Ivax Pharmaceuticals (UK) Ltd v Astrazeneca AB

This is a Patent action between two pharmaceutical companies. The Claimant “Ivax” is the biggest generic pharmaceutical company in the UK. It is also apparently the third largest asthma specialist in the UK. AstraZeneca is another well known pharmaceutical company. It is the owner of two European patents for an inhaled drug combination called Symbicort, which is a successful treatment for asthma. One of the patents relates to the use of Symbicort for the treatment of asthma (“the 371 Patent”); the other (“the 993 patent”) is for the same product but used for treatment of chronic obstructive pulmonary disease. The 371 patent was granted on 6^th March 2002 and will remain in force until August 2015 (unless revoked); the 993 patent was granted on the 14^th August 2002 and will remain in force until September 2018 (unless revoked). Each is the subject of opposition proceedings in the European Patent Office (“EPO”). Amongst those who are opposing is the parent company of Ivax. In addition to that opposition, in this jurisdiction Ivax has launched the current proceedings which seek to revoke the two patents principally on the grounds of obviousness. In the principal application before me, AstraZeneca seeks to stay these proceedings pending the determination of the EPO proceedings. Should I decline to do that, there is then a dispute as to what the trial date should be – Ivax says the trial can and should take place in December of this year (2004); AstraZeneca says it should not take place until April next year (2005). In addition, there is an application for directions, but it was common ground that once the stay application and trial date were determined, the relevant directions (if any) could probably be agreed between the parties. The issues for me are therefore first whether to order a stay and second, if I do not order a stay, when the trial should take place.

The possible interaction between the jurisdiction of this court to revoke patents and the jurisdiction of the EPO has been set out in judgments in earlier actions and there is no need to set it out here. I refer in particular to the judgment of Aldous L.J. in Beloit Technologies Inc. –v- Valmet Paper Machinery Inc. [1997] RPC 489 at page 501ff. In relation to staying proceedings, he concluded (at page 503):

“The fact that there may be proceedings both in the national courts and before the EPO is inevitable as patent rights, both under the Convention and under the Act, are national rights to be enforced by the national courts with revocation and amendment being possible in both the national courts and in certain circumstances before the EPO. That overlap can mean that there are parallel proceedings in this country and the EPO with the potential for conflict. It is desirable for that to be avoided. Therefore the Patents Court will stay the English proceedings pending a final resolution of the European proceedings, if they can be resolved quickly and a stay will not inflict injustice on a party or be against public interest. Unfortunately that is not always possible as resolution of opposition proceedings in the EPO takes from about 4-8 years.”

The present situation is a manifestation of those parallel proceedings with a potential for conflicting decisions. In Kimberly-Clark Inc. –v- Procter & Gamble Limited [2000] FSR 235 at page 245 Aldous L.J. expressed similar views:

“It is not sensible for a court in this country to allow proceedings to be heard in this country which duplicate those in the EPO unless justice requires that to happen. At the time that the 1977 Act was enacted, it was envisaged that proceedings before the EPO would be concluded with reasonable expedition. The consequence would be that any overlap between EPO proceedings and national actions could be prevented by staying the proceedings in this country for a short period. In some cases the Patents court has refused to stay proceedings in this country, despite the obvious desirability of taking that action, because of the injustice that a stay would cause.”

What I take from these decisions is that there is an emphasis or presumption in favour of a stay but not where to do so would cause injustice. That is the approach that I propose to adopt in this application.

In those circumstances and against that legal and factual background AstraZeneca applies for a stay of these English proceedings. It starts from the presumption in favour of a stay and relies on two supporting factors which it says reinforces the justice of a stay in this particular case. First, it points out that if the present proceedings were not stayed, it would lose the legitimate juridical advantage that it has in the EPO proceedings of a more flexible approach to amendments. Mr Baldwin QC, appearing for AstraZeneca, pointed out that the approach of the EPO to amendments to the patent was more “indulgent” (to use the word used in Beloit at page 503 line 13), whereas in this jurisdiction amendments (if any) are to be formulated clearly, once only and at an early stage of the proceedings. To deprive him of that advantage would not, he said, be fair. Second, he pointed to the potential waste of costs in the revocation proceedings in this jurisdiction. It is anticipated that if these proceedings are allowed to continue the cost of taking them to trial and a subsequent appeal would be over £2m. That cost, and the management cost of dealing with these proceedings, could well be wasted. Third, there is a risk of inconsistent decisions. In addition, AstraZeneca relies on what it says is the poverty of certain aspects of Ivax’s case.

For its part, Ivax starts from the proposition that its case is a strong one. It relies on the fact that a similar patent held by Glaxo was revoked on the basis of obviousness.

A very great deal of the evidence before me related to the likely timescales for a final determination in the EPO and for the processes necessary to get Ivax’s competing product to market. Each has a part to play in the argument in this case, and I should therefore make some findings about them, so far as I can on the evidence.

The first area of dispute was the length of time it would take to get the EPO proceedings resolved. There were conflicting predictions. In the first round of evidence Mr Rich, a partner in Herbert Smith (the solicitors to AstraZeneca) predicted that the final decision on both applications in the EPO, after appeals, would be some time in 2007 or 2008. He did not particularise that timetable. In response Mr Wight, a European patent attorney, was more gloomy about a timetable. There were many steps which might be taken in the proceedings which, if in fact taken, would lengthen the various stages and therefore the overall hearing time, and he put a final date at not before 2010 or even 2011. It could take even longer than that, according to him, if the Opposition Division hears the application step by step (taking one, some or all of the grounds of opposition separately and generating an appeal on each before the next is heard), though his final conclusion is that 2010/2011 remains realistic. AstraZeneca provided evidence from Mr Mercer, another patent attorney, in riposte to that. He sought to play down many of Mr Wright’s gloomier prognostications, acknowledging them as theoretically possible but unlikely and pointing out that new rules of procedure for the Technical Board of Appeal would mean that appeals would take no more than 2 or 3 years to complete, and setting out a timetable which reinforces 2007 or 2008 as being realistic for a final decision.

It is not possible to make a finding as to which is more likely to be correct. These things are incapable of accurate prediction, and anything in the nature of complex litigation involving many parties (which the EPO proceedings in effect are) is vulnerable to unforeseen delays and pitfalls. Some of Mr Mercer’s suggested methods of shortening proceedings are to some extent untried (such as the effect of the new appeals rules and what he says about the possibility of an accelerated procedure). It was urged on me by Mr Baldwin that I should accept the views of Mr Mercer who might be said to be speaking from greater experience, but I do not think that should drive me to use his periods as a working assumption. I intend to take a date which is between the two dates suggested by the attorneys, not as a result of a misplaced spirit of compromise or of difference-splitting but in a spirit of caution, and to take 2008/2009 as a sensible target end date. That puts the relevant date of final resolution at over 4½ years from now.

I turn next to the timetabling for the steps necessary to get a generic drug to market. This involves a number of steps, which have been particularised in the evidence. Most of the projected steps have a range of possibility of times for completion – for example, the initial laboratory stage is estimated at [Confidential material omitted] months. At some stage, before marketing can occur, regulatory authorisation must be obtained. The purpose of this is to prove clinical safety. This can be obtained in two or three ways. The first (“full application”) involves Ivax in gathering its own clinical information, conducting its own clinical trials and then submitting the drug for approval. This is costly, but the exercise can be conducted, and the information submitted, when Ivax wishes. An alternative method is an abridged route which involves conducting different and cheaper trials and then submitting the results so that they can be used with the figures already submitted by AstraZeneca for Symbicort on the footing that the generic drug is sufficiently similar to Symbicort. While cheaper, this route is more delayed because the Symbicort figures are protected by confidentiality for 10 years in the UK (expiring in August 2010 in the present case), so while the preparatory work can be done the marketing authorisation process cannot be commenced until the expiry of that confidentiality period. There is a hybrid form of this route to authorisation involving getting authorisation in another country and then getting that authorisation recognised in the UK by a mutual recognition process. Some countries (for example Ireland and Spain) have a 6 year confidentiality period in place of the UK’s 10 years, so the authorisation can be obtained earlier in those countries and mutual recognition sought in this jurisdiction. That means that authorisation can be sought earlier and obtained earlier elsewhere (provided all the prior development phases have been gone through) and the process of obtaining authorisation in the UK is quicker still, though application still cannot be made until August 2010 when AstraZeneca’s confidentiality period expires. There is a further variant (a “mixed data” application) with which I need not deal.

Mr Hennessy, a Project Leader at Ivax, has provided a witness statement giving estimates for the times for the various stages under these various possibilities. He has in the main given time brackets (x to y months) because it is not possible to be categorical about how long some of the stages will take. All these various possibilities, with best case and worst case scenarios (in terms of the shortest/longest estimated limits for the various steps) have been plotted on timelines by Mr Baldwin. I will not set out the various stages, their various permutations in length and the additional permutations arising out of the different regulatory possibilities. It will be sufficient to refer to the end date shown by those time lines. AstraZeneca has not, at least for the purposes of this application, sought to contest the various figures for the stages that are put forward by Mr Hennessy, though it disputes some of the conclusions to be drawn from them.

I accept that AstraZeneca will suffer prejudice of the nature alleged if there is no stay, though I put more weight on the amendments point, and the risk of inconsistent decisions, than on the wasted costs point. Ivax sought to counter the prejudice relating to amendment by offering undertakings limiting its right to object to amendments, but to my mind these undertakings were not sufficient to deal with the problem.

Accordingly, this analysis of prejudice is not made out.

The main thrust of Ivax’s evidence before me concerned the desirability of getting to market before their competitors. Mr Simon Clark, Vice-President and General Manager of Ivax for the UK (and other areas) stressed this in his witness statement, and gave figures for the amounts of sales likely to be made on that assumption, and he gave figures for the likely reduction in price when other generics come on to the market.

In addition, in this context I take into account the delay that has occurred in this matter. I have given the dates for the grant of the patents. Symbicort had been launched in Sweden in 2000, and by the date of the grant it was already apparent on market figures that it was likely to be a successful and lucrative product, so presumably it had become apparent that a generic equivalent would or might be an attractive proposition. However, despite that, Ivax did not act as one would expect of someone who was anxious to get into the market. It gave notice of opposition on the last day for doing so (9 months after the grant) in the case of each patent. That is not the act of a person who is anxious to exploit a pressing commercial opportunity. Having done that, it was not until 5^th February 2004 that these English proceedings were commenced – two years after the grant of the first patent. Mr Floyd said that it was reasonable for his client to wait until the second patent was granted before launching English proceedings, and that the formulation of proceedings would take some time and consideration so that it was entirely reasonable and explicable that proceedings should not have been commenced until about August 2003. I am not sure that that is the correct analysis, but even if it is it still leaves an unexplained delay of 6 months. (I would observe that months count for Ivax – in resisting the proposal that a delay in the trial from December 2004 to April 2005, they say that that delay would cost them [Confidential material omitted] of sales, [Confidential material omitted]. All those time factors do not give the picture of a party which needs to know where it stands and cannot afford to wait until 2008 for an EPO decision. Of course, the position might have changed since then, and it may have become more commercially pressing or desirable to get an early decision, but if that is the case then that has not been explained to me in the evidence.

In addition to those factors relating to delay, there is another unsatisfactory aspect of Ivax’s case. Ivax has started parallel proceedings in Ireland. They would wish to carry out development and manufacture there. Ivax would presumably wish those proceedings to be seen as part of a strategy for getting the product to market as early as possible. Yet they have not pursued that tactic consistently. The Irish proceedings were started even later than the English ones – in April 2004. If pursued in their current court, the evidence indicates that there would be a trial judgment in those proceedings in April 2006, with any appeal (which is as of right in Ireland, and therefore more likely) in June 2007. There is a way of expediting that. The case is technically within the jurisdiction of the new Irish Commercial Court, and could be transferred there subject to the Court deciding to accept them. If that were done then there would be a trial between January and April 2005 (again there is a dispute as to when this is likely to happen) with an appeal a year or so later. But in order to achieve that degree of expedition an application to transfer to the Commercial Court has to be made, and to date that has not happened. Again, therefore, there is conduct on the part of Ivax which does not sit happily within a case based on pressing commercial factors.

Accordingly, I do not consider that Ivax has made out a case that its commercial position, and its commercial intentions, require that, in justice, it be allowed to proceed with these English proceedings. In this context it is also worthy of note that Ivax has not sought to bring parallel proceedings in at least one other potential major market for a competing generic product, namely Germany. One might have expected it to have done so (or at least explain why it has not) if its case on general commercial factors were a strong one. It has done neither. (It has not started proceedings in other potentially good markets either – France and Italy – though there may be other reasons for that and I do not take this factor into account in relation to those markets.)

It should be noted that Ivax relies merely on commercial matters. It does not maintain that development would be hampered at present by the possibility that AstraZeneca would take infringement proceedings. This point, if it had been raised, would have been dealt with by undertakings offered by AstraZeneca the net effect of which would be to prevent AstraZeneca taking proceedings against Ivax and its customers (if any) for the period of the stay of the UK action, to proceed in the EPO with due diligence and not to seek financial relief for anything done during the period of the stay. If there had been a good case on a real “lost opportunity” basis I would have been minded to hold that the undertakings offered did not safeguard Ivax adequately because they do not deal with the risk to development costs or financial losses arising out of delay. Undertakings were offered, and accepted, in Unisantis SA v X-Ray Optical Systems Inc (Lewison J, [2004] EWHC 734 (Ch)). However, they were not the same as those in the present case because they included an undertaking by the patentee to confine its financial claims to a royalty payment in the event of the patents being upheld. That element, which seems to me to have been the crucial factor leading to the granting of the stay in that case, is absent from the undertakings offered in this case, and had it mattered I would probably have considered that absence to have been crucial. As it is, however, the point does not arise in this case because I do not consider that Ivax have advanced a sufficient case based on plans for commercial exploitation of a competing product.

Ivax has also relied on the public interest – there will be very large saving to the NHS if there are competing products in the market sooner rather than later, in accordance with its development plans. [Confidential material omitted]. If that case is flawed, so is its case on public interest. I would also observe that this altruistic reliance on the public interest did not seem to compel Ivax to commence proceedings as early as it might – see above.

Accordingly, applying the tests referred to above, I do not think that the justice of the case, based on the evidence before me, requires that these proceedings be allowed to go ahead in parallel with (or in fact ahead of) the EPO proceedings. I confess that the apparent delays in getting the matter dealt with in the EPO when compared with the English proceedings would have been such that, had there been a proper commercial justification, I might well have been minded to hold that justice required that there be no stay here. The timescale in the EPO strikes me as being inherently undesirably long, though I do not think that this factor alone would justify refusal of a stay – Aldous LJ was doubtless aware of this factor in the above cases but he does not seem to have thought that this, by itself, would have justified the refusal of a stay. The position might again have been different if Ivax had sued earlier, so that the time differential between an English trial/appeal and the EPO proceedings would have been even more striking and undesirable. However, those are different cases. In the case before me I take the view that the prima facie desirability of a stay has not been rebutted. I shall therefore grant the stay. Should the position change, and in particular should there be a breach of the undertaking to prosecute the EPO proceedings with due diligence, then Ivax would be at liberty to apply to remove the stay.

My decision on the stay makes it unnecessary for me to decide this point. However, submissions were advanced, and I have come to a clear conclusion about it so in case it should matter I express my views shortly. A trial date of December 2004 is currently pencilled in – Pumfrey J has so ordered. AstraZeneca opposes that because the timetable is too tight to make it fair or desirable to have a trial then, bearing in mind all that has to be done, and because its lead solicitor and its preferred team of counsel are not available for that date. It suggests April 2005. Ivax wishes to have the December trial date because of the potential cost to it of delaying until April. That cost is said to arise from the 4 month delay which will arise from its getting its product to market. As far as I can tell, it flows from its case that it can demonstrate that it would be able to get to market a sufficiently long period ahead of its competitors to make its development costs worthwhile. I have already held that case to be flawed on the facts, so that point comes out of the equation. However, even if it had been true I would still have ruled in favour of an April date. I do not put much weight on the unavailability of AstraZeneca’s preferred legal team members, but its fears that preparation time is inadequate cannot be dismissed. If they are plausible I do not see why AstraZeneca should be vulnerable on this point at the behest of a party which, on its own admission, could have started these proceedings many months earlier than it did (and in my view well over a year before it actually did). I would therefore have ruled in favour of an April 2005 trial date.

I shall therefore order a stay of these proceedings pending the determination of the parallel EPO proceedings.