UK: IP Bulletin - June 2014

Last Updated: 3 July 2014
Article by Ian Wood

Welcome to the June edition of "IP Bulletin" – the intellectual property law update from Charles Russell's Intellectual Property team.

The Bulletin details some recent important cases and key developments.

PATENTS

UK appeal stayed pending outcome of EPO central amendment applications: Samsung Electronics Co Ltd v Apple Retail UK Ltd & Other [2014] EWCA Civ 250

Comment

The Court of Appeal recently stayed Samsung's appeal against a finding of invalidity of two of its mobile 'phone patents, pending the outcome of Samsung's applications for central amendment of those patents at the European Patent Office ("EPO"). The Court of Appeal said that Samsung's application for a stay was not an abuse of the court process because UK legislation allowed for parallel proceedings in both the national courts and the EPO. In addition, the central amendment application was expected to conclude soon and a refusal of the stay might have resulted in the UK appeal proceeding on what may turn out to have been a false basis, resulting in wasted costs and time for the parties.

The decision to stay the appeal leaves the parties in a state of flux, facing uncertainty until the outcome of EPO procedures is known. Additionally, many interested parties may find it highly unsatisfactory that, if the amendments are allowed, the Court of Appeal will be the first UK court to consider the amended patents following the EPO's decision. The Court of Appeal has already made clear that the appeal in respect of both patents will not be heard until the EPO's decision is known in relation to both central amendment applications (the EPO ruled recently on one of the patents and a decision is expected shortly on the other). The Court of Appeal has said it is appropriate in the circumstances that there should be a single appeal hearing in relation to both patents.

Samsung Electronics Co Ltd v Apple Retail UK Ltd and another [2014] EWCA Civ 250, 11 March 2014

Background

In this patent dispute, Samsung brought patent infringement proceedings against Apple in the UK alleging that Apple infringed three of Samsung's patents concerning mobile 'phones. (Only two of the patents were at issue in the appeal.) In the High Court in March 2013, Floyd J held that neither of the two Samsung patents was entitled to its claimed priority date and that each was invalid (by reason of intervening prior art). He also held that even if the patents had been entitled to their claimed priority dates, both patents would have been invalid for obviousness. Samsung appealed this decision.

Samsung also filed applications (in November 2013) at the EPO to amend the two patents at issue (the "central amendment applications") .

Samsung then applied to adjourn the UK appeal pending determination of the central amendment applications.

Decision

The Court of Appeal agreed to grant Samsung's application to stay the appeal from the High Court decision of March 2013, pending a decision of the EPO of Samsung's application for central amendment of the patents.

The Court of Appeal made the following key points in its judgment:

  • Samsung's central amendment applications were proceeding and likely to be concluded in the relatively near future (and very likely before final disposition of the Court of Appeal proceedings);
  • any application made by Samsung after the trial to amend the patents (under s75 Patents Act 1977) would very likely have been refused in the exercise of the court's discretion (following Nikken Kosakushko Works v Pioneer Trading Co [2005] EWCA Civ 906 and Nokia GmbH v IPCom & Co KG [2011] EWCA Civ6);
  • the pursuit of the central amendment applications is not itself an abuse of the process of the court (it is permitted by the European Patent Convention, the implementing regulations and the Patents Act 1977) – it was therefore not an abuse of process for Samsung to make and pursue its central amendment applications. Support for this conclusion may be derived from the Supreme Court's decision in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46;
  • the central amendment applications may or may not be successful. The EPO's decision (if the EPO grants the applications) would be effective in every designated state, and the patents would be deemed to have been in their amended form from grant;
  • it was not suggested that an adjournment would in and of itself cause Apple any significant prejudice; and
  • a refusal of the adjournment might have resulted in the appeal proceeding on what may turn out to have been a false basis with the consequential waste of costs and time that would entail.

Following the Court of Appeal's decision, the parties shortly found themselves back in court. The EPO had ruled on one of the patents, allowing the amendment, but indicated that a final determination in respect of the other patent would take a further few months. Samsung submitted that the appeal in respect of the first patent should not be delayed pending the EPO's decision concerning the second patent but the Court of Appeal decided that there should be a single appeal hearing on both patents when the outcome of the EPO's decision is known. Samsung had commenced proceedings against Apple for infringement of both patents in a single action, there were legal issues common to both cases and single legal teams were engaged on the appeal. In the circumstances, the court said it was appropriate that there should be a single appeal hearing in relation to both patents.

Samsung Electronics Co Ltd v Apple Retail UK Ltd and another [2014] EWCA Civ 376, 1 April 2014

New technology transfer block exemption and guidelines – effective from May 2014

Comment

The European Commission has adopted a new technology transfer block exemption regulation and guidelines on the application of Article 101 of the Treaty on the Functioning of the European Union ("TFEU") to technology transfer agreements.

The new arrangements (which replace existing arrangements in place since 2004) will be effective from May 2014 and will provide, for technology transfer agreements, an automatic exemption from the prohibition on anti-competitive agreements set out in Article 101. A transitional period lasting one year will be available to protect existing agreements. It will therefore be advisable to reassess existing agreements to check if they require amendment in order to continue to comply with EU competition law after the transitional period.

Background

Technology transfer agreements are licensing agreements where one party authorises another party to use the licensor's patents, know how or software for the production of goods or services. The block exemption helps businesses understand whether agreements to which they are a party could be held invalid for breaching EU competition law if particular clauses are included. (There is a risk of significant fines for companies breaching competition law.)

What are the changes?

The main changes concern:

  • a new test for assessing when provisions relating to the licensing of other intellectual property rights and the purchase of products by the licensee are covered by the block exemption;
  • a change to the treatment of certain passive sales restrictions;
  • the removal of all exclusive grant back obligations from the scope of the block exemption;
  • changes to the treatment of clauses allowing a licensor to terminate if the licensee challenges the validity of the licensed intellectual property rights; and
  • clarifications of the Commission's approach to settlement agreements.

For a transitional period lasting one year, agreements block exempted under the old rules will continue to receive protection. It will therefore be advisable to review existing agreements during the transitional period to check if they require amendment in order to continue to comply with EU competition law when the transitional period expires.

IP/14/229, MEMO/14/208

Unitary Patent Court - Update

There have been a few recent developments concerning the introduction of the new Unitary Patent Court ("UPC"). The most important recent development is that the UPC will not be operational until the end of 2015 at the earliest. Most of the other developments are of an administrative nature.

The fifth meeting of the Preparatory Committee for the Unified Patent Court (UPC) on 18 March 2014 agreed that the UPC will not be operational until the end of 2015 at the earliest.

In addition, a dedicated training centre for judges for the Unified Patent Court was officially opened on 13 March 2014 in Budapest.

The latest draft Rules of Procedure for the Unified Patent Court (UPC) have been published for information only, taking into account comments received during the public consultation on the previous (15th) draft. The Legal Group of the Preparatory Committee will now examine the draft set of rules at the level of participating EU member states. Any comments should be submitted at the oral hearing planned to be held by the Legal Group in the course of this year, which will seek input of users on all suggested amendments to the text since the written consultation.

Sweden, Lithuania, Latvia and Estonia have agreed on the creation of a regional division of the Unified Patent Court (UPC). This is the first agreement by a group of member states who are signatories to the UPC Agreement to set up a regional division; there is expected to be at least one more, for the Benelux countries (Belgium, Netherlands and Luxembourg).

The EPO has published the results of a study on the effects (advantages and disadvantages) of the UPC regime.

The main concerns raised relate to the level of fees for the Unitary Patent itself, which have not yet been decided, and the costs (also unknown) and procedural uncertainties of the UPC.

Hospira UK Ltd v Genentech Inc. - High Court finds two patents relating to Herceptin (the breast cancer drug) invalid

Comment

This decision by the High Court, finding Genentech's Herceptin patents invalid, paves the way (subject to an appeal by Genentech) for Hospira to launch its generic version of the breast cancer treatment when Genentech's Herceptin SPC expires in July 2014.

Herceptin is one of the best-selling drugs in the world. Not only has it been of benefit to many patients and contributed much towards progress in the treatment of breast cancer, Herceptin has also generated huge profits – 49 billion Swiss Francs of sales - for the Roche group (profits now within reach of generic companies). Genentech's protection for the branded drug in the US expires in 2019, providing further opportunity for generics.

The case illustrates that care needs to be taken when pursuing follow-on protection for inventions. It is clear from the present decision that trying to extend protection for a successful branded product such as Herceptin is likely to raise issues of obviousness, based upon prior art previously disclosed at the time of the application for protection / regulatory approval of the branded product.

Background

Genentech's basic Herceptin patent extended by SPC is due to expire on 28 July 2014. The present action was brought by a generic drug company (Hospira) to clear entry to the market on expiry of the basic patent.

Genentech (part of the Swiss pharma company Roche) had a number of follow-on patents, two of which (EPs '115 and '455) Hospira might have infringed on launching a generic version of the drug. One patent ('115) related to a dosage regime, the other ('455) to a method of purification of the active component.

Hospira said that the '115 patent claims were invalid (obvious over the state of the art at the earliest priority date. The key item of prior art was a US FDA label for Herceptin published when Herceptin was approved by the FDA) and that the '455 claims were invalid (because they lacked novelty over a previous Genentech Patent Co-operation Treaty application (the "Andya" prior art) and that the invention was obvious, relying in this respect on some slides presented at a conference in 1996 (the "Waterside" prior art)).

Decision

Birss J held that the '115 claims were obvious (over the FDA label) and if not invalid for obviousness, were invalid for insufficiency (based on the information in the patent, read in the light of common general knowledge) and not entitled to the claimed priority. He also held the '455 claims lacked novelty over Andya and lacked inventive step (over Waterside).

Hospira had applied for a declaration of non-infringement which Birss J granted (on the basis that Hospira's generic composition fell outside the scope of Genentech's claims). A generic version of the breast cancer treatment drug is likely to be available in July 2014 (subject to Genentech appealing the decision).

Hospira UK Ltd v Genentech Inc [2014] EWHC 1094 (Pat), 10 April 2014

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