The Secretary of State for Health v Servier Laboratories Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Terence Etherton MR,Lord Justice Longmore,Lord Justice McCombe |
| Judgment Date | 12 July 2019 |
| Neutral Citation | [2019] EWCA Civ 1160 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2017/3331 |
| Date | 12 July 2019 |
[2019] EWCA Civ 1160
THE MASTER OF THE ROLLS
Lord Justice Longmore
and
Lord Justice McCombe
Case No: A3/2017/3331
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Roth J
Royal Courts of Justice
Strand, London, WC2A 2LL
Jonathan Crow QC and David Drake (instructed by Peters and Peters Solicitors LLP) for the Appellants
Kelyn Bacon QC and Daniel Piccinin (instructed by Sidley Austin LLP) for the Respondents
Hearing dates: 11 & 12 June 2019
Approved Judgment
Sir Terence Etherton MR, Lord Justice Longmore and
Introduction
This is an appeal against paragraph 1 of the order dated 19 July 2017 of Roth J, by which he struck out the claim of the appellant, the Secretary of State for Health and the NHS Business Services Authority (together “the NHS”), that the third respondent is liable for interfering with the NHS's economic interests by unlawful means. For convenience, we make no distinction in this judgment between the third respondent and the other respondents (together “Servier”).
The factual essence of the claim is that Servier, by practising deceit on the European Patent Office (“EPO”) and the English courts, succeeded in obtaining a patent for a pharmaceutical drug and, by an interlocutory injunction, succeeded in delaying the introduction into the UK of a cheaper generic version of the drug, causing the NHS to pay higher prices than would otherwise have been the case. The claim, in law, is for the tort of causing loss by unlawful means (“the unlawful means tort”).
The correctness of the decision of Roth J turns on the question of law whether an unlawful means tort claim can succeed if the wrongful act of the defendant against a third party public authority does not interfere with the liberty of the public authority to deal with the claimant. Although hotly disputed by Servier, and yet to be determined at the trial, the allegation of deceit is to be assumed to be true for the purposes of determining the question of law on the strike out application.
Factual background
Perindopril is a prescription-only ACE (Angiotensin-Converting Enzyme) inhibitor used in the treatment of hypertension and cardiac insufficiency. Since 1990 it has been sold by Servier in the UK under the brand name “Coversyl”.
Following an application in 2001, Servier was granted a patent by the EPO in 2004 for the alpha crystalline form of the perindopril salt. The patent was then opposed by ten opponents in October-November 2006. The Opposition Division of the EPO decided to maintain the patent for reasons given in a decision of September 2006.
In August 2006 Servier obtained an interim injunction against Apotex, a supplier of generic perindopril, restraining it from selling the generic version in the UK.
In July 2007 the UK designation of the patent was held to be invalid by Pumfrey J since it lacked novelty, or alternatively was obvious over another existing patent ( [2007] EWHC 1538 (Pat)). That decision was upheld in the Court of Appeal in May 2008 ( [2008] EWCA Civ 445). In 2009 the EPO Technical Board of Appeal revoked the European patent.
The proceedings
In 2011 the NHS commenced proceedings against Servier for damages and interest in excess of £220 million for breaches of competition law and for the unlawful means tort. The unlawful means tort claim is based on the allegation that Servier obtained the patent from the EPO and defended the patent in both the EPO and the English courts on the basis of representations about the novelty of the alpha salt of perindopril, which Servier knew to be false or were made by Servier with reckless indifference to their truth.
The NHS alleges that, because of the wrongful actions of Servier, manufacturers of generic medicines did not enter the market as early as they would otherwise have chosen to do, which would have driven down the price of perindopril, and so the NHS paid too much for its supplies of Servier's product.
Servier applied to have the unlawful interference claim struck out because, even assuming that the NHS's factual allegations are true, there was no interference with either the EPO's or the English court's freedom to deal with the NHS, and so an essential element of the tort was missing.
OBG
Much of the argument before Roth J and on this appeal has turned on the application of OBG Ltd v Allan [2007] UKHL 721, [2008] 1 AC 1, to the alleged facts in the present case. In OBG the House of Lords, among other things, considered in considerable detail the history and constituent elements of the unlawful means tort.
Three appeals were heard together by the House of Lords, only one of which, Douglas v Hello! Ltd (No. 3) involved the unlawful means tort. In that case the claimants were Michael Douglas, Catherine Zeta-Jones and OK! magazine (“OK!”), to which Mr Douglas and Ms Zeta-Jones had granted exclusive rights to publish approved photographs of their wedding. The defendant magazine, Hello! Ltd (“Hello!”), published photographs taken by a surreptitious, unapproved freelance photographer. OK! brought claims against Hello! for beach of confidence and for the unlawful means tort.
Lindsay J held Hello! liable for breach of a duty of confidence owed to OK!. He held that photographs taken at the wedding had the necessary quality of confidentiality and that their publication by Hello! had caused loss to OK!. As to whether the images were of a kind to import an obligation of confidence, everyone attending the wedding had been asked not to take or share photographs, and everyone knew that the reason for that request was that OK! had paid for the exclusive rights to publish the photographs. An obligation to keep the information confidential was therefore owed both to OK! and to the Douglases.
Lindsay J dismissed the unlawful means claim on the basis that Hello! did not have the necessary intention to cause loss to OK!. He accepted Hello's evidence that they had merely intended to publish an article in their magazine that was of interest to their readers, without intending thereby to damage OK!'s business.
The Court of Appeal reversed Lindsay J's decision on breach of confidence on the basis that the obligation attached only to the photographs approved by the Douglases, not to any other photographs that might be taken at the wedding. The Court of Appeal agreed with Lindsay J on the unlawful means tort claim.
The House of Lords preferred the reasoning of Lindsay J on confidentiality and rejected the Court of Appeal's analysis as uncommercial. On that basis OK! was entitled to sue Hello! directly for its breach of the duty of confidence owed to OK!.
Accordingly, in the event, it was not necessary for the House of Lords to reach a dispositive decision on the unlawful means tort, which it was necessary to deploy as an alternative claim if Hello!'s duty of confidence was owed only to the Douglases, the unlawful means being the breach of that duty of confidentiality to the Douglases, thereby causing loss to OK!. All the members of the appellate committee made it clear, however, that the appeal on that alternative way of putting OK!'s case would have failed. All of them, other than Lord Nicholls, held that it would have failed because breach of that duty of confidentiality did not interfere with the liberty of the Douglases to deal with OK!.
Although, as we have said, the House of Lords considered the unlawful means tort and its history in considerable detail, it is sufficient at this stage to mention only the following passages in the leading speech of Lord Hoffmann in order to provide a context for the judgment of Roth J and this appeal. Other passages will be considered in our substantive Discussion section below in the context of the arguments advanced before us by each side.
“47. The essence of the tort therefore appears to be (a) a wrongful interference with the actions of a third party in which the claimant has an economic interest and (b) an intention thereby to cause loss to the claimant. …”
“49. In my opinion, and subject to one qualification, acts against a third party count as unlawful means only if they are actionable by that third party. The qualification is that they will also be unlawful means if the only reason why they are not actionable is because the third party has suffered no loss. …”
“50. Lonrho plc v Fayed [1990] 2 QB 479 was arguably within the same principle as the National Phonograph Co case. The plaintiff said that the defendant had intentionally caused it loss by making fraudulent statements to the directors of the company which owned Harrods, and to the Secretary of State for Trade and Industry, which induced the directors to accept his bid for Harrods and the Secretary of State not to refer the bid to the Monopolies Commission. The defendant was thereby able to gain control of Harrods to the detriment of the plaintiff, who wanted to buy it instead. In the Court of Appeal, Dillon LJ, at p 489, referred to the National Phonograph case as authority for rejecting an argument that the means used to cause loss to the plaintiff could not be unlawful because neither the directors nor the Secretary of State had suffered any loss. That seems to me correct. The allegations were of fraudulent representations made to third parties, which would have been actionable by them if they had suffered loss, but which were intended to induce the third parties to act in a way which caused loss to the plaintiff. The Court of Appeal therefore refused to strike out the claim as unarguable and their decision was...
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