Teva Pharma — Produtos Farmaceuticos Lda and Another v Astrazeneca-Produtos Farmaceuticos Lad and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Flaux,Lord Justice Sales,Lord Justice Rupert Jackson |
| Judgment Date | 14 December 2017 |
| Neutral Citation | [2017] EWCA Civ 2135 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2017/1870 (A) (B) |
| Date | 14 December 2017 |
[2017] EWCA Civ 2135
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION, COMMERCIAL COURT
MR JUSTICE LEGGATT
CL-2017-000291
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Rupert Jackson
Lord Justice Sales
and
Lord Justice Flaux
Case No: A3/2017/1870 (A) (B)
Mr Alan Maclean QC & Mr Daniel Alexander QC (instructed by Simmons & Simmons LLP) for the Appellant
Mr Ian Mill QC & Mr Andrew Scott QC (instructed by Arnold & Porter Kaye Scholer LLP) for the Respondent
Hearing dates: Thursday 30 November 2017
Judgment Approved
Introduction
The appellants (to whom I will refer as "Teva") appeal, with the permission of Leggatt J, his Order dated 30 June 2017 whereby he dismissed their application for summary judgment and ordered them to pay the costs of the respondents (to whom I will refer as "AstraZeneca"). The purpose of the hearing before the judge had been (pursuant to the earlier Order of Blair J dated 9 June 2017) to determine whether Teva were entitled to a declaration that, pursuant to the terms of a Settlement Agreement dated 25 February 2013, Teva and their affiliates were entitled to use, import, store, offer for sale, sell, market and distribute the Teva Product as defined in Portugal from 3 July 2017 onwards. The hearing before the judge (and the appeal before this Court) concerned a short point of construction of that Settlement Agreement.
Relevant factual background leading up to the Settlement Agreement
The appellants are Portuguese pharmaceutical companies in the Teva Group. The first respondent is a Portuguese pharmaceutical company in the AstraZeneca Group. The second respondent is a Japanese company and registered proprietor of the patent EP 0521471 ("the Patent") over rosuvastatin ("the patented compound"), a chemical compound that is the active ingredient in certain statins drugs. The first respondent held an exclusive sub-licence to exploit the patent in Portugal and was the marketing authorisation holder for drugs containing the patented compound as an active ingredient, sold on the Portuguese market.
European patents granted under the European Patent Convention have a life of 20 years from filing of the application. As the application for this patent was made on 30 June 1992, the Patent expired on 30 June 2012. Since the pre-clinical testing and clinical trials of pharmaceutical products usually continue long after an application for a patent has been made, it can take a while before the product is authorised to enter the market, by which time some of the twenty year period will have expired. To address this problem, Supplementary Protection Certificates ("SPCs") were created by (most recently) Regulation (EC) No 469/2009 of the European Parliament and of the Council.
AstraZeneca's SPC in this case was granted on 25 November 2003 and lasted until 3 July 2017. The expiry date was subsequently corrected to 30 June 2017 by an ex officio decision of the Portuguese Patent Office on 1 July 2013, but at the time that the Settlement Agreement was concluded, the expiry date of the SPC was 3 July 2017.
In Europe, generic pharmaceutical manufacturers such as Teva are entitled to obtain marketing authorisations prior to the expiry of a patent or SPC and it will be for the patentee to enforce its intellectual property rights before the national courts or, in the case of Portugal, before mandatory arbitration tribunals.
In January 2012, Teva had obtained marketing authorisations from the relevant Portuguese authority, Infarmed, for their generic rosuvastatin product. The response of AstraZeneca was to commence proceedings in the Portuguese Administrative Court against Infarmed, in which Teva were interested parties, and mandatory arbitration proceedings against Teva in which the tribunal was established on 31 July 2012. In those arbitration proceedings, Teva served a lengthy Defence on 17 November 2012, in which, inter alia, they challenged the validity of the Patent. On 2 December 2012, AstraZeneca served a detailed Reply, which, inter alia, contended that the arbitrators were not a forum before which the validity of the Patent could be challenged.
By the end of January 2013, AstraZeneca were concerned that a launch by Teva of their generic product was imminent, so they sought a preliminary injunction in Portugal to protect their rights under the SPC. In fact, Teva launched their product in Portugal on 1 February 2013. Following correspondence between the parties, the Settlement Agreement was entered into to settle disputes relating to the sale of the generic product.
The terms of the Settlement Agreement
The Preamble to the Settlement Agreement identified the parties to the Agreement and stated at (v) that AstraZeneca had commenced "the Proceedings" defined in clause 1.1 as encompassing the proceedings before the Portuguese Administrative Court, the arbitration proceedings and various injunction proceedings. Recitals (vi) and (vii) in the Preamble stated:
"(vi) Given the existence of the Patent the Parties wish to avoid the costs, risks, expenses and time which would be associated with any disputes relating to the said Patent, including the Proceedings, and wish to enter into a negotiated and consensual agreement terminating and/or preventing such disputes.
(vii) Accordingly, the Parties have agreed to resolve/prevent such disputes between them on and subject to the terms set out below."
Clause 1 contained a number of Definitions. So far as relevant, "Patent" was defined as "EP 0521471 and Portuguese Supplementary Protection Certificate 156". "Product" was defined as AstraZeneca's product containing the patented compound. "Generic Product" was defined as any pharmaceutical product that was a generic version of the Product, incorporating the patented compound in any dosage form; and "Teva Product" meant any Generic Product marketed by Teva and/or their affiliates.
Clause 2 is headed "Settlement and Covenant not to Sue". Clauses 2.1 and 2.2 provided as follows:
"2.1 Teva undertakes to:
(a) Withdraw Teva Product from the Portuguese market, namely from the wholesalers immediately after the Effective Date;
(b) As of 21 st February 2013 cease any offer or sales of Teva Product to the distribution channels and pharmacies;
(c) As of the Effective Date immediately send a letter to wholesalers, with a copy to the Patentee, to communicate in writing the undertakings mentioned in a) and b);
(d) Pay a compensation to the Patentee on the amount of € 150,000 (one hundred and fifty thousand euros) in case of breach of clause 2.1 a) and b).
(e) Within 3 (three) days of the Effective Date to communicate in writing to Infarmed the undertakings mentioned in this clause, with a copy to the Patentee;
(f) Within 3 (three) days of the Effective Date to request Infarmed to change the status of the Generic Product from "marketed" to "out of stock" until the earliest date set out in clause 2.7;
(g) Within 5 (five) days of the Effective Date to publicly announce that it will not challenge the validity of EP 521471 and SPC 156 Portugal and sending a written evidence to the Patentee of that public announcement;
(h) For the breach of any Teva's above undertakings e) to g) to pay Shionogi and AstraZeneca a daily compensation for damages on the amount of € 99,700.00 (ninety nine thousand seven hundred euros).
2.2 Teva shall not be obliged to recall any Teva Product which is in pharmacies and/or with patients in Portugal."
Clauses 2.3 to 2.5 then provided for AstraZeneca to withdraw and discontinue the various sets of court and arbitration proceedings they had commenced in Portugal within ten days of Teva performing their undertakings in clause 2.1.
Clause 2.6 is a general release in these terms:
"2.6. Subject to clause 2.1 (d) and (h), as of the Effective Date, Patentee irrevocably releases and forever discharges Teva and its customers in relation to any claims, rights, demands or damages arising from the use, importation, storage, offer for sale, sale, marketing, distribution of the Teva Product in or for Portugal other than in breach of this Agreement."
Finally, clause 2.7 contains the undertaking by Teva not to sell etc. their generic product before the earlier of certain dates, so far as currently relevant, before 3 July 2017:
"2.7. As of the Effective Date, and subject to clause 2.1 above, Teva and/or any of its affiliates undertakes that it will not sell the Teva Product in Portugal prior to the earlier of:
(a) 3 July 2017;
(b) the date on which the Patents is invalidated by a final (res judicata) court decision;
(c) the date on which the Patentee launches a Generic Product or licenses a third party to launch a Generic Product in Portugal;
(d) ten (10) days after Teva notifies the Patentee that a third party launches a Generic Product and if the Patentee has not initiated preliminary injunction proceedings;
(e) ninety (90) days after a third party launches a Generic Product if the Patentee has not obtained an injunction prohibiting further sales of such Generic Product."
The current dispute
At the time that the Settlement Agreement was entered into, the extant intellectual property right of AstraZeneca was SPC 156. However, European patent law recognises the possibility of a six month extension to SPCs by way of a Paediatric Extension. These were designed to address the concern that pharmaceutical products used to treat children were not appropriately authorised. They provide for an extension of six months to the term of an SPC, provided that four conditions are met:
a) A Paediatric Investigation Plan ("PIP") is drawn up and approved by the European Medicines Agency;
b) The clinical...
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