Eli Lilly & Company v Human Genome Sciences, Inc

In patent litigation, costs should ordinarily be determined by an issue-based approach where the proceedings involve numerous distinct issues and substantial expenditure. The successful party may recover the general costs of the action and the costs of issues on which it succeeded, while being deprived of the costs of a discrete issue on which it failed. The court must assess all the circumstances, including the parties’ conduct, the relative success on particular issues, the significance and cost of each issue, and the risk that an order would produce an unjust result. A deduction should remain proportionate to the overall outcome and should not effectively reverse the ordinary consequence of overall success.

The claimant succeeded in revoking the defendant’s patent on grounds including lack of industrial applicability, insufficiency and obviousness, but failed on a distinct bioinformatics issue concerning obviousness. The court had previously determined the merits and was required to decide the consequential costs order.

The claimant sought recovery of its costs subject to a deduction of no more than 30 per cent. The defendant argued that the claimant should recover little or nothing because the bioinformatics issue had generated substantial costs. The central question was the fair and proportionate allocation of costs in light of overall success and issue-specific failure.

1. The court applied the issue-based approach described by Jacob LJ in SmithKline Beecham v Apotex [2005] FSR 24, particularly because patent proceedings commonly involve numerous issues and extensive costs.
2. The claimant was the successful party overall because it achieved its commercial objective of revoking the patent. Its allegations were reasonable, and the defendant’s manner of defending the action was also reasonable.
3. The bioinformatics issue was self-contained and substantially increased the costs of the proceedings. It was therefore appropriate to identify that issue separately when assessing costs.
4. The court took account of the proportion of each party’s costs attributable to the issue, the different burdens imposed on the parties, the claimant’s overall success, and the fact that several of the claimant’s submissions on the issue had been accepted.
5. It would have been unjust to deprive the claimant of the costs of the bioinformatics issue and require it to pay all of the defendant’s costs of that issue, since the result could have been that the claimant recovered nothing or made a net payment despite succeeding overall.
6. Applying CPR 44.3, the court ordered that the claimant recover 60 per cent of its costs of the action as a whole.