Remedies in relation to patents: 2002 developments

The courts have appeared more willing to grant interim injunction to patentees in 2002, but also more inclined to question costs as the trend of proactive judicial case-management continues.

Interim injunction granted

Interim injunctions in patent matters in recent years have been comparatively rare. In a potentially significant departure from this position, in 2002 the Patents Court granted the patentee an interim injunction in SmithKline Beecham v Apotex.

The Defendant raised a number of grounds in support of its arguments against the grant of an interim injunction. All such grounds were dismissed. In particular, the Court did not accept that amendment proceedings in relation to the patent-in-suit precluded the grant of an interim injunction. It noted that there was a formidable body of authority to the effect that the Court can enforce a partially valid patent by way of interlocutory injunction, where the enforcement is of a claim which is valid.

Further, the Court considered the Defendant’s arguments concerning non-exploitation of the patent by SKB to be without merit. In particular, the patentee, whilst not exploiting the anhydrate form of the patent-in-suit, did commercially exploit an interchangeable hemihydrate form. Accordingly, there was no question of an abuse of monopoly, nor the possibility that a compulsory licence would be granted. Further, it was not necessarily the case that damages would be restricted to a reasonable royalty.

The Defendant also submitted that an interim injunction was inappropriate since damages would not be available (since the patent would not be shown to have been framed in good faith and with reasonable skill and knowledge) and damages were thus not an inadequate remedy. Jacob J dismissed this argument and cited with approval the decision of Laws J in ex parte Rhone Poulenc in which he stated: “this argument involves, to my mind, the proposition that the very reason why damages are an inadequate (because unavailable) remedy to RPR amounts itself to a reason why they should not obtain an injunction. At first blush the submission possesses an Alice in Wonderland, or perhaps Gilbertian, quality”. The Court considered that, where damages were unavailable, there was more rather than less reason to grant an interim injunction.

Of further interest in this case were Jacob J’s comments concerning the impact of generic competition in the pharmaceutical industry. He remained firmly convinced that the damage caused by entry into the market on a substantial scale would be both very substantial and not adequately quantifiable. Jacob J’s comments would seem widely applicable to any generic company.

Jacob J’s decision also seems to have been significantly influenced by the fact that the Defendants deliberately refrained from making an application for revocation or seeking a declaration of non-infringement. They had thus brought the uncertainty of the position upon themselves. Jacob J commented “where litigation is bound to ensue if the Defendant introduces his product, he could avoid all the problems of an interlocutory injunction if he clears the way first. That is what the procedures for revocation and declaration for non-infringement are for”.

Finally, the Court considered the question of whether the Defendants would be good for any damages. The Court is often asked to assess the credit worthiness of an organisation, not only interim injunctions, but in cases of security for costs and others too. Jacob J has suggested that, in all these cases, the plain and simple shortcut was a guarantee from a bank in the jurisdiction.

Costs in Patents County Court under review

In considering the issue of costs in the case of Warheit v Olympia Tools, the Court of Appeal commented on the high level of costs that had been incurred in the case. The patentee’s costs amounted to £250,000 for a two-day trial at the Patents County Court with further costs incurred for the appeal. This had come as a surprise to the Court and could not have been envisaged by the Lord Chancellor in setting up the Patents County Court as a less expensive and more speedy forum for patent litigation. In directing a detailed assessment, the Court of Appeal expressed the hope that the cost Judge would give his views in writing, so that they could be reported and practitioners could be made aware of them.

Indemnity costs and interest calculations

The issue of costs was also considered in Dyson v Hoover. Prior to the matter being tried at first instance, Dyson had made a Part 36 offer which had been declined by Hoover. Dyson had subsequently won at trial and Hoover’s later appeal was dismissed. At the commencement of the quantum proceedings, Hoover had made a Part 36 payment into Court of £1.7 million. This was not accepted by Dyson. However, just prior to the damages hearing, Hoover paid a further £2.3 million into Court, making the total amount paid into Court by Hoover £4 million. The payment into Court also included an offer by Hoover to pay Dyson’s reasonable costs of the enquiry, subject to a detailed assessment in default of agreement. Dyson accepted the payment in, but sought its costs on an indemnity basis on the premise that it had made a Part 36 offer before the trial on liability, which Dyson had subsequently beaten. Dyson further contended that the Court retained a discretion to award costs on an indemnity basis in any event.

The Court refused to award costs on an indemnity basis. If a Claimant chooses to accept a Part 36 offer or payment, he takes it on the conditions on which the offer or payment was made, that being the sum paid into Court plus costs awarded on a standard basis. Once the offer was accepted, the Court had no discretion to award indemnity costs. Since this was a potential trap for the accepting party, the Judge suggested that the way round the difficulty would be for the accepting party to write to the offering party to settle the basis upon which the money paid in will be taken out.