UK Supreme Court refuses NHS damages relating to grant of invalid patent

July 2021

UK Supreme Court refuses NHS damages relating to grant of invalid patent

On 2 July 2021, the UK Supreme Court dismissed an appeal brought by the Secretary of State for Health and the NHS Business Services Authority (“The NHS”) against a Court of Appeal decision to dismiss their claims against Servier Laboratory Ltd (Servier) under the tort of causing loss by unlawful means – a highly unusual and uncommon tort claim in patent litigation.

Servier are the proprietors of a series of patents relating to the anti-hypertensive drug, perindopril, which is used in the treatment of a number of cardiovascular diseases. The European Patent Office (EPO) granted Servier a patent for the alpha crystalline form of perindopril salt in 2004.

Servier subsequently used the patent to obtain an interlocutory injunction in the UK courts against Apotex, a supplier of generic perindopril, preventing it from selling the generic version in the UK.

However, in July 2007, the UK designation of the patent was held to be invalid on grounds that it lacked novelty or was obvious over an existing patent. That decision was upheld in the Court of Appeal in May 2008, and in 2009 the EPO Technical Board of Appeal revoked the European patent.

The crux of the NHS’s claim in the present case is that Servier, by knowingly practising deceit on the European Patent Office and the English courts, succeeded in obtaining a patent for a pharmaceutical drug and, by interim injunction, succeeded in delaying the introduction into the UK of a cheaper generic version of the drug, causing the NHS to pay higher prices than would otherwise have been the case. The NHS subsequently brought proceedings against Servier for damages and interest in excess of £220 million. The claim, in law, is for the tort of causing loss by unlawful means.

Although disputed by Servier, the NHS’s allegations that Servier knowingly made false representations before the EPO and English courts were assumed, for the purposes of assessing the question of law, to be true. The issue considered by the Supreme Court was therefore whether the requirements of the tort of causing loss by unlawful means were present.

The appeal in this instance therefore hinged on an earlier case heard in the House of Lords - OBG Ltd v Allan [2007] UKHL 721. In OBG, ‘unlawful means’ were defined as acts wherein a defendant wrongfully interferes with the actions of a third party in which the claimant has an economic interest and thereby intends to cause loss to the claimant. The rationale of the unlawful means tort is therefore to preserve a person’s liberty to deal with others. However, the tort is carefully confined in that the unlawful act must affect the third party’s freedom to deal with the claimant. Thus, in the present instance, it seemed that, regardless of the allegations of the presence or absence of an unlawful act, there must be interference with the freedom of the English Courts and EPO to deal with the NHS. Indeed, Servier argued no such interference existed.

The NHS, however, argued that the unlawful means tort ought not to be limited to cases in which the unlawful act of the defendant is limited to the dealings of the claimant with the third party, but should further extend to non-dealing cases, particularly those relating to deceit on a public authority. Consequently, the NHS argued that, in view of the defendants’ alleged false representations to the EPO and English courts, the requirements of the tort were met.

However, the Supreme Court sided with Servier and dismissed the appeal, deciding that a claim for loss by unlawful means cannot succeed in the absence of interference with the dealings of a third party with a claimant. Indeed, even assuming that the allegations of false representation at the EPO and High Courts were true, the court determined there was no interference with the freedom of the NHS to deal with either the EPO or the UK courts and therefore a fundamental element of the tort was absent.

The decision in this instance, although lacking immediate impact, is nevertheless important for the area of patent litigation. Indeed, the dealing requirement discussed above performs the valuable function of delineating the degree of connection required between an unlawful means used and the damage suffered. Further, the requirement seemingly provides a limit to the liability of a defendant with regard to an otherwise indeterminate number of claimants.

It appears difficult to envisage circumstances of infringement and validity proceedings wherein all elements of the unlawful means tort are fulfilled. It therefore appears that patentees can rest assured that any patent subsequently found to be invalid, by whatever means, is unlikely to give rise to a host of peripheral litigants claiming the tort of causing loss by unlawful means.

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