England and Wales High Court (Patents Court) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/07/2008

MR. JUSTICE FLOYD :

1. These proceedings are in form an application by Hospira UK Limited for a declaration of non-infringement of EP UK No. 0577303 in the name of Eli Lilly and Company. The patent is alleged to protect the drug gemcitabine.
2. The action was commenced by claim form on 31st October 2007. There is no counterclaim for infringement in the way that there can sometimes be. The position has now been reached that Hospira has served a confidential process description and extracts from their DMF.
3. No issue of substance now remains. Lilly accept that manufacture according to the process description does not infringe any claim of the '303 patent. Therefore importation and sale of that product cannot infringe either. The trial fixed for January 2009 is therefore, on the basis of the situation that has now been reached, likely not to occur.
4. Hospira remains concerned that Lilly will none the less commence infringement proceedings when product made according to the process description is launched. The current expected launch date is March 2009. Such an action, particularly if coupled with an interlocutory injunction, would be likely, say Hospira, to cause them very serious commercial harm. The effect of a declaration of non-infringement was described by Pumfrey J, as he then was, in Niche Generics Limited v Lundbeck A/S [2003] EWHC 2590 (Pat); [2004] FSR 20 at paragraphs 24 to 25 in the following terms:

"I think before turning to the subject matter of the application I should very briefly state my understanding of the effect of the declaration. The declaration merely tells the defendant that if the claimants can demonstrate that the manufacture is according to the process description which forms the subject matter of the declaration, then there is no infringement of the patent. It neither involves a warrant by the claimants that the product sold within the United Kingdom will be manufactured according to that process description, nor does it provide the claimants with an immunity based upon the claimants' own assertion of the manner in which the product is made. It is merely a manner of clearing out of the way issues of construction and substantive law relating to infringement so that the only issue in the future which should arise between the parties is the process used for the manufacture of the defendant's product.

"There is, in my view, no question of policing or of making efficacious such a declaration. The question, infringement or not, still has to be resolved according to the process used in relation to any particular batch of product supplied by the claimants to the market in the United Kingdom. Thus, if the patentee suspects infringement, an action for infringement can always be commenced. If the claimant in the action for the declaration of non-infringement succeeds in showing that the process used in manufacture is no different from that forming the subject matter of the declaration, then the action stops at that point."

5. So there is nothing in principle preventing Lilly from commencing an action if they have a basis for doing so when Hospira begin to import. The first issue in such an action would be likely to be, is the gemcitabine which is imported by Hospira made in accordance with the process description? If so, there will be no infringement. One arrives at that conclusion without consideration of the claims of the patent.
6. Hospira says that in the present case Lilly have no present basis for believing that the product to be imported will be anything other than the non-infringing gemcitabine made according to the process description. They therefore, say Hospira, have no basis for commencing an action.
7. Hospira have provided Lilly with the report of an independent expert instructed by them (Dr. Adlington) who has inspected the process in China carried out under the control of Hospira's Chinese supplier. Hospira point to the fact that to import product made otherwise than in accordance with the process description and DMF would be a criminal offence.
8. Bearing those matters in mind, Hospira are seeking by this application an amendment to the pleadings in the following form. They seek to insert additional paragraphs and a prayer for relief into the particulars of claim:

"3A. The Claimant has applied to the authorities for marketing authorisation for the product it wished to market in the United Kingdom containing gemcitabine hydrochloride as the active pharmaceutical ingredient. This application includes a detailed description of the manufacturing process ('the Confidential DMF Process') which will be used for making the said products it wishes to market. The Confidential DMF Process contains full particulars of all stages of the said process and the Claimant avers that the marketing of the said products after 5 March 2009 would not constitute an infringement of any claims of any UK patents subsisting at that date and held by or licensed to the Defendant.

"3B. In support of the plea that the gemcitabine hydrochloride is to be manufactured in accordance with the process described in the Confidential Product Description and the Confidential DMF Process, the third party manufacturer has recently permitted a representative of the Claimant's solicitors and an independent expert to inspect the said process. The Claimant is preparing evidence reporting the same which will be provided to the Defendant's representatives as soon as it is ready.

"3C. It is extremely important commercially for the Claimant to be able to launch its gemcitabine product in March 2008 without fear of the Defendant seeking interim or permanent relief, and the Claimant seeks to 'clear the way' for launch completely in these proceedings. Without prejudice to the contention that the Defendant already has sufficient material to be able to conclude that the gemcitabine hydrochloride is to be manufactured in accordance with the process described in the Confidential Product Description and the Confidential DMF Process, the Claimant is willing to give the Defendant reasonable time to consider the evidence referred to in paragraph 3B above, and, if legitimate reasons can be provided for requiring it, to seek an inspection of the process used. Once the Defendant has had this opportunity, in order to provide the Claimant with the certainty it requires, the Defendant should be required to make its case or be prevented from bringing any proceedings at a late stage. In the premises in the Claimant is entitled to an anti-suit injunction in the form sought in the prayer for relief."

"2. An injunction to prevent the Defendant from bringing proceedings for infringement of the Patent against the Claimant, save that such injunction shall not prevent proceedings being issued and served which are based on material facts not known to the Defendant as at the date of this injunction."

9. This is undoubtedly an unusual application in that it is an injunction to prevent a party from even commencing an action. There is no dispute that the court can in certain circumstances grant an injunction to restrain the commencement of future proceedings. That jurisdiction arises most frequently in connection with foreign proceedings in a number of ways: see the judgment of the Court of Appeal in Munib Masri v Consolidated contractors [2008] EWCA Civ 625. An example in the domestic field is an injunction to prevent the presentation of a petition to wind up a company or its advertisement. The basis of that jurisdiction is that the court has an inherent power to protect its process from abuse. The authorities emphasise that the jurisdiction should be carefully exercised, see Bhamjee v Forsdick and Others [2003] EWCA Civ 1113, paragraphs 11 to 13, in particular the citation by Collins LJ from the judgment of Brooke LJ in AB & Others v John Wyeth & Brother Ltd [1997] 8 Med LR 57, 70 where he said:

"'The first is that the court has an inherent jurisdiction to step in and prevent its process being abused for the purpose of injustice, or in order to maintain its character as a Court of Justice. The second is that the court should be very slow to exercise this summary power (see also Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210, per Lord Blackburn at p 221: "it should not be lightly done"). The third is that the category of case in which the court should be willing to exercise this power is almost by definition never closed.'"

10. Here Mr. Gee QC for Lilly submits that there is no threat by Lilly to bring vexatious or abusive proceedings. Mr. Watson QC for Hospira says that it can be seen that there is a threat from a number of matters, for example, (a) Lilly have obtained an interim injunction in Denmark based apparently on a suggestion, rightly no longer maintained in this jurisdiction, that gemcitabine cannot be made economically by any route other than an infringing one; and (b) Lilly have suggested in a letter from its solicitors of 9th July 2008 that taking various steps by Hospira could remove the risk of litigation from their launch. The inference is that without those steps there was an existing risk of litigation.
11. I have to say that I have considerable sympathy for Hospira's position. What they want to establish is that Lilly has no present basis for the suggestion that imported gemcitabine will be anything other than non-infringing gemcitabine made by the route set out in the process description. If so, they say Lilly should start an action now rather than wait until Hospira's launch when it would inflict the maximum harm.
12. I asked Mr. Gee whether Lilly did have any present basis for supposing that Hospira's product would in fact infringe when imported. His answer was that the event being in the future it was a question of weighing risks of infringement, making a yes or no answer impossible. I have to say that on the evidence which I have seen, viewed objectively, it is plain beyond peradventure that Lilly have no present basis for believing that Hospira's product will not be made by the process description. Put another way, I cannot see how anyone could, on behalf of Lilly, sign a statement of truth or particulars of infringement alleging a threat of infringement on the present evidence. Be that as it may, the pleading does not assert that Lilly are threatening or intending to bring vexatious proceedings.
13. Mr. Watson rightly recognised that in those circumstances the pleading is vulnerable and invited me to consider the matter on a wider basis. But even considering the evidence as a whole and departing from the pleading, the most that can be said on the evidence is that Lilly are reserving their right to bring proceedings. By definition it is not possible to say now that there is a threat that those proceedings when brought will be abusive.
14. For that reason I consider that the case based on the amendment has no real prospect of success. It follows that I should refuse permission for it to be advanced.
15. I am concerned, however, that Lilly should not view this decision as in any way approving of encouraging the issue of proceedings around the date of Hospira's launch. Assuming that at that stage the DMF is at least, so far as concerns the issue of infringement, in the same form as currently, an allegation of infringement, based on the suggestion that a different process is being used, is tantamount to an allegation of fraud against Hospira and/or their suppliers. Those advising Lilly at that time will know the extent of the obligation that imposes on them: see the observations of Jacob LJ in Generics UK Limited v H Lundbeck A/S [2006] EWCA Civ 1261, at paragraphs 6 to 19, in particular at 9. In that case the Court of Appeal held that an allegation of infringement in similar circumstances, an intention to import in accordance with a non-infringing DMF, had no prospect of success despite quite strenuous attempts to suggest that it was not in fact the process that would be used.
16. The fact that Lilly are not currently in a position to commence such proceedings does not, however, of course mean that they will not be subsequently. If such proceedings for infringement are launched, the court will have extensive powers to prevent its process from being abused. Whilst I cannot of course bind a subsequent court, it is highly unlikely that there could be any question of an interim injunction being granted in March 2009 in the absence of some material change in circumstances between now and then. Lilly cannot sit on their hands now and expect the court to come to their aid in several months' time.
17. The best time to assess whether Lilly's proceedings are brought in good faith or, by contrast, have no realistic prospect of success, or are otherwise an abuse of the process of the court, is when those proceedings are brought, not in advance by means of an anti-suit injunction for which there is no present basis. I therefore dismiss the application.

MR. GEE: Obviously those observations will be taken note of on our side. I hope I didn't say anything which would lead you to think that Lilly were not going to proceed in accordance with those observations.

My Lord, in those circumstances, I ask you to dismiss the application for leave to amend with costs. We have done a costs schedule. I can give copies to my learned friend. It was served this morning, but I think it is none the worse for that because it is up-to-date. The problem with serving it earlier is that you have to put further things in. You can see that the costs come to £76,000.

MR. JUSTICE FLOYD: Am I looking at three separate documents or three copies of the same thing?

MR. GEE: Three copies of the same, I think.

MR. JUSTICE FLOYD: £76,000.

MR. GEE: I don't know how you would approach this, but one way of doing it would be to send it for detailed assessment but to make an order for interim payment. Another would be to deal with it all now. I don't know what you would be minded to do.

MR. JUSTICE FLOYD: What are you inviting me to do? MR. GEE: Either.

MR. JUSTICE FLOYD: Good. Very well.

MR. GEE: The Commercial Court, I venture to suggest, has a practice where it tries to assess costs if they come below £100,000. That is by no means universal and it is all a matter for the individual judge. You can see what the costs are. The charging rates your Lordship will be familiar with. You can see attendances on Eli Lilly, 3.9 hours for the partner, 2.6 hours for the assistant, and so on, work done on documents, attendances at hearing. The attendance at the hearing is slightly underestimated because of course we have gone over into this afternoon. I make no point on that. There is counsel's fees, which I hope are reasonable.

MR. JUSTICE FLOYD: There it is. Mr. Watson?

MR. WATSON: My Lord, in our submission there should be no order as to costs. We are very happy with what my Lord has said and done. I think I was quite frank in addressing my Lord, that that might be something that my Lord would do. We have achieved what we needed to do. We were not able to get that through correspondence. Yes, the actual application has failed. The commercial basis for making the application has succeeded. In the circumstances, to send us away having to pay whatever my Lord deems to be appropriate when we have actually achieved what we wanted, which was to get across to Lilly that they in fact have to move now or highly likely will not be able to seek any interim relief later, the warning that on the evidence that my Lord has seen, that they have "plain beyond per adventure no case for infringement", that is of enormous commercial benefit. Whether my Lord factors that in, we are going away very happy and there can be no joy on the other side. I would submit it was a necessary application and there should be no order as to costs.

As to the quantum, I cannot suggest it is outrageous. My learned friend is getting more than me.

MR. JUSTICE FLOYD: You don't have a schedule of your own?

MR. WATSON: I don't think we do. We have not shown the other side. All I am just moaning about is Mr. Gee is getting more than me; but there again he did look at the law.

The more important point is that this has been an important commercial outing. We have achieved what we needed to achieve. My friend's position has been exposed for what it is. We suggest no order as to costs.

MR. JUSTICE FLOYD: Mr. Gee?

MR. GEE: My Lord, if you turn to the White Book and go to page 1119 at 44.3, the rules say that the court has a discretion as to whether costs are payable by one party to another. If the court decides to make an order about costs, a general rule is that the unsuccessful party will be ordered to pay the costs but the court may make a different order.

Mr. Watson is asking for a different order.

At page 1120, at the foot, although the normal rule is that an unsuccessful party should be ordered to pay the successful party's costs, the court has a discretion to make a different order where it would be unjust to follow the normal rule. "Where a successful party has fought a case on a number of distinct bases on which he has lost, including an improper allegation of fraud", etc.

If we had consented to this amendment, the position is that we would have had a trial, and so on, and the whole thing would have had to be dealt with. The amendment has not been allowed in principle. If there is going to be some order on the basis that it is not just that we should have our costs, then it has to be on a rational proper basis, not on a basis of, "We have turned up for a chat and we have got what we wanted from the chat." That is not to be encouraged it. It would mean that you would have this chat in other patent actions where there was going to be a launch on the market, and so on, and that is highly undesirable.

Your Lordship's observations, if I might respectfully say so, I said nothing that was inconsistent with them this morning. What I had to say I said on instructions, and one has to bear in mind there are considerations for those instructions which the clients have to decide upon.

There are problems about confidentiality from foreign proceedings, and one should be aware of that. In my respectful submission, the position is that we have succeeded. We have had to come up here to resist the amendment. We have been successful. There is no reason why it would be unjust to give us our costs, which would be the normal order.

MR. JUSTICE FLOYD: I think the right order is that Hospira should pay the costs of this application. Whilst it is fair to say that some of the things that I have said in my judgment may be of some comfort to Hospira, the fact is that they have brought an application on which they have been unsuccessful. The court should not encourage such applications. Furthermore, to depart from the general rule that the unsuccessful party should pay the costs requires some rather more substantial basis than the fact that the judgment on the application has some crumbs of comfort for the unsuccessful party.

The sums of money which are the subject of this application are quite high for a half day contested application. Mr. Watson has not suggested that they are wholly extravagant, and I think therefore that I should, if I can, assess them.

Some of the times spent doing work on documents, for example, 28.2 hours and 20.7 hours of two very senior solicitors seem to me to be outside what one would expect, given the rather limited evidential basis for this application. I therefore propose to assess these costs in the sum of £50,000.

MR. WATSON: My Lord, I think they owe us 100, so that makes life quite easy; they just owe us 50.

MR. JUSTICE FLOYD: I am glad everybody is using round figures.

MR. WATSON: Could we have CPR 31.22? If my Lord is interested, we can do it. I don't think there is any dispute between the juniors that they are documents that are confidential. I don't want to sweep it over my Lord on that basis.

MR. JUSTICE FLOYD: All the documents that were marked confidential that were referred to should remain so, notwithstanding anything that has happened today.

MR. WATSON: My Lord, it means that the action is very nearly at an end. There is this residual DMF, so can we try and negotiate that? If necessary, we will have to come back and then we can have a final order on the action.

MR. JUSTICE FLOYD: Liberty to apply for a final order. Is there anything else?

MR. WATSON: No, my Lord.

MR. JUSTICE FLOYD: Very well. Thank you both very much.

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