Arrow Declarations - Teva UK v Novartis

Author Dfrg.msc Public Domain Source Wikimedia Commons
 Jane Lambert

Court of Appeal (Lords Justices Arnold and Nugee and Sir Christopher Floyd) Teva UK Ltd and another v Novartis AG  [2022] EWCA Civ 1617 (8 Dec 2022)

This was an appeal against Mrs Justice Bacon's refusal to grant an Arrow declaration in Teva UK Ltd and another v Novartis AG [2022] EWHC 2779 (Ch) (19 Oct 2022). Lord Justice Arnold defined an Arrow declaration as "a declaration that a product, process or use was lacking in novelty or obvious as at the priority date of a patent application" at para [17] of his judgment in Teva UK Ltd and another v Novartis AG [2022] EWCA Civ 1617.  He explained that Arrow declarations take their name from the seminal decision of Kitchin J (as he then was) in Arrow Generics Ltd v Merck & Co Inc [2007] EWHC 1900 (Pat), [2008] Bus LR 487.  He continued:  

"The point of such declaration is that it is in effect a declaration that the claimant will have a Gillette defence to any subsequent claim for patent infringement in relation to that product, process or use: see Gillette Safety Razor Co v Anglo-American Trading Co Ltd (1913) 30 RPC 465. Thus it enables the court pre-emptively to determine a patent infringement case before the patent has even been granted without having to decide whether the patent would be invalid, or not infringed because the claimant's product, process or use would not fall within the claims, if and when granted."

I discussed such declarations in detail in my article Arrow Declarations on 16 Oct 2021.

The declaration that Mrs Justice Bacon had been asked to make by Teva UK Ltd and Teva Pharmaceutical Industries Ltd. ("Teva") was that 

"importing and selling generic fingolimod to treat relapsing-remitting multiple sclerosis (RRMS) at a daily dose of 0.5 mg p.o. was obvious at the priority date of European Patent EP 2 959 894 (EP 894), for which Novartis AG is the registered proprietor"

Her ladyship refused to grant the requested declaration and denied Teva's request for permission to appeal. Teva renewed its application for permission to appeal to the Court of Appeal. Lord Justice Arnold gave permission and expedited the appeal because Novartis had commenced proceedings for infringement of EP894, and applied for preliminary injunctions, against Teva in a number of EU Member States, including Germany. The German proceedings were due to be heard on 15 Dec 2022. Teva wished, if successful in the appeal and the subsequent obviousness determination, to rely on the Arrow declaration and the English court's reasoned judgment on the issue of obviousness in those proceedings.  The issue before the Court of Appeal was:

"Is it proper for the courts of England and Wales to make a declaration solely for the purpose of influencing a decision by a foreign court on an issue governed by the law of the foreign court?"

Lords Justices Arnold and Nugee and Sir Christopher Floyd heard the appeal on 28 Nov 2022. They dismissed the appeal on the day of the hearing and set out their reasons in writing on 6 Dec 2022.  

Lord Justice Arnold, who delivered the lead judgment, set out the history of the litigation in England and elsewhere over Teva's challenge to Novartis's monopoly of fingolimod, an S1P receptor modulator, for the treatment of relapsing-remitting multiple sclerosis ("RRMS") between para [2] and [14].  He said at para [2] that the market for the product was a very valuable one, worth some $2.8 billion worldwide. He added that it was Novartis' second biggest selling product in the UK with annual sales of £46 million.

He noted at para [15] that the High Court has an inherent jurisdiction (the existence of which is confirmed by CPR40.20) to make a declaration, including a negative declaration, that is to say, a declaration that a party is not under a liability.  He referred at para [15] to para [41] of Lord Woolf MR's judgment in Messier-Dowty Ltd v Sabena Ltd  [2000] WLR 2040, [2000] 1 WLR 2040, [2000] 1 Lloyd's Rep 428, [2001] ILPr 5, [2000] 1 LLR 428, [2001] 1 All ER 275, [2000] CP Rep 72, [2000] CLC 889, [2000] EWCA Civ 48, [2000] 1 All ER (Comm) 833:

"Lord Wilberforce and Lord Denning M.R. differed in the circumstances of [an earlier] case as to whether the declaration would serve a useful purpose. However, if it would, that it would then be appropriate to grant a declaration was agreed. The approach is pragmatic. It is not a matter of jurisdiction. It is a matter of discretion. The deployment of negative declarations should be scrutinised and their use rejected where it would serve no useful purpose. However, where a negative declaration would help to ensure that the aims of justice are achieved the courts should not be reluctant to grant such declarations. They can and do assist in achieving justice. … So in my judgment the development of the use of declaratory relief in relation to commercial disputes should not be constrained by artificial limits wrongly related to jurisdiction. It should instead be kept within proper bounds by the exercise of the court's discretion."

At para [16] pf his judgment in Teva, Lord Justice Arnold mentioned Mr Justice Neuberger's judgment in Financial Services Authority v Rourke [2002] CP Rep 14, [2001] EWHC 704 (Ch) where he said, after citing Messier-Dowty:

"It seems to me that, when considering whether to grant a declaration or not, the court should take into account justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose and whether there are any other special reasons why or why not the court should grant the declaration."

Lord Justice Arnold discussed Arrow at [17] and observed at [18] that the jurisdiction to grant an Arrow declaration had been confirmed by the Court of Appeal in Fujifilm Kyowa Kirin Biologics Co Ltd v AbbVie Biotechnology Ltd [2017] RPC 9, [2017] EWCA Civ 1, [2018] Bus LR 228, [2017] CP Rep 16. He referred to para [18] of Lord Justice Floyd's judgment in that case:

"We have said enough to explain why we do not consider that there is any issue of principle which prevents the granting of Arrow declarations in appropriate cases. Drawing the threads together: (i) A declaration that a product, process or use was old or obvious at a particular date does not necessarily offend against section 74 of the 1977 Act. (ii) Such a declaration may offend against the 1977 Act where it is a disguised attack on the validity of a granted patent. (iii) Such declarations do not offend against the scheme of the EPC or the Act simply because the declaration is sought against the background of pending divisional applications by the counter-party. (iv) On the other hand the existence of pending applications cannot itself be a sufficient justification for granting a declaration. (v) Whether such a declaration is justified depends on whether a sufficient case can be made for the exercise of the court's discretion in accordance with established principles."

Lord Justice Floyd said that the circumstances in which an Arrow declaration might be made would be rare at para [95] of his judgment in that case.  In paras [24] and [25] of Glaxo Group Ltd v Vectura Ltd [2019] RPC 2, [2019] Bus LR 648, [2018] EWCA Civ 1496, [2018] WLR(D) 400, Lord Justice Floyd noted:

"[24]. In my judgment paras 98(iv) and 98(v) of this court's judgment in the Fujifilm case [2018] Bus LR 228 need to be read together, taking into account what was said in para 93. The statutory remedy of revocation (and I would add the declaration of non-infringement) are remedies which are available if a relevant patent exists. Thus 'any person' may bring a revocation action by identifying a granted patent and without the need to show any particular commercial interest: see section 72 of the Patents Act 1977 and Cairnstores Ltd v Aktiebolaget Hässle [2002] FSR 35. Similarly a person wishing to obtain a declaration of non-infringement needs to do no more than identify the patent and provide the statutory particulars of his proposed act: see section 71 of the Patents Act 1977. The person seeking revocation, or a declaration of non-infringement, does not need to justify the need for the relief any further. As Jacob LJ said in Nokia Corpn v Interdigital Technology Corpn [2007] FSR 23, para 17:

'Section 71 requires no claim of right nor even any intention by the applicant for a declaration to make or do the acts, the subject matter of the declaration he seeks. Normally, of course, the applicant will at least have in mind the possibility of doing those acts but whether he does or not is irrelevant. The only question is whether the patent covers what is described in the full particulars called for by section 71(1)(a).'

[25]. The jurisdiction to grant an Arrow declaration is by contrast discretionary. Identification of a relevant application is a necessary but not sufficient condition for an application for such relief. It is necessary to go further and examine whether it would serve a useful purpose. The point being made by paras 98(iv) and 98(v) in the Fujifilm case is the contrast between a remedy which depends only on the existence of a patent (or application) and one whose availability turns on a critical examination of the purpose which its grant would serve."

At para [21] of Teva, Lord Justice Arnold mentioned two examples of the exercise of the court's discretion to grant or refuse an Arrow declaration:   Fujifilm Kyowa Kirin Biologics Company Ltd v Abbvie Biotechnology Ltd (Rev 1) [2017] EWHC 395 (Pat) (3 March 2017) where Mr Justice Henry Carr made such a declaration and  Pfizer Ltd v F. Hoffmann-La Roche AG [2019] EWHC 1520 (Pat), [2019] RPC 14. Citing Actavis Group HF v Eli Lilly & Co  Lord Justice Arnold acknowledged the English courts'  jurisdiction to making a declaration of non-infringement of a foreign patent in appropriate cases.  Between paras [25] and [34] Lord Justice Arnold discussed the weight that German courts give to the judgments of foreign, particularly English, courts when considering issues that had previously been before those courts.

Between [53] and [61] Lord Justice Arnold reviewed Mrs Justice Bacon's judgment and in particular her conclusion that an Arrow declaration would serve no useful purpose in German and other litigation.  He noted at [62] that her ladyship's judgment was an exercise of discretion.  It followed that the Court of Appeal could only reconsider the issue if the judge had erred in law or principle, taken a factor into account which she should not have, failed to take into account a factor which she should have or was plainly wrong.  

Teva had contended that the judge erred in principle at [61] and [76] of her judgment. It argued that she should have asked herself

 
"(i) whether the declaration would serve a useful purpose and
(ii) whether there were any special reasons for or against the grant of a declaration,
and that she was wrong to ask whether there was 'a very compelling justification' for granting one." 

In the alternative, Teva argued that the judge had been wrong to conclude that there was no 'very compelling justification" given 

(i) the impact that a declaration was likely to have in Germany and in Country A and 

(ii) Novartis' conduct in attempting to enforce EP894 by applying for an interim injunction and then abandoning protection for that patent in the UK.

In Lord Justice Arnold's judgment, Mrs Justice Bacon's only error was in adopting an approach that was too favourable to Teva.   He said at  para [64]:

"Once she had found that a declaration was not required in order to redress uncertainty in the UK market, it followed that, as the judge recognised, the only purposes which could be served by a declaration were to assist the courts of Germany and Country A in deciding issues under their own laws. The judge essentially followed Birss J's approach to that question in Pfizer v Hoffmann-La Roche. As explained above, however, I have concluded that assisting a foreign court to decide an issue under its own law is not a legitimate reason for the grant of declaratory relief."

He added two points between [65] and [66]:

"[65] ......................  The first is that counsel for Teva placed particular reliance upon the fact that the grant of an injunction in Country A would affect the supply of Teva's product in the UK. As the judge pointed out, however, that would simply be a knock-on consequence of the courts of Country A applying their own law within their territory.
[66] The second point concerns Teva's reliance upon Novartis' conduct in applying for an interim injunction before subsequently abandoning their claim to patent protection in the UK. I agree with the judge that this is not a factor which in itself justifies the grant of a declaration. Rather, it is a matter to be addressed by enforcing Novartis' cross-undertakings in damages and by awards of costs."

Lord Justice Nugee and Sir Christopher Floyd delivered concurring judgments.

This is an important case on the exercise of a rarely used but powerful jurisdiction.  Anyone wishing to discuss this case may call me on 020 7404 5252 during office hours or send me a message through my contact page.