Birss J excuses Chugai from tocilizumab royalties in UCB "validity tie breaker"

It's August.  The Friday before a Bank Holiday weekend.  So surely, Mr Justice Birss is not handing down a meaty patent judgment today?  Think again.  This morning, Birss J handed down his decision in Chugai Pharmaceutical v UCB & Celltech [2018] EWHC 2264 in favor of Chugai.

The issue

The AmeriKat heads into her Bank
Holiday weekend armed with Birss J's
latest judgment

The case concerns a worldwide licence granted to Chugai by UCB, for US patent 7,566,771 entitled "Humanised Antibodies".  This patent expires on 29 July 2026 and is one of a portfolio of patents licenced to Chugai.  Under the licence, royalties are paid on the sales of a relevant product in a territory if that product falls within the scope of one of the patent's claims (i.e. "infringes") irrespective of the patent's validity unless and until the patent is finally declared invalid (see Jacob LJ in Celltech v Medimmune [2004] EWCA Civ 1331).  The language of the licence is as follows:

"Royalties shall be payable only upon Net Sales in countries where, but for the licence granted by UCB to CHUGAI pursuant to Article 2, CHUGAI or a Permitted Sublicensee would infringe a Valid Claim of the relevant patent…" (emphasis added)

Since January 2016, all of the patents in the portfolio have expired, save for the 771 Patent.  With English law and the English courts governing the licence, it fell to Mr Justice Birss to determine whether Chugai's tocilizumab product (ACTEMRA) - an immunosuppressive drug used mainly for the treatment of rheumatoid arthritis - fell within (by the time they got to trial) Claim 2 of the 771 Patent.  Chugai sought a declaration that it did not - thus no royalties are or would be due under the licence for its tocilizumab products.  UCB argued that tocilizumab did fall within Claim 2.

To answer this question, Claim 2 had to be construed.  Because it is a US patent, claim construction had to be decided under US law.  Chugai rejected UCB's construction because that construction would invalidate Claim 2 as it would capture a prior art antibody called anti-Tac referred to in a citation called "Queen".  UCB accepted this to be the consequence for the purpose of the English proceedings only, but argued that (subject to one caveat - see below) it was irrelevant to the issue before the UK because the patent had not been declared invalid and, to do so, Chugai would need to commence proceedings in the US (being a US patent).  If they did, UCB said they could defend the invalidity attack by "swearing behind" Queen (read more about "swearing behind" here - it was not an issue that made it to trial see [11]).

What does Claim 2 mean?

Claim 2 of the patent reads as follows:

"A humanised antibody molecule having affinity for a predetermined antigen and comprising a composite heavy chain and a complementary light chain, said composite heavy chain having a variable domain including complementarity determining regions (CDRs) and framework regions, wherein, according to the Kabat numbering system, in said composite heavy chain: said CDRs are non-human donor at residues 31 to 35, 50 to 58, and 95 to 102; and said framework regions are non-human donor at: 

a) residue 6;
b) one or more of residues 23 and 24;
c) one or more of residues 48 and 49;
d) one or more of residues 71 and 73;
e) one or more of residues 75, 76, and 78; and
f) one or more of residues 88 and 91;

provided that said heavy chain is not a chimeric antibody heavy chain having a donor variable domain and a human constant region"

After lengthy discussion (not summarized in this post), the judge concluded that the claims alone could be read either way - either in Chugai's favor or in UCB's favor.  The specification also provided no assistance as various sections supported both cases.  The prosecution file (remember US law is being applied) did the same.  The extrinsic evidence was found to "firmly support Chugai", but the judge noted it was "the least powerful source of evidence".

In the US, claim construction can be assessed by way of "intrinsic evidence" and "extrinsic evidence".  Intrinsic evidence is focused on what the patent (claims and specification) actually says, how the terms are used in the patent and prosecution file and the prior art cited therein.  Extrinsic evidence deals with scientific principles, meaning of technical terms, expert/inventor testimony, dictionaries and learned treaties (i.e. in our language - what the skilled person would understand the language to mean using his/her CGK).  Extrinsic evidence is a secondary source and, as Birss J summarized Phillips v AWH Corp 415 F.3d 1303 (Feb Cir 2005), "may be less significant than the intrinsic record in determining the legally operative meaning of the claim language...Care must therefore be taken...". 

So what is a Judge to do?  

Well, here is where validity comes into play.  Validity in a licence dispute in the English courts governed by English law concerning a US patent?  Surely not, you might say!  Validity can only be tried by the courts of the country of the patent.  The validity of US patents decided by US courts.  The validity of UK patents decided by UK courts.  But, and let's quote Birss J here at [4]:

"considerations about validity, to the extent they are relevant under the applicable law, may be taken into account in this court in resolving the question of claim scope and the fact those considerations arise does not undermine the jurisdiction of this court to decide the issue in this case (see Chugai v UCB [2017] EWHC 1216 (Pat) Henry Carr J)."

UCB accepted that validity does play a role under US law in relation to claim construction - what is referred to as the validity "tie breaker" and the caveat mentioned above.  If, having applied all tools of claim construction, the claim is still ambiguous, then the claim should be construed to preserve validity (see Phillips at pp1327-1329).  This validity analysis is not a "regular component of claim construction" and is limited to cases in which a claim remains ambiguous after all available claim construction tools (intrinsic and extrinsic) have been applied.  Birss J continued at [84]:

"While this principle is based on it being reasonable to infer that the USPTO would not knowingly issue an invalid patent, the applicability of the tie-breaker in any particular case depends on the strength of the inference that the USPTO would have recognised that one claim interpretation would have rendered the claim invalid and the USPTO would not have issued the patent assuming that to be the proper construction of the claim (Phillips at 1328)."

On that basis Claim 2 must be construed in the manner contended by Chugai (remember UCB's construction would cover the Queen prior art and anti-Tac antibody and thus would be invalid).

Mr Justice Birss made a little bit of an addendum to that finding as follows by revisiting the extrinsic evidence: 

"However I do not think the construction issue is in fact so insoluble that only a tie breaker would do. Taking the extrinsic evidence into account, the patent can be construed in a reasonably coherent way using Chugai’s approach provided one accepts that many of the statements which do support UCB are just not talking about the claims. They are talking about the wider work undertaken by the inventors. The claims and that wider description cannot be made to fit together on either party’s case. The claims claim a particular kind of antibody which has the beneficial properties but the claims would not be understood as trying to claim every sort of antibody within the widest technical descriptions in the document. In the specification the “invention” is just not the same thing as what has been claimed in these claims nor are all the preferred embodiments. That has particular significance for the references using an acceptor with any degree of homology and the point that the impact on affinity is likely to be the same whether the framework residues were conserved or changed to donor. On UCB’s case the claim would cover an antibody for which no changes were made at all but, despite the breadth of the description, and the suggestion that one way to go is to go for high homology, the idea of no changes at all is not suggested anywhere and in my judgment the person of ordinary skill in the art would not understand the specification to go that far. It is also true that in order to fall within the claim one would have to use a human framework with lower homology than would be needed on UCB’s construction but the specification by no means rules out using a relatively low homology acceptor. On Chugai’s construction the claims use language in the same manner as the person of ordinary skill in the art would be familiar with from the wider art."

So, with that - a victorious Chugai and a declaration that no royalties are due for any of their tocilizumab products manufactured after January 2016. 

Why should you read this decision?  

If you are at a loose end this Bank Holiday weekend, you could do worse than taking a gander at this decision.  It is worthwhile for two reasons:

1. It gives a nice summary of antibody technology and development and, given the apparent ambiguity in the terms used in the patent (claims and specification), some helpful lessons for patent drafting.  
2. It clearly and succinctly summarizes the US law on claim construction on the basis of evidence provided by the  US law experts for the parties -  Judge Paul Redmond Michel (retired) and Professor Donald Chisum - and the limits under US law to the use of prosecution history  (see [87]-[92]).

And with the rain starting to already fall in London (it is a Bank Holiday after all), the AmeriKat wishes you and yours a very happy and relaxing weekend.