. It was not suggested by the Comptroller that the petitioners had been in any way lax in their S promotion efforts but it was strongly argued by Mr. Aldous on his behalf and by Mr. Falconer for the opponents that they had failed to show that they had been inadequately remunerated. It will be convenient first to deal with the history of the matter from which a proper conclusion on the question of fault or otherwise on the petitioners' part can be arrived at. 10 The petitioners are the well-known chemical company, being in fact organis (...truncated)