Monday, 28 July 2014

Further undertakings, a stay -- and an expression of hope

Last week PatLit reported on the refusal of Mr Justice Arnold, in Actavis Group PTC EHF v Pharmacia LLC [2014] EWHC 2265 (Pat), to grant a stay of patent revocation proceedings in England and Wales pending the outcome of parallel opposition proceedings before the European Patent Office. On Thursday of last week, in [2014] EWHC 2611 (Pat), the same judge delivered a further judgment in which he granted a stay, having considered the effect of two further undertakings from Pharmacia. This judgment is not yet on BAILII but, since it is only seven paragraphs long, PatLit is reproducing it below in full:
1. This is a renewed application by Pharmacia for a stay of these proceedings until the final determination of the parallel proceedings before the European Patent Office. The background is set out in full in my judgment of 11 July 2014 ([2014] EWHC 2265 (Pat), and I will not repeat it here. As was set out in the postscript to that judgment at paragraph 33, following the circulation of a draft of the judgment to the parties, Pharmacia offered two additional undertakings in return for a stay of the proceedings. Those additional undertakings are summarised in paragraph 33 of the previous judgment and have subsequently been elaborated, together with the other undertakings offered by Pharmacia, under cover of a letter from Pharmacia's solicitors dated 23 July 2014.

2. Against that background, Pharmacia now seeks a stay of the proceedings on the basis of all of those undertakings. As can be seen from paragraphs 30 and 31 of my previous judgment, I concluded that a stay should not be granted on the basis of the undertakings offered by Pharmacia set out in paragraph 12 of that judgment. As I stated, it seemed to me that the competing considerations were finely balanced, but nevertheless they favoured the refusal of a stay. The key consideration that weighed with me in reaching that conclusion was that, having regard to the likely length of time it would take for the EPO proceedings to be resolved, the undertakings that were offered by Pharmacia, although they largely eliminated the commercial uncertainty to Actavis during the period of stay, did not address the uncertainty caused by the prospect that Actavis might be removed from the market by an injunction in, say, five years' time and might have to pay ordinary damages or account for its profits for the last two of those years.

3. In my view, the additional undertakings now offered by Pharmacia meet that point, and accordingly do substantially eliminate the commercial uncertainty to which Actavis will be exposed in the United Kingdom as a result of a stay.

4. Actavis continues to resist a stay even on the basis of the additional undertakings proffered by Pharmacia. Actavis’ reasons for resisting a stay are set out in paragraphs 9 19 of the third witness statement of Mark Hilton of Actavis’ solicitors. In summary, the key points that Mr. Hilton makes on behalf of Actavis are twofold. First, he makes the point that Actavis wishes to launch its generic sustained release pramipexole product throughout Europe. Accordingly, Actavis wishes to remove the commercial uncertainty caused by the existence of the Patent as soon as possible across Europe. Actavis takes the view that an early decision from this court will be of considerable assistance to it in that regard. It will give Actavis and its customers confidence as to the position across Europe. Furthermore, it is likely to be of persuasive effect in other jurisdictions. The second main point made by Mr. Hilton follows on from the first, namely that an early decision of this court will assist in promoting settlement between the parties on a pan European basis. An additional point Mr Hilton makes, which to my mind is of less weight than the two main points, is to suggest that it is clear from Pharmacia’s attitude and the undertakings that it has offered that the Patent is a weak one, and that there is a strong public interest in the validity of weak patents being scrutinised by a competent court at the earliest possible date.

5. In my judgment, the matters that are relied upon from Actavis are considerations which do favour the refusal of a stay. Nevertheless, I have to consider the overall balance, having regard to the guidance given by the Court of Appeal in IPCom GmbH v HTC Europe Co Ltd [2013] EWCA Civ 1496, [2014] RPC 12, at paragraph 68. Taking all of the factors set out in that judgment into consideration, it seems to me that the overall balance now comes down in favour of the grant of a stay. While I accept that Actavis has a good reason to want to obtain a decision of this court at an early date and that that will be of assistance to Actavis in the ways that Mr. Hilton describes, I nevertheless consider that the additional undertakings offered by Pharmacia go sufficiently far to tip the balance in favour of a stay, having regard to the other factors mentioned in IPCom.

6. For those reasons, I will now grant a stay on the basis of the undertakings set out under cover of Pharmacia's solicitors’ letter dated 23 July 2014 as clarified with counsel for Pharmacia this morning.

7. I should say one thing further, which is this. Counsel for Actavis made the point that, although Pharmacia has offered an undertaking to co operate with Actavis to seek expedition of the opposition proceedings in the EPO, including any appeal to the Board of Appeal, there was room for doubt as to whether the EPO would accede to a request for acceleration, given that Pharmacia has offered an undertaking not to seek an injunction in the UK. I acknowledge the force of that point. However, it seems to me to be clear that expedition of the EPO proceedings is warranted not merely because of the existence of the English proceedings, which will include the counterclaim for infringement that Pharmacia has undertaken to bring. It seems to me to be plain from the current position of the parties that there is a strong likelihood of further proceedings elsewhere in Europe and, furthermore, a strong likelihood that those further proceedings will include infringement proceedings in one or more contracting states of the EPC. Accordingly, I express the hope that the EPO will accede to the joint request of the parties to accelerate the opposition proceedings and any appeal.
That the EPO should expedite proceedings is clear; whether it will take note of the hope of a British trial judge or of the parties themselves is however less certain.   Do readers of this weblog have any evidence, anecdotal or otherwise, of the EPO accelerating proceedings because a national court has expressed the wish that this should happen?


Anonymous said...

This is the relevant para 33 from the previous judgment:
'33.After this judgment was circulated to the parties in draft, Pharmacia offered two additional undertakings in return for a stay of the proceedings, namely (i) not to seek an injunction in the UK against Actavis or its customers in relation to Actavis' sustained release pramipexole product during the life of the Patent and (ii) only to seek damages of 1% of Actavis' net sales in the UK during the life of the Patent if the Patent is ultimately held valid by the EPO and valid and infringed by the English courts. I shall hear further argument on this proposal as well as costs. '

1% of net sales seems eminently sensible for a weak patent. I wonder if that is a standard rate, and whether settlement based on that rate would be anti-competitive.

MaxDrei said...

Jeremy I suspect the degree of acceleration of Opposition proceedings at the EPO will depend on the attitude of the Chair and First Member of the OD and then the Chair and Rapporteur of the TBA. Remember the aircraft seats litigation? In it, as I recall, there was a direct written request from Robin Jacob to the TBA to speed up. The Chair replied in writing.

I believe that Chairman has retired from the EPO and now practises in London. I'm sure he could offer you some cogent thoughts.

Anonymous said...

The Court of Appeal has indicated that stays should be the norm. It seems Actavis wanted to use the English case as a proxy for German or other national invalidity proceedings. If the generic company doesn't have a significant commercial interest in the UK market for its product then why should it be permitted to use the English Court to try to usurp the EPO or other national Courts? A stay in this context seems eminently sensible.

Roufousse T. Fairfly said...

Do readers of this weblog have any evidence, anecdotal or otherwise, of the EPO accelerating proceedings because a national court has expressed the wish that this should happen?

Jeremy, have a look at this summary of T18/09 here, as well as the decision itself and the wrapper.

Jeremy said...

Roufousse, thanks so much for this reference.

MaxDrei said...

Jeremy, Roufousse refreshes my memory. So thanks to him, also from me.

The case I was recalling above(29/7 at 07:30) was indeed the one which Roufousse now so helpfully and succinctly fingers. Nothing at all to do with aircraft seats, although I was right that it was Robin Jacob.