Actavis UK Ltd & Ors v Eli Lilly & Company

This is an application by Actavis for judgment on admissions seeking a declaration. The circumstances in which the application arise are somewhat complex, but they have largely been set out in a number of previous judgments of mine, as well as the judgment of Court of Appeal delivered on 25 June [2015] EWCA Civ. 555. Accordingly, I will not repeat the full background here.

In summary, the issue which remains between the parties is as to whether there will be indirect infringement by Actavis as a result of the reconstitution or dilution of Actavis’ product by healthcare professionals in circumstances where Actavis will market their product with a Summary of Product Characteristics (“SmPC”) which directs that the product be reconstituted or diluted with a dextrose solution.

On 16 July 2015 I directed an expedited trial of that issue in circumstances where, at that time, it appeared that Lilly’s case was that it was foreseeable that, despite the instruction in the SmPC, healthcare professionals in the United Kingdom, France, Italy and Spain would reconstitute or dilute Actavis’ product with saline at least some of the time.

Subsequently, the matter came before me again on 22 October 2015 for the resolution of various case management issues, and in particular an application by Lilly to amend its Statement of Case to reflect the case that was being advanced in the expert evidence which Lilly had served on about 9 October 2015.

Summarising briefly, it was Actavis’ position at the hearing on 22 October 2015 that Lilly’s application to amend its Statement of Case represented a substantial change in Lilly’s position which would be prejudicial to Actavis if it were to be permitted because of the short time remaining before the trial date, which had been fixed for the week of 2 November 2015.

As part of that submission, Actavis contended that, upon analysis, Lilly’s expert evidence in each of the four jurisdictions (United Kingdom, Spain, France and Italy) and its draft Amended Statement of Case amounted to an acceptance that, to begin with, healthcare professionals in the four countries would follow the instructions contained in Actavis’ SmPC and would, therefore, reconstitute or dilute the product with dextrose solution. Lilly contended, however, that it was foreseeable that, between six months and two years after the launch of Actavis’ product, stability data for the product in saline would be published by third parties, and that, after such data had been published, healthcare professionals in the four jurisdictions would start reconstituting or diluting Actavis’ product with saline instead of dextrose solution.

Actavis submitted that that amounted to an admission by Lilly that, as at the date of launch of Actavis’ product, there would be no infringement of the Patent by Actavis. Lilly’s case was only that there was a possibility of infringement after the stability data had been published at some point thereafter. During the course of the hearing, I asked counsel for Lilly whether Lilly accepted that there would be no infringement as at launch. As the transcript records, he confirmed that that was indeed the position.

Accordingly, earlier in today’s hearing, I have determined that the form of the order made on 22 October 2015 shall include the following recital:

It was in the light of that concession, confirmed by Lilly in the course of counsel's submissions, and furthermore in the light of an undertaking given by Lilly not to seek preliminary injunctions to restrain the launch of Actavis’ product, that I permitted Lilly to amend its Statement of Case on the basis that there would be a consequential adjournment of the trial, which has subsequently been refixed for the week of 25 January 2016.

Subsequently Actavis have applied for judgment upon the admission given by Lilly, seeking a declaration of the court. The terms of the declaration sought by Actavis are as follows:

Against that background, the first question to be considered is the court's jurisdiction. So far as that is concerned, counsel for Lilly submitted that the application was properly to be viewed not as an application for judgment upon admissions, but as an application for summary judgment. In that regard he pointed out that the combined effect of CPR r.14.3 and 14.1(2) was that an application for judgment on an admission may be made where notice of an admission has been given in writing. He submitted that this is not such a case.

Although I doubt that it matters, I do not accept that submission. As counsel for Actavis pointed out, in the present case the admissions that were originally relied upon by Actavis were the admissions that were made by Lilly in writing, in particular in its draft Amended Statement of Case, and also in the evidence of the four expert witnesses relating to the four jurisdictions in question whose evidence have been adduced by Lilly. What happened during the course of the hearing was that the effect of the documents previously served by Lilly was confirmed by counsel for Lilly in his submissions. Moreover, those submissions were recorded in writing in the form of a transcript.

More importantly for present purposes, counsel for Lilly submitted that the effect of the declarations sought would be, as he put it, to frank the product supplied by Actavis for a period after the launch of the product. So far as that submission is concerned, however, the current state of play in these proceedings needs to be borne carefully in mind. The current state of play is that it is now Lilly's own case that, as at the date of launch of the product in each of the four countries, the relevant healthcare professionals will follow the instructions contained in the SmPC and will, therefore, reconstitute or dilute the product with dextrose solution. Accordingly, as I have already explained, it is admitted by Lilly that at that point there will be no infringement of the Patent. It is Lilly's case that, at some point thereafter, stability data for Actavis' product in saline will be published by third parties. As I have indicated, Lilly’s evidence is that that is likely to happen between six months and two years after launch.

Lilly also places reliance upon the fact that the Actavis product will have a shelf life of a number of months which is presently confidential. As yet, however, Lilly has no coherent case as to the way in which the shelf life of the product will impact upon the date from which it may be said that it is arguable that Actavis will infringe the Patent, even upon the supposition that, as Lilly contends, the healthcare professionals are likely to use the data published by third parties as a basis for changing their practice with regard to reconstitution or dilution of the Actavis product. Earlier today I heard an application by Lilly to re-amend its Statement of Case in that regard. In the result, I did not give Lilly permission to re-amend its Statement of Case in the form that was put forward today, except for immaterial parts, but I have left it open for Lilly to make a further application based on a reformulated amendment to its Statement of Case, if it is able to devise one that meets the difficulties that were identified during the course of argument.

In those circumstances, I do not accept the submission made by counsel for Lilly that the effect of the declaration would be to frank product as non-infringing when Lilly has an arguable case that at some point it may become infringing. As matters stand, that is simply not so; and that is exactly what the first three words of the proposed declaration make clear.

I turn, then, to the question of whether the declarations sought by Actavis would serve a useful purpose. It is common ground between the parties that the court has an inherent jurisdiction to grant a declaration where it would serve a useful purpose.

Actavis contend that the making of the declaration sought would serve a use purpose because it would reduce commercial uncertainty as to the status of the Actavis product. Actavis point out that, as I have explained in a number of previous judgments, Actavis brought these proceedings in order to clear the path for the launch of their product and to obtain legal certainty in advance of launch. For reasons explained in part in my judgment of 17 July 2015, and as a result of the adjournment that occurred on 22 October 2015, Actavis are now not going to be able to obtain a judgment of the court until, at the earliest, some time in February 2016. Thus, Actavis are in a position where they are not going to obtain even a first instance decision as early as they had hoped.

Actavis have already received some measure of protection from the commercial consequences of that delay in the form, first, of the admission confirmed by Lilly during the course of the hearing on 22 October and, secondly, the undertaking given by Lilly on 22 October, but nevertheless Actavis contend that there is uncertainty in the market which a declaration will usefully alleviate.

In that regard, Actavis point in the first place to evidence as to the position in Italy. That is dealt with in paragraphs 7 and 8 of the 19th witness statement of Mark Hilton on behalf of Actavis. He explains there that there is some uncertainty as to Actavis’ ability to obtain a reimbursement price in Italy as a result of the Patent. As he frankly says, there is also uncertainty as to whether the declaration would completely resolve that uncertainty, but his evidence, based on information from his Italian colleagues, is that it will certainly be of assistance. In response to that, Stephen Bennett, in his tenth statement on behalf of Lilly, at paragraphs 5 and 6, says that, based on information supplied by an Italian colleague of his, there is no barrier to Actavis obtaining a reimbursement price in Italy.

On the evidence before the court, it does not seem to me that I can be confident that Mr. Bennett's account of the position is correct. It may be correct, but it may not. As it seems to me, there is a real prospect of uncertainty in Italy which the declaration will assist to resolve.

Next, Actavis rely upon the potential chilling effects of the litigation upon their preparations for launch in all four of the countries. It is pointed out on behalf of Actavis that this litigation has been quite widely publicised and that this is complicated litigation which is not easy for customers to understand. Accordingly, Actavis say that a declaration of the court will assist Actavis in making it clear to prospective customers that, as at the point of launch, there is no question of the Patent being infringed by Actavis, even if Lilly is able to argue that there will be infringement at some future point.

Against that, points have been made by Lilly, through Mr. Bennett, as to the currently expected timing of Actavis' launch of their product. So far as that is concerned, I am not persuaded that the currently expected date of launch means that the declaration would not be of any utility to Actavis. On the contrary, it seems to me that there is every likelihood that Actavis would find the declaration of utility in discussions with prospective customers taking place prior to the expected launch date. Furthermore, so far as the United Kingdom specifically is concerned, it seems to me that that is unaffected by the fact that there will not be any supply of product pursuant to a tender until February 2016.

Finally, I agree with Actavis that the declaration will be of utility to Actavis having regard to what is referred to as the Letters part of the case. I do not propose to lengthen this judgment further by explaining the details of that. Suffice it to say that I accept that that too is a relevant consideration.

For those reasons, I conclude that this is a case where, first, Actavis are entitled to judgment on admissions, and secondly, that the requisite criteria for the making of a declaration in the terms sought are satisfied.