Actavis v Eli Lilly: a new era for UK patent law

The decision in Actavis v Eli Lilly was handed down by Lord Neuberger for the UK Supreme Court in July this year. It sweeps away the established law on determining the metes and bounds of a patent in the UK. Ironically, at a time when the UK is distancing itself from its EU neighbours, the UK Supreme Court stepped into line with the likes of Germany and the Netherlands.

The purpose of this article is not to give a detailed review of the case; others have done this well. Rather, it is to focus on how the law has changed in the UK, and on some of the effects.

Death of ‘purposive construction’?

The UK courts previously interpreted claims using so-called “purposive construction”. This law was settled (many thought decisively so) by Lord Hoffman in Kirin-Amgen v Hoechst Marion Roussel. Under purposive construction, the critical question is “what would a person skilled in the art have understood the patentee to have used the language of the claim to mean?”

The UK position must comply with the European Patent Convention (EPC), specifically the Protocol on the Interpretation Article 69 EPC, article 2 of which reads:

“For the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims.”

Equivalents were to be considered when purposively construing the claim, but those equivalents were not necessarily covered by the patent. This approach, Lord Hoffman held, struck the right balance between a strict, literal interpretation of the claim, and one where the words of the claim become a mere guide.

With Actavis, Lord Neuberger changed the law so that some equivalents that are not covered by a purposively construed claim can nevertheless be an infringement. To him, purposive construction was not in line with article 2 of the Protocol. He defined a new test based upon the “protocol questions” from Improver v Remington:

Notwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention, ie, the inventive concept revealed by the patent?

Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention?

Would such a reader of the patent have concluded that the patentee nonetheless intended that strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention?

For a variant to infringe, the answers must be yes, yes and no. This test significantly broadens the scope of a patent—by how much, we won’t know until we have case law. Patentees should be happy, potential infringers less so, but neither will know quite where they stand.

“Given that the law is now as stated by the Supreme Court in Actavis v Lilly, it seems to me that it is not possible for the court to conclude at present that the defendants’ allegation of infringement has no real prospect of success," Mr Justice Arnold

How does it affect us?

A new ‘validity gap’

Actavis hints that the scope of claims for assessing validity and infringement may be different, which is anathema to most UK patent practitioners. This potentially puts patentees in a dubiously strong position, and limits opportunities to run a “squeeze” defence.

Narrow claims

Patentees often have to accept narrow claims because of prior art, lack of disclosure, or formal issues such as “added matter”. Narrow claims are now more valuable because, simply put, their scope is now broader. This will affect prosecution strategies, and formerly marginal patents may now be resurgent.

It’s certainly tempting to obtain a defensible, narrow claim to enforce using equivalence, rather than fight for a broad claim of more dubious validity.

Freedom to operate

Patent scope has increased, and the boundaries have greatly blurred. This makes freedom to operate (FTO) harder to achieve, and it’s harder to know when you have it. Identifying the “inventive concept” will be of paramount importance in assessing the scope, which requires a deep analysis of the prior art. Existing FTO opinions may now be wrong. Licensing activity is likely to increase.

Prosecution history

While Lord Neuberger was keen to limit the significance of prosecution history, it undoubtedly now plays a part. While care is already taken with prosecution history (particular in view of the US), there may be an opportunity to imply a broad scope under equivalence, and certainly to avoid reining it in.

Change is already being felt. In Mr Justice Arnold’s decision in Generics UK & Synthon v Yeda Research & Teva Pharmaceuticals this year, he said: “Given that the law is now as stated by the Supreme Court in Actavis v Lilly, it seems to me that it is not possible for the court to conclude at present that the defendants’ allegation of infringement has no real prospect of success.” In other words, a previously hopeless case for infringement now has legs.

Douglas Drysdale is a partner at HGF. He acts for a broad range of clients within the life sciences and chemical fields. He has extensive experience handling contentious IP matters for large and small clients, including high-profile opposition and appeal proceedings at the EPO, and he has a particularly strong reputation with SMEs and universities. He can be contacted at: ddrysdale@hgf.com