Hospira UK Ltd v Cubist Pharmaceuticals, LLC

JurisdictionEngland & Wales
CourtChancery Division (Patents Court)
JudgeMr. Justice Henry Carr
Judgment Date17 Oct 2016
Neutral Citation[2016] EWHC 2661 (Pat)
Docket NumberCase No: HP-2014-000037

[2016] EWHC 2661 (Pat)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

PATENTS COURT

The Rolls Building,

7 Rolls Buildings,

London, EC4A 1NL

Before:

Mr. Justice Henry Carr

Case No: HP-2014-000037

Between:
Hospira UK Limited
Claimant
and
Cubist Pharmaceuticals, LLC
Defendant

Mr. Richard Meade, QC (instructed by Taylor Wessing LLP) for the Claimant

Mr. Andrew Waugh, QC andMr. Thomas Hinchliffe, QC (instructed by Carpmaels & Ransford LLP) for the Defendant

Mr. Justice Henry Carr

Costs

1

In this matter I am asked to decide the question of costs following judgment in this action whereby I revoked three patents owned by the Defendant ("Cubist"). It was accepted before trial by Cubist that another patent, which the parties designate "the 580 patent", was invalid.

2

It is common ground that, as the winner, the Claimant ("Hospira") is entitled to its general costs. The dispute is whether, in respect of certain issues, Hospira should not recover its costs and in respect of certain other issues I should order that Hospira pay Cubist's costs.

3

Before turning to these issues, a question arises in relation to the 580 patent. Mr. Waugh QC, who appears for Cubist, submits that the estimate of costs that have been provided by Hospira, which is £112,500, ought to be treated with great caution because no detailed calculation or basis for this quantification is put forward. He suggests that it is normal to record time against each patent in multi-patent litigation and those details have not been disclosed or provided. He also points out that Ms. Balleny of Carpmaels and Ransford has calculated that Cubist's costs of dealing with the 580 patent were £60,000 rather than £112,500.

4

For my part, I see no reason to doubt the estimate of Hospira's costs which has been provided in Mr. Stoate's third witness statement at [4.2]. The basis of that calculation is reasonable, given that this was Cubist's patent and Carpmaels & Ransford were familiar with this subject matter having prosecuted patents from the same family. It is unsurprising that Hospira's costs would be likely to be more than those of Cubist's. Furthermore, on a form of order hearing of this nature, it is not necessary to submit a detailed costs bill, which is a matter for the assessment. Therefore, I accept Mr. Stoate's estimate and that is the figure which I shall apply when considering the overall percentages of recoverable costs.

5

I now turn to the issues in respect of which there is some dispute as to whether there should be a deduction and, if so, how much. It is often said that the correct principles to apply in patent actions are very well known. In particular, in Monsanto v Cargill No.2 [2007] EWHC 3113, [2008] FSR 16 at [2]–[9], Pumfrey LJ set out the approach that the courts should take to costs in patent actions under the CPR. This approach was subsequently approved by the Court of Appeal in MMI v Cellxion [2012] EWHC Civ. 139. In summary:

i) The overall winner is likely, save in the most exceptional circumstances, to be entitled to payment of all his costs which are not or cannot be allocated to a particular issue, which are the general costs of the action.

ii) If costs are suitably circumscribable so that they can properly be allocated to issues upon which the overall winner has nevertheless lost, there are two questions:

a) should that party recover his costs of that issue; and

b) is the case so exceptional that the winning party should pay the otherwise unsuccessful party's costs incurred in respect of that issue?

6

The fact that those principles are frequently cited disguises an uncertainty in their application, namely, what is meant by the phrase "so exceptional that the winning party should pay the otherwise unsuccessful party's costs". Mr. Waugh has referred me to the principles set out in the White Book at paragraph 44.2.7, p.1254. The authors state that:

"The rules themselves impose no requirement to the effect that an issue-based costs order should be made only in "a suitably exceptional case" and none is to be implied, although there needs to be a reason based on justice for departing from the general rule, and the question of the extent to which costs of a particular issue are to be disallowed should be left to the evaluation and discretion of the judge by reference to the justice and circumstances of the particular case."

7

This summary is supported by the decision of the Court of Appeal in F&C Alternative Investment (Holdings) Ltd v Barthelmy (No.3) [2012] EWCA Civ. 843; [2013] 1 WLR 548, per Davis LJ at [47]–[49]. When rejecting a submission that, under the issue based approach, the court should only order payment of costs by the winning party in an exceptional case, he said:

"47 In my view that is a hopeless argument. The Rules themselves impose no requirement of exceptionality as such and none is to be implied — although there of course needs to be reason, based on justice, for departing from the general rule set out in Part 44.3(2).

49 … The application of the rules in this context requires no further gloss. The question of the extent to which costs of a particular issue are to be disallowed or notionally paid should be left to the evaluation and discretion of the judge, by reference to the justice and circumstances of the particular case."

8

Arnold J applied this approach in patent litigation in Hospira UK Ltd and Novartis AG [2013] EWHC 886, where he said:

"Is it appropriate in all the circumstances of the individual case not merely to deprive the winning party of its costs on an issue in relation to which it has lost but also to require it to pay the other side's costs."

9

Nonetheless, it will be seen that there is a tension between the requirement of a suitably exceptional case before costs are ordered in a patent case against a successful party; Monsanto v Cargill No.2; and the express rejection of this requirement in F&C Alternative Investment (Holdings) Ltd and Barthelmy. This raises the question of whether the approach to awards of costs in patent cases differs from that adopted in other types of litigation. In my judgment it does not. Patent litigation is very expensive, and it is important that parties should be encouraged only to pursue their best points, and to be aware of the cost implications of failing to do so.

10

In my view, this apparent dichotomy may be resolved by a proper understanding of the phrase " suitably exceptional". It is intended to indicate that if the unsuccessful party succeeds on a particular issue, that is not, on its own, sufficient to award costs against the successful party. There must be something which makes it appropriate and just to order not only that the successful party does not recover his costs, but also that it should pay the costs of the relevant issue. On the other hand, it is not intended to imply that such awards of costs will be extremely rare. Where there is a discrete issue, which required substantial expenditure of costs, it may be just in all the circumstances to order payment of costs.

11

I now turn to the issues which are in dispute. The first issue on which Hospira did not succeed was the question of "daptomycin insufficiency". The facts, which are set out at the end of my judgment, are reasonably clear. Mr. Waugh submits that Hospira pursued a case that the skilled person would not be able to make daptomycin, given a mistaken stereochemical assignment in a...

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