An Arrow Through Declaratory Relief?

What can a business do if it wants to launch a product on the market but a competitor with patent application rights keeps evergreening those patent applications by abandoning and filing divisionals? In this way, it can be that some patent applications are never fully tested, but nevertheless can create uncertainty for competitors considering launching a new product.  Such uncertainty can exist in any sector, but it tends to happen most frequently in the pharmaceutical field.

The British courts have long provided assistance to a would-be market entrant in such circumstances in the form of a so-called Arrow Declaration which takes its name from the case Arrow Generics Ltd v Merck & Co Inc [2007] EWHC 1900 (Pat), [2008] Bus LR 487. In the words of Arnold LJ in the recent case of Teva UK Ltd and another v Novartis AG [2022] EWCA Civ 1617:

“An Arrow declaration is a declaration that a product, process or use was lacking in novelty or obvious as at the priority date of a patent application. The point of such declaration is that it is in effect a declaration that the claimant will have a Gillette defence to any subsequent claim for patent infringement in relation to that product, process or use: see Gillette Safety Razor Co v Anglo-American Trading Co Ltd (1913) 30 RPC 465. Thus it enables the court pre-emptively to determine a patent infringement case before the patent has even been granted without having to decide whether the patent would be invalid, or not infringed because the claimant’s product, process or use would not fall within the claims, if and when granted.”

In the recent Teva v Novartis case the Court of Appeal, upholding the decision of Bacon J in the High Court, decided that it was not proper in this case to make such a declaration. To understand the reasons why the application was brought but was ultimately unsuccessful, it is necessary to delve a little into the history to Novartis’ patent applications and the litigation between the parties:

• Novartis marketed a drug under the trade mark Gilenya for the treatment of relapsing-remitting multiple sclerosis. The market for Gilenya is valuable - $2.8 billion worldwide, with annual sales in the U.K. alone of £46 million.
• Patent and regulatory protection for Gilenya finally expired on 22 March 2022.
• As is not uncommon in order to extend their exclusivity in Gilenya, Novartis had made patent applications for formulations of, and dosage regimes, including:
• A European patent application EP 2 037 906 - filed June 2007 - amended March 2009 - withdrawn April 2015
• A first divisional EP 2 698 154 - filed September 2013 - deemed withdrawn May 2016
• A second divisional EP 2 959 894 (“EP 894”) - filed July 2015 - granted October 2022 - opposed by Teva and nine others.  (Final determination of the opposition proceedings is not expected for many years.)
• A third divisional application EP 3 797 765 - filed November 2020
• February 2022 - Teva obtained marketing authorisation for its generic product and commenced an application for an Arrow Declaration so that it could launch on the U.K. market with certainty.
• March 2022 - Novartis commences a cross-claim for infringement under EP 894 and seeks an interim injunction. (At this time EP 894 had not formally been granted, but in view of the decision of the Technical Board of Appeal at the EPO it was certain that it would be granted.)
• April 2022 - Novartis’ application for an interim injunction was refused, but an injunction was ordered preventing the sale of the generic until determination of Novartis’ application for permission to appeal.
• May 2022 - Novartis’ application for permission to appeal was refused.
• August 2022 - Novartis stated that they were removing the U.K. designation from EP 894 (and EP 3 797 765) and applied to discontinue their infringement claim.
• September 2022 - Novartis applies to strike out Teva’s claim for an Arrow Declaration. Meade J orders that the trial on Teva’s claim for an Arrow declaration is confined to the issue of whether, as a matter of discretion, a declaration should be granted in circumstances where Novartis no longer have any relevant patent protection in the U.K.
• October 2022 - In the High Court Bacon J refused the application for an Arrow Declaration. Separately Novartis commences infringement claims and seeks interim injunctions in a number of European states including most importantly Germany.
• December 2022 - The Court of Appeal upholds Bacon J’s decision.

The judge noted that Novartis had declined to provide any explanation for dedesignating the U.K., and inferred that the motive for doing so was to shield the portfolio from the risk of an adverse decision in the English Patents Court. Even so, one may wonder why Teva persisted with its application for an Arrow Declaration in the English Courts in circumstances in which the threat from Novartis’ patents/applications in the U.K. had gone as a result of the U.K. dedesignation. Teva put forward five reasons:

• Novartis’ aggressive enforcement of EP 894, including the fact that it had obtained injunctive relief.
• A declaration would provide clarity to Teva’s customer in the U.K., the NHS.
• The inadequacy of Novartis’ undertakings in dispelling the uncertainty on the U.K. market.
• The potential utility of a U.K. judgment to a decision in Germany on whether to grant a preliminary injunction against Teva. (Due to the bifurcated patent litigation system in Germany, a party often faces an injunction after an infringement trial for a year or so pending a decision on validity in a different court - the so-called “injunction gap”. A decision from a respected Court on the same EP patent can be persuasive in deterring the German Court from granting an injunction in the injunction gap period.)
• Teva’s supplies to the U.K. transited through Country A (which country is confidential and not recorded in the Judgment), such that an injunction against Teva in that country would threaten that supply chain to the U.K.  Accordingly, if a declaration of the English Court was influential on the Court in Country A the English Court should make the declaration in order to mitigate the risk of disruption to the U.K. market.

Teva accepted that the first of these five points was not a stand-alone reason for granting a declaration. The second and third reasons were held to lack merit.

As to the fourth point, Bacon J accepted that a German Court would undoubtedly take account of a declaration from the English Court and would give it such weight as considered appropriate, but went on to state:

“… the fundamental problem with this aspect of Teva’s case is that the case-law … consistently establishes that if the only or predominant purpose of the declaration sought is to use the judgment for a foreign court, this court will look carefully at the justification for the declaration. In such a case, a declaration is only likely to be granted in unusual cases where [there is] a very compelling justification for doing so.”

And as to the fifth point, Bacon J concluded it was inevitable in a world of global supply chains that an injunction in one territory could be disruptive of the supply chain to the U.K. and that a declaration by the Patents Court might well have an impact on this but was not persuaded that this was sufficient.

The Court of Appeal agreed with Bacon J and her decisions, save for concluding that Bacon J fell into error in one respect, and in doing so was too favourable to Teva. Arnold LJ (who gave the leading Judgment) felt that once Bacon J had:

“… found that a declaration was not required in order to redress uncertainty in the UK market, it followed that … the only purposes which could be served by a declaration were to assist the courts of Germany and Country A in deciding issues under their own laws. … assisting a foreign court to decide an issue under its own law is not a legitimate reason for the grant [by an English Court] of declaratory relief.”

Accordingly, the Court of Appeal upheld the decision of the High Court not to grant an Arrow Declaration.

This case is perhaps to be contrasted with the decision last year in Advanced Bionics and another v Med-El Elektromedizinische Gerate GmbH [2021] EWHC 2415 (Pat). In that case the English High Court ordered an expedited trial of a patent infringement claim in order that a Judgment of the English Court would be available by the time the German Court made a decision on granting an injunction. In that case, however, the court held that an injunction in Germany during the injunction gap period could have a material impact on the market in the U.K. Furthermore, this was not a case in which there were no material issues before the English Court as both infringement in the jurisdiction and the validity of a British (EP-GB) patent were in issue. Interestingly in that case in the subsequent English substantive Judgment, the patent was held to be invalid, but had it been valid it would have been infringed, whereas the German Court reached a different decision on infringement, demonstrating the point that although decisions in one European Patent contracting state may be considered and reviewed by a court in another contracting state, they are not binding.

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This article does not establish a lawyer-client relationship.  The views expressed herein are solely the views of the author and do not represent the views of Brown Rudnick LLP, those parties represented by the author, or the parties represented by Brown Rudnick LLP.