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This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

Inside IP: Patents Court considers question of challenges to validity of foreign patents
 Briefing 
Author
David Rose & Nina O'Sullivan
Date
05 June 2017

Inside IP: Patents Court considers question of challenges to validity of foreign patents

In recent years, the English courts have demonstrated their willingness to adjudicate on claims relating to the infringement of foreign IP rights. Following the landmark Supreme Court decision in Lucasfilm v Ainsworth, which confirmed that the English courts have jurisdiction over enforcement of foreign copyrights, the long-running case of Actavis v Lilly has seen the Courts consider a claim of non-infringement in relation to foreign designations of European patents.    

In Actavis v Lilly, however, Actavis undertook not to challenge the validity of the foreign designations, because Article 22(4) of the Brussels I Regulation (Article 24(4) of the Re-cast Brussels I Regulation) provides that such questions must be determined by the courts of the EU Member State where the patent is registered.   

The issue of whether questions as to validity of a foreign patent outside of the Brussels I regime are justiciable before an English court has now been considered in Chugai Pharmaceutical v UCB. The Judge, Mr Henry Carr J, did not ultimately have to determine this question to decide the case. However, he set out what he described as powerful arguments against direct challenges, where validity of foreign patents is the principal issue, being justiciable before the English courts. The Judge's comments on this issue are obiter and it remains open to a party in another case to seek to challenge directly issues of validity of foreign patents before the English courts. However, the Judge's comments set the scene for how such arguments will be considered.

BACKGROUND

UCB Pharma had granted a licence to Chugai Pharmaceutical Co. Ltd in relation to a patent portfolio concerning products containing a humanised anti-IL-6 receptor antibody known as tocilizumab. Only one patent under the licence remains in force, a US patent (the US Patent). Chugai considers that its tocilizumab products fall outside the scope of the claims of the US Patent and is seeking a declaration from the Court that it does not owe any royalties to UCB for the manufacture and sale of its products post-12 January 2016. As part of its case, Chugai relies on US principles of construction in relation to ambiguous claims, in support of its arguments of a classic 'squeeze' between infringement and validity. The licence agreement contains an exclusive jurisdiction clause in favour of the English courts but, as is common in patent licences, also provides that revocation or similar claims for invalidity should be determined by the court of the states of protection.  

The trial of the action will take place in February 2018 but UCB argued that whilst the claim was 'dressed up' as a declaration relating to a contract, in substance it concerns the scope and validity of the US Patent, and the English courts have no power to determine the validity of a foreign patent.

DECISION

Henry Carr J rejected UCB's arguments that the claim was non-justiciable. UCB argued that:

  • it would infringe the territorial limits of the court's jurisdictional powers and constitute an affront to comity, against the Moçambique principle (this is a common law rule providing that the English courts have no jurisdiction to determine title to, or the right to possession of, foreign land), and/or
  • it was a breach of the foreign act of state doctrine (which requires that the English courts will not determine the sovereign acts of a foreign state).

The Judge decided that Chugai's claim was not a direct challenge to the validity of the US Patent. Chugai was not claiming the US Patent to be invalid but was merely asking the Court to ask itself, as a guide to construction, what would be the hypothetical consequences for validity of the rival interpretations.  Further, Chugai's arguments concerning validity were incidental to the essential nature of its claim, which was for a determination of its royalty obligations under the licence.

Henry Carr J also concluded that the dispute fell within the exclusive jurisdiction clause. He noted that, if UCB's submissions on the inseparable nature of infringement and validity arguments were correct, clauses in patent licences giving exclusive jurisdiction on infringement of foreign patents to the English court would generally be unenforceable.   

Accordingly, he decided that the claim fell outside the Moçambique rule. As for the foreign act of state doctrine, he concluded that the decision of a patent examiner to grant a patent is not an act of state, as compared to an attempt to challenge legislation or government acts such as requisition. The act of state doctrine was therefore not an impediment to an action for infringement of foreign IP rights, even if the validity of a grant is in issue. 

DIRECT CHALLENGES TO VALIDITY OF FOREIGN PATENTS

The Judge's decision on the nature of Chugai's claim determined the issue of whether the claim for a declaration was justiciable by the English court. However, he noted that, if he had concluded that Chugai was seeking to invalidate the US Patent before the English Court, this would have been contrary to the licence. 

Of particular interest was the Judge's further obiter views as to whether, in the absence of agreement, direct challenges to the validity of a foreign patent outside the scope of the Brussels I regime are justiciable before the English courts. He concluded that there are powerful arguments that such direct challenges, where validity is the principal issue, would not be justiciable before the English courts, including:

  • There is a basis for distinguishing between infringement and invalidity claims; infringement claims affect only the parties to the action, whereas a patent is a monopoly right in rem which applies to the entire population of the territory of grant. 
  • Article 22(4) of the Brussels I Regulation reflects this distinction. 
  • The Moçambique rule no longer applies to claims for damages to trespass but does apply to actions principally concerned with determination of title to or possession of foreign land. Infringement claims are analogous to trespass claims, whereas a validity attack is analogous to a challenge to title to or possession of land.  
  • Patents are local monopolies involving local policies and public interest, and their effect is territorially limited. As such, their validity should be matters for the local judges in the country where the patent right was first granted. 

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