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A
contractual clause conferring jurisdiction on the English courts to
determine any issues relating to the performance of an agreement between
the licensor and licensee of a patent was evidence that the parties
had intended to ensure that a forum for a hearing of a dispute had specialist
courts, experienced at determining all issues of patent infringement.
Accordingly, the English courts could determine the question of whether
the manufacture and sale of a product infringed the placement of the
licensor, even where proceedings have been issued in the US to determine
the validity of the patent itself.
Celltech had granted a licence to Medimmune under which Medimmune would
pay royalties for products sold or manufactured that would, apart from
the grant of the licence, infringe patents owned by Celltech. Medimmune
began to manufacture and sell a product in the US which Celltech claimed
infringed their US patent. Accordingly, Celltech claimed that royalties
were payable. Medimmune sought declarations from the US courts that
the US patent was invalid. Celltech commenced proceedings against Medimmune
in England under the terms of a jurisdiction clause in the agreement
between the parties which conferred jurisdiction relating to questions
of liability under the agreement on the English courts. Medimmune applied
for a stay of the English proceedings pending the outcome of the US
proceedings. Their application was rejected at the first instance and
they appealed.
The appeal was dismissed by the court. The court addressed two questions
which were identified by the Judge at first instance. First, whether
the agreement conferred jurisdiction on the English courts to decide
whether the products sold and manufactured by Medimmune were covered
by Celltech's US patent; secondly, whether the court should, in its
discretion, decline jurisdiction nonetheless.
The scope of the jurisdiction clause
The provisions of the agreement stated that "the validity, construction
and performance of this agreement shall be governed by English law".
It further stated that "all disputes, claims or proceedings between
the parties relating to the validity, construction or performance of
this agreement shall be subject to the jurisdiction of the laws of England
to the jurisdiction of whose Court the parties hereto submit".
Medimmune contended that the word "performance" had a restricted
meaning, covering issues such as the administration of royalties but
not the underlying question of the scope of the licenced patents. They
contended that the parties could not have intended to allow for adjudication
of a dispute about the scope of a patent to take place in the UK, while
the adjudication on validity took place in the country of the patent
concerned. The court rejected this argument stating that as a matter
of plain language "performance" would include the basic obligation
to pay royalties under the agreement. The court would, in applying English
law, apply the appropriate foreign law as to scope. Indeed, the parties
had selected the courts of England because they had wished to ensure
that the jurisdiction had specialist, experienced Courts to decide matters.
Discretion of the court
It was accepted by the parties that there must be strong reasons for
granting a stay where there is a clause giving jurisdiction to a particular
court. The argument of Medimmune was that the US court was determining
the validity of the US patent and, in doing so, would construe the claims.
Accordingly, the US courts were the natural forum to decide on a proper
scope and validity of the patent. Furthermore, there was a risk that
the US and English courts would reach inconsistent decisions. The court
held that all relevant matters had been taken into account by the judge
at first instance in exercising his discretion, and accordingly his
decision could not be challenged. The court went further by adding that
if it were to exercise the discretion afresh, it would reach the same
decision as the Judge at first instance.
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