Rolls Building
Fetter Lane, London, EC4A 1NL
Before :
THE HON MR JUSTICE ARNOLD
Between :
ACTAVIS GROUP HF | Claimant |
- and - | |
ELI LILLY AND COMPANY | Defendant |
And between : | |
MEDIS EHF | Claimant |
- and - | |
ELI LILLY AND COMPANY | Defendant |
Richard Meade QC and Thomas Raphael (instructed by Bird & Bird LLP) for the Claimants
Stephen Phillips QC and Thomas Mitcheson (instructed by Hogan Lovells International LLP) for the Defendant
Hearing dates: 14-15 November 2012
Judgment
MR JUSTICE ARNOLD :
Contents
Topic Paragraphs
Introduction 1
Background 2-23
The parties 2-3
The Patent 4-5
The pre-action correspondence 6-10
The First Claim 11-16
The Second Claim 17-20
The German proceedings 21
France, Italy and Spain 22
European Patent Office opposition 23
Matters not in dispute 24-34
The issues 35
Was service of the First Claim validly effected under the consent for
service? 36-60
The law 36-39
Assessment 40-60
Did the consent extend to a claim by Actavis Group? 41-52
Did the consent extend to a claim in respect of the non-UK
designations of the Patent? 53-59
Conclusion 60
Was service of the First Claim validly effected under CPR r.63.14(2)(a)? 61-66
Was service of the First Claim validly effected under CPR r.6.9(2)? 67-80
The law 67-71
Assessment 72-80
Was service of the Second Claim validly effected under the consent for
service? 81
Was there consent to jurisdiction? 82
Forum non conveniens 83-105
The law 84
Assessment 85-105
Summary of conclusions 106
Introduction
Pemetrexed is a cancer treatment which has been marketed by the Defendant (“Lilly”) or its subsidiaries under the brand name Alimta since 2004. It was protected by a basic patent that has been extended by Supplementary Protection Certificates (“the SPCs”) which will expire in December 2015. Lilly also owns European Patent No. 1 313 508 (“the Patent”), which will not expire until June 2021, for the use of pemetrexed disodium in combination with vitamin B12 or a pharmaceutical derivative thereof. The Claimants (whom I will refer to as “Actavis” save when it is necessary to distinguish between them) contend that dealings in pemetrexed dipotassium will not infringe the Patent. Lilly disputes this. Actavis would like a resolution of this issue in good time for them to enter the market on expiry of the SPCs. Furthermore, Actavis would like the issue to be determined with respect to the French, German, Italian, Spanish and United Kingdom designations of the Patent, which cover the major pharmaceutical markets in Europe, in a single trial. Accordingly, Actavis have commenced these proceedings seeking declarations of non-infringement of each of those designations of the Patent. Actavis do not challenge the validity of the Patent in these proceedings. By the applications which are now before the Court, Lilly seeks declarations that this Court does not have, alternatively should not exercise, jurisdiction in respect of the French, German, Italian and Spanish designations of the Patent. Lilly does not contest the Court’s jurisdiction with regard to the UK designation.
Background
The parties
The Actavis group of companies is a well-known multinational supplier of generic pharmaceuticals. The Actavis group presently has its headquarters in Switzerland, having moved there from Iceland in 2009. Watson Pharmaceuticals is currently in the process of acquiring the Actavis group, and as a result certain changes have recently been made to the corporate structure of the Actavis group, but for the purposes of the present applications these can be ignored. The ultimate holding company of the Actavis group is Actavis Equity S.àr.l, a company incorporated in Luxembourg. The parent operating company is a company which in July 2012 was called Actavis Group hf (“Actavis Group”), a company incorporated in Iceland. Actavis Group has a considerable number of subsidiaries incorporated in different countries which are responsible for selling the group’s products. These include Actavis France, Actavis Deutschland GmbH & Co KG (“Actavis Deutschland”), Actavis Italy SpA, Actavis Spain SA and Actavis UK Ltd. Actavis Group PTC ehf (“Actavis PTC”), a company incorporated in Iceland, is another subsidiary of Actavis Group. Actavis PTC has a number of subsidiaries, including Actavis hf and Medis ehf (“Medis”), both companies incorporated in Iceland; but these do not include the national sales subsidiaries for France, Germany, Italy, Spain or the UK.
Lilly is incorporated in the State of Indiana, United States of America. Lilly has a considerable number of subsidiaries, including Eli Lilly and Company Ltd (“Lilly UK”), which is incorporated in England.
The Patent
The Patent has an earliest claimed priority date of 30 June 2000, a filing date of 15 June 2001 and a date of grant of 18 April 2007. The specification is entitled “Combination containing an antifolate and methylmalonic acid lowering agent”. The representative identified on the first page of the specification is as follows:
“Burnside, Ivan John et al
Eli Lilly and Company Limited
European Patent Operations
Lilly Research Centre
Erl Wood Manor
Sunnighill [sic] Road
Windlesham, Surrey GU20 6PH (GB)”
The only independent claims are claim 1 and 12, which are as follows:
“1. Use of pemetrexed disodium in the manufacture of a medicament for use in combination therapy for inhibiting tumor growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof, said pharmaceutical derivative of vitamin B12 being hydroxocobalamin, cyano-10-chlorocobalamin, aquocobalamin perchlorate, aquo-10-chlorocobalamin perchlorate, azidocobalamin, chlorocobalamin or cobalamin.
12. A product containing pemetrexed disodium, vitamin B 12 or a pharmaceutical derivative thereof said pharmaceutical derivative of vitamin B12 being hydroxocobalamin, cyano-10-chlorocobalamin, aquocobalamin perchlorate, aquo-10-chlorocobalamin perchlorate, azidocobalamin, chlorocobalamin or cobalamin, and, optionally, a folic binding protein binding agent selected from the group consisting of folic acid, (6R)-5-methyl-5,6,7,8-tetrahydrofolic acid and (6R)-5-formyl-5,6,7,8-tetrahydrofolic acid, or a physiologically available salt or ester thereof, as a combined preparation for the simultaneous, separate or sequential use in inhibiting tumor growth.”
The pre-action correspondence
On 12 July 2012 Actavis’ solicitors Bird & Bird wrote to Lilly at “C/O Ivan J. Burnside, Lilly Research Centre, Erl Wood Manor, Windlesham, Surrey GU20 6PH”. This is Lilly’s address for service registered with the Intellectual Property Office in respect of the UK designation of the Patent pursuant to rule 103 of the Patents Rules 2007. It may be noted that the addresses for service in respect of the French, German, Italian and Spanish designations are the addresses of local patent attorneys in the respective jurisdictions.
Given the importance of the terms of this letter to the issues on the present application, it is necessary to set out almost all of it:
“EP 1 313 508 (“the Patent”)
We represent Actavis Group PTC ehf and its relevant national subsidiaries (“Actavis”).
You are registered as the proprietor of European Patent (UK) No. 1 313 508 B1 entitled “Combination containing an antifolate and methylmalonic acid lowering agent” that is currently valid until 15 June 2021.
The purpose of this letter is to put you on notice that Actavis wishes at the expiry of SPC/GB05/011 to launch a pemetrexed product for use in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals in the United Kingdom. At the same time (i.e. upon expiry of the equivalent SPCs) Actavis similarly wishes to launch such a product in other jurisdictions, including but not limited to Germany, France, Italy and Spain.
Actavis is aware of the Patent. We should be grateful if you would treat this letter as relating to the national designations of EP 1 313 508 B1 in Germany (DE60127970 (T2)), France (EP 1 313 508 B1), Italy (ES2284660 (T3)), and the United Kingdom, Actavis has no wish to engage in litigation with you about the Patent but will do so if necessary. The purpose of this letter is to attempt to avoid such litigation.
On this basis and in accordance with section 71 of the Patents Act 1977 and/or the inherent jurisdiction of the Court, our client hereby seeks a written acknowledgement from the proprietor of the Patent that each of the proposed acts alone set out below would not constitute an infringement of the Patent:
1. Actavis imports, keeps, offers for disposal and disposes of medicaments in the United Kingdom containing pemetrexed dipotassium for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof, said pharmaceutical derivative of vitamin B12 being hydroxocobalamin, cyano-10-chlorocobalamin, aquocobalamin perchlorate, aquo-10-chlorocobalamin perchlorate, azidocobalamin, chlorocobalamin, or cobalamin.
2. Actavis imports, keeps, offers for disposal or disposes of medicaments in the United Kingdom containing pemetrexed dipotassium for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof, said pharmaceutical derivative of vitamin B12 being hydroxocobalmin, cyano-10-chlorocobalamin, aquocobalamin perchlorate, aquo-10-chlorocobalamin perchlorate, azidocobalamin, chlorocobalamin or cobalamin and a folic binding protein binding agent selected from folic acis, (6R)-5-methly-5,6,7,8-tetrahydrofolic acid and (6R)-5-forinyl-5,6,7,8-tetrahydrofolic acid of a physiologically available salt or ester thereof.
We consider that the answer to the proposed acts should be the same across Europe in relation to the acts specified in the national provisions equivalent to section 60 of the Patents Act. Accordingly, we assume that if you are prepared to provide the declarations sought in accordance with section 71 of the Patents Act that you will also be willing to provide such an acknowledgement that such acts in each and all of the jurisdictions where the Patent is in force or where the national patents specified above are registered would not infringe such patents. We should be grateful if you would also provide us with such a written acknowledgement.
For the avoidance of doubt and given other relevant constraints, Actavis is not planning an imminent launch of such a product.…”
It is worth emphasising for the benefit of readers unfamiliar with the procedure under section 71 of the Patents Act 1977 that, as is clear from the letter when read as a whole, numbered paragraphs 1 and 2, although expressed in the present tense, described acts which Bird & Bird’s clients proposed to do at some point in the future.
On 26 July 2012 Lilly’s solicitors Hogan Lovells wrote to Bird & Bird seeking further information about the proposed acts. On the same day Bird & Bird replied providing some, but not all, of the information requested. The letter was headed in the same manner as the letter dated 12 July 2012, and it referred a number of times to “our client”. Bird & Bird’s letter concluded:
“We consider that your client is, and has been since 12 July 2012, in possession of all the facts that it needs in order to provide the written acknowledgements sought by our client. If the acknowledgments have not been provided to us by 4:00 pm on Tuesday 31 July 2012, our client intends to serve proceedings on your client seeking appropriate declarations from the Court. We should be grateful if you would inform us by return whether or not you are instructed to accept service of such proceedings.”
On 31 July 2012 Hogan Lovells replied to Bird & Bird’s letter dated 26 July 2012. This letter stated:
“We confirm that we are instructed to accept service on behalf of our client.”
The First Claim
In the meantime, this Court issued the Claim Form in claim number HC12E02962 (“the First Claim”), with Particulars of Claim attached, at the request of Bird & Bird on 27 July 2012. The Claimant in the First Claim is Actavis Group and the Defendant is Lilly. The claim is for (1) a declaration pursuant to section 71 of the 1977 Act that dealings in pemetrexed dipotassium in the UK as proposed in Bird & Bird’s letter dated 12 July 2012 would not infringe any claim of the UK designation of the Patent and (2) a declaration pursuant to the Court’s inherent jurisdiction that dealings in pemetrexed dipotassium in France, Germany, Italy and Spain as proposed in Bird & Bird’s letter dated 12 July 2012 would not infringe any claim of the corresponding designations of the Patent. As noted above, there is no challenge to the validity of the Patent.
On 1 August 2012 Bird & Bird wrote to Hogan Lovells enclosing “by way of service” the Claim Form, Particulars of Claim and Response Pack in the First Claim. These documents referred to the UK designation of the Patent as “the Patent” and the other four designations as “the Related Patents”. The letter went on to say:
“In your letter of 31 July 2012, you confirmed that you were instructed to accept service on behalf of your client (Eli Lilly & Company). As you are aware, the proprietor of the Patent is Eli Lilly & Company. You will also be aware that the proprietor of the Related Patents is the same Eli Lilly & Company. Accordingly, upon receipt by you of this letter and the enclosures Eli Lilly & Company has been served in relation to the action as a whole and that [sic] there is no requirement for our client to go to the time and expense of serving these same proceedings on the addresses for service for the Related Patents.”
On 15 August 2012 Hogan Lovells filed an acknowledgement of service on behalf of Lilly indicating an intention to contest jurisdiction.
On 23 August 2012 Hogan Lovells wrote to Bird & Bird disputing that Bird & Bird’s letter dated 1 August 2012 constituted valid service of the Claim Form in the First Claim for two reasons. First, “this firm was not instructed to accept service of a claim by Actavis Group”. Secondly, “in any event, [the confirmation given in the letter dated 31 July 2012] was only in respect of appropriate declarations of non-infringement, which would not include declarations in relation to the foreign designations of EP508”. The letter went on to say that Lilly would also contend that this Court did not have, or should not exercise, jurisdiction over the claims for declarations in respect of the non-UK designations of the Patent; but that Lilly accepted that this Court had and should exercise jurisdiction over the claim in respect of the UK designation.
On 29 August 2012 Lilly duly filed an application contesting the Court’s jurisdiction in respect of the claims in respect of the non-UK designations.
On 11 October 2012 Bird & Bird wrote to Lilly “C/O Ivan J. Burnside, Lilly Research Centre, Erl Wood Manor, Windlesham, Surrey GU20 6PH” enclosing “by way of service” the Claim Form, Particulars of Claim and Response Pack in the First Claim without prejudice to their client’s contention that the First Claim had already been served.
The Second Claim
Also on 29 August 2012, this Court issued the Claim Form in claim number HC12A03340 (“the Second Claim”), with Particulars of Claim attached, at the request of Bird & Bird. The Claimant in the Second Claim is Medis and the Defendant is Lilly. Apart from the identity of the Claimant, the Second Claim is identical to the First Claim.
On the same day Bird & Bird wrote to both Hogan Lovells and to Lilly “C/O Ivan J. Burnside, Lilly Research Centre, Erl Wood Manor, Windlesham, Surrey GU20 6PH” enclosing “by way of service” the Claim Form, Particulars of Claim and Response Pack in the Second Claim.
On 4 September 2012 Hogan Lovells wrote to Bird & Bird disputing that Bird & Bird’s letter dated 29 August 2012 constituted valid service of the Claim Form in the Second Claim so far as it related to the non-UK designations of the Patent. The letter went on to reiterate Lilly’s contention that this Court did not have, or should not exercise jurisdiction over the claims for declarations in respect of the non-UK designations of the Patent.
On 26 September 2012 Lilly duly filed an application contesting the Court’s jurisdiction in respect of the claims in respect of the non-UK designations.
The German proceedings
On 30 July 2012 Lilly issued proceedings against Actavis PTC and Actavis Deutschland in the Düsseldorf Landgericht (Düsseldorf Regional Court) for threatened infringement of the German designation of the Patent, relying upon Bird & Bird’s letter dated 12 July 2012. These proceedings were served on 9 August 2012. Actavis PTC and Actavis Deutschland have challenged the jurisdiction of the Düsseldorf Regional Court on the ground of lis alibi pendens. As I understand it, the Düsseldorf Regional Court has yet to rule upon that challenge. The trial of the German proceedings (if not dismissed or stayed on jurisdictional grounds) is scheduled for March 2014.
France, Italy and Spain
To date, Lilly has not commenced proceedings for threatened infringement of the Patent in France, Italy or Spain.
European Patent Office opposition
The grant of the Patent was opposed before the European Patent Office by Teva Pharmaceutical Industries Ltd (“Teva”). The opposition was rejected by the Opposition Division at a hearing on 18 November 2010 for reasons given in writing on 27 December 2010. On 3 March 2011 Teva appealed to the Technical Board of Appeal (appeal T 542/11). On 30 October 2012 Actavis Deutschland filed a notice of intervention in the appeal relying upon the German proceedings as providing the basis for its intervention. (In effect, therefore, the Actavis group has voluntarily bifurcated the infringement and validity aspects of its case with respect to the Patent.) There is no application by Lilly to stay these proceedings pending the determination of the appeal.
Matters not in dispute
It is convenient before turning to the issues to set out a number of matters which are not in dispute.
First, Actavis do not suggest that they can found jurisdiction under either Article 2 or Article 5 of Council Regulation 44/2001/EC of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Brussels I Regulation”). Given that Lilly is not domiciled in an EU Member State, it follows that the jurisdiction of this Court is a matter for national law, in accordance with Article 4 of the Brussels I Regulation. (The same is true with regard to the Brussels and Lugano Conventions.)
Secondly, Actavis have not sought, and therefore have not obtained, permission to serve either the First Claim or the Second Claim on Lilly out of the jurisdiction. Nor have Actavis suggested that they would be able to obtain permission to serve Lilly out of the jurisdiction on any of the grounds specified in CPR Practice Direction 6B paragraph 3.1.
Thirdly, if the Claim Form in the First Claim has been validly served on Lilly, the issue of the Claim Form on 27 July 2012 seized the English court of that claim for the purposes of lis pendens under Article 30(1) of the Brussels I Regulation. Actavis contend that it follows that, if this Court has jurisdiction over the claim in respect of the German designation of the Patent, this Court is the first seized of that claim, rather than the Düsseldorf Regional Court.
Fourthly, Lilly does not dispute that the claims raised in the First and Second Claims with regard to the non-UK designations of the Court are justiciable before this Court (i.e. that this Court has subject matter jurisdiction). In the light of the decision of the Supreme Court in Lucasfilm Ltd v Ainsworth [2011] UKSC 39, [2012] 1 AC 208, Lilly has not sought to argue that such claims are not justiciable before this Court by virtue of the Moçambique rule (British South Africa Co v Cia de Moçambique [1893] AC 602) even though they concern patents rather than copyrights. I shall return to this point below.
Fifthly, as noted above, Actavis have not challenged the validity of the Patent in either the First or Second Claim. Furthermore, Actavis have undertaken not to challenge validity, or to contend that the Patent is invalid, in these proceedings either by way of claim or by way of defence to any counterclaim for infringement if this Court accepts jurisdiction over the First and/or Second Claims. In these circumstances counsel for Lilly accepted that this Court was not required to decline jurisdiction by virtue of Article 22(4) of the Brussels I Regulation, which confers exclusive jurisdiction over challenges to the validity of registered intellectual property rights on the courts of the States where they are registered: see Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG v Lamellen under Kupplungsbau Beteilungs KG [2006] ECR I-6523 at [16]. He nevertheless sought to rely upon Article 22(4) as part of Lilly’s argument on forum non conveniens, as I shall explain below.
Sixthly, it is common ground that the law applicable to the question of whether this Court has power to grant declarations as to whether Actavis’ proposed acts would infringe each of the non-UK designations of the Patent is English law as the lex fori, since this is a question of procedure or remedy. Furthermore, Lilly does not dispute that under English law, if Actavis can demonstrate that they have a “real commercial reason” for seeking declaratory relief, then the Court can grant such declarations pursuant to its inherent jurisdiction: see Nokia Corp v InterDigital Corp [2006] EWCA Civ 1618, [2007] FSR 23. For the avoidance of doubt, Lilly has not conceded that Actavis do have a real commercial reason.
Seventhly, it is common ground that, by virtue of Article 8(1) of European Parliament and Council Regulation 864/2007/EC of 31 July 2007 on the law applicable to non-contractual regulations (“the Rome II Regulation”), the law applicable to the question of whether Actavis’ proposed acts would infringe each non-UK designation of the Patent is the substantive patent law of that country. Accordingly, unless Lilly chooses not to raise any issue as to foreign law (in which case this Court will assume that the foreign laws are no different to English law) or the parties agree that the questions of whether Actavis’ proposed acts would infringe each of the designations of the Patent should all be tried by reference to another law, then this Court will be required to apply French law to determine whether there would be infringement of the French designation, German law to determine whether there would be infringement of the German designation and so on.
Eighthly, it is common ground that, since France, Germany, Italy, Spain and the United Kingdom are all Contracting States to the European Patent Convention, each of those countries is obliged to give effect in its national substantive patent law to Article 69 EPC and the Protocol on the Interpretation of Article 69. As is well known, in theory this should mean that each country’s courts adopt the same approach to determining the scope of protection of a patent; but in practice there appear to be differences between the jurisprudence of the different countries, particularly with regard to equivalents. The extent of these differences, and the extent to which such differences are responsible for different outcomes when the same European patent is litigated in different countries (as opposed to other factors, such as different evidence, different procedures and the fact that even within one country courts often disagree with each other on questions of patent interpretation) are much debated. I shall return to this point below.
Ninthly, it is common ground that, since France, Germany, Italy, Spain and the UK all signed the Agreement relating to Community Patents to which the Community Patent Convention as revised in 1989 was annexed, each of those countries has implemented Articles 25 and 26 CPC in its national laws even though the CPC never came into force. In the United Kingdom Articles 25 and 26 CPC are implemented by section 60 of the 1977 Act. Lilly has adduced no evidence that there is any difference between the provisions of section 60 and the corresponding provisions of French, German, Italian and Spanish law that is material to the question of whether Actavis’ proposed acts would infringe the relevant designations of the Patent. While there has been no corresponding harmonisation of national laws on accessory liability, Lilly has not adduced any evidence that there is any difference between the relevant national laws that is material to the question of whether Actavis’ proposed acts would infringe the relevant designations of the Patent.
Tenthly, Actavis have not suggested that this Court is prevented by the Brussels I Regulation from granting a stay of the First and Second Claims so far as they relate to the non-UK designations of the Patent on forum non conveniens grounds (compare cases such as Case C-281/02 Owusu v Jackson [2005] ECR I-1383).
The issues
The issues arising on Lilly’s applications are as follows:
Was service of the First Claim validly effected:
under the consent for service contained in Hogan Lovells’ letter dated 31 July 2012,
under CPR r. 63.14, and/or
under CPR r. 6.9?
Was service of the Second Claim validly effected under the consent for service? (The issues under CPR rr. 63.14 and 6.9 are identical for the Second Claim.)
If the consent for service covers the First (or Second) Claim, was it also a consent to jurisdiction?
If service has been validly effected, but there has been no consent to jurisdiction, should the Court decline to exercise its jurisdiction on the ground of forum non conveniens?
Was service of the First Claim validly effected under the consent for service?
The law
Although the consent for service is not strictly a contract, it is common ground that it should be interpreted in accordance with the principles of contractual interpretation stated by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912-913. As Lord Hoffmann summarised it in the later cases of Bank of Credit and Commerce International SA v Ali [2001] UKHL 8, [2002] 1 AC 251 at [37] and Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1011 at [14], the correct approach is to ask what a reasonable person having all the background knowledge which would have been available to the parties at the time would have understood them to be using the language of the contract to mean.
The fourth principle stated by Lord Hoffmann in Investors Compensation Scheme re-states his earlier observation in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 at 775:
“The meaning of words, as they would appear in a dictionary, and the effect of their syntactical arrangement, as it would appear in a grammar, is part of the material which we use to understand a speaker's utterance. But it is only a part; another part is our knowledge of the background against which the utterance was made. It is that background which enables us, not only to choose the intended meaning when a word has more than one dictionary meaning but also, in the ways I have explained, to understand a speaker's meaning, often without ambiguity, when he has used the wrong words.”
The fifth principle was stated by Lord Hoffman at 913 as follows:
“The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.”
In Chartbrook Lord Hoffmann acknowledged at [15] that “it clearly requires a strong case to persuade the court that something must have gone wrong with the language”.
Assessment
As noted above, Lilly disputes that the letter dated 31 July 2012 gave consent to service of the First Claim for two reasons. Before I turn to consider those reasons, it is worth noting that Lilly has not suggested that the scope of Hogan Lovells’ actual authority to consent to service is relevant to the enquiry.
Did the consent extend to a claim by Actavis Group? Lilly contends that it only consented to service of a claim by the companies identified in Bird & Bird’s letter dated 12 July 2012, namely “Actavis Group PTC ehf and its relevant national subsidiaries”. As is common ground, however, Actavis Group is neither Actavis PTC nor a subsidiary of Actavis PTC. Actavis contend that the reasonable person having all the background knowledge available to the parties as at 31 July 2012 would have understood Bird & Bird’s letter dated 26 July 2012 to have requested, and Hogan Lovells’ letter dated 31 July 2012 to have given, consent to service of proceedings by the parent operating company of the Actavis group and its relevant national subsidiaries regardless of their precise identities.
In assessing these rival contentions, the starting point is to identify the background knowledge available to the parties as at 31 July 2012. Since it is Lilly that was being asked to consent to service, it is the knowledge available to Lilly which matters. I do not understand it to be disputed that Lilly knew that the Actavis group is a multinational supplier of generic pharmaceuticals and that companies in the group are frequent litigants in patent disputes before this Court. The evidence in support of Lilly’s application in the First Claim includes a print-out of a D&B Global Reference Solution search showing the structure of the Actavis group carried out by Hogan Lovells on 2 August 2012. It is not disputed that a search on 31 July 2012 would have yielded the same result, and accordingly this information was available to Lilly at that date. The search shows that (i) Actavis Group is (ignoring what appears to be a holding company) the parent company of the group, (ii) Actavis Group has a large number of national subsidiaries (including in Germany, Italy and the UK), (iii) Actavis PTC is a subsidiary of Actavis Group (and not vice-versa) and (iv) Actavis PTC only has active subsidiaries in Iceland (one of which is Medis).
It should be noted that Actavis has included in its evidence on these applications a confidential document showing the actual structure of the Actavis group as at July 2012. This shows that the structure shown by the D&B search is in fact inaccurate and incomplete. For example, it includes Actavis Group’s French and Spanish subsidiaries, whereas the D&B search does not. As counsel for Lilly accepted, however, this information shown in the confidential document was not available to Lilly as at 31 July 2012.
Lilly has sought to rely upon the fact that 33 out of 34 marketing authorisations granted by the Medicines and Healthcare Regulatory Agency to the Actavis group this year were granted to Actavis PTC. I am unconvinced that this information is background knowledge which was available to the parties as at 31 July 2012, since it only emerged in Lilly’s reply evidence. Although I accept that the information was in the public domain, that indicates that, even when challenging this Court’s jurisdiction, Lilly and its lawyers did not initially think that it was relevant to search for that information. Even if it was background knowledge available to the parties as at 31 July 2012, however, I do not regard it as significant. This is because, once a marketing authorisation has been granted to one company in a group, it can be relied on by other companies in the group (including a parent and a subsidiary).
The next thing to consider is whether and to what extent the reasonable person would have understood the precise identity of the prospective claimants to be important to the consent which was given. There are three aspects to this enquiry.
The first is the information which was provided in Bird & Bird’s letter dated 12 July 2012. This stated that Bird & Bird acted for “Actavis Group PTC ehf and its relevant national subsidiaries”. It is common ground that “relevant” would have been understood to mean “relevant to the designations of the Patent mentioned below”, but the letter did not identify the “relevant national subsidiaries” in question. If the identity of the intended claimants was a matter of concern to Lilly, one would have expected Hogan Lovells to ask for further information about this before consenting to service. It did not do so.
The second aspect is the substantive claim. In some cases, the identity of the prospective claimant will be important to the prospective defendant, and hence to the interpretation of any consent to service, because it is relevant to the substantive claim: see, for example, Firstdale Ltd v Quinton [2004] EWHC 1926 (Comm). In the present case, the claims are claims for declarations pursuant to the Court’s inherent jurisdiction that proposed acts would not infringe the non-UK designations of the Patent. In my judgment the identity of the person who proposes to do the acts is irrelevant to that question. The identity of the claimant may be relevant to the question of whether the claimant has a real commercial reason for seeking declaratory relief, but in my view it is manifest that the Actavis group does have a real commercial reason. I cannot see that it really matters for that purpose precisely which company or companies in the group brings the claim. (I should make it clear, however, that in saying this I am not intending to prejudge any arguments about the res judicata effect of any declarations which Actavis may obtain.)
The third aspect is procedural. In some cases, the identity of the prospective claimant will be important to the prospective defendant because it is relevant to procedural questions such as disclosure, compellability of witnesses and security for costs. In the present case Lilly does not suggest that the precise identity of the claimant(s) affects any of these questions. It is unlikely that any company in the Actavis group will have any disclosable documents and it is unlikely that any company in the Actavis group will have any compellable witness, since the primary - and probably the only - issue in the First and Second Claims will be the construction of claims 1 and 12 of the Patent. Lilly has not sought security for costs, and in any event it has not suggested that it would make any difference to such an application whether the claimant was Actavis Group or Actavis PTC.
Counsel for Lilly argued that the words “Actavis Group PTC ehf and its relevant national subsidiaries” were perfectly clear, that there was nothing to suggest that anything had gone wrong with the language and that they should therefore be given their natural and ordinary meaning.
Counsel for Actavis argued that the reasonable person equipped with the background knowledge would realise that Bird & Bird or their clients (in fact it was their clients) must have made a mistake in referring to Actavis PTC rather than Actavis Group, since Actavis PTC did not appear to be the parent operating company of the Actavis group and did not have any relevant national subsidiaries. He drew an analogy with the tenant’s letters in Mannai, which said “12 January 1995” when the tenant meant 13 January 1995.
Counsel for Actavis also argued that the reasonable person would conclude that, when Hogan Lovells stated on 31 July 2012 that Lilly consented to service, Lilly was not concerned as to the precise identity of the prospective claimant. In this connection he drew an analogy with the case of Front Carriers Ltd v Atlantic and Orient Shipping Corp [2007] EWHC 421 (Comm), [2007] 2 Lloyds Rep 131, in which Langley J held that the communications between the parties showed that the defendant had intended to contract with the disponent owner of the vessel. The defendant did not care who that was provided it was a member of the claimant’s group. Accordingly, a contract had been formed between the claimant and the defendant, even though the draft contract referred to another company with a similar name.
Did the consent extend to a claim in respect of the non-UK designations of the Patent? Lilly contends that it only consented to service of a claim in respect of the UK designation. Actavis contend that Lilly also consented to service of claims in respect of the French, German, Italian and Spanish designations.
Counsel for Actavis argued that Bird & Bird’s letter dated 12 July 2012 made it crystal clear in the second and third paragraphs that it was concerned with the position in France, Germany, Italy and Spain as well as the UK and that it sought both “a written acknowledgement” in relation to the UK and “a written acknowledgement” in relation to the other jurisdictions. He further argued that Bird & Bird’s letter dated 26 July 2012 had clearly stated that if “the acknowledgements [plural]”, which must mean all the acknowledgements sought in the 12 July letter, were not provided, Actavis intended to serve proceedings seeking “appropriate declarations [plural]”, which must mean declarations in respect of the matters not acknowledged, from “the Court” [singular]”, which could only mean this Court. It then asked whether Hogan Lovells were instructed to accept service of “such proceedings”, which could only mean proceedings in this Court seeking those declarations.
Counsel for Lilly argued that the correspondence had to be read against the background that claims for declarations of non-infringement of foreign designations of patents were almost unprecedented. While I accept that that is so, it seems to me that the importance of that factor is considerably tempered by the impact of the Supreme Court’s decision in Lucasfilm on 27 July 2011. As any experienced intellectual property solicitor, such as those representing Lilly, would have known, that decision made it much easier for parties to argue that the claims concerning infringement and non-infringement of foreign patents were justiciable in this Court. Thus it was only a matter of time before a case such as this one presented itself.
Counsel for Lilly also sought to rely upon the fact that Lilly had instructed Hogan Lovells to issue proceedings in Germany prior to 26 July 2012, and those proceedings were issued on 30 July 2012. As he accepted in the course of argument, however, those facts do not form part of the relevant background knowledge, since Actavis only became aware of the German proceedings on 9 August 2012.
Counsel for Lilly went on to dispute counsel for Actavis’ reading of the correspondence. He fastened on the word “declarations” in the second sentence of the paragraph following numbered paragraph 2 in the 12 July letter. He argued that the word “declarations” in the 26 July letter referred back to those declarations, that is to say, declarations under the 1977 Act in respect of the UK designation.
In my judgment counsel for Lilly’s argument places more weight upon the use of the word “declarations” in that sentence than it can bear. I consider that the correct interpretation of the correspondence is that argued for by counsel for Actavis. I therefore conclude that Lilly consented to the service of proceedings which included claims for declarations of non-infringement of the non-UK designations of the Patent.
Finally, I should record that counsel for Lilly also sought to rely upon the final paragraph of Bird & Bird’s letter dated 1 August 2012 (quoted in paragraph 12 above) as evincing some uncertainty about whether service had been validly effected under the consent for service. As counsel for Actavis pointed out, however, that letter cannot affect the proper interpretation of the consent for service. In any event, I do not agree with the interpretation placed upon the final paragraph by counsel for Lilly.
Conclusion. It follows that the First Claim was validly served under the consent for service. In case I am wrong in this conclusion, however, I must go on to consider whether the First Claim has been validly served in one of the other ways relied on and whether the Second Claim has been validly served.
Was service of the First Claim validly effected under CPR r. 63.14(2)(a)?
CPR r. 63.14(1) and (2) provide as follows:
“(1) Subject to paragraph (2), Part 6 applies to service of a claim form and any document in any proceedings under this Part.”
(2) A claim form relating to a registered right may be served–
(a) on a party who has registered the right at the address for service given for that right in the United Kingdom Patent Office register, provided the address is within the United Kingdom; or
(b) in accordance with rule 6.32(1), 6.33(1) or 6.33(2) on a party who has registered the right at the address for service given for that right in the appropriate register at—
(i) the United Kingdom Patent Office; or
(ii) the Office for Harmonisation in the Internal Market.”
CPR r. 63.1 includes the following provisions:
“(1) This Part applies to all intellectual property claims including-
(a) registered intellectual property rights such as
(i) patents;
…
(2) In this Part –
(a) ‘the 1977 Act’ means the Patents Act 1977;
…
(e) ‘patent’ means a patent under the 1977 Act …
…”
As noted above, Bird & Bird served the First Claim on the address for service given by Lilly for the UK designation of the Patent, which is an address within the United Kingdom, on 11 October 2012. There is no dispute that that was good service of the First Claim so far as it concerned the UK designation of the Patent in accordance with CPR r. 63.14(2)(a). Actavis contend that it was also good service of the First Claim so far as it concerned the non-UK designations. Lilly disputes this.
The dispute turns on the proper interpretation of the words “claim form relating to a registered right” in r. 63.14(2). It is common ground that a UK designation of a European patent is a registered right within the definitions contained in r. 63.1, but a non-UK designation of a European patent is not. Counsel for Actavis submitted that a claim form which contained a claim concerning a UK designation related to that registered right even if it also included claims relating to other designations. Counsel for Lilly submitted that “relating to” meant “so far as it relates to”. He pointed out that, if counsel for Actavis’ interpretation were accepted, it would enable a claimant with a claim concerning a UK patent to serve unrelated claims against the same defendant without having to found jurisdiction under Articles 2 or 5 of the Brussels I Regulation, without having to obtain permission to serve out of the jurisdiction and without having to satisfy CPR r. 6.9.
In my judgment r. 63.14(2) is properly to be construed in the manner contended for by counsel for Lilly. Accordingly, service of the Claim Form in the First Claim on the address for service did not constitute good service of the First Claim under r. 63.14(2)(a).
It follows that it is not necessary for me to consider a point raised by counsel for Lilly as to the effect of r. 63.14(1) and CPR r. 6.7(1)(b) having regard to the consent for service.
Was service of the First Claim validly effected under CPR r. 6.9(2)?
The law
CPR r. 6.9(2) enables a claim form to be served on a company or corporation other than one registered in England and Wales at “[a]ny place within the jurisdiction where the corporation carries on its activities; or any place of business of the company within the jurisdiction”. This provision is the successor to a series of earlier provisions going back to RSC Order IX r. 8. Although the general rule is that the CPR are a new procedural code, and thus cases decided under the RSC are no longer authoritative, it is common ground that in this area earlier authorities remain highly persuasive. These authorities establish the following principles.
There is no requirement that the claim be connected to the activities or business carried on at the place in question: see Dicey, Morris and Collins, The Conflict of Laws (15th ed) at §11-117 and the cases cited in footnote 326, to which may be added Sea Assets Ltd v PT Garuda Indonesia [2001] BCC 294 at 299. The “place of business” must be a fixed and definite one: see Dicey at §11-118 and the cases cited in footnote 331. The activity must have been carried on for a sufficient time for it be characterised as a business: see Dicey at §11-118. The business or activities done at the place do not need to be substantial as a proportion of the company’s business or activities: see Aktiesselskabet Dampskib “Hercules” v Grand Trunk Pacific Railway Co [1912] 1 KB 222 and South India Shipping Corp Ltd v Export-Import Bank of Korea [1985] 1 WLR 585. Nor does the company need itself to own or lease the place of business: see Saccharin Corporation v Chemische Fabrik [1911] 2 KB 516.
As the editors of Dicey point out at §11-119 (footnote omitted):
“… in practice a real problem will normally only arise where the corporation's business is alleged to be carried on by a representative or agent, who is not an officer or employee of the corporation, and who may act as a representative or agent for other corporations in addition. Service may be effected on the representative or agent if the business is that of the corporation, and not solely the business of the representative or agent who acts for it in England. Where the representative or agent has power to make contracts on behalf of the foreign corporation and displays its name on his premises, there will be little difficulty in establishing that the place of business is that of the corporation”
The leading authority on this question remains Adams v Cape Industries plc [1990] 1 Ch 433 at 530-531, in which the Court of Appeal held that the question whether the representative had been carrying on the foreign corporation's business or had been doing no more than carrying on his own business would necessitate an investigation of the functions he had been performing and all aspects of the relationship between him and the corporation, including the following:
“(a) whether or not the fixed place of business from which the representative operated was originally acquired for the purpose of enabling him to act on behalf of the corporation; (b) whether the corporation had directly reimbursed him for (i) the cost of his accommodation at the fixed place of business; (ii) the cost of his staff; (c) what other contribution, if any, the overseas corporation made to the financing of the business carried on by the representative; (d) whether the representative was remunerated by reference to transactions, e.g. by commission, or by fixed regular payments or in some other way; (e) what degree of control the corporation exercised over the running of the business conducted by the representative; (f) whether the representative reserved part of his accommodation or part of his staff for conducting business related to the corporation; (g) whether the representative displayed the corporation's name at his premises or on his stationery, and if so, whether he did so in such a way as to indicate that he was a representative of the corporation; (h) what business, if any, the representative transacted as principal exclusively on his own behalf; (i) whether the representative made contracts with customers or other third parties in the name of the corporation, or otherwise in such manner as to bind it; (j) if so, whether the representative required specific authority in advance before binding the corporation to contractual obligations.”
In relation to factors (i) and (j), the Court held that it was wrong to say that the presence of the corporation could never be established unless the representative had authority to contract on behalf of the principal, but that the presence or absence of such authority was of great importance and was the principal test.
Assessment
Actavis contend that Lilly has a place of business at the Lilly Research Centre in Windlesham, which is owned by Lilly UK. Although Actavis rely upon a number of matters in support of this contention, counsel for Actavis primarily focussed upon the activities of the European Patent Operations Department, which is headed by Dr Burnside. In addition to Dr Burnside, the Department consists of six patent attorneys and three patent administrators. The Department is located in the Lilly Research Centre.
Dr Burnside’s current title is “Senior Director – Assistant General Patent Counsel”. He is a European patent attorney and a UK chartered patent attorney. He has been employed by Lilly UK since 1 January 2001. In a speaker biography for a conference organised by the Intellectual Property Owners Association in Brussels on 10 May 2012 Dr Burnside described himself as follows:
“Ivan Burnside is Sr. Director-Assistant General Patent Counsel at Eli Lilly and Company. … He trained in a London Private Practice firm before joining Eli Lilly and Company in January 2001. … Ivan is based in the United Kingdom and reports to Vice President-Deputy General Patent Counsel, located in the United States of America. He is head of European Patent Operations Department covering prosecution, oppositions, appeals, defense and enforcement (litigation) of patents in the European region, IP aspects of parallel trade in Europe, customs and excise procedures and IP advocacy activities. ”
As noted above, Dr Burnside was Lilly’s representative before the European Patent Office in respect of the Patent and his address is the address for service in respect of the UK designation. The same is true with regard to many of Lilly’s other European patents. As Lilly points out, however, it is required to have a professional representative to act on its behalf in all proceedings under the EPC who must be a national of a Contracting State and have his place of business of employment in a Contracting State by virtue of Articles 133(2) and 134(2) EPC. It is also obliged to have an address for service in respect of UK designations of European patents, but that address need not be in the UK.
Under a delegation of authority dated 23 July 2009, Lilly (“the Company”) has expressly delegated to Dr Burnside the following authority:
“Authority to approve and execute for and on behalf of the Company, documents in connection with patent matters in Europe relating to:
(i) the institution, prosecution, and completion of proceedings directed towards the issuance of patents;
(ii) the amendment, restriction, renewal, reissue, revival, maintenance, restoration, cancellation, extension and abandonment of patents and applications for patents;
(iii) the institution, prosecution, and termination of proceedings of opposition, revocation, and nullification, including the filing of preliminary statements, concessions of priority, disclaimers, abandonments of the contents, and abandonments of the invention, the institution of any revocation or nullification being subject to prior approval by the Senior Vice President and General Counsel of the Company;
(iv) the institution, prosecution, and termination of proceedings of enforcement of patents, including the filing of applications for interim, interlocutory and preliminary injunctions, and all other proceedings for infringement of patents, the initiation of such proceedings being subject to prior approval by the Senior Vice President and General Counsel of the Company;
(v) the settlement of patent proceedings of opposition, revocation, nullification and enforcement, subject to prior approval by the Senior Vice President and General Counsel of the Company;
(vi) the filings of statutory disclaimers;
(vii) the institution, prosecution, and termination of appellate proceedings; and
(viii) the granting and the revocation of powers of attorney in connection with any of the foregoing.”
It can be seen that some of the matters in paragraphs (iii) and (iv) and all of the matters in paragraph (v) are subject to prior approval, whereas none of the other matters are. It can also be seen that Dr Burnside has authority to enter into contracts on Lilly’s behalf, for example with external attorneys, lawyers and expert witnesses as well as paying application and renewal fees. It is clear from the evidence that Dr Burnside, assisted by the other members of the European Patent Operations Department, does all of these things in relation to Lilly’s European patent portfolio, does them for Lilly, does them in Lilly’s name and does them from Windlesham, taking both strategic and tactical decisions. Furthermore, the European Medicines Agency has addressed decisions to Lilly at Windlesham, in particular with regard to waivers for paediatric use of pemetrexed disodium and other products and in connection with paediatric investigation plans for various products.
Counsel for Lilly submitted that the role of Dr Burnside and his colleagues was no different to that of an external firm of patent attorneys. I do not accept that. As counsel for Actavis pointed out, by way of example, Dr Burnside has authority to abandon (or, as English lawyers would say, surrender) Lilly’s European patents. It is inconceivable that an external firm would be given that authority. It is worth pointing out in this connection that patents are among the most important assets of a pharmaceutical company like Lilly.
If one considers the factors listed in Adams v Cape, the position with regard to the European Patent Operations Department generally, and Dr Burnside specifically, is as follows:
The Lilly Research Centre was set up in 1967. It is not clear how long the European Patent Operations Department has been based there, but it does not appear that the premises were acquired by Lilly UK for the purpose of housing the Department.
It appears that the day to day operations of the Department are funded by Lilly UK, and in particular that Lilly UK pays the salaries of the employees, but it is not clear whether or not Lilly UK receives any reimbursement from Lilly.
It is not clear whether or not Lilly makes any other contribution to the financing of the Department.
It does not appear that the Department is remunerated by Lilly for its work whether by commission or otherwise.
It appears that Lilly does exercise overall management control over the Department, while allowing the Department a fair degree of autonomy as shown by Dr Burnside’s authority.
Part of the Centre and the whole of the Department are reserved for conducting Lilly’s European patent business (although the Department also handles the European patent business of other Lilly subsidiaries).
Dr Burnside’s business card, email signature and speaker biography present him as representing Lilly, albeit that the first two also give Lilly UK as part of his address.
The Department does not appear to transact much business on behalf of Lilly UK as distinct from Lilly (or other Lilly subsidiaries).
The Department does make contracts in the name of Lilly, as discussed above.
Dr Burnside requires approval in relation to some matters, but not others.
Counsel for Lilly sought to rely upon certain other factors as supporting the conclusion that Lilly did not have a place of business in the UK, such as the fact that Lilly does not, but Lilly UK does, pay corporation tax in the UK. I do not regard factors of this kind as persuasive. The test for a place of business in the UK under CPR r. 6.9 is not the same as the test for the payment of corporation tax. It is quite possible for a foreign corporation to have a place of business here without paying corporation tax here. Furthermore, Actavis’ case is based primarily upon the operations of the European Patent Operations Department, which might well not give rise to taxable profits.
Taking all of the evidence into account, I conclude that Lilly does have a place of business here for the purposes of CPR r. 6.9 in the form of the European Patent Operations Department in Windlesham. Accordingly, the First Claim was validly served at that address.
Was service of the Second Claim validly effected under the consent for service?
Actavis contends that, if the consent for service embraced claims for declarations of non-infringement of the non-UK designations of the Patent but not a claim by Actavis Group, then the Second Claim was validly served under the consent for service given by Hogan Lovells on behalf of Lilly because, as is common ground, Medis is a subsidiary of Actavis PTC. Lilly ripostes that, by the time Bird & Bird purported to serve the Second Claim on Hogan Lovells, Lilly had clearly withdrawn any consent to the service of claims for declarations of non-infringement of the non-UK designations of the Patent by Hogan Lovells’ letter dated 23 August 2012. Counsel for Actavis did not press any argument to the contrary. In my judgment Lilly is correct on this point. Accordingly, the Second Claim was not validly served under the consent for service.
Was there consent to jurisdiction?
Actavis contends that, if Hogan Lovells’ letter dated 31 July 2012 amounted to consent to service of the First Claim, it also amounted to consent to this Court’s jurisdiction. Unlike in cases such as Sphere Drake Insurance plc v Gunes Sigorta AS [1988] Lloyds Rep 139, the letter did not consent to service, but reserved the right to contest jurisdiction. Counsel for Lilly did not press any argument to the contrary. In my judgment Actavis are correct on this point. Accordingly, Lilly consented to the jurisdiction of this Court over the First Claim. It is common ground that, in those circumstances, Lilly cannot contest jurisdiction on the ground of forum non conveniens.
Forum non conveniens
If the First Claim was not validly served under the consent for service, but the First Claim was validly served under either r. 63.14(2)(a) or r. 6.9(2), Lilly seeks a stay of the proceedings on the ground of forum non conveniens.
The law
It is common ground that the principles to be applied are those stated by Lord Goff of Chieveley in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 at 476-478. The key elements of those principles are as follows:
“(a) The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.
…
(d) Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum. These are the factors which Lord Diplock described, in MacShannon’s case [1978] A.C. 795, 812, as indicating that justice can be done in the other forum at ‘substantially less inconvenience or expense.’ … Lord Keith of Kinkel, in The Abidin Daver [1984] A.C. 398, 415, … referred to the ‘natural forum’ as being ‘that with which the action had the most real and substantial connection.’ So it is for connecting factors in this sense that the court must first look; and these will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction …, and the places where the parties respectively reside or carry on business.
(e) If the court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay …
(f) If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this inquiry, the court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors with other jurisdictions. One such factor can be the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction …”
Assessment
It is common ground that Actavis’ claims for declarations of non-infringement of the French, German, Italian and Spanish designations of the Patent can be tried in the courts of France, Germany, Italy and Spain respectively. The question is whether those courts are the appropriate fora for the trial of those claims. If the Court concludes that they are, Actavis do not contend that there are any circumstances by reason of which justice requires that a stay should nevertheless be refused.
Counsel for Lilly submitted that, even where there was no challenge to validity, the natural forum for determining an issue as to patent infringement was the courts of the state in which the patent was registered, and therefore this Court should be very cautious about exercising jurisdiction over questions of infringement of foreign patents. In support of this submission, he relied in particular upon the following well-known passage in the judgment of Aldous J in Plastus Kreativ AB v Minnesota Mining and Manufacturing Co. [1995] RPC 438 at 447:
“For myself I would not welcome the task of having to decide whether a person had infringed a foreign patent. Although patent actions appear on their face to be disputes between two parties, in reality they also concern the public. A finding of infringement is a finding that a monopoly granted by the state is to be enforced. The result is invariably that the public have to pay higher prices than if the monopoly did not exist. If that be the proper result, then that result should, I believe, come about from a decision of a court situated in the state where the public have to pay the higher prices. One only has to imagine a decision of this court that the German public should pay to a British company substantial sums of money to realise the difficulties that might arise. I believe that, if the local courts are responsible for enforcing and deciding questions of validity and infringement, the conclusions reached are likely to command the respect of the public. Also a conclusion that a patent is infringed or not infringed involves in this country a decision on validity as in this country no man can infringe an invalid patent. In the present case the plaintiffs admit the validity of the patent and therefore there is no dispute upon the matter. However, it will be implicit in the judgment of this court that there has been infringement, and that, between the parties, the patent is valid. Thus, I believe it is at least convenient that infringement, like validity, is decided in the state in which it arises.”
These points were repeated, together with further reasons as to why it was not appropriate for the courts of this country to determine issues of infringement of foreign intellectual property rights, by Jacob LJ delivering the judgment of the Court of Appeal in Lucasfilm v Ainsworth [2009] EWCA Civ 503, [2010] Ch 503 at [174]-[183]. The conclusion the Court of Appeal drew from these considerations was that such issues were not justiciable before the English courts (i.e. the courts lacked subject matter jurisdiction). The Supreme Court disagreed, however, and held that at least claims for copyright infringement were justiciable.
As noted above, Lilly has not argued that claims for patent infringement (or their mirror image, claims for declarations of non-infringement) stand in a different position to claims for copyright infringement so far as the question of justiciability is concerned. Nevertheless, counsel for Lilly relied upon many of the same considerations which led the Court of Appeal to conclude that such claims were not justiciable as supporting Lilly’s contention that jurisdiction should be declined on the ground of forum non conveniens. As he pointed out, this is the approach which was advocated in Fawcett and Torremans, Intellectual Property and Private International Law (2nd ed) at §§6.91, 6.93-6.118 and 6.200-6.209, which was published between the decisions of the Court of Appeal and Supreme Court in Lucasfilm v Ainsworth, although it should be noted that an important part of the authors’ argument was that “the great virtue of the doctrine of forum non conveniens [is that] it provides the flexibility to allow an action commenced in England to continue, which a blanket subject matter limitation of jurisdiction does not” (§6.207).
If, however, one considers the reasons given in Lucasfilm v Ainsworth at [104]-[110] by Lord Walker of Gestingthorpe JSC and Lord Collins of Mapesbury, with whom Lord Phillips of Worth Matravers PSC and Baroness of Richmond JSC agreed and with whom Lord Mance JSC agreed subject to one reservation, for holding that there is no subject matter limitation on jurisdiction, in my opinion they are equally relevant to the operation of the forum non conveniens doctrine. The passage is too long to quote in full, but I would particularly highlight the following excerpts:
“108. There is no doubt that the modern trend is in favour of the enforcement of foreign intellectual property rights. First, article 22(4) of the Brussels I Regulation only assigns exclusive jurisdiction to the country where the right originates in cases which are concerned with registration or validity of rights which are ‘required to be deposited or registered’ and does not apply to infringement actions in which there is no issue as to validity. This can rarely, if ever, apply to copyright. Second, the Rome II Regulation also plainly envisages the litigation of foreign intellectual property rights and, third, the professional and academic bodies which have considered the issue, the American Law Institute and the Max Planck Institute, clearly favour them, at any rate where issues of validity are not engaged.
109. There are no issues of policy which militate against the enforcement of foreign copyright. States have an interest in the international recognition and enforcement of their copyrights …. Many of the points relied on by the Court of Appeal to justify the application of the Moçambique rule in this case as a matter of policy would apply to many international cases over which the English court would have jurisdiction and would in principle exercise it, especially the suggestion that questions of foreign law would have to be decided. It was also said by the Court of Appeal that enforcement of foreign intellectual property law might involve a clash of policies such that a defendant may be restrained by injunction from doing acts in this country which are lawful in this country. But such an injunction will be granted only if the acts are anticipated to achieve fruition in another country, and there is no objection in principle to such an injunction. Nor is there any objection in principle, as the Court of Appeal thought, to a restraint on acts in another country. Extra-territorial injunctions are commonly granted here against defendants subject to the in personam jurisdiction. …”
Having regard to this reasoning, I find it difficult to believe that, if Mr Ainsworth had been domiciled in a country outside Europe, but had been resident and validly served in England, the Supreme Court would have held that considerations such as the need to apply foreign law, the extra-territorial effect of any injunction and the economic effect of enforcing foreign intellectual property rights meant that it was appropriate to stay the proceedings on the ground of forum non conveniens.
In this connection, it is also worth bearing in mind that neither the Brussels I Regulation nor the Rome II Regulation nor, so far as I am aware, the national law of any EU Member State (or Brussels or Lugano Contracting State) other than the UK and Ireland incorporates the doctrine of forum non conveniens.
If patents are no different to copyrights for the purposes of justiciability, why should they be treated differently for the purposes of forum non conveniens when validity is not in issue? Patents are, of course, monopolies, whereas copyrights are not, but why should that make all the difference? After all, in many contexts, copyrights have effects that are practically indistinguishable from true monopolies.
Counsel for Lilly argued that there was an important difference, particularly in cases like the present one, which was that, even if a party in the position of Actavis did not challenge the validity of the patent, validity was relevant to the scope of the patent’s claims at least under the approaches to Article 69 EPC and the Protocol adopted in some Contracting States. In support of this, he relied in particular upon evidence adduced by Lilly as to the approach taken by the French courts to Article 69 EPC and the Protocol. In brief, this suggests that the prior art is to be taken into account when determining the scope of protection. On this basis, counsel for Lilly submitted that Article 22(4) of the Brussels I Regulation supported the conclusion that the natural forum for the trial of a patent infringement (or non-infringement) claim was the State where the patent was registered.
As counsel for Actavis pointed out, the evidential foundation for this submission is less than compelling: Actavis’ evidence as to the approach taken in France is to the contrary and that was not really contested in Lilly’s evidence in reply. In any event, however, I am not persuaded that this factor makes any real difference to the question of whether the foreign courts are the appropriate fora for the determination of Actavis’ claims: see, by analogy, Case C-616/10 Solvay SA v Honeywell Fluorine Products Europe BV [2012] ECR I-0000 at [48]-[51] (holding that Article 22(4) does not preclude the grant of a cross-border provisional injunction to restrain patent infringement under Article 31 of the Brussels I Regulation even where invalidity is raised as a defence).
Counsel for Actavis submitted that there was no more appropriate forum than this Court because there was no court which was better placed to hear and determine claims in respect of the five designations of the Patent together. As he pointed out, this is not a conventional forum non conveniens dispute, since it is accepted that this Court has and should exercise jurisdiction in respect of Actavis’ claim in respect of the UK designation of the Patent in any event. Furthermore, it is not suggested by Lilly that any of the courts of France, Germany, Spain or Italy would have and exercise jurisdiction to determine all five claims together (or even two of them). Thus the issue is whether this Court should determine all five claims together, or whether they should be tried separately in five different courts. As counsel for Actavis submitted, in other types of cases, these factors have been regarded as militating strongly against the grant of a stay: see Bouygues Offshore v Caspian Shipping (Nos 1, 3,4, 5) [1998] 2 Lloyds Rep 461 at 470-471; Donohue v Armco Inc [2001] UKHL 64, [2002] 1 Lloyds Rep 425 at [28], [33]-[34], [36], [75]; and Crofts v Cathay Pacific Airways Ltd [2005] EWCA Civ 599, [2005] ICR 1436 at [51].
Counsel for Actavis argued that in the present case it was advantageous for all five claims to be determined by one court for three main reasons. First, it would mean that the case would be conducted by one team of lawyers on each side using one set of factual and expert witnesses (although in the present case it appears unlikely that there will be any need for factual witnesses), thereby saving costs for both sides. Secondly, it would enable the case to be determined by reference to one law, namely English law, if Lilly chose not to raise any issue as to foreign law, thereby saving even more costs. Thirdly, even if different laws were applied, it would mean that one court (and one court on appeal) would determine all five claims, thereby eliminating the prospect of inconsistent decisions unless they really were mandated by the different national laws’ approaches to Article 69 EPC and the Protocol.
In support of these arguments, counsel for Actavis relied upon the following observations, albeit in a slightly different context, of Laddie J in Sepracor Inc v Hoechst Marion Roussel Ltd [1999] FSR 754:
“21. … No doubt it is convenient and generally speaking desirable that, say, the law of Denmark should be considered and applied by Danish courts. For that purpose the foreign court would be the forum conveniens. But the courts here frequently have to determine issues of foreign law. The choice would appear to be between one action here with evidence relating to the law in 12 countries or separate actions in each of thirteen countries (assuming, of course, that under the Brussels Convention each and all of the foreign courts would be permitted to accept jurisdiction). If the former course is taken, although there may be separate issues relating to the law of joint tortfeasance in each country, it is likely that the law of infringement and validity will be in nearly all respects identical since each country has tried to implement the provisions of the EPC. On the other hand if the latter course is taken, in each of thirteen countries the national courts will be asked to determine the same issues of infringement and validity. This will involve preparing and producing evidence in each countries and 26 teams of lawyers will have to be instructed.
22. I have no doubt that one action would be quicker, cheaper and more convenient. It will reduce the possibility of conflicting decisions on the same EPC issues. In addition the Convention is designed to produce a uniform international code in accordance with which litigation is directed to specified national courts. It is well known and established that considerations of forum conveniens is not a relevant consideration under the Convention. I can think of no circumstances which would justify me exercising any discretion I may have so as to make an order which prevents a party from litigating in a court in which, in accordance with the provisions of the Convention, he is entitled to sue.”
Counsel for Lilly’s answers to the three points made by counsel for Actavis were as follows. So far as the first was concerned, he submitted that any saving would be outweighed by the cost and inconvenience of having to prove four foreign laws by means of expert evidence. In reality, there would be five teams of lawyers involved even if all five claims were tried here. As to the second point, he submitted that Lilly should not be obliged to consent to English law being applied to issues of infringement of its foreign patents. He relied on the fact that, when I asked counsel for Actavis whether Actavis would be prepared to agree to all five claims being tried by this Court applying Lilly’s choice of one of the five laws, the answer was no. With regard to the third point, he submitted that the differences between the different national approaches were real and would be likely to lead to different outcomes.
I agree with counsel for Lilly with regard to the second point. So far as the other two points are concerned, however, I agree with counsel for Actavis. I am unimpressed by the argument that foreign law is difficult and expensive to prove because it is treated as a question of fact. Nowadays, it is increasingly common for English courts to follow the approach adopted by Laddie J in Celltech R & D Ltd v MedImmune Inc [2004] EWHC 1124 (Pat), which he described at [48] as follows:
“Both parties provided expert evidence on the relevant German law, that evidence being given by Mr Peter Von Rospatt for the claimant and by Mr Matthias Brandi-Dohrn for the defendant. Although those witnesses disagreed on a few important issues, the parties agreed to forego the right to cross-examine. Their position is that the relevant German case law has been identified and they are content that I should read that for the purpose of resolving relevant areas of dispute.”
Furthermore, it is increasingly common in intellectual property cases for the courts of this country to apply case law from other EU Member States when deciding questions of European Union law or national law based on European conventions such as the CPC: see, for example, Grimme Landmaschinenfabrik GmbH & Co KG v Scott [2010] EWCA Civ 1110, [2011] FSR 7.
As to the different national approaches, I accept that there are differences. In my view, however, the differences are rather less now than they have been in the past. Certainly, in recent years the European patent judiciary have been striving for consistency. I am sceptical that the remaining differences of approach, as opposed to other factors, are responsible for different outcomes in parallel cases. In any event, it seems to me to be manifest that it will reduce the likelihood of inconsistent decisions if one court at first instance and one court on appeal determines all five of Actavis’ claims.
Counsel for Actavis also submitted that the English courts could provide a final determination more quickly than the French, German, Italian and Spanish courts, in particular because the pendency time on appeal from this Court to the Court of Appeal is relatively short by international standards and because a decision by the Court of Appeal is unlikely to be appealable to the Supreme Court (unlike, say, a decision of the Oberlandesgericht in Germany, which would be more readily appealable to the Bundesgerichtshof). He argued that this should be a significant factor in the exercise of the Court’s discretion as to whether to grant a stay because it was important to Actavis to achieve a final determination well before the end of 2015.
I accept the premises of this submission, but not the conclusion. Lord Goff’s speech in Spiliada made it clear that the decision whether to grant or refuse a stay on forum non conveniens grounds, while technically an exercise of discretion, is not an exercise in determining what course appears most convenient. The question to be determined is the appropriate forum for trial. Except where excessive delay in the foreign forum amounts to a reason for a stay to be refused in the interests of justice, that does not depend on the relative speed of the competing fora: see VTB Capital plc v Nutritek International Corp [2011] EWHC 3107 (Ch) at [199(iii)] (a point not affected by the subsequent decision of the Court of Appeal in that case).
Finally, counsel for Actavis relied also on the fact that Lilly’s European Patent Operations Department based in Windlesham has responsibility for the Patent as supporting the conclusion that England was the appropriate forum. I agree that this is a small factor favouring that conclusion.
Neither side relied on the location of witnesses or documents as being significant factors.
In conclusion, in my judgment Lilly has not shown that the courts of France, Germany, Italy and Spain are the appropriate fora for the trial of Actavis’ claims in relation to the French, German, Italian and Spanish designations of the Patent. Certainly I do not consider that it has shown that those courts are clearly or distinctly more appropriate than this Court. Accordingly, I would decline to grant a stay of those claims on the grounds of forum non conveniens.
Summary of conclusions
For the reasons given above, I conclude that:
Lilly consented to service of the First Claim, and thereby consented to the jurisdiction of this Court over it.
The First Claim was not validly served pursuant to CPR r. 63.14(2)(a).
The First Claim was validly served pursuant to CPR r. 6.9(2).
Lilly did not consent to service of the Second Claim. Otherwise, the conclusions with regard to service of the First Claim also apply to the Second Claim.
If Lilly did not consent to service, but the First Claim was validly served pursuant to either CPR r. 63.14(2)(a) or CPR r. 6.9(2), no stay of Actavis’ claims under the non-UK designations of the Patent should be granted on forum non conveniens grounds.