Andrew Lykiardopoulos QC appeared with James Segan QC for the Claimant, Royalty Pharma Collection Trust (“Royalty Pharma”), and Adrian Speck QC and James Whyte appeared for the Defendant, Boehringer, in proceedings concerning the payment of royalties in relation to a patent licence agreement.
In 2005, Boehringer was granted a non-exclusive licence in relation to patents and patent licences owned by Prosidion Limited. In 2011, Prosidion assigned the benefit of the agreement to Royalty Pharma. In 2015, Royalty Pharma and Boehringer negotiated amendments to the agreement. The agreement was governed by German law, with the courts of England and Wales having jurisdiction over any dispute. Royalty Pharma issued legal proceedings claiming outstanding royalties pursuant to the 2015 amendments. Boehringer counterclaimed for repayment of overpaid royalties in relation to the original agreement.
Boehringer sell various pharmaceuticals used to treat type-2 diabetes. The active pharmaceutical ingredient, linagliptin, was manufactured by Boehringer in Germany with some formulated into products in Germany and some exported by Boehringer to other countries. Royalty Pharma claimed that, but for the amended licence agreement, the manufacture of linagliptin in Germany would infringe the German designation of one of its patents (“EP 705”), claim 1 of which comprised an EPC 2000 claim for the use of linagliptin to treat type-2 diabetes. Royalties were, therefore, owed under the amended agreement. Boehringer’s counterclaim was that, under the original agreement, only the sale of product in a territory with an existing licensed claim that covered the sale of product gave rise to an obligation to pay royalties. Boehringer had overpaid under the original agreement by calculating royalties on worldwide sales. By trial, this was common ground.
Hacon HHJ held that the 2015 amendments obliged Boehringer to pay royalties if it carried out certain acts which, but for the licence agreement, would have infringed. The German doctrine of “sinnfällige Herrichtung” (manifest arrangement) meant that where an accused product had been manifestly arranged in a manner for use according to the purpose identified in the patent claim, it will satisfy the purpose limitation of that claim.
The judge went on to find that an EPC 2000 claim will be directly infringed if the alleged infringer carries out certain acts in Germany in relation to the product of the claim, where the product is sufficiently tied to the use specified in the claim such that the requirement of sinnfällige Herrichtung is satisfied. Linagliptin manufactured by Boehringer was suitable for the use specified in claim 1 of EP 705 and Boehringer knew it would be used exclusively for that purpose. Therefore, the manufacture of linagliptin in Germany would (but for the licence) have infringed EP 705. That infringement occurred even where the linagliptin was destined for export i.e. put to the use specified in the claim outside of the jurisdiction. As such, Boehringer owed royalties to Royalty Pharma.