Novartis Ag & Ors v Focus Pharmaceuticals Ltd & Ors

Where defendants have overall success in patent litigation, the starting point is that they receive their costs. The court may make deductions for issues on which they were unsuccessful, but the deduction should reflect the costs fairly attributable to those issues. No deduction is required for a pleaded issue that was not pursued or for work that was necessarily undertaken for another issue. A late and unnecessary issue may not justify a further deduction where it caused only limited additional argument. The court may order payment on account by applying a reasonable percentage to the costs awarded. An application under Civil Procedure Rules 1998, r. 31.22, may be granted where both parties seek disclosure-related orders and neither opposes the other’s application.

The judgment dealt with consequential matters following an earlier patent judgment between Novartis and Focus, Actavis and Teva, reported at [2015] EWHC 1068 (Pat). The parties agreed that the issues should be determined on written submissions. The principal questions were the proportion of the defendants’ costs recoverable after their overall success, the amount payable on account, applications concerning documents under CPR r. 31.22, and Novartis’s application for permission to appeal.

The court held that the defendants were overall successful and that the starting point was an entitlement to their costs. Deductions were nevertheless required for matters on which they had failed.

1. Construction: the defendants had unsuccessfully advanced a preferred construction. Only the additional costs of advancing that construction should be deducted. The deduction was assessed at 2%.
2. Novelty over US031: no deduction was made because the pleaded novelty case was not run, no evidence or submissions were adduced on it, and work identifying missing features was also necessary for the obviousness case.
3. WO784: the defendants did not pursue this validity issue at trial. A deduction of 8% was appropriate, including the effect of the defendants’ greater combined costs.
4. Insufficiency: the defendants accepted that they should not recover costs on two of the three points. No deduction was made for the point run as a squeeze between obviousness and insufficiency. A 10% deduction was made for the remaining points.
5. Priority: although unnecessary and adding nothing to the added-matter objection, the issue was raised late and caused only additional legal argument. No further deduction was justified.
6. Infringement: a 5% deduction was made because the defendants lost on the factual issue whether their patches had the same starting dose as the reference patch.

Novartis was therefore ordered to pay 75% of the defendants’ costs. Payment on account was fixed at 55% of that amount, representing 55% of 75% of the defendants’ total bill. Orders under Civil Procedure Rules 1998, r. 31.22, were granted. Permission to appeal was granted because the added-matter and, narrowly, obviousness cases had a real prospect of success.

The judgment records that it followed an earlier judgment in the same litigation, reported at [2015] EWHC 1068 (Pat), after which the parties agreed that consequential issues should be determined on paper. No appellate decision is stated.