Friday, 25 July 2014

No stay: balancing justice, speed and the chilling effect of uncertainty

Actavis Group PTC EHF v Pharmacia LLC [2014] EWHC 2265 (Pat), decided earlier this month by Mr Justice Arnold in the Patents Court, England and Wales, is yet another case involving an application for a stay. There sometimes seem to be more applications for stays than there are substantive proceedings, which says a lot about the way in which litigants have to struggle with a multitude of jurisdictions and causes of action in the Europe of today.

In this case Pharmacia owned a European patent relating to sustained release dosage forms of pramipexole, a product used for the treatment of Parkinson’s disease and restless leg syndrome. Actavis applied to revoke the United Kingdom designation of this patent on various grounds, there being parallel opposition proceedings relating to the same patent before the European Patent Office (EPO).

A dispute arose as to how quickly the EPO proceedings were likely to be resolved, both without and with expedition, and taking into account a possible appeal to the Board of Appeal and the remission of the case  by the Board of Appeal to the Opposition Division. Pharmacia then sought a stay of the UK revocation proceedings until the EPO proceedings had finally ground to a halt, while offering a number of undertakings as a sort of sweetener. These were (i) to seek expedition of the EPO proceedings, (ii) not to seek an injunction against Actavis or its customers until the determination of the EPO proceedings and (iii) only to seek damages of 1% of Actavis' net sales during the period from launch until the determination of the EPO proceedings if the patent was held valid both by the EPO and in the UK.

Actavis was unhappy with this, submitting that a stay should be refused because the proceedings regarding the UK segment of the patent would be resolved significantly earlier than the EPO proceedings and that the decision regarding the UK would provide it with reasonable commercial certainty, at least in the UK, and might assist in promoting settlement.

Arnold J, in a brief (33 paragraph) judgment, dismissed the application for a stay.

* the court's discretion to grant a stay of proceedings, which was very wide, should be exercised to achieve the balance of justice between the parties, having regard to all the relevant circumstances of the particular case;

* while that discretion was indeed wide, previous cases suggested that the default option was that the proceedings should be stayed. It was thus for Actavis to show why no stay should be granted.

* resolution of the proceedings before the courts in England and Wales was likely to take two years. In contrast, while both the Opposition Division and the Board of Appeal were likely to expedite the proceedings, neither the fact of expedition nor its outcome could be guaranteed.

* even with expedition, the EPO proceedings were likely to take at least three years to resolve -- possibly considerably more, if the Board of Appeal remitted the case to the Opposition Division.

* if the national proceedings were stayed, the oppositions failed and the national proceedings were then resumed, they would not be resolved until at least five years from now. In terms of commercial certainty, the starting point was to consider what Actavis’ position would be if there were no stay: it would be exposed to commercial uncertainty with regard to its position in the UK during the two years it would take to resolve the national proceedings.

* while the competing considerations were finely balanced, ultimately they favoured the refusal of a stay.

Arnold J's observations concerning the undertakings that Pharmacia was willing to offer is worthy of note. he said, at [30]:
"... Pharmacia's undertakings go a considerable way to reducing the commercial uncertainty to Actavis in the UK if the English proceedings are stayed, but in my judgment not quite far enough. While they do largely eliminate the commercial uncertainty during the period of the stay, and indeed give Actavis the positive benefit of ensuring that it can get on the market during that period rather than having to rely upon a claim under a cross-undertaking in damages, the problem is that they do not address the uncertainty caused by the prospect that Actavis may be removed from the market by an injunction in, say, five years' time and may have to pay ordinary damages or account for its profits for the last two of those years. That uncertainty will inevitably have a chilling effect on Actavis' investment decisions".

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