The act of state doctrine has long been recognised by the UK courts as serving to limit the powers of domestic courts to adjudicate on the actions of foreign governments. Yet while the doctrine itself is well established, its application in the world of intellectual property rights is less familiar territory.
In Chugai v UCB  EWHC 1216 (Pat), Henry Carr J considered the question of whether the doctrine could be applied to the grant of a foreign patent. His finding that the grant of a patent did not engage the act of state doctrine was ultimately obiter. It is nonetheless further support, consistent with the approach of Lords Mance and Neuberger in Belhaj v Straw  UKSC 3;  2 WLR 456, for a limited application of the doctrine to acts of a foreign state’s executive within its own territory.
Chugai had a licence agreement with UCB for an antibody drug known as tocilizumab. Under the terms of the licence it agreed to pay royalties in relation to any act which, but for the licence granted, would infringe a “valid claim” of any underlying patent. The licence agreement contained a jurisdiction clause, the effect of which was that all questions in relation to the licence other than the validity of any underlying patents would be subject to the jurisdiction of the English courts.
while the doctrine itself is well established, its application in the world of intellectual property rights is less familiar territory
Chugai sought a declaration that its tocilizumab product did not infringe any valid claim of the particular US patent at issue, and accordingly fell outside the terms of the licence. It was common ground that the scope of the patent was to be determined according to US principles of construction. Chugai argued that in accordance with those principles the patent should be construed such as to sustain its validity, and that the broader construction argued for by UCB could not be sustained as it would result in the patent being invalid. UCB sought to strike out this part of Chugai’s pleading on the basis that it put the validity of the relevant patent at issue. Accordingly, it said, these parts of Chugai’s statement of case were non-justiciable, as the English Court had no power to determine the validity of a foreign patent.
It was in support of the latter principle that UCB sought to rely, among other arguments, on the contention that determining the validity of a foreign patent was prevented under the act of state doctrine. (The other major prong of UCB’s case was that such a determination would be contrary to the rule in British South Africa Co v Companhia de Moçambique  AC 602 that the English court has no jurisdiction to determine right of title to, or right to possession of, immovable property located outside the jurisdiction.)
Validity not in issue
The judge disagreed with UCB’s characterisation of the case. Instead he agreed with Chugai that its claim was a contractual one, which raised matters of validity only incidentally in the context of the correct construction of the patent. This did not involve putting validity in issue in the way that UCB contended.
Since the grant of a patent could only arguably be called into question where the validity of that patent was in play, the judge’s findings on this point effectively obviated the need for any final determination in relation to the act of state doctrine. Nevertheless, the judge gave detailed, albeit obiter, consideration to the matter, and to the question of whether a direct challenge to validity would be justiciable.
Application of the act of state doctrine to the grant of patents
UCB argued that the grant of a patent fell within the “second rule” of the doctrine as discussed in Belhaj – i.e. that English courts will not question executive acts of a foreign state which take effect within the territory of that state.
It faced something of an uphill task in doing so, since its case was contrary to clear indications from two Supreme Court benches – in Lucasfilm v Ainsworth  UKSC 39;  1 AC 20 and in Belhaj – that the doctrine did not apply to the grant of intellectual property rights.
the judge agreed with the principle that grant of a patent by a patent examiner was not an act of state
The judge noted that in their combined judgment in Lucasfilm, Lords Walker and Collins had emphasised the distinction between acts having the character of “governmental acts” – such as requisition of property – that were subject to the doctrine, and other acts of foreign state ministers or officials, which were not. Their Lordships found that actions concerning intellectual property rights, and specifically the grant of a patent, fell in the latter camp:
[the doctrine] should not today be regarded as an impediment to an action for infringement of foreign intellectual property rights, even if validity of a grant is in issue, simply because the action calls into question the decision of a foreign official. 
Lucasfilm was a case concerning the justiciability of a claim under a US copyright, and Lord Mance expressly declined to give his view on whether the act of state doctrine could apply to a question concerning the validity of intellectual property rights which, like patents, depended on state grant. Nonetheless in Belhaj both he and Lord Neuberger referred to Lucasfilm in support of a limited application of the second strand of the doctrine.
While recognising that the statements in both Lucasfilm and Belhaj were obiter, the judge agreed with the principle that grant of a patent by a patent examiner was not an act of state. It was quite different, he observed, from a “government act” such as the requisition of property. Accordingly, he found that the act of state doctrine was not an impediment to patent infringement proceedings, even if validity were at issue (at ).
Henry Carr J’s judgment supports the view that the grant of a patent is not an act encompassed by the act of state doctrine, and that consequently the doctrine has limited, if any, application to a challenge to the validity of a foreign patent.
it was not prejudicial to comity for the court to exercise its jurisdiction where the parties had agreed to submit their dispute to its adjudication
The judge also considered the principle of comity in his application of the doctrine to the instant case, observing at  that it was not prejudicial to comity for the court to exercise its jurisdiction where the parties had agreed to submit their dispute to its adjudication. That comity is an essential principle underlying the act of state doctrine is well established: see for example comment to that effect by Lord Sumption in Belhaj at . However, the manner in which Henry Carr J considered it on the specific facts in Chugai arguably parallels that of Newman CJ in his dissenting judgment in Voda v Cordis Corp (2007) 476 F 3d 887 (Fed Cir), which was approved by Lords Walker and Collins in Lucasfilm. Newman CJ emphasised that the act of state doctrine was to preclude judicial acts which might embarrass the executive in its conduct of foreign affairs: it was for this reason that he observed that “not every governmental action and not every ministerial action is an act of state”, the fundamental criterion, he said, being “whether the governmental action is a significant public act or whether it is a ministerial function”.
Newman CJ was here relying on the more explicit regard to the public policy aspect of the act of state doctrine that has been adopted in the US courts since the decision of the Supreme Court in Banco Nacional de Cuba v Sabbatino (1964) 376 US 398. Notably, both Lords Neuberger and Sumption in Belhaj expressly cautioned that the more flexible approach this had engendered in the US was not that of the English courts (at  and at ). Nevertheless, it appears to have been with one eye on such wider policy considerations, and the role that they evidently played in the reasoning of the court in Lucasfilm, that Henry Carr J made his observations in Chugai.
Within the broad principles delimiting the various ‘rules’ of the doctrine discussed in Belhaj, there appears to be no ‘bright line’ distinction to be drawn as to when acts by state officials are liable to fall within the doctrine and when not. Henry Carr J’s approach suggests that it may be open for parties to influence by their private agreements the extent to which the doctrine will apply in cases involving an act of an official or semi-official character, such as the grant of a patent, which fall outside the paradigm case of requisition of property.