Patent case changes 60 year old precedent rules

The Court of Appeal made legal history earlier this month in the Actavis UK Ltd v Merck & Co Inc [2008] EWCA Civ 444 patent infringement case. It created a new exception to the rule that the Court of Appeal (unlike the House of Lords) is bound by its own prior rulings. Although Jacob LJ, who gave judgment on behalf of all three judges in the appeal court, made it clear that the new exception was strictly limited, the court's determination that it was able to and should create this exception is highly significant.

The new exception is that the Court of Appeal "is free but not bound to depart from the ratio decidendi [i.e. "decided point of law"] of its own earlier decision if it is satisfied that the European Patent Office (EPO) Boards of Appeal have formed a settled view of European Patent law which is inconsistent with that earlier decision. Generally this court will follow such a settled view".

Background

In Young v Bristol Aeroplane in 1944 the Court of Appeal held that: "this court is bound to follow previous decisions of its own as well as those of courts of co-ordinate jurisdiction. The only exceptions to this rule …are… (1.) The court is entitled and bound to decide which of two conflicting decisions of its own it will follow. (2.) The court is bound to refuse to follow a decision of its own which, though not expressly overruled, cannot, in its opinion, stand with a decision of the House of Lords (3.) The court is not bound to follow a decision of its own if it is satisfied that the decision was given per incuriam [i.e. in clear error]".

Faced with an at least arguable conflict between an EPO decision it wished to follow and an earlier decision of its own, the Court of Appeal in the Actavis case was motivated to re-examine this rule and consider creating a new exception to it. The conflict related to whether a new dosage regime can confer novelty on a Swiss form second medical use patent claim and/or whether such a claim was unpatentable as being a method of treatment. See our analysis of this substantive issue.

Although the rule in Young has been approved by the House of Lords several times, Jacob LJ was at pains to point out that it is at heart a rule imposed by the Court of Appeal on itself in order to ensure legal certainty - "So ultimately it is for this court, exercising its powers in favour of legal certainty, to rule on whether there can and should be further exceptions to the rule…..This country is now a member of the European Union, is a party to the European Convention on Human Rights, and, of particular relevance to this case, is a party to the European Patent Convention. It would be absurd to say the rule laid down for the closed system in 1944 must necessarily apply in all those changed circumstances…"

He concluded that the Young rule should not apply with its full force in the context of the European Patent Convention (EPC) system. The EPC was intended to harmonise patent law for all members, the UK Patent Act 1977 says in its preamble that it is an Act intended to give effect to the EPC.

If UK case-law is out of line with settled EPO case-law, it will either be recognising as valid patents which the EPO has held should not, as a matter of law, be granted or holding invalid patents which the EPO considers are valid. Either situation would be "bad for the European market" and lead to much legal uncertainty.

It was not satisfactory to expect such situations to be remedied by the House of Lords as the House "itself has held that the EPO Boards of Appeal, if they have a settled approach on a point of law, should be followed. So to say the Court of Appeal should throw its hands up and leave it to the House of Lords (or Supreme Court) to reverse it (as it would very likely do, in the absence of a margin of appreciation) is more or less simply to delay the inevitable at great expense".

Comment

Patentees can now hope to see more consistency between the results they get in the EPO and those in the UK courts. Lawyers will for now focus their arguments on whether the arguably conflicting EPO case-law is "settled" or not. For example, it is unlikely that the UK court will view the EPO case-law on the software and business methods "as such" exceptions to patentability as settled and so will continue to follow its own Court of Appeal precedents (see Aerotel Ltd. v Telco Holdings Ltd & Ors Rev 1 [2006] EWCA Civ 1371 - where Jacob LJ noted that on this issue "the decisions of the EPO Boards of Appeal are mutually contradictory").

It is difficult not to wonder why the UK Patent Act, having noted the importance of EPO decisions since 1977, has taken until now for the new exception to the general precedent rule to be created. Furthermore, the wider effect, if any, of this judgment may have yet to be felt.

Although Jacob LJ was careful to prescribe the limits of the exception and to differentiate it from arguably analogous situations (i.e. conflicting European Court of Human Rights decisions) his reasoning for finding the Court of Appeal free to create it, could be used by it again in different circumstances to free itself further from its self-imposed shackles.