No "German injunction gap" expedition in Abbott v Dexcom global diabetes battle, as Mr Justice Mellor expresses "some regret"

Merpel gives the "German injunction gap"
factor some much needed side-eye

After the end of what English and Welsh litigators call the Trinity term (aka end of the term before the Court breaks for the summer holidays), Mr Justice Mellor was working overtime to deliver two decisions.  The second of these decisions, Abbott v Dexcom [2021] EWHC 2246, concerned Abbott's latest application to expedite a patent trial revoking four of Dexcom's patents.  Mr Justice Mellor dismissed the application "with some regret".  

A primary motivation for Abbott's expedition application was to obtain a UK court decision on the validity of four European patents in order to influence a German court considering infringement of the German EP equivalents and to prevent the problems of the "injunction gap".  The injunction gap arises in Germany because infringement is decided before and separately to validity.  As readers know, in the UK, a patent's infringement and validity are heard together so there is no infringement finding- and thus injunction - before the validity of the patent is determined.   Thus, a strategy that can be used in litigation is to get the UK court to say that the patent is invalid and/or not infringed and use that decision in the German infringement courts to cast doubt as to infringement and validity of the patent to try to avoid an injunction in Germany (and thus to avoid the period when an injunction could be granted between the infringement decision and validity decision).  But no such luck for Abbott, "regret[tably]".  Here is what happened.  

Background 

Abbott and Dexcom compete in the sale of glucose monitoring devices for diabetes.  Most UK diabetes patients monitor their glucose levels using the "fingerprick" method.  But around 30% of patients require the more sophisticated method called "continuous glucose monitoring" or CGM.   Abbott and Dexcom agree that once a patient gets used to a particular CGM system, they are likely to continue using that system or its upgrade.  CGM customers therefore stick with their product.  

Abbott has two CGM devices on the market - the Freestyle Libre 1 and Libre 2 - which Abbott claims is the top selling CGM product in the world, used by 3 million people in 50 countries.  Libre 2 was launched in October 2020.  Since 2017, Abbott has supplied these through the NHS and has secured a significant majority of the UK CGM market, as well as a significant number of users in Germany which is growing year on year.  With a more expensive product than Abbott's, Dexcom has a much smaller UK market share.  Both companies have some more sophisticated products in the pipeline for the UK - Abbott's Freestyle Libre 3 and Dexcom's G7 (which is said to be a lower cost, realtime CGM product).  The UK launch of the Freestyle Libre 3 is said to be confidential, but the G7 is intended to be launched this autumn 2021.  

In Germany, Abbott has already launched the Freestyle Libre 3.  They also have a major distribution hub for their Freestyle Libre products in Germany, which serves the whole of Europe (which includes the UK), Middle East and Asia Pacific.  Millions of Freestyle Libre units will pass through the German hub in 2021.  

The global litigation 

Both parties have a number of patents covering the CGM devices.  This UK action is one of a number of actions that have recently been started by the parties globally.  This followed the end of the parties peace agreement provided for by a settlement agreement following the last bout of litigation.  The peace contractually ended on 31 March 2021 and then officially ended on 30 June 2021 when Dexcom sued Abbot for infringement in the US.   

The next day, Dexcom filed infringement claims in Germany in Landgericht Mannheim (known to be a very fast infringement court) and Abbott commenced its own infringement claim in the US.   On 12 July, Abbott then issued its own infringement claims in Germany (involving four of its patents) and then filed UK infringement claims (on eight of its patents) and this revocation claim for four patents owned by Dexicom.  Dexicom is counterclaiming for infringement of its four patents and invalidity of eight patents.  In Germany and the UK, there are no claims for preliminary injunctions.  Dexcom has confirmed that it does not have any intention to seek interim relief.  

Abbott commenced its expedition application on 14 July to expedite its revocation claim of four of Dexcom's patents.  Abbott sought a listing of an 8-9 day trial floating no later than 28 February 2022, but argued for a trial in January 2022.  The Patents Court tries to have trials heard 12 months from the start of the case, i.e. in this case around 12 July 2022.  Thus, the February 2022 date would be considered "expedition" being 6/7 months from the start of the case, and requiring an application for expedition.

The law

Normally, when considering whether to expedite a trial, the Court will consider four factors that were set out by the Court of Appeal in Gore v Geox [2008] EWCA 622 being:  (1) whether the applicants have shown good reason for expedition; (2) whether expedition would interfere with the good administration of justice; (3) whether expedition would cause prejudice to the other party; and (4) whether there are any special factors.  Expedition applications and these principles are considered against the backdrop of the fact that the "courts are busy and that expediting one case will often slow the progress of others", but there is no closed class of cases or circumstances where expedition will be "just and appropriate".  However, "expedition will only be justified on the basis of real, objectively viewed urgency" and "commercial certainty needs to be evaluated in its proper context" (James Petter v EMC Europe [2015] EWCA Civ 480).

In the context of expedition of patent trials to avoid the German injunction gap, Mr Justice Birss (as he then was) in Nicoventures Trading Limited v Philip Morris & or [2020] EWHC 1594 added three points to the Gore factors:

1.  Prove your application to justify jumping the queue:  That there are a large number of litigants in the Business and Property Courts (which includes the Patents Court) who would like their trial earlier.  For there to be "queue-jumping...there has to be a good reason for it" applying the relevant principles.  In essence, the applicant has to prove their application, they cannot just expect the court to speed up the trial.  See [111].

2.  Commercial certainty is not enough:  "[A] mere wish for commercial certainty is not enough to justify expedition." Again, the applicant has to prove the "good reason" in evidence according to the principles. See [12].

3.  German "injunction gap" is not enough on its own:  The German injunction gap is a factor which the court will take into account, "but it is never enough on its own".  See [13], [21].  On this third point, Mr Justice Birss (as he then was) provided an explanation as to the German injunction gap and the interaction with UK patent proceedings at [14]-[19] of his decision, summarizing previous decisions (HTC v Apple, ZTE, v Ericsson, Garmin v Phillips) where Mr Justice Arnold (as he then was) consistently expressed the view that the presence of a possible German injunction gap "was a factor to take into account".  Mr Justice Henry Carr in Takeda v Hoffmann-La Roche [2018] EWHC 2155 held that parties should at least have the opportunity to obtain a UK court judgment which may have some influence on a German infringement court because, by a decision of the Bundesgerichtshof, dated 15th April 2010, Xa ZB 10/09, Roll-Forming Machine, the Federal Supreme Court held that the German courts "are required to consider decisions rendered by organs of the European Patent Office and courts in other EPC contracting states and pertaining to a largely similar issue and, where appropriate, address the reasons leading to a diverging result in the earlier decision. Insofar as points of law are concerned, this also applies, for instance, to the question of whether the subject-matter of a property right was obvious in the light of prior art."  Similarly, Henry Carr J said, "[i]f I were hearing an infringement case in the UK, I would be very interested to see what decision the German courts had reached."

 

Later in the judgment at [48], Mr Justice Mellor in this case neatly summarized the touchstone for expedition as being that "reasons in favour of expedition must be sufficiently powerful to outweigh any interference with the administration of justice, prejudice to others and any special factors against expedition."

The impact of the injunction gap in Germany on Abbott

With Dexcom's German infringement claims brought in the quick infringement courts in Mannheim, and trials scheduled to be heard in Germany in March/April 2022, Abbott sought expedition of the UK revocation case to be heard in February 2022.  If Dexcom's German infringement claim succeeds then the following can happen:  (1) Abbott can request that the infringement proceedings are stayed pending the decision in their nullity (validity) case; (2) if there is no stay, then an order for an injunction generally follows; (3) if an injunction is granted, Dexcom must serve the judgment and put up a bank guarantee which is designed to cover Abbott's losses (usually profits) for a period of 18 months if the injunction is later lifted.  An injunction would remain in force until the relevant patent is held invalid - either in the nullity action before the German Federal Patent Court or in EPO opposition proceedings.  Abbott estimates that there could be an injunction in Germany as early as the second half of April 2022, 6 weeks after the first hearing date.  

All four of the Dexcom patents and two of Abbott's patents are still in the EPO nine-month opposition window.  Under German law, this means that nullity (invalidity) proceedings cannot be filed in Germany until either the opposition deadline has passed without any opposition being filed or, if oppositions are filed, the conclusion of the opposition proceedings (including appeals).  In order to be able to request a stay of an injunction in Germany, Abbot will have to file oppositions in the EPO to each of the four Dexcom patents in August or September 2021.  EPO oppositions to a first instance decision usually take around 18 months from the end of the nine-month opposition period.  Acceleration of EPO oppositions is possible where there is a pending national court infringement action and can cut the time down to 13 months.  

Thus, doing the math(s), if an injunction is granted in April 2022 and Abbott can't file an opposition which will give them the lever to request a stay of an injunction until August/September, then Abbott could be forced off the German market for 4-5 months.  This would have a severe impact on Abbott's CGM business not only in Germany, but elsewhere given that one of Abbott's big distribution hubs is in Germany.  

Mellor J was prepared to assume (even absent evidence) that the cost of moving Abbott's distribution hub, even for its Freestyle products, would be significantly costly.  Although, he also acknowledged that "any responsible business would make suitable contingency plans so that injunctions in Germany would only affect supplies in Germany."  

Mr Justice Mellor also made a comment about the "unfairness" of the German injunction gap as follows at [28]:

"In spite of the available procedures in Germany (summarised in paragraph 20 above), in theory the injunction gap problem in Germany is capable of producing some very unfair results.  If a patent is pretty clearly invalid, there is no problem because the infringement court grants a stay.  If a patent is weak but no stay is granted (because invalidity is not clear enough) and ultimately is declared invalid, it may suit a competitor to put up the required security.  As I understand matters, the security does not amount to a cross-undertaking in damages.  The competitor may calculate that he can inflict far more damage on his rival through an injunction than the value of the security he will lose.  Whether such unfairness can occur in practice lies in the hands of the German courts, who I am sure are aware of the scourge of weak patents which turn out to be invalid when scrutinised."

The impact of the injunction gap in Germany on Dexcom

It is expected that Abbott will add another four patents to their already four patents which they have counterclaimed for infringement in Germany.  Of those 8 patents, 2 are still in the EPO opposition period and 2 are already opposed.  The remaining 6 are free to be challenged for validity in the German courts.  Thus, for four patents, Dexcom face the same injunction gap problem in Germany as Abbott.  However, there was no evidence that Dexcom has a similar major distribution hub in Germany.  As Mellor J concluded "one possible outcome is that both leading CGM products are injuncted and kept off the German market for a considerable period".  

Abbott's application 

Mellor J first started by assessing how much was involved in the trial.  He concluded that this was a category 3 technical complexity case (1 being the lowest and 5 being most technically complex case).  There were four patents with 13 different pieces or prior art and insufficiency attacks.  The technology "is not complex and the claims are expressed at a general level".  There would likely be 2 expert witnesses.  Thus, Mellor J agreed with Abbott that the estimate of 1.5 days pre-reading, 6 days hearing and a day off for writing closing submissions was sufficient.  

He then turned to Abbott's argument that Dexcom's patents are clearly invalid and that expedition was required to provide certainty so they could launch their new Freestyle Libre 3 product in the UK and so that the UK decision could be used to prevent Dexcom interfering with Abbott's European market.  Dexcom disagreed that expedition was warranted but even if it was then all trials concerning the 12 patents at issue between the parties should be expedited so there was no commercial asymmetry.  This asymmetry point was one which Mellor J found to be a fair one.    

Mr Justice Mellor then explained that before the hearing, he has circulated a possible solution to the parties.  Over to the Judge at [40] as follows:

"I asked each side to consider whether they would be prepared to give an undertaking (the precise wording to be considered) along the following lines, namely, not to seek or enforce injunctive relief in Germany (or elsewhere in Europe, including the UK) on any EP until after validity of that EP (in whatever designation) had been considered and determined by a first instance court."

Abbott confirmed they would be prepared to provide the undertaking on the condition that Dexcom reciprocated.  Dexcom raised some points as summarized by the Judge at [44] including the need to get all relevant companies (including exclusive licensees who may be in different countries) to sign the undertakings, the undertakings needing to extend to customers of the parties (not just parties themselves), the universe of patents would need to be identified, etc.  Mr Justice Mellor did not consider these points to be insurmountable.  But ultimately, neither Dexcom or Abbott could agree mutual undertakings.  The judge found this to be "unfortunate because this seemed to be an ideal opportunity by which both sides could avoid the problem of the injunction gap in Germany".   

After Mellor J's undertaking proposal, Dexcom proposed a simpler undertaking which would essentially carve out from a German enforcement action any supply from Abbott's German distribution center that was intended to the UK. 

Turning to the Gore factors Mellor J held as follows:

1.  Would expedition interfere with the good administration of justice?  No.  Yes, there would be queue jumping, but given that, as a category 3 case, the case could be assigned to a Deputy Judge "the interference with the administration of justice would not, in my view, be significant" in that event.  The judge also noted that the trial list was very full because a number of patent trials have already been expedited.  Merpel wonders, therefore, how good a job the courts are doing in ensuring only the most deserving cases get expedited?

2.  Would expedition cause prejudice to Dexcom?  Yes, but the prejudice to Dexcom for a trial in February/March 2022 (as opposed to Abbott's original target of January 2022) "would be minor, particularly in view of the extensive litigation on which Dexcom has decided to embark which they would have known was gong to result in retaliatory action from Abbott." [52]

3.  Good reason for expedition and other special factors:   No good reason for expedition.  Although Abbott framed their application for expedition on the basis of achieving commercial certainty in the UK before its intended launch, Dexcom had confirmed that they would not be seeking a preliminary injunction should Abbott launch "at risk".   Further, as the Judge noted, although "risk remains, due to the natural uncertainty in litigation, Abbott might well have assessed the risk as low because of their view on validity.  If so, this would tend to indicate that commercial certainty in the UK is not a particularly powerful reason for expedition." Which left, unfortunately, the lone reason of the German injunction gap.  Given Dexcom's proposal regarding Abbott's distribution center, Abbott's remaining justification for expedition boiled down to:  (a) Abbott's desire to protect its German market; (b) Abbott's desire to protect distribution to other countries from its German hub.  But, as the case law repeatedly stated, this reason "is not a strong factor and cannot justify expedition on its own". 

Mr Justice Mellor explained at [57]-[58] the following:

" The situation under consideration in this case is a good example as to why.  The UK court is not here to police European patents across Europe which may be perceived to be weak and may ultimately be proved to be invalid.

There is a further special factor against expedition.  This is the asymmetry which an order for expedition would create - thereby Abbott would secure protection against the injunction gap in Germany, but Dexcom would not.  This is why I specifically asked Abbott if they would be prepared to offer the undertaking I suggested (assuming I was prepared to order expedition) but without a reciprocal undertaking from Dexcom, but they were not.

...Whilst in the UK Abbott would gain comfort from the UK first instance court confirming their view as to the invalidity of the Dexcom patents, this together with the primary reasons just mentioned, does not provide a sufficiently good reason for expedition, particularly in view of the special factor which I have just mentioned.  Therefore, on the basis of the simpler undertaking offered by Dexcom, I dismiss this application."

The Judge closed his judgment with the following:

"I reach this conclusion with some regret, but the authorities are clear and they do not allow me to assist Abbott in this instance."

Comments and mew-sings

So what does this mean?  It means that an appellate court would have to opine on the "German injunction gap" factor for there to be a chance for this factor to be elevated in status in the assessment of expedition.   Is there a realistic chance of this given the increasing competition between the UK and German courts and making the Patents Court an attractive venue?  However, where there is no commercial reason or factor for the need of expedition as it relates to the UK market, the AmeriKat queries whether as a pure matter of law an appellate court will be attracted to increasing the status of this factor in and of its self.  Indeed, Merpel is struck by the comment about the "UK court is not here to police European patents across Europe".  Merpel wonders how that squares with the quasi-policing of non-UK patents in other areas of patent law, such as in the determination of global FRAND licences.  Is there a unifying philosophy as to the role of the UK courts in extraterritorial patent concerns? Purr-haps a good topic for a dissertation.