Two down, two to go

The Paris Tribunal de grande instance (TGI) has recently handed down an unusually long judgment. But I will refrain from commenting on all 64 pages that the decision comprises. Instead, I will focus on the initial portion.

No, not so much out of laziness – who said that?

But mainly because this initial portion addresses the very important issue of standing in a patent nullity suit, which was already discussed here not long ago.

As usual, a word of context first – which, as usual again, is not so straightforward.

Pellenc is a French agricultural company, which has been marketing an electrical pruner since 1988. From 1989 to 2014, they were involved in commercial and cooperation agreements with Switzerland-based group Felco, which is active in the same field. In particular, Pellenc supplied Felco with batteries for some of their electrical pruners. At some point, Felco drastically reduced the volume of its orders to Pellenc and then introduced a new tool that they had developed.

However, Pellenc had six patents in store: two French patents and four European ones.

Felco, in a bold preemptive strike, filed a nullity suit in France in July 2012 against all six patents.

One of the European patent was revoked in opposition proceedings at the EPO, and the revocation was confirmed by the Board of appeal.

The French part of another European patent was definitively forsaken at the French patent office (presumably to avoid substitution of the original French patent).

All of that left the court with two French patents and two European patents to deal with.

But, in order not to make things easier, Pellenc filed requests for limitation of these four patents. The requests for limitation of the two French patents were accepted by the Institut National de la Propriété Industrielle (INPI) in May 2015. The EPO, on the other hand, initially rejected the central requests for limitation of the two European patents, in June and November 2015.

In view of these lingering limitation proceedings, the case management judge separated the case into two: a first sub-case concerned with the nullity claim regarding the two limited French patents; and a second sub-case concerned with the nullity claim regarding the two European patents still in limbo. Obviously, the first sub-case progressed quicker than the second one, which leads us to the decision at stake.

Let’s not maintain the suspense for too long: the two French patents were revoked in full.

The court made a very thorough job of deciding on the interpretation of a number of contested claim terms, and then reviewed each claim (yes, including all dependent ones) in great detail, finding them all deprived of novelty or inventive step. Hence the lengthy judgment.

Sometimes, patents are like dominos: when you start toppling one…

But most interesting is how the court handled the defense that the nullity complaint was inadmissible due to lack of standing.

In the decision, the court recalled the principles to be applied for assessing whether a nullity claimant has standing to sue:

Therefore, a competitor can file an action for nullity of a patent if they can demonstrate the existence of sufficient interest to free an upcoming exploitation of the patented technology or a similar one: nullity actions are open to an industrialist willing to free a market. 

More specifically, it must be established that the claims which are sought to be nullified “are or may be an impediment to their economic activity, because they have or plan to have an activity in the field of the patented invention“.

The court also made it clear that the claimant does not need to establish the existence or imminence of an infringement of any particular claims of the patents at stake. But it should be explained “how the patent may get in the way of their activity“.

In my previous post on the topic, which was in the pharma field, we could see that the court examined the evidence as to whether the patent stood in the claimant’s way in a very thorough and severe manner. In fact, standing was acknowledged for some of the patent claims but not others.

Now, in the present case, it seems that the analysis was overall easier and more straightforward. 

The court first noted that there it was undisputed that Felco and Pellenc were competitors in France, since both make and market electrical pruners. In fact, it was mentioned in Pellenc’s submissions themselves that the recent tool developed by Felco was in competition with their tools.

The interesting point is that the competing tool was put on the market in France in May 2013, i.e. ten months after the nullity complaint was filed. The court concluded that, even if there was no competition on the day the complaint was filed, there was competition at least thereafter, so that the inadmissibility defense could no longer be relied upon.

In other terms, the relevant date for the assessment of standing in a patent nullity suit is the day on which the court decides on the inadmissibility defense, and not the day on which the complaint is filed – in keeping with the general rules of civil procedure in this country.

The court further remarked that Pellenc sued the Felco companies in Switzerland for unfair competition. It seems that Pellenc claimed in the Swiss lawsuit that Felco had taken unfair advantage of Pellenc’s patented and non-patented know-how which was transmitted to them over the course of their longstanding relationship. This was seen as further confirmation of Felco’s proper standing.

Yet another factor taken into account by the court was that Pellenc opposed two European patents owned by Felco. Frankly, I think this is a very indirect factor. It is more a possible indication of Pellenc’s activity being impeded by Felco’s IP than the other way around.

Apparently, there was also a dispute as to the legal consequences of the agreement between Felco and Pellenc on Felco’s standing. It was probably an exciting one, at that, as both parties filed consultations by renowned legal experts, respectively Prof. Reboul and Prof. Galloux. But the decision does not say much as to which arguments were made. It is simply stated that:

Regarding the contractual relationships which existed between the parties, it should be noted that they have ceased; besides, the existence of contractual relationships does not deprive the contracting party of their right to seek the invalidation of the patents, and does not render standing illegitimate per se. 

Indeed, if the patents were to be held invalid, the standing of [Felco] would be legitimized and Pellenc would have illegitimately asserted worthless patents against their co-contracting party. 

Therefore, the existence of contractual relationships cannot make a contracting party’s standing to seek nullity of patents belonging to the other contracting party illegitimate. 

It is unclear whether the agreement explicitly contained a provision prohibiting Felco from seeking revocation of the patents, or whether the argument was that the agreement indirectly or implicitly prevented Felco from pursuing this course of action. Probably the latter.

But at any rate, the principle seems to be clearly established in this judgment that an agreement cannot restrict a party’s right to seek invalidation of a patent, and in particular cannot annihilate said party’s standing to sue. This is in addition to the serious concerns that non-challenge clauses may raise under competition law.

Good to know!

At that point, the court rejected Pellenc’s defense and, as mentioned above, held all claims of both French patents invalid, after carefully reviewing them one by one.

With two of Pellenc’s patents down, there are two more to go – namely the two European ones, which were also sought to be limited.

I checked on the European patent register, and it turns out that both patents were finally limited at the EPO, in June 2016. So, unless the parties settle, these patents should soon also be subjected to the firing squad of the TGI’s third chamber. Stay tuned.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre, 1ère section, March 2, 2017, Felco SA et al. v. SA Pellenc, RG No. 12/15393.

Where we stand

When it comes to nullity actions in France, there are two topics which have been ultra hot for a few years, and which I think have not yet been addressed on this blog. Maybe precisely because they were too burning hot.

The first topic is standing, and the second one is the statute of limitations. Both are major stumbling blocks on a third party’s way to a preemptive strike.

A recent judgment by the Paris Tribunal de grande instance (TGI) in a pharma case addresses both topics, head-on. Therefore, now seems to be a good time to finally venture into these hazardous waters.

In the case at hand, Actelion Pharmaceuticals filed a nullity suit against the French part of European patent No. EP 1200092 (EP’092) to Icos Corporation (a company of the Eli Lilly group) in June 2015. The patent proprietor challenged the admissibility of the action because they said (1) the claimant did not have standing and (2) the action was time-barred.

So, where do we stand on standing?

Since a famous Barilla case a few years ago, courts seem to have gotten tougher on the appraisal of the standing of nullity claimants, and much ink has been spilled on this topic.

In this context, it is interesting to extensively quote the court’s general remarks on the issue in Actelion, as they are rather complete and enlightening:

[…] The standing to file an action for nullity of a French patent or of the French part of a European patent must be appraised under the requirements of ordinary law and therefore must be personal, legitimate, actual and current on the day the complaint is filed. However, posterior evidence can enlighten the court on the situation at this date or even enable a regularization […]. 

This latter point is interesting. It suggests that even in the absence of standing on the day the complaint is filed, the action may still be admissible if standing can later be acknowledged. By way of example, it is conceivable that the patentee’s behavior after the filing of the complaint may legitimize the lawsuit.

The court’s general guidance then goes on as follows:

The existence of the claimants’ standing must be appraised in view of the object and purpose of the action for nullity of the patent […]. The grant of the patent, whether it is a reward for an investment and a creative effort of the inventor, or for the disclosure of an invention, confers an advantageous monopoly to its owner which is legitimate and admissible in a context of free competition and free innovation only to the extent that its validity requirements are met. A nullity suit thus aims, for a competitor, at retroactively clearing the market of an unjustified obstacle and […] benefits to all when it is filed as a main action and is successful. In this context, the nullity standing must be assessed in concreto and in a flexible manner, in view of the general interest which the action serves: it must be acknowledged for any person who, personally, has an economic activity in the field of the invention which is effectively, or potentially but certainly, impeded by the claims the nullity of which is requested.  

In this respect, the nullity plaintiff must establish the existence of an actual and serious project which may be hampered by the patent, but does not have to establish effective marketing acts, let alone the existence of infringement in advance, claim by claim, by disclosing all of its technical advances;  the advantage conferred by the nullity action […], namely the improvement of the legal situation of the plaintiff, lies in the certainty that they will be able, once their project is set, to engage in costly research necessary for the manufacture and marketing of a product which may compete with the invention, without risking being sued by the patent proprietor and without waiting for this to happen. In particular in the pharmaceutical field, standing borders a prevention interest which is objectively substantiated, as there is no justification for punishing a cautious competitor. 

In other terms a balance has to be struck.

Unlike oppositions at the EPO, a nullity action may not be filed by any person. The claimant must have an actual and objective interest in the patented invention which must be clearly demonstrated, and this is to be appraised on a case by case basis. On the other hand, nullity suits are not exclusively reserved to actual infringers. There must be an incentive for competitors willing to clear their way before actually working the claimed invention or even before spending “costly research” to this end.

At this point, it is probably time to have a look at the patent at stake, which relates to the drug tadalafil, the active substance in the famous drug Cialis for the treatment of erectile dysfunction.

Tadalafil is an inhibitor of an enzyme called phosphodiesterase type 5 (PDE-5). It turns out that this active is also useful for the treatment of pulmonary hypertension (PHTN).

Stop killing rhinos! There is no tadalafil in the horn.

The EP’092 patent more specifically claims a particular formulation of the drug tadalafil, in a specific particulate form, as well as a method of manufacture. Claim 12 relates to this drug formulation for use in (any) method of treatment. Claims 13 to 19 are Swiss-type claims directed to the treatment of various sexual dysfunctions.

Actelion is active in the field of the treatment of PHTN, one of the illnesses against which tadalafil is useful – and one which is of course different from sexual dysfunction. The court immediately noted that tadalafil may thus be an interesting molecule for Actelion; and that Actelion and Icos / Eli Lilly are competitors in the treatment of PHTN.

But the court did not limit itself to this basic finding and examined in much more detail the evidence pointing to an actual interest by Actelion in the subject-matter of the patent. 

In this respect, the court found it significant that, in the context of parallel nullity proceedings in the UK, Eli Lilly filed a counterclaim for infringement of the British part of the EP’092 patent. Although this counterclaim does not concern the French territory, the court stated that:

This position implies the existence of a threat which may be carried out in France and above all an objective link between the economic activity of the claimants and the French part of the EP’092 patent.

Then, the court reviewed four different aspects of Actelion’s development activities: 

  • a clinical study conducted in 2012 on the treatment of PHTN by a combination of macitentan with a PDE-5 inhibitor;
  • a clinical study published in 2015, on the treatment of PHTN by a combination of selexipag with a PDE-5 inhibitor;
  • an ongoing multinational clinical trial aiming at comparing a triple combination therapy based on macitentan, tadalafil and selexipag with a double combination therapy based on macitentan and tadalafil, for naive patients recently diagnosed with PHTN; and
  • an ongoing French clinical trial on a double combination therapy based on macitentan and tadalafil, as first-line treatment of PHTN.

The two first studies in the list did not specifically involve tadalafil, but since tadalafil is a particular PDE-5 inhibitor, the court concluded that they were relevant. As for the two last trials in the list, they relied on the use of tadalafil and were therefore directly relevant. Interestingly, these two trials were initiated after the nullity complaint was filed. But the court found that they were nevertheless indicative of R&D work already initiated before that date and could therefore be taken into account for assessing standing.

The next comment by the court probably deserves to be extensively quoted:

Contrary to Actelion’s […] submissions, each of these different elements in isolation is not sufficient to characterize their standing. But their combination demonstrates that the parties are indeed in a situation of competition on the market of the PHTN treatment, and that the latter may rely on the use of tadalafil and pertains to the technical field of the EP’092 patent, which is a second therapeutic use patent not limited to the treatment of sexual dysfunction, and that the combination [of tadalafil] with products which they market is the subject of research authorized in France. To this objective link with the EP’092 patent one must add the actuality and seriousness of the claimants’ plans in France, which do not require a prior commercialization nor a perfect correspondence with the patent’s claims and notably with the specific particle size which is claimed; as well as the threat against them which materialized in the UK.

As a result, Actelion was found to have standing to request the revocation of claims 1 to 12 of the patent. However, regarding claims 13 to 19, the court concluded that there was no standing, as these claims specifically concerned the treatment of sexual dysfunction, and this was not a pathology field covered by Actelion. 

In summary, the court’s position on standing is the following: 

  • standing is appraised in concreto, and a very detailed demonstration by the nullity plaintiff is requested;
  • the plaintiff does not need to demonstrate that they implement or want to implement the various claim features (this is lucky I would say);
  • on the other hand, evidence is required that the plaintiff works in the narrow technical field of the patent at stake;
  • in this respect, one isolated piece of evidence does not seem to be enough, several converging lines of evidence are required.

All in all, the appraisal appears to be extremely strict and it certainly does not encourage preventive nullity suits in any way, although those may be the most rational and effective way to settle a dispute before infringement actually occurs and damages may be incurred.

In a next post, I will try to address the second aspect of the judgment, namely the statute of limitations – the aspect on which Actelion actually lost the case.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre, 1ère section, March 16, 2017, Actelion Pharmaceuticals Ltd. & Actelion Pharmaceuticals France v. Icos Corporation, RG No. 15/07920.