Court of Appeal grants interlocutory injunction to patent holder against generic drug launch pending full trial.

THE COURT OF APPEAL

Neutral Citation Number: [2018] IECA 177

Record No. 2018/166

Peart J.

Hogan J.

Whelan J.

BETWEEN/

MERCK SHARP & DOHME CORP.

PLAINTIFF/

APPLICANT

- AND -

CLONMEL HEALTHCARE LIMITED

DEFENDANT/

RESPONDENT

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 12th day of June 2018

1. The background to this appeal has been fully set out in the judgment which Peart J. has just delivered and in the judgment which

Whelan J. is about to deliver. I gratefully adopt their summary of the complex factual background to these proceedings. Since,

however, I have concluded that the plaintiff/appellant, Merck, Sharp & Dohme (“Merck”), is entitled to the interlocutory relief which it

seeks and that damages would not be an adequate remedy for this purpose, I feel accordingly obliged to dissent from the conclusions

of the majority of the Court.

The background facts

2. As Peart J. has noted in his judgment, Merck was the holder of Irish patent No. 0 720 599 (“the 599 patent”) which expired on the

14th September 2014. This patent covered ezetimebe (which is the generic name of the active ingredient in Inergy® and, as it

happens, other Merck products), as well as the combination of ezetimebe and simvastatin. The patented product is designed to deal

with high levels of cholesterol in the blood stream and elevated levels of cholesterol are, of course, the main cause of cardiovascular

disease. This combination allows for reduced doses of the cholesterol-reducing statins and, accordingly, has – or so it is claimed -

added benefits for the user.

3. Although the main patent has expired, Merck’s exclusive rights in relation to products containing ezetimebe as an active ingredient

were extended to the 16th April 2018 by a Supplementary Protection Certificate 2003/014 (“the 2003 SPC”). Neither this patent nor

the 2003 SPC are at issue in this appeal.

4. What is, however, at issue is the claim by Merck that its exclusive rights in respect of products containing ezetimebe in

combination with simvastatin (Inegy®) have been further extended until 1st April 2019 by the grant of Supplemental Protection

Certificate No. 2005/2001 (“the 2005 SPC”). The defendant in these proceedings, Clonmel Healthcare Ltd. (“Clonmel”), is a generic

manufacturer of pharmaceutical products and it has challenged the validity of the 2005 SPC by way of defence to the present patent

infringement proceedings. It maintains that as the 2005 SPC is not valid, its own launch of its rival generic product upon the

expiration of the 2003 SPC on the 16th April 2018 infringes no subsisting intellectual property right of Merck. It is perhaps worth

noting the invalidity of the 2005 SPC appears to have been first asserted by Clonmel on 12th April 2018 in pre-action correspondence

just as its own generic product was about to be launched. It is clear that both parties have raised fair questions and weights

arguments both in favour of and against the validity of the SPC.

5. This entire case turns, therefore, on the validity of the 2005 SPC. If that SPC is invalid, then it is clear that Merck has no right to

seek an injunction. Conversely, if the SPC is valid, then the actions of Clonmel amount to a clear patent infringement. I will turn

presently to a consideration of this issue.

Whether damages are an adequate remedy for Merck

6. In assessing the question of whether damages represent an adequate remedy for Merck, there are, to my mind, a number of

pressing considerations.

7. First, as both Peart and Whelan JJ. have noted in their respective judgments, part of the acute difficulty in this case is the speed

with which these proceedings must of necessity be disposed of. It is entirely accepted that Merck’s intellectual property rights will

expire on 1st April 2019 at the very latest and, of course, Clonmel maintain that they already have so expired. As Whelan J. points

out in the judgment she is about to deliver, it is, unfortunately, almost impossible to see how complex patent litigation of this kind can

be litigated to finality within this short period of time. In these circumstances, one is obliged to conclude that the grant or refusal of

the interlocutory relief will in substance dispose of the proceedings, subject only to the question of damages. The very fact that this

is so is one important critically important reason why the traditional Campus Oil rules (Campus Oil Ltd. v. Minister for Industry and

Energy (No.2)) [1983] I.R. 88) cannot be applied in the present case without, at least, some considerable qualification.

8. A second consideration is that the 2005 SPC was granted by the Patent Office on the 24th August 2005 following an application by

Merck on 21 January 2005. While it is true that the grant of the SPC can be – and is – challenged in purely inter partes proceedings in

which the Controller of Patents, Designs and Trade Marks is not a necessary party (or even a legitimus contradictor), this can

nonetheless not take from the fact that the grant of the SPC enjoys a presumption of validity. To that extent, therefore, the onus is

on Clonmel to show that the SPC ought not have to have been granted.

9. The third consideration is that an SPC is an intellectual property right which is very closely akin to that of the basic patent itself.

As Article 5 of Regulation (EC) No. 469/2009 concerning the supplementary protection certificate for medicinal products provides, the

SPC “shall confer the same rights as conferred by the basic patent and shall be subject to the same obligations and the same

limitations.” Under our own national procedural system, an intellectual property right is a property right which enjoys constitutional

protection: see Phonographic Performance Ltd. v. Cody [1994] 2 I.L.R.M. 241, 247, per Keane J. It follows, accordingly, that the

courts are obliged, in line with the obligations imposed by Article 40.3.2 of the Constitution to defend and vindicate that right by

supplying an effective remedy for that purpose: see, e.g., Albion Properties Ltd. v. Moonblast Ltd. [2011] IEHC 107, [2011] 3 I.R.

563; Wallace v. Irish Aviation Authority [2012] IEHC 178.

10. To my mind, two consequences flow from this. First, where an established property right – such as an intellectual property right –

has been infringed, that holder is prima facie entitled to an injunction to restrain such an infringement. As I put the matter in Herrera

v. Garda Commissioner [2013] IEHC 311 – in the admittedly very different context of whether the Gardaí had the power to detain the

plaintiff’s passport -

“In the present case, therefore, the first question therefore is whether the defendants can show that they have any

potentially sustainable defence to the plaintiff’s action. For this purpose, the defendants, having admitted custody of the

plaintiff’s passport and that they have refused to return it, would have to show at least some arguable defence to the

plaintiff’s claim based on statute or common law. No such defence has been advanced or has even been suggested.

In these circumstances, the plaintiff’s entitlement to a mandatory interlocutory injunction is all but unarguable. If, for

example, A borrows B’s motor vehicle and then refuses to return it when called upon by B to do so, it would be little

comfort to B to be told that the courts very rarely granted interlocutory mandatory relief or that B would have an

adequate remedy in damages for which A was a mark. In such circumstances it would be the plain duty of this Court to

order the immediate return of the vehicle unless A could set up some potentially plausible defence.

Indeed, it was in this vein that, as I have previously observed, Article 40.3.2 obliges the courts to secure litigants an

effective remedy to vindicate their constitutional rights to persons and property and not simply to afford a remedy which

is purely theoretical or illusory in character: see, e.g., Albion Properties Ltd. v. Moonblast Ltd. [2011] IEHC 107; Wallace

v. Irish Aviation Authority [2012] IEHC 178. This is especially so where the grant of injunctive relief is necessary to secure

to the plaintiff a core constitutional right and where the refusal of relief could prejudicially hinder the exercise of that

right. In these circumstances the courts cannot be beguiled by legal formalism or corralled into the unthinking and

uncritical application of rules governing the grant of interlocutory relief without taking proper account of these factors.”

11. I do not, of course, say that an intellectual property right is on that account inviolable or that other factors – including, as

Whelan J. notes, the public interest – cannot ever properly come into the reckoning in considering an application for an interlocutory

injunction. I nevertheless take the view that, generally speaking, a clear infringement of an established intellectual property right such

as a patent or an SPC must be restrained by injunction if the courts are to remain faithful to their constitutional obligation as imposed

by Article 40.3.2 to respect and vindicate the property rights of every citizen. It is no answer in a case of this kind to say that the

fact that the patent infringer is prepared to pay damages and is also a mark for such damages is a ground for not granting an

interlocutory injunction in the first place. If that were indeed the law, then the courts would, I think, be failing in the constitutional

obligation of which I have just spoken. Insofar as Kelly J. held to the contrary in his judgment in Smithkline Beecham plc v. Genthon

BV, High Court, 28 February 2003 on that point I consider that, with respect, that decision was incorrect and should not be followed.

12. The second consequence is that, yet again, these considerations mean that the Campus Oil rules cannot be applied in some

formalistic, unyielding fashion in the special case of an interlocutory injunction application of this kind.

13. One might equally add that the same conclusion is reached if this matter is viewed through the prism of EU law. By granting an

SPC the State is “implementing” union law for the purposes of Article 51(1) of the EU Charter of Fundamental Rights and Freedoms

since it is clearly acting pursuant to the terms of a power conferred by a Union legislative instrument. Article 17(2) of the Charter

provides that intellectual property rights “shall be protected” and Article 47(1) provides that: “Everyone whose rights and freedoms

guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the

conditions laid down in this Article.”

14. It follows, therefore, that if Merck’s SPC is valid, then as a right which must be protected (Article 17(2) of the Charter), this

State is therefore obliged – just as is ordained by the strikingly similar provisions of Article 40.3.2 of the Constitution - to secure an

effective remedy for that violation (Article 47(1) of the Charter).

15. Over and above all of this it is clear that Clonmel will be able to launch at a huge price advantage to Merck and the evidence

overwhelmingly suggests that Merck will in practice be excluded from the market as a result of these enormous price drops. I do not

doubt but that the existence of an SPC extending the lifetime of the patent has enabled Merck to charge super-normal monopoly

profits in respect of this medicinal product, often at the expense of either the consumer or, in the context of a public health care

system, the taxpayer. But then again no one has ever suggested that pharmaceutical companies are guided by the precepts of the

Sermon on the Mount.

16. The fact remains, however, is that the Union legislator has elected to provide for this system of supplementary patent protection.

It has, furthermore, specifically provided for the SPC system in the case of medicinal products, precisely because as recitals 2, 3 and

4 of the 2009 Regulation expressly recognise:

“(2) Pharmaceutical research plays a decisive role in the continuing improvement in public health.

(3) Medicinal products, especially those that are the result of long, costly research will not continue to be developed in

the Community and in Europe unless they are covered by favourable rules that provide for sufficient protection to

encourage such research.

(4) At the moment, the period that elapses between the filing of an application for a patent for a new medicinal product

and authorisation to place the medicinal product on the market makes the period of effective protection under the patent

insufficient to cover the investment put into the research.

(5) This situation leads to a lack of protection which penalises pharmaceutical research.”

17. It is, accordingly, the courts’ duty to give effect to and to uphold Merck’s SPC, assuming, of course, that it is valid in the first

instance.

Has there been a clear infringement of an established intellectual property right

18. All of this presupposes, of course, that Merck has established a clear infringement of an established intellectual property right. As

to the first requirement there can, I suggest, be little doubt and, indeed, it was not really disputed, but that the launch by Clonmel of

its generic rival on 16 April 2018 would amount to a clear infringement of the Merck SPC, assuming, that is, that the SPC is itself valid.

19. As I have already stated, everything ultimately turns, therefore, on the question of whether the 2005 SPC is valid. For all the

reasons I have just mentioned – and not least the facts that the SPC is close to its expiry date so that its validity cannot be

meaningfully litigated to conclusion following a full hearing with appropriate evidence; that both sides have raised a fair arguable case

as to the validity of the SPC and, assuming the validity of the SPC, damages would not be an adequate remedy for Merck – the

ordinary Campus Oil principles cannot be meaningfully applied with at least some modifications. As Clarke J. noted in Okunade v.

Minister for Justice, Equality and Law Reform [2012] IESC 49, [2012] 3 I.R. 152, there are certain categories of cases where “a

refinement of what might be described as the ‘pure’ Campus Oil test has evolved.” Clarke J. then went on to say that some examples:

“are illustrative of the fact that such refinements and variations can be seen as a response to the need to minimise the

risk of injustice in the context of the particular types of issues which are likely to arise in special cases”

20. In the present case, the risk of injustice is inherently tied up with the issue of the validity of the SPC. There is, unfortunately, no

escaping the fact that in these special circumstances this Court is required to form a view - however tentative and provisional - on

this substantive issue, even though it is one of some considerable complexity and difficulty. Given the special and particular facts of

the present case, it will not do simply to state that both sides can raise a fair question to be tried as to both the validity (Merck) and

the invalidity (Clonmel) of the SPC.

21. Circumstances, urgency and the passage of time accordingly has obliged the Court to form a view on this question, even though

the absence of an oral hearing and the presence of expert evidence from both sides has made this task even more difficult than would

usually have been the case. It is clear that the 599 patent contained at least one and possibly two separate inventions. The first was

the provision of novel active substances for the treatment of atherosclerosis, namely, hydroxy-substituted azetidinones such as

ezetimebe. The second invention which is alleged by Merck – and disputed by Clonmel - was the novel combination of these active

substances with cholesterol biosynthesis inhibitors such as statins.

22. The 2004 SPC covered the first invention, namely, ezetimebe. The 2005 SPC covered the alleged second invention consisting of a

combination of ezetimebe/simvastatin. Quite obviously that 2005 SPC – assuming, again, that it is valid – only grants patent

protection in respect of that combination of ezetimebe/simvastatin. As Mr. Gerard Brennan, a company executive of Merck, explained

in his affidavit, this combination

“enabled the reduction of cholesterol values over and above what is possible through treatment with statins alone. It also

solved the problem that the use of statins could trigger side effects and intolerances. Thanks to the combination with

novel active substances such as ezetimibe, it was in fact possible to reduce the quantity of statin administered to the

patient and thereby achieve the same or ever better results with regard to the reduction of cholesterol values.”

23. This view has also been confirmed by an opinion supplied by a Prosessor Assmann, a retired professor of laboratory medicine at

the University of Muenster, in Germany, with particular specialities in these areas. Professor Assmann stated that at the priority date

of the 599 patent, it was not common practice to administer more than one of the these agents to patients due to the risk of side

effects. He further stated, however, that a combination therapy makes it possible to achieve a 10% to 20% greater reduction in

cholesterol levels in the blood than is possible in treatment with the maximum dose of the statin.

24. Professor Assmann further referred to the fact that proof that the combination of ezetimibe with a statin such as simvastatin is

superior to statin mono-therapy was only provided as recently as 2015 with the publication of what is described as the “IMPROVE - IT

Study” in the New England Journal of Medicine. While Clonmel naturally dispute the suggestion that the combination did represent a

core invention of the 599 Patent, what, then, is the legal position if Professor Assmann’s opinion were to be accepted at a full

hearing?

Article 1 and Article 3 of the 2009 Regulation

25. Article 1 of the 2009 Regulation provides in relevant part that:

“(a) ‘medicinal product’ means any substance or combination of substances presented for treating or preventing disease in

human beings or animals and any substance or combination of substances which may be administered to human beings or

animals with a view to making a medical diagnosis or to restoring, correcting or modifying physiological functions in

humans or in animals;

(b) ‘product’ means the active ingredient or combination of active ingredients of a medicinal product;

(c) ‘basic patent’ means a patent which protects a product as such, a process to obtain a product or an application of a

product, and which is designated by its holder for the purpose of the procedure for grant of a certificate;

(d) ‘certificate’ means the supplementary protection certificate;

(e) ‘application for an extension of the duration’ means an application for an extension of the duration of the certificate

pursuant to Article 13(3) of this Regulation and Article 36 of Regulation (EC) No 1901/2006 of the European Parliament

and of the Council of 12 December 2006 on medicinal products for paediatric use (1).”

26. Article 3 of the 2009 Regulation provides that an SPC certificate shall be granted if:

“…in the Member State in which the application referred to in Article 7 is submitted and at the date of that application:

(a) the product is protected by a basic patent in force;

(b) a valid authorisation to place the product on the market as a medicinal product has been granted….

(c) the product has not already been the subject of a certificate…

(d) the authorisation referred to in point (b) is the first authorisation to place the product on the market as a medicinal

product.”

27. It is admittedly true that the interpretation of Article 3 of the 2009 Regulation has not been without its difficulties. The real

question, however, so far as the present case is concerned is whether the “product is protected by a basic patent in force” within

the meaning of Article 3(b) of the 2009 Regulation. “Product” is defined by Article 3(1)(b) as including “a combination of active

ingredients of a medicinal product.” In Case C-31/13 Forsgren EU:C:2015:13 the Court of Justice held that the term “active

ingredient” implied substances producing a “pharmacological, immunological or metabolic action of their own.”

28. In the light of Professor Assmann’s opinion there is, therefore, at least for the purposes of the present case, a strong case to be

made on the evidence adduced before us that the SPC was granted in respect of a combination of active ingredients (namely,

ezetimebe and simvastatin) which produces pharmacological, immunological or metabolic actions of their own.

29. That, however, in itself is not enough, since it is clear from the opinion of Advocate General Wathelet in Case C-121/17 Teva

(U.K.) Ltd. v. Gilead Sciences Ltd. (at para. 87)(April 28, 2018) that the relevant active ingredients must be “specifically and precisely

identifiable on the priority date of the patent.” It may be noted that in Teva the defendant company had obtained an SPC in respect

of anti-viral medical product containing two active ingredients, namely, TD and emtricitabine, even though it was agreed that the

latter active ingredient had not been expressly named in the claims of the basic patent. Wathelet AG noted that embricitabine had

been claimed “solely through the use of completely indeterminate expressions such as ‘comprising’ and ‘optionally other therapeutic

ingredients”, terms which he thought “may cover multiple expressions that are not specifically and precisely identifiable on the priority

date of the patent.” The Advocate General accordingly concluded that “it would not have been obvious to a person skilled in the art

that the active ingredient emtricitbane was specifically and precisely identifiable in the wording of the claims of the patent.”

30. Can that be said here? The basic 599 patent contained a claim (claim 9) for ezetimebe “…in combination with a cholesterol

biosynthesis inhibitor in a pharmaceutically acceptable carrier” . Claims 16 and 17 provide:

“16. A pharmaceutical composition of claims 9, 12 or 15 wherein the cholesterol biosynthesis inhibitor is selected from the

group consisting HMG CoA reductase inhibitors, squalene synthesis inhibitors and squalene epoxidase inhibitors.

17. A pharmaceutical composition of claim 16 wherein the cholesterol biosynthesis inhibitor is selected from the group

consisting of lovastatin, fluvastatin, simvastatin, CI-981, L-659, 869, squalestatin 1 and NB-598.”

31. In contrast, therefore, to the situation in Teva it is clear an active ingredient here – simvastatin - used in combination with

ezitimebe was specifically and precisely identifiable in the original patent claim.

32. In these circumstances, unsatisfactory and all as it, I repeat that I believe that we have to choose based on the available

evidence. Applying the Advocate General’s text in Teva, I find myself obliged to conclude that as that evidence stands – and I

acknowledge that matters may change following further exploration of these complex and difficult matters at a full hearing – Clonmel

has not persuaded me that the SPC is invalid.

Conclusions

33. In summary, therefore, I have concluded:

34. First, given the special nature of a patent, damages are in themselves rarely an adequate remedy for a clearly established patent

infringement. Both Article 40.3.2 of the Constitution and Article 47 of the EU Charter of Fundamental Rights both separately and

independently require that this right be protected and, where necessary, vindicated by means of an effective remedy.

35. Second, given that the SPC is due to expire within the next nine months or so, the outcome of this application for an interlocutory

injunction is in practice likely to be dispositive of the litigation between the parties. It will be all but impossible to have the validity of

the SPC determined by the High Court following a full hearing with appropriate discovery, expert evidence etc. within this timeframe.

36. Third, in these special circumstances and given that damages are not, in my view, an adequate remedy, some modification of the

traditional “pure” Campus Oil principles is required. The later approach in Okunade requires the Court to adopt the approach of

evaluating the least possible injustice and this, to my mind, obliges us to pronounce – however – tentatively on the underlying merits

of the SPC.

37. Fourth, if the SPC is valid, then the launch by Clonmel of its generic product would amount to a clear patent infringement.

38. Fifth, applying the opinion of Wathelet A.G. in Teva, I think that there is at present evidence to suggest that an active ingredient

here – simvastatin - used in combination with ezitimebe was “specifically and precisely identifiable” in the original patent claim. This in

turn suggests to me that the SPC is more likely than not to be found to be valid at the ultimate trial of the action. If this is correct,

then this points strongly to the grant of an interlocutory injunction to restrain what would otherwise amount to a clear patent

infringement and in respect of which I consider that damages would not be an adequate remedy.

39. Sixth, applying, therefore, the Okunade approach in the special context of this case, I consider that the least injustice is then

caused by allowing the appeal and by granting Merck the interlocutory relief which it seeks.