High Court throws out claim for loss under the ‘unlawful means’ tort

High Court throws out claim for loss under the ‘unlawful means’ tort Secretary for State for Health v Servier Laboratories Ltd, High Court of England and Wales, 2 August 2017, [2017] EWHC 2006 (Ch) In the latest chapter of litigation involving Servier’s branded perindopril drug, Coversyl, the High Court has struck out a claim for damages for loss caused by unlawful means. Legal context It was alleged that misrepresentations made to the European Patent Office (EPO) in the course of an application for a patent (which was later revoked), as well as an interim injunction application to enforce the patent pending trial—with the intention of securing grant of the patent, delaying generic entry into the perindopril market and achieving elevated prices in respect of Servier’s supply of perindopril to that market—had caused loss to the claimant English Health Authorities. However, Mr Justice Roth found case law dictated the tort required, among other things, that the alleged unlawful means had to affect the freedom of the third party to deal with the claimant; in this case, ‘the “third party” are the EPO and the English court, and there is no question of interference with their “freedom to deal” with the English Health Authorities, or indeed with anyone else’. Accordingly, the ground of claim alleging loss caused by unlawful means had to be struck out as falling outside the scope of that tort. Facts The defendants (collectively referred to as ‘Servier’) were the patent owners and/or licensees of a number of European patents for the pharmaceutical drug Perindopril, an angiotensin-converting enzyme (ACE) inhibitor prescribed for treatment of hypertension and cardiac insufficiency. The present action related to a European patent, granted to the third defendant Les Laboratoires Servier (LLS) for the alpha crystalline form of the perindopril salt: EP 1 296 947 (‘the 947 patent’). The first defendant (‘SLL’) was the exclusive licensee under the UK designation of the 947 patent. By 2006, the basic protection for the process of industrial synthesis of Perindopril under EP 0 308 341 (‘the 341 patent’) had expired, and Servier hoped that the 947 patent would essentially provide an extension of its monopoly in Perindopril. The 947 patent was opposed at the EPO (one of the central grounds of attack was that the alpha crystalline form would be the inevitable result of simply following Servier’s own earlier 341 patent). The EPO dismissed that opposition and held the 947 patent valid despite the earlier 341 patent. Servier then decided it was time to turn its attention towards enforcing its rights, namely by attacking a certain range of products manufactured by the large generics producer, Apotex. In 2007, Mr Justice Pumfrey held that the 947 patent was anticipated by the 341 patent and was therefore invalid for lack of novelty and/or inventive step (Les Laboratoires Servier v Apotex [2007] EWHC 1538 (Pat)). On appeal, Lord Justice Jacob gave a most damning assessment regarding the Servier patent and upheld Pumfrey J’s decision: … were the patent valid, Servier’s monopoly in practice would last until 2020. But, as the judge held and we confirm, it is invalid. And very plainly so. It is the sort of patent which can give the patent system a bad name. … the only solution to this type of undesirable patent is a rapid and efficient method for obtaining its revocation. Then it can be got rid of before it does too much harm to the public interest (see [2008] EWCA Civ 445). In the meantime, an appeal was proceeding before the EPO Technical Board of Appeal, which eventually revoked the 947 patent in 2009. Subsequently, the claimants (collectively referred to as ‘the English Health Authorities’) commenced these proceedings, seeking damages from Servier for a series of alleged breaches of both EU and UK competition law (‘the competition law claims’). In particular, Servier were accused of entering into a series of agreements with generic manufacturers and suppliers not to enter the market with a generic version of Perindopril and/or to withdraw their patent challenges, which constituted an infringement of Article 101 of the Treaty on the Functioning of the European Union (‘TFEU’) and/or s 2 of the Competition Act 1998 (‘CA’), and also an abuse of a dominant position which Servier held in the UK, and therefore an infringement of Article 102 TFEU and/or s 18 CA. In addition to the competition law claims, the English Heath Authorities alleged that LLS had obtained the grant of the 947 patent, and further successfully defended it in opposition proceedings, by making misleading or dishonest misrepresentations to the EPO; LLS and SLL further repeated or relied on those misrepresentations in obtaining interim relief in the English courts, and such deceit gave rise to a free-standing right of action in tort against LLS for its interference with its economic interests by unlawful means. The claimants alleged that the conduct of LLS had caused elevated prices for Perindopril, achieved at the expense of the English Heath Authorities, by virtue of them bearing the financial burden of reimbursement payments to pharmacists and doctors for Perindopril dispensed and/or administered pursuant to the NHS. Servier applied to strike out the free-standing claim for the tort of unlawful means on the basis that it disclosed no cause of action, relying on the landmark decision in OBG Ltd v Allen [2007] UKHL 21; in particular, the passage at [51] where Lord Hoffmann said: Unlawful means therefore consists of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful as against that third party and which is intended to cause loss to the claimant. It does not in my opinion include acts which may be unlawful against a third party but which do not affect his freedom to deal with the claimant. Servier submitted that since the ‘third party’ was the EPO and the English court, and there was no question of interference with their ‘freedom to deal’ with the English Health Authorities or anyone else, the claim was not within the ambit of the tort of unlawful means. The claimants submitted that the ratio of OBG Ltd v Allen did not lie within such narrow terms, and that the scope of the tort was wider. Further, the claimants argued that since this common law tort was still in the process of development, it would be inappropriate to strike out the claim on a summary application before finding all the facts at trial. Analysis As all parties agreed that OBG Ltd v Allen presented an authoritative statement of the law, Mr Justice Roth began by analysing that case in some detail, and concluded that judgment made clear that the unlawful means tort comprised three elements: (a) the use of unlawful means towards a third party; (b) which was actionable by that third party, or would be if he suffered loss; and (c) an intention to injure the claimant. Servier’s challenge in the present action was directed against element (a) in the English Health Authorities’ free-standing claim for the tort of unlawful means. Roth J disagreed with the English Health Authorities’ argument that element (a) should not be interpreted restrictively: ‘the whole approach of Lord Hoffmann and the express opinions of Lord Walker, Baroness Hale and Lord Brown emphasised the need to confine the tort within careful limits, and support the view that the unlawful means must affect the third party’s freedom to deal with the claimant’. Roth J accepted that some aspects of the tort might still require refinement, such as the precise boundary of what might constitute ‘unlawful’ means. However, in his opinion, the only relevant issue for the present application was whether those means must affect the third party’s freedom to deal with the claimant, and the issue had been clearly determined; as Lord Walker said in OBG Ltd v Allen at [270]: I do not, for my part, see Lord Hoffmann’s proposed test as a narrow or rigid one. On the contrary, that test (set out in para 51 of his opinion) of whether the defendant’s wrong interferes with the freedom of a third party to deal with the claimant, if taken out of context, might be regarded as so flexible as to be of limited utility. But in practice it does not lack context. The authorities demonstrate its application in relation to a wide variety of economic relationships. I would favour a fairly cautious incremental approach to its extension to any category not found in the existing authorities. In other words, Lord Walker had indicated that Lord Hoffmann’s test for unlawful means was, if anything, too broad and flexible, but there was no suggestion that the test should extend beyond economic relationships. Further, Roth J explained, if the claimants in the present case were correct regarding the wider scope of the tort, then ‘the right to claim against Servier would cover not only all the various UK Health Authorities but also all potential generic competitors who suffered loss through their inability to supply a generic version of perindopril by reason of the 947 Patent; any private medical expenses insurer who paid higher prices for reimbursement of the cost of perindopril; and, subject to any issues of jurisdiction, all foreign health authorities and insurers in each of the various other states in Europe that were designated under the 947 Patent’. That would be the opposite of confining the tort within a narrow ambit. As Roth J said, ‘a patent was a creation of statue, and the statutory regime governing patents prescribed rights and remedies in a manner that reflected the legislative assessment of the policy issues involved. If those who suffered economic loss by reason of a patent being obtained by dishonest or reckless misrepresentations as to novelty or obviousness could use the unlawful means tort at common law to claim damages, that would circumvent that legislative balance.’ In OBG Ltd v Allen, Lord Hoffmann discussed a number of late twentieth-century cases in which the unlawful means tort had been considered, and noted that the common law had been traditionally reluctant to become involved in devising rules of fair competition, and had largely left such rules to be laid down by Parliament. Moreover, as Jacob LJ had suggested in his 2008 ruling on the 947 patent, any remedy should be found in the field of competition law: It is right to observe that nothing Servier did was unlawful. It is the court’s job to see that try-ons such as the present patent get nowhere. The only sanction (apart, perhaps, from competition law which thus far has had nothing or virtually nothing to say about unmeritorious patents) may, under the English litigation system, lie in an award of costs on the higher (indemnity) scale if the patent is defended unreasonably. That position, Roth J observed, reflected legislative policy, and was the basis of the standalone claim as regards the additional grounds of abuse of the dominant position that Servier held in the UK, based on conduct before the EPO and the English court. Roth J concluded that, although caution should be exercised by the courts before striking out a claim on a summary application, pursuant to Article 6(1) of the European Convention on Human Rights, even assuming all the facts in favour of the English Health Authorities, the issue raised was a pure point of law. Given that the EPO or English courts did not have any economic dealings with the English Health Authorities, it was clear that the claim for the tort of unlawful means was bound to fail and, therefore, Roth J found it was appropriate and indeed desirable to dispose of it at this stage, so that the parties knew where they stood and the potentially significant costs of additional disclosure on this aspect could be avoided. Accordingly, the unlawful means claim was struck out. Practical significance This judgment illustrates the difficulty that claimants can face when trying to obtain damages on the basis of alleged deceitful conduct by a patent applicant. In the present case, the claimants framed the unlawful means claim on the basis of an allegation in their Particulars of Claim headed ‘Abuse of the Patent System’, under which it was stated that the application filed by LLS at the EPO for what became the 947 patent ‘contained express and implied representations that the alpha form was novel and implied representations that the alpha form was not obvious’. It was then alleged that ‘the said representations’ were ‘repeated and/or further relied on’ by LLS in contesting the opposition proceedings before the EPO, and by LLS and/or SLL ‘in the stance they adopted in the proceedings in the English courts’ in successfully obtaining interim relief. Unlike the US, the UK does not have a doctrine of ‘fraud on the patent office’ which could have complicated matters in this case. However, Servier did not suggest that the express or implied representations which lay at the foundation of the claimants’ allegation of deceit were unarguable, and the judge assumed that the allegation of deceit was made out. However, as Roth J made clear, any remedy for financial loss incurred as a result of a party making misleading or dishonest representations to the EPO and/or the courts as to the validity of a patent should be sought under the auspices of competition law rather than the economic tort of unlawful means. © The Author(s) 2018. Published by Oxford University Press. All rights reserved. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Intellectual Property Law & Practice Oxford University Press

High Court throws out claim for loss under the ‘unlawful means’ tort

Loading next page...
 
/lp/ou_press/high-court-throws-out-claim-for-loss-under-the-unlawful-means-tort-SpAxrzK0P1
Publisher
Oxford University Press
Copyright
© The Author(s) 2018. Published by Oxford University Press. All rights reserved.
ISSN
1747-1532
eISSN
1747-1540
D.O.I.
10.1093/jiplp/jpx232
Publisher site
See Article on Publisher Site

Abstract

Secretary for State for Health v Servier Laboratories Ltd, High Court of England and Wales, 2 August 2017, [2017] EWHC 2006 (Ch) In the latest chapter of litigation involving Servier’s branded perindopril drug, Coversyl, the High Court has struck out a claim for damages for loss caused by unlawful means. Legal context It was alleged that misrepresentations made to the European Patent Office (EPO) in the course of an application for a patent (which was later revoked), as well as an interim injunction application to enforce the patent pending trial—with the intention of securing grant of the patent, delaying generic entry into the perindopril market and achieving elevated prices in respect of Servier’s supply of perindopril to that market—had caused loss to the claimant English Health Authorities. However, Mr Justice Roth found case law dictated the tort required, among other things, that the alleged unlawful means had to affect the freedom of the third party to deal with the claimant; in this case, ‘the “third party” are the EPO and the English court, and there is no question of interference with their “freedom to deal” with the English Health Authorities, or indeed with anyone else’. Accordingly, the ground of claim alleging loss caused by unlawful means had to be struck out as falling outside the scope of that tort. Facts The defendants (collectively referred to as ‘Servier’) were the patent owners and/or licensees of a number of European patents for the pharmaceutical drug Perindopril, an angiotensin-converting enzyme (ACE) inhibitor prescribed for treatment of hypertension and cardiac insufficiency. The present action related to a European patent, granted to the third defendant Les Laboratoires Servier (LLS) for the alpha crystalline form of the perindopril salt: EP 1 296 947 (‘the 947 patent’). The first defendant (‘SLL’) was the exclusive licensee under the UK designation of the 947 patent. By 2006, the basic protection for the process of industrial synthesis of Perindopril under EP 0 308 341 (‘the 341 patent’) had expired, and Servier hoped that the 947 patent would essentially provide an extension of its monopoly in Perindopril. The 947 patent was opposed at the EPO (one of the central grounds of attack was that the alpha crystalline form would be the inevitable result of simply following Servier’s own earlier 341 patent). The EPO dismissed that opposition and held the 947 patent valid despite the earlier 341 patent. Servier then decided it was time to turn its attention towards enforcing its rights, namely by attacking a certain range of products manufactured by the large generics producer, Apotex. In 2007, Mr Justice Pumfrey held that the 947 patent was anticipated by the 341 patent and was therefore invalid for lack of novelty and/or inventive step (Les Laboratoires Servier v Apotex [2007] EWHC 1538 (Pat)). On appeal, Lord Justice Jacob gave a most damning assessment regarding the Servier patent and upheld Pumfrey J’s decision: … were the patent valid, Servier’s monopoly in practice would last until 2020. But, as the judge held and we confirm, it is invalid. And very plainly so. It is the sort of patent which can give the patent system a bad name. … the only solution to this type of undesirable patent is a rapid and efficient method for obtaining its revocation. Then it can be got rid of before it does too much harm to the public interest (see [2008] EWCA Civ 445). In the meantime, an appeal was proceeding before the EPO Technical Board of Appeal, which eventually revoked the 947 patent in 2009. Subsequently, the claimants (collectively referred to as ‘the English Health Authorities’) commenced these proceedings, seeking damages from Servier for a series of alleged breaches of both EU and UK competition law (‘the competition law claims’). In particular, Servier were accused of entering into a series of agreements with generic manufacturers and suppliers not to enter the market with a generic version of Perindopril and/or to withdraw their patent challenges, which constituted an infringement of Article 101 of the Treaty on the Functioning of the European Union (‘TFEU’) and/or s 2 of the Competition Act 1998 (‘CA’), and also an abuse of a dominant position which Servier held in the UK, and therefore an infringement of Article 102 TFEU and/or s 18 CA. In addition to the competition law claims, the English Heath Authorities alleged that LLS had obtained the grant of the 947 patent, and further successfully defended it in opposition proceedings, by making misleading or dishonest misrepresentations to the EPO; LLS and SLL further repeated or relied on those misrepresentations in obtaining interim relief in the English courts, and such deceit gave rise to a free-standing right of action in tort against LLS for its interference with its economic interests by unlawful means. The claimants alleged that the conduct of LLS had caused elevated prices for Perindopril, achieved at the expense of the English Heath Authorities, by virtue of them bearing the financial burden of reimbursement payments to pharmacists and doctors for Perindopril dispensed and/or administered pursuant to the NHS. Servier applied to strike out the free-standing claim for the tort of unlawful means on the basis that it disclosed no cause of action, relying on the landmark decision in OBG Ltd v Allen [2007] UKHL 21; in particular, the passage at [51] where Lord Hoffmann said: Unlawful means therefore consists of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful as against that third party and which is intended to cause loss to the claimant. It does not in my opinion include acts which may be unlawful against a third party but which do not affect his freedom to deal with the claimant. Servier submitted that since the ‘third party’ was the EPO and the English court, and there was no question of interference with their ‘freedom to deal’ with the English Health Authorities or anyone else, the claim was not within the ambit of the tort of unlawful means. The claimants submitted that the ratio of OBG Ltd v Allen did not lie within such narrow terms, and that the scope of the tort was wider. Further, the claimants argued that since this common law tort was still in the process of development, it would be inappropriate to strike out the claim on a summary application before finding all the facts at trial. Analysis As all parties agreed that OBG Ltd v Allen presented an authoritative statement of the law, Mr Justice Roth began by analysing that case in some detail, and concluded that judgment made clear that the unlawful means tort comprised three elements: (a) the use of unlawful means towards a third party; (b) which was actionable by that third party, or would be if he suffered loss; and (c) an intention to injure the claimant. Servier’s challenge in the present action was directed against element (a) in the English Health Authorities’ free-standing claim for the tort of unlawful means. Roth J disagreed with the English Health Authorities’ argument that element (a) should not be interpreted restrictively: ‘the whole approach of Lord Hoffmann and the express opinions of Lord Walker, Baroness Hale and Lord Brown emphasised the need to confine the tort within careful limits, and support the view that the unlawful means must affect the third party’s freedom to deal with the claimant’. Roth J accepted that some aspects of the tort might still require refinement, such as the precise boundary of what might constitute ‘unlawful’ means. However, in his opinion, the only relevant issue for the present application was whether those means must affect the third party’s freedom to deal with the claimant, and the issue had been clearly determined; as Lord Walker said in OBG Ltd v Allen at [270]: I do not, for my part, see Lord Hoffmann’s proposed test as a narrow or rigid one. On the contrary, that test (set out in para 51 of his opinion) of whether the defendant’s wrong interferes with the freedom of a third party to deal with the claimant, if taken out of context, might be regarded as so flexible as to be of limited utility. But in practice it does not lack context. The authorities demonstrate its application in relation to a wide variety of economic relationships. I would favour a fairly cautious incremental approach to its extension to any category not found in the existing authorities. In other words, Lord Walker had indicated that Lord Hoffmann’s test for unlawful means was, if anything, too broad and flexible, but there was no suggestion that the test should extend beyond economic relationships. Further, Roth J explained, if the claimants in the present case were correct regarding the wider scope of the tort, then ‘the right to claim against Servier would cover not only all the various UK Health Authorities but also all potential generic competitors who suffered loss through their inability to supply a generic version of perindopril by reason of the 947 Patent; any private medical expenses insurer who paid higher prices for reimbursement of the cost of perindopril; and, subject to any issues of jurisdiction, all foreign health authorities and insurers in each of the various other states in Europe that were designated under the 947 Patent’. That would be the opposite of confining the tort within a narrow ambit. As Roth J said, ‘a patent was a creation of statue, and the statutory regime governing patents prescribed rights and remedies in a manner that reflected the legislative assessment of the policy issues involved. If those who suffered economic loss by reason of a patent being obtained by dishonest or reckless misrepresentations as to novelty or obviousness could use the unlawful means tort at common law to claim damages, that would circumvent that legislative balance.’ In OBG Ltd v Allen, Lord Hoffmann discussed a number of late twentieth-century cases in which the unlawful means tort had been considered, and noted that the common law had been traditionally reluctant to become involved in devising rules of fair competition, and had largely left such rules to be laid down by Parliament. Moreover, as Jacob LJ had suggested in his 2008 ruling on the 947 patent, any remedy should be found in the field of competition law: It is right to observe that nothing Servier did was unlawful. It is the court’s job to see that try-ons such as the present patent get nowhere. The only sanction (apart, perhaps, from competition law which thus far has had nothing or virtually nothing to say about unmeritorious patents) may, under the English litigation system, lie in an award of costs on the higher (indemnity) scale if the patent is defended unreasonably. That position, Roth J observed, reflected legislative policy, and was the basis of the standalone claim as regards the additional grounds of abuse of the dominant position that Servier held in the UK, based on conduct before the EPO and the English court. Roth J concluded that, although caution should be exercised by the courts before striking out a claim on a summary application, pursuant to Article 6(1) of the European Convention on Human Rights, even assuming all the facts in favour of the English Health Authorities, the issue raised was a pure point of law. Given that the EPO or English courts did not have any economic dealings with the English Health Authorities, it was clear that the claim for the tort of unlawful means was bound to fail and, therefore, Roth J found it was appropriate and indeed desirable to dispose of it at this stage, so that the parties knew where they stood and the potentially significant costs of additional disclosure on this aspect could be avoided. Accordingly, the unlawful means claim was struck out. Practical significance This judgment illustrates the difficulty that claimants can face when trying to obtain damages on the basis of alleged deceitful conduct by a patent applicant. In the present case, the claimants framed the unlawful means claim on the basis of an allegation in their Particulars of Claim headed ‘Abuse of the Patent System’, under which it was stated that the application filed by LLS at the EPO for what became the 947 patent ‘contained express and implied representations that the alpha form was novel and implied representations that the alpha form was not obvious’. It was then alleged that ‘the said representations’ were ‘repeated and/or further relied on’ by LLS in contesting the opposition proceedings before the EPO, and by LLS and/or SLL ‘in the stance they adopted in the proceedings in the English courts’ in successfully obtaining interim relief. Unlike the US, the UK does not have a doctrine of ‘fraud on the patent office’ which could have complicated matters in this case. However, Servier did not suggest that the express or implied representations which lay at the foundation of the claimants’ allegation of deceit were unarguable, and the judge assumed that the allegation of deceit was made out. However, as Roth J made clear, any remedy for financial loss incurred as a result of a party making misleading or dishonest representations to the EPO and/or the courts as to the validity of a patent should be sought under the auspices of competition law rather than the economic tort of unlawful means. © The Author(s) 2018. Published by Oxford University Press. All rights reserved.

Journal

Journal of Intellectual Property Law & PracticeOxford University Press

Published: Mar 1, 2018

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve Freelancer

DeepDyve Pro

Price
FREE
$49/month

$360/year
Save searches from Google Scholar, PubMed
Create lists to organize your research
Export lists, citations
Access to DeepDyve database
Abstract access only
Unlimited access to over
18 million full-text articles
Print
20 pages/month
PDF Discount
20% off