1 ` PATENT AND PHARMA UPDATE Our regular patent and pharma update aims to keep you informed of recent developments in United Kingdom and European law relating to patents and the pharmaceutical industry. 1. As expected, Spanish inquisition on Unitary Patent fails to convert Court of Justice Kingdom of Spain v European Parliament and Council of the European Union  (Judgments), CJEU, Case C‑146/13 and Case C-147/13, 5 May 2015 The Court of Justice of the European Union has rejected Spain's second round of challenges to the Regulations establishing a unitary patent system via enhanced cooperation across participating member states. Thanks to the Court of Justice's rejection of the latest Spanish challenge, the idea of a single patent right which is valid and enforceable across (most of) the EU will not now need to go back to the European Commission drawing board. However there remains a complicated mix of patent protection options across the EU with several member states not signing up for the new unitary right or its enforcement system, the Unified Patent Court. This may lead to patchy coverage for a system that was designed to achieve a one stop shop for patent rights and litigation in the EU and obviate the need for the multijurisdictional litigation that we currently see across Europe. Read more Since we reported on the rejection of the Spanish challenge, Italy has announced that it now intends to join in with the enhanced cooperation procedure relating to the Unitary Patent. 2. Court of Appeal clarifies scope of Swiss form second medical use claims Warner-Lambert Company, Llc v Actavis Group PTC & Ors  EWCA Civ 556, 28 May 2015 In an important judgment, the Court of Appeal has considered the interpretation of 'Swiss form' second medical use claims i.e. claims directed to the use of a chemical compound for the preparation of a pharmaceutical composition 'for' the treatment of a particular disease. The Court concluded that a manufacturer who knows (including having constructive knowledge), or can reasonably foresee, the ultimate intentional use of the composition for the patented indication will infringe such a claim. This differed from the decision at first instance, where Arnold J held that a specific subjective intention or desire on the part of the manufacturer that the composition be used for the patented indication was required. JUNE 2015 London Table of Contents 1. As expected, Spanish inquisition on Unitary Patent fails to convert Court of Justice 1 2. Court of Appeal clarifies scope of Swiss form second medical use claims 1 3. Court of Appeal upholds £27 million damages award against AstraZeneca, where interim injunction was discharged because generics did not infringe NEXIUM patent 2 4. Court of Appeal confirms H&M cannot challenge validity of Stretchline's fabric patent, as this would breach a settlement agreement in earlier proceedings 3 5. Too soon for a CJEU referral in Teva's challenge to ViiV's SPC for KIVEXA 3 6. Patents Court sheds light on the correct approach to FRAND issues 4 7. IPCom patent found valid but not essential to UMTS standards 5 8. Teva's COPAXONE patent is mostly valid, while Synthon's lawyers' instructions to expert witness are 'a lesson in what can go wrong' 5 9. A golden ticket for licensees? Patentee ordered to disclose existing licences before infringement proceedings begin 6 10.Intellectual Property Office says Court is better placed to hear entitlement dispute over Amgen patents covering Teva's LONQUEX injectable 6 11.Novartis feels the 'squeeze': broad claim construction leads to invalidity of patent for EXELON Alzheimer's patch 7 12.'Mailer' business communication patent invalid for lack of novelty or inventive step 7 13.European Free Trade Association Court clarifies relationship between SPCs and marketing authorisations for veterinary products 8 14.Key points from featured UK decisions 10 15.Contacts 13 RELATED LINKS > Herbert Smith Freehills > The Unified Patent Court and the Unitary Patent 2 The Court of Appeal has also opened up the possibility that indirect infringement under s 60(2) Patents Act 1977 might occur not only where the invention is put into effect by one person alone, but also where the actions of more than one person, when taken together, put the invention into effect. Read more 3. Court of Appeal upholds £27 million damages award against AstraZeneca, where interim injunction was discharged because generics did not infringe NEXIUM patent AstraZeneca AB & Anor v KRKA dd Novo Mesto & Anor  EWCA Civ 484, 21 May 2015 • The Court of Appeal has upheld a £27 million award to Krka and Consilient for damages suffered as a result of an interim injunction granted to prevent alleged infringement of an AstraZeneca esomeprazole patent, when AstraZeneca later accepted that the generic product did not infringe based on the outcome in related proceedings. • Patentees are reminded that before offering a cross-undertaking to obtain an interim injunction, they should seriously consider their potential exposure if it turns out that there is no infringement or the patent is invalid. • A party to a claim under a cross-undertaking should identify actual markets that serve as 'true comparators' to the hypothetical counterfactual scenario in which the injunction was not granted, and should present evidence of the effect of generic launch in those comparator markets. • Evidence from NHS Medicine Managers is also likely to be persuasive to a court's assessment of damages of this kind in the pharmaceutical industry. In this long-running dispute, AstraZeneca owned patent EP (UK) 1 020 461 which it asserted covered its NEXIUM esomeprazole tablets, most commonly used to treat stomach ulcers. In 2010, Krka and Consilient sought to market a generic esomeprazole capsule called EMOZUL. When AstraZeneca commenced infringement proceedings, Krka and Consilient consented to an interim injunction pending trial on the basis that AstraZeneca gave the usual cross-undertaking in damages. In separate proceedings decided in mid-2011, the Patents Court found that Ranbaxy (UK) Ltd did not infringe the same patent with its generic version of esomeprazole. The interim injunction against Krka and Consilient was discharged and they, along with a number of other companies, began selling generic esomeprazole. Krka and Consilient claimed damages from AstraZeneca under the cross-undertaking to compensate for lost profit and loss of the 'first mover' advantage suffered because of the interim injunction. At first instance, Sales J awarded Krka and Consilient £27 million, the largest ever award made by the Patents Court in a damages inquiry of this kind. AstraZeneca appealed, contending that Sales J had fallen into error in over 50 different respects, many of which the Court of Appeal said were attempts to challenge the primary judge's findings of fact. The Court of Appeal held that the evidence originally presented by AstraZeneca to obtain the interim injunction supported 'a liberal but fair assessment' of Krka and Consilient's loss in the present claim under the cross-undertaking. AstraZeneca had said that entry of generic esomeprazole would lead to a significant loss of market share for Nexium or a downward price spiral, and that over 90% of AstraZeneca's market would be accessible to Krka and Consilient. Accordingly, AstraZeneca could not now submit that the assessment of the generics' damages was a task of extreme complexity and that the court should adopt a cautious approach. The Court of Appeal was reluctant to interfere with Sales J's award given that it was necessarily based on 'a fact sensitive evaluative exercise'. Sales J had found that, but for the injunction, Krka and Consilient would have entered the esomeprazole market with 'full force and effect'. This was not a case where there was a mere chance that the generics would have done so. The Court of Appeal had no hesitation in accepting that in the case of a complex market such as this, 'evidence of true comparables' was likely to assist the court in assessing what would have happened but for the grant of the injunction. The 'insuperable difficulty' facing AstraZeneca was that Sales J had 'decisively rejected' its evidence that generic entry to the esomeprazole market in 2011 (after the interim injunction was lifted) and to the venlafaxine market in 2009 (which AstraZeneca had referred to as providing a useful reference) were true comparables to the hypothetical entry of Krka and Consilient to the esomeprazole market in 2010, which would have taken place had the interim injunction not been in force. In contrast, Sales J had been 'greatly assisted' by the evidence from 16 NHS Medicine Managers regarding the effect of generic entry to the esomeprazole market: four gave evidence for AstraZeneca and 12 for Krka and Consilient. The Court of Appeal found that Sales J was entitled to place the weight on this evidence that he did. This evidence had led Sales J to conclude that, following Krka and Consilient's strategy of marketing Emozul to Medicine Managers, Primary Care Trusts would largely have issued guidance recommending a change to prescribing practice in order to make savings on bills of esomeprazole products. Given that there were no other generic launches on the horizon when Krka and Consilient first sought to launch in 2010, this change would have led to much greater sales of the Krka and Consilient product than when they actually did launch in 2011 along with many other generics. Finally it was appropriate for Sales J to have applied a 20% discount to the calculated damages to reflect the various uncertainties inherent in the assessment of the counterfactual scenario. According to the Court of Appeal, Sales J's award of £27 million was properly founded upon all of the evidence before him and there was no reason to overturn it. 3 4. Court of Appeal confirms H&M cannot challenge validity of Stretchline's fabric patent, as this would breach a settlement agreement in earlier proceedings Stretchline Intellectual Properties Ltd v H&M Hennes & Mauritz UK Ltd  EWCA Civ 516, 22 May 2015 • The Court of Appeal has upheld a finding that H&M cannot challenge the validity of Stretchline's patent for a fabric used in underwire bras because, for H&M to do so, would breach a settlement agreement entered between the parties in earlier proceedings relating to infringement of the same patent. • The judgment reminds parties negotiating settlement agreements in patent disputes to consider the effect that the contract will have in limiting the usual statutory rights to challenge validity, or for a patentee to allege infringement, in any future disputes between the parties over the same patent. Stretchline's patent, GB 2 309 038, claims the use of a fusible yarn used in underwire bras and swimwear. In 2009, Stretchline obtained samples of bras sold by H&M and subsequently began the original infringement proceedings. In its defence, H&M claimed that the patent was invalid and counterclaimed for revocation. Following a mediation in 2011, the parties entered into a settlement agreement to compromise all existing and potential claims worldwide. A release clause prevented either party from pursuing all claims relating to or arising from the original proceedings. In 2012, Stretchline obtained further allegedly infringing samples of garments sold by H&M and in 2013, commenced a new set of proceedings in relation to the same patent. Stretchline claimed that by selling bras falling within the patent after the date of the settlement, H&M had both infringed the patent and breached the settlement agreement. H&M defended both claims on the bases that its bras did not fall within the scope of the patent and that the patent was invalid. Stretchline applied for an order striking out the parts of H&M's defence and counterclaim that alleged invalidity on the basis that H&M was precluded from challenging validity of the patent under the settlement agreement. Stretchline said that the agreement resolving the original proceedings had been made in full and final settlement of the parties' respective claims and the parties had agreed not to pursue any further proceedings relating to or arising from those claims. According to H&M, Stretchline's allegation in the present proceeding was based on a different construction of the patent than in the original proceeding. H&M said that when it entered the settlement agreement, Stretchline had used a particular test to measure fabric resistance which was the test described in the patent, whereas Stretchline was now using a different test, the results of which were not directly comparable with those of the original test. H&M submitted that the tests that Stretchline now proposed would mean that the patent covered a wider range of fabrics, and if the scope of the patent was to be determined using a new test, then so too should validity. At first instance, Sales J agreed with Stretchline and struck out those parts of H&M's defence and counterclaim alleging invalidity. Sales J's view was that, on proper construction of the settlement agreement, the parties had intended to definitively compromise all matters in dispute in the original proceedings, which included validity of the patent. H&M appealed, but was not successful. The Court of Appeal accepted the conclusions made by Sales J, and held that: • In the settlement agreement, the recitals, general release clause and agreement not to sue were broad enough to show that the parties intended to compromise all issues in dispute, including validity, in favour of a contractual arrangement. • An 'essential component' of the settlement agreement was the compromise of H&M's statutory right to claim that the patent was invalid. It was immaterial whether H&M sought to raise invalidity by way of a defence or a counterclaim. • The parties had not entered into the settlement agreement with the belief that the scope of the patent was limited by the resistance test used by Stretchline in the first proceeding. The test now used by Stretchline was within H&M's reasonable contemplation when it entered the agreement. Thus H&M could not rely on Stetchline's use of the new test to establish that the present dispute was not covered by the terms of the settlement agreement. • Although the Court of Appeal had not been asked to decide on this point, it found that given the breadth of the settlement agreement Stretchline was precluded from pursuing its claim for patent infringement in parallel with its claim for breach of contract. 5. Too soon for a CJEU referral in Teva's challenge to ViiV's SPC for KIVEXA ViiV Healthcare UK Ltd v Teva UK Ltd  EWHC 1074 (Ch), John Baldwin QC, 23 April 2015 • The Patents Court has refused ViiV's application for a referral to the Court of Justice of the European Union (CJEU) to determine questions about whether a marketing authorisation for an A+B+C combination pharmaceutical product amounts to the first approval for an A+B combination for the purpose of a supplementary protection certificate (SPC). • The judgment demonstrates that, although many SPC cases do end up with references to the CJEU, referral applications will only be granted if the CJEU's opinion is necessary to the national court at that stage of the proceeding and the questions are sufficiently precise. The dispute related to ViiV's patent EP (UK) 0 817 637, in which claim 1 covered a combination of abacavir and lamivudine (A+B), and claim 3 covered a combination of abacavir, AZT, and lamivudin (A+B+C). ViiV sold two HIV treatments covered by the patent: 4 • Kivexa, a combination of abacavir and lamivudine (A+B), for which marketing authorisation (MA) was notified in December 2004 and an SPC was subsequently granted; and • Trizivir, a combination of abacavir, lamivudine and AZT (A+B+C), for which MA for Trizivir was notified in January 2001, and for which there was no SPC because the marketing authorisation was granted within five years of filing the patent. In November 2014, ViiV issued infringement proceedings against Teva, who went on to apply for revocation of the patent and the Kivexa SPC. The parties agreed that, regardless of whether the reference to the CJEU was made, the revocation action would proceed to trial in around March 2016, with an appeal judgment around a year later. With regards to validity of the SPC, the parties disagreed as to the interpretation of Article 3 of Regulation (EC) No 469/2009 (the SPC Regulation), under which an SPC may be granted in respect of a medicinal product where a valid marketing authorisation has been granted which is the first authorisation to place the product on the market. According to Teva, the 2001 marketing authorisationfor Trizivir, the A+B+C product, constituted the first marketing authorisation for the A+B product, which went on to be sold as Kivexa. ViiV on the other hand submitted that the matter was not clear, particularly where there was an innovation in combining A+B over A+B+C, a scenario which had not previously been before the CJEU. According to ViiV questions addressing this point should be referred to the CJEU at this early stage so that the reference would conclude around the same time as the Court of Appeal would decide an appeal on patent validity. ViiV said that the making of a reference now would represent effective case management, furthering the 'overriding objective'. But the Deputy Judge did not accept ViiV's contention that a CJEU referral was appropriate because: • the test for a national court making a referral is necessity from the perspective of the national court (article 267 of the Treaty on the Functioning of the European Union), and ViiV had not established that here; and • ViiV was seeking guidance from the CJEU to be better placed to decide whether to apply to amend its patent, to maximise the protection for Kivexa while maintaining as wide a patent monopoly as possible. While this was desirable from ViiV's point of view, it was not so for Teva. To make a reference to the CJEU merely to enable ViiV to be better informed in this way went well beyond the 'necessity' requirement for a referral under article 267. The Deputy Judge's view was that it was too early to decide whether a reference was necessary here given that: • if the patent was revoked at the validity trial, all questions relating to the SPC would become irrelevant; • if ViiV's conditional applications to amend the patent were not allowable for conventional reasons, other questions relating to the amendments would become irrelevant; and • if the A+B combination was found not to be innovative over the A+B+C combination, an important element of ViiV's argument that its SPC is valid would fall away and related questions would become irrelevant. 6. Patents Court sheds light on the correct approach to FRAND issues Unwired Planet International Ltd v Huawei Technologies Co. Ltd & Ors  EWHC 1029 (Pat), 24 April 2015 • Birss J in the Patents Court has rejected Huawei's application for summary judgment against elements of Unwired's claim for infringement of its portfolio of patents which are essential to the 2G, 3G and 4G telecommunications standards. • Unwired was under a contractual obligation to license on Fair Reasonable And Non-Discriminatory (FRAND) terms those patents which had been declared to the European Telecommunications Standards Institute (ETSI) as being essential. Huawei argued that Unwired's two initial licensing proposals were not FRAND and sought summary judgment. Technical standards set out requirements for a particular technology, with a view to encouraging interoperability between equipment made by different manufacturers. In Europe, for telecoms a patentee is able to declare to ETSI a patent as being essential to a standard if practising the standard would inevitably infringe that patent. By making this declaration, the patentee also gives an irrevocable undertaking to ETSI that it will offer licences to third parties on FRAND terms. Unwired is not an operating company in the telecommunications business; instead its business lies in monetising patents obtained from third parties. Unwired had previously obtained a portfolio of essential patents from Ericsson (the largest of the network infrastructure vendors and a significant holder of standard essential patents) on the basis that they would share the royalties received from licensing them. Unwired commenced proceedings against Huawei, Samsung and Google for patent infringement in March 2014 and put forward licensing proposals to the defendants in April and July 2014. The case has been divided into a series of five technical trials covering particular patents in Unwired's portfolio and a single non-technical trial covering FRAND issues and competition law. Huawei argued that Unwired's licensing proposals were not FRAND on a number of grounds. For example, the proposals (1) were global licences, which charged royalties for sales in territories where Unwired had no patents; and (2) bundled essential patents and non-essential patents together. Huawei sought summary judgment in relation to Unwired's claim for a declaration that its licensing proposals were FRAND. The test for summary judgment/striking out in this case was that Unwired's claim for the FRAND declaration had no real prospect of success. 5 The Court found it was not possible to construe Unwired's FRAND undertaking to ETSI in the abstract without considering competition law as part of the factual matrix. The Court rejected Huawei's argument that Unwired's proposals could not be FRAND as they demanded royalties for worldwide sales, for example in Iran where Unwired had no patent coverage. The Court accepted that there is a 'key distinction' between 'the scope of rights licensed and the royalty bearing event.' In particular 'Huawei phones sold in Iran will be made in countries in which Unwired Planet has patents and therefore (on Unwired Planet’s case) making them will need a licence. One example is China.' The Court went on describe royalties on worldwide sales as 'a pretty conventional form of IP licence.' Huawei's 'best point', according to Birss J, was on the bundling of essential patents with non-essential patents, however, the Court wanted to consider the factual context at trial rather than deciding this point summarily. 7. IPCom patent found valid but not essential to UMTS standards IPCOM GmbH & Co Kg v HTC Europe Co Ltd & Ors  EWHC 1034 (Pat), 24 April 2015 • IPCom has experienced mixed results in proceedings in the High Court against HTC, Nokia and others, with Birss J in the High Court upholding the validity of IPCom's patent and allowing a number of proposed amendments, but ultimately finding that the patent was not essential to the UMTS standard and therefore not infringed. In these proceedings, IPCom had alleged that its patent, EP (UK) 1 841 268 (268 Patent) was infringed by a number of HTC mobile devices (the class A phones) on the basis that the 268 Patent had been declared essential to the UMTS standard. As well as challenging the validity of the 268 Patent, HTC also sought a declaration of non-infringement in relation to a number of other mobile devices (the class B to G phones). In a judgment delivered on 24 April 2015, Birss J rejected HTC's invalidity attack and found the 268 Patent valid, but notably held that the construction of the claim in suit adopted by the Court also meant that the patent was not in fact essential to the UMTS standard, and was therefore not infringed. This decision is part of a series of long-running and complex disputes between IPCom, Nokia and HTC. The 268 Patent is a divisional of EP 1186189, which had been revoked in the course of earlier proceedings between IPCom and Nokia. In addition, the 268 Patent itself has also been the subject of previous litigation between IPCom and Nokia – it was held valid and infringed by Nokia in  EWHC 1470 (Pat), as upheld on appeal in  EWCA Civ 567. However subsequently the 268 Patent was held invalid in opposition proceedings at the European Patents Office (EPO), with the EPO ultimately accepting an amended form of the claims. In the course of the present proceedings against HTC, IPCom applied to amend the 268 Patent in line with the amendments accepted by the EPO, thus the Court was required to consider both the allowability of the proposed amendments, as well as infringement. The 268 Patent relates to controlling access to a random access channel (RACH) in a UMTS network, by prioritising access first based on a user class assigned to each device, and following this, using a lottery-based system. One of the amendments proposed by IPCom was to add to claim 2 the requirement that: 'the access authorization data are transmitted as a bit pattern'. One of the key issues before Birss J both on infringement and validity was therefore the construction of 'bit pattern'. The judge held that 'bit pattern' was in this context a technical term, and would be understood by the skilled addressee as referring to a format which 'consists of a sequence of bits of a predetermined length where significance is carried by the position and value of the bits'. Based on this understanding, Birss J held that on the evidence provided, he was not satisfied that access authorisation data is transmitted in a bit pattern format in UMTS. As a result, the 268 Patent was not essential to the UMTS standard, and therefore was not infringed by any of the devices in classes A to G. In relation to validity, HTC had argued that if IPCom's construction of the claim was accepted, the claim would be invalid for added matter as an intermediate generalisation. The judge agreed that, in terms of the coverage of the claim, the amended claim was an intermediate generalisation. However, the judge emphasised that in order for an amendment to amount to added matter, the intermediate generalisation must be in terms of disclosure, not coverage. In other words to characterise a claim as an intermediate generalisation is not sufficient to establish the presence of added matter. Proving that a claim is an intermediate generalisation in terms of coverage does not establish added matter. Having regard to this important distinction, and reading the claim in the context of the specification as a whole, the judge held that the amendment did not result in the claim disclosing anything beyond the relevant embodiment. The judge also rejected HTC's challenges to the proposed amendments based on clarity and discretionary grounds. Thus the patent was held valid and the amendments allowed. 8. Teva's COPAXONE patent is mostly valid, while Synthon's lawyers' instructions to expert witness are 'a lesson in what can go wrong' Synthon B.V. v Teva Pharmaceutical Industries Ltd  EWHC 1395 (Pat), 21 May 2015 • The Patents Court has found that two Teva-owned patents for the purification of glatiramer acetate, used to treat multiple sclerosis, are mostly valid with only a small number of subsidiary claims invalid for added matter. • Synthon's expert evidence was heavily criticised, with the Court saying that the poorly prepared expert report was a result of the expert's 'over reliance' on the advice of the Synthon legal team. • Lawyers working with expert witnesses must take care to properly advise experts of their personal responsibilities and role, and not allow the wishes of clients to interfere with the expert's independent judgment. If lawyers fail to do so, they 6 risk the expert making inconsistent or unsustainable statements in cross-examination and ultimately, the Court placing less weight on the evidence than it otherwise would have done. Teva owned two divisional patents, EP (UK) 2 177 528 and EP (UK) 2 361 924 covering a process for purifying glatiramer acetate, a treatment for multiple sclerosis sold as COPAXONE. Synthon sought revocation of the patents, claiming both were invalid for lack of novelty, lack of inventive step, insufficiency, and, in the case of certain claims of the 924 patent, for added matter over the application as filed. Birss J generally rejected Synthon's invalidity arguments, but found that a handful of subsidiary claims of the 924 patent were invalid for added matter. Of particular interest are Birss J's criticisms of the expert report filed for Synthon and of Synthon's lawyers' instructions to that expert. The judge noted deficiencies in the way material had been selectively quoted in the report but not annexed. Birss J was also unimpressed that several key qualifications to the evidence had only emerged in cross examination, when they should have been dealt with in a reply report. He inferred 'that the root cause of the problem was the manner in which [the] expert's report was prepared, the fact that she had not undertaken this exercise before and her over reliance on the advice of the Synthon legal team'. Birss J warned that 'despite the fact that clients may not like it', legal teams need to fully advise experts about their personal responsibilities and that it is the expert's duty to exercise their own discretion when deciding the content of a report and whether or not a reply report is required. Synthon's legal team were dealt another blow when counsel put a recent printout from Wikipedia before Teva's witness in relation to which Birss J stated he was 'not prepared to place weight on [such evidence] on a contentious issue of this kind in any case'. Birss J did not make much of the fact that the specification did not expressly assert that a particular element of the invention was 'surprising' or 'difficult', as patents specifications often do. Including such language could leave a patent holder a 'hostage to fortune' when it turns out that prior art, at the time unknown to the inventor, shows that the element was not so surprising at all. It was 'quite enough' for the specification to 'explain the invention so that the claims are supported and can be understood and so that the skilled person can perform the invention to the standard required by the law.' Before the matter came before the Birss J in the Patents Court, the Hague District Court had found that the Dutch designations of the patents were invalid in their entirety. However according to Birss J, there were key differences in the evidence before the Patents Court in relation to the approach the skilled person would take to the problem solved by the patents. 9. A golden ticket for licensees? Patentee ordered to disclose existing licences before infringement proceedings begin The Big Bus Company Ltd v Ticketogo Ltd  EWHC 1094 (Pat), 28 April 2015 • In an 'unprecedented' application, the Patents Court has ordered pre-action disclosure of a patentee's existing licence agreements, so that the alleged infringer can quantify its potential damages liability under the patentee's intimated infringement claim. • This is the first time in the UK that a party accused of patent infringement has obtained an order granting access to the patentee's documents going to quantum before infringement proceedings have begun. Following the judgment, patentees who exploit their patents via licensing arrangements may need to disclose the terms of those arrangements if they threaten a third party with infringement proceedings. This is particularly so where the cost of proceedings may be greater than the cost of taking a licence. Companies facing patent infringement allegations and demands that they accept a licence may be able to obtain a court order for disclosure of the patentee's existing licence agreements. The company will need to identify a set of the patentee's licences sufficiently comparable to what it would be offered, and establish that the disclosure would help settle, dispose of, or reduce the costs of the dispute. Read more 10. Intellectual Property Office says Court is better placed to hear entitlement dispute over Amgen patents covering Teva's LONQUEX injectable Teva Pharma B.V. v Amgen Inc & Anor  Case BL O/144/15, Intellectual Property Office, 2 April 2015 • The UK Intellectual Property Office (IPO) has exercised the discretion under s 37(8) of the Patents Act to decline to deal with a claim for entitlement made by Teva in relation to an Amgen patent, on the basis that the claim may be more properly dealt with by a Court and despite the fact that the patent had lapsed. • However in relation to Teva's claim to entitlement in relation to a patent that had since been revoked, Teva's claim was struck out on the basis of Art.68 of the European Patent Convention (EPC). However, the revocation did not affect Teva's claim in relation to inventorship of the patent under s 13 of the Patents Act. • This case is an important reminder that entitlement and inventorship disputes can arise in respect of patents that are no longer registered, for example where a patentee wants to claim back damages or royalty income for infringement that occurred while the patent was registered or where the outcomes may affect disputes in jurisdictions where the respective national designation of the patent remains registered. 7 The IPO has delivered a decision in the latest round of proceedings between Teva and Amgen in relation to patents relevant to Teva's LONQUEX product. The Amgen patents in issue in these proceedings were EP (UK) 1 482 046 (046 Patent) and EP (UK) 2 345 724 (724 Patent), which related to a granulocyte colony stimulating factor (G-CSF) polypeptide which has been chemically modified with polyethylene glycol, in a process referred to as PEGylation. Teva's claims in these proceedings related to entitlement under s37 of the Patents Act and inventorship under s13. In particular, Teva claimed that it was entitled to both patents based on rights derived from a post-doctoral researcher at the University of California, whom Teva claimed should be named as either the sole inventor of both patents, or a co-inventor with the currently-named inventor Dr Osslund. However, Teva also requested that pursuant to s 37(8) of the Act, the IPO exercise its discretion and decline to deal with this matter on the basis that it would more properly be dealt with by a Court. The complicating factor was that the 046 Patent had lapsed in the UK for non-payment of renewal fees, and the 724 Patent had been revoked, with the agreement of the parties, both in the UK and centrally before the EPO. Given these circumstances, Amgen submitted that there was no basis for Teva's entitlement claim in relation to either patent, and that the claim should be struck out as an abuse of process, or that summary judgment be given in Amgen's favour. In relation to the lapsed 046 Patent, the Hearing Officer refused to either strike out Teva's claim or grant summary judgment. The Hearing Officer held that parties are entitled to have issues as to entitlement resolved, even after a patent has expired. Given the six year limitation period, even though the 046 Patent had lapsed, it could still give rise to valuable rights. The nature of the issues and evidence in relation to the entitlement claim meant that it was not appropriate to order summary judgment. In relation to the revoked 724 Patent, the Hearing Officer struck out Teva's entitlement claim under s 37 on the basis that, as a consequence of Art 68 of the EPC, the 724 Patent was deemed not to have had the legal effects set out in Arts 64 and 67 of the EPC. However, the Hearing Officer declined to strike out the claim to inventorship under s 13, on the basis that the right to be named as an inventor did not fall under Arts 64 or 67, and as such, the revocation of the patent did not change the fact that the application existed and was granted for the purposes of a claim to inventorship. The Hearing Officer went on to exercise the discretion under s 37(8) and declined to deal with the s 37 entitlement claim, on the basis that it would more properly be determined by the Court. Whether or not the discretion should be exercised involved 'a balancing of all of the competing factors in order to determine which jurisdiction is better placed to deal with the questions that arise in each case'. Here the following factors tipped the balance in favour of referral to the Court: • the likely relevance of foreign non-patent law issues (relating to US employment and contract law); • an 'extremely long' trial estimate of at least five days; and • the significance of the outcome for the parties, particularly in light of the fact that this dispute was part of a larger dispute across Europe between the parties regarding the 046 Patent. Finally, given the likely overlap between the facts and issues to be considered in the s 37 and s 13 proceedings, the Hearing Officer ordered that the s 13 proceedings before the IPO would be stayed pending the resolution of the s 37 proceedings. 11. Novartis feels the 'squeeze': broad claim construction leads to invalidity of patent for EXELON Alzheimer's patch Novartis AG & Ors v Focus Pharmaceuticals Ltd & Ors  EWHC 1068 (Pat), 27 April 2015 • Arnold J in the Patents Court has found that Novartis' patent, covering its EXELON rivastigmine transdermal patch to treat Alzheimer's disease, is invalid. • To establish infringement by the generic defendants (Focus, Actavis, and Teva), Novartis proposed a broad claim construction, covering any patch which delivered the same starting dose as a defined reference patch. While the Court accepted the broad construction, this led to the conclusion that the patent was invalid because it included added matter over the application as filed and because it was obvious over a prior US patent. • In other European jurisdictions, courts hearing disputes over the equivalent Novartis patents have made divergent findings, particularly with respect to infringement by generics. • Arnold J has since granted Novartis permission to appeal, stating that the appeal from the finding of added matter has a real prospect of success, but he is only narrowly persuaded that the same is true of the appeal from the finding of obviousness ( EWHC 1553). It remains to be seen whether the Court of Appeal will uphold Arnold J's findings. Read more 12. 'Mailer' business communication patent invalid for lack of novelty or inventive step Everseal Stationery Products Ltd v Document Management Solutions Ltd & Ors  EWHC 842 (IPEC), 1 April 2015 • HHJ Hacon in the Intellectual Property Enterprise Court (IPEC) has held that Everseal's patent GB 2 340 073, for a letter which is folded, sealed with adhesive and then posted, known as a 'mailer', is invalid for lack of novelty over the prior use of an earlier mailer and for lack of inventive step over two US patents. • Futher, the judge suggested that Everseal should have made better use of the opportunities to observe and propose amendments to experiments in relation to infringement, which are not often conducted in IPEC proceedings. 8 Everseal alleged that Document Management, and four of its officers, had made and sold mailers which infringed Everseal's patent. The patent concerned a means of sealing mailers employing a type of adhesive not previously used for that purpose. The essence of the claimed invention was a mailer with an adhesive which was ‘non-tacky’, but 'self-seals irreversibly’ under merely finger pressure. HHJ Hacon concluded that the patent was invalid for: • Lack of novelty over a mailer that had been publically available before the priority date for a period of around 3 months. No sample of the prior art mailer was before the IPEC and Document Management relied on evidence from a manager of the company that had distributed these mailers. HHJ Hacon did not accept Everseal's submission that the prior art mailer could not have had the characteristics that the manager claimed because if it had, it would have been a huge commercial success. Correspondence from the time showed that the prior art mailer had been a commercial failure because it was too expensive, regardless of the effectiveness of the product. • Lack of inventive step over two US patents for mailers, given that Everseal did not suggest that there was any technical prejudice that would deter the skilled team from applying known adhesives to mailers of the kind described in those patents to arrive at the invention in claim 1 of the patent, which encompassed mailers being completed by hand or by using a typewriter. With regards to claim 7 of the patent, which covered laser-printable mailers, the expert evidence was that for a skilled person to create a suitable adhesive would have only involved tweaking known formulations, a ‘bread and butter’ task. Correspondence indicted that any 'long-felt want' in the mailer industry for the claimed adhesive was because the cost was prohibitive to a commercially successful product, not because the adhesive was not obvious. Had the patent been valid, one of the three Document Management mailers in dispute would infringe and two would not. This was a rare case before the IPEC in which experiments had been conducted, here by Document Management to establish non-infringement on account of the pressure at which Document Management's mailers would seal. The experiments had originally been conducted informally and Everseal had accepted them at a hearing where it was represented by a director. Very shortly before trial, Everseal, by then advised by solicitors and counsel, objected to the experiments. The court ordered that the experiments be repeated with Everseal present and with photographs taken. Everseal was also entitled to request amendments or additions to the experiments. However Everseal had not then made use of these 'exceptional' opportunities to watch repeats of the experiments or to suggest variations which might have proved infringement. For this reason, HHJ Hacon was not sympathetic to Everseal's argument that the Document Management mailers the subject of the experiments infringed. 13. European Free Trade Association Court clarifies relationship between SPCs and marketing authorisations for veterinary products Pharmaq AS v Intervet International BV  (Judgment), European Free Trade Association Court, Case E-16-14, 9 April 2015 In a referral from Norway's Oslo District Court regarding the validity and scope of Intervet's supplementary protection certificate (SPC) for a fish vaccine (Norvax), the European Free Trade Association (EFTA) Court has decided that: • an 'exceptional circumstances' authorisation for a veterinary medicinal product (under art 26(3), Directive 2001/82) is a valid authorisation for the purposes of the SPC regulation in force in the EFTA States: Iceland, Liechtenstein, Norway, and Switzerland (though Switzerland does not participate in the EFTA Court) (Council Regulation (EEC) No 1768/92, the EFTA SPC Regulation); • a provisional permission to use a veterinary medical product in the event of a serious epizootic disease (art 8, Directive 2001/82) is not a first marketing authorisation for the purpose of the EFTA SPC Regulation; • an SPC is invalid to the extent its scope is wider than set out in the marketing authorisation on which it is based (art 4, EFTA SPC Regulation); and • an SPC cannot protect a specific strain of a virus covered by the basic patent, but not referred to in the marketing authorisation, unless the specific strain constituted the same active ingredient as in the authorised product and had therapeutic effects falling within the therapeutic indications for which the marketing authorisation was granted. The EFTA Court left the Norwegian Court to assess the facts and decide the validity of Intervet's SPC based on the nature of the permissions granted to Intervet, and to decide whether Intervet's SPC covered a different strain of the same virus on which Norvax was based. Background Intervet had obtained patents in Europe, the UK, and Norway covering a vaccine for fish, sold as Norvax. From 2003 to 2011, Intervet sold Norvax in Norway and Ireland under special approval exemptions from marketing authorisation under national legislation (MAs). In 2005, Intervet was granted a provisional marketing authorisation in the UK, and in 2011 Intervet was granted full MAs in the UK and Norway. Intervet went on to obtain an SPC in Norway, which was to run until 2020 given that the provisional MA granted in the UK in 2005 was deemed the first MA in the European Economic Area (EEA). The SPC reflected the broad terms of the patent, rather than the narrower wording of the MA granted for Norvax which covered only one particular virus strain. In an earlier Norwegian proceeding between the parties, Pharmaq's vaccine, which was based on a different strain of the same virus, had been found to infringe Intervet's patent. 9 In the present proceeding, Pharmaq sought a declaration that Intervet's SPC was invalid. The Norwegian Court referred a number of questions to the EFTA Court regarding the application of articles 2, 3 and 4 of the EFTA SPC Regulation. The relevant provisions of the EFTA SPC Regulation are substantially identical to the European Union's Regulation (EC) No 469/2009 concerning the SPC for medicinal products, which has not yet been incorporated into the European Economic Area (EEA) Agreement. The EFTA Court hears disputes arising in Iceland, Liechtenstein, and Norway. These countries are members of the EEA, but not members of the European Union, so therefore not subject to jurisdiction of Court of Justice of the European Union (CJEU). In contrast to the CJEU, EFTA Court judgments are non-binding and purely advisory. It remains to be seen whether the CJEU will take the same approach if faced with similar questions. Marketing authorisation and 'placing on the market' (arts 2 and 3, ETFA SPC Regulation) According to Article 2 of the EFTA SPC Regulation, a veterinary medicinal product is eligible for an SPC if it is protected by a valid patent in the state concerned and if, before being placed on the EEA market it obtained a marketing authorisation pursuant to an administrative authorisation procedure as laid down in Directive 2001/82, including safety and efficacy testing. The EFTA Court held that an SPC for a veterinary medicinal product may be granted on the basis of a marketing authorisation obtained pursuant to the procedure for authorisation in exceptional circumstances under Article 26(3) of Directive 2001/82, and any administrative authorisation procedure set out in Title III of Directive 2001/82. However permissions granted under the first paragraph of Article 8 of Directive 2001/82, for example permissions for use in crisis situations such as serious epizootic diseases, do not constitute marketing authorisations within the meaning of the EFTA SPC Regulation. The Court did not appear to give much weight to submissions made by Intervet, supported by the UK Government and the European Commission, that to disqualify a product from the benefit of an SPC because it was first granted permission other than a marketing authorisation would undermine public health considerations by deterring patentees from making their products available in crisis situations such as those envisaged in Article 8, Directive 2001/82. It was for the Norwegian Court to determine whether the permissions granted to Intervet in Norway, Ireland, and the UK before full marketing authorisation was granted in 2011, amounted to marketing authorisations on which the Norwegian SPC could validly be based. Scope of protection where SPC wording extends beyond MA Pharmaq also contended that Intervet's SPC was invalid because the broad wording covered vaccines based on strains of the virus beyond the one strain referred to in the MA for Norvax. Intervet submitted that the SPC for both the specific strain of the virus contained in Norvax, and other strains covered by the patent, would be valid if the active ingredient is the same and the therapeutic effects are equivalent. However, Intervet accepted that the scope of the SPC protection should be limited to the specific strain contained in Norvax. On this point, the EFTA Court broadly agreed with Intervet, but it is still up to the Norwegian Court to decide the validity of the SPC based on the EFTA Court's opinion. 10 14. Key points from featured UK decisions Patentee(s) / patent no. Other party/ies Product Court Judge Legal issue Outcome Decisions related to pharmaceutical patents Warner-Lambert Company LLC EP (UK) 0 934 061 Actavis Group PTC EHF Actavis UK Limited Caduceus Pharma Limited LYRICA (pregabalin to treat neuropathic pain, anxiety, and epilepsy) Court of Appeal Arden, Ryder, and Floyd LJJ Direct infringement – How Swiss form claims should be construed – what does it mean to claim the use of a compound X for the preparation of a pharmaceutical composition for treating disease Y? Indirect infringement – Whether to reverse Arnold J's decision to strike out Warner-Lambert's case of indirect infringement. Interim injunction – Whether to reverse Arnold J's decision to refuse to award an interim injunction to Warner-Lambert on the balance of justice. Appeal allowed in so far as: Direct infringement – A manufacturer will infringe if it knows or can reasonably foresee the ultimate intentional use of the composition for the indication specified in the Swiss form claim. Indirect infringement – WarnerLambert's case of indirect infringement allowed to run to trial. Appeal dismissed in so far as: Interim injunction – Arnold J's decision to refuse to grant an interim injunction upheld. AstraZeneca AB AstraZeneca UK Ltd EP (UK) 1 020 461 KRKA dd Novo Mesto Consilient Health Ltd NEXIUM (esomeprazole to treat ulcers) Court of Appeal Longmore, Kitchin, Floyd LJJ Whether to allow AstraZeneca's appeal from the Patents Court's award to the generics of over £27 million in damages suffered as a result of an interim injunction granted to prevent launch of a product which was later found not to infringe. Appeal dismissed. AstraZeneca to pay generics over £27 million in damages under cross-undertaking. ViiV Healthcare UK Ltd EP (UK) 0 817 637 Teva UK Ltd KIVEXA (abacavir + lamivudine to treat HIV) Patents Court John Baldwin QC Whether to allow ViiV's application to refer questions relating to SPCs and marketing authorisations for pharmaceutical products to the Court of Justice of the European Union (CJEU) at an early stage of the proceeding. Application refused. No referral to the CJEU of questions related to SPCs. 11 Patentee(s) / patent no. Other party/ies Product Court Judge Legal issue Outcome Novartis AG LTS Lohhmann Therapie-Systeme AG Novartis Pharmaceuticals UK Limited EP (UK) 2 292 219 Focus Pharmaceuticals Ltd Actavis Group PTC Teva UK Limited EXELON (rivastigmine transdermal patch to treat Alzheimer's disease) Patents Court Arnold J Whether the patent was invalid for added matter, obviousness, and/or insufficiency. Whether the generic parties infringed the patent. Patent invalid for added matter and obviousness. If patent had been valid, the generics parties would have infringed. Teva Pharmaceutical Industries Ltd EP (UK) 2 177 528 EP (UK) 2 361 924 Synthon B.V. COPAXONE (glatiramer acetate to treat multiple sclerosis) Patents Court Birss J Whether the patents were invalid for lack novelty, lack inventive step, insufficiency, and/or added matter. Patents valid, with the exception of a few subsidiary claims of the 924 patent that were invalid for added matter. Amgen Inc Amgen Manufacturing Ltd EP (UK) 1 482 046 EP (UK) 2 345 724 Teva Pharma BV Teva's LONQUEX (lipegfilgrastim solution for injection for chemotherapy patients) Intellectual Property Office Hearing Officer Howard Whether to refer Teva's entitlement claim for the 046 Patent to a Court despite the fact that the patent had lapsed. Whether to strike out Teva's entitlement claim for the 724 Patent, which had since been revoked both in the UK and centrally at the EPO. Teva's claim for entitlement in respect of the 046 Patent referred to Court. Teva's claim for entitlement in respect of the 724 Patent struck out. Decisions related to patents other than pharmaceutical patents Stretchline Intellectual Properties Ltd GB 2 309 038 H&M Hennes & Mauritz UK Ltd Fusible woven barrier to prevent the ends of underwire from penetrating tubular fabric, for use in bras and swimming costumes Court of Appeal Aikens, Kitchin, Briggs LJJ Whether to allow H&M's appeal from the Patents Court's decision to strike out H&M's validity challenge as being in breach of a settlement agreement between the parties in an earlier proceeding for infringement of the same patent. Appeal dismissed. The parts of H&M's defence and counterclaim raising invalidity were struck out. 12 Patentee(s) / patent no. Other party/ies Product Court Judge Legal issue Outcome IPCOM GmbH & Co Kg EP (UK) 1 841 268 HTC Europe Co Ltd Bright Point Great Britain Limited HTC Corporation Nokia Corporation A mobile station for operation in a Universal Mobile Telecommunications System (UMTS) mobile radio network Patents Court Birss J Whether IPCom should be permitted to amend the claims of the EP(UK) patent to the same form as they were allowed by the EPO Board of Appeal. Whether the patent as amended was invalid for added matter. Whether HTC infringed. Whether IPCom's patent was essential to the UMTS standard. IPCom permitted to amend patent. Patent valid as amended. HTC did not infringe. IPCom's patent not essential to the UMTS standard. Ticketogo Ltd GB 2 391 101 The Big Bus Company Ltd A system for issuing tickets over the internet. Patents Court Arnold J Whether to grant Big Bus disclosure of Ticketogo's licences granted under the patent before Ticketogo had commenced threatened infringement proceedings. Pre-action disclosure granted as it would save costs and assist with settlement. It would not be burdensome for Ticketogo to disclose the class of licences sought. Everseal Stationery Products Ltd GB 2 340 073 Document Management Solutions Ltd Raymond George Richard George Simon James George Robert Morris A ‘mailer’ (being a letter or other business communication, which is folded, sealed, and then posted) with a particular irreversible self-seal adhesive Intellectual Property Enterprise Court HHJ Hacon Whether Everseal's patent was novel over a prior mailer sold before the priority date, and had an inventive step over two prior US patents. Whether three mailers made and sold by Document Management infringed Everseal's patent. Patent invalid for lack of novelty and lack of inventive step. Had the patent been valid, one of Document Management's mailers would infringe, and two would not. 13 15. Contacts Christopher Sharp (Senior Associate, London) T +44 20 7466 2591 Christopher.Sharp@hsf.com Anna Vandervliet (Senior Associate, Australia) T +44 20 7466 2842 Anna.Vandervliet@hsf.com Grace Pead (Associate, Australia) T +44 20 7466 7518 Grace.Pead@hsf.com If you would like to receive more copies of this briefing, or would like to receive Herbert Smith Freehills briefings from other practice areas, or would like to be taken off the distribution lists for such briefings, please email firstname.lastname@example.org. © Herbert Smith Freehills LLP 2015 The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on the information provided herein.