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You are here: BAILII >> Databases >> England and Wales High Court (Patents Court) Decisions >> Eli Lilly & Co & Ors v Genentech Inc [2017] EWHC 3104 (Pat) (06 December 2017) URL: https://www.bailii.org/ew/cases/EWHC/Patents/2017/3104.html Cite as: [2017] WLR(D) 819, [2018] WLR 1755, [2018] FSR 18, [2018] 1 WLR 1755, [2017] EWHC 3104 (Pat) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST
PATENTS COURT
Rolls Building, Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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| (1) Eli Lilly & Co. (2) Lilly France SAS. (3) Eli Lilly Deutschland GmbH (4) Eli Lilly Italia SpA (5) Eli Lilly and Co (Ireland) Limited (6) Eli Lilly Kinsale Limited (7) Lilly SA (8) Eli Lilly and Company Limited |
Claimants |
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| - and - |
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 Genentech Inc. |
Defendant |
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David Lewis QC, Michael Ashcroft QC and William Duncan (instructed by Marks & Clerk Solicitors LLP) for the Defendant
Hearing dates: 6th and 7th November 2017
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Crown Copyright ©
Mr Justice Birss :
Genentech, is another major international pharmaceutical company. The patent belongs to Genentech and that company, which is a US corporation and therefore domiciled outside the area of the Brussels 1 (recast) Regulation or Lugano conventions, is the proprietor of all the relevant national designations of EP 822.
Genentech does not have an IL17 product on the market or any product for psoriasis on the market or under development. Nevertheless Genentech has applied for a supplementary protection certificate under Regulation 469/2009 in various EU states (the UK, France, Germany, Spain, Italy and Ireland). The SPC application is based on Genentech's patent EP 822 and on Lilly's marketing authorisation for Taltz. Necessarily therefore Genentech's position must be that Taltz is a product protected by EP 822. Lilly disputes that Genentech can acquire such an SPC in that way but that is not germane to the issues I have to decide on this application.
Genentech applies to set aside service of the proceedings insofar as they include the Related Claims or for a stay on jurisdiction grounds. Three grounds are advanced by Genentech. The parties advanced them in argument in the opposite order, no doubt because, as good advocates, each side wanted to start with its best point. The three grounds are as follows. The first is that the Related Claims cannot be brought within one of the gateways for service out of the jurisdiction and so service should be set aside under CPR r6.36/6.37. The gateways are specified in CPR PD6B. The only relevant gateway is that in paragraph 3.1 (4A) of PD6B and Genentech submit the Related Claims are not within that gateway. The second is that the proceedings are "concerned with" the validity of the non-UK patents and thereby engage Art 24(4) of the Brussels I (recast) Regulation 1215/2012 and so, since under that provision the courts of the Member State in which the patent is registered (France, Germany, Spain, Italy and Ireland) have exclusive jurisdiction over validity, this court must decline jurisdiction over this aspect of these proceedings under Art 27 of the regulation. The third ground is forum non-conveniens. The argument is that England is not the proper forum for these claims. I have ranked the claims in this way because the gateway point is entirely distinct from the other two and because there is an overlap between the arguments on Art 24(4) and forum non-conveniens and it is convenient to resolve the former before dealing with the latter. Although it does not matter, I believe Art 24(4) is Genentech's best point, as was indicated by their approach to arguing the issues.
Genentech.
The CPR Gateway in PD 6B para 3.1(4A)
Genentech submitted that where there is a doubt about the construction of the gateway provision, that doubt should be resolved in favour of the foreign defendant, i.e. Genentech. Lilly did not agree and submitted that the decision of the Supreme Court in Abela v Baadarani [2013] UKSC 44 in which Lord Sumption held (at paragraph 53) that the traditional characterisation of service out of the jurisdiction using "muscular presumptions" and language such as "exorbitant" was no longer correct because the introduction into English law of the distinct forum non-conveniens doctrine in Spiliada v Cansulex [1987] AC 460 provided a proper and pragmatic safeguard for foreign defendants. Therefore Lilly argues that the previous line of authority starting from In re Hagen [1908] P 189, which is the basis for Genentech's submission, is no longer good law. I must say I see the force in Lilly's submission however in Cruz City 1 Mauritius Holdings v Unitech Ltd and Ors [2014] EWHC 3704 (Comm) Males J recently rejected that very same submission at paragraph 16 and since I am not convinced the point is central to the issues I have to decide I will not get into it any further.
Genentech accepts that Lilly has a properly arguable case. I agree.
Genentech did not dissent from that. I will return briefly to this below.
"3.1 The claimant may serve the claim form out of the jurisdiction, with the permission of the court under r6.36 where-…
(4A) A claim is made against the defendant in reliance on one or more of paragraphs (2), (6) to (16), (19) or (21) and a further claim is made against the same defendant which arises out of the same or closely connected facts."
Genentech for a DNI in relation to the UK patent (the UK designation of EP 822). There is no dispute this UK claim falls within relevant paragraphs of paragraph 3.1 of PD 6B i.e. (9) (tort) and (11) (property within the jurisdiction). The Related Claims are made against the same defendant, Genentech. The submission is that the Related Claims arise out of the same or closely connected facts as the UK DNI. Those facts include, at least, the characteristics of the antibody product itself. They include the acts the subject of the DNIs, such as sale and manufacture of the product. Lilly says that in a DNI those are a hypothetical set of facts on which the declarations are sought and are the same hypothetical facts for the UK patent and all the Related Claims. The facts may also include at least some of the facts relevant to claim construction (such as common general knowledge) although neither party got into that. So Lilly submits the gateway applies on the plain meaning of the words.
Genentech does not agree. It contends that the Related Claims do not involve the same or closely connected facts. That is for a number of reasons. First the facts. Each claim involves a distinct patent albeit they arise from the same bundle of rights granted by the EPO. They are territorially and legally distinct. Analytically the DNI claims have different claimants because the true claimant is the operating company in the relevant state. Each Related Claim will involve the application of foreign law, namely the local law of infringement, particularly about the determination of claim scope. Genentech submit that there are differences between these local laws despite their common origin in the EPC. Since under domestic law, foreign law is a question of fact, each Related Claim will involve facts which are unique to it and are not the same or closely connected to the UK DNI.
Genentech also suggested that there might be further facts relating to infringing acts which may differ in each jurisdiction but I was not persuaded that was a significant point. For one thing the declarations are all formulated on the same, hypothetical factual basis. For the same reason the fact that there are multiple Lilly companies as claimants does not assist Genentech here. A DNI could be brought by a single group company. Having the local operating companies as co-claimants is appropriate because it ensures the right entities are bound by the result and that works for the benefit of both sides. A final reason why I do not believe the infringing acts point assists Genentech is because it seems to be premised on the argument that the laws of infringement in different states were quite distinct, I think because the EU decisions in this area recognise that infringement is a matter of national law. So it is, and it is not (much) governed by the EPC, but in practice the infringement laws of the various states are closely aligned for a number of reasons including the Community Patent Convention (CPC).
Genentech is clearly correct in its submission that each Related Claim will involve a legally distinct patent and a decision on foreign law which is a question of fact in this court.
Genentech's next point is that the right way to look at gateway (4A) is to consider it alongside the other gateways concerned with joinder of parties and also with the joinder of parties under EU law in Art 8(1) of Brussels I (recast). This is the necessary and proper party test. That is said to be the right way to apply the gateway or at least arguably so such that the gateway is ambiguous and should be construed in Genentech's favour that way. Applying that approach, says Genentech, the Related Claims fall outside the gateway.
Genentech submitted that the considerations explained by Lord Collins in Altimo v Kyrgyz [2011] UKPC 7 at paragraph 87 in relation to the question of bringing a further foreign party into the proceedings under the necessary and proper party gateway, should be applied to gateway (4A). Lord Collins asked if, had the two defendants been within the jurisdiction, would they both have been proper parties and explained that this would be so if the claims against them both involved the "same investigation", referring also to the matters being "closely bound up" and to a "common thread".
Genentech's submission that guidance can be had from Art 8(1) of the Brussels I (recast). Bearing in mind that the scheme of the regulation is that, subject to exceptions, defendants should be sued in the state in which they are domiciled, Art 8(1) is the provision which allows defendants domiciled in one state to be sued in another state, when they are one of a number of defendants, as long as one of the other defendants is domiciled in that other state. The regulation refers to claims which are "so closely connected that it is expedient to hear and determine them together to avoid a risk of irreconcilable judgments". As Genentech point out in Roche v Primus (Case C-539/03) the ECJ held that different companies in the same corporate group in various European states could not be sued in one proceeding using the different designations of a European patent because the factual situation was different. Such defendants could only be joined when the proceedings are so closely connected that it is expedient to hear and determine then together to avoid the risk of irreconcilable judgments resulting from separate proceedings. There was no such risk in that case because for the CJEU a different outcome on two patents both of which are designations of the same EP is not what that court regarded as an irreconcilable judgment.
Genentech relied on paragraph 55 of the judgment in which the judge considered gateway (4A) and said that it seemed likely to him that the words "same or closely connected facts" were likely to have a similar meaning to the "proper party" test in Altimo and that if one test is met, the other is likely met also. I entirely agree with Edis J that if the test in Altimo is satisfied then the gateway (4A) test is also likely to be met. The judge decided that that test was satisfied in the case before him and so that is the ratio of the decision. I do not read the judgment as going further than that and holding that the two tests have exactly the same scope but if and to the extent it does then I respectfully disagree. Gateway (4A) is not concerned with whether someone is a proper party and I believe it raises different considerations.
Genentech's application.
Art 24(4) of Brussels I (recast)
Genentech disagrees. Briefly put Genentech's point is that one must look at the substance of what is being alleged and not only the form. Genentech point to judgments which say or can be read as saying exactly that. Lilly says that no other case has gone as far as Genentech's submission needs to go for Genentech to be correct and that there is more to the cases than Genentech's submission allows. In order to resolve this fundamental disagreement about the authorities I need to go through the cases with some care.
The law
"… the view must be taken that the exclusive jurisdiction provided for by that provision [now Art 24(4)] should apply whatever form of proceedings in which the issue of a patent's validity is raised, be it by way of an action or plea in objection, at the time the case is brought or at a later stage."
Genentech sought to persuade me that the effect of the undertakings recorded in the order actually made in Actavis v Lilly meant that Actavis's undertaking had that wider effect. I do not agree. Paragraph 28 of the judgment makes clear that Actavis' undertaking was not to challenge validity or contend the patent is invalid either by way of claim or defence to any counterclaim for infringement "in these proceedings", i.e. the UK proceedings.
Genentech's argument seemed to be that the judge's emphasis on the "single issue of whether Molycorp has infringed a valid claim" would mean that even if the nullity proceedings had not been commenced in that case, the claim in the UK still engaged Art 24(4). Arnold J does not say that. I will return to this below after dealing with the last cases in the chronology.
"… the Court of Justice of the European Union has held that Article 24(4) should be given a wide interpretation, and it has implicitly endorsed the reasoning of Laddie J in Coin Controls Ltd v Suzo International (UK) Ltd [1999] Ch 33 to the effect that the issues of validity and infringement are inseparable in patent cases because there is in the end only one question: has the defendant infringed a valid claim? Accordingly, I held that this court had no jurisdiction over Rhodia's claim in respect of the German designation of the Patent because, although framed exclusively as a claim for infringement, it implicitly asserted that the German designation was valid when, as the claim itself acknowledged, the validity of the German designation had been challenged by Molycorp and had to be determined by the German courts."
Genentech's argument seemed to suggest that the difference was that Actavis v Lilly an undertaking had been given not to challenge validity, however that undertaking did not cover a revocation claim in the patent's home member state and moreover it was not an undertaking about the arguments Actavis could deploy. The undertaking meant that the English court was not going to be asked to make a finding about validity. It did not mean Actavis were fettered in the arguments they could deploy.
Genentech's core point and it has a resonance in references in some of the judgments I have mentioned to looking at the substance of the arguments. But I am not convinced for two reasons.
Genentech's core point is that it does not make sense to me to decide something as fundamental as the court's jurisdiction to determine a case based on the way the arguments are put. Many arguments about construction have unspoken consequences for validity. A party may be able to deploy two rhetorical points in support of a given construction, one based on the language and the other based on consequences such as validity. I do not see how the court's jurisdiction can depend on whether the party chooses to deploy one or other or both pieces of rhetoric.
Is validity going to be in issue in future?
Genentech has made clear that if the court does not decline jurisdiction then it intends to counterclaim for infringement. Lilly's response was to state that its undertaking was not concerned with a counterclaim and it was not prepared to undertake not to challenge validity of the foreign designations until it had seen Genentech's counterclaim.
Genentech submitted this was an inappropriate change in position as compared to the unqualified undertaking given to the Master and submitted in argument that the Master's order should be discharged for that reason (no application for such an order was made). I agree with Genentech that Lilly's position could and should have been explained to the Master more fully since the possibility of an infringement counterclaim from Genentech was foreseeable to the experienced legal team representing Lilly. However Genentech make too much of this. On its face the undertaking applies to the proceedings in the form they were constituted and that is what mattered. There is no justification in discharging the order on that ground.
Genentech will not seek an injunction against Lilly to take Taltz off the market even if it does infringe. Maybe a royalty will be sought instead. This is not as fanciful as all that, it has been done in other cases recently in the Patents Court (cf Merck v Ono [2015] EWHC 2973 (Pat)). If that is what Genentech does then Lilly may take the view that the stakes are not so high that it wishes to challenge validity of the non-UK designations. So the court should not assume that a counterclaim for by disputing the validity of any of the non-UK patents will inevitably follow as a defence to a counterclaim for infringement of those patents.
Genentech, intentions can change and, crucially, there is what could be a good reason why Genentech may wish not actually to counterclaim for infringement if it can effectively get the benefit of doing so without actually issuing a counterclaim. The issue has to do with the rules applicable to the parallel EPO opposition. Lilly is not a party to those proceedings and it cannot join them now because it did not bring an opposition within 9 months of grant. However under the EPO's rules, if while opposition proceedings are pending the patentee brings a claim for infringement against someone who is not a party to those proceedings, then that person has the standing to join the EPO proceedings. Genentech may not want to have another opponent in the EPO and Lilly may feel its position on validity of the non-UK designations would be sufficiently protected by being in the EPO proceedings (c.f. Actavis in Lilly v Actavis). A challenge in the EPO does not engage Art 24(4).
Genentech will counterclaim for infringement of the non-UK patents and Lilly would put validity in issue in response. In that case the approach of the English courts is to decline jurisdiction now rather than wait. However 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.
Forum non-conveniens
Genentech contend that even if the previous arguments fail the Related Claims should be stayed on forum non-conveniens grounds. The test to be applied comes from the well known Spiliada v Cansulex case. The question is whether England is clearly and distinctly the most appropriate forum for trying the related claims in the interests of all the parties and the purposes of securing the ends of justice. The burden is on Lilly.
Genentech's representatives submit that Lilly's approach in this case will put pressure on Genentech to try and adopt a uniform construction of EP 822 which preserves validity and leads to a conclusion that ixekizumab infringes. But they would be trying to do this anyway even if the case is heard in different parallel jurisdictions as any rational patentee would. I reject the suggestion that this somehow makes these proceedings unfair.
Genentech submits there are no or no sufficient facts to link these matters to the UK. I disagree. It is true that the product is made in Ireland and that QC testing is in Italy, but the UK is a major market and the evidence shows that it may well be largest market in Europe well within the lifetime of the patents. The Patents Court in London is well equipped to handle cases of this kind including (I refer again to Actavis v Lilly) cases which bring together a group of non-UK patents from the same European bundle as the UK patent. Trying so many aspects of this overall dispute together in one place on one occasion and in a timely fashion is also likely to promote settlement.
Genentech is correct that the decision of the Patents Court on infringement of a foreign patent in a Brussels-Lugano state is not binding as to claim scope on the courts of that state trying the issue of validity, all that means is that the problem described is inherent in GAT v LUK. It is nothing to do with the substance of the particular arguments being run by one party or another in the infringement case and everything to do with the simple fact that the scope of the claims is as much an issue to be decided when considering infringement as it is an issue to be decided when considering validity. Since at worst it is inherent in the arrangement whereby the English court can hear a "pure breach" case, I do not regard it as a factor of significant weight in the overall analysis under Spiliada.
Genentech is correct are much more likely to be problems for Lilly than problems for Genentech. The English Court's decision will be binding on the issue of infringement between these parties. If Lilly wins in the English Court such that ixekizumab does not infringe then that's that. It does not matter if the foreign patents are valid or invalid. Even if the foreign courts decided validity on a different claim construction, ixekizumab still does not infringe those patents. If Lilly loses in the English Court such that ixekizumab does infringe the foreign patents then that issue is still finally decided and that is irrespective of the issue of validity of the UK patent. Lilly may want to try and attack validity of the foreign patents and it may succeed or it may fail but the risk which arises from the foreign court accepting a narrower construction when considering validity rather than the wide one which led to the finding of infringement is all with Lilly.
Genentech for the purposes of securing the ends of justice.
Conclusion
Genentech's applications, subject to the point on costs relating to Lilly challenging the validity of the foreign patents in response to a counterclaim for infringement.