Patent - Infringement - Order for destruction

Merck Canada Inc and another v Sigma Pharmaceuticals plc: Patents County Court (Judge Birss QC): 3 May 2012

In the substantive proceedings, the court had held that the defendant company had infringed the patent held by the claimant companies by the parallel import of a drug from Poland (see [2012] All ER (D) 04 (May)). The court had granted permission to appeal on the points of European Union law but had refused permission on the estoppel issue. The claimants’ supplementary protection certificate (the SPC) was due to expire in 11 months. The defendant held a substantial quantity of stock.

Some of it had been re-boxed or relabelled and could not be re-exported and sold in Poland and some would expire later than the SPC. The claimants sought an injunction preventing infringement and an order for destruction of the infringing product in the defendant’s possession under section 61(1)(b) of the Patents Act 1977 (the 1977 act). The defendant sought an order staying the destruction pending the appeal. The claimants sought a further provision that, while they did not object to the re-export to Poland if it was still in its original Polish packaging, the defendant should not otherwise part with possession of its stock which had been imported into the UK in infringement of the patent and should preserve it so that it would be destroyed in the event the appeal was unsuccessful. The claimants further sought an inquiry in respect of damages or an account of profits and disclosure under Island Records Ltd v Tring International plc ([1995] 3 All ER 444) (Island Records) in advance of the election. The defendant sought a stay of the inquiry pending the appeal.

It fell to be determined: (i) whether the destruction order should permit the defendant to retain stock dated such that it could be sold after the expiry of the SPC on the basis that the stock was perfectly good product, had been imported in good faith and there would be no springboard of any significance; and (ii) whether the inquiry should be stayed pending the appeal. The application would be allowed.

(1) It was an established principle that orders for destruction or delivery up were not made because the act of keeping was itself an act of infringement as defined by section 60(1)(a) of the 1977 act. In such a case, the continued keeping would be caught by the injunction. Orders for delivery up or destruction were ancillary to the injunction and their purpose was to act as an aid to the injunction. Such an order, when made, would obviously have the effect of protecting the patentee from any use after the expiry of articles made during the currency of the patent but it was not accurate to say that that in itself was a, or the, purpose of orders for destruction (see [17], [21] of the judgment).

In the instant case, the order for destruction would be made in its normal form, without a provision permitting the defendant to retain its possession of stock imported in infringement of the patent in order to sell it in the UK at the end of the term of the SPC. That would be because, as an order in aid of the injunction, the purpose would be to ensure that the defendant had not retained stock which it could sell in breach of the injunction. Secondly, the court was not satisfied there would be no substantial springboard in the instant case. Thirdly, the fact the stock was ‘perfectly good product’ was irrelevant. Fourthly, as regarded proportionality, the goods to be caught by the order ought never to have been imported in the first place. Fifthly, there were no relevant third parties whose interests needed to be catered for (see [21]-[27] of the judgment).

(2) Disclosure under Island Records would be ordered since that seemed to be a step which could be taken at a relatively low cost. The claimants could then decide whether to elect for an inquiry in respect of damages or an account of profits (see [32] of the judgment). The defendant would be ordered to destroy infringing product in its possession and provide disclosure under Island Records (see [28], [32] of the judgment).

Tom Hinchliffe (instructed by Hogan Lovells International LLP) for the claimants; Martin Howe QC (instructed by Maitland Walker LLP) for the defendant.