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Actavis Group PTC EHF v Pharmacia LLC, Patents Court, 11 July 2014, [2014] EWHC 2265 (Pat), Arnold J

On 11 July 2014, the Patents Court refused to stay validity proceedings relating to the UK designation of a European patent, whilst opposition proceedings are on-going at the EPO. This was despite the patentee, Pharmacia, offering undertakings: (i) to seek expedition of the EPO proceedings; (ii) not to seek an injunction against the potential infringer (Actavis) in the UK until final determination of the EPO proceedings; and (iii) only to seek damages of 1% of Actavis’ net sales during the period from launch to the determination of the EPO proceedings. Instead, the likelihood that the EPO proceedings would take significantly longer to resolve than the English case appears to have been Arnold J’s key reason for refusing the stay. This is despite Court of Appeal guidelines from IPCom v HTC in 2013 which indicate that a stay should be the default option.

Pharmacia is the owner of a patent for sustained release dosage forms of pramipexole, suitable for once-daily administration for the treatment of Parkinson’s disease and restless leg syndrome. The patent was granted in 2013 and, absent earlier revocation, will expire in 2023. In April 2014, Actavis commenced proceedings against Pharmacia, seeking revocation of the patent. Then, in June 2014, when the case came before the Court for directions, Pharmacia applied for a stay pending the outcome of the EPO opposition proceedings. Two oppositions had been filed, one by Actavis, and the other by a law firm acting for an anonymous third party. By the date of the hearing before Arnold J, the deadline for opposing the patent at the EPO had ended.

The IPCom Guidelines, which follow the observations of the Supreme Court in Virgin v Premium, set out 13 principles for the Patents Court to consider when exercising its discretion in deciding applications of this nature. The discretion given to the Patents Court is very wide, the foremost aim being to achieve the balance of justice having regard to all the relevant circumstances. However, the guidelines also suggest that if there are no other factors, a stay of the national proceedings should be the default option.

In considering the Guidelines, the relative timings of the English and EPO proceedings were clearly at the forefront of the Judge’s mind. The parties were agreed that the UK proceedings would be decided at first instance within 12 months and on appeal within two years. There was considerable dispute about the timings at the EPO, but Arnold J concluded that the EPO proceedings would be likely to take over five years to resolve without expedition and probably at least three years with expedition.

Next he considered the relative commercial certainty of the two options and noted that Pharmacia’s undertakings went a considerable way to reducing the commercial uncertainty to Actavis, although not quite enough considering the timeframes involved. In relation to costs, Arnold J accepted that there would be a risk of substantial wasted costs if a stay was refused. However, in accordance with the Guidelines, he concluded that this was outweighed by commercial factors concerned with early resolution; moreover, the damages payable to Pharmacia if the patent were held valid and infringed would be modest compared to the costs of the UK proceedings.

Arnold J also considered the possibility that the UK decision might provoke a settlement and also the public interest – both factors identified in the IPCom Guidelines. Overall, despite the undertakings from Pharmacia, the Judge refused a stay.

Arnold J considered the issues were “finely balanced”, but held that the relative timings were a key reason for his decision, and the fact that commercial certainty for the parties as regards the UK would be achieved much more quickly if the stay was refused.

Interestingly, a postscript to the judgment reveals that this story is not yet over. Arnold J noted that after he had released his judgment in draft to the parties, Pharmacia offered two additional undertakings in return for a stay: (i) not to seek an injunction in the UK against Actavis and its customers for the life of the patent and (ii) only to seek damages of 1% of Actavis’ net sales in the UK during the life of the patent. The Judge indicated that he would hear further arguments on this issue. This suggests that he is interested in at least hearing how Actavis would respond to these additional undertakings. It remains to be seen whether these additional undertakings will be deemed to be sufficient to tip the balance in favour of a stay.

Whilst there is clearly an unfortunate duplication of costs in allowing litigation to proceed in the UK and at the EPO concurrently, this judgment illustrates the Court’s reluctance to force the parties to wait for lengthy EPO proceedings to conclude, especially considering the fact that these EPO proceedings can become more and more protracted depending on the circumstances of the case. Thus, whilst the “default position” is a stay, it seems that only in very particular circumstances will this default position be adopted.

Read the entire decision here.

Head note: Rachel Mumby