The reach of the Constitutional Court: Piecemeal litigation and the principle of res judicata

September 1st, 2020
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Picture source: Gallo Images/Getty

The simple difficulty with the plenary jurisdiction argument is that it avoids the most important word in s 167(3)(b)(ii) of the Constitution, viz ‘if’. In short, the conditional clause ‘if’ means that the Constitutional Court (CC) is confined to matters qualified by the clause. In ‘Does the Constitutional Court have plenary (unlimited) appeal jurisdiction?’ 2017 (April) DR 13, I concluded that: ‘The conditional clause in this section introduces two conditions, which must be present if the CC were to consider the grant of leave to appeal in a non-constitutional matter: “The matter raises an arguable point of law” of “general public importance which ought to be considered”. This obviously voids the plenary jurisdiction argument.’

While writing the February update of Harms Intellectual Property Law Reports, I came across an interesting judgment where the CC ventured in a patent matter into intellectual property territory in Ascendis Animal Health (Pty) Ltd v Merck Sharp Dohme Corporation and Others 2020 (1) SA 327 (CC).

The judgment was a deadlock in that ten CC judges presided over the matter. Five judges were of the view that the appeal must be dismissed and the other five judges were not in agreement.

Consequently, it was held that this meant that the original judgment and order handed down by van der Westhuizen J of the Gauteng Division of the High Court in Pretoria, remains in place.

The facts

The invention, namely, the subject matter of the patent, was an anti-parasitic formulation. In June 2011, the applicant, Ascendis Animal Health (Pty) Ltd, filed an application for the revocation of the South African Patent 1998/10975 (the 1998 patent) against Merck Sharp Dohme Corporation and Merial Ltd on a number of grounds including lack of novelty and inventiveness.

During the exchange of pleadings and relevant documents between the parties in the revocation proceedings Merck Sharp Dohme Corporation and Merial Limited, instituted proceedings against the applicant for infringing the 1998 patent.

The revocation proceedings turned on the validity of the 1998 patent in light of the disclosure in a separate patent registered in 1992; whereas the infringement action turned on the unauthorised use, and transgression, of the 1998 patent.

Nonetheless, underpinning both proceedings, albeit in different contexts and with different forms of relief sought, was the question of the validity of the 1998 patent.

Teffo J, revoked the 1998 patent for lack of novelty, in light of the disclosure of the 1992 patent in March 2014. Then in 2016, Louw J, in interim interdictory proceedings between the parties, held that it is trite that generally, piecemeal litigation is to be avoided. He found that the applicant was attempting to retry the matter by amending its pleadings in the infringement proceedings and this amounted to piecemeal litigation. The judgment of the High Court (given in 2019 by van der Westhuizen J) concerned two amendment applications made in the patent infringement proceedings. He dismissed the applications and refused to grant leave to appeal against the dismissal of the applicant’s applications to amend its pleadings.

All of these judges were sitting as Commissioners of Patents in the Gauteng Division of the High Court in Pretoria. The Supreme Court of Appeal (SCA) dismissed an application for leave to appeal against van der Westhuizen J’s order. The applicant then ‘knocked on the doors’ of the CC seeking to overturn the judgment and order of the High Court and judgment under discussion was given on 24 October 2019.

The issue

The crisp issue that was considered by van der Westhuizen J was whether or not the validity of a patent may be challenged and attacked on the various grounds listed in the Patents Act 57 of 1998 in a piecemeal fashion. He held that a party may elect to rely on one or more of these listed grounds, but this does not mean that they can rely on all of them all in a piecemeal fashion.

In his judgment, van der Westhuizen J discussed the requirements for a successful reliance on the doctrine of res judicata, namely: ‘(i) same parties (the parties are the same); (ii) the same cause of action (the invalidity of the 1998 patent); (iii) the same relief (the revocation of the 1998 patent); and (iv) a final judgment (the [SCA] judgment)’ and ‘[certifying] that all the claims of the 1998 patent are valid in accordance with s 74 of the [Patents] Act’.

Van der Westhuizen J held that the requirements were, indeed, fulfilled.

Section 167(3) of the Constitution reads as follows:

‘(3) The Constitutional Court –

(a) is the highest court of the Republic; and

(b) may decide –

(i) constitutional matters; and

(ii) any other matter, if the Constitutional Court grants leave to appeal on the grounds that the matter raises an arguable point of law of general public importance which ought to be considered by that Court; and

(c) makes the final decision whether a matter is within its jurisdiction.’

The CC’s judgment
  • The first judgment

The first judgment in the Ascendis matter was written by Khampepe J and was concurred in by Froneman J, Ledwaba AJ, Nicholls AJ and Theron J.

In short, the first Bench brought the matter within the ambit of s 167(3) by holding, inter alia, that: ‘It is well established that res judicata implicates the rights contained in s 34. However, the High Court, as will become evident later, extended the application of res judicata and, as a result, adversely affected the right by denying the applicant an opportunity to raise a defence, which potentially taints the fairness element of the hearing. This prima facie extension of res judicata interferes with the applicant’s constitutional right to have the merits of the separate, undecided causes of action heard in court and thus gives this court jurisdiction to decide the matter. … The High Court found that the case was res judicata and that the grounds listed in s 61 are a single cause of action. These findings may have significant, adverse ramifications for future potential litigants who might be interested in bringing a revocation case. As will be seen later, there are also reasonable prospects of success on the question of whether the High Court extended and misapplied the principle of res judicata. Therefore, this matter begets an arguable point of law.’

In the end this cluster of judges found that the application of res judicata was wrong.

  • The second judgment

The second judgment in the Ascendis matter was written by Cameron J and was concurred by Mogoeng CJ, Jafta J, Madlanga J and Mhlantla J. Cameron J held otherwise on this issue (obviously agreeing that the CC has jurisdiction): ‘This approach the first judgment grounds in an analysis of the Act that finds that each ground of revocation – absence of novelty; non-inventiveness or obviousness; and lack of usefulness or inutility – is a separate statutory cause of action entitling the challenger to raise each one, at will, in either revocation proceedings or later in defending an infringement claim. … The question is this. Should the courts countenance multiple-stage defences in patent disputes – first bite at revocation, second bite when sued for infringement? I think not. This is not how enforcement of patents should most fairly and efficiently work. … If an alleged infringer, who fails to make a successful case for revocation, is permitted to raise further invalidity defences when later sued for infringement, there can be no principled reason to preclude it from launching a fresh revocation claim, on any new ground. When that failed, the patent-holder would have to initiate yet a further damages claim. To which the alleged infringer could respond with further new defences. And on and on. The resulting dissonance in the two sets of patent litigation seems calculated to produce not only incoherence, but also to affront directly our long-held judicial caution against piecemeal litigation. … In my view, that question – the patent’s validity – has been conclusively determined between these parties. In lawyerspeak, it is res judicata.’

Put differently, you cannot have your cake and eat it too, that is how the English would put it. Personally, I have always found this saying to be an oxymoron, namely, a figure of speech in which apparently contradictory terms appear in conjunction.

So there you have it, per Cameron J (and the other gathering of concurring CC justices), you may have a patent but if someone tries to steal one slice of your patent’s validity in revocation proceedings and do not succeed, the remainder they cannot eat.

Derek Harms SC BA LLB (Unisa) DiP (London) DiP (University of Pennsylvania) is a senior counsel and a member of the Church Square Association of Advocates in Pretoria.

This article was first published in De Rebus in 2020 (Sept) DR 29.