In Teva v Chiesi, the Patents Court has considered the extent to which a generic pharmaceutical company should clear the way to market before launch and the implications for an infringement counterclaim brought by a patentee based on a threat by the generic to infringe, in circumstances where the generic has not yet obtained a marketing authorisation. The Court allowed the patentee's infringement claim to proceed to trial. It also rejected Teva's argument that requiring it to disclose its launch plans was a breach of competition law and/or an abuse of process.
Teva seeks to revoke three Chiesi patents relating to a combination of beclomethasone and formoterol in an inhaler, in order to clear the way to market. Chiesi has counterclaimed on a quia timet basis for infringement (i.e. on the basis that Teva threatens and intends to infringe the patents). The action will be heard in October 2020.
In response to Chiesi's requests for disclosure or a product description in relation to its alleged infringing product, Teva sought to strike out the infringement claim (and failing that, that it should be stayed) on a number of grounds.
Quia timet infringement
Teva argued that there was no evidence that it threatens or intends to commit an infringing act, relying upon the fact that it does not yet have a marketing authorisation, given that it could not launch without one (and in circumstances where it had made no indication of its launch plans).
Obtaining a marketing authorisation has been held in earlier cases to be evidence of a threat to infringe a patent justifying a quia timet action. However, the Court said it was "well established" that a generic should clear the way in advance, by bringing proceedings for patent revocation and/or declarations of non-infringement well before its launch on the market. Whilst there was no legal duty to clear the way, the courts have established that a failure to do so could be taken into account on an interim injunction application and may be a strong or even decisive factor. On this point, it should be noted that in a more recent decision the Court has made clear that clearing the way is an issue to consider only if damages are not an adequate remedy if an injunction is refused; in that case, the injunction application was denied because price depression could be quantified.
For a patentee to be able to bring a quia timet action, it has to show that it had a real prospect of establishing at trial a sufficiently strong probability that an injunction would be required to prevent harm to the claimant occurring after trial. The relevant question was not whether the generic may be about to launch its product at the start of the patentee's action. Therefore, the existence or not of a marketing authorisation was not relevant: it was the existence of the threat and an intention to start selling product at some point within the patent's lifetime that justified a quia timet infringement action.
The fact that Teva had issued revocation proceedings (in relation to patents expiring in 2027/2028) led to an inference that it intended to sell a product protected by the patents before expiry. The Court also concluded that it was a reasonable inference that Teva wished to reserve the ability to launch at risk, even if the patents were found to be valid.
Abuse of process
Teva argued that the true motive of Chiesi's counterclaim for infringement was to force Teva to disclose its launch plans. The judge rejected the abuse of process argument. Whilst a patentee would like to know what its rival plans were, the purpose of the infringement claim was 'for its own sake' (i.e. to obtain appropriate relief for infringement of its patent). If Teva had wanted to avoid disclosing its further commercial plans, it could have given an undertaking not to sell a product covered by any patent found to be valid.
Stay on the grounds of competition law
Teva also relied upon the CJEU's decision in the paroxetine 'pay for delay' litigation, arguing that the effect of that decision was that the parties were competitors, and that competition law prevented it giving disclosure relating to its confidential plans, even if ordered by a court, as this would amount to a concerted practice. Whilst the provision of information between undertakings could amount to prohibited collusion, the Court said that the provision of necessary disclosure in patent litigation in this case could not conceivably amount to any form of collusion. The purpose of the patent system was to stimulate innovation, which was itself pro-competitive; resolving patent disputes was part of that system and therefore inherently pro-competitive. However, the position on disclosure could be different if the litigation was a sham designed to facilitate anti-competitive information exchange.
Finally, the Court also rejected Teva's claim for a stay on the basis that it was prepared to offer 14 days' notice of launch. Whilst this might demonstrate Teva was not going to launch surreptitiously, it was no substitute for resolving infringement issues at the trial in October.