Schering Corporation was the registered proprietor of a patent for a therapeutic product. Cipla Ltd planned to launch the product on the European market. Prior to the planned launch Cipla wrote to Schering and headed the letter “without prejudice”.

In the letter Cipla stated it was aware Schering had registered a patent for a product but that Cipla believed Schering’s registered patent to be invalid. Cipla also it did not wish to engage in confrontation with Schering if there was an alternative commercial solution acceptable to both parties. The letter also stated that if no such solution were reached, Cipla would seek revocation of Schering’s patent prior to the launch of the product.

Schering did not respond to Cipla’s invitation to enter into negotiations and issued proceedings alleging patent infringement based only on the contents of the letter.

Cipla argued that the contents of the letter were to be treated as privileged and Schering had no material it could rely upon as the basis for its action. Schering contended that the letter was not privileged as it contained merely an assertion of Cipla's claim and not a willingness to negotiate.

Cipla applied to strike out the proceedings alleging patent infringement.