Viiv and Teva to fight SPC dispute without benefit of premature CJEU ruling

ViiV Healthcare UK Ltd v Teva UK Ltd [2015] EWHC 1074 (Ch), a Patents Court, England and Wales, decision of John Baldwin QC, sitting as a Deputy Judge of the High Court, is a bit of a curiosity -- a case on supplmentary protection certificates (SPCs) for pharmaceutical patents that did not result in a reference to the Court of Justice of the European Union for a preliminary ruling (it seems quite ironical that it's SPC cases that get referred to the CJEU so often when the mere fact of a reference can add a couple of years to the length of a trial while the SPC itself is for such a short period of time).

In short, Viiv had an SPC on the basis of its UK patent for a medicinal product containing abacavir and lamivudine for the treatment of HIV. Viiv issued proceedings for a declaration as to the proper interpretation of Article 3 of Regulation 469/2009 (the SPC Regulation) in the context of its 2009 SPC for "a combination comprising abacavir, optionally in the form of a physiologically functional derivative and lamivudine, optionally in the form of a physiologically functional derivative". In response, Teva applied to revoke the patent and the SPC.

Both parties agreed that the patent revocation proceedings should progress to trial regardless of whether a reference was made, and the trial was expected to take place in March 2016, with a Court of Appeal judgment following about a year later. The parties had cooperated in producing drafts of an agreed statement which set out their factual contentions.

In these proceedings Teva argued that there was no need to make a reference to the CJEU until essential facts had been found. No, said Viiv: the question of whether to make a reference was essentially one of case management, and the overriding objective of the Civil Procedure Rules was best served by making a reference now so that it would be better placed to decide whether to make any application to amend the patent.

John Baldwin QC refused the application, making the following observations:

* The CJEU's "Recommendations to national courts and tribunals in relation to the initiation of preliminary ruling proceedings" stated that

"A national court or tribunal may submit a request for a preliminary ruling to the Court as soon as it finds that a ruling on the interpretation or validity of European Union law is necessary to enable it to give judgment."

* Case law made it clear that, as a rule, the court could not tell whether it was necessary to decide a point until all the facts were ascertained, so in general it was best to decide the facts first; it followed that, in principle, a reference should only be made in the context of facts agreed or determined by the national court,

* On references to the CJEU, it was not unusual to include facts in "Agreed Statements of Facts" which were not actually facts but which were parties' factual contentions. There might be circumstances where that was appropriate -- but that should not be the norm as it was contrary to the concept that references were only made when a decision on the question was necessary to enable the court to give judgment.  The issue was not desirability from the parties' perspective but necessity from the court's perspective.

* It was wrong for the court to make a reference to the CJEU merely to enable a party to be better informed as to whether to go forward with an application to amend its patent.

* In this particular case it was far too early to make a reference. The proposed statement of facts was not sufficiently precise to give the CJEU a firm basis on which to make a decision and there were too many contingencies. In any event, if the patent was revoked at the validity trial, all questions relating to the SPC would become irrelevant.

This blogger thinks that the Deputy Judge got it right, even if this ruling does rather spoil the fun for those of us who enjoy watching the continuing evolution of CJEU jurisprudence and measuring it up against the twin criteria of commercial necessity and common sense.

Standard Essential Patents Lose Ground

Colm Ahern

PatLit has received the following item from Spain, written by Colm Ahern (of Elzaburu, Madrid) including Colm's comment on the Advocate General's opinion on a reference to the Court of Justice (CJEU) of a case outlined in a previous post:

The Advocate General’s conclusions in Huawei v ZTE (C‑170/13) which were published today amount to a significant departure from the very strict conditions laid down by the BGH in the Orange Book case regarding standard essential patents and anti-trust law. They also vindicate the Commission’s position which has been openly critical of Orange Book. 

The Advocate General rejects the application of the rules established by the BGH in the Orange Book case, because that dispute concerned a de facto standard whereas the patent in suit concerns a standard which was agreed as part of a standardization process undertaken by the European Telecommunications Standards Institute in which both Huawei and ZTE had taken part. Huawei had agreed to provide licenses to competitors on fair, reasonable, and non-discriminatory terms (FRAND).

The BGH held that the seeking of a cessation injunction by a patent holder with a dominant position, would only constitute abuse of that position if the alleged infringer had made un unconditional and binding license offer which could not be limited to cases where patent infringement had been proven. By contrast the Advocate General places the burden on the patent holder to first send a notice letter setting out not only the alleged infringement but also the terms of license offer under FRAND conditions of a type normally used. The alleged infringer could then respond with a counter-offer setting out alternative terms. The patent holder could only seek an injunction if the counter-offer were held not to be serious and to constitute a mere delaying tactic. The alleged infringer could also reserve the right to later challenge both patent validity and the existence of infringement.

If the CJEU now accepts the Advocate General’s conclusions, the rights held by owners of SEP patents under the “Orange Book Standard” will be significantly curtailed.

Bolar CJEU reference: Poles say no, Germans say yes

Paul England

Via Paul England (Taylor Wessing LLP) comes news that the Düsseldorf Court of Appeal, Germany, has referred some questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling as to whether and, if so, under what conditions, the supply of patent-protected substances by a third party to a generic company, which intends to use the substance for obtaining a marketing authorization, is covered by the Bolar exemption. Paul explains:

While it is undisputed that generics themselves are allowed to manufacture the patent protected substance for marketing authorization purposes under the Bolar exemption, it was unclear whether active pharmaceutical ingredient (API) suppliers may sell a protected substance to generics for Bolar purposes. The question is crucial for the API suppliers and the generic industry in Europe. If a supply in the development phase is not possible under the Bolar exemption, European API suppliers will be forced out of Europe and the supply sources for generic companies and their ability to enter the market immediately after patent expiry will be seriously limited. The objectives of the Bolar exemption to strengthen the generic industry in Europe and allow immediate market entry of generic products after patent expiry would be at risk.

Cases

Decision of the Polish courts

The Polish Supreme Court recently confirmed decisions of its lower instance courts and decided that third party supply is not covered by the Polish implementation of the Bolar exemption. The Court also refused to refer the case to the CJEU.

Decision of the German courts

The district court Düsseldorf decided that such a third party supply is only exempted by the Bolar provision under very restrictive conditions, namely if the supplier is co-organiser of the tests and studies carried out by its customer and allowed under the Bolar exemption. The district court of Düsseldorf refused to refer the question of third party supply to the CJEU.

The Düsseldorf Court of Appeal has now disagreed with the first instance decision and referred the question to the CJEU. According to the Düsseldorf Court of Appeal, third party supply shall be allowed under certain conditions, namely if the supply is aimed at the privileged purposes.

Paul promises that Taylor Wessing will report further details of this reference as they are made public.

Contributory Infringement and Territoriality

Simple question: a Belgian shopkeeper B sells a product infringing a German patent to his client C in his shop in Belgium. Infringement or not? Most of us would say the answer is plainly no – territoriality principle.

The BGH has now wondered whether this might change if the shopkeeper knows that the client wants to sell the product in Germany. Then, the act of selling could amount to contributory infringement.

The question became relevant not for patent infringement but because a copyright and trademark owner had sued a Belgian defendant before the German Courts by arguing that the contributor to a main infringement may be sued – according to the German Civil Procedure law - before the courts having jurisdiction for the main infringement action. In the above case, these would be the German Courts.

The BGH has therefore referred the following  question on the interpretation of Art. 5 Nr. 3 EUGVVO (Council Regulation (EC) No 44/2001) to the ECJ:

Must Article 5 Nr. 3 of the Council Regulation (EC) No 44/2001 be interpreted such that the harmful event occurred in one member state (member state A), when the tort, delict or quasi-delict, being subject of the procedure or from which claims are derived has been committed in a different member state (member state B) and consists in the participation in the tort, delict or quasi-delict, having occurred in the first-mentioned member state (member state A)? (freely translated by the author of this note)

If the answer would be positive, this would clearly open new and interesting options for cross-border litigation on the basis of Article 5 Nr. 3 of the Council Regulation (EC) No 44/2001 not only for copyright and trademark cases but also in patent cases where the application of Art. 6 Nr. 1 of the Council Regulation (EC) No 44/2001 is foreclosed after the ECJ-decision Roche/Primus, as long as Art. 22 Nr. 4 of the regulation does not enter the game.

On the same day, the BGH referred the same question on the interpretation of Art. 93 par. 5 of the Commnity Trademark Regulation (Council Regulation (EG) 40/94) to the ECJ. PatLit will keep you updated.