IP Bulletin - Spring 2013

PATENTS

The High Court examines consent to service and jurisdiction to hear application for declaration of non-infringement

In this application contesting jurisdiction, the High Court ruled (not unexpectedly) that the English court has jurisdiction to hear an application for declarations of non-infringement in relation to both a UK and several foreign designations of a European Patent. More significantly, the High Court also considered the question of effective service - by consent and under the Civil Procedure Rules (CPR 63.14(2) and CPR 6.9(2)). The ruling makes clear that before consenting to service, the scope of the claim and reservation of the right to challenge jurisdiction should be carefully considered.

Actavis Group HF v Eli Lilly & Company and between Medis EHF v Eli Lilly & Company [2012] EWHC 3316

Background

The cancer treatment drug pemetrexed, marketed by the defendant ("Lilly") under the brand name Alimta since 2004, was protected by a basic patent extended by Supplementary Protection Certificates ("the SPCs") due to expire in December 2015. Lilly also owned a further patent EP No. 1 313 508 (the "Patent") due to expire in June 2021.

The claimant ("Actavis") contended that the claimant's product pemetrexed dipotassium did not infringe the Patent, although Lilly disputed this. Actavis, in order to resolve the issue in good time for entry onto the market on expiry of the basic patent SPCs and in order for the issue to be determined with respect to the French, German, Italian, Spanish and United Kingdom designations of the patent in a single trial, commenced proceedings seeking declarations of non-infringement of each of those designations of the Patent. Actavis did not challenge the validity of the Patent. Lilly, in response, sought declarations that the English court did not have, or alternatively should not exercise, jurisdiction in respect of the French, German, Italian and Spanish designations of the Patent but did not contest the court's jurisdiction with regard to the UK designation.

Before legal proceedings were commenced by Actavis, letters were exchanged between the parties respective firms of solicitors. Following the exchange of correspondence, on 1 August 2012 a claim form (the "First Claim") was served by the claimant Actavis' solicitors on the defendant Lilly's solicitors. On 23 August 2012, the defendant's solicitors wrote to the claimant's solicitors, disputing that the letter of 1 August 2012 constituted valid service of the claim form for two reasons; firstly, that the defendant's solicitors were not instructed to accept service of a claim by the claimant company and secondly, that an earlier letter sent by the defendant's solicitors dated 31 July 2012 giving confirmation that the firm was instructed to accept service on behalf of Lilly, was given only in respect of appropriate declarations of non-infringement which would not include declarations in relation to the foreign designations of the Patent. For reasons which are not clear, Lilly followed this with an application to the court contesting the court's jurisdiction in respect of claims concerning the non-UK designations.

On 29 August 2012, the claimant's solicitors wrote to the defendant's solicitors and Dr Ivan Burnside, a senior patent attorney employed by Lilly in the UK since 2001, enclosing by way of service a claim form, Particulars of Claim and Response Pack in a further action (the "Second Claim"). Apart from the name of the claimant, the Second Claim was identical to the First Claim. The defendant's solicitors disputed that this letter constituted valid service in so far as it related to the non-UK designations of the Patent and (again for reasons which are not clear) subsequently filed an application contesting the court's jurisdiction in respect of claims of the non-UK designations.

(On 11 October 2012, the claimant's solicitors wrote to Lilly, care of Mr Burnside, enclosing by way of service the Claim Form, particulars of Claim and Response Pack in the First Claim without prejudice to Actavis' contention that the First Claim had already been served.)

Accordingly, the issues arising on Lilly's applications concerned valid service of the claims and consent to jurisdiction:

Was service of the First Claim validly effected: under the consent for service contained in the defendant's solicitors' letter dated 31 July 2012; under the Civil Procedure Rules ("CPR") r. 63.14 (see below for full details); and/or under CPR r. 6.9 (again, see below for full details)? Was service of the Second Claim validly effected under the consent for service? (The issues under CPR r. 63.14 and 6.9 are identical for the Second Claim.) If the consent for service covered the First (or Second) Claim, was it also a consent to jurisdiction? If service had been validly effected, but there had been no consent to jurisdiction, should the Court decline to exercise its jurisdiction on the ground of forum non conveniens? Decision

Mr Justice Arnold concluded that:

Lilly consented to service of the First Claim and thereby consented to the jurisdiction of the court over it; the First Claim was not validly served pursuant to CPR r 63.14(2)(a); the First Claim was validly served pursuant to CPR r 6.9(2); Lilly did not consent to service of the Second Claim (and the conclusions with regard to the First Claim also applied to the Second Claim); and if Lilly did not consent to service, but the First Claim was validly served, no stay of Actavis' claims under the non-UK designations of the Patent should be granted on forum non conveniens grounds. Dealing specifically with the issues, the judge decided:

Consent to service

A letter consenting to service should be interpreted in accordance with the principles of contractual interpretation: the law states that the correct approach is to ask what a reasonable person having all the background knowledge which would have been available to the parties at the time would have understood the words to mean. Words should be given their 'natural and ordinary meaning' and it requires a strong case to persuade the court that something must have gone wrong with the language. (following Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, Bank of Credit and Commerce International SA v Ali [2001] UKHL 8, [2002] 1 AC 251 and Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1011

In the present case, Lilly disputed that the letter dated 31 July 2012 gave consent to service of the First Claim. Lilly contended that it consented to service of a claim by the companies identified in the claimant's solicitors' letter dated 12 July 2012, namely "Actavis Group PTC ehf and its relevant national subsidiaries". However, the claimant was neither Actavis PTC ehf nor a subsidiary of Actavis PTC ehf. Actavis contended that a reasonable person having all the background knowledge available to the parties as at 31 July 2012 would have understood the claimant's solicitors' letter to have requested, and the defendant's solicitors' letter to have given, consent to service of proceedings by the parent operating company of the Actavis Group and its relevant national subsidiaries regardless of their precise identities.

The judge said that the starting point was to identify the background knowledge available to the parties as at 31 July 2012. Since Lilly was being asked to consent to service, it was the knowledge available to Lilly which mattered. On the evidence and having heard the parties' submissions, the judge concluded that Lilly consented to the service of proceedings by the parent operating company of the Actavis Group and its relevant national subsidiaries and that the claimant was covered by that consent.

Did the consent to service extend to a claim in respect of the non-UK designations of the Patent?

Lilly contended that it only consented to service of a claim in respect of the UK designation of the Patent. It was Actavis' position that Lilly also consented to service of claims in respect of the non-UK designations (France, Germany, Italy and Spain). Counsel for Actavis argued that its solicitors' letter dated 12 July 2012 made clear that it was concerned with the position in France, Germany, Italy and Spain as well as the UK and that it sought both "a written acknowledgement" in relation to the UK and "a written acknowledgement" in relation to the other jurisdictions. Counsel for Actavis also argued that the letter clearly stated that if "the acknowledgements [plural]" were not provided, Actavis intended to serve proceedings seeking "appropriate declarations [plural]", which must mean declarations in respect of the matters not acknowledged, from "the Court" [singular]", which could only mean the present Court. The letter then asked whether the defendant's solicitors were instructed to accept service of "such proceedings", which could only mean proceedings in the present Court seeking those declarations.

Counsel for Lilly argued that the correspondence had to be read against the background that claims for declarations of non-infringement of foreign designations of patents were almost unprecedented. (Note, whilst counsel's argument was that such declarations were almost unprecedented, of course such declarations have been granted in the past both in the UK and in other Member States, for example in Mölnlycke Health Care v BSN Medical Ltd [2010] EWCA Civ 988, 30 July 2010. Counsel for Lilly and the judge appear to have overlooked this). The judge ruled that the importance of the factor raised by counsel was tempered by the Supreme Court's decision in Lucasfilm v Ainsworth [2011] UKSC 39, [2012] 1 AC 208 on 27 July 2011. An experienced intellectual property solicitor would have known that Lucasfilm made it much easier for parties to argue that the claims concerning infringement and non-infringement of foreign patents were justiciable in the English Court. Thus it was only a matter of time...