Interim Injunctions - Merck Sharp & Dohme Corp v Clonmel Healthcare Ltd.

The Four Courts, Dublin

Author Jtdirl

Released into public domain by the copyright owner

Source Wikipedia Supreme Court of Ireland

Jane Lambert

Irish Supreme Court (Chief Justice Clarke and Justices O'Donnel Donal, McKechnie, Dunne, O'Malley and Iseult) Merck Sharp & Dohme Corp v Clonmel Healthcare Ltd. [2019] IESC 65, 31 July 2019

This was an unusual appeal in that the discretion of an applications judge and the decision of a majority of the appellate court were second-guessed after the expiry of the intellectual property right upon which the applicant for an interim injunction had relied.  The Supreme Court of Ireland allowed an appeal against the Irish Court of Appeal's decision in Merck Sharp & Dohme Corp v Clonmel Healthcare Ltd. [2018] IECA 177 to reject an appeal from Mr Justice Haughton's refusal to restrain Clonmel Healthcare Ltd. from marketing a product that was alleged to have infringed Merck Sharp & Dohme Corp Ltd' s Irish supplementary protection certificate 3005'2001.

Merck had owned patents for simvastatin, a statin for the treatment of cholesterol. and ezetimibe. It sold a combination of those drugs as Inegy. The patents for simvastatin and ezetimibe had expired but Merck obtained two supplementary protection certificates one of which expired on 18 April 2018 and the other on 1 April 2019.  Clonmel launched a generic competitor to Inegy on the expiry of the first SPC but before the expiry of the second.  Merck applied successfully without notice to Mr Justice McGovern for an interim injunction to restrain Clonmel from selling the generic product before the expiry of the second SPC.  Clonmel resisted the application on the ground that the second SPC was invalid.  On the return day, Mr Justice Haughton refused to renew the injunction on the ground that an award of damages was an adequate remedy for the claimant, Merck and his decision was upheld on appeal.  Even though the second SPC would expire before the hearing of the appeal, Merck pressed the Supreme Court to determine whether Mr Justice Haughton had been right to refuse the interim injunction for the 11 months or so before the expiry of the second SPC.

The Irish practice on interim injunctions originates from the decision of the House of Lords in American Cyanamid Co (No 1) v Ethicon Ltd  1975] 2 WLR 316, [1975] 1 All ER 504, [1977] FSR 593, [1975] AC 396, [1975] UKHL 1.  Mr Justice O'Donnell who delivered the judgment of the Supreme Court analysed that appeal between paragraphs [27] and [33].   He also discussed the Irish Supreme Court's judgment in  Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450 where an interim injunction was refused on the ground that the interlocutory proceedings were likely to dispose of the case as a whole.  He then considered the balance of convenience in this case recognizing that an award of damages would compensate neither party.  The problem for the claimant was that its pricing structure would have been undermined from the moment a generic product entered the Irish market. The difficulty for Clonmel had it been restrained until 1 April 2019 it would enter the market with other generic competitors whereby it would have lost first-mover advantage. Consequently, damages would not have been an adequate remedy for either party.

At paragraph [54] the learned judge suggested the following test for cases such as this:

"(1) First, the court should consider whether, if the plaintiff succeeded at the trial, a permanent injunction might be granted. If not, then it is extremely unlikely that an interlocutory injunction seeking the same relief upon ending the trial could be granted;
(2) The court should then consider if it has been established that there is a fair question to be tried, which may also involve a consideration of whether the case will probably go to trial. In many cases, the straightforward application of the American Cyanimid and Campus Oil approach will yield the correct outcome. However, the qualification of that approach should be kept in mind. Even then, if the claim is of a nature that could be tried, the court, in considering the balance of convenience or balance of justice, should do so with an awareness that cases may not go to trial, and that the presence or absence of an injunction may be a significant tactical benefit;
(3) If there is a fair issue to be tried (and it probably will be tried), the court should consider how best the matter should be arranged pending the trial, which involves a consideration of the balance of convenience and the balance of justice;
(4) The most important element in that balance is, in most cases, the question of adequacy of damages;
(5) In commercial cases where the breach of contract is claimed, courts should be robustly sceptical of a claim that damages are not an adequate remedy;
(6) Nevertheless, difficulty in assessing damages may be a factor which can be taken account of and lead to the grant of an interlocutory injunction, particularly where the difficulty in calculation and assessment makes it more likely that any damages awarded will not be a precise and perfect remedy. In such cases, it may be just and convenient to grant an interlocutory injunction, even though damages are an available remedy at trial.
(7) While the adequacy of damages is the most important component of any assessment of the balance of convenience or balance of justice, a number of other factors may come into play and may properly be considered and weighed in the balance in considering how matters are to be held most fairly pending a trial, and recognising the possibility that there may be no trial;
(8) While a structured approach facilitates analysis and, if necessary, review, any application should be approached with a recognition of the essential flexibility of the remedy and the fundamental objective in seeking to minimise injustice, in circumstances where the legal rights of the parties have yet to be determined."

Applying those principles, their lordships decided that the greater risk of injustice lay in refusing the injunction and although they could no longer restore Mr Justice McGovern's injunction they could at least allow the appeal.

I can't say how this appeal will be received in the rest of the common law world.  Appellate courts in other countries are slow to reverse the exercise of a judge's discretion unless it is clearly wrong and they do not generally consider hypothetical issues.  On the other hand, cases of this kind occur all the time and not just in intellectual property disputes.  Mr Justice O'Donnell's 8 principles are a useful and instructive way of addressing the problem.   I can see plenty of circumstances where I would insert them into a skelly.

Should anyone wish to discuss this case or patents law or interim remedies in general, call me on 020 7404 5252 during office hours or send me a message through my contact page,