The Supreme Court in London today issued its judgement in the appeal brought by the Secretary of State for Health against the dismissal by the Court of Appeal in 2019 of its claim against Servier Laboratories Ltd under the tort of causing loss by unlawful means. In a unanimous decision, the Supreme Court dismissed the appeal.

 

Background

 

Servier Laboratories Ltd., the respondent, develops and manufactures the medicinal product perindopril. Patents for the product were granted by the European Patent Office and upheld at first instance following opposition proceedings. The respondent asserted its patent rights in the UK High Court, obtaining an injunction. However, in 2005, the High Court held that the UK designation of the patent under which the injunction was granted was invalid due to lack of novelty or obviousness. That decision was upheld by the Court of Appeal in 2008 and in 2009 The Technical Board of Appeal of the European Patent Office revoked the patent.

 

The appellant’s interest in this matter derives from the fact that they fund the cost of drugs dispensed by the NHS. In 2011, they brought proceedings against the respondent for damages and interest in excess of £220 million for breaches of competition law and under the tort of causing loss by unlawful means. The unlawful means tort, the subject of this judgement, is based on the allegation that Servier made representations to both the EPO and the English courts as to the validity of their patent which they knew were false, or were recklessly indifferent to their veracity. This caused the patent to be wrongfully upheld and resulted in delay to generic medicines entering the market and a higher price having to be paid by the NHS.

 

Commentary

 

The use of the tort of causing loss by unlawful means in a patent case is unusual. If the Supreme Court had allowed this appeal the implications for patent practice and practitioners in the UK would have been profound because it would have opened a cause of action to a new class of claimants on the periphery of patent infringement and validity proceedings, namely those adversely affected financially by the initial upholding of a patent which is eventually proven invalid.

 

In the present case, the claimant/appellant was claiming damage on the basis that it had to pay a higher price for a drug than it would have had to have paid had the patent for it never been granted or upheld. One might say that that is precisely what patents are for, so what is there for the claimant/appellant to complain about? The answer lies in how the patent was allegedly obtained and upheld – by fraud and misrepresentation, according to the claimant/appellant. The alleged fraud and misrepresentation by the defendant/respondent before the patent office was the ingredient that could be used to trigger the cause.

 

Interestingly, the case did not turn on the presence or absence of any fraud or misrepresentation, (strenuously denied by the defendant/appellant, it must be noted) despite the withering criticism levelled at it by the High Court and Appeal judges. That was assumed to be proven. The question was one of law, namely whether the ingredients of the tort established as essential by an earlier House of Lords decision were present. The Supreme Court, agreeing with Mr Justice Roth at first instance and the Court of Appeal, found otherwise. Although it was accepted that the patent offices were the subject of unlawful acts by the defendant/respondent, it was found that there was no interference with their freedom to deal with the claimant/appellant. Rather neatly, the ingredient found to be missing in this case is one that is unlikely to ever be present in any similar case, and thus it appears that this novel and clever new application of the tort of causing loss by unlawful means to patent cases ends here.

 

In the end, although it was open to them to do so, the Supreme Court declined the claimant/appellant’s invitation to widen the ambit of this tort, despite the tempting prospect of a large boost to the public purse. Had the claimant/appellant framed its argument in terms of an exception restricted to a defined class of claimants, public bodies for instance, perhaps the outcome would have been different.

 

 

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