Are Successive Patent Validity Challenges Permissible?

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The South African Patents Act sets out a number of requirements for a patent to be valid. For example, the invention claimed in a patent must be new and not obvious.
South Africa Intellectual Property

The South African Patents Act sets out a number of requirements for a patent to be valid. For example, the invention claimed in a patent must be new and not obvious. If a patent does not meet these requirements, a person can apply to court for the patent to be revoked. Persons against whom a court action has been brought for infringement of a patent can also raise invalidity of the patent as a defence.

To try to avoid invalid patents from being granted in the first place, the Patent Offices in many regions examine patent applications for validity. To do so properly, however, requires skilled and experienced examiners. The Patent Office in South Africa currently does not examine patent applications for validity and never has. Thus, it might be argued that, particularly in a non-examining country such as South Africa, persons who successfully challenge the validity of a patent and get it revoked, though motivated by their own interests, are also performing a public service. After all, revocation of a patent found to be invalid gives the public at large greater freedom to operate, unhampered by an unmerited, artificial monopoly. Thus, the argument could go, courts should not be quick to bar successive validity challenges from being heard, even if they are made by the same person.

On the other hand, allowing successive validity challenges by the same person could potentially lead to incoherent rulings being made by different courts on the same issue and to abusive litigation. For example, successive validity challenges could be used as a delaying tactic by a person who is being, or expects to be, sued for patent infringement, to enable continued infringement for as long as possible. There is a longstanding doctrine in law, known as "res judicata" (also known as double jeopardy), which a party in court proceedings can raise to prevent an opponent from relitigating the same claim (or "cause of action") when the claim has already been determined by a competent court finally, i.e., after the determination of any appeal that may have been instituted. The doctrine of res judicata, as it is classically formulated, applies to a later dispute that involves the same parties, where the same relief is sought and where reliance is made on the same cause of action.

These issues were considered by South Africa's highest court, the Constitutional Court, in Ascendis Animal Health v Merck Sharpe Dohme. The outcome was an evenly split decision. The case has aspects that are interesting not just for patent law but also more generally in relation to the application and continuing development of the doctrine of res judicata in South Africa. An important area of disagreement amongst the justices of the Constitutional Court was on the application of a "same issue" test when barring a subsequent legal challenge brought by the same party.

The case related to a legal action instituted by joint patentees Merck and Merial and a South African licensee ("the plaintiffs") against Ascendis ("the defendant") for infringement of a South African patent for a remedy for treating parasites in livestock. At the time when the plaintiffs instituted infringement proceedings, the defendant had already launched an application to revoke the patent for invalidity. The defendant asserted, both as the basis for its attack on the validity of the patent in the revocation proceedings and as its defence in the infringement proceedings, that the patent was invalid on the grounds of a lack of novelty and a lack of an inventive step (obviousness).

To put it in layman's terms, novelty requires that something about the invention is different from what existed before (in particular, it must be different from the "state of the art" as this term is defined in the Patents Act). For obviousness, the claim is that, even if the invention is new, the difference from what existed before is merely an obvious step.

In this case, to avoid the same invalidity points raised by the defendant from being argued in different court proceedings in parallel, the parties agreed to pause the infringement proceedings so as first to proceed to finality with the revocation proceedings instituted by the defendant. In the revocation proceedings, the defendant abandoned its attack on the patent on the basis of obviousness. The defendant was initially successful with its other attack, based on a lack of novelty, and the patent was revoked by the court of first instance (the Court of the Commissioner of Patents) on this basis. This decision was, however, overturned on appeal by the Supreme Court of Appeal, and thus the patent stood.

After the appeal ruling, the plaintiffs indicated that they would be proceeding with their infringement action against the defendant. The defendant then sought to amend its pleadings in the infringement action to remove its invalidity defence based on a lack of novelty whilst retaining its invalidity defence of obviousness. The defendant also sought to amend its pleadings to add a new defence that the patent was invalid for inutility, i.e., the invention could not be performed or did not lead to the advantages and benefits stated in the specification, this being another of the grounds for invalidity that is provided in the Patents Act.

The plaintiffs also sought to amend their pleadings in the infringement action, in particular so as to contend that all of the validity challenges to its patent were res judicata since the validity of the patent had already been finally upheld in the appeal ruling of the Supreme Court of Appeal, when it overturned the decision to revoke the patent for lack of novelty. In response, the defendant contended that the doctrine of res judicata was not applicable, submitting that each ground for revocation is a separate and distinct cause of action.

The Commissioner of Patents found no merit in the defendant's submission and disallowed the defendant's amendment whilst allowing the plaintiffs' amendment. Amongst other things, the Commissioner found that the "cause of action" in the application for revocation of a patent to generally be the invalidity of the patent, and thus found that the doctrine of res judicata applied. The Commissioner thus barred the defendant from continuing to challenge the validity of the patent. The defendant, wishing to challenge this ruling, applied for leave to appeal, which was denied by the Commissioner and subsequently also denied by the Supreme Court of Appeal. Finally, the defendant approached the Constitutional Court, which resulted in the evenly split decision, two judgments being issued which were each supported by five Justices.

In neither of the judgments of the Constitutional Court was there support for the Commissioner's view that any claim that a patent is invalid is the same cause of action as any previous invalidity claim, irrespective of the particular ground under the Patents Act upon which such invalidity claim is based. In this regard it was pointed out that a cause of action means every fact that needs to be proved in order to support a litigant's claim and further that the facts needed to be proved to support the various grounds for invalidity that had been raised, were not the same. Thus, the defendant's causes of action in relation to invalidity for obviousness and inutility could not be said to the same as its previous cause of action concerning invalidity due to a lack of novelty. There was, however, disagreement in the respective judgments of the Constitutional Court on the way in which a previous unsuccessful validity challenge could affect a later validity challenge brought by the same party.

According to the first of the two judgments, the default position is that, in a situation where a party had previously unsuccessfully challenged the validity of a patent, it is for the patentee to show why a subsequent validity challenge brought by the same party should be barred, such as by contending that there is an abuse of court process. It was pointed out that it is for a party who contends that there is an abuse of court process to plead this and to lay a foundation in fact which would enable opposing parties to respond. However, this was not done by the plaintiff and therefore the issue was therefore not properly before the Constitutional Court to adjudicate.

According to the second judgment, an expanded version of the doctrine of res judicata could be applied in this case to bar the defendant's defences as the "same issue" (the invalidity of the patent) was being raised as in the previous revocation proceedings, even though the causes of action were not identical. In this regard reference was made in the second judgment to a relatively recent South African decision issued by the Supreme Court of Appeal (Pratt v Firstrand Bank) in relation to contract enforcement, where a contracting party who had tried, but failed, to invalidate a contract was disallowed from raising a new defence to the contract's validity when sued for damages for its breach. Thus, according to the second judgment, the default position in patent litigation should similarly be that a previously unsuccessful revocation applicant is precluded from raising the issue of patent invalidity in a subsequent claim for damages. Where this is shown by the unsuccessful revocation applicant to be unfair, then a court should allow the later defence to be raised, exceptionally, for that reason. According to the second judgment, it would, however, run counter to South African jurisprudence and invert the requirements of res judicata itself to require a party who is raising an exception of res judicata, including an expanded version of it, to show that upholding the exception would be just.

In contrast, in the first judgment of the Constitutional Court, reference was made to a previous Constitutional Court decision (Mkhize NO v Premier of the Province of KwaZulu-Natal) which had endorsed the view that the "same issue" enquiry is an enquiry as to whether an issue of fact or law was an essential element of a previous judgment on which reliance is placed. There was unease in the first judgment about the approach of the other Justices in the second judgment in conducting a "same issue" enquiry in a way that was different from the way in which it had been previously endorsed by the Constitutional Court and without defining with precision what an "issue" is. It was thought that this could cause hardship and injustice.

Further, with reference to the fact that the Patent Office does not examine a patent's validity on patent registration, the view was expressed in the first judgment that there should in fact be an inclination to encourage the bringing of more revocation challenges and not to create extensions in common law in relation to the doctrine of res judicata that increase the costs and risks of doing so.

Since the decision of the Constitutional Court was evenly split, it remains an open question as to which approach is the correct approach. However, it can be noted that in neither of the judgments was it thought desirable for a carte blanche to be created for parties to institute proceedings to revoke a patent on a repetitive basis. Nor did either of the judgments take the position that there was an absolute bar, without any possible exception, to a further validity challenge to a patent being brought.

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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