TEVA UK LIMITED & Anor. v NOVARTIS AG

An Arrow declaration is discretionary and should be granted only where it serves a useful purpose, assessed in the context of the dispute and having regard to justice to all parties and any special reasons. The existence of a real dispute is not confined to an existing dispute about UK legal rights. A declaration may address future rights or uncertainty about whether UK rights arise.

Where UK patent protection has been abandoned, the fact that an English declaration may assist proceedings abroad or indirectly protect a UK supply chain will rarely suffice. Unusual and compelling circumstances are required, particularly where the declaration’s predominant purpose is to influence foreign courts and there is no continuing uncertainty in the UK market.

Teva sought an Arrow declaration that importing and selling generic fingolimod at a daily dose of 0.5 mg for relapsing-remitting multiple sclerosis was obvious at the priority date of EP 894. The declaration was sought after Novartis had commenced infringement proceedings and pursued interim injunctive relief, but later de-designated the UK from the patent application and discontinued its infringement claim.

Following amendments permitted by Meade J, the trial was confined to whether the declaration should be granted as a matter of discretion, on the assumption that the claimed subject-matter was obvious. Teva relied principally on residual UK uncertainty, the effect on its supply chain through another European country, and the possible assistance a UK judgment would provide in German proceedings. The central issue was whether those matters supplied a sufficient useful purpose and compelling justification for declaratory relief.

1. The application was refused. The court declined to grant the Arrow declaration. The technical issue of obviousness was assumed in Teva’s favour for the purposes of the discretionary hearing.
2. The discretion to grant declaratory relief requires consideration of justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose, and any special reasons for or against granting it. The question whether there is a dispute concerning UK legal rights must not be construed narrowly. A dispute may concern an issue of fact, a future UK legal right, or whether such a right arises at all. The parties were before the court and Novartis’ resistance meant that the issue was not merely academic.
3. Novartis’ withdrawal of the UK designation was inferred to have been motivated by a wish to avoid an adverse decision. That conduct was relevant only insofar as it created or perpetuated commercial uncertainty. It was not an independent basis for granting relief as a means of censuring conduct.
4. There was no evidence that the NHS remained confused about the UK market. Novartis had confirmed that the market was open to generic competition, and the revised undertakings were not shown to be ambiguous. The evidential foundation which had supported the declaration in Fujifilm v AbbVie was therefore absent.
5. The German courts would take account of an English declaration, but the experts’ evidence did not establish the weight it would receive. A declaration whose predominant purpose was to influence foreign proceedings required unusual circumstances and a very compelling justification. Teva’s supply-chain evidence was accepted, including the likely time and expense of changing its route through Country A. However, the indirect effect of foreign injunction proceedings on UK supply was insufficient. Global supply chains were not unusual, and the case lacked the continuing UK uncertainty present in Fujifilm v AbbVie. Assistance with settlement was likewise insufficient.