Chugai Pharmaceutical Company Ltd v UCB Pharma S.A.
| Jurisdiction | England & Wales |
| Judge | Mr Justice Birss |
| Judgment Date | 24 August 2018 |
| Neutral Citation | [2018] EWHC 2264 (Pat) |
| Court | Chancery Division (Patents Court) |
| Docket Number | Case No: HP-2016-000063 |
| Date | 24 August 2018 |
[2018] EWHC 2264 (Pat)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT
Royal Courts of Justice
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
THE HON. Mr Justice Birss
Case No: HP-2016-000063
Richard Meade QC and Mark Chacksfield (instructed by Marks & Clerk Solicitors) for the Claimant
Michael Tappin QC and James Whyte (instructed by Powell Gilbert) for the Defendants
Hearing dates: 27th, 28th February, 1st, 6th, 7th, 8th March 2018
| Topic | Paragraphs |
| Introduction | 1 |
| The witnesses | 15 |
| Technical background | 22 |
| The issue | 43 |
| US Law | 53 |
| Construction of the 771 patent | 113 |
| The claims | 115 |
| The specification | 134 |
| The prosecution history | 207 |
| Extrinsic evidence | 238 |
| Overall—the true construction of claim 2 | 245 |
| Conclusion | 249 |
Introduction
This case is about United States patent 7,566,77The patent is entitled Humanised Antibodies and names Robert Adair, Diljeet Singh Athwal, and John Emtage as inventors. The patent is licensed to the claimant Chugai under a patent licence agreement between Chugai and the first defendant UCB. The licence was entered into on 10 th December 2007. It is a worldwide licence. For any given territory, royalties are due on sales in that territory pursuant to clause 3.1 as follows:
“Royalties shall be payable only upon Net Sales in countries where, but for the licence granted by UCB to CHUGAI pursuant to Article 2, CHUGAI or a Permitted Sublicensee would infringe a Valid Claim of the relevant patent …”
The meaning of this clause is not in dispute. Royalties are due on sales of a relevant product in a territory if that product falls within the scope of one of the claims of a patent which is in force in that territory, unless and until that patent expires or is finally held invalid.
The effect of this clause is the same as a similar clause addressed in Celltech v Medimmune [2004] EWCA Civ 1331 in which Jacob LJ held that the word “infringe” in such a clause means: to fall within the scope of the claims assuming the patent is valid such that royalties will be payable if the product does fall within the scope of the claims regardless of its validity unless and until the patent is finally declared invalid. As Jacob LJ went on to explain, a bargain of that kind makes commercial sense even though it means that royalties would be due under a patent which might in fact be invalid, provided the patent had not actually been declared invalid (see paragraph 13 of Celltech).
Just as in Celltech, so here the licence agreement is governed by English law and has an exclusive jurisdiction clause in favour of the English court (clause 18). Thus, again as in Celltech, the English court has jurisdiction concerning the scope of a licensed patent but the issue of validity can only be tried by the courts of the country of that patent. Nevertheless considerations about validity, to the extent they are relevant under the applicable law, may be taken into account in this court in resolving the question of claim scope and the fact those considerations arise does not undermine the jurisdiction of this court to decide the issue in this case (see Chugai v UCB [2017] EWHC 1216 (Pat) Henry Carr J).
Since 13 th January 2016 the 771 patent has been the last patent left in the licensed portfolio. All the others had expired by that date. That the other patents have expired is not surprising because the portfolio is essentially based on patent applications for which the earliest claimed priority was derived from a British application GB 8928874 filed on 21 st December 1989. A UK patent which claimed priority from that filing would normally have to have been filed within one year of it and would expire 20 years later (December 2010). Today, most jurisdictions in the world have patent systems which will generally produce a similar result, with expiry dates counted from the date of filing the appropriate application rather than the date the patent office decides to grant the patent. US law today is similar as well but that similarity is the result of a change in US law. Prior to that and in appropriate circumstances the term of a US patent ran from the date of issue (i.e. grant) for the term of 17 years. The application for the 771 patent was filed with the USPTO on 7 th June 1995. That was before US law changed. The prosecution of the application which became the 771 patent through the USPTO took about 13 years and it was issued on 28 th July 2009. Accordingly the 771 patent expires on 28 th July 2026. Chugai place some emphasis on this, as if to submit that UCB has done something worthy of criticism. Such a criticism would be unwarranted. The fact the term of the 771 patent works in the way it does is no basis for criticising UCB. The patentee simply took a course it was entitled to take under US practice and law at the relevant time.
Chugai has a pharmaceutical product called tocilizumab. Tocilizumab is an immunosuppressive drug mainly used in the treatment of rheumatoid arthritis. It is a humanised antibody to the interleukin-6 (IL-6) receptor. The brand name for Chugai's tocilizumab in the USA is Actemra.
Chugai has been paying royalties under the licence in relation to sales of tocilizumab. Chugai has not disputed that royalties were due when the licensed patent portfolio contained more patents than the 771 patent. However Chugai contends that tocilizumab does not “infringe a Valid Claim” (within clause 3.1) of the 771 patent and therefore does not attract royalties to the extent the product is manufactured after 13 th January 2016. Accordingly Chugai contends that once the 771 patent is the only remaining patent in force, no royalties are due under the licence for such products. Chugai seeks an appropriate declaration to that effect from the English court.
UCB accepts that once the 771 patent is the last remaining patent, Chugai's liability to pay royalties for tocilizumab made after 13 th January 2016 depends on the question of whether tocilizumab “infringes a Valid Claim” of the 771 patent. UCB's case is that tocilizumab does indeed fall within the scope of the claims of the 771 patent and so a royalty is still due. UCB denies that the declaration should be granted in Chugai's favour.
The issue is of some commercial significance. Given that the 771 patent lasts until 2026 and given the high value of sales of tocilizumab, the sums potentially due are substantial. The details are confidential and irrelevant.
By the trial the issues had narrowed down to the single question of whether tocilizumab falls within the scope of claim 2 of the 771 patent. That issue is a matter of claim construction and falls to be decided under US law. The nature of tocilizumab is not in dispute. No issues arise relating to parties and so there is no need to distinguish between the three defendants, whom I will refer to simply as UCB.
Chugai contends that on UCB's construction of the claim, the claim would be invalid because it would cover a prior art antibody called anti-Tac described in a reference called Queen. UCB admits that on its case on claim construction the antibody in Queen would indeed fall within the relevant claim and also admits, for the purposes of these proceedings only, that that would make the claim invalid. However UCB's submission is that subject to one point, this consequence is irrelevant to the issues the English court has to decide. UCB maintains its case on construction and argues that Chugai's true remedy is and has always been to bring proceedings in the US court to invalidate the relevant claims. If those proceedings were to be commenced, one of the things UCB has made clear is that it would defend such an invalidity attack on the basis that it can “swear behind” Queen. Swearing behind is a feature of US law whereby if a patentee can establish the necessary facts, then a putative item of prior art is not prior art. The facts to be established would essentially be that although the putative prior art dates from before the earliest effective filing date of the patentee's patent, the patentee's invention was actually made before the prior art. Establishing a right to swear behind involves a factual inquiry into the conception of the invention and its reduction to practice. The details of swearing behind do not matter for the purposes of this judgment.
The one point on which UCB accepts validity does play a role under US law relating to claim construction is as what has been called a “tie-breaker”. In other words if, having applied all the available tools of claim construction, the claim is still ambiguous, then the claim should be construed to preserve validity. However UCB contends that in this case the claim is clear and that principle does not apply.
At one stage in these proceedings the factual question of swearing behind was one of the issues to be decided. Chugai does not accept that UCB can establish the facts necessary to swear behind Queen. However UCB's admission for the purpose of these proceedings that the claim would be invalid over Queen on UCB's construction meant that those issues could be dropped. This was discussed at the pre-trial review (PTR) on 8 th February 2018. Chugai were initially reluctant to agree that the swearing behind issues should therefore be dropped because of a concern that even if Chugai won this UK case, despite the binding nature of the declaratory relief, there might be scope for UCB to try to bring infringement proceedings in the USA against Chugai. Whether that was a realistic concern or not does not matter. The issue was resolved at the...
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GW Pharma v Otsuka
...common in international patent licences. They are similar to the terms of the licence in the judgment of Henry Carr J in Chugai Pharmaceutical Co. v UCB Pharma SA [2017] EWHC 1216 (Pat) which, at paragraph 39, the judge noted were in turn similar to the licence in Celltech v Medimmune [20......