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European IP Bulletin, Issue 24, July - Patents
Patents
5. Patents and Design Rights in Ultraframe v Eurocell
Ultraframe v Eurocell [2005] EWCA (Civ) 761 was an appeal from the judgment of Mr Justice Lewison, (a summary of which appeared in EIPB Issue 15). Both Ultraframe and Eurocell manufactured and sold kits of parts for making low pitch conservatories lean to roof assemblies. Those assemblies were made from long and hollow UPVC panels joined and reinforced together. Ultraframe contended that Eurocell’s “Pinnacle 500” infringes its own patent for “Ultralite 500” and its unregistered design right in the complete assembly of the panels and in some components for their product. Eurocell counterclaimed for revocation of the patent and denied any infringement of the design rights.
Mr Justice Lewison held that though the patent was valid, it was not infringed. He further held that there was no infringement of design rights in the components but there was an infringement by “Pinnacle 500” of the assembly as a whole. He also held that it was possible for the Defendant to give an undertaking under s.239 of Copyright Designs and Patents Act 1988 to take a licence under s. 237, even though at the time of the undertaking, the rights in the designs have expired. Being aggrieved, both the parties appealed his decision.
The Court of Appeal had to construe the meaning of the last words of Claim-1 of the patent. Ultraframe contended that the objective of the patent was to provide an improved building structure. In the prior art, the panels are linked together before the stiffening member was held. The claimed invention offered dual advantage over these earlier assemblies: it holds the parts together and provided rigidity. Therefore, the word “interengage” as used in the claim should have a broader meaning that the whole structure is “held together” by the stiffening member. Eurocell on the other hand contended that the claim was much narrower: usage of the term "interengage" required more than that the two panels abutted each other. Therefore, it must mean that there has to be some sort of interlocking or partial restraint of movement between the panels.
Jacob and Mummery LJJ (Neuberger LJ dissenting) agreed with Ultraframe on the issue of infringement of the patent. The key principle in determining the extent of patent monopoly was simply one of the construction of the claim read in the context of the description and the drawings, as clarified by the House of Lords in Kirin Amgen v Hoechst Marion Rousel. The key question was: what would a person skilled in the art have understood the patentee using the language of the claim to mean? In this case, the skilled man would view the panels as described as actually being used. Once viewed from this perspective, the skilled man would read the word “interengage” within the context of the technical teaching of the patent as to mean some sort of linking only – a linking less than a proper “interconnection”. A narrower construction would only amount to a pointless limitation on the patentee’s claim.
On the question of infringement of the unregistered design rights in the panels and the assembly, the Court unanimously agreed with Lewison J that there was an infringement. Accordingly, Eurocell’s appeal was dismissed, while that of Ultraframe was allowed. On the issue of interpretation of s239, they concurred with Lewison J that once Eurocell was found to have infringed the unregistered design rights of Ultraframe, he was entitled to accept the undertaking offered by Eurocell. It was immaterial whether the unregistered design rights were not subsisting in favour of Ultraframe at the time when the undertaking was offered.
6. Glasgow University in Legal Battle Over Spin-out Technology Patents
Glasgow University is currently engaged in a three way legal battle over the ownership of the intellectual property rights of aepEX, a sleep-monitoring device.
The Department of Research and Enterprise at the University set up a company called Audiomedix to develop aepEX, a device used to monitor sleep in patients under anaesthesia. The company went into liquidation. Prior to that, one of the non-executive directors, John White acquired the patents through another company, Medical Device Management (MDM), of which he was a commercial director. MDM had previously signed a contract with Audiomedix to manufacture and market aepEX. The petition for Audiomedix to placed under liquidation was filed by Mr. White after the rights had been passed to MDM.
The Glasgow University claims that it still owns the rights to aepEX as they only licensed certain rights to Audiomedix. Under that licence neither Audiomedix nor the liquidator were permitted to assign or sell the rights, as they were still the property of the University. MDM bought the rights from Audiomedix prior to its collapse. The question to be answered now is who owns what rights to aepEX.
Audiomedix was a spin off company of the Glasgow University set up to develop the sleep monitor to be used in hospital theatres. Under s 30 of the Patents Act 1977, patents, like any other form of movable property, can be licensed or assigned to third parties. In this case, the ownership of the patents is in dispute because it is not clear whether Audiomedix retained title when it transferred those rights to MDM.
The above dispute may well be resolved amicably. However, if not, it will doubtless remind us all about the tech transfer issues arising when a University creates a company to develop its patented products. Licensing agreements and other legal contracts are important in defining precisely how and what rights are transferred, not to mention what events can terminate such arrangements.
7. The European Commission Fines Astrazeneca €60 million For Misusing Patent System to Delay Generic Drug Competition
On 15 June 2005, in the first antitrust case of its kind, the European Commission found the drug company AstraZeneca guilty of abusing patent protection granted to its bestselling drug Losec after a six-year investigation.
Losec is an anti-ulcer drug for AstraZeneca. Toward the end of 1990s, Losec became the world’s best-selling prescription drug for the treatment of stomach ulcers and other acid-related diseases. The case arose in 1999 from two generic drug companies, which claimed that AstraZeneca was misusing patent and other regulatory rules to extend the protection for Losec.
The European Commission found that AstraZeneca infringed EC Article 82, EEA Article 54 and the competition rules of misusing dominate market positions by blocking or delaying market access for generic versions of Losec and preventing parallel imports of Losec to keep the drug price artificially high between 1993 and 2000. AstraZeneca did this by:
Giving the wrong date of when the drug was first approved (the extension is calculated from the date that the drug is cleared for sale instead of the date of the original patent) for market authorisation to several patent authorities in the EEA to gain longer protection from generic competition through a Supplementary Protection Certificate (SPC). AstraZeneca’s misleading conduct amounted to abuse in Belgium, Denmark, Germany, the Netherlands, Norway and the United Kingdom.
Withdrawing a capsule version of Losec from Denmark, Norway and Sweden to stop generic companies from copying it and thereby delaying the entry of generic firms and parallel traders, since generic drugs are only approved if the original version is still on the market.
AstraZeneca defended itself by arguing that it had acted in good faith, that the fine ignored the substantial evidence provided that Losec is just one of the treatments available for stomach acid disorders and that the decision was factually and legally flawed.
The European healthcare system relies on cheap generic drugs to keep the prices low for the benefit of public health and the patent system is indispensable for competitive European R&D pharmaceutical industries. However by preventing generic competition, AstraZeneca was able to keep Losec prices artificially high. Moreover, legitimate competition from generic products encourages innovation in pharmaceuticals.
The Commission emphasised that this case does not concern the alleged misuse of intellectual property rights, but the alleged misuse of governmental procedures. As can be seen from this case, the patent system is designed to reward innovative drug companies as an incentive to recover R&D expenses and to reap the rewards associated with such innovations, but not as a system to be used for anti-competitive purposes or to stifle the development of future innovations.
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