Interim injunctions and preliminary issues cannot be divorced in latest generic pain dispute before Mr Justice Arnold

Yawning in overly long meetings is commonplace
for the AmeriKat, but not when she reads a decision
from Mr Justice Arnold

The AmeriKat relishes the moment when she sees an email land into her inbox with news of the latest IP tussle.  Even more so, when the email attaches a judgment that is short and easily digestible, as was the case in Mr Justice Arnold's decision in Napp v Dr Reddy's and Sandoz [2016] EWHC 493.  Admittedly, the decision was short because it was about an application to give short notice.  Yes, the AmeriKat knows this may seem dull to many, but she is here to change your mind.  The decision flags up a new generic battle in the English Patents Court and is a helpful reminder to those who may be considering bouncing their opponents into court hearing without proper notice.  So, not one to look  a gift horse in the mouth, the AmeriKat summarizes the decision below:

What's the product?

Dr Reddy's and Sandoz's proposed seven-day buprenorphine transdermal patches (i.e. a pain medication for the treatment of moderate  chronic pain) - generic versions of, what the AmeriKat can gleam, Napp's BuTrans transdermal patch.

What's the issue?

Will the court order a trial of a preliminary issue in principle, separate from the question of directions for that trial, when the applicants have not given three days'  notice to the respondent?

What's the answer?

No.

What happened?

Dr Reddy's sought acknowledgment of non-infringement for its proposed product from the then patentee, Euro-Clinique (the patent was subsequently transferred to Napp).  A couple weeks later, on 10 February 2015, after Napp learned that Sandoz was also proposing to launch a similar product, Sandoz agreed not to launch its product before a certain date.  However, Napp subsequently learned Sandoz was undertaking pre-launch activities.  Napp applied for an interim injunction against Sandoz and, at the same time, did the same in respect of Dr Reddy's.

The Sandoz application was heard on an urgent basis on 22 February (two days after issue).   Undertakings were provided by Sandoz and the application is due to be heard next week (14-16 March), along with the Dr Reddy's application.  Directions in respect of Dr Reddy's application was heard on 1 March.

On 2 March, Sandoz served an application on notice seeking a trial on the preliminary issue of infringement to be heard in late April.  The witness statement in support was not served until 6:00PM on 3 March and it was not until 6PM on 4 March that the product and process description (PPD) for its intended product was served.  On 4 March , Dr Reddy's also served an application notice for the trial of a preliminary issue, but in respect of a proposed counterclaim for a declaration of non-infringement (DNI) to be heard in June 2016.  This preliminary hearing  on this issue will provide Dr Reddy's with information as to what it has to do to avoid infringement on the proper construction of the claim.

Both Sandoz and Dr Reddy failed to give three days notice to Napp with respect to their applications (see CPR Rule 23.7(1)(b)) and requested that the court exercise its power to hear the applications notwithstanding (CPR 23.7(4)).

What did the court decide?

The preliminary issue was only mooted on 1 March, Sandoz's application was not made until 2 March (with evidence and PPD yet to follow) and Dr Reddy's on 4 March.  Dr Reddy's and Sandoz took slightly different positions in their respective applications.   It was therefore not fair to require Napp to deal with the question of whether there should be a trial of a preliminary issue on the short notice it has been given.  As Mr Justice Arnold stated:

"I see no sufficient justification for railroading Napp into an early hearing. There was nothing to prevent Sandoz and Dr Reddy’s from giving the ordinary three days’ notice, which would have led to a hearing later this week."

The Court held that it was not appropriate to deal with the question of whether there should be a trial of a preliminary issue in principle, separately from the question of directions.  The whole point of the applications are to have a preliminary issue decided quickly.  The timing of the preliminary issue (and thus the directions) are key to that consideration.

Further, it was inappropriate to divorce the question of a preliminary issue from the question of a preliminary injunction.  The grant of a preliminary injunction is an exercise of case management.  The court is tasked with deciding what course will lead to the "least ultimate risk of injustice in circumstances where the court does not know who is going to be ultimately successful at trial, or indeed on appeal.".  Although the judge recognized that Sandoz and Dr Reddy's applications for a preliminary issue were aimed at short-circuiting this exercise (and thus cost/time which should be "applauded"), all of these questions were interconnected.  This is because even if there are strong arguments in principle for why a preliminary issue should be tried,

"...in order to decide what directions should be given for the trial of that issue, one has to have regard to such questions as how quickly that can fairly be tried. If it cannot be tried quite as quickly as Dr Reddy’s and Sandoz propose, when can it be tried? What are the consequences of that for the balance of the risk of injustice in terms of undertakings or an interim injunction? Also, what is going to be done with regard to the question of the validity of the patents and on what timing?"

What is the take home point?

So what have we learned from the decision?

1. Without sufficient justification, applications for a preliminary issue must be made in accordance with the three-days' notice rule.  
2. The principle as to whether to order a trial of a preliminary issue cannot be divorced from the question as to the directions for such a trial.
3. If you are arguing for a preliminary issue to be heard, ensure you have canvassed all points that need to be addressed in the directions (i.e. do you want directions for serving expert evidence, how long do you need, etc).  
4. If there are applications for an interim injunction and a preliminary issue at play, expect they will be heard together so the court is fully seized of all aspects of the matter.  
5. Should this be the case, evidence and submissions relating to the "interconnectedness" of the applications (as headlined by Mr Justice Arnold's questions above) will assist the court in deciding which course to pursue.

Readers will have to wait for Tuesday or Wednesday  when the hearing is expected to take place (the Cause List for Monday does not show a hearing), to find out what happens next.