Biggart Baillie advises in key patent law decision in the Court of Session
Tuesday, November 30, 2010
Biggart Baillie LLP has advised a major global agrochemical company in a significant decision for UK patent law in the Court of Session.
The Opinion, issued by Lord Malcolm on Friday 26 November 2010, followed a two-day hearing in October in the Outer House of the Court of Session in the case of Bayer Cropscience KK v Charles River Preclinical Laboratories Limited and Albuagh Inc.
Lord Malcolm was asked to consider, for the first time, whether the proprietor of a patent could seek an order for a competitor to account for profits made following a patent infringement which took place at the end of the patent’s life but which created the opportunity for the competitor to enjoy a “springboard” advantage into the marketplace after the patent had expired.
Albaugh Inc. applied to the US Environmental Protection Agency (EPA) in March 2005 for registration of their pesticide product, which contained Bayer’s patented compound, imidacloprid. Bayer’s patent over imidacloprid was due to expire in March 2006.
Albaugh‘s EPA application included mandatory test data which it had gathered by importing imidacloprid into the UK and instructing tests to be carried out on it, in March 2005.
It had previously been established that this importation and testing had infringed Bayer’s patent, however what remained in question was whether sales made by Albaugh after the patent had expired, were made lawfully or whether they were derived from the infringement in terms of section 61 of the Patents Act 1977.
The claim against Albuagh, for an accounting of up to 10 million US Dollars, is based on the argument that the infringements of Bayer’s patent provided Albaugh with a “springboard” onto the market almost a year earlier than otherwise would have been possible had they waited until the patent had expired before carrying out the tests for the EPA application.
Bayer argued that the purpose of the infringement was to “steal a march” on the competition and that by infringing the patent, Albaugh had received an “unfair benefit” in the form of profits which, but for the infringement, would not have been generated.
Albaugh argued that the sales were “lawful sales” made from “lawful transactions” and thus an accounting should not be ordered.
Lord Malcolm, deciding in Bayer’s favour, stated:
“…the basic purpose of the remedy sought by the pursuer is to deprive the infringer of unfair or unjustified profits. The second defender deliberately used the invention in order to obtain an unfair advantage over its competitors and then exploit it for financial gain. Why should one ignore the profits from the sales when asking whether any benefit was improperly gained from the infringement?”
The significance of the case lies in its novelty in UK (and indeed European) patent law. UK Courts have previously held that where a springboard advantage had been gained by an infringement of a patent, the patent holder can seek damages to compensate the sale loss of sales it could have made and/or an injunction to prevent further damage.
However no UK court had considered whether the springboard principle applied equally to an account of profits.
In Dyson Appliances Ltd v Hoover Ltd (No.2) [2001] RPC 27, the High Court in England granted an injunction against Hoover for a period of 12 months from making further sales of its vacuum cleaning product which was developed using Dyson’s patented technology, even though the patent had expired by the time of the decision.
Lord Malcolm also considered the case of Gerber Garment Technology v Lectra Systems Ltd [1995] RPC 383 in which Mr Justice Jacob upheld the validity of a damages claim in respect of an infringer who had established a springboard on the market by infringing the Plaintiff’s patented technology.
Lord Malcolm held that Bayer should be allowed to proceed to a proof before answer in order to determine the extent (if any) of the advantage gained by Albaugh as a result of the infringements.
This decision further bolsters the rights of patent holders. A patent holder can seek an accounting in respect of profits made by an infringer after a patent term has expired, where the infringer has achieved an advantage or “springboard” onto the market early by reason of that infringement.
Additional comments on the progress of this case can be obtained directly from Brent Haywood or Craig Smith.
The information contained in this article is given for general information only and does not constitute legal advice on any specific matter.