EU & Competition news

Date: 17 May 2008

Court: High Court, Chancery Division (Patents Court) - England

On 17 March 2008, Mr. Justice Mann heard an application for an interim injunction made by Leo Pharma against Sandoz Limited. The application concerned Leo Pharma's patent for a new form of calciopotriol, calciopotriol monohydrate, used in the treatment of psoriasis.

Background

Sandoz obtained a marketing authorisation for a calciopotriol ointment on 12 April 2007. It later obtained a marketing authorisation for a cream. Leo Pharma managed to obtain samples of the ointment and testing showed that it contained their patented compound. On this basis, their solicitors wrote to Sandoz in late August, alleging infringement of Leo Pharma's patent by the ointment and requesting samples of the cream.

Sandoz repeatedly refused to provide samples of the cream to Leo Pharma. It also failed to correct Leo Pharma's belief that the cream product was to be launched in September 2007. The product was actually launched on 31 October 2007. Leo only became aware of this in December 2007 when Sandoz again refused to supply a sample on the basis that the product was now publicly available. Sandoz eventually provided a sample when Leo Pharma continued to have difficulties in sourcing one on the market.

When Leo Pharma was finally able to conduct tests on the sample of the cream, 15% of the crystalline forms detected were the patented calciopotriol monohydrate. 

Serious question to be tried?

At the interim injunction hearing, Sandoz argued that there was no serious question to be tried in relation to infringement of the patent. This was on the basis that Sandoz' cream did not display the beneficial effects of the calciopotriol monohydrate crystals disclosed in Leo Pharma's patent due to the small percentage of the monohydrate crystals present in the cream. It argued that this was "common sense".

Mr. Justice Mann found that it was not the place of a Judge hearing an interim application to decide using his common sense an issue which should properly be the subject of expert evidence at trial.

Balance of convenience

If an interim injunction is granted, a generic company will clearly suffer financial losses. However, these can be reimbursed to it by way of the Claimant's cross-undertaking in damages if the generic company is ultimately successful at trial. However, damages may not be an adequate remedy for the generic company's loss of the opportunity to put the first generic version of a product on the market. The Court will take this into account in deciding whether to grant an interim injunction.

If an interim injunction is not granted, the patentee will lose out on sales to the competing generic. Again, it can generally be compensated for such lost sales by way of damages at trial. Often the price of its product will have to be reduced because of the presence of a competitor on the market, though, and generally the patentee will not be able to put its prices back up post-trial even if it succeeds in removing the competing generic product from the market. The Court will also take this potential permanent price drop into account when considering whether to grant an interim injunction.

In the Leo Pharma case, the Court found that both parties had valid arguments along the lines set out above for saying that financial compensation would not be an adequate remedy if the decision to grant an interim injunction (or not) was ultimately overturned at trial. So, the Court had to consider other factors in deciding whether to grant the injunction.

The Court found that Sandoz, in its repeated refusals to co-operate with Leo Pharma in correspondence, had been deliberately obstructive. Although legally permissible, the Court found that such tactics created unnecessary uncertainty for the patentee. This shifted the balance of convenience in the patentee's favour and the Court granted an interim injunction. In doing so, the Court also found that Sandoz had unreasonably failed to correct Leo Pharma's information about when the Sandoz product would be marketed. On this basis, Sandoz was not allowed to rely on arguments of "status quo" (namely, that its product had already been on the market for three months at the time of the court hearing and so should be allowed to stay there) when the status quo had been engineered through its own tactics.

Conclusion

The Court's decision not to decide technical questions of infringement at an interim hearing on the basis of "common sense" is clearly the right decision. However, deciding where the balance of convenience lay on the basis of the parties' legal tactics rather than the losses and uncertainties that they faced is a little unusual. This case serves as a warning to generic companies that there is little point in misleading a patentee in order to get a product on the market before a preliminary injunction can be granted, as the injunction may well be granted anyway.