Wayne Condon is the team leader of the Life Sciences litigation group at Griffith Hack. He specialises in providing strategic IP and regulatory advice to the generic pharmaceutical industry. He has more than 30 years' experience in conducting patent and other IP litigation in a number of jurisdictions for some of the world’s best known pharmaceutical companies.
Jacky Mandelbaum has extensive experience in all aspects of intellectual property law and, in particular, has represented and advised clients in litigation involving patents, confidential information, copyright, breach of contract and misleading and deceptive conduct. She has advised clients across a wide variety of industries but specifically in the area of biotechnology, pharmaceuticals, and materials science.
To register for GenericsWeb's free monthly newsletter 'INNsight', click here Some litigation practice issues for generic pharma in Australia A key concern to generic pharmaceutical companies seeking to market generic pharmaceutical products in Australia is the threat of an interlocutory injunction, preventing launch of the product pending a full trial. According to the recent trend in court cases, generic companies must have their ‘eyes wide open’ to this risk and, as a result, actively monitor the patent position of the intended generic product. If a generic pharmaceutical company plans to market a product in the face of a registered patent, it should carefully consider issuing revocation proceedings or investigate seeking a declaration of non-infringement (discussed further below), well in advance of the planned launch date. Interlocutory InjunctionsPrior to 2005, the grant of an interlocutory injunction in pharmaceutical patent cases was extremely rare in Australia. However, since reforms made in 2005 to the Australian Pharmaceutical Benefits Scheme, which subsidises the price of pharmaceutical products in Australia, interlocutory injunctions have been granted in seven out of nine applications made. In order to be granted an interlocutory injunction the patentee is required to show:(a) it has a serious question to be tried that the generic product infringes its patent;(b) it will suffer irreparable harm if the injunction is not granted, that will not be capable of compensation through an award of damages; and(c) the ‘balance of convenience’ is in favour of the grant of the injunction (i.e. it will suffer more harm than the generic company).However, the trend in the cases shows that the courts in Australia are increasingly concerned to protect the status quo. The approach has been, even where there is a prima facie case of invalidity, to factor that in only in considering the balance of convenience. In each case, the court has placed emphasis on the fact that the generic company has known about the existence of the relevant patent and has made the commercial decision not to take action to revoke it sooner. Accordingly, where the generic company has persisted with its marketing after finding out about the relevant patent, it is seen to be entering the market with its ‘eyes wide open’, that is, in full knowledge of the likelihood of an infringement claim. In those circumstances, the court is increasingly finding that the difficulties it faces are of its own making and cannot be relied on to avoid an injunction.Another mantra which is often repeated in these cases is that the generic company should have ‘cleared the path’ well in advance of its proposed launch date. Even where a generic company believes on reasonable grounds that the relevant patent is likely to be ultimately held invalid, the court considers that it should take action to commence revocation proceedings well in advance of its proposed launch date.A recent decision of the Full Federal Court of Australia provides a glimmer of hope to generic companies. In that case, an interlocutory injunction was discharged on appeal, on the basis that the strength of the argument on invalidity of the patent was so strong, it meant that the patentee could not establish a serious question of infringement. While the Full Federal Court made observations that a generic company should not be expected necessarily to ‘clear the path’, or be penalised for entering the market with its ‘eyes wide open’, it remains to be seen whether the observations will be given much weight in subsequent decisions.The strategic concern that this trend raises for generic companies is that if action is not taken well in advance of launch, the threat of an injunction is high. The time to trial and judgment can be around 18 months, leading to a substantial delay from the planned time to market. It is likely, however, that other generic companies seeking to launch during the period of the injunction will also be enjoined. Accordingly, the generic companies will all be in a position to launch at the same time.The alternative is to institute a revocation case well in advance of launch to ‘clear the path’. However, there is no provision in Australia that provides an advantage to the first company to do this, such as the Hatch-Waxman provisions in the United States. Therefore, while one generic company may take action to ‘clear the path’ for its launch, in doing so it also clears the path for any other generic company having not incurred any of the costs of the proceeding. As soon as the patent is revoked, other generic companies can launch their own products such that the first mover in the proceeding, does not obtain the first mover advantage on the market. Declarations of non-infringementA path not taken by generic companies in Australia compared to, for example, the United Kingdom, is to seek a declaration of non-infringement where they consider there is a strong case that a relevant patent is not infringed.The reason is that the provision of the Patents Act 1990 (Cth) (Patents Act) that deals with non-infringement declarations is not attractive. It has been interpreted narrowly by the court so as to have very limited application, only in relation to a product which is, itself, the subject of a granted patent. Further, the party seeking the non-infringement declaration must pay the cost of all parties to the proceeding, regardless of the outcome.Although it has not yet been tested in Australia, it is our view that it may be possible to seek a declaration of non-infringement outside of the provisions of the Patents Act, based on the inherent power of the Federal Court to grant declarations (under the Federal Court of Australia Act 1976 (Cth)). Given the number of molecules coming off patent in coming years and the possibility for generic companies to work around secondary patents, the need for a declaration of non-infringement is likely to become highlighted in the future. The ability to seek a declaration of non-infringement rather than institute a full revocation proceeding where there are strong grounds to argue that the relevant patent is not infringed, is an attractive option both in terms of saving time and costs. Further, it avoids the strategic concern faced by most generic companies that in instituting a revocation proceeding, they are incurring the cost of clearing the way for all generic products. A non-infringement declaration would clear the path for only the one product.It remains to be seen how the courts will continue to deal with the issue of interlocutory injunctions in Australia where the position has become extremely difficult for generic companies trying to launch their products on the market. The position at the moment requires that where a generic company is proposing to launch a product in Australia it should keep itself abreast of the relevant patent landscape and, where there is a patent potentially in the way, seek to revoke that patent as soon as possible, consider a non-infringement declaration or alternatively prepare to launch and then face the inevitable threat of an interlocutory injunction application by the patentee. Wayne Condon (Principal) & Jacky Mandelbaum (Senior Associate)August 2010wayne.condon@griffithhack.com.aujacky.mandelbaum@griffithhack.com.au BACK TO TOP To register for GenericsWeb's free monthly newsletter 'INNsight', click here
A key concern to generic pharmaceutical companies seeking to market generic pharmaceutical products in Australia is the threat of an interlocutory injunction, preventing launch of the product pending a full trial. According to the recent trend in court cases, generic companies must have their ‘eyes wide open’ to this risk and, as a result, actively monitor the patent position of the intended generic product. If a generic pharmaceutical company plans to market a product in the face of a registered patent, it should carefully consider issuing revocation proceedings or investigate seeking a declaration of non-infringement (discussed further below), well in advance of the planned launch date.
Interlocutory InjunctionsPrior to 2005, the grant of an interlocutory injunction in pharmaceutical patent cases was extremely rare in Australia. However, since reforms made in 2005 to the Australian Pharmaceutical Benefits Scheme, which subsidises the price of pharmaceutical products in Australia, interlocutory injunctions have been granted in seven out of nine applications made. In order to be granted an interlocutory injunction the patentee is required to show:(a) it has a serious question to be tried that the generic product infringes its patent;(b) it will suffer irreparable harm if the injunction is not granted, that will not be capable of compensation through an award of damages; and(c) the ‘balance of convenience’ is in favour of the grant of the injunction (i.e. it will suffer more harm than the generic company).However, the trend in the cases shows that the courts in Australia are increasingly concerned to protect the status quo. The approach has been, even where there is a prima facie case of invalidity, to factor that in only in considering the balance of convenience. In each case, the court has placed emphasis on the fact that the generic company has known about the existence of the relevant patent and has made the commercial decision not to take action to revoke it sooner. Accordingly, where the generic company has persisted with its marketing after finding out about the relevant patent, it is seen to be entering the market with its ‘eyes wide open’, that is, in full knowledge of the likelihood of an infringement claim. In those circumstances, the court is increasingly finding that the difficulties it faces are of its own making and cannot be relied on to avoid an injunction.Another mantra which is often repeated in these cases is that the generic company should have ‘cleared the path’ well in advance of its proposed launch date. Even where a generic company believes on reasonable grounds that the relevant patent is likely to be ultimately held invalid, the court considers that it should take action to commence revocation proceedings well in advance of its proposed launch date.A recent decision of the Full Federal Court of Australia provides a glimmer of hope to generic companies. In that case, an interlocutory injunction was discharged on appeal, on the basis that the strength of the argument on invalidity of the patent was so strong, it meant that the patentee could not establish a serious question of infringement. While the Full Federal Court made observations that a generic company should not be expected necessarily to ‘clear the path’, or be penalised for entering the market with its ‘eyes wide open’, it remains to be seen whether the observations will be given much weight in subsequent decisions.The strategic concern that this trend raises for generic companies is that if action is not taken well in advance of launch, the threat of an injunction is high. The time to trial and judgment can be around 18 months, leading to a substantial delay from the planned time to market. It is likely, however, that other generic companies seeking to launch during the period of the injunction will also be enjoined. Accordingly, the generic companies will all be in a position to launch at the same time.The alternative is to institute a revocation case well in advance of launch to ‘clear the path’. However, there is no provision in Australia that provides an advantage to the first company to do this, such as the Hatch-Waxman provisions in the United States. Therefore, while one generic company may take action to ‘clear the path’ for its launch, in doing so it also clears the path for any other generic company having not incurred any of the costs of the proceeding. As soon as the patent is revoked, other generic companies can launch their own products such that the first mover in the proceeding, does not obtain the first mover advantage on the market.
Declarations of non-infringementA path not taken by generic companies in Australia compared to, for example, the United Kingdom, is to seek a declaration of non-infringement where they consider there is a strong case that a relevant patent is not infringed.The reason is that the provision of the Patents Act 1990 (Cth) (Patents Act) that deals with non-infringement declarations is not attractive. It has been interpreted narrowly by the court so as to have very limited application, only in relation to a product which is, itself, the subject of a granted patent. Further, the party seeking the non-infringement declaration must pay the cost of all parties to the proceeding, regardless of the outcome.Although it has not yet been tested in Australia, it is our view that it may be possible to seek a declaration of non-infringement outside of the provisions of the Patents Act, based on the inherent power of the Federal Court to grant declarations (under the Federal Court of Australia Act 1976 (Cth)). Given the number of molecules coming off patent in coming years and the possibility for generic companies to work around secondary patents, the need for a declaration of non-infringement is likely to become highlighted in the future. The ability to seek a declaration of non-infringement rather than institute a full revocation proceeding where there are strong grounds to argue that the relevant patent is not infringed, is an attractive option both in terms of saving time and costs. Further, it avoids the strategic concern faced by most generic companies that in instituting a revocation proceeding, they are incurring the cost of clearing the way for all generic products. A non-infringement declaration would clear the path for only the one product.It remains to be seen how the courts will continue to deal with the issue of interlocutory injunctions in Australia where the position has become extremely difficult for generic companies trying to launch their products on the market. The position at the moment requires that where a generic company is proposing to launch a product in Australia it should keep itself abreast of the relevant patent landscape and, where there is a patent potentially in the way, seek to revoke that patent as soon as possible, consider a non-infringement declaration or alternatively prepare to launch and then face the inevitable threat of an interlocutory injunction application by the patentee.
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