This is an appeal by the administrators of the Tulane Education Fund (“Tulane”) against a decision of Mr Roger Wyand QC, sitting as a deputy High Court judge of the Chancery Division, dated 17 April 2012 and his consequential order whereby he dismissed Tulane’s appeal from a decision of Mr Ben Micklewright, the Hearing Officer acting for the Comptroller, dated 20 July 2011 that a Supplementary Protection Certificate (“SPC”) should not be brought into effect by reason of a failure to pay the appropriate fees within the time prescribed under the Patents Act 1977 (“the 1977 Act”).

The regime for the grant of SPCs in respect of medicinal products was first established by Council Regulation (EEC) No 1768/92 of 18 June 1992 (“the 1992 Regulation”) which came into force on 2 January 1993. It was subsequently amended on a number of occasions and was then repealed and replaced by a codified version, Regulation (EC) No 469/2009 of the European Parliament and of the Council of 6 May 2009 (“the 2009 Regulation”), which came into force on 6 July 2009.

The adoption of the 1992 Regulation reflected a recognition that the period between the filing of an application for a basic patent for a new medicinal product and the grant of an authorisation to place the product on the market renders the period of effective protection under such a patent insufficient to cover the investment put into research. The SPC regime therefore provides an additional period of protection of up to five years from the date of expiry of the basic patent.

A number of other features of the SPC regime have a bearing on the present case. First, an SPC only provides protection for a particular medicinal product, unlike the basic patent which protects all products falling within the scope of its claims. Second, an application for an SPC must be lodged within six months from the date on which the marketing authorisation was granted. It will not, however, come into effect until the basic patent has expired, which may be some time later. Third, and as will be seen, Member States may require the payment of fees.

In this case, the Hearing Officer and the deputy judge concluded that Tulane had failed to pay the prescribed fees in due time and that the SPC, although properly applied for and granted, therefore never came into effect. In very broad summary, Tulane contends that, in so deciding, they fell into error and that they ought to have held that:

the fee regime introduced under the 1977 Act did not survive the repeal of the 1992 Regulation and its codification in the 2009 Regulation; and

the fee regime was in any event ultra vires.

Tulane continues that it was therefore not at any time under any obligation to pay the prescribed fees and so the SPC did come into force upon the expiry of the basic patent.

In this judgment I will refer primarily to the relevant provisions of the 2009 Regulation, indicating, where appropriate, the corresponding provisions in the 1992 Regulation.

Two kinds of fees may be charged in respect of an SPC, an application fee and annual fees. The application fee is dealt with by Article 8(4) of the 2009 Regulation (Article 8(2) of the 1992 Regulation):

Annual fees are dealt with by Article 12 of the 2009 Regulation (Article 12 of the 1992 Regulation):

The consequence of a failure to pay is set out in Article 14(c) of the 2009 Regulation (Article 14(c) of the 1992 Regulation):

The procedures to be applied are dealt with by Article 19 of the 2009 Regulation (Article 18 of the 1992 Regulation):

In the absence of procedural provisions in this Regulation, the procedural provisions applicable under national law to the corresponding basic patent shall apply to the certificate, unless the national law lays down special procedural provisions for certificates.

Notwithstanding paragraph 1, the procedure for opposition to the granting of a certificate shall be excluded.”

Finally, the 1992 Regulation was repealed by Article 22 of the 2009 Regulation:

The UK did not introduce special provisions for SPCs into the 1977 Act until 17 December 2007 when the Patents (Compulsory Licensing and Supplementary Protection Certificates) Regulations 2007 (SI 2007 No 3293) came into force. These Regulations amended the 1977 Act to make it clear how the Act applied to SPCs in respect of medicinal products and, under a parallel system, in respect of plant protection products, and they introduced a new s.128B into the 1977 Act in respect of both. It reads:

Schedule 4A sets out the various provisions of the 1977 Act which apply to SPCs and the manner in which they are to be given effect. It reads in material part:

A little later, paragraph 5 makes provision for fees:

A supplementary protection certificate does not take effect unless:

The prescribed period and notice requirements are then set out in rule 116 of the Patents Rules 2007 (“the Patents Rules”) which reads:

Finally, the prescribed fee for an SPC to take effect and the additional fee in respect of a late payment are set out in the Patent (Fees) Rules 2007, as amended (“the Patents (Fees) Rules”):

The application for the SPC in issue was filed on 9 September 1999 in the name of ASTA Medica Aktiengesellschaft, Tulane’s predecessor in title, and it was assigned the number SPC/GB/99/033. On 11 August 2000 it was duly granted but it was not due to come into effect until 11 July 2008, the day after the basic patent expired.

It followed that the three month period for the payment of the prescribed fee set by rule 116 of the Patents Rules ran from 11 April to 11 July 2008. On 11 April 2008 the Intellectual Property Office (“the IPO”) issued a notice regarding payment of the prescribed fee as it was required to do. No payment was forthcoming by 11 July 2008 and accordingly, by letter dated 15 July 2008, the IPO sent a reminder stating that the fee had not been paid and setting out the requirements for paying the fee late, again as it was required to do.

The additional grace period set by paragraph 5 of Schedule 4A ran from 12 July 2008 to 11 January 2009 but the prescribed fee and the prescribed additional fee were still not forthcoming. According to the records of the IPO, the SPC was therefore considered to have lapsed on 11 July 2008.

On 13 March 2009 Tulane made an application to the IPO to bring the SPC into effect. Tulane explained that the failure to pay the fees was inadvertent. As noted by the Hearing Officer, Tulane had instructed a firm called Dennemeyer & Co (“Dennemeyer”), a specialist in the payment of maintenance fees for intellectual property rights, to pay the fee required to bring the SPC into effect. On 22 July 2008 Dennemeyer sent to the IPO a payment order in respect of all the fees for which they were responsible and which were due in or before July 2008. It related to over 3,000 patents and included £4,000 in respect of the SPC. This payment did not, however, include the additional fee required. Moreover, Dennemeyer tendered the payment using the electronic renewal system intended for patents. As a result, the IPO’s computer system attempted to read the SPC number as if was a patent number. Inevitably it was not recognised and so the payment was rejected. That rejection was accompanied by an automatic report which used a number format appropriate for a patent and explained that the patent number quoted was invalid.

It seems Dennemeyer was confused by the automatic report because it had not tendered payment in respect of a patent having that number, and so it took no action. It was not until 16 January 2009 that it appreciated that the prescribed fees had not been paid and then immediately contacted the IPO.

Tulane sought to persuade the Hearing Officer to grant the SPC on three different grounds. First it contended that its failure to pay the prescribed fees was attributable, at least in part, to a default, omission or other error by the IPO and that this constituted an irregularity of procedure which the Comptroller therefore had a discretion to rectify under rule 107 of the Patents Rules. It submitted that the IPO had fallen into error in wrongly identifying the SPC as a patent in its computer-generated report and in failing to send a proper rejection notice in relation to the fee which had been tendered. The Hearing Officer rejected both of these arguments. He considered that the mistake arose primarily because Dennemeyer used the wrong system to pay the fee. Further, the IPO had followed its normal practice throughout and, on 11 April 2008, sent the first reminder that the fee was due and, on 15 July 2008, the further notice that the fee was by then overdue.

Tulane next contended that it was entitled to have the SPC reinstated under s.20A of the 1977 Act. This is one of the provisions of the 1977 Act which is listed in paragraph 2 of Schedule 4A as applying to SPCs and permits an application to be reinstated in particular circumstances. This contention depended on whether an SPC which has been granted but has not come into effect can be considered to be “an application” within the meaning of s.20A. The Hearing Officer held it could not.

Finally, Tulane argued that it was entitled to rely upon s.28 of the 1977 Act. Section 28 makes provision for the restoration of patents where a patentee has failed to pay a renewal fee within the prescribed period or within the period of six months following the end of the prescribed period. It reads so far as relevant:

The Hearing Officer rejected this ground too, holding that s.128B and Schedule 4A identified all of the provisions of the 1977 Act which Parliament intended should apply to SPCs. No mention was made of s.28 and accordingly it had no application to SPCs. It followed that it was not a provision upon which Tulane could rely.

Tulane appealed against the findings of the Hearing Officer in relation to the first and third grounds, that is to say those based upon rule 107 of the Patents Rules and s.28 of the 1977 Act. It also raised a further ground of appeal, contending that paragraph 5 of Schedule 4A was ultra vires.

The deputy judge was persuaded that the IPO was at fault in failing to send out a rejection that accurately identified the reference number used in the payment application. But he was not persuaded that this error resulted in the failure by Tulane to pay the prescribed fees in due time. The IPO was not at fault in any other respect and accordingly the appeal under rule 107 failed. There is no further appeal against that finding.

Turning to the appeal based upon s.28, the deputy judge held that the Hearing Officer had come to the correct conclusion as to the proper interpretation of s.128B and Schedule 4A of the 1977 Act. The various provisions of the 1977 Act identified in Schedule 4A were the only provisions which applied to SPCs. But that did not dispose of this ground of appeal because Tulane also deployed an argument based upon the references in s.128B to the 1992 Regulation. As I have explained, the 1992 Regulation was repealed by the 2009 Regulation as from 6 July 2009. Tulane’s argument then ran as follows:

From 6 July 2009, the 2009 Regulation applied in the UK and throughout the European Union.

Nevertheless, s.128B was not and to date has not been amended so as to refer to the 2009 Regulation; rather, it continues to refer to the 1992 Regulation.

It is not permissible to read the reference in s.128B to the 1992 Regulation as a reference to the 2009 Regulation.

Hence s.128B and Schedule 4A no longer apply to medicinal SPCs. Instead, pursuant to Article 19 of the 2009 Regulation, any procedural provisions which apply to the basic patent must also apply to the SPC, including, in particular, s.28.

The deputy judge rejected this argument and his reasoning is set out in his judgment at [63]:

It is this finding which forms the basis of the first ground of appeal.

Finally the deputy judge addressed the contention advanced for the first time before him, that paragraph 5 of Schedule 4A was ultra vires. Tulane argued that the 1992 Regulation (and now the 2009 Regulation) only provided for an application fee (in Article 8(2)) and annual fees (in Article 12). No other fee has ever been permitted. The fees prescribed by paragraph 5 of Schedule 4A, rule 116 of the Patents Rules and rule 6 of the Patents (Fees) Rules cannot, however, properly be described as an application fee or annual fees and so there was never any power to require them to be paid.

The deputy judge rejected this submission, holding that the prescribed fees were indeed annual fees. It is this finding which forms the basis of the second ground of appeal.

Tulane therefore advances two grounds of appeal:

the deputy judge fell into error in finding that the reference to the 1992 Regulation in s.128B of the 1977 Act could be construed as a reference to the 2009 Regulation; and

the deputy judge fell into error in failing to find that paragraph 5 of Schedule 4A of the 1977 Act was ultra vires.

Although these two grounds are presented in the notice of appeal in the order in which the deputy judge addressed them, it seems to me that the second ground ought logically to be dealt with first.

Mr Phillip Johnson, who has appeared on behalf of Tulane as he did below, submitted that the fees prescribed under paragraph 5 of Schedule 4A are not annual fees or, indeed, renewal fees. Further, they are not an application fee which, as I have explained, is separately provided for. He argued that the prescribed fees are, in effect, sui generis fees and are not envisaged by the 1992 Regulation or the 2009 Regulation. Accordingly, he continued, the inclusion of this provision in the Patent (Compulsory Licensing Supplementary Protection Certificates) Regulations 2007 was outwith the power conferred by s.2(2) of the European Communities Act 1972.

Mr Johnson developed this ground of appeal as follows. He began with the phrase “annual fees” in Article 12 of the 1992 Regulation and submitted that this means “renewal fees”. In support of this contention he referred us to the proposal for the 1992 Regulation which was presented by the Commission on 11 April 1990 as COM (90) 101 final-SYN 255. Article 10 of that proposal reads:

Member States may require that the certificate shall be subject to the payment of renewal fees imposed by the authority referred to in Article 7(1).

The failure to pay such fees will result in the lapse of the certificate.”

The explanatory memorandum accompanying this proposal says:

However, the French, German and Spanish versions of the proposal use the phrase “annual fees”. The phrase “annual fees” is then used in Article 12 of the 1992 Regulation in all of its language versions. All these materials indicate, so Mr Johnson submitted, that the phrases “annual fees” and “renewal fees” were considered to be synonymous.

Second, Mr Johnson pointed to the proposal presented by the Commission for the Regulation creating SPCs for plant protection products which was published on 9 December 1994 as COM (94) 579 final. Article 12 of this proposal provides for the payment of annual fees in the same terms as Article 12 of the 1992 Regulation. However, the explanatory memorandum once again says:

This Article states that the Member States may provide that renewal of the certificate is subject to the payment of a fee. It is for the Member States to establish the amount if they decide to introduce such fees, failure to pay causing the certificate to lapse.”

I have to say that I do not find these preparatory materials provide any real assistance in construing Article 12 of the 1992 Regulation. The use of the phrase “renewal fees” in the English language version of the proposal for that Regulation may indeed indicate that the Council regarded it as synonymous with the phrase “annual fees”. On the other hand, its change to “annual fees” in Article 12 of the Regulation is just as consistent with an understanding by the Council that the phrases have different meanings and an intention to bring all of the different language versions of the Regulation into conformity with each other.

Nor can I derive any assistance from the proposal for the Regulation creating SPCs for plant protection products. It was published over two years after the 1992 Regulation and, in any event, Article 12 is drawn in precisely the same terms.

True it is that the various explanatory memoranda say that Member States may provide that renewal of the certificate is subject to the payment of a fee. But that is also the effect of the fee regime imposed under paragraph 5 of Schedule 4A, as I shall explain. The memoranda therefore shed little light on the issue with which we are here concerned.

I come then to what I consider were Mr Johnson’s primary submissions which he developed as follows. An essential characteristic of annual fees, or indeed renewal fees, is that the liability to pay them only arises year by year. This is of considerable importance because it means that the proprietor of the SPC may allow the SPC to lapse should the product it protects prove unprofitable.

Further, the wording of paragraph 5 of Schedule 4A is such that unless the relevant fees are paid the granted certificate never takes effect. In that regard Article 13(1) of the 1992 Regulation (and of the 2009 Regulation) reads:

The certificate shall take effect at the end of the lawful term of the basic patent for a period equal to the period which elapsed between the date on which the application for a basic patent was lodged and the date of the first authorization to place the product on the market in the Community reduced by a period of five years.

Notwithstanding paragraph 1, the duration of the certificate may not exceed five years from the date on which it takes effect.”

It says the certificate shall take effect at the end of the lawful term of the basic patent. This, argued Mr Johnson, is a mandatory requirement and not contingent on any fee being paid.

I believe the starting point for a consideration of these submissions must be Article 12 itself and I would make two general points at the outset. First, the provision is permissive; there has never been a requirement that Member States must implement an annual fee regime. Second, save that any fees must be “annual”, no restriction or limitation has ever been imposed upon Member States as to the level of the fees or when or how they must be paid. All of these matters have been left to Member States to decide for themselves and Article 18 of the 1992 Regulation (now Article 19 of the 2009 Regulation) permitted them to lay down special procedural provisions to give effect to those decisions.

That brings me to paragraph 5 of Schedule 4A, rule 116 of the Patents Rules and rule 6 of the Patents (Fees) Rules. These all relate to matters arising under the provisions of the 1992 Regulation and, as such, plainly fall within the scope of s.2(2) of the European Communities Act 1972, subject to the overriding requirement that they must of course impose a regime for the payment of annual fees.

In considering the crucial issue whether they impose a regime for the payment of annual fees, I think it important to have in mind that, for the reasons I have explained, an SPC may be granted some time before it is due to take effect. Further, the maximum term of each SPC will vary from certificate to certificate and depend upon the date on which the application for the basic patent was filed and the date of the first authorisation to place the product on the market in the EU, subject to the requirement that the duration of the certificate may not exceed five years from the date on which it takes effect.

Turning now to the fee structure set out in rule 6 of the Patents (Fees) Rules, it can be seen that as the number of years for which the certificate is to have effect increases, so also does the fee. Further and importantly, an applicant is not required to take a certificate for the whole period permitted by the Regulation. He may elect to take the certificate for a shorter period and, if he does so, he will only pay a fee in respect of those years for which he has elected. Thus far, as it seems to me, the prescribed fee may properly be described as an annual fee. It is calculated by reference to the number of years for which a certificate is to have effect.

I come then to consider the impact on this analysis of the requirement imposed by rule 116 of the Patents Rules that the fee must be paid before the SPC takes effect. Here I believe that Mr Johnson’s submissions confuse the nature of the fee and the date upon which the liability to pay it arises. I do not believe that the fee ceases to be an annual fee because the rules impose an obligation to pay it in advance. Nor does the fee cease to be an annual fee because the rules impose an obligation to pay it all at once. Further, I do not consider that these rules are in conflict with Article 13. Provided the fee is paid within the prescribed period, the certificate will automatically take effect on the day after expiry of the basic patent.

For all these reasons, I would reject this ground of appeal.

As I have indicated, the deputy judge found that the 2009 Regulation was intended to replace the 1992 Regulation for all purposes and so, as from 6 July 2009, s.128B of the 1977 Act should be construed as referring to the 2009 Regulation. His reasoning is not clear but it seems to have been founded either upon the principle that, so far as possible, national courts are required to construe domestic legislation consistently with EU law obligations or, put another way, to look for a conforming interpretation; alternatively, upon the inclusion in Article 22 of the 2009 Regulation of the words “References to the repealed Regulation shall be construed as references to this Regulation and shall be read in accordance with the correlation table in Annex II” and the notion that in some way these words effected an amendment to the 1977 Act.

As I shall explain, I am satisfied that the deputy judge arrived ultimately at the right result but I do not believe that his reasoning is sustainable, and I did not understand Miss Charlotte May, who has appeared on behalf of the Comptroller as she did before the deputy judge, to contend otherwise.

Taking the two possible elements of the deputy judge’s reasoning in turn, the 2009 Regulation has direct effect in the United Kingdom and Article 19 ensures that the United Kingdom is (and always was) compliant with its obligations irrespective of s.128B. Indeed, it will be recalled that no provision similar to s.128B existed from 2 January 1993 when the SPC regime came into being until 17 December 2007 when the Patents (Compulsory Licensing and Supplementary Protection Certificates) Regulations 2007 came into force. It follows that this is not a case in which it is necessary or appropriate to look for a conforming interpretation of s.128B.

Similarly, it is, I think, clear that no assistance can be derived from the words in Article 22 of the 2009 Regulation which I have recited at [53] above. As the Court of Justice explained in Case C-8/90 Willy Kennes v Verkooyen PVBA [1991] ECR I-4402, such wording merely confirms the consequences at an EU level of the repeal of the 1992 Regulation. Its purpose is to ensure that references to the 1992 Regulation appearing in other EU measures are to be interpreted as references to the 2009 Regulation. It has no effect on provisions of national law which implement the 1992 Regulation.

Mr Johnson submitted that, this being so, Tulane’s rights under the 1992 Regulation ceased on 6 July 2009, but immediately thereafter it gained rights under the 2009 Regulation. From that date, the 2009 Regulation applied in the United Kingdom and throughout the EU. Further, Mr Johnson argued, as a matter of domestic law, an EU instrument which has been repealed should be treated as if it had never existed, except as to transactions which are past and closed. It follows, he submitted, that as from 6 July 2009 the 1992 Regulation must be treated as an EU instrument which never existed.

Turning to s.128B, Mr Johnson emphasised this was not and to date has not been amended to refer to the 2009 Regulation; rather it continues to refer to the 1992 Regulation. Further, he continued, there is no provision or principle of domestic law which allows s.128B to be interpreted so as to refer to the 2009 Regulation. Moreover, he argued, since the 1992 Regulation has been repealed, it must be treated as having been “struck from the statute book”.

So, Mr Johnson said, there is now no national law laying down a special procedure in relation to SPCs and it follows that under Article 19(1) of the 2009 Regulation the procedural provisions applicable to the basic patent should apply to the SPC in issue. Those include s.28 of the 1977 Act and accordingly, as from 6 July 2009, Tulane was entitled to make an application to restore the SPC under s.28 and the deputy judge should have so held.

Anticipating the difficulties arising from the deficiencies in the deputy judge’s reasoning and in order to meet Mr Johnson’s submissions, Miss May advanced a series of other arguments in support of the position taken by the Comptroller. In summary she contended:

Section 128B, properly construed in accordance with domestic principles of interpretation, does continue to apply to SPCs granted under the 1992 Regulation.

In any event, s.128B applied at all material times to the SPC in issue because it was granted under the 1992 Regulation, and the annual fee and additional fee were not paid during the prescribed period which expired whilst that Regulation remained in force. It is therefore a transaction which is past and closed.

Section 28 does not apply to the SPC in issue because (a) it did not “cease to have effect”, rather it never had effect at all; (b) the fee in question was an annual fee and not a renewal fee; and (c) there was never any satisfactory evidence that Tulane’s failure to pay the fee was unintentional.

Section 128B, properly construed in accordance with domestic principles of interpretation, does apply to SPCs issued under the 2009 Regulation.

The arguments deployed by Mr Johnson and Miss May are of varying degrees of complexity but in my judgment the short and complete answer to this ground of appeal lies in the clear wording of s.128B. This defines the SPCs to which it applies as including certificates issued under the 1992 Regulation. There can be no doubt that the SPC in issue was indeed granted under the 1992 Regulation and so it is an SPC to which s.128B applied. Has the position in relation to this SPC changed since 6 July 2009? I do not believe that it has. Section 128B has not been repealed or amended. Further, this SPC was and remains an SPC which was granted under the 1992 Regulation. The fact that the 1992 Regulation has been repealed cannot alter that fact. So s.128B continues to apply to it. That, it seems to me, was plainly Parliament’s intention. It follows that, as the deputy judge held, the only provisions of the 1977 Act which apply to it are those set out in Schedule 4A. They do not include s.28.

The other arguments deployed by Mr Johnson and Miss May raise difficult issues which may or may not arise in relation to other SPCs, and since it is not necessary to address them to decide this appeal I prefer not to do so.

For all the reasons I have given I would dismiss this appeal.

I agree.

I also agree.