The High Court has refused a university’s application for permission to adduce expert evidence relating to the interpretation of a licence it had entered into with a pharmaceutical company.
Under the licence, which was entered into in 2004, the university granted the company an exclusive worldwide licence of its patent rights and associated intellectual property to develop and commercialise medicines for the treatment of cancer. The company was entitled to sublicense those rights, in which case it was required to pay the university a specified percentage of all ‘net lump sum revenues’ as defined in the licence.
Many years later, a dispute arose regarding how the clauses defining ‘net lump sum revenues’ were to be construed. The university sought permission to adduce expert evidence in the field of licensing agreements. It proposed that the expert should address the forms that pharmaceutical licensing agreements typically take and the main commercial and legal factors that influence their terms. It also proposed that the expert address the extent to which each alternative construction of the clauses was consistent with the commercial purpose of the licence and with business common sense, and the extent to which each was supported by various facts regarding the terms of the licence.
The Court noted that the starting point in relation to expert evidence is whether it is admissible. The university was seeking to justify expert evidence in relation to the issues of construction on the basis that the Court was entitled to have regard to evidence of ‘market practice’.
The licence had been drafted by skilled professionals, and the dispute concerned the meaning of a term defined using ordinary language. The university had not provided any indication of what it was about the factual background to the licence that would be difficult for the Court to understand without assistance, or what the market practice that was relevant might be. In the Court’s judgment, the university had not shown that expert evidence of market practice was admissible. The other issues put forward by the university invited the expert to usurp the Court’s function in determining the meaning of the licence.
Even if the proposed evidence was admissible, the Court did not consider that it should exercise its discretion to permit expert evidence. The Court had to construe a term in a patent licensing agreement. The trial was to take place before a judge with experience of patent cases. The expert evidence, if it was admissible, was neither necessary nor would it assist the Court.