Arrow declaration misses its target

Summary

The English Patents Court and the decisions of its judges are highly regarded internationally, and particularly within Member States of the European Patent Convention (EPC). For this reason, litigants, whether patentees or defendants, frequently seek one of its decisions in order to support strategies involving other jurisdictions.

One such type of decision is an Arrow declaration, named after the case Arrow Generics Ltd v Merck & Co Inc [2007] EWHC 1900 (Pat). An Arrow declaration requires the court to consider whether a product, process or use lacked novelty or was obvious as at the priority date of a patent application. The purpose is to set up a Gillette defence in any subsequent infringement action (ie what the alleged infringer is doing was known or obvious, so if the claims cover the activity, the claims are invalid).

This appeal considers the extent to which the Patents Court will go in order to provide a “spin-off value” for one party, in the courts of another jurisdiction.

Written by Paul A. Harris, Head of Litigation at Dehns.

Teva UK Limited and anor v Novartis AG [2022] EWCA Civ 1617

Case background

The Respondents (“Novartis”) markets fingolimod (under the mark GILENYA) as a treatment for a type of Multiple Sclerosis throughout the EU and in the UK. They have sales $2.8 billion worldwide and £46 million in the UK.

Novartis has various patent families around fingolimod, including one claiming a daily dose of 0.5 mg, administered orally. This family included an International Patent Application claiming priority from 27 June 2006 (‘IA’), an EP deriving from the IA and three divisional EP applications deriving from the original EP. The first divisional was withdrawn, the second (EP 894) became granted but is in the opposition period at the EPO, and the third divisional (EP 765) was only filed in November 2020.

Having obtained a marketing authorization for generic fingolimod, in February 2022, Teva sought an Arrow declaration. In early March 2022, Novartis counterclaimed for injunctive relief, which was decided in April 2022, with the judge refusing the interim injunction but ordering an expedited trial. Following refusal for permission to appeal, Novartis withdrew the UK designations from EP 894 and EP 765.

After further interim applications for striking out and amendment of statements of case, there was a 2 day trial on the Arrow declaration application. The only issue concerned the court’s discretion whether to grant the declaration in circumstances where there was (now) no patent protection in the UK. Following the trial, Bacon J refused to grant an Arrow declaration. However, Arnold LJ granted permission to appeal on an expedited basis. That expedition was so that the appeal could be heard before preliminary injunction hearings in various jurisdictions (including in Germany on 15 December 2022) were held. Also important was a similar hearing in ‘Country A’ (which was confidential) where Teva’s product transited before reaching the UK. Expert evidence was adduced by Teva, as to the extent to which the German courts have regard for English Patents Court judgements.

Decision

Arnold LJ (as one would expect) thoroughly reviewed the law relating to Arrow declarations. As Novartis had de-designated the UK for EP 894 and EP 765, seeking a declaration to set up a Gillette defence was no longer an option. Arnold LJ therefore considered the so called “spin-off value” Patents Court decisions could have. The first type of value is to aid wider settlement where patents in other EPC Member States are in issue. The second is that Patents Court decisions may be persuasive of other jurisdictions’ courts: this is particularly so with Germany.

The Patents Court takes the “spin-off value” into account in a number of contexts, namely, whether to: expedite trial to be before a foreign court’s trial; stay English proceedings pending EPO opposition determination; consider if a claim is an abuse of process. In the present case, Teva sought a declaration for the sole purpose of influencing a foreign court, which would decide the matter under its own domestic law (albeit that EPC patent law is substantially harmonized). The judge considered the four English decisions where this had previously occurred.

Arnold LJ concluded that it would be wrong for English courts to make declarations solely for the purposes of influencing the decision of a foreign court, where that court’s jurisdiction’s own law applied. He then went on to consider whether the trial judge had, in any event, applied the law incorrectly or otherwise erred, and considered she had not. The judgement was upheld and the appeal dismissed.

Implication

As patent lawyers, while we can be justifiably proud of the English Patents Court and its decisions, there are limits to the uses and purposes they can be put to, outside of its own jurisdiction. Although Teva argued its supply may be cut off if Country A’s courts injuncted them, as Arnold LJ pointed out, that is a consequence of that country’s courts applying its domestic law. Aside from that, there is no obligation or guarantee that the foreign court would follow what the English Patents Court had decided.

However, with the uncertainty which will befall the UPC until some sort of harmony has been achieved, the English Patents Court’s decisions will undoubtedly be sought more frequently, and remain the target for parties seeking Arrow declarations.