Chugai Pharmaceutical Co Ltd v UCB Pharma SA

UCB does not attempt to strike out the declaration on the basis that, in substance, it amounts to a declaration of non-infringement of a foreign patent. Even if I strike out the Disputed Paragraphs, the English court will still be required to determine the scope of the claim of the 771 Patent, and whether they are infringed by Chugai’s tocilizumab product, to decide whether such products are royalty bearing. It will also need to consider the prosecution history and, in that context, the Queen Prior Art. At the heart of UCB’s case is the proposition that issues of infringement and validity are inseparable, a fact which, according to UCB, is apparent from Chugai’s reliance on the United States doctrine of ambiguity, which is alleged to set up a “squeeze” between infringement and validity. UCB relies, by way of analogy, on the decision of Arnold J in Anan Kasei Co Ltd v Molycorp Chemicals & Oxides (Europe) Ltd [2016] EWHC 1722 (Pat); [2017] FSR 13.

In the Anan case the claimant sought to carve out issues of validity by seeking a declaration that the defendant’s acts infringed a German patent “if the German designation is invalid (which is to be determined by the German courts)”. By this means, it sought to avoid the application of articles 24(4) and 27 of EU Regulation 1215/2012 of 12 December 2012 (“the Brussels I Regulation”). These articles provide, amongst other things, that the courts of each Member State shall have exclusive jurisdiction in proceedings concerned, or principally concerned, with the registration or validity of any European patent granted for that Member State. They have no direct application in the present case because the 771 Patent is a United States patent.

In Anan, having cited several authorities of relevance to articles 24 and 27, including Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) (Case C-4/03) [2006] ECR I-6509, Arnold J held that the dispute was, or was principally, concerned with the validity of the German designation of the patent. Because the issue between the parties was the single issue of whether the defendant had infringed a valid claim of the German designation, this was an attempt artificially to split them into sub-issues, when, as a matter of substance, they were inseparable. He explained this at [24]:

“[24] […] the issue between the parties with respect to the German designation is the single issue of whether Molycorp has infringed a valid claim of that patent. Rhodia’s formulation of its claim attempts by procedural means to split that single issue into two sub-issues, namely infringement and validity; but as a matter of substance those sub-issues are inseparable. Rhodia’s claim implicitly asserts that the German designation is valid, since if all the claims were invalid there could be no question of infringement. But, as Rhodia’s claim itself acknowledges, the validity of the German designation has been challenged by Molycorp and must be determined by the German courts.”

In my judgment, this decision illustrates that the court should carefully examine the substance of the dispute in the context of challenges to jurisdiction under articles 24 and 27 of the Brussels I Regulation. However, not every infringement dispute is concerned with, or principally concerned with, a challenge to validity of the patent in suit. For example, if a party has undertaken not to challenge validity, and only to pursue a case of non-infringement.

One such case is Actavis UK Ltd v Eli Lilly & Co [2014] EWHC 1511 (Pat); [2015] R.P.C. 6, in which the claimant sought declarations of non-infringement in relation to the UK, French, Spanish and Italian designations of a European Patent. In order to avoid a challenge to jurisdiction under articles 24 and 27 of the Brussels I Regulation, the claimant undertook not to challenge the validity of the patent. However, it advanced the contention, in aid of its construction, that if the defendant’s construction of the claims was correct, then the patent would have been rejected by the European Patent Office on the basis of invalidity for added subject matter. Arnold J accepted this argument when considering direct infringement of the UK designation of the patent. He also held that there was no direct infringement of the Spanish designation, for the same reasons as the UK designation; [187]. His decision was upheld by the Court of Appeal in relation to direct infringement. He said at [148]:

“[148] Lilly is correct that validity is not in issue in these proceedings, but it does not follow that the court cannot consider what the consequences of Lilly's construction would be for the validity of the Patent: see e.g. AHP v Novartis […]. If Lilly could not have obtained claims which explicitly referred to pemetrexed or any pharmaceutically acceptable and sufficiently soluble salt thereof because such claims would have been invalid, I cannot see how it can be right to construe “pemetrexed disodium” in claims 1 and 12 as granted as having that meaning for the purposes of infringement.”

So even though validity was not, and could not be raised, Arnold J held that it was appropriate to consider the consequences of Lilly’s construction for the validity of the patent. Actavis did not claim that the patent was invalid. It proceeded on the basis that the patent was valid, and contended that this supported its construction of the claims. This was permissible.

It was not contended before me that Arnold J was wrong in his approach, even though validity was not in issue. In my view, he was plainly right. The Protocol on Interpretation of Article 69 of the European Patent Convention requires, inter alia, that the extent of protection of a European Patent is to be interpreted in a manner which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties. This may require the court, when considering scope of protection, to address the consequences of rival constructions for the validity of a patent, as a construction which would lead to invalidity may be unfair to the patentee.

In its claim for a declaration in these proceedings, Chugai does not claim that the 771 Patent is invalid. Obviously, it does not seek a declaration of invalidity, but this is not merely a question of form, it is one of substance. Chugai contends that its construction is correct and does not contend, on this construction, that the 771 Patent is invalid. As a subsidiary argument, it points to the consequences for validity if UCB’s construction is correct. If Chugai succeeds on its subsidiary argument, this would lead to a finding that its tocilizumab product falls outside the scope of the claims of the 771 Patent, and therefore no royalties are payable under the Licence. It is not asking the English court to conclude that the 771 Patent is invalid, as it contends that UCB’s construction should be rejected.

In the circumstances, I reject UCB’s submission that Chugai is challenging the 771 Patent’s validity by formulating its claim as a contractual one for a declaration concerning royalties, or by characterising it as one concerned with infringement of the 771 Patent. I accept Chugai’s submission that it does not claim that the 771 Patent is invalid, but merely requires the court to ask itself, as a guide to construction, what would be the hypothetical consequences for validity of the rival interpretations. Furthermore, the arguments advanced in the Disputed Paragraphs are incidental to the essential nature of Chugai’s claim, which is a claim for determination of its royalty obligations under the Licence.

As set out above, pursuant to article 18 of the Licence, the parties have agreed to submit generally “to the exclusive jurisdiction of the English courts”. In my judgment, this means that they have submitted to the jurisdiction of the English courts all disputes under or in connection with the Licence, unless the Licence terms indicate to the contrary. This is consistent with the general principle that jurisdiction clauses are to be interpreted “widely and generously”, as commercial parties who agree to an exclusive forum clause are likely to have intended their disputes to be resolved in a single forum: Fiona Trust v Privalov [2008] 1 Lloyds Rep 254 (HL), [13]; UBS v Nordbank [2009] 2 Lloyds Rep 272 (CA), [82].

The Licence contains an exception or qualification to the scope of article 18. The definition in article 1.1 of “Valid Claim” means that a claim is to be treated as valid if it has not been held to be invalid or unenforceable in an appealed or unappealable decision of a court of competent authority having jurisdiction over such patent. Accordingly, for the purposes of the Licence, only the US courts can determine that the 771 Patent is invalid, and a claim of the patent will not be treated as invalid until the appeal process has been completed. Were the English court to reach a determination of invalidity, it would make no difference to the royalty obligations under the Licence, which are payable where a “Valid Claim” of a relevant patent is infringed.

In summary, the parties have agreed that revocation or similar claims for invalidity should be determined by the courts of the state of protection. Otherwise, the Licence indicates no relevant limitation on the broad scope of the jurisdiction clause, which includes disputes as to scope of claims.

In my judgment, the contentions advanced by Chugai in these proceedings, including in the Disputed Paragraphs, are in accordance with the agreement reached between the parties. Chugai’s pleading raises a dispute about the scope of the claims of the 771 Patent before the English court, and does not seek to invalidate the Patent.

A very similar licence agreement was considered in Celltech v Medimmune [2004] EWHC 1522; [2004] EWCA Civ 1331, where the licence agreement (granted by the registered proprietor of the 771 Patent) contained the same definition of “Valid Claim”. The courts arrived at the same interpretation as I have reached in the present case. Jacob LJ summarised this at [32](a)-(b), when approving the judgment of Laddie J:

“(a)

The parties bargained to give jurisdiction to the English court concerning the scope of the licensed patents;

(b)

That bargain expressly recognised that the issue of validity of the licensed patents could only be tried by the court(s) of the relevant country(ies) — that is what the definition of Valid Claim is about. What was agreed was not only foreseeable but foreseen by the very terms of the agreement. That is a highly material factor in deciding whether the court should permit a party from departing from his bargain, see e.g. per Waller J in British Aerospace v Dee Howard [1993] 1 Lloyd's Rep. 405”

Both parties relied on [11] – [12] of the judgment of Jacob LJ in Celltech, where he said:

“[11] Before going any further I observe that in the jargon of the patent world, whether or not a product “infringes” can have two distinct meanings. It can mean merely “fall within the scope of protection assuming the patent is valid” or “fall within the scope of a valid patent.” Only in the latter case is making or selling the product wrongful. Which meaning it has will normally be apparent from context. Thus in the expressions “you cannot infringe an invalid patent” (per Laddie J. in Coin Controls Ltd v Suzo International (UK) Ltd [1997] F.S.R. 660 at p.669) and “no man can infringe an invalid patent” (per Aldous J in Plastus Kreativ AB v Minnesota Mining and Manufacturing Co [1995] R.P.C. 438 at p.447) the second meaning is apparent. On the other hand MedImmune's application to the US court for a declaration that Synagis “does not infringe any valid claim” of US Adair 2 really means a declaration that Synagis does not fall within a valid claim—if it does fall within such a claim it cannot infringe in the sense of being wrongful because it will be licensed.

[12] Returning to the Agreement, royalties are due on products “where the manufacture or sale … would, but for the licence granted hereby, infringe a Valid Claim” (3.3). The definition of “Valid Claim” means that a claim is regarded as valid unless and until it is finally decided to be invalid (1.10). Thus I think it is clear that “infringe” in clause 3.3 has the first meaning. Royalties are payable under all products falling within granted Adair patents if the product falls within the scope of a claim of such a patent, irrespective of its validity, unless and until it is finally declared invalid.”

Mr Raphael QC, on behalf of Chugai, submitted that the position is the same in the case before me. Chugai’s claim seeks to establish that it is no longer liable for royalties because its products do not fall within the scope of the claims of the 771 Patent. It does not seek to invalidate any claim of the 771 Patent, which is a matter for the US Courts. Mr Tappin QC, on behalf of UCB, referred to the first meaning of infringement, which is whether a product falls within the scope of protection assuming the patent is valid. He said that Chugai was not prepared to assume that the 771 Patent is valid, but seeks, on UCB’s construction, to challenge its validity.

I accept Chugai’s submission on this issue and I reject the submission of UCB. When read in context, Jacob LJ was explaining that the agreement before him contained an exclusive jurisdiction clause the effect of which was to confer jurisdiction on the English court in disputes concerning scope of claims, whether or not such claims were valid. The question of validity was a matter for the US courts.

I should mention that in Celltech, Laddie J rejected an application for a stay of the UK proceedings by MedImmune pending determination of infringement and validity by the US Courts, even though he was prepared to assume that there might be a “squeeze” between infringement and validity in the UK proceedings. His judgment was affirmed on appeal. Laddie J explained at [23] - [24] the commercial importance of exclusive jurisdiction clauses in patent licences, and of requiring parties to stick to their agreements. His reasoning may be summarised as follows:

I respectfully agree with Laddie J, and I consider that his analysis is apt to describe the commercial purpose of the division (in respect of jurisdiction) between scope of claim and validity issues in the Licence in the present case. I also note that Laddie J regarded “squeezes” between infringement and validity as a matter over which the English court had jurisdiction pursuant to the licence agreement, as distinct from applications for revocation, which were a matter for the court where the patent was granted.

Mr Layton QC, who presented the jurisdictional aspects of this application on behalf of UCB, argued that the provisions of the Licence, and the bargain between the parties, make no difference, as subject matter jurisdiction cannot be conferred by agreement between the parties. He recognised that since, on his case, issues of infringement and validity were inseparable, and validity of a foreign patent was not justiciable in the UK, clauses in patent licences which gave exclusive jurisdiction in respect of infringement of foreign patents to the English court would generally be unenforceable. This is a conclusion that I would be most reluctant to reach, given the importance of such clauses in patent licences.

I do not accept that the terms of the Licence are immaterial. UCB’s arguments depend on the proposition that it would be a breach of the principle of comity for the English court to adjudicate on the issues raised by the Disputed Paragraphs. Where the parties have agreed that the scope of patents which are the subject of a licence agreement should be determined by the English court, it is not an affront to comity to give effect to that agreement.

This issue was considered by Peter Prescott QC sitting as a Deputy High Court Judge in Griggs v Evans [2005] Ch. 153. He held that there is no breach of the principle of comity for the English court to exercise jurisdiction where the parties have chosen, by agreement, to submit their dispute to its adjudication. He said at [133]:

“[133] … in one sense it has always been possible to call into question both the validity and the scope of a foreign intellectual property right. For instance, where the defendant has agreed to pay royalties to the claimant on any product covered by a valid claim of a foreign patent and the agreement is governed by English law and confers jurisdiction upon the English courts. A recent instance is Celltech (Adair's) US Patent [2004] FSR 35: indeed at first instance Jacob J said [2003] FSR 433, para 8: “…I found myself receiving submissions on US case law just as if I were a US District Judge”. When this happens our courts are not considered to act in breach of comity. Even though they might appear to be enquiring into the validity or scope of an intellectual property right granted by a foreign sovereign. But in truth, they are not purporting to tell the American public, say, that one of their patents is invalid or that the scope of its claims is not what it might appear to be. They are merely settling the rights of two private litigants who have chosen to submit their dispute to the adjudication of our courts.”

The Supreme Court in Lucasfilm Ltd v Ainsworth [2011] UKSC 39; [2012] 1 AC 20 considered, amongst other issues, the application of the rule in Moçambique to a claim for infringement of copyright in the USA. The defendants, operating from England, produced replicas of storm-trooper helmets featured in the Star Wars films for public sale, without the consent of the claimants. Some of the replica helmets were sold to buyers in the USA. The claimants sought enforcement of their United States copyright in the UK proceedings. The Court of Appeal held that the English court did not have jurisdiction to decide a claim concerning infringement of a foreign copyright. The essential reasoning of the Court of Appeal, and the jurisdiction issue before the Supreme Court, were summarised in [51] – [52] of the combined judgment of Lord Walker and Lord Collins, with whom Lord Phillips and Lady Hale agreed:

“[51] The Court of Appeal decided that the claim for breach of the United States copyright was non-justiciable. It held that the rule in British South Africa Co v Companhia de Moçambique [1893] AC 602 that the English court has no jurisdiction to entertain an action for the determination of the title to, or the right to possession of, foreign land, or the recovery of damages for trespass to such land, was an example of a general principle which applied not only to foreign land, but also to claims for infringement of foreign intellectual property rights, including copyright, irrespective of whether issues of title or validity were involved; and irrespective of whether the rights required registration (such as trade marks or registered designs) or not. It also held that article 2 of the Brussels I Regulation did not require the English court to exercise jurisdiction.

[52] The substantial question on this aspect of the appeal is whether, as Lucasfilm contends, the Court of Appeal was wrong, as a matter of law and policy, to extend to foreign copyrights the common law rule in the Moçambique case that actions for damages for infringement or invasion of property rights in foreign land are not justiciable.”

The Supreme Court explained the rule in Moçambique, in its original form, at [54]:

“[54] The decision in the Moçambique case is the authoritative foundation for the rule that the English court "has no jurisdiction to entertain an action for (1) the determination of the title to, or the right to the possession of, any immovable situate out of England … or (2) the recovery of damages for trespass to such immovable" (Dicey, Conflict of Laws, 1st ed (1896), pp 214-215, Rule 39). The rule has for long been subject to an exception where there is a contract, or an equity, between the parties, which the courts of equity will enforce: ibid, p 216; Penn v Lord Baltimore (1750) 1 Ves Sen 444.”

The Supreme Court held that it was necessary to understand the context from which the rule in Moçambique had originated. It explained at [59] that:

“The leading cases all involved unusual factual situations in which the claim had major political ramifications, and in which, therefore, issues of international law and comity were engaged.”

The Supreme Court then considered the Australian decision in Potter v Broken Hill Pty Co Ltd [1905] VLR 612; affd. (1906) 3 CLR 479, which had been widely cited in case law as extending the Moçambique rule to foreign patents. It held that its reasoning in relation to the Moçambique rule had been fatally undermined by the enactment of section 30(1) of the Civil Jurisdiction and Judgments Act 1982, which abolished the rule insofar as it extended to trespass; [71] – [72]. The Supreme Court stated that:

“[76] The consequence is that in the United Kingdom the trespass aspect of the Moçambique rule has no application as regards land in other member states, and (subject to the controversial question of the applicability of article 2) can only apply to land outside the member states where a question of title is involved: see Dicey, Morris & Collins, Conflict of Laws, 14th ed (2006), vol 2, paras 23–025–23–027.”

For this reason, it was held at [105] that:

“It is clear that much of the underpinning of the Moçambique rule and the decision in Potter v Brokenhill Pty Co. Ltd has been eroded. All that is left of the Moçambique rule (except to the extent that it is modified by the Brussels I Regulation) is that there is no jurisdiction in proceedings for infringement of rights in foreign land where the proceedings are "principally concerned with a question of the title to, or the right to possession of, that property."”

The Supreme Court also made clear at [108] – [109] that the modern trend is in favour of the enforcement of foreign intellectual property rights in the English court, where validity is not challenged and there is no issue of policy which would militate against enforcement of foreign copyrights. It follows that the rule in Moçambique, in its attenuated form, does not affect the jurisdiction of the English court in respect of claims for infringement of foreign copyrights. Indeed, the reasoning of the Supreme Court applies generally to infringement of intellectual property rights and this is how the effect of its reasoning has been understood. In Actavis v Lilly [2012] EWHC 3316 (Pat) [29], [86] – [94] Arnold J rejected a forum non conveniens challenge to a claim for a declaration of non-infringement of foreign patents, where validity was not in issue. The rejection of non-justiciability challenges in such cases of infringement of intellectual property rights is also supported by Dicey, Morris and Collins on the Conflict of Laws (15^th Edition) (“Dicey”) at [34.027].

Mr Layton submits, and I accept, that the Supreme Court in Lucasfilm did not decide that the issue of the validity of foreign patents which were outside the scope of the Brussels I Regulation was justiciable in the English Courts. Lords Walker and Collins said at [106] that:

“It is possible to see how the rationale of the Moçambique rule can be applied to patents, at any rate where questions of validity are involved. For example the claims might touch on the validity of patents in sensitive areas, such as armaments, and that no doubt is part of the rationale for article 22(4) of the Brussels I Regulation.”

This is supported by Dicey (supra) which states at [34.027] that it remains open to be decided whether questions as to the validity of a foreign patent are matters which are non-justiciable before an English court.

There are certain longstanding exceptions to the rule in Moçambique. I have already mentioned the contractual exception, which was referred to in Griggs v Evans and Lucasfilm. This exception was discussed by the Court of Appeal in Hamed v Stevens [2013] EWCA Civ 911; [2013] I.L.Pr. 37. Lloyd-Jones LJ said at [19] – [20] that:

“…it has long been accepted in England that an English court may, as between parties before it, give an in personam judgment to enforce contractual or equitable rights in respect of immovable property situated in a foreign country….”

This exception has its origin in the practice of Court of Chancery which was willing to exercise jurisdiction over a defendant within its jurisdiction so as to compel him to give effect to obligations he had incurred in relation to land situated abroad. (See e.g. Penn v Baltimore [1750] 1 Ves. Sen. 444.) In Deschamps v Miller [1908] 1 Ch. 856 Parker J. stated, with regard to the obligations which the court will enforce in this way:

“They all depend upon the existence between the parties to the suit of some personal obligation arising out of contract or implied contract, fiduciary relationship or fraud, or other conduct which, in the view of the Court of Equity in this country, would be unconscionable, and do not depend for their existence on the law of the locus of the immovable property.” (at p. 863)

In addition, I have referred to [105] of Lucasfilm, where it was held that he Moçambique rule, in its attenuated form, can only apply to proceedings which are principally concerned with a question of the title to, or the right to possession of foreign land. A similar exception was referred to in the judgment of Lloyd Jones LJ in Hamed v Stevens at [14]. For the rule to apply, the proceedings must raise directly, as opposed to incidentally, the issue of title to foreign land:

“It is quite true that in the exercise of the undoubted jurisdiction of the Courts it may become necessary incidentally to investigate and determine the title to foreign lands; but it does not seem to me to follow that because such a question may incidentally arise and fall to be adjudicated upon, the Courts possess, or that it is expedient that they should exercise, jurisdiction to try an action founded on a disputed claim of title to foreign lands. (at p. 626)

In St. Pierre v. South American Stores (Gath & Chaves Ld.) [1936] 1 K.B. 382 , Scott L.J. referred to this passage and continued:

“By these words I understand him to have meant that it is the action founded on a disputed claim of title to foreign lands over which an English Court has no jurisdiction, and that where no question of title arises, or only arises as a collateral incident of the trial of other issues, there is nothing to exclude the jurisdiction.” (at p. 397)”

I do not consider that this court should decline jurisdiction in respect of the Disputed Paragraphs, for the following reasons. First, Chugai does not contend that the 771 Patent is invalid, nor does Chugai seek any relief as to invalidity. Its case is limited to a dispute about the scope of the claims of the 771 Patent, and insofar as it refers to validity, it is to support its construction of those claims.

Secondly, there is no direct challenge to validity by Chugai and, insofar as the issue arises at all, it will only do so incidentally, in support of Chugai’s case that its construction should be accepted. This dispute is clearly not principally concerned with the question of validity.

Thirdly, Chugai’s case is correctly characterised as a contractual claim for a declaration that no royalties are due under the Licence because Chugai’s product is not one that falls within the scope of a claim of the 771 Patent, irrespective of its validity. However, even if it were framed as a declaration for non-infringement, this would make no difference, and UCB does not, and could not, seek to strike it out on that basis; see Lucasfilm and Actavis v Lilly (supra).

Fourthly, the parties have agreed that the scope of the patents which are the subject of the Licence should be determined by the English court; it is not an affront to comity to give effect to that agreement. This case falls within the longstanding contractual exception to the Moçambique rule.

UCB relies upon the decision of the Supreme Court in Belhaj v Straw [2017] UKSC 3; [2017] 2 WLR 456 at [121] – [123] and in particular the discussion of the doctrine of foreign act of state by reference to the following three rules (although there was some doubt about the scope of at least the second rule):

UCB relies upon the analysis of the policy underlying the doctrine by Lord Sumption at [225] – [227], and in particular that the doctrine is based upon the principle of comity, which Lord Sumption preferred to call “an awareness that the courts of the United Kingdom are an organ of the United Kingdom”. He explained that “Like any other organ of the United Kingdom, the courts must respect the sovereignty and autonomy of other states.” He also held that “the act of state doctrine is influenced by the constitutional separation of powers, which assigns the conduct of foreign affairs to the executive.”

The question before me is whether an adjudication by this court in relation to the Disputed Paragraphs would contravene the act of state doctrine. The act of state doctrine, in the context of intellectual property claims, was considered by the Supreme Court in Lucasfilm at [81] – [86]. In summary, Lords Walker and Collins said:

They also held that Potter v Broken Hill Pty Co Ltd [1905] VLR 612 stood alone in using the act of state doctrine as an impediment to actions for infringement of foreign intellectual property rights. The Supreme Court agreed with the dissenting Judgment of Circuit Judge Newman in Voda v Cordis Corpn 476 F 3d 887, that “not every governmental action and not every ministerial activity is an act of state” and with the Court of Appeals for the Third Circuit in Mannington Mills, Inc v Congoleum Corpn (1979) 595 F 2d 1287, 1293–1294 (3d Cir) which was “unable to accept the proposition that the mere issuance of patents by a foreign power constitutes … an act of state”

At [86] Lords Walker and Collins said:

“[86] It has been said that the grant of a national patent is "an exercise of national sovereignty" (Jenard Report on the Brussels Convention (OJ 1979 C59, pp 1, 36)), and the European court has emphasised that the issue of patents necessitates the involvement of the national administrative authorities (Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509, para [23]). But in England the foreign act of state doctrine has not been applied to any acts other than foreign legislation or governmental acts of officials such as requisition, and it should not today be regarded as an impediment to an action for infringement of foreign intellectual property rights, even if validity of a grant is in issue, simply because the action calls into question the decision of a foreign official. (emphasis added).”

Lord Mance made clear at [115] that he was expressing no view about the application or scope of the doctrine of act of state in relation to issues of validity of foreign intellectual property rights which (unlike copyright) could depend upon state grant. However, the other members of the Supreme Court expressed no such reservation and agreed with the combined judgment of Lords Walker and Collins.

Mr Layton argues that paragraph [86] is obiter, since the question of infringement and validity of foreign patents was not in issue. I agree. However, the reasoning of the Supreme Court, which led it to allow the appeal from the judgment of the Court of Appeal, cannot and should not be ignored. Mr Layton has very fairly drawn my attention to certain passages in the Belhaj case, where the Supreme Court specifically referred to Lucasfilm. Lord Mance stated at [73] that:

“(iv)

Acts of officials granting or registering intellectual property rights have been held to be outside any doctrine of foreign act of state: Lucasfilm Ltd v Ainsworth [2011] UKSC 39; [2012] 1 AC 208.”

Lord Neuberger stated at [162] that:

“[161] Further, such recent authority as there is in this jurisdiction tends to support a limited interpretation of the second rule. In Lucasfilm Ltd v Ainsworth [2012] 1 AC 208, para 86, Lord Walker and Lord Collins said that "in England the foreign act of state doctrine has not been applied to any acts other than foreign legislation or governmental acts of officials such as requisition", and so refused to apply it to the grant of a patent.” 

Mr Layton submits that these statements are an inaccurate paraphrase of obiter dicta in Lucasfilm. I do not agree. The decision of a patent examiner to grant a patent is not an act of state. Any party may challenge the validity of the patent in court proceedings, which is quite different from an attempt to challenge legislation or government acts such as requisition. Therefore, the act of state doctrine is not an impediment to an action for infringement of foreign intellectual property rights, even if the validity of a grant is in issue.

I do not consider that this court should decline jurisdiction in respect of the disputed paragraphs of Chugai’s Statement of Case on the basis that its adjudication would be contrary to the doctrine of act of state, for the reasons set out above in relation to the rule in Moçambique. It is not a breach of the principle of comity to exercise jurisdiction where the parties have chosen, by agreement, to submit their dispute to the adjudication of the English courts. Furthermore, the act of state doctrine does not present an impediment to an action for infringement of a foreign patent, even if validity is in issue (although in this case, Chugai does not seek to invalidate the 771 Patent).

In case this application goes further, it may be helpful for me to indicate the course that I would have taken, if I had considered that Chugai was seeking to invalidate the 771 Patent in the English court. That, in my judgment, would have been contrary to the Licence, whereby the parties have agreed that the validity of patents within its scope should be adjudicated on by the courts where they were granted. Furthermore, a declaration or finding of invalidity would not affect the obligation to pay royalties, which would remain unless and until the US courts held that the 771 Patent was invalid. Therefore, I would not have allowed the claim to proceed.

That leaves the wider question of whether, in the absence of agreement, direct challenges to the validity of foreign patents which are outside the scope of article 22(4) of the Brussels I Regulation (for example claims for revocation or declarations of invalidity) are justiciable here. Professor Briggs in Civil Jurisdiction and Judgments (6^th Ed, 2016) states at [4.09]:

“The grant of a patent is closer to an act of sovereign power than many; if a court considers that a patent should be held to be invalid and cancelled as a result, it is hard to see how this can be done and made effective by a court other than at the place where the patent was granted and must now be cancelled. Moreover, as the Brussels 1 Regulation reserves proceedings which have as their object the validity of a patent to the courts of the Member State under which it was granted, it would be difficult to attack a rule of the common law which was built on the same foundation.”

Mr Raphael, who recognised that his case would be considerably more difficult if Chugai was mounting a direct challenge to validity in the English court, did not dissent from this reasoning, apart from the suggestion that the act of state doctrine might preclude challenges to validity. He suggested that such challenges might be precluded by the rule in Moçambique or by the use of the public policy exception which applies at common law; the latter possibility is referred to in Dicey at [34-027].

In my view, there are powerful arguments that such direct challenges, where validity is the principal issue, are not justiciable. In particular:

So, whilst my provisional view is that direct challenges to the validity of foreign patents should not be justiciable in the English courts, it is not necessary for me to reach a conclusion on this important question, which should be decided in circumstances where it matters to the result.

For the reasons set out above, I dismiss UCB’s applications to strike out the Disputed Paragraphs and for summary judgment in respect thereof. In my judgment, the English court has jurisdiction in respect of the issues raised by the Disputed Paragraphs.