English court will exercise jurisdiction over foreign designations of European Patents where validity is not challenged
Locations
Actavis Group and Eli Lilly & Company [2013] EWCA Civ 517
The Court of Appeal has recently dismissed a jurisdictional challenge brought by Eli Lilly in respect of the non-UK designations of a European Patent. In reaching their decision, the Court of Appeal has confirmed that the English courts have jurisdiction to hear claims for non-infringement declaratory relief in respect of foreign designations of European patents, provided there is no challenge to the validity of the patent and there is a legitimate basis for the English court to exercise jurisdiction.
Background
Eli Lilly ("Lilly") developed the chemotherapy drug Alimta (INN-pemetrexed). Alimta is protected by Supplementary Protection Certificates (the "SPCs") in various EU member states which are due to expire in December 2015. Lilly also owns a European Patent (the "Patent") which is directed to the use of pemetrexed in the form of its disodium salt. The Patent, which is not due to expire until 2021, has national designations in the UK, France, Germany, Italy and Spain.
Actavis Group hf ("Actavis Group"), which is the parent operating company of numerous subsidiaries incorporated in various countries, including the UK, France, Germany, Italy, Spain and Iceland, wished to market a product to compete with Alimta. Whilst Actavis Group accepted that it could not do so until the SPCs expired in December 2015, it asserted that it could do so after this date (as their competing product contained pemetrexed dipotassium and so could not infringe the Patent). Actavis Group therefore sought declarations of non-infringement in respect of each of the Patent's designations. The validity of the Patent was not challenged.
Solicitors for Actavis Group wrote to Lilly's representatives stating that they "represented Actavis Group PTC ehf and its relevant national subsidiaries" and indicating their client's intention to launch a competing product upon the expiry of the SPCs. Actavis Group PTC ehf ("Actavis PTC") is an Icelandic subsidiary of Actavis Group which, whilst it has its own subsidiaries, none of these were trading in any of the Patent's designated states. Pre-action correspondence followed between the parties' solicitors and, upon request from Actavis Group's solicitors, Lilly's solicitors confirmed that they were instructed to accept service on behalf of their client.
Declaratory action
Proceedings seeking declarations of non-infringement of the Patent through dealing in the competing product were issued by Actavis Group on 27 July 2012.
Lilly challenged the jurisdiction of the English Court in respect of the foreign designations. Lilly's position was that: (a) there had been no proper service of proceedings upon it as it had agreed to accept service of proceedings brought by Actavis PTC (the Icelandic subsidiary) and its national subsidiaries, but not Actavis Group; and (b) the English Court did not have jurisdiction to give declarations in respect of the foreign designations and Lilly's solicitors therefore only ever agreed to accept service of proceedings in respect of the UK designation of the Patent. Lilly, whose application was dismissed at first instance, was given permission to appeal.
(a) Did Lilly agree to accept service of proceedings brought by Actavis Group?
The Court of Appeal confirmed that the correct approach was to ask what a reasonable person, who had all the background knowledge that would reasonably have been available to the parties, would have understood the parties to have meant by the language used in their pre-action correspondence. The Court held that as Lilly and Actavis Group were both large and successful international pharmaceutical businesses that were considering potential litigation which would impact upon their businesses in a number of jurisdictions, it was entirely reasonable for them to have an understanding of each other's corporate structures. The reasonable person would therefore have realised that Actavis Group and/or their solicitors had made a mistake in calling the group company Actavis PTC (as it would have been known that this company had no trading subsidiaries in the designated territories) and should have in fact made reference to Actavis Group (which did have the relevant trading subsidiaries).
(b) Did Lilly agree to accept service of proceedings in respect of the foreign designations?
Lilly argued that the reasonable person would have viewed Actavis Group's pre-action correspondence as a threat to launch proceedings in the English courts (if the requested declarations of non-infringement were not given) solely in respect of the UK designation.
However, the Court of Appeal held that Lilly's arguments were based on an artificial reading of the pre-action correspondence. Actavis' letters made it clear that the declarations sought were in relation to each of the Patent's designated territories, not just the UK designation. The letters also made clear that, if the declarations of non-infringement were not received, Actavis Group intended to bring proceedings in the English court in respect of both the UK and foreign designations. The Court also confirmed that this was not a surprising stance to take as the English court has jurisdiction to determine claims of infringement of foreign IP rights provided validity of those rights has not also been challenged and there is a legitimate basis for the English court to exercise jurisdiction. Actavis Group were therefore entitled to have all their claims, i.e. the UK and other national designations, determined by the English court.
Comment
This case confirms that, in cases where validity is not challenged, the English court is willing to exercise jurisdiction over foreign designations of European Patents. If, after consideration of the laws of each respective foreign designated state the English court determines the Patent is not infringed, it is willing to grant declarations of non-infringement covering those states. This decision confirms that parties wishing to obtain declarations of non-infringement in a number of national designations of a European Patent can do so more efficiently by consolidating all claims for declaratory relief in one action before the UK Courts. This case also serves as a cautionary reminder to ensure that when accepting service, it is made clear in respect of (a) which corporate entities and (b) which IP rights.
Tommy McKenna, Solicitor, IP Enforcement and Litigation Group
Beatriz San Martin, Partner, IP Enforcement and Litigation Group