Eli Lilly & Company Ltd v Neopharma Ltd & Anor

Summary judgment in a patent case is exceptional. The court must decide whether the opposing case has a realistic, rather than fanciful, prospect of success, while avoiding a mini-trial and considering evidence reasonably expected to be available at trial. A case may nevertheless be decided summarily where the evidence is sufficient and the issue is a short point of law or construction.

A conditional order requiring security may be made when summary judgment is refused, but the jurisdiction must be exercised with great caution. A weak case alone is ordinarily insufficient. The court must balance the apparent strength of the case, the parties’ conduct, the risk of unrecoverable costs and access to justice. Security must not knowingly be fixed at an unaffordable level.

Eli Lilly sued Neopharma Ltd and Gurnos Ltd for infringement of a patent relating to olanzapine. The defendants relied on invalidity based on three items of prior art: 235, Chakrabarti 1980, and Sullivan & Franklin.

The patent had previously been upheld in litigation between Lilly and Dr Reddy’s Laboratories, both at first instance and on appeal. Lilly applied for summary judgment and, alternatively, for security for costs or a conditional order. The central issues were whether the defendants had a realistic prospect of success on each invalidity challenge and whether the proceedings should continue only on payment of security.

1. Summary judgment. Applying the principles summarised in Virgin Atlantic Airways v Delta Airways Limited [2010] EWHC 3094 (Pat), the court must assess whether the case has a realistic prospect of success without conducting a mini-trial. It must consider both the evidence before it and evidence reasonably expected to be available at trial.
2. The challenge based on 235 had no realistic prospect of success and summary judgment was granted on that issue. The challenges based on Chakrabarti and Sullivan & Franklin were unpromising and, by a narrow margin, remained more than merely arguable because the defendants identified evidence which might be adduced at trial. Summary judgment on those issues was refused.
3. Conditional security. Under CPR 3.1 and CPR 24.6, the court had jurisdiction to impose a payment into court as a condition of refusing summary judgment. Following Olatawura v Abiloye [2002] EWCA Civ 998, the jurisdiction required great caution. The apparent strength of the case and the conduct of the proceedings were relevant, but weakness alone would rarely justify security.
4. The court also had to consider access to justice under article 6 of the ECHR. A bare assertion of inability to provide security was insufficient. The defendants had not given a full and candid account of their resources, possible financial backing or anticipated income from olanzapine sales. The court could manage the risk of stifling the proceedings by allowing time to raise the security.
5. The circumstances were truly exceptional. They included the previous unsuccessful attacks, the failure to rely on the new material in Germany or the earlier UK proceedings, the defendants’ conduct in launching the product, the substantial cross-undertaking claim, the risk of unrecoverable costs and the policy reflected in section 65 of the Patents Act 1977. Security of £200,000 was ordered, and the proceedings were stayed until it was provided.
6. Rule 3.1 was not to be used to circumvent the traditional requirements for security under CPR Part 25. The Part 25 application therefore did not require separate determination. The claimant was awarded 80% of its application costs on the standard basis. The trial was to be vacated if security was not provided by the end of July 2011, subject to a December 2011 longstop.

First-instance decision. The judgment records earlier litigation concerning the same patent, including a first-instance decision in the DRL action and a Court of Appeal judgment upholding validity in December 2009, but this decision was not itself an appeal.