29 October 2016

Where can you sue for trade mark infringement or passing off: AMS Neve v Heritage Audio

Author NuclearVaccum
Source Wikipedia
Creative Commons Licence

AMS Neve Ltd and Others v Heritage Audio S.L. and Another [2016] EWHC 2563 (IPEC)

Mark Vallance Crabtree and Barnett Waddingham Trustees Limited are the registered proprietors of three trade marks for sound recording and processing equipment that are used by AMS Neve Ltd. in its business. Two of those are UK trade marks and the third is an EU mark. Heritage Audio SL is a Spanish company that trades in audio equipment. AMS Neve and the trade mark proprietors have brought proceedings against Heritage Audio and its sole director, Pedro Rodriguez Arribas, in the Intellectual Property Enterprise Court for trade mark infringement and passing off on the grounds that they have offered for sale and sold equipment by reference to signs confusingly similar to each of those marks in the United Kingdom and other places.

Heritage and Mr Arribas applied for an order that the English courts do not have jurisdiction to try the claim under CPR Part 11. The application came on before His Honour Judge Hacon on 27 July and 11 Oct 2016. His Honour granted the application with regard to the EU trade mark but dismissed it with regard to the rest of the claim. The reason why the application in relation to the EU trade mark was allowed but not the rest of the action is that the jurisdiction to try claims for infringement of national trade marks and passing off is determined by Regulation (EU) No. 1215/2012 of 12 December 2012 ("the Jurisdiction and Judgments Regulation") while the jurisdiction to try claims for infringement of EU trade marks is determined by Council Regulation (EC) No. 207/2009 ("the EU Trade Mark Regulation") as amended by Regulation (EU) 2015/2424.

The acts that were alleged to have infringed the trade marks were the advertisement, offer for sale and sale of goods under or by reference to signs that were said to resemble the registered marks. Those acts were also said to amount to passing off as did certain statements on Heritage's website and in social media that were said to imply a connection between Heritage and AMS. Evidencing those acts was an invoice for €1,260 plus €40 for shipping to a customer in London, emails between Mr Arribas and a distributor in London, an Engish language website listing distributors in England and phone conversations by the claimant's solicitors with one of those distributors. The defendants argued that all transactions were concluded in Spain and the website contained invitations to treat.

Applying art 7 (2) of the Jurisdiction and Judgments Regulation which provides that
"A person domiciled in a Member State may be sued in another Member State:

(2) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;"
the judge held that the harmful event that was alleged to have occurred would have taken place in England. He referred to Case C-523/10 Wintersteiger AG v Products 4U Sondermaschinenbau GmbH ECLI:EU:C:2012:220, [2012] EUECJ C-523/10, [2012] WLR(D) 117, EU:C:2012:220, [2013] Bus LR 150 where the Court of Justice  held:
"Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that an action relating to infringement of a trade mark registered in a Member State because of the use, by an advertiser, of a keyword identical to that trade mark on a search engine website operating under a country-specific top-level domain of another Member State may be brought before either the courts of the Member State in which the trade mark is registered or the courts of the Member State of the place of establishment of the advertiser."
With regard to EU trade mark infringement, Judge Hacon noted that art 97 (1) of the EU Trade Mark Regulation provides:
"Subject to the provisions of this Regulation as well as to any provisions of Regulation (EC) No 44/2001 applicable by virtue of Article 94, proceedings in respect of the actions and claims referred to in Article 96 shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment."
One of the exceptions to this rule was provided by art 97 (5):
"Proceedings in respect of the actions and claims referred to in Article 96, with the exception of actions for a declaration of non-infringement of a Community trade mark, may also be brought in the courts of the Member State in which the act of infringement has been committed or threatened, or in which an act within the meaning of Article 9(3), second sentence, has been committed."
The Court of Justice had considered the predecessor to art 97 (5) in Case C-360/12 Coty Germany GmbH v First Note Perfumes NV  [2014] EUECJ C-360/12, ECLI:EU:C:2014:1318, [2014] BUS LR 1294, [2014] WLR(D) 243, EU:C:2014:1318 which concluded:
"The concept of ‘the Member State in which the act of infringement has been committed’ in Article 93 (5) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark must be interpreted as meaning that, in the event of a sale and delivery of a counterfeit product in one Member State, followed by a resale by the purchaser in another Member State, that provision does not allow jurisdiction to be established to hear an infringement action against the original seller who did not himself act in the Member State where the court seised is situated."
This issue before the Court in Coty was whether the German courts had jurisdiction over a Belgian reseller who sold infringing goods in Belgium to a German importer. Judge Hacon discerned from the above ruling that the place where the infringement had been committed or was threatened for the purposes of art 97 (5) of the EU Trade Mark Regulation was not necessarily the same as the place where a harmful event had occurred or might occur within the meaning of art 7 (2) of the Jurisdiction and Judgments Regulation. In his view, there would have to be an infringing act as prohibited by art 9 (2) of the EU Trade Mark Regulation.

Referring to Coty His Honour stated at paragraph [67] of his judgment that the scope of art 97 (5) exception would be limited in many cases. He continued that the Court had drawn
"a conscious distinction between, on the one hand, the event of taking steps to put a sign on a website or alternatively the event of taking a decision to that effect and, on the other hand, the event of the display of the sign on the website. Only the courts of the place where the former event(s) take place have jurisdiction, in particular where locating the action in that place is most likely to facilitate the taking of evidence and the conduct of the proceedings for infringement of the EU Trade Mark."
Applying that principle to the facts of the case  before him, Judge Hacon held that the proper forum was Spain since that was the place of the defendant's domicile as well as the Member State in which the allegedly infringing acts had occurred.

Both the Jurisdiction and Judgments and EU Trade Mark Regulations will cease to apply once the negotiating period provided by art 50 (3) of the Treaty on European Union has expired. As there will be many businesses holding British and EU or other national trade marks it is to be hoped that HM Government will negotiate something like the Lugano Convention for the UK after we leave (see What Sort of IP Framework do we need after Brexit and what are we likely to get? 3 July 2016). Ironically, if we were able to negotiate something like Lugano for our country, the jurisdiction of our courts in respect of infringements of EU trade marks could in some circumstances be broader than it is at present since art 97 (5) would not apply but something like art 7 (2) of the Jurisdiction and Judgments Regulation would.

Should anyone wish to discuss this case, the Jurisdiction and Judgments Regulation or trade mark law generally (see Trade Marks FAQ he or she should call me on +44 (0)20 7404 5252 during office hours or use my message form.

17 October 2016

The Pregabalin Appeal: Generics v Warner Lambert

Author Acdx
Source Wikipedia
Creative Commons Licence

Generics (UK) Ltd (t/a Mylan) v Warner-Lambert Company LLC [2016] EWCA Civ 1006 (13 Oct 2016)

This was an appeal against two of Mr Justice Arnold's judgments. The first was his decision in Generics (UK) Ltd (t/a Mylan) v Warner-Lambert Company LLC [2015] EWHC 2548 (Pat) which I discussed in The Pregabalin Trial: Generics (UK) Ltd v Warner-Lambert Company LLC 18 Sept 2015. The second was his refusal to allow Warner-Lambert to amend certain claims of its patent after trial in  Generics (UK) Ltd (t/a Mylan) v Warner-Lambert Company LLC [2015] EWHC 3370 (Pat) on the ground that the application was an abuse of the process of the court.

The Issues
Lord Justice Floyd, who delivered the lead judgment on the appeal, identified the issues before the Court of Appeal as follows in the first paragraph of his judgment:
"Firstly, did Arnold J correctly hold certain claims of the patent in suit invalid for insufficiency; and, if so, should he have held more claims invalid on that ground? Secondly, was he correct in holding the patentee's application to amend claim 3 of the patent, made after judgment on the issue of invalidity, to be an abuse of the process of the court? Thirdly, if there were any valid claims which were the subject of the allegation of infringement, was the judge correct to hold that there was no infringement of the (Swiss-form, second medical use) claims in the patent?"
In the first of those judgments, Mr Justice Arnold had held that none of the claims of the patent in suit was obvious over any of the prior art relied on but several of the claims were invalid on grounds of insufficiency. Even if those claims had been valid, they would not have been infringed under s.60 (1) (c) or (2) of the Patents Act 1977. Consequently, as a result of certain letters sent out by Warner-Lambert, Pfizer was liable for making groundless threats of patent infringement proceedings.

The Facts
Warner-Lambert Company LLC ("Warner-Lambert"), now a subsidiary of Pfizer Inc ("Pfizer"), owns European Patent (UK)  0 934 061. Although the patent's title is "Isobutyl GABA and its derivatives for the treatment of pain", the relevant derivative is pregabalin, to which the Swiss-style, second medical use claims are limited. Warner-Lambert markets pregabalin under its trade mark Lyrica for the treatment of neuropathic pain, as well as for its previously known indications of general anxiety disorder ("GAD") and epilepsy. Pfizer markets the drug in the UK through its British subsidiary Pfizer Ltd. Lyrica is one of the Pfizer's most successful products. Global sales of the product amounted to approximately $4.6 billion in 2013 of which UK sales contributed approximately $310 million. Naturally, generic manufacturers want to break into the markets for the treatment of GAD and epilepsy and neuropathic pain.

The Litigation
Generics (UK) Ltd, trading as Mylan ("Mylan"), and Actavis Group PTC EHF brought separate claims for revocation of the patent on 24 June and 12 Sept 2014 respectively on the grounds of lack of inventive step and insufficiency. On 8 Dec 2014 Warner-Lambert commenced a claim for infringement of the patent against Actavis PTC, Actavis UK Ltd and Caduceus Pharma Ltd ("Actavis"), Warner-Lambert applied for an interim injunction to restrain sales of Actavis' generic pregabalin product, which was called Lecaent. The application came on before Mr Justice Arnold, who dismissed it in Warner-Lambert Company, LLC v Actavis Group Ptc EHF and Others [2015] EWHC 72 (Pat) (21 Jan 2015). I wrote about that judgment in Swiss Style Claims: Warner Lambert v Actavis 28 Jan 2015.

Actavis then made an application to strike out Warner-Lambert's claim for infringement. The application also came before Mr Justice Arnold J, who granted it insofar as the action was brought under s.60 (2) but not under s.60 (1) (c) of the Act because the correct scope to be afforded to Swiss style second medical use claims was a developing area of patent law. On 28 May 2015 the Court of Appeal dismissed Warner-Lambert's appeal against the refusal of the interim injunction but allowed an appeal against the striking out of the claim under s.60 (2). In so doing the learned Lord Justices held that Warner-Lambert's case under both subsections of s.60 was arguable.

The actions and counterclaims for groundless threats came on for trial before Mr Justice Arnold who delivered the first of the judgments mentioned above. His lordship gave both sides permission to appeal.

On 1 Oct 2015 Warner-Lambert made a conditional application to amend claim 3 of the patent by adding  the words "caused by injury or infection of peripheral sensory nerves" to the claim to the use of pregabalin to treat neuropathic pain,  The amendment was opposed by Mylan and Actavis in Generics (UK) Ltd (t/a Mylan) v Warner-Lambert Company LLC [2015] EWHC 3370 (Pat) (25 Nov 2015)  on the ground that that application was an abuse of process and Mr Justice Arnold agreed with them,

The Appeal
Warner-Lambert appealed against Mr Justice Arnold's finding on insufficiency and abuse of process and his dismissal of the counterclaim for infringement. The Court of Appeal dealt with each of the issues that Lord Justice Floyd had identified in para [1] of his judgment in turn.

S.72 (1) (c) of the Patents Act 1977 gives the court power to revoke a patent if "the specification of the patent does not disclose the invention clearly enough and completely enough for it to be performed by a person skilled in the art." The reason for this provision is that s.14 (3) requires every specification to 
"disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art."
That requirement is the heart of the bargain that an inventor makes with a state. In exchange for teaching those with the necessary skills and knowledge how to make or use the invention, the state offers the inventor a monopoly of the invention for up to 20 years from his or her patent application.

Citing paras 100 and 101 of Lord Justice Kitchin's judgment in Regeneron Pharmaceuticals Inc. and another v Genentech Inc. [2013] EWCA Civ 93, [2013] RPC 28, Lord Justice Floyd noted that a patent may be bad for insufficiency not only where the directions in the specification are inadequate to enable the skilled addressee to perform the invention at all but also where a claim is excessively broad having regard to the patentee's contribution to the art. At para [100] of his jusgment in Regeneron, Lord Justice Kitchin had said  that it must
"be possible to make a reasonable prediction the invention will work with substantially everything falling within the scope of the claim or, put another way, the assertion that the invention will work across the scope of the claim must be plausible or credible."
In the appeal before him, Lord Justice Floyd considered what was meant by the requirement that the specification should make the invention plausible or credible.

After reviewing  T 0609/02 Salk Institute for Biological Studies and T 1329/04 Johns Hopkins University School of Medicine where that point had arisen before the European Patent Office Boards of Appeal Lord Justice Floyd concluded at para [19] of his judgment:
"i) A mere assertion that compound X is suitable for treating disease Y is not sufficient without any more to render the invention plausible: Salk [9];
ii) The disclosure of the patent specification does not have to be definitely predictive of the efficacy of the invention: in vitro tests which may well not be reproducible in humans or animals may suffice: Salk [10], [11];
iii) An example of adequate support to amount to a plausible disclosure would be experimental tests, showing that the claimed compound has a direct effect on a metabolic mechanism specifically involved in the disease: Salk [9];
iv) Later published data are not admissible if they alone render the invention plausible: Salk [9], Johns Hopkins [12];
v) Ultimately the purpose of the requirement of sufficiency is to place the reader in possession of the invention without imposing undue burden on him by way of further investigation or research: Salk [10]."
 His Lordship also considered the Supreme Court' decision in  Human Genome Sciences Inc v Eli Lilly & Co.  [2012] 1 All ER 1154, [2012] RPC 6, [2011] UKSC 51, [2012] Bus LR D37 and the House of Lords' in Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] UKHL 49, [2008] RPC 28 which were broadly consistent with his conclusions even though those cases addressed different issues.

In order to determine whether a specification discloses the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art it is  necessary to construe the relevant claims, identify the person or persons skilled in the art to whom the specification is addressed and their common general knowledge. I discussed how the trial judge had approached those issues and reached his decision in my Pregabalin trial case note.

On appeal Warner-Lambert maintained the arguments that Mr Justice Arnold had rejected on the construction of the contentious claims arguing that if it was correct on those issues, the claims were plausible substantially across their breadth. Secondly, it submitted that the claims were plausible substantially across their breadth even on the construction arrived at by the judge. Thirdly it contended that the claims were plausible because pregabalin was shown to be anti-hyperalgesic.

Mylan and Actavis, submitted that the judge was right on the issues of construction and thus right to reject the argument that the claims were plausible substantially across their breadth. They also submitted that the judge had been wrong to find that the claims which were limited to types of peripheral neuropathic pain, claims 10, 11 and 12, were plausible.

The Court of Appeal rejected Warner-Lambert's criticism of the trial judge's findings on the skilled addressees' common general knowledge and his construction of the claims in contention. Finding themselves in substantial agreement with the court below their lordships rejected Warner Lambert's appeal on insufficiency.

Abuse of Process
Actavis and Mylan objected to the application to amend the  patent on the ground that it was an abuse of the process of the court, When the application came before him Mr Justice Arnold dismissed it on the ground that the application to amend  could and should have been made before trial.

In reaching his decision Mr Justiice Arnold considered the decisions of the Court of Appeal in  Nikken Kosakusho Works and another v Pioneer Trading Company and another [2006] FSR 4, [2005] EWCA Civ 906 and Nokia GmbH v IPCOM GmbH & Co KG [2011] FSR 15, [2011] Bus LR 1488, [2011] EWCA Civ 6. In thse cases Lord Justice Jacob had explored the circumstances when a c an amendment of a patent might be allowed, He said in Nikken:
"There are different situations in which the exercise of the discretion to allow amendment of a patent may be sought: (a) before a trial; (b) after trial, at which certain claims have been held valid but other claims held invalid, the patentee simply wishing to delete the invalid claims (I would include here also the case where the patentee wishes to re-write the claims so as to exclude various dependencies as in Hallen v Brabantia [1990] FSR 134. There the patentee is in effect continuing to claim which he had claimed before but in a much smaller way); and (c) after a trial in which all claims have been held invalid but the patentee wishes to insert what he hopes are validating amendments."
Lord Justice Jacob said that the court would usually allow amendment in the first two situations but not in the third in the absence of a good reason for doing so.

Lord Justice Floyd explained at para [174] of his judgment:
"The reason why the jurisprudence views with hostility the rewriting of claims after judgment is that, in contrast to the case where the claim existed in some form in the unamended patent, the party attacking the patent has not had a proper opportunity during the trial to address that claim. A further trial is thus rendered necessary in order to avoid procedural unfairness to that party, and it is the imposition of that further trial which is regarded as undue harassment."
He concluded at that that the amendment sought would, if granted, enable Warner-Lambert to bring fresh proceedings for the infringement of the amended patent on grounds that had not been raised at trial and that would be procedurally unfair. In the absence of a good reason for not seeking an amendment before trial Lord Justice Floyd could see no ground for interfering with Mr Justice Arnold's decision,

Having held that the claims of  patent upon which Warner-Lambert relied were invalid and that those claims should not be amended, the appeal on infringement failed.

Swiss Style Claims
Although not strictly an issue in the appeal the Lord Justices considered the arguments that had been made on infringement in relation to Swiss style claims. As Lord Justice Floyd observed at para [187]:
"The law is struggling on the one hand to give the patentee a proper reward for his contribution to the art by elucidating the new use for the drug, whilst at the same time not excluding the competing manufacturer from making and marketing the drug for its known purpose. The issue is complicated by the interaction with the law relating to, and the practices of the market in, prescription medicines. The solution adopted by this court in [its decision of the interlocutory issues] was an attempt to strike the right balance by not placing insuperable obstacles in the path of the patentee, whilst at the same time recognising in very clear terms that the remedies available for infringement will have to be moulded so as to achieve fair and proportionate relief tailored to the very special circumstances of this type of case."
He therefore considered the following matters:
"Firstly, it is right that I should take a further look at the law on the construction of second medical use claims in Swiss form in the light of Arnold J's reservations and the further developments in the law of other states and the EPO. Secondly, I propose to deal with the arguments addressed to us by the intervener, the Secretary of State for Health, who was not called upon in [the interim issues appeal] and who has served a respondent's notice on the issue of the proper interpretation of Swiss-form claims. Thirdly, I propose to address Warner-Lambert's complaint that the judge failed correctly to apply the law as stated in [the previous appeal]. Fourthly, I will say something about indirect infringement."
After reviewing decisions on Swiss style claims in other EU member states Lord Justice Floyd endorsed the approach of the Court of Appeal in its earlier decision in this case notwithstanding Mr Justice Arnold's misgivings in the court below.

The Secretary of State had submitted that "as a general principle, the law does not impose liability as an accessory on the basis of a mental element which is less demanding than that of the person primarily responsible" and referred to the decision of the Supreme Court in Fish & Fish v Sea Shepherd UK and others [2015] UKSC 10 with regard to joint tort feasance at pars [37] to [44]. His lordship rejected that submission on the ground that the policy considerations in that case were different. S.60 (2) of the Patents Act 1977 provided a complete code for the issues in hand.

As to the third point, Lord Justice Floyd opined at para [216] that Mr Justice Arnold fell into error in his application of the Court of Appeal's judgment. He explained:
"Because claims in this form rely for their novelty on the purpose of the use of the drug, it is only essential that the manufacturer is able to foresee that there will be intentional use for the new medical indication. Intentional use is to be distinguished from use where the drug is prescribed for a different indication and, without it in any sense being the intention of the treatment, a pain condition is in fact treated."
On the fourth point, the learned Lord Justice considered that the prescription of a generic drug for a second medical use or its packaging for that purpose could amount to infringing acts.

Lord Justice Kitchin and Lord Justice Patten delivered concurring judgments.

This is an important case on insufficiency and abuse of process but it does not take the law on the infringement of a patent for a second medical use of an existing preparation much further. The Court of Appeal affirmed its earlier decision in the appeal on the interlocutory issues but that was never intended to be a final decision of the substantive ones.

Should anyone wish to discuss this case or any of the issues that arose in it, he or she should not hesitate to call me on 020 7404 5252 during office hours or send me a message through my contact form.

10 October 2016

Trade Secrets: Kerry Ingredients v Bakkavor Group

Kerry Group's Headquarters in Tralee
Author: Hajotthu
Source: Wikipedia
Creative Commons Licence

Kerry Ingredients (UK) Ltd v Bakkavor Group Ltd and Others [2016] EWHC 2448 (Ch) (7 Oct 2016) Mr Justice Newey

The issue in this case was whether a food manufacturer that had received secret information on the manufacture of edible infused oils from its supplier for health and safety and regulatory purposes only could use that information to develop its own range of infused oils.

The Parties
The claimant was a wholly owned subsidiary of Kerry Group Plc. The group describes itself as "the largest and broadest industry innovation and solutions provider in the global ingredients and flavours market." The Kerry Group produces more than 30 infused oils at its plant at Padiham near Burnley. Its main products, each of which is a clear liquid, are infused with mint, chilli, basil, lemon, garlic, rosemary or coriander. Those oils have a variety of uses. They can, for instance, be added to salads or pizzas, used as an ingredient of ready meals or diluted with olive oil for resale as an infused oil product.

The defendants were members of the Bakkavor group of companies. That group specializes in making and developing private label prepared foods for grocery retailers and well-known international food service operators. Its customers include many of the leading supermarkets and fast food chains. Although Kerry's production and deliveries to the defendants were redacted from the judgment, it is clear that Bakkavor companies were important customers of the claimant.

The Complaint
The Bakkavor group first thought of making its own infused oils, or at least finding an alternative supplier, in 2010. It decided to stay with Kerry because consultants that had been engaged to develop a substitute product reported that the project was
"by far more complex than originally thought" and that the "samples of basil oil received so far are all missing the fresh intense grassy character that dominates the [claimant's] product."
In 2012 Bakkavor decided to make another attempt. This time it used information that had been supplied to it for regulatory and health and safety purposes by Kerry.

The Claim
Kerry learned of Bakkavor's plans to make its own infused oils from an equipment manufacturer that had done business with Bakkavor. That manufacturer told Kerry that it had supplied equipment for making infused oils for testing purposes to Bakkavor and suggested a similar trial with Kerry.  At a meeting between senior officials of the two groups on 28 Sept 2015, Kerry confronted Bakkavor with its plans to find an alternative source of infused oils.  Bakkavor admitted that it intended to make its own supplies from early 2016.

Interim Injunction
On 20 Nov 2015 Kerry issued proceedings against Bakkavor for breach of confidence out of the Bristol District Registry and applied for an interim injunction to stop the defendant companies from importing, exporting, putting on the market or offering for sale any edible oil product infused with herbs and/or spices the making of which was enabled or assisted by the use of allegedly confidential information. The application came on as an application by order before the Mercantile judge for the South-West, His Honour Judge Havelock-Allan QC, sitting as a judge of the Chancery Division on 14 Dec 2015. That judge granted the injunction in the terms requested until trial or further order.

The Trial
The action came on for trial before Mr. Justice Newey in Bristol between the 24 and 30 June 2016 and he delivered judgment on 7 Oct 2016.  Particulars of the information that Kerry alleges that it supplied to Bakkavor in confidence and which Bakkavor used to make its own substitute products are set out in para [16] of the judgment though most of those details have been redacted.

Kerry contended that any use of that information, or of any one or more elements of it, constituted a breach of confidence. It argued that it had
"only ever supplied the confidential information to Bakkavor for safety and regulatory purposes and that a reasonable person standing in the shoes of Bakkavor would have realised that the information was being provided just for those purposes and was not to be used for Bakkavor's own product development."
Bakkavor denied that any of that information had been confidential.  It stressed the extent to which Kerry's methods draw on a small number of recognized food safety techniques and argued that anyone using those techniques would almost inevitably end up with the same formulation as Kerry. It also argued that certain of the steps given in the flow chart annexed to the particulars of claim ("Store Ingredients" and "Debox", for instance) were obvious and concluded that the process was "no more than a matter of trial and error."

The Contentions
The judge referred to Mr Justice Megarry's decision in Coco v A.N. Clark (Engineers) Ltd [1968] FSR 415, 419 in which he identified the elements that enable an action for breach of confidence to succeed:
"First, the information itself, in the words of Lord Greene, M.R. in the Saltman case on page 215, must 'have the necessary quality of confidence about it'. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."
 His lordship explored the terms "quality of confidence", "circumstances importing an obligation of confidence" and "unauthorized use" by reference to other passages in Coco and other authorities before analysing the evidence before him.

The Decision
Mr Justice Newey rejected Bakkavor's argument that the information lacked the "quality of confidence" on the ground that at least one stage of Kerry's process was ingenious and unique to that company. Kerry's expert witness had referred to it as a clever feature. The expert conceded that "[i]f someone had unlimited resources and time they may well come up with a similar process flow and HACCP to that used by Kerry" but added that "the ifs and buts could take years to test and reject before stumbling on Kerry's precise combination." Relying on that evidence, the judge said at para [87] of his judgment  that
"someone wishing to match Kerry's products but lacking the information Bakkavor had as to how Kerry makes them would not be able to discover Kerry's methods without substantial work or 'special labours.'"
Nevertheless,  he added at para [110]:
"Kerry's information is, as it appears to me, to be seen as having limited confidentiality. Given time, it would be possible for Bakkavor to replicate Kerry's oils using information in the public domain. Even without the confidential information, Bakkavor would be aware of what the Kerry products look like and taste like and what ingredients are declared on their labels. Coupling that knowledge with, in particular, the recognised repertoire of ways in which to address the relevant food safety issues, Bakkavor would, I think, be able to reinvent Kerry's production techniques. It may be that it would not ultimately choose to heat for exactly the same combination of [detail redacted] as Kerry and that it would adopt a different ratio of oil and herb/infusion ingredient, but that would be because it had preferred a slightly different "recipe" rather than because it had not been able to achieve Kerry's."
He estimated at para [116]  that "a head start of a year will have been gained" by the use of Kerry's information.

As Bakkavor had not signed a confidentiality or non-disclosure agreement the judge had to consider whether the information had been "imparted in circumstances importing an obligation of confidence." Mr. Justice Newey referred to para [224] of Mr. Justice Arnold's decision in Force India Formula One Team Ltd v 1 Malaysia Racing Team SDN BHD and Others  [2012] RPC 29, [2012] EWHC 616 (Ch):
"An equitable obligation of confidence will arise as a result of the acquisition or receipt of confidential information if, but only if, the acquirer or recipient either knows or has notice (objectively assessed by reference to a reasonable person standing in his shoes) that the information is confidential."
He concluded that any reasonable person standing in the shoes of Bakkavor would have realised that the information was being provided just for health and safety and regulatry purposes and was not to be used for Bakkavor's own product development.

He summarized his findings at para [118] of his judgment:
"i) Bakkavor has misused information confidential to Kerry relating to the production of edible infused oils;
ii) an injunction along the lines of that granted by Judge Havelock-Allan should be granted and extend until 30 June 2017; and
iii) it is also appropriate to give directions, if Kerry wishes, for an inquiry as to financial relief."
The Trade Secrets Directive
As I mentioned in The Trade Secrets Directive 7 July 2016 the European Council and European Parliament adopted Directive (EU) 2016/943 of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ 15.6.2016 L 157/1) ("the Trade Secrets Directive") which has to be implemented before the 9 June 2018. That should be long before the UK likely to leave the EU. It is therefore worth considering whether the Trade Secrets Directive would have made a difference,]

Art 4 (1) of the Directive requires member states to ensure that trade secret holders are entitled to apply for the measures, procedures and remedies provided for in this Directive in order to prevent, or obtain redress for, the unlawful acquisition, use or disclosure of their trade secret. A trade secret is defined as
"information which meets all of the following requirements:
(a) it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
(b) it has commercial value because it is secret;
(c) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret."
There might have been some argument as to whether the regulatory and safety information had been kept secret in view of its disclosure for those purposes and the publication of They steep to conquer" in the Food Manufacturer magazine in Sept 2004. However, the issues would have been the same as they were before Mr Justice Newey and there is no reason to suppose that the conclusion wold have been different.

Art 4 (3) provides that the use of a trade secret shall be considered unlawful whenever carried out, without the consent of the trade secret holder, by a person who is found to meet one of a number of conditions. One of those conditions is "being in breach of a contractual or any other duty to limit the use of the trade secret." The court would still have to consider whether the supply of the information for regulatory and supply purposes only would have placed Bakkavor under "a duty to limit the use of a trade secret." That would have required a similar analysis of the evidence as was done by Mr, Justice Newey and the result is likely to have been the same.

The remedies provided by the Trade Secrets Directive are essentially those that were granted by Judge Havelock-Allan QC and Mr. Justice Newey. It is therefore likely that the case would have been decided the same way had it been determined after the implementation  of the Directive though it is possible that the claim might have resolved sooner given the clarity and certainty of the legislation.

Acknowledgement of Confidentiality
A food manufacturer in Bakkavor's position might well have thought twice about making use of the information that it had acquired for regulatory and safety purposes had it signed an acknowledgement that such information was secret and confidential and that it had been disclosed in confidence for one purpose only and an undertaking to use it only for that purpose. Had such a document existed Bakkavor could have been reminded of its acknowledgement and undertaking at the meeting between the two sides on 28 Sept 2015.

Intellectual Property Litigation outside London
The resolution of this dispute in Bristol within less than a year from the issue of the claim form shows that intellectual property litigation can be conducted and concluded satisfactorily outside the Rolls Building. As I wrote in What does the Intellectual Property Enterprise Court mean for Litigants in the North West? 12 Oct 2013 IP North West
"The abolition of the Patents County Court and the establishment of IPEC do not affect the jurisdiction of the rest of the Vice-Chancellor of the County Palatine of Lancaster and his deputies or of the Liverpool, Manchester and Preston County Courts under CPR 63.13 to hear intellectual property claims falling within paragraph 16.1 of the Part 63 Practice Direction."
There are still circumstances when I would recommend issuing proceedings out of a Chancery District Registry:
"If a claimant and his or her solicitors are in the North and he or she requires urgent interim injunctive relief I would consider issuing proceedings in Liverpool, Manchester or Preston. I would also consider issuing proceedings there for other IP claims if all the parties and their witnesses were in the North. Finally, I would consider the County Court sitting in those cities for claims similar to Sullivan's."
Kerry was just such a case. Interim injunctve relief was sought. Its solicitors issued the claim form out of the District Registry because they practised in the city. It could have been done in London but it was probably cheaper and at least as convenient to conduct the litigation in Bristol.

Further Information
Should anyone wish to discuss this case or the law of confidence generally, he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.

04 October 2016

The Cialis Litigation - Actavis Group PTC EHF and Others v Icos Corp and Another

A wife complaints to the Qadi about her husband's impotence
Artist: Hamse-i Atai (18th century Ottoman miniature)
Source Wikipedia

Mr Justice Birss: Actavis and Others v Eli Lilly and Another [2016] EWHC 1955 (Pat) (10 Aug 2016) 

Although it is not spelt out anywhere in the 492 paragraphs and annexes to Mr Justice Birss's judgment, this complicated litigation appears to have been an action by a group of generics suppliers led by the Icelandic company Actavis Group PTC EHF for the revocation of European patent (UK)  1,173,181 entitled Composition comprising phosphodiesterase inhibitors for the treatment of sexual dysfunction and European patent (UK) 1,200,092 Beta-carboline drug products and a counterclaim against two of those companies for patent infringement. No less than 4 separate actions were consolidated in a trial that took place between the 15 June and 1 July 2016. Judgment was delivered on 10 Aug 2016.

Commercial Importance of the Litigation

The patents in suit (that is to say, the patents the subject of the litigation) concern tadalafil which is better known as Cialis. As everybody known Cialis is one of two drugs used to treat erectile dysfunction. The other is sildenafil which is sold under the trade mark Viagra. At para [1] of his judgment, Mr Justice Birss observed:
"The commercial value of these proceedings is very high. Based on public IMS data, branded sales of CIALIS for 2014 in the United Kingdom come to about $99 million while sales of ADCIRCA were $1 million. The European sales amount to about $¾ billion annually and Lilly's accounts for 2014 showed a figure of $2.29 billion for global turnover of CIALIS."
The first of those patents ("181") related to dosing of tadalafil while the second ("092") related to the optimum formulation of that pharmaceutical.


The validity of both patents was challenged on grounds of anticipation, obviousness, added matter and insufficiency.

In order to understand the challenge it should be remembered that a patent can be granted only for an invention that is new and involves an inventive step (see s.1 (1) (a) and (b) of the Patents Act 1977). Anticipation means that the invention for which a patent is sought or has been granted has already been invented and is therefore not new. Obviousness means that it lacked an inventive step having regard to everything that would have been known to skilled addressees ("men of women skilled in the art" or experts in the relevant technology) at the time of the invention. In other words the step between the invention and what was known was obvious to such persons.

Added matter arises where a patent or application for a patent has been amended.  S/76 (1) of the Act provides:
"An application for a patent which -
(a) is made in respect of matter disclosed in an earlier application, or in the specification of a patent which has been granted, and
(b) discloses additional matter, that is, matter extending beyond that disclosed in the earlier application, as filed, or the application for the patent, as filed,
may be filed under section 8(3), 12 or 37(4) above, or as mentioned in section 15(9) above, but shall not be allowed to proceed unless it is amended so as to exclude the additional matter."
Essentially added matter means attributes of an invention for which a monopoly is claimed that had not been disclosed in a previous patent or patent application.

S.14 (3) of the Act requires applicants for patents to disclose the invention in their specification
"in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art."
S.72 (1) (c) provides that a patent may be revoked if
"the specification of the patent does not disclose the invention clearly enough and completely enough for it to be performed by a person skilled in the art."
Insufficiency basically means that the patentee has failed to disclose the invention in sufficient detail or clarity for it to be performed by the skilled addressees that I mentioned above.


Both patents claimed priority from earlier American patents. The significance of priority is that the novelty of an invention is to be determined not from the time that of the application for the patent in suit but at the time of the application for the patent from which the patent in suit claims priority. That is because art 4 A (1) of the Paris Convention for the Protection of Industrial Property provides:
"Any person who has duly filed an application for a patent, or for the registration of a utility model, or of an industrial design, or of a trademark, in one of the countries of the Union, or his successor in title, shall enjoy, for the purpose of filing in the other countries, a right of priority during the periods hereinafter fixed."
Art 4 C (1) of the Convention further provides that the period of priority referred to above shall be 12 months for patents and utility models,

The argument in this case was that the previous American patents did not disclose tadalafil either at all or in sufficient detail for the inventions for which the European patents were granted to be performed by skilled addressees. If priority was lost then the novelty might have been challenged on the ground that patent applications published after the US patent applications but before the European patents anticipated the subject matter of the European patents.

Patent 181

Claim 1 of that patent was for
    "A pharmaceutical unit dosage composition comprising 1 to 5 mg of a compound having the structural formula:

said unit dosage form suitable for oral administration up to a maximum total dose of 5 mg per day."
The compound disclosed in the formula was tadalafil and the invention was the optimum dosage to treat erectile dysfunction without significant side effects. As the judge put it at para [131] of his judgment:
"The invention presented in the patent specification is the discovery that tadalafil can be administered at low doses in a manner which is still clinically effective but also has low adverse side effects."
 Priority Date for 181

S.5 (2) of the Patents Act provides that an invention is entitled to priority from a previous application filed before the patent application if it is supported by matter disclosed in that document. Patent 181 claimed priority from a US provisional patent application Ser. No. 60/132,036, which was filed on 30 Apr 1999. That application is referred to in Compositions comprising phosphodiesterase inhabitors for the treatment of sexual disfunction which was granted a US patent under publication number US 6943166 B1. The judge's task was to consider whether the US provisional patent application disclosed the optimum dosage of tadalafil as claimed in claim 1 of patent 181.

In approaching that task he referred to the Court of Appeal's decision in Medimmune Ltd v Novartis Pharmaceuticals UK Ltd and Others [2012] EWCA Civ 1234, [2013] RPC 27 (10 Oct 2012) and Mr Justice Floyd's in Samsung Electronics Co. Ltd v Apple Retail UK Ltd and Another [2013] EWHC 467 (Pat) (7 March 2013). In Medimmune the Court made clear at paras [151] to [154] of their judgment that "the approach to considering whether the 'same invention' has been taught is not formulaic but is a matter of technical disclosure, explicit or implicit, and that the important thing is whether the disclosure as a whole is enabling and effectively gives the skilled person what is in the claim." In Samsung the learned judge summarized the task of the court in the following way:
"(a) to read and understand, through the eyes of the skilled person, the disclosure of the priority document as a whole;
(b) to determine the subject matter of the relevant claim;
(c) to decide whether, as a matter of substance not of form, the subject matter of the relevant claim can be derived directly and unambiguously from the disclosure of the priority document."
Mr Justice Birss endorsed that approach at para [141] of his judgment and  in particular with the emphasis on the decision being a matter of substance not form.

His Lordship's analysis is to be found between paras [143] and [234]. He concluded at [234] that although one of the examples in the previous application was not clearly tadalafil the use claims were supported by what was disclosed in the earlier document and thus all but two of the claims maintained priority.

Added Matter in Respect of 181

The judge directed himself at para [235] that the correct comparison was between the granted patent and the application as filed. He considered the question shortly at [236]:
"There is no issue about identifying tadalafil in the application both as a chemical entity and as the drug used in the relevant examples. That is clearly and unambiguously disclosed. The argument is about the references to dosage forms of 1-5 mg and administration up to a maximum total dose of 5mg per day. The application contains more examples than the priority document, including examples of dosing up to 100 mg, but nevertheless on page 8 of the application the same text about dosing is present as appears in the priority document at pages 6-7. Nothing in the extra material in the application undermines a conclusion that if, as I have held, the claims are supported by that passage in the priority document then they are also supported by the application. Accordingly there is no added matter in the claims."
Novelty in Respect of 181

The law on novelty was agreed by the parties and the judge considered the issue of novelty from para [238] to [256]. Except for the two claims mentioned above that were conceded by Icos the judge rejected the challenge on anticipation.

Inventive Step in 181

Mr Justice Birss took as his starting point the Court of Appeal's guidance in Pozzoli Spa v BDMO SA and Another [2007] EWCA Civ 588, [2007] FSR 37, [2007] BusLR D117.  The prior art relied upon was Daugan's patent (Controlled-release pharmaceutical formulations containing a cgmp pde-5 inhibitor (WO 2000024383 A1)) and the judge analysed the issue of obviousness as follows:
"i) In terms of motives to find a solution to the problem the patent addresses, the skilled team would be highly motived by Daugan and the success of sildenafil to investigate tadalafil as a treatment for erectile dysfunction.
ii) As for possible avenues of research, overall tadalafil would be obvious to investigate. In terms of doses however, 5 mg/day is a significantly lower dose than the 50 mg dose exemplified in the Daugan prior art and the marketed doses of sildenafil. It is also significantly lower than the 50 mg dose which would be chosen for the first test of efficacy at Phase IIa. It would not be chosen in the routine first dose ranging study. The team would not have anticipated daily dosing as something to be studied from the outset but once the half-life was discovered it is likely that daily dosing would be included.
iii) In terms of effort, overall the programme would involve very substantial resources of time, money and people but it would be pursued. However, by the time the idea of investigating lower doses presents itself, the team would have established safe, tolerable and effective doses of tadalafil at 25mg on demand and 10 mg for daily dosing. At that stage the impetus to investigate lower doses would be reduced but not eliminated.
iv) Expectations of success can be considered overall and in relation to particular studies. Overall the team would embark on the project with a reasonable expectation of success in establishing tadalafil as a safe, tolerable and effective treatment for tadalafil. However, the claimants failed to prove that efficacy at 5mg tadalafil was predictable or worth considering by the skilled team based on the properties of tadalafil as compared to sildenafil. The team would know that in principle there would be a minimum effective dose for tadalafil but would also know that its definition depends on a value judgment made by the team. In relation to the dose ranging studies, the team would conduct them hoping for a dose response. Following discovery of a plateau starting at 25 mg or 10mg, there would very likely be a subsequent dose ranging study which included 5 mg. The team would include a 5 mg dose in this study hoping to see a dose response but that does not mean they would have a reasonable expectation that 5mg would produce a clinically relevant effect at all nor one with minimal side effects. Assuming a 5 mg /day dose of tadalafil was tested, it would not be tested with a reasonable expectation of success.
v) Considering unexpected or surprising results, the position is as follows. The path to a 5 mg dose requires the discovery of new information such as the half life and the IC50 vs PDE6. That information would inevitably be found in any clinical programme. The path includes an important result which is unexpected even if it is not actually surprising, i.e. the plateau in the dose response from 10 to 100 mg. There is also a surprising result: the existence of a useful effect with reduced side effects. The claimed 5mg /day dose has that property.
vi) A number of value judgments would be required of a skilled team in a programme which reaches the claimed invention. One is to define the level of clinical effect to be regarded as relevant. Another is to embark on investigating daily dosing. An important value judgment is what to do when an unexpected plateau in the dose response has been identified at the same time as a marketable dose."
He concluded at [344] that at least one of the claims of 181 involved an inventive step.

Insufficiency of 181

The insufficiency point was abandoned in the course of the trial.

Infringement of 181

As all attacks on the patent's validity failed, the judge concluded at para [491] that at least one of the claims would be infringed. He set out his reasoning at para [137] and decided at [355] that the appropriate remedy was an injunction.

Patent 092

Mr Justice Birss made a different decision in respect of the 092 patent. He found all the claims to be invalid and dismissed the counterclaim.

The invention for which the patent was granted was essentially for a faster acting tadalafil tablet which consisted of a number of product and use claims (see paras [385] - [391]). Claim 1 was for:
"A free drug particulate form of a compound having a formula 

and pharmaceutically acceptable salts and solvates thereof in which the compound is present as solid particles not intimately embedded in a polymeric co-precipitate, wherein at least 90% of the particles have a particle size of less than about 40 microns."
The patent's validity was challenged on very much the same grounds as in 181

The priority and added matter challenges failed (see paras [392] - [394] for priority and [385[ to [399] for added matter) but those for want of novelty (paras [400] to [409]), obviousness ([410] to [458]) and insufficiency (paras [459] to [489]) succeeded.

The judge's approach to obviousness is interesting. The issue before him was whether the prior art havung regard to the skilled team's common general knowledge was sufficient to make the invention obvious. His Lordship had to decide between two seemingly conflicting lines of authority:
"If the relevant standard is as high as Jacob LJ put it in St Gobain [2005] EWCA Civ 177 at paragraph 35 ("more or less self-evident that what is being tested ought to work") then I should reject the obviousness case. However as Floyd J said in Omnipharm [2011] EWHC 3393 (Pat) that formulation of the test was explained by Lord Hoffmann in Conor v Angiotech [2007] EWCA Civ 5 as a "fair expectation of success" with the degree of expectation depending on the facts of the case. Moreover in Teva v Leo when Jacob LJ referred again to paragraph 35 of St Gobain, the passage quoted did not include the sentence about "more or less self-evident". On the facts of this case I do not believe the St Gobain way of putting the question is the appropriate one."
Mr Justice Birss resolved the issue through the following analysis:
"i) In terms of motives to find a solution to the problem the patent addresses, the skilled team would be highly motived by Daugan and the success of sildenafil to investigate tadalafil as a treatment for erectile dysfunction.
ii) As for possible avenues of research, overall tadalafil would be obvious to investigate. With low solubility and given the high dose required relative to it (i.e. a high dose number) there are some but not many options to consider. Top of the list is micronisation. It is simple and well known. The micronised formulation would include a surfactant.
iii) In terms of effort, overall the programme would involve very substantial resources of time, money and people but it would be pursued. The impetus to look at possible formulations would be substantial. At the point the formulations were being tested, the team would not have an alternative successful avenue available to them.
iv) Overall the team would embark on the project with a reasonable expectation of success in establishing tadalafil as a safe, tolerable and effective treatment for erectile dysfunction. The team would not know for sure that tadalafil could be formulated successfully but they would not give up without testing a fairly short list of expedients, of which micronisation would be one. In relation to the test of the formulation itself the team would have a high expectation that micronisation would improve the formulation. I have rejected Prof Frijlink's views on the skilled team's expectations of success both based on timings in the gastrointestinal tract and based on inferences from Daugan.
v) In terms of unexpected or surprising results, the low solubility of tadalafil is not unexpected although it does present a problem for the team. Nevertheless it is a problem the team is familiar with in general terms. The team would not be surprised that micronisation worked.
vi) The only significant value judgment which would be required of a skilled team in a programme which reached the claimed invention would be to test a micronised formulation of tadalafil (including a surfactant). That would not be a difficult decision."
The case turned to a large extent on its own facts but the judge did state some principles in relation to priority, novelty and obviousness of general application. Should anyone wish to discuss this case or the issues raised in it, he or she should call me on 020 7404 5252 during office hours or use my contact form.