Patents: remedies 2003 developments

We are likely to see more applications for interim injunctive relief and fewer appeals on issues of anticipation or obviousness in the future as a result of guidance from the Courts last year.

Clarification on causation of damages awaited

On an enquiry as to damages, the question can arise as to the lost profits to which the successful patentee is rightfully entitled. The issue of causation in such cases is unclear and remains unclear notwithstanding the Court of Appeal decision in . Pending the enquiry as to damages, Stolt successfully argued that Coflexip should replead their case indicating how and why the use of the invention by Stolt was causative of the loss in respect of each of 15 contracts that had been awarded to Stolt. Coflexip appealed this decision and sought a ruling from the Court of Appeal that the relevant test for causation was the “but for” test – that is, that the Defendant had been shown to infringe their patent and that, but for those infringing acts, the relevant contracts would have been awarded to them. Stolt argued that the “but for” test was not sufficient to determine causation. Coflexip would also need to prove that the contracts had been awarded to Stolt as a result of their use of the infringing process – they too sought a determination from the Court of Appeal. The Court declined, however, to resolve the issue of causation pending clarification of the background facts of the case. Both parties’ views on the law of causation were arguable and it was inappropriate to resolve such issues at an interlocutory stage

In the case of , the issue of causation of damages was also considered. On this occasion, the Court of Appeal stated that a patentee was entitled to recover damages for loss caused by the infringement provided that they were not too remote and that the normal considerations (as set out in ) would apply. There was no general proposition that damage caused by infringement would be too remote and unrecoverable unless the damage was a loss of sales in goods falling within the ambit of the claim of the patent. In the case the anhydrate and hemihydrate were for all practicable purposes interchangeable and it was reasonably arguable that the damage caused to the sales of one by the sales of the other would not be too remote.

Prospects of obtaining interim injunctions in patent proceedings improve

Interim injunctions in patent proceedings in recent years have been comparatively rare. Following the cases of and last year, the prospects of obtaining interim injunctions in such actions appear, however, to have dramatically 16 UK Patents Review 2004 improved, particularly for pharmaceutical companies seeking to prevent early generic entry into the market.

The case of related to SmithKline Beecham’s patent for crystalline paroxetine hydrochloride, its preparation and its use as a therapeutic agent, particularly relating to its anhydrous form. SmithKline Beecham sell a different form (the hemihydrate) as a pharmaceutical under the name Seroxat. The same patent has been the subject of much litigation in this jurisdiction and elsewhere. In this particular case SmithKline Beecham applied for an interim injunction to restrain the alleged infringing activity of the Defendant.

At first instance, an interim injunction was granted and a number of arguments raised by the Defendant were dismissed (see our UK Patents Review 2003). Thus interim injunctions could be granted notwithstanding that amendment proceedings were pending, the patentee was not exploiting the product claimed in the patent and notwithstanding the fact that damages might be unavailable to the respondent.

The Court of Appeal last year upheld the first instance decision on similar grounds. In particular, the Court of Appeal held that the Court’s jurisdiction to grant interlocutory injunctions is not limited (including by section 63 of the Patents Act 1977). A final injunction would normally be granted in cases where damages after amendment would not be recoverable by the applicant, and there was no principle that would preclude an interlocutory injunction from being granted in similar circumstances. Whilst it would be unusual to grant an interlocutory injunction if no damages could be recovered by the respondent, there was no principle why a Court should not grant such an injunction.

The Court of Appeal also supported the Judge’s considerations in weighing up the balance of convenience. He had been entitled to have in mind that the Defendants could have cleared the way before them by seeking revocation of the patent or seeking a declaration of non-infringement. There was no error of principle in the Judge’s exercise of discretion.

An interim injunction was also granted in a pharmaceutical case against a generic company in . Wyeth sought to obtain an interim injunction preventing Alpharma from selling a generic version of its modified release tetracycline antibiotic. It submitted that there was an arguable case of patent infringement and passing off and that the balance of convenience fell in its favour. The Defendant sought to persuade the Judge that the patent was clearly invalid and not infringed.

Notwithstanding his judgment in , and without retracting any comments made in that judgment, Laddie J refused to be drawn on the merits of the claim - “most patent actions are too complicated to allow a Court to reach a reliable view as to the merits at an interlocutory stage, and certainly not without engaging in a hard-fought mini trial”. As long as the claims and defences are triable, the Court should move on to determining the balance of convenience. In weighing up the balance of convenience in the case, Laddie J considered the least unjust course to be to preserve the status quo since both parties agreed that the case could be ready for trial in about four months and the Defendant had already delayed launch of the product by three and half months. Accordingly, he granted the Claimant the interim relief sought.

Orders for stays of proceedings may be reversed if there is a significant material change in circumstances

There were two applications for orders for stays of proceedings in the case of , one by either party and both with different decisions reached. General Electric brought patent infringement proceedings against Enercon in respect of its patent for variable speed wind generators. The patent was subject to an opposition procedure at the European Patent Office (EPO) and to avoid unnecessary costs of litigation, the Defendant applied for a stay of proceedings pending the outcome of the opposition procedure. Laddie J refused to grant a stay since, although there were substantial arguments on either side and he did not find it an easy decision to arrive at, a stay would seriously undermine the value of the Claimant’s rights if, at the end of the day, the patent was held to be valid. This was by virtue of the likely significant delay in obtaining a final determination from the European Patent Office Technical Board of Appeals.

During the course of the year, the EPO held the patent to be invalid and subsequently the Claimant sought a stay of proceedings pending the outcome of its appeal at the EPO. Importantly, pending the stay it offered undertakings to the Defendant for the period of the stay not to seek damages or injunctive relief or delivery up of infringing goods and not to seek interest in respect of past infringements and interim injunctive relief if it was successful in its appeal at the EPO.

Laddie J considered that an order for a stay of an action, or a refusal of an application to stay, can always be reversed if there is a significant material change in circumstances. The decision in the EPO was not a sufficient change in circumstances since the possibility of a successful opposition had been considered on the earlier application. The Claimant’s offer, however, did amount to a significant change in circumstances since it was so extensive and offered so much protection to the Defendant, in effect cutting out the Claimant’s monopoly for a period of two to three years.

Issues-based approach on costs often appropriate

An issues-based approach to cost was applied by Laddie J in the case of Ferries. Although the Defendant successfully defended the claim for infringement by virtue of section 60(5)(d) of the Patents Act 1977 (see above), since validity of the patent was upheld, at a costs hearing the Judge ordered that the Claimant pay 20% of the Defendant’s costs and that the Defendant pay 80% of the Claimant’s cost. The Defendant appealed submitting that an issues-based approach was inappropriate and that the bulk of costs should have been awarded in its favour since it had successfully rebutted the claim. The Court of Appeal dismissed this appeal endorsing the issues-based approached adopted by the Judge. Although determinative of the infringement action, the section 60(5)(d) point was decided relatively cheaply and quickly, whereas the rest of the issues involved a patent action with the need for detailed evidence and argument. This case can be contrasted with the decision in , reported in our UK Patents Review 2002.

Grounds of Appeal will in future need to contain a succinct statement of the principle that the Judge is said to have infringed and authority for that principle

In a supporting judgment in the case of (see above) Buxton LJ commented upon appeal procedure in this jurisdiction.

Following the guidance given by the Court of Appeal in and the House of Lords in , a Court should only interfere with the views of the trial judge if it can be shown that he has erred “in principle”. Buxton LJ stated that this phrase “has never been defined, and probably cannot be and does not need to be. At the least, however, it can be said that an error of principle can only arise if the Judge has departed from a rule or practice that applies also outside the boundaries of the facts of the instant case; that rule or practice can be coherently encapsulated in verbal form; and can be demonstrated to be binding on the Judge”.

Buxton LJ noted that in appeals frequently parties will assert that the Judge erred “in principle”, but not identify the relevant principle often since on any view no such errors had occurred. In other cases where there might have been a matter of principle involved, it is difficult to extract what the principle is. Further, sometimes although principles are stated, they are not acted on.

In light of this experience, Buxton LJ suggested that in future, when a trial Judge’s conclusions on anticipation or obviousness are challenged, the Grounds of Appeal should, in respect of each complaint, contain a succinct statement of the principle that the Judge is said to have infringed and, unless self-evident, what the authority is for that principle. Buxton LJ suggested that trial Judges keep this approach in mind when considering whether to grant permission to appeal. The Vice Chancellor, endorsing this practice suggested that there be an amendment to CPR Rule 52 or its Practice Direction.