Staying Expedited Proceedings - Neurim Pharmaceuticals v Mylan

Author Karjis Sambrans Licence  CC BY 2.0  Source Wikimedia Commons












Patents Court (Mr Ian Karet) Neurim Pharmaceuticals (1991) Ltd another v Generics (UK) Ltd (T/A Viatris) and another [2021] EWHC 2897 (Pat) (29 Ort 2021)

This was an application by Generics (UK) Limited and Mylan UK Healthcare Limited ("Mylan") for a stay of the expedited trial that had been ordered by Mr Justice Mellor in Neurim Pharmaceuticals (1991) Ltd and another v Generics UK Ltd (t/a Mylan) and another [2021] EWHC 2198 (Pat) (2 Aug 2021) which I discussed in Practice - Neurim Pharmaceuticals v Mylan on 30 March 2022.  The purpose of the proposed stay was to await the outcome of opposition proceedings in the European Patent Office under Part V of the European Patent Convention.  The outcome of those proceedings including an appeal could be expected in 2023 or  2024.

The reason why Mr Justice Mellor ordered an expedited trial is that European patent 3,103,443 had a very short term.  It had been filed on 12 Aug 2002 but had not been granted until 30 June 2021.  Mr Justice Mellor noted at para [40] of his judgment that Neurim Pharmaceuticals (1991) Ltd and Flynn Pharma ("Neurim") appeared to have a valid patent that Mylan appeared to have infringed.  The only way that there could be a judgment on the patent's validity and whether it had been infringed before the patent's expiry was by ordering those matters to be tried as preliminary issues.  That would enable the claimants, Neurim Pharmaceuticals (1991) Ltd and Flynn Pharma, to obtain injunctions against Mylan thereby clearing the British market of competing generic products before the expiry of the patent.   The trial of those issues had been listed for December 2021.   Were a trial to take place after the expiry of the patent the only remedy that the court could award would be damages which may or may not have been adequate to compensate Neurim for any infringement.

Opposition is a procedure by which the validity of a European patent can be determined in the European Patent Office.   Art 99 (1) of the European Patent Office provides:

"Within nine months of the publication of the mention of the grant of the European patent in the European Patent Bulletin, any person may give notice to the European Patent Office of opposition to that patent, in accordance with the Implementing Regulations."

The grounds for opposition are set out in art 100:

"(a)   the subject-matter of the European patent is not patentable under Articles 52 to 57;
(b)   the European patent does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art;
(c)   the subject-matter of the European patent extends beyond the content of the application as filed, or if the patent was granted on a divisional application or on a new application filed under Article 61, beyond the content of the earlier application as filed."

The advantage of opposition proceedings is that the outcome applies to all the countries for which a European patent has been designated.   The alternative is revocation proceedings in one or more of those designated countries.  Revocation proceedings in England and Wales can be very expensive indeed.  According to TaylorWessing's Patent Map, such proceedings are not exactly cheap anywhere in Europe.

An application for a stay had been made before the hearing before Mr Justice Mellor on 28 and 30 July 2021 but he did not have enough time to deal with it.   It was listed for a separate hearing on 22 Oct 2021. The learned judge was aware of the application and its possible impact on his order for the trial of the preliminary issues.  He said at para [16] of his judgment, "Mylan has secured a date for the hearing of its application to stay this action pending the outcome of its opposition in the EPO".

Mylan's application came on before Mr Ian Karet sitting as a deputy judge of the High Court.  The learned deputy judge delivered his judgment on 29 Oct 2021 (see Neurim Pharmaceuticals (1991) Ltd and another v Generics (UK) Ltd (T/A Viatris) and another [2021] EWHC 2897 (Pat) (29 Oct 2021).  At para [58] of that judgment, he refused the application for a stay.  
 
Mylan argued for a stay on the grounds that the patent in suit was probably invalid, that damages would be an adequate remedy for Neurim and that Teva was about to enter the market with a generic product which was likely to pick up all Mylan's lost sales, Neurim replied that Mr Justice Marcus Smith had found the parent patent to be valid and infringed, that Neurim would sue Teva as well as Mylan and that a judgment would increase legal certainty.

Mr Karet said that the approach to be taken by a UK court considering an application to stay UK patent proceedings during an EPO opposition had been set out by the Court of Appeal in IPCom GmbH v HTC Europe [2013] EWCA Civ 1496.  He referred to para [38] of Lord Justice Floyd's judgment:

"1. The discretion, which is very wide indeed, should be exercised to achieve the balance of justice between the parties having regard to all the relevant circumstances of the particular case.
2. The discretion is of the Patents Court, not of the Court of Appeal. The Court of Appeal would not be justified in interfering with a first instance decision that accords with legal principle and has been reached by taking into account all the relevant, and only the relevant, circumstances.
3. Although neither the EPC nor the 1977 Act contains express provisions relating to automatic or discretionary stay of proceedings in national courts, they provide the context and condition the exercise of the discretion.
4. It should thus be remembered that the possibility of concurrent proceedings contesting the validity of a patent granted by the EPO is inherent in the system established by the EPC. It should also be remembered that national courts exercise exclusive jurisdiction on infringement issues.
5. If there are no other factors, a stay of the national proceedings is the default option. There is no purpose in pursuing two sets of proceedings simply because the Convention allows for it.
6. It is for the party resisting the grant of the stay to show why it should not be granted. Ultimately it is a question of where the balance of justice lies.
7. One important factor affecting the exercise of the discretion is the extent to which refusal of a stay will irrevocably deprive a party of any part of the benefit which the concurrent jurisdiction of the EPO and the national court is intended to confer. Thus, if allowing the national court to proceed might allow the patentee to obtain monetary compensation which is not repayable if the patent is subsequently revoked, this would be a weighty factor in favour of the grant of a stay. It may, however, be possible to mitigate the effect of this factor by the offer of suitable undertakings to repay.
8. The Patents Court judge is entitled to refuse a stay of the national proceedings where the evidence is that some commercial certainty would be achieved at a considerably earlier date in the case of the UK proceedings than in the EPO. It is true that it will not be possible to attain certainty everywhere until the EPO proceedings are finally resolved, but some certainty, sooner rather than later, and somewhere, such as in the UK, rather than nowhere, is, in general, preferable to continuing uncertainty everywhere.
9. It is permissible to take account of the fact that resolution of the national proceedings, whilst not finally resolving everything, may, by deciding some important issues, promote settlement.
10. An important factor affecting the discretion will be the length of time that it will take for the respective proceedings in the national court and in the EPO to reach a conclusion. This is not an independent factor, but needs to be considered in conjunction with the prejudice which any party will suffer from the delay, and lack of certainty, and what the national proceedings can achieve in terms of certainty.
11. The public interest in dispelling the uncertainty surrounding the validity of monopoly rights conferred by the grant of a patent is also a factor to be considered.
12. In weighing the balance it is material to take into account the risk of wasted costs, but this factor will normally be outweighed by commercial factors concerned with early resolution.
13. The hearing of an application for a stay is not to become a mini-trial of the various factors affecting its grant or refusal. The parties' assertions need to be examined critically, but at a relatively high level of generality."

The deputy judge noted that the above guidance was derived from the judgment of the Court of Appeal in Glaxo v Genentech [2008] EWCA Civ 23 as considered by the court in the light of Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46. He added that Lord Justice Floyd had said in Adaptive Spectrum and Signalling Alignment Inc v British Telecommunications PLC [2014] EWCA Civ 1513 that it was now "more or less inevitable" that Adaptive would have to undertake, as a price of resisting a stay of UK proceedings, to repay (in the event of revocation or amendment) any financial relief subsequently obtained. He observed that BT had sought a cross-undertaking in damages in relation to the final injunction ordered in that case in case the EPO subsequently revoked or materially amended the patent. The Court of Appeal rejected that on the grounds that a cross-undertaking is appropriate to take account of the possibility that an earlier judgment is wrong. A subsequent EPO revocation or amendment would mean that the final injunction would become ineffective or have to be discharged from the date of revocation/amendment, but not ab initio. There was therefore no reason for Adaptive to pay for the harm during the period when the injunction was rightly granted.

Between para [36] and para [57] of his judgment, Mr Karet reviewed and applied the guidelines from para [38] of Lord Justice Floyd's judgment in IP Com.  He explained his reason for dismissing Mylan's application at para [59]:

"The balance of justice in all the relevant circumstances lies on the side of allowing Neurim to continue on the course of action ordered by Mellor J. A decision on the preliminary issues will give the parties some more commercial certainty within a relatively short time and during the life of the Patent. Granting a stay would open the possibility of generic competition which may well have a significant impact on Neurim at the very end of the Patent's life."

Anyone wishing to discuss this judgment is welcome to call me on +44 (0)20 7404 5252 during normal office hours or to send me a message through my contact form.

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