PLC Magazine IP/IT Bytes

By Louise Lanzkron

07-2019

Patents: interim injunctions

Summary

The High Court has refused to grant an interim injunction to restrain alleged patent infringement before trial where an expedited trial had been ordered, the defendant had undertaken to limit its marketing activities, and the patentee could not show irremediable damage.

Background

On an application for an interim injunction, the court will consider:

  • Whether there is a serious question to be tried.
  • If so, whether the balance of convenience is in favour of making the order (American Cyanamid Co v Ethicon Ltd [1975] AC 396).

While there is no obligation on a generic manufacturer to commence proceedings for revocation or a declaration of non-infringement of a potentially conflicting patent, if it does not clear the way to market when it must have realised that the patentee would be likely to seek an interim injunction if there was an arguable case of infringement, it risks falling on the wrong side of the balance of convenience (SmithKline Beecham Plc v Apotex Europe Ltd, www.practicallaw.com/9-203-1788).

Facts

A marketed a medical device used for treating a life-threatening heart condition. The market for the device in the UK was small compared with that in other countries, but this was due to change as a favourable decision from the NHS to fund the procedure was expected.

E was planning to launch its competing device in the UK in 2019. A had issued infringement proceedings and E counterclaimed alleging invalidity.

An expedited trial was ordered for December 2019. A applied for an interim injunction to prevent E from marketing its product in the UK before the trial.

E submitted evidence showing that it intended to roll out its device in a controlled manner to a small number of hospitals during 2019 and 2020, in order to obtain feedback from UK clinicians, and to promote its device, so as properly to compete with A's device when NHS funding was introduced. E gave an undertaking to limit its activity to ten patients at two hospitals.

A accepted that the expedited trial would limit the damage that it could suffer as there would be a court decision before E entered the market on a full commercial scale. However, A argued that irreparable harm would occur because E would bundle and cross-sell its device with other heart disease products, that E's activities would disrupt A's relationship with clinicians, and reputational damage to A.

E argued that damages would be an adequate remedy for A, whereas E would suffer irreparable harm as it would be unable to enter and compete with A in the expanding NHS-funded market if wrongly injuncted having not been able to obtain feedback from clinicians on its device.

Decision

The court refused A's application for an interim injunction.

There was a serious issue to be tried for the purposes of the American Cyanamid principles. The court did not consider the prior art and the validity of the patents or which device was clinically superior. If damages would be an adequate remedy for A, the court should not interfere with E's freedom of action by granting an injunction. Given E's undertaking to limit its activities to ten implantations in two hospitals, A would not suffer irreparable harm in the period until judgment. Quantification of A's loss would be very easy given E's acceptance that each sale of its device would be a sale lost to A. Allegations of bundling were not made out given evidence from E that bundling did not occur, nor was there any reputational damage or disruption of clinician relationships as E's device was already well known to clinicians.

If the risk of irreparable harm to both sides was evenly balanced, it might be significant that E had failed to clear the way for its product by seeking revocation of the patents or a declaration of non-infringement, but the risk of irreparable harm was not evenly balanced in light of E's undertaking to limit its activity. Although it was not clear exactly when the NHS would start to fund the procedure, E would need to be in a position to launch its device later in 2019. If E was restrained from launching, it would be unable to compete with A for the expanding market. A's device would enjoy a monopoly as the only such device available in the UK and E would face the challenge of entering the market later. In the expanding market it could not be said that every sale of A's device would have been a sale of E's device if it was on the market, and it would be therefore impossible to quantify the loss of E's sales for that period. It would also be impossible to predict the impact this would have on the market going forward, and so to quantify E's lost sales as a result of a wrongly granted injunction.

Comment

The court's refusal to grant a preliminary injunction here does not indicate a change in the law. In cases involving patents for medicines where a generic manufacturer is seeking to enter the market, the court may be more inclined to consider that damages will not be an adequate remedy for the patentee given that entry onto the market by the generic is often likely to be followed by other generic manufacturers leading to a rapid downward price spiral that might never be restored. This factor has become less relevant since the time taken to get to trial has shortened. Here, not only was there an expedited trial order, but also the circumstances were atypical in that E's product was likely to be more expensive than A's, there was no evidence of additional competition in the market, and E had undertaken to limit its activities to ten implantations in two hospitals before judgment.

The court criticised the parties for adducing extensive clinical evidence comparing E's product and A's device, which was inappropriate for an interim hearing. This evidence was put in on the assumption that, had the balance of convenience been even, an additional factor would have been the public interest since heart valve implants are potentially life-saving devices. The decision also demonstrates that "clearing the way" is only important if the balance of harms to the claimant and defendant is even.

Case: Evalve Inc and Abbott v Edwards Lifesciences Ltd [2019] EWHC 1158 (Pat).

Breach of confidence, copyright and database rights: live sports data

Summary

The High Court has held that copyright and database rights did not subsist in live sports data, but breach of confidence was available to protect this data, and that there was no liability for conspiracy to injure by unlawful means.

Background

Copyright does not subsist in information derived from pure routine work which does not involve sufficient skill, labour or judgment (Bookmakers Afternoon Greyhound Services Ltd v Wilf Gilbert (Staffordshire) Ltd [1994] FSR 723).

The maker of a database has the right to prevent extraction or re-utilisation of the whole, or a substantial part, of the contents of a database (the database right). The repeated and systematic extraction or re-utilisation of insubstantial parts of the contents of the database, which conflict with a normal exploitation of that database, or unreasonably prejudice the legitimate interests of the maker of the database, are also not permitted (regulation 16, Copyright and Rights in Databases Regulations 1997 (SI 1997/3032)).

To be protected by the law of confidential information, information must be confidential in nature, that is, not in the public domain. It must be disclosed in circumstances importing an obligation of confidence, and there must have been a breach of that confidence by the person receiving the information, to the detriment of the person imparting it (Coco v A N Clark (Engineers) Ltd [1968] FSR 415).

In Douglas v Hello!, the House of Lords held that information about a celebrity wedding was capable of being protected where a third party had paid for exclusive rights over photographs taken at the wedding (www.practicallaw.com/6-364-4967). Particular emphasis was placed on the commercial value of the information. The length of time before the information would likely enter the public domain was of secondary importance to the fact that the celebrity couple had sufficient control to enable them to impose an obligation of confidence over commercially valuable information.

A claim of conspiracy by unlawful means involves an agreement to take action that was unlawful with the intention of causing damage to a person who suffered damage as a result. Where the unlawful means consisted of breach of confidence, this depends on knowledge (or blind-eye knowledge) that rights of confidence were infringed.

Betting shows are the representative fixed odds for each horse in a race created by combining the odds offered by on-course bookmakers.

Facts

R provided live betting and horseracing data (raceday data), and betting shows, to off-course bookmakers. R had arrangements with on-course bookmakers, including T.

R argued that S had conspired with the bookmakers and T to injure R by unlawful means consisting of infringement of copyright and database rights, breach of contract and breach of confidence. R also brought a direct claim for breach of confidence by T, and by S, arising out of T's collection and distribution to S of the raceday data and direct claims for infringement of copyright and database right by S in relation to the manner in which it created its betting shows.

Decision

The court held that R had failed to establish copyright in the betting shows.The process of arriving at the information comprised in the betting shows was pure routine work that did not involve sufficient skill, labour or judgment to justify the existence of copyright. If copyright had existed, there would have been no infringement because S had not precisely copied the betting shows but had merely moved its own prices closer to them.

R also failed to establish infringement of database rights. Each betting show was a new price that was separate and distinct from the database entries. There was no conduct amounting to an extraction or re-utilisation of any part of R's database. S had merely consulted the betting shows, which did not amount to extraction or re-utilisation even if the betting shows formed part of the database. There was also no systematic extraction or re-utilisation of insubstantial parts of the contents of the database. S's conduct did not lead to the reconstitution of the database as a whole, or a substantial part of it.

The claim of breach of contract also failed as there was no contractual restriction on T feeding raceday data to S.

R's claim for breach of confidence in relation to the raceday data was against both T and S, T being the original acquirer of the information and S being the third-party recipient; a claim for breach of confidence could be established directly against S if it knew, or ought to have known, of the confidentiality of that information.

The raceday data had the necessary quality of confidence not because it was inherently confidential in nature but because it had substantial commercial value if only for a short time before the start of the race sufficient for R to enjoy its exclusive rights of publication. Its commercial confidentiality arose from T's unique position of being able to collect raceday data and disseminate it for pool betting purposes only, and not for fixed-odds betting purposes, without being subject to contractual restrictions.

Whether the raceday data was imparted to T in circumstances that would impart an obligation of confidence depended on the purpose for which T collected the raceday data. T's purpose in collecting the information was for pool betting activities only. A reasonable person in T's position would have known of the steps taken by R to preserve confidentiality in the data and to grant an exclusive right to exploit it for fixed-odds betting purposes. T would therefore have appreciated that its entitlement to collect and distribute the data was limited to the purpose of pool betting.

A reasonable person in the position of S would have appreciated that T had acquired the raceday information in circumstances that imposed a duty of confidence; S would have known that T's sole purpose of collecting the raceday information was for pool betting purposes so that use of the information for any other purpose amounted to a breach of confidence. This was despite the fact that S had sought and obtained contractual reassurances from T that it was in a position to provide the raceday data.

There had been unauthorised use of the raceday data to R's detriment. S's action in supplying a rival unauthorised data feed to bookmakers interfered with R's exclusive right causing it detriment and S was liable to R for breach of confidence in the data supplied to it by T. So, the direct claim against S succeeded.

Although a reasonable person in S's position would have appreciated that T acquired the information in circumstances of confidence that precluded its use for fixed-odds betting, it neither actually knew that, nor turned a blind eye to whether, T was unable lawfully to provide it with raceday data. S did not have the requisite knowledge of unlawfulness consisting of breach of confidence for the purposes of the claim in conspiracy.

Comment

Organisers of sporting events and the official distributors of live data from those events have historically had to rely largely on a combination of database rights and the contractual enforcement of ticket terms against data scouts to protect the value of their rights. Here, for the first time, the court applied the principles of breach of confidence established in Douglas to sports events, giving event organisers a new tool to protect the value of their official rights against distributors of unofficial data. The principles in Douglas were also extended here to apply in the context of constantly changing data which is updated on a regular basis.

The decision illustrates the difficulties in establishing subsistence and infringement of copyright and database rights in live sports data. Notably, the court distinguished between consulting data and extracting and utilising it for a separate purpose or gain. The law of confidence potentially provides greater protection against dissemination of unofficial data.

Case: Racing Partnership Ltd and others v Done Brothers (Cash Betting) Ltd and others [2019] EWHC 1156 (Ch).

First published in the July 2019 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.