UK Supreme Court shoots down NHS £220m drug patent suit
The UK Government has failed to convince UK Supreme Court judges that Servier Laboratories misrepresented its blood pressure drugs patent in legal proceedings to block generic competitors from entering the market.
Both the UK Secretary of State for Health and the NHS Business Services Authority sought to pursue a £220m damages suit against Servier, claiming that it deceived the European Patent Office and UK Courts by defending the novelty of the patent that it “knew to be false”.
As a result of the proceedings, a generic of perindopril did not enter the market as early as it would have, which the Secretary of State claims led the NHS to pay higher prices for the treatment.
To convince the court that it was entitled to damages, the UK Government argued that its tort of causing loss by unlawful means claim—which alleges intentional causing of loss by interfering with the freedom of a third party to deal with the claimant—was valid and that Servier “intentionally caused loss” to the Secretary of State and NHS through deceit.
The claim was struck down by the English High Court and the Court of Appeal in prior proceedings, leading the Secretary of State and NHS to appeal the decision to the Supreme Court.
Justice Lord Hamblen of the Supreme Court ruled today, Friday June 2, that the claim must again be dismissed.
‘Dealing requirement’
The crux of the discussion was whether a necessary element of the unlawful means tort is that the unlawful means should have affected the third party’s freedom to deal with the claimant.
This “necessary element” was referred to as the dealing requirement.
In prior proceedings before High Court Justice Roth and the Court of Appeal, both held that the dealing requirement was necessary to the tort, upholding a prior verdict on the issue voted on by the House of Lords in OBG v Allan in 2007.
The Secretary of State contended that the dealing requirement “should not be part of the ratio of OBG” and that the Supreme Court should depart from the House of Lords’ ruling that it is necessary.
The Supreme Court ruled that the lower courts’ decision to strike the claim was correct and that the dealing requirement was a necessary element of the unlawful means of tort.
Dr Beatriz San Martin, partner at Arnold & Porter, said: "In my view, this Supreme Court decision correctly narrows the application of the unlawful means tort, keeping it within reasonable bounds, something which Lord Hoffman had been at pains to ensure in the earlier House of Lords decision of OBG Ltd v Allan.
“The application of the OBG decision by the Supreme Court was pivotal to the outcome of the appeal and, in particular, whether statements made by Lord Hoffman in OBG were part of the ratio of the decision-creating binding precedent.”
‘Opening the floodgates’
Calling into question the dealing requirement could have had a significant impact on the scope of the unlawful means tort, opening up the possibility of anyone who has suffered a loss due to an inventor’s decision being able to claim the tort, according to San Martin.
She added: "Had the Supreme Court departed from the previous OBG decision, it might have opened the floodgates to unlawful means claims from anyone who may have suffered loss as a result of an innovator’s action to obtain, defend and enforce one of its patents when that patent was ultimately invalidated.
“Instead, the Supreme Court has correctly limited unlawful means claims to circumstances in which a third party’s freedom to deal with the claimant is affected."
Case History
Servier Laboratories submitted a patent application to cover perindopril to the European Patent Office in 2001 which was granted in 2004.
The patent was opposed by ten companies, with nine proceeding to hearings before the Opposition Division at the EPO in July 2006.
Servier defended its UK designation of the patent before the English courts and obtained injunctions against generic pharma companies who had claimed that the patent was invalid for its UK designation.
The validity of the UK patent went to trial, where High Court Justice Lord Pumfrey held that the patent was invalid as it “lacked novelty or, alternatively was obvious over another existing patent”. This decision was upheld at the Court of Appeal in May 2008 and the patent was later revoked by the EPO Technical Board of Appeal in 2009.
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