Thailand Law Journal 2012 Fall Issue 1 Volume 15

Four-Factor Test

As, considered in eBay v. MerckExchange , the traditional ‘four-factor test’ used by the courts in order to determine the validity of the grant of a permanent injunction were as follows: (1) the plaintiff would have to demonstrate that he had suffered an irreparable injury; (2) there was an inadequacy posed by the remedies available in law; (3) there would be considered an equitable remedy after balancing out the conflicting interests of the plaintiff and the defendant and; (4) public interest would not be flouted while granting the permanent injunction . These four factors are considered specifically with respect to the grant of injunctions to pharmaceutical patents. In Hoffman v. Roche, in Paragraph 86 of the judgment established that irreparable harm would have been caused to numerous parties who were not parties to the suit in question if an injunction were to be issued. The court finally concluded that between the mutually exclusive options – the public interest involved in granting the injunction to affirm the patent during the patent infringement claim was still pending, and the public interest in enabling access to the people to a life saving drug, the balance of convenience tilts towards the favour of not granting the injunction, especially so, in the case of life-saving drugs.

The Balance of Convenience Test

In Hoffman v. Roche, the court found that the defendant had succeeded in raising a strong enough claim against the validity of the patent and the court refused to further explore the merits of the patent in itself. Hence, considering the American Cyanamid principles, the court went on to explore the test of ‘Balance of Convenience’. The factors to be considered were (i) The extent to which the disadvantages incurred by each party could not be compensated through damages when he succeeded in the trial; (ii) The nature of the product and its use; (iii) The timing of the action; (iv) Where it is found the case is balanced, it might be essential to consider the relative tenacity of each party’s case.

Life-Saving Drugs – The Balance of Convenience Test

India, though mindful of her obligations under the TRIPS regime, reiterated that India is a dualist regime with respect to the adoption of international obligations into the national framework. Furthermore the court states that the court had to keep in mind the degree of harm which would be perpetuated with respect to the specific drug in question – the court stated that Article 21 of the Indian Constitution would be violated in substance where the injury to third parties was not accounted for. With respect to life-saving drugs, it receives a larger amount of significance given the fact that the degree of harm resulting from the impediment to a possible chance of improvement of life-expectancy or even recovery itself. The court in this case referred back to the case of eBay v. Merckexchange which took into account public interest while denying the grant of an injunction. Specifically dealing with the aspect of patent injunctions, the court referred to the case of Cordis Corporation v. Boston Scientific Corporation where the US Court of Appeals for the Federal Circuit had refused the grant of a patent injunction where the product was a drug-eluting stent considering the availability of the appliance would become  limited. The public interest in ensuring ‘availability’ of a certain appliance was reiterated and the court restated its obligation to hinder those activities which might injure public health.

The ‘Balance of convenience’ condition encompasses within it the aspect of the plaintiff suffering from an irreparable hardship. The court noted that about 90,000 men and 79,000 women in India suffer annually from lung cancer. The court admitted that it might be inaccurate in identifying the exact impact of the grant of injunction on the drug- nevertheless it made a calculated assumption that a large number of patients would be deprived of access to the drug if limited, especially considering the fact Tarceva is a life-saving drug.

The Injunction Remedy

A plaintiff is required to make out a strong prima facie case for the grant of an interim injunction. An interim injunction will not be granted if the patent which has been obtained by the plaintiff is a recent one and there is a serious controversy about the validity of the patent itself .

The question determined in Franz Huemer v. New Yash was whether non-use could be grounds for refusing a temporary injunction . In the case of Hoffman v. Roche, Roche, on having gathered evidence that Cipla intended to launch a generic version of Erlocip in India and for export to other countries, filed an action for permanent injunction and damages. Roche in order to strengthen its claim stated that the patent had passed through the levels of the grant of patent and the pre-grant stage – further the drug has been credited with some degree of success.

Non-User Plaintiff Patentee considerations

However, the court validly considered, under its Civil Procedure Code, 1908, as under Order 39, Rule 1, which deals with the grounds for granting a temporary injunction, as to whether the court could take into consideration the element of “suppression” of the patent in the Indian market. In India, non-user plaintiff-patentee has been identified as a ground for the refusal of an injunction . The counsel for the plaintiff submitted that while non-use might be a valid ground of refusal to grant a temporary injunction in the field of trademarks, it could not function with respect to patents considering the exclusive right to “use” the patent, inevitably contained within it, the right not to use. The court however, noted immediately, that following the liberalisation policy in India, such a mode of exercising the patent would not be lucrative to Indian interests. To augment this notion, the court explored certain judgments from England and the United States. In the case of Plympton v. Malcolmson , where the complainant had approached the court ten years following the registration of the patent, followed by not having used the patent, the court observed that there was a requirement to prove ‘actual public use’ of the patent for a number of years in order to substantiate one’s claim. Further dealing with the implications for the industry, the court also observed in the case of Cryosdale v. Fisher , that publication in one part of the industry might not have reached other parts of the industry.

However, it was contended that the patents which had been registered by Mr. Huemer should be revoked considering there was no novelty under Section 64 of the Indian Patents Act, 1970. This contention however, was rejected by the court on the counsel for the plaintiff submitting that though non-use could be a ground under Section 84 of the Patents Act, 1970 for the grant of a compulsory license, as under Section 107 of the act, which states that a ground under Section 64 for revocation could also be a defence which could possibly be raised, and considering under Section 64 of the Act, non-use was not specified, a non-user plaintiff would not in himself create a defence for a patent-infringer.

Local Working Requirement under Article 27.1 and interplay with Article 31

A valid consideration would be whether under Article 27.1 of the TRIPS Agreement which stipulates that there shall be no discrimination on the grounds of place of production, the argument that for pharmaceuticals, it is essential to bolster the strength of one’s argument while responding to an application for a compulsory license in a situation of ‘national emergency’ with a local manufacturing unit. It is essential to have local state owned production capacity considering the Indonesian experience in the 1998 Asian Financial Crisis, owing to which there was a collapse of the local currency leading to a standstill and a reduction of imports of raw materials. Further, the ability of Brazil to produce those ARVs which are essential for the local market has served to increase the bargaining power during negotiations .

Absence of Manufacturing Facility in India

In the case of Hoffman v. Roche, Roche had claimed that the drug had been made available in India since 2006 and had recorded sales worth Rs. 13. 2 crores in India. This was despite the plaintiff not having a manufacturing facility in India. The treatment structure involved that the plaintiff use the drug for two months and the dosage for the patient was once a day.
The court had observed that the absence of a manufacturing unit in India could result in possible Denial of Remedies. The court, in response to Cipla having further pointed that, the patent being ‘new’ and younger than six years old in the market would not be entitled to claim a permanent injunction, went on to consider the risks involved in the possible ‘Denial of Remedies’ which would be effectuated in the case of the grant of a patent injunction in the case of a life-saving drug. The inherent dangers in granting an injunction against production had been noted in the Novartis case wherein the court had identified that if the manufacturing capabilities of a certain party were to be dismantled, it would result in ‘disastrous’ consequences if the import capacity of the patent holder were to be impeded, or hindered by any other state.

Building a Production Capacity

With respect to efavirenz, the submission from the Consumer Project on Technology identified that Thailand was interest in creating a climate which would stimulate competition among generic suppliers and enhance capacity to manufacture AIDS medicines. The end motive was to be able to create economies of scale in the production of essential medicines. The importance of developing production capacity can be deduced by understanding the ratio between the number of patients in a particular country and the costs allocated per patient. With respect to efavirenz, the U.S. was 35 times better prepared to counter an HIV infection in a patient.  Merck & Co. had reduced the price of STOCRIN for patients in least developed countries further in February 2007, following the epidemic. In a communication to the Director, Department of Disease Control on 27th January 2005, MSD Thailand, regarding the pricing of antiretroviral drugs in Thailand, it was identified that if the Government could reduce certain charges on the pharmaceutical companies, they could in turn decrease the prices, considering they were already operating at no profit .

Consequences following the grant of an injunction

The Hon’ble Justice Kennedy was astute in observing that the operation of permanent injunctions in patents had certain ramifications unlike the other cases which had been handled earlier by the principles of equity. He specifically noted that certain patent-holders may use the permanent injunction as a tool for increasing licensing fees, and the patent may never be used as a mode of production . He narrowed down further to identify that injunctive relief may have different consequences for patents on business methods which are gaining significance currently.

Extensive Knowledge of Prior Art by Competitor

While dealing with the issue or consideration that a prospective challenger of a patent-holder’s right could be more familiar with the existent ‘prior art’ than others, the aspect of competitors who might be well versed with the developments in the field gains importance. Where there is a serious issue regarding the validity of the grant of the patent on the originality or inventive genius ingredient, the existence of possible prior art would further disentitle the patent-holder. In this particular case, it was taken into consideration that the defendant was a party who was not new to the field having been a dealer, manufacturer and seller of ploughs in India and could hence be assumed to be familiar with the prior art in the field . In Hoffman v. Roche, Cipla had contended the validity of the patent on the grounds that it lacks inventive step, that it does not reveal an inventive step and finally that there was non-working of the patent. This becomes characteristic of the possible identifications which can be made by the competitors in a specific field in a territorially defined market. In Manioka Thevar, for example, regarding the manufacture of ploughs, the defendant, stated that the new pattern of plough developed by the plaintiff was a predictable result of prior art and was hence, obvious. The patent-holder on being refused an interim injunction had filed an appeal for the grant of an interim injunction.