Squeezed out of validity and into the jurisdiction
13 July 2017
UCB licensed Chugai rights to its tocilizumab patents. The licence contained an exclusive jurisdiction clause in favour of the English courts. Only one US patent remained in force. Chugai wanted a declaration that its tocilizumab products (sold only in the US) fell outside of the scope of the last patent and accordingly no royalty payments were due under the licence.
Chugai set up a “squeeze” argument where UCB’s construction of the claim was sufficiently wide so as to place the claim within the scope of a prior art document, which would render the claim invalid. If UCB maintained a narrow construction to avoid the prior art, Chugai’s product would fall outside the claims.
UCB claimed Chugai’s arguments on construction were effectively a validity challenge and the English courts didn’t have jurisdiction to determine validity. Chugai said it was not seeking to challenge validity of the Patent - it merely sought a declaration which hinged on the construction of the claims.
The court held that a challenge to the scope of the patent was not a validity challenge. The exclusive jurisdiction clause meant that the English court could decide all matters relating to the licence, save with respect to validity. The court acknowledged it made sense for a single court to determine all the issues of infringement, if they arose.
The decision confirms that the UK courts will determine issues regarding the scope of foreign IP rights. When entering into IP licences, parties should be aware that issues relating to the scope of the IP rights will be encompassed by their agreement, but issues relating to the validity rights will still be subject to the exclusive jurisdiction of the courts of the country granting the rights. Parties should draft the governing law clauses in IP licences with care.