Patent News - Winston & Strawn

Patent News London

April 2012

A Practice Point: Tactical Litigation Delays Become Harder In the UK In the non-patent case of Fred Perry (Holdings) Limited v Brands Plaza Trading Limited & Another [2012] EWCA Civ 224, the Court of Appeal has signalled the intent of the English courts to require civil litigation to be pushed along at a reasonable pace. This case concerned a “relief from sanctions” application on behalf of defendants that had missed numerous court deadlines and orders. The defendants in this case had not complied with an English court procedural order known as an “unless order”. They had also failed to comply with a number of directions set out in the case and not complied with various English Civil Procedure Rules (“CPR”). As a result of this non-compliance, the defences in the case had been struck out and judgment entered for the claimant (Fred Perry). The defendants had then applied under CPR 3.9 for “relief from sanctions” to set aside this default judgment. The application was made on the basis that justice would be best served by allowing the defendants in the case to present a defence at trial and that the appropriate sanction against them in this matter was to penalise them in costs. The courts’ approach to such applications in the past has been lenient. However, it was made clear by the Lords Justice in this judgment that non-compliance with both the Civil Procedure Rules and also orders of the court will not be tolerated. The Court also noted that the defendants’ suggestion of a costs sanction rang particularly hollow given that they had also failed to pay earlier costs orders and that one of the reasons given for their non-compliance with court orders and CPR provisions was a lack of funds. The defendants failed in their appeal and so the defences were struck out and judgment in favour of the claimant confirmed. Lord Justice Jackson was keen to highlight that this particular provision of the CPR will change in a year’s time. Gone will be the rather complex multi-factorial provision that resembled a “tick-box” exercise and in its place will be a provision focussing very much on the judge’s analysis of the facts of the particular case in the round. It is worth replicating the new rule in full: “On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider the circumstances of the case, so as to enable it to deal justly with the application including the need: a. For litigation to be conducted efficiently and at proportionate cost; and b. To enforce compliance with rules, practice directions and court orders.” Litigants have been warned. Gareth Morgan +44 (0)20 7011 8726 [email protected]

This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2012 Winston & Strawn LLP

Patent News London

April 2012

Obviousness – Is the Revocation Bar Being Raised? Two decisions handed down from the English appeal courts suggest that the manner in which the “obvious to try” test is being applied is raising the bar for patent challengers in demonstrating the skilled person (or team) would have arrived at the impugned invention through obvious routes given certain prior art. The first case of Apimed Medical Honey Limited v Brightwake Limited [2012] EWCA Civ 5 was handed down in January and concerned an appeal from the judgment of the Patents County Court that the patent was invalid. The appeal was unopposed in the sense that Brightwake had withdrawn from the case because the parties had settled following a finding of non-infringement in the lower court. Hence Apimed appealed only on the invalidity of its patent and the Comptroller of the IPO opposed through the Treasury Solicitor because the case raised sufficiently important issues (namely the undesirability of invalid patents being returned to the register for want of opposition) for the Comptroller to seek judicial clarification. The main points in issue were: 1. Whether the judge had correctly identified the patent’s contribution over the prior art; 2. Whether a finding of “obvious over the common general knowledge” could be justified; 3. Whether the comptroller would be permitted to raise a new novelty argument. On these points, the first two flow in sequence. First, the Court of Appeal found that the judge had failed to identify the true invention as compared to the cited prior art. The invention itself required the use of an alginate gelling agent to thicken honey such that it could be used as a putty or rolled into a sheet to dress wounds, i.e. it did away with the need for dressings. When compared with the prior art that described the use of alginate/gauze dressings the true invention was to remove the need for a dressing, not the particular agents to use within a dressing. Having corrected the judge’s analysis of the differences between the invention and the prior art the Court overturned his finding of obviousness. The Court then turned to the finding of “obvious over the common general knowledge”. In respect of this the Court said: “It is well established that an obviousness argument based upon the common general knowledge alone must be treated with caution because it is unencumbered with any detail which might point to non-obviousness and is particularly likely to be tainted with the impermissible use of hindsight.” As one might expect, having thus opened its analysis of this part of the judge’s findings, the Court found that this part of the judgment was also unsound and overturned this finding of obviousness. As to the new arguments that the Comptroller sought to bring into the appeal, the Court said that they were not before the court at first instance, had not been developed in evidence, and raised technical issues which would be impossible to resolve in the appeal. The Court therefore refused to permit the Comptroller to raise this new point. The second case that we wish to bring to the attention of readers is Gedeon Richter plc v Bayer Schering Pharma AG [2012] EWCA Civ 235. This is another decision of the Court of Appeal dealing with obviousness. Bayer is the proprietor of a number of patents directed at formulations of birth control medications. Two patents were in issue at trial. The judge had found the main claims of one of the patents invalid for obviousness but permitted the patentee to amend the patent to delete the invalid claims. The second patent, also in amended form, was held to be valid. The appeal went forward on the findings of non-obviousness of the amended claims and also that the patents contained added matter. We will focus on the first part of the appeal. Gedeon Richter put forward the challenge on appeal that the skilled team would have read together two publications separated in time by over 10 years and where the earliest paper was published over 15 years before the priority date of the two patents challenged. The Court noted that it was “a matter of trite law” that the earlier before the priority date is the prior art cited for obviousness, the harder it is to prove the obviousness case. Further, the case on obviousness was complicated because the later paper of the two Gedeon Richter argued that the skilled person would combine, concerned a substance that was not one of the actives in the patent claim, was published in a little read journal and did not provide formulation details of the active it concerned. The combination of papers was critical to Gedeon Richter’s case because following only the earlier paper would have led to the skilled person undertaking in vitro tests and becoming discouraged, in effect there was a “lion in the path” when following the accepted formulation prior art.

Winston & Strawn London Patent News | 2

Despite the apparent difficulties in this case, the main argument was that the deficiencies in the later prior art from a formulation standpoint was tempered by the fact that the skilled team in this case did not only contain formulators, but medicinal chemists and biochemists too and they would turn up the later paper in a publication search and bring it to the attention of the formulators. The Court rejected this (noting, for example, that Gideon Richter had not called a medicinal chemist to address the point). Gedeon Richter also ran a variant of this, an “obvious to try” argument based on these two papers. The Court again rejected this. Although the judge had accepted that the prior art might have led the skilled team to consider that the “drug might survive in the final formulation”, this was not good enough. In the view of the Court of Appeal, the judge’s analysis placed the result of the invention closer to “not impossible” than “obvious”. As further words of caution, the Court of Appeal took into account other evidence as proof of non-obviousness. The evidence of how long it took to arrive at the invention was considered telling and the fact that it is still not known why the in vivo results with the drugs differ from the in vitro results (which the Court found would have discouraged the skilled team from proceeding any further) strongly suggested that the invention was not obvious because the result could not have been predicted. Both cases represent cautionary tales for parties wishing to run obviousness cases in the UK. Further, although secondary evidence alone is probably not good enough to win a case for a patentee, for the Court of Appeal in the Bayer case it was clearly a useful “common sense” check that they, and the judge at first instance, had analysed the inventiveness of the patent in the correct way. Gareth Morgan +44 (0)20 7011 8726 [email protected]

This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2012 Winston & Strawn LLP

Patent News London

April 2012

The Patent Box: Is It Big Enough? 10 February 2012 marked the closure of the UK government’s period of consultation on the draft legislation for a ‘Patent Box’, which would aim to stimulate the UK economy by enhancing the desirability of the UK as a location for R&D. The legislation, currently due to come into effect on 1 April 2013, is intended to lower the rate of corporation tax from 26% to 10% (although this is due to be lowered anyway to 24% by 1 April 2013) for profits made from patented technology. It is intended to operate as an ‘opt in’ scheme, in which companies holding patents can participate if their company structure and income from patents would provide a tax advantage by doing so. In response to stakeholders pointing out that patents may be commercialised throughout a lifespan of up to 20 years, the Patent Box will be available to companies with existing patents rather than, as first proposed, only those patents that have seen commercialisation since November 2010. However, the suggestion by other interested parties that the relief should be extended to other IP rights, such as trade marks, has not been taken on by the UK government. As will be outlined below, this limitation may work against its overall success. The move to introduce this legislation could be seen as a policy designed both to rebut the oft-held notion that the UK has lost some of international status as a hotbed of innovation and address the fact that multi-national companies are choosing other countries to site their R&D centres or to hold their IP. Headlines about multinationals leaving the UK, such as a large multi-national pharmaceutical company’s decision to shift its R&D efforts out of the UK in 2011, have pushed the implementation of the Patent Box further up the political agenda. This is addressed directly in the opening paragraph of a consultation document for the Patent Box which states the UK government is committed to creating the most competitive corporate tax system in the G20. However, despite its efforts to attract some of these companies to the UK with this new tax offering, it may be that the UK is still behind the curve on this issue. Several other European countries have already been operating similar schemes designed, at least ostensibly, to stimulate and reward innovation. In the Netherlands, a similar scheme is known as the Innovation Box and imposes an effective 5% rate. In Luxemburg, the IP Box taxes relevant profits at less than 6%. Tax relief for innovation is also available in Belgium at a low rate and in Ireland; all ‘trading income’ (therefore not limited to income from IP) can attract an effective rate of 12.5%. All of these countries are offering the relief to a wider potential audience than simply patent holders. Tax relief for innovation will be welcomed in the UK by existing hard pressed SMEs and could lead to both growth in these companies and to other technology focused start ups appearing. To this end, the Patent Box may prove to be a success. However, with limited coverage of IP rights and a higher headline rate than some our European neighbours’ equivalent schemes, it is questionable whether the other intended effect of the legislation, to have international companies coming to the UK, employing UK workers and paying UK tax, will be achieved. Tim Robinson +44 (0)20 7011 8730 [email protected]

This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2012 Winston & Strawn LLP

Patent News London

April 2012

The Border Detention (or Not?) of Fake Goods in Transit In December of last year, the Court of Justice of the EU (“CJEU”) handed down its ruling in the joined cases of Philips (C446/09) and Nokia (C495/09)1.

Background The cases concerned the EU regime for the detention at the customs border of goods suspected of infringing intellectual properly rights, i.e. Regulation 1383/2003 and its predecessor, Regulation 3295/94 (“The Regulations”). In Nokia, a consignment of what appeared to be obviously fake Nokia mobile phones and accessories was discovered by customs at London Heathrow airport, en route to Columbia from Hong Kong. In Philips, Belgian customs officials discovered a shipment of electric shavers resembling the proprietary design of the Philips shavers. Here, the goods originated from China, but the final destination of the goods was not determined. In both cases, the national courts had to grapple with the issue of whether goods in transit could infringe intellectual property rights in the EU and, therefore, fall within the scope of the Regulations.

Decision of the CJEU The CJEU was asked to consider, effectively, the questions of: 1. whether or not EU customs officers can detain goods which are suspected of being either imitations of goods protected in the EU by a trade mark registration, or copies of goods protected in the EU by copyright (or related rights) while such goods are under their supervision, even if the goods are not bound for the EU market (e.g. because they are en route to a third country outside the EU, or are being held awaiting confirmation of final destination); and 2. if suspect goods are detained, when a competent court comes to assessing the substantive infringement issues, do such goods actually infringe the intellectual property rights relied upon? Relevant to this is the question of whether or not the “manufacturing fiction”, where the goods are deemed to have been manufactured in the EU state of detention, may be applied? In its decision, the CJEU made it clear that the EU border detention regime “deals only with combating the entry into the EU of goods which infringe intellectual property rights”2, and the measures adopted under the regime should not impede legitimate international trade. Accordingly, it was ruled that goods cannot be classified as counterfeit or pirated goods under the regime of the Regulation, merely on the basis of the fact that they are brought into the customs territory of the EU under a suspensive procedure (i.e. whilst under customs supervision). The “manufacturing fiction” concept has therefore been rejected. However, goods under customs control (but not yet on the market) may, according to the CJEU, infringe the right in question where it is proven that they are intended to be put on sale in the EU. Such proof may be provided, inter alia, where it turns out the goods have been sold to a customer in the EU or offered for sale or advertised to consumers in the EU, or where it is apparent from documents or correspondence that diversion of the goods to the EU is envisaged. Moreover, the CJEU also ruled that Customs can and should react as soon as there are indications giving grounds for suspecting that that an infringement exists. Here, the CJEU offered some examples of such indications: a failure to declare the final destination of the goods, a lack of precise or reliable information as to the identity or address of the consignor of the goods, a general lack of cooperation with the customs authorities and/or documents or correspondence suggesting that there is liable to be a diversion of the goods onto the EU market.

Koninklijke Philips Electronics NV v. Lucheng Meijing Industrial Company Ltd; Nokia Corporation v. HMRC We would note here that, while the questions addressed by the CJEU were in the context of trade marks and copyright/designs, it would appear the CJEU contemplates its reasoning to apply to all intellectual property rights.

1 2

Winston & Strawn London Patent News | 2

Conclusion The decision of the CJEU will undoubtedly be a cause for great frustration amongst brand owners. First, even blatantly fake goods will seemingly be able to pass through Europe (home to many of the major international transit hubs) entirely unencumbered as long as there are no indications of “fraudulent diversion” into the EU. While the CJEU mentions in its judgment that EU customs authorities are permitted to cooperate with their brethren in the non-EU country of destination in circumstances where it is suspected the goods will infringe intellectual property rights locally, it is wondered whether this is practically feasible. Second, while the CJEU has given some indications as to what might constitute grounds for suspicion of diversion, they are not complete. The question remains as to, in any given circumstance, how much prima facie evidence the brand owner will have to supply to customs before they feel able or obliged to act, and how much evidence the brand owner will need to adduce before the national courts to make good the case that the suspect goods are, in fact, intended for the EU market. We suggest that this might not always be a straightforward task for the brand owners, particularly as we are constantly being told how increasingly sophisticated the importers of counterfeit and pirated goods are becoming. The debate therefore returns to whether the EU legal framework can, and should, be changed to allow the EU authorities to take a more effective and central role in policing against the international trade in counterfeits. This raises complex questions; in particular, is there a “one size fits all” regime that provides the brand owners and customs authorities with the tools to fight the counterfeiters, yet protects the interests of legitimate international trade (having regard here to the controversy over the EU detentions of bona fide generic medicines en route to the developing world). Further, and as noted in our previous article on the implementation of ACTA, would any change in the regime whereby the EU becomes involved in enforcement on a global scale necessarily add another dimension to the territorial scope of intellectual property rights? Phil Carey +44 (0)20 7011 8728 [email protected]

This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2012 Winston & Strawn LLP

Patent News London

April 2012

The Unified Patent Court and Unitary Patent – A Status Report As we have previously reported1, the proposal for a unified patent litigation system4 for the EU in its current form has met with concern from judges, practitioners and industry alike. Many commentators, including us, have stated the system as a whole has not been thought through properly. Consequently, it risks not serving its purpose of providing a cost-effective, yet high quality, forum for patent litigation in Europe. When we last reported on the status of the unified patent system, the sense was that the institutions of the EU, notably the Commission and the (then) Polish Presidency of the Council, were hell bent on obtaining agreement on the legislative package by the end of 2011, and that the EU’s “political will” to secure an agreement without further delay meant the concerns over the system were falling on deaf ears. Indeed, the Polish Presidency had signalled its intention to organise an initialing ceremony in Warsaw for the end of December where the text of the agreement on the unified court would be finalised. So, where are now? The short answer is that the initialing ceremony has not happened. The message from the Council was that the failure to sign off on the legislative package in December was a result of the Member States having failed to agree on the location of the Central Division of the unified court - what has been called in a Council statement “the last outstanding issue in the patent package”. The Council also reported on the commitment of the Member States to reaching a final agreement on this point “by June 2012 at the latest”3. Whilst the location of the Central Division is, of course, an important consideration, it is rather bewildering that the substantive concerns voiced by the actual users of the patent system remain unacknowledged (publicly, at least) by the EU institutions having conduct of this most important initiative. It does seem, however, that the UK Parliament is sitting up and taking notice of the current state of affairs. The European Scrutiny Committee of our House of Commons opened an inquiry into the unified patent court in January of this year. “The Scrutiny Committee assesses the legal and/or political importance of draft EU legislation… Ministers should not vote in the Council of Ministers on proposals which the Committee has not cleared or which are awaiting debate.” www.parliament.uk The Scrutiny Committee has held two evidence sessions to date, first seeking the views of representatives of the legal profession in Europe on the current proposals, and then requesting that the UK Government explain its position. The inquiry is ongoing, but it appears to us that the Scrutiny Committee is asking itself the right question – how can it be that the only outstanding issue, according to the Council, is the location of the Central Division, when so many important concerns over the substance of the proposed system seemingly remain unresolved? Through its evidence to the Scrutiny Committee, it does appear that the UK Government is engaging with the (now Danish) Presidency of the Council on some of the most pressing concerns with the proposed system, namely the possibility of the bifurcation of infringement and validity proceedings, and the inclusion in the EU Regulation on the unitary patent right of substantive provisions regarding infringement (and the spectre of the EU Court of Justice being asked to interpret those provisions).

See here and here. The so-called “patent package” comprises an EU patents court, and a unitary EU patent right. 3 Press Release following the 20-21 February 2012 meeting of the Competitiveness Council 1 2

Winston & Strawn London Patent News | 2

Furthermore, the indications from the Scrutiny Committee’s minutes are that the UK Government is taking a position whereby it will not sign the unified patent court agreement until the Rules of Procedure for the system have been (close to) finalised. This, if maintained, is a welcome stance from the UK Government. Given the apparent refusal of the EU legislature to rethink the overall architecture of the unified system4, it seems that it may well fall on the Rules of Procedure to ensure that the worst of the potential inequities of the proposed system are, at least to some degree, mitigated. Finally, the UK Government has suggested, in its evidence to the Scrutiny Committee, that the June 2012 deadline mentioned above for sign-off on the legislative package might slip. In conclusion, we wait to see what progress can be made on the draft Rules of Procedure for the unified court and hope that, now the Council’s self-imposed deadline of December 2011 for sign-off on the package has passed, a more circumspect approach towards the European patent system will now be taken. Phil Carey +44 (0)20 7011 8728 [email protected]

For example, the EU Parliament’s Legal Affairs Committee (JURI) has effectively blessed the legislative package in its current form (although we understand there will be no Parliamentary vote on the package until the issue over the location of the central Division has been resolved).

4

This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2012 Winston & Strawn LLP

Patent News London

April 2012

Snaps, Specs and Supermarkets – Recent ‘Soft’ IP Cases Snaps: Temple Island Collections Ltd v New English Teas [2012] EWPCC 1 A case causing somewhat of a stir in the world of copyright law at the moment is the recent Temple Islands case about photographs of a bright red routemaster bus. The case was heard in the Patents County Court by His Honour Judge Birss QC. The Claimant’s photograph was of a bright red bus with the Houses of Parliament and Big Ben in black and white in the background and Westminster Bridge, and the river in black and white in the foreground. The photograph used by the Defendant on its souvenir products was also of a bright red bus on Westminster Bridge but was taken from a different angle with a smaller part of the Houses of Parliament and Big Ben in black and white in the background, and the arches of the bridge and the river were not visible in the foreground. The two photographs were therefore not identical but did share a number of common elements. Judge Birss found that the Defendant’s photograph infringed the Claimant’s copyright in its photograph. Some commentators have expressed surprise at the decision and its potential impact on what is known as the idea/expression distinction. The English Courts have recognised in copyright cases that a line should be drawn between the idea behind a work, which tends not to be protected by copyright, and the expression of that idea, which can be protected. It had been thought that the general layout of a photograph, particularly where that photograph consisted of a public building or setting, fell more toward the ‘idea’ end of the scale and would not be protected by copyright. A photographer could therefore recreate a photograph taken by another to produce a similar image because it was the underlying idea that was being copied (as it were), rather than the expression of it. The recreated image would not be a ‘copy’ as the taking of the photograph would itself require the necessary creative input to make it ‘original’. Following the present case, that may have changed and the scope of protection for photographs may have been broadened. Having said that, it appears the Defendant is seeking permission to appeal the first instance decision, so we await with interest to see if the Court of Appeal picks up the case, and whether or not the appellate Court agrees with Judge Birss.

Specs and Supermarkets: Specsavers v Asda Stores [2012] EWCA Civ 24 The long running battle over the branding used by Asda for its in-store opticians has now reached the Court of Appeal, which handed down its judgment at the end of January. Asda re-launched its in-store opticians in 2009 using the slogans “be a real spec saver at Asda” and “Spec savings at Asda” as well as a logo which comprised two abutting white ovals on a green background with the words “Asda Opticians” in green over the ovals. Specsavers objected on the grounds of its trade mark registrations for, amongst other things, “Specsavers” and a logo comprising overlapping ovals which it uses in a green colour. An interesting aspect to this case is the impact of Asda’s decision to “live dangerously”. It seemed clear that Asda initially intended to parody Specsavers’ branding but, ultimately, decided not to do this. Nevertheless, the process for designing the branding to be used by Asda started with something close to that used by Specsavers and evolved over time to branding that it considered to be a safe distance away from Specsavers though still, in the Court’s view, capable of bringing to mind or implicitly drawing a comparison with Specsavers. In the end this tactic was Asda’s saviour in one sense but its downfall in another. In relation to the infringement claims brought against Asda under Article 9(1)(b) of the CTM Regulation, where a likelihood of confusion is a necessary element, the Court’s view seemed to be that Asda’s strategy indicated that it did not want to cause confusion between it and Specsavers. When the slogans and logos it has used were considered in context, it was clear that although Asda may have wished to allude to Specsavers in its campaign, it also wanted to distinguish itself from Specsavers and did not want customers to be confused. The Court of Appeal suggested that in taking the decision to live dangerously, Asda has appreciated the risk of confusion and endeavoured to adopt a sign which was a safe distance away.

Winston & Strawn London Patent News | 2

However, it was a different story with regard to the infringement claims brought against Asda under Article 9(1)(c) of the CTM Regulation, where it was argued that an unfair advantage existed. The Court of Appeal overturned the judgment of the first instance judge on this point and held that Specsavers’ marks had been infringed. It found that Asda had used the concept of Specsavers as a value provider and that it intended to benefit from the power of attraction attaching to the Specsavers brand and to free-ride on Specsavers’ marketing efforts. Asda’s advertising campaign created a link in consumers’ minds between it and Specsavers, this link gave Asda an advantage and that advantage was unfair, therefore the marks were infringed. Sarah Innes +44 (0)20 7011 8709 [email protected]

This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2012 Winston & Strawn LLP

Patent News London

April 2012

Pip, Breast Implants and Consumer Protection In Europe The recent furore over the rupture of breast implants containing regulatorily unapproved clinically untested industrial grade silicone has understandably raised serious questions about the adequacy of the European regulatory legislation of products for cosmetic surgery. Here, we review the relevant European legislation on medical devices. This note will not review the current status of the clinical and toxicological issues with these implants, suffice it to say that women implanted with these prostheses manufactured by the French company PIP are now very concerned that rupture and release into breast tissue of potentially toxic silicone may cause cancer. Although there is no evidence as yet of any long term harm from such rupture and tissue deposition, there is insufficient knowledge of the long term safety of this industrial grade product. It therefore remains to be seen with litigation under consumer protection and/ or the general consumer safety legislation will be successful.

Medical Devices Regulatory Legislation The onus of satisfying conformity to the essential legal requirements of safety and fitness for purpose of a medical device lies with the producer, subject in most cases to the approval an independent ‘notified body’. The manufacturer must apply an appropriate conformity assessment procedure and complete a declaration of conformity. The choice of conformity assessment procedure depends on a risk based classification either on a total quality management system audited to ISO 9000 series as customised for medical devices with EN4600 series standard, or individual product assessment. The essential requirements relate to the safety of the device, including labelling requirements expressed in terms of scientific and technical performance characteristics. This should include evaluation of clinical data but not necessarily in terms of efficacy. Also manufacturers have post marketing safety surveillance and vigilance requirements. In parallel, Member States have market surveillance obligations. The national regulatory authority has the power to effect the withdrawal of the product in its jurisdiction and the matter is then referred to the Commission for coordination with other Member states. Medical devices are defined as: any instrument, apparatus, appliance or other article, whether used alone or in combination, including the software necessary for its proper application by the manufacturer, to be used for human beings for the purpose of › diagnosis, prevention, monitoring, treatment or alleviation of disease, › investigation, replacement or modification of the anatomy or of a physiological process... Marketing of medical devices in the EU is governed by three principal Directives: Directive 90/385/EEC on active implantable medical devices, Directive 93/42/EEC on medical devices, and Directive 98/79/EEC on in vitro diagnostics. All these Directives were implemented into UK law as from 13 June 2002 by the Medical Devices Regulations 20021. The basic structure, concepts and terminology are identical across all three. Ultimate authority for their interpretation rests with the Court of Justice of the European Community, to which questions of interpretation of Community law may be referred by national courts. There are also a sequence of guidance notes issued by the Commission (MEDDEV series) arising out of meetings with notified bodies, etc. Member State competent authorities, whilst not involved in the assessment or authorisation for placing on the market, do have the responsibility to oversee the competence and performance of notified bodies within their jurisdiction. However the legal responsibility for safety, fitness for purpose and general product liability and duties under the general product safety legislation rests with the manufacturer.

SI 2002/618. Part 1 deals with introductory measures common to all devices, general medical devices Part II, active implantable devices Part III,in vitro diagnostics Part IV, notified bodies, conformity assessment bodies and marking of products Part V, fees Part VI and general and enforcement measures Part VII.

1

Winston & Strawn London Patent News | 2

Classification Medical devices are categorised on the basis of the potential degree of risk they represent. Class IIa and IIb are invasive or implantable devices or those which do interact with the body; whereas Class III is for devices which affect the function of vital organs. Breast implants, in common with devices such as contact lenses, urinary catheters, dental bridges and crowns, would be classified as Class II. For all products in Class II a full quality assurance system, audited periodically by a notified body including examination and certification of the design dossier of each product, must be carried out. As regards legal liability, a manufacturer is defined as a natural or legal person with the responsibility for the design, manufacture, packaging and labelling of a device before it is placed on the market under his own name, regardless of whether these operations were carried out by himself or on his behalf by a third party2. The Regulations require a manufacturer to observe the manufacturers obligations set out in the relevant conformity procedure and to take account of the results of any assessment or verification operations carried out at an intermediate stage of manufacture3.

Product liability under the Consumer Protection Act 1987 The main legislation dealing with liability of producers for defective products is the Consumer Protection Act 1987 (the CPA). Part 1 of the CPA implements EC Directive 85/374 on Liability for Defective Products. The introductory wording of the CPA and European Court of Justice jurisprudence4 make it clear that where there are textual differences between the CPA and the Directive, the Directive should prevail and the CPA should be interpreted in light of the purpose of the Directive. Furthermore, the ECJ has held that a producer’s liability for defective products must be identical throughout EC member states. The CPA confers strict liability on the “producer” of a defective product for damage caused by the defect5. Any claim brought under this Act would be brought by the consumer of the product, who must demonstrate that the product is defective and that the defect caused the damage. The burden of proof is on the claimant. The legal test that the Court will apply is the “but for” and “balance of probabilities” test, i.e. but for the use of the product, the claimant’s actual damage would not have occurred on the balance of probabilities. Damages awards in the UK are not intended to be punitive. The claimant must prove the loss he has suffered and will be awarded damages to compensate him for this loss. In addition the CPA excludes claims not exceeding £2756. The CPA defines damage as “death or personal injuries or any loss of or damage to any property (including land)”7. Whilst the CPA appears to exclude pure economic loss, e.g. loss of earnings, the Directive does not. Given that the CPA needs to be interpreted in light of the Directive, the scope for damages is, therefore, exceedingly broad. The limitation period for bringing a claim under the CPA is three years from the later of (a) the cause of the personal injury by the defective product or (b) the date of knowledge of the defect by the claimant. The Court has discretion to exclude this limitation period with respect to personal injury cases only8. There is also a long-stop limitation period under the CPA and Directive9, stating that the rights conferred upon the injured person will be extinguished if an action is not brought within 10 years of the date on which the producer put the product into circulation. Liability will not attach if the defect came into existence after the product left the defendant. However products with latent defects are defective as at the date of supply. A producer has a defence if it proves that the state of the scientific and technical knowledge at the time when it put the product into circulation was not such as to enable the defect to be discovered. The scope of this defence has been circumscribed in the UK by the decision of A v National Blood Authority10 and, under the principles laid out in that judgment, it would be difficult to prove one fell within this defence. Certainly once the existence of a defect is known and there is a risk that it will materialise in any product, it is immaterial that the known risk was unavoidable in the defective product.

2 Directive (EEC) 93/42, Art 1.2 (f); the Regulations, reg 2 (1) 3 The Regulations, reg 17 (2) 4 Case C-300/95 Commission v UK 5 section 2(1) CPA 6 section 5(4) CPA 7 section 5(1) CPA 8 s33 Limitation Act 1980 9 Art 11 Directive 10 [2001] EWHC QB 446 (26th March 2001)

Winston & Strawn London Patent News | 13

It appears then that the current status of liability for defective breast implants would lie primarily with the manufacturer who put the product(s) into circulation; the notified body responsible for issuing the CE mark and the national competent authority would not engage liability under the consumer protection legislation. However both organisations could be held liable in negligence. Peter Feldschreiber +44 (0)20 7011 8722 [email protected]

This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2012 Winston & Strawn LLP

Patent News London

April 2012

The Dutch Docket No Longer A Rocket We have assembled a lot of materials and statistics comparing the leading European patent litigation jurisdictions. This variations between these courts has lead to widespread forum shopping. There have been fewer opportunities to compare the passage of cases in leading jurisdictions in trade mark cases. Our group has now had the experience of being able to compare the progress of two trade mark cases, essentially about the same subject-matter, in the English and Dutch courts, to the highest level in each case. The outcomes were similar. The timelines to the final decision in each country were starkly different. The cases concerned the words BACH, BACH REMEDIES and BACH FLOWER REMEDIES used in practice in relation to complementary medicines, and in registration for pharmaceutical and homeopathic remedies and services related to them. The story started back in the 1930s. Dr Edward Bach was a well-renowned physician practising in Harley Street, London. Dr Bach became convinced of a link between emotional and physical health and, from 1930 onwards, devoted himself entirely to finding natural remedies that would combat poor health by introducing harmony and peace into the lives of patients. With this in mind he developed remedies manufactured from plant flowers and blossoms of trees and shrubs. Each of these remedies was attuned to specific emotions and frames of mind. Dr Bach described his remedies in a book that appeared in 1933 entitled “The Twelve Healers and Other Remedies”. This book also contained precise indications of how the remedies should be prepared, and two methods were described for this. He was, and remained, very keen to ensure that as many people benefitted from the remedies and that they should know how to make them. The book also gave the details of two firms of London chemists who would supply the remedies for people who could not make their own. Whether, Dr Bach’s prescription for a healthy life benefitted him I had rather doubted. In 1936, Dr Bach died prematurely. He was only 50 years old. He had moved to a small village in Oxfordshire to carry on his complementary medicine work. However, I have recently learnt that he was diagnosed as having cancer in 1917 and so to survive another nearly 20 years, and to continue his philanthropic work to the end, was a significant achievement. After his death, his assistants (disciples even) carried on his philanthropic work. In 1979, a successor to those disciples, but not Dr Bach’s business because there never was one, set up a business and registered Bach as a trade mark for relevant goods. In 1988, Julian Barnard, a devotee of Dr Bach’s original teachings, set up a company called Healing Herbs Limited to spread the gospel of Dr Bach and to provide flower remedies, made in accordance with Dr Bach’s original directions, for those who could not make them themselves. His company, and many other practitioners, were harried by trade mark agents for the registered proprietor, a company confusingly called Bach Flower Remedies Limited. By this time, so the evidence showed, the products – whoever made them – had become known as Bach remedies or Bach flower remedies out of respect for Dr Bach and his work, and as the convenient and natural way to refer to these products. Likewise, the practitioners had become known as Bach practitioners. The situation reached such a pitch that Julian Barnard’s company issued High Court proceedings against Bach Flower Remedies Limited (“Flower Remedies”) asking the English High Court to revoke the latter’s UK trade mark registrations for Bach and a stylised signature version of that word. To cut a long – but extraordinary – story short, after scores of witnesses were cross-examined at the trial in London, the trial judge, now Lord Neuberger (the former Law Lord and now Master of the Rolls – President of the Court of Appeal), held that the word registration was descriptive of the goods it was applied to, was generic, should not have been registered and was invalid. The stylised signature mark was allowed to remain on the register, but subject to the exclusion that the registration gave no proprietary rights to the word Bach itself. The Court of Appeal robustly upheld the trial judge’s decision and refused the Defendant’s request to refer the case to the European Court of Justice. The further application for permission to appeal led to a hearing in the House of Lords. The application was refused. The Defendant was ordered to pay all the Claimant’s legal costs. That was in 2000.

Winston & Strawn London Patent News | 2

A similar, but not identical, situation had all this time prevailed in the Netherlands. After a short pause to recover its energy for further significant litigation, Healing Herbs and its indefatigable Managing Director, Julian Barnard, applied to revoke the word registration and the signature registration there. Paul Steinhauser (now of Arnold Siedsma) was the lead lawyer for Healing Herbs; Charles Gielen of Nauta Dutilh led for Flower Remedies. At the trial, the Dutch court ordered all of the registrations to be revoked. The Dutch Court of Appeal agreed that the Bach word marks were generic and had not acquired distinctiveness through use and should be expunged from the Benelux Trade marks Register, but spared the signature registration, holding that it had a sufficiently distinctive nature so as not to suffer the same fate. The Dutch Supreme Court has just upheld the Court of Appeal’s decision. The case was unusual in a way different from its unusual subject-matter. As I trailed at the start, the different periods of time the English case and the Dutch case took to reach their conclusions were remarkably different. The English case had started in 1996, the first instance decision was delivered on 22 May 1998, the Court of Appeal decision as given on 21 October 1999, and the House of Lords refused permission for a further substantive appeal in a hearing on 4 July 2000. So the English case took no more than four years from start to finish. The Dutch case took ten years. It started in 2002. The trial decision was on 30 June 2004. The Court of Appeal’s final judgement was given on 23 February 2010. The Supreme Court handed down its decision on 20 January 2012. For Healing Herbs, it was worth waiting for – just ! Richard Price1 +44 (0)20 7011 8735 [email protected]

Paul Steinhauser, now of Arnold Siedsma was lead advocate for Healing Herbs in the Netherlands; Charles Gielan of Nauta Dutilh lead for Flower Remedies. Richard Price lead the UK team for Healing Herbs throughout.

1

This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2012 Winston & Strawn LLP

Patent News London

April 2012

Pharma Corner Whilst the decisions relating to the manner in which the English courts approach the question of the obviousness of patents (also reviewed in this newsletter) are of particular interest to those working in the pharmaceutical industry, perhaps the most significant judgment handed down over the last few months has been the SPC case relating to the litigation between Novartis and Medimmune on the Cambridge Antibody Technology’s (CAT) phage display technology. The case brought by Medimmune (successors in title to CAT) claimed that any commercial pharmaceutical product containing an antibody that had, at some stage in its development, been improved or optimised using phage display technology, fell within the claims of the patents in suit and royalties were due. Novartis claimed that the patents were invalid and not infringed. In a lengthy judgment last year, the Patents Court in London held that the patents were indeed invalid. However, in the event that the court was wrong on the validity of the patents, a further hearing considered the validity of the SPC on the patent directed at the monoclonal antibody produced by Novartis (ranibizumab, marketed as Lucentis). Mr Justice Arnold handed down his judgment last month in the SPC case1 and gave another detailed judgment, helpfully reviewing all the recent Court of Justice of the EU (CJEU) case law directed at SPCs over the last year or so. The judge was critical of much of the terminology and reasoning that had been used by the CJEU through these recent judgments and expressed the view that further references were going to be required in order to try to bring clarity to this area of SPC law. The fundamental question the Judge posed can be stated as: “How can any EU court seek to give effect to a harmonised, pan-EU vision of the SPC Regulation and decide what constitutes the scope of an SPC if that requires an analysis of unharmonised national law relating to infringement?” Arnold J expressed his dismay at the quality of the CJEU’s analysis highlighting that it is not at all certain whether this court is describing scope of protection or infringement at various points in their judgments (or that it even knows the difference between the two). Also the Judge queried the use of different language to describe the guidance provided to national Member State courts by the CJEU in determining whether or not a product is “protected by a basic patent”. In various recent judgments the CJEU has said that the product has to be “specified in the wording of the claims” or “identified in the wording of the claims”. Arnold J expressed the view that first, it was unfortunate for the CJEU to be using inconsistent terminology and, second, that he interpreted this language restrictively and held that claims to processes for producing monoclonal antibodies using phage display to refine and optimise their binding efficiencies, did not specify or identify individual monoclonal antibodies in the manner required by the CJEU and so he held the SPC invalid. The case will, no doubt, progress to the Court of Appeal where a further referral to the CJEU for a preliminary ruling seems inevitable. A further point of note is that neither party took the point as to whether SPCs obtained by reference to third party, allegedly infringing, products fall within the scope of the SPC Regulation at all. The argument was trailed (in the judgment) that, because the SPC Regulation was intended to encourage innovation and compensate patentees for time spent off the market due to regulatory requirements, is it justified to extend the operation of the regime to allegedly infringing products? This is a fascinating question and one that will need to be heard at a future date in a different case. One can understand the reluctance of either party in this matter actively to argue this point. Gareth Morgan +44 (0)20 7011 8726 [email protected]

Novartis Pharmaceuticals UK Limited v Medimmune & Another [2012] EWHC 181 (Pat)

1

This publication has been prepared for general guidance only and does not constitute professional advice or a comprehensive review of the law. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. You should seek specific legal advice before acting on the information contained herein. No reproduction or redistribution is permitted without the written permission of Winston & Strawn LLP. © 2012 Winston & Strawn LLP