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Wednesday, 1 January 2014

The wounded patent survived, was only just infringed, but no injunction

New Year's Day is perhaps not an auspicious time on which to post about a technically detailed patent case, but this Kat has finally had a chance to complete a review of this decision from mid December, and, having ended 2013 with an electronic case, what better way to start 2014 than with a chemical one?  But first, of course, a Happy New Year to our dear readers.

Convatec Technologies and Smith & Nephew are back in the Patents Court, again. Their disputes over various wound dressings continue, but dare we hope that they perhaps may be drawing to an end?

IPKat in need of wound dressing
Convatec Technologies are the proprietor of EP (UK) 1,343,510, a patent for a light-stabilized silverisation of gel forming fibres in the context of an antimicrobial component of a wound dressing, a product called Aquacel Ag. In earlier proceedings (reported by the IPKat here and here) Smith & Nephew contested the validity of Convatec's silverisation patent, but the patent was upheld in amended form. A related prior dispute between Convatec and Smith & Nephew involving nonsilverised versions of their respective products, Aquacel and Durafiber, and relating to a different patent, was reported by the IPKat here, and the appeal decision upholding the first instance judgement can be read on BAILII.

But let us return to the current case Smith & Nephew Plc v Convatec Technologies Inc & Anor No 2 [2013] EWHC 3955 (Pat) (12 December 2013). The product Durafiber Ag, produced by Smith & Nephew, is a silverised wound dressing, though containing different gel forming fibres from Convatec's Aquacel Ag, and Convatec contended that it infringes EP (UK) 1,343,510.  The revocation action having resulted in maintenance of an amended patent, the present proceedings dealt with Smith & Nephew's contention that the amended patent was not infringed.

Claim 1 as amended was in the following terms:
A method of preparing a light stabilized antimicrobial material, characterised in that the method comprises the steps of:
(a) preparing a solution comprising an organic solvent and a source of silver in a quantity sufficient to provide a desired silver concentration in said material;
(b) subjecting a material which includes gel-forming fibres containing one or more hydrophilic, amphoteric or anionic polymers to said solution for a time sufficient to incorporate said desired silver concentration into said polymer, wherein said polymer comprises a polysaccharide or modified polysaccharide, a polyvinylpyrrolidone, a polyvinyl alcohol, a polyvinyl ether, a polyurethane, a polyacrylate, a polyacrylamide, collagen, or gelatin or mixtures thereof; and
(c) subjecting said polymer, during or after step (b) to one or more agents selected from the group consisting of ammonium salts, thiosulphates, chlorides and peroxides which facilitate the binding of said silver on said polymer, the agent being present in a concentration between 1% and 25% of the total volume of treatment, which material is substantially photostable upon drying, but which will dissociate to release said silver upon rehydration of said material.
The matter of claim construction that was at issue was the range of the salt in step c, and specifically the meaning of "1%" in this context.  (Incidentally, this range was introduced by one of the amendments made in the previous validity proceedings).

Convatec's primary case was that the lower boundary of the claimed range was understood to contain everything that would round to the nearest whole number, 1, which would include everything from 0.5% to 1.5%.  Under this construction, Smith & Nephew's commercially used concentration of 0.77% would infringe.

Smith & Nephew's primary case was that the claim should "mean what it says", namely that the lower boundary was absolute so anything below this, even for example 0.9999%, would not infringe. Their fall-back case was based on a significant figures argument, that the lower boundary of 1% was quoted to one significant figure.  On this view, the boundary should include everything equal to 1 to one significant figure, which would include everything from 0.95% to 1.5%. This asymmetry of the range is a result of dealing with significant figures of numbers which powers of 10. [It was news to this Kat that, to one significant figure, "1" means the asymmetric range of between 0.95 and 1.5, but, having seen the point, it does make sense.]

And Merpel is not very good at maths...
Birss J adopted the "significant figures" construction of Smith & Nephew's fall-back case, calling it "the natural approach of the skilled person" and stating that "None of the reasons to prefer the other constructions advanced were persuasive." Based on this construction, the commercial concentration used by Smith & Nephew did not infringe.

But that was not the end of the matter, because of some experiments performed by Smith & Nephew in the process of obtaining CE mark approval for their product (without which approval the product could not be sold in the EU).  In relation to these experiments, it was critical what was meant by "of the total volume of treatment" in step c, and in particular whether "carryover", that is, the volume of fluid brought forward from step b because of the absorbency of the fibres, was to be taken into consideration for the calculation.  If carryover is not taken into account, then the volume of treatment in those experiments would be 1.01-1.02%, and they would infringe.  But Birss J accepted Smith & Nephew's contention that carryover should be taken into consideration.

The problem then was that there were two ways in which the carryover calculation could be performed - a "theoretical" manner and an  "empirical" manner. This "empirical" method involved doing later tests on the fibres subsequent to the experiments that were alleged to have infringed.  In Smith & Nephew's original Process Description of the relevant experiments, only the theoretical approach was used, resulting in values of 0.96-0.97%, which would infringe.  But later the empirical approach was applied, resulting in values of 0.92% to 0.93%, which would be outside the claim.

In this difficult and finely balanced situation, Birss J noted that:
In my judgment, although the legal burden to prove infringement rests with Convatec, Smith & Nephew bear an evidential onus to establish that the figures they derive using the empirical carryover method are fair or at least that the true figures must be further from the claim. They are the ones seeking to show that the empirical carryover method can be applied in this way. 
and in the end he concluded that
the only reliable figures I have to go on in relation to the experiments are the figures in Smith & Nephew's Process Description. On that basis the four experiments infringe the 510 patent. 
[Incidentally, Merpel is not so sure about this - Smith & Nephew are stated to be the Claimant, so this looks like a declaration of non-infringement case.  According to the recent Generics v Teva/Yeda decision, the burden of proof should therefore be on the alleged infringer, not the patentee. But perhaps there is some complexity here that Merpel has not seen, as the judgment never actually states whether the matter is an infringement action or a declaration of non-infringement UPDATE 24 January Merpel apologises - the judgment states at para 5 "So after my judgment was handed down in June 2012 Smith & Nephew developed a new process which they thought would not infringe and in January 2013 they began this action for a declaration of non-infringement of the 510 patent. Convatec counterclaimed alleging infringement and the action has now come on to trial. "  The distinction from Generics v Teva/Yeda would therefore be the presence of the counter-claim for infringement, and so now Merpel is reassured.]

The significance of this was that, although according to this judgment Smith & Nephew's commercial product was held not to infringe Convatec's patent,  the experiments that were held to constitute infringement had been used to obtain CE mark approval.  The CE mark approval was granted in June 2012, whereas the non-infringing process was not finalised until October 2012.  Convatec therefore argued that the infringement had provided a springboard allowing Smith & Nephew to market the product earlier than if they had never infringed, and had had to wait until they had a non-infringing process in hand before seeking CE mark approval, and therefore Convatec sought an injunction. Birss J decided, after a detailed review of the jurisprudence on springboard relief:  "I am satisfied that the court can, in a proper case, make an order of the kind sought by Convatec", notwithstanding that in this case, unusually, the final commercial product that would be included in the scope of the injunction sought did not actually infringe the patent.  He summarised the criteria as follows:
Overall in my judgment that the following factors are relevant in considering final springboard relief in a patent case:
i) Caution is required before a final injunction is granted restraining an otherwise lawful activity. Nevertheless in a proper case it will be.
ii) The nature of any unwarranted advantage relied on should be identified. The precise relationship between the unlawful activity in the past and the later acts which are said to exploit that unwarranted advantage needs to be considered.
iii) If an injunction is to be granted it must be in an appropriate form and for a duration which is commensurate with the unwarranted advantage relied on.
iv) The court must be particularly careful not to put the claimant in a better position than it would be if there had been no infringement at all, especially if otherwise lawful competitive activity will be restrained.
v) In considering what relief to grant, the availability of other remedies apart from an injunction needs to be taken into account, not only damages but, as in Vestergaard, the availability of an account of profits should be considered too.
So then it fell to consider what should be the start date, and duration, of the springboard.  Convatec argued that it started in October 2012, when Smith & Nephew had finished developing the non-infringing process.  Smith & Nephew argued for much earlier dates.  But in the end Birss J decided on the date of the Patents Court decision upholding the patent in amended form, namely June 2012.

Then there was the question of how long CE mark approval would have taken based on the non-infringing process.  As the judgment records:
Starting from June 2012, it took Smith & Nephew until October 2012 to finish developing the non-infringing process. That is not disputed. There was then a dispute about when Smith & Nephew would have been ready to file for CE mark approval. Convatec submitted Smith & Nephew would have been ready in February 2013 and Smith & Nephew contended they would have been ready in December 2012.
Or there again, perhaps she is...
There was then an argument as to how long the approval process would have taken - Convatec argued for 20 months, and Smith & Nephew for 10.  Birss J concluded that the longest realistic estimate of the period to obtain CE mark approval would be 14 months, and that it would not be less than 10 months.

The judgment then considered the factors together in order to decide whether a springboard injunction was appropriate.  Noting the unusual factual situation:
The scope of the injunction sought by Convatec is broad. It would prevent Smith & Nephew from selling a product which is not the subject matter of the invention. By that I mean to draw a distinction from Generics and Dyson. In those cases the product which could not be sold was a product within the claim. The reason the activity restrained by the injunction was otherwise unlawful was purely temporal. This injunction would prevent Smith & Nephew from doing something which does not and never would have infringed a valid patent. This is not a reason to refuse springboard relief altogether but it is a factor to take into account in deciding if the unwarranted advantage obtained would support it. 
The relationship between the infringing acts and the later non-infringing acts is not direct. Whereas in Generics [C-0316/95, 9th July 1997, ECJ] samples were submitted (an act of infringement) and in Dyson a number of infringing acts were committed including actually launching the product on the market (paragraph 49), in this case the link between the infringement depends on the submission of data to a regulatory authority. I think this is an important point. Although, as Neuberger J recognised in Kirin-Amgen [[2005] FSR 41], an injunction to restrain infringements has the effect of preventing the generation of the regulatory data, the fact remains that data does not infringe the patent and that submitting data is not itself an act of infringement. I do not have to decide whether this alone would be a sufficient ground to refuse any springboard relief but again it seems to me to be a factor which should be taken into account. 
and that
The evidence has left the length of the putative CE mark application period in doubt. I am satisfied that the length of the period it would have taken to obtain CE mark approval would be between 10 and 14 months. The least period it would have taken is 10 months and the most is 14 months. Starting from December 2012, grant of CE mark approval in February 2014 is no more likely than a grant in October 2013. 
the judgment considered:
If Smith & Nephew started selling Durafiber Ag in the UK and Europe today, the question I have to ask myself is whether they could be said to be exploiting an unwarranted advantage gained from the infringements in 2009/2010? 
In my judgment they would not. If Smith & Nephew had applied for CE mark approval in December 2012 it is just as likely that they would have obtained it by now as that they would not. To regard sales of non-infringing Durafiber Ag in the UK or EU from now on as being the product of an unwarranted advantage would be unfair. To prevent those sales or award damages or an account in respect of them would overcompensate the patentee for the harm caused by the infringements in the past.
If the infringements in the past had not taken place, Smith & Nephew would have had to obtain CE mark approval after they finished developing the non-infringing process. They could have got it by now. The least period it could have taken to get approval has now passed. Unless I am satisfied that they would not have got the CE mark by now, I should not award springboard relief. I am not so satisfied. 
 The judgment concluded that
I find that any springboard gained by Smith & Nephew from the infringements in 2009 and 2010 has now expired. As a result I do not have to resolve the argument between 10 and 14 months. 
and finally:
I find that Smith & Nephew's commercial process for making Durafiber Ag does not infringe Convatec's 510 patent. Some of the work carried out by Smith & Nephew in 2009/2010 which led to data being generated for use in the application for regulatory approval did infringe the 510 patent. However I refuse to grant an injunction to restrain sales of Durafiber Ag.
There is not quite the end of the dispute between the parties - presumably there could yet be an appeal of this decision, and the judgment refers to an ongoing enquiry as to a cross-undertaking in damages in relation to undertakings given by Smith & Nephew to Convatec, to which in the end Convatec were not entitled.  But with this judgment all the substantive matters appear to have been decided, and so perhaps it may mark the beginning of the end.

Merpel meanwhile is amused that a case that started off being basically about chemistry should end up being basically about mathematics.

5 comments:

Shelagh said...

I read all this with cynicism and admiration in equal measure!
When the antimicrobial value of colloidal silver was understood in the 1930s it was derided by manufacturing pharmacists as they could see no profit in it, and were far more interested in the synthesis of profitable drugs.
CS is available but only through the "alternative" marketplace and when I was selling it a substantial amount of my job was education and reassurance that just because it was not being sold in Boots it could still work.
I have watched with admiration how, having worked out that the route to profit was through the means of application ie wound dressings, the healing power of silver is being embraced by those who once so comprehensively rubbished it.

Anonymous said...

In this case Birss used the significant figures approach to interpret claim scope as including values below 1%. However it's also clear he looked to the specification for whether it offered guidance on the point. I wonder if the issue had been validity over a prior art document that disclosed a value just below 1% whether the analysis would have been different, and whether acknowledgement of the prior art document in the specification would have pushed the interpretation to one which gave validity given that the writer of the specification would have had the intention of writing a novel claim.

Thomas Cotter said...

One question, which I assume U.K. readers will know the answer to immediately: why didn't the Bolar-type experimental use defense apply here?

Darren Smyth said...


Dear Thomas - good question. I believe the answer is as follows.

The Bolar exemption in the UK exempts from patent infringement:

"an act done in conducting a study, test or trial which is necessary for and is conducted with a view to the application of paragraphs 1 to 5 of article 13 of Directive 2001/82/EC or paragraphs 1 to 4 of article 10 of Directive 2001/83/EC"

Thus the type of approval that can be so exempted relates only to substances for medicinal or veterinary use, and only to abridged authorisations relating to generics, not to original authorisations. The CE mark approval process is different and relates to medical devices, and there is no patent emption for this.

I guess that it was not covered by the normal experimental use exemption either because it was not experimental. Other experiments that were carried out WERE covered by this exemption (in the end the parties agreed on this) which is why the emphasis was finally focussed on the particular 4 experiments referred to in the judgment and my note.

Darren

Thomas Cotter said...

Thank you, Darren, for clarifying that. Very helpful!

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