Tag: Patent

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Autostore v Ocado. The High Court holds not entirely convincingly on applicable law to obligations of confidence in relation to high-stake patent infringement suit.

In Autostore Technology AS v Ocado Group Plc & Ors [2023] EWHC 716 (Pat), Claimant AutoStore is a Norwegian company, pioneer in automated warehouse technology. First defendant develops automated systems for use in large scale grocery businesses.  The second defendant is a joint venture between the first defendant and Marks & Spencer. Ocado is a former customer of AutoStore’s.

Ocado’s defences include that the patents were invalid due to prior non-confidential disclosures to two parties based in Russia, including EVS, a company based in St Petersburg, and Russia’s central bank.

‘Matter made available to the public’ is part of the ‘state of the art’ condition for patents (in the UK: s.2(2) of the 1977 Act). It may affect the novelty or obviousness of a patent: Subsections 2(1) and (2) of the Patents Act 1977 (“the 1977 Act”) provide:

“2. (1) An invention shall be taken to be new if it does not form part of the state of the art.

(2) The state of the art in the case of an invention shall be taken to comprise all matter (whether a product, a process, information about either, or anything else) which has at any time before the priority date of that invention been made available to the public (whether in the United Kingdom or elsewhere) by written or oral description, by use or in any other way.”

In support of their case of lack of novelty and inventive step Ocado rely on alleged prior disclosures to the Russian entities which Autostore say were made in confidence and could not therefore be part of the state of the art.

The section of the judgment that is of relevance to the blog (other than the brief reference to the TRIPS agreement [256]), is the qualification of the obligation not to disclose matter to the public, as (non)contractual, and the subsequent application of Rome II.  Hacon J summarises the issues [263] ff

Where a party relies on an express contractual restriction on the foreign disclosure of information, the effect of the alleged contract will be assessed according to the applicable law.  The party asserting the contractual restriction is obliged to plead the existence, the circumstances of formation and the relevant terms of the contract.  An English court seised will apply Rome I to determine which foreign law governs the contract.  The court will then decide whether, according to that law, there was an express term of confidentiality as alleged and whether its effect was to restrict the use of the information in issue.

The position is not so straightforward where it is said that a party in a foreign context was restrained from using information under an obligation that was not contractual – what an English court would recognise as an equitable obligation.

Rome II does not expressly recognise equitable obligations as a separate category. Clearly however they may still qualify as ‘non-contractual’.

[270 ff] Hacon J justifiably rejects Ocado’s assertion that Rome I and II dovetail. It is beyond doubt that not all obligations that are not contractual, must necessarily be covered by Rome II and vice versa.  Likewise, the overall application of Rome II clearly may imply non-contractual obligations that are putative. Meaning for the purposes of the application of Rome II, one may have to pretend for the time being that there are non-contractual obligations at play and that these are covered by Rome II, only for the so identified substantive lex causae to decide that there are not, after all, any non-contractual obligations at play.

Re the alleged disclosures made by the Bank, [276 ff] AutoStore’s primary contention is that the hypothetical breach of the alleged equitable obligation of confidence is correctly categorised as a culpa in contrahendo within the meaning of A12 Rome II, seeking support ia in CJEU Ergo. [286] It argues the respective obligations of confidentiality arose in the context of negotiations (with the Russian companies) which ultimately led to the conclusion of the Distribution Agreement governed by Norwegian law.  Consequently, the same law applies to the obligations of confidentiality.

However upon consideration the judge holds [298] – with much support found in prof Dickinson’s Rome II volume and his contribution on Rome II in Dicey’s 16th ed – that A12 does not apply to the alleged disclosures by the Bank, seeing as in his view A12 does not apply to third parties to the contractual negotiations, even agents of the contracting parties. There were no negotiations between AutoStore and the Bank and AutoStore for its own reasons wanted to ensure that any agreement reached would be with EVS and not the Bank.

Instead, [324] ff, the lex causae is held to have arisen out of an act of unfair competition within the meaning of A6 of Rome II. That is important, for Article 6 does not have an escape clause like Article 4(3).

Here, the judge’s reasoning is under par.

Oddly for instance he holds A6(2) is not engaged ia [335] ‘because the Bank is not a competitor of AutoStore’s’ yet he nevertheless applies A6(1): ‘the law applicable to a putative obligation of confidence on the Bank was the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected.’: this is not convincing.

Reference is then made by the judge to CJEU Verein für Konsumenteninformation v Amazon EU Sàrl , CJEU Volkswagen and to Celgard, and to the Mozaikbetrachtung present in particular in the latter case. However he then [351] holds that ‘attention must be paid to the hypothesis posited in this case. It is that the Bank was about to make Bank Bot Designs public or had already done so’, subsequently linking that [353] to the procedural relief Autosore would have hypothetically sought for the potential breach, in, the judge holds, Russia. Conclusion [354]: ‘Of the laws made applicable under art.6(1) of Rome II to apply to the question of confidentiality, the one that would have mattered on the hypothesis raised would have been Russian law.’ That link to procedural relief to me comes out of nowhere.

As for the relationship with EVS, [301] the question arises as to whether AutoStore and EVS contemplated a contractual relationship at the relevant times. The judge [302] holds that a theoretical possibility of the purchase of goods or services or of some other contractual relationship does not suffice to trigger A12: commercial parties are almost constantly on the look-out for such relationships. [322] after having considered the various arguments the judge holds that A12 is engaged vis-a-vis EVS, yet that the putative law of the contract cannot be determined by A12(1), hence requiring the application of A12(2)(a). The applicable law is the law of the country in which damage would hypothetically have occurred, here, it is held, Russia.

Applicable law for both claims having been held to be Russian law, the remainder of the judgment then deals with evidence of that law and the conclusion [396] that the information was disclosed without imposing any obligation of confidence on either EVS or the Bank.

As noted the A6 analysis in my view is appealable. For both the A6 and the A12 analysis it is also a pity and concern to see, once again, the English courts (chicken and egg-wise led of course by counsels’ probable absence of presentation of same) lack of engagement on issues of both acquired and retained EU conflict of laws, with scholarship outside of the UK and /or other than written in English.

Geert.

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IRnova v FLIR. CJEU would seem casually to reject reflexivity, and confirms narrow interpretation of A24(4) BIa’s exclusive jurisdictional rule for (in casu non-EU) patents.

Update 2 January 2023 Maxence Rivoir has an excellent note on the case in the CLJ here.

Lydia Lundstedt has prior review of the judgment in CJEU C-399/21 IRnova AB v FLIR Systems AB (who had been business partners in the past) here. Swedish courts are clearly busy referring the private international law elements of patent cases to the CJEU.

Of particular note is that a 3 judge chamber would seem to have ruled out reflexive effect as casually as if it were swatting a fly.

On 13 December 2019, IRnova brought an action before the Patent and Market Court seeking, inter alia, a declaration that it had a better right to the inventions covered by international patent applications, subsequently supplemented by European, US and Chinese patent applications deposited by FLIR in 2015 and 2016, and by US patents granted to FLIR on the basis of those latter applications. In support of that action, IRnova had stated, in essence, that those inventions had been made by one of its employees, meaning that that employee had to be regarded as their inventor or, at the very least, as their co-inventor. IRnova therefore argued that, as the inventor’s employer and thus successor in title, it had to be regarded as the owner of the inventions. However, FLIR, without having acquired those inventions or otherwise being entitled to do so, deposited the applications in its own name.

The court had dismissed jurisdiction viz the Chinese and US patent applications, and the US patents, on the ground, in essence, that it regarded the action concerning the determination of the inventor as being linked to the registration and validity of the patents, and it applied A24(4) BIa reflexively. The Appeals Court referred the issue on reflexive effect to the CJEU, in the following terms:

‘Is an action seeking a declaration of better entitlement to an invention, based on a claim of inventorship or co-inventorship according to national patent applications and patents registered in a non-Member State, covered by exclusive jurisdiction for the purposes of Article 24(4) of [the Brussels Ia Regulation]?’

however the CJEU reformulated [22-24] the case as not concerning reflexive effect at all, rather, enquiring about the scope of the A24(4) gateway.

The Court first of all [25] ff makes a point of confirming its broad reading of the ‘international’ element required to trigger European private international law, referring to CJEU Owusu.

It then [35] would seem to rule out reflexivity in a very matter of factly way (and as Lydia also noted, without AG Opinion) and despite as noted having earlier reformulated the question away from reflexivity:

as has already been pointed out in paragraph 26 of the present judgment, the patent applications at issue in the main proceedings were deposited and the patents concerned were granted not in a Member State, but in third countries, namely the United States and China. As Article 24(4) of the Brussels Ia Regulation does not envisage that situation, however, that provision cannot be regarded as applicable to the main proceedings.

This may have already answered a core question in  BSH Hausgeräte v Aktiebolaget Electrolux.

[36] ff it adds (‘in any event’) reference ia to CJEU Hanssen and to the exceptional nature of A24 [39]. It holds that [42]

the main proceedings relate not to the existence of the deposit of a patent application or the grant of a patent, the validity or lapse of a patent, or indeed an alleged right of priority by reason of an earlier deposit, but to whether FLIR must be regarded as being the proprietor of the right to the inventions concerned or to a portion of them.

[47] it refers ia to the fact that fact that

an examination of the claims of the patent or patent application at issue may have to be carried out in the light of the substantive patent law of the country in which that application was deposited or that patent was granted [however it ] does not require the application of the rule of exclusive jurisdiction laid down in Article 24(4) of the Brussels Ia Regulation

The operative part of the judgment refers both to the A24(4) restrictive interpretation element and to the third countries element hence once cannot simply regard the reflexivity issue as obiter.

Much relevant and surprisingly succinct on the reflexivity issue.

Geert.

EU Private International Law, 3rd ed. 2021, 2.208 and 2.548.

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Vestel v Philips. Court of Appeal rejects attempt to ground jurisdiction on a claim requalified from abuse of dominance to patent DNI.

In Vestel Elektronik Sanayi Ve Ticaret A.S. & Anor v Access Advance LLC & Anor [2021] EWCA Civ 440 – also known as Vestel v Philips, the Court of Appeal has rejected an attempt to establish jurisdiction for the Courts of England and Wales in a stand-alone competition law damages case.

Hacon J had earlier rejected jurisdiction in the claim which at first instance was formulated as an abuse of dominance claim. That claim was now reformulated with Birss LJ’s permission [30], with the relevant tort being the tort of patent infringement, and in effect the claim a negative declaration relating to that patent. That a claim for declaration of non-liability in tort (‘a ‘negative declaration’) may be covered by A7(2) BIa, was confirmed by the CJEU in C-133/11 Folien Fischer. In the case art issue, it would require Vestel to show it had not infringed a valid IP right. However Birss LJ holds that Vestel’s claim, aimed at obtaining a FRAND declaration for the patented technology (Vestel needs a licence for the technology patented by Philips, and wants it at FRAND terms: Fair, Reasonable and Non-Discriminatory).

The declarations sought by Vestel, after dropping the abuse of dominance plea, are in this form [49]: i) A declaration that the terms offered are not FRAND; ii) A declaration that the terms of Vestel’s counter-offer are FRAND; and  iii) Alternatively, a declaration as to the terms which would be FRAND. these, is it held, are not declarations of non-liability in tort. Vestel have not been given right to access the IPRs. They seek that right in specified terms. They cannot claim that a hypothetical right of entry can proactively ground jurisdiction on the ground that the non-existing access has not been transgressed. As Birss LJ puts it: ‘Vestel’s position is like that of a trespasser with no right to enter the property claiming that if they had permission then it would not be a trespass.’

This was a creative jurisdictional attempt. I think it justifiably failed.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.198; para 2.454.

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Philips v TCL. On lis alibi pendens /res judicata, and FRAND proceedings.

In Koninklijke Philips NV v Tinno Mobile Technology Corporation & Ors [2020] EWHC 2553 (Ch) Mann J considers the English side of a licence on  ‘FRAND’ (fair, reasonable and non-discriminatory) terms.  In these English proceedings Philips seek inter alia, a declaration that the terms it has offered are FRAND, or alternatively that FRAND terms be determined. Its injunction claim accepts that the injunction will only come into force if a worldwide FRAND licence is not accepted by TCL, one of the defendants who is seeking the licence. TCL have commenced proceedings in France which, inter alia, seem to seek to have FRAND terms determined. Philips attempted to have those proceedings stayed pursuant to Article 29 Brussels Ia, but that attempt failed, as did an application for a stay under Article 30 BIa. In turn, not surprisingly, TCL seek a stay of the English proceedings, including, crucially, the vacation of a trial date in November which is intended to determine FRAND issues, in favour of its French proceedings pursuant to the same Articles 29 and/or 30 Brussels Ia.

Philips’ claim form says it is for infringement of two of its European patents, corresponding injunction (prohibiting further infringement) and damages or an account of profits, and other ancillary relief.

At 49 in assessing the impact of the French judgment and the scope of its res judicata, Mann J justifiable refers to C-456/11 Gothaer, that it is not just the ‘dispositif’ of a judgment which has res judicata, but also the core reasoning: at 40 of the CJEU judgment: ‘the concept of res judicata under European Union law does not attach only to the operative part of the judgment in question, but also attaches to the ratio decidendi of that judgment, which provides the necessary underpinning for the operative part and is inseparable from it …’

His enquiry of the dispositif and the French judge’s reasoning as well as, to a certain extent, the submissions of the parties, leads Mann J to conclude that the French judge did not hold that the French court was first seized of FRAND proceedings. Instead, she held that the proceedings in England and the proceedings in France did not (for the purposes of A29) have the same subject matter. That means that the question of first seised became irrelevant.

Mann J then holds himself that the English court was first seized of the FRAND issue and consequently has no power under A30 BIa to stay its proceedings. It was suggested in vain by counsel for the defendants that Articles 29 and 30 are not acte clair on the point of new actions arising in an existing action, given a distinction between the word “proceedings” in Article 29 and “actions” in Article 30 at least in the English version of those Articles.

The jurisdictional challenge was rejected and the relief granted.
Geert.
(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5.
Third edition forthcoming February 2021.
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Cyberinsults over patents, unfair competition and jurisdiction. The Paris Court of Appeal in Manitou v JCB.

In Manitou v J.C. Bamford Excavators, (defendant is better known as ‘JCB’ which in England is an eponym for ‘digger’ or excavator) the Paris Court of Appeal held that French Courts have jurisdiction in an interesting tale of patent insults. JCB (England incorporated) had obtained a French injunction against Manitou (domiciled at France) obliging it to halt production of one of its products possibly in violation of a JCB patent. On the eve of an important trade fair taking place in France, JCB boasted about the injunction in a Twitter, Linked-in and website post. Manitou argue the post was insulting and an act of unfair competition.

Manitou claim jurisdiction on the basis of A7(2) BIa, special jurisdiction for tort, per CJEU C-618/15 Concurrences /Samsumg /Amazon, which I reviewed here. It refers to all sites on which the news was posted being accessible in France (Pinckney would have been strong authority here); to the post discussing a French judgment which is only aimed at and enforceable in France; and that its publication was timed to coincide with the aforementioned French fair. JCB on the other hand argue mere accessibility does not suffice and that the sites did not target readers in France.

The Court refers both to Shevill and to Concurrences; decides that the very fact that the site was published in English does not insulate it from French jurisdiction (seeing also that plenty of potential clients looking to buy from Manitou at the time would have been in France for the fair); and that the publication clearly would have affected the brand’s reputation in France and also its sales there. Jurisdiction therefore established.

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2

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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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Eli Lilly v Genentech: When does a patent infringement case turn into questions of validity? – and its impact on cost findings.

I explained the issue in [2017] EWHC 3104 (Pat) Eli Lily v Genentech in my posting on Chugai v UCB. A defendant in a patent infringement case often tries to make the case that the suit is about patent invalidity really: for this obliges the court per GAT v Luk to refer (only the) invalidity issue to the court with exclusive jurisdiction under Article 24(4) Brussels I Recast.

Here, Eli Lily seek a declaration of non infringement of a bundle of European patents held by Genentech, a US-incorporated firm.

Birss J in the case summarises all relevant precedent, including Chugai, to reach the conclusion that the suit can stay in the UK.

Of note is his holding on costs. The English courts do not just review whether the case is currently about validity but also what the likelihood is that it will become one on validity. For if it does later on, Birss J suggests ‘this entire exercise will have been something of a charade‘ (at 84). (Which is not quite the case: even if the validity issue needs to be temporarily outsourced to different courts, the infringement issue may later return to the courts of England).

On this point, Eli Lilly refuse to disclose whether they may seek a ruling on the validity of the patents: they would rather wait to see Genentech’s defence. Not an unacceptable position, but one, High Court does warn, which will have an impact on costs. At 87: ‘I am satisfied that these unusual circumstances mean that it would not be fair to pre-empt what each party may decide to do. There are sufficient uncertainties that the right thing to do is wait and see what happens. However in my firm but necessarily provisional view that wait should be at Lilly’s risk as to costs. If Genentech does counterclaim for infringement, and validity of the non-UK patents is put in issue (here or abroad) in response, then it is very likely that Lilly should bear the whole costs of this application even if they win it in its form today.‘

That latter point is interesting. It’s twice now this week that judgments come to my attention where jurisdictional considerations are clothed in costs implications.

Geert.

(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.7.

 

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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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Actavis v Eli Lilly. On the extent to which patent DNIs (Declarations of non-Infringement) are covered by Rome II’s exception for procedure.

Update 14 July 2017 the judgment was overturned by the Supreme Court [2017] UKSC 48, albeit not on the issues discussed here.

Actavis UK Ltd & Ors v Eli Lilly & Company [2015] EWCA Civ 555 discusses ia, at 100 ff, the question whether under Rome II the English court must apply the corresponding foreign laws governing the conditions for applying for patent ‘declarations of non-infringement’ (DNIs) in each of the foreign jurisdictions, or whether English law, as the lex fori, applies. English law takes  a more relaxed attitude amongst the EU Member States re what must be shown before a party can apply to the court for a DNI.

Are the rules for obtaining DNIs matters of procedure, falling outside the scope of Rome II per Article 1(3)? The judge whose findings were being appealed had held that DNI standing rules are not concerned with the substantive rights and obligations of the parties with regard to infringement of the patent in suit: they fall under the procedural exception. Viz the argument that Article 15(c) (A15 deals with the ‘scope of the law applicable’) he had held that there is a distinction to be drawn between the availability in principle of a remedy and the steps which must be taken in order to obtain that remedy. It was in his judgment only the former which was caught by Article 15 and made subject to the lex causae.

Longmore LJ at 138 referred to Wall v Mutelle de Poitiers Assurances and agreed with the first instance judge that the rules with which the case is concerned are conditions of admissibility of actions, rather than rules concerned with the substance or content of parties’ rights. They are covered by the exception for procedure and hence subject to the lex fori, English law. At 144 ff he rejects the applicability of specific parts of Article 15 to the various conditions relating to DNIs.

Interesting and relevant.

Geert.

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

 

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Actavis v Eli Lilly in the High Court: Better reach for a tablet when litigating patents.

In [2012] EWHC 3316 (Pat) Actavis v Eli Lilly, the High Court (Patents) upheld jurisdiction for the English courts to hear a case in which applicant seeks a pan-European declaration of non-infringement of a patent. Actavis, a generics manufacturer, sought declaration that it had not infringed Eli Lilly’s patent for Permetrexed, a cancer treatment.

Arnold J, along the lines of  the Supreme Court’s decision in Lucasfilm v Ainsworth, held that forum non conveniens arguments would not sway the Court towards declining jurisdiction for the non-UK parts of the declaration (Germany, France, Italy, Spain).  Arnold J referred to the de facto approximation of patent law in the various EU Member States:

‘As to the different national approaches, I accept that there are differences. In my view, however, the differences are rather less now than they have been in the past. Certainly, in recent years the European patent judiciary have been striving for consistency. I am sceptical that the remaining differences of approach, as opposed to other factors, are responsible for different outcomes in parallel cases. In any event, it seems to me to be manifest that it will reduce the likelihood of inconsistent decisions if one court at first instance and one court on appeal determines all five of Actavis’ claims. ‘

The judgment adds to the layer of complexity in intellectual property litigation. Prima facie the judgment may offer a great means to have pan-European patent infringement cases held in England (the very reference to a number of pending trial dates even in Germany, quietly underline the speed with which the UK can hear cases such as these).

Distinguishing is however of the essence:

– Actavis are headquartered in Switzerland (one will recall that under the Brussels I Regulation, the plaintiff’s domicile or nationality is generally irrelevant). Defendant is domiciled in the State of Indiana, United States. The declarations are not sought against any EU domiciled companies – Brussels I is not applicable. The outcome may be entirely different had the opposite been the case.

– The validity of Lilly’s patent is not sub judice. This too, even outside the Jurisdiction Regulation (where the exclusive ground of Article 22(4) would have trumped English jurisdiction), may have led to a different outcome under forum non conveniens arguments.

– Arnold J’s suggestion of de facto approximation may not hold with the ECJ for actions which do come within the Jurisdiction Regulation. As reported on this blog, even in Solvay, the ECJ  does not drop its insistence per Roche that de lege lata, European patent law remains national.

All of this may lead indeed to the awkward result that patent infringement cases are more swiftly and expertly dealt with in EU courts against non-EU defendants, then against EU defendants.

Geert.

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