In December 2020 we reported on the judgment of Marcus Smith J in the case of Neurim vs Mylan in which the judge found that Neurim’s patent was both valid and infringed. This case came back before Marcus Smith J for a further hearing on 22 February 2021 resulting in a judgment on consequential matters handed down on 12 March 2021 (the “Consequentials Judgment”).
This case provides a reminder of the interaction between opposition proceedings before the European Patent Office (“EPO”) proceedings and those before national courts.
The need for the Consequentials Judgment arose from parallel proceedings concerning Neurim’s patent at the EPO.
The term “European patent” refers to patents granted under the European Patent Convention. However it is not a pan-European right but a bundle of separately enforceable national rights awarded following a centralised application process. For readers less familiar with the many European institutions, note that European Patent Convention has nothing to do with the European Union and is unaffected by Brexit.
In the first nine months following the grant of a European patent, the validity of the grant can be challenged centrally before the EPO (known as an ‘Opposition’). Oppositions are first heard before the Opposition Division and decisions of the Opposition Division may be appealed to the Board of Appeal. The filing of an appeal suspends a revocation of a patent by the Opposition Division.
A successful Opposition has the advantage to the opponent of revoking the patent across all contracting states. However, there are downsides, most notably the time it takes. An Opposition generally takes a number of years to be completed, including an appeal. This means that for many contracting states national revocation proceedings are likely be resolved far more quickly than an Opposition.
Whereas in some jurisdictions, such as Germany, a national revocation action cannot be brought whilst Opposition proceedings are pending, in the UK it is not uncommon for a UK revocation action and an Opposition to proceed in parallel, as was the position in the Neurim vs Mylan.
Facts of this case
In November 2019 the Opposition Division held that the patent was invalid. This decision was appealed to the EPO Technical Board of Appeal (“TBA”) by Neurim.
The key dates in the UK proceedings were as follows:
- On 4 December 2020, Marcus Smith J gave judgment holding that Neurim’s patent was valid and infringed (the “Judgment”).
- On 16 December 2020, Marcus Smith J ordered ex tempore, that amongst other things, Neurim as the successful party be awarded its costs.
- On 18 December 2020, the TBA, during the oral hearing of Neurim’s appeal, expressed an opinion orally that the patent lacked sufficiency. In light of this, Neurim elected to withdraw its appeal of the Opposition Division’s decision such that the decision became final and the patent was revoked.
- On 30 December 2020, Marcus Smith J made a further order varying large parts of the 16 December Order (including the injunction and the declaration of validity).
The 30 December Order also records Mylan’s application to be awarded the costs of the claim due to a material change in circumstances. That is, Neurim’s acceptance before the TBA that the patent should be revoked. This application was determined at a hearing on 22 February 2021 which gave rise to the Consequentials Judgment.
At the February hearing Neurim sought to maintain two provisions of the 16 December Order:
i) the costs order made in Neurim’s favour; and
ii) the permission to appeal the judge’s finding that Flynn Pharma was not Neurim’s exclusive licensee.
Firstly, Marcus Smith J considered whether he had jurisdiction to vary the 16 December Order and whether that jurisdiction should be exercised. The Judge held that the 16 December could and should be revisited citing, in particular: the proximity of the outcome of the TBA appeal and the 16 December Order, the fact that the 16 December Order was not drawn up, that it would be grossly unfair to Mylan for it to be unable to contend that the 16 December Oder should be varied; and it was implicit that the 16 December hearing was on the basis that any orders made could and would (if appropriate) be re-visited.
Marcus Smith J next dealt with the exclusive licensee point, holding that he was not persuaded that there was any proper purpose to be served by granting permission to appeal in circumstances where there was no longer any patent which could be subject of the (non-)exclusive licence.
On costs, the Judge applied the well-established principle that the successful party should be awarded its costs. The Judge went on to find that the effect of the EPO proceedings on the outcome of the UK proceedings (i.e. effectively reversing the findings) was a relevant factor and in light of this “it is obvious that Mylan is the winner”. The quirk is that this outcome was arrived at despite the judgment in the UK proceedings which went almost entirely Neurim’s way. The judge was not convinced that any other factors were sufficient to displace his conclusion that, notwithstanding that finding, Mylan should be awarded its costs as the overall winner.
Notably, the Judge commentedon both parties’ conduct in not raising the possibility of the UK trial being rendered pointless in light of the imminent TBA hearing. The Judge held that in not making an application for an adjournment each of the parties assumed the risk of costs being wasted and of a costs order being made that followed the outcome of the interaction between the UK and EPO proceedings (rather than the reasoning of the UK proceedings alone).
Although the facts are unusual (it is rare for a final order hearing and a TBA hearing have been so close in time), the weight given to the effect of the TBA hearing in this scenario is perhaps surprising. Most practitioners would be used to costs being awarded to the party successful in the UK proceedings regardless of the outcome of proceedings elsewhere.
However, this was not quite the end of the matter. The circumstances of the Consequentials Judgment raises the further (hypothetical) question of what would have happened if the Judgment had been given at the same time, with the same outcome, but TBA hearing had been in early 2022 (as it might have been had it not been expedited). In this scenario, the 16 December Order would have been drawn up and Mylan would have been injuncted for over a year. Mylan may also have delivered up or destroyed infringing product and, paid the costs of the UK proceedings. The Judge did not need to answer this question and was at pains to emphasize that he was not answering it. Nonetheless, he did not rule out the possibility that Mylan might still have been able to recover its costs in this scenario.
Differing decisions between the UK court and the EPO are sure to arise in future. This decision may encourage a party who is ultimately successful as a result of later EPO decision to be more ambitious in seeking to rely on that decision to amend so-called ‘final’ orders issued by the UK Court.