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The English courts have jurisdiction to consider the validity of foreign patents if that issue needs “to be addressed in order to decide on the true nature and scope of the parties’ contractual obligations to one another”, the Court of Appeal has confirmed.

In Otsuka v GW Pharma, the claimant (a Japanese company) sued the defendants (two UK companies) in England for royalties under an agreement governed by New York law.  The defendants indicated that part of their defence would include a contention that certain jointly-owned foreign patents from which the claimed royalty entitlement emerged were invalid, and argued that the English court accordingly had no jurisdiction to consider the claim, because of (i) the rule in British South Africa Co v Compania de Moçambique [1893] AC 602, or (ii) the foreign act of state principle.  The defendants further argued that England was not the appropriate forum.  The Court of Appeal (Birss LJ, with whom Thirlwall and Baker LJJ agreed) upheld the High Court’s rejection of all of these arguments, finding (i) that the claim did not infringe the Moçambique rule, since it was not principally concerned with validity and in any event fell within the contractual exception to that rule ([25]-[60]), (ii) that the claim would not require consideration of any non-justiciable foreign act of state ([61]-[75]), and (iii) that no error had been shown in the Judge’s analysis of the appropriate forum ([76]-[80]).

The decision is available here.

James Segan KC and Ravi Mehta acted for Otsuka.

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