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European IP Bulletin, Issue 33, July 2006 - Patents
PATENTS
6. Under Hand and Overhead? Patent Co-Ownership Explained
The UK Court of Appeal recently ruled in the case of Derek Hughes v Neil Paxman [2006] EWCA Civ 818.
Section 36 of the Patents Act 1977 sets out the rights of patent co-owners, and in particular states that one co-owner may not licence without the other owner’s permission. This judgment revolved around whether the Court would allow one co-owner to grant a licence even when the other co-owner refused (based on application section 37 of the Act).
In this case, the Court of Appeal confirmed that section 37 did give the Comptroller the power to allow co-owners to grant licences in deadlock situations. This was evident in Patents Acts pre-dating the 1977 Act, and before that, in the common law. In particular, the Court of Appeal considered that the 1949 Act contained a power of the Comptroller to overcome deadlock situations and this power existed also under the 1977 Act. It existed to provide a fair commercial solution that was not arbitrary and had to be considered rationally, fairly and proportionately and did not therefore conflict with the other co-owner’s human rights (despite Hughes’ argument that this would breach the human right to peaceful enjoyment of property).
Mr Justice Jacobs, giving the leading judgment felt that this decision had a sound basis on underlying principles, as patents introduce an overriding public interest in making the invention available to the benefit of the public. In any case, if the argument had been successful then the patent might be exposed to a compulsory licensing scheme through failure to exploit.
This judgment was merely a preliminary skirmish of a larger dispute relating to control of the patent. The parties had set up a company to exploit the patent but there is an ongoing dispute as to the terms attached to this. As with most of the recent flurry of disputes relating to the ownership of patents, the need to put in place clear and precise contractual provisions relating to the ownership and any subsequent patents, cannot be emphasised enough.
7. Ranbaxy Loses in Court of Appeal on Lipitor
Ranbaxy UK Ltd v Warner-Lambert [2006] EWCA Civ 876 concerned two patents owned by Warner-Lambert (‘633 and ‘281) that were important to atorvastatin, a cholesterol synthesis inhibitor. This case was an appeal on behalf of Ranbaxy against a decision refusing a declaration of non-infringement for ‘633 and a cross appeal by Warner-Lambert against the finding that its ‘281 patent was invalid for lack of novelty and obviousness. The entire case of non-infringement rested on the interpretation of claim 1 of the ‘633, which had used two formulae (I) and (X) to represent the pharmaceutically active compound used in Lipitor. Mr Justice Pumfrey had to decide whether the claim covered the single enantiomer as explained by the formula used in the claim, or whether it only covered the racemic mixture (i.e. the 50/50 mixture of the two enantiomers of a chiral molecule) of both enantiomers. Ranbaxy contended that the formula used in the claim referred only the racemic atorvastatin when seen within the context of the specification. Therefore, a single enantiomer such as the one Ranbaxy intended to market, was outside the scope of the patent claims. Mr Justice Pumfrey rejected such a narrow claim construction holding that the claims of ‘633 embraced both the racemate and individual enantiomers. At the same time, he held the ‘281 patent invalid on the grounds of anticipation and obviousness in view of a prior co-pending application and a prior published international application respectively.
The Court of Appeal dismissed both the appeal and cross-appeal upholding that:
- from the reading of the prior art and the patent, the skilled reader would know that it is the particular form of enantiomer, the one which is the centre of dispute between the parties, that will have all or most of the pharmaceutical activity. He would also expect the patentee to know this fact. Since the purpose of the claim is to demarcate the invention, there is simply no rational basis for supposing that the patentee would want to exclude the enantiomer which actually is the essence of the invention
- the actual drawing representing formula (I) cannot be taken to mean a racemate even when viewed in the context of the patent. This is because there is no rational reason or convention illustrating that the figure could mean only the racemate in the context of the patent; or that the figure showing a particular enantiomer could not mean both the racemate and/or either enantiomer
- on the question of lack of novelty of the ‘281 patent, the prior publication clearly discloses one of the ways in which one can make the single enantiomer of the acid, and it is the same acid that can be used to make the calcium salt. Since, the only way of carrying out the teaching of the earlier patent would necessarily infringe the later claim of the ‘281 patent, it is invalid for lack of novelty.
8. Patent Injunctions in the US and UK
In 2001, MercExchange sued eBay in the US District Court for the Eastern District of Virginia for patent infringement. In May 2003, a jury found eBay guilty of infringement on all but one of the patents in suit and ordered it to pay MercExchange $29.5 million. The Court, however did not issue an injunction. On appeal, the Federal Circuit overturned the decision to refuse an injunction, applying a “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances”. This issue that came before the Supreme Court, who gave their opinion on the matter on 15 May 2006.
In a unanimous decision, the Supreme Court did not decide whether or not MercExchange should be granted an injunction, but instead issued guidance on the matter and referred the decision back to the District Court.
The Supreme Court explained that an injunction should not automatically be granted, the decision to grant such an injunction instead being an act of equitable discretion by the Court. In exercising this discretion, the Court must follow the well established principles of equity, thereby requiring the party seeking a permanent injunction to satisfy a four factor test. The plaintiff must therefore demonstrate:
- that it has suffered an irreparable injury
- that remedies available at law, such as monetary damages, are inadequate to compensate for that injury
- that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted
- that the public interest would not be disserved by a permanent injunction.
The Supreme Court confirmed that these general principles applied equally to patent disputes, noting that the US Patent Act stated that injunctions “may” be granted “in accordance with the principles of equity”. The Court went on to comment that although a patent grants a right to exclude others from the invention, the creation of a right is distinct from the provision of remedies for violations of that right.
On the face of it, the Supreme Court decision may seem to mirror the legal position of the UK with regard to the grant of injunctions. As with the US, in the UK a successful claimant for patent infringement does not have a right to a final injunction, and will instead be granted an injunction only at the equitable discretion of the Court, taking into account all of the usual principles of equity under UK law. However, there are two important differences under UK law which distinguish it from the guidance given by the Supreme Court in this case.
In both the UK and the US, a final injunction will only be granted where damages are not adequate relief. However, unlike the UK, the US generally permits the award of punitive damages, such that damages might more often be deemed as being an adequate remedy.
More importantly, however, is the manner in which the public interest is taken into account when deciding upon the grant of an injunction. Whilst the Supreme Court has emphasised the importance of this aspect in US law, this is of lesser importance under UK law in instances of patent infringement. Although public interest is a factor (Chiron v Organon Teknika [1992] FSR 512), the Patents Act 1977, as amended, includes provisions for the compulsory licensing of patents in instances where the non‑use of the patented invention would harm the public interest. In contrast, there is no equivalent provision under US law. The possibility for compulsory licensing in the UK thereby provides a separate mechanism for taking the public interest into consideration, such that this is of a lesser importance when deciding whether to grant a final injunction against an infringer (Biogen v Medeva [1993] RPC 475). As a result, it is generally unlikely that a final injunction will be refused for patent infringement in the UK.
This piece is an abridged form of an article which appeared in e-commerce Law Reports, volume 6, issue 2, written by Andrew Sharples, a European Patent Attorney at McDermott Will & Emery UK LLP.
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