August 16, 2022
Neurim Pharmaceuticals (1991) Ltd applied for interim injunction relief against Teva UK Ltd in relation to the alleged infringement of its second medical use divisional European Patent designating the UK for “Circadin”, which is a prolonged release melatonin product indicated for the short-term treatment of primary insomnia characterised by poor-quality sleep in patients aged 55 or over.
Neurim sought relief to stop Teva from supplying or selling any generic version of Neurim’s Circadin product. The divisional patent, which is essentially the same as the parent patent (the Patent) is due to expire on 12 August 2022.
In April 2022, Mr Justice Mellor rejected Neurim’s application on American Cyanamid principles (the First Judgment) finding that:
- damages would be an adequate remedy for Neurim pre-expiry of the Patent, but not post-expiry;
- damages would not be an adequate remedy for Teva, either pre- or post-expiry;
- the balance of the risk of injustice came down in favour of Teva, as calculating Neurim’s damages post-expiry was subject to fewer uncertainties than for Teva; and
- in any event, maintaining the status quo left Teva on the market.
Since the First Judgment, the following had occurred:
- on 27 May 2022, the Court of Appeal rejected an appeal brought by Generics (UK) Ltd (trading as Mylan at the time) against the Order of Marcus Smith J in which he had found the Patent valid and infringed (the Mylan Court of Appeal Judgment);
- as a result, Mylan was injuncted from selling its generic product, “Melatonin Mylan”, and ordered to take certain steps to retrieve infringing product from its customers by 6 June 2022 and to ensure that by 28 June 2022 all infringing products had been withdrawn from channels of distribution and put into escrow; and
- Neurim issued this second application for an interim injunction against Teva.
Mellor J noted that, since his First Judgment, more evidence containing further information and greater detail in certain areas had been provided by the parties. Therefore, it was appropriate to revisit certain findings from the First Judgment. In any event, he was now dealing with a different period, i.e., from the date of this hearing looking forward in the light of the evidence now available.
Material change in circumstances
Mellor J noted the long-standing requirement that the reconsideration of an interim order requires the applicant to demonstrate a significant and material change in circumstances.
Teva accepted that the circumstances had changed but suggested that the change(s) were not material or significant. Neurim/Flynn relied on: (i) the Mylan Court of Appeal Judgment; and (ii) the fact that Mylan had been removed from the market. Teva also accepted that whether there had been a material change of circumstance was an arid debate because if new circumstances favoured the grant of an injunction when they did not before, then they would amount to a material change and if not, not. Therefore, Mellor J concluded that it was right to consider this second application on the basis of the evidence now before him.
As Mr Justice Laddie had found in Series 5 Software v Clarke  FSR 273, when considering interim relief, the court should bear in mind “any clear view [it] may reach as to the relative strength of the parties’ cases”. Considering the merits, Mellor J said that he was unable to form any clear view for various reasons, including the fact that in the Mylan Court of Appeal Judgment, Lord Justice Arnold had dismissed a couple of points on the ground that it had not been open to Mylan to argue them, but which Teva now emphasised it would cover in its expert evidence and in argument at trial. Teva said that any trial in this case would therefore not be the same as in the Mylan case where the Patent was found valid and infringed and Mylan removed from the market. In these circumstances, Mellor J was not inclined (nor permitted) to examine the merits any further. In any event, he was unable to form any clear view as to who would win. Accordingly, he turned to the American Cyanamid guidelines.
Would damages be an adequate remedy for Neurim if no injunction were granted?
Mellor J found that the evidence now available pointed even more firmly to the same conclusion as he had reached in the First Judgment, that the loss suffered by Neurim over the period pre-expiry of the Patent would be capable of being ascertained with a reasonably high degree of accuracy if Teva were not injuncted. Therefore, damages would be an adequate remedy for Neurim if at trial the Patent was found to be valid and infringed, yet Teva had not been injuncted in the interim period.
The evidence was that more generics had obtained or applied for marketing authorisations. Therefore, it was entirely feasible that on expiry there would be up to six (possibly more) entities competing in the market for melatonin.
The expert evidence was that the price spiral on expiry would be rapid, and a new post-expiry equilibrium price would be achieved within days, regardless of the starting point. If this were correct, Mellor J said, Neurim’s loss post-expiry would not be significant. Even if the price took a little longer to come down to a post-expiry equilibrium, Neurim might be able to point to certain sales contracts awarded post-expiry and identify reasons why, if Teva had been injuncted, it would have secured those contracts. However, although this represented uncertainty and therefore an element of inadequacy in Neurim’s damages, the court would still be able to make a determination, Mellor J said. Accordingly, damages would be an adequate remedy for Neurim in the post-expiry period as well as pre-expiry.
Would damages be an adequate remedy for Teva if an injunction were granted?
If the Patent was subsequently found to be invalid, but Teva had been injuncted and was off the market until expiry of the Patent, the court would have to estimate the damage suffered by Teva for being kept off the market, i.e., by estimating the sales Teva would have made if it had not been injuncted.
Mellor J found that the conclusion he had reached in his First Judgment, i.e., that damages would not be an adequate remedy because of the uncertainties in trying to ascertain Teva’s loss pre-expiry, still held.
Mellor J said that if Teva were injuncted and off the market until expiry of the Patent, it would have to enter the melatonin market afresh once the Patent had expired. Teva would be able to maintain some of its customer relationships over the seven weeks of the injunction, but it was likely that most of its customers would have to purchase supplies of melatonin from Neurim in the meantime. The court would know the volumes and prices which Teva was able to achieve in the post-expiry period but, again, there would be considerable uncertainty over the volumes and customers that Teva would have managed to establish up to the point of expiry, with which it would have carried on into the post-expiry period, if it had not been injuncted. The pre-expiry uncertainty therefore translated in to the post-expiry period: Teva would enter the post-expiry period in a different position if it had not been injuncted, to that in which it would find itself at the post-expiry point if it had been injuncted. In other words, uncertainties would remain over what new customers and volumes Teva would have captured in the interim period if it had not been injuncted and hence over the assessment of the loss of Teva’s “first mover” advantage at the post-expiry point and into the future.
Accordingly, Mellor J found that damages would not be an adequate remedy for Teva post-expiry.
Mellor J concluded that the balance on this second application had shifted further in Teva’s favour. Therefore, the balance of the risk of irremediable harm came down in favour of Teva.
The status quo
Mellor J said that the relevant status quo was that which existed at the date of deemed service of this second application on Teva, which was 8 June 2022. By then, Teva had been on the market for nearly eight months, with just over two months to expiry. In Mellor J’s view, this pointed firmly in favour of no injunction.
Accordingly, the second application for interim relief was refused. While Mellor J had some sympathy for Neurim as it was a relatively small entity fighting powerful generic entities, if it were to establish at trial that the Patent had been infringed by Teva, it would receive adequate compensation at that point. (Neurim Pharmaceuticals (1991) Ltd v Teva UK Ltd  EWHC 1641 (Pat) (29 June 2022) — to read the judgment in full, click here).