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?

Undertakings in patent litigation: some welcome clarification

The decision today of the Court of Appeal for England and Wales in Zipher Ltd v Markem Systems Limited and Markem Technologies Limited [2009] EWCA Civ 44 is the latest in a long line of judicial rulings in a dispute that has been in and out of the British courts since Markem first took it into its head to challenge Zipher's proprietorship of two patents back in 2002. It is not the intention of this note to trace the sad history of this contest, but rather to focus on the very helpful contribution made by Lord Neuberger (this is now the third occasion in recent months that a Law Lord has descended to the lower appellate court in order to deliver a leading judgment: see also here and here). In his judgment, with which Lord Justice Jacob and Sir Peter Gibson concurred, he clarified the issue that had bedevilled the minds of too many expensive lawyers for too long: had Zipher given an undertaking to the court that it would not further press its case regarding the first four claims of a disputed patent, or had it not?

Now we know what it takes to undertake ...

Here Lord Neuberger explains at paragraphs 19 to 25, for the benefit of all, what might be called the Modern Law of Undertakings (citations omitted):

"An undertaking is a very serious matter with potentially very serious consequences. It is a solemn promise to the court, breach of which can lead to imprisonment or a heavy fine. Accordingly, there should never be room for argument as to whether or not an undertaking has been given. Further, while there is inevitably sometimes room for argument as to the interpretation of an undertaking, the circumstances in which such arguments can be raised should be kept to a minimum. Accordingly, any undertaking should be expressed in full and clear terms and should also be recorded in writing.

None of this is either controversial or original. Unsurprisingly, it is well established. ... "it is in all cases highly desirable that any undertaking to the court shall be recorded and served on the giver personally". ... the "most obvious and convenient way … is to record the undertaking in an order of the court …". ... "the general practice to be adopted" was that the "undertaking should be included in a recital or preamble in the order of the court", which should be issued and served on the person who gave the undertaking with a penal notice. ...

... in a case where there is a bona fide dispute as to whether an undertaking has been given, the fact that neither the existence nor the terms of the undertaking has been recorded in writing militates against an undertaking having been given. All the more so where the court has made an order in which the undertaking, if given, could and should have been recorded. ... in a case where an undertaking has been given, even where the court makes no order, that ought itself be recorded in a formal order which should recite in full any undertaking that has been given.

... it must also follow ... that, where the terms of an undertaking could equally well be interpreted as having a narrow scope or a wide scope, it is the narrower scope which must prevail. An accusation that there has been a breach of an undertaking has similarities with an allegation of criminal behaviour, and it therefore must be right that, where two interpretations of an undertaking are equally convincing, the less stringent one should prevail. (Of course, in some circumstances, the terms of an undertaking may be ambiguous in such a way as to render the undertaking simply unenforceable).

In this case, the undertaking is said to have been given orally, and was never committed to writing (save that the variation to the patent which would have resulted from the alleged undertaking was written down and handed to the court). The argument as to whether an undertaking was given, and what its terms were, has therefore centred on the transcript of what was said at the hearing. Quite apart from the self-evident undesirability of courts having to trawl through transcripts of earlier hearings to consider whether any binding commitments were made on behalf of any party, and, if so, the meaning and extent of any commitment, there are, I think, four points of principle to bear in mind when considering transcripts in such circumstances.

First, all the relevant passages must be read together and, of course, in their overall context. Secondly, one should be wary of indulging in what Lord Diplock characterised as "detailed semantic analysis" of the words revealed by the transcript: if such analysis can be inappropriate in relation to formal written contracts, it must be a fortiori when it comes to oral exchanges in court. Thirdly, if there is real doubt as to the meaning or effect of what was said, it should, as mentioned, be resolved in favour of the person who would be bound. Fourthly, it is permissible to have regard to what was said and done after the undertaking is said to have been given, in order to assist in resolving whether it was, and, if so, what its terms were ....

... The fact that undertakings should be recorded formally in writing in clear terms does not mean that the court is bound to conclude that, where that has not happened, no undertaking has been given. There is no rule that an undertaking given to the court must be recorded in writing before it can be effective. In other words, whether an undertaking has been given is ultimately a question of fact in each case. Equally, the fact that, in cases of doubt, an undertaking should be construed beneficially to the person who gave it, does not mean that the court should search for uncertainties or ambiguities in undertakings. Ultimately, an undertaking is to be interpreted in the same way as any other document (assuming that it is in documentary form, as it ought to be)".

On the facts the Court of Appeal, allowing the appeal, held that no undertaking had been given. with luck, if the court's words are heeded, this issue will never need to trouble any judge in patent proceedings again.