We reported recently on the judgment in Neurim/Flynn v Mylan where the Patents Court had found Neurim's second medical use patent relating to Circadin (the Patent) valid and infringed by Mylan. A further significant finding in the decision was that Flynn was not an exclusive licensee of the Patent in the UK. The case was heard on an expedited basis following an earlier decision (upheld on appeal) to refuse Neurim/Flynn an interim injunction against Mylan in relation to its planned launch, on the basis that damages would be an adequate remedy.
The usual outcome of a finding of infringement of a valid patent include, of course, orders for a final injunction and costs in favour of the patentee. However, although orders along those lines were made immediately following the judgment (the orders were made on 16 December, with the judgment having been delivered on 4 December 2020), the outcome in this case is now a very different one. The Court considered it had jurisdiction to vary the orders made, as this was an "exceptional case even amongst exceptional cases". This was because of the wider context of proceedings relating to the Patent before the Technical Board of Appeal of the European Patent Office (EPO). This was highly relevant because, if the EPO revokes a patent, that revocation will take effect in all European Patent Convention states designated in the patent. Accordingly, even if a national court finds the designated patent valid, that decision can be 'trumped' by the decision of the EPO Board of Appeal to revoke it. However, a decision of EPO finding a patent valid will not trump a finding of invalidity before a national court.
On 18 December 2020, following a hearing before the EPO Board of Appeal (where it had expressed the opinion orally that the Patent lacked sufficiency), Neurim withdrew its appeal against the finding of invalidity of the Opposition Division. This meant that the Patent was therefore revoked – "it is as if the Patent never was".
It appears that this is the first time that this kind of situation has arisen. However, whilst there have been no cases considering the varying of an order in the context of parallel jurisdictions considering the same question at more or less the same time, and reaching different conclusions, the Courts have considered the inter-connectedness between the twin routes to patent revocation when considering whether to grant a stay pending the outcome of EPO proceedings.
The Court concluded that, given the "very special facts" of this case, it had jurisdiction to vary the orders made following the decision, and should exercise its discretion to do so. Subsequent determinations of the EPO may therefore entitle a party in English proceedings to seek a variation of a prior order, though the Court stressed this would not always and inevitably be the case. Specifically, it noted that a different approach may have been appropriate in this case if, say, the EPO appeal had not taken place until 2022. Perhaps the Court of Appeal might have been called upon to give appropriate directions in relation to the court's order and the recovery of any losses as a result of those orders. However, this was a difficult hypothetical scenario, and it was an open question as to what the legal position would be in those circumstances.
The Court decided it could re-visit the orders made on 16 December 2020 based on the following factors:
- the proximity of the outcome of the EPO appeal to the orders that the Court made on 16 December 2020;
- the orders of 16 December 2020 were not drawn up and consequential orders did need to be made;
- it would be grossly unfair to Mylan for it to be unable to contend that the orders should not be varied; and
- the hearing on 16 December 2020 was conducted on the basis that any orders made could and would be re-visited if appropriate.
Neurim no longer sought a declaration of validity and of infringement, an injunction, delivery up/destruction or an inquiry as to damages/account of profits. However, it sought to maintain two aspects of the 16 December 2020:
- Permission to appeal the finding that Flynn was not an exclusive licensee: having previously given permission to Neurim/Flynn to appeal this finding (discussed in more detail in our previous update), the Court now reversed this point. As the patent had now been revoked once and for all, there was no longer any proper purpose to be served by giving permission to appeal on this question. Accordingly, Neurim/Flynn will need to seek permission from the Court of Appeal if they wish to appeal this difficult question (which has potentially general application).
- Costs: A costs order had been made in favour of Neurim on 16 December 2020 – but for the outcome of the EPO proceedings, it was clearly the winner of the English proceedings. However, both parties now contended that they were the successful party – again, clearly, in relation to the actual outcome, Mylan was the winner.
The Court concluded that Mylan was the successful party and therefore should have its costs. In particular, the Court noted that Neurim could have made an application to adjourn the English proceedings given that, in June/July 2020, both parties knew there was a clear possibility that the outcome could be rendered pointless as the EPO proceedings were imminent. Instead, both parties assumed the risk of costs being wasted, and of an adverse costs order. Whilst the Court was clear it was not singling it out for particular blame, Neurim could not now complain that it had to bear the entire costs of the trial.
The Court's decision demonstrates that the 'twin tracks' of UK and EPO revocation proceedings cannot be treated as "hermetically sealed, one from the other". Instead, they may in appropriate cases have significant inter-connectedness, with the outcome of EPO proceedings being a relevant factor for the UK court to consider carefully, both when considering whether to grant a stay of UK proceedings, but also in relation to remedies and relief. Whilst the Court said that the scenario in this case was extremely unusual and represented a "curious (and hopefully not to be repeated) interaction between the UK proceedings and the EPO proceedings", it also highlighted the interesting and difficult and hypothetical question if the EPO hearing finding revocation had not taken place until 2022.