Merck Sharp & Dohme Corporation v Clonmel Healthcare Ltd

• Jurisdiction: Ireland
• Judge: O'Donnell J.
• Judgment Date: 31 July 2019
• Neutral Citation: [2019] IESC 65
• Docket Number: [S:AP:IE:2018:000107],[S.C. No. 107 of 2018]
• Court: Supreme Court
• Date: 31 July 2019

Between/

Merck Sharp

&

Dohme Corporation

Plaintiff/Appellant

AND

Clonmel Healthcare Limited

Defendant/Respondent

[2019] IESC 65

O'Donnell Donal J.

Clarke C.J.

O'Donnell Donal J.

McKechnie J.

Dunne J.

O'Malley Iseult J.

[S:AP:IE:2018:000107]

AN CHÚIRT UACHTARACH

THE SUPREME COURT

Interlocutory injunction – Supplementary Protection Certificate – Infringement – Appellant seeking an interlocutory injunction restraining the infringement by the respondent of a Supplementary Protection Certificate – Whether the respondent’s case had that degree of strength which would outweigh the factors in favour of the grant of injunction

Facts: The appellant, Merck Sharp & Dohme Corporation, appealed to the Supreme Court against the decision of the Court of Appeal (Peart and Whelan JJ, Hogan J dissenting) upholding the judgment of the High Court (Haughton J) refusing an interlocutory injunction restraining the infringement by the respondent, Clonmel Healthcare Limited, of a Supplementary Protection Certificate, which itself had expired before the hearing of this appeal.

Held by O’Donnell J that Clonmel’s case had not been shown to have that degree of strength which would outweigh the factors in favour of the grant of injunction. Accordingly, O’Donnell J considered that if the case was considered as of April 2018, then an interlocutory injunction ought to have been granted, subject to the Merck’s undertaking in respect of damages, and a direction for a speedy trial on the issue of validity.

O’Donnell J held that if the matter was still live, he would allow the appeal against the orders of the High Court and the Court of Appeal and grant an interlocutory injunction pending the hearing. In the circumstances of this appeal, however, O’Donnell J held that it was sufficient simply to allow the appeal.

Appeal allowed.

Judgment of O'Donnell J. delivered the 31st day of July, 2019.

Introduction

1 The appellant, Merck Sharp & Dohme Corporation (‘Merck’), appeals against the decision of the Court of Appeal (Peart and Whelan JJ., Hogan J. dissenting) upholding the judgment of the High Court (Haughton J.) refusing an interlocutory injunction restraining the infringement by the respondent, Clonmel Healthcare Limited (‘Clonmel’), of a Supplementary Protection Certificate (‘S.P.C.’), which itself had expired before the hearing of this appeal. As such, it might appear to be a matter of, at best, academic interest, and then only to the specialist. However, this appeal raises important questions as to the proper approach to the application for an interlocutory injunction, which is an important remedy in many different disputes.

Facts

2 Merck (or its corporate parent), was the holder of a number of patents and S.P.C.s which are relevant to these proceedings. The earliest relevant patent was European Patent No. 0 033 538 (‘the 538 patent’) relating to simvastatin, a statin for the treatment of cholesterol. The patent was filed in 1981 and an S.P.C. obtained, which expired in turn in May 2003. Merck (or its corporate parent) is also the proprietor of European Patent No. 0 720 599 (‘the 599 patent’) which, it is agreed, covered the active ingredient ezetimibe. The 599 patent expired on 14 September 2014. S.P.C. No. 2003/014 was granted in 2003 (‘the 014 S.P.C.’) in respect of ezetimibe, which itself expired on 16 April 2018.

3 Merck marketed both simvastatin and ezetimibe as monotherapies, but these proceedings concern a product marketed under the name Inegy, which was a combination of the two, and which it is accepted had greater therapeutic effect in the reduction of cholesterol. Merck maintained, and still maintains, that the combination was covered by the 599 patent, and, accordingly, obtained a separate S.P.C. No. 2005/2001 (‘the 001 S.P.C.’). The 001 S.P.C. was due to expire, in turn, on 1 April 2019. This case concerns the window period between the expiry of the 014 S.P.C. on 16 April 2018 and the expiry of the contested 001 S.P.C. on 1 April 2019. Clonmel does not dispute that Inegy was protected by the 599 patent and by the 014 S.P.C., since it contained the active ingredient ezetimibe, but argues that the 001 S.P.C. is invalid. Accordingly, it argues that it was entitled to launch a generic competitor to Inegy, which it did on 17 April 2018, the day after the expiry of the 014 S.P.C. There had been some correspondence between the parties” lawyers in Ireland culminating with Clonmel's solicitors notifying Merck's lawyers of the launch of its generic competitor and maintaining that ‘the balance of convenience clearly lies with our client and damages will fully compensate your client should an infringement be found to have occurred (which infringement is denied)’.

4 The High Court (McGovern J.) granted an interim injunction on the ex parte application by Merck, but Haughton J. refused the application for an interlocutory injunction. The Court of Appeal, by a majority, upheld that decision (see [2018] IECA 177). There was, however, a significant difference in approach between the different judgments. Haughton J. had considered that damages were an adequate remedy for Merck in the event that it succeeded in establishing the validity of the 001 S.P.C., and consequently an infringement, and, therefore, it was not necessary to go further and consider any question of the balance of convenience (including whether damages would have been an adequate remedy for Clonmel). In the Court of Appeal, Peart J. considered that damages would be an adequate remedy for Merck but would not adequately compensate Clonmel on the assumption that it was restrained by an injunction pending trial, but nevertheless succeeded at the trial. He considered that Clonmel would lose its first mover advantage and an opportunity to become the ‘incumbent generic’ on the expiry of the monopoly. Whelan J., for her part, considered that the case should be approached on the basis that the grant of the injunction at the interlocutory stage would dispose of the case as a whole. Relying on the decision of this court in Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450, she held that that the damages Merck might suffer in the event that an injunction was refused and the challenge to the validity of the 001 S.P.C. was rejected were nevertheless pre-eminently a commercial loss, since the 001 S.P.C. was so close to expiration. On the other hand, she considered that Clonmel, in the event that it was restrained by injunction but nevertheless succeeded at trial, would lose the benefit of the first mover advantage and its standing as the market leader in the critical post-monopoly stage, which was something that could not be adequately compensated for by damages. Hogan J. (dissenting), for his part, laid emphasis on the nature of the property right at issue, and considered that damages were not an adequate remedy for a breach of that right in the event that it was determined that the 001 S.P.C. was valid. In the circumstances, he considered that some modification of the test in Campus Oil v. The Minister for Industry (No. 2) [1983] I.R. 88 was required, and that weight should be given in such circumstances to the existence of the 001 S.P.C. and to the at least tentative view which he had formed as to the likely merits of the claim on invalidity. He considered that Clonmel's claim of invalidity was not likely to succeed, and that accordingly an injunction should be granted.

5 This case has proceeded with commendable speed through the system of the courts. Indeed, the Court of Appeal heard the appeal before the full written judgment in the High Court was available. Nevertheless, it became clear in the course of case management of this appeal that it was unlikely that it would be possible to have a hearing and a decision in this case much before the expiry of the 001 S.P.C. However, Merck in particular, maintained that the appeal raised important points of principle in relation to the grant of injunctions in respect of S.P.C.s which were due to expire. While Merck itself held a number of such S.P.C.s, this was a matter of general interest in the pharmaceutical sector. Accordingly, it pressed for a hearing of the appeal. It was agreed at case management, however, that the appeal should proceed on the basis that Merck would not argue that, if it was successful on the appeal, any injunction ought to be dissolved. This effectively conceded to Clonmel the benefit of having no threat of an injunction prior to April 2019, when it would have been free, on any view, to market its product, and meant that it was not essential that the matter be determined before the expiry of the S.P.C. It was also agreed, therefore, that the court could approach the case on the basis of the matters as they stood at the date of the initial application for an interlocutory injunction. Accordingly, it would not be necessary to have a further round of evidence as to developments since the launch of Clonmel's product in April 2018, and furthermore, the analysis could be approached free of any constraints which might be contended to apply when an appellate court is invited to review the decision of a trial court on an interlocutory application. The net, albeit difficult, issue to which this appeal was confined was whether or not an interlocutory injunction should have been granted to Merck as the position then stood when this application came before the High Court in April 2018.

The Supplementary Protection Certificate

6 It is well known that the underlying objective justifying the grant of a patent is to provide a monopoly for a limited period in order to encourage invention and the dissemination of knowledge, which is beneficial to the wider community. However, the grant of a valid patent does not in itself lead inevitably to a commercially viable product. Because of the necessity to seek a patent at the earliest viable stage,...