15 July, 2019
Mylan Health Pty Ltd v Sun Pharma ANZ Pty Ltd (No 2) [2019] FCA 505
What you need to know
- Sun Pharma's generic fenofibrate product can now enter the market pending the outcome of Mylan's appeal against a first instance decision deciding that all claims that Sun Pharma's products were alleged to infringe were either invalid or not infringed.
- This is the first pharmaceutical patent case in Australia to address whether an interlocutory injunction should be granted to prevent generic launch pending the outcome of an appeal.
- Justice Yates held that a finding of invalidity at first instance will impact the assessment of the apparent strength of an appellant’s prima facie case of infringement, although it does not necessarily bar an injunction being obtained.
- Consistent with recent decisions, the Court held that the balance of convenience favoured the generic with his Honour concluding that it would be more difficult to calculate Sun Pharma's potential losses (and those of interested parties such as the Commonwealth and other generics) than Mylan Health's losses.
First instance decision
In April 2016, Mylan Health Pty Ltd (Mylan) commenced proceedings against Sun Pharma ANZ Pty Ltd (Sun Pharma) for infringement of three patents directed to products containing fenofibrate. On 4 May 2016, an interlocutory injunction was granted, by consent, preventing Sun Pharma from launching any generic fenofibrate product.
At first instance, Justice Nicholas revoked all asserted claims in two of Mylan's patents and two asserted claims were revoked for the remaining (expired) patent. Sun Pharma was found not to infringe the remaining asserted claims in the expired patent.
When giving judgment Justice Nicholas ordered that the interlocutory injunction be discharged despite Mylan applying for a stay of the discharge. Mylan appealed and applied for an interlocutory injunction pending the outcome of that appeal.
Interlocutory injunction application
Principles
This was the first Australian case to address whether an interlocutory injunction should be granted to prevent a generic launch pending the outcome of an appeal (although there have been decisions regarding the stay of the discharge of an injunction).
The Court applied the ordinary equitable principles pertaining to interlocutory injunctions to the appeal context, namely:
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Prima facie case: whether the applicant can demonstrate a prima facie case, such that, on the evidence, there is a probability that the applicant would succeed on appeal; and
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Balance of convenience: whether the balance of convenience favours ordering an injunction pending the outcome of the appeal. Including consideration of the likely harm to the applicant if the injunction is refused (and vice versa the harm to the respondent should the injunction be granted), the status quo, and the difficulties in assessing damages (for the applicant) and compensation (for the respondent and other affected parties).
These elements cannot be viewed in isolation. This means, for example, a very strong prima facie case may warrant a higher inconvenience to the respondent.
Prima facie case
Justice Yates was not persuaded that Mylan's appeal was "more than merely arguable". His Honour's reasoning highlights that it will be difficult to obtain an injunction in circumstances where there is a cogent first instance judgment. In particular, Justice Yates observed:
| "…after a ten day hearing, when the issues then before the Court on infringement and the validity of the patents were canvassed extensively against a considerable body of expert evidence, the primary judge came to firm views on infringement and validity after what seems to be (if I may say so) a careful analysis of the issues involved. As stated by French J in Stirling Harbour v Bunbury, the Court’s assessment of the strength of an appellant’s case, in an application such as the present one, will be influenced by the fact that there has been an adverse judgment at first instance." |
| "It is, of course, also relevant to consider how adverse that judgment is, and to appreciate the nature of the grounds of appeal that are to be relied on." |
Balance of convenience
Consistent with the recent shift in the Court's views on calculating loss, Justice Yates held that Sun Pharma's potential losses would be more difficult to calculate than Mylan's potential losses (despite Sun Pharma previously being subject to an interlocutory injunction pending the outcome of the first instance decision). In particular, the assessment of Sun Pharma's loss pursuant to the cross-undertaking, would involve the consideration of multiple counterfactuals advanced by multiple claimants (including other generics and potentially the Commonwealth). By comparison, Mylan's potential loss could be assessed by comparing the state of the market before generic entry (which is known) and is not hypothetical.
His Honour recognised that this conclusion was a departure from the longstanding position of the Court. He stated:
| "…the recent experience of the Court has demonstrated that, whatever general views might have been held in the past about the difficulty of that task compared with the task of assessing damages for infringement, the calculation of compensation under an undertaking as to damages can impose burdens and raise uncertainties that are far greater than the burdens and uncertainties involved in assessing damages for infringement." |
Key takeaways
Where an applicant is unsuccessful following a cogent first instance judgment, obtaining a further interlocutory injunction pending the outcome of the appeal may be challenging.
Moreover, as reported in our 4 March 2019 IP@Ashurst Update here, the Court appears to have shifted its position on the balance of convenience in pharmaceutical patent cases. This case represents yet another instance where the Court has concluded that the difficulties of calculating the generic party's losses outweighed the difficulties in calculating the innovator's loss.
This continues to be an area to watch in future pharmaceutical patent interlocutory injunction applications.
Ashurst acted for Sun Pharma in the proceedings.
For further information, please contact:
Nina Fitzgerald, Partner, Ashurst
nina.fitzgerald@ashurst.com
