Actavis Group hf v Eli Lilly & Company

The Court of Appeal dismissed the defendant's appeal and upheld the judge's decision that service of the claim was valid. The court applied ordinary principles of contractual interpretation to conclude, on an objective and commercially sensible reading of the correspondence of July 2012, that Lilly (through its solicitors) agreed to accept service of proceedings brought by the Actavis parent company and its relevant national trading subsidiaries, including proceedings covering foreign designations of the same European patent.

On the question of service under the Civil Procedure Rules, the court held that CPR 6.9 applied because Lilly carried on parts of its business at the Windlesham research centre (notably the European patent operations) such that those activities constituted a place of business of the foreign corporation in the jurisdiction. By contrast, CPR 63.14 was held not to permit service in respect of foreign designations of a European patent: that rule applies only to claims concerning patents under the Patents Act 1977 and thus to United Kingdom designations recorded in the UK register.

The court therefore concluded the judge was right to dismiss Lilly's challenge to jurisdiction. The court did not need to decide whether a stay for forum non conveniens ought to be granted because the consent to service determination disposed of the appeal.

Background and parties: Actavis Group (and related Actavis companies) sought declarations that products containing pemetrexed dipotassium would not infringe the UK and certain foreign national designations of a European patent owned by Eli Lilly. Lilly disputed that the foreign-designation claims could be determined in England and challenged jurisdiction and service.

Nature of claim and procedural posture: The claims sought declarations under section 71 of the Patents Act 1977 and, in respect of foreign designations, declarations under the court's inherent jurisdiction. The case reached the Court of Appeal on Lilly's challenge to Arnold J's finding that the English court had jurisdiction because (i) Lilly's solicitors had agreed to accept service, and (ii) service had also been validly effected under CPR 6.9. Arnold J had dismissed Lilly's applications; Lilly appealed to this court from [2012] EWHC 3316 (Pat).

Issues framed:

• whether Hogan Lovells had agreed to accept service and, if so, on what scope;
• whether service was valid under CPR 6.9 at a place of business;
• whether service could validly be effected under CPR 63.14 in respect of foreign designations of the same European patent;
• whether a stay on forum non conveniens grounds should be granted (decided unnecessary for disposition of this appeal).

Court's reasoning: The court applied objective commercial contract interpretation (citing Rainy Sky) to the letters exchanged in July 2012. Taking account of available background knowledge about the Actavis corporate group and the letter content as a whole, the reasonable recipient would have understood Bird & Bird's references to the parent and "relevant national subsidiaries" as referring to the parent operating company and its trading subsidiaries that would market the product in the jurisdictions named. Hogan Lovells' confirmation that they were instructed to accept service therefore covered proceedings by Actavis Group and its relevant trading subsidiaries and encompassed claims about foreign designations.

The court held that CPR 6.9(2) permitted service at the Windlesham address because activities carried on there — notably the European Patent Operations Department under Dr Burnside, regulatory interactions and regional management functions — were sufficiently fixed, deliberate and conducted on behalf of Lilly to amount to a place of business of the foreign corporation in the jurisdiction. By contrast CPR 63.14 was construed as limited to claims concerning patents under the Patents Act 1977 (i.e. UK designations recorded in the UK register) and does not provide a route to serve claims relating to foreign national designations merely because they are designations of the same European patent.

Subsidiary findings and implications: The court endorsed the judge's factual findings about the Windlesham activities and delegation of authority to the European patent head. It emphasised that CPR 63.14 cannot be used to "convoy" foreign-patent claims into the UK court simply by including a UK designation claim on the same form.

Appeal dismissed. The Court of Appeal held that (i) on an objective commercial reading of the correspondence Lilly, through Hogan Lovells, had agreed to accept service on behalf of Eli Lilly & Company of proceedings brought by the Actavis parent and its relevant national trading subsidiaries, including in respect of foreign designations; (ii) service was valid under CPR 6.9 because Lilly carried on relevant business at the Windlesham address such that it constituted a place of business in the jurisdiction; and (iii) CPR 63.14 does not permit service in relation to foreign designations of a European patent recorded outside the UK register. Those conclusions justified dismissal of Lilly's jurisdictional challenge.

Appeal from the High Court of Justice, Chancery Division (Patents Court), Arnold J, [2012] EWHC 3316 (Pat). Permission to appeal was granted by the judge and the appeal was heard in the Court of Appeal (Civil Division) and dismissed by the court in [2013] EWCA Civ 517.