Resolution Chemicals Ltd v H. Lundbeck A-S  EWCA Civ 924
The Court of Appeal has upheld a decision of the High Court that Resolution was not precluded from bringing an action for revocation of Lundbeck's SPC and patent due to privity of interest with Arrow Generics, a company that had previously challenged the validity of the patent on which the SPC was based.
Lundbeck hold a European Patent (the "Patent"), which is now the subject of a supplementary protection certificate (the "SPC") for escitalopram, a single enantiomer of the compound citalopram (a drug used in the treatment of depression).
The UK counterpart of the Patent was extensively litigated unsuccessfully in 2005 by a number of generic pharmaceutical companies, including Arrow Generics Limited ("Arrow"). Before and at the time of the final judgment in the 2005 proceedings, Resolution was part of the same group of companies as Arrow. Resolution had previously made attempts to make a generic version of escitalopram but their involvement with escitalopram ended in 2004 just before proceedings were brought.
In 2009 Resolution became an independent company when it was hived off following the purchase of Arrow Group by Watson Pharmaceuticals Inc. Resolution launched its own proceedings in November 2012 to challenge Lundbeck's SPC and patent. Lundbeck contended that Resolution could not bring the action because it had privity of interest with Arrow, which in turn was estopped from bringing a similar action as a result of the judgment in the 2005 proceedings (i.e. Arrow could not litigate a second time what had already been decided between itself and Lundbeck).
At first instance the judge found that Resolution's case could proceed because it had had no interest in the drug at the time of the previous proceedings. Lundbeck appealed submitting that Resolution had effectively stood back and let Arrow fight the proceedings for it and it should therefore be bound by privity of interest.
The main argument: Privity of Interest
Privity of interest provides an exception to the general principle of the law of estoppel that the estoppel binds only the parties to the previous litigation. Lord Justice Floyd concluded from a review of the case law on privity of interest that:
"a court which has the task of assessing whether there is privity of interest between a new party and a party to previous proceedings needs to examine (a) the extent to which the new party had an interest in the subject matter of the previous action; (b) the extent to which the new party can be said to be, in reality, the party to the original proceedings by reason of his relationship with that party, and (c) against this background to ask whether it is just that the new party should be bound by the outcome of the previous litigation."
Applying the above principles Lord Justice Floyd concluded that just because Arrow and Resolution were part of the same group was not enough to show privity of interest. From the facts in the case, there was no evidence that suggested the 2005 proceedings were being conducted by Arrow for Resolutions benefit. Resolution had no concrete interest in the 2005 proceedings, evident from the fact that Resolution's involvement in the drug had ceased the previous year. The submission that Resolution had stood back and allowed Arrow to fight its battle failed on the facts. Lord Justice Floyd concluded that the judge was entitled to come to the conclusion that to hold Resolution bound by the outcome of the 2005 proceedings was quite unjust.
The case re-enforces the narrow scope of privity of interest and provides a useful re-statement of the test to be applied when assessing whether there is privity of interest between a new party and a party to previous proceedings, so as to prevent the new party litigating the same matter.