Novartis AG & Anor v Johnson & Johnson Medical Ltd & Ors

Costs in patent litigation are governed by the general discretion under CPR 44.3. The unsuccessful party will usually pay the successful party’s general costs, but the court must consider all the circumstances, including success on particular issues and the parties’ conduct.

An issue-based order is appropriate where the issues lost by the overall winner are sufficiently distinct and their costs can reasonably be identified. The exercise is necessarily approximate. A party should not ordinarily be deprived of costs merely because it lost discrete issues unless the circumstances provide sufficient justification.

The claimants brought patent proceedings concerning EP (UK) 0,819,258 and the defendants’ Oasys contact lenses. In the substantive judgment, the patent was held invalid for insufficiency, while attacks based on lack of novelty and obviousness failed. The claimants succeeded on some infringement issues but the patent was revoked and they obtained no relief.

The court therefore had to determine the appropriate costs order, including whether to adopt an issue-based approach, how to treat general and issue-specific costs, and the appropriate interim payment on account.

1. The court exercised its discretion under CPR 44.3. The defendants were the overall winners and were normally entitled to their general costs. Relevant circumstances included the complexity of the litigation, the parties’ conduct, the reasonableness of the issues pursued, and each side’s success on particular issues.

2. Following the guidance in SmithKline Beecham v Apotex, [2004] EWCA Civ 1703; [2005] FSR 24, an issue-by-issue approach should be adopted so far as reasonably practicable. It is not capable of producing mathematical precision. The reasonableness of raising or contesting an issue remains a relevant aspect of conduct.

3. The guidance in Monsanto v Cargill, [2007] EWHC 3113 (Pat), was applied. The overall winner should generally recover unallocated general costs. Costs attributable to issues lost by that party may be disallowed, but an order requiring the overall winner to pay the other side’s costs of those issues requires more than ordinary conduct considerations and increasingly strong justification as the court departs from the general rule.

4. The defendants’ general costs were allowed because they had successfully defended the claim and the litigation was complex. The claimants’ additional costs relating to issues on which they lost were disallowed, but the claimants were not ordered to pay the defendants’ costs of those issues. The claimants were awarded their costs relating to abandoned prior art. The defendants were awarded 70% of their overall costs, to be assessed.

5. An interim payment on account of costs of £1.25 million was ordered, together with interest on costs and 28 days for payment. The parties were directed to agree and lodge the minute of order.