29 February 2016

Patents Court refuses stay of claim for revocation and declaration of non-infringement

The Patents Court has refused Janssen’s application to stay Eli Lilly’s action for revocation of certain claims of Janssen’s European Patent (UK) 2305282 (the Patent), and for a declaration of non-infringement in respect of its solanezumab product. This is part of a long-running battle between the parties, and follows Arnold J’s 2013 decision that the parent patent (the Patent is a divisional patent) was invalid. There are separate EPO proceedings in respect of the parent patent (the Technical Board of Appeal will hear the appeal of the finding of invalidity in May 2016) and the Patent (the oral proceedings before the Opposition Division will be heard in June). Janssen sought a stay pending the outcome of the EPO proceedings relating to the Patent. 

In refusing a stay, the Court applied the IPCom factors (discussed in our November 2013 update). The Court also considered Arnold J’s application of those factors in Actavis v Pharmacia where, as discussed in our July 2014 update, he had initially refused a stay, but had gone on to grant one after Pharmacia had offered various undertakings (i.e., not to seek an injunction during the life of the patent and that they would only seek damages of 1% of net sales in the UK during the life of the patent).

In this case, Janssen also offered undertakings in an attempt to address any arguments of commercial uncertainty, i.e., to:

  • Support any application by Lilly to the TBA to accelerate any appeal

  • Not to seek an interim/final injunction in the UK in respect of infringement of the Patent and any SPC that might be granted

  • If validity was upheld, not to seek damages other than on a reasonable royalty basis

However, unlike in the Actavis case, the Court was not satisfied that these undertakings dealt with the problems of commercial uncertainty.  A key factor in the Court’s decision not to stay the English proceedings was Lilly’s claim for a declaration of non-infringement. Lilly’s counsel argued that the IPCom requirement that Courts should remember that national courts exercise exclusive jurisdiction on infringement issues was almost tantamount to saying that a dispute on infringement was an overriding factor. Whilst the Judge did not accept that infringement was a 'trump card', it was clearly an important factor pointing against the grant of a stay; a finding of non-infringement would be the end of the matter as Lilly would be able to launch solanezumab regardless of validity.

A further, unusual, factor in this case was that the Patent will shortly expire but Janssen does not have a marketing authorisation in place on which to base an SPC application; however, if Lilly’s product is authorised before the Patent expires, Janssen could seek to apply for an SPC on the basis of Lilly’s authorisation. It was important for Lilly to know where it stood in relation to any future Janssen SPC application. This was compounded by the fact that Janssen could not say what the reasonable royalty rate would be (compared to Actavis where Pharmacia offered a royalty rate of 1%).

The Court also considered the relative timing of the EPO and English proceedings: the advanced stage of the EPO proceedings and the likelihood that any appeal on the Patent would be accelerated were factors that pointed in favour of a stay. Whilst the Judge recognised that the ‘spectre of remission’ meant it was possible that the EPO proceedings could be delayed, given the fact that the English proceedings were at an early stage, it was likely that the EPO validity decision (even after an appeal) would come first.

The Judge recognised that refusing a stay meant there was the potential for some wasted costs. The estimated costs of the English proceedings based on the parent patent proceedings was £5 million in aggregate, though should be less given the familiar ground for the Court. The Judge agreed with Lilly, however, that this was not a significant sum, in the light of the value of the case to the parties commercially. 

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