Preliminary injunctions available despite first instance invalidity finding

The UK Court of Appeal has reversed an earlier decision of the High Court and granted Novartis a preliminary injunction against Hospira, preventing sales of generic zoledronic acid for treating osteoporosis ([2013] EWCA Civ 583). The decision provides precedent for the granting of a preliminary injunction in respect of a UK patent which is under appeal, notwithstanding the patent previously being held invalid in first instance proceedings. This most recent development will therefore be welcomed by pharmaceutical innovators. 

Facts
The facts were as follows:

• Two Novartis patents relating to the use of the bisphosphonate osteoporosis drug zoledronic acid (Aclasta®) were invalidated by the High Court during revocation proceedings in February 2013.
• At the end of April 2013, after having obtained permission to appeal the decision of invalidity, Novartis brought infringement proceedings and applied for a preliminary injunction against Hospira.
• The preliminary injunction application was initially dismissed by the High Court, but this decision was reversed a few days later on 22nd May 2013 by the Court of Appeal, despite the invalidity decision regarding the patents.
• Hospira was injuncted from launching its generic zoledronic acid product at least until a final decision on the validity of the patents was handed down by the Court of Appeal.

First instance decision on validity
Hospira’s attempt to clear the way showed early promise at the High Court, which held that both of Novartis’s patents were not entitled to priority and that they therefore lacked novelty over an intervening disclosure. The patents were also held to be invalid for insufficiency. The judgment contained reasoning on the interpretation and validity of medical-use claims which came as a surprise to some observers. Therefore, practitioners are eagerly awaiting the views of the Court of Appeal on the High Court judgment.

First instance preliminary injunction decision
Despite the invalidity decision, it was possible for Novartis to apply for a preliminary injunction because it had started appeal proceedings to reverse the High Court's decision. The possibility that Novartis would prevail on appeal and that the patents would ultimately be held valid was sufficient basis for the preliminary injunction application.

However, Hospira received more good news when the High Court refused to grant the preliminary injunction. Hospira successfully argued that the earlier invalidity decision represented a “clear view on the merits” which should be taken into account in deciding that the balance of justice was in its favour (ie, that it would suffer greater unquantifiable damage if the preliminary injunction was granted than Novartis would suffer it was not granted).

The High Court agreed, considering that the position before the invalidity trial could not be equated to that after it.  Now that the patents had been held invalid, Novartis should face a higher threshold on the prospects of it succeeding on appeal. The court appeared to consider that it counted against Novartis that it could not show anything more than a “real prospect of success” on appeal, as underlined by the judge’s view that he would probably have granted the preliminary injunction had Novartis applied for it before the invalidity trial.

Court of Appeal decision
The Court of Appeal disagreed with the High Court, holding that Novartis should not have been penalised by the earlier invalidity decision. According to the Court of Appeal, once it had been established that Novartis’s appeal had at least a “real prospect of success”, it was not useful to quantify that prospect and attempt to give weight to it in assessing the balance of justice. 

In finding for Novartis, the Court of Appeal agreed with the statement of the High Court judge that, had Hospira tried to launch its product before the invalidity trial, Novartis would likely have been granted the preliminary injunction. However, the Court of Appeal held the situation to be the same after the invalidity trial because the unquantifiable damage to Novartis (the immediate downward price erosion in the period until the appeal trial) outweighed the damage to Hospira (loss of “first mover” advantage).

Interestingly, Hospira’s argument that Novartis could avoid loss of market share without cutting the price of its branded product, by diverting sales to its generics arm, Sandoz, was not considered to be persuasive by the Court of Appeal. The fact was that the market would become accustomed to lower prices (whether as a result of generic sales by Sandoz or by third parties such as Hospira) and restoring the monopoly position would, if possible at all, be accompanied by harm of other kinds for Novartis (eg, loss of reputation). 

A further argument by Hospira that it was unreasonable for generic manufacturers to start proceedings so far in advance of the intended launch as to be able to obtain a final judgment (including any appeal) was rejected by the Court of Appeal. According to the court, it was not unreasonable to expect generic manufacturers to plan on the basis that there would be an appeal, as appeals are the norm, rather than the exception, in disputes between pharmaceutical companies.

Comment
Innovators will be encouraged by this ruling, which shows that preliminary injunctions in the United Kingdom are not barred solely by an adverse finding in first instance proceedings on validity. The decision highlights that the onus still firmly remains with generic manufacturers to clear the way before launching their products. The Court of Appeal sounded this warning:

"The way to market for a generic manufacturer is not clear until all arguable objections from the patentee have been eliminated.  If the generic manufacturer allows the trial of the action at first instance to coincide with the intended launch date, he runs the risk that a successful appeal could get in the way, even if judgment at first instance is given in his favour.”