Alimta: no such thing as a contingent abuse of process

This is a shorter version of an IPKat post, here.

It's worth taking a look at Actavis UK Ltd v Eli Lilly & Company [2013] EWHC 3749 (Pat), a decision of Mr Justice Arnold in the Patents Court, England and Wales, on 27 November 2013.

Eli Lilly held a patent for a cancer-treating drug, Alimta. Actavis wanted to market its own cancer-treating drug on the expiry of Eli Lilly's Alimta SPC and sought declarations of non-infringement in advance of that date. Actavis also wished this issue to be determined with respect to French, German, Italian and Spanish designations of the same patent in a single trial, and commenced two actions which the court said it had jurisdiction to deal with, ordering them to be tried together.

Eli Lilly served a defence, maintaining that Actavis had no locus standi to bring the proceedings because it had failed to comply with French and Spanish procedural requirements to give three months and one month's notice respectively before commencing proceedings. Actavis disputed that French and Spanish law applied, but in any event began two further actions to assist in addressing Eli Lilly's procedural arguments. Eli Lilly then applied to stay the later actions pending the trial in the earlier actions on the basis that they were an abuse of process because Actavis only commenced them in order to circumvent the French and Spanish procedural requirements. Eli Lilly's position was that a stay would be appropriate because (i) if the earlier actions were held to be ill-founded, the later actions would be an abuse of process, and (ii) if the earlier actions were held to be well-founded the later actions would be unnecessary.

Arnold J refused the application for a stay. In his view:

* Eli Lilly had not sought to strike out the earlier actions as a abuse of process, but argued that there would be an abuse of process in respect of the later actions if the earlier actions were held to be ill-founded. However, it was not proper for a court to stigmatise a claim as an abuse of process on a contingent basis. The problem arose by virtue of the earlier actions and the consequences in terms of lis pendens that those actions had.

* If Eli Lilly was right to say that the consequences of those actions being pending was to prevent it from raising the procedural objections that it wished to raise in the later actions, that was a natural consequence of the existence of the earlier actions -- not the consequence of bringing the later actions.

* Despite its apparent logic, Eli Lilly's application was logically incoherent. Even if the later actions were stayed, the court would not have deseized itself of those actions. Accordingly they would have lis pendens priority and would prevent actions being taken in France and Spain. If Eli Lilly was right that the earlier actions were ill-founded, and if it was right as to the consequences, it could raise its abuse of process objections to the later actions at that time.

Should I Stay Or Should I Go?

One of the particularities of the German double-tracked patent litigation system with infringement judged at a court differing from the court judging validity (Bundespatentgericht) is the synchronization of these procedures.

In theory, both tracks are joined at the BGH acting as the 2nd instance in nullity and – if leave to revision is granted – as the 3rd instance in the infringement procedure. The decision not to grant leave to revision may be appealed in a so-called “Nichtzulassungsbeschwerde” (NZB), which may be based on the grounds of severe violations of the right to be heard or other grounds of fundamental importance. Isolated wrong decisions do usually not count among these grounds.

In a fairly surprising decision with the name “Crimpwerkzeug III” (see english summary here), the BGH found that differences in claim construction between the 2nd instance infringement proceedings and the 2nd instance nullity proceedings may in fact constitute such a ground of fundamental importance provided that the correct interpretation (i.e. that of the BGH) would have led to a differing result in the infringement proceedings. The main argument was that the persistence of and lack of legal remedies against such irreconcilable discrepancies between the two tracks would derogate the public reliance in the German double-tracked legal system as a whole.

As a matter of course, the assessment of the differing claim construction requires that both procedures are completed. As a consequence, it appeared to be mandatory for the BGH to stay the NZB procedure (and delay the legal force of the infringement sentence) until completion of the nullity/invalidity procedure after Crimpwerkzeug III. I presume that this has led to an increasing number of NZB procedures pending at the BGH.

The recent decision “Klimaschrank” has now put limits to the rule that the BGH has to stay the NZB procedure in these cases. The BGH emphasized that the decision to stay the procedure is not mandatory but still at the discretion of the senate and that a late filing of the nullity action (as compared to the filing of the infringement action) may be of some weight in favour of the patentee. In the case at issue, the nullity suit had been lodged eight months after the pronouncement of the infringement decision and only briefly after the publication of Crimpwerkzeug III.

In cases where the nullity action is filed more or less directly in response to the infringement action, it remains the standing advice to lodge a NZB if the district court decides on the infringement without waiting for the nullity procedure as a precautionary measure.

Impact of weblog on number of opponents: a form of abuse?

A practitioner acting for one of a number of opponents challenging a business method-type patent before the EPO has drawn the attention of PatLit to the fact that the proprietor's response contains an observation that opposition to its patent has been encouraged by a weblog, Schemaworks. According to the proprietor's response, this constitutes an abuse which also entitles to the proprietor to an award of costs based upon it. According to the response,

19 notices of oppositions have been filed naming 29 parties. It is believed that the large number of oppositions is due to a blog created by one Mikkel Hippe Brun which can be seen at http://blog.schemaworks.com/

For example, the blog has EPO Form 2300 available as a download to enable opponents to launch oppositions.

Whilst it is accepted that any person may give notice of opposition under Art. 99 EPC, it is submitted that setting up a blog to inundate the proprietor with oppositions is an abusive process which puts the proprietor as a relatively small company at a significant disadvantage. The proprietor requests that the Opposition Division bear this in mind during the opposition procedure, particularly with regard to requests for extension of time and an award of costs, if deemed appropriate.

While the large number of oppositions (19) and opponents (29) may well have been swollen by virtue of the blog, it is difficult to see how the use of a blog to support an opposition, whether by the opponent himself or by an interested third party, should make any difference to the outcome. The criteria of patentability, and of invalidity, remain unchanged and any patent that is granted without fulfilling them is vulnerable to an action for revocation at any time throughout its life. One might expect the use of blogs therefore to enhance the grant of quality patents.

Revocation proceedings not an abuse of process even if not commercially justified

In TNS Group Holdings Ltd v Neilsen Media Research Inc. [2009] EWHC 1160 (Pat), a decision of Mr Justice Arnold of 20 May, the Patents Court for England and Wales ruled that the Patents Act 1977, s.72(1), which states that "any person" may apply to revoke a granted patent, means exactly what it says. On this basis, the intention of a claimant in revocation proceedings is irrelevant and it is not therefore an abuse of process to bring a revocation action even if the applicant has no commercial reason to do so. In this case, the patent owner had offered the claimant a licence to use the patent (for television audience management measurement systems) on terms which -- though confidential -- must have been sufficiently attractive for the patentee to be able to argue that the plaintiff would be no better off if the patent were revoked than if it remained in force.

The judge went further: a claimant's declared intention to use validity decision in the United Kingdom as persuasive authority when seeking revocation in other European jurisdictions was legitimate, since consistency of decisions as between European jurisdictions is a desirable end. As he said (at para.26):

"It is commonplace for parties litigating on the same European patent in a number of Contracting States to put before the courts of one Contracting State decisions arrived at in one or more other Contracting States. I do not see that such conduct can possibly be stigmatised as an abuse of process. That is particularly so given that such judgments may come to the attention of courts in other Contracting States in any event. The courts of all the Contracting States are seeking to apply the same substantive law. It would be most unfortunate if anything were to be done which made it more difficult for the courts of the Contracting States to arrive at common answers to common questions".

Having so held, Arnold J in any event refused to stay the revocation action before him, pending the outcome of opposition proceedings in the European Patent Office since the EPO proceedings would take at least two years longer than a final decision in the UK courts.