An unimpressed LJ Floyd strikes out Regen Lab's UK appeal (Regen v Estar)

Regen versus Estar was one of the key decisions of the High Court last year (Regen Lab v Estar [2019] EWHC 63 (Pat), IPKat here). Regen's EP(UK) patent for its lucrative platelet purification (PRP) technology was revoked for lacking novelty in view of prior use. The case was part of the international dispute between rival PRP companies Regen Lab and Estar Medical. Regen filed an appeal against the UK decision to revoke their patent but has since been slow in filing the necessary appeal documents and payment of the costs ordered to Estar by High Court. Lord Justice Floyd, with some choice phrases regarding Regen's conduct throughout proceedings, has now struck out the appeal in view of Regen's inaction ([2020] EWCA Civ 451).

The patent at issue (EP (UK) 2073862) related to a method of extracting platelets from the blood. Regen brought an infringement action against Estar.  Estar counterclaimed that Regen's patent was invalid. The issue of validity was primarily concerned with whether the claims were novel in view of Regen's own disclosures before the priority date of the patent. In the High Court, HHJ Hacon found the patent lacked novelty in view of the prior use. Regen was ordered to pay Estar interim costs of just over £250,000.

Reluctant payers

Regen submitted that they were not in a position to pay the ordered costs by the deadline, and applied for a stay of payment. The Judge rejected this application, after considering evidence submitted by Estar concerning Regen's "lavish expenditure" on litigation and marketing. Regen had, for example, initiated costly US litigation against Estar. Regen had argued that payment of the costs would stifle their appeal of the UK decision. However, Regen apparently shot themselves in the foot with regards to this argument by giving evidence in the US case that they would "of course" be able to pay the costs ordered in the UK. In view of this, and in the absence of any further submissions from Regen, the Judge rejected the application for a stay of payment.

In the meantime, Regen had also appealed the High Court decision. However, Regen did not file the appeal bundle for the appeal case by the deadline for doing so (despite a number of extensions being granted for the deadline).  Instead, Regen argued that the appeal proceedings should be stayed, in view of the pending appeal before the EPO for the patent.

Throughout proceedings, Regen seemed to have issues with their external representatives. They changed counsel a number of times and ended up without legal representation. Regen argued that, because of its lack of solicitors and its ignorance of the procedural timetable, it was impossible for them to meet the deadline for filing the appeal bundle. Regen also e-mailed the court. In this email, Regen didn't attempt to argue that they were unable to pay the costs ordered by the court. On the contrary, Regen submitted that they were "in good financial shape", that they had withdrawn but intended to re-file the US complaint and that they were continuing patent enforcement action across Europe. Regen also displayed a certain bitterness of feeling towards Estar, arguing that "the only activity of Estar is to commercialise copycats of Regen's products. It would therefore be desirable for the PRP industry that Estar disappears from the market".

Telephone hearings - the new reality

A few weeks before the appeal was due to commence, Regen submitted a formal request for the appeal to be stayed.  Estar argued that the appeal should be struck out in view of Regen's inaction.

In order to resolve the fraught situation, Lord Justice Floyd scheduled a hearing to discuss the requests of both Regen and Estar. Regen asked for the hearing to be postponed due to the coronavirus. However, in view of the urgency (the date of the appeal was swiftly approaching), the Judge decided to proceed with the hearing by telephone. Regen alleged that they could not attend by telephone. The Judge found this this "incredible" and the telephone hearing proceeded (with Regen's attendance).

Stay of proceedings in view of a pending EPO appeal?

Unsurprisingly, Lord Justice Floyd was not overly impressed with Regen's conduct. After considering the facts, the Judge found that "the scales came down very heavily against Regen" with regards to their application for a stay.

The patent had been revoked across Europe by the Opposition Division of the EPO. The appeal from this decision is currently pending. Lord Justice Floyd first addressed Regen's request for a stay to proceedings in view of this pending EPO appeal. Lord Justice Floyd considered the fact that Regen had not made a formal request for a stay of the UK appeal until a few weeks from the appeal hearing. The Judge noted that "by that stage [Regen] had ensured that the prejudice to Estar would be extreme. Not only would Estar lose their date for the hearing of the appeal, but Regen had banked a period of uncertainty at least until the appeal could be re-fixed".

Lord Justice Floyd was also not impressed with the "highly inconsistent" conduct of Regen with regards to the UK and EPO actions. In particular, the Judge noted that "[i]t was Regen who chose to pursue Estar to judgment in the UK before the proceedings in the EPO were resolved, no doubt hoping for a success by utilising this jurisdiction. Now it has met with failure at first instance it wants to halt the proceedings whilst they attempt to restore the validity of the patent in the EPO." In other words, Regen wanted to have its cake and eat it.

Finally, Lord Justice Floyd noted that Regen "has shown itself perfectly content to launch litigation in multiple countries against Estar with no apparent regard for saving costs. The relatively small costs saving achieved by staying the appeal carries little or no weight against that background". A stay of proceedings in view of the pending EPO appeal was therefore not granted.

Stay of proceedings in view of ongoing criminal proceedings?

Whilst all this was going, Regen had also launched criminal proceedings in Switzerland against one of their former employees, "for violation of commercial confidentiality, unfair competition and industrial espionage". The Swiss proceedings relate to whether the employee had disclosed confidential information to Estar. In their statement of grounds for the related EPO appeal, Regen argued that "[f]acts show that a former Regen Lab employee has intensively collaborated with Estar...The Swiss police and the prosecutor are still investing on the case". Regen argued that the UK appeal case should also be stayed in view of these criminal proceedings.

Lord Justice Floyd disagreed. The Judge noted that "Regen has persistently sought to withhold from Estar the documents in which these allegations are set out, except on an 'Attorney's eyes only' basis which would prevent Estar from taking instructions". Therefore, the Judge concluded "[i]t would be unthinkable for this court to grant a stay or postponement of the appeal based on allegations which Estar have not been able to learn about, let alone respond to. It is not open to me in accordance with common law principles of natural justice to take steps based on material which one side has not been able to deal with". The stay of proceedings was therefore refused.

Adjournment?

The Judge also refused a request from Regen's for an adjournment of the appeal hearing. With a turn of phrase likely to make even the most thick-skinned claimant wince, the Judge noted that he was "entirely satisfied that any difficulties which Regen has in preparing for the appeal are of its own making. If Regen is not ready for its appeal that can only be because of its failure to put its solicitors in funds to deal with it. It has not helped itself by changing solicitors twice and then deciding to proceed without any legal representation at all, in circumstances where it plainly could pay for representation on its own evidence". The Judge was therefore not prepared to grant an adjournment.

Should the appeal continue?

By the date of the telephone hearing, Regen still had not paid the costs ordered by the High Court. Regen further had not filed the appeal bundle. Lord Justice Floyd considered whether the appeal should therefore be dismissed. The Judge looked to Regen for an explanation for their failure to perform the necessary actions. In more wince inducing language, the Judge noted that "Regen had a history of procedural wrongdoing, one is tempted to say procedural vandalism...Against that background there was an obvious inference that continued breaches would be treated as intentional, and not warrant any further indulgence being offered by the court" (para. 30).

So what explanation did Regen offer? Regen placed the blame both on their former solicitors and the fact that they were unrepresented. Regen complained about the costs of their solicitors had asked to be placed on account before taking action on behalf of Regen. However, they insisted that they had not been unable to pay the solicitors.

The Judge was "wholly unable to accept that this amounts to a good explanation for the failure to comply. Ultimately, I believe that Regen has taken a deliberate decision not to pay any outstanding sums to Estar, or expend further money on this appeal by instructing solicitors and putting them in funds...The failure to progress the appeal is plainly part of a deliberate strategy on the part of Regen aimed at de-railing it. It believed that by dragging its feet it could achieve derailment of the appeal without the need to obtain a stay." (para. 33)

Lord Justice Floyd therefore dismissed the appeal with costs. There will thus be no further consideration of the validity of the patent in the UK. The UK dispute comes to an end not because of any fact of substantive patent law, but an apparent unwillingness of one of the parties to follow the procedural rules.