Illumina, Inc v Premiatha Health PLC [2016] EWHC 1726 (Pat)
In July 2015 the Court of Justice of the European Union (CJEU) handed down its judgment in Huawei Technologies Co. Ltd v ZTE Corp., ZTE Deutschland GmbH (Case C-170/13). In that Judgment the CJEU ruled that in proceedings for an infringement of a patent asserted by the patentee to be a standard essential patent (SEP), it could (but not necessarily would) be an abuse of a dominant position for the patentee to seek, among other things, an injunction to prevent further infringements of the patent. The recently published decision in Illumina, Inc v Premiatha Health PLC [2016] EWHC 1726 (Pat) illustrates the impact this might have on the conduct of patent litigation proceedings in the English jurisdiction.
In the Illumina v Premiatha case in two separate, but consolidated, actions Illumina asserted that Premiatha had infringed three of Illumina's patents. The case management conference (CMC) was scheduled to be heard on 18 April 2016. Just two weeks before the CMC, Premiatha indicated that it intended to pursue a competition defence along the lines established in Huawei v ZTE. This lead to a flurry of activity prior to the CMC including, just a few days before the CMC, a formal application by Premiatha to amend its defence to raise the competition issues accompanied by draft pleadings. At the CMC Illumina therefore had not had the time to consider in full the proposed new competition defences. Premiatha argued that the Court should allow the amendments, but leave it open for Illumina then to seek summary Judgment or a strike-out if of the view that these new additional defences could not succeed. The Judge (Birss J) was not enamoured with such an approach, and he also recognised that Illumina could not be expected to address a wholly new case at such very short notice. The only option, therefore, was to defer to a later hearing the question of whether Premiatha would be permitted to make this substantial amendment to its case.
Some months passed before that later hearing. In the intervening period Illumina filed a notice of objection to Premiatha's proposed amendments, and there was a flurry of witness statements from both sides as to the arguability of the various competition defences Premiatha sought to introduce.
At the reconvened hearing the Judge (Roth J) recognised that not only were three patents in dispute, but there also were multiple claims in each patent in dispute. Therefore, unless Premiatha was wholly successful in establishing that there was no infringement of a valid claim, the eventual end result of the patent infringement claim could take on many different forms. As the competition law defences depend in large part on the scope of the patents, this therefore means that those defences could take many different forms. Accordingly the Judge concluded that as the pleadings on the competition law issues could be more sophisticated and have tighter focus once the outcome of the patent infringement and validity part of the case was known, it made sense to defer until after the trial on those issues deciding whether the competition defences were realistic defences and should be allowed into the case.
This seems an eminently sensible solution, particularly as the scope of the patents inter-relates with the definition of the market against which market share and dominance must be assessed. It also replicates the usual approach to damages in English proceedings, with quantification held over for a hearing after the infringement and validity decision; this avoids wasting time and costs addressing that issue if there is no infringement of a valid claim, or to bring focus to the quantification process once it is known which claims are valid and infringed. The downside is that it adds an extra stage to the proceedings, and consequently delays finality for both parties, which downside is compounded if there is any appeal.
The Judge also had some interesting comments to make when it came to assessing the substantial costs of this hearing. Illumina argued that Premiatha had pressed for a ruling that its competition law defences were admissible and should be admitted, and as Premiatha had failed in this objective Premiatha should pay the costs. On the other hand, Premiatha argued that it was at Illumina's insistence that Premiatha had prepared and served draft pleadings addressing its competition law defences, and it was at Illumina's instance that the matter was not dealt with at the CMC, and therefore Illumina should be liable for all the intervening costs. The Judge concluded that save in one respect the question of costs could not fairly be addressed until the outcome of the trial when the whole issue surrounding the competition law defences could be resolved, and therefore the question of costs should be held over until then. The Judge did, however, criticise the parties for failing to give consideration to a pragmatic and sensible way forward. That criticism was directed at both parties, but the Judge felt that Premiatha was the more culpable: Premiatha were the party bringing the application, and therefore the burden was on Premiatha to be offering such solutions. The Judge therefore ordered that in any event Premiatha could not recover their costs of the hearing.
Following Huawei v ZTE it is to be expected that more patent infringement claims will have competition law based defences. The defence might arise whenever it could be argued that patentee is subject to a FRAND (fair, reasonable and non-discriminatory) obligation – because the patents in question are SEPs (as was the case in Huawei), or because the patents confer a position of market dominance (as Premiatha seeks to argue in this case). It seems likely, but not inevitable, that oftentimes the competition law defences will be separated out into a separate later hearing which was also the approach adopted by the Court in Unwired Planet v Huawei and others. One can see the sanity of this: why waste time and costs arguing about competition law matters until (a) it is known that the patent is valid and infringed, and (b) the scope of the patent claims, and therefore market and market share, is known. On the other hand this will add a significant delay to the final resolution of the claims: realistically perhaps a year or so, and even more if there is an appeal. This case also is interesting because the technology at issue is medical diagnostics, and it shows FRAND based competition law defences breaking out from the preserve of telecoms cases, and continues the trend of competition law playing an ever greater role in patent infringement proceedings.