Posts Tagged IPR

Glaxo v Sandoz. Collateral use of evidence. Discovery (‘disclosure’) shopping at the High Court.

Update 22 March 2019 for a similar application in the US, see Postalis, No. 18-mc-497 (JGK), analysed by Laura Kelly.

Glaxo Welcome v Sandoz et al  [2018] EWHC 3229 (Ch),  puts the spotlight on an important part of international forum shopping, namely discovery /disclosure, in particular collateral use of document obtained in one jurisdiction, in litigation in another. What is fundamentally at stake is that the launch of proceedings in a discovery friendly jurisdiction, may be simply employed as a jack for obtaining evidence to be used in a discovery-heavy jurisdiction. (A few months back the principles were also applied in Buzzfeed v Gubarev [2018] EWHC 1201 (QB)

Claimants apply for an order permitting the second claimant to use certain documents disclosed by some of the defendants (“the Sandoz Defendants”) in the claim in the English courts, in a claim in Belgium between the second claimant and Sandoz NV (“Sandoz Belgium”). The two claims are part of global litigation between members of the GlaxoSmithKline and Sandoz groups of companies. In Europe there are claims in several jurisdictions including England and Wales, The Republic of Ireland, Germany, The Netherlands and Belgium. The disclosure exercise between the claimants and the Sandoz Defendants has been very substantial. It involved the Sandoz Defendants reviewing 406,300 documents using 50 legally qualified reviewers. This led to the subsequent disclosure of slightly in excess of 75,000 documents to the claimants.

As Marsh CM notes at 11, ‘There is a marked contrast in the manner in which litigation is conducted in England and Wales on the one hand and Belgium (and most other Civil law countries) on the other hand. In England and Wales, the ability to obtain disclosure that is adverse to the other party’s claim is an important feature of litigation. However, the evidence provided in connection with the application shows that disclosure is only available in a very limited form in Belgium. One of the issues to be determined is whether disclosure obtained in this jurisdiction should be made available to a party that is engaged in litigation in a jurisdiction where disclosure, if not unknown, is very limited in scope.’

He is of course spot on: obtaining relevant documentation from the other party is not easily done in Belgium (and elsewhere) and often needs to be deduced from final filings of submissions or indeed at the hearing stage.

Relevant authority is discussed at 22 ff., and is really quite relevant: the discussion shows among others great consideration of rule of law concerns, mutual trust between EU Member States and Council of Europe parties, and the relevance of applicable law in the assessment (at 22(5): ‘The Belgian Claim proceeds under harmonised EU law as set out in the Trade Mark Directive. It follows that the English court is in a better position to consider initial relevance of the documents to the issues in the Belgian Claim than would be the case were the claim to be one brought under domestic Belgian law’).’

Final conclusion is in favour of collateral use of a substantial amount of documents. It is worth copying Marsh CM’s reasons in full: at 60:

(1)    The parties to this claim, and associated companies, are engaged in litigation on a very wide scale in many jurisdictions. They are part of very substantial businesses with equal resources. There is no suggestion that the application is oppressive.

(2)    Although the legal basis for this claim and the Belgian Claim are markedly different, there are similarities between some of the issues that are engaged.

(3)    The claimants have been able to satisfy the court that the majority of the documents they seek to use are likely to be relevant to the Belgian Claim. The interests of justice would therefore militate in favour of the claimants having an opportunity to obtain advice about their use in the Belgian Claim.

(4)    Use of the documents to enable the second claimant to consider whether, having obtained advice, a claim against additional parties should be pursued is, to my mind, more compelling than use of documents in connection with the Belgian Claim. There are no risks of adversely affecting the existing proceedings. The court should be slow to stand in the way of a party who wishes to obtain advice about pursuing a lawful course of action.

(5)    There is now an agreed procedure for the orderly progress of the appeal in Brussels with the second claimant filing an additional brief followed by Sandoz Belgium. The disruption, if any, by the introduction of additional documents has been minimised.

(6)    The number of documents the claimants seek to use is relatively small. Those that may be used in the Belgian Claim are not disproportionate in volume to what is at stake in those proceedings. There is no real danger that the Belgian Claim will be overwhelmed with additional documents even if all of them are deployed and Sandoz Belgium considers it is necessary to file additional documents to counter documents having been ‘cherry picked’ by the claimants.

(7)    The difference of approach between litigation in England and Belgium is a factor, but one of limited weight. There is no suggestion that the use of documents obtained in disclosure is an abuse of this court’s process. The risk of the Belgian Court’s process being subverted by the introduction of disclosure documents is marginal, particularly bearing in mind the involvement of the Belgian lawyers and the procedure that has been agreed.

(8)    I accept Mr Hickman’s submission in relation to the documents exhibited to Morris 7. The documents that are exhibited were extensively discussed in the witness statement which was read by the Deputy Judge. Although the claimants do not make an application for a declaration that they are permitted to use those documents as of right, the documents have been legitimately deployed for the purposes of an application heard in open court (subject only to the pro tem confidentiality order).

(9)    It is not open to the Sandoz Defendants to say, and they have not submitted, that if the order permitting use of the documents is made, their position in the Belgian Claim is prejudiced, in the sense that the likelihood of them successfully prosecuting the claim and/or defending the counterclaim is reduced. The interests of justice require that material which is likely to be relevant should be permitted for proper purposes. A reduction in their prospects of success is an immaterial consideration in their favour and, if anything, it weighs in the balance in favour of the claimant.

 

Geert.

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Clutching at jurisdictional straws as short as hotpants. Suing Google for hotlinkers: High Court refuses service out of jurisdiction in Wheat v Alphabet /Google Inc and Monaco Telecom.

Hotlinking is explained at para 17 of [2018] EWHC 550 (Ch) Wheat v Alphabet /Google Inc and Monaco Telecom. (Cross-reference is also made to the related main case against Monaco Telecom, [2017] EWHC 3150 (Ch)). The principal claim against Monaco Telecom is that it has broadcast, and continues to broadcast, an unauthorised duplicate of theirearth.com – claimant’s website. Google is involved in the litigation because claimant alleges that Google’s search engine algorithm has done little to address hotlinking practice, which, it is said, facilitates copyright infringement.

Both cases are a good example of the standards for serving out of jurisdiction, essentially, to what degree courts of the UK should accept jurisdiction against non-UK defendants (here: with claimants resident in the UK). The Brussels I Recast Regulation is not engaged in either cases for neither Monaco nor Alphabet are EU based.

Copyright aficionados are best referred to the judgment to appreciate its impact. The judgment essentially confirms that other than in a B2C context (particularly where EU law applies and privacy is involved), suing (for tort) Google or indeed internet companies not headquartered here, is not an easy proposition.

Geert.

 

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DNIs, patents, exhaustion and jurisdiction under Lugano: Parainen Pearl v Jebsen Skipsrederi.

A case title which sounds a bit like a Scandinavian crimi – that’s because it almost is. In [2017] EWHC 2570 (Pat) Parainen Pearl et al v Jebsen Skipsrederi et al the facts amounted to claimants, who had purchased a vessel containing a pneumatic cement system patented by defendant (a company domiciled in Norway), seeking a declaration of non-infringement (DNI) of said patent. The purchase was somewhat downstream for the vessel had been sold a number of times before.

Claimants suggested jurisdiction for the UK courts for DNIs relating effectively to the whole of the EEA (at least under their reasoning; the specific countries sought were Sweden and Finland). For the English (and Welsh side of things jurisdiction is established without discussion under Article 5(3) Lugano, forum delicti. Reference was made to Wintersteiger and to Folien Fischer.

Claimants suggested that by the first sale to the original owner, defendants had ‘exhausted’ their intellectual property thus rendering the vessel into a good free to sold across the EEA. Should the court agree with that view, that finding of exhaustion would have to be accepted, still the argument went, across the EEA. Hence, an initial finding of exhaustion, given the need to apply EEA law the same in all EEA Member States, would have to be accepted by all other States and conversely this would give the English courts jurisdiction for pan-EEA DNIs.

Arnold J refers to among others Roche, Actavis v Eli Lilly, Marzillier. He holds that a potential finding by an English court of exhaustion may not necessarily be recognised and enforced by other courts in the EU or indeed EEA: it is not for the UK courts to presume that this will be so (despite their being little room for others in the EEA to refuse to enforce): ‘(Counsel for claimant) argued that.., on a proper application of European law, there could only be one answer as to whether or not the Defendants’ rights under the Patent in respect of the Vessel had been exhausted. In my view, however, it does not follow that it would be proper for this Court to exercise jurisdiction over matters that, under the scheme of the Lugano Convention, lie within the province of the courts of other Contracting States.’

Article 5(3) which works for UK jurisdiction, can then as it were not be used as a joinder-type (Article 6(1) Lugano; Article 8(1) Brussels I Recast) bridgehead for jurisdiction on further claims.

Conclusion: UK courts have no jurisdiction in so far as the DNIs extend beyond the UK designation of the Patent.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.4, Heading 2.2.12.1.

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Rulings on costs and their impact on the effet utile of EU civil procedure. The High Court in PABLO STAR re copyright infringement.

In [2017] EWHC 2541 (IPEC) Pablo Star Media v Richard Bowen the issue was one over copyright infringement relating to a photograph of Dylan Thomas. Of interest to this blog is not the copyright issue or the height of damages relating to same – I am not a specialist in that area. (As far as the jurisdictional issues are concerned, there is a slightly muddled reference to the Brussels I Recast and various other Regulations including Regulation 542/2014 which I discussed here).

What did trigger my interest, though, is the ruling on costs.

At 33-34 Hacon J quotes the District Judge’s reasoning for obliging claimant (Pablo Star) to pay part of the defendant’s cost, despite having won the case. In that cost award, the District Judge scolds claimant for having initiated proceedings in Ireland as well as the UK, and for considering (or threatening, as the case may be) litigation in the US. The High Court at 38 and 41 leaves aside the proceedings in Ireland as a factor to consider, and now limits the reasoning for the award on cost to the potential proceedings in the US.

Now, costs determination largely is within the realm of national rules of civil procedure. Sometimes, EU and /or international law has a direct impact on cost determination, such as for instance in the case of Aarhus and environmental litigation; or, importantly for the case at issue, Directive 2004/48 on intellectual property rights enforcement (the enforcement Directive). This Directive provides in Article 14 on legal costs

‘Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this.’

That Directive was applied in CJEU C-57/15 UVP v Telenet, expressly condemning Belgium’s restrictive regime on cost recovery in intellectual property cases. The High Court’s finding on cost may to my mind be at odds with that ruling.

More generally, the District Judge’s reference to claimant’s Irish proceedings contributing to the judge’s finding on cost, without a doubt is an infringement of the effet utile of the EU’s jurisdictional regimes. Claimant has a certain right to sue in Ireland and that possibility must in no way be disciplined.  Hacon J at the High Court, purposely or not, may have insulated himself from criticism at this point, by leaving the Irish proceedings outside the consideration and only referring to the threat of US proceedings as relevant for partially shifting costs to the plaintiff.

Absolute numbers in the case are not high. Yet the principle to my mind deserves right to appeal at the CA and, from there on, potentially to the CJEU.

Geert.

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Chugai v UCB: When does one litigate not just the scope but also the validity of a patent?

Update 31 August 2018 the merits of the case were subsequently held in August 2018,  [2018] EWHC 2264 (Pat).

End of exam season (sadly not yet of marking marathon). In the next few weeks I shall be posting on judgments issued a little or longer while ago, which I was pondering to use in exams. (I did for some of them).

In [2017] EWHC 1216 (Pat) Chugai Pharmaceutical v UCB the issue at stake was to what degree a suit seeking to establish absence of liability under a patent license, in reality provokes argument on the validity of the patent. Carr J has excellent review of precedent, much of which has passed in one way or another on this blog. Please do refer to judgment for proper reading.

Claimant (“Chugai”) seeks a declaration against the Defendants (collectively “UCB”) that it is not obliged to continue to pay royalties under a patent licence (“the Licence”) granted by the First Defendant (“UCB Pharma”).  UCB Pharma is a Belgian company with an English branch which entered into the Licence with Chugai in respect of a portfolio of patents. Chugai claims that its products, which are, in part, manufactured and sold in the USA, fall outside the scope of the claims of the Patent concerned. Accordingly, Chugai seeks a declaration that it owes no royalties for the manufacture and sale of these drugs manufactured after a certain date.

UCB alleges that, although framed as a claim for a declaration relating to a contract, a part of these proceedings, in substance, concerns not only the scope but also the validity of the Patent. UCB submits that the validity of a US patent is non-justiciable, since the English court has no power to determine the validity of a foreign patent. Accordingly, it submits that those parts of Chugai’s pleading which are said to raise issues of invalidity fall outside the subject matter jurisdiction of the English court.

European private international law as readers will know lays greats emphasis on exclusive jurisdiction in the case of validity of patents. The CJEU’s holding in C-4/03 Gat v Luk that nullity actions against a national part of a certain European patent can only be conducted in the jurisdiction for which that patent was registered, regardless of whether the nullity argument is raised in the suit or by way of defence, is now included verbatim in Article 24(4) Brussels I Recast. The EU’s take is rooted in the idea that the grant of a national patent is “an exercise of national sovereignty” (Jenard Report on the Brussels Convention (OJ 1979 C59, pp 1, 36)). The rule therefore engages the Act of State doctrine, and suggests that comity requires the courts of States other than the State of issue, to keep their hands off the case.

Particularly in cases where defendant is accused of having infringed a patent, this rule gives it a great possibility to stall proceedings. Where the action is ‘passive’, with plaintiff aiming to establish no infringement, the argument that the suit really involves validity of patent is less easily made.

The possibility of ‘torpedo’ abuse, coupled with less deference to the jurisdictional consequences of the Act of State doctrine [particularly its contested extension to intellectual property rights], means the English courts in particular are becoming less impressed with the exclusivity. (Albeit Carr J on balance decides per curiam (at 73-74) that direct challenges to the validity of foreign patents should not be justiciable in the English courts). Where the EU Regulation applies, they do not have much choice. Carr J refers to [2016] EWHC 1722 (Pat) Anan where claimant sought to carve out issues of validity by seeking a declaration that the defendant’s acts infringed a German patent “if the German designation is invalid (which is to be determined by the German courts)“.  EU law meant this attempt could not be honoured. Carr J however suggests that EU rules have no direct application in the present case because the Patent at stake is a United States patent. That is spot on, on the facts of the case: choice of court having been made in favour of the English courts, the case does not fall under the amended lis alibi pendens rule of the Brussels I Recast. In Article 33 juncto recital 24, reflexive effect is suggested for the Regulation’s exclusive jurisdictional rules, leaving a Member State court in a position (not: under an obligation) to give way to pending litigation in third countries, if its own jurisdiction is based on a non-exlusive jurisdictional rule (Articles 4, 7, 8 or 9) and not within the context of the protected categories.

Allow me to lean on 20 Essex Street’s conclusion in their review of the case: Carr J held that the case before him was not a direct challenge to validity. He accepted Chugai’s submissions that its claim was contractual. Disputed parts of the patent were incidental to the essential nature of its claim, which was a claim for determination of its royalty obligations. In his view, this claim fell within the exclusive jurisdiction clause, in favour of the English courts, which parties had agreed.

Essential reading for IP litigators.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.7.

 

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Trusts (Stiftung) and estate planning. You cannot have your cake, and eat it.

One cannot have one’s cake and eat it. Meaning once the cake has been eaten, it is gone and you no longer have it. (Apologies but this saying is so often misunderstood I thought I should clarify).

Anyways, the Flemish tax administration had something along these lines in mind when it recently ruled in a case involving a Liechtenstein Stiftung. Many thanks to De Broeck & Van Laere for bringing the ruling to my attention. The Inland Revenue generally employ quite a lot of deference towards trusts and Stiftungs of all kind. In the case at hand however it requalified the transfer of means from the Stiftung to the heirs of the deceased, as being of a contractual nature. That is because the deceased, upon creation of the Stiftung, had issued such precise instructions in the Stiftung’s by-laws, that the hands of the trustees (or equivalent thereof) had been tied.  This essentially takes away a crucial part of the Stiftung’s nature, and no longer shields the assets from the (Flemish) taxman. The cake has been eaten.

Geert.

 

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Unjust enrichment under Rome II. The High Court in Banque Cantonale de Genève.

RPC and Sarah Shaul it seems, like me, are hoovering up database backlog – once again thank you to their excellent blog for alerting me to Banque Cantonale de Genève v Polevent. Other than the direct impact for the interpretation of Rome II‘s Article 10, and its relation with Article 4’s general rule, an important lesson from the case to me seems to be, yet again, the relevance of the articulation of claims, for the determination of jurisdiction.

Facts are as follows (at 2 ff). Claimant (“BCGE”) is a bank in Geneva. On 24 March 2104 a man calling himself Mr. Dumas telephoned BCGE and asked to speak to Yvan Nicolet of the accounting department. He was not in the office and so the call was taken by Jacqueline Konrad-Bertherin. Mr. Dumas asked her to send a confidential message to what he said was the private mail address of Eric Bourgeaux, the deputy CEO of BCGE. She did so and received a reply from someone claiming to be Mr. Bourgeaux instructing her to pay Euro 6,870,058 from BCGE to the Natwest Bank in London in favour of Polevent Limited. She did so. She believed she had been instructed to do so by Mr. Bourgeaux; but she had not been. The fraud was discovered and repayment was requested later that day.

Shortly before the fraud Natwest had been advised of a freezing order against Polevent in favour of an Italian company Enoi SpA (“Enoi”). The funds were therefore frozen in Polevent’s account with Natwest. BCGE has claimed damages from Polevent for deceit. BCGE accepts that that claim is governed by the law of Geneva. It has also advanced a claim against Polevent in restitution on the basis that the sum was paid by mistake. It claims that since Polevent must have realised that the sum was paid by mistake the conscience of Polevent was affected such that a constructive trust arises thereby providing BCGE with a proprietary claim in respect of the frozen funds. BCGE says that this proprietary claim is governed by English law.

Enoi is another creditor of Polevent. Enoi maintains that BCGE’s claim for restitution, in common with the claim is in deceit, is governed by the law of Geneva which does not recognise a proprietary claim. The resulting dispute is therefore between two creditors of Polevent. That company is in liquidation and has taken no part in this dispute.

 

The only preliminary issue which the High Court was asked to adjudicate on is worth repeating in full:

“On the basis of the facts as pleaded in the Amended Particulars of Claim and on the basis that the claim set out at paragraph 13 of the Amended particulars of Claim is governed by the law of Geneva, are the claims set out at paragraph 15 of the Amended particulars of Claim governed by English law or by the law of Geneva ? ”

One can appreciate why two different claims were formulated here.

For the claim in damages for deceit, BCGE accept Geneva law applies. The claim for restitution on the basis of unjust enrichment, however, is covered in its view by Article 10(3) Rome II: the law of the place in which the unjust enrichment took place, this being England, hence allowing for the existence of a constructive trust and priority in the pecking order following Polevent’s insolvency.

Enoi argue that the claim in restitution, like the claim in damages, is covered by the law of Geneva: at 9:

The submission of counsel for Enoi is that the law governing the claim in restitution is the law of Geneva by reason of Article 4(1) of Rome II. The claim arises out of the tort/delict of fraud and so the governing law is that of the place in which the damage occurred, namely, Geneva. Alternatively, the governing law is the law of Geneva pursuant to Article 10(1) on the grounds that the unjust enrichment concerns a relationship arising out of a tort/delict such that the governing law is that which governs that relationship, namely, the law of Geneva. In the further alternative the governing law is the law of Geneva pursuant to Article 10(4) on the grounds that the obligation arising out of the unjust enrichment is manifestly more closely connected with Geneva.

Both parties of course reverse engineer their governing law arguments: being aware of the attraction of one State’s laws over the other, counsel brief is to convince the court that the matter is characterised so that it leads to the warranted applicable law.

Enoi suggest that BCGE in reality have one claim only: one in fraud, a tort, it argues, from which the claim in unjust enrichment follows in a dependent fashion. Teare J disagrees (at 13). A claim in restitution need not be fault-based. It is a separate claim, to which Article 10’s regime applies (in the end leading to a finding of English law).

The judgment is in fact quite short. Its crucial implication to me would seem to be that BCGE has won the day by formulating two separate heads of action. Teare J acknowledges that his view may be an ‘unduly English law’ view, in other words, that he read the formulation of two claims at face value, as being two separate claims, because English law recognises non-fault based unjust enrichment. Regardless of the fact that other States, including European States, do so too, the obvious question is whether the EU’s qualification would be the same. The concept of unjust enrichment, like the concept of tort, necessarily needs to be an ‘autonomous’ one. Yet without much guidance in the preparatory works of Rome II on this concept, who can blame national law for filling in the blanks?

Geert.

(Handbook EU Private International Law, 2nd ed 2016, Chapter 4, Heading 4.7).

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