Patents Court Confirms Onus to “Clear the Way” and Factors Giving Rise to Quia Timet Infringement Claims

Birss J has handed down an interim judgment in the Patents Court which confirms the expectation on generic pharmaceutical companies to “clear the way”, in addition to factors which give rise to an actionable claim for quia timet (threatened) infringement.

In addition, the judgment addresses possible points of competition law, illegality and abuse of process which stem from the disclosure of generic launch plans to originator patentees. For obvious reasons, launch plans are highly commercially sensitive to generic companies, and so generic companies wish to limit disclosure as much as possible.

The case is Teva v Chiesi [2020] EWHC 1311 (Pat), and arises from revocation actions brought by Teva on three Chiesi patents relating to the inhaler product beclomethasone/formoterol. Teva applied to revoke the patents for invalidity eight years before expiry.

Clearing the Way and Quia Timet

In its Defence and Counterclaim, Chiesi counterclaimed for infringement on a quia timet basis. Chiesi’s claim was that, in applying to revoke the patents, Teva had created a strong inference of an intention to launch a product which might otherwise infringe them. The counterclaim for infringement would require Teva to provide a Product and Process Description (“PPD”) describing the product it eventually intended to launch.

However, Teva had no marketing authorisation for its product and had made no indication of its launch plans. Thus, Teva argued, there was no indication of any threat to infringe the Chiesi patents. On this basis, Teva applied to strike out these quia timet claims.

First, Birss J addressed Teva’s contention that threatened infringement could not arise if the generic company in question had not been granted a marketing authorisation (“MA”), and that applying to revoke a patent alone does not in and of itself amount to a threat of infringement. In particular, Teva argued that it cannot launch a product without an MA (to do so would be illegal) and so, without an MA, there is no credible threat to infringe. Counsel for Teva relied in part on an excerpt from Birss J’s judgment in Actavis v Icos [2016] EWHC 1955 (Pat):

“353. Viewed objectively today, the UK market for tadalafil is large and valuable. It is obvious that a generic company would wish to sell tadalafil once the SPC has expired. Actavis and Mylan have applied for and are obtaining marketing authorisations for their generic tadalafil products. That is an expensive and time consuming process. Viewed objectively, it only makes sense if they are planning to sell tadalafil sometime. The 181 patent (and, I will assume, 092) are potential obstacles. Bringing proceedings to revoke them is not proof of an intention to sell but it also supports the inference based primarily on the marketing authorisation.”

And:

“356. The flaw in the logic of the question posed by Actavis and Mylan is that the inference on which this quia timet infringement action is based does not derive solely or even predominantly from the fact they have sought to clear the way by applying to revoke patents. It derives from the marketing authorisation process. Furthermore, while there is a cost and trouble associated with product and process descriptions, that only arises because there is an issue on infringement. The companies are entitled not to admit infringement, but in that case infringement is in issue and should be sorted out in advance just as much as validity. The logic of clearing the way covers both infringement and validity.”

The judge agreed that the excerpts above might support Teva’s position, but only if taken out of context.

In assessing the argument, Birss J took a step back, and considered the intention of “clearing the way” holistically. He summarised that, whilst there is no requirement for a generic company to “clear the way”, the onus is firmly on generic companies to do so. If generic companies do not “clear the way”, they can expect to be enjoined at interim stage:

“in this jurisdiction it is well established that a rival in these circumstances ought to clear the way in advance – in other words bring court proceedings such as an action for patent revocation and/or declarations of non-infringement well before the rival’s launch on the market. The rival has no duty in law owed to anyone to clear the way, rather the courts have established that a failure to clear the way can be taken into account on an application by the incumbent for an interlocutory injunction to restrain the rival’s sales pending resolution of the patent dispute. In many cases it is a strong or even decisive factor.”

Birss J then set out his view, based on the “clearing the way” principle, that it is always better to sort out issues of infringement in parallel with challenges to the validity of patents. It is desirable to allow all the issues to be aired in the same proceedings and what Chiesi was seeking to do, in principle, was entirely proper.

Turning to whether there was a credible threat of infringement, Birss J recapped the test set out in MSD v Teva [2012] EWHC 627 (Pat) and [2013] EWHC 1958 (Pat): what matters is whether the patentee can prove “a sufficiently strong probability that an injunction would be required to prevent harm to the claimant to justify bringing the proceedings.”

Further, in order to avoid strike out, Chieisi had to establish a “reasonable prospect of success” in meeting that requirement at trial (not at interim stage).

The judge then turned to the facts: Teva had started its revocation proceedings eight years before the expiry of the patents in question. It did not confirm a lack of intention to launch before patent expiry, but had offered to provide two weeks’ notice of any launch. The judge found that this created a strong inference that Teva intended to launch a product before expiry, or that it sought to reserve the possibility to launch before patent expiry. Given the time it takes to develop a product and amount of investment required to obtain an MA, he did not consider that Teva’s launch plans would be so inchoate that it did not have a concrete product in mind (and there was no evidence to that effect to lead to him to any other conclusion).

The judge simply put it: “If the claimant had wished to say that it did not intend to launch unless it succeeded in revoking the patent, then it had a clear opportunity to do so in the exchange of correspondence. It did not.”

On this basis, the judge allowed the quia timet claim to proceed.

Illegality, Competition and Abuse of Process

Teva also ran an argument that the requirement to furnish Chiesi with details of its launch amounted to illegality (sharing of information amounted to anti-competitive collusion). It further alleged that Chiesi’s infringement claim was brought to eke out details of Teva’s proposed launch, which amounted to an abuse of process. The judge gave short shrift to either argument.

In relation to illegality, Birss J approved the analysis of the CAT in the recent paroxetine litigation. The CAT held that patent litigation, no matter the outcome at trial, is inherently pro-competitive. Therefore, on the basis that the Judge was also satisfied the litigation was not a sham litigation, the competition arguments were dismissed.

In relation to abuse, Birss J acknowledged that Chiesi, no doubt, would like to learn of competitor’s launch plans. However, even if such a motive in bringing the infringement could be attributed to Chiesi, it was not the only motive. Chiesi’s other intention is to sue Teva for infringement and obtain its proper legal remedies, such as an injunction, if the claim is made out. The judge also considered it was relevant that Teva, not Chieisi, had commenced the litigation, and that Teva had already partially revealed its intention to launch by seeking to revoke the patents.

Comments

The case confirms the onus on generic companies to “clear the way” in the UK with respect to issues of both validity and infringement of patents that might block the marketing of their products. Even if generic companies proactively seek to revoke patents many years before expiry, they can expect infringement to be in issue unless they offer firm undertakings not to launch until the patent expires or is revoked.

The impact of this ruling is yet to be full understood. On the one hand it might result in more “clearing the way” cases assessing both validity and infringement. However, it is also possible that it might encourage a greater number of “at risk” launches because generic companies might wait until they are certain they have a product available for sale in the UK which is the first generic to market before embarking upon costly litigation (this hearing alone cost both parties almost £450,000).