Patents: issue estoppel and abuse of process

By Audrey Horton

04-2020

The Patents Court has applied issue estoppel and abuse of process principles to a claim challenging the validity of a divisional patent, where the parent patent had previously been held to be invalid.

Summary

The Patents Court has applied issue estoppel and abuse of process principles to a claim challenging the validity of a divisional patent, where the parent patent had previously been held to be invalid.

Background

Issue estoppel arises where an issue has already been determined in a final decision in an earlier action between the same parties. The issue determined in the earlier action must be fundamental to the earlier decision and the issue in the later action the same as was finally determined in the earlier action.

The rule in Henderson v Henderson prevents parties from litigating matters that fell within the scope of earlier determined litigation and which could, and should, have been brought before the court in that earlier litigation ([1843] 3 Hare 100). However, it will rarely apply unless the later proceedings can properly be characterised as unjust harassment.

The doctrine of res judicata prevents a person who has obtained a decision from one court or tribunal from bringing a claim for the same complaint before another court (Clark v In Focus Asset Management [2014] EWCA Civ 118).

A patent may be revoked if the matter disclosed in the specification extends beyond that disclosed in the original application as filed. If a patent is amended to include subject matter that extends beyond the application, and the added matter cannot be removed, the patent will be invalid. Broadening amendments can be made during patent prosecution, and added matter features in a pending divisional application can be deleted before grant.

Facts

L applied to revoke G's parent patent. L argued that the claims relating to psoriasis were invalid because they were not plausible at the priority date of the patent. 

G argued that the claims were plausible but did not challenge the date at which plausibility was to be assessed. G later applied to amend to plead plausibility at the filing date, but the Patents Court refused permission as it was too near the trial. 

The Patents Court revoked G's parent patent after a lengthy, complex and expensive trial. It found that two claims of the patent relating to the treatment of psoriasis were invalid for lacking plausibility at the priority date.

The European Patent Office (EPO) Board of Appeal later revoked the parent patent for added matter, with the effect that it was deemed to have never existed.

L applied to revoke G's European divisional patent, which was virtually identical to G's parent patent. L argued that res judicata arose from the Patents Court's earlier decision to revoke the parent patent and applied for summary judgment. L argued that estoppel based on Henderson v Henderson should apply because G could and should have raised this issue earlier in the parent patent action.

G argued that there was no issue estoppel where there were alternative grounds for a decision because none of these grounds were fundamental to the decision reached. Patents are usually challenged on multiple grounds. A patent may, for example, be found invalid for lack of obviousness based on two different prior art documents.

G also argued that it would be an injustice to prevent it from pursuing the case that the divisional patent was valid and infringed. G argued that the fact that it had been given permission to appeal the Patents Court's decision meant it must have had a good prospect of success. The EPO had revoked the patent for added matter, a ground which had been rejected by the Patents Court.

Decision

The court refused L's application for summary judgment in respect of its revocation action. 

G was estopped from arguing that the antibody claims of the divisional patent were valid. G was also estopped from arguing that two claims relating to the treatment of psoriasis were plausible at the priority date. However, G had a real prospect of defending those claims as being plausible at the filing date of the divisional patent, on the basis that the common general knowledge had developed sufficiently between the priority date and the filing date, and therefore summary judgment was not appropriate in respect of those claims.

Although the divisional and parent patents were virtually identical, they were different property rights, so L could not rely on cause of action estoppel but rather on issue estoppel and the Henderson v Henderson rule. The underlying public interest in both is the same: finality in litigation. This public interest was reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public. Application of estoppel principles is also subject to the overriding consideration that it must result in justice.

The court rejected G's argument that if a patent was found invalid on more than one ground, neither ground could be considered fundamental to the decision, meaning estoppel should not apply to either ground. There was no clear and binding authority on this point. It depended on all the circumstances of the case. Even if there were alternative grounds for invalidation, estoppel could apply to both grounds.

If an issue could not be appealed, the question arose whether estoppel on that issue would create an injustice. The court rejected G's argument to that effect on the grounds that any potential injustice was outweighed by the certainty that a finding that issue estoppel did not apply would result in a rerun of a lengthy and expensive trial. This was not in the public interest and would be an injustice to L. 

The public interest was a strong factor here. This case was very close to giving rise to cause of action estoppel, as all the obviousness issues were identical in both actions. The only issue which would not be identical in the divisional patent action was that of the relevant date for determining plausibility. 

The court rejected L's argument that estoppel based on the Henderson v Henderson rule should apply because G could and should have raised the issue earlier in the parent patent action. G should not be prevented from arguing plausibility at the filing date simply because it could have pleaded this in the parent patent action but had left it too late to apply to amend. Expert evidence had established an arguable case that there was a change in the common general knowledge between the priority date and the date of filing, such that plausibility could be established at the filing date. G should not be denied the possibility of arguing plausibility at the filing date of the divisional patent. 

Comment

The ability to obtain divisional patents which must not include new subject matter from their parent, but which are separate items of intellectual property, means that issue estoppel is potentially very important in patent litigation where the patent owner seeks to enforce a divisional patent of a parent which has been held invalid centrally by the EPO in opposition proceedings, resulting in deemed non-existence.

This decision confirms the principle that patentees must be careful to present all arguments when appropriate, and that a divisional patent will not offer an opportunity to re-argue the same arguments made in the parent case. There may be a limited opportunity to pursue arguments in a second action concerning a virtually identical patent if, as in the present case, the patentee was refused permission in the parent case for case management reasons.  

Case:  Eli Lilly and Company v Genentech Inc [2020] EWHC 261 (Pat).

First published in the April 2020 issue of PLC Magazine and reproduced with the kind permission of the publishers.  Subscription enquiries 020 7202 1200.