The Istanbul Court of Intellectual and Industrial Property has ordered a patentee to pay €333,000 to the manufacturer of a generic pharmaceutical, after an injunction was unfairly granted against the manufacturer’s product. However, both parties are appealing the decision – the first in this area.
The IP Court initially granted a precautionary injunction against the manufacturer after a court-appointed expert panel opined that otherwise there would be a risk of patent infringement. The injunction was lifted after a few months when another panel held the opposite view. Even once the injunction was lifted, the manufacturer did not launch its product on the market. However, after the infringement action on merits was rejected and the decision became final, it did file a damages action, on the grounds that it had incurred a loss of profit by being prevented from manufacturing and marketing its generic products as a result of the unfair injunction.
The company argued that if the injunction had not been issued it would have been able to launch the first generic product on the market for this particular drug and could have secured as much as 85% of the patented pharmaceutical’s market share.
The patentee argued that the casual link between the damage alleged by the generics manufacturer and the fault could not be proved and, more importantly, the generic product was never placed on the market, even after the injunction was lifted. Therefore, the damages demand should be rejected. Further the patentee pointed out that at the date that the injunction was issued, the generic product had been granted a marketing authorisation only; in order to launch it also need to secure further regulatory steps (eg, price approval and sales permission), which would have taken at least 125 days to secure. Therefore, 125 days should be deducted from the term of the injunction when calculating damages. The patentee further emphasised that the generic product had only been approved for a single indication while the original product has two different indications. Consequently, the market share of the original product would naturally be higher than that of the subsequent generic product. The court should consider the market share for the approved indication only. Finally the patentee provided the court with official data, which indicated the market share of the first generic pharmaceutical to enter into the market in relation to a similar oncology drug was between 6% and 16%; in addition, the generic manufacturer in that case was a well-known and reputable company unlike the generic manufacturer in the current action.
The court of first instance ruled that in order to be held liable for compensation of damages incurred due to the decision to issue the injunction, it is sufficient that the main claim (in this case, infringement) is rejected and there is no need to investigate whether the defendant patentee is faulty. In relation to the calculation of the damages, the court deducted 17 days from the term of the injunction to account for the period during which the sales permission would have been sought. Then it took the example provided by the patentee (indicating that the market share of a similar oncology generic product was between 6% and 16%) and decided that the market share of the generic product at issue would have been 16% if the injunction had not been granted. However, it failed to consider the fact that the generic product had been approved for one indication only, whereas the original product had two indications. Finally, the court ordered the patentee to pay €333,000 to the generic manufacturer to compensate it for the damages it suffered as a result of the unfair injunction.
The essential issue in this case was how to calculate the loss of profits suffered by the generic manufacturer, when it had never in fact launched its product on the market. The market share, the price and the possible expenses of the manufacturer had to be calculated in order to estimate what its profits would have been if it had launched during the term of the injunction. In order to visualise this scenario as concretely as possible, both parties came up with solutions that served their own interest. The IP Court’s approach was a mixture of arguments from both sides as well as the arguments of court-appointed expert panels. However, little of the court’s reasoning was based on concrete and sound grounds.
Both parties have appealed the IP Court’s decision and the case is now pending before the district court. The district court’s decision will be significant as it will be the first case in the pharmaceutical sector for compensation for damages arising from an unfair injunction.
First published by IAM - International Report in Jun 19, 2019.