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High Court strikes out English health authorities' claim under the tort of unlawful means against patentee

If a patentee makes false representations during the prosecution of a patent application, and as a consequence a patent is granted which perhaps should not have been, can someone who suffers loss as a result of the granted patent seek to recover such loss from the patentee? This was the question the High Court recently considered in striking out a claim for economic loss caused by unlawful means.

If a patentee makes false representations during the prosecution of a patent application, and as a consequence a patent is granted which perhaps should not have been, can someone who suffers loss as a result of the granted patent seek to recover such loss from the patentee? This was the question the High Court recently considered in striking out a claim for economic loss caused by unlawful means.

Background

This decision, [2017] EWHC 2006 (Ch), is the latest in the Secretary for State for Health v Servier litigation concerning Servier's pharmaceutical drug perindopril – a prescription only drug which is used in the treatment of hypertension and cardiac insufficiency and which was sold in the UK under the brand name "Coversyl". Supply of Coversyl began in the UK in 1990 and was protected by a process patent for the industrial synthesis of perindopril: EP 0 308 341.

Whilst this litigation (brought originally in 2011 by the Secretary for State for Health and many English health authorities against various Servier group companies) includes two grounds related to competition law issues, this present action:

  1. related to Servier's later patent for the alpha crystalline form of the perindopril salt: EP 1 296 947;

  2. dealt only with the English health authorities' claim under the tort of causing loss by unlawful means, which was brought against Servier; and

  3. concerned Servier's application to strike out this element of the claim.

Claimants' arguments

The claimants alleged that the patent application filed by Servier at the EPO (for what would become the '947 patent) contained express and implied representations that the alpha form was novel, and implied representations that the alpha form was not obvious. They said that these representations were also repeated by Servier in opposition proceedings before the EPO, and before the English courts in an application by Servier for an interim injunction.

The claimants argued that these representations were untrue, in that the alpha form of the '947 patent was not novel and/or not obvious, in particular because:

  1. "the '341 patent led to the production of the alpha form as its inevitable result;

  2. The perindopril marketed by Servier in the UK both before and after [the priority date of the '947 patent] was in the alpha form;

  3. Consequently, the alpha form was part of the state of the art … and/or would have been obvious to a person skilled in the art."

The claimants also alleged that the servants or agents of Servier either knew or were reckless to these matters and that Servier "obtained, defended and enforced statutory patent rights in the United Kingdom in relation to the ['947 patent] by deceit: that is, by means of misrepresentations made dishonestly or recklessly to the EPO and/or to the English Courts."

This, the claimants asserted, gave rise to the tort of causing loss by unlawful means (i.e. the claimants suffered loss as a result of unlawful misrepresentations). The claimants further alleged that the result/intention of this was to deter competition in relation to the supply of perindopril into the UK market and to achieve higher prices and volumes in respect of the supply of the drug in the UK, higher than those consistent with a more competitive market.

High Court's decision

Roth J commented that since there was no doctrine of "fraud on the patent office" (unlike in the USA) it may be "challenging for the claimants to establish the express or implied representations which are the foundation of their allegation of deceit". However, for the purposes of this strike out application he assumed the allegation of deceit was made out.

He then referred to the case of OBG Ltd v Allan [2007] UKHL 21, which both sides agreed was the most up-to-date case on the law on the tort of causing loss by unlawful means. After analysing the case, he concluded that this tort (sometimes referred to as the intentional interference tort) comprises three elements:

  1. the use of unlawful means towards a third party which affects the third party's freedom to deal with the claimant;

  2. which is actionable by that third party, or would be if he suffered loss; and

  3. an intention to injure the claimant.

The claimants argued that the scope of the tort was wider (relying on Lonrho plc v Fayed [1992] 1 AC 448). They argued that the tort was still in the process of development, such that it would be wrong to grant this strike out application, before finding all the facts at trial.

Roth J accepted that some aspects of the tort "may still require refinement", such as what constitutes "unlawful", however he concluded that the only legal issue for this application was whether those means affected the third party's freedom to deal with the claimant. In this case, the third party were the English court and the EPO. As there was no question as to their "freedom to deal" with the English health authorities (or indeed anyone else), this requirement had not been met.

Roth J said the claimants' approach would be the opposite of confining the tort to a narrow ambit and went on to say:

"… a patent is a creation of statute, and the statutory regime governing patents prescribes rights and remedies in a manner that reflects the legislative assessment of the policy issues involved. If those who suffered economic loss by reason of a patent being obtained by dishonest or reckless misrepresentations as to novelty or obviousness could use the unlawful means tort at common law to claim damages, that would circumvent that legislative balance"

(i.e. a judicial way of expressing a view that all hell could break loose in patent law and practice).

Roth J therefore concluded that any remedy should be confined to the field of competition law. He struck out the claim under the tort of unlawful means, leaving only the competition law issues in dispute between the parties.

Comment

This decision, which is consistent with the approach taken in OBG v Allan, seems a sensible one. It confirms that the scope of economic torts relating to competition should be limited, leaving their general regulation in the hands of competition law.

The balance between the rights of a patent owner and its potential competitors and the general public is a delicate one. As Roth J said in this case, if the claimants' approach had been adopted:

"… then given the broad interpretation of the element of intention adopted in OBG v Allen, the right to claim against Servier would cover not only all the various UK Health Authorities but also all potential generic competitors who suffered loss through their inability to supply a generic version of perindopril by reason of the 947 Patent; any private medical expenses insurer who paid higher prices for reimbursement of the cost of perindopril; and, subject to any issues of jurisdiction, all foreign health authorities and insurers in each of the various other states in Europe that were designated under the 947 Patent."

We wait to see whether the Secretary of State for Health has more success under either or both of its claims based on a breach of competition laws.

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