09 December 2015

The Importance of Keeping Promises: Warner-Lambert Company LLC v Sandoz GmbH and Others

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In Swiss Style Claims: Warner-Lambert Companv Actavis 25 Jan 2015 I explained that Warner-Lambert LLC had a patent for a drug called pregabalin for treating epilepsy and GAD (generalized anxiety disorder). That patent expired in 2013 although the monopoly was extended for a short time by a supplementary protection certificate which has now lapsed. Warner-Lambert discovered a new use for pregabalin in the treatment of neuropathic pain for which it was granted a new patent. Actavis sought the revocation of the new patent on grounds of obviousness and insufficiency and applied for permission to market pregabalin for the treatment of epilepsy and GAD. The case that I discussed in my case note was an unsuccessful attempt by Warner-Lambert to impose conditions on the sale of pregabilin in the UK (see Warner -Lambert Company, LLC v Actavis Group Ptc EHF and others [2015] EWHC 72 (Pat)).

The action came on for trial before Mr Justice Arnold in  Generics (UK) Ltd (t/a Mylan) v Warner-Lambert Company LLC [2015] EWHC 2548 (Pat) (10 Sept 2015) which I discussed in The Pregabalin Trial: Generics (UK) Ltd v Warner-Lambert Company LLC on 18 Sept 2015. In his judgment Mr Justice Arnold held that certain claims of the new patent were invalid for insufficiency, that the patent had not been infringed and that Warner-Lambert's parent company Pfizer had made groundless threats.  The learned judge gave Warner-Lambert permission to appeal and suspended revocation of the invalidated claims pending the hearing of the appeal.

Sandoz GmbH and its subsidiary Sandoz Ltd ("the Sandoz companies") are part of a large group of companies ("Sandoz") that supply generic pharmaceuticals.  After the patent for the original use of pregabalin had expired and the supplementary protection certificate had lapsed, Sandoz applied to the European Medicines Agency for authorization to market the product for both its original use and its new use. Warner-Lambert's solicitors wrote to Sandoz in December 2014 warning that they considered that the sale of the product even for the original use might infringe their patent. Sandoz replied with a promise to give Warner-Lambert at least 7 days notice before launching pregabalin on the British market.  In June 2015 Sandoz advised Warner-Lambert that it would supply the product for all uses if it "received confirmation from the High Court that the second patent is invalid". Following judgment in the Pregabalin trial Sandoz decided to launch preabalin for all uses and delivered a large consignment of packs of the medicine to the retailer Lloyd's Pharmacy Ltd ("Lloyds") without first notifying Warner-Lambert or its solicitors.

As soon as it learned that Sandoz had started to market pregabalin for all uses, Warner-Lambert applied by telephone to Mr Justice Birss for an order restraining further distribution of the product over the hearing of its application for interim injunctions until trial. That judge granted an injunction over the hearing of the application and ordered the Sandoz companies to provide information including the names of any third party to which they might have delivered the pharmaceutical and whether there was any provision for recall or return of the product.  The telephone application had been made upon informal notice to the Sandoz companies (what used to be know as "an ex parte application with notice") and there was a further hearing before Mr Justice Birss a few days later at which both parties were represented by leading counsel. Upon Sandoz's disclosing that it had supplied the drug to Lloyds, Warner-Lambert joined that retailer as a third defendant. The relief sought by Warner-Lambert was for (1) an interim injunction to restrain the Sandoz companies from infringing the patent for the second medical use by dealing in a generic pregabalin product for pain relief and (2) an interim injunction requiring Lloyds to refrain from dispensing the quantities of pregabalin in its possession. The judge ordered the application to be heard as an application by order, extended the injunctions that he had already granted and gave the usual directions for the exchange of witness statements and exhibits.

The application by order came on before Mr Justice Arnold in Warner-Lambert Company LLC v Sandoz GmbH and Others [2015] EWHC 3153 (Pat) (4 Nov 2015). Even though he had decided that several claims of the patent were invalid in the Pregabalin trial and had denied rather less extensive injunctive relief to the same claimant almost a year earlier the judge granted the injunctions sought against the Sandoz companies [paragraph [103]] and Lloyds [paragraph 118].

In his judgment in the hearing before him (Warner-Lambert Company LLC v Sandoz GmbH and Another, [2015] EWHC 2919 (Pat) )Mr Justice Birss said:
"24. … What is manifest in my judgment is that this is a matter which should have been dealt with by Lloyds and Sandoz and AAH giving proper notice to Warner-Lambert and the whole matter could have been resolved in an orderly fashion. To have taken the course they have taken by attempting to shift such a large volume of material in such a short space of time, Sandoz, AAH and Lloyds only have themselves to blame.
25. The court's task in a situation like this is to hold the ring as best one can in order that the dispute can be resolved in an orderly and proper fashion. By taking the course they have taken, Sandoz, AAH and Lloyds have made it as difficult as they could to allow that to take place. It would be entirely right that I should make the order sought and I will do so, subject to [joinder of Lloyds as a party to the proceedings]"
Mr Justice Arnold endorsed those observations and added at paragraph [48] of his own judgment:
"The Patents Court expects litigants in patent disputes before it to behave responsibly to enable disputes to be resolved in an orderly manner. That generally entails the giving of prior notice in circumstances such as these. As the history related above demonstrates, the Patents Court will not hesitate to use its powers, and in particular its powers to grant urgent interim relief, to attempt to ensure that parties who try to steal a march on other parties and thereby present the Court with a fait accompli do not benefit from such conduct."
However, his lordship also said:
"While I have thought it right to endorse Birss J's observations with respect to the failure of Sandoz, AAH and Lloyds to give Warner-Lambert prior notice of their intended launch of the Sandoz Full Label Product, I should make it clear that in my judgment that failure has relatively little bearing on Warner-Lambert's present application."
The judge also commented on an inaccuracy in the Sanders companies' head of retail's witness statement on whether the goods that had been delivered to Lloyds could be recalled or returned although he added that it had very little bearing on the application before him.

The Sandoz companies had two excuses for their conduct. The first was that Mr Justice Arnold's decision in the Pregabalin trial was tantamount to invalidation of the patent in suit. The second was that  some pharmacies are not willing to stock and dispense skinny label generic pregabalin products, but are willing to stock and dispense a full label generic pregabalin product. Although the only specific evidence on this point came from Lloyds, it appeared that Boots, Well and some other pharmacies took the same view.

It is perhaps worth explaining here what is meant by the terms "skinny label" and "full label". Under Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001on the Community code relating to medicinal products for human use(OJ L 311, 28.11.2001, p. 67) companies that wish to supply pharmaceutical products must supply certain information about the drug which is known as "the label". Where a generic product is supplied for some uses but not others the supplier need provide information only in respect of the uses for which the product is marketed. Such information is known as "the skinny label".

Mr Justice Arnold was not persuaded by either excuse.  As to the first he said at paragraph [39]:
"any competent English patent lawyer would know that:
i) Warner-Lambert V would be likely to be the subject of an appeal, provided permission to appeal was granted by either the Patents Court or the Court of Appeal;
ii) an order for revocation is ordinarily stayed pending appeal, or at least pending an application to the Court of Appeal for permission to appeal if the Patents Court has refused permission to appeal; and
iii) in any event, the Patent was found partially valid with respect to a number of pain indications."
As to the second he made the following observations at paragraph [63]:
"First, many other pharmacies are stocking and dispensing skinny label generic pregabalin products. Secondly, it is not clear to me that Lloyds has taken into account the fact that the SmPC and PIL for skinny label generic pregabalin products can and do include warnings as to adverse events when pregabalin is taken for the treatment of neuropathic pain (see Warner-Lambert V at [443]). Furthermore, at least in the case of Actavis' skinny label product, the PIL also includes the so-called "blue box" wording about prescription of the product for the treatment of conditions not listed in the PIL (see Warner-Lambert V at [444]-[447]). Thirdly, I find it difficult to see why Lloyds should be blamed if the pharmacist on duty does not know what indication pregabalin has been prescribed for. As one would expect, Mr Howard makes it clear in his evidence that Lloyds strives to ensure that, if the pharmacist does know, then the appropriate product is dispensed."
His lordship then considered the merits of the application in accordance with the principles expounded by Lord Hoffman in paragraphs [16] to [20] of the Privy Council's judgment in  National Commercial Bank Jamaica Ltd v. Olint Corp Ltd (Jamaica) [2009] WLR 1405, [2009] UKPC 16, [2009] 1 CLC 637, [2009] 1 WLR 1405, [2009] Bus LR 1110. "The key point" in Mr Justice Arnold's view "is that the court should adopt whichever course seems likely to cause the least irremediable prejudice to one party or the other." Notwithstanding his own judgment in the Pregabalin trial he held that there was a serious issue to be tried in that the appeal might be successful or the patent might be saved by amendment.  In weighing the risk of injustice against the Sandoz companies he said at paragraph [103]:
"In my judgment, granting the relief sought by Warner-Lambert would create a lesser risk of irremediable harm than refusing it. This is for two main reasons. First, I consider that there is a greater risk of Warner-Lambert suffering unquantifiable and irremediable loss if an injunction is refused than there is of Sandoz suffering unquantifiable and irremediable loss if an injunction is granted. Secondly, I consider that there is a strong case for preservation of the status quo pending trial (or the decision of the Court of Appeal, if that is available sooner). If no injunction is granted, the arrival of full label generic pregabalin on the market will make it significantly more difficult for the Court to ensure appropriate compensation of those parties which it is finally determined merit compensation."
As for the risk of injustice against Lloyds he concluded that "the  balance of the risk of injustice comes down in favour of the grant of an injunction against Lloyds for the reasons explained above."

Would the outcome have been different had the Sandoz companies given Warner-Lambert 7 days notice of their intention to market full label pregabalin as they had promised at one point? Mr Justice Arnold said that it had very little bearing on his decision but that begs the question why he mentioned the point in his judgment. It would certainly have saved the parties the costs of the without notice application before Mr Justice Birss and it might have induced Mr Justice Arnold to consider the defendants' arguments more sympathetically. The decision whether or not to grant an interim injunction is an exercise of judicial discretion and it certainly does no harm at all to be on the right side of the tribunal.

Should anyone wish to discuss this case note, interim injunctions or patent law in general call me on 020 7404 5252 during office hours or send me a message on my contact form.