Seeking Preliminary Injunction for Pharmaceutical Patent Infringement in Sweden - A Comparative Law Analysis of Pharmaceutical Patent Protection and Injunction Proceedings in the Nordic Countries By Erik Ficks, Roschier Introduction 2009 has brought about significant changes to the Swedish pharmaceutical market as a consequence of the dismantling of the state pharmacy monopoly. As of 1 July 2009, parties other than the Swedish state are permitted to establish pharmacies. Several of the previously state-owned pharmacies have already been sold to private actors and as of 1 November 2009, several over-the-counter pharmaceuticals are permitted be sold in the regular retail trade (i.e. outside the pharmacies). This increased activity creates an increased need for patent holders to safeguard their rights, primarily by preliminary injunctions. It is crucial to prevent the premature market launch of generic pharmaceuticals which may cause immediate economic damage in terms of loss of sales of a patented pharmaceutical, especially since (mandatory) generic substitution occurs in all Nordic countries. Coincidentally, due to the delayed implementation of the Enforcement Directive 1 (also known as IPRED), it became possible for Swedish courts to issue preliminary injunctions against imminent threats of patent infringement as of 1 April 2009. Previously, preliminary injunctions could only be granted for completed infringements. In order to present how the Swedish courts may apply this new provision for preliminary injunctions for pharmaceutical patent infringements in particular, a comparison is made with cases where such preliminary injunctions have been granted in Denmark, Norway and Finland. The focus of this article is on the point in time when a preliminary injunction may be granted. A Background to Pharmaceutical Patent Protection and Preliminary Injunction Proceedings in the Nordic Countries The national patent provisions in Sweden, Denmark, Finland and Norway were prepared in the 1960s through a joint report concerning Nordic patent legislation 2 (the Nordic Report ). However, the enforcement of rights and the procedural rules were not harmonized. Further, in 1978, Sweden became the first Nordic country where the European Patent Convention ( EPC ) entered into force. The EPC was subsequently ratified by Denmark in 1990, Finland in 1996 and Norway in 2008. All of these Nordic countries have also entered into the World Trade Organization s agreement on Trade-Related Aspects of Intellectual Property Rights ( TRIPS ). When discussing patent protection for pharmaceuticals, it is of course necessary to note the difference between product patents and analogous process patents. The opinion in the Nordic Report was that product patents for pharmaceuticals should not be allowed. However, in connection with the approval of the EPC in 1978, Sweden amended its patent legislation to include product protection for pharmaceuticals. Denmark followed suit in 1983. In Norway it has been possible to apply for a product patent for a pharmaceutical since 1992, and in Finland since 1995. The legal developments in Norway and Finland were because of the requirement in Article 27 of TRIPS. 1 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights. 2 NU 1963:6. Betenkning angående nordisk patentlovgivning (Report on Nordic Patent Legislation). This article was first published in EPLAW Patent Blog 12/2009 (www.eplawpatentblog.com)
With regard to sanctions for patent infringements, in addition to civil damages and criminal sanctions, it is possible in Denmark and Norway to obtain preliminary and final injunctions pursuant to the national provisions of procedural law. In Finland, such special provisions have been introduced into the Finnish Patents Act, but preliminary injunction proceedings are in the majority of cases based on the general provisions concerning precautionary measures under the Finnish Code of Judicial Procedure. In Sweden there are also two legal bases for an injunction, but as opposed to Finland, it is basically only the special provisions in the Swedish Patents Act that are relied upon. The advantage of injunctions as a means to enforcing patent rights are considered to be that that the patent holder does not need to prove the infringer s intent or negligence, but merely that there objectively speaking is an infringement. The prerequisites for granting preliminary injunctions in the Nordic countries are similar, but some important differences exist. Generally speaking, the main prerequisite is that there is a risk of the applicant s rights being negatively impaired if a preliminary injunction is not granted. The court is generally obliged to carry out an assessment of proportionality. Only in Sweden is this obligation not codified, but it is obvious from case law that the court in principle should conduct a proportionality test between the applicant s interest and the detriment that the measure can cause to the counterparty. However, if an infringement is more or less obvious, an injunction should be granted and the room for a proportionality test is, under such circumstances, very small. In Denmark and Norway, it is similarly stated that the court can refuse to grant an injunction if it would result in such damage or inconvenience for the counterparty that is in an apparent disproportion to the applicant s interest to be secured with the injunction. Also in Finland an assessment of balance of interests shall be made; the court must assess whether the counterparty would suffer unreasonable inconvenience compared to the interest to be secured. Injunctions for Imminent Infringements pursuant to the Enforcement Directive The Enforcement Directive should have been implemented on 29 April 2006 at the latest and contains provisions regarding preliminary precautionary measures (Article 9) and injunctions (Article 11). On 15 May 2008, the ECJ convicted Sweden of violating the convention due to Sweden s failure to show that the implementation of the Enforcement Directive had occurred on time. 3 It was not until 24 February 2009 that the Swedish Parliament voted for the implementation and the amendments entered into force as of 1 April 2009. Denmark and Finland had previously implemented the Enforcement Directive. Since the Enforcement Directive refers to procedural law, it is not included in the so-called EEA-agreements, and Norway as a non-eu member state is therefore not obliged to implement the Enforcement Directive. Pursuant to Article 9, EU member states shall guarantee, inter alia, that precautionary measures in the form of injunctions against an alleged infringer may be issued with the intention to prevent any imminent infringement. Of the Nordic countries that have implemented the Enforcement Directive, Sweden is the only country where the question regarding preliminary injunctions against imminent infringement has given rise to any discussion. In the Swedish implementation of Article 9, it has been construed in the manner that there is no explicit mentioning of imminent infringements, which, in all fairness, is an undefined concept in the Directive. Instead, it was decided in Sweden to expand the notion that infringements committed by intention or gross negligence constitute penalized actions and that an attempt or preparation for such infringement can result in a penalty by virtue of the general provisions of the Swedish Penal Code. Considering that attempts as well as preparations for infringements are measures that take place prior to a completed infringement, enforcements at this stage were held to be equivalent to finding that an infringement is 3 The Commission of the European Communities v. the Kingdom of Sweden, Case No C-341/07, 15 May 2008. 2
imminent. The assessment by the Swedish Government was that there is no obligation pursuant to the Enforcement Directive, and furthermore it was not deemed to be appropriate, to also introduce provisions regarding preliminary injunctions in other situations than those where such an attempt or a preparation has occurred. Accordingly, new injunction provisions applicable in such situations are now found in Section 57(b) of the Swedish Patents Act. In connection with the announcement of this new provision, it was decided by the legislator that the normal prerequisites for an attempt pursuant to the Swedish Penal Code must be fulfilled also in this respect, but with the exception that the applicant does not need to show intent or negligence. With regard to a preparation, however, it is an absolute requirement in the Swedish Penal Code, and therefore also a prerequisite in preliminary injunction proceedings, that such action must have been taken with the intent to execute or promote a crime (i.e. a patent infringement in this respect). This may seem strange, especially considering that the purpose of injunctions is to grant the advantage of not having to prove intent or negligence. Nonetheless, this is the consequence of the technical legal solution adopted in Sweden when implementing the Enforcement Directive. Seeking Preliminary Injunction for Imminent Pharmaceutical Patent Infringements Sweden Unlike the application for marketing authorization, it was previously unclear in Sweden whether an application for the inclusion of a pharmaceutical into the pharmaceutical benefits scheme (subsidized by the state) to the Tandvårds- och Läkemedelsförmånsverket ( TLV ) constitutes an offering within the meaning of the Swedish Patents Act. As a background, TLV decides whether a pharmaceutical is included in the pharmaceutical benefits scheme and sets the price at which the company that applied for the inclusion may sell the pharmaceutical. However, the Supreme Court of Sweden ruled on 23 December 2008, in a dispute between Pfizer and STADApharm, that this was not the case. 4 It was undisputed in this case that STADApharm s generic pharmaceuticals were within the scope of the supplementary protection certificate for Pfizer s product. STADApharm had been granted marketing authorization for its product on 22 December 2004, despite that the supplementary protection was in force until 28 October 2005. STADApharm applied on 20 April 2005 to include the generic pharmaceutical in the pharmaceutical benefits scheme and thereby requested that a price be set. After some discussions, the TLV decided to grant the product pharmaceutical benefit status as of 25 May 2005 and set a price. The state-owned pharmacy monopoly, Apoteket, was informed of the decision on the same day and the generic pharmaceutical was included in its sales catalogue. However, STADApharm stopped orders on the product the following day. Before any sales of the generic pharmaceutical had taken place, Pfizer requested that the Stockholm District Court declare that the application to TLV to set a price for the pharmaceutical, together with discussions concerning the price, constituted a completed patent infringement in the form of an offering. The courts in all three instances noted that there is no clear definition of an offering under Swedish patent law. However, reference was made to statements in legal doctrine by the Swedish scholar Bengt Domeij that it does not have to imply selling but comprises every expression for a will to, under commercial conditions, offer a product that infringes a patent, e.g. through leasing. 5 4 Pfizer AB v. STADApharm AB, the Supreme Court of Sweden, Case No T 4705-07, 23 December 2008. 5 Bengt Domeij, Fokus på patenträtten, 1997, p. 65. 3
The majority panel of the Stockholm District Court held that the application to TLV expressed such a will to offer a product that the action should be deemed as a prohibited offering for sale. Since STADApharm is a commercial company, it was considered that the application had evidently been made in order to later be able to sell the pharmaceutical to Apoteket. However, the majority panel of the Svea Court of Appeal held that the fact that there obviously existed an underlying commercial purpose for the application to TLV alone was not enough. An offering for sale must be directed towards a potential customer or connected to a concrete business transaction. According to the Svea Court of Appeal, STADApharm had not through its request undertaken to sell the product or otherwise assign some right to the same. Instead, the application can primarily be seen as a preparatory action in order to render a later offering for sale possible. 6 The findings of the Supreme Court are brief, but repeat the stance of the Court of Appeal in substance, by noting that an approval of the application solely implies that the pharmaceutical that the applicant markets or intends to market is comprised by the pharmaceutical benefits scheme and that the applicant, within the scope of this system, can sell the pharmaceutical at a particular price. The Supreme Court also remarked that the application cannot in itself be viewed to have been made with the purpose that the authority shall acquire any right to a product neither on the authority s own or someone else s behalf. Since Svea Court of Appeal stated in this dispute that the application to TLV should principally be seen as a preparatory measure, the question is whether such measures could be prohibited as an attempt or preparation to patent infringement pursuant to the new injunction provision. There is, however, no statement that would provide further guidance in the Supreme Court s or the lower courts decisions. Pursuant to the Swedish Penal Code, an attempt occurs when someone has started to commit a certain crime without having come to a completion, if there is danger of completion. Preparation is considered to be the situation when someone, with the intent to execute or promote a crime, either receives or provides money or something else as payment for a crime or in order to cover expenses for execution of a crime, or acquires, manufactures, provides, receives, stocks, transports, compiles or undertakes another similar position with something that is particularly intended to be used as means of committing a crime. In relation to an offering for sale within the meaning of patent law, an attempt could, for example, be both at the stage that someone has drafted a written offer concerning an infringing product and posted the offer, but the recipient has not yet received the letter, as well as at the stage that someone has drafted a written offer concerning an infringing product and put it in an envelope, but the offer has not yet been posted. With regard to preparation, the first typical action, i.e. giving or receiving compensation for a crime, does not greatly differ under patent law from the same assessment in relation to other crimes. The other typical action, i.e. dealing with particular means for committing a crime, is, however, more difficult to assess. In addition to equipment obviously connected to criminal activities, e.g. a sawed-off shotgun, such equipment for committing a crime that may be legal but are typically pursued in connection with the commitment of the crime in question are also included. Within patent law, and particularly in relation to pharmaceutical patents, this could very well correspond to activities such as contact with authorities who carry out administrative measures prior to the sale of a pharmaceutical. However, in addition to this, the applicant must in the preliminary injunction proceedings establish the probability that the counterparty intented to execute or promote an infringing action (e.g. offering for sale of an infringing pharmaceutical). It can therefore be asserted that an injunction is issued already on the basis 6 STADApharm AB v. Pfizer AB, Svea Court of Appeal, Case No T 5467-06, 6 November 2007. 4
of an application for marketing authorization if also additional circumstances in the counterparty s action which indicates a concrete risk for patent infringement are at hand, even though the marketing authorization as such does not constitute infringement. This view also finds support in decisions by Danish, Norwegian and Finnish courts, which will be described below. A Comparison with Case Law from Other Nordic Countries It is evident from two current cases in Denmark that it is possible to obtain preliminary injunctions against imminent infringement of a pharmaceutical patent after the counterparty has been granted marketing authorization. As leave to appeal to the Supreme Court was not granted in either case, the decisions are final. In the first case, 7 Novartis requested a preliminary injunction against Teva on 5 September 2007. Teva had in December 2006 applied for a marketing authorization for its generic pharmaceutical, despite that supplementary protection was in force until 2011. Teva objected to the request by noting that it had already in previous letters to Novartis confirmed that it had no intention of marketing its pharmaceutical at that time and, furthermore, that the primary reason for the application for marketing authorization was to use Denmark as a reference state in a procedure for decentralized approval. Teva also emphasized that it was currently not claiming that the patent was invalid or that the generic pharmaceutical could legally be marketed. Because of these objections, the court of first instance found that Novartis had not established a probability for that Teva was going to commit patent infringement. Novartis appealed and the appellate court, same as the court of first instance, noted that an application for marketing authorization neither constitutes patent infringement as such nor is sufficient ground in itself for a preliminary injunction. However, it was further noted by the court that such an application together with surrounding circumstances could render it probable that a patent infringement would be committed and that the prerequisites for issuing a preliminary injunction therefore are at hand. In this case, such circumstances were considered to exist since the application for marketing authorization had been filed at a very early stage in relation to the expiration of the term of the patent and that Teva had refused to confirm that it would respect the patent. Teva s objection that the application had been filed with the purpose of using Denmark as a reference state did not lead to any other conclusion, since after the application for marketing authorization in Denmark was granted Teva had also obtained marketing authorization in Ireland. A preliminary injunction was therefore issued in accordance with the request. In the second case, 8 Eli Lilly requested a preliminary injunction against Nomeco, one of three so-called full-range wholesalers for pharmaceuticals in Denmark that are obligated to offer all pharmaceuticals registered in the Danish Medicinregistret. The basis for the request was that Eli Lilly during the summer of 2007 had observed that several generic pharmaceutical companies had applied for and had been granted marketing authorizations for their generic pharmaceuticals, despite that the patent was in force until 2011. In the generic pharmaceutical companies responses to Eli Lilly s letter, it was indeed stated that there were presently no plans on market launch. However, the generic pharmaceuticals had already been put on the English market. The Danish courts noted that the application for and the granting of a marketing authorization is a central action prior to the marketing of a pharmaceutical and therefore creates a natural presumption that the holder intends to sell the product. The courts 7 Novartis AG and Novartis Healthcare A/S v. Teva Danmark A/S, Østre Landsret, Case No B-1053-08, 18 November 2008 (Novartis AG and Novartis Healthcare A/S v. Teva Denmark A/S, Retten i Lyngby, Case No FS 4089/2007, 11 March 2008). 8 Nomeco A/S v. Eli Lilly and Company Ltd and Eli Lilly Danmark A/S, Østre Landsret, Case No B-1294-08, 21 January 2009 (Eli Lilly and Company Ltd and Eli Lilly Danmark A/S v. Nomeco A/S, Retten på Frederiksberg, Case No FS 1-13061/2007, 28 April 2008). 5
also noted that although some of the responses of the marketing authorization holders to letters from Eli Lilly had weakened this presumption to some extent, none of them had disclosed any further information regarding the background to the applications. Since the counterparty had not undertaken not to market the generic pharmaceuticals, it could be held that the infringing products were going to be made available should the generic pharmaceutical companies announce their prices to Medicinregistret. Eli Lilly was therefore deemed to have established a probability that the marketing of the generic pharmaceuticals was to occur within the near future and a preliminary injunction was issued in accordance with the request. There are similar examples to be found in Norwegian and Finnish cases where preliminary injunctions have been granted for imminent patent infringements. 9 Situations where preliminary injunctions have been granted are e.g. when the distributor of an approved generic pharmaceutical due to pressure from the patent holder informs that market launch will take place within only a few weeks, when permission for a generic pharmaceutical to be included in the pharmaceuticals benefits scheme is repeatedly extended or when a sales representative books a meeting in a health care centre in order to showcase the generic pharmaceutical for physicians. Concluding Remarks Subsequent to the introduction of a new injunction provision to the Swedish Patents Act on 1 April 2009, injunctions may also be issued against attempt or preparation for patent infringement in Sweden. Unfortunately, a technical legal solution will contribute to that the Swedish legal system will in the future differ from other Nordic countries on how the injunction provisions are defined. However, we consider that there is room in the application of the law for interpreting the new Swedish provision in the same manner that the provisions regarding injunctions are applied in other Nordic countries, but it is yet too early to tell whether the amendment will have any practical effect for patent holders in Sweden. In Denmark, Norway and Finland preliminary injunctions may be issued against imminent infringements of pharmaceutical patents when the applicant establishes a probability that the counterparty intends to launch an infringing product in the near future. This is the case, e.g. when the counterparty has given a statement regarding a planned launch of the product. The described cases also show that an application for marketing authorization filed prior to the expiration of the term of the patent does not in itself constitute sufficient ground for issuing a preliminary injunction, but that such application together with additional surrounding circumstances may lead to the conclusion that a concrete risk for patent infringement is considered imminent. Such additional circumstances may be an unwillingness of the counterparty to confirm that it will not enter the market during the term of the patent, especially if this occurs together with a contestation of the patent infringement or the validity of the patent, as well as other actions by the counterparty in other countries with a similar patent situation. The applicant s matter is also reinforced if the filing of the counterparty s application for marketing authorization occurred long before the expiry of the term of the patent. In this way, the applicant can indicate an action or behavior of the counterparty that implies a concrete risk that a patent infringement is at hand. Guidance can hopefully be obtained from the abovementioned Nordic decisions, and the requirements for granting a request for a preliminary injunction against an attempt or preparation for patent infringement should not be set higher in Sweden. 9 See e.g. Merck & Co Inc., Merck and Company Inc., Merck Sharp & Dohme BV and MSD (Norway) A/S v. Krka Sverige Ab, Oslo byfogdembete, Case No 06-180835TVA-OBYF, 11 December 2006, and Warner-Lambert Company LLC and Pfizer Oy v. Ranbaxy UK Ltd and Ranbaxy Pharma AB, Helsinki District Court, Case No. 07/30482, Decision No 8069, 20 March 2008 (Warner-Lambert Company LLC and Pfizer Oy vs. Ranbaxy UK Ltd and Ranbaxy Pharma AB, Helsinki Court of Appeal, Case No 07/30482, Decision No 32701, 21 November 2007). 6