South Africa: Patents in the highest court

In South Africa it is not uncommon for IP cases to go all the way up to the Supreme Court of Appeal (SCA), South Africa’s highest court for most civil matters. There is, however, a higher court in South Africa, the Constitutional Court - this court primarily deals with matters that affect the South African Constitution, although it will also consider other important legal issues. The Constitutional Court has in the past heard a matter dealing with trade marks, one that considered the issue of how trade mark law intersects with the constitutional right of freedom of expression - that case involved the satirical use of a well-known brand. Recently the Constitutional Court heard its first ever patent case, Ascendis Animal Health (Pty) Ltd v Merck Sharp Dohme Corporation, Merial Limited and Merial South Africa (Pty) Ltd, 24 October 2019.

The background is that there were two separate legal proceedings between the parties. The first was a patent infringement claim that had been stayed (held in abeyance) pending a decision in the second case, which was an application to revoke the patent that had allegedly been infringed. The case for revocation was based on lack of novelty. The end result of the revocation application was that the SCA declared the patent valid – the court found that there was no problem with novelty. As a result of the finding that the patent did not fail the novelty test, the party that was defending the infringement claim wished to amend its plea (defence) in the second case by raising defences of obviousness and lack of utility (inutility). It was the issue of whether these amendments to the plea in the infringement case should be allowed that made its way up to the Constitutional Court.

So to summarise, the legal issue was this: if a court in a revocation application finds that a patent does not fail the novelty standard (and is therefore valid), can the party being sued for infringement of that patent challenge it on grounds of obviousness or inutility? A major issue here was the concept of res judicata, in other words the defence that the issue has already been decided and cannot therefore be raised again.

The case was heard by 10 judges. Five of the judges held that the further attacks by the same party based on obviousness and inutility were barred by the res judicata rule. The other five held that they were not.

The five judges who held that further attacks were barred took the view that the patent’s validity had been conclusively determined by the earlier court, the SCA. The judge who handed down the judgment on behalf of the five judges, Judge Cameron, said that ‘the issue of validity between the parties is long-worn and settled.’ He said that ‘the default position should be that a previously unsuccessful revocation applicant is precluded from raising the validity of the patent in a subsequent damages claim.’ He used the expression ‘issue estoppel’ to describe res judicata. He accepted that his ruling would not suit the party being sued for infringement, but he favoured the greater good: ‘Of greater consequence is the destabilisation of our patent litigation system, through creating a perilous and novel default. This would be to the prejudice of all.’

The other five judges took the opposite view. The judge who handed down the judgment of these five judges, Judge Khampepe, explained their approach in some detail.

There are distinct differences between a revocation application and an infringement action – in a revocation application evidence is provided by way of affidavit, whereas in an infringement action oral evidence is submitted. Furthermore, the remedies are very different - revocation removes the patent from the register, thus making it a remedy in rem (against a thing), whereas an invalidity defence in an infringement action does not remove the patent from the register but simply renders it unenforceable against the person challenging it, thus making it a remedy in personam (against a person). This makes it wrong to say that ‘the findings in the revocation proceedings have a final effect on the infringement action for causes which have not actually been adjudicated upon in revocation proceedings.’

The judge took this further as follows: ‘Each of the grounds of revocation as set out in section 61 of the Act constitute separate, distinct and independent causes of action because the facta probanda (essential facts) that need to be proven for each ground are different. Although the legal conclusion that results from claims of either novelty, obviousness or inutility may be the same (in other words the finding of a patent’s invalidity) it does not follow that they all represent a single cause of action. The facts required to prove a claim of novelty, inutility and obviousness are markedly different as the elements constituting each ground are different.’

What is particularly interesting is that Judge Khampepe (like Judge Cameron) looked at the bigger picture. In her case she considered the fact that South Africa has a deposit (non-examination) patent system:

‘We must not lose sight of the fact that testing the validity of patents is in the public interest because patents create artificial monopolies... South Africa completely relies on private parties to regulate this artificial monopoly system...instead of deterring litigants who are working both in a private capacity and for the public interest, there should be an inclination to encourage them to bring more revocation challenges.’

The end result was that five judges took the view that the issue of the patent’s validity had been decisively concluded and could not be argued further. The other five judges took the view that it could. This meant that the decision of the lower court, the SCA, had to stand. This was that issues of obviousness and inutility could not now be raised against the patent.

contact us for further information.

Date published: 2 December 2019
Author: Spoor & Fisher

Tags: South Africa patents South Africa Supreme Court of Appeal (SCA)