Teva UK Limited & Anor. v Novartis AG

This is an application by Teva in these proceedings in which there are two actions, which I will call "the Teva action" and "the Novartis action", to amend its pleadings. The trial of the claims is floating from 3rd October 2022. The reduced issues, as I will describe, which Teva now wishes to raise will, it is clear, occupy much less time than the full issues originally destined for trial and what was under discussion at the hearing today was the possibility of dealing with those new issues at the back end of the current trial window, whose last two days are the 17th and 18th October. Although no definite decision has been arrived at, it does seem to me that if I allow the proposed amendment, the trial of them will take about two days, plus some pre-reading.

The Novartis action is in respect of a European patent application, whose date of grant has changed over time, but as I understand it, it is currently due to grant in about early/mid-October. I think I have been referred to a date of 12th October. It is a dosing regimen patent and an unusual feature of this litigation is that Novartis sought interim injunctive relief prior to the grant of the patent and Roth J, having heard the application in March, gave judgment in April in which he found that there was jurisdiction to grant relief prior to the grant of the patent, but he declined to do so on the balance of convenience and permission to appeal his decision was refused, finally, at a hearing before Birss LJ, in due course.

Teva's claim has from the outset included Arrow declaratory relief. Part of the reason for that was the fact that the patent had not yet granted; there is also Arrow declaratory relief sought in the counterclaim in Novartis's claim

Matters were thereafter progressing towards trial and there are parallel proceedings in a number of courts of Europe against Teva and other defendants, as I will touch on in due course, but so far as the UK is concerned, matters changed significantly when, on 10th August, Novartis announced that it was going to withdraw the UK designation so that the patent (“EP 894”), will not grant in the UK. Novartis has declined to state the reasons for that decision on the basis of confidentiality and privilege and it has said that the reasons are specific to the UK. It is unnecessary to dig into the detail of that, but one point that does appear to be specific to the UK is that following the refusal of injunctive relief, the UK supply of the drug in question, fingolimod, for treating relapsing remitting multiple sclerosis, in the dose claimed has become a generic market.

Teva wants to carry on its claim for Arrow declaratory relief in October and that presented it with a problem, because whilst the patent was on course for grant and while there was the likelihood, indeed, the intention that there would be a contested fight over validity, that claim needed no great support and based on the judgment of Birss J, as he then was in Pfizer (as I will touch on again shortly and will give the citation), it was more or less inevitable that if Teva won on validity, it would get the Arrow declaratory relief or, at the very least, the question of discretion to grant the relief would be an easy one for Teva to succeed on. That all changed with Novartis's withdrawal of the UK designation.

It is said by Mr. Waugh, King's Counsel, who appears for Novartis today, that Teva could have supported the Arrow claim on the bases which it now relies on at any time. In a theoretical sense that is true, but for reasons I have just gone into, there was simply no reason for Teva to even think about that until the events of August.

A timetable of recent events is given in Teva's skeleton at paragraph 13 as follows:

There is no controversy about that and it covers events from 10th August onwards. Teva has served its technical evidence. Novartis has not, and said that it will not do so. On 25th August, Teva issued an application for directions for the conduct of the October trial in the changed landscape confronting it. On 2nd September, Novartis made an application under CPR Part 3 to determine that the declaratory relief sought by Teva served no useful purpose, and therefore that the Arrow claim had to be struck out. On 6th September, Teva sought to amend its pleadings to raise a different basis for Arrow relief, as I will shortly discuss, and then the matter came before me last week, when -- given that I was sitting in the applications court at the time and given the speed with which things had moved -- there was no time to deal with it substantively. I adjourned the matter until this week with a direction to Teva that it must put in a full pleading of the matters which it wished to raise and must put in the evidence that it would seek to rely on at trial, if permitted to amend, which it has now done in the shape of a fifth witness statement of Mr. Sharp, of Teva's solicitors, and an expert report of Dr. Anna Wolters-Höhne, a German-law expert who has also provided a very short supplementary expert report yesterday in response to some criticisms of her earlier evidence made by Novartis.

The effect of the amendments, to which I will turn in due course, is to completely replace the basis for Arrow relief. There is no real doubt about that. The more or less unanswerable case on discretion which was present when there was the likelihood of a UK right has been replaced with something very different which I set out as follows:

Novartis maintains its opposition to the amendment and I therefore have to decide whether I should permit it or not and, if I do, how to carry matters forwards to trial. It is clear that this is, in form and in substance, an application by Teva to amend its pleadings and part of the picture, but only part of the picture, is therefore whether the pleading raises an arguable case. I also have to consider very carefully whether to allow an amendment of this kind so close to trial.

This application engages a number of strands of authority. In my view, what I first and foremost must consider is that this is an application to amend close to trial and I have been directed to the following authorities on that question, primarily by Novartis, but I do not understand Teva really to disagree with them. First of all, in Pearce v East and North Hertfordshire NHS Trust [2020] EWHC 1504 (QB) Lambert J stated:

Secondly, Scott v Singh 2020 EWHC, 1714, (Comm) where Judge Eyre said this:

Novartis relies, drawing those threads together on the following propositions.

First, that it is not the law that amendment should in general be allowed purely in order to resolve a dispute between the parties, but rather there is a heavy burden on a party seeking a very late amendment to show the strength of the case and why justice requires them to be able to pursue it.

Secondly, that a proposed amendment must be properly formulated, coherent and clearly set out the case which the other party is to meet, especially in the case of a late amendment. Novartis go on to say that it is not open to a party seeking to make a late amendment to say the deficiencies in the proposed pleading can be remedied in due course by further particularisation -- a point to which I will return.

Third, that the new case set out in the proposed pleading must have a real, as opposed to a fanciful, prospect of the claim being raised succeeding. Although it is a shorthand, I am going to call that "the strike out standard".

Fourth, that a proposed amendment has to be supported by evidence that establishes a factual basis.

I was also referred, by Novartis, to the CPR, and what it says in the notes to Part 17 about late amendments, and in particular to the note at 17.3.8 referring to:

When I directed Teva to put its case in by way of pleading and evidence last week, I did so under a very tight timetable and I gave Teva what I thought was an appropriate warning, and it is against that background that I will assess the criticisms of the pleading and evidence made by Novartis. However, this is not a one-way street. The time pressure has arisen because Novartis pulled the UK designation in August, something which it has failed to explain. Indeed, it has consciously chosen not to explain. I am of the view that it is quite likely that Novartis could have made that decision earlier. I do not say they did do this, but it is even possible that they did in fact make that decision earlier and made a further calculated decision about when to notify it to Teva. In any event, it is Novartis's very unusual conduct in asserting a patent, seeking and even for a brief period obtaining interlocutory relief, and then pulling it, all the while maintaining it in other proceedings in EPC States that has caused the shortness of time.

That, in my view, would not be anywhere near enough to lead me to let through an amendment if there could not be a fair trial, but it forms the background against which to consider the criticisms of Teva's evidence and pleadings to which I have referred.

Later in this judgment, I will touch on a few of the key decisions in relation to Arrow declarations. Those are a couple of judgments in the Fujifilm litigation and the decision of Birss J (as he then was), in Pfizer v Hoffman-La Roche [2019] EWHC 1520 (Pat). I think caution is required in considering that those litigations represent what is typical to Arrow declarations or that they represent, in some way, the minimum complexity or effort that is needed. The Fujifilm litigation was truly a saga, returning to court many times with many different courses of conduct by the patentee to seek to preserve its position, with a number of reported judgments with a very long and complicated trial at the end of the day.

The Pfizer case, whilst it only took three days in court, packed a lot in because it involved detailed consideration of the prosecution history of the patent families in question and cross-examination on deeply disputed aspects of foreign law, in that case Belgian law, where there was a real and significant issue between the parties.

I do not consider that I should fall into the trap of considering either of those as a metric for what would be involved in a trial of what Teva's pleading raises. Teva's pleading is much more self-contained and as I have said already, I agree with the assessment that two days of court time ought to be enough and the issues raised are basically fact evidence about the litigation landscape, fact evidence about other litigations in Europe, some fact evidence about how the declarations sought would help Teva or might help Teva and then expert evidence of German law where, I can see already from the comments that have been passed by Novartis on Teva's expert evidence, any areas of dispute are likely to be extremely limited.

I approach the question of whether a trial at the back end of the current window is possible with, I hope, a realistic assessment of what is truly involved in this case.

Novartis says that it cannot be ready and that a fair trial which gives it an opportunity to make its case and understand and meet the case against it is not possible in the time available and it also criticises the particularity of the pleading put forward by Teva. These points all go together to some extent, but I have to break them down somehow or other, so the way that I am going to seek to do that is by looking at the points where Novartis has said that it will be in difficulty meeting the timetable or meeting any timetable for a trial in October.

The first point that Novartis put forward in its skeleton was that it does not currently have a German-law independent expert on whose evidence it can rely. I am unimpressed by this. The dispute on German law, if indeed there is one at all, is extremely narrow and Novartis is an enormous organisation which is clearly willing to throw tremendous resources at this case and I am sure that it will be able to find a German-law expert if it feels that it is essential. I have to say that I think putting that forward as its first reason why there was a problem meeting the trial date is somewhat symptomatic of an approach by Novartis that it simply is not willing to try all that hard to meet the timetable.

Secondly, it is said that there are matters which might require disclosure or matters where Teva's case is not yet clear. For example, Novartis says, that paragraph 23A(d) of the draft pleading, asserting that some undertakings have been offered by Novartis are not such as to offer the same protection as the declaration sought, is unclear and may require evidence which cannot be obtained in time.

I agree that that subparagraph of the pleading lacks some particularity and Dr. Turner KC, appearing for Teva, agrees that Teva will spell out the ways in which the undertakings leave gaps, as Teva would say, but that is a really small point. It is primarily a point of argument and not of fact, and although, as I said earlier, Novartis says that in the case of a very late amendment, the party seeking to amend should not be allowed to fix problems of this kind, I do not consider for a moment that that can be an immutable rule and, under the time pressure imposed on it in circumstances which I have described, I think Teva's omission in that respect is not unreasonable and pretty much as soon as it has been raised by Novartis, Teva has addressed it. The substantive question of whether the undertakings match the protection given by a declaration is not a difficult one to argue or one that is very fact-sensitive at all.

Second, it is said that Teva has pleaded a vague case about whether the declaratory relief sought will enable parties to know that the proposed acts are obvious. Novartis says that the pleading should spell out who those third parties are. I agree, and this is another respect in which there is a problem with Teva's pleading, but for reasons touched on already, I think it is curable and in the course of oral submissions, Dr. Turner, on behalf of Teva, clarified that the third parties in question are the NHS.

On a practical level, and jumping across to the question of evidence, there was a lack of clarity about Teva's intentions in relation to this and Mr. Sharp, Teva's solicitor, had cross-referred in his evidence to some witness statements used in interlocutory stages of this litigation, namely from a Ms. Paddy and a Ms. Britton. It has been clarified that those are not relied on and Teva does not intend, as one would expect, to try to call evidence from people who are actually confused and, therefore, this boils down to a dispute, really, about whether the undertakings and/or the declarations are clear and comprehensible and whether either of them is better than the other and I do not consider that requires much, if any, factual investigation. Novartis has said that it might want to call evidence from the NHS and/or from its internal people, explaining that the matters are entirely clear to the NHS and it can do that, but I do not regard this as a particularly heavy issue to be tried in mid-October.

Next, and more significantly, in my view, Novartis has focused on Teva's pleading at paragraph 23A(h), that Novartis's strategy has the potential to impact supply chains for the sale of Teva's generic product. Novartis has made a number of responses to this. One response that it has made is that a question will arise which might require cross-examination and/or disclosure over whether it would be burdensome for Teva, if it cannot carry on activities in the manner in which it has described, to switch to doing the same things or substitute things in a different jurisdiction.

This issue has given me considerable pause because I do not think it is unreasonable for Novartis to raise this question and, furthermore, Teva's position on this has evolved during the course of the hearing before me. Initially, Dr. Turner's position was that Teva was not going to say anything one way or another about the burden of changing its supply chain but, later on in the hearing, he said that Teva might want to give some evidence and that it would do so by next Wednesday.

This is related to a further criticism of the evidence of Mr. Sharp, because in paragraphs 7.12 and 7.13, he speaks on information and belief from a Dr. McBride of Teva as to the position with supply chains and a point is made that that is not a proper form of evidence with regard, in particular, to PD57AC. Dr. Turner sought to meet that particular procedural objection by saying that Teva would provide a witness from within the company to verify what is said, which is that the product is shipped from a non-EPC Contracting State jurisdiction to what is designated as Country A, which is designated by the patent-in-suit and that there would be disruption if Teva had to change that, but he does not speak to the burden of that or alternative options available to Teva.

I agree that this part of Mr. Sharp's evidence is not in compliance with PD57AC and unlike other objections where he simply, for example, summarises foreign proceedings and the question of whether he is speaking from personal knowledge is one that just does not matter. There is a genuine point here to be taken. However, having thought about it carefully, I think that this is unlikely to be a point of grave importance at any trial, if the pleading otherwise raises an arguable case, and I very strongly suspect that if Teva puts in the evidence it seeks next week, it will be at a rather general level, saying that moving supply chains from one country to another is disruptive and expensive. I am dubious in the extreme that that can either realistically be contradicted or that there is any merit in going into the nitty-gritty of how much it will cost or why or how long it will take or anything like that. Whilst I agree, therefore, there was a deficiency in the procedural route adopted by Teva and being cautious to allow it off the hook with an amendment which is so close to trial, I think this is in the end a minor point and curable in the sense that I have indicated.

If I turn out to be wrong and it proves, when Teva provides that evidence next week, that there is a genuine dispute, then the matter may have to be revisited and it may come about that Teva even has to choose between running the point and keeping the trial date, but for the moment, in my view, in the unusual circumstances of this case, I am justified in allowing Teva the opportunity to improve its position.

Mr. Sharp's evidence in relation to Ms. Paddy and Ms. Britton will require surgery to remove references to that hearsay; that is the certainty for the NHS point I have touched on already. The last objection taken is that Mr. Sharp has given evidence which contravenes PD57AC when he says in paragraph 7.19 that a reasoned decision and declaration from the Patents Court could assist the parties to reach settlement. I do not think Mr. Sharp has any personal basis for saying that and I think it is, with no disrespect, vague and useless and any litigator, including a former litigator such as a judge, could reach a conclusion on that without the assistance of Mr. Sharp. I note that Novartis has already responded to this by giving, at least at this interim stage, evidence on information and belief from a named individual within Novartis who says that of course there could be a settlement, but this additional UK decision will not make any difference. I have to say, without expressing any concluded view, that very much has the ring of truth about it but, in any event, promotion of settlement, in my view, is a very small part of the picture.

All that being so, I consider that with appropriate directions, which I will deal with in the event that I conclude that the case is at least arguable, this is not an amendment which threatens the trial date and having regard to the overriding objective of devoting an appropriate amount of the court's resources to a case and deciding the real issues, I think that if the pleaded case is arguable, it would not be an objection to it that there is a practical problem with having a trial.

I should also say, although I think this is probably better organised under the analysis of whether the claim is arguable, that Mr. Waugh criticised the German-law expert evidence put in by Teva on the basis that it does not address itself specifically to the question of whether a UK decision would have additional value in a German court, over and above the other litigation taking place across Europe. To my mind, that is not a question about the feasibility of a trial in October, but an issue on the merits.

I turn to consider whether the pleaded case crosses the strike out threshold. On that, I have been referred by Teva to the decision of Lord Browne-Wilkinson in Barrett v L B Islington [1999] 3 Weekly Law Reports 83, referred to in a number of later cases which I have been shown, that in an area of law which is uncertain and developing, it would not normally be appropriate to strike out and that development of the law should be on the basis of actual facts and not on the basis of hypothetical facts. There is no dispute as far as I can tell before me today about that being a principle which I have to bear in mind.

I have been referred, against that background, to the following parts of Fujifilm in the Court of Appeal by one side or another as follows:

Paragraph 73(vi) records an argument of Mr. Hobbs KC and gives context to some of the later part of the judgment:

Paragraph 95, rejecting a floodgates argument that was made states as follows:

Paragraph 99, which is under the heading of discretion, and records, as Floyd LJ said:

That last point about the statutory proceedings for revocation of course has to be read against the qualification that in the present case the patent has not yet granted, although it probably will have done very shortly before the end of the current window.

I was referred next to the decision of Henry Carr J in the trial in Fujifilm, which is [2017] EWHC 395 (Pat), where he referred to spin-off judgment at paragraph 374 and following:

Then Carr J said in his assessment:

Henry Carr J accepted that the spin-off value of a judgment in a Contracting State can be valuable, but that he would not take that into account other than to the extent that would impact on the UK market, which was a reference to supply chains.

Finally at 416:

Henry Carr J said that he found relevance in the unusual facts of the case to do with AbbVie's conduct of threatening infringement whilst abandoning proceedings at the last moment. I do not accept that there is any direct parallel between AbbVie's conduct and that of Novartis in this case. I have made clear in the course of argument that I do not think it is appropriate to conduct my decision-making on this application by comparing facts, but it does seem to me that paragraph 416 justifies the proposition that the conduct of the patentee is a relevant factor to put into the mix and can have weight. Whilst, as I say, Novartis's conduct is very different in many ways from that of AbbVie, it is unusual and I would go so far as to say surprising.

Finally, on this, I was referred to the decision of Birss J in Pfizer, to which I have referred already. That is [2019] EWHC 1520 (Pat). Birss J (as he then was), identified the high-level points, the key principles at paragraph 64 as follows:

He said that the most important case on the modern approach is Messier-Dowty and that the key touchstone there was useful purpose; that the approach is pragmatic and not a matter of jurisdiction, but a matter of discretion.

I have also found important and helpful paragraphs 85-88, where Birss J concluded that he would not grant the declarations sought, basically because he concluded that it was an exercise in forum shopping and that the foreign court -- in that case the Belgian court -- would be able to reach its own decision about what to do and would not be assisted by a decision of the English court.

Finally at paragraph 118, Birss J said had there been pending UK applications there would be a plain case for an Arrow declaration. That is what I referred to at the beginning of this judgment. At paragraph 122, in a wrap-up, he said, reiterating what I have touched on already, that the true purpose of an Arrow declaration in the case before him was for its use in foreign courts and that that was not enough.

Novartis says that the proposed amended pleading is no more than what was before Birss J in Pfizer and, furthermore, that given the other disputes in other European territories, details of which are given in the evidence and which I think it is unnecessary to pick through, the German court will not get any additional benefit from a UK decision and, furthermore, even if there were not any other cases going on in Europe, an uncontested decision in the UK will not be of assistance there.

The two key points for me are that this is an uncertain and developing area and that I am hearing not a trial or a mini-trial, but a strike-out application. I say this is an uncertain and developing area because there are few decisions. It is developing. My recollection is that it was for commercial reasons, but certainly it is true to say that the Pfizer case did not go to the Court of Appeal. So whilst it is a decision of a respected patents judge, it cannot be taken as a firm decision to the effect that spin-off value is of such very limited use and only relevant in such limited circumstances. In my view, it is not impossible that, at trial, with a full understanding of the German law position and of the other proceedings around Europe, and of the other factors which make this situation unique, in particular Novartis's conduct, it is not impossible that the court exercising a discretion would make an Arrow declaration. I am confident that it is the better, fairer route to find the facts against the backdrop of my decision that that can fairly be done, rather than to decide this as a matter of law, which just simply, to my mind, opens up the possibility that my decision to strike out the claim or to not allow it because it does not pass the strike out standard, will itself go to the Court of Appeal and delay things.

I am bolstered in that conclusion, although it is not necessary to the ultimate result, that proceeding in this way uses court time that is already set aside for these litigants and offers the possibility, I put it no more highly than that, that if the trial judge is minded to grant a declaration, it will be done in a timeframe which is useful to Teva.

My conclusion is that I will allow the amendment, subject to the further particularisation of the pleading and subject to the changes to Teva's evidence that I have indicated and I will allow Teva until next Wednesday to amplify that evidence, but apart from that, I think the pleading should be allowed.

I want to make it clear that, in that conclusion, I am by no means saying that Teva has an easy ride to come. It could easily be the conclusion of the trial judge in due course that an uncontested decision of a UK court, when there are many other decisions to broadly similar effect just is not worth it, but that is for another day and for trial. My decision today is that, in the sense that I have indicated and with the limitations indicated, permission to amend, and I will now consider directions.

Post script: when giving judgment orally I intended to say, but inadvertently omitted to, that that the 2-day trial I have directed is on the discretionary issues only.  It does not include dealing with the technical issues in the event that Teva succeeds on discretion.  In the event that Teva succeeds on discretion it will be for the trial judge also to decide when and how to assess the technical issues.  In that scenario Teva will of course be free to argue that decision on the technical issues is needed, and can be done, quickly.

My reasons for this conclusion are that there is already time and resource pressure on the trial, that Teva has not sought to argue that the apparent strength of the patent is a factor on discretion, that in the event that Teva does not succeed on discretion the technical issues should arguably not be considered at all (see Pfizer), and the fact (already mentioned) that if Teva succeeds, a quick decision on the technical issues can be argued for.