Patent Law at the UK Supreme Court 2019

By Thomas Brick, Trainee Patent Attorney

Following a bumper year of patent activity in 2018, the UK Supreme Court did not slow down in 2019, issuing judgements on obviousness, compensation and hearing cases on FRAND disputes. This blog is a whistle-stop tour of the patent related UK Supreme Court cases of 2019 and takes a brief look ahead to 2020.

Obviousness

In November 2018, the Supreme Court heard the case of Actavis Group PTC EHF and others v ICOS Corporation and others concerning whether a dosage regime patent for tadalafil [1] – which ICOS’ exclusive licensee Eli Lilly sold under the brand name CIALIS for the treatment of erectile dysfunction and benign prostatic hyperplasia – was obvious. The pharmaceutical community paid particularly close attention to the case, with four interventions from industry bodies.

The Supreme Court’s decision of March 2019 focused on the correct approach to the assessment of obviousness . In addressing the statutory question of obviousness [2] in Section 3 of the Patents Act 1977, it is common for English courts to adopt the so-called Windsurfing/Pozzoli test. Whilst both this approach and the EPO alternative of the “problem-solution” approach address the inventive concept of the claims, Lord Hodge noted in his judgement that neither approach should be “applied in a mechanistic way”. The question of obviousness must be considered on the facts of each case. Factors that were held to be relevant considerations in Actavis v ICOS included the following:

  • Whether, at the priority date, something was “obvious to try” – that is, whether it was obvious to undertake a specific piece of research which had a reasonable or fair prospect of success;
  • The routine nature of the research and any established practice of following such research through to a particular point;
  • The burden and cost of the research programme;
  • The necessity for and the nature of the value judgments that the skilled team would have in the course of a testing programme;
  • The existence of alternative or multiple paths of research;
  • The motive of the skilled person; the notional skilled person is not assumed to undertake technical trials for the sake of doing so but rather because he or she has some end in mind;
  • The fact that the results of research which the inventor actually carried out are unexpected or surprising;
  • The courts have repeatedly emphasised that one must not use hindsight, which includes knowledge of the invention, in addressing the statutory question of obviousness;
  • Whether a feature of a claimed invention is an added benefit in a context in which the claimed innovation is obvious for another purpose;
  • The nature of the invention.

The Supreme Court also confirmed that, with dosage patents, the skilled person aims for a dose as low as possible so as to be effective – this is ordinarily the appropriate dosage regime and, consequently, is an obvious one.

Inventor compensation 

In English law, the legal rights to an invention created by an employee (in the course of their normal duties, provided an invention might reasonably be expected to result from the employee carrying out their duties) belong to their employer. Section 40 of the Patents Act 1977, however, stipulates that an employee inventor can apply for compensation where the patent (or, for patents applied for after 1 January 2005, the invention underlying it) is of “outstanding benefit” to the employer.

Professor Shanks, while in employment at Unilever in 1982, had invented a system for measuring the glucose concentration in bodily fluids. Patents for the invention were not exploited by Unilever themselves, but rather licenses were granted to various companies at a total consideration of about £20.3 million. Unilever later sold the patent portfolio, bringing the total net benefit from the patents to around £24.3 million.

In 2006, Professor Shanks sought compensation from Unilever at the UKIPO under Section 40 UKPA 1977. The UK IPO found that the benefit provided by the patents fell short of being “outstanding”. Professor Shanks subsequently appealed this decision to the High Court [3] and then to the Court of Appeal [4] but was unsuccessful on both occasions.

The Supreme Court heard Professor Shanks’ appeal in February 2019 and decided in October 2019 that the patents were indeed of “outstanding benefit” to Unilever and that Professor Shanks was entitled to a fair share of the benefit (£2 million in this instance) [5] .

The Supreme Court’s decision in this case has provided important guidance as to the manner in which a claim for employee compensation under Section 40 UKPA 1977 is to be dealt, particularly where the employers are large corporations.

FRAND

2018 was a significant year for the English courts on the topic of fair, reasonable and non-discriminatory (FRAND) licensing of patents. Following the Court of Appeal decision in Unwired Planet International Ltd. v Huawei Technologies Ltd. [6], the UK became arguably the most attractive forum globally for proprietors of standard essential patents (SEPs) seeking assistance in settling licensing negotiations – in part because of the high rates determined by Lord Kitchin in this case.

The Court of Appeal upheld High Court Judge Colin Birss’ insistence of a global FRAND license on Unwired Planet’s SEPs. Mr Justice Birss originally found that, for any given situation, there is only one set of FRAND terms and one FRAND rate. The appellate court however opined that multiple rates and multiple sets of terms may all be fair and reasonable. Similar issues concerning jurisdiction were raised in the Court of Appeal proceedings between Huawei and ZTE v Conversant [7] resulting in the joining of cases.

2019 saw the culmination of this saga, with a four day Supreme Court hearing in October of this year that dealt with four questions:

1. Does the English court have the power or jurisdiction, or is it a proper exercise of any such power or jurisdiction without the parties’ agreement:

  • To grant an injunction restraining infringement of a UK SEP unless the defendant enters into a global licence under a multinational patent portfolio;
  • To determine the rates/terms for such a licence; and
  • To declare that such rates/terms are FRAND?

2. If the answer to (1) is “yes”, is England the proper forum for such a claim in the circumstances of the Conversant proceedings?

3. What is the meaning and effect of the non-discrimination component of the FRAND undertaking and does it mean that materially the same licence terms as offered to Samsung must be offered to Huawei in the circumstances of the Unwired case?

4. Does the CJEU’s decision in Huawei v ZTE mean that a SEP owner is entitled to seek an injunction restraining infringement of those SEPs in circumstances such as those of the Unwired case?

It is likely that the Supreme Court will deliver its decisions in early 2020, which will determine a number of key issues that will set the path for future litigation over SEPs and FRAND licensing.

Sufficiency (still to come)

In late November 2018, the Supreme Court granted permission to appeal the decision of Kymab Ltd. v Regeneron Pharmaceuticals Inc. [8] on the grounds that the Court of Appeal wrongly interpreted and applied the law of insufficiency. The two patents of concern [9] [10], relate to biotechnology, and in particular concern the production of human antibodies using transgenic mice. No date has yet been set for a hearing, but we may see even more patent activity at the UK Supreme Court in 2020.

[1] EP(UK) 1173181

[2] [2019] UKSC 15

[3] [2014] EWHC 1647 (Pat)

[4] [2017] EWCA Civ 2

[5] [2019] UKSC 45

[6] [2018] EWCA Civ 2344

[7] [2019] ECWA Civ 38

[8] [2018] EWCA Civ 671

[9] EP(UK) 1360287

[10] EP(UK) 2264163