Category: 3. Business

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The chief executive of Italian bank Banca Monte dei Paschi di Siena is under investigation for alleged market manipulation and obstruction of supervisory functions in connection with its takeover of rival Mediobanca.

MPS said on Thursday that it had received a search warrant and its chief executive Luigi Lovaglio had been served a “notice of investigation by Milan’s prosecutor’s office in his capacity as chief executive officer”.

Milanese prosecutors are also investigating MPS and its top shareholders Delfin and Francesco Gaetano Caltagirone for alleged market manipulation and obstruction of regulatory functions, according to three people familiar with the details of the investigation.

Delfin and Caltagirone were also top shareholders in Mediobanca.

The investigation was first reported by Italian newspaper Corriere della Sera.

Delfin declined to comment. Caltagirone did not immediately reply to a request for comment.

MPS said it was “confident it can provide all the necessary information to clarify the correctness of its actions and expresses its full trust in the competent authorities, with whom it confirms its full co-operation”.

Shares in MPS fell more than 4 per cent in afternoon trading in Milan.

This is a developing story

Campbell’s has dismissed an executive who allegedly referred to the soup company’s products as being made for “poor people” and denigrated its Indian employees.

Martin Bally, who was the vice-president of Campbell’s information technology department, was recorded making the alleged comments by another employee.

Campbell’s – which started producing canned condensed soup in 1897, and whose cans feature in some of Andy Warhol’s best-known 1960s pop artworks – said it had reviewed the recording and believed the voice to belong to Bally.

Campbell’s made “highly processed food” and “shit for fucking poor people”, Bally reportedly told a former employee, Robert Garza, according to a wrongful termination lawsuit filed by Garza.

In an hour-long rant, broadcast by a Michigan TV station, Bally goes on to say: “Who buys our shit? I don’t buy Campbell’s products barely any more. It’s not healthy now that I know what the fuck’s in it … bioengineered meat.

“I don’t wanna eat a piece of chicken that came from a 3D printer.”

Allegedly referring to Campbell’s employees of Indian heritage, Bally said: “Fucking Indians don’t know a fucking thing … Like they couldn’t think for their fucking selves.”

Garza, who was a security analyst at Campbell’s, told a local news outlet he recorded Bally when he met him to discuss his salary and felt something was not right. He is now suing the company for unfair dismissal and is alleging that Bally made racist remarks, admitted to being under the influence of drugs at work, and retaliated when Garza tried to make a complaint about him.

Campbell’s – which rebranded last year, dropping “soup” from its name to reflect a move to selling more snack foods – apologised for the “hurt” caused by Bally’s comments, which it described as “vulgar, offensive and false”.

In a statement, Campbell’s said Bally had been dismissed, adding: “This behaviour does not reflect our values and the culture of our company, and we will not tolerate that kind of language under any circumstances.”

Campbell’s dismissed Bally’s allegation that the chicken used in its soups was “bioengineered”, calling the comments about its food “not only inaccurate – they are patently absurd”.

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The company said: “The chicken meat in our soups comes from long-trusted, USDA [United States Department of Agriculture] approved US suppliers and meets our high quality standards. All our soups are made with no antibiotics ever chicken meat. Any claims to the contrary are completely false.”

New Jersey-based Campbell’s can trace its history back over 150 years. In more recent times, it has expanded its product range to include more snacks and owns brands including V8 drinks, Prego sauces and Kettle Brand, the maker of Kettle Chips.

Bally has been approached for comment.

The first dispute (35-page / 1.3MB PDF) is between Amgen on the one hand and Sanofi and Regeneron on the other, concerning two products – Amgen’s evolocumab, sold under the brand name Repatha, and Sanofi’s and Regeneron’s alirocumab, sold under the brand name Praluent. Both products are therapeutic monoclonal antibodies used to treat and prevent ailments caused by high cholesterol levels, especially when patients do not respond adequately to changes in diet and treatment with statins. 

The second dispute (53-page / 2.5MB PDF) is between Edwards Lifesciences Corporation (Edwards) and Meril Life Sciences group (Meril) in relation to Edwards patents relating to a prosthetic heart valve it manufactures and rival Meril valve products.

The decision in the Amgen v Sanofi and Regeneron case is the first UPC Court of Appeal decision ‘on the merits’, which is where the court hears arguments – and rules – on the substantive legal issues at hand, as opposed to just dealing with preliminary or procedural matters.

Under the holistic approach that the Court of Appeal has endorsed, the first step in assessing whether there has been an inventive step is to determine a ‘realistic starting point’ in the prior art that would have been of interest to the skilled person considering a similar underlying problem as that which the patent claimed to solve. 

“This must be done by establishing what the invention adds to the state of the art, not by looking at the individual features of the claim, but by comparing the claim as a whole in the context of the specification and the drawings, thus also considering the inventive concept underlying the invention (the technical teaching), which must be based on the technical effect(s) that the person skilled in the art, on the basis of the application, understands is (are) achieved with the claimed invention,” the Court of Appeal said.

The UPC Court of Appeal also confirmed that determination of a realistic staring point should not be made with the benefit of hindsight. It said there can be more than one realistic staring point – in those cases “the claimed invention must be inventive starting from each of them”.

“A starting point is realistic if the teaching thereof would have been of interest to a person skilled in the art who, at the effective date, wishes to solve the objective problem,” the court said. “This may for instance be the case if the relevant piece of prior art already discloses several features similar to those relevant to the invention as claimed and/or addresses the same or a similar underlying problem as that of the claimed invention.”

Once a realistic starting point has been determined, the next step involves assessing whether it would be obvious for the skilled person to arrive at the claimed solution in the patent from that point.

In this regard, the Court of Appeal said: “The claimed solution is obvious when at the effective date the person skilled in the art, starting from a realistic starting point in the state of the art in the relevant field of technology and wishing to solve the objective problem, would (and not only ‘could’) have arrived at the claimed solution”.

The court said this assessment is to be made with a view to the person skilled in the art having “no inventive skills and no imagination” and requiring “a pointer or motivation … that, starting from a realistic starting point, directs them to implement a next step in the direction of the claimed invention”.

It added: “As a general rule, a claimed solution must be considered not inventive/obvious when the person skilled in the art would take the next step, prompted by the pointer or as a matter of routine, and arrive at the claimed invention. For an inventive step to be present, it is not necessary to show improvement of the technical teaching as defined by the patent claims over the prior art. Inventive step may also be found if the patent claims disclose a non-obvious alternative to solutions known in the prior art.”

According to the Court of Appeal, the expectations of the skilled person in taking the ‘next step’ after a realistic starting point has been determined will also be informative of whether a patent’s claims are obvious and lacking an inventive step.

The court said: “A claimed solution is obvious if the skilled person would have taken the next step in expectation of finding an envisaged solution of his technical problem. This is generally the case when the results of the next step were clearly predictable, or where there was a reasonable expectation of success. The burden of proof that the results were clearly predictable or the skilled person would have reasonably expected success, i.e. that the solution he envisages by taking the next step would solve the objective problem, lies on the party asserting invalidity of the patent.”

“A reasonable expectation of success implies the ability of the skilled person to predict rationally, on the basis of scientific appraisal of the known facts before a research project was started, the successful conclusion of that project within acceptable time limits. Whether there is a reasonable expectation of success depends on the circumstances of the case. The more unexplored a technical field of research, the more difficult it was to make predictions about its successful conclusion and the lower the expectation of success. Envisaged practical or technical difficulties as well as the costs involved in testing whether the desired result will be obtained when taking a next step may also withhold the skilled person from taking that step. On the other hand, the stronger a pointer towards the claimed solution, the lower the threshold for a reasonable expectation of success,” it added.

The court said that the burden of proof will shift to those claiming obviousness if patent rights holders are able to “sufficiently substantiate” uncertainties and/or practical or technical difficulties relating to the problem that the invention is supposed to solve.

Applying this holistic approach, the UPC Court of Appeal overturned the earlier decision taken by the Munich Central Division of the UPC in the Amgen v Sanofi and Regeneron case, finding that Amgen’s patent is valid.

In the Edwards v Meril case, the Court of Appeal largely rejected appeals by Meril against decisions taken by the Paris Central Division of the UPC and the Munich local division of the UPC respectively, confirming the validity of Edwards’ patents at issue and maintaining, albeit with some amendments, injunctions imposed on Meril regarding the supply of its rival products.

Patent law expert Sarah Taylor of Pinsent Masons said: “The Court of Appeal’s approval of this holistic approach indicates that the UPC is willing to create its own law. That said, it is clearly inspired by the EPO’s approach, and it is interesting that both decisions indicated that, despite the differences in approach between national courts and the EPO, they generally all lead to the same conclusion, supporting the UPC’s broader aim of aligning with EPO case law.”   

“Many Court of Appeal decisions to-date have helped to present the UPC as a largely patentee-friendly forum, and while the outcomes in both of these cases were patentee-friendly, this holistic approach offers more flexibility to those challenging patent validity and may result in challengers being drawn more to the UPC. It will be interesting to see if the clarification on the approach to inventive step encourages even more engagement with the UPC, particularly by challengers in the pharmaceuticals space,” she said.

“The Edwards v Meril decision also contains practical considerations for businesses on both sides of a patent disputes, with the Court of Appeal confirming a pragmatic approach to injunctive relief when patient interests are at stake,” added Taylor. 

The Court of Appeal confirmed that an exception to the right to injunctive relief may be justified where the infringing embodiment – in this case Meril’s extra large valves – is the sole available treatment. The Munich local division had already acknowledged that Edwards offered no equivalent to these larger valves, but determined that Meril’s extra large product should only be excluded from the scope of the injunction once a team at Edwards had approved their use. The Court of Appeal found that the availability of these products should not depend on Edwards’ approval and amended the relief to carve these products out of the scope of the injunction.  

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The US Securities and Exchange Commission is investigating investment bank Jefferies over its relationship with collapsed car parts company First Brands Group.

The regulator is seeking information about whether Jefferies gave investors in its Point Bonita fund enough information about their exposure to the auto business, which filed for bankruptcy in September with $12bn in debt, according to two people with knowledge of the matter.

It is also looking into internal controls and potential conflicts within and between different parts of the bank. The SEC’s inquiry is at an early stage and it is not clear whether it will result in any allegations of wrongdoing.

Jefferies chief executive Rich Handler said last month that the bank believes it was “defrauded” by First Brands, whose collapse raised questions about lending standards in the fast-growing but opaque private credit industry. He said the company’s bankruptcy had not seriously harmed the bank’s core business.

The existence of a civil probe into Jefferies’ relationship with First Brands is a sign of how the company’s collapse is affecting other financial institutions.

The regulator, a civil enforcement body rather than a criminal prosecutor, often asks questions about high-profile cases and those probes do not necessarily mean any wrongdoing has taken place. It is not clear whether the SEC is also looking into other financial firms’ dealings with First Brands.

Jefferies declined to comment. The SEC said it does not comment on the existence or non-existence of a possible investigation.

Jefferies had a long-standing relationship with First Brands, which included advising the company, providing it with opaque invoice financing and placing billions of dollars of loans with other investors.

In October Jefferies said a specialist invoice-finance fund it manages, Point Bonita Capital, had about $715mn invested in “receivables” — money owed under customer invoices — from retailers that bought First Brands products such as windscreen wipers to sell to consumers.

Jefferies has said the receivables were due from blue-chip companies including Walmart. Point Bonita documents did not list any exposure to First Brands as of June, but showed that the fund’s second and third largest exposures were to its customers, Walmart and auto parts retailer O’Reilly.

However, in a statement in October the bank said First Brands had been “directing” funds from customers to Point Bonita, rather than the Jefferies fund receiving payment from Walmart and others directly. Bankruptcy filings have confirmed that invoice lenders that provided $2.3bn of financing linked to receivables were all paid by First Brands rather than its customers.

The Financial Times also reported in October that Jefferies earned extra fees on financing it provided to First Brands through a “side letter” with the company, which some lenders said was not disclosed to them and may have violated the terms of their loan.

Jefferies has since confirmed the existence of the arrangement. It stated that First Brands received a legal opinion confirming the fees did not breach its loan terms and that a document listing the letter was disclosed to all of the group’s lenders.

Separately, federal prosecutors at the US Department of Justice have opened an inquiry into the collapse of First Brands, the FT reported last month.

First Brands founder Patrick James this month regained access to his bank accounts after winning a court battle against the company, which was trying to extend a freeze on his assets.

Additional reporting by Rob Smith in London and Stefania Palma in Washington