First published in our Biotech Review of the Year publication (Issue 10).
Although the case concerned a small molecule medicinal product, the answer to this question is of broader interest in the life sciences field, as the circumstances under which Arrow relief is available is often a consideration for parties seeking to clear the way prior to launch, particularly in the biosimilars field.
An Arrow declaration is a declaration that a particular product, process or use would have been lacking in novelty or obvious as at the priority date of a patent application, in other words, a pre-grant declaration from the Court. The effect of such a declaration is that it gives the claimant in the Arrow proceedings a so-called Gillette defence to any subsequent claim for infringement of any future patent rights relating to that product, process or use.
On 25 February 2022, Teva issued proceedings against Novartis seeking Arrow declaratory relief. If granted, the relief sought by Teva would have deemed the use of a daily oral dose of 0.5 mg of fingolimod to treat relapsing-remitting multiple sclerosis (RRMS) obvious under English law as at 27 June 2006, the priority date of the Novartis patent application in issue – EP 2 959 894 (EP 894), directed to such use. Fingolimod is sold by Novartis in the UK for the treatment of RRMS under the brand name Gilenya®, primarily at the claimed daily oral dose of 0.5 mg. Regulatory exclusivity for Gilenya in the form of marketing protection expired in the UK and EU on 22 March 2022.
EP 894 was original rejected by the EPO’s Examining Division (ED) in late 2020 but on 8 February 2022, the Technical Board of Appeal (TBA) allowed Novartis’ appeal and issued a ruling directing the ED to grant the patent with the approved claim. EP 894 eventually granted on 12 October 2022.
Shortly after the TBA hearing, Teva issued its claim for Arrow declaratory relief. A week later (on 2 March 2022), Novartis issued infringement proceedings against a number of generics companies, including Teva, based on the EP 894 application and the threat by those companies to launch 0.5 mg generic fingolimod products in the UK for use in the claimed dosage regime. In addition to Teva, three of these companies also raised claims for Arrow declarations. Novartis also issued an application for interim injunctive relief, which was refused by Mr Justice Roth on 26 April 2022 on the basis of his finding that there would be no irreparable harm to Novartis should he refuse an interim injunction. Permission to appeal this decision was ultimately refused on 25 May 2022. Although the interim injunction was refused, the generics companies were restrained from selling their fingolimod products pending determination of the application for interim relief, and the subsequent request for permission to appeal, in other words, from 22 March to 25 May 2022.
On 10 August 2022, Novartis withdrew the UK designation of EP 894 whilst it was still pending as an application. This meant that EP 894 would not grant in the UK. As a result, Novartis sought to discontinue the infringement proceedings and invited Teva and the other defendants to discontinue their claims to Arrow relief. Novartis indicated that it would not serve expert evidence and would not make any submissions on validity should a trial on the technical issues take place. On the same day that it de-designated the UK designation of EP 894, Novartis also notified the NHS that it was withdrawing from the proceedings.
Teva declined to withdraw its claim to Arrow relief, but successfully applied to amend the basis on which the claim was made, and a trial on the discretionary issues in respect of Teva’s application for declaratory relief was held before Mrs Justice Bacon on 17-18 October 2022. If Teva were to be successful on the question of relief, a trial on obviousness would have been listed for a later date. In the meantime, Teva had served reports from two experts in support of their arguments on obviousness.
First instance decision
The previous case law on Arrow declarations held that in determining whether to exercise its discretionary power to grant such a declaration (in addition to the merits of the validity arguments), the court must take into account: (i) justice to the claimant; (ii) justice to the defendant; (iii) whether the declaration would serve a useful purpose; and (iv) whether there are any other special reasons why or why not the court should grant the declaration. Teva sought to argue that declaratory relief would serve a useful purpose for the following reasons:
- Novartis’ enforcement of EP 894 prior to grant, before later de-designating the UK designation, which in effect led to a short-term injunction until permission to appeal was determined, amounted to a special reason for the granting of the declaration, being a relevant factor in the assessment of useful purpose.
- A declaration would alleviate alleged residual confusion about the status of generic fingolimod in the UK, in particular within the NHS.
- The undertakings offered by Novartis regarding future patent rights were allegedly insufficient to provide certainty to Teva and third parties regarding possible future patent rights which might impact upon sales of generic fingolimod in the UK.
- A reasoned judgment on obviousness would be taken into account by the courts in other jurisdictions, where Novartis may also be seeking to enforce EP 894, in particular the courts in Germany.
- A reasoned judgment on obviousness would help to protect Teva’s supply chains for generic fingolimod to the UK, including transit through confidential “Country A”.
- A reasoned judgment would assist in settlement discussions between the parties across Europe.
In respect of the first reason, the judge held that the actions of Novartis alone could not support the grant of an Arrow declaration where there was otherwise no useful purpose, and therefore had to be considered as part of the other factors relied on by Teva. As to the second ground, uncertainty in the UK, the judge noted that there was no evidence before her that a declaration from the court would make any difference to the NHS’ procurement policy or its understanding of the situation. Nor was there any evidence, as there had been in the earlier Fujifilm v AbbVie case , of any commercial uncertainty perpetuated by Novartis’ actions in the litigation. On the third issue of undertakings, by the time of judgment the judge was satisfied that the undertakings being offered by Novartis were not ambiguous or lacking in clarity such as to create or perpetuate uncertainty on the market.
The tenor of the judgment was therefore in relation to the question of “spin-off” value abroad, including in relation to the supply chain to the UK. The parties had served expert evidence on German law as to the value of a judgment from the English court in German infringement proceedings, including applications there for a preliminary injunction. In essence, the evidence on German law was that an English declaratory judgment would be of interest to and taken into account by a German court in deciding whether to grant preliminary injunctive relief in Germany. Teva also argued that a validity decision would have benefit in other EPC member states even if the court did not have expert evidence before it from any additional jurisdictions. Ultimately the judge held that the fundamental problem with Teva’s main argument on spin-off value was that the existing (first instance) case law established that if the only or predominant purpose of the declaration sought is to use it for a foreign court, the court will look carefully at the justification for the declaration. In such a case, a declaration is only likely to be granted in unusual cases where there is a compelling justification for doing so.
In assessing the supply chain argument, the judge accepted that based on the evidence before her a declaration may well have an impact on Teva’s supply chain in so far as it is taken into account in Country A through which Teva tranships its generic fingolimod products. The question was whether that was enough to grant a declaration where the sole or predominant purpose is for its use abroad. She did not think that it was. Given the prevalence of international supply chains, decisions of foreign courts will often have an indirect impact on supply routes to the UK. However, that did not change the fact that the purpose of the declaration sought here was to use it abroad in Country A and other countries, rather than to obtain or enforce any right in the UK. The judge therefore did not consider that there were particular unusual circumstances in the case to provide a compelling justification for the grant of the relief sought. Nor did Novartis’ conduct in the UK case tip the balance in favour of granting a declaration where the conduct could not be said to have resulted in any continuing uncertainty on the UK market.
In passing, the judge also dismissed the argument regarding promotion of settlement. Although unchallenged evidence had been adduced to the effect that a reasoned judgment in the UK would not assist settlement in other jurisdictions, the judge in any event held that promotion of settlement would not have been a sufficiently compelling reason to grant a declaration in this case.
Overall, the judge endorsed the judgment of Mr Justice Birss (as he then was) in the earlier case of Pfizer v Roche, who had come to much the same conclusion.
On application to the Court of Appeal, permission to appeal was granted by Lord Justice Arnold, and the hearing took place on an expedited basis on 28 November 2022, in light of parallel preliminary injunction proceedings in Germany under EP 894 that were listed to be heard on 16 December 2022. Having heard the arguments of both sides, the Court of Appeal indicated at the end of the hearing that Teva’s appeal was dismissed and that written reasons would follow. The reasoned judgment was handed down on 8 December 2022.
Teva argued on appeal that the first instance judge had erred in principle in failing to ask whether (i) the declaration sought would serve a useful purpose; and (ii) whether there were any reasons for or against the grant of a declaration, and that the judge had further erred in asking whether there was a “very compelling justification” for granting the declaration.
Giving the leading judgment (with which Nugee LJ and Sir Christopher Floyd agreed), Arnold LJ stated that Bacon J had been correct to find that, once it was shown that a declaration was not required in order to dispel uncertainty in the UK market, it followed that the only purpose which could be served by a declaration was to assist the courts of other countries.
Arnold LJ concluded that assisting a foreign court to decide an issue under its own law is not a legitimate reason for the grant of declaratory relief, and that it is not the function of the Patents Court to provide advisory opinions to foreign courts seised of issues which fall to be determined in accordance with their own laws. Arnold LJ added that the fact that the grant of an injunction in another country would affect the supply of Teva’s product in the UK is simply a knock-on consequence of the courts of that country applying their own law within their territory.
Impact of ruling
This ruling is important in terms of further clarifying the circumstances in which Arrow relief can be obtained from the court, including guidance from the higher Court of Appeal which can be binding on the first instance courts.
Arnold LJ clarified that “spin off” value does not justify the diversion of significant resources to trying purely academic questions in the UK. If anything, the Court of Appeal adopted a stricter approach than the judge at first instance, who had at least held open that the court might grant a declaration solely for spin-off value to one or more foreign courts in compelling circumstances. The decision of the Court of Appeal does not appear to leave open that possibility. Notably, Arnold LJ indicated that comity requires restraint on the part of the English courts, not jurisdictional imperialism, otherwise the English courts would be enabling forum shopping.
If there are no remaining relevant IP rights covering the UK and no commercial uncertainty in this country, this ruling makes clear that it will be very challenging for parties to persuade a court to grant such relief.
 Novartis v Teva & Ors  EWCA Civ 775; EWHC 2779 (Ch) (Pat).
 Named after a 1913 case, the defence operates where the alleged infringer can demonstrate that they work the prior art or an obvious variant, guaranteeing that the patentee cannot succeed in demonstrating that a later patent is both valid and infringed
  EWHC 959 (Pat)
 There was one pending divisional application in the same patent family, which was also withdrawn
  EWHC 2366 (Pat)
  EWHC 395 (Pat)
  EWHC 1520 (Pat)