Flynn Held To Be Exclusive Licensee While Both Parties At Fault On Costs In Neurim v Mylan Court Of Appeal Judgment

• Published date: 06 May 2022
• Subject Matter: Intellectual Property, Litigation, Mediation & Arbitration, Patent, Trials & Appeals & Compensation
• Law Firm: EIP
• Author: Ms Lydia Birch

On 29 March 2022, the Court of Appeal handed down judgment in relation to appeals made by the Claimants (Neurim and Flynn) on two issues. Overturning Marcus Smith J's decisions, the Court of Appeal, led by Arnold LJ, found (1) Flynn an "exclusive licensee", and (2) both sides at fault for wasting costs of the UK proceedings against the backdrop of the concurrent EPO proceedings.

Flynn found to be an exclusive licensee

The case concerned the alleged infringement of Neurim's EP'702 patent - a second medical use patent, unconditionally amended, claiming the use of a prolonged release formulation of melatonin in 2mg dose form for improving the restorative quality of sleep in patients aged 55 years and over, suffering from primary insomnia. Flynn, pursuant to a licence from Neurim, has been able to market its product 'Circadin' in the UK, but was found not to have been an exclusive licensee at first instance after it was deemed unable to bring proceedings independently of Neurim.

Notwithstanding the fact that EP'702 has now been revoked by the EPO (discussed further below), it was common ground that the question of whether Flynn was an exclusive licensee and had standing to sue for infringement was still relevant to subsequent proceedings concerning a divisional of the patent (EP3103443).

Allowing the Claimants' appeal, the Court of Appeal found that Flynn was indeed an exclusive licensee and that the judge had failed to appreciate four points:

1. The contractual effect of the licence allowed Flynn to work the invention of the patent to the exclusion of Neurim.

2. Nothing in the licence altered the effect of s.67(1) of the Patents Act 1977, in which an exclusive licensee shall have the same right as the patent proprietor to bring proceedings in respect of any infringement of the patent. In other words, nothing prevented Flynn from being a Claimant in the proceedings. The licence merely regulated how the parties should proceed in the event of litigation.

3. Nothing in s.67(1) requires an exclusive licensee to be able to take action independently of the patentee. In fact s.67(3) requires that the patentee should be joined as a party if proceedings are taken by an exclusive licensee.

4. The purpose of s.67 is ultimately to enable an exclusive licensee to recover its losses (or share of infringer's profits) in the event of an infringement (s.67(2)). Mylan's arguments would have defeated that purpose.

Mylan's arguments that an exclusive licence must be co-extensive...