Alicante IP Colloquia

For anyone finding themselves in southeastern Spain on April 19, Alicante IP Colloquia is putting on an in-person event at noon titled «Hacia la cuantificación del daño» ("Toward the quantification of damages").  Panelists will be Judges Florencio Molina López and Gustavo Andrés Martin Martín.  The event is free, but registration is mandatory (link available here).  Judge Molina López is the author of a recent book on protective letters (see here).  I'm guessing the panelists will address the recent decision of the Madrid Court of Appeals in Eli Lilly v. Teva, previously noted on this blog here and here.

Stief on Preliminary Injunctions Prior to Grant

The issue of whether courts in EPO member states have authority to grant preliminary injunctions on the basis of pending patent applications has recently been litigated in a number of European countries (see previous mentions on this blog here, here, here, and here).  Marco Stief has now published two papers, one in German and one in English, on the topic, noting that such injunctions appear to be permissible in some countries, albeit in several of them only in exceptional cases.  His more recent contribution is Fingolimod—(no) injunction before patent grant, J. Intell. Prop. L. & Prac. __ (forthcoming 2024).  Here is the abstract:

This article analyses the position of European courts on the availability of preliminary injunctions on the basis of a patent application, reviewing several national decisions in the fingolimod litigation. The decisions handed down by the Düsseldorf Regional Court, the Tribunal Judiciaire de Paris, the Danish Maritime and Commercial Court, the District Court of The Hague and the Barcelona Commercial Court show that the courts, with limited exceptions, reject provisional legal protection on the basis of a mere patent application on the grounds of absence of legal certainty.  The analysis identifies four (minimum) prerequisites that must be fulfilled for the courts to consider the possibility of issuing an injunction before a patent is granted.

The corresponding German article is (Keine) Unterlassungsverfügung:  Zugleich Besprechung von LG Düsseldorf „Fingolimod‟ unter Berücksichtigung von Parallel-Verfahren in anderen Jurisdiktionen, ("No Preliminary Injunction:  As Well as Case Law from the Düsseldorf Regional Court in "Fingolimod" in Consideration of Parallel Proceedings in Other Jurisdictions"), 23/2023 GRUR 1651-60.

For a different point of view, see Matthieu Dhenne’s article Preliminary Injunctions Based on a Patent Application:  A Justified Solution? (Fingolimod Case), 45 EIPR 236 (2023), previously noted here, and his more recent post FINGOLIMOD or the Hesitation Blues: can preliminary injunctions be based on a patent application under French law?, Kluwer Patent Blog, Dec. 19, 2023, which updates the French case law discussed in his earlier article and in the two Stief articles.

Montefusco and Crespo on Spanish Eli Lilly v. Teva Decision

A post I published a few months ago titled Recent Patent Damages Decision of the Madrid Court of Appeal began as follows:

A few weeks back Adrián Crespo published a short post on the Kluwer Patent Blog titled Patent case: Judgment no. 18/2023 of Madrid Court of Appeals (Section32) of 23 June 2023, Spain.  The author writes that, as a result of the decision, “generic companies wishing to launch at risk” should be aware that “the first mover(s) will be held liable for triggering regulatory price reduction and thus for the damages arising from the price gap between the innovator and the generic, even if other third parties have launched at a later point in time.”  The post references a longer summary of the decision on Kluwer IP Law, to which I do not have access, but I was able to obtain a copy of the decision itself and will note a few things about it below.  (Here is a link to the decision in the original Spanish, and here is a link to a machine translation.)

More recently, Mr. Crespo and Josep Montefusco have published an article titled Madrid Court of Appeal Rules in Landmark Damages Case, 46 EIPR 65 (2024).  The abstract reads:

In a recent judgment, the Madrid Court of Appeal (Section 32) has ruled in the landmark raloxifene patent infringement case. The decision dealt inter alia with the allocation of liability among patent infringers for triggering regulatory price reduction. This comment considers the main implications of this precedent, which are likely to shape future damages claims in Spain (an important market for pharmaceutical products which, moreover, is not part of the Agreement on a Unified Patent Court).

The article provides a detailed analysis of the facts and the principal holdings.  It concludes, first, that one of the decision’s important holdings is that “patentees and/or their licensees may claim damages for losses suffered by their subsidiaries” (p.69).  (By way of comparison, I would note that U.S. law on this point is not altogether clear; for brief discussion and citations, see my post dated Oct. 26, 2016, noting Mark Lemley’s critique of Federal Circuit case law that generally precludes a patentee from recovering losses suffered by its exclusive licensee, and district court cases considering the “inexorable flow” doctrine, under which a parent may under some circumstances recover for losses suffered by a subsidiary.  In a somewhat related vein, see also my post dated Nov. 20, 2023, discussing some recent French and Canadian cases addressing  standing to sue of licensees and related companies. )  Second, the article notes the significance of the court’s holding that the first generic in the market can be liable for a subsequent price reduction even if other entrants follow, and considers its implications and possible nuances.

Recent Patent Damages Decision of the Madrid Court of Appeal

A few weeks back Adrián Crespo published a short post on the Kluwer Patent Blog titled Patent case: Judgment no. 18/2023 of Madrid Court of Appeals (Section32) of 23 June 2023, Spain.  The author writes that, as a result of the decision, “generic companies wishing to launch at risk” should be aware that “the first mover(s) will be held liable for triggering regulatory price reduction and thus for the damages arising from the price gap between the innovator and the generic, even if other third parties have launched at a later point in time.”  The post references a longer summary of the decision on Kluwer IP Law, to which I do not have access, but I was able to obtain a copy of the decision itself and will note a few things about it below.  (Here is a link to the decision in the original Spanish, and here is a link to a machine translation.)

The facts of the case, in brief, are as follows.  Eli Lilly and Company was the owner of ES 2 102 602, the Spanish validation of a European patent, covering the active ingredient Raloxifene, as well as a SPC 009900002.  These rights expired on August 5, 2013.  Daiichi Sankyo Europe GmbH was Eli Lilly’s exclusive licensee, and marketed the brand-name drug Evista in Spain through a Spanish subsidiary, Daiichi Sankyo España.  (Eli Lilly also marketed some amount of its own Raloxifene product under the brand name Optrumar, however, through a Spanish distributor, Esteve.) Teva launched-at-risk a generic version of the drug in Spain in May 2011.  Prior to launch of the generic product, the Spanish Ministry of Health set the price of the Teva product at €13.22 and included both the brand name and generic drug in a “homogeneous grouping.”  Under Spanish law, pharmacists are required to dispense the lowest priced drug in the group, so as a result Daiichi had to lower its price by 40%.  Meanwhile, another company, Laboratorios Cinfa, S.A., also obtained permission to market a generic version of the drug and began doing so in January 2012.  Thereafter several other generic firms entered the market as well.

Eli Lilly and Daiichi filed suit against Teva and Cinfa.  The court of first instance entered judgment for the plaintiffs, and the defendants appealed.  I’ll just note that the court affirms on liability, and focus on the damages issues.  The appeals court holds as follows:

First, Daiichi is entitled to recover its lost profit from sales of Evista that it would have made, but for the defendants’ infringement, through the term of SPC expiration in 2013.  The court rejects Cinfa’s argument that its liability should be reduced to take into account sales made by other generic firms from June 12, 2012 through August 5, 2013 (heading 7, para. 2).  (If I understand correctly, the plaintiffs didn’t sue these other companies to avoid having to defend the patent’s validity against them.  Cinfa had already lost on the validity issue in a different Spanish proceeding and was estopped from raising other grounds for invalidity in this case.)  

Second, Daiichi also is entitled to recover price erosion damages caused by the reduction in its profit margin caused by the infringement through August 5, 2013.  The appeals court holds that the party responsible for the drop is Teva, the first firm to launch at-risk, since it was Teva’s entry into the market that caused the Spanish Ministry to bring about the 40% reduction in the price of Raloxifene drugs (heading 12).  

Third, Daiichi is entitled to recover compensation for the reduction in the net operating profit after tax suffered by its Spanish subsidiary as a result of the infringement, which reduction in turn reduced the consolidated profit of Daiichi.

Fourth, Eli Lilly is entitled to an award of the profits Teva and Cinfa made on additional sales of the drug at the lower price, which sales displaced sales that Eli Lilly would have made through the distributor (but which did not displace existing sales from Daiichi).  Cinfa does not get to deduct costs it incurred to bring its product to market, because these costs would have been incurred anyway after the expiration of the SPC and thus are not directly related to the infringing activity (heading 15).

Going back to the beginning, Mr. Crespo asserts that the final damages award will be in the seven-figure range, which would be quite high for a European country.

Molina on Protective Letters in Spain

I just received a copy of Judge Florencio Molina López's new book, El escrito preventivo frente a las medidas cautelares inaudita parte (Bosch Mercantil 2022) (in English, the title can be translated as "The protective letter as a defense mechanism against ex parte preliminary injunctions").  The subject of protective letters is one I discuss, briefly, in my book and have occasionally touched on in this blog.  For example, I noted (here) a 2017 European Commission Communication that defined a protective letter as "an instrument by which "a defendant fearing to be sued for an IPR infringement (for instance, because it has received a warning letter from the rightholder) informs the competent judicial authorities in advance, (i.e. even before an application has been made), why the potential infringement claim is, according to the defendant, not founded," and which stated that such letters "can be seen as a good instrument to help balance, in a fair and proportionate manner, the various conflicting interests and fundamental rights at issue in relation to the possibility of issuing ex parte measures set out in Articles 7(1) and 9(4) of IPRED."  My understanding is that protective letters are used most extensively in Germany (where they are called Schutzschriften), but that other countries including Spain now make use of them as well.  Anyway, I met Judge Molina at a conference at the University of Nevada-Las Vegas in 2018, at which he and Germany's Judge Anne-Kristin Fricke both spoke on protective letters, and then in 2019 I spent some time with both judges during an extended stay in Europe (see, e.g., here).

Below is the book description (in my very unofficial, but I hope reasonably accurate, translation from the Spanish), and here is a link to the publisher's webpage:

           

            This work has as its objective the legal analysis of the procedural instrument known as the protective letter:  its German origin and a brief comparative study, the application and responses provided by our commercial courts following the legal recognition in Spain with article 132 of the Law No. 24/2015 of July 24, 2015, on Patents, as well as the various problems that the interpretation and application of the same has produced thus far in our country.  In addition, it compares and analyzes the judgments rendered within the context of the Barcelona Commercial Court's Fast Action Protocol for the Mobile World Congress, as well as other decisions which have applied this procedural form beyond the legal and traditional scope of patents.