Review of Patent Cases in the English Courts in by Brian Cordery, Dominic Adair, Naomi Hazenberg and Sylvia Delbeuf

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1 Review of Patent Cases in the English Courts in 2013 by Brian Cordery, Dominic Adair, Naomi Hazenberg and Sylvia Delbeuf

2 2 Quotation of the Year A procedure which allows disputes over patent rights to take in excess of a decade cannot meet the needs of industry, particularly in rapidly moving areas of technology. Although such a procedure may technically comply with Article 6 of the European Convention on Human Rights, which guarantees a trial before an independent tribunal within a reasonable time, the opportunity for successive appeals and remittals means that there is in practice no final determination of the parties rights for many years. Given their procedures, the Boards have a difficult task in seeking to achieve justice and finality Per Floyd LJ in IPCom v HTC 1. 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 Brian Cordery (brian.cordery@bristows.com), or the Bristows lawyer with whom you normally deal. Alternatively, telephone on + 44 (0) [2013] EWCA 1496 at 23 Bristows February 2014

3 Review of Patent Cases in the English Courts in Index Quotation of the Year Inside front cover Introduction 2 Claim Construction and Infringement 2 Manufacture versus Repair 2 Indirect Infringement 3 Infringement Defences 4 Validity 4 Patentability 4 Entitlement to Priority 5 Novelty 6 Obviousness 6 Skilled addressee 7 Insufficiency 7 Added Matter 8 Supplementary Protection Certificates (SPCs) 9 Damages 10 Damages for Groundless Threats 11 Costs 11 Interest on costs 12 Procedural Issues 12 Jurisdiction 12 Parallel Imports/Specific Mechanism 13 Disclosure 13 Experts 13 Cause of Action Estoppel 14 Springboard Injunctions 15 Final Injunctions 15 Interim Injunctions 16 Fair Reasonable And Non-Discirminatory licence terms 17 Conflict of Interest 17 Joinder of parties 17 Unitary Patent / Unified Patent Court 18 Looking Ahead 20 The Authors 21 Bristows February 2014

4 2 Introduction In 2013, there were two important decisions from the Supreme Court and numerous decisions from the Court of Appeal and the Patents Court on substantive and procedural issues. In terms of the number of decisions, it was also a productive year. There were 81 decisions, compared to 82 in 2012 and 60 in As with last year, the life sciences and telecommunications sectors continued to dominate the Court lists, although both decisions from the Supreme Court related to mechanical patents. Of particular importance this year were the following developments: The elevation of Floyd J and Vos J to the Court of Appeal; The promotion of HHJ Birss QC to the High Court, the change in name from Patents County Court to Intellectual Property Enterprise Court and the appointment of Richard Hacon as its Judge; The Supreme Court s judgment in Schütz v Werit 2, bringing further clarification to the law concerning infringement by remanufacture, and comfort to those in the consumables business; The Supreme Court s judgment in Virgin v Zodiac 3 that UK damages liability ends with the subsequent revocation of the patent at the EPO, thus overturning over a century of established jurisprudence in this area; Related to that, the Court of Appeal s revision of the Glaxo Guidelines 4 for granting stays pending EPO Opposition proceedings in IPCom v HTC 5. As with previous years, this review attempts to summarise the most important decisions on a topicby-topic basis. We shall refer to the UK Patents Act 1977 as the Act and the European Patent Convention 2000 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 question of construing numerical ranges in a claim came before the court again last year. In Smith & Nephew v ConvaTec No. 2 6, Birss J was tasked with determining whether a process utilising a concentration of 0.77% active agent fell within a claim limited to a process utilising a concentration of between 1 and 25%. In defining the scope of the numerical range in the claim, the Judge noted that it is not always the case that the question of whether a value should be held to fall within a numerical limit should be decided by rounding that value to the same number of significant figures as the range is expressed in the claim. It was, however, the construction adopted in this case: 1% is expressed to one significant figure, therefore anything greater than or equal to 0.95% would round to 1% when expressed to one significant figure. This would be the natural approach of the skilled person and there was nothing to dissuade the Judge from applying it. The patent did not consistently apply an alternative rounding convention; nor was it relevant that the significant figures approach proved asymmetric in relation to the patented values. This approach also ensured that the relative error margins at the lower and upper limits of the claim were comparable. Manufacture versus Repair When vexed by a particularly tricky analysis, it is often the lawyer s answer that the issue will be assessed by the Court on a case by case basis and will depend on a matter of fact and degree. And so it was with the Supreme Court s decision in Schütz v Werit 7, which provides greater certainty on the difficult question of what constitutes an infringing act of manufacture as opposed to a permissible act of repair when renewing a patented article. Readers will recall that the article in question in Schütz was a so-called intermediate bulk container (IBC) - essentially, a bottle within a cage used to transport liquids in bulk and the activity to which the exclusive licensee Schütz objected was the replacement of bottles within used IBCs. 2 [2013] UKSC 16 3 [2013] UKSC 46 4 Glaxo Group Ltd v Genentech Inc [2008] EWCA Civ 23; [2008] Bus. L.R [2013] EWCA Civ [2013] EWHC 3955 (Pat) 7 See footnote 2, ante Bristows February 2014

5 Review of Patent Cases in the English Courts in The decisions in the Courts below had flip-flopped, with Floyd J (as he then was) holding that re-bottling was not an infringement 8 and Jacob LJ reversing him, holding that it was 9. The Supreme Court, Lord Neuberger giving judgment, reversed the decision again: re-bottling of IBCs was not an infringement. Floyd J was right, but for somewhat more nuanced reasons. The case turned on its facts but the judgment is a useful illustration of the factors that should be taken into account when deciding whether an activity constitutes an infringing act of manufacture. In particular, the facts concerning IBCs provide a useful contrast to United Wire 10, the previous House of Lords decision on the same question, referred to in detail by the Supreme Court and the Courts below, which concerned an assembly of wire mesh framed on a screen. Renewing the wire mesh in that case was an infringement. Lord Neuberger set out eight general principles with which to conduct the analysis on the somewhat slippery meaning of the word makes, noting that he derived comfort from the fact that these were points which carried force with the German Supreme Court, which had considered the same case, and were also consistent with the previous House of Lords decision in United Wire 11. He took particular care to emphasise that the decision of the German Supreme Court should be accorded considerable respect, albeit there was no obligation to follow such a decision; indeed he acknowledged that complete consistency in approach is not presently feasible or even realistic. Of perhaps greatest value to practitioners are the practical tips provided for assessing the facts of a case. These refer to a scenario in which a component is replaced in a patented assembly. They include the relative life expectancy and physical perishability of the replaced part, the expectations of the purchaser in making the replacement, whether the replaced part includes any aspect of the inventive concept, whether the replaced part is a free-standing item, the nature of the work involved in making the replacement and potentially also the value of the assembly before and after the replacement is made. These guidelines were applied to the capsule-based Nespresso coffee machine by Arnold J in Nestec v Dualit 12. He held that the cheap, perishable and disposable capsules were a subsidiary part of the system in comparison to the durable and expensive machine and noted that they also had an independent commercial existence. Furthermore, given that capsules are consumables, purchasers of the machines would assume they had the right to obtain capsules from any source to use with the machine. Having found that the capsules did not embody the inventive concept, the Judge found that consumers were not even repairing, let alone making, the claimed system. Accordingly, replacing the capsules during use did not amount to patent infringement. Indirect Infringement The decision in Nestec v Dualit 13 also contained a detailed application of the law relating to indirect infringement pursuant to Section 60(2) of the Act. In particular, the Judge assessed whether the defendant committed an infringement by supplying consumers with capsules that could be used with the claimant s Nespresso machines on the basis that the capsules were means relating to an essential element of the invention, for putting the invention into effect. First, Arnold J noted that purchasers of Nespresso machines had an implied licence to obtain and use any capsules as this permitted use for the intended purpose, i.e. to make coffee. Despite this finding negating any possibility of infringement, the Judge went on with his assessment. In the absence of any previous UK decisions, he considered German and Dutch decisions to assess whether an element known in the prior art could amount to an essential element. In finding that it could (provided that it contributed to the implementation of the invention s technical teaching) the coffee capsules were held to be an essential element. The Judge also provided a concise definition of what amounts to a staple commercial product under Section 60(3) of the Act one which is ordinarily commercially supplied for a variety of uses. The coffee capsules failed to meet this standard, given that there was no use other than with a limited range of portionised coffee machines. 8 [2010] EWHC 660 (Pat); [2010] FSR 22 9 [2011] EWCA Civ 303; [2011] FSR United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC [2013] EWHC 923 (Pat) 13 See footnote 12, ante

6 4 Infringement Defences Arnold J s decision in HTC v Nokia 14 is a rare example of a telecoms patent being held to be valid and infringed. Nokia s claim to a novel and inventive modulator arrangement was found to be implemented in the chipsets of several of HTC s products. However, a large portion of the judgment was given over to considering HTC s argument that, by virtue of an agreement between Qualcomm and Nokia, it had a licence as far as its products containing the Qualcomm chipset were concerned. HTC purchased its chipsets from Qualcomm in Taiwan. It was held that, in contrast to a sale by a patentee, from which a purchaser takes the goods free from territorial restrictions (absent any agreement to the contrary), sale abroad by a licensee is not sufficient to give the purchaser freedom to deal with goods covered by the UK patent. Furthermore, as a matter of English law, HTC could not acquire wider rights on purchasing the Qualcomm chips than Qualcomm was granted by Nokia in its licence. Validity Patentability The patentability of software-related inventions is a difficult area of practice. In particular, it is often hard to elucidate the technical character of the invention, it being unpatentable if the technical character results from the computer program as such. A good example of technical character is provided by the litigation in HTC v Apple 15. Since HTC and Apple had settled their dispute following the first instance judgment in the UK action 16, which concerned four Apple patents, HTC did not take part in the appeal 17 where Apple sought to overturn a finding of invalidity in respect of two of its patents. One of the patents, which related to computer devices with touch sensitive screens which were capable of responding to more than one touch at a time, had been found at first instance to be invalid as a computer program as such. The Court of Appeal overturned this decision because the problem dealt with in the patent, namely how to deal with multiple touches at the same time, was essentially technical. The solution, although implemented in software, lay in a method concerned with the internal operation of the device and there was a practical benefit of the invention in presenting a new and improved interface to application programmers which made it easier to write application software for a multi-touch device. Following this decision, the High Court in Lantana v Comptroller 18 reviewed the Comptroller s decision to the refuse grant of a patent application as it related to a computer program as such under Section 1(2) of the Act. The application concerned a method of remote file access between two internet-connected computers, facilitated by an with a machine readable file retrieval instruction. Birss J highlighted that the fact that a claim was novel and inventive was not the determinative factor in assessing whether there was a technical contribution. In considering the five AT&T 19 signposts, it was held that none of them assisted Lantana. Although the Judge noted that a computer genuinely exercising control over another computer might be a technical contribution, merely sending an was not control at all. Furthermore, a method that simply circumvented problems using conventional techniques would not give rise to a patentable invention. We reported last year the decision of the UK IPO (Dr Lawrence Cullen) in relation to the patentability of two applications relating to the use of stem cells made by International Stem Cell Corporation (ISCC) 20. Essentially, the applications were rejected on the basis that even though it was clear that the parthenogenetically-activated human oocyte could not develop into a human, the CJEU in Brüstle 21 had said that the key consideration was whether the oocyte was capable of commencing the human developmental process (not necessarily completing it). In April 2013, Henry Carr QC, sitting as deputy Judge in the Patents Court, heard an appeal by ISCC from Dr Cullen s decision. He considered that there was sufficient doubt in the CJEU s Brüstle judgment to justify another reference. In particular, it was not clear from the judgment whether it was commencement per se that mattered or whether the commencement must be linked to the ultimate development of a human being. The following question was referred: 14 [2013] EWHC 3247 (Pat) 15 [2013] EWCA Civ [2012] EWHC 2037 (Pat) 17 See footnote 15, ante 18 [2013] EWHC 2673 (Pat) 19 The signposts identified in AT&T Knowledge Ventures LP v Comptroller General of Patents Designs and Trade Marks [2009] EWHC 343 (Pat), [2009] Info. T.L.R International Stem Cell Corporation BL O/316/12 21 Case C-34/10 Bristows February 2014

7 Review of Patent Cases in the English Courts in Are unfertilised human ova whose division and further development have been stimulated by parthenogenesis, and which, in contrast to fertilised ova, contain only pluripotent cells and are incapable of developing into human beings, included in the term human embryos in Article 6(2)(c) of Directive 98/44/EC on the legal protection of biotechnological inventions? Entitlement to Priority One might say that 2013 was the year in which the courts got tough on priority. Several decisions were given which were adverse to the patentee. To claim priority effectively, the same invention must be directly and unambiguously derivable by the skilled person, using common general knowledge, from the earlier application looking at the document as a whole. Should priority be lost, intervening prior art can prove fatal to the patent, as Samsung found to its cost when all three of its UMTS Standards Essential Patents were held invalid 22. Different elements of a claim can have different priority dates if there is a limited number of clearly defined subject matters and each is disclosed by a different priority document. The claimed arrangements in Nestec v Dualit 23 contemplated the housing used to receive the spent capsules being positioned in three places; the movable part of the device, the fixed part or divided between the two. The priority document, however, only disclosed the first of these. Hence, there was argument between whether there was partial priority or no priority at all, depending upon whether the three scenarios were clearly defined. Arnold J held that, unlike the first two options, the third was not a clear alternative and merely represented everything not covered by the first two. Hence the relevant claim lacked priority completely. Having lost priority, the priority document became prior art pursuant to Section 2(3) of the Act and was held to amount to a novelty destroying disclosure. The ability of the same disclosure to anticipate and yet not provide support for a later patent has been labelled poisonous priority by some commentators. In the life sciences arena, Hospira and Mylan challenged the validity of two related patents to a dosage regimen for zoledronate the invention in both patents being in the surprising finding that the medicine could be given by intravenous infusion once yearly as opposed to the daily or weekly regimens which were in use at the priority date. Arnold J held the patents inventive over the cited prior art but he also judged that the claims were not entitled to their claimed priority date as the priority document did not include a link between the various elements of the claim, even though all the elements were disclosed in the document. Priority having been lost, there was an intervening publication on behalf of the patentee reporting on the clinical trials for zoledronate which were disclosed in the patents and used to demonstrate the efficacy of the annual regimen, which was accepted to invalidate the patents. An interesting legal point concerned the status of the abstract to the priority document a US patent application. Arnold J relied upon the wording of Article 4H of the Paris Convention to find that the whole of the priority document including the abstract and claims would form part of the disclosure for the purposes of assessing priority. As discussed in more detail below, certain of the claims were also held insufficient as they placed an undue burden on the skilled person to find out what doses and dosage intervals worked 24. The patentee appealed and the appeal proceeded on the basis of a single claim not held insufficient. However, in a decision handed down just before Christmas 25, Floyd LJ also found that this claim was not entitled to claim priority. He held that although each element of the claim was present in the priority document there was no direct and unambiguous disclosure of all the integers of the claim together. Moreover, the general teaching was not specific enough and the specific teaching was not general enough. Birss J clarified two further aspects of the law relating to priority in HTC v Gemalto 26. First, the Court considered the derivation of the priority right. The strict test laid down in Cook v Edwards 27 mandates that an applicant is only entitled to priority if he himself had filed the earlier application or was a successor in title. Importantly, the situation cannot be remedied if he subsequently acquires title to the invention. However, the Judge referred to, and agreed with, 22 Samsung Electronics Co Ltd v Apple Retail UK Ltd [2013] EWHC 467 (Pat); [2013] EWHC 468 (Pat) 23 [2013] EWHC 923 (Pat) 24 Hospira, GUK v Novartis [2013] EWHC 516 (Pat) 25 Hospira, GUK v Novartis [2013] EWCA Civ [2013] EWHC 1876 (Pat) 27 [2010] EWCA Civ 718

8 6 Arnold J s ruling in KCI v Smith & Nephew 28 in which it was held sufficient for a patentee to be the recipient of an effective transfer of the entire beneficial interest in the invention to become the successor in title for the priority right. In the present case, employer entitlement was governed by US/Texan law by virtue of Section 43(2) of the Act and the failure of both parties to make submissions as to the applicable law meant that Birss J had to assume that the corresponding law was the same as English law. As such, the applicant was the successor in title to each of the three applicants named on the priority application and was entitled to claim priority. However, after all that, on the substantive question of priority, the Judge held that the patent was not entitled to priority because the claim had taken a specific concept disclosed in the priority document and generalised it a so-called intermediate generalisation. The conclusion from all of the above is that challenging priority is currently en vogue in the English Patents Courts and Judges at all levels are being rigorous in their approach. For patentees to feel comfortable that a patent will survive a priority attack, substantive identity between the priority document, the application as filed and the granted patent is needed. Novelty Anticipation by prior use was considered by Vos J in Swarovski-Optik v Leica 29, a case about riflescope optics. It was alleged that a particular prior art riflescope had been sold in Finland before the priority date and that, in certain circumstances, the optics within the prior art riflescope could be arranged so as to anticipate the patented configuration. This required use by someone with uncorrected long-sight in extreme conditions. Having referred to Lord Hoffmann s judgment in Synthon 30 that to destroy novelty, there must be clear and unambiguous disclosure which necessarily results in infringement of the claim, the Judge held there was no anticipation by prior use because normal usage of the prior art riflescope would not put the lenses in the patented configuration. Obviousness By and large, the question of inventive step continues to be assessed by reference to the Pozzoli questions 31. The neat encapsulation of the principal issues as set out by Kitchin J (as he then was) in Generics v Lundbeck 32 is also virtually ubiquitous in patent cases involving obviousness. This provides that: The question of obviousness must be considered on the facts of each case. The Court must consider the weight to be attached to any particular factor in the light of all the relevant circumstances. These may include such matters as the motive to find a solution to the problem the patent addresses, the number and extent of the possible avenues of research, the effort involved in pursuing them and the expectation of success 33 Readers of last year s review will recall that in Medimmune v Novartis 34, Kitchin LJ set out some observations on the question of obvious to try and these observations have quickly become embedded in the law. In short, the notion of something being obvious to try is useful only in a case where there is a fair expectation of success. How much of an expectation of success is needed depends upon the particular facts of the case. These principles were applied by Arnold J to revoke Wellcome and GSK s patent to an anti-malarial combination therapy of atovaquone and proguanil in a 5:2 ratio 35. The ratio alone was the only feature which differed from the prior art and this of itself was not inventive. But would the skilled person proceed with the routine experimental work to get there? Arnold J held that there would be sufficient motivation to proceed and dismissed arguments to the contrary based on the secondary indicia of commercial success and the reaction of the scientific community. In relation to the latter point, although the reaction of the scientific community was ostensibly negative, the Judge decided that, in fact, this merely meant that the audience was behaving as good scientists do, and being critical. Kitchin LJ s principles were also applied by the Court of Appeal in Regeneron v Genentech 36, which upheld the validity of Genentech s patent for the use of VEGF antagonists for the treatment of certain diseases 28 [2010] EWHC 1487 (Pat) 29 [2013] EWHC 1227 (Pat) 30 [2006] RPC Pozzoli SPA v BDMO SA [2007] EWCA Civ [2007] EWHC 1040 (Pat) 33 Generics v Lundbeck [2007] EWHC 1040 (Pat) per Kitchin J at [2012] EWCA 1234 at [2013] EWHC 148 (Pat) 36 [2013] EWCA Civ 93 Bristows February 2014

9 Review of Patent Cases in the English Courts in characterised by angiogenesis. On the facts of the case, Kitchin LJ approved the finding of the trial Judge that although there was a very strong motivation to find a therapy for the diseases in question, VEGF was only one of many factors that could be investigated and the commonly held view was that no single factor was responsible for angiogenesis hence focussing solely on anti-vegf therapy was not obvious. An important decision from the Court of Appeal in concerned Yeda s patent for copolymer-1, on which exclusive licensee Teva relied to protect its Copaxone treatment for multiple sclerosis. The most interesting aspect of the decision concerned the issue of obviousness for lack of technical contribution, or so-called AgrEvo obviousness 38. Relying on a line of cases from the EPO and the UK Courts, Floyd LJ held that Arnold J below him had been incorrect to hold that if the specification of a patent made a technical effect plausible, it was not open to a third party to challenge the existence of that effect by later evidence. He noted that it is common for a party alleging obviousness or rebutting such a challenge to rely on evidence generated after the patent such as commercial success or the reaction in the field when the patent was published. However, on the evidence, Floyd LJ considered that the technical effect of the lower molecular weight range was made plausible by the specification. A challenge to the inventive step of the patent over a specific prior art citation was also rejected Floyd LJ holding that Arnold J had ample material on which to base his conclusions. In one of his Samsung v Apple decisions 39, in addition to the finding that the patent lacked priority, Floyd J (as then was) found that the patent was invalid for AgrEvo obviousness. In a rare instance of this attack being mounted outside the chemical or pharmaceutical sphere, Apple contended that the patent claim was broad enough to cover arrangements which would not confer the apparent benefit of balancing the channels transmitted across the in-phase and quadrature branches of the signal. As a result, it was adjudged that it was possible to put the claim into effect in a system that does not achieve the requisite balance. Skilled addressee Little remains to be said about the identity and characteristics of the skilled addressee following Jacob LJ s colourful exposition in Technip France SA s Patent 40 : a nerd but not a complete android is how he put it, at least in part. It is common that the skilled addressee can comprise a team but less common that the interplay between team members should determine the outcome of a case. However, in OOO Abbott 41 a case in the PCC about snap-fit aluminium inserts in slatwall retail displays, the patent was held inventive over prior art comprising a near-identical plastic version of the patented aluminium fitting. HHJ Birss QC decided that although the skilled team comprised a slatwall designer and an aluminium extrusion specialist, the designer would have no cause to consult the specialist about the plastic fitting, even though it was conceded that the specialist would certainly proceed with an aluminium version when faced with the plastic fitting. Insufficiency Biotechnological inventions are often alleged to be insufficient. This particular attack on validity goes with the territory of such inventions. They are often high upstream in the technological process and filed at an early stage, before the patentee has developed the technology enough to be certain of the mechanism at work or to have fully characterised the technical end points. This is reflected in the fact that much of the case law in recent years has concerned biotech patents - and 2013 continued this trend. So-called Biogen insufficiency arises where the invention has not been sufficiently taught across the full scope of the patent claims. This aspect of insufficiency was considered by the Court of Appeal in Regeneron v Genentech 42 and Kitchin LJ s judgment contains some useful observations. Noting that it must be at least plausible or credible that the invention will work across the scope of the claim, he continued: If it is possible to make such a prediction then it cannot be said the claim is insufficient simply because the patentee has not demonstrated the invention works in every case On the other hand, if it is not possible to make such a prediction or if it 37 Generics v Yeda and Teva [2013] EWCA Civ T 939/92 [1996] EPOR [2013] EWHC 468 (Pat) 40 [2004] RPC 46 at OOO Abbott and Chasmer v Design & Display and Eureka Display [2013] EWPCC See footnote 36, ante

10 8 is shown the prediction is wrong and the invention does not work with substantially all the products or methods falling within the scope of the claim then the scope of monopoly will exceed the technical contribution the patentee has made to the art and the claim will be insufficient. The role of post-dated evidence in the assessment of insufficiency was considered by Arnold J in Lilly v Janssen Alzheimer Immunotherapy 43. The Judge proposed a two-stage test for dealing with such evidence 44 : (i) Determine whether the disclosure of the patent makes it plausible that the invention will work across the scope of the claim; if so, (ii) Consider whether the post-dated evidence establishes that, in fact, the invention cannot be performed across the scope of the claim without undue burden. The patent was owned by Janssen and claimed a pharmaceutical composition comprising a human IgG1 antibody to amyloid-β (a protein implicated in forming the neuritic plaques seen in Alzheimer s patients) for use in treating or preventing a disease characterised by amyloid deposit. In relation to the first stage of the test, Arnold J held that the wording of the claim was such that it covered any antibody that was efficacious. However, the examples in the patent indicated that, in fact, only N-terminal antibodies were effective. On this basis alone, the patent was held insufficient. Dealing, for completeness, with the second head of the test, the Judge held that Phase 3 clinical trial data from the patentee showed that its own antibodies were ultimately not efficacious, despite best efforts at success over a period of more than a decade and at a cost running into hundreds of millions of dollars. This confirmed the patent to be insufficient. We noted above that Novartis second medical use patent to a yearly dosage regimen for zoledronate was held not entitled to priority. Arnold J s judgment also held that the open-ended claims i.e. those that were not limited both in terms of the amount of zoledronate to be given to a patient and the period between administrations were all insufficient. This was because they placed an undue burden on the skilled person to find out doses and dosage intervals that worked. 45 This finding was not pursued on appeal but practitioners should be mindful of it when seeking to enforce second medical use patents in future. Added Matter Readers depressed by EPO case law on added matter will take heart from two decisions from HHJ Birss QC in the Patents County Court (PCC) last year, both dismissing added matter attacks by finding implicit disclosure in the application as filed. In Brigade v Amber Valley 46, Brigade s patent for warning alarms in reversing vehicles claimed a device which emitted broadband noise alone without any frequency amplification or attenuation. Amber Valley complained that the patent application referred only to: (i) the use of a tonal sound in combination with broadband noise; or (ii) the use of broadband noise with at least one frequency which was selectively amplified or attenuated, and hence matter had been added. In finding the patent to be both valid and infringed, HHJ Birss QC rejected the added matter attack. Whilst the Judge acknowledged that the inventive concept of the patent was not spelled out laboriously in words anywhere in the patent application, the existence of an express disclosure is not the test for added matter...both the alert sound combination idea and the amplified/attenuated sound idea are examples of the application of the same essential concept. The essential concept is the idea of a device emitting a locating sound comprising the majority of frequencies in the human hearing range...in my judgment the idea of a device emitting a locating sound comprising the majority of frequencies in the human hearing range would be directly and unambiguously derived from the patent application as a whole by a person skilled in the art. On that basis there can be no added matter. In Lizzano Interiors v Interiors Manufacturing 47, the allegation was that the patented gasket for joining glass partition walls was not disclosed in the 43 [2013] EWHC 1737 (Pat) 44 The approach taken by Arnold J is notable for its similarity to the way in which AgrEvo-type obviousness was dealt with by the Court of Appeal in Mylan v Yeda and Teva, reported above, which was handed down a month later. 45 Following Novartis v Johnson & Johnson [2010] EWCA Civ [2013] EWPCC [2013] EWPCC 12 Bristows February 2014

11 Review of Patent Cases in the English Courts in application as filed when not in use - words added by amendment during prosecution. HHJ Birss QC dismissed the attack on the basis that, although there was no explicit reference to the gasket not in use, there was a description of the gasket followed by an explanation that the gasket could be inserted into position. It followed from the future tense of the words in the specification that the initial description of the gasket could be understood as applying to the gasket before it was in situ. Supplementary Protection Certificates (SPCs) In our 2012 review we reported that the landmark decision of the CJEU in Medeva 48 had probably served to exacerbate the uncertainty in the important field of SPCs served to show that our concerns were probably well-founded. It is just about possible to detect a degree of logic in the matrix of decisions from the CJEU but the fitness for purpose of the Regulation (no. 469/2009) justifiably continues to be questioned. The biggest day for SPCs in 2013 was undoubtedly 12 th December when the CJEU handed down three important decisions: Eli Lilly v HGS 49, Georgetown 50 and Actavis v Sanofi 51. The Lilly v HGS decision concerned Article 3(a) of the Regulation i.e. when can it be said that a product is protected by a basic patent in force? Most readers will recall that in Medeva the CJEU rejected the infringement test and held that to be protected a product had to be specified in the claims of the basic patent. But what precisely did this mean? Could it be satisfied by a general definition or a functional definition? The CJEU answered this question partially in the Lilly case, holding that where the active ingredient is covered by a functional formula in the claims it is sufficient if it was possible to reach the conclusion on the basis of those claims, interpreted inter alia in light of the description of the invention as required by Article 69 EPC and its Protocol, that the claims relate, implicitly but necessarily and specifically to the active ingredient in question, which is a matter to be determined by the referring Court. Whilst this almost certainly represents a slight relaxation of the specified in the claims test, regrettably it will probably lead to yet further references. Another point addressed in the case concerned the situation where a patent holder seeks to obtain an SPC based on a third party s marketing authorisation (MA). The CJEU has suggested that such piggy-backing would be contrary to the objectives of the SPC Regulation as: that patent holder had not made any investment in research relating to that aspect of his original invention that would undermine the objective of the Regulation, as referred to in recital 4 in the preamble thereto. Ever since the Medeva decision, a question that has been in the minds of SPC enthusiasts is whether the CJEU really intended to disturb the orthodoxy when it hinted in Medeva that only one SPC per basic patent would be allowed rather than one SPC per product per patent. Following the Georgetown decision, many practitioners will have breathed a sigh of relief as the CJEU held that if a patent protects several different products it is possible to obtain several SPCs in relation to each of those different products, provided, inter alia, that each of those products is protected as such by the patent. However, in Actavis v Sanofi, the CJEU held that if the patentee had already obtained an SPC for the active ingredient (which of course would entitle him to oppose the selling of any medicines containing that active ingredient either alone or in combination 52 ), it could not obtain a further SPC for the combination of that active ingredient with another active ingredient (not protected as such by the patent) on the basis of the same patent and a subsequent MA for that combination. However, if the combination itself was the subject of a new basic patent then that could form the basis for a new combination SPC based upon a later MA for the combination. Before the Actavis v Sanofi ruling was handed down, in Actavis v Boehringer Ingelheim 53, Birss J referred another series of questions in relation to an SPC for telmisartan/hctz based on a patent principally directed to telmisartan. Interestingly, following objection by the UK IPO to the application for an SPC for telmisartan/hctz, the patent had been amended to include a claim to this specific combination. The UK IPO then granted the SPC. Two of the questions were 48 C-322/10 49 C-493/12 50 C-484/12 51 C-443/13 52 Following Novartis v Actavis [2012] EWHC 2545 (Pat) 53 [2013] EWHC 2927 (Pat)

12 10 directed to whether the amendment of a patent should impact upon its ability to serve as a basic patent for an SPC. Birss J s view, which seems correct, is that it should not. This reference may well be decided by a reasoned order in light of Actavis v Sanofi. Another interesting issue arose in a reference to the CJEU concerning GSK s SPC applications for AS03, an adjuvant used in Prepandrix, an influenza vaccine. Article 1(b) of the SPC Regulation enables SPCs to be granted for products and product is defined as an active ingredient or combination of active ingredients. It was common ground that AS03 did not have any therapeutic effect on its own although it did enhance the therapeutic effect of the antigen within the vaccine. The UK IPO s view was that the law following the MIT decision 54 was clear that excipients were not to be regarded as active ingredients for the purposes of the SPC Regulation. However, both GSK and the UK IPO considered that a reference to the CJEU was necessary and Arnold J agreed 55. He concluded: this is the third time in six months that I have had to refer questions of interpretation of the SPC Regulation to the CJEU. I do so with considerable regret. That this should be necessary demonstrates the dysfunctional state of the SPC system at present. This is primarily due to the poor drafting of the SPC Regulation and the failure of the European Commission, Council and Parliament to revise it. Matters have not been assisted, however, by the fact that the Court of Justice s recent case law interpreting the SPC Regulation has not provided the level of clarity and consistency that is required. The reference was decided by a reasoned order on 14 November On this occasion, the CJEU decided to follow closely its earlier MIT decision and confirmed that active ingredient in the definition of product in Article 1(b) must be interpreted narrowly and cannot include an adjuvant having no therapeutic effect of its own. It held further that the term combination of active ingredients could not include a combination of an active ingredient having therapeutic effects on its own with an adjuvant which, while enhancing those therapeutic effects, had no therapeutic effects on its own. The issue of whether a Swiss MA, which was automatically recognised in Liechtenstein before amendment of the bilateral agreement, should constitute the first authorisation to place the product on the market for the purposes of calculating the duration of an SPC appears to have been definitively decided by way of a reasoned order on 14 November in AstraZeneca v Comptroller-General 58. The CJEU applied its judgment in Novartis 59 stating that that ruling was unequivocal. The MA granted in Switzerland may be regarded as the first MA for the medicinal product in the EEA, even where the European Medicines Agency (EMA) refused to grant an MA on the basis of the same data and/or the Swiss MA was suspended and only reinstated following the submission of further data. Damages 2013 was a productive year for damages enquiries in patents cases. In addition to the hearing of the enquiry in the AstraZeneca case 60, there was the damages enquiry in the PCC in Xena v Cantideck 61, a case about platforms for taking loads from cranes in building construction. HHJ Birss QC confirmed that the principles in Gerber v Lectra 62 remain the general approach to be followed. Plainly, each enquiry turns on its facts but one notable distinction from Gerber was the finding that in Xena, losses could not be claimed in respect of non-infringing but related products. These related products (fixed platforms rather than the patented rolling platforms) were entirely separate from the patented products in the Xena case. The case is also notable for the successful claim to interest as a head of damages (rather than interest on damages) following the House of Lords decision in Sempra Metals 63. In Xena, damages for interest were awarded at 8%, reflecting the cost of borrowing to Xena, which had to take loans to survive during the period of infringing activity (and which subsequently went bust). Finally, the case considers the question of moral prejudice damages under Art 13(1) of the Enforcement Directive 64 for wilful infringement. HHJ Birss QC refused relief under this head, preferring to characterise the defendant s deliberate attempt to mislead Xena as an issue of conduct to be dealt with in costs rather than damages. 54 C-431/04 55 GSK v Comptroller-General of Patents [2013] EWHC 619 (Pat) 56 C-210/13 57 C 617/12 Bristows February [2012] EWHC 2840 (Pat) 59 The original decision referring questions from Arnold J is found at C-207/03 and 252/03, 21 April Case heard on 4-8 November The Judgment was handed down on 24 January 2014 and will be discussed in next year s review. 61 [2013] EWPCC 1 62 [1995] RPC Sempra Metals v Inland Revenue Commissioners [2008] 1 AC Directive 2004/48/EC

13 Review of Patent Cases in the English Courts in Damages for Groundless Threats We reported last year that Sudarshan v Clariant 65 showed that the provisions for groundless threats continued to operate as a trap for the unwary. Readers will recall that Clariant, the patentee, was found liable for making groundless threats to Sudarshan (a manufacturer and importer) that Sudarshan s customers would be sued. Clariant s letter to Sudarshan 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. Clariant appealed the decision and the case came before the Court of Appeal, Kitchin LJ giving judgment, in July last year. The appeal judgment considers the third party threats point and Clariant s plea of innocence under Section 70(2A) of the Act 66. In relation to the third party threats point, Kitchin LJ cited a long line of authority going back to Skinner v Perry 67 to say that a person can be threatened by a communication made to a person other than himself. The old authorities indicated that this much was clear from the words circulars and advertisements in the legislation, describing the form of the threat. These words have remained unaltered in the legislation since 1883 and Kitchin LJ stated: Parliament has had many opportunities to intervene but has chosen not to do so. He rejected the argument that the permissibility of threats against a manufacturer under Section 70(4) applied to all threats, including those made against others. In relation to the innocence defence under Section 70(2A)(b), the question to be determined was whose knowledge counted as that of the company for the purpose of this section. Clariant sought to argue that it was the in-house patent attorney alone - it was accepted at trial that he personally did not know or have reason to suspect the patent was not valid. Kitchin LJ disagreed, noting that it was also clear from the evidence at trial that the inventor of the patent recorded in his laboratory notebooks information fatal to the validity of the patent. This knowledge would have given the patent attorney reason to believe the patent was invalid. The fact that there was a breakdown in communication between inventor and patent attorney in this case could not be relied upon to excuse the threatening behaviour. The controlling mind of the company for the purpose of the innocence defence was the mind of both the patent attorney and the inventor. A particularly striking example of the care which must be exercised when drafting notice letters came in a dispute concerning a patent for an induction heating unit for hair rollers 68. Richard Meade QC, sitting as a Recorder in the Patents County Court, reminded the parties that the correct test was to ask how the communication would be understood by the ordinary reader in the position of the actual recipient of the relevant communication. In this case, a letter from the patentees solicitors which stated that the product complained of fell within the scope of the patent (which was still an application at this point) and which advised that prosecution of the application would be expedited was held to amount to a threat. A subsequent from a commercial director was held to be even clearer. The take-home message remains that warning letters in patent cases must be extremely carefully drafted if the threats provisions are to be avoided. Costs When assessing costs, the English Courts continue to follow an issue-based approach exemplified by Jacob LJ in SmithKline Beecham v Apotex 69 : An issue-by-issue approach is therefore one that should be applied so far as it reasonably can. On the other hand such an approach is not the be-all and endall. Whether or not it was reasonable for a party to raise, pursue or contest a particular allegation remains a relevant factor to be taken into account as part of the conduct of the parties Omnipharm v Merial 70 was just one instance of this in 2013 where the Court of Appeal agreed with the trial Judge s finding that Merial should pay 40% of Omnipharm s costs as it was the overall winner it had won a substantial part of the prize for which it fought 65 [2012] EWHC 1569 (Ch) 66 [2013] EWCA Civ (1893) 10 RPC 1 68 SDL Hair v Next Row Ltd [2013] EWPCC [2004] EWCA Civ [2013] EWCA Civ 2

14 12 the action - even though both sides had won on substantial issues. The Court of Appeal also ruled that it should only interfere with the trial Judge s discretion on costs if: he has exceeded the generous ambit within which reasonable disagreement is possible. The Supreme Court decision in Schütz v Werit 71 dealt, obiter, with the effect of non-registration of a licence on costs and damages under Section 68 (both before and after the amendment of the legislation in April 2006). The factual scenario is complex, with multiple licences, late registrations and changes in the legislation all within the timeframe of the dispute. Lord Neuberger declined to deal with the question of whether registration of the first licence meant that late registration of the second licence had no effect (he noted only that the Court of Appeal s reasoning on this point should not necessarily be regarded as correct ). However, he did feel able to provide an opinion on the other points in the appeal, which can be summarised thus: if a defendant wishes to use Section 68 to disentitle a claimant from relief, it must be pleaded; provided it is pleaded, non-registration will disentitle a successful claimant from damages or costs as the case may be (damages prior to the amendment of the section, costs after) until such time as the exclusive licence is registered. Interest on costs The normal rule under CPR40.8 is that interest runs at the judgment rate (8% per annum) from the date on which judgment is given. However, under this rule, the Court also has a discretion to order that the judgment rate should apply from an earlier date. In Dupont Nutrition Biosciences v Novozymes 72, Floyd J considered the situation in which a revocation claim ran in parallel with proceedings before the EPO, the English claim was not stayed and the EPO revoked the patent on appeal. Should the higher judgment rate of interest run from the date of the EPO decision so far as the High Court costs are concerned? Although neither party could find reported authority on an earlier date for interest at judgment rate being awarded, the Judge decided that this should be one such case where it was appropriate. It was clear with absolute certainty that, from the date of the Technical Board of Appeal decision, the patentee would lose the case against it in the High Court. Accordingly, Floyd J ordered the judgment rate of interest to be paid on costs from 14 days after the TBA decision, and at the lower, commercial, rate before that. However, he did grant Novozymes permission to appeal on this point, in view of the absence of any previous authority. Procedural Issues Jurisdiction In last year s review we discussed in considerable depth the decision of Arnold J in Actavis v Eli Lilly 73 in which it was held that Actavis had validly served proceedings on Eli Lilly in respect not only of a European Patent (UK) but also its counterparts in France, Germany, Italy and Spain. It was also held that it was appropriate to determine the dispute in respect of all the designations in the English Court. On appeal in 2013, the Court of Appeal agreed with the trial Judge s findings in respect of the service elements of the judgment Eli Lilly s solicitors had consented to accept service of proceedings and in any event service had been effected on Eli Lilly directly on Eli Lilly s European Patent Operations Department in Surrey. The upshot of the decisions is that English solicitors should be very careful in correspondence as to the type of proceedings that they are instructed to accept service of when responding to the usual enquiry from a party wishing to serve proceedings on the lawyers directly. Although, having found service had been effected by the other two routes the additional point was of academic interest only, the Court of Appeal also agreed that the proceedings had not been served under CPR because non-uk designations of a European Patent were not patents under the UK Patents Act and the English Civil Procedure Rules did not provide means of service in relation to them. The Court of Appeal was also the setting for the next chapter in the long-running dispute between Virgin and Zodiac 74. In addition to the usual issues of infringement and invalidity, the Court grappled with an interesting argument that the grant of one patent by the EPO was null in respect of the UK because Virgin either never designated the UK on its application or withdrew any designation that it did make. The Court was found 71 See footnote 2, ante 72 [2013] EWHC 483 (Pat) 73 [2012] EWHC 3316 (Pat) 74 Virgin Atlantic Airways Ltd v Jet Airways, Delta Air Lines, Air Canada and Zodiac [2013] EWCA Civ 1713 Bristows February 2014

15 Review of Patent Cases in the English Courts in to lack jurisdiction in relation to this question; indeed the UK s status as a contracting state did not give it any involvement or responsibility for the examination or grant of the patent. This was entirely a matter for the EPO which is a factually and legally independent body in the exercise of its grant making powers. Furthermore, Section 77(1) of the Act, which makes European patents directly effective, was found not to be sufficient to create a jurisdictional link. Cases on jurisdiction and forum non conveniens are rare, so it is all the more unusual to have two closely similar cases in a patents context in consecutive years. In 2012, Arnold J heard Innovia v Frito Lay 75, reported in last year s review, and in 2013, it was the turn of Vos J to hear the similar case of Conductive Inkjet Technology v Uni-Pixel Displays 76. Like Innovia, the case concerned an application to set aside permission to serve out of the jurisdiction an entitlement claim by English company Conductive Inkjet Technology in respect of patent applications alleged to have been filed in breach of confidence by Uni-Pixel Displays (UPD), a US company. There was also a second claim for breach of confidence per se. The outcome of the case was also similar. Vos J held that the entitlement claim under Section 82 of the Act must be heard in England according to the exclusive jurisdiction provided by Article 3 of the EPC Protocol on Recognition 77 and that the forum non conveniens doctrine did not apply to that claim. However, forum non conveniens did apply to the breach of confidence claim and Vos J s weighing of the Spiliada 78 factors pointed to England as the most appropriate forum (for example, because many of the witnesses were located here). That alone, however, was not quite enough. What nailed it to England was the same reason as in the Innovia case: the factual matrix of the breach of confidence claim overlapped significantly with the entitlement claim and because the entitlement claim had to be heard in England, it followed that England was also the appropriate forum in which to hear the claim for breach of confidence. Accordingly, UPD s application to set aside permission to serve out of the jurisdiction was dismissed subject to the fulfilment of certain conditions. Parallel Imports/Specific Mechanism The Specific Mechanism is a derogation from the rules on the free movement of goods which was included in the Act of Accession of the ten Member States (including Poland) that joined the EU in In 2010 Sigma had imported and sold in the UK medicines put on the market in Poland by Merck under the trade mark Singulair, the active ingredient of which, montelukast sodium, is protected by a UK patent and related SPC. Sigma had written to Merck in 2009 to notify them that it intended to import Singulair into the UK from Poland and had received no response. At first instance HHJ Birss QC held that the Specific Mechanism applied and that Merck was entitled to an injunction and financial remedies 79. In the Court of Appeal, Kitchin LJ agreed in some respects with the trial Judge 80, but ultimately held that questions should be referred to the CJEU concerning the operation of the Specific Mechanism, particularly as no reference had previously been made on these issues. The precise formulation of the questions can be found in case C-539/13 (Merck v Sigma). Disclosure An unusual application for post-trial specific disclosure was made by the claimants in Eugen Seitz v KHS 81, a revocation action, seeking certain classes of document the existence of which was known to one of the claimant s employees but kept secret until after the trial because he had signed a confidentiality agreement. On reflecting on the potential importance of the documents after the trial, the employee had a change of heart and informed his lawyers. Roth J held that one of the classes of documents, dealing with technical prejudice and constituting potentially valuable secondary evidence on obviousness, should be disclosed. The documents were potentially relevant and the search not disproportionate. In fact, the employee knew exactly where to find them. Should the documents turn out to be significant, the trial could be re-opened upon the claimant s application. Experts Contrary to Arnold J s previous commentary in Medimmune v Novartis 82, in Blue Gentian v Tristar 83, Birss J rejected criticism that an expert s evidence was tainted with hindsight because he was aware of 75 [2012] EWHC 790 (Pat) 76 [2013] EWHC 2968 (Ch) 77 Protocol on Jurisdiction and Recognition of Decisions in respect of the Right to the Grant of a European Patent. 78 Spiliada Maritime Corp. v Cansulex Ltd [1987] AC Merck v Sigma [2012] EWPCC Merck v Sigma [2013] EWCA Civ Eugen Seitz AG v KHS Coroplast and Norgren [2013] EWHC 1108 (Pat) 82 [2011] EWHC 1669 (Pat) 83 [2013] EWHC 4098 (Pat)

16 14 the patent and had its configuration in mind when considering the differences in the prior art. No favour was given to the other side s expert who was given the prior art before the patent and the Judge stressed that an expert s role in relation to inventive step was to use their technical knowledge to give the Court an insight into the technical issues as well as the attitude and approach of the skilled person. This appears to be a softening of the previous position but it is yet to be seen if this approach will be widely adopted. Cause of Action Estoppel It is a fundamental principle of English patent law that any third party may challenge the validity of a patent. However, an equally fundamental rule exists in English law that a party which has challenged the validity of a patent cannot have a second bite at the cherry. The tension between these principles was explored by the High Court and the Court of Appeal in a case concerning the leading anti-depressant medicine, escitalopram. Some readers may recall that Lundbeck s patent for escitalopram was upheld by the Court of Appeal 84 and, in 2009, by the House of Lords 85 when it was challenged by, among others, Arrow Generics and Teva. In 2012 another company, Resolution Chemicals Limited, applied to revoke the basic patent upon which the UK SPC for escitalopram was based. Lundbeck issued an application for summary judgment on two grounds. The first ground was that Resolution was precluded by estoppel from bringing its claim. The principal contention in relation to the estoppel argument was the fact that Resolution belonged to the same corporate group as Arrow Generics at the time of the earlier litigation. At first instance 86, Arnold J applied the leading authorities of Gleeson v Wippell 87 and Johnson v Gore Wood 88 and concluded that Resolution had no interest in escitalopram at the time of the earlier litigation and there was accordingly no privity of interest. On appeal 89, Floyd LJ agreed, holding that at the time of the earlier litigation, Resolution was not in a position to make escitalopram and that although Arrow and Resolution were under common control, their relationship was not such that it could be said that Arrow was conducting the proceedings for Resolution s benefit. A second allegation that Resolution was bound to Teva by privity of interest by virtue of Teva supplying Resolution with escitalopram pursuant to a supply agreement was also rejected and not pursued on appeal. The second ground for summary judgment was that Resolution had no real prospect of success. This was also dismissed by Arnold J, who observed, in line with many earlier authorities, that summary judgment is rarely appropriate in patent cases even on issues as to claim construction and infringement. The long-running dispute in Virgin v Premium 90 caused the Supreme Court to examine and overturn the controversial principle laid down in the line of decisions leading to the Court of Appeal s judgment in Unilin 91 that damages paid for infringement of a patent later revoked by the EPO need not be repaid. Following a decision by the Court of Appeal that Virgin s patent was valid and infringed by Zodiac, the Technical Board of Appeal found the relevant claims to be invalid and the patent survived in amended form without the infringed claims. Following the Unilin principle, the Court of Appeal nevertheless allowed Virgin to recover damages because its findings were res judicata between the parties. In his leading judgment, Lord Sumption held that the decisions in Coflexip 92 and Unilin were wrong in law. Cause of action estoppel was only absolute in relation to points decided on the earlier occasion rather than being a generally applicable absolute principle. Further, the Supreme Court relied upon the statutory framework to find that the revocation of a patent had retrospective effect against the entire world. Thus, Virgin were prevented from recovering any damages. The question of whether Zodiac would have been able to recover the damages had they already been paid was raised, but left unanswered. The Supreme Court recognised the considerable significance that its decision could have in UK patent litigation where there are co-pending EPO Opposition proceedings and it requested that the Court of Appeal review the Glaxo 93 guidelines on when UK litigation should be stayed pending resolution of EPO Opposition proceedings at an appropriate time. This opportunity arose in IPCom v HTC 94 in which Floyd LJ held that the Court s discretion to progress or stay a case depending on its facts should be retained. Having remarked that the protracted nature of EPO Opposition procedure fell short of meeting 84 Lundbeck v GUK, Arrow and Teva [2008] EWCA Civ GUK, Arrow and Teva v Lundbeck [2009] UKHL Resolution Chemicals v Lundbeck [2013] EWHC 739 (Pat) 87 [1977] 1 W.L.R (No.1) [2002] 2 A.C Resolution Chemicals v Lundbeck [2013] EWCA Civ [2013] UKSC Unilin Beheer BV v Berry Floor NV [2007] EWCA Civ 364, [2008] 1 All E.R Coflexip SA v Stolt Offshore MS Ltd [2004] EWCA Civ 213, [2004] F.S.R See footnote 4, ante 94 See footnote 1, ante Bristows February 2014

17 Review of Patent Cases in the English Courts in the needs of industry 95, Floyd LJ went on to consider how best to align UK procedure with the existing EPO framework. In the Court s eyes, imposing a mandatory stay would mark the end of the English Court s ability to clear the way for those needing to launch products and conduct business in the jurisdiction. It would also create a significant hole in the ability to enforce a patent for a large proportion of its life span. Rather than dispensing with the Glaxo 96 guidelines completely, some revisions were provided which result in a pragmatic approach to stays in these circumstances. These allow the delay arising from EPO Oppositions to be weighed against other factors including prejudice arising from the delay, the lack of commercial certainty and what a national decision could achieve in the meantime, such as the promotion of settlement. In circumstances in which the UK proceedings could provide one party with an irrevocable unfair advantage (such as receiving damages on a patent that was later revoked by the EPO), there would be strong support for a stay. However, this risk could be mitigated by an undertaking to repay national damages should the EPO decision go the other way. This important decision signals that the UK is a forum in which it is possible for patentees to resolve IP disputes effectively and efficiently. It is also a neat illustration of the Court of Appeal moulding the jurisprudence of the Supreme Court to achieve a practical outcome. Springboard Injunctions As noted above, the result of the construction adopted by Birss J in Smith & Nephew v ConvaTec No was that Smith & Nephew s commercial process, which utilised a concentration of 0.77% active agent, did not infringe. However, it was held that four of the many work-up experiments which led to it being granted its regulatory approval for the product did infringe. As such, the Court was also required to consider whether ConvaTec should be granted a springboard injunction to prevent Smith & Nephew from exploiting its noninfringing 0.77% process prior to patent expiry on the basis of infringing work-up experiments that assisted in obtaining its regulatory approval. In this instance, the Court refused to grant an injunction. However, in doing so, Birss J discussed the relevant factors to consider in deciding whether to grant springboard relief, noting that caution must be exercised. He suggested that the Court should consider the nature of any unwarranted advantage relied on (granting only an injunction commensurate with its duration); the relationship between the past infringements and the later acts which were said to exploit that advantage; whether the product to be sold was the subject-matter of the patent; and whether the patent remained in force. The Court must also ensure that the claimant was not put in a better position than if there had been no infringement, especially if to do so would restrain lawful competitive activity. Final Injunctions An important decision in relation to injunctions came in a dispute relating to efavirenz, a drug used in the treatment of HIV infections, which arguably changes the landscape for generic companies preparing to enter the UK market. BMS was the exclusive licensee to a patent and an SPC for efavirenz, the latter expiring in November As most readers will know, in order to sell a medicine in the UK, it is necessary for the vendor to obtain an MA from an authorised regulatory authority but, unlike many other countries around the world, in the UK no procedural further steps are necessary before sales, including reimbursed sales can commence. In light of this, it is customary for patent holders to write to generics companies who obtain marketing authorisations for medicines which are protected by patents to seek undertakings that the generics company will not launch or will at least give the patentee sufficient notice to defend its position in Court. Teva obtained an authorisation to sell a generic medicine containing efavirenz at the end of 2011 and, when BMS lawyers wrote a letter seeking the usual assurances, Teva refused to do so. As reported last year, this led to an interim injunction hearing early in 2012 the result of which was that Teva was injuncted on an interim basis until the trial 98. The case duly proceeded to trial in 2013 and resulted in Teva being injuncted permanently 99. In forming the view that an injunction should be granted on a quia timet basis, Birss J held that, viewed objectively at the date of the claim in February 2012, the UK market for efavirenz was large and vulnerable. Launching before SPC expiry would be a rational thing for a generics 95 See Quotation of the Year, ante 96 See footnote 4, ante 97 See footnote 6, ante 98 Merck v Teva [2012] EWHC 627 (Pat) 99 Merck v Teva [2013] EWHC 1958 (Pat)

18 16 company to do if it were prepared to bear the risk of infringement. Relying on Teva s previous conduct in relation to atorvastatin (where Teva had surreptitiously launched millions of tablets in the UK in a short space of time despite having given reassurances that it would respect Pfizer s patent), the Judge held that Teva was demonstrably prepared to launch at risk of infringing an originator s patent if it chose to do so. It was therefore appropriate for BMS to raise the issue in correspondence. Viewed subjectively, the Judge found that the evidence was that Teva had no plans to launch efavirenz prior to SPC expiry but was keeping its options open. The upshot of the decision is that generics companies in the UK are under increased pressure to be proactive in dealing with enquiries from patent holders when they have obtained marketing authorisations ahead of patent expiry. The decision is likely to have a major impact on pre-action conduct of patent holders and generics companies in the pharmaceutical field. Following his decision that HTC infringed Nokia s patents, Arnold J granted a final injunction to restrain further infringement in respect of some of its handsets 100. Despite HTC s arguments that damages would be sufficient in lieu of an injunction, it was adjudged that it was proportional to award an injunction preventing further sales of several of HTC s phones which were already on the market. Arnold J refused to stay the injunction pending appeal on several of HTC s products, reasoning that these had been designed and launched with the knowledge that it was facing infringement claims. The injunction was, however, stayed with respect to HTC s flagship handset as the damage caused by having to withdraw this from the market would be both considerable and very difficult to quantify. A mere nine days later, this decision was overturned by the Court of Appeal 101. In doing so, Patten LJ considered that the Judge had lost sight of the basis upon which this type of temporary stay is granted. He considered that there was no distinction between the effect of an injunction on the handset identified at first instance and the rest of the products in HTC s flagship range. Noting that there was inconsistency in the reasoning that a stay was justified in relation to the handset which represented the biggest competition to Nokia but was not so in respect of the less competitive products, Patten LJ granted a general stay of the injunction pending appeal. Interim Injunctions An interesting decision from the Court of Appeal in 2013 concerned whether, and if so when, an interim injunction should be granted in respect of a patent held invalid at first instance pending an appeal on the merits. Earlier in this review we mentioned that all claims of Novartis zoledronate dosage regimen patents were held not entitled priority and therefore invalid in light of intervening prior art which came into play when priority was lost. Certain of the claims were also held insufficient. Following the trial, at a hearing on 12 April 2013, Arnold J granted Novartis permission to appeal on the basis that he was just about persuaded that the appeal had real prospects of success. Novartis also owned a compound patent for zoledronate, the SPC for which expired on 15 May In correspondence following the grant of the UK marketing authorisation for its zoledronate medicine, Hospira had undertaken not to launch its generic zoledronate medicines until expiry of the compound SPC and had reserved its position pending the trial of the issue of the validity of the dosage regimen patents. On 24 April, Hospira notified Novartis that it intended to launch its zoledronate medicine on expiry of the SPC. Upon receiving this news, Novartis issued proceedings and sought an interim injunction. The application came before Birss J on 13 May, his first day as a High Court Judge. On 14 May, fresh from the Welcoming Speeches to mark his elevation, Birss J refused the injunction, holding that although he would probably have granted an interim injunction if the application were brought before the trial, now that the merits had been decided the overall balance is different 102. The Judge held that if Novartis had wished to have the matter considered by the Court of Appeal prior to the expiry of the compound SPC, it should have made an application to expedite the trial to enable the second instance assessment to take place. Novartis urgently appealed, Floyd LJ granted permission to appeal on 16 May and on 17 May the Court of Appeal heard the appeal. 100 [2013] EWHC 3778 (Pat) 101 [2013] EWCA Civ Novartis v Hospira [2013] EWHC 1285 (Pat) Bristows February 2014

19 Review of Patent Cases in the English Courts in On 22 May the Court of Appeal overturned Birss J s decision. Giving the lead judgment, Floyd LJ held that cases such as Ketchum International v Group Public Relations 103 and Servier v Apotex 104 made it clear that the Court had jurisdiction to grant an interim injunction pending an appeal even when a refusal would not render the effect of the appeal nugatory. He also held that the appeal had a realistic prospect of success although the merits were not clear in favour of one side or another. However, Floyd LJ considered that it was wrong to place the burden to expedite the trial on Novartis alone and that the balance of hardship favoured the granting of the injunction pending the appeal on the merits which was estimated to be between six and eight months away. Fair, Reasonable And Non-Discriminatory (FRAND) licence terms The CMC in the case of Vringo v ZTE 105 focussed on the claimant s application for the Court to determine FRAND issues before looking at the substantive infringement and validity of six of Vringo s patents which, it argued, were essential to the ETSI standards. These patents formed part of Vringo s global patent portfolio that encompasses over 500 patents, hundreds of which are said to be Standards Essential Patents. Birss J commented that the Court had been prepared to determine a fair licence rate before looking at liability in the context of other IP rights and that there was no reason this approach could not, in theory, be extended to patent portfolios. There are two different circumstances in which the Court could make a determination relating to the rate and terms of a licence that would bring about different results that of a willing licensee and licensor in which the decision ends the dispute and that of parties who will continue to look at the validity and infringement issues before being bound by the initial finding. In refusing the application, the Court noted that it would only be a worthwhile exercise if both licensor and licensee were willing to be bound by its determination and that it would not compel and coerce a defendant into the position where it must be bound by a FRAND decision, thereby losing its entitlement to challenge the validity and infringement of the patents in suit. Conflict of Interest Another skirmish in the escitalopram saga occurred when Lundbeck made an application to Arnold J that he should recuse himself because of his previous association with Professor Sir Jack Baldwin, the former Waynflete Professor of Chemistry at Oxford University 106. Ahead of the hearing, Arnold J produced a note of his recollections of his undergraduate studies in Oxford in the late 1970s and early 1980s. Broadly speaking, these included attending a series of lectures given by Professor Baldwin which the Judge described as interesting though they were poorly delivered and undertaking a project in his final undergraduate year which was notionally supervised by Professor Baldwin and pursuant to which Arnold J was offered a place as a D. Phil student which he declined. Having set out the facts, and an uncontroversial summary of the role of expert witnesses in patent litigation, Arnold J turned to the law of apparent bias as authoritatively stated by Lord Hope in Porter v Magill 107 as follows: the question is whether the fairminded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. In his overall assessment, Arnold J considered, after anxious consideration, that there was no prospect that such an observer could so conclude. An appeal of this point was swiftly dismissed 108 although the trial on the merits settled at the door of the Court a few weeks later. Joinder of parties Selection of parties to litigation often has a strategic element and susceptibility to disclosure was the reason why, in Teva v Amgen 109, Teva wished to keep Amgen Inc in the proceedings in circumstances where Amgen Inc had assigned the relevant patent to its UK manufacturing company. Amgen applied to remove Amgen Inc from the litigation. Arnold J heard the application. He noted that a group of companies is entitled to structure itself in whatever manner it pleases and there was nothing improper in a structure that minimised disclosure risk. Furthermore, it was inappropriate to bring proceedings against a company solely for the aim of obtaining disclosure. However, on the facts of the present application, he rejected Amgen s application to release Amgen Inc. The litigation concerned declaratory relief and the principles 103 [1997] 1 W.L.R [2007] EWHC 1905 (Ch) 105 [2013] EWHC 1591 (Pat) 106 See footnote 1, ante 107 [2001] UKHL Resolution Chemicals Ltd v Lundbeck [2013] EWCA Civ [2013] EWHC 3711 (Pat)

20 18 concerning the grant of such relief against a party were set out by Aikens LJ in Rolls Royce 110. The essential criterion for the present case was the question of whether Amgen Inc would be affected by the Court s determination of the issues concerning the legal right in question and it was clear for several reasons that Amgen Inc would be so affected. Unitary Patent / Unified Patent Court 111 Much has been written over the past 12 months about the UPC and unitary patent, not least on Bristows microsite, Therefore, rather than look back over the last year, we will look forward to progress which we may expect for 2014, and attempt to answer the questions on everyone s lips: will it really happen, and if so, when? It was perhaps appropriate that 2013 the 40 th anniversary year of the signing of the EPC should see the signature of a Treaty committing 25 EU states to create a pan-european patent Court, the Unified Patent Court ( UPC ). It is, however, a supreme irony that something which had taken 40 years since then to agree, should, in the end have been so rushed that its imperfections are apparent even to the politicians who devised it. At a closed session of the European Parliament s JURI Committee, Bernhard Rapkay MEP (now infamously) described the compromise as not just sub-optimal, but sub-sub-sub optimal. More publicly, in a speech at a small conference in Brussels on the eve of the signing of the UPC Agreement, Kerstin Jorna likened the project to a cake which had just come out of the oven. It was not so good but the users would, she felt, make the best of it. And so they must, for sooner or later the new Court will effectively replace national patent Courts for most patent litigation. Some national litigation will survive, however, not just for the UPC transitional period, but in perpetuity in the form of litigation concerning national patents; and one huge question is whether in the long term the patent strategies of some parts of industry will move back to national patent filings rather than stay with the European route, or (as intended by the politicians) toward the new so-called unitary patent. No attempt will be made to predict the answer to this question, but before addressing the two main issues (whether, and when) we first ask what will 2014 hold? Out with the crystal ball Some aspects are very easy to predict. The easiest of all is that the Rules of Procedure will be finalised, and indeed by the time this article is published, it is possible that the 16 th (and effectively final) draft will also have been published. The redoubtable Kevin Mooney completed his work at the end of January, with the major areas of controversy now being limited mainly to languages (rule 14) and procedural appeals (rule 220). Hence that ball now lies in another court. There will be a show-piece meeting to debate the rules in late spring or early summer (somewhat later than anticipated) and the rules will be finalised in the summer. It will be said that this will give users a full year to digest the rules and to prepare for the new system. Some further ratifications will be made during the year, with France almost certainly being the first of the big three to do so. The IP Bill will be passed and will enable the UK also to ratify but we will not do so in 2014; that will have to wait until the spring of The fee structure for the unitary patent may well emerge in The EPO hopes to agree the renewal fees by the summer. The indications are that this will be set at around the equivalent of four national renewals. But which four? And will the distribution key to the sharing of these fees be agreed? The UK IPO is resigned to losing out on this matter, but this should not be of much concern to the IPO s finances in the short to medium term, given that it would be surprising if many patentees opt for unitary patents until the end of the transitional period at least after all, the ability to prune portfolios is essential and unitary patent pruning is an oxymoron; these patents must be maintained in full or the patent axed in toto. The Court fees should also be revealed. The indications are that a German-style value of dispute system will be used. So too should the regime for costs recovery become known. This could be controversial, since it seems that there will be a cap 110 Rolls-Royce plc v Unite the Union [2009] EWCA Civ 387; [2010] 1 WLR This section was prepared by Bristows partner Alan Johnson, to whom the authors express sincere thanks. Bristows February 2014

21 Review of Patent Cases in the English Courts in at levels not out of place in the IPEC possibly only 35,000 for lower level disputes. At such levels, it is easy to predict that the UPC would be very attractive to Non-Practising Entities who would have little to fear from adverse costs orders. Thankfully, it appears that higher recovery levels will be set. And of course we may also be told what the infamous opt-out fee will be the fee for not using the Court system for one s existing European patents, and which seems inherently unfair. (When one is already inside a theme park, one does not normally expect to be charged to exit, particularly if one had known nothing about any exit charge at the time of entry.) 2014 may also see some announcement of the candidate Judges of the UPC. The request for expressions of interest attracted some 1300 responses, with, so it is said, 800 coming from Germany and with every Italian Judge having registered interest. At the very least, there should initially be some clarity on the qualification requirements, some opacity arising from the provisions of the UPC Agreement that eligibility for the position of UPC Judge is to mirror national eligibility. In the UK, all solicitors and barristers of any seniority are eligible for office as a national Judge and hence as a Judge of the UPC. In France, however, eligibility arises only if one has attended Judge school. Will, therefore, French practitioners be ineligible? That would be an odd result to say the least. A conference has been scheduled for 13 and 14 March in Budapest to discuss judicial training, so perhaps some clarity will emerge then. Some progress may also be made to resolve the meaning of lawyers in Article 48(1) not forgetting that in the German version of the text, the equivalent word is Anwälten, which may have a broader meaning) and whether this can include patent attorneys (or in German Patentanwälte ) or at least those English patent attorneys with the PAL qualification. So too might one hope for progress toward the establishment of courses leading to the qualification to be known as the European Patent Litigation Certificate (Art 48(2)). And finally for 2014, one can foresee a positive opinion from the CJEU s Advocate General relating to the second Spanish challenge. Whilst aspects of this challenge undoubtedly have merit, it is difficult to see even the CJEU being immune from the pressure to decide that the proposed system is not unlawful. If so, the chances are that the Court itself would follow that view in spring All of which would pave the way for the UPC to open for business by the Preparatory Committee s target date of early 2015 (for which read summer 2015). But is that date realistic, and indeed will all the remaining hurdles be overcome? Will it happen and if so, when? If it is right that the CJEU will reject the second Spanish challenge, and France ratifies promptly as expected, this leaves mainly the question of the UK and German ratifications to consider in answering the first part of the question. The German position remains surprisingly unclear. Rumours have circulated of German dissatisfaction with their allocation of Central Division work. In the electronic age, far from all automotive patents are in class F, and only some 9% of oppositions relate to class F cases. Calls have also already been heard from Germany that the transitional period should be extended to the maximum 14 years, which is hardly a vote of confidence. Also, it is self-evident that Germany, as with so many things European, will be the main country to fund the set-up of the new system. Hence German second thoughts represent something of a threat. However, it would seem surprising to say the least if Germany of all pro-european countries would be the one to derail the project. What then of the UK? Ratification is not currently seen as a political issue. Always assuming, therefore, that Scotland does not cause a constitutional hiatus, but instead decides to remain a part of the UK, that will pave the way for UK ratification before the next General Election. That said, should the Conservatives win the next election, it might seem perverse to proceed with the project pending the promised referendum on EU membership. Quite possibly, therefore, the timing of the potential UK referendum on EU membership

22 20 could be cited as a reason to delay launching the new system, no matter how unlikely an out vote might be. This timing might also fit in with the numerous practical issues the Preparatory Committee faces. Not only are there questions over appointment of Judges and their training, but there is the critical issue of the UPC computer system. The UK has been landed with this poisoned chalice, and the challenges for the IPO s Neil Feinson who leads the project are obvious. So far we know that the system will be a COTS Custom Off-The-Shelf system. This seems a very sensible move. We also understand that it is hoped that the procurement process will be completed this year, with a view to commissioning the system early next year. Nonetheless, the need to get the system right and within a reasonable budget, points toward 2015 being optimistic. Indeed, in Germany talk is already of a 2017 start-date, although upon quite what this is based is unclear. Hence, whilst in theory 2015 might remain achievable, the smart money probably should be on a 2016 start-up. Which is just as well. When one stops to think about what patent departments throughout Europe need to do in preparation, another two years seems essential. And if the fees, including the opt-out fee, are known, at least departmental budgets can be set in time, which would be impossible with a 2015 start date. appearing increasingly out-of-step with the European Commission s stance on Standards Essential Patents, and so the Mannheim Court referred a series of questions designed to bring matters to a head. With the scale and ferocity of the smartphone wars continuing unabated, the Court s opinion is eagerly anticipated on all sides. Elsewhere, no doubt more questions on SPCs will be referred to the CJEU in the (perhaps forlorn) hope that one day the CJEU might answer a question actually put to it rather than restating the question to suit its own ends. Perhaps we may even see the Commission putting forward a proposal to revise the Regulations in the context of SPCs for unitary patents, and in the process address some of the many uncertainties which currently exist? Last but by no means least, the newly-named IPEC is expected to continue to flourish under the stewardship of HHJ Hacon. Birss J is a tough act to follow but there is every reason to believe that this Court can continue to provide a viable alternative for smaller IP disputes and in some respects a proving ground for the procedures that will be in play in the UPC. In summary, therefore, it looks highly likely that the UPC will indeed become a reality, subject only to a possible UK referendum resulting in an out vote. Hence, in conclusion, a pun is irresistible: reform of the UK IP system will depend on the failure of UKIP. Looking Ahead 2014 is set to be an interesting year in the patents arena. All practitioners will be closely watching UPC developments and gearing up for the challenges and opportunities that lie ahead. Hotly awaited is the decision in the CJEU Huawei v ZTE 112 referral. The German courts have for some time had a fairly settled practice of being able to grant injunctions to a successful patentee notwithstanding its FRAND commitments where the so-called Orange Book criteria were satisfied. That practice was 112 C-170/13 Bristows February 2014

23 Review of Patent Cases in the English Courts in The Authors 01 Brian Cordery Partner 01 Brian specialises in contentious intellectual property matters. He has been involved in numerous patent disputes, mostly concerning pharmaceuticals but also in other fields. His first Patent Review of the Year was published in will be his twentieth year at Bristows. 02 Dominic Adair Associate 02 Dominic 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. Dominic will become a partner in the firm on 1 May Naomi Hazenberg Associate 04 Naomi specialises in intellectual property litigation. Although she has experience with a broad range of IP rights, her practice is largely focused on patent disputes. She has a particular interest in technical and telecoms matters having obtained a masters degree in Physics prior to joining Bristows. 04 Sylvia Delbeuf Paralegal Sylvia works as a paralegal in the Intellectual Property Department at Bristows. She is part of a team which is responsible for the co-ordination of the defence of the intellectual property of a major pharmaceutical product, in which she assists with the management of litigation in a number of jurisdictions. She regularly works alongside lawyers and patent attorneys in other jurisdictions including several other European countries as well as Asia and South America.

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