Teva Pharma BV & Anor v Amgen, Inc & Anor

The issue which I have to decide is whether it is “desirable” within the meaning of CPR rule 19.2(3) for Amgen, Inc. (“AI”) to cease to be a party to three claims relating to European Patent (UK) No. 2 345 724 entitled “G-CSF analog compositions and methods” (“724 (UK)”) brought by Teva UK Ltd (in the case of the first and third claims) and by Teva Pharma BV and Teva UK Ltd (in the case of the second claim). It is not necessary for present purposes to distinguish between Teva UK Ltd and Teva Pharma BV, and I shall refer to them individually and collectively as “Teva”.

The three claims are as follows:

The Revocation Claim and the SPC Claim were brought against AI. The DNI Claim was brought against AI and Amgen Manufacturing Ltd (“AML”). I shall refer to AI and AML collectively as “Amgen”. As explained in more detail below, at the dates on which the Claims were brought, AI was the registered proprietor of 724 (UK), although AI had assigned 724 to AML. AML is now the registered proprietor of 724 (UK).

Teva is a pharmaceutical company. Although best known as a manufacturer and supplier of generic pharmaceutical products, it also develops its own products. Lonquex is one such product. Teva’s objective in bringing the Claims is to ensure that it may lawfully market Lonquex, which it intends to launch in the near future.

Lipegfilgrastim is a long-acting granulocyte colony-stimulating factor (G-CSF) for the treatment of neutropenia. G-CSF is a polypeptide which stimulates bone marrow to produce granulocytes (a type of white blood cell). Neutropenia is a deficiency of white blood cells, typically caused by chemotherapy for cancer. The condition makes patients, who may already be very sick, susceptible to bacterial infections, and is therefore extremely serious.

Lipegfilgrastim is a pegylated G-CSF i.e. it has polyethylene glycol attached to the polypeptide. It is made by an enzyme-induced pegylation technology which was originally developed by Neose Technologies Inc (“Neose”). On 21 April 2004 Neose and a company called BioGenerix announced that they were collaborating on developing a long-acting G-CSF product using Neose’s pegylation technology. On 15 July 2004 Neose’s US Patent Application 2004/0137557 disclosing Neose’s pegylation technology was published. Subsequently Teva acquired Neose’s pegylation technology and the associated proprietary rights.

On 7 November 2007 Teva announced successful results from a Phase I trial of lipegfilgrastim. On 6 June 2011 Teva announced successful results from a Phase III trial of lipegfilgrastim. On 25 July 2013 Teva was granted a European marketing authorisation for lipegfilgrastim on the basis of a full regulatory dossier including the results of the Phase III trial.

Amgen is a pharmaceutical company. Amgen markets its own long-acting G-CSF product called Neulasta. The active ingredient of Neulasta is pegfilgrastim. Neulasta currently enjoys annual global sales of around $4 billion.

AI is a corporation incorporated in the State of Delaware, USA and its principal place of business is in California. AML is a company incorporated in Bermuda. AML is (directly or indirectly) a wholly-owned subsidiary of AI. AML manufactures Neulasta at a facility in Puerto Rico.

724 is part of a complicated family of European patents and patent applications, all of which claim priority from a US Patent Application dated 28 January 1993. The parent patent is European Patent No. 0 612 846, the application for which was filed on 27 January 1994 and which was granted on 16 August 2000. Three divisional applications from the parent were filed: Nos. 0 890 640, 0 965 638 (“638”) and 0 974 655. None of those three applications was pursued to grant. Subsequently a divisional application from 638 was filed, No. 1 233 065 (“065”). This was not pursued to grant either. On 11 August 2004 a second divisional application from 638 was filed, No. 1 482 046 (“046”). This eventually proceeded to grant on 11 April 2012. On 29 September 2010 724 was filed as a divisional application from 065. This proceeded to grant on 3 July 2013. The claims of 724 are similar, albeit not identical, to those of 046.

Prior to 13 August 2013, all of the patents and applications in this family, and their counterparts worldwide, were owned by AI. AI also owns a completely different family of patents, including European Patent No. 0 733 067 and an SPC based on that patent, which protect Neulasta.

The due date for payment of the renewal fee for the UK designation of 046 (“046 (UK)”) was 31 January 2013. The renewal fee was not paid by AI. The six month time limit for late payment of the renewal fee expired on 31 July 2013 without AI having paid the fee, and accordingly 046 (UK) lapsed. AI has not adduced any evidence that this was unintentional.

On 13 August 2013 AI and AML entered into an agreement whereby AI assigned 724 to AML (“the Agreement”). None of the other European patents or applications in the family were included, nor were any of their counterparts in other territories. The assignment was expressed to be in consideration of (i) an immediate payment of an amount which has not been disclosed and (ii) “an ongoing royalty upon first commercial sale of all products developed or commercialized from the Assigned Patent” at a rate to be negotiated between the parties. The Agreement is governed by Californian law.

On the same date AI and AML also entered into a short-form assignment of 724 which omits details of the consideration and other terms of the Agreement (“the Assignment”).

Teva’s evidence, which has not been controverted by Amgen, is that AML does not own any other patents.

On 14 August 2013 (i.e. the day after the Agreement) AI applied for a preliminary injunction against Teva in Germany alleging that dealings in Lonquex would infringe the German designation of 046 (“046 (DE)”). This application was unsuccessful, but AI has appealed.

Teva commenced the Revocation Claim on 19 September 2013. AI was named as the defendant. It is common ground that at that date (a) AI was the registered proprietor of 724 (UK) and (b) Teva was unaware of the Assignment or the Agreement. The Revocation Claim was served at AI’s address for service (AI’s patent attorneys) on the same day. On 4 October 2013 Amgen’s solicitors filed an acknowledgement of service.

Teva commenced the SPC Claim on 7 October 2013. AI was named as the defendant. It is common ground that at that date (a) AI was the registered proprietor of 724 (UK) and (b) Teva was unaware of the Assignment or the Agreement. On the same day Teva’s solicitors invited Amgen’s solicitors to accept service of the SPC Claim. On 9 October 2013 Master Bragge granted Teva permission to serve the SPC Claim on AI out of the jurisdiction.

On 16 October 2013 Amgen’s solicitors wrote to Teva’s solicitors informing them about the Assignment and suggesting that Teva amend both sets of proceedings to substitute AML for AI, and indicating that, if this was done, they would accept service of the SPC Claim.

On 18 October 2013 AI issued an application for permission to serve a combined Defence to both Claims on the date on which the Defence was due in the SPC Claim.

On 25 October 2013 Teva served the SPC Claim on AI in California.

On 4 November 2013 Amgen applied for orders that AML be substituted for AI in both the Revocation Claim and the SPC Claim.

Teva commenced the DNI Claim on 6 November 2013. AI and AML were both named as defendants. As I understand it, Amgen’s solicitors accepted service without prejudice to Amgen’s contention that AI should not be a party to this Claim. Although Amgen has not issued a separate application notice in relation to the DNI Claim, the parties have sensibly proceeded on the basis that the court’s decision in relation to the other two Claims will also apply to the DNI Clam.

Amgen’s applications first came before me on 7 November 2013. By that time Teva had indicated that it was agreeable to (a) AML being added as a party to the Revocation Claim and the SPC Claim and (b) Amgen serving a combined Defence to all three Claims on 2 December 2013. Accordingly, I made orders to that effect. Teva opposed AI ceasing to be party to the Claims, however.

At that stage, it appeared to me that Amgen’s applications to remove AI from the proceedings were premature for two reasons. First, because at that date AI was still the registered proprietor of 724 (UK). Secondly, because Teva had raised questions about the Agreement, which at that stage Amgen had not disclosed. Accordingly, I adjourned the applications for 14 days and made an order for disclosure of the Agreement. Since then, AML has been registered as proprietor of 724 (UK) and the Agreement had been disclosed.

Amgen’s applications are made pursuant to CPR rule 19.2. This provides, so far as relevant, as follows:

“(2)

The court may order a person to be added as a new party if –

(a)

it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

(b)

there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.

(3)

The court may order any person to cease to be a party if it is not desirable for that person to be a party to the proceedings.

(4)

The court may order a new party to be substituted for an existing one if –

(a)

the existing party’s interest or liability has passed to the new party; and

(b)

it is desirable to substitute the new party so that the court can resolve the matters in dispute in the proceedings.”

It is common ground that, as Waller LJ stated in Davies v Department of Trade & Industry [2006] EWCA Civ 1360, [2007] 1 WLR 3232 at [12], rule 19.2 confers “a very wide power to enable parties who may be affected by a finding in any proceedings to be joined”. See also Nottinghamshire County Council v Bottomley [2010] EWCA Civ 756, [2010] Med LR 407 at [20] (Stanley Burton LJ) and R (Nicklinson) v Ministry of Justice [2013] EWCA Civ 466 at [12] (Elias LJ). It appears that this power may be exercised to add (and therefore to retain) a party even if no existing party is in a position to assert a claim against the party sought to be joined: see Dunlop Haywards (DHL) Ltd v Erinaceous Insurance Services Ltd [2009] EWCA Civ 354, [2009] Lloyd’s Rep IR 464 at [58]-[60] (Rix LJ quoting Field J below without apparent disapproval).

Amgen has provided no explanation for the assignment of 724 by AI to AML, despite being challenged to do so by Teva. Teva contends that, in the absence of an alternative explanation, it should be inferred that AI’s motive was to avoid having to give disclosure of documents in the event that Teva brought a claim to revoke 724. Teva contends that this inference is supported by the following matters.

First, Teva contends that there are good grounds for believing that AI has damaging documents in its possession. There is a major insufficiency attack on 724, on the basis that it does not disclose a method of attachment of polyethylene glycol in a way which would fall within the claims. Teva invites the inference that this was not disclosed because Amgen had not achieved this by the time it made the application. Accordingly, Teva says that the time and effort which Amgen required to achieve this will be highly relevant to the insufficiency attack. Teva believes that that work was done by AI and so it will have the relevant documents.

Secondly, Teva points out that AI allowed 046 (UK) to lapse, but Amgen has given no explanation for this.

Thirdly, Teva says that there are a number of features of the Agreement which call for an explanation:

Teva contends that the only rational explanation is as follows:

Counsel for Amgen accepted that it was difficult for him to resist the inference that the reason for the assignment was connected with the proceedings which Amgen intended to bring against Teva. He submitted that it did not necessarily follow that the motive was to avoid disclosure. He suggested that an alternative reason was to ensure that Amgen could recover damages for AML’s lost profits, which would not necessarily be recoverable by AI: see Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443.

There are a number of problems with this suggestion, however. First, Amgen has not adduced any evidence that this was the reason. Secondly, Amgen has not adduced any evidence that AML makes profits by manufacturing Neulasta. Thirdly, Amgen has not adduced any evidence as to the financial relationship between AI and AML. Fourthly, it does not explain why AI allowed 046 (UK) to lapse. Fifthly, it does not explain why the Agreement only relates to 724.

Accordingly, I infer that the reason for the Agreement was as Teva suggests.

As counsel for Teva submitted, it is clear that the Claims were properly brought against AI at the dates on which they were commenced, since at those dates AI was the registered proprietor of 724 (UK) even though it had assigned 724 (UK) to AML. The Patents Act 1977, the Patents Rules 2007 and the CPR make it clear that a person is entitled to consult the register of patents and commence revocation proceedings by serving those proceedings on the proprietor at the address that they find in the register: see in particular section 32(9) of the 1977 Act, rule 103 of the 2007 Rules and CPR rule 63.14(2)(a). Even when the claimant knows that the patent in suit has been assigned to another party, the registered proprietor remains a proper party, in order to ensure that any order the claimant obtains is fully effective: see e.g. Practice Direction 63 paragraph 14.1.

As counsel for Amgen submitted, however, it does not necessarily follow that it is desirable for AI to remain a party now that it is no longer the registered proprietor of 724 (UK). On the face of it, AI’s interest has passed to AML. Accordingly, Amgen contends that the court should make an order under CPR rule 19.2(4).

As noted above, Teva has accepted that AML should be added as a defendant to the Revocation Claim and the SPC Claim under rule 19.2(2). Thus the issue is whether it is desirable for AI to cease to be a party under rule 19.2(3).

Counsel for Teva advanced four reasons why it was not desirable for AI to cease to be a party, but on the contrary it was desirable for AI to remain a party.

First, he submitted that it was clear that AI had gone to considerable lengths to avoid being a party to proceedings concerning its G-CSF patents in this country and had done so in order to avoid disclosure. I accept that this is the case, but I do not accept that this in itself makes it desirable for AI to remain a party. A group of companies is entitled to structure its patent holdings in whatever manner it considers most advantageous. There is nothing improper about choosing an ownership structure which avoids or minimises the risk of disclosure. Nor does the choice of such a structure mean that it is desirable for a party with no interest in a patent to be a party to proceedings concerning that patent.

Secondly, counsel for Teva submitted that it was desirable for AI to remain a party in order that Teva could seek disclosure from it. He accepted that it was not legitimate to bring proceedings against a party purely in order to obtain disclosure from that party (see e.g. Douihech v Findlay [1990] 1 WLR 269 and Unilever plc v Chefaro Proprietaries Ltd [1994] FSR 135 at 139 (Glidewell LJ)); but he submitted that this was a factor which could be taken into account with other factors. In principle, I am inclined to accept that, but I do not regard it as a significant factor in the present case. No decision has yet been made as to the relevance or proportionality of the disclosure which Teva seeks, and it cannot be assumed that Teva will necessarily obtain such disclosure even if AI remains a party. Furthermore, there are other potential ways for Teva to obtain disclosure from AI even if AI ceases to remain a party. Even if no order could be made under CPR rule 31.17 because AI is outside the jurisdiction (as to which I express no view), Teva could make an application in the USA under 28 USC §1782.

Thirdly, counsel for Teva submitted that AI had a potential financial interest in the proceedings as a result of the royalty provision in the Agreement. This submission gave rise to a dispute between counsel as to the construction of that provision. Counsel for Amgen submitted that it only applied to the commercialisation of products by AML, whereas counsel for Teva submitted that it extended to infringing products. It is not necessary for present purposes to attempt to resolve that dispute. Even if counsel for Teva is correct, I do not accept that the mere fact that AI has a potential financial interest in the outcome means that it is desirable for AI to remain a party. Thus a financial interest in the outcome would not suffice to make AI a privy: see Kirin-Amgen Inc v Boehringer Mannheim GmbH [1997] FSR 289.

Fourthly, counsel for Teva submitted that Teva’s real adversary in this legal and commercial battle was AI, that AML was merely a proxy through whom AI wished to conduct the litigation and that it was desirable for the real adversary to be party to the litigation so that the court’s rulings would be binding on it. In particular, he submitted that Teva had a legitimate interest in ensuring that AI was bound by any declarations made by the court that 724 (UK) was invalid and/or that dealings in lipegfilgrastim did not infringe 724 (UK) and/or that no SPC could validly be based on 724 (UK).

In order to evaluate this submission, it is necessary to consider the principles concerning the grant of declaratory relief. These were summarised by Aikens LJ in Rolls-Royce plc v Unite the Union [2009] EWCA Civ 387, [2010] 1 WLR 318 at [120] as follows:

“For the purposes of the present case, I think that the principles in the cases can be summarised as follows.

(1)

The power of the court to grant declaratory relief is discretionary.

(2)

There must, in general, be a real and present dispute between the parties before the court as to the existence or extent of a legal right between them. However, the claimant does not need to have a present cause of action against the defendant.

(3)

Each party must, in general, be affected by the court's determination of the issues concerning the legal right in question.

(4)

The fact that the claimant is not a party to the relevant contract in respect of which a declaration is sought is not fatal to an application for a declaration, provided that it is directly affected by the issue (in this respect the cases have undoubtedly ‘moved on’ from Meadows).

(5)

The court will be prepared to give declaratory relief in respect of a ‘friendly action’ or where there is an ‘academic question’ if all parties so wish, even on ‘private law’ issues. This may particularly be so if it is a ‘test case’, or it may affect a significant number of other cases, and it is in the public interest to decide the issue concerned.

(6)

However, the court must be satisfied that all sides of the argument will be fully and properly put. It must therefore ensure that all those affected are either before it or will have their arguments put before the court.

(7)

In all cases, assuming that the other tests are satisfied, the court must ask: is this the most effective way of resolving the issues raised? In answering that question it must consider the other options of resolving this issue.”

Although Aikens LJ dissented in that case, his summary of the relevant principles has been treated as authoritative in subsequent cases: see e.g. Milebush Properties Ltd v Tameside Metropolitan Borough Council [2011] EWCA Civ 279, [2012] 1 P & CR 3 at [46] (Mummery LJ) and [95] (Jackson LJ), although Moore-Bick LJ suggested at [87]-[88] that principle (2) was expressed somewhat too narrowly.

Applying those principles to the present case, counsel for Teva submitted that Teva had a good claim for declaratory relief against AI, assuming it was successful in the Claims, whereas counsel for Amgen submitted that principles (2), (3) and (7) led to the conclusion that Teva was not in a position to obtain declaratory relief against AI.

I do not consider that it is necessary or appropriate for me to determine whether Teva would succeed in a claim for declaratory relief against AI. It is sufficient for me to decide whether Teva has a real prospect of successfully claiming declaratory relief against AI: if Teva does have a real prospect of success, then it must follow that it is desirable for AI to remain a party.

In my judgment Teva does have a real prospect of successfully claiming declaratory relief against AI. It is clear from Rolls-Royce that the fact that the party in question (here, AI) does not own the legal right in question (here, 724(UK)) is not determinative. The key question is whether that party will be affected by the court’s determination of the issues concerning that right, so that, where the first party is sought be made a defendant, the opposing party (here, Teva) has a legitimate interest in ensuring that the first party is bound by that determination. I consider that it is arguable that AI will be affected by the court’s determination of the issues concerning 724 (UK) in a number of ways.

First, on the present state of the evidence, there appears to be nothing to prevent AI from procuring that AML assigns 724 back to it at any time. There is no evidence that AI intends to do this. Nevertheless, given the evidence that AI assigned 724 to AML for tactical reasons, it seems to me that Teva is legitimately concerned that AI may change its mind in future for different tactical reasons.

Secondly, AI remains the owner of the other patents in the family. If it turned out that AI did not intend to allow 046 (UK) to lapse, it might be able to obtain an order for restoration of that patent to the register pursuant to section 28 of the 1977 Act. If it did so, it could then bring proceedings for infringement of 046 (UK) against Teva in parallel to the German proceedings. Even if that possibility is discounted, AI might be able to bring proceedings against Teva for infringement of other patents in the family (e.g. another divisional). If AI did not do so prior to the trial of the present Claims, and Teva was successful in the Claims, then Teva would be able to rely on the principle in Henderson v Henderson (1843) 3 Hare 100 as an answer to a future claim of that nature. It is true that, as counsel for Amgen submitted, the same argument would run even if AI was not party to the present proceedings; but that would create an extra obstacle for Teva to overcome.

Thirdly, if Teva is successful in the Claims, it may be anticipated that Teva will wish to contend that the findings of fact made by this court are res judicata and give rise to issue estoppels binding on Amgen in other proceedings, such as proceedings against AI in Germany for revocation of 046 (DE). This is particularly likely to be the case if Teva is successful in establishing in the Revocation Claim that 724 is invalid on the grounds of insufficiency as outlined above. As counsel for Amgen submitted, the effect of such findings in other proceedings in other countries will be a matter for the courts of those countries applying their own laws. Nevertheless, I consider that Teva is more likely to prevail in such arguments if the finding is made in proceedings to which AI is a party than if it is made in proceedings to which AI is not a party.

Fourthly, there is a particular question which may arise in relation to the SPC Claim. In order to explain this, it is necessary to set out the relevant provisions of the SPC Regulation:

“Article 1

Definitions

For the purpose of this Regulation:

…

(c)

‘basic patent’ means a patent which protects a product as defined in (b) as such, a process to obtain a product or an application of a product, and which is designated by its holder for the purpose of the procedure for grant of a certificate;

…

Article 3

Conditions for obtaining a certificate

A certificate shall be granted if, in the Member State in which the application referred to in Article 7 is submitted and at the date of that application:

(a)

the product is protected by a basic patent in force;

(b)

a valid authorisation to place the product on the market as a medicinal product has been granted in accordance with Directive 2001/83/EC or Directive 2001/82/EC, as appropriate;

…

Article 6

Entitlement to the certificate

The certificate shall be granted to the holder of the basic patent or his successor in title.”

As yet, neither AI nor AML has applied for an SPC in respect of 724 (UK). It appears to be common ground that Amgen could not seek an SPC in respect of 724 (UK) based on any marketing authorisation obtained by Amgen. Teva anticipates that Amgen will apply for an SPC in respect of 724 (UK) based on Teva’s marketing authorisation for Lonquex. Given that that marketing authorisation was granted on 25 July 2013, Amgen has until 25 January 2014 to file any such application: see Article 7(2) of the SPC Regulation.

In the SPC Claim, Teva contends that no SPC could validly be granted in respect of 724 (UK) even if 724 (UK) is valid and lipegfilgrastim falls within the scope of the claims for two reasons. The first is that lipegfilgrastim is not protected by 724 (UK) within the meaning of Article 3(a) because it is not specified in the wording of the claims (see Case C-322/10 Medeva BV v Comptroller-General of Patents, Designs and Trade Marks [2011] ECR I-12051, Case C-422/10 Georgetown University v Comptroller-General of Patents, Designs and Trade Marks [2011] ECR I-12157, Case C-518/10 Yeda Research and Development Comptroller-General of Patents, Designs and Trade Marks [2011] ECR I-12209, Case C-630/10 University of Queensland v Comptroller-General of Patents, Designs and Trade Marks [2011] ECR I-12231 and Case C-6/11 Daiichi Sankyo Co v Comptroller-General of Patents, Designs and Trade Marks [2011] ECR I-12255).

The second reason is that Teva’s marketing authorisation for Lonquex is not a valid authorisation within the meaning of Article 3(b) of the Regulation because it was not obtained by the holder of the basic patent or an undertaking economically linked with the holder (see Novartis Pharmaceuticals UK Ltd v MedImmune Ltd [2012] EWHC 181 (Pat), [2012] FSR 23 and Eli Lilly & Co v Human Genome Sciences Inc [2012] EWHC 2290 (Pat)).

Counsel for Teva submitted that it was at least arguable that Article 6 meant that, if an SPC could validly be granted, it could be granted either to AI (as original holder of the patent) or to AML (as AI’s successor in title). Counsel for Amgen riposted that it was clear from Article 1(c) that the “holder of the patent” meant the person who was the holder at the time of designating the patent for the purposes of applying for the SPC, and that in the present case that could only be AML. I agree with counsel for Amgen that that appears to be the natural interpretation of Article 1(c); but experience of many references to the Court of Justice of the European Union concerning the interpretation of the SPC Regulation shows that it is difficult to be confident as to the answers to such questions.

Accordingly, I consider that it is not desirable for AI to cease to be a party to the Claims. On the contrary, it is desirable for AI to remain a party.

For the reasons given above, Amgen’s application for an order that AI shall cease to be a party to the Claims is dismissed.