Actavis UK Ltd v Eli Lilly & Company

This is an application by the Defendant (“Lilly”) for a stay of two claims referred to as the Fourth and Fifth Actions on the ground of alleged abuse of process.

The general background to the matter is set out in the judgment which I gave in two proceedings referred to as the First and Second Actions on 27 November 2012 ([2012] EWHC 3316 (Pat)). In summary, pemetrexed is a cancer treatment which has been marketed by 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 ("Actavis") contend that dealings in pemetrexed dipotassium, ditromethamine or diacid 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 a series of five actions in this country seeking declarations of non-infringement of each of those designations of the Patent.

On 12 July 2012 Actavis wrote to Lilly seeking an acknowledgement of non-infringement of the relevant designations of the Patent in respect of proposed dealings in pemetrexed dipotassium in France, Germany, Italy, Spain and the United Kingdom.

The First Action (HC 12 E 02962) was commenced by a claim form issued on 27 July 2012. The claim form was served on Lilly's solicitors on 1 August 2012. On 15 August 2012 Lilly acknowledged service indicating an intention to contest the jurisdiction of the court and subsequently it issued an application for that purpose.

On 29 August 2012 Actavis commenced the Second Action (HC 12 A 03340) by issuing a claim form and serving it on Lilly at the premises of Lilly's European Patent Department. On 26 September 2012 Lilly filed an acknowledgement of service again indicating an intention to contest jurisdiction and subsequently it issued an application for that purpose.

Lilly's two applications to contest jurisdiction came before me in November 2012. In the judgment to which I have already referred, I held that Lilly had consented to service of the claim form in the First Action and hence to the jurisdiction of this court. I also held, among other things, that the claim form in the Second Action had been validly served and that no stay should be granted on forum non conveniens grounds. As I set out in that judgment at [30], it was then 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 foreign designations of the Patent was English law as the lex fori. As I shall explain, that has subsequently changed.

Upon giving judgment, I made a provisional order for directions for trial of the claims. The trial was subsequently fixed for 7 April 2014.

On 17 April 2013 Actavis issued the claim form in the Third Action (HP A 01487). In this action Actavis joined further Actavis companies to the proceedings in addition to those that had been joined to the First and Second Actions. In addition, they sought declarations of the non-infringement in respect of dealings in pemetrexed ditromethamine and diacid salts. On 1 May 2013 Lilly acknowledged service, again indicating an intention to contest the jurisdiction of the court.

On 21 May 2013 the Court of Appeal dismissed an appeal by Lilly from my order of 27 November 2012 ([2013] EWCA Civ 515, [2013] RPC 37). Consequentially, the Court of Appeal made an order, as part of which Actavis consented to the dismissal of the Second Action, it being redundant in the light of the Court's resolution of the jurisdiction issue.

On 27 June 2013 I made a consent order dismissing Lilly's jurisdictional challenge to the Third Action and giving directions for the service of combined Particulars of Claim, Defence and Reply in the First and Third Actions and for the First and Third Actions to be tried together in the existing slot. Provision was also made for a further case management conference in due course.

On 18 July 2013 Lilly served its combined Defence in the First and Third Actions. In its Defence, Lilly contends, broadly speaking, that Actavis is not entitled to the declarations of non-infringement it seeks for two reasons. First, Lilly contends that Actavis have no locus standi to seek declaratory relief in respect of the French, German, Italian and Spanish designations of the Patent. As part of that case, Lilly contends, contrary to what it had conceded at the time of the hearing before me in November 2012, that the applicable law is not the lex fori, that is to say English law, but rather is the lex loci protectionis, that is to say the law of the relevant country.

Furthermore, Lilly relies upon certain procedural provisions, in particular of French law and Spanish law. Lilly contends that the effect of those procedural provisions is that a party in the position of Actavis cannot commence proceedings for a declaration of non-infringement until a certain period of time after requesting an acknowledgment of non-infringement. In the case of France, a three month period must elapse and, in the case of Spain, a one month period must elapse. The purpose of these provisions, so Lilly contends, is to give the patentee time in which to consider its position and, if it considers it appropriate, to commence infringement proceedings.

I should explain that, so far as this country is concerned, Lilly does not raise its first ground of objection to the claim, but instead it counterclaims for infringement.

The second main reason why Lilly says that Actavis are not entitled to a declaration of infringement is that each of the three salts in question fall within the relevant integer of the claims of the Patent when properly construed or by equivalence.

On 16 September 2013 Actavis sent a further so-called "taking position" letter to Lilly. One purpose of this letter was to lay the foundation for a contention by Actavis that if, (which Actavis dispute) Actavis had not met the relevant procedural requirements under, in particular, French and Spanish law, at the dates when the First and Third Actions were commenced, then they did so at a later point in time. Actavis contend that they can rely upon compliance with the relevant procedural requirements after commencement of those actions, but prior to trial. Lilly does not accept this.

On 18 September 2013 Actavis issued the claim form in the Fourth Action (HP13 BO4212). It also issued an application to amend its claim form in the First and Third Actions. The purpose of starting the Fourth Action, according to Actavis, was two-fold. First, it was in order to assist in overcoming Lilly's procedural arguments under foreign law and, secondly, to ensure that there was lis pendens from 18 September 2013 at the claim form level in respect of the dipotassium salt. Lilly subsequently acknowledged service in respect of the fourth claim form and did not contest jurisdiction.

On 30 September 2013 Actavis served their combined Reply in the First and Third Actions. In their Reply Actavis maintain that the applicable law is the lex fori, but that, in any event, they have complied with all relevant procedural requirements under the foreign laws.

On 17 October 2013 there was a case management conference before me in the First and Third Actions. On that occasion, I gave Actavis permission to amend its claim forms in the First and Third Actions. The effect of those amendments was to bring additional Actavis companies and the two additional salts into the First Action, and to add the dipotassium salt to the Third Action. As amended, the claim forms in the First and Third Actions are largely identical. I also made further directions designed to enable the First and Third Actions to be ready for the existing trial date of 7 April 2014 in the light of the issues raised in the combined Defence and combined Reply.

On 17 October 2013 Actavis issued the claim form in the Fifth Action (HP E04604). Again, Lilly acknowledged service and did not contest jurisdiction. According to Actavis, the purpose of the Fifth Action is to seek to overcome Lilly's reliance upon the one month's procedural requirement of Spanish law. In short, Actavis contend that, even if Spanish law is the applicable law, even if Actavis cannot rely upon the letters of 12 July 2012 and 16 September 2013 in the First and Third Actions and even if Actavis cannot rely upon those letters in the Fourth Action (contrary to Actavis’ contentions), then, on any view, the Fifth Action, having been commenced over a month after the letter of 16 September 2013, will be properly constituted and effective under Spanish law. (I would add that Actavis have threatened to start a sixth action three months after 16 September 2013 in order to overcome the French procedural objection if this proves necessary.)

On 11 November 2013 Lilly issued an application notice seeking a stay of the Fourth and Fifth actions until 28 days after judgment in the First and Third Actions alleging that the Fourth and Fifth Actions are an abuse of process.

On 12 November 2013 Actavis issued an application notice seeking an order that the Fourth and Fifth Actions be heard together with the First and Third Actions in April 2014, with the combined pleadings in the First and Third actions standing as pleadings in the Fourth and Fifth Actions with any necessary adjustments. I should say before proceeding further that Lilly has sensibly indicated that, if its application is refused, it consents to Actavis' application.

In Hunter v Chief Constable of the West Midlands [1982] AC 529 at 536, Lord Diplock referred to:

"… the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people. The circumstances in which abuse of process can arise are very varied .... It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power."

As Lord Bingham of Cornhill explained in Johnson v Gore Wood & Co [2002] 2 AC 1 at 31, this involves:

"... a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court ..."

In the context of the Civil Procedure Rules, assessment of whether there is an abuse of process is inseparably bound up with the question of what best serves the overriding objective. Thus, as Lord Phillips of Worth Matravers MR said in Jameel v Dow Jones & Co Inc [2005] EWCA Civ 75, [2005] QB 946 at [54]:

"An abuse of process is of concern not merely to the parties but to the court. It is no longer the role of the court simply to provide a level playing field and to referee whatever game the parties choose to play upon it. The court is concerned to ensure that judicial and court resources are appropriately and proportionately used in accordance with the requirements of justice."

As was indicated in the Hunter case, the categories of abuse of process are not closed. There are a number of established situations in which abuse of process may be recognised. One is where the court's process is being used for an improper or collateral purpose. Another is relitigation of matters that could and should have been litigated previously. A third is where it is plain that litigation is pointless and wasteful.

The particular form of abuse which Lilly invokes is that which can arise where the claimant has framed its claim in such a manner as to seek to circumvent a time restriction. Counsel for Lilly relied, in particular, upon the decision of Jackson J (as he then was) in Carter Commercial Developments v Bedford Borough Council [2001] EWHC 669 (Admin) applying the judgment of the Court of Appeal in Clark v University of Lincolnshire and Humberside [2000] 1 WLR 1988. In that case, the gravamen of the complaint of abuse of process was concisely identified by the judge at [30] as follows:

"The issues which the claimant seeks to raise are plainly public law issues and should properly be dealt with by judicial review proceedings under Part 54. The reason why the claimant has resorted to the Part 8 procedure is obvious. The claimant is seeking to circumvent the time limits contained in Part 54."

As will be clear from that quotation, the claimant was well out of time for an application for judicial review under Part 54 and was, therefore, seeking to bring private law proceedings under Part 8 instead. That was held to be an abuse of process.

Lilly contends that, if it turns out that the First and Third Actions are ill-founded because Actavis have not complied with the procedural requirements under French and Spanish law, then the bringing of the Fourth and Fifth Actions will have amounted to an abuse of process. If it turns out that the First and Third Actions are well-founded, Lilly says, then the Fourth and Fifth Actions will be unnecessary and need go no further. In those circumstances, Lilly say that the proper course for the court to take is to stay the Fourth and Fifth Actions until after 28 days after judgment following the trial of the First and Third Actions. Counsel for Lilly points out that it is well established that it is not a proper response to abuse of process to strike out a claim if some lesser course of action will suffice to deal with the abuse: see, for example, Asiansky Television plc v Bayer-Rosin [2001] EWCA Civ 1792 at [49] (Clarke LJ, as he then was).

Before proceeding further, it may be noted that Lilly’s complaint relates to the French and Spanish designations of the Patent, and not to the German or Italian designations. On the other hand, Actavis only appear to rely on the Fourth and Fifth Actions with respect to the former designations.

Assuming that the First and Third Actions are ill-founded with respect to the French and Spanish designations, Lilly says that the abuse arises out of the fact that, by bringing the Fourth and Fifth Actions during the currency of the First and Third Actions, which create a lis pendens that prevents Lilly from bringing actions in France and Spain, Actavis will have circumvented the relevant procedural requirements under French and Spanish law. Lilly complains that, as a result, it will have been deprived of the statutory right which it says it has under French and Spanish law of a period of three months (under French law) or one month (under Spanish law) from the date on which Actavis requested an acknowledgement of non-infringement, to consider its position and to decide whether or not to bring infringement proceedings in those countries.

I do not consider that the Fourth and Fifth Actions are an abuse of process or that there should be a stay of those proceedings. My reasons are as follows.

In the first place, it will be noted that Lilly do not seek to strike out the Fourth and Fifth Actions now. As I see it, that involves a concession by Lilly that it cannot be said at this point in time that the Fourth and Fifth Actions are an abuse of process. Rather, as I have sought to explain, Lilly's case is that there is a contingent abuse here. It is an abuse which only exists if it turns out that Actavis' existing actions are ill-founded. If it turns out that the First and Third Actions are well-founded, Lilly does not say that the Fourth and Fifth Actions would constitute an abuse, simply that they will be unnecessary. I cannot see that it is proper for the court to stigmatise claims as an abuse of process on the basis of a contingency.

Secondly, the problem which Lilly says exists is one which exists, to the extent that it does, by virtue of the First and Third Actions and the consequences of the pendency of those actions. There is, and can be, no dispute that the First and Third Actions are properly constituted actions over which it has been decided that this court has jurisdiction. Those actions have whatever consequences in terms of lis pendens that they have. If Lilly is correct in saying that the lis pendens consequences of those actions is to prevent Lilly from bringing actions in France and Spain and thus of depriving Lilly of the procedural protections to which it claims to be entitled under French and Spanish law, as to which I express no view, then that is a natural consequence of the existence of the First and Third Actions. It is not a consequence of the bringing of the Fourth and Fifth Actions. In those circumstances, I cannot see that the Fourth and Fifth Actions are an abuse. Actavis are simply taking ordinary procedural steps to overcome procedural obstacles raised by Lilly.

Thirdly, it seems to me that Lilly's application is logically incoherent. What Lilly is asking the court to do is to stay the Fourth and Fifth Actions until 28 days until after judgment in the First and Third Actions. Supposedly, the reason for that is to enable Lilly, if it turns out that the First and Third Actions are ill-founded for the procedural reasons advanced by Lilly, to have the opportunity to start actions for infringement against Actavis in France and Spain. I leave entirely on one side that at no stage has Lilly stated that, in those circumstances, it would in fact bring actions in France and Spain. But even if the Fourth and Fifth Actions are stayed as requested by Lilly, the court will not have dis-seised itself of those actions. They will remain alive. They will have lis pendens priority and they will prevent any actions proceeding with regards to the subject-matter of those actions in France and Spain. At the end of the 28 days they will revive and they will fall to be determined, unless they are at that point struck out as an abuse of the process. So, in effect, what Lilly is seeking to do is to delay the point at which it is decided whether or not the Fourth and Fifth Actions are in fact an abuse of the process. That is because, as I have pointed out, Lilly cannot establish that they are an abuse of the process as matters stand. But if it cannot be established that the Fourth and Fifth Action are an abuse of process as matters stand, it cannot be correct to prevent them proceeding to trial. To put it another way, if it turns out that Lilly it is right as to the First and Third Actions being ill-founded, and if Lilly is right as to the consequences of that, then Lilly can raise its objection to the Fourth and Fifth Actions as being an abuse of process at that point in time.

For all of those reasons, this application is dismissed.

I have to deal with the costs of the two main applications. So far as the costs of Lilly's stay application are concerned, it is accepted that Lilly, having lost, should pay the costs of that application. So far as the cross-application by Actavis is concerned, as I understand it, Lilly's position is that costs should be in the case because it was a normal case management application. To some extent I accept that, but, on the other hand, it was an unnecessary application because Actavis' proposed directions could have been agreed to. They were not and, therefore, the application became necessary. In the result, I have vindicated Actavis' position. So it seems to me that Lilly should pay the costs of both applications.

I was asked by counsel for Actavis to order that they be assessed on the indemnity basis. In my view, neither application is sufficiently out of the ordinary to justify the making of an order for assessment on the indemnity basis.