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Bristol Myers Co and Others v. Beecham Group Ltd

Read the full judgment text of on BabelCite. was delivered on 15 March 1968.

1. On 24th November, 1967, Mills-Owens J. granted an interlocutory injunction restraining the defendants until judgment in this action from advertising, offering for sale, selling or supplying the antibiotic hetacillin or any preparation containing the same or otherwise infringing either or both of the plaintiff company's United Kingdom Letters Patent Nos. 870395 and 873049. The defendants appealed to this court; and in dismissing the appeal on 23rd February we indicated that we would give our r

Case No.
Court
Date15 Mar 1968
Judge—
Case Document
100%Judiciary

CACV000051A/1967

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO. 51 OF 1967.

(ON APPEAL FROM O.J. 828 OF 1967)

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BETWEEN
BRISTOL MYERS COMPANY 1st Appellant
(1st Defendant)
BRISTOL LABORATORIES
INTERNATIONAL CORPORATION		 2nd Appellant
(2nd Defendant)
SHEWAN TOMES (TRADERS) LIMITTED 3rd Appellant
(3rd Defendant)

AND
BEECHAM GROUP LIMITED Respondent
(Plaintiff)

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Coram: C.J., Blair-Kerr & Huggins, JJ.

Date of Judgment: 15 March 1968

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JUDGMENT

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1. On 24th November, 1967, Mills-Owens J. granted an interlocutory injunction restraining the defendants until judgment in this action from advertising, offering for sale, selling or supplying the antibiotic hetacillin or any preparation containing the same or otherwise infringing either or both of the plaintiff company's United Kingdom Letters Patent Nos. 870395 and 873049. The defendants appealed to this court; and in dismissing the appeal on 23rd February we indicated that we would give our reasons later. We now set them out in some detail because, in our view, to do justice to the arguments put before us it is desirable to do so though we have kept constantly in mind the fact that this is an appeal in an interlocutory matter.

2. The background to the dispute between the parties goes back to 1957 when chemists employed by the plaintiff company achieved a fundamental break-through in antibiotic research by isolating the penicillin nucleus, 6-aminopenicillanic acid (referred to during this appeal as "6-APA"). This discovery was acclaimed throughout the world as an outstanding achievement in chemotherapy because it led to the design and evolution of a whole series of new penicillins (conventionally known as semi-synthetic penicillins) formed by the addition to the nucleus of what is known to organic chemists as "side-chains".

3. One such semi-synthetic penicillin, which was discovered by the plaintiff company shortly after 6-APA had been isolated, is called ampicillin, and it is sold under the trade name "Penbritin". This compound very soon acquired a world-wide reputation as being the only antibiotic which was highly active against both Gram-positive and Gram-negative bacteria over a broad spectrum. The processes by which it is manufactured, and the product itself, are protected by the two patents (Nos. 870395 and 873049) which have been registered not only in the United Kingdom and Hong Kong, but in many other parts of the world.

4. Following these discoveries a close relationship existed between the plaintiff company and the first defendant corporation and they were of considerable assistance to one another. We shall presently refer in more detail to various licence agreements which were executed in 1959 and 1960. At this stage it is sufficient to say that the broad intention, according to the plaintiff company, was that the first defendant corporation were to have the rights of manufacture and sale of penicillin derivatives, including ampicillin, in America and Canada leaving the rest of the world, or the greater portion of it, to the plaintiffs.

5. This arrangement appears to have worked well until the plaintiff company discovered recently that the first defendant corporation were manufacturing a compound called hetacillin and causing it to be sold in many countries other than America and Canada under the trade name "Versapen". The first defendants admit that they manufacture hetacillin in America and they have stated that their intention is to market this drug in Hong Kong. They claim that it does not infringe the plaintiff's patents either as a product or with respect to the process by which it is produced. The present action is part of a world-wide dispute between the plaintiff company and the first defendant corporation. The second defendant corporation is a wholly-owned subsidiary of the first defendant corporation and it has a place of business in Hong Kong. The third defendant is a company incorporated in Hong Kong; and it is concerned in the distribution of hetacillin to the trade here.

6. It was not in dispute that if the importation into, and sale in, Hong Kong of hetacillin is an infringement of the plaintiff's patents in respect of ampicillin, the defendants are proper parties to be enjoined. In the lower court the position was that the second and third defendants were legally represented at the hearing. The first defendant corporation refused to accept service although they had solicitors in Hong Kong and they were fully aware of these proceedings. The learned judge granted an injunction against them ex parte; and, in our view, this was the proper course to adopt. As the learned judge said:-

"Enjoining the second and third defendants would not prevent the first defendant from distributing through other agencies in Hongkong."

7. We were much indebted to counsel for their explanations in regard to the basic principles on which the science of organic chemistry is founded, and for explaining the meaning of a number of technical terms occurring in the specifications and affidavits. This did not involve counsel giving evidence from the Bar on any matter which would be in issue at the trial; and we had no hesitation in accepting their assistance. As Lord Denning said in Baldwin v. Francis(1):-

"... whenever the meaning of words arises, however technical or obscure, then, unless there is some dispute about it, it is common practice for the Court to inform itself by any means that is reliable and ready to hand. Counsel usually give any necessary explanation: or reference may be made to a dictionary which may be a general dictionary or even a technical one. If the subject matter is too difficult to be resolved by such means, the court can always call in aid an assessor specially qualified to explain it ... The one thing that the court ought not to do is to refuse jurisdiction in a case because it does not understand the technical terms employed in it. Scientists and engineers are entitled to have their rights enforced and their wrongs redressed as well as anyone else; and the court must possess itself of whatever information is necessary for the purpose. Some judges may have it already because of their previous experience. Others may have to acquire it for the first time ... All that happens is that the court is equipping itself for its task by taking judicial notice of all such things as it ought to know in order to do its work properly."

8. It is perhaps common knowledge that a chemical compound consists of a vast number of molecules each of which is composed of the same number of atoms of the same elements arranged in space in a particular way. One of the simplest compounds is water; and, as is notorious, each molecule of water consists of two atoms of hydrogen and one atom of oxygen (H2O). When, under suitable conditions, two chemical compounds "react" one with the other, there is a rearrangement of some, or all, of the atoms which make up the ...(illegible) of the reacting compounds; and the resulting products are qualitatively different. The compound, or compounds, produced by a chemical reaction are new compounds, although they may be closely related to the reacting compounds.

9. The plaintiff alleges that the defendants have infringed Claim I of patent 870395 and Claim 12 of patent 873049 (both process claims) and claims, 1, 2, 3 and 5 of patent 873049 (product claims). Claim I of patent 870395 reads:-

"A process for the preparation of 6-acyl-amino derivatives of pencillanic acid in which 6-aminopencillanic acid, ... or a salt thereof, is reacted with a carboxylic acid chloride or bromide, a sulphonic acid chloride, an ester of chlorocarbonic acid, an acid anhydride of a carboxylic acid or a mixed acid anhydride derived from a carboxylic acid."

10. The essence of the claim is that it protects the process of reacting 6-aminopenicillanic (6 APA) with any chemical compound which falls withir one or other of the various groups named therein.

11. It is common ground that it protects the process by which ampicillin is manufactured. The full chemical name of this compound is alpha-aminobenzylpenicillin, or alternatively 6-alpha-aminophenylacetamido penicillanic acid. It is the product of the reaction of 6-APA with alpha-aminophenylacetyl chloride, the chloride salt of alpha-aminophenylacetic acid. This acid is "a carboxylic acid", and it is the chloride of this acid with which we are concerned.

12. A carboxylic acid is an acid in which a hydrocarbon, or radical, group is combined with the carboxyl group - COOH. Perhaps the simplest carboxylic acid is acetic acid (CH3-COOH). Another carboxylic acid is phenylacetic acid (C6H5-CH2-COOH). This is a substituted acid, the phenyl group (C6H5) replacing or substituting one of the hydrogen atoms of the (CH3) methyl group of acetic acid. Another carboxylic acid is aminophenylacetic acid . Included in the molecule of this acid is an NH2 group - known to organic chemists as an amino group. The chemical formula for the chloride of aminophenylacetic acid (i.e. aminophenylacetyl chloride) is .

13. The actual method employed by the first defendants in the commercial manufacture of hetacillin is described in an affidavit dated 8th August 1967 by one of their employees, a Mr. Sadoff. This gentleman does not claim to have any special qualifications in organic chemistry; but he claims to have a degree in "chemical engineering." He says:-

"In the commercial manufacture of hetacillin by Bristol-Myers Company 6-aminopenicillanic acid is dissolved in water and a large quantity of acetone. The solution is then cooled, made acidic by addition of hydrochloric acid, after which D(-)-2-aminophenylacetyl chloride hydrochloride is added in small portions with concomitant addition of aqueous sodium hydroxide to maintain the solution at the desired acidity. These steps lead to the formation (by reaction of molecules of 6-aminopenicillanic acid with molecules of D(-)-2-aminophenylacetyl chloride hydrochloride) of the hydrochloric salt of D(-)-alpha-aminobenzyl-pencillin as one of the solute constituents of the solution. I say as one of the solute constituents of the solution because the solution is a true solution, that is, a single homogeneous liquid which is of uniform character or nature throughout and in which the individual solute molecules and particles of the different chemical constituents of the solution are so tiny and so far apart and uniformly dispersed amongst one another that the physical properties of the solution are a single totality which is different from the physical properties of any of the components thereof. It is not relevant that this true solution at an early stage contains insoluble solid particles of degraded reagents, primarily 2-phenylglycine, because these solids are later removed by filtration and discarded. Thus the solution is not itself ampicillin nor is it usable as an antibacterial agent because said solution is one homogeneous liquid in which the solute molecules of ampicillin salt (hydrochloric acid salt of D(-)-alpha-amino-benzylpenicillin) which form one of the chemical constituents of the solution are uniformly dispersed throughout the solution amongst modecules and particles of the other solute constituents of the solution such as unreacted 6-aminopenicillanic acid, acetone, hydrochloric acid, sodium chloride and, of course water the solvent. Molecules of hetacillin are formed at this stage as a result of some of the newly formed molecules of D(-)-alpha-amino-benzyl-penicillin immediately reacting with molecules of acetone. And in order to facilitate production of further molecules of hetacillin by such further reaction, the solution is then ....." etc.

It is therefore admitted that the process starts with 6-APA and the only question is whether it involves reacting 6-APA with a carboxylic acid chloride as alleged by the plaintiffs. We have seen that amino-phenylacetyl chloride is a carboxylic acid chloride; but that compound simpliciter is not referred to in Mr. Sadoff's affidavit. What he says the defendants use is amino-phenylacetyl chloride hydrochloride . The fact is, however, that this is obtained by adding hydrochloric acid (HC1) to the chloride; and, in the acylation process which then takes place, the hydrochloric acid plays only an incidental (though, as we shall later see, a vital) part: the real reaction is between the 6-APA and the amino-phenylacetyl chloride which is a constituent part of the amino-phenylacetyl chloride hydrochloride. The reason for the introduction of the hydrochloric acid to the chemical system is that it provides a positively charged hydrogen atom (H+) - known as a proton - and the purpose of this "protonation" is to protect the amino (-NH2) group in the amino-phenylacetyl chloride and prevent it from reacting during the acylation reaction with 6-APA. Further reference will be made to protonation in connection with Claim 12 of patent 873049. It does not affect Claim I of patent 870395. The general claim protects, inter alia, the process whereby 6-APA is reacted with amino-phenylacetyl chloride, which is a carboxylic acid chloride.

14. The important admission in the defendants' affidavit is that alpha-amino-benzylpenicillin is formed "by the reaction of molecules of 6-amino-penicillanic acid with molecules of D(-)-2-amino-phenylacetyl chloride hydrochloride." This amounts to a clear admission on their part that the first chemical reaction involved in the manufacture by them of hetacillin is the reaction of 6-APA with a carboxylic acid chloride. It does not detract in any way from the reality of the reaction that the resulting compound, viz. ampicillin, "remains as one of the solute constituents of the solution" and that it is not isolated during the manufacturing process so as to be observable with the naked eye and available for therapeutic purposes.

15. Nevertheless, counsel for the defendants argues that an interim injunction should not be granted. He says that in these proceedings the plaintiff company are unable to rely on their English patent which protects the process by which 6-APA is made, and the product itself, because this patent had not been registered in Hong Kong when the writ issued. It is common ground that this patent has now been registered in Hong Kong. But, in any event, it seems to us that the non-registration in Hong Kong of the 6-APA patent could not be of any material assistance to the defendants. The question is: have the first defendant corporation, in making hetacillin, used the plaintiff company's patented process as described in Claim I of patent 870395? They admit that they start with the penicillin nucleus (6-APA): and, on a plain reading of Mr. Sadoff's affidavit, the first stage in the manufacture of hetacillin is an acylation reaction involving 6-APA and a carboxylic acid chloride. As the evidence stands, there seems to be no room for argument.

16. Counsel for the defendants frankly admitted that "as a matter of organic chemistry" it is not ...(illegible) to produce a single molecule of hetacillin otherwise than by the reaction of acetone with ampicillin. Nevertheless, he submitted that the first part of the process whereby ampicillin was produced was a trivial part of the whole process by which hetacillin was produced. This argument leads naturally to a consideration of what is frequently referred to in patent cases as the "saccharin principle". The gravamen of the judgments in Saccharin Corporation Ltd. v. Anglo-Continental Chemical Works(1) and Wilderman v. Berk(2) was stated by counsel for the plaintiff company in the court below and in this court - in our view correctly - in these words:-

"When an invention as claimed has been used abroad (out of the jurisdiction) and the results of using it have been brought within the jurisdiction, there is infringement of the invention claimed within the jurisdiction unless it can be said that the use of the invention abroad was trivial in relation to the imported product."

17. In the Saccharin Corporation case(1), the facts were these: The plaintiffs' patented a new method of making ortho-toluene-sulpho-chloride, a compound used in the manufacture of saccharin. The defendants used this new process in the manufacture of saccharin and they imported the saccharin into England and sold it there. In granting an injunction to restrain the infringement of the plaintiffs' patent, Buckley J. said:-

"The plaintiffs' process is one for the manufacture of ortho-toluene-sulpho chloride, and that product is not saccharin. From that they" (the defendants) "argue that they have not imported or sold in infringement of the patent. Now the facts are that, after the ortho-toluene-sulpho chloride has been manufactured, you have for the production of saccharin first to change the chloride for an amide group and then to oxidise into saccharin and water. The article imported and sold, therefore, is produced by certain subsequent chemical operations from the article produced under the patented process. The article imported and sold is not ortho-toluene-sulpho chloride but ortho-toluene-sulpho chloride is contained in saccharin. The defendants say that the importation of that article is not an infringement ................................................ If the patented process were the last stage in the production of the article sold, the importation and sale of the product would, in my opinion, plainly be an infringement. Does it make it any the less an infringement that the article produced and sold is manufactured by the use of the patented process which is subjected to certain other processes? In my opinion it does not. By the sale of saccharin, in the course of the production of which the patented process is used, the patentee is deprived of some part of the whole profit and advantage of the invention, and the importer is indirectly making use of the invention."

18. Counsel for the defendants relied heavily on the judgment of Tomlin J. in the Wilderman(2) case, the facts of which are conveniently summarised in Terrell para. 365 thus:-

"In Wilderman(2) ..... the patent related to an improvement in a part of an electrolytic machine for making caustic potash. The defendants had imported caustic potash from abroad and the plaintiff proved that this had been made in Germany by means of an electrolytic cell fitted with the improvement which was the subject of his patent. No evidence was adduced as to the materiality of the improvement in enabling the production of the caustic potash."

The headnote (2) reads:-

"Held, that if there had been used in connection with the manufacture of an imported article some apparatus or material in respect of which there is a subsisting patent, the importation of the article is not necessarily an infringement, but the nature of the invention, and the extent to which its employment has played a part in the production of the article, must be considered; that in the absence of evidence as to these matters, infringement had not been proved."

Tomlin J. said (p.88):-

"It is urged on the plaintiff's behalf that once I am satisfied that there has been used in connection with the manufacture of an imported article, in however an unimportant or trifling respect, some apparatus or material in respect of which there is a subsisting patent, the importation of the article manufactured is necessarily an infringement. I do not think that the cases to which I have been referred compel me to accept so wide a proposition, and I do not accept it. I cannot think, for example, that the employment of a patented cutting blowpipe or a patented hammer in the manufacture of some part of a locomotive would necessarily render the importation of the locomotive an infringement. In my judgment, each case must be determined on its own merits by reference to the nature of the invention, and the extent to which its employment played a part in the production of the article the importation of which is complained of."

19. It seems to us that, on Mr. Sadoff's evidence, the reaction of 6-APA with the carboxylic acid chloride is an essential intermediate step in the manufacture of hetacillin. It is indeed one of the only two reactions which take place in the defendants' process of manufacturing hetacillin; and this first reaction cannot possibly, in our view, be fairly described as "trivial".

20. Strictly, that is enough to dispose of the case, subject only to the question whether the defendants are protected by licences granted by the plaintiffs; but, in deference to the thorough arguments of counsel, we shall refer also to the claims in patent No. 873049.

21. Here it is necessary to go into the chemistry in more detail. On page 1 of the specification to patent 873049, the plaintiff company says:-

".......... new penicillin derivatives ......... can be obtained by introducing aminoacyl substituent groups into the amino group of 6-amino penicillanic acid." (6 APA).

The structural formula for 6 APA is given in both specifications thus:-

An "acyl" radical is that part of an acid molecule attached to the -OH group. For example, reverting to the formula for acetic acid (CH3-COOH), the acyl radical (in this case called "acetyl") is CH3CO. In the case of alpha-amino-phenyl acetic acid the acyl group is and an amino group (NH2) forms part of that acyl group.

22. Acylation is the introduction of an acyl group by means of an acylating agent. The acylating agent used in the production of ampicillin is alpha-amino-phenylacetyl chloride and in the process of acylation with 6-APA, one of the hydrogen atoms in the amino (-NH2) group in 6-APA is "substituted", i.e. replaced, by part of the molecule of the acylating agent.

23. It is an essential feature of this acylation reaction that the amino (NH2) group in the acylating agent should be protected so that it is prevented from reacting at this stage. In one of his affidavits, Dr. Nayler, one of the organic chemists who isolated 6-APA, says that if the NH2 group in the acylating agent is not so protected, the reaction would not result in ampicillin but in N-acylated ampicillin - a different compound.

24. In the manufacture of ampicillin, this protection to the NH2 group in the acylating agent is given by the introduction into the chemical system of a positively charged hydrogen atom (H+). If hydrochloric acid (HC1) is used for this purpose it ionizes to H+ and C1+ Dr. Naylor describes the process in this way:-

"In the use of amino acid chloride hydrochlorides in peptide synthesis the protecting group is a proton (H+). That is, the -NH2 group of the amino acid is changed by protonation (addition of a proton) to give the group -NH+3 . Subsequently, this protecting group (H+) is removed by alkali so that the protected amino group is changed back to the original amino group -NH2."

25. In claim 12 of patent 873049, the acylation process, for which protection is claimed, is stated thus:-

"The process for the preparation of penicillin derivatives .................. which comprises coupling 6-amino penicillanic acid with an acid of the general formula XOH having its amino group ...... protected, or a salt thereof, and thereafter removing the protecting group ..... under sufficiently mild conditions to avoid destruction of the penicillin nucleus." destruction of the penicillin nucleus."

X in the above general formula is defined in claim 1 (a product claim) as "an amino-substituted acyl group containing up to 20 carbon atoms" and having the formula where R may be any one of a number of groups of named compounds one of which is an "aryl" group. The phenyl radical (C6H5) is a typical "aryl" radical. In the case of alpha-amino phenylacetic acid n(which is a multiplication factor in the above general formula) is zero; and therefore the (CH2)n group is zero. The acid has less than 20 carbon atoms (8 in fact); and it is "of the general formula XOH". It is, of course, the chloride salt of this acid (alpha-amino-phenylacetyl chloride) which is used as the acylating agent.

26. The acylation reaction in the manufacture of ampicillin, using hydrochloric acid for purposes of protonation, may be illustrated thus:-

27. Thus, the defendants' process, on the face of it, appears to infringe the process protected by claim 12. The defendants, however, set up in relation to this claim the two arguments which they set up in relation to patent No. 870395; and we reject them both for the same reasons. Here, however, they also make what has been described as "the protonation point". Counsel referred to certain paragraphs on page 2 of the specification (lines 20-45) which indicated that, for the purpose of protonation during the acylation reaction, the plaintiff company considered it "preferable" to use a number of named compounds such as an ester of chlorocarbonic acid. In these paragraphs, they also refer to "standard procedures" of protonation and "suitable protecting groups". Counsel's submission, as we understood it, was that protonation was a process which was well-known to organic chemists and that it had been used in peptide synthesis for many years; that the word "protected" in claim 12 must be given some restricted meaning because if it were given its ordinary meaning, courts would be bound to hold that the claim was invalid; that, looking at the specification as a whole, the word "protected" in claim 12 should be interpreted as meaning "protected in the manner indicated at lines 20-45 on page 2 of the specification"; and that because hydrochloric acid (the protecting agent used by the first defendants) is not specifically mentioned on page 2 of the specification, therefore there is no breach of claim 12.

28. It is disputable whether this argument was really open to the defendants. They have not questioned the validity of the plaintiff company's patents. But, in any event, we see no reason for limiting the meaning of the word "protected" in claim 12 in the way suggested. As Sir Mark Romer said in British Hartford-Fairmont Syndicates Ltd. v. Jackson Bros. (Knottingley) Ltd.(3) :-

" One may and one ought to refer to the body of the specification for the purpose of ascertaining the meaning of words and phrases used in the claims, or for the purpose of resolving difficulties of construction occasioned by the claims when read by themselves. But when the construction of a claim when read by itself is plain, it is not, in my opinion, legitimate to diminish the ambit of the monopoly claimed merely because in the body of the specification the patentee has described his invention in more restricted terms than in the claim itself."

At page 2 of the specification the plaintiff company has not described the process of protecting the amino group in the acylating agent in "more restricted terms". They have merely stated how they consider this may preferably be done; and they suggest a number of suitable compounds, some of which are mentioned specifically in claims 13 and 14. But, in any event on page 2 they also mention "standard procedures". It would appear that the use of hydrochloric acid, for the purpose of protonation, is standard practice; and, as the learned judge in the court below said:-

" ... the mere use, as one step, of a previously known method does not, of itself, establish lack of novelty (see Terrell, para. 306 quoting Fletcher Moulton L.J. in British Westinghouse v. Braulik(4) and para. 319 quoting Greene L.J. in Wood v. Gowshall Ltd.(5)"

Consequently, we think there is nothing in the protonation point.

29. We come then to the product claims. Claim I of this patent protects "penicillin derivatives of the general formula":

where X is an amino-substituted acyl group containing up to 20 carbon atoms and having the formula where R may be any one of a number of groups of compounds, one of which is an "aryl" group (C6H5). We have already discussed the latter part of this claim in dealing with claim 12. The question here is whether hetacillin is a "penicillin derivative of the general formula" stated; and we may start by quoting from a paper submitted to the Journal of Organic Chemistry in September 1965 (referred to during this appeal as "the Hardcastle paper") by three organic chemists employed by the first defendants, and two others. They said:-

" We wish to report on hetacillin a unique derivative of 6-aminopenicillanic acid ...... This compound can be prepared by the reaction of acetone with 6-D-(-) alpha-aminophenylacetamido-penicillanic acid, the amphoteric and clinically important semi-synthetic penicillin known generally as ampicillin."

They then go on to describe two methods of preparing hetacillin. According to one method (method B), the operator starts with ampicillin; and the paper says that hetacillin is produced by the reaction of acetone with ampicillin. In the other method (method A) the operator starts with 6-APA, the acylating agent (D-alpha-aminophenylacetyl chloride hydrochloride), and acetone. The chemical reaction of acetone with ampicillin may be illustrated as follows:-

The defendants say that hetacillin is not a "penicillin derivative". They referred to the various differences in the chemical structure of the two compounds and to the fact that a member of their staff, Mr. Peltier had coined a new word for hetacillin viz. "penicinate". In his affidavit, Mr. Peltier refers to the nitrogen atom in the (NH2) group of 6APA and he says:-

" In hetacillin's structure, the same nitrogen atom is ....... attached to 3 carbon atoms and no hydrogen atom at all. This is in contrast to the penicillins in which .......... this same nitrogen atom is attached to two carbom atoms and one hydrogen atom. Because of this difference hetacillin is called a 'penicinate' rather than a penicillin. Compared to ampicillin, hetacillin also contains three additional carbon atoms and a net increase of four hydrogen atoms."

30. In the manufacture of hetacillin, the first defendants start with the penicillin nucleus (6-APA) and their process then produces ampicillin. The fact that ampicillin is made to react with acetone to produce a new compound does not, in our view, make it any the less a "penicillin derivative". The word 'penicinate' does not appear to be a word which is used generally to describe any particular class of compounds; and, an the evidence stands at the moment, it seems to us that hetacillin clearly falls within the description "penicillin derivative". In our view, it matters not what one calls hetacillin. What we have to ask ourselves is whether the defendants have produced something which is, for the purposes of patent law, a penicillin derivative of the kind protected.

31. However, the phrase used in claim I of patent 873049 is "penicillin derivatives of the general formula .........". What the defendants say is that the formula of hetacillin differs materially from the general formula; and it cannot be denied that there is force in this contention. If one compares the formula of hetacillin with that of ampicillin, or any of the other penicillins, one sees at once that there is a marked difference in respect of the two nitrogen atoms present in both molecules. To produce hetacillin, a condensation reaction involving ampicillin and acetone results in the formation of a ring system made up of the nitrogen of the NH2 group of ampicillin, the carbon of the carbonyl group of acetone and the nitrogen of the -NH- group of ampicillin. However, the plaintiffs submit that this is to ignore the reality of the matter. It is the plaintiff company's case that no matter whether one stars with ampicillin or with 6-APA and this particular acylating agent, the only way in which hetacillin may be produced is by the condensation reaction of acetone with ampicillin. Dr. Naylor, one of the organic chemists responsible for the isolation of 6-APA, has commented on Mr. Sadoff's description as follows:-

" ....... This procedure is not significantly different from Method A in the Hardcastle et al paper, .... the information given by Mr. Sadoff in no way alters my view that the first product of the reaction is ampicillin and that this compound subsequently reacts with acetone to produce hetacillin after the pH has been raised to near neutrality. It is quite true ..... that the ampicillin is not isolated during this procedure, but isolation of such an intermediate is not necessary in order to establish its presence in solution."

In an earlier affidavit dated 7th February, 1967, Dr. Naylor says:

" Conditions suitable for condensation of alpha-aminobenzylpenicillin and acetone to give hetacillin are stated in United States Patent No. ......" (the first defendant's U.S.A. patent for hetacillin) "to include a pH from about 5.5 to about 9.5 and preferably from 7.5 to 9. These conditions are not met in method A until after the completion of the initial acylation step to produce ampicillin is complete, at which point triethylamine is added to raise the pH to 7.5. After the adjustment of pH the acetone which has been present in the mixture from the outset can be expected to start to react with the ampicillin produced in the first stage to give hetacillin. Method A specifies that the mixture should be stored for 20 hours at this point, and it is obvious that the formation of hetacillin occurs during this storage period.
To the best of my knowledge no method of producing hetacillin without using ampicillin has ever been reported. Similarly all reported methods for the preparation of ampicillin involve the acylation, either directly or indirectly, of 6-aminopenicillanic acid."

In the chemical formula already quoted, illustrating the reaction of acetone with ampicillin, the double arrows indicate that the chemical reaction is a reversible one, that is to say that under certain conditions hetacillin hydrolyses back to ampicillin and acetone. In his affidavit dated 7th February, 1967, Dr. Naylor states:-

" .... the reaction of ampicillin with acetone to give hetacillin and water is reversible and this conclusion is confirmed by the use of double arrows in the equation at the top of Chart I in the paper by Hardcastle ....... Reversible reactions proceed in accordance with a classical concept in Physical Chemistry commonly referred to as the 'Law of Mass Action'. This states that the rates of both the forward reaction and the back reaction are directly proportional to the molecular concentrations of the reacting substances."

Having described the conditions favourable for the formation of hetacillin, namely an excess of acetone, Dr. Naylor continues:-

" The statement in ...... the United States patent that it is 'preferred not to have a major amount of water present in the reaction medium' represents a routine precaution which would be taken in order to minimise the rate of the reverse reaction whereby hetacillin hydrolyses to ampicillin and acetone.
Considering what will happen when hetacillin is dissolved in water within the specified pH range of 5.5 to 9.5 the situation will in fact be the reverse of that which favours the formation of hetacillin since water and not acetone will now be present in large excess. In a dilute solution the concentration of water is maximal (i.e. approaching unity) and essentially constant, so the rate of hydrolysis of hetacillin to ampicillin and acetone should be directly proportional to the concentration of hetacillin alone. Once some hydrolysis to ampicillin and acetone has occurred the opportunity for these products to recombine will exist. However, the rate of re-formation of hetacillin will be directly proportional to the mathematical product of the ampicillin concentration and the acetone concentration, and since both these concentrations will necessarily be small quantities (much less than unity) their product will be even smaller. Under such conditions, therefore, the equilibrium position can be expected to be heavily in favour of the conversion of hetacillin into ampicillin and acetone."

32. In his affidavit of 7th February, 1967, Dr. Robinson, the plaintiff company's senior medical adviser in clinical research, says:-

" ...... preliminary studies have indicated that hetacillin sold by Bristol Laboratories Ltd. rapidly hydrolyses and in fact only ampicillin could be detected in the blood ten minutes after a 500 milligram oral dose of such hetacillin."

Counsel for the plaintiff company did not suggest that the product hetacillin is intended to be ampicillin with just such addition as might camouflage the presence of the ampicillin. As Wilde C.J. said in Stead v. Anderson(6):

" We think it clear that the action is maintainable in respect of what the defendant does, not what he intends."

Nevertheless counsel submits that in fact hetacillin is nothing more than camouflaged ampicillin.

33. In the grant of Letters Patent, the Royal Command runs:-

" We ...... command all our subjects ......... that they do not .......... either directly or indirectly make use of or put in practice the said invention, nor in any wise imitate the same without the consent licence or agreement of the said patentee ..........".

It is established law that a person infringes a patent if he takes the "substance" of the invention claimed, even if he avoids textual infringement. As Lord Reid said in Van der Lely N.V. v. Bamfords Ltd.(7)

" Copying an invention by taking its 'pith and marrow' without textual infringement of the patent is an old and familiar abuse which the law has never been powerless to prevent. It may be that in doing so there is some illogicality, but our law has always preferred good sense to strict logic. The illogicality arises in this way. On the one hand the patentee is tied strictly to the invention which he claims and the mode of effecting an improvement which he says is his invention. Logically it would seem to follow that if another person is ingenious enough to effect that improvement by a slightly different method he will not infringe. But it has long been recognised that there 'may be an essence or substance of the invention underlying the mere accident of form; and that invention, like every other invention, may be pirated by a theft in a disguised or mutilated form, and it will be in every case a question of fact whether the alleged piracy is the same in substance and effect or is a substantially new and different combination' (per James L.J. in Clark v. Adie (1873) L.R. 10 Ch. 667) It was in Clark v. Adie that Lord Cairns used the expression 'pith and marrow of the invention'; (1877) 2 Appeal cases 315 at 320."

34. Again, counsel for the plaintiff company did not suggest that the first defendants deliberately thought up this way of manufacturing a compound which they could say had a different chemical structure, well-knowing that it would hydrolyse back to ampicillin in the sphere where it is required and intended to operate, namely the human body. This would appear to have been the view taken by Lord Justice Russell in comparable proceedings before the English Court of Appeal when, in referring to the reversible reaction of acetone with ampicillin, he said:

" ...... the process leaves, and deliberately leaves, the ampicillin, so to speak, latent, awaiting its necessarily intended re-emergence in the alkaline condition of blood or intestines.".

35. As we have said, what the first defendants intended to do is not the issue before us; and, in any event, we would not wish to express a concluded view as to what the first defendants' intentions were. Nevertheless, as Dr. Naylor says, the double arrows on page 2 of the Hardcastle paper indicate that the first defendants' research workers were well aware that in 1951 two other research workers (Davis & Levy) had obtained a reversible reaction by the use of acetone in comparable circumstances. In view of that, Mr. Peltier's allegation in his affidavit of 8th August 1967 that "at the time that hetacillin was first discovered and produced it was not known or contemplated that under certain conditions it might hydrolyse into ampicillin" is a little surprising. What strikes one very forcibly about the affidavit evidence in this case is that the first defendants give no indication as to what they set out to achieve by the use of acetone; and, on the evidence as it stands, its main, if not its only, features appear to be its ability to camouflage the presence of ampicillin in what counsel described as "the brew" during the manufacturing process, and its ability to cause hetacillin to turn back into ampicillin in the blood. Whether or not the first defendants planned these things, it seems abundantly clear that, by the time they came to register their United States Patents for hetacillin, they well knew that it would hydrolyse back to ampicillin in the blood.

36. In a paper published in the British Medical Journal in June, 1967, two of the plaintiff company's chemists (Sutherland & Robinson) quote a chemist (Bunn) employed by the first defendants as having stated that the anti-bacterial spectra of hetacillin and ampicillin were essentially the same. In layman's language that would appear to indicate that the two drugs were equally effective against the same classes of bacteria. Sutherland & Robinson continue thus:-

" Serum and urine samples from subjects who received ampicillin were assayed against standard solutions prepared from ampicillin. Similarly samples from subjects who received hetacillin were assayed against hetacillin standards though, in fact, standard solutions prepared from hetacillin and ampicillin gave the same inhibition zone diameters in this assay. This is not surprising in view of the speed at which hetacillin hydrolyses to ampicillin.
The amounts of unchanged hetacillin appearing in the blood stream of human subjects after the oral and intramuscular administration of hetacillin were measured, hetacillin was separated from ampicillin ...... after oral administration of hetacillin, ampicillin alone was detected in the blood stream for the first 30 minutes after dosing. Thereafter unchanged hetacillin was detected in small and variable amounts in some subjects up to 90 minutes after administration after which ampicillin alone was present in the blood stream. The amount of unchanged hetacillin present at any time represented a small fraction of the total antibiotic and at the time of peak antibiotic serum concentrations ampicillin only was present. On intramuscular administration of hetacillin, small amounts of unchanged hetacillin were first detected after 30 minutes declining to trace quantities 120 minutes later. Whenever hetacillin was detected there was generally only a small fraction of the total antibiotic in the blood stream."

37. The defendants do not deny that hetacillin reverts to ampicillin and acetone when it is injected into the blood or taken orally; but, they say that there is still some room for argument as to the rate at which hydrolysis takes place. However, one of their own witnesses (Mr. Peltier) has stated that in certain experiments which he carried out no hetacillin was detected in the blood two hours after intravenous injection. In a pamphlet advertising hetacillin, the defendants say that the rate of absorption of the two drugs is somewhat different and that their studies indicate that hetacillin produces statistically significant higher serum levels than ampicillin at 3, 4 and 6 hours. Bearing in mind, of course, that on the defendants' evidence, no hetacillin was detected by them in the blood after two hours, it would appear that what they were measuring at peak periods was, for all practical purposes, ampicillin. It is not suggested by the defendants that acetone plays any part in arresting bacterial activity.

38. The defendants' experiments appear to indicate that it is arguable that hetacillin causes fewer side-effects, for example, they say that the possibility that it may cause such things as skin-rashes and anaphylactic reactions is significantly less than in the case of ampicillin; and they put forward a theory that this may be due to the fact that the NH2 group in the ampicillin molecule tends to "degrade" or break up.

39. There were affidavits before this court which were not before the English Court of Appeal; and, no doubt at the trial, there may be scope for argument as to whether hetacillin is, or is not, an improvement on ampicillin in a number of respects. But we agree with the learned judge in the court below that, at this stage, all this seems to be quite beside the point. The real question is: Have the defendants made use of the plaintiffs' inventions?

40. Counsel for the plaintiff company put his position thus: He urged the court to take the view that hetacillin was a colourable imitation of ampicillin; and that, bearing in mind the chemical compounds from which, and the processes by which, hetacillin is manufactured, and bearing in mind that, before the peak level of antibiotic activity is reached, by far the greater part, if not all, of the hetacillin injected into the blood stream is hydrolysed back to ampicillin, the court should say that it is the equivalent of ampicillin within the framework of the purpose for which it is intended to be used. We have no hesitation in saying that this appears to us to be a correct conclusion on the face of the evidence before us.

41. It is not necessary to deal in detail with the other claims. The product claims in this case follow the usual pattern adopted to meet any difficulty that may arise over the validity of the broader claim. Claims 2, 3 and 5 are progressively more restricted, the last being a claim to ampicillin pure and simple. It is sufficient to say that ampicillin is covered by the other two claims. In dealing with Claim I we have shown that ampicillin is, on the evidence before us, the "pith and marrow" of hetacillin; and therefore there is, prima facie, an infringement of these claims also.

42. In Challender v. Royle(8), Cotton, L.J. said:-

" It is very true that in all cases of interlocutory injunction the court does consider and ought to consider the balance of convenience and inconvenience in granting or refusing the injunction. But there is another and very material question to be considered - Has the plaintiff made out a prima facie case? That is to say, if the evidence remains as it is, is it probable that at the hearing of the action he will get a decree in his favour? Therefore, although I quite agree that the court ought not on an interlocutory injunction to attempt finally to decide the question whether the act complained of is an infringement or (if the question of the validity of the patent is raised) whether the patent is a valid one or not, yet in my opinion it ought to be satisfied that on one or both of those two points the plaintiff in the action has made out a prima facie case, and unless the court is so satisfied it would be wrong to grant an injunction merely on the ground that it cannot do the defendant any harm."

Not only have the defendants not raised the question of validity, but they do not dispute that if the plaintiff company has made out a prima facie case of infringement, damages would be an inadequate remedy; and the question of balance of convenience was not argued before us. The only question therefore is whether the plaintiff has made out a prima facie case of infringement.

43. When a court grants an interlocutory injunction, it is simply a case of first impression on the material and arguments then before it. It does not make findings of fact; but a court is quite entitled to express a provisional view as to the probable result of the trial and to decide questions of law if the essential facts do not appear to be seriously in dispute. A court should not shirk its duty simply because the evidence is of a highly technical nature or because the affidavits reveal that there are some questions of fact to be resolved.

44. In our view the plaintiff company has made out a prima facie case of infringement in respect of both process claims and the four product claims.

45. The defendants however, contend that even assuming the import of hetacillin into Hong Kong to be an infringement of the Hong Kong registered patents, they cannot be liable because the first and second defendants hold licences by the plaintiffs. Counsel for the plaintiffs has emphasized that no argument was based upon the licences when the matter came before the English courts, and he suggests that in some way this indicates the defendants' own lack of faith in the arguments now advanced. We decline to speculate upon the reasons for the introduction of new arguments at this stage; and we proceed to consider them on their merits.

46. The defendants rely upon Betts v. Wilmott(9) as being on all fours with the case at Bar. There the plaintiff had registered patents both in England and in France relating to a form of seal for bottles. He sued the defendant, described as a "retail chemist", for infringement in England; and he proved that the seals alleged to constitute the infringement were not made in his English factory. The defendant argued that they could have been made in the plaintiff's factory in France, and that it was for the plaintiff to prove that they had not been so made. This the plaintiff failed to do; and the action was dismissed. The ratio decidendi of the case is clearly stated by Lord Justice Cotton in Soci??Anonyme des Hanufactures de ...(illegible) v. ...(illegible) Patent and Blast Company(10):-

" When an article is sold without any restriction on the buyer, whether it is manufactured under (a foreign or an English patent), that, in my opinion, as against the vendor gives the purchaser an absolute right to deal with that which he so buys in any way he thinks fit, and of course that includes selling in any country where there is a patent in the possession of and owned by the vendor".

It is immediately apparent that the case turned upon the relationship of vendor and purchaser of goods. Here the goods alleged to infringe the plaintiffs' patents were not made by the plaintiffs but by the first defendants. The defendants therefore seek to bring themselves within the ambit of Betts v. Wilmott(9) by suggesting that the second defendants have been placed in a position analogous to that of a purchaser from the patentee by virtue of the first defendants' (the manufacturers) having been granted an exclusive licence and having thereby been stood in the shoes of the patentees themselves. They say that the patentees have, by the licences, bargained away their whole profit and advantage under all their patents in return for royalties. It seems to be suggested that the agreement to pay royalties in respect of all the goods sold in Panama (and these include the goods alleged to be infringing the Hong Kong patents) gives the plaintiffs all they are entitled to. This is a brave attempt to retrieve a hopeless position, but it is fully answered by the plaintiff. They say that the argument is based upon a fundamental misunderstanding of the nature of a licence. A licence does not so much create a right or interest as an immunity: it permits the licencee to do something which, if done by the world at large, would be actionable. One must therefore inquire what is the nature of the action in respect of which the immunity is given; and they say that the licences themselves clearly show that the action in contemplation is an action in the courts of the United States of America for infringement of the United States patents. For this reason the royalties paid were royalties in return for rights under the United States patents. There is no question of the plaintiffs' having bargained away their whole profit and advantage regardless of the territorial limits of these licences. The evidence is that they had no knowledge that the royalties which were paid related to goods which were intended for the Hong Kong market.

47. This brings us to a consideration of the terms of the licences; and, although there have been three agreements in all placed before us, the first two can be considered together, the second being supplemental to the first. The apparent effect of the first two agreements may be sufficiently seen from the recitals in the first which state :

"  hereas, BRISTOL is desirous of securing certain rights and licences from BEECHAM in and to the afore-mentioned developments, discoveries and inventions and under the afore-mentioned patent rights to manufacture, use and sell licenced products (A) and (B) (as hereinafter defined) in the United States of America (as hereinafter defined) and the dominion of Canada, in accordance with the terms and conditions hereof;
whereas, BEECHAM is able and willing to grant such rights and licences upon the terms and conditions hereof;".

For the moment, all that needs to be said is that the principal agreement was expressed to be subject to construction in accordance with the laws of the State of New York. By the third agreement BEECHAM granted to the second defendants (hereinafter referred to as BLISA) a non-exclusive right and licence to manufacture, use and sell, the licenced products in the scheduled territories, which territories expressly excluded "Hong Kong and Kowloon". This agreement is to be construed in accordance with the laws of England. The language of the licences is not what one would expect had they been drafted by an English lawyer but at least, as ...(illegible) the first two documents, this need not cause us any anxiety. They are to be construed in accordance with the laws of the State of New York; and we have the opinion of an attorney (Mr. Knight) of that State as to the construction which would be put upon them by the United States courts. Counsel for the defendants has questioned the right of Mr. Knight to be heard as an expert; but we are satisfied that we should accept him as such: see Donckt v. Thellusson(11). In the absence of evidence to the contrary, we think it right to take his opinion as authoritative, and that it must be accepted for the purposes of this appeal that the BRISTOL licence conferred no immunity in respect of infringements of patents other than the United States patents, i.e., an immunity against suits brought in the United States courts in respect of infringements within the jurisdiction of those courts.

48. As regards the BLISA agreement, Mr. Knight is no doubt entitled to speak as to the interpretation which the United States courts would put upon it; but that would not be relevant. We must construe it for ourselves according to English law. Whatever may be the difficulties of the language used, we are unable to extract from the document a licence, express or implied, to the defendants or any of them to do in Hong Kong what would, in any one else, be an infringement of the Hong Kong registered patents.

49. The plaintiffs challenge (and we think rightly challenge) the contention that the licences confer an exclusive licence equivalent to an assignment of the patent, even if it be accepted that they are restricted to the limits of the United States jurisdiction. In the first place, there is a reservation to the patentee of certain rights of selling the licensed products "in consumer package form" in the United States of America. Secondly, there is a time limit on the licence. Thirdly, both licences deal, under the heading "Third Party Infringement", with the circumstances in which the licencees may ...(illegible) a suit for infringement in their own name.

50. In our view, the judge at chambers was right when he said that the case was governed by the principle applied in Societe Anonyme des Manufactures de Glaces v. Tilghman's Patent Sand Blast Company(10). In that case, the owners of patents in Belgium and England granted a licence to manufacture in Belgium but not elsewhere. The licencee manufactured articles in Belgium and sold them in England. The Court of Appeal held that the grant of the licence to use the patent in Belgium did not imply permission to sell the manufactured article in England. The basis of this decision is that when the patentee issues his licence he relieves the licencee of the liability to actions for infringement within the same territorial limits as is covered by the patent; and that is all. Consequently, the licence, by reference to the patent, carries its own inherent territorial limitation without any express words to that effect, unless it be extended expressly, or by necessary implication, beyond those territorial limits. Far from there being words of extension in the present case, both licences contained an express provision in the following terms :

" Nothing contained in this agreement shall be construed as preventing either party hereto from manufacturing, using or selling any product or from using any process or apparatus in any area of the would, except insofar as said party may be prevented from doing so by letters patent not licenced hereunder".

It seems to us that this provision clearly implied a reservation to the patentees of their rights under any patents other than those included within the definition of "Licenced Beecham Patents". We are not concerned to inquire whether what has been done in the United States or in the State of Panama is actionable at the instance of the plaintiffs: we are prepared to assume that the licences confer a complete immunity from suit within both those jurisdictions. It does not necessarily follow that because there is immunity in the jurisdiction where the licence is granted that there will be immunity in all other jurisdictions.

51. In the result the plaintiffs have made out a prima facie case of infringement in Hong Kong, for which infringement neither the first nor the second defendants had any immunity under the terms of their licences. Clearly the first and second defendants could not confer upon the third defendants an immunity which they themselves did not enjoy.

52. For the above reasons, we dismissed the appeal against the granting of an injunction.

53. There was also an appeal against the order that the costs before the judge at Chambers be the plaintiffs' costs in the cause. We saw no reason to interfere with that order. Having been successful before us the plaintiffs were entitled to the costs of the appeal. They asked for a certificate for three counsel and we were referred to the judgement of Buckley, J. in Dunlop Pneumatic Tyre Co. Ltd. v Wapshare Tube Co. Ltd. (1900) 17 R.P.C. 433, 459. We were not satisfied that the demands made on counsel in the present case were comparable to the demands in that case, where a very large number of experiments had to be made and there were issues which were shifting from time to time. Nor did we think that the fact that two of the counsel engaged were not regularly practising before the courts of the Colony justified a departure from the test applied in that case. Accordingly, having regard to the general principles illustrated by the cases collected in vol. I Butterworth's Costs, 2nd Edition, P. 190, to which Defendants' Counsel referred us, we gave a certificate for only two counsel.

(Michael Hogan)
President.

(J.A. Blair-Kerr)
Judge.

(Alan Huggins)
Judge.

Hong Kong, the 15th day of March, 1968.

Representation:

Henry Litton (Johnson Stokes & Master) for the Appellants (the Defendants) Patrick Graham Q.C., Stephen Gratwick and Charles Ching (Wilkinson & Grist) for the Respondent (the Plaintiff).

(1) (1959) R.P.C. at 236.

(1) (1901) 1 Ch. 414; (1900) 17 R.P.C. 307

(2) 42 R.P.C. 79

(3) 49 R.P.C. 495 at 556

(4) 27 R.P.C. 209 at 230

(5) 54 R.P.C. 37

(6) 2 W.P.C. 151 at P.156.

(7) (1963) R.P.C. 61

(8) 4R.P.C. 363 at p.372; 36 Ch. Div. 425 at p.436

(9) (1871) L.R.6 Ch. App. 239.

(10) (1884) 25 Ch. D.1 at p.9.

(11) (1849) 8 Common Bench 812.