Patent and Pharma Update, August 2020

Key recent developments in the United Kingdom and Europe relating to patents and the pharmaceutical sector

In this edition we cover landmark judgments from the UK and German Supreme Courts, on sufficiency in the UK and FRAND obligations in Germany. We also cover a significant decision of the CJEU in relation to SPCs in the Santen case, as well as a decision concerning the provision of sample medicine to pharmacists and the Advocate General’s Opinion regarding an appeal from a fine imposed for anticompetitive agreements and we report on an important decision of the European Patent Office regarding the patentability of plant and animal products. This edition also includes our analysis of a number of noteworthy UK High Court and Court of Appeal decisions on issues including injunctions, attempted strike-out of an infringement claim and the law on obviousness. Finally, we report on UK’s formal withdrawal from the Unified Patent Court Agreement.

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Court of Appeal of England & Wales maintains no interim injunction for Neurim and Flynn against generic Circadin® – damages held to be an adequate remedy

On 19 June 2020, LJJ Floyd, Males and Arnold dismissed the appeal brought by Neurim Pharmaceuticals (1991) Limited (Neurim) and Flynn Pharma Limited (Flynn) that sought to overturn the High Court’s decision refusing an interim injunction against Generics UK Ltd (t/a Mylan) and Mylan UK Healthcare Limited (Mylan), concerning their generic prolonged release melatonin product.

While the Court of Appeal (CoA) heavily criticised the approach taken by Marcus Smith J in his High Court decision, the CoA ultimately agreed with his conclusion and core finding – that damages would be an adequate remedy for Neurim and Flynn and an interim injunction was not warranted when applying the American Cyanamid criteria.

In reaching this conclusion, Lord Justice Floyd (who delivered CoA’s unanimous decision) noted that the court did not reach its conclusion on the inadequacy of damages by deciding “any principle of general application” that should be applied when considering future applications for interim injunctions in pharmaceutical patent cases. The decision not to exercise judicial discretion had turned on the “extremely unusual” facts of the case, central to which was the relatively limited period of time until the expedited trial (in ~ 4 months’ time). The short duration of any potential interim injunction also rendered a lot of Neurim and Flynn’s evidence on the inadequacy of damages unpersuasive in the eyes of Floyd LJ, as it had been prepared prior to expedition of the trial, and did not dress what harm would be caused to Neurim and Flynn in the 4 months before trial.

Background

Neurim is the registered proprietor of EP 1 441 702 (the Patent), which expires on 12 August 2022, and which covers a prolonged release formulation comprising melatonin for improving the restorative quality of sleep in a patient suffering from primary insomnia characterised by non-restorative sleep.

Flynn, under an exclusive licence of the Patent, markets in the UK a melatonin product called Circadin® that was developed by Neurim and which is indicated for the treatment of primary insomnia characterised by poor quality of sleep in patients who are aged 55 or over. The UK market for Circadin® represents 45% of the European market and Circadin® is Flynn’s flagship product that accounts for a major portion of its profits.

Having obtained a UK marketing authorisation in December 2019 for a generic product with the same label as Circadin®, Mylan had proposed to launch its a generic product imminently. As a consequence, in February 2020, Neurim and Flynn commenced proceedings against Mylan for infringement of the Patent, seeking a declaration of infringement and injunctive and other relief, and Mylan counterclaimed for revocation of the Patent. Neurim and Flynn also filed an application for an interim injunction in March 2020. After Neurim and Flynn filed their evidence in support of an interim injunction, the substantive trial was expedited such that this trial will commence in late October 2020.

Marcus Smith J rejected Neurim and Flynn’s application for an interim injunction by his decision of 3 June 2020, on the basis that the criteria in American Cyanamid were not satisfied as damages were an adequate remedy. Our previous analysis of this decision of Marcus Smith J is available here. Neurim and Flynn appealed this rejection, and the appeal was heard by the CoA on an expedited basis on 18 June 2020. Pending the decision in this appeal Mylan continued its undertakings that it would not launch its generic product.

Analysis of CoA decision

When considering Neurim and Flynn’s application for an interim injunction, Floyd LJ approached the exercise of judicial discretion using the settled 4-stage criteria set out on American Cyanamid v Ethicon [1975] AC 396:

  • Stage 1: Is there a serious question to be tried?
  • Stage 2: Are damages an adequate remedy for the claimant?
  • Stage 3: If not, are damages (on the cross-undertaking in damages) an adequate remedy for the defendant
  • Stage 4: If damages are not an adequate remedy for either side, where does the balance of convenience lie?

Floyd LJ heavily criticised the approach of Marcus Smith J to Stages 2 to 4 in which he had directed himself that he should not attempt to resolve disputed issues of fact and should determine these questions on the basis of whether there was a serious issue to be tried, this being the approach for Stage 1. When considering Marcus Smith J’s approach Floyd LJ observed that “[i]t is difficult to see how the judge’s approach could work satisfactorily in practice, where both sides contend they have raised a serious question to be tried on a given factual issue”. The correct approach to Stages 2 to 4 requiring that the court tackle these questions “the best it can on the available written evidence”. Although it may ultimately prove impossible to form a view on certain issues, Floyd LJ emphasised that “the court should not abandon the task at the outset”. These comments appear to be directed to Marcus Smith J’s finding that the parties’ written evidence was “substantially valueless” as it was prepared by the parties’ internal experts and therefore not independent evidence, and his refusal to engage with that evidence with a critical eye.

Despite Marcus Smith J’s error in approach, Floyd LJ held that it was ultimately immaterial as the CoA were as well placed as Marcus Smith J to determine the issues of factual dispute that he had declined to decide, as they arose as a matter of written evidence alone.

As it was not disputed at the appeal that Stage 1 of the American Cynamid criteria was satisfied, Floyd LJ turned to Stage 2 and the adequacy of damages to Neurim and Flynn should the court not award an interim injunction at this stage and then a final injunction be obtained following trial (the Relevant Period). Here, the determination of whether damages are “adequate” does not require damages to be a “perfect remedy”. When approaching this assessment, Floyd LJ highlighted that the boundary between damages being adequate or inadequate was not a precise one and that it was a matter of judicial evaluation of the evidence. If such an evaluation did not result in the crossing of the boundary from adequacy into inadequacy, then, normally, an interim injunction will not be granted.

Floyd LJ considered the two distinct heads of loss argued by Neurim and Flynn: (i) their lost sales and price erosion of Circadin® (pecuniary losses); and (ii) the consequential damage to their businesses caused in a variety of ways by the lost revenue from Circadin® (consequential losses). It was argued by Neurim and Flynn that such consequential losses would arise as a result of this lost revenue as it would: create a need to close down research and development (including clinical trials) and educational programmes; cause them to make redundancies; have an impact on the market for Neurim and Flynn’s other products; and harm their distribution networks.

When considering the evidence of Neurim and Flynn’s pecuniary losses and consequential losses with a critical eye, the expedition of the substantive trial significantly influenced Floyd LJ’s view. This was because Neurim and Flynn’s evidence had been prepared on a different footing – that the trial would take place in one to two years – rather than in just over 4 months’ time, such that it “cannot be assumed that a short period of generic competition followed by a final injunction would have the same effect”. Floyd LJ observed that this shortened period represented a lesser part of the remaining life of the Patent and resulted in a “different perspective” as to whether multiple generic companies would launch competing products and cause a downward spiral in the price of Circadin® in that period.

The presence of a downward “price spiral” was observed by Floyd LJ to be a “familiar point” taken by patentees seeking interim injunctions in pharmaceutical patent cases to help them overcome the hurdle of Stage 2. In many such cases, the courts have held that such a price spiral gives rise to unquantifiable losses for the patentee, with this resulting in the inadequacy of damages for them. However, Floyd LJ cautioned against comparisons with other cases as the presence of a price spiral is “intensely fact sensitive”. Floyd LJ having examined the evidence in this case held that it was not one where there would be a downward price spiral. He formed this view on the basis that the reduced length of the Relevant Period was a very short time period for the dramatic price effects suggested in the evidence of Neurim and Flynn. This was particularly the case given: the relatively high levels of prescription by brand name (53%), with this prescribing practice giving some protection against generic competition; the slow speed by which changes would occur in the relevant reimbursement regime (the NHS Drug Tariff Categories); and the reduced prospect of the launch of a further generic product in the Relevant Period (with the evidence showing that this was possible, but falling a “long way short of establishing that it was likely”).

Floyd LJ was also “wholly unpersuaded” by the submissions that Neurim and Flynn’s evidence established consequential losses in this shortened Relevant Period as it would be “flogging a dead horse” as the market had “become generic”. Floyd LJ disagreed that a shortened period of competition with just one generic company amount to a market that had “become generic”. Further, he could not accept that even if the market had “become generic” why this would result in the discontinuance of research funding or why, if investment in Circadin® was worthwhile for the two remaining years of patent exclusivity, investment would no longer be worthwhile due to a four month period of competition by one generic company. He concluded on the basis of his view of the facts that it was “not realistic to suppose that the lost revenues would be on such a scale as to necessitate the drastic steps referred to by Neurim and Flynn revenues using their existing reserves until the shortfall is recovered from Mylan”.

Given his rejection of any consequential losses to Neurim and Flynn, Floyd LJ then considered the “core question” of whether the calculation of damages caused by the remaining pecuniary losses in the absence of a downward price spiral were of such complexity as to render their remedy in damages inadequate. He held that this had not been established and that the facts of this case “make the court’s task in assessing the loss to Neurim and Flynn relatively straightforward”. Neurim and Flynn had provided the court with detailed sales forecasts, and the court would have additional resources (like actual sales figures) at the time of the damages enquiry. Even if the assessment of damages for a period of the infringement required some extrapolation, the CoA noted that damages are to be “assessed liberally”, and would therefore provide an adequate remedy for the losses that Neurim and Flynn might face.

Given that Neurim and Flynn fell at Stage 2 of the American Cyanamid criteria, the CoA did not consider Stages 3 and 4, and dismissed the appeal.

Conclusion

While Floyd LJ may not have “decided any principle of general application” in this decision, it demonstrates the critical eye that the courts will cast on the evidence supporting the inadequacy of damages for those seeking an interim injunction in pharmaceutical patent cases.

Jonathan Turnbull
Jonathan Turnbull
Partner
+44 20 7466 2174
Priyanka Madan
Priyanka Madan
Associate
+39 02 0068 1365

Unsuccessful strike out of a quia timet infringement counterclaim

Teva UK Ltd v Chiesi Farmaceutici SpA [2020] EWHC 1311 (Pat), 2 June 2020

Summary

After having been pressed by the defendant pharmaceutical company, Chiesi Farmaceutici SpA (“Chiesi”), to disclose a product description in a patent revocation action brought by Teva UK Ltd (“Teva”), Teva applied to strike out Chiesi’s counterclaim for quia timet infringement. Teva argued that the legal test for such a claim had not been met and, in the alternative, that the disclosure of the product description required for the infringement claim would violate competition law. Mr Justice Birss refused to strike out the counterclaim for infringement on the basis that it has a real prospect of success at trial and that the disclosure sought by Chiesi does not amount to collusion contrary to Art 101 TFEU.

Background

In October 2019, Teva brought an action to revoke three of Chiesi’s patents which, along with others, cover one of Chiesi’s products known as FOSTAIR in the UK, used in inhalers to treat asthmatics. The patents are due to expire in 2027/28, but the data exclusivity for FOSTAIR expired in 2012 such that generic companies were free to apply for marketing authorisations for that product. In response to Teva’s revocation action, Chiesi filed a defence and counterclaimed for infringement on a quia timet basis, seeking disclosure of a product description in the usual way. The trial for both the validity and infringement claims is currently listed for October 2020.

Legal test for a strike out claim and quia timet injunction

Birss J reiterated that the legal test for infringement on a quia timet basis is whether “viewed in all the relevant circumstances, there was a sufficiently strong probability that an injunction would be required to prevent the harm to the claimant to justify bringing the proceedings” (MSD v Teva [2013] EWHC 1958 (Pat)). He rejected Teva’s submissions that sought to qualify this test and also the submission that, as a matter of legal principle, it was a prerequisite for quia timet claims in pharmaceutical patent case for there to be a pleaded, relevant marketing authorisation. In rejecting the latter submission, he considered and distinguished his earlier decision in Actavis v ICOS [2016] EWHC 1955 (Pat) on which Teva relied. In Actavis v ICOS, Birss J held when granting a final injunction at trial that the inference supporting quia timet infringement does not derive solely or even predominantly from the fact they have sought to clear the way by applying to revoke patents, but that it derived from the relevant marketing authorisation. Addressing Teva’s submission, Birss J cautioned that this decision and his reliance on the existence of a relevant marketing authorisation must not be taken out of context. In Actavis v ICOS, he was considering the grant of a final injunction at trial whereas in this case he was being asked to strike out a claim for infringement on a quia timet basis at an interim stage.

In considering the correct approach, Birss J held that a lack of evidence at the start of the action to justify a final injunction is not determinative of the relevant question at a strike out hearing, where the relevant legal question is whether there is a real prospect of success of establishing a threat or intention to infringe at trial, i.e. whether such evidence may exist by then. In the absence of other regulatory hurdles that would preclude a marketing authorisation during the remaining life of the patent, it is not a complete answer at an interim stage that the alleged infringer has not obtained a marketing authorisation, although the weight given to this fact will change if the question is assessed again at trial. Birss J took further support for his conclusion from Arnold J (as he then was) allowing a quia timet infringement claim by amendment in Generics v Sandoz [2017] EWHC 2276 (Pat).

Birss J also held that the approach of the English Courts to patent litigation was a relevant consideration. Here, he highlighted the well established principle that an alleged infringer ought to “clear the way” by revoking the relevant patent and/or seeking a declaration of non-infringement (“DNI”). Actions to clear the way usually result in the alleged infringer seeking to both revoke the patent and obtain a DNI, such that issues of both infringement and validity are determined together. In such actions, the fundamental question can be answered: are the alleged infringer’s proposed acts lawful or not in view of the patentee’s rights. If the alleged infringer chooses not to seek a DNI, then the patentee may wish to counterclaim for infringement so that this fundamental question can be answered.

In light of these considerations, a simple, rebuttable inference can be drawn from the fact that the party seeking the revocation of the patent intends to infringe by launching a product before expiry of the patent.  As Teva had commenced revocation proceedings, Birss J drew this inference, which, as set out above, is not displaced simply by the absence of a pleaded, relevant marketing authorisation. Birss J drew further support for this inference from the fact that, as pleaded by Chiesi, Teva had failed in correspondence to state that it did not have an intention to launch, despite having been given an opportunity to do so. Teva’s offer of two weeks’ notice of launch was also insufficient to rebut this inference, as it would not allow infringement to be decided in advance of such a launch. In light of this, Birss J was satisfied that Chiesi’s pleaded claim for quia timet infringement had a real prospect at trial and therefore refused to strike out this claim.

Abuse of process

Teva pleaded an alternative free standing “abuse of process” argument to strike out the claim, contending that the Chiesi’s true motive in pleading the infringement counterclaim was a collateral one, namely to obtain Teva’s launch plans through disclosure. Having summarised the earlier law, Birss J relied on JSC BTA Bank v Ablyazov (No. 6) [2011] 1 W.L.R. 2996 as establishing that even if a claimant has two purposes for commencing proceedings, one legitimate and the other sufficiently collateral as to be illegitimate, the commencement of proceedings will not be an abuse. Birss J starkly noted that even assuming disclosure was one of Chiesi’s motives, it is obvious that there is another purpose in bringing the infringement claim, namely to sue Teva for infringement and obtain appropriate remedies such as an injunction if the claim is made out. Furthermore, he noted the claim was being brought by Teva in the first place, and thus held that the infringement claim is not an abuse of process.

Competition law

Teva put forward another alternative argument, submitting that the parties are “competitors” and that there is a very real risk that the provision of the information requested by Chiesi mentioned above would be found to infringe Art 101(1) TFEU. Birss J agreed that the parties were competitors and summarised infringement of Art. 101(1) as requiring a collusion between undertakings.

Birss J highlighted that the point of the patent system is to stimulate innovation, which itself is pro-competitive. Resolving disputes between rivals about patent validity and infringement are part of that system and therefore this sort of litigation, conducted properly and not as part of a sham, is inherently pro-competitive, irrespective of the result. A court determination that a patent is valid and infringed should not be seen as a “negative” result even if it means that consumers will pay higher prices for the patented goods, because such determinations are a necessary means of ensuring that patent-holders receive the proper rewards for their innovations.

Although Birss J agreed that the provision of information between undertakings can itself amount to the requisite form of collusion required, Art. 101 will only be engaged if this provision amounts to practical cooperation between the parties being substituted for the risks of competition. Balancing the factors above, the judge concluded that exchange pursuant to disclosure obligations and case management orders which are made in properly constituted patent litigation does not meet the minimum threshold to amount to a form of collusion prohibited by Art. 101 TFEU, and, accordingly, he dismissed the competition law argument.

Stay of proceedings

Finally, Teva argued that, if the claim was not struck out, it should be stayed because it was prepared to offer 14 days’ notice of launch. Birss J was not convinced by the argument and stated that it offered no substitute for resolving issues of infringement on their merits at trial, remarking that Chiesi asking Teva for two months’ notice seemed to have been a fair attempt at a compromise.

Jonathan Turnbull
Jonathan Turnbull
Partner
+44 20 7466 2174
Monika Klajn
Monika Klajn
Associate, London
+44 20 7466 7604
Charlie Madill
Charlie Madill
Trainee, London
+44 20 7466 3585

 

 

COVID-19: Pressure Points: The UK Government confirms that it will indemnify ventilator manufacturers against IP infringement claims

The UK Government has issued an indemnity in relation to claims brought against the manufacturers of new ventilators produced to deal with the COVID-19 pandemic in the UK as part of the Government’s campaign for rapidly manufactured ventilator systems (RMVS).  A letter from Michael Gove MP to the Chair of the Public Accounts Committee (3 April) confirms that product liability and intellectual property infringement liabilities will be indemnified by the Government.

There is no specific statement of the amount the Government expects may be needed in relation to these RMVS indemnities, other than an indication that it could be over £3 million. A contingent liability for the Government of over £3 million, for which there is not statutory authority, would normally require a 14 day approval process. The exception is in cases of special urgency. In his letter, Mr Gove acknowledges that he is not using the usual procedure for liabilities over £3 million, but is notifying the Public Accounts Committee directly, in order to prevent further delay and allow the contracts for procurement to be concluded.

Mr Gove states that the need for both indemnities is “driven by the unprecedented speed of the development of these medical device. The indemnities are essential for the emergency provision of ventilators, procured at pace“.

Author

Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, IP, London
+44 20 7466 2217

 

 

 

COVID-19: Pressure points: UK Government disables domain names and social media accounts involved in selling fake or unauthorised COVID-19 products

On Saturday (4 April 2020) the UK Government issued a press release on how the medicines and medical devices regulator, the Medicines and Healthcare Products Regulatory Agency (MHRA), is investigating the increasing number of bogus medical products being sold through unauthorised websites claiming to treat or prevent COVID-19 cases of fake or unlicensed COVID-19 medical products.

These concerns were reflected in our blog post of 2 April, COVID Counterfeits, which identified many of the problems facing business supply chains caused by the opportunities that unscrupulous parties see arising from the pandemic, and suggested ways to deal with them using intellectual property rights and advertising regulations inter alia.

The Government’s press release refers to “self-testing kits, ‘miracle cures’, ‘antiviral misting sprays’, and unlicensed medicines” as being amongst the products being promoted, and states very clearly:

At this time, there are currently no medicines licensed specifically for the treatment or prevention of COVID-19 and there are no CE marked self-testing kits approved for home use“.

According to the press release, the MHRA has disabled 9 domain names and social media accounts selling fake or unauthorised COVID-19 products.

Lynda Scammell, MHRA Enforcement Official, is quoted as saying: “There is no medicine licensed specifically to treat or prevent COVID-19, therefore any claiming to do so are not authorised and have not undergone regulatory approvals required for sale on the UK market. We cannot guarantee the safety or quality of the product and this poses a risk to your health.”

Key Contacts and Authors

Joel Smith
Joel Smith
Partner, Head of Intellectual Property, London
+20 7466 2331
Jonathan Turnbull
Jonathan Turnbull
Partner, Intellectual Property & Pharma, London
+44 20 7466 2174
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, IP, London
+44 20 7466 2217

 

COVID-19: Pressure points: COVID Counterfeits – combating counterfeiting, product replacement, misleading advertising and cyber crime in the current crisis

Whilst as a global community we have witnessed extreme acts of kindness, compassion and camaraderie since the start of the COVID-19 crisis, regrettably, some have sought to exploit the crisis. From sales of counterfeits, mis-substitution of products and misleading advertising, to reverse engineering and cyber attacks, intellectual property (IP) rights holders are amongst the many becoming victims of such activities. Here we ask what has been happening and what IP holders can do about it. We provide an overview of the options available for IP rights holders to limit the damage caused by such activities, and, if necessary, enforce their rights.

What has been happening?

A range of counterfeit medicines, vaccines and other devices which claim to prevent, test for or even cure COVID-19 have been introduced into the market in the wake of the global epidemic. In some cases these have been found to be relatively non-harmful substances, such as paracetamol or caffeine tablets, whereas in more extreme cases the ingredients have been far more dangerous, such as thiocyanate and hydrogen peroxide. Similarly, for Personal Protection Equipment (“PPE”), counterfeit face masks have been produced that have not been thoroughly tested and consequently do not bear the required “CE” mark.

Incidences of cybercrime are also on the rise as criminals take advantage of the unique opportunity COVID-19 has provided. Included within the broad range of businesses that have been targeted there have been ransomware attacks on scientific testing centres and laboratories and phishing attacks on members of the public, through emails claiming to contain important information from the government.

Supply chains have also been weakened by the crisis, with suppliers either unable to meet demand or unable to sustain themselves with the reduction in demand. In the former case, the temptation is for purchasers to seek alternative sources for required products or component products, leading to an increase in counterfeit or substitute products being offered on the market, possible reverse engineering attempts or misleading advertising of alternatives as suitable replacements.

Although this note focuses on those seeking to exploit the COVID-19 crisis, many people and companies have rallied together to fight the pandemic, such that there have been significant collaborative efforts aimed at solving the medical issues presented by COVID-19 (see our publication COVID-19 Global: Collaboration is key in the race to develop a vaccine).

What can IP rights owners do about it?

Considerations include infringement of patent and trade mark rights, parallel imports, Customs seizure, issues with threatening the supply chain, misleading advertising and passing off, falsified medicines provisions and cyber threats.

Patent infringement

Where the holder of a patent, or the exclusive licensee of a patent, is aware of an infringement of its rights, patent infringement proceedings can be commenced in the national courts where the patent is in force. Where the invention relates to a product, it will be an infringement of the patent right in the country of export to distribute the product, and also an infringement in the country of importation.

A rights holder can also approach the national courts to obtain additional information on possible infringement: for example, in the UK, a type of order called a Norwich Pharmacal order can be sought for the purpose of identifying the wrongdoer (such as the supplier of the allegedly infringing goods or other distributors).  Applications for disclosure and non-party disclosure are also available, where infringement proceedings have been commenced.

Reverse engineering may be attempted to make up for the lack of supply of patented goods or in an attempt to “design around” a patented part or product that cannot be sourced or for which there is a significant delay. If a patent is in force and the inventive concept of the patent is infringed then so-called “designing around” will not avoid infringement, however if alternative ways to achieve the same effect may do so, depending upon the way the patent’s claims are structured.

Trade mark infringement

The Trade Marks Act 1994 (“TMA”) contains provisions covering UK trade mark infringement, as well as criminal offences relating to anti-counterfeiting. Further, both the EU Trademark Regulation (2017/1001), which governs the unauthorised use of EU trade marks, and the EU Customs Enforcement Regulation (608/2013), which concerns the customs enforcement of IP rights by customs authorities, have effect in the UK. The Customs Regulation makes it possible for Customs authorities to have intercepted goods destroyed, without the need for a Court to determine whether any right has been infringed under national law. See more on this above.

Whether opportunistic trade mark applications for “Covid” or “Coronavirus” may have any value is another question. During March 2020, there were 7 UK trade mark applications and one EU trade mark application designating the UK for “Coronavirus” or variants thereof (including for “KEEP CALM AND CORONAVIRUS ON”!), as well as 12 applications for “Covid” or variations thereof, although the earliest two of these have been withdrawn. The remaining applications are under examination and it remains to be seen whether they may be registered.

Civil actions:  For counterfeit goods, the use of a sign in the course of trade will normally be identical to the registered trade mark and in relation to identical goods. Accordingly, this constitutes a subcategory of infringement under Section 10(1) of the TMA) or Article 9(2)(a) of the Trade Mark Regulation in relation to EU trade marks). In the case of use of an identical mark on identical goods, the trade mark owner is not required to demonstrate a likelihood of confusion.

If urgent action is required, in certain circumstances UK courts can grant interim injunctions and search and seizure orders against the infringer. These orders can be applied for without notice to the infringer and granted within days. Where urgent action is not warranted, then the trade mark owner may initiate proceedings seeking permanent injunctions against future infringement, orders for the infringer to pay damages or an account of profits to the trade mark owner, orders for the infringer to deliver up or destroy the infringing goods and costs.

Criminal Actions: Under section 92 of the TMA, it is a criminal offence to use without the proprietor’s consent a sign identical with a trade mark, or likely to be mistaken for that mark, with a view to make a gain or to cause a loss to another. The Fraud Act 2006 and the Proceeds of Crime Act 2002 may also be relevant to criminal IP cases:

  • Under the Fraud Act, it is a criminal offence to dishonestly make a false representation with an intention to make a gain for oneself or another or an intention to cause loss to another or expose another to a risk of loss, and to make or possess articles for use in or in connection with fraud, and to make or supply articles for use in fraud.
  • The Proceeds of Crime Act provides for the recovery of assets and proceeds obtained through crime, including IP crime, as well as recovery of proceeds of crime through civil proceedings where a criminal conviction has not been possible.

Trade mark owners have the right to bring private prosecutions under the various criminal IP provisions. Alternatively, the Crown Prosecutions Service may bring criminal proceedings against suspected offenders, but has no influence over private prosecutions. National Trading Standards also provides national and local protection and enforcement of IP rights, and is empowered to bring criminal prosecutions themselves, issue statutory notices and cautions, and obtain search and seizure orders from the courts. Further, the Police Intellectual Property Crime Unit (PIPCU) is the specialist unit within the police service tasked with tackling serious and organised IP crime and in particular IP crime committed online.

Parallel Imports

During the current times of high demand for particular products and the potential/actual breakdown of normal supply chains, there may be an increase in supply from jurisdictions where products are available at a lower price or simply are still available. This leads to what is called parallel imports or grey goods markets, where products that were only supposed to be supplied to one country’s market are sold into another. IP rights can be used to prevent this except where they have been “exhausted”. IP rights in goods that have been put on the market in the EU with the consent of the IP right owner and are now circulating in the EU are deemed exhausted, unless there has been repackaging of the product in the case of pharmaceuticals, and then generally only where there is some element of risk to the ultimate consumer. It may be possible to prevent importation from third countries however, depending on whether the courts consider international exhaustion of rights to have occurred. Much will depend on evidence of consent or otherwise of the IP right owner.

Customs seizure

When it is not clear whether an infringement of intellectual property rights is occurring, or by whom, it is important to turn to the national customs authorities, which monitor the goods that are passing through their borders each day.

EU Regulation No 608/2013 gives patentees an avenue to ask border authorities to inspect and seize possibly counterfeit and pirated goods upon importation into the member state.  Under this regulation, an application can be made to each customs authority to request them to seize goods that are suspected of infringing an intellectual property right.  Such application should provide the authority with sufficient information in which to identify possibly infringing goods, including detailed descriptions and photographs of the goods and any likely packaging or labelling. (See above for more on trade mark infringing goods).

If possibly infringing goods are seized by customs, the authority is to provide the applicant with information about the goods, including photographs of goods and the names and addresses of the consignee and the holder of the goods, and their origin, provenance and destination. In some instances, it will be possible to request that a sample of the goods be analysed The applicant can request destruction of the goods if they consider that the goods are indeed infringing their rights, and/or the applicant can commence legal proceedings for infringement.

Threatening an infringer’s supply chain

At first glance, it may appear that a quick way to stop infringements would be to contact those retailing the infringing products or supplying materials to the infringer for their manufacture. However, the national laws on unjustified/groundless threats (such as those in the UK, as updated by the Intellectual Property (Unjustified Threats) Act 2017) could result in liability and proceedings against the rights owner making such a threat. Under UK law threats could be actionable as unjustified threats as a matter of patent, trade mark or design law if threats are made in relation to secondary acts of infringement, such as sale or supply of essential means. As a consequence, great care needs to be taken when sending letters threatening action to anyone other than primary infringers for primary infringing acts.

Misleading advertising and passing off

Misleading advertising and adverts that attempt to pass goods off as those of another, are both actionable and injunctions can be obtained to stop these activities. Misleading advertising can also be a criminal offence (corporate and directorial), in a B2B context, under the Business Protection from Misleading Marketing Regulations 2008 (BPRs), and, in a B2C context, under the Consumer Protection from Unfair Trading Regulations 2008 (as amended by the Consumer Protection (Amendment) Regulations) (CPRs).

The CPRs protect the consumer against unfair commercial practices including misleading actions and omissions, which are prohibited under these regulations. The BPRs prohibit advertising that misleads traders and define advertising as misleading where it: “(a)  in any way, including its presentation, deceives or is likely to deceive the traders to whom it is addressed or whom it reaches; and by reason of its deceptive nature, is likely to affect their economic behaviour; or (b)  for those reasons, injures or is likely to injure a competitor”. Anything that would breach the CPRs is also a breach of the BPRs. This could include false attribution of intellectual property rights.  Enforcement is via enforcement authorities (usually Trading Standards) which can require undertakings and bring injunction proceedings.  The BPRs also regulate comparative advertising which is could also be relevant in COVID-19 situations e.g. where products are being advertised or compared as substitutes for example, although there are no criminal sanctions for comparative advertising, only regulatory ones as described above.

For passing off to be made out there has to be an act of misrepresentation that goods/businesses are those of another, that other must have demonstrable goodwill in those goods/business and there must be actual or likely damage.  Passing off actions can be difficult to bring without significant evidence and individual instances of confusion as to the origins of the goods or services being offered. However, the goodwill-owner can bring the action themselves such that it has more control over enforcement and is not reliant on the relevant enforcement authorities to bring actions under the BPRs or CPRs.

Online sales

Online distribution of counterfeit goods is becoming ever more prevalent. Use of social media platforms, including the use hidden closed group on platforms such as Facebook, is now considered to have overtaken the more traditional auction sites and online marketplaces. This can, unfortunately, make such sales harder to detect. Online platforms also have procedures to take down infringing content and listings of counterfeit goods, but the efficiency of these procedures, and scope of what content can be removed, vary between sites.

In addition, the following steps can be considered:

  • An action before Nominet, which is the the ‘.uk’, ‘.cymru’ and ‘.wales’ domain registry,. It offers a domain name dispute resolution service (DRS) that rights holders can use to take down domain names used in relation to online IP infringement. Nominet will also suspend domain names involved in online IP infringement in response to requests from PIPCU, who are focussed on stopping online counterfeit trading and can bring prosecutions and have assets seized under the Proceeds of Crime Act.
  • Seeking an order from the courts against the internet service providers (ISPs) to block websites known to host infringing content under Section 97 of the Copyright, Designs and Patents Act 1988.
  • Involving the National Trading Standards’ e-Crime Team, which is focused on investigating online crime, including counterfeiting and IP crime, and has the power to seize counterfeit goods and takedown of infringing website listings.

Falsified Medicines

In relation to medicines, the Falsified Medicine Directive (the “FMD”)) may be of assistance (Directive 2011/62/EU which amended Directive 2001/83/EC on the Community code relating to medicinal products for human use in order to prevent the entry of falsified medicinal products into the legal supply chain). A falsified medicine is defined by the European Medicines Agency (“EMA”) as a “fake medicine that passes itself off as a real, authorised medicine”.  The FMD contains provisions requiring Member States to impose penalties for acts involving falsified medicinal products however sold.

The UK implemented the FMD via the Human Medicines Regulations 2012, as amended by two further statutory instruments the following year (the “Regulations”). The Regulations make it a criminal offence to import, manufacture or distribute active substances unless they are registered with the relevant licensing authority and meet stringent regulations elsewhere in the legislation.

Therefore, although not a direct remedy for a rights holder, these provisions offer reassurance to pharmaceutical manufacturers as the Regulations provide barriers to, and sanctions against, those involved in activities relating to falsified medicines if they attempt to introduce falsified medicines into the pharmacy supply chain.

 

Key contacts and Authors 

Joel Smith
Joel Smith
Partner, Head of Intellectual Property, London
+20 7466 2331
Jonathan Turnbull
Jonathan Turnbull
Partner, Intellectual Property & Pharma, London
+44 20 7466 2174
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, IP, London
+44 20 7466 2217
Kate Macmillan
Kate Macmillan
Consultant, London
+44 20 7466 3737
Joanna Silver
Joanna Silver
Senior Associate, IP, London
+44 20 7466 2315
George McCubbin
George McCubbin
Associate, IP, London
+44 20 7466 2784
Charlie Madill
Charlie Madill
+44 20 7466 3585

RATIFICATION OF THE UPC AGREEMENT IN SIGHT? GERMAN CONSTITUTIONAL DECISION LIKELY EARLY IN 2020

As those with an interest in patents will be aware, the Unified Patent Court is still not a reality. The final ratification of the Unified Patent Court Agreement (“UPCA”) required for the agreement to come into effect, is that of Germany (over 13 states having ratified including the UK and France, which, along with Germany, were the three states which were required to have ratified along with at least ten more, before the UPCA could come into force – see here for ratification details). Without the UPC established to enforce them, unitary patents cannot be granted.  Germany’s ratification has yet to be received.

The outcome is still awaited of the constitutional case objecting to a ratification of the UPCA by Germany, which was listed to be decided in 2019.  In a recent interview, Judge Huber of the German Federal Constitutional Court (which is the court due to decide the case) denied that the delay had anything to do with Brexit, rather that other important cases were also waiting to be decided and took precedence. He suggested that the case might be decided in the early part of 2020.

It is generally thought that the German court is likely to reject the objector’s case, but only once this is determined can the German government make a decision on whether to ratify the UPCA. Indications are that all administrative preparation to ratify had been made in readiness, however the issue of Brexit is also key, in governmental terms at least. In July 2019, in a response to a Brief Enquiry, the Federal Government stated that the consequences of Brexit were as yet unknown (and by implication were delaying ratification), but also reasserted the current Federal Government’s commitment to the unitary patent and UPC project.

For more on the Unified Patent Court (UPC) and unitary patent (UP) system, see our UPC hub here: www.hsf.com/upc

Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, London
+44 20 7466 2217

CJEU refuses UK High Court’s request for preliminary ruling on SPC applications based on third-party MAs, on account of referred question being “hypothetical” (C-239/19 Eli Lilly v Genentech)

On 5 September 2019, the Ninth Chamber of the CJEU refused a request for referral in relation to the interpretation of Article 3(b) of Regulation (EC) No 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the supplementary protection certificate for medicinal products (‘SPC Regulation‘).

Business impact

In its order, the CJEU held that this request for a preliminary ruling was manifestly inadmissible a under Article 52(3) of the Rules of Procedure of the Court of Justice, as the question referred was hypothetical for the purposes of the dispute in the main proceedings.

The referral request was made by High Court of Justice (England and Wales) in proceedings [2019] EWHC 388 (Pat) between Eli Lilly and Genentech. The referral was concerned with whether the SPC regulation should preclude SPC applications based on third-party marketing authorisations (‘MAs‘), which is where a patent holder seeks to obtain an SPC for a product without the consent of the unrelated third party that has developed that product and obtained the necessary a MA for it.

This issue is not a new one, and was previously referred to in Eli Lilly v HGS (C-493/12). Although it was not being pursued as a standalone ground, the CJEU decision observed in this case that if an SPC were granted to the patent holder, even though he was not the holder of the MA granted for the medicinal product developed from the specifications of the patent, and had therefore not made any investment in research relating to that aspect of his original invention, that would undermine the objective of the SPC Regulation. In a similar vein, in Gilead v Teva (C-121/17; a case that did not concern grant of SPCs based on third-party MAs) the CJEU held in paragraph 50 of its decision that when applying Article 3(a) of the SPC Regulation no account should be taken of research which took place after the filing date or priority date of the basic patent, as this would enable the SPC holder to unduly to enjoy protection for those unknown results.

The refusal of the reference means that disappointingly, the rather important question of SPC applications based on third-party MAs remains unanswered. Nevertheless, it is likely that there will be a further reference on this issue in the future, perhaps from one of the other national courts where the dispute between Eli Lilly and Genentech remains live, or from the Court of Appeal in the UK (should this happen before Brexit).

Background

The referral request was made by the UK High Court in proceedings which related to Genentech’s patent EP (UK) 1 641 822, entitled ‘IL 17A/F heterologous peptides and therapeutic uses thereof’ (the ‘Basic Patent’) and Eli Lilly’s MA for their product ‘ixekizumab’ marketed under the brand name ‘Taltz’.

Genentech contended that the formulation for ixekizumab fell within the scope of the Basic Patent, and applied for an SPC on the basis of the Basic Patent and Eli Lilly’s MA for ixekizumab.

Eli Lilly in turn contended that two grounds precluded the grant of the SPC: 1) the SPC application at issue did not comply with Article 3(a) of the SPC regulation, since the formulation for ixekizumab was not protected by the Basic Patent; and 2) the application did not comply with either Article 2 or Article 3(b) and (d) of the SPC Regulation, because the MA for ixekizumab is not a relevant MA, since it is owned by a third party and was relied upon without that party’s consent.

By the time the referring decision as handed down, the Basic Patent had already been held to be invalid in parallel proceedings. Nevertheless, Mr Justice Arnold considered it necessary to make a referral to the CJEU on whether the SPC Regulation should preclude SPC applications based on third-party MAs. Various factors played a role in making the referral:

  1. Even though the Basic Patent had been held to be invalid in parallel proceedings, it may be maintained on appeal;
  2. Because of Brexit, it is highly probable that the Court of Appeal will cease to have jurisdiction to refer a question for a preliminary ruling to the Court of Justice, so it was considered necessary that the High Court refer such a question now;
  3. As of the date of the reference decision, Eli Lilly and Genentech were in dispute on this issue not only in the United Kingdom but also in other Member States;
  4. This issue had arisen in other previous cases.

Keeping the above in mind, Mr Justice Arnold referred the following question to the CJEU:

Does [the SPC Regulation] preclude the grant of an SPC to the proprietor of a basic patent in respect of a product which is the subject of a marketing authorisation held by a third party without that party’s consent? 

Analysis

The CJEU’s order clarifies that the role of the CJEU is to aid with interpretation of such EU law as is necessary for national courts to give judgment in cases upon which they are called to adjudicate. A reference for a preliminary ruling made by a national court is to be rejected where it is obvious that the interpretation of EU law that is sought is unrelated to the actual facts of the main action or its object, or where the problem is hypothetical.

In considering whether the clarification or interpretation of EU law sought in the referral is necessary, the CJEU held that it is not sufficient to say that there may be an appeal down the line which may render the hypothetical scenario true. Neither is it of relevance that the same issue exists in proceedings in other jurisdictions, or may have been raised in previous proceedings – the existence of disputes in other Member States of the European Union or of previous disputes does not support the conclusion that the interpretation of EU law that is sought is necessary for the resolution of the dispute which the referring court is called upon to resolve.

The CJEU also clarified that the referring court could not pre-emptively request a reference pending Brexit, on the basis that the appeal court might subsequently lose its jurisdiction to refer the same question because of withdrawal from the European Union pursuant to Article 50 of the TFEU, and while EU law continues in full force in the UK.

Conclusion

Although the refusal of the CJEU to decide on the referral is disappointing, it is hoped that the question of SPC applications based on third-party MAs will not remained unanswered much longer, and that there will be a decision that clarifies this issue in the foreseeable future. Meanwhile, the CJEU’s order sheds light on some important issues like the CJEU’s approach to references in light of Brexit, which will no doubt inform litigation strategy in the coming months.

Sebastian Moore
Sebastian Moore
Partner
+44 20 7466 2801
Martina Maffei
Martina Maffei
Associate
+39 02 0068 1353
Priyanka Madan
Priyanka Madan
Associate
+44 20 7466 2986

 

Data Assets – Protecting and Driving Value in a Digital Age

Faced with the exponential rise of data as an asset class in its own right, organisations are now taking a fresh look at the data that are available or accessible to them and the ways in which the value of those data can be safeguarded, unlocked and maximised. Data have become a strategic and valuable asset for many organisations but protecting and exploiting that asset is not always simple.

Our feature article, published in May’s edition of PLC Magazine and linked in this post, considers data as an asset, how intellectual property rights can be employed to protect data, how data can be used effectively and how to minimise associated legal risks.

The article explores key legal considerations for organisations looking to develop or refine a data commercialisation strategy, including in respect of:

  • the concept of so-called data “ownership”;
  • intellectual property rights;
  • contractual rights;
  • information governance;
  • competition law; and
  • corporate transactions.

For the full article please click below:

 

This article was first published in PLC Magazine, May 2019

Edward Du Boulay
Edward Du Boulay
Senior Associate, Digital TMT & Data, London
+44 20 7466 2384
Miriam Everett
Miriam Everett
Partner, Head of Data Protection & Privacy, London
+44 20 7466 2378
Kyriakos Fountoukakos
Kyriakos Fountoukakos
Partner, Competition and Trade, Brussels
+32 2 518 1840
Andrew Moir
Andrew Moir
Partner, Head of Cybersecurity, London
+44 20 7466 2773
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, Intellectual Property, London
+44 20 7466 2217
Joel Smith
Joel Smith
Partner, Head of Intellectual Property, London
+44 20 7466 2331
Manish Soni
Manish Soni
Senior Associate, London
+44 20 7466 2016

Preparations for the UPC continue despite an “unpredictable environment”

The UPC Preparatory Committee has issued a “Status of the Unified Patent Court Project” statement and review of 2018, confirming that there are now 16 states which have ratified the UPC, and that German ratification is still awaited (dependent on the outcome of the complaint pending before the Constitutional Court in Germany) before the project can move into provisional application phase. This latter phase is allows the courts to be prepared and judges to be appointed.

 

Despite the current, somewhat unpredictable environment, the technical and operational preparations are continuing allowing for the project to move at pace in the event of a positive outcome from the German Constitutional Court“.

The press release says nothing more than was already known, but it does confirm that the status of the project is constantly being reviewed, stating that the Chairman of the UPC Preparatory Committee “continues to meet with the Executive Group and the operational team on a monthly basis” and noting that those that have applied for judicial positions in the Unified Patent Court are being contacted separately.

Author

Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, London
+44 20 7466 2217