Appeal dismissed: patent infringement claim survives strike out

What’s happened?

Earlier this month, the Patents Court refused to strike out a patent infringement counterclaim made on a quia timet basis. The Court of Appeal then refused permission to appeal quickly on the papers on 22 June. Accordingly, this patent action – between Chiesi Farmaceutici SpA (Chiesi) as patentee and Teva UK Limited (Teva) as the alleged infringer – looks likely to proceed in relation to both invalidity and infringement, with trial currently listed to be heard in the Patents Court in October 2020.

Background

In October 2019, Teva started clearing the way proceedings to revoke 3 of Chiesi's EP(UK) patents relating to treatments for broncho-pulmonary diseases including asthma.

Chiesi counterclaimed for infringement, even though it seems that it knew nothing about Teva’s launch plans or the status of its generic marketing authorisation. This left Chiesi with only 4 grounds on which to plead its particulars of infringement:

(a) Teva’s UK revocation action;
(b) the long time until the expiry dates of Chiesi’s 3 patents (in 2027);
(c) a parallel revocation action in Ireland (Teva’s manufacturing location); and
(d) exchanges of correspondence.

The Patents Court decision

Teva argued that Chiesi’s grounds were not enough and so applied to strike out its counterclaim on 3 grounds:

1. the pleaded case had no real prospect of success;
2. the claim was an abuse of process; and
3. the claim should have been stayed due to reasons relating to competition law.

In his judgment on 3 June, Birss J rejected all of these grounds. Some of the key points arising from his analysis are as follows:

Starting a patent revocation action in the UK infers a rebuttable presumption that you intend to launch an infringing product before patent expiry.

This goes to the first two grounds (a) and (b) for Chiesi’s counterclaim. Once such presumption is inferred, the Court held it was up to Teva to rebut it, for example by undertaking not to launch if it fails to revoke the patent(s).

Not having a marketing authorisation does not necessarily mean that you pose no threat of infringement.

The Court held that this alone does not rebut the above presumption of threatened launch, and added that Teva’s intention to obtain such marketing authorisation was implicit within such inference.

Starting a patent revocation action outside the UK may not be enough to infer a threat of infringement in the UK

There is a short remark in the decision that indicated that, had the other grounds failed, the revocation action in Ireland – the third pleaded point (c) – would not have been enough for counterclaim for Chiesi. This may be a warning to patentees not to expect a straightforward gateway to start UK infringement proceedings based on inferences from ex-UK revocation actions. Interestingly, there is no mention of the impact (if any) of parallel EPO oppositions in this respect (which affects every EP designation, including an EP(UK)), notwithstanding that one of Chiesi’s patents was under active opposition by (inter alia) Teva.

Correspondence plays a key part

This goes to Chiesi’s pleaded ground (d) and played a significant role in this decision. Two points in particular are mentioned. First, the judge remarked that Teva could rebut the inference of threatened launch by undertaking to give notice of an intention to launch, provided that the notice period gives a timeframe in which infringement can be decided in advance of launch. Here, Chiesi originally asked for 2 months’ notice and Teva had offered 2 weeks, without substantiating that it would be enough. Second, the judge also held that it was open for Teva to have said its launch plans were, eg. “so inchoate that it does not yet have a concrete product in mind”, which it did not.

Should generic competitors have to divulge their launch plans, or more so, would that be anti-competitive?

Teva argued that it had genuine fear of a serious risk of liability under EU and UK law of revealing its confidential launch plans. Teva suggested a CJEU reference may be needed on this point, but did not seek one here. Birss J rejected this ground reasonably swiftly, holding that that there was nothing that could conceivably amount to any form of collusion or concerted practice and that disclosure was objectively necessary to the exercise of legitimate patent litigation.

One legitimate purpose is enough not to be an abuse of process

This related to Teva’s strike out application based on abuse of process, where it argued that Chiesi’s true motive was to obtain Teva's launch plans. Birss J held this argument to be hopeless; adding that it didn’t even matter if this was one of Chiesi’s motives, provided that it had another legitimate purpose. In this case, the judge held that Chiesi clearly wanted to sue for infringement to obtain appropriate remedies such as an injunction.

Comment

While this sort of decision relies heavily on its facts, it adds to a growing line of patent cases in which quia timet claims for infringement have been allowed to proceed. A number of these cases have been heard before Birss J, and two of his decisions were cited, including: (a) MSD v Teva ¹ as to the “probability that an injunction would be required to prevent the harm to the claimant to justify bringing the proceedings."; and (b) Actavis v ICOS ², in which a counterclaim for patent infringement proceeded in circumstances where generic marketing authorisations had been obtained.

One point not mentioned in the key points above is the emphasis placed on the fact that Chiesi’s claim for infringement was a counterclaim in this case. This appeared prominently in the judge’s reasoning in a number of areas by reinforcing the legitimacy of the claim and thereby countering both the allegation of abuse of process and the competition law concerns. As emphasised by Birss J at the outset, this resonates with the UK court’s overarching preference to hear infringement and validity together, and not bifurcate them.

The significance of the counterclaim raises the question of how an infringement claim might be scrutinised in circumstances where the patentee brings a quia timet action, ie without the benefit of a rebuttable presumption of threatened launch from a revocation action. At the core of this issue is the emphasis placed by the UK courts on the need for generic pharmaceutical companies to clear the way before launch, which, as in this case, raises the inference and hence the likelihood of a counterclaim for infringement being introduced. In this respect, the judge states (emphasis added):

“However in this jurisdiction it is well established that a rival in these circumstances ought to clear the way in advance – in other words bring court proceedings such as an action for patent revocation and/or declarations of non-infringement well before the rival's launch on the market. The rival has no duty in law owed to anyone to clear the way, rather the courts have established that a failure to clear the way can be taken into account on an application by the incumbent for an interlocutory injunction to restrain the rival's sales pending resolution of the patent dispute. In many cases it is a strong or even decisive factor.”

As shown by this quote, linked to clearing the way is the risk that, if you don’t, you will be subject to a preliminary injunction. In these respects, this provides an interesting contrast to the recent decision in Neurim v Mylan (see our note here) where a generic pharmaceutical company failed to clear the way but was not subject to a preliminary injunction. While the Neurim case has been held by the Court of Appeal to be extremely unusual (and may well be appealed to the Supreme Court), it provides an interesting environment for the arrival of this Teva v Chiesi decision. In particular, if there is any question that pharmaceutical patentees will find it harder to obtain preliminary injunctions and/or that more launch at risk strategies will arise following Neurim, then patentees may want to consider these principles further and try to commence earlier quia timet patent infringement claims in the UK in order to obtain final injunctions sooner, rather than relying on interim relief to secure their market.

¹ MSD v Teva [2013] EWHC 1958 (Pat)
² Actavis v ICOS (2016) (see para 353-356)