UK- Patents Court

Actavis Group PTC EHF v Pharmacia LLC

7 July 2014

Pharmacia applied to stay English proceedings concerning the validity of the UK part of its European patent for a sustained release form of pramipexole pending the outcome of parallel validity proceedings before the EPO. Arnold J refused the application. His main reason was that the EPO would take longer than the UK Courts to resolve the validity of the patent, leading to a longer period of commercial uncertainty for Actavis.

The judge was of the view that undertakings offered by Pharmacia were insufficient to resolve the uncertainty, but their extended undertakings, offered post-judgment and to be considered separately by the judge, may swing the balance in Pharmacia’s favour.

Background

EP (UK) No. 1536792 ‘Pramipexole once-daily dosage form’ is owned by Pharmacia and is for the treatment of Parkinson's disease and restless leg syndrome. The product is marketed in the UK by the exclusive licensee Boehringer Ingelheim under the brand name Mirapexin.

Actavis expects to be granted a marketing authorisation prior to the trial window. It intends to launch its product as soon as possible thereafter and said it would tell Pharmacia about its launch in time for Pharmacia to apply for an interim injunction if it wanted to. Thus, there had been a clear threat to infringe the Patent.

Actavis opposed the Patent at the EPO in October 2013 soon after the Patent granted. The largest market for this product is Germany followed by the UK (worth £14 million a year). The parties accepted that Actavis could not effectively bring proceedings to revoke the German designation of the Patent because the German courts would automatically stay those proceedings while the EPO proceedings were ongoing.

Pharmacia offered undertakings to the Court: (a) to seek expedition of the proceedings at the EPO (b) not to seek an injunction against Actavis and its customers until the EPO proceedings were determined, and (c) only to seek damages of 1% of Actavis’ net sales during the period from launch until the determination of the EPO proceedings if the Patent was held valid both by the EPO and by the English courts.

Judgment

Arnold J applied the recent guidance on stays in patent cases as set out by the Court of Appeal in IPCom GmbH & Co v HTC Europe Co Ltd.

The default position was that the proceedings should be stayed and that Actavis, as the party resisting the stay, should show why a stay should not be granted. In deciding where the balance of justice lay, Arnold J considered the following factors:

Timing of English and EPO proceedings

The English proceedings would be concluded by October 2016 (30 months after they were commenced).

There was a dispute as to how long it would take from the Notice of Appeal to the final decision of the Technical Board of Appeal. Arnold J noted that the EPO case was likely to be assigned to either Board 3.3.07 or Board 3.3.02. The judge preferred Actavis’ evidence that the EPO proceedings were likely to take over five years to be resolved, and could easily take longer. This accords with our recent analysis of the timing of appeals from the Opposition Division to the Technical Board of Appeal for these boards for decisions published in 2012 and 2013 to April 2014. These boards take on average about 3.5 years to reach a decision on appeal from the Opposition Division.

Commercial certainty

Pharmacia argued that its undertakings would effectively eliminate the commercial uncertainty which a stay would otherwise expose Actavis to. Actavis disagreed.

The judge said that Pharmacia’s undertakings still left open the possibility that Actavis could be taken off the market by an interim injunction if the EPO found that the patent was valid, before the English courts had considered it. Even if there was no interim injunction, Actavis still also faced the possibility of having to pay more than 1% in damages for its sales after the EPO decision. The judge said “That uncertainty will inevitably have a chilling effect on Actavis' investment decisions.”

Costs

It was common ground that the EPO proceedings would cost the parties a fraction of the amounts they would need to spend on a UK revocation action. The judge preferred Actavis’ evidence that the UK proceedings would cost each party around £1.9 million but did not appear to require Actavis to give an undertaking in relation to wasted costs.

The judge found the considerations finely balanced. Ultimately, he concluded that the circumstances favoured the refusal of a stay. The key reason for this was that the EPO proceedings had only just begun. Commercial certainty would be achieved earlier if the UK proceedings were to continue as planned with a trial in June-July 2015. It was also relevant that a UK decision might assist with settlement and with the public interest in knowing whether or not a patent was valid.

Interestingly, in response to the draft judgment, Pharmacia offered two additional undertakings: (a) not to seek an injunction against Actavis and its customers during the life of the Patent and (b) only to seek damages of 1% of Actavis’ net sales during the life of the Patent if it is ultimately held valid by the EPO and valid and infringed by the English courts.

The judge will consider whether these further undertakings give Actavis sufficient commercial certainty to tip the balance in favour of a stay.

Comment

It was thought that the UK courts might re-visit their practice of refusing stays following the Virgin and IPCom cases (“If there are no other factors, a stay of the national proceedings is the default option”); here, the difficulty was that the EPO was plainly going to take much longer than the English courts to reach a decision. Pharmacia’s late offer of further undertakings suggests that it is very keen to achieve the stay, rather than have the UK court rule first.