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Tuesday, 9 November 2010

ALK-Abello Ltd v Meridian Medical Technologies - To transfer or not to transfer: that is the question

This morning, in ALK-Abello Ltd v Meridian Medical Technologies & Dey Pharma LP [2010] EWPCC 014, HHJ Birss QC handed down a judgment of the Patents County Court concerning the factors that are to be taken into account when deciding if proceedings should be transferred to the High Court.

By way of background: the case concerns European Patent (UK) No. 0 620 748, originally granted to Meridian in July 2010 but transferred to Dey in early October following the commencement of proceedings. The patent relates to automatic, spring-loaded and pre-primed, injector devices. ALK is currently the UK distributor of the EpiPen (a device utilising the patented invention for the delivery of adrenaline, that is used in the treatment of severe allergic reactions), pursuant to an agreement with the patent's owner, Dey. The agreement between ALK and Dey comes to an end at the end of this year and ALK has indicated that it intends to market its own adrenaline product called JEXT thereafter.

ALK filed an opposition at the EPO, however the 9 month opposition period under the EPC will not expire until 28 April 2011 (not March 2011 as stated in the judgment) and EPO practice indicates that the Opposition Division will not start to look substantively at the case until that period ends in order that they can deal with all oppositions to a patent in one go. ALK wanted to deal with the patent in a shorter timeframe than was available at the EPO and therefore brought their case before the Patents County Court seeking a declaration that its JEXT device is non-infringing, and also alleging that the patent is invalid.

ALK had initially levelled their claim at the (then) proprietor of the patent, Meridian. However when the patent was transferred to Dey, ALK applied to join Dey as a second defendant. In response, Dey indicated that they wanted to transfer the case to the High Court.
ALK's claim form was issued on 17 September 2010, merely two weeks before the new procedures for the Patents County Court came into effect. Referring to his earlier judgment in the Technical Fibre case [2010] EWPCC 011, HHJ Birss noted that he had held that:
"the new procedures in CPR Pt 45.41 – Pt 45.43 and corresponding section 25C of the Costs Practice Direction; CPR Pt 63, Section V Patents County Court, consisting of CPR Pt 63.17 – 63.26; and Section V of the Practice Direction 63 – Intellectual Property Claims paragraphs 27 – 31, did not apply to existing cases. This case is of course one such albeit only by a matter of a couple of weeks."
However, the new provisions on transfer in Practice Direction 30 which supplements CPR Pt 30 seemed to the judge to "self evidently ... apply from 1st October 2010 to all cases whenever they commenced. Neither party before me in the present case argued to the contrary."

Considering the issue of transfer, the judge noted that s42 of the County Courts Act 1984, CPR Pt 30.3, s289(2) of the Copyright, Designs and Patents Act 1988 and the new paragraphs 9.1. and 9.2 of PD 30 were all relevant to the case before him. He also noted that, so far as he was aware:
“this is the first contested application to transfer a case between the High Court and the Patents County Court since the new provisions came in on 1st October 2010. Nevertheless I am sure that guidance can be obtained from the cases decided prior to 1st October 2010, always bearing in mind that the legislative framework when they were decided was not exactly the same as it is now.”
Thereafter, reference was made to Memminger v Triplite [1992] RPC 210, and Chaplin v Lotus (Court of Appeal, Bingham MR, Rose and Waite LJJ, unreported 17th December 1993), as having some utility at least as a starting point to allowing one to gauge the sorts of enterprises the Patents County Court is intended to serve.

Pulling these factors together. The points to consider were stated to be:
“(i) the financial position of the parties (s289(2) 1988 Act). This includes but is not limited to considering whether a party can only afford to bring or defend the claim in a patents county court (para 9.1(1) Practice Direction 30). This factor is closely related to access to justice. The Patents County Court was set up to assist small and medium sized enterprises in enforcing and litigating intellectual property disputes. Guidance on the nature of these enterprises can be found from the Commission Recommendation 2003/361/EC.

(ii) whether the claim is appropriate to be determined by a patents county court. This involves considering:

(a) the value of the claim, including the value of an injunction and the amount in dispute. (para 9.1(2)(a) Practice Direction 30 and CPR 30.3(a))

(b) the complexity of the issues (para 9.1(2)(b) Practice Direction 30 and CPR 30.3(d))

(c) the estimated length of the trial. (para 9.1(2)(c) Practice Direction 30). Related to this is CPR 30.3(b) - whether it would be more convenient or fair for hearings (including the trial) to be held in some other court.

(iii) the importance of the outcome of the claim to the public in general (CPR 30.3(e)) albeit that a case raising an important question of fact or law need not necessarily be transferred to the Patents Court (s289(2) 1988 Act).”
One factor that was not considered to play a role was that in CPR Pt 30.3(c) (availability of a judge specialising in the type of claim in question) “since specialist judges are available in both courts.”

It was also stressed that the above factors should be considered within the wider view of what sort of cases the PCC was established to handle. Critically, “its role is to provide cheaper, speedier and more informal procedures to ensure that small and medium sized enterprises, and private individuals, were not deterred from innovation by the potential cost of litigation to safeguard their rights.” The decision therefore “turns on what the interests of justice require, taking into account both parties interests and interests of other litigants.”

Applying these factors to the case in front of him, HHJ Birss looked at the financial position of the parties, concluding that both were part of substantial undertakings: neither was an SME. “There is no question here that both sides can well afford to litigate in the High Court.” On the issue of whether the claim was appropriate to be determined by the PCC, the judge noted first of all that:
“for the purposes of considering transfers, the assessment of the value of a claim and the value of an injunction is intended to reflect commercial realities. It is not intended to involve fine questions of causation or remoteness of damage. Accordingly as it stands before me this claim is one with a value measured as a substantial part of $24 Million per year. I note also that the patent has just over two years left before expiry.”
The complexity of the case was also described as being appropriate for the PCC: “This is not a complex patent case. The facts are simple and there is no legal issue arising of which I am aware. A mechanical patent of this kind can appear complicated at first sight but the Patents County Court is a specialist court for dealing with just this sort of case.”

[Merpel prefers this kind of transfer (left)]

On the issue of timing, the Judge noted that: “It seems to me that if the court was faced with an application to transfer which would inherently build in a delay of that kind, this would be a factor which weighed against transferring the case.” However, in this instance, the parties had indicated that they were not seeking to delay the case and that if the judge was minded to transfer the case he could do so safe in the knowledge that he was not causing significant delay. “The trial will be heard in the High Court before the summer, which is essentially when it would be heard in the Patents County Court.”

Moving to the issue of the importance of outcome, the Judge observed that:
“Although this is a factor in High Court / County Court transfers generally, in the Patents County Court the effect of the 1988 Act is that a case raising an important question of fact or law need not necessarily be transferred. However that does not make importance irrelevant altogether.”
In conclusion, the Judge stated that:
“The conundrum on this application is that I have no doubt the case is entirely suitable to be tried in the Patents County Court from the point of view of the issues arising and the case management machinery necessary to deal with them. The balance I have to draw would have been more difficult if the delay point was still live but that was sorted out during the hearing and I can transfer this case safe in the knowledge that I am not building in major delays by doing so.
"The value of the case on the evidence as it stands points in favour of the High Court and the financial position of the parties does so as well. It might be asked why a case which could readily be decided in this court using the procedures now available should not be heard here. Why does value matter? The answer in my judgment is to emphasise what the Patents County Court was set up to achieve. The decisive factor is that the court was set up to ensure that small and medium sized enterprises, and private individuals, were not deterred from innovation by the potential cost of litigation to safeguard their rights. With the new procedures in place I intend to devote my energies to making them work in order to achieve that objective. However this is not the case in which to do it.”
Notwithstanding, therefore, that some commentators had argued that the Patents County Court procedures are ideal for cases of this kind irrespective of value, the Judge considered that it should be transferred to the High Court.

Other transfers here, here and here

2 comments:

Anonymous said...

So what is Cautious Co. going to make of this? The simple question of whether the case should be transferred or not requires a number of barristers (one a QC) and two firms of top-flight London IP solicitors. The result = "Yes", albeit after a pretty heavy, 66-para judgment. It would be interesting to compare: (i) total costs of this hearing (barristers and solicitors included); vs (ii) the PCC costs-cap; vs (iii) the projected total costs of the EPO opposition.

Tom Broadhurst said...

I think this was the correct and a brave decision. There was equality of arms between the two sides and an agreed high value. There will be trickier cases where there are distinct inequality of arms and real differences in the assessments of the value.

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