Merck Sharp Dohme Corporation and Another v Teva Pharma BV and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Birss |
| Judgment Date | 09 July 2013 |
| Neutral Citation | [2013] EWHC 1958 (Pat) |
| Docket Number | Case No: HC12C00541 |
| Court | Chancery Division (Patents Court) |
| Date | 09 July 2013 |
[2013] EWHC 1958 (Pat)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr Justice Birss
Case No: HC12C00541
Justin Turner QC (instructed by Hogan Lovells) for the Claimants
Simon Thorley QC and Mark Chacksfield (instructed by Winston & Strawn) for the Defendants
Judgment (REDACTED)
Hearing dates: 11th, 12th June 2013
In this action Dr Justin Turner QC appears for the claimants instructed by Hogan Lovells and Mr Simon Thorley QC leading Mr Mark Chacksfield instructed by Winston & Strawn appears for the defendants.
This is a claim for infringement of European Patent (UK) No. 0,582,455 which is in force until 3 rd August 2013 and SPC/GB00/035 which is in force until 19 November 2013. The first claimant is the patentee and proprietor of the SPC and the second claimant is the exclusive licensee. I will refer to the claimants as BMS (singular). The patent and SPC relate to efavirenz, a non-nucleoside reverse transcriptase inhibitor. Efavirenz inhibits viral replication and is used in the control of HIV infections. It is used both as a sole agent (sold under the trade mark SUSTIVA) and as part of a co-formulation with emtricitabine and tenofovir (sold under the mark ATRIPLA). UK sales of SUSTIVA in the twelve months to December 2012 were $22 million. Efavirenz is an important product for BMS.
The defendants can be referred to simply as Teva (singular). On 20 th October 2011 the Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion on the grant of a marketing authorisation for Teva's generic efavirenz product to be sold under the name Efavirenz Teva. On 9 th January 2012 the Commission granted that marketing authorisation to Teva.
The issuance of the CHMP opinion is a matter of public record. BMS believed that there was a risk Teva was going to launch its efavirenz product in the UK before the SPC expired and its solicitors wrote to Teva on 1 st December 2011. Teva refused to say what its intentions were for efavirenz, explaining that its policy was that its plans were confidential and that it was not obliged to tell BMS (or the court) what its intentions were. BMS interpreted Teva's stance, in the overall context, as evidence of a threat and intention by Teva to launch before the SPC expired. BMS started these proceedings on 9 th February 2012. BMS applied for an interim injunction. Teva applied to strike the action out on the basis that it disclosed no arguable cause of action. I heard both applications together on 8 th March 2012. I dismissed the application to strike out and granted an interim injunction in a judgment handed down on 15 th March 2012.
The action proceeded and this is the trial. Teva accepts, for the purpose of this action in this jurisdiction alone, that the patent and SPC covers Efavirenz Teva. There are no technical issues arising in relation to the patent. Indeed the patent was not opened at trial. Teva had the opportunity in these proceedings to challenge the validity of the patent and/or the SPC but did not do so. One might therefore ask what the action is actually about. The answer is as follows.
In summary BMS contends that at the point the action began Teva was threatening and intending to infringe the patent (i.e. launch before 19 November 2013). Teva contends it was not. Teva contends that it made the position clear on 23 rd April 2012, in its response to a Part 18 Request from BMS, which states:
"The defendants have not at any material time had any plans to supply pharmaceutical products containing efavirenz for disposal in the United Kingdom before 20 November 2013."
Teva says that at the relevant date (9th February 2012) as a matter of fact it did not have any intention to launch efavirenz before 20 November 2013. Thus the action must fail. Mr Thorley submits that while there may (or may not) be costs consequences arising from the fact that Teva did not make this position clear until after the claim began and after the Defence was served, the action must be dismissed because Teva simply did not intend to infringe. He put the matter this way at the start of his closing submissions (Day2 p53 ln14):
"The issue —— and it is a very small one between us, but it is quite an important one because one needs to know for the future where one is going —— is if we were to write in response to a letter before action what we have now put in our Part 18 response, at no material time have we an intention to launch before the expiry date, whether thereafter a party can start proceedings for quia timet relief and obtain the sanction of the court behind that to say, "You have got to give either a contractual undertaking or be subject to an order of the court that you will not do that" —— obviously the position we adopt on this side of the court is once we have said we are not going to do something, thereafter of course somebody can start proceedings saying, "We do not believe you." If necessary, it can come to trial, as this one has, and the court will then have to assess as to whether you were right or wrong in saying, "I do not intend."
Obviously what has happened in this case is we did not come up with that letter at the outset, for reasons that you have heard of, and we accept that if we are correct that they have failed to prove that there is an actionable threat, none the less the court has options with regard to costs for the fact that we did not put our cards on the table earlier on. The fact that we did not does not mean that we lose the action.
What one has here is really a very simple question of fact that your Lordship has to decide as to whether at the date this action started —— or possibly at the date that the interim injunction was granted, and in some cases at the date of trial, but obviously not here, because we have been injuncted —— in fact there was a threat. The fact that they perceived that there was a threat is neither here nor there."
BMS agrees that the point is important but does not agree that there was no proper basis to bring these proceedings. It submits the action should succeed and an injunction to be granted against Teva until the expiry of the SPC.
There was no argument that if a threat at the date of issue was established, which Teva denies, then in this case a final injunction until the expiry of the SPC would follow. Thus the only question I have to decide concerns the position at the date the action started.
The witnesses and the facts
BMS provided witness statements from Charles Caruso, Executive Director, Legal at the first claimant; Amadou Diarra, European Vice President and General Manager for UK and Ireland for the second claimant; and Stephen Bennett, a solicitor and partner at Hogan Lovells. The point of this evidence was to explain why by early 2012 BMS were worried that Teva were about to launch efavirenz. Mr Diarra summarised the reasons for this as follows:
i) There was and is a significant market for efavirenz in the UK;
ii) Teva's marketing authorisation application and approval;
iii) Teva's failure to engage in correspondence;
iv) Teva's previous behaviour with regard to atorvastatin;
v) There could be a "first generic mover" advantage for Teva to launch early;
vi) Teva's existing portfolio of generic products potentially made them an attractive option to the procurement authorities in the UK;
vii) The difficulties in calculating the loss for BMS were Teva to launch.
Two points made by Mr Diarra require some explanation at this stage.
First the advantage to the first generic mover. It is not in dispute that, as a generalisation, if a generic drug company is able to start selling the generic version of a successful branded product before any other generic is available, large profits can be made in a short time. Before any generic is on the market for a given drug, the market is a monopoly and the level of the price for the branded drug being sold by the originator company is relatively high. When the first generic starts selling, this first generic does not have to offer a large discount over the existing branded price in order to take market share. While the market is a duopoly between the branded product and the generic product, the generic company can expect to be able to sell at a price which is in effect a modest discount off the branded price. This is much higher than the generic's cost of sales. When more generic companies enter the market, in order to compete they need to offer discounts against each other and the price falls rapidly to a level governed by the generic companies' costs of sales (plus a profit margin). That is much lower than the branded price. Any given real market may not operate in this way for any number of reasons but as a general proposition, both sides accept this "first generic mover" advantage is a well understood idea.
Second, atorvastatin. In 2010 Teva engaged in correspondence with the patent holder (Warner-Lambert) stating that they intended to launch generic atorvastatin in November 2011, which was after the expiry of the relevant SPC, but then surreptitiously launched the product on a very large scale in June 2011, before expiry, and without any notice to the patentee. The matter came before Floyd J on 20 th June 2011, the day Warner-Lambert discovered that Teva's atorvastatin was on sale. Teva's counsel appeared on the application at very short notice. Teva's position was that they believed the patent was invalid. In paragraph 6 of his judgment ( Warner Lambert v Teva [2011] EWHC 1606 (Pat)) Floyd J noted the evidence that one million packets had been sold in that morning alone. In...
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