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Clear the way: strike out of patent infringement claim rejected

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United Kingdom

Mr Justice Birss has recently handed down judgment in Teva UK Limited v Chiesi Farmaceutici SpA [2020] EWHC 1311 (Pat), rejecting an application to strike out a counterclaim of infringement.  Due to the lockdown currently in place in the UK as a result of Covid-19, the hearing took place remotely via Skype and the judgment was delivered remotely by email circulation to the parties' representatives.
 

Background

Pharmaceutical companies will often seek to "clear the way" to market when launching a new product.  Specifically, a generics manufacturer may be planning to enter the market for a medicinal product but find themselves blocked by the remaining term of an existing patent.  The generics manufacturer may elect to enter the market and risk being sued by the patent holder for infringement.  Alternatively, it may issue proceedings to invalidate the patent first.  The generics manufacturer may also be blocked by the need to obtain market authorisation, a regulatory requirement for pharmaceuticals.  This obstacle is not something the generics manufacturer can ignore.

In these proceedings, Teva sought to revoke three patents belonging to Chiesi.  The claims related to a combination of beclomethasone and formoterol in an inhaler.  Two of the patents related to rescue treatment for acute episodes of asthma attacks.  The third patent related to the combination with certain excipients for the prevention or treatment of broncho-pulmonary disease.  Chiesi counterclaimed for the threatened infringement of the patents by Teva on a quia timet basis and sought detailed disclosure as part of the proceedings.

Teva applied to strike out the infringement claim on the basis that it had no real prospects of success.  Teva contended that there was no evidence that it threatened or intended to carry out an infringing act.  Specifically, there was no evidence pleaded in Chiesi's counterclaim that Teva had sought or obtained market authorisation for a product and, therefore, Chiesi had failed to evidence any intention to infringe in the future.  Teva also alleged the counterclaim was an abuse of process, designed to seek disclosure of its launch plans.  In support of its strike out application, Teva offered to undertake to notify Chiesi 14 days prior to launching any product in the future, so as to allow time for Chiesi to secure an interim injunction if required.

Teva also raised a competition law argument, asserting that Chiesi had sought certain disclosure from Teva, and by sharing commercial information with a competitor, this amounted to a concerted practice under the Competition Act, which mirrors Article 101(1) of the Treaty of the Foundation of the European Union ("TFEU").

The Judgment

Birss J noted that, as a strike out application, it was not necessary to prove whether Teva intended to infringe the patents, but that, on the material pleaded, there was a real prospect of successfully establishing threatened infringement at trial. 

The starting point was the simple inference that, in bringing revocation proceedings, Teva intended to infringe by launching a rival product before the expiry of the patent.  There is no authority to prevent a quia timet infringement claim without pleading in relation to market authorisation.  All Chiesi was required to show was that there is a sufficiently strong probability that an injunction will be required to prevent harm after the trial.  There was also an inference that Teva intends to launch a generic product through its failure to deny as much in pre-action correspondence and its offer of an undertaking to provide 14 days' notice before any launch.  Whether Teva genuinely does have an intention to infringe is a question for trial.  Chiesi had done enough to establish a real probability of success at trial.

In terms of abuse of process, Teva contended that Chiesi had a collateral intention of securing disclosure of Teva's launch plan by bringing the infringement claim.  Birss J found the abuse of process argument hopeless.  The institution of proceedings with an ulterior motive is not, of itself, enough to be an abuse: the party must be using the court's processes to achieve something not available in the course of properly conducted proceedings.  Similarly, Chiesi did not start these proceedings.  The infringement claim was a counterclaim.

Regarding competition law, Birss held that the parties are potential competitors. As such, if the litigation was a sham, designed to facilitate anti-competitive information exchange, then that could amount to collusion, but in this case there was no suggestion that the litigation was a sham.  Birss noted that the patent system is inherently pro-competitive.  The disclosure of information as part of the proceedings is part and parcel of litigation and there is absolutely nothing to suggest any collusion.  The disclosure of the information was necessary for the pro-competitive exercise of resolving the validity and infringement of a patent.

Comment

The case is a good example of the difficulties facing a party seeking to strike out an opponent's pleading in patent proceedings.  Ordinarily, issues of infringement and validity require disclosure, witness evidence and expert evidence to be utilised in determining the dispute at trial.  The respondent to a strike out application must show a reasonable prospect of success at trial.  That is a relatively low threshold.  The inference that a generics manufacturer intends to infringe is strong where it seeks to revoke the patent.  In this case, Teva's failure to expressly deny an intention to infringe only strengthened that inference. 

The case also underlines the court's preference to deal with issues of validity and infringement in one single set of proceedings, so as to avoid any inconsistent interpretation of the claims as well as procedural economy.  This is to be contrasted with the approach adopted in other jurisdictions, such as Germany, which operates a bifurcation system to determine validity and infringement separately.

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Areas of Expertise

Intellectual Property