6 October 2017

Supreme Court Decision On Actavis v Eli Lilly (Doctrine Of Equivalents)

Marks & Clerk


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Occasionally, patent infringement sees a truly landmark ruling that forces everyone to sit up and take notice – and one such ruling arrived last month.
UK Intellectual Property
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Occasionally, patent infringement sees a truly landmark ruling that forces everyone to sit up and take notice – and one such ruling arrived last month. Indeed, it has been hailed as the most important decision on patent infringement for more than a decade. It also represents a very patentee-friendly decision.

Until now the UK courts did not apply what is known as a 'doctrine of equivalents' when considering patents. This is a legal principle which allows parties to be held liable for infringing a patent even if the infringement does not fall within the literal scope of a patent claim. But following a ruling in the case of Actavis UK Limited v. Eli Lilly & Company – concerning the use of a chemical compound called Pemetrexed, used for the treatment of cancerous tumours – a new precedent has been set.

Essentially, claims may now be interpreted by UK courts more broadly than previously – which in turn means that patent owners could enjoy a broader scope of protection. For example, a product or process which is not covered by a literal interpretation of the claim language may now be held to infringe if the variant feature is considered to be immaterial (e.g. if the variant feature achieves substantially the same result in substantially the same way).

The ground-breaking ruling also brings the UK more closely into line with German and Dutch courts and it is expected that the new Unified Patents Court will adopt a similar approach. It further means that third parties may find it harder and more complex to design around patents, in the hope of avoiding infringement. The ruling of this recent case may mean that companies need to be more diligent than ever in order to ensure they avoid infringement. And one key way to do this is through Freedom to Operate (FTO) searches. Searches of this type review granted patents and pending applications to check for any conflicting third party rights in particular jurisdictions/territories.

Of course, patents give the owner a monopoly right which allows them to prevent others from making, using, importing or selling an invention covered by the patent – but the patent proprietor does not necessarily have an automatic right to exploit their invention themselves. This is because third parties may have patent rights that they would infringe when attempting to exploit the invention. An FTO search allows you to determine whether a particular action, such as marketing or distributing a product, can be done without infringing the intellectual property rights of others.

For example, if party A owned a patent to a bicycle, and party B owned a patent to a wheel, party A would not be able to sell a bicycle with wheels as that would infringe B's patent. (By the same token, party B would also be unable to sell bicycles as that would infringe A's patent.) In this simplistic case, the sensible solution would likely be some cross-licence or assignment agreement. This demonstrates that, whether or not a party is a patent owner, it is good practice to carry out an FTO search prior to launch of a new product.

FTO searches should not just be considered immediately prior to product launch – in many instances it is useful to carry out FTO searches regularly during the research and development process. This way, if any conflicting rights are identified, it may still be possible to design around them and so avoid infringement. It can also be a comfort for investors to see that preliminary investigations have revealed that there are no barriers to market. Don't forget that IP rights are specific to different jurisdictions, so an FTO search should be carried out in each particular country or region in which you want to operate.

In the UK, the recent ruling from the Supreme Court means that there will be some instances where a third party previously considered to avoid infringement may now be held liable. As a consequence, some patent owners could now take action against third parties who previously avoided infringement only by making immaterial changes to a product or process. Equally, on the other side, a third party may have cause to revisit any previous FTO search results to ensure that their position has not changed as a result of this decision.

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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