England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (PATENTS COURT)
THE HON MR JUSTICE FLOYD
[2011] EWHC 3393 (Pat)

		Royal Courts of Justice Strand, London, WC2A 2LL
		29/01/2013

Lord Justice Kitchin:

1. This is the judgment of the court.
2. The parties have been unable to agree a form of order in the light of our main judgment ([2013] EWCA Civ 2) and have identified a series of issues upon which we have been asked to rule. We shall address them in turn.

What is the appropriate order to make in relation to the costs of the respondent's notice and cross-appeal?

3. Each side seeks its costs of these issues. Merial says that, alternatively, there should be no order in respect of these costs in so far as they were incurred in relation the 564 patent but it should have these costs in so far as they were incurred in relation to the 881 patent.
4. We have come to the conclusion that Omnipharm is entitled to these costs for the following reasons. First, we believe Omnipharm is properly characterised as the winner; it has achieved its commercial aim on this appeal. Merial's appeal against the judge's finding of insufficiency has failed.
5. Second, as recorded at [10] of our main judgment, Omnipharm's contentions in relation to obviousness were contingent. Omnipharm's case was that the judge's finding that the 564 patent was insufficient was consequent upon his reasons for rejecting the obviousness attack against the patent. Accordingly, if the judge had not found the patent insufficient, he ought to have found it invalid for obviousness. By parity of reasoning, he ought to have found the 881 patent invalid for obviousness too. It followed that once this court had formed the view that the appeal against the judge's finding of insufficiency of the 564 patent must be dismissed, the appeal on obviousness in relation to both patents fell away.
6. Third, Omnipharm says, with justification, that its stance has been consistent. It made clear it would only seek permission to cross-appeal in the event that Merial was granted permission to appeal. In its main skeleton on the appeal dated 30 April 2012 it argued the issue of obviousness in relation to the 564 patent and sought permission to cross-appeal in relation to the 881 patent. Then, in its reply skeleton dated 27 September 2012, it said in terms that it would only pursue its appeal in relation to the obviousness of either patent in the event that it was unsuccessful in upholding the decision of the judge that the 564 patent was insufficient. That was the position it maintained at the hearing of the appeal.
7. Fourth, as for insufficiency on the basis that the claims cover systemic administration, this was raised against the 564 patent and Omnipharm lost. But it was only a further reason for upholding the judge's finding of insufficiency and did not take up much time. It was also raised against the 881 patent, but only contingently.

Should the costs of the applications for maintenance of security subsequent to 8 February 2012 which Omnipharm has been ordered to pay, be expressed as a percentage deduction from Omnipharm's costs of the appeal or be left to a detailed separate assessment?

8. Merial says it has incurred at least £38,000 and asks that these costs be assessed and set-off against any costs it is required to pay. Omnipharm suggests a deduction of 7.5% from its costs.
9. We have no doubt Merial's formulation is the correct one. We say that for the following reasons. First, these issues are self contained. Second, the costs are, on any basis, substantial. Third, there is a real issue as to whether the 7.5% suggested by Omnipharm would properly compensate Merial.
10. There appears to be a yet further issue as to whether Merial should be entitled to the costs associated with the extension of the undertaking to repay the interim payment ordered by Floyd J to Mr Donnelly and others. But this is not a matter which was raised before us and we do not believe it is one with which we should now deal.

Should there be a payment on account of Omnipharm's costs of the appeal and, if so, how much?

11. The answer to this follows from the answer we have given in relation to the first issue. Omnipharm is entitled to its costs, including the costs of the cross-appeal and respondent's notice. We are satisfied it is appropriate to order a payment on account of about 50% of Omnipharm's estimate of its appeal costs, that is to say £100,000, upon Omnipharm's undertaking to repay this sum if the order is varied on further appeal.

Permission to appeal to the Supreme Court

12. Merial seeks permission to appeal to the Supreme Court. We have no doubt that permission to appeal must be refused. We have concluded the judge made no error of principle. In our main judgment we expressly recognised the distinction between the obviousness and insufficiency allegations (see, for example, [136]). Nevertheless, in this case there was, for the reasons we have given, a substantial overlap between them.

Should Omnipharm's solicitors be required to maintain the security for costs of £699,650 which they currently hold pending the determination of any application by Merial for permission to appeal to the Supreme Court?

13. Merial asks that the security which has been provided be maintained pending the determination of an application for permission to appeal to the Supreme Court.
14. Omnipharm says that is inappropriate. Merial's prospects of obtaining permission to appeal are vanishingly small; it needs the money to secure its entry onto the market and it has offered an undertaking in the following terms:

"Each of the Claimant, Martin Donnelly, QEDetal Limited (an Irish registered company with number 476355) and Mr Donnelly's Dubai registered company called "QEDetal" undertake to repay to Fasken Martineau such amount of security for costs as the Supreme Court considers appropriate in the event that permission to appeal to the Supreme Court is granted to the Defendant."

15. We recognise that maintenance of the security would preserve the status quo. Nevertheless, we do not believe it is appropriate to require Omnipharm to maintain the security for the following reasons. First, it has the benefit of concurrent findings of the High Court and this court on the issue in relation to which Merial intends to seek permission to appeal to the Supreme Court. Second, it says with some force that all orders for payment of security have been met by it to date. If the Supreme Court gives permission to appeal and considers that security is appropriate, there is no reason to suppose it would not again be provided pursuant to the undertaking offered. If it were not provided, Omnipharm would be unable to defend the appeal. Finally, although it has not served evidence in relation to this issue following our judgment, there was evidence in February 2012 that if the security was not paid out its entry onto the market would be delayed. Be that as it may, there can be no doubt it has been denied the use of the money.

Other minor points

16. Merial raises two minor matters on the wording. The first is whether the word "conditionally" should appear in the recital in relation to the appeal. We do not think it should. It may cause confusion and the position is made quite clear in our main judgment and in this further ruling.
17. Second, it asks for the interest provision to reflect the possibility that Omnipharm is the net payer. There is no prospect of this in the light of this ruling and we prefer Omnipharm's formulation.