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Patent interlocutory injunctions - Infringers beware!

Date: 29 January 2010
Author: Article written by Rachel Garcia, formerly a Senior Associate with FB Rice
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Abbott GmbH & Co. KG v Apotex Pty Ltd (2009) FCA 1366

Key Points

  • There is a growing trend for the Federal Court to grant interlocutory injunctions in patent cases. 
  • Where a prima facie case of infringement is made by the patentee, the Court is more likely to restrain the alleged infringer from selling the alleged infringing goods.
  • Potential infringers should consider either obtaining a declaration of non-infringement or commencing an action to revoke a patent before engaging in any potentially infringing actions.
  • Patentees should consider taking action early to make others aware of the existence of a patent as this is likely to factor into the Court's consideration of the balance of convenience.

Interlocutory injunctions - Court Determination

The issues that are addressed by a Court in any application for interlocutory injunction include:

  • whether there is a serious question to be tried;
  • whether the applicant will suffer irreparable harm, for which damages will not be adequate compensation, unless an injunction will be granted; and
  • whether the balance of convenience favours the granting of an injunction.

The Beecham position

In addressing the issues in patent cases, Courts have previously adopted the "Beecham position".  In Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. [1968] HCA 1; (1968) 118 CLR 618 ("Beecham") the High Court placed significant weight on the validity of the patent. There was an onus on the patentee to make a prima facie case of infringement and to defend the validity of the patent before an injunction would be granted. This meant that the Courts were generally reluctant to grant interlocutory injunctions in cases where a counter claim for invalidity was made.

Growing Trend

This is no longer the case. In 2009 the same principles for determining an application for injunction have been applied but without qualifications of the kind referred to in Beecham. Greater consideration has been taken of the adequacy of damages and the balance of convenience.  This is well illustrated in Abbott GmbH & Co. KG v Apotex Pty Ltd [2009] FCA 1366, which was handed down by the Federal Court on 20 November 2009.

Abbott GmbH & Co. KG v Apotex Pty Ltd [2009] FCA 1366

Background

Abbott GmbH & Co. KG is the patentee of Australian Patent No 601167, due to expire on 11 December 2011. The claimed invention relates to a pharmaceutical compound referred to in this case as "sibutriamine hydrochloride monohydrate". Abbott Australasia Pty Ltd is the exclusive licensee of the patent and sells a weight loss drug under the trade mark "REDUCTIL" containing sibutriamine hydrochloride monohydrate.

Infringement

On 2 November 2009, Abbott GmbH Co KG and Abbott Australasia Pty Ltd ("Abbott") commenced proceedings in the Federal Court alleging that the respondent Apotex Pty Ltd ("Apotex") was about to infringe the patent. Jessup J. was required to determine if it was appropriate for an interlocutary injunction to restrain Apotex from selling its own generic weight loss drug in which the active ingredient was said (by Abbott) to be sibutriamine hydrochloride monohydrate. Unless restrained, Apotex proposed to manufacture and to market the generic drug from 21 November 2009.

Serious question to be tried

In coming to his finding Jessup J foreshadowed that the focus of his inquiry would revolve around both the adequacy of damages as a remedy and the balance of convenience but not the question of validity of the patent:

As to the first inquiry, "it is sufficient that the [applicants] show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.": ABC v O'Neill at 82[65] [2006] HCA 46; (2006) 227 CLR 57. In a patent case which involves a challenge to validity by way of defence -

"unless the case for invalidity is sufficiently strong (at the provisional level) to qualify the conclusion that, overall, the applicant has a serious question, or a probability of success, the court should move to consider the adequacy of damages, the balance of convenience and other discretionary matters. It is the applicant's title to interlocutory relief which is under consideration, and the bottom-line question, as it were, is whether the applicant has a serious question, or a probability of success, not whether the respondent does in relation to some point of defence raised or foreshadowed."

Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1498; (2008) 79 IPR 261, 267. It was common ground that I should take this approach in the present case

On consideration of the evidence Jessup J ruled that the prima facie case of infringement had been made. He also ruled that there was a prima facie case for invalidity which needed to be considered further.  This did not, however, undermine the case on infringement.

Damages

Apotex submitted that it would be possible to measure with accuracy the sales lost to Abbott as a result of the presence on the market of the alleged infringing generic drug. Abbott contended that damages would not be an adequate remedy.

In concluding that damages would not be an adequate remedy for Abbott, Jessup J found that the suggestion that accurate records could be kept was true but ultimately too simplistic and too optimistic. Other factors for which damages could not readily be calculated, must be considered, including for example changes to markets, sales forces and marketing exercises. Jessup J noted that should Apotex be allowed to sell its product, the market confronting REDUCTIL would alter significantly.

Balance of convenience

The Court turned to consideration of the balance of convenience. Jessup J took considerable interest in Apotex's awareness of the patent and its conscious decision to proceed to launch a generic product without making a timely challenge to the validity of the patent in suit. Jessup J stated:

It then becomes relevant and quite possibly critical, that the respondent knew of the patent in suit, and (I infer) of its potential to stand in the way of its commercial plans, as much as a year ago. Yet no challenge was made to the validity of the patent until the applicants were on the threshold of losing the added protection  of patent No 633529. Standing alone this would account to an important discretionary consideration in favour of granting the relief which the applicants seek. ......

This consideration of the infringer's actions was also taken in Medrad Inc v Alpine Medical Pty Ltd [2009] FCA 949.

Conclusion

Recent decisions indicate that in circumstances where a prima facie case of infringement exists, the likely success of applications for injunctive relief has improved.

The issue of damages and conduct of the infringer are likely to be considered in detail. In 2009 there were several cases relating to pharmaceuticals, medical products and IT products in which the judges concluded that damages were not adequate compensation.  Further, the willingness of potential infringers to proceed with commercial plans despite knowledge of a patent that may stand in the way of those plans was viewed with some criticism.

If you would like any assistance with your patent issues, please contact a member of the Chemistry team.
 
This Newsletter is for the general information of our clients. Its contents are not a complete statement of the law on any subject. Professional advice should be sought before any course of action is pursued.
Tags:  patent interlocutory injunctions
 
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