UK: English Court Flexes Its Muscles On Pan-European Declarations Of Non-Infringement

Last Updated: 22 January 2013
Article by Philip Bilney and Beatriz San Martín

Actavis Group HF v Eli Lilly & Company (USA)/ Medis EHF v Eli Lilly & Company (USA)
[2012] EWHC 3316 (Pat)

Summary

This case concerns the cancer treatment Pemetrexed made by Eli Lilly & Company (USA) ("Lilly"). In particular it concerns patent EP No. 1 313 508 (the "Patent") covering the use of pemetrexed disodium in combination with vitamin B12 or a pharmaceutical derivative therefor.  Actavis wanted to launch a pemetrexed dipotassium product in the UK and other jurisdictions (including Germany, France, Italy and Spain).  Following some unsuccessful pre-action correspondence with Lilly, Actavis sought from the Court a declaration of non-infringement not only in relation to the UK designation of the Patent, but also in respect of the French, German, Italian and Spanish designations.  The main issues in this hearing related to service and jurisdiction. Mr Justice Arnold held that proceedings were validly served and the UK was the appropriate forum for the proceedings.

Does the English Court have jurisdiction in respect of the foreign designations?

This question was broken down into several issues.

Consent to Service

Lilly contended that, in the pre-action correspondence between the parties' solicitors, it had only consented to service of a claim in the UK by the companies identified in Actavis' solicitors' first letter explaining who they acted for, namely a subsidiary of the group rather than the parent holding company Actavis Group hf.  Although not strictly a contract, the Judge decided the issue should be construed in accordance with the principles of contractual interpretation. Taking into consideration the relevant background knowledge, it was clear a mistake had been made in referring to the subsidiary rather than the holding company.

Lilly also contended that the consent it had given did not extend to service of the proceedings in relation to the non-UK designations of the Patent.  The judge disagreed with this. Looking at the correspondence between the parties' solicitors, use of the words "acknowledgments [plural]"  and "declarations [plural]" by Actavis' solicitor's, and asking whether Lilly was instructed to accept service of "such proceedings", could only mean proceedings in the English Court seeking those declarations. Lilly further argued that it was almost unprecedented for the English Courts to hear a declaration of non-infringement of foreign designations of patents. However, the Judge referred to the Supreme Court decision in Lucasfilm v Ainsworth (which concerned the ability of English Court's to hear a US copyright claim & is reported here) and explained that this decision had made it easier for parties to argue that claims concerning infringement and non-infringement of foreign patents were justiciable in the English Courts.

The Judge concluded that Lilly had consented to the service of proceedings by the Actavis Group and its relevant national subsidiaries. Lilly had also consented to the service of proceedings which included claims for declarations of non-infringement of the non-UK designations of the Patent.  By consenting to service it also meant that Lilly had consented to the jurisdiction of the UK Court, which meant jurisdiction could not be contested on the ground of forum non conveniens (discussed further below).

Service under the CPR

In case he was wrong on consent to service, the Judge went on to consider whether service had been validly executed under the CPR.  Most interestingly this meant considering whether Lilly had a place of business or carried on activities in England & Wales.  Key factors to take into account were that Lilly had a research centre in Surrey owned by Lilly UK, which also housed their European Patent Operations Department, headed by Dr Burnside.  Dr Burnside was Lilly's representative before the EPO, and was delegated various responsibilities including the ability to surrender patents if appropriate.  The Judge referred to the case of Adams v Cape Industries plc [1990] which set out the major factors to be considered, and the "principal" test of whether the company's representative had authority to contract on behalf of the  company.  Applying this to the facts, the Judge found that Lilly did have a place of business in England for the purposes of the English jurisdictional rules, and therefore was subject to the personal jurisdiction of the English Court.

Forum non conveniens

If proceedings were not considered to have been validly served, Eli Lilly sought a stay of proceedings on the ground that the English Courts were not the proper place in which to bring the claim ("forum non conveniens").

The Judge referred to the key case of Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 which stated "a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action i.e. in which the case may be tried more suitably for the interests of all parties and the ends of justice".

Earlier case law suggested that the Court should be cautious about exercising jurisdiction over questions of infringement of foreign patents.  However, recent case law, namely Lucasfilm,indicated that "the modern trend is in favour of the enforcement of foreign intellectual property rights".  The Judge was particularly influenced with the reasoning in Lucasfilm and thought they were equally applicable to the operation of forum non conveniens

Counsel for Actavis gave three main reasons why it was advantageous for all five claims to be determined by one court: (i) the case would be conducted by one team of lawyers (thereby saving costs); (ii) it would enable the case to be determined by reference to one law (thereby saving further costs); and (iii) one court determining all five claims would eliminate the prospect of inconsistent decisions.  The Judge rejected Lilly's argument that it should not be obliged to consent to one law (i.e. English law) being applied to the issues of infringement of its foreign patents. He also commented that neither side thought the location of witnesses or documents was a significant factor.  In conclusion, the Judge thought that Lilly "had not shown that the Courts of France, Germany, Italy and Spain were the appropriate fora for the trial of Actavis' claims in relation to the French, German, Italian, and Spanish designations of the Patent.  Certainly I do not consider that it has shown that those Courts are clearly or distinctly more appropriate than this Court.  Accordingly I would decline to grant a stay of those claims on the grounds of forum non conveniens."

Comment

Following in the footsteps of Lucasfilm, this decision continues the current trend of the English Courts to be much more inclined to hear claims for the enforcement of foreign intellectual property rights.  Whether our friends in Europe will be pleased with this decision remains to be seen  - it is easy to envisage them feeling slightly vexed and arguing that they are best placed to rule on legal issues concerning the law of their land.  However, this case is unusual in that it did not concern any challenge to the validity of the underlying patent, which would likely have given exclusive jurisdiction to the respective foreign Courts. Nevertheless, with the European Union rapidly moving ahead with proposals for a unified patent litigation system, the English Courts appear keen to take a leading role in decisions regarding pan-European infringement.

This case also highlights the importance of considering issues of service carefully.  If a party is in doubt about consenting to service, they should reserve their position so they can fall back on this argument should the need arise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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