Patents: the injunction spotlight shifts its focus

We recently reported on the unusual decision in Neurim v Generics and Mylan. It was unusual because Neurim failed to obtain an interim injunction to prevent the launch of a generic competitor product, and surprising because the judge found that the market would be likely be altered in a way which could not be restored.  He found that, despite such alteration, damages would be an adequate remedy.

There was a quick jump to the Court of Appeal, with a decision just a week later. The first instance decision was upheld; but the Court ruled that the judge had made a number of errors on the way.  These are worth noting because they highlight both how the test for an interim injunction is applied, and how difficult it will be to show in any pharma case that the market will not be irretrievably disrupted by entry of a generic competitor. Lord Justice Floyd put this succinctly in the penultimate paragraph of his reasoning:

“[Neurim] suggested that this decision [not to grant an injunction] would have grave consequences for the pharmaceutical industry generally. I do not agree. I have not decided any principle of general application. I have explained why I do not think that the extremely unusual facts of this case give rise to such difficult questions of computation of damages as to trigger the exercise of the court's discretion to grant an injunction.” (My emphasis.)

Major lessons

• Firstly, evidence. The American Cyanamid case (discussed here, and briefly summarised below) says an interim injunction hearing should not be a mini-trial on the substantive issues for trial.  That applies only to the first step of the test: is there a serious issue to be tried?  Where the judge got it wrong was that on all the other steps, most notably, “Are damages an adequate remedy?” the judge must make a decision, as best he can, on the evidence before him.  There will not be a right or wrong answer, rather a sliding scale from an adequate to inadequate remedy. The appeal judge explained:

“As the judge noted, when Lord Diplock spoke of damages being an "adequate" remedy, he was not suggesting that damages must provide a perfect remedy. As the judge also observed, there comes a point where "damages as a remedy falls so far short of the perfect, that the remedy can no longer be described as adequate". I agree with this. The boundary between the adequate and the inadequate is not a precise one. It is a matter for judicial evaluation on the evidence in any given case whether or not the boundary is crossed. If it is not crossed in relation to the claimant's loss then, normally, an injunction will not be granted.”

That means parties will need to invest in producing evidence covering each of the last three steps in the American Cyanamid test.

• Secondly, as noted above, when considering generic market entry, it is only likely to be in very unusual cases that an injunction will not be found to be appropriate.  In this case, the trial was only four months away.  The appeal judge discounted the likelihood of other generics entering the market in that time, so the more difficult question of damage attributable to other generic market entrants was not important.  Indeed, the likelihood was that the “reimbursement” price – the price paid by the NHS for the drug – might not even be affected in such a short period of time, as it usually takes some time for the Department of Health to move a drug to another reimbursement price list.

So unusually, in this case, damages was an adequate remedy.

• Thirdly, the ability to obtain a speedy trial, a very valuable facility in English court proceedings, can make a fundamental difference to the outcome on an interim injunction application.

But why, if the time to trial was so short (four months), would it not be appropriate to grant an injunction anyway?

In one sense this is no longer a valid question.  It applies to the third question in American Cyanamid: “If damages are not an adequate remedy to the claimant, consider the adequacy of the undertaking in damages to the defendant”.  If the answer to the second question is that damages are an adequate remedy, you do not need to consider the third question. 

However, the evidence will not always give a clear answer to each question in turn, so that will not always be the case.

There is also a specific compelling reason for a generic competitor entering the market earlier: first mover advantage.  If Mylan’s launch were delayed, they could expect to lose that advantage as other competing generic producers would be in the wings, waiting to pounce on the opportunity.  In that case the impact of stopping Mylan entering the market, even for only four months, could be both significant and difficult to quantify.

The evidence counts

Although this case is a highly unusual one, and got to a final decision only after two attempts, the analysis provides useful insights into key elements of the test for obtaining an interim injunction. It seems that evidence relating to steps 2 to 4 in the American Cyanamid test really does matter.

A brief summary of the American Cyanamid test:

1. Is there a serious issue to be tried?
2. Are damages an adequate remedy for the claimant?
3. If damages are not an adequate remedy to the claimant, consider the adequacy of the undertaking in damages to the defendant.
4. Where there is no adequate remedy for either side, the court must consider all relevant factors. This involves various considerations that will vary depending on the details of the case.  

The court can consider the relative strength of the parties’ positions, but only where there is convincing evidence that one side is clearly stronger than the other is.