Patent interim injunctions, clearing the way and patent strategy

There’s a common strategic issue for generic pharmaceuticla manufacturers as to whether they should obtain a win in court before launching their product. The risks are (a) an injunction and (b) accumulated damages if the generic decides to wait and see what the innovator company will do. The issue is not unique to the pharmaceutical industry, but the pressure is a little more acute because of the absolute monopoly in the product enjoyed by the innovator company just prior to the first generic launch.

In some jurisdictions, most notably the UK, a line of authorities has sprung up which requires the generic company to either obtain a declaration of non-infringement or revoke the patent prior to launch.

In the ongoing global Plavix litigation, the Australian Federal Court recently granted an interlocutory injunction to Sanofi stopping GenRx (now a subsidiary of Apotex) from launching until after the result at first instance – GenRx Pty Ltd v Sanofi-Aventis [2007] FCA 1485 (21 September 2007).

The judge granted the injunction even though he considered there to be a reasonably strong invalidity case. To their strategic disadvantage, GenRx waited until the day before obtaining Regulatory approval to sell the drug before commencing it’s revocation action and evidently did not (or probably could not) deny infringement. Also telling to the Judge was that Apotex had lost equivalent litigation in the US and elsewhere. Although there it’s quite likely that there will be an appeal, the reasoning is quite fact specific and unlikely to be broadly applicable.

To some this may seem like a high water mark in the well known ‘clear the way’ line of cases. However, on closer inspection, it’s evident that GenRx made a few strategic errors which wrong footed them in court. As I mentioned in a recent post, the problem for GenTx is that they are now behind the game.

In other industries such as the High Tech area, the situation can be much more complex – there is usually at least some competition for a given product (with more similarities than those of drugs used for the same indication), and more patents owned by many parties will potentially cover any given product and all of its components. In this industry, believe me, freedom to operate clearance is not as clear cut as in Pharma. As a result, it seems unlikely that a ‘clear the way’ requirement will ever apply. The most common strategy is to prepare for it, but deal with any litigation if and when it arises. In these industries, there are usually myriad other strategic moves that can be made to neutralise the threat, or turn it into an opportunity. One I wrote about in April 2006 (in the context of responses to patent ‘trolls’) is a first class surveillance program coupled with the willingness to acqiure potentially useful / relevant IP.

What would you add?

2 Comments on “Patent interim injunctions, clearing the way and patent strategy

  1. I’m not too sure about Australia, but it seems that the UK courts have previously changed their opinion on whether clearing the way is a necessity to avoid an injunction, which of course makes it very hard for the generic in deciding a strategy.  In the US it seems much clearer, launching ‘at risk’ could result in triple damages so don’t do it unless you are absolutely forced (I believe Apotex did this in the end with generic Plavix).
    One issue is that, if the first injunction is granted (regardless of the merit of the decision), other injunctions based on the same patent are almost obliged to be granted (Perindopril in the UK is an example).
    If Apotex/GenRx in this case had sought revocation earlier in the process, long before TGA authorisation, they stood a chance of opening the door to other generics whilst they didn’t have a product to launch (If the case were heard quickly, or if another party received TGA authorisation and overcame the injunction). 
    I’d be interested to hear your thoughts on whether watching another generic company undertake revocation proceedings in Australia would constitute ‘clearing the way’, or does the party upon whom the injunction is sought need to be actively involved in the revocation activity (if so, how involved?)

  2. Leighton – thanks for more great comments.On launching at risk in the US – the chances of willfulness must be pretty remote in light of In Re Seagate (see my recent post).  Which is a good thing for generic companies.UK Perindopril / injunctions for subsequent generics – this isn’t automatic.  Say, for example the first generic is relying on invalidity, but a subsequent one has a good non-infringement position – then this is clearly distinguishable and it will be harder for the court to impose the injunction (all else being equal). GenRx completing litigation too early and allowing other generics onto the market – part of the art of pharma patent litigation strategy is to change the throttle speed of the litigation and time your litigation and judgments to make the most of this.  Not always easy, but a big part of the game.  Waiting for another generic to revoke is a good strategy – provided you are happy that they will in fact run the case and win…  In the UK the strategy is to commence proceedings and join yours to the original generic company – which is frustrating for the leading generic, but can be avoided, for example with a suitably different non-infringement case (depending on which patent you’re litigating, of course).Watching someone else revoke a patent is probably unlikely to be considered ‘clearing the way’ as the company hasn’t taken positive steps itself to deal with the issue.  Having said that, if the patent is revoked, then who cares, and if it is not, then there are bigger problems.One option for a generic company who is watching another litigating a blocking patent is to not join the proceedings, but offer to provide assistance with the litigation.  The trouble is that the first generic will not cede any decision making power so that the best the second generic can do is offer a new astounding piece of prior art or something similar. 

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