Secretary of State v Servier: Supremes decline to broaden scope of unlawful means tort

When a patent is held to be invalid for want of novelty or inventiveness, a party which has suffered loss by being denied access to cheaper products cannot get damages on the basis that their loss was caused by unlawful means. In Secretary of State for Health v Servier Laboratories Ltd, where the loss arose because there were no generic equivalents of the invalidly-patented drug, the Supreme Court held that the "dealing requirement" laid down in OBG Ltd v Allan [2008] 1 AC 1, which states that the unlawful means should have affected the third party’s freedom to deal with the claimant, is a necessary element of the tort. So it's not exactly a patent case, but it deals with interesting questions about what an applicant or patentee can and can't do to protect their invention when novelty or inventiveness is in doubt.

The issue of the validity of the UK designation of the patent in suit was held to be invalid as long ago as July 2007 by the late Pumfrey J held ([2007] EWHC 1538 (Pat)). It lacked novelty, or alternatively was obvious over another existing patent. The Court of Appeal upheld that decision in May 2008 ([2008] EWCA Civ 445), the leading judgment being given by Jacob LJ, and in 2009 the EPO Technical Board of Appeal revoked the patent.

Causing loss by unlawful means is an economic tort, consisting of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful and which is intended to cause loss to the claimant. In this case, the claimant was of course the Secretary of State (not the recently departed one - it would have been Jeremy Hunt at the relevant time) and the third parties whose freedom was interfered with were the European Patent Office and the courts of England and Wales. As neither of the third parties had dealt with the Secretary of State, the claim could only succeed if the court said that the dealing requirement did not form part of the ratio of OBG or departed from that case (which, incidentally, was one of three cases dealt with together by the House of Lords, one of the others being better-known to IP lawyers: Douglas v Hello!).

To cut a fairly long story (30 pages) short, the Supremes could see no reason to do either of these things. In reviewing Lord Hoffmann's reasons in OBG for imposing the requirement, they listed seven good reasons for it, which should be enough for anyone. The claim was struck out by the judge at first instance, the Court of Appeal upheld him, and now the Supremes have too.

Whether the patentee deceived the EPO or the courts is another matter: for the purposes of the strike-out, it was assumed that they had, but the important matter is that there was no sufficient connection between the alleged deception and the loss that the Secretary of State claimed to have suffered. Under the 1966 Practice Statement which remains effective in the Supreme Court (see Practice Direction 3, para 3.1.3), there was no reason for the Supreme Court to depart from OBG, no injustice that called for the invocation of that Statement.

But this is an intellectual property law blog, so we should leave the tort law to others - if the Secretary of State cannot claim on the basis of unlawful means, what can he (or, though not then and not now, she) do about what would (if proven) be reprehensible conduct? Jacob LJ dealt with this back in 2008, saying that there might be a sanction under competition law but noting that the application of that body of law to unmeritorious patents was not something that had been explored. There is, it seems, a claim that Servier's conduct amounts to an abuse of a dominant position, and we (and the Secretary of State) must now wait to see how that goes. It certainly looks more promising, and more closely related to patent law than the tort under consideration in today's judgment.