A number of Federal Court decisions from 2019 suggest that the balance may be shifting away from originators in the battle for interlocutory injunctions in pharmaceutical patent matters.
The decision by Justice Jagot in Sigma Pharmaceuticals v Wyeth[1] is significant. It is the first time the Court has considered the compensation to be awarded pursuant to undertakings given, as the price of the grant of an interlocutory injunction restraining infringement of a pharmaceutical patent. This decision has implications not only for the assessment damages resulting from the grant of an interlocutory injunction, but for the granting of such injunctions more generally.
The judgment was delivered in October 2018, following many years of skirmishes in the Federal Court between the parties in relation to the extended-release formulation of venlafaxine (Efexor-XR®).
Background
In 2009, Wyeth (now a subsidiary of Pfizer) sought interlocutory injunctions restraining three pharmaceutical companies from marketing and supply generic venlafaxine in Australia. As is usually the case, a condition of granting the interlocutory injunction was that Wyeth gave the Court an undertaking as to damages which might be caused by the operation of a wrongly-granted injunction. Pursuant to the Court’s Usual Undertaking as to Damages Practice Note (GPN-UNDR), Wyeth was required to give an undertaking:
(a) to submit to such order (if any) as the Court may consider to be just for the payment of compensation, (to be assessed by the Court or as it may direct), to any person, (whether or not that person is a party), affected by the operation of the order or undertaking or any continuation (with or without variation) of the order or undertaking; and
(b) to pay the compensation referred to in (a) to the person affected by the operation of the order or undertaking.
The Court’s interlocutory decision was confirmed in 2010 and final injunctions were granted. However, the decision was overturned on appeal with the Full Court holding the patent invalid.
As a result, a total of six claimants sought compensation pursuant to the undertakings. These included the pharmaceutical companies subject to the injunctions, Sigma, Alphapharm and Generic Health, as well as non-parties, Alembic and Pharmathen – manufacturers and suppliers of generic venlafaxine products to the generics. The Commonwealth also sought compensation, but settled its claim before judgment.
The Decision
After six years, culminating in a six week trial, Justice Jagot concluded that compensation would be paid to each claimant on the basis that they had been adversely affected by the operation of one or more of the interlocutory injunctions. In short, each claimant had suffered loss as a result of the generic pharmaceutical companies being wrongly restrained from supplying generic venlafaxine.
The judgment confirmed that non-parties may be entitled to compensation under an undertaking as to damages, provided they can prove they were adversely affected and that the losses were reasonably foreseeable at the time the injunction was granted.
Following the costly, lengthy and complex damages case, Justice Jagot observed at [1336] that:
“It is difficult to imagine that when Sundberg J and then I granted the interlocutory injunctions in 2009 we anticipated that if those injunctions turned out to be wrongly granted, the resulting exercise would bear any resemblance to this one. Hindsight makes one thing certain. Knowing what has occurred, it could never have been concluded, for example, that insofar as relevant to the balance of convenience it would be easier for the generics to prove their loss if the interlocutory injunctions were wrongly granted than for Wyeth to prove its loss if the interlocutory injunctions were withheld and the method patent was valid.”
The difficulty in calculating harm caused by an interlocutory injunction wrongly granted has become a factor in a number of subsequent decisions. Justice Jagot continued on this thread in H. Lundbeck A/S v Sandoz Pty Ltd[2], noting in relation to the assessment of damages for patent infringement “that it was far easier for Lundbeck to prove the value of its loss on the basis of the generics having entered the market than it was for the generics in Sigma to prove the value of their loss on the basis that they were wrongfully held out of the market”.
Perhaps more tellingly, in Sanofi-Aventis v Alphapharm[3], Justice Burley refused an application by Sanofi-Aventis for an interlocutory injunction against Alphapharm to restrain its launch of Semglee insulin product (a biosimilar to Sanofi-Aventis’ Lantus SoloStar). His Honour held that Alphapharm was likely to suffer significant harm that would not be easily compensated if an interlocutory injunction was granted. The decision repeatedly referenced Jagot J’s comments in Sigma noting that the calculation of the harm suffered by Alphapharm was more difficult than for Sanofi-Aventis. An application for leave to appeal from Justice Burley’s refusal to grant the interlocutory injunction was rejected.
Conclusion
Given the pricing consequences under the Pharmaceutical
Benefits Scheme, patentees in Australia have largely been successful in
obtaining interlocutory injunctions against generics. However, these recent
decisions suggest that the difficult task of calculating damages caused by
wrongly granted interlocutory injunctions may be shifting the balance of
convenience against originators seeking to restrain the launch of generic or
biosimilar products in Australia.
[1] Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2018] FCA 1556
[2] H. Lundbeck A/S v Sandoz Pty Ltd [2018] FCA 1797
[3] Sanofi-Aventis Deutschland GmbH v Alphapharm Pty Ltd (No 3) [2018] FCA 2060