Saturday, 29 August 2009

Costs in patent infringement and invalidity cases

In Novartis AG & Anor v Johnson & Johnson Medical Ltd & Ors [2009] EWHC 2029 (Pat) Kitchin J had to consider what award of costs should be made when the claimants had won on some but not all the points in their claim. He had held in Novartis AG & Anor v Johnson & Johnson Medical Ltd (t/a Johnson & Johnson Vision Care) & Anor [2009] EWHC 1671 (Pat) that the patent in suit was invalid for insufficiency, but that it was not invalid for want of novelty or for obviousness. The defendants' product infringed some of the claims, but not others. This might all seem academic given that the patent was invalid anyway: but the defendants said this was an exceptional case in which they should get all their costs.

CPR 44.3 is the governing rule, and in SmithKline Beecham v Apotex [2004] EWCA Civ 1703; [2005] FSR 24 Jacob LJ explained how to apply it in a patent case. Costs should be estimated on an issue by issue basis so far as this was reasonable, but although this was fairer it was not an exact science. In paras 7 and 8 of his judgment in Monsanto v Cargill [2007] EWHC 3113 (Pat) Pumfrey J explained further how the CPRs applied, including the important phrase: "the overall winner is likely (save in the most exceptional circumstances) to be entitled to payment of all his costs which are not or cannot be allocated to a particular issue".

The costs involved here were not insignicant. In fact, they show the wisdom of doing all one can to avoid being involved in patent litigation. The claimants had run up fees of £2.32 million. The defendants' professional fees were £3.65, with disbursements of £820,000.

The judge thought that the defendants had clearly come out overall winners. They had successfully seen off a challenge that would have closed down their business in the offending products in the UK, and disrupted it throughout Europe. They were entitled to their general costs. Both parties had conducted themselves in ways that caused the costs to escalate, but the judge thought they had not done so unreasonably and noted that this was a hard-fought case with a great deal at stake.

The claimants argued, odd though it may seem, that they won on the vast majority of issues. They lost on one infringement point and on insufficiency: but the insufficiency of their patent specification meant that they were dead in the water. The defendants said that the novelty and insufficiency arguments went hand in hand, in a classic "squeeze" - arguing that either the patent does not disclose the invention in sufficient detail to enable it to be worked, or if it does it lacks novelty or is obvious. In this case, it was reasonable to run the novelty and obviousness claims. The issues were sufficiently circumscribed to justify an issue-based approach, and the judge proceeded to apportion the costs on this basis.

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