Swiss-type exception

Today, I would like to provide a brief report on some ongoing pharma litigation in France, in connection with zoledronic acid.

Novartis AG is the proprietor of the French part of European patent No. EP1296689. This Swiss-type company was granted Swiss-type claims by the EPO.

More specifically, independent claim 1 is the following:

Use of 1-hydroxy-2-(imidazol-1-yl)ethane-1, 1-diphosphonic acid, or a pharmaceutically acceptable salt thereof, or any hydrate thereof in the preparation of a medicament for the treatment of osteoporosis in which the 1-hydroxy-2-(imidazol-1-yl)ethane-1,1-diphosphonic acid, or a pharmaceutically acceptable salt thereof, or any hydrate thereof is administered intravenously and intermittently and in which the period between administrations is at least about 6 months.

There is also an independent claim 5:

Use of 1-hydroxy-2-(imidazol-1-yl)ethane-1,1-diphosphonic acid, or a pharmaceutically acceptable salt thereof, or any hydrate thereof for the preparation of a medicament for the treatment of osteoporosis wherein said medicament is adapted for intravenous administration in a unit dosage form which comprises from about 1 up to about 10 mg of 1-hydroxy-2-(imidazol-1-yl)ethane-1,1-diphosphonic acid, or a pharmaceutically acceptable salt thereof, or any hydrate thereof, wherein the period between administrations of bisphosphonate is at least about 6 months.

I wonder how these claims are going to fare at the Paris Tribunal de grande instance (TGI) validity-wise, given the historical dislike of such claims by this court. But this is not today’s topic.

When looking for a patent on Swiss-type cheese, I stumbled on this remarkable invention on a cheese-flavored cigarette filter. Hard cheese as exemplified by Parmesan, Romano or Swiss cheese is preferred. So sad that camembert was not cited.

In December 2014, Novartis started patent infringement proceedings against Biogaran, Agila Specialties Polska SP and Sanochemia Pharmazutika AG. The exploitation of the generic Aclasta in France was considered by Novartis as an infringement of the patent.

The lawsuit was linked with other pending lawsuits, namely infringement proceedings against several Teva companies, as well as nullity proceedings initiated by Biogaran.

The decision discussed today is not a judgment on the merits, but rather a judgment on two preliminary objections filed by the defendant Sanochemia.

One of the preliminary objections was an alleged nullity of Novartis’ writ of summons. The other one was an alleged lack of jurisdiction of the Paris TGI. Such preliminary objections, or “exceptions” as they are called in French procedural law, are dealt with by the judge in charge of case management, before the trial in front of the full court. In this case, both were a bit of a long shot, and they were rejected by the judge on January 28, 2016. Sanochemia appealed, but the first instance decision was confirmed by the Cour d’appel de Paris on May 12, 2017.

Readers may be curious to know how the Paris TGI could possibly be considered as having no jurisdiction – according to the defendant. After all, we are talking about the alleged infringement of the French part part of a European patent, and this is the daily bread of the 3rd chamber of the Paris TGI.

Well, the argument presented by Sanochemia was very creative – although a long shot, as I mentioned.

Sanochemia is the manufacturer of the generic drug. The drug is manufactured in Austria. Then, it is imported into France and marketed in this country, and Sanochemia may or may not be directly involved in such activities – hard to tell based on the court’s ruling. At any rate, Sanochemia stated that it did not have any marketing authorization in France.

Now, remember that the patent at stake is a Swiss-type patent, and that the patent claims are accordingly directed to the use of an active substance for the preparation of a medicament for a particular treatment modality. My understanding is that Sanochemia considered that these claims exclusively protect a manufacturing process.

Since the manufacturing process was not carried out in France, Sanochemia argued that the alleged infringement in fact took place in Austria, and not in France. Sanochemia’s case was that they did not commit any act on the French territory. Therefore, they said, the Austrian courts had exclusive jurisdiction under the Brussels I jurisdiction.

As could be expected, the Paris Cour d’appel held that this theory did not hold water:

As noted by the judge in charge of case management, regulation No. EC 44/2011 of December 22, 2000 on jurisdiction provides that a person residing on the territory of a member state can be sued in another member state, and, in matters relating to delict or quasi-delict, in the courts for the place where the harmful event occurred.

Even if the act of manufacturing the product took place in Austria, the court for the place where the harmful event occurred is however not in Austria, since the drug alleged to be infringing is said to have been imported into France by Sanochemia. Therefore, the arguments presented by Sanochemia pertain to a defense on the merits and need to be examined on the merits. The judge in charge of case management thus rightfully rejected the exception of lack of jurisdiction filed by Sanochemia. 

In summary, Sanochemia argued that they did not commit any act of infringement in France. However, the mere fact that infringement in France is alleged by Novartis implies that this question must be decided by French courts.

Whether Sanochemia is ultimately found to be guilty of infringement (assuming that the patent passes the validity hurdle) will be very interesting to watch, given the particular claims at stake, namely Swiss-type, dosage regimen claims.

According to article 64(2) EPC, “if the subject-matter of the European patent is a process, the protection conferred by the patent shall extend to the products directly obtained by such process“. Thus, typically, a company that manufactures a product abroad according to a patented process and imports it into France can be declared guilty of infringement of the patent at stake.

But in the present case, the claims are not classical manufacturing process claims. The main part of the invention, or to be more precise the contribution of the invention to the art, lies in the dosage regimen (namely “administered intravenously and intermittently and in which the period between administrations is at least about 6 months” if we focus on claim 1), and this has in principle nothing to do with the manufacturing process.

In fact, one of Sanochemia’s arguments regarding the alleged nullity of Novartis’ writ of summons was that it was not clear from the writ whether the alleged infringement related to the manufacture of the drug or the manufacture of the leaflet, which contained dosage indications. The court found that the writ of summons was sufficiently clear – and the decision does not contain further details. But I would add that even the mere importation of a drug into France without any label or leaflet could possibly be an act of contributory infringement of a dosage regimen claim.

So, definitely a case to keep watching – today’s discussion being just an amuse-bouche.


CASE REFERENCE: Cour d’appel de Paris, pôle 5 chambre 2, May 12, 2017, Sanochemia Pharmazutika AG v. Novartis AG et al., RG No. 16/05608.

Protocol not recognized

Another week, another issue of international jurisdiction. Last week’s post was about a case of declaration of non-infringement. This week’s post is about a case of ownership claim. But I think this time the decision issued by a French judge has a greater potential for arousing controversy.

In short: the judge decided that the Protocol on Recognition should be discarded in the determination of jurisdiction in the case at hand. The “Protocol on Recognition” is short for “Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the Grant of a European Patent“. The object of the Protocol is to define which courts of the EPC contracting states shall have jurisdiction to decide claims, against the applicant, to the right to the grant of a European patent.

Pursuant to Article 164(1) EPC, the Protocol is considered as an “integral part” of the EPC, and therefore is part of an international agreement. So, I think the decision by the judge not to apply the Protocol is a pretty big deal.

Let’s turn to the specifics of the case. This is a dispute between a British company, NCAM Technologies Ltd. and a French company, Solidanim, both active in the field of motion picture technology. Both hold IP on similar technologies, respectively called NCAM Live and SolidTrack.

Solidanim filed a French patent application in December 2011, followed by a European patent application in December 2012, claiming the priority of the French application. The French patent was granted, and the European application is still pending.

NCAM Technologies Ltd. filed a British patent application in May 2012, followed by another British patent application and a PCT application in May 2013, claiming the priority of the initial 2012 filing. The PCT application entered regional phase at the EPO.

Filing date 1918 – the early days of cartoon technology.

Apparently, Solidanim told clients that NCAM had stolen its SolidTrack technology. NCAM did not like that and sued Solidanim in front of the Paris Tribunal de grande instance (TGI) in October 2015. NCAM requested that Solidanim’s French patent be held invalid, and that Solidanim be declared guilty of unfair competition due to disparagement.

In March 2016, Solidanim counterclaimed for infringement of its French patent and of its European patent application and for unfair competition.

Even more importantly for the present post, Solidanim claimed ownership of NCAM’s British patent, PCT application and resulting European application.

In June 2016, NCAM retaliated by presenting the case management judge with a number of procedural requests:

  • that the proceedings should be stayed with respect to Solidanim’s infringement claims;
  • that the proceedings should continue with respect to NCAM’s nullity claim; and
  • that the court should acknowledge its lack of jurisdiction with respect to Solidanim’s ownership claim.

This leads us to the order issued by the case management judge in November 2016. The first request was quite easily granted. Indeed, infringement proceedings based on a pending European patent application are stayed as of right (article L. 615-4 Code de la propriété intellectuelle). Furthermore, infringement proceedings based on a French patent are also stayed as of right if there is a parallel European patent application which is still pending (article L. 614-15 Code de la propriété intellectuelle). This is because the French patent is bound to totally or partially disappear after the grant of the European patent (more specifically, at the end of the opposition time limit or at the end of the opposition proceedings, if any).

Turning to the second request, there was no mandatory rule for the judge to follow. He had discretion whether to proceed further or to stay. He decided to stay, “for a good administration of justice“, according to the ritual phrase, due to the parallel European patent application still being examined at the EPO, and since the fate of the French patent is closely tied to that of the European application.

But the big prize was the third request. NCAM based its request on the Protocol on Recognition, and more specifically article 2:

Subject to Articles 4 and 5, if an applicant for a European patent has his residence or principal place of business within one of the Contracting States, proceedings shall be brought against him in the courts of that Contracting State.

Articles 4 and 5 are irrelevant here, as they relate to employees’ inventions and cases in which there is a preexisting agreement with a jurisdiction clause in place between the parties.

So, this is quite straightforward. According to article 2 of the Protocol, the British courts should have exclusive jurisdiction to rule on Solidanim’s claim for ownership of NCAM’s European application, since NCAM has its principal place of business in the UK.

However, Solidanim relied on the Brussels I regulation, namely regulation (EU) No. 1215/2012, already discussed last week. More specifically, Solidanim relied on article 8(3) of the regulation, per which:

A person domiciled in a Member State may also be sued: […] (3) on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending.

Claims were already pending in the Paris TGI due to NCAM’s original complaint. Solidanim’s case was that their ownership counterclaim arose from the same facts on which the original nullity and unfair competition claims were based. As a result, the French court also had jurisdiction under the Brussels I regulation.

The judge thus had to address two questions:

  • First, as a matter of fact, did Solidanim’s ownership counterclaim indeed arise from the same facts on which the original claims were based?
  • Second, as a matter of law, which provisions should prevail: those of the Protocol on Recognition or those of the Brussels I regulation?

As to the first point, the judge agreed with Solidanim that the conditions of article 8(3) of the regulation were met:

[…] The latter claims are closely related to the circumstances of fact and relations between the parties, which need to be assessed so as to determine whether the filings made by NCAM did or did not violate Solidanim’s rights on the FR’057 patent, the validity of which is challenged in front of the Parisian court. 

I am not sure I fully understand why a nullity claim concerning one patent is necessarily closely related to an ownership claim concerning other, later applications by another party – apart from the general background of the case. On the other hand, it seems quite clear that NCAM’s unfair competition / disparagement original claim was closely related to Solidanim’s ownership counterclaim. In both cases, the issue, to put it bluntly, was whether or not NCAM had “stolen” Solidanim’s technology.

But the legal issue is certainly the most interesting one. Both the Protocol and the regulation contain some general provisions on how they should be articulated with other legal instruments.

On the one hand, according to article 11(1) of the Protocol:

In relations between any Contracting States the provisions of this Protocol shall prevail over any conflicting provisions of other agreements on jurisdiction or the recognition of judgments.

So the Protocol proclaims itself to be superior to any other agreement. But the regulation is not an agreement. It is a piece of EU law.

On the other hand, the regulation contains an entire chapter (articles 67 to 73) on its relationship with other instruments. This chapter contains general guidance and some specific provisions, but no specific provisions regarding the Protocol on Recognition.

So the judge turned to a CJEU decision relevant for this issue, namely C-533/08 (TNT Express Nederland BV v. AXA Versicherung AG) of May 4, 2010. This decision deals with the articulation between regulation (EC) No. 44/2001, which was the previous version of the Brussels I regulation, and an international agreement, namely the Convention on the Contract for the International Carriage of Goods by Road, signed in Geneva in 1956.

The court interpreted article 71 of regulation 44/2001 as meaning that:

in a case such as the main proceedings, the rules governing jurisdiction, recognition and enforcement that are laid down by a convention on a particular matter […] apply provided that they are highly predictable, facilitate the sound administration of justice and enable the risk of concurrent proceedings to be minimised and that they ensure, under conditions at least as favourable as those provided for by the regulation, the free movement of judgments in civil and commercial matters and mutual trust in the administration of justice in the European Union (favor executionis).

Article 71 of regulation 1215/2012 is similar to article 71 of regulation 44/2001. Therefore, the judge applied the criteria set by the supreme court of the EU, based on the premise that the same criteria should apply whatever the international agreement at stake is.

The judge acknowledged that the Protocol on Recognition affords a high degree of predictability.

However, turning to the objectives of sound administration of justice and of minimizing the risk of concurrent proceedings, the judge noted that the claims and counterclaims at stake were so closely related that the sound administration of justice and the minimization of the risk of concurrent proceedings were better served if all claims and counterclaims were handled by the same court.

The judge noted that

On the one hand, the [NCAM] patents relate to a system similar to the one claimed by Solidanim in its FR’057 patent, in that they deal with real-time merging or composing of computer-generated 3D objects and a video stream from a video camera. And on the other hand, the ownership claims rely on the same factual circumstances relating to the relationships between the parties and their employees, which lead them both to claim a primacy on the inventions provided in these different patents or applications and to consider that the statements made by the parties against each other constitute acts of unfair competition. 

Consequently, said the judge, the Protocol for Recognition did not pass the test set in C-533/08 in the present circumstances, and it should thus simply be ignored, to the benefit of the Brussels I regulation.

Let’s see how this case further develops. It could even be a matter for further reference to the CJEU down the road, could it not?

As a side note, in a few years’ time, I assume that the Brussels I regulation will no longer apply to the UK, so that a similar situation will have to be handled completely differently.


CASE REFERENCE: Tribunal de grande instance, 3ème chambre 2ème section, ordonnance du juge de la mise en état, November 24, 2016, NCAM Technologies Ltd. v. Solidanim, RG No. 15/15648.

Borderline

Cross-border litigation is a relatively uncommon but quite fascinating area of European patent law. I naively view it as a fairytale land of Italian torpedoes and Dutch spiders.

So I found it very interesting when I read a recent French decision in which the judge crossed the borderline and trod this unbeaten path.

In this case, several companies, including UK-based Furnace Solutions Ltd. and other French related companies, as well as one individual, filed a declaratory action of non-infringement in front of the Paris Tribunal de grande instance (TGI) against the French company CTP Environnement, as the owner of European patent No. EP 1528318.

Remarkably, the plaintiffs asked the French court to declare that both the French part and the British part of the patent are not infringed. The patent proprietor claimed that the TGI lacks jurisdiction. Such a procedural defense was addressed not by the full panel of the court but by the case management judge, in an order dated November 18, 2016.

The pan-European litigation game.

In brief, the judge rejected the lack of jurisdiction defense, and thus decided that the case could proceed further and that the TGI could rule on the declaratory claims with respect to both France and the UK.

In order to reach this conclusion, the judge reviewed the atlas of cross-border litigation, namely the so-called Brussels I regulation, formerly regulation (EC) No. 44/2001, still formerly known as the 1968 Brussels Convention, and nowadays known as regulation (EU) No. 1215/2012.

The central issue at stake was the articulation between articles 4(1) and 24(4) of the regulation.

According to article 4(1):

Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

An action for declaration of non-infringement is a lawsuit against the patent proprietor. Therefore, this provision apparently makes it possible for a third party to file a declaratory action relating to any national part of a European patent in the courts of the country in which the patent proprietor has its seat.

In the present case, CTP Environnement is based in France, which is why the action was filed in front of the Paris TGI.

But in IP matters there is a limit to this general jurisdiction rule, which is set in article 24(4):

The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties: […]  in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place. Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that Member State.

So the courts of each country have exclusive jurisdiction with respect to any issues of “registration” (whatever that means) and validity (well, we know what that means) of the respective national parts of a European patent. In other terms, nullity of the UK part of a European patent cannot be requested in France, it has to be requested in the UK.

According to the CJEU case C-4/03 (GAT v. LuK), exclusive jurisdiction as defined above applies in “all proceedings where the validity of the patent is decisive, irrespective of whether this is raised by way of an action or a plea in objection“. In other terms, not only invalidity claims or counterclaims, but also invalidity defenses are forbidden territory for cross-border litigation. This has actually been made clearer in the above version of article 24 than it was in the original 1968 Brussels Convention based on which GAT v. LuK was issued.

CTP’s defense in the present case was that a declaratory action may very well give rise to an infringement counterclaim, and then a nullity counter-counterclaim. Therefore, should the French court accept to hear the UK part of the declaratory action, it could impinge on prohibited UK-only validity issues.

In addition, the complaint made reference to a possible objection of extension of subject-matter of the patent, which meant that the validity of the patent would be challenged.

The judge rejected these arguments with the following brief reasoning:

In the present case, and at the present stage, the lawsuit concerns a claim for declaration of non-infringement without for the time being any counterclaim for infringement by CTP nor any claim for nullity of the UK part of the allegedly infringed patent, which would then be a matter for jurisdiction of British courts. 

Therefore, at the present stage of the lawsuit, article 24(4) […] is not applicable. Since the defendant has its seat in France, the present court has jurisdiction based on article 4 […] so that the defense of lack of jurisdiction must be rejected. 

It is clear from the above statements that the situation may change and that there may be a lack of jurisdiction in the future, if further claims are filed. What is less clear is whether only an invalidity claim by Furnace Solutions et al. would trigger this lack of jurisdiction, or whether also an infringement counterclaim by CTP would lead to the same result.

At any rate, the approach taken by the French judge in Furnace Solutions seems to be consistent with the outcome of the Actavis v. Eli Lilly pemetrexed case in the UK, where the British courts ruled on a declaration of non-infringement of a European patent in the UK but also France, Italy and Spain. See for instance the second pemetrexed appeal judgment dated 2015 here. In this case as well, the validity of the patent was expressly not challenged.

Together with the C-616/10 Solvay v. Honeywell CJEU ruling of 2012, which reopened the door to cross-border injunctions in the form of interim relief, these cases could pave the way for a revival of cross-border litigation – pending the UPC big bang.

As a final remark to those eager to follow in the footsteps of Furnace Solutions Ltd., the admissibility of a declaration of non-infringement in France is subject to a mandatory stage of pre-litigation negotiation.

Article L. 615-9 Code de la propriété intellectuelle provides that:

Any person who proves exploiting industrially on the territory of a Member State of the European Economic Community, or serious and effective preparations to that effect, may invite the owner of a patent to take position on the opposability of his title against such industrial exploitation, the description of which shall be communicated to him.

If said person challenges the answer made, or if the patent proprietor does not take position within a deadline of three months, they can sue to have a court rule that the patent does not impede said exploitation, without prejudice to a patent nullity action and to a later infringement action if the exploitation is not conducted in the terms specified in the description mentioned in the previous paragraph. 

In summary, prior notice to the patent proprietor is mandatory. Furthermore, in view of the three-month deadline, it seems virtually impossible to validly launch a surprise declaratory action in this country.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 2ème section, ordonnance du juge de la mise en état, November 18, 2016, Furnace Solutions Ltd. et al. v. CTP Environnement, RG No. 15/06637.