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Interlocutory injunctions: Adequacy of damages to be considered aspect of balance of convenience

Merck Sharp & Dohme Corporation v Clonmel Healthcare Ltd [2019] IESC 65

 

Interlocutory Injunction - Supplementary Protection Certificate - Adequacy of damages aspect of balance of convenience

 

Judgment of O'Donnell J delivered 31 July 2019:

The present case came before the Supreme Court by way of an appeal against the decision of the Court of Appeal, which upheld the judgment of the High Court refusing an interlocutory injunction against the respondents who were alleged to have infringed a Supplementary Protection Certificate.

SPCs extend certain protections for individual ingredients contained within patents for medicinal products (SI 125/1993). The ingredients in this case were simvastatin and ezetimibe, which aid in the treatment of cholesterol when combined together. The plaintiff sold this combination as a product called ‘Inegy’. Delivering judgment, O’Donnell J noted that although the SPC had expired, there were still important issues to be considered as regards the operation of interlocutory injunctions.

A number of separate patents and SPCs covered these separate ingredients and their combination. Following the expiration of one of these patents in April 2018, the defendants believed that they were in the clear to create and sell a generic version – notwithstanding the fact that Merck alleged the combination of the two was covered by a separate patent which would not expire until April 2019.

In correspondence from 2018, lawyers for the defendants contended that even if a breach were to be found at a later date that damages would be an adequate remedy for the plaintiffs and as such, that they would be continuing with manufacturing the generic version. At the High Court, an interim injunction had been granted, but the application for an interlocutory injunction was refused. This decision was then upheld by the Court of Appeal.

Given the short amount of time between this refusal and the expiration date of the last remaining SPC, it was unlikely that a hearing could be organised before the Supreme Court on time. However, the plaintiffs argued that an appeal was merited on principle as a means of clearing up the operation of injunctions in the context of SPCs. The question then was whether an interlocutory injunction should have been granted to the plaintiffs when the application arose before the High Court originally.

As the defendants were going to market their simvastatin-ezetimibe combination product at a significantly reduced price compared to the original Merck product, it was likely that they would cannibalise sales. If they were wrong and the SPC was indeed still in place, they argued that the financial damage caused to the plaintiffs was quantifiable as it was an exclusively a commercial loss.

As we know, injunctions will not be granted where damages are an adequate remedy. Clonmel placed reliance on the decision in Curust Financial Services Ltd v Loewe-Lack- Werk [1994] 1 IR 150 where it was stated: ‘Difficulty, as distinct from complete impossibility, in the assessment of such damages should not … be a ground for characterising the award of damages as an inadequate remedy.’

The plaintiffs, for their part, placed reliance on UK authorities – where the established practice is to grant an injunction restraining the entry of generic or biosimilar drugs into the market. The rationale behind this is that where a generic pharmaceutical product is released into the market, it causes permanent and irreparable damage to the patentee as it will almost certainly lead to an irreversible decline in sales. Even where they are successful in having the generic products removed from the market, they will not be able to charge the same price as before.

The principles governing the granting of interlocutory injunctive relief in Ireland are to be found in Campus Oil Ltd v Minister for Industry & Commerce (No 2) [1983] IR 88, which adopted a modified version of the test laid out in American Cyanamid v Ethicon Ltd [1975] UKHL 1. It is as follows:

  • Is there a fair and bona fide question to be tried?
  • Are damages an adequate remedy?
  • Does the balance of convenience favour the granting of an injunction?

O’Donnell J noted that although there is a ‘clear logic’ to this test, it would be preferable if the issue of the adequacy of damages was considered as an element of the balance of convenience, as opposed to a separate arm of the test. O’Donnell J also cautioned against viewing the test as a ‘strict statutory formulation’ but rather as a guide. The court must also weigh up the risk of doing injustice. As was noted at para 33:

‘While the decision in American Cyanamid, adopted in Campus Oil, has been distilled over subsequent years and reduced to some simple, readily understood, and helpful rules of thumb, it is important, in my view, to note that the essence of the decision was negative: it rejected the prima facie case test. Second, the underlying theme of the decision was to reassert the flexibility of the remedy and the essential function of an interlocutory injunction in finding a just solution pending the hearing of the action. Even though the judgment is lucidly and succinctly expressed, it should not, in my view, be approached as though it were the laying down of strict mechanical rules for the control of future cases.’

The learned judge concluded by holding that if the matter was still live, he would allow the appeal against the orders of the High Court and Court of Appeal – thus granting the interlocutory injunctive relief pending the trial of the action. In any event, the defendants and their competitors gained the right to manufacturer generic versions of Inegy from April 2019.

Read the judgment in full here. For further reading on interlocutory injunctions generally, click here.

 

 

Please note that this is intended to be a clear and accurate case note of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly.

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