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Posted on 13 March 2020

Patents Court rejects interim injunction in medical devices case

The Patents Court rejected an application for an interim injunction in Abbott v Edwards. Whilst the facts of the case are perhaps unusual, the decision is a reminder that, where a patent owner cannot establish that it will suffer irreparable and unquantifiable harm, it will not be possible to obtain an interim injunction.

When assessing whether to grant an interim injunction, the Court applies the test set out in the American Cyanamid decision. Importantly, the Court must consider each of the steps in the test in a sequential way. For example, if the Claimant is unable to show (under the second step in American Cyanamid) that it will suffer irreparable harm or unquantifiable harm (i.e. the Court considers damages would be an adequate remedy for the Claimant), there is no need to proceed further with the assessment. Here, the Court found it easy to conclude that any harm caused to Abbott was quantifiable, also rejecting Abbott’s arguments of potential reputational damage. Edwards indicated it would offer an undertaking pending judgment/order to arrange implantation of its devices in only 10 patients in two UK hospitals. It also accepted that each sale it made amounted to one lost sale to Abbott. Further, the facts of the case were clearly different to the perhaps more typical case relating to pharmaceutical products, where there are a number of generic competitors, with the patentee able to make arguments of an alleged downward price spiral.

The Court also rejected Abbott’s reliance on Edwards not having made any attempt to clear the way before bringing its device to the UK market. This can often be a significant factor in innovator/generic litigation, but the Court stressed that it will only be a relevant factor where the irreparable harm to both parties is evenly balanced, at which point additional factors (in addition to clearing the way, maintaining the status quo) become relevant. As the Judge had concluded that Abbott would not suffer irreparable harm, Edwards’ failure to clear the way was not a relevant consideration.

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Patents Court rejects claim for Arrow Declaration

Recent years have seen the Courts considering whether to grant Arrow declarations to deal with particular instances of uncertainty caused by patentee prosecution strategies. An Arrow declaration provides that a particular product intended to be launched by a generic or biosimilar manufacturer, for example, would have been obvious and/or lacked novelty in the light of the state of the art at a particular date, the priority date of a particular patent application. As a result, if that application (or a divisional based upon the original application) does subsequently proceed to a grant, the party with the benefit of the Arrow declaration can rely on it as a defence to any subsequent claim for patent infringement.

The Court of Appeal confirmed the jurisdiction to grant Arrow declarations in Fujifilm v AbbVie. Because of the unusual circumstances in that case including AbbVie’s conduct, and the need for commercial certainty, the Patents Court later decided it was appropriate to grant the declaration.

However, as an exercise of discretion, the decision to grant an Arrow declaration will very much depend upon the facts of the case, and the Court’s assessment of whether it will serve a useful purpose. In Pfizer v Roche, the Patents Court rejected Pfizer’s application for an Arrow declaration in relation to its proposed launch in Europe of a biosimilar monoclonal antibody drug (bevacizumab) for the treatment of various cancers in combination with other drugs. Pfizer’s plans to launch immediately after expiry of Roche’s SPC in June 2020 were, it argued, hindered by a “thicket of second-line patents and patent applications” which was causing general uncertainty.

The Court rejected the application for one key reason. Roche has no relevant UK patent application and, a few weeks after Pfizer’s court action began, it had de-designated the UK from all relevant pending European Patent applications. By this step, Roche abandoned any prospect of obtaining a UK patent in the future. Pfizer argued that this was a “deliberate and transparent act of shielding” by Roche. Given the UK was a valuable market for bevacizumab (both now and in the future), Pfizer argued this was clearly intended to prolong the commercial uncertainty. However, the Court concluded that the declarations sought would serve no useful purpose, despite the fact that it inferred that Roche’s motive for de-designating the UK was to shield its portfolio from the risk of an adverse decision in the UK court, and it recognised an Arrow declaration would be of real commercial value for Pfizer. It also recognised that the true impact of such a declaration would be the spin-off value in foreign jurisdictions.

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Not “too big to pay”: Supreme Court awards compensation to inventor

Receiving compensation for their inventions may be more straightforward for research employees following the Supreme Court’s much anticipated decision in Shanks v Unilever, which saw the award of £2m to Professor Shanks after a 13 year Court battle. However, whilst the decision provides important guidance on employee compensation for inventions and confirms that businesses will not necessarily be “too big to pay”, it is likely that such cases will continue to be rare. Demonstrating that an invention is ‘outstanding’ to justify compensation will remain a high hurdle. Much will also depend on the particular context of the size and nature of the employer’s business.

For four years from 1982, Professor Shanks was employed by Unilever Central Resources Ltd (“CRL”), a research facility wholly-owned by Unilever plc, to develop biosensors. Shortly after joining Unilever, Professor Shanks invented an Electrochemical Capillary Fill Device for monitoring blood glucose levels. Despite filing for patent protection and the subsequent expansion of the glucose testing market, Unilever did not regard it as a key technology. It did not exploit or commercialise the patents, save for licensing them to third parties. Nonetheless, the net financial benefit to Unilever through licensing the patents was £24 million.

Under the Patents Act 1977, an award of compensation should be made where (1) having regard to among other things the size and nature of the employer’s undertaking, the patent (or the invention under the new provision) is of outstanding benefit to the employer and (2) it is just that the inventor is awarded compensation. Overturning the decisions of the lower courts, the Supreme Court ruled that the patents were of outstanding benefit to Professor Shanks’ employer, and that he was entitled to a fair share of the benefit. The Supreme Court assessed this at 5% of £24m, resulting in £2m - taking into account inflation reflecting the impact of time on the value of the money.

The Court’s assessment of “outstanding benefit” is of particular significance. Lord Kitchin noted that ‘outstanding’ was an ordinary English word meaning exceptional or standing out in terms of money or money’s worth, but that it was also a relative and qualitative term which had to be assessed as against the size and nature of the employer’s undertaking. The difficulty was that CRL was part of a larger group of companies and the real benefits had been received by other Unilever group companies. Adopting a practical and commercial approach, Lord Kitchin said that the correct approach was to look at the commercial reality of the situation from the employer’s perspective. Where a group company has a dedicated research company for the benefit of the whole group and patents are assigned to other group members for their benefit, the benefit of a patent to the group must be assessed by the extent of the benefit of that patent to the group, and how that compares with the benefit of the other inventions by the research company.

Unilever’s central argument had been that the benefit of £24m was dwarfed by its turnover and profits as a whole, its wide range of products such as ice cream, spreads and deodorants generating billions in sales and millions in profits over the life of the relevant patents. The Supreme Court therefore had to consider the fundamental question of the assessment of the size and nature of an undertaking in the assessment of an outstanding benefit: in effect, could an employer ever be ‘too big to pay’? The Supreme Court concluded that a court should be “very cautious” in accepting that a patent has not been of outstanding benefit simply because it has had no significant impact on an undertaking’s overall profitability or the value of all its sales, as there could be a number of different factors at work.

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