Novartis v Hospira - Interim Injunction Granted

These three principles are:

1. Is there a serious case to be tried?
2. Adequacy of damages to either party: would the claimant be adequately compensated by an award of damages at trial?
3. Is there a doubt as to the adequacy of damages? If so, the extent of any uncompensatable disadvantage will determine the 'balance of convenience'.

In general, these three principles are applied by the English courts when deciding whether to grant an interim injunction. However, recently the High Court heard a case between Novartis AG and Hospira UK Limited (a generic pharmaceutical supplier) in which slightly different considerations were applied, on the basis that a trial had already taken place. The Court of Appeal has subsequently reversed the decision.

This case and its subsequent appeal to are of interest to innovators and generic companies alike. There is now precedent for the English courts to grant an interim injunction pending appeal even if the patent at issue has been found invalid at first instance.

Novartis had two European patents (EP (UK) 1296689 and EP(UK) 1591122) covering the use of zoledronic acid for the treatment of osteoporosis. They also had a compound patent and a Supplementary Protection Certificate (SPC) covering zoledronic acid. The SPC was due to expire on 15 May 2013, whilst the two medical use patents expired much later on 17 June 2021.

In order to 'clear the way' for the launch of their generic, Hospira began revocation proceedings against Novartis' two medical use patents in December 2011. In late November 2012, Hospira then obtained a marketing authorisation for zoledronic acid, with the intention to launch their generic zoledronic acid as soon as possible after the SPC expiry date.

The revocation proceedings were started in sufficient time to ensure that the trial was heard before the compound SPC expired, and came before Arnold J in February 2013. In March 2013, Arnold J declared both of Novartis' two medical use patents as invalid on the grounds that they were not entitled to priority and an intervening publication rendered them invalid. Some of the claims were also found invalid for insufficiency.

Following Novartis' appeal of the invalidity decision, Hospira informed Novartis that it intended to launch in the UK upon expiry of the SPC. Two days later, Novartis commenced infringement proceedings and sought an interim injunction to restrain Hospira's launch of their generic pending the appeal of the invalidity decision.

Prior to this decision, there was no precedent for the grant of an interim injunction pending appeal when the patent had been found invalid. Birss J therefore held that in exercising the court's discretion to grant or refuse an interim injunction, he must consider the risks of harm which cannot be compensated in damages along with the nature of the proceedings.

In this case, the parties' rival cases had been heard at a full trial and a detailed judgment had been given. This could not be ignored when considering whether or not to grant an interim injunction.

With regard to the nature of the proceedings, Birss J firstly agreed with Novartis that the appeal was plainly arguable since the issue of priority relied on construction, but he also noted that he could not conclude who would win.

Then in considering the harm to both parties, he gave weight to:

1. the possibility that Hospira would lose their 'first mover advantage' since they appeared to be the first generic ready to launch immediately on the expiry of the SPC;
2. the real risk that an injunction now, would cause direct loss to Hospira which is difficult to quantify;
3. the real risk that if an injunction was not granted and the appeal succeeded, that Novartis would be unable to restore their prices fully without significant harm to their reputation; and
4. the higher uncertainty associated with Hospira's losses assessed on a cross-undertaking than the uncertainty associated with Novartis' losses assessed as damages if no injunction was granted but they won the appeal.

Overall, Birss J held that granting or refusing the injunction would lead to a risk of significant unquantifiable loss for both parties. He also held that if this was the case before trial, then he would probably grant an interim injunction. However, as a trial had already taken place, he concluded that the overall balance of convenience was different. If Novartis won the appeal, their monopoly would be restored and any financial loss during the lapse of the patent would be recoverable from damages paid by the Hospira and any other generics that launch in that period. He therefore refused to grant the interim injunction.

Novartis appealed this decision to the Court of Appeal where Floyd LJ held that Birss J should not have found that the first instance decision affected the balance of convenience. He held that once Birss J had decided that the appeal was arguable with real prospects of success, he should have moved to the balance of convenience, where on the facts of the case, Novartis succeeded. The 'unquantifiable damage' to Novartis outweighed that to Hospira as there would be an immediate downward price spiral if generic zoledronic acid were to be launched. The Court of Appeal was also unconvinced that Hospira would lose its 'first mover advantage' pending the invalidity appeal.

Accordingly the Court of Appeal granted the interim injunction pending appeal of the first instance decision.

Comment

There is therefore now precedent for the English courts to grant interim injunctions pending appeal even if the patent(s) at issue have been found invalid by the courts at first instance. Patentees must also prove the same factors in applying for an interim injunction pending appeal as they would for an interim injunction pending trial. In other words, follow the principles set out in American Cyanamid.

For further information, please contact your usual D Young & Co advisor.