Interim injunctions and litigation strategy after Ranbaxy v Pfizer
The District Court of Helsinki gave an interesting and rare decision this year regarding damages for unnecessary interim injunctions in a case between Ranbaxy Laboratories Limited, Ranbaxy UK Limited and Ranbaxy Pharma AB (Ranbaxy) as plaintiffs and Warner-Lambert Company LLC and Pfizer Oy (Pfizer) as defendants (Decision of the District Court of Helsinki L 10/6838, June 4, 2014). Ranbaxy is the producer of, inter alia, a medicine competing with another named Lipitor, which is produced by one of the biggest pharmaceutical companies in the world, Pfizer.
Regarding the Finnish legal system it should be noted that while this case was still at the district court, all Finnish IP matters were centralised at the Market Court as of September 1, 2013. Further, Finland will not come under the Nordic-Baltic regional division of the Unified Patent Court (UPC) but will establish a local Finnish division instead.
A unique feature of Finnish pharmaceutical patent litigation has been that it was not possible to receive a product patent for pharmaceutical products prior to 1995, instead of which analogical method patents were granted. The concept of the analogical method patent is not mentioned in the Finnish Patents Act but in the Patent Regulations, where it is characterised by the novelty and inventiveness of the end-product and not the process in itself.
As chemical compounds can typically be manufactured using several different methods, it is often possible to make changes to the process in order to avoid literal infringement of an analogy process patent, and naturally generic manufacturers have utilised the possibilities generated by this limited scope of protection.
However, this is not the only reason for the relatively steady flow of pharmaceutical litigation cases to Finland, as the fast-track process offered for generic pricing and reimbursement applications presumably also plays an important role when deciding whether to enter Finnish markets. Whether this trend will continue in future under the UPC regime depends on many factors, but we argue that it is probable that smaller markets will remain the litigation focus in the pharmaceutical sector in future.
Background
The case between Ranbaxy and Pfizer centred on an interim injunction obtained by Pfizer to stop the entry into, and the sale of, Ranbaxy’s product in the Finnish market and was related to a series of similar proceedings between the same parties during the first decade of the 21st century. The District Court of Helsinki found that this injunction had been obtained unnecessarily and estimated that due to the injunction Ranbaxy had lost sales worth €35 million ($47 million) between 2007 and 2009, and thereby profits of as much as €16.5 million ($22.2 million), or 47 percent of turnover, which Pfizer was ordered to compensate it for.
Ranbaxy had originally claimed damages of €23.3 million ($31.4 million), while Pfizer would have agreed to damages of €330,000 ($444,000). Pfizer admitted that the interim injunction had been unnecessary, but claimed that there was no causal relation to the damage that was claimed to have been caused. The causality was, however, agreed to by the court, which deemed it was clear that Ranbaxy would have entered the market prior to 2009 without the interim injunction.
Liability for unnecessary interim injunctions is strict
The damages awarded were based on the Code on Judicial Procedure, stipulating that an applicant which has unnecessarily resorted to an interim injunction shall be liable to compensate the opposing party for the damage caused. This liability is strict, meaning that it is not possible to avoid liability by, for example, providing evidence that a party acted without negligence.
In relation to the general interim measures in Chapter 7 Section 3 of the Act, this generally requires that either the claim requirement (the applicant has a right against the defendant) or the danger requirement (there is a danger that the opposing party hinders or undermines the realisation of the right or decreases its value) was lacking when the interim injunction was awarded, and/or that the court conducted an incorrect evaluation of the inconvenience caused by the injunction to the opposing party. In this case, however, the court did not have to pay much attention to this because, as stated above, Pfizer had itself admitted that the injunction had been unnecessary.
How to estimate damages arising from unnecessary interim injunctions
As regards the amount of damages, the court applied the provision of the same act stipulating that if no evidence is available as to the amount of damage, or it can be presented only with difficulty, the court shall have the power to assess the amount, within reason. Pfizer attempted to contest the applicability of this section, claiming that Ranbaxy had not presented the accounts available.
The court, however, responded by stating that the outcome must be such that the balance between the relatively low threshold of evidence imposed on the seeker of an interim injunction and the liability for damages is maintained. If the threshold of evidence imposed was too high, leading to a small amount of damages or no damages at all, this balance would be lost.
The court also emphasised the special features of the case, stating that where the business has not even been started, and thus evidence is almost impossible to obtain, it is reasonable that the court estimates the damages. At the same time, however, the court emphasised the principle of prohibition of enrichment, requiring that the party having suffered the losses may not enrich itself on the basis of the damages.
When estimating the amount of damages, the court took into consideration that the medicine in question was very popular and successful; that Pfizer had itself estimated that the losses caused were at least €35 million and even as much as €66 million; that the distributor of Ranbaxy’s product, Orion, was a well-established company in the Finnish medicine market with a good reputation; and that sales prospects for the first generic medicine would have been good.
Analysis and advice for future litigants
We consider that the outcome of the decision must have been a huge negative surprise for Pfizer which, as expected, announced after the decision that it would appeal against it. Our guess is that the risk of monetary consequences might have been incorrectly deemed lower by Pfizer due to the fact that it is often quite difficult to prove damage and causality. On the other hand it is possible that, despite being excessive, the damages awarded were less than the profits gained by Pfizer as a result of the interim injunction.
As stated above, Ranbaxy’s own estimation was that it had suffered damages of €23.3 million, based on a turnover of €49 million. In that case, the evaluation would naturally be different.
As these cases are fought in various European countries, this one should be evaluated from the perspective of an overall litigation strategy and not focus solely on Finnish law. In comparison, even from a pan-Nordic perspective, Kristian Fredrikson, an IP litigator at one of the leading Swedish law firms, Delphi, comments that there are differences: “The Finnish decision is certainly an interesting one. I would say that also in Sweden such damages for a reversed decision on interim injunctions in a final judgment would be exceptional.”
He continues that: “It would also be unusual if a court found that interim injunctions were sought with the intention to cause economic loss, as an interim injunction granted on its merits would be considered fair if all criteria were met at the time and as liability for damages is strict.”
It is in any event clear that the decision needs to be carefully evaluated with an eye on future IP litigation and strategy. The Finnish decision is a strong reminder that there is a real and considerable risk if interim injunctions are sought without having the merits for a final injunction to be secured.
Jan Lindberg is a partner and attorney at law, M.Jur (Oxford), Attorneys at Law Trust Ltd. He can be contacted at: Jan.Lindberg@thetrust.fi
