Neurim Pharmaceuticals (1991) Ltd v Generics (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Newey,Lord Justice Birss,Lord Justice Arnold |
| Judgment Date | 29 March 2022 |
| Neutral Citation | [2022] EWCA Civ 359 |
| Docket Number | Case Nos: CA-2021-000571/572/573/574/575/576 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 359
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, BUSINESS AND PROPERTY
COURTS OF ENGLAND AND WALES, INTELLECTUAL PROPERTY LIST (ChD),
PATENTS COURT
Marcus Smith J
[2020] EWHC 3270 (Pat), [2021] EWHC 530 (Pat)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Newey
Lord Justice Arnold
and
Lord Justice Birss
Case Nos: CA-2021-000571/572/573/574/575/576
Andrew Lykiardopoulos QC and Katherine Moggridge (instructed by Gowling WLG (UK) LLP) for the First Appellant and (instructed by Pinsent Masons LLP) for the Second Appellant
Mark Vanhegan QC and Mitchell Beebe (instructed by Taylor Wessing LLP) for the Respondents
Hearing dates: 14–15 March 2022
Approved Judgment
This judgment was handed down remotely at 10.30 on 29 March 2022 by circulation to the parties or their representatives by email and by release to BAILII and the National Archives.
Introduction
This is an appeal by the Claimants against orders made by Marcus Smith J on 30 December 2020 and 12 March 2021 in proceedings brought by the Claimants against the Defendants (“Mylan”) for alleged infringement of European Patent (UK) No. 1 441 702 (“EP702”). EP702 was a second medical use patent which (as unconditionally proposed to be amended) claimed the use of a prolonged release formulation of melatonin in 2 mg dose form for improving the restorative quality of sleep in a patient aged 55 years or older suffering from primary insomnia characterised by non-restorative sleep. The First Claimant (“Neurim”) was the proprietor of EP702. The Second Claimant (“Flynn”) markets a product falling within the claims of EP702 under the trade mark Circadin in the United Kingdom pursuant to a licence granted by Neurim. The market for Circadin is worth around £30 million a year, and so the amount at stake in the proceedings was substantial even though EP702 was due to expire on 12 August 2022.
The appeal raises two issues. The first is whether the judge was correct to hold that Flynn was not an exclusive licensee under EP702, and thus had no standing to sue for infringement. The second is whether the judge was correct to order the Claimants to pay Mylan's costs of the proceedings even though the Claimants had succeeded on all issues except the exclusive licence point at trial before him because, at the conclusion of a hearing before the Technical Board of Appeal of the European Patent Office shortly afterwards, Neurim withdrew its appeal against an order of the Opposition Division revoking EP702. Such an order is said to have effect ab initio or ex tunc, meaning that the legal effect of the order is that the patent is deemed never to have existed.
It might be thought that, EP702 having been revoked, the first issue is now academic. It is common ground, however, that this is not the case because the issue is material to subsequent proceedings between the same parties concerning a divisional of EP702, namely European Patent (UK) No. 3 103 443 (“EP443”).
The exclusive licence issue
The statutory provisions
Section 67 of the Patents Act 1977 provides:
“Proceedings for infringement by exclusive licensee
(1) Subject to the provisions of this section, the holder of an exclusive licence under a patent shall have the same right as the proprietor of the patent to bring proceedings in respect of any infringement of the patent committed after the date of the licence; and references to the proprietor of the patent in the provisions of this Act relating to infringement shall be construed accordingly.
(2) In awarding damages or granting any other relief in any such proceedings the court or the comptroller shall take into consideration any loss suffered or likely to be suffered by the exclusive licensee as such as a result of the infringement, or, as the case may be, the profits derived from the infringement, so far as it constitutes an infringement of the rights of the exclusive licensee as such.
(3) In any proceedings taken by an exclusive licensee by virtue of this section the proprietor of the patent shall be made a party to the proceedings, but if made a defendant or defender shall not be liable for any costs or expenses unless he enters an appearance and takes part in the proceedings.”
Section 130(1) contains the following definition:
“‘ exclusive licence’ means a licence from the proprietor of or applicant for a patent conferring on the licensee, or on him and persons authorised by him, to the exclusion of all other persons (including the proprietor or applicant), any right in respect of the invention to which the patent or application relates, and ‘ exclusive licensee’ and ‘ non-exclusive licence’ shall be construed accordingly”.
Section 125(1) provides that “an invention for a patent for which an application has been made or for which a patent has been granted shall, unless the context otherwise requires, be taken to be that specified in a claim of the specification of the application or patent, as the case may be”.
Previous case law
The definition of “exclusive licence” in section 130(1) of the 1977 Act and its predecessor in section 101(1) of the Patents Act 1949 have been considered in a number of first instance decisions. For the purposes of this appeal the most pertinent exposition is that by Pumfrey J in Spring Form Inc v Toy Brokers Ltd [2002] FSR 17 at [20]:
“This definition is essential to an understanding of subsection 67(2). There can be more than one exclusive licensee under a patent, as there is more than one ‘right in respect of the invention’. In my judgment this term does not merely relate to the list of ways of infringing the patent set out in section 60, which are not described as rights, but to any subdivision of the monopoly conferred on the proprietor. To take an example proposed in argument, in the case of a pharmaceutical product, one manufacturer may have an exclusive licence in respect of manufacture and sale of dosage forms for veterinary purposes and another may have an exclusive licence in respect of manufacture and sale of material of dosage forms for administration to humans. The veterinary licensee has no interest in recovery in respect of human products although he has a cause of action in respect of them. Subsection 67(2) is directed to ensuring that the exclusive licensee obtains compensation, to use a neutral term, only where the infringement affects his slice of the monopoly conferred by the patent.”
The claims of EP702
It is sufficient for the purposes of the appeal to refer to claims 1 and 2 of EP702 as proposed to be amended. These claims were in “Swiss” form, but there were parallel claims in EPC 2000 form:
“1. Use of a prolonged release formulation comprising melatonin in unit dosage form, each unit dosage comprising 0.025 to 10 2 mg of melatonin, in the manufacture of a medicament for improving the restorative quality of sleep in a patient aged 55 years or older suffering from primary insomnia characterised by non-restorative sleep, wherein the medicament comprises also at least one pharmaceutically acceptable diluent, preservative, antioxidant, solubilizer, emulsifiers, adjuvant or carrier.
2. Use according to claim 1, wherein the medicament is further characterised by at least one of the following features:
(i) it is adapted for oral, rectal, parenteral, transbuccal, intrapulmonary (e.g., by inhalation) or transdermal administration;
(ii) it is in depot form which will release the melatonin slowly in the body, over a preselected time period.”
The Circadin marketing authorisation
A company in the same group as Neurim holds a marketing authorisation for Circadin which was originally granted by the European Medicines Agency on 29 June 2007 and, by virtue of post-Brexit arrangements, continues to cover the UK. The authorisation is Circadin 2 mg prolonged release tablets containing 80 mg lactose monohydrate as excipient indicated as monotherapy for the short-term treatment of primary insomnia characterised by poor quality of sleep in patients who are aged 55 or over.
The agreements between Neurim and Flynn
Neurim and Flynn entered into three relevant agreements: (i) a Licence and Distribution Agreement dated 26 November 2011, (ii) an Amendment and Common Interest Agreement dated 22 January 2020 and (iii) a Clarification Agreement dated 19 May 2020. The relevant terms of the agreements are either set out or summarised in the judge's judgment dated 4 December 2020 [2020] EWHC 3270 (Pat) (“the December Judgment”) at [129]–[131]. For the purposes of the appeal, it is sufficient to refer to the following provisions.
Clause 3.1 of the 26 November 2011 agreement as amended by the 22 January 2020 agreement provides:
“Neurim grants Flynn which accepts, under the Neurim Patents, the Neurim Confidential Information, the Existing Marketing Authorisation and the Trademark, an exclusive licence to Distribute the Product in the Territory for use in the Field during the Term.”
“Neurim Patents” are defined as meaning EP702 and any divisionals. “Distribute” is defined as meaning import, distribute, promote, market, sell or offer for sale. “Territory” is defined as meaning the United Kingdom and the Republic of Ireland. As amended by the 19 May 2020 agreement, “Product” is defined as follows:
“the prolonged release prescription product containing 2mg Melatonin known as Circadin including any generic equivalent or version thereof”.
Clause 17 of the 26 November 2011 agreement as amended by the 22 January 2020 agreement contains a series of provisions concerning proceedings to restrain infringement of Neurim Patents. Clause 17.1 provides that...
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