Novartis Pharma AG v Eli Lilly Nederlands B.v

• Jurisdiction: Ireland
• Judge: Mr. Justice Twomey
• Judgment Date: 21 December 2021
• Neutral Citation: [2021] IEHC 814
• Docket Number: [2021 No. 2527 P]
• Year: 2021
• Court: High Court

Between

Novartis Pharma AG

Plaintiff

and

Eli Lilly Nederlands B.V.

and

Eli Lilly Kinsale Limited

and by Order

Eli Lilly and Company (Ireland) Limited

and

Eli Lilly and Company Limited

Defendant

[2021] IEHC 814

[2021 No. 2527 P]

THE HIGH COURT

Modularisation of trial – Revocation – Patent infringement – Defendant seeking modularisation of trial – Whether the modularisation sought was in the public interest

Facts: Two sets of proceedings related to European patent (IE) 2 784 084 (the Patent) owned by the plaintiff, Novartis. The first set of proceedings was a revocation action taken by the defendant, Eli Lilly, against Novartis on the 13th April, 2021 in relation to the Patent, in which Eli Lilly claimed, inter alia, that the Patent owned by Novartis should not have been granted as it lacked novelty. The second set of proceedings were patent infringement proceedings taken by Novartis against Eli Lilly on the 15th April, 2021 in relation to Eli Lilly’s competing product, which Novartis alleged breached its Patent. Eli Lilly claimed, as a defence to the infringement action, that Novartis’ acquisition of the Patent and its alleged use by Novartis to seek to prevent competition from Eli Lilly constituted an abuse of a dominant position in breach of competition law. In that regard, Eli Lilly claimed that Novartis had a dominant position in the market for products targeted at the treatment of psoriasis where a high degree of efficacy and speed is required. Eli Lilly also relied on the same competition law issues to support its counterclaim in the infringement action. Eli Lilly wanted the High Court to split the trial into two modules, with the first module addressing whether Eli Lilly’s product, Taltz, and/or ixekizumab, fell within the scope of the claims of the Patent, i.e. the infringement action. That module would also deal with issues questioning the validity of the Patent in the revocation action and issues regarding Novartis’s application for a supplementary protection certificate for the Patent. Damages would be dealt with in the second module. Novartis agreed with Eli Lilly that the infringement and revocation actions should be dealt with in the first module and damages in the second module. However, the main point of dispute was Eli Lilly’s proposal that the second module, rather than the first module, should deal with the competition defence and the remedies to be granted, including in particular any injunctive relief to be granted against Eli Lilly, if Novartis were to be successful.

Held by Twomey J that it was in the public interest that at least 2 ½ weeks, but perhaps 4 weeks or more (on Eli Lilly’s case) of extremely valuable court time could potentially be saved in the case. Twomey J held that this amount of court time would be saved if the competition defence was heard in the second module, rather than in the first module (and assuming Eli Lilly were to win the infringement or revocation action). Twomey J held that if there was no prejudice to Novartis, the Court would have no hesitation in ordering the modularisation sought, as it was in the public interest and in the interests of saving legal costs and management time for both parties. However, Twomey J held that there was a prejudice to Novartis which was significant, since it was the possible loss of the opportunity to seek an injunction to prevent the sale of infringing products by Eli Lilly (if Novartis were to win the litigation).

Twomey J refused to order the modularisation of the trial as sought by Eli Lilly.

Request denied.

JUDGMENT OF Mr. Justice Twomey delivered on the 21st day of December, 2021

SUMMARY

1 This case considers, inter alia, whether the current shortage of judges in the High Court affects the approach of a court to an application to modularise a trial, where that modularisation has the potential to save up to four weeks of very valuable and scarce court time.

2 This is a case dealing with a dispute between two multinational pharma companies regarding products with which persons with psoriasis may be familiar, i.e. Cosentyx, which is manufactured by the plaintiff (“Novartis”) and Taltz, which is manufactured by the defendant, (“Eli Lilly”), the party seeking the modularisation.

3 The substantive proceedings, which it is proposed be modularised, involve two sets of proceedings relating to European patent (IE) 2 784 084 (the “Patent”) owned by Novartis. The first set of proceedings is a revocation action (the “revocation action”) taken by Eli Lilly against Novartis on the 13th April, 2021 in relation to the Patent, in which Eli Lilly claims, inter alia, that the Patent now owned by Novartis should not have been granted as it lacks novelty.

4 The second set of proceedings are patent infringement proceedings (the “infringement action”) taken by Novartis against Eli Lilly on the 15th April, 2021 in relation to the Eli Lilly's competing product, Taltz, which Novartis alleges breaches its Patent.

5 Eli Lilly claims, as a defence to the infringement action, that Novartis' acquisition of the Patent and its alleged use by Novartis to seek to prevent competition from Eli Lilly constitutes an abuse of a dominant position in breach of competition law (the “competition defence”). In this regard, Eli Lilly claims that Novartis has a dominant position in the market for products targeted at the treatment of psoriasis where a high degree of efficacy and speed is required. Eli Lilly also relies on these same competition law issues to support its counterclaim in the infringement action.

The modularisation sought by Eli Lilly

6 Eli Lilly wants this Court to split the trial into two modules, with the first module addressing whether Eli Lilly's product, Taltz, and/or ixekizumab, falls within the scope of the claims of the Patent, i.e. the infringement action. This module would also deal with issues questioning the validity of the Patent in the revocation action and issues regarding Novartis's application for a supplementary protection certificate for the Patent. Damages would be dealt with in the second module.

7 Novartis agrees with Eli Lilly that the infringement and revocation actions should be dealt with in the first module and damages in the second module.

8 However, the main point of dispute is Eli Lilly's proposal that the second module, rather than the first module, should deal with the competition defence and the remedies to be granted, including in particular any injunctive relief to be granted against Eli Lilly, if Novartis were to be successful.

9 For ease of reference in this judgment, Novartis' preferred option will be referred to as a ‘unitary trial’ ( albeit that Novartis agrees that damages will be dealt with separately in the second module). Eli Lilly's proposal will be referred to as a ‘modularised trial’ (i.e. with the competition defence and injunction issues dealt with in the second module, as well as damages).

Saving of costs for parties and court time, by modularising the trial?

10 If Eli Lilly were to win either on the infringement action or the revocation action in the first module, then it would not have to rely on its competition defence. It is because of this possibility of not having to deal with the competition defence, that Eli Lilly says that it should be part of the second module, particularly as it says that the competition defence will take between 2 ¹/₂ weeks and 4 weeks. Thus, Eli Lilly says that by putting the competition defence into the second module, while it is not guaranteed to save time and money (i.e. if Eli Lilly loses the infringement and revocation actions), it nonetheless has the clear potential to save a considerable amount of legal costs and management time in the interests of the parties and in the interest of saving court time, which is in the public interest.

11 For its part, Novartis makes the point that any remedies cannot be dealt with until after the question of whether Eli Lilly has a competition defence has been determined. Accordingly, the entitlement of Novartis to the remedy of an injunction can only be decided after the competition defence has been determined. Thus, deferring the competition defence to the second module has the effect of deferring its possibility of getting an injunction to the second module. This is the tactical reason, it claims, that Eli Lilly is seeking to have the competition defence dealt with in the second module.

Relevance of the expiry of the Patent

12 Novartis says that there is a clear tactical advantage to Eli Lilly taking this approach because the Patent is due to expire on 2nd June, 2024.

13 Accordingly, Novartis says that the interval between Eli Lilly's proposed first and second module, and in particular the possibility of Eli Lilly being able to delay the second module by appealing the first module, means that the real effect, of putting the competition defence (and injunction) into the second module, is that the Patent will have expired by the time a judgment is delivered in relation to Eli Lilly's second module.

14 This, Novartis claims, will thereby deprive Novartis of the opportunity to apply for an injunction (assuming, of course, that it wins the litigation) and therefore deprives it of a very significant remedy in patent infringement cases.

Public interest is now more acute and favours the ordering of the modularisation

15 As noted hereunder, this Court concludes that there is a public interest in potentially saving 2 ¹/₂ weeks, at least, and possibly up to 4 weeks, of extremely valuable and scarce court time, and that this factor very much favours the modularisation of the trial as suggested by Eli Lilly.

16 This public interest in saving on court time, wherever possible, is particularly strong at present, since the 2021 EU Justice Scoreboard illustrates in stark fashion (at p. 28) that Ireland is, literally, at the bottom of the table of 27 countries for...