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MALAYSIA: PATENT – ULTIMATE DECISION ON DEPENDENT CLAIM’S SURVIVAL IN COURT

12th June, 2020

On 26 June 2018, an application for leave to appeal to the Federal Court filed by Merck Sharp & Dohme Group and Merck Sharp & Dohme (Malaysia) Sdn Bhd (hereinafter referred to as the Appellants) was granted. The application for leave to appeal was following the dismissal by the High Court on 30 August 2016 of the Appellants’ infringement action against Hovid Berhad (hereinafter referred to as the Respondent) and the subsequent dismissal by the Court of Appeal on 19 September 2017 on the Appellants’ appeal against decision of the High Court.

The 1st Appellant is a company incorporated in the United States of America (USA) which holds a Malaysian granted patent no. MY-118194-A (hereinafter referred to as “the 194 Patent”) under the Patents Act 1983 (the Act), providing the 1st Appellant the rights to produce a pharmaceutical product of alendronic acid or a pharmaceutically acceptable salt (alendronate) under the trade name “Fosamax” to inhibit bone resorption in humans. The ‘194 Patent has one independent claim (independent claim 1) and 21 dependent claims (dependent claims 2-22). In addition, the 2nd Appellant is a Malaysian company that holds an exclusive license from the 1st Appellant to distribute, sell, and offer to sell the “Fosamax” products in Malaysia. On the other hand, the Respondent is a Malaysian company which has been granted approval by the National Pharmaceutical Control Bureau to market “alendronate 70 mg” tablets.

On full trial at the High Court, the Appellants claimed that the Respondent had infringed the ‘194 Patent for importing, manufacturing, offering for sale and stocking the alendronate 70 mg tablets as the Appellants were the respective registered owner and exclusive licence holder for the ‘194 Patent which related to alendronate dosing. The Appellants’ infringement action against the Respondent was dismissed by the High Court. Further, the High Court had allowed the Respondent’s counterclaim for invalidation of ‘194 Patent on the ground that the ‘194 Patent was obvious and thus lacked of inventive step. More particularly, as all dependent claims ultimately make reference to the independent claim 1 which had been invalidated, it therefore rendered all dependent claims to be consequently invalidated as well without a need for the Respondent to adduce evidence to invalidate each of the dependent claims. The High Court had referred to the decision of SKB Shutters case (supra) as the basis of the judgement. 

On appeal, the Court of Appeal had unanimously dismissed the Appellants’ appeal on the same ground that the ‘194 Patent was indeed obvious and lacked of inventive step. In addition, the Court affirmed with the judgement made by the High Court, whereby once the independent claim 1 was found to be invalid, all other dependent claims were also rendered invalid. This led the Appellants to file the application for leave to appeal to the Federal Court against the decision of both the High Court and the Court of Appeal.

The Federal Court had allowed the leave application on only one question of law, namely whether claims which are dependent on an independent claim adjudged to be invalid would be automatically rendered invalid without the need for the Court to consider separately the validity of each and every dependent claim(s).

The counsel for Appellants argued that the decision in SKB Shutters was wrong, uncertain, and/or unjust based on the following grounds:

  1. the principle in the SKB Shutters is inconsistent with the Act and the Patents Regulations 1986 (the Regulations);
  2. neither the Act nor the Regulations provides for the principle in the SKB Shutters;
  3. the statutory grounds for invalidating a patent claim as provided under the Act do not distinguish an independent claim from a dependent claim;
  4. Section 56(2) of the Act did not state about automatic invalidation of dependent claims upon the invalidation ruling of the independent claim;
  5. the principle held in the SKB Shutters was premised on the misconceived understanding of the role of a dependent claim vis-à-vis its independent claim; and
  6. the principle held in the SKB Shutters defeats the objective of the Act as it will result in dependent claims redundant.

In addition, the counsel for Appellants emphasized on the main issue for consideration by the Federal Court, namely the determination of the leave question, which is to change the practice of ruling that bound lower courts to accept SKB Shutters ruling owing to the principle of stare decisis. Further, the counsel for Appellants implored for the matter to be remitted back to the High Court to hear and determine the issue of validity of each dependent claims on the ground of obviousness or inventive step and consequently received a return of the sum which the Appellants had already paid to the Respondent.

On the other hand, the counsel for Respondent submitted that as the leave question is only concerning validity of the dependent claims, the independent claim 1 of the ‘194 Patent should still be invalid following the decision held by the High Court and affirmed by the Court of Appeal, irrespective of the answer to the leave question. The counsel for Respondent also counterclaimed that the SKB Shutters ruling of “when an independent claim falls, the dependent claims automatically falls” is correct and well-founded in the context of a patent containing one invention only which is common in almost every patent by virtue of section 26 of the Act.

Based on the minority judgement of the Federal Court, the judges agreed with the counsel for Respondent, whereby the ruling of the independent claim 1 being invalid will not be disturbed by this judgement. The judges are of the view that all dependent claims do not comprise independent features and depend entirely on the strength and validity of the independent claim 1. Therefore, the judges concurred with the counsel for Respondent that the dependent claims are only left with limitations without the features of the independent claims if the independent claim is invalid. Further, once the independent claim is deemed invalid, all dependent claims should be deemed invalid as these claims form a single general inventive concept and the dependent claims cannot stand by themselves without the independent claim. As a result, the minority judgement ruled that the leave question is an act of futility and serves no purpose due to all dependent claims would be automatically rendered invalid upon invalidation of the independent claim. Hence, the question of revisiting the SKB Shutter’s ruling did not arise. In conclusion, the minority judgement dismissed the Appellants’ appeal with cost and the Courts’ decision were retained.

In contrast, the majority judgement of the Federal Court first started with looking at the concept and definitions of the independent and dependent claims, examining the form of patent claims and the position in other jurisdiction such as United Kingdom and US, and finally clarifying the position of amendment of claims in Malaysia under the Act. The judges held that Type 1 claims consist of one or more independent claims which are supersets of their dependent claims incorporating all features to have the broadest scope possible, whereas Type 2 claims consist of one or more broad independent claims that do not necessarily include all of the features listed in the specification. However, the dependent claims under the Type 2 claims may include additional features over and above the independent claims, resulting to more specific and narrower scope of protection; hence, harder to infringe.

The judges are of the view that the different forms of claims have different implications when determining their interdependency and by extension, their validity. In addition, the judges opined that it is inaccurate to merely perceive a dependent claim as only an extension of an independent claim. As determining the interdependency of claims is crucial when deducing which dependent claims cannot stand by themselves when the independent claim falls, it is therefore important for trial court to also consider oral evidence in respect of each of those claims or category of claims as may have been defined by counsel at the outset of trial in addition to reading and construing the independent and dependent claims in full. However, in this case and in SKB Shutters, there was no such consideration of oral evidence in respect of the dependent claims.

As a result, the majority judgement held that in the event an independent claim is deemed invalid, all dependent claims may not necessarily to be automatically failed. More particularly, the validity of dependent claims is depending on the form of claim used as well as the basis of challenge to their validity. The majority judgement also held that trial court should undertake evidential process of examining each claim separately to avoid overlooking any additional features under the dependent claims that may render them valid. Hence, the SKB Shutters failed to take into account the dependent claims and the basis of challenge to their validity. In conclusion, the majority judgement allowed the Appellants’ appeal and remitted the case to the High Court to determine whether each of the dependent claims possesses independent validity.