Common law doctrines and patent infringement in South Africa: Villa Crop Protection (Pty) Ltd v Bayer Intellectual Property GmbH

Do common law doctrines such as the doctrine of (un)clean hands apply in the consideration of a patentee's claim for patent infringement in South Africa? This was the key question before South Africa's apex court, the Constitutional Court in Villa Crop Protection (Pty) Ltd v Bayer Intellectual Property GmbH decided in December 2022. 

Background

The case was about the trial court’s decision refusing Villa Crop’s application for leave to amend its pleadings (i.e., its defence). That refusal was upheld by the Supreme Court of Appeal which should have been the end of it unless Villa Crop could convince the Constitutional Court that it was in the interest of justice to hear the appeal or that the matter raised an arguable point of law of general public importance. [Under South Africa’s Constitution, the Constitutional Court’s appellate jurisdiction can only be activated if the matter is in the “interests of justice” or “raises an arguable point of law of general public importance which ought to be considered by that Court”].

...Patentee not the patent!

Bayer had sued Villa Crop for patent infringement. Villa Crop filed its defence in which it alleged the invalidity of Bayer’s patent and therefore sought to revoke Bayer’s patent on the grounds of section 61(1)(g) of the Patents Act – “that the prescribed declaration lodged in respect of the application for the patent contains a false statement or representation which is material and which the patentee knew to be false at the time when the declaration was made”.

Villa Crop subsequently filed an application for leave to amend its pleadings to introduce the common law special defence of (un)clean hands as a preliminary objection (so-called “point in limine”). The unclean hands in this case are allegedly Bayer’s – Villa Crop claims that Bayer’s patent which formed the basis of its infringement claim was obtained based on misrepresentations. Before obtaining its patent in South Africa, Bayer had applied to various authorities in the European Communities for Supplementary Protection Certificates (SPCs) to extend its patent rights. In those applications, Bayer represented that the active ingredient in its plant protection product, spirotetramat, was protected by its basic patent. However, in South Africa, and after these European applications were made, Bayer represented that spirotetramat was a novel invention. This representation was also made in the proceedings before the trial court (i.e., the Court of the Commissioner of Patents). Villa Crop’ claims that the representations made in support of the SPCs contradict those relied upon before the Court of the Commissioner of Patents, which means that Bayer approached the court with unclean hands.

Villa Crop’s application to the Constitutional Court was to (1) set aside the decision of the lower court refusing leave to amend and (2) grant it leave to amend its pleadings in the lower court. For the Constitutional Court to grant the reliefs sought, it first needed to grant Villa Crop leave to appeal. As stated above, leave to appeal is hinged on establishing that it was in the interest of justice and/or that the matter raised an arguable point of law of general public importance.

What the Constitutional Court said…

The Constitutional Court in a 6-3 majority, granted Villa Crop leave to appeal, upheld the appeal and set aside the decision of the lower court (the Court of the Commissioner of Patents) and granted Villa Crop leave to amend its pleadings by the introduction of its special plea of the defence of unclean hands.

On the issue of leave to appeal, the Constitutional Court held that the lower court made an error of law because it applied an incorrect legal standard (i.e., "the interests of justice") in arriving at its decision to refuse leave to amend. [The correct legal standard is permissiveness such that amendments are always allowed unless sought in bad faith or would cause an injustice that cannot be remedied by an award of costs]. In the Constitutional Court’s view, this error of law on the part of the trial court implicates the constitutional right of access to the courts and was therefore a constitutional matter that engages the jurisdiction of Constitutional Court. The error of law denied the defendant (Villa Crop) its constitutional right to “have a dispute resolved by the application of law before a court [which] entails the right of a litigant to frame the dispute that requires resolution, and in the present matter, to formulate a defence”. [Paras 64-65].

The Constitutional Court in deciding the issue of leave to appeal, also considered whether the matter raised an arguable point of law of general public importance. The minority decision (3 out of 9 justices) took the view that it did not because if the proposed special plea was allowed and was successful, it would allow a defence that does not attack the validity of a patent to destabilise and subvert the existing depositary patent system. The minority decision added that such was a reform that should be left to the Parliament. The majority decision which is the judgment of the Constitutional Court found that the matter raised an arguable point of law of general public importance in that it raised the question of how the standard of honesty expected of a patentee relates to their claims to enforce their patents under the Patent Act. The court distinguished section 61(1)(g) of the Patents Act from the application of the doctrine of unclean hands in the case pointing that while both were hinged on misrepresentations made in the patent application, the former (invalidity because of misrepresentation per s61(1)(g) of the Patents Act) was about the patent while the latter (unclean hands because of misrepresentation) was about the patentee.

On the issue of leave to amend pleadings to include the special plea, the Constitutional Court granted the leave sought holding that amendments are always allowed unless sought in bad faith or would cause an injustice that cannot be remedied by an award of costs. The Constitutional Court held that there was neither bad faith nor injustice established regarding Villa Crop’s application for leave to amend. 

The Constitutional Court pointed out that the challenge of abuse of process is aimed at the litigant (i.e., the patentee) and not the patent.

Comment

The Constitutional Court was categorical that patent rights and indeed other statutory rights are not immune from the application of common law doctrines such as abuse of court process and its implications. For this Kat, the fact that counsel for Villa Crop raised this plea is ingenious especially resulting as it were in the possibility of indirectly addressing the negative consequences of a depository patent system such as operates in South Africa. [In the absence of substantive examination, patents get granted sometimes for frivolous and commonplace inventions]. The Constitutional Court’s use of “interests of justice” and “arguable point of law of general public importance” was also an ingenious way to make judicial pronouncement that indirectly addresses the (negative) side effects of the patent depositary system in South Africa. [This could be yielding dividends already since in January 2023, there were claims that the Patent Registry issued a Practice Note cautioning applicants against filing South African patents that are copies of previously published patents in other countries).

However, whether Bayer’s hands if proven to be unclean, would be unclean enough to preclude it from prosecuting its patent infringement claim is an entirely different issue. According to the Constitutional Court, the power of courts to prevent an abuse of process is one that is “most sparingly used” and is to be exercised “with great caution”. In the circumstances, Villa Crop has its job cut out to convince the trial court that Bayer’s hands are so unclean as to amount to abuse of process and to warrant a dismissal of its claims. 

Will the misrepresentations relied upon by Villa Crop, even proven, amount to an abuse of process? If abuse is established, would it be enough to non-suit Bayer? 

If established that Bayer’s statement in its declaration for the South African patent was crucial to its patent grant and was false to its knowledge and that the falsity was also made on oath before the trial court (in the affidavit forming part of Bayer’s pleadings), would this combination make Bayer’s hands reach a fatal level of uncleanliness? As far as abuse of process goes, the focus and/or target is Bayer’s hands not the patent and/or its validity. We can only wait and see how this goes.

Stay tuned...