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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Neurim Pharmaceuticals (1991) Ltd & Anor v Generics (UK) Ltd & Anor (Rev1) [2022] EWCA Civ 359 (29 March 2022) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2022/359.html Cite as: [2022] EWCA Civ 359 |
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CIVIL
DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES, INTELLECTUAL PROPERTY LIST (ChD), PATENTS COURT
Marcus Smith J
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE ARNOLD
and
LORD JUSTICE BIRSS
____________________
(1) NEURIM PHARMACEUTICALS (1991) LIMITED (2) FLYNN PHARMA LIMITED |
Claimants/ Appellants |
|
- and - |
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(1) GENERICS (UK) LIMITED (2) VIATRIS UK HEALTHCARE LIMITED |
Defendants/ Respondents |
____________________
Mark Vanhegan QC and Mitchell Beebe (instructed by Taylor Wessing LLP) for the Respondents
Hearing dates : 14-15 March 2022
____________________
Crown Copyright ©
This judgment was handed down remotely at 10.30 on 29 March 2022
by circulation to the parties or their representatives by email and by release to BAILII and the National Archives.
Lord Justice Arnold:
Introduction
The exclusive licence issue
The statutory provisions
"Proceedings for infringement by exclusive licensee
(1) Subject to the provisions of this section, the holder of an exclusive licence under a patent shall have the same right as the proprietor of the patent to bring proceedings in respect of any infringement of the patent committed after the date of the licence; and references to the proprietor of the patent in the provisions of this Act relating to infringement shall be construed accordingly.
(2) In awarding damages or granting any other relief in any such proceedings the court or the comptroller shall take into consideration any loss suffered or likely to be suffered by the exclusive licensee as such as a result of the infringement, or, as the case may be, the profits derived from the infringement, so far as it constitutes an infringement of the rights of the exclusive licensee as such.
(3) In any proceedings taken by an exclusive licensee by virtue of this section the proprietor of the patent shall be made a party to the proceedings, but if made a defendant or defender shall not be liable for any costs or expenses unless he enters an appearance and takes part in the proceedings."
"'exclusive licence' means a licence from the proprietor of or applicant for a patent conferring on the licensee, or on him and persons authorised by him, to the exclusion of all other persons (including the proprietor or applicant), any right in respect of the invention to which the patent or application relates, and 'exclusive licensee' and 'non-exclusive licence' shall be construed accordingly".
Previous case law
"This definition is essential to an understanding of subsection 67(2). There can be more than one exclusive licensee under a patent, as there is more than one 'right in respect of the invention'. In my judgment this term does not merely relate to the list of ways of infringing the patent set out in section 60, which are not described as rights, but to any subdivision of the monopoly conferred on the proprietor. To take an example proposed in argument, in the case of a pharmaceutical product, one manufacturer may have an exclusive licence in respect of manufacture and sale of dosage forms for veterinary purposes and another may have an exclusive licence in respect of manufacture and sale of material of dosage forms for administration to humans. The veterinary licensee has no interest in recovery in respect of human products although he has a cause of action in respect of them. Subsection 67(2) is directed to ensuring that the exclusive licensee obtains compensation, to use a neutral term, only where the infringement affects his slice of the monopoly conferred by the patent."
The claims of EP702
"1. Use of a prolonged release formulation comprising melatonin in unit dosage form,each unit dosagecomprising0.025 to 102 mg of melatonin, in the manufacture of a medicament for improving the restorative quality of sleep in a patient aged 55 years or older suffering from primary insomnia characterised by non-restorative sleep, wherein the medicament comprises also at least one pharmaceutically acceptable diluent, preservative, antioxidant, solubilizer, emulsifiers, adjuvant or carrier.
2. Use according to claim 1, wherein the medicament is further characterised by at least one of the following features:
(i) it is adapted for oral, rectal, parenteral, transbuccal, intrapulmonary (e.g., by inhalation) or transdermal administration;
(ii) it is in depot form which will release the melatonin slowly in the body, over a preselected time period."
The Circadin marketing authorisation
The agreements between Neurim and Flynn
"Neurim grants Flynn which accepts, under the Neurim Patents, the Neurim Confidential Information, the Existing Marketing Authorisation and the Trademark, an exclusive licence to Distribute the Product in the Territory for use in the Field during the Term."
"the prolonged release prescription product containing 2mg Melatonin known as Circadin including any generic equivalent or version thereof".
Mylan's arguments and the judge's conclusions
The appeal
"Section 67(1) of the Patents Act 1977 provides that the holder of an exclusive licence under a patent shall have the same right as the proprietor of the patent to bring proceedings in respect of any infringement of the patent committed after the date of the licence. This is expressed to be a consequence of the grant of an exclusive licence as defined by section 130(1). The right to bring proceedings for infringement is not expressed to be a necessary condition for 'exclusivity'."
"The upshot is that what appears, on its face, to be an exclusive licence to Flynn, is actually no such thing when the provisions regarding the enforcement of Flynn's rights under the licence are taken into account. These provisions make absolutely clear that Flynn has no rights independent of Neurim, and that an infringement action such as this is in reality being prosecuted as a single cause of action by Neurim, with Flynn as little more than a cypher. … Viewing the licence agreement between Neurim and Flynn as a whole, this is not a case where two interested persons can separately prosecute separate rights. Rather, this is a case where the apparently separate and exclusive rights of Flynn are eliminated by the ostensibly procedural, but in truth substantive, provisions of clause 17."
The respondent's notice
"The critical language in section 130(1) is 'conferring…any right in respect of the invention'. Provided that right is exclusive, even if it is only a sliver of a claim of a patent, it seems that the requirements of section 130(1) are met. In this case, therefore, I conclude that Flynn has been granted an exclusive licence in relation to 2 mg doses of melatonin in those aged 55 and over, and that even though the unamended Patent claims unit dosages between 0.025 and 10 mg, so far as 2 mg does are concerned, Flynn has the exclusive right to work the Patent, to the exclusion of Neurim."
The costs issue
The procedural history
"AND UPON the Claimants accepting in the light of the First Claimant's withdrawal of its appeal before the Technical Board of Appeal, and accepting that the Patent has been revoked ab initio, that the Claimants are not entitled to any substantive relief against the Defendants in respect of the Patent, whether by way of injunctions or by way of inquiry as to damages or account of profits or otherwise howsoever".
The judge's reasoning
"The judge must look closely at the facts of the particular case before him and ask: who, as a matter of substance and reality, has won?"
"77. Viewing the matter from the point of view of outcome, it is obvious that Mylan is the winner and Neurim the loser. Referring to the issues arising on the pleadings, Neurim contended that the Patent was valid and infringed; Mylan contended that the Patent was invalid, and should be revoked. Viewing the matter through the prism of the pleadings, Mylan is clearly and unequivocally the winner. The oddity – if it can be called that – is that this outcome has been achieved despite and not because of the Judgment in the UK Proceedings, which (as I have said) went more or less entirely Neurim's way.
78. I conclude that, given the interaction that exists between the EPO Proceedings and the UK Proceedings, which is fully taken into account when considering whether a stay of the UK Proceedings should be granted, the 'result in real life' in this case is to be determined by comparing the remedies and relief sought by the parties to the UK Proceedings with what they have actually obtained. As I have said, viewed through this prism, there is only one winner: although Neurim contended that the Patent was valid and infringed, the recitals to the 30 December 2020 Order make clear that this outcome has not been achieved. By contrast, Mylan's contention that the Patent should be revoked has succeeded, albeit by a curious (and hopefully not to be repeated) interaction between the UK Proceedings and the EPO Proceedings."
"80. I should say that I do not consider that the usual alternative of an issues-based costs order to be appropriate here. The fact is that the issues all go one way or they all go the other way depending on whether one looks at the outcome as stated in the Judgment or the outcome as it will appear in the new consequential order that I will, in due course, make. In other words, an issues-based costs order is not, in my judgment, a particularly helpful tool in the present case, extremely useful though it normally is.
81. Nor do I consider that it would be appropriate to make an order along the lines of 'everyone's a winner, and everyone's a loser'. Tempting though it is to make no order as to costs, I consider that that would be inconsistent with my provisional finding that Mylan is the winner. What I must do is consider whether there are other specific factors in play that can properly justify a different costs order."
"89. … Had the parties jointly sought an adjournment, I suspect it would have been granted. As it is, I infer that one or both of the parties did not want an adjournment, and one can understand why: Mylan, for its part, would have wanted its two bites of the revocation cherry; and Neurim, having failed to obtain an interim injunction, would have wanted a final injunction in place as soon as possible in the event of it succeeding in both the UK and the EPO Proceedings. The quickest way of achieving that was by way of maintaining the expedited trial in the UK Proceedings, whilst pressing on with the EPO Proceedings.
90. Without in any way wishing to criticise or be prescriptive, whilst the parties may very well have had their own reasons for wanting the EPO and the UK Proceedings to proceed in parallel, their conduct (in not referring the matter to the court) deprived the court of considering whether a stay of the UK Proceedings was or was not appropriate. In effect, the parties prevented the court from re-visiting, or considering re-visiting, Nugee J's order expediting the trial. Nugee J's order would have been premised on an appeal in the EPO Proceedings in the first quarter of2022:
an appeal in the EPO actually listed for hearing and determination on 17 and 18 December 2020 is a very different matter.
91. I remind myself of Floyd LJ's twelfth proposition or guidance in IPCom [GmbH & Co KG v HTC Europe Co Ltd [2013]EWCA
![]()
Civ
1496, [2014] Bus LR 187 at [68]]: in weighing the balance of staying or not staying English proceedings, it is material to take account of costs liable to be wasted. In this case, the picture changed dramatically between March 2020 (when expedition was ordered by Nugee J) and June 2020 (when, in my judgment, there was a material change, such that a party would have been justified in bringing the matter back before the court for re-consideration). As I see it, the following possibilities existed as at June/July 2020:
(1) An application to adjourn could have been made by both parties: in such a case, and in such circumstances, it is difficult to see a court declining the application – but, even if it had been declined, there would have been the opportunity to consider – in advance – what would happen on the question of costs if the EPO Proceedings proceeded in parallel with and with outcomes at roughly the same time as the UK Proceedings, simply because the UK Proceedings were not adjourned
(2) An application to adjourn could have been made by one party, and resisted by the other. In such a case, the court would obviously need to understand why an adjournment was being resisted, and it may be that the adjournment would not be granted. All would depend on the facts and matters advanced by the parties on the application. If the adjournment was refused, the court would be in a strong position to articulate which party would bear the costs of the trial of the UK Proceedings if the outcomes of the EPO and UK Proceedings diverged.
(3) The third possibility is the one that occurred: no application to adjourn was made by either party. In June/July 2020, both Neurim and Mylan knew that there was a clear potential for the outcome of the UK Proceedings to be rendered pointless in light of the imminent hearing before the Technical Board of Appeal in the EPO Proceedings. The parties would have been well aware of potentiality. In my judgment, in not seeking to engage with the court on the question of adjournment, each of the parties assumed the risk of costs being wasted and of a costs order being made that followed the outcome of the interaction between the UK and the EPO Proceedings, as opposed to the reasoning (whatever it might be) of the UK Proceedings. I do not say that an outcome based order will always, or even generally, be the right one, although in this case I consider it to be the correct starting point when assessing the incidence of costs, for the reasons I have given. It seems to me that Neurim cannot now complain that it bears the entire costs of the trial simply because – although the Judgment favoured it – the outcome of the interaction between the EPO Proceedings and the UK Proceedings has resulted in Neurim being the losing party. The costs of the UK Proceedings were costs thrown away because the decision of the Technical Board of Appeal in the EPO Proceedings rendered the trial in the UK Proceedings unnecessary. That is something that Neurim could have avoided, and I consider there is no reason why I should alter the provisional view on costs that I have reached. Indeed, I consider the fact that it lay within Neurim's power to bring this issue before the court to support and further justify the provisional view on costs that I have reached.
92. I should make clear that I am in no way singling out Neurim for particular blame. Had the outcome of the interaction between the EPO Proceedings and the UK Proceedings favoured Neurim, then I would have considered that a provisional costs order in the UK Proceedings ought to favour Neurim, and I would have considered Mylan's failure to raise the matter of an adjournment in June/July 2020 in exactly the same way as I have considered Neurim's."
Grounds of appeal
Appeals on costs
"This is an appeal … from the county court in relation to costs. As such, it is overcast, from start to finish, by the heavy burden faced by any appellant in establishing that the judge's decision falls outside the discretion in relation to costs conferred upon him under rule 44.3(1) of theCivil
Procedure Rules 1998 . For reasons of general policy, namely that it is undesirable for further costs to be incurred in arguing about costs, this court discourages such appeals by interpreting such discretion very widely."
Ground 2
Ground 1
Ground 3
What order should be made?
Conclusion
Lord Justice Birss:
Lord Justice Newey: