AIPPI Congress Report 8: Innovator v Innovator - injunctions

Innovator v Innovator - does this matter where
 injunctions are concerned? The AmeriKat is not
so convinced....

The wonderful AusKat Clare Cunliffe continues her reports from AIPPI's World Congress in Sydney with news from the second pharmaceutical patent session, Injunctions: Innovator vs Innovator, the panel discussed the relief that is appropriate in cases when innovators compete in the same field and infringement is found.

The panel was chaired by S. Peter Ludwig of Fish & Richardson. The panel members were Mattias Zigann, the presiding judge of the Munich Regional Court,

Philip Kerr of Allens Linklaters and Larry Welch, the Senior Director, and Assistant General Patent Counsel at Eli Lilly and Company.

Mr Ludwig explained that the question of what relief was appropriate had been highlighted by the very recent decision of the United States Court of Appeals for the Federal Circuit in AMGEN INC & ors v. SANOFI, AVENTISUB LLC & ors.  In the case at first instance, Sanofi and Regeneron had accepted that alirocumab (Praluent)  infringed the patent in suit, subject to issues of validity.  Judge Robinson had concluded that the patent was valid, and applied the test articulated in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), which requires a plaintiff to demonstrate:

(1) that it has suffered an irreparable injury;

(2) that remedies available at law are inadequate to compensate for that injury;

(3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and

(4) that the public interest would not be disserved by a permanent injunction.

Judge Robinson observed in relation to the fourth consideration that: “The public generally is better served by having a choice of available treatments. Therefore, the court finds itself between a rock and a hard place, i.e., being a patent holder and a verdict winner should be a meaningful factor in the balancing test, but taking an independently developed, helpful drug off the market does not benefit the public.”  However, she granted a permanent injunction on the basis that plaintiffs had demonstrated irreparable harm, as well as the inadequacy of money damages.

On appeal, the Federal Circuit ruled that the trial court erred by excluding evidence regarding written description; excluding evidence on enablement; improperly instructing the jury on written description, and improperly granting a permanent injunction, and remitted the matter to the judge for reconsideration.  In relation to the last point, the Court noted that the trial judge clearly violated eBay by issuing a permanent injunction despite finding that the injunction would disserve the public interest. The Court of Appeal also noted that the trial judge erred in assessing the public interest, because eliminating a choice of drugs is not, by itself, sufficient to disserve the public interest (since enjoining a drug would always reduce a choice of drugs).

Judge Zigann noted that in Germany, the questions of validity and infringement are bifurcated, but that a judge considering whether to grant a preliminary injunction will either consider validity on the basis of the documents (in Munich), or will consider whether the patent has been tested in opposition proceedings or nullity proceedings (in Dusseldorf).  The judge will also consider whether there is a prima facie case of infringement and whether the matter is urgent (generally, proceedings must be commenced within one month to eight weeks after the patentee becomes aware of the infringement).  The court may also impose a bond.

Mr Kerr explained that the position is similar in Australia (although proceedings are not bifurcated).  In the context of a preliminary or interlocutory injunction, where a patentee has made out an arguable case on validity and the alleged infringer has made an arguable case on validity, the court will look at whether damages would be an adequate remedy (this requirement is usually easy to satisfy in the pharmaceutical context because the operation of the Australian Pharmaceutical Benefits Scheme means that price of an innovator product will usually drop dramatically following the entry of a generic) and whether the balance of convenience favours the grant of an injunction.  Mr Kerr observed that Australian Courts had not given significant weight to the question of public interest in recent cases.  Mr Kerr noted that when a patentee succeeded at trial, permanent injunctions were granted almost as a matter of course.

Mr Welch noted that because so much patent litigation in the US occurs under the Hatch-Waxman Act (before the generic product has entered the market), the issue of preliminary injunctions does not often arise.  However, he noted that the question is likely to be more relevant in the context where an innovative product was alleged to be infringing.  In the context of preliminary injunctions, the Curt will consider the eBay factors, and will also consider whether the patentee is likely to succeed on the merits.  He noted that the decision of the Court of Appeal in Amgen leaves open the question of whether the value of an infringing innovator drug might be such that no injunction should be granted.

Judge Zigann observed that in considering whether to grant an injunction, it is necessary to consider the circumstances of the parties as well as public policy.  However, it is desirable for the legislature to define public interest, and to set out factors which are relevant to assessing public interest.  He noted that the recent litigation between Shionogi v Merck (in which the German Federal Court of Justice confirmed the decision of the Federal Patent Court granting Merck a compulsory license to EP 1 422 218 owned by Shionogi) demonstrated the circumstances where the public interest would support the grant of a compulsory license.  In that case, Merck obtained a licence to distribute Isentress for the treatment of specific patient groups that could not be treated with other drugs without serious side effects, in light of the fact that HIV infections are infectious and lethal.

Mr Kerr concluded that he did not consider that any special circumstances applied to innovator products which would justify that a different approach should be taken to the issue of injunctive relief. He noted that in Australia, as in Germany, it was possible to apply for a compulsory licence, but that he was not aware of any case which had been decided by a court where an alleged infringer had applied for a compulsory licence in answer to an infringement allegation.

Mr Welch also opposed the proposition that a different approach should be taken to innovator drugs.  He said that as the Court of Appeal explained in Amgen, if the innovator was infringing was simply providing another choice, the public interest would not be served by granting an injunction.  In any case, denying an injunction was tantamount to granting a compulsory license.  Given that the right to exclude others from the area of monopoly is fundamental to the nature of the patent grant, any approach which denied injunctive relief where the infringing drugs was innovative tended to undermine the nature of the monopoly.

Judge Zigann observed that although access to affordable medicines was an important public policy objective, there were multiple ways to achieve that objective, including the provision of public health care, and fixing the price of pharmaceuticals. Ultimately, he reiterated that it was for the Parliament to determine how to achieve this objective.   Mr Kerr agreed that it was for Parliament to determine the best regime to deliver more affordable drugs to the public where cost of innovation is high.  Larry Welch observed that the question of access to medicines could be resolved without impinging upon the rights and incentives of pharmaceutical patentees, and that it was desirable to find other ways to provide access.

Mr Ludwig observed that pharmaceutical companies make significant investments in research and development on the basis that patents are available to protect that investments.  He suggested that since that investment is necessary to produce pharmaceutical products, there was also a public interest in protecting the patentee’s rights. Mr Welch agreed, observing that a refusal to grant injunctions would mean that the incentives for patentees would be reduced.  Judge Zigann agreed that there were ways to protect the public interest which did not require impinging on patent rights.

The speakers concluded that where a valid patent was infringed by an innovative product, the patentee should be entitled to the same remedies as would apply in the case of infringement by a generic product.