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Posted on 30 March 2021

Court of Appeal upholds rejection of interim injunction as damages were adequate remedy

In June 2020, the Patents Court rejected Neurim/Flynn's (Neurim) application for an interim injunction against Mylan in relation to its planned launch of a generic competitor product to Circadin. The Court of Appeal subsequently rejected Neurim's appeal, having heard it on an expedited basis, therefore upholding the refusal of the interim injunction.  However, in reaching its decision, the Court of Appeal stressed the "intensively fact sensitive" nature of such cases. It said this case presented "extremely unusual facts", which meant that calculating Neurim's losses would not be difficult, and reiterated that it was not providing any principles of general application. Because the Court of Appeal upheld the finding that damages would be an adequate remedy, it did not therefore have to consider the balance of convenience and important issues such as 'clearing the way'.

In terms of the specific facts, the expedited trial was due to take place in October 2020 and therefore the period of generic competition was a short one. This brought into "sharp focus" the question of whether a price spiral was likely to occur in this case. Further, it was also not a case of multiple generic entrants: the evidence was that only Mylan, and possibly Teva, were ready to launch, but Neurim had reached a settlement with Teva. Neurim argued that other companies might be in a position to launch but this only highlighted a possibility, not a likelihood, of further generic entry. 

Accordingly, the Court said that its task of assessing Neurim's losses was relatively straightforward, based on Neurim's reasonably detailed forecasts of its expected sales revenues in the relevant periods, and actual sales for Neurim and Mylan for the period up to trial. The calculation for the period after any injunction was granted would be "marginally less robust", as it required an extrapolation to determine Neurim's likely sales and prices in that period, but damages were to be assessed liberally, i.e., not going so far as to punish the infringer.

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Status as exclusive licensee

Following an expedited trial, the Patents Court went on to find that Neurim's second medical use patent relating to Circadin was valid, rejecting attacks based on lack of novelty, obviousness, insufficiency and plausibility. Mylan accepted that, if the patent was valid, it would be infringing. Of particular interest was Flynn's status as the purported exclusive licensee of the patent in the UK, under various agreements with Neurim. Having reviewed the totality of the agreements, the Court concluded that, whilst on their face they purported to confer exclusivity, this was taken away by the provisions relating to litigation concerning the patent. Specifically, Flynn was not entitled under the agreements to initiate UK infringement proceedings without Neurim.

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Interplay between Patents Court and EPO proceedings

Whilst the Court had found the patent valid and infringed, the final outcome was not a final injunction and costs in favour of Neurim; instead, the order in relation to validity was in effect reversed as a result of a subsequent decision of the European Patent Office Technical Board of Appeal, which only a few weeks later ruled that the patent was invalid. The Court concluded that, because of these exceptional circumstances, it had jurisdiction to vary the orders made. It appears that this is the first time that this kind of situation has arisen and it required the Court to consider the interplay between the twin routes to patent revocation (before the EPO and a national court) in the context of the grant of remedies. It concluded that those twin tracks cannot be treated as "hermetically sealed, one from the other" – that said, the Court also highlighted the difficult and hypothetical question as to what would have been the correct approach if, for example, the EPO hearing finding invalidity had not taken place until 2022.

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Patents Court considers clearing the way and disclosure of launch plans

In Teva v Chiesi, the Patents Court 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 argued that there was no evidence that it threatened or intended to commit an infringing act, relying upon the fact that it did 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).

For a patentee to be able to bring a quia timet action, it had 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.

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Abbott v Edwards – public interest defence to injunction not successful

In Abbott v Edwards, the Patents Court found that Edwards' PASCAL device infringed patents licensed to Abbott in relation to medical devices used to treat mitral valve regurgitation by a transcatheter technique. When it came to the question of injunctive relief, Edwards raised a public interest argument, on the basis that some doctors had the reasonable clinical opinion that its device would be better for certain patients.

The normal remedy for a successful patentee is a general injunction to restrain future infringements, and Birss J stressed that the availability of an exclusionary injunction for infringement of a valid patent represents an important manifestation of the patent monopoly. However, he did accept that the public interest can be a relevant consideration, both under UK law and under the EU Enforcement Directive, and may justify refusal of an injunction or a carve out from its general terms, or for an award of damages in lieu of an injunction. But his starting point was that patent laws already put restrictions on patent rights to protect the public interest, such as for example provisions relating to Crown use, compulsory licensing and patentable subject matter. As such, the Court's power to refuse or qualify a patent on public interest grounds should be used "sparingly and in limited circumstances".

Birss J concluded that the following were relevant factors:

  • Whether the drug or device is concerned with treatments for serious medical conditions, and perhaps only for life-saving treatments; and
  • The nature of the competitive product.

Simply because there are clinically tangible differences between two products, which mean some doctors prefer (non-negligently) to use one product over another, was not sufficient to engage a relevant public interest. Even in the 'harder case' where, for some patients, the patentee’s product was not an adequate treatment but the infringing product was, the public interest was still not engaged because it did not examine the basis for the reasonable view of doctors. The defence would only apply where the infringing product was the only suitable treatment to protect the lives of patients, where that fact was established by objective evidence.

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Subsequently, the Patents Court decided to grant a stay of the injunction pending the outcome of Edwards' appeal as this would be the "fair way to hold the ring". This is a reminder to patent owners that, even where they have been successful at first instance, they may have to wait until after an appeal has been dealt with to enforce their remedies (if they are successful on appeal).

The Court considered the evidence of the parties and held that the fairest course of action was to follow an interim decision made in the case. In that decision, the Court rejected Abbott's application for an interim injunction (as we reported here) because Abbott would not suffer irreparable harm in doing so. It further ordered that Edwards was only permitted to distribute a small number of the devices to a limited number of patients at specific centres until the appeal was heard.

Mexichem v Honeywell: Court of Appeal considers Arrow declaration

Mexichem sought revocation of six Honeywell patents relating to compounds that are useful in refrigeration systems, and also declaratory relief in the form of Arrow declarations relating to certain divisional patent applications currently before the EPO. Mexichem sought declarations that the mere idea of using certain refrigerants in a mobile air-conditioning system (MAC) was obvious at certain dates, which could then be used as a defence if Honeywell sued Mexichem for infringement based on those divisional patents.

Honeywell sought to strike out the claim for Arrow declarations (or for summary judgment on those claims) on the basis that the declaration was not sought in relation to a specific product or process which Mexichem intended to market in the UK, it was not sufficiently clear, and that a declaration in the broad terms sought lacked any utility. 

The Court of Appeal refused to strike out the claim and decided that Arrow declarations do not need to be sought in relation to a specific product or process, and declarations sought in more general terms could still serve a useful purpose.

In terms of the alleged breadth of the declaration sought, it was not correct to construe the declarations  as if they were patent claims so that every conceivable product which could fall within the declaration was declared to be obvious. All Mexichem was seeking was a declaration that the mere idea of using the disclosure of the two refrigerants in a MAC was obvious; the declaration said nothing about whether combinations of those refrigerants with lubricants and other refrigerants were obvious or not.

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Shenzhen v Noco: Use of Amazon's complaints procedure in lieu of interim declaration

Noco had used Amazon's complaints procedure seeking delisting of certain Shenzhen products on the basis that it claimed that Shenzhen's products infringed its patent for a device to jump start car batteries. The delisting had the effect of removing about 30-40% of Shenzhen's UK revenue.

Shenzhen complained to Amazon who said it would consider re-listing the products if Shenzhen provided a judicial decision declaring that the products did not infringe Noco's patent. Shenzhen applied for summary judgment before the Patents Court that its products did not infringe and, in the alternative, an interim declaration of non-infringement.

The Patents Court refused to grant summary judgment on the basis that Shenzhen's evidence on how its products worked was "unsatisfactory and unreliable" and it was not appropriate for summary judgment as a fuller investigation of the facts was needed with expert evidence. The Court also refused to order an interim declaration on the basis that whether Shenzhen's product infringed was a "yes/no question, and it only permits a final answer, not a temporary one". Such an issue needed to be dealt with at trial where a final determination could be made.

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