Court of Appeal dismisses patent appeal and denies interim injunction

What happened?

In an expedited appeal from the UK Patents Court, the Court of Appeal has dismissed Neurim/Flynn’s appeal and refused to award an interim injunction preventing generic pharmaceutical launch pending trial.

Demonstrating the Court of Appeal’s robust, business as usual approach to remote hearings in the current climate, the hearing took place last Thursday 18 June 2020, two weeks after the appealed decision, by a panel of Lord Justices Floyd, Arnold and Males.

Is this a step change for pharma patents?

A notable case where the Court of Appeal heard an expedited appeal following a refusal by the Patents Court to grant an interim injunction was in Novartis v Hospira (2013). In that case, the Court of Appeal instated an interim injunction against the generic launch of zoledronic acid, notwithstanding that (pending appeal) the patent had been held invalid in the same UK proceedings.

Accordingly, the refusal of the interim injunction in the original decision of Mr Justice Marcus Smith in this case raised the prospect of a change of step in the UK; in particular as to whether generic pharmaceutical companies need to clear the way before launch. The impact of the first instance decision arose mainly from the finding that Neurim/Flynn fell at an early point in the American Cyanamid tests: the Patents Court held that the damage caused to the innovator/originator product (Circadin) was quantifiable as damages. This was notwithstanding many cases finding that generic launch did cause unquantifiable, irreparable harm, albeit there had been a few exceptions, and, like any equitable remedy, the decision can turn on the particular facts. As a result, there was no need to consider the more typically debated issues as to the balance of convenience, albeit obiter comments were made in such respects.

In this way, this case sought to challenge any suggestion that, as a matter of principle, generic pharmaceutical launch causes unquantifiable loss to the innovator/originator. Following the Court of Appeal’s decision, this case is an exception to what can, at best, be said to be a majority rule. But the Court of Appeal was careful to refute strongly any suggestion that the opposite applies, i.e. that generic entry will never cause unquantifiable loss. In this respect, the leading (and only substantive judgment) by Floyd LJ expressly stated that:

“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.”

How is this case “extremely unusual”?

Notwithstanding the above statement, it remains to be seen see how truly distinguishable this decision will be for future pharma companies seeking to obtain interim injunctive relief pending trial. In terms of identifying the “extremely unusual facts”, the matters highlighted in this decision include that:

• There was an expediated trial that meant the relevant length of time the interim injunction would be granted for was only four months. In this respect, the decision emphasised that the evidence of consequential losses presented by Neurim and Flynn had been produced before expedition and so related to longer term effects.

• Neurim and Flynn were held to have sufficient cash reserves to sustain their revenue until trial, with the Court of Appeal dismissing the suggestion that their consequential losses would result in parts of their operation having to shut down.

• Mylan were the only “ready to launch” generic company that could compete in this timeframe, with Teva (the only other generic with a UK marketing authorisation) having agreed not to launch in the UK via settlement. The Court of Appeal accepted that further generic launch was a possibility, but found that the evidence fell short of establishing it was likely.

• Neurim and Flynn had provided detailed forecasting of their predicted revenues, which was held provided basis to quantify their damages, which could be “assessed liberally”. The Court of Appeal went so far as to correct certain findings (relating to the impact of a second generic launch), such that it held that the damages calculation was actually even less complicated and more quantifiable than the Patents Court decision had found.

These factors all contributed to the Court of Appeal’s overall view that the patentee/licensee in this case did not face a ‘price spiral’ situation and that there was quantifiable damage. As such, the Court of Appeal did not go on to consider at all matters as to the balance of convenience.

What’s next?

Following its success at first instance, Mylan had agreed to stay off the market until 19 June, following which it continued to portray its intentions to launch in the UK imminently. It remains to be seen if Neurim will now make a further appeal to the Supreme Court and/or whether Mylan will agree (or be forced) to delay its launch any longer. Given the imminence of launch plans as well and the upcoming summer court break, any such appeal seems likely to be pursued on an expedited basis.