[1996] F.S.R. 863
1996 WL 1091666 (Ch D (Patents Ct)), [1996] F.S.R. 863, (1996) 19(11)
I.P.D.
19,098
(Cite as: [1996] F.S.R. 863)
C. Corporation v. E. Medical Ltd and Others
In the Patents Court
Pat Ct
Before: Mr Justice Walker
3 July 1996
ROBERT WALKER J.:
The parties to this action are all pharmaceutical companies. The plaintiff,
C. Corporation (which I will call "C.") is an American company based in or
near Oakland, California. The first defendant, E. Medical Limited (which
I will call "E.") is an English company and a subsidiary of the second
defendant M. Plc, also an English company (which I will call "M."). The
third defendant S. K. B. B. SA (which I will call "SKBB") is a Belgium
company based at Rixensart in Belgium.
E. is the registered proprietor of European Patent U.K. No. 162639 as
assignee of the W. F. Limited, the original proprietor, with a priority date
of May 12, 1984. That is the patent in suit. It designates, among other
countries, the United Kingdom, Belgium, the Netherlands and Italy.
The first claim under the patent is "an acellular or purified Bordetella
pertussis antigen characterised by...", and then various technical features
are specified which include a reference to a molecular weight of between
67,000 and 73,000. I mention that point in particular because there
are various references in the correspondence to a 69 kiloDalton antigen
and that is the point there being referred to. Bordetella pertussis is
better known to the English speaking world as whooping cough or to
Francophones as la coqueluche.
SKBB is an exclusive licensee with worldwide rights under the patent.
There is a formal licence agreement dated September 14, 1994 which,
in a slightly redated form, is in evidence. C. also produces an accellular
pertussis vaccine. It is, I think, manufactured not only in the United
States, but also in Italy by an Italian company which is a subsidiary of
C., Bi. SPA (which I will call "Bi. Italy"). The evidence of Dr Dino Di.,
who is the President of C. Bi. Company, another C. subsidiary, and is
also a director of Bi. Italy, is that vaccines manufactured by Bi. Italy in
two forms as A. and as A. DTP were launched on the Italian market in
September 1993 and August 1995 respectively and that C. intends to
obtain market authorisation for both forms of the vaccine in the United
Kingdom. Moreover, the clinical trials in the United Kingdom have already
commenced for that purpose. They commenced, it appears, in April 1996.
The first form of C.'s vaccine is a single-component vaccine against
whooping cough alone. The DTP form is a three-component vaccine
against protection against diphtheria, tetanus and whooping cough (or
pertussis). These developments are plainly unwelcome to the defendants
(I shall come in more detail to the evidence on that) and there has
already been some litigation in Italy.
On April 1, 1996 C. commenced two sets of proceedings in England,
first a petition, Chancery 1996 C No. 2160, to which E. as registered
proprietor is the only respondent, seeking revocation of the patent in
suit and, second, this action. Chancery 1996 C No. 2161 commenced by
writ and statement of claim, with parties as I have mentioned. In this
action C. seeks, not under section 71 of the Patents Act 1977, but under
the inherent urisdiction, a declaration that neither form of C.'s acellular
vaccine, that is neither the single-component pertussis vaccine nor the
three component DTP vaccine, infringes the patent in suit. E. has put in a
defence and counterclaim for a declaration that C.'s vaccines do infringe
the patent. M. has put in a defence pleading that the statement of claim
discloses no cause of action against it.
By this application, which is made by notice of motion dated May 7, 1996,
SKBB seeks an order that service of the writ on it should be set aside
and that SKBB should be struck out as a defendant on two alternative
grounds. First, that this is not a case in which the write may be served
outside the jurisdiction under the Civil Jurisdiction and Judgements Act
1982 (which I will call "the 1982 Act") or, secondly, that the statement of
claim discloses no reasonable cause of action against SKBB or is frivolous,
vexatious or otherwise an abuse of process. Alternatively, SKBB seeks an
extension of time for its defence.
Under the Brussels Convention, the amended text of which is set out in
Schedule 1 to the 1982 Act, Article 6(1) by way of qualification of the
general "defend at home" principle in Article 2 provides that:
A person domiciled in a Contracting State [in this case SKBB being
domiciled in Belgium] may also be sued:
where he is one of a number of defendants, in the courts of the place
where any one of them is domiciled.
As I have mentioned, E. and M., being English companies, are domiciled in
the United Kingdom.
I should also perhaps note at this point, before turning to the facts in a
little more detail, that Article 16 of the Brussels Conventions provides
for exclusive jurisdiction in some cases, regardless of domicile, so as
to override the more general rules. Article 16(4) gives jurisdiction in
proceedings concerned with the registration or validity of patents to the
courts of the contracting state in which the registration has taken place.
Article 16(4) does not apply to infringement proceedings. It is reasonably
clear that C.'s petition would fall within Article 16(4) (if anything turned
on that) but that this action does not, especially since I am told that
E. is now seeking to amend its counterclaim to plead that C.'s present
clinical trials in the United Kingdom are actual infringements and E. is
seeking to claim an injunction and damages in respect of those alleged
infringements.
The relief which C. seeks against SKBB in this action is, as I have made
clear, purely declaratory. The proper parties to proceedings for declaratory
relief, assuming those proceedings not to be wholly misconceived,
represent a question which cannot be decided in a purely mechanical way,
but which requires the court to form a judgment as to the weight and
substance of the parties' interests and generally as to what is in issue.
That appears from a large number of authorities, many of which are
referred to in the judgment of Aldous J. in Biogen Inc. v. M. PLC [1993]
R.P.C. 475, a case on which Mr Mark Platts-Mills, Q.C., who appears for
SKBB, strongly relies, but which Mr David Kitchin, Q.C., who appears for
C., seeks to distinguish.
I must, I think, say quite a lot at different points in this judgment about
the case of Biogen v. M.. It was a case where Biogen, the registered
proprietor of two European United Kingdom patents in respect of hepatitis
B vaccine brought infringement proceedings against M. on the ground that
it had imported an infringing vaccine and had marketed it in the United
Kingdom. M. counterclaimed against Biogen for a declaration that M.'s
vaccine did not, or would not, infringe any valid claim of the patents in
suit, adding Smith Kline Beecham Plc (which I will call "SKB UK") as a
defendant to the counterclaim on the basis that it controlled the patents
in suit. M. then applied for leave to add SKBB, the Belgium company, as
a third defendant to the counterclaim. SKBB resisted that and SKB UK
sought to strike out the allegation of its control of the patents in suit. That
allegation was in paragraph 10 of the defence and counterclaim which was
sought to be amended so as to refer to SKBB also. The particulars under
the proposed new paragraph 10 of the defence and counterclaim are set
out fully at pages 480 to 481 of the report.
That was the context in which Aldous J., having referred to the decision
of the Court of Appeal in Molnlycke A.B. v. Procter & Gamble Ltd [1992]
R.P.C. 21, and in particular what had been said by Dillon L.J. at page 35,
continued at page 488:
That reasoning is not directly applicable to the facts of the present case
because M. only seeks a declaration against the SKB companies. M. does
not have a cause of action against the SKB companies and Biogen which
if resolved in its favour would allow it to choose which company it would
enforce the judgment against. Thus the SKB companies' application to
strike out does not amount to dictating to M. which company should be
sued. The dispute is whether the discretionary relief of a declaration
would be appropriate in a case where the substantive dispute of validity
and infringement will be resolved between Biogen and M. and the only
interest of M. in joining the SKB companies is discovery.
Then after referring to Ord. 15, r. 16 of the Rules of the Supreme Court,
Aldous J. continued at pages 489 to 490, and I must, I think, quote a lot
of the judgment at this point:
It is settled law that the power of the court under the rule is confined
to declaring contested legal rights. As was pointed out by the Court of
Appeal in Re Clay, Clay v. Booth [1919] 1 Ch 66, a person cannot obtain
a declaration unless a claim of right has been made against him. An
illustrative case in the patent field where no claim had been made in
North Eastern Marine Engineering Co. Ltd. v. Leeds Forge Co. Ltd. (1906)
23 R.P.C. 96. No declaration was made in that case.
The power to make a declaration is a discretionary power which will only
be involved in appropriate circumstances to settle appropriate questions.
In particular, I adopt the words of Lord Dunedin, approved by Viscount
Kilmuir. L.C. in Vine v. National Dock Labour Board [1957] A.C. 488 at
500:
"The question must be a real and not a theoretical question; the person
raising it must have a real interest to raise it: he must be able to secure a
proper contradicter, that is to say, someone presently existing who has a
true interest to oppose the declaration sought."
I would add that that quotation is a verbatim quotation from what Lord
Dunedin said in the Russian Commercial & Industrial Bank v. British Bank
for Foreign Trade [1921] 2 A.C. 438 at 448.
I need not read the next paragraph and I go on with the next very
important paragraph:
I have come to the conclusion that amendment of paragraph 10 and the
addition of SKB Biologicals [SKBB] should not be allowed. Further, SKB
PLC [SKB UK] paragraph 10 as served, and the request for a declaration
should be struck out. Although there is a pleaded claim of right by the
SKB companies, the dispute is theoretical. The issue of infringement and
validity will be decided in the action as constituted. The SKB companies
will be bound by that result. The SKB companies do not have any claim in
damages against M. and their interest is in the protection that injunctive
relief will bring. Whether or not such relief is appropriate is the issue
that will be decided between Biogen and M.. The theoretical nature of
the dispute between M. and the companies is illustrated by the fact that
whether or not the declaration is actually ordered is irrelevant to M. and
the SKB companies. Provided the SKB companies give discovery, M.'s
purpose in seeking a declaration will in theory and in practice be achieved.
That is different to other proceedings where, as in the Molnlycke case, the
plaintiff has enforceable relief. There is nothing wrong in choosing to join
a party to an action for discovery provided that the person choosing has a
real legal interest to do so.
In the present case, there is no such real interest as the declaration,
if made, will not provide M. with any right or advantage not available
to them at the moment. M. do not need nor want the declaration to be
granted save as a stalking horse for discovery.
I also believe it is relevant that M. seek to bring into the proceedings
[SKBB] which is a foreign company. They believe, and I will assume
rightly believe, that they do not need leave of the court to serve the
proceedings on [SKBB]. Even so, I do not believe it right that foreign
companies should be made to submit to the jurisdiction of the court
unless there is a genuine and real dispute between the company and
the plaintiff. There is no such dispute in this case. The only dispute is
whether [SKBB] should give discovery. It is frivolous and vexatious to
bring proceedings against a foreign company where the plaintiff has no
real interest in the relief claimed and no interest in deciding the pleaded
issues as between himself and the foreign company.
It seems to be nowhere stated in the report of Biogen v. M. what precisely
was the interest of what Aldous J. called the SKB companies in that case.
However, it seems a reasonable inference, as Mr Platts-Mills on my direct
invitation and on instructions has confirmed to me, that in the Biogen
case the interests of SKBB and SKB UK were respectively as exclusive
licensee of the patents in suit and as holding company of the exclusive
licensee. When Aldous J. said "the SKB companies do not have any claim
in damages against M.", he must, I think, have meant that no such claim
was actually being made. It would on the basis that it was an exclusive
licensee have been open to SKBB to bring such a claim under section 67
of the Patents Act 1977.
In view of what Aldous J. said about theoretical disputes and real
interests, I must say rather more about the facts as they appear from
the affidavit of Mr David Roberts, the Head of the Corporate Intellectual
Property Department of SKB UK and its affiliates, including SKBB, from
the affidavit of Dr Di. which I have already referred to, and from the
exhibits to those two affidavits. Mr Roberts' affidavit exhibits the redacted
licence between E. and SKBB. Clause 6 of the licence agreement deals
in some detail with patent prosecution and litigation. I need not read the
whole clause. Its general effect, as one would expect, is to provide for
which party is to have primary responsibility for any litigation of various
types that may ensue, but with a general obligation of co-operation
and assistance and provisions as to the ultimate incidences of costs in
litigation of various types. C.'s claim seems to fall within clause 6(4) of
the agreement, that it claims to be defended primarily by E., and E.'
counterclaim sees to fall within clause 6(5), under which E. has a right but
no duty to claim and SKBB has a right but no duty to join in the claim.
There is evidence in the form of exhibited correspondence and also an
article in a Belgium journal consisting of an interview with Mr Jean St., the
Senior Vice-President and General Manager of SKBB, that SKBB has for
some time regarded itself as in dispute, and potentially close to litigation,
with C. over C.'s plans for marketing its pertussis vaccines in Europe.
Although the interview reports more colourful language. I prefer to quote
Mr St.'s own letter dated October 2, 1995 to Dr Di.. Towards the end of
the letter Mr St. said:
For its part, Bi. has aggressively claimed in the press superiority of its
vaccine over other 69 kD containing vaccines. This appears to SKBB
not to be supported by any credible scientific data. Moreover Bi. has
also released to the media its intention to build new facilities for the
manufacture of its acellular pertussis vaccine and subsequent sale thereon
without any regard to M./SKBB patent rights.
Furthermore, Bi. has launched its triple vaccine (A. DTP) in the Italian
market which is another infringement of M./SKBB patent rights. Hence,
the second legal action.
Bi.'s bad faith behaviour and the continuing challenge to the validity of
the European 69 kD patent are indications that Bi. is not truly willing to
resolve the patent issue through licensing negotiations.
We believe that Bi. has a very simple choice: either (a) Bi. accepts its A.
product is dominated by a valid patent and accordingly requests a licence;
or (b) Bi. challenges the validity and the domination of that patent and
accordingly takes the position it does not need a licence.
If Bi. chooses option (a) SKBB confirms it is prepared to negotiate in
good faith a sublicence grant that would ensure the medical need for a
monovalent acellular pertussis vaccine in Italy is fulfilled.
Under option (b) there can be no resolution of the matter but through
litigation.
There is no evidence in reply to Dr Di.'s affidavit and on the evidence as a
whole I conclude that there is a real and imminent prospect of a genuine
dispute as to whether the importation and sale in the United Kingdom
of C.'s products would infringe E.' patent; that SKBB as an exclusive
worldwide licensee has a real commercial interest in that issue and that
it has through Mr St., as Chief Executive, asserted its right and referred
to litigation in correspondence, notably the letter from which I have just
quoted.
As I have said, Mr Platts-Mills' application is put on two apparently quite
different bases, that is the Brussels Convention as reflected in the 1982
Act and an Ord. 18, r. 19 strike out. But in this case those two apparently
different bases seem to me to converge to a considerable extent. If
SKBB is a proper co-defendant with English domiciled defendants for
the purposes of Article 6(1). it can hardly not be a proper co-defendant
for strike out purposes. Conversely, if it ought to be struck out under
domestic rules of procedure, it plainly cannot be a proper co-defendant
under Article 6(1).
Mr Platts-Mills referred me to the decision of the European Court of
Justice in Kalfelis (Athanasios) v. Banque Schroder Munchmeyer Hengst
& Co. (Case 189/87)[1988] E.C.R. 5565. That shows (in the judgment
on the first question) that, as one would expect, since it is very likely to
be required under any domestic rules of procedure, a connection must
exist between the claims to be made against the various defendants.
It must be (see page 5584) "a connection of such a kind that it is
expedient to determine those actions together in order to avoid the risk
of irreconcilable judgments resulting from separate proceedings". So
what is required is a connection such as to produce a risk of inconsistent
judgments if the connected claims are not heard and determined
together. It is the connection, it seems to me, that is the test. The risk of
inconsistent judgments is the reason for the test.
I see no room under Article 6(1), despite Mr Platts-Mills' eloquent
argument to the contrary, for taking account of an offer to be bound
by the judgment as any reason for restricting the scope of Article 6(1)
further than, if I may say so, the very natural restrictions which the
European Court of Justice discerned in the Kalfelis case. If SKBB is a
proper defendant under English procedural rules then the connection
between the claims for declaratory relief against it, against E. and against
M. is in my judgment both close and obvious, as Mr Kitchin submits. I do
not find it necessary to consider Mr Kitchin's alternative argument based
on Article 5(3), except to say that I do feel some doubts about its validity
in these circumstances.
I have already cited extensively from the judgment of Aldous J. in Biogen
v. M. [1993] R.P.C. 475. That case is plainly of considerable importance in
considering the position under ordinary English procedural rules and the
decision does, at any rate at first blush, give Mr Platts-Mills a good deal
of assistance on this second point. Nothing it seems was said in Biogen
v. M. about the Brussels Convention apart from the point reflected in the
penultimate paragraph, which I quoted, about there being no need to
obtain leave to serve out. In particular I have to consider the passage at
page 489 which is so important that I will read it a second time:
Although there is pleaded a claim of right by the SKB companies, the
dispute is theoretical. The issue of infringement and validity will be
decided in the action as constituted. The SKB companies will be bound by
that result. The SKB companies do not have any claim in damages against
M. and their interest is in the protection that injunctive relief will bring.
Whether or not such relief is appropriate is the issue that will be decided
between Biogen and M.. The theoretical nature of the dispute between
M. and the companies is illustrated by the fact that whether or not the
declaration is actually ordered is irrelevant to M. and the SKB companies.
Provided the SKB companies give discovery, M.'s purpose in seeking a
declaration will in theory and in practice be achieved. That is different
to other proceedings where, as in the Molnlycke case, the plaintiff has
enforceable relief.
I have to say that when I first read that passage I found it very puzzling
and despite all the assistance of experienced counsel before me, I still
find the passage quite a puzzle. In considering how far these two cases
are on all fours, I discern several points of difference between them
and I would note the following points in particular which are roughly
in ascending order of importance. First, in Biogen v. M. there was an
application for joinder of SKBB as a further defendant to a counterclaim
which had already been made. That by itself presented something of an
initial hurdle, although very little weight probably can be attached to that.
Then there is the fact that the judge seems not to have been referred
in any way to the Brussels Convention or the 1982 Act; consequently
the judge's remarks which put at least some weight in the balance at
page 490 about his reluctance to join a foreign company were perhaps
not fully considered. Thirdly, is the fact that Aldous J. did not, so far as
I can see, anywhere in his long judgment identify SKBB as an exclusive
licensee under the patents in that case. That inevitably raises the question
whether the judge did have that point in mind although it seems, if
I may say so, in the highest degree unlikely that he did not. Possibly
the explanation lies in the different terms of the licence in that case,
even though I am told that it was an exclusive licence. But for whatever
reason, it was plainly of importance to the judge's conclusion that he said
(in a passage which I have already read twice) that the SKB companies
did not have any claim in damages against M.. Fourthly, and I think much
the most important, it was established or conceded in that case that SKBB
was sought to be joined for purposes of discovery only and that is plainly
a point which carried a great deal of weight with the judge; see passages
in his judgment at page 487, 489 and 490.
I should hesitate very long indeed before not following a decision of
Aldous J., a judge who has enormously greater experience than I have
in patent matters, if it was clearly addressed to a point which I have to
decide. Indeed, not merely would I hesitate long about not following
Aldous J., but I would have no hesitation in following him.
But it does seem to me that in the present case, reduced to its barest
essentials, I find this. First, that proceedings for declaratory relief as
to non-infringement are a well recognised procedure in appropriate
circumstances and the inherent jurisdiction, as well as the jurisdiction
under section 71, is well recognised. Secondly, that on the undisputed
facts of this case C. is seeking to raise an issue of real importance on
facts which are real and present and not either hypothetical or future.
Thirdly, that E. as proprietor of the patent is a natural defendant to such
proceedings and has at no stage and in no way contended otherwise.
Fourthly, that SKBB as a worldwide exclusive licensee, which has plaintly
taken a combative attitude to C.'s claim, is also a natural defendant with a
real interest in the relief sought.
Whatever the full explanation of what I have called the puzzling passage
in the judgment of Aldous J. in Biogen v. M., I do not find in it anything
to distract me from what I see as the natural conclusion from the four
basic points that I have mentioned, that is that under English procedural
rules and the practice of the English court as to declaratory relief SKBB
is a proper party and not an improperly joined party to the claim for
declaratory relief.
I must however deal with two further points on which Mr Platts-Mills
relied. First he drew my attention to the very recently reported decision of
Jacob J. in Organon Teknika Ltd v. Hoffmann-La Roche AG [1996] F.S.R.
383. I will read the first part of the summary in the headnote at page 384
where Jacob J. is recorded as having decided:
In English law validity and infringement were part of the same questions.
It was not possible to infringe an invalid claim even if you fell within
its language. However, section 74(2) [that I interpose is of course the
Patents Act 1977] could not be construed as allowing questions of validity
to arise in a claim for declaration of non-infringement pursuant to the
inherent jurisdiction.
That, it seems to me, reflects one of the curiosities of patent law, that
as a matter of substance validity and infringement are two sides of the
same coin (or sometimes, to change the metaphor, two jaws of the
same squeeze argument), but that as a matter of procedure (both under
English domestic rules and under the Brussels Convention, as one can see
by looking at the limited scope of Article 16(4), there may be substantial
difficulties between the way in which those questions, interlocking though
they are, can be raised and adjudicated on. But for my part I cannot
see that as a reason for not taking what I see as the natural course in
apparently proper and purposeful proceedings, seeking a declaration of
non-infringement, whether or not there is any possibility, a possibility
adverted to by Jacob J. in the case I have just mentioned, of the issue
of validity later coming in by some amendment in the writ action. That
appears to be a theoretical possibility, but I place no weight on it because
no weight was placed on it in argument.
The other matter which I must consider and weigh up is the open offer
made on behalf of SKBB in a letter sent as recently as July 1 last; that
is some seven weeks after the launch of the notice of motion, by which
SKBB has offered to be bound by the outcome of these proceedings, even
though struck out, with a proviso to safeguard its position in the event of
running into limitation problems.
Mr Kitchin urges on me that that offer is unsatisfactory because it does
not cover the possibility of a settlement being negotiated between his
client and E. and M. to which SKBB was not a party. There has been a
great deal of discussion which does seem to me to be truly hypothetical
about those various possibilities and for my part I am inclined to accept,
and do accept, Mr Platts-Mills' submission that I should not regard that
as a matter that is decisive of this case. Nevertheless, whether it is a
friendly or unfriendly course on the part of C. (and litigants have no duty
to be friendly to each other, although they have a duty to be fair to each
other) the fact is that C. takes the view that it is not prepared to accept
that SKBB's departure from the proceedings (on terms of being bound
except in a particular situation) is a satisfactory substitute for continuing
with proceedings which are to my mind, and for the reasons which I
have mentioned, properly and not improperly constituted. It is not, so
far as I am aware, the practice of the court in the patent field, any more
than in any other field, to permit one party to withdraw otherwise than
by consent simply because he agrees to be bound by a result reached
between parties who remain in the litigation. It does of course happen
from time to time, but when it happens, it happens by consent.
The effect of SKBB departing on those terms would include its ceasing in
any normal circumstances to be liable for the costs of the proceedings.
There can in this case be little doubt about E.' ability to pay costs.
Nevertheless, the fact is that both E. and SKBB, as registered proprietor
and exclusive licensee respectively, have a real interest in this litigation,
as is evidenced by clause 6 of the licence agreement which I have already
mentioned. I do not think it right (despite, as I have said, Mr Platts-
Mills' eloquent submissions to the contrary) to strike out SKBB from
proceedings in which in my judgment C. has properly made it a party and
in circumstances where C. does not consent to its withdrawing on the
terms proposed. I shall therefore dismiss the substantive application, but
grant SKBB an extension of time for its defence. Second defendant to pay
plaintiff's costs in any event. Leave to appeal refused.