England and Wales High Court (Patents Court) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		27th June 2011

MR. JUSTICE FLOYD:

1. On Monday 20th June, that is to say, seven days ago, I granted a without notice interim injunction against the first three defendants, who I shall refer to as Teva, Phoenix and AAH. The injunction restrained sales and similar alleged infringing acts in relation to generic atorvastatin.
2. It appeared that Teva had launched their generic atorvastatin ahead of the anticipated expiry date of the SPC which protects the claimants (Warner-Lambert's) sales of Lipitor, an anticholesterol drug.
3. The launch had taken place on an apparently substantial scale through wholesale pharmacies such as Phoenix and AAH, and by direct sales as well as over the internet.
4. Given that the application had been made without notice and on the suggestion of counsel for Teva, who was present at the hearing on 20th June, I qualified the injunction that I granted with an exception or carve-out in the cases of the second and third defendants, which read as follows:

"...save for atorvastatin supplied by Pfizer Ireland Pharmaceuticals Limited" (that is to say, the claimants' Lipitor product) and save in the case of the second and third defendants only, in pursuance of an existing contractual obligation incurred before notification of this order, for supply before Thursday 11th July 2011."

The purpose of the carve-out was to protect those who had contractual expectations of receiving the generic atorvastatin, such as retail pharmacies, who might be placed in difficulty if the injunction was to bite immediately on orders which had been accepted for delivery in the relatively near future.

5. The injunction was expressed to continue until a return date of 11th July. That was to give sufficient time for the filing of evidence on both sides. However, the matter comes back before me today on the basis of a liberty to apply which I granted to AAH and Phoenix to set aside or vary the order.
6. Although a number of disputes had arisen between the parties in the meantime, the principal matters which I have to decide are, first of all, whether the injunction should extend to two further companies. Barclay, the fourth intended defendant, is an affiliated company of AAH and Rowlands, which is an affiliated company of Phoenix. Rowlands is, but Barclay is not, a retail pharmacy.
7. The reason the injunction is sought is that there are substantial quantities of generic atorvastatin which remain unsold and for which there are no contractual commitments to supply. Some of that atorvastatin is already in the possession of Rowlands and had been at the date on which I granted the injunction.
8. The other issue which I have to decide is the application by AAH and Phoenix to discharge the without notice injunction. They say that there was no adequate basis for the injunction to be granted in the first place, given that it was only to extend over a relatively short period.
9. The way in which I dealt with the balance of convenience on 20th June was to say this:

"It does seem to me that, even over a relatively short period until the application can be heard, there is a real risk of damage being caused to the market in this product, which, even on this limited amount of evidence, it is possible to discern. The launch is obviously on a very large scale, involving at least two pharmaceutical retailers and millions of tablets. To suggest that that is not going to have a real impact on the market over three weeks is, in my view, not correct. What is more, the fact that these pharmaceuticals are being offered over the internet suggests, to me at least, that the availability of this product is likely to spread extremely rapidly -- faster than if it was being marketed by sales representatives on a one-to-one basis.

"Given those considerations, in my view, the balance of convenience over the very short period until the effective hearing of the application is in favour of the Claimants. I bear in mind that the Second and Third Defendants have not been notified, but it is not as if atorvastatin is not available from other sources. What is more, it is difficult to see how being deprived of atorvastatin from this particular source could cause damage to those Defendants on a scale anything approaching that which would occur to the Claimants."

10. The position of the second and third defendants was further fortified by the carve-out. Whilst it is not correct to say that the second and third defendants could themselves obtain supplies of atorvastatin from the claimants, it is quite clear that their customers can. Indeed, until last Sunday, any retail pharmacist who was interested in stocking atorvastatin could do so by obtaining supplies from the claimants. That remains the case today.
11. AAH and Phoenix challenge the conclusion which I reached in those paragraphs of my judgment. They invite me to look at the incremental effect of the relatively circumscribed sales which could be made if the injunction were discharged. They suggest that this quantity is so small compared with the annual sales of Lipitor, that the impact on the claimant can be described as minimal.
12. Warner-Lambert's position is that in the light of the figures which are now available as to the amount of generic atorvastatin sold by Teva, their fears of a very large launch were justified. The total amount of atorvastatin supplied amounts to about two months of the total UK market in atorvastatin. If all this atorvastatin is allowed to reach the market, one could be looking at a very substantial period of supply, particularly in the context of the short period which remains in the life of the SPC.
13. Warner-Lambert complain that the damage they will suffer is not limited to their lost profits. Pharmacists who are offered the reduced price generic product will exert pressure on Warner-Lambert to reduce their prices and the effects of this will last beyond 11th July. If this atorvastatin is allowed to be sold without the injunction restraining it, then the effects will undoubtedly continue beyond that date.
14. AAH and Phoenix take as their primary position that Warner-Lambert will suffer no irreparable harm at all pending the hearing on 11th July. They say that over that very short period, it is extremely unlikely that Warner-Lambert will have to reduce their prices. If Warner-Lambert stand firm on their prices then damages, according to the usual measure, will be a perfect recompense for them.
15. I have to say that I am wholly unable to accept that submission. A launch on the scale which was contemplated and has begun would undoubtedly distort the market in Lipitor beyond the ability of any inquiry as to damages to compensate the claimants. One only has to think of the effect on Warner-Lambert's reputation when it is made clear that a price differential of 22.5% is available to purchasers of the generic product to see that some damage of an irreparable nature is bound to be incurred.
16. In the alternative, however, AAH and Phoenix submit that the evidence now before me allows me to conclude that the damage to them, if I continue the injunction, will be far greater than the damage to the claimant. They rely on a number of matters.
17. First of all, they say that there is evidence that Warner-Lambert are using the injunction in a way which is prejudicial to them in communications with pharmacists. Accordingly, on 21st June, by way of example, Pfizer issued a statement on generic atorvastatin which read as follows:

"Pfizer announced today that, at its request, the High Court of Justice in London issued a ruling restraining the distribution and sale of generic atorvastatin by Teva UK Limited, Phoenix Healthcare Distribution Limited and AAH Pharmaceuticals Limited in the UK until a further hearing scheduled July 11th, 2011. The court's order can be found on Allen & Overy's website at ...." and then a URL is given.

"The company stated that any distribution or sale in the UK of generic atorvastatin by wholesalers, traders or pharmacies is unauthorised and that it will take appropriate legal action to prevent the violation of its valid patent rights. The UK patent at issue is covered by an SPC which does not expire until November 2011 and Pfizer has applied for a six-month paediatric extension to the SPC. In 2005, the same court had rejected a challenge to the patent by Ranbaxy finding that a generic atorvastatin product would infringe Pfizer's patent covering atorvastatin, the active ingredient in Lipitor. That decision was affirmed on appeal.

"Pfizer will vigorously pursue all appropriate legal remedies to prevent infringement of its valid intellectual property rights and reserves the right to claim damages from any infringing party."

18. What is said about that statement is that it fails to give adequate emphasis to the existence of the carve-out. It is correct that the carve-out is not mentioned specifically but the statement does make reference to the full version of the order, which was available at the URL which is mentioned. I do not think that any criticism can be raised about that aspect of the statement.
19. The second criticism that is made is that the second paragraph uses the word "unauthorised", an expression which, in the pharmaceutical industry, might be taken to indicate that the product did not have a marketing authorisation. I think that is an improbable interpretation to take if one were a pharmacist in the UK. The statement makes it clear that the basis of the order was the supplementary protection certificate and the final paragraph makes it clear that it is infringement of intellectual property rights which is complained of.
20. I therefore do not think there is much to complain of in that statement.
21. AAH also complain about the fact that Pfizer were writing to pharmacists, or giving them information, to suggest that they should return supplies of generic atorvastatin to their suppliers. For example, one such statement reads:

"Customers should appreciate that there is a High Court injunction in relation to generic atorvastatin as supplied and/or distributed by Teva, AAH and Phoenix. We would ask that you return your supplies of any such product. We will continue to supply you with Lipitor in accordance with our normal trading terms."

22. Again, it seems to me that that is, whilst perhaps not the most legally fulsome account of what was going on, a request which Pfizer was entitled to make given that they assert that atorvastatin sold by Teva is an infringement of their patent rights and that is an assertion which they intend to justify. Quite apart from that, Teva have not been backward in making statements to the market themselves which makes their position clear as well.
23. I think what one has to bear in mind with all this material is that the issue with which I am concerned is the effect which the injunction is having over the period with which I am concerned. In order to redress any wrong which is contained in any of these statements, AAH and Phoenix would have to show that there had been a misuse of the court order or some misrepresentation had been made. I do not think that the evidence establishes anything of that kind.
24. Apart from this, the case on irreparable harm to AAH is put in the witness statement of Mr. James, who is the Group Managing Director of AAH, in this principal way. He addresses the question of the supply of the remaining stock to the chain of pharmacies with which AAH are affiliated, known as Lloyds. He says:

"In our opinion, the supply of this stock to Lloyds cannot of itself cause Pfizer any unquantifiable harm, particularly in light of the stock that has already come on to the market. .... Further, the fact that product has not been sent to Lloyds is also damaging our reputation in the market. A number of pharmacists have pointed to the fact that our own associated pharmacy does not have stock and this (accompanied by the existence of the interim injunction and Pfizer's comments about it) are causing them to conclude that this was somehow deliberate upon the part of AAH. This is causing greater concern and further harm to our reputation and standing with those pharmacists. In fact, for the reasons I have given, AAH was not content to say that the stock set aside for Lloyds formed part of a 'contractual obligation' and so, because of the interim injunction, has not been able to supply Lloyds."

25. As I understand it, the complaint made there is that some retail pharmacists will have obtained the product but that AAH and its associated retail chain, Lloyds, will not, and that, as a result, there will be harm to AAH's reputation.
26. In addition to that, AAH point to the fact that once atorvastatin is in the retail chain, if it has to be returned and has been in the pharmacist for more than five days, it will have to be destroyed. They say the existence of the injunction is causing pharmacists to return generic atorvastatin with the result that some of this product will have to be destroyed.
27. As against this, Mr. Thorley, on behalf of Warner-Lambert, submits that one should not lose sight of the fact that until last Sunday, there was no such thing as generic atorvastatin and that if matters are arranged so as to preserve the status quo pending the further hearing, it is unlikely that AAH and Phoenix will suffer any irreparable harm. He says they are likely to have accepted these very large quantities of generic atorvastatin in the knowledge of the existence of the SPC and to the extent that there is some consequential effect, they have only themselves to blame.
28. Subject to the product which is in the possession of Rowlands, to which I will come subsequently, I am not persuaded that it would be appropriate to release these further unsold stocks from the effect of the injunction pending the further hearing. It seems to me that much of what was alleged by Warner-Lambert at the without notice hearing has been made good by the subsequent evidence.
29. The carve-out was included in the order by way of protection for existing contractual commitments. That was the basis on which I decided to hold the ring pending a substantial hearing of the application. It seems to me that to place one foot, as it were, on the carve-out and say that given that that has occurred, it will not cause any significant further damage if further product is released is not the right approach. It seems to me, in substance, that no basis is really shown for taking a different approach from that which I took at the without notice hearing and that the carve-out which was arrived at then was a way of striking the balance between the contractual commitments which had been arrived at and the damage to the respective parties.
30. I see no basis for allowing the further sales of product to which no such contractual commitment attaches and, thereby, potentially extending the period for which that damage might be sustained by Warner-Lambert. I can see no real unquantifiable harm to AAH or Phoenix. I think the argument that their reputation will be affected over this very short period is too tenuous to take account of.
31. That being so, I have to turn to the position of Rowlands. As I have indicated, Rowlands is a retail pharmacy. Mr. Hinchliffe submits that product which is actually in Rowland's possession, and was there at the date I granted the injunction, is product which has been sold. To the extent that that has caused even unquantifiable damage to the claimants, that damage will have been caused and the incremental effect of that atorvastatin actually being dispensed is nothing.
32. That is a formidable submission. Mr. Thorley answers it by saying that it will create a situation in which all the main retail chains are injuncted either, effectively, because they cannot obtain further product or by virtue of the existing injunctions against AAH and Phoenix. Accordingly, creating a situation in the market with such uneven treatment would be likely to harm the reputation of the claimants.
33. I am unpersuaded by that answer. It seems to me that once the product has found its way into retail pharmacies and is being dispensed then that is a situation which is not capable of remedy by virtue of injunction. The actual dispensing of the product is not the basis of the harm to the claimants. It is the sales of the products by the wholesalers which is the source of the damage.
34. In those circumstances, I propose to leave the injunction in place as regards the existing defendants and grant an injunction in respect of Barclay, but I do not propose to injunct Rowlands against the retail sales of stocks in their possession, as identified on the schedule which has been produced.
(For proceedings: see separate transcript)
35. The claimant seeks an order in the following terms: the third defendant (that is to say AAH) discloses the names and addresses, so far as known to them of each and every person, firm or company to whom it has supplied or offered to supply atorvastatin, save in respect of supplies of atorvastatin made to dispensing pharmacies and details of the amounts or atorvastatin so supplied and their recipients thereof.
36. The disclosure so far given by AAH reveals that quite a substantial proportion of the atorvastatin which was supplied to them by Teva was sold to non-affiliated pharmacies before the grant of the injunction on 20th June. The claimants, understandably, want to know whether there is any significant cache or stockpile of generic atorvastatin in the wholesale, as opposed to the retail, supply chain.
37. I have already indicated in the judgment which I have given that atorvastatin within a retail pharmacy is likely to have been purchased and, therefore, the court would be acting in vain if it granted an injunction against sales at that point, but the converse applies to wholesale pharmacies. It therefore seems to me to be appropriate, at least in principle, that this disclosure be given. Mr. Lykiardopoulos questions whether it is urgent but it seems to me that it is urgent, because in the absence of an injunction that atorvastatin may get into the hands of retail pharmacies and therefore be beyond the reach of any injunction which the court would be prepared to grant.
38. Mr. Lykiardopoulos also raises the problem of defining what is a dispensing pharmacy and what is not. I do not think, in principle, there is any such difficulty. A wholesaler is a wholesaler and a dispensing pharmacy is a dispensing pharmacy. If there are difficulties in defining precisely where the line is to be drawn, then the court may be called upon to adjudicate, provided the point is adequately flagged up for the claimants to know what it is. They can either agree that it is excluded or the court can decide whether it is or whether it is not.
39. In principle, it seems to me that this information ought to be disclosed forthwith so that the trail is not allowed to go cold.


 


(For proceedings: see separate transcript)