England: The Patents Court exercises its jurisdiction to grant a pan-European declaration of non-infringement

09 January 2013

Mark Hilton, Victoria Gardner

On 27 November 2012, the Patents Court handed down its judgment in an application to contest its jurisdiction to hear an action for a declaration of non-infringement in relation to both a UK and foreign designations of a European patent. 

On 27 November 2012, the Patents Court handed down its judgment in an application to contest its jurisdiction to hear an action for a declaration of non-infringement in relation to both a UK and foreign designations of a European patent.

It held that a first set of proceedings (in the name of Actavis Group HF) had been validly served on the defendant both pursuant to the consent given by the patentee’s lawyers and also CPR 6.9(2) (service at a place of business within the jurisdiction) (and a second set of proceedings (in the name of Medis EHF) had been validly served pursuant to CPR 6.9(2)). 

In the former case, the patentee accepted that if it was held to have consented to service of the proceedings (which as stated above, it was) then that consent also extended to the court having jurisdiction over the claim. In the latter case, the Court held that it would not decline to exercise its jurisdiction over the claim (i.e., to grant a declaration of non-infringement in respect of the non-UK designations of the European patent) by staying the claims in respect of the non-UK designations on the basis of forum non conveniens. As nothing turns on the second set of proceedings, we deal below only with the Judgment in relation to the first set of proceedings.
 
Background

Actavis’s lawyers had written to Eli Lilly and Company asking for an acknowledgement of non-infringement in respect of the UK and French, German, Italian and Spanish designations of a European patent (the European Patent), relating to the sodium salt of the pharmaceutical drug, pemetrexed used for the treatment of cancer.  Actavis’s lawyers had stated in their letter that they acted for Actavis Group PTC ehf and its relevant national subsidiaries. Lilly through its lawyers had declined to give the requested acknowledgement but had stated in correspondence that they were instructed to accept service on behalf of their client. Actavis’s lawyers duly issued proceedings in the name of Actavis Group HF against Eli Lilly and Company requesting a declaration of non-infringement in respect of the UK and French, German, Italian and Spanish designations of the European patent. The proceedings were served at the offices of Lilly’s lawyers and also at the registered address for service in the UK as recorded on the UK Patents Register.

Lilly contended that, in relation to the non-UK designations of the European Patent, the proceedings were not validly served and insofar as service was effected under the rules of the court (as opposed to with their consent) then the court should stay the claims in respect of the non-UK designations of the European Patent on the ground of forum non conveniens.

One of the key points to note at the outset is that Actavis undertook not to challenge validity of the European Patent, or contend that the European Patent was invalid, in the proceedings either by way of claim or by way of defence to any counterclaim for infringement provided that the Court accepted jurisdiction. 

Actavis argued (and Lilly accepted) that in these circumstances, the court was not required to decline jurisdiction by virtue of Article 22(4) of the Brussels Regulation which confers exclusive jurisdiction over challenges to validity of registered IPRs on the courts of the States where they are registered.

In GAT v LUK, the ECJ ultimately decided that validity actions against a national part of a European patent, whether raised within infringement proceedings or as a separate validity action, could not be decided by foreign courts and thus could only be conducted in the jurisdiction for which that patent was registered. Such an action is therefore inadmissible and must be terminated, as the foreign court is not competent to rule on validity. The ECJ did however make clear that there was no barrier to the pursuit of an action for infringement where the question of the validity of a patent allegedly infringed was not called into question.

The Patent Court's Decision

The Judge held that in the circumstances (which he reviewed in some detail) service was validly effected on Lilly under the consent that had been provided by Lilly’s lawyers (even though the claimant to the proceedings was an Actavis company which had not been specifically mentioned in the letter before action). As mentioned above, Lilly conceded that if this was the case then their consent extended to the Court having jurisdiction over the claims.

Actavis also argued that service was validly effected under two separate rules of the Court: first, rule 63.14(2)(a) which provides that a claim in respect of a UK Patent can be served at the registered address for service in the UK as recorded on the UK Patents Register and second, rule 6.9(2) which provides that a claim can be served on a company other than one registered in England at “any place within the jurisdiction where the corporation carries on its activities; or any place of business of the company within the jurisdiction.” The patentee Lilly being a US company was not one which was registered in England.

The Court held that service of the proceedings on the address for service did not constitute good service under rule 63.14(2)(a) in respect of the non-UK designations of the European Patent.

However, in the circumstances, the Court held that the same address (namely Lilly’s European Patent Operations Department) did constitute a place of business in the England and therefore that the proceedings in respect of the non-UK designations of the European Patent were validly served under rule 6.9(2).

The Judge then went on to consider whether, on the basis that the proceedings had been validly served under rule 6.9(2), the Court should nevertheless stay the proceedings on the ground of forum non conveniens.

It was common ground between the parties that the principles of law to be applied were those stated by Lord Goff in Spiliada Maritime Corp v Cansulex Ltd.

It was also common ground that (1) declarations of non-infringement of the French, German, Italian and Spanish designations of the European Patent could be tried in the courts of France, Germany, Italy and Spain respectively and (2) claims for patent infringement (or declarations of non-infringement) were no different to claims for copyright infringement so far as the question of justiciability was concerned (i.e., just as claims for copyright infringement had been held justiciable by the Supreme Court in Lucasfilm v Ainsworth so were claims for patent infringement).

The main argument advanced by Lilly for a stay concerned the relevance of validity to the scope of the claims of a patent and therefore the determination of infringement (even though the validity of the patent was not being challenged). Actavis questioned the evidential basis for this argument and the Judge questioned its relevance in any event.

Actavis advanced several arguments as to why all five claims in the present case should be determined by the English court. 

First, Actavis pointed out that the dispute was not a true “forum non conveniens” type dispute in that the issue was whether the English Court should determine all five claims or whether they should be tried separately in five different courts. 

Second, Actavis put forward three reasons why it was advantageous for the five claims to be determined by the English court: (1) the case could be run using using one set of lawyers and one set of factual witnesses; (2) the case could be determined by reference to only one law (should Eli Lilly chose not to raise any issue of foreign law) and (3) even if different laws were to be applied, it would mean one court at first instance and one court on appeal would determine all five claims which would eliminate the prospect of inconsistent decisions.

On balance, the Judge favoured Actavis’ arguments and held that, on the basis of valid service under CPR 6.9(2), no stay of the claims under the non-UK designations of the European Patent would be granted on the ground of forum non conveniens.

Implications of the decision for future cases

The key finding in this decision is the fact that the Court refused to stay validly served claims for declarations of non-infringement of non-UK designations of a European Patent on the ground of forum non conveniens. In this particular case, the person requesting the declaration of non-infringement had undertaken not to challenge the validity of the European patent in the proceedings thereby avoiding the impact of Article 22(4) of the Brussels Regulation which gives exclusive jurisdiction over validity of a European Patent to the courts of the state where the European Patent is registered. It remains to be seen in future cases whether the person requesting such a declaration of non-infringement would have to give such an undertaking in order to avoid the impact of Article 22(4).

The first step in any action is service of the proceedings on the defendant. This would not normally be an issue for a defendant who was domiciled in the UK or for that matter, the EU. A second important finding in this decision is the fact that the Court held that the activities taking place at European Patent Operations Department of the US company, Lilly, were sufficient for it to constitute a place of business in the UK under CPR 6.9(2) and therefore the service of the proceedings at that place of business was valid. The Judgment provides useful guidance for future cases involving non-EU based patentees against whom such a declaration is to be sought.

 

Other items in the Patents Update newsletter for January 2013:

> China: Two recent Supreme Court decisions open up greater possibilities for amendment of Chinese patents

> England: The PCC - A review of the first four patent cases to come to trial in the PCC

> England: Patent litigation statistics for 2011 and 2012

> England: The Patent Box

> Germany: "Customary usage in the trade" gains importance in determining infringement in repair/reconstruction cases

> Germany: Stay of first instance infringement decisions in standard essential patent actions

> Holland: Cross-border patent litigation revival 'Solvay vs Honeywell'

> Spain: Some interesting peculiarities of Spanish Utility Models

> EU: Unitary Patent Regulation and Unified Patent Court Agreement

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