Licence disputes in the UK courts

January 2019

The courts of England & Wales have long been considered a world class forum for patent litigation. However, more recently the courts have seen a number of licence disputes come before them, with issues ranging from royalty payments to exclusivity. We provide a summary of these cases below.

Payments under licensing agreements

One issue which has been particularly prevalent in the courts relates to payments due under a licensing arrangement. Payment structures can take many forms, from straightforward royalties to milestone payments linked to certain thresholds being met during the course of the licence. Both of these have been considered by the courts.

Astex Therapeutics Limited v AstraZeneca AB

This case first came before the High Court1. The parties had entered into a collaborative research agreement between the parties to develop a BACE inhibitor as part of a treatment for Alzheimer's disease. Under the agreement all ‘collaboration compounds’ entitled the claimant to milestone payments. What constituted ‘collaboration compounds’ was the question at issue. The court held such compounds were those which had been discovered as a direct result of the research project. As the two compounds at issue had not been discovered as a direct result of the chemical structure modification performed during the research project, they were not covered and the defendant could therefore recover two milestone payments already paid to the claimant.

The case was appealed and came before the Court of Appeal in 20182, in which the High Court's decision was upheld. The circumstances surrounding the project (AstraZeneca had a research project in this field prior to the agreement being entered into), and the terms of the agreement itself (it did not contain terms governing ownership and licensing of compounds developed after the collaboration term ended) formed the basis of the court's reasoning.

Chugai Pharma v UCB

In this case, the court addressed the justiciability of foreign patents in the English courts in the context of a patent licence dispute3. Chugai sought a declaration against UCB that it is not obliged to continue to pay royalties under a worldwide non-exclusive licence between the parties, relating to products containing tocilizumab. The licence had English law and English jurisdiction clauses.

At the time of the case, the only patent remaining in force which the licence applied to was a US Patent. The claimant argued its tocilizumab products fell outside the scope of the claims of that patent. Validity was indirectly put in issue due to an ambiguity in the claim wording. UCB sought to strike out the application on the basis that the declaration concerned both scope and validity of the patent, so that it was non-justiciable in the English court.

The court rejected UCB’s submission that Chugai was challenging validity by formulating its claim as a contractual one for a declaration concerning royalties, or by characterising it as one concerned with infringement of the patent. It considered that direct challenges to the validity of foreign patents should not be justiciable in the English courts, but the facts of the case meant the court did not have to reach a conclusion on that question.

When the case returned to the court in 20184, the English court confirmed that it has jurisdiction concerning the scope of a licensed patent although it will use the law of the country of the patent in question (in this case US law) to do so. Although questions of validity of a foreign patent can only be tried by the courts of the country of that patent, the English court will allow validity considerations to be taken into account to resolve the question of claim scope.

The court found that Chugai’s tocilizumab product did not infringe a valid claim of the US patent and no royalties were therefore due under the patent licence.

Exclusivity – Oxford Nanopore Technologies v Pacific Biosciences of California

Another issue to come before the courts is when a licence can be considered to be an exclusive licence under section 130 (1) Patent Act 1977. This is particularly important considering that it is only patent holders and exclusive licensees who have standing to bring infringement claims, pursuant to section 67(1) of the Patents Act.

Oxford Nanopore Technologies Limited v Pacific Biosciences of California, Inc5 addressed the particular question of whether a licence can be considered exclusive if a third party has an option to take a licence under the patent but has not yet done so, and the impact that has on a claimant's standing to sue for infringement. It was argued that the option had the effect of making the licence non-exclusive.

The court held that were the third party to work the invention, it would be infringing the patent unless and until it completed the contractual step of opting for a licence (which the court considered was not an onerous step to take). However, the court further acknowledged that the third party had not yet opted for a licence, and may never do so. As a result, the first claimant's licence remained an exclusive licence and it was entitled to bring the claim.


Questions arising from licence disputes come in many forms and have wide-ranging impacts on both contract and patent law. As the courts have demonstrated with the recent raft of decisions addressing the wide variety of questions arising out of patent licence disputes, England & Wales is a good forum for such disputes, as well as for patent litigation.

If you have any questions on this article or would like to propose a subject to be addressed by Synapse please contact us.

1[2017] EWHC 1442 (Ch)

2[2018] EWCA Civ 2444

3[2017] EWHC 1216 (Pat)

4[2018] EWHC 2264.

5[2017] EWHC 3190 (Pat).

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Belinda Lavin

Belinda is an associate in our London office specialising in contentious and non-contentious intellectual property matters.

"One issue which has been particularly prevalent in the courts relates to payments due under a licensing arrangement."