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	England and Wales Patents County Court
You are here: BAILII >> Databases >> England and Wales Patents County Court >> Merck Canada Inc & Anor v Sigma Pharmaceuticals Plc [2012] EWPCC 18 (27 April 2012) URL: http://www.bailii.org/ew/cases/EWPCC/2012/18.html Cite as: [2012] EWPCC 18, [2013] RPC 1

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IN THE PATENTS COUNTY COURT

		Rolls Building 7 Rolls Buildings London EC4A 1NL
		27/04/2012

His Honour Judge Birss QC :

1. This is an action for infringement of European Patent (UK) No. 0 480 717 entitled "Unsaturated hydroxyalkylquinoline acids as leukotriene antagonists" as well as the related supplementary protection certificate SPC/GB98/025 which protects the product "Montelukast, or a pharmaceutically acceptable salt thereof, preferably montelukast sodium". The first claimant is the registered proprietor of the patent and the SPC and the second claimant is currently the exclusive licensee as a result of an exclusive licence which it entered into on 27^th May 2011. I will refer to the claimants together as Merck. At some points in the argument I will need to distinguish between different Merck group companies and I will do so when necessary.
2. Both the patent and the SPC protect montelukast sodium. This compound is the active ingredient in a Merck product called SINGULAIR which is a treatment for adult and paediatric asthma conditions. Singulair is one of Merck's most successful products. The SPC is due to expire on 24^th February 2013.
3. The defendant ("Sigma") has imported Singulair into the United Kingdom from Poland and sold it here. There is no dispute that the product imported falls within the scope of the monopoly granted by the patent and the SPC and there is no challenge to the validity of either. The issues arise from the rules relating to parallel importation of drugs from one Member State of the EU to another and from estoppel.
4. Ordinarily parallel importing the patentee's product on sale in one Member State and selling it here does not infringe a UK patent. However Merck submit that the Singulair imported from Poland and sold is an infringement of its rights as a result of the operation of a provision called the Specific Mechanism which forms part of the Act of Accession by which Poland joined the EU.

Sigma's case

5. Sigma's position is that before they could rely on the Specific Mechanism in this case, Merck needed to satisfy a precondition and they failed to do so. The precondition arose because Merck were given advance notification in June 2009 of the intention to import Singulair from Poland and, Sigma contends, if Merck had wanted to rely on their patent rights, they needed to respond to that notification and say so. Sigma submits that as a result of not responding, Merck cannot use their patent rights in relation to acts of importation and marketing insofar as the acts took place before Merck did demonstrate their intention to exercise their rights. Sigma contends that this is the effect of the Specific Mechanism when it is read and understood in the context of a ruling of the ECJ in Generics & Harris v Smith Kline & French, Case 191/90, [1993] RPC 333 and when one bears in mind that provisions like the Specific Mechanism, as derogations from European free circulation law, are to be interpreted narrowly. Sigma also contends that the case may well be one which should be referred to the CJEU.
6. Merck did object to Sigma's activity in December 2010. Sigma's case is that this is the occasion on which Merck exercised their option to use their patent rights and as a result Sigma had to stop. Sigma then did so, however Merck are not entitled to damages for the prior acts of importation and sale.
7. As separate defences under national law, Sigma initially relied on an argument that Merck had consented to the activity and on estoppel. The consent argument was dropped before trial given the approach to consent in European law such as that considered in Zino Davidoff (conjoined cases C-414-6/99 [2002] RPC 20).
8. That leaves the estoppel. Sigma argues that Merck are estopped from invoking their patent rights in relation to the past acts. This is based on essentially the same facts as the Specific Mechanism point. Sigma relies on the notification in June 2009 and also on further notification letters relating to trade marks and the so called BMS conditions (see e.g. my judgment in Hollister v Medik [2011] EWPCC 24 and paragraph 120 below). Merck did not respond to any of these letters and Sigma contends this gives rise to an estoppel in its favour such that Merck are estopped from claiming damages. Again Sigma accepts that the estoppel does not prevent Merck from asserting its rights as from December 2010 but at that point Sigma stopped selling.
9. There is also an issue about goods which Sigma had imported in good faith by December 2010 but had not sold. These are presently being held by Sigma.

Merck's case

10. There is no dispute the June 2009 letter was received by Merck and not responded to. The reason for the lack of a response was inadvertence and administrative error. However, fundamentally, Merck's case is that the Specific Mechanism does not work in the way Sigma contend. There is no requirement for an option to be exercised in the manner contended for. Sigma has simply infringed and Merck are entitled to damages. Merck contend there is no need for a reference. Merck also deny the existence of the estoppel, contending that silence cannot satisfy the requirements for estoppel.
11. There is a significant dispute relating to the identity of who should have given and received the notification letter. The notification letter was not actually sent by Sigma and makes no mention of Sigma. It was sent by another company in the group called Pharma XL. Merck contend that, especially if (which they deny) the Specific Mechanism operates in the way Sigma contends, then the notification was neither sent by the appropriate sender nor sent to the appropriate recipient. It was sent to the company which held the marketing authorisation for Singulair. That was the second claimant ("MSD Ltd") but at the time MSD Ltd had no rights to enforce the patent. It was neither the patent holder nor an exclusive licensee. It has become an exclusive licensee subsequently but that was well after the relevant events.

The proceedings

12. The action is concerned primarily with liability for past acts. At the heart of the case is a legal dispute about the Specific Mechanism. There are some disputes of fact but they are self contained in nature. At the CMC directions were given limiting evidence and disclosure to specified issues. The trial consisted largely of legal argument. There were two witnesses, who were cross-examined for about one hour each. Tom Hinchliffe instructed by Hogan Lovells represented Merck while Martin Howe QC leading Isabel Jamal represented Sigma. The detailed legal argument meant that the case required two days to be heard.

The witnesses

13. I heard evidence from Dr Tony Rollins of Merck and Mr Manish Hansraj Shah of Sigma.
14. Dr Rollins is Managing Counsel of the European and Japanese Patent Department of MSD Ltd. His evidence was primarily directed towards an allegation that Merck did not have in place any or any adequate system for responding to "specific mechanism" letters. He explained how Merck's internal processes worked. He was cross-examined by Mr Howe essentially to highlight a point about the difficulty for an outsider in pinning down which company within Merck was in fact responsible for what. This was to illustrate Mr Howe's submission on the parties' issue arising in relation to the Specific Mechanism. I will return to it below. Dr Rollins gave his evidence entirely fairly. Mr Howe made no criticism of him as a witness.
15. Mr Shah is a chartered accountant and Finance Director of Sigma. He is also a shareholder of Sigma. He explained that Sigma was founded in 1980/81 by his brother Bharat Shah, who is the managing director. Another brother Kamal Shah is operations director and Sigma is a family business. Mr Shah gave evidence about Sigma's activities (which was not disputed) and gave evidence about his state of mind. This was relevant to the estoppel. He was cross-examined about his knowledge and a particular point arose about his belief that a third party, Quadrant, was importing Singulair from Poland as far back as October 2008. Merck were concerned that in cross-examination Mr Shah's position on the point was different from the position adopted in correspondence. I will deal with the Quadrant issue below. As a witness, in my judgment Mr Shah gave his evidence fairly and I make no criticism of him.

The Law

16. The Specific Mechanism is to be found in Chapter 2 to Annex IV of the Act of Accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia or Slovakia to the European Union. The Accession was signed in Athens on 16^th April 2003. It provides:

2. COMPANY LAW

Treaty establishing the European Community:

Part Three, Title I

Free Movement Of Goods

SPECIFIC MECHANISM

With regard to the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovenia or Slovakia, the holder, or his beneficiary, of a patent or supplementary protection certificate for a pharmaceutical product filed in a Member State at a time when such protection could not be obtained in one of the abovementioned new Member States for that product, may rely on the rights granted by that patent or supplementary protection certificate in order to prevent the import and marketing of that product in the Member State or States where the product in question enjoys patent protection or supplementary protection, even if the product was put on the market in that new Member State for the first time by him or with his consent.

Any person intending to import or market a pharmaceutical product covered by the above paragraph in a Member State where the product enjoys patent or supplementary protection shall demonstrate to the competent authorities in the application regarding that import that one month's prior notification has been given to the holder or beneficiary of such protection.

17. Although it is part of an international treaty, the Specific Mechanism has effect in the United Kingdom as a result of s2(1) of the European Communities Act 1972 which provides that:

(1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression "["enforceable EU right"]" and similar expressions shall be read as referring to one to which this subsection applies.

18. The expression "the Treaties" is defined in section 1 of the 1972 Act so as to include the 2003 Act of Accession and thus the Specific Mechanism, as part of the treaty, is effective in law without further enactment.
19. Essentially the Specific Mechanism means that certain UK patents (essentially product claims) can be used to prevent parallel imports from (in this case) Poland if the patent was filed at a time when Polish law did not permit that sort of protection. In that respect it acts to override the usual consequences of a patentee putting product onto the market in a Member State.
20. The issue is about the circumstances in which such a patent can be used in that way. Mr Hinchliffe submits that the words "may rely" in the first paragraph of the Specific Mechanism simply reflects the fact that the patent rights are private rights which the holder can enforce by bringing legal proceedings if it wishes. Whether it chooses to do so (with the attendant cost that this will incur) is a matter for the holder. The language is being used in contradistinction to a restriction imposed by the state.
21. Mr Howe submitted that a prior demonstration that the patentee intended to exercise its rights must have been given to the importer before those rights can be exercised. For that he relied on the Generics & Harris case which in turn was based on the special provisions with essentially the same effect as the Specific Mechanism in Art.s 47 and 209 of the Acts of Accession of Spain and Portugal by which those two states joined the Community on 1^st January 1986. Those provisions provide as follows:

"… the holder or his beneficiary, of a patent [… of a certain kind filed at a certain time ... ] may rely upon the rights granted by that patent in order to prevent the import and marketing of that product in the present member-State or States where that product enjoys patent protection even if that product was put on the market in [Spain (or) Portugal] for the first time by him or with his consent"

(emphasis added)

22. In Generics & Harris the ECJ had to consider the Spain/Portugal special provisions. At paragraphs 38 and 42 the court said this:

[38] In order to interpret those Articles [i.e. Arts 47 and 209], it is necessary to have regard to the actual wording of the provisions, according to which the proprietor of the patent 'may rely upon the rights granted by that patent in order to prevent the import and marketing' of the product.

[39] The first condition for the application of those provisions is […]

….

[42] The second condition governing the prohibition on importing patented products from Spain and Portugal concerns the fact that the provisions of Articles 47 and 209 of the Act of Accession merely confer upon the proprietor of the patent the option of preventing such imports. Those derogating provisions are therefore inapplicable unless the proprietor of the patent demonstrates his intention to exercise that option. Contrary to the view expressed by the Spanish Government in its written observations, the effect of that condition is not to prohibit the authorities of the Member States from applying those provisions themselves. However, for the provisions to apply in such a case the proprietor of the patent must have demonstrated his intention to exercise the right conferred upon him by Articles 47 and 209.

(emphasis added)

23. Mr Howe submits that paragraph 42 and in particular the passages in it I have emphasised above could not be clearer. The ECJ there was stating that the patentee has an option whether to rely on the special provisions and, if he wishes to exercise that option, he must demonstrate an intention to do so. Thus until he does, he has no right to rely on the special provisions. Although this was said in relation to the Spanish and Portuguese provisions and applies directly to them, it forms a key part of the background to corresponding provisions which were put into the 2003 Accession treaty I have considered, and the key expression, that the patentee "may rely" upon the patent in the relevant circumstances, is the same in both. Thus when the 2003 Accession treaty was agreed, it was meant to mean the same thing in this respect as the Spanish and Portuguese treaty as decided upon by the ECJ. Moreover it explains why the requirement for notice was put into the Specific Mechanism (which was not in the Spanish or Portuguese treaty), it was to facilitate the exercise of this option. In further support for the argument, Sigma relies on the principle that these derogations are to be read narrowly.
24. As I said above, Merck submit that "may rely" simply reflects the fact that the patent is a private right. A patentee does not lose, for example the right to claim damages for past acts of infringement, just because an intention to exercise the right is not demonstrated in advance. Merck submit that the point in Generics & Harris arose in particular context and does not mean what Sigma says it means. As to the purpose of the notice referred to in the second paragraph of the specific mechanism, Merck says that this is simply to give the patentee warning that the acts are going to take place but nothing more. A patentee then has the chance to seek relief if it wishes to do so, including interim relief, but is not obliged to do anything.
25. It may be observed that there is no later case, to which my attention has been drawn, in which the point has been considered or mentioned one way or the other in relation to either the Spanish/ Portuguese provisions or the 2003 Accession treaty. Mr Hinchliffe referred to two cases in which the point could have arisen but did not. First: Welcome Foundation v Discpharm [1993] FSR 433, which is a decision of HHJ Ford in the Patents County Court. However, as Mr Howe pointed out, that case was heard and decided in April/May 1992 before the judgment of the ECJ in Generics & Harris, which was in October 1992. Second: Merck v Primecrown (Cases C-267/95 and C-268/95) [1997] FSR 237, in which parallel importing generally and the Spanish / Portuguese provisions in particular were considered by the ECJ. However as I read Merck v Primecrown, there would have been no reason for the particular point arising before me to have been taken in that case.
26. I do not regard that absence of later authority on the point as helpful either way.

Interpretation of community law and references to the CJEU

27. Community law is to be interpreted using a teleological approach. Thus its true interpretation is not based solely on the ordinary meaning of the words used but one must consider the purpose for which it was implemented and consider such preparatory documents as exist.

Preparatory documents

28. A point arose about preparatory documents. The only document which contained anything which might have a bearing on the issue I have to decide was a summary record of a meeting of the Pharmaceutical Committee of the European Commission on 2^nd October 2002. The document provides some support for Merck's construction. Mr Howe submitted that since the issue is the interpretation of the Specific Mechanism and since that forms part of a treaty, the rules of customary international law codified in the Vienna Convention on the Law of Treaties apply to its interpretation. He argued that although a record of the kind in question would be admissible to interpret a piece of EU legislation drafted as such, e.g. a directive or regulation, the Accession treaty was drafted between the EU (and/or the existing Member States) on one side and the new Accession states on the other. It was not an EU legislative measure. Thus a meeting of the European Commission's Pharmaceutical Committee could only reflect the objectives of one party to the agreement and not the other(s). As such it was not admissible pursuant to Art 32 of the Vienna Convention. That Article permits recourse to be had to preparatory work of the treaty, which can include documents exchanged between the representatives of the negotiating parties and records of oral discussions between them, but it cannot include private meetings undertaken by one party to the negotiations without evidence the records were communicated to the other side. Mr Hinchliffe submitted that in all probability the point recorded in the summary record would have been communicated to the negotiating putative new member states, since it appeared to provide the (only) explanation why the second paragraph of the Specific Mechanism was inserted into the draft, which happened after the meeting. However he could point to no record of the point having been explained to the putative new member states nor any evidence whether and to what extent it was publicised at the time.
29. Mr Howe's point is persuasive but I am reluctant to get into what seems to me to be a point with potentially far reaching consequences unless it is truly necessary. I asked Mr Howe if he had any EU cases in which this interpretation issue was considered. He produced some cases in which the ECJ had applied the Vienna Convention to the interpretation of association agreements between the Community and third states (such as El-Yassini v Home Secretary Case C-416/96 [1993] ECR I-1209 at [47] concerning the EEC-Morocco Cooperation Agreement) but that is a different situation. He submitted that in Opinion 1/91 re draft EEA Agreement [1991] ECR 1-6079 at paragraph 14 the ECJ had applied the Vienna convention to the interpretation of the Treaty of Rome but I do not read the paragraph that way.
30. Furthermore, although it seemed to be common ground between Mr Howe and Mr Hinchliffe that the record of the October 2002 meeting would be a legitimate aid to interpretation of the Specific Mechanism if that was indeed a piece of EU legislation like a directive, it is not clear to me it is as simple as that given Mr Howe's submission that the record concerns a private meeting. In a note produced after the trial (see below) Merck submitted that similar records had been taken into account in the interpretation of EU legislation (in Stauder v Ulm [1969] ECR 425 Case 29/69 and Furlanis v ANAS Case C-143/94 [1995] ECR I-3633) but on the material before me I am not in a position to say whether the analogy is exact and I decline to enter into that particular issue.
31. On 16^th April Merck's solicitors and counsel produced a note on the approach to interpretation. They submitted that as a matter of EU law, the primary EU treaties are part of the EU legal order and are not to be treated as ordinary international treaties. They referred to the contrast drawn in the seminal judgment of the ECJ in Costa v ENEL Case 6/64 [1964] ECR 585 between the EEC Treaty which has created its own legal system and ordinary international treaties and submitted that if primary EU treaties were treated as ordinary international treaties then that would fundamentally undermine the legal order of the EU. They also referred to Case C-445/00 Republic of Austria v Council [2003] ECR I-8586 in which a Council Regulation was annulled as illegal by the Court of Justice on the basis that it was inconsistent with a protocol in the Act of Accession of Austria to the Community. The point was that the protocols and annexes to an Act of Accession constitute primary law which, unless that Act provides otherwise, may not be suspended, amended or repealed otherwise than in accordance with the procedures for review of the original Treaties (paragraph 62). It seems to me that neither Costa v ENEL nor Austria v Council are really addressed to the question I have to decide which is concerned with what material is admissible as an aid to interpretation of the Accession treaty. I can quite see that the Accession treaty here is not simply an ordinary international treaty (Costa) and represents primary law (Austria v Council) but it seems to me these points do not to face up to the question of whether a document representing the views of one party to the negotiation which led to its agreement is properly admissible. I can also see that the question of what is admissible to interpret the treaty is itself is ultimately a matter of EU law, but that does not answer the question either.
32. The note also submitted that the Court of Justice has made use of documentary sources that are clearly not part of the official record of negotiations when interpreting primary EU law treaties citing one case (Case C/60 Humblet v Belgian State [1960] ECR 559) in which the opinions expressed in the national parliaments of signatory states were examined. However these are sources of a different kind to the summary record here.
33. In the end, for reasons which appear below, I did not find it necessary to consider the record of the October 2002 meeting and so I will assume, without deciding, that the record is not admissible.

Reference for a preliminary ruling

34. Under Art 267 TFEU the Court of Justice has jurisdiction to give preliminary rulings on the interpretation of the EU treaties and where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the CJEU to give a ruling thereon. This applies to the Patents County Court as much as to any other first instance court. Courts against whose decisions there is no appeal are in a different position. They are generally obliged to refer unless the correct interpretation of the law is obvious ("acte clair" – see CILFIT Case 283/81 [1982] ECR 3415). Lower courts, such as this court, have a complete discretion as to whether to refer.
35. In Bulmer v Bollinger [1974] Ch 401 Lord Denning said that "unless the point is really important it would seem better for the English judge to decide it himself" whereas in R v International Stock Exchange ex parte Else [1993] QB 534 Sir Thomas Bingham MR said "if the national court is in any real doubt, it should ordinarily refer". The CJEU has issued an Information Note on References from National Courts for a Preliminary Ruling (2005/C 143/01). At paragraph 12 it indicates that a court against whose decisions there is a judicial remedy may, in particular when sufficient clarification is given in the case law of the Court, itself decide on the correct interpretation of Community law and its application to the factual situation before it.
36. I have decided not to refer the question of the interpretation of the Specific Mechanism to the CJEU. My reasons are these.
37. First there is a substantial framework of case law from the CJEU/ECJ dealing with parallel imports and this kind of derogation from the free circulation rules already, albeit self evidently there is no decision directly on the point I have to consider.
38. Second the point is one which, once the issue is put in its proper context, does not appear to be particularly difficult although I recognise that appearances can be deceptive. If I needed to resolve Mr Howe's submission about the proper approach to the interpretation of the Accession treaty, different considerations might apply.
39. Third and importantly in my judgment, the SPC in this case will expire in February 2013. It is highly unlikely that the CJEU will be in a position to rule on any reference before then. It is also doubtful whether, if permission to appeal is given here, the Court of Appeal would hear an appeal from this judgment by that time either. Accordingly this is the only court with any opportunity to rule on the point before it becomes purely a matter of damages between the parties. Although damages are at stake for past (alleged) infringements, Sigma are also holding stock which they had imported but not sold before Merck wrote to them. They have undertaken not to sell until the expiry of the SPC or two weeks after my judgment, whichever is the earlier, and Merck have given a cross-undertaking. However Sigma's unsold Singulair packs have their own expiry dates and I gather that some of them will expire before the SPC does. Thus there is an advantage in coming to a decision now.
40. Fourth, this case is proceeding in the Patents County Court, a court intended to facilitate the resolution of intellectual property disputes in a cost effective, efficient and proportionate manner. Committing the parties to a minimum of a further 18 months to two years of litigation, with the concomitant cost, before a decision is reached runs counter to that aim. It is by no means determinative on the issue but in my judgment it is another relevant factor.
41. Having decided not to refer the issue to the CJEU, I now move to consider the point on its merits.

Does a failure to demonstrate an intention to exercise the right under the Specific Mechanism bar a patentee's claim for damages (or an account of profits) for patent infringement?

42. To deal with the point on its merits and put Generics & Harris in its proper context, the legal background which needs to be taken into account includes the EU rules on free circulation and parallel importing as well as the development in UK patent law which led to many pharmaceutical patents being treated as endorsed "licences of right" in the 1980s and early 1990s. Then I will turn to consider the case itself and after that address the wider considerations relied on by the parties as supporting their rival interpretations of the Specific Mechanism.

The legal background

43. The European Union has always been intended to limit barriers to trade between member states and the original Treaty of Rome on which the EEC was based contained important articles dealing with this. The modern equivalents are Articles 34 - 36 in Chapter 3 of the TFEU. They provide as follows:

CHAPTER 3

Prohibition of quantitative restrictions between Member States

Article 34

Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.

Article 35

Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.

Article 36

The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

44. Thus Art 34 TFEU (as it now is) prevents import restrictions between Member States of the EU (or measures having equivalent effect) in order to ensure free circulation of goods throughout the single market. Art 36 allows certain derogations from Art 34 but only in particular circumstances. One of the derogations which is expressly permitted by Art 36 is the protection of industrial or commercial property. That property includes intellectual property and includes patent rights.
45. Importing a product on sale in one state of the EU into another for sale there is called parallel importing. The business exploits price differences prevailing in different states of the EU for the same product.
46. This case is concerned with pharmaceutical products and there are two parallel systems of law which are relevant to parallel imports. One is the intellectual property system including patents and trade marks. The other is the medicines regulatory system. All pharmaceutical products require a marketing authorisation before they can be sold, regardless of whether a drug is patented or not.
47. The national regulatory authorities are required to grant parallel import licences (PL/PIs) in order to facilitate free circulation in accordance with EU law (see the ECJ in Officier van Justitie v de Peijper, Case 104/75, [1975] ECR 613). When granted, the PL/PI can be said to "piggy-back" on the national marketing authorisation of the drug company in the country of import and permits the parallel imported product to be marketed under its umbrella.
48. The grant of marketing authorisations in general and PL/PIs in particular has nothing to do with patent rights. When the regulator grants a marketing authorisation the concern is safety and efficacy of the medicine. Whether the product would or would not infringe a patent is irrelevant and is not part of the regulator's consideration.
49. One obvious snag with parallel imports is that the product sold in (say) Poland will be labelled up in Polish. Selling such a thing labelled that way in the United Kingdom does not make a lot of sense, especially bearing in mind it may be a powerful medicine with serious potential side effects. The national regulatory authorities are concerned to safeguard the patient safety aspects of parallel imported drugs. Thus PL/PIs will specify the wording of translated patient information leaflets which are to be inserted into packets for the UK market. The regulator will want to make sure that the wording is kept up to date, for example if a new safety warning or contra-indication has to be added. They will want to ensure that all the packets are properly labelled so that they can be traced back to their source if a problem arises. They will also require that operations like repackaging which could prejudice the integrity of the drugs are carried out in proper premises and under properly controlled conditions.
50. In fact under the UK system the actual importer of the product may not be the holder of the PL/PI. So long as the actual importer is named on a list of importers, another company can import the products to be processed under a given PL/PI and the conditions in the PL/PI apply to that processing operation. In such a case however, the party responsible to the regulator for ensuring the conditions are complied with will still be the holder of the PL/PI.
51. In considering patents and parallel imports, the ECJ in Centrafarm v Sterling Drug, Case 15/74, [1975] F.S.R. 161 at paras 8-9 said this:

[8] In so far as it makes an exception to one of the fundamental principles of the Common Market, [Article 36] allows derogations to the free movements of goods only to the extent that such derogations are justified for the protection of the rights which constitute the specific object of such property.

[9] As regards patents, the specific object of industrial property is inter alia to ensure to the holder, so as to recompense the creative effort of the inventor, the exclusive right to utilise an invention with a view to the manufacture and first putting into circulation of industrial products, either directly or by the grant of licences to third parties, as well as the right to oppose any infringement.

(see also Parke Davis v Probel, Case 24/67, [1968] ECR 65)

52. The point being made is that the derogation is only justified for the protection of what is sometimes called the "specific subject matter" or "specific object" of the property. In the case of patents, the specific subject matter is the exclusive right to utilise the invention and first put products into circulation. Thus once the patentee has put products the subject of his patent into circulation in the EU, the inventor has received recompense for the creative effort. The upshot of this reasoning is that while a patentee can rely on its patent to prevent imports from another Member State of goods made or put into circulation there by a third party without the patentee's consent, the patentee cannot rely on a patent to prevent parallel imports of its own goods, i.e. those which were put onto the market by the patentee or with its consent.
53. Parallel importing of drugs came back to the ECJ in an important case, Merck v Stephar (Case 187/80 1981 CMLR 463). That case concerned a drug patented in the Netherlands and also marketed by Merck in Italy where no patent protection was available under Italian law. The Italian marketed drugs were being introduced into the Dutch market by parallel imports. The innovator companies in the pharmaceutical industry regarded this as unfair since in such a situation the selling price in the non-patent country (Italy) was bound to be lower than the price in a patented country (the Netherlands) because there would be generic competition in Italy driving the price down which only existed because of the lack of a patent. However the ECJ held that since the patentee had voluntarily chosen to market the drug in Italy, the goods, once on the Italian market, were in free circulation within the Community and may not be blocked by Dutch patent law even though the return on the patentee's investment may be lower because of the reduced monopoly value in Italy.
54. Although out of chronological order it is convenient at this stage to mention Merck v Primecrown in which the ECJ had the opportunity to reconsider the position taken in Merck v Stephar but affirmed it. On that occasion the ECJ noted (paragraph 41) that in Pharmon v Hoechst (Case 19/84, [1985] ECR 2281) the Court had confirmed the principles in Merck v Stephar and also that in Pharmon the Court had emphasised the importance of the patentee's consent to the product in question being put into circulation.
55. Merck v Stephar having been decided in the early 1980s, in the mid 1980s Spain and Portugal joined the Community. They were countries with patent laws which had not permitted patentees to obtain protection for pharmaceutical products as such. In other words the patent protection available in those countries hitherto was less than the protection available elsewhere. Accordingly, in order to ameliorate what would otherwise have been the effect of Merck v Stephar, once those states were part of the single market, the special provisions mentioned above (Arts 47 and 209 respectively) were inserted into the Spanish and Portuguese Treaties of Accession to the European Communities. These provided in substance that the rule in Merck v Stephar was not to apply to pharmaceutical products during a transitional period. These special provisions were the forerunner of the Specific Mechanism at issue in the case before me.
56. Meanwhile in the sphere of patents, some important developments had been taking place. In the 1973 the European Patent Convention had come into force and this was given effect to in the UK by the 1977 Patents Act. This provided that patents should last for 20 years from filing whereas before the patent term in the UK was 16 years from the date of the patent. Transitional provisions in the 1977 Act provided that for certain pre-1977 Act patents (called new existing patents) their term was extended to 20 years from the date of the patent, however in the period of the extension the patent would be treated as endorsed "licences of right".
57. The endorsement "licences of right" means that the patentee has voluntarily thrown his invention open to anyone who cares to ask for a licence on terms to be agreed between the parties or in default of agreement on terms settled by the Comptroller. One advantage of doing this is that the patent renewal fees are reduced. Of course under the transitional provisions it was not voluntary at all but was the quid pro quo for the patentee obtaining a four year extension on the patent term.
58. Inevitably the question of these licences of right in the context of valuable pharmaceutical patents was litigated extensively in the 1980s. Often the case arose as a dispute arising from the settlement by the Comptroller of the terms of the licence of right. The key case relied on by Mr Howe, Generics & Harris is one of those. Before getting to Generics & Harris it is necessary to touch on the prior ruling of the ECJ in Allen and Hanburys v Generics UK Case 434/85 [1988] FSR 312.
59. The Allen and Hanburys case was about salbutamol. The defendant (GUK) had requested a licence of right so as to import generic salbutamol into the UK from another Member State and then, before the licence was settled, informed the patentee that it was going to import the product anyway. The patentee sought an injunction. There was provision in the Act (s46(3)(a)) by which no injunction could be granted against an infringer who undertook to take a licence of right settled by the Comptroller. However that provision was subject to a proviso that it did not apply if the infringement was by importation. It would only apply to local manufacture. The matter went to the House of Lords and they referred questions to the ECJ. The key questions were (1) whether the free circulation rules in the treaty (Art 30 and 36 as they then were) prevented the patentee from obtaining from the competent national authorities (i.e. the court) an injunction preventing importation and (2) whether the free circulation rules meant the national authorities (i.e. the Comptroller) were obliged to include a term in the licence of right permitting imports from another Member State.
60. The ECJ had to consider how the free circulation rules established in Parke Davis, Centrafarm and Merck v Stephar applied in the case of a patent endorsed "licenses of right". The ECJ based its decision on a consideration of the specific subject matter of the patent. Although the specific subject matter of a patent was usually the exclusive right to manufacture and market a product, once it has been endorsed "licences of right", the patentee only has a right to obtain a fair return because he cannot oppose the grant of a licence to third parties. Thus once a patent is endorsed licences of right its specific subject matter is appreciably altered. On that basis the ECJ held that such a right could not be relied on to prevent importation. Thus when the patent was endorsed licenses of right and the circumstances were that local manufacture could not be banned, the courts could not grant an injunction banning imports from another Member State and the Comptroller could not settle a licence which impeded such imports.

The Generics & Harris point

61. Generics & Harris arose in the following way. Smith Kline & French ("SKF") had a patent for cimetidine. It was extended by the 1977 Act transitional provisions and subject to the licences of right system. GUK and Harris wanted inter alia to import and sell generic cimetidine and applied for licences of right to be settled by the Comptroller. The issue was about provisions in the licence banning imports. The Comptroller settled terms, the parties appealed to the Patents Court (Falconer J) and appealed on from there to the Court of Appeal (Lloyd, Nicholls and Butler-Sloss LJJ). The Court of Appeal referred three questions to the ECJ. Questions 1 and 2 arose because at that time the UK view was that licences of right would allow imports from outside the EEC if the patentee manufactured his drug in another member state but would ban such imports if the patentee manufactured in the UK. Question 3 was about whether the Spanish/Portuguese Acts of Accession and the ECJ's judgment in Allen and Hanburys meant that it would be contrary to Arts 30 and 36 for the Comptroller to settle a licence which contained a term banning imports from Spain and Portugal. The issue before me is about question 3.
62. It was common ground that, putting Spain and Portugal to one side, importation from Member States could not be prohibited following the ECJ in Allen and Hanburys. However SKF contended that Spain and Portugal were in a different position. On that point the Comptroller had held that Allen and Hanburys meant he could not ban imports from Spain and Portugal. The Patents Court took a different view, equating imports from Spain and Portugal with imports from outside the EEC, which meant imports of raw cimetidine could be permitted but not formulated cimetidine. In the Court of Appeal SKF argued that Art.s 47 and 209 of the Acts of Accession meant that an import ban from Spain and Portugal was permissible because those provisions in effect placed Spain and Portugal in the same position as countries outside the free circulation rules.
63. Nicholls LJ expressed a clear view on the point (paragraphs 122-130). Nicholls LJ was of the view that imports could not be restricted from Spain and Portugal in a licence of right because of Allen and Hanburys. The key was the difference in what constituted the specific subject matter of a patent. Once the patent is endorsed licences of right, the patentee has no exclusive right to manufacture and sell, he merely retains a right to receive a fair return. Under the licence (once settled) the patentee will receive a fair return – which is all he is entitled to – and therefore no ban on imports is justified. Lloyd LJ agreed with his conclusion but thought the point was not an easy one (paragraphs 74-76). Butler-Sloss LJ agreed with both judgments.
64. In the ECJ the court answered question 3 such that the Comptroller in such a case was able to settle a licence prohibiting imports from Spain and Portugal provided two conditions were satisfied. The first was that national law had to confer on the patentee the right to prevent imports and the second was that the proprietor had exercised the right conferred on him by the Specific Mechanism. These can be seen in the formal answer to question 3 (repeated in paragraph 43 of the judgment) as follows:

Articles 47 and 209 […] must be interpreted to the effect that the authorities of the member-States competent to settle, in the absence of agreement, the conditions of licences of right may, on the basis of those provisions and in derogation from the principles laid down by Articles 30 and 36 EEC, prohibit the licensee from importing from Spain and Portugal a patented pharmaceutical product

if national law confers upon the proprietor of the patent the right to prevent imports and

if the proprietor exercises the right conferred upon him by Articles 47 and 209.

[the paragraph lay out has been added by me]

65. The first condition was about national law. Part of the background to this point was that the parties did not agree whether the patentee in a licence of right case did or did not have the right to prevent imports. The Court (and see also Advocate General van Gerven's Opinion in paragraphs 13 to 16) was of the view that that was a matter of national law. The Court was deciding here that in their earlier decision in Allen and Hanburys it had not been the ECJ which had decided that a patent endorsed licence of right was a "weak" patent which merely retained a right to obtain a fair return. Rather that was a matter of national law. If the patent merely gave the right to a fair return then that was all the patentee had. The words "may rely" in Art.s 47 and 209 of the Acts of Accession did not create new rights exceeding the protection conferred by the patent by national law (see Judgment of the Court paragraph 41).
66. Paragraph 42 of Generics & Harris, relied on by Mr Howe, is the paragraph of the judgment which deals with the second condition. It is not something the Advocate General dealt with.
67. The second condition states that the patentee must exercise the right conferred on him by the special provisions. However, as can be seen from the answer itself, the question arose in the context of a debate about the settlement by the national authorities in a member state (i.e. the Comptroller) of the terms of a licence which includes a term banning imports. The answer given is that the national authority competent to settle a licence may prohibit the import provided both conditions are satisfied.
68. Although it is not spelled out at length in the judgment, I conclude that the point actually at issue before the European Court starts from the idea that when the Comptroller was inserting a ban on imports in a licence of right, that could be regarded as the national authority of the member state itself actually banning the imports. I do not think that is an accurate characterisation of the Comptroller's function in settling the terms of a licence of right but nevertheless one can see why it might appear like that in the ECJ.
69. The argument then was that the wording in Art.s 47/209 on their face precludes a national authority from doing that. The Spanish Government appeared to be arguing that since the provisions referred only to the patent holder (or his beneficiary), Art.s 47/209 prohibited national authorities from prohibiting imports (or rather prohibited national authorities from settling a licence which prohibited imports). That is what "applying the derogation themselves" means. It means settling a licence which contains a term prohibiting imports. This has to be what the 3^rd sentence of paragraph 42 is referring to since otherwise the paragraph makes little sense. The argument being put must have been that national patent offices had no right to ban imports and were not given such a right by the Specific Mechanism.
70. The Court's answer to this point was that it was true that these derogating provisions (Art.s 47/ 209) merely give the patentee an option of preventing imports (paragraph 42 first sentence) and it is true that this means the provisions are inapplicable unless the patentee demonstrates his intention to exercise that option (paragraph 42 second sentence), since after all it is only an option. However what this comes to is that the Specific Mechanism does not prohibit the Comptroller from ever settling a licence banning imports (paragraph 42 third sentence) but it does mean that for the provisions to apply "in such a case" the patentee must have demonstrated his intention to exercise the right conferred on him by the derogation provisions. In other words in such a case (i.e. when the Comptroller is settling a licence) the Comptroller is entitled to prohibit imports as long as the patentee has already demonstrated an intention to exercise the right to prevent imports.
71. Thus the language in paragraph 42 is talking about the patentee demonstrating something to the national authorities settling a licence (e.g. the Comptroller). Because the right to prevent imports is the patentee's optional right not the national authority's right, the national authority can only ban imports in a licence once the patentee has demonstrated an intention to exercise the right. Once the intention to exercise the right has been demonstrated, and provided of course the patentee actually has the right to prevent imports in the first place, then the terms of the licence can include a ban on imports but the terms cannot do so otherwise.
72. Seen in this light, its context as a decision concerning the settlement of licenses of right is critical. The paragraph is nothing to do with a situation in which there is no licence of right being settled. It is not concerned with the means by which a patentee exercises his patent rights before the courts at all. The Court was not saying that a patentee cannot sue to prevent imports or recover damages for past imports unless he demonstrates an intention to exercise the right to prevent the imports in advance, what the Court was saying was that a prohibition in a licence of right cannot be inserted unless the patentee demonstrates an intention to exercise the right to prevent imports. It does not purport to establish the principle contended for by Mr Howe.
73. The "option" referred to in Generics & Harris is no different from the choice of a patentee in a normal case, nothing to do with Art 47 / 209 or licences of right, to take proceedings for patent infringement. For example no Court would issue an injunction prohibiting imports or award damages unless the patentee asks for it. In the language of the first two sentences of paragraph 42, the patentee always has an option of preventing imports (by injunction) but nothing will happen unless the patentee demonstrates his intention to exercise that option by seeking the injunction.

Wider considerations relating to the Specific Mechanism

74. If Generics & Harris does not support Sigma's argument, should the Specific Mechanism be interpreted that way based on any other considerations? In my judgment it should not, for the following reasons.
75. First, absent Generics & Harris, there is simply nothing in wording of the Specific Mechanism which states that prior notice must be given by the patentee as a precondition to the rights being exercised.
76. There is no reference to notice by the patentee at all. The only reference to notice is the other way round – notice by the importer to the patentee. Even that notice, to the patentee, is provided for in an elliptical way as I shall explain. The reference to notice to the patentee is contained in the second paragraph of the Specific Mechanism. The wording is actually concerned with the person intended to import or market the drug demonstrating something to the local regulatory authority. They must demonstrate, in the context of their application for a PL/PI, that notice of the intention to import has been given to the patent holder or beneficiary. Thus, by way of illustration, in the PL/PI application form for applications to the MHRA there is a box to tick if the import is from one of the accession states. The importer must tick one of two boxes, either a box to say that the Specific Mechanism does not apply or else a box to say that the rights holder has been notified of the intention to import.
77. However although the regulator has to be notified that notice has been given, there is nothing the regulator needs to do with that information. It is not a ground of refusal of any marketing authorisation, including a PL/PI, that its use would infringe a patent.
78. So in fact the express obligation provided for by the wording of the Specific Mechanism is not that the intending importer or marketer must notify the patentee, rather the express obligation is to tell the regulator that notice to the patentee has been given. That is hardly a promising starting point for an argument that the patentee must respond to this notice and declare his intentions or else lose his right to financial compensation altogether.
79. Second, it might be said that the second paragraph of the Specific Mechanism, which requires notice to be given to the patent holder or beneficiary, supports Sigma's case. I reject that. For one thing, the purpose of the second paragraph cannot have been to implement Mr Howe's interpretation of the earlier Generics & Harris decision since I have rejected that interpretation. I accept Mr Hinchliffe's submission as to the purpose of the notice provision. It is to give the patentee some warning and therefore the ability to take practical preventative measures if he wishes such as seeking an interim injunction.
80. Moreover, Merck ask rhetorically what happens if the applicant ticks the box, telling the national authority that it has given notice but in fact did not do so? The failure may be deliberate or accidental. The notice may have been sent in good faith but failed to arrive at the patent holder. In any case the terms of the Specific Mechanism have been complied with to the letter but the patentee has not been informed. This is a minor point if the Specific Mechanism has the meaning Merck contend for but is a real problem if the Specific Mechanism contemplates that a patentee's rights have no effect unless they are asserted. The point is not made good by devising an answer which seems reasonable to say that perhaps in that case a patentee would be able to sue if it was fair. The issue is that as a matter of interpretation of the provisions, machinery to address this sort of thing is entirely absent. That is a ground for concluding the provision does not have the effect contended for.
81. Third, consideration of the purpose of the Specific Mechanism in general does not lead to Sigma's conclusion. The Specific Mechanism was to ameliorate what would have been the effect of Merck v Stephar once the Accession states joined the EU but in circumstances in which the patentees never could have obtained appropriate patents in those states and thus never could receive proper recompense for that invention in that market. The provision only applies to a certain limited class of cases, with patents filed at the time the equivalent protection was unavailable in the relevant state. Patent rights in general do not require prior notice before they can be exercised and there is no reason why these patent rights should be any different.
82. Fourth, the fact that the Specific Mechanism is a derogation from the free circulation rules and thus should be interpreted strictly (held in Merck v Primecrown paragraphs 23-24) does not help. The point in Merck v Primecrown was concerned with interpreting a definition of a date which was ambiguous having regard to the different language versions of the provision. The earlier version was chosen. That is an entirely different matter from the point here. There is no definition or term in the Specific Mechanism to interpret widely or narrowly. The principle of narrow or strict interpretation cannot justify reading into the provisions a precondition which is just not there.
83. Fifth, there was a suggestion that prior notice was required because otherwise the Specific Mechanism could create a burden on parallel importers to work out what the patent position might be for a given drug. I reject that. Parallel importers are sophisticated operators in their field. They know that products are worth parallel importing because they command higher prices, usually as a result of being protected by patents. All patents are on a public register precisely in order to allow them to be considered by third parties. If the importers do not wish to look into the point themselves, there are numerous firms of patent attorneys who will offer a service to investigate the patent position on a product for them.
84. Sixth, the question of parties becomes very significant if Sigma's case is accepted. The second paragraph of the Specific Mechanism contains the reference to notice to the patentee (or beneficiary). As Mr Howe points out it does not actually say who must give the notice, it only provides for who must tell the regulator that notice has been given. This point was being relied on by Sigma to excuse the fact that notice in this case was not given by the importer (Sigma) but by Pharma XL. If the notice is as important as Sigma's case would make it, then it seems to me to be odd that the provision can be read as not even providing for precisely who must give the notice to the patentee.
85. As to the identity of the person to whom notice should be given, the Specific Mechanism refers to the patent holder or his beneficiary. "Beneficiary" here obviously means someone who can already enforce the patent, since otherwise, if "beneficiary" had a wider meaning and included entities with no right to sue but who nevertheless may benefit from the existence of the patent, the words "may rely" would purport to give that wider group patent enforcement rights that national law did not provide for. It plainly does not do that.
86. The notice in this case was sent by Pharma XL to MSD Ltd. Pharma XL is not the importer and MSD Ltd was not the patent holder and had no right to sue under the patent at the time. Sigma submitted that none of this was a problem because the national law view of distinctions between corporate entities was not relevant and the EU view of undertakings as economic units was the correct way of looking at it. So Sigma contended that "beneficiary" was an autonomous concept in EU law and not limited to parties with a right to sue.
87. The Waymade point also illustrates this difficulty. I deal with it in the section on estoppel but the essential facts are that Waymade Plc, a separate company from the Sigma group, were named in Pharma XL's list of importers provided to the MHRA in relation to the relevant PL/PI application for Polish Singulair. However Waymade had already given a Specific Mechanism notice to Merck about imports of Polish Singulair in 2007 and Merck had objected to the imports. So does their inclusion in this later PL/PI application give Waymade a further bite at the cherry? Their standing in relation to the latter notice is the same as Sigma's – both were listed in the importers list given to the MHRA and neither were named in the June 2009 notice to Merck. If the notice is good enough for Sigma, why not for Waymade? A further bizarre twist is that Waymade will have been entirely oblivious to their inclusion in Pharma XL's list. So were they now allowed to import despite not knowing that they could and even though they had been told they could not? For all Sigma know, perhaps they were named in a PL/PI list applicable to Waymade's notice, which was objected to by Merck. In fact it appears not to have happened although a Sigma group company OPD Laboratories Ltd does appear in a PL/PI list for another company, Ginova. If Sigma are on another list, would that mean that actually, unknown to Sigma, Merck has made an objection which applies to them? It may be said that this Waymade point can be answered by saying that each PL/PI is taken separately but it is not obvious why that should be so and it would be a recipe for abuse. Importers could send numerous notices to a patent holder in the hope that one is missed and then use that one.
88. In my judgment the problems addressed above are points against Sigma's interpretation of the Specific Mechanism. If the notice is only concerned with warning a party with rights to enforce the patent that they may wish to take steps, then there is no harm if a broad view is taken of the persons by whom and to whom the notices must be given. On the other hand if Sigma are correct and the right to financial compensation is lost unless the patentee/beneficiary does something in advance, then it is vital that the right people are notified and notified in good time and one would expect legislation intended to have that effect to be drafted accordingly.
89. A point which I believe does not assist either way was Mr Howe's argument that because Poland is a now part of the EU, any goods on the Polish market are in free circulation in the whole EU according to ordinary principles and the only thing which could change that position would be if the patentee invoked his patent rights in response to a notice from the importer. This argument simply begs the question. Goods on the market in Poland are generally in free circulation but the Specific Mechanism is undoubtedly a derogation from that. Merely because it is a derogation does not seem to me to mandate that it must be the subject of a prior invocation of the patentee's rights.
90. On the other hand there are points put forward by Merck to support their case on the Specific Mechanism which I do not accept. Much of the argument turned on whether the Specific Mechanism should be regarded as deeming Poland (and the other Accession states) as outside the EU for the purposes of free circulation. That seems to me to be an argument which does not help. The Specific Mechanism does not say anything about deeming states in or out. Apart from anything else the Specific Mechanism still requires a patent in the state into which the drug is to be imported, and so unless a company has patents in all Member States (which it often will but need not necessarily) then goods sold in Poland will be in free circulation so that they can be imported into a non-patent country.
91. Another point made by Merck which I do not regard as supporting their case is the following. They pointed out that Sigma's construction of the Specific Mechanism would mean that whether a patentee's rights in relation to a particular pack were exhausted depended on the identity of the importer and so until the pack is bought in Poland to be imported here it is in an unknown state. They argue that it would be surprising if the question of whether the particular pack can be lawfully imported and sold here depends on who does the importing. I reject this argument. It seems to me that one could, if one wanted to, create an elaborate system with the effect contended for by Sigma and it could work and be self consistent if one did so. There is nothing inherently flawed in the system proposed by Sigma provided all the details are worked out. However I do agree that the absence of a fully worked out scheme to deal with potential anomalies is a point against the argument that the Specific Mechanism was ever intended to work in that way.
92. In conclusion, although Mr Howe's argument on the meaning of the Specific Mechanism is an attractive one, in my judgment it is not right.

Estoppel

93. I did not detect an issue of principle between the parties on the law of estoppel although their submissions placed the emphasis on different points. Mr Howe submitted that the three principles of the law of estoppel, that is representation, reliance and detriment, are set out comprehensively in Gillett v Holt [2001] Ch 210 (CA). He submitted that in that case the Court made clear that the three requirements cannot be looked at in isolation but must be looked at in the round. The reference to looking "in the round" is at p225 of the judgment of Robert Walker LJ (with whom Beldam and Waller LJJ agreed) and I accept it. It is illustrated in Gillett v Holt by the points made in the same paragraph that "the quality of the relevant assurances may influence the issue of reliance" and "reliance and detriment are often intertwined". On the other hand much of the discussion in Gillett v Holt seems to me to be concerned with issues which do not arise in this case.
94. Mr Hinchliffe, citing the famous judgment of Oliver J in Taylor Fashions v Liverpool Victoria Trustees [1982] QB 133, emphasised four elements to establish an estoppel: assurance, reliance, detriment and unconscionability. Understandably Mr Howe did not dissent and I accept that submission as well.
95. Mr Hinchliffe also cited Youell v Bland Welch & Co. (No 2)[1990] 2 Lloyds Rep 431. He relied on the passage at p449 (based largely on the quotation there from the judgment of Lord Goff in The Kanchenjuga [1990] 1 Lloyds Rep 391) as a summary of the position. He placed particular emphasis on the need for an unequivocal representation (by words or conduct) that a party does not intend to enforce his legal rights.
96. Mr Hinchliffe also relied on the passage at p452 as authority for the proposition that silence is equivocal and cannot constitute an assurance to establish an estoppel. To say that silence can never do so goes too far. The passage relied on in the judgment of Phillips J is as follows:

"Silence

In the context of estoppel silence differs from a positive representation in that its effect will not normally be to induce a misunderstanding but to permit a misunderstanding that has already been induced to persist. In such circumstances a party who has remained silent may be estopped from asserting that the facts are other than those which they were mistakenly assumed to be. But such an estoppel will only arise if the party estopped was under a legal duty to dispel the other party's misunderstanding."

97. Following this, Phillips J went on to consider Greenwood v Martins Bank [1933] AC 51 about a customer of a bank who discovered someone was forging his signature on cheques but failed immediately to draw this to the bank's attention. He was held to owe the bank a legal duty to inform the bank of the forgeries and to be estopped from asserting the cheques were forgeries.
98. I take the point being made by Phillips J to be that in silence cases, the circumstances in which a legal duty to dispel a misunderstanding is necessary in order to found the estoppel are the ones in which the silence has permitted an already existing misunderstanding to persist, rather than the ones in which silence has induced a misunderstanding in the first place. This may be a significant point because Mr Howe submitted that this was a case of inducing rather than permitting a misunderstanding and so no legal duty was necessary to found the estoppel.
99. Mr Hinchliffe also relied on Farmers Build v Carier [1999] RPC 461 at 486-489. In that case Farmers Build found out about Carier's machine in 1993 and believed it was an infringement of their design rights but decided to wait and see how Carier's machine prospered. There was no complaint until the letter before action was written in January 1996. The trial judge accepted the defendant's argument that the claims against them for damages and/or an account of profits were barred by acquiescence, relying on Taylor Fashions and also Habib Bank v Habib Bank [1982] RPC 1 and Film Investors Overseas Services v The Home Video Channel [1997] EMLR 347. The Court of Appeal overturned the judgment on this point. The Court emphasised that Farmers Build had brought their infringement proceedings within the limitation period and the pleaded case and evidence did not establish any reliance by Carier on any representation or conduct of Farmers Build inducing a reasonable belief in Carier that design rights did not exist or would not be enforced so as to prevent Farmers Build from enforcing their legal rights within the limitation period. There was no evidence Farmers Build had lulled Carier into a false sense of security or into thinking that Farmers Build had abandoned any intention to pursue a claim against them. The Court concluded that as a matter of law the judge had been wrong to hold that standing by and taking no steps to pursue a claim for infringement made it unconscionable to claim damages or an account of profits.
100. It is clear that the facts of Farmers Build are different from the alleged facts before me. This case involves an allegation of reliance whereas Farmers Build did not. A point I draw from both Youell and Farmers Build is to place emphasis on unconscionability as a highly material element. If a party's silence did not induce the relevant misunderstanding but only permitted an existing misunderstanding to persist, it is not unconscionable to require there to have been a legal duty to dispel the misunderstanding before finding an estoppel. If the defendant did not place reliance on the silence at all then the claimant merely standing by does not make enforcement within the limitation period unconscionable.

The Facts

101. The key events in this case start in 2008/2009. At that time Singulair was an established product in the UK market and Sigma were an established business parallel importing pharmaceuticals into the UK. Sigma were parallel importing Singulair into the UK from Italy. It will be recalled that Italy is not part of the Specific Mechanism. Mr Shah's evidence was that at about that time (late 2008 or early 2009) he became aware that Singular was being imported into the UK from Poland. He identified a source of product in Poland and because of problems with Singulair supplies from Italy he decided to seek a PL/PI for Polish 5mg and 10mg Singulair. Since he knew the Specific Mechanism might apply he sent the June 2009 letter to Merck. It was sent by him in his capacity as a director of Pharma XL, another Sigma group company. Pharma XL is the company the Sigma group uses to obtain PL/PIs.
102. Mr Shah's state of mind was explored in evidence. He stated that he received an email on 3^rd October 2008 from Craig Fishwick of Quadrant Pharmaceuticals Ltd. The email attached a long list of details of parallel import licences held by Quadrant. The point of this communication is that parallel importers like Quadrant and Sigma make their PL/PI's available to other companies for a fee. The list includes Quadrant's licence number, a labelling fee, the details of the product in question (name, strength, pharmaceutical form, pack size etc.), the kind of repackaging permitted (overlabelling, reboxing etc.), and the country of origin. So if Sigma wanted to do so they could import the particular product from the relevant country and have Quadrant repackage it for the UK market so that it could be sold here under Quadrant's PL/PI. Sigma would pay Quadrant the fee indicated for that exercise. All this, provided it is done correctly, is permitted by the UK regulator.
103. The list has over 3000 entries in it across 37 pages. On page 30 of the list is an entry for Singulair paediatric 4mg tablets from Poland. It was clear from the cross-examination that as an experienced person in the parallel import business, Mr Shah understood the list for what it was, i.e. offers to use PL/PIs, rather than an indication itself that Quadrant were selling Polish Singulair in the UK market at the time.
104. Mr Shah's witness statement (paragraph 7) could be read as asserting that the list did show that Quadrant were actually selling Polish Singular in the UK at the time but I do not believe Mr Shah was attempting to mislead the court. I regard this part of paragraph 7 as just loosely drafted.
105. Mr Shah gave clear evidence in cross-examination that he believed Polish Singular was on sale in the UK market. He insisted that product was on the market and said that there had been another company on the market who offered Sigma Polish Singulair 4mg labelled by Quadrant. He was pressed on this on the basis of a submission by Mr Hinchliffe that the only ground given in his witness statement for that belief was the Quadrant list, which could not support it. Mr Hinchliffe also relied on correspondence between the solicitors. Maitland Walker had been asked about the basis for Mr Shah's belief that Quadrant was importing and selling Singulair and their reply simply referred to paragraph 7 of Mr Shah's witness statement. However in answer to Mr Hinchliffe's point, Mr Howe pointed out that in fact paragraph 7 also referred to market intelligence as well as the Quadrant list and submitted there was no reason not to believe Mr Shah's evidence.
106. As I have said already Mr Shah gave his evidence fairly. He clearly believed that Polish Singulair was available on the UK market at the time, labelled by Quadrant and I find as a fact that Mr Shah had that belief. A key basis for his belief was market intelligence. The fact that the only documentary evidence he now has is the Quadrant licence list, which does not prove product was in fact available, does not undermine Mr Shah's belief.
107. There are a number of distinct but closely related questions here. What was actually on the market, what did Mr Shah believe and was Mr Shah's belief reasonable? As to the latter two, I am quite sure Mr Shah reasonably believed that Polish Singulair was available in the UK. If a parallel importer like Mr Shah had heard market intelligence that it was available, Quadrant's licence list would be consistent with that intelligence, albeit not determinative.
108. As to whether such Singulair was actually on the UK market, Mr Rollins gave evidence that the only Polish Singulair Merck had been aware of before mid 2009 was from a company called CD Pharma. Mr Shah readily accepted that Merck would be the best people to know about parallel imported Singulair from Poland coming on the market. Clearly Merck were not aware of any Quadrant labelled Polish Singulair on the UK market at the time, and you would expect them to know if it was, but it seems to me that this does not positively establish that no such Singulair was available here on a small scale. I will make no finding on the point since it seems to me to be immaterial on the issues I have to decide. In evidence there were three Specific Mechanism notification letters from Quadrant to Merck relating to Polish Singulair. Two were dated June 2009. Mr Rollins explained in his evidence that he investigated whether notifications had been replied to and found that the June 2009 Quadrant letters do not appear in Merck's files. I find therefore that they were not received. The third Quadrant letter is dated 18 January 2007 and addressed to the trade mark department at MSD Ltd. It related to both Singulair and another drug Cozaar. Mr Rollins does not deal with the 2007 letter and I infer from that that it is in Merck's files but that there is no evidence of a reply to Quadrant.
109. As mentioned above, Mr Shah was responsible for the June 2009 notification letter to Merck sent by Pharma XL. Mr Hinchliffe established in cross-examination that at the time of the notification, Mr Shah knew the following:

i) He knew that Singulair was protected by a patent in the UK. Indeed parallel importing usually only makes economic sense when a drug is still on patent because that is when the local price is high.

ii) He knew Singulair had been on the market in the UK since the late 1990s.

iii) He knew that Poland was a country in which medicines were potentially available at much cheaper prices and knew that Singulair was a potential product to parallel import from Poland.

iv) He knew that one factor in success in parallel importing was to be first to develop sales of product sourced from a particular country.

v) He knew about the Specific Mechanism and the fact that it potentially gave patentees the ability to oppose parallel imports from Poland.

vi) He knew there was no commercial reason why a patentee would ever want to consent to parallel importation if he could legitimately oppose it.

110. These factors are not the only material factors from Mr Shah's point of view in deciding whether to embark on parallel importing. He would also wish to consider whether there would be a viable market, the actual price differential and the availability of stock, but in any case I find that the factors listed were indeed part of Mr Shah's thinking at the relevant time.
111. The June 2009 letter was sent to the "Manager, Regulatory Affairs" at MSD Ltd. It refers to Singulair 5mg and 10mg tablets from Poland and is headed "Notice of Intention to parallel import the product above to the UK". The letter states that "our company" (i.e. Pharma XL Ltd) intends to import the product and obtain the respective authorisation in the UK. The letter states that "We kindly ask you to comment on whether you have any concerns about our intention to import with regard to any patent rights held by your undertaking" and refers to the accession treaty transitional provisions. The letter ends by stating:

"Our intention to import is therefore conditional on the fact that no infringement of patent rights of your undertaking will take place. If you can demonstrate that such patent rights exist and that they have to be respected under the special transitional provisions we will refrain from importing the product above to the UK.

We will assume that no such rights exist if we have not received any comment from you within one month."

112. There was no reply.
113. Merck have now established that overall they did reply to 16 notices received under the Specific Mechanism about imports of Polish Singulair and stated their objections. Their internal policy is to do that as appropriate. However Merck missed a further 5 notices, including this one from Pharma XL.
114. There was a suggestion that as a result of discussions between different parallel importers in the industry, Mr Shah must have known that Merck had objected to other attempts to import Singulair from Poland. He denied any such knowledge and I accept Mr Shah's evidence on that.
115. Mr Shah's evidence in his witness statement was that he assumed from the lack of a reply that either the Specific Mechanism did not apply to the patents in question or that the patent/SPC Holder/beneficiary did not intend to object. He said that this was not surprising to him as he knew that Quadrant had been importing Singulair from Poland and selling it in the UK. Elsewhere in the statement he said that he assumed from this (i.e. from his knowledge that Singulair from Poland was coming into the UK market) that the claimants either had not or could not object to the trade.
116. Mr Shah then explained that relying on the fact that Merck had not responded to the June letter, the PL/PIs were applied for. The first PL/PI was applied for in November 2009 and granted in May 2010. The list with Sigma's name on it was given to the MHRA in March 2010.
117. The PL/PIs were applied for by and granted to Pharma XL and, in accordance with the MHRA practice, names a list of importers. Included in that list is Sigma.
118. There was a point in evidence concerning another importer named in the list, Waymade Plc. Merck pointed out that in June 2007, Waymade had given notice to them under the Specific Mechanism regarding Singulair parallel imports from Poland. Merck had replied to that notice, objecting to the importation. Merck argued that since Waymade were named in the list of importers in Pharma XL's PL/PI application, Merck's objection, which must obviously have been known to Waymade, must have been something Pharma XL (and therefore Sigma) were or should have been aware of.
119. In fact, as Mr Shah explained in his evidence, importers are routinely named in these lists without their knowledge or even consent. The reason is in order to facilitate the utilisation of one company's PL/PIs by others such as was offered by Quadrant in its licence list. The process is facilitated if the importer, which could be a third party, is already named. Mr Shah explained that neither he nor any of his colleagues were aware of the objection to Waymade. I accept that.
120. The first PL/PI granted to Pharma XL was on 21^st May 2010 for the 5mg dosage form. After that on 4^th June 2010 Pharma XL wrote another letter to Merck notifying them about the intention to import Singulair. This was the first of four trade mark notification letters. These letters are part of the process of parallel importing branded pharmaceuticals governed by Bristol-Myers Squibb cases C-427/93, C429/93, C-436/93 [1998] ECR I-3457. In summary the ECJ held that in order for this repackaging and use of the trade marks not to infringe, five conditions must be satisfied. Some of the conditions are to ensure the repackaging and relabelling is done appropriately but the fifth condition is that the importer must give notice to the trade mark owner. The 4^th June 2010 letter was one such. Mr Shah said that four such letters were sent (representing two dosage forms – 5mg/10mg and two kinds of repackaging – overlabelling and reboxing). They were sent to the Manager, Regulatory Affairs at MSD Ltd. The 4^th June letter is representative. It states:

"Re Singulair Paediatric Chewable 5mg tablets Poland

…

Following the recent grant of the above licence and to ensure compliance with existing case law, we are notifying you as the Trade Mark owner of our intention to market Singulair 5mg Tablets. Please find enclosed a sample of the above product, as it will be marketed.

Marketing of this product will commence in 15 working days from the date of this notification i.e. 24^th June 2010."

121. Merck did not respond to either of these letters.
122. Sigma started buying stock in June 2010 but stock bought in advance of 25^th June was held until the expiry of the notice period in the 4^th June letter. Although Mr Shah does not say so in terms, I infer Sigma started selling repackaged Polish Singular in the UK shortly afterwards. He explains he was not aware of any objection from the claimants until the letter from Hogan Lovells dated 14^th December 2010. On 16^th December he suspended all sales.
123. Sigma are holding a substantial quantity of unsold stock which they have undertaken not to sell pro tem and Merck has given a cross-undertaking in that respect. An issue arose about whether that stock could be re-exported back to Poland and sold there. For them to be resold in Poland, the original boxes and Polish patient information leaflets would be needed. Mr Shah explained that the original components had been disposed of. At the moment, while I can see some force in Sigma's argument that the unsold stock could not now be sold in Poland, it does not seem to me to be an issue I have to resolve.
124. A point which needs to be addressed is the identity of the person to whom the Pharma XL letters was addressed. The June 2009 letter was not addressed to the patent department and was not even addressed to the patentee. At the relevant time MSD Ltd was not even an exclusive licensee.
125. Mr Howe cross-examined Mr Rollins with a view to highlighting the complexity of the corporate structure of Merck. One point made in cross-examination was that the company named on the Polish Singulair boxes as the owner of the trade mark did not seem to be the right company. The pack indicated the trade mark owner was Merck & Co. Inc whereas the trade marks registered indicated it should be Merck Sharp Dohme Corp. In the witness box Mr Rollins had various ideas what the explanation might be, including it having something to do with the merger between Merck and Schering Plough, but was not sure. Afterwards it emerged that the explanation was that as a result of the merger the Schering Plough company bought Merck & Co. Inc. and then changed its name to Merck & Co. Inc. while the company formerly called Merck & Co. Inc changed its name to Merck Sharp Dohme Corp.. There is nothing unusual about this and I doubt Merck are any different from any other major multinational group but it does serve to show that it is difficult for outsiders to know which company in a group they should address themselves to.
126. Mr Rollins explained that his company tried to respond to all these sorts of letters but that they receive a large number of them. The Regulatory Affairs department of MSD Ltd at Hoddesdon, Herts received about 170 parallel import notifications in 2009. These may or may not relate to the Specific Mechanism and there is frequently nothing to distinguish Specific Mechanism letters from general parallel import notifications. They are addressed in all sorts of ways and Mr Rollins gave examples. Merck's policy is that managers receiving such letters should notify the intellectual property department and local legal director. There is a policy document which includes a list of products Merck regards as eligible for protection under the Specific Mechanism and Singulair from Poland is on the list.
127. However I reject the suggestion that there could have been any significant impediment to prevent Sigma from identifying the patent in suit in this case and identifying the actual holder of that patent. As regards identifying the patent itself, I have mentioned this above in the context of the Specific Mechanism. Companies like Sigma are perfectly capable of finding out what the patent position is. At worst they may have to pay a fee to a firm of patent attorneys for the work but in the context of the value of the parallel imports in this case, those charges would not be significant. Organisations considering taking a step which may or may not infringe a third party's patent rights routinely seek advice from their patent attorneys or lawyers. Once you know which patent you are interested in, you can identify the patent holder without difficulty. There is a public register of patents and the identity of the proprietor of every UK patent is identified on it.
128. A point arose about a letter concerning a different drug Aerius. On 12^th May 2010 Mr Shah at Pharma XL had received a letter in response to an entirely separate notification concerning Aerius from the Czech Republic. This letter was from the Regulatory Affairs Manager at "MSD" in Welwyn Garden City, Herts and stated that there was no objection to the proposed parallel import since the relevant SPC has expired. There was a suggestion that this illustrated Mr Shah's wider point that there was a general practice in the industry to notify the company with the marketing authorisation for the relevant drug, particularly in relation to BMS notifications. So it is said Mr Shah was entitled to believe that a letter addressed to a Merck Regulatory Affairs Manager would get through to the right person. After all the company selling the drug must have some sort of licence under the patent, formal or informal, even if it has no actual right to bring proceedings for infringement.
129. However I do not regard the Aerius episode as an indication that Mr Shah could take it that the Regulatory Affairs Manager at MSD was always the right person to communicate with. For one thing this letter was in response to a letter from Pharma XL to Schering Plough.

Application of the law to the facts

130. Since I have found that, as a matter of law, the Specific Mechanism does not work in the manner contended for by Sigma, no further issues arise in relation to it. It does not give Sigma a defence in this case. I will now consider the estoppel.
131. The cross-examination did not challenge Mr Shah's evidence that he did think that Merck did not object to his company's marketing of Polish Singulair in the UK and I accept his evidence about his state of mind. That state of mind arose from two key things. It arose from Mr Shah's belief that Polish Singulair was already on the market in the UK and then also from Merck's silence following the various notices. In my judgment that means that it is not accurate to say simply that Merck's silence induced Mr Shah's misunderstanding. Given that he thought Polish Singulair was on the market (whether rightly or wrongly) is it not surprising that Mr Shah could imagine that Merck were not objecting to Polish Singulair entering the UK. After all they would be likely to know about the Polish product already on sale and did not appear to be stopping it.
132. Accordingly before the silence following the June 2009 letter or the later trade mark letters could ever be operative on Mr Shah, he had already been induced to misunderstand Merck's stance by his belief that Quadrant labelled product was on sale. Could it be said that Merck were also responsible for inducing that prior misunderstanding concerning Quadrant being on sale? I reject that. Even assuming Quadrant product really was on the market, Merck did not know that and so cannot be faulted for not taking steps to stop it. That is the key point. Moreover even if it could be said to some extent to go back to Merck's probable non-response to Quadrant's 2007 notification letter, all that could ever have been was another example of silence by Merck. I also remind myself that Quadrant's 2007 letter was addressed to the trade mark department and not the patent department.
133. Furthermore it is important to consider whether Mr Shah's ultimate belief that Merck did not object was a reasonable one. I have found that his belief about Quadrant was reasonable but that is a different issue. Was it reasonable for Mr Shah to infer that Merck did not object from the silence in response to the various notification letters? Or looking at it another way, was it reasonable for Mr Shah to rely on the silence in these circumstances?
134. For it to have been reasonable to begin to draw an inference that Merck did not object, it seems to me that the letters would need to have been sent to the right person. Although I can see why it might seem to make sense to a parallel importer from their point of view to write to the "Manager, Regulatory Affairs", the proper addressee of a letter about patent rights must be the patentee (or exclusive licensee) or at the very least the patent department of the organisation concerned. If you address your letter to the wrong individual, it is not reasonable to infer from their failure to respond that someone else does not object to what you are proposing to do. I can quite see why silence might give rise to a question mark about the matter but when the letter is not addressed to the correct entity the correct thing to do is check.
135. The patentee could have been readily identified. Since Mr Shah knew that there was a UK patent, if he was going to rely on a response to the letter (or its absence), he could and should have taken steps to find the patent and identify the patentee. This would have been a simple process to perform. When he wrote the letter of June 2009, Mr Shah had no sufficient basis for assuming that the Manager, Regulatory Affairs at MSD Ltd was the correct individual to write to. In fact it was not. At the very least he ought to have identified the patent in question and then written either to the proprietor itself (the First Claimant, a Canadian company then called Merck Frosst Canada Ltd), or to the address for service given in the UK patents register for the patent. That UK address for service is given as MSD Ltd in Hoddesdon but crucially it expressly states that the address is to the "European Patent Department" at that address. It is no good writing to the "Manager, Regulatory Affairs" at the same address since manifestly in a large organisation there is no guarantee they will be the same person (they are not).
136. The fact that Mr Shah may have thought that letters addressed to the marketing authorisation holder generally tended to end up in the right place is not a substitute for careful consideration of the addressee of the notice. If you are going to draw conclusions from a nil return, such a casual attitude to the notice is not reasonable.
137. Moreover there is no evidence that Mr Shah ever checked that his letter had been received at all. A prudent businessman, who was thinking about what to take from the lack of a response to a letter when deciding to import about £4 million worth of stock, would check the letter had been received. A simple telephone call would be a start. There is no suggestion Sigma did any such thing.
138. Given the matters above, I cannot see how silence in this case could ever be characterised as an unequivocal representation of anything.
139. An important point is that absent Merck's consent and given the Specific Mechanism, the importation of Singulair from Poland would amount to a clear case of patent infringement. That is an important factor which a prudent businessman in Mr Shah's position could and should have taken into account.
140. What of the trade mark letters? It does not seem to me that these later trade mark letters change anything. Apart from anything else as far as I am aware from a trade mark point of view, there was nothing to object to. The BMS trade mark issues are nothing to do with patents. There is no reason why Mr Shah could reasonably have assumed that a person considering trade mark questions would be a person also concerned with patent rights and the Specific Mechanism. After all parallel imports of Singulair from other Member States (e.g. Italy) were taking place at the time and they were entirely lawful from a patent point of view but they still needed to comply with the BMS trade mark conditions.
141. It is nevertheless striking that Pharma XL not only wrote in June 2009 but wrote again between June and September 2010 to tell Merck they were going to import Singulair from Poland and never got a response. The letters do make it quite clear that Pharma XL intend to import Singulair and the Specific Mechanism letter specifically states that they will not import if Merck demonstrate they have relevant patent rights. Clearly in a perfect world Merck would have responded to such a letter, stating their objection and indeed Merck's policy was to do that. If they had I am sure Sigma would not have imported Singulair from Poland.
142. Merck had no legal duty to respond to the June 2009 letter, which is the one concerning the Specific Mechanism and patent rights. Although I can see that all of this would have been avoided if they had replied, in my judgment it would be wrong to hold that they had entirely lost their legal right to claim damages for patent infringement as a result of an inadvertent failure to reply.
143. I have considered separately whether there is a legal duty to reply to the later BMS trade mark letters. It seems to me that there cannot have been a legal duty to reply if Merck had no objection from a trade mark point of view. None has been taken and so I do not need to decide any wider point in relation to those letters.
144. I have also considered the point that the letters to Merck were sent by Pharma XL, made no mention of Sigma, but the defendant in this case seeking to rely on the estoppel is Sigma. Mr Hinchliffe submitted it was impossible to act unconscionably in relation to a person you are unaware of. Although to some extent it might be said that there could be no relevant difference between the two Sigma group companies here, (after all the relevant PL/PI in this case is held by Pharma XL albeit the goods are imported and sold by Sigma) in fact the Sigma group companies actually took the point in correspondence. Hogan Lovells wrote in December 2010 to Pharma XL (since their name appears on the packs since they hold the PL/PI). Maitland Walker replied on their behalf and correspondence ensued. Then on 21^st April Pharma XL took the point that they had not imported or sold any stock and did not currently hold any. On 25^th May Hogan Lovells then sent a letter before action to Sigma and in the end the proceedings were pursued against Sigma. I do not regard this point on its own as precluding an estoppel on the facts of this case but the fact that the defendant is not the person named in the letters to Merck is another factor in the overall circumstances.
145. It seems to me that Mr Shah's belief that Merck did not object was not a reasonable one in the circumstances and cannot be laid at Merck's door. Moreover regardless of what Mr Shah actually believed, in my judgment it was not reasonable for Mr Shah to rely on that belief to decide to parallel import Polish Singulair and sell it here, given the circumstances in which that belief arose.
146. Finally I will consider the matter of unconscionability. The claim for damages for patent infringement has been brought within the limitation period. It would be unconscionable to bar such a claim in the circumstances of this case. Merck never consented to this activity either expressly or implicitly. Sigma had no proper basis to assume Merck did not object. I reject the estoppel defence.

Conclusion

147. Merck's case is proved. As a matter of law the Specific Mechanism does not require the patentee to give advance notice and Sigma has no defence arising from the Specific Mechanism. On the facts of this case no estoppel arises to prevent Merck from relying on its patent rights in relation to Sigma's dealings in Singulair.