This consequential judgment, handed down by Mr Justice Marcus Smith on 12 March 2021, addresses the repercussions deriving from two opposing conclusions having been reached, almost concurrently, by the Patents Court and the European Patent Office.
The patent in question claimed prolonged release pharmaceutical formulations concerning the active ingredient melatonin to improve the restorative quality of sleep in a patient suffering from primary insomnia characterised by non-restorative sleep.
On 4 December 2020, following an expedited trial, the Patents Court determined Neurim Pharmaceuticals Ltd’s (“Neurim”) EP (UK) 1,441,702 B1 (the “Patent”) to be valid and infringed by Generics UK Limited and Mylan UK Healthcare Limited (“Mylan”). On 16 December 2020 Orders were made in Neurim’s favour, in line with that judgment, but were never sealed (together, the “First Order”).
Only 48 hours later, the EPO Technical Board of Appeal expressed its oral opinion, that the Patent lacked sufficiency. Neurim withdrew its appeal against the earlier invalidity decision of the Opposition Division (“OD”) and, in consequence, the Patent was revoked. Revocation takes place ab initio, meaning it’s as though the patent never was.
What then became of the judgment of the Patents court and the First Order which flowed from it, just two days before? The Court has now determined these outstanding issues in a fascinating procedural review.
To appreciate how this circumstance arose, it is necessary to examine the timeline of procedural events.
In February 2018, Mylan opposed Neurim’s patent at the EPO and, in January 2020, the OD confirmed its preliminary opinion in writing that the patent was invalid for lack of novelty.
On 14 January 2020, Neurim appealed the OD’s decision, which appeal had suspensive effect (i.e. rendering the patent valid ‘for the time being’). Exactly one month later, Neurim issued a claim in the Patents Court inviting the Court to declare the Patent to be valid and infringed. There was no dispute that the Patent would be infringed if valid.
Neurim applied for interim relief, which application was ultimately refused on 3 June 2020, that decision subsequently being upheld by the Court of Appeal. Mylan’s sales of the prolonged release melatonin product continued.
Trial took place on 29 and 30 October, and 2 and 5 November 2020. Judgment was handed down on 4 December 2020. A hearing consequential on judgment was fixed for the 16 December 2020 (from which the First Order was born) and two days later, the Patents Court validity decision was reversed, and the Patent was revoked. To avoid protracted uncertainty, the First Order was nullified by the Court on 30 December 2020 with a further Order (the “Second Order”) and consequential judgment was reserved, until 12 March 2021.
THE FACTS AND ARGUMENTS
What then was the status of the First Order, made but never sealed, and what should the Court do now?
Neurim argued that the Court did not have jurisdiction to vary the First Order and insisted that, even if it did, that jurisdiction should not be exercised. It contended that Court proceedings are totally distinct from those in the EPO and the possibility that the EPO might find the Patent to be invalid had already been contemplated and addressed by the Court in the context of the First Order’s “Sunset Provisions”. (These Sunset Provisions were drafted with foresight, depending entirely on the outcome at the EPO. However, they dealt only with the injunction element of the relief, which would fall away if the EPO found the Patent to be invalid.)
Neurim also contended that the Court should maintain its permission to appeal an aspect of its original ruling, that Flynn Pharma Limited was not an exclusive licensee under the Patent, and therefore had no standing to bring proceedings.
Finally, Neurim submitted that the First Order’s costs provisions made in its favour, be maintained.
Mr Justice Smith deliberated over the Court’s jurisdiction to re-visit the First Order, noting that, in accordance with Re Barrell Enterprises, an order can be varied at any time until the order is drawn up and perfected. Absent such jurisdiction, the judge termed the prospect of Mylan having to approach the Court of Appeal to set aside the First Order, which clearly couldn’t stand, as ‘frankly absurd’.
The Court determined that variation was indeed appropriate given the significance of the parallel jurisdictions, and the very special facts of this case. The judge rejected the notion that the EPO and Court proceedings were anything other than inter-connected. In pressing this point, he deemed it incumbent on parties to such proceedings to keep the Court appraised of ongoing matters in the EPO.
The Court disagreed with Neurim’s contention that the Sunset Provisions obviated the need to re-consider the First Order (which solely related to the continuing status of injunctive relief). The other provisions in the First Order (costs, damages, delivery up etc.) did not fall within the Sunset Provisions (hence the need to revoke them with the Second Order).
As to the status of Neurim’s right of appeal, the Court was unpersuaded that there would be any purpose in granting permission to appeal an aspect of the judgment that was directed to the Flynn Pharma’s status as a licensee under a patent that no longer exists, and has never existed.
On the issue of costs, whilst the Court has broad discretion, generally the unsuccessful party will be ordered to pay the costs of the successful party (costs follow the event). Both sides, however, claimed success!
In a pragmatic and common sense analysis, the Court determined that Mylan was the clear winner. In considering whether the normal costs order should follow such a finding, the Court placed significant weight on the failure (by both parties) to apply for an adjournment of Court proceedings in June/July 2020 when summons were received from the Technical Boards of Appeal for December 2020.
In such circumstances, each side might be deemed to have assumed the risk of contradictory and proximate decisions within the two jurisdictions. It was therefore appropriate that Neurim pay Mylan’s costs.
Parties to patent litigation should remember that they do not litigate in a vacuum. The existence of revocation proceedings before the EPO is a factor in and of itself capable of justifying a stay of national proceedings.
In this case, the Court could well understand why neither party had raised the possibility of adjournment: Neurim sought the protection afforded by a mandatory injunction against Mylan’s ongoing ‘infringing activities’; for Mylan the nature of the parallel jurisdictions allowed it two bites at the ‘revocation cherry’.
However, while understandable, both parties’ failure to raise the question of a stay had led to wasted costs that could ultimately have burdened either party.
In many respects it is the proximity of the two validity findings (deriving from the expedition of the Technical Board of Appeal proceedings) that makes this case so interesting. Contradictory decisions are not unusual, however, and the Court contemplated what the consequences might have been if the EPO Appeal had been delayed until 2022, as originally anticipated. In such circumstances, the First Order would have been in effect for a longer period, with Mylan suffering a prolonged injunction together with an order for delivery up and destruction of its product (as well as incurring a substantial costs liability). The Court suggested that, had those events played out, the First Order against Mylan might be reversed and the benefits in Neurim’s favour would be counteracted. This provides a potential ray of hope for unsuccessful parties before the national Courts, who may look to later findings at the EPO potentially to redress their misfortunes.