Glaxo Group Ltd v Genentech Inc & Anor [2007] EWHC 1416 (Pat)

[2007] EWHC 1416 (Pat)

Case No HC07C00367

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

PATENTS COURT

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 15 June 2007

Before

MR JUSTICE LEWISON

Between

GLAXO GROUP LIMITEDClaimant

(1) GENENTECH INCDefendants

(2) BIOGEN IDEC INCDefendant

Mr Daniel Alexander QC (instructed by Rouse Legal) for Claimant

Mr Richard Arnold QC (instructed by Wragge & Co.LLP) for Defendants

Hearing Hearing dates: 12 June 2007

Judgment

Mr Justice Lewison :

Introduction 1 The European Patent Office 6 Clearing the path 13 Concurrent proceedings 16 The traditional approach 16 Forum non conveniens 19 The patent cases 23 Why are patent cases different?37 Does a claim for infringement make all the difference?39 Conclusion 41 Relevant factors in favour of a stay 42 Avoidance of duplication 42 Costs 44 Amendment of claims 45 Undertakings 47 Relevant factors against a stay 53 When will the EPO proceedings be resolved?54 The national proceedings 55 The effect of delay 57 Spin off value 63 Result 66

Introduction

[1]Rheumatoid arthritis (“RA”) is a chronic, progressive and disabling auto-immune disease. Its initiating causes are unknown. Its symptoms are the painful inflammation and swelling of joints. It is a debilitating disease and affects the sufferer’s ability to do everyday activities. RA affects several hundred thousands of people in the UK. New drugs to alleviate its symptoms can make headline news.

[2]European Patent No. 1 176 981 (“the patent”) was granted on 30 November 2005. The patentees are Genentech Inc. and Biogen Idec Inc. The patent designates 25 states, one of which is the United Kingdom. It is a second medical indication patent which discloses and claims the use of an anti-CD20 antibody, including an antibody with the international non-proprietary name of rituximab (marketed as MabThera and Rituxan), in the manufacture of a medicament for treatment of rheumatoid arthritis in a mammal, and in particular human beings. Rituximab was already known for the treatment of non-Hodgkin’s lymphoma (a form of cancer).Claim 1 is to “Use of an anti-CD20 antibody in the manufacture of a medicament for the treatment of rheumatoid arthritis in a mammal”. Claim 5 is more restrictive, and limits the claim to use of a chimeric antibody which comprises rituximab.

[3]The Claimant (“GSK”) is co-developing an anti-CD20 antibody known as ofatumumab as a therapy for RA with a Danish biotech company called Genmab. The co-development with Genmab was announced in December 2006. Ofatumumab is also known as “HuMax-CD20” and it is a fully human monoclonal anti-CD20 antibody. Ofatumumab is in Phase III development for CD20 positive chronic lymphocytic leukemia and non-Hodgkin’s lymphoma. GSK proposes to commercialise ofatumumab as a therapy for RA as soon as possible. It is, I think, common ground that the commercialisation of ofatumumab would not infringe claim 5 of the patent as granted; but Genetech may argue that it would infringe claim 1.

[4]However, GSK says that the patent as granted is invalid, and ought to be revoked. Oppositions to the grant of the Patent were filed by GSK and Wyeth in the European Patent Office (“EPO”) on 30 August 2006, the last day of the permitted nine month period. Oppositions were also filed by Genmab A/S, Trubion Pharmaceuticals Inc and four other parties. In each case the opponent sought revocation of the patent on various grounds. On 19 February 2007 GSK began the present claim seeking revocation of the UK designation of the patent. There are a number of grounds of invalidity: anticipation, obviousness, added matter and sufficiency. The grounds of invalidity alleged by GSK in support of this claim are all grounds which have been raised in the opposition proceedings, but in the UK proceedings GSK relies upon a smaller number of items of prior art. The prior art includes not only publications, but also oral presentations and actual use.

[5]Genentech now applies to stay the UK proceedings, pending the decision of the EPO in the opposition proceedings.

The European Patent Office

[6]The background to the EPO and its functions are described by Jacob LJ in Unilin Beheer BV v. Berry Floor NV

[2007] EWCA Civ 364

. The summary that follows is taken from his judgment. The idea of a European Patent and a European Patent system came out of the Council of Europe in the early 1950s. By the early 1960s there was substantial agreement as to what the substantive law should be, the agreement being embodied in the Strasbourg Convention 1963. Also the idea of a common patent office for Europe had come into being. Work on these two matters continued into the 1970s. In 1972 a Diplomatic Conference was convened. It led to the European Patent Convention (“EPC”) in 1973.The EPC is an international treaty between sovereign states. It is not part of the legislation of the European Union. It was incorporated into English law by the Patents Act 1977.Broadly the EPC did two things. First it prescribed what Member States should have as their substantive patent law. 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.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.

[7]Third parties have no direct say in the examination procedure. There is no means by which a third party can formally oppose grant. 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.This compromise is that within 9 months of 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 an "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.Where an opponent opposes a granted patent his opposition applies to all the contracting states in which the patent has effect. He cannot limit his opposition to one contracting state only.Appeal lies to a Board of Appeal whose members operate in a judicial capacity. Apart from procedure by way of opposition however, the EPC also allowed attacks on validity (only for the state concerned) 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 for infringement from the moment of grant.

[8]It is therefore inherent in the structure created by the EPC that there may be parallel proceedings both in the EPO and in the national court. As Aldous L.J. put it in Beloit Technologies Inc v. Valmet Paper Machinery Inc

[1997] RPC 489

“The fact that there may be proceedings both in the national courts and before the EPO is inevitable as patent 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 the national courts and in certain circumstances before the EPO.”

[9]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. It would be possible to compile an anthology of judicial expressions of regret at the slowness of opposition proceedings in the EPO. Examples may be found in General Hospital Corporation’s European Patent (UK)

[2000] FSR 633

, 644 (Aldous LJ); Unilin Beheer BV v. Berry Floor NV para 16 (Jacob LJ).

[10]As mentioned, once a European patent has been granted it has the same effect as if it had been a series of national patents granted by the individual designated states. Under Council Regulation (EC) No 44/2001 Article 22 in matters relating to the validity of patents, the courts of the member state in which the patent is registered (or is deemed to be registered by the terms of an international Convention) have exclusive jurisdiction. So it is not possible to attack in the UK courts the validity of a patent in, say, Germany or France which has resulted from the grant of a European patent designating those countries. In the absence of opposition proceedings in the EPO separate actions in each state would be necessary.

[11]However, the interaction between decisions of the EPO and the national courts is untidy. It is not possible to say that a decision of one always and automatically trumps a decision of the other. If a national court upholds the validity of a patent, but the EPO later revokes it, the EPO’s revocation will prevail. However, even that statement is an oversimplification, because as between the parties to the action in the national court, the judgment of the national court will create a res judicata between the parties to the national proceedings as regards past infringements: Unilin Beheer BV v. Berry Floor NV. If the EPO does revoke a patent, the revocation will apply to all the designated territories. On the other hand, if the EPO upholds a patent, it is still open to the national court to revoke it. In that event the national court’s decision will prevail, but only as regards its own territory. The patent will still be valid in other designated countries (unless revoked by the courts of those countries).

[12]There is one other important difference between the EPO and the national courts. The EPO has no power to deal with questions of infringement, which are the exclusive province of the national courts. It is commonplace for an alleged infringer to respond to infringement proceedings by attacking the validity of the patent. So most proceedings initiated by a patentee seeking to enforce its rights will also involve a consideration by the national court of the validity of the patent.

Clearing the path

[13]An enterprise which wishes to launch a pharmaceutical product will have to spend enormous sums of money in order to get a product to market. There will be expensive and lengthy clinical trials to conduct; regulatory approval to obtain; manufacture and packaging to arrange, and the costs of promoting and marketing the product. It therefore makes sense for an aspiring entrant to the market to try to clear the path of impediments before major investment decisions need to be made. One such impediment is the existence of a patent which, if valid, would be infringed by the new product.

[14]A failure to clear the path may also impact on the willingness of the court to grant an interim injunction at the suit of the patentee. In SmithKlineBeecham plc v Apotex Europe Ltd

[2003] FSR 30

Jacob J said:

“Where litigation is bound to ensue if the defendant introduces his product he can avoid all the problems of an interlocutory injunction if he clears the way first. That is what the procedures for revocation and declaration of non-infringement are for.”

[15]The Court of Appeal in that case took a similar view:

[2003] FSR 31

. Concurrent proceedings The traditional approach

Concurrent proceedings

[16]In an ideal world there would be one forum in which all relevant disputes between the parties could be settled quickly, effectively and finally. But the world is not ideal. So the courts have been faced with the problem of how to manage disputes that have spawned multi-jurisdictional proceedings. Sometimes the questions are resolved by applying international rules contained in conventions or regulations; but no one suggests that any such international rules apply directly to the present case. The question is therefore one for the inherent jurisdiction of the court (which is recognised by s. 49 (3) of the Supreme Court Act 1981 and CPR Part 3.1 (2)(f)).

[17]Mr Arnold QC, for Genentech, submits that it is well established that it is 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 before different domestic courts or tribunals and in such a case one claim will ordinarily be stayed or struck out: see McHenry v Lewis

(1883) 22 Ch D 397

. Mr Alexander QC, for GSK, does not dispute this general principle. Where, however, one claim is proceeding in this jurisdiction and the other is proceeding in a foreign jurisdiction, the position is different. In such a case the existence of two sets of concurrent proceedings was, traditionally, not considered to be prima facie vexatious. However the court had a discretion either to stay the domestic proceedings, or to grant an anti-suit injunction, or to put the claimant to his election which proceedings to prosecute. This was, however, a power which was exercised with caution. As Cotton LJ put it in McHenry v Lewis at 406:

“In the first place, it is a jurisdiction which one ought to exercise with extreme caution. Stopping in the middle of a suit a plaintiff from going on when he has a right of action as against the defendant, is a jurisdiction which has to be exercised with very considerable caution.”

[18]In the same case Bowen LJ said at 407-8:

“I agree that it would be most unwise, unless one was actually driven to do so for the purpose of deciding this case, to lay down any definition of what is vexatious or oppressive, or to draw a circle, so to speak, round this Court unnecessarily, and to say that it will not move outside it. I would much rather rest on the general principle that the Court can and will interfere whenever there is vexation and oppression to prevent the administration of justice being perverted for an unjust end. I would rather do that than attempt to define what vexation and oppression mean; they must vary with the circumstances of each case. I think that Cox v. Mitchell 7 C. B. (N.S.) 55 decided nothing more, that it simply lays down the proposition, that the mere pendency of an action abroad is not a sufficient reason for staying an action at home, although the causes of action and the parties may be the same. So understood, it seems to me to be common sense.”

Forum non conveniens

[19]So much for the traditional approach. The next step in Mr Arnold’s argument is that since the acceptance by the English courts of the doctrine of forum non conveniens as a result of the well-known quartet of decisions of the House of Lords in The Atlantic Star

[1974] AC 436

, MacShannon v Rockware Glass Ltd

[1978] AC 795

, The Abidin Daver

[1984] AC 398

and Spiliada Maritime Corp v Cansulex Ltd

[1987] AC 460

, it has become considerably easier for a defendant to obtain a stay of domestic proceedings in favour of actual or potential foreign ones. It is no longer necessary to show that the bringing of the domestic proceedings is vexatious or oppressive: a stay will be granted where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum i.e. in which the case may be tried more suitably for the interests of the parties and the ends of justice.

[20]Since The Spiliada it is clear that a defendant is entitled to apply for a stay of domestic proceedings, even where jurisdiction has been founded as of right: per Lord Goff of Chievely at 474. Lord Goff summarised the basic principles as follows: i) The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice. ii) In general the burden of proof rests on the defendant to persuade the court to exercise its discretion to grant a stay. If the court is satisfied that there is another available forum which is prima facie the appropriate forum for the trial of the action, the burden will then shift to the claimant to show that there are special circumstances by reason of which justice requires that the trial should nevertheless take place in this country; iii) The question being whether there is some other forum which is the appropriate forum for the trial of the action, it is pertinent to ask whether the fact that the plaintiff has, ex hypothesi, founded jurisdiction as of right in accordance with the law of this country, of itself gives the plaintiff an advantage in the sense that the English court will not lightly disturb jurisdiction so established.The burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum. iv) Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum. These will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction, and the places where the parties respectively reside or carry on business. v) If the court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay. vi) If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this inquiry, the court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors with other jurisdictions.

[21]Mr Arnold says that despite the formulation of the principles in The Spiliada it remains good law that it is vexatious for a claimant to seek the same relief in respect of the same cause of action against the same defendant in English proceedings as he is already seeking in foreign proceedings, and in such a case the court should ordinarily stay or dismiss the English proceedings. As a matter of general principle I think that he is right. In Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd

[1989] 3 All ER 65

a Queensland company wished to raise extra capital by the placement of shares; and in 1987 entered into an agreement with the defendant, an English merchant bank, and five brokers for the placement of its shares. The defendant and the five brokers were subsidiaries of an Australian banking group carrying on business primarily in Australia. A dispute arose over the performance of the agreement, each side claiming that the other was in breach. The claimant issued proceedings in England against the defendant (but not the brokers) claiming repayment of money paid to the defendant in respect of fees. The defendant served a defence and counterclaim in those proceedings claiming entitlement to remuneration by way of a quantum meruit. In the mean time the claimant issued proceedings in Queensland against both the defendant and the brokers claiming damages for breach of the agreement. Browne-Wilkinson V-C said:

“Counsel for the plaintiff sought to approach this case as though it was simply one in which one applied the rules of forum conveniens as now stated in Spiliada Maritime Corp v Cansulex Ltd, The Spiliada, [1987] AC 460. In my judgment it is not as straightforward as that. What we have in this case, and so far as I know it has not previously arisen, is a case in which the same party has initiated proceedings in two separate jurisdictions, those proceedings raising either at the present time or inevitably in the future exactly the same issues. The plaintiff, having itself invoked the two jurisdictions, now applies for a stay of the counterclaim (which naturally arises out of the claim) on the terms that it merely stays its own existing action in this country. In my judgment, where a plaintiff seeks to pursue the same defendant in two jurisdictions in relation to the same subject matter, the proceedings verge on the vexatious. I am not suggesting in any sense that the plaintiff in this case was being deliberately vexatious, but the outcome is vexatious.”

[22]Mr Arnold correctly says that the present case is a case in which the claimant is not the patentee but a party seeking revocation of a European patent which has brought both an opposition in the EPO and an English claim; and there is no counterclaim for infringement. Moreover, it is the patentee who seeks the stay. In such a case, he says, the claimant is vexing the defendant patentee twice over for the same relief in respect of the same cause of action, namely revocation of the EP (UK) on the grounds of invalidity asserted, and the English proceedings should be stayed unless there are some exceptional circumstances which justify refusal of a stay.

The patent cases

[23]A somewhat different approach has been developed in patent cases involving parallel proceedings both in the EPO and in the courts of this country. Mr Arnold says that the approach that has evolved has been fundamentally mistaken. He says that the courts dealing with patent cases have not been referred to the relevant principles in the cases on vexation by duplication of proceedings that preceded The Spiliada. It is true that not all the cases on which Mr Arnold relies were cited to the court in the cases that are most commonly cited in setting out the relevant principles (largely observations of Aldous LJ), but I do not consider that the principles have been ignored. Pall Corporation v. Commercial Hydraulics (Bedford) Limited

[1989] RPC 703

was a decision of the Court of Appeal, consisting of Sir John Donaldson MR, and Dillon and Staughton LJJ. It is inconceivable that that constitution of the court could have been unaware of the general approach that our courts adopt towards cases of concurrent proceedings in different jurisdictions or of the principles laid down by The Spiliada, decided two years previously. The case was one in which the claimant brought infringement proceedings in the High Court. The defendants denied infringement and counterclaimed for revocation on the ground of invalidity. One of the defendants had also lodged a notice of opposition at the EPO. It then sought a stay of the proceedings pending determination by the EPO. Whitford J refused the stay and the Court of Appeal upheld his refusal. The Spiliada was not only cited to the court; it was referred to in the judgment of Dillon LJ who gave the only reasoned judgment. (Leading counsel for the respondent was, as it happens, Mr William Aldous QC). Dillon LJ said:

“In these circumstances I have had very clearly in mind the comment of Lord Templeman in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460 at 465, that the solution of disputes about the relative merits of trial in England and trial abroad is pre-eminently a matter for the trial judge.”

[24]He referred to other cases dealing with the principles of forum non conveniens and continued:

“However, for present purposes, those authorities are really irrelevant. This is not a case in which it is said that the English proceedings must be stayed for ever, and got rid of for ever; that cannot be done because this is the only country in which proceedings for infringement in this country can be tried.”

[25]I pause to note that the Pall case included proceedings for infringement. I will return to the significance of that later. Dillon LJ then continued:

“The judge, as I see it, had to exercise his discretion whether or not it is better in the interest of justice that the English proceedings should be stayed until the decision in the European Patent Office by balancing the various procedural considerations which may result from either course. The fundamental one, as I see it, is the length of time the proceedings in the European Patent Office are likely to take. The evidence indicates that the opposition proceedings are likely to take some four or five years to come to a conclusion, and a conclusion in the European Patent Office is likely to be followed by an appeal to the Board of Appeals of the European Patent Office. By contrast, this action has a provisional date for trial in this country, if it is not stayed, for June next year. The early trial of the action is particularly important to the plaintiffs in that the patent has a limited life from a priority date which is already a long while ago.” (Emphasis added)

[26]Pall was decided in 1988. In Beloit Technologies Inc v. Valmet Paper Machinery Inc

[1996] FSR718

the Court of Appeal considered the principles relating to duplicitous proceedings. A stay of the appeal pending a decision of the EPO was nevertheless refused. In Beloit Technologies Inc v. Valmet Paper Machinery Inc (the substantive appeal, decided in 1997) at 503 Aldous LJ said (obiter):

“The fact that there may be proceedings both in the national courts and before the EPO is inevitable as patent 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 the 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.”

[27]This observation suggests that a stay of the national proceedings will not be granted unless two conditions are satisfied: first that the European proceedings can be resolved quickly and second that a stay will not inflict injustice on a party or be against the public interest.

[28]Dillon LJ’s statement of the appropriate test in Pall was cited and applied by Neuberger J in General Hospital Corporation’s European Patent (UK)

[2000] FSR 633

in which a stay was granted. His approach was upheld by the Court of Appeal (which included Aldous LJ). The question of the stay was the only issue before the Court of Appeal, so what was decided was ratio. Aldous LJ said at 644:

“It was envisaged that the opposition procedure would be concluded expeditiously so as not to interfere with proceedings in national courts. That has proved wrong. Unfortunately, the EPO has not been able to devise and enforce a procedure which has enabled speedy resolution with the result that oppositions of substance often take four years or more to complete. This has put the national patent courts in a dilemma. Clearly, it is desirable to await the outcome of an opposition as it could result in revocation of a patent or a patent in a different form to that before the national patent court. On the other hand, a delay of four years, or perhaps more, can often seem unacceptable. What should be done?”

[29]Although Aldous LJ did not give a direct answer to the rhetorical question that he posed, it is plain from the tenor of his examination of the exercise by Neuberger J of his discretion, that he regarded the answer as depending on all the facts of the case, rather than by the application of a rule of thumb that concurrent proceedings were vexatious. Nor did he suggest that two independent conditions had to be satisfied; although the length of any potential delay was plainly a highly material factor. This time no infringement proceedings were involved in this jurisdiction, although there were infringement proceedings on foot in France, Germany and Italy.

[30]Aldous LJ returned to the theme in Kimberly-Clark Worldwide Inc. v. Procter & Gamble Ltd [2000] R.P.C. 422. At 429-30 he said:

“No doubt the drafters of the EPC and Parliament, when enacting the 1977 Act, envisaged that applications for European patents would be published about 18 months after filing and that grant would follow soon thereafter. They also envisaged that the opposition procedure, which included an appeal, would be completed in say two years. However, the popularity of the EPO has raised difficulties in achieving that aim, 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.”

[31]At 431 he said:

“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 consequence 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 that a stay would cause.”

[32]It is true to say that in these observations, Aldous LJ contemplated a stay for a “short period”; but it seems to me that the overarching factor is the delay that would be occasioned by a stay balanced against the prejudice that it would cause, rather than the satisfaction of an independent condition.

[33]In Ivax Pharmaceuticals (UK) Ltd. v. AstraZeneca AB

[2004] EWHC 1264

Mann J referred to the observations of Aldous LJ in Beloit and Kimberly-Clark and said:

“What I take from these decisions is that there is an emphasis or presumption in favour of a stay but not where to do so would cause injustice. That is the approach that I propose to adopt in this application.”

[34]In Hunt Technology Limited v. Don & Low Ltd

[2005] EWHC 376

at paragraph 7 Laddie J said:

“I have no doubt that Mann J was right. There is a presumption in favour of a stay. However, that does not mean, as at times appear to be suggested on this application, that this is a difficult presumption for a party resisting a stay to overcome. Absent any other consideration, there are obvious advantages in only having one set of proceedings rather than allowing two to be pursued simultaneously. The proceedings in the EPO may result in the patent being held invalid, in which case the English proceedings would become redundant. Therefore, absent any other consideration, a stay is the appropriate course to adopt. But when there are other considerations, it is for the court to weigh up the pros and cons and see where the justice of the situation lies.”

[35]These principles were adopted by Kitchin J in GlaxoSmithKline Biologicals SA v Sanofi Pasteur SA

[2006] EWHC 2333 (Pat)

[36]Finally, to complete the anthology of citations, in Unilin Jacob LJ said at para 25:

“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 started here in May 2002 and was finally over by November 2005. The EPO proceedings are still running and could be still 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.” (Emphasis added)

Why are patent cases different?

[37]I agree with Mr Arnold that in patent cases involving parallel proceedings in our courts and the EPO, the court has adopted a more flexible approach that differs from the approach taken in the normal run of commercial litigation.

[38]There are, I think, a number of reasons why the different approach in patent cases is warranted: i) Patents have territorial application. A patent in the same terms may be granted in several states world-wide. The courts of the state in which the patent is in force have exclusive jurisdiction to deal with questions of infringement, even if the allegations of infringement are identical. The causes of action are not the same. That is unlike a case of, say, tort or breach of contract where more than one national court may have jurisdiction over precisely the same dispute. World-wide litigation in patent cases is a normal incident of the world of patents. ii) It is inherent in the legal structure that set up the EPO that proceedings may take place both in the EPO itself and in the national courts. Indeed Aldous LJ went so far as to say that it was “inevitable”. iii) The EPO has no power to deal with questions of infringement. Where, therefore, infringement is alleged and the claim is met by a counterclaim for revocation, either both claim and counterclaim must be stayed or both must be allowed to proceed. Anything else would be grossly unfair. But a stay may be unfair to a patentee whose patent is presumed to be valid unless and until revoked. iv) Opposition in the EPO is automatically treated as opposition to all the national patents that have come into operation as a result of the grant of the European patent. An opponent cannot choose to limit his opposition in the EPO to patents having effect in some contracting states, and take his chance in the national courts of the others. If he is not allowed to proceed both in the EPO and in our courts, one of his alternative courses of action would be to abandon his opposition in the EPO and begin claims for revocation in all the contracting states in which the patent has effect. The patentee could have no objection to that course, which would proliferate rather than reduce a multiplicity of suits. v) A decision of the EPO is not necessarily final anyway. It is final if it revokes, but not if it does not. Unlike the normal commercial case where a decision of a court of competent jurisdiction is final, whatever it decides, the finality of a decision of the EPO, even in opposition proceedings, is dependent on what it decides. Accordingly, the straightforward approach adopted by Browne-Wilkinson V-C in Australian Commercial Research and Development Ltd cannot be directly applied to patent cases. vi) The courts are generally wary of granting negative declarations. But in patent cases there is a statutory procedure for obtaining declarations of non-infringement. That shows the value that is to be attached to commercial certainty. A claim for revocation is part of the armoury available to achieve commercial certainty. vii) Patents are monopolies. The common law has traditionally been cautious about upholding monopolies, and there is a public interest in ensuring that invalid monopolies are declared to be such as soon as possible.

Does a claim for infringement make all the difference?

[39]Mr Arnold says that most of the patent cases in which the question of stay has been discussed have involved English proceedings in which the patentee is suing for infringement, and such cases involve different considerations to cases which only involve parallel claims for revocation of the patent. In fact the General Hospital case did not involve infringement proceedings in this jurisdiction, but on the other hand it was a case in which a stay was granted. However, I reject Mr Arnold’s submission that in a case that does not involve infringement proceedings that are already on foot, the court should grant a stay in the absence of exceptional circumstances. That seems to me to set the bar too high, and is not consistent with the way in which the patent cases have developed. If the approach is to be changed, it must be done by a higher court than this one.

[40]As his fall-back position Mr Arnold said that there is a significant difference between(a) a case in which an alleged infringer seeks to stay infringement proceedings brought by the patentee pending the determination of parallel opposition proceedings brought by the alleged infringer and

(b) a case in which the patentee seeks to stay one of two claims for revocation of the patent brought by a party against whom no infringement claim has been made. In the latter situation there is no question of the patentee being prevented from enforcing valuable patent rights for a lengthy period; and even if the patentee’s ability to enforce his patent were adversely affected that would be a consequence voluntarily assumed by the patentee, and it would be a consequence that favoured the party seeking revocation rather than prejudicing him. There is, of course, some force in that, but it assumes that the patentee has valuable patent rights to enforce, when that is the very question in issue. If it turns out that the patentee does not have valuable patent rights to enforce, the effect of the stay will have been to prolong an invalid monopoly and thereby stultify innovation. While, therefore, I agree with Mr Arnold that the absence of infringement proceedings is a relevant consideration, I do not consider that it is decisive.

Conclusion

[41]Equally I do not accept Mr Alexander’s submission that there is an independent condition to be satisfied, namely that the stay must be a short one (how short is short?). I have no doubt, however, that the length of any stay and any prejudice that would flow from it is a highly material (sometimes the most material) factor. 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. Relevant factors in favour of a stay Avoidance of duplication

Relevant factors in favour of a stay

[42]It is common ground that the grant of a stay would avoid duplication of proceedings. Mr Arnold says that if the patent is either(a) upheld both by the English courts and by the EPO or

(b) revoked both by the English courts and by the EPO or

(c) upheld by the English courts but revoked by the EPO, then the English proceedings will have been entirely pointless, a waste of the parties’ time and money and a waste of the English courts’ judicial resources to the detriment of other litigants. It is only if the patent is upheld by the EPO but revoked by the English court that GSK will have achieved anything. I see the theoretical force of this but it is in my judgment too theoretical. It seems to me to be highly unlikely that the EPO and the English court are in watertight boxes. A finding of the English court will be of relevance to the proceedings in the EPO. Even if it is not, the parties’ professional teams who are likely to be involved in both the English proceedings and the opposition in the EPO will not have wasted their time in becoming familiar with the case. This is akin to, although not quite, the so-called “Cambridgeshire factor” referred to in The Spiliada. Although I accept that the avoidance of duplication is a desideratum, I do not think that the consequences of refusing a stay are quite as dire as Mr Arnold suggests.

[43]In addition, as Mr Arnold himself recognises, even if the EPO does uphold the validity of the patent, GSK would be entitled to challenge its validity in the national courts and could reactivate these proceedings for that purpose if they were stayed. So duplication may not be avoided anyway.

Costs

[44]The costs of taking the case to trial in the national court are estimated at about £500,000 each side. That is of course a lot of money. But in proportion to the size of the potential market and the costs of bringing the product to market it is not so great. All parties are powerful multinationals who can afford the cost. And in any event, as I have said, I am not convinced that all the costs would be wasted anyway. Quite apart from that, costs are in the discretion of the court; and the trial judge may take the view that any decision about costs should be deferred until after the outcome of the proceedings in the EPO is known.

Amendment of claims

[45]It is common for European patents to be amended during the course of opposition proceedings. An amendment may even be allowed after a decision at first instance and during the pendency of an appeal to the Board of Appeal. If an amendment is allowed it will take effect in the UK as elsewhere. Two possible consequences flow from this. The first is that the procedure in the EPO is more advantageous to the patentee than the corresponding national procedure. Although the court has power to permit amendments to the claims to be made, it is not the practice of our courts to permit amendments to be made after trial: Lubrizol Corp v Esso Petroleum Co Ltd

[1998] RPC 727

at 790 (Aldous LJ). The second is that if the national court rules on the patent in its unamended form and the patent is subsequently amended in the EPO and its validity in the amended form upheld, the national court’s decision will turn out to have been arrived at on a false basis. However, although these are possible consequences, Mr Arnold accepts that that this is not such a significant factor where there is no claim for infringement. Moreover, as Mr Alexander points out, the claims are drafted in such a way as to make it difficult to see how claim 1 for instance (which is the nub of the dispute) can be amended so as to preserve its validity. Even though Mr Arnold rightly said that his client could not be expected to advance amendments at this early stage of the national proceedings, he had no suggestions about what kind of validating amendment might be possible.

[46]Although the possibility of amendment in the EPO is a “juridical advantage” to the patentee it is not one on which I can place great weight on the facts of this case.

Undertakings

[47]In some cases the balance in favour of granting a stay has been tipped by the offer of undertakings by the patentee. Genentech has offered undertakings in the following terms: i) Not to sue GSK or its customers during the period of the stay for any act of infringement of the patent; ii) Not to claim any financial relief from GSK or its customers other than damages on a reasonable royalty basis in respect of any act of infringement committed during the period of the stay; iii) Not to seek any injunction or delivery up of infringing material against GSK or its customers in respect of any act of infringement of the patent committed during the period of the stay iv) To prosecute the EPO proceedings with all reasonable endeavours.

[48]In Ivax Pharmaceuticals (UK) Ltd. v. AstraZeneca AB undertakings were offered. In fact Mann J held that the undertakings were unnecessary because Ivax had not demonstrated a case that their plans for commercial exploitation of the competing product would not be hampered by the grant of a stay. But he commented on the offered undertakings as follows:

“It should be noted that Ivax relies merely on commercial matters. It does not maintain that development would be hampered at present by the possibility that AstraZeneca would take infringement proceedings. This point, if it had been raised, would have been dealt with by undertakings offered by AstraZeneca the net effect of which would be to prevent AstraZeneca taking proceedings against Ivax and its customers (if any) for the period of the stay of the UK action, to proceed in the EPO with due diligence and not to seek financial relief for anything done during the period of the stay. If there had been a good case on a real "lost opportunity" basis I would have been minded to hold that the undertakings offered did not safeguard Ivax adequately because they do not deal with the risk to development costs or financial losses arising out of delay. Undertakings were offered, and accepted, in Unisantis SA v X-Ray Optical Systems Inc (Lewison J, [2004] EWHC 734 (Ch)). However, they were not the same as those in the present case because they included an undertaking by the patentee to confine its financial claims to a royalty payment in the event of the patents being upheld. That element, which seems to me to have been the crucial factor leading to the granting of the stay in that case, is absent from the undertakings offered in this case, and had it mattered I would probably have considered that absence to have been crucial.”

[49]Undertakings were also offered in Sanofi. Kitchin J commented on them as follows:

“Clearly these undertakings are very significant. They remove any risk of an injunction or damages claimed on a loss of profits basis. Sanofi says that effectively it is offering a licence on reasonable terms and points to the evidence of Miss Chiappinelli (to which I have referred) that GSK would be prepared to launch a vaccine in the UK under the terms of a licence granted on reasonable terms if a final decision upholding the validity of the patent were to be handed down.”

[50]I might also add that what tipped the balance for me in the Unisantis case was that the offered undertakings would have removed the risk of taking the competitor off the market.

[51]In the present case the offered undertakings do not have that effect. Genentech wishes to preserve the right to seek an injunction preventing further sales of GSK’s product if the patent is upheld in the EPO. The grant of an injunction some way down the line could be very serious so far as GSK is concerned. According to the evidence of Ms Brant (Genentech’s witness) the cost of Phase III clinical trials (which have yet to be incurred) would be of the order of US$50- 100 million, in addition to which a company launching a new product would typically spend US$80 million in the year before launch, and a further US$200 million in each of the three to four years following launch. If, therefore, GSK is stopped from commercial exploitation of its product after launch, it could have spent anything up to US$380 million or more depending on when the injunction were to be granted. Even if it were stopped before launch, the costs could have reached US$180 million. Undertakings which preserve the patentee’s right to claim an injunction (and do not limit its financial claims for post-stay infringements to a claim for a reasonable royalty) are cold comfort. If, on the other hand, the offered undertakings are equivalent to the offer of a licence on reasonable terms, they are entitled to very much greater weight.

[52]I place very little weight on the offered undertakings in this case.

Relevant factors against a stay

[53]It is obvious that the grant of a stay will delay the resolution of the national proceedings: that is its purpose. So the overall question is: does that matter and, if so, how much?

When will the EPO proceedings be resolved?

[54]I have already referred to a number of judicial comments on the tardiness of proceedings in the EPO. There are signs that things are improving, but not by much. Both sides produced tables of statistical information about the length of time taken to resolve oppositions in the EPO. GSK says that the EPO proceedings, including an appeal, are unlikely to be concluded before mid-2012. Genentech on the other hand says that taking into account recent procedural changes in the EPO they may well be concluded by the end of 2010. This latter prediction seems to me to be optimistic. Mr Walton (Genentech’s witness) says that he expects to be summoned to an oral hearing in the EPO in 2008, and that any subsequent appeal is likely to take 2 to 3 years. That would mean that even on his evidence a final resolution in 2011 is a real possibility. These predictions are based on averages, and the current case has an unusual number of opponents. One may suspect that an increased number of parties gives added scope for delay. On the other hand there is no hard evidence that the number of opponents does in fact cause delay. I cannot of course predict the future. But I am unable to say that GSK’s prediction is unrealistic. I think I should work on the basis that although it is just possible that the EPO proceedings will conclude by the end of 2010, they are not likely to be concluded before 2011, and may well not be concluded for a further 12 months or so after that.

The national proceedings

[55]A trial date for the national proceedings is fixed (subject to the outcome of this application) for February 2008. If there is an appeal it is thought that it would be dealt with by early to mid-2009.

[56]Accordingly there is likely to be a delay of anything between 18 months and three years if a stay is granted.

The effect of delay

[57]GSK’s Phase II clinical trials are almost complete. By the time this judgment is released the results will have been presented to an international congress of Rheumatology. Phase III trials will begin shortly afterwards. As I have said Genentech’s evidence is that the cost of Phase III trials is of the order of US$50- 100 million. GSK’s figure, although confidential, is unsurprisingly of the same order of magnitude.

[58]Ms Brant says that it typically takes 18 to 24 months to recruit patients for Phase III trials; and that the trials themselves take 6 months and a further 12 follow up. She therefore says that Phase III trials will not be complete for 3 years (i.e. by mid 2010) or more. GSK’s timetable is confidential but it is of the same order as Ms Brant suggests.

[59]However, GSK say that they do not intend to follow the usual path. They intend to apply for marketing authorisation in two stages, the first in the [confidential information redacted] and the second in [confidential information redacted]. Since it takes about a year to obtain authorisation, they expect to be ready to launch ofatumumab (no doubt with a more pronounceable brand name) worldwide in [confidential information redacted]. Genentech say that this is over-optimistic and predict a launch date in 2012.

[60]It is possible that proceedings in the EPO will be concluded before the actual launch date of ofatumumab (if Genentech’s more optimistic view of the EPO and its more pessimistic view of the launch date turn out to be correct). But there is a real risk that they will not. However, although the projected launch date is of course important, it is not decisive. Spending decisions will have to be taken before launch. I have already mentioned the figures given by Ms Brant. The final year before launch will require a commitment of the order of US$80 million. Achieving commercial certainty before that commitment has to be made is of obvious importance. Dr Easeman (GSK’s witness) puts it more generally. He says:

“A pharmaceutical development of the magnitude in question requires as much certainty as possible. It would be commercially highly damaging to GSK for there to be a delay (or a risk of delay) to [confidential information redacted] launch [confidential information redacted]”

[61]I have no difficulty in accepting that. As Jacob LJ said in Unilin “Business needs to know where it stands”.

[62]I conclude that even on optimistic assumptions about the length of the delay, the delay matters, and may matter to the tune of US$80 million. To my mind this is the most important of the various factors I must balance.

Spin off value

[63]In Unilever v. Frisa

[2000] FSR 708

Laddie J said:

“Furthermore, there is an advantage of proceedings being conducted here in accordance with the fairly tight timetables which are now imposed, namely that judgments obtained from this court, or obtained from this court and then from the Court of Appeal on issues of infringement and validity have in the past, at least on occasions, helped to inform the parties so as to enable them to resolve their disputes of a worldwide basis earlier rather than later.”

[64]Kitchin J accepted the potential value of a decision of the English court in Sanofi. Mr Arnold described this as “precedential value” and said that it was not of much value in places such as Australia where the law is different. But I do not think that Laddie J’s point was solely about precedential value. His point, as I read the quoted passage, is that a reasoned judgement of the Patents Court (and a fortiori of the Court of Appeal) will help the parties to settle their disputes without further recourse to the courts.

[65]This is a factor on which I place some weight.

Result

[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.