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High Court rejects Neurim's second application for of interim injunction against Teva

Posted on 14 September 2022

Abstract

In the days and weeks running up to the expiry of Neurim's divisional Patent relating to Circadin, a melatonin-based insomnia treatment in August 2022, litigation continued between Neurim/Flynn and Teva.

We last commented on this matter, and Neurim/Flynn's claim against Mylan, following the Court of Appeal's decision regarding Flynn's status as an exclusive licensee in the claim against Mylan, and the High Court's decision to refuse to grant an interim injunction against Teva.

Subsequently, the Circadin litigation has continued, notably in May 2022 with the Court of Appeal rejecting Mylan's appeal against the Order of Marcus Smith J in which he found the Patent valid and infringed. Following that decision, Mylan was prohibited by an injunction from selling its melatonin product, Melatonin Mylan.

This development was relied on by Neurim/Flynn to justify a second application for an interim injunction to restrain Teva from supplying Teva Melatonin product, notwithstanding the earlier decision of Mr Justice Mellor in April 2022, in which he had refused an application by Neurim/Flynn to injunct Teva.

In the High Court's recent decision addressing this second application for an injunction against Teva, the Court had to consider the circumstances in which a Court may reconsider an interlocutory order or interim decision. Citing Chanel v Woolworth, Mellor J concluded that the Court requires a significant and material change in circumstances for reconsideration of an interim decision. Neurim/Flynn argued that the Court of Appeal decision in the Mylan litigation and, specifically, the recent removal of Mylan from the market following its finding that the Patent was both valid and infringed, was such a material change of circumstances. Whilst Mellor J doubted whether these constituted a material change of circumstances, he acknowledged that Teva had "pragmatically" accepted that particular debate was "arid" – if the change favoured granting an injunction against Teva when circumstances did not before then that change would be material, but if circumstances still did not justify such an injunction then the changes were not material. Accordingly, Mellor J went on to consider the merits of this second application for an interim injunction against Teva.

The judge focussed on one of the American Cyanamid questions, namely whether damages (for the unsuccessful party, having been vindicated at trial) would be an adequate remedy for either of the parties, both after and (in the seven weeks) before expiry of the Patent. The judge's clear view was that the balance of the adequacy of damages and risk of irremediable harm came down even more firmly in favour of Teva than it had in his first decision. This was largely because, on the basis of updated evidence before the Court, there would be greater uncertainty about the volumes of sales Teva would be able to make prior to expiry of the Patent (which would also translate into uncertainty post-expiry and the assessment of loss of Teva's first mover advantage).

The question of a "downward price spiral" was also reconsidered. On this application, Neurim/Flynn relied upon expert evidence which, in the judge's view, wrongly assumed that both parties would experience the same or similar effects of the downward price spiral following expiry of the Patent. Each party's position had to be considered separately. Moreover, whether the injunction was granted or not would create an even greater difference in the way Teva would experience the price spiral than it would for Neurim/Flynn.

Ultimately, the judge again refused Neurim/Flynn's application for an interim injunction, and refused permission to appeal.

Neurim/Flynn levelled a wider criticism at the UK patent system, suggesting that litigants in such cases may question whether the system (and specifically the consideration of interim injunctions) is fit for purpose. Their submissions raised the rhetorical question:

"It is common for there to be multiple generic companies entering or making moves to enter the market where a valuable pharmaceutical is for one reason or another coming off patent. Is a patentee supposed to sue all of them at once, and create one "pharma-mega action"? Is the patentee supposed to fight, win, and then start all over again against another Defendant?"

In this case, as discussed in our earlier posts, Neurim/Flynn's approach had been closer to the latter as they had previously been involved in litigation with Mylan since before Mylan Circadin had even been launched. Neurim/Flynn could have taken action against Teva as early as July 2021, or at least at the time of Teva's launch in October 2021, but did not do so. This could have enabled Neurim/Flynn to obtain an injunction against Teva – even though Mylan were already on the market, maintaining the status quo at that time would have kept Teva off the market.

Bearing this timeline in mind, it rather takes the wind out of Neurim/Flynn's argument that Teva failed to "clear the way" prior to launch. In the judge's view, there would not have been time to oppose the Patent from June/July 2021 (when the Patent was granted), even on an expedited trial, prior to its expiry. Teva could have applied to be joined to the Mylan action – likely ceding control about how proceedings were run, and losing the opportunity to "wait and see" if Mylan prevailed. Similarly, Neurim/Flynn could have joined Teva to the Mylan proceedings – likely destroying their prospect of getting a final judgment on the Patent prior to expiry. This would have been similarly unattractive as a strategy, and possibly indicative that Neurim/Flynn would have opposed any attempt by Teva to join in the previous Mylan action, because of the inherent risk of delaying proceedings.

Teva sought an order that Neurim/Flynn pay their costs on an indemnity basis (allowing for a higher cost recovery than on the standard basis). The principle the courts apply is that indemnity costs may be awarded where the circumstances include "something outside the ordinary and reasonable conduct of proceedings… out of the norm". Teva argued that a second application for an interim injunction against them constituted such extraordinary circumstances. Mellor J agreed, noting that there was more information available to him about the period after the Patent would expire, but that had shifted the balance more firmly in Teva's favour. Neurim/Flynn were therefore ordered to pay Teva's costs of the application on an indemnity basis.

It has already been noted that this litigation has created a "highly unusual set of circumstances" for Neurim/Flynn to face, as a relatively small entity against two major generic pharmaceutical companies. The litigation has the potential to continue to twist and turn and we will continue to report on new decisions of note.

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