Prospects of obtaining an interim injunction in patent proceedings improve

The Court of Appeal last month upheld the grant of an interim injunction by Jacob J in SmithKline Beecham -v- Apotex [2003] EWCA Civ 137. Interim injunctions in patent proceedings in recent years have been comparatively rare. This important decision from the Court of Appeal may lead to more interim injunctions being granted in patent cases, particularly to prevent early generic entry into the pharmaceuticals market.

The case concerned SmithKline Beecham's patent relating to crystalline paroxetine hydrochloride, its preparation and its use as a therapeutic agent, particularly relating to an anhydrous form. In fact, SmithKline Beecham sells a different form (the hemihydrate) as a pharmaceutical under the name Seroxat. The same patent was the subject of an application for revocation by BASF in an earlier case in the UK last year. In that case, Pumfrey J held the patent to be partially valid and SmithKline Beecham launched an application to amend the patent. In proceedings on the equivalent patent in the US last week, Apotex were held not to infringe SmithKline Beecham's patent. In the present case SmithKline Beecham applied for an interim injunction to restrain alleged infringements by the Defendants.

At first instance, the Defendants submitted that an interim injunction was inappropriate on a number of grounds, all of which were dismissed by the Judge:

• The fact that amendment proceedings were pending did not preclude the grant of an interim injunction. There was a formidable body of authority to the effect that the Court can enforce a partially valid patent by way of interlocutory injunction where the enforcement is of a claim which is valid.
• The fact that SmithKline Beecham were not exploiting a product claimed in the patent did not mean that an interim injunction should not be granted. The hemihydrate product sold by SmithKline Beecham was interchangeable for the anhydrous form and there was therefore no abuse of monopoly or grounds for the grant of a compulsory licence. Further it was not the case that SmithKline Beecham would necessarily be restricted to a claim of damages for a reasonable royalty.
• The fact that damages might be unavailable, if the Defendants made out their argument that the claim had not been framed in good faith and with reasonable skill and knowledge, did not mean that an injunction was not available. Jacob J cited with approval the decision of Laws J in ex parte Rhone Poulenc, who stated: "The argument involves, to my mind, the proposition that the very reason why damages are an inadequate (because unavailable) remedy to RPR amounts itself to a reason why they should not obtain an injunction. At first blush, the submission possesses an Alice in Wonderland, or perhaps Gilbertian, quality". The fact that damages might be unavailable in fact made an injunction more rather than less appropriate.

Of further interest in the first instance decision were Jacob J's comments regarding the availability of injunctions to pharmaceutical companies in the face of generic competition. The Judge remained firmly convinced that the damage caused by entry into the market of generic Seroxat on a substantial scale would be both very substantial and not adequately quantifiable and, arguably, Jacob J's comments are of wider applicability.

The Judge's comments seem to have been influenced by the fact that the Defendants had deliberately refrained from making an application for revocation or seeking a declaration of non-infringement and had brought the position of uncertainty that they were in upon themselves. Jacob J stated:

"where litigation is bound to ensue if the Defendant introduces his product he can avoid all the problem, of an interlocutory injunction if he clears the way first. That is what the procedures for revocation and declaration for non-infringement are for".

Lastly, the Court turned to the question of whether the Defendants would be able to pay any damages awarded. Jacob J noted that the Court was often asked to assess the creditworthiness of an organisation and that this happened not only on interim injunctions, but also in cases of security for costs and others too. In all these cases the plain and simple shortcut was a guarantee from a bank in the jurisdiction. Jacob J had suggested this at an earlier stage in the proceedings and the Defendants had chosen not to go down this route.

The Court of Appeal last month upheld the first instance decision on similar grounds. In particular the Court of Appeal held that the Court's jurisdiction to grant interlocutory injunctions is not limited (including by s.63 of the Patents Act 1977). If a final injunction would normally be granted in cases where damages after amendment would not be recoverable, there was no principle that would preclude an interlocutory injunction from being granted in similar circumstances. Whilst it would be unusual to grant an interlocutory injunction if no damages could be recovered, there was no principle why a Court should not grant such an injunction.

On the issue of damages, the Court of Appeal stated that a patentee was entitled to recover damages for loss caused by the infringement provided that they were not too remote and that the normal considerations (as set out in Gerber –v- Lectra) would apply. There was no general proposition that damage caused by infringement would be too remote and unrecoverable unless the damage was a loss of sales in goods falling within the ambit of the claim of the patent. In this case the anhydrate and hemihydrate forms were for all practical purposes interchangeable and it was reasonably arguable that the damage caused to the sales of one by the sales of the other would not be too remote.

The Court of Appeal also supported the Judge's considerations in weighing up the balance of convenience. He had been entitled to have in mind that the Defendants could have cleared the way before them by seeking revocation of the patent or seeking a declaration of non-infringement. There was no error of principle in the Judge's exercise of discretion.

The Court of Appeal's decision to uphold the grant of an interim injunction in this case is important and we may expect to see more applications for interim injunctions, particularly in pharmaceutical matters, in the coming months.

If you would like to discuss matters contained in this case, please contact Nick Beckett at [email protected] or on +44 (0)20 7367 2490.