Hague District Court grants cross-border preliminary injunction against Mylan in Novartis SPC battle

Conventional wisdom says that the Dutch courts favour a pragmatic and commercial approach to patent litigation, allowing, where they can, patentees to effectively obtain cross-border injunctions against multiple defendants. In a recent decision dated 29 September 2020, the Hague District Court once again proved this conventional wisdom to be true. 

The Court’s decision imposes a pan-European preliminary injunction on three different Mylan entities for the infringement or facilitation of infringement of a Supplementary Protection Certificate (SPC) held by Novartis. There decision can be found here [in Dutch].

The decision is interesting because of (1) the Court's analysis of the interface between paediatric extensions, orphan drugs and SPC's; (2) the Court's finding that the holder of a market authorization (MA) and a parent company can be liable for tortious interference of patent infringement; and (3) the Court's assumption of jurisdiction to impose cross-border relief against a foreign MA holder.

This decision does not come out of the blue. It cites and follows two notable precedents in which similar conclusions were reached: a 2012 decision in proceedings between Boehringer Ingelheim and Teva [here] and a 2016 decision between Novartis and Teva [here]. With this decision, the Hague court confirms and further expands on those precedents, giving an important signal to pharmaceutical patent holders that it is willing to impose practical solutions in cases of imminent, cross-border infringement of their rights.

1: Stacking rewards? Orphan drugs, paediatric extensions and SPC's

In Europe, two important market exclusivity mechanisms for pharmaceuticals include those for orphan drugs, for the treatment of rare diseases, on the basis of Regulation 141/2000 (the Orphan Drug Regulation); and paediatric extensions, obtained for showing that medicines also work to treat younger patients, on the basis of Regulation 1901/2006 (the Paediatric Drug Regulation).

Specifically, Article 8 of the Orphan Drug Regulation states that where a MA is granted for an orphan drug, its holder shall enjoy a 10 year period of market exclusivity. If the holder of this MA additionally satisfies the requirements of the Paediatric Drug Regulation, this period is extended by two years, pursuant to Article 37. In cases where the relevant pharmaceutical does not have orphan drug status, the duration of the SPC is extended by six months, pursuant to Article 36. Thus, the Paediatric Drug Regulation envisions two distinct rewards: two year exclusivity for orphan drugs and 6 months SPC-extension in all other cases.

The dispute before the Hague District Court concerned deferasirox, sold by Novartis as Exjade and used to treat chronic iron overload in human blood. A patent covering the compound expired on 23 June 2017, and Novartis obtained an SPC on the basis of this patent which was initially set to expire on 30 August 2021. Novartis was granted a six-month paediatric extension for the SPC in 2018 after the European Commission concluded, on 10 November 2017, that Novartis had fulfilled all necessary requirements under the Paediatric Drug Regulation.

Deferasirox, however, had also been designated an orphan drug. Thus, starting on 31 August 2006, Novartis enjoyed a ten year period of market exclusivity under the Orphan Drug Regulation. When this period expired on 1 September 2016, deferasirox was stricken from the orphan drug register. Novartis' request to amend the market authorization for deferasirox to include a paediatric indication was filed well before the expiry of this period, on 8 December 2011.

Mylan argued that in such a case, the six month SPC extension was not available to Novartis: according to Mylan, Novartis had "used up" the maximum duration of its market exclusivity, and should have pursued its application for the two-year extension under the Paediatric Drug Regulation more diligently prior to the expiry of the orphan drug period if it wanted to obtain another reward. Instead, Mylan alleged, Novartis purposefully stalled the application to first ride out its orphan drug exclusivity and then obtain a 6 month SPC extension.

The District Court disagreed. It held that the only form of abuse the Paediatric Regulation seeks to avoid is claiming two rewards, i.e. extensions of market exclusivity and the SPC. But it was undisputed that Novartis had not received an extension of its orphan drug market exclusivity. In case Mylan believed the application process for a paediatric extension was dragged out unnecessarily, it should have intervened in that process with its complaints: the District Court considered that it is not up to it or to national patent offices to make that assessment. It held that if Mylan's argument were followed, Novartis would effectively receive no reward at all for its application under the Paediatric Drug Regulation, which would be contrary to the Regulation's stated purpose. Thus, the District Court concluded that the SPC extension was properly granted.

Inspired by the Dutch patent courts, Lucy likes to think outside the box

2: Tortious interference with patent infringement

Mylan intended to launch a generic version of deferasirox and so Novartis filed and infringement suit against three Mylan entities:

  1. Mylan BV, a Dutch entity that intended to market the generic product in the Netherlands;

  2. Mylan SAS, a French entity that holds the European MA for Mylan's generic product;

  3. Mylan NV, a Dutch entity that is the parent company of the Mylan group.
Having established that the SPC extension was properly granted, it was an easy step for the District Court to enjoin Mylan BV from infringing it. As to this entity, the injunction was limited to the Netherlands.

But what about the other two Mylan entities? It is settled case-law in the Netherlands that merely holding a MA does not constitute an act of patent infringement, but facilitating infringement by third parties may constitute tortious interference vis-à-vis the patent holder. The District Court held that Mylan SAS acted tortiously towards Novartis by allowing group companies to sell the generic product under its MA, thus facilitating the infringement of Novartis' rights. On this basis, the District Court issued a cross-border injunction against Mylan SAS.

Notably, the District Court did not analyse whether facilitating infringement by making available its MA to infringing group companies also constitutes a tort in all other Member States for which the injunction was imposed. It merely referred to statements submitted by Novartis which supposedly showed that allowing group companies to sell infringing products under an MA constituted a tort in all Member States where Novartis' SPC is in force. That rather surprised this Kat, who always thought that accepting tortious interference by the MA holder was rather exceptional.

As for Mylan NV, the District Court held that there was a serious risk that Mylan NV would "exercise control over its local subsidiaries and/or instruct them to infringe or to facilitate or encourage such infringement" [para 4.16]. This conclusion appears to have been based primarily on Mylan NV's refusal to acknowledge the validity of Novartis' SPC and to commit that it would not in any way facilitate its infringement by local companies. As with Mylan SAS, the District Court issued a pan-European injunction against Mylan NV, in particular to stop it from "giving approval for launches at risk" [para 5.3].

Here, too, there may be good grounds to enjoin Mylan NV, but this Kat would have preferred a more detailed discussion in the judgment why Mylan NV's involvement with its subsidiaries' operations was so intensive that it constituted a separate tort, independent of the patent infringement committed by the subsidiaries in their respective countries.

3: Jurisdiction

Lastly, the grounds on which the District Court assumed cross-border jurisdiction over Mylan SAS - an entity not domiciled in the Netherlands – on the basis of Article 8(1) of Regulation 1215/2012 (the Recast Brussels I Regulation).

Article 8(1) provides that persons may be sued in a Member State where their co-defendants are domiciled [as was the case here: the other Mylan entities are Dutch], "provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."

According to the District Court, this latter condition of “closely connected” was met, because both Mylan NV and Mylan SAS were accused of tortious interference with infringement of Novartis' patent by local Mylan subsidiaries. The Court stated that the allegedly tortious conduct differed in that Mylan NV exercised "operational control" and Mylan SAS had "regulatory control" over the subsidiaries, but held that these alleged acts "showed significant overlap both in a legal and a factual sense" [para 4.3.4].

Notably, the District Court held that there was a risk of irreconcilable judgments, because Mylan NV's instructions to Mylan SAS were specifically alleged to be tortious [i.e. Mylan NV allegedly acted tortiously by failing to prevent Mylan SAS from making available the MA to local subsidiaries]. The success of the tort claim against Mylan NV thus depended in part on the success of the tort claim against Mylan SAS, and thus, the District Court held, the latter claim was "nested" in the former. The resultant "tortious kaleidoscope" strikes this Kat as an original application of Article 8(1) Recast Brussels I Regulation, which future litigants will no doubt attempt to apply to their case.

Hague District Court grants cross-border preliminary injunction against Mylan in Novartis SPC battle Hague District Court grants cross-border preliminary injunction against Mylan in Novartis SPC battle Reviewed by Léon Dijkman on Thursday, October 22, 2020 Rating: 5

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