Actavis: England and Wales High Court Goes Cross-Border

Leading European patent litigator Richard Ebbink (Brinkhof) has penned the following comment on last week's Patent Court decision of Mr Justice Arnold in Actavis Group HF v Eli Lilly & Co [2012] EWHC 3316 (Pat):

Actavis: England and Wales High Court Goes Cross-Border 

Last year the United Kingdom's Supreme Court in a copyright case held that there was no doubt that the modern trend was in favour of the enforcement of foreign IP rights and that there are no issues of policy which militate against it --  nor is there any objection in principle. This could be different, the Supreme Court considered, where issues of validity are engaged (see Lucasfilm v Ainsworth, 27 July 2011, paras 108 and 109). Last week in Actavis v Lilly the High Court of England & Wales in a patent case held that it had jurisdiction to decide on a declaration of non-infringement not only regarding the GB part, but also regarding the French, the German, the Italian, and the Spanish part of the European patent at issue.

In Actavis v Lilly there were no issues of invalidity engaged because the plaintiff, Actavis, didn’t raise them and the defendant Eli Lilly didn’t either (they were the patentees, after all). Therefore Article 22(4) of the Brussels Regulation on Jurisdiction, which provides that validity is the exclusive domain of the country of registration, did not come into play. Lilly accepted this.

English service practice; English doctrine

The decision is not really concerned with cross-border issues under the Brussels Regulation on Jurisdiction (BR). It rather turned on issues of service and jurisdiction under English law. That was because Eli Lilly was a US domiciled entity which had not committed a tort in England, so that the Articles 2 and 5 BR could not be used as a basis for jurisdiction. Further to Article 4 BR the question then became whether the English court had jurisdiction against Lilly under English national procedural law. To establish this, the decision goes at length into all kinds of particularities of English procedural practice and law.

The first conclusion – based on correspondence between solicitors - was that Lilly had consented to being served in the UK and that, even if that would not have been the case, Lilly had been validly served in the UK because its European patent department constituted a place of business in the UK, proper for service. The second conclusion – based on the common law doctrine of forum non conveniens – was that the English court had jurisdiction over Eli Lilly for the cross-border non-infringement claims. This is where the Lucasfilm decision was leading.

Race to the Courthouse

Both conclusions were equally important because there had been a race to the courthouse:  having been put on notice by Actavis’ solicitors of its London cross-border non-infringement desires by letter of 12 July 2012, Eli Lilly instructed its German lawyers to file an infringement suit against Actavis in Düsseldorf. As it happened, the English team won the race: the English court was seised of the non-infringement matter on 27 July, the German court of the infringement matter on 31 July.

Since the London court also held that it had jurisdiction regarding the German non-infringement claim, under Article 27 BR the Düsseldorf court would have to suspend its proceedings until the decision of the English court on jurisdiction has become final.

The applicable laws

The 27 November decision contains some considerations on the applicable law and procedure. Further to EU Regulation 864/2007 (Rome II) the court will apply the relevant foreign laws to the cross-border parts of the claim. That is not a problematic prospect since Article 69 EPC (scope of protection) must be uniformly applied in every European country. As to any procedural and remedial questions the London court will apply English law as the lex fori. Both these positions (substantive law and procedural law) were common ground between the parties, as the decision records at the outset.

Artcile 69, Article 22(4), and Solvay v Honeywell

The decision spends a few words on the argument – ran by Lilly in the course of their forum non conveniens defence – that, even though validity was not challenged, under French law validity was relevant nevertheless because in France the prior art has to be taken into account when determining scope of protection, so that Article 22(4) – forcing the English court to stay the cross-border non-infringement proceedings -- would come in via the scope door.

The Patents Court (Mr Justice Arnold) was not impressed by this argument. One, the evidence cited for ‘the French approach’ to Article 69 was “less than compelling”, and two, the validity factor does not make any real difference for determining that the foreign court is the more appropriate court (as part of the forum non conveniens argument). For this conclusion the decision “by analogy” relies on the CJEU decision in Case C-616/10 (Solvay v Honeywell).

Solvay deals with a foreign invalidity defence raised in the course of proceedings for an interlocutory cross-border injunction. In case provisional jurisdiction is based on Article 31, the CJEU in Solvay held that the infringement court would not have to stay the cross-border part of the case. It is difficult to see an analogy with the Lilly situation (which, after all, was a case on the merits to which Article 31 was wholly irrelevant). Perhaps it was just that the English court felt more at ease to dismiss the Lilly ‘invalidity via the backdoor’ argument because Solvay did open some of the cross-border doors which GAT/LuK (Case C-4/03) had closed.

Conclusion

For a Continental observer it is difficult to judge the merits of the Lilly decision as to English proper service and forum non conveniens considerations. As to its cross-border consequences the decision should not be surprising, however. It is in line with the conclusion which under the Brussels Regulation has been confirmed to be the law several times: If there is jurisdiction based on domicile, the extent of this jurisdiction is worldwide and cannot be restricted on forum non conveniens grounds. See, for example, CJEU Cases C-69/93 (Shevill v Presse Alliance, 1995) and C-281/02 (Owusu, 2005).

Thanks so much, Richard, for your thoughts and analysis, which are very much appreciated.

Readers may also want to take a look at this note by the AdvoKat on the IPKat weblog here.