Hospira UK Ltd v Novartis AG

In patent litigation, costs are approached in stages. The court should first identify the overall winner, then decide whether the winner lost a sufficiently distinct issue, and finally ask whether all the circumstances justify depriving the winner of its costs on that issue and ordering it to pay the opposing party’s costs. The expression “suitably exceptional” does not impose a separate requirement of exceptionality. The assessment is one of appropriateness in the individual case. Costs decisions require a broad-brush, impressionistic assessment. A percentage order is generally preferable to detailed assessment where precision would be disproportionate.

These were two patent actions brought by Hospira UK Ltd and Generics (UK) Ltd (trading as Mylan) against Novartis AG. The claimants succeeded in revoking Novartis’s patents and therefore achieved their commercial objective. The court was required to determine the appropriate costs order after the claimants succeeded overall but lost or abandoned particular issues, including an obviousness attack, common general knowledge issues and prior-art points.

The central questions were whether the claimants should recover all their costs, whether they should be deprived of costs on particular issues, and whether they should pay any of Novartis’s costs.

1. Overall result. The claimants were the overall winners because the patents had been revoked. Novartis therefore did not displace the starting point that the successful parties should recover their costs.
2. The court applied a three-stage approach: identify who won overall; consider whether the winner lost on an issue sufficiently circumscribed to justify depriving it of the costs of that issue; and determine whether the circumstances made it appropriate also to order the winner to pay the other party’s costs. The phrase “suitably exceptional”, derived from Summit Property v Pitmans (A Firm) [2001] EWCA Civ 2020, did not impose a specific requirement of exceptionality. The question was appropriateness in all the circumstances, consistently with the explanation in F&C Alternative Investments (Holdings) Ltd v Barthelemy [2012] EWCA Civ 843 at [46]–[49].
3. The abandoned prior-art points and the added-matter objection did not justify ordering the claimants to pay Novartis’s costs. The claimants had been justified in raising the prior art initially, although they were somewhat slow to abandon it. That justified some reflection in the costs order, but not a separate payment to Novartis.
4. The unsuccessful obviousness attack justified depriving the claimants of their own costs of that issue and requiring them to pay Novartis’s costs relating to it. Although findings on common general knowledge had assisted the claimants on priority, there was no direct squeeze between priority and obviousness. The obviousness case required additional work by Novartis, its experts and the court, and the common-general-knowledge investigation was somewhat more extensive because of it.
5. The assessment was necessarily broad-brush and not susceptible of precision. A percentage order was preferable to detailed assessment. Hospira was ordered to recover 40 per cent of its costs from Novartis, and Mylan 60 per cent.

First-instance costs decision following the successful revocation of Novartis’s patents. No earlier decision is identified in the judgment.