Pharmaceutical patent infringement - interlocutory injunctions now easier to obtain

By Nicholas Tyacke.

Key Points:
Three recent decisions indicate what matters will be relevant in granting an interlocutory injunction against the infringement of a pharmaceutical patent.

Traditionally, Australian courts have been reluctant to grant an interlocutory injunction against the infringement of a pharmaceutical patent. This has particularly been the case where the alleged infringer has raised serious questions as to the validity of the patent-in-suit, has undertaken to keep an account of its profits and appeared likely to be able to meet any financial award made against it at the final hearing. Recent decisions indicate, however, that at least some judges of the Federal Court are not so reluctant.

The principles governing the grant of an interlocutory injunction

It is well established that in order to be granted an interlocutory injunction, an applicant must establish:

• that there is a serious question to be tried; ie., if the matter proceeds to a final hearing, there is a probability that the applicant for the interlocutory injunction will be successful;
• that it will suffer irreparable harm for which damages will not be adequate compensation unless an interlocutory injunction is granted; and
• that the balance of convenience favours the grant of an interlocutory injunction.

In a patent case, the first factor will depend on the applicant establishing that there is a serious question to be tried on the issue of infringement despite whatever evidence has been led on the issue of invalidity.

Recent cases

In the last two and a half years, the Federal Court has ruled on four interlocutory injunction applications in pharmaceutical patent cases. In three of those four cases, the Court granted an interlocutory injunction. The factors that each of those Courts considered significant in granting such an injunction are discussed below.

GenRx Pty Ltd v Sanofi-Aventis [2007] FCA 1485 (21 September 2007)

In the GenRx case, the most recent of this trilogy, the Court granted an interlocutory injunction restraining GenRx from infringing Sanofi-Aventis' Australian patent relating to clopidogrel, the active ingredient in Sanofi's Plavix product. GenRx commenced proceedings seeking revocation of the Clopidogrel Patent one day before it obtained registration of its generic clopidogrel product on the Australian Register of Therapeutic Goods ("ARTG"). Sanofi brought a cross-claim for infringement and an application for an interlocutory injunction restraining infringement of the Clopidogrel Patent. GenRx conceded infringement for the purposes of the interlocutory injunction application.

Justice Gyles granted the injunction sought by Sanofi despite:

• finding that there was a "substantial issue" to be tried as to the validity of the asserted claims of the Clopidogrel Patent
• GenRx offering to secure a sum sufficient to cover any reasonably likely assessment of damages; and
• GenRx offering other undertakings to ameliorate the effect of its commencing trade.

As infringement was conceded for the purpose of the interlocutory injunction application, the issue before the Court on the first factor was whether there was a serious question to be tried as to the validity of the asserted claims sufficient for the court to conclude that there was no serious question to be tried overall.

Referring to the decision of the then Federal Court Justice Gummow in Martin Engineering Co v Trison Holdings Pty Ltd (1988) 81 ALR 543, as did Justice Moore in the Merck case discussed below, Justice Gyles noted that the effect of that decision was to give greater weight in favour of the grant of an interlocutory injunction to the grant of a patent than might have been deduced from earlier precedent.

He also gave considerable weight to the "longstanding existence and exploitation of the patent in suit"; the patent having been granted 17 years before the commencement of the revocation proceedings.

Justice Gyles also held that GenRx's failure to bring revocation proceedings in a timely fashion weighed in favour of the grant of an interlocutory injunction. He held that it may have been reasonable for GenRx not to move to revoke the Clopidogrel Patent until after the expiry in July 2003 of an earlier patent that covered clopidogrel, but that there was no good reason for GenRx not to seek to revoke the Clopidogrel Patent from that date onwards. Justice Gyles held that the inability of GenRx to market its clopidogrel product until it had obtained registration of its product on the ARTG, which it did not apply for until 2006, was not a valid basis for delaying the commencement of revocation proceedings.

He also gave some weight to the fact that similar patents had survived validity challenges in the US and Canada.

Justice Gyles found that the balance of convenience also tipped in favour of the grant of an interlocutory injunction.

He also held that he was not satisfied that damages would be an adequate remedy, despite the undertakings offered in this regard by GenRx referred to above. He rejected as a basis for this holding the difficulty in assessing damages asserted by Sanofi, holding that it should not be too difficult to assess the effect on the incumbent of a new entrant who would have to keep clear records of what took place. However, Justice Gyles was much influenced by the effects of disturbing the status quo, particularly as it related to the operation of the PBS. He held that a new entrant in this field would have an effect which may be both unpredictable and irreversible. Justice Gyles further held that there was likely to be interference with the trade patterns of Sanofi with its customers, both wholesale and retail, much of which it had built up since 2003 as GenRx looked on, that may not be detectable or measurable in money terms.

Merck & Co. inc. v. GenRx Pty Ltd (2006) 70 IPR 286 (31 October 2006)

In the Merck case, the Court granted an interlocutory injunction restraining GenRx from infringing Merck's patent that covered processes for preparing alendronic acid and its salts, as well as the compounds themselves prepared by the claimed processes, including 4-amino-1-hydroxybutylidene-1, 1-bisphosphonic acid monosodium salt trihydrate (AMT) (the "AMT Patent"), the active ingredient in Merck's Fosamax product. GenRx had obtained registration for its AMT products on the ARTG and inclusion of some of those products on the Pharmaceutical Benefits Scheme ("PBS"). There was no dispute that GenRx's AMT product would infringe Merck's patent.

Justice Moore held that this case warranted the grant of an interlocutory injunction, despite holding that there was a serious question to be tried as to the validity of the AMT Patent.

He held that the balance of convenience favoured the grant of the injunction as GenRx had placed itself in its present position deliberately and knowingly - "with its eyes wide open." GenRx had been aware of the AMT Patent since at least 2004, prior to lodging an application to register its products on the ARTG, and yet had not at any stage commenced revocation proceedings. He thus gave little weight to GenRx' claims that it would suffer commercial and reputational loss if the interlocutory injunction were granted.

As to the adequacy of damages as a remedy for GenRx's infringement, Justice Moore held that Merck's losses would be financial losses for which damages could be awarded, but that it would be difficult to assess with any real precision what those losses were so as to be able to compensate Merck for its actual loss. He held that this would be the case because the clear picture of Merck’s present significant market share (though already adversely affected by one generic in the market, Alendro) was likely to be quickly and substantially muddied by the entry of not only the generics to be imported by GenRx, but other generics which might be encouraged to follow GenRx’s example. Justice Moore also held that changes may be made to the PBS in the near future and how they might impact on any loss suffered by Merck would be difficult to gauge.

Pharmacia Italia S.p.A. v Interpharma Pty Ltd [2005] FCA 1675 (23 November 2005)

In the Pharmacia case, the Court granted an interlocutory injunction restraining Interpharma from infringing Pharmacia's patent covering injectable ready-to-use solutions containing an anti-tumour anthracycline glycoside, including doxorubicin hydrochloride and epirubicin hydrochloride.

Interpharma intended to import into Australia and thereafter sell and distribute ready-to-use solutions containing doxorubicin hydrochloride and epirubicin hydrochloride. Interpharma had procured the listing of its solutions on the PBS, effective from 1 August 2005. In order to do so, it had provided the PBAC written assurances that a stock of the imported solutions would be available for supply on the date of the PBS listing. However, as of 9 November 2005, it had not yet imported a supply of those solutions. Thus, as of that day, no supply of the solutions was available for sale in Australia, and the solutions had not yet been listed on the PBS.

In September 2005, Pharmacia sought an injunction (1) restraining Interpharma from importing or offering to import the solutions and (2) requiring Interpharma to procure the withdrawal of the PBS listing. Interpharma sought revocation of the patent. The Court granted Pharmacia an injunction restraining the importing or offering to import, but declined to grant an injunction requiring Interpharma to procure the withdrawal of the PBS listing.

Justice Sundberg held that there was a serious question to be tried on the issue of infringement, but that Interpharma had failed to establish that there was a serious question to be tried as to invalidity.

In a forerunner to the cases discussed above, Justice Sundberg, in ruling that the balance of convenience weighed in favour of the grant of an interlocutory injunction, noted that Interpharma had entered its chosen market with "its eyes wide open" to the possible consequences, and could not avoid being enjoined simply because of those possible consequences.

Justice Sundberg also held that damages were not an adequate remedy as Interpharma did not establish that it had the capacity to pay any damages that may be awarded, and did not undertake to quarantine the profit it would make from importing and selling the infringing product. He doubted whether an indemnity given by a substantial foreign company provided any real comfort where the foreign company lacked a presence in Australia.

Conclusion

The three decisions discussed above indicate a greater willingness on the part of at least some judges of the Federal Court to grant an interlocutory injunction in pharmaceutical patent cases.

Those cases also indicate that an applicant in such cases should emphasise, where possible:

with respect to whether there is a serious question to be tried and with respect to balance of convenience:

• that the basis of its application is a granted patent or patents, which was/were granted following a thorough examination of its/their validity by the Commissioner of Patents;
• the strength of its infringement case (ie., that there is a serious question to be tried on this issue);
• the weakness of the invalidity case (ie., that there is no serious question to be tried on this issue);
• the length of time that the patent/patents-in-suit have been exploited by the patentee without a successful challenge to its/their validity;
• the length of the delay between the time that the alleged infringer learned of the patent/patents-in-suit and the time it challenged its/their validity; 
• that the alleged infringer placed itself in its present position deliberately and knowingly - "with its eyes wide open" to the possible consequences of being enjoined;
• that during the period between the time the alleged infringer learned of the patent/patents-in-suit and the time it brought a revocation action, the applicant had made a significant investment, in terms of time, money and resources, in establishing its market and trade patterns; and
• that similar patents had survived validity challenges in foreign jurisdictions; and

with respect to irreparable harm, that damages are not an adequate remedy because:

• the patentee will suffer non-financial loss, such as damage to reputation;
• damages are not readily quantifiable for the following reasons:
  • a new entrant in the field of the patented invention would have an effect which would be both unpredictable and irreversible;
  • such an entrant would likely interfere with the trade patterns of the patentee with its customers, both wholesale and retail, emphasising, as indicated above, to the extent possible, the extent to which those trade patterns had been built up while the alleged infringer looked on;
  • the clear picture of the patentee’s present market share is likely to be quickly and substantially muddied by the entry of not only the generic product to be imported by the alleged infringer, but other generic products from other suppliers which might be encouraged to follow the alleged infringer's example;
  • generic companies in Australia often market their products by offering a 'baker's dozen' of generic products with volume discounts, making quantification or relevant sales difficult;
  • the new entrant will trigger price reductions under the PBS that will not be reversed if that product is then withdrawn from the market following the final hearing; and
  • changes may be made to the PBS in the near future, if this is the case, which will further complicate the assessment of the loss that the alleged infringer will cause to the patentee;
• the extent, if any, to which the alleged infringer does not have the capacity to pay any damages that may be awarded; and
• if a foreign company, that it lacks a presence in Australia and an indemnity does not provide sufficient comfort.

For further information, please contact John Collins.