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November 18, 2019

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The Rise And Fall Of The SKB Shutters Case: A Brief Look At The Recent Federal Court Case Of Merck Sharp & Dohme Corp & Anor V Hovid Berhad


- Indran Shanmuganathan, IP Litigator & Partner [ Shearn Delamore & Co. ]
- Michelle Loi Choi Yoke, Partner [ Shearn Delamore & Co. ]
- Yap Khai Jian, Legal Associate [ Shearn Delamore & Co. ]

Indran-Shanmuganathan-Michelle-Loi-Choi-Yoke-Yap-Khai-Jian

In 2015, the Federal Court in the SKB Shutters case ruled that the validity of a dependent claim will automatically fall upon the substantive finding of invalidity of its independent claim (“the SKB Shutters Ruling”)...

Introduction – The Rise Of The SKB Shutters Case

The case of SKB Shutters Manufacturing Sdn Bhd v. Seng Kong Shutters Industries Sdn Bhd & Anor1 (“the SKB Shutters case”) started off just like any other ordinary patent case in the High Court. It was a case that revolved around a roller shutter door. The Plaintiff had sued the Defendant over infringement of a few of its patent claims. There were counter-claims for invalidity. Somewhere along the line, as the case traveled up to the highest court of the land, a somewhat controversial pronouncement was made.

In 2015, the Federal Court in the SKB Shutters case ruled that the validity of a dependent claim will automatically fall upon the substantive finding of invalidity of its independent claim (“the SKB Shutters Ruling”). More specifically, the Federal Court held that unless the dependent claims were redrafted to incorporate the features of the independent claim that they were dependent upon and were made as independent claims, the dependent claims could not survive. This decision appeared to hinge on the inability of patentees to amend patent claims during the pendency of litigation as provided for under Section 79A (3) of the Patents Act 19832 (“the PA”). The SKB Shutters Ruling saw a departure from this known practice where all claims, albeit independent or dependent, were assessed substantively if challenged in Court. As a result, dependent claims seem to be redundant and their bane of existence was put to question with many questioning whether it was worthwhile to have all their claims drafted in an independent manner.

Malaysian patent practitioners had to live with the after effect of the SKB Shutters Ruling for 4 years. Whether 4 years is perceived as a long duration of time is a subjective matter. For one, having the Federal Court revisit its previous decision is an extremely rare feat, let alone persuading the panel of 5 judges to overrule its own brethren’s decision.

Four years later, the Federal Court made the rare move in overruling the SKB Shutters Ruling in the case of Merck Sharp & Dohme Corp & Anor v Hovid Berhad (“the Merck case”)3.

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Facts Of The Merck Case

In 2016, Merck Sharp & Dohme Corp and its local licensee (“Merck”) initiated a patent infringement action at the High Court against Hovid Berhad (“Hovid”) on the basis that Hovid’s use of alendronate 70mg tablets infringed several claims of Merck’s MY-118194 Patent for “pharmaceutical compositions for use in inhibiting bone resorption” (“the 194 Patent”). The claims of the 194 Patent as relied upon by Merck in this infringement action included the independent claim 1 and several of its dependent claims. Hovid counterclaimed to invalidate the 194 Patent on various grounds including the ground that the 194 Patent was obvious.

The High Court4 considered the independent claim 1 of the 194 Patent substantively and decided that the independent claim 1 was invalid on the ground of obviousness. As the High Court was bound by the SKB Shutters Ruling on the principle of stare decisis, it then went on to state that: “all Dependent Claims shall be consequentially invalidated without a need for the Defendant [Hovid] to adduce evidence to invalidate each Dependent Claim. Nor is there a requirement for the Court to consider separately the validity of each Dependent Claim”5.

Dissatisfied, Merck appealed against the High Court’s decision to the Court of Appeal. The Court of Appeal6 affirmed the decision of the High Court and stated that it too was bound by the SKB Shutters Ruling.

In 2018, Merck applied for leave from the Federal Court to appeal against the decision of the Court of Appeal. The following question of law was raised: -

“Where an independent claim is adjudged to be invalid, whether claims which are dependent on the said independent claim would be automatically rendered invalid without the need for the Court to consider separately the validity of each and every dependent claim[s]” (“the Question”).

Leave was granted on the Question and the substantive appeal was heard on 29.04.2019. On 21.08.2019, the majority of the panel in allowing the appeal of Merck answered the Question in the negative and decided to depart from the SKB Shutters Ruling.

The Fall Of The SKB Shutters Case

The following reasons were given: -

A. Misconception over the role of dependent claims
The Federal Court accepted that an independent claim defines the broadest penumbra of monopoly for the patentee whereas a dependent claim with its additional features or limitations outlines a narrower scope of monopoly. This is consistent with the description of a dependent claim as provided for under Regulation 14(1) of the Patents Regulations 1986 (“the PR”).7 As such, a dependent claim is sometimes considered as a “fall back” claim for the patentee in that the additional or limiting features are the patentee’s shields that could potentially better withstand validity challenges by third parties.

In arriving at this decision, the Federal Court drew examples from other jurisdictions such as the United Kingdom8, Australia9 and the United States of America10, holding that the SKB Shutters Ruling was not only inconsistent with the PA and PR, but also incompatible with the position in other jurisdictions.

B. Misinterpretation of the prohibition of amendment pending proceedings
The Federal Court in the SKB Shutters case took the view that due to the prohibition of amendment of claims pending court proceedings under Section 79A(3) of the PA, a dependent claim would be rendered unintelligible if its independent claim was found to be invalid. On the contrary, the Federal Court in the Merck case had approached the various amendment provisions under the PA in a holistic manner. More particularly, the Federal Court had considered sections 56(3)11, 79A(3) and 57(2)12 of the PA and came to the finding that the prohibition of amendment during litigation notwithstanding, the Court remains vested with the power to order for amendment after the conclusion of litigation.

Welcoming The Merck Case

The decision in the Merck case finally did away with the precarious position of a dependent claim previously created by the SKB Shutters Ruling and the far-reaching effects created by the SKB Shutters Ruling. Not only was it welcomed with relief by IP legal practitioners in Malaysia, patentees comforted by the Merck case can now file their patents with dependent claims without the fear of having the dependent claims being automatically invalidated merely upon the invalidation of its independent claim.

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1 [2015] 6 MLJ 293.
2 Section 79A(3) of the PA states that: “The Registrar shall not make an amendment under this section if there are pending before any Court proceedings in which the validity of the patent may be put in issue”.
3 According to LexisNexis and the Current Law Journal search, there were only 6 cases since 1967 where the Federal Court expressly overruled its own decisions, namely, Tan Ying Hong v Tan Sian San & Ors [2010] 2 MLJ 1 (overruling Adorna Properties Sdn Bhd v Boonsom Boonyanit @ Sun Yok Eng [2001] 1 MLJ 241); Kathiravelu Ganesan & Anor v Kojasa Holdings Bhd [1997] 2 MLJ 685 (overruling Inchcape Malaysia Holdings BHd v RB Gray & Anor [1985] 2 MLJ 297; Dr Shamsul Bahar Abdul Kadir & Anoter Appeal v RHB Bank Bhd [2015] 4 CLJ 561 (overruling Ambank (M) Bhd v Tan Tem Son & Another Appeal (2013) 3 CLJ 317); Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 7 CLJ 584 (overruling 2 cases, Yong Tim v Hoo Kok Chong & Anor [2005] 3 CLJ 229 and Ang Hiok Seng v Yim Yut Kiu [1997] 1 CLJ 497); and Majlis Ugama Islam Pulau Pinang dan Seberang Perai v Shaik Zolkafilly Shaik Natar & Ors [2003] 3 CLJ 289 (overruling Mohd Habibullah Mahmood v Faridah bt Dato Talib [1993] 1 CLJ 264). None of these cases were IP cases.
4 Merck Sharp & Dohme Corp & Anor v Hovid Bhd [2017] MLJU 77.
5 Paragraph 98(1) of Merck Sharp & Dohme Corp & Anor v Hovid Bhd [2017] MLJU 77.
6 Merck Sharp & Dohme Corp & Anor v Hovid Bhd [2019] 4 MLJ 121.
7 Regulation 14(1) of the PR states that: “any claim which includes all the features of one or more other claims, shall contain, if possible, a reference to the other claim and shall then state the additional features claimed” (emphasis added).
8 The Federal Court referred to the case of Raychem Corp’s Patents [1998] 2 RPC 31, Generics (UK) Limited (t/a Mylan) v Warner-Lambert Company LLC (No.2) [2016] RPC 16, Gillette Safety Razor Company v Anglo-American Trading Company Ld [1913] 30 RPC 465, Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] RPC 28, Ultraframe (UK) Ltd v Eurocell Building Plastics Ltd [2005] RPC 36, Verathon Medical (Canada) ulc v Aircraft Medical Limited [2011] CSOH 19.
9 The Federal Court referred to the case of Austal Ships Pty Ltd v Stena Rederi Aktiebolag (2005) FCA 805.
10 The Federal Court referred to the 35 United States Code (U.S.C) § 112 (2006), the US Code of Federal Regulations [37 CFR § 1.75(c)], the US Manual of Patent Examining Procedure [section 1824, 6.4(a)], Honeywell Int’l, Inc. v Hamilton Sundstrand Corp, 370 F.3d 1131, 1148 (Fed. Cir. 2004), Wahpeton Canvas Co v Frontier Inc 870 F.2d 1546, 1552, Sandt Tech., Ltd v Resco Metal & Plastics Corp., 264 F.3d 1344, 1356 (Fed. Cir. 2001).
11 Section 56(3) of the PA states that: “Where the provisions of subsection (1) apply on only some of the claims or some parts of a claim, such claims or parts of a claim may be declared invalid by the Court and the invalidity of part of a claim shall be declared in the form of a corresponding limitation of the claim in question” (emphasis added).
12 Section 57(2) of the PA states that: “When the decision of the Court becomes final, the Registrar of the Court shall notify the Registrar who shall record the said declaration in the Register and cause it to be published in the Gazette”.

Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.

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