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In Australia, patentees may apply to a Court, usually the Federal Court of Australia, for an interlocutory injunction to restrain the respondent from engaging in conduct alleged to infringe the patent owner's rights, until such time as the matter is finally determined by the Court or otherwise resolved by the parties.
In Hexal Australia Pty Ltd v Roche Therapeutics Inc. & Others1 Roche was the owner of an Australian patent relating to a treatment for congestive heart failure. Hexal had obtained regulatory approval for its generic brand of the drug and, at the same time, commenced proceedings seeking to revoke Roche’s patent. Roche countered by filing a cross claim for infringement and an application for an interlocutory injunction against Hexal. In doing so, Roche was particularly concerned to prevent Hexal from making an application to list its product on the Australian Pharmaceutical Benefits Scheme (PBS),1 until the claim for revocation and the cross claim for infringement had been heard by the Federal Court.
The application against Hexal was heard at the same time as a similar application brought by Roche against another Australian generic drug manufacturer, Alphapharm Pty Ltd, over its plans to launch a competing product.
In deciding whether to grant an interlocutory injunction, a Court must be satisfied that:
1. there is a serious question to be tried, that is, if the matter proceeds to a final hearing, there is a probability that the applicant for the interlocutory injunction will be successful;
2. in the absence of an injunction, the applicant will suffer irreparable harm for which damages will not be adequate compensation; and
3. the balance of convenience favours the granting of an injunction.
In Hexal v Roche, Justice Stone of the Federal Court applied these principles and found that there was a serious question to be tried both in relation to infringement of Roche’s patent and as to the validity of the patent. In doing so, her Honour referred to a number of authorities that make it clear that an interlocutory application is not an appropriate forum in which to conduct a preliminary trial. Accordingly, while her Honour expressed the opinion that the “concerns on validity probably have more weight” than the case on infringement, she was not prepared to go so far as to find that the case on validity was so strong that there was no serious question to be tried.
Turning then to the question of irreparable harm, her Honour concluded that Roche had failed to demonstrate that, in the absence of an injunction, it would suffer irreparable harm for which damages would not be an adequate compensation. Her Honour reasoned that because, at the time of interlocutory hearing, Roche had 100% of the relevant market, any loss of market share as a result of the entry into the market of either Hexal or Alphapharm would be easily quantifiable. In the event Roche ultimately succeeded in its case against Hexal and Alphapharm, Roche could be fully compensated for any such loss by way of a payment of damages or an account of profits.
Her Honour rejected Roche’s argument that a payment of damages would not compensate it for the investment it had made in promoting and marketing its treatment for congestive heart failure. In her Honour’s opinion, if the claim for infringement were successful against both Hexal and Alphapharm, both companies would have to withdraw from the market. Roche would then regain its market monopoly and could continue to enjoy the benefit of its investment.
Having found that Roche had not established that it would suffer irreparable harm, it was not strictly necessary for Justice Stone to consider the third requirement, namely that the balance of convenience favours the granting of the injunction. Nevertheless, her Honour gave some consideration to the submissions made by the parties and expressed the view that, while the submissions were finely balanced, the balance of convenience favoured the refusal of the interlocutory relief sought by Roche. In particular, her Honour concluded:
· the case for invalidity argued by Hexal and Alphapharm was probably stronger than Roche’s case on infringement;
· an injunction would result in a lengthy delay to Hexal’s and Alpharpharm’s plans to launch their products;
· the loss caused to Hexal and Alphapharm by such a delay would be particularly difficult to assess;
· any loss to Roche would be comparatively easy to quantify; and
· the matter could be expedited and the parties could proceed towards an early hearing.
Her Honour therefore refused to grant Roche’s application for an interlocutory injunction.
Roche’s lack of success did not deter Pharmacia Italia SPA from bringing a similar application for an interlocutory injunction against Interpharma Pty Ltd, less than two months later. In Interpharma Pty Ltd v Pharmacia Italia SPA,2 Pharmacia was the owner of a patent for certain injectable drug solutions used in chemotherapy. Interpharma intended to import and sell these drugs in Australia and, with a view to doing so, had obtained Australian regulatory approval and listed its product on the PBS. In light of Interpharma’s conduct, Pharmacia brought a cross claim for patent infringement and made an application for an interlocutory injunction.
In deciding the matter, Justice Sundberg of the Federal Court applied the same principles relating to interlocutory injunctions as applied by Justice Stone in Hexal v Roche. His Honour found there was a serious question to be tried on infringement, but that Interpharma’s evidence failed to establish a serious question to be tried as to the alleged invalidity of the patent.
Justice Sundberg also found against Interpharma in relation to the issue of irreparable harm. His Honour accepted Pharmacia’s submissions that, in the absence of an injunction, the losses suffered by Pharmacia would be substantial and that Interpharma’s capacity to meet any significant award of damages was limited. On that basis, his Honour concluded that damages would not be adequate compensation for the harm that Pharmacia would suffer if Interpharma were not restrained from entering the market.
Finally, his Honour concluded that the balance of convenience favoured the grant of an injunction. His Honour was persuaded in this regard by the fact that Interpharma had acted in full knowledge of Pharmacia’s patent and the possible consequences flowing from that. Further, while Interpharma had obtained regulatory approval and PBS listing, it had not yet established itself in the market or, indeed, imported the relevant solutions. Accordingly, it should be “kept at bay” until a decision had been made as to whether its “invasion” constituted an infringement of Pharmacia’s patent rights.
The willingness of the Court, in Pharmacia v Interpharma, to grant an injunction should give some hope to patent owners who may wish to enforce their patent rights by seeking an urgent interlocutory injunction against alleged infringers. It demonstrates that, despite some opinions to the contrary, the Federal Court is not averse to granting injunctions to protect a patent owner’s position. Given that the determination of an interlocutory application will often have the practical effect of forcing a resolution of the proceedings as a whole, this is particularly good news for patent owners.
However, the decision in Hexal v Roche serves as a reminder that each case depends heavily on the particular facts and circumstances. A comparison of the two decisions reinforces the need to ensure that careful consideration is given to each of the requirements for the grant of an interlocutory injunction, before deciding whether to proceed. In particular, patent owners should consider the following:
· Will there be sufficient evidence available, particularly given the short time frame usually allowed for evidence preparation in interlocutory applications, to establish a serious question to be tried on both infringement and validity?
· In the absence of an injunction, will the damage suffered be something more than just a financial loss? If so, evidence of that damage is essential.
· What is the financial position of the alleged infringer? Are they likely to be able to pay damages in the event an injunction is refused but the case on infringement is successfully made out?
· What effect is an interlocutory injunction likely to have on the alleged infringer? If the effect of an injunction would be to cause irreparable harm to the alleged infringer, this is likely to count against the grant of an injunction.
· Are there any alternatives that would achieve the same, or at least a similarly acceptable result as an interlocutory injunction? For example, could an early final hearing also serve the same purpose? Or can the parties reach agreement in relation to the giving of undertakings that are acceptable to all?
In addition to these factors, it is always essential to ensure that an application for an interlocutory injunction is brought as quickly as possible. Delay on the part of the patent owner in bringing such an application may be fatal to the application.
1 [2005] FCA 1218; Shelston IP Lawyers acted for Hexal Australia Pty Ltd in this proceeding.
2 The PBS is a scheme by which the Federal Government of Australia subsidises the prices of pharmaceutical products supplied on prescription to Australian consumers. As a practical matter, if a product is not listed on the PBS and there is a subsidised brand available, the unsubsidised product is unlikely to be prescribed.
3 [2005] FCA 1675
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