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  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?