Review of Patent Cases in the English Courts in 2012

Review of Patent Cases in the English Courts in 2012 by Brian Cordery, Dominic Adair, Sam Tuxford and Tanny Massaquoi

© Bristows February 2013

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Quotation of the Year:

“The issue of principle I derive from the various European decisions is that there is no issue of principle.” HHJ Birss QC in Merck v Teva [2012] EWHC 627 (Pat) at §82

Review of Patent Cases in the English Courts in 2012 1


Index Quotation of the Year Inside front cover

Introduction 2

Claim Construction and Infringement 2 Infringement Defences 3

Validity 3 Patentability 3 Entitlement to Priority 4 Novelty 4 Obviousness 4 Insufficiency 5

Supplementary Protection Certificates (“SPCs”) 6

Damages 8 Damages for Groundless Threats 9

Costs 9

Procedural Issues 10 Jurisdiction 10 Jurisdiction of the Patents County Court 11 Interim Injunctions 11 Proceedings in the Patents County Court 12 Expedition 13 Final Injunctions 13 Dissemination of Judgments 13 Security for Costs 13 Specific Mechanism 13 Delivery up / destruction 14 Experiments 14 Confidentiality Clubs 14

Unitary Patent / Unified Patent Court - “UP” and running at last 15

Looking Ahead 17

The Authors 18


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5 [2012] EWHC 2545 (Pat)6 Case C-443/127 [2005] RPC 98 STEP v Emson [1993] RPC 5139 [2012] EWPCC 3810 Ranbaxy v AstraZeneca [2011] EWHC 1831 (Pat)

1 [2012] EWHC 3316 (Pat)2 [2012] EWCA Civ 12343 [2012] EWHC 911 (Ch)4 C-322/10

2012 contained some important decisions from both the High Court and the Court of Appeal, particularly as regards the law of obviousness and on certain procedural issues. In terms of the number of decisions, it was a bumper year. There were 82 decisions, compared to 60 in 2011 and 66 in 2010. As with last year, the life sciences and telecommunications sectors continued to dominate the Court lists.

Of particular importance this year were the following developments:

• At last, after decades of attempts, agreement was finally reached on the Unitary Patent and Unified Patent Court, and the Danes used their Presidency of the EU to broker a deal to share the Central Division of the UPC between Paris, London, and (almost certainly) Munich.

• The ruling of Arnold J in Actavis v Eli Lilly1 that it was appropriate for the English Patents Court to hear a declaration of non-infringement in respect, not only of the UK designation of a European Patent but, in respect of the French, German, Italian and Spanish designations as well. The decision is not without controversy and has already been appealed.

• The ruling from the Court of Appeal in Medimmune v Novartis2 that the question of whether a purported invention is “obvious to try” should be kept firmly in its place. Instead, it is the simple test prescribed by statute that is paramount.

• The High Court’s decision in Fabio Perini v LPC3, a rare example of a judgment on a damages inquiry in the UK, providing welcome guidance on the principles under which damages for patent infringement should be assessed.

• Finally, although life sciences practitioners with an inherent streak of optimism might have hoped that the law regarding Supplementary Protection Certificates (SPCs) would have been settled following the ruling of the Court of Justice for the European Union (“CJEU”) in Medeva4 and the other cases that were referred by the English Courts in 2010, the reality is that the law remains distinctly unsettled. In what might be regarded by some as an indication of a lack of confidence in the CJEU, in Actavis

v Sanofi,5 Arnold J decided to refer a question which had essentially already been asked and answered in Medeva. As with previous years, this review attempts to summarise the most important decisions on a topic by topic basis. We shall refer to the UK Patents Act 1977 as “the Act” and the European Patent Convention as “the EPC”. As always, the authors have endeavoured to cover every important development that occurred during the course of the year. However, as this is a condensed summary, not every decision is mentioned.

Claim Construction and Infringement

The approach to claim construction taken by the English Courts continues to follow the single overriding question prescribed by Lord Hoffmann in Kirin Amgen:7 “What would a person skilled in the art have understood the patentee to be using the language of the claim to mean?”. It is well known that in considering this question, meticulous verbal analysis is to be eschewed. However, this does not mean that one can simply ignore an integer of the claim just because it does not appear to make any difference to the inventive concept.8 HHJ Birss QC had this point in mind in BOS v Cobra9 in which BOS’s patent to a security net in estate cars - protecting passengers from flying luggage – was held not infringed by Cobra’s net used in the Volvo XC60. The claim required a “fixing arrangement associated with one edge in order to connect the security net to the estate car in the region of this edge”. The patent exemplified a roller-blind type arrangement, where the connection to the car was clearly in the region of the lower edge of the net. However, the Volvo net was connected to the car by hooks on the end of straps at the bottom corners of the net which were well away from its lower edge. Whilst the fixing arrangement in the Volvo net was associated with the edge, the Judge considered that it was not “in the region of this edge” and held that it was not permissible to ignore this requirement in construing the claim.

In recent years, the Courts have attributed to the skilled addressee an increasingly complete understanding of patent law. The skilled addressee is now deemed to possess an awareness of divisional patents and an understanding of claim sets, including Swiss-type claims.10

Introduction


To this understanding must now be added an awareness of the convention of drafting European patents that the words “[apparatus] for [achieving a result]” in a product claim (as opposed to process claims) almost always means “suitable for”, i.e. “capable of”, as opposed to “intended for”. This construction avoids the potential problem that there is no reference to intention in the definition of primary infringement of product claims and also that the law is silent on the sort of intention that would be required. On this basis, HHJ Birss QC interpreted a claim to a gripper-like device to mean that the device must be capable of receiving a plurality of weights and not that it was intended to do so by the designer or anyone else.11

Infringement Defences

As many readers will know, section 64 of the Act provides, broadly, that a person who does an act before the priority date of a patent, or makes effective and serious preparations to do so, has the right to continue to do that act, although the provision is subject to several qualifications. A challenge to the legality of section 64 as being inconsistent with the IP Enforcement Directive was rejected in Schenck v Universal Balancing12 as the latter was designed to harmonise the remedies available following a finding of infringement and was not concerned with the acts of infringement themselves. However, although the legality of section 64 was confirmed, it was held that it did not apply where a product being made before the priority date was different in numerous ways to a product made after the priority date.

Also at issue in that case was a section of the Act which has received little judicial consideration in recent years: section 62, which potentially restricts the recovery of damages when an infringer was not aware, and had no reasonable grounds for supposing, that the patent existed. The Judge held that the correct test to use was a subjective/objective test, determining first what the entity seeking to invoke the defence actually knew, and then assessing what a reasonable person would infer from that.13 Bearing in mind the size and nature of the balancing machine industry, it was held that Universal Balancing could take advantage of the defence right up until the point in time when a meeting took place at which its competitor raised the issue of the patent. It is noteworthy that this decision was based on the determination that the industry

in question was “not a patent rich field of technology at all”, suggesting that in many fields such as telecoms and pharma, the defence is rarely likely to succeed.

Validity

PatentabilityIt is trite law that a discovery per se is not a patentable invention. In the context of a purported second medical use invention, merely describing new information about the mode of action of the existing (first) use will not be sufficient to obtain a patent. This was made clear by Jacob J (as he then was) in BMS v Baker Norton14 and affirmed in 2012 by Mann J in El Tawil v Comptroller,15 an appeal on patentability from a negative decision of the UKIPO, concerning a purported new use of zinc for the treatment of bowel disease. Mann J also re-iterated that in the context of second medical use inventions, more than mere assertion is required in support of the purported second medical use, albeit relatively rudimentary tests will do.16 In this case, the applicant had done no more than describe mechanisms by which zinc acted to improve bowel function. In fact, such mechanisms were already known and had they been patentable, the patent would have been anticipated.It is not the objective of this review to consider the patent decisions of the UKIPO. However, the authors make an exception for the important decision of Dr Lawrence Cullen of 16 August 2012 in relation to the patentability of two applications relating to the use of stem cells.17 The decision related to an appeal to the Hearing Officer from a decision of the Examiner at the UKIPO which rejected two applications by International Stem Cell Corporation on the basis that they related to subject matter excluded by Article 6(2)(c) of the Biotech Directive,18 i.e. were “uses of human embryos for industrial or commercial purposes”. The applications concerned methods to produce human stem cells and corneal tissues derived from such stem cells. The key issue was whether the results of the applicant’s method of producing the stem cells, by parthenogenetic activation, fell within the definition of “human embryo” laid down by the CJEU in Brüstle.19

The CJEU had specifically contemplated the status of a parthenogenetically-activated human oocyte and included it within the definition of a human embryo. In particular, the CJEU had said that it should be included because it was capable of commencing the human developmental process

11 Schenck v Universal Balancing [2012] EWHC 1920 (Pat)12 See footnote 11 ante13 Following Lancer Boss v Henley Forklift [1975] RPC 307

14 [1999] RPC 253 at §5915 [2012] EWHC 185 (Ch)16 Following Predergast’s Applications [2000] RPC 446 and Salk Institute v Karo Bio T0609/02 17 International Stem Cell Corporation BL O/316/1218 Directive 98/44/EC19 Case C-34/10


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(even if it was not capable of concluding it). Although Dr Cullen was convinced on the science explained to him that a parthenogenetically-activated human oocyte could never develop into a human, it was nonetheless clear that it was the commencement of the process that the CJEU considered important. Accordingly, and despite having “a great deal of sympathy with the applicant’s situation”, Dr Cullen rejected the appeal, noting that “as the lowest level of tribunal, I must clearly exercise the greatest of caution in departing from any aspect of the CJEU’s decision”.

Entitlement to PriorityThe challenge of lack of entitlement to priority was made in various cases throughout the year. The approach now being adopted by the Court in such cases is that taken by Arnold J in Intervet v Merial.20 Generally, the skilled person, equipped with common general knowledge, must be able to derive essentially the same information as forms the subject matter of the granted claim from the previous application as a whole, such that he is then able to work the invention in accordance with that claim.

NoveltyA reminder of the requirements for anticipation by prior use was provided by Floyd J in Wagner v Earlex,21 a case concerning a patent for a spray paint apparatus, a prototype for which was exhibited by the patentee at a trade show in Chicago before the priority date. Noting the twin requirements of disclosure and enablement, and with reference to Lord Hoffmann’s judgment in this regard in Synthon v SKB,22 Floyd J considered in particular whether the fact that the product was present at the show meant that the claims were anticipated. The product was demonstrated by the patentee to members of the public at the show who were free to, and did, use the sprayer themselves. He held that the claims were not anticipated - certain integers of the claims were not disclosed because it was not possible to deduce them clearly and unambiguously from the display, notwithstanding the fact that, as Aldous J explained in Lux v Pike,23 a machine on display can be read like a book. However, the features that were not possible to deduce clearly and unambiguously from the display, could be reproduced by a skilled person with an interest in the function of the features of the machine, exercising a simple trial and error process, and without any inventive activity. Accordingly, the patent, although novel, was held invalid for obviousness.

ObviousnessObviousness is a multifactorial question and the summary provided by Kitchin J (as he then was) in Generics v Lundbeck,24 subsequently approved by Lord Hoffmann,25 in this regard continues to be cited with approval. A reminder, however, that it is only guidance – that obviousness is a statutory question – was provided not once but twice by the Court of Appeal during the course of 2012.

The first case was Medimmune v Novartis,26 which, as readers may recall from Arnold J’s 161-page epic judgment at first instance,27 concerned Medimmune’s research-tool patent covering a method for producing “a molecule with binding specificity for a particular target”. The key question on obviousness was whether Arnold J had erred in finding the invention obvious to try over a disclosure made at a conference in New York, but not obvious over a paper published by the same individual. Kitchin LJ held that Arnold J had got it right. The evidence showed that there were clear differences between the two disclosures, the conference disclosure going further and being accompanied by positive statements encouraging those present to do the necessary work. Lewison LJ agreed, reducing the matter to its basics: “In short the patentee pursued an identified goal with known means. Where, then, was the inventive step?”.

Lewison LJ went on to caution that one of the considerations in the multifactorial approach, whether the invention was “obvious to try”, should not be allowed to take on a life of its own – sentiments that “seem to have been largely ignored by the profession”. He added: “It cannot be said too often that the statutory test is: “was the invention obvious at the priority date?” It is not: “was it obvious to try”... we should stick to the statutory question, which has to be applied in all sorts of circumstances and in all sorts of different fields of endeavour”. The decision suggests that although the “obvious to try” doctrine is likely to remain a useful one in appropriate cases, parties should always remember to frame arguments in the context of the statutory test.

A couple of months later, the Court of Appeal affirmed its approach to obviousness, and the question of “obvious to try”, in Novartis v Generics (UK) Limited.28 Kitchin LJ

20 [2010] EWHC 29421 [2012] EWHC 984 (Pat)22 [2006] RPC 1023 [1993] RPC 107

24 [2007] EWHC 1040 (Pat); [2007] RPC 3225 Conor v Angiotech [2008] UKHL 49, [2008] RPC 28 at §4226 See footnote 2 ante27 [2011] EWHC 1669 (Pat)28 [2012] EWCA Civ 1623


and Lewison LJ were again two of the three Judges. In his leading judgment, Kitchin LJ concluded: “I reject the submission that the court can only make a finding of obviousness where it is manifest that a test ought to work. That would be to impose a straightjacket upon the assessment of obviousness which is not warranted by the statutory test and would, for example, preclude a finding of obviousness in a case where the results of an entirely routine test are unpredictable”.

In 2010, the Court of Appeal in Schlumberger29 took the opportunity to explain that although “secondary evidence has to be kept in its place”,30 the contemporaneous evidence of writings, actions and reactions of those in the field can be of assistance to the Court. This was applied by Floyd J in Regeneron v Genentech,31 the Judge being persuaded that Genentech’s patent to the use of antagonists of VEGF for the treatment of disorders involving the excessive growth of blood vessels was inventive, in part because one of the inventors had received the Lasker-DeBakey Medical Award in connection with the invention.

It will also be of considerable assistance to inventive step if a patentee can show an element of mystery about the invention. In Gedeon Richter v Bayer,32 none of the expert witnesses was able to explain how the invention actually worked. In upholding Floyd J’s first instance finding that two patents for the combination of drospirenone and ethinylestradiol were valid, the Court of Appeal explained: “if something is inexplicable even after it is known, it is all the more unlikely to have been predictable (and thus obvious) before.”33

One difference in approach to the question of inventive step between the English Courts and the EPO is the extent to which the parties may rely on post-dated evidence in order to render it plausible that the invention solved the technical problem and to demonstrate the technical effect. In addressing this “important point of principle” in the course of a very lengthy judgment relating to a patent for Copaxone,34 Arnold J held as follows:

(i) If, when read with the skilled person’s common general knowledge, the patent did not disclose enough to make the invention plausible, it was not permissible for the patentee to rely upon post-dated evidence to demonstrate the technical effect;

(ii) The corollary of (i) was that if a patent did make the

invention plausible at its filing date, it was not open to a challenger to rely on post-dated evidence to refute this; but

(iii) Post-dated evidence may be relied upon to confirm that the disclosure in the patent either does or does not make it plausible that the invention solves the technical problem. Thus, if the specification does make it plausible that the invention solves the technical problem, it would be open to an applicant for revocation to rely upon post- dated evidence to cast doubt on this, so as to place an evidential burden on the patentee to show that the invention does solve the technical problem.

The Patents Judges of many states of the European Union have developed a healthy respect for each other. This respect has been enhanced greatly by the numerous conferences and other events providing a forum for formal debate and informal discussion. The English Patents Judges will read decisions in parallel cases and, indeed, would expect the parties to draw their attention to such decisions.35 However, this does not mean that an English Judge will always follow a decision from a sophisticated counterpart. Arnold J demonstrated this rather comprehensively in Teva v AstraZeneca,36 finding no fewer than seven reasons to disagree with the District Court of The Hague’s finding that AstraZeneca’s patent for a sustained released formulation of the anti-psychotic drug quetiapine was valid.

InsufficiencyIt is now a firmly established principle of English patent law that insufficiency is a single objection which may arise in several different ways. Without limitation, the Courts have identified three common types of insufficiency: classical insufficiency, Biogen insufficiency (or insufficiency by excessive claim breadth) and insufficiency by ambiguity.37 In Regeneron v Genentech,38 although numerous insufficiency objections were raised against Genentech’s patent, Floyd J rejected them all. Notably, he observed that: “a patent is not insufficient because it may take much work to develop the most elegant or refined embodiment of its inventive concept. If one were to carry on with the refinement, one would still be making use of the principle disclosed in the patent, working towards an improved embodiment of it.”

The Supreme Court decision in HGS v Eli Lilly39 was not the end of the case - having reached a final determination on

29 Schlumberger v Electromagnetic Geoservices [2010] EWCA Civ 81930 per Nicholls LJ in Molnlycke v P&G [1994] RPC 4931 [2012] EWHC 657 (Pat)32 [2012] EWCA Civ 23533 See footnote 31 ante34 Generics v Yeda and Teva [2012] EWHC 1848 (Pat)

35 Grimme Maschinenfabrik v Derek Scott [2010] EWCA Civ 1110 per Jacob LJ at §79. 36 [2012] EWHC 655 (Pat)37 Zipher v Markem [2009] RPC 1 and Sandvik v Kennametal [2011] EWHC 3311 (Pat)38 See footnote 31 ante39 [2011] UKSC 51


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the question of susceptibility to industrial application, it fell to the Court of Appeal40 to consider several remitted issues, including the sufficiency of certain claims.

Readers will recall that the fact that HGS’ patent had been drafted at a very high level of generality aided its survival before the Supreme Court, who considered it capable of industrial application. The same point also weighed in its favour before the Court of Appeal. One of the claims at issue was claim 13 (“commercially the really important claim”) for a class of antibodies that bind to the neutrokine-alpha protein. It was no more specific than this, and in particular did not require any binding antibody to be “useful”. Largely on this basis, Lilly’s objection of insufficiency, that it would require undue effort to find out which of the millions of antibodies would be useful, was dismissed. It assisted HGS’ case that the first instance Judge had decided as a matter of fact that all the antibodies falling within claim 13 could be made. Furthermore, the fact that the Supreme Court had already held the claim to be capable of industrial application – having the utility only of binding to the protein – was helpful; Lewison LJ noted that the Supreme Court’s (Lord Neuberger’s) view that there is a close connection (“indeed overlap”) between susceptibility to industrial application and sufficiency meant that a finding on one led to a similar finding on the other.It is understood that Lilly is seeking permission to appeal to the Supreme Court in relation to the Court of Appeal’s decision in this case.

Supplementary Protection Certificates (“SPCs”)

The world of SPCs was turned upside down on 24 November 2011 when the CJEU handed down its ruling in Medeva.41 Readers will recall that this decision held that, in order to be “protected by a basic patent in force” for the purposes of Article 3(a) of the SPC Regulation, the product in question had to be “specified in the wording of the claims”. Additionally, the CJEU in Medeva gave a broad interpretation to Article 3(b) of the SPC Regulation, such that if a patent claims a single product (e.g. A), but there is a marketing authorisation (“MA”) for a combination medicine (e.g. A + B), this was sufficient for the purposes of a valid authorisation for A. As regards the scope of an SPC and how it was infringed, the CJEU hinted that an SPC for A would be infringed by any medicine containing A

regardless of whether there was another active ingredient present or not. Finally, the CJEU in Medeva stated that “where a patent protects a product, in accordance with Article 3(c) of the SPC Regulation, only one SPC may be granted for that basic patent (see Biogen paragraph 28)”. On the same day as Medeva, a similar decision was given in the Georgetown42 reference. Reasoned Orders were subsequently given in relation to other similar references in Yeda,43 Queensland44 and Daiichi.45

Most commentators agree that Medeva raised as many, if not more, questions as it answered. For instance – what does “specified in the wording of the claims” actually mean? On what basis is it possible to pluck out one element of an authorisation for a combination medicine? Was an SPC for A infringed by the sale of medicines containing A in combination with other active ingredients? Had the CJEU really intended to disturb the orthodox approach to Article 3(c) of the Regulation of one SPC per product per patent?

Some answers to these questions emerged in 2012 but much uncertainty remains, and it is clear that the Judges of several EU nations, including but by no means limited to the UK, remain dissatisfied with the approach taken by Europe’s highest court.

The opportunity to analyse the CJEU’s approach to Article 3(a) came before Arnold J early on in 2012 when he was called upon to decide whether Medimmune’s SPC for ranibizumab was valid. As noted previously, Medimmune held a research-tool patent covering a method for producing “a molecule with binding specificity for a particular target”. In summer 2011, this patent was held invalid and not infringed by Novartis’ monoclonal antiboby, ranibizumab. Shortly before the trial of this action, Medimmune had sought and obtained its SPC for ranibizumab. The SPC issues were stayed pending Medeva and were restored before the Court in early February 2012 (since Medimmune had appealed the decision on patent validity and infringement). In his judgment, Arnold J accepted first that Medeva and the subsequent references noted above were in respect of combination products and therefore distinguishable from the research-tool patent at issue. He also agreed that the Medeva ruling was unclear and that the Queensland46 decision which held that, in relation to process claims, the product needed to be “identified in the wording of the claims of the patent as the product deriving from the process in

40 Eli Lilly v HGS [2012] EWCA Civ 1185 41 See footnote 4 ante

42 C-422/1043 C-518/1044 C-630/1045 C-6/1146 See Footnote 43 ante


question” contained reasoning which was “hard to follow”. However, he nevertheless considered that it was clear that ranibizumab was not “specified in the wording of the claims” as “the product deriving from the process in question” and the SPC was held invalid. Interestingly, the judgment notes that Novartis had elected not to run an argument that Medimmune’s SPC was improperly based on Novartis’ MA.

Article 3(a) came back before the Court47 in a case more analogous to Medeva. This time the question was whether an SPC for irbesartan plus hydrochlorothiazide was protected by a basic patent which included a claim to “[irbesartan] in association with a diuretic”, where it was common ground that hydrochlorothiazide was a commonly-used diuretic even though neither it, nor any other particular diuretics, were specifically mentioned in the specification or claims of the patent. On this occasion, Arnold J decided that the uncertainty created by Medeva was so great that it was necessary to re-iterate the original question posed to the CJEU in Medeva (in a slightly rephrased form). He also offered his own solution - namely, that the question of “protected by a basic patent in force” should be a question of substance not form and should be directed to the inventive concept of the basic patent in issue. If this solution were adopted then an SPC to irbesartan plus hydrochlorothiazide would not be allowed because the combination was not part of the inventive concept of the basic patent relied on; only irbesartan should be entitled to an SPC.

The point not argued in Medimmune, namely whether an applicant for an SPC may rely on the MA of another, even a competitor, was considered by Warren J in Lilly v HGS.48 The patent was the same HGS patent that went to the Supreme Court on its susceptibility to industrial application.49 Lilly sought a declaration that if HGS were to apply for an SPC based on a MA held by Lilly, such an SPC would be invalid. Warren J was asked by Lilly to make an immediate reference to the CJEU in relation to the third party SPC question and also in relation to the question of whether HGS’ patent specified Lilly’s antibody in the wording of the claims. HGS asked that Lilly’s claim be struck out for being premature, neither the SPC nor MA having been applied for, let alone granted.

Warren J refused HGS’ strike-out application and allowed Lilly’s claim for a declaration to proceed. There was a need

for Lilly to have commercial certainty: if the declaration was denied, Lilly would be at risk of infringing the SPC and so would be inclined to delay the application for its MA, to the detriment of patients. However, the Judge was careful to note that this was an exceptional case and not an opening of the floodgates for declaratory actions concerning SPCs. Although the claim was not struck out, Warren J ordered a stay pending the outcome of the validity case before the Court of Appeal on the issues remitted by the Supreme Court.

In relation to Lilly’s application for a reference, he considered that the answer to the third party SPC question was clear:50 no connection is required between undertakings in order for one to rely on the MA of another. Should it be otherwise, investigating the question of “connection” would put undue burden on the authorities and bring with it all the uncertainties that a fact-sensitive exercise entails. Warren J considered that there would be no need to refer the third party SPC question if it stood alone, but because a reference was necessary to deal with the “specified in the claims” question, the third party SPC question should be referred too. However, there was no point in making the reference until the facts were established, hence the application for an immediate reference was refused and the parties were invited to raise the matter again in the future.

That was not the end of it, however. Although carefully planned, Warren J’s scheme for the handling of the case was, as he put it, “hijacked” by the making of the reference to the CJEU by Arnold J in Actavis v Sanofi,51 noted above, on the same “specified in the wording of the claims” question. To deal with this, and the impact of the Court of Appeal decision,52 upholding the validity of HGS’ patent, Warren J revised his directions at a subsequent hearing.53 He dispensed with his earlier order for a stay, meaning that the third party SPC issue could proceed, chose to make an immediate reference54 on the “specified in the claims” question, with a request that it be joined with Arnold J’s reference, but refused to expedite the proceedings on the basis that even after waiting for the CJEU’s answer to a reference, Lilly would still have time to obtain its MA before HGS’ patent expires. Whether this is overly optimistic remains to be seen.

As regards Article 3(c) and the question of whether one SPC per product per patent or one SPC per patent was the

47 Actavis v Sanofi Judgment of Arnold J, dated 20 September 2012. See footnote 5 ante48 [2012] EWHC 2290 (Pat)49 [2011] UKSC 51

50 Note that he subsequently clarified that this did not mean he considered it to be acte clair – see Lilly v HGS [2012] EWHC 2857 (Pat) at §5 and §2151 See footnote 5ante52 [2012] EWCA Civ 118553 [2012] EWHC 2857 (Pat)54 Case C-493/12


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correct approach, it was noted when the Queensland case came back to the Court55 that the UKIPO’s view was that the CJEU in Medeva did not intend to change the law and so two SPC applications were allowed even though they were based on one patent. However, later in the year in the irbesartan / hydrochlorothiazide case,56 Arnold J, relying on the u-turn in Neurim57 (summarised below) ruled that “it cannot safely be assumed that the CJEU did not intend to change the law in Medeva merely because it did not say so explicitly”, and decided to refer a question on the issue.

Perhaps the most interesting SPC case of the year was the judgment of the CJEU in Neurim. The Neurim case concerned Article 3(d) of the SPC regulation which requires that the MA supporting the SPC should be the first MA to place the product on the market in the EEA. At first instance, Arnold J had concluded that Neurim’s SPC based on a patent and MA for the use of melatonin in human sleep disorders should not be granted because of the existence of a previous MA to place melatonin on the market for the enhancement of reproductive activity in sheep.58 As readers may recall, the Court of Appeal strongly disagreed with the approach of the High Court and referred the matter to the CJEU.59 In its ruling,60 the CJEU endorsed the approach taken by the Court of Appeal without even mentioning previous decisions such as Pharmacia Italia,61 MIT,62 and Yissum,63 which pointed in the opposition direction. So now, as regards Article 3(d), the question to consider is whether the earlier MA would fall within the scope of the basic patent relied upon for the new SPC. If it does, then the MA upon which the SPC must be based is the earlier MA (which is likely to mean that the time for applying for an SPC will have expired and/or the term of SPC will be zero). If there is no overlap between the earlier MA and the [later] patent, the later MA will be used. This effectively opens up for the first time the possibility of SPCs for second medical use patents.

Clarity was given in respect of the scope and effects of an SPC (Articles 4 and 5) when, on 9 February 2012, the CJEU handed down a Reasoned Order in the Actavis v Novartis64 reference ruling that an SPC for A would be infringed by any medicine containing A regardless of the presence of other active ingredients in the medicine, provided the medicine would have infringed the basic patent. This is consistent with the rationale of the CJEU that SPC issues should follow a patents-based approach.

A further reference was made to the CJEU on 19 October 201265 by Arnold J, revisiting the issue of whether a Swiss MA, which had been automatically recognised in Liechtenstein, should constitute the “first authorisation to place the product on the market” for the purposes of calculating the duration of an SPC pursuant to Article 13(1).66 In this case, the Swiss MA had been granted under an accelerated procedure on the basis of Phase II data but was subsequently suspended pending further data. The EMA was not willing to grant the MA on the same data set and required further extensive studies. AstraZeneca argued that the Swiss MA should not constitute the first MA in the EEA and, although Arnold J took a cautious approach, he acknowledged that the interpretation of Article 13 was not acte clair.

For completeness, it is worth mentioning that in the continuing Lipitor® saga, Roth J refused to make a reference to the CJEU in relation to the Paediatric Regulation, despite acknowledging that the Court had power to do so.67 He held that the Court had discretion to revoke a paediatric extension granted contrary to the Paediatric Regulation, but was not obliged to do so and that in this case the extension had not been granted in contravention of the Regulation. Damages

Since quantum is only considered after liability has been determined in the UK, damages inquiries are rare in UK patent proceedings. Given the likely costs of a full inquiry, which can often match or exceed those of the liability trial, the parties are often inclined to settle. This has left practitioners with a paucity of case law, which meant the decision of the High Court (Norris J) in Fabio Perini v LPC was received with open arms68. The High Court had previously found that Perini’s patent, concerning methods of sealing the loose ends of rolls of paper to the body of the rolls, was valid and infringed by PCMC’s tail-sealer machine, a decision that was upheld on appeal.

PCMC manufactured and sold its tail-sealer machine in Italy to LPC, who then imported and operated the machine in the UK. PCMC was found to be jointly liable with LPC for assisting in the installation and commissioning of the machines in the UK. Perini’s damages claim included a

55 Decision of Arnold J of 14 February [2012] EWHC 223 (Pat)56 Actavis v Sanofi. See footnote 5 ante57 C-130/1158 [2010] EWHC 976 (Pat)59 [2011] EWCA Civ 22860 See footnote 57 ante61 C-31/0362 C-431/0463 C-202/0564 C-442/11

65 AstraZeneca v Comptroller-General of Patents, Designs and Trade Marks [2012] EWHC2840 (Pat).66 In joined cases C-207/03 and C-252/03 the CJEU held that a Swiss MA automatically re ognised in Liechtenstein constituted the first MA in the EEA for purses of Article 13.67 Dr Reddy’s v Warner-Lambert [2012] EWHC 3715 (Pat)68 See footnote 3 ante


claim for lost profits on the supply of the entire machine lines and additional equipment, and it subsequently sought to broaden the scope of its claim in two respects. First, it claimed that the patent had also been infringed by PCMC supplying the infringing machines to LPC in the UK. Secondly, Perini alleged that PCMC had also supplied another party, Georgia-Pacific (which was not a party to the main proceedings), with infringing machines. Norris J held that the first point was res judicata (having been raised unsuccessfully at the trial on liability) and therefore not open for Perini to argue again. However, on the second point, Norris J explained Perini could seek damages in respect of PCMC acting in common design with Georgia-Pacific, since this infringement was of the same type as that on which Perini had succeeded at trial: “It is just and convenient to extend the inquiry to other cases of infringement by use for which PCMC is jointly liable (even if technically this involves introducing new causes of action) because these involve the same type of infringement as that on which the Court has ruled.”

Damages for Groundless Threats Despite the amendments made in the Patents Act 2004 to soften them, the statutory provisions relating to groundless threats still have sufficient teeth to catch the unwary. In Sudarshan v Clariant,69 the patent in suit turned out to be plainly invalid, having been anticipated by the process described in the patentee’s own earlier patent. This fact, coupled with disclosure which suggested that the patentee was aware of the facts which led to the finding of invalidity, deprived the patentee from relying on the defence in section 70(2A) Patents Act 1977, i.e. that it did not know and had no reason to believe that the patent was invalid. The threats provisions were engaged by a letter sent to Sudarshan which stated: “Certainly you will not be interested in continuously effecting a patent infringement which may involve most serious penalties to the infringer and his customers.” The patentee sought to argue that Sudarshan was a manufacturer and so could be threatened with impunity. However, Sudarshan successfully argued that the threat was also directed at its customers and that in that situation it stood as a “person aggrieved” under section 70(1) of the Act. Subsequently, Mr John Baldwin QC (sitting as a Deputy Judge) ordered both an inquiry into the damages caused by the groundless threats and disclosure by the patentee as to the persons to whom threats had been made.70

Costs

Two points of interest came out of Arnold J’s 8 February quartet of costs decisions in the Sandvik v Kennametal litigation.71 The first point related to conditional fee arrangements (CFAs).72 Kennametal’s solicitors were acting under a CFA geared to pay a 35% success fee. Sandvik sought to persuade the Judge that CFAs have no place in patent litigation between large commercial undertakings because their purpose is to improve access to justice. The Judge disagreed, noting that the position was made plain by the House of Lords in Campbell v MGN:73 the fact that a litigant may have the means to litigate without one is not a bar to a success fee being recoverable. Furthermore, Arnold J also allowed the success fee to factor in his assessment of the level of costs to be paid on account, pending detailed assessment (despite not deciding on whether 35% was appropriate).74 The second point related to interest.75 Arnold J clarified that in circumstances where the post-judgment hearing had been postponed at the request of one of the parties (in this case to accommodate counsel’s availability), interest on costs would nevertheless run from the earlier date from which the postponement took place, particularly in view of the fact that when the postponement was made, Kennametal put Sandvik on notice that it would seek interest from the earlier date.

It is well known that costs in the Patents County Court are capped (CPR 45.42). However, what happens in multi-party litigation? Should a claimant that has prevailed over multiple defendants receive an amount of costs greater than the cap (each defendant paying within the cap)? This question came before HHJ Birss QC in the context of registered designs in Gimex v Chill Bag.76 The answer, the Judge ruled, was that the cap operates on both giving and receiving costs. So if, as in this case, a single claimant wins against multiple defendants, the costs recouped for the liability trial will still be capped at £50k. Had the claimant lost, it would have the comfort of knowing it would not have to pay more than £50k, even if, in that scenario, the winning defendants would take a smaller share each. The subsequent case of Liversidge v Mumford and Abbott, which also came before HHJ Birss QC, confirmed this position. The two (separately represented) defendants, having successfully invalidated the patent and established non-infringement, had their combined costs claim capped

69 [2012] EWHC 1569 (Ch)70 [2012] EWHC 2941 (Pat)

71 [2012] EWHC 245-8 (Pat)72 [2012] EWHC 245 (Pat)73 [2005] UKHL 6174 [2012] EWHC 248 (Pat)75 [2012] EWHC 247 (Pat)76 [2012] EWPCC 34


10

77 [2012] EWPCC 4078 [2012] EWHC 790 (Pat)79 See footnote 1 ante

at £50k. Whilst the Judge saw considerable force in the point that the defendants were being penalised in costs because the claimant chose to sue other parties in the same action, he considered that any such issue should be foreseen early in the proceedings and canvassed at the CMC: “It may be that in some cases the fairest and most cost-effective way to proceed in a multi-defendant case will be to allow the claim to proceed against one defendant alone and stay the action against the other pending trial.”77

Procedural Issues

JurisdictionOne of the most interesting decisions of 2012 concerned the question of whether the English Patents Court could, and moreover should, entertain an application for a declaration of non-infringement, not only in respect of UK designations of European patents, but also in respect of non-UK designations too. It was the second of the year’s two decisions from Arnold J dealing with jurisdiction (Innovia v Frito Lay78 then Actavis v Eli Lilly79).

In late July 2012, Actavis issued proceedings in the English High Court for a declaration that its proposed launch of pemetrexed dipotassium in the UK, France, Germany, Italy and Spain would not infringe the UK and corresponding national designations of Lilly’s patent, which was for the use of pemetrexed disidium in combination with vitamin B12 or a pharmaceutical derivative thereof. Actavis undertook not to challenge validity in these proceedings, provided the Court accepted jurisdiction. Ultimately, the questions before the Court were: (i) had Lilly US consented to accept service in respect of the claim (including the requests in respect of the non-UK patents)? (ii) if not, had service been effected under the Civil Procedure Rules? and (iii) if service was effected only pursuant to (ii), should the proceedings be stayed under the doctrine of forum non conveniens?

As regards (i), after considering the pre-action correspondence, Arnold J held that Lilly US had consented to service by a letter from Lilly US’ English solicitors. As regards (ii), Arnold J held that even if there was no consent to service, service had nevertheless been validly effected under the rules because Lilly’s European Patent Operations Department constituted a place of business in the UK. This finding was based mostly on the delegation of authority from Lilly’s US office to its UK office.

The Court then assessed whether the proceedings should be stayed under the doctrine of forum non conveniens, which could only come into play if service was effected under (ii) above and not consented to under (i). The Judge considered the English Supreme Court’s decision on copyright in Lucasfilm v Ainsworth80 and held if patents were no different to copyright for the purposes of justiciability (and Lilly did not argue otherwise), there was no reason why they should be different for the purposes of forum non conveniens when validity was not in issue. The Court then considered whether justice demanded that the claims should be stayed in favour of a more appropriate forum (i.e. the national courts of the non-UK designations included in the proceedings). Overall, the Judge preferred Actavis’ reasons why the claims should be determined in one court, including the cost savings (only one team of lawyers on each side using one set of witnesses) and reduced risk of inconsistent decisions, over Lilly’s argument based on difficulties of a court applying foreign law. Arnold J concluded that Lilly had not shown that the courts of France, Germany, Italy and Spain were clearly or distinctly more appropriate than the English Court. It is understood that Lilly has appealed this decision and the case will be heard in April 2013.

The Innovia81 case concerned an entitlement dispute between US snack-food giant Frito-Lay and UK packaging company Innovia concerning patents for the materials used in crisp bags. It was alleged by Innovia that Frito-Lay had acted in breach of confidence in applying for patents based on information provided by Innovia in the US. The factual matrix of the case is complex, with multiple actions and a multi-jurisdictional mixture of patent applications and granted patents, and the legislation at issue is varied, taking in the EPC, EPC Protocol on Recognition,82 Patents Act, and Brussels I and Rome II Conventions (quoted over some 14 pages of the judgment). Essentially, however, the decision is in respect of various interim applications made by Frito-Lay to determine whether the courts of the US or the UK were best-placed to hear the dispute.

Arnold J held that the UK was the most appropriate forum. His decision was made on the basis that the various claims of entitlement and breach of confidence were factually so intertwined that they should be heard together. The dispute was nailed to the UK as a result of two statutory provisions: sections 82 and 12 of the Act. Section 82

80 [2011] FSR 41, [2011] UKSC 39, [2012] 1 AC 20881 See footnote 76 ante82 The Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the Grant of a European Patent


85 [2012] EWHC 627 (Pat)86 American Cyanamid v Ethicon [1975] AC 39687 [2011] EWHC 1691 (Pat)

83 Case C-281/02; [2005] ECR I-1383.84 [2012] EWPCC 51

deals with entitlement to European patent applications and, significantly, Arnold J held that the exclusive jurisdiction conferred by the EPC Protocol on Recognition on the contracting state meant that section 82 operated to exclude not just other EPC contracting states but also non-contracting states, such as the US. Consequently, the entitlement case on the European applications had to be heard in the UK. Frito-Lay’s application to stay the case on grounds of forum non conveniens failed because Arnold J also held that the rules on jurisdiction under the EPC Protocol on Recognition were strict, and should not be undermined by the forum non conveniens doctrine, following the approach taken by the CJEU to the Brussels I Regulation in Owusu v Jackson.83

Entitlement to the other, foreign, patent applications was dealt with under section 12, the English Court being able to apply foreign law to determine entitlement to foreign applications (although in this case, applying US law led to the conclusion that only the USPTO may determine inventorship, and hence entitlement, to pending US applications). Arnold J held that jurisdiction under section 12 is not lost if the applications mature into patents during the pendency of the proceedings because jurisdiction is determined as at the date of commencement of proceedings.

Jurisdiction of the Patents County CourtThe jurisdiction of the PCC to hear breach of confidence claims was the subject of Ningbo Wentai v Wang84, a case concerning a patent for a folding golf cart in which a counterclaim for breach of confidence had been made by the patentee in defending a revocation action. The patent action came to a swift end, it becoming apparent that the patent was invalid owing to prior disclosures made in public, alleged to have been made in breach of confidence, which took place earlier than the permitted 6 month period under section 2(4) of the Act. As to whether the breach of confidence case could continue alone in the PCC, HHJ Birss QC decided that it could. Although it was highly unlikely that the PCC had ordinary jurisdiction to hear the breach of confidence claim, it being the type of “technical trade secrets litigation” that would ordinarily proceed in the Chancery Division, the special jurisdiction conferred by section 287 of the Copyright Designs and Patents Act 1988 allowed the PCC to hear proceedings ancillary to or arising out of the same subject matter as patent and design

(and also now trade mark) cases. The fact that the patent case had already ended did not matter. The Judge noted that there would also be another way to litigate a breach of confidence claim in the PCC, even if it stood alone: start it in the Chancery Division and apply for a transfer to the PCC under section 40(2) of the County Courts Act 1984.

Interim InjunctionsThe question of how far a generics company must go to provide reassurances to patent holders came up for consideration in an application for an interim injunction made early in 2012 in Merck v Teva.85 HHJ Birss QC, sitting as a Judge in the High Court, granted Merck’s application for an interim injunction in circumstances where Teva had been granted an MA and had taken no further action other than refusing to divulge its intentions as to whether it would launch before patent expiry.

The application was brought on a quia timet basis, there being only a threat, not an ongoing act of infringement, and as such the case deals with the question of what constitutes an imminent threat, alongside the application of the American Cyanamid86 questions to the facts and the related issue of whether Merck’s application should be struck out for having no reasonable prospect of success.The decision is notable for several reasons, not least the way in which it fits with other decisions on similar facts around Europe. Although HHJ Birss QC was careful to set out his analysis of the other cases and distinguish them on the facts, the bigger picture remains that other courts in Europe (France, the Netherlands, Sweden, Germany and Denmark) have generally not granted interim injunctions in circumstances where a generic company has merely obtained a granted MA and refused to answer questions.How then does this English decision differ on its facts? The answer appears to be in the combination of various elements: Teva obtained its MA a long time (22 months) before patent expiry, it refused to confirm it would not launch when faced with an ultimatum to respond and, importantly, its track record was perhaps marred by the atorvastatin case we reported last year (Warner-Lambert v Teva),87 in which Teva had reneged on statements it had made concerning its intended launch date. In that case, having said in a letter that it would not launch until after patent expiry, it entered the market 5 months earlier with a dramatic high-volume launch and was promptly injuncted by Floyd J. One might also add that Teva had not “cleared the way”


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93 [2012] EWCA Civ 593 per Etherton LJ giving the leading judgment at §6394[2012] EWPCC 19

88 [2010] EWHC 294589 See footnote 83 ante at §3990 Les Laboratoires Servier v Apotex [2007] EWHC 1538 (Pat)91 [2011] EWHC 730 (Pat)92 [2008] EWHC 2347 (Ch)

in Merck v Teva. Although nothing was said in the judgment about the status in law of “clearing the way” following Cephalon v Orchid,88 comments were nonetheless made to the effect that if Teva considered the patent to be invalid it could and should have started a revocation action.The decision is also notable for the Judge’s treatment of the issue of what constitutes a threat of infringement, and, in particular, the question of imminence. HHJ Birss QC indicated that on the key question of whether there is proof of a threat and an intention to infringe, the court has considerable latitude to make an inference. This need not require the threat to be immediate. In a comment that may encourage quia timet injunction applications to be made at an earlier stage, he noted: “In my judgment one needs to be careful with the “imminence” of a threat. If a defendant intends to launch an infringing product tomorrow then no doubt that is an imminent threat. However if a defendant intends today to launch at any time during the period of the patent, then the fact that the launch date may be one year away (with the patent not due to expire until afterwards) does not make an action for a quia timet injunction premature. On the contrary it makes sense for the parties to come to court and sort out their legal rights in advance.”89

Such is the saga of the litigation between Servier and Apotex in relation to Servier’s patent for alpha-crystalline perindopril, revoked by Pumfrey J in 2007,90 that one can almost rely on there being a new case to report in each edition of this review. 2012 was no exception, the Court of Appeal giving its judgment in the appeal from Arnold J’s decision,91 reported last year, on the ex turpi causa principle. To recap briefly, the case concerns damages claimed by Apotex by way of compensation for being kept off the market by an interim injunction prior to the revocation of Servier’s patent. Arnold J had ruled that the award of damages, assessed by Norris J at £17.5 million,92 and paid by Servier, should be refunded by Apotex because the damages were claimed in respect of lost sales of a product whose manufacture in Canada infringed Servier’s Canadian patent. He applied the legal principle ex turpi causa non oritur actio (no action can arise from an illegal or immoral act) to prevent Apotex from relying on its own wrongdoing in Canada to make the claim in England in respect of the same product as a matter of public policy.

The Court of Appeal reversed Arnold J’s decision. Although a great deal of argument was put forward by the

parties on the ex turpi causa principle, in the end the Court did not find it necessary to delve into the law too deeply (“It is not necessary in order to resolve this appeal to undertake a comprehensive analysis of the decided cases”).93 Rather, the factor that weighed most heavily in their decision was a concession made by Apotex just a day before the hearing in which it agreed to discount the compensation by an amount equal to that which the Canadian Court would have ordered by way of damages for the infringement in Canada. This was characterised as a “cost of manufacture”. Apotex argued that this financial offsetting would prevent either party receiving an unjustified windfall. The Court agreed and embraced the idea as one which also promoted international comity between the courts of England and Canada. It also reflected the reality that patents are territorial and a product that infringes a patent in one country can be sold perfectly lawfully in another country without patent protection. On the ex turpi causa principle, it held that although the rule was engaged, it should be applied proportionately to the illegality involved. Apotex had acted in good faith in Canada, believing the Canadian patent to be invalid and hence its actions were “low on the scale of culpability”.

The saga of Servier v Apotex looks set to continue: permission has been granted for Servier to appeal this decision to the Supreme Court.

Proceedings in the Patents County CourtWe noted at the beginning of last year’s review that the Patents County Court was continuing to go from strength to strength, principally because of the dedication, intelligence and pragmatism shown by its presiding Judge, HHJ Birss QC. One striking example from 2012 to illustrate that this trend continues related to a dispute over two patents relating to an apparatus for cleaning shower and bath enclosures owned by SC Johnson & Son, which Unilever contended were invalid. The Judge observed: “One might ask whether a case between two multinational corporations is suitable for the PCC...In terms of the issues to be decided, the case is clearly suitable for the PCC...the trial took one and a half days. As far as I can tell it has been run expeditiously and without major cost.”94 It was also interesting that the Court ordered sequential exchange of expert reports in order to meet any concerns that Unilever had not pleaded its case on obviousness with sufficient clarity.


99 [2012] EWHC 1567 (Pat)100 2004/48101 See footnote 9 ante102 [2012] EWPCC 44103 Eli Lilly v Neopharma and another [2012] EWHC 2297 (Ch)104 Chapter 2 to Annex IV of the Act of Accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia or Slovakia to the European Union, signed in Athens on 16 April 2003.

95 See in particular Kimberley Clark Worldwide v P&G [2000] RPC 422.96 [2012] EWHC 184 (Pat)97 [2009] EWCA Civ 168 and [2010] RPC 1498 [2012] EWCA Civ 567

ExpeditionThe desirability of avoiding a waste of court time and resources during co-pending English revocation and EPO opposition proceedings has long been recognised and for some years there was a presumption that the English proceedings ought to be stayed in such situations.95 Stays of English litigation pending EPO proceedings have been rather less common in recent years but the benefits of avoiding redundant or conflicting English decisions drove an alternative request at the case management conference in Eli Lilly v Biogen:96 namely, a request to the EPO that its proceedings should be expedited. Interestingly, Floyd J was persuaded to make such a request “politely” to the Technical Board of Appeal, despite the fact that Lilly, the requesting party, was not a party to the opposition proceedings. His decision to do so follows the suggestion of Jacob LJ in two separate judgments in Lilly v HGS97 that parties involved in parallel proceedings should communicate with the court and the EPO at an early stage and ask, where possible, the appropriate tribunal to speed things up.

Final InjunctionsOne of the hot topics in patent litigation across the globe is the extent to which standards essential patent holders may seek injunctive relief. The case of Nokia v IPCom98 takes the debate a step further in providing a rare example of a court considering relief in circumstances where the patent - IPCom’s standard essential telecoms patent – was found to be valid and infringed on appeal. IPCom and Nokia are proceeding to a trial in the summer of 2013 as to the ‘FRAND’ (fair, reasonable and non-discriminatory) terms for the grant of a licence. IPCom is not presently pursuing an injunction against Nokia on the basis that Nokia has undertaken not to infringe the patent and to enter into a FRAND licence on the terms set by the Court. IPCom have also sued HTC on the same patent and the parties agreed that the FRAND issues between IPCom/HTC should be heard at the same time as IPCom/Nokia. Having given undertakings similar to those provided by Nokia, HTC sought to stay the technical trial (i.e. the issues of validity and infringement) pending the patent’s opposition at the EPO. In allowing HTC’s application, Roth J indicated that had HTC not given the relevant undertakings, it would indeed be entirely appropriate for IPCom to seek injunctive relief on its standards essential patent: “…if another party

declined to offer similar undertakings, then it would not have the same ground to resist an injunction…”99

Dissemination of JudgmentsWhilst Article 15 of the IP Enforcement Directive100 refers to dissemination of the judgment in a case in which a rights holder has established infringement, no such provision is made for the alleged infringer should the rights holder lose the case. In BOS v Cobra, Cobra, having successfully invalidated BOS’s patent and established non-infringement,101 sought an order for dissemination, asking BOS to place a notice on its website referring to the main judgment for 6 months and to place an advertisement in a prominent trade journal for two editions. HHJ Birss QC disregarded the aforementioned asymmetry in the IP Enforcement Directive: “Remedies like declarations are available to either side”. On the facts, he considered it fair and proportionate to make the order sought. BOS’s parallel infringement action had been successful in Germany, so it was particularly important to publicise the UK finding of non-infringement.102

Security for CostsWhen a patent has been challenged and survived that challenge, a certificate of contested validity can be awarded to the patentee, pursuant to which subsequent challengers may be penalised in costs. Section 65(2) of the Act provides that if a party relying on a certificate of contested validity wins, that party is entitled to “solicitor and own client costs” – broadly, costs which have actually been incurred unless they are unreasonable or unreasonably incurred. When dealing with an application for further security for costs in a subsequent challenge to the olanzapine patent, Floyd J relied on, among other things, section 65(2) in awarding Eli Lilly a further £550,000 by way of security.103

Specific MechanismThe so-called “Specific Mechanism”104 is a form of transitional provision relating to the enforcement of pharmaceutical patents against parallel imports from the Eastern European accession countries in circumstances where equivalent patent protection was not available in those countries. It is a derogation from the principle of free movement of goods and, put simply, is a means to prevent cheap drug products leaking into protected markets elsewhere in Europe in certain defined circumstances. The operation of the provision, and in particular the question of


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111 Island Records v Tring [1995] FSR 560112 Generics v Yeda and Teva. See footnote 34 ante113 Generics v Yeda and Teva [2011] EWHC 3200 (Pat)114 [2012] EWCA Civ 726115 Stemming from Prince Jefri Bolkiah v KPMG [1999] (ref)

105 [2012] EWPCC 18106 [2012] EWPCC 21107 [2005] EWCA (Civ) 294108 Terrell on the Law of Patents, 17th Edition at §19-76109 Monsanto v Stauffer [1988] FSR 57110 Directive 2004/48 EC

whether notification to the patentee by the parallel trader was necessary, came before the Patents County Court in the case of Merck v Sigma.105 Sigma sought to argue that it had given Merck notice of its intention to parallel import Polish Singulair® into the UK and because Merck did not respond, it was prevented from exercising its rights under the Specific Mechanism by reason of (i) the meaning of the legislation and (ii) the law of estoppel. HHJ Birss QC did not agree: there was nothing in the Specific Mechanism that required the patentee to give notice (rather, the purpose of the legislation was to warn the patentee) and, on the estoppel point, although mere silence can give rise to an estoppel, this only applies when the party maintaining the silence has a legal duty to dispel the other party’s misunderstanding. In this case, there was no such duty. It was Merck’s choice whether to assert its patent rights or not. Accordingly, Merck had not lost the right to claim damages for infringement.

Delivery up / destructionFollowing the finding of infringement in the aforementioned case of Merck v Sigma, HHJ Birss QC went on to consider the appropriate form of order to grant relief.106

The purpose of an order for delivery up or destruction of infringing product is said to be that of an aid to an injunction (Jacob LJ in Mayne Pharma v Pharmacia).107 Terrell notes that it also has the purpose of protecting the patentee from post-expiry use of infringing product made during the term of the patent.108 HHJ Birss QC declared himself unsatisfied that Terrell was correct on this point, with reference to a decision of the Supreme Court of South Africa.109 In the Merck case, the order was made primarily to assist in aid of the injunction. With reference to the IP Enforcement Directive110 he noted that this was proportionate to the infringement and not adverse to the interests of any third parties (none of which were identified). However, the Judge’s reasons do also note that the remedy prevented Sigma using the stock as a springboard into market after expiry. Noting that springboard relief was a separate point, unrelated to the purpose of delivery up, he nonetheless took the view that it had a role to play in the exercise of discretion.

Interestingly, given that the case was heard in the PCC, he also considered the impact of costs capping on the

question of a stay of the damages inquiry pending appeal. Given the general rule that no stay is awarded but the successful claimant proceeds at his own risk on costs, he ordered Island Records disclosure111 (i.e. disclosure of sufficient information to enable a choice to be made between damages or an account of profits) and held over the question of a stay until a subsequent directions hearing when the parties had a better idea of the sums at stake.

ExperimentsThe dividing line between what is an experiment and what is not remains a fine one but it is clear that there are limits in areas outside traditional laboratory endeavours. By way of example, in an application in the Copaxone litigation,112 Arnold J noted that: “Speaking for myself, I am extremely reluctant to accept that all computerised statistical analyses constitute experiments”.

Confidentiality Clubs It is common practice in English patent litigation for each party to form a “confidentiality club”, the members of which are given access to the other side’s confidential materials such as disclosure and product/process descriptions. Confidentiality clubs are normally comprised of a party’s external advisers, expert witnesses and a small number of representatives of the party itself (perhaps a lawyer, a patent attorney and/or a technical expert).

In last year’s update we reported that an in-house patent attorney with Generics [UK] Limited (which trades in the UK as “Mylan”) had been prevented by the Patents Court from joining Mylan’s confidentiality club in a dispute against Yeda and Teva about a patent relating to the medicine Copaxone because the attorney in question had previously been employed by Teva and might have a subconscious memory of events which could influence Mylan’s conduct in the litigation.113 Mylan appealed and on 31 May 2012 the Court of Appeal unanimously overturned the original decision, albeit for different reasons.114 Sir Robin Jacob held that the so-called Bolkiah Rule,115 which imposes higher stands of confidentiality on external professionals involved in litigation than on employees, should also apply to in-house patent attorneys but that there was no evidence to suggest that the patent attorney in question was in possession of any confidential information. In contrast, Etherton LJ held that the Bolkiah Rule should not extend to in-house professionals although he agreed that there


116 The authors are grateful to Bristows’ partner, Alan Johnson, who wrote this section of the review.

was no evidence to suggest that the individual concerned possessed any relevant confidential information. Ward LJ agreed with Etherton LJ and it is this aspect of the decision that forms the precedent.

Unitary Patent / Unified Patent Court – “UP” and running at last116

2012 was a momentous year in the seemingly endless history of what we now know as the Unitary Patent and Unified Patent Court. At last, after decades of attempts, agreement was finally reached – if not between all EU states, then at least between most of them. Looking back at last year’s equivalent piece, the author notes that he correctly predicted that the Danes would use their Presidency of the EU to broker a deal to share the Central Division of the UPC between Paris, London, and Munich; but was not so accurate in his assessment of the problem of Articles 6-8 of the draft Patent Regulation (which would have given the CJEU the final say on the meaning of infringement) as “intractable”. The author would also remind readers of his analogy of the draft package as it then stood with the monster in Mary Shelley’s Frankenstein, lying on the laboratory table, with the Danish Presidency hovering over the motionless creature to see if it could be brought to life. Given that nothing of substance has changed in the package, save for the replacement of Articles 6-8 with a provision which is arguably almost as bad for users (albeit for different reasons), it is therefore very much open to debate as to whether the life that has been breathed into the creation should be the source of celebration or horror.

Since the author is now part way through a series of articles in the CIPA Journal discussing the new system in detail, he will not dwell on the detail of the arrangements which lie in store, but rather takes the opportunity to look at whether the system will live up to the objectives which were set by the Commission.

The non-Unitary Patent – it is self-evident that the Commission has failed in its goal to achieve a Unitary Patent for the EU. How can a patent which does not cover two of the six most important patent jurisdictions – Italy and Spain – possibly be described as “unitary”? But more than that, we do not yet know if the remaining 25 countries (soon to be 26 when Croatia joins the EU in July)

will ratify the UPC treaty, and hence become eligible for coverage by the “unitary” patent. Poland is well known to have changed its position – a great irony considering the instrumental role of its Presidency in promoting the agreement in the second half of 2011 – and has indicated it will not join the initial wave of signatures, let alone ratify any time soon. But others may similarly be slow to ratify, or never do so. Hungary, Romania, Greece, Portugal, and the Czech Republic have all been mentioned by commentators as having cold feet, and of course Ireland and Denmark will probably require referenda. It is even rumoured that Germany (one of the three countries which must ratify before the system can come into force) may not ratify for perhaps four years. If, however, UK, France and Germany do ratify relatively promptly, the system will come into effect when another 10 states have ratified. Since one of these may be Italy due to its participation in the Court system, this means that a “unitary” patent may need to be supplemented by as many as 16 conventional EPs to obtain pan-EU coverage when the system first goes live. Even if the UP turns out to be cheaper to obtain and maintain than seems likely, this is plainly anything but the game-changing positive development in the future of innovation in Europe which the Commission would have us believe.

The UPC – a better litigation system for Claimants? – it is, of course, true that the fragmented litigation system in Europe is inefficient. There is often duplication in major litigation which is commonly fought in two, three or even more countries in some cases, all concerning the same EP, theoretically to be interpreted in the same manner. The vast majority of litigation, however, – something over 90% at least – is fought in only one European state. More importantly, when measuring the changes against the Commission’s criteria that the litigation system should be better for SMEs, what is the assessment? An informal poll among Bristows’ patent litigation partners reveals that over our careers (cumulatively approaching 200 man-years) we have dealt with only a handful of SME clients wanting to assert their rights in more than one EU state, or been on the other side in such a dispute, and have had not one such case within the last 10 years. Hence, from an English perspective at least, the value of the new system to SMEs really should be judged first and foremost against the cost of asserting patents in the UK. It is true that English patent litigation was inaccessible to SMEs. That is no longer the case, however, since the re-vamped Patents County


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117 eBay Inc. v MercExchange L.L.C., 547 U.S. 388 (2006)

Court rules came into force in 2010, with the number of patent cases now rising to significant levels. In Germany and France, there are numerous small suits which by all accounts are dealt with at relatively low cost. What then will be the cost by comparison of UPC litigation which, after the transitional period has expired, will be mandatory for EPs? Whilst it is almost impossible to answer that question quantitatively, qualitatively the answer is obvious from an assessment of the structure of the system and draft rules: it will be significantly more expensive than PCC litigation. As reported by Jochen Pagenberg in the December 2012 issue of the CIPA Journal, the same will be true for German SMEs, and doubtless the same will also be true for French SMEs. On what possible basis can this situation be described as an improvement for SMEs wishing to assert their rights?

What about Defendants? – the author has, it is fair to say, something of a hobby horse about the Commission’s obsession with claimants – or plaintiffs as we must now call them once again. At all times, we hear about how it will be better for companies – especially SMEs – to be able to obtain unitary protection and to assert their unitary rights in a unitary manner. But not only is that demonstrably incorrect, it also totally ignores the problems created for defendants – and especially SME defendants. One has a choice as to whether or not to sue, but none as to whether or not to be sued, and where. Any SME offering its products or services on the web can probably be dragged to a far-off division of the UPC, accused of patent infringement and be forced to defend itself in proceedings in a foreign language. Whilst the MD of an unsuspecting SME is trying to deal with the trials and tribulations of daily life in his small factory, he may find on his doorstep a bailiff seeking to enforce a saisie contrafaçon style order issued by a court based in a country he has never even visited – and find this to be only the start of his problems as he discovers that this court can close down his factory. One dreads to think also what his local High Street Solicitor, little versed in the nuances of CPR Part 63, still less Part 2, Chapter 4 of the UPC rules of procedure, will make of this when he or she receives the inevitable call for help.

Good for growth (of European Non-Practising Entities’ businesses) – whatever one may think of the business model of a company which purchases patents and seeks a suitable return on its investment, it is a business which is a product of legal systems. It is no coincidence that a country whose legal system permits contingency fee lawyers,

does not make the loser reimburse the winner for its legal costs, and which permits triple damages to be awarded by a lay jury, is one in which NPEs do very well (even post eBay117). If trying to promote growth, then why not introduce some NPE-friendly characteristics into Europe so we can likewise promote this business model? Why not design a system such that the canny plaintiff can sue virtually anywhere it likes so as to cause maximum inconvenience to the defendant? Why not permit Regional Divisions to be made up of a majority of local Judges, despite their potentially limited experience of patent matters? Why not allow those Judges to grant injunctions without ensuring that the validity of the patent in suit is tested first? In what better way we can ensure that businesses are encouraged to relocate into countries outside the system, in the same way that Microsoft famously decided less than two years ago to move out of Germany so as to avoid the hazards of the German bifurcation system. Indeed, one might almost suspect that the UPC is a cunning Commission plan to encourage EU businesses to relocate to Spain and thereby alleviate its chronic unemployment and fiscal crisis.

Conclusion? – if your author seems a little gloomy about what has happened, this is not because he lacks confidence in the future, but simply because it could all have been so much better. For the last several years he has, together with many colleagues in the patent professions, judiciary and industry, lobbied for improvements. Notwithstanding these efforts, what has resulted from the political process is sub-optimal from a client perspective. Private practice and in-house lawyers and patent attorneys alike will face looks of incredulity from our clients as we endeavour to explain the brave new world which awaits. It is some consolation that, but for the efforts of the UK Government’s negotiators, it could have been even worse.

However, now that the system is set in stone (save for ratification, the Spanish challenge in the CJEU and some sparring on the rules of procedure), we must forget what might have been and look to the future. All practitioners need urgently to get to grips with the new regime, and as one who has spent a great deal of time with colleagues in the office working out strategies for clients, your author believes that the patent professions can justifiably have confidence in the future. There is no doubt that we have to make this system work for our clients, and just as the patent attorney profession adapted to the EPC, so too will the patent specialists in the UK legal profession entering the fray in the UPC. But spare a thought for the SME: he who


118 Case ID: UKSC 2011/0159 119 See footnote 93 ante 120 See footnote 40 ante

was supposed to need all this change, as he looks to his inexperienced High Street Solicitor for help in this minefield. Sadly, there will be casualties!

At the time of going to press on 19 February, the UPC agreement has just been signed by 24 countries. In addition to Spain and Poland, Bulgaria is the third non-signatory, although it is understood that it plans to sign as soon as purely administrative hurdles have been overcome. Also, the Commission has clarified its understanding that owners of existing European patents will be able to opt out of the UPC system for the entire life of the patent instead of just the 7 year transitional period.

Latest news, commentary, legislation and rules can be found at the website www.bristowsupc.com.

Looking Ahead

The following developments are expected in 2013:

• In early 2013, the Supreme Court heard an appeal in the case of Schütz v Werit.118 This provided England’s highest court with the opportunity to tackle the thorny subject matter of manufacture versus repair. Many commentators have considerable sympathy with the first instance decision of Floyd J which was subsequently overturned by the Court of Appeal. The outcome is awaited with interest.

• The Supreme Court is also set to hear a case concerning the ex turpi causa principle in Servier v Apotex.119

• The Supreme Court may again hear a facet of the dispute between Lilly v HGS120 if it accepts the appeal by Lilly against the Court of Appeal decision on insufficiency.

• The High Court is scheduled to hear a trial on the appropriate FRAND (fair, reasonable and non- discriminatory) terms for a licence to Nokia and HTC under one of IPCom’s standards essential patents, which was found to be valid and infringed by Nokia, following an appeal. This could be the first definitive judicial pronouncement as to what FRAND means in terms of royalty rates.

• The Unitary Patent and UPC now appear to be well on their way to becoming a reality. Matters to look out for in the year ahead include:

o The first ratifications of the UPC (Luxembourg could lead the way)

o The decision of the CJEU on the legality of the Enhanced Cooperation procedure

o Finalisation of the Court rules

o Amendment of the Brussels Convention Regulation (1215/2012 – better known as 44/2001) which must be effected before the

Unitary Patent and UPC system can come into effect

o Announcements as to where local and regional divisions will be established.


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01 Brian Cordery Partner

Brian Cordery specialises in contentious intellectual property matters. Brian’s practice is divided between patents and other intellectual property rights. His experience and knowledge of patents have led him to be involved with several leading patent cases in recent years. He also has a strong interest in interim relief practice and procedure.

02 Dominic Adair Associate

Dominic Adair is a senior associate in the Intellectual Property Department at Bristows. His practice mainly involves patent litigation and lifecycle management but he has experience of other intellectual property rights including trade marks, designs and copyright. Prior to joining Bristows, Dominic obtained a PhD in Zoology.

03 Sam Tuxford Associate

Sam Tuxford is an associate in the Intellectual Property Department at Bristows. Sam specialises in intellectual property law with an emphasis on litigation. He has a Masters degree in engineering and is particularly interested in matters relating to the engineering, technology and telecommunications industries.

04 Tanny Massaquoi Paralegal

Tanny works as a paralegal in the Intellectual Property Department at Bristows. Tanny is part of a team that assists with a life cycle management project for one of the world’s largest pharmaceutical companies. She assists with the co-ordination of a multinational litigation project, regularly working alongside lawyers and patent attorneys in Europe, Asia, and South America.

The Authors

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02

03

04


The information contained in this document is intended for general guidance only. If you would like further information on any subject covered by this Bulletin, please e-mail Brian Cordery ([email protected]), or the Bristows lawyer with whom you normally deal. Alternatively, telephone on + 44 (0) 20 7400 8000.


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Review of Patent Cases in the English Courts in 2012

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