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9 November 2017

Actavis v Lilly Supreme Court Decision – the impact on intellectual property

Since early summer, the European IP profession has been digesting the landmark decision of Actavis v Eli Lilly which was handed down by the UK’s Supreme Court in July. The decision covered a number of issues including direct infringement in the UK, the effect of prosecution history on claim interpretation/scope, direct infringement in France, Italy, and Spain, as well as indirect infringement. Here, we focus on the specific issue of direct infringement. Specifically, the two main issues on which the Supreme Court’s decision focusses: 1) distinguishing between claim interpretation and the scope of protection afforded by the claims, and 2) assessing infringement of “equivalents”.

The case concerns pemetrexed, which is a known chemical having therapeutic effects on cancerous tumours, but which can have damaging and sometimes fatal side effects. As a result of these adverse side effects, it was rarely used in practice as an anti-cancer drug. Eli Lilly discovered that these negative side effects could be avoided if pemetrexed is administered in combination with vitamin B12, and were granted a patent (EP 1 313 508) which contained a claim to the use of pemetrexed disodium in the manufacture of a medicament for use in combination with vitamin B12 for the treatment of cancer.

Actavis sought a declaration of non- infringement in respect of three pemetrexed products which they intended to launch prior to expiry of Eli Lilly’s patent. Actavis was of the opinion that its three products (pemetrexed diacid, pemetrexed ditromethamine, and pemetrexed dipotassium) fell outside the scope of a claim limited to pemetrexed disodium.

At the High Court, it was held that none of Actavis’ products would directly or indirectly infringe the patent. The Court of Appeal agreed with the High Court with regards to direct infringement, but found indirect infringement. In contrast, the 1 Supreme Court found all three Actavis products directly and indirectly infringe the claims. It is the finding by the Supreme Court of direct infringement, in contrast to both the High Court and the Court of Appeal, that has caused such interest in this case.

The case law directing the UK’s approach to claim interpretation/ claim scope has developed over a number of years starting with the pioneering Catnic decision and apparently being settled in the House of Lord’s decision Kirin-Amgen Inc v Hoechst Marion Roussel  Ltd [2004] UKHL 46 (‘Kirin-Amgen’). With the Actavis v Lilly Supreme Court decision, the UK’s approach has been significantly altered. One of the aims of this realignment set out in the recent Supreme Court decision is to bring the UK more into line with other European jurisdictions. The extent to which this has been achieved will be tested in due course as courts in other European countries hand down future infringement decisions, and we wait with interest to see if they follow a similar approach set out in this Supreme Court decision.

The Supreme Court decision highlights the importance of Article 69 EPC 2000, which sets out the extent of protection conferred by a European patent, in addition to The Protocol on the Interpretation of Article 69 (the Protocol) in assessing the scope of protection afforded by the patent. According to Article 1 of the Protocol, the extent of protection conferred by a European patent should combine fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties.

Article 2 of the Protocol explicitly refers to equivalents and states that for the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims.

Having considered the Protocol, the Supreme Court concludes that assessing infringement of “variants” is best approached by addressing two issues:

  1. does the variant infringe any of theclaimsasamatterofnormal interpretation; and, if not,
  2. does the variant nonetheless infringe because it varies from the invention in a way or ways which or areimmaterial?

Issue (i) is broadly in line with the previous approach as set out in the House of Lord’s decision Kirin-Amgen which until now has been followed by UK courts. Issue (ii) is not altogether new but the way this Supreme Court decision requires us to answer the question is different to the approach previously adopted. In particular, it involves not merely identifying what the words of a claim would mean in their context to the notional addressee, but also considering the extent, if any, to which the scope of protection afforded by the claim should extend beyond that meaning. This is a distinct departure from the previous approach outlined in Kirin-Amgen in which the scope of protection afforded by the claims was based primarily on what the skilled person would understand the claims to mean. Indeed, the Supreme Court decision went out of its way to criticise the approach adopted in Kirin-Amgen.

The Supreme Court stressed that there should be a clear distinction between the issue of claim interpretation and the issue of scope of protection afforded by the claims. The decision stressed that the assessment of infringement does not involve merely identifying what the words of the claim would mean in their context to a notional addressee. The Supreme Court justified this by highlighting that the Protocol to Article 69 EPC contains separate Articles 1 and 2, with Article 1 being concerned with the interpretation of the claims, Article 2 being concerned with equivalents. The Supreme Court reasons that the two Articles must therefore relate to different concepts. Hence, its conclusion that assessing claim interpretation and assessing the scope of protection afforded by the claims should not be conflated.

On the face of it, this would seem to be consistent with the Protocol to Article 69 EPC, but at the same time it appears to raise for the first time the possibility that a claim in the UK can be construed differently to the scope of protection afforded by the same claim. Does this mean that the scope of a claim can be different depending on what is being assessed, i.e. novelty or infringement? This aspect of the decision is causing great debate within the UK patent profession and to date the debate has only raised more questions that it has answered.

As well as challenging the overall approach adopted by the UK to the assessment of infringement, the Supreme Court re-formulated the UK’s Improver/Protocol questions relevant to the assessment of  infringement by equivalents. Previously, UK courts had tended to follow the so-called “Improver/ Protocol” questions designed to provide guidance when assessing alleged infringement of variants. These Improver/Protocol questions have been extensively used in the UK since 1990.

Similar tests have been adopted in other EPC jurisdictions, such as France, Germany, Italy, and Spain. However, the Supreme Court found that they did not fully agree with the three Improver/Protocol questions and therefore set about tweaking each of the three questions. In particular, the Supreme Court ” found that the Improver questions did not afford fair protection for the patent proprietor, as required by Article 1 of the Protocol. In view of this, the Supreme Court reformulated the three Protocol questions as follows:

  1. Notwithstanding that it is not within the literal meaning of the relevant claims(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention, i.e. the inventive concept revealed by the patent?
  2. Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention?
  3. Would such a reader of the patent have  concluded that the patentee nonetheless intended that strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention?

In order to establish infringement in a case where there is no literal infringement, a patentee would have to establish that the answer to the first two questions was “yes” and that the answer to the third question was “no”. Applying these newly formulated questions, the Supreme Court found Actavis’ products to infringe Eli Lilly’s patent.

One aspect of the reformulation of the Protocol questions that was critical in overturning the Court of Appeal decision concerns the reformulation of question 2. In particular, it is critical that the new question 2 imparts the skilled person with the knowledge that the variant achieves substantially the same result as the invention, before asking if it would have been obvious that the variant achieves the same result in substantially the same way.

Applying the old Protocol questions, the Court of Appeal considered whether it would have been obvious at the publication date of the patent that the variant would have the same material effect as what was claimed. In the pharmaceutical field in particular, the effect of even small modifications to a small molecule compound can be very unpredictable. Even the effect of exchanging one salt form for another is not predictable. Indeed, the pharmaceutical industry routinely investigates different salt forms in order to identify the one with the most useful properties. Taking into account this unpredictability, the Court of Appeal did not consider it obvious at the publication date of the Eli Lilly patent that Actavis’ proposed products would achieve the same material effect as the claimed disodium salt.

Question 2 was therefore answered “no” by the Court of Appeal and therefore did not find direct infringement by the Actavis products.

In contrast, the Supreme Court applied the new Protocol questions in which question 2 now involves providing the skilled person with the knowledge that the proposed Actavis products achieve substantially the same result as the claimed disodium salt before asking if it would have been obvious that the variant worked in substantially the same way. With the knowledge that the variants work, the unpredictability associated with small modifications in pharmaceutical products is no longer an issue. Knowing that the variants worked, it would have been obvious that they worked in substantially the same way as the claimed disodium salt. The Supreme Court therefore answered Question 2 “yes”, meaning that it reached a different conclusion to the Court of Appeal.

The Supreme Court also went on to decide that the reader of the patent would not have concluded that the patentee intended strict compliance with the literal meaning of the relevant claim was an essential requirement of the invention. In this context, the Supreme Court highlighted four points.

First, although the language of the claim is important, consideration of the third question does not exclude the specification of the patent and all the knowledge and expertise which the notional addressee is assumed to have. Second, the fact that the language of the claim does not on any sensible reading cover the variant is certainly not enough to justify holding that the patentee does not satisfy the third question. Third, when considering the third question, it is appropriate to ask whether the component at issue is an “essential” part of the invention, but that is not the same thing as asking if it is an “essential” part of the overall product or process of which the inventive concept is part. Fourth, when considering a variant which would have been obvious at the date of infringement rather than at the priority date, it is necessary to imbue the notional addressee with rather more information than he might have had at the priority date.

Factors influencing the Supreme Court’s decision include:

  • The description of the patent includes passages describing the invention in the context of “anti- folates” and “anti-folate drugs” as opposed to the more specific compound “pemetrexed disodium”.
  • The skilled person would “understand that the reason the claims were limited to the disodium salt was because that was the only pemetrexed salt on which the experiments described in the specification had been carried out”.
  • The proprietor attempted to claim salts of pemetrexed (in general) the EPO refused citing the lack of basis in the application asfiled.

The relative weighting of these factors is not elaborated on in the Supreme Court decision. However, in view of all the circumstances, the Supreme Court held that a reader of the patent would have concluded that the patentee did not intend strict compliance with the literal meaning of the claims.

The result is a significant shift in the UK’s approach to assessing direct infringement. For the past decade, patent attorneys, litigators, patent proprietors, and third parties have looked to Kirin-Amgen to assess infringement. Established practice was that one must adopt a “purposive construction” in order to determine “what the skilled person in the art would have understood the patentee  to be using the language of the claim to mean”. In fact, Kirin-Amgen appeared to caution against the prospect of a claim covering equivalents and even stated that “we have article 69 [EPC] which, as it seems to me, firmly shuts the door on any doctrine which extends protection outside the claims”. The law was therefore clear – a general doctrine of equivalents did not exist in the UK.

The Supreme Court has now effectively reversed Kirin-Amgen and has introduced a doctrine of equivalents into UK patent law. A doctrine of equivalents essentially allows a patent proprietor to extend their monopoly beyond the literal meaning of the claims of a patent. It  is designed to prevent third parties from making insignificant changes to a product/process, resulting in a mere alternative which falls outside the literal meaning of the claim.

Patent proprietors will certainly welcome this development – the scope of protection conferred by a patent in the UK might now be broader than previously thought. On the other hand, there are issues that a doctrine of equivalents can introduce. One issue was highlighted in Kirin-Amgen: “once the monopoly has been allowed to escape from the terms of the claims, it is not easy to know where its limits should be drawn”. Determining the limits of a patent’s scope of protection is less clear when considering equivalents, and consequently providing third parties with freedom-to-operate advice will become more difficult.

The Supreme Court decision stresses that the revised Improver/Protocol questions remain only guidelines and not strict rules. We wait with interest how the lower courts interpret and apply this new approach. How they do will significantly affect how UK law in this area develops. We also wait to see what conclusions are reached by the courts of other European countries. For example, a new judgment from the Higher District Court Dusseldorf, Germany, is currently awaited by the same parties; and following the UK decision the Court of Milan, Italy decided that products similar to the Actavis products do not directly infringe Eli Lilly’s patent, although this decision in Italy is still appealable.

Any developments will be reported in future editions of Inside IP or via the Venner Shipley website.