Glaxo Group Ltd v Genentech Inc & Anor [2008] EWCA Civ 23

[2008] EWCA Civ 23Case No A3/2007/1305
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
MR JUSTICE LEWISON
HC07 CO0367
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 31/01/2008
Before
LORD JUSTICE WARDLORD JUSTICE MUMMERYLORD JUSTICE JACOB
Between
GLAXO GROUP LIMITEDClaimant/GENENTECH INCDefendants/AppellantsBIOGEN IDEC INCAppellant
MR RICHARD ARNOLD QC (instructed by Wragge & Co LLP) for AppellantsMR DANIEL ALEXANDER QC and DR JUSTIN TURNER (instructed by Rouse Legal) for RespondentHearing Hearing date: 3 rd August 2007
JudgmentLord Justice Mummery (giving the judgment of the court):Introduction
[1]At the end of the expedited hearing the court announced its decision that this appeal would be dismissed and that, as the appeal raised an important point of principle and practice, judgments would be put in writing and handed down later. Since then there have been further developments in the litigation taking the urgency out of the situation (see paragraphs 18 to 20 below).[2]The point of principle and practice arises in legal proceedings in the Patents Court running in parallel with proceedings about the same subject matter and between the same parties in the European Patent Office (EPO). In both sets of proceedings the validity of a European Patent granted under the European Patent Convention (EPC) was contested.[3]The general question is this: in what circumstances should the Patents Court exercise its inherent power to stay revocation proceedings pending the final outcome of the opposition proceedings in the EPO? The judge and the parties were agreed that this court should review the authorities on stay of legal proceedings and give general guidance on the discretion that is frequently invoked in the Patents Court.[4]The particular question is this: should the Court of Appeal interfere with the discretion of the judge? In this case Lewison J refused a stay of the revocation proceedings pending the final determination of the opposition proceedings in the EPO (including all appeals). The appeal is from his order dated 15 June 2007 dismissing the application by the appellants, Genentech Inc and Biogen Idec Inc (Genentech), for a stay of revocation proceedings brought by the respondent, Glaxo Group Limited (GSK).[5]GSK’s action was for revocation of the UK designation of Genentech’s European Patent No 1,176, 981 (the Patent), a second medical use patent, on the ground of invalidity. It is presumed to be a valid patent unless and until it is revoked. GSK was not alone in objecting to the validity of the Patent. On 31 May 2007 another action for the revocation of the Patent on the same grounds was brought against Genentech by Wyeth. The court was informed that Wyeth accepted that, if Genentech succeeded in staying GSK’s proceedings, the Wyeth action should also be stayed.[6]The contested Patent was described as for “use of an anti-CD 20 antibody in the manufacture of a medicament for the treatment of rheumatoid arthritis in a mammal” (claim 1). GSK’s interest in the patent arose from its trials for the development of an antibody, which GSK contended is different from Genentech’s, is not disclosed in the patent and owes nothing to it. GSK contended that antibodies of the kind described in the Patent, such as rituximab, were available and used for therapy before the priority date. The Grounds of Invalidity relied upon consist of academic publications available to the public before the priority date. GSK proposed to call experimental and expert evidence at the trial of the action at which there would be contested factual issues.[7]Spurred by the need for commercial certainty GSK wanted to clear Genentech’s patent out of its path as soon as possible. It issued opposition proceedings in the EPO. It then initiated the revocation action in the Patents Court.[8]GSK made good progress with the revocation action. Directions were agreed and the trial was set down for hearing in the Patents Court floating from 4 February 2008. GSK naturally wanted the trial to go ahead on that date. Genentech, as patentee seeking to protect its patent, understandably did not want the trial to take place as soon as February. Its preference was for the court to follow a course, which would effectively postpone a final decision on the contested validity of the patent, possibly for as long as another four years.[9]It was not surprising that Lewison J decided that the arrangements and agreed timetable for February’s trial should not be disturbed and that it should go ahead as arranged. Nor was it surprising that Lewison J granted Genentech permission to appeal. He recognised that, irrespective of the prospects of success in the appeal, the application raised an important point of principle and practice. He said that “The question of a stay of national proceedings pending opposition in the EPO arises frequently. The current practice of the Patents Court differs to some extent from the practice in commercial litigation. Guidance from the Court of Appeal (as ratio rather than obiter) is needed.” Guidance from the Court of Appeal (as ratio rather than obiter) is needed.”[10]GSK’s reason for wanting an early decision on the disputed validity of the patent was that it has plans to launch its potentially valuable rheumatoid arthritis therapy (ofatumumab) originally developed by its collaborator, Genmab A/S. The UK is likely to be a significant market for the product. GSK’s pressing need was for certainty in making its commercial plans and its investment. The need was demonstrated to the satisfaction of the judge in GSK’s evidence on the stay application. An early resolution of the disputed validity of the patent in the Patents Court would be more likely to produce some real commercial certainty than waiting years for a final decision in the EPO.[11]GSK argued that appellate interference with the judge’s discretion would be unjustified. Lewison J had carefully and correctly applied the legal principles. He had rejected Genentech’s stay application after the fullest possible discussion of what, in the light of all the conflicting considerations, would be the just course. He held that a stay of the revocation proceedings and the extended period of uncertainty that that would entail would not be just.[12]Genentech’s position on the appeal was that the judge’s decision on the justice of the case was flawed by errors of legal principle, compounded by misdirections on fact and law, and that this court should overturn his decision by granting a stay.[13]Genentech stressed that the whole basis of the court’s jurisdiction to stay legal proceedings was the injustice, inherent in the waste of money, time and effort and in the consequent vexation inherent in the unnecessary duplication of legal proceedings. It was prima facie vexatious and an abuse of process for a claimant to bring two claims against the same defendant in respect of the same cause of action to obtain the same relief. Since the decisions of the House of Lords in cases such as The Spiliada [1987] AC 460 it had become easier for a defendant to obtain a stay of domestic proceedings in favour of actual or potential foreign proceedings. A stay will be granted if the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum being a place where the case can be tried more suitably for the interests of the parties and the ends of justice.[14]Many additional detailed points were made on the facts: GSK’s opposition in the EPO had preceded its revocation action; there was nothing requiring a second set of proceedings to be brought in the UK; infringement of patent, which was admittedly outside the jurisdiction of the EPO and within the exclusive jurisdiction of the national courts, was not in issue in the revocation action; GSK could have made a claim for a declaration of non-infringement in the action, but had not done so; nor had GSK’s action attracted any counterclaim by Genentech seeking quia timet relief for infringement of the Patent, which Genentech contended would have been premature.[15]The legal thrust of Genentech’s case for a stay was that there was a presumption that GSK’s revocation action was an abusive duplication of legal process by it. GSK was seeking the same relief in respect of the same cause of action against the same defendant as it was already seeking in the prior opposition proceedings in the EPO. The strong presumption in favour of a stay in such circumstances was well established by the leading authorities on forum conveniens generally and on the particular problem of parallel patent proceedings.[16]Genentech contended that the commercial certainty argument based on the revocation action was unconvincing, since only the final resolution of the EPO proceedings would secure for GSK the advantage of effective certainty in all of the States covered by the EPC. In dealing with GSK’s complaint of damage flowing from the continuing delay in the EPO, the judge had misinterpreted the evidence and had wrongly treated the time that it would take to achieve finality in the EPO as a material factor affecting his discretion.[17]Before delving into the detailed background to the appeal, the judgment of Lewison J, the law and the rival submissions, we should mention a development notified to the court since judgment was reserved.

Post-hearing developments

[18]On 13 September 2007 Genentech’s solicitors informed the court that their clients had decided to consent to the revocation of the patent. On 24 September GSK’s solicitors wrote to the court referring to the consent to revocation and explaining why the court might still consider it desirable to provide reasons for its judgment.[19]GSK’s solicitors pointed out that, notwithstanding the consent to revocation, the proceedings in which the application for stay was made were not yet completely concluded; a wider need remained for clarification of the principles upon which a stay of the kind sought in this case may be granted; apart from the immediate issue between the parties. GSK also had its own reasons for wishing to know the principles, as the point arose quite frequently in litigation in which it or members of its group were involved. Moreover GSK and Genentech had incurred substantial costs in relation to the stay application and they welcomed the court’s recognition that the costs and efforts put into the application had not been wasted.[20]Genentech’s late consent to the revocation of the patent in suit took the urgency out of the situation that had led to the expedited hearing of the appeal and the immediate decision on it, but, in our judgment, it has not absolved the court from its duty to the parties and to the wider public to supply written reasons for its decision.

Undertakings

[21]Some additional background on the course of the proceedings and the rival submissions is necessary.[22]Genentech recognised that it would be unsatisfactory for GSK to be exposed to the risk of infringement proceedings while a stay of its revocation action was in place. It offered undertakings to the court that, if a stay were granted, it would not sue GSK or its customers during the period of the stay for infringement of the UK Patent; not claim any financial relief from GSK or its customers other than damages on a reasonable royalty basis in respect of any act of infringement of the UK Patent committed during the period of the stay by GSK or any of its customers; not seek any injunction or delivery up of infringing material in respect of any act of infringement of the UK Patent committed during the period of the stay by GSK or any of its customers; and it would prosecute the EPO proceedings with all reasonable endeavours.

Lewison J’s judgment

[23]In the final paragraphs of his judgment

the judge said:

“66. Balancing all the factors together, I conclude that the balance of justice comes down in favour of allowing these proceedings to go to trial. I therefore refuse the application. 67. I would, however, add that the practice now adopted in patent cases does seem to be to some extent out of line with the more usual commercial case which comes before our courts. The guidance has stemmed largely from obiter observations of Aldous LJ. It may well be time for the Court of Appeal to examine the current practice to see whether it is justified and if it is, to say so definitively, once and for all.”
[24]The judgment of Lewison J ([2007] EWHC 1416 (Pat)) is organised into three main sections.[25]In the first section covering the problem of concurrent proceedings generally the judge discussed the “traditional” approach of the court to a stay in commercial cases, the doctrine of forum conveniens as expounded by the House of Lords in cases such as The Spiliada [1987] AC 460 at 474, and the “somewhat different approach” which has developed in the case of parallel proceedings in the EPO and in the Patents Court.[26]As for commercial cases the general principle is clearly a presumption in favour of a stay: the additional inconvenience or expense resulting from allowing two sets of legal proceedings to be pursued in two different jurisdictions where the same facts would be in issue and the evidence of the same witnesses would be required, can only be justified by cogent evidence that, for example, some personal or juridical advantage would be available only in the English proceedings and there would be injustice of depriving him of it. This court was referred to Dicey, Morris and Collins on the Conflict of Laws (14th ed) Vol 1 at paragraphs 12-036. The text continues in paragraph 12-037- “ In Australian Commercial Research and Development Ltd v. ANZ Mc Caughan Merchant Bank Ltd Sir Nicolas Browne-Wilkinson V.-C. approved the statement in the eleventh edition of this work that where the same plaintiff sues the same defendant in England and abroad it is not likely that the court would allow, except in very unusual circumstances, the continuation of proceedings in two different jurisdictions. The court would put the plaintiff to his election. In that case the Vice-Chancellor said that if the plaintiff opted to continue the foreign proceedings the English proceedings would not merely be stayed; the plaintiff would have to discontinue them. ”[27]The decision cited was affirmed by the Court of Appeal. The editors of Dicey comment that there may be cases where a stay rather than a discontinuance of English proceedings, or an injunction requiring foreign proceedings to be discontinued, would be appropriate.[28]Lewison J reviewed the relevant authorities on the approach taken by the courts to an application for a stay of English patent proceedings pending resolution of the proceedings in the EPO: Pall Corporation v. Commercial Hydraulics (Bedford) Limited [1989] RPC 703; Beloit Technologies Inc v. Valmet Paper Machinery (UK) Ltd [1997] RPC 489; General Hospital Corporation’s European Patent (UK) [2000] FSR 633; Kimberly-Clark Worldwide Inc v. Proctor & Gamble Ltd [2000] RPC 422; Ivax Pharmaceuticals (UK) Ltd v. AstraZeneca AB [2004] EWHC 1264 (stay granted); Hunt Technologies Limited v. Don & Low Ltd [2005] EWHC 376 (stay granted); GlaxoSmithKline Biologicals SA v. Sanofi Pasteur SA [2006] EWHC 2333 (stay refused); and Unlin Beheer BV v. Berry Floor NV [2007] EWCA Civ 364. It is unnecessary to include in this judgment all the relevant passages cited by the judge in paragraphs 24-37 of his judgment. What is now requested from this court by Lewison J and by the parties is a clear steer for future cases rather than a detailed resume of past cases.[29]Lewison J pinpointed the reason why the approach to a stay in European patent cases differs from a stay in ordinary commercial litigation relating to contract and tort issues. The critical difference noted by the judge is that the possibility of parallel validityproceedings in national courts and in the EPO is inherent in the legal arrangements in the EPC under which the EPO was established. This can be contrasted with infringementproceedings. There was no possibility of concurrent infringement proceedings. The EPO has no jurisdiction over infringement claims. National courts of contracting States have exclusive jurisdiction to try them. The judge also commented that a decision by the EPO was not necessarily final. Although a decision to revoke was final, a decision not to revoke left the way open for revocation by the national court because the EPO decision did not create an estoppel precluding a subsequent challenge by an unsuccessful opponent before the English courts: Buehler AG v. Chronos Richardson Ltd [1998] RPC 609.[30]The judge concluded that, on applications for a stay of parallel validity proceedings, the court had “adopted a more flexible approach that differs from the approach taken in the normal run of commercial litigation” (paragraph 38). He summarised the position as follows- “42. ….In my judgment the correct approach for me to adopt is that there is a presumption, although not a strong one, in favour of a stay, and that it is for the party resisting the stay to overcome the presumption. In the end, I must decide where the balance of justice lies.”[31]In the next two sections of his judgment the judge weighed in the scales of justice all the factors for and against a stay.[32]On the one hand, the main factor in favour of a stay was the avoidance of the duplication of legal proceedings and the costs of taking the revocation action to trial, though he held that the legal costs were small relative to the costs associated with developing the product and the potential market. There were some other factors, but the judge did not attach much weight to them: the possibility of amendment of the patent in the course of opposition proceedings in the EPO (no proposals for amendment were advanced); the offer made by Genentech during the hearing below of undertakings not to bring proceedings or make claims for infringement during the period of the stay and to prosecute the EPO proceedings with all reasonable endeavours, but no undertaking was offered not to seek injunctive relief after the stay was lifted.[33]On the other hand, the main factor against a stay was the length of the stay which would seriously prejudice GSK, because it would take significantly longer to resolve the EPO proceedings so that they would not be completed before GSK’s scheduled launch date for its product ofatumumab. The delay would be commercially damaging. The EPO proceedings might well not be completed before 2011/2012, and then it might be necessary to add another 2 years for the completion of the proceedings in the Patents Court and the Court of Appeal. This was to be compared with the quicker resolution if a stay were refused and the proceedings in the Patents Court were allowed to continue. The time to achieve finality in the Patents Court action (including appeals) was estimated at between 18 months and three years. Achieving commercial certainty was important to GSK, as was the financial cost associated with the delay, estimated by it at US$80m. The judge treated these as important factors in the balance. He also placed some weight on the potential spin-off value of a decision of the Patents Court for achieving a settlement of the disputes between the parties on a world-wide basis.[34]This careful balancing exercise, determined principally by the delay caused by a stay and the prejudice it would cause, led the judge to reject Genentech’s application for a stay.

Genentech’s submissions

[35]Mr Richard Arnold QC made many criticisms of Lewison J’s judgment. He accepted that, as the appeal was against an exercise of a judicial discretion, the burden was on him to show that the judge had erred in principle or that for some other reason his decision was plainly wrong.[36]Mr Arnold’s main plank was that GSK’s revocation action was prima facie vexatious, as it duplicated GSK’s opposition proceedings in the EPO. There was a “strong presumption” that the domestic revocation action should be stayed pending the determination of the proceedings in the EPO. He relied on the same general principles regarding a stay as those laid down by the House of Lords in The Spiliada and other recent leading cases. The key factor was whether the claimant could obtain the same relief in the foreign forum as in the domestic forum. He cited and analysed the three decisions of this court on stays of patents cases pending opposition in the EPO- Pall Corp (patent infringement proceedings with counterclaim for revocation-refusal of a stay upheld); Beloit (stay refused)and General Hospital Corp (stay granted) (see paragraph 28 above for references).[37]Mr Arnold cited obiter statements of general principle by Aldous LJ in the authorities, which have been interpreted in later cases as indicating that there is a presumption in favour of a stay of English proceedings, including infringement proceedings, where there are parallel opposition proceedings in the EPO, but the presumption may be rebutted and a stay refused where it would cause injustice.[38]In Beloit Aldous LJ said at page 503:
“The fact that there may be proceedings both in the national courts and before the EPO is inevitable as patents rights, both under the Convention and under the Act, are national rights to be enforced by the national courts with revocation and amendment being possible in both national courts and in certain circumstances before the EPO. That overlap can mean that there are parallel proceedings in this country and the EPO with the potential for conflict. It is desirable for that to be avoided. Therefore the Patents Court will stay the English proceedings pending a final resolution of the European proceedings, if they can be resolved quickly and a stay will not inflict injustice on a party or be against the public interest. Unfortunately that is not always possible as resolution of opposition proceedings in the EPO takes from about 4-8 years.”
[39]In Kimberly-Clark (also cited above) Aldous LJ said:
“(at page 243) ..the popularity of the EPO has raised difficulties in achieving that aim [sc. Of completing opposition proceedings in two years], so that delays are encountered. That has led to difficulties due to overlapping jurisdictions when actions in the national courts have been taken after grant and opposition proceedings are still before the EPO. The courts of some countries order a stay of the national proceedings until after the EPO has completed its opposition procedure, but others, such as this country, are prepared to accept the anomalous situation of having two overlapping proceedings if justice requires. (at page 245) It is not sensible for a court in this country to allow proceedings to be heard in this country which duplicate those in the EPO unless justice requires that to happen. At the time that the 1977 Act was enacted, it was envisaged that proceedings before the EPO would be concluded with reasonable expedition. The consequences would be that any overlap between EPO proceedings and national actions could be prevented by staying the proceedings in this country for a short period. In some cases the Patents Court has refused to stay proceedings in this country, despite the obvious desirability of taking that action because of the injustice it would cause. (at page 250-251) I have already referred to the option to stay proceedings in this country which, in my view, must be the preferred option when opposition proceedings are before the EPO. Unfortunately the judge did not consider whether in this case a stay would cause injustice. He referred to lengthy periods during which good and valuable patent rights would be unenforceable but did not consider the possibility that interlocutory relief could be granted in the meantime.”
[40]Mr Arnold pointed out that the effect of the stay would impact on Genentech, as well as on GSK (given the proposed undertaking) because it would prevent Genentech from enforcing the patent until the validity issue was resolved in the EPO.[41]Mr Arnold contended that Lewison J correctly held, in accordance with the authorities, that there was a presumption in favour of a stay, but he wrongly said that it was not a strong one and then proceeded to exercise his discretion wrongly in his treatment of the various factors.[42]The judge had reached his conclusions on the different approach to be applied in patent cases by a process of reasoning that had no relevance to a pure revocation case like the present. His reference to the possibility of parallel infringement claims raised different considerations to parallel national and EPO revocation proceedings and did not make them more acceptable; there was nothing in the EPC obliging national courts to determine revocation proceedings while opposition proceedings were pending before the EPO; some Contracting States granted stays in this situation; the decision in Buehler that the decision of the EPO not to revoke did not prevent a subsequent challenge to validity in the national courts did not mean that the opponent was entitled to pursue the EPO opposition and the revocation action simultaneously; while there is a public interest in the revocation of invalid monopolies as soon as possible there was also a public interest in the avoidance of the duplication of legal proceedings which affected other court users.[43]He submitted that the judge misdirected himself. He should have held that in a case where the claimant first seeks revocation in the EPO and subsequently seeks revocation of its UK designation in the English courts and there is no claim by the patentee for infringement or for threat of it, the English proceedings are prima facie vexatious and there should be a strong presumption in favour of a stay pending the conclusion of the EPO proceedings. The length of stay was not a material factor in the discretion unless it caused significant prejudice to the claimant and the mere fact that the EPO proceedings were longer than the national ones was not a good reason for refusing a stay.[44]The reality of the position on duplication was that, if the Patent was upheld by the Patents Court and the EPO, or was revoked by both the Patents Court and the EPO, or upheld by the Patents Court but revoked by the EPO, the revocation action in the Patents Court will have been pointless and a waste of the parties’ time and money and a waste of judicial resources to the detriment of other litigants.[45]The only circumstances in which the time and money spent on the revocation action would not have been entirely wasted is if the Patent is revoked by the Patents Court but upheld by the EPO, that is if inconsistent decisions are reached, which is not a frequent occurrence.[46]Mr Arnold made criticisms of the judge’s interpretation of the evidence. He had misread the evidence as to the pre-launch marketing costs ($80m) that would be incurred by GSK in developing and launching its product as referable only to the UK, whereas the costs were worldwide (excluding Japan). In fact GSK’s case on prejudice was based not on pre-launch marketing costs, but on something else (said to be confidential).[47]The judge failed to consider what GSK’s commercial position would be if the UK designation was revoked but the other designations were upheld. He ignored Genentech’s unchallenged evidence that the product would need to be marketed in at least four other states in order to recoup those costs and therefore GSK would not be able to clear the path for its product merely by revocation of the UK designation of the Patent.[48]As to the individual factors in favour of a stay and against a stay Mr Arnold criticised the judge’s application of the principles by commenting on his treatment of each of the factors for and against a stay.[49]First, as for the duration of the stay, the judge wrongly regarded the length of the stay as a highly material factor. He should have held that it was not material, unless it caused significant prejudice to GSK, which it did not. He did not even consider the possibility of stay for a limited period, such as 2 years.[50]When considering the duration of the EPO proceedings he should have concluded that GSK’s prediction of the time it would take to resolve the EPO proceedings was unreliable, based on a sample of only 6 EPO cases. Recent changes in the EPO had significantly speeded up its procedures. He should have held that, as indicated in Genentech’s evidence based on a sample of 83 EPO cases, the EPO proceedings were likely to be concluded by the end of 2010.[51]Secondly, the duplication of legal costs. Genentech’s estimated legal costs of the trial in the Patents Court was £500,000. GSK’s costs were likely to be similar. The Wyeth proceedings would increase this figure, which did not include the costs of an appeal. There was also management time. The judge only considered the trial costs, ignored the Wyeth factor and was wrong to hold that the potential wasted costs of a duplication of proceedings were proportionate to the potential market. Proportionality was immaterial where costs are wholly wasted. In any event, the costs were not proportionate.[52]Thirdly, the need for commercial certainty. GSK could only obtain the commercial certainty it sought by a successful outcome in the EPO opposition proceedings leading to the revocation centrally of the designation in all the different Contracting States. Revocation of the UK designation of the patent would not clear the path of European patents to the extent required by GSK for its commercial plans. This was the key factor. The success of the revocation action in the Patents Court would only clear the path for marketing in the UK. Its ability to market elsewhere in the world would remain constrained by the other designations of the European Patent, other granted patents and corresponding pending applications.[53]The judge also ignored Genentech’s unchallenged evidence that the costs of developing manufacturing and marketing of ofatumumab could not be justified by marketing the product in the UK alone. The development costs will be huge. There will be additional substantial costs of manufacture and marketing. In order to recoup the costs involved the product would need to be marketed not just in the UK but also in at least 4 other European countries (Germany, France, Spain and Italy), which would be unaffected by the revocation of the UK designation of the Patent and in the USA. The UK market was not big enough to justify revocation of only the UK designation of the Patent.[54]Fourthly, as to the prejudicial effects on GSK of the delay which would be caused by a stay, the judge accepted GSK’s evidence as to its proposed product launch date. There was considerable uncertainty about that. The projected timetable was optimistic. The judge should have held that GSK’s product was unlikely to be launched until much later. GSK’s estimate as to when the product could be launched was made without the benefit of recent experience.[55]Fifthly, the judge held that the “spin off value” of an English judgment enabling the parties to negotiate a worldwide settlement was of some weight, but Mr Arnold protested that this finding was not open to him, as it was not even mentioned as a factor in GSK’s evidence. It was of little or no weight. Genentech’s position was that it was very unlikely that an English judgment would lead to a settlement as the key contest in Europe is in the EPO and worldwide it is likely to be in the USA.[56]Sixthly, there was a clutch of other considerations which the judge had not properly taken into account in his discretion: as explained above GSK would only achieve something worth the duplication of proceedings if the patent was upheld by the EPO, but revoked by the English court, an important consideration wrongly treated by the judge as merely theoretical; he had ignored the existence of the parallel Wyeth proceedings; he had failed to take proper account of the undertakings offered by Genentech to the court treating them as of very little weight as they did not prevent Genentech from seeking an injunction to take GSK’s product off the market if the Patent were upheld in the EPO; without any evidence to support the point the judge wrongly treated the work done by GSK’s legal team for the English proceedings as of assistance to them in the EPO proceedings; on the issue of costs wasted by refusing a stay, the judge failed to consider the costs of an appeal, and only considered the costs to trial; the judge fundamentally misunderstood the evidence as to the development, manufacturing and marketing costs for GSK’s ofatumumab, treating the costs as referable to the UK only, when they were in fact worldwide costs; and the judge wrongly disregarded as a significant factor in favour of a stay that it is common for European patents to be amended during the course of opposition proceedings by means of the auxiliary requests procedure and that such amendments would take effect in the UK and elsewhere complicating parallel proceedings.[57]Finally, Mr Arnold proposed the possibility of a middle way for balancing the justice of the case by expressly providing for change of circumstances relating to the speed of the EPO proceedings and the speed and success of GSK’s trials and applications for marketing authorisation for its product. Justice could be achieved by granting a stay for, say, two years and by including in the stay a liberty to apply to deal with the situation in which GSK would be ready to launch and market its product before the conclusion of the opposition proceedings in the EPO. The judge had ignored the possibility of this middle way.

Discussion

[58]The first point is that discussion about the inherent power of the English Courts to stay legal proceedings should start with the terms of its statutory recognition and saving in section 49(3) of the Supreme Court Act 1981. The section saves the inherent power of the court to stay any proceedings before it “where it thinks fit to do so” either of its own motion or on the application of any person. This is the widest possible judicial discretion.[59]The second point is that this court should not interfere with the exercise of this very wide discretion, unless there was an error of legal principle or for some other reason the decision of the first instance judge was plainly wrong. The forceful words of Lord Templeman in The Spiliada [1987] AC 460 at 465F are a strong reminder of the different roles in this area of the experienced first instance judge (saving costs, short submissions and no citation of reported cases on other facts) and of the appellate court (appeals rare and slow to interfere). The discretion is not that of Appeal Court judges, but of the Patents Court judges, who have the expertise and experience required for the conduct of all aspects of patent litigation. Their discretions should be left alone by this court, save in the unusual event of their clearly going off the legal rails.[60]The third point is that the approach of the courts to the exercise of judicial discretion generally is plain. All the circumstances relevant to the balance of justice in the case must be properly pondered and weighed in the scales. It is unprofitable for this or any other court to pretend that it can compile a complete list of factors valid for all cases or that it can grade them according to weight. No list could possibly cover all cases. The factors and their relative weight inevitably differ from one situation to another.[61]The various factors carefully examined by Lewison J and debated in this court are regularly encountered in the sensitive area of the discretion to interfere with a party’s right to litigate. The presumptions and the primary principles were discussed along with instances of their having to bend to the compromise of circumstances: the avoidance of unnecessary duplication of proceedings wasteful of money, time and effort; attention to the commercial need for certainty and finality; claims of priority in commencing proceedings in a jurisdiction of choice; the injustice of avoidable delays; the conduct of the parties; and the relative claims of prejudice and change of position. All these factors cropped up in the competing arguments and, when the exercise was over, this court, like Lewison J, had accumulated a considerable pile of arguments on each side.[62]The fifth point is the key question: how, at the end of the day, is the court to decide which factors are decisive of the discretion in a certain type of case and in the particular case? A check list is a convenient way of making sure that the court has all the information that it needs and of collating the information. But where does the court go from there? A map collates masses of information worth many hours of study, but it is of little practical use for finding the way until you have first worked out where you are on the map.[63]The answer to the key question lies, as Lewison J appreciated, in the analysis of the context of the discretion. This is vital to gaining a perspective on the overall situation facing the parties and the court in parallel proceedings. The context usually provides a clear pointer to the factor or factors carrying more weight than any other in steering the discretion.[64]The sixth point is that the correct context of this discretion case is, as Lewison J explained, in the EPC itself and in its division of functions between the international legal institutions and the national legal institutions. The explanation of the difference in the court’s approach to the duplication of proceedings in patent cases and the doctrine of forum non conveniens, as applied in commercial cases, is to be found in their very different contexts.

The EPC context

[65]We start with two statements of the obvious.[66]First, the EPC did not itself make any express provision for a discretion to stay national patent proceedings pending EPO proceedings on the ground of forum non conveniens or otherwise. (cf international conventions which contain such provisions: see Dicey, Morris & Collins on the Conflict of Laws -14th Edition paragraph 12-006 on page 465.) The absence of an express discretion in the EPC does not diminish the relevance of the subject matter and terms of the EPC as a factor in the exercise of an inherent domestic law power to stay.[67]Secondly, domestic legislation implementing the EPC does not make express provision for a discretion to stay national patent proceedings. (cf section 49 of the Civil Jurisdiction and Judgments Act 1982 (as amended) which saves the power of any UK court to stay any proceedings before it on the ground of forum non conveniens or otherwise, provided that the stay is not “inconsistent with the 1968 Convention or, as the case may be, the Lugano Convention.”)[68]The structure and terms of the EPC are relevant to the context of the court’s power to stay national proceedings. This is different from the starting point in the commercial conflict of laws cases, such as The Spiliada, in which there is only supposed to be one court for determining the contract or tort issue in question. This feature of the forum conveniens cases supports a general presumption or inclination in favour of a stay of one of the sets of proceedings.[69]In the case of the European patent, the national courts of the Contracting States can be asked to look again at what the EPO has done. This creates potential for duplication and for conflict without setting a specific agenda or supplying a procedure for its resolution. As Aldous LJ said in General Hospital Corps European Patent [2000] FSR 633 (a case in which the Court of Appeal declined to interfere with the grant of a stay at first instance) it is desirable to avoid conflict. To that end “…the Patents Court will stay English proceedings pending final resolution of the European proceedings, if they can be resolved quickly and a stay will not inflict injustice on party or be against the public interest. Unfortunately that is not always possible as resolution of opposition proceedings in the EPO takes from about 4-eight years.”[70]In Unilin Beheer BV v. Berry Floor NV & Ors [2007] EWCA Civ 364 (Unilin), Jacob LJ explained the background to the potential conflict. The EPC established the European patent system, including the EPO. It is an international treaty between sovereign states, which was implemented into UK domestic law by the Patents Act 1977 (the 1977 Act) and it is not part of European Community Law which has its own impact on the enforcement of intellectual property rights in national courts.[71]A short outline of the current European Patent system operated under the EPC was given by Jacob LJ in the leading judgment in Unilin. It informs the exercise of the discretion invoked in the national court in this case - “8. Broadly the EPC did two things. First it prescribed what Member States should have as their substantive patent law, essentially following the Strasbourg agreement [the 1963 Convention]. Second it set up the EPO. This is a common office to which a patent application may be made seeking patent protection in the states chosen (“designated”) by the applicant. The application is processed and examined there. 9. If it survives examination a “European Patent” is granted. The term is a misnomer. The legal effect of a grant by the EPO is a series of national parallel patents each treated in each national law of the “designated” states as if it had been granted by the patent office of the state concerned. 10. Thus the 1977 Act did two main things, first it made substantive patent law accord with that laid down by the EPC and second it deemed a patent granted by the EPO with a UK designation (called a “European Patent (UK))” to have the same effect as if it had been granted by the UK Patent Office pursuant to an application made to it.”[72]After explaining the process of applying for a European patent and the system of appeal to Boards of Appeal and the Enlarged Board of Appeal, Jacob LJ described the process of opposition relevant to GSK’s revocation action in the present case- “13. Third parties have no direct say in the examination procedure. There is no means by which a third party can formally oppose grant. Those who created the EPC thought, almost certainly rightly, that if true opposition (i.e. opposition against the actual grant) proceedings were available, patentees would be likely to suffer too much delay before they could actually enforce their patents. That had indeed been the case in this country, for instance under the opposition procedure of the 1949 Patents Act. As an alternative it would have been possible to leave all post-grant revocation proceedings to national courts. This potentially would have required (at least in theory) proceedings attacking the patent in all the designated states to clear the way for the whole of Europe. That was felt to be wasteful. On the other hand the parties to the EPC were not prepared to leave all questions of validity to the EPO. So a compromise was reached.14. The compromise was that within 9 months of the grant, third parties can make a central attack on the patent (by now strictly a bundle of national patents) in the EPO. The proceedings are called “opposition” although they are in reality proceedings for revocation. The use of the word “opposition” is an indication that in some respects the proceedings are regarded as a continuation of the examination process. Perhaps for that reason the original examiner normally sits as part of the opposition division panel-judging his or her prior decision to grant the patent. Proceedings at this level are called “administrative” rather than “judicial” though it is difficult to see why –after all the opposition division is deciding a dispute between rival parties. Appeal lies to a Board of Appeal whose members, as I have said, clearly operate in a judicial capacity.15. Apart from procedure by way of opposition, however. The EPC also allowed attacks on validity (only for the state concerned, of course) in the national courts. Such an attack can be made from the date of grant right down to expiry and even beyond-you are not required to wait until an EPO opposition is over before you can attack a patent in a national court. And likewise the patentee can sue from the moment of grant, and indeed it happened in the present case.16. At the time of making of the Treaty it was thought that opposition proceedings would be relatively quick. But that has not proved to be so. Partly this is due to the success (in terms of numbers) of the EPO. There may be other reasons- for instance I have long wondered whether if the 9 month period were abolished, people would not bother to oppose unless they had to whereas now they have to get their opposition in often before they know whether the patent matters commercially. In the UK when the time limit for attacking a patent in the patent office was abolished in 1977, the result, contrary to what was expected, was an almost total collapse of proceedings for revocation in the patent office. It may well also be that matters could be improved by way of procedure, for instance by tightening up on adjournments and avoiding as far as possible remission of cases from a Board of Appeal back to the Opposition Division as frequently happens now. Whatever the reasons, it is currently the case that opposition proceedings can take many years.17. No one pretends that the compromise is satisfactory- it was a fudge at the time and remains so. Unless and until sensible judicial arrangements are put in place, the litigation of European Patents in various national courts and the EPO will remain a messy, expensive and prolix business. One would hope that the politicians would find a way to put various national interests on one side for the sake of European industry as a whole. But despite attempt after attempt that has not yet been possible.18. The result of the EPC compromise is that a national court system can find a patent valid by a final and conclusive decision and yet later, in opposition proceedings it is determined that the patent is invalid or must be reduced in scope. That is what happened here.”[73]This exposition of the main features of the EPC system reveals a cardinal feature of the overall context of the application for a stay in this and similar cases. The risk of duplication of national proceedings and EPO proceedings is inherent in the EPC regime. Thus in Unilin the UK Patents Court found that the patent was valid. Later the EPO held that it was invalid (the appeal was in the end settled). The issue was what effect, if any, the EPO ruling had on the validity and enforceability of the judgment already obtained in the UK Patents Court.[74]In this case the issue is a prior one, as there has not yet been a ruling on the validity issue from either the Patents Court or the EPO. It is legitimate for a person contesting the validity of a European patent to attack it both in an action for revocation in the UK courts and by opposition proceedings in the EPO. The grant of a patent by the EPO does not create an estoppel which would prevent the UK courts from determining whether or not the patent should be revoked. It is inherent in the EPC that the national court may look at what the EPO has done. Should one set of proceedings take precedence over the other? And, if so, which? Or should they both be allowed to continue?[75]Jacob LJ touched on the stay point in Unilin in the section of his judgment dealing with the question whether the EPO or the national court is “top”, as to which his opinion was that it was not helpful to ask the question in that way in view of the untidy compromise inherent in the EPC. The EPO was “top” in the case where the patent was still in opposition when a national court holds it to be valid and the EPO then revokes, while the national court was “top” in the sense that when the EPO holds the patent to be valid a national court may subsequently revoke the patent. As to stays Jacob LJ referred to Kimberley-Clark v. P & G [2000] FSR 235 and to the following passage in the judgment of Aldous LJ on the subject of parallel proceedings at p.250 (see paragraph 39 above):
“I have already referred to the option to stay the proceedings in this country which, in my view, must be the preferred option when opposition proceedings are before the EPO. Unfortunately the judge did not consider whether in this case a stay would cause injustice. He referred to lengthy periods during which good and valuable patent rights would be unenforceable, but did not consider the possibility that interlocutory relief could be granted in the meantime. The judge looked at the matter as a point of principle so as to decide what was the ambit of the discretion given in section 75 in circumstances when opposition proceedings were in being. He went on to decide that he should confine consideration under section 75 to those matters which would be taken into account by the EPO under their jurisdiction. The fallacy of that approach is that the legislative jurisdiction of the EPO differs to that of the court under section 75 and more importantly the limitation of the court’s jurisdiction proposed by the judge does not meet the vice of having two tribunals considering the same question with the risk that they could come to different conclusions.”
[76]Jacob LJ commented in Unilin, in the context of the patentee enforcing his patent in the UK courts while the opposition proceedings are proceeding in the EPO- “ 25. This does not help here. Of course in principle the preferred option is to stay UK proceedings if there are corresponding EPO proceedings. And it may in some circumstances be the case that an interim injunction could serve to hold the fort whilst these proceed. But all must depend on the circumstances and particularly the timing. Normally, although a stay is in principle the preferred course, it would be wrong to prevent the patentee from enforcing his patent here if the EPO opposition will not be concluded reasonably soon-as all too often it sadly is not. Take this case: the action was started here in May 2002 and was finally over by November 2005. The EPO proceedings are still running and could still be doing so at the end of next year. Business needs to know where it stands-and a patentee is entitled to enforce his patent without undergoing the risks inherent on the cross undertaking in damages – especially if the period involved could involve years.”[77]“Business needs to know where it stands” is as an important a feature of contested validity cases as of patent infringement cases. GSK had a genuine commercial interest in revocation of the Patent. It wished to know before it launched its product whether Genentech could rely on the Patent to stop it from making or selling its product in the UK. Lewison J found that GSK would suffer actual prejudice if there was delay in resolving the validity of the Patent.[78]On this approach we do not think that it is possible to fault Lewison J’s decision. Having carefully considered all the circumstances and having applied the legal principles relevant to a stay of legal proceedings in the context of the EPC, he made a correct assessment of the factors for and against a stay and he was entitled to conclude that the balance of justice was in favour of rejecting Genentech’s application to stay GSK’s revocation action.

General guidance on stay of parallel proceedings

[79]The following summary is offered as general guidance on the Patents Court’s discretion to stay legal proceedings on the ground that there are parallel proceedings pending in the EPO contesting the validity of the patent in suit. It is not intended to fetter the discretion of the court nor should it be interpreted as having that effect.[80]First, the discretion, which is very wide indeed, should be exercised to achieve the balance of justice between the parties having regard to all the relevant circumstances of the particular case.[81]Secondly, it is the discretion of the Patents Court, not of the Court of Appeal. The Court of Appeal would not be justified in interfering with a first instance decision that accords with legal principle and has been reached by taking into account all the relevant, and only the relevant, circumstances.[82]Thirdly, although neither the EPC nor the 1977 Act contains express provisions relating to automatic or discretionary stay of proceedings in national courts, they provide the context and condition the exercise of the discretion.[83]Fourthly, the possibility of the duplication of proceedings contesting the validity of a patent granted by the EPO is inherent in the system established by the EPC. In practice national courts exercise exclusive jurisdiction on infringement issues and they have concurrent jurisdiction with the EPO on validity issues. As Mr Daniel Alexander QC appearing for GSK said, the Contracting States and the UK Parliament contemplated that the national Patents Courts should be able to determine the same issues of patentability as the EPO. The resultant legislation allowed the determination by the national court and the EPO to proceed at the same time. Indeed, there is nothing in the EPC or the 1977 Act to prevent the commencement of revocation proceedings in the Patents Court on the very date of the grant of the patent by the EPO.[84]Fifthly, this setting indicates that, in present conditions, one factor affecting the discretion will usually carry more weight than any other. That is the length of time that it will take for the respective proceedings in the national court and in the EPO to achieve some certainty on the issue of the validity of the patent in suit so that business knows where it stands. The length of the stay of proceedings, if granted, is, in general, the most significant factor in the discretion. Both the parties’ legitimate interests and the public interest are in dispelling the uncertainty surrounding the validity of the monopoly rights conferred by the grant of a patent and the existence or non-existence of exclusive proprietary rights on a public register. A decision in the revocation action in the Patents Court will dispel some of the uncertainty. If the likelihood is that proceedings in the Patents Court would achieve this resolution significantly sooner than the proceedings in the EPO, it would normally be a proper exercise of discretion to decline to stay the Patents Court proceedings. They should be allowed to proceed to a decision that would supply some certainty in the public interest and the parties’ legitimate interests.[85]Sixthly, there are no grounds justifying the application by the Patents Court of a presumption that the duplication of legal proceedings in it and in the EPO is, without more, a ground for a stay of the proceedings in the Patents Court, as the EPC system allows for parallel proceedings contesting the validity of the patent in both the international court (which is what the EPO in substance is) and in the national court.[86]Seventhly, the Patents Court judge is entitled to refuse a stay of the national proceedings where, as here, the evidence is that some commercial certainty would be achieved at a considerably earlier date in the case of the UK proceedings than in the EPO. It is true that it will not be possible to attain certainty everywhere until the EPO proceedings are finally resolved, but some certainty, sooner rather than later, and somewhere, such as in the UK, rather than nowhere, is, in general, preferable to continuing uncertainty everywhere. Thus, in this case some degree of commercial certainty could be achieved at the trial of the UK revocation action in February without unfairly prejudicing Genentech’s legitimate interests in the protection of its patent.[87]Eighthly, much weight should be given to an assertion by a commercial party that it has a good reason for resisting a stay. Normally a party is the best judge of its interests. Contentions of a competitor that there is no commercial need for early resolution of validity should be viewed with suspicion. Detailed arguments of the sort advanced here are unlikely to carry weight and a judge would be justified in dealing with them shortly.[88]Finally, other considerations in the particular case may affect the balance of justice, such as the additional costs in the duplication of proceedings, the order in which the proceedings were commenced and so on, but, in general, the other factors, through relevant, are of lesser importance than achieving some commercial certainty somewhere sooner. The judge will receive evidence and submissions on other relevant factors, but should be wary of over-elaboration of the issues by the parties in their evidence and legal submissions. Although due consideration must, of course, be given to the evidence and the arguments, the actual exercise of the discretion does not require the judge to deliver a judgment dealing in detail with all the points taken by the parties. A global assessment of the relevant material, supported by valid reasons, is normally sufficient to justify the decision to refuse or to grant a stay.

Result

[89]It was for these reasons that we were in favour of dismissing the appeal at the conclusion of the hearing. In brief, there was no error of legal principle in Lewison J’s judgment and, in all the circumstances of the case, he was entitled to take the course of allowing GSK to proceed with its revocation action in the Patents Court.

Cited in 13 later judgments

and 4 more of the most senior