In depth consideration of issues of joint tort feasance are often considered to be the domain of academics or general commercial litigators rather than patent litigators. Following the line of precedent set in Unilever Plc v Gillette (UK) Ltd  RPC 583, a parent company (often located outside the jurisdiction) can be joined as a party to patent proceedings in the UK if the companies act with a “common design”. Historically, allegations of “common design” are rarely contested with any real vigour by defendants.
Sometimes in patent litigation the scenario can become slightly more complicated where one defendant owns the patent and the other is on the patents register. In accordance with CPR rule 63.14(2) (a), a claim relating to a registered right must be “served on the party who has registered that right at the address for service given for that right in UK Patent Office Register….”. Although any change of ownership should always be recorded on the Register, in practice it isn’t. The consequence being that both entities usually end up as defendants.
Departing from the status quo, in Teva v (1) Amgen, Inc. (2) Amgen Manufacturing Limited, Amgen Inc. was not content with remaining a party to the litigation once the assignment of the patent was properly registered. First, it suggested to Teva that it should amend its pleadings, and, when that approach failed, it applied under rarely used CPR Rule 19.2 (3) for an order to cease to be a party to all proceedings.
Background to the Litigation
The dispute between Teva and Amgen relates to long acting granulocyte colony stimulating factors (“G-GSF’s”), a class of polypeptide which stimulates bone marrow to produce granulocytes (a type of white blood cell) used in the treatment of Neutropenia. Amgen manufactures a long acting G-CSF called Neulasta, which enjoys annual global sales of around $4 billion. Teva intends to launch its long acting G-CSF, Lonquex, in the near future. It should be noted that Lonquex is not a generic version of Neulasta as their active ingredients are not identical.
On 19 September 2013 Teva Pharma BV and Teva UK Limited (“Teva”) brought claims for revocation of EP (UK) 2 345 724 (“’724”) and on 7 October 2013 a declaration that any Supplementary Protection Certificate (“SPC”) based on ‘724 would be invalid. These claims were brought against the registered proprietor of the patent Amgen, Inc (“AI”).
On 16 October Amgen’s solicitors wrote to Teva’s solicitors informing them that ‘724 had been assigned to Amgen Manufacturing Ltd (“AML”) and suggesting they should amend both sets of proceedings to substitute AI for AML. Teva did not amend its pleadings and went ahead and served the SPC claim on AI in California. So Amgen then applied on 4 November 2013 under CPR Rule 19.2(3) for orders that AML be substituted for AI in both claims. On 6 November 2013 Teva commenced a third action for a declaration of non-infringement against both AI and AML (together referred to as “Amgen”).
The Judge initially adjourned the applications for 14 days, making an order for disclosure of the patent assignment agreement between AI and AML. During the intervening period AML was registered as proprietor of ‘724 (UK).
At the reconvened hearing, Amgen’s counsel submitted that now AI was no longer the registered proprietor of ‘724 (UK) it was no longer desirable for it to be remain a party and accordingly the Judge should make the order requested.
Teva contended that absent of any explanation, it should be inferred that AI’s motive for the assignment of ‘724 to AML was to avoid giving disclosure. Further, Teva contended that the reason for this was that AI had in its possession damaging documents which would support an insufficiently attack on ‘724. Counsel for Amgen countered that ‘724 was assigned because Amgen wished to recover damages for AML’s lost profits. Amgen did not adduce any evidence on any of these points and the Judge inferred that the assignment was made for the reasons Teva suggested.
Teva advanced four reasons why it was desirable for AI to remain a party:
AI had gone to considerable lengths to avoid being a party to proceedings in the UK in order to avoid disclosure;
So Teva could seek disclosure from it;
AI had a financial interest in the proceedings due to the royalty provision in the assignment agreement; and
AI was Teva’s real adversary and it had a legitimate interest in ensuring that AI was bound by any declarations made by the Court.
The Judge was not convinced by the first three reasons given by Teva. He found that going to great lengths to avoid disclosure did not, in itself, make it desirable that AI should be a party. A group of companies was entitled to structure its patent holdings however it considered most advantageous and there was nothing wrong about choosing a structure that minimised the risk of disclosure. In terms of obtaining disclosure, while it is improper to bring proceedings against a party purely to obtain disclosure, in some cases the potential for disclosure might be a factor relevant to whether a party should remain involved.
Teva submitted that, were it successful in its claims, it would have a good claim for declaratory relief against AI. The Judge held it was not necessary to determine whether Teva would succeed in a claim for declaratory relief against AI, instead it was sufficient for him to decide whether Teva had a real prospect of successfully claiming declaratory relief. If Teva had a real prospect of success, he reasoned, it must follow that it is desirable for AI to remain a party.
The key question in deciding whether Teva had a real prospect of successfully claiming declaratory relief was not whether AI owned the legal right in question but whether AI would be affected by the Court’s determination of issues concerning that right. The Judge found that it was arguable that AI would be affected by the Court’s determination of the issues concerning ‘724 (UK) in the following ways.
Teva had a legitimate concern that AI might in the future procure that AML assigns ‘724 back to it.
AI remained the owner of the other patents in the family and if it remained a party, Teva would be able to rely on the rule in Henderson v Henderson (1843) 3 Hare 100 should AI bring proceedings at a later date.
If Teva was successful, it might wish to contend that the findings of fact were res judicata and gave rise to an issue estoppel binding on AI in parallel proceedings;
There was a potential issue over which Amgen entity was entitled to apply for an SPC based on ‘724.
Accordingly, and dismissing Amgen’s application, the Judge it was desirable for AI to remain a party to proceedings.
In finding it was desirable for AI to be a party to the proceedings (a positive finding), a stricter test was passed than had the Judge simply found it was not undesirable for AI to be a party (the standard required for an application under CPR Rule 19.2 (3)).
While its peculiar facts may at first examination appear to be limit the impact of this decision, there does not appear to be any reason why the Judge’s reasoning should not be applied in arguing that a parent company should be joined as a party to patent litigation where the other side wishes it to be bound by any declarations made by the Court. Although, as noted above, a pleading of common design is rarely contested with any vigour, if it were this decision would undoubtedly be of importance.
This decision represents yet another reason why it is becoming increasingly difficult for large corporates to enforce their patents from remote corners of their corporate structures (e.g. IP holding companies) without the parent company being joined to proceedings. IP Assets are often moved around corporate structures for tax reasons (e.g. the UKIPO’s Patent Box) or for governance purposes but this decision underlines that the Courts will not allow defendants to slip-slide out of their CPR 31 obligations by reason of their chosen corporate structure.