IP Bulletin - May 2012

RECENT DEVELOPMENTS

PATENTS

High Court refuses to strike out an application for an injunction against infringing a drug patent

Merck Sharp & Dohme Corp and another v Teva Pharma BV and another, 15 March 2012.

The High Court has granted an interim injunction restraining sale of Teva's generic efavirenz product pending trial, in order to prevent patent infringement. The marketing authorisation for the generic product was applied for much earlier than normal before the expiry of the relevant patent and Teva refused to answer questions about the product launch. The case makes clear that a record of behaviour of a generic company (including the early launch of another generic product) is likely to be taken into account by the court when an application for an Interim injunction is made.

The patent, owned by Merck Sharp & Dohme and Bristol-Myers Squibb Pharmaceuticals Ltd, for a pharmaceutical preparation known as efavirenz (marketed as Sustiva), an antiretroviral compound, and supplementary protection certificate was due to expire in November 2013. Teva, a generic manufacturer, had obtained a marketing authorisation for its version of the drug and declined, when asked, to say when it planned to launch the generic preparation. The patent owners applied for an interim injunction pending trial to restrain Teva from infringing the patent. Teva applied for an order that the action be struck out.

HHJ Birss QC, sitting as a deputy High Court judge, held that the evidence supported the case for an interim injunction and that the action should not be struck out. Teva had sought the marketing authorisation some 22 months before the expiry of the relevant patent and SPC. The judge said it seemed obvious to him that "Teva must have obtained the marketing authorisation nearly two years in advance of expiry because they intend to launch before the [patent] rights have expired. It is not suggested that such a long period of time is normal and Teva do not say it is." That, combined with Teva having previously and surreptitiously launched a generic product in advance of [patent] expiry and the fact that Teva refused to answer questions about the launch when asked, supported the claimant's case that the launch of Teva's efavirenz preparation was intended to happen before the expiry date. The interim injunction restraining sale of Teva's generic efavirenz pending trial was granted (Teva's application to strike out was refused).

The Court of Appeal upholds a decision of the High Court concerning contraceptive formulation patents

Gedeon Richter plc v Bayer Pharma AG [2012] EWCA Civ 235, 7 March 2012.

In this recent action concerning contraceptive formulation patents, the Court of Appeal confirms the test to be applied when considering added matter (it will be added matter until it is clearly and unambiguously disclosed in the application explicitly or implicitly) and revisits the "obvious to try" test, including drawing attention to the dangers of hindsight in relation to obviousness.

The Court of Appeal recently upheld a decision of Floyd J that two patents for formulation of contraceptive pharmaceuticals were not invalid for added matter and were not obvious. The appellant, Gedeon Richter plc ("Richter"), sought revocation of two patents owned by the respondent Bayer Schering Pharma AG ("Schering"). Both patents related to immediate release formulations of the steroidal hormones drospirenone ("DSP") and ethinylestradiol ("EE"). The High Court held that the patents were not invalid for obviousness and were not invalid for added matter.

On appeal, upholding the decision of Floyd J, Kitchin LJ and Sir Robin Jacob decided that the judge had applied the correct test for added matter; the judge directed himself properly as to the law prior to considering whether there was added matter. Specifically, Floyd J set out the relevant test and emphasised four points: "..the fact that a claim covers something does not mean it discloses it; express disclosure in the patent of that which is implicit in the application does not amount to added matter; nevertheless, implicit disclosure is to be distinguished from matter which would be obvious to the skilled reader; and an eye needs to be kept on "impermissible intermediate generalisation"..". The Court of Appeal regarded it as "inconceivable that the judge did not have well in mind that subject matter will be added unless it is clearly and unambiguously disclosed in the application explicitly or implicitly, the so called strict comparison requirement". Further the judge expressly reminded himself of the need to draw a line between implicit disclosure and that which is obvious and so would have been well aware of the dangers of hindsight.

In relation to the finding of inventive step, the Court of Appeal considered the three published papers cited by the appellant and concluded that although the skilled person or team would have considered one of the items of prior art relied on by the appellant, the appellant did not adduce expert evidence to support its contentions that further evidence cited would have been read (even though the appellant had leave to call a medicinal chemist) and the judge was entitled to conclude that direct persuasive evidence was not available.

Counsel for Gedeon, the appellant, also advanced a case of "obvious to try". The Court revisited the significant limitations of the "obvious to try" test as set out in Conor v Angiotech [2008] UKHL 49, summarised as ".. the notion of something being obvious to try was useful as a means of establishing obviousness only in a case in which there was a fair expectation of success" and "..how much of an expectation would be needed, depended upon the particular facts of the case".

The Court held that the problem for the appellant in the present case was that there was really no or only the slightest expectation of success. "..It is all too easy to reconstruct with hindsight avenues that might have been pursued. The step from the published paper to the invention would have been more of a speculative jump in the dark than anything else." In addition, secondary evidence of the length of time it took the respondent to reach the invention, supported the conclusion of invention. Floyd J was entitled to make the evaluation "I think Schering's history provides a reasonable measure of support for non-obviousness".

Finally, in reaching his decision, there was another matter taken into account by Floyd J concerning the time taken for dissolution of the drug to take place in the stomach: there was no clear explanation of how the invention worked. Even now, it is not known why rapid dissolution of the drug takes place in the stomach. The judge, mindful of the dangers of hindsight, was correct to conclude that if something is inexplicable even after it is known, it is all the more unlikely to have been predictable (and thus obvious) before.

TRADE MARKS

High Court rules on claim for damages for the period following a disputed termination of an exclusive licence agreement

Leofelis SA and another v Lonsdale Sports Ltd and others; Trademark Licensing Co Ltd and another v Leofelis SA and others [2012] EWHC 485 (Ch)

In this pro-longed and complicated dispute concerning a trade mark licence agreement (there were in fact two sets of proceedings between the parties), the High Court has ruled in favour of the Licensor in summary judgment applications concerning a claim for damages following alleged breach by the Licensee and subsequent disputed termination of contract by the Licensee, followed by a second (undisputed) termination by the Licensor.

The ruling confirms that a party to a contract may rely upon a breach which subsequently comes to light in order to justify an earlier termination of a contract (if the initial breach relied upon for the termination turns out not to be a breach after all). However, the ruling makes clear that such a breach may not be relied upon in a claim for damages against the Licensor because "..that alleged breach ...cannot be the cause of the termination and thus of the loss that flowed from the termination" (Roth J) (and summary judgment was given in favour of the Licensor on this basis preventing the Licensee recovering damages after the earlier termination date).

Leofelis SA ("Leofelis") was granted an exclusive licence agreement (the "Agreement") by two Lonsdale companies ("Lonsdale") in November 2002, for a period of six years from 1 January 2003, to use a series of trade marks (the "Trade Marks"), subject to payment of royalties, in relation to clothing and other goods in the then member states of the European Union, excluding the UK and Ireland. Under the terms of the Agreement, Leofelis was entitled to grant sub-licences of the Trade Marks, subject to the consent of Lonsdale. The Agreement provided for limited rights of termination and gave Leofelis the right to renew the Agreement for a further term expiring in 2014, subject to payment of further royalties.

Leofelis granted a sub-licence to an Italian company, Leeside srl, for Italy (the sublicence was extended to further European territories) and a further sub-licence to Punch GmbH for Germany, Benelux, Hungary and Poland. The German Punch licence was terminated in 2006 for non-payment of royalties.

Following a dispute between Lonsdale and Leofelis concerning the Leeside sub-licence and sales by Leeside in Germany, Lonsdale obtained an injunction in Germany preventing sales of Lonsdale branded goods there. The High Court in England subsequently ruled that the sub-licence to Leeside for Germany was valid and that therefore the...