Dutch Supreme Court: Health Insurer Not Entitled to Reimbursement for Payments Made in Connection with Subsequently Invalidated Patent

While we await the CJEU’s judgment (date not yet announced) in Mylan AB v. Gilead Sciences Finland Oy, Case C-473/22 (see post discussing Advocate General Szpunar’s opinion here), the Supreme Court of the Netherlands has issued a decision addressing whether compensation is due for losses suffered during the period of time a patentee enforced a preliminary injunction concerning a patent that is later revoked.  The case, Menzis Zorgversekeraar N.V. v. AstraZeneca B.V., is briefly excerpted in this post on EPLaw, which links to the decision in the original Dutch and in English translation.  The patent in suit covered a sustained release formulation of a drug, quietapine.  (An earlier patent on the immediate release version of the drug expired in 2012.)  The District Court of the Hague sustained the validity of the sustained release patent in 2012, after which AstraZeneca obtained a preliminary injunction prohibiting Sandoz from marketing a generic version of the sustained release formulation in the Netherlands.    In 2014, however, the Court of Appeal for the Hague reversed the 2012 judgment and revoked the Dutch patent for lack of inventive step, following which Astra Zeneca’s competitors launched their generic versions.  In 2016, Menzis, a health insurer, filed a complaint alleging that AstraZeneca should be required to compensate Menzis for losses sustained from having to reimburse insureds for the use of AstraZeneca’s brand-name sustained release formulation during the time the generic drugs were excluded from the market.  The district court ruled for Menzis, but the Court of Appeal reversed, and the Supreme Court affirms the Court of Appeal.

In so ruling, the Court of Appeal ruling (which the Supreme Court quotes with approval) held that “[i] follows from the CFS Bakel/Stork judgment [no citation provided] that Dutch law conforms to the view - also held in our neighboring countries - that some form of culpability on the part of the patentee is required in order to assume liability after the revocation of a patent” (para. 5.2).  The Court of Appeal either distinguished or overruled what I assume to be a previous Netherlands Supreme Court decision, Ciba Geigy/Voorbraak (paras. 5.7 - .5.8):

In that judgment, the Supreme Court ruled that, in principle, it should be assumed that the person who, by threatening enforcement, forced his opposing party to behave in accordance with an injunction issued in summary proceedings, has acted unlawfully if, as the judgment on the merits of the case shows with hindsight, he was not entitled to require the opposing party to refrain from the acts in question. Irrespective of whether that judgment is consistent with the rules of the European Enforcement Directive as interpreted in the Court of Justice's judgment in Bayer/Richter (AstraZeneca disputes that), it does not follow from the Ciba Geigy/Voorbraak judgment that the patentee has strict liability to others other than the party who has been forced to comply with an interlocutory injunction by threat of enforcement. The rationale for this judgment focuses exclusively on the special position of that opposing party and is based in part on the consideration that penalties forfeited for failure to comply with the interlocutory injunction will continue to be forfeited following a contrary judgment on the merits. The latter strikes a certain balance between the clashing interests. That balance is lacking when extending strict liability to parties such as Menzis, which are not liable to forfeit penalties for non-compliance with the injunction.

 

. . . [T]he judgment in Ciga Geigy/Voorbraak is not exclusively based on the provisional nature of a decision in summary proceedings, but also on (the precisely definitive nature of) the indebtedness of forfeited penalties. . . .

The Court of Appeals further correctly concluded that AstraZeneca’s reliance on the patent during the relevant time period was not unlawful.  The standard is whether “AstraZeneca knew, or should have realized, in that period that a serious, non-negligible chance existed that the patent would not stand up in opposition or nullity proceedings,” (para. 5.10), and the Court says no:  the 2012 district court decision supported validity, and some other European countries also upheld the validity, although the English High Court found the U.K. portion of the patent invalid in 2012.  Finally, the Supreme Court states that, although “the circumstance that AstraZeneca did not act unlawfully does not automatically imply that the enrichment alleged by Menzis is justified,” the facts do not support a finding of unjust enrichment.     

One additional notable thing about this case is that, as stated above, it was the health insurer that was seeking reimbursement, rather than the excluded generic firms.  Except for the fact that the present case does not involve any allegation of fraud, this situation is reminiscent of Sec’y of State for Health v. Servier Labs. Ltd., [2021] UKSC 24, in which the U.K. Supreme Court rejected a claim that the defendants, who allegedly caused the U.K.’s National Health Service to suffer economic harm by defrauding the EPO into issuing a patent that later was found to be invalid, could be liable under the doctrine of “unlawful means.”  The UKSC held that the doctrine does not apply unless the defendant’s conduct affected the third party’s (EPO’s) freedom to deal with the plaintiff.  Here, by contrast, it appears that the Dutch courts would permit a health insurer to collect reimbursement on the right set of facts.